Euro Area Growth Estimate Lowered; Accor Sells Motel 6

Arthi Gupta
22 May, 2012
New York City

The European indexes gained more than 1% and the OECD lowered euro area growth forecast and Greece is expected to extend recession in the sixth year in 2013. The UK annual consumer price inflation eased in April. Accor agreed to sell Motel 6 to Blackstone for $1.9 billion.

[R]1:00 PM Frankfurt – The European indexes gained. The OECD lowered euro area growth forecast for this year. The UK annual consumer price inflation eased in April. Accor agreed to sell Motel 6 to Blackstone for $1.9 billion.[/R]

The European indexes extended gains after the finance ministers of France and Germany reaffirmed their commitment towards Greece and said that an exit of Greece was not a solution to the euro-zone debt crisis.

The two ministers also discussed the launch of Eurobonds but with divergent opinions as Germany resisted the move and worried that in the end the nation will end up bearing obligation of other countries. .

The yields on Spanish bonds decreased but traded above six percent as stress in the sovereign bond market remained high.

In Paris trading, the CAC-40 Index gained 21.95 or 0.7% to 3,049.10 and in Frankfurt the DAX Index edged higher 49.49 or 0.8% to 6,380.61

The yield on Spain’s benchmark 10-year bonds eased 12 basis points to 6.13%, and the yields on the 10-year Italian bonds dropped 17 basis points to 5.76%.

OECD Lowers Outlook

The Organization for Economic Co-operation and Development cut the economic outlook for euro-zone this year.

OECD said the euro area economy may contract 0.1% in 2012 compared to the 0.2% growth projected in November.

UK Inflation Eases

The UK annual consumer price inflation eased to 3% in April from 3.5% in March, data from the Office for National Statistics showed today. Inflation continues to stay above the 2% target.

Monthly inflation surged to 0.6% in April from 0.3% in March.

Retail price inflation eased marginally to 3.5% in April from 3.6%in March.

Accor to Sell Motel 6

Accor SA, the French hotel group agreed to sell its low tariff hotels in the U.S. to an affiliate of Blackstone Real Estate Partners VII for a total value of $1.9 billion. The network includes Motel 6 and Studio 6, and comprises 1.102 hotels in the U.S. and Canada.

Because of the transaction, the hotel group aims to reduce its net debt by approximately €330 million and its fixed-lease commitments by €525 million.

Shaw Group Divests Energy & Chemicals Unit

The Shaw Group Inc., the U.S.-based construction services company agreed to sell substantially all of its energy and chemicals business to Technip for about $300 million in cash, subject to certain adjustments.

Shaw anticipates closing the divestiture in the fourth quarter 2012.

Gainers & Losers

Koninklijke Philips Electronics NV rose 1.6% to €15.19 after the Dutch consumer electronics company estimated mid-term 2013 financial targets of 4% to 6% sales growth, 10% to 12% operating earnings and 12% to 14% on return on capital.

Marks and Spencer Group Plc climbed 0.4% to €339.40 after the clothing retailer said for the year ended March 31 revenue increased 2% to £9.9 billion from £9.7 billion last year. Full-year pretax profit fell 1.2% to £705.9 million.

Merck KGaA fell 1.4% to €75.13 after the pharmaceutical and chemical company said it is acquiring an interest in Israeli start-up company QLight Nanotech.

Sixt AG rose 2.5% to €14.45 after the German mobility solutions provider said first quarter revenue increased 4.5% to €380.8 million from €364.4 million in the prior-year quarter. Profit after taxes for the quarter declined 20% to €17.9 million from €22.4 million in the previous year.

Vodafone Group plc increased 1.9% to 168.15 pence after the mobile communications company reported full-year group revenue improved 1.2% to £46.4 billion, with the organic service revenue up 1.5% and data revenue up 22.2%.

Earnings before interest, tax, depreciation and amortization fell 1.3% to £14.5 billion from a year earlier.