Business


French companies hit by government sale talk


Prime Minister Jean Marc Ayrault Photo - AFP

Paris: Shares in a number of companies in which the deficit-hit French government has a stake plummeted on Monday after Prime Minister Jean Marc Ayrault said the state was looking to reduce its stake in a "number of companies".

On a slightly falling Paris stock exchange, shares in airliner Air France KLM fell by 2.85 percent to 7.39 euros, utility giant GDF Suez fell 1.46 percent to 16.49 euros and defence company Safran dropped 1.09 percent to 37.49 euros.

France holds a 37-percent stake in GDF Suez, a 16-percent stake in Air France-KLM and a 27-percent stake in Safran. Hit by a stagnant economy, the French government is struggling to balance its finances.

Last week, the European Union allowed the country a two-year reprieve to meet the bloc's deficit ceiling of three percent of GDP after Brussels said it expected the French deficit to reach 3.9 percent in 2013 and 4.2 percent in 2014.

The EU also said France will contract by 0.1 percent in 2013 but despite the gloom, there was a glimmer of positive news on Monday with an index tracking sentiment in France's key service sector coming in slightly better than expected.

The Markit purchasing managers' index for the services sector rose in April to 44.3 from a four-year low of 41.3 in March, though at below 50, the result still indicates economic contractation.

The survey however said manufacturing data was at its worst level since August 2010 as companies prioritise cutting staff, helping push French unemployment to a record 3.2 million people in March.

On Monday French President Francois Hollande spent the first anniversary of his election victory against right-winger Nicolas Sarkozy as the most unpopular president in modern French history with many angered by his government's failure to turn around the economy.

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