The European markets struggled to find a direction on Tuesday. The markets ended the session mixed, as attention focused on the testimony of U.S. Federal Reserve Chairman Ben Bernanke began his testimony before the Senate.
The Federal Reserve is prepared to take further action to jump start the sluggish U.S. recovery, the nation's top central banker told lawmakers Tuesday morning. However, Fed Chairman Ben Bernanke offered no hints that the central bank is specifically planning another round of quantitative easing.
"Reflecting its concerns about the slow pace of progress in reducing unemployment and the downside risks to the economic outlook, the FOMC made clear at its June meeting that it is prepared to take further actions as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," Bernanke said in delivering his twice-a-year testimony to the Senate Banking Committee.
The International Monetary Fund Monday said it approved a fresh loan to Portugal after the country passed a monetary review in connection with its bailout program. The IMF approved the disbursement of EUR1.48 billion after completing its fourth review of the Portuguese economy under an extended fund facility (EFF) arrangement with the government. With the release of fresh funds the total disbursements under the EFF arrangement will reach around EUR21.13 billion.
Just three days after it downgraded the country's sovereign credit rating by two notches, rating agency Moody's Investors Service on Monday lowered the long-term debt and deposit ratings of ten Italian banks and the issuer ratings for three Italian financial institutions by one to two notches. All of the banks and financial institutions affected by the ratings cut have a 'negative' outlook, which may increase the likelihood of future downgrades.
Spanish borrowing costs declined on Tuesday in its first debt auction since the government announced the latest round of austerity measures last week in a bid to attain deficit targets amid a severe recession.
The Spanish Treasury sold a total EUR 3.56 billion of 12- and 18-month bills, slightly exceeding the target of EUR 2.5 billion - EUR 3.5 billion set for the sale. The country placed EUR 2.6 billion worth of 12-month T-bills to yield 3.918 percent, which was much less than the 5.074 percent paid at the previous auction on June 19.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.21 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.34 percent.
The DAX of Germany climbed by 0.18 percent and the SMI of Switzerland increased by 0.11 percent. The CAC 40 of France decreased by 0.09 percent and the FTSE 100 of the U.K. dropped by 0.72 percent,
In Paris, Alcatel-Lucent sank by 20.19 percent after the telecom equipment maker forecast an operating loss excluding certain items in its second quarter.
Technip climbed by 1.57 percent, after it was awarded a contract by Marathon Oil Norge.
In London, Royal Dutch Shell Plc finished down by 0.50 percent. The company said it would not revise its 220 pence per share offer to acquire Cove Energy and not take part in the auction process to complete the potential acquisition.
British lender HSBC Holdings fell by 1.88 percent after the British lender and top U.S. bank regulator, the Office of the Comptroller of the Currency, drew stinging criticism in a Senate report on money-laundering.
Shares of CSR Plc surged by 33.72 percent. Samsung Electronics agreed to acquire its handset connectivity and location development operations and technology for $310 million in cash.
Rio Tinto declined by 2.68 percent after the mining giant reported second quarter iron ore production that was almost flat with last year.
G4S dropped by 5.66 percent, after it was downgraded to "Neutral" from "Buy" by Bank of America.
Wolseley decreased by 2.15 percent. The company announced that it will explore strategic options for its businesses in France.
National Grid fell by 3.08 percent, after Societe Generale lowered its price target on the stock.
German investor sentiment declined for the third month in a row to its lowest level in six months, adding to signs that the euro area debt crisis is hurting the outlook for the region's biggest economy. The ZEW Indicator of Economic Sentiment dropped to minus 19.6 points from minus 16.9 in June. That was slightly better than economists' forecast for a score of minus 20.
U.K.'s annual consumer price inflation eased for a third straight month in June to the lowest level since November 2009, helped by falling fuel prices and heavy discounting to boost sales, the latest figures from the Office for National Statistics showed Tuesday. Consumer price inflation fell to 2.4 percent in June from 2.8 percent in May. Economists expected the rate to remain unchanged at the May level.
With a steep drop in energy prices offset by higher prices for food, medical care, and apparel, the Labor Department released a report on Tuesday showing that overall U.S. consumer prices were unchanged in the month of June. The Labor Department said its consumer price index came in flat in June following a 0.3 percent drop in May. The flat reading on consumer prices came in line with economist estimates.
Industrial production in the U.S. increased by slightly more than anticipated in the month of June, according to a report released by the Federal Reserve on Tuesday, with the increase partly due to a rebound by output in the manufacturing sector.
The Fed said industrial production rose by 0.4 percent in June following a revised 0.2 percent decrease in May. Economists had expected production to increase by 0.3 percent compared to the 0.1 percent drop originally reported for the previous month.
Homebuilder confidence has seen a substantial improvement in the month of July, according to a report released by the National Association of Home Builders on Tuesday, with the index of homebuilder confidence rising to a new five-year high.
The report showed that the NAHB /Wells Fargo Housing Market Index jumped to 35 in July from 29 in June, marking the biggest monthly increase in nearly a decade. Economists had expected the index to edge up to a reading of 30.
by RTT Staff Writer
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