More Uncertainty in Italy After Berlusconi Conviction; AXA, RBS, MAN in Focus

Nigel Thomas
02 Aug, 2013
New York City

European markets eased the euro gained fractionally after the U.S. added less than expected jobs in July. Italian Prime Minister Berlusconi was convicted by the highest court for tax fraud. RBS swung to net profit in first-half.

[R]4:30 PM Frankfurt – European markets eased the euro gained fractionally after the U.S. added less than expected jobs in July. Italian Prime Minister Berlusconi was convicted by the highest court for tax fraud. RBS swung to net profit in first-half.[/R]

European markets pared back weekly gains after U.S. government report showed smaller than expected increase in employment.

In London, FTSE 100 index decreased 0.6%, in Frankfurt DAX index declined 0.2% and in Paris CAC 40 index fell 0.1%.

The Swiss Market Index soared 1.6% tracking gains in world markets after it resumed trading from National Day holiday yesterday.

More Uncertainty in Italy on Berlusconi Conviction

Italian markets and bond yields were in focus after the nation’s Supreme Court upheld the lower court ruling convicting former Prime Minister Silvio Berlusconi for tax fraud.

The 76-year old billionaire because of his age will not have to go a prison but will have to select between one year of house arrest or community service.

This is the first definitive sentence received by Berlusconi in his two-decade long in politics and is likely to be expelled from parliament when lawmakers return in September.

Italy, the third largest economy on the euro zone is facing a new round of uncertainties as the nation struggles to implement higher real estate taxes and struggles under a mountain of debt.

Bond investors were calm to the news and spread to the German bond yields decreased 262 basis points from 270 points at Friday’s close.

Stocks in Review

Deutsche Lufthansa AG declined 4% after the German airline reported first-half operating profit plunged 69%.

IAG, the parent of British Airways said its operating net swung to profit of 134 million euros excluding one-time items compared to 4 million euros loss in the quarter a year ago.

AXA S.A., the second largest insurer in Europe reported first-half operating income of 2.58 billion euros and net income declined less than expected 3%.

Royal Bank of Scotland Group Plc decreased 5% to 316 pence after the largest UK based publicly controlled lender reported first-half net income of 535 million pounds compared to a 2 billion pound loss in the period a year ago.

Separately, RBS appointed head of consumer unit Ross McEwan as its Chief Executive Officer.

MAN Group soared 8% to 90.21 pence after the largest publicly traded hedge fund manager reported first-half adjusted pre-tax profit increase of 9.8% to $134 million. Net fees from investment performance linked gains increased more than three-fold to $90 million.