Markets News Afternoon: Talks reported on increasing Eurozone bail-out fund; Fyffes gains from banana price rise
By Finfacts Team
Jan 11, 2011 - 5:01 PM

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German Chancellor Angela Merkel began a two-day Mediterranean tour on Monday in Malta, where she met Maltese Prime Minister Lawrence Gonzi, Valetta, Jan 10, 2011.

EU Bailout Fund: The Wall Street Journal has reported that European Union governments are discussing proposals to increase the €440bn bailout fund for indebted Eurozone countries, a recognition that the fund might prove too small if the region's debt crisis spreads to Spain, according to European officials.

No decision has been taken yet, and none is currently expected at next week's meeting of EU finance ministers, said a senior European official, who pointed out that hardly any of the fund’s firepower has been used yet.

The Journal says officials from European finance ministries were debating the possible overhaul of the main bailout mechanism, the European Financial Stability Facility, at talks in Brussels on Monday and Tuesday, according to people familiar with the matter. The officials are aiming to prepare the ground for next week’s gathering of EU finance ministers, but the sensitivity of the issue means it may take several weeks to resolve, these people said.

OECD: In November 2010, in the OECD area, comprising 33 mainly developed countries, the unemployment rate was 8.6%, unchanged from October. The OECD-wide rate has been stable at 8.5%-8.6% since February 2010, despite diverging trends at the national level. New data show that the unemployment rate for the United States fell by 0.4 percentage point to 9.4% in December, while the rate for Canada was unchanged at 7.6%.

Germany‘s unemployment rate, though unchanged in November at 6.7%, has been declining steadily since June 2009. It is the only OECD country reporting a lower unemployment rate today than in 2007. Australia, Canada, Finland, Korea and Sweden recorded small declines in unemployment rates in November, compared to rises in Austria, the Czech Republic, Denmark, France, Hungary and Luxembourg. In the remaining countries the unemployment rate was broadly stable.

The OECD area unemployment level remains close to post-war highs. There were 45.8m unemployed persons in OECD countries in November 2010, down 0.3m from November 2009 but 15.9m higher than in November 2007.

Iraq Oil: Bob Dudley, BP's chief executive, has welcomed the achievement of a major production target in Iraq by the Rumaila Operating Organisation (ROO), of which BP is a major shareholder. The ROO has met a major milestone in the re-development of the super-giant field in Southern Iraq, increasing production by more than 10% above the initial production rate.

Bob Dudley said:
"BP has a long history in Iraq. Reaching this production milestone is a great achievement and underlines BP's success in building its presence in the region. Increasing production at Rumaila, the world's fourth largest oilfield, has been a massive undertaking.

"All parties including BP, Petrochina, SOMO and South Oil Company should be very proud of their achievements. We look forward to working with our partners to make Rumaila the world's second largest oilfield. This is important, for Iraq, for BP and for global energy supplies," Dudley added.

"Every day that funds don't go to new business start-ups is a lost opportunity in terms of jobs" Brian Hayes, deputy finance spokesman at Ireland's Fine Gael told CNBC. "What we need to do in the first instance is to create some confidence...ultimately we need a loan guarantee system in place," he said.

Fyffes: Fyffes said this afternoon that expects its Adjusted EBITA* for 2010 to be in the range €19m-€20m, compared to the €14m-€18m previously indicated. Banana selling prices in the Continental European market finished the year strongly.

Fyffes expects to deliver a mid-single digit percentage increase in its Adjusted EPS* for 2010 compared to the 5.19 cent in 2009, reflecting the additional benefit of a lower minority interest charge for the year.

In 2011 the Banana and Pineapple industries face higher costs due to less favourable exchange rates and increased bunker fuel prices. Fyffes believes higher selling prices will be required in all its markets. Fyffes is targeting an Adjusted EBITA* for 2011 in the range €17m-€22m.

The group said it continues to pursue a number of opportunities to further develop its business in order to increase shareholder value.

*Adjusted EBITA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EPS exclude amortisation charges, the Group’s 40% share of the results of Balmoral International Land plc and exceptional items.

US Markets

The Dow rose 57 points or 0.49% Tuesday to 11,694.

The S&P 500 added 0.52% and the Nasdaq advanced 0.38%.

European Markets

The pan-European Dow Jones Stoxx 600 rose 1.30% Tuesday.

In Dublin the ISEQ is also up 1.30%.

CRH which accounts for about 27% of the Dublin market's capitalisation, gained 0.25%; BoI is up 5.08%; Aer Lingus gained 6.025 and Fyffes rose 1.32%.

European benchmarks

Irish share prices

Euribor Interest Rates


Crude oil for February delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $90.49 per barrel up $1.24 from Monday's close. In London, Brent for February is trading on the International Commodities Exchange at $97.08.


The euro is trading at $1.2973 and at £0.8310.

"Ireland needs to restore its public finances on to its sustainable debt trajectory, it needs to revive its banking system… it needs to get growth back into its economy after a very, very virulent downturn," Donal O'Mahony, global strategist at Davy told CNBC:

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