Stocks in Europe Rise; Banks, Autos Lead

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

Stocks in Europe closed higher on the optimism that a rise in earnings bodes well for the credit market. After the close Goldman Sachs joined other banks and said that banks in the U.S. may need to raise as much as $65 billion in capital. 123jump.com estimates that European banks will have to raise another $60 billion in capital to cover mounting losses in credit markets and in loans related to housing market.

[R]12:00PM New York, 4:00PM Frankfurt – European stocks recover from the last week’s market decline. Manufacturing sector in Germany add staff.[/R]

Europe market update

European stocks recover from last week losses resisting news of rising inflation in the euro area. The key indices in Germany and France were higher. UK inflation rose to a 10-year high in May and a day ago Eurostat reported 16-year high inflation in the euro area.

The CAC 40 gained 28.59 or 0.61% in to 4,686.70. In Germany the DAX 30-index advanced 66.28 or 0.98% to 6,796.16. Stocks in Switzerland climbed as the Swiss Market index gained 13.15 or 0.18% to 7,251.42. The FTSE 100 gained 67.30 or 1.53% to 5,861.00.

Euro area inflation reaches a record high of 3.7% in May 2008

The euro area has recorded an inflation rate of 3.7% in May 2008 up from its 3.3% in April. In 2007 the rate of annual inflation was 1.9%. The monthly inflation in May was 0.6%.
In May 2008, the lowest annual rates were observed in Netherlands of 2.1%, in Portugal of 2.5%, in Germany of 3.1%, and the highest in Latvia of 17.7%, in Bulgaria of 14% and in Lithuania of 12.3%.

The main components contributing to the inflation were transport with 1.8% rise followed by increases in housing of 0.8% and in recreation of 0.7%. The lowest increases were recorded in communication, health and clothing.

German Investor Confidence falls

The ZEW Indicator of Economic Sentiment for Germany dropped in June. The indicator decreased by 11.0 points and is currently standing at minus 52.4 points after minus 41.4 points in the previous month. This is still well below its historical average of 29.2 points.

The economic sentiment indicator is facing two opposing forces as rising food and energy prices reduce consumer purchasing power and slowing incoming order on rising euro drag business investment growth.

The assessment of the current economic situation in Germany decreased slightly in June 2008. The corresponding indicator dropped by 1.0 points to 37.6 points.

Germany’s number of manufacturing sector employees rise by 2.9% in April 2008

The Germany Federal Statistical Office reported that at the end of April, 5.3 million persons worked in local units of manufacturing with 50 or more employees, an increase of 148,800 persons or 2.9% compared to a year ago. The number of hours worked in April increased 15.4% from a year earlier to 752 million.

The rising activities in manufactuing sector is responsible for the demand for more employees in the sector. Increased number of hours worked might be inferered to mean that some people are forgoing their holidays to put more hours in the face of rising food prices and fuel.

Germany registers 1st Quarter increase in foreign trade with Russia

German exports to Russia increased 25.4% in the first quarter of 2008 on the same quarter a year earlier. The value of the goods exported to Russia amounted to 7.5 billion euros. German exports were up 5.7% to 252.5 billion euros. Unlike nominal exports, exports in real terms, that is without considering changes in value, increased by 4.9%.

Gainers and losers

Societe Generale led the gainers in the CAC 40 index stocks with a rise of 4.69% to 60.87 euros followed by gains in Alcatel- Lucent of 4.16% to 4.50 euros, in BNP Paribas of 2.74% to 63.60 euros, in ACCOR of 2.59% to 47.83 euros and in Vallourec of 2.41% to 199.33 euros.

Saint Gobain led the decliners in the CAC 40 index with a loss of 1.94% to 44.34 euros followed by losses in Lafarge of 0.79% to 107.03 euros, in Vinci of 0.60% to 42.43 euros, in Danone of 0.54% to 50.97 euros and in Bouygues of 0.50% to 45.21 euros

Among the DAX 30 index shares, Infineon Technologies led the gainers with a rise of 3.48% to 6.72 euros followed by gains in Deutsche Bank of 2.86% to 63.71 euros, in Deutsche Borse of 2.85% to 85.97 euros, in Volkswagen of 2.50% to 178.68% and in Allianz of 2.31% to 119.21 euros.

TUI AG led the decliners in the DAX 30 index with a fall of 0.81% to 15.93 euros followed by losses in Fresenius Medical Care of 0.62% to 35.51 euros, in Deutsche Telekom of 0.29% to 10.27 euros, in Henkel KGaA of 0.24% to 28.52 euros and in MAN AG of 0.16% to 86.23 euros.

Precious metals trade sideways

At mid-day in London, gold traded unchanged at $883 an ounce. Silver fell 1 cent to $16.73 an ounce, platinum gained $8 to $2,063 an ounce and palladium lost $6 to $464 an ounce.