By Paddy Power Trader

UK News

A hung parliament in Britain looks increasingly likely as the main opposition Conservative’s lead over the ruling Labour Party slips. The Populus polls for the Times newspaper found support for Prime Minister Gordon Brown’s Labour Party up two points from last month at 30%, while the centre-right Conservatives were down one point to 40%. (RTRS)

Despite a raft of comments from high-profile speakers such as Jim Rogers, Bill Gross of Pimco and a former chief economist at the IMF – there are number of reasons to believe that the UK won’t end up like Greece. (Telegraph) Firstly, unlike financially distressed members of the Euro, Britain has its own currency. Britain can simply print more money to pay its debts, and arguable has already done so through QE. Obviously, it will be a major blow to Britain’s international standing if it looses its AAA credit rating, but in truth the rating is something of a red herring, and is not the major issue here. The second reason Britain is unlikely to suffer the same fate as Greece, or even Spain, is that the UK has nowhere near the same magnitude of problem. By contrast, UK competitiveness is improving fast, in part because of the flexibility of its labour markets, which has allowed companies to adjust their cost bases quickly by changed circumstances.

UK RICS House Price Balance (Jan) M/M 32% vs. Exp. 27% (Prev. 30%) (BBG/RTRS) Property price rises in Britain picked up pace in January, even as unusually heavy snowfall led to a sharp drop in new buyer enquiries.

British retail sales fell in January to record the worst performance for that month in 15 years, a survey by the British Retail Consortium showed. (RTRS) The BRC said the value of sales last month was 0.7% lower than a year ago when measured on like-for-like basis. That followed a 4.2% annual gain in December, said Stephen Robertson, director general. He said the snow at the start of the month had boosted food sales but hit other sectors. Food sales growth slowed in the second half of the month, however, and clothing and footwear sales picked up. Some consumers may also have brought forward their purchases to December to beat VAT going back up to 17.5% on Jan1 after the cut to 15% over 2009. Also in the news, UK sales fall prompts fears of ‘double-dip’ recession, reports Telegraph.

UK Monster Employment Index (Jan) M/M 111 vs. Prev. 120 (RTRS) UK Monster Employment Index fell by nine points (8%) in January as the online recruitment activity recorded a seasonal slowdown.

Britain’s Treasury should impose “effective and enforceable” sanctions to encourage the country’s bailed-out lenders to meet loan promises made as a condition of receiving taxpayer support, according to parliamentary Committee of Public Accounts. (RTRS)

US News

T-notes were on a downward trajectory on Monday as looming supply weighed; however losses were capped as concerns over deficits at European peripheral states persisted. At the pit close t-notes were down 12 ticks at 118.15+. At 0641 GMT UST’s were trading up 3 ticks to 118.18+ as JGB’s moved higher with a weaker Nikkei (-0.2%). However, gains were capped ahead of the first of this week’s USD 81bln of US issuance.

Fed’s Dudley said the US financial system is in much better shape than a year ago even as small- to medium-sized banks remain under significant pressure. Dudley further said that loan losses in commercial real estate, consumer lending, and mortgages are likely to continue for some time. (BBG

European News

ECB’s Trichet said keeping inflation expectations anchored remains of paramount importance, under exceptional circumstances even more than in normal times. (BBG) Trichet will today depart a meeting of policy makers in Sydney a day earlier to attend a gathering of EU leaders, according to an ECB spokeswoman.

The ECB may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. (BBG)

Greek bailout is looking increasingly likely. (Times) For the EUR, Greece remains the biggest worry, with attention shifting yesterday to the country’s banking system. Government officials insisted that everything was fine, but bankers reported that the repo market was virtually closed to Greek borrowers.

Greek finance minister Papaconstantinou says Greece is ‘fully committed’ to stability plan. (BBG) Papaconstantinou says Greece will tackle its budget deficit and a Greek aid call would send worst signal.

Spanish finance ministry says 21% of public debt expires in next 12 months. (BBG/Les Echos) Spanish deputy finance minister, Campa, said that the country’s debt is manageable.

Asian News

JGBs edged up after worries over the worsening fiscal health of some European countries hurt shares and lifted US Treasuries. JGBs were trading at 139.33 (+0.23) at 0621 GMT. (RTRS)

PBOC governor Zhou said that the pace of bank lending in China was stable. (RTRS)

Forex

Fed’s Yellen says more flexible CNY may ease ‘global imbalances’ and could reduce China’s inflation concerns. (BBG)

RBA’s Stevens said that keeping rates low may help create bubbles. (BBG)

Bank of Canada’s Duguay repeats conditional commitment to hold key interest rate at 0.25% until end of Q2 and says strong CAD and low US demand will continue to be significant drags on economy. (RTRS)

Traders in record bet against the EUR. (FT FrontPage) Traders and hedge funds have bet nearly USD 8bln against the EUR, amassing the biggest ever short position in the single currency on fears of a Eurozone debt crisis.

Commodities

Oil sank below USD 72 a barrel, after rising nearly 1% the day before, weighed down by nagging worries over an uncertain demand outlook and the fiscal health of some Eurozone countries. WTI crude futures were trading at USD 71.81, down USD 0.08, at 0612 GMT. (RTRS)

El Nino, the weather-altering Pacific warming which has hit the price of commodities from sugar to natural gas, is starting to fade and could end by June. (FT) The effect could be to cut the costs of agricultural commodities as regular rain patterns returned and to raise the price of natural gas and oil because of the higher likelihood of an active hurricane season in the Gulf of Mexico, analysts said.

Company News

UK

BP – Co. reports “fuel/gas imbalances” at Carson refinery. (BBG)

Royal Bank of Scotland/Lloyds – British taxpayers may be able to sell their stakes in two banks in five years, with RBS exiting the government’s asset-insurance program in “two to three years”, a panel of lawmakers reported, citing testimony by Treasury official. (BBG)

AstraZeneca – Co.’s widely used cholesterol-lowering drug Crestor was approved by US regulators to prevent heart attacks and strokes for a broader group of patients. (BBG)

TUI Travel – Co.’s Q1 revenue GBP 2.53bln, down 8% vs. last year and Q1 underlying operating loss GBP 107mln vs. Prev. GBP 35mln. Co. says significant improvement in Q2 profitability and sees H1 results in line with forecasts. Co. is confident that it can meet board’s forecasts for 2010. (BBG)

BSkyB – Co. places 10% of ITV and says proceeds were GBP 196mln in placement. Says to keep 7.5% ITV stake for medium term. (BBG)

US

Equities finished lower as continued concerns regarding the creditworthiness of certain Eurozone nations dented sentiment. Financials were the worst performing sector, closely followed by basic materials as equities oscillated between gains and losses. With a light economic calendar, stocks were range-bound in the latter half of the session however came under further selling pressure before the bell. At the closing bell; the S&P 500 closed down 0.89% at 1056.74, the DJIA closed down 1.04% at 9908.39 and the NASDAQ 100 closed down 0.64% at 1734.88.

Electronic Arts – Q3 adjusted EPS USD 0.33 vs. Exp. USD 0.31, Q3 adjusted net revenue USD 1.35bln vs. Exp. USD 1.34bln. Co. sees Q4 adjusted EPS USD 0.02-0.06 vs. Exp. USD 0.13 and Q4 adjusted revenue USD 800-850mln vs. Exp. USD 859.04mln. Also says sees Q1 adjusted loss per share USD 0.35-0.40 vs. Exp. USD 0.04 and sees Q1 adjusted revenue USD 460-500mln vs. Exp. USD 762.0mln. In after market trade co. shares fell 6.5%. (BBG/RTRS)

Boeing – Co.’s 747-8, the biggest jumbo jet it’s ever built, flew for the first time today, joining the composite-plastic 787 Dreamliner in delayed flight-test programs the co. aims to complete this year. (BBG)

United Technologies - Co. increases quarterly dividend by 10.4% to USD 0.425 per share. (RTRS)

Kraft Foods – About 400 workers at Cadbury Somerdale plant may lose their jobs despite co. saying that it “would be in a position to continue to operate” the factory. (Times)

Europe

Credit Agricole – Co. may take a write-down of about EUR 1bln as it ends its shareholder pact in Intesa Sanpaolo with Assicurazioni Generali. (Les Echos)

Renault – Nissan forecasts JPY 35bln FY net income and scraps loss forecast. Nissan Q3 net income JPY 45bln vs. Exp. JPY 27.2bln profit. (BBG)

Lafarge – Co. wants to develop further in Poland and will try to use any opportunity to acquire. (Parkiet) Generali - Co. CEO says unwinding of agreement with Credit Agricole Intesa is credible option. (RTRS)

SAS – Co. subject to various rumours, including another share issue. (Kauppalehti)

Swedbank – Co. post a Q4 operating loss of SEK 1.67bln but says it might make a profit this year. (BBG/RTRS) Novartis – Co. gains exclusive rights to Debio 025, a hepatitis C drug currently in phase 2 trials. In other news, the UK’s NICE says it has been unable to recommend everolimus (afinitor) for the second line treatment of advanced renal cell carcinoma. (BBG)

UBS – Q4 net CHF 1.21bln vs. Exp. CHF 416mln, investment bank Q4 pretax profit CHF 297mln vs. CHF 1.37bln loss, Q4 trading loss CHF 62mln vs. Exp. CHF 536mln profit. Q4 outflows CHF 12.0bln for wealth management Americas and says sees money outflows in immediate future, margin pressure. Co. says regulatory changes may have “profound consequences”. (BBG)

Credit Suisse – Co.’s Americas Private Bank Head Dechellis wants to expand in Brazil and Mexico, later Canada and sees ‘aggressive’ growth in 2010. (RTRS) In other news, co. is expanding its US wealth management business, ups private wealth advisers by 300 to a total of 700. (Sources)

Swatch Group – Co. FY net CHF 759mln vs. Exp. CHF 700mln, FY operating profit CHF 903mln vs. CHF 1.2bln. Says excellent outlook for rest of year. (BBG)