European Markets Advance 1%; Aegon, Fraport, Lafarge in Focus

Devan Biswas
17 Feb, 2012
New York City

European markets gained on the optimism that ministers will approve the entire bailout at the next meeting. Indexes in Germany, France and Italy led the region and gained for the third week in a row. Aegon earnings plunged on restructuring charges. Frankfurt airport strike disrupts regional traffic.

[R]6:55 PM Frankfurt – European markets advanced on the optimism that finance ministers will approve the entire bailout at the next meeting. Indexes in Germany, France and Italy led the region and gained for the third week in a row. Aegon earnings plunged on restructuring charges. Frankfurt airport strike disrupts flights across the region.[/R]

Stocks across Europe gained and market indexes advanced more than 1% in Germany, France, Spain and Italy.

Several indexes closed at a 6-month high and the German benchmark index soared to 16% in the year so far leading the region.

Market spirit were lifted in the early trading after European Central Bank officials suggested that the bank is preparing a plan to participate in the Greek debt swap plan as long as it is not part of the Collective Action Clause.

Greek lawmakers are expected to vote on the exception that will exclude the central bank in case not enough private sector borrowers participate in the swap.

Greece is scheduled to vote on private sector debt swap on February 21, a day after the meeting of the euro zone ministers, and will kick in the debt swap period that will end on March 9, according to local media reports.

In London, FTSE 100 index rose 29.60 or 0.5% to 5,912, in Frankfurt DAX 30 index increased 95.2 or 1.4% to 6,847 and in Paris CAC 40 index added 45.7 to 3,439.

The benchmark index in Spain increased 1.2%, in Greece closed up 0.9% after rising as much as 2.3% and in Milan gained 1.1%.

Yields in bond markets were on the slide on the hopes that finance ministers will approve the Greek debt in entirety.

German 10-year bund declined to 1.387% and yield on similar bond for Spain declined 9 basis points to 5.24% and for Italy dropped 8 basis points to 5.57%.

Stock Movers

Aegon NV, the Dutch insurer rose 7% after it reported 75% fall in earnings in fourth quarter on one-time reorganization costs and lower returns of investments and the fall in interest rates.

The insurance company reiterated its plan to increase core earnings between 7% and 10% a year until 2015 and generate return on equity between 10% and 12%.

Fraport AG increased €1.01 to €45.69 and the workers at the Frankfurt airport guiding airplanes to the parking slots struck and disrupted operations. At least 290 of the daily 1,300 flights are canceled today and Lufthansa was forced to cancel more than 50% of its regional flights today.

Banks traded sharply higher on the optimism that the Greek negotiations are likely to conclude as early as February 20.

Deutsche Bank increased 30 cents to €33.75, Societe Generale SA added 1.34 to €23.90 and UniCredit SpA gained 1.5% to €4.22. Barclays added 1.5% to 248.35 pence and Banco Santander SA added 0.6%.

Earnings Review

Air Liquide SA, the industrial gas supplier reported revenue growth for the year increased 7.2% to €14.46 billion from €13.49 billion in last year. Net profit for the year grew 9.4% to €1.54 billion or €5.43 earnings per share compared to €1.40 billion or €4.99 per share in the prior year.

Aegon N.V., the insurance company reported fourth quarter sales fell 6% to €1.41 billion from €1.51 billion in the same quarter last year. Net income in the quarter declined 75% to €81 million compared to €318 million a year ago earlier.

The decline was mainly due to higher exceptional charges and expenses in the UK and lower equity markets and interest rates.

For 2011 sales decreased 5% to €5.70 billion from €6.02 billion in last year. Net income for the year slumped 50% to €3.67 billion compared to €3.19 billion in the prior year.

Lafarge SA, the building material maker reported fourth quarter sales rose 5% to €3.81 billion from €3.63 billion in the same quarter last year. Net loss in the quarter swung to €3 million or 1 cent per share compared to net income of €62 million or 22 cents per share a year ago.

For 2011 sales grew 3% to €15.28 billion from €14.83 billion in last year. Net income for the year dropped 28% to €583 million or €2.07 earnings per share compared to €827 million or €2.89 per share in the prior year.