Volatile European Markets, Orange and Bouygues Confirm Talks

Lucy Stoeva
05 Jan, 2016
New York City

European markets closed little changed after a volatile trading session. December unemployment in Germany was flat at 6.3%, the lowest in 24 years. Volkswagen faces more civil penalties in the U.S. Orange and Bouygues confirmed merger talks.

[R]4:00 PM Frankfurt – European markets closed little changed after a volatile trading session. December unemployment in Germany was flat at 6.3%, the lowest in 24 years. Volkswagen faces more civil penalties in the U.S. Orange and Bouygues confirmed merger talks.[/R]

Stock markets in Europe were in and out of negative territory on Tuesday and closed little changed as investors dealt with uncertainty over China and improvement in telecom stocks.

People’s Bank of China announced 130 billion yuan or $20 billion in short-term funds to alleviate investors’ concerns and confirm its easing bias, following a sharp plunge in market indexes in Shanghai on the first day of trading in 2016.

The bank offered the funds as seven-day reverse repos at an interest rate of 2.25%.

Chinese stocks dropped 6.7% yesterday, triggering a trading halt and a global selloff and market indexes extended losses on the second day.

On Tuesday, the China Shanghai Composite Index eased down 0.26% to at 3,288.

In Germany, the unemployment rate was flat at 6.3% in December, the lowest in 24 years, according to the BA labor agency.

Inflation in the euro zone remained unchanged in December at 0.2% from a year ago month, according to preliminary data from Eurostat.

Core inflation, which excludes unprocessed food and energy, increased 0.8% from a year ago month.

Telecom stocks were in spotlight after Orange and Bouygues confirmed merger talks and boosted stocks in the sector.

Numericable soared 12.2%, Altice jumped 10%, and Iliad gained 2.7%.

In London trading, FTSE 100 index gained 29.05, or 0.48%, to 6,122.48 and in Frankfurt the DAX index closed flat at 10,283.03.

In Paris, CAC 40 index was up 2.95, or 0.07%, to 4,525.40.

Bouygues SA, the French industrial conglomerate rose 0.32% to €37.29 and telecom operator Orange added 0.49% to €15.28 after the two companies confirmed preliminary merger talks.

Next PLC lost 4.7% to 6,850 pence after the U.K. apparel retailer said the unusually warm weather, poor stock availability, and online competition, led to disappointing performance in November and December.

The company revised its forecast for full-year profit to £817 million, an increase of 4.4% over the previous year. Next said that the forecast could increase by £7 million depending on trade in January.

Volkswagen AG tumbled 6% to €129.5 as the German car maker faces more civil penalties in the U.S.

The U.S. Department of Justice filed a lawsuit against Volkswagen and claims $90 billion for installing emissions defeat devices in about 600,000 diesel-engine vehicles.