Weak Euro Area Manufacturing, Greece Announces

Arthi Gupta
03 Dec, 2012
New York City

The European indexes traded higher after a private survey showed improving manufacturing in China. The downturn in the euro zone manufacturing sector eased in November. Greece announced

[R]2:40 PM Frankfurt – The European indexes traded higher after a private survey showed improving manufacturing in China. The downturn in the euro zone manufacturing sector eased in November. Greece announced €10 billion debt buyback program.[/R]

The European indexes gained after a private survey showed improving manufacturing in China and Greece announced a plan to buy back €10 billion bonds to unfreeze the delayed aid.

The HSBC purchasing managers’ index for China rose to 50.5 in November from 49.5 in October. The marginal improvement in a private survey was welcome by investors as companies’ battle falling demand from the euro zone.

Euro zone finance ministers are to meet in Brussels today to discuss details of the Greek debt buyback program. Greece confirmed that it will be buying up to €10 billion of its own debt at a price higher than the current price in the market. The buyback has to be concluded by December 13 for Greece to avail €30 billion of the bailout money.

Greek government will purchase bonds at a set price for a series of bonds with nominal value of €63 billion. The bonds were trading at 25% to 34% to its nominal value in the market before the announcement. The bond prices have gained in the last week on the expectations that the government will announce a plan today.

Greek government said it will not spend more than €10 billion on the buyback and investment must declare their interest by Dec 7 and receive settlement on Dec 17.

German Chancellor Angela Merkel hinted that Germany may ultimately write-off Greek debt, but not before 2015, according to an interview with Bild am Sonntag newspaper.

Moody''s Investors Service downgraded its ratings on the ESM to Aa1 from Aaa, while the ESFS provisional ratings were slashed to (P)Aaa1 from (P)Aaa, maintaining a negative outlook on each.

In Paris trading, the CAC-40 Index rose 41.31 or 1.2% to 3,598.59 and in Frankfurt the DAX Index edged higher 73.02 or 1% to 7,478.32.

The yields on Spain’s benchmark were at 5.34%. Italian 10-year yields declined three basis points to 4.56%.

Euro Zone Manufacturing Slows

The downturn in the euro zone manufacturing sector eased in November, as the rates of contraction in output, new orders and employment all slowed.

The seasonally adjusted Markit Final Eurozone Manufacturing PMI rose to an eight-month month high and was unchanged from the earlier flash estimate. The final reading of Markit’s manufacturing purchasing managers’ index rose to 46.2 in November from 45.4 in October.

Spanish Manufacturing Rises

Business conditions in the Spanish manufacturing sector deteriorated again in November, albeit at a weaker pace.

The seasonally adjusted Markit Purchasing Managers’ Index rose to 45.3 in November from 43.5 in October. Worsening business conditions have now been signalled in each of the past 19 months.

French PMI Up

French manufacturing sector operating conditions remained weak in November, according to a report released by Markit Economics today.

The headline Purchasing Managers’ Index climbed to 44.5 in November from 43.7 in October and its highest reading in three months. Any reading below 50 indicates a contraction.

German Manufacturing Output Gains

There were slower declines in German manufacturing output and new orders during November.

The final seasonally adjusted Markit/BME Germany Purchasing Managers’ Index edged higher to 46.8 in November from 46 in October.

UK Manufacturing Eases

UK manufacturing downturn eases in November. The seasonally adjusted Markit/CIPS Purchasing Managers’ Index rose to 49.1 in November from October’s three-month low of 47.3.

HSBC Plans Selling Toxic U.S. Debt

HSBC Holdings Plc begins to divest over $40 billion or £25 billion of toxic U.S. debt it is still holding on its books, according to The Daily Telegraph.

Reports added that the bank intends to dispose four sub-prime loan portfolios worth $2.7 billion in the next year.