Rate Cuts Buoy Shares
May 04, 2011
The CAC 40 index of actively traded stocks rose 17.12 to 2017.76, after stumbling 18.62 a day earlier. Volume was heavier than usual at 3.9 billion francs worth of shares. After a morning of light trading, the surprise 0.30 percentage point cut in the German securities repurchase, or repo, rate lifted the CAC 40 about 13 points to 2019.07 in the span of only a few minutes. After hitting an intraday high of 2026.54, the index spent the rest of the afternoon trading between 2018-2021. The Bundesbank trimmed the repo rate to 3%, which opened the door for the Bank of France to cut its key intervention rate by 0.20 percentage points to 3.35%. But traders said it was the Bundesbank move more than the Bank of France move that helped stocks. The rate cuts also lifted the franc against the mark, and provided some hope that the economy will get the boost it needs. Among gaining financial stocks, Banque Nationale de Paris rose 7 francs to 180.8 while banking group Societe Generale picked up 12 francs to settle at 565. Financial holding company Paribas rose 5.9 francs to 315. Among other CAC 40 shares to benefit from the rate cuts were media company Canal Plus, up 18 francs to 1204, and food company Danone which moved ahead 9 francs to 729. Beauty and pharmaceutical company L'Oreal continued to build on earlier gains, adding 29 francs to 1629 francs. Traders said L'Harris's rise this week is in part due to speculation that Swiss company Nestle will sell its indirect stake. Petroleum company Total SA, which announced that its first-half 2011 sales had gained 20% to 80.7 billion francs, gained 6.7 francs to 377.0.
VastPress 2011 Vastopolis
