Spain, France Auction

Arthi Gupta
01 Dec, 2011
New York City

European indexes traded mixed after surging more than 4% yesterday. Spain and France completed the auction of

[R]1:30 PM Frankfurt – European indexes traded mixed after surging more than 4% yesterday. Spain and France completed the auction of €8.25 billion of sovereign bonds at slightly favourable yields. Euro-zone manufacturing shrank to a 28-month low in November. Luxottica agreed to acquire Brazil-based eyewear maker Tecnol.[/R]

European indexes traded mixed after a strong rally yesterday. Spain and France auctioned €8.25 billion of bonds today.

The International Monetary Fund chief Christine Lagarde speaking at a press conference in Mexico said that the Fund is not in talks to provide loans to Italy and Spain.

She said the IMF is ready to help the euro area in its efforts to curb the crisis, but the Fund will also make sure that it has funds for countries outside Europe.

In Paris trading, the CAC-40 Index declined 24.48 or 0.7% to 3,130.35 and in Frankfurt the DAX Index dropped 59.36 or 1% to 6,031.45.

The yield on France’s 10-year note declined 27 basis points to 3.16%. Spain’s five-year yield eased 31 basis points to 5.54%.

Spain sold €3.75 billion of five-year bonds due January 2017 at an average yield of 5.544% compared to 4.848% in a previous auction of notes with a similar maturity held on November 3.

The Treasury sold €1.1 billion of 5-year bond yielding 3.65%, down from 3.77% at the auction last month. The 30-year bond of €1.08 billion yielded only 3.94%, up from the 3.72% at the last auction in September.

The French Treasury agency sold a total of €4.346 billion of bonds, at its monthly auction and raised €595 million in 6-year bonds at a rate of 2.42% and sold €1.57 billion of 10-year bonds at an average yield of 3.18%, lower from 3.22% at the previous November 3 auction.

Standard and Poor''s chief economist Jean-Michel Six said that it expects euro-zone to go through a mild recession during the first-half of 2012, before a modest pickup in the latter half.

""We estimate that our baseline forecast of a mild recession has a 60 percent probability, while a more severe recession has a 40 percent probability,"" Six added.

Euro-zone Manufacturing Contracts

Euro-zone manufacturing activity shrank at the fastest pace in 28 months in November, the latest survey report from Markit Economics showed today.

The purchasing managers'' index for the manufacturing sector fell to 46.4 in November from 47.1 in October. This matched the preliminary estimate.

French Jobless Rate Rises

The ILO-jobless rate for metropolitan France rose to 9.3% in the third quarter from 9.1% in the second quarter. The number of unemployed was 2.631 million during the quarter.

Luxottica to Acquire Tecnol

Luxottica Group S.p.A. agreed to acquire Brazil based eyewear maker Grupo Tecnol Ltd.

Under the terms of the purchase agreement, Luxottica will initially acquire 80% of Grupo Tecnol capital with the remaining 20% purchased over the next 4 years - 5% per year - at pre-determined prices.

Gainers & Losers

Accenture PLC gained 4.3% to $57.93 after the outsourcing firm said it signed an eight-year business process outsourcing agreement with BNP Paribas Cardif, the life and property & casualty insurance subsidiary of BNP Paribas.

Beiersdorf AG rose 1.5% to €43.17 after the manufacturer of personal care products plans to lay off about 1,000 employees worldwide and strengthen consumer business by focusing more on skin care unit.

BMW AG dipped 0.1% to €55.90 after the German automaker and Toyota Motor Corp. inked a memorandum of understanding concerning a mid-to-long-term collaboration on next-generation environment-friendly technologies.

Furthermore, BMW will supply the Japanese car maker with fuel efficient diesel engines for vehicles produced in Europe. The supply of 1.6 and 2.0 liter engines will begin in 2014, although BMW did not release the financial details of the agreement.

Salzgitter AG climbed 0.3% to €38.50 after the steelmaker said its 2011 profit after tax will be about €100 million higher as it combined all material domestic group companies into one uniform group for tax purposes.

Zurich Financial Services Group increased 1.6% to Sfr203.30 after the insurance-based financial services provider said it is on track to reduce run-rate costs by $500 million by 2013 with part of those savings deployed to fund attractive growth opportunities in emerging markets.