European markets turned in a mixed performance on Wednesday, as optimism for fresh stimulus measures waned. Policy decisions are expected to be reported by the Federal Reserve this evening and by the European Central Bank on Thursday. The Bank of England is likely to keep its policy on hold on Thursday, even as the economy slipped deeper into recession and inflation showed signs of easing. Mixed earnings reports and weak euro-area manufacturing data also prompted investors to move to the sidelines after some early buying.
Germany paid record low cost to borrow funds for five years as investors remain uncertain about whether the European Central Bank would adopt bold measures as promised at its rate-setting session tomorrow. The yield on the five-year debt fell to a record low 0.31 percent from 0.52 percent paid in the previous sale on July 4.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.38 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.56 percent.
The FTSE 100 of the U.K. climbed by 1.33 percent and the CAC 40 of France gained 0.91 percent. The DAX of Germany dropped by 0.26 percent and the SMI of Switzerland fell by 0.05 percent.
In Frankfurt, shares of Henkel increased by 1.86 percent. The detergent maker reported higher profit and revenue for the second quarter, driven by good performance in emerging markets.
Deutsche Bank declined by 1.61 percent. The company announced 1,900 job cuts as part of its efforts to realize savings of about 3 billion euros.
BMW Group dropped by 3.04 percent. The company reported a 28 percent decline in profit for the second quarter, despite higher revenues and sales volume, owing partly to higher costs and a benefit last year. The firm reaffirmed the targets for 2012.
In Paris, Societe Generale rose by 0.53 percent. The lender reported a slump in its second-quarter profit, reflecting slowdown in economic growth in Europe and continued tensions in European financial markets.
Vinci SA dropped by 2.23 percent after the construction giant reported a drop in first-half net profit to 784 million euros or 1.44 euro per share from 814 million euros or 1.48 euro per share in the same period last year, hurt mainly by special charges. The company issued a cautious outlook for rest of the year, citing the European economic crisis.
Schneider Electric surged by 5.20 percent, after the company confirmed its full-year forecast of flat to slightly positive organic growth for sales and an adjusted EBITDA margin between 14 percent and 15 percent.
In London, Standard Chartered gained 3.96 percent. The bank reported a 12 percent increase in profits for the first half of the year.
Shares of Next surged by 6.46 percent, after the company increased its full year forecast.
Whitbread fell by 1.54 percent, after UBS downgraded its rating on the stock to "Neutral" from "Buy."
Antofagasta climbed by 2.43 percent, after the miner reaffirmed its copper output target for the full year.
The downturn in the Eurozone manufacturing sector gathered momentum at the start of the third quarter, final data from Markit Economics showed Wednesday. The manufacturing Purchasing Managers' Index fell more than initially estimated to 44 in July, a 37-month low, from 45.1 in June. The flash estimate for July was 44.1.
Germany's manufacturing sector contracted more than initially estimated in July, and the rate of fall accelerated from the previous month, data from a survey by Markit Economics and BME showed Wednesday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 43 in July from 45 in June, and hit the lowest level since June 2009. The flash estimates had indicated a decline to 43.3.
Business conditions across French manufacturing sector deteriorated further in July with the relevant indicator falling to its lowest level since May 2009, a survey by Markit Economics showed Wednesday. The purchasing managers' index fell to a 38-month low of 43.4 in July from 45.2 in June. The flash survey results showed a reading of 43.6.
The U.K. manufacturing sector contracted at the fastest rate since March 2009 due to substantial declines in output and new orders, suggesting a sharp downturn in the economy at the start of the third quarter.
The seasonally adjusted purchasing managers' index fell to 45.4 in July from a revised reading of 48.4 in June, data from a survey by the Chartered Institute of Purchasing & Supply and Markit Economics showed Wednesday. Economists were expecting the index to fall to 48.4 from the 48.6 estimated initially for June.
Overall shop price inflation in the United Kingdom slowed in July to 1.0 percent from 1.1 percent in June, the British Retail Consortium reported Wednesday.
Employment in the U.S. private sector increased by much more than anticipated in the month of July, according to a report released by payroll processor Automatic Data Processing, Inc. on Wednesday.
The report showed that the private sector added 163,000 jobs in July following a downwardly revised increase of 172,000 jobs in June. Economists had expected an increase of about 120,000 jobs compared to the increase of 176,000 jobs originally reported for the previous month.
Fueled by strong growth in the residential sector, U.S. construction spending increased for the third straight month in June. According to figures released Wednesday by the Commerce Department, overall U.S. construction spending grew by 0.4 percent in June to a seasonally adjusted annual rate of $842.1 billion.
While the growth was slightly weaker than the 0.5 percent growth predicted by most economists, it comes atop revised figures that showed already strong growth in May and April growing by even more than previously reported.
While the Institute for Supply Management released a report Wednesday showing a modest increase by its index of U.S. manufacturing activity, the index rose by less than expected and continued to point to a contraction in the sector.
The ISM said its purchasing managers' index inched up to 49.8 in July from 49.7 in June, although a reading below 50 indicates a contraction in manufacturing activity. Economists had been expecting the index to climb to a reading of 50.2.
by RTT Staff Writer
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