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European Market Update

Published 12/05/2011, 08:31 AM
Updated 01/01/2017, 02:20 AM
(EU) ECB: €7.0b Borrowed In Overnight Loan Facility V €8.6B Prior; €332.7B Parked In Deposit Facility €313.8B Prior, Highest Deposit Reading Since June 2010

(GE) Germany Sells €2.68b In New 6-Month Bubills; Avg Yield 0.0005% V 0.0800% Prior; Bid-To-Cover: 3.8x V 2.2x Prior

European PMI services data was mixed: Italy, UK and France data was better than expected and rose m/m.Germany PMI services missed expectations while the German Nov final composite index had its first contraction since July 2009; Spain services PMI hits lowest level since March 2009

Italian, Spanish equities lead gains as bond yields continue to move sharply lower

Belgian banks outperform as the government's 6 political parties approved the coalition agreement

ECB daily borrowings remain elevated on session

Chinese yuan trades at lower end of trading band against US

FTSE 100 +0.50% at 5582, DAX +0.90% at 6136, CAC 40 +1.2% at 3202, IBEX 35 +1.6% at 8695, FTSE MIB +2.3% at 15,826, SMI +0.30% at 5735

European shares rallied in today's session following Italy's announcement of new austerity measures and the meeting of Sarkozy and Merkel. The Italian government announced new measures which would include a €20B in cuts and €10B in stimulus through 2014 aimed at promoting growth and employment. Merkel met Sarkozy in Paris today to advance a plan for stricter rules on deficit ahead of the much-anticipated EU summit on December 9th. Markets have hopes that the EU officials will advance with a solution to the EU's debt crisis.

While European financials were trading higher, German bank Commerzbank lost over 8% during the session following speculations that the bank may be nationalized. Commerzbank also announced an offer to repurchase hybrid capital instruments, intending to accept tenders up to €600M. Meanwhile, Dexia rallied over 7% after issuing a draft guarantee agreement to the board. UK name Michael Page lost over 11% after issuing a warning profit. The recruitment firm stated that its short-term visibility was reduced.
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