European Automakers, Banks Decline; Greece, Portgual in Focus

Arjun Dave
16 May, 2011
New York City

European markets traded lower as finance ministers gather to discuss Portugal bailout conditions. Investors were nervous about the fate of additional financing for Greece. The euro edged higher but commodities declined. Inflation in the euro-zone increased to 2.8% and preliminary trade deficit rose.

[R]4:00 PM Frankfurt – European markets traded lower as finance ministers gather to discuss Portugal bailout conditions. Investors were nervous about the fate of additional financing for Greece. The euro edged higher but commodities declined. Inflation in the euro-zone increased to 2.8% and preliminary trade deficit in Mach in the zone increased.[/R]

European markets traded lower and the euro gained as finance ministers in the region gathered in Brussels to finalize the 78 billion euros bailout terms for Portugal. Ministers are also expected to discuss the conditions and steps for the additional funds for Greece.

CAC 40 index declined 52.47 or 1.4% to 3,966.15 and DAX 30 index dropped 1.2% or 89.79 to 7,313.52.

The euro traded volatile but inched higher to $1.4178 and price of gold increased $6.40 to $1,500 and crude oil declined 37 cents to $99.28 a barrel.

Annual inflation in the euro area rose to 2.8% in April and increased from 2.7% in March. Monthly inflation was 0.6% in April. Compared to a year ago inflation rose to 3.2%.

First estimate of the Euro zone trade deficit in March with rest of the world was €2.8 billion compared to €2.7 billion a year ago month. First estimate for the wider EU27 trade deficit in March was €9.6 billion.

Stock Movers

Worries related to Greece and Portugal dragged bank stocks in trading. Credit Agricole SA declined 2.4% and BNP Paribas SA fell 1.8%.

German banks also closed lower. Deutsche Bank fell 1.2% and Commerzbank AG fell 4.6%.

Deutsche Boerse AG rose 4.4% after Nasdaq OMX Group Inc and IntercontinentalExchange Inc withdrew its offer for NYSE Euronext Inc.

Separately London Stock Exchange Group Plc soared 6.5% and the exchanged reaffirmed its commitment to a deal with Canada based TMX Group Inc after it received a rival bid from a consortium of Canadian banks and pension funds.

Energy stocks declined after crude oil and natural gas prices fell. BMW AG fell 0.9%, Volkswagen AG declined 1.9% and Daimler AG dropped 1.8%. Renault SA dropped 2%.

Spyker Cars soared 18% after the Dutch owner of Swedish automaker Saab arranged a funding with China based Pangda Automobile Trade Co Ltd.

Oil companies closed lower. Royal Dutch Shell Plc dropped 0.4% and BP Plc declined 1.1%.