Hollande Tax Plan Rejected, EC Approves Dexia Resolution Plan

Arthi Gupta
31 Dec, 2012
New York City

The European indexes traded sideways on U.S. fiscal cliff worries. French reject higher tax proposals. The UK housing equity withdrawal was

[R]1:50 PM Frankfurt – The European indexes traded sideways on U.S. fiscal cliff worries. French reject higher tax proposals. The UK housing equity withdrawal was £8 billion in the third quarter. BG Group secured a $1.8 billion loan from U.S. Ex-Im Bank.[/R]

The European indexes fluctuated in the last session of trading as U.S. lawmakers failed to agree on a revised budget and avoid automatic tax increase and spending cuts.

The failure to an agreement is likely to kick in higher taxes for all Americans and cut domestic programs and much needed bloated military spending.

But the uncertainty in Washington is likely to have an impact in how businesses process payroll checks and how benefit programs are run from tomorrow.

The European Commission approved the revised Dexia orderly resolution plan submitted by the Belgian, French and Luxembourg on December 14. It will permit implementation of €5.5 billion capital increase for Dexia SA along with the establishment of the definitive tripartite funding guarantee.

French President Francois Hollande''s proposal to impose taxes of about 75% on people whose annual income was above €1 million was rejected by the country''s Constitutional Council on Saturday, media reports said.

The proposal is aimed at reducing public debt.

Many European markets are closed today for trading; while the markets in London and Paris close early.

In Paris trading, the CAC-40 Index gained 27.67 or 0.8% to 3,647.92 and in Frankfurt the DAX Index edged lower 43.49 or 0.6 % to 7,612.39.

The yields on Spain’s benchmark were at 5.265%. Italian 10-year yields were at 4.497%.

For the year, the CAC 40 Index surged 15.4% and the DAX Index soared 29.1%.

Spanish Current Account Swings to Surplus

Spain''s current account swung to a surplus of €865.4 million in October compared to a deficit of €1.36 billion in the same month a year earlier, data released by the central bank showed.

UK Housing Equity Withdrawal Negative

The UK housing equity withdrawal in seasonally adjusted terms was -£8 billion in the third quarter, a report on Housing Equity Withdrawal from the Bank of England showed today.

HEW as a percentage of post-tax income was -2.9% in the third quarter compared to -3.5% in the second quarter.

The negative figure indicates a continued injection of housing equity by households overall, with the net flow of lending secured on dwellings remaining weaker than their investment in housing.

Stock Movers

BG Group plc increased 0.7% to 1,014.67 pence after the oil and gas explorer secured a $1.8 billion loan from the Export-Import Bank of the United States.

City of London Investment Group plc climbed 1.2% to 245 pence after the asset management company announced that Doug Allison, Finance Director, will replace Chief Executive Officer from Barry Olliff.

Gasol PLC rose 1.7% to 13.60 pence after the African-focused gas company reported total comprehensive loss for the six months ended September 30 widened to £1.73 million compared with a loss of £1.04 million a year before.

Rexam Plc dipped 0.2% to 435.50 pence after the consumer packaging firm confirmed that it has received approval from the Chinese authorities, and anticipates completion of the sale of its Cosmetics, Toiletries and Household care products business to an affiliate of Sun European Partners, LLP for $459 million in cash.