European Indexes Slide; Fiat Raises Chrysler Stake, Glencore IPO

Arthi Gupta
12 Apr, 2011
New York City

European indexes declined after Japan raised the nuclear disaster level at the Fukushima nuclear plant to the highest level. Fiat increased its stake in Chrysler to 30%. German investor sentiment deteriorated more than estimated in April.

[R]2:00 PM Frankfurt – European indexes declined after Japan raised the nuclear disaster level at the Fukushima nuclear plant to the highest level. Fiat increased its stake in Chrysler to 30%. German investor sentiment deteriorated more than estimated in April.[/R]

European markets dropped after Japan raised nuclear disaster risk to the highest level and crude oil declined. The IMF also cut the global economic growth outlook and trimmed the growth estimates of the U.S. and Japan.

France''s current account deficit widened to €5.2 billion in February from the revised €4.1 billion in January, the Bank of France said today.

The ZEW Indicator of Economic Sentiment for Germany dropped to 7.6 in April from March''s 14.1, the Centre for European Economic Research or ZEW said.

World markets slumped after the Japanese nuclear agency revised the severity of the nuclear threats from Fukushima to a level of seven, from five. The highest risk level on the international scale matches the risk similar to radiation leaks in Chernobyl, Russia in 1986.

The Japan Meteorological Agency said first quake struck Fukushima area with a magnitude of 4 and the second quake of a magnitude of 6.3 struck in the ocean east of Tokyo, swinging buildings in downtown Tokyo and closing Narita airport runways.

Japan''s Economy and Fiscal Policy Minister Kaoru Yosano said today that the devastating March 11 earthquake and tsunami could result in a greater impact on the economy than expected earlier.

The global economic recovery is gaining strength, but new challenges such as high commodity prices have emerged, the International Monetary Fund said in its April 2011 World Economic Outlook released on Monday.

The world economy is forecast to expand nearly 4.4% in both 2011 and 2012, after expanding 5% last year. The projections for 2011 and 2012 were unrevised from January estimates.

The International Energy Agency maintains its 2011 global oil demand growth forecast but noted that high oil prices started denting demand growth based on its preliminary data for January and February.

Spot crude oil prices jumped as much as 15% in March, as outages from Libya and mounting unrest in the MENA region offset a seasonal drop in refinery runs, it noted.

On the supply side, the agency said global oil supply fell 0.7 millions of barrels a day to 88.3 mbd in March on reduced Libyan crude supply, after rising to an all-time high of 89 mbd in February, up 0.2 mbd from January.

In Paris CAC-40 Index declined 45.56 or 1.13% to 3,993.14 and in Frankfurt DAX index dropped 69.93 or 0.97% to 7,134.93.

Fiat Increases Stake in Chrysler

Fiat S.p.A said that it has increased its interest in Chrysler Group LLC to 30% from 25%, effective today. The 5% stake raise comes after Fiat achieved second of the three performance-related milestones contemplated by the Chrysler Group Operating Agreement.

The second milestone required Chrysler to achieve cumulative revenues of more than $1.5 billion attributable to company sales made outside of Canada, Mexico and the United States after June 10, 2009. Fiat also had to secure agreements to sell one or more Chrysler vehicles through 90% of its dealers in Brazil and the European Union.

Glencore Plans IPO

Swiss commodities trader Glencore International AG is planning to raise $9 billion to $11 billion through an initial public offering in London and Hong Kong, media reported on Tuesday citing people familiar with the matter.

Glencore would use the proceeds of the offering to consolidate its European presence and to buy larger assets.

Gainers & Losers

Banca Monte dei Paschi di Siena SpA surged 3.02% to €0.97 after the Italian lender intends to raise up to €2.47 billion through a share issue to repay government emergency support.

Fraport AG fell 1.85% to €50.27 after the operator of the Frankfurt International Airport reported that total passenger traffic for its five majority-owned airports grew 5.2% to 6.3 million in the March and traffic rose 3.7% in the first quarter.

Hochtief AG surged 4.32% to €64.95 after the global construction group’s chief executive officer Herbert Luetkestratkoetter resigned after the majority controlled Leighton reported losses.

Nokia Corp. rose 0.11% to $9.03 after the Finnish mobile giant unveiled two new smartphones: the Nokia E6 and Nokia X7.

Chairman Jorma Ollila''s commented that the mobile phone maker expects to suffer more losses in its smartphone market share before enjoying gains from its new range with Microsoft Corp.''s Windows Phone operating system.

Renault SA declined 2.65% to €37.95 after the French carmaker said that Patrick Pélata resigned as the company''s chief operating officer after two audits showed """"chain of failings and dysfunctions within the company"""" that led to the wrongful dismissal of three senior executives in January for alleged corporate espionage.