European Retail Sales Fall, German Orders Decline

Devan Biswas
05 Jun, 2012
New York City

European markets traded mixed and looked ahead for a statement from the G7 meeting today. Spain regained market focus after Treasury minister warned that rising bond yields will effectively shut Spain from credit markets. The euro declined and German orders fell 1.9% in April.

[R]3:50 PM Frankfurt – European markets traded mixed and looked ahead for a statement from the G7 meeting today. Spain regained market focus after Treasury minister warned that rising bond yields will effectively shut Spain from credit markets. The euro declined and German orders fell 1.9% in April.[/R]

European markets traded mixed ahead of the outcome of the G7 finance ministers and central bankers as Spain troubles unnerved traders, politicians and regulators.

The benchmark IBEX in Madrid rebounded 0.3% on the hopes of some action in the euro zone and Spanish Treasury Minister Cristobal Montoro said Spain was shut out of the credit markets at current borrowing costs and banks should be recapitalized through direct lending from European agencies.

Spanish 10-year government bond yields declined 1.8 basis points to 6.39% but not before spiking near 6.5% after comments from Montoro.

Spain is still scheduled to raise up to 2 billion euros through the sale of medium and long term government bonds on Thursday.

The Spanish government has been pushing for the distribution of direct bailout funds to troubled banks and not through the Spanish government which is battling with rising det. The government does not want to be saddled with long term obligations for banks.

The euro declined 0.5% against the dollar to $1.2406 but managed to stay above two-year low of $1.228 according to the last trade reported in Frankfurt trading.

The latest economic data across the euro zone also showed ongoing economic weakness. Retail sales and German industrial orders fell more than anticipated in April.

German industrial orders fell at the fastest pace since November and after adjusting for seasonality and inflation fell 1.9% in April from previous month.

Economy Ministry data showed the decline was driven by the fall of 3.6% in exports orders. Consumer orders declined 5% and capital goods orders dropped 3.3% in the month.

The orders declined in April and March orders were revised higher to 3.2% from the previously reported 2.2%. April orders were above the level reported in the first quarter of the year.

Retail sales in the euro zone fell 1% in April from March when they rose 0.3%, according to the latest data released by the eurostat in Luxembourg. Retail sales in Germany increased 0.6% in the month ad sales in Spain fell 2.4%. Sales in Austria declined 3.5% and in France fell 1.5%. Sales for Greece and Italy were not released.