European Stocks Improve Amidst Talks of Financial Deal for Greece

For a 2nd day on a row, the European stocks have increased as the speculations are rife that the Finance Ministers of the Euro region will agree on a possible financial deal for Greece. The market is quite optimistic about a possible cease-fire in Gaza as well.

EasyJet Plc experienced the biggest jump in the last 5 years. This was mainly attributed by the fact that the Budget Airline doubled its dividend (From 10.5 pence, it jumped to 21.5 pence). EasyJet is currently at 692 pence (Jumping by 6.1%). The pretax profit for the company is at $504 million in 2012, till 30th September. This is actually more than the initial estimated profit of $498 million. The jump of EasyJet Plc benefited the travel shares on a whole. 

Glencore International Plc and Xstrata Plc both saw jumps in the share prices after the investors provided the required approval for the proposed $31 billion merger. This will possibly the biggest deal of this year in the industry, however, there are 2 hurdles to overcome yet. The regulators of both China and Europe are yet to provide their clearance. Currently, Glencore International Plc is at 331.75 jumping by 1.6% and Xstrata is at 986.6 pence after surging by 3.1%.

On the other hand, Credit Suisse Group AG suffered a drop of 1.7% after announcing its plans to reorganize the investment bank. It has also announced to merge the asset management system with the private bank so that they can reduce the complexity of the system and cut costs.

The Stoxx Europe 600 Index or SXXP has seen an increase of 0.3% and is at 269.49 currently. Even on yesterday, the index saw a jump of 2.2%, thereby reaching its one-week high. Incidentally, since 4th June, the index has seen a total high of 15%. The European Central Bank announced their unlimited bond-buying plan and Federal Reserve also started their 3rd round of asset purchases at that time, helping the index to increase further.

The European Finance Ministers have mutually agreed to fill the $19.2 billion gap in the public account of Greece, according to reports. However, a decision is yet to be taken on how the gap will be filled. Three options are currently in minds of the ministers: extending the repayment deadlines, recycling ECB profits on the Greek bonds and charging Greece lower interest rates. Only last week, the lenders agreed to give Greece 2 more years to cut the budget deficit. However, that may well add up more money into the debt load of Greece and the proposal is in direct clash with the International Monetary Fund. According to the Prime Minister of Luxemburg, Jean-Claude Juncker, chances are high that a possible solution will be reached, but he cannot confirm anything, at least not at this point.

The National Benchmarks have seen an increase for 14 of the 18 Western European countries. The CAC 40 of France has climbed up by 0.7%, whereas, the FTSE 100 Index of Germany has increased by 0.2%. The DAX of Germany has climbed up by 0.7% as well.

Fiat SpA however suffered a drop of 5% and is priced at 3.31 Euros currently. USB AG announced that the renowned automaker from Italy will have to raise between 1.6 billion Euros and 2.9 billion Euros so that it can finance the purchase procedure of the remaining shares of Chrysler Group LLC. The biggest shareholder of Fiat, Exor SpA also slipped by 3.8% and is currently at 18.37 Euros. On the other hand, Deutsche Bank AG saw a dip of 1.4% in its share prices, whereas, Intesa Sanpaolo SpA shares decline by 1.1%.

Royal Imtech NV, which was one of the major infrastructure providers for 2012 European Championships, suffered a big slump of 11%. This is the biggest drop that the company has suffered in the last 4 years. The third-largest platinum producer in the world, Lonmin Plc saw a jump of 13% though. After Exane BNP Paribas predicted higher profit margins for Accor SA in future, the company’s share prices also increased by 3.4%.