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Market Update

European Markets at 2-Year Highs, German Confidence Improves

Author: Barry Randall
Last Update: 1:51 PM ET January 29 2013

4:30 PM Frankfurt – European markets advanced to new 23-month highs. Consumer confidence index in Germany suggested an improvement but the index in France held steady. Retail sales in Spain declined for the 30th month in a row. Philips gained on better-than-expected earnings.

Financial market indexes in Europe scaled to new highs and 16 of the largest 18 country indexes gained.

FTSE 100 index in London traded up 0.7% to close at 6,339 and DAX 30 index in Frankfurt gained 0.2% to 7,849.

In Paris, CAC 40 index added 0.1% to 3,786 and IBE 35 in Madrid declined 0.5%.

Market sentiment was on the decline after German consumer confidence rebounded but French sentiment was flat and retail sales in Spain declined.

A private survey conducted by GfK increased 5.8 points for February from an upwardly revised 5.7 points for January. The indicator is a forward looking indicator suggesting how the confidence is likely to be in the next month.

Separately, Germany’s statistics office, Destatis reported economy shrank in the final quarter by 0.5% and for all of 2012 economy expanded at 0.7%. The quarterly decline was heavily influenced by the weakness in Southern Europe that weakened business investment in Germany.

The Federation of German Industries estimated economic growth in 2013 to increase to 0.8% but the economy is likely to struggle in the first quarter. The Berlin based industry association suggested in a report today that Germany is likely to avoid a technical recession and display a clear “upturn” later in the year.

France’s statistics bureau said consumer confidence index was flat at 86 in January matching the reading in December.

Retail sales in Spain declined 10.7% from a year ago in December after falling at 7.8% in November. The December monthly decline completes the 30th monthly fall in retail sales according to the data released by the statistics office of Spain.

Stocks in Review

3i Group Plc increased 3% to 266 pence after the company confirmed that activist investor Edward Bramson has increased his stake in the venture capital fund operator.

Anglo American Plc added 3% to 1,929 pence after the iron ore miner said it has written down $4 billion from the value of its Minas-Rio project in Brazil and raised its capital spending estimate.

BT Group Plc decreased 2% to 246 pence after negative comments from Merrill Lynch indicated efforts to increase sales are increasing cost and lowering earnings growth.

Royal Philips gained 2% to 22.40 euros after the world’s largest lighting systems maker said fourth quarter operating earnings increased 50% to 875 million euros.

Royal Bank of Scotland declined 6% to 345 pence after the U.S. authorities brought criminal charges that the lender attempted to rig interest rates. People familiar with the talks with the U.S. Justice Department suggested that the bank may agree as early as this Friday to settle charges and pay 500 million pounds.

Software AG plunged 17% to 28.50 euros after Germany based infrastructure software developer reported lower than expected revenues of 276 million euros and net income of 50.7 million euros.

Saipem SpA declined 3% to 30.40 euros after Merrill Lynch sold 9.97 million shares in the largest Europe based oil platform service contractor at 30.65 euros, according to Bloomberg News.

William Hill advanced 2% to 374 pence after the U.K. based gambling bookmaker said full-year revenues rose 12% on stronger than expected fourth quarter results. The full-year data are scheduled to be released on March 1.

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