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Market Update

Broad Market Declines in Europe, Cyprus Bailout Cost Jumps

Author: Nigel Thomas
Last Update: 1:24 PM ET April 12 2013

4:30 PM Frankfurt – European markets traded lower with Germany leading the losers. The across the board sell-off was accelerated after Cyprus sought additional bailout and the worries of growing contagion to smaller nations in the euro zone.

European stocks closed in the red on renewed emergency bailout pleas from Cyprus, U.S. retail sales in March fell unexpectedly and consumer confidence hits a nine-month low.

The FTSE 100 in London fell as much as 0.53% or 33.83 to 6382.31 on across the board losses. In Frankfurt, the DAX index was down heaviest, shedding 1.70% to 7737.97. The CAC-40 in Paris dropped 1.31% at 3726.25.

Markets in Europe except Portugal declined.

Portugal received a loan reprieve from the European Union. Cyprus has applied to the EU seeking to double the financial aid agreed to a few weeks ago citing escalating costs. It said the cost of the rescue had climbed to 23 billion euro from 17.5 billion euro, needing an extra 6 billion euro.

This could mean further losses for depositors.

EU finance ministers met in Dublin, Ireland to discuss the Cyprus crisis. Investors fear the rising bailout cost for Cyprus may ripple through the northern Europe, Slovenia, and possibly France.

The ministers said the size of the Cypriot bailout will not change from the agreed 10 billion euro, and expected the tiny island nation to restructure two of its biggest banks to ease funding constraints.

At the meeting, the minsters agreed to extend by seven years the repayment period for Portugal and Ireland's bailout loans granted two years ago.

In the US, retail sales for March declined a shocking 0,4%, the most since June 2012, from a gain of 1% in February, official statistics showed. In those nine months, consumer confidence reached its lowest levels.

Benckiser Agrees to Master Blenders Purchase

D.E Master Blenders 1753 NV fell 0.7% to €12.14 after the Netherlands based tea and coffee industry said investor group led by Joh. A. Benckiser agreed to buy the company for approx €7.5 billion or $9.8 billion in cash per ordinary share.

The Germany based consumer products conglomerate Joh. A. Benckiser already controlled 15% of the holding company.

The offer price of €12.50 a share represents a 36% premium to company’s volume-weighted average closing price for the three months to March 27. The stock edged lower today because the potential deal was announced on March 28 with the price of €12.75 a share.

Benckiser is funding the deal with €4.9 billion of equity and €3 billion of debt.

Investment vehicle controlled by Reimann family of Germany recently acquired Caribou Coffee and Peet’s Coffee & Tea for a combined price of $1.3 billion.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc