Bank Worries in Europe

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

Bank nationalization fears drag European shares down. Deutsche Telekom gains on better than expected earnings. Germany inflation unexpectedly climbed in February weighing the sentiment in trading in markets in Germany, France and Switzerland.

[R]1:00PM New York, 6:00 Frankfurt – Bank nationalization fears drag European shares down. Deutsche Telkom gains on strong earnings.[/R]

European stocks took a plunge led by banks after the US government indicated that it may nationalize troubled Citigroup by taking a larger stake.

The news stoked fears that more banks grappling with toxic assets globally may face the same fate. Separately the World Bank has created a 24.5 billion euro financial rescue package for eastern European banks.

Germany inflation unexpectedly climbed in February weighing the sentiment in trading in markets in Germany, France and Switzerland.

Market Sentiment

In Frankfurt trading the DAX 30 Index retreated 2.5% or 98.88 to 3,843.74. Of the 30 DAX index shares, only 5 rose, 24 fell and one traded unchanged.

Deutsche Telekom rose 1.3% after the telecom operator reported results which beat analyst forecasts and declared a dividend of a 5 euro cent also above expectation. Chief executive Rene Obermann, said the company has endured the storm of recession.

Man AG also gained 0.3% followed by gains in Bayer AG of 0.3%, in SAP AG of 0.3% and Muenchener Rueckversicherungs AG of 0.02%. E.ON AG traded flat.

Volkswagen AG led decliners with a loss of 6.6%, followed by losses in Adidas AG of 4.8%, in Deutsche Boerse AG of 4.3%, in Salzgitter AG of 3.9% and Daimler AG of 3.7%.

Allianz also fell 0.9 after the insurer reported a loss, while Deutsche Post dropped 1.9% on missing analyst earnings and dividend expectations.

In Paris trading the CAC 40 slid 1.6% to 2,700.50.

Saint Gobain led advancers with a gain of 4.2%, followed by gains in Veolia Environ of 3.3%, in France Telecom of 1.6%, in PPR of 1.4% and Carrefour of 1.2%.

Insurer Axa led decliners with a loss of 8.4%, followed by losses in Michelin of 6%, in Artcelormittal of 4.8%, in Lafarge of 4.7% and Sanofi-Aventis of 4.6%.

German Inflation Shoots

The Federal Statistical Office (Destatis) today reported that inflation in Europe’s largest economy accelerated in February.

According statistical bureau, the harmonized inflation rate rose by 0.1 percentage points to 1% as motor fuels and package vacations for travellers rose. The harmonised consumer price index climbed 0.7%.

Stabilization Plan for Eastern Europe

The World Bank today unveiled a stabilization package for both Central and Eastern Europe valued at 24.5 billion euros.

Details of the package will be negotiated at EU summit on Sunday.

Ferenc Gyurcsany, Hungarian Prime Minister said about 180 billion euros will be needed to bail out countries in eastern Europe.

In Eastern Europe, the rescue package will assist Bulgaria, the Czech Republic, Croatia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Ukraine.

European Earnings Review

Deutsche Telekom AG, Europe’s biggest telephone company said fourth quarter revenues rose 1.2% to €16.1 billion from €15.9 billion, a year earlier. Net loss in the quarter was €730 million compared to net loss of €750 million, a year earlier.

Eiffage SA, France’s third-largest construction company said full-year sales fell 5% to €13.2 billion. Net profit in the full-year declined 9.3% to €302 million compared to net profit of €333 million, a year earlier.

Eiffage SA, in the last one year traded as high as €62.55 in April 2008 and as low as €24.19 in October 2008. Based on the yesterday’s closing price of €29.10 the company has market cap of €2.70 billion.

Nyrstar NV, the world’s largest zinc producer said full-year sales dropped 37% to €2.4 billion. Net loss in the full-year was €595 million.

Nyrstar NV, in the last one year traded as high as €2.63 in March 2008 and as low as €2.37 in October 2008. Based on the yesterday’s closing price of €2.59 the company has market cap of €257.70 million.

Piaggio & C. SpA, Italian scooter maker said full-year sales fell 7.2% to €1,570.1 million from €1,692.1 million, a year earlier. Net profit in the full-year fell 27.8% to €43.3 million compared to net profit of €60.0 million, a year earlier.

Piaggio & C. SpA, in the last one year traded as high as €2.04 in February 2008 and as low as €0.97 in July 2008. Based on the yesterday’s closing price of €1.05 the company has market cap of €389.97 million.

Sogefi SpA, an Italy-based company operating in the automotive sector said full-year revenues fell 5.1% to €1,017.5 million from €1,071.8 million, a year earlier. Net profit in the full-year fell 45.4% to €28.5 million compared to net profit of €52.2 million, a year earlier.

Sogefi SpA, in the last one year traded as high as €12.53 in February 2008 and as low as €0.95 in February 2009. Based on the yesterday’s closing price of €0.962 the company has market cap of €109.91 million.

Europe Markets Review

In London FTSE 100 Index closed lower 85.55 or 2.18% to 3,830.09, in Paris CAC 40 Index decreased 42.36 or 1.54% to close at 2,702.48 and in Frankfurt DAX index lower 98.88 or 2.51% to close at 3,843.74. In Zurich trading SMI decreased 80.11 or 1.68% to close at 4,690.67.