Germany Lowers Expectations; Statoil Offered $4.4 B for Brigham Exploration

Devan Biswas
17 Oct, 2011
New York City

European markets turned volatile after comments from German finance minister and spokesman for German Chancellor played down expectations of comprehensive solution on the weekend summit. Statoil ASA agreed to acquire Brigham Exploration for $4.4 billion.

[R]4:40 PM Frankfurt – European markets turned volatile after comments from German finance minister and spokesman for German Chancellor played down expectations of comprehensive solution on the weekend summit. Statoil ASA agreed to acquire Brigham Exploration for $4.4 billion.[/R]

European indexes turned volatile after comments from German finance minister added more uncertainty and German Chancellor’s Spokesman lowered expectations ahead of the October 23 summit.

Finance Minister Walter Schaeuble played down market expectations and said in Dusseldorf, “We won’t have a definitive solution this weekend.”

Market indexes have rallied in the last two weeks in anticipation of a resolution to banking recapitalization plan and target to lower Greek sovereign debt.

Chancellor Angela Merkel’s spokesman Steffen Seibert also commented at a news conference that “the dreams” of this resolution at the weekend meeting “will mean everything will be solved and over by Monday cannot be fulfilled.”

CAC 40 index decreased 0.6% or 19.19 to 3,198.70 and DAX 30 index fell 64.24 or 1.1% to 5,902.96. Market indexes in Switzerland declined 0.5%, in Sweden fell 1.6% and in Milan decreased 0.2%.

Italian bond yield perked up again to 5.80%, near the peak before the European Central Bank started buying the Italian and Spanish bonds. The weekly purchase data is expected to be released at the end of the day today and is expected to show the smallest purchase of troubled bonds in the last week.

The euro advanced to $1.38 and gold edged up a fraction in the European trading.

The benchmark index in Athens, Greece edged 0.2% lower ahead of series of strikes that are expected to peak on Thursday as lawmakers vote on more austerity measures.

In addition, French government spokeswoman Valerie Pecresse said on French radio, “We are going toward a collective European solution.”

France and Germany are expected recapitalize European banks to tier one ratio of 9% in the next six months, much sooner that the 2013 deadline set by the Basle committee.

The quicker recapitalization plan expected to be set by the EU officials is resisted by banks and the euro zone solution for the banks to recapitalized and not just French banks is disagreed by German and Dutch banks.

Stock Movers

BNP Paribas SA declined 3% to €31.27, Societe Generale edged lower 2.6% to €20.28 and Credit Agricole fell 2.6% to €5.06.

ArcelorMittal declined 2.6% to €13.98 and Thyssen Krupp AG fell 4% to €20.42.

Volkswagen AG decreased 1.4% to €101.10, Daimler AG fell 3.9% to €36.35 and Renault SA declined 0.6% to €26.83.

Bayer AG decreased 2.1% to €43.88 and BASF SE declined 1.6% to €50.49.

Statoil ASA declined 2.6% after the Norway based oil explorer agreed to acquire all outstanding shares of the U.S. based Brigham Exploration for $4.4 billion or $36.50 a share. With the purchase the company will extend its shale gas fields to Montana and North Dakota based fields and will deepen its involvement in unconventional oil exploration.