European Service Sector Slumps, Swiss Re Swings to Profit

Arthi Gupta
04 May, 2012
New York City

The European indexes edged lower ahead of regional elections this weekend and weaker-than-estimated service sector growth. Mixed earnings did not lift investor sentiment either despite Linde and BNP Paribas reporting better than expected results.

[R]1:00 PM Frankfurt – The European indexes edged lower ahead of regional elections this weekend and weaker-than-estimated service sector growth. Mixed earnings did not lift investor sentiment either despite Linde and BNP Paribas reporting better than expected results.[/R]

The European indexes dropped after the latest batch of data offered weakening economic snapshot across the region. The economic activities are declining in the region and the activities in the service and manufacturing sectors are dropping at a 0.5% quarterly rate.

Traders are also looking ahead of the elections results in France, Germany, Italy and Greece this weekend and the outcome may force the politicians to back off their commitment to austerity measures.

On the earnings front, Linde and BNP Paribas quarterly net rose but Lafarge and Air France – KLM loss widened in the quarter.

In Paris trading, the CAC-40 Index declined 29.94 or 0.9% to 3,193.42 and in Frankfurt the DAX Index edged lower 52.83 or 0.8% to 6,640.90.

For the week, the CAC-40 Index rose 0.2% and the DAX Index fell 1.5%.

Euro area retail sales rebounded in March but service sector activity disappointed in April with a contraction in the French and Spanish service sector. Spanish jobless rate declined in April.

Euro-zone Private Sector Activity Slides, Retail Sales Up

Euro-zone private sector activity declined in April at the fastest rate since October 2011, final data released by Markit showed Friday.

The composite output index dropped to 46.7 in April from 49.1 in March.

Separately, euro-zone retail sales rose 0.3% from a month ago in March compared to the 0.2% drop in February, Eurostat said today.

Gainers & Losers

Air France - KLM dipped 0.4% to €3.49 after the airline reported first quarter revenues grew 6% to €5.65 billion from €5.33 billion in the prior-year quarter. Group net loss widened 0.3% to €368 million or €1.25 per share from €367 million or €1.24 per share a year-ago quarter.

BNP Paribas SA rose 1.1% to €29.42 after the France-based bank group reported first quarter revenues declined 15.4% to €9.89 billion compared to €11.69 billion in the prior year. Net income in the quarter grew 9.6% to €2.87 billion from €2.62 billion last year.

Lafarge SA soared 3.4% to €31 after the France-based cement company said first quarter sales grew 5% to €3.35 billion from €3.21 billion. Net loss group share widened 52% to €44 million or 15 cents per share from €29 million or 10 cents per share a year ago.

Linde AG declined 1.2% to €126.95 after the German industrial gases firm reported first quarter revenues grew 5.4% to €3.51 billion from €3.33 billion in the same quarter last year. Net profit in the quarter rose 1.1% to €287 million or €1.68 per share from €284 million or €1.67 per share a year ago.

Swiss Reinsurance Co. Ltd. rose 1.5% to Sfr58.7 after it reported first quarter total revenues increased 34.5% to $8.97 billion from $6.67 billion in the same quarter a year earlier. Net income generated in the quarter was $1.14 billion or $3.33 per share compared to a net loss of $665 million or $1.94 per share last year.