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European Market Update : 04/02/2013

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#1 ⇑ Haut ⇑ 04-02-2013 12:34:23

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European Market Update : 04/02/2013

Peripheral yields rise in session; Growing political scandal undermining renewed confidence in Spanish debt while the Italian political race continues to tighten

China services PMI hits 5-month high (11th straight month of expansion)

JGB yields move higher on reports that Japan Govt Pension Fund (size $1.1T and world largest) mulling lower allocation to domestic bonds

European Peripheral bond yield moved to 1-month with Spain Rajoy facing corruption allegations while Italian elections becoming a real horse race

Spain PM Rajoy and Germany Chancellor Merkel to meet in Berlin today, ahead of the EU Leader summit at the end of the week.

Economic Data
(CH) Swiss Q4 UBS Real Estate Bubble Index: 1.11 v 1.02 prior

(BR) Brazil Jan FIPE CPI Monthly: 1.2% v 1.1%e

(ES) Spain Jan Net Unemployment M/M: +132.1K v +150.0Ke

(TR) Turkey Jan Consumer Prices M/M: 1.7% v 1.1%e; Y/Y: 7.3% v 6.8%e; CPI Core Y/Y: 5.7% v 5.7%e

(TR) Turkey Jan Producer Prices M/M: -0.2% v -0.1% prior; Y/Y: 1.9% v 2.5% prior

(EU) ECB: 7M borrowed in overnight loan facility vs. 335.0M prior; 180.95B parked in deposit facility vs. 185.4B prior

(ZA) South Africa Jan Naamsa Vehicle Sales Y/Y: 14.1% v 1.8% prior

(EU) Euro Zone Feb Sentix Investor Confidence: -3.9 v -1.7e (18th straight negative reading)

(UK) Jan PMI Construction: 48.7 v 49.2e (4th straight contraction)

(EU) Euro Zone Dec PPI M/M: -0.2% v -0.2%e; Y/Y: 2.1% v 2.1%e

(DE) German Jan new car registrations 192K, -8.5% y/y - VDIK

Fixed Income:
(NO) Norway sold NOK3B vs. NOK3.0B in 10-month Bills; Yield 1.77%

(NL) Netherlands Debt Agency (DSTA) sold total 3.71B vs. 5.0B indicated in 3-month and 6-month bills

Sells 2.76B vs. 2.0-3.0B indicated in 3-month bills; Yield: 0.000% v -0.011% prior; Bid-to-cover: 1.64x v 2.1x prior

Sells 1.03B vs. 2.0B indicated in 6-month Bills; Avg Yield: +0.021% v -0.007% prior; Bid-to-cover:3.17x v 3.6x prior


Indices: FTSE 100 -0.30% at 6,326, DAX -0.10% at 7,824, CAC-40 -0.20% at 3,766, IBEX-35 -0.50% at 8,191, FTSE MIB -1.5% at 17,059, SMI +0.24% at 7,438, S&P 500 Futures flat 1,507

European equity markets are mostly lower, as political concerns have weighed on the FTSE MIB in Italy. European banks are mostly lower, led by declines in Italian banks. Resource related firms are broadly lower, in line with the declines being seen for commodity prices. Looking ahead this week will be heavy, in terms of major European corporate earnings. Additionally, traders are expected to focus on central bank meetings (ECB and BoE to meet on Thursday) and data out of China (including monthly CPI and trade balance).

UK movers [Vodafone -1.5% (broker commentary), Stagecoach -1.2% (broker commentary); Salamader Energy +11% (oil find), Randgold +2% (Q4 results)]

Germany movers [SDF -2% (broker commentary), Linde -1% (broker commentary); Symrise +3% (broker commentary), E.ON +2% (union suspended planned strikes)]

France movers [Renault -1.5% (broker commentary), Thales -0.50% (probe related to 787 battery fires)]
Italy movers [Monte Paschi -5% (ongoing concerns related to derivatives transactions),Unicredit -2.5% (broker commentary)]

Switzerland movers [Swatch +2% (FY12 earnings, dividend) ; Meyer Burger -5% (capital raise concerns), Julius Baer -2% (FY results)]

The Netherlands movers [Imtech -35% (impairment charge and probe related to Polish unit)]

ECB Draghi noted that the promissory note used to bailout Anglo Irish was not marketable in a letter to Irish opposition Fin Min and would continue to discuss what was achievable within the context of existing treaties

ECB's Weidmann (Germany) stated that he did not see Spain's economy growing until 2014

German Chancellor Merkel's Cabinet expected to pass bank-separation plan this week

Russia Fin Min Siluanov commented that considering a lower rate on its loan to Cyprus and said to be leaning to rolling over existing loan to Cyprus. He also noted that Russia Inflation could slow to 3-4% by 2018 and that Russia had no timeframe on Eurobond sale; will look to 2012 issuance for yield guidance

Spain Bank Rescue fund (FROB) lent 953M to Deposit Guarantee Fund. FGD borrowed funds for nine months to cover costs of injecting funds into Unnim before its sale to BBVA

Shadow MPC said to have voted 6 to 3 for surprise interest rate hike at this week's BOE rate decision citing fiscal policy being off course. The recent lull in the EMU crisis was also provided an opportunity to raise rates while the markets were calm (Note: BOE interest rate decision on Thursday, Fen 7th with all analysts expecting the BOE to keep both interest rates and asset purchase target unchanged at 0.50% and 375B respectively

IEA Chief Economist Birol: High oil prices are a hurdle for the global economic recovery

The Euro encountered some headwinds to have it pause from its recent strength. Peripheral bond yield moved to 1-month highs on the European open with Spain Rajoy facing corruption allegations while the election in Italy had contender Berlusconi narrowing the front-runners lead. Citigroup commented on the ECB rate decision this week and saw Draghi as opening the door for a future rate cut during the post rate decision press conference, Analyst cited tighter financing conditions following the run-up in money market rates and recent Euro currency appreciation. Over the weekend France Fin Min Moscovici reiterated his view that that the Euro might be "possibly becoming too strong".

JPY currency weakened to test the 93 handle against the USD for fresh 33-month lows for the yen. The USD/JPY has weakened around 7.5% in 2013 thus far. EUR/JPY cross was making its way towards the 127 neighborhood. Dealers noted Japan's finance minister commented that ending the yen's long-running uptrend remained a top priority for the government, suggesting the currency's recent weakening did not yet satisfy the nation's leadership.

The GBP/USD was firmer in the session. Dealers were unsure just exactly how persuasive the Shadow MPC was in which reports that it voted 6 to 3 for surprise interest rate hike at this week's BOE rate decision citing fiscal policy being off course (Note: Symbolic vote)

The AUD/USD was steady at 1.0420 area ahead of the RBA decision on Tuesday with most forecasts having the central bank holding rates steady at 3.00%

Political/ In the Papers:
Japan Fin Min Aso said the Japanese government is modeling policy after measures adopted during 1930s Depression by Fin Min Takahashi, who told BOJ to underwrite govt debt to fund spending reported the Japanese press.

Spain PM Rajoy denied allegations of graft that were raised in Spanish press this week during a televised address to party leaders gathered at an emergency meeting today to address the allegations that for years he and other People's Party members received kickbacks from a slush fund controlled by the party treasurer.

(ES) Spain's opposition Socialist Party calling for resignation of PM Rajoy amid corruption allegations - financial press; Latest polls showing support for Rajoy's People's Party at 23.9%, record low and down from 29.9% in prior month.

France Fin Min Moscovic was reported as saying "The euro is stable, the euro is strong, perhaps too strong in some regards. in the French press

US Port strikers reach deal. Federal mediators say a tentative deal has been reached between companies and longshoremen at east coast and gulf coast ports. An agreement was reached late Friday night covering 14,650 port workers from Boston to Houston who handle container cargo, averting strike actions threatened by the longshoremen's union

(EU) China Sovereign Wealth Fund CIC Chairman Jin: CIC believes its a good time to invest in Europe

(CY) Cyprus central bank: Study into the extent of exposure to Greek banking system has been submitted as part of EU bailout request

(IT) Italy former PM Berlusconi: Promises to abolish a tax on primary residences and refund property taxes forced by the Monti govt - financial press

(UK) Chancellor Osborne in last-minute discussions for power to split up banks - British press

(CN) China PBoC Chief Zhou said to be stepping down in March - Chinese press

Looking Ahead
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

(IT) Italian Court holds Final Berlusconi Hearing

06:00 (IS) Israel to sell Bills and Bonds

06:00 (RO) Romania to sell Bills

06:00 (NO) Norway to sell NOK3.0B in 10-month Bills

06:30 (US) Daily Libor Fixings

08:30 (SG) Singapore Jan Purchasing Managers Index: 48.8e v 48.6 prior; Electronics Sector Index: 47.1e v 46.6 prior

08:50 (FR) France Debt Agency (AFT) to sell 6.2-7.4B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB call for bids in main 7-day Refi Tender

09:45 (US) Jan ISM New York: No est v 54.3 prior

10:00 (DE) German Chancellor Merkel meets Spain PM Rajoy in Berlin

10:00 (US) Dec Factory Orders: 2.3%e v 0.0% prior

10:00 (US) Dec Durable Goods revisions

10:00 (DK) Denmark Jan Foreign Currency Reserves (DKK): No est v 504.0B prior

11:00 (US) Fed to buy $2.75-3.50B in bonds

11:30 (US) Treasury to sell combined $60B in 3-Month and 6-Month Bills

16:00 (CO) Colombia Jan Producer Price Index M/M: No est v -0.7% prior; Y/Y: No est v -3.0% prior

16:45 (NZ) New Zealand Q4 Average Hourly Earnings Q/Q: 0.4%e v 1.4% prior

16:45 (NZ) New Zealand Q4 Private Wages Excluding Overtime Q/Q: 0.6%e v 0.5% prior; Including Overtime Q/Q: 0.5%e v 0.5% prior

22:20 (AU) RBA Interest Rate Decision: Expected to leave Cash Target unchanged at 3.00%

Written by Trade The News   

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    European Market Update : 04/02/2013

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