IMF Approves

Arthi Gupta
25 Oct, 2012
New York City

The European indexes gained on better than expected earnings. Sweden left its key rate unchanged and IMF approved

[R]1:30 PM Frankfurt – The European indexes gained on better than expected earnings. Sweden left its key rate unchanged and IMF approved €1.5 billion disbursement for Portugal. Euro zone money supply growth fell and the UK economy expanded in the third quarter.[/R]

European indexes edged higher on the hopes that more central bank action may follow after the latest economic weakness and better than expected earnings results from corporations.

The IMF approved another €1.5 billion disbursement for Portugal and Sweden''s central bank decided to hold the benchmark repo rate at 1.25%.

Shell agreed to acquire Beryl area energy fields in the UK for $525 million.

Greek finance minister Yannis Stournaras said yesterday that Greece was granted a two-year extension to abide by the terms set out by troika. However, the German finance ministry and the European Central Bank Executive Board member Joerg Asmussen rejected Greece''s assertion.

The International Monetary Fund completed the fifth review of Portugal’s performance under an economic program and approved immediate disbursement of €1.5 billion, bringing total disbursements under the Extended Fund Facility arrangement to about €21.8 billion.

The Executive Board of the Riksbank in Sweden held the repo rate unchanged at 1.25% and lowered the repo-rate path to stimulate the economy so that inflation rises towards the target of 2%.

The central bank said Swedish exports are dampened by the weak activity in the euro area and estimated gross domestic product to grow 0.9% this year from the 1.5% forecast in September.

In Paris trading, the CAC-40 Index gained 17.08 or 0.5% to 3,443.87 and in Frankfurt the DAX Index edged higher 40.84 or 0.6% to 7,233.73.

The yields on Spain’s benchmark 10-year declined four basis points to 5.53%. Italian 10-year yields were at 4.82%.

Euro Area Money Supply Growth Dips

The annual growth rate of the broad monetary aggregate M3 dropped to 2.7% in September compared with 2.8% in August, data published by the European Central Bank showed today.

The three-month average of the annual growth rates of M3 in the period from July to September slowed to 3% compared with 3.1% in the period from June to August.

The annual growth rate of M1 decreased to 5% in September from 5.2% in August.

The annual growth rate of credit extended to the private sector declined to -1.3% in September compared with -1.2% in August.

UK Economy Rebounds

The UK economy rebounded strongly in the third quarter, following three successive quarters of contraction, according to a report released by the Office for National Statistics today.

The preliminary estimate of GDP shows that the UK economy grew 1% in the third quarter, following a 0.4% drop in the second quarter.

Separately, the UK services output expanded 1.7% in August from a year ago, following a 1.1% rise in July, the Office for National Statistics said.

Two largest contributors to the growth were government and other services sector with a growth of 3.2% and business services and finance sector with a rise of 1.2%.

Spanish PPI Eases

Spain''s annual producer price inflation eased unexpectedly to 3.8% in September, from 4.1% in August, the statistics office INE said today.

Annual growth in capital goods prices climbed to 0.8% and intermediate goods cost to 1.3% in September.

From a month ago, the producer price index dipped 0.1% in September, following a 1.2% rise in August.

Shell to Acquire Beryl Area Assets

Royal Dutch Shell plc signed an agreement with Hess Corporation to acquire its interests in the Beryl area fields and the Scottish Area Gas Evacuation System for $ 525 million.

The Beryl Area includes 12 fields located on the UK Continental Shelf and with this acquisition, Shell’s interest in the different fields will increase between 9% to 65% depending on the field.