European Indexes Higher; Transatlantic, Allied World Assurance Ink Deal

Arthi Gupta
13 Jun, 2011
New York City

The European indexes traded higher after Glencore planned $19.5 billion takeover of Kazakhstan miner ENRC. Prada Hong Kong IPO estimated to raise $2.61 billion. Transatlantic inked deal with Allied World Assurance.

[R]3:30 PM Frankfurt – The European indexes traded higher after Glencore planned $19.5 billion takeover of Kazakhstan miner ENRC. Prada Hong Kong IPO estimated to raise $2.61 billion. Transatlantic inked deal with Allied World Assurance.[/R]

Asian markets fell on worries about the global economic outlook and lower-than-estimated new loan growth in China.

Core machinery orders in Japan declined 3.3% in April from March when they rose 2.9%. The orders indicate capital spending level in the next three months. The decline in orders was largely driven by the supply constraints after the triple disaster in March and is expected to rebound in the third quarter.

European Council President Herman Van Rompuy reportedly said while speaking at a Russia-EU summit held in Nizhny Novgorod, Russia on Friday that the second bailout package for Greece is likely to be ready by the end of this month.

Euro-zone finance ministers are to discuss a second rescue package for Greece on June 20, reportedly between €70 billion to €100 billion.

Jean-Claude Juncker, head of the euro-zone finance ministers, said in a radio interview in Berlin that any contribution from private sector creditors over ""soft restructuring"" of Greece''s debt should be ""voluntary.""

The European Central Bank governing council member Jens Weidmann said in an interview to the German daily Welt am Sonntag today that the euro will remain stable even in the case of a default by Greece.

In Turkey, Prime Minister Receb Tayyib Erdogan’s Justice and Development Party won the majority of votes in the Parliamentary elections, but fell short of the two-thirds majority needed to amend the constitution.

Italy''s industrial production rose 1% on a monthly basis in April as against the revised 0.7% expansion in March, data from the statistics office Istat showed.

In Paris CAC-40 Index gained 12.67 or 0.32% to 3,817.79 and in Frankfurt DAX index edged higher 9.82 or 0.14% to 7,079.72.

Prada Prices Hong Kong IPO

Prada S.p.A., the Italian luxury goods firm is expected to raise up to $2.61 billion in a global offering of 423.28 million shares, comprising 380.95 million international shares and 42.33 million Hong Kong shares. The pricing of the shares is expected to be between HK$36.5 and HK$48 per share.

Prada estimates to receive about HK$2.439 billion from the global offering and about 75% of the net proceeds will be used to expand the company''s DOS network and floor space and part of the proceeds will be used to repay bank loans.

Glencore Plans ENRC Takeover

Glencore International Plc, the Swiss commodities trader and miner is planning a £12 billion or $19.5 billion takeover of Kazakhstan miner Eurasian Natural Resources Corp., according to reports on Sunday. The move will make it the world''s largest mining operator.

Transatlantic Inks Deal with Allied World Assurance

Transatlantic Holdings Inc., the reinsurance company signed a merger agreement with Allied World Assurance Co. Holdings AG to create a global specialty insurer and reinsurer.

The combined entity will have total invested assets of $21 billion, total shareholders'' equity of nearly $7 billion, and total capital of $8.5 billion.

Gainers & Losers

Deutsche Lufthansa AG rose 0.47% to €13.97 after the German air carrier reported total traffic in terms of revenue seat-kilometers rose 6.9% to 18.25 billion in May from May 2010.

During May 2011, the airline''s total number of passengers rose 7.3% from last year to 9.68 million.

Electrolux AB gained 0.99% to SEK 153.30 after the Swedish appliance company planned to implement price increases of 5% to 7% for appliances in the European market with effect from October 1. The company believes that the price hike will offset growing costs for raw materials and transportation.

Henkel AG & Co KGaA fell 0.4% to €47.39 after the German household goods maker has been downgraded to ""underweight"" from ""equal weight"" by Morgan Stanley.