Ukraine warns Russia to get out

EU Market Update: Conflicting ideas if Greece will need more financial assistance after return to markets; Ukraine warns Russia to get out

Notes/Observations

- ECB stepping up its verbal intervention on Euro but dealers' note it had yet declare that QE was imminent

- (EU) ECB's Noyer (France): Reiterates Council view that a strong Euro trims inflation rate by half a point; Weaker Euro is desirable but easier to talk about than orchestrate - Le Figaro

- (DE) German Fin Min Schaeuble: Reiterates European view of no danger of deflation; further Euro currency strengthening could have negative effect on economy - German Press

- (EU) Financial press article on ECB measures: Suggest next step would be to adopt a negative deposit rate, perhaps as soon as the June meeting

- (UR) Ukraine imposed deadline for pro-Russian Separatists to lay down arms has now passed; no reports pro-Russian Separatists have complied with the deadline

- (GR) Greece PM Samaras: The markets positive response to bond issue is the first step toward emerging from its economic crisis; no need for 3rd bailout - Greek press

- Swiss traded Kuehn & Nagel, KNIN.CH, missed analyst estimates Rev CHF4.31b v CHF5.2B expected, attributed results to planned changes in warehouse capacity, margin pressure and forex impact.

Equities

- Market Focal Points: Equity markets open lower following negative leads from the US and Russia, DAX declines amid concerns related to Ukraine, Spain's Santander lags in the banking sector, IBEX-35 declines toward 10,000 psychological level, French companies expected to report sales results in US morning (L'Oreal, Casino) , European corporate debt issuance subdued on today's session

- Indices [Stoxx50 -0.7%, FTSE 10 -0.7% at 6,518, DAX -0.8% at 9,243, CAC-40 -0.7% at 4,335, IBEX-35 -1.6% at 10,043, FTSE MIB -0.8% at 21,019, SMI -0.7% at 8,242, S&P 500 Futures -0.2% at 1,808]

By Sector

- Financials [National Bank of Greece ETE.GR -12% (capital raise concerns), Banca Popolare di Milano PMI.IT -6% (failed to pass governance plan)]

- Basic Materials/Resources [Yara International YAR.NO +1% (buyback plan)]

- Consumer Discretionary [TomTom TOM2.NL -3% (broker commentary), Peugeot UG.FR -3% (reaffirmed 2016 cash flow target); Marine Harvest MHG.NO +3% (guided Q1 profits sharply higher y/y)]

- Technology [STMicroelectronics STM.FR -2% (broker commentary)]

- Healthcare [Cytos CYTN.CH -90% (disappointing data, bankruptcy concerns), Glaxo GSK.UK -1% (probe in Poland)]

- Industrials [Symrise SY1.DE -3% (acquisition), Deutsche Post DPW.DE -2% (broker commentary)]

- Stoxx50 sectors [Industrials -1%, Technology -0.6%, Financials -0.5%, Basic Materials -0.5%, Utilities -0.5%, Consumer Cyclical -0.4%, Telecom -0.3%, Energy ; Consumer Non-Cyclical +0.8%]

Currencies/Fixed Income

- The EUR/USD was relatively steady during the European morning after gapping down some 40 pips in Asia following the Draghi's weekend comments. Dealers noted that the stepped up talk by ECB members still had to yet declare that QE was imminent. Financial press articles on ECB measures suggested that next step would be to adopt a negative deposit rate, perhaps as soon as the June meeting. EUR/USD was at 1.3820 just ahead of the NY morning

- Risk aversion helped to put a bid into European bond futures

Economic Data

- (FI) Finland Mar CPI M/M: 0.2% v 0.2%e; Y/Y: 1.1% v 1.0%e

- (FI) Finland Feb Final Retail Sales Volume Y/Y: -0.4 v -1.1% prelim

- (HU) Hungary Feb Final Industrial Production M/M: 1.6 v 1.6% prelim; Y/Y: 8.1 v 8.1% prelim

- (EU) ECB €0.0M borrowed in overnight loan facility vs. €50M prior; €21.2B parked in deposit facility vs. €20.3B prior - Daily Eurosystem Liquidity Conditions

- (IT) Italy Mar Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 0.4% v 0.4% prelim; CPI Index Ex Tobacco Mar: 107.2 v 107.2 prior

- (IT) Italy Mar Final CPI EU Harmonized M/M: 2.2% v 2.1% prelim; Y/Y: 0.3% v 0.3% prelim

- (ES) Spain Mar bank borrowings from ECB: €184.9B (gross) v €190.6B prior (19th straight decline)

- (IT) Italy Feb General Government Debt: €2/1072T (record level) v €2.0895T prior

- (EU) Euro Zone Feb Industrial Production M/M: 0.2% v 0.2%e; Y/Y: 1.7% v 1.5%e

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- 06:30 (EU) EU Foreign Ministers hold meeting in Luxembourg

- 06:45 (US) Daily Libor Fixing

- 07:00 (RO) Romania to sell RON500M in Bonds

- 07:00 (BR) Brazil Apr FGV Inflation IGP1- M/M: 1.1%e v 1.3% prior

- 07:00 (IL) Israel Mar CPI M/M: +0.2%e v -0.2% prior; Y/Y: 1.2%e v 1.2% prior

- 07:30 (BR) Brazil Central Bank Weekly Economists Survey

- 08:00 (PL) Poland Mar M3 Money Supply M/M: 0.7%e v 0.6% prior; Y/Y: 4.8%e v 5.3% prior

- 08:15 Baltic Dry Bulk Index

- 08:30 (US) Mar Advance Retail Sales M/M: 0.9%e v 0.3% prior; Retail Sales Ex Auto M/M: 0.5%e v 0.3% prior; Retail Sales Ex Auto and Gas: 0.4%e v 0.3% prior; Retail Sales Control Group: 0.5%e v 0.3% -prior

- 08:50 (FR) France Debt Agency (AFT) to sell combined €7.6B in 3-month, 6-month and 12-month Bills

- To sell €3.9B in 3-month Bills

- To sell €1.8B in 6-month Bills

- To sell €1.9B in 12-month Bills

- 09:00 (CA) Canada Mar Teranet/National Bank HPI M/M: No est v 0.3% prior; Y/Y: No est v 5.0% prior; House Price Index: No est v 160.41 prior

- 09:30 (EU) ECB announces amount in next 7-day Term Deposit Tender to offset govt bond purchases under SMP

- 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

- 10:00 (US) Feb Business Inventories: 0.5%e v 0.4% prior

- 11:00 (US) Congressional Budget Office (CBO)

- 11:00 (US) Fed to purchase $0.90-1.15B in Notes

- 11:30 (US) Treasury to sell $48B in 3-Month and 6-Month Bills

- 12:00 (CA) Canadian Minister Valcourt Speaks at Empire Club

- 12:45 (EU) ECB's Noyer speaks in New York