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Reports Europe

European stock market, economy and companies update (December 12, 2012)

December 12, 2012, Wednesday, 12:05 GMT | 07:05 EST | 16:35 IST | 19:05 SGT
Contributed by Trade The News


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

***Equities***
- Indices: FTSE 100 +0.20% at 5,937, DAX +0.20% at 7,605, CAC-40 -0.10% at 3,641, IBEX-35 +0.40% at 7,949, FTSE MIB +0.25% at 15,624, SMI +0.30% at 6,991, S&P 500 Futures +0.10% at 1,433

- Follow the mixed open, European equity markets are mostly higher ahead of the US Fed rate decision. The peripheral indices have outperformed, amid the decline in Spanish and Italian bond yields, while the French CAC-40 has underperformed. Coming into today's session, the CAC-40 had closed higher for 7 straight days. European banks are mostly higher. Outperformers in the sector include Bankia and Commerzbank, while laggards include BNP and Unicredit. Additionally, Greek banks have moved higher by over 2%, as the country's sovereign bonds have extended gains following the close of the acceptance period for the debt buyback. There has been speculation that some of Greece's private sector creditors may keep some of their exposure to the country's bonds, after the buyback, as some believe that the risk of a Greek exit from the euro zone has declined in recent months.

- UK movers [HMV +5% (speculation of financial support agreement), Senior +3.5% (trading update), Drax +1% (renewed takeover speculation); SuperGroup -7% (H1 profits declined y/y), Imagination Technologies -4% (H1 results)]
- France movers [Peugeot +6% (speculated related to added job cuts); Accor -1% (French high court ruling)]
- Germany movers [Wacker Chemie +5.5% (China said to have raised subsidies for certain solar projects), ThyssenKrupp +2.5% (broker commentary)]
- Spain movers [Inditex -0.80% (9-month results)]
- Switzerland movers [Barry Callebaut -2% ($950M acquisition)]

Speakers:
- Greece Debt Agency (PDMA) confirmed bond buy back price at avg 33.8 cents on the euro. It would accept 1.29B in EFSF financing if offered
- IMF's Selassie reiterated view of strong progress being made in Portugal's reforms. Further drag on growth from fiscal adjustment is one of the risks. One third of the adjustment to still be one
- ESM head Regling said Spain's yields were sustainable, reiterates did not believe the country would need more funds
- OPEC expected to maintain current oil production quotas at meeting today and will not discuss individual country quotas. Debate over new Sec Gen will be a harsh one with Libya's Abdullah al-Badri likely to be asked to stay in the post for another six months
- Goldman Sachs economist: RBA might cut rates to 2.00% due to AUD currency strength
- Czech Central Bank Vice Gov Tomsik: Negative interest rates are possible but not the optimal solution
- IEA Monthly Oil Market Report slightly increased its global oil demand forecast by 100K bpd for 2012 and 2013. It now forecasted 2013 oil demand growth at 865K bpd but noted demand growth to remain sluggish. It saw 2013 global oil demand at 90.5M bpd and raised 2013 Non-Opec supply forecast by 70K bpd to 54.2M bpd. It maintained 2013 avg OPEC stocks at 29.9M bpd. It stated that 5 of world's top 10 oil consumers were now Non-OECD countries
- OPEC oil ministers comments ahead of meeting
- UAE Oil Min: OPEC production is at levels the market needs; global economy is struggling and need to watch developments closely; Sec Gen must be unanimously elected
- Iran Oil Min: Oil production cut would be better for the market as market is over supplied; not expecting any deal on individual country quotas
- Libya Oil Min: Oil proces are comfortable for both suppliers and consumers; production now back to normal in Libya
- Iraq Oil Min: Will not cut its own production
- Ecuador Oil Min: Current oil prices are comfortable for consumers and producers.

Currencies:
- Risk appetite was on steady footing that resulted in a softer USD and JPY currencies against the major pairs in the session. The markets also awaited the conclusion of the FOMC meeting and were expecting the board to decide on new steps to ease monetary policy to replace the Fed's Operation Twist program, which expires this month.
-The JPY continued its soft tone against the major currencies ahead of the weekend Japanese elections. The USD/JPY hit a fresh 8-month high just below the 83 handle. .
-The EUR/USD stayed above the 1.30 handle in the session with investors appearing to welcome the results of the Greek buy-back scheme. The Greek 10-year government bond yield eased 0.25bps to test under 12.85%. There is also optimism that a banking union agreement could be reached at today's European Finance Minister meeting. Lastly commented from ECB's Praet took out some of the rate cut speculation from the ECB after he noted that interest rates had only a small amount of maneuvering room
- Ahead of Thursday's SNB rate decision there was chatter that a Swiss bank paid a large premium for a good amount of at the money options

Political/ In the Papers:
- (EU) ECB's Praet: Interest rates only have a small amount of maneuvering room, ECB strongly evaluating economic signals - financial press; Notes the ECB is technically prepared for a negative deposit rate but full impacts must be evaluated, must be careful with negative rates
- (GR) Update on Greece's debt buyback: Offers above 31B, Debt buyback to bring down debt levels to 126.6%/GDP (below the 124% target); Average price of the buyback came in at 0.335
- (IT) Italy Democratic Party chief Bersani: Would be best for PM Monti not to run in upcoming elections; Italy will remain in European Union no matter what; Italy needs austerity now.
- (PT) Portugal contingency plan if the govt fails to meet 2013 deficit target includes state employee payroll cuts as well as efficiency improvements- Jornal de Negocios
- (ES) For the first 9-months, Spain's regions said to owe suppliers around 13B - Spanish Press
- (US) US House Speaker Boehner does not find the reduced $1.4T White House offer as acceptable - financial press; The counter offer did not substantially change earlier $800B increase in tax revenue.
- (US) House Speaker Boehner aide: GOP made a counter-proposal today to a new offer proposed by the White House on the fiscal cliff on Monday - financial press
- (US) US President Obama is optimistic on fiscal deal; adds that time is running short - financial press
- (US) US President Obama, House Speaker Boehner held phone conversation regarding fiscal cliff Tuesday evening - financial press
- (US) Senate Majority Leader Reid (D-NV): Will be hard to reach a deal by Christmas

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (AT) OPEC Meeting in Austria
- (LX) Luxembourg PM Juncker in Parliament on State finances
- (IT) Former Italy PM Berlusconi to appear at Book Presentation in Rome
- (EU) EU Finance Ministers meet on Banking Supervision
- (EU) EU Finance Ministers meet in Brussels
- (IS) Israel Nov Trade Balance: No est v -$1.7B prior
- 06:00 (PL) Poland to sell Bonds
- 06:30 (US) Daily Libor Fixings
- 06:30 (CL) Chile Central Bank's Traders Survey
- 07:00 (UK) Prime Minister's Question Time in House of Commons
- 07:00 (US) MBA Mortgage Applications w/e Dec 7th: No est v 4.5% prior
- 08:00 (AT) OPEC press conference
- 08:30 (EU) EU Finance Minister Meeting
- 08:30 (US) Nov Import Price Index M/M: -0.5%e v +0.5% prior; Y/Y: -1.0%e v +0.4% prior
- 09:00 (MX) Mexico Oct Industrial Production M/M: -0.3%e v 0.9% prior; Y/Y: 3.4%e v 2.4% prior
- 09:00 (UK) BOE's Jenkins
- 09:15 (UK) Economists testify on Autumn Budget Statement
- 09:30 (BR) Brazil Central Bank weekly currency flows
- 10:00 (US) U.S. Federal Election Commission Holds Open Meeting
- 10:00 (DE) Swiss-German Tax accord mediation committee meets at Bundesrat
- 10:30 (US) Weekly DOE U.S. Crude Oil Inventories
- 11:00 (EU) ECB's Constancio presents Financial Stability Review
- 12:00 (US) United Nations' Security Council on North Korea
- 11:30 (US) Treasury to sell $21B in 10-Year Notes
- 12:00 (CA) Canada to sell 3 Year Notes
- 12:30 (US) FOMC Interest Rate Decision: expected to leave interest rates unchanged at 0.25%
- 14:00 (US) FOMC to Release Projections of Economy and Fed Funds Rate
- 14:00 (US) Nov Monthly Budget Statement: -$170.0Be v -$137.3B prior
- 14:15 (US) Fed Chairman Bernanke holds Press Conference
- 16:00 (CO) Colombia Oct Trade Balance: $365.0Me v $440.0M prior; Imports CIF: No est v $4.6B prior


***Notes/Observations***
- All eyes on the Fed and reactions to the widely anticipated next round of QE
- North Korea successfully launches satellite; UN Security Council to meet later today
- President Obama and House Speaker Boehner exchange offers
- India Oct Industrial Production beats expectations with largest monthly rise since June 2011
- Greece 10-year gov't yield at lowest level since April 2011 following completion of buy-back
- Italy 12-month Bills Avg Yield hits lowest since March
- USD/JPY pair hits 8-month high near the 83 handle; break above targets 92
- UK Jobless Claims Change comes in better than expected
- Ravi Shankar dies at 92.


***Economic Data***
- (DE) Germany Nov Final Consumer Price Index M/M: -0.1% v -0.1%e; Y/Y: 1.9% v 1.9%e
- (DE) Germany Nov Final CPI EU Harmonized M/M: -0.2% v -0.1%e; Y/Y: 1.9% v 2.0%e
- (FR) France Oct Current Account: -2.8B v -3.4B prior
- (FR) France Nov Consumer Price Index M/M: -0.2% v 0.0%e; Y/Y: 1.4% v 1.6%e; CPI Ex Tobacco Index: 124.61 v 124.77e
- (FR) France Nov CPI EU Harmonized M/M: -0.2% v 0.0%e; Y/Y: 1.6% v 1.8%e
- (ES) Spain Oct House transactions Y/Y: 12.8% 0.9% prior
- (ZA) South Africa Nov CPI (all items) M/M: 0.0% v 0.2%e v; Y/Y: 5.6% v 5.6%e
- (EU) ECB: 507M borrowed in overnight loan facility vs. 569M prior; 236.7B parked in deposit facility vs. 229.0B prior
- (NL) Netherlands Oct Trade Balance: 3.6B v 3.6B prior
- (IC) Iceland Central Bank (Sedlabanki) left its 7-day Lending Rate at 6.00%
- (UK) Nov Jobless Claims Change: -3.0K v +7.0Ke; Claimant Count Rate: 4.8% v 4.8%e; Employment Change 3M/3M: +40K v +45Ke
- (UK) Oct Average Weekly Earnings 3M/Y: % v 1.9%e; Weekly Earnings ex-Bonus 3M/Y: % v 1.9%e
- (UK) Oct ILO Unemployment Rate: % v 7.8%e
- (EU) Euro Zone Oct Industrial Production M/M: -1.4% v 0.0%e; Y/Y: -3.6% v -2.4%e
- (CH) Swiss Dec Credit Suisse ZEW Expectations Survey: -15.5 v -27.9 prior
- (PT) Portugal Nov Consumer Price Index M/M: -0.3%% v -0.1%e; Y/Y: 1.9% v 2.2%e
- (PT) Portugal Nov CPI EU Harmonized M/M: -0.4% v -0.2%e; Y/Y: 1.9% v 2.1%e

Fixed Income:
- (SE) Sweden sold SEK3.5B vs. SEK3.5B indicated in 3.75% 2017 Bonds; Yield 0.9374%
- (EU) ECB allotted$3.3B in 7-Day USD Liquidity Tender at fixed 0.66% vs. $$4.1B prior
- (IT) Italy Debt Agency (Tesoro) sold 6.5B vs. 6.5B indicated in 12-month Bills ; Avg Yield 1.456% (lowest since March) v 1.762% prior; Bid-to-cover: 1.94x v 1.76x prior
- (CH) Switzerland sold CHF299M in 1.25% 2037 Bonds; Avg Yield 0.969% v 1.031% prior
- (RU) Russia sold RUB20B in 2017 OFZ Bonds; Yield 6.48%