Europe stocks shrug off Greek deficit, await data

AP News
Posted: Apr 26, 2011 8:40 AM
Europe stocks shrug off Greek deficit, await data

European stocks rose moderately Tuesday as traders returned from the Easter holiday to face a big week of economic data and shrugged at the latest bad budget news from crisis-stricken Greece.

After being closed since Thursday, Germany's Dax rose 0.5 percent to 7333.38. The FTSE 100 index in London was up 0.4 percent at 6045.32, while France's CAC-40 was up 0.3 percent at 4,035.30. Asian shares fell on disappointing U.S. corporate earnings.

U.S. stock futures rose ahead of the New York open ahead of another big earnings day, with the Dow up 0.3 percent at 12,467 and the Standard & Poor's up 0.4 at 1,336.4.

Ford Motor Co. provided positive news with profit of $2.6 billion for its best first quarter in 13 years, and 3M also beat forecasts and raised its outlook. Coca-Cola figures fell just short, however.

Greece's struggle with its heavy debt burden produced more downbeat headlines, with the European statistics agency saying the country's budget deficit rose last year to 10.5 percent of GDP, above the forecast 9.6 percent.

A sharper revision of Greece's budget deficit had launched Europe's debt crisis in late 2009, but this one was largely reported ahead of time in news media and priced in by the markets. The country has been bailed out by the European Union and the IMF and is still struggling to avoid having to restructure its debts.

Analysts at Credit Agricole said this revision's impact was lessened by improvements in Greece's formerly lax statistics keeping and by announcement of more cutbacks to address the increased deficit.

"On the bright side, now that Eurostat and IMF experts have labeled Greece's public finances data as more reliable, one could expect this revision to be the last of a long series, and the Greek government already announced additional austerity measures to offset the corresponding fiscal shortfall," they said.

While the trading week in Europe is shortened by the holiday, markets could face mixed signals from heavy data flow that includes a two-day U.S. Federal Reserve meeting beginning Tuesday, the key Standard & Poor's/Case-Shiller housing survey and U.S. consumer confidence figures. Meanwhile Germany, Europe's biggest economy, has earnings from Deutsche Bank AG, Daimler AG, Bayer, Merck, and SAP toward the end of the week.

The Fed meeting will be watched for confirmation the central bank will end its $600 billion program to expand the money supply through its bond purchase program known as quantitative easing.

April U.S. consumer confidence is expected to increase, although higher oil prices are limiting gains in optimism and willingness to spend, while markets expect the Case-Shiller index to show a continued slack housing market that has weighed on the U.S. recovery.

In Asia, Japan's Nikkei 225 index was down 1.1 percent to 9,568.27, with investors unloading blue chip shares ahead of what is expected to be a punishing earnings season. Nintendo Co. Ltd. announced Monday that its annual profit dropped for the second straight year as sales of its gaming devices fell.

Other major Japanese companies reporting this week include Canon Inc., Honda Motor Co., and Komatsu Ltd., the world's second-largest construction machinery maker after Caterpillar Inc. Canon shares were down 1 percent. Honda dropped 1.6 percent and Komatsu fell 1.5 percent.

Toyota Motor Corp. slumped 2.4 percent, a day after announcing its car production in Japan plummeted a staggering 62.7 percent in March due to a parts supply crunch following the earthquake and tsunami on March 11.

Elsewhere, South Korea's Kospi was down 0.6 percent to 2,204.51, and Hong Kong's Hang Seng dropped 1.1 percent to 23,865.91. Mainland China's Shanghai Composite Index lost 0.9 percent to 2,937.73. Benchmarks in Taiwan, Singapore, Indonesia and the Philippines were also down.

Weak earnings on Wall Street had pushed stocks lower on Monday. The Dow Jones Industrial Average lost 0.2 percent to close at 12,479.88. The Standard & Poor's 500 index lost 0.2 percent to 1,335.25. The Nasdaq composite edged up 0.2 percent to 2,825.88.

Kimberly-Clark, the maker of Kleenex and Huggies, dropped 2.7 percent after missing earnings estimates. The company also lowered its earnings forecast for the full year. Johnson Controls fell 2.8 percent, after saying it expects revenue to drop by $500 million in the third quarter because of the earthquake in Japan.

Benchmark crude for June delivery was down 12 cents to $112.16 a barrel in electronic trading on the New York Mercantile Exchange. The euro rose to $1.4618, up 0.3 percent on the day. The yen slipped 0.1 percent to 81.73 against the dollar.


Pamela Sampson in Bangkok contributed to this report.