Indexes in Europe Decline 1%; Credit Suisse, BASF, Siemens Fall

Devan Biswas
28 Jul, 2011
New York City

European markets turned lower for the third day in a row on a string of weak earnings and a decline in confidence index in the euro-zone. The indexes fell more than 1% in Germany, France, Greece, Switzerland and Sweden.

[R]3:00 PM Frankfurt – European markets turned lower for the third day in a row on a string of weak earnings and a decline in confidence index in the euro-zone. The indexes fell more than 1% in Germany, France, Greece, Switzerland and Sweden.[/R]

The European markets declined for the third day this week as the U.S. slides near default and may not be able to avert a rating downgrade. The euro strengthened and weak earnings from BASF, Siemens and Vallourec contributed to the decline.

Investors also sold bonds of Italy and Spain for the fifth day in a row as the world markets declined and premium to the German bunds rose.

The CAC-40 index dropped 1.2% or 45.80 to 3,688 and the DAX 30 index declined 1.5% or 111.50 to 7,141.

The benchmark index in Milan dropped 1.1% to 18,278.40 and in Spain fell 0.8% to 9,568.00. The indexes in Athens, Zurich and Stockholm dropped nearly 1%.

The monthly sentiment index tracked by the European Commission that measures confidence among businesses and consumers in the euro-zone declined to 103.2 in July from 105.4 in June.

The index declined for the fourth month in a row and was at its low since 102.2 in August 2010. The index is the net of the positive and negative replies with a long term average of 100.

Stock Movers

Air France Group dropped 8% to 8.70 euros and Deutsche Lufthansa AG declined 3% to 14.05 euros after the airlines reported earnings that were lower than expected after fuel prices surged and demand to North Africa travel was trimmed.

BASF SE dropped 6% to 61.99 euros after the chemical maker reported earnings before interest and taxes were nearly unchanged at 2.24 billion euros.

Credit Suisse AG declined 3% to 28.40 euros after the investment bank reported second quarter net declined 52% to Sfr768 million or $959 million as the trading released earnings declined. The company also plans to cut 2,000 jobs.

Finnmeccanica SpA dropped 14% to 5.96 euros after the company revised its 2011 revenues estimate lower between 17.5 billion euros and 18 billion euros from the range of 18.3 billion euros to 19 billion euros.

Kemira Declined 9% to 10.88 euros after the Finland based water-treatment chemical maker said second quarter net income was 30.7 million euros.

Lafarge SA declined 5% to 37.65 euros after second quarter operating profit declined to 702 million euros from 838 million euros a year ago quarter.

Siemens AG declined 1% to 90.22 euros after the engineering company said net profit in the fiscal third quarter declined 47% to 763 million euros and guided 7.5 billion euros of earnings for the full year.

Technip added 2% to 75.40 euros after the company revised its full year earnings higher and said second quarter earnings increased to 132.5 million euros from 106.1 million euros a year ago.

Vallourec SA tumbled 15% to 70.05 euros after the French steel pipe maker said second quarter earnings fell from a year ago on the rising raw material prices.

Volkwagen AG decreased 6.5% to 134.5 euros after the largest European car maker reported second quarter operating earnings of 3.17 billion euros. The company blamed rising euro and commodities prices and said the earnings for the year will be under pressure.