European stocks advanced for a second day, trimming the Dow Jones Stoxx 600 Index's weekly decline, as China's industrial output and US retail sales and consumer confidence increased more than forecast.
BHP Billiton Ltd., the world's biggest mining company, and Xstrata Plc rallied with higher metals prices. ING Groep NV surged 1.6% after saying it will repay 5.6 billion Euros ($8.3 billion) of government aid. Randstad Holding NV surged 4% after CA Cheuvreux upgraded the world's second-largest staffing company.
The Stoxx 600 advanced 0.5% to 245.13, bringing its weekly drop to 1.5%. The measure has climbed 55% since 9 March, pushing the valuation to about 55 times its companies' reported earnings, near the highest level since 2003.
The Stoxx 600 fell for the first three days of this week as Spain's credit outlook was reduced to negative from stable by Standard & Poor's Ratings Services and Fitch Ratings downgraded Greece. The reliability of sovereign credit has come under increased scrutiny since 25 November, when Dubai World, a state- owned holding company, said it would seek a standstill agreement on its debt repayments.
The Stoxx 600 is heading for its biggest annual gain in 10 years after central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy.
European Union leaders said government stimulus measures should stay in place until the "recovery is fully secured."
GERMANY
German stocks advanced for a second day, with the benchmark DAX Index trimming its weekly decline, after reports showed US retail sales and China's industrial output grew more than economists forecast.
Linde AG surged 3.9% after Morgan Stanley recommended the world's second-biggest maker of industrial gases. BASF SE, the largest chemical maker, completed its longest stretch of weekly gains since 2008. Volkswagen AG rose 1.2% as the carmaker reported higher group sales.
The DAX added 0.8% to 5,756.29. The gauge posted a 1.1% drop this week. The broader HDAX Index also increased 0.8% Friday.
Linde jumped 3.9% to 85.60 Euros, its biggest advance since April. The company was raised to "overweight" from "equal-weight" at Morgan Stanley, which said "consensus is failing to recognize the recovery potential in sales in the medium term."
BASF advanced 1.9% to 43.04 Euros, completing its sixth week of gains. Chief Executive Officer Juergen Hambrecht may avoid making the company's first dividend cut for 16 years after an unexpected spurt in orders, analysts said. BASF is able to earn its cost of capital this year, Hambrecht's prerequisite for maintaining investor payouts.
Volkswagen, Europe's biggest automaker, added 1.2% to 81.67 Euros, capping its first weekly gain in almost two months. The company said group deliveries increased 19% to 531,300 vehicles in November from a year earlier.
Allianz, Europe's biggest insurer, rose 1.7% to 84.60 Euros. The company is optimistic on the outlook for directors and officers insurance after claims peaked and prices began rising in some industries, Allianz executives said.
K+S, Europe's biggest potash producer, advanced 1.6% to 42.25 Euros. The company sold new shares valued at 689 million Euros ($1.01 billion) to improve its balance sheet and secure an investment-grade rating.
RWE, Germany's second-largest utility, posted a second weekly gain and climbed 1.3% to 64.39 Euros Friday. The company will win back about 100,000 electricity clients this year, Chief Operating Officer Ulrich Jobs said.
Carl Zeiss Meditec surged 4.8% to 12.05 Euros, its biggest jump in a month. The maker of medical lasers to correct vision defects was raised to "add" from "hold" at Commerzbank AG and to "buy" from "hold" at UniCredit Markets & Investment Banking.
Separately, the company appointed Christian Mueller to the management board and as chief financial officer, with effect from Dec. 15.
Drillisch climbed 3.2% to 5.23 Euros, snapping a four-day drop. The mobile-phone company said it had become the sole shareholder of MSP Holding GmbH after it bought United Internet AG's stake in MSP.
ElringKlinger jumped 3% to 15.65 Euros as the German automotive supplier was rated "buy" in new coverage at Close Brothers Group Plc.
Fraport increased 1.3% to 34.93 Euros after the operator of the Frankfurt airport was raised to "overweight" from "neutral" at HSBC Holdings Plc.
Q-Cells slid 1.9% to 10.35 Euros, a third straight decline. The solar-cell maker was rated "sell" in new coverage at Hapoalim Securities.
Stada Arzneimittel fell 1.8% to 25.89 Euros, its biggest drop this month.
The German generic-drug maker was cut to "neutral" from "buy" at BofA Merrill Lynch Global Research, which said "while our buy thesis was partly predicated on positive German healthcare reform proposals and cost savings, we now believe these are largely priced in."
FRANCE
France's CAC 40 Index added 5.34, or 0.1%, to 3,803.72 in Paris, for a 1.1% decline this week. The SBF 120 Index rose 0.2% Friday.
Stocks sensitive to the economy gained as reports Friday showed China's industrial output grew more than economists estimated in November, sales at US retailers rose more than forecast last month and a gauge of US consumer confidence topped estimates this month.
PSA Peugeot Citroen, Europe's second-largest carmaker, climbed 2.3% to 23.75 Euros. European Aeronautics, Defence & Space Co., owner of planemaker Airbus SAS, gained 2% to 12.37 Euros.
Air Liquide SA, the world's biggest producer of industrial gases, rallied 1.2% to 77.7 Euros.
Club Mediterranee advanced 33 cents, or 2.4%, to 14.25 Euros, gaining for a second day this week. Europe's largest resort company said winter bookings in the past eight weeks are up 22%. Gilbert Dupont raised its recommendation on the stock to "buy" from "accumulate."
Entrepose Contracting jumped 2.47 Euros, or 4.3%, to 59.47, the biggest gain in about six weeks. The builder of pipelines and storage facilities won a contract from a unit of Exxon Mobil Corp. in Papua New Guinea.
LVMH Moet Hennessy Louis Vuitton climbed 1.35 Euros, or 1.9%, to 73.62, gaining the most in a week. The world's biggest maker of luxury goods was rated "overweight" in new coverage at Barclays Plc.
Meetic, Europe's biggest publicly traded Internet dating site, advanced 25 cents, or 1.4%, to 18.60 Euros, for the biggest gain in more than a week. The stock was raised to "buy" from "hold" at Berenberg Bank.
Thales added 1.06 Euros, or 3.2%, to 33.91, the biggest gain in nine weeks. Europe's second-biggest defense-electronics maker plans to make 1.3 billion Euros ($1.9 billion) in productivity gains as it shakes up management, cuts costs and improves handling of contract bids.
BELGIUM
The Bel 20 in brussels closed out the trading session and the week Friday at 2,487.38, up 0.15%.
Belgium's economy grew by 0.5% in the third quarter of 2009, in line with a flash estimate released in October, the country's central bank said on Wednesday.
On a year-on-year basis, the Belgian economy expanded by 3.4%, against the initial forecast of 3.5%, the central bank said.
The Belgian central bank on Monday raised its forecasts for economic growth in the country for this year and next. For 2009 it forecast economic contraction of 3.1% and for 2010 growth of 1.0%.
The contribution to GDP from the manufacturing sector rose by 1.0% in the third quarter against a 0.8% drop in the second and of services by 0.4% against a 0.1% fall.
Household spending improved by 0.2% in the third quarter, but capital investment fell by 2.0%, and by 1.8% among businesses.
Exports of goods and services rose 6.4%, while imports rose 5.7%
Franco-Belgian bank Dexia SA Wednesday said it has concluded a deal to sell Dexia Epargne Pension to BNP Paribas.
DEP, a 100% subsidiary of Dexia, offers life insurance products in France, principally to private clients, via some 60 distribution partners.
DEP employs 65 people, most of whom are located in Paris, Dexia said.
The sale of Dexia's insurance unit falls within the restructuring that was required after it received state aid during the financial crisis.
The transaction is subject to approval from the supervisory authorities and is expected to be finalized in the first quarter of 2010, Dexia said.
The profit made by Dexia from the sale will be recorded in the bank's accounts for the first quarter of 2010.
THE NETHERLANDS
In Amsterdam, the AEX rounded out a busy week on 320.14, a gain of 0.77% for the day.
Dutch telecommunications company Royal KPN said Wednesday it has extended its cash tender offer to acquire all the outstanding shares of iBasis Inc which are not held by KPN.
KPN has extended the expiration date of the tender offer in order to allow all of iBasis's investors additional time to participate in the offer, including investors who are required to provide instructions to tender through their bank, broker or other nominee.
The tender offer will now expire at midnight, New York City time, on Friday, December 18, 2009, unless further extended. All other terms and conditions of the tender offer, including the final offer price of $3.00 per share, remain unchanged.
The depositary for the tender offer has informed KPN that, as of midnight on Tuesday, December 8, 2009, approximately 23,112,954 shares have been tendered in and not withdrawn from the tender offer.
Together with the 40,121,074 shares already owned by KPN, this represents approximately 88.8% of the shares outstanding immediately prior to the expiration of the offer.
Fortis investors seeking to reverse the breakup of the financial-services firm lost a court bid to halt the integration of the former Belgian banking unit into BNP Paribas SA.
The Brussels Commercial Court rejected Friday demands from more than 2,000 Fortis investors to impose constraints on the integration of Fortis Bank SA/NV by Paris-based BNP Paribas. Judge Patrice Libiez also ruled the Brussels court can't keep the Dutch government from selling ASR Nederland NV, the former Dutch insurance unit of Fortis.
Giving in to demands from investors who hold less than 1% of Fortis shares would possibly have endangered financial stability in Belgium as Fortis Bank is still recovering from the banking crisis and is trying to regain confidence of its customers, the Brussels court said. Libiez also ruled the Dutch state and central bank are immune in Belgian courts.
The Brussels court also ordered Fortis to disclose some internal documents detailing the valuation of its former units in the breakup as well as some documents compiled for the voting procedures at the April 28 annual meeting in Ghent.
The Dutch central bank raised its economic outlook for 2010 on expectations that improvement in global trade would boost the country's exports.
The central bank now predicts the Dutch economy to grow 0.7% in 2010, a revision from a contraction of between 0.8% and 1.4% forecast in June. Growth is then expected to accelerate to 1.2% in 2011. In the current year, the economy would contract 4%. The Netherlands' economy exited recession in the third quarter by growing 0.4% sequentially.
Moreover, the central bank forecasts unemployment rate to rise to over 6.5% in 2011. Inflation in the next two years is expected to remain below 1% due to the decline wage growth. It sees inflation at 0.2% in 2010 and at 0.7% in 2011, down from 1% predicted for this year.
AUSTRIA
The ATX in Vienna closed out the day Friday at 2,489.08, dropping 0.11% on the day.
Italian tax agents and police carried out checks on branches of Austrian banks in Italy on Thursday, just weeks after raids on Swiss banking offices as part of a crackdown on tax evasion.
Italy's tax agency said in a statement that the operation was to verify banks were accurately reporting their relations with clients. Italy launched a tax amnesty earlier this year to recover billions of Euros illegally held in foreign tax havens.
Austrian industrial-lighting manufacturer Zumtobel said Wednesday its fiscal first-half net profit fell 41% because of the global economic crisis, fierce price competition and currency losses, and cautioned that demand hasn't yet bottomed out.
The company reiterated it intends to partly counter the sluggish demand by cutting Eur100 million in costs by the end of fiscal 2011, and said it managed to trim the first Eur47 million in the past 12 months.
"In spite of isolated positive signals, we are unable to report a turnaround in demand. We expect to see a further decline in revenues for the full 2010 financial year, although this should be more moderate during the second six months because of the lower prior-year comparative values," Zumtobel Chief Executive Andreas Ludwig said in a statement.
"Our ongoing cost savings efforts will help us generate positive operating results in the seasonally weaker second half of the year," Ludwig said.
Statistics Austria announced that the wholesale price index for November dropped 3% year-on-year, after a 6.2% decline in the previous month. The year-on-year decline in wholesale prices started in November 2008.
Month-on-month, the index rose 0.2% in November. In October, wholesales prices dipped 0.1%.
SWITZERLAND
Zurich's SMI finished a hectic week at 6,411.58, up a fraction of 0.01% for the session Friday.
Philipp Hildebrand, hedge fund manager turned central banker, is setting his sights on the dangers posed by UBS AG and Credit Suisse Group AG to the Swiss economy.
Hildebrand, who takes the helm of the Swiss National Bank next month, is pushing what he calls a "no-more-taboos" stance after decades in which Switzerland's banks were treated more with reverence than regulation. A year after the financial crisis forced a government bailout of UBS, the 46-year-old is signaling a willingness to be tougher than foreign counterparts and that he may go as far as to break up a bank if needed.
Credit Suisse and UBS have assets six times the size of the economy, a source of unease for a country that relies on the perception of stability to attract wealthy investors. While banks have indicated they'll fight any laws putting them at a disadvantage, Hildebrand has said that the size of the Swiss financial sector doesn't only call for faster but also stricter rules in the Alpine nation.
The SNB, which tomorrow holds its last policy meeting under President Jean-Pierre Roth before Hildebrand takes over on Jan. 1, will probably keep its key rate at 0.25%, according to all 16 economists in a Bloomberg News survey. The bank will release its decision at 9:30 a.m. in Zurich.
Hildebrand, who previously worked for hedge fund company Moore Capital Management, also faces the challenge of withdrawing unprecedented stimulus measures without derailing an economic recovery from the worst slump in over thirty years or stoking inflation. As the economy recovers, the SNB may phase out its purchases of foreign currencies aimed to keep the franc from appreciating.
Switzerland's unadjusted jobless rate rose to 4.2% in November from 4% recorded in October, the State Secretariat for Economic Affairs said Wednesday. That was in line with economists' expectations. At the same time, the seasonally adjusted jobless rate stood stable at 4.1%.
On an unadjusted basis, there were 163,950 unemployed people at the end of November, up 581,2 from October. Unemployment among youngsters rose 153 persons from October to 293,36. There were 226,116 jobseekers in November, an increase of 814,4 from the previous month. A total of 129,36 vacancies were reported in November, down 211 month-on-month.
Switzerland's Federal Statistical Office announced that the consumer price index or CPI remained unchanged in November, compared to a 0.8% fall in the previous month. Economists were looking for a decline of 0.1%. A year ago, the CPI was up 1.5%.
On a monthly basis, the CPI increased 0.2% in November, slower than the 0.6% growth in the preceding month. Economists expected a flat reading for November.
Switzerland's seasonally adjusted retail sales rose 1.3% month-on-month in October in real terms, the Federal Statistical Office reported Monday.
In nominal terms, growth was 0.7%.
Excluding fuel, retail sales rose real seasonally adjusted 1.4% on a monthly basis and climbed 1.4% nominally. Retail sales of food, drinks and tobacco registered an increase of real 1.9% and the non-food sector showed positive growth of 1.6%.
On an annual basis, not seasonally adjusted retail sales grew 3.1% in real terms in October and increased 2.1% in nominal terms.
SWEDEN
The OMX in Stockholm brought the week to an end at 949.84, up 0.26%.
Deutsche Bank has upgraded its share price targets on six Swedish industrial companies and has reaffirmed its rating at "hold" for four of them and at "buy" for the other two.
The target on Assa Abloy has been hiked to SEK140 from SEK130, that on Sandvik to SEK90 from SEK85, on Trelleborg to SEK55 from SEK45, and on Alfa Laval to SEK95 from SEK85. All four companies got their "hold" ratings maintained.
At the same time, Deutsche Bank kept its "buy" recommendation for Atlas Copco and AB SKF, while raising the companies' targets to SEK120 from SEK105 and to SEK145 from SEK135, respectively.
Statistics Sweden announced that the industrial production dropped 16.1% year-on-year in October, faster than the 12.5% decline expected by economists.
On a monthly basis, industrial output declined 2.7% in October, slower than the 0.9% growth expected by economists.
In the August to October period, industrial production decreased 1.3% compared to the May to July period.
They also announced that the industrial new orders decreased 13.3% year-on-year in October, compared to the 12.9% fall in the previous month, revised from 12.1% decline reported initially.
On a monthly basis, industrial new orders increased 1.5% in October, faster than the 0.4% growth in the preceding month.
For the August to October period, new orders increased 1.4% compared to the previous three months period.
The activity index, which measures activity in the Swedish economy, dropped 0.28% in October, after falling 0.31% in September. The index decreased to 102.61 from 102.90 in September.
Year-on-year, the index on a trend basis, slipped 3.31% in October, following 3.61% fall in September.
On a seasonally adjusted basis, the activity index increased 0.31% in October, compared to the 2.91% fall in the previous month.
The statistical office said the decrease in the index was mainly due to a fall in exports of goods and industrial production.
Swedish central government payments showed a surplus of SEK 6.7 billion in November, the Debt Office reported Monday. This was smaller than the SEK 13 billion surplus estimated by the Debt Office.
The report showed that net lending and interest payments on central government debt were SEK 4 billion and SEK 0.1 billion higher than calculated. At the same time, tax payments were SEK 3 billion lower than estimated. And, disbursements from authorities were SEK 1 billion lower than forecast.
For the twelve-month period up to the end of November, central government payments resulted in a deficit of SEK 191 billion. Central government debt amounted to SEK 1,115 billion at the end of November.
NORWAY
Oslo's OBX completed the week at 330.82, down 0.16% for the Friday session.
More than 933,000 passengers travelled with low-fare airline Norwegian in November. This an increase of more than 200,000 passengers, or 28% compared with November last year.
Norwegian November daily oil production rose slightly to 2.064 million barrels a day from October's 2.009 million barrels, preliminary figures from the country's Petroleum Directorate showed Wednesday.
Figures also indicated output of 344,000 barrels a day of natural gas liquids and condensate in November, down from 351,000 barrels in October.
In October, final figures for total oil and gas output show 19.8 million cubic meters of oil equivalents were produced, 1.4 million less than in October 2008.
Production from Snoehvit was reduced in October due to planned maintenance, while the Vigdis and Snorre fields were also operating below capacity, the NPD said.
In January to October, average daily production was about 2 million barrels of oil, or 197.2 million cubic meters in total, which is 0.6 million cubic meters more than the same period last year.
The NPD said production from the Snoehvit and Vale fields was closed for planned maintenance and technical problems. "The Volund field is waiting for capacity on Alvheim and is closed for the time being," it said.
Final figures for November production will be published at the beginning of January, the NPD said.
Industrial production in Norway dropped a seasonally adjusted 1.1% month-on-month in October, in contrast to the 1% rise in the previous month, Statistics Norway reported on Monday.
Manufacturing, mining & quarrying output fell 1.5% on month in October, reversing the 2.3% gain in the preceding month. Economists had expected manufacturing, mining & quarrying production to rise 0.4%.
On a yearly basis, industrial output dropped a working day adjusted 4.9% in October. Manufacturing production dropped 5.3%, steeper than expectations for a 3.7% decline.
In a separate report, the statistical agency said that manufacturing turnover increased 1.7% month-on-month in October, rebounding from the 1.2% decrease in the previous month. Turnover grew by 2% in the domestic market and by 1.8% in the export market.
DENMARK
In Copenhagen, the OMX ended on 332.00, up 0.04% on the day.
The Danish economy is headed for a gradual but modest upturn, though it will take many quarters to regain pre-crisis output levels, Denmark's central bank said on Thursday.
The Nationalbank said in a quarterly economic review that several indicators pointed to a stabilisation of the Danish economy in the third quarter.
"Looking forward, the emerging economic turnaround abroad can contribute to pulling up activity in Denmark through increased exports," the bank said.
"A gradual upswing with modest growth is expected," it said, but it did not provide new numerical forecasts for the economy which has been suffering from its worst downturn since the Second World War.
"It will take many quarters before last year's loss of production is recovered, so unemployment is expected to continue to rise," it added.
The bank, whose monetary policy aims to keep the crown currency stable against the Euro, said the crown had been stable in recent months near its central parity though demand for crowns had increased.
The bank's mandate is to keep the crown within a narrow band to the Euro around its central parity of 7.46038 and between 7.62824 and 7.29252.
The bank said that demand for the crown in the foreign-exchange market led it to buy considerable amounts of currency, but it added that its interventions in the market had decreased markedly since its last interest rate cut in September.
The Nationalbank's main policy interest rate, the lending rate, stands at 1.25% after 11 cuts totalling 425 basis points since November 2008 when the global economic crisis deepened, dragging Denmark's economy with it.
The bank said that the government's 2010 budget and earlier decisions meant that fiscal policy would be expansive next year.
It said that lax policy underscored a need for the central government to come up with a medium-term plan for consolidating public finances in the years ahead.
"Such a plan should not only include a target for consolidation, but also show the means that will be used to achieve the planned improvement in fiscal policy," it said.
"That would strengthen the credibility of fiscal policy and reduce the risk of widening rate spreads to rates abroad as a consequence of the fast build-up of debt," it said.
The bank's quarterly review came a day before the government is scheduled to publish a review of its 2010 budget proposal from August.
Statistics Denmark announced that the seasonally adjusted trade surplus stood at DKK 3.6 billion in October, down from DKK 6 billion surplus in the previous month.
Exports dropped 16% year-on-year to DKK 40.5 billion in October, while imports fell 21% to DKK 36.9 billion.
On a monthly basis, exports dropped 1.3% and imports increased 5.3% in October.
Meanwhile, the trade surplus, excluding ships, etc. amounted to DKK 6.9 billion in October, down from DKK 7.2 billion surplus in September.
On a monthly basis, exports and imports decreased by 1.2% and 0.6%, respectively in October. Year-on-year, exports decreased 15.8% in October, while imports dropped 26.9%.
SD also said in a report that the current account surplus amounted to DKK 5.5 billion in October, up from DKK 3.1 billion surplus in a year ago. However, the current transfers showed a deficit of DKK 2.5 billion.
In the August to October period, the current account surplus was DKK 8.6 billion.
FINLAND
Helsinki's OMX rounded off the day at 6,239.68, up 1.07% and one of the best performing European markets Friday.
Workers in the finance industry will begin strike action next Monday.
The industrial action follows the rejection by unions of a compromise proposal to resolve a dispute over salaries and terms of work.
The Federation of Finnish Financial Services FKL said that although no teller service will be available at bank counters, cash dispensers, essential online services and card transactions should continue to function normally. Salaries, pensions and social support payments will also be deposited into customers' accounts as usual.
The Finnish Social Insurance Institute Kela previously indicated that pension and disability benefit payments normally due on December 14th would be paid on December 11th.
On Wednesday Suora, which represents in the finance, insurance, gaming and alcohol sectors; Rahoitusleijonat, which represents Sampo Bank employees and the Federation of Professional and Managerial Staff YTN, turned down a proposal put forward by the state labour mediator, claiming that they were not satisfied with the proposed salary increases.
"We wanted to apply the regular sectoral contract negotiations based on our specific needs and salary capabilities, so that we would get good results from the banks in addition to salary increases that are rightfully due to workers," explained Suora President Tarja Lankila.
Representing the employer across the bargaining table, the Federation of Finnish Financial Services was prepared to accept the offer. Heikki Vitie, Chair of FKL's Labour Market Board said he was disappointed by the outcome of the negotiations.
"We hoped the labour representatives would have shouldered their responsibilities in these difficult economic circumstances. The offer was the most reasonable from every point of view, and would have allowed us to safeguard industrial peace in the sector," he said during a briefing.
Some 30,000 workers in the financial sector will down their pens in the industrial action, including supervisors, specialists and professional staff.
Finland's industrial production rose 2.2% month-on-month in October, the Statistics Finland said Thursday. It follows a 1.3% drop in September. A year ago, production was down 1.9%.
On an annual basis, industrial output was down 18.9% in October, slightly slower than the 22.7% decline recorded in the previous month.
Industrial output has been falling since November last year.
Outotec Oyj of Finland has Friday acquired 19.9% of the issued share capital of Ausmelt at a price of 85 cents per share from interests associated with Dr John Floyd.
Dr Floyd is the inventor of Ausmelt's top submerged lance (TSL) smelting technology and founder of the Ausmelt business. He is deputy chairman of Ausmelt.
Outotec is a leading global provider of process solutions, technologies and services for the mining and metallurgical industries. Outotec's technologies and services cover the whole production chain of processing minerals to metals. With a history of over 100 years in its antecedent metal companies, Outokumpu and Lurgi Metallurgie, Outotec is a major force in the global mining and metallurgical industry.
SPAIN
The IBEX in Madrid finished the week at 11,616.00, up 0.18%.
Wednesday, rating agency Standard & Poor's revised its credit rating outlook on Spain to negative from stable and affirmed the 'AA+' long-term and 'A-1+' short-term sovereign credit ratings. The agency said the country will experience a more pronounced and persistent deterioration in its public finances and a more prolonged period of economic weakness versus its peers.
"The change in the outlook stems from our expectation of significantly lower GDP growth and persistently high fiscal deficits relative to peers over the medium term, in the absence of more aggressive fiscal consolidation efforts and a stronger policy focus on enhancing medium-term growth prospects," Standard & Poor's credit analyst Trevor Cullinan said.
The agency warned that deflationary pressures could be more persistent in Spain than in most other Eurozone sovereigns. Such pressures would further slow the pace of fiscal consolidation in the medium term.
Spanish fashion retailer Inditex SA, the owner of Zara, beat forecasts Thursday with a 1% fall in net profit in the first nine months of the fiscal year, as its ambitious international expansion program pushed costs higher while sales stayed weak in its Spanish home market.
Europe's largest fashion retailer by revenue ahead of Hennes & Mauritz AB said net profit in the nine months to Oct. 31 fell to €831 million ($1.22 billion) from €843 million a year earlier. Revenue rose 6% to €7.76 billion from €7.35 billion. Operating costs increased 7.2% to €2.87 billion, mainly due to store expansion.
Analysts surveyed by Dow Jones Newswires had expected net profit of €814.8 million on revenue of €7.82 billion.
Inditex, owner of brands like Bershka, Stradivarius, Pull & Bear and Massimo Dutti, said sales between Aug. 1 and the first week of Dec. 6 rose 9% when measured in local currencies. Its top brand, Zara, recently rolled out a fall-winter collection dominated by dressy black garments for men and "romantic" Victorian style cream-colored shirts for women.
While it scaled down expansion this year due to the global economic downturn, the Galicia, Spain-based company still opened 266 stores in the first nine months of its fiscal year, of which 90 were opened in Asia. Recent launches include a new flagship store on Chicago's Michigan Avenue and one in Tokyo's trendy Shibuya district.
PORTUGAL
Lisbon's PSI General completed the day on 2,802.16, up 0.61%.
Portuguese infrastructure company Mota Engil SGPS said it is in talks to buy stakes in two Latin American companies as it seeks to diversify out of Portugal and into faster-growing economies.
In a regulatory filing, the company said its waste management unit, Mota-Engil Ambiente e Servicos, is finalizing negotiations to buy a 50% stake in a Brazilian peer. It didn't disclose the name of the company.
Mota Engil also said its construction unit is in talks to buy a builder in Mexico in association with Opway, an unlisted Portuguese builder. The filing came in response to local media reports about Mota Engil's interest in the region.
In a separate regulatory filing released late Wednesday, the company said it will spend a maximum of Eur30 million in its potential investments in Brazil and Mexico in 2010.
Statistics Portugal said in a report that the trade deficit stood at Eur 4.76 billion in the August to October period, narrowing from Eur 6.09 billion deficit recorded in the same period last year.
During the period, exports dropped 14.3% to Eur 7.65 billion, while imports declined 17.4% to Eur 12.41 billion.
They also announced that the industrial new orders decreased 21% year-on-year in the quarter ended in October, compared to the 25.5% fall in the quarter ended in September.
Industrial new orders in internal market fell 14.5% annually in the three months ended in October, slower than the 19.8% fall in September. At the same time, new orders in external market fell 27.1% versus 31% decline in the previous period.
The gross domestic product or GDP increased 0.7% sequentially in the third quarter, faster than the 0.5% growth seen in the previous quarter.
The GDP in third quarter was revised from 0.9% increase reported initially.
Year-on-year, the GDP decreased 2.5% in the third quarter, compared to the 3.7% fall in the preceding quarter. The third quarter GDP was revised from 2.4% decline estimated earlier.
ITALY
Italy's benchmark FTSE MIB Index gained for a second day, adding 25.84, or 0.1%, to 22,411.51 in Milan. The gauge fell 2.2% this week.
Atlantia rose for the first time this week, adding 27 cents, or 1.5%, to 17.8 Euros. Europe's largest toll-highway operator said it completed a private placement of corporate bonds worth 20 billion Yen ($219 million).
The bonds have a maturity of 29 years and pay a fixed semi- annual coupon, the company said. "The cash raised as a result of the issue will be used to meet the funding requirements of Autostrade per l'Italia in connection with the investment plan envisaged in its concession agreement," Banca Imi said in a note. The brokerage kept a "buy" rating.
Autogrill, the world's biggest manager of airport restaurants, advanced the most in a week, adding 20.5 cents, or 2.4%, to 8.66 Euros. Intermonte Sim SpA reiterated an "outperform" recommendation on the stock, citing BAA Ltd.'s airports traffic data for November.
Banca Popolare di Milano slid 6 cents, or 1.2%, to 5.06 Euros. Financial stocks were the worst performers in Europe, led by Greek banks. Greece and Ireland are among countries in an "intolerable" economic situation, which may lead to bailouts or even an exit from the Euro area by the end of next year, according to Standard Bank Plc.
Banco Popolare fell 14 cents, or 2.6%, to 5.31 Euros. UniCredit SpA (UCG IM) retreated 3.25 cents, or 1.4%, to 2.27 Euros.
Exprivia advanced 5.8 cents, or 5.1%, to 1.19 Euros, the highest in almost a month. The developer of computer software said Thursday after the market closed that it won an 11 million-Euro ($16.2 million) contract to supply an integrated system for managing data and images in radiology and cardiology for the hospitals of Asti and Nizza Monferrato.
Italcementi, Italy's largest cement maker, rose 25 cents, or 2.7%, to 9.44 Euros. Turkey's domestic cement sales will increase 3% to 5% in 2010, in line with expected economic growth, Vatan reported, citing Adnan Ignebekcili, head of the country's cement producers' association.
Separately, Carillion Plc, Britain's second-largest construction company, advanced after forecasting earnings will increase.
Piaggio & C. added 3.4 cents, or 1.9%, to 1.85 Euros. Equita Sim SpA increased its price estimate on the scooter-maker by 4% to 2.28 Euros, saying in a note that "short-term news flow should be boosted by growth in Vietnam" and the "strong Indian market." The brokerage reiterated a "buy" rating.
Prysmian increased 30 cents, or 2.6%, to 11.7 Euros, a second day of gains. Shares of the world's second-biggest cable maker advanced as metal prices rose.
GREECE
The ATHEX Composite in Athens ended a tumultuous week at 2,160.68, down 2.41% for the day.
The Fitch Ratings downgraded Greece's Long-term foreign currency and local currency Issuer Default Ratings on Tuesday, citing concerns over the medium-term outlook for public finances. It was the first time in ten years a leading ratings agency put Greece below a rating of A grade.
The rating agency lowered long-term foreign currency and local currency IDRs to 'BBB+' from 'A-', with negative outlook. The European Central Bank's relaxed rules currently allows the bonds rated 'BBB-' as collateral for loans. The Short-term foreign currency IDR was downgraded to 'F2' from 'F1'. The Country Ceiling was affirmed at 'AAA', in line with the common country ceiling for Euro area sovereigns.
The agency estimate that the government debt burden would possibly increase to close to 130% of GDP before stabilizing. At the same time, the agency holds the view that the government's target to narrow the fiscal deficit by 3.6 pp of GDP to 9.1% in 2010 is achievable.
"Fitch recognises the efforts that the government has made to improve fiscal transparency and understands that further measures will be announced in January 2010 to support the reduction in the fiscal deficit to 3% of GDP by 2013 as recommended by the EC under the EDP, including supplementary fiscal measures to underpin realization of the 2010 Budget deficit target," the agency said.
Earlier this week, Standard & Poor's has kept Greece's A- long-term sovereign rating on a negative credit watch. The rating agency said the Greek government's fiscal consolidation plans are unlikely to secure a sustained reduction in fiscal deficits and the public debt burden.
Greek Finance Minister George Papaconstantinou said there is "absolutely" no risk that the country will default on its debt, seeking to ease the concerns of investors after Greece had its credit rating cut on Tuesday.
"We're moving swiftly to reassure citizens and markets that we're moving in the right direction," Papaconstantinou said. The minister also said that Greece will not seek a European Union aid package.
Greek 10-year government bonds fell. The difference in yield, or spread, over German bunds widened 7 basis points to 228 basis points as of 8:43 am in London. Greece's Athens Stock Exchange General Index declined for a third straight day, falling 2.3%, with National Bank of Greece SA, the largest lender, losing 4.4% to 17.4 Euros.
Papaconstantinou said there is no risk to the Greek banking system as the banks are "fundamentally sound".
Greece's socialist government, elected in October, plans to cut the budget deficit to 9.1% of gross domestic product next year from 12.7% this year. Papaconstantinou, an economist with studies from the London School of Economics and 10 years at the Organization for Economic Cooperation and Development, is fending off criticism from the European Union and investors that he is not doing enough.
The Greek government budget plans, including one-off measures and a partial freeze on public-sector pay, "are unlikely by themselves to alter Greece's medium-term fiscal dynamics" given the prospects of high deficits, debt and sluggish economic growth, S&P said.
Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since World War II.
U
China's industrial production grew more than economists estimated in November, exports fell the least in 13 months and imports surged, confirming the nation's role as leader of the world recovery. 
