By Paddy Power Trader

Citigroup said that the Fed and the ECB are to wait longer before raising rates. (BBG)

The Fed will increase its benchmark interest rate from near zero in the final quarter of 2010 rather than the second quarter, while the ECB will raise its key rate from 1% in the first quarter of 2011 instead of sometime in the prior three months, according to the economists.

Most global banks are still unsafe, warns S&P. (Telegraph)

Standard & Poor’s has given warning that nearly all of the world’s big banks lack sufficient capital to cover trading and investment exposure, risking further downgrades over the next 18 months unless they move swiftly to beef up their defences.

UK

Little in the way of fresh UK related news as the market looks ahead to mortgage data at 0930GMT and the BoE’s quarterly inflation testimony at 0945GMT.

Most global banks are still unsafe, warns S&P. (Telegraph)

Standard & Poor’s has given warning that nearly all of the world’s big banks lack sufficient capital to cover trading and investment exposure, risking further downgrades over the next 18 months unless they move swiftly to beef up their defences.

US

T-notes were lower on Monday in early trade following good gains in equities on the back of a weakening USD. However, prices did advance in the latter half of the session after Bullard’s dovish comments overnight and on touted short covering. At the pit close t-notes finished up 1+ ticks at 119.19+. At 0624 GMT UST’s were trading up 7 ticks to 119.27, underpinned by weakness in Asian equities overnight, ahead of month end and with US GDP expected to be revised down to 2.8% from a previous 3.5%.

US President Obama says US has only taken the ‘first step’ to heal its economy. (BBG)

Obama says economic growth is a ‘prerequisite’ for job growth.

The Fed asked nine of the US banks that were part of this year’s stress tests to submit plans for repaying the government’s capital injections, a person familiar with the situation said. (BBG)

Mortgage backed securities downgrades warning. (FT)

Moody’s, the rating agency, has warned that many bonds secured against US commercial property in the boom years could see several further rounds of downgrades as the market continues to come under pressure. There is about USD 3500bln of outstanding commercial real estate debt in the US, of which almost a quarter was funded by securitisation.

USD 44bln 2y note auction drew yields of 0.802% vs. Exp. 0.786%, b/c 3.16 vs. Prev. 3.63 and indirects 44.5% vs. Prev. 44.4%. 95.78% of the issuance allotted at high and the 2y auction high yield is lowest on record. (BBG)

Europe

Two German regional savings banks that hold a majority stake in WestLB are prepared to let the bank become insolvent, according to sources. (FAZ)

Asia

JGB’s edged up as some market players covered short positions made late last week and the Nikkei share average fell (-1.0%). JGBs were trading at 139.42 (+0.17) at 0614 GMT. (RTRS)

Japanese cabinet ministers increased pressure on the Bank of Japan to respond to deflation, with one saying that the central bank was asleep at the wheel. (RTRS)

The Japanese Finance Minister is planning to float JPY 140,000bln (GBP 950bln) of ordinary government bonds in 2010, an unprecedented issuance of debt that will reignite concerns about the credit worthiness of the world’s second biggest economy. (Times)

Fitch said that the weakening loan quality and capital of Japan’s mega-banks is a concern. (RTRS)

Geopolitical World Economics

Brazil’s Lula says Brazil backs Iran’s right to enrich uranium but says Iran’s nuclear program must follow international rules. (BBG)

Forex

The quarterly survey of expectations on behalf of RBNZ showed business managers forecast annual inflation to average 2.1% over the coming year, from 1.8% in the August survey. The survey also showed economic growth is expected to pick up, with GDP rising 1.7% in the coming year from 0.8% in the previous survey. (RTRS)

Commodities

Oil eased overnight to hover above USD 77 a barrel, weighed down by a firmer greenback, but trade thinned ahead of the Thanksgiving holiday and weekly US data that could show rising crude stocks in the world’s top oil user. WTI crude futures were trading at USD 77.63, up USD 0.07, at 0610 GMT. (RTRS)

Company News

UK

HSBC – Marsh & McLennan, the second-largest global insurance broker by assets, is exploring a deal to buy part of co.’s insurance business. (Daily Telegraph)

GlaxoSmithKline – Japan’s health ministry will investigate advice by co. for Canadian authorities to hold off on using a batch of its swine flu vaccine. (Asahi)

Royal Dutch Shell – Co. has delayed the start up of the world’s biggest liquefied Natural Gas production line in Qatar because other projects in the area were pushed back. (BBG)

Royal Dutch Shell/BHP Billiton – Cos. could make a joint bid for the Australian-listed oil and gas group Woodside Petroleum which has a market cap approximately USD 32bln. Shell currently holds a 34.3% stake in Woodside. (Australian Financial Review)

Rio Tinto – Co. said it struck a deal that will see it buy product from the Phil’s Creek project of Iron Ore Holding in Western Australia and then transport it to the coast for export. (Sources) In other news, market talk that Chinalco has sold stake in co., unconfirmed. (RANsquawk)

Lloyds – Co. announced a proposed 1.34 for 1 Rights Issue of 36.5bln new shares at GBP 0.37 per new share. Co. sees proceeds of GBP 13.5bln. (BBG)

Cadbury – Ferrero has assessed a 40-60% break-up plan for co. and will pitch this to Hershey. It is thought Mediobanca are prepared to offer EUR 3bln financing to the joint bid. Nestlé is thought to only be taking a reflective interest in co. and not an active one as previously believed. The source also said Nestlé is only considering the

general situation of the market at this point in time. (Sources) In other news, the Ferrero family has denied it is divided over a possible bid for UK confectionary group. (La Repubblica)

Rolls Royce – Co. could lose a USD 1.5bln contract awarded only five months ago by Gulf Air after the carrier announced a big change in strategy. (FT)

BAE Systems – Workers from the defence co. gathered in Houston to protest against the loss of a USD 280.9mln US military vehicle contract. (BBG)

Xstrata – Co. began talks with workers at its Altonorte Copper smelter in northern Chile to reach a new wage accord. (BBG) In other news, co. bought an option in an iron ore project in the Lekoumou district, in the Republic of Congo. (Sources)

Marks & Spencer – Co. executive chairman Rose said Britain has “got to the bottom” of the recession, adding that the UK clothing retailer will continue to invest in sustainability. (BBG)

National Express – Spain’s Cosmen family, co.’s largest shareholder, has increased its shareholding ahead of the transport group’s Rights Issue meeting later this month. (FT) Co. spokesman said that co. remains “confident” that a majority of shareholders will support the proposed rights offering even as the Cosmen family has increased its holding close to 20%. (BBG)

Severn Trent – H1 net income GBP 149.7mln vs. GBP 83.8mln loss. Says on track to deliver planned cost savings for FY and says has strong liquidity position. (BBG)

US

Equities finished higher as risk appetite returned and the greenback was hit after comments over the weekend from the Fed’s Bullard who stated that the Central Bank should continue purchasing mortgage-backed securities beyond the program’s planned expiry. Equities were further buoyed by positive existing US home sales data which rose at their fastest pace since February 2007. The telecommunications sector was the leading mover with Sprint Nextel (+3.72%) and Verizon (+2.96%) outperforming. At the closing bell, the S&P 500 closed up 1.36% at 1106.254, the DJIA closed up 1.29% at 10451.02 and the NASDAQ 100 closed up 1.62% at 1792.94.

Hewlett Packard – Q4 adjusted EPS USD 1.14 vs. Exp. USD 1.12, Q4 Revenue USD 30.8bln vs. Exp. USD 30.36bln. Co. says expects to outperform the market and sees Q1 revenue USD 29.6-29.9bln vs. Exp. USD 29.6bln, also sees year adjusted EPS USD 4.23-4.35 vs. Exp. USD 4.30. Co. to buy back shares up to USD 8bln of outstanding common stock and co.’s estimates for Q1 and full fiscal year of 2010 do not reflect the potential impact of the Acquisition of 3Com. (BBG/RTRS)

Qualcomm – Ericsson withdraws complaint against co.’s 3G activities. (Sources)

GE – Co. said to lean towards IPO of Vivendi’s NBC Universal stake, GE owns 80% of NBC Universal, while Vivendi has rest. Co. says it will still be seeking deal with Vivendi and remains committed to deal with Comcast. (BBG)

PG – Moody’s revises Co.’s AA3 rating outlook to stable. (RTRS)

Kraft Foods – Brynwood Partners VI acquires Balance Bar Unit from co. (Sources)

Motorola/ Research in Motion – Cos. sued by Klausner Technologies for visual voicemail patent infringement. (RTRS)

Merck – Co. won dismissal of the second case scheduled for trial over claims its osteoporosis drug Fosamax caused so-called jaw death. (BBG)

Europe

GERMANY

Adidas – Co. will cancel its contracts with soccer clubs and athletes found guilty of wrongdoing in the latest match-fixing scandal. (Sueddeutsche Zeitung)

FRANCE

AXA – Co.’s EUR 2bln right offer has a subscription rate of about 100%. (La Tribune)

Vivendi – Co. tightened its grip over its pay-TV unit Canal Plus France by agreeing to buy a 9.9% stake held by French broadcaster for EUR 744mln. (RTRS)

EADS – Airbus expects to deliver almost 100 planes to customers in China next year, up from almost 80 this year. (Flight International) In other news, delivery of A380 to Lufthansa delayed by several months. (FT Deutschland)

PPR – Co. CEO says co. plan to sell its European retail units, including Fnac and Conforama and to raise EUR 4bln from the sales. (WSJ)

OTHER FRENCH COMPANIES

Areva – Toshiba Corp would hold 70% of co.’s transmission and distribution unit, and Innovation Network of Japan 30%, if their joint bid is successful. (Le Figaro)

PAN-EUROPEAN

Unilever – Co. still has EUR 2bln war chest, looking for further buys. (Het Financieele Dagblad)

Repsol – Co.’s Peruvian oil refinery said its workers plan to begin a 48-hour strike today. The strike, declared inadmissible by the Labor Ministry, won’t “significantly” cut production at the 102,000bpd refinery. (BBG)

SWISS

Nestlé – Co. said will be hiring up to 1,500 people in Brazil in 2010. In other news, co. is thought to only be taking a reflective interest in Cadbury and not an active one as previously believed. The source also said co. is only considering the general situation of the market at this point in time. (BBG/Sources)

Novartis – Co. persuaded a US jury to reject a challenge by Teva to a patent on the Famvir treatment for genital herpes. (BBG)

Roche – Co. reportedly failed to win the backing of the UK health-cost panel NICE for using Avastin to treat advanced bowel cancer due to high costs. (S&P)

Asia

Nikkei hit its lowest close in four months as banking shares were sold on persistent worries that more financial firms would tap the market for equity financing and as a stronger JPY hurt shares of exporters. Japan Airlines Corp plunged to a record low on worries about a possible bankruptcy, while consumer lender Takefuji Corp fell nearly 7% after a two-notch downgrade from rating agency Moody’s to a level indicating a very high credit risk. (RTRS)

Shanghai’s USD-denominated B-share index plunge more than 8% after investors were disappointed by lack of market-friendly steps from the government. Investors pocketed recent gains, propelled by market talk which included rumours that China might merge B share with the coming international board to be set up for foreign companies listing in Shanghai. The B-share fall spilled over the main, CNY-denominated A-share index late in Tuesday’s trade, with the benchmark Shanghai Composite Index down more than 3% at the close. (RTRS)

Also getting some attention was yesterday’s news that China’s banking regulator issued a stern warning to banks to strictly comply with capital requirements or face sanctions. Banks that fail to comply by the end of the year with capital adequacy requirements, the amount of capital they must hold against their loans-could be punished with limits on market access, overseas investment and new braches, the China Banking Regulatory Commission said. Such sanctions already exist, but have rarely been enforced. (WSJ)

Japanese banks – Fitch Ratings has today said in a forthcoming commentary that weaker loan quality may put pressure on Japan’s “mega” banks’ performance and in turn capitalisation, which remains somewhat weak by international standards, especially in terms of the “core” capital levels. (BBG)

Bank of China – Co. is studying various ways to raise capital but has no plans for now to do so. Reports on Monday were that co. was in talks with investment banks about a plan to raise as much as USD 15bln. (RTRS)