European Inflation at 2.7% and Record Unemployment

Arthi Gupta
01 Mar, 2012
New York City

European indexes rose after Spain raised

[R]4:00 PM Frankfurt – European indexes rose after Spain raised €4.5 billion in a bond auction as borrowing costs fell. The euro area inflation rose and jobless rate soared to a record high of 10.1%. The UK home prices increased in February. Vivendi plunged 8% on a quarterly loss.[/R]

European markets gained after the Spanish Treasury sold €4.5 billion bonds at lower yields and inflation rose at the faster pace in the region and unemployment surged to the record high since the creation of the euro.

The Greek parliament approved pension and health reforms aimed at cutting costs by €3.2 billion with 213 votes in favour and 58 against and public workers struck today in Athens opposing measures.

Euro area finance ministers are set to meet later today in Brussels to discuss Greece’s second bailout package.

In Paris trading, the CAC-40 Index gained 37.13 or 1.1% to 3,489.46 and in Frankfurt the DAX Index edged higher 65.58 or 1.0% to 6,921.06.

Italian 10-year yields fell 20 basis points at 4.98%. Spanish 10-year yields dropped 8 basis points to be at 4.88%.

Spanish Bond Auction

The Spanish Treasury sold €4.5 billion bonds in one, three and four year bonds matching the upper end of its €3.5 billion to €4.5 billion target range.

The country sold €1.9 billion 4 percent July 2015 bonds at an average yield of 2.617%, down from 3.332% paid in the previous sale on February 16. Demand was 2.37 times the offer, better than 2.19 previously.

The Treasury sold €1.06 billion 3.40 percent April 2014 debt at yield 2.06% and the bid-to-cover ratio was 2.8.

The agency also sold €1.53 billion of bonds maturing October 31, 2016 and carrying a coupon rate of 4.25 percent at yield 3.376%, down from 3.455% in the previous auction on February 2. Investors bid 2.6 times the offer, less than 3.57 in the previous sale.

Euro-zone Inflation, Unemployment Up

Euro-zone inflation rose to 2.7% in February from 2.6% in January, flash estimate from Eurostat showed.

The statistics office is slated to publish final February figures on March 14.

The euro-zone unemployment rate rose to a seasonally adjusted 10.7% in January from 10.6% in December, Eurostat said today.

Compared with December, the number of persons unemployed in the euro area increased by 185,000. From the same period of last year, unemployment rose 1.221 million to 16.925 million.

In the EU27, the jobless rate was 10.1% in January compared with 10% in December.

Also, the Italian jobless rate climbed to 9.2% in January from 8.9% in December, the highest since the statistics office started monthly data series in January 2004.

UK Home Prices Rise

The UK home prices increased 0.6% on a monthly basis in February compared to a 0.3% fall in January, the Nationwide Building Society said. The price of a typical home is now £162,712.

Home prices in the UK saw its biggest gain since April 2010.

Gainers & Losers

Adecco SA surged 8.5% to Sfr49.21 after the Swiss human resources firm reported fourth quarter group revenues gained 4% to €5.19 billion. Net income attributable to shareholders declined 6% to €133 million from €141 million reported last year. Basic earnings per share fell to 71 cents from 73 cents per share in the prior-year quarter.

Continental AG rose 2.3% to €69.90 after the German automotive supplier reported fiscal year 2011 sales grew 17.1% to €30.5 billion from €26.05 billion last year. Net income for the period climbed 115% to €1.24 billion or €6.21 per share compared to €576.0 million or €2.88 per share a year ago.

For fiscal 2012, the company estimates sales to rise by more than 5% to more than €32 billion.

Koninklijke Ahold N.V. fell 1.1% to €10.27 after the Netherlands-based retail group reported fourth quarter net sales increased 4.5% to €7.29 billion from €6.98 billion in the comparable period last year. Net income attributable to common shareholders surged 75.3% to €270 million or 24 cents per share from €154 million or 13 cents per share last year.

Man Group plc surged 7.9% to 141.20 pence after the hedge fund manager said its assets under management for the first two months in 2012 increased to $59.5 billion from $58.4 billion recorded at the end of last year.

Vivendi SA plunged 7.9% to €14.84 after the French media and telecom group reported fourth quarter revenues declined 2.8% to €7.78 billion from €8.01 billion in the comparable period.

Loss for the quarter was €118 million or 9 cents per share as against a profit of €559 million or 45 cents per share in the prior-year quarter.

Total revenue for 2011 was flat at €28.81 billion and net profit rose 22% to €2.68 billion.

WPP Plc increased 3.9% to 834.50 pence after the advertising firm reported fiscal year 2011 annual revenues climbed 7.4% to £10.02 billion compared to £9.33 billion in 2010. On a like-for-like basis, which excludes the impact of currency and acquisitions, revenues were up 5.3%.

Profits attributable to share owners surged 43.4% to £840 million from £586 million.