European Indexes Mixed, Spanish Yield Above 7%

Arthi Gupta
20 Jul, 2012
New York City

The European indexes traded lower ahead of the euro area finance ministers conference call. Heineken offered to acquire Fraser & Neave

[R]1:30 PM Frankfurt – The European indexes traded lower ahead of the euro area finance ministers conference call. Heineken offered to acquire Fraser & Neave’s interests in Asia Pacific Breweries. Renault-Nissan Alliance planned to invest $160 million in Korea.[/R]

European indexes traded mixed ahead of the euro-zone finance ministers meeting in Brussels today. The conference call among ministers is expected to approve the €100 billion aid plan to Spanish banks.

Spain will receive the first disbursement of €30 billion by the end of this month after the memorandum of understanding is adopted. However, Spanish banks need up to €62 billion to shore up their banking sector.

Yesterday, the lower house of the German Parliament, the Bundestag approved the Spanish bank bailout with 473 lawmakers voting for and 97 against it. Finland’s Parliament also approved the plan today.

Fitch Ratings affirmed Italy''s long-term foreign and local currency issuer default ratings at ''A-'' with a negative outlook. The short-term foreign currency rating is affirmed at ''F2'' and the country ceiling at ''AAA.''

The agency said the affirmation reflects the demonstrated commitment of the government to reducing the budget deficit and public debt, as well as parliament''s adoption of a balanced budget amendment to the Constitution and ratification of the Fiscal Compact.

In earnings news, Sulzer said first-half sales surged driven by the major acquisition and organic growth and Publicis Groupe second quarter consolidated revenue grew 15.5%.

In Paris trading, the CAC-40 Index declined 50.55 or 1.6% to 3,213.09 and in Frankfurt the DAX Index edged lower 74.52 or 1.1% to 6,683.52.

For the week, the CAC-40 Index added 1.4% and the DAX Index surged 9%.

The yields on Spain’s benchmark 10-year bonds were little changed at 7.01%. Italian 10-year yields fell two basis points to 5.98%.

German PPI Eases

German producer price inflation eased in June, the Federal Statistics Office said today.

The producer price index eased to 1.6% annually in June from 2.1% in May. This was the lowest rate of inflation since May 2010, when it was at 0.9%.

Renault-Nissan Plans Investment in Korea

Renault SA, the French auto maker said that Renault-Nissan Alliance will invest $160 million in Korea to meet anticipated demand for the next-generation Nissan Rogue and to accelerate growth of Renault Samsung Motors.

Gainers & Losers

Enea AB soared 10% to SEK 40.70 after the information technology provider stated second quarter sales climbed 12.3% to SEK 120.6 million from SEK 107.4 million in the previous year. Net profit in the quarter surged 352% to SEK 14.9 million or 88 cents per share from SEK 3.3 million or 19 cents per share in the prior year.

Haldex AB plunged 7.2% to SEK 31.10 after the brake systems manufacturer reported second quarter sales rose 3.4% to SEK 1.065 billion compared to a quarter a year ago. Earnings for the quarter plunged 84.4% to SEK 7 million or 14 cents per share from SEK 45 million or 95 cents per share a year ago.

Heineken N.V. rose 1.4% to €43.62 after the Dutch brewer offered to acquire its joint venture partner Fraser & Neave Ltd.''s stake in Singapore-based Asia Pacific Breweries Ltd. at a price of S$50 per APB share, for a total consideration of S$5.1 billion or $4.07 billion.

KTM AG fell 1.1% to €43.50 after the motorcycle manufacturer said worldwide first-half motorcycles sales soared 36% to 50,233 motorcycles from the same period last year.

Publicis Groupe SA gained 1.4% to €38.99 after the communications firm said second quarter consolidated revenue grew 15.5% to €1.63 billion. Revenues for the first-half grew 14.3% to €3.08 billion.

Scania AB surged 5.5% to SEK 121.90 after the Swedish commercial vehicle manufacturer reported net sales fell 16.4% to SEK 19.21 billion, compared with SEK 22.97 billion in the prior-year period. Net income in the quarter plunged 40% to SEK 1.46 billion or SEK 1.82 per share from SEK 2.43 billion or SEK 3.04 per share in the year-ago quarter.

Sulzer AG dipped 0.9% to Sfr119.70 after the pumps maker said first-half sales soared 20.1% to Sfr1.92 billion from the comparable period in 2011. Net income gained 5.4% to Sfr131.5 million compared with Sfr124.8 million last year. Basic earnings per share rose to Sfr3.87 from Sfr3.69 a year before.

Swedish Match AB slumped 3.1% to SEK 279.90 after the tobacco company reported second quarter sales grew 9% to SEK 3.21 billion from SEK 2.94 billion in the prior-year quarter. Profit attributable to shareholders advanced 23.4% to SEK 759 million or SEK 3.69 per share from SEK 615 million or SEK 2.92 per share last year.