Lackluster Trading in European Stocks, Telecom Italia to Cut

Lucy Stoeva
16 May, 2016
New York City

European stocks recovered after a volatile day as a rally in oil prices offset disappointing economic data from China. Eutelsat extended two-day loss to more than 31%. Telecom Italia more than doubled its cost-cutting target to

[R]4:00 PM Frankfurt, Germany – European stocks recovered after a volatile day as a rally in oil prices offset disappointing economic data from China. Eutelsat extended two-day loss to more than 31%. Telecom Italia more than doubled its cost-cutting target to €1.6 billion by 2018.[/R]

European stocks recovered at the end of the trading session as a rally in oil prices offset disappointing economic data from China.

Stock markets in Germany and Switzerland were closed for Whit Monday holiday.

Among major decliners, Eutelsat dropped 6.8% on concerns about the satellite operator’s future. The stock extended Friday plunge of 27.6% after the company negatively revised its full-year outlook.

Latest industrial-production and investment data from China was below expectations, despite the government’s ambitious policy to stimulate the economy.

Industrial output rose 6% in April from the previous year, compared with growth of 6.8% in March, the National Bureau of Statistics said on Saturday.

Retail sales grew 10.1% in April from a year ago, slower than the 10.5% growth registered in March, the Chinese statistical bureau said.

In addition, the central bank said banks lent 555.6 billion yuan in April, or $85.1 billion, below expectations, compared to 1.37 trillion yuan in March.

Fiscal spending also slowed down in April with growth of 4.5% over the previous year, compared with growth of 15.4% in the first quarter.

On the positive side, mining stocks and metal prices rose as the data from China raised expectations for more government stimulus.

Shares of Anglo American soared 5.4%, Antofagasta climbed 3.4%, Fresnillo jumped 3.1%, BHP Billiton added 2.1%, and Glencore rose 1.9%.

Oil prices also advanced, with Brent crude oil futures up 2.59% to $49.07 per barrel and WTI crude oil futures gaining 3.18% to $47.68.

Among energy stocks, Tullow Oil jumped 5%, Lundin Petroleum rose 3.4%, and BP and Royal Dutch shell gained 1% each.

In London, the FTSE 100 index edged up 12.90, or 0.21%, to 6,151.40, while in Paris, the CAC 40 index dropped 7.71, or 0.18%, to 4,312.28.

Telecom Italia S.p.A gained 3% to €0.87 after the company announced a new business plan with a significantly higher cost-cutting target in an effort to boost profitability.

The Italian telecom operator more than doubled its target for reducing expenses to €1.6 billion by 2018 from the previous target of €600 million. The projected cuts are divided between operating costs and capital spending.

In the first quarter, EBITDA fell 16% to €1.71 billion from the same period a year ago. Sales dropped 12% to €4.4 billion from the first quarter of 2015.

Net debt declined to €27.1 billion from €166 million at the end of 2015.