Europe midday: Germany may be open to a precautionary credit line for Spain
Tue 16 Oct 2012
LONDON (SHARECAST) - -Germany may be open to granting Spain a precautionary credit line -Reports
-Contradictory reports on whether Spain will ask for a bail-out
-Some Euro zone banks regaining access to unsecured funding-Barclays
-Spanish 10 year bond yields down 5bp to 5.77 per cent
The major European equity benchmarks are now registering large gains. That following reports that Germany may be open to granting Spain a precautionary credit line.
Also adding to the favourable sentiment, The Financial Times wrote this morning that Spain may be close to asking for a bail-out. However, it added that it is being delayed by considerations put forth by Germany and by worries over what the repercussions of that could be for Italy.
Bloomberg is also casting a spotlight on Spain today. However, it was earlier reporting that Spain's PM believes that holding out for longer will win the country better terms, similar to what other reports seem to be pointing to yesterday.
Meantime, S&P has further cuts its long term credit ratings on 11 Spanish banks and short term rates on four. This is normal as financial institutions’ credit ratings are usually linked to the sovereign’s by means of the so-called zero coupon curve.
The Spanish Treasury has sold 4.86bn euros in 12 and 18 month bills this morning, more than the 4.5bn which had been expected and at lower rates than the last time around.
Car sales off
Luxury group LVMH has today unveiled a further slowdown in comparable sales growth in the third quarter, to 6%.
Roche Holdings gained 0.5% after reporting third- quarter sales that exceeded analyst estimates.
Registrations plummeted 11% to 1.13m vehicles last month from 1.27m a year earlier, according to data out from the Brussels-based European Automobile Manufacturers’ Association (ACEA). It was the 12th consecutive monthly drop and the biggest decline since October 2010.
As an aside, The Telegraph was reporting this morning that French business leaders are in a state of near panic over the seriousness of the current financial crisis.
From a sector stand-point the best performance is now to be seen in shares of the following industrial groups: Banks (2.05%), Technology (1.93%) and Insurance (1.69%).
Better than forecast economic numbers
Eurozone consumer prices for the month of September have come in at a 2.6% year-on-year rate of change (Consensus: 2.7%).
The German ZEW Institute’s investor sentiment index for the month of September increased to -11.5 points, after -18.2 points in the month before (Consensus: -14.9).
Slight gains in other asset classes
The euro/dollar is now up by 0.84% to the 1.3056 dollar mark.
Front month Brent crude futures are falling by 0.294 dollars to the 115.46 dollar mark on the ICE.