Euro Watch

EasyJet Plc is the second largest low cost airline of Europe which has to do a tight rope walk in the face of rising fuel prices in the market. According to Andy Harrison, the Chief Executive officer of EasyJet the low cost air carrier is under pressure which has prompted the company to purchase contracts for jet fuel at great prices for the next year. The CEO said that if the fuel prices maintain their current price levels it will cause a great stress on almost all airlines during an interview on Wednesday. He further said that the company at present is hedging for the next year but the price it has to pay is much higher.

The single largest cost for EasyJet is fuel and oil which has been over $100 a barrel over the five of last seven days at the Mercantile Exchange in New York. EasyJet is planning a 20% increase in its pretax profit for the financial year from September 30 and it is 40 percent hedged at about $735 a metric ton of jet fuel when evaluated against its last year’s average of $688. The CEO, Harrison while speaking at the company’s base at London Luton airport said that EasyJet is striving hard on its non fuel expenditure, he further said that it is difficult to immediately come up with new ways of cost cutting when the fuel prices rise. The company plans a 50% hedge which means that the airline will purchase contracts which promise a constant fuel price on a regular twelve month basis, the CEO further explained. This strategy of the company according to the CEO is safer and better than guessing about the direction the oil prices will take to.

The CEO also added that the aim of the company is not to have an outlook of the market and said that the company will be purchasing 1.3 million metric tons of jet fuel for the current year. The strategy of hedging is in place to ensure that there is a cushioning against the volatility of the oil prices in the market. In the stock market the shares of EasyJet also recorded a drop as they declined by 2.8% or by 12.5 pence to 442.5% and this was the share’s greatest decline in 20 days.

The shares of EasyJet were the most unsuccessful shares on the Bloomberg Airlines Index for the day. The net worth of EasyJet is about 1.86 billion pounds or $3.7 billion. In the last 12 months the stocks dropped by 33% as against the 26% decline on the European airlines index. The largest low cost airline of Europe, Ryanair Holdings Plc jumped by 49% at the market. An analyst with Ryanair Holdings Plc Chris Avery said that many of the published forecasts for the airlines do not state a barrel of oil at $95 to $100 and the fallout can be financially bad for many carriers. EasyJet CEO Harrison also pointed out that each ten dollar rise for the oil barrel results in 60 million pounds or $119 million in the operating costs of the airlines.

Tags: European Economy News by Michael Greene
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The Munich based Siemens which is the biggest engineering and technology company will be cutting as much as 3,800 jobs all over the world following its failure to attract a buyer for its unit called Siemens Enterprise Communications or SEN. The company confirmed the announcement of the job cuts on Tuesday at its Munich HQ. The proposed job cuts of Siemens in Germany alone will be 2,000. In addition to this job cut the company is also planning to cut down on its 3,000 workers in two ways, it will either sell its factories or can also enter into partnerships with companies. Among these proposed cuts, job cuts in Germany are expected to be 1,200. Siemens seems to be reshuffling the communications division so that it can woo a buyer and also avoid the repetition that afflicted its mobile unit.

By the time Siemens sold the unit to Benq of Taipei in 2006 it was suffering losses amounting to €1 million every day. The Taiwanese company also had to suffer from bankruptcy after it bought the company which resulted in great layoffs. The company told that it will begin negotiations with the representatives of the employees very soon and would attempt to come up with a social plan for the workers who would be suffering from job cuts. Joe Kaeser, the chief financial officer of Siemens told in a statement that the company will speed up the reshuffling of Siemens Enterprise Communications and the other related reorganizing measures which are under Siemen’s control so that the personnel steps related to the reshuffling could be socially optimum. There are as many as 17,500 individuals who work for the SEN telecommunications unit. The SEN earlier was known as Siemens Enterprise Networks and Siemens had been trying to sell the unit for quite a long time now. The engineering and technology giant also said that it was talking to three potential buyers for the unit.

The unit’s Munich head quarters will be the worst sufferers by the job cuts and as many as 1,700 workers will be handed over their walking papers. Siemens said that SEN would let go of its manufacturing activities either by selling or getting a third party to operate its Leipzig factory which employs 530 workers. The company further added that it would also sell or get new partners to run its production units located in Thessaloniki, Greece and Curitiba, Brazil. A statement issued by the company said that there is also the possibility of closing down the facilities located in these regions. The savings program initiated by the company seemed to be approved by the German stock market on Tuesday because the shares of the company gained by 2% in the early trading hours. The corporate sector of Germany in 2006 witnessed the largest corruption scandal at Siemens which affected it badly. The corruption scandal of Siemens forced the Siemens CEO Klaus Kleinfeld to resign. Former Chairman Heinrich Von Pierer also had to put down his papers owing to the scandal.

Tags: European Economy News by James Gardner
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The Safilo Group SpA holds the distinction of being the world’s second biggest eyeglass frame maker climbed to its highest position in over seven weeks when the group announced that it anticipated significant growth in its dividends. The growth which Safilo registered was almost 16.8% and it grew by 34 cents, the stocks closed up at 10.8% at 2.23 euros in Milan. The fresh increase in the stocks is the highest since last month and with this increase the total market worth of the group stands at about 636 million euros or $943 million. Head of equities with Centrobanca in Milan Pio De Gregorio said that such levels of the stock are good-looking in the medium term especially for luxury items and the supplementary demand coming from Asia is a significant balancing element for the sluggish US and European demands.

Claudio Gottardi, the Co-Chief Executive Officer of the group during her interview in Milan expressed that the company wants to increase its dividends by as much as 36% which was also the company’s net profit increase last year. The Safilo group is improving the margins by reorganizing its methods of producing eyewear; the group is also focusing on the expansion of its retail activities by acquisitions and also having its own stores. The Co-Chief Executive further added that the company is waiting for the final figures and he also added that the group will be capable of presenting a significant raise for the current year’s dividend. Claudio Gottardi further added that the increase can be even a bit higher than the percentage growth in net income. The Co-CEO further added that that company expected flat sales for itself in the US for the current year. Sales for the Safilo group in Spain and Italy can decline but sales in the other European nations either improved or remained stable.

The net income for the Padua Italy based group increased by 36% to 51 million euros from 37.5 million euros in 2007. The company recorded revenue of 1.19 billion euros from its earlier 1.12 billion euros in 2006. The group also told that income before interest, taxes, depreciation and amortization can rise to 18% of the sales for 2008 which will be an increase from 15% recorded last year. Safilo and its competitor company Luxottica Group SpA are cashing in on demand for luxury items through signing agreements so that they can make eyeglass frames under license. For the Safilo group its net income comes from accords signed with companies like Gucci Group NV, Giorgio Armani SpA and LVMH Moet Hennessy Louis Vuitton SA.

The Safilo is also putting in investments in the brands owned by the group itself such as Carrera sunglasses. The group will be opening a factory in China in the current year and there will be old as well as new stores opened in Shanghai, Beijing and Hong Kong. However the retail expansion of the group will be done with its brand called Solstice sunglass.

Tags: European Economy News by Michael Greene
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The fear of globalization is not only haunting developing nations but also continents like Europe. However with the study of the European labor market the picture of Europe against the backdrop of globalization is quite encouraging. Globalization means increased trade and the burning issues like outsourcing and offshoring instead of job cuts can increase more jobs in the advanced economies such as in West Europe. The European Economic Advisory Group, which comprises of academics from Europe and the Ifo institute in Munich which organizes this group argued in favor of globalization and said that even if globalization means decline in the demand of particular skills but at the same time this phenomenon can clear the rigidities in labor market which destroy jobs. The result of the study by the group indicates that the positive outcomes of globalization far outnumber the negative aspects of globalization.

Even though the group’s statistical data is unfinished it does indicate that globalization will definitely result in long term increase in employment. The report also said that given the results of the study globalization instead of being a curse to employment in Western Europe can in fact be a blessing for the continent. However the thing to worry about according to the study of EEAG is that the gains secured from globalization are most likely to be unevenly distributed in the region. Individuals with higher skills and riches stand to benefit from globalization and individuals with lower skills can turn losers and will have to face tough competition foreign labors as well as immigrants. If nations profit from trade it will also have its side effects in the form of growing inequality.

The European Economic Advisory Group urged to the governments that they should not have policies which strive to maintain equality in employment and wages against the background of competition from abroad. The group also suggested that the government on the contrary should see that the profits gained from globalization are distributed fairly in their nations and the other responsibility which the governments must perform is to see that the sections of society which will otherwise lose in the wake of globalization get their share of the profits secured from globalization. The group was highly critical and even attacked German leadership’s policies that gave higher minimum wages which according to the group would tempt people to opt for unemployment. The higher benefits gained from unemployment will make unemployment attractive to people, the group also added. Instead of such policies the group recommends lessening the impact that would result for individuals who will be doing jobs which are no longer viable in rich nations.

The EEAG also recommends that leaderships should concentrate more on retraining schemes, and compensation for individuals who would be accepting new employment that offer lower wages, as well as support severance compensation for displaced employees. However some past economic studies have found that there is a definite link between loss of employment and globalization and the group argues that such results were incomplete.

Tags: European Economy News by James Gardner
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The notes of European government recorded the greatest drop in four years as traders were concerned about speeding inflation rates in the region which will affect the policy makers of central bank in their scope for cutting rates on interest. The impact was mostly felt in the two year government notes because they are most vulnerable to rate changes. The two year government notes dropped lowest for a second consecutive week owing to investors backed up citing that the ECB will decrease its main rate which earlier stood for a six year high. According to the reports for the week the rate of inflation especially in countries like France and Germany accelerated at a faster rate which was more than economists had estimated.

The increase in the prices of food and energy was the main reason for the accelerating inflation in these countries the report also stated. Chief of investment grade debt strategy at ING Bank NV in Amsterdam Padhraic Garvey said that the figures of inflation led investors to back up their bets wagered on interest rate cuts. The chief also added that this drop does not affect his views on the bigger picture and he also said that he expected the current year to be a sluggish environment for growth and returns will further begin to drop from its current standing. The return on the two year note increased by 23 basis points and stood at 3.34% which was the highest position for it since April 2004. The value of the 4% security which will mature in 2009 also dropped to 0.40 that is 4 euros per 1,000-euro or $1,484 face amount, to 101.12 and stood at 101.12. According to Garvey’s estimate the return on the notes will decline to 3% by month of June in the current year. Returns progress opposite to bond prices.

Germany is Europe’s biggest economy where as per a government report, annual producer prices increased by 3.3% which was the fastest rise in thirteen months. Consumer prices in France shot by an annual 3.2% which was a rise from its earlier 2.8% in December according to the national statistics bureau Insee and this data is calculated on EU harmonized system. This rise is the fastest since the year 1996. The return on the ten year Bund of Germany, which is considered as the standard for Europe gained by four basis points and stood at 4%. The longer dated bonds generally give higher yields as against the shorter dated bonds and this is when the traders calculate that the central banks will maintain their higher rates to tame inflation.

ECB’s borrowing costs dropped when the expected returns on the Euribor futures contract for June rose to 18 basis points and stood at 4.09% in last week. The inflation prospects increased as calculated by the return difference between nominal and index-linked bonds. The breakeven rate for the ten year inflation protected notes of France, which is also the standard for Europe gained by as much as 2.22% which is the record gain since last month.

Tags: European Economy News by Vanessa Clark
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The European Commission cut its forecast for economic growth and raised its projection for inflation, reflecting the dilemma facing the European Central Bank. The economy of the 15 nations that share the euro will expand 1.8 percent this year, which is 0.4 percent below the rate predicted in November and the weakest since 2005. Inflation will average 2.6 percent, which is an increase from the previous estimate of 2.1 percent, the strongest since the euro began trading in 1999. The lethal combo of weakening expansion and rising inflation complicates the work of ECB, as it seeks to shield its economy from a US slowdown, without surrendering its campaign to restrain price pressures. The commission announced that economic activity is set to moderate, but the risks to the growth forecast remains sizeable.

The U.S slowdown is combining with costlier credit along with oil prices rising to about $199 a barrel and a rising euro to curb expansion. At the same time, higher energy prices and more expensive food are fanning inflation. Such risks prompted ECB President Jean–Claude Trichet to warn that stronger inflation and weaker growth, both were risks to economy. This was in stark contrast to his previous view that price pressures were the greatest threat. The central bank has left it’s benchmark interest rate at a six-year high of 4 percent since June and investors predict it will follow the Federal Reserve in easing credit by the end of second quarter.

Heineken NV, the Dutch brewer, announced that second-half profit fell by a third as slower economic growth in the US prevented the company from increasing prices in an effort to offset the rising cost of barley, metal and power. As a result, shares posted the biggest drop since 2003. The jump in credit costs from the collapse of the US subprime–mortgage market has sparked losses in stock markets around the world as Wall Street firms revealed $146 billion in losses on their debt holdings. Global stocks have lost more than $6 trillion this year. The commission’s growth forecast is more optimistic than the 1.6 percent prediction of the International Monetary Fund and the 1.7 percent median estimate of economists surveyed by Bloomberg News.

ECB releases new forecasts on March 6. Record–low unemployment, a balanced current account and “comparatively” low government budget deficits have cushioned the economy, the commission had said. In a review of individual economies, the commission slashed its forecast for growth in Italy by half to 0.7 percent amid a decline in confidence among executives. It predicted Spain would witness a “soft landing”, even as its real-estate market fades, with a growth of 2.7 percent this year, which is lower than its previous estimate of 3.0 percent. The commission said that weaker international growth explained its decision to cut its prediction for expansion in Germany from 1.6 percent to 2.1 percent and that for France from 1.7 percent to 2.0 percent.

Tags: European Economy News, European Union News by Michael Greene
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Mobile phones have long begun conquering parts of the world that are far from the nearest electrical substation. However, the rising oil prices are causing a great concern for operators. In the far reaches of places like Africa and Pakistan, companies such as Ericsson or Nokia Siemens Networks are installing new cellular base stations at a rapid pace. These facilities almost always get their power from diesel–powered generators. Fuel accounts for as much as two-thirds of base-station operating costs. In addition, there are the transport charges for trucking diesel over poor roads to remote areas and guarding it against thefts. As a result, green energy is all of a sudden transforming from just a feel-good project to a serious workable option for the mobile service providers. As mobile networks are fast expanding beyond the reach of power grids, they need to find a less expensive alternative to diesel. After years of experimentations on base stations powered by wind, solar energy and biofuel equipment, suppliers are preparing to roll out alternative energy technology in significant numbers.

Two Asian network operators are expected to announce plans for more than 500 new base stations which are powered by a combination of sun and wind. Solving the power problem has all of a sudden become a key factor in maintaining the growth of the mobile industry. The number of mobile subscribers is expected to climb to a mind staggering 5 billion by 2015. A large proportion of those new users will be in rural areas that have little infrastructure. Flexenclosure, a Swedish firm that makes shelters for base staion equipment, estimates that in Africa alone 40,000 new base stations will be located beyond the reach of reliable electrical grids during the next few years. Thanks to advances in technology, it’s becoming more practical to run base stations with renewable energy. For instance, it requires only one fourth as many solar cells to power a base station from five years ago.

Equipment producers have also put more effort in reducing the amount of power that a base station needs in the first place. Ericsson buries the battery for base stations about 20 feet underground, reducing the need for energy gulping cooling equipment (besides it also reduces the risk of theft). Installing the radio equipment at the top of the tower next to the antenna also helps to save power. The shorter the cable connecting the radio to the antenna, lesser is the power lost in transmission. Nokia Siemens is working on software that shuts down part of the base station at night, when there is less demand. Power conservation is turning out to be a major area of competition, and mobile service providers are racking their brains to come up with the base station that consumes the lowest amount of power. In fact, someday, green powered base stations may start popping up even in developed countries where the power grid is everywhere and reliable, but the pressure is mounting to reduce carbon emissions.

Tags: European Economy News by James Gardner
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The German chancellor, Angela Merkel threatened Liechtenstein with isolation in Europe, unless the Alpine tax haven eased bank secrecy. This happened even as bilateral tensions grew over Berlin’s handling of its spiraling tax evasion inquiry. Ms Merkel was speaking at Berlin after a meeting with Liechtenstein’s Prime Minister, Otmar Hasler. She accused the principality’s banks of “encouraging lawbreaking” in Germany by offering services allowing tax evasion. The German Chancellor warned that Germany could block Liechtenstein’s entry into the European Union’s border-free Schengen zone due in November. The principality’s entry into Schengen is expected to be discussed next Thursday by EU interior ministers, but Ms Merkel has made it clear that she “would not be surprised” if the German parliament “linked” its confirmation of the territory’s membership to other issues. German legislators reflected the same notion on Wednesday, calling an end to the status of Vaduz, the capital of Liechtenstein as a tax haven in the heart of Europe.

Angel Merkel was speaking almost a week after German prosecutors had launched an investigation in as many as 1,000 people who were suspected of hiding funds worth millions of euros via special trusts in Liechtenstein. The chancellor issued a stern warning to Liechtenstein saying it must act fast as “the clock is ticking”. Ms Merkel’s hardened stance reflected the souring of Berlin’s relations with Vaduz over the tax affair. This was as an aftermath when Crown Price Alois von Liechtenstein accused Germany of mounting “an attack” on his country, by allowing its secret service agents to buy allegedly stolen data on back clients from a former bank employee in the principality. Price Alois also expressed disgust in the way the tiny German-speaking territory being perpetually dominated by Berlin, calling it an “overpowering state”. To this, Ms Merkel retorted that the Prince’s outbursts are not making things any easier and that it was “not the right way to proceed and frankly its not helpful for out relationship”.

Mr. Hasler had sought to reduce tensions, and offered Germany assistance with its investigations. He accepted that Liechtenstein’s standing as a financial center was “going through a reform process”, but rejected the German accusation that it was actively promoting tax crime with its system of special foundations. He clarified, saying that it’s not legitimate to say that investing in Liechtenstein’s foundations means tax evasion. However, he did not publicly respond to specific calls for greater financial transparency. She said Vaduz should move quickly to abide by global guidelines set by Organization for Economic Co-operation and Development to reduce tax haven secrecy. OECD officials said that Liechtenstein was the “most secretive” of all tax havens monitored by the organization- even more notorious and reclusive than Monaco and Andorra, which are also on its blacklist of “uncooperative jurisdictions”. The ball is clearly in Liechtenstein’s court; either, set the tax system straight or be prepared to be treated as an outcast. Germany is too powerful a country and holds dominant and extensive influence and Liechtenstein would do well to come to terms with this fact.

Tags: European Economy News by Vanessa Clark
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Crude Oil prices plunged from a record $100.10 a barrel in New York on a speculation that a U.S.Energy Department will be showing stockpiles rose for a sixth week. Oil prices fell as traders sold contracts to lock in the 4.5 % gain from yesterday, when prices closed at over $100 a barrel for the first time. Inventories probably climbed to 303.4 million barrels in the week ended Feb 15 from 301.1 million barrels due to the reduced heating-fuel use, according to responses in a Bloomberg survey. There are indications of some profit-taking surging into the market and people are waiting for the inventory data. As the weather warms up, the refineries are shifting to produce more gasoline rather than heating oils. Crude Oil March delivery dropped as much as 90 cents that would be 0.9 percent, to $99.11 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Futures soared to $100.10, which is the highest intraday price since trading began in 1983.

The Organization of Petroleum Exporting Countries is set to meet on March 5, and expected to cut output as the demand for winter heating is waning, this was announced by the oil ministries from Algeria and Iran in the past week. Oil also rose as a weakening dollar caused traders to invest in commodities as a hedge against inflation. OPEC has had a close inspection of what the US dollar has been doing the past couple of years and made the realization that they are getting fewer bangs for their buck.

These days, there are so many different players in the market and they have got plenty of cash to effect a change in the way the market moves. The record was they third time oil has reached $100. The previous was $100.09 a barrel in New York on Jan 3, a day after touching $100 for the first time after militant attacks in Nigeria, Africa’s biggest producer. The Energy department report is expected to released on Feb 21 at 10.30 am in Washington, which is a day later than the usual because of the President’s holiday on Feb 18.Brent crude settlement for the month of April fell as much as 86 cents or 0.9 percent, to $97.70 a barrel on London’s ICE Futures Europe exchange at 12:48 pm Singapore time. The contract was finally closed yesterday at a record $98.56 a barrel, which is an increase of 3.9 percent.

Inventories Gain

Oil supplies probably gained 2.28 million barrels in the week ended Feb 15. From 301.1 million barrels, according to a median of response in a Bloomberg survey. According to the responses, gasoline inventories probably climbed 500,000 barrels from 229.2 million. Supplies of distillate fuels, a category that comprises of heating oil and diesels, fell 2 million barrels from 127 million the week before, according to the survey. Gasoline and heating oil surged after an explosion shut Alon USA Energy Inc’s Big Spring, Texas refinery. The facility is capable of processing 70,000 barrels of crude oil a day. Mark Waggoner , president of Excel Futures Inc, commented that the refinery troubles seems to be getting bigger and bigger every year and that not a single new refinery was built in 35 years or so and every year somewhere, something keeps breaking down.

Tags: European Economy News by Michael Greene
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Despite being the world’s second largest consumer-products company, Unilever always found itself being shadowed and outrun by agiler and more relentless rivals. The notable amongst them being Cincinnati based Procror & Gamble. But Unilever has decided to shed its sleepy uninspiring tag once and for all by challenging Proctor & Gamble in a category that it practically owns, antidandruff shampoo. It might sound a bit mundane but the battle against scalp flakes is big business theses days. Trade analysts that antidandruff shampoo accounts for half of the annual $40 billion global shampoo market. The biggest opportunity for Unilever lies in nascent markets, where antidandruff shampoos are categorized into premium products, this means they actually costs more than the beauty brands such as P&G’s Pantene. An ambitious restructuring program, aggressive marketing and a dandruff shampoo just might take the consumer goods company to the top.

Head & Shoulders, also from P&G is by far the market leader in so-called BRIC countries which includes Russia, India, Brazil and China with a $1.8 billion product line. Analysts speculate that Unilever may be as much as 40 years behind P&G in some of the areas. Unilever’s fight back weapon is surprising to say the least, an antidandruff shampoo called Clear that wasn’t even created in a state of the art western lab but rather in the developing world.

Augmented with a new found zeal, Unilever went on a blitzkrieg, blasting out to seven new markets in just six months last year, sweeping up sales of $367 million. In Philippines, which was long considered a P&G territory, Head & Shoulders was enjoying an unchallenged reign in the antidandruff category until Clear was launched in July of 2007. In just five months, Unilever’s shampoo had overtaken Head & Shoulders to grab 15.6% of the market share. In China, Unilever is a much smaller player than P&G, with total sales coming to around $1.2 billion. However, Clear was able to slice through the Chinese market and went from 0 to 3.3% market share in less than a year. Unilever now plans to bring Clear to the bigger Western markets in Europe and the US. In the world of consumer products that would be an anomaly- a brand that was developed and first launched in the emerging markets. It would serve as a whack to the face for other brands who blatantly export products from the US and Europe to developing markets.

The credit for surprising twist of fortune of Unilever goes to Chief Executive Patrick Cescau, who launched an ambitious restructuring program three years ago. He got rid of underperforming brands, divested the company’s frozen food business and stripped out layers of bureaucracy which included half the ranks of top management, who had kept the firm lagging for years. Cescau straightened out unnecessary complications with his “One Unilever Plan”. Brands now rely on a single formulation, one package design and a single marketing strategy, in contrast to the fragmented and hazy approach of the past.

Tags: European Economy News by James Gardner
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The European Union struggled to put up a show of unity over Kosovo, even as majority of the members agreed to recognize the breakaway province’s declaration of independence, Spain and Romania rubbished its action as illegal. France’s foreign minister, Bernard Kouchner announced President Nicolas Sarkozy’s decision that the time has come to end the Balkan troubles and the need of the hour is reconciliation. About 20 of the 27 member states in the EU including Italy, Germany and the UK were ready to recognize the Kosovars as independent. EU’s efforts to at least put up a show of unity failed as Spain made it clear from the start that it has no intention of recognizing Kosovo’s independence. The reason stated is that Kosovo “did not respect international law”. The statement brutally exposed the divide within the EU over legal basis of Kosovo’s secession. Spain, wary of the impact on its Basque and Catalan nationalist movements, is thought to be unhappy that Kosovo’s ethnic Alban leaders declined to postpone independence until after Spain’s March 9 general election.

EU foreign minister later agreed on a joint statement that Kosovo’s independence set no precedent for other disputes in Europe or beyond. In an attempt to appease Belgrade’s anger, they repeated an offer of eventual Union membership for Serbia – and all other Balkan countries. EU hopes that the lure of membership will calm searing passions in Serbia and other Balkan states. The Kosovo crisis has yet again exposed the glaring differences of national interest within the EU, as they did during the wars of the Yugoslav succession back in the 1990’s. Russia, a prime opponent of Kosovo’s secession and Serbia’s strongest diplomatic ally, says it violates international law as it was not agreed on with Serbia and also lacked approval of the United Nations Security Council. Within the EU, Spain’s stance is shared by Bulgaria, Cyprus, Greece and Slovakia. However, some are concerned about the impact on their own minorities. The Greek Cypriot government fears that the recognition of Kosovo may bolster the cause of Turkish Cypriot separatists. In spite of the internal turmoil, EU is still trying to put up at least a phony show of unity by planning to send a law and order mission to Kosovo over the next four months and replace the UN operation that has administered it since 1999.

Berlin is expected to recognize Kosovo at a cabinet meeting on Wednesday; this was stated by Germany’s foreign minister, Frank-Walter Steinmeier. Although, Dimitrij Rupel, foreign minister of Slovenia and who also holds the EU’s rotating presidency bravely claimed that “The EU once again survived this test of unity”, it’s pretty clear that things are far from calm within the union. As each state tries to protect its own individualistic interests the matter seems far from getting resolved anytime soon.

Tags: European Economy News, European Union News by Vanessa Clark
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Guy Quaden, ECB council member said that the delay in the US economy would be more distinct than expected which suggests that ECB would amend its development forecasts prepared in the month of December. On February 12th Quaden told the reporters that they have to forget what had happed in December and try to reassess it. He even said that it is obvious that the delay in the United States would be extra pronounced than the earlier forecasts.

During the last week Jean-Claude Trichet the ECB president said that the insecurity about the forecasts for the economic developments is curiously high. On 29th January the International Monetary Fund reduced its development forecasts for the Euro region by almost half point to 1.6 % since the Housing markets in US slump threatens to hold back worldwide economic development.

Quaden also added that even if the Euro region is not completely dependent on the United States compared to the previous year then they would not say that they are resistant, however certain corruptions through the channel of economic markets is substantial. According to the projections of December that would be revised in the month of March, until now the ECB anticipates development in the 15 nations of the Euro region to slowdown to 2 % in the present year from 2.6 % in the year 2007.

With reference to the last week’s conference of the governing council of ECB, Quaden said that they have stressed out more than the earlier downfall that risked the developments in the region. It was the tense situation in the month of December and the slowdown of development which may be profound due to the outcome of the increase rate over the average term.

Inflation demands

The inflation in the Euro region was up to 3.2 % in the month of January, the best since last 14 years and higher than the ECB’s 2 %. Following the Federal Reserve of US and the reduced interest rates in the Euro region, the ECB seems to be in tremendous pressure since the development prospects got worse. Dissimilar to the Federal Reserve, the primary consent of ECB is to hold inflation.

The standard rate of European banks is at 4 % and the policy makers will have a meeting on 6th March to decide on the rates. Most of the market traders did guess that the economic hold back will force the European Central Bank to shift its workings on the monetary policies. The oblique rate for the month of December on the Euribor was at 3.45 %, behind from 4.36 % which was in 2007.

Emergency Cut

The Federal Reserve reduced its standard rate by 1½ % point to 3 % point on January 30th, subsequent to the three quarter point cut a few days earlier. The Federal; Reserve pointed out that it may reduce the rates again in order to avert the US economy from falling into a slump. The upcoming information on the economic development in the Euro regions 15 nations is said to be mixed exclaimed Quaden. Belgian and German market assurance suddenly increased in the month of January which indicated the development in these markets may possibly survive the slowdown in US. He even said that they will monitor, discuss and analyze the situation even when they maintain their rates steady.

Tags: ECB: European Central Bank News, European Economy News by Michael Greene
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Dassault Systems one of the leading companies in 3D designs and engineering software did not fulfill their expectations as they said that the weaker dollars rates and the even the pervious partnership with the IBM Company was responsible for this. The company’s shares were believed to tumble at 14 % to 32.50 euros or 47.45 dollars at the trading in Paris on 13th February. This was the biggest downfalls for the company in the last five years after they had reported higher profits and revenues for the year 2007; however their expectations failed to stand by. Market investors were in particular worried about the decline in the profit margins and the feeble fourth-quarter. The shares of this company ended at 3.7 percent to close at 36.40 euros or 53.14 dollars.

Dassault Systems posted its revenues of 541 million dollars in the quarter that ended at 5.1 % on 31st December 2007 for the similar period in the previous year on the basis of non-GAAP. The fourth quarter revenues of GAAP were 529.4 million dollars on a year to year increase of 4 percent. For the present year the revenues climbed to 8 % that is to 1.86 billion. Dassault Systems said that its main line has increased to 12 % in the regular currency however they were hurt by the weak dollar and strong euro. Their net profits for the quarter increased to 10 % up to 137.4 million dollars and for the whole year it rose to 9 % to end at 346 million dollars.

Anxiety over Worldwide Delay

In the remarks over the investigations Hoi Chuen Lam and Gerardus Vos the Citibank analysts in London said their results were light. Whereas James Clark the Credit Suisse analyst reported that the fourth quarter revenues were up to 10 million dollars, which were less than 551.1 million dollars what the bank had anticipated. Clark also said that the currency headwind may possibly affect the financial aspects of Dassault System through the first half of the present year.

In another message Adam Shepard the London analyst said quarterly sales of software’s were up to 460.5 million dollars an increase of almost 9 percent in a year. However the company may struggle ever more to counteract slower developments in tough automotive and aerospace market. Fear over the possible worldwide economic delays may even reflect on the shares.

Previous IBM agreements slowdown revenues

The innovative software PLM or Product Lifecycle Management allows all the businesses to manage and stimulate products from its original design through to maintain and re-engineer. Clients from some of the high-tech, consumer goods and apparel industries like Gucci Group, Under Armour and LG Electronics were recently been attracted by Dassault Systems.
Dassault Systems said that the problems with IBM the former business associate were responsible for the shortfall of 5.8 million dollars in the service revenues from the technical and consulting support. The service revenues had a drop of 13 % which amounted to 79.7 million dollars. Refusing to accept the economic downfall in the western countries, Bernard Charles the chief executive said that they would like to continuously expand their sales especially in the Eastern Europe, Russia, India and China. Sales in the region of Asia climbed to 22 % in the last quarter in comparison to Europe’s 8 % and 10 % in United States which even comprises of Dassault revenues of 31 %.

Tags: European Economy News by James Gardner
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The development of Eurozone bisected in the concluding month of the previous year and confirmed that a considerable slowdown is in progress even if it was not that remarkable. According to the EU statistics, in the 4th quarter the net domestic product in the Eurozone region extended by 0.4 % after 0.8 % development in the last three months. The financial system of Italy is believed to have tightened. However, according to the 4th quarter development report by the United States, Eurozone did make developments quite faster than 0.2 %. Even countries like Netherlands and Spain showed amazing sturdiness. In spite of risks that Spain is placed on the edge of the pointer, its construction escorted a slowdown and it’s GDP enhanced by 0.8 % after it was 0.7 % in the 3rd quarter.

The ECB alleviated its hawkish attitude during the last week in a stir witnesses by the onlookers since it opened the doors for potential cuts in the borrowing costs of the Eurozone. But, German Bundesbank President Axel Weber cautioned on 14th February that economy expectations about the cuts of interest rates in the duct had not taken into consideration the dangers of inflation ahead. Axel Weber measured amongst the extra hawkish members of the European Central Banks governing commission, was even positive about the basic development outlooks, especially in Germany. He said that the pressure of the United States economy on the region of Eurozone has declined in the previous 10 to 15 years, even as the domestic and the world’s financial system are at present healthy.

Still, market analysts cautioned that the present development information were doubtful to have only momentary weakness. Barclays Capital’s Julian Callow said that they were in the sluggish smoggy space. The 4th quarter was doubtful to have observed an important rebound with the development being struck by the higher interest rates and strong euro and even the fall-out from the worldwide chaos. Moreover, the consumers of Eurozone seem to have taken anxiety at the surprise in the inflation that struck a 14 year high of 3.2 %. ECB reported that the housing prices of Eurozone were even chilly considerably, during its present monthly bulletin even though remaining comparatively floating when it is seen from the historical point of view.

After 0.7 % in the last three months, weak consumer expenditures forced the development in Germany during the 4th quarter where the GDP was extended by 0.3 %. As an alternative the development was powered by investments and exports in the equipment and machinery. The progress of French economy was even slowed down by 0.3 % from 0.8 % in the last three months. This hold back was believed to have been mainly harsh in Italy. Due to the technical renovations of its information Italy’s statistical office postponed publications of its 4th quarter development figures. However, at the Unicredit in Milan Marco Valli evaluated that GDP had minimized by 0.3 %. Valli said that the strike by several lorry drivers will be likely to hit the development and this would continue for a while.

Tags: European Economy News by Vanessa Clark
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Below is listed some of the companies shares which may have abided by prices alterations in the region of Europe. Symbols of stocks are in addition after the names of companies along with the latest prices of stocks.

The Dow Jones Stoxx 600 Index mounted up to 3.3% to 323.03 on 12th of January while the Dow Jones Stoxx 50 climbed to 3,246.93 which is almost 3.5 % increase. On the other hand Dow Jones Euro Stoxx 50 also added 3.4 % increase and ended at 3,803.76.

COM Direct Bank is Germany’s biggest online bank which offers direct banking, financial advisory and brokerage services. One of the company’s online brokers said that COM Direct Bank’s fourth quarter profits fell down to 26 % because of higher costs. However, median analyst’s evaluations in the survey of Bloomberg shows the profits increased to 4.1 % to end at 8.22 Euros. Assa Abloy AB is the world’s largest lockmaker which offers locking systems for hospitals, offices, hotels, schools and also security planning, consulting and maintenance services. According to the surveys by Bloomberg, the company’s fourth quarter net profit increased to 141 million dollars or 911.1 million kronor. And according to nine analysts the company’s sales were even raised to 8.76 billion kronor which is an increase of 7.6 %.

Electricite de France is one of the biggest power generators in Europe, its annual report for the year 2007 was opened at 58.8 billion Euros in comparison to 58.9 billion Euros the previous year. Their shares climbed to 4.8 % or 3.22 Euros to end at 69.84 Euros. On the other hand PSA Peugeot Citroen the second biggest automobile manufacturer in Europe released its second half results which showed a net profit of 407 million Euros. In the previous year they had gained losses by 127 million Euros. Their shares for this year increased to 5.2 % or 2.36 Euros and closed at 47.64 Euros.

Infineon Technologies AG is one of the largest makers of semiconductor equipments in the world. The second largest chipmaker in Europe Infineon Technologies Company stated that it had a decline of 35 % in the quarterly net profits as its sales did drop last year. On the other hand Germany’s biggest steelmaker ThyssenKrupp AG listed to circulate its first quarterly reports. The Company reported that its net profit declined more than what it had expected. The shares of the Company climbed to 5.1 % or 1.69 Euros and ended at 35 Euros.

The world’s biggest vitamin producer Royal DSM creates original services and products in material and life sciences. DSM presented its fourth quarterly net profits which mounted to 128 million Euros or 44 % as it shares gained 4.1 % or 1.11 Euros to close at 28.12 Euros. Like wise Thales Group the biggest producer of military electronics in Europe’s said that its net profits rose to 22 %. It was due to the increasing demand for security and aerospace equipments. Its shares also gained 4.4 % or 1.64 Euros increase and closed at 38.89 Euros.

French wind power company, Theolia SA which is partly owned by Electric Company released its report for the year 2007. Its shares increased to 5 % or 93 cents and closed at 19.55 Euros. However, third largest oil manufacturer in Europe, Total said that its net profit of the fourth quarter climbed to 11 %. It was mainly due to the increasing output from many profitable projects. Its shares gained 3 % or 1.43 Euros to close at 49.50 Euros.

Tags: European Economy News, European Stocks & Shares News by Michael Greene
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Market analysts said that losses of the share price won’t have that much impact on the German Economy, as long as the insecurity doesn’t lug in the market. Lemmings are not particularly smart but are quite appealing. They toss themselves off the cliff with no judgment, as one jumps from the cliff the others follow and literally they all die. At present no one has passed on as in the global stock market during the last few days, however, investors did act like lemmings. Only one Monday itself, stocks of the top 30 companies wiped off 63 billion dollars off the German market value. Since then everybody has been referring to this as a crisis. However, several economists said that this crisis is practical and does not bear on the actual economy of the country.

At the Hamburg World Economic Institute, Michael Brauninger said that till now, everything whatever has occurred is that only the shareholders assets have been shattered. The losses of the share prices will not have any fair amount of impact on Germany’s Economy. It is quite early to predict said Joachim Scheide at the Kiel Institute. He even insisted that the stocks would possess a decline for a longer period of time for the alarm bells to begin ringing.

Several economists exclaimed that the panic between the investors was due to the unnecessary declines in most of the stocks. The economist at the Halle Institute Mr. Udo Ludwig said that many stocks were knocked even though they are in healthy conditions. He said that the psychology of the markets were responsible for the comprehensive declines in the entire 30 stocks of German’s Dax indexes. When a single business personal sells his products the other follows in suit, this is so highly contagious exclaimed Udo Ludwig.

Everything Depends on the US Economy

Deutsche Bank’s chief economist Norbert Walter said that these crises are far from being over and the risk of a recession in the United States has developed. This was mainly due to the banking crisis which is even the US consumer confidence crisis. Everyone should wait and watch what is going to happen said MR. Brauninger HWWI economist and also appealed for peace. Jurgen Stark the ECB Executive Board member even cautioned against inflating the importance of the plunge in the German Stocks. He also told Die Zeit, the weekly newspaper that the markets are quite edgy and they are all seeing exaggerations at the moment.

Stark said that as the risks had improved and the present instability was not helpful, they should not evaluate these exaggerations. He also added that he seemed to worry about the pace of Euro zone increase at 3.1 %. The ECB was in fact concerned and anxious about the inflation and the consumer price achievement were the main concern of the central bank as told by Stark to Die Zeit. However, what will occur if the US economy and the stock market keeps on creating bad news and that will in return start depressing the German consumers. Will it stop the German people spending money and in this manner it will lead to a monetary slowdown.
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Tags: European Economy News, European Stocks & Shares News by James Gardner
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On 12th of February, as Moscow and Kiev settled a broader agreement over the debts of natural gas, Ukraine and Russia decided to cut out an arguable Swiss trading company during the center of the arguments between the two countries. RosUkrEnergo is partially owned by two Ukrainian business personals and partially owned by the Russian monopoly gas company Gazprom; there has been a fillet of conflicts between the two countries. It succeeded a monopoly on the supplies of Gazprom to Ukraine subsequent to the argument over the prices in the year 2006.

Prime Minister of Ukraine, Yulia Tymoshenko promised to get rid of the agent as a middleman identified him as a criminal canker. However, Gazprom had cautioned that its substitution could escort an enhancement in the gas prices. Ukrainian President Viktor Yushchenko and his Russian counterpart Vladimir Putin came to a conclusion from the discussions in Kremlin on 12th of February as they announced that they had agreed to the settlement of almost 1 billion dollars (690 million euros or 513 million pounds) in debts which Gazprom claimed to be owned by Kiev.

Both the presidents agreed to the settlement just before the cut-off time that would have witnessed Gazprom dropping its supplies to Ukraine. This was the risk that had transformed fears in the European Countries that their supplies would be affected. Chief executive of Gazprom Mr. Alexei Miller said that the agreement had been finalized to cut relations with RosUkrEnergo and trade with a joint venture owned directly by Naftogaz Ukainy, the energy monopoly of Ukraine and Gazprom. A spokesperson said that the innovative unit would deliver gas from Central Russia and Asia to Ukraine on the similar terms and prices as RosUkrEnergo for the year 2008. It is not clear when this joint venture would be formed.

Most of the investors seemed to be threatened subsequent to Semyon Mogilevich who was suspended by the politicians of Ukraine to be linked to the gas business of the region. Semyon Mogilevich was arrested in the capital city of Russia on January on the allegations of tax evasion in relation to the perfume retailer of Moscow. Some of the political analysts in the region had suggested Mogilevich’s arrest could have been linked to the hand-shakes in the gas trade between Russia and Ukraine.

The security and safety service of Ukraine did investigate RosUkrEnergo for the possible relations with Semyon Mpogilevich in the year 2006, however that investigation remained uncompleted till today. Ivan Fursin and Dmytro Firtash of RosUkrEnergo, who jointly possessed half the business have deprived of having any relations with Semyon Mogilevich. An attorney for Semyon Mpogilevich has also disapproved that his client possesses any relations with the gas business personals. A spokesman for Dmytro Firtash refused to comment on Tuesday the 12th of February on the news that the criminal canker was no longer the trader or the middleman. Even the spokesperson for RosUkrEnergo Company refused to comment on the same.

Tags: European Economy News by Vanessa Clark
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The group of Credit Suisse is said to be making more profits for the first time in more than a decade compared to UBS AG, after Brady Dougan, the Chief Executive Officer evaded the records which made his competitors announce the quarterly loss by a bank which is one of the biggest in recent times. Credit Suisse was about to report on 12th February that its net income dropped to 1.29 billion dollars or 1.43 billion Swiss francs which is 69 % in the fourth quarter. According to the median estimation UBS had marked down 14 billion dollars on securities polluted by the subprime mortgages of US and will provide specifications of its 12.5 billion Swiss Franc quarterly loss on 14th of Feb.

Brady Dougan was an ex-derivatives trader who later became CEO to Credit Suisse in the month of May subsequently making the investment banking company’s most lucrative unit. He even extended debt assets before the fall that led to almost 1.45 billion dollars in record. By comparison, in July subsequent to the third quarter declining earnings, Marcel Rohner was named as the CEO of UBS. Florian Esterer who assists overseas 56 billion dollars at Swisscanto Asset Management in Zurich said that Credit Suisse is undoubtedly at a better position as compared to both the companies. He also added that there were some tougher times to come further on for UBS.

On 30th of January, UBS one of the biggest wealth managers in the world said that it had earned a 4.4 billion Swiss Francs loss in the year 2007. It was for the first time that UBS had gained less than its competitor Credit Suisse ever since it was created in a combination in 1998. According to the analysts, during the years 2001 and 2002, Credit Suisse had posted losses while it had earned 8.65 billion Swiss Francs of profit during the previous year. As the demands for financing and trading slows down, investment banking of Credit Suisse may be more flexible.

Investment banks spent 68 cents of each dollar in the first half during 2007 in comparison to 71 % cost to income ratio by UBS. Since taking over as CEO in October, Marcel Rohner did cut 1,500 jobs at the security division of UBS while Brady Dougan has cut around 500 jobs by now. Kiri Vijayarajah and Jeremy Sigee the Citigroup Analysts wrote to their clients that the investment bank of UBS was in fact suffering huge losses of revenue momentum against a condition of seriously increased management departures and headcount. Credit Suisse is behind managing funds for well-to-do clients as it is attracting 38.2 billion Swiss Francs in total income in the first nine months of the year in comparison to 120.2 billion Swiss Francs by UBS. Credit Suisse even plans to hire additional 1,000 advisers by the year 2010 and is trying to invest in Hong Kong, Singapore and United States.

Tags: European Economy News by Michael Greene
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France was pressurized by the European Union ministers to meet scarcity of budgets. For the time being, the commission remains hopeful about a possible downturn. France was insisted by European ministers to maintain a resolution to an innovative target of 2010 for harmonizing its scarcity of budgets. However, it indicated that they would take into consideration the country’s progress report in the later assessment. On Monday the 11th of February, finance ministers from the 15 group decided to persuade France to achieve the target of reducing the scarcity of budgets, in spite of France being pressurized to stay away from any reference to the scarcity timetable implemented by the European Union’s financial members in Berlin during last April.

During the conference in Brussels, Jean-Claude Juncker, the Euro-group chief and the Prime Minister of Luxembourg said to the reporters that France needs to emphasize its efforts to consolidate budgets, through an accurate request of its budget for the year 2008 and even to be on mark for its medium term objective in the year 2010. It was generally due to the predictions of monetary slow down that France claimed it required to rework on the previous budgetary obligations and even to stabilize its orders by 2012. Christine Lagarde, French finance minister said that they are taking several efforts possible to accomplish their balance before 2010, however in the present circumstances there is no point in making allegations as it would be very difficult to do so.

However, as few of the bigger EU countries disagreed to accept these explanations, Wouter Bos, the Dutch finance minister commented that France had previously requested for this even prior to this as there was a recession, so that must not be the actual argument. Pointing out that the regulations reinforcing the Euros may lose reliability; Peer Steinbruck the German finance chief said that particularly the bigger countries may unite themselves to the pledge in order to accomplish their MTO by the year 2010. But, while verifying the new target, the ministers of Euro group even acknowledged that the cyclical activities of national global economies would be considered in future evaluation of countries presentation.

Jean-Claude Juncker said that they would asses the condition when the particular time arrives if in case France does not accomplish its given cyclical conditions. So to discuss on this issue, they along with the Euro group members would have to consider back when the time comes. The members of the Euro group must ensure that the decision made by Berlin is observed. In the meantime, Jose Manuel Barroso the president of European Commission did make an unusual appearance at the meeting for a discussion on the trends of general economy, subsequent to the latest turbulences on the worldwide economical markets. Barroso even said that they possess no specific reason to panic about declines. He even disagreed that the members of EU states should take legal actions relatively, than sending gloomy mails.

However, Joaquin Almunia the economy commissioner expressed clearly the concerns over the increasing inflation that accelerated in the financial union to 3.2 % in the month of January. He said that they expect the increasing inflation to be short-term; however they are particularly concerned over this. They need to stay vigilant and even remain watchful so that the increase does not turn out to be a fashion in the prospects of the financial agents.

Tags: European Economy News, European Union News by James Gardner
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All over the city of Moscow several posters were being plastered stating the 15th anniversary celebration of Gazprom, Russia’s leading Joint Stock Company. The slogan such as “From victory to victory” was displayed on the streets, exhibiting the self-esteem of this state controlled domination. Gazprom’s anniversary was celebrated on Monday night, the 11th of February 2008 with an extravagant party in Kremlin. Several top personalities from the world like Tina Turner, Russian President Vladimir Putin and Dmitry Medvedev were present in the party. The entire crowd of over 6,000 was remarkably entertained by the famous pop star from Russia Alla Pugacheva.

On the next day, Russian President Vladimir Putin represented Gazprom on a conference to negotiate with the Ukrainian President Viktor Yushchenko. On a rather different occasion Putin discussed about the outstanding gasoline bills of about 1.5 billion dollars due by Ukraine, it was decided that if Ukraine does not pay back the dues in time Russia would reduce energy supplies drastically in the coming period. This deal was agreed by the Ukrainian President to the relief of the consumers in his country even though specifications are yet to materialize. In the welcoming move both the parties agreed to remove unapparent mediator Rosukrenergo from the deal.

President Vladimir Putin’s involvement in the argument simply substantiates what ever has been extensively understandable. Even though Gazprom was apparently changed from a government organization into a semi private venture fifteen years ago, it still remains a part of the Russian government. All the important resolutions were taken in the city of Kremlin. Both practically and psychologically, Gazprom is denied to be a commercial venture. It is one of the singular significant instruments of the Russian resurgent state. The shares of Gazprom are always attractive to all the investors, even though the state manages almost half the shares. That is an indication of the higher gas prices, not to the activities of its administration.

Gazprom has not yet opened a single most essential latest gas field in the last 15 years. It still depends on the Siberian gas discovers improved in the Soviet period in order to supply its European markets. Latest projections such as the offshore Shtokman field and the Yamal Peninsula are years from impending on pouring out. As an alternative, the organizations concentrate on defending its monopoly situation by buying or building downstream assets like pipelines or even by making political acquisitions like the media business enterprises.

Russian President Vladimir Putin said he wanted all the companies of Russia to link the lines of the biggest companies in the world along with Gazprom to guide them over. Mr. Vladimir Putin along with his government officials insisted that it is at the present a business enterprise which is charging market values and even ensuring supplies to its consumers. However, in anticipation of the company, Gazprom will not simply be a character, but the very instrument of Russia’s influence.

Tags: European Economy News by Vanessa Clark
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