Italian Debt Auction Fuels European Market Rebound

Nigel Thomas
27 Feb, 2013
New York City

European markers sharply rebounded after Italy managed to place debt at a slightly higher yield. Market indexes in Paris rebounded 1.9% and in Milan jumped nearly 2%. Italian bond yields closed at 4.83%, a four-month high.

[R]5:00 PM Frankfurt – European markers sharply rebounded after Italy managed to place debt at a slightly higher yield. Market indexes in Paris rebounded 1.9% and in Milan jumped nearly 2%. Italian bond yields closed at 4.83%, a four-month high.[/R]

European markets rebounded after Italy managed to sell debt a day after election results. The FTSE MIB Index gained 1.8% after falling as much as 5% in Tuesday’s trading.

In London trading, FTSE 100 index edged up 0.9% or 55.4 to 6,326 and in Frankfurt, the DAX index rose 1% or 78.7 to 7,676. In Paris, CAC 40 index gained 1.9% or 69.6 to 3,691.

Italy placed 5- and 10-year of bonds totaling 6.5 billion euros, the maximum target set by the treasury.

The yields on the 10-year bonds jumped to a 4-month high to 4.83% but lower than 4.96% at yesterday’s close.

For the auction, the bid-to-ask ratio was 1.65 compared to 1.32 times in the previous auction on January 30. The last auction averaged at a yield of 4.17% for 10-year bonds.

Italian bond yields rose but the Treasury managed to complete the auction and meet the highest target despite the growing uncertainties after general elections.

Beppe Grillo, the leader of 5 Star Movement with the third largest share of votes in general election said today his party members will not vote in favor of any coalition government.

Spanish 10-year bond yields decreased 13 basis points to 5.23% and similar yield for Portugal declined 7 basis points to 6.49%.

German 10-year bund yield increased to 1.45%.

Stocks in Review

Anheuser Busch Inbev SA gained 1% to €70.50 after the Belgium based brewing company reported revenue for the fiscal year ending in December soared 7.2% to $39.76 billion.

Net income for the year climbed 24% to $7.24 billion compared to $5.86 billion and earnings per share rose to $4.53 from $3.67 a year ago.

EADS NV surged 6.4% to €37.10 after the Netherlands based aerospace and defense group reported revenue for the fiscal year ending in December jumped 15% to €56.48 billion.

Net income for the year surged 19% to €1.23 billion compared to €1.03 billion and earnings per share rose to €1.50 from €1.27 a year ago. At the end of the year, the aviation company said new order totaled €102.5 billion and total backlog increased to €566.5 billion.

Deliveries remained strong with record 588 aircraft for Airbus Commercial, 29 aircraft for Airbus Military, 475 helicopters at Eurocopter.

The company expects in 2013, gross commercial aircraft orders nearly 700 aircraft and Airbus deliveries to grow between 600 and 610 commercial aircraft.

Centrica plc fell 0.3% to 347.90 pence after the UK based energy company stated group revenue for the fiscal year ending in December advanced 5% to €23.94 billion.

Profit for the year surged more than two-fold to €1.27 billion compared to €421 million and earnings per share climbed nearly two-fold to €24.4 from €8.5 a year ago earlier.

The energy company said total adjusted operating profit in the year surged 14% to €2.74 billion and adjusted earnings advanced 5% to €1.41 billion.

Henderson Group plc declined 5.1% to 151.60 pence after the UK based investment manager reported total fees income for the year ending in December dropped 9% €437.8 million.

Profit for the year jumped nearly three-fold to €99.9 million compared to €33.9 million and diluted earnings per share climbed nearly three-fold to 9.2 pence from 3.4 pence a year ago.

The Restaurant Group plc climbed 7.2% to 417.16 pence after the UK based restaurants and pub operator said revenue for the fiscal year ending on December 30 jumped 9% to €532.5 million.

Profit for the year advanced 6% to €48.23 million compared to €34.38 million and diluted earnings per share increased to 24.5 pence from 17.18 pence a year period.

The Weir Group Plc increased 3.3% to 2,237 pence after the UK based capital goods maker said revenue for the fiscal year ending on December 28 climbed 11% to €2.54 billion.

Profit for the year increased 6% to €315.7 million compared to €298.3 million and diluted earnings per share increased to €146.2 from €130.5 a year period.