European Indexes Sideways, German Auction Falls Short of Target

Arthi Gupta
05 Sep, 2012
New York City

The European indexes traded sideways ahead of the ECB policy meeting tomorrow. Germany sold

[R]2:15 PM Frankfurt – The European indexes traded sideways ahead of the ECB policy meeting tomorrow. Germany sold €3.61 billion of 10-year bonds in an auction today. Euro zone economic output contracted for the seventh successive month in August.[/R]

European indexes fluctuated ahead of the ECB policy meeting tomorrow as investors digested another batch of weakening economic data in the region.

A survey released today pointed that the euro zone economic downturn continued in August, as output contracted in Germany, France, Italy and Spain.

European Union President Herman Van Rompuy is scheduled to meet French President François Hollande today.

In Paris trading, the CAC-40 Index declined 5.56 or 0.2% to 3,393.46 and in Frankfurt the DAX Index edged higher 24.85 or 0.4% to 6.957.11.

The yields on Spain’s benchmark 10-year were at 6.54%. Italian 10-year yields were at 5.65%.

German Bond Auction

Germany sold €3.61 billion of 10 year bonds at an average yield of 1.42%, the same as in the last auction in August 8.

The treasury raised less than its target of €5 billion from the auction, the cover ratio declined to 1.1 compared to1.8 in August.

Euro Zone Output Contracts, Retail Sales Drop

Euro zone economic output contracted for the seventh month in a row in August, data from a survey by Markit Economics showed today.

The seasonally adjusted composite output index, designed to measure activity in both the manufacturing and service sectors, dropped to 46.3 in August from 46.5 in July, below its earlier flash estimate of 46.6.

The Services Business Activity Index declined to 47.2 in August, from 47.5 in the preliminary estimates and 47.9 recorded in July.

Separately, retail sales in the euro zone declined 0.2% on a monthly basis in July, following a 0.1% gain in June, data released by Eurostat showed.

From a month ago, food, drinks and tobacco decreased 0.9% and the non food sector rose 0.9% in the euro area.

Annually, sales fell 1.7% in July.

On an annual comparison, food, drinks and tobacco fell 1.7% while the non food sector decreased 1% in the euro area.

Gainers & Losers

BASF SE fell 1.2% to €60.75 after the chemical company increased the price for its vitamin B2 products for human and animal nutrition by 10% globally.

BMW AG declined 1% to €54.82 after the automobile manufacturer reported total U.S. sales in August fell 5.7% to 22,553 vehicles from the 23,924 vehicles sold in the same month a year ago.

Deutsche Bank AG rose 1% to €27.925 after the financial service provider is likely to eliminate as many as 85 jobs in its equities units in Hong Kong and Japan, according to reports from Bloomberg.

Compagnie Financiere Richemont AG climbed 1.6% to Sfr60.10 after the Swiss luxury goods group reported sales growth over the five-month period to August was 13% at constant exchange rates or 23% at current rates.

ING Groep N.V. gained 1.1% to €6.074 after the Dutch lender intends to sell all of its approximately 54 million shares or 9% stake in Capital One in a public offering that could raise $3 billion. ING acquired the stake in Capital One when it sold its online division in the U.S. to Capital One.

Novartis AG advanced 0.9% to Sfr56.45 after the Swiss drug maker said that new data for Lucentis confirms long-term efficacy and benefits of individualized treatment.

Schneider Electric SA dropped 0.4% to €49.08 after the energy management specialist sold its 0.45% stake in AXA for approximately €120 million.

Swiss Re AG edged higher 0.1% to Sfr60.2 after the reinsurer completed the sale of its Admin Re U.S. business to Jackson National Life Insurance Co. The transaction results in an estimated loss on sale of $0.4 billion.