European Banks Fall; G-7 Gloomy Outlook

123jump.com Staff
16 Feb, 2009
New York City

European markets close lower on weakness in banks and financial stocks. G-7 finance ministers fail to offer a clear plan to prevent the further widening of the economic downturn and persistent weakness in banking sector. Air Liquide rallies on strong earnings.

[R]1:00PM New York, 6:00 Frankfurt – European markets close lower on weakness in banks and financial stocks. G-7 finance ministers fail to offer a clear plan to prevent the further widening of the economic downturn and persistent weakness in banking sector. Air Liquide rallies on strong earnings.[/R]

Stocks in Europe closed lower on renewed worries of banking system and protracted economic downturn. Bank stocks fell on renewed financial worries after the G-7 finance ministers and central bankers failed to deliver concrete measures on how to rescue credit markets. The G-7 in a statement said the current economic downturn was likely to worsen.

The latest economic report from Japan suggested the sharpest economic slowdown in thirty five years also offered another evidence of protracted economic slump.

The news sent the euro down a quarter-percentage to $1.2755.

Air Liquide rallied 6.8% in Paris after reporting strong earnings and proposing a dividend of 2.25 euros a share for 2008.

Market sentiment

In Frankfurt trading the DAX Index lost 1.1% or 46.75 to 4,366.64. Of the 30 shares in DAX Index shares, 10 gained and 20 lost.

Linde AG led advancers with a gain of 2.6% followed by gains in ThyssenKrupp of 1.1%, in Deutsche Telkom of 0.8%, in K+S of and in Muenchener Rue of 0.6%.

ThyssenKrupp climbed for a second day after it reported better than expected fourth quarter earnings on Friday.

Commerzebank led decliners for the second consecutive day of trading with a loss of 7.2% followed by losses in Deutsche Postbank of 6.6%, in Deutsche Bank of 6.5%, in Infineon Tech of 3.5% and in Deutsche Post of 2.7%. Banks fell as the outcome of G-7 meeting failed to restore confidence in credit markets.

In Paris the CAC 40 closed 1.1% lower to 2,965.33.

Air Liquide, the world’s largest industrial gasses maker, led advancers with a gain of 6.8% after reporting a full-year pre-tax profit of 1,220 million euros for 2008 and declaring a dividend of 2.25 euros a share.

Air France-KML also rose 1.45 after airline on Friday said it has taken measures to strengthen its financial position and return to operating profit in 2009, followed by gains in Lagardere S.C.A of 1.2%, in Eads of 0.8% and in Essilor international of 0.5%.
Societe Generale led decliners for a second day of trading with a loss of 4.8% followed by losses in Axa of 4.7%, in Michelin of 3.9%, in Alcatel-Lucent of 3.7% and EDF of 3.4%..

G-7 fails to lay out concrete stabilization measures

The Group of Seven finance ministers and central bankers, who met in Rome at the weekend, only ended with statements of good intent that however lacked concrete measures on how to resuscitate financial markets and world economy.

In a statement issued today, the bloc warned that the recession of the world economy was still far from bottoming out. The answer, said the group, lied in integrating stabilization initiatives into multi-country efforts and urged the US treasury secretary, to finalize the $2.5 trillion bank rescue plan for the world’s largest economy.

Air Liquide Predicts Higher 2009 Profit

Air Liquide, the industrial gas maker, today reported a full-year pre-tax profit of 1,220 million euros for 2008, an increase of 10.8% from a year ago.

During the review period, revenue grew 11% to 13.1 billion euros on firm natural gas prices and solid growth in engineering activities. Sales in gas and services increased 10.3% to 11.0 billion euros on a sustained demand from industrial merchant, electronics and healthcare.

Air Liquide said about 80% of its revenue comes from “long-term defensive markets” or from products that are least affected by business cycles.

The group also said it has made investment commitments worth about 7 billion euros over the last three years. The company’s revenue forecasts in the next two years indicate that turnover from new plant investments scheduled to come on stream this year is likely to increase to about 1 billion euros.

Through 2009, the company expects demand for gases used in refining and healthcare to remain firm.

Europe Markets Review

In London FTSE 100 Index closed lower 54.84 or 1.31% to 4,134.75, in Paris CAC 40 Index decreased 35.64 or 1.19% to close at 2,962.22 and in Frankfurt DAX index lower 46.75 or 1.06% to close at 4,366.64. In Zurich trading SMI decreased 49.22 or 0.96% to close at 5,077.62.