European Investors Nervous; Greek Bonds Fall

Mayank Mehta
27 Jan, 2010
New York City

European markets declined as the prospect of early stimulus withdrawal worries investors. Greek bonds declined on its first day of trading. Portugal plan to cut the deficit to 8.3% may not be enough to meet the EU requirement. BBVA dropped after reporting earnings that misses estimates.

[R]7:00PM Frankfurt, Paris; 1:00 PM New York – European markets declined as the prospect of early stimulus withdrawal worries investors. Greek bonds declined on its first day of trading. Portugal plan to cut the deficit to 8.3% may not be enough to meet the EU requirement. BBVA dropped after reporting earnings that misses estimates.[/R]

European markets closed lower on the worries that the European Central Bank will withdraw the stimulus for additional lending earlier than anticipated. National Bank of Greece SA declined on weak bond market.

In London FTSE 100 Index closed lower 59.38 or 1.13% to 5,217.47, in Paris CAC 40 Index decreased 47.24 or 1.24% to close at 3,759.80, in Frankfurt DAX index lower 25.73 or 0.45% to close at 5,643.20. In Zurich trading SMI decreased 11.20 or 0.17% to close at 6,473.03.

Greek bonds declined on the first day of trading as investors worried that the government may need additional funds to plug the record deficit. Director General of the Public Debt Management Agency in Athens said UK investors bought 26% of the offering of 8 billion euros and domestic investors purchased 26%. French investors bought just less than 8% of the offering.

Yields on the bonds due in 2015 increased 35 basis points to 385 points compared to the benchmark rate according to data available from Markit Ltd.

Gainers & Losers

ArcelorMittal fell 2.6% to €28.82 after the steelmaker announced that its French unit has filed a lawsuit against three competitors in the United States, alleging infringement of a US patent for hot- and cold-rolled metal sheeting used for car bodies. According to Dow Jones reported.

Banco Bilbao Vizcaya Argentaria SA the diversified international financial group said fourth quarter net interest income rose 16% to €3.6 billion from €3.1 billion a year ago. Net profit for the quarter fell 94% to €31 million compared to net profit of €519 million a year ago.

BMW AG dropped 1.2% to €29.88 after the maker of luxury cars was upgraded to “buy” from “hold” at Equinet AG.

Credit Agricole SA slipped 1.9% to €11.63 after the bank was downgraded on the stock to “equal-weight” from “overweight” at Morgan Stanley.

E.ON AG dropped 0.2% to €26.99 after the utility was added to the list of “most preferred” utilities at UBS AG.

Hi-Media SA rose 2.6% to €5.49 after the online advertising agency said it is counting on te recovery in the advertising market in mid-2010, after recording a jump of 41% of its turnover in the fourth quarter.

Inter Parfums SA the perfume maker rose 1.1% to €18.17.

ProSiebenSat.1 Media AG fell 4.1% to €9.30 after the private broadcaster was upgraded “buy” at BofA Merrill Lynch Global Research.

Renault SA the carmaker decreased 2.7% to €34.03.

SAP AG rose 0.9% to €46.05 after the software company said fourth quarter revenues fell 8.6% to €3.2 billion from €3.5 billion a year ago. Net profit for the quarter fell 12% to €727 million or €0.61 per diluted share compared to net profit of €830 million or €0.70 per share a year ago.

STMicroelectronics N.V slipped 0.7% to €6.05 after the chipmaker said fourth quarter sales rose 13.6% to $2.58 billion from $2.28 billion a year ago. Net loss for the quarter was $70 million or $0.08 per diluted share compared to net loss of $366 million or $0.42 per share a year ago.

Sky Deutschland AG the subscription television network increased 4.8% to €1.85.

TUI AG the charter tour operator fell 2.0% to €6.46.

Vallourec SA the maker of steel tubes for oil and gas production dropped 1.0% to €124.10.

Volkswagen AG fell 0.8% to €67.19 after the carmaker was rated “buy” in new coverage at Royal Bank of Scotland Group Plc.

Wacker Chemie AG fell 5.0% to €102.75 after the chemical maker said fourth quarter sales declined 6% to €935 million.

DAX Index Movers

Commerzbank AG led the decliners in the DAX index of 4.19%, followed by losses in Daimler AG of 3.25%, in Volkswagen AG of 2.95%, in MAN SE of 2.90%, and in Infineon Technologies AG of 2.89%.

BASF SE led gainers in the DAX index with a rise of 0.95%, followed by losses in Henkel AG of 0.89%.

CAC-40 Index Movers

Lafarge S.A led the decliners in the CAC-40 index of 4.49%, followed by losses in STMicroelectronics N.V. of 4.39%, in PSA Peugeot Citroen S.A. of 3.98%, in Renault SA of 3.19%, and in Compagnie de Saint-Gobain SA of 2.87%.

Technip gainers in the CAC-40 index with a rise of 1.92% followed by gainers in Pernod Ricard SA of 1.22%, in Accor SA of 0.08%, in Veolia Environnement of 0.04% and in Essilor International SA of 0.02%.