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Reports Europe

European stock market, economy and companies update (January 02, 2014)

January 2, 2014, Thursday, 14:07 GMT | 09:07 EST | 18:37 IST | 21:07 SGT
Contributed by Trade The News


***Notes/Observations***
- China Dec Manufacturing PMIs hit multi-month lows as demand for exports weakens (Official govt PMI Manufacturing hits 4-month low (50.5 v 50.9e); HSBC PMI Manufacturing at 3-month low (50.5 v 50.5e)
- Latvia formally joins the EMU as its 18th member effective Jan 1st
- Major European PMI Manufacturing data shows region continued to stabilize (Spain, Italy, Germany and Euro Zone all meet or slightly exceed expectations; France continues to disappoint


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Equities**
Indices [Stoxx50 -0.8%, FTSE 100 -0.3% at 6,726, DAX -0.6% at 9,494, CAC-40 -0.8% at 4,260, IBEX-35 -1.3% at 9,796, FTSE MIB +0.2% at 19,008, SMI -0.2% at 8,202, S&P 500 Futures closed until 6:00 ET]

- Market Focal Points: Stocks opened at 5-year highs (DAX opened up 0.5%) on the first trading day of the New Year. The open marked the highs for the day as profit takers took most European markets into negative territory within the first 30 minutes of trading. Mixed PMIs kept buyers at bay keeping stocks near the lows ahead of the afternoon session.

By Sector:
- Industrials [Fiat F.IT +12.2% (Deal to buy Chrysler), Finmeccanica FNC.IT -1.0% (India cancels $770M deal)]
- Energy [Ophir OPHR.UK -6.2% (No oil found at Mlinzi well), RWE RWE.DE -1.7% (Rumors of a capital raise, but company says no plans for any capital increase)]
- Financials [Colonial COL.ES -9.2% (To call extraordinary shareholder meeting), Sacyr Vallehermoso SYV.ES -9.2% (may suspend work on Panama canal expansion)]
- Consumer Discretionary [Sligro SLIGR.NL -2.6% (Dec Rev below expectations), Debenhams DEB.UK -2.7% (CFO to resign)]

Speakers:
- ECB's Weidmann (Germany): Reiterates view that Negative real interest rates should not be permanent. Problem that 'too big to fail' has yet to be solved. He noted that ECB might charge more for any new LTROs to prevent carry trades
- German CDU's Bosbach: Reiterates view that a third aid package for Greece is likely in 2014, but a bond haircut is unlikely
- German govt official Kuehl: Seek to tighten conditions for individuals who declare tax evasion to avoid persecution. Individuals would have to declare all tax evaded for 10 years from current 5
- Turkey Econ Min Zeybekci: Need to be calm regarding FX intervention; silent power might be more effective on FX level. He supported restriction on credit cards and luxury spending
- Czech Social Democrat leader Sobotka: Govt might take power by mid-Jan

Currencies/Fixed Income:
- Risk appetite began 2014 on wobbly footing after weaker than expected China manufacturing PMI reading. Overall FX action was generally quiet in Asia in early new year trade, with Japan remaining closed until Monday (Jan 6th) and little effort in Europe
- With the start of 2014 dealers will watch the trading range for January in the EUR/USD pair. The January trading range historically marked either the HIGH/LOW for the Euro for the remainder of the trading year. The 1.3903 level is the 6-year financial crisis downtrend line will be closely watched
- The GBP saw little reaction in the miss of its PMI Manufacturing data. The GBP/USD was fractionally lower at 1.6555 as the data was still second-strongest in past two-and-a-half years
- TRY currency (Lira) hit fresh record low against USD amid political scandal; trades above 2.1760 level
- Bund and Gilt futures started the year with sharp losses setting the trend for what is likely a further rise in yields this year as major economies continue to stabilize. The 10-year Treasury yields opens 2014 electronic trade at 3.04%; highest level since 2011

Political/In the Papers:
- (UK) According to a poll from economists, UK 2014 economy's growth rate seen close to 3% v 2.4% forecasted by UK treasury last month
- (FR) France President Hollande: Tax burden has become too heavy, 2013 was intense and difficult; Govt spending to be reduced in 2014, lower taxes and reduce labor costs for business
- (ES) Spain Fin Min De Guindos: Expects job creation in 2014 to be significant
- (IT) Italy President Napolitano: in 2014 hope to have Italy on a path toward growth, improved employment, and political and judicial reform
- (CN) PBoC won't conduct open market operations (OMO) in today's session; Drains CNY29B this week v injected CNY29B prior (first net drain in 3 weeks)
- (CN) China State Information Center: 2014 GDP may be 7.5%; 2014 PPI may decline 0.5%

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (CZ) Czech Dec Budget Balance (CZK): No est v -79.4B prior
- (ZA) South Africa Dec Naamsa Vehicle Sales Y/Y: No est v -4.6% prior
- 06:00 (RU) Russia Gold and Forex Reserve w/e Dec 20th: No est v $508.5B prior
- 06:45 (US) Daily Libor Fixing
- 07:00 (BR) Brazil Dec PMI Manufacturing: No est v 49.7 prior
- 07:30 (US) Jan RBC Consumer Outlook Index: No est v 49.7 prior
- 08:00 (PL) Poland Q3 Current Account Balance: -€2.3Be v €0.4B prior
- 08:30 (US) Initial Jobless Claims: 342Ke v 338K prior; Continuing Claims: 2.90Me v 2.92M prior
- 08:58 (US) Dec Final Markit PMI Manufacturing: 54.7e v 54.7 prelim
- 09:30 (BR) Brazil weekly Currency Flows
- 10:00 (US) Dec ISM Manufacturing: 56.8e v 57.3 prior; ISM Prices Paid: 53.0e v 52.5 prior
- 10:00 (US) Nov Construction Spending M/M: 0.7%e v 0.8% prior
- 10:00 (MX) Mexico Nov Total Remittances: $1.8Be v $1.9B prior
- 11:00 (US) Treasury 3-year, 10-year and 30-year refunding announcement
- 12:00 (BR) Brazil Dec Monthly Trade Balance: $1.5Be v $1.7B prior; Total Exports: $20.7Be v $20.9B prior; Total Imports: $19.0Be v $19.1B prior
- 12:00 (IT) Italy Dec Budget Balance: No est v -€7.2B prior
- 12:00 (IT) Italy Dec New Car Registrations Y/Y: No est v -4.5% prior
- 13:00 (MX) Mexico Dec IMEF Manufacturing Index: 51.5e v 50.1 prior; Non-Manufacturing Index: 51.1e v 50.4 prior
- 20:00 (CN) China Dec Non-manufacturing PMI: No est v 56.0 prior


***Economic Data***
- (IN) India Dec HSBC/Markit PMI Manufacturing: 50.7 v 51.3 prior; second straight month of growth
- (AU) Australia Dec Commodity Index AUD: 92.1 v 89.9 prior; Commodity Index Y/Y: -4.0 v -1.9% prior
- (IE) Ireland Dec Investec Manufacturing PMI: 53.5 v 52.4 prior
- (SE) Sweden Dec PMI Manufacturing: 52.2 v 55.2e
- (PL) Poland Dec Manufacturing PMI: 53.2 54.8e; 7th straight month of expansion
- (HU) Hungary Dec Manufacturing PMI: 50.2 v 52.6 prior; 5th straight month of growth
- (TR) Turkey Dec Manufacturing PMI: 53.5 v 55.0 prior
- (NL) Netherlands Dec PMI Manufacturing: 57.0 v 56.8 prior; highest since April 2011 (32 month high)
- (EU) ECB €301M borrowed in overnight loan facility vs. €32M prior; €85.7B parked in deposit facility vs. €86.9B prior - Daily Eurosystem Liquidity Conditions
- (ES) Spain Dec. Manufacturing PMI: 50.8 v 49.8e; first growth in two months
- (SE) Sweden Oct Non-Manual Workers Wages Y/Y: 1.9% v 1.6% prior
- (CZ) Czech Republic Dec Manufacturing PMI: 54.7 v 55.4 prior
- (SE) Sweden Nov Household Lending Y/Y: 4.9% v 4.9%e
- (HK) Hong Kong Nov Retail Sales Value Y/Y: 8.5% v 5.5%e; Retail Sales Volume Y/Y: 9.0% v 4.0%e
- (IT) Italy Dec PMI Manufacturing: 53.3 v 51.7e; 6th straight month of growth and highest since Aug 2011
- (FR) France Dec Final PMI Manufacturing: 47.0 v 47.1e; Seven month low and confirms 22nd straight month of contraction
- (DE) Germany Dec Final PMI Manufacturing: 54.3 v 54.2e; confirms its 6th straight month of growth
- (EU) Euro Zone Dec Final PMI Manufacturing: 52.7 v 52.7e
- (GR) Greece Dec Manufacturing PMI: 49.6 v 49.2 prior; highest since Sept 2009 but 51st reading in contraction territory
- (UK) Dec PMI Manufacturing: 57.3 v 58.4e
- (DK) Denmark Dec PMI Survey: 53.5 v 57.9 prior

Fixed Income:
- None seen