Japanese Officials Reject Charges Of Exchange Rate Manipulation

Nikkei225 Index surges 2.9% at 10,926 (Sharpest gain since March 22, 2011) after Japan Core CPI reading of 0.2 y/y puts pressure mounts on BoJ

Japanese officials rejected charges they are manipulating the exchange rate.

Japan Fin Min: BoJ easing aimed at beating deflation, not currency manipulation; excessive JPY strength being corrected

Japan: Econ Min: Reiterates he will explain Japan FX stance and clarify misunderstandings of Japan policy at Davos

IMF Lagarge: global economy was showing a timid recovery and would be slightly better in 2013 but uncertainties did remain

ECB's Draghi: Positive contagion on markets had yet to be transmitted into the real economy

German IFO survey registers MoM increases and beat analyst expectations

UK Q4 GDP weaker than expected as it contracts by 0.3%

Focus on amount of first ECB LTRO repayment announcement with €100B expected

Economic Data
(RU) Russia Narrow Money Supply Narrow w/e Jan 21st: 7.52T v 7.64& prior

(FI) Finland Q4 House Prices Q/Q: -0.3 v +1.1% prior; Y/Y: 3.0% v 1.8% prior

(HU) Hungary Nov Retail Trade Y/Y: -4.1% v -3.2%e

(ES) Spain Dec Producer Prices M/M: -0.1% v -0.5% prior; Y/Y: 2.7% v 2.8% prior

(EU) ECB: €0.0M borrowed in overnight loan facility vs. €0.0M prior; €210.3b parked in deposit facility vs. €206.8B prior

(TW) Taiwan Dec M2 Money Supply Y/Y: 3.7 v 3.3% prior; M1 Money Supply Y/Y: % v 3.7% prior

(NL) Netherlands Jan Producer Confidence: -5.6 v -5.1e

(DE) Germany Jan IFO Business Climate: 104.2 v 103.0e; Current Assessment: 108.0 v 107.3e; Expectations Survey: 100.5 v 98.5e

(GR) Greece Nov Current Account: -€850M v -€684M prior

(UK) Q4 Advanced GDP Q/Q: -0.3% v -0.1%e; Y/Y: 0.0% v 0.2%e

(UK) Q4 Advanced Index of Services M/M: 0.0% v -0.1%e; 3M/3M: 0.6% v 0.5%e

(GR) Greece Q3 Household disposable income: €33.2B v €37.2B y/y

Fixed Income
(ZA) South Africa sold total ZAR800M in I/L 2025, 2038 and 2050 Bonds

Equities
Indices: FTSE 100 +0.10% at 6,273, DAX +1% at 7,825, CAC-40 +0.60% at 3,772, IBEX-35 +0.50% at 8,711, FTSE MIB +0.40% at 17,832, SMI flat at 7,453, S&P 500 Futures +0.30% at 1,495

European equity markets are mostly in positive territory, after opening broadly lower, as the German DAX has hit a new multi-year high, amid the release of better than expected IFO data. The FTSE 100 has lagged, as UK Q4 GDP missed market expectations. European banks are trading mostly higher ahead of the ECB's announcement related to LTRO payments. US companies due to report earnings later today include Honeywell and Procter & Gamble.

UK movers: [IAG +2% (broker commentary); LSE -1% (broker commentary), Anglo American -0.50% (Q4 production update)]

Germany movers: [Bayer +4% (broker commentary),TUI AG +1.5% (broker commentary) ;Salzgitter -2.5% (broker commentary), Wacker Chemie -1.5% (broker commentary),K+S -0.90% (broker commentary)]

France movers: [STMicroelectronics +4% (broker commentary),Credit Agricole +2% (asset sale),Technip +1.7% (broker commentary)]

Italy movers: [Banca Monte Paschi +7% (largest shareholder to support capital plan),Pirelli -2.5% (broker commentary)Saipem -1.6% (broker commentary)]

Switzerland movers: [Clariant +2.5% (broker commentary)]

Dutch movers: [SNS Reaal +9% (talks with possible investors),Akzo Nobel +0.30% (broker commentary)]