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Reports Europe

European stock market, economy and companies update (October 05, 2012)

October 5, 2012, Friday, 10:29 GMT | 05:29 EST | 13:59 IST | 16:29 SGT
Contributed by Trade The News

- BOJ keeps rates unchanged as expected but again lowers its economic assessment
- IMF said to be cutting 2012 and 2013 global outlook
- French Stats Agency INSEE sees Quarterly growth stuck at Zero
- Markets remain cautious ahead of US Jobs report
- Italy PM Monti, Spain PM Rajoy and France President Hollande to meet in Malta later today

-Indices: FTSE 100 +0.25% at 5,842, DAX +0.30% at 7,328, CAC-40 +0.60% at 3,420, IBEX-35 +0.60% at 7861, FTSE MIB +0.40% at 15,573, SMI +0.10% at 6,639, S&P 500 Futures flat at 1,456

- Following the slightly higher open, equities have remained in positive territory ahead of the later today US payrolls report. The Athens Stock Exchange (ASE) has outperformed on merger speculation in the banking sector. Banks are mostly higher, led by French and Spanish financials. Resource related companies are gaining despite mixed commodity prices.
- In Greece, shares of National Bank of Greece [ETE.GR] and Eurobank [EUROB.GR] have risen by over 5% on merger speculation. In France, Sanofi [SAN.FR] has outperformed the overall CAC-40, as the company presented data on its Lantus treatment. Air Berlin [AB1.DE] has moved slightly higher following the release of its September traffic figures. Fiat [F.IT] has declined by over 0.50%, amid speculation that the firm could seek to enter into a transaction with Opel. Swiss Re [SREN.CH] has lost over 0.50%, after disclosing that its Chief Investment Officer(CIO) would resign.

- FTSE 100 movers (Vedanta +3%, ENRC +2.5%, IMI +2.3%, Rio Tinto +2.1%, Rexam +2%; United Utilities -1.4%, British Land -1.3%, Johnson Matthey -1.2%, Smith & Nephew -1.2%, Next -1.1%)
- CAC-40 movers (Technip +2.7%, SocGen +1.7%, BNP Paribas +1.6%, Vallourec +1.5%, STMicroelectronics +1.2%; Bouygues -2%, EDF -1.2%, GDF Suez -1%)
- DAX movers (SAP +1.1%, Volkswagen, BMW +1%, Lanxess -1.2%)
- IBEX-35 movers (Grifols +1.7%, Acciona +1.2%, Indra Sisemas +1.1%, Santander +1.1%; Bankia -4%, Gas Natural -1%)
- FTSE MIB movers (Parmalat +3.6%, Eni +1.1%; Mediaset -1.9%, Lottomatica -1.2%, Fiat -1%)
- SMI movers (Givaudan +1.8%, Swiss Re -1.2%)

- IMF said to be cutting its 2012 and 2013 global GDP growth forecasts with 2012 global GDP growth outlook lowered to 3.3% from 3.4% and 2013 global GDP growth outlook cut to 3.6% from 3.9%. The IMF to also cut its outlook for several, BRICS countries with China 2013 GDP growth outlook cut to 8.2% from 8.4% prior; India 2013 GDP growth cut to 6.0% from 6.6% prior and Brazil 2013 GDP growth cut to 4.0% from 4.7% prior. On Europe the IMF to cut 2012 German GDP growth to 0.9% from 1.0% and 2013 German GDP growth outlook to 0.9% from 1.4%
- IMF Spokesperson Rice stated in the press that the IMF would visit Spain between Oct 15-26th to supervise banking aid program and would report findings to Spain and the EU when finished
- A Senior Euro zone official commented that there would be no decision on Greece anytime soon and was confident that any and added that a Spanish bailout request was not imminent. Spain bond credit enhancement idea was 'simply not the case' nor was a Greek debt restructuring was not on the table. A decision was needed on legacy cutoff date and discussions had started on direct bank recap mechanism. Too soon to say was ESM recaps had seniority with no rush to finish work on recap mechanism
- Spain Econ Min Latorre stated that sovereign bond spreads did not correspond to Spain fundamentals and that Spain was sticking to its 2013 growth forecasts
- EU's Barroso commented that EU Countries must eliminate imbalances
- Swiss Oct KOF Institute again cut its 2012 GDP forecast to 0.9% from 1.2%
- Czech Central Bank minutes noted that the decision was not unanimous to cut Repo Rate by 25bps to 0.25% back on Sept 27th with Board members Rezabek and Zamrazilova voted against the rate cut. The Board was also split on Non-Standard policy measures. Stronger CZK currency had been surprising and would needed to be taken into account in future policy deliberations
- Hungary Econ Min Matolcsy cut its 2013 GDP growth forecast to 1.0% from 1.6% prior view but noted that the budget deficit to be below 3% in both 2012 and 2013. He also noted that the domestic economy to be in recession in 2012. He also added that it would not extend transaction tax to Central bank
- Poland Fin Min Rostowski commented that Polish economic conditions were determined by the Euro area as its exports comprised approx 40% of Polish GDP
- The Russian Central Bank commented after its rate decision that it held interest rates steady based upon inflation risks and growth prospects. It noted that inflation was linked to both food and tariffs

- FX markets were quiet with limited price movement ahead of the key US employment report.
- The EUR/USD pair hovered around the 1.30 handle throughout the session and locked within a 30 pip range. The pair was off its session lows after reports circulated that ECB would buy 'heavily' in bond markets in its OMT program for 1 to 2 months then stop for an assessment period. The German Bundesbank would participate despite its opposition
- The USD/JPY pair was steady around the 78.40 area in subdued trading. The JPY had little reaction to the BOJ rate decision and press conference

Political/ In the Papers:
-(BE) Belgium Minister-President Kris Peeters (CD & V): 2013 will be a difficult year but will get better in 2014; Sees GDP of 1.9% from 2014-2017 - De Tijd
-(EU) BNP Adviser Lemierre: No country comes out of the euro, it would be too expensive and nobody wants to take responsibility for the political purpose - De Tijd
-(FR) France Stats agency INSEE quarterly outlook: Sees flat growth Q3 and Q4, which marks 5 consecutive quarters with no growth; Sees France 2012 GDP at 0.2% but only thanks to statistical carryover from 2011 when GDP was 1.7%.
- (DE) Germany Fin Min Schaeuble: Reducing debt is a precondition for sustained growth; will warn about high debt levels at upcoming IMF meeting
-(GR) Greece's sovereign bond prices have moved off of the lows hit in late May - FT; Some have suggested that hedge funds have been driving the rally in Greek bonds on moves by the ECB and less concern about a Greek exit from the Euro.
- (IT) Chairman of Banca Monte Paschi said there could be a credit crunch when banks in Italy have to repay 3-year ECB LTRO loans - financial press
- (GR) Two large Greece banks in advanced merger discussions - Greek press

***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- 06:00 (DE) Germany Aug Factory Orders M/M: -0.5%e v +0.5% prior; Y/Y: -4.3%e v -4.5% prior
- 06:00 (IE) Ireland Aug Industrial Production M/M: No est v 1.0% prior; Y/Y: No est v 4.8% prior
- 06:00 (IC) Iceland to sell Bonds
- 06:10 (UK) DMO to sell combined 2.5B in 1-month, 3-mnth and 6-month Bills
- 06:30 (US) Daily Libor fixing
- 07:30 (CL) Chile Aug Economic Activity Index M/M: No est v 0.4% prior; Y/Y: 5.6%e v 5.3% prior
- 07:30 (IN) Weekly India Forex Reserves
- 08:00 (BR) Brazil Sept IBGE Inflation M/M: 0.5%e v 0.4% prior; Y/Y: 5.2%e v 5.2% prior
- 08:00 (PL) Poland Sept Official Reserves: No est v $103.5B prior
- 08:15 (CH) UBS Chairman Axel Weber Speaks in Zurich
- 08:30 (US) Sept Change in Nonfarm Payrolls Sep 115Ke v 96Kprior; Change in Private Payrolls: 129Ke v 103K prior; Change in Manufacturing Payrolls: 0.0Ke (flat) v -15K prior
- 08:30 (US) Sept Unemployment Rate: 8.2%e v 8.1% prior; Underemployment Rate: No est v 14.7% prior; Change in Household Employment: no est v -119K prior
- 08:30 (US) Sept Avg Hourly Earning M/M: 0.2%e v 0.0% prior; Y/Y: 1.8%e v 1.7% prior; Avg Weekly Hours: 34.4e v 34.4 prior
- 08:30 (CA) Canada Sept Net Change in Employment: +10.0Ke v +34.3Kprior; Unemployment Rate: 7.3%e v 7.3% prior; Full Time Employment: no est v -12.5K prior; Part Time Employment Change: no est v +46.7 prior; Participation Rate: no est v 66.6% prior
- 08:30 (CA) Canada Aug Building Permits M/M: -1.3%e v -2.3% prior
- 10:45 (US) US President Obama campain remarks
- 12:00 (IT) Italy PM Monti with France President Hollande and Spain PM Rajoy in Malta
- 13:00 (DE) German Chancellor Merkel
- 13:00 (US) Feds Duke
- 13:30 (IT) Italy PM Monti press conference in Malta
- 15:00 (US) Aug Consumer Credit: +$7.5Be v -$3.3B prior
- 20:00 (CO) Colombia Sept Consumer Price Index M/M: 0.2%e v 0.0% prior; Y/Y: 3.0%e v 3.1% prior

07:00 (BR) Brazil Municipal Elections

***Economic Data***
- (RU) Russia Central Bank (CBR) leaves Refinancing Rate unchanged at 8.25%; As expected
- (RU) Russia Narrow Money Supply w/e Oct 1st (RUB): 7.11T v 7.19T prior
- (ZA) South Africa Sept Net Reserves: $48.8B v $48.3B prior; Gross Reserves: $51.0B v $50.0B prior
- (HU) Hungary Sept Foreign Currency Reserves: 34.6B v 35.2B prior
- (ES) Spain Aug Industrial Output WDA Y/Y: -3.2% v -5.5%e; Industrial Output NSA Y/Y: -3.1% v -2.7% prior
- (CH) Swiss SNB Sept foreign currency reserves (CHF): 429.3B v 418.4B prior
- (CZ) Czech Aug Retail Sales Y/Y: -0.8% v -0.9%e
- (DK) Denmark Aug Industrial Production M/M: -2.3% v -2.7%e;
Industrial Orders M/M: -27.5% v +23.4% prior
- (HU) Hungary Aug Preliminary Industrial Production M/M: +2.6% v -1.2% prior; Y/Y: +1.4% v -1.5%e
- (AT) Austria Sept Wholesale Price Index M/M: 0.4% v 1.9% prior; Y/Y: 4.2% v 4.5% prior
- (SE) Sweden Aug Service Production M/M: +0.3% v -0.2%e; Y/Y: 1.2% v 1.0%e
- (SE) Sweden Sept Budget Balance (SEK): 2.8B v 11.1B prior
- (CZ) Czech Sept International Reserves: $40.5B v $40.0B prior
- (NO) Norway Aug Industrial Production M/M: +0.3% v -4.5% prior; Y/Y: 1.9% v 2.6% prior
- (NO) Norway Aug Manufacturing Production M/M: +0.9% v -0.3%e; Y/Y: 5.6 v 7.6% prior
- (TW) Taiwan Sept Foreign Exchange Reserves: $398.0B v $394.2B prior
- (IT) Bank of Italy (BOI) Sept Balance-Sheet Aggregates: ECB funding to banks in Italy: 276.7B vs. 280.7B prior
- (EU) Euro Zone Q2 GDP y/y revised lower from -0.5% to -0.9%

Fixed Income:
- (IN) India sold total INR130B vs. INR130B indicated in 2020, 2025 and 2041 bonds
- (ZA) South Africa sold total ZAR570M in I/L 2025, 2038 and 2050 Bonds