Higher Losses at Banks, Indexes Decline

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

European stocks traded lower on the rising worries on the losses in credit market. Goldman Sachs estimated higher losses at UBS than at Credit Suisse and Deutsche Bank. UBS is likely to report $4 billion asset write downs linked to the risky loans. In addition, BASF decided to cancel its 3 billion euros program to repurchase shares. France Telecom is likely to walk away from its bid for TeliaSonera if it fails to raise funds.

[R]2:00PM New York, 8:00PM Frankfurt – European stocks trade mixed in today’s trade./R]

Europe market update

European stocks traded mixed in today’s trading session, the key indices in Germany closed higher while for France the indices closed lower.

The CAC 40 fell 0.11% to 4,613.78. In Germany the DAX 30-index gained 6.31 points or 0.09% to 6,735.22. Shares in Switzerland dropped as the Swiss Market index slipped 19.81 points or 0.28% to 7,162.75. The FTSE 100 slipped 19 points or 0.33% to 5,737.90.

The Brent Crude Oil Futures lost $2.29 or 1.68% to $134.15 a barrel.

France Telecom unlikely to raise funds for TeliaSonera bid

Gervas Pellissiers, the chief financial officer reported that France Telecom SA has limited margin to raise about 246.2 billion kronor for its Sweden’s TeliaSonera AB bid. The company is likely to walk away from the deal if it fail to raise funds.

Gainers and losers

Vallourec led the gainers in the CAC 40 index stocks with a rise of 5.56% to 211.44 euros followed by gains in Arcelormittal of 4.31% to 65.54 euros, in EDF of 2.20% to 63.84, in Total of 1.45 to 52.34 euros and in Gaz De France of 1.32% to 42.92 euros.

Dexia led the decliners in the CAC 40 index with a loss of 5.30% to 12.49 euros followed by losses in Alcatel-Lucent of 3.18% to 4.25 euros, in Veolia Environment of 2.67% to 37.05 euros, in STMicroelectronics of 2.63% to 7.19 euros and in Bouygues of 2.50% to 43.59 euros.

Among the DAX 30 index shares, ThyssenKrupp led the gainers with a rise of 1.72% to 41.35 euros followed by gains in RWE AG of 1.71% to 81.66, in Allianz of 1.35% to 118.58 euros, in E.ON AG of 1.32% to 129.65 euros and in Hypo Real Estate Holdings of 1.14% to 21.25 euros.

MAN AG led the decliners in the DAX 30 index with a fall of 3.14% to 82.04 euros followed by losses in Adidas of 2.19% to 43.33 euros, in Deutsche Postbank of 2.17% to 58.19 euros, in Deutsche Post AG of 1.86% to 17.92 euros and in Infineon Technologies of 1.58% to 6.52 euros.

The largest chemical producer BASF SE plans to cancel its proposed 3 billion euros share buyback after company looks for ways to pay for the rising energy cost but has completed its earlier plan to buyback share of 3 billion euros in 2007 and 2008.

Precious metals rise

At 4:59 PM, in London, gold gained $9.70 to $903 an ounce. Silver advanced 15 cents to $17.22 an ounce, platinum fell $32 to $2,067 an ounce, palladium gained $6 to $472 an ounce and copper futures gained $4.50 to $379.25 an ounce.


[R]2:00AM New York, 7:00PM London - UK retail sales rise 3.5% in May. Treasury proposes additional powers for the BOE and FSA.[/R]

Stocks in London fell fractionally after mixed reports showed increases in May retail sales and falling house prices for the same month.

Also the Bank of England Governor Mervyn King gave a gloomy outlook on the state of the economy, indicating that consumers will have to endure declining real purchasing power as authorities try to rein in on rising inflation.

Market sentiment

In London trading FTSE 100 index fell 0.84% or 48.5 at 5,708.40.

Of the FTSE 100 index stocks 31 gained, 70 declined, and 1 was unchanged. Anglo America led advancers in the index shares with a rise of 3.50% followed by Eurasian Natural increasing 3.34%.

Government to give BOE ad FSA new powers

The U.K Chancellor of the Exchequer Alistair Darling said in a speech and published on the Treasury’s Web site that the Government will be giving additional powers to the FSA to superintend over individual institutions and to the Bank of England for maintaining stability in the financial system.

Mr. Darling will set out the full details tomorrow in a letter to the Chairman of the Treasury Select Committee and in a consultation document.

“At the centre of our banking reform proposals are new powers for both the FSA and the Bank and improved procedures for coordination between them,” said Darling in a speech.

The FSA will remain the sole banking supervisor and government intends to provide a formal legal responsibility alongside the existing role in monetary policy.

Darling added: “The challenge for us is to ensure that the authorities can act quickly and decisively where necessary to support financial institutions. These proposals will give the authorities the full range of powers they need.”

John Gieve, one of the two deputy governors, will quit next year and Deputy Governor Rachel Lomax will also retire this year.

At the same dinner, Bank of England Governor Mervyn King said a slowdown in the economy this year will be necessary to dampen price and wage pressures in order to meet the inflation target.

King added that people will have to endure a loss a real purchasing power induced by the temporary slowing in the “growth of our real take home pay”.

Retail sales increase 3.5% in May

The Office of National Statistics reported on its Web site today that retail sales rose 1.8% in the quarter to May from the previous three months.

Retail sales in May increased 3.5% from a year ago, a sharpest decline in the two decades after a revised data in April of a fall of 0.3%. From a year ago sales rose 8.1% in May and in April rose revised 3.8% from the earlier estimate of 4.2% increase.

Sales volume for food stores rose 4.7% and non-food stores increased 9.9% and for the three-months to May sales volume rose 1.8% from the prior three months. Seasonally adjusted sales in the three months rose 5.4%.

Gainers & Losers

Anglo America led advancers in the FTSE 100 index shares with a rise of 3.50% followed by increases in Eurasian Natural of 3.34%, in ICAP Plc of 2.95%, in First Group Plc of 2.05%, and Centrica Plc of 2.04%.

Retailers, Next dropped 1.45% and Tesco shed 0.84%.

HBOS led decliners in the FTSE 100 index shares with a fall of 6.90% followed by losses in Alliance & Leicester of 5.73%, in Thomson Reuters of 4.75%, in Persimmon of 3.82%, and Friends Provident Plc of 3.53%.

HBOS fell after reporting that house prices fell 2.4% in May from the previous month and slumped 3.8% on an annual basis at £184,111.

Financial stocks also declined on a gloomy outlook on the UK economy.