Spain in Focus, Scotiabank to Acquire ING Direct

Arthi Gupta
30 Aug, 2012
New York City

The European indexes declined and German unemployment rate held at 6.8%. Italy raised

[R]12:30 PM Frankfurt – The European indexes declined and German unemployment rate held at 6.8%. Italy raised €7.29 billion in a bond auction today at lower borrowing costs. Scotiabank agreed to acquire ING Direct for C$3.1 billion. Carrefour net loss narrowed in the first-half.[/R]

European markets were trending lower as investors were cautious ahead of the meeting of leaders of France and Spain. The latest German unemployment data also highlighted the vulnerability of the labor markets.

German index dropped as much as 0.9% on the worries that Spain is preparing to ask for a larger bailout as the financial crisis in the nation remains entrenched and unemployment hovers near record level.

Italy''s borrowing costs declined at a bond auction today.

Spanish Prime Minister Mariano Rajoy is scheduled to meet French President Francois Hollande in Madrid today and investors worry that the nation may be forced to ask for a larger bailout as Catalonia became the third region to ask for help.

In Paris trading, the CAC-40 Index declined 4.41 or 0.1% to 3,409.48 and in Frankfurt the DAX Index edged lower 59.86 or 0.9% to 6.951.32.

The yields on Spain’s benchmark 10-year rose nine basis points to 6.55%. Italian 10-year yields climbed 4 basis points to 5.81%.

Italian Bond Auction

The Italian Treasury raised €7.29 billion in a bond auction today at lower borrowing costs.

The agency sold €4 billion of the 10-year bond due November 22 at an average yield of 5.82% from 5.96% in the prior auction on July 30 for a security of similar maturity. The bid-to-cover ratio rose to 1.42 from 1.29.

Italy also sold €2.5 billion of a five-year due June 2017 at an average yield of 4.73% compared to an average yield of 5.29% in the previous sale on July 30. The bid-to-cover ratio increased to 1.46 from 1.34 in July.

The Treasury also sold €793 million of a floating rate CCTeu note maturing June 2017.

Euro Zone Confidence Weakens

Euro zone economic sentiment index declined to 86.1 in August from 87.9 in July, European Commission said today.

Separately, business confidence rose by 0.06 points to -1.21 in August.

Spanish Inflation Rises

Spain''s inflation, as measured by the harmonized index of consumer prices rose to 2.7% in August from 2.2% in July, flash estimate from the statistics office Ine showed.

Scotiabank to Acquire ING Direct

Scotiabank agreed to purchase Canadian online arm of the ING Group for $3.126 billion in cash and the transaction is expected to close by the end of the year.

With this acquisition, Scotiabank will gain about C$40 billion in assets, C$30 billion in deposits, and 1.8 million customers.

Gainers & Losers

Carrefour SA soared 5.4% to €16.60 after the French retailer said first-half total revenues, excluding VAT, rose 0.9% to €38.82 billion. Net loss, group share narrowed to €31 million from a net loss of €249 million last year.

INDUS Holding AG gained 0.4% to €19.34 after the holding company reported first-half group sales rose to €540.7 million from €535.6 million the prior year. Net income for the first half fell to €23.5 million, from net income of €33.3 million last year.

Pernod Ricard SA fell 1.3% to €86.60 after the spirits and wines producer said fiscal full-year 2012 net sales improved 7% to €8.215 billion, from a year earlier. Net profit rose 10% to €1.201 billion compared to the previous year on better operating performance.