European Indexes Slump 2%; Deutsche Bank, Credit Agricole Drop 5%

Arthi Gupta
02 Sep, 2011
New York City

The European market indexes declined more than 2%. Talks between Greece and international lenders suspended after disagreement over budget cuts. Shell agreed to sell stake in gas transport system to Infragas Norge AS for $730 million. Peugeot plans to invest

[R]1:30 PM Frankfurt – The European market indexes declined more than 2%. Talks between Greece and international lenders suspended after disagreement over budget cuts. Shell agreed to sell stake in gas transport system to Infragas Norge AS for $730 million. Peugeot plans to invest €650 million in India.[/R]

European banks declined after the U.S. Federal Housing Finance Agency planned to sue some of the largest banks on claims that mortgages securitized by the lenders misled investors regarding the quality of the loans.

The list of banks on the FHFA target includes Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank.

Deutsche Bank slumped 5%, Commerzbank plunged 5.07%, Credit Agricole declined 4.51% and Societe Generale dropped 3.35%.

European Central Bank President Jean-Claude Trichet said in an interview with Italian business daily Il Sole 24 Ore published on the bank''s Web site today that structural reforms in Italy are necessary to increase the growth potential of the economy.

Trichet said the measures decided by the government in its August 5 plan are of extreme importance to rapidly reduce public finance deficits and enhance the flexibility of the Italian economy.

Greek authorities have not been able to reach an agreement with the European Union, International Monetary Fund and European Central Bank on the country’s ability to meet its deficit targets with the necessary budget cuts.

However, the combined mission is estimated to return within ten days after the Greek authorities are ready with a draft of the 2012 budget.

In Paris, CAC-40 Index declined 79.45 to 2.43% to 3,186.47 and in Frankfurt DAX Index edged lower 156.68 or 2.74% to 5,573.99.

For the week, the CAC-40 Index soared 3.2% and the DAX Index gained 0.65%.

Euro-zone producer prices rose 0.5% on a monthly basis and 6.1% on an annual basis in July, according to the latest data from Eurostat.

Spanish Unemployment Rises

Spain''s jobless rate rose 1.25% or 51,185 from the previous month to 4.13 million in August, the Labour Ministry said on Friday. On a yearly basis, the number of unemployed rose 161,266 in August.

Spain logged the highest unemployment rate of 21.2% in the euro area, Eurostat said on Wednesday.

Shell to Sell Stake to Infragas Norge

A/S Norske Shell, the wholly-owned subsidiary of Royal Dutch Shell Plc agreed to sell its interests in natural gas transport infrastructure joint venture Gassled to Infragas Norge AS for NOK 3,925 million or $730 million, as part of its strategy of exiting non-strategic assets and focusing on major growth projects.

Gainers & Losers

PSA Peugeot Citroen S.A. plunged 4.1% to €20.26 after the French car manufacturer said it will invest Rs 4,000 crore or about €650 million in India to build a vehicle manufacturing plant.

Porsche Automobil Holding SE fell 2.21% to €45.24 after the German sports-car maker announced a 7% rise in August deliveries in the U.S. compared to the same period last year.

Sandvik AB rose 2.04% to SEK87.50 after the Swedish engineering group announced a new strategy that includes the creation of five business areas instead of three and the development of a stronger platform for utilizing common resources effective from January 1, 2012.

SAP AG, the German global software corporation dropped 1.18% to €37.40 after a U.S. federal judge overturned a $1.3 billion jury verdict granted earlier to Oracle Corp. in a copyright infringement lawsuit, calling it ""grossly excessive.""

Straumann Holding AG, the Swiss dental implants firm slumped 4.71% to Sfr145.80 on a rating downgrade from a broker.