European Markets Fall, French Confidence Deteriorates

Arthi Gupta
23 Oct, 2012
New York City

The European indexes declined and Spain raised

[R]1:00 PM Frankfurt – The European indexes declined and Spain raised €3.527 billion from a bond auction today. French business sentiment worsened in October. The UK mortgage approvals rose in September. The Spanish economy contracted in the third quarter.[/R]

European indexes edged lower on mixed corporate earnings and Spain raised €3.527 billion from an auction of three- and six-month bills.

Moody’s downgraded five Spanish regions, Andalucia, Extremadura, Castilla-La Mancha, Catalonia, and Murcia by one or two notches each.

In Paris trading, the CAC-40 Index fell 19.76 or 0.6% to 3,463.49 and in Frankfurt the DAX Index edged lower 59.59 or 0.8% to 7,267.96.

The yields on Spain’s benchmark 10-year rose 0.05 percentage point to 5.53%. Italian 10-year yields climbed 0.04 percentage point to 4.80%.

Spanish Bond Auction

Spain raised €3.527 billion from an auction of three- and six-month bills, exceeding its maximum target of €3.5 billion.

The Spanish Treasury issued €2.56 billion in six-month bills at an average yield of 2.1% compared to 2.3% in the prior auction. The bid-to-cover ratio rose to 2 compared to 1.8.

The country also issued €967 million in three-month bills at an average yield of 1.45% compared to 1.25% in the prior auction. The bid-to-cover ratio climbed to 4.3 compared to 3.3 last time.

French Confidence Drops

French business sentiment worsened in October, data released by statistics office Insee showed today.

The headline business confidence index dropped to 85 in October from 90 in September.

Confidence in the retail sector improved to 89 in October from 87 in September.

UK Mortgage Approvals Climb

The number of mortgage approvals for house purchases in the United Kingdom increased to 31,175 in September from 30,683 in August, data released by the British Bankers'' Association showed.

The banks’ net mortgage lending grew 0.5% in the year to September.

Gross mortgage lending of £7.3 billion in September was lower than the recent monthly average and reflected continued low levels of activity in the housing market, the agency said.

Spanish Economy Contracts

The Spanish gross domestic product declined 0.4% sequentially in the third quarter, similar to the contraction seen in the second quarter, a report from the Bank of Spain showed.

Annually, the economy is estimated to have contracted 1.7% in the third quarter compared to 1.3% in the second quarter.

Italian Non-EU Deficit Narrows

Italy''s merchandise trade with non-European Union countries in September resulted in a deficit, preliminary data released by statistics office Istat showed.

Exports of goods to non-EU countries increased 0.3% and imports decreased 7.6% on an annual basis in September. The deficit from trade with non-EU states narrowed to €596 million in September from €1.83 billion in the same month last year.