Arcandor Insolvency; Veolia Surges

Darlington Musarurwa
09 Jun, 2009
New York City

European markets closed mixed after German exports fell more than expected in April and industrial production declined. Business confidence in France in May increased. Arcandor filed for insolvency and bankers will sell its majority stake in Thomas Cook. Air France-KLM traffic declined.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European markets closed mixed after German exports fell more than expected in April and industrial production declined. Business confidence in France in May increased. Arcandor filed for insolvency and bankers will sell its majority stake in Thomas Cook. Air France-KLM traffic declined.[/R]

European market indexes closed mixed and nervous investors focused on economic fundamentals. German exports fell more than expected in April and industrial production in the month declined. Confidence in business community in France increased in May after government stimulus and interest rate cuts.

German industrial production declined 1.9% in April from March when it increased 0.3%. The surprising decline was driven by a fall in machinery production by 6.4%, manufacturing output 2.9% and intermediate goods by 1%.

German Current Account and Trade Surplus Falls

German exports in April declined 28.7% from a year ago month to 63.8 billion euros and imports fell 22.9% to 54.4 billion euros. On a seasonally adjusted basis, exports decreased 4.8% and imports declined 5.8% from March of this year.

Trade surplus declined to 9.4 billion euros from a year ago to 19 billion euros.

Preliminary current account surplus decreased to 5.8 billion euros from 15.4 billion euros.

German Gainers & Losers

Arcandor AG dropped 48% to 51 cents after the department store chain operator filed for insolvency and protection from creditors. The retailer had sought bailout funds from the government. The company’s majority stake in UK based Thomas Cook is likely to be auctioned by bankers.

Porsche SE decreased 0.4% to 46.80 euros, Deutsche Lufthansa AG declined 1.3% to 9.62 euros and Volkswagen AG increased 2.5% to 254.18 euros.

Porsche is in exclusive talks with Qatar controlled sovereign funds for a stake sale in the company.

Heidelberger Druckmaschinen AG plunged 10% to 4.55 euros after it estimated first quarter losses to exceed the period a year ago and is looking to sell shares if market conditions are favorable.

Wire Card AG increased 2.9% to 6.71 euros after the online payment processing software and Sweden based DIBS Payment Services AB entered in a partnership.

DAX Index Movers

Deutsche Boerse AG led the decliners in the DAX index of 2.95% followed by losses in Deutsche Post AG of 2.64%, in Deutsche Lufthansa AG of 1.53%, in Commerzbank AG of 1.40%, in ThyssenKrupp AG of 1.36%.

Volkswagen AG led gainers in the DAX index with a rise of 1.88% followed by gains in K+S AG of 1.73%, in RWE AG of 1.48% in Merck KGaA of 1.40%, in E.ON AG of 1.35%.

French Gainers & Losers

Air France- KLM Group decreased 5% or 54 cents to 9.93 euros after the airline said that passenger miles flown declined 8.1% in May. The fifth monthly decline in passenger was driven by a calendar shift. The load factor declined 2% to 77.3% as capacity declined 5.7% in the month.

Including Martin Air, cargo traffic declined 1% and load factor fell 1.9% to 62.9%.

Broker comments dragged Danone SA down 4.8% to 34.57 euros, Legrand SA increased 4.4% to 15.29 euros and Groupe Flo SA declined 9% to 3.36 euros and Wendel fell 2.8% to 26 euros.

EADS dropped 4.1% to 11.42 after Thai Airways suggested that it may cancel A380 passenger version orders.

Veolia Environnement surged 5.3% to 5.33 euros after it stated that its subsidiary Veolia Transport is interested in merging with Transdev, a subsidiary of Caisse des Depots et Consignations Group. The merged company will seek stock market listing. Veolia Transport 2008 revenues were 6 billion euros and employed 83,654 people in 28 countries.

CAC-40 Index Movers

Air France-KLM led the decliners in the CAC-40 index of 5.15% followed by losses in EADS NV of 4.12%, in Carrefour S.A. of 3.17%, in Alstom SA of 2.65%, Lagardere SCA 2.18%.

Veolia Environmental Services gainers in the CAC-40 index with a rise of 5.31% followed by gains in Danone SA of 4.77%, in STMicroelectronics N.V. of 4.69%, in Alcatel Lucent of 2.66%, in Credit Agricole SA of 2.27%.

Europe Markets Review

In London FTSE 100 Index closed lower 0.43 or 0.01% to 4,404.79, in Paris CAC 40 Index increased 7.07 or 0.21% to close at 3,296.73 and in Frankfurt DAX index lower 6.86 or 0.14% to close at 4,997.86. In Zurich trading SMI decreased 3.05 or 0.06% to close at 5,388.67.