G20 Lifts Stakes for Europe as Leaders Promise Deeper Integration

Arthi Gupta
20 Jun, 2012
New York City

European markets cautiously traded higher on the optimism that banking industry integration will break the debt spiral in the highly indebted nations in the region. German producer price inflation eased more than estimated in May.

[R]1:30 PM Frankfurt – European markets cautiously traded higher on the optimism that banking industry integration will break the debt spiral in the highly indebted nations in the region. German producer price inflation eased more than estimated in May.[/R]

European markets traded slightly higher and political leaders at G20 meeting pledged to focus on Europe and leaders in the region promised concrete plans to expedite integration.

European leaders committed to advancing the banking industry integration across the region at the meeting next week with the aim of broader fiscal integration plan by the end of the year.

The G20 statement noted that euro are countries are committed to “take all necessary political measures” to preserve the currency union and the region also plans “to consider concrete steps towards a more integrated financial structure” that will include common bank supervision and recapitalization and closure of failed banks and extend deposit guarantee to bank depositors.

G20 leaders urged European leaders to accelerate the banking industry integration in the region that will severe the cycle of highly indebted countries are forced to rescue local banks that only add to the government debt.

Greek political leaders are expected to finalize the formation of new coalition government and cabinet ministry as early as this evening, according to local media reports.

New Democracy’s Antonis Samaras. Evangelos Venizelos, the Pasok socialist party leader said that an agreement could be reached to forming a coalition government in Greece by ''midday today''.

New Democracy’s leader Antonis Samaras is scheduled to meet both Venizelos and Democratic left leader Fotis Kouvelis today to form a government with stable majority in the parliament. Greek government is expected to push for revision of the bailout terms from international lenders and relax some of the harshest austerity measures like lowering of minimum wages.

In Paris trading, the CAC-40 Index declined 6.96 or 0.2% to 3,110.55 and in Frankfurt the DAX Index edged higher 2.57 or 0.1% to 6,365.24.

The yield on Spain’s benchmark 10-year bonds fell six basis points to 6.98% after a statement from the G20 leaders raised hopes of specific steps to curtain government debts in the long run.

German PPI Eases

Germany''s producer price inflation slowed more than anticipated to 2.1% in May from 2.4% in April, Destatis said today.

Gainers & Losers

Barry Callebaut AG fell 0.5% to Sfr876 after the manufacturer of cocoa and chocolate products restated sales revenue for the nine months ended May 31, 2011 to Sfr3.51 billion from the originally reported Sfr3.99 billion. Total sales volume was restated to 972,802 tons from the earlier 1,046,141 tons.

Alpha Bank SA fell 2.8% to €1.38 after the banking and financial services company denied that it was in talks with Emporiki Bank, a unit of French lender Credit Agricole SA to acquire some of its assets.

Hennes & Mauritz AB rose 2.5% to SEK 236.10 after the Swedish apparel retailer said second quarter sales including VAT grew 14% to SEK 36.95 billion from SEK 32.4 billion in the prior-year quarter. Net profit in the quarter rose 22.5% to SEK 5.22 billion or SEK 3.15 per share compared to net profit of SEK 4.26 billion or SEK 2.57 per share last year.

Rio Tinto plc climbed 1.4% to 3,093 pence after the miner said it will commit $4.2 billion to develop its tier one iron ore business.