European Indexes Lower; Alpha Bank Swings to Loss

Arthi Gupta
30 Aug, 2011
New York City

European indexes declined after euro-zone confidence slumped in August. Macarthur accepted sweetened A$16 a share offer from Peabody and ArcelorMittal. Italy sold

[R]2:00 PM Frankfurt – European indexes declined after euro-zone confidence slumped in August. Macarthur accepted sweetened A$16 a share offer from Peabody and ArcelorMittal. Italy sold €3.75 billion of 10-year bonds at lower yield. Alpha Bank swung to loss on impairment charge on Greek government bonds.[/R]

European indexes fell after euro-zone economic confidence declined sharply in August driven by a broad-based deterioration in sentiment across the sectors, a monthly survey from the European Commission showed.

The economic confidence index fell to 98.3 in August, its lowest level since May 2010, from 103 in July.

Separately, the International Monetary Fund lowered the growth forecast for the U.S. and euro-zone.

The draft report forecasted euro-zone economy to grow 1.9% this year, slower than the 2% expansion predicted in June. The euro-zone growth outlook for 2012 was trimmed to 1.4% from 1.7%.

The Italian government on Monday dropped plans to introduce a tax on high earners and scaled back the proposed cuts to local authority funding, Prime Minister Silvio Berlusconi''s office said.

The revised plan excludes the ""solidarity tax"" on those earning more than €90,000.

French plans to achieve consensus on the financial transaction tax at the G-20 meeting to be held on November 3 and 4 in Cannes, Finance Minister Francois Baroin said in an interview with newspaper Le Journal du Dimanche on Sunday.

Italy sold €3.75 billion of 10-year bonds at a yield of 5.22% compared to the yield of 5.77% at the previous auction of 10-year bond in July. The bid-to-cover ratio was 1.27 times as against the bid-to-cover ratio of 1.4 in the prior auction.

The Treasury sold €2.99 billion of bonds maturing in 2014.

In Paris, CAC-40 Index dipped 0.21 to 0.01% to 3,153.99 and in Frankfurt DAX Index edged lower 35.69 or 0.63% to 5,634.38.

The Athens General Index declined 2.349% after soaring 14% on Monday after reports that Greek banks EFG Eurobank Ergasias SA and Alpha Bank SA plan to merge.

Macarthur Accepts Sweetened Offer

Macarthur Coal Ltd., the Australian coal producer accepted a sweetened A$16 per share all-cash acquisition offer from PEAMCoal Pty Ltd. in a deal valued at A$4.8 billion.

PEAMCoal is a newly formed company that is 60% owned by U.S. coal miner Peabody Energy Corp. and 40% by ArcelorMittal SA.

PEAMCoal sweetened its offer by A$0.50 per share over its initial offer of $15.50 per share and it represents a 44% premium to the closing price of Macarthur Coal stock on the Australian Securities Exchange of A$11.08 on July 11, the last trading day prior to the initial offer.

Vodafone Confirms Talks for Wind Hellas

Vodafone Group, the British cell phone carrier confirmed that it has entered into discussions with Largo Limited to explore a potential business combination between Vodafone Greece and Wind Hellas Telecommunications SA, Greece''s third biggest telecom operator.

Gainers & Losers

Alpha Bank SA surged 10.12% to €2.72 after the banking and financial services company reported first-half net loss was €524.8 million compared to a profit of €38.2 million in the prior year impacted by impairment losses on Greek government bonds of €538.6 million.

Net interest income declined 4.1% to €879.4 million from €917.4 million in the preceding year, reflecting lower loan volumes.

Deutsche EuroShop AG gained 0.3% to €27.07 after the company that invests in shopping malls in Germany and across Europe acquired 50% stake in the Allee-Center in Magdeburg previously held by Unibail-Rodamco.

Distribuidora Internacional de Alimentacion SA soared 5.86% to €2.80 after the Spanish discount grocer reported first-half sales rose 1.5% to €4.785 billion from €4.671 billion obtained in the first-half of 2010. Net income in the period was €4.69 million compared to the €18.8 million loss generated in the same period of last year.

Nestle SA, the Swiss foods maker fell 1.5% to Sfr49.79 on negative broker comments.

S IMMO AG climbed 0.4% to €3.82 after the real estate company said first-half net income rose 17.7% to €7.3 million from €6.2 million in the prior-year period.