Weak European Manufacturing Data Adds to ECB Expectations

Arthi Gupta
03 Sep, 2012
New York City

The European indexes inched higher ahead of the ECB meeting on Thursday. The euro zone manufacturing sector contracted for the thirteenth month in a row in August. Fresenius decides not to submit a new takeover offer for Rh

[R]3:40 PM Frankfurt – The European indexes inched higher ahead of the ECB meeting on Thursday. The euro zone manufacturing sector contracted for the thirteenth month in a row in August. Fresenius decides not to submit a new takeover offer for Rhön-Klinikum.[/R]

European indexes gained after weak global manufacturing data spurred hopes of additional stimulus measures. Manufacturing sector contracted for the thirteenth month in a row.

Manufacturing remained depressed in Germany, Sweden and Italy and contracted substantially in Greece and Spain.

The European Central Bank is scheduled to meet this Thursday and markets are building expectations of specific steps to arrest the rising bond yields in the peripheral sovereign bond markets.

In Paris trading, the CAC-40 Index gained 20.45 or 0.6% to 3,433.93 and in Frankfurt the DAX Index edged higher 29.22 or 0.4% to 6.999.82.

The yields on Spain’s benchmark 10-year fell two basis points to 6.84%. Italian 10-year yields declined four basis points to 5.81%.

U.S. markets are closed for the Labor Day holiday.

Chinese manufacturing activity fell in August. The HSBC purchasing managers'' index fell to 47.6 in August from 49.3 in July, as new business decreased at the sharpest rate in nine months.

Euro zone Factory PMI Rises

Downturn in euro zone manufacturing continued in August, as weak demand hit output and employment, according to a survey from Markit Economics.

The purchasing managers'' index, that measures the activity in the factory sector, rose to 45.1 in August from 44 in July. The revised reading was below the earlier flash estimate of 45.3. The euro zone manufacturing sector contracted for the thirteenth successive month in August.

Swiss Retail Sales Eases

Retail sales in Switzerland in real terms, increased a calendar-adjusted 3.2% on an annual basis in July, from the 3.3% rise in June, preliminary data released by the Federal Statistics Office showed today.

However, overall sales in the retail sector dropped a seasonally adjusted 0.4% in July compared to the 0.1% gain in June.

Gainers & Losers

Fresenius SE & Co. KGaA advanced 2.2% to €86.66 after the Germany based dialysis services provider decided not to submit a new takeover offer for RHÖN-KLINIKUM AG.

Holcim Ltd rose 0.3% to Sfr58.75 and the cement supplier targeted to improve the return on invested capital and increase operating profit by at least Sfr1.5 billion by the end of 2014 compared to 2011.

Novartis AG climbed 0.4% to Sfr56.50 after the healthcare solutions provider presented additional data showing the efficacy of once-daily COPD portfolio versus comparators.

Total SA gained 0.4% to €39.86 after the oil and gas explorer acquired a 40% interest in the offshore Block M-11 in Martaban basin.

UBS AG, the financial services provider advanced 0.3% to Sfr10.71 after three former executives of the company were convicted for participating in municipal finance contracts.