Over 25% unemployment in Spain, Euro area: 11.6%

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President of the European Council, Mr. Herman Van Rompuy, is responsible for summoning EU leaders to summits, is determined to continue with this month’s gathering on the bloc’s 1 trillion euro seven-year budget – even if UK parliament demands for cuts that make an agreement unlikely.

Mr. Van Rompuy is weighing whether to seek for a compromise with the British Prime Minister, David Cameron, or to isolate the UK by striking a deal with the other 26 European Union members. Most of the countries have shown more flexibility towards slight budget increases, according to officials briefed on the matter.

The euro-area unemployment rate got up to 11.6% in September, increasing by 1.3% than a year before. Right now, there are 18.5 million unemployed adults within the age range of 15 to 64 years, over 2 million more than there were a year ago. Greece and Spain have youth unemployment rates as high as 55.6% and 54.2%, respectively.

In October, Spain’s unemployment rate breached 25% for the first time in the country’s recent history. As an alarm signal of deepening recession, the negative jobs data also raised the likelihood that Spain might, once again, miss budget targets. The one continuous positive element: the labor picture is so dark that it might help Mr. Rajoy to build the case that lenders cannot risk by imposing further austerity measures to Spain, in exchange for rescue funding.

Greece’s downward spiral has come once again to the top of the euro zone agenda, with economists and analysts warning that it is closer than ever to run out of cash, and that the survival of a coalition government brought in just five months ago is threated. Greece’s economy has disappointed on every key indicator – growth, unemployment or debt reduction – since the initial bailout terms were agreed. The debt-to-GDP ratio, already the highest in the euro zone, will reach 189 percent, instead of 179 percent, Finance Minister Yannis Stournaras announced. That means that the targets agreed as part of the bailout are, for sure, based on over-optimistic forecasts. The country’s privatization plan is also not proceeding as quickly as hoped. Greek government also wants the deadline for its primary surplus to reach 4.5% to be prolonged by two years, to 2016.

Greece’s parliament has been asked to investigate why two former finance ministers did not pursue possible tax evaders on the so-called “Lagarde list”, formed by 2,000 Greeks with Swiss bank accounts. Mr. George Papaconstantinou and his successor, Mr. Evangelos Venizelos, who has been in charge of the finance portfolio from September 2009 until June this year, might face charges of negligence if parliament referred them for trial, according to what legal experts state.

Mr. Papaconstantinou received a record of the list of Greek depositors in 2010 from Christine Lagarde, who was by that time France’s finance minister, but did not take action to instruct Greek financial police to start a full investigation. He stated the list was later “mislaid”. Mr. Venizelos also let the issue lapse after he took over as finance minister in 2011. Parliament opened proceedings on the prosecutor’s request.

OAO Gazprom, the world’s biggest natural gas producer, announced its second-quarter profit fell 50%, beating estimates, as the state-run company gave price discounts to European clients and the ruble weakened.
Net income declined to 150.8 billion rubles ($4.8 billion) from 303.7 billion rubles a year before, the Moscow-based company said in financial statements on its website. Revenue slid 2.4% to 1.01 trillion rubles. Gazprom shares rose 0.7% to 145.46 rubles by 11:21 a.m. in Moscow. The stock has lost 15% year-to-date.

Most European (SXXP) stocks have advanced, with the Stoxx Europe 600 Index going for a weekly gain, as investors expected the last U.S. monthly jobs report before presidential elections tobe held next week. Of the total of 166 companies in the Stoxx 600 which have reported earnings so far this season, 88 have exceeded estimates, and 75 have missed them.

  • Beiersdorf climbed 4.6% to 59.22 euros after the producer of Nivea skin-care products raised its 2012 forecast for sales growth to as much as 4%, from a previous prediction of about 3%.
  • Telekom Austria AG (TKA) gained 2.6% to 4.99 euros after Format magazine said the government will approve the company’s 390 million-euro ($502 million) bid to gain 750,000 prepaid mobile clients from Orange Austria’s Yesss! unit.
  • Siemens AG (SIE) added 1.6% to 79.62 euros. Europe’s biggest engineering firm will report “very good” results for 2012, Austria’s Die Presse newspaper cited company’s Chief Executive Officer Peter Loescher as saying in an interview.
  • Alcatel-Lucent slumped 5.3% to 78 euro cents after posting a third-quarter net loss of 146 million euros, compared with 194 million euros of profit one year before. The phone-equipment producer, whose shares have dropped 36% so far this year, has been France’s most-shorted stock, according to Markit, signalling an increasing number of investors are predicting further declines.
  • Deutsche Telekom dropped 3% to 8.63 euros. The German company may cut its dividend from next year by as much as a third, according to Handelsblatt, citing unidentified supervisory board members.
  • Admiral Group Plc (ADM) lost 5.7 percent to 1,077 pence after saying third-quarter revenue fell 2 percent to 570 million pounds ($918 million) from a year earlier.
  • Hikma Pharmaceuticals Plc (HIK) slid 3.5 percent to 728 pence after saying it expects a full-year loss of about $15 million from its generics division, while a previous forecast that it should break even.

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