German Sentiment Declines, Samsung Acquires 3% Stake in ASML

Arthi Gupta
27 Aug, 2012
New York City

The European indexes gained on central bank optimism. UK home prices fell and German business confidence weakened in August. Euro zone economic activity remained unchanged in July. Samsung agreed to invest

[R]1:45 PM Frankfurt – The European indexes gained on central bank optimism. UK home prices fell and German business confidence weakened in August. Euro zone economic activity remained unchanged in July. Samsung agreed to invest €779 million in ASML.[/R]

European indexes edged higher after investors shifted attention to the long expected central bank action to revive sovereign bond market after leaders of Germany, France and Greece talks were inconclusive.

The round of meeting among the European leaders last week is expected to lead to more meetings and delayed decision making reflecting the fragmented power structure in Europe and lack of consensus among the members of euro zone.

The French leader stressed that Greece must remain in the euro zone but did not clarify if he agreed with the Greek prime minister Antonis Samaras request of two more years to full its contract term obligations.

Greece vowed spending cuts of worth €11.5 billion for 2013 and 2014 in exchange for €130 billion bailout from the European Union, the European Central Bank and the International Monetary Fund. But Greece is lagging in meetings its deficit target agreed at the time of the bailout.

In economic news, UK home prices fell in August and German import price inflation declined unexpectedly and Swedish retail sales increased in July.

In Paris trading, the CAC-40 Index increased 18.1 or 0.5% to 3,451.50 and in Frankfurt the DAX Index advanced 59.3 or 0.9% to 7,030.13.

The UK market is closed for the Summer Bank Holiday.

The yields on Spain’s benchmark 10-year fell two basis points to 6.40% and Italian benchmark fell one basis point to 5.71%.

Euro Zone Leading Index Flat

The leading economic index for the euro area was unchanged in July at 104.8, according to a report from the Conference Board released today, following a decreases of 0.2% in June and 0.3% in May.

UK Home Prices Drop

UK home prices fell in August, property tracking Web site Hometrack reported today.

An index measuring the average asking price of a home in the United Kingdom fell 0.1% from the previous month in August. Prices in London were flat.

From a year ago, prices declined 0.5% in August.

German Confidence Wanes, Import Price Inflation Falls

Germany''s business confidence index dropped more than estimated to 102.3 in August from 103.3 in the July.

The expectations index declined to 94.2 in August from 95.5 in July.

Separately, Germany''s import price inflation declined unexpectedly to 1.2% in July from 1.3% in June, Destatis said today.

On a monthly basis, import prices climbed 0.7% in July, reversing a 1.5% drop in June.

The export price index grew 1.4 percentage points annually, the same rate of growth as seen in June. Month-on-month, the increase was 0.3 percent.

Swedish Retail Sales Rise

Sweden''s retail sales increased a seasonally adjusted 0.3% from a month ago in July from the 0.3% drop in June, revised down from 0.4%, data released by Statistics Sweden showed.

Separately, producer price index fell 1.1% annually in July. In the manufacturing sector, PPI fell 0.3% annually and 0.8% on a monthly basis in July.

Gainers & Losers

Accor SA rose 0.2% to €26.49 after the hotel operator reported a sale-and-lease back agreement for the MGallery Mondial Am Dom in Cologne for €20.5 million and the MGallery Convent Hotel in Amsterdam for €23.5 million.

ASML Holding N.V. gained 0.2% to €46.23 after the Dutch semiconductor equipment maker said that Samsung Electronics Co. Ltd., the South Korean conglomerate agreed to invest €503 million for a 3% equity stake in the company and €276 million for research and development of next generation lithography technologies.

BHP Billiton plc fell 1.4% to 1,933 pence after the miner agreed to sell its wholly-owned Yeelirrie uranium deposit in Western Australia to Cameco Corporation for $430 million.

Q-Cells SE surged 10.6% to €0.19 after South Korea''s Hanwha Group intended to acquire the German insolvent photovoltaic company.

Volvo AB climbed 0.6% to SEK 86.30 after the manufacturer of trucks, buses and construction equipment announced organizational changes in Asia.