ECB Holds Rate; EADS Net Soars, Carrefour Struggles

Arthi Gupta
08 Mar, 2012
New York City

European indexes soared on optimism of a successful Greek debt swap deal ahead of the deadline this evening. Greek jobless rate rose to a record 21% in December and German output rebounded in January. Simon Property Group agreed to acquire stake in Kl

[R]1:30 PM Frankfurt – European indexes soared on optimism of a successful Greek debt swap deal ahead of the deadline this evening. Greek jobless rate rose to a record 21% in December and German output rebounded in January. Simon Property Group agreed to acquire stake in Klépierre from BNP Paribas for €1.5 billion.[/R]

European indexes edged higher on optimism ahead of the Greek debt swap deal with a deadline this evening. However, it is far from clear if Greece will be able to avoid a default.

Private investors in Greece will have to decide by 8 p.m. local time whether to take a 53.5% haircut of their existing Greek holdings in exchange for new bonds that pay lower interest rate.

At least 61% of private holders of Greek debt have agreed to the swap but uncertainty reigns if hedge funds will participate in the swap or challenge the offer in courts that may drag for more than a decade.

Adding to woes Greece’s jobless rate reached to a record high of 21% in December, according to latest reports.

Investors focused on mixed corporate earnings. Air France-KLM scrapped its dividend, Deutsche Post and EADS hiked their dividend and Carrefour more than halved its annual dividend for fiscal 2011.

In Paris trading, the CAC-40 Index soared 69.69 or 2.1% to 3,461.37 and in Frankfurt the DAX Index edged higher 139.52 or 2.1% to 6,810.61.

The yield on Italy’s 10-year note dropped 14 basis points to 4.80%. The Spanish 10-year yield declined five basis points to 5.04%.

ECB Holds Rates

The European Central Bank left its key interest rate unchanged at a record low 1% for the third month in a row.

The rate on the marginal lending facility was held at 1.75%, while the deposit facility rate was kept at 0.25%.

German Output Rebounds

German industrial production climbed 1.6% from a month ago in January, following a 2.6% fall in December, according to the Federal Ministry of Economy and Technology.

Greek Jobless Rate Climbs

Greek jobless rate rose to 21% in December from 20.9% in November, data from the Hellenic Statistics Authority showed today.

The number of unemployed in Greece surged 40.9% to 1.03 million in December from a year earlier. Compared with November, the number of unemployed rose 0.38%.

Simon Group Acquires Stake in Klépierre

Simon Property Group, Inc. said it is acquiring a 28.7% equity stake in Klépierre from BNP Paribas for €28 per share or a total transaction value of approximately $2 billion or €1.5 billion.

Gainers & Losers

Anheuser-Busch InBev NV soared 3% to €52.44 after the brewer reported fourth quarter revenues grew 5.7% to $9.87 billion from $9.47 billion in the same quarter last year. Profit attributable to equity holders surged 91% to $1.85 billion from $968 million reported last year.

Air France-KLM rose 1.3% to €4.24 after the Franco-Dutch airline reported fourth quarter revenues grew 1.8% to €6.03 billion from €5.92 billion in the prior year with 3.2% increase in passenger revenues. Net loss in the quarter widened more than four-fold to €259 million or 88 cents per share compared to €46 million or 16 cents per share in the same quarter last year.

Total revenues for fiscal 2011 rose 4.5% to €24.36 billion from €23.31 in 2010. Net loss for the year was €809 million or €2.73 per share compared to net income of €289 million or 89 cents per share in the prior year.

Carrefour SA fell 1.5% to €17.35 after the hypermarket chain reported fiscal year sales rose 0.9% to €81.27 billion from €80.51 billion in the prior year. Annual net profit fell 14.3% to €371 million from €433 million in 2010.

Deutsche Post AG surged 5.7% to €13.65 after the German postal and logistics firm said fourth-quarter revenue increased 2.1% to €14.13 billion from €13.83 billion in the previous year. Consolidated net profit slumped 64% to €175 million from €487 million a year ago, with basic earnings per share plunging to 14 cents from 40 cents in the 2010 period.

In 2011, revenues rose 2.8% to €52.8 billion from €51.4 billion in 2010. Net profit for the year fell 52% to €1.2 billion in 2011 or 96 cents per share from €2.5 billion or €2.10in the previous year.

European Aeronautic Defence and Space Co. or EADS NV soared 9.1% to €29.29 after the pan-European aerospace and defense corporation said fourth quarter revenues advanced 16% to €16.44 billion from €14.2 billion last year. Net income in the quarter surged 72% to €612 million or 75 cents per share from €355 million or 44 cents per share in the prior year.

For fiscal year 2011, revenues increased 7% to €49.1 billion from €45.8 billion in 2010. Net Income increased 87% to €1,033 million or earnings per share of €1.27 compared to net income of €553 million or €0.68 in 2010.

Infineon Technologies AG climbed 3.1% to €7.50 after the German semiconductor maker estimated a decline in fiscal 2012 revenue in the mid single-digit percentage range.