European Indexes Higher; Banks Rebound on ECB Action

Arthi Gupta
16 Sep, 2011
New York City

The European indexes traded higher. The euro area trade surplus increased to

[R]1:00 PM Frankfurt – The European indexes traded higher. The euro area trade surplus increased to €4.3 billion in July. Helle Thorning-Schmidt became the first woman Prime Minister of Denmark. Imtech agreed to acquire Canada-based marine company Groupe Techsol Marine.[/R]

European indexes gained on easing of euro area debt concerns but banks were in focus. The coordinated central banks action to provide dollar liquidity eased the tension in the short term debt market and reassured financial markets that the central banks stand ready to pump new money and avoid a scenario all too familiar in 2008.

Federal Reserve of the U.S., the Bank of Japan, the Swiss National Bank and the Bank of England acted together to offer dollar liquidity to European banks as liquidity from U.S. banks and money market funds declined in the last three months.

The central banks offered dollar denominated loans for a longer maturity of three months compared to weekly loans available before. The European Central Bank also confirmed that two banks have tapped the rarely accessed weekly dollar denominated loans totalling $575 million. The ECB did not disclose the names of two banks.

The swap agreement between the Fed and borrowing central bank will provide longer term debt and the ECB will begin offering these loans to banks from October 14 and again in November and December.

Deutsche Bank surged 4.5% to €26, Commerzbank soared 3% to €1.79, and French lenders Societe Generale gained 2.2% to €18.73 and Credit Agricole edged higher 0.4% to €5.54.

A meeting of European finance officials is scheduled in Wroclaw, Poland to discuss the sovereign crisis. U.S. Treasury Secretary Timothy F. Geithner is expected to urge EU finance ministers to step up their crisis-fighting strategy.

Denmark''s center-left Social Democrat bloc leader Helle Thorning-Schmidt is expected to be the country''s first woman Prime Minister.

The Social Democrat bloc won 89 seats in the 179-member Danish Parliament in a closely-contested general election on Thursday against the center-right coalition''s 86.

In Paris, CAC-40 Index gained 5.88 to 0.2% to 3,051.09 and in Frankfurt DAX Index edged higher 59.15 or 1.1% to 5,567.87.

For the week, the CAC-40 climbed 2.6% and the DAX surged 7.3%.

Euro Area Surplus Climbs

The euro area trade surplus increased to €4.3 billion in July from €0.1 billion in June, data from Eurostat showed.

However, the euro area current account deficit widened to a seasonally adjusted €12.9 billion in July from €7.1 billion in June, the European Central Bank said today.

Imtech Acquires Groupe Techsol Marine

Imtech N.V., the Netherlands-based technical services provider said it acquired the Canadian marine company Groupe Techsol Marine for an undisclosed sum.

The acquisition gives Imtech access to a high-tech marine production site in Canada, while bolstering its service and maintenance presence in North-America, the company noted.

Gainers & Losers

Air France-KLM SA gained 1.3% to €6.14 after the Franco-Dutch airline said its board of directors approved an order of 110 long-haul aircraft from Boeing Co. and Airbus SAS.

BASF SE climbed 0.02% to €47.82 after the chemical company said it increased its European sales prices for ethylamines and methylamines.

E.ON AG, the German utility company surged 3.9% to €15.69 after positive broker comments.

Neste Oil Oyj increased 1.70% to €7.48 after the Finnish oil refining and marketing company’s subsidiary Neste Oil NV agreed to sell its Beringen, Belgium-based polyalphaolefin producing facilities to Chevron Phillips Chemical International NV, wholly owned by Chevron Phillips.

The deal also includes a quality control laboratory and related maintenance services located in Beringen.

Wolford AG advanced 2.50% to €22.56 after the retailer of hosiery and lingerie reported first quarter sales rose 6.5% to €31.78 million from €29.84 million in the prior year. Net loss in the quarter narrowed 30.3% to €1.75 million compared to a €2.51 million last year.