Euro Area Expands Bailout Fund to

Arthi Gupta
22 Mar, 2011
New York City

European indexes traded sideways after German exports rose in the fourth quarter. Euro area finance ministers decided to increase capital base of permanent bailout fund to

[R]3:30 PM Frankfurt – European indexes traded sideways after German exports rose in the fourth quarter. Euro area finance ministers decided to increase capital base of permanent bailout fund to €700 billion. Merck and Sanofi terminated a venture in animal health.[/R]

European markets traded sideways as German exports rose in the fourth quarter and Swiss trade surplus increases on a 12.5% rise in exports.

U.S. indexes and Asian markets traded higher as the nuclear concerns in Japan eased and four of the six reactors were connected to power sources at the troubled Fukushima power plant.

Media in Japan reports power supply was extended to more areas in the affected regions and rolling blackouts are declining in Tokyo. The Nikkei surged 4.4% on Tuesday.

Tokyo Electric Power Co. said radioactive substances were detected in seawater near the Fukushima 1 nuclear power plant and raised concern about the food supplies from the northern Japan.

TEPCO said radioactive iodine at levels 126.7 times higher than the legal limit and radioactive cesium 24.8 times higher were detected in seawater near the plant.

The operator of the troubled nuclear power plant in northeastern Japan resumed efforts today to restore power at reactors a day after gray smoke from the reactor 3 building halted their efforts, news reports said. An external power source became available late Monday for reactor 1, TEPCO said. The external power source is available for four reactors 1, 2, 5 and 6 out of the six.

In Libya, coalition forces launched another wave of air strikes against military targets, while forces loyal to Moammar Qadhafi are bombarding the rebel-held western city of Misrata. There are several reports of civilian casualties and Arab League and African Union are seeking to limit the strikes to the enforcement of no-fly zone.

In Paris CAC-40 index gained 10.28 or 0.26% to 3,914.73 and in Frankfurt DAX index edged lower 6.28 or 0.09% to 6,809.84.

Euro Area Increases Permanent Bailout Fund

Euro-zone finance ministers agreed to set up the capital base of their permanent bailout fund at €700 billion or $990 billion, as part of its response to the region''s sovereign debt crisis.

The ESM capital base will be formed by €80 billion paid-in-capital by euro-zone members. The remaining €620 billion will be added in the form of callable capital and guarantees.

The European Stability Mechanism will have a lending capacity of €500 billion as of 2013, when it will replace the current temporary rescue fund European Financial Stability Facility.

German Exports Rise

German exports rose 20.7% annually in the fourth quarter of 2010, the Federal Statistics Office said on Tuesday. In terms of value, exports were worth €256.3 billion.

Swiss Trade Surplus Improves

Switzerland''s trade surplus rose to Sfr2.5 billion in February from Sfr2.04 billion in January, the Federal Customs Administration said today.

In real terms, exports grew 15.2% annually in February after adjusting for working day variations following a 10.5% increase in January.

Merck and Sanofi Ends JV in Animal Health

Merck & Co. Inc. and Sanofi-Aventis said in a joint statement that they have mutually agreed to terminate their previous deal to form a new joint venture in animal health, citing increasing complexity in the implementation of the proposed transaction as the reason for discontinuing their agreement.

Gainers & Losers

Brenntag AG fell 1.31% to €72.20 after the chemical distributor said that its current COO Steven Holland will takeover as CEO on June 22 following the company''s general shareholders'' meeting.

Metro AG slumped 3.48% to €48.35 after the German retailer said fourth quarter total sales grew 1.6% to €19.74 billion from last year''s €19.43 billion on higher sales in all business segments.

Net profit in the quarter surged 33% to €754 million or 2.31 euros per share from €567 million or 1.74 euros per share last year, driven mainly by sales growth internationally and strength at its Metro Cash & Carry segment.

Nokia Corp. gained 0.59% to €5.93 after the mobile handset maker announced the launch of smartphone Nokia Astound, which will be available exclusively from T-Mobile U.S.A., beginning April 6.