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Market Update

European Indexes Jump on Improving German Data, Spain Raises €4 Billion


Author: Barry Randall
ticker.com
Last Update: 10:50 AM ET February 19 2013

4:00 PM Frankfurt – Markets in the European Union soared after German investor confidence in February was ahead of expectations by a wide margin. Spain successfully raised 4 billion euros meeting its debt sale target. Italy is set to complete parliamentary election this weekend.

Market indexes across the European Union traded higher after latest data on German sentiment showed a sharp increase.

The index of investor confidence in Germany increased to 48.2 in February from 31.5 in January, according to ZEW Center for European Economic Research.

In London trading, FTSE 100 index rose 0.8% or 51.7 to 6,370 and in Frankfurt, the DAX index climbed 1.5% or 116.7 to 7,745. In Paris, CAC 40 index increased 1.8% or 65 to 3,732.

Bond market was active ahead of Italian election this weekend. In a close election, ex-Prime Minister Silvio Berlusconi is trailing in polls and technocrat Mario Monti is losing momentum to other candidates. Investors are worried that elections may remain inconclusive.

The yield on Italian 10-year bond declined 2 basis points to 4.39%, a slight premium from the low in 4.07% in January. German bund of similar maturity eased 1.5 basis points to 1.61% and Spanish bond yield was flat.

Spain successfully sold 4 billion euros in short-term debt today meeting its debt sale target.

The treasury office sold 3.1 billion euros of the 9-month bills at an average yield of 1.444% with a bid-to-cover ratio of 2.3. The debt office also sold 886 million of 3-month bills at an average yield of 0.421%.

Stocks in Review

Danone SA surged 5% to €52.70 after the France based food maker reported sales in the fiscal year ending in December, advanced 5% to €20.87 billion compared to €19.32 billion in the same period of last year.

Net income slipped 4% to €1.79 billion from €1.86 billion from a year ago and underlying diluted earnings per share dropped to €3.01 compared to €2.89 from a year ago.

The company plans to cut around 900 jobs in Europe within next two years on lower than expected demand in the region.

Drax Group plc climbed 5% to 635 pence after the UK based coal powered electric utility provider reported revenue for the full year ending in December, fell 3% to £1.78 billion compared to £1.84 billion in the same period of last year.

Net profit plummeted 65% to £163.8 million from £464.6 million from a year ago and basic earnings per share declined 65% to £44 compared to £126 from a year ago.

MTU Aero Engines Holding AG increased 4% to 71.79 euros after the aircraft engine maker said group revenues are expected to increase as much as 12% in 2013. The company also reported adjusted operating earnings of 374.3 million euros in 2012.

Nobel Biocare Holding AG gained 1.8% to £4,573. Switzerland based household, health and personal care products maker reported revenue for the full-year ending in December, grew 2% to €580.5 million compared to €569.2 million in the same period of last year.

Net profit jumped 15.3% to €45.8 million from €39.8 million from a year ago and basic earnings per share dropped to €0.37 compared to €0.32 from a year ago.

Nobel Biocare expects to deliver an EBIT margin improvement for 2013 of 50 to100 bps.

Vodafone Group Plc declined 2.6% to 162.42 pence and the company entered in a strategic five-year partnership with BAE Systems. The stock was also downgraded to “sell” by analyst Robin Bienenstock with Alliance Bernstein. He added in his report that the wireless carrier’s European assets are likely to shrink as much as 23%.

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