Italy Raises

Arthi Gupta
26 Jan, 2012
New York City

European markets rallied after Italy raised

[R]4:00 PM Frankfurt – European markets rallied after Italy raised €5 billion from an auction of short-term debt as borrowing costs fell. European leaders struggle to decide the size of the rescue fund. Nokia swung to loss on lower revenues.[/R]

European markets traded higher more than 1.5% after Italy raised the maximum amount it targeted at a bond auction.

The IMF urged Europe for a successful resolution of the sovereign debt crisis. The consumer confidence index for France rose in January. Germany resisted the IMF’s calls for the European Central Bank to take losses in its Greek bond holdings.

The International Monetary Fund said in a note prepared for the January 19-20, 2012 meeting of the Group of Twenty Deputies in Mexico City that the European Central Bank must enhance crisis management by providing sufficient funding through expanded use of the ECB''s balance sheet.

The lender urged for deeper fiscal and financial integration across Europe to underpin the sustainability of the common currency.

The impasse between Greece and its private lenders continues with no solution so far regarding the debt swap ratio. Talks resume today to resolve the deadlock.

Finance ministers in the euro zone agreed to set up a permanent rescue fund as early June after a 2-day meeting this week but remain far apart with the size of the fund. The leaders hope to set up a fund with as much as €700 billion to €1 trillion but Germany resisted the calls to increase the size above €500 billion.

In Paris trading, the CAC-40 Index gained 51.48 or 1.6% to 3,363.96 and in Frankfurt the DAX Index edged higher 120.21 or 1.9% to 6,542.04.

Italian Bond Auction

The Italian Treasury raised €5 billion from the combined sale of zero coupon bond and inflation linked treasury bonds.

Italy sold €4.5 billion of the new 24-month CTZ maturing in January 2014 at a yield of 3.763%, down from 4.853% for similar maturity notes sold on December 28.

The Treasury also sold €500 million of inflation-linked bonds due 2014 at a yield of 3.2% and the bid-to-cover ratio was 2.79.

Italy’s 10-year yields fell 13 basis points to 6.10% and Spanish 10-year yields fell 16 basis points to 5.24%.

German Sentiment to Improve

Confidence among German consumers is set to increase in February, survey results from market research group GfK showed today.

The forward-looking consumer confidence index is seen at 5.9 in February, higher than the revised 5.7 in January.

French Confidence Climbs

The consumer confidence index for France rose to 81 in January from 80 in December, data released by statistics office Insee showed today.

Separately, French industrial demand outlook for the first quarter of 2012 has weakened slightly, according to a quarterly business survey published by Insee on Thursday.

The survey balance for the expected change in demand fell to -8 in January 2012 from -6 in October 2011.

Gainers & Losers

Deutsche Telekom AG rose 0.6% to €8.74 after the German telecom company announced that its South African T-Systems unit and Anglo-South African insurer Old Mutual Plc have agreed for an IT infrastructure management deal valued at about SAR 2.58 billion or about €250 million.

Hennes & Mauritz AB climbed 2% to SEK 228.60 after the Swedish apparel retailer reported fourth quarter sales excluding sales tax rose 4.2% to 30.952 billion kronor from 29.711 billion kronor. Profit after tax fell 2.4% to 5.357 billion kronor or 3.24 kronor a share compared to 5.487 billion kronor or 3.32 kronor a share.

For the full year, excluding VAT sales rose to 110 billion kronor from 108.483 billion kronor. Profit after tax for the period declined to 15.821 billion kronor or 9.56 kronor a share from 18.681 billion kronor or 11.29 kronor a share in the prior year.

Logitech International S.A. plunged 12.6% to Sfr6.51 after the computer interface devices manufacturer reported third quarter net sales decreased 5% to $714.60 million from $754.05 million in the same quarter last year. Net income in the quarter fell 15% to $55.33 million or 32 cents per share compared to net income of $65.0 million or 36 cents per share in the prior-year quarter.

Nokia Corp. gained 1.2% to €4.108 after the mobile phone maker reported fourth quarter net sales decreased 21% to €10 billion from €12.65 billion in the same quarter last year. Loss in the quarter was €1.07 billion or 29 cents per share compared to a profit of €745 million or 20 cents per share in the previous year.