European Output Declines For Third Month, Markets Struggle

Barry Randall
14 Jan, 2013
New York City

European markets were weak across the region but merger activities lifted larger markets. Industrial production declined 3.7% in November, third monthly decline in a row.

[R]4:30 PM Frankfurt – European markets were weak across the region but merger activities lifted larger markets. Industrial production declined 3.7% in November, third monthly decline in a row.[/R]

European markets were in early decline after industrial production declined in November but closed higher on merger deals announcements.

Industrial production fell 0.3% in November from October according to the latest data released by the eurostat, the statistics office of the euro zone based in Luxembourg.

The production index declined for the third month in a row even though the rate of fall had eased. The output index declined 2.3% in September and declined 1% in October.

From a year ago, industrial production declined 3.7% in November. Industrial output increased 0.1% in the month, a turnaround from the decline in two previous months, but still the data highlighted the difficulty faced by German exporters.

In London trading, FTSE 100 index declined 0.1% to 6,114; in Frankfurt the DAX index gained 13.5% or 0.2% to 7,729 and in Paris the CAC 40 index added 0.2% or 5.8 to 3,712.

Market indexes closed lower in eleven of the sixteen nations in the euro zone.

The euro held its ground and consolidated at $1.3365 ahead of three separate speeches from the Fed officials later today.

Stocks were under pressure in early trading in Germany and in peripheral nations in the euro zone on the ongoing worries that the slow economic growth may dampen earnings growth at corporations.

TNT Express plunged 49% after United Parcel Service Inc said it will abandon its takeover offer for the company after European regulators said they will block the deal.

Stocks in Review

Cap Gemini increased 3% to €35.25 after Barclays Plc lifted its view on the stock following an upgrade from Goldman Sachs on the speculation that the company will deliver better results in 2013 after India based Infosys lifted current year sales outlook last week.

Electricite de France SA soared the most in a year by 5.4% to €14.40 after French government agreed to compensate the company for its deficits resulting from its mandatory public-service investments.

The company said it will received payments in a schedule to 2018 totaling €4.9 billion.

PSA Peugeot Citroen gained 5% to €6.41 after the France’s second largest automaker said its auto financing division completed €5.3 billion loan agreements as a part of a refinancing plan.

Saint Gobain gained 2.2% and reversed earlier losses in the session after it said it received a $1.7 billion offer from Ireland based Ardagh Group for its North American business at its glass making unit Verallia.

Harry Winston Diamond Corporation ((HWD)) climbed 9.5% or $1.35 to $15.81 after the Canada based luxury watch retailer agreed to sell its luxury brand diamond jewelry and watch division to The Swatch Group Ltd. for $750 million in cash plus assumption $250 million and net debt..

Swatch Group increased 4% to Sfr512.50.

United Parcel Service, Inc. ((UPS)) increased 1.7% or $1.39 to $79.31 after the courier services provider abandoned its €5.2 billion or $6.9 billion takeover of Netherlands based express delivery company, TNT Express.

Competition authorities at the European Commission informed the two companies that its proposed asset sales did not go far enough and may harm competition and will block the merger proposal.

UPS will pay a termination fee of 200 million euros to TNT and will withdraw the offer. In March 2012, UPS has offered to purchase TNT.

Shares of TNT Express declined 49% to €4.90 in early trading Amsterdam exchange. PostNL, which controls 30% stake in TNT plunged 36% to €1.82.