European Indexes Up; Commerzbank Net Down 93%, Nestle Net Falls 16%

Arthi Gupta
10 Aug, 2011
New York City

European indexes rebounded after a week of chaotic trading. The IEA lowered its 2011 global oil demand growth forecast. The SNB lifted banks'' sight deposits to curb franc appreciation. E.ON planned slashing about 11,000 jobs and Nestle first-half net fell 16%.

[R]2:00 PM Frankfurt – European indexes rebounded after a week of chaotic trading. The IEA lowered its 2011 global oil demand growth forecast. The SNB lifted banks'' sight deposits to curb franc appreciation. E.ON planned slashing about 11,000 jobs and Nestle first-half net fell 16%.[/R]

European indexes and Asian markets traded higher after the Federal Reserve left interest rates unchanged at near-zero levels and reiterated that rates are likely to remain at exceptionally low levels at least through mid-2013.

However, the Fed indicated that there would be a slowdown in economic recovery with imminent downside risks.

Data released today showed that China''s trade surplus increased more than estimated in July. The surplus rose to $31.48 billion from $22.27 billion in June.

The Swiss National Bank on Wednesday once again had to initiate steps to contain the appreciation of the Swiss franc.

The central bank aims to rapidly raise banks'' sight deposits to Sfr120 billion from Sfr80 billion to increase the supply of liquidity to the Swiss franc money market. Additional measures include conducting foreign exchange swap transactions.

The SNB stated the “massive overvaluation” of the currency has raised the downside risks to price stability.

Last week, the central bank had lowered the interest rate as close to zero and raised the liquidity supply to the Swiss franc money market.

The International Energy Agency trimmed 2011 global oil product demand growth by 0.10 million barrels per day to 1.2 mbd. The Paris-based agency said that global oil demand this year will be 89.5 mbd on average, up 1.2 mbd year-over-year.

In Paris CAC-40 Index gained 4.93 to 0.15% to 3,181.55 and in Frankfurt DAX Index edged higher 95.61 or 1.62% to 6,013.32.

Italy sold €6.5 billion of bills today and borrowing costs fell from the previous sale after the European Central Bank began buying the country’s bonds, leading to a plunge in yields this week.

Italy sold its one-year bills to yield 2.959%, down from 3.67% at last auction on July 12. Demand was 1.94 times the amount on offer, compared with 1.55 times last month.

French Industrial Output Falls

French industrial production declined 1.6% on a monthly basis in June, according to data published by the statistics office Insee today.

German Inflation Rises

Germany''s consumer price index rose 2.4% in July as against 2.3% in June, final data published by the Federal Statistics Office showed. Inflation remains above the two-percent threshold.

GDF Inks MoU with China Investment Corp.

GDF Suez signed a Memorandum of Understanding with China Investment Corp., for cooperation across multiple businesses and regions, in particular in Asia Pacific.

China Investment will buy a minority stake in the company''s exploration and production business. CIC will own 30% of GDF SUEZ E&P. The transaction values GDF SUEZ E&P at about €8.1 billion in enterprise value.

Gainers & Losers

Commerzbank AG surged 3.14% to €2.20 after the German lender said second quarter net profit attributable to its shareholders slumped 93% to €24 million from €352 million in the prior-year period. Net interest income in the quarter slipped 2% to €1.8 billion.

E.ON AG fell 0.45% to €15.45 after the energy group reported second-quarter sales increased 35% to €25.2 billion from €18.6 billion last year. Net loss in the quarter was €1.58 billion or 0.83 euros per share compared to a profit of €1.63 billion or 0.85 euros per share last year.

The company plans to cut about 9,000 to 11,000 jobs, primarily in administrative functions to reduce its costs from currently around €11 billion to around €9.5 billion per year by the end of 2015.

GDF Suez SA gained 2.8% to €20.58 after the France-based natural gas and electricity supplier stated first-half revenues grew 7.9% to €45.7 billion from last year. Net income declined 23.2% to €2.74 billion from €3.57 billion a year ago.

Henkel AG & Co. KGaA soared 7.05% to €44.49 after the Persil detergent maker reported second quarter sales grew 1.5% to €3.95 billion from €3.89 billion in the prior-year quarter. Net income in the quarter rose 34% to €366 million or 0.84 euros per share from €273 million or 0.63 euros per share in the same quarter last year.

H. Lundbeck A/S climbed 6.8% to DKK 124.60 after the Denmark-based pharmaceuticals company said second quarter revenue rose 9% to DKK 4.1 billion from DKK 3.77 billion in the same period last year. Net profit increased 21% to DKK 797 million from last year. Earnings per share for the quarter were DKK 4.06.

Nestlé S.A. rose 0.75% to Sfr47.05 after the food maker said first-half sales fell 13% to Sfr41 billion compared to Sfr47.09 billion in the prior-year period. Net profit for the period dropped 16% to Sfr4.70 billion or 1.46 francs per share compared to Sfr5.45 billion or 1.59 francs per share in the prior year period.

PATRIZIA Immobilien AG increased 9.19% to €4.04 after the Germany-based real estate company said second quarter revenues fell 43% to €56.02 million from €98.27 million in the comparable period last year. Net loss in the quarter widened 83.3% to €1.98 million or 0.04 euros per share compared to a net loss of €1.08 million or 0.02 euros per share last year.

Singulus Technologies AG surged 8.06% to €3.06 after the manufacturer of optical disc production lines reported second quarter revenues grew 61% to €44.8 million from €27.8 million in the previous year. Net profit generated in the quarter was €1.1 million versus loss of €2.2 million last year. Basic earnings per share for the quarter were 0.03 euros compared to loss per share of 0.05 euros a year ago.