Italy Sells

Barry Randall
28 Dec, 2012
New York City

European markets traded lower on the worries that the U.S. lawmakers are likely to miss a deadline to settle budget differences. Market indexes in Paris fell 1.4% and in Frankfurt declined 0.6%. Trading volume in the region fell sharply in the session.

[R]4:00 PM Frankfurt – European markets traded lower on the worries that the U.S. lawmakers are likely to miss a deadline to settle budget differences. Market indexes in Paris fell 1.4% and in Frankfurt declined 0.6%. Trading volume in the region fell sharply in the session. Italy sold €3 billion of bonds.[/R]

Stocks in European markets traded lower as U.S. lawmakers struggle to bridge differences. France lowered its estimate of economic growth and Spanish retail sales fell more than expected for the second month in a row.

In London trading, FTSE 100 index fell 33.4 or 0.6% to 5,921, in Frankfurt the DAX index declined 43.50 or 0.6% to 7,621 and in Paris the CAC 40 decreased 48.4 or 1.3%.

For the week, the DAX index gained 0.2% and the CAC 40 index fell 0.6%.

French Economic Growth Lowered

French economic growth estimate was revised lower to 0.1% today from its previous estimate of an increase of 0.2%, according to the statistics agency Insee.

The latest revision in the economic growth was driven by weaker than expected investment from business and smaller increase in household consumption.

Business investments in the quarter declined 0.6% and international trade contributed 0.3% to the economic growth but household consumption growth slowed to 0.2%. International trade subtracted 0.4 percentage point in the previous quarter.

In a separate report, the number of people looking for work increased by 29,300 in November.

Spanish Retail Sales Fall

Spanish retail sales declined 7.8% in November from a year ago after declining 8.4% in October.

Prime Minister Mariano Rajoy said at the last news conference of the year that he is prepared to seek help from European Union if conditions warrant it, reversing his earlier stance that he will avoid help at all costs.

Italy Completes Bond Offerings

The Treasury office in Rome sold €3 billion of 10-year bonds that yielded 4.48% up from 4.45% at the last auction on November 29.

In addition, the Treasury sold €2.9 billion bonds with maturity in 2017 yielding 3.26% compared to 3.23% in November 29 auction.

Bid to spread ratio for 10-year increased to 1.47 times from 1.18 at the previous auction last month and the ratio increased to 1.29 from 1.24 for 5-year bonds.

The 10-year Italian bonds traded 1 basis point declined to 4.5% and premium to German debt stabilized at 321.6 points.

Stocks in Review

Atari declined 6% to 89 euro cents after the video game maker said it will report an operating loss in the second half of current fiscal year and estimated a “significant” loss in the year.

Royal Caribbean Cruise Ltd awarded a contract to build 361 meter “Oasis” class cruise ship to a shipyard controlled by STX France SA for more than €1 billion. The contract terms also includes an option for a second ship.

European banks were under pressure. Banco Santander declined 2% to €5.99 and BNP Paribas SA fell 2.1% to €42.59.

KBC Groep NV, the largest bank and insurance group of Belgium declined 1.3% to €25.90 after it agreed to sell its stake in Slovenia based Nova Ljubljanska Banka d.d. The bank is still behind in missing a deadline imposed by the European Union to dispose other asssets.

Bankia plunged 22% to 42.79 euro cents, a new low since it was listed in July 2011, and the stock will be dropped from the Spanish benchmark IBEX 35 from next year.

Porsche SE soared 6% to €61.56, the high not seen last January, after the company won a lawsuit on appeal that it planned to corner Volkswagen AG shares. The group of hedge funds based in the U.S. had sought more than $1 billion in damages.

Vinci SA declined 1.7% to €36.09 after it agreed to purchase Portugal based airport operator ANA controlled by the government for €3.08 billion.