Europe Faces Recession; UK Mortgage Approvals Fall

Arthi Gupta
23 Mar, 2012
New York City

European indexes fell as the euro zone teeters on a recession but France lifted its economic growth outlook for the current year and business confidence improved in March. The UK confidence and mortgage approvals fell in February. Accenture quarterly profit rose 28%.

[R]1:00 PM Frankfurt – European indexes fell as the euro zone teeters on a recession but France lifted its economic growth outlook for the current year and business confidence improved in March. The UK confidence and mortgage approvals fell in February. Accenture quarterly profit rose 28%.[/R]

European indexes traded lower on the renewed worries of a global economic slowdown. Investors were jittery as the euro area borders on a recession and China engineers a soft landing. In addition, bond yields in Spain and Italy were on the rise.

In Paris trading, the CAC-40 Index fell 20.81 or 0.6% to 3,451.81 and in Frankfurt the DAX Index edged lower 26.31 or 0.4% to 6.953.93.

For the week, the CAC-40 Index slumped 4% and the DAX Index declined 2.8%.

Italian 10-year bond yields climbed four basis points to 5.14%. The 10-year Spanish government bond yields rose two basis points to 5.51%.

French Economic Outlook, Business Sentiment Up

The French Finance Minister Francois Baroin said that the country’s economy is expected to grow 0.7% this year and 1.75% in 2013. In January, the government had downgraded the 2012 growth outlook to 0.5%.

Separately, French business confidence improved markedly in March, a survey by the statistics office Insee showed today.

The headline synthetic index rose to 96 in March from a revised reading of 93 in February.

UK Confidence, Mortgage Approvals Drop

UK consumer confidence declined unexpectedly in February, according to a survey published by the Nationwide Building Society.

The consumer confidence index declined to 44 in February from 47 in January.

The survey report also showed that a measure of consumers'' expectations for the economy fell 4 points to 60.

In a separate report, the number of mortgage approvals for home purchase in the UK fell to 33,103 in February from a downwardly revised 37,977 in January, data released by the British Bankers'' Association showed today.

Gainers & Losers

Accenture Plc fell 0.4% to $63.52 after the technology-consulting company, reported second quarter net revenues rose 12% to $6.8 billion compared to $6.1 billion last year. Net income for the quarter climbed 28% to $644 million or 97 cents per share compared to $503 million or 75 cents per share last year.

BT Group Plc soared 4.8% to 230.60 pence after the UK telecommunications firm reached an agreement with the trustee of BT Pension Scheme to make a lump sum payment of £2 billion before the end of March followed by nine deficit payments of £325 million in March of each year from 2013 to 2021.

Credit Suisse Group AG climbed 0.5% to Sfr26.20 after the financial services company said Peter Weibel will be stepping down from the board of directors of both Credit Suisse Group AG and Credit Suisse AG as of the next Annual General Meeting on April 27.

Lloyds Banking Group PLC declined 2.7% to $2.19 after the financial services group announced the creation of around 500 new roles to support the Verde business. The group further added it is on track to complete the transfer of the business before the end of 2013 in line with the deadline set by the European regulators.

MediGene AG advanced 0.8% to €1.34 after the biotechnology company reported fiscal year 2011 total revenue more than doubled to €4.65 million from €2.29 million reported for the previous year. Net profit for the year was €6.28 million compared to a net loss of €17.86 million in the previous year.