European Market Update

(EU) ECB: €2.2B borrowed in overnight loan facility v €2.4B prior; €479.4B parked in deposit facility vs. €488.9B prior

(IN) India FY11 annual GDP Y/Y: 8.4% v 8.4% prior (Revision)

(ZA) South Africa Dec Private Sector Credit Y/Y: 6.3%e v 5.9% prior; M3 Money Supply Y/Y: 8.2% v 7.6%e

(DE) Germany Dec Retail Sales M/M: -1.4%% v 0.8%e; Y/Y: -0.9% v 0.9%e

(DE) Germany Dec ILO Employment : 41.26M v 41.19M prior; Unemployment: 5.5% v 5.5% prior

(FI) Finland Nov Final Trade Balance: -€358.0M v -€260M prelim

(CH) Swiss Dec UBS Consumption Indicator: 0.92 v 0.78 prior

(TW) Taiwan Dec Leading Index M/M: 0.5% v 0.5% prior; Coincident Index M/M: -0.6% v -0.6% prior

(TH) Thailand Dec Business Sentiment Index: 48.5 v 39.0 prior

(TH) Thailand Dec Current Account Balance: +1.9B v -$1.0Be; Total Trade Account Balance: -$238M v +$218M prior; Overall Trade Balance: -$1.0B v -$1.5B prior

(FR) France Dec Producer Prices M/M: -0.1% v -0.1%e; Y/Y: 4.7% v 4.7%e

(FR) France Dec Consumer Spending M/M: -0.7% v +0.2%e; Y/Y: -3.1% v -2.1%e

(ES) Spain Nov Total Housing Permits M/M: -13.2 v -22.0% prior; Housing Permits Y/Y: -31.5% v -2.9% prior

(CH) Swiss Central Bank publishes Dec Balance Sheet Data: Currency Holdings (CHF): 257.5B v 261.9B prior

(HU) Hungary Dec Unemployment Rate: 10.7% v 10.%e

(HU) Hungary Dec Producer Prices M/M: -0.5% v +2.5% prior; Y/Y: 7.5% v 7.4%e

(ES) Spain January Preliminary Consumer Price Index Y/Y: 2.0% v 2.3%e; CPI EU Harmonized Y/Y: 2.0% v 2.2%e

(TR) Turkey Dec Trade Balance: -$8.1B v -$8.6Be

(TW) Taiwan Q4 Preliminary GDP Constant Prices Y/Y: 1.9% v 2.8%e

(DE) Germany Jan Unemployment Change: -34K v -10Ke; Unemployment Rate: 6.7% v 6.8%e

(HK) Hong Kong Dec M2 Money Supply Y/Y: 4.6% v 3.6% prior; M3 Money Supply Y/Y: 4.6% v 3.5% prior; M1 Money Supply Y/Y: 8/8% v 3.1% prior

(HK) Hong Kong Dec Govt Mthly Budget Budget (HKD): +38.3BB v -1.4B prior

(CZ) Czech Dec Money Supply Y/Y: 5.2% v 5.2% prior

(IC) Iceland Dec Final Trade Balance (ISK): 6.9B v 14.5B prelim

(IT) Italy Dec Preliminary Unemployment Rate: 8.9% v 8.7%e

(NO) Norway Dec Credit Indicator Growth Y/Y: 6.7% v 6.5%e

(NO) Norway Dec Retail sales Volume M/M: -0.3 v +0.2%e; Y/Y: 2.6% v 2.2%e

(ES) Spain Nov Current Account: -€4.1B v +€0.5B prior

(UK) Dec Net Consumer Credit: -£0.4B v +£0.4Be; Net Lending: £0.7B v £0.8Be

(UK) Dec Mortgage Approvals: 52.9K v 54.0Ke

(UK) Dec M4 Money Supply M/M: -1.4% v -0.5% prior (largest monthly decline on record); Y/Y: -2.5% v -2.5% prior; M4 Ex OFCs 3M Annualized: -0.8 v +3.2% prior

(EU) Euro Zone Dec Unemployment Rate: 10.4% 10.4%e (highest level since April 1998)

(BE) Belgium Dec Unemployment Rate: 7.2% v 7.2% prior

(IT) Italy Dec PPI M/M: +0.1% v -0.1%e; Y/Y: 3.8% v 3.7%e

(GR) Greece Nov Retail Sales Value Y/Y: -6.3% v -8.1% prior; Retail Sales Volume Y/Y: -8.9% v -10.8% prior

(MA) Malaysia Central Bank left the Overnight Rate unchanged at 3.00%; as expected

Fixed Income:

(ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2018, 2020 and 2031 Bonds

(EU) ECB allotted €115.6B vs. €120Be in 7-Day Main Refinancing Tender

(HU) Hungary Debt Agency (AKK) sold HUF50B in 3-Month Bills; avg yield 7.41% v 7.94% prior; Bid-to-cover: 2.73x v 3.15x prior

(BE) Belgium Debt Agency sold total €2.58B vs. €3.0B indicated in 3-month and 6-month Bills

Sold €1.64B vs. €1.8Be in 3-month Bills; Avg Yield 0.506% v 0.429% prior; Bid-to-cover: 2.70x v 2.23x prior

Sold €940M vs. €1.2Be in 6-month Bills, Avg Yield 0.710% v 0.364% prior; Bid-to-cover: 4.02x v 2.01x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Notes/Observations

EU Governments appear to be closer to fiscal union arrangement and agreement on €500B ESM Bailout Fund

ECB Draghi: Fiscal Pact is first step toward fiscal union

Continued optimism on progress in Greek PSI talks

German Jan unemployment data beats expectations

Italy Dec Unemployment data higher than expectations

Euro Zone Dec Unemployment of 10.4% is the highest since 1998

Equities:

FTSE 100 +0.80% at 5715, DAX +0.90% at 6503, CAC-40 +1.1% at 3302, IBEX-35 +0.40% at 8553, FTSE MIB +1.5% at 15,983, SMI +0.30% at 5989

European shares rose during the session as markets adopted a risk-on attitude following EU summit. European leaders agreed on stricter budget plan while Greece's PM Papademos noted that debt talks had advanced significantly. Continental banks rose on optimism while UK banks declined after Santander [SAN.ES] expected a tough 2012 for UK banks. Oil stocks were also up tracking gains in crude.

ARM Holdings [ARM.UK] reported higher than expected earnings which pushed the stock higher.