The European markets finished mixed on Wednesday, as concerns over the debt situation in the Eurozone persist. Borrowing costs increased today in Spain, Italy and even in Germany amidst the uncertainty. The focus of investors has shifted away from Spain and toward the second round of elections which will take place in Greece this weekend.
The decline in Eurozone industrial production pressured the markets this morning. The drop in the U.S. producer price index and the decline in U.S. retail sales added to the negative mood as the day progressed.
Spanish borrowing costs on Tuesday rose to its highest level since the country adopted euro more than a decade back, as optimism that followed a 100 billion euros EU bailout of its banks continued to fade.
The benchmark 10-year bond yield hit 6.81 percent, suggesting that markets remained wary about the situation in Eurozone. The euphoria that followed a higher-than-expected bailout over the weekend was entirely nullified by Monday as investors' attention was shifted to the upcoming Greek election.
Italy's borrowing costs surged at a sale of its one-year treasury bills on Wednesday after a EUR 100 billion Spanish bank rescue failed to calm concerns that Rome may be the next to seek a bailout. The Italian Treasury raised the targeted EUR 6.5 billion from the sale of its 12-month bills. The average yield on the 1-year paper rose to 3.972 percent from 2.34 percent in the previous sale on May 11.
Germany's bond auction on Wednesday met with slightly higher costs ahead of the election in Greece this weekend and Spain's bailout plan underway. The country sold EUR 4.04 billion from 10-year bund auction, Bundesbank said. Investors bid for EUR 5.8 billion, exceeding the maximum target of EUR 5 billion. The average yield rose marginally to 1.52 percent from 1.47 percent in the prior auction held on May 16.
The Euro Stoxx 50 index of eurozone bluechip stock decreased by 0.24 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.24 percent.
The DAX of German finished lower by 0.14 percent and the CAC 40 of France dropped by 0.55 percent. The FTSE 100 of the U.K. rose by 0.18 percent and the SMI of Switzerland gained 0.42 percent.
In Frankfurt, Siemens fell by 1.87 percent. UBS removed Siemens from 'European Key Call List.'
Shares of Volkswagen finished lower by 2.33 percent. Daimler dropped by 2.57 percent and BMW lost 1.67 percent.
In Paris, Maurel & Prom surged by 17.98 percent on buyout talks.
Renault decreased by 4.18 percent and Peugeot fell by 1.14 percent.
Schneider Electric dropped by 5.36 percent and Alstom closed down by 5.40 percent.
In London, Sainsbury declined by 2.61 percent. The retailer reported higher sales for the first quarter.
Cairn Energy dropped by 1.10 percent. The oil & gas giant has agreed to buy North Sea oil producer Nautical Petroleum in a 414 million pounds deal. Nautical shares surged by 55.16 percent.
HSBC raised Tesco to "Overweight" from "Neutral." The stock finished down by 0.03 percent.
Vedanta Resources fell by 2.82 percent and Xstrata decreased by 5.15 percent. Evraz dropped by 2.47 percent and Rio Tinto dipped by 0.52 percent.
SSE PLC increased by 2.06 percent. Barclays upgraded the stock to "Overweight" from "Equal weight."
Resolution climbed by 0.41 percent. UBS upgraded its rating on the stock to "Buy" from "Neutral."
Eurozone industrial production declined for the second consecutive month in April reinforcing the view that the currency bloc is heading into a recession. Industrial production logged a monthly fall of 0.8 percent in April after easing 0.1 percent in March, data from Eurostat showed Wednesday. Nonetheless, the decline was smaller than economists' forecast of 1.2 percent drop.
Germany's harmonized consumer prices rose more than initially estimated in May, final data from the Federal Statistical Office revealed Wednesday. EU harmonized inflation came in at 2.2 percent in May, revised up from the prior estimate of 2.1 percent. The rate was thus unchanged from the 2.2 percent seen in April.
Inflation in France eased again in May, the latest figures from the statistical office Insee showed Wednesday. Inflation, as measured by the harmonized index of consumer prices, slowed to 2.3 percent in May from 2.4 percent in April.
A steep drop in energy prices at the producer level fueled a larger than expected decrease in overall producer prices in May, according to figures released Wednesday by the Labor Department. The producer price index for finished goods fell a full 1 percent in May, marking the largest drop since July 2009. Economists had predicted a fairly large drop by the index following April's 0.2 percent decline, but most had expected producer prices to fall by 0.6 percent.
Retail sales in the U.S. showed a modest decrease in the month of May, according to a report released by the Commerce Department on Wednesday, with the report also showing a notable downward revision to the sales data for April.
The Commerce Department said retail sales edged down by 0.2 percent in May, matching the revised decrease seen in April. Economists had expected sales to dip by 0.2 percent compared to the 0.1 percent increase originally reported for the previous month.
U.S. business inventories increased by more than expected in April, according to figures released by the Commerce Department on Wednesday, with business sales showing a small but steady increase for the month. Commerce Department figures put the seasonally adjusted level of business inventories at $1.5751 trillion at the end of April, a 0.4 percent increase from March levels. The increase, which is bigger than the 0.3 percent increase predicted by most economists, comes atop a 0.3 percent increase in inventories in March.
by RTT Staff Writer
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