European Indexes Mixed; Fiat Lifts Chrysler Stake

Arthi Gupta
03 Jun, 2011
New York City

The European indexes traded sideways on Greek debt worries. U.S. Treasury proposed to sell Chrysler stake to Fiat for $560 million. Samsonite planned to raise $1.5 billion in a Hong Kong IPO.

[R]4:00 PM Frankfurt – The European indexes traded sideways on Greek debt worries. U.S. Treasury proposed to sell Chrysler stake to Fiat for $560 million. Samsonite planned to raise $1.5 billion in a Hong Kong IPO.[/R]

European indexes traded sideways after private sector growth weakened and Asian markets declined on global economic concerns. Greece’s debt and the contagion worries hovered market sentiment.

Euro-zone private sector growth eased to a five-month low in May after recoveries slowed in all nations across the region.

The final composite output index fell to 55.8 in May from 57.8 in April, data released by Markit Economics showed on Friday but the index stayed above the flash estimate of 55.4.

Germany''s private sector growth eased in May, signaling the weakest expansion in activity since October 2010, data released by Markit Economics and BME showed.

In Paris CAC-40 Index declined 25.87 or 0.64% to 3,864.08 and in Frankfurt DAX index edged lower 23.50 or 0.33% to 7,050.62.

The rating agency Moody''s warned that it may place the U.S. government''s Aaa rating under review for a possible downgrade if there is no progress on increasing the debt limit in the coming weeks.

""The rating outlook will depend on the outcome of negotiations on deficit reduction,"" Moody''s said.

The rating agency’s warning is as usual too late and most bond investors have factored in a long tern decline in bond prices as the U.S. debt limit reaches to a new high and the prospect of higher inflation loom.

U.S. Treasury Sells Chrysler Stake to Fiat

The U.S. Department of the Treasury reached an agreement with Italian carmaker Fiat S.p.A to sell its 6% fully diluted equity interest in automaker Chrysler Group LLC to Fiat.

The expected total proceeds to Treasury from this transaction are $560 million.

Samsonite Plans $1.5 Billion IPO

Samsonite International S.A., the travel luggage company plans to raise up to $1.5 billion in an initial public offering in Hong Kong, the company said on Thursday in a regulatory filing.

The firm intends to offer 671.24 million shares in the global offering, comprising 604.11 million in international offering and 67.12 million in Hong Kong public offering. The offer price is expected to vary between HK$13.50 and HK$17.50 per share.

The company expects to receive net proceeds of HK$1.38 billion from the global offering and plans to use the proceeds to repay debt.

Gainers & Losers

Lundin Petroleum AB fell 3.91% to SEK 83.50 after the Swedish oil outfit said that its Malaysian subsidiary entered into an agreement with PETRONAS Carigali Sdn Bhd to farm-in to Block PM307 offshore Peninsula Malaysia.

Under the agreement, Lundin Petroleum acquires a 75% interest and operatorship. PETRONAS Carigali Sdn Bhd holds the remaining 25% interest in the block.

Rio Tinto Plc fell 1.10% to 4,097 pence after the Anglo-Australian mining giant said it sealed land use partnerships with five indigenous groups across the Pilbara region of Western Australia.

Vislink plc gained 1.25% to 19.49 pence after the company engaged in technology business said it acquired the entire issued share capital of Gigawave Ltd. for a cash consideration of £3.75 million.