European Markets Drift Lower; Aegon, Allianz, RWE Slump

Arthi Gupta
24 Feb, 2011
New York City

The European indexes declined after unabated protests in Libya. Euro area economic sentiment improved in February and German economy expanded in the fourth quarter. French consumer confidence remained unchanged in February. Italy retail sales rose in December.

[R]4:00 PM Frankfurt – The European indexes declined after unabated protests in Libya. Euro area economic sentiment improved in February and German economy expanded in the fourth quarter. French consumer confidence remained unchanged in February. Italy retail sales rose in December.[/R]

Traders are worried that the political unrest in Libya may spread to other oil producing countries and Muammar Gaddafi lost control over areas in the Eastern rich in oil.

The oil price has jumped 21% in the last thirty days and now trades at 30-month high.

International momentum is building for action against Libyan leader Muammar Qaddafi’s regime for a protest crackdown that has killed hundreds in more than a week.

U.S. and Asian markets traded lower on escalating violence in Libya. U.S. weekly jobless claims fell 22,000 to 391,000, below the 400,000 mark.

In Paris CAC 40 Index declined 2.13 or 0.05% to close at 4,010.99 and in Frankfurt DAX Index edged lower 68.97 or 0.96% to close at 7,125.63.

Moody''s Lowers Cyprus Bond Ratings

Moody''s downgraded Cyprus'' government bond ratings by two notches to A2 from Aa3, citing concerns about the country''s weakening medium-term credit fundamentals and structural deterioration in the government''s fiscal metrics.

Euro-zone Economic Sentiment Improves

Euro-zone economic sentiment index rose to 107.8 in February from 106.8 in January, according to a monthly survey from the European Commission released today.

The European Commission said business confidence in the euro area remained unchanged at 1.45 points in February.

German Economic Growth Confirmed, Business Credit Constraints Ease

The German economy expanded as estimated in the fourth quarter of 2010, official data showed on Thursday.

The economy expanded 0.4% sequentially in the fourth quarter, following a 0.7% expansion in the previous three months, confirming the initial estimate released on February 15, detailed data from the Federal Statistics Office showed.

The Ifo Institute said that its credit constraint indicator for Germany dropped 1.8 percentage point to 23.6% in February, marking the fourteenth consecutive month of decline.

French Consumer Confidence Flat

French households'' confidence about the economic situation stabilized in February, survey data released by the statistics office Insee showed on Thursday. The consumer confidence index was at 85 in February, unchanged from January.

Italy Retail Sales Up

Italian retail sales rose a seasonally adjusted 0.2% in December reversing a 0.3% drop in November, statistics office Istat said on Thursday.

Food retailing advanced 0.3% while non-food retailing edged higher 0.1% in December.

On an annual basis, retail sales climbed 0.4% in December compared to the 0.8% rise in November.

Swiss Employment Rises

Employment in the Swiss economy rose 1.2% annually to 4.08 million in the fourth quarter of 2010, the Federal Statistics Office said on Thursday.

Employment in the secondary sector increased 1.4%. The statistics agency said the secondary sector logged a strong growth than the tertiary sector for the first time since the first quarter of 2007.

In the tertiary sector, the employment growth was 1.1% annually, official data showed.

Gainers & Losers

Aegon N.V. plunged 4.06% to €5.22 after the Dutch insurance company said fourth quarter net income fell 19% to €318 million compared to €393 million last year.

New life sales increased 0.2% to €558 million from €557 million in the prior-year quarter, while value of new business dropped 35% to €141 million from €216 million a year ago.

Allianz SE slumped 3.68% to €100.75 after the German insurer reported fourth quarter total revenues edged up 1.9% to €26 billion from €25.5 billion in the prior-year quarter. Net income in the quarter rose 11.4% to €1.14 billion or 2.49 euros per share as against €1.02 billion or 2.25 euros per share a year ago, reflecting increased profitability in property-Casualty and Life/Health segments.

BASF SE gained 0.39% to €58.98 after the chemical company reported total sales for the full year 2010 increased 26% to €63.9 billion compared with last year. Fiscal year 2010 income from operations or EBIT before special items surged 68% to €8.1 billion. Earnings per share were 4.96 euros, up 223% from the prior-year period.

Crédit Agricole S.A. surged 4.71% to €12.33 after the retail banking group said fourth quarter net loss was €328 million versus a profit of €433 million a year ago. For the quarter, the company''s net banking income rose 8.1% to €4.86 billion from €4.49 billion in the previous year.

Deutsche Postbank AG dipped 0.31% to €20.90 after the German financial services provider said fourth quarter consolidated net loss narrowed 19.2% to €80 million compared to loss of €99 million last year. However, net interest income grew 7% to €664 million from €621 million last year, reflecting lower interest expenses.

France Telecom SA declined 2.19% to €15.84 after the France-based telecommunication operator said fiscal year 2010 revenues climbed 1.5% to €45.50 billion versus €44.84 billion in the comparable period.

Net income for the full year increased 62% to €4.88 billion or 1.82 euros per share from €3.02 billion or 1.14 euros per share last year, driven mainly by higher gain on the formation of Orange and T-Mobile joint venture in the UK as well as strong revenue performance in rest of the world segment.

Henkel AG & Co. KGaA decreased 1.96% to €43.29 after the company engaged in laundry and home care, cosmetics, and adhesive technologies businesses said fourth quarter sales rose 11.5% to €3.73 billion from €3.35 billion a year earlier. Net income in the quarter increased 44% to €254 million compared to €177 million last year.

Full-year 2010 sales rose 11.2% to €15,092 million. Net income in fiscal year 2010 surged 82% to €1,143 million from €628 million last year.

Kudelski SA slumped 4.24% to Sfr 19.20 after the Swiss holding company stated fiscal year 2010 total revenues and operating income rose 0.9% to Sfr 1.07 billion from Sfr 1.06 billion in the prior year. Net income in the period increased 30.5% to Sfr 66.7 million from Sfr 51.1 million last year.

Repsol YPF SA edged higher 0.66% to €23.66 after the Spanish oil and gas company reported fourth quarter income surged 1279% to €2.91 billion from €211 million last year, helped by higher oil and gas prices and the appreciation of the dollar.

RWE AG plummeted 6.17% to €48.88 after the German electric power and natural gas public utility reported fiscal year 2010 external revenue increased 11.7% to €53.32 billion from €47.74 billion in the comparable period a year ago. Net income in the period declined 7.4% to €3.31 billion or 6.20 euros per share from €3.57 billion or 6.70 euros per share in the 2009 period.

Transocean Ltd. gained 0.50% to $82.03 after the offshore contract drilling service provider reported fourth quarter revenue dropped 21% to $2.160 billion from $2.733 billion in the year-ago period. Net loss in the quarter was $799 million or $2.51 per share compared to net income of $723 million or $2.24 per share in the year-ago period.