European Indexes Lower, Salzgitter Plunges 7%

Arthi Gupta
05 Mar, 2012
New York City

European indexes fell as uncertainty reigned on the Greek debt swap deal and the credit default swap trigger. China lowered economic growth target in the current year. The euro area private sector contracted and German private sector growth eased in February. Salzgitter plunged 7%.

[R]12:30 PM Frankfurt – European indexes fell as uncertainty reigned on the Greek debt swap deal and the credit default swap trigger. China lowered economic growth target in the current year. The euro area private sector contracted and German private sector growth eased in February. Salzgitter plunged 7%.[/R]

European indexes traded lower after China cut its economic growth target to an eight-year low for 2012 and traders await the outcome of the decision of private investors in the debt swap deal in Greece.

China lowered its GDP growth target to 7.5% in 2012, the lowest since 2004 from the previous target of 8% growth, according to Premier Wen Jiabao''s address at the annual meeting of the National People''s Congress in Beijing.

The inflation target is set at 4% for this year, unchanged from last year.

Investors are awaiting the outcome of Greek private investors’ willingness to participate in the bond swap deal. It is not clear how the credit default swaps will be treated by the industry association because under the Greek laws any acceptance rate below 66% will trigger the collective action clause and under the UK law the trigger is set below 75% acceptance rate.

Investors have March 8 deadline to accept or reject the debt swap.

In Paris trading, the CAC-40 Index declined 28.96 or 0.8% to 3,472.21 and in Frankfurt the DAX Index edged lower 75.67 or 1.1% to 6,846.35.

Italian 10-year yields climbed three basis points to 4.94%. Spanish 10-year yields rose five basis points to 4.95%.

Euro-zone Private Sector Shrinks, Retail Sales Rise

The euro-zone private sector contracted in February, survey results from Markit Economics showed.

The final Composite Output Index fell to 49.3 in February, below the earlier flash estimate of 49.7 from 50.4 in January.

Separately, the euro-zone retail sales grew 0.3% from a month ago in January, following a 0.5% fall in December, data from Eurostat showed today.

German Private Sector Growth Eases

German private sector growth eased in February, a final report from Markit Economics showed.

The final composite output index, that measures the performance of both manufacturing and service sectors, fell to 53.2 in February from 53.9 in January.

Gainers & Losers

Commerzbank AG fell 3.2% to €1.90 after the German bank decided to strengthen its core tier-1 capital by €776 million in the first-half of 2012.

Credit Suisse Group AG dropped 1.4% to Sfr24.57 after the financial services company announced a tender offer to repurchase certain outstanding tier-1 and tier-2 securities up to an aggregate amount in cash equivalent to Sfr4 billion.

Elekta AB soared 4.4% to SEK 319.70 after the human care company reported third quarter net sales climbed 41% to SEK 2.57 billion from SEK 1.82 billion in the same quarter a year earlier. Net income in the quarter rose 101% to SEK 392 million or SEK 4.15 per share from SEK 195 million or SEK 2.06 per share a year ago.

Kuehne & Nagel International Ltd. declined 1.3% to Sfr117.30 after the transportation and logistics operator reported fiscal 2011 revenue fell 3.3% to Sfr19.59 billion from Sfr20.26 billion in 2010. Earnings were flat at Sfr601 million. On a per share basis, earnings slipped to Sfr5.03 from Sfr5.05.

The company also hiked its dividend 40% to Sfr3.85 per share from Sfr2.75 per share last year.

Salzgitter AG plunged 6.7% to €42.28 after the Germany-based steel producer reported fiscal 2011 external sales grew 19% to €9.84 billion from €8.3 billion in the prior year. Net profit surged 687% to €236 million compared to €30 million a year ago. Basic earnings per share rose to €4.31 from 55 cents per share in the previous year.