The European markets finished in the red on Tuesday, due to the uncertainty created by the results of the Italian elections. Early results showed that no single party or coalition has secured enough seats in the Italian parliamentary elections to form a government on their own. The center-left Democratic Party led by Pier Luigi Bersani was slightly ahead in the Lower House, while the center-right coalition led by former Prime Minister Silvio Berlusconi was leading in the Senate.
Italy’s borrowing costs rose on Tuesday as the inconclusive election results signaled political instability in the coming weeks.
The Rome-based Treasury raised EUR 8.75 billion from the sale of 6-month bills, in line with the target set for the auction. However, the yield on the 6-month paper rose to 1.237 percent from 0.731 percent paid on January 29. The bid-to-cover ratio shrunk to 1.44 from 1.65.
The country is set to auction up to EUR 6.5 billion of five-and-10-year bonds on Wednesday. On Tuesday, the 10-year Italian benchmark rose more than 30 points to around 4.80 percent.
U.S. Federal Reserve Chairman Ben Bernanke on Tuesday downplayed speculation that the central bank is getting ready to end its controversial quantitative easing program.
In semi-annual testimony before the U.S. Senate Banking Committee, Bernanke said the Fed’s $85 billion/month asset-buying program is needed to preserve a nascent housing recovery and modest improvement in the jobs market.
Bank of England Deputy Governor Paul Tucker said on Tuesday that he is open to do more quantitative easing depending on the outlook for demand and inflation.
“I would also judge that the existing degree of monetary easing from QE is likely to gain more traction on spending than it had last autumn, given reduced tail risks from the international environment,” he said in a written testimony to the Treasury Select Committee.
Germany will return to growth in the first quarter after shrinking 0.6 percent in the fourth quarter, European Central Bank Executive Board member Joerg Asmussen said Monday. He reportedly said Greece, Spain and Portugal will see notable negative growth.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 3.06 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 1.35 percent.
The DAX of Germany dropped by 2.27 percent and the CAC 40 of France fell by 2.67 percent. The FTSE 100 of the U.K. decreased by 1.33 percent and the SMI of Switzerland finished down by 1.90 percent.
In Frankfurt, Commerzbank declined by 3.04 percent and Deutsche Bank lost 4.90 percent.
Basf decreased by 4.71 percent, after reporting a lower profit for the fourth quarter.
Fresenius and Fresenius Medical Care gained 2.75 percent and 1.45 percent, respectively, after reporting financial results.
In Paris, Credit Agricole, dropped by 5.89 percent. Societe Generale fell by 5.85 percent and BNP Paribas lost 4.52 percent.
Vivendi finished down by 1.44 percent. The media and telecom giant reported a sharp decline in annual profit.
In London, Barclays fell by 4.70 percent and HSBC decreased by 2.18 percent. Royal Bank of Scotland lost 4.06 percent and Lloyds declined by 4.02 percent.
Whitbread, which reported growth in 11-week sales, dropped by 3.59 percent.
CRH reported a decline in fiscal 2012 profit, amid weak European performance. The building materials group also announced the retirement of its chief executive. The stock finished higher by 0.99 percent.
GKN climbed by 3.65 percent, after reporting a 68 percent increase in its full year 2012 pre-tax profit.
Croda International increased by 1.17 percent, after reporting full year 2012 results.
Bovis Homes, which was downgraded at Citigroup, lost 1.59 percent.
Property developer Redrow decreased by 4.19 percent after issuing a cautiously optimistic outlook.
Retail sales in the United Kingdom increased at the weakest pace in five months in February, data released by the Confederation of British Industry (CBI) showed Tuesday.
The balance of the percentage of retailers who reported a growth in sales and those who registered a contraction declined to +8 percent in February from +17 in January. The rate of growth slowed for the third successive month, and the latest figure was the lowest since September 2012. Economists had forecast a modest decline to +16 percent.
Spain’s mortgaged properties declined 26.2 percent in December from a year ago to 28,573 units, data from the statistical office INE showed Tuesday. At the same time, the average value of mortgages slipped 2.6 percent annually to EUR 108,622 in December.
Home prices in major U.S. metropolitan areas rose by slightly more than expected in the month of December, according to a report released by Standard & Poor’s on Tuesday.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index increased by a seasonally adjusted 0.9 percent in December following a 0.7 percent increase in November. Economists had been expecting the index to increase by about 0.8 percent.
New home sales in the U.S. showed a substantial rebound in the month of January, according to a report released by the Commerce Department on Tuesday, with sales reaching their highest level in well over four years.
The Commerce Department said new home sales surged up by 15.6 percent to a seasonally adjusted annual rate of 437,000 in January from the revised December rate of 378,000. Economists had been expecting new home sales to show a more modest increase to an annual rate of 381,000 from the 369,000 originally reported for the previous month.
With fiscal cliff uncertainty and worries about the impact of an increase in payroll taxes waning, the Conference Board released a report on Tuesday showing a substantial rebound in U.S. consumer confidence in the month of February.
The Conference Board said its consumer confidence index jumped to 69.6 in February from a revised 58.4 in January. Economists had been expecting the index to climb to 61.0 from the 58.6 that had been reported for the previous month.
by RTT Staff Writer
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