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Reports Europe

European stock market, economy and companies update (November 28, 2012)

November 28, 2012, Wednesday, 11:37 GMT | 06:37 EST | 16:07 IST | 18:37 SGT
Contributed by Trade The News


- Indices: FTSE 100 -0.20% at 5,787, DAX -0.10% at 7,324, CAC-40 -0.30% at 3,492, IBEX-35 -0.90% at 7,794, FTSE MIB -0.20% at 15,449, SMI +0.20% at 6,726, S&P 500 Futures -0.10% at 1,396

- European equity markets have tracked yesterday's declines in the US equity markets, as concerns about the "fiscal cliff" and debt ceiling issues continue to linger. Today's weakness has been led by Greece's Athens Stock Exchange (ASE), as markets continue to await more details related to the Greek government's bond buyback plan. Also, there is uncertainty about when Germany's parliament will vote on Greece's aid package. Spain's IBEX has declined by over 1%, as the Bank of Spain said that it expects the country's economic contraction to continue into Q4. European banks are broadly lower, led by weakness in the Greek banking sector. Shares of Deutsche Bank have also underperformed. Resource related firms are moving lower, amid the decline in Chinese equities and commodity prices.

- UK movers [Tate & Lyle -2.3% (ex-dividend), National Grid -1.9% (ex-dividend), Smith & Nephew -1% (announced acquisition), Thomas Cook -1.5% (weaker than expected FY12 sales); Marks & Spencer +3.5% (pension agreement), United Utilities +2% (raised interim dividend), Arm Holdings +1% (renewed takeover speculation)]
- France movers (Bourbon -1.2% (index removal)]
- Germany movers [Deutsche Bank -1.5% (capital concerns/libor testimony), ThyssenKrupp -1.5% (asset sale concerns), Metro -3% (share placement speculation), Celesio -2% (share placement), Wacker Chemie -1% (index removal)]
- Italy movers (Banco Popolare -2.5% (credit rating concerns), Banca Monte Paschi -1.5% (approved capital plan)]
- Switzerland movers [Swiss Life -4.5% (writedown for AWD unit), Nobel Biocare -1 % (index removal)]
- Austria movers [Raiffeisen Bank -4% (Q3 earnings)]
- Greece [Banks have again traded lower by over 4% on today's session (uncertainty related to gov't debt buyback and German aid vote)]

- Bank of Spain (BOS): Recent data suggests that Q4 GDP will continue to contract; Impact of ECB measures starting to wane
- ECB's Couere: Temptation to fragment markets should be restricted; Integration is key to economic growth
- ECB's Demetriades (Cyprus): Not ruling out a rate cut as short term EMU outlook remains weak. Negative deposit rate is possible, but not sure if desirable, its uncharted waters and will need to be approached with caution. Sensible for OMT to aim at short-end of curve, but can't rule out buying on the long end. OMT could become relevant for countries other than Spain
- BoE Deputy Gov Bean: Q4 will be weak, UK GDP decline possible. QE was less effective now than during 2009. Door hasn't been closed for further asset purchases. Euro area remains biggest downside risk to outlook. Inflation not too much of a concern
- Netherlands Fin Min Dijsselebloem: No reason to delay the deposit guarantee plan and would not for an EU agreement on deposit guarantee plan
- EU Commission approves restructuring plans for 4 Spanish banks; The 4 banks capital needs are 37B
- Sweden Central Bank Financial Stability Report: Financial sector is financially strong but several structural weaknesses in system. Recommends banks to have adequate capital and liquidity. To recommend STIBOR reform as it does have shortcomings
- Greece to announce details on coming bond buy back scheme in coming days
- Thailand Central Bank stated after keeping rate unchanged that the decision to hold was unanimous (7 to 0) as current policy already supported economic growth

- Dealers noted that sentiment was wobbling on the edge of the fiscal cliff that provided some flows into both USD and JPY currencies ahead of the European open. A comment from Senate Majority leader Reid noted that that little progress on the budget talks had been made between Democrats and Republicans.
- Despite Uncertainties that still remain in the details of the Greek deal and concerns of upcoming European Parliament votes on the Greece the peripheral yield were a touch lower in the session. Italy 10-year gov't yield below 4.70%, lower by several basis points in session and lowest level since mid-2011. The EUR/USD was marginally softer in the session after failing to convincingly print reversal candle on Tuesday's close. The pair tested 1.2912 before stabilizing with support layered thru the mid 1.28 level.

Political/ In the Papers:
- (DE) German CDU lawmaker Meister: German Parliament cannot approve a Greece package if it believes there is a risk of a haircut at a later date
- (DE) German Bundesbank's Weidmann: No direct Bundesbank transfers to Greece- Die Welt; Bundestag (lower house) to decide on use of Bundesbank profit
- (GR) German opposition member Steinbrueck: Bundestag vote on Greece should be delayed until lawmakers have all necessary information; A related report said that the SPD may boycott the Greek vote this week and push for a date to vote next week as the party is seeking more information
- (GR) Greece PM Samaras: Reiterates no further painful austerity measures are needed but there is more to do yet to increase growth and create jobs
- PBoC said to be more tolerant regarding the appreciation of the yuan, as the central bank has intervened less in the fx market - Xinhua; A related Chinese press report said that in Oct the PBoC bought a net of CNY1.08B in foreign exchange vs. CNY2.04B in Sept; In Aug, the PBoC purchased CNY5.5B in foreign exchange.

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- (EU) EU Blueprint Report and integration of the single market (deepening of EMU ties)
- (US) US House Speaker Boehner on Fiscal Cliff
- (FR) France President Hollande with Sweden PM Stoltenberg in Paris
- (DE) Germany Nov CPI Baden Wuerttemberg M/M: No est v 0.0% prior; Y/Y: No est v 1.7% prior
- (BR) Brazil Central Bank (COPOM) Interest Rate Decision: Expected to leave the SELIC Target Rate unchanged at 7.25%
- 06:00 (EU) EU Commission growth survey
- 06:00 (DE) Germany Nov CPI Bavaria M/M: No est v 0.1% prior; Y/Y: No est v 2.1% prior
- 06:00 (IE) Ireland Retail Sales Volume M/M: No est v 0.9% prior; Y/Y: No est v 1.4% prior
- 06:30 (CL) Chile Central Bank's Traders Survey
- 06:30 (US) Daily Libor Fixing
- 06:30 (CL) Chile Central Bank Minutes
- 07:00 (GR) Greece Cabinet meeting
- 07:00 (US) MBA Mortgage Applications w/e Nov 23rd: No est v -2.2% prior
- 08:00 (DE) Germany Nov Preliminary Consumer Price Index M/M: -0.1%e v 0.0% prior; Y/Y: 1.9%e v 2.0% prior
- 08:00 (DE) Germany Nov Preliminary CPI EU Harmonized M/M: -0.1%e v 0.1% prior; Y/Y: 2.0%e v 2.1% prior
- 08:30 (DE) German Parliament Finance Committee on Basel III
- 09:30 (BR) Brazil Central Bank Weekly Currency Flow Data
- 10:00 (US) Oct New Home Sales: 390Ke v 389K prior
- 10:30 (EU) EU Commissioner Rehn in Parliament
- 10:30 (US) Weekly DOE Crude Oil Inventories
- 11:00 (IC) Iceland Central Bank Minutes from Rate Meeting
- 11:00 (US) Fed to purchase $1.75-2.25B in bonds
- 11:00 (IC) Iceland releases minutes from Rate Meeting
- 12:15 (US) Fed's Tarullo on foreign bank regulation
- 12:15 (CH) SNB President Jordan Speaks in Bern
- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 14:00 (US) Fed releases Beige Book Economic Survey
- 14:00 (US) Fed to purchase $4.25-5.25B in Notes
- 14:00 (US) Fed releases Beige Book Economic Survey
- 18:50 (JP) Japan Oct Retail Sales M/M: +1.0%e v -3.6% prior; Y/Y: -0.8%e v +0.4% prior

***Economic Data***
- (TH) Thailand Central Bank left Benchmark Interest Rate unchanged at 2.75%, as expected
- (ES) Spain Oct Adjusted Real Retail Sales Y/Y: -9.7% v -9.4%e; Real Retail Sales Y/Y: -8.4% v -10.0%e
- (DE) Germany Nov CPI Saxony M/M: -0.1% v +0.1% prior; Y/Y: 2.0% v 2.0% prior
- (HU) Hungary Oct Unemployment Rate: 10.5% v 10.5%e
- (EU) ECB: 2.46B borrowed in overnight loan facility 2.4B prior; 241.9B parked in deposit facility vs. 245.2B prior
- (NL) Netherlands Nov Producer Confidence: -7.0 v -7.9e
- (SE) Sweden Q3 Current Account (SEK): 66.1B v 61.5B prior
- (EU) Euro Zone Oct M3 Money Supply Y/Y: 3.9% v 2.8%e (highest reading since Oct 2008) v 2.7% prior; M3 Money Supply 3M Average: 3.1% v 2.8%e
- (DE) Germany Nov CPI Brandenburg M/M: -0.2 v 0.1% prior; Y/Y: 1.5% v 1.9% prior
- (DE) Germany Nov CPI Hesse M/M: -0.2 v 0.0% prior; Y/Y: 1.8% v 2.0% prior
- (IC) Iceland Nov CPI M/M: 0.3% v 0.3% prior; Y/Y: 4.5% v 4.2% prior

Fixed Income:
- (RU) Russia sold RUB13.5B vs. RUB15B indicated in 2017 OFZ bonds; Yield 6.80% vs. guidance of 6.80-6.85%
- (SE) Sweden sold SEK3.5B in 2023 Bonds, Yield 1.6158% v 1.4416% prior
- ECB allotted $3.2B in 7-Day USD Liquidity Tender at fixed 0.68% vs. $3.3B prior
- (IT) Italy Debt Agency (Tesoro) sold 7.5B vs. 7.5B indicated in 6-month Bills, Avg Yield 0.919% (lowest since April 2010) v 1.34% prior; Bid-to-cover: 1.65x v 1.52x prior
- (EU) ECB allotted 7.4B in 3-Month MRO Tender at fixed 0.75% vs. 10.0Be
- (DE) Germany sold 2.507B in 0.5% Oct 2017 BOBL; Avg Yield 0.41% v 0.42% prior; Bid-to-cover: 1.9x v 1.5x prior