Greek Economy Shrinks 6.2%, Inflation in Germany Picks Up

Arthi Gupta
13 Aug, 2012
New York City

The European indexes pared losses. Italy raised

[R]2:15 PM Frankfurt – The European indexes pared losses. Italy raised €8 billion in a bond auction today. German wholesale price inflation rose in July and the Greek economy contracted in the second quarter. Julius Baer agreed to acquire Merrill Lynch’s International Wealth Management business for Sfr860 million.[/R]

European indexes pared losses after trading sideways on weak economic data from Japan and Italy completed the sale of €8 billion debt today, however at higher yields.

In economic news, Germany’s wholesale price inflation rose more than estimated in July and Greek gross domestic product contracted in the second quarter. French current account deficit widened in June.

In earnings news, E.ON first-half sales grew 23% annually and net earnings tripled. SolarWorld swung to second quarter loss.

Japan’s gross domestic product rose at an annualized rate of 1.4% in the second quarter compared with 5.5% in the prior quarter, according to a report from the Japanese Cabinet Office released today.

In Paris trading, the CAC-40 Index gained 0.35 to 3,435.94 and in Frankfurt the DAX Index edged higher 7.60 or 0.1% to 6,953.77.

The yields on Spain’s benchmark 10-year bonds rose three basis points to 6.88%. Italian 10-year yields climbed two basis points to 5.90%.

Italian Bond Auction

The Italian Treasury sold €8 billion of Treasury bills of 12-month debt at an average yield of 2.767% compared to an average yield of 2.697% at the prior auction on July 12. The bid-to-cover ratio rose to 1.69 from 1.55 last month.

German WPI Rises

Germany’s wholesale price inflation rose to 2% in July from 1.1% in June, the latest data from the Federal Statistics Office showed today.

The increase was driven by a 4.7% surge in wholesale prices of solid fuels and petroleum products.

On a monthly basis, prices increased 0.3% in July.

French Current Account Deficit Widens

French current account deficit widened to €4.9 billion in June from a €4 billion shortfall recorded in May, data from the Bank of France showed today.

The deficit on goods account rose to €6.3 billion in June from €5.7 billion in May. Service account surplus fell to €1.5 billion in June from €1.9 billion in the previous month.

Greek Economy Contracts

The Greek economy contracted for the ninth straight time in the second quarter, flash estimate from the Hellenic Statistics Authority showed.

Gross domestic product declined 6.2% from the prior year, but slower than the 6.5% decrease a quarter ago.

Julius Baer to Acquire Merrill’s Wealth Management Unit

Julius Baer agreed to acquire Merrill Lynch’s International Wealth Management business based outside the U.S. for Sfr860 million.

Julius Baer expects the acquisition to add to its earnings from the third full-year following completion of the deal.

Julius Baer’s existing assets under management would increase by 40% to Sfr251 billion and Sfr72 billion of assets is expected to be transferred from Merrill.

Gainers & Losers

A.S. Création Tapeten AG soared 4.3% to €31.04 after the wallpaper manufacturer said first-half total sales rose 4.5% to €103.6 million. Net profit rose 21.7% to €5.46 million compared with €4.49 million last year, with earnings per share rising to €1.98, from €1.63 a year earlier.

Colt Group S.A. rose 0.1% to 115 pence after the holding company acquired ThinkGrid, a channel-focused cloud platform provider.

Deutsche Wohnen AG climbed 0.7% to €13.93 after the residential property developer said first-half consolidated group profit rose to €36.9 million from €16.9 million in the previous year.

E.ON AG rose 2.3% to €18.21 after the energy solutions provider said first-half sales grew 23% annually to €65.4 billion. Net income soared to €2.91 billion from €691 million in the previous year.

Michael Page International plc gained 0.2% to 379.90 pence after the staffing firm reported first-half revenue edged up 0.1% to £502.63 million from the same period last year. Pre-tax profit slumped 37.9% to £28.24 million from £45.47 million last year.

QSC AG slumped 4.8% to €2.09 after the telecommunications provider stated second quarter revenues decreased to €116.6 million from €121.8 million last year. Consolidated net income declined to €2.9 million from €3.9 million a year-ago quarter.

SolarWorld AG plunged 10.9% to €1.18 after the solar panel maker said second quarter consolidated net loss swung to €161.06 million compared to a €9.94 million profit in the comparable period in 2011.

WPP Plc fell 0.9% to 856 pence after the advertising company said its wholly owned operating company JWT agreed to acquire rest of the shares in Manajans Thompson Reklam Isleri A.S. WPP that it does not own.