Greek Impasse Raises Fears in Euro Zone, Spanish Yields Above 6%

Arthi Gupta
09 May, 2012
New York City

The European indexes traded sideways while Greek parties struggle to form a coalition government. Stock markets were calm but Spanish yields rose above 6%. German exports rose unexpectedly in March. Commerzbank, ING, and E.ON quarterly net fell.

[R]1:00 PM Frankfurt – The European indexes traded sideways while Greek parties struggle to form a coalition government. Stock markets were calm but Spanish yields rose above 6%. German exports rose unexpectedly in March. Commerzbank, ING, and E.ON quarterly net fell.[/R]

The European indexes traded sideways and investors are increasingly factoring the possibility of Greece exiting the euro zone, once unthinkable only weeks ago.

Another parliamentary election may have to be scheduled as early as June if parties fail to cobble together a coalition.

Euro zone leaders are expected to meet in the next two weeks to discuss the future bailouts for Greece and the possible losses stemming from the Greek default.

Alexis Tsipras, leader of Greece''s left-wing Syriza party has been given the mandate by President Karolos Papoulias to form a government within the next three days. However, Tsipras refused to enter in a coalition with parties that supported the bailout and declared the loan agreement “null.”

In corporate earnings, net income at ING plunged 51% and at Commerzbank dropped 63% but Henkel profit rose 30%.

In Paris trading, the CAC-40 Index declined 13.10 or 0.4% to 3,111.43 and in Frankfurt the DAX Index edged higher 0.41 or 0.1% to 6,444.32.

The yield on Spain’s benchmark 10-year bonds climbed 18 basis points to 6.02%, and the Italian bond yields rose eight basis points to 5.54%.

German Factory Sales Growth Eases

Germany''s manufacturing turnover increased a seasonally adjusted 0.2% on a monthly basis in March from the 1.2% growth in February, data released by the Federal Statistics Office showed.

Separately, Germany''s exports rose a seasonally adjusted 0.9% in March after increasing 1.5% in February, data from Destatis showed. Imports climbed 1.2% from a month ago in March slower than the 3.6% increase in February.

French Deficit Narrows

France''s merchandise trade deficit decreased to €5.721 billion in March from €6.279 billion in February, data released by the Directorate General of Customs and Excise showed today. In March 2011, the trade balance was a deficit of €6.190 billion.

Gainers & Losers

Commerzbank AG rose 3% to €1.57 after the Germany bank said first quarter revenues before loan loss provisions plunged 28.5% to €2.59 billion from €3.62 billion. Profit attributable to shareholders in the quarter plummeted 62.5% to €369 million from €985 million a year ago.

E.ON AG fell 1.6% to €15.39 after the electric utility said first quarter sales soared 28% to €35.73 billion from €27.85 billion in the previous year. Net profit for the quarter fell 24% to €1.72 billion or 90 cents per share compared with €2.27 billion or €1.19 per share a year-ago quarter.

Fraport AG Frankfurt Airport Services Worldwide climbed 0.4% to €45.19 after the airport operator reported first quarter group revenue improved 5.8% from a year ago to €537.9 million. Profit attributable to shareholders declined 36.6% to €15.6 million from €24.6 million in the previous year. Earnings per 10 share were 17 cents compared to 27 cents last year.

Henkel AG & Co. KGaA declined 1.6% to €54.10 after the German household consumer products maker reported first quarter sales grew 4.8% to €4.01 billion. Net income in the quarter rose 30.3% to €378 million from €290 million last year. Earnings per preferred share rose to 86 euro cents from 66 cents a year ago.

ING Group, N.V. plunged 5.1% to $6.58 after the Dutch financial services company reported first quarter net profit plunged 50.8% to €680 million from €1.38 billion in the same period a year ago.

Meda AB soared 5.3% to SEK 67.85 after the Swedish pharmaceutical company said first quarter group net sales rose 15% to SEK 3.38 billion, from SEK 2.94 billion in the prior-year quarter. Profit for the quarter dropped 0.8% to SEK 370 million from SEK 373 million a year ago. Earnings per share matched the year ago data of SEK 1.24.