European Markets Ease, Spain Struggles to Contain Deficit

Nigel Thomas
26 Apr, 2013
New York City

European markets eased and pared weekly gains of 3% after Spanish government sought to extend by two years to meet the deficit target set by the European Union. PPR, the French luxury goods maker fell on a revenue miss and Total SA declined on lower revenues.

[R]4:30 PM Frankfurt – European markets eased and pared weekly gains of 3% after Spanish government sought to extend by two years to meet the deficit target set by the European Union. PPR, the French luxury goods maker fell on a revenue miss and Total SA declined on lower revenues.[/R]

Markets across the European Union declined after investors recalibrated the expectations of central bank actions. Indexes in the region pared weekly gains of more than 3%.

FTSE 100 index in London decreased 0.5% and DAX index in Frankfurt declined 0.3% and CAC 40 index in Paris dropped 0.9%.

For the year so far, the DAX 30 index is up 2.6% and the CAC 40 index has gained 4.5% and the FTSE 100 index surged 8.7%.

Spanish Prime Minister Mariano Rajoy’s Cabinet approved a plan to lower government deficit to 3% target set by the European Union two years later to 2016. The government deficit in the last year was 10.6%.

Deputy Prime Minister Soraya Saenz de Santamaria said to reporters in Madrid that the government has lowered its estimate of economic growth in 2014 to 0.5% from the July estimate of 1.2%.

Yesterday, Spain reported unemployment surged above 27% and long-term unemployment of people looking for work more than six months extended to three years according to private estimates.

Stocks in Review

Gjensidige, the Norwegian insurer, dropped 6% and led the decliners across Europe, after the company wrote down NKK611 million or $104 million on its investment in insurer Storebrand.

Ocado, the UK based online grocer, declined 5% after the company denied that it received overtures from the fourth largest supermarket William Morrison to acquire the company.

Pfizer ((PFE)) dropped 2% after an advisory committee for European regulators rejected the company’s rheumatoid arthritis.

Luxury goods retailer PPR plunged 6% in Paris trading after first quarter sales increased 1%, less than expected.

Total SA declined 1.5% in Paris after the oil company said earnings declined 7% on the losses in Canadian oil-sands project related losses and lower output.