France Unveils

Arthi Gupta
25 Aug, 2011
New York City

European indexes extended gains. The French Prime Minister Francois Fillon unveiled a package of austerity measures that could save

[R]1:30 PM Frankfurt – European indexes extended gains. The French Prime Minister Francois Fillon unveiled a package of austerity measures that could save €12 billion. Credit Agricole and Ahold quarterly net declined.[/R]

European indexes traded higher as central bankers around the world gather tomorrow to discuss the status of the world economy.

The French Prime Minister Francois Fillon unveiled a package of austerity measures on Wednesday aimed at generating additional savings of €12 billion over the next two years to narrow its budget deficit.

The measures are expected to save €1 billion in 2011 and €11 billion in 2012. This includes levying an additional tax of 3% on those with annual income above €500,000.

Prime Minister Francois Fillon said the new tax on the rich would remain in place until the country’s budget deficit target of 3% is met.

Fillon added that the economy is estimated to expand by 1.75% this year, rather than 2% and for 2012 to 1.75% from a previous 2.25%. The government hopes to slash its public deficit to 5.7% this year, 4.6% next year and 3% in 2013.

Additional taxes on alcohol, soft drinks, tobacco, theme park tickets and capital gains will also be levied as part of the austerity measures.

In Paris, CAC-40 Index gained 25.76 to 0.8% to 3,165.31 and in Frankfurt DAX Index edged higher 38.76 or 0.7% to 5,719.84.

German consumer confidence is likely to decline further in September. The Gfk institute''s forward looking consumer sentiment index is expected to decline to 13.4 in September from 44.6 in August.

Gainers & Losers

Credit Agricole SA surged 6.2% to €6.60 after the retail banking group said second quarter revenue rose 1.1% to €5.53 billion. Net profit in the quarter fell 11% to €339 million compared with €379 million in the same period in 2010.

Gemalto NV soared 8% to €31.88 after the Dutch company that provides microprocessor personal devices reported first-half revenues on an IFRS basis gained 14% to €928.46 million from €815 million in the year ago period.

Profit on an IFRS basis for the period climbed 0.2% to €44.59 million compared to €44.48 million in the year ago period. However, earnings per share declined to €0.52 from €0.53 last year.

Glencore International Plc gained 1.91% to 397.05 pence after the listed commodities trader stated first-half revenues gained 32% to $92.12 billion from last year''s $70.01 billion. Net income, before other significant items, increased 57% to $2.45 billion from $1.56 billion a year earlier.

INDUS Holding AG rose 0.76% to €18.64 after the company engaged in the acquisition of small and medium-sized companies said first-half sales revenues increased 20% to €540 million versus €450.3 million last year. Net income for the period surged 89.2% to €33.3 million from €17.6 million in the prior year.

Koninklijke Ahold N.V. plunged 5% to €7.92 after the Dutch supermarket chain operator reported second quarter net sales fell 3.5% to €6.87 billion from €7.13 billion a year ago. Net income declined 1.5% to €199 million from €202 million reported a year ago. Earnings per share remained flat at 0.17 euros.

Raiffeisen Bank International AG climbed 2.97% to €27.70 after the Austria-based holding company said first-half pre-tax profit advanced 52% to €879 million as against €579 million last year. Net interest income was flat €1.781 billion in the same period a year ago.