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Market Update

France to Miss Deficit Target, Spain Announces Unscheduled Debt Auction

Author: Barry Randall
Last Update: 12:23 PM ET March 12 2013

5:00 PM Frankfurt Market indexes across the currency zone closed mixed with a negative bias after France said it is likely to miss its deficit and growth targets. Spain said it plans to sell bonds in unscheduled auctions this week. Italy placed 7.75 billion euros of one-year debt at yield of 1.28%.

Markets in Europe struggled after Italy and Spain placed more bonds and manufacturing output declined in the U.K. in January.

In London trading, FTSE 100 index edged up 0.3% or 18.8 to 6,512 and in Frankfurt, the DAX index inched down to 16.3 to 7,968. In Paris, CAC 40 index rose 0.2% or 7 to 3,843.

French Prime Minister Jean-Marc Ayrault said on France 3 television that the government will miss the public deficit goal in the current year on the weaker than expected economic growth.

The government had targeted 0.8% economic growth and most economists are estimating growth near zero. Ayrault insisted that the government is committed to cut the deficit to zero by 2017.

The European Union required France to maintain a deficit target of 3% in 2013 and France is scheduled to release its 2012 GDP estimate on Thursday.

The UK manufacturing output declined 1.5% in January from the previous month.

Separately, German economy ministry said the economy is on the verge of recovery on the rising confidence in the euro zone and signs of improving conditions in the global economic conditions.

In the first debt auction after the election, Italy attracted higher than expected demand for its bonds despite the political uncertainty.

Ital sold 7.75 billion euros of 12-month bonds that averaged yield of 1.28% from the yield of 1.094% in the previous auction. Italy is scheduled to sell 7.25 billion euros of bonds tomorrow.

Spain following its announcement for the 2013 debt strategy said it plans to sell three longer-dated bonds this week. The unscheduled bond auction would not have a specific size target but will take advantage of the recent bond market rally.

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