Spanish Yields at 6%, GDF Completes International Power Purchase

Arthi Gupta
16 Apr, 2012
New York City

The European indexes pared gains as investors focused on the rising bond yields. GDF acquired remaining 30% stake in International Power for

[R]1:30 PM Frankfurt – The European indexes pared gains as investors focused on the rising bond yields. GDF acquired remaining 30% stake in International Power for £6.4 billion. Henkel rose after reiterating fiscal 2012 growth outlook.[/R]

European indexes gained after see-sawing in early morning trading. Spain was in focus after yields rose above 6%, the record high for the year and raising prospects of anther debt squeeze in the euro zone. The credit default swap for Spanish 5-year debt shot up to a new high and premium to the German bund rose to a high last seen in the last summer.

In Paris trading, the CAC-40 Index climbed 20.90 or 0.7% to 3,209.99 and in Frankfurt the DAX Index edged higher 41.08 or 0.6% to 6,624.98.

The yield on Spain’s benchmark 10 year bonds climbed 16 basis points to 6.1% and the Italian bond yields rose 15 basis points to 5.6%.

Euro-zone Swings to Surplus

Euro-zone's trade balance swung to surplus of €2.8 billion in February compared to a revised €7.9 billion deficit in January, data from Eurostat showed today.

German Factory Employment Climbs

Employment in the German manufacturing sector rose from last year in February, data released by the Federal Statistics Office showed today.

The number of persons working in industrial units with 50 or more employees increased 3.4% from a year ago to around 5.17 million in February.

GDF Acquires Complete Stake in IPR

GDF Suez SA, the France-based natural gas and electricity supplier said its wholly-owned subsidiary Electrabel S.A. has agreed to buy from International Power Plc the remaining 30% stake that it does not already own for £6.4 billion or $10 billion.

The revised bid of 418 pence a share is more than an indicative offer of 390 pence per that IPR rejected early this month as grossly undervaluing the company.

The offer values the entire issued and to be issued share capital of IPR at around £22.8 billion, assuming full conversion of IPR's convertible bonds and exercise of share options.

Gainers & Losers

AB Volvo rose 0.6% to SEK 87.50 after the Swedish vehicle maker received an order from the US District Court for the District of Columbia to make a payment of $72 million in penalties and interest on a dispute pertaining to emission compliance of 8,354 model year 2005 Volvo Penta engines.

Credit Suisse Group AG fell 0.9% to Sfr23.40 on a media report that that the Swiss investment bank may cut about 5000 jobs in its investment banking business at its forthcoming first quarter result, Der Sonntag reported, citing an unidentified executive.

Fraport AG declined 1.8% to €47.45 after the owner and operator of Frankfurt Airport reported passenger traffic for March grew 2.9% to 6.52 million.

In the first quarter of fiscal 2012, Fraport recorded a 3.5% rise in total passenger numbers to 17.52 million.

Henkel AG & Co. KGaA rose 1.1% to €55.33 after the German household consumer products maker estimated for fiscal 2012, organic sales growth between 3% and 5%, a growth in adjusted EBIT margin to 14% from last year's 13% and to improve adjusted earnings per preferred share by at least 10%.

Hennes & Mauritz AB climbed 1% to SEK 233.30 after the Swedish apparel retailer said March total sales including VAT in local currencies rose 26% compared to last year.

Koninklijke KPN NV plunged 6% to €7.16 after the Dutch telecommunications company said it is a comprehensive review of the strategic options in respect of its mobile operations in Belgium.