Qatar’s royal family and Luxembourg have teamed up to buy Dexia‘s private banking arm in a deal valuing the business at €730m. It forms part of a wider bailout of the Franco-Belgian bank by the governments of Belgium, France and Luxembourg in October.
Precision Capital, a Qatari investment group, will acquire 90% of the stake, the remaining 10% will be acquired by the Grand Dutchy of Luxembourg. Dexia’s Banque Internationale specalises in wealth management.
The FTSE is now down 25 points at 5339, a 0.5% fall. Other European shares have also edged lower: the Dax in Frankfurt has slipped 0.15% while the CAC in Paris has lost 0.27%.
While markets continue to worry about the debt crisis, a couple of surveys painted a slightly more reassuring picture of consumer confidence in Germany and the UK.
The Nationwide consumer confidence index for Britain crept up to 40 from its record low of 36 in October, but was still about half its long run average of 77.
Meanwhile, German consumer morale held steady going into January, as income expectations and views of the economy improved despite a softening of households’ willingness to make major purchases. The rise in confidence in the economic outlook was the first such improvement in five months.
The latest consumer sentiment indicator from the GfK market research institute, based on a poll of 2,000 Germans, held at 5.6 – the same reading as in December and also a year ago – despite economists’ forecast for it to fall to 5.5.
GfK said:
Consumers at the moment clearly find the continued strong economic conditions better than in the past months.
The labour market appears robust overall and points to further falls in unemployment. Most German companies are busier than average.
About 3m jobs could be at risk if Britain does not stay at the heart of Europe, leading businessmen suggested today.
In a letter to the Telegraph, a group of 20 businessmen urged the government to seize opportunities to “re-engage in the decision-making process” in the European Union, arguing that Europe’s future was vital to Britain’s economic interests.
Signatories include Virgin boss Sir Richard Branson, British Telecom chairman Sir Mike Rake, and Sir Martin Sorrell, chief executive of advertising group WPP. Roland Rudd, the chairman of Business for New Europe, former EU trade commissioner Lord Brittan, and Sir Stephen Wall, Tony Blair’s former adviser on Europe, have also signed the letter. Their intervention comes 10 days after David Cameron vetoed EU treaty reforms.
The business leaders write:
The government estimates that three million British jobs rely on exports to our European partners. The EU’s institutions, from the commission to the European Court of Justice, exist mainly to safeguard the single market’s level playing field. Protecting the single market has to be the bedrock of our re-engagement with Europe.
They also argue that it is in Britain’s interest for the euro to survive, and that the EU’s single market is “of great importance” to the UK.
It accounts for over half our trade, but we must deepen and widen it, and push for reform in services, telecoms, the digital arena and energy.
While we’re still waiting for France to lose its top credit rating, a move that is expected before Christmas, some early morning musings from Evolution Securities:
Still nothing from S&P on euro area ratings, wonder if they maybe use this as a sort of advent-calendar opening another door every day. One day showed high Italian yields, another day there was weak economic growth, then a festive group of disagreeing European leaders, on the 9th of December there was that agreement with relatively little substance – we know pretty much what is behind the big door, but is it one notch or two and what about Germany?
London’s leading shares have fallen more than 30 points to 5334 in the first couple of minutes of trading, a 0.55% loss.
On currency markets, the euro has hit a 10-month low against sterling in thin year-end trade. The single currency dropped to 83.705p, the lowest since mid-February.
Turning to commodities, Brent crude futures climbed above $ 104 a barrel on growing threats to supply. Hundreds of oil workers held a third day of protests in Kazakhstan, which pumps around 1.6m barrels a day. Concerns over supplies from Iran also resurfaced after the OPEC member said crude production had dropped due to lack of investment in its oil fields.
Ben Le Brun, market analyst at OptionsXpress in Sydney, told Reuters:
Geopolitical tensions that threaten oil supply have put a floor under prices. With better economic data out of the United States, there are enough factors to push oil higher, barring any surprises out of the eurozone.
Good morning. Welcome back to our rolling coverage of the eurozone debt crisis.
Asian stocks and the euro steadied but sentiment remains fragile. Tokyo’s Nikkei rose 0.5%, after hitting a new three-week low yesterday, while Hong Kong’s Hang Seng edged down 0.3%.
Michael Hewson, market analyst at CMC Markets, expects the FTSE 100 index to open 12 points lower at 5,353, while Germany’s Dax is set to open 10 points lower at 5,661.
The single currency slid back towards its recent lows yesterday after the failure of European finance ministers to agree on the full €200bn worth of additional loans to the IMF. The figure now looks likely to be closer €150bn after the UK said it would only contribute as part of a wider global agreement, and only if other countries outside the EU participate. Other EU nations also expressed reservations about the loans, including Germany’s Bundesbank but indicated they would take part if countries like the US also did so.
In Spain the new prime minister outlined a whole range of reforms, including moving public holidays to the nearest Monday or Friday to avoid lengthy shutdowns, but admitted that the country was likely to miss its fourth-quarter growth target. Fiscal targets will also be missed amid further austerity and recession.
Spain will sell some short-dated debt later this morning. Greece will also sell 3 month bills today. Hewson said:
Today’s 3 and 6 month T-bill auction of around €4bn is likely to see yields continue at their recently elevated levels, and increasing the pressure on the Spanish economy.
There’s a slew of confidence data out today in Germany and the UK, along with the CBI retail sales survey for December.
