Greek Bailout Summit in Focus; Nokia Swings to Loss

Arthi Gupta
21 Jul, 2011
New York City

European indexes traded lower ahead of the euro-zone summit in Brussels today as France and Germany struck a deal to provide a bailout and restrict private lenders participation. The Spanish Treasury completed the sale of

[R]3:00 PM Frankfurt – European indexes traded lower ahead of the euro-zone summit in Brussels today as France and Germany struck a deal to provide a bailout and restrict private lenders participation. The Spanish Treasury completed the sale of €2.6 billion bonds at elevated yields. Nokia swung to quarterly loss.[/R]

European indexes edged lower as investors focus on the euro-zone summit later today in Brussels to provide a second bailout package for Greece.

Cautious optimism prevailed in the early trading after German government spokesman Steffen Seibert said that German Chancellor Angela Merkel and French President Nicolas Sarkozy reached an agreement to extend financing to Greece.

Market speculated that France may have dropped its plan to tax €50 billion on banks to pay for Greek bailout.

Mixed earnings from Roche, ABB, and Ericsson also weighed on investors’ sentiment.

The Spanish Treasury issued a total of €2.621 billion in bonds maturing in 2021 and 2026.

Spain sold €1.8 billion of a 10-year bond at an average yield of 5.896%, higher from 5.395% at the last sale on May 19. The bid-to-cover rate was 1.90 compared with 1.8 last time.

The Treasury sold another €814 million of a 15-year bond at a yield of 6.191%, up from 6.027% at the last auction on June 16. The bid-to-cover rate was 2.08 versus 2.6 at its last auction.

France also sold nearly €8 billion of short-dated bonds.

U.S. indexes futures and Asian markets fluctuated ahead of the Eurogroup meeting and mixed economic data from China and Japan.

China''s manufacturing sector contracted for the first time in 28 months in July. The HSBC manufacturing purchasing managers'' index fell to 48.9 in July from 50.1 in June.

In another report, Japan recorded a trade surplus of 70.7 billion yen in June. The exports decline slowed for the first time in three months after dropping more than 10% in April and May.

In Paris CAC-40 Index declined 6.24 to 0.17% to 3,748.36 and in Frankfurt DAX Index edged lower 5.30 or 0.07% to 7,216.06.

Euro-zone private sector growth slowed more than estimated in July to near stagnation, according to preliminary results of the Purchasing Managers'' Survey released today.

The Flash Eurozone Composite Purchasing Managers'' Index fell to a 23-month low of 50.8 from June''s 53.3, Markit Economics said.

Randstad Acquires SFN Group

Randstad Holding NV, the world''s second-largest staffing company, agreed to acquire U.S.-based workforce solutions company SFN Group Inc. for $14 a share or approximately $771 million.

As a result of this acquisition, Randstad will become the third-largest HR services provider in North America, doubling its presence in the U.S. and reinforcing its position in Canada.

Gainers & Losers

ABB Ltd. fell 2.22% to Sfr20.29 after the Swiss engineering group reported second quarter revenues rose 28% to $9.68 billion from $7.57 billion in the year-ago quarter. Net income increased 43% to $893 million from $623 million in the prior year. Basic earnings per share grew to $0.39 from last year''s $0.27.

Akzo Nobel NV dipped 0.56% to €41.90 after the Dutch specialty chemicals firm reported second quarter revenues rose 5% to €4.1 billion from €3.91 billion last year. Net income in the quarter declined 1.8% to €268 million or 1.14 euros per share from €273 million or 1.16 euros per share in the same quarter last year.

Colt Group S.A. plunged 8,42% to 120.70 pence after the European telecommunications operator reported total revenue for the six months ended June 30 decreased 3.5% to €766.2 million from €794.2 million in the previous year. Profit for the period declined 62% to €17.2 million or 2 cents per share compared with €45.6 million or 5 cents per share in the comparable period last year.

Nokia Corp. surged 4.14% to $5.79 after the mobile maker said second quarter net sales declined 7.2% to €9.275 billion from €10.003 billion in the same period a year ago. Loss in the quarter was €368 million compared to a profit of €227 million last year.

Roche Holding AG rose 0.14% to Sfr139.90 after the Swiss drugmaker reported first-half sales declined 12% to Sfr21.67 billion from Sfr24.64 billion in the previous year. Net income in the period fell 6% to Sfr5.15 billion or 6.04 francs per share as against Sfr5.47 billion or 6.37 francs per share last year.

Telefon AB L.M. Ericsson slumped 9.41% to SEK 83.25 after the Swedish telecom equipment maker reported second quarter net sales improved 14.1% to SEK 54.77 billion from SEK 47.97 billion kronor. Net income in the quarter surged 66% to SEK 3.12 billion or 0.96 krona per share from SEK 1.88 billion or 0.58 krona per share last year.

Telenor ASA increased 1.675% to NOK 88.00 after the telecommunications company in Norway reported second quarter revenues rose 3.4% to NOK 24.36 billion from NOK 23.55 billion in the previous year. Basic earnings per share from total operations were NOK 2.77 versus NOK 5.73 last year.