UBS Discount, Air France Declines

123jump.com Staff
22 May, 2008
New York City

European markets closed mixed on higher crude oil prices and weak financial stocks. Energy companies rose to a record high tracking record high in the crude oil futures prices above $135 a barrel while airlines led by Air France fell. Crude oil futures reached a new record on supply worries, sustained global demand and weak U.S dollar. Air France reported its first quarterly loss in the last six years on higher fuel costs and charges for anti-competitive practices.

[R]12:00AM Frankfurt, 6:00PM New York – Air France reported its first quarterly loss on higher fuel charges and anti-competitive investigation charges of 530 million euros.[/R]

Europe Market Update

Energy companies rose to a record high tracking record high in the crude oil futures prices above $135 a barrel while airlines led by Air France fell. Crude oil futures reached a new record on supply worries, sustained global demand and weak U.S dollar.

Germany's DAX 30 index rose 0.4% or 29.5 to 7,070.33 lifted by gains in Infineon and Commerzbank. In France CAC 40 gained 1.19 or 0.02% to 5,028.74. Air France plunged after reporting a net loss, first since 2003.

In Frankfurt, Germany the market traded mixed as 12 stocks traded in the negative while 16 stocks gained and 2 stocks traded unchanged. The losers were led by Deutsche Borse loss of 3.61% to close at 95.80 euros.

In Paris trading, of the CAC 40 index stocks, 19 were up, 20 closed down and 1 was unchanged. The losers were led by Air France which plunged 10.29% to close at 16.73 euros after reporting a first quarter loss of 542 million euros.

Market Movers

Of the DAX 30 shares, Infineon led the gainers with a rise of 4.5% to 6.57 euros followed by increases in Commerzbank of 2.7% to 22.23 euros, in Deutsche Telecommunication of 2.5% to 10.98 euros, in Fresenius Medical of 2.4% to 35.28 euros and RWE AG of 1.6%. Allianz SE led the decliners in the index with a loss of 3.8% followed by losses in Deutsche Boerse of 3.5%, in Deutsche Lufthansa of 1.4%, in TUI AG of 1.3% and Henkel of 1.1%.

Of the CAC 40 share, STMicro led the gainers with a rise of 2.80 % followed by gains in of Alstom of 2.6%, in EDF of 2.5% to 71.10 euros, in Societe Generale of 2.3% to 67.77 euros and in Credit Agricole of 1.9% to 18.77 euros.

Air France led decliners in CAC 40 index with a loss of 10.2% or 16.74 euros after reporting a net loss of 542 million euros in the fourth quarter ended March 31. PPR followed Air France of 2.2% to 83.65 euros, in AXA of 1.4% to 22.505 euros, in Air Liquide of 1.1% to 93.42 euros and in Accor of 1.1% to 48.68 euros.

Consumer confidence rise in Italy

Isae Institute reported Italian consumer confidence rose to its highest this month after Prime Minister Silvio Berlusconi's new government announced tax reduction and relief for homeowners facing higher mortgage payments.

In its latest survey of 2,000 families, the Rome-based Institute's index climbed to 103.2 from a revised 99.9 last month.

The Institute said consumer optimism about their short-term prospects rose to 101.7 from 95.6, while confidence about the economic situation increased to 84.9 from 79.6.

UBS prices its rights offering at 31% discount

UBS, the battered Swiss banker increased its outstanding count by nearly one third and sold at a discount of 31% to shore up its balance sheet after a string of losses in the U.S. mortgage market.

UBS finalized its terms of rights offering to place 760 million shares at a price of Sfr 21 to raise Sfr 15.9 billion. The deal was authorized the board at the annual general meeting on April 23 and the issue is fully underwritten by the syndicate of banks led by JP Morgan, BNP Paribas and Goldman Sachs.

The stocks holders with 20 shares will have a right to buy 7 shares in the new offering. The trading in the newly issued shares will begin on June 13. The subscription rights will trade from May 27 through June 9th of this year on the SWX in Switzerland and on the NYSE in New York. The newly issued shares will trade on SWX, NYSE and on the Tokyo Stock Exchange.

The deal comes on the heels of losses at the bank in the last three quarter. The bank only months ago completed Sfr 13 billion offering to maintain its Tier 1 ratio. In the third quarter of 2007 the bank lost Sfr 950 million followed by losses in the fourth quarter of Sfr 12.9 billion and in the first quarter of 2008 of Sfr 11.5 billion. The total reported losses in the three quarters are nearly Sfr 25 billion.