European Indexes Decline, Spanish, Italian Yields Above 6%

Arthi Gupta
04 Jul, 2012
New York City

The European indexes edged lower on weaker-than-estimated service sector activity in June. Investors look ahead for actions from European Central Bank and Bank of England tomorrow.

[R]3:00 PM Frankfurt – The European indexes edged lower on weaker-than-estimated service sector activity in June. Investors look ahead for actions from European Central Bank and Bank of England tomorrow.[/R]

European markets traded lower after a contraction in service sector activity and latest data indicated that the region is battling with weakening economies.

German output contracted at the fastest rate in three years and France also saw a further decline. Italy and Spain struggle with recessionary forces.

The U.S. market is closed to celebrate Independence Day holiday.

In Paris trading, the CAC-40 Index declined 14.61 or 0.5% to 3,256.62 and in Frankfurt the DAX Index edged lower 30.22 or 0.5% to 6,548.59.

The yields on 10-year bond of Spain traded at 6.32% and Italian bonds rose eight basis points to 6.35%.

The Swedish central bank decided to retain the benchmark repo rate at 1.5% to support economic activity and ensure that inflation is in line with the 2% target.

Euro-zone Retail Sales Improve

Retail sales in the euro-zone increased unexpectedly in May, the latest data from Eurostat showed today.

Retail sales rose 0.6% from a month ago in May, following a 1.4% fall in sales in April.

German Service Sector Stagnates

German service sector output stagnates in June, results of a survey by Markit Economics showed today.

The final seasonally adjusted Markit Germany Composite Output Index, which measures the combined output of the manufacturing and service sectors dropped to 48.1 in June from 49.3 during May.

Gainers & Losers

Bayer AG, the German chemical and pharmaceutical firm fell 0.4% to €58.05 after its CropScience agricultural unit signed a pact to acquire California-based peer AgraQuest Inc for $425 million plus milestone payments.

BMW AG rose 0.6% to €59.28 after the automobile manufacturer reported that its U.S. June sales rose 3.2% annually to 27,720 vehicles.

Capgemini fell 0.6% to €29.03 after the information technology group and Bayer Business Services signed a contract for the provision of IT services from India.