Banks Lead European Indexes Lower; ABB Falls on Earnings

Devan Biswas
16 Feb, 2012
New York City

European markets eased on the renewed worries linked to Greek bailout and fresh downward view on European banks from a credit opinion firm. Fraport AG, the operator of Frankfurt airport faces a union strike that may cancel 10% of flights as early as today.

[R]5:30 PM Frankfurt – European markets eased on the renewed worries linked to Greek bailout and fresh downward view on European banks from a credit opinion firm. Fraport AG, the operator of Frankfurt airport faces a union strike that may cancel 10% of flights as early as today.[/R]

European markets were on the defensive one more time as Greek bailout decision was delayed and investors digested the weakness in the economy in the fourth quarter.

The market sentiment was on the decline on the worries that Greek bailout amount will be curtailed and most of the amount may not be released after the election.

In London, FTSE 100 index fell 30.70 or 0.5% to 5,861, in Frankfurt DAX 30 index decreased 54.2 or 0.8% to 6,704 and in Paris CAC 40 index fell 17.3 to 3,373.

Banks were on the decline in France and Spain after regulators removed the restriction on short sale. Spain removed the ban today and France lifted its ban two days ago.

Moody’s, credit opinion firm said it may lower its views on 114 European financial institutions and 17 global banks and other lending companies. The credit firm cited weakening global economic conditions and increased regulatory burdens among other reasons to change its opinions.

Stock Movers

ABB Ltd. ((ABB)) dropped 4.8% in Zurich trading after the Switzerland based power and automation company reported fourth quarter net sales increased 15% to $10.6 billion from $9.2 billion in the same quarter last year. Net income in the quarter increased 19% to $830 million or 36 cents per diluted share compared to $700 million or 31 cents per diluted share in the year ago.

The stock declined after it offered a cautious outlook and hoped that more orders in China and North America will lift orders.

For 2011 total revenue increased 20% to $38.0 billion from $31.6 billion in last year. Net income for the year soared 24% to $3.17 billion or $1.38 per diluted share compared to $2.56 billion or $1.12 per share in the prior year.

Fraport AG declined 18 cents to €44.68 and the workers at the Frankfurt airport guiding airplanes to the parking slots plan to expand strike for additional 14-hour walkout on Friday.

Spanish banks fell in volatile trading. Banco Santander dropped 3%, Banco Bilbao Vizcaya Argentaria SA fell 3% and Bankia SA plunged more than 7%.

After the comments from Moody’s, banks in Germany, France and UK declined.

HSBC plc declined 0.5%, Barclays Plc eased 0.3% and Deutsche Bank AG dropped more than 1%.

Societe Generale SA increased 1% to 22.60 and BNP Paribas SA added 3% after reversing earlier losses. UniCredit SpA eased a fraction in Milan trading after rebounding from the earlier loss of 5%.