Fitch Cuts Japan's Sovereign Rating Two Notches

(JP) Japan Apr Supermarket Sales Y/Y: --1.9% v -2.4% prior

(FI) Finland Apr Unemployment Rate: 8.4% v 8.4%e

(DK) Denmark May Consumer Confidence Indicator: 0.4 v 0.6 prior

(ZA) South Africa Mar Leading Indicator: 134.5 v 134.4 prior

(NL) Netherlands May Consumer Confidence: -38 v -32 prior

(NO) Norway Q1 GDP Q/Q: 1.4% v 0.9%e; GDP Mainland Norway Q/Q: 1.1% v 0.9%e

(UK) Mar ONS UK House Prices Y/Y: -0.4% v +1.0% prior

(UK) Apr Public Finances (PSNCR): -£23.2B v -£6.0Be; Public Sector Net Borrowing: -£18.8B v -£22.8Be; PSNB ex Interventions: -£16.5B v -£20.0Be

(UK) Apr CPI M/M: 0.6% v 0.6%e; Y/Y: 3.0% v 3.1%e; Core CPI Y/Y: 2.1% v 2.0%e

(UK) Apr RPI M/M: 0.7% v 0.6%e; Y/Y: 3.5% v 3.4%e; Core RPI- Ex Mortgages Y/Y: 3.5% v 3.5%e; Retail Price Index: 242.5 v 242.4e

(HK) Hong Kong Apr CPI Y/Y: 4.7% v 4.7%e

(IC) Iceland Apr Wage Index M/M: -0.1% v 1.1% prior; Y/Y: 11.9% v 12.1% prior

Fixed Income

(NL) Netherlands Debt Agency (DSTA) sold €3.0B vs. €2.5-3.5B indicated rangein 0.75% Apr 2015 DSL bonds; Avg Yield 0.456% v 0.618% prior

(ES) Spain Debt Agency (Tesoro) sold total €2.53B vs. €1.5-2.5B indicated range in 3-Month and 6-Month Bills

Sold €1.51B in 3-month Bills; Avg Yield 0.846% v 0.634% prior; Bid-to-cover: 3.95x v 7.61x; Max Yield 0.879% v 0.720% prior

Sold €1.02B in 6-month Bills; Avg Yield 1.737% v 1.580% prior; Bid-to-cover: 4.3x v 3.25x prior; Max Yield 1.793% v 1.628% prior

(ID) Indonesia sold total IDR550B vs. IDR1.0T target in 2918, 2022, 2027 and 2037 project-based Sukuk bonds

(ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2017, 2021 and 2041 Bonds

(HU) Hungary Debt Agency (AKK) sold HUF45B in 3-Month Bills; Avg Yield 7.15% v 7.16% prior; Bid-to-cover: 1.56x v 2.01x prior

(EU) ECB allotted €37.9B in 7-Day Main Refinancing Tender at fixed 1.0% vs. €40Be

Notes/Observations

Fitch cut Japan's sovereign rating.

The battle lines have been drawn, ahead of Wednesday's informal EU Summit; France want Eurobond; Germany wants growth without being financed by debt.

BOE does not need to send inflation letter to Chancellor. First time in 10 quarters.

Equities

FTSE 100 +0.80% at 5345, DAX +0.60% at 6368, CAC-40 +0.50% at 3043, IBEX-35 +0.10% at 6533, FTSE MIB +1.4% at 13,198, SMI +0.60% at 5848

European equity indices opened the session higher, led by gains in banks and resource related shares, amid market optimism ahead of Wednesday's EU summit and the decline in peripheral bond yields. As of the time of writing, equity indices are off of their best levels, as Fitch has downgraded Japan's sovereign rating. In Greece, the Athens Stock Exchange (ASE) is lower by over 0.50%, amid renewed speculation that Greece's largest banks will be provided €18B in financing.

Shares of Marks and Spencer [MKS.UK] and Vodafone [VOD.UK] are both trading higher following the release of their respective full year earnings reports. Yell Group [YELL.UK] is lower by over 12%, as the company announced that it has hired advisers to help revise the company's capital structure. Homeserve [HSV.UK] has lost over 20%, as the company disclosed that the UK's FSA launched an investigation into certain historical issues at the company.

Thomas Cook [TCG.UK] has gained over 5%, after disclosing the sale of its unit in India. In Italy, Unione di Banche [UBI.IT] is higher by over 1% on speculation that the Bank of Italy may approve measures which would allow the company to increase its core tier 1 capital ratio. Accor [AC.FR] has gained more than 4% after agreeing to sell its Motel 6 unit for $1.9B. Swiss hearing solutions firm Sonova [SOON.CH] has lost over 5%, as the company's full year earnings missed analyst expectations.