Economic Growth in Germany Slows and in France and Italy Shrinks

Arthi Gupta
14 Aug, 2012
New York City

The European indexes gained after the German economy expanded more than estimated in the second quarter and the activities in the euro zone declined 0.2%. The UK home prices declined in July. RWE planned to cut 2,400 positions globally.

[R]1:45 PM Frankfurt – The European indexes gained after the German economy expanded more than estimated in the second quarter and the activities in the euro zone declined 0.2%. The UK home prices declined in July. RWE planned to cut 2,400 positions globally.[/R]

The economy in the euro zone contracted less than expected and Spain and Italy reported declining activities for more than a year.

German economy expanded at a slower pace in the second quarter and France recorded zero growth for the third quarter in a row and the economies of Italy and Spain shrank again.

In earnings news, A.P. Moller-Maersk second quarter net plunged 39%, and TUI third quarter turnover rose 8%. CRH plunged 5% after half-yearly revenues climbed 5%.

In Paris trading, the CAC-40 Index gained 16.64 or 0.5% to 3,444.02 and in Frankfurt the DAX Index edged higher 55.41 or 0.8% to 6,965.54.

The yield on benchmark 10-year bonds of Spain was unchanged at 6.84% and of Italy climbed three basis points to 5.91%.

Euro zone Economy Contracts

The economy contracted 0.2% in the second quarter in both the euro area and the European Union compared with the previous quarter, according to a flash estimate from Eurostat.

In the previous quarter, economic growth in the euro zone had been zero.

From a year ago, seasonally adjusted GDP fell 0.4% in the euro area and 0.2% in the EU27 in the second quarter, Eurostat said.

In a separate report, the statistics office said seasonally adjusted industrial production fell 0.6% in the euro area and 0.9% in the EU272 on a monthly basis in June. In May, production rose 0.9% and 0.8% in the euro area and EU27 respectively.

Annually, industrial production dropped 2.1% in the euro area and 2.2% in the EU27 in June.

France Stagnates, Germany Grows 0.3%

The German economy expanded more than estimated in the second quarter, preliminary estimates from the Federal Statistics Office showed.

The gross domestic product rose 0.3% on a quarterly basis in the second quarter, following a 0.5% expansion in the first quarter.

Separately, the French economy recorded zero growth in the second quarter, the preliminary data released by the statistics office Insee showed today. It was the third consecutive quarter without growth.

The Italian economy, the third largest in the region, shark 0.7% in the quarter and the fourth largest economy of Spain declined 0.4%.

UK Home Prices Drop

Home prices in the United Kingdom declined in July, according to survey results released by the Royal Institute of Chartered Surveyors.

The monthly RICS price index fell to minus-24 in July from minus-22 recorded in June.

Separately, home prices in the United Kingdom edged higher in June, data released by the Office for National Statistics showed today.

The home price index increased 2.3% on an annual basis in June.

Compared to May, home prices advanced a seasonally adjusted 0.5% in June, data showed.

UK Inflation Climbs

Inflation in the UK rose in July, the latest data from the Office for National Statistics showed. The consumer price index rose 2.6% from a year ago in July compared to the 2.4% increase in the previous month.

The retail price index rose 3.2% annually in July from the 2.8% increase in June.

German Sentiment Declines

Germany''s investor sentiment weakened in August, according to results of the monthly ZEW survey released today.

The ZEW Indicator of Economic Sentiment fell to -25.5 in August from -19.6 in July. The current conditions index declined to 18.2 in August from 21.1 in July.

Gainers & Losers

A.P. Moller-Maersk A/S rose 0.8% to DKK 40,920 after the Danish business conglomerate reported second quarter revenue fell 1% to $15.35 billion from the prior-year quarter. Profit for the quarter plunged 39% to $965 million compared to $1.57 billion last year.

BAUER AG climbed 0.4% to €17.40 after the services and machinery provider said first-half total revenue rose 9.6% to €701.5 million from the previous year. Net loss swung to €3.1 million compared to a profit of €5.6 million last year.

CRH Plc plunged 5% to €14.73 after the building materials manufacturer reported half-yearly revenues climbed 5% to €8.59 billion from the previous year. Pre-tax profit rose 23% to €117 million from €95 million in the prior year.

Hochtief AG fell 1.5% to €40.32 after the building and industrial service provider reported second quarter consolidated net loss swung to €15 million compared to a profit of €13.84 million last year.

Kabel Deutschland Holding AG dipped 0.4% to €51.70 after the cable network operator said first quarter revenues increased 7.7% to €444 million compared to €412 million in the quarter a year ago. Net profit surged to €66 million or 74 cents per share from €8 million or 9 cents per share in the prior year.

Merck KGaA soared 4.2% to €85.98 after German drug maker reported second quarter total revenues rose 12% to €2.85 billion and sales were up 11% to €2.74 billion compared to the year-ago quarter. Loss after tax narrowed to €61 million from €87 million last year.

Nordex SE declined 2.6% to €3.09 after German wind turbine manufacturer reported first-half sales grew 4.4% to €421.1 million. Consolidated loss widened to €23.3 million compared to a loss of €4.1 million last year.

RWE AG dropped 0.7% to €32.70 after German utility reported first-half revenues fell 1.3% to €27.09 billion. Net income for the first half edged down 0.4% to €1.58 billion. Recurrent net income, the key determinant of the RWE dividend, was stable at €1.7 billion.

Salzgitter AG gained 1.2% to €31.72 after German steel maker said first-half consolidated external sales climbed to €5.38 billion from €4.77 billion in the 2011 first half. Net loss in the period swung to €22.5 million or 46 cents per basic share compared to a profit of €93.7 million or €1.70 per basic share in the prior-year period.

Sky Deutschland AG advanced 1.2% to €2.82 after German pay television operator reported second quarter revenue rose 18% to €326.7 million from the prior-year quarter. Net loss narrowed to €13.8 million compared to a loss of €53.6 million last year.

TUI AG surged 6.6% to €5.76 after the tour operator said third quarter sales rose 8% to €4.72 billion from a year earlier. Operating earnings for the quarter climbed 6% to €102 million compared with €96 million last year.

Wirecard AG increased 1.8% to €15.98 after the electronic payment provider reported first-half consolidated revenues increased 20.3% to €177.9 million and operating earnings soared 39.7% to €49.4 million compared to last year.