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European Shares Set To Extend Losses

European shares may extend the previous session's losses on Thursday, with banks in focus after Moody's Investors Service downgraded the credit ratings of five Portuguese banks, citing expectations for a further deterioration in asset quality, additional asset risks and a lack of access to wholesale funding sources, given the country's poor economic outlook.

Moody's cut senior debt and deposit ratings of Banco Espirito Santo, Banco Internacional do Funchal, Banco BPI and Caixa Geral de Depositos by one notch, aligning their ratings at the same level or one notch below the Ba3 ratings of the Portuguese government debt. The debt and deposit ratings of Banco Santander Totta, a subsidiary of Banco Santander S.A., were lowered by two notches to Ba1.

Asian markets are edging lower, with key benchmark indexes in Japan, China, Hong Kong and Taiwan falling 1-2 percent, as concerns of growth prospects in the world's two largest economies, the United States and China, sapped appetite for riskier assets. The Japanese yen rose against all of its 16 major counterparts as mixed U.S. durable goods orders data stoked concerns about the global economy.

Oil extended the previous session's losses, with Brent crude futures hovering near $124 a barrel after data from the U.S. Energy Information Administration showed crude inventories in the world' top oil consuming economy rose 7.1 million barrels last week, the largest weekly build since July 2010. Also weighing on prices, France said it is in talks with Britain and the United States over a possible release of strategic oil reserves to drive down global oil prices.

In economic releases, economic confidence survey results from Eurozone and unemployment from Germany are the major statistical reports due in the European session. Investors will also pay close attention to a bond auction in Italy, with the government aiming to raise a maximum of EUR 9 billion from the long-term debt auction.

In corporate news, Gagfah SA, the biggest residential landlord in Germany, announced that its board of directors has resolved to make a cash tender offer for shares in the company with a maximum aggregate purchase price of EUR 75 million.

Telecommunications service provider Drillisch AG announced that it has successfully placed EUR 125 million senior bonds exchangeable into existing ordinary registered shares of freenet AG.

Solar inverter maker Solar Technology AG reported fiscal 2011 operating profit of 240 million euros, lower than last year's 516 million euros, and said it expects only moderate growth in the global PV market in 2012.

Touax reported a marginal rise in its 2011 net attributable income to EUR 13.4 million from EUR 13.3 million in the prior year.

Swiss pharmaceutical giant Novartis AG has teamed up with U.S. researchers associated with the company along with the Broad Institute to launch the "Cancer Cell Line Encyclopedia" that will help the common man as well as cancer research community.

European shares fell modestly in volatile trading on Wednesday, with banks and miners pacing the declines, after U.K. GDP was revised lower to show 0.3 percent contraction in the fourth quarter of 2011 and data showed new orders for U.S. durable goods rose less than expected in February.

The Euro Stoxx 50 index of eurozone bluechip stocks and the Stoxx Europe 50 index, which includes some major U.K. companies, fell around a percent each, while around Europe, Switzerland's SMI, the U.K.'s FTSE 100, France's CAC 40 and the German DAX fell between 0.3 percent and 1.1 percent.

On Wall Street, stocks drifted lower overnight, with the Dow Jones Industrial Average, the Nasdaq Composite index and the S&P 500 losing around half a percent each, following mixed data on durable goods orders. A report from the Commerce Department showed that durable goods orders rose by 2.2 percent in February following a revised 3.6 percent decrease in January. Economists had expected orders to increase by about 2.9 percent.

by RTT Staff Writer

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