European Markets Weaken; VW, BMW Sales Rise

Mayank Mehta
08 Dec, 2009
New York City

German seasonally adjusted industrial production decreased 1.8% in October from September. Production declined 12.4% from a year ago. BMW and Volkswagen sales increased in November. Greek stocks and bonds decline.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – German seasonally adjusted industrial production decreased 1.8% in October from September. Production declined 12.4% from a year ago. BMW and Volkswagen sales increased in November. Greek stocks and bonds decline.[/R]

European stocks closed lower with banks leading the decliners. Royal Bank of Scotland dropped more than 7% and Standard Chartered Plc and HSBC Plc declined on the worries that the banks may have to absorb more Dubai linked losses.

The rating agency Moody’s Investors Services highlighted the growing budget deficits in the US and UK may force it to review its top ratings of sovereign debts of these nations.

Fed Chairman Bernanke yesterday stressed that the Fed has a plan to unwind the large stimulus and it will “not” be inflationary. Investors are increasingly worried about the inflationary pressures in the years to come.

The rising sovereign debt, growing fiscal deficits in the U.S., UK, Europe and several emerging markets has worried investors.

In London FTSE 100 Index closed lower 87.53 or 1.65% to 5,223.13, in Paris CAC 40 Index decreased 54.75 or 1.43% to close at 3,785.30, in Frankfurt DAX index lower 96.17 or 1.66% to close at 5,688.58. In Zurich trading SMI decreased 70.87 or 1.10% to close at 6,399.74.

German seasonally adjusted industrial production decreased 1.8% in October from September. Production declined 12.4% from a year ago.

Greece Default Worries Rise

Greek stocks and bonds decline as rating agencies clamor for a possible downgrade and investors fear deteriorating government financials. Though investors demand higher yield on bonds, Greece is not alone when it comes lack of fiscal discipline in Europe.

Greek stocks and bonds declined as investors increasingly take a dim view of the government finances. Rating agencies have been sounding alarms that the nation’s debt may be downgraded. Banks fell sharply for the second day.

Fitch Ratings cut the government debt rating one step lower to BBB+ ad S&P placed the debt on watch.

Gainers & Losers

Affine SA the property rental company rose 0.1% to €16.68.

Air France-KLM fell 0.1% to €11.38 after the airline said CEO, Pierre-Henri Gourgeon, stated the demand environment is still “horribly depressed”, but the airline noted a slight improvement in conditions.

BMW AG fell 1.0% to €32.28 after group sales increased 11.5% in November to 107,686 vehicles.

Centrosolar Group AG rose 0.7% to €4.11 after the solar company said that it has opened an international branch in the Netherlands. The new office is based in Tiel 30 kilometers south of Utrecht.

Daimler AG fell 1.6% to €35.78 after the maker of luxury cars was upgraded to “underweight” in research coverage at Barclays Plc.

Demag Cranes AG decreased 5.8% to €24.20 after the provider of industrial cranes and port automation technology said full-year revenues fell 14.6% to €1.05 billion from €1.23 billion a year ago. Net profit in the full-year fell 98.5% to €1.2 million or €0.04 per diluted share compared to net profit of €80.8 million or €3.79 per share a year ago.

Hochtief AG the construction group fell 1.3% to €52.46.

Lukoil OAO an integrated oil and gas company said nine months revenues fell 36.4% to $56.8 billion from $89.3 billion a year ago. Net profit in the nine months fell 51% to $5.3 billion or $6.24 per diluted share compared to net profit of $10.8 billion or $12.85 per share a year ago.

PSA Peugeot Citroen S.A fell 0.7% to €23.92 after the automaker released new fuel cell hybrid concept vehicle at a trade show.

Theolia SA the wind-power generator fell 1.0% to €3.69.

ThyssenKrupp AG fell 1.5% to €24.50 said Arab shipbuilder Abu Dhabi Mar Tuesday confirmed it is in preliminary talks with the steelmaker on German submarine builder Howaldtswerke-Deutsche Werft.

Volkswagen AG dropped 1.7% to €80.00 after the automobile manufacturer said Audi November sales increase 8.9% on higher sales in China.

DAX Index Movers

BASF SE led the decliners in the DAX index of 3.28%, followed by losses in Deutsche Telekom AG of 3.24%, in Volkswagen AG of 3.06%, in Deutsche Boerse AG of 2.90%, and in Diamler AG of 2.86%.

Infineon Technologies AG led gainers in the DAX index with a rise of 1.05%.

CAC-40 Index Movers

Unibail-Rodamco SA led the decliners in the CAC-40 index of 3.81%, followed by losses in Credit Agricole SA of 3.04%, in Air Liquide SA of 2.89%, in Lafarge of 2.80%, and in Alstom SA of 2.78%.

Alcatel Lucent gainers in the CAC-40 index with a rise of 1.33% followed by gainers in STMicroelectronics N.V. of 0.85%, in Cap Gemini SA of 0.03%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 12 increased, 90 declined and none were unchanged.

The Royal Bank of Scotland Group Plc decliners in the FTSE 100 index with a loss of 7.73% followed by losses in Segro Plc of 4.03%, in Hammerson Plc of 3.97%, in Lonmin Plc of 3.89%, and in Rentokil Initial Plc of 3.86%.

Pearson Plc led gainers in the FTSE 100 index with a rise of 1.05% followed by increase in Thomas Cook Group Plc of 0.99%, in Compass Group Plc of 0.77%, in Admiral Group Plc of 0.55%, and in Autonomy Corporation Plc of 0.55%.