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Europe: bulls try their luck heading into final bell

Daria Bulanova, Analyst, Global Markets (Finam)

On Thursday, April 5, European equity benchmarks traded on a mixed note against growing borrowing costs for Spain and concerns over the Eurozone’s ability to fix its debt crisis.

Spanish Prime Minister Mariano Rajoy Brey stated that the national economy is in a precarious state. The statement sparked a rise in yields on Spanish bonds, which were on the rise for a third day in a row, with the spread between 10-year Spanish bonds and German bonds widening to 400 basis points, the first such case since December 12, 2011.

Yields on Italian 10-year bonds also moved higher, going up by 7 bp to 5.44%, while their spread with the relevant German bonds rose 12 bp to 370 bp. France likewise saw its borrowing costs escalate. On Thursday, France sold EUR 4.32 bn in debt, with yields on its 10-year bonds increasing from 2.91% to 2.98%.

As for the regional macroeconomic data, we would like to highlight the Swiss CPI, which jumped 0.6% m-o-m in March, against the forecast increase from 0.3% to 0.4%. British industrial production showed a 0.4% upturn m-o-m in February, outpacing the estimated growth of 0.3% m-o-m after a 0.4% downturn the previous month, which lifted market sentiment. On the contrary, data on German industrial production in February, which revealed a 1.3% contraction m-o-m, against the forecast slide of just 0.5% m-o-m, left market players discouraged.

В четверг состоялось заседание Банка Англии, в ходе которого было принято решение о сохранении ключевой процентной ставки на неизменном уровне 0,5%. При этом комитет центробанка во главе с Мервином Кингом проголосовал за сохранение программы по покупке активов на прежнем уровне 325 млрд фунтов стерлингов ($514 млрд). At a meeting on Thursday, the Bank of England opted to hold its benchmark interest rate unchanged at 0.5%. The Central Bank committee, chaired by Mervyn King, voted in favor of retaining the asset purchase program at the previous level of GBP 325 bn (USD 514 bn).

It is noteworthy that bulls managed to claw back part of the turf lost moving into the final bell, gaining support from climbing commodity prices, which sparked a rally in mining companies. Thus, Copper advanced in New York trading for the first time in the last three days, following the release of positive labor market numbers stateside.

In the upshot, regional indicator STXE 600 edged 0.12% higher to close at 259.07. The British FTSE 100 index climbed 0.35%, German’s main stock market gauge DAX eased 0.13% and the French CAC 40 benchmark ended 0.19% higher.

Banking shares led the decliners. Notably, the Italian Banco Popolare and Banca Monte dei Paschi di Siena sank 2.5% and 5%, respectively, while the Spanish lender CaixaBank retreated 1.6%. British banks likewise saw downside, with Lloyds Banking Group, Royal Bank of Scotland Group and HSBC Holdings sliding 1.6%, 1.1% and 0.4%, respectively. The French lender Credit Agricole tumbled 2% and the German banks Commerzbank and Deutsche Bank shed 1.9% and 0.1%.

British investment firm Ashmore Group spiked 5.2% after UBS analysts raised the investment rating for its shares from Neutral to Buy. Meanwhile, National Express Group added on 0.7% after being upgraded by Morgan Stanley analysts from Market Perform to Outperform.

The German pharmaceutical company Merck had its investment rating cut from Outperform to Neutral by Exane BNP Paribas analysts, which sent its shares 1.8% lower.

Rising commodity prices helped prop up mining equities. The shares of Xstrata gained 3.5%, the world’s biggest mining company BHP Billiton rose 1.6% in London and Vedanta Resources saw its market cap firm 2.1%. The world’s leading commodities trader Glencore gained 5.8% in value.

IndexCountryValueChangeChange, %YTD, %
ATX Austria 2 059,73 -32,36 -1,55% 8,88%
BEL20 Index Belgium 2 253,73 -8,72 -0,39% 8,17%
FTSE 100 United Kingdom 5 723,67 19,9 0,35% 2,72%
DAX Index Germany 6 775,26 -8,8 -0,13% 14,87%
IBEX 35 INDEX Spain 7 660,50 -0,2 0,00% -10,57%
S&P/MIB Italy 15 216,02 -29,9 -0,20% 0,84%
AEX Netherlands 314,91 1,04 0,33% 0,78%
OMX Nordic 40 Scandinavia 986,12 -2,02 -0,21% 9,60%
CAC 40 France 3 319,81 6,34 0,19% 5,06%
SMI Switzerland 6 163,49 -3,3 -0,05% 3,83%