Friday's European Market Update

German IFO survey exceeds expectations with Business Climate improving for the first time in 7 months

Economic Data

• (RU) Russia Narrow Money Supply w/e Nov 19th: 7.24T v 7.18T prior
• (DE) Germany Q3 Final GDP Q/Q: 0.2% v 0.2%e; Y/Y: 0.4% v 0.4%e; GDP wda Y/Y: 0.9% v 0.9%e
• (DE) Germany Q3 Domestic Demand: 0.0% v 0.0%e; Government Spending: 0.4% v 0.2%e; Private Consumption: 0.3% v 0.2%e; Capital Investment: +0.2% v -0.1%e; Construction Investment: 1.5% v 0.8%e; Exports: 1.4% v 1.0%e; Imports: 1.0% v 0.5%e
• (FR) France Nov Business Confidence Indicator: 88 v 87e; Production Outlook Indicator: -40 v -53e; Own-Company Production Outlook: -7 v -9 prior
• (ES) Spain Oct Producer Prices M/M: -0.1% v -0.1% prior; Y/Y: 3.5% v 3.8% prior
• (TW) Taiwan Oct Industrial Production Y/Y: 4.6% v 2.6%e; Commercial Sales Y/Y: -0.7% v +0.3%e
• (TW) Taiwan Q3 Final GDP Y/Y: 1.0% v 1.0%e
• (EU) ECB: €2.0B borrowed in overnight loan facility €1.9B prior; €228.8B parked in deposit facility vs. €226.3B prior
• (AT) Austria Sept Industrial Production M/M: -1.6% v +1.0% prior; Y/Y: 2.3% v 3.8% prior
• (DE) Germany Nov IFO Business Climate: 101.4 v 99.5e (first MoM rise in 7 months); Current Assessment: 108.1 v 106.3e; Expectations Survey: 95.2 v 93.0e
• (IT) Italy Sept Retail Sales M/M: 0.1% v 0.0%e; Y/Y: -1.7% v -1.1%e
• (MA) Malaysia Oct CPI Y/Y: 1.3% v 1.3%e
• (UK) Oct BBA Loans for House Purchase: 33.0K v 32.0Ke

Fixed Income

• (IN) India sold total INR130B vs. INR130B in 2020, 2025 and 2041 bonds
• (ZA) South Africa sold ZAR800M in I/L 2022, 2038 and 2050 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Notes/Observations

• Cyprus said to have reaches agreement on bailout with EU/IMF/ECB troika; deal is seen at around €17B
• Taiwan Cabinet plans to propose stock market measures by end of 2012; no further details were provided; Equity markets end session +3.1% for largest gain in 12 months
• Japan LDP (opposition) Leader Abe backs off FX intervention threat; Not thinking of currency intervention to weaken the JPY currency
• More speculation that China could again widen the CNY currency trading band
• German Nov IFO Business Climate beats expectations and registers first MoM increase in seven months
• German Upper House (Bundesrat) rejected tax treaty on undeclared Swiss accounts
• Various Northern European leaders see no chance of budget deal at today's EU Summit; need another meeting to work out issues

Equities

• Indices: FTSE 100 +0.1% at 5,798, DAX unchanged at 7,247, CAC-40 -0.1% at 3,495, IBEX-35 -0.5% 7,836 at, FTSE MIB -0.4% at 15,496, SMI +0.2% at 6,692 , S&P 500 Futures +0.1% at 1,390

Trading levels were relatively benign following the Thanksgiving holiday in the U.S. Stocks entered the session broadly in the green on slow, but positive progress reports on a Greece bailout. An S&P downgrade of Spanish banks, which hinted at a further downgrade to Spain's sovereign rating pushed European indexes into the red. The markets then bottomed on better than expected German IFO data, pushing back to the flat line. Later in the session, markets rallied into the green as further details of Greek bondholder concessions were released. The Cyprus stock market was up 8.6% after reaching a bailout deal with the Troika.

Individual movers included: Evotec (EVT.DE) received CIR accreditation from the Ministry of Education and is trading +1% after the news. EADS (EAD.FR) is down 2% after the German government reported an interest to buy a 3% stake in the company directly from the French govt. Delta Llyod (DL.NL) is down 2% after the sale of its German activities to Nomura cancelled were cancelled. Alcatel Lucent (ALU.FR) rose to almost €1 when they announced they are seeking a possible loan from Goldman Sachs, but the stock has since traded lower, down 1.3% on the day. Hochschild (HOC.UK) is down 2% after announcing delays to the Inmaculada and Crespo construction projects. Outotec (OTE1V.FI) is up 6.7% after increasing medium term sales targets.