European Indexes Higher; French Manufacturing Confidence Surges

Arthi Gupta
21 Jan, 2011
New York City

The European indexes gained after German business confidence improved in January. Euro-zone consumer sentiment declined in January and current account deficit narrowed in the third quarter. French manufacturing confidence soared and Portugal PPI rose in December.

[R]3:30 PM Frankfurt – The European indexes gained after German business confidence improved in January. Euro-zone consumer sentiment declined in January and current account deficit narrowed in the third quarter. French manufacturing confidence soared and Portugal PPI rose in December.[/R]

European indexes traded higher across the region after German business confidence improved and a rise in commodities prices. Better than expected to increase in earnings from GE and Google also bolstered the sentiment but China worries also hovered on trading sentiment.

Investors in Central and Eastern Europe remained downbeat on their current business conditions, while their expectations were weighed down by weaker prospects for Turkey, according to survey results released by the Centre for European Economic Research (ZEW) and the Erste Group Bank.

The ZEW-Erste Group Bank CEE Indicator dropped by 6.5 points from the previous month to 16.2 in January, reflecting more cautious economic expectations on a six-months time horizon for Turkey.

In Paris CAC 40 Index surged 70.49 or 1.78% to close at 4,035.33 and in Frankfurt DAX Index edged higher 71.37 or 1.02% to close at 7,095.64. For the week, the CAC 40 Index increased 1.25%.

Euro Area Consumer Sentiment Falls, Current Account Deficit Narrows

Euro-zone''s consumer confidence indicator fell to minus 11.4 in January from minus 11 in December, a flash estimate from the European Commission showed on Thursday.

The EU27 current account balance deficit narrowed to €19.7 billion in the third quarter from a deficit of €34.9 billion recorded in the second quarter, according to data from Eurostat released today. A year ago, the deficit was €26.1 billion.

German Business Confidence Improves

German business confidence hit a new high in January, boosted by an increasingly optimistic manufacturing and construction sectors.

The business climate index, which measures firms'' sentiment, rose to 110.3 in January from a revised 109.8 in December, a monthly survey conducted by the Ifo institute among 7,000 executives showed on Friday. The Ifo index rose for the eighth consecutive month.

French Leading Index Drops, Manufacturing Confidence Soars

A leading indicator of the French economy fell in November, following four consecutive monthly increases.

The Conference Board leading index dropped 0.3% in November, following a 0.2% rise in October and a 0.7% increase in September.

French manufacturing confidence in January rose to its highest level in more than two-and-a-half years, latest survey results released by the statistics office Insee showed today.

The sentiment index for the sector climbed to 108 in January from a revised 102 recorded in December. That was the highest reading since March 2008.

Portugal PPI Up

Portugal''s producer price index rose 4.9% annually in December, Statistics Portugal said. Producer prices for the manufacturing industry rose 4.6% annually in December, as against November''s 4.1% increase.

Italian Records Trade Balance Deficit

Italy''s exports to non-EU nations increased 19.2% annually in December, the statistics office Istat showed on Friday. At the same time, imports surged 48.4% from the same period of last year.

The trade balance resulted in a deficit of €1.33 billion compared to a €1.38 billion surplus in the same period of 2009.

Swiss Money Supply Grows

Switzerland''s M3 money supply grew 6.6% annually in December compared to the 5.9% increase in November, the Swiss National Bank said on Friday.

Gainers & Losers

ABB Ltd. fell 2.14% to $22.81 after the Swiss engineering group and Baldor Electric Co. said that the Antitrust Division of the United States Department of Justice cleared ABB''s proposed acquisition pursuant to a cash tender offer for all of the outstanding shares of common stock of Baldor at a price of $63.50 per share net to the holder in cash.

ArcelorMittal S.A. gained 1.56% to $35.85 after the largest steelmaker was upgraded to “buy” from “hold” by UniCredit.

ASML Holding N.V. surged 3.71% to $38.57.

Avanti Communications Group PLC climbed 0.24% to 625.50 pence after the provider of satellite communication services said that it has been awarded two new contracts to develop and demonstrate technology to deliver video to the edge of terrestrial networks using Avanti''s HYLAS 1 satellite capacity.

itelligence AG edged higher 0.30% to €6.77 after the Germany-based information technology (IT) company said fourth quarter revenue rose 35.2% to €83.4 million compared to €61.7 million in 2009.

MorphoSys AG fell 0.12% to €20.55 after the Germany-based biotechnology company said that it estimates full-year 2010 revenues of about €87 million.

Novartis AG rose 0.18% to Sfr54.30 after the pharmaceutical company said the European Medicines Agency''s Committee for Medicinal Products for Human Use adopted a positive opinion for Gilenya (fingolimod) 0.5 mg daily as a disease modifying therapy in patients with highly active relapsing-remitting multiple sclerosis despite treatment with beta interferon, or in patients with rapidly evolving severe relapsing- remitting MS.

Technip SA climbed 2.45% to €69.45 after the France-based operator of gas and oil engineering, technologies and projects said that it received a contract worth about €70 million for the phase 1 of a heavy residue hydrocracking complex to be built at the refinery located in Burgas, Bulgaria.

The contract is scheduled to be completed in May 2013.