European Markets Trim Losses, Swiss Index Surges 2.9%

Barry Randall
03 Jan, 2013
New York City

European markets trimmed losses and Swiss market index played a catch up after holiday break. The benchmark index soared 2.9% in Zurich trading. Indexes across the region traded lower as resource and banks closed down.

[R]4:30 PM Frankfurt – European markets trimmed losses and Swiss market index played a catch up after holiday break. The benchmark index soared 2.9% in Zurich trading. Indexes across the region traded lower as resource and banks closed down.[/R]

European market indexes were under pressure at the opening after rallying sharply in yesterday’s trading. Market indexes recovered in the late afternoon but traders were cautions on the upcoming U.S. debt negotiations.

In London trading, FTSE 100 index gained 0.3% or 20 to 6,047 and in Frankfurt trading, DAX index declined 22.3 or 0.3% to 7,756. In Paris, CAC 40 index decreased 0.3% or 12.8 to 3,721.

Swiss markets soared after trading reopened for the first time this year and played a catch up to the regional markets. The benchmark index SMI jumped 2.9%.

Market indexes were under pressure after German unemployment held steady and Spain reported a decline in registered unemployment rate in December. In UK home prices fell in December and my decline in 2013 according to the latest economic survey released by Nationwide Building Society.

In Switzerland, manufacturing output decreased less than estimated by economists in December and the overall KOF economic indicator weakened for the third month in a row.

German Unemployment Steady, Spain Adds Service Jobs

German unemployment increased less than expected.

Federal Labor Agency said the number of people looking for work in December increased to a seasonally adjusted 3,000 to 2.94 million. The increase in the month was less than what most economists had estimated between 10,000 and 15,000.

The seasonally adjusted unemployment rate in the largest economy in Europe held steady at 6.9%, near a two-decade low.

Separately, Spain reported registered unemployment declined for the first time in December in five months.

Labor ministry said the number of unemployed declined by 59,094 in December from November and total number of unemployed declined 1.2% in the month to 4.85 million in the month.

The decline in unemployment rate was driven by increase in service sector employment for the holiday season.

Spanish unemployment is expected to stay above 25% in 2013 as the nation heads for another year of contracting economic activities.

Stocks in Review

Alcatel-Lucent soared 10% to 1.15 euros after Credit Suisse upgraded the recommendation to “neutral” from “underperform.”

Compass Group, the caterer to airlines, declined 1.6% after Espirito Santo Investment Bank downgraded the stock rating on valuation concerns. The bank lowered its price target on the stock to 700 pence from the previous target of 750 pence.

K+S AG declined 3.5% to 33.89 after the U.S. and Canada based fertilizer companies cut prices for the latest agreement with a Chinese company.

Potash Corp, Agrium Inc and Mosaic Co said on Monday that they agreed to sell 1 million tons of fertilizer to China based Sinofert Holdings Ltd at a $70 a ton price lower than the sale price in March.

Next Plc gained 2.5% to 3,873 pence in London trading after the UK’s second largest apparel retailer revised higher full-year net income to between 611 million pounds and 625 million pounds.

Trading volume in the stock was nearly double its last three month of daily average volume.

Swiss stocks soared and the benchmark index surged more than 2.5%. Roche Holding AG soared 3% and Novartis AG added 2.2%.

UBS, the largest Swiss bank gained 4.1% to Sfr14.80. Swatch Group AG gained 6.4% to Sfr490.50 and Richemont soared 5.5% to Sfr75.50.

Rio Tinto Plc declined 0.9% in London trading to 3,658.50 pence and BHP Billiton plc fell 0.4% to 2,199 pence. Mining companies were lower on profit taking.

Wacker Chemie AG surged 5% to 53.39 euros after UBS recommended the German maker of polysilicon to a list of chemical companies favored in Europe.