German Inflation Up, French Sentiment Record Low

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

European stocks closed higher despite weak consumer sentiment in France and a rise in inflation in Germany. Consumer sentiment in France was recorded at a two-decade low as rising fuel prices eat in the disposable income. Rising fuel prices is expected to lift inflation in May in Germany. SAP led the gainers in the DAX 30 stocks and Deutsche Post led the decliners in the index. In Cac-40 index CAP Gemini led the gainers and BNP Paribas led the decliners in the index.

[R]2:30PM New York, 8:30PM Frankfurt - European stocks rose despite a rise in inflation in Germany and weak consumer sentiment in France./R]

Europe market update

European share rose first time in four days after crude prices fell to a one-week low near $125 a barrel with the key indices in Germany and France closing higher.

The Wiesbaden based Federal Statistical Office reported import prices in German, an early indicator of inflation pressure in the economy gained 0.9% in April from 0.4% a month earlier driven high energy costs.

Consumer confidence in France fell to record low in May as fuel and gasoline costs increased, the National Statistical Office reported on Wednesday, prompting fishermen to stage protests about shrinking incomes.

Market movers

In France, the index CAC 40 gained 1.5% led by a sharp rise of 4.8% in CAP Gemini. BNP Paribas, Air France and Saint Gobain were only index decliners.
The DAX 30-index rose 1.4% or 95.11 to close. Shares in Frankfurt closed at 7,053.72 levels.

Gainers and losers

CAP Gemini led the gainers in the CAC 40 index stocks with a rise of 4.7% to 41.59 euros followed by gains in Unibail-Rodamco of 3.6% to 168.96 euros, in Veolia Environment of 3.6% to 46.23 euros, in Alcatel-Lucent of 3.1% to 4.78 euros and in Pernod Ricard of 2.8% to 72.49 euros.

BNP Paribas led the decliners in the CAC 40 index with a loss of 0.47% to 65.55 euros followed by losses in Air France of 0.29% to 16.84 euros and in Saint Gobain of 0.26% to 52.81 euros.

Among the DAX 30 index shares, SAP AG led the advancers with a rise 4.8% to 34.95 euros followed by gains in ThyssenKrupp of 3.8% to 44.30 euros, in Adidas of 3.3% to 46.48, in Infineon of 3.1% to 6.25 euros and in Bayer AG of 3% to 56.40 euros.

Deutsche Post AG led the decliners in the DAX 30 index with a fall of 4.8% to 20.42 euros followed by losses in Deutsche Postbank of 1% to 60.76 euros, in Hypo Real Estate of 0.7% to 21.31 euros, in Deutsche Boerse of 0.59% to 92.97 euros and in Deutsche Telekom of 0.46% to 10.72 euros.

Germany import prices rose

The Wiesbaden based Federal Statistical Office reported import prices in Germany, a leading indicator of inflation driver gained 0.9% in April from 0.4% a month earlier on high energy costs.

The cost of imported crude oil surged 41.4% from a year earlier while energy products were 36% more expensive. In April coal prices gained 32% while wheat prices climbed 44%. Excluding energy costs, import prices gained 1.5% in the year.

Oil prices have more than doubled over the past year and surged above $135 dollar a barrel last week, inflating household energy costs. The euro has gained 17% over the same period, breaching $1.60 for the first time last month.

Separately, the German consumer price index in May is expected to rise 3% from a year earlier after increasing 2.6% in April according the Federal Statistics Office in Wiesbaden. In the month, prices increased 0.6%.

France''s consumer confidence falls

Consumer confidence in France fell to record low in May as fuel and gasoline costs increased. The Paris based government statistics agency INSEE said the overall consumer sentiment indicator declined to minus 41 from minus 38 in April, the lowest since the introduction of the index 21 years ago. An index of living standard in France fell to minus 74 in May from minus 70 in April. France is facing one of the quickest gains in inflation in the last two decades prompting fisherman across the country.

European Central Bank President Jean-Claude Trichet urged companies not to set a ``bad example'''' to workers by awarding large pay increases to executives. Trichet followed European officials in pressing for wage restraint among the region''s top earners as a way of cooling inflation. Trichet has been urging unions and employees not to protest against price rises and not to seek salary hikes at a rate higher than inflation rate.

World markets review

In Tokyo Nikkei 225 Index closed lower 183.87 or 1.32% to 13,709.44, in Hong Kong Hang Seng index decreased 32.53 or 0.13% closed to 24,249.51. In Australia ASX 200 index lower 66.30 or 1.16% to close 5,648.10. In Malaysia KL Composite index decreased 13.66 or 1.07% closed to 1,260.58.

In South Korea Kospi Index decreased 19.59 or 1.07% to close at 1,805.64, in Thailand SET index closed lower 22.61 or 2.64% to 832.99 and Indonesia JSE Index edged increased 36.77 or 1.53% to 2,433.77. Sensex index in India increased 249.78 or 1.53% to 16,525.37.

In London FTSE 100 Index closed higher 11.10 or 0.18% to 6,069.60, in Paris CAC 40 Index increased 64.55 or 1.32% to close at 4,971.11 and in Frankfurt DAX index higher 75.18 or 1.08% to close at 7,033.84. In Zurich trading SMI increased 56.53 or 0.76% to close at 7,474.50.