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Europe open: Merkel loses another state to the CDU

International

Europe open: Merkel loses another state to the CDU

Mon, 21 January 2013

- Merkelís CDU loses elections in Lower Saxony
- Banks deposited 196.4bn euros overnight at ECB
- Richemont down on weakness in Asia Pacific

FTSE-100: 0.22%
Dax-30: 0.32%
Cac-40:0.20%
FTSE-Mibtel 30: 0.07%
Ibex 35: 0.35%
Stoxx 600: 0.05%

The major European equity benchmarks have begun the day slightly lower. That ahead of this eveningís meeting of Eurogroup finance ministers and after the unexpected election defeat of German Chancellor Angela Merkelís CDU in the state of Lower Saxony.

The SPD/Greens won another state from Merkel's CDU/CSU/FDP coalition, even if only by one seat. Barclays Research does not see the results as affecting policy-making at the federal level. Also to be taken into account, Merkel and her allies in the FDP continue to lead very comfortably in national polls (at 47% versus the SPD/Greens at 38%). Even so, the national elections could still become a tighter race than the latest polls suggest, these economists suggest.

Discussions at todayís Eurogroup meeting are expected to include direct bank recapitalization by the European Stability Mechanism (ESM), the aid program for the Spanish banking sector according to analysts and the naming of the groupingís new President.

Acting as a backdrop, US markets will remain closed today in observance of the Martin Luther King Holiday. No less relevant, today saw the start of the Bank of Japanís two day policy meeting, after which it may unveil aggressive new policy measures Ė at least on the monetary policy side.

Richemont weighs on the Stoxx
Luxury goods maker Richemont today announced that sales in the last quarter of 2012 were flat in the Asia Pacific region, even if that follows on several years of exceptional growth in that area of the world, especially in China. To be had in account are the demanding comparative figures for the same quarter last year. As well, wholesale sales growth was lower than in the first six months and in the comparative period due to the cautious approach taken by the Groupís retail partners in Hong Kong and mainland China.

German power producer E.On has asked unions to return to talks.

In the latest edition of Der Spiegel EADS Chief Executive Tom Enders tells the German government that it will not accept interference in the companyís decisions on when and where to develop aircraft in the future.

From a sector stand-point the worst performers are personal and household goods (-0.95%), Media (-0.72%) and Automobiles and Parts (-0.24%).

Better than expected economic data
The Dutch consumer confidence index for the month of January improved to -36 points from -39 in the month before (Consensus: -39).

German producer prices fell by 0.3% month-on-month in December (Consensus: 0.0%).

Euro steady despite election results
The euro/dollar is now standing 0.11% lower at 1.3314.

Front month Brent crude futures are now down by 0.233 at 111.62 dollars.


AB

FTSE 100 Top Risers

Name Last Chg.% Time
Royal Bank of Scotland Group 364.20 10.77 17:06
Anglo American 1,639.50 3.44 17:00
Pearson 1,132.00 2.82 17:10
Vodafone Group 202.05 2.12 16:50
Barclays 218.05 1.66 17:00

FTSE 100 Top Fallers

Name Last Chg.% Time
British Sky Broadcasting Group 874.50 -5.46 17:08
GlaxoSmithKline 1,423.00 -3.16 17:08
Petrofac Ltd. 1,127.00 -2.17 17:08
Rexam 513.00 -2.01 17:00
GKN 344.20 -1.99 17:08