Italy Proposes

Arthi Gupta
15 Aug, 2011
New York City

European indexes edged higher after a tumultuous last week on optimism of global economic recovery. The Italian cabinet approved

[R]1:00 PM Frankfurt – European indexes edged higher after a tumultuous last week on optimism of global economic recovery. The Italian cabinet approved €45 billion austerity plan. Transocean agreed to acquire Norway-based Aker Drilling for $1.43 billion.[/R]

The Italian cabinet at an emergency meeting on Friday passed a €45 billion austerity plan that aims to meet budgetary requirements by the European Central Bank within two years. The cabinet agreed to €20 billion of cuts in 2012 and €25 billion in 2013.

The measures, which still need to be approved by the Italian parliament, include cuts to public employees and reduction in the number of local authorities and national festivities, together with a pension reform, solidarity taxes affecting high incomes and new liberalizations, ANSA news agency reported.

The Dutch market regulator AFM said on Friday that there is currently no need to impose a short selling ban in the Netherlands.

The Swiss National Bank may set a lower limit for euro-franc exchange rate in an attempt to halt gains in the currency, Swiss newspaper SonntagsZeitung reported on Sunday.

""The plans are ready,"" the paper said quoting sources with knowledge about the situation. The Swiss daily further added that the SNB and the government are in intensive talks over setting a lower limit to the exchange rate.

In Paris CAC-40 Index gained 3.56 to 0.11% to 3,217.31 and in Frankfurt DAX Index edged higher 44.79 or 0.74% to 6,042.32.

The world economy is entering a new ""danger zone"" with the recent financial market turbulence eroding investor confidence, World Bank President Robert Zoellick told reporters after addressing the Asia Society in Sydney on Sunday.

Asian markets traded higher after Japan''s GDP contracted 1.3% on an annual basis in the second quarter, following the downwardly revised 3.6% drop in the previous three months, the Cabinet Office said on Monday in a preliminary report.

Separately, Japan’s finance minister Yoshihiko Noda told the public broadcaster NHK over the weekend that the government would take further steps to weaken the yen as the strength of the currency poses a threat to the economy''s recovery.

German Factory Employment Up

Employment in German factories increased from last year in June, preliminary data released by the Federal Statistics Office showed on Monday.

The number of persons working in manufacturing units with 50 or more employees rose 3.1% annually to 5.07 million in June.

Transocean Acquires Aker Drilling

Transocean Services AS, a wholly owned subsidiary of Transocean Ltd. announced an all cash voluntary offer for 100% of the shares of Aker Drilling ASA, a Norway-based offshore drilling rig contractor for NOK 26.50 per share. The offer represents a 62% premium to Aker Drilling''s 30-day average price of 16.39 Kroner per share.

The offer price indicates an equity market capitalization of about NOK 7.93 billion or $1.43 billion.

The acquisition would contribute approximately $1.05 billion in firm contract backlog to Transocean and is also expected to be immediately accretive to Transocean''s earnings.

Gainers & Losers

H & M Hennes & Mauritz AB fell 1.73% to SEK 198.40 after the Swedish apparel retailer said H&M group total sales for July, including VAT, rose 3%, in local currencies. In comparable units, sales declined 6%.

The total number of stores rose to 2,306 on July 31 as against 2,066 on July 31, 2010.

Spectris Plc surged 5.11% to 1,418 pence after the British precision instruments maker agreed to acquire U.S.-based Omega Engineering business for $475 million or about £290 million, on a debt and cash-free basis.

Transocean Ltd. soared 4.76% to Sfr44.25 after the Swiss drilling contractor reported an all cash voluntary offer for Aker Drilling ASA at NOK 26.50 per share.