Euro Weakens, Continental Forecasts Growth to Fall to 5%

Lucy Stoeva
11 Jan, 2016
New York City

European markets closed higher after a volatile session and another day of sell-off in Shanghai. The European Commission ruled that 35 multinational companies will have to pay additional taxes of

[R]4:00 PM Frankfurt – European markets closed higher after a volatile session and another day of sell-off in Shanghai. The European Commission ruled that 35 multinational companies will have to pay additional taxes of €700 million in Belgium. Continental AG estimated revenue growth to slow to 5% in 2016.[/R]

European stocks markets closed higher after a volatile Monday session as sell-off in Shanghai and a weaker euro sent mixed signals to investors.

Market indexes opened on a negative after Shanghai Composite Index closed 5.3% lower, despite the attempts of the Chinese central bank to push the yuan higher.

As trading progressed in the euro zone and indexes changed direction and recouped losses as the euro fell against the dollar and other major currencies.

The euro traded at $1.08, down from $1.09 on Friday. The currency lost 0.75% against the British Pound and closed at 75 U.K. pence.

The European Commission, the antitrust regulator, ruled that 35 multinational companies, including Apple, Amazon, Starbucks and Anheuser-Busch InBev, will have to pay taxes of €700 million in Belgium after the companies were deemed to have benefited from an illegal tax break.

Belgian authorities will continue to negotiate with EU regulators and may decide to appeal the decision in the EU court in Luxembourg, according to Mr. Van Overtveldt, the Belgian finance minister.

In Frankfurt, DAX index recorded the largest gains, up 89.88, or 0.9%, to 9,939.22 after the euro weakened.

In London, FTSE 100 index traded flat at 5,913.65 and in Paris, CAC 40 index added 23.49, or 0.54%, to 4,357.25.

Volkswagen AG jumped 3.5% to €119.15 on reports in German media that the auto maker plans to prove to the U.S. regulators that it can solve some of the diesel emissions problems.

Daimler AG gained 1% to €68.89 after the board member Hubertus Troska said that Mercedes-Benz still has growth potential in China.

Anheuser-Busch InBev SA/NV added 2.6% to €110.35 despite the decision of the EC that could result in additional tax payments.

The Belgian brewer is in the process of acquiring the London-traded SAM Miller Plc, for about $108 billion.

Continental AG lost 0.27% to 202.25 after the second-largest auto parts maker in Europe warned that revenue growth would slow down to 5% in 2016 based on the current estimate of global auto production.

For 2015, the German auto parts maker reported preliminary sales of €39.2 billion, an increase of 14% from the previous year.

Adjusted operating profit in 2015 rose to €4.4 billion, while operating profit margin reached 11.7%.

Continental was able to meet its targets as growth in Europe and the U.S. compensated for the slowdown in China, said CEO Elmar Degenhart.