European Indexes Up 2%; Kloeckner Surges

Darlington Musarurwa
24 Jun, 2009
New York City

European markets recovered in the afternoon trading. The OECD deepened its estimate of recession in Germany and UK but lifted its outlook among 30 member nations. Steel products distributor surged 5.1% after it indicated 1.6 billion euro capital for acquisition.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European markets recovered in the afternoon trading. The OECD deepened its estimate of recession in Germany and UK but lifted its outlook among 30 member nations. Steel products distributor surged 5.1% after it indicated 1.6 billion euro capital for acquisition.[/R]

European markets closed higher on a rally in the afternoon. Stocks gained after the U.S. reported better than expected durable goods orders.

The Paris based Organization for Economic Cooperation and Development improved its outlook for 30 member nations in 2009 but estimated slow and fragile recovery in 2010.

The European Central Bank offered to loan 442 billion euros for one year directly to corporations to unlock credit markets. The move follows after central bank signaled that it will not lower interest rate in the near future but credit markets remain seized for many industrial borrowers.

OECD Revises Outlook

The Organization for Economic Cooperation and Development revised its forecast of economic decline for the 30 countries it reviews and signaled a deeper recession and slower recovery for the UK and Germany.

The average economic decline of all 30 nations is estimated at 4.1% compared to 4.3% decline estimated in March. The economies are expected to recover at 0.7% in 2010 rise compared to 0.1% increase in March estimate.

The Paris based organization estimated deeper decline for Germany in 2009 to 6.1% from 5.3% estimate in March. The OECD also estimated unemployment rate to increase 11.6% in 2010 from 8.7% in 2009.

The French economy is expected to decline 3% in 2009 and recover gradually in 2010 with anemic growth rate of 0.2%.

The UK economy is expected to fall 4.3% in 2009 compared to a decline of 3.7% in March. The forecast is lower than the UK government estimated decline of 3.5%.

Euro zone economy is expected to decline 4.8% and flat in 2010.

China is estimated to lead the world with an increase o 7.7% in 2009 followed by 5.9% increase in India. Russian economy is expected to fall 8% and that of Brazil is expected to decline 0.8%.

Gainers & Losers

SAP AG increased 3.2% to 28.94 euros after Oracle suggested that market for software is improving.

Deutsche Bank AG increased 6.6% to 42.85 euros after Citibank lifted the bank’s earnings outlook and revised the target price to 42 euros from 34 euros.

Kloeckner & Co SE surged 5.1% to 13.96 euros after the company indicated it plans to eliminate 1,500 jobs and save 65 million euros in 2009. Net debt has declined from 571 million euros at the end of 2008 to 250 million in May 2009. The company also guided second quarter performance better than first quarter without disclosing any numbers.

The company has 1.6 billion in euros to finance acquisition without performance covenants. The company has a track record of 18 acquisitions since IPO.

Praktiker Bau AG surged 11.9% to 6.77 euros after Bloomberg News cited Morgan Stanley acquired 3.1% stake in the company.

Air France – KLM Group increased 2.5% to 8.99 euros after it completed 661 million euros of bonds.

Veolia Environnement increased 2.2% to 21.05 euros after it said it is in exclusive talks to sell its unit to TFN. The company has received 120 million euro bid or nine times its operating earnings in 2008 for its Veolia Properte Nettoyage et Multiservices.

DAX Index Movers

Fresenius SE led the decliners in the DAX index of 2.47% followed by losses in Fresenius Medical Care AG & Co. KGaA of 1.25%, in Deutsche Telekom AG of 1.21%, in Hannover Rueckversicherung AG of 0.86%, in Merck KGaA AG of 0.58%.

Volkswagen AG led gainers in the DAX index with a rise of 11.27%, followed by increase in Deutsche Bank AG of 5.78%, in ThyssenKrupp AG of 5.67%, in Commerzbank AG of 4.01%, in Salzgitter AG of 3.80%.

CAC-40 Index Movers

Sanofi-Aventis led the decliners in the CAC-40 index of 1.74% followed by losses in Credit Agricole SA of 0.14%.

ArcelorMittal gainers in the CAC-40 index with a rise of 5.90% followed by gains in Alstom SA of 4.53%, in Accor SA of 4.53%, in AXA of 4.47%, in BNP Paribas Asset Management SA of 4.46%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 71 increased, 30 declined and 1 were unchanged.

Man Group Plc decliners in the FTSE 100 index with a loss of 4.09% followed by losses in Friends Provident plc of 3.04%, in Experian PLC of 3.00%, in Wm Morrison Supermarkets PLC of 1.84% and in Unilever PLC of 1.81%.

Anglo American plc led gainers in the FTSE 100 index with a rise of 10.17% followed by increase in Lonmin Plc of 7.05in Kazakhmys PLC of 6.87%, in Eurasian Natural Resources Corporation PLC of 6.85%, in Rio Tinto plc of 5.55%.

Europe Markets Review

In London FTSE 100 Index closed higher 49.96 or 1.18% to 4,279.98, in Paris CAC 40 Index increased 67.94 or 2.18% to close at 3,184.76 and in Frankfurt DAX index higher 128.86 or 2.74% to close at 4,836.01. In Zurich trading SMI increased 122.11 or 2.29% to close at 5,443.42.