German Consumer Sentiment Improves; Ericsson Net Surges

Arthi Gupta
25 Jan, 2011
New York City

The European indexes fell after German consumer sentiment improved unexpectedly in January. French consumer spending climbed more-than-anticipated and Spain factory price inflation soared in December. Ericsson and Siemens net rose.

[R]4:00 PM Frankfurt – The European indexes fell after German consumer sentiment improved unexpectedly in January. French consumer spending climbed more-than-anticipated and Spain factory price inflation soared in December. Ericsson and Siemens net rose.[/R]

U.S. indexes declined after mixed corporate earnings and Asian markets traded mixed.

German banks are very optimistic about their lending over the next one year, according to Bundesbank’s bank lending survey released today.

The German central bank said the anticipated strong growth in new lending is due in part to the increased use of existing credit lines. By contrast, dampening effects continue to stem from repayments, particularly by larger corporations.

The German Industrial Association, or BDI, said it expects the economy to expand by 2.5% this year slower than 3.6% growth in 2010.

In Paris CAC 40 Index declined 2.68 or 0.07% to close at 4,030.53 and in Frankfurt DAX Index edged higher 15.46 or 0.22% to close at 7,083.23.

German Consumer Sentiment Improves, Construction Orders Rise

German consumer confidence is on the rise, according to a survey by market research company GfK. The GfK''s Consumer Climate Index was forecast to rise to 5.7 in February from a revised 5.5 in January. The improvement was largely due to a perceived greater willingness by shoppers to make major purchases, the research group said.

The GfK study was based on around 2,000 consumer interviews held during the past month.

New orders in Germany''s construction industry rose 0.5% annually in November, the Federal Statistics Office reported on Tuesday. Total revenues generated in the industry increased 6% from the previous year in November to nearly €8.9 billion.

There were 729,000 persons employed in the construction sector at the end of November, which was 2.1% or 15,000 higher than last year.

French Consumer Spending Climbs, Housing Starts Rise

French consumer spending increased more than expected in December, driven by higher car purchases, according to data released today.

Consumer spending rose 0.6% on a monthly basis in December, compared to a 2.7% growth in November. The increase in household spending was largely driven by higher car purchases, which grew 8.6% from the previous month.

Annually, consumer spending rose 0.4% in December.

French housing starts increased 15% annually in the three months to December, latest data from the Housing Ministry showed on Tuesday. During the same period, housing approvals rose 3.6%, the ministry said.

There was an increase of 16.8% in the new construction started. Construction of existing building increased 0.3%. Residential construction starts rose 12.1%.

On a seasonally adjusted basis, housing starts rose 2.4% on a monthly basis in December, while approvals fell 0.7%.

Spain PPI Surges

Spain''s factory price inflation rose at the strongest pace in over two years in December as energy costs soared, according to official data.

The producer price index rose 5.3% in December from a 4.4% increase in November, statistics office INE said. The main reason was a 13.5% spike in energy costs and a 5.7% increase in the price of intermediate goods.

Hungary Retail Sales Drop

Hungary''s retail sales dropped a calendar-adjusted 0.3% annually in November compared to the 0.7% fall in October, data released by the Hungarian Central Statistics Office showed on Tuesday.

For the January to November period, total retail sales declined 2.5% from the same period last year.

Greece Trade Deficit Contracts

Greece''s merchandise trade deficit for November decreased 44.2% to €1.471 billion from €2.635 billion last year, the Hellenic Statistics Authority reported on Tuesday.

Gainers & Losers

LM Ericsson Telephone Company surged 3.32% to $12.12 after the Swedish telecom equipment maker reported fourth quarter net sales grew 8% to SEK 62.8 billion from SEK 58.3 billion in the prior year. Net income in the quarter surged 504% to SEK 4.4 billion or SEK 1.34 per share compared to net income of SEK 0.7 billion or SEK 0.10 per share last year, boosted by lower restructuring charges, improved earnings in Sony Ericsson, as well as the positive impact of Nortel acquisition.

Luxottica Group S.p.A. gained 2.89% to $31.00 after the Italian eyewear maker stated sales in the final three months of 2010 rose 16.4 to €1.35 billion from €1.16 billion a year earlier.

Novo Nordisk A/S climbed 1.55% to DKK 623.00 after the healthcare company has been upgraded to “buy” from “neutral” by Goldman Sachs.

Siemens AG advanced 0.76% to €94.56 after the after the German electronics and electrical engineering company reported first quarter revenue increased 12% to €19.49 billion from last year''s €17.35 billion. Net income in the quarter increased 16% to €1.72 billion or 1.95 euro per share from €1.48 billion or 1.68 euro per share in the previous year, as all three of its sectors contributed to order and revenue growth.

STMicroelectronics N.V. slumped 3.08% to €8.30 after the chipmaker said fourth quarter net revenues rose 10% to $2.83 billion from $2.58 billion in the same quarter last year. Net income generated in the quarter was $219 million or 24 cents per diluted share compared to a net loss of $70 million or 8 cents per share for the year-ago quarter.

Weatherford International Ltd. fell 0.85% to $22.25 after the Swiss-based oilfield service company fourth quarter net revenues grew 20% to $2.9 billion from $2.43 billion in the same quarter last year. Net loss in the quarter widened 77% to $53.76 million or 7 cents per share from $30.39 million or 4 cents per share in the previous year.

For the full year ended December 31, the company posted net income of $24.51 million or $0.03 per share, significantly down from $253.77 million or $0.35 per share in the preceding year. Annual revenues improved to $10.21 billion from $8.83 billion in the prior year.