By Paddy Power Trader

Concerns grow of overheated debt markets. (FT)

Some of the most controversial financial practices of the credit-bubble years – from “cov lite” (short for covenant light -loan borrowers are granted credit with few, if any conditions) to “Pik toggle” (transactions make it possible for debt to be repaid with more debt) notes and “dividend recap” exercises – have returned to Wall Street, stoking fears that debt markets are growing overheated.

UK

Chancellor needs an extra GBP 15bln, ITEM says. (Telegraph)

The Ernst & Young ITEM Club said that a combination of spending cuts and tax increases would be required and that fiscal tightening of an extra GBP 15bln on top of that implied in the Budget would be required to meet the Chancellor’s projections for just below GBP 100bln of borrowing by 2013-14.

Posen calls for ‘bubble tax’ on homes. (Telegraph)

Homeowners must be charged penalty taxes on their properties if the UK is to avoid a future housing crash, according to Adam Posen, a member of the Bank of England’s Monetary Policy Committee.

US

Treasuries finished lower on Tuesday as worries over Dubai debt repayments subsided and stronger than expected pending home sales spurred investors to reallocate capital back in to equities. At the pit close t-notes finished down 12 ticks at 119.18. At 0637 GMT USTs were trading down 2.5 ticks to 119.15.

Fed’s Plosser says Fed should raise rates in line with market trends however it may become appropriate to hike rates before unemployment has fallen to acceptable levels. (BBG/RTRS) Plosser says outlook for inflation becoming more uncertain and uncertainty over fiscal policy could lead to weaker recovery. Says housing market decline may have bottomed out but commercial real estate market had not turned corner and poses risks to some banks. Plosser said is more confident the US is in a sustainable recovery although it will take more time before can be fully confident in health of financial sector.

Fed directors agreed accommodative policy still ‘appropriate’ and remain concerned about sustainability of pick up. (BBG)

Fed directors said inflation expectations are at modest levels and factory output appeared to have stabilised. Say noted signs of more positive growth trends and sought no change in rates in October.

US Total Vehicle Sales Y/Y (Nov) 10.92mln vs. Exp. 10.50mln (Prev. 10.45mln), Domestic Vehicle Sales Y/Y (Nov) 8.36mln vs. Exp. 7.80mln (Prev. 7.94mln). (BBG) Ford – Adjusted November vehicle sales rise 8.7% vs. Exp. rise 4.1%. Chrysler – Nov US total sales fall 19% vs. Exp. fall 27%. General Motors – Adjusted November US sales rise 6.3% vs. Exp. rise 5.8%. (BBG)

ABC Consumer Confidence (Nov 29) W/W -45 vs. Prev. -47 (BBG)

Europe

France’s Lagarde said Dubai poses no systemic risk to Eurozone and FX impact will be regional. (RTRS)

EU’s Juncker says Greece situation is worrying but doesn’t think Greece will not fall into bankruptcy.

EU’s Almunia says in February, finance ministers will consider stepping up budget disciplinary action against Greece and says Greece failed to take effective deficit moves. (RTRS)

Demand for 12-month loans from the ECB will jump this month as banks take advantage of the final unlimited offer, according to a survey of economists. (BBG)

Asia

`JGB’s fell with 10-year futures pulling away from 20-month highs and the yield curve steepening, after the Bank of Japan’s new funding plan fell short of market expectations. JGBs were trading at 140.27 (-0.20) at 0614 GMT. (RTRS)

Bank of Japan board member Suda said that the central bank would not rule out any policy options as it aims to adopt the most effective monetary adjustment methods. (RTRS)

In other news, the Bank of Japan will continue to provide ample funds to markets after the bank offered to inject JPY 1trl of funds in its same-day operations.

Japanese manufacturers’ confidence rose in November to levels not seen since October 2008, but the pace of recovery is expected to be slow in an economy mired in deflation. (RTRS)

The manufacturers’ sentiment index in the Reuters tankan rose 7 points to -28 in November from October. It was up 14 points from three months earlier and is seen improving by a further 6 points over the next three months.

China plans to maintain its interest rates until a US Federal Reserve raise on concern about the impact of capital inflows, according to unidentified government officials. (BBG)

Geopolitical World Economics

Iran releases five Britons detained from Yatch, according to the State Radio. (RTRS)

Iran’s Ahmadinejad says West cannot isolate Iran over its nuclear programme. (RTRS)

Ahmadinejad says Iran’s nuclear issue resolved, no need for talks and says Russia made a ‘mistake’ by voting in favour of anti-Iran UN resolution.

Forex

Australia’s cash rates will keep rising next year, according to RBA watcher Terry McCrann. (Herald)

EU’s Juncker says EUR is overvalued. (BBG/RTRS)

Juncker says strong CNY/EUR is desirable to reduce global imbalances and believes China wants to see steady appreciation of CNY.

Commodities

Crude oil traded near USD 78 a barrel after an industry report showed US supplies gained, raising concern that fuel demand in the biggest energy-consuming nation may be slow to recover. WTI crude futures were trading at USD 78.34, up USD 0.03, at 0639 GMT. (BBG)

Iran oil minister says oil exports may stop if embargo continues. (Sources)

US API Crude Oil Inventories W/W (Nov. 27) +2887K vs. Prev. +3347K

US API Gasoline Inventories W/W (Nov. 27) +3423K vs. Prev. +1707K

US API Distillate Inventory W/W (Nov. 27) +1059 vs. Prev -2360K. (BBG)

Company News

UK

GlaxoSmithKline – WHO clears co.’s H1N1 vaccine for developing. (BBG)

RBS – Co.’s institutional investors have raised concerns about the bank’s ability to compete as the UK Treasury demand the right to veto the size and terms of bonus payment s for its bankers. (Times)

Barclays – Co. completes sale of BGI to Blackrock, BGI consideration at completion USD 15.2bln. Co. sees net gain from BGI deal of USD 9.7bln and says to have 19.9% economic interest of enlarged Blackrock. Co. sees estimated core tier 1 ratio of 9.2% and sees tier 1 ratio of 11.9%. (BBG)

Tullow Oil – Co. will have to decide in coming weeks whether to pre-empt the sale of Heritage Oil’s Ugandan assets to Eni. (FT)

Sage Group – FY net GBP 189.5mln vs. Prev. GBP 166.3mln, says “not yet seeing general recovery”. (BBG)

AB Foods – Co. is facing a protest outside its annual meeting on Friday. Workers represented by the Usdaw trade union are resisting plans to close sites in Newcastle and Andover, which could result in the loss of up to 400 jobs. (BBG)

Companies going ex-dividend: SABMiller (USD 0.1700), Associated British Foods (GBP 0.1410), Johnson Matthey (GBP 0.1110), London Stock Exchange (GBP 0.0840), National Grid (GBP 0.1365), Severn Trent (GBP 0.2671)

US

Equities finished higher as risk appetite increased after investors’ concerns surrounding the Dubai situation receded. Stocks opened higher as investor sentiment was boosted by encouraging Chinese data and were then further buoyed by better pending home sales for the month of October. Later on in the session, equities were given a further lift after the three major US automakers reported better than anticipated US auto sales for the month of November. At the closing bell, the S&P 500 closed up 1.21% at 1108.86, the DJIA closed up 1.23% at 10471.58 and the NASDAQ 100 closed up 1.15% at 1787.71.

S&P 500 – UBS says index may climb to 1,250 by end of 2010. (BBG)

Microsoft – France’s largest publisher Lagardere says it is in discussions over content with co. (La Tribune)

Dupont – Co. reaffirms previous forecast for revenue and EPS and sees 10% sales growth compound annual growth rate 2009-2012. Co. sees 2009 sales USD 26bln. (BBG)

Morgan Stanley – Kohlberg Kravis Roberts & Co. is among the bidders for co.’s stake in Chinese investment bank CICC, a deal could reach more than USD 1bln. (RTRS)

Bank of America – At least two candidates for the top job at co. told directors that the giant bank should consider breaking itself up, but board members in charge of the CEO search have rejected the idea at least for now. (WSJ)

Ford – Adjusted November vehicle sales rise 8.7% vs. Exp. rise 4.1%. Co. sees total market share in November higher vs. year ago and Q4 production plan unchanged, co. says it is boosting Q1 2010 production by 58%. Co. economist says modest economic recovery is underway, but it won’t feel like a recovery until job market improves. (BBG/RTRS)

Chrysler – Co.’s November US total sales fall 19% vs. Exp. fall 27% (BBG)

General Motors – Adjusted November US sales rise 6.3% vs. Exp. rise 5.8%. Co’s CEO Fritz Henderson to step down. (BBG/CNBC)

GE – Co. will not pay Vivendi any cash for its 20% stake in NBC Universal until late next year at the earliest. (FT)

Merck – Co. is among the companies short-listed for the AUD 900mln sale of iNova Pharmaceutical Pty, which may be completed this month. (The Australian Financial Review)

Northrop Grumman – Co. said it won’t bid for the USD 35bln Air Force tanker program unless the draft request for proposals is changed, citing “financial burdens.” (BBG)

Motorola – Co.’s co-CEO says no reason why home set-top business cannot return to a double digit operating margin business and sees 10% decline in networking business but says it will see double digit operating margins in 2010. (RTRS)

Teva/Amgen – Teva sues Amgen to seek patent clearance on new cancer drug, Teva seeks court ruling new drug doesn’t infringe Amgen patents. (BBG)

Corning – Co. says set sales up 30%, large sets up 50% and sees no signs of glut in glass sales. Co. expects 20% growth in LCD TV sales next year and expects Q4 gross margin similar to Q3’s 41%. (BBG)

Electronic Arts – Co.’s CEO says can see co. publishing as little as 30 packaged game titles in future from more than 50 now. Says sees its digital business over time as perhaps more important than its packaged games business. (RTRS)

Kraft Foods – Co. remains favourite to acquire Cadbury, says Bernstein analyst Andrew Wood. However, he said that co. will have to pay more than the GBP 9.8bln bargain price it ha been hoping for originally because of interest from rival potential bidders. (Daily Express/Neue Zuercher Zeitung)

Europe

GERMANY

German November new car registration up by about 20% Y/Y, according to source at German Auto ASSN VDIK. (RTRS)

German banks – German economy minister Bruederle says government could take regulatory measures if banks do not lend more. (RTRS)

Siemens – Nokia Siemens ready to offer USD 810mln cash for Nortel’s optical networking, carrier ethernet assets. (RTRS)

Deutsche Telekom – Co.’s T-Systems unit has landed a big contract with BP, no financial details were disclosed. (Sources)

Daimler – Mercedes Benz reports November US sales of 16,797, up 19%. (BBG) In other news, co. is in discussions with Bajaj Auto, TVS Group and Magna Auto to sell its commercial vehicles in India. (Economic Times)

Volkswagen – Co.’s US November sales rose 13.7%. Porsche November US vehicle sales up 18%. (BBG) In other news, Co. denies taking over Karmann development division. (Handelsblatt)

BMW – November US sales fall 7.5%. (BBG)

Deutsche Postbank – Co. CEO says he doesn’t expect key shareholder Deutsche Bank to be in any rush to gain a majority stake in co. (Sources)

K+S – Co. declines to comment on rumour it is target for Yara International. (Die Welt)

FRANCE

Sanofi Aventis – Co. is among the companies short-listed for the AUD 900mln sale of iNova Pharmaceutical Pty, which may be completed this month. (The Australian Financial Review)

France Telecom – Co.’s UK Orange unit will formally detail its merger with Deutsche Telekom’s UK T-Mobile unit to European regulators in the next few weeks. (FT)

EDF – Co. said it stopped production at unit four of its Cruas-Meysse nuclear site in southern France after heavy rain led to discharges from the River Rhone affecting the unit’s cooling system. (BBG)

EADS – Airbus says it expects to sell 100 A380 model passenger planes in Japan by 2028. (BBG)

Bouygues – Q3 operating profit EUR 689mln vs. Exp. EUR 613mln, Q3 net EUR 477mln vs. Prev. EUR 501mln. Says Alstom stake contributed EUR 263mln to profit and confirms FY sales target of EUR 31.2bln. In other news, Co.’s CFO says intends to keep Alstom stake at around 30%, co. expects a 150 basis point decrease in operating margin for real estate in 2009. (BBG/RTRS)

PPR – Co. to price CFAO IPO at between EUR 25.0-26.5 a share, compared with indicated range of EUR 24.8-29.0. (RTRS)

Schneider Electric – Co. does not see need for capital increase to fund Areva T&D buy according to a close source. Areva T&D buy seen closing in Spring 2010 and co. has means to finance Areva T&D buy and still has leeway for further deals. Co. says it sees full revenue and cost synergies from a likely joint purchase with Alstom of co.’s T&D unit of EUR 120mln by 2014, with 50% of these benefits achieved by 2012. In other news, Fitch places co. on ratings watch negative (RTRS/S&P)

Alstom – Moody’s assigns negative outlook to co.’s BAA1 rating. (BBG/RTRS)

PPR – Co. is set to sell shares in its African unit CFAO at EUR 26 each. (Wansquare)

Companies paying dividend: LVMH (EUR 0.3500)

OTHER FRENCH COMPANIES

Areva – EC likely to access joint-bid by Schneider/Alstom as two separate transactions. (Sources)

PAN-EUROPEAN

Italian Banks – Bank of Italy raises loan cap for banks on interbank lending market to 75% of regulatory capital. (RTRS)

Telefonica – Co. to sell Blackberry 9700 in Spain from EUR 99. (BBG)

Nokia – Nokia Siemens ready to offer USD 810mln cash for Nortel’s optical networking, carrier ethernet assets. (RTRS)

Telecom Italia – Co. in unlikely to take a final decision on whether to sell its 50% stake in Telecom Argentina. (Il Sore 24 Ore)

Anheuser-Busch InBev – Blackstone Group completed the purchase of Busch Entertainment from co. for USD 2.3bln in cash. (BBG)

SWISS

Roche – Co. says Taspoglutide meets primary endpoints in a study. (BBG)

Asia

Nikkei rose 0.4% to close at a two-week high, with short-covering buoying the market as the JPY fell against the USD while metals shares rose after Gold hit a record high. (RTRS)

Toyota Motors – Co. reports US sales of 133,700 vehicles, an increase of 11.5% over last November. (RTRS)

Nissan – Co.’s US sales rise 29.9% in November from year earlier. (RTRS)

Honda – Co.’s November US sales fall 2.9% on unadjusted basis. (BBG)