European Market Update

(DE) Germany Jan CPI Saxony: -0.4% v +0.7% prior; Y/Y: 2.3% v 2.2% prior

(ES) Spain Q4 Preliminary GDP Q/Q: -0.3% v -0.3%e; Y/Y: 0.3% v 0.2%e

(TW) Taiwan Dec Unemployment Rate: 4.2% v 4.3%e; (lowest level since Aug 2008 )

(TW) Taiwan Dec Money Supply M1B Daily Avg Y/Y: 3.5% v 4.2% prior; M2 Money Supply M2 Daily Avg Y/Y: 5.0% v 4.8%e

(SE) Sweden Nov Non-Manual Workers Wages Y/Y: 2.6% v 2.3% prior

DE) Germany Jan CPI Brandenberg: -0.4% v +0.6% prior; Y/Y: 2.2% v 2.1% prior

(IT) Italy Jan Business Confidence: 92.1 v 92.3e

(DE) Germany Jan CPI North Rhine Westphalia: -0.4% v +0.7% prior; Y/Y: 1.8% v 1.7% prior

(EU) Euro Zone Jan Business Climate Indicator:-0.21 v -0.25e; Consumer Confidence: -20.7 v -20.6e; Economic Confidence: 93.4 v 93.8e; Industrial Confidence: -7.2 v -6.8e; Services Confidence: -0.6 v -1.6e

(BR) Brazil Jan FGV Inflation IGP-M M/M: 0.3% v 0.3%e; Y/Y: 4.5% v 4.6%e

(PT) Portugal Jan Consumer Confidence: -57.1 v -56.8 prior; Economic Climate Indicator: -4.7 v -4.4 prior

Fixed Income:

(IT) Italy Debt Agency (Tesoro) sold total €7.74B v. €5.5-8.0B indicated range in 2016, 2017, 2021 and 2022 Bonds

Sold €746M in 3.75% Apr 2016 BTP; Gross Yield 4.79% v 4.93% prior ; Bid-to-cover: x v 1.93x prior

Sold €3.57B vs. €3.0-4.0Be in May 4.75% 2017 BTPs; Avg Yield 5.39% v 4.93% prior; Bid-to-cover: 1.3x v 2.3x prior

Sold €1.16B in 3.75% March 2021 BTPs; Avg Yield 5.74% v 5.49% prior; Bid-to-cover: x v 1.58x prior

Sold €2.00B vs. €1.5-2.0Be in 5% March 2022 BTPs Avg Yield 6.08% v 6.98% prior; Bid-to-cover: 1.42x v 1.42x prior

(NO) Norway sold NOK4.0B vs. NOK4.0B indicated in 5% 2015 Bonds; Yield 1.59% v 3.22% prior

(SK) Slovakia Debt Agency (ARDAL) sold €260.5M in 12-month Bills; Yield 1.704% v 1.9699% prior, Bid-to-cover: 2.85 v 3.03x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Notes/Observations

EU Leader meet in Brussels on fiscal compact treaty and ESM facility

France President proposes VAT increase and financial tax ahead of spring elections

Troika officials increased their estimates for the 2nd bailout package for Greece by €15B to €145B due to deteriorating economic situation

Equities:

FTSE 100 -0.50% at 5703, DAX -0.40% at 6485, CAC-40 -0.80% at 3292, IBEX-35 -1.1% at 8562, FTSE MIB -0.50% at 15,852, SMI -0.30% at 6011

European shares declined during the session pressured by the financial sector as Greece failed to reach a final agreement with its private creditors. The debt talks, now at a tentative stage, come at a crucial time ahead of the EU's first 2012 summit which will take place today in Brussels. EU leaders are expected to finalize its austerity measures package but the discussion may center around a deal on PSI.

In individual news, Philips [PHIA.NL] lost over 2% after reporting a wider than expected loss and remained cautious on 2012, especially Europe. The company had already issued two profit warnings regarding its disappointing Q4 earnings. Hochtief [HOT.DE] also sank after lowering its FY11 guidance due to extraordinary charges. On the other hand, Ryanair [RYA.UK] for FY net to €480M v €440M prior.