Greece Elections Soothe Market Jitters, Spanish Yield at 7.14%

Arthi Gupta
18 Jun, 2012
New York City

The European indexes rose after pro-bailout party won elections in Greece. Rising Spanish and Italian yields have dampened investor sentiment. A leading indicator of the French economy fell in April. U.S.-based Molson Coors completed its acquisition of StarBev for

[R]1:30 PM Frankfurt – The European indexes rose after pro-bailout party won elections in Greece. Rising Spanish and Italian yields have dampened investor sentiment. A leading indicator of the French economy fell in April. U.S.-based Molson Coors completed its acquisition of StarBev for €2.65 billion.[/R]

European markets gained after the conservative pro-bail out New Democracy party led by Antonis Samaras clinched a narrow victory in Greece. The victory allayed fears of Greece’s exit from the euro-zone as of now.

But investors are concerned with rising Spanish and Italian yields. The Spanish 10-year bond yields touched a record high of 7.14% today.

The conservative pro-bail out New Democracy party led by Antonis Samaras squeezed a narrow victory over its left-wing opposition in the Greek parliamentary polls held yesterday.

Based on results from 99% of the votes counted, New Democracy won 30% of the votes or 129 seats and Syriza was second with 27% of the votes or 71 seats and Pasok secured about 12.3% of the votes or 33 seats in the 300-seat Parliament, according to Interior Ministry projections.

The leading party gets 50 extra seats in the parliament thus boosting the chances of the New Democracy party to form a government. However, with no single party able to win clear majority, a coalition government looks imminent.

The new government has to fully oblige to the austerity terms set by the European Union and the International Monetary Fund if it is to get the €130-billion or $164-billion bailout fund.

Last week, European central banks had indicated they are prepared to inject significant liquidity in the event Greek outcome leads to market chaos.

Separately, Greece''s international creditors may return to Athens once the new government is in place to assist the country in its fiscal adjustment effort, the Eurogroup said in a statement on Sunday.

French President Francois Hollande’s led Socialist Party and its Left allies together won 314 seats, an absolute majority in the 577-seat National Assembly in Sunday''s parliamentary run-off elections, according to reports quoting the Interior Ministry said.

Sarkozy''s UMP and its allies won 229 seats, the Socialist-allied Greens 17 and the Left Front 10, according to final results released by the Ministry.

In Paris trading, the CAC-40 Index gained 3.20 or 0.1% to 3,090.82 and in Frankfurt the DAX Index edged higher 33.55 or 0.5% to 6,263.28.

The yield on Spain’s benchmark 10-year bonds rose 22 basis points to 7.14 %, and the yields on the 10-year Italian bonds rose 15 basis points to 6.08%.

French Leading Index Falls

The leading economic index of the French economy decreased 0.1% on a monthly basis to 113.7 in April, after rising a revised 0.4% in March, data from a survey by the Conference Board showed today.

The coincident economic index, which measures the current situation, remained unchanged at 104.4 in April.

Norwegian Surplus Rises

Norway''s current account surplus increased to NOK137 billion in the first quarter from NOK109 billion in the fourth quarter, data released by Statistics Norway showed, driven by a sharp increase in prices of oil and natural gas.

In the first quarter of 2011, the balance was a surplus of NOK84 billion.

The balance of goods and services was a surplus of NOK130 billion during the first quarter compared to the NOK103 billion surplus in the fourth quarter.

Molson Coors Completes Acquisition of StarBev

Molson Coors Brewing Company completed its previously announced acquisition of StarBev for approximately €2.65 billion.

The acquisition includes Staropramen, the business unit’s flagship brand with sales in more than 30 countries worldwide.

Elekta Sells Radiation Therapy Treatment Systems

Elekta AB, the Swedish medical instruments maker signed a deal to sell ten Elekta Synergy radiation therapy treatment systems to UK''s NHS Supply Chain. The financial terms were not disclosed. The systems will be delivered over the next 18 months.

With the purchase, NHS Supply Chain will have the world''s first linac to bring 3D and 4D image guidance into the treatment set-up process.

Gainers & Losers

AB Volvo fell 0.8% to SEK 76.35 after the Swedish builder of heavy equipments said its total deliveries from truck operations in May 2012 decreased 3% to 19,734 vehicles from 20,258 vehicles in the year-earlier period.

AXA SA soared 4.1% to €9.89 after the French insurer’s investment arm raised $7 billion for buyout deals, the Financial Times reported on Sunday.

Elster Group SE climbed 3% to $16.40 after the German engineering firm confirmed talks that Melrose Plc would make an all-cash offer of $20.50 per American Depositary Share, valuing the company at around $2.3 billion.

Sodexo S.A. increased 0.8% to €59.92 after the French catering and vouchers company signed a binding agreement with Innovacion y Conveniencia, S.A. de C.V. and Sistemas de Operacion Integral, S.A. de C.V., to acquire Mexican caterer Servi-Bonos, S.A. de C.V. The financial terms of the acquisition were not disclosed.