European Stocks Fall; Veolia Dividend Cut

123jump.com Staff
06 Mar, 2009
New York City

European main indexes closed on the downside on worries that the global recession may continue to batter consumer spending and corporate earnings through the year. Veolia Environnement reported lower than expected annual results and cut its dividend. Air France passenger traffic dropped.

[R]1:00PM New York, 6:00 Frankfurt – European indexes close the week down. German steel output tumbles.[/R]

European main indexes closed on the downside on worries that the global recession may continue to batter consumer spending and corporate earnings through the year.

Unemployment in the US soared as financial instability in central and eastern Europe also escalated. Leading banks in France slumped.

The U.S. Department of Agriculture said bad weather conditions in France and Spain will affect wine production in the European Union and trim output by 1%.

Mixed corporate earnings also hurt confidence.

Veolia Environnement SA gained in Paris trading despite reporting below-expectation full-year financial results, which forced the world’s biggest water company to cut its dividend.

Air France-KML, , also reported that passenger traffic fell 6% in February as the Asian market contracted forcing Europe’s largest airline to reduce capacity.

Market Sentiment

In Frankfurt trading the DAX 30 Index fell 0.8% or 29.08 to 3,666.41.

Of the 30 DAX index shares, 6 gained and 24 lost.

Daimler AG led winners and added 2.3%, followed by gains in BMW of 1.9%, in Adidas AG of 0.8%, in Deutsche Telekom of 0.6% and Henkel AG-PFD of 0.4%.

Infineon Tech led decliners with a loss of 11.5%, followed by losses in Commerzbank of 5.7%, in Deutsche Post –RG of 5%, in Deutsche Post Bank of 4.7% and Allianz SE of 4.3%.

In Paris trading the CAC 40 lost 0.9% to 2,547.23 as bank losses weighed the market.

Saint Gobain led advancers with a gain of 3.9%, followed by gains in Veolia Environnement SA of 3.9%, in Renault of 2.8%, in GDF Suez of 2.8% and Lafarge of 2.6%.

Credit Agricole led decliners with a loss of 9.7%, followed by losses in Societe Generale of 8.4%, in BNP Paribas SA of 8.3%, in Alcatel-Lucent of 6.2% and CAP Gemini of 5.9%.

BNP Paribas SA is close to striking a deal with Belgium over the Belgian and Luxembourgian subsidiaries of Fortis.

Steel Output in Germany Falls

The Federal Statistical office today said iron and steel production in Germany fell in February compared to January on falling demand from car and machinery manufacturers.

Raw iron output from metallurgical plants fell 35.8% to 1.49 million tons, while raw steel production also tumbled 31.6% to 2.58 million tons.

Belgium and BNP Paribas Fortis Closer to a Deal

Belgian Finance Minister said the Belgian government was close to striking a deal with BNP Paribas SA, France’s largest bank, over the Belgian and Luxembourgian subsidiaries of Fortis.

The deal will pave the way for BNP Paribas to acquire Fortis’ banking arms from Belgium after shareholders in February stopped the takeover.