LONDON (SHARECAST) - -Troika recommends giving Greece 2 more years
-Investors worried by weak prospects in emerging markets
-US-Israeli military excercises
-Draghi says common bank regulator in force only in 2014
-Spanish 10 year debt yields up 19bp to 5.82 per cent
-Schaeuble says no to Grexit and Greek yields drop
-Goldman believes Germany will need to accept certain degree of debt mutualisation
-Citi Chief Economist Buiter thinks some periphery debt restructuring will be needed -FT
FTSE-Mibtel 30: 0.51%
Ibex 35: 0.34%
Stoxx 600: 0.51%
European equities were buoyed today by reports that the Troika has asked the Eurogroup for another two years’ time for Greece to be able to meet its commitments as regards fiscal adjustment. Said proposal is expected to be discussed at this next Thursday’s summit of Eurozone leaders.
Critically, some estimates purport to show that giving Greece more time could equate to another €30bn in aid. The country’s Prime Minister however was adamant over the weekend to the effect that they do not need more money, just liquidity. Hence his proposal to pay a lower interest rate on the European Central Bank’s holdings of Greek public debt.
Also worth noting, European Central Bank (ECB) President Mario Draghi said today that common banking supervision in the euro area is likely to become operational only in 2014, even if the council regulation enters into force in January 2013. That means that the European Stability Mechanism (ESM) may not be available to directly recapitalize banks next year (thus by-passing sovereign states´ own balance sheets and debt ratios).
Acting as a backdrop, economists from at least two well known –and influential- banks, those from Goldman Sachs and Citi, criticized in different forums a certain lack of cohesion on the part of European authorities. In rather blunt terms both warned of the risk of a euro break-up should authorities fail to go ‘the full mile.’
Of interest as well, towards the close of the session some reports appeared to cite Mexico´s President to the effect –apparently- that a Spanish request for aid may be getting closer.
Banks moved higher nonetheless
Orkla has agreed to combine units with Norsk Hydro to provide aluminum profiles, building systems and tubing in North America and Europe.
The Fashion retailer H&M advanced after reporting a 15% increase in total sales for September. Like-for-like sales rose by 6%.
Shares of German cosmetics retailer Douglas were up strongly after Advent made an offer for the company.
From a sector stand-point the best performers within the DJ Stoxx 600 were seen in the following industrial groups: Banks (1.09%) and Real estate (1.07%).
Slightly stronger than forecast Swiss wholesale prices
Swiss producer prices increased by 0.3% month-on-month in September (Consensus: 0.2%).
And crude rose again
The euro/dollar is now down by 0.10% to the 1.2941 dollar mark.
Front month Brent crude futures rose by 102,8 dollars to the 115,81 dollar mark on the ICE.