Record Unemployment in Euro Zone; UBS, Deutsche Bank Net Plunge

Arthi Gupta
31 Jul, 2012
New York City

The European indexes edged lower after unemployment in the region stayed near record high for the second month in a row and UBS, Deutsche Bank and Bayer reported large decline in earnings. Retail sales in Spain fell.

[R]1:30 PM Frankfurt – The European indexes edged lower after unemployment in the region stayed near record high for the second month in a row and UBS, Deutsche Bank and Bayer reported large decline in earnings. Retail sales in Spain fell.[/R]

European indexes dropped after unemployment in the region rose to a record high and the latest batch of earnings disappointed investors.

Bayer, UBS, and Deutsche Bank posted large declines in quarterly earnings and BP plc and a discount retailer Metro swung to a quarterly loss.

In economic news, euro-zone annual inflation remained stable in July. Spain’s retail sales fell 4.3% in June.

In Paris trading, the CAC-40 Index gained 11.21 or 0.3% to 3,331.64 and in Frankfurt the DAX Index edged higher 39.65 or 0.6% to 6,814.29.

The yields on Spain’s benchmark 10-year bonds climbed three basis points at 6.59%. Italian 10-year yields rose five basis points at 6.03%.

Euro-zone Unemployment Stable

The euro-zone unemployment rate remained unchanged in June, Eurostat reported today.

The jobless rate for June was a record high of 11.2% matching the data in May but increased from 10% in the month a year ago.

In all, 17.8 million people are unemployed in the euro zone of 17 nations and in the wider region of 27 European Union 25.1 million are unemployed. The number unemployed increased by 123,000 from the month of May.

Separately, the euro-zone annual inflation rate remained stable at 2.4% in July, data published by Eurostat showed.

However, the reading was above the central bank''s target of ""below but close to 2 percent."" The final data is due on August 16.

German Unemployment Climbs

The number of unemployed in Germany rose 7,000 in July from a month earlier, data from the Federal Labor Agency showed. The jobless rate was at 6.8% in July.

Separately, the seasonally adjusted jobless rate for Germany fell to 5.4% in June from 5.5% in May, the Federal Statistics Office said.

Italian Unemployment Rate Rises

Italy''s unemployment rate increased to 10.8% in June from 10.6% in May, revised up from 10.1%, data released by statistics office Istat showed.

There were around 2.79 million unemployed persons in June, up 2.7% compared to May.

Annually, unemployment climbed 37.5%, data showed.

Spanish Retail Sales Drop

Spain’s retail sales fell 4.3% in June from the prior year, the statistics office INE said today.

Food sales dipped 0.7% and non-retail turnover dropped 6.8% in June.

UK Sentiment Steady

The UK consumer confidence remained flat in July, according to the market research agency GfK NOP.

An index measuring consumer confidence in the United Kingdom was at -29 in July, unchanged from June.

Gainers & Losers

Aer Lingus Group PLC rose 1.4% to €1.10 after the low-cost airline reported second quarter total revenue grew 6.7% to €374.8 million from the prior-year quarter. Pre-tax profit declined to €11.4 million from €42.7 million in the prior-year quarter.

Anheuser-Busch InBev NV slumped 3.8% to €63.75 after the brewer said second quarter revenue dipped to $9.87 billion compared with $9.95 billion in the previous year. Profit in the quarter climbed to $1.96 billion from $1.45 billion a year ago, with earnings per share rising to $1.23 from 90 cents last year.

Bayer AG soared 3.2% to €63.12 after the holding company reported second quarter sales grew 10% to €10.18 billion. Group net income for the quarter declined 34% to €494 million or 60 cents per share from €747 million or 90 cents per share in the year-ago quarter.

BP plc fell 3.9% to 427 pence after the oil and gas explorer said second quarter net swung to a loss of $1.385 billion compared to $5.72 billion profit last year.

Deutsche Bank AG gained 0.1% to $30.31 after the investment bank reported second quarter net revenues fell 6% to €8.0 billion compared to €8.5 billion in the quarter year ago. Net income for the quarter slumped to €661 million or 68 cents per share compared to €1.2 billion or €1.24 per share in the second quarter 2011.

EDF SA increased 1.2% to €16.80 after the French electricity producer reported first-half revenues grew to €36.22 billion from €33.46 billion in the prior-year period. Net income rose 4.6% to €2.77 billion or €1.50 per share from €2.65 billion or €1.43 per share a year ago.

Hugo Boss AG plunged 4.9% to €82.59 after the clothes manufacturer said second quarter net sales rose 20% to €485.4 million from €405.4 million in the prior year. Net income climbed to €40.2 million or 58 cents per share compared to €31.1 million or 45 cents per share a year ago.

Infineon Technologies AG surged 7.1% to €5.92 after the semiconductors maker stated third quarter revenue declined to €990 million from €1.04 billion in the prior-year quarter. Net income for the quarter fell to €82 million or 8 cents per share from €190 million or 17 cents per share a year ago.

METRO AG edged higher 1.2% to €22.02 after the international retailer said second quarter sales climbed 1.8% to €15.85 billion from €15.57 billion in the year-ago quarter. Net loss in the quarter was €20 million or 6 cents per share compared to the profit of €40 million or 12 cents per share last year.

UBS AG plummeted 4.9% to Sfr10.39 after the Swiss financial services provider said second quarter net profit plunged to Sfr425 million from Sfr1.015 billion in the prior year. Net interest income dropped 3% to Sfr1.393 billion.