Merkel Seeks Deeper Fiscal Union; ThyssenKrupp Swings to Loss

Arthi Gupta
02 Dec, 2011
New York City

European indexes soared after German Chancellor Angela Merkel urges for tighter fiscal union. The French economy is estimated to grow 1% in 2012. Spanish jobless rate continues to rise in November. RBS agreed to sell its pub business to Heineken for

[R]1:30 PM Frankfurt – European indexes soared after German Chancellor Angela Merkel urges for tighter fiscal union. The French economy is estimated to grow 1% in 2012. Spanish jobless rate continues to rise in November. RBS agreed to sell its pub business to Heineken for £422 million.[/R]

European markets edged higher as politicians offer more promises and appear to work on arranging more financing to contain the widening and deepening debt contagion in the euro zone.

European leaders have been in whirlwind of meetings and conferences for more than two years and are promising more of the same while debt contagion spreads.

Most investors and media reports highlight the strength of the German economy, however German fiscal conditions are just as weak as many of the euro-zone members and total debt of the nation has been on the rise and has not met the deficit target set by the European Commission.

German Chancellor Angela Merkel while addressing the Bundestag on Friday said that the European nations are working toward setting up a “fiscal union” with rigorous budgetary oversight to resolve the euro-zone''s debt crisis.

The German leader stressed the ""need to change the treaties or create new treaties,"" bringing in budget discipline and effective crisis management mechanism.

The new fiscal union that Merkel proposed envisages strict rules, including intervention in the national budget of at least the euro-zone member-states.

She told lawmakers that she rejected the idea of the European Central Bank issuing Eurobonds, and that the discussion about it ""does not contribute to the resolution of the crisis.""

Separately, French President Nicolas Sarkozy is to meet German Chancellor Angela Merkel next Monday in Paris and meet UK''s Prime Minister David Cameron today.

European leaders meet in Brussels on December 9 for possible changes to the EU treaties.

The French economy is estimated to grow 1% in the year, although the growth in the first-half of 2012 will be ""complicated"", Finance Minister Francois Baroin said in a radio interview on Friday.

In Paris trading, the CAC-40 Index gained 59.19 or 1.9% to 3,189.14 and in Frankfurt the DAX Index edged higher 100.81 or 1.7% to 6,139.57.

For the week, the CAC-40 Index surged 11.7% and the DAX Index soared 11.8%.

The 10-year Italian yield fell 21 basis points to 6.44%, the rate on Spanish bonds of similar maturity dropped 24 basis points to 5.5% and the yield on French bond rose 9 basis points to 3.2%.

Spain Jobless Rate Rises

The number of unemployed in Spain continued to rise in November according to data released by the Labor Ministry showed today.

Data from the public unemployment offices showed that unemployed rose 59,536 in November compared to a rise of 134,182 in October.

RBS Sells Pub Portfolio to Heineken

Royal Bank of Scotland Group PLC, the lender said it sold its tenanted pub business to Scottish & Newcastle Pub Co. (Management) Limited, a subsidiary of Dutch brewer Heineken N.V. for £422 million. The business comprises 918 pubs across the UK.

Gainers & Losers

AkzoNobel rose 1% to €36.25 after the manufacturer of paints, coatings and specialty chemicals completed the acquisition of coatings business of Korea based SSCP, a supplier of coatings to wider consumer electronics industry.

Deutsche Telekom AG fell 0.9% to €9.47 after the company’s U.S. subsidiary T Mobile may not be able to merge with AT&T Inc. The German government owns a 32% stake in Deutsche Telekom.

Rio Tinto Plc climbed 2.4% to 3,383 pence after the miner approved an additional $2.7 billion capital investment to modernize its Kitimat aluminum smelter in British Columbia in order to complete the $3.3 billion project in 2014.

ThyssenKrupp AG dropped 2.1% to €18.60 after the diversified industrial group stated fiscal year 2011 revenues went up 15% to €49.09 billion from last year''s €42.62 billion.

Net loss for the period was €1.78 billion compared to the prior-year profit of €927 million. The recent year''s results included €2.9 billion in impairment charges incurred at the company''s Steel Americas and now-discontinued Stainless Global, or Inoxum, segments.