European Indexes Drop 1%; Glencore IPO, Danone Sales Rise 19%

Arthi Gupta
14 Apr, 2011
New York City

The European indexes declined on rising commodity prices. Glencore is expected to raise as much as $11 billion in a dual listing in London and Hong Kong. Danone quarterly sales rose 19% and Roche reported group net sales declined 9%.

[R]1:00 PM Frankfurt – The European indexes declined on rising commodity prices. Glencore is expected to raise as much as $11 billion in a dual listing in London and Hong Kong. Danone quarterly sales rose 19% and Roche reported group net sales declined 9%.[/R]

Markets in Europe declined on the worries that ongoing aggression in Libya will sap more resources and crude oil prices will remain higher even after the departure of Libyan leader.

Markets sentiment has been waning in the last two weeks after a steady rise in commodities prices caused several economists to lower their economic assessment in the region.

A two-day conference of foreign ministers from NATO and partner countries will be held in Berlin today.

The meeting is scheduled to discuss strategies for Western nations’ aggression in Libya in the name of protecting civilians and overthrowing its leader Muamar Gaddafi.

France and UK are conducting military attacks on the oil rich nation and U.S. is providing strategic support for the aggression. The coalition forces have failed to dislodge Gadaffi after more than two weeks of strikes that cost the NATO nations more than $1 billion a day.

The stance of monetary policy remains accommodative as the interest rates across the entire maturity spectrum remain low, the European Central Bank said in its monthly bulletin on Thursday.

""""""""The adjustment of the current very accommodative monetary policy stance is warranted in the light of upside risks to price stability,"""""""" the bank said.

The central bank said its decision to raise interest rate by 25 basis points on April 7 maintains inflation expectations firmly anchored in the euro area.

In Paris CAC-40 Index declined 46.37 or 1.16% to 3,959.86 and in Frankfurt DAX index edged lower 63.60 or 0.89% to 7,114.37.

Glencore Proceeds with IPO

Glencore International plc, the Swiss commodities trader intends to proceed with an initial public offering of about $9 billion to $11 billion in the London and Hong Kong Stock Exchanges.

The company intends for a primary listing on London Stock Exchange with offering of about $6.8 to $8.8 billion, and a secondary listing of its ordinary shares on Hong Kong Stock Exchange of approximately $2.2 billion.

The proceeds of the IPO will be used towards increasing its ownership in JSC Kazzinc, a Kazakhstan based zinc operation along with funding its capital expenditure for the next three years, including expansion projects.

Gainers & Losers

Danone SA gained 0.94% to €47.28 after the French dairy producer reported first quarter consolidated sales rose 19.6% to €4.76 billion from €3.98 billion in the prior year. Comparable sales rose 8.5% from a year earlier and bottled water sales gained 13%.

Koninklijke Philips Electronics NV fell 1.21% to €21.17 after the electronics group extended its existing €1.8 billion revolving credit facility until February 18, 2016.

Porsche Automobil Holding SE dipped 0.16% to €44.49 announced the completion of around €4.9 billion capital raising. The company increased its share capital by up to €131.25 million through the issuance of new ordinary shares and new preferred shares.

Roche Holding AG declined 0.98% to Sfr131.80 after the Swiss pharmaceutical giant reported first quarter group net sales declined 9% to Sfr11.12 billion from Sfr12.25 billion a year ago, hurt by negative exchange rate impact and lower pharmaceuticals sales, mainly for cancer drug Avastin.

Sanofi-Aventis SA rose 0.11% to $37.09 after the drugs developer put its U.S. dermatology business up for sale, according to reports that may raise up to $300 million.