Italian Premier Monti Resigns, German Trade Surplus Shrinks

Arthi Gupta
10 Dec, 2012
New York City

The European indexes traded sideways after Italian premier Mario Monti resigned ahead of schedule. The euro zone investor confidence improved in December and Greek output rose in October. The Italian economy contracted in the third quarter, fifth quarterly shrinkage in a row.

[R]5:00 PM Frankfurt – The European indexes traded sideways after Italian premier Mario Monti resigned ahead of schedule. The euro zone investor confidence improved in December and Greek output rose in October. The Italian economy contracted in the third quarter, fifth quarterly shrinkage in a row.[/R]

The European indexes closed lower after Italian premier Mario Monti resigned unexpectedly ahead of the schedule after former Premier Silvio Berlusconi’s party withdrew support.

Italian yields surged 29 basis points after Monti said he will resign after the budget approval and European leaders praised him for his austerity measures.

Italy is scheduled for new elections in February and Democratic Party leader Pier Luigi Bersani is likely to lead the next government according to recent opinion polls. Bersani said he will continue the policies put in place by Prime Minister Monti.

The next government will confront record unemployment, shrinking economy and record government deficit that has ballooned to 126% of gross domestic product.

Separately, Italian economy contracted for the fifth quarter in a row and industrial production fell 1.1% in October. German export rose less than imports and trade surplus fell to the lowest level in six months.

Greece extended the deadline for the buyback of debt till tomorrow, after initial offers fell short of target last week.

In Paris trading, the CAC-40 Index rose 0.19 or 0.01% to 3,606.06 and in Frankfurt the DAX Index edged higher 1.14 or 0.01% to 7,518.94. Milan benchmark index fell 2.5% and indexes in Spain also declined on the spill over impact after the resignation of Italian prime minister.

The yields on Spain’s benchmark rose climbed 11 basis points to 5.57%. Italian 10-year yields soared as much as 36 basis points and settled higher 29 basis points to 4.81%.

The euro declined to a 2-week low to $1.287.

Euro Zone Confidence Improves

Euro zone investor confidence improved in December, data released by the think-tank Sentix showed today.

The Sentix Index rose to -16.8 in December from -18.8 in November. This is its fourth increase in a row.

German Manufacturing Turnover Falls

Germany''s manufacturing turnover fell a seasonally-and-working-day adjusted 0.8% on a monthly basis in October after declining 3% in September, data released by the Federal Statistics Office of Germany showed.

From a year ago, turnover in the manufacturing dropped a working-day adjusted 3.3% in October following a 2.6% decline in September.

Separately, German exports grew 0.3% and imports increased 2.5% in October from September, Destatis reported. The trade surplus fell to €15.8 billion in October from €16.9 billion in September.

The current account surplus declined to €13.6 billion in October from a surplus of €17.3 billion in the September.

Greek Output Improves

Greece’s industrial production increased 2% on an annual basis in October from the 7% drop in September, data released by the Hellenic Statistics Authority showed today.

Production in the mining and quarrying industry increased 15.8% annually, while manufacturing production climbed 1.1%.

On a monthly basis, industrial production declined 6.5% in October following the 2.6 % gain in September.

Separately, Greece''s merchandise exports, excluding oil products, increased 13.8% annually to €1.529 billion in October. The value of imports increased 10.1% from a year ago to €2.734 billion.

In another report, Greece''s consumer price inflation eased to 1% in November from 1.6% in October, data released by the Hellenic Statistics Authority showed.

Food and non-alcoholic beverages prices rose 0.1% annually in November.

From a month ago, the consumer price index decreased 0.5% in November following the 0.8% increase in October.

Italian Economy Contracts

Italy''s gross domestic product contracted 0.2% in the third quarter compared with the 0.7% decline in the second quarter, final data from statistics office Istat showed. The latest was the fifth consecutive contraction.

Annually, the GDP declined 2.4% in the third quarter.