Greek Bailout Lifts European Indexes; TomTom Swings to Loss

Arthi Gupta
22 Jul, 2011
New York City

European indexes traded higher after euro-zone leaders agreed on new bailout package for Greece of longer maturity and drastically lower interest rate. Private sector will contribute

[R]1:30 PM Frankfurt – European indexes traded higher after euro-zone leaders agreed on new bailout package for Greece of longer maturity and drastically lower interest rate. Private sector will contribute €50 billion in the plan. Euro-zone industrial new orders increased. Volvo net surged 62% on demand for its trucks.[/R]

World indexes gained after euro-zone leaders on Thursday agreed on a new aid package for Greece during a crucial summit held in Brussels on Thursday.

The euro-zone countries and the International Monetary Fund will lend an additional €109 billion with the private financial sector making its own contribution of €50 billion. The package comes in addition to the €110 billion Greece received as part of its first bailout in 2010.

During the summit, it was decided to lengthen the maturity of future EFSF loans to Greece to the maximum from the current 7.5 years to a minimum of 15 years and up to 30 years with a grace period of 10 years.

The second bailout should help Greece slash its debt by €26 billion by 2014, according to Greek Prime Minister George Papandreou. That amounts to 12% of the nation''s Gross Domestic Product. Greece currently has a total of €350 billion in public debt.

In Paris CAC-40 Index gained 35.53 to 0.93% to 3,852.28 and in Frankfurt DAX Index edged higher 40.61 or 0.57% to 7,330.40. For the week, the CAC-40 Index surged 3.37% and the DAX Index advanced 2.29%.

The European Bank for Reconstruction and Development raised the growth forecast for this year for the emerging 29 economies across Europe to 4.8% from 4.6% predicted in May. The 2012 growth estimate was kept unchanged at 4.4%.

Euro-zone industrial new orders increased 3.6% on a monthly basis in May, after dropping 0.1% in April, according to data released by Eurostat today.

German business sentiment fell more than expected in July, reports said citing a monthly survey from the Ifo institute. The Ifo business climate index dropped to 112.9 in July from 114.5 in June.

Fitch Ratings on Friday said that the credit ratings on Spanish and Italian local and regional governments will potentially be lowered in case of a rating downgrade on the sovereign ratings of these countries.

Accor Sells Lenôtre

Accor said it has entered into exclusive negotiations with Sodexo for the sale of Lenôtre at an enterprise value of €75 million.

Gainers & Losers

AB Volvo climbed 5.3% to SEK 107.40 after the Swedish truckmaker reported second quarter net sales increased 15% to SEK 79 billion from SEK 69 billion in the year-ago quarter. Net income in the quarter surged 62% to SEK 5.24 billion or SEK 2.52 per share compared to net income of SEK 3.23 billion or SEK 1.55 per share in the previous year.

adidas AG gained 2.6% to €54.960 after the producer of sportswear and sports equipment estimated revenue to increase to €17 billion by 2015 from €12 billion last year, Chief Executive Officer Herbert Hainer said in an interview.

Julius Baer Gruppe AG soared 3.2% to Sfr36.42 after the Swiss banking firm said first-half net profit decreased 20.3% to Sfr147.3 million from Sfr184.8 million last year.

SsAB AB surged 9.8% to SEK 95.00 after the specialty steel maker said second quarter sales increased 8% to SEK 11.77 billion from last year''s SEK 10.91 billion. Net profit in the quarter soared 140% to SEK 885 million or SEK 2.73 per share, versus SEK 369 million or SEK 1.14 per share in the prior-year quarter.

Syngenta AG fell 1.5% to Sfr270.00 after the Swiss agribusiness reported first-half sales climbed 14% to $7.70 billion, from $6.74 billion in the comparable period a year ago. Net income in the period grew 14% to $1.43 billion or $15.38 per share from $1.25 billion or $13.39 per share last year.

TomTom NY rose 1% to €3.69 after the manufacturer of portable navigation devices stated second quarter revenues declined 13% to €314.22 million compared with €361.97 million in the previous year. Net loss in the quarter was €489.25 million or €2.20 a share versus a profit of €33.72 million or 15 cents a share in the comparable period a year ago.