Italy Auctions

Arthi Gupta
29 Dec, 2011
New York City

European markets climbed after Italy sold

[R]1:30 PM Frankfurt – European markets climbed after Italy sold €7 billion of long term debt at an auction today at lower borrowing costs. Euro area money supply growth eased and Spanish retail sales declined in November and Hungarian current account surplus fell in the third quarter.[/R]

The European indexes edged higher after Italy sold €7.02 billion of long term debt at an auction today, less than its maximum target of €9 billion in the final sale for this year.

However the stress in the bond market was evident as the yield declined from the peak of 7.56% in the last auction in November. The long term outlook for Italy is still uncertain and political parties are still struggling to develop economic plans that will accommodate the higher yield and stimulate long term growth.

The Treasury in Rome sold €2.5 billion of 10-year bonds at an average yield of 6.98%, down from 7.56% in the previous auction on November 29. The bid-to-cover ratio was 1.34 compared with the bid-to-cover ratio of 1.36 last month.

The agency sold €2.5 billion in 3-year bonds at an interest rate of 5.62% compared to 7.89% at the previous sale on November 29. The country also sold €2 billion in bonds due for repayment in 2021 and a floating-rate security due 2018.

Italian 10-year yield climbed 12 basis points to 7.12% after the auction and Italy plans to raise at least €450 billion in debt in 2012.

Euro-zone M3 Growth Eases

Euro-zone money supply growth slowed more than estimated in November, the European Central Bank said today.

The broad measure of money supply, M3 rose 2% in November, slower than the 2.6% increase in October.

In Paris trading, the CAC-40 Index gained 6.61 or 0.2% to 3,077.70 and in Frankfurt the DAX Index edged higher 15.10 or 0.3% to 5,786.43.

Spain Retail Sales Fall

Spain''s retail sales declined for the seventeenth consecutive month in November, data released by statistics office INE showed.

Retail sales, at constant prices, declined 7.2% annually in November, following a 7.1% drop in October. Retail trade, excluding sales at service stations, decreased 7.1% annually in November after falling 6.9% percent in October.

Italian Sentiment Drops

Italian manufacturing confidence index fell to 92.5 in December from 94 in November, data from the statistics office Istat showed.

Confidence in the construction sector fell to 80.1 in December from 87.2 in November.

Greek Producer Price Inflation Rises

Greece''s producer price index increased 7.4% on an annual basis in November versus the 8.1% decrease in October, data released by the Hellenic Statistics Authority showed.

On a monthly basis, output prices edged up 0.7% in November, after remaining flat in October.

Hungary Current Account Surplus Declines

Hungary''s current account surplus dropped to €381 million in the third quarter from €530 million in the second quarter, revised down from €738 million, data released by the central bank showed Thursday.

The surplus in the current transfers account rose to €152 million in the third quarter from €45 million in the second quarter.

Gainers & Losers

ACE Limited fell 0.9% to $69.97 after the provider of insurance products said it acquired Rio Guayas Compania de Seguros y Reaseguros, a general insurance company in Ecuador that is owned by Banco de Guayaquil, for about $55 million in cash.

Continental AG dipped 0.2% to €47.47 after the German automotive supplier reportedly estimates fourth quarter revenue to be slightly higher than the third quarter.

Deutsche Boerse AG gained 0.6% to €11.72 after the German exchange operator and NYSE Euronext extended the deadline for completion of their planned merger until March 31, 2012.

RWE AG rose 0.3% to €26.58 after the utility sold a 20-megawatt wind power project to Renerco Renewable Energy Concepts.