European markets closed slightly higher after trading in the red for most of the session on concerns swine flu may become a pandemic. The Spanish index posted a loss as companies in the nation face higher exposure to Mexico than other European Counterparts.
[U][B]Europe Session Key Developments[/B][/U][B]
• Travel Companies Fall on Flu Fears
• Commodities Dip on Concerns of Longer Recession
• Fundamentals Show Mixed Signs of Improvement
European Stocks Pare Losses as Traders Remain Cautiously Optimistic [/B]
European markets closed slightly higher after trading in the red for most of the session on concerns swine flu may become a pandemic. The Spanish index posted a loss as companies in the nation face higher exposure to Mexico than other European Counterparts. Firms involved with flight and travel are seeing considerable downside today, while drug makers are responding positively to concern surrounding the flu outbreak. Following a rally off early March lows, markets have traded sideways as investors remain uncertain on the future despite a resurgence of confidence in financials following government action. In the previous week, the International Monetary Fund issued grim warnings that total losses from the financial mess could reach as high as 4.1 trillion and banks will require large increases in capital to stay in business. The IMF’s expectation for the UK is a further $200 billion in losses, well above the $110 billion that has been written off thus far. Failure to increase capital ahead of time could lead to a resumption of the credit crisis and government takeovers of failing institutions. Fundamental indicators released today came in mixed as German and Italian consumer confidence posted above estimates for declines while the housing market remains weak. Hometrack’s housing survey in the UK came in at a monthly decline of 0.3% and loans in the UK fell for the first time in four months with the addition of a lower revision to the previous months figure. Top economists believe a stronger housing market is key to recovery in the banking sector and the overall economy.
[B]FTSE 100 4,167.01 +11.02 +0.27%[/B]
The UK index was lower for most of the session before rising for a small gain at the close. Four of the ten sectors posted gains with Healthcare leading at 4.56% while financials and basic materials fell more than one percent. Leading gains were drug makers including GlaxoSmithKline up 5.67%, and a 3.72% rise in AstraZeneca shares, as investors buy the firms amid fears that swine flu will spread quickly in advanced nations. Also seen up noticeably was Insurer Aviva with a 5.03% move to the upside. Losers on the day included firms involved with travel as the flu scare may hurt business. British Airways was the largest decliner on the session at 7.75% followed by cruise line operator Carnival down 6.81% at the close. Indicators in the UK today showed a further slide in the housing market, and a decline in loans for the first time in four months raised concern that government actions may not be as effective as hoped.
[B]CAC 40 3,102.43 -0.42 -0.01%[/B]
Trading in the French market ended with an insignificant move as more than fifty percent of stocks fell on the session. Six of the ten sectors posted declines with financials and basic materials suffering nearly two percent moves lower. Healthcare moved higher with a 2.63% gain as investors buy drug makers on the risk that swine flu spreads quickly. Drug maker Sanofi-Aventis saw its shares rise 2.43% on the day. Leading gains was Eletricite De France up 5.41%. Seeing significant downside today was Air France, dropping 6.56%, followed by a 3.72% decline for hotel company Accor.
[B]DAX 4,694.07 +19.75 +0.42%[/B]
The German market managed to close with a small gain on the session as greater than one percent moves in telecom and utilities made up for losses of less than a percent in four of the nine sectors. Deutschebank led advancers with a 5.26% ahead of the company’s earnings report tomorrow. Others seen considerable upside included retailer Metro with a 3.72% move followed by utility E.on rising 3.05%. Airliner Lufthansa posted a sharp 9.25% drop as fears accelerate over swine flu and its potential repercussions on travel. Import prices in Germany continue to decline while consumer confidence today came in unchanged from the previous month’s upward revision. Economists polled by Bloomberg had expected the measure to fall slightly. Overall the German economy remains highly dependent on trade for nearly half of its GDP and improvements in global markets remain as serious a concern as domestic strength.
[B]
IBEX 35 8,777.00 -111.20 -1.25%[/B]
Trading in the Spanish market led to the largest decline of the five majors with five sectors falling more than one percent and only two of the nine posting gains of less than one-half of one percent. Sharp downside in travel firms was seen as airliner Iberia fell 6.58% followed by wind turbine maker Gamesa with a 3.43% fall. 29 of the 34 companies in the IBEX fell on the day as Spain suffers higher than average exposure to the Mexican market. Banco Bilbao generates more than one-third of its recurring revenue from Mexico and a drop in the peso along with fears of a prolonged recession could hurt profits at the bank and other firms.
[B]
S&P/MIB 18,823.00 +172.00 +0.92%[/B]
Italy’s leading index led advancers with the largest gain on the session, although not even a one percent move. Six of the nine sectors moved higher with technology leading with a 3.18% move. Just over half of the index posted gains on the day with major firms rising including automaker Fiat, Unicredit and utility Enel. Leading declines was airport restaurant operator Autogrill with a 4.8% loss as investors fear the flu virus may hurt business at the firm.
