European Markets Decline on Weak Forecast

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

European markets declined after a regional survey of manufacturing and services organization showed a weakest read in several years. The index in May fell to 51.1 from 51.9 in April. Separately first quarter economic growth in Italy increased at 0.4% from the fourth quarter and rose at 0.2% from a year ago. Volkswagen reported 10.5% vehicles sales rise in April and for the first four months global deliveries rose 7.9% to 2.14 million vehicles.

[R]3:00PM New York, 9:00PM Frankfurt – Stocks in Germany and France fell on the weakness global markets and worries related to strong euro and rising inflation.[/R]

Europe market update

European stocks declined after data showed a weak reading on the regional services activity for May. NTC Economics Ltd which conducts the survey for Royal Bank of Scotland reported the index fell to 51.1 in May from 51.9 in April. Europe''s service and manufacturing industries rose at the slowest pace in five years this month on surging crude prices, record euro and tighter lending standard.

In Germany, the DAX 30 index declined 1.8% or 125.20 at 6,945.13 with Infineon leading the losers. In France the CAC 40 lost 1.9%.

Market movers

Of the DAX 30 index shares, 24 gained, 2 declined and 4 were unchanged. Infineon led the decliners by 5.1% to 6.29 euros followed by losses in MAN AG of 4.1% or 4.17 euros to 96.64 euros, in Siemens AG of 3.07% or 2.70 euros to 71.46, in E.O.AG of 3.2% or 4.28 euros, and in Thyssenkrupp AG of 3.2% or 1.45 euros to 42.70.

Deutsche Postbank led the gainers in the DAX 30 index with a rise of 2.4% or 1.47 euros to 63 euros, in Deutsche Post AG of 1.44% to 21.90 euros and in Adidas of 0.6% to 45.30 euros.

Of the CAC 40 index shares, 38 shares declined and 2 gained. Vivendi and Essilor were the only gainers. Vivendi rose 0.5% to 26.00 euros and Essilor added 0.4% to 9.85 euros. Alcatel-Lucent led the decliners with a loss of 4.5% followed by losses in EADS of 4.4%, in Renault of 4.1%, in CAO Gemini of 7.8% and in Lafarge of 3.5%.

Volkswagen sales rise 11%

Volkswagen AG fell 2.2% or 4.08 euros to 180.80 euros after reporting it reported May vehicles sales rose 10.5% from a month earlier on gains in China and Brazil offsetting the decline in North America.

The German auto maker which also makes Audi and Skoda brands sold 568,000 vehicles to customers last month. According to a statement released by the company, sales rose 7.9% from a year earlier to 2.14 million vehicles for the first four months of the year.

In Europe, Group deliveries from January to April rose by 3.0% to 1.22 million vehicles, of which 1.04 million were delivered in Western Europe, up 0.7%. In Germany deliveries rose 5.9% to 339,000 vehicles. In Central and Eastern Europe delivery rose 18% to 178,000 vehicles.

In North America deliveries fell 4.9% to 159,000 of which 100,000 vehicles were delivered to the U.S. location where deliveries fell 0.7%. Sales in China rose 29% to 368,000 vehicles from a year ago and in South America sales gained 19.5% to 260,000 vehicles. Sales to Brazil were 203,000, a rise of 24.3% from a year ago.

Italy''s economy grows at 0.4% in the first quarter

Italy''s economy expanded 0.4% in the first quarter from the fourth quarter and 0.2% from the first quarter of 2007 according to the statistics released by Italian statistical agency Istat. The economy shrank 0.4% in the fourth quarter from the third quarter and rose 0.1% from a year ago on 0.2% fall in consumer spending.

Economies in Germany and France have been more resilient so far. Germany registered 1.5% rise in the first quarter and French economy grew 0.6% in the quarter.

French consumer on manufactured goods decline

The National Statistical Office in Paris reported that French consumer spending on manufactured goods declined for a second month in April as shoppers curbed purchases of cars and clothes. Such spending, which accounts for about 15% of the economy, fell 0.8%, after a revised decline of 1% in March.

World markets review

In Tokyo Nikkei 225 Index closed lower 33.74 or 0.24% to 14,012.20, in Hong Kong Hang Seng index decreased 329.05 or 1.31% closed to 24,714.07. In Australia ASX 200 index lower 58.90 or 1.01% to close 5,768.00. In Malaysia KL Composite index decreased 2.79 or 0.22% closed to 1,274.78.

In South Korea Kospi Index decreased 7.48 or 0.41% to close at 1,827.94, in Thailand SET index closed higher 1.05 or 0.12% to 875.59 and Indonesia JSE Index edged decreased 38.00 or 1.52% to 2,465.96. Sensex index in India decreased 257.47 or 1.52% to 16,649.64.

In London FTSE 100 Index closed lower 94.30 or 1.53% to 6,087.30, in Paris CAC 40 Index decreased 94.97 or 1.89% to close at 4,933.77 and in Frankfurt DAX index lower 126.28 or 1.79% to close at 6,944.05. In Zurich trading SMI decreased 118.09 or 1.56% to close at 7,459.94.