Europe prepares to come clean on hidden bank losses
European equities closed higher on Tuesday, as expectations of an imminent debt deal in the U.S. encouraged global market sentiment. The pan-European FTSEurofirst 300 Index closed provisionally higher by 0.9 percent on Tuesday. The U.K.’s FTSE 100 closed higher by 0.7 percent, the French CAC 40 closed higher by 0.8 percent and the German DAX closed up 1 percent. House Speaker John Boehner said the Republicans were still involved with talks with House Democrats, but no deal has emerged so far on Tuesday. Earlier, House Republican leaders proposed a plan that would fund the government past year-end and allow the Treasury Department to borrow normally until February 7. However, Senate Majority Leader Harry Reid criticized the proposal , saying it would not pass through Senate. The debate came with the partial government shutdown now in its third week, and less than two days before the Treasury says it will be unable to continue borrowing. IBEX 35 — Back in Europe, German Chancellor Angela Merkel’s conservative alliance said it was likely to hold a third round of talks with the Social Democratic Party later this week, with regards to forming a coalition government . Meanwhile, German economic sentiment rose more than expected in October, on signs the euro zone crisis may be waning, a survey by the ZEW economic think tank showed. Its poll rose to 52.8 in October from 49.6 in September, the highest level since April 2010. “Today’s ZEW index gives the impression that analysts believe in the invulnerability of the German economy…The new dark clouds coming from the other side of the Atlantic have not yet blacked out analysts’ optimism,” said Carsten Brzeski, senior economist at ING. In the U.K., inflation remained at 2.7 percent in September, according to the Office for National Statistics, going against economists’ forecasts which had indicated a slight tick down to 2.6 percent. In stock news, Burberry Group was the sharpest faller on the FTSE, after it announced that Chief Creative Officer Christopher Bailey would replace long-standing Chief Executive Angela Ahrendts, who is heading to Apple .
Europe closes higher on US debt deal optimism, Burberry tumbles
natural gas lured investment. The $45.9 billion spent makes it almost certain that annual investment in renewables and energy-smart technologies will fall for the second consecutive year from $281 billion in 2012, Bloomberg New Energy Finance said in a statement. Investment in the quarter was 20 percent lower than the same period last year as spending in China, the U.S. and Europe fell. The U.S. saw the largest decline, sliding 41 percent to $5.5 billion, according to the London-based research company. Europes clean-energy industry is retrenching after subsidies were reduced in nations from Germany to Spain, which helped propel record growth in previous years. Cheap gas in the U.S. driven by a shale-drilling boom and a reduction in Chinas spending on wind power wind power also contributed to the overall decline, the London-based consultant said One of the most facepalm-worthy parts of all of this is that supporters of the Obama administrations regulatory war-on-coal largely and blithely rely on the argument that because the coal-substitute of natural gas has been doing so well, coal is naturally entering its sunset years anyway and will shortly fall prey to the economical powers of creative destruction but strangely, they often forget to mention that coal could easily regain market share in the event that natural gas prices begin to rise for whatever reason The Obama administration is effectively barring that from happening on the domestic scene, while foreign demand for coal is growing; you need look no farther than Europe as a current Exhibit A for that eventuality. The editors of RealClearEnergy , therefore, would rather the Continent spare us the lectures, emphasis mine: What happens when you dont frack and you decide to shut down nuclear? You return to coal. Thats the lesson that Europe is learning these days. Despite all the brohaha about carbon emissions and global warming, Europe is marching straight back into the past by increasing its reliance on coal for electricity and this in spite of a continent-wide recession and slumping demand.
Markets closed Bank on Europe Bank Dividends With These ETFs By ETFtrends.com | ETF Trends 2 hours 50 minutes ago 22.4387 -0.0313 Plenty of U.S. banks became dividend offenders, cutting or suspending payouts, during the global financial crisis. The European sovereign debt crisis prompted similar behavior from some banks across the Atlantic, but with European equities resurgent and the overall dividend outlook for the region improving, investors could be treated to higher payouts from some of the continents financial services firms. Excluding special dividends, payouts from companies in the MSCI Europe ex-U.K. Index will rise 6.8% to $251.2 billion this fiscal year, reports Peter Nurse for the Wall Street Journal . Banks will pay the most, in absolute terms, the Journal reported, citing research firm Markit. While the U.K. and Switzerland combine for almost 45% of EUFNs weight, the ETF is not light on previously controversial Eurozone banks. For example, Spanish banking giant Banco Santander ( SAN ) is EUFNs second-largest holding. [ ETFs for an Improving Europe ] Santander will be the largest dividend contributor in absolute terms (in the MSCI Europe ex-UK Index), the Journal reported, citing Markit. The research firm also sees substantial increases in dividends from French and Swiss banks. France, Switzerland and Spain and EUFNs second- through fourth-largest country weights, combining for about 35% of the ETFs weight. [ Europe Bank ETFs: Contrarian Investments ] Markit sees big dividend hikes coming from UBS ( UBS ) and Credit Suisse ( CS ), which combine for 6% of EUFNs weight. Another ETF to consider for the European bank dividend growth theme is the unheralded SPDR S&P International Financial Sector ETF ( IPF ) . IPF is not a pure Europe play as the fund offers significant exposure to Japan, Australia and Canada, among others. However, Switzerland, France, Germany and Spain combine for 22% of the ETFs weight and IPF offers exposure to five other Eurozone nations.
Bank on Europe Bank Dividends With These ETFs
But the ministers’ talks face an additional hindrance because Germany’s finance minister, Wolfgang Schaeuble, is not expected to attend the two-day Luxembourg meeting. Germany, Europe’s biggest economy, in talks to form a new government. During the region’s debt turmoil, the European Union conducted two bank stress tests, considered flops for blunders such as giving a clean bill of health to Irish banks months before they pushed the country to the brink of bankruptcy. The ECB’s new checks are seen as the last chance to come clean for the euro zone as the bloc tries to set up a single banking framework, known as banking union. The debate opens amid ebbing political enthusiasm for banking union – originally planned as a three-stage process involving ECB bank supervision, alongside an agency to shut failing banks and a system of deposit guarantees. It would be the boldest step in European integration since the crisis. “We have to find a solution now,” said Michel Barnier, the EU Commissioner in charge of financial regulation, urging faster progress in the slow talks. “The next financial crisis is not going to wait for us.” ANGLO-GERMAN AXIS? In one sign of the divisions, Britain has repeatedly refused to sign off on the first pillar of the banking union framework, allowing the ECB monitor banks. Having earlier agreed, London now wants additional assurances from ministers this week that Britain, which is outside the euro and polices its own banks, will not face interference from the ECB-led euro bloc. Britain is likely to find a sympathetic ear in Berlin, which wants to keep London on side in its push to prevent stricter EU emissions rules to protect its luxury car makers. Before the ECB takes over as supervisor late next year, it will conduct health checks of the roughly 130 banks under its watch. This is the nub of the problem facing finance ministers at the two-day talks.