LONDON (SHARECAST) - -US money market funds increased Eurozone exposure in September -Fitch
-Schaeuble opposed to further funds for Greece
-Berlusconi could pull his support for Mario Monti
-Spanish 10 year bond yields up by 6bp to 5.66%
-Italian 10 year bond yields up by 11bp to 5.02%
FTSE Mibtel 30: -1.51%
Ibex 35: -0.60%
Stoxx 600: -0.39%
For the most part, European markets finished the session off their worst levels of the day after having begun the week trading firmly lower, albeit on very low trading volumes. That against the backdrop of New York markets having decided to shut their doors ahead of the arrival of hurricane Sandy –tonight- and on the back of the rather negative news-flow coming out of the Eurozone.
In particular, markets focused on a threat by Italy´s ex-Prime Minister –Silvio Berlusconi- to “pull the plug” on Mr. Monti, whose government depends on bipartisan parliamentary support. Berlusconi added that he will take a decision in the coming days.
No less relevant, German Finance Minister Wolfgang Schaeuble responded yesterday to a purported recommendation from the Troika that public sector bondholders should also take “hair-cuts” on their holdings of Greek debt, so as to give the Aegean nation more breathing space, saying that they would be “a bit unrealistic.” Such measures are considered necessary if the country is to lower its debt burden to 120% of gross domestic product by 2020.
Euro region finance ministers will hold a conference call on Greece on October 31st.
Furthermore, Eurogroup head Jean Claude Juncker has called for an additional meeting of Eurozone finance ministers on November 8th. This as leaders try to fashion a consensus on how to proceed with Greece.
Meantime, and in Spain, the first details of the country´s bad bank –which has been labeled with the acronym SERAB- were forthcoming today. The bank is expected to purchase up to €90bn in bad assets, with discounts of 46% on the book value of the property loans on banks´ books.
Lastly, Finnish euro-sceptic parties have made further gains at the latest local elections.
Shares of UBS rose by 7%
UBS was the most talked about stock this morning. The Swiss investment bank is rumoured to be studying up to 10,000 lay-offs, or almost 16% of its work force. More significantly even, it may wind down and spin-off its fixed income arm in a bid to reduce its risk weighted assets by up to 100bn Swiss francs, thus notably reducing the need for more capital for an underperforming business segment.
From a sector stand-point the worst performance on the DJ Stoxx 600 can now be seen in the following industrial groups: Insurance (-1.16%), Basic resources (-0.98%) and Telecommunications: (-0.80%).
Spanish retail sales crater
Spanish retail sales dropped by 12.6% month-on-month in September, versus -2.0% in the month before.
The German October consumer price index rose by 2% year-on-year, one tenth of a percentage point above forecasts, although unchanged from the previous month.
Crude futures lower as Sandy approaches US
Front month Brent crude futures are now higher by 0.164 dollars to the $109.73 mark on the ICE. This as refineries on the eastern US seaboard reduce or cut output all-together as hurricane Sandy approaches.
The euro/dollar is now down by 0.24% to the 1.2907 dollar level. Some traders are watching to see if the single currency closes below 1.29 now that it has broken through an upwards trend-line