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Reports Europe

European stock market, economy and companies update (October 15, 2012)

October 15, 2012, Monday, 09:57 GMT | 04:57 EST | 13:27 IST | 15:57 SGT
Contributed by Trade The News


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Plan for Santander to buy RBS UK retail branches collapses
- Fed Chief Bernanke urges developing countries to let their currency appreciate to aid global rebalancing
- Scotland leader Salmond meets UK leader Cameron today to lay groundwork to end 300 years union with UK
- China Trade Balance has constructive components but doubts whether China will be able to sustain these numbers into the year-end; CPI release shows PBoC has room for ease if needed
- Renewed speculation that a Spanish bailout request will come in November to coincide with a revised Greek program and a Cyprus aid package
- Greece 10-year bond yields at lowest levels since the march PSI debt restructuring
- India WPI inflation data at 10-month high and adds pressure on RBI to refrain from cutting rates

***Equities***
-Indices: FTSE 100 +0.50% at 5,821, DAX +0.80% at 7,288, CAC-40 +1.2% at 3,429, IBEX-35 +0.70% at 7,703, FTSE MIB +0.90% at 15,659, SMI +0.70% at 6,699, S&P 500 Futures +0.50% at 1,428.50

- Following the losses seen during the prior week, European equity indices are mostly higher. The strongest gains have been seen by the French CAC-40, amid gains in shares of energy producer Total. Also, French banks have led the gains being seen in the banking sector. Resource related firms are trading mixed, as commodity prices have moved lower.

- In France, shares of energy producer Total [FP.FR] have gained over 1%, as the company reported a sharp y/y rise in its Q3 European refining margin. Alcatel Lucent [ALU.FR] has lost 3%,as Chinese competitor ZTE Corp issued a profit warning. Shares of Vivendi [VIV.FR] have advanced by over 2%, amid speculation that the firm could seek a merger for its SFR unit. In Germany, cosmetics retailer Douglas [DOU.DE] is higher by more than 7%, as the company received a bid from Advent International. Electric cable maker Leoni [LEO.DE] has declined by over 1% amid speculation that the firm could issue a profit warning. Swedish retailer H&M [HMB.SE] has traded higher, as the firm's Sept sales figures beat analyst expectations. In Switzerland, transport-services firm Panalpina [PWTN.CH] is lower by more than 6%, as the company made cautious comments regarding the outlook for the air freight business. UK-listed medical imaging firm Optos [OPTS] is higher by more than 7%, after the company guided its FY revenues above expectations. RBS [RBS.UK] has lagged the performance of other European banks, amid reports that the agreement for the firm to sell over 300 branches to Santander had collapsed.

- FTSE 100 movers (Hargreaves Lansdown +2.8%, Standard Chartered +1.8%, Barclays +1.7%, Kingfisher +1.5%, Lloyds +1.5%; BT Group -1.7%, Kazakhmys -1.2%)
- CAC-40 movers (Vivendi +2.7%, Accor +2.3%, Alstom +2.2%, Credit Agricole +2.2%, Total +1.9%; Alcatel -4%)
- DAX movers (Commerzbank +1.7%, RWE +1.5%, BASF +1.4%, SAP +1.4%, Deutsche Bank +1.3%; K+S -2.3%)
- IBEX-35 movers (Bankia +2.2%, Acciona +2.1%, Santander +1.9%, Iberdrola +1.1%, Endesa +1%, Repsol +1%; Banco Popular -2.9%, Gamesa -2%, Sacyr -1.2%, Acerinox -1.2%, Banco de Sabadell -1%)
- FTSE MIB movers (Mediaset +3.3%, Banca Popolare di Milano Scarl +1.9%, Finmeccanica +1.9%, Mediobanca +1.8%, Banca Monte dei Paschi di Siena +1.5%)
- SMI movers (Credit Suiise +1.7%, Givaudan +1.2%, Adecco +1.1%, Swatch +1%)

Speakers:
- EU's Rehn stated that he aimed to complete talks with Greece by mid-Nov and considering giving Greece more time for fiscal reforms. Hope to reach pact with Greece on fiscal goals and structural reforms this week
- German Fin Min Schaeuble stated that Europe was on track to solve its problems
- Italy PM Monti commented that the financial crisis was causing fragmentation of EMU, must integrate financial markets more
- Former ECB official Orphanides commented that another rate cut from the ECB would be warranted give the weak economic outlook
- The Lombardy region in Italy might have snap elections. A new government could be named, as the regional governor was being probed as part of a graft scandal.
- German Foreign Min Westerwelle stated that he was concerned about situation on Turkey-Syria border. He added that he expected to strengthen sanctions against Iran at EU Foreign Ministers meeting in Luxembourg today
- Russia Central Banker stated that Russia's 2013-15 GDP growth could be below 3.5-4.0% range
- Russia may cut oil export duty 3.4% to $404.5/ton effective Nov 1st
- Hungary Dep Econ Min Csefalvay stated that the Govt was committed to keeping deficit below 3% of GDP and would take more steps to ensure the target if necessary
- Taiwan Central Bank stated that real interest rates were tuning negative due to higher CPI data and it would adopt appropriate monetary policy

Currencies:
- The USD softened during a quit European session with dealers focusing on EU Commissioner Rehn comments that seem that fall in line with earlier rumors that a Spanish bailout request would come in November to coincide with a revised Greek program and a Cyprus aid package. The EUR/USD started the session around the 1.2900 area but climbed to test 1.2950 by mid-morning. Overall analysts noted that the EUR/USD forward points suggested further stability for the time being.
- The M&A flows in the USD/JPY appeared to be baked in after Japan's Softbank confirmed plans to take $20.1B or 70% stake in Sprint. The pair was holding steady around 78.65 area.
- Key retail sales data later today in the US could continue to paint the global slowdown narrative leave a risk-off tone in markets.

Political/ In the Papers:
- (EU) Big package with bailouts for Spain and Cyprus and revised loan program for Greece could coming in Nov - financial press;
- (GR) ECB Asmussen (Germany): Greece should use credit to buy back its own bonds; such a scheme could help Greece meet its debt goal
- (GR) (EU) Some officials have suggested that the ECB expand its emergency liquidity assistance (ELA) financing to Greece - German Press
- (ES) Euro zone officials now indicating that Spain could request a bailout in November - financial press
- (ES) Spain looking to secure a guarantee from the ECB to keep risk premiums to around 200bps over credit benchmarks before asking for a bailout- El Pais


***Looking Ahead***
***All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (EU) EU Foreign Ministers meet in Luxembourg
- (PT) Portugal to present its 2013 budget
- (PE) Peru Aug Economic Activity Index Y/Y: 6.6%e v 7.2% prior
- (PE) Peru Sept Unemployment Rate: No est v 6.7% prior
- 06:30 (US) Daily Libor Fixing
- 07:30 (BR) Brazil Central Bank Weekly Economists Survey
- 08:00 (US) Fed's Dudley speaks at NABE in New York
- 08:00 (PL) Poland Sept CPI M/M: +0.3%e v -0.3% prior; Y/Y: 4.0%e v 3.8% prior
- 08:00 (PL) Poland Aug Current Account: -1.1B v -1.0B prior; Trade Balance: -450Me v -314M prior; Exports: 12.1B e v 12.3B prior; Imports: 12.6Be v 12.6B prior
- 08:00 (RO) Romania to sell RON1.0B in Bills
- 08:30 (US) Oct Empire Manufacturing: -4.00e v -10.41 prior
- 08:30 (US) Sept Advance Retail Sales: 0.8%e v 0.9% prior; Retail Sales Less Autos: 0.6%e v 0.8% prior; Retail Sales Ex Auto & Gas: 0.4%e v 0.1% -prior
- 09:00 (BE) Belgium Aug Trade Balance: No est v 1.4B prior
- 09:00 (CA) Sept Existing Home Sales M/M: -5.0%e v -5.8% prior
- 09:00 (PL) Sept YTD Budget Performance: No est v 65.5% prior
- 09:00 (FR) France Debt Agency (AFT) to sell between 5.8-7.0B in 3-month, 6-month and 12-month bills
- 09:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:30 (EU) ECB announces weekly settlements in Govt Bond Purchases program
- 09:45 (UK) BOE to buy 1.0B 2015-2019 Gilts in reverse auction; bid-to-cover: x v 2.51x prior
- 10:00 (US) Aug Business Inventories: 0.5%e v 0.8% prior
- 10:30 (CA) Canada Q3 Business Outlook Future Sales: 13.25e v 15.00 prior; BoC Senior Loan Officer Survey: No est v -10.8 prior
- 11:00 (US) Fed to buy$4.25-5.25B in notes
- 11:30 (US) Treasury to sell combined $60B in 3-Month and 6-Month Bills
- 12:30 (IS) Israel Sept Consumer Prices M/M: 0.5%e v 1.0% prior; Y/Y: 2.6%e v 1.9% prior
- 12:30 (DE) German Chancellor Merkel attends CDU Regional Conference
- 12:45 (US) Fed's Lacker speaks on U.S. Economy in Virginia
- 13:10 (US) Fed's Bullard speaks on U.S. Economy in St. Louis
- 15:05 (CA) Bank of Canada Governor Carney Speaks in British Columbia.


***Economic Data***
- (FI) Finland Sept CPI M/M: 0.4% v 0.2% prior; Y/Y: 2.7% v 2.7% prior
- (IN) India Sept Monthly Wholesale Prices Y/Y: 7.8% v 7.7%e, 10-month high
- (CZ) Czech Sept PPI (Industrial) M/M: 0.0% v 0.3%e; Y/Y: 1.7% v 2.0%e
- (FI) Finland Aug Current Account: 80M v 150M prior
- (TR) Turkey July Unemployment Rate: 8.4% v 8.0% prior
- (CZ) Czech Aug Export Price Index Y/Y: 3.7% v 4.7% prior; Import Price Index Y/Y: 5.8% v 5.5% prior
- (DK) Denmark Sept Wholesale Prices M/M: 0.6% v 1.6% prior; Y/Y: 4.1 v 3.2% prior
- (EU) ECB: 1.3B borrowed in overnight loan facility v 867M prior; 260.5B parked in deposit facility vs. 243.2B prior
- (CH) Swiss Sept Producer & Import Prices M/M: 0.3% v 0.2%e; Y/Y: 0.3% v 0.1%e
- (PH) Philippines Aug Overseas Remittances: $1.8B v $1.8B prior; Y/Y: 7.6% v 5.4% prior
- (CZ) Czech Aug Current Account (CZK): -26.6B v -18.5Be
- (NO) Norway Sept Trade Balance (NOK): 23.6B v 33.8B prior
- (IT) Italy Aug Public Finance Supplement: General Government Debt: 1.976T v 1.968T prior

Fixed Income:
- (IT) Italy opened books for Oct 2016 Euro-denominated Inflation-linked Retail bonds
- (SK) Slovakia Debt Agency (ARDAL) sold 60.9M in 2025 bonds; Avg Yield 3.5453% v 3.8454% prior; Bid-to-cover: 1.3x
- (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 12-month Bills; Yield 1.74%; Bid-to-cover 2.5x
- (NL) Netherlands Debt Agency (DSTA) sold total 2.09B vs. 4.0B indicated in 3-month and 6-month Bills
- Sold 1.07B vs.2B indicated in 3-month bills; Yield: -0.037% v -0.05% prior; Bid-to-cover: 3.49x v 3.03x prior
- Sold 1.02B vs. 2.0B indicated in 6-month Bills; Avg Yield: -0.021% v -0.013% prior; Bid-to-cover: 3.66x v 3.09 x prior

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