European Markets Weak, German Index Drops 1.4%; OMV

Arjun Dave
17 May, 2011
New York City

European markets traded sideways but the index in Germany dropped more than 1.4% after economic sentiment index declined for the third month in a row and dropped to near 10% of its average. French conglomerate Bouygues SA quarterly net plunged 81%. OMV AG announced

[R]3:55 PM Frankfurt – European markets traded sideways but the index in Germany dropped more than 1.4% after economic sentiment index declined for the third month in a row and dropped to near 10% of its historic average. French conglomerate Bouygues SA quarterly net plunged 81%. OMV AG announced 900 million euros shares offering.[/R]

European markets indexes opened higher on the optimistic outlook after Spain and Greece completed the sale of bonds and European Union officials finalized the terms of loans for Portugal.

However, in the late afternoon market turned its focus to Greece as the troubled nation prepared to ask for at least 50 billion euros in additional loans.

DAX index declined 1.4% to or 98.66 to 7,288.88 and CAC 40 index fell 30.29 or 0.7% to 3,960.70.

The benchmark index in Spain increased a fraction to 10,370.50 and in Milan declined 0.5% to 21,550.02. Portugal index increased 0.1%.

Spain sold 5.47 billion euros of 12-month and 18-month treasury bills that attracted higher interest compared to the previous auction. Greece sold 1.625 billion europs of 13-week of treasury bills.

German benchmark index declined after private think tank ZEW survey indicated a decline in economic confidence for the third straight month. The index fell to 3.1 in May from 7.6 in April and significantly below the historic average of 26.5. The mood turned sour after Greece debt restructuring gained momentum in the last three months.

UK annual inflation measured at consumer prices increased to 4.5% in April from 4.0% in March. In the year to April, Road Price Index, the measures the inflation for retail consumer items, annual inflation fell to 5.3% from 5.4% to March.

U.S. housing permits in April increased 4.0% from March or fell 12.8% a year ago month to 551,000. Housing starts in April fell 10.6% from March. Housing completion increased 4.1% from March or fell 25.5% from a year ago month to 554,000.

Stock Movers

AkzoNobel NV declined 1.8% after it completed the sale of its U.S. division.

Bouygues SA, French conglomerate declined 4.2% after net income declined 81% first quarter to 34 million euros on lower contribution from its stake in Alstom SA.

Carrefour SA increased 1.3% after it reaffirmed its 2011 earnings and made positive comments for its operations in Belgium and Spain.

OMV AG declined 1.4% to 29.55 euros after the largest oil company in central Europe announced a plan to sell 900 million euros of shares to fund its acquisition in Turkey and Tunisia. The company is expected to sell as many as 9.1% of its outstanding shares or 27.3 million shares at a price not to exceed 33 euros.

Societe General SA increased 0.3% and BNP Paribas SA added 0.2% after Spain and Greece completed the bonds offering and European officials finalized the bailout terms for Portugal.

Technology and industrial stocks declined in Frankfurt. BASF SE declined 2% and Infineon Technologies AG fell 3.2%.

Vodafone Group Plc increased 1% after the mobile telecom operator said annual net declined 7.8% to 7.97 billion pounds on revenues increase of 3.2%. The mobile carrier also took impairment charges for its operations in Spain and Eastern European markets.