Shanghai Composite Closes At Fresh 3 ½-Year Low; Euro Crisis 50% Through

(FR) France Aug Business Confidence: 90 v 90e; Production Outlook Indicator: -44 v -44 prior; Own-Company Production Outlook: -6 v -9 prior

(DE) Germany Aug CPI Saxony M/M: 0.3 v 0.4% prior; Y/Y: 2.1 v 1.8% prior

(CH) Swiss Aug KOF Swiss Leading Indicator: 1.57 v 1.45e

(DK) Denmark Q2 Preliminary GDP Q/Q: -0.5% v -0.2%e; Y/Y: -0.9% v -0.2%e

(SE) Sweden Aug Consumer Confidence: 5.4 v 5.7e; Manufacturing Confidence: -9 v -3e; Economic Tendency Survey: 97.1 v 95.5e

(DE) Germany Aug CPI Brandenburg M/M: 0.2% v 0.4% prior; Y/Y: 2.0% v 1.7% prior

(DE) Germany Aug CPI Hesse M/M: 0.4% v 0.4% prior; Y/Y: 2.3% v 1.7% prior

(DE) Germany Aug CPI Baden Wuerttemberg M/M: 0.2% v 0.4% prior; Y/Y: 1.8% v 1.4% prior

(IT) Italy Jun Retail Sales M/M: +0.4% v -0.2%e; Y/Y: -0.5% v -1.7% prior

(NO) Norway Q2 Manufacturing Wage Index Q/Q: 0.1%v 0.7% prior

(IC) Iceland Aug CPI M/M: -0.2 v -0.7% prior; Y/Y: 4.1 v 4.6% prior

(IT) Italy Aug Consumer Confidence: 86.0 v 86.0e

(GR) Greece July PPI Y/Y: 3.8% v 2.9% prior

Fixed Income
(IT) Italy Debt Agency (Tesoro) sold €9.0B vs. €9.0B indicated in 6-month Bill; Avg Yield 1.585% v 2.454% prior; Bid-to-cover: 1.69x v 1.61x prior

(RU) Russia sold RUB2.6B in 2017 OFZ Bond; Yield 7.57%

(EU) ECB allotted $6.2B in 7-Day USD Liquidity Tender at fixed 0.63% vs. $8.5B prior

(SE) Sweden sold SEK10B in 3-month Bills; Yield 1.0091 v 0.9940% prior

(EU) ECB allotted €9.7B in 3-Month Tender at fixed 0.75% vs. €10Be

(IN) India sold total INR120B vs. INR120B indicated in 3-month and 6-month Bills

Notes/Observations
ECB's Liikanen: policymakers should carefully consider comments on euro; Europe half way through crisis

Renewed speculation that the EU/IMF/ECB Troika might relax Portugal's 2012 deficit target to 5% from the current 4.5%

Hurricane Isaac makes landfall in SE Louisiana

IEA head: no need for an SPR release at the moment

Equities
Indices: FTSE 100 -0.50% at 5747, DAX -0.60% at 6965, CAC-40 -0.50% at 3414, IBEX-35 -0.40% at 7306, FTSE MIB -0.25% at 14,954, SMI flat at 6420, S&P 500 Futures -0.10% at 1406.50

Following the mixed open, most indices are trading in negative territory amid weakness in banks and resource-related firms. The equity underperformance has been led by the German DAX and French CAC-40. The declines in the equity markets has come amid the rise in peripheral bond yields and as China's Shanghai Composite closed at the lowest level since February 2009. Additionally, markets have traded cautiously ahead of central bank commentary out of the Jackson Hole conference due later in the week. Fed Chairman Bernanke is due to address the conference on Friday.

French hotel company Accor [AC.FR] is lower by over 1%, on weaker than expected H1 results. Engineering/construction firm Bouygues [EN.FR] has declined by more than 6%, as H1 net profits declined y/y amid weakness in the telecom business. Cosmetics firm L'Oreal [OR.FR] is lower by over 3%, following the release of H1 results. In the UK, larger copper miner Antofagasta [ANTO.UK] has traded slightly lower, as the company reported a y/y decline in its H1 net profit.

Shares of Austrian bank Raiffeisen [RBI.AT] have lost over 2%, as the company report weaker than expected Q2 results. In the Italian banking sector, UBI Banca [UBI.IT] and Banca Monte Paschi de Siena [BMPS.IT] are trading lower, following the release of their respective H1 earnings reports. Banca Popolare di Milano's [PMI.IT] shares are higher by over 2%, as the company reported H1 results. In German Lufthansa [LHA.DE] has underperformed the DAX, amid ongoing concerns that the firm's cabin crew workers could announce a strike.