Greece Woes Drag European Indexes; Aegon Repays Dutch Government

Arthi Gupta
15 Jun, 2011
New York City

The European indexes slumped after euro area finance ministers failed to reach a consensus on a second bailout package for Greece. Nyrstar agreed to acquire Canada-based Breakwater for C$663 million. Sensata Technologies agreed to buy Sensor-NITE for

[R]3:00 PM Frankfurt – The European indexes slumped after euro area finance ministers failed to reach a consensus on a second bailout package for Greece. Nyrstar agreed to acquire Canada-based Breakwater for C$663 million. Sensata Technologies agreed to buy Sensor-NITE for €225 million.[/R]

World indexes traded lower after a lack of decision for a second bailout plan for Greece. Investors are cautious after Moody''s placed the ratings of three French banks on review for a possible downgrade.

The European Central Bank executive board member Juergen Stark said in an interview on Deutschlandfunk radio that participation of private banks in extending fresh bailout for Greece must be made ""voluntary"" or else, it would have negative effects on financial markets.

Separately, Euro-zone chairman Jean-Claude Juncker told at the emergency meeting of euro area finance ministers that all options available will be discussed to “save Greece from bankruptcy.”

The meeting also discussed the possibility of forcing private sector Greek bondholders to share the burden of the new bailout package, reports said.

Greece''s largest labor unions have called for a 24-hour general strike across the country today demanding the withdrawal of the ""harsh"" austerity measures imposed on the public. The Greek Parliament is due to begin discussions on the proposed five-year €28 billion austerity program today.

In another related development, Moody''s Investors Service contemplated lowering the credit ratings of French banking groups, Credit Agricole SA, BNP Paribas SA, and Societe Generale over their investment in Greece.

The rating agency on Wednesday said it has placed these companies'' financial strength ratings and long-term debt and deposit ratings on review for possible downgrade.

In Paris CAC-40 Index fell 44.09 or 1.17% to 3,819.89 and in Frankfurt DAX index edged lower 62.14 or 0.86% to 7,142.65.

Rio Tinto Quickens Iron Ore Expansion Program

Rio Tinto Plc said it is speeding up its iron ore expansion program in the Pilbara region of Western Australia with a funding of $676 million for early works and procurement.

This will help capacity expansion to reach 333 million tonnes a year in the first-half of 2015, six months earlier than expected.

Nyrstar Acquires Breakwater

Breakwater Resources Ltd. agreed to be bought by Nyrstar NV for C$7 or $7.23 per share in cash, or C$619 million or$639.5 million.

Under the deal, Breakwater would issue a dividend of C$0.50 per share to its holders, bringing the total value of the deal to C$663 million.

Sensata Technologies Buys Sensor-NITE

Sensata Technologies Holding N.V., the Dutch sensors and controls maker said it agreed to buy Sensor-NITE Group Companies, a supplier of high temperature exhaust gas sensors, from Belgian firm Elex Group for €225 million or about $325 million.

Gainers & Losers

AEGON N.V. gained 0.85% to €4.61 after the Dutch insurer repurchased all of the €3 billion core capital securities issued to the Dutch State at the height of the financial crisis in 2008. The Dutch Central Bank has given its consent to AEGON''s buyback of €750 million of core capital.

Fraport AG rose 0.55% to €54.44 after the the owner and operator of Frankfurt Airport reported passenger traffic grew 5.8% from a year earlier to 5.04 million passengers in May.

H & M Hennes & Mauritz AB slumped 3.17% to SEK 216.60 after the Swedish apparel maker said its total sales for the month of May in local currencies, including value added tax, increased 12% and comparable sales improved 2% from last year.

Industria de Diseño Textil, S.A. fell 1.68% to €60.71 after the world’s largest fashion groups said first quarter net sales rose 11% to €2.96 billion from €2.67 billion in the year-ago quarter. Net income for the quarter increased 10% to €332 million from €301 million in the prior year.

Qiagen NV dipped 0.11% to €13.62 after the Netherlands-based sample and assay technologies provider said it is in exclusive negotiations to buy a 47% initial stake in French peer Ipsogen S.A. at 12.90 euros per share.

AB Volvo declined 2% to SEK 103.50 after the Swedish automaker said its Volvo Bus Corp. unit secured an order worth $231 million for New York City.

Zurich Financial Services AG dropped 1.08% to Sfr219.90 after the insurance-based financial services provider said its UK non-core subsidiary Zurich Specialties London Ltd. will transfer its run-off insurance business to Swiss Re at book value, as part of its announced strategy to divest most of its non-core businesses.

The insurer will transfer about $950 million in gross assets and liabilities to Swiss Re.