Euro-zone Industrial Orders Accelerate; Philips Plunges 6.3%

Arthi Gupta
24 Jan, 2011
New York City

The European indexes fell after Philips reported lower-than-estimated earnings. Euro-zone reported strong private sector growth. The IMF extended credit line for Poland. Hungary hiked key rate. Telefonica and China Unicom strengthened alliance. Novartis agreed to acquire Genoptix for $470 million.

[R]3:45 PM Frankfurt – The European indexes fell after Philips reported lower-than-estimated earnings. Euro-zone reported strong private sector growth. The IMF extended credit line for Poland. Hungary hiked key rate. Telefonica and China Unicom strengthened alliance. Novartis agreed to acquire Genoptix for $470 million.[/R]

U.S. indexes traded sideways as merger news dominate trading. Asian markets traded mixed on Chinese rate hike worries.

In an interview with German newspaper Die Welt, the European Union''s Economic and Monetary Affairs Commissioner Olli Rehn said the size and scope of the €440 billion European bailout fund must be enlarged and European governments must make quick decisions on additional measures to combat the sovereign debt crisis.

The European Central Bank President Jean-Claude Trichet said on Sunday that he does not see signs of second-round inflationary effects in euro-zone.

In Paris CAC 40 Index declined 1.05 or 0.03% to close at 4,016.40 and in Frankfurt DAX Index edged lower 37.63 or 0.53% to close at 7,024.79.

IMF Extends Credit Line for Poland

The International Monetary Fund on Friday agreed to extend a new $30 billion two-year credit line for Poland in place of an existing $20.4 billion credit line.

Euro-zone Private Sector Growth Up, Industrial Orders Rise

Euro-zone private sector growth rose to a six-month high in January, Markit Economics said today.

The Markit Flash Eurozone composite output index rose to a six-month high of 56.3 in January from 55.5 in December. The flash Purchasing Managers'' Index for manufacturing fell to 56.9 in January from 57.1 in December, while the flash services PMI rose to 55.2 in January from 54.2 in December.

Euro-zone industrial new orders rose 2.1% on a monthly basis in November compared to the 1.4% increase in October, Eurostat said today. Orders for intermediate goods rose 1.3% in November, following the 1.4% growth in October.

On an annual basis, industrial order growth accelerated to 19.9% in November from 14.8% recorded in October.

In EU27, monthly industrial order growth rose to 1.6% in November from 0.4% in October and annual growth climbed to 18.9% in November from 14% in October.

French Private Sector Activity Improves

French private sector expansion improved in January with the headline composite output index rising to a four-month high of 56.9 in January from 56.3 in December, flash estimates from Markit Economics showed today.

The flash manufacturing purchasing managers'' index, however, dropped to a six-month low of 54.3 in January from 57.2 in December.

French industrial demand increased significantly during the fourth quarter last year, but the outlook for this quarter remains dull, according to survey results released by the French statistics office INSEE today.

France''s plans to restructure international monetary system are not intended to weaken the dollar, Finance Minister Christine Lagarde told CNBC.

Further, the minister said France''s stance on the creation of a single Eurobond has not changed and it still opposes such an idea.

German Private Sector Activity Rises

Germany''s private sector growth in January was the strongest since June 2006, data from Markit Economics showed on Monday.

The seasonally adjusted Markit Flash Germany Composite Output Index rose to 61 in January from 60.3 in December.

The Purchasing Managers'' Index for the manufacturing sector declined to 60.2 in January from 60.7 in December. The services PMI rose to 60 in January from 59.2 in December.

Estonia''s Trade Deficit Widens

Estonia''s trade balance widened to €40 million in November from a €10 million shortfall in October, data from Statistics Estonia showed on Monday.

Exports of goods totaled €861 million at current prices, up 48% from the prior year. At the same time, imports surged 38% to €901 million.

Austrian Economy Forecasted to Expand

Austrian economy will expand at an average pace of 2.2% to 2015, while the budget deficit is likely to fall below the EU limit of 3% by next year, Austrian Institute of Economic Research said on Monday.

Hungary Hikes Key Rate

Hungary''s central bank on Monday decided to raise its benchmark central bank base rate by 25 basis points to 6%. The new rate will be effective from January 25.

Telefonica and China Unicom Strengthen Alliance

Telefonica SA, the Spanish telecom company and Chinese mobile operator China Unicom Hong Kong Ltd. said on Sunday that they have agreed to enhance their strategic alliance and will buy an additional $500 million stake in each other.

Under the deal, China Unicom will increase its stake in Telefonica''s share capital to 1.37% from about 0.9% at present, while Telefonica will increase its stake in China Unicom to 9.7% from around 8.4%.

China Unicom said it will raise its stake through the acquisition of 21.83 million Telefonica shares at an agreed price of €17.16 per share. In turn, Telefonica will buy China Unicom shares from third parties over the next nine months.

Novartis Acquires Genoptix

Novartis AG agreed to acquire California-based laboratory services provider Genoptix, Inc. through an all cash tender offer at $25.00 per share, representing a total equity value of $470 million and an enterprise value of $330 million. The transaction is expected to close within the first half of 2011.

Gainers & Losers

AkzoNobel N.V. fell 0.27% to €45.35 after the global paints and coatings company said it signaled its strategic intent to accelerate growth by investing close to €90 million in a new facility being built in Brazil. The plant, operated by the company''s Pulp and Paper Chemicals business, Eka Chemicals, expects to supply pulp mill.

Fiat S.p.A. declined 2.88% to €7.09 after the Italy-based auto and farm equipment maker was downgraded from “neutral” to “underperform” by BofA Merrill Lynch.

Koninklijke Philips Electronics NV plunged 6.27% to €23.03 after the consumer electronics company reported fourth quarter sales grew 2% to €7.4 billion from €7.26 billion in the prior-year quarter. Net income in the quarter increased 84.4% to €463 million from €251 million last year. Earnings per share rose to 0.49 euro from 0.27 euro in the same quarter last year.

MorphoSys AG rose 2.43% to €20.20 after the Germany-based biotechnology company said that it received a clinical milestone payment from Boehringer Ingelheim related to the regulatory filing of a clinical trial application for a phase 1 trial of a HuCAL-derived antibody. However, financial details were not disclosed.

Sanofi-Aventis S.A. gained 1.23% to $34.54 after the pharmaceutical group extended its tender offer for all outstanding shares of common stock of Genzyme Corp. at $69.00 per share, net to the seller in cash, without interest and less any required withholding taxes.

The tender is now scheduled to expire at 11:59 p.m., New York City time on February 15, 2011 unless it is further extended. The offer was previously scheduled to expire at 11:59 p.m., New York City time on January 21, 2011.

Wincor Nixdorf AG dropped 2.40% to €56.84 after the Germany-based company that provides information technology (IT) solutions for the retail and banking sectors said first quarter net sales grew 4% to €634 million from €607 million in the prior year period. Net profit in the quarter rose 3% to €34 million from €33 million in the year-ago period.