G20 Demands Larger Rescue Fund; European Indexes Fall 1.1%

Arthi Gupta
27 Feb, 2012
New York City

The G20 nations demanded Europe to increase the size of its bailout fund. Italy raised

[R]1:30 PM Frankfurt – The G20 nations demanded Europe to increase the size of its bailout fund. Italy raised €12.25 billion and Germany raised €2.545 billion in a bond auction today. Ahold agreed to buy bol.com for €350 million. SCA offered to acquire Taiwan-based Everbeauty for $290 million.[/R]

European markets edged lower as investors focused on the statement from G20 finance ministers that rebuffed the calls for more lending to the euro zone nations.

Ministers from largest 20 economies called on European leaders to increase the size of financial rescue fund before seeking help from the International Monetary Fund. However, Germany has resisted the calls to increase the fund size before countries begin to implement tougher austerity measures and lower government deficits.

Leaders at the G20 stressed for the combination of the European Financial Stability Fund and the European Monetary Mechanism to create a €750 billion or $ 1 trillion fund.

In addition, German lawmakers are expected to approve today the second Greek bailout package.

In Paris trading, the CAC-40 Index declined 39.53 or 1.1% to 3,428.34 and in Frankfurt the DAX Index edged lower 76.01 or 1.1% to 6,789.27.

German Bond Auction

Germany raised €2.545 billion through the issue of 12-month treasury bills, or bubills at an average yield of 0.077% compared to 0.07% in the prior auction conducted on January 23, the Bundesbank said today.

Italian Bond Auction

The Italian Treasury raised €12.25 billion or $16.43 billion in a bond auction today as borrowing costs fell.

Italy sold €8.75 billion 6-month treasury bills at an average yield of 1.202% compared to 1.969% at a previous auction on January 27. Demand was 1.36 times the offer, broadly unchanged from the previous sale that saw a bid-to-cover ratio of 1.35.

Italy also sold €3.5 billion in bonds maturing in December 2012 at an average yield of 1.29% and investors bid 2.19 times the amount offered.

Ahold Buys Bol.com

Koninklijke Ahold NV, the Dutch retailer said that it is acquiring retail website bol.com from Cyrte Investments and NPM Capital for €350 million in cash.

Bol.com is the most visited retail website in the Netherlands and served 3.4 million active customers offering a broad range of products in non-food categories.

SCA Offers to acquire Everbeauty

Svenska Cellulosa Aktiebolaget said it has made a binding offer to acquire the Taiwan-based hygiene products firm Everbeauty for about SEK 1.9 billion or $290 million on a debt-free basis.

Gainers & Losers

Arcadis N.V. fell 2.3% to €13.90 after the infrastructure and engineering firm said fourth quarter net revenues rose 15% to €402 million from €350 million in the previous year, mainly as a result of the EC Harris merger. Net income in the quarter fell 9% to €20.6 million or 30 cents per share compared with €22.6 million or 34 cents per share in the quarter a year ago.

Gerry Weber International AG declined 1% to €27.72 after the German company active in the fashion and lifestyle sector reported fiscal 2011 sales revenues rose 13% to €702.7 million from €621.9 million a year earlier. Net income gained 24% to €67.0 million or €1.48 a share compared to €54.0 million or €1.29 per share a year ago.

Lufthansa AG slumped 3.5% to €10.06 after the aviation company canceled 140 of today''s flights as Frankfurt Airport''s ground controllers are scheduled to resuming a new three-day strike over a pay dispute.

Nokia Oyj soared 4.7% to $5.80 after the Finland based mobile handset maker released a new range of products and services at the Mobile World Congress in Barcelona, Spain in partnership with Microsoft that will target entry price customers with cheaper smartphones.

Transocean Ltd. rose 2.3% to Sfr46.95 after the provider of offshore contract drilling services for oil and gas wells reported fourth quarter operating revenues improved 14% to $2.42 billion from $2.13 billion revenues reported a year earlier.

Net loss in the quarter widened to $6.119 billion or $18.62 per diluted share compared to a net loss of $799 million or $2.51 per diluted share in 2010.

The latest loss included $ 6.176 billion of certain net unfavorable items including an estimated goodwill impairment of $5.2 billion and an estimated loss contingency of $1 billion associated with the Macondo Well incident in the Gulf of Mexico.