Earnings Lift European Indexes, Credit Suisse Soars 6%

Arthi Gupta
18 Jul, 2012
New York City

The European indexes gained on better-than-anticipated earnings. Germany raised

[R]1:30 PM Frankfurt – The European indexes gained on better-than-anticipated earnings. Germany raised €4.17 billion in a bond auction at negative yield. Credit Suisse planned to boost capital by Sfr15.3 billion before year-end.[/R]

European indexes gained after better-than-estimated earnings and Credit Suisse said it plans to increase by Sfr15.3 billion. Ericsson net plunged impacted by lower profitability in network.

An auction of 2-year treasury notes by Germany saw negative yields for the first time.

In economic news, Italian current account deficit narrowed in May but investor confidence in Switzerland improved in July.

The French economy may grow at least 1% next year if the government sticks to deficit reduction measures and reforms, European Central Bank Governing Council member Christian Noyer said in an interview on Europe 1 radio.

Abebe Aemro Selassie, IMF mission chief for Portugal said in a survey that the Portuguese government has been implementing the required reforms in a rigorous manner but also highlighted unemployment as a risk factor.

In Paris trading, the CAC-40 Index gained 27.34 or 0.9% to 3,203.65 and in Frankfurt the DAX Index edged higher 22.85 or 0.4% to 6,598.71.

The yields on Spain’s benchmark 10-year bonds declined seven basis points to 6.76%. Italian 10-year yields fell nine basis points to 5.96%.

German Bond Auction

Germany sold its 2-year treasury notes maturing on June 2014 at negative yield, according to Bundesbank data.

The country raised €4.173 billion from the sale of June 2014 treasury notes at an average yield of 0.06% compared to an average yield of 0.10% in the previous sale on June 20. The bid-to-cover ratio, which mirrors investor demand, rose to 2 from 1.9.

The target set for the auction was €5 billion.

Italian Deficit Narrows

Italy''s current account deficit fell to €1.199 billion in May from €5.458 billion in the same month last year, data released by Bank of Italy showed today.

The goods trade account surplus was €2.188 billion in May, reversing the €1.433 billion deficit recorded a year earlier.

Swiss Confidence Gains

Investor confidence in Switzerland improved in July, data from a survey by Credit Suisse and the Center for European Economic Research showed today.

The headline index increased to -42.5 points in July from -43.4 points in June.

Gainers & Losers

Accor SA rose 0.7% to €25.05 after the French hotel operator reported second quarter consolidated revenue fell 0.8% to €1,475 million.

ASML Holding N.V. gained 0.5% to €41.65 after the semiconductor equipment maker said second quarter sales fell 19.6% annually to €1.23 billion. Net income in the quarter plunged 32% to €292 million or 71 cents per share from €432.1 million or €1.00 per share a year-ago quarter.

Credit Suisse Group AG soared 6.2% to Sfr18.20 after the financial services provider reported second quarter net revenues declined 8.9% to Sfr6.28 billion from last year.

Reported net income attributable to shareholders increased 2.6% to Sfr788 million from Sfr768 million in the prior-year quarter. Earnings per share declined to 46 cents from 48 cents a year ago.

Nordea Bank AB climbed 2.8% to SEK 62.3 after the financial services group reported second quarter net profit attributable to shareholders rose 17.5% to €820 million compared to €698 million a year ago. Net interest income grew 9% to €1.46 billion from €1.33 billion in the prior-year quarter.

PUMA SE slumped 5.5% to €213.95 after the sporting equipment manufacturer estimated first-half net earnings to fall 13% from a year ago quarter.

Telefonaktiebolaget LM Ericsson declined 3.8% to SEK 56.65 after the Swedish telecom equipment maker said second quarter net sales improved 1% to SEK 55.3 billion from the comparable period last year. Net income in the quarter plunged 63% to SEK 1.2 billion or 34 cents per share from SEK 3.2 billion or 96 cents per share the prior year.

TeliaSonera AB fell 2.9% to SEK 44.05 after the mobile network operator said second quarter net sales improved 1.1% to SEK 26.29 billion from the previous year. Net profit in the quarter rose 10% to SEK 4.25 billion or 98 cents per share from SEK 3.86 billion or 89 cents per share last year.