European Market Indexes Drop on Weak Banks

Mayank Mehta
17 Dec, 2009
New York City

European banks declined after Basel based committee recommended higher capital requirements and tougher bonus and dividend standards at banks. Greek banks fell for the fourth day in a row. Deutsche Bank AG is in talks to buy commodities trading unit from Royal Bank of Scotland.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European banks declined after Basel based committee recommended higher capital requirements and tougher bonus and dividend standards at banks. Greek banks fell for the fourth day in a row. Deutsche Bank AG is in talks to buy commodities trading unit from Royal Bank of Scotland.[/R]

European and Greek and UK banks were on the decline after comments from the Basel based international regulators and Germany plans to issue larger debt in 2010.

Alpha Bank declined 3.5% to €8.25 and Piraeus Bank fell 2.6% to €8.04 in Athens, Greece trading after Standard & Poor’s lowered its credit rating on the Greek bonds.

In London FTSE 100 Index closed lower 102.65 or 1.93% to 5,217.61, in Paris CAC 40 Index decreased 45.00 or 1.16% to close at 3,830.82, in Frankfurt DAX index lower 58.99 or 1.00% to close at 5,844.44. In Zurich trading SMI decreased 43.09 or 0.66% to close at 6,489.23.

Basel Committee on Banking Supervision in a statement released on its Web site said that it will ask banks to maintain higher liquidity and capital tom meet future financial shocks. The committee also will start monitoring leverage ratios at banks and will require multinational banks to hold at least 30 days of liquidity in its reserves.

Federal Finance Agency in Germany said that it will sell €343 billion euros of debt in 2010, more than debt of €329 billion in 2009 and €213 billion in 2008.

Gainers & Losers

Accor SA the hotelier added 1.0% to €37.53.

BMW AG the maker of luxury cars increased 0.6% to €32.40.

Bonduelle SCA the processed and fresh-vegetable producer advanced 1.7% to €77.35.

Dexia SA dropped 1.6% to €4.66.

Deutsche Bank AG dropped 0.6% to €51.86 and the lender is lead bidder for commodities trading company RBS Sempra, the Financial Times reported. Royal Bank of Scotland Group plc said in November it was selling its 51% stake in the firm, which it jointly owns with Sempra Energy based in San Diego, California to meet the UK government requirements.

Deutsche Telekom AG fell 1.4% to €10.14 and the phone company said France Telecom and the company are working with regulators in Brussels rather than London to scrutinize the proposed merger of their UK mobile phone businesses.

EADS NV rose 2.2% to €12.93 after the defense group and parent of Airbus SAS was upgraded to “outperform” from “market perform” at Sanford C. Bernstein & Co.

E.ON AG the power and gas company dropped 0.8% to €28.05.

Stratec Biomedical Systems AG gained 1.8% to €27.40 after the maker of laboratory equipment for diagnostics companies expects sales in the range of €96 million to €102 million and EBIT margin to expand by more than 0.5 percentage point compared to 2009.

Veolia Environnement decreased 0.9% to €22.34 after the water company was downgraded to “add” from “buy” at AlphaValue.

Vinci SA fell 0.9% to €39.63 after the construction company was downgraded to “outperform” from “selected list” at CA Cheuvreux.

Volkswagen AG decreased 0.4% to €80.92 and the carmaker said its South Korean sales of Audi AG are expected to be near 6,800 vehicles.

Wirecard AG rose 1.8% to €9.48 after the vendor of online payment software said that it has signed a purchase agreement on December 16, 2009 for the acquisition of E-Credit Plus Pte. Ltd., Singapore. The final closing is planned to be concluded by the time of the acquisition date, January 1, 2010.

DAX Index Movers

Commerzbank AG led the decliners in the DAX index of 4.32%, followed by losses in Infineon Technologies AG of 2.66%, in K+S AG of 2.01%, in Deutsche Telekom AG of 1.90%, and in Deutsche Post AG of 1.50%.

Adidas AG led gainers in the DAX index with a rise of 1.21% followed by increase in BMW AG of 1.20%, in Fresenius SE of 0.90%, in ThyssenKrupp AG of 0.47%, and in Siemens AG of 0.44%.

CAC-40 Index Movers

Credit Agricole SA led the decliners in the CAC-40 index of 4.59%, followed by losses in Lagardere SCA of 3.60%, in Societe Generale SA of 3.36%, in Suez Environnement SA of 2.98%, and in Michelin SCA of 1.88%.

EADS NV gainers in the CAC-40 index with a rise of 2.37% followed by gainers in Bouygues SA of 1.53%, in Accor SA of 0.36%, in AXA of 0.18%, and in Vallourec SA of 0.16%.

FTSE 100 Index Movers

Of the stocks in the FTSE 100 index, 8 increased, 93 declined and 1 were unchanged.

Lloyds Banking Group Plc decliners in the FTSE 100 index with a loss of 7.21% followed by losses in Barclays Plc of 5.72%, in Xstrata Plc of 4.78%, in Compass Group Plc of 3.96%, and in Antofagasta Plc of 3.82%.

Rentokil Initial Plc led gainers in the FTSE 100 index with a rise of 1.81% followed by increase in Invensys Plc of 0.89%, in G4S Plc of 0.74%, in Cadbury Plc of 0.44%, and in Resolution Limited of 0.30%.