European Market Update: February 6, 2012

Greek political leaders continue to struggle over planned austerity measures

Economic Data

(EU) ECB: €2.8B borrowed in overnight loan facility v €1.5B prior; parked in deposit facility (second highest level on record) vs. €488.7B prior

(UK) Jan Halifax House Prices M/M: 0.6% v 0.1%e; 3M/Y: -1.8% v -2.1%e

(CZ) Czech Dec Industrial Output Y/Y: 2.0% v 1.3%e; Construction Output Y/Y: +14.6% v -2.3% prior

(TW) Taiwan Jan CPI Y/Y: 2.4% v 2.2%e; WPI Y/Y: 4.3% v 4.1%e

(TW) Taiwan Jan Foreign Exchange Reserves: $390.3B v $385.5B prior

(SE) Sweden Dec Service Production M/M:0.0% v 0.2%e; Y/Y: 3.0% v 2.2%e

(UK) UK Jan new car registration Y/Y: 0.0% v -3.7% prior - SMMT

(EU) Euro Zone Feb Sentix Investor Confidence: -11.1 v -15.0e

Fixed Income:

(NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 4.5% 2019 Bonds; Yield 2.10%

(SK) Slovakia Debt Agency (ARDAL)sold €304M in 12-month Bills; Yield 1.6416% v 1.7044% prior; Bid-to-cover 1.18x v 2.85x prior

(NL) Netherlands Debt Agency (DSTA) sold €2.2B vs. €4.0B indicated in 3-month and 6-month Bills

Sold €1.11B vs.€2.0Be in 79-Day Bills; Yield 0.032% vs. 0.11% prior

Sold €1.09B vs. €2.0B in 174-Day Bills; Yield 0.05% vs. 0.009% prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Notes/Observations

ECB deposits at 2nd all-time highest level and back above $500B

Greek ruling coalition fractured on austerity measures

German Chancellor to meet French President Sarkozy in Paris likely will discuss the Greek impasse.

Euro zone finance ministers may hold a meeting later this week in Brussels about Greece's debt restructuring and the second bailout program. - DjBlue as Giants win Super bowl; New Jersey fails to provide team with its promised tickertape parade

Equities:

FTSE 100 +0.50% at 5825, DAX +0.40% at 6681, CAC-40 +0.50% at 3391, FTSE MIB +0.30% at 16,327, SMI +0.50% at 6095

European equity indices opened the session lower, led by declines in French equities. European banks are mostly in negative territory amid continued concerns related to Greece and Portugal. Additionally, there has been speculation that European banking officials might have reservations about some of the capital plans presented by banks, while the daily use of the ECB's deposit facility has moved back towards the recent record highs. Underperformers include Credit Agricole [ACA.FR] and SocGen [GLE.FR].

In individual movers, Greek banks have risen by over 5% on continued hopes that they will not be nationalized. In the UK, shares of miners Xstrata [XTA.UK] and Glencore [GLEN.UK] have each moved lower by over 1%, as the companies have gained in recent sessions after confirming that they were in talks. Government services provider RM Plc [RM.UK] has declined by more than 10%, after reporting its FY11 results. In Switzerland, Julius Baer [BAER.CH] has declined by over 3%, after cutting its medium term pre-tax profit margin target. Most European airlines are trading lower amid the reports of cold weather conditions in various parts of Europe over the weekend. Also, China's government confirmed that Chinese airlines can be exempt from certain EU-imposed carbon emissions rules.