Germany Lifts Growth Outlook, Poland Raises Key Rate; Swatch Drops 4.5%

Arthi Gupta
19 Jan, 2011
New York City

The European indexes edged lower after euro-zone current account deficit widened and construction output fell in November. Germany lifted growth forecast for 2011. Spain home sales plunged in November and Poland raised key interest rate.

[R]4:00 PM Frankfurt – The European indexes edged lower after euro-zone current account deficit widened and construction output fell in November. Germany lifted growth forecast for 2011. Spain home sales plunged in November and Poland raised key interest rate.[/R]

European markets indexes generally declined as the sovereign debt worries resurface and U.S. indexes traded flat after mixed earnings and Asian markets gained.

Chinese President arrived in the U.S. for a four-day visit to discuss trade and currency.

In Paris CAC 40 Index declined 6.15 or 0.15% to close at 4,006.53 and in Frankfurt DAX Index edged lower 19.10 or 0.27% to close at 7,124.35.

Euro Area Current Account Deficit Widens, Construction Output Falls

The euro-zone''s current account deficit rose in November due to larger shortfalls in the goods and income accounts.

The European Central Bank said the seasonally adjusted current account deficit rose to €11.2 billion in November from €9.6 billion in October.

The goods deficit climbed to €4 billion in November from €2.4 billion in October and the income account shortfall rising to €4.3 billion in November from €1.9 billion in October.

Euro-zone construction output declined 0.9% month-on-month on a seasonally adjusted basis in November, data from Eurostat showed today. This follows an upwardly revised 0.3% rise in October.

Annually, output in euro-zone construction industry dropped a working day adjusted 6.8% in November compared to a revised 5.9% decline in October.

Germany Lifts Growth Forecast for 2011

The German economy would grow faster this year than initially thought, latest forecasts from the Federal Ministry of Economics and Technology suggested.

In its Annual Economic Report 2011 released on Wednesday, the ministry said the gross domestic product is likely to rise 2.3% this year, faster than the 1.8% growth it had predicted in October.

According to preliminary estimate, Germany''s gross domestic product climbed 3.6% in 2010.

Swedish Inflation, GDP Forecasted to Grow

The one year inflation and economic growth expectations among Swedish money market investors increased since December, according to a survey conducted by TNS SIFO Prospera.

The Swedish one-year look ahead inflation is estimated at 2.1%, compared to the 1.7% estimated during the previous survey period, survey results showed on Wednesday. Also, inflation expectations for the coming two years rose to 2.2%.

Likewise, gross domestic product is forecast to grow 3.4% in the coming twelve months compared to 3.1% projected during December survey. And growth is seen at 2.9% for the coming two years.

Spain Home Sales Drop

Home sales in Spain fell 6.2% annually to around 32,750 in November, statistics office INE said on Wednesday.

However, on a monthly basis, sales rose 20.4% in November.

Poland Raises Key Rate

Poland''s central bank hiked its key interest rate by 25 basis points to 3.75%, effective from January 20. The central bank hiked the rate for the first time since June 2008 to curb inflation.

According to the Central Statistics Office, inflation in Poland rose to 3.1% in December from 2.7% in November.

Gainers & Losers

ASML Holding N.V. fell 2.19% to €29.30 after the semiconductor equipment maker reported fourth quarter total net sales more than doubled 162% to €1.52 billion from €580.6 million in the same quarter last year. Net income in the quarter increased 706% to €406.8 million or 0.93 euros per share from €50.5 million or 0.12 euros per share in the previous year.

For the full year, the company posted net income of €1.02 billion or 2.33 euros per share, compared to a net loss of €150.9 million or 0.35 euros per share in the previous year. Total net sales surged 182.4% to €4.51 billion from €1.6 billion in the prior year.

Eiffage S.A. surged 5.55% to €36.97 after the construction company won a €3.4 billion contract to build a high-speed rail link between Le Mans and Rennes.

Roche Holding AG gained 0.43% to Sfr141.10 after the Swiss pharmaceutical company’s biotechnology business Genentech stated that its investigational drug candidate RG7204 showed significant survival benefit in a phase III clinical study for people with previously untreated advanced skin cancer.

The Swatch Group AG slumped 4.53% to Sfr375.20 after the Swiss watch maker said its gross sales for the full-year 2010 grew 18.8%, as market conditions improved helped by the return of consumer confidence. Sales improved 21.8% at constant exchange rates.

X5 Retail Group N.V. increased 1.54% to $46.20 after largest retail company in Russia said that consolidated net retail sales for the fourth quarter grew 35% annually to 106,265 million rubles compared to 78,567 million rubles in the year-ago period.