Euro Area Industrial Production Flat; Areva, Swiss Re, Munich Re Fall

Arthi Gupta
14 Mar, 2011
New York City

European markets traded lower after a summit of European leaders failed to calm credit markets. Insurers fell on the worries that Japan quake related claims may surge to $34 billion. France Telecom-Orange and Agility venture acquired 44% stake in Iraq-based Korek Telecom.

[R]3:30 PM Frankfurt – European markets traded lower after a summit of European leaders failed to calm credit markets. Insurers fell on the worries that Japan quake related claims may surge to $34 billion. France Telecom-Orange and Agility venture acquired 44% stake in Iraq-based Korek Telecom.[/R]

Markets in Europe tracked losses in Japan and Asia after the benchmark index fell as nuclear radiation leak worries added to the Libya turmoil and European sovereign default worries. The last week meeting of European leaders failed to ease pressures in the credit markets.

Nuclear power makers and uranium miners and insurance companies led the decliners in the European trading. World insurers are bracing losses as high as $34 billion linked to Japan earthquake and tsunami.

World markets fell as an aftermath of the devastating earthquake and tsunami in Japan last week. The Japanese Nikkei 225 plunged more than 630 points, or 6.11%.

A second explosion occurred at Japan’s Fukushima Dai-ichi nuclear plant on Monday following a blast on Saturday.

The blast occurred at the plant’s No. 3 reactor building, according to Tokyo Electric Power, the operator. An explosion similar in nature destroyed the plant’s No.1 reactor on Saturday.

Prime Minister Naoto Kan said the situation at the nuclear plant was alarming, and the earthquake had thrown Japan into ""the most severe crisis since World War II.""

The Bank of Japan is to inject 15 trillion yen into the banking system to stabilize financial markets, and another 6.8 trillion yen will be pumped in over the next two days and the central bank will expand government bond buying by 3 trillion yen.

European leaders agreed over the week-end to beef up the euro-zone bail-out fund. The effective lending capacity of the European Financial Stability Facility was raised to €440 billion from around €250 billion while the cost of Greece’s rescue loans was cut.

In Paris CAC-40 index declined 25.00 or 0.64% to close at 3,903.68 and in Frankfurt DAX index edged lower 91.42 or 1.31% to close at 6,890.07.

Euro-zone Industrial Production Remains Unchanged

Euro-zone industrial production rose a seasonally adjusted 0.3% on a monthly basis in January, unchanged from the upwardly revised 0.3% increase in December, the Eurostat said on Monday.

Durable consumer goods output grew 2.5% while non-durable consumer goods output fell 0.4%.

On an annual basis, industrial production growth slowed to 6.6% in January from a revised 8.8% in December.

Greece Import Price Inflation Eases

Greece import price annual inflation eased to 6.1% in January from December''s 6.6%, the Hellenic Statistics Authority said on Monday.

On a monthly basis, import prices declined 0.8% in January from the 1.7% increase in December.

Dutch Trade Surplus Drops

Dutch trade surplus declined marginally to €3.09 billion in January from €3.4 in December, Statistics Netherlands said today. This was €0.9 billion more than last year.

During the month, exports value rose 20.7% annually to €32.4 billion, while imports climbed 19% to €29.4 billion.

Orange and Agility Venture Acquires Stake in Korek Telecom

France Telecom-Orange and its partner Agility, a logistics company based in Kuwait reported a binding agreement with the shareholders of Korek Telecom to acquire a 44% stake in the Iraqi mobile operator.

Agility will contribute its existing convertible debt and inject an additional payment of $50 million or €36 million in exchange for a 24% indirect stake in Korek Telecom and a $100 million or €72 million 4-year shareholder loan to Korek Telecom.

France Telecom-Orange will pay $245 million or €175 million for a 20% indirect stake in Korek Telecom, and will extend a $185 million or €132 million 4-year shareholder loan to Korek Telecom.

Korek Telecom will use the entire proceeds for the payment of license fees, reduction of outstanding borrowings, and for improvement and expansion of network and services.

Deutsche Bank Sells Towers to DWS Fund

Deutsche Bank AG said it is selling its headquarters in Frankfurt am Main to a closed-end real estate fund to be launched by its mutual fund unit DWS for about €600 million.

Following the deal, Deutsche Bank will continue to use the twin towers on the basis of a long-term lease.

Gainers & Losers

Areva SA, the French nuclear reactor maker plunged 8.45% to €31.91 after Japan''s Jiji news agency reported that a meltdown was possible at a key nuclear reactor that was damaged by Friday''s earthquake.

ElringKlinger AG plummeted 9.33% to €20.26 after the gasket maker said its fiscal year 2010 revenue rose 37.4% to €795.7 million, based on provisional figures, from €579.3 million in the prior year. Net income for the year surged 97.1% to €68.6 million or 1.11 euros per share from €34.8 million or 0.58 euros per share in the year earlier period.

The company noted that fiscal 2010 witnessed the ElringKlinger Group recover well from the crisis-induced effects of sluggish sales within the international automotive industry.

First Derivatives plc surged 3.8% to 441.00 pence after the provider of software and support services in its trading update said revenues and profits for the year to February 2011 are expected to be in line with current market expectations.

Reinsurers such as Swiss Re, Hannover Re, Scor SE and Munich Re declined.