Europeans Ban Short Selling; Bauer, ThyssenKrupp Net Fall

Arthi Gupta
12 Aug, 2011
New York City

European indexes traded higher after France, Italy, Spain and Belgium banned short-selling of financial stocks. The French economy recorded zero growth in the second quarter prompting worries of credit rating. ThyssenKrupp quarterly net declined 22%.

[R]1:00 PM Frankfurt – European indexes traded higher after France, Italy, Spain and Belgium banned short-selling of financial stocks. The French economy recorded zero growth in the second quarter prompting worries of credit rating. ThyssenKrupp quarterly net declined 22%.[/R]

European indexes edged higher after France, Italy, Spain and Belgium banned short-selling of financial stocks from today to prevent further declines in banking stocks’ share prices, the European Securities and Markets Authority said.

The decision was in sharp contrast to free market principles and what European authorities preached in 1998 to Asian and Russian governments.

During the Asian Contagion and the Russian currency crisis, the European Union and the European exchanges admonished Asian governments to adhere to free market principles and let the market discover the true prices of its assets.

The drumbeat of pressure on Thailand, Indonesia, Malaysia and Russia was relentless with warning governments to not interfere with markets.

Traders are still worried that France may lose its highest credit rating and French banks may suffer more losses in its Italian, Greek and Spanish bonds holdings. However, the ratings agencies confirmed France''s AAA rating yesterday.

The markets are jittery if France would be able to sustain its rating if economy falters and banks need a bailout that may cost as much as €300 billion.

French Prime Minister and German Chancellor Angela Merkel will meet in Paris on Tuesday to discuss the euro-zone debt crisis, according to a statement published on the Web site of the French presidency.

The French economy recorded zero growth in the second quarter largely due to a decline in consumer spending. Gross domestic product remained flat on a sequential basis in the second quarter after expanding 0.9% in the first quarter, the statistics office Insee said.

Swiss National Bank Vice President Thomas Jordan said yesterday a temporary peg to the euro is possible. The Swiss central bank is battling the steady rise in the Swiss franc and the currency soared to a record high against the euro and the dollar this week.

Industrial production in the euro area increased 2.9% on an annual basis in June, slower than the 4.4% growth recorded in May, which was revised up from 4%, according to data released by Eurostat today.

In EU27, industrial production rose 1.7% from a year ago in June compared to the 4.4% gain in May.

In Paris CAC-40 Index gained 52.24 to 1.69% to 3,141.90 and in Frankfurt DAX Index edged higher 107.36 or 1.85% to 5,905.02.

For the week, the CAC-40 Index plunged 4.17% and the DAX Index slumped 4.5%.

Asian markets declined after Japan’s gross domestic product is now forecast to grow 0.5% in fiscal 2011, slower than the previously predicted 1.5%, according to a statement from the Cabinet Office.

The report also estimated economy to grow between 2.7% and 2.9% in next fiscal year on the rebound in production.

Gainers & Losers

Bauer AG surged 11.81% to €21.02 after the German provider of services, machinery and ancillary products reported second quarter consolidated revenues increased 2.3% to €325.07 million from €317.65 million last year. Net profit in the quarter declined 12.5% to €7.64 million or 0.45 euros per share from €8.73 million or 0.51 euros per share last year.

Hamburger Hafen und Logistik AG soared 5.26% to €26.10 after the logistics and transportation company said first-half revenue grew 18.6% to €596.0 million from €502.6 million in the same period last year. Profit after tax increased 18% to €53 million from €44.9 million in the prior-year period.

LPKF Laser & Electronics AG fell 1.57% to €10.04 after the special machine manufacturer reported second quarter revenues grew 23% to €23.4 million from a year ago and 3% to €37.7 million during the first-half of 2011.

Sky Deutschland AG gained 2.92% to €2.50 after the German pay television operator reported second quarter revenues increased 17.2% to €276.7 million versus €236.1 million in the comparable period a year ago. Net loss in the quarter narrowed 35% to €53.6 million compared with €81.9 million in the previous year.

ThyssenKrupp AG declined 2.28% to €22.69 after the diversified industrial group said third quarter net sales grew 10% to €12.85 billion from €11.68 billion in the prior-year quarter. Net income in the quarter declined 22% to €212 million or 0.46 euros per share, from €272 million or 0.58 euros per share last year.