Euro Zone Ministers Discuss Emergency Lending, Markets Advance

Barry Randall
21 Jan, 2013
New York City

European markets gained and the earnings growth expectations are low in the region ahead of the scheduled release. Producer prices rose 2.2% in third quarter in Switzerland but declined 0.3% in December in Germany. Spain is set to release jobs data this week.

[R]4:00 PM Frankfurt – European markets gained and the earnings growth expectations are low in the region ahead of the scheduled release. Producer prices rose 2.2% in third quarter in Switzerland but declined 0.3% in December in Germany. Spain is set to release jobs data this week. [/R]

Market indexes across Europe gained to close at a 2-year high as finance ministers in the region meet for the first time in the year.

In London trading, FTSE 100 index increased 0.4% or 24.3 to 6,179 and in Frankfurt the DAX index gained 0.5% or 41.80 to 7,744.

In Paris, the CAC 40 index edged up 0.5% or 18.90 to 3,790. Market indexes in 14 of the 18 nations in the region closed higher.

Euro zone finance ministers are set to discuss how to channel the emergency lending directly to banks and under what conditions the European Stability Mechanism can override governments.

In economic news, producer prices in third quarter to December in Switzerland increased 2.2% from a year ago period.

German producer price declined 0.3% in December after falling 01% in November.

Average asking home price in London increased again according to the latest data released by the online real estate site Rightmove Plc.

Asking price on average increased 3.6% in January from the previous month according to the website.

Spain’s economy ministry said exports declined 0.6% in November from a year ago when the exports had increased 7.4%. Spain is also set to release home price data and Bank of Spain is set to announce its estimate of fourth quarter GDP growth.

Economists are estimating the economy to declined 1.5% in the current year after shrinking 1.4% in 2012.

In bond market trading, Spain’s 10-year benchmark bond eased and the yield increased to 5.11% ahead of jobs report scheduled to be released this week. The spread to German bund increased to 3.52 percentage points.

Stocks in Review

Banks in Madrid were in focus after the Bank of Spain said last week that default rates on loans surged to 17% in the third quarter and soared to 30% for all real estate loans.

Lending to consumers and businesses declined 0.3% in the November from October, according to the central bank.

BancoPopular Espanol SA and CaixaBank gained 0.8%.

Danish industrial enzymes maker Novozymes soared 6.5% to DKK171.10 in Copenhagen trading.

Sales in 2012 increased 7% from a year ago to DKK 11.234 billion and net profit increased declined to 10% to DKK2 billion after rising at 13% in 2011.

Laundry detergent and other household cleaning products enzymes sales increased to DKK3.78 billion and totaled 34% of all sales.

Diluted earnings per share increased to DKK6.33 from DKK5.71 in 2011.

Pearson Plc declined 2.3% to 1,209 pence after the book publisher lowered its estimate of 2012 net earnings to 84 pence from the previous estimate of 84.9 pence and blamed on lower incomes in the professional education segments and its Financial Times Group businesses.

PostNL NV increased 5.7% to 1.88 euros after a hedge fund demanded the company to detail its plan to restore its stock price and dividend after UPS withdrew its offer for TNT Express NV.

Credit Suisse lifted its view on parent of British Air. International Consolidated Airlines Group increased 1.7% to 211 pence. Air France-KLM Group gained 4% to 8.40 euros after the broker lifted its outlook.

The Swiss luxury group Richemont dropped 5.5% to Sfr74.70 after the company said sales growth has declined to flat in Asia Pacific and said third quarter revenues rose 9.3% to 2.86 billion euros.

Other luxury group stocks declined on the Richemont sales report. LVMH Moet Hennessy Louis Vuitton SA decreased 1.4% and Burberry Group Plc decreased 1.3%.

Sky Deutschland AG dropped 4.8% to 4.52 euros after the Germany based pay TV operator estimated annual loss that was larger than expected by analysts. The company also said it will place 20.4 million shares at 4.46 euro each in a new offering.