European Bond Yields Drop Near 2-Year Low, VW Reiterates Outlook

Nigel Thomas
29 Apr, 2013
New York City

Bond yield in Europe declined after Italy appointed Prime Minister Enrico Letta. Italian bond yield fell near 2-year low and economic confidence across the euro zone fell to the lowest since December. Aberdeen Asset Management soared to a 12-year high and VW reiterated its 2013 operating profit.

[R]4:00 PM Frankfurt – Bond yield across the euro zone declined after Italy appointed Prime Minister Enrico Letta. Italian bond yield fell near 2-year low and economic confidence across the euro zone fell to the lowest since December. Aberdeen Asset Management soared to a 12-year high and VW reiterated its 2013 operating profit target.[/R]

European markets traded higher after Italy appointed a new prime minister overcoming deep divide among lawmakers for two months and bond yields fell across the currency zone.

In London trading, FTSE 100 index increased 0.1% to 6,435 and in Frankfurt the DAX index gained 0.4% to 7,844. In Paris, CAC 40 index soared 1% to 3,849 after bond yields dropped.

The yield on Italian bonds declined to the lowest in 2-1/2 years after lawmakers elected Enrico Letta as the next prime minister of Italy.

The yield on 10-year bonds declined 12 basis points to 3.95%, 270 basis points higher than the similar maturity German Bund. Spanish 10-year yield decreased 7 basis points to 4.21%

Enrico Letta was sworn in as prime minister on Sunday, ending political uncertainties after inconclusive elections in February.

Economic confidence in the euro zone declined more than expected, the European Commission in Brussels said today.

The index of consumer and executive sentiment dropped to 88.6 in April from the revised 90.1 in March. The index declined to the lowest since December.

Stocks in Review

Aberdeen Asset Management soared 9% to 454 pence in London trading, a 12-year high, after the Scottish money manager reported first-half adjusted pre-tax profit of 222.8 million pounds. The asset manager also increased its dividend to 6 pence a share.

Ageas increased 4% to 27.43 euros after the largest Belgium based life insurer announced a special 1 euro a share dividend. The company will pass on the proceeds of the 1.04 billion euros from the sale of Royal Park Investments’ portfolio and 144 million euros from the sale of a derivative linked to the BNP Paribas SA stocks.

Balfour Beatty plunged 13% to 215.2 pence, the lowest since November 2011, after the largest construction company in the UK said operating profit will fall short by 50 million pounds to its previous estimate.

Italian banks rallied after the divided lawmakers agreed on a consensus Prime Minister Enrico Letta and ease concerns over political instability for now.

Intesa SanPaolo SpA increased 2.7% to 1.35 euros and UniCredit SpA added 1.9% to 4 euros.

Rentokil Initial Plc gained 4% to 100.2 pence after the pest control products maker agreed to sell its unprofitable City Link to Better Capital for 1 pound and booked a 40 million-pound loss.

Swedish Match AB, the tobacco and snuff maker, increased 6% to SKK219 after it posted first-quarter net income of SKK740 million.

Volkswagen AG increased 2% to 151.20 euros after the company reiterated 2013 operating earnings of 1.14 billion euros matching the results a year ago.