European markets finished mixed on Wednesday, after returning to action following Tuesday's May Day holiday. The markets got off to a positive start today, building off of Tuesday's rally in the U.S. and the gains in Asian markets, which were fueled by the better than expected ISM manufacturing report.
The markets reversed direction in the afternoon after the U.S. ADP employment result missed expectations. Several weaker than expected manufacturing reports in Europe also weighed on investors Wednesday, in addition to the increase in the Eurozone's unemployment rate. Bank stocks were also a source of weakness, as concerns over Spain and Italy persist.
Standard and Poor's on Wednesday said that it is raising the long-term foreign and local currency debt ratings on Greece to 'CCC/C' from 'selective default' following the completion of the "distressed" debt exchange. The outlook on the long-term rating is 'stable' reflecting S&P's view of the government's stated commitment to improving its fiscal track record.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.74 percent, while the Stoxx Europe 50 index, which includes some major U.K. Companies, finished lower by 0.03 percent.
The DAX of Germany dropped by 0.75 percent and the FTSE 100 of the U.K. closed down by 0.93 percent. The CAC 40 of France gained 0.42 percent and the SMI of Switzerland increased by 0.20 percent.
In Frankfurt, Brenntag finished down by 1.50 percent. Credit Suisse downgraded its rating on the stock to "Neutral" from "Outperform."
Commerzbank dropped by 2.51 percent and Deutsche Bank closed down by 2.48 percent.
Fuchs Petrolub increased by 1.44 percent, after reporting a higher profit in the first quarter.
In Paris, STMicroelectronics climbed by 1.26 percent. Citigroup and Goldman Sachs raised their ratings on the stock.
Credit Agricole fell by 2.94 percent and BNP Paribas declined by 1.00 percent. Societe Generale finished with a gain of 0.95 percent.
In London, Standard Chartered dropped by 3.90 percent. The lender reported low double digit growth in operating profit in the first quarter, but said its income growth has been impacted by the continued strength of the US dollar against Asian currencies.
Lloyds Banking Group fell by 4.52 percent. S&P Equity raised the stock to "Hold" from "Sell." Barclays finished down by 5.54 percent and Royal Bank of Scotland lost 2.09 percent.
BskyB climbed by 1.52 percent, after reporting a higher profit.
Next increased by 2.59 percent. The company expects profit for the first half to be ahead of last year.
Home Retail sank by 13.32 percent. The firm reported a sharp decline in fiscal 2012 profit, reflecting lower sales and margins in its Argos and Homebase brands.
Software services provider Kewill surged by 25.99 percent, after it agreed to be acquired by Kinetic Bidco Ltd., for about 89.5 million pounds.
UBS rose by 3.71 percent in Zurich. The lender reported a 54 percent decline in profit for the first quarter, amid a loss at its investment banking unit owing to a hefty charge tied to own credit loss. The company saw strong net new money inflows in the wealth management businesses.
Shares of Swisscom increased by 4.38 percent, after the company confirmed its guidance for the year. The company also announced that it would return to dividends in 2013 if it attains all of its targets for 2012.
Unemployment in Germany rose unexpectedly in April suggesting that the economy may have lost momentum after the euro area debt crisis intensified with Spain assuming the center stage amid renewed tensions in the region. The Federal Labor Agency said Wednesday that the number of unemployed persons in the country rose by 19,000 from a month earlier to 2.875 million in April, after adjusting for seasonal variations. This was in contrast to economists' expectations for a decrease of 10,000.
The euro area unemployment rate rose to a record high in March driven by an increase in job losses in the southern periphery countries. The seasonally adjusted jobless rate climbed to 10.9 percent in March, the highest since April 1997, from 10.8 percent in February, the latest figures from Eurostat revealed Wednesday. The outcome was in line with expectations.
The Eurozone manufacturing sector contracted more than initially estimated for April, Markit Economics said Wednesday. According to the survey, the Purchasing Managers' Index for manufacturing fell to a near three-year low of 45.9, from 47.7 in March and below the earlier flash estimate of 46.0.
Germany's manufacturing sector contracted for the second consecutive month in April, and the corresponding indicator dropped to the lowest level in thirty-three months, final data released by Markit Economics and HSBC Bank showed Thursday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 46.2 in April from 48.4 in March, marking the second consecutive fall in activity. The latest reading was slightly lower than 46.3 estimated earlier.
Private sector employment in the U.S. increased by less than expected in the month of April, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday, with the data adding to recent concerns about the labor market. ADP said that private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 201,000 jobs in March. Economists had expected an increase of about 183,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.
A steep drop in civilian aircraft orders in March contributed to the largest monthly decline in U.S. factory orders since March of 2009, according to figures released Wednesday by the Commerce Department. New orders for manufactured goods fell by 1.5 percent to $460.5 billion in March following a 1.1 percent increase in February. While the March decrease is slightly less severe than the 1.6 percent decline predicted by most economists, the February increase was downwardly revised from the 1.3 percent increase initially reported.
by RTT Staff Writer
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