Weaker Euro and Banks in Focus in European Trading

Lucy Stoeva
18 Mar, 2016
New York City

European stocks were little changed on Friday as investors in the absence of large swings in oil and commodity prices. Generali announced a jump of 15% in annual pre-tax profit. Nordea Bank confirmed plans to transform its subsidiaries into branches.

[R]4:00 PM Frankfurt, Germany – European stocks were little changed on Friday as investors in the absence of large swings in oil and commodity prices. Generali announced a jump of 15% in annual pre-tax profit. Nordea Bank confirmed plans to transform its subsidiaries into branches.[/R]

European stocks were little changed on Friday as investors concentrated on company-specific news in the absence of large swings in the oil and commodity prices.

Manufacturing stocks recorded small gains after the euro dropped against the U.S. dollar.

The euro fell 0.4% to $1.1272 from its five-week high on Thursday, following Fed’s indications for fewer rate hikes in 2016.

Auto makers BMW, Daimler, Renault, and Peugeot gained about 1%, while Fiat Chrysler soared 2.7%.

The European Central Bank announced the conditions for the merger between Italian lenders Banco Popolare and Banca Popolare di Milano and asked for a long-term industrial plan.

Banco Popolare rose 2.5% and Banca Popolare di Milano dropped 0.5% on the news.

Brent crude oil futures inched down 0.29% to $41.42, while WTI crude oil eased 0.6% to $39.96.

In London, the FTSE 100 index fell 11.48, or 0.19 %, to 6,189.64, while in Frankfurt, the DAX index climbed 58.60, or 0.59%, to 9,950.80.

In Paris, the CAC 40 index edged up 19.62, or 0.44 %, to 4,462.51.

In Madrid, Banco Santander] climbed 0.8% to €4.28 after the bank said it aims an increase of 5% in its 2016 dividend.

Executive Chairman Ana Botín said Friday that the bank plans to increase dividend to €0.21 per share for 2016 from €0.20 in 2015.

Payment breakdown will remain unchanged from 2015 and will consist of three cash installments and one in additional shares.

The share price of the bank has dropped more than 30% in the past 12 months due to concerns about capitalization, the operations in recession-troubled Brazil, and the potential Brexit.

Generali fell 1.7% to €13.65 despite announcing a 15% jump in annual pre-tax profit of €3.5 billion for 2015 and return on equity of 14%.

The recently appointed CEO, Philippe Donnet, plans to keep his predecessor’s strategy and targets improved cash flow and dividends.

Generali forecasted free cash flow of €7 billion and dividend payments of €5 billion between 2015 and 2018 after cutting costs and selling assets to improve its capital position.

Nordea Bank tumbled 5.4% to 83.05 Swedish kronor after the bank, which operates in Scandinavia and the Baltic region, confirmed reorganization plans and announced a dividend of €0.64 per share.

At the annual meeting shareholders approved the reorganization that transforms three subsidiaries banks into branches. The mergers are expected to take place in early 2017.

While the mergers is not likely to affect capitalization or corporate tax, there could be significant additional costs depending on regulations. The proposed Swedish Resolution Fund could add annual costs of €200 million over the next five years.