Greece Reshuffles Cabinet; ING Direct Fetches $9 Billion

Arthi Gupta
17 Jun, 2011
New York City

The European indexes traded higher after Greek Prime Minister George Papandreou reshuffled his cabinet. ING Groep sold ING Direct to U.S.-based Capital One for $9 billion. The euro area trade balance swung to deficit of

[R]1:30 PM Frankfurt – The European indexes traded higher after Greek Prime Minister George Papandreou reshuffled his cabinet. ING Groep sold ING Direct to U.S.-based Capital One for $9 billion. The euro area trade balance swung to deficit of €4.1 billion in April.[/R]

U.S. indexes and European stocks gained after the Greek Prime Minister Papandreou reshuffled his cabinet. Asian markets fell on rising concerns over Greece''s ability to avoid a default.

Greek Prime Minister George Papandreou reshuffled cabinet to garner support for the government''s austerity measures. Evangelos Venizelos will be the country''s new Finance Minister, a government spokesperson said today, replacing George Papaconstantinou. Papaconstantinou will become the new minister of Environment.

The new cabinet is expected to be sworn in later on Friday and is due to face a confidence vote next week, reports say.

The Greek government is under immense pressure from within his own party over unpopular austerity measures demanded by the European Union and the International Monetary Fund that include public-sector pay-cuts and tax hikes to save an extra €28 billion, or $40.5 billion.

The austerity measures also include selling-off state property worth €50 billion, or $70 billion.

German Chancellor Angela Merkel and French President Nicolas Sarkozy will hold talks later in the day in Berlin over a second bailout package for Greece to avoid default on its sovereign debt of €340 billion, or $481 billion.

In Paris CAC-40 Index gained 33.46 or 0.89% to 3,826.45 and in Frankfurt DAX index edged higher 52.51 or 0.74% to 7,162.71. For the week, the CAC-40 Index rose 0.56%.

The euro area trade balance swung to deficit of €4.1 billion in April compared to a surplus of €1.6 billion in March, data from Eurostat showed.

Capital One Acquires ING Direct

Capital One Financial Corp. agreed to buy ING Direct from Dutch financial services firm ING Groep NV in a cash and stock deal valued at $9 billion.

Under the deal, Capital One will pay ING Groep $6.2 billion in cash and issue about 55.9 million Capital One shares, valued at $2.8 billion.

Gainers & Losers

Carrefour SA fell 2.02% to €27.18 after the retailer named Noel Prioux as executive director of its French operations.

Celesio AG plunged 12.52% to €13.18 after the drug wholesaler reported profits this year may not match last year''s, because of government cutbacks throughout Europe and a more competitive environment in Germany.

Porsche Automobil Holding SE declined 1.04% to €46.98 on positive comments from the company. The company expects to generate a profit before special charges for fiscal 2011.

Puma AG Rudolf Dassler Sport dipped 0.15% to €203.30 after the German sports shoe manufacturer declared that the arbitration ruling of June 2, 2010, allowing the vesting of all PUMA trademark rights in Spain to PUMA in exchange for a one-time payment of €98 million, has been repealed by the District Court of Madrid.

Vinci SA gained 0.82% to €42.35 after the infrastructure builder said it signed a €7.8 billion or $11 billion contract to build and maintain a new high-speed train line between the cities of Tours and Bordeaux in southern France.

Vivendi SA rose 0.3% to €18.38 after the French entertainment conglomerate reported concluding its buy out of Vodafone Group plc''s 44% stake in French mobile phone company SFR for a transaction amount of €7.95 billion. Vivendi now controls 100% of SFR.

Volkswagen AG declined 0.81% to €116.85 after the German automaker said its vehicle deliveries for May rose 17.4% to 708,900 units, from 604,000 units in the same month a year ago.