European Indexes Advance; LVMH, Novartis Surge

Arthi Gupta
19 Apr, 2011
New York City

European indexes gained on upbeat economic data. Volvo Buses and China based SAIC Motors agreed to form a joint venture for new energy driveline systems. Novartis net dropped reflecting additional financing costs related to the acquisition of Alcon.

[R]1:30 PM Frankfurt – European indexes gained on upbeat economic data. Volvo Buses and China based SAIC Motors agreed to form a joint venture for new energy driveline systems. Novartis net dropped reflecting additional financing costs related to the acquisition of Alcon.[/R]

European markets gained a day after Greece debt restructuring debt worries put investors on the defensive. Investors remain cautious ahead of earnings this week and elevated energy and commodities prices.

U.S. and Asian stocks fell after a late rating agency warning surprised markets. Investors have increasingly questioned the highest debt rating awarded to the U.S., the largest debtor nation in the world. S&P and Moody’s are increasingly viewed as biased and late in the analysis.

Euro-zone consumer confidence fell more than expected to minus 11.4 in April, from minus 10.6 in March, a flash estimate from the European Commission showed.

Germany''s private sector activity grew at a slower pace in April, survey results from Markit Economics showed. The seasonally adjusted flash composite output index fell to 59.9 in April, a 5-month low, from 60.4 in March.

However, French private sector activity rose to its highest level in over ten-and-a-half years in April, led by strong service sector. Both services and manufacturing purchasing managers'' indexes improved during the month.

Greece sold €1.625 billion of 13-week Treasury bills at the high yield of 4.1%. The bid-to-cover ratio was at 3.45 versus 5.08 at the last auction.

In Paris CAC-40 Index gained 31.35 or 0.81% to 3,912.59 and in Frankfurt DAX index edged higher 33.11 or 0.47% to 7,059.96.

European Central Bank policymaker Juergen Stark was quoted as saying on Tuesday that debt restructuring of crisis-hit euro-zone members may not help solve the region''s problems.

Instead, it would be ""extremely costly"" to the respective countries, reports quoted Stark as saying in an interview published in Portugal''s daily Publico.

Separately, the European Central Bank President Jean-Claude Trichet said in a video interview to the Wall Street Journal on Monday that there are no alarming signs of second round effects of inflation in the euro-zone yet, but there is a need to remain alert.

""Until now, I do not see alarming second-round effects,"" Trichet said. ""There are some signs here and there that are not going in the right direction.""

Genmab and Seattle Genetics in Research Collaboration

Genmab A/S, the Danish biotechnology company and Seattle Genetics Inc. reported upgrading their existing research collaboration to include the research and development of cancer-targeting antibody Humax-CD74 using Seattle''s antibody-drug conjugate technology.

Volvo Buses Forms JV with SAIC Motors

Volvo AB said Volvo Buses and Chinese SAIC Motors have agreed to form a new joint venture company for driveline systems for new energy buses such as hybrids and electric buses.

The new company will be named Shanghai Green Bus Drive System Co. and will be based in Shanghai, China. Volvo will invest RMB 40 million and SAIC Motors will invest RMB 60 million. SAIC Motors will own 60% of the new company, whereas Volvo will own 40%.

Gainers & Losers

Actelion Ltd. fell 1.09% to Sfr50.10 after the Swiss biopharmaceutical firm reported first quarter net revenues advanced 5% to Sfr528.2 million while product revenues remained flat at Sfr450.1 million. Net income for the quarter rose 10% to Sfr146.3 million from last year''s Sfr132.8 million, helped by its global pulmonary arterial hypertension franchise.

BMW AG gained 2.36% to €58.56 after the automobile manufacturer said its subsidiary DesignworksUSA, the California-based strategic design consultancy with studios in Los Angeles, Munich, and Singapore, will open a new studio in Shanghai in the second half of 2011.

LVMH Moet Hennessy Louis Vuitton SA surged 4.46% to €114.65 after the luxury products company reported first quarter revenue grew 17% to €5.2 billion from €4.5 billion in the year-ago period, with double-digit revenue growth across all segments.

Novartis AG surged 3.66% to Sfr50.40 after the Swiss drug giant reported first quarter profit net sales climbed 16% to $14.03 billion from $12.13 billion in the prior year. Net income in the quarter dropped 4% to $2.82 billion or $1.21 per diluted share from last year''s $2.95 billion or $1.29 per share a year ago.

TeliaSonera AB declined 1.35% to SEK 49.10 after the telecommunications firm reported first quarter net sales decreased 5.6% to SEK 24.73 billion from SEK 26.19 billion in the same quarter last year. Net income in the quarter slipped 1.5% to SEK 4.65 billion from SEK 4.72 billion in the previous year. On a per share basis, earnings were SEK 1.04, down from SEK 1.05 reported in the prior year.