World Markets Digest ESM Bailout Fund

Markets for a second day saw some heavy selling across the region, Europe's debt crisis continues to be the catalyst. In Australia mining names were especially under pressure followed by the banks. AUD/USD was down almost one cent from Thursday around $1.0121. Gold and silver remained bid with heightened risk aversion.

As expected the Bank of Korea released revised outlooks for 2011 and 2012. Notable cuts 2011 GDP target to 3.8% from 4.3% prior; Cuts 2012 GDP to 3.7% from 4.6%. BoK Director General Lee said South Korea GDP will slow in H1 of 2012 , recover in H2; GDP to hit the bottom in Q1 at 0.7%. KRW remained weak throughout the session down over 0.5% against the USD.

Japan released their final Q3 GDP data. On a q/q basis rose 1.4%, slightly down from the 1.5% preliminary reading but higher than expectations. Final exports were +7.3% v 6.2% prelim. Private consumption fell to 0.8% from 1.0% prelim and Corporate CAPEX increased 1.4% from the 1.1% prelim reading. A Japan cabinet official noted that the final Q3 GDP data show supply constraints have been restored following March earthquake.

China Nov CPI was released coming in at the lowest level since SEPT 2010 at 4.2%, food prices also fell to a 8.8% y/y increase down from 11.9% prior. PPI also fell, coming in at 2.7%, the lowest level since Jan 2010. PBoC adviser Li Daokui in the press commented that the yuan exchange rate is already approaching equilibrium; China could end its persistent trade surpluses and cut its current accounts surplus to under 2% within 2-years.

Late in the Asian, after a marathon session in the first day of EU leaders meeting, some resolutions were announced. Leaders agreed to not pursue plans to change treaty for all 27 members; Agree to explore a bilateral loan to IMF of €200B, with €150B from the EU. Will try for a 17 member treaty change. (Note: EU-17 members use the euro as the currency). EU leaders agree permanent ESM bailout fund will NOT have a banking license.

EUR/USD fell to session lows below $1.3330, AUD/USD fell below $1.01, a one-week low. France President Sarkozy said the ECB to manage EFSF and ESM facilities, Draghi proposed putting the ECB's capabilities at the disposal of bailout funds and said no agreement had been reached on euro bonds. German Chancellor Merkel affirmed that treaty change will apply to euro zone countries and those that want to join. EU President Van Rompuy confirms the EU will raise up to €200B for IMF loan; EU member states will transpose fiscal rules in national law.

Equities

Samsung Electronics, 005930.KS: Apple has lost appeal to extend ban on the sale of Galaxy tablet in Australia

9501.JP: (JP) Japan Trade Min Edano: Considering all options for Tepco but no arrangements have been made for an injection of public funds

PKX: South Korea steelmakers Posco and Hyundai Steel may consider US imports - financial press