Divided EU Leaders Face More Cuts in Spending

Maureen Salinas
23 Nov, 2012
New York City

European markets were generally flat after leaders of 27 nations failed to finalize next seven year budget from 2014. Germany, UK, Sweden and Holland are pushing for larger cuts in expenses including popular farm subsidies and European officials pay.

[R]3:30 PM Frankfurt – European markets were generally flat after leaders of 27 nations failed to finalize next seven year budget from 2014. Germany, UK, Sweden and Holland are pushing for larger cuts in expenses including popular farm subsidies and European officials pay.[/R]

European leaders gathered in Brussels to hammer out seven year budget beginning 2014 and are likely to meet again as early as February to settle wide difference in spending cuts proposed several countries.

“There are huge differences,” Dutch Prime Minister Mark Rutte.

Rich countries, Germany, Sweden, Holland and UK are net contributors to the budget are seeking larger than agreed on a compromised budget plan and developing countries are seeking more spending on infrastructure.

France, Poland, Greece and Italy are seeking smaller cuts in farm subsidies that are popular in home markets.

Germany and UK are pushing for additional budget cuts of as much as 75 billion euros on top of the 80 billion euros. UK Prime Minister David Cameron sought more cuts in 50,000 European civil servants.

After the first day of prolonged negotiations, the compromised budget was cut to 974 billion euros and on the second day of negotiations most donor countries were looking to trim that further to 950 billion euros with spending cuts across the board.

The euro traded nearly flat at $1.288.

European markets traded nearly flat in thin trading ahead of the opening in New York.

FTSE 100 index in London increased 9.9 or 0.2% to 5,801, DAX index added 3.1 to 7,248 in Frankfurt and CAC 40 index in Paris gained 1.5 to 3,500.

Stocks in Review

Amadeus IT Holdings SA extended losses for the seventh day by 3% to 17.95 euros after HSBC Holdings Plc failed to find a buyer for its 5.4% stake in the travel reservation services provider.

Carrefour SA decreased 23 cents to 18.67 euros and Metro AG fell 49 cents to 21.53 euros after Nomura lowered its view on the grocery and general goods retailer and blamed on the weak economic conditions in the region.

EADS declined 1.4% to 24.91 euros after a report in Handelsblatt speculated that German government is likely to acquire some of the stake held by French government. France and Germany are likely to have equal 12% stake in the company and Spain will hold 5% stake.

Valeo SA added 1.5% to 34.52 euros after Goldman Sachs lifted its view on the the auto parts maker.

Ouotec soared 7% to 39.21 euros after the Finland based mining machinery maker said sales and operating margins are expected to increase in 2013 based on the current order negotiations.

Iliad SA gained 3.45 euros or 2.7% to 131.90 euros on a broker recommendation. The discount mobile services provider has jumped nearly 20% in the last one month of trading.