EU Tackles Regional Slowdown

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

European stocks rebound after a decline for four days in a row on the optimism that the region wide government bailout of the banking sector will stabilize financial markets. German unemployment increased for the fourth month in a row.

[R]1:00PM New York, 6:00 Frankfurt – European stocks rebound after a decline for four days in a row on the optimism that the region wide government bailout of the banking sector will stabilize financial markets. German unemployment increased for the fourth month in a row.[/R]

Stocks in Europe recovered from four days of consecutive losses as new moves to deal with toxic bank assets revived sentiment. Financial stocks in Germany, France and Switzerland climbed.

The European Union further boosted the market sentiment after its Monetary Affairs Commissioner assured the World Bank that it will coordinate a regional effort at financial sector stabilization in Central and Eastern Europe.

The Commission of the 27-member grouping however advised that sentiment in the Eurozone has fallen further.

Market Sentiment

In Frankfurt trading the DAX 30 Index surged 2.7% or 102.39 to 3,948.

Of the DAX index shares, 20 rose and 10 declined.

Deutsche Bank AG, Germany’s largest bank by market capitalization led advancers with a gain of 12.2%, followed by gains in Allianz SE of 10.2% after Europe’s biggest insurer by market value reported that the group was financially sound despite posting a fourth quarter net loss of 3.11 billion.

Insurance concern Muenchener Rueckversicherungs AG also rose 9.6% followed by gains in BASF SE of 6.7% and Man AG of 4.9%.

Infineon Tech led decliners with a loss of 8.8%, followed by losses in Deutsche Post AG of 5.6% after the biggest mail carrier in Europe reported a full-year loss. Germany’s second-largest utility, RWE AG also fell 2.5% despite a fourth quarter profit in 2008, followed by losses in Bayer AG of 1.9% and SAP AG of 1.5%.

In Paris trading the CAC 40 advanced 2.4% to 2,762.81.

BNP Paribas led advancers with a gain of 14%, followed by gains in Societe Generale of 9.7%, in AXA of 9.6%, in Veolia Environ of 8.3%, in Credit Agricole 7.6%.

Saint Gobain led decliners with a loss of 6%, followed by losses in Vallourec of 5.3%, in Sanofi-Aventis of 1.65%, in Schneider Electric of 1.6% and Dexia AG of 1.2%.

Dexia AG, the world’s largest lender to local governments, declined on weak earnings. The group’s fourth quarter profit fell to €2.6 billion from a net profit of €587 million in 2007.

EU Assures Banks Assistance

The European Union Monetary Affairs Commission in a letter to the World Bank assured that it has put together financial rescue measures for banks in the 27-member grouping.

Joaquin Almunia, the Commissioner for Monetary Affairs indicated that the bailout packages also covered banks in eastern Europe, most of which are subsidiaries of western financial institutions. The rescue plan will be discussed at an EU emergency summit slated for March 1.

The aid package also covers balance of payments for member governments.

German Unemployment Rises for Fourth Month

The Federal Labor Agency today released a report which showed that the seasonally adjusted unemployment rate in the country gained 0.1 percentage points from 7.8% in January.

According to the report, the number of unemployed amounted to a seasonally adjusted 40,000 million in February.

When compared with the same month a year earlier, the number of unemployed persons after seasonal adjustment had also increased.

Europe Markets Review

In London FTSE 100 Index closed higher 66.66 or 1.73% to 3,915.64, in Paris CAC 40 Index increased 47.92 or 1.78% to close at 2,744.84 and in Frankfurt DAX index higher 96.41 or 2.51% to close at 3,942.62. In Zurich trading SMI increased 68.28 or 1.45% to close at 4,770.78.