European Markets Lower on Greek Strife; Demag Agrees to $1.4 Billion Offer

Arthi Gupta
16 Jun, 2011
New York City

The European indexes slumped on ongoing concerns in Greece. Euro-zone annual inflation eased to 2.7% in May. The International Energy Agency lifted global oil demand growth forecast for 2011. U.S. based Terex Corp agreed to acquire Demag Cranes for $1.4 billion.

[R]2:30 PM Frankfurt – The European indexes slumped on ongoing concerns in Greece. Euro-zone annual inflation eased to 2.7% in May. The International Energy Agency lifted global oil demand growth forecast for 2011. U.S. based Terex Corp agreed to acquire Demag Cranes for 45.50 euros per share.[/R]

Global indexes slid on euro debt concerns and political strife in Greece. The Asian markets traded lower with most indexes in the region declining more than 1.3%.

Greece descended into chaos as prime minister offered to resign to unite the nation and students and labor unions rioted on the streets of Athens. Prime Minister George Papandreou in a televised address last night to the nation said he will form a new government and call a vote of confidence in parliament.

Greek unemployment also surged in the first quarter to 15.9% from 12% in the quarter a year ago and unemployment among youth soared to 30%.

The latest market decline was started after euro-zone leaders and the European Central Bank failed to agree on the second Greek bailout terms yesterday.

The ECB is expected to take significant losses if Greek bonds are restructured. The European finance ministers could not agree on share of losses for private sector banks if Greek bonds are restructured.

The Greek government is frantically trying to bolster support for implementing austerity measures that would save the government at least €28 billion or $40.5 billion in exchange for the bailout package offered by the European Union and the International Monetary Fund.

Euro-zone annual inflation slowed in May, after rising in the previous month, latest data confirmed. Annual inflation eased to 2.7% in May from 2.8% recorded in April, Eurostat said.

In Paris CAC-40 Index fell 49.23 or 1.29% to 3,756.21 and in Frankfurt DAX index edged lower 75.97 or 1.07% to 7,039.11.

Terex Announces Deal to Acquire Demag Cranes

Terex Corp., the Connecticut-based machinery products and equipment maker announced a deal to acquire Germany-based Demag Cranes AG in a recommended offer of 45.50 euros per share.

Upon completion of the takeover, the combined entity will have total revenues of about $5.8 billion in 2011, with a strong footprint in Europe and emerging markets, especially in China.

IEA Lifts Global Oil Demand Growth Forecast

The International Energy Agency, in its monthly Oil Market Report released today, lifted up its 2011 global oil product demand growth by 0.10 million barrels per day to 1.3 mbd.

The agency estimated global demand will grow to 94.2 mbd by 2015, 900,000 barrels a day higher than last year''s forecast.

Gainers & Losers

Air France-KLM SA, the global airlines company slumped 3.27% to €10.06 after a broker lowered its view on the airline.

Carrefour SA, the grocery retailer plunged 4.24% to €27.52 after a broker downgraded the stock.

Deutsche Lufthansa AG, the aviation company rose 0.83% to €13.93.

Heidelberger Druckmaschinen AG fell 0.48% to €2.69 after the manufacturer of sheet fed offset printing machines for the print media reported fourth quarter net sales rose 4.3% to €746 million. Net loss in the quarter narrowed 28.2% to €51 million from €71 million in the prior year.

Sanofi-Aventis SA plummeted 4.35% to $36.72 after the French drug maker formed a two-year research collaboration with Amsterdam-based private biopharmaceutical firm Audion Therapeutics to develop potential treatments for hearing loss.