German Bond Auction Falls Short; Nokia Plunges 17%

Arthi Gupta
11 Apr, 2012
New York City

The European indexes rebounded but German bond auction failed to meet expectations and bond yields of Spain and Italy fell. Germany raised

[R]3:30 PM Frankfurt – The European indexes rebounded but German bond auction failed to meet expectations and bond yields of Spain and Italy fell. Germany raised €3.87 billion and Italy raised €11 billion from bond auctions today. Nokia cuts outlook for the first quarter. Automakers report strong monthly sales.[/R]

European indexes rebounded from a two-month low but German bond auction failed to meet its target and bond yields fell to a new low in the year. Luxury automakers reported strong monthly sales on stable domestic demand.

Investors were on alert after an 8.7 magnitude earthquake struck off the west coast of Northern Sumatra in Indonesia today, triggering a tsunami alert for 28 countries across the Indian Ocean region including India.

In Paris trading, the CAC-40 Index rose 46.09 or 1.4% to 3,264.77 and in Frankfurt the DAX Index edged higher 97.88 or 1.5% to 6,701.16.

The yield on Spain’s benchmark 10 year bonds fell 8 basis points to 5.86% after trading at a high since November and the Italian bond yields dropped 6 basis points to 5.54%.

Market indexes in Milan rebounded more than 2% after plunging 5% yesterday and in Spain retraced 1.7%.

Both market indexes were under pressure for the last three sessions after yields on sovereign bonds resumed their advances and central bank in Spain said national banks may need more capital if current economic weakness worsens.

German, Italian Bond Auctions

Germany raised €3.87 billion from the sale of 10-year federal bonds at an average yield of 1.77%, the Bundesbank said. The bid-to-cover ratio was 1.1.

However, the sale was well below the maximum target of €5 billion.

Italy raised €11 billion from an auction of short-term bills of 3-months and 12-months at higher yields.

The Italian Treasury sold €8 billion of 12-month bills at an average yield of 2.84% compared to 1.405% at the previous auction. Demand exceeded the offer by 1.52 times compared to 1.38 last month.

The country also issued three-month bills for €3 billion at an average yield of 1.249%. The bid-to-cover ratio was 1.81.

German WPI Eases

Germany''s wholesale price index eased to 2.2% on an annual basis in March compared to the 2.6% rise in February, data released by the Federal Statistics Office showed today.

Gainers & Losers

BMW AG rose 2.3% to €66.58 after the German carmaker said it sold a total of 185,728 BMW, MINI and Rolls-Royce vehicles in March, up 12% from 165,846 units last year.

Bouygues SA soared 3.9% to €21.60 after the French industrial group’s subsidiary Bouygues Bâtiment International signed an agreement to acquire 100% of Thomas Vale Group, the UK contractor.

Givaudan AG climbed 3.5% to Sfr893 after the Swiss manufacturer of fragrance and flavour products said first-quarter sales rose 4.7% to Sfr1.06 billion from Sfr1.01 billion the prior year.

Nokia Corp. plunged 16.7% to $4.19 after the Finnish mobile-phone maker currently estimates its first quarter 2012 non-IFRS Devices & Services operating margin to be about negative 3%, compared with the prior expected range of ""around breakeven, ranging either above or below by approximately 2 percentage points"".

Technip SA rose 1.3% to €83.56 after the operator of gas and oil engineering, technologies and projects said it secured from INPEX Corp. a flexible pipe supply lump sum contract for the Ichthys gas field in Australia.

Tom Tailor Holding AG climbed 0.1% to €13.32 after the fashion company said first quarter sales in the retail segment, which includes e-commerce, increased 45.5% year over year. On a like-for-like basis, sales rose 17.7%.

Volkswagen AG surged 3.8% to €129.80 after the Germany-based automobile manufacturer said March passenger cars sales increased 14.6% to 536,600 vehicles from 468,100 vehicles last year.

For the first quarter, passenger car sales grew 10.5% to 1.36 million vehicles from 1.23 million vehicles last year.