By Paddy Power Trader

British retail sales will rise 1.9% over Christmas, bouncing back from last year’s decline, but below the increase of the previous nine years, according to the Centre for Retail Research. (RTRS)

Bank of England should cap its bond purchase plan at GBP 200bln this week in signal that it will stop buying assets in the next quarter, former policy maker DeAnne Julius said. (BBG)

Updates to Lloyds and RBS:

RBS agrees key terms of Asset Protection Scheme. Sees cost of APS cover GBP 700mln a year 2009-2011 and sees cost of APS cover of GBP 500mln thereafter. Co. says Treasury to subscribe for GBP 25.5bln in B shares. Co. says HM Treasury ordinary shareholding remains at 70.3% while the economic interest rises to 84.4%. Says credit impairments “may now be plateauing” and sees 2010, 2011 results to be significantly impacted by impairments. Says first loss to be absorbed by bank GBP 60bln vs. Prev. GBP 42.2bln. Finally, co. to sell within next 4 years parts of its UK branch/corporate business, RBS insurance, global merchant services and RBS Sempra. (BBG/RTRS)

HM Treasury says Lloyds won’t participate in APS. Lloyds proposal is to generate at least GBP 21bln pf core capital and Co. sees at least GBP 7.5bln from exchange offer. Co. announces GBP 13.5bln rights offer and will also pay the government a fee of GBP 2.5bln in return for the implicit protection already provided by the taxpayer. Co. continued to deliver good revenue performance and continues to expect loss before tax for 2009. (BBG/RTRS)

HM Treasury says that RBS and Lloyds will be required to make divestments of significant parts of their businesses over four years. (RTRS)

UK

Updates to Lloyds and RBS:

RBS agrees key terms of Asset Protection Scheme. Sees cost of APS cover GBP 700mln a year 2009-2011 and sees cost of APS cover of GBP 500mln thereafter. Co. says Treasury to subscribe for GBP 25.5bln in B shares. Co. says HM Treasury ordinary shareholding remains at 70.3% while the economic interest rises to 84.4%. Says credit impairments “may now be plateauing” and sees 2010, 2011 results to be significantly impacted by impairments. Says first loss to be absorbed by bank GBP 60bln vs. Prev. GBP 42.2bln. Finally, co. to sell within next 4 years parts of its UK branch/corporate business, RBS insurance, global merchant services and RBS Sempra. (BBG/RTRS)

HM Treasury says Lloyds won’t participate in APS. Lloyds proposal is to generate at least GBP 21bln pf core capital and Co. sees at least GBP 7.5bln from exchange offer. Co. announces GBP 13.5bln rights offer and will also pay the government a fee of GBP 2.5bln in return for the implicit protection already provided by the taxpayer. Co. continued to deliver good revenue performance and continues to expect loss before tax for 2009. (BBG/RTRS)

HM Treasury says that RBS and Lloyds will be required to make divestments of significant parts of their businesses over four years. (RTRS)

US

Volatility in the US stock market was mirrored in the bonds on Monday as T-Notes, which traded as low as 118.09 after the strong ISM manufacturing report and Pending Home Sales figures, rallied to a session high of 118.24 shortly afterwards before settling at 118.145 at 2100 GMT (1500 CST). The most interesting development overnight was the lack of any rally in T-Notes after the US Treasury said it needed to borrow USD 276bln during Oct-Dec 2009, USD 209 bln less than previously forecast. The Black and Decker/Stanley Works merger after market helped to push T-Notes down further. At 0640 GMT UST’s were trading near unchanged up 1 tick at 118.16+ ahead of today’s factory orders report.

Fed’s Tarullo said that Fed pay guidelines may change and evolve to standards, adding that public scrutiny of compensation was never more intense. (BBG)

Treasury’s Krueger said that the US economy is starting to recover and it will take time for hiring to materialise. (BBG)

The US Treasury Department said on Monday it expected to borrow a net USD 276bln through sales of marketable debt during the October-December quarter, much less than it previously anticipated. The fourth-quarter borrowing total was USD 209bln less than forecast in July. (RTRS)

US commercial bankruptcy filings rose 7% in October compared to the previous month, with signs that there are more to come, citing data from a private company. (WSJ)

World Economics

US Secretary of State Hillary Clinton on Monday urged Iran to accept the six-powers proposal on its nuclear programme, saying the offer would not be changed. (RTRS)

Forex

RBA raises cash rate 25 bps to 3.5% as expected but was careful not to fuel expectations for another hike in December. RBA said that it is to gradually lessen stimulus. (RTRS)

SNB’s Jordan says USD to remain bellwether currency for time being. (Sources)

SNB’s Jordan says time for exit from loose monetary policy has not come yet. (BBG)

SNB’s Jordan says SNB has been successful in preventing CHF gain. Says uncertainties about economic development extremely high. Adds that timing of exit strategy is big question and that main indicator for exit is inflation forecast.

Commodities

Oil edged further above USD 78 a barrel after rising more than 1.5% a day ago, as traders weighed the impact of a possible rise in US crude stocks against positive manufacturing and home sales data. WTI crude futures were trading at USD 78.21, up USD 0.08, at 0601 BST. (RTRS)

BP restarting hydrotreater at 265,000 BPD Carson, California, refinery, according to sources. (RTRS)

Company News

UK

UK Banks – UK FSA to increasingly scrutinise banks’ business models, according to Hector Sants, the FSA chief executive. (Sources)

RBS – Co. agrees key terms of Asset Protection Scheme. Size of APS pool reduced from GBP 325bln as reported on 26 February 2009 to GBP 282bln. Sees cost of APS cover GBP 700mln a year 2009-2011 and sees cost of APS cover of GBP 500mln thereafter. Co. says Treasury to subscribe for GBP 25.5bln in B shares. Co. says HM Treasury ordinary shareholding remains at 70.3% while the economic interest rises to 84.4%. Says credit impairments “may now be plateauing” and sees 2010, 2011 results to be significantly impacted by impairments. Says first loss to be absorbed by bank GBP 60bln vs. Prev. GBP 42.2bln. Finally, co. to sell within next 4 years parts of its UK branch/corporate business, RBS insurance, global merchant services and RBS Sempra. (BBG/RTRS) In other news, Co. to cut 3,700 jobs from high street branches, union says. (BBG)

Lloyds – HM Treasury says Co. won’t participate in APS. Co.’s proposal is to generate at least GBP 21bln pf core capital and Co. sees at least GBP 7.5bln from exchange offer. Co. announces GBP 13.5bln rights offer and will also pay the government a fee of GBP 2.5bln in return for the implicit protection already provided by the taxpayer. Co. continued to deliver good revenue performance and continues to expect loss before tax for 2009. (BBG/RTRS)

RBS/Lloyds – HM Treasury says that Co.s will be required to make divestments of significant parts of their businesses over four years. (RTRS)

HSBC – Co. seeks Chinese acquisitions. (Business World)

Rio Tinto/BHP Billiton – The two companies still open to Chinalco’s involvement in iron ore joint venture. (The Australian)

British Airways – The low-cost carried Ryanair said it could topple co. as the UK’s dominant airline within months. Although Ryanair carried 1.4mln passengers in the British market during Sep., compared to co.’s 1.6mln, the flag carried is reducing the number of flights that it offers this winter while Ryanair is forecasting it will continue to grow. (The Times)

Land Securities – Britain’s biggest property developer, has indicated its fresh confidence in the market by setting aside GBP 200mln for two big developments in London next year. (The Times)

Tesco – Co. was urged yesterday to launch a EUR 15bln bid for Ahold in order to further its ambitions in the United States. (The Times)

Rolls Royce - Co. says trading in line. (BBG)

Aviva – Delta Lloyd’s initial public offering has been prices around EUR 16, at the lower end of an indicated range due to the recent slump in financial stocks. (Het Financieele Dagblad)

AB Foods – Co. reports FY group revenue of GBP 9.30bln , +12% and reports adjusted operating profit of GBP 720mln, +8%. (BBG)

Hammerson – Co. says “degree of confidence” returned to market and to benefit from new developments as market improve. (BBG)

OTHER UK COMPANIES

National Express – Co.’ key shareholders are calling for Jorge Cosmen, the deputy chairman, to reconsider his position as tensions grows between the executive an other board members. (The Times)

RyanAir – Co. has no need to visit bond market, could use cash for dividend or aircraft financing, according to CEO. (Sources)

US

Stocks ended higher but well off their best levels of the day as volatility continued to tug at the market. Stocks jumped early Monday after strong reports on manufacturing and housing but were fluctuating by the afternoon. The Dow Jones industrial average ended up 77 points after being up as much as 146 points. Strong readings for ISM Manufacturing were later offset by a high employment constituent being described as “a mirage” by ISM’s Ore. The market seemed unable to decide whether the pace of recovery could continue to be maintained. At the close the S&P 500 rose 5.6 points to 1041.78 and the Nasdaq Composite climbed less than a point to finish 2045.28. After market, stock futures continued to rally following strong earnings from Anadarko Petroleum and Chesapeake Energy. The big news after market (helping the bid) was the news that The Stanley Works and Black and Decker are to merge in a deal valued at USD 4.5bln.

US Banks – According to sources, 20 banks spoke with NY Fed during planned meeting for about half-hour. NY Fed instructed banks to incorporate proposed rules in year-end compensation decisions and Morgan Stanley CEO Mack stressed during Fed meeting need for global coordination among regulators on pay. (RTRS)

Anadarko Petroleum – Q3 adjusted loss per share USD 0.11 vs. Exp. Loss per share USD 0.31. Boosts forecast for YR sales volumes. (BBG)

Chesapeake Energy – Q3 adjusted EPS USD 0.70 vs. Exp. USD 0.65. Q3 revenue USD 1.8bln vs. Exp. USD 1.7bln. (BBG)

Wal Mart – Co. wins approval of Federal wage lawsuits settlement and promised to pay as much as USD 85mln to settle suits. (BBG)

Microsoft – Co. loses court bid to invalidate webexchange patents. (BBG)

US Bancorp – Co. says it will exit the FDIC’s transaction account guarantee and to opt-out 6 month extension of TAGP. Citing strong capital, liquidity position. (BBG)

Lockheed Martin – Co. awarded USD 292mln contract from US army. (theflyotnhewall.com)

Eli Lilly – Patients and doctors should be aware of possible kidney function problems with co.’s and Amylin Pharmaceuticals’ Byetta diabetes drug, US FDA said. But Amylin Senior Vice President Orville Kolterman said there was “no evidence from preclinical and clinical studies that Byetta has any direct toxic effect on the kidney”. (RTRS)

Ford – UAW announces results of voting at co. an says that 75% of membership in skilled trades voted to reject. (BBG)

Black & Decker – Stanley Works, maker of the world-famous handyman’s knife, has cut one of the biggest DIY deals of the time by taking control of co. in a USD 4.5bln deal. (The Times) Stanley Works sees USD 350mln in cost synergies and sees EPS accretion of about USD 1.00 per share by year 3. (BBG)

Starbucks – Co. faces competition in the US from Italy’s IllyCaffe SpA, which is signing exclusive agreements with independent coffee shops. (WSJ)

Europe

GERMANY

BMW – Q3 sales EUR 11.8bln vs. Exp. EUR 11.84bln, Q3 net income EUR 78mln vs. prev. EUR 298mln. Says co.’s 2009 earning “likely to be positive” and is “cautiously optimistic” for 2010. (BBG) In other news, Co.’s US President Jim O’Donnell says industry-wide 2010 light vehicle sales will be 11-11.5mln unit. Says consumer debt will delay recovery of US auto industry sales. Adds that in US luxury market there is “almost deflation” in prices despite weak USD. (RTRS)

Beiersdorf – Q3 EBIT EUR 144mln vs. Exp. EUR 139.7mln, Q3 sales EUR 1.41bln vs. Exp. EUR 1.43bln. Co. raises outlook and expects EBIT margin of 11% for consumer unit. (BBG)

Fresenius – Co.’s Q3 net adjusted EUR 128mln vs. Prev. ERU 112mln. Co. confirms forecast. (BBG)

Metro – Co.’s Q3 net EUR 72mln vs. Exp. EUR 88mln; Q3 sales EUR 15.6bln vs. Exp. EUR 15.58bln. Co. doesn’t expect significant trend improvement in Q4. (BBG)

FRANCE

N/A

PAN-EUROPEAN

Italy New Car Sales up 15.69% Y/Y to 195,545 units in October, according to transport ministry. (RTRS)

SWISS

UBS – Q3 net loss CHF 564mln vs. Exp. CHF 337mln, cites  3 substantial accounting changes totalling CHF 2.15bln. Says strong capital position and adds that “businesses steadily returning to normal”. Adds that sees “another own credit charge” in Q4 on credit spreads. Finally, says tier 1 “among strongest in the industry”. (BBG)

Swiss Re – Co.’s Q3 net CHF 334mln vs. Exp. loss CHF 51mln. Co. sees reduction in legacy exposures by end 2010. Co. says the outlook is encouraging. (BBG)

Asia

Japanese markets closed for Culture Day.

UK & EU Equity Broker Recommendations 03 November

GlaxoSmithKline CUT TO `UNDERPERFORM’ VS `NEUTRAL’ AT BOFA
Royal Dutch Shell RAISED TO `NEUTRAL’ AT CREDIT SUISSE
AstraZeneca RAISED TO `NEUTRAL’ AT BOFA MERRILL
BASF RAISED TO `BUY’ FROM `ACCUMULATE’ AT EQUINET
Man Group: UBS UPGRADES TO NEUTRAL VS SELL
Allianz RAISED TO `ADD’ FROM `HOLD’ AT Commerzbank