French Banks Extend Losses; Zurich Financial Net Soars 88%

Arthi Gupta
11 Aug, 2011
New York City

European indexes fell on the second day on the growing worries of the French credit rating. Societe Generale, BNP Paribas and Credit Agricole extended losses for the second day. German wholesale inflation fell in July. Daimler, Rolls Royce secure 95% of Tognum. Zurich Financial net surged 88%.

[R]1:55 PM Frankfurt – European indexes fell on the second day on the growing worries of the French credit rating. Societe Generale, BNP Paribas and Credit Agricole extended losses for the second day. German wholesale inflation fell in July. Daimler, Rolls Royce secure 95% of Tognum. Zurich Financial net surged 88%.[/R]

European markets traded negative with banks leading the decline for the second day in a row. French banks extended losses for the second day as market speculated a rating decline for France and more losses for banks stemming from the Italian and Spanish bond holdings.

European indexes declined on grim economic outlook. Greece’s jobless rate reached record levels in May to 16.6%.

Investors are jittery on fears that France may be the next downgrade target. The banking sector was the worst hit and extended losses for the second day with Societe General slumping 5.1% and Credit Agricole declining 3.42%.

President Nicolas Sarkozy held an emergency meeting on Wednesday with Finance Minister Francois Baroin and Budget Minister Valerie Pecresse to formulate proposals to reduce the country''s public deficit. The government aims to bring the public deficit down to 5.7% of GDP in 2011.

The European Central Bank in its monthly bulletin said the monetary policy stance remains accommodative and said it will monitor any increase in price to preserve the stability of the prices in the region.

Swiss National Bank Deputy President Thomas Jordan Jordan told Swiss daily TagesAnzeiger that monetary policy could be made more expansionary without the central bank intervening in the foreign exchange market.

The Spanish 10-year bond yields fell four basis points to 5% and the Italian 10-year bond yields dropped four basis points to 5.05%.

In Paris CAC-40 Index declined 20.80 to 0.69% to 2,982.19 and in Frankfurt DAX Index edged higher 16.98 or 0.30% to 5,630.40.

Asian markets were on the decline on the worsening global economic backdrop. Chinese fiscal revenue increased 26.7% in July from a year ago to 986.4 billion yuan, the Ministry of Finance said.

German Wholesale Price Inflation Eases

German wholesale prices increased 8.2% in July from a year ago, slower than the 8.5% increase in June, according to data released from the Federal Statistics Office today. The index of selling prices in wholesale trade on a monthly basis slipped 0.6% in July, the same rate of decline in June.

Greek Jobless Rate Surges

Greek jobless rate reached record levels in May, the Hellenic Statistics Authority said today. The jobless rate rose to 16.6% in May from 12% in the month a year ago. The number of unemployed rose 220,534 to 822,719 in May.

Daimler, Rolls Royce Raise Stake in Tognum

Daimler AG and Rolls-Royce Group plc reached a milestone in their takeover of Tognum AG by increasing their ownership to 95%.

The two companies acquired an additional 0.83% of Tognum AG''s equity in a tender offer through their joint venture, Engine Holding GmbH.

With the acquisition of Tognum, Daimler and Rolls-Royce plan to create a supplier of complete systems for industrial engines.

Gainers & Losers

Aegon N.V. plunged 7.02% to €2.76 after the Dutch insurer reported second quarter sales declined 15% to €1.26 billion from €1.48 billion a year earlier. Net income in the quarter fell 2.4% to €403 million from €413 million in the previous year.

Anheuser-Busch InBev fell 1.04% to €34.78 after the brewer reported second quarter revenues increased 8.5% to $9.95 billion from prior year''s $9.17 billion. Profit in the quarter grew 26% to $1.45 billion or $0.90 per share from $1.15 billion or $0.72 per share a year ago.

Bilfinger Berger AG dipped 0.32% to €55.67 after the German construction firm said second quarter revenue grew 2% to €2.08 billion from €2.04 billion in the prior year. Net profit for the quarter declined 17% to €58 million or 1.29 euros per share from €70 million or 1.57 euros per share reported for the same quarter last year.

K+S Group AG slumped 3.54% to €40.88 after the German specialty fertilizers supplier reported second quarter revenues rose 11% to €1.05 billion from €948.1 million in the previous year. Net income in the quarter plunged 62.5%to €28.6 million or 0.15 euros per share from €76.2 million or 0.40 euros per share a year ago.

TUI AG surged 3.44% to €4.84 after the travel group said third quarter sales rose 9.3% to €4.39 billion from €4.02 billion in the previous year. Net loss for the quarter widened 225% to €39.6 million or 0.18 euros per share versus a loss of €12.2 million or 0.01 euros per share in the prior year.

Zurich Financial Services AG soared 5.94% to Sfr153.50 after the insurance-based financial services provider said second quarter operating profit rose 25% to $1.28 billion from $1.03 billion a year earlier. Net income for the quarter surged 88% to $1.33 billion or $9.02 per diluted share versus $707 million or $4.82 per share in the same quarter last year, from the sale of shares in New China Life Insurance.