Spain, Greece, Italy Worries Grip European Markets

Arthi Gupta
28 May, 2012
New York City

The European indexes edged higher after pro-bailout parties in Greece regained ground in opinion polls ahead of the June 17 election. Swedish retail sales fell in April. Italian confidence slumped in May. Deutsche Wohnen agreed to acquire BauBeCon Group for about

[R]1:00 PM Frankfurt – The European indexes edged higher after pro-bailout parties in Greece regained ground in opinion polls ahead of the June 17 election. Swedish retail sales fell in April. Italian confidence slumped in May. Deutsche Wohnen agreed to acquire BauBeCon Group for about €1.235 billion.[/R]

The European indexes edged higher after pro-bailout parties in Greece regained ground in opinion polls ahead of the June 17 election.

The conservative New Democracy party, a staunch believer in the austerity measures gained a slim lead over the leftist SYRIZA party.

Spain remained in focus as investors began to size up the recapitalization plans for several banks and worried that Spain may need several hundred billions of euros of bailout from international lenders and the European Central Bank.

Over the weekend, Bankia, the fourth largest Spanish bank asked for 19 billion euros of bailout from Spanish government, twice the amount earlier expected. In addition, Spanish banks faced another downgrade by a rating agency and may not be able to access capital markets as interest rate on the borrowed capital jumped to unsustainable levels.

In Paris trading, the CAC-40 Index gained 25.31 or 0.8% to 3,073.25 and in Frankfurt the DAX Index edged higher 73.04 or 1.1% to 6,388.90.

The yield on Spain’s benchmark 10-year bonds surged 16 basis points to 6.47%, and the yields on the 10-year Italian bonds rose 6.7 basis points to 5.87%.

The U.S. markets are closed today for Memorial Day.

Swedish Retail Sales Decline

Retail sales in Sweden declined in April, data from Statistics Sweden showed.

On a seasonally adjusted month-on-month basis, sales volume fell 0.2% in April compared to a 0.1% rise in March.

Retail sale for consumer goods remained unchanged on an annual basis while retail sales for durables increased 1.5% in April.

In another report, Sweden''s trade surplus increased to SEK 4.7 billion in April from SEK 2.3 billion in the previous year, Statistics Sweden said on Monday.

Exports decreased 2% from a year ago, while imports fell 4% in April.

Italian Confidence Slumps

Confidence in the Italian manufacturing sector worsened unexpectedly in May, data released by statistics office Istat showed.

The manufacturing confidence index dropped to 86.2 in May from 89.1 in April. The construction confidence index decreased to 81.8 in May from 83.7 in the previous month.

Deutsche Wohnen Acquires BauBeCon

Deutsche Wohnen AG, the German real estate firm agreed to acquire Barclays Plc''s German real-estate holding company, the BauBeCon Group for about €1.235 billion.

The company will enlarge its existing residential portfolio from currently 50,000 to 73,500 residential units through the acquisition of 23,500 BauBeCon units.

Gainers & Losers

Bankia SA plunged 14% to €1.35 after the Spanish banking conglomerate requested €19 billion in bailout capital from Spain.

Fabasoft AG rose 0.5% to €3.71 after the software manufacturer reported group sales revenue for the fiscal 2012 rose 8.5% to €22.9 million from €21.1 million in the year ago.

Logica Plc climbed 2% to 67.20 pence after the technology service group and Tapiola Data, a subsidiary of the Finnish insurance company Tapiola Group signed an agreement to form a new technology venture.