European Markets Fall; Daimler, Volkswagen Drop

123jump.com Staff
02 Jul, 2009
New York City

European market indexes closed sharply lower after the U.S. unemployment rate increased to 9.5%. Elan surged 20% after Johnson & Johnson acquired a stake in the company. Daimler, Volkswagen, PSA Peugeot and Renault declined after Credit Suisse lowered its outlook on the sector.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – UK and European market indexes closed sharply lower after the U.S. unemployment rate increased to 9.5%. Elan surged 20% after Johnson & Johnson acquired a stake in the company. Daimler, Volkswagen, PSA Peugeot and Renault declined after Credit Suisse lowered its outlook on the sector.[/R]

European stocks fell sharply after the U.S. unemployment rose to 26-year record to 9.5%. The employers eliminated 467,000 jobs surprising many economists. The job losses continue in manufacturing, retail and construction industries.

The ECB left its key interest rates unchanged. The lending rate for refinancing to banks was left at 1% as expected.

Gainers & Losers

Elan Corporation surged 20.2% to 5.70 euros after Johnson & Johnson invest $1 billion to take 18.4% stake in the company and acquired portfolio of drugs related to Alzheimer.

Auto stocks in Germany declined after Credit Suisse lowered its outlook for European automakers. The auto sales have been rising in Germany, France and Italy after the governments offered tax incentives.

However, the U.S. sales of German automakers fell in June. Daimler sales plunged 26% and Volkswagen sales declined 18%.

Volkswagen AG dropped 7.8% to 228.85 euros, Daimler declined 5.5% to 14.98 and PSA Peugeot Citroen decreased 5.4% to 18.05 euros. Renault SA lost 4.8% to 25.56 euros. Fiat SpA dropped 1% to 7.22 euros.

European energy companies declined more than 3% after the crude oil prices fell for the third day in a row. Total, Royal Dutch Shell, British Petroleum and Eni dropped.

Lowered rating from brokerages dragged stocks of CNP Assurances SA and Thales SA down 2.6% and 3.8% respectively.

The French mobile home maker Trigano SA increased 2.5% to 10.70 after it said that third quarter was profitable.

Banks in Italy closed lower. Banco Popolare dropped 5.3% and Banca Monte dei Paschi de Siena lost 5.3%.

Europe Markets Review

In London FTSE 100 Index closed lower 106.44 or 2.45% to 4,234.27, in Paris CAC 40 Index decreased 100.59 or 3.13% to close at 3,116.41 and in Frankfurt DAX index lower 186.95 or 3.81% to close at 4,718.49. In Zurich trading SMI decreased 117.71 or 2.15% to close at 5,355.23.

DAX Index Movers

Volkswagen AG led the decliners in the DAX index of 7.34% followed by losses in Commerzbank AG of 6.23%, in Deutsche Boerse AG of 5.74%, in Salzgitter AG of 5.18%, in ThyssenKrupp AG of 5.14%.

Fresenius Medical Care AG & Co. KGaA led gainers in the DAX index with a rise of 0.75%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 4 increased, 98 declined and none were unchanged.

WPP Plc decliners in the FTSE 100 index with a loss of 7.01% followed by losses in Anglo American plc of 5.81%, in Rio Tinto plc of 5.70%, in London Stock Exchange Group Plc of 5.48% and in Lonmin Plc of 5.01%.

Diageo plc led gainers in the FTSE 100 index with a rise of 0.89% followed by increase in Petrofac Limited of 0.52%, in Friends Provident plc of 0.18%, in Admiral Group plc of 0.11%.