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Reports Europe

European stock market, economy and companies update (January 31, 2013)

January 31, 2013, Thursday, 10:48 GMT | 05:48 EST | 15:18 IST | 17:48 SGT
Contributed by Trade The News


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

***Equities***
-Indices: FTSE 100 -0.40% at 6,299, DAX -0.30% at 7,784, CAC-40 -0.70% at 3,740, IBEX-35 -1.7% at 8,430, FTSE MIB -1% at 17,122, SMI -0.10% at 7,381, S&P 500 Futures flat at 1,495

- European equity indices are broadly lower, as traders digest US Jan ADP employment and Q4 growth figures, in addition to earnings reports from Santander and Deutsche Bank. Italy's FTSE MIB and Spain's IBEX-35 are leading the declines, amid the rise in peripheral bond yields. Banks are broadly lower, with the exception of Deutsche Bank, while resources related firms are mostly in negative territory. US companies due to report earnings results during the morning session include Aetna, Altria, Colgate, Dow Chemical, Mastercard, Potash, Under Armour, UPS and Whirlpool

-UK moves [E2V Technologies -18% (profit warning), Real Good Food -13.5% (profit warning),Enterprise Inn -10% (sales update), Astrazeneca -5% (FY13 guidance), Investec -2.5% (H1 results), 3i -2% (Q3 trading update), Shell -1.2% (Q4 results); Lonmin +8.5% (production update, broker commentary), Mitchells & Butlers +7.5% (sales update),Kazakhmys +3% (FY12 production), British Sky +1% (H1 results),Diageo +0.90% (H1 results)]
- France movers [Credit Agricole -2.5% (speculation related to new provisions),STMicroelectronics -1.5% (Q4 results); Altran +2.5% (FY12 sales]
- Germany movers [Infineon +3% (Q1 results),Fresenius SE +2.5% (broker commentary), Deutsche Bank +1% (Q4 earnings)]
- Italy movers [Saipem +3.5% (short sale ban in Italy), Banca Monte Paschi flat (Moody's placed rating on downgrade review]
- Spain movers [Santander -2.3% (FY12 results)]
- Switzerland movers [Nobel Biocare -3.6% (broker commentary); Bucher +1.5% (FY12 sales, outlook)]

Speakers:
- ECB member Constancio (Portugal) stated that the legal framework for bank supervisor was robust but must must ensure legacy asset fallout was borne by banks and countries first. Banking resolution should use minimum of public money possible
- Germany's Q1 GDP seen growing by +0.2% (would avoid a technical recession)
- (EU) European Banking Authority (EBA) Chairman Enria stated that it was considering new stress tests in banking sector but had no decision on when
- German Parliamentary member: ECB is concerned that any instability in Cyprus banking sector could impact Greece - financial press
- EU's Barnier: Not out of crisis at this time but over peak of financial crisis
- EU's Ashton: Confident of meeting with Iran soon
- Poland Dep Labor Min stated that Jan Unemployment Rate was seen at 14.0% (**Note Dec came in at 13.4%)
- Spain PM Rajoy spokesperson refuted press report that PM Rajoy has undeclared income (**Note: Press report noted that PM Rajoy received 250K from secret funds between 1997-2008 when he was govt minister and leader of the opposition)
- Ireland High Court rejected claim against promissory bank note
- Germany HDE Retail Association saw 1% retail sales rise in 2013 in nominal terms
- Russia Agricultural Min Fedorov commented that the Govt should lower grain import duty from the current 5% level. He also reiterated that its 2013-14 grain harvest at 95M tons with exports of at least 15M
- Asian Development Bank (ADB) chief Kuroda commented that Asia could grow 6.5-6.6% in 2013. He noted that growth in US and Europe remained elusive and was cautiously optimistic that Asia would lead global growth. China might grow slightly over 8% and India should see 6.5% in its current fiscal year
- S&P: Steps taken by India govt are positive, but still not comfortable enough to change India's rating outlook to stable from negative
- Iran stated that it sought to increase speed of its uranium enrichment program

Currencies:
- Month end trading seemed to provide an excuse for some position squaring of recent FX moves.
- The EUR/USD was slightly weaker in the session despite better German unemployment figures as EUR-related crosses experienced some profit taking.
- Peripheral yields began the session on a higher note with both Spain and Italy up over 10bps at one point (seemed related to Italy's FTSE MIB Index that was off sharp on Wed). Yield did calmed down a bit as the session wore on as the Italian stock exchanged steady. Bund futures were rallying and aided by the weaker German retail sales data for Dec.

Political/ In the Papers:
- (IE) Ireland think tank ESRI cuts 2013 GDP forecast to 1.3% from 2.1% prior, 2014 GDP forecast +2.3% - financial press; Pressure on 2013 budget bailout target.
- (IT) The potential political fallout from the Monte Paschi derivatives scandal has made a split election result more likely - Telegraph's Ambrose Evans-Pritchard
- (UK) BoE's Weale: Nominal GDP target would have more disadvantages than advantages, interest rate commitments may work sometimes; Doubt that QE is as effective as the BOE has claimed.
- (IR) Iran crude oil exports rise to highest level since EU sanctions were put in place, to 1.4M bpd in December from low of 900K bpd in Sept - financial press
- (CN) China Iron and Steel Agency (CISA): steel overcapacity likely to stay unchanged, steel mill profits -98% y/y to CNY1.6B
- (JP) BoJ Dep Gov Yamaguchi: May increase asset purchases further if required; to continue to pursue monetary easing if needed

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (EU) ECB members Constancio (Portugal), Liikanen (Finland) with EU's Barnier at conference in Brussels
- (EU) EU Foreign Ministers hold Meeting in Brussels
- (ES) Spain ban on Short Selling scheduled to end
- (IS) Israel Dec Unemployment Rate: No est v 6.7% prior
- (ES) Spain Nov Total Housing Permits M/M: No est v 5.8% prior; Y/Y: No est v -34.3% prior
- (RU) Russia Q4 Advanced GDP Y/Y: 2.4%e v 2.9% prior; 2012 Annual Real GDP Real Y/Y: 3.5%e v 4.3% prior
- 06:00 (AT) Austria Chancellor Faymann in Vienna with EU's Barroso
- 06:00 (BR) Brazil Dec Unemployment Rate: 4.5%e v 4.9% prior
- 06:00 (RU) Russia Gold & Forex Reserve USD w/e Jan 25th: No est v $530.4B prior
- 06:00 (CZ) Czech Republic to sell CZK9.0B in 12-month Bills
- 06:30 (US) Daily Libor fixing
- 07:00 (CL) Chile Dec Unemployment Rate: 6.0%e v 6.2% prior
- 07:00 (ZA) South Africa Dec Trade Balance (ZAR): -2.4Be v -7.9B prior
- 07:30 (US) Jan Challenger Job Cuts: No est v 32.6K prior; Y/Y: No est v -22.1% prior
- 08:00 (PL) Poland Central Bank (NBP) Jan Inflation Expectations: 2.8%e v 3.4% prior
- 08:00 (DE) Germany Jan Preliminary Consumer Price Index M/M: -0.4%e v +0.9% prior; Y/Y: 2.0%e v 2.1% prior
- 08:00 (DE) Germany Jan Preliminary CPI EU Harmonized M/M: -0.5%e v 0.9% prior; Y/Y: 2.0%e v 2.0% prior
- 08:30 (US) Q4 Employment Cost Index: 0.5%e v 0.4% prior
- 08:30 (US) Dec Personal Income: 0.8%e v 0.6% prior; Personal Spending: 0.3%e v 0.4% prior
- 08:30 (US) Dec PCE Deflator M/M: 0.0%e v -0.2% prior; Y/Y: 1.4%e v 1.4% prior
- 08:30 (US) Dec PCE Core M/M: 0.1%e v 0.0% prior; Y/Y: 1.4%e v 1.5% prior
- 08:30 (US) Initial Jobless Claims: 350Ke v 330K prior; Continuing Claims: 3.171Me v 3.157M prior
- 08:30 (CA) Canada Nov Gross Domestic Product M/M: 0.2%e v 0.1% prior; Y/Y: 1.4%e v 1.1% prior
- 08:30 (CA) Canada Dec Industrial Product Price M/M: 0.0%e v -0.3% prior; Raw Materials Price Index M/M: +0.2%e v -1.9% prior
- 08:30 (BR) Brazil to sell 2013, 2015 and 2016 Bills
- 08:30 (BR) Brazil to sell Fixed-rate 2019 and 2023 bonds
- 09:00 (US) Jan NAPM-Milwaukee: 52.0 v prior (Note Nov release was 45.5)
- 09:30 (US) Hagel Nomination Hearing
- 09:45 (EU) ECB member Praet (Belgium) in Brussels
- 09:45 (US) Jan Chicago Purchasing Manager: 50.5e v 48.9 prior (revised from 51.6)
- 10:00 (MX) Mexico Dec Net Outstanding Loans (MXP): No est v 2.268T prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (CO) Colombia Dec Urban Unemployment Rate: 10.0%e v 9.8% prior
- 11:00 (US) Fed to purchase $1.25-1.75B in Notes
- 14:00 (AR) Argentina Dec Construction Activity M/M: No est v -0.9% prior; Y/Y: No est v -4.7% prior
- 20:00 (CN) China Jan Manufacturing PMI: 51.0e v 50.6 prior


***Notes/Observations***
- FOMC reiterated its condition of 6.5% unemployment and repeated to buy USTs at $45B a month and MBS at $40B per month; Growth in economic activity had paused in recent months
-US Senate reaches deal to vote on debt ceiling extension today and is expected to pass
- German Chancellor Merkel might not have majority support from her own coalition to approve possible Cyprus aid; SPD opposition will probably vote against it
- Japan Dec Industrial Production data below expectations but did rise by fastest pace in 18 months
-BoE's Weale: Would not rule out further QE at some stage
- Germany Dec Retail Sales come in well below expectations
- Germany's Jan Unemployment data comes in better than expected with back month improvement


***Economic Data***
- (DE) Germany Dec Retail Sales M/M: -1.7% v -0.1%e; Y/Y: -4.7% v -1.5%e
- (UK) Jan Nationwide House Prices M/M: 0.5% v 0.2%e; Y/Y: 0.0% v -0.3%e
- (DE) Germany Dec ILO Employment: 41.65M v 41.55M prior; Unemployment rate: 5.3% v 5.3% prior
- (FI) Finland Nov Final Trade Balance: 180M v 210M prelim
- (TH) Thailand Dec Current Account: +730M v -$700Me; Total Trade Balance: $283M v $627M prior; Overall Trade Balance: $0.8B v $1.2B prior
- (TH) Thailand Dec Business Sentiment Index: 50.6 v 52.0 prior
- (FR) France Dec Producer Prices M/M: -0.3% v -0.1%e; Y/Y: 1.6% v 2.0%e
- (FR) France Dec Consumer Spending M/M: 0.0% v 0.1%e; Y/Y: -0.1% v +0.1%e
- (HU) M/M: Hungary Dec Producer Prices M/M: +0.5% v -0.7% prior; Y/Y: -1.8% v -2.0%
- (DK) Denmark Dec Unemployment Rate: 4.8% v 4.9%e; Gross Unemployment Rate: 6.2% v 6.3%e
- (TR) Turkey Dec Trade Balance: -$7.2B v -$9.5Be
- (ES) Spain Jan Preliminary Consumer Price Index Y/Y: 2.6% v 3.0%e; CPI EU Harmonized Y/Y: 2.8% v 3.1%e
- (EU) ECB: 3.01B borrowed in overnight loan facility vs. 4.0M prior; 165.9B parked in deposit facility vs. 208.1B prior
- (HK) Hong Kong Dec Govt Monthly Budget Balance (HKD): 51.7B v 24.8B prior
- (HK) Hong Kong Dec Retail Sales Value Y/Y: 8.8% v 7.6%e; Retail Sales Volume Y/Y: 8.1% v 6.5%e
- (DE) Germany Jan Unemployment Change: -16K v +8.0Ke; Unemployment Rate: 6.8% v 6.9%e
- (NO) Norway Dec Retail Sales Volume M/M: 0.2% v 0.1%e; Y/Y: -1.6% v 2.4% prior
- (IC) Iceland Dec Final Trade Balance (ISK): 3.5B v 5.0B prelim
- (IT) Italy Dec PPI M/M: -0.2% v -0.1%e; Y/Y: 2.0% v 2.0%e
- (CZ) Czech Dec Money Supply Y/Y: 4.5% v 5.0% prior
- (NO) Norway Dec Credit Indicator Growth Y/Y: 6.5% v 6.9%e
- (HK) Hong Kong Dec M3 Money Supply Y/Y: 12.1% v 10.9% prior
- (ES) Spain Nov Current Account: 1.8B v 0.9B prior
- (ZA) South Africa Dec PPI M/M: -0.1% v +0.2%e; Y/Y: 5.2% v 5.5%e
- (EU) Euro Area Q3 house Prices: -0.7% q/q, -2.5% y/y
- (MA) Malaysia Dec M3 Money Supply y/y: 8.8% v 10.7% prior
- (GR) Greece Nov Retail Sales Volume Y/Y: -16.8% v -18.1% prior
- (IN) India Apr-Dec Budget Balance (INR) -4.05T; at 78.8% of FY13 target of INR5.14T
- (MA) Malaysia Central Bank leaves Overnight Rate unchanged at 3.00%. as expected

Fixed Income:
- (HU) Hungary Debt Agency (AKK) sold HUF65B vs. HUF50B indicated in 12-Months Treasury Bills; Avg Yield 5.23% v 5.33% prior; Bid-to-cover: 2.21x v 2.08x
- (SE) Sweden sold SEK750M in I/L 2022 bonds; Yield: 0.2613%
- (IE) Ireland Debt Agency (NTMA) to offer 5 new amortizing bonds to primary dealers