ECB Rates Unchanged, Credit Agricole Discount

123jump.com Staff
05 Jun, 2008
New York City

Jean Trichet said on Thursday the ECB may raise interest rates next month to combat inflation. German manufacturing orders in April declined 1.8% from a month earlier, but orders during the first four months rose 15%. French unemployment rate dropped to its lowest level in a decade, reaching 7.5% in the first quarter. The CAC 40 share index fell 0.1% and the DAX 30-share index declined 0.4%. Credit Agricole prices its stock at a discount. Credit Agricole prices its offering of 6 billion euros.

[R]2:00PM New York, 8:00PM Frankfurt – The ECB and BoE left the rates unchanged. European markets closed lower./R]

Europe market update

European stocks fell being dragged by falling volume of retail trade in the euro area and rising energy products imports in Germany, the key indices in Germany and France closed lower.

The CAC 40 retreated 8.01 points or 0.16% to 4,907.29. In Germany the DAX 30-index fell 23.60 points or 0.34% to 6,941.83. Shares in Switzerland advanced as the Swiss Market index gained 52.75 points or 0.70% to 7,567.23. The FTSE 100 climbed 25.20 points or 0.42% to 5,995.30.

Economic Releases

At today’s meeting the Governing Council of the ECB decided that the minimum bid rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.00%, 5.00% and 3.00% respectively.

The ECB President Jean Claude Trichet at a press meeting after the decision said that the bank may consider increasing rates if inflation remains above its target range. The inflation in the euro region in May was reported at 3.6% above the 2% target rate. The ECB is more focused on fighting inflation and the comment from the president is the clearest indication that rates may be revised higher at the next meeting.

Germany insolvencies drop by 13.1% in the first quarter of 2008. The Federal Statistical Office indicated that in the first quarter of 2008, German insolvency courts reported 38,281 insolvencies, 7,147 of them referred to enterprises and 31,134 to other debtors. Without the results of Nordrhein-Westfalen the total number of insolvencies decreased 13.1% compared with the first quarter of 2007, enterprise insolvencies decreased 12.6% and insolvencies of other debtors decreased 13.2%.

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 5.0%.

French unemployment at the end of the first quarter was reported at 7.5% and in the metropolitan France was at 7.2%. In addition according to INSEE, the French statistical agency, there are 2.6 million people are looking for work.

The unemployment rate declined from 7.8% in the fourth quarter of 2007 and from 8.4% in the first quarter a year ago.

On average, the employment rate in the population aged 15-64 years was 65.1% and the activity rate in the population aged 15-64 years was 70.1%.

Gainers and losers

Vallourec led the gainers in the CAC 40 index stocks with a rise of 3.36% to 208.45 euros followed by gains in Arcelormittal of 2.53% to 65.65 euros, in Veolia Environ of 2.30% to 46.14 euros, in Unibail -Rodamco of 2.07% to 170.18 euros and in Lagardere S.C.A. of 2.05% to 47.75 euros.

Credit Agricole led the decliners in the CAC 40 index with a loss of 7.73% to 15.39 euros followed by losses in France Telecom of 5.09% to 18.25 euros, in EADS of 3.23% to 14.64 euros, in Alstom of 1.97% to 163.80 euros and in Peugot of 1.78% to 39.08 euros.

Credit Agricole decided to price its offering at 37% discount at 10.36 euros. Credit Agricole hopes to raise nearly 6 billion euro after is has taken losses related to subprime loans of 5.5 billion euros in the last four quarters.

Among the DAX 30 index shares, Hypo Real Estate Holdings led the gainers with a rise of 2.68% to 20.69 euros followed by gains in Henkel KGaA of 1.40% to 31.05 euros, in Metro AG of 1.37% to 147.43 euros, in Deutsche Postbank of 1.06% to 63.05 euros and in Linde of 1.01% to 96.10 euros.

MAN AG led the decliners in the DAX 30 index with a fall of 3.08% to 93.37 euros followed by losses in BMW of 1.98% to 36.12 euros, in Continental of 1.60% to 71.35 euros, in SAP AG of 1.40% to 34.61 euros and in RWE AG of 1.35% to 82.05 euros.