Euro Area Inflation Eases to 2.8%; Vestas Slumps 15%

Arthi Gupta
04 Jan, 2012
New York City

European markets declined after UniCredit proposed an offering to raise

[R]1:45 PM Frankfurt – European markets declined after UniCredit proposed an offering to raise €7.5 billion. Germany raised €4 billion in 10-year bond auction at 1.93% yield. Euro area inflation eased to 2.8% and private sector activity improved in December.[/R]

European indexes edged lower on the ongoing debt crisis.

Germany successfully auctioned €4.06 billion in 10-year bonds at an average yield of 1.93%, down from 1.98% in November after getting bids for €5.14 billion of the debt securities.

The yield on Germany’s 10-year debt rose three basis points to 1.93%.

Greece may be forced out of euro if leaders failed to agree on the second bailout package in three months, reports said. ""The second bailout agreement must be signed otherwise we are out of the markets, out of the euro,"" reports quoted Greek government spokesman Pantelis Kapsis as saying in an interview to television channel Skai.

European leaders have proposed a second loan package worth €130 billion to Greece as the first €110 billion bailout proved insufficient to stabilize its public finances.

French President Nicolas Sarkozy and German Chancellor Angela Merkel are to meet on January 9 in Berlin to prepare for an EU summit at the end of the month.

Italian Prime Minister Mario Monti will also hold talks on the euro area debt crisis with German Chancellor Angela Merkel next Wednesday in Berlin, the German government announced.

In Paris trading, the CAC-40 Index declined 29.37 or 0.9% to 3,216.03 and in Frankfurt the DAX Index edged lower 42.91 or 0.7% to 6.123.66.

The Italian 10-year bond yield was little changed at 6.92% and the yield on Spain’s 10-year bonds rose 11 basis points.

Euro-zone Inflation Eases

Euro-zone consumer price inflation eased to 2.8% in December, from 3% in November, flash estimate from Eurostat showed on Wednesday. But inflation continues to stay above the central bank''s target of ''below, but close to 2%''.

The statistics office is slated to publish the final report on January 17.

Italian Inflation Stable

Italy''s harmonized index of consumer prices increased 3.7% on an annual basis in December, unchanged from November, according to preliminary data released by statistics office Istat today.

Euro-zone Private Sector Activity Rises

Euro-zone''s composite output index, that measures activity in both manufacturing and services, rose to a 3-month high of 48.3 in December from 47 in November, the latest survey data released by Markit Economics showed. The latest reading was above the flash estimate of 47.9.

German Private Sector Up

German private sector expanded in December as previously estimated, final survey data from Markit Economics showed.

The final composite output index, that measures activity in both manufacturing and services, rose to 51.3 in December from 49.4 in November. This matched the flash estimate.

French Services PMI Soars

French final services Purchasing Managers'' Index rose to 50.3 in December from 49.6 in November, final data from Markit Economics showed Wednesday. The reading was slightly above the 50.2 flash estimate.

Spanish Export Price Inflation Slows In November

Spain''s export price index increased 4.4% on an annual basis in November, slower than the 5.3% growth in October, data released by statistics office Ine showed on Wednesday.

On a monthly basis, export prices decreased 0.3% in November, reversing the 0.1% increase in October.

French Consumer Spending Drops

French consumer spending decreased 0.1% on a monthly basis in November, after increasing a revised 0.1% in October the statistics office Insee said today.

Gainers & Losers

CRH Plc fell 1.1% to €15.48 after the building materials supplier said it has spent €0.4 billion for acquisitions and investment activities during the second-half of 2011.

EDF SA plunged 4% to €18.45 after the utility could be forced to spend around €10 billion to meet new safety requirements.

The French nuclear-safety authority (ASN) on Tuesday urged all of the country''s 58 nuclear reactors to improve their safety systems as ""soon as possible"" to guard against natural disasters like earthquakes and floods.

UniCredit S.p.A. plummeted 8.5% to €5.75 after the Italian bank said its board approved the pre-emptive offer to issue a maximum of 3.86 billion new ordinary shares at the price of €1.943 per share, aiming to raise share capital by €7.5 billion.

Vestas Wind Systems A/S slumped 15.3% to DKK58.95 after the Danish wind turbine maker cut its 2011 sales outlook to €6 billion, from the previous estimate of €6.4 billion.