European Indexes Higher; UBS to Slash 3,500 Jobs

Arthi Gupta
23 Aug, 2011
New York City

European indexes traded higher and Spain completed the sale of bonds at a lower yield. UBS planned to eliminate 3,500 jobs. The Committee on Foreign Investment in the United States approved Deutsche Boerse and NYSE Euronext merger.

[R]1:30 PM Frankfurt – European indexes traded higher and Spain completed the sale of bonds at a lower yield. UBS planned to eliminate 3,500 jobs. The Committee on Foreign Investment in the United States approved Deutsche Boerse and NYSE Euronext merger.[/R]

European indexes edged higher tracking gains in Asia and a rise in commodities markets and the ECB lowered its purchase of sovereign bonds of peripheral nations. The indexes were higher after Spain completed an auction of bonds at a lower yield.

The French and German finance ministers are scheduled to meet in Paris today for the formulation of a financial transaction tax and harmonization of corporate taxes between the two countries.

Germany''s Bundesbank in its monthly report for August said that the recent resolutions taken by the heads of state of the euro area and the institutions of the European Union transfer sizeable additional risks to the countries providing assistance and their taxpayers.

The Spanish Treasury sold €2.9 billion of 3- and 6-month T-bills today. The Treasury sold €805 million 3-month T-bill at a bid-to-cover ratio of 7.6, up from 6.3 in July at an average yield of 1.357% compared with 1.899% in the July auction.

The Treasury also sold €2.1 billion of 6-month T-bill with the bid-to-cover ratio of 3.6 from 2.2 in July at an average yield of 2.187% versus 2.519% in July.

UBS planned to eliminate around 3,500 jobs to reduce annual costs by Sfr2 billion by the end of 2013.

Libyan rebels led by the NATA aggression tightened their grip on Tripoli with the capture of Muammar Gaddafi''s three sons and fighting was still raging around Gaddafi''s compound in Tripoli but the whereabouts of the Libyan leader were still unknown.

In Paris, CAC-40 Index soared 52.41 to 1.72% to 3,103.77 and in Frankfurt DAX Index gained 84.46 or 1.54% to 5,558.24.

The Markit/HSBC survey showed that the Chinese purchasing managers'' index rose to 49.8 in August from 49.3 in July.

Private sector activity in the euro zone region remained stable, according to the results of a survey by Markit Economics. Flash estimates showed that the composite output index remained unchanged at 51.1.

German economic sentiment worsened in August with the corresponding indicator declining 22.5 points to -37.6 driven by uncertain macroeconomic conditions.

UBS Plans Cost Reduction

UBS AG planned to eliminate expenses of a total of approximately Sfr2 billion from annual costs by the end of 2013. These plans include savings associated with headcount reductions of approximately 3,500 through redundancies as well as natural attrition, and further real estate rationalization.

The company expects to recognize restructuring charges of approximately Sfr550 million in connection with its cost reduction plans.

Gainers & Losers

BayWa AG soared 3.1% to €31.90 after the German conglomerate in agriculture, building materials and energy sectors said it is expanding in renewable energies to Austria and Eastern Europe.

Chocoladefabriken Lindt & Sprüngli AG surged 5.84% to Sfr2,318.00 after the chocolate maker said first-half sales declined 4.7% to Sfr1.01 billion from Sfr1.06 billion in the prior-year period. Net income in the period increased 29.4% to Sfr32.1 million from Sfr24.8 million francs in the prior year.

Deutsche Boerse AG fell 1.40% to €39.37 after the financial marketplace operator said that the Committee on Foreign Investment in the United States has completed its review of the Deutsche Boerse and NYSE Euronext combination without objection to the transaction.

Kudelski SA plunged 6.19% to Sfr7.88 after the digital security and convergent media solutions provider reported first-half total revenues and other operating income declined 21.8% to Sfr404.5 million from Sfr517.1 million in the same period last year.

Net loss in the period was Sfr11.5 million compared to a net profit of Sfr32 million in the prior-year period.

Zurich Financial Services AG gained 2.7% to Sfr171.00.