European Rates on Hold, Broad Advance in European Indexes

Nigel Thomas
01 Aug, 2013
New York City

European markets advanced after the European Central Bank and Bank of England left key rates unchanged. A private survey of manufacturing sector showed a slight growth. Royal Dutch Shell earnings fell unexpectedly. BMW issued cautious outlook. Sanofi estimated larger decline in earnings.

[R]4:45 PM Frankfurt – European markets advanced after the European Central Bank and Bank of England left key rates unchanged. A private survey of manufacturing sector showed a slight growth. Royal Dutch Shell earnings fell unexpectedly. BMW issued cautious outlook. Sanofi estimated larger decline in earnings.[/R]

European markets traded higher and 15 of the 17 largest markets in the European Union advanced.

Market indexes in London added 0.4% in Frankfurt gained 1.4% and in Paris advanced 0.7%.

The Bank of England and the European Central Bank left their reference rates unchanged, as expected by most economists.

ECB President Mario Draghi said early indications show that the economies across the euro zone are stabilizing and interest rates will remain low for an extended period.

A private survey of euro zone manufacturing index showed an expansion for the first time in two-years.

The survey conducted by Markit said final read on its manufacturing index was 50.3, any reading above 50 indicates expansion.

Stocks in Review

AstraZeneca Plc slid 0.4% to 3,321.50 pence after the UK based biopharmaceutical reported revenue in the second quarter dropped 10% to $12.6 billion from $14.01 billion a year earlier. Profit for the quarter declined 43% to $1.84 billion compared to $3.23 billion and diluted earnings per share slumped 66 cents from $1.26.

Abertis Infraestructuras SA, the Spain based infrastructure company agreed to sell London based Luton airport to a consortium of Spain based Grupo Aena and AXA the asset manager for €502 million or £433 million.

Bayerische Motoren Werke AG declined 1% to 72.74 euros after the luxury car maker reported second-quarter earnings before interest and taxes dropped 9% to 2.07 billion euros. Chief Executive Officer Norbert Reithofer issued a cautious outlook on the European car market and said may not rebound until the second half of 2014.

Lloyds Banking Group Plc, surged 8.4% to 74.26 pence after the UK based financial service provider reported total income for the first-half jumped 5% to £22.07 billion from £16.26 billion a year earlier. Net for the period swung to a profit £1.58 billion compared to a loss of a £662 million and diluted earnings per share swung to 2.2 pence from a loss of 1 penny.

Metro AG surged 7% to 27.75 euros after largest retailer in Germany reported second quarter operating earnings of 276 million euros.

Royal Dutch Shell Plc declined 5.3% to 2,120.50 pence after the UK and Holland based oil and gas explorer reported revenue in the second quarter dropped 3.8% to $112.7 billion from $117.1 billion a year earlier. Net income for the quarter plummeted 57% to $1.74 billion compared to $4.08 billion and diluted earnings per share declined 27 cents from 66 cents a year ago.

Sanofi SA declined 5% to 76 euros after the largest French drug maker said full-year earnings per share excluding currency variations and one-time costs is likely to fall as much as 10% from its previous estimate of 5% decline.

Societe Bic SA soared 9% after the pen-maker reported first-half revenues of 937.5 million euros beating the estimate of 930 million euros.

Societe Genenrale SA soared 10% on a rally in banking stocks and expectations of higher earnings.