The European markets largely closed in positive territory on Tuesday. The markets overcame some weaker than expected economic results, as well as the negative impact of the news on Standard Chartered. Energy stocks and miners provided support Tuesday and several bank stocks managed to overcome early losses and turned positive.
The Italian economy remained stuck in recession in the second quarter as austerity measures weighed heavily on economic activity. The fourth successive contraction has raised concerns about the ability of the government to bring order to its public finances.
Gross domestic product dropped 0.7 percent sequentially, slower than the 0.8 percent decline in the previous quarter, preliminary data from the statistical office Istat showed Tuesday. Economists had forecast a similar 0.8 percent decline for the second quarter.
Italy's surging borrowing costs sparked speculation that the country is on the verge to seek European rescue fund. But, Prime Minister Mario Monti played down such rumors. Monti warned Europe that the region is facing the threat of a psychological disintegration due to the impact of the debt crisis, in an interview over the weekend.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.60 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.60 percent.
The DAX of Germany climbed by 0.71 percent and the CAC 40 of France gained 1.52 percent. The FTSE 100 of the U.K. rose by 0.56 percent, but the SMI of Switzerland fell by 0.08 percent.
In Frankfurt, Munich Re gained 0.55 percent after reporting second-quarter results.
Credit Suisse re-initiated Fresenius with an "Outperform" rating. The stock finished down by 1.12 percent.
E.ON climbed by 1.96 percent, after the company reaffirmed its increased outlook for 2012.
Lanxess dropped by 1.61 percent. The specialty chemicals company reported a slight fall in profit for the second quarter, even as revenue climbed over 8 percent. The company backed its profitability view for the full year.
Kuka finished higher by 3.04 percent, after the company's second quarter profit increased.
In Paris, Danone increased by 0.17 percent, after Morgan Stanley downgraded its rating on the stock.
In London, Standard Chartered plunged by 16.43 percent. The New York State Department of Financial Services accused its unit Standard Chartered Bank of hiding $250 billion in illegal dealings with Iran for more than a decade.
Barclays finished up by 1.50 percent and Lloyds Banking Group rose by 1.00 percent, but Royal Bank of Scotland dropped by 0.57 percent.
InterContinental Hotels rose by 6.35 percent. The company reported a surge in second-quarter profit, increased its dividend and announced a $1 billion return of capital.
Xstrata gained 1.57 percent, after the company reported a 33 percent decline in first-half profit, reflecting lower commodity prices.
Retail sales in the United Kingdom rose unexpectedly in July as warm weather and Olympics boosted sales of food and drinks, a report from the British Retail Consortium (BRC) revealed Tuesday. Retail sales values rose 0.1 percent on a like-for-like basis annually in July. Economists had forecast a 0.2 percent drop.
Production in the British industrial sector shrank notably in June mainly due to extra holidays for the Queen's Diamond Jubilee celebrations, the latest figures from the Office for National Statistics (ONS) showed Tuesday. However, the decline was not as steeper as expected and is likely to lead to an upward revision in the second quarter GDP figures.
Industrial production fell 2.5 percent month-on-month compared to expectations for a 3.5 percent drop. This followed a 1 percent increase in May and 0.6 percent decline in April. Production has now fallen for fifteen consecutive months.
German factory orders declined more-than-expected in June as both domestic and foreign demand deteriorated, which raised fears that the economy shrunk in the second quarter. Factory orders fell 1.7 percent month-on-month, data from the Federal Ministry of Economy and Technology showed Tuesday. It was worse than expected 0.8 percent drop and reversed the 0.7 percent increase in the previous month.
by RTT Staff Writer
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