German Unemployment, Spain Inflation Up

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

European markets edged lower as home prices in the UK fell, record inflation in Spain and German unemployment edged higher. Annualized inflation in Spain in May rose to 4.7% in May from 4.2% in April. The sharp rise in inflation is fueled by rising energy and food prices. UK home prices fell for the seventh month in a row as more buyers face tighter mortgage lending.

[R]3:00PM New York, 9:00PM Frankfurt - European stocks fell weighed down by worries of declining home prices in the UK and rising inflation expectations in the eur zone and higher inflation estimate in Spain./R]

Europe market update

European shares fell weighed down by funding problems for property buyers, the key indices in Germany and France closed higher.

Prices of houses in U.K fell the most in May since at least 1991. The home market is being affected by the shortage of credit to property market of buyers.

European Central Bank urges the containment of inflation expectations as it reported that signs of inflation expectation have been trending up recently.

Inflation in Spain in May rose to near fifteen year high on rising food and energy prices. Consumer prices gained 4.7% from a year ago using the European Union''s calculation method, after a 4.2% increase in April.

Market movers

In France, the index CAC 40 gained 0.10% led by a sharp rise of 3.35% in Gaz De France and 3.31% in Vallourec. Credit Agricole, Air France –KLM and Saint Gobain led the decliners.

The DAX 30-index rose 21.19 or 0.301% to close at 7,055.03. Shares in Switzerland closed higher as the Swiss Market index climbed 0.90% to close at 7,541.76.

European Gainers and losers

Gaz De France led the gainers in the CAC 40 index stocks with a rise of 3.35% to 43.73 euros followed by gains in Vallourec of 3.31% to 197.84 euros, in Suez of 2.68% to 47.40 euros, in Danone of 2.35% to 56.16 euros and in Cap Gemini of 2.06% to 42.50 euros.

Credit Agricole led the decliners in the CAC 40 index with a loss of 3.81% to 17.16 euros followed by losses in Air France of 3.80% to 16.20 euros, in Saint Gobain of 3.21% to 51.11 euros, in Unibail-Radmco of 2.75% to 164.25 euros and in Dexia of 2.41% to 14.95 euros

Among the DAX 30 index shares, E.ON AG led the advancers with a rise of 2.81% to 136.39 euros followed by gains in RWE AG of 2.65% to 83.76 euros, in BMW AG of 1.42% to 37.13 euros, in Continental AG of 1.05% to 80.13 euros and in SAP AG of 0.74% to 35.21 euros.

Infineon Technologies led the decliners in the DAX 30 index with a fall of 10% to 5.63 euros followed by losses in Man AG of 2.25% to 98.95 euros, in Deutsche Postbank AG of 1.73% to 59.71 euros, in Volkswagen of 1.67% to 179.18 euros and in Deutsche Borse of 1.58% to 91.50 euros.

European Retail Sales Rise

European retail sales rose for the first time in three months in May, led by purchases of clothing and food.

The measure of sales growth in the euro region rose to 53.1, the biggest monthly increase in a year, after plunging to 41.8 in April, the lowest on record. The index is based on a survey of more than 1,000 executives compiled for Bloomberg News by NTC Economics Ltd. A reading above 50 signals expansion.

Sales jumped in Germany and France, the euro region''s largest economies. The German index rose to 56.6 from 44.6, the biggest monthly gain since November 2006. The measure for France was at 59.6 after 46.2, the highest in almost two years. Italian sales fell for the 15th month, with the index rising to 38.8 from 31.4.

Inflation in Spain is estimated to rise 4.7% in May

Annual inflation in Spain in May is estimated to have increased at the fastest pace in at least 11 years as oil prices increase drive energy costs. Consumer prices in May are estimated to have increased at 4.7% from a year ago using the European Union''s calculation method, after a 4.2% increase in April, the Madrid based National Statistics Institute reported on its Web site.

Spanish retail sales declined 3.4% in April from the year-earlier period after adjusting for the number of shopping days. And the recent slump in the housing market has brought down the consumer confidence to the lowest level in more than thirteen years.

Germany unemployment rate rise

The Federal Labour in Germany reported on Thursday that unemployment in Europe''s largest economy increased this month for the first time in more than two years as record oil prices and the euro''s rise against the dollar weighed on exports.

The agency said jobless rate in May rose to 3.31 million as the numbers of men out of work increased by 4,000 from a month earlier.

Internationally comparable figures using International Labour Organisation methodology put the number of job seekers at 3.39 million in April and the unemployment rate at 7.8%.

UK Home Prices Drops

Prices of houses fell in May by the most since at least 1991 as the shortage of credit starved the property market of buyers, reported the Nationwide Building Society. The price of an average home dropped 2.5% in May from April to 173,583 pounds. Other private estimates of home prices recently showed a decline in home prices. The largest mortgage lender HBOS reported a decline in home prices in April by 0.9% and the Bank of England Governor Mervyn King suggested that home prices may fall further.

Barrat Developments Plc fell 2.5% today in London trading after the report and Persimmon Plc dropped 4%.

World markets review

In Tokyo Nikkei 225 Index closed higher 415.03 or 3.03% to 14,124.47, in Hong Kong Hang Seng index climbed 134.48 or 0.55% closed to 24,383.99. In Australia ASX 200 index climbed 61.30 or 1.09% to close 5,709.40. In Malaysia KL Composite index increased 1.24 or 0.10% to close at 1,261.82.

In South Korea Kospi Index increased 35.58 or 1.97% to close at 1,841.22, in Thailand SET index decreased 2.38 or 0.29% to 830.61 and Indonesia JSE Index edged increased 13.18 or 0.52% to 2,446.95. Sensex index in India fell 209.11 or 1.27% to 16,316.26.

In London FTSE 100 Index closed lower 1.5 or 0.02% to 6,068.10, in Paris CAC 40 Index increased 0.10% to close at 4,975.90 and in Frankfurt DAX index higher 21.19 or 0.30% to close at 7,055.03. In Zurich trading SMI increased 67.26 or 0.90% to close at 7,541.76.