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Reports Europe

European stock market, economy and companies update (December 07, 2012)

December 7, 2012, Friday, 12:12 GMT | 08:12 EST | 17:42 IST | 20:12 SGT
Contributed by Trade The News


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

***Equities***
- FTSE 100 -0..10% at 5,896, DAX -0.10% at 7,528, CAC-40 -0.10% at 3,599, IBEX-35 -0.60% at 7,864, FTSE MIB -0.80% at 15,702, SMI -0.05% at 6,909, S&P 500 Futures -0.10% at 1,412

- Equity markets in Europe, are trading mixed as the German Bundesbank raised concerns about the growth outlook for the country. The Italian FTSE MIB has once again lagged on today's session, amid political concerns and rise in peripheral bond yields. Banks are mostly lower, as traders assess yesterday's ECB commentary related to negative interest rates. Underperformers in the sector include Banco Popular Espanol, Bankia, Commerzbank, Intesa and Unicredit. Data from the Bank of Italy showed that Italian banks reduced their reliance on the ECB for the 4th straight month in Nov. Looking ahead, markets are expected to focus on the monthly US payrolls report and German Oct industrial production data. Also, later today is the deadline for submissions related to Greece's debt buyback plan.

- UK movers [Marks & Spencer -1.5% (broker commentary), Photo-Me International -2.5% (H1 sales down y/y)]
- France movers [Club Med -4% (FY results), Alcatel Lucent -2.5% (removed from CAC-40), GDF Suez -1% (cautious broker commentary, follow-through selling); Gemalto +1% (added to CAC-40)]
- Germany movers [Loewe -4% (cautious FY outlook), Deutsche Telekom -3% (cut dividend), Dialog Semiconductor -1% (6 straight decline), RWE and E.ON -0.50% (Germany 2013 power prices hit record lows), Reinsurers underperform DAX (follows earthquake in Japan); Linde +1% (broker commentary)]
- Italy movers [Impreglio +2% (approved strategic plan),Telecom Italia +1% (considering sale of stake in fixed-line unit, rejects Sawiris offer)]
- Spain movers [Banco Popular and Bankia lower by over 3% (continue to underperform European banking sector, higher Spanish yields)]
- Greece moves [Greek banks broadly lower (today is deadline for debt exchange submissions)]

Speakers:
- German Bundesbank cut its 2012 and 2013 GDP growth forecasts and noted that the cyclical outlook for German economy had dimmed. The central bank cut its 2012 GDP growth to +0.7% from 1.0% prior Jun view and slashed the 2013 GDP to +0.4% from +1.6% prior Jun view. It also raised 2013 Unemployment Rate to 7.2% from 6.5% prior Jun view. It noted that the German economic activity might decline in Q4 2012 and in Q1 2013 with the main drag on growth stemmed from slowing global economy and EMU crisis with risks to the downside. It added that the weak growth phase would not likely to last very long
- Austria Central Bank cuts its 2013 GDP growth Outlook to 0.5% from 1.7% prior view
- Greece said not willing to extend the deadline for the debt buyback plan and will be completed later today
- ECB's Draghi stated at a EU-Hungary press conference that lowering interest rates to stimulate economy might risk sparking depreciation pressures in currency at some point. Fiscal imbalances were starting to be unwound, deleveraging was proceeding in an orderly way. Credit flows to real economy negatively affected in some parts of Euro zone
While indebted economies crimped Central Bank room to maneuver. The debt crisis was a cautionary tale for aspiring Euro members
- Hungary Central Gov Simor: Stimulating growth need not put price stability at risk. Public debt must be put on a sustainable declining path and the health of Hungary financial system must be retained
- ECB's Nowotny: Sees problematic development of real economy with inflation easing
- Hungary Chief IMF negotiator Varga: Chance for IMF deal 'smaller' than before, may continue IMF talks after 2013 budget is discussed
- Czech Pres Klaus: will NOT sign any change to Lisbon Treaty to allow bailout fund creation from 2013 (**Note: Will not stop implementation of ESM itself as only approval from euro-zone member states is needed for the program and that has already been completed)
- Poland Fin Min Rostowski saw room for significant Polish rate cuts
- Poland Labor Ministry: Sees Nov jobless rate at 12.9%
- India Fin Min Chidambram commented that it would seek an additional INR321.1B in gross spending in current fiscal year but saw no need for extra borrowing at this time

Currencies:
- The EUR/USD encountered another bout of weakness after the German Bundesbank cut its 2012 and 2013 growth forecasts. The EUR/USD tested 1.2920 before stabilizing, Dealers noted that there were several technical factors aiding support around the 1.2910-20 area but the trend seemed lower unless it could climb back above the 1.3030 by the NY close. The submission of bids for the Greek debt buy-back was set to expire just after the European markets close but the results wont be known until late next week.
- The JPY strengthened following the initial reports of a 7.3 magnitude earthquake in the Northeastern sector of the country. The USD/JPY tested 82.20 on the initial reports of the quake on repatriation flows but the pair edge back higher as the Tsunami warnings were lifted in Japan

Political/ In the Papers:
- (GR) Greece draft tax bill looking to raise 3.0B over 2-yrs uses an increased income tax and a stricter system of issuing social benefits for families - ekathimerini
- (CY) Cyprus Fin Min Shiarly: Cyprus economy to contract by 3.5% in 2013 v 2.4% seen previously
- (IT) Democratic Party leader Pier Luigi Bersani: PD party (centrist) will support Italy PM Monti until the end
-(UK) UK Institute for Fiscal Studies (IFS) recommends govt to raise money through tax rises vs cuts - British press
- (CN) China Academy of Social Sciences (CASS) analyst Yi Xianrong: China needs to cut housing inventory to reduce risk of a market bubble - Chinese press

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (RU) Russia Narrow Money Supply w/e Dec 3rd (RUB): No est v 7.24T prior
- (CO) Colombia Monetary Policy Minutes
- (RU) Russia Nov Official Reserve Assets: No est v $526.8B prior
- 06:00 (DE) Germany Oct Industrial Production M/M: 0.0%e v -1.8% prior; Y/Y: -1.5%e v -1.2% prior
- 06:00 (PT) Portugal Oct Industrial Sales M/M: No est v 8.8% prior; Y/Y: No est v -8.1% prior
- 06:00 (PT) Portugal Oct Trade Balance: No est v-1.1B prior
- 06:00 (CL) Chile CPI M/M: 0.0%e v 0.6% prior; Y/Y: 2.6%e v 2.9% prior; CPI Ex Perishables & Fuel M/M: 0.0%e v 0.2% prior
- 06:00 (PT) Portugal Q3 Final GDP Q/Q: -0.8%e v -0.8% prelim; Y/Y: -3.4%e v -3.4% prelim
- 06:00 (BR) Brazil Nov IBGE Inflation IPCA M/M: No est v 0.6% prior; Y/Y: No est v 5.5% prior
- 06:00 (IC) Iceland to sell Bonds
- 06:10 (UK) DMO to sell 2.5B in 1-month, 3-month and 6-month Bills
- 06:30 (US) Daily Libor Fixings
- 06:30 (EU) ECB member Knot (Netherlands)
-06:30 (CL) Chile Nov Trade Balance: $60Me v $70.0M prior; Total Exports: No est v $7.3B prior; Total Imports: No est v $7.3B prior
-06:30 (CL) Chile Nov Copper Exports: No est v $4.4B prior
- 06:30 (IN) India Weekly Forex Reserves
- (BR) Brazil Nov Vehicle Production: No est v 318.7K prior; Vehicle Sales: No est v 341.6K prior; Vehicle Exports: No est v 41.8K prior
- 08:30 (US) Nov Change in Nonfarm Payrolls: +85Ke v +171Kprior; Change in Private Payrolls: +90Ke v +184K prior; Change in Manufacturing Payrolls: -3Ke v +13K prior
- 08:30 (US) Nov Unemployment Rate: 7.9%e v 7.9% prior; Underemployment Rate: No est v 14.6% prior; Change in Household Employment: No est v +410K prior
- 08:30 (US) Nov Avg Hourly Earning M/M: 0.2%e v 0.0% prior; Y/Y: 1.7%e v 1.6% prior; Avg Weekly Hours: 34.4e v 34.4 prior
- 08:30 (CA) Canada Nov Net Change in Employment: +10.0Ke v +1.8K prior; Unemployment Rate: 7.4%e v 7.4% prior; Full Time Employment Change: No est v +7.3K prior; Part Time Employment Change: No est v -5.5prior; Participation Rate: No est v 66.8% prior
- 08:30 (IT) EU's Barroso to meet Italy PM Monti
- 09:00 (MX) Mexico Nov Consumer Prices M/M: 0.8%e v 0.5% prior; Y/Y: 4.4%e v 4.6% prior; CPI Core M/M: 0.2%e v 0.2% prior
- 09:55 (US) Dec Preliminary University of Michigan Confidence: 82.0e v 82.7 prior Nov final
- 10:00 (DE) ECB member Weidmann (Germany) in Berlin
- 10:00 (CA) Canada Dep Fin Min Horgan in Toronto
- 10:00 (UK) Nov NIESR GDP Estimate: No est v +0.5% prior
- 11:00 (US) Fed to sell $7.0-8.0B in notes
- 12:00 (GR) Deadline for submission for Greek debt buyback (**Note: Details to be unveiled on Thurs, Dec 13th)
- 15:00 (US) Oct Consumer Credit: $10.0Be v $11.4B prior


***Notes/Observations***
- China Shanghai Composite has best weekly gain in 3 months
- Australia trade balance showed the highest deficit since late 2009, Exports to China rose to A$6.28B from A$5.25B prior
- Asia Development Bank trimmed its 2012 and 2013 Asia GDP to 6.0% and 6.6% respectively
- Budget talks said to have resume between White House and Boehner staff
- Berlusconi party PDL withdraws support for Monti. Raises risk of snap elections; Italian PDL opposition meets Italy President
- German Bundesbank cuts 2012 and 2013 GDP outlook; Austria cut growth view too in session
- A 7.3 magnitude earthquake hits offshore North-eastern Japan; limited tsunami warning issued (later lifted); Fukushima nuclear facility was not impacted.
- UK industrial Production and Manufacturing data come in worse than expected with back-month downwards revisions
- Focus on US Nov Non-Farm payrolls

***Economic Data***
- (RU) Russia Narrow Money Supply w/e Dec 3rd (RUB): 7.16T v 7.24T prior
- (ZA) South Africa Nov Net Reserves: $48.4B v $48.6Be; Gross Reserves: $50.8B v $50.7Be
- (DE) Germany Q3 Labor Costs Q/Q: 0.7% v 1.5% prior; Y/Y: 3.3 v 2.5% prior
- (FI) Finland Oct Preliminary Trade Balance: -225M v -61.0M prior
- (FR) France Oct Central Govt. Balance: -94.6B v -85.0B prior
- (FR) France Oct Trade Balance: -4.7B v -4.9Be
- (DK) Denmark Oct Industrial Production M/M: -1.4% v -3.3% prior; Industrial Orders M/M: -11.0% v 10.9% prior
- (CZ) Czech Oct Trade Balance (CZK): 33.0BB v 38.0Be
- (CZ) Czech Q3 Final GDP Q/Q: -0.3% v -0.3%e; Y/Y: -1.3% v -1.5%e
- (HU) Hungary Oct Preliminary Industrial Production M/M: -3.8% v +0.7% prior; Y/Y: -3.8% v 0.6%e
- (HU) Hungary Q3 Final GDP Q/Q: -0.2% v -0.2% prelim; Y/Y: -1.5% v -1.5% prelim
- (CH) Swiss Nov Foreign Currency Reserves (CHF): 424.8B v 422.0Be
- (TW) Taiwan Nov Total Trade Balance: $3.4B v $3.2Be; Total Exports Y/Y: +0.9% v +7.8%; Total Imports Y/Y: +0.1% v +7.3%
- (EU) ECB: 585M borrowed in overnight loan facility 665M prior; 230.0B parked in deposit facility vs. 229.3B prior
- (SE) Sweden Nov Budget Balance (SEK): +8.2BB v -14.2B prior
- (AT) Austria Nov Wholesale Price Index M/M: -1.0%% v -0.4% prior; Y/Y: 2.8% v 4.2% prior
- (NL) Netherlands Oct Industrial Production M/M: -1.0% v -0.2%e; Y/Y: -1.7% v -0.4%e; Industrial Sales Y/Y: +3.3% v -3.9% prior
- (IC) Iceland Q3 GDP Q/Q: +3.5% v -6.5% prior; Y/Y: 2.1% v 0.2% prior
- (CZ) Czech Q3 Current Account: -? v -260.2M prior
- (CZ) Czech Nov International Reserves: $44.2B v $44.2B prior
- (NO) Norway Oct Industrial Production M/M: +4.8% v -5.6% prior; Y/Y: +2.5% v -5.0% prior
- (NO) Norway Oct Manufacturing Production M/M: -0.3%% v+ 0.4%e; Y/Y: 2.7% v 2.4% prior
- (HK) Hong Kong Nov Foreign Currency Reserves: $305.2B v $301.7B prior
- (UK) Oct Industrial Production M/M: -0.8% v +0.8%e; Y/Y: -3.0% v -0.5%e
- (UK) Oct Manufacturing Production M/M: -2.1% v -0.2%e; Y/Y: -2.1-0.2%e
- (UK) Nov BoE/GfK Inflation Expectations Survey: Next 12 Months: 3.5% v 3.2% prior
- (IT) Bank of Italy Nov Balance-Sheet Aggregates: .
- (GR) Greece Q3 Final GDP Y/Y: -6.9% v -7.2% prelim
- (IT) Bank of Italy (BOI) Nov Balance-Sheet Aggregates: ECB funding to banks in Italy: 273.3B v 276.5B prior

Fixed Income:
- (IN) India sold total INR120B vs. INR120B indicated in 2020, 2025 and 2041 bonds
- (ZA) South Africa sold total ZAR800M in I/L 2022, 2038 and 2050 Bonds