Business & Financial News

French banking stocks opened sharply down Monday on the Paris Stock Exchange, after the results of parliamentary elections in Greece and the presidential election in France.

In early trade, the shares agricultural, heavily exposed to Greece because of its local subsidiary Emporiki weighed down by losses, falling nearly 6%.

BNP Paribas and Societe Generale fell by more than 3.5%, underperforming the European banking index down by 1.18% at the same time. 

In Greece, voters, angered by the recession and austerity, were heavily penalized Sunday the two main parties, New Democracy (ND, right) and the Party Socialist (PASOK), and offered to the radical left a spectacular breakthrough in the risk of boosting debt crisis and questions about maintaining their country in the euro area.

In France, Socialist Francois Hollande, who plans to reform the banking system to protect customer deposits and make the market less risky activities, has won Sunday's presidential election, marking the return of the left in power.

Labor costs in Germany rose at the slowest rate of any European Union over the past decade, said Tuesday the Federal Office of Statistics , emphasizing the positive effect of wage moderation.

The cost of one hour of work in the private sector rose 19.4% between 2001 and 2011 in Germany, which is half that in France, where the cost jumped 39.2 % over the same period, well above the European average of 36.1%.

The moderate wage growth, which started from a high base, helped Germany to remain among the top exporting economies in the world and to remain competitive . 

"The moderate wage growth in recent years has made possible a positive development (…). Many new jobs were created and existing jobs are been protected, supporting consumption, "said the director of the Chamber of Commerce, Martin Wansleben.

In 2011, German employers paid an average of 30.10 euros for each full hour of work in the private sector, well above the average for the EU to 22.80 euros.

Belgium shows labor costs the highest in the region at 39.30 euros per hour while Bulgaria has the lowest, to 3.50 euros.

U.S. stocks finished mostly slightly higher Friday, the Dow Jones having received solid results from several big names such rating Microsoft, General Electric and McDonald's, but the downturn in the technology sector weighed on the Nasdaq.

The Dow Jones industrials gained 30 0.5%, or 65.16 points, to 13,029.26. The S & P-500, wider, took 1.61 points, or 0.12%, to 1378.53.

The Nasdaq Composite, however, yielded 7.11 points (0.24%) to 3000.45, weighed down by including SanDisk, which dropped more than 11% after a warning on its sales business. The decline of Apple (-2.46%) also weighed.

For the week, the Nasdaq fell 0.4%, but the Dow Jones rose 1.4% and the S & P 500 0.6%, encouraged by the good start of the earnings season.

Of the 121 companies in the S & P 500 having reported their quarterly on the date of Friday, 81% exceeded Wall Street expectations, according to Thomson Reuters data.

Microsoft has topped the Dow Jones gains, surging 4.5% Thursday after reporting a profit above the consensus, PC sales are e , as revealed better than expected.

SanDisk has dropped 11.27% to 35.91 dollars. The memory manufacturer has said it expected a revenue well below Wall Street expectations in the second quarter due to lower prices in the sector.

In its wake, the index of the semiconductor sector fell 2.38% on the session. Apple has lost 2.46% to 572.98 dollars.

SEASON RESULTS STILL GOOD

General Electric closed up 1.1%. The first American industrial conglomerate reported earnings and sales better than expected first quarter thanks to strong demand for energy equipment Ticks and railway equipment.

McDonald's took 0.7%. The world's number one fast food has published quarterly results rise, driven by strong sales in its restaurants in the United States.

"Yesterday there was some concern to see McDonald's to miss the consensus, but he reached out and showed strong sales growth at stores constant. GE beat expectations. Overall the earnings season continues to be good, "said Peter Jankovskis for Oakbrook Investments LLC.

The industrial conglomerate Honeywell International has published its quarterly results next up and has revised upwards its annual financial targets. The stock closed up 2.4% to 59.39 dollars.

Schlumberger took 2.7%. The oil services group published the first-quarter net profit up 39% to $ 1.31 billion, or 97 cents per share.

A Wall Street as on the European stock exchanges, investors awaited further reassurance on the capabilities of the International Monetary Fund (IMF) to raise new funds to contain the crisis euro area.

The Group of Twenty (G20) is committed in the evening to give the International Monetary Fund (IMF) over $ 430 billion of additional resources, making more than double its capacity loan.

Audi, the premium brand of Volkswagen sold 143,500 vehicles in March, a record, or 14.1% from a year earlier, thanks to solid demand from the States U.S. and China.

Over the quarter, the manufacturer sold 346,100 vehicles, representing an increase of 10.8%.

"We started the year 2012 successfully and we anticipate continued growth in the coming months," said in a statement Peter Schwarzenbauer, responsible for sales of Audi.

Universal Music, a subsidiary of Vivendi, has requested a green light from European authorities to buy back the recorded music division of the British label EMI, said Monday the European Commission on its website.

The operation of some € 1.4 billion would allow the first record company to add to its global catalog Coldplay and Katy Perry for example. But it may be a long and careful consideration of the competition authorities.

In November, Universal said hold 26.5% of global recorded music. By merging its operations with those of EMI, the group would control, in some European countries, over 50% of the market.

The European Commission, guardian of competition in the Union, was given until March 23 whether to grant the green light for the operation.

Post held an extraordinary board Thursday on the topic of financing local government, while negotiations on the resumption of Dexma, a subsidiary of French bank Dexia during dismantling lement, seem to enter their final stretch.

The holding of the Board, initially reported by a director representing the CGT in the public group, was confirmed by a spokesman for The Post.

"An extraordinary Board of Directors of La Poste Group is convened for tomorrow Thursday, February 9 to 16 hours," said Bernard Dupin, the administrator CGT, in a statement specifying that the funding local authorities will be on the agenda. 

The board of directors "will be preceded for employee representatives in a meeting with Mr. Philippe Wahl, chief executive of Bank PO," said Bernard Dupin.

The Deposit must meet on Wednesday its supervisory board to review the case Dexia. The CDC, which had already participated in the rescue of Dexia in 2008, and The Post Bank should take over from the Franco-Belgian bank in this market with the launch, scheduled for mid-2012, a new public bank dedicated to local governments.

Agreement on the resumption of Dexma (Dexia MA), specializing in refinancing loans to local authorities, is crucial in the context of drying of loans to community s French local.

SARKOZY HOLD A CONFERENCE

During question time in the National Assembly, the minister in charge of local authorities reported that the head of state Nicolas Sarkozy Friday held a conference on local finances. 

"The president meets this Friday, February 10 a conference on local government finance which will deepen these topics with associations of local authorities, particularly the partnership with the Deposit and Consignment Office, which must again be examined, "he said and Philippe Richert.

Estimates of Dexia Credit Local, some 10 billion euros in 2012 could fail to secure the financing that French local authorities have required banks deserting the market due of the crisis and the new prudential rules.

In this context, some local governments are forced to abandon or postpone their investment plans. 

The construction group Vinci also does not exclude a decrease in orders from local authorities in the coming months while the new bank created by the Post Bank and the CDC has put in place .

"Because of the lack especially of the great actor that was Dexia to finance local authorities and before the implementation of the actor who is being set up between the Deposit and Post Bank (…), it is possible that over the coming months we observe a decrease in orders from local authorities, "said Xavier Huillard, CEO of Vinci, during a press conference.

Between the peaks decisions that decide nothing and unexpected twists, difficult to navigate in the soap extension to the rescue of the euro. L'Expansion. Com reported on what appears achievements and problems that appear before the appointment-critical? – Wednesday. European leaders meeting in Brussels.

While the EU summit Sunday was to end months of indecision and too limited solutions, the world was offered a new appointment on Wednesday to see whether the euro area will finally be saved. Back to what appears to finally being resolved and the problems that remain … or emerging.

What is clear

The discount massive Greek debt

The banking lobby is hoping for a discount of 40%, Brussels wants instead to 50 or 60%.But if negotiations continue on the final figure, the principle of a very significant effacement of the Greek debt appears to act for both parties. To justify this level, Europe is based on a report of the troika, which includes the country's creditors, European Union, ECB and IMF. According to the report, banks must accept losses from 50% to 60% for the country's debt is sustainable. This prospect terrifies but investors in Greece. The Athens Stock Exchange fell Monday. Concerns focus on the consequences of such a discount to banks and pension funds in the country, who hold 15% of Greek sovereign debt. Local employers in turn denounced a decision that would lead to a "devaluation of financial assets and real estate" of the Greeks and "suffocation of the private sector."

The recapitalization of banks

To absorb losses arising from the discount and deal with a possible extension of impairment to Spain and Italy, banks are encouraged to recapitalize. With two options. Either they agree to promote their sovereign debt to market, whereby they are set a target to achieve a capital ratio of hard 9% by mid-2012. Either they refuse, and then have to meet a higher target of 9.5%. According to a European source, this would represent a comprehensive effort to recapitalize "107 or 108 billion euros."The scenario always favors a priority call to the private sector and the public opening of windows and finally, in case of failure the use of a solution through the EFSF.

On French banks, Baroin reiterated on Monday that Europe 1 "may not need to open this window public" and that they would carry out this recapitalization "at the expense of dividends and bonuses" . Christian Noyer, Governor of the Bank of France, for his part spoke of a limited effort at "least ten billion euros."

Strengthening the EFSF

It is unclear exactly how the European financial stability but we know it will not be converted into bank, as called Paris. Berlin vetoed because it would require the fund to refinance with the ECB, that "treaties do not allow," said Chancellor Angela Merkel.Options to leverage the capacity of intervention of EFSF without increasing resources have been reduced to two. First possibility: make a guarantee fund for the obligations of troubled countries (Greece, Italy and Spain) that protects owners up to 20 to 30% of the loan amount. This insurance should put downward pressure on interest rates. Second option on the table: create a special fund to accept contributions from outside investors, and could be backed by the IMF. But as the EU president, Herman Van Rompuy, both options could ultimately be chosen. "Combined, these two models could have a cumulative effect," he said Sunday.

The new problems that emerge

The non-European contribution to EFSF

The proposed involvement of outside investors – outside the euro area – raises some reservations.The fear of other states to mix with European desnquiétudes rise. "The Chinese said they were interested, but some member states are skeptical about the idea of ​​integrating a Chinese contribution to the EFSF," said one diplomat. Which could ultimately leave the field open to the German proposal as EFSF Guarantee Fund.

The payment of the IMF to Greece

To avoid suffocation in the country, the creditors of Athens must pay the sixth installment of the loan of 110 billion euros. But if Europe accepted Friday the payment of its share (5.8 billion), the IMF still has not cleared the release of funds. The Secretary General of the IMF, Christine Lagarde, said Friday she would recommend the Fund to pay the remaining share (2.2 billion).But for this it will be another meeting of the Board of the IMF in November …

The use of Italy EFSF

Italy is under pressure to further reduce its debt and deficits. Prime Minister Silvio Berlusconi was ordered to reach the European summit Wednesday with a detailed road map for further reforms of its economy, particularly on pensions. "This is not to appeal to the solidarity of partners if we do not effort," even said Nicolas Sarkozy. Now Italy has indeed need that help. She is a candidate to benefit from new support program called "precautionary" developed in July. The tool is expected to be able to provide credit lines or to allow the EFSF to buy government debt from one country to investors in the market "secondary" to influence interest rates.Relief Fund would replace the ECB and redeeming debt from the Italian August but warned that it would not do it forever. Except that Europe now poses its terms. Silvio Berlusconi has already given some pledges by suggesting that it might raise the retirement age to 67. It could also speed up privatization to relieve the huge debt the country to 1,900 billion euros.

The pessimistic comments by the Fed on the U.S. economy were right the last hopes of the market. Paris loses about 5% as other European markets, the euro and oil fall as well.

Financial markets no longer know where to turn. They awaited the Fed's effective measures to stimulate activity, they have mostly kept very pessimistic comments on the U.S. economy. And as concerns over the health of European banks are still there, the world's stock markets have performed a new dive on Thursday.

After opening sharply lower, European stock markets accentuated their losses by mid-afternoon. The Paris Bourse and yielded 4.57%, Frankfurt 3.77%, 4.70% London, Milan and Madrid 3.70% 4.40%. At the opening of the New York Stock Exchange, the Dow Jones lost 1.45% and the Nasdaq 2.85%..

Bank stocks, especially French, were the first victims of this new access of depression. Societe Generale, Credit Agricole and Natixis were down more than 7%. BNP Paribas, some limited damage to -3.3%. Alarmist comments by an officer of the influential American fund Pimco, saying that French banks could tip the whole of Europe into recession, came to power concerns.

Equity markets are not the only ones suffering. Direct result of growth at half mast, and thus reduced demand, oil prices plunged more than 5% in New York, returning to their lowest levels in a month. A barrel of "light sweet crude" for November delivery traded at 80.91 dollars.

On the foreign exchange market, the euro has meanwhile fallen below $ 1.35. It especially touched its lowest level for ten years against the yen.

Main accused of helping the new blues, the U.S. central bank. "The Fed, instead of reassuring the markets, instead encouraged the weak operators and increased their aversion to assets considered risky," explained Jane Foley, analyst at Rabobank.

As expected, it has announced the launch of Operation Twist, which will be for sale by the end of June 2012 for $ 400 billion of treasury bills in order to redeem an equivalent amount with a longer maturity. The stated objective is to lower interest rates over time. Problem, the effectiveness of the measure is highly controversial because these rates are already low. Its impact on business would not be obvious.

Unconvincing in action, the Fed, however, impressed the market by the extent of his pessimism on the U.S. economy, citing the "continuing weakness" of the labor market and "significant risks" associated with "tensions global financial markets. " Expected as the messiah, Bern Bernanke, the head of the U.S. central bank has disappointed. The Fed "does not have the tools to miraculously revive economic growth," could only observe Nigel Gault, the firm IHS Global Insight.

Several indicators have confirmed the sluggishness of activity across the Atlantic, like the new jobless claims last week to 423,000, down but higher than expected (418,000). For its part, the Conference Board's composite index came out up 0.3% in August, but slowed down, which is a sign of increased risks to growth.The U.S. treasury secretary, Timothy Geithner, has found himself in Washington that the slow economic growth was a challenge "bigger" than the debt that states the world should give priority to support growth.

As if this were not enough, the bad news continued to accumulate on the side of the euro area. The private sector activity there is in fact contracted in September for the first time in over two years, according to a first estimate of the firm Markit PMI. The activity slows and approaches the stagnation in Germany and France, the two largest economies in the region, the source said. Italy, whose financial markets worried, revised sharply downward its growth forecasts, reduced to 0.7% for 2011, 0.6% in 2012 and 0.9% in 2013.Rome assured that the austerity plan passed last week was enough to balance the budget by 2013. But the bond market, the Italian securities suffered, with a standard rate record deal with German titles, safe havens in which investors have rushed. The performance of the German Bund and 10-year fell to its lowest ever observed in 1.665%.

The debate continues in Europe on the recapitalization of banks, following the call to use the IMF's European Financial Stability Fund (EFSF) to recapitalize the most exposed to the debt crisis. The IMF estimates the potential losses in the sector to 200 billion euros. Echoing the words of his colleague in charge of Competition, Joaquin Almunia, European Commissioner Michel Barnier to Financial Services found that 25 of them need to be recapitalized.

While European politicians opposing the idea of ​​issuing Eurobonds to respond to the crisis of sovereign debt, China could affect their development.

Europe is the first export market of China, which has clearly said he was in his interest to avoid a financial collapse that could cause a global recession.

China also wants to diversify its foreign reserves to reduce the share of U.S. government bonds, and did not wait for the deterioration in the sovereign rating of the United States last month to start doing.

"European countries are facing problems of sovereign debt.We have said countless times that China wants to give a hand and we will continue to invest (in Europe), "said Premier Wen Jiabao during the 'Summer Davos Forum' week last in the Chinese city of Dalian.

But he also said that the major developed economies were healthier fiscal position and urged Europe to make a reciprocal gesture by granting China the status of market economy.

Europeans have so far been reluctant to make this concession, given the exchange rate regime of the yuan, state control of Chinese industry and commercial litigation, intellectual property, for example.

Upon entry to the World Trade Organization (WTO) in 2001, China agreed to a covenant which provided that she would not have the status of market economy in the world before 2016.Beijing has long called for this status to be granted in advance, as that would provide better protection against anti-dumping duties including the EU.

"A crisis is an opportunity"

"Europeans have not been sufficiently sensitive to the needs of China," said Etienne Reuter, a consultant who was representing the EU in Hong Kong and Japan.

China also wants the EU to lift an arms embargo imposed in 1989 after the crushing of the "Beijing Spring".

Privately, EU officials who manage the debt crisis remember that China is one of the few large foreign investors continue to buy bonds of countries in the euro area in the secondary market.

China thinks it also has also taken a large share of bonds rated triple-A issued by the European Financial Stability (EFSF) to support Greece, Ireland and Portugal as part of programs helps set up by the EU and the International Monetary Fund.

For Beijing, the problem is rather that there is not enough paper issues rated triple A European response to the request.Yields on German government bonds and UK safe haven to which have turned many investors are thus fell below the rate of inflation.

"It is in the interest of China that the euro area is stable with the creation of Euro-bonds, but China may have an impact on the decision of the European countries I doubt," said however Xu Bei, a Chinese economist who works in Paris for the French bank Natixis investment.

"In the Chinese mentality, a crisis is always an opportunity.The Chinese word for crisis has two characters: one meaning danger, the other opportunity, "says she.

In the short term, she says, it would make sense for China to buy the Italian Treasury bonds, which are active in Europe among the more volume and more liquid while providing an attractive return "if Excluding a scenario of extreme crisis. "

SECURE INVESTMENT

There is clearly a debate within the Chinese leadership on the pros and cons of going to the assistance of Europe.

Forum in Dalian last week, an adviser to the Chinese central bank, Daokui Li said that China should refrain from buying large volumes of European bonds.

In its edition for abroad, the People's Daily, for its part says that China should not act alone but work with other creditors, including the IMF, and ask that the euro area investment guarantees.

"Faced with latent systemic risk for European debt, China should both take the role of responsible great power but must also make security a prerequisite for an investment," said an editorial in Xiangyang Li, researcher international relations at the Chinese Academy of Social Sciences.

According to Etienne Reuter, Wen Jiabao wants to open China further and support the conservative voice of Europe, but among the other leaders argue that Beijing must be careful not to get too involved in other countries.

Chinese public opinion, at least as reflected by the blogs on the internet, look for caution on the issue of investment in Europe is for its part Bei Xu.

As for David Bowers, the financial advisory firm Absolute Strategy Research, the Committee is unlikely that China will take strategic initiatives to scale before the change of the management team in 2012, which should be reflected in particular by replacing Hu Jintao and Premier Wen Jiabao.

"The people that the Chinese are dealing, it is the Germans.Triple A is a nation like China, mercantile like China, and the Chinese could help them avoid making the taxpayers bear the German "a heavy burden, he said.

China is becoming the next two years the largest trading partner of Germany instead of France, noted David Bowers.

"They (the Chinese) will have to wait until Germany is clearer about what she wants in Europe," he said.

Wall Street closed down Tuesday but reduced its losses quite considerably.

The Dow Jones lost 100.20 points (0.89%) to 11,140.06. The S & P 500 drops 8.67 points (0.74%) to 1165.30. The Nasdaq Composite Index gives 6.50 points (0.26%) to 2473.83.

These data are likely to vary even slightly.