German Confidence Rebounds; Vivendi, Deutsche Bank Fall

Barry Randall
22 Jan, 2013
New York City

European markets closed lower as the earnings season get in the full swing this week. Vivendi declined on the difficult business conditions at its telecom unit. Deutsche Bank was asked to simulate profit after a breakup of banking from securities business by the German regulator.

[R]4:00 PM Frankfurt – European markets closed lower as the earnings season get in the full swing this week. Vivendi declined on the difficult business conditions at its telecom unit. Deutsche Bank was asked to simulate profit after a breakup of banking from securities business by the German regulator.[/R]

European markets opened lower following the weakness in Asian markets after Bank of Japan revised its inflation target but fell short of bond purchase program schedule.

Market indexes briefly rebounded after business confidence in Germany improved but declined in the final hour of trading on the weakness in New York.

In London, FTSE 100 index declined 1.8 to 6,179 and in Frankfurt, the DAX index fell 52.6 or 0.7% to 7,696. In Paris, CAC 40 index fell 22 or 0.6% to 3,741.

Markets in Madrid, Milan and Stockholm and in Zurich were weak as well.

The ZEW Center for European Economic Research based in Mannheim said its index for investor expectations increased to 31.5 in January from 6.9 in December.

The confidence index increased to the highest in 30 months after central bank offered more support to lending and offered more liquidity to banks.

Stocks in Review

Deutsche Bank declined 2% to 35.92 euros after German regulator Bafin asked the largest German lender to simulate profit when securities trading and banking divisions are separated. The news was first reported by Boersen Zeitung.

Vivendi SA declined 4% to 16.10 euros after chief executive of its SFR phone unit Stephane Roussel anticipated tough market conditions in the next 18 months in an interview with Le Parisien.

SFR also plans to cut tariffs by as much as 25% on certain communication plans.

Drillisch AG gained 3.5% to 12.28 euros, a record high in the last ten years, after the telecom company said it will increase 2012 dividend to 1 euro per share from 70 cents in 2011.

Monte Paschi declined 6% to 27.8 euros on the worries that a derivative contract may cut bank’s profit by as much as 220 million euros in 2012.

The bank signed a contract with Nomura Holdings Inc about 3-years ago that will cut into earnings according to a news report published in Ill Fatto Qutidiano that cited an internal memo written by Chief Executive Fabrizio Viola.