European Automakers Gain; Markets Decline

Mayank Mehta
03 Feb, 2010
New York City

European markets closed lower on the persistent worries related to rising deficit at smaller member nations in the EU. Norway left its key lending rate at 1.75%. Electrolux dropped on lower than expected earnings. Vinci fourth quarter revenue declined 4.5%.

[R]7:00PM Frankfurt, Paris; 1:00 PM New York – European markets closed lower on the persistent worries related to rising deficit at smaller member nations in the EU. Norway left its key lending rate at 1.75%. Electrolux dropped on lower than expected earnings. Vinci fourth quarter revenue declined 4.5%.[/R]

Market indexes in Europe trended lower as Greece, Spain, Portugal and Italy worries kept traders guessing. Investors appeared calmer after EU regulators publicly supported Greek plan to curb trade deficit. Regulators also demanded regular updates on the deficit reduction plan progress from the Greek government.

IBEX 35 index of Spain declined 2.3% and in Greece ASE Index dropped 1.9% at close. Greece’s largest labor union declared to strike on February 24 after the government decided to increase retirement age in to curb rising social security payments.

Norway left its key lending rate unchanged at 1.75% and indicated stable economic environment until the next meeting in March.

Norges Bank raised the key lending rate twice in the last quarter to stem rising home prices. Home prices increased at 11.6% in the last quarter from a year ago as crude oil prices recovered. Unemployment rate at 3.3% in Norway is the lowest in Europe.

AB Electrolux dropped as much as 14% after it reported lower than expected operating profit. The operating margins and earnings were affected on lower than expected sales and higher raw material costs.

Electrolux declared 4 kronor per share dividend matching the payment in 2006.

EU Retail trade Stable

Retail trade sales in December remained stable compared to November in euro area EA16 and fell 0.1% in the EU27. In November retail trade decreased 0.5% in both zones.
Compared with December 2008 retail sales index decline 1.6% in the euro area and 1.0% in the EU27.

In London FTSE 100 Index closed lower 30.16 or 0.57% to 5,253.15, in Paris CAC 40 Index decreased 18.66 or 0.49% to close at 3,793.47, in Frankfurt DAX index lower 37.57 or 0.66% to close at 5,672.09. In Zurich trading SMI increased 3.68 or 0.06% to close at 6,553.80.

Europe Earnings Review

AB Electrolux, the producer of home appliances said fourth quarter revenues fell 1.7% to SEK28.2 billion from SEK28.7 billion a year ago. Net profit for the quarter was SEK664 million or SEK2.34 per diluted share compared to net loss of SEK474 million or SEK1.68 per share a year ago.

Roche Holding AG, the pharmaceuticals and diagnostics company said full-year sales rose 8% to CHF49.1 billion from CHF45.6 billion a year ago. Net profit for the year fell 21% to CHF8.5 billion or CHF9.02 per diluted share compared to net profit of CHF10.8 billion per share a year ago.

Gainers & Losers

Alten SA added 2.3% to €21.37 after the telecom services company said 2009 sales rose 1.3% to €857.1 million.

Aixtron AG the maker of specialized equipment used to produce LED screens rose 2.6% to €23.30.

Beiersdorf AG added 1.0% to €42.39 after the consumer products maker was upgraded “underweight” in new coverage at Barclays Capital.

Coheris SA the software company slipped 8.8% to €2.77.

Danone SA rose 1.3% to €42.35 after the yogurt maker was rated at “overweight” in a new coverage at Barclays Capital.

Daimler AG increased 1.7% to 34.34 after it reported U.S. sales in January surged 45%.

Etablissements Maurel et Prom SA gained 4.0% to €13.09 after the oil exploration company said full-year sales rose 99% to €183.2 million from €92.3 million a year ago.

L''Oreal SA rose 0.01% to €77.61 after the cosmetics maker was rated “underweight” in new coverage at Barclays Capital.

Munich Re closed unchanged at €108.75 after the reinsurer was downgraded to “reduce” from “neutral” at Nomura Holdings Inc.

NRJ Group SA the radio station rose 1.6% to €6.61.

Porsche Automobil Holding SE the sports-car maker rose 1.2% to €43.40.

Television Francaise 1 SA the most-watched television station in France dropped 0.2% to €13.15.

Unibail-Rodamco SA dropped 0.8% to €157.65 after the company was upgraded to “neutral” from “underweight” at HSBC Holdings Plc.

Vinci SA advanced 1.7% to €40.19 after the construction company said fourth quarter revenue fell 4.5% to €8.46 billion from €8.86 billion a year ago.

Volkswagen AG the carmaker gained 2.1% to €68.11 after it reported U.S. sales in January increase 41%.

DAX Index Movers

Deutsche Boerse AG led the decliners in the DAX index of 4.92%, followed by losses in Infineon Technologies AG of 3.21%, in Commerzbank AG of 2.82%, in Adidas AG of 2.53%, and in Deutsche Lufthansa AG of 2.49%.

MAN SE led gainers in the DAX index with a rise of 2.91%, followed by losses in Diamler AG of 1.86%, in K+S AG of 0.77%, in SAP AG of 0.56%, and in Fresenius SE of 0.49%.

CAC-40 Index Movers

Credit Agricole SA led the decliners in the CAC-40 index of 3.65%, followed by losses in Dexia SA of 2.63%, in BNP Paribas SA of 2.49%, in Societe Generale SA of 2.36% and in Suez Environnement SA of 1.98%.

Vinci SA gainers in the CAC-40 index with a rise of 2.08% followed by gainers in Vallourec SA of 1.85%, in Bouygues SA of 0.98%, in Michelin SCA of 0.62% and in Danone SA of 0.62%.