16/01/2012 16:43
European stocks swung between gains and losses, following three days of declines, as France auctioned debt after Standard & Poor’s stripped the country of its top credit rating. U.S. index futures and Asian shares fell.
Carnival Corp. (CCL) tumbled 17 percent in London after its Costa Concordia cruise liner ran aground off Italy, killing at least six people. Holcim Ltd. (HOLN) retreated 2.6 percent as the cement maker said it will book a charge in the fourth quarter. Fiat SpA (F) and Daimler AG (DAI) led a rally in carmakers after Goldman Sachs Group Inc. recommended the industry.
The benchmark Stoxx Europe 600 Index gained 0.1 percent to 249.5 at 2:07 p.m. in London after earlier falling as much as 0.5 percent and rising as much as 0.4 percent. Futures on the Standard & Poor’s 500 Index expiring in March lost 0.2 percent. The U.S. market is closed for a holiday today. The MSCI Asia Pacific Index dropped 1.1 percent.
“While the downgrades to France may not be too surprising to markets, it is still disappointing news,” said Dominic Rossi, chief investment officer for equities at Fidelity Worldwide Investment in London. “The euro-zone crisis is now dominating market activity again, after a period in which better economic news from the U.S., and easier monetary policy in China had helped markets move higher.”
The Stoxx 600 erased its gains on Jan. 13, closing 0.1 percent lower, after reports that S&P planned to downgrade several euro-area countries. The gauge still climbed 0.7 percent over the week as Spain and Italy sold debt at lower borrowing costs.
S&P Downgrades France
The rating company downgraded France to AA+ from AAA with a negative outlook after the close of European trading on Jan. 13. It cut Cyprus, Italy, Portugal and Spain by two grades, while also lowering the long-term ratings on Austria, Malta, Slovakia and Slovenia.
Germany, Belgium, Estonia, Finland, Ireland, Luxembourg and the Netherlands had their grades affirmed.
The euro declined for a second day, falling to an 11-year low against the yen today even as the European Central Bank was said to buy Italian and Spanish bonds.
French borrowing costs fell at a sale of 51-week treasury bills in the first sale since the nation’s credit downgrade. France sold the bills at a yield of 0.406 percent versus 0.454 percent at an auction of similar-maturity securities on Jan. 9.
Fiscal Deficit Rules
Euro-area leaders will this week try to rescue under-fire efforts to deliver new fiscal rules and cut Greece’s debt burden as they urge investors to ignore the S&P downgrades.
Greek officials will reconvene with creditors on Jan. 18 after discussions stalled last week over the size of investor losses in a proposed debt swap, raising the threat of default. German Chancellor Angela Merkel and French President Nicolas Sarkozy will also meet as the ECB warns governments against “watering down” a revamp of budget laws.
Carnival dropped 17 percent to 1,863 pence, the biggest tumble since 2008, after its cruise liner capsized off the Italian coast on Jan. 13, injuring about 60 people. The ship, carrying more than 4,000 passengers and crew, hit submerged rocks in the Tyrrhenian Sea. Rescuers are still searching for as many as 17 people.
Morgan Stanley lowered its recommendation for the shares to “equal weight” from “overweight.”
Holcim lost 2.6 percent to 50.50 Swiss francs. The world’s second-largest cement maker said it will book a 775 million- franc ($812 million) charge in the fourth quarter after writing off investments in South Africa and revaluing assets in sluggish markets from Spain to the U.S.
Lundin Drops
Lundin Petroleum AB (LUPE) sank 14 percent to 151.80 kronor after the company said it will probably reduce its estimates for the recoverable resources at the Avaldsnes discovery.
Fiat led a gauge of carmakers to the biggest gain on the Stoxx 600 today as Goldman Sachs reiterated its “attractive” view on the industry. Fiat jumped 4 percent to 4.04 euros, Fiat Industrial SpA (FI) increased 2.9 percent to 7.34 euros and Pirelli & C. SpA climbed 4.4 percent to 6.88 euros as analysts recommended all three companies’ shares and added Pirelli to their “conviction buy” list.
Daimler (DAI) was also added to Goldman’s “conviction buy” list, while Renault SA (RNO) was upgraded to “neutral” from “sell.” The carmakers climbed 2.6 percent to 38.98 euros and 2.3 percent to 30.69 euros, respectively.
“The sector is now discounting a substantial decline in returns in 2012,” wrote Goldman analyst Stefan Burgstaller in a report to clients dated today. “The European Union sector is in better financial and operational shape than in 2007, and we believe it is well placed to benefit from global economic realignment.”
Richemont, Rockhopper
Cie. Financiere Richemont SA gained 1.8 percent to 51.60 francs after the world’s second-largest luxury goods maker reported 24 percent growth in third-quarter revenue to 2.62 billion euros, as sales of Cartier jewelry increased in Asia. That beat the median analyst estimate of 2.54 billion euros.
Rockhopper Exploration Plc (RKH) jumped 10 percent to 303.3 pence, its biggest rally in a month, after the Sunday Times reported that Cairn Energy Plc has held talks with the U.K. company that discovered oil near the Falkland Islands off Argentina.
Rockhopper has hired Bank of America Corp. to find a partner to share development costs. The talks may lead to a takeover, the Sunday Times said, citing unidentified bankers.
Cairn Energy doesn’t comment on rumors, a spokesman, who declined to be identified citing company policy, told Bloomberg News by phone yesterday. Rockhopper spokesman Patrick d’Ancona declined to comment.
Carnival Corp. (CCL) tumbled 17 percent in London after its Costa Concordia cruise liner ran aground off Italy, killing at least six people. Holcim Ltd. (HOLN) retreated 2.6 percent as the cement maker said it will book a charge in the fourth quarter. Fiat SpA (F) and Daimler AG (DAI) led a rally in carmakers after Goldman Sachs Group Inc. recommended the industry.
The benchmark Stoxx Europe 600 Index gained 0.1 percent to 249.5 at 2:07 p.m. in London after earlier falling as much as 0.5 percent and rising as much as 0.4 percent. Futures on the Standard & Poor’s 500 Index expiring in March lost 0.2 percent. The U.S. market is closed for a holiday today. The MSCI Asia Pacific Index dropped 1.1 percent.
“While the downgrades to France may not be too surprising to markets, it is still disappointing news,” said Dominic Rossi, chief investment officer for equities at Fidelity Worldwide Investment in London. “The euro-zone crisis is now dominating market activity again, after a period in which better economic news from the U.S., and easier monetary policy in China had helped markets move higher.”
The Stoxx 600 erased its gains on Jan. 13, closing 0.1 percent lower, after reports that S&P planned to downgrade several euro-area countries. The gauge still climbed 0.7 percent over the week as Spain and Italy sold debt at lower borrowing costs.
S&P Downgrades France
The rating company downgraded France to AA+ from AAA with a negative outlook after the close of European trading on Jan. 13. It cut Cyprus, Italy, Portugal and Spain by two grades, while also lowering the long-term ratings on Austria, Malta, Slovakia and Slovenia.
Germany, Belgium, Estonia, Finland, Ireland, Luxembourg and the Netherlands had their grades affirmed.
The euro declined for a second day, falling to an 11-year low against the yen today even as the European Central Bank was said to buy Italian and Spanish bonds.
French borrowing costs fell at a sale of 51-week treasury bills in the first sale since the nation’s credit downgrade. France sold the bills at a yield of 0.406 percent versus 0.454 percent at an auction of similar-maturity securities on Jan. 9.
Fiscal Deficit Rules
Euro-area leaders will this week try to rescue under-fire efforts to deliver new fiscal rules and cut Greece’s debt burden as they urge investors to ignore the S&P downgrades.
Greek officials will reconvene with creditors on Jan. 18 after discussions stalled last week over the size of investor losses in a proposed debt swap, raising the threat of default. German Chancellor Angela Merkel and French President Nicolas Sarkozy will also meet as the ECB warns governments against “watering down” a revamp of budget laws.
Carnival dropped 17 percent to 1,863 pence, the biggest tumble since 2008, after its cruise liner capsized off the Italian coast on Jan. 13, injuring about 60 people. The ship, carrying more than 4,000 passengers and crew, hit submerged rocks in the Tyrrhenian Sea. Rescuers are still searching for as many as 17 people.
Morgan Stanley lowered its recommendation for the shares to “equal weight” from “overweight.”
Holcim lost 2.6 percent to 50.50 Swiss francs. The world’s second-largest cement maker said it will book a 775 million- franc ($812 million) charge in the fourth quarter after writing off investments in South Africa and revaluing assets in sluggish markets from Spain to the U.S.
Lundin Drops
Lundin Petroleum AB (LUPE) sank 14 percent to 151.80 kronor after the company said it will probably reduce its estimates for the recoverable resources at the Avaldsnes discovery.
Fiat led a gauge of carmakers to the biggest gain on the Stoxx 600 today as Goldman Sachs reiterated its “attractive” view on the industry. Fiat jumped 4 percent to 4.04 euros, Fiat Industrial SpA (FI) increased 2.9 percent to 7.34 euros and Pirelli & C. SpA climbed 4.4 percent to 6.88 euros as analysts recommended all three companies’ shares and added Pirelli to their “conviction buy” list.
Daimler (DAI) was also added to Goldman’s “conviction buy” list, while Renault SA (RNO) was upgraded to “neutral” from “sell.” The carmakers climbed 2.6 percent to 38.98 euros and 2.3 percent to 30.69 euros, respectively.
“The sector is now discounting a substantial decline in returns in 2012,” wrote Goldman analyst Stefan Burgstaller in a report to clients dated today. “The European Union sector is in better financial and operational shape than in 2007, and we believe it is well placed to benefit from global economic realignment.”
Richemont, Rockhopper
Cie. Financiere Richemont SA gained 1.8 percent to 51.60 francs after the world’s second-largest luxury goods maker reported 24 percent growth in third-quarter revenue to 2.62 billion euros, as sales of Cartier jewelry increased in Asia. That beat the median analyst estimate of 2.54 billion euros.
Rockhopper Exploration Plc (RKH) jumped 10 percent to 303.3 pence, its biggest rally in a month, after the Sunday Times reported that Cairn Energy Plc has held talks with the U.K. company that discovered oil near the Falkland Islands off Argentina.
Rockhopper has hired Bank of America Corp. to find a partner to share development costs. The talks may lead to a takeover, the Sunday Times said, citing unidentified bankers.
Cairn Energy doesn’t comment on rumors, a spokesman, who declined to be identified citing company policy, told Bloomberg News by phone yesterday. Rockhopper spokesman Patrick d’Ancona declined to comment.
Related Articles
