ECB Lowers Outlook, Greek Jobless Rate at 23%

Arthi Gupta
09 Aug, 2012
New York City

The European indexes edged lower after the ECB cut economic growth outlook. Greek jobless rate rose to record levels in May and the UK deficit widened and Italian surplus rose in June.

[R]3:45 PM Frankfurt – The European indexes edged lower after the ECB cut economic growth outlook. Greek jobless rate rose to record levels in May and the UK deficit widened and Italian surplus rose in June.[/R]

European indexes declined after the European Central Bank in its monthly bulletin report released today forecasted the euro zone economy to shrink 0.3% this year compared to the prior estimate of a 0.2% decline.

In other economic news, youth unemployment in Greece rose in May, the UK trade gap widened and Italian surplus rose in June.

In earnings news, Aviva posted a loss but Nestlé reported a rise in earnings in the first-half. Deutsche reported second quarter net revenue edged down 0.7% but profit soared 76.4%.

In Paris trading, the CAC-40 Index declined 5.88 or 0.2% to 3,432.17 and in Frankfurt the DAX Index edged lower 51.48 or 0.7% to 6,916.06.

The yields on Spain’s benchmark 10-year bonds were at 6.88%. Italian 10-year yields were at 5.86%.

Greek Jobless Rate Rises

Unemployment in Greece rose to a new record high in May, data released by the Hellenic Statistics Authority showed.

The unemployment rate increased to 23.1% in May, reaching the highest level since records started. In May 2011, the jobless rate was 16.8%.

The unemployment rate among youth, aged between 15 and 24, was 54.9% in May, up from 41.7% recorded in the same month last year.

In all 1.15 million unemployed persons in Greece in May compared to about 836,000 jobless persons recorded a year earlier.

Separately, industrial production in Greece rose 0.3% on an annual basis in June compared with a 2.9% decline in May. From a month ago, industrial output eased to 4% in June from the 6.4% gain in May.

Italian Surplus Climbs

Italy''s trade surplus rose to €2.517 billion in June, from €1.01 billion in May, data from the statistics office Istat showed today.

Exports rose 5.5% from a year ago in June, while imports fell 7.1%.

UK Deficit Widens

The UK trade gap widened to £10.1 billion in June from £8.4 billion in May, the Office for National Statistics said today.

The overall balance on trade in goods and services was £4.3 billion compared to a £2.7 billion shortfall in May.

Gainers & Losers

Aviva plc declined 1.5% to 313.60 pence after the British insurer reported first-half net loss attributable to shareholders was £745 million or 26 pence per share compared to a profit of £125 million or 15.1 pence per share last year.

Bilfinger Berger SE added 3.1% to €69.13 after the German builder said first-half net income slumped 39% to €161 million compared with €264 million a year before. On a per share basis, earnings fell to €3.65 from €5.99 last year.

Commerzbank AG slumped 4.4% to €1.23 after the bank reported first half operating profit fell to €1.04 billion or 17 cents per share compared to €1.2 billion or 53 cents per share in the preceding year.

Deutsche Telekom AG declined 2.5% to €9.16 after the telecommunications provider reported second quarter net revenue edged down 0.7% to €14.4 billion. Net profit soared 76.4% to €614 million from €348 million the prior year.

Deutsche Lufthansa AG dropped 1% to €9.86 after the German aviation group reported passengers flown in July rose 2.1% to 10.15 million from the year-ago month.

Nestlé SA soared 3.4% to Sfr61.70 after the food company said first-half total group sales increased 7.5% to Sfr44.1 billion. Net profit increased 8.9% to Sfr5.1 billion, from Sfr4.7 billion last year.

Swiss Re AG fell 2.21% to Sfr60.55 after the reinsurer reported second-quarter consolidated net income plunged 91% to $83 million from $960 million last year.