European Indexes Decline, Yield in Italian Auction Falls

Arthi Gupta
29 Aug, 2012
New York City

The European indexes trended lower and the latest batch of economic data offered slightly better outlook. Italy raised

[R]12:30 PM Frankfurt – The European indexes trended lower and the latest batch of economic data offered slightly better outlook. Italy raised €9 billion in a bond auction at a lower yield. Syngenta agreed to acquire the DuPont Professional Products insecticide business for $125 million.[/R]

European indexes traded lower in thin trading as markets await central bank decisions that may support sovereign bond market of peripheral nations. The latest indicators in the region offered a slightly better view.

Germany’s inflation rose more than expected in August and French business confidence in manufacturing industry improved. Italian retail sales rose in June and Swiss leading indicators gained this month.

The Spanish region of Catalonia formally requested a €5 billion bailout from the government to restore economic growth. Catalonia is the third Spanish region after Valencia and Murcia to seek financial aid.

The Italian Prime Minister Mario Monti is scheduled to meet German Chancellor Angela Merkel in Berlin today.

In Paris trading, the CAC-40 Index declined 17.29 or 0.5% to 3,414.26 and in Frankfurt the DAX Index edged lower 39.95 or 0.6% to 6.962.83.

The yields on Spain’s benchmark 10-year rose 8.2 basis points to 6.58%. Italian 10-year yields climbed 4.4 basis points to 5.87%.

Italian Bond Auction

Italy raised €9 billion from the sale of Treasury bills at lower borrowing costs.

The Italian Treasury sold the 181-day bills at an average yield of 1.585% compared to an average yield of 2.454% at the previous auction on July 27. The bid-to-cover ratio rose to 1.69 from 1.61 last month.

Gainers & Losers

Accor SA fell 2.1% to €25.89 after the French hotel operator said first-half revenue fell 0.1% to €2.717 billion. Net loss, group share in the period swung to €532 million compared to a profit of €41 million a year ago.

Bouygues SA plunged 7.2% to €20.33 after the French industrial group said first half net profit attributable to the group declined 29% to €278 million, from €391 million last year.

L''Oreal SA slumped 4.3% to €96.71 after the French cosmetics group said first half sales grew 10.5% to €11.2 billion from last year on comparable-store sales rise of 6%. Net profit rose 10.8% to €1.63 billion or €2.69 per share, from €1.47 billion or €2.46 per share last year.

Syngenta AG gained a fraction and said it agreed to acquire the DuPont Professional Products insecticide business for $125 million.

Volvo AB rose 1.3% to SEK 85.30 after the trucks manufacturer said total deliveries from truck operations in July increased 5% to 17,672 vehicles from 16.898 vehicles in the corresponding month last year.