Fourth Quarterly Slowdown in Italy, Standard Chartered Plunges 22%

Arthi Gupta
07 Aug, 2012
New York City

Italian economy extended the decline for the fourth quarter in a row and German factory orders fell 1.7%, more than estimated in June. The UK retail sales rose unexpectedly in July. Standard Chartered plunged 22% on money laundering charges.

[R]1:45 PM Frankfurt – Italian economy extended the decline for the fourth quarter in a row and German factory orders fell 1.7%, more than estimated in June. The UK retail sales rose unexpectedly in July. Standard Chartered plunged 22% on money laundering charges.[/R]

European markets traded higher despite the latest weak economic data from Germany and Italy.

Italian statistics agency reported a fall in economic activities for the fourth quarter in a row and German machine orders declined.

The UK industrial production fell but retail sales rose in June and Swiss jobless rate remained steady in July.

In Paris trading, the CAC-40 Index gained 19.19 or 0.6% to 3,422.12 and in Frankfurt the DAX Index edged higher 23.49 or 0.3% to 6,942.10.

The yields on Spain’s benchmark 10-year bonds rose six basis points to 6.86%. Italian 10-year yields climbed five basis points to 6.05%.

German Factory Orders Fall

German factory orders fell 1.7% from a month ago in June compared to a 0.7% rise in May, the latest data from the Federal Ministry of Economy and Technology showed today.

Annually, factory orders dropped 7.8% in June following a 5.3% fall in May.

UK Retail Sales Climb

Retail sales in the United Kingdom rose unexpectedly in July, a report from the British Retail Consortium showed today.

Retail sales values rose 0.1% on a comparable basis annually in July. A year ago, sales recorded a 0.6% increase.

Overall retail sales, which include those at newly opened stores, rose 2.0% on year in July.

Separately, the UK industrial production fell 2.5% and manufacturing output declined 2.9% on a monthly basis in June, data from the Office for National Statistics showed.

Swiss Jobless Rate Steady

The seasonally adjusted unemployment rate for Switzerland remained unchanged at 2.9% in July, data released by the State Secretariat for Economic Affairs showed.

The number of unemployed rose by 1,426 to 116,294 at the end of July.

Italian Economy Contracts

The Italian economy contracted for the fourth quarter in a row ending in June according to the preliminary data from the statistics office Istat showed.

Gross domestic product fell 0.7% sequentially following the 0.8% decline in the first quarter. On a yearly basis, the economy shrank 2.5% in the second quarter from the 1.4% contraction in the first quarter.

Falling domestic consumption and weak bank lending played a key role in extending the slowing economic activities in the fourth largest economy in the euro zone.

Gainers & Losers

Danske Bank A/S soared 5.1% to DKK 94.55 after the Denmark-based bank reported net profit of DKK 2.3 billion for the first half, a 20% rise from the first half of 2011.

E.ON AG increased 0.5% to €17.70 after the energy solutions provider said it expects first-half operating earnings of €6.7 billion and its underlying net income around €3.3 billion.

InterContinental Hotels Group PLC soared 5.9% to 1,717 pence after the hotel operator reported second-quarter revenue increased 3.3% to $469 million from $454 million last year. Net profit climbed to $121 million, from $87 million in the year-ago period.

Koninklijke DSM N.V. slumped 5% to €39.14 after the life sciences and materials sciences-based company said second quarter sales remained flat at €2.27 billion. Net profit plunged 90% to €41 million from €392 million reported a year ago. Earnings per share plunged to 23 cents from €2.35 in the same quarter a year earlier.

Lanxess AG plunged 4% to €58.43 after the specialty chemicals company reported second quarter sales climbed 8.1% to €2.42 billion from €2.24 billion in the prior-year quarter. Net income fell 2.8% to €176 million from €181 million last year.

Meggitt plc rose 1.1% to 400.60 pence after the technology products and systems manufacturer reported first-half revenues climbed 19% to £776 million. Pre-tax profit for the period grew 13% to £127.2 million from £112.2 million a year ago.

Munich Re climbed 0.5% to €118.20 after the German reinsurer reported second quarter consolidated profit increased to €808 million from €736 million last year.

Rational AG gained 2.3% to €202.50 after the industrial food steamers and ovens manufacturer said second quarter sales advanced 17% annually to €107.5 million. Group earnings rose 23% to €23.7 million from €19.2 million in the prior year.

Standard Chartered PLC plunged 22% to 1,150.50 pence after the New York based regulator charged the British bank that it compromised U.S. financial system and laundered money for Iranian banks and central bank between 2001 and 2007 that were worth $250 billion. The regulator has asked the New York based unit to appoint an independent onsite monitor to oversee its operation in the state.

Xstrata Plc edged higher 2.3% to 903 pence after the miner said first-half revenues declined 7% to $15.55 billion from the year-ago period. Profit attributable to equity holders of the parent plunged 33% to $1.94 billion from $2.92 billion a year-ago quarter.