European Markets Sell Off; Credit Suisse, Air France Fall 6%

Devan Biswas
10 Feb, 2011
New York City

European markets edged lower after world markets fell on the fears of rising inflation worldwide. European markets also declined after Cisco Systems earnings fell and Credit Suisse lowered its target rate of return to 15% form 18%. Air France reported quarterly loss.

[R]4:00 PM Frankfurt – European markets edged lower after world markets fell on the fears of rising inflation worldwide. European markets also declined after Cisco Systems earnings fell and Credit Suisse lowered its target rate of return to 15% form 18%. Air France reported quarterly loss.[/R]

European stocks traded lower on the worries that rising inflation around the world may halt the economic recovery. Cisco Systems lower earnings also played a role in weak sentiment.

DAX 30 index rose 4.4 to 7,325.38 and CAC 40 index declined 5.14 to 4,085.60 and IBEX 35 index fell 147.10 or 1.4% to 10,788.50. Indexes in Stockholm fell 0.6%, in Zurich dropped 0.4% and Milan plunged 0.7%.

Return on equity at the bank was 14.4% in 2010.

Credit Suisse declined more than 6% to Sfr 42.00 after fourth quarter net rose 6.1% to Sfr841 million from Sfr793 million and also lowered its target rate of return on equity to 15% from 18%.

Credit Suisse said it raised its Tier 1 capital ratio to 17.2% from 16.3% at the end of 2009.

Chief executive Brady Dougan told on a conference call after earnings that capital requirements to run the business are increased and 15% return on equity is “achievable” and will be “best-in-class performance.”

Swill government has been demanding higher capital and has laid out one of the strictest guidelines in the world, still many analysts fear that Credit Suisse may not have enough capital that may be need to meet future requirements.

Profit at investment banking unit increased 41% to Sfr558 million and in private banking unit fell to Sfr824 million.

Stock Movers

Rio Tinto Plc said it extended its offer period to acquire Riversdale Mining by another fourteen days to March 4.

Net earnings for the year ending in December soared 194% to $14.32 billion from $4.87 billion a year ago. The global miner also increased full year dividend 20% to $1.08 per share of which final dividend is 63 cents.

The company also announced the $5 billion stock buyback program and also said it lowered its debt to $4.3 billion at the end of the year from $18.9 billion.

The strong operations and profits were driven by a sharp increase in production and prices in iron ore operations. Iron Ore group generated net profit of $10.2 billion, 147% higher than a year ago and Pilbara region mines production soared to 224 million tons.

Air France dropped more than 7% to 12.70 euros after the airline reported loss in its fiscal third quarter of 46 million euros and lowered its full year outlook.

Deutsche Lufthansa AG declined 2.8% to 15.55 euros and International Consolidated Airlines Group SA dropped 5% to 247 pence.

Dansk Bank dropped 10.5% to 124.60 kroner after the largest Danish bank reported lower than expected earnings and said it will sell shares worth 20 billion kroner.