European Indexes Mixed; Deutsche Bank Swings to Profit

Arthi Gupta
25 Oct, 2011
New York City

European indexes traded sideways ahead of the summit tomorrow. Spain issued

[R]2:30 PM Frankfurt – European indexes traded sideways ahead of the summit tomorrow. Spain issued €3.47 billion of bonds at higher yields. Novartis planned to eliminate 2,000 jobs to cut operating costs. UBS net slumps 39%.[/R]

European indexes traded sideways in anticipation of final details of the bank recapitalization plan, Greek bond crisis and the process and the amount of leverage in the rescue fund.

Investors are increasingly worried that the European policymakers and leaders are lagging market expectations and situation may spin out of control. Italian and Spanish bond yields were on the rise as Italy may become the next focus of speculators.

The Spanish Treasury issued €3.47 billion of bonds, but yields rose significantly compared with the last auction.

The Treasury issued €1.38 billion notes maturing in three months, less than the €1.6 billion at the previous auction on Sept. 27. The average yield was at 2.292% compared with the previous yield of 1.692%. Nevertheless, the bid-to-cover ratio in today’s auction rose to 3.1, up from 2.5 at the last auction.

The Treasury also sold €2.09 billion in bonds maturing in six months, more than the €1.62 billion sold in the previous auction in late September. The average yield rose to 3.302%, from 2.665%, however the bid-to-cover was 2.6, less than the previous ratio of 4.0.

French banks are likely to need less than €10 billion to boost their capital to levels to be set by EU authorities, Bank of France Governor Christian Noyer said on Monday in an interview on French radio BFM.

He also said there was no French bank in particular that needed help with capital.

In Paris, the CAC-40 Index declined 16.55 or 0.5% to 3,203.91 and in Frankfurt; the DAX Index edged higher 82.71 or 1.4% to 6,137.98.

German, French Sentiment Improves

German consumer confidence is set to improve slightly in November and consumers in France turned less pessimistic in October, results of separate surveys showed today.

Germany''s forward looking consumer sentiment index rose unexpectedly to 5.3 for November from 5.2 in October; according to a survey carried out by the market research group GfK.

French consumer sentiment indicator rose to 82 in October from 80 in September, the statistics office Insee said.

Novartis Plans Job Cuts

Novartis, the Swiss drug maker plans to eliminate 2,000 positions mostly in Switzerland and the U.S., and close two sites in Switzerland and one in Italy over three to five years.

The company said the job reductions will be offset by 700 new positions in low cost and other countries.

Gainers & Losers

Deutsche Bank AG rose 1.9% to €29.02 after the German financial service company reported third quarter net revenues surged 47% to €7.3 billion from €5 billion last year. Net income generated in the quarter was €725 million or 74 cents per share compared to a net loss of €1.21 billion or €1.75 a share last year.

Novartis AG fell 2.5% to Sfr50.50 after the Swiss drug maker reported third quarter net sales climbed 18% to $14.84 billion from $12.58 billion in the same period last year. Net income in the quarter increased 7% to $2.49 billion from $2.32 billion in the previous year.

On a per-share basis, earnings improved to $1.02 from $0.99 per share reported in the prior year.

Puma AG declined 2.1% to €230.75 after the German footwear, apparel and accessories maker said third quarter consolidated sales increased 10.2% currency adjusted to €841.6 million. Net earnings in the quarter remained flat at € 81.7 million.

Earnings per share increased to €5.45 from €5.43 in the same quarter last year.

UBS AG gained 2.5% to Sfr11.42 after the financial services company reported third quarter net profit plunged 39% to Sfr1.02 billion or Sfr0.27 per share from last year''s Sfr1.66 billion or Sfr0.44 per share.

Net interest income for the quarter grew 16% to Sfr1.86 billion from Sfr1.60 billion last year.