European results look less positive, as profit falls at Barclays and BBVA. The Spanish lender and other firms like German drugmaker Bayer suffering from unfavourable exchange rates, as the euro zone struggles to get on to a solid footing. Joanna Partridge reports
As Europe struggles down the road to recovery, a mixed picture from the region's corporates. Britain's Barclays taking a hit from falling income at its investment bank. Its underlying profits fell 8% in the second quarter - as its attempts to crack down on high-risk trading and subdued market activity weighed on investment banking revenue. It's still setting aside money for possible future fines or customer compensation. The lender has been cutting costs and assets it no longer wants, and has chopped 5,000 staff this year. Dominic Elliot is from Reuters Breakingviews. SOUNDBITE: Dominic Elliot, Columnist, Reuters Breakingviews, saying (English): "They've had several attempts now to try and cut back the investment bank and the wider group, but on May 8 they came up with a new idea which was a bit more comprehensive than the last plans and so what you're seeing now is some effect from that, but the quarter was three months to June, so it only really took effect for about half of that." Net profit dropped by 39% in the second quarter at BBVA, Spain's second-biggest bank by market value, and it said lending revenue fell. It makes most of its profit outside its home market, and said it had been hit by unfavourable exchange rates - especially in Venezuela. Currency headwinds also knocked results at Bayer, Germany's largest drugmaker, which came in under estimates. In this case, it said a strong euro has weighed on the valued of overseas sales. But there was some positive news from France's troubled car industry. Peugeot Citroen narrowed its first half net loss. And its auto division posted the first profit in three years, boosting it shares, as the turnaround plan began to show results. And Airbus' first half profit was also up by 10%. The mixed corporate picture in the euro zone highlighting its struggle to get on a solid footing after leaving recession a year ago. Annual inflation probably slowed in the euro zone's motor, Germany, in July, suggested by data from some German states. The threat of deflation has been a concern for the ECB for some time. Mike Gallagher is from IDEAglobal. SOUNDBITE: Mike Gallagher, IDEAglobal, saying (English): "The real trigger for the ECB to be honest is that they would have to see a genuine risk of deflation, and that's persistent negative inflation, before they would pull the trigger on quantitative easing." Spain's economy grew at its fastest rate in 6 years in the second quarter, although consumer prices also fell by their sharpest annual rate since late 2009.