European Markets Extend 5-Day Losses, Vodafone to Buy Kabel Deutschland

Nigel Thomas
24 Jun, 2013
New York City

European markets extended losses and erased gains in the year so far and the euro weakened as the dollar advanced. Vodafone agreed to offer 7.7 billion euros to Germany

[R]4:15 PM Frankfurt – European markets extended losses and erased gains in the year so far and the euro weakened as the dollar advanced. Vodafone agreed to offer 7.7 billion euros to Germany’s largest cable operator Kabel Deutschland. Telefonica S.A. agreed to sell its Irish unit to Hutchison Whampoa.[/R]

European markets declined in a broad selloff that erased gains in most national indexes after Fed and China worries loomed.

FTSE 100 index declined 1.2%, the DAX index dropped 1% and the CAC 40 index plunged 1.7%.

For the year so far, the CAC 40 index is down 1.2% and the DAX 30 index is up 1.5% and the FTSE 100 index higher 2.5%.

In currency markets, Swedish krona declined 1.5% to 8.89 a euro and the Norwegian krone fell 1.3% to 8.05 a euro.

Spanish telecommunication group Telefonica S.A. agreed to sell its Ireland subsidiary to Hong Kong based Hutchison Whampoa Group for 850 million euros. Telefonica declined 1.6% in Madrid trading.

Also, Vodafone agreed to acquire Germany’s largest cable operator Kabel Deutschland for 7.7 billion euros or $10 billion.

Liberty Global controlled by billionaire John Malone is still in the bidding race and may offer a higher bid.

On the economic front, Germany’s business confidence index increased in June as expected by many economists.

In a private survey of 7,000 business executives conducted by Munich based Ifo Institute showed the business sentiment index improved slightly to 105.9 in June from 105.7 in May.

Belgian business confidence index declined to -12.8 in June from -12.4 in May, National Bank of Belgium said today. Confidence was lower in the manufacturing and construction industries but confidence in the trade recovered in the month.

Stocks in Review

The discount retailer Metro AG declined 6% after Citigroup lowered its view on the stock and recommended “sell.” Carrefour in Paris decreased 4%.

In Paris trading, BNP Paribas declined 2% and metal fabricator Vallourec and Danone dropped 2.2%.

In London trading, Vedanta Resources declined 4.8% but Essar Energy gained 3.5% after it reported quarterly financial results.

Eurasian Natural Resources Corp’s independent committee asked shareholders to reject a bid from the founders and Kazakh government that valued the company at $4.7 billion.

Erste Group, the largest Austrian bank, declined the most in a year after the bank reported lower than expected earnings and proposed a recapitalization plan and a rights offering that may raise as much as $1 billion.