European Indexes Lower; Zurich Financial, Santander in a Venture

Arthi Gupta
22 Feb, 2011
New York City

The European indexes slide as protests continued in Libya, Morocco and Bahrain. German consumer sentiment strengthened. French housing starts growth slackened in January. Swiss trade surplus and exports rose in January. Zurich Financial formed venture with Banco Santander.

[R]4:00 PM Frankfurt – The European indexes slide as protests continued in Libya, Morocco and Bahrain. German consumer sentiment strengthened. French housing starts growth slackened in January. Swiss trade surplus and exports rose in January. Zurich Financial formed venture with Banco Santander.[/R]

World markets traded lower on escalating tension in Libya and surge in crude oil prices. Moody''s downgrading of Japan''s credit rating too had an impact on investor sentiment.

Restructuring of debt by a euro-zone country is a ""huge leap into the unknown,"" Lorenzo Bini Smaghi, a member of the ECB''s six-man Executive Board, said.

European Central Bank Executive Board member Juergen Stark said the bank will act ""quickly and decisively"" to check inflation as risks to the medium-term outlook for price development in the euro area moves to the upside.

The European Central Bank may need to adjust its monetary policy as prices pressures increase, the bank''s Governing Council member Yves Mersch said.

""I would not be surprised if we would have to adjust somewhat our language,"" Mersch told Bloomberg News in an interview on Monday.

Consolidating public budgets and initiating comprehensive economic reforms at national levels should be cornerstones in reforming the European Monetary Union governance, exiting European Central Bank Governing Council member Axel Weber wrote in Monday''s Financial Times.

In Paris CAC 40 Index declined 45.89 or 1.12% to close at 4,051.50 and in Frankfurt DAX Index edged lower 6.71 or 0.09% to close at 7,315.10.

German Consumer Sentiment Climbs

German consumer sentiment continued its upward trend in February, a survey conducted by the GfK Group showed on Tuesday.

The forward-looking consumer sentiment index for March rose to 6 from a revised 5.8 points in February. That was the highest reading since October 2007.

The survey, based on around 2,000 consumer interviews showed that German employees expect wages and salary to increase more generously this year than in previous years.

French Housing Starts Growth Slackens

Housing starts in France increased a seasonally adjusted 1.6% on a monthly basis in January compared to the 2.4% rise in December, data released by the housing ministry showed on Tuesday.

Italy Consumer Confidence Improves

Italian consumer confidence index improved to 106.4 in February from 105.9 in January, a survey conducted by the statistics office Istat showed today.

Swiss Trade Surplus Rises, Watch Exports Up

Switzerland''s trade surplus rose to Sfr1.96 billion from Sfr1.3 billion in December, the Federal Customs Administration said on Tuesday.

Swiss watch exports rose 16.9% from the same period a year earlier to Sfr1.1 billion or $1.2 billion in January, the watch industry federation FH said on Tuesday.

Switzerland''s exports recorded robust growth in January, fueled by surging demand from Germany, China and the U.S.

Exports climbed 15.5% annually in real terms in January after an 11.2% growth in December, the Federal Customs Administration said.

Zurich Financial and Banco Santander in Venture

Zurich Financial Services AG announced a 25-year strategic distribution arrangement with Spanish financial services firm Banco Santander SA in Latin America. As part of the transaction, Zurich will acquire a 51% stake in Santander''s life insurance, pension and general insurance operations in Brazil, Mexico, Chile, Argentina and Uruguay for $1.67 billion.

Zurich said that the alliance with Santander provides it with access to over 5,600 bank branches and an additional 36 million customers in the Latin American region.

Gainers & Losers

Aareal Bank AG surged 7.76% to €24.78 after the Germany-based bank reported fourth quarter net income surged 92% to €25 million as against prior year''s €13 million, boosted by favorable interest rate environment as well as significant reduction in allowance for credit losses. Net interest income rose 21% to €139 million from the prior year''s €115 million.

DAB Bank AG plunged 5.82% to €4.63 after the Germany-based discount broker and direct retail bank reported fiscal year 2010 pre-tax profit of €28.57 million. Net interest income declined 14% to €55.65 million in 2010 from €64.73 million in 2009.

Q-Cells SE dropped 3.29% to €3.20 after the solar cells maker said fourth quarter sales revenues grew 54% to €386.9 million from €250.5 million in the previous year. Net income generated in the quarter was €50.2 million compared to a loss of €137.6 million in the prior year.

Sapiens International Corp. N.V. fell 2.22% to $4.40 after the provider of software solutions for the insurance industry said fourth quarter revenues rose 25% to $14.67 million from $11.77 million in the prior-year quarter. Net income in the quarter climbed 36% to $1.71 million or 7 cents per diluted share compared to net income of $1.26 million or 6 cents per share last year.

Wienerberger AG gained 1.99% to €15.15 after the producer of bricks and clay roof tiles stated full-year 2010 revenues declined 4.4% to €1.74 billion from €1.82 billion n the prior year. Net loss in the period narrowed 77% to €66.97 million or 0.57 euros per share compared to loss of €289.3 million or 3.17 euros per share last year.