European Indexes Drop 2% as Leaders Gather

Arthi Gupta
23 May, 2012
New York City

The European indexes slumped 2% as European leaders gather in Brussels to discuss Greece and possible growth measures and consumer sentiment in Italy dropped to the lowest on record. The UK retail sales fell in April. Cove Energy accepted

[R]1:00 PM Frankfurt – The European indexes slumped 2% as European leaders gather in Brussels to discuss Greece and possible growth measures and consumer sentiment in Italy dropped to the lowest on record. The UK retail sales fell in April. Cove Energy accepted £1.22 billion PTTEP takeover offer.[/R]

The European indexes plunged 2% and the euro edged lower as leaders of all 27 nations in the E.U. region prepare to meet one more time to discuss Greece and rising sovereign debt stress.

The stress in the bond market was evident as Germany sold two year notes of €4.6 billion that yielded only 0.07% and Italian confidence index fell to the lowest on record since data collection began.

The Bank of England''s Monetary Policy Committee voted to maintain quantitative easing unchanged at £325 billion through a split vote but were unanimous in retaining the interest rate at a record low 0.50%, the minutes of the meeting showed today.

The minutes of meeting held on May 9 and 10 also showed that more committee members are open to stimulus measures “if outlook warranted.”

In Paris trading, the CAC-40 Index slumped 58.40 or 1.9% to 3,025.69 and in Frankfurt the DAX Index edged lower 112.05 or 1.8% to 6,324.08.

The yield on Spain’s benchmark 10-year bonds fell 19 basis points to 6.11%, and the yields on the 10-year Italian bonds dropped 20 basis points each to 5.73%.

Euro-zone Swings to Surplus

The euro-zone current account swung to a seasonally adjusted surplus of €9.1 billion in March compared to a deficit of €1.2 billion in February, the European Central Bank said today.

UK Retail Sales Fall

The UK retail sales, including automotive fuel dropped 2.3% from a month ago in April, data from the Office for National Statistics showed today.

Annually, sales fell 1.1% in April.

Retail sales, excluding automotive fuel dropped 1% on a monthly basis in April. From a year ago, sales excluding auto fuel fell 0.3%.

Italy Sentiment Weakens

Consumer confidence in Italy declined in May, data released by the statistics office ISTAT showed.

The consumer confidence indicator fell to 86.5 in May from a downwardly revised 88.8 in April.

SAP to Acquire Ariba

SAP AG’s subsidiary, SAP America, Inc. agreed to acquire Ariba, the cloud computing company for $45 per share or approximately $4.3 billion, represents a 20% premium over Ariba''s closing price on May 21.

The transaction is expected to close in the third quarter of 2012 and will help SAP expand its business-to-business collaboration solutions.

With $444 million in total revenue, Ariba experienced 38.5% annual growth in 2011.

Cove Energy Accepts PTTEP Offer

PTT Exploration and Production Public Co. Ltd., the Thailand based oil and gas company offered to buy Cove Energy Plc for 240 pence per share valuing the company at approximately £1.22 billion.

The offer price represents a premium of approximately 9.1% to the offer of 220 pence per Cove Share announced by Royal Dutch Shell Plc earlier.

Gainers & Losers

Barclays Bank Plc slumped 4.2% to 180.95 pence after the British financial services provider agreed to sell 26.21 million shares of common stock of BlackRock in an underwritten public offering at a price of $160 per share.

Flughafen Wien AG fell 1.3% to €32.74 after the operator of Vienna International Airport reported first quarter revenue increased 5.7% to €139.04 million from €131.52 million last year. Net profit attributable to equity shareholders grew 9.1% to €21.58 million from €19.78 million last year.

Technip SA declined 2.6% to €74.98 after the operator of gas and oil engineering, technologies and projects said it was awarded by Petróleos Mexicanos two subsea contracts in the Bay of Campeche, Mexico, worth a total of €105 million.