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European Stocks Seen Subdued After Chinese Data

4/23/2012 2:22 AM ET

European shares are seen opening lower on Monday, tracking weak Asian cues, lower commodity prices and a retreat in the euro from a two-week high against the dollar, as Chinese PMI data released today failed to allay concerns about the global economy.

China's manufacturing activity shrank for a sixth consecutive month in April, but the pace of decline eased from a month earlier owing to slower contraction in output, new orders and employment, a key survey revealed today. The HSBC/Markit purchasing managers' index rose to 49.1 in April from 48.3 in March, with the reading below 50 still indicating a contraction in activity.

Meanwhile, the group of 20 finance ministers and central bank governors said that they had reached an agreement to lift the funding resources of the International Monetary Fund by over $430 billion to safeguard global financial stability and put the global economic recovery on a sounder footing. With the additional boosting, the IMF fund for loans has doubled its capacity and the total firepower has reached above 1 trillion.

In the first round of the French Presidential Elections on Sunday, Socialist leader Francois Hollande won the most number of votes, pushing incumbent Nicolas Sarkozy to the second place, estimates show. Hollande and Conservative President Sarkozy will now go into a second run-off vote on 6 May.

In economic releases, U.K. household finances deteriorated for a second consecutive month in April, a survey by Markit Economics revealed. The headline household finance index fell to a three-month low of 37 in April from 37.8 in March, as lower earnings, higher household debt and elevated inflation expectations exerted greater pressure on current finances, Markit said.

In corporate news, Vodafone Group Plc is nearing a deal to acquire U.K.-based telecom company Cable & Wireless Worldwide for more than $1 billion.

Drugmaker Pfizer Inc. said it has agreed to divest its infant nutrition business to Nestle SA for $11.85 billion in cash.

Royal Philips Electronics posted first-quarter net income of 249 million euros, higher than 138 million euros reported a year ago, but said it remains cautious about the remainder of 2012 given the uncertainties in Europe and in the healthcare and construction markets.

European stocks advanced on Friday, as an unexpected rise in German business sentiment for a sixth month in a row in April and encouraging U.S. corporate earnings helped ease concerns over rising borrowing costs for Spain and Italy.

The Euro Stoxx 50 index of eurozone bluechip stocks rose 1.2 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, finished up 0.8 percent, while around Europe, France's CAC 40, the U.K.'s FTSE 100, Switzerland's SMI and the German DAX rose between 0.5 percent and 1.2 percent.

On Wall Street, another round of strong earnings from companies such as Microsoft, General Electric and McDonald's helped stocks end mostly higher on Friday. Paring early gains, the Dow rose half a percent and the S&P 500 edged up 0.1 percent, while the tech-heavy Nasdaq posted a modest 0.2 percent loss.

by RTT Staff Writer

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