Equity markets open higher

EU Mid-Market Update: Holiday mode kicking in

Notes/Observations

- In China, the Stats Bureau revised up its 2013 GDP target by 3.4%, in line with earlier speculation, to reflect the latest census data.

- BOJ keeps policy steady (as expected) in an 8-1 vote; keeps inflation target timeline unchanged despite recent decline in oil prices

- German Gfk consumer confidence beat expectations and hits an 8-year high

Economic data

- (DE) Germany GfK Consumer Confidence (beats): 9.0 v 8.8e (highest since Dec 2006)

- (DE) Germany Nov PPI M/M: 0.0% v -0.2%e; Y/Y: -0.9% v -1.1%e

- (FR) France Dec Confidence data mixed; Business Confidence (miss): 94 v 95e; Manufacturing Confidence (inline): 99 v 99e;

- (IT) Italy Oct Industrial Sales M/M: +0.4% v -0.4% prior; Y/Y: -0.7% v -2.2% prior

- (IT) Italy Oct Industrial Orders M/M: +0.1% v -1.5% prior; Y/Y: -0.2% v -0.4% prior

- (NO) Norway Dec Unemployment Rate (inline): 2.7% v 2.7%e

- (UK) Nov Public Finances (PSNCR): +£6.7v -£2.8B prior; Public Sector Net Borrowing: £13.4B v £14.8Be; Central Government NCR: +£7.2B v -£3.7B prior; PSNB ex Banking Groups: £14.1B v £15.1Be

- (IT) Italy Nov Hourly Wages M/M: 0.1% v 0.1% prior; Y/Y: 1.1% v 1.0% prior

Fixed Income:

- None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

**Equities**

Indices [Stoxx50 +0.1%, FTSE 100 +0.6% at 6,508, DAX +0.4% at 9,854, CAC-40 +0.30% at 4,261, IBEX-35 -0.1% at 10,377, FTSE MIB -0.6% at 18,946, SMI -0.5% at 8,958, S&P 500 Futures +0.4% at 2,068]

- Market Focal Points/Key Themes: Equity markets open higher, extending Thursday's sharp gains amid US equity rally and rebound in oil prices; S&P 500 Futures trade near prior record high; Markets later pare gains; Another profit warning weighs on Air France; Roche declines on unfavorable phase III data; Gazprom's London ADRs trade lower; Energy shares rebound

By Sector

- Consumer Discretionary [Air France AF.FR -7% (profit warning)]

- Healthcare [Adocia ADOC.FR +30% (agreement with Eli Lilly); Morphosys MOR.DE -7% (to discontinue phase III study), Roche ROG.CH -5.5% (unfavorable data presentations)]

- Energy [Seadrill SDRL.NO -7% (broker commentary)]

- Industrials [BASF BAS.DE -1% (canceled asset swap agreement with Gazprom)]

- Basic Materials /Resources [CropEnergies CE2.DE +5% (reaffirmed outlook)]

- Technology [Atos ATO.FR +6% (acquisition)]

- Stoxx50 sectors [Consumer Cyclical +0.9%, Technology +0.8%, Industrials +0.8%, Telecom +0.7%, Energy +0.6%, Financials +0.6%, Consumer Non-Cyclical +0.3%; Utilities -0.5%, Basic Materials -0.3%]

Speakers

- ECB officials said to be considering making weaker euro zone countries bear larger risk burden in any QE plan

- France Fin Min Sapin stated that lower oil benefit to consumers; reiterated 2015 deficit forecast of 4.1%

- Russia Fin Min Siluanov stated that he expected the RUB currency (Ruble) to begin strengthening in early 2015 and saw no risk in selling FX at this time and buying back in 2015. Lastly he added that Duma passage of bank recap bill to have minimal effect on monetary policy

- BOJ Gov Kuroda post rate decision press conference reiterated view that domestic economy to continued its moderate recovery trend; impact from April sales tax was waning. Decline in oil prices will help to boost economy in the medium/long term but will weigh on prices in the short term. Virtuous cycle was working; positive cycles in corporate, household sectors remain in place. Reiterated view that CPI likely to hit the 2% target around FY15 - and that that monetary policy was not aimed at targeting FX rates

- Japan Cabinet Office (Govt) Dec Monthly Economic Report maintained its overall economic assessment of seeing a moderate recovery though weakness can be seen in private consumption. It raised Business Investment and Industrial output views

- Japan Econ Min Amari: Domestic economy was steadily recovering thanks to Abenomics. Virtuous cycle was beginning to take hold in Japan. Govt would not drop its commitment to fiscal consolidation and to maintain FY20 consolidation target.

- Hong Kong Monetary Authority (HKMA) results of FX investigation: Saw no evidence of collusion among the banks in probe

- Russia Foreign Min Lavrov reiterated view that West is not meeting its agreement on Ukraine in trying to resolve the crisis

Currencies

- The USD was steady in a quiet session following a resurgence of the Fed- and SNB-inspired global risk appetite environment.

- The EUR/USD remained below the 1.23 level on intensifying speculation of a QE announcement from the ECB at the Jan-22 meeting

**Political/In the Papers:

- (RU) President Obama signed Russia sanctions bill but not currently planning to impose any new sanctions

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- (SI) Slovenia Sovereign Debt Rating published by S&P

- (SE) Sweden Sovereign Debt Rating published by Fitch

- (RU) Russia President Putin meets with Russia business leaders

- 06:00 (UK) Dec CBI Industrial Reported Sales: 30e v 27 prior

- 06:00 (IE) Ireland Nov PPI M/M: No est v 0.5% prior; Y/Y: No est v 0.3% prior

- 06:00 (BR) Brazil Dec IBGE Inflation IPCA-15 M/M: 0.8%e v 0.4% prior; Y/Y: 6.4%e v 6.4% prior

- 06:00 (BR) Brazil Nov Unemployment Rate: 4.5%e v 4.7% prior

- 06:00 (EU) ECB Announcement related to LTRO repayments vs. 11.5Be

- 06:05 (UK) DMO to sell combined £5.0B in 1-month, 3-month and 6-month Bills (1.0B, 2.0B and 2.0B respectively)

- 06:00 (NO) Norway Releases 2015 Bond Auction Plan 06:00 Brazil Central Bank quarterly inflation report

- 06:30 (IN) India Forex w/e Dec 12th: No est v $314.7B prior

- 06:45 (US) Daily Libor Fixing

- 07:00 (EU) EMA releases Drug Approvals and Safety Decisions

- 07:30 (BR) Brazil Nov Current Account Balance: -$8.5Be v -$8.1B prior; Foreign Direct Investment (FDI): $4.5Be v $5.0B prior

- 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (CA) Canada Nov CPI M/M: -0.2%e v +0.1% prior; Y/Y: 2.2%e v 2.4% prior; Consumer Price Index: No est v 125.9 prior

- 08:30 (CA) Canada Nov CPI Core M/M: 0.1%e v 0.3% prior; Y/Y: 2.5%e v 2.3% prior

- 08:30 (CA) Canada Nov CPI (Seasonally Adj) M/M: No est v 0.1% prior; CPI Core (Seasonally Adj) M/M: No est v 0.2% prior

- 08:30 (CA) Canada Retail Sales M/M: -0.2%e v +0.8% prior; Retail Sales Ex Auto M/M: 0.2%e v 0.0% prior

- 09:00 (MX) Mexico Nov Unemployment Rate (Unadj): 4.6%e v 4.8% prior; Unemployment Rate (Seasonally Adj): 4.7%e v 4.7% prior

- 10:00 (MX) Mexico Central Bank Monetary Policy Minutes

- 10:00 (MX) Mexico Central Bank Economist Survey

- 10:00 (US) Fed's Evans gives Opening Remarks In Chicago

- 11:00 (US) Dec Kansas City Fed Manufacturing Activity: 7e v 7 prior

- 11:00 (CO) Colombia Q3 GDP Q/Q: 0.8%e v -0.1% prior; Y/Y: 4.2%e v 4.3% prior

- 12:30 (US) Fed's Lacker speaks on Economy in Charlotte, North Carolina

- 14:00 (AR) Argentina Nov Trade Balance: $0.5Be v $0.4B prior

- (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 4.50%