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Europe midday: IFO gives the Euro a leg up

International

Europe midday: IFO gives the Euro a leg up

Fri, 23 November 2012
Europe midday: IFO gives the Euro a leg up

-German IFO index rose for first time in seven months
-EU summit may not reach an agreement on long-term budget
-IMF shows flexibility on Greece
-Troika has yet to fill 10bn euro gap in Greek financing
-Cyprus said to be very close to agreement with Troika

FTSE-100: 0.22%
Dax-30: 0.10%
Cac-40: 0.11%
FTSE Mibtel 30: -0.10%
Ibex 35: -0.35%
Stoxx 600: 0.08%

“Positions remain too far apart,” German Chancellor Angela Merkel was reported to have said last night after the first session of the EU heads of States summit in Brussels whose aim is to thrash out a new long-term budget, for the period running from 2014 and 2020. She added that while some progress might be achieved at the current gathering there may need to be further meetings down the road before an agreement is reached.

For his part, the President of the EU Council, Herrmann Van Rompuy, emphasised that this is a long-term budget such that austerity must be balanced against the need to plan out all the way to the end of the current decade.

European equities keyed off of all of the above to start the day slightly lower, but turned around following the release of a better than expected reading on German business confidence, courtesy of the IFO institute.

Intriguingly perhaps, that better-than-expected reading was in part the result of an improvement in the outlook for exports.

As regards Greece, the International Monetary Fund (IMF) is now willing to accept that the country's debt load would be sustainable if it falls to 124% of GDP by 2020, instead of the earlier target of 120% which it had been holding out for, a Greek official told Reuters on condition of anonymity.

Even so, European leaders have yet to fill a 10bn euro gap before the IMF is willing to release the next tranche of aid for the Mediterranean country.

EADS off
Shares of EADS were falling by over 2% in the early going. The German government will purchase shares in the pan-European aeronautics behemoth from France, German daily Handelsblatt reported, citing unidentified German government sources.

French chemical maker Arkema’s Chief Executive Officer Thierry Le Henaff said he expects demand in China to grow well after the country’s New Year.

Suez Environment’s Chief Executive, on the other hand, sounded a note of caution as regards what can be expected in 2013 and 2014.

Analysts at Berenberg Bank downgraded their recommendation on shares of Danone to sell from hold.

The best performers on the DJ Stoxx 600 were the following: Retail (0.26%), Insurance (0.13%) and Food&Beverage (0.12%).

IFO surprises to the upside
Germany gross domestic product grew at a 0.2% quarter-on-quarter pace in the third quarter, as expected. While investment in machinery and inventories weighed on GDP private consumption and net exports served to propel economic activity forward.

French statistics institute INSEE’s business confidence index for the month of November came in at 87 points, versus 85 in October (Consensus: 86).

The IFO Institute’s widely followed gauge of German business confidence rose in November to the 101.4 point level, from 100 in the previous month, its first increase in seven months. The consensus estimate had been for the headline index to retreat to 99.5.

Single currency little changed
The euro/dollar was rising by 0.31% to the 1.2921 dollar mark.

Front month Brent crude futures have turned around to rise by 0.018 dollars to the 110.57 dollar level on the ICE.


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FTSE 100 Top Risers

Name Last Chg.% Time
Barclays 240.80 8.20 16:59
Royal Bank of Scotland Group 388.00 6.21 17:03
International Consolidated Airlines Group SA (CDI) 409.20 4.74 16:48
St James's Place 742.50 4.56 16:59
ARM Holdings 875.00 4.35 16:59

FTSE 100 Top Fallers

Name Last Chg.% Time
Randgold Resources Ltd. 3,678.00 -2.67 17:01
Fresnillo 695.00 -2.65 17:09
Direct Line Insurance Group 275.70 -1.95 17:01
TUI Travel 398.60 -0.55 17:01
Morrison (Wm) Supermarkets 154.80 -0.51 17:09