ECB Seeks Sovereign Budget Oversight, Spanish Retail Sales Plunge

Arthi Gupta
29 Oct, 2012
New York City

The European indexes edged lower. Spanish retail sales plunged in September and the UK home prices eased in October. Penguin and Random House agreed to combine their businesses.

[R]1:30 PM Frankfurt – The European indexes edged lower. Spanish retail sales plunged in September and the UK home prices eased in October. Penguin and Random House agreed to combine their businesses.[/R]

European indexes traded lower as leaders schedule to meet this week and European regulators step up the media offensive to gain deeper control over member nation’s budgets.

The Italian Prime Minister Mario Monti and the Spanish Premier Mariano Rajoy meet in Madrid today.

The European Central Bank President Mario Draghi said in an interview with the German magazine Der Spiegel that he fully backed German Finance Minister Wolfgang Schaeuble''s proposal for giving the EU Commissioner for Economic and Monetary Affairs a direct say in national budgets.

He said in order to restore confidence in the euro area; countries need to transfer part of their sovereignty to the European level.

In Paris trading, the CAC-40 Index declined 30.26 or 0.9% to 3,404.48 and in Frankfurt the DAX Index edged lower 33.52 or 0.5% to 7,198.36.

The yields on Spain’s benchmark 10-year is at 5.66. Italian 10-year yield is at 4.89%.

Separately, in a joint report from the European Central Bank and European Commission said that Spain is on track to fix its banking sector but the nation will need strong actions to deal with some banks.

Spain agreed to set up Asset Management Company that will take over risky assets from banks and the new company will be in place on December 1. The agreement paves the way for banks to receive a loan of up to €100 billion to recapitalize its banks.

Former Italian Prime Minister Silvio Berlusconi was sentenced to four years in jail on Friday.

The judge ruled that between 2000 and 2003, there had been “an incredible fraud operation” around broadcast rights transactions and said that Berlusconi showed a “natural capacity for crime.”

Berlusconi has the right to appeal the ruling two more times before the sentence becomes enforceable.

UK Home Prices Ease

The UK home price increase slowed 0.1% in October, unchanged from the rate in September, property tracking Web site Hometrack said today.

Annually, home prices declined 0.4% in October after falling 0.5% in September.

The number of sales agreed surged 9.2% in October.

Separately, the UK mortgage approvals increased to 50,024 in September from 47,921 a month ago, data from the Bank of England showed today.

Total lending to individuals rose 0.1% or £1.7 billion in September from the prior month.

Consumer credit climbed £1.2 billion in September.

In another report, M4 money supply rose 0.2% from a month ago, but fell 3.5% annually in September.

Spanish Retail Sales Drop

Spain''s retail sales plunged 12.6% on an annual basis in September, following the 2% fall in August, revised down from 2.1%, data released by statistics office INE showed.

Sales of food products fell 5.9% and non-food products dropped 16.8% compared to September 2011.

Swedish Retail Sales Up

Sweden''s retail trade sales volume increased 1.7% in September from August, data released by Statistics Sweden showed today.

Retail trade sales volume increased 4.6% in September compared to the same month last year. Retail sales for consumables increased 1.4% while retail sales for durables increased 7%.