European Market Update: World Bank leads coordinated 2 year plan to lend €25B to banks and businesses in Eastern Europe; SEK currency slumps after weaker GDP data


ECONOMIC DATA

- (IN) India Q4 GDP Y/Y: 5.3% v 6.1%e

- (TH) Thailand Jan Manufacturing Production Y/Y: -21.3% v -23.0%e; Manufacturing Index: 155.6 v 156.6 prior

- (TH) Thailand Jan Current Account Balance: $2.3B v $1.1Be; Total Trade balance $1.69B v $$496.0M prior

- (SP) Feb Prelim CPI - EU Harmonized Y/Y: 0.7% v 0.8%e

- (HU) Jan Unemployment Rate: 8.4% v 8.3%e

- (SP) Spain Dec Current Account - €6.37B v - €8.5B prior

- (DE) Denmark Q4 GDP Q/Q: -2.0% v -0.9%e; Y/Y: -3.9% v -2.0%e

- (IT) Feb Retailers Confidence General: 94.7 v 95.3 prior; Services Survey: 32 v -30 prior

- (SW) Swedish Jan PPI M/M: 0.9% v 0.4%e; Y/Y: 3.9% v 3.0%e

- (SW) Swedish Q4 GDP Q/Q: -2.4% v -1.6%e; Y/Y: -4.9% v -2.1%e

- (SW) Swedish Jan Retail Sales: 1.3% v -0.5%e; Y/Y: 2.2% v -0.4%e

- (SW) Swedish Q4 Current Account: SEK63.6 v SEK70.9B prior

- (IT) Italian Dec Large Company Employment: -0.7% v -1.0% prior

- (NO) Norwegian Q4 Manufacturing Wage Index Q/Q: 1.0% v 2.5% prior

- (CZ) Czech Money Supply Y/Y: % v 6.5% prior

- (EU) Euro-zone Jan CPI M/M: -0.8% v -0.8%e; Y/Y: 1.1% v 1.1%e; CPI Core Y/Y: 1.6% v 1.8%e

- (EU) Euro-zone Unemployment Rate: 8.2% v 8.1%e

- (GE) German Feb Prelim CPI M/M: 0.6% v 0.3%e; Y/Y: 1.0% v 0.8%e

- (GE) German Feb Preliminary EU Harmonized M/M: 0.7% v 0.3%e; Y/Y: 1.0% v 0.7%e

- (SZ) Swiss Feb KOF Leading Indicator: -1.40 v -0.93e, lowest reading on record

- (UK) Jan House Prices M/M: -0.8%; Y/Y: -15.1% - Land Registry


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- In equities, Lloyds [LLOY.UK] reported a 2008 net profit of €819M, well below forecasts for £1.51B.
Revenues were €9.8B, lower than the €11.1B consensus. Lloyds confirmed that it is holding talks with the UK Treasury to participate in the Asset Protection Scheme. Lloyds CEO commented that there are downside risks in the UK economy, noting that the bank expects UK 2009 GDP to contract by 2.5%.
|| Deutsche Telecom [DTE.GE] reported a Q4 net profit (on an ex-item basis) of €861M, beating consensus expectations for a €670M. Revenues came in above expectations at €16.1B. The company also maintained its dividend. DT noted that its UK mobile operation have been hurt by fierce competition while T-Mobile USA sustained double-digit growth. || Roche's [ROG.SZ] Mabthera was approved by the EU for patients with chronic Lymphocytic Leukemia. || Fuchs [FPE.GE] reported a 2008 net of €100.3M and revenues of €1.39B in line with consensus forecasts. The company increase the dividend on preferred shares to €1.60/shr from €1.50. Fuchs said that unsatisfactory market conditions have continued in 2009. || Nyrstar [NYR.BE] reported an H2 net loss of €614M, worse than expectations for a €569M loss. Revenues came in above forecasts. The company cancelled its dividend for FY08, noting that the effects of the sudden and severe downturn in the global economy during the second half of 2008 were expected to continue throughout 2009. || The Italian press reported that Enel [ENEL.IT] is planning to issue up to €7B in rights. Il Sole 24 Ore reported that the plan would be announced on March 12th, with Mediobanca SpA as a possible advisor on the share sale. || Erste Bank [EBS.AS] reported a 2008 net profit of €859.6M, below analyst estimates of €935M. Revenues were €7.00B, slightly above forecast. The bank said it was raising capital and cutting its 2008 dividend to €0.65 from €0.75. || AstraZeneca [AZN.UK] received an FDA complete response letter on Seroquel. || William Hill [WMH.UK] reported a 2008 operating profit of £278.6M, slightly above expectations while revenues were £964M, just below estimates. The company announced that it would raise £350M in a new rights issue (50% of share capital) and would not pay final dividend. The company also entered into new bank facilities that, together with its existing facility, made for aggregate funding of £838.5M. || Acciona [ANA.SP] reported a 2008 net profit of €464M, missing estimates of €501M. Revenues were above consensus at €12.67B. The company's net debt stands at €17.9B. || Iberia Airlines [IBLA.SP] reported a Q4 net loss of €19M, improving on expectations for a loss of €41.5M. Revenues were €1.33B, roughly in line with consensus expectations.

- In speakers, the ECB's Weber applauded the central bank for fully anchored inflationary expectations. He commented that the Euro Zone has seen the emergence of soverign debt spread in most market segments, blaming the differentials on inappropriate national policies. || ECB's Ordonez said that Europe is confronting a crisis of unknown proportions as well as prospects for a deep recession. Ordonez said that structural reforms are needed to reduce the impact of the economic situation. He applauded the ECB's efforts to keep inflation anchored and commented that the euro has helped to protect the region from an exchange rate crisis. He noted that Euro Zone regional divergence was quite moderate, but more must be done to reduce differences in inflation and GDP across EMU. EMU nations should continue to attempt to co-ordinate fiscal policy and that stability was best for jobs and economic growth. || ECB's Gonzales-Paramo commented that some Euro Zone members were in weak fiscal position. || IMF Strauss Khan welcomed to any joint action plan to aide Eastern European countries. || EU's Almunia reiterated that chances of Euro Zone break up are remote, noting that interest in joining the EMU is on the rise.

- In currencies, risk aversion set in during the European morning. The GBP was weaker after Lloyds failed to announce an agreement on a government asset insurance program. The GBP/USD was off 100 pips at 1.4180 and EUR/GBP tested the 0.8950 area ||The Indian Q4 GDP data came in below forecasts. The scope of the global crisis highlighted by the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank announcing measures to provide up to €24.5B in aid to Eastern Europe. EUR/USD below the 1.27 level. Risk aversion allowing the JPY pairs to retreat from recent moves. USD/JPY off 97.50, off 85 pips from opening levels in Asia. EUR/JPY at 123.60, lower by 150 pips from its Tokyo open.|| EUR/SEK recorded a new all time high of 11.4945 in the session following its weaker GDP data || South Korean FX authorities seen selling USD to counter recent KRW weakness as the Won tested above 1,540 level to hit its worse level since 1998|| Swiss National Bank's Roth announces that he will retire at end of the year 2009, No successor named at this point

- In fixed income, month-end funding, position squaring and weak equities have seen fixed income well bid this morning after yesterday's aggressive sell off. Gilt futures, which have rolled into June, are 72 ticks at 121.95 the time of writing, outperforming Bunds (up 40 ticks at 124.85) and T-Notes futures (6 ticks higher at 121-29). France announced plans to sell €7B in new OAT's next week. In corporate, Centrica has mandated a 2 part sterling denominated issue, with pricing indicated at 260bp over gilts for a new 5y , and 270bps in a new 13 year.

- In energy, Nigeria stated it would privatize four state owned oil refineries; weak oil prices create need to raise funds. || TNK-BP Holding [TNBP.RU] Reported FY08 reserve replacement ratio at 146% with proven reserves 10.3Boe. || Nippon Oil [5001.JP] reported March crude oil throughput down 22% y/y to 3.99M KL with the decline due to refinery maintenance. The cut in planned crude throughput comes in response to continued weak domestic oil demand. || Norwegian Central Bank stated that it would not purchase FX for Oil Fund in March compared to NOK150M/day spent in February.

- In credit crisis news, the World Bank is coordinating a two-year plan to lend €25B to banks and businesses in Eastern Europe while the European Bank for Reconstruction and Development (EBRD) plans to guarantee up to €6B for Eastern European financial sector. The European Investment Bank will commit €11B for businesses. In addition, the World Bank plans to lend €7.5B for banks, trade financing and risk insurance. The lenders are calling for fast, coordinated action to address the region's crisis.|| Swedish Riksbank entered a pre-cautionary arrangement with Estonia. The Estonian Central bank can borrow up to SEK10B.


NOTES

- Dealer continue the amount of debt the US will accumulate to fight off its economic and financial crisis with the cumulative US deficit of $3.8T during 2010 to 2014 period, represents 4.7% of GDP

- Emerging market growth is moving toward the front burner of issues. India Q4 GDPO came in at 5.3% below the 6.1% forecast.. China remains confident it would achieve 8% growth. S&P cuts rating of 10 life insurers on increased loss assumptions and capital adequacy. Dealers noting that month end positioning would likely morph into rebalancing flows.

- Looking Ahead:

- 7:00 (SA) South African Jan Trade Balance: ZAR5.5B expected v -ZAR1.6B prior.

- 8:30 (CA) Canadian Q4 Current Account (BOP): -$5.1B expected v $5.6B prior

- 8:30 (CA) Canadian Jan Industrial Product Price: -0.5% expected ; Raw materials Price Index M/M: -2.3% expected

- 8:30 (US) Q4 Preliminary GDP Q/Q: -5.4% expected v -3.8% prior

- 8:30 (US) GDP Price Index: -0.1% expected v -0.1% prior

- 8:30 (US) Q4 Core PCE Q/Q: 0.6% expected v 0.6% prior

- 8:30 (US) Q4 Personal Consumption: -3.7% expected v -3.5% prior

- 9:45 (US) Feb Chicago Purchasing Manager Index: 33.0 expected v 33.3 prior

- 10:00 (US) Feb Final University of Michigan Confidence Index: 56.0 expected v 56.2 prior

- 10:00 (US) Feb NAPM- Milwaukee: 35.0 expected v 33.0 prior

-(GE) German Feb Prelim CPI M/M: 0.3% expected v -0.5% prior; Y/Y: 0.8% expected v 0.9% prior, EU Harmonized M/M: 0.3% expected v-0.6% prior; Y/Y: 0.7% v 0.9% prior

- 10:15 (EU) ECB's Nowotny speaks in Vienna