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Market Update

Reported Euro Zone Inflation Up 1.4%, ECB Says 4 Banks to Repay Loans

Author: Nigel Thomas
Last Update: 11:42 AM ET June 14 2013

3:00 PM Frankfurt – European markets traded higher after the reported inflation data was in-line with estimates. European Central Bank said four banks are scheduled to repay €3.19 billion of long-term loans issued at the height of financial crisis in 2011 next week.

European markets opened higher and extended gains after the release of U.S. industrial production data.

In London, FTSE 100 index increased 0.5% and in Frankfurt the DAX index added 1%. In Paris trading, the CAC 40 index advanced 0.8%.

The euro was under slight pressure and traded at $1.331 from yesterday’s close of $1.338.

Bank of England Deputy Governor Paul Tucker announced his plan to resign after serving the bank for 33 years. Tucker was passed over by Mark Carney, head of Bank of Canada, to lead the central bank in England.

The European Central Bank said today four banks are expected to repay a total of €3.19 billion of loans next week. The loans were issued at the height of financial crisis in 2011 as a part of the long term refinancing operation conducted by the central bank.

Consumer prices in the euro zone increased 1.4% in May from a year ago month after increasing 1.2% in April. The core inflation, which excludes volatile energy and food prices, increased 1% after rising 1% in April.

However, the inflation faced by most consumers is significantly higher than reported by the central bank. The inflation when fully accounted for increase in cost of education, healthcare services and home prices, increased in the euro zone more than 6% according to the data tracked by Ticker.com.

Poland’s core inflation eased to 1% in May from 1.1% in April, according to the statistics office of the nation. The core inflation, excludes the volatile food and energy prices.

The core inflation in May declined 0.1% when compared to April and overall consumer price inflation eased to 0.5% in the month from 0.8% in April.

Polish economy expanded at 0.4% in first quarter to March after expanding at 0.7% in April.

Stocks in Review

Barry Callebaut AG, the Switzerland based chocolate producer sold 318,858 at a price of about $300 million of new shares. New shares are expected to start trading on Swiss Exchange on June 18.

Elan Corporation, Plc jumped 8.5% to €10.08 after the drugmaker said it has authorized a formal sale process and invited Royalty Pharma to participate.

Earlier Royalty offered to buy Elan for $6.7 billion but the deal was rejected by the Elan managements.

Glencore Xstrata Plc climbed 3.3% to 316.15 pence after the Swiss based commodities miner and trader signed revolving credit facilities for $17.3 billion. The facilities are for general corporate purposes and replace the previous revolving credit facilities of both Glencore and Xstrata plc.

Hochtief AG surged 6.1% to €51.83 after the Germany based construction group reported to buy back up to 4,313,000 shares worth €260 million of its own shares.

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