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European Markets Finished Higher After Banks Rebound

4/11/2012 12:03 PM ET

The European markets climbed on Wednesday, rebounding from their recent losses. Bank stocks provided strength to the markets, following an upgrade of the banking sector. HSBC upgraded the European bank sector to "Overweight" for the first time in four years. Mining stocks were another source of strength.

The stronger than expected earnings report from U.S. aluminum company Alcoa Tuesday evening helped to put investors in a positive mood. The company's report is viewed as the beginning of the U.S. earnings reporting season. Yields on government bonds in both Spain and Italy eased on Wednesday, following the sharp increase in yields over the last few days. Meanwhile, Germany's auction failed to augment bids for the maximum amount set for the issue on Wednesday. The Bundesbank said the 10-year federal bond issue raised EUR 3.87 billion, which was well below the maximum target of EUR 5 billion. The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.72 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished higher by 0.49 percent.

The CAC 40 of France climbed by 0.62 percent and the DAX of Germany gained 1.03 percent. The FTSE 100 of the U.K. advanced by 0.70 percent, but the SMI of Switzerland dipped by 0.03 percent.

In Frankfurt, Deutsche Bank climbed by 2.33 percent and Commerzbank rose by 4.13 percent.

Volkswagen rose by 2.96 percent. The company reported a 14.6 percent increase in global car sales for March. BMW also climbed by 2.50 percent after its sales report.

Drillisch fell by 0.24 percent. HSBC downgraded its rating on the stock to "Neutral" from "Overweight."

HSBC also downgraded Freenet to "Neutral" from "Overweight." The stock finished up by 0.80 percent.

Pfeiffer Vacuum declined by 1.85 percent, after HSBC reduced the stock to "Underweight" from "Neutral."

In Paris, Credit Agricole gained 1.49 percent and BNP Paribas rose by 0.84 percent.

Bouygues increased by 4.57 percent. Its subsidiary Bouygues B√Ętiment International signed an agreement to acquire 100 percent of U.K. contractor Thomas Vale Group.

Technip climbed by 1.08 percent. The company secured from INPEX Corp. a flexible pipe supply lump sum contract for the Ichthys gas field in Australia.

EADS gained 1.04 percent after Merrill Lynch raised the stock to the Europe 1 List and increased its price target to 42 euros from 36 euros.

In London, Barclays increased by 2.81 percent and Lloyds Banking Group rose by 2.65 percent. HSBC Holdings climbed by 0.73 percent and Royal Bank of Scotland gained 2.18 percent. Investec Securities also upgraded its rating on shares of Barclays to "Buy" from "Hold."

BHP Billiton increased by 1.31 percent. The miner announced that it will close one of its coal mines in Australia.

Mining stocks performed well on Wednesday. Shares of Rio Tinto climbed by 0.92 percent and Fresnillo gained 3.43 percent. Kazakhmys rose by 1.88 percent and Antofagasta finished up by 3.54 percent.

G4S finished higher by 2.56 percent, after Morgan Stanley upgraded the stock to "Overweight" from "Equal weight."

BT Group declined by 2.47 percent. JP Morgan Cazenove downgraded the stock to "Neutral" from "Overweight."

Michael Page fell by 3.55 percent after issuing a trading update.

In Zurich, Givaudan rose by 3.65 percent. The Swiss manufacturer of fragrance and flavour products said it experienced a strong start to the year, with first-quarter sales increasing 4.7 percent.

Germany's wholesale price inflation slowed for the second consecutive month in March, data released by the Federal Statistical Office showed Wednesday. The wholesale price index increased 2.2 percent on an annual basis in March, slower than the 2.6 percent growth seen in February.

Retail sales in the UK rebounded in March as unusually warm weather encouraged spending on clothing, footwear and outdoor leisure, the British Retail Consortium (BRC) said Wednesday. Retail sales rose 1.3 percent on a like-for-like basis from March 2011. This followed a 0.3 percent decline in February and was better than economists' forecast for no growth.

Prices of goods imported to the U.S. surged higher in March, driven by higher prices in both the fuel and non-fuel sectors, according to figures released Wednesday by the Department of Labor. March saw a 1.3 percent increase in overall import prices, the largest monthly increase since April of 2011. While most economists had predicted a large increase in import prices, few had expected it to be so large, with most expecting the increase to come in at 1 percent.

U.S. export prices also increased in March, rising by 0.8 percent, the largest increase since April of 2011. The export price growth exceeded the 0.3 percent increase predicted by most economists and builds on the 0.4 percent increase in February.

by RTT Staff Writer

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