By Corinne Gretler - Jan 4, 2012 6:50 PM GMT+0700
Jan. 4 (Bloomberg) -- Steen Jakobsen, chief economist at Saxo Bank A/S, discusses the outlook for the global economy, Federal Reserve policy disclosures and China. He speaks with Linzie Janis and Linda Yueh on Bloomberg Television's "Countdown." (Source: Bloomberg)
European stocks (SXXP) retreated from a five-month high as UniCredit (UCG) SpA’s rights offer boosted concern that banks will need to raise more capital to weather the debt crisis. U.S. futures declined, while Asian shares advanced.
UniCredit, Italy’s largest lender, slid to the lowest since March 2009 after setting a 43 percent price discount for the rights offer. Vestas Wind Systems A/S (VWS), the world’s biggest wind- turbine maker, slumped 15 percent after cutting its revenue and profit forecasts. Next Plc (NXT) dropped 3.5 percent as the U.K.’s second-largest clothing retailer reported revenue that missed analyst estimates.
The benchmark Stoxx Europe 600 Index (SXXP) fell 0.4 percent to 250.01 at 11:49 a.m. in London. The measure rose to the highest level since Aug. 3 yesterday after a report showed that U.S. manufacturing expanded in December at the fastest pace in six months. Standard & Poor’s 500 Index (SPZ1) futures expiring in March lost 0.2 percent today, while the MSCI Asia Pacific Index (MXAP) climbed 1 percent.
“The European debt crisis has never really abated,” said John Plassard, director at Louis Capital Markets SA in Geneva. “Even though 2011 ended relatively well, 2012 remains at risk. States will have to find 800 billion euros in the financial markets this year, so we should have a lot of market volatility ahead of us, at least during the first half.”
Bond Auctions
Germany and Portugal sold bonds today, kicking off a competition for finance that may determine whether euro-area leaders can preserve the single currency.
Germany got bids for 5.14 billion euros of 10-year bunds at an auction, more than the maximum sales target of 5 billion euros. The debt agency accepted bids for 4.06 billion euros at an average yield of 1.93 percent. Portugal’s borrowing costs fell at a sale of 1 billion euros of three-month bills.
The offers will be followed by auctions from Greece, Italy and Spain later in the month as common-currency members commence sales that may reach 262 billion euros in the first quarter and 865 billion euros in 2012, according to Deutsche Bank AG forecasts.
Spanish Prime Minister Mariano Rajoy’s government is considering applying for loans from the European Union’s rescue fund and the International Monetary Fund to finance the restructuring of the country’s financial industry, Expansion reported, citing unidentified people with knowledge of the matter.
U.S. Economy
In the U.S., a Commerce Department report at 10 a.m. New York time may show that factory orders (TMNOCHNG) climbed 2 percent in November after a 0.4 percent drop the previous month, according to the median projection of 57 economists in a Bloomberg survey.
A gauge of banks was the worst performer (SXXP) of the 19 industry groups in the Stoxx 600.
UniCredit tumbled 8.5 percent to 5.80 euros as the bank said it will sell shares at 1.943 euros apiece to raise 7.5 billion euros. The rights offer is a 43 percent discount to yesterday’s closing price, excluding the value of rights.
Banco Santander SA (SAN) slid 4.7 percent to 5.74 euros as new stock sold last month to bolster capital at Spain’s biggest lender started trading in Madrid. Santander raised 1.94 billion euros in December by swapping non-listed preferred securities sold to retail customers in 2009 for newly-issued stock that can be accounted as core capital.
Banco Comercial Portugues SA (BCP) and Banco Espirito Santo SA (BES) retreated 6.7 percent to 14 euros cents and 5 percent to 1.28 euros, respectively, in Lisbon.
Banks Park Funds
Euro-area banks parked 453.2 billion euros with the European Central Bank yesterday, up from 446 billion euros the previous day. That’s the highest since the euro’s introduction in 1999.
Vestas sank 15 percent to 58.90 kroner after cutting its earnings forecasts and saying it will announce a significant change to its corporate structure on Jan. 12.
Vestas now expects sales of about 6 billion euros for 2011, down from the 6.4 billion euros it forecast on Oct. 30, which itself was a reduction from 7 billion euros. Sean McLoughlin, an analyst at HSBC Holdings Plc, cut the stock to “underweight” from “neutral.”
Next dropped 3.5 percent to 2,645 pence after it reported sales that missed analyst estimates as growth in online revenue failed to offset lower store sales during a period that included the peak Christmas holiday season.
EDF, Audika (ADI)
Electricite de France SA slid 4.3 percent to 18.40 euros. The utility will have to invest between 10 billion and 15 billion euros to bring safety standards at its French reactors into line with recommendations from national nuclear safety watchdog ASN, Les Echos reported, citing unidentified ASN and EDF officials.
Audika Groupe declined 1.8 percent to 13.35 euros after lowering its 2011 sales forecast, saying the “very unfavorable” economic outlook led some clients to wait before buying its hearing aids. The shares were downgraded to “reduce” from “neutral” at Oddo Securities.
Swiss rival Sonova Holding AG (SOON) slumped 2.8 percent to 94.90 Swiss francs.
Oil and gas companies advanced, with BP Plc (BP/) gaining 1.2 percent to 476.7 pence and Neste Oil Oyj adding 1.6 percent to 8.43 euros. Premier Oil Plc (PMO), the London-based oil explorer, increased 3.1 percent to 376.7 pence.
Qiagen NV (QGEN), the German biotechnology company, rallied 4.7 percent to 11.38 euros as Tycho Peterson, an analyst at JPMorgan Chase & Co. raised the stock to “overweight” from “neutral.”
Egide (GID) SA, the producer of ceramic packages that protect electronic systems used by the U.S. Air Force, rallied 13 percent to 6.50 euros as revenue in 2011 rose to 26.9 million euros from 24.7 million euros a year earlier.
To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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