Europe Defer Aid to Greece; Indexes Slump

Arthi Gupta
20 Jun, 2011
New York City

The European indexes slumped after euro-zone finance ministers failed to reach a consensus on the disbursement of the second tranche of aid to Greece. Publicis Groupe agreed to acquire Genedigi for further expansion in China.

[R]3:50 PM Frankfurt – The European indexes slumped after euro-zone finance ministers failed to reach a consensus on the disbursement of the second tranche of aid to Greece. Publicis Groupe agreed to acquire Genedigi for further expansion in China.[/R]

World markets edged lower after the euro-zone finance ministers delayed the decision on bailout conditions till early July. The uncertainty hobbled world markets and the euro. In addition G-7 finance ministers also conducted emergency conference call before the Asian markets opened.

The ongoing Greek troubles have been at the centre stage of world investors for the third week in a row as Greece struggles with the implementation of new austerity measures and ramp up asset sale to meet the demands of the European regulators.

The finance ministers in a late night meeting on Sunday rejected a proposal to approve a further €12 billion to Greece on the grounds that the country needs to implement the planned €28 billion spending cuts and rapid privatization.

The deeply unpopular austerity measures have divided the Greek government and people have rioted on the streets for more than one week. Greek Prime Minister George Papandreou will seek a vote of confidence in the Parliament on Tuesday.

Asian markets tracked the European markets and traded lower. Economic data from the region also failed to lift sentiment in trading.

Japan saw a merchandise trade deficit of 853.7 billion yen in May, following the revised 464.8 billion yen deficit in April, the Ministry of Finance said today, following the devastating earthquake and tsunami on March 11.

China's consumer inflation soared to 5.5% in May from a year earlier.

In Paris CAC-40 Index declined 35.33 or 0.9% to 3,789.85 and in Frankfurt DAX index edged lower 27.71 or 0.4% to 7,136.29. Italian index fell 2.2% after a rating agency placed its local and foreign debt on review with a downgrade bias.

Peripheral markets in Europe fell sharply. The index in Greece declined 1.9.6% and in Spain dropped 1.3% after falling as much as 1.7%. Technical glitches delayed the opening of markets in Paris, Lisbon, Brussels and Amsterdam operated by the NYSE Euronext.

Publicis Groupe Acquires Genedigi

Publicis Groupe SA inked an agreement to acquire Genedigi Group, China's independent public relations and marketing communications agency. Terms of the transaction were not disclosed.

As part of the acquisition, Genedigi will be aligned with MSLGROUP, Publicis’ flagship specialty communications, public relations and events network.

Publicis Groupe stated that the acquisition is in line with its strategy to increase its revenue derived from emerging markets to 30% over the next three years, with China at its core.

Gainers & Losers

Basilea Pharmaceutica Ltd. Fell 2.05% to Sfr66.95 after the Swiss drugmaker said it estimates fiscal year 2011 average operating loss of 7 million francs per month compared to the previous projection of 8 million francs per month.

Safran S.A dropped 0.97% to €28.08 after the French aerospace leader and Honeywell International Inc. signed a pact to create a joint venture company intended to deliver a new electric green taxiing system for new and existing aircraft.

Royal Philips Electronics NV declined 0.67% to €17.78 after the Dutch healthcare and consumer goods maker announced a partnership with Russian State Atomic Energy Corp. to develop a nuclear medicine industry ecosystem in Russia.

Statoil ASA gained 0.53% to NOK 132.10 after the integrated energy company estimates to raise production from around 1.9 million barrels in 2010 to above 2.5 million barrels of oil equivalents per day in 2020.

Zurich Financial Services AG decreased 1.02% to Sfr213.20 after the insurance-based financial services provider said it currently estimates aggregate claims of around $295 million for both Zurich North America and Farmers Re regarding the series of severe weather-related events, which hit the U.S. in April and May of this year.