Spanish Treasury Auction Lifts European Markets; Electrolux Drops 13%

Arthi Gupta
19 Jul, 2011
New York City

European indexes rallied from a seven-month low on better-than-estimated earnings. An emergency summit of euro area leaders is scheduled for Thursday in Brussels to finalize a bailout package for Greece. Spain successfully sold

[R]1:00 PM Frankfurt – European indexes rallied from a seven-month low on better-than-estimated earnings. An emergency summit of euro area leaders is scheduled for Thursday in Brussels to finalize a bailout package for Greece. Spain successfully sold €4.45 billion in bond auction.[/R]

European indexes gained on strong earnings. However, German economic sentiment slumped for the fifth consecutive month in July.

In Paris CAC-40 Index gained 44.28 to 1.21% to 3,694.99 and in Frankfurt DAX Index edged higher 100.95 or 1.42% to 7,208.87.

Asian markets extended losses on debt worries in the United States and Europe. Fitch warned that it will place the U.S. sovereign rating on Rating Watch Negative if the debt limit is not raised by the August 2 deadline.

Euro-zone governments are considering imposing a levy on banks to involve private creditors in Greek rescue, Germany''s Die Welt newspaper reported on Monday, citing diplomatic sources.

Separately, European Council President Herman Van Rompuy has convened a meeting of the Euro-zone Heads of State or Government in Brussels on Thursday, to deal with the financial stability of the euro area and the future financing of the Greek program.

Caution prevailed among investors after the bank stress tests results failed to make any credible impact. The outcome of the emergency meeting in Brussels is being closely watched so as to gauge the future of Greece and its impact on the region''s ongoing debt crisis.

Spain''s Treasury issued a total of €4.449 billion in 12- and 18-month notes today. The Treasury issued a total of €3.788 billion in 12-month notes that yielded 3.76% compared to the yield 2.728% at the previous auction. The bid-to-cover ratio was 2.2, compared to the previous 2.9.

The Treasury also issued €661 million in 18-month notes with a yield of 3.98% compared to the previous 3.299%. The bid-to-cover ratio was 5.5 compared to the previous 3.9.

German Sentiment Deteriorates

German economic sentiment fell more-than-expected in July, dropping for the fifth consecutive month, industry data showed on Tuesday.

The ZEW Centre for Economic Research said that its index of German economic sentiment fell to -15.1 in July from a reading of -9.0 in June.

The current economic situation index for Germany improved to 90.6 in July from 87.6 in June.

Greece Unemployment Drops

Greece''s jobless rate dropped to 15.8% in April from 16.2% in March, the Hellenic Statistics Authority said today, after rising steadily since last June. A year ago, the rate was 11.9%.

Gainers & Losers

AB Electrolux plunged 12.93% to SEK 125.90 after the Swedish appliance company reported second quarter net sales declined 12% to SEK 24.14 billion from SEK 27.31 billion in the same quarter last year. Net income declined to SEK 561 million or 1.97 krona per share from SEK 1.03 billion or 3.61 krona per share in the previous year.

Nordea Bank AB surged 5.25% to SEK 66.15 after the Swedish financial services group reported second quarter net profit increased 30% to €700 million or 0.18 euros per share from €539 million or 0.13 euros per share last year.

Novartis AG gained 3.66% to Sfr51.30 after the Swiss drug maker reported second quarter net sales gained 27% to $14.92 billion from $11.72 billion in the prior year. Net income increased 12% to $2.73 billion from prior year''s $2.44 billion.

On a per share basis, earnings grew to $1.13 from last year''s $1.06, as a result of the Alcon transaction related share increase.

Roche Holding AG rose 0.81% to Sfr137.10 after the Swiss drugmaker agreed to acquire Germany-based mtm laboratories AG for an upfront payment of around €130 million plus up to €60 million based on certain milestones.

SCOR S.E. increased 1.85% to €17.30 after the reinsurance company finalized the sale of its Investors Insurance Corporation unit to Athene Holding Ltd. for $55 million.