By Paddy Power Trader

The group of governors and heads of supervision who oversee the Basel Committee on Banking Supervision said Monday that they had reached a “broad agreement” on the “overall design” of new capital and liquidity rules for banks. (RTRS) The central bankers and regulators, meeting at the Bank for International Settlements, agreed on a new 3% leverage ratio to apply to banks around the world, they said in a statement. The ratio will be tested from 2013 until 2017, and banks would be required to start publishing their individual leverage figures starting in 2015.

UK News

There is little in the way of any fresh UK news today and a light economic calendar will be observed with only the CBI distributive trade report due at 1100BST.

US News

T-notes reversed initial losses to finish the session higher as combination of weak economic data and month-end buying saw the yield on the 10y fall below 3%. At the close; t-notes finished up 2 ticks at 122.23+. At 0627BST UST’s were trading up 2+ ticks to 122.26 ahead of an expected easing in US consumer confidence in the month of July.

Fed’s Plosser said it is too soon for the Fed to bolster record US monetary stimulus in response to slower-than-forecast gains in economic growth and employment. (Sources)

US recovery elusive amid fiscal gaps. (FT) Most US states are expecting to see tax revenues improve after a free fall from the recession, but a recovery remains uncertain and hinged on whether economic growth withstands the end of federal stimulus funds, a report today shows.

European News

Germany refused for the time being to sign parts of a developing international agreement on bank capital and liquidity rules that is being negotiated by the Basel Committee on Banking Supervision, according to unidentified officials close to the talks. (WSJ)

European banks who only just scraped through a health check could look for over EUR 25bln in new capital, while Spain’s smaller lenders set out to reassure investors on Monday that they too can raise funds. (RTRS)

A plan by France, Germany and the UK to tax banks on their riskier assets will damage the countries’ competitiveness, according to the CEO of BNP Paribas. (Le Figaro)

Forex

JGBs were little changed overnight in a market struggling to find short-term cues after the results of European bank stress tests and ahead of economic data at home and abroad later in the week. JGBs were trading at 141.86 (+0.12) 0602 BST. (RTRS)

About 23% of the CNY 7.66trl that Chinese banks have lent to local government financing vehicles are at serious risk of default. (New Century Weekly) The Chinese language magazine said the China Banking Regulatory Commission disclosed the estimate at a meeting with banks last week. According to the initial results of a CBRC investigation, only 27% of the local government projects are generating enough cash flow to pay off the loan, and banks will have to call in guarantees lined up by the local authorities to recover the remaining 50% of the loans.

However Brainard declined to estimate extent to which China’s CNY is undervalued.

Australia Conference Board Leading Index (May) M/M 0.3% vs. Prev. 0.1% (Sources)

Commodities

Oil was steady near USD 79 a barrel overnight as forecasts indicated a trend of falling crude inventories and rising refined products stockpiles in the US would continue. WTI crude futures were trading at USD 78.96, down USD 0.01, at 0622 BST.

Company News

Despite soft economic data, equities finished the session higher as combination of speculative M&A activity, together with reports that Fedex (+5.75%) raised its profit forecasts raised investor sentiment. Investor confidence was also supported by absence of negative reaction to the EU bank stress tests which as a result lifted the financials in the S&P 500.

UK

BP – Co. says headline replacement cost loss for the quarter of USD 17bln, and co. has taken a pre tax charge of USD 32.2bln for the Gulf of Mexico oil spill. Co. plans to reduce its net debt level down to a range of USD 10-15bln within the next 18 months, and plans to sell assets for up to USD 30bln over the next 18 months. Co. will consider its position on future dividend payments at Q4 2010 results. Co.’s chairman says liquidity position is strong. Co.’s CEO Tony Hayward will step down and will be succeeded by Robert Dudley. (RTRS/Sources) – Co. relief well could drill into leaking Gulf well by end of next week – US government (RTRS)

AstraZeneca – US FDA staff memo states that main trial of co. anti-clotting drug Brilinta was well-designed in general. Says restricting Statin use in Brilinta trial appears inappropriate and that changes in Statin exposure may be relevant to time course of the presumed Brilinta benefit. Adds that rates of incomplete follow-up in Brilinta study ‘are concerning’. (RTRS)

Xstrata – Co. says Q2 Copper output down 3% and consolidated coal production down 0.6%. Co.’s Zinc and Nickel production rose in the quarter. (Sources)

Provident Financial – Co.’s H1 profit GBP 38.9mln vs. Prev. GBP38.2mln, and H1 pretax profit GBP 54.0mln. Co.’s interim dividend GBP 0.254 per share. Co. says plan to deliver 2010 growth on track. (Sources)

Arm Holdings – Co. Q2 sales GBP 100mln vs. Exp. GBP 91.2mln, co. says starts H2 with record order backlog. (Sources)

Compass Group – Co. is actively looking for bolt on acquisitions, citing an interview with Chief Executive Officer. (FT)

African Barrick Gold – Half-year net USD 99mln, up 217%. H1 output 356.206 ounces, up 23% (Sources)

Intercontintinental Hotels – Barclays is placing 30mln shares of the Co. (10%) for shareholder Ellerman Corporation. Placing is believed to be at between GBP11 and GBP11.50. (Sources)

US

Genzyme (+7.80%) led the Nasdaq 100 index following reports that Sanofi Aventis and GlaxoSmithKline was prepared to bid for the company. The session was dominated with little fresh news flow, which exacerbated some of the price action and rally late into the close saw indices print fresh highs. Finally, at the closing bell DJIA closed up 0.97% 10525, S&P 500 closed up 1.12% at 1115 and NASDAQ 100 closed up 0.80% at 1890.

Wal-Mart Stores – Co. is extending its straight talk prepaid mobile phone service at AT&T inc’s network. (WSJ)

Yahoo Japan/Google – Japans largest internet portal site, appears set to adopt Google’s search engine instead of teaming up with Microsoft like partner Yahoo Inc. (Sources)

News Corp – According to reports, co. is likely to be well positioned for further European buys if BSkyB offer succeeds. (Australian Financial Review)

Europe

Germany refused for the time being to sign parts of a developing international agreement on bank capital and liquidity rules that is being negotiated by the Basel Committee on Banking Supervision, according to unidentified officials close to the talks. (WSJ)

Deutsche Bank – Co.’s Q2 net EUR 1.2bln vs. Exp. EUR 1.05bln, and Q2 loan/loss provision EUR 243mln vs. Exp. EUR 450mln. Co.’s Tier 1 capital ratio 11.3% at the end of Q2, and Q2 equity trading EUR 642mln vs. Exp. EUR 757mln. Co. repeats operating profit target of EUR 10bln in 2011, and co.’s CEO says co. is well positioned. Co.’s sovereign exposure figures as of 31st March 2010: Germany – EUR 25.7bln, Italy – EUR 8.14bln, UK – EUR 1.99bln, Greece – EUR 1.09bln, Spain – EUR 1bln, Portugal – EUR 465mln, and Ireland – EUR 309mln. (Sources)

SAP – Co.’s Q2 net income EUR 491mln vs. Exp. EUR 525mln, and Q2 total sales EUR 2.89bln vs. Exp. EUR 2.7bln. Co. sees FY 2010 non-IFRs software, and software-related revenue up 9%-11%. (Sources)

Hypo Real Estate – Co. says sovereign exposure to Greece at EUR 7.91bln, to Ireland EUR 10.28bln and Italy EUR 37.36bln. (RTRS) Vivendi – Supreme Court ruling precludes co.’s shareholder claims – Lawyer. (Sources)

Danone – Co.’s H1 net from cont. ops. EUR 848mln vs. Exp. EUR 819mln, and sees 2010 like for like sales growth of at least 6%. Co. confirms 2010 forecasts for margin and free cash flow. (Sources/RTRS) EU Financials – The group of governors and heads of supervision who oversee the Basel Committee on Banking Supervision said Monday that they had reached a “broad agreement” on the “overall design” of new capital and liquidity rules for banks. The central bankers and regulators, meeting at the Bank for International Settlements, agreed on a new 3%leverage ratio to apply to banks around the world, they said in a statement. The ratio will be tested from 2013 until 2017, and banks would be required to start publishing their individual leverage figures starting in 2015. (RTRS)

ING – Co. is rumoured to be on the verge of acquiring Cyprus-based Marfin Popular Bank (Daily Mail)

Telecom Italia – Fitch reiterates BBB rating for the co., stable outlook. (Sources)

Banco Popular – Co. 1H net EUR 355mln vs. Exp. EUR 361mln, co.’s bad loans ratio 5.04% vs. 4.91 in March (Sources)

Aegon – Fitch Ratings has downgraded co.’s long term IDR to A from A+. The outlook is stable. (Sources) UBS – Co.’s Q2 net income CHF 2.01bln vs. Exp. CHF 1.12bln, and trading income CHF 3.45bln vs. Exp. CHF 1.9bln. Co. says net new money outflows wealth management CHF 5.5bln, and provisions CHF 48mln vs. Exp. CHF 156mln. Co. is confident about future. Co.’s CFO Cryan says unlikely to pay dividend. (Sources)

Roche – Co. receives FDA clearance for Coaguchek XS Pro System with bar code reader for PT/INR testing at the point of care. (RTRS)