European Indexes Turn Lower; Italian, Spanish Yields Rise

Arthi Gupta
13 Apr, 2012
New York City

The European indexes declined and rising Italian and Spanish yields have dampened investor sentiment. Bauer full year 2011 profit declined driven by poor performance in its construction segment.

[R]12:30 PM Frankfurt – The European indexes declined and rising Italian and Spanish yields have dampened investor sentiment. Bauer full year 2011 profit declined driven by poor performance in its construction segment.[/R]

European indexes edged lower and market indexes in France and Germany are set to close down for the week. Weaker than expected Chinese economic growth data added to the caution as Italy is set to face a wave of labor strikes and Spanish banks may seek more capital in the next six months.

The Chinese gross domestic product expanded 8.1% on an annual basis in the first quarter compared to 8.9% rise in the fourth quarter, the National Bureau of Statistics said today. The GDP growth was the slowest in nearly three years.

Italy’s labor unions are to stage a nationwide protest today against the pension plan laid out by Prime Minister Mario Monti that was part of a $26 billion austerity package passed in January.

In Paris trading, the CAC-40 Index fell 37.95 or 1.1% to 3,231.90 and in Frankfurt the DAX Index edged lower 67.99 or 1% to 6,674.90.

For the week, the CAC-40 Index plunged 5.5% and the DAX Index fell 1.6%.

The yield on Spain’s benchmark 10 year bonds rose 0.08 percentage point to 5.86% and the Italian bond yields rose 0.06 percentage point to 5.43%.

The net borrowings of Spanish banks from the European Central Bank rose in March.

Bank of Spain said that Spanish banks'' net borrowing from ECB climbed to €227.6 billion in March from €152.4 billion in February.

Banks in the whole euro system borrowed €361.7 billion in March compared to the €322.05 billion in February.

German Inflation Eases

Germany''s consumer price inflation on an annual basis eased to 2.1% in March following a 2.3% increase in February, final data from the Federal Statistics Office showed today.

On a monthly basis, inflation rose 0.3% in March, after growing 0.7% in February.

Spanish Inflation Slows

Spain''s annual consumer price inflation slowed to 1.9% in March, in line with the flash estimate, from 2% in February, final data from the statistics office INE showed today.

Gainers & Losers

Alstom SA, the French maker of turbines and trains gained 0.4% to €27.9350 after a broker upgrade.

Bauer AG climbed 0.1% to €19.79 after the construction engineering and machinery manufacturing company stated fiscal year 2011 total group revenues rose 5.2% to €1.37 billion from €1.31 billion in the prior-year period. Net profit for the year fell 14.3% to €34.1 million or €1.86 per share compared with €39.8 million or €2.04 per share a year ago.

Glencore International plc rose 0.2% to 405.60 pence after the integrated commodities producer and marketer and Xstrata plc are currently engaged in discussions with the regulatory authorities, including the European Commission for their proposed merger.

Koninklijke KPN NV fell 1% to €7.66 after the Dutch telecommunication firm said it declared a 2011 dividend of 85 cents per ordinary share.

L''Oreal SA climbed 2.1% to €93.01 after the France-based cosmetic group said first quarter sales grew 9.4% to €5.64 billion from €5.16 billion last year, driven by a strong demand for its products in emerging markets. On a like-for-like basis, sales increased 6.4%.