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Reports Europe

European stock market, economy and companies update (April 12, 2013)

April 12, 2013, Friday, 10:07 GMT | 05:07 EST | 13:37 IST | 16:07 SGT
Contributed by Trade The News


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

***Equities***
Indices: FTSE 100 -0.60% at 6,379, DAX -1.3% at 7,772, CAC-40 -0.90% at 3,742, IBEX-35 -1% at 8,075, FTSE MIB -1.2% at 15,822, SMI -0.40% at 7,784, S&P 500 Futures -0.30% at 1,584

- European equity markets are broadly lower, despite Thursday's gains in US equities. Markets have seen profit taking, ahead of corporate earnings from JP Morgan and Wells Fargo. Also, key data out of China (including Q1 GDP) is due to be released next week. Furthermore, there are concerns that Cyprus may require more EU funds. Following the out performance seen earlier in the week for the banking sector, financials are trading lower on today's session, led by declines in shares of Santander. Resource related firms are mostly lower, in line with the declines being seen for commodity prices. A weaker than expected sales forecast from India's Infosys has weighed on the overall European software sector (Atos Origin -2%, Cap Gemini -3.5%, Software AG -3%).

- UK movers [Johnson Matthey +2% (broker commentary); Croda -3% (broker commentary), William Hill -1.5% (broker commentary), BAE Systems -1.5% (broker commentary)]
- Germany movers [Duerr +2% (broker commentary); K+S -2.5% (broker commentary), Volkswagen -2.5% (cautious commentary)]

Speakers:
- Cyprus President Anastasiades commented that it would ask EU for extra assistance ( **There was some thought that Cyprus might need €23B: On March 10th, the ECB said that Cyprus' financing needs for 2013-16 at €23B and confirmed the size of the aid package at €10B
- Financial press report followed that Cyprus to ask for increase in €10B loan and seek more from EU structural funds and that the request to be for more aid in letters to EU officials
- Cyprus Fin Min official: President was not suggesting an increase in bailout loans but refered to technical and structural aid
- EU Official: Loan of €10B to Cyprus would NOT be renegotiated; country did not ask for fresh money at meeting today
- EU Supervisors Report on Risks to Euro Zone's Economy reiterated that any risk of contagion related to Cyprus was limited
- The informal Eurogroup meeting took place in Dublin with a rash of commentary by officials heading into the gathering.
- Eurogroup head/Netherlands Fin Min Dijsselbloem noted that Slovenia was not on agenda at meeting today and hoped to reach an agreement on Cyprus MOU today. He was confident about reaching an agreement on loan extensions for Ireland, Portugal. He added that the Japanese JPY currency (yen) was NOT on Eurogroup agenda today nor was the Euro exchange rate rate
- EU Commissioner Rehn stated that he saw an agreement on Ireland and Portugal loan extensions and an extensive debate on banking union today
- Austria Fin Min Fekter reiterated her stance on bank secrecy with no need to automatically share information with EU
- Germany Fin Min Schaeuble added that he saw good result on Cyprus from Eurogroup meeting
- Spain Fin Min De Guindos reiterated euro zone monetary policy transmission is broken.
- Ireland Fin Min Noonan noted that Cyprus will not be a main issue at Eurogroup today as situation is pretty well resolved
- France Fin Min Moscovici stated that the meeting must make progress on banking union
- Cyprus Fin Min Georgiades confirmed that it had received a letter from ECB chief Draghi regarding central bank independence and agreed with contents of letter
- Cyprus President Anastasiades: Cyprus Parliament has authority to investigate central bank gov Demetriades
- Ireland Central Bank's Sheridan stated that it needed faster pace for dealing with delinquencies
- Japan Cabinet Office April Monthly Report maintained its economic assessment that economy was showing signs of picking up recently, while weakness could be seen in some areas. Assessment of personal consumption, exports and bankruptcies were all raised (Note: *First pause in assessment after three straight economic upgrades)
- Japan Econ Min Amari commented that there was is a time lag in which the weaker JPY currency would benefit exports and that the weaker JPY would have a positive effect on economy. He noted that BOJ Gov did report on monetary adjustments at the Monthly Cabinet meeting
- Thailand Central Bank Asst Gov stated that it might take measures if household debt and asset prices continued to rise and affect long term financial stability. He also noted that it would continue to monitor capital inflows
- North Korea Gov official: To increase production of nuclear material for energy purposes

Currencies:
- Renewed reports that Cyprus would ask for an increase in is €10B bailout weighed upon risks as an informal Eurogroup and Ecofin meeting got under way. Numerous EU officials noted that Cyprus would not be a topic at the meetings was quickly dismissed as 'rhetoric'. The EUR/USD was lower to test the lower part of the 1.30 handle. The risk aversion also prompted the JPY currency to move off trend lows.

Political/In the Papers:
-(CY) Cyprus Finance Ministry reportedly extends capital controls for another 7 days; will allow transactions of up to €300K within the country; Increases allowances for company payments overseas to €20K
-(EU) IMF Global Financial Stability Report: Monetary easing has delayed the repair of bank balance sheets, ECB easing may have impacted European bank stocks and increased default risks
- (EU) Govt officials attempting to push for a clean up of the banking balance sheets in the EU; may look to conduct stress tests before the ECB adopts its supervisory role - financial press
- (EU) EU's Rehn: Model used in Spain is a reference point; resolution should be enforced in parallel with ESM program
-(EU) ECB's Kranjec: Unjustified to compare Slovenia to Cyprus, situation is serious but a bailout program can be avoided
- (GR) Greece and troika making progress on civil servant issues, indicate than a deal may be reached by Tuesday - ekathimerini
- (PT) Portugal faces struggle to avoid a second bailout - FT
- (PT) According to leaked documents, the Troika estimates that Portugal will need to borrow €14.1B in 2014 - London Telegraph
- (JP) Japan BOJ Gov Kuroda: Reiterates will do whatever is necessary to defeat deflation and make policy adjustment when ncecessary - press conference
- JGB: (JP) BoJ purchased ¥2.51T in JGBs across the curve in today's bond buying operation (as indicated) - US financial press; Demand for the 5-10 yr and more than 10-yr JGB operations was more than 3X the offer; Demand at the shorter dated operations was about 4X the offer

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (DE) German Chancellor Merkel with UK PM Cameron
- (NL) ECB member Knot in Dublin
- 06:00 (IT) Group of advisors report to President Napolitano
- 06:00 (JP) Japan Econ Min Amari to hold briefing
- 06:00 (BE) Belgium to sell Bonds
- 06:00 (EU) ECB Announces repayments in 3-Year LTROs
- 06:10 (UK) DMO to sell £3.0B in 1-month, 6-month and 3-month bills
- 06:30 (US) Daily Libor Fixing
- 06:30 (EU) EU-27 Finance Ministers, Central Bankers meet in Dublin
- 07:00 (FI) Finland PM Katainen with Porugal PM Coelho
- 07:30 (BR) Brazil Feb Economic Activity Index M/M: -0.7%e v+ 1.3% prior; Y/Y: No est v 3.8% prior
- 07:30 (IN) India Forex Reserves w/e Apr 5th: No est v $292.7B prior
- 08:00 (IC) Iceland Mar Unemployment Rate: No est v 5.5% prior
- 08:00(PL) Poland Mar M3 Money Supply: 0.6%e v 0.8% prior; M3 Money Supply Level (PLN): No est v 920.8B
- 08:30 (US) Mar Producer Price Index M/M: -0.2%e v +0.7% prior; Y/Y: 1.4%e v 1.7% prior
- 08:30 (US) Mar PPI Ex Food & Energy M/M: 0.2%e v 0.2% prior; Y/Y: 1.7%e v 1.7% prior
- 08:30 (US) Mar Advance Retail Sales: 0.0%e v 1.1% prior; Retail Sales Less Autos: 0.0%e v 1.0% prior; Retail Sales Ex Auto & Gas: 0.3%e v 0.4% prior
- 08:45(US) Fed's Rosengren (moderate, voter) in Boston
- 09:55 (US) Apr Preliminary University of Michigan Confidence: 78.5e v 78.6 prior
- 10:00 (US) Feb Business Inventories: 0.4%e v 1.0% prior
- 10:00 (EU) EU's Almunia speaks at ABA Antitrust Law Event in Washington
- 12:30 (US) Fed Chairman Bernanke at conference on low income
- 15:00 (AR) Argentina Mar Consumer Price Index M/M: 0.6%e v 0.5% prior; Y/Y: 10.4%e v 10.8% prior
- 15:00 (AR) Argentina Mar Wholesale Price Index M/M: No est v 1.0% prior; Y/Y: No est v 13.3% prior


***Notes/Observations***
- Informal Eurogroup and EcoFin meetings in Dublin Ireland seeks to reach an agreement on Cyprus MOU and discuss banking union; Slovenia is not on agenda
- EU may adjust ECB Bank supervision rules to address German concerns
- Cyprus extends capital controls for seven days but eases some restrictions
- Cyprus President Anastasiades: To ask EU for "extra assistance
- IMF Draft cuts US 2013 GDP outlook on sequester concerns; raises Japan
- Japan maintains economic assessment that economy showing signs of a pick-up
- China CNY currency has 7th straight week of gains; best winning streak in 5-months ahead of next week's GDP data (**Note due on April 15th with 8.0%e y/y)

***Economic Data***
- (RU) Russia Narrow Money Supply w/e Apr 8th (RUB): 7.43T v7.41 T prior
- (IN) India Feb Industrial Production Y/Y: +0.6% v -1.3%e
- (DE) Germany Mar Wholesale Price Index M/M: -0.2% v +0.1% prior; Y/Y: 0.3% v 1.4% prior
- (FI) Finland Feb Final Retail Sales Volume Y/Y: -0.6% v -1.9% prior
- (FR) France Feb Current Account: -€ v -€5.0B prior
- (HU) Hungary Feb Final Industrial Production M/M: 0.3% v 0.3% prelim; Y/Y: -1.1% v -1.1% prelim
- (ES) Spain Mar Consumer Price Index M/M: 0.4% v 0.3%e; Y/Y: 2.4% v 2.4%e
- (ES) Spain Mar CPI EU Harmonized M/M: 1.9% v 1.9%e; Y/Y: 2.6% v 2.6%e
- (ES) Spain Mar CPI Core M/M: 0.6% v 0.6%e; Y/Y: 2.3% v 2.2%e
- (EU) ECB: €807M borrowed in overnight loan facility vs. €1.1B prior; €108.9B parked in deposit facility vs. €99.9B prior
- (IT) Italy Mar Final CPIM/M: 0.2% v 0.3%e, Y/Y: 1.6% v 1.7%e; EU Harmonized Y/Y: 1.8% v 1.8% prelim
- (ES) Bank of Spain (BOS): Mar Spanish Banks ECB borrowings at €260B vs. €272B prior (7th straight decline)
- (IT) Bank of Italy Releases Feb. Public Finance Supplement General Government Debt: €2.017T v €2.023T prior
- (UK) Feb Construction Output M/M: +5.5 v -4.8% prior; Y/Y: -7.0 v -5.5% prior
- (EU) Euro Zone Feb Ind. Production M/M: 0.4% v 0.2%e; Y/Y: -3.1% v -2.5%e

Fixed Income:
- (IN) India sold total INR150B vs. INR150B indicated in 2018, 2025, 2030, and 2041 bonds