European Indexes Gain; UBS Net Drops 18%, Parmalat Soars 12%

Arthi Gupta
26 Apr, 2011
New York City

The European indexes gained after Puma estimated sales of

[R]1:30 PM Frankfurt – The European indexes gained after Puma estimated sales of €3 billion for the year and UBS said client fund inflows were the highest since the end of 2007. Aegon agreed to sell Transamerica Reinsurance unit to Scor for $1.4 billion.[/R]

U.S. indexes and European markets advanced after reports of better-than-anticipated corporate earnings. Asian markets declined after Nintendo stated profits fell for the second consecutive year.

The Spanish Treasury this morning auctioned €1.163 billion in 3-month bills, at a rate of 1.440% versus 0.929% the last time. The bid-to-cover ratio was 4.4 times the amount on offer, above 4.3 on the previous occasion.

The Treasury also auctioned €806 million of 6-month debt, at 1.9% versus 1.378% in the prior auctions. The auction drew demand of 7.1 times of the offered bonds, versus 7.7 times in the previous auction.

European Central Bank chief Jean-Claude Trichet in an interview with Finnish publications Helsingin Sanomat and Kauppalehti said that the authorities need to be permanently alert to avoid risks arising from the second round effects of higher energy and commodity prices.

In the interview posted on ECB''s Web site on Tuesday, Trichet also stressed on the need to continue solidly anchoring inflation expectations in a period marked by uncertainties and turbulence.

The government deficit of the euro area fell to 6% of gross domestic product in 2010 from 6.3% in 2009, data from the Eurostat showed today.

The EU27 government deficit declined to 6.4% of GDP in 2010 from 6.8% in 2009. The government debt to GDP ratio rose to 80% at the end of 2010 from 74.4% at the end of 2009.

In Paris CAC-40 Index gained 13.38 or 0.33% to 4,035.26 and in Frankfurt DAX index edged higher 40.50 or 0.56% to 7,335.99.

Aegon Sells Transamerica Reinsurance Unit to Scor

Aegon N.V., the Dutch insurer agreed to divest its life reinsurance business, Transamerica Reinsurance business to French reinsurer Scor SE for $1.4 billion, which comprises cash proceeds of $0.9 billion, with a further $0.5 billion in capital released. The company plans to use $1.1 billion of the proceeds to repay Dutch State aid.

The deal is expected to improve Aegon''s risk-return profile, and also reduce reinsurance reserve financing related to the divested life reinsurance business by about 50%.

Gainers & Losers

Air Liquide SA gained 0.204% to €98.1 after the French gas maker reported first quarter group revenue increased 12.4% percent to €3.54 billion marked by growth in all regions, especially in Asia-Pacific.

Clariant AG rose 0.28% to Sfr17.80 after the company engaged in the specialty chemicals sector said it completed the purchase of 96.15% of the shares in Süd-Chemie from One Equity Partners and the family shareholders.

Parmalat SpA, the Italian dairy giant soared 11.51% to €2.58 after France’s Lactalis, which already owns nearly 30%, said it will bid for the company.

Puma AG Rudolf Dassler Sport surged 7.09% to €223.40 after the German designer of footwear, apparel and accessories reported first quarter consolidated sales increased 13.2% to €773.4 million from the same period last year. Net earnings in the quarter rose 7.1% to €77.7 million from €72.5 million in the prior-year quarter. Earnings per share were 5.15 euros compared with 4.80 euros a year ago.

Sanofi-Aventis SA climbed 0.92% to $38.37 after the French healthcare company''s vaccines division Sanofi Pasteur said that the U.S. Food and Drug Administration approved the company''s meningococcal conjugate vaccine Menactra for children of 9 months to 23 months age.

UBS AG dipped 0.05% to $18.67 after the Swiss bank reported first quarter net profit declined 18% to Sfr1.81 billion or 0.47 francs per share from Sfr2.20 billion or 0.58 francs per share in the previous year, primarily due to sharply lower profit at its investment banking business where revenue from securities trading declined 9%.