January 4, 2007 at 1:16 pm #75002
Jan. 4 (Bloomberg) — Expansion in European service industries, the biggest part of the economy, unexpectedly slowed in December, a sign growth in the region may have peaked.
Royal Bank of Scotland Group Plc said its services index, which gauges growth in industries from telecommunications to banking, fell to 57.2 from 57.6 in November. A reading above 50 indicates expansion. Economists expected the index, based on a survey of purchasing managers by NTC Economics Ltd., to remain unchanged.
Economic growth may moderate from the fastest pace in six years after the European Central Bank raised interest rates, Germany increased a sales tax, and as a cooling global economy crimps European exports. The manufacturing industry also lost momentum last month. The economy may expand 2.2 percent this year after growing 2.6 percent in 2006, the Organization for Economic Cooperation and Development said today.
The services report “suggests a soft landing from last year’s peak,” said Marco Valli, an economist at UniCredit Banca Mobiliare SpA in Milan. “The economy is still growing at a healthy pace.”
The euro fell to $1.3102 at 1:30 p.m. in Frankfurt from $1.3126 before the report and European bonds advanced. The yield on the 10-year bond fell 2 basis points to 3.93 percent. Yields move inversely to prices. European stocks declined, with the Dow Jones Stoxx 600 Index down 0.6 percent to 367.66.January 5, 2007 at 2:19 pm #76207
Jan. 5 (Bloomberg) — Confidence in the European economy stayed close to a six-year high and unemployment fell to a record low, indicating domestic demand may help sustain expansion in the euro region as export growth eases.
An index of sentiment among executives and consumers in the euro area slipped to 110.1 in December from 110.3 in November, the European Commission in Brussels said today. The region’s jobless rate declined to 7.6 percent in November, the lowest since the euro-area figures were first collated in 1993.January 5, 2007 at 2:20 pm #76208
Jan. 5 (Bloomberg) — European retail sales grew in December at the slowest pace in nine months, a sign that economic expansion is easing, the Bloomberg purchasing managers index showed.
An index of retail sales in the euro economy fell to a seasonally adjusted 52.1 from 53.7 in November, a survey of more than 1,000 retail executives compiled for Bloomberg LP by NTC Economics Ltd. showed today. A level above 50 indicates growth.February 14, 2007 at 2:36 pm #76465
Feb. 14 (Bloomberg) — Air France-KLM Group, Europe’s biggest airline, said third-quarter profit tripled on increased Asian and North American traffic and higher ticket prices.
Net income for the three months ended Dec. 31 increased to 229 million euros ($298 million), or 79 cents a share, from 77 million euros, or 28 cents, a year earlier. Sales rose 5.9 percent to 5.75 billion euros, the Paris-based company said today in a statement.
Chief Executive Officer Jean-Cyril Spinetta, who led Air France’s purchase of KLM in 2004, used higher fares and oil surcharges to boost earnings. Air France attracted travelers with bases in Paris and Amsterdam for connecting flights. The airline confirmed its full-year outlook for “very strong results.” Some analysts expressed disappointment the forecast wasn’t increased.
“Strong demand on the international flights is allowing airlines to raise their fares,” said Yan Derocles, an analyst at Oddo Securities in Paris who has an “add” rating on the shares. “That combined with stable unit costs is why their results were up.”
Shares of Air France fell as much as 72 cents, or 2.1 percent, to 34.42 euros and were down 1.1 percent as of 11:52 a.m. in Paris. The stock has risen 74 percent in the last 12 months compared with a 77 percent gain for the Bloomberg Europe Airlines Index.
Net income was boosted by 73 million euros after the company reduced provisions for Dutch taxes, Derocles said.February 16, 2007 at 3:13 am #76475
Feb. 16 (Bloomberg) — Stock investors who hunt for high yields in Europe are looking everywhere except the U.K., where companies pay the biggest dividends in the world’s major markets.
Britain’s FTSE 100 Index is lagging behind the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, for a third year. The pound’s 13 percent rally against the dollar in the past 12 months and rising interest rates are weighing on earnings and share prices.
The slowdown in profit growth is enough to deter money managers even though FTSE 100 companies’ dividend payments relative to share prices are 16 percent higher than those in the 13 countries sharing the euro, according to data compiled by Bloomberg. Dividends for the FTSE 100 are two-thirds more than those of the Dow Jones Industrial Average in the U.S. and are almost quadruple those of Japan’s Nikkei-225 Stock Average.
“We are finding better opportunities outside the U.K.,” said Wouter Weijand, who buys income-producing stocks worldwide for the $2.7 billion ABN Amro High Income Equity Fund in Amsterdam. He has an “underweight” position in U.K. stocks: he owns fewer shares than are represented in his benchmark, the Standard & Poor’s/Citigroup High Income Index.
Companies in the FTSE 100 pay shareholders a portion of their profit equal to 3.62 percent of the share price, Bloomberg data show. The yield is the highest among Europe’s stock markets and exceeds the 3.11 percent yield for the Euro Stoxx 50. Second highest is Italy.February 24, 2007 at 1:17 am #76511
Feb. 23 (Bloomberg) — German business confidence fell more than economists forecast in February, providing further evidence economic growth is slowing from the fastest pace in six years.
The Ifo institute’s sentiment index, based on responses from 7,000 executives, declined to 107 from 107.9 in January. Economists expected a drop to 107.5, according to the median of 41 estimates in a Bloomberg News survey. The Munich-based institute’s index reached 108.7 in December, the highest since records for a reunified Germany began in January 1991.
The euro’s 10 percent appreciation against the dollar in the past 12 months may erode German export growth, which last year drove the fastest economic expansion since 2000. An increase in value-added tax on Jan. 1 also threatens to reduce consumer spending. Manufacturing growth lost momentum in January and retail sales slumped, industry surveys showed.
The Ifo’s decline was “expected and is by no means dramatic,” said Thomas Mayer, chief European economist at Deutsche Bank AG in London. “After enormous growth in the fourth quarter we were bound to see a slight correction, mainly driven by the VAT increase.”
The economy expanded 0.9 percent in the last three months of the year, faster than the 0.6 percent forecast by economists and the 0.8 percent growth recorded in the third quarter.
Growth may slow to 1.7 percent this year from 2.7 percent in 2006, according to government forecasts.February 26, 2007 at 1:01 pm #76523
the commodity drivers are at work again:
Feb. 26 (Bloomberg) — European stocks rose for a third day, led by BP Plc, the region’s second-largest energy company, and Anglo American Plc as oil gained and metals rallied to a record.
Mining shares in the Dow Jones Stoxx 600 Index are trading at an all-time high as investors bet advances in prices of industrial metals will continue to boost earnings. Energy stocks had their biggest gain in a month.
“We have an overweight exposure to both oil and mining companies,” said Richard Robinson, who helps oversee the equivalent of $1.8 billion at Jersey-based Ashburton Ltd. “China’s growth story is still there and analysts are starting to increase their estimates for commodity prices.”March 2, 2007 at 8:12 pm #76545
By Sarah Thompson
March 2 (Bloomberg) — European stocks had the worst week since the beginning of the four-year bull market as efforts by China to restrain borrowing and concern that U.S. economic growth is slowing extended a sell-off in global equities.
“China isn’t really the reason, it’s more of an excuse” for the market’s slump, said Justin Urquhart Stewart, director at 7 Investment Management in London which oversees just under $3 billion. “It’s acting like a catalyst for all the other issues around including concern about growth in the U.S. economy.”March 10, 2007 at 5:13 pm #76577
March 10 (Bloomberg) — European stocks posted the biggest weekly advance since December after companies in the region including E.ON AG and Suez SA reported better-than-expected earnings.
E.ON, Europe’s largest power company, climbed after it said fourth-quarter profit more than doubled. Suez, the world’s second-biggest water utility, rose after posting a 54 percent jump in second-half profit. Alliance Boots Plc soared 17 percent after it received a buyout offer.
Stocks in the region have recouped more than a third of what they lost in a five-day global rout triggered on Feb. 27 by a sell-off in Chinese equities and disappointing U.S. economic reports.
“This week’s positive earnings show that more companies might exceed analyst estimates in 2007,” said Peter Braendle, a fund manager at Zurich-based Swisscanto Asset Management, which oversees the equivalent of $46 billion including E.ON stock.
The Dow Jones Stoxx 600 Index rallied 1.9 percent to 367.35, the biggest gain since the week ending Dec. 15, as all 18 industry groups increased. The Stoxx 50 climbed 1.7 percent, and the Euro Stoxx 50, a measure for the 12 countries using the euro, gained 2 percent.
Some 65 percent of the Stoxx 50 companies that have reported fourth-quarter results or sales have beaten analysts’ estimates. In 2007, earnings for Stoxx 600 companies will rise 7.4 percent on average, according to estimates compiled by FactSet Research Systems, compared with 13.9 percent growth estimated for 2006.March 29, 2007 at 10:55 am #76649
March 29 (Bloomberg) — European retail sales rose for the first time in three months in March as German consumer spending recovered from a tax increase at the beginning of the year.
A gauge of retail sales in the 13-nation euro economy rose to a seasonally adjusted 53.4 after February’s 49.8, a survey of more than 1,000 retail executives compiled for Bloomberg LP by London- based NTC Economics Ltd. showed today. A reading above 50 indicates an increase.
Faster economic growth has spurred hiring, encouraging consumers to spend even in Germany, where retail sales had slumped after an increase in value-added tax on Jan. 1. German unemployment dropped to the lowest in almost six years in March and KarstadtQuelle AG, the country’s largest retailer, today reported its first annual profit since 2003.
“Today’s indicator suggests that the economies of Germany and the euro region will clearly regain strength in the second quarter after a slowdown following the VAT increase,” said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. Retail sales “will probably continue to show an expansion.”
Retailers are more confident about business for the coming month, NTC said. A gauge of expected sales rose to 63 from 59.6.
The euro rose to $1.3345 at 11:27 a.m. in Frankfurt from $1.3322 before the report. European government bonds fell, pushing the yield on the 10-year bund up 3 basis points to 4.05 percent, as signs of sustained economic growth underpinned the case for higher interest rates.March 31, 2007 at 1:58 pm #76660
March 30 (Bloomberg) — Confidence in the European economy unexpectedly rose to a six-year high and unemployment fell to a record low, giving the European Central Bank scope to raise interest rates further in the 13-nation euro region.April 2, 2007 at 12:03 pm #76669
April 2 (Bloomberg) — Europe’s manufacturing growth unexpectedly slowed in March after demand for exports cooled and a tax increase in Germany reduced consumer spending in the region’s largest economy.
Royal Bank of Scotland Group Plc said its index of manufacturing in the euro region fell to 55.4, the lowest since February 2006, from 55.6 a month earlier. A reading above 50 indicates growth. Economists expected the gauge, compiled by NTC Economics Ltd. from a survey of 3,000 purchasing managers, to increase to 55.7, the median of 32 estimates in a Bloomberg News survey showed.
The euro region’s economy, which expanded at the fastest pace in six years in 2006, probably slowed in the first quarter as the U.S. economy cooled and Germany’s Jan. 1 increase in value-added sales tax to 19 percent from 16 percent curbed household spending. Growth may regain momentum as demand in Asia encourages companies to maintain hiring and investment.
“Business activity has reached a plateau, albeit at a high level,” said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland in London. “The index is reassuring us that foreign demand is not falling off a cliff and that growth is not unwinding rapidly. It’s still strong enough for the European Central Bank to raise rates to 4 percent in June.”
The ECB increased its benchmark rate to 3.75 percent last month, the seventh move since late 2005, and left the door open for a further increase to contain inflation, saying current interest rates are still boosting economic growth.April 6, 2007 at 3:51 pm #76690
April 6 (Bloomberg) — European stocks rallied this week as mergers and acquisitions offset concern that economic growth in the U.S. is slowing, lifting the Dow Jones Stoxx 600 Index to within two points of a six-year high.
“The fact that we’re seeing so much M&A across the board is a statement of confidence about growth worldwide” and that’s lifting stocks, said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London, which manages about $36 billion. “If the prospects for expansion get dimmer, this activity will simply vanish immediately.”
Telecom Italia SpA led telecommunications shares higher after its holding company received offers for a stake. Carrefour SA and Royal Ahold NV gained amid speculation that the retailers may be targets of takeovers by private equity firms.
Europe’s Stoxx 600 Index climbed 1.6 percent this week to 380.26. The index closed on Feb. 19 at a six-year high of 382.19. The Stoxx 50 gained 1.5 percent and the Euro Stoxx 50, a gauge for the 13 nations using the euro, added 2.2 percent.April 17, 2007 at 10:46 pm #76748
April 17 (Bloomberg) — Europe’s trade deficits with China and Japan continued to expand in January, underscoring concerns among European officials that the yen and the yuan need to strengthen against the euro.
The 13-nation euro region’s trade gap with China swelled 30 percent from a year earlier to 10.7 billion euros ($14.5 billion), while the shortfall with Japan increased 17 percent to 2.1 billion euros, the European Union’s statistics office in Luxembourg said today.
“For a number of countries the appreciation of the euro is starting to be more and more painful,” said Frederic Pretet, an economist at Societe General in Paris. This “could be more and more of an issue for the performance of the euro area.”
The worsening trade positions with Asia’s two largest economies pushed Europe into an annual trade deficit last year, its first since 2000. Both Japan and China have seen their external surpluses increase this year, helped by currencies that the International Monetary Fund says don’t reflect the strength of their economies.
China’s overall trade surplus almost doubled to $46.4 billion in the first quarter from a year earlier. Japan’s current-account surplus, a broader measure of trade, rose 4.9 percent to 2.42 trillion yen ($20 billion) in February.
The euro area’s overall trade balance fell to a deficit of 200 million euros in February on a seasonally adjusted basis, compared with a revised surplus of 1.8 billion euros for the prior month. Economists had expected a February surplus of 1.3 billion euros, according to a Bloomberg News survey. Detailed trade data are published with a one-month delay.April 27, 2007 at 10:03 pm #76798
April 27 (Bloomberg) — U.K. home prices, rising at the fastest pace in two years, are “very highly inflated” and at risk of collapsing, said Vincent Tchenguiz, one of Britain’s largest residential property owners.
A shortage of housing has driven the price of an average home up 11 percent over the past year, according to HBOS Plc, the U.K.’s largest mortgage lender, even after the Bank of England raised its benchmark interest rate three times to a 5 1/2-year high.
“It is not sustainable in the long term, prices are very high,” Tchenguiz, 50, said in an interview. “The bubble could burst in the event of a financial shock or terrorism.”
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