European market update

Germany led the bounce in European stock markets last week as investors set aside recent concerns over higher interest rates and rising inflation levels.

Lower food and energy bills helped trim UK's inflation rate to a seven-month low of 2.5% in May, although a rebound in retail sales over the month suggests that higher interest rates have had a limited impact on consumer spending.

The Swiss central bank raised its benchmark interest rate by 0.25% to 2.5%, and signalled there were more increases to come if inflationary pressures fail to ease.

The eurozone's trade balance remained in surplus in April, as exports grew faster than imports despite the euro strengthening against the dollar.

Commodities: Exploration and production player Imperial Energy released another positive drilling report relating to the latest round of activity involving its Siberian assets.

Consumer: Car and light-truck sales at Renault fell 4.2% in May, led by a slump in Europe; separately the French carmaker said it was considering production of a low-cost vehicle earmarked for India. Phillips Electronics reiterated the company's target to grow organically by as much as 6% a year, while making further acquisitions in health technology, urban lighting and ‘new lifestyle' products. French luxury firm PPR has received approval from European and US competition regulators for its €330-per-share takeover of German sporting goods company Puma.

Financials: Financial stocks enjoyed a broad-based rebound last week. In sector news, Barclays' ex-CFO Naguib Kheraj, who is overseeing the planned purchase of ABN, revealed that the value of its all-share offer may not end up less than that currently offered by the RBS-led consortium. BNP CEO Baudoin Prot made headlines by announcing that France's biggest bank will play a 'key role' in the banking sector's consolidation, although he stated that the rumoured tie-up between BNP and rival Societe Generale was not on the agenda.

Industrials: Austrian brickmaker Wienerberger finally secured the acquisition of Baggeridge Brick, after a drawn-out battle against UK rival Michelmersh. Swedish Industrials holding company Hexagon plans to spin off its polymers unit, whilst the UK's Ultra Electronics has agreed to buy Criticom, a US video conferencing company, to strengthen its portfolio of defence products.

Property: Property shares rallied over the week after a period of poor performance. Quintain Estates announced excellent full-year results, with a strong increase in reported asset values and an optimistic outlook on the opportunities for value creation in their development pipeline and fund management business.

Retail: Shares of Dobbies Garden Centres reached an all-time high, after UK tycoon Tom Hunter bought an additional 10% stake through his investment company, West Coast Capital, and said he may challenge Tesco's offer for the retailer. Fashion label Ted Baker issued a positive trading update, on the back of higher retail sales growth.

Aberdeen Asset Management Asia Limited