European Banks, Stocks Lower on Portgual Worries

Arjun Dave
05 Apr, 2011
New York City

European markets traded lower after Portugal debt drifted closer to external bailout. A rating agency downgraded Portugal debt. European retail sales eased 0.1% in February. Banks in Portugal, Spain and Germany declined.

[R]1:00 PM Frankfurt – European markets traded lower after Portugal debt drifted closer to external bailout. A rating agency downgraded Portugal debt. European retail sales eased 0.1% in February. Banks in Portugal, Spain and Germany declined.[/R]

European markets declined after stocks in Asia closed mixed and Portugal debt rating was downgraded and retail sales eased in the euro-zone. Poland increased its benchmark rate to 4%.

Retail trade sales in February decreased 0.1% compared to January in both the euro area and in the wider zone of 27 nations.

Retail sales index rose 0.1% from a year ago month in the euro area and 0.9% in the EU27.

Rating agency downgrade, long overdue only added fresh jitters to the market as Portugal inch closer to external bailout.

Moody’s Investors Service lowered sovereign rating of Portugal by one notch from A3 to Baa1 and said it expects country to seek outside financial help to deal with the rising interest rate.

Portugal needs to raise at least 10 billion euros in the next two months and the latest round of debt offering was done at a sharply higher rate of 5.79%.

DAX 30 index decreased 0.3% or 21.44 to 7,153.89 and CAC 40 declined 0.5% or 20.02 to 4,022.90.

The benchmark index IBEX 35 in Spain dropped 1% to 10,650.60 and in Portugal PSI 20 index dropped 0.8%.

Stock Movers

Banks in Portugal and Spain declined. Banco Santander Sa declined 2.4% to 8.17 euros and Banco Espirito Santos SA declined 1.4% to 2.91 euros. Banco Comercial Portugues SA 1.6% to 57.30 euros.

GDF Suez SA declined 3% to 27.39 euros and EDF decreased 3.2% to 28.60 euros after local media reports estimated that retail prices increase at the end of June are expected to be muted.

Volkswagen AG declined 0.3% to 110 euros and Daimler AG increased 0.9% to 52.01 euros.

TU1 AG surged 4.5% to 8.91 euros after the company confirmed it plans to sell its stake in its container shipping unit Hapag-Llyod AG. The Frankfurter Allegemeine Zeitung reported that the company had preliminary talks with sovereign wealth fund in Oman and a logistics company in China.

Deutsche Bank declined 1.5% to 41.51 euros and Deutsche Post dropped 0.8% to 12.80 euros.

Intensa Sanpaolo SpA increased 0.4% to 2.14 euros and Unicredit SpA increased 0.3%. Banca Popolare di Milano added 0.8%.

Parmalat SpA declined 3.8% to 2.30 euros after Italian newspaper Il Sole 24 Ore said France based Groupe Lactalis that controls 29% stake in the company is likely to make a bid for the company.

STMicroelectronics increased 3% to 9.02 euros after the Semiconductor Industry Association said orders are weaker than a month ago in March and Texas Instruments agreed to acquire National Semiconductor for $6.5 billion.