Europe's Industrial Production Up 1.2%; Record UK Unemployment

Devan Biswas
12 Oct, 2011
New York City

European markets rebounded and looked beyond Slovakia vote. Miners and industrial companies gained after August industrial production surged across the region from a year ago. German 30-year bond failed to attract investors and the ECB lent $1.35 billion in emergency loans to only six banks.

[R]5:05 PM Frankfurt – European markets rebounded and looked beyond Slovakia vote. Miners and industrial companies gained after August industrial production surged across the region from a year ago. German 30-year bond failed to attract investors and the ECB lent $1.35 billion in emergency loans to only six banks.[/R]

European markets rebounded after industrial production in August was higher than expected and German chancellor Angela Merkel expressed confidence that Slovakia will approve the expansion of the euro zone rescue fund.

Industrial production in August increased 1.2% from the previous month and soared 5.3% from a year ago, according to the data released by the eurostat. Capital goods production increased 12.2% from a year ago and durable consumer goods output increased 2.8%.

Output in Germany declined 1% from a month ago but soared 7.8% from a year ago. Even Ireland that is undergoing a severe austerity measures showed production increase of 4.4% from the previous month and soared 10.1% from a year ago.

German bunds fell 60 ticks after German auction of €1.625 billion 30-year bonds drew a weak response and fell short of the offered amount.

The European Central Bank said only six banks accessed its emergency credit facility and lent $1.35 billion, significantly lower than most market watchers expectations.

Yesterday, after the market close, Slovakian parliament rejected the measure to expand the €440 billion rescue fund. Of the 124 members only 55 backed the measure, far less than the required majority of 76.

The rejection also led the fall of the current four member coalition government and no date has been set for a new vote with the interim government in place but the opposition leader said that his party will support the measure at the second vote that will be completed before the crucial October 23.

Yesterday, Herman Van Rompuy, president of the council of European Union leaders delayed the meeting of European leaders by a week to October 23 and set that as the deadline to announce a plan to recapitalize banks and expand the power the European rescue fund.

The CAC 40 index increased 2.1% to 3,219.96, the DAX index gained 1.6% to 5,961.30 and the market indexes in Switzerland added 0.5% and in Greece rose 0.9% and in Italy soared 2%.

Greece’s cash deficit increased nearly 4% from a year ago period of nine months ending in September according to its central bank. The government’s cash deficit increased to €19.23 billion from €18.5 billion a year ago period.

Greek banks soared more than 7% after international lender troika confirmed that Greece has met all the requirements for the release of sixth tranche of €8 billion aid.

Slovakia is the only member in the 17-member euro zone that has not ratified the expansion of the rescue fund.

UK Unemployment Soars to 8.1%

UK unemployment hit the highest last seen in 1994. The unemployment rate in three months to August increased to 8.1% and the number of unemployed increased 114,000 to 2.57 million.

The unemployment among the young increased to 991,000 and for the people between 16 and 24 years of age surged to 21.3%.

Stock Movers

Volkswagen AG increased 97 cents to €98.40 and Daimler AG gained 48 cents to €35.85 and BMW AG gained 76 cents to €53.75.

Greek banks soared after the troika of international certified the nation for the release of aid.

Alpha Bank soared 15%, National Bank of Greece gained 8% and Piraeus Bank SA soared 10% to 27 cents.

BNP Paribas SA increased 7% to €35.88, Societe Generale SA gained €1.34 to €23.19 and Deutsche Bank advanced 5% to €29.35.

ASML gained 2% to €27.01 after the semiconductor equipment maker said third quarter net income was €355 million.

Michelin SCA increased 5.2% to €49.01, Fiat SpA added 30 cents to €4.86 and Daimler AG increased €1.81 to €37.66.