Euro Falls on Weak German Economic Data

Arthi Gupta
24 Oct, 2012
New York City

The European indexes advanced. German confidence deteriorated, euro area private sector activity fell to a 40-month low, and UK factory orders fell unexpectedly in October. Rolls-Royce won a $2.6 billion order from Singapore Airlines.

[R]2:30 PM Frankfurt – The European indexes advanced. German confidence deteriorated, euro area private sector activity fell to a 40-month low, and UK factory orders fell unexpectedly in October. Rolls-Royce won a $2.6 billion order from Singapore Airlines.[/R]

European indexes advanced despite weaker than expected corporate earnings and economic data and the rise in bond yields of Italy and Spain.

Euro area private sector activity fell to a 40-month low and German business confidence deteriorated in October weighing on investor sentiment.

In Paris trading, the CAC-40 Index gained 16.57 or 0.5% to 3,422.59 and in Frankfurt the DAX Index edged higher 22.83 or 0.3% to 7,196.52.

The yields on Spain’s benchmark 10-year rose six basis points to 5.6%. Italian 10-year yields climbed four basis points to 4.90%.

Euro Area Sentiment Improves

Euro zone consumer confidence improved in October, a survey published by European Commission showed.

The flash consumer confidence indicator rose to -25.6 in October from -25.9 in September.

For the wider region of EU nations, the confidence index fell to -24.2 in October from -24 in September.

Separately, the euro zone downturn deepened at start of fourth quarter as PMI hit 40-month low, a survey by Markit Economics showed.

The purchasing managers'' index for the manufacturing sector declined to 45.3 in October from 46.1 in September. The services activity index rose marginally to 46.2 in October from 46.1 in September.

The composite output index, that measures performance of both manufacturing and services sector, fell to 45.8 in October from 46.1 in September, a 40-month low.

In another report, euro zone government debt-to-GDP ratio increased to 90% in the second quarter from 88.2% at the end of the first quarter, data published by Eurostat showed today.

A year ago, the debt was 87.1% of GDP.

German Manufacturing Activity Falls

German manufacturing activity declined in October, preliminary results of a survey by Markit Economics showed today.

The purchasing managers'' index for the manufacturing sector fell to 45.7 in October from 47.4 in September.

The services activity index fell to 49.3 in October from 49.7 in September.

The composite output index, a measure of performance of both manufacturing and services sectors, dropped to 48.1 in October from 49.2 in September, a two-month low.

Separately, Germany''s business confidence continued to deteriorate in October, according to survey results from the Ifo Institute.

The business climate index fell to 100 in October from 101.4 September.

UK Factory Orders Decline

The UK factory orders fell unexpectedly in October, the Industrial Trends survey conducted by Confederation of British Industry showed.

The order book balance slumped to -23 in October from -8 in September.

Rolls-Royce Secures Singapore Airlines Order

Rolls-Royce Holdings Plc won a $2.6 billion order, at list prices, from Singapore Airlines for Trent engines to power 20 Airbus A350-900 and five Airbus A380 aircraft. The order includes long-term TotalCare service support.