ECONOMIC DATA

- (PH) Philippine Central Bank maintained the Overnight Borrowing Rate at 4.00%; as expected

- (GE) Germany Q4 hourly Labor Costs Q/Q: -0.5%; Y/Y: +1.6%

- (FR) France Jan Central Gov't Balance: -€9.2B v -€140.0Be

- (FR) France Q4 Final NoN-Farm Payrolls Q/Q: % v -0.4%e

- (SP) Spain Jan House Transactions Y/Y: 2.1% v -0.3% prior

- (HU) Hungary Feb Consumer Prices M/M: 0.3% v 0.7%e; Y/Y: 5.7% v 6.1%e

- (HU) Hungary Jan Preliminary Trade Balance: €290.4M v €203.0Me

- (TU) Turkey Jan Current Account (TRY): -3.0B v -3.2B prior

- (RU) Russia Gold & Forex Reserves: $436.9B v $434.1B prior

- (DE) Denmark Jan Current Account (DKK): -0.2B v 4.2Be; Trade Balance ex Shipping: 4.0B v 5.7Be

- (SW) Sweden Feb CPI Headline M/M: 0.6% v 0.5%e; Y/Y: 1.2% v 1.1%e

- (SW) Sweden Feb CPI Underlying M/M: 0.6% v 0.4%e; Y/Y: 2.7% v 2.6%e; CPI Level: 301.59 v 301.45e

- (SW) Sweden revised Jan Retail Sales 0.8% v 1.7% prior; Y/Y: 3.3% v 5.1% prior

- SW) Sweden Feb AMV Unemployment Rate: 5.6% v 5.6%e

- (EU) ECB Mar Monthly Report: Reiterates the ECB press conference from March 4th. Interest rates are appropriate

- (UK) BOE Quarterly Inflation Attitudes Survey: 1 year CPI expectations at 2.5% v 2.4% prior (Nov)


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

- Equities: Equity markets in Europe looked set to ignore a positive session inAsia with a few disappointing earnings releases and a $7B cash purchaseby BP [BP.UK] for Devon [DVN] assets setting the pre-market tone. Aftermarket reports from Lagardere [MMB.FR], France's largest publisherpresented a strongly bearish view of the advertising market withexpectations of further decline in spending through 2010. Shares of K+S[SDF.GE], following a moderately strong earnings and guidance figuresjoined Lagardere in pressuring markets lower. It has been speculatedthat as strong figures in K+S were already 'baked in,' that the sharesare taking a breather from a sharp upward run. Into 4:30EST, marketsattempted to rally with a number of German listed names providing'final' FY09 numbers. Autos led a rally that took the DAX positive withVW [VOW3.GE] and BMW [BMW.GE] pushing higher. Swatch Group [UHR.SZ]confirmed strong sales figures in the YTD period that rallied theluxury sector names. Other notable upward movers included Thomas Cook[TCG.UK] on a Citi note postulating at TCG/TUI trading play. Equitiesin Europe, however, continued to be weighed slightly to the downsidewith miners and banks broadly giving back ground. Reported commentaryfrom Brazilian miner Vale [VALE] that iron ore price talks with Chinahad been broken off has continued a trend of pricing issues that hastroubled ore markets since 2008.
Trading volumes in Europe remain belowmoving averages.

- Individual equities: Devon/BP DVN: [BP] confirms plans to acquire $7B in assets; BP to sell 50% stake in Kirby Oil sands to Devon. || Old Mutual [OML.UK]: Reports FY09 op profit £1.17B v £1.14B y/y; Reducing exposure to US by exploring disposal of US Life business. || Morrison's [MRW.UK]: Reports FY09 Pretax £858M v £655M y/y, Rev £15.4B v £14.5B y/y. || Lagardere [MMB.FR]: Reports FY09 net profit €165M v €627M y/y, EBIT €450M v €480Me, Rev €7.9B v €8.2B y/y. || K+S [SDF.GE]: Reports Q4 Net €17.5M v €18Me, Rev €1.1B v €960Me. ||

- Speakers: S&P commented on the Sovereign debt outlookand saw 2010 EU sovereign bond issuance rising to record level ofalmost €1.45T. Sovereign debt-linked vulnerabilities have risenespecially in the EMU area. It saw benchmark yields rising as centralbanks phased out special stimulus measures. S&P forecasted Greece's2010 budget deficit to GDP ratio at 10.1% (Note Greek target is 8.7%under its austerity measures) and saw UK 2010 budget deficit to GDPratio at 12.9%***EU's Juncker reiterates view European Monetary Fund(EMF) would not help Greece's situation ***China Commerce Min Chen commented that inflation was a big problem in 2010 and that the Gov't should monitor the imported commodity prices *** ECB March Monthly reportlargely reflected the press conference from last week.
The ECB sawprice developments to remain subdued over the policy relevant horizon.The latest information has also confirmed that the recovery in the euroare is on track. Current key ECB interest rates remained appropriate.As regards fiscal policies, high levels of public deficit and debtplaced an additional burden on monetary policy and undermine theStability and Growth Pact as a key pillar of Economic and MonetaryUnion. Consolidation of public finances should start in 2011 at thelatest and will have to exceed substantially the annual adjustment of0.5% of GDP set as a minimum requirement by the Stability and GrowthPact.*** ECB's Mersch stated that inflationary pressures werenot evident at this time. He reiterated that ECB never pre-commits butwa always ready to act . He added that the has not discussed EuropeanMonetary Fund (EMF) at governing council and referred to the concept as"fantasy". He stated that the Greece austerity measures were'courageous' and was moving in the proper direction. Overall he sawbalanced economic risks *** Japan MOF Noda: Believed BoJ has asense of crisis and will closely watch their decision next week. Henoted that both the government and BoJ would do what is needed to avoiddeflation*** India Central Bank Dep Gov Gokarn reiterated the view thatgovernment borrowing would not to be a huge challenge in FY11. He alsonoted that h e did not see double-digit WPI inflation persisting toolong in India***German Econ Min Bruederle reiterated that he didnot see a broad credit crunch occurring in Germany but saw creditshortages in some sectors and mainly related to larger medium sizedbusinesses. He called on banks to increase their lending ***Germany BGA Export associationforecasted a weak recovery in export levels through 2010 and trimmedthe overall view fir 2010 to a rise of 9% from their prior view of a10% increase. German economy seen rising 3% in 2010 with German foreigntrade surplus seen at €161.7B. It noted that a weaker Euro is aidingexports but reiterated a risk of credit crunch by mid-year. Lastly itcommented that it did not seen reaching pre-crisis levels until 2013 ***German IFW institutemaintained its 2010 German GDP forecast at +1.2% but lowered its 2011view to 1.8% from 2% prior. The German economy to contract in Q1 due toharsh winter weather - Sees only modest economic recovery and theenvironment remains fragile ***IATA lowered Airline Industry2010 loss forecast to $2.8B from $5.6B prior. It revised the 2009 losstarget to $9.4B from $11B prior view. It noted that 2010 improvementsto be driven by growth in Latin America and Asia while the Atlantic andEuro markets to remain soft ***Poland Central Bank Dep Gov Wiesiolekcommented in a press interview that there was no need to extend IMFloan for Poland. He saw little danger of speculative attack on Zlotycurrency (PLN). It would halt 6-month repo operations in H2 of theyear.

- Currencies: The USD was mildly softer in a subdued European morning. Russia shifted its floating ruble band by another 5 kopecks to 34.30,which is its 14th move since mid-February and dealers noting that thiswas fueling euro currency demand. EUR/USD heading into the NY morningat 1.3660 area. The EUR/CHF cross tested the 1.46 option barrier aheadof the SNB rate decision later today. The GBP shrugged off some M&Aflows and rallied to teat 1.5030 area following the UK inflationexpectations survey by the BOE. Poland Central Bank Gov commented onits reserve makeup and noted that it lowered its portion of USD andsterling and raised the AUD and NOK levels.

- Fixed Income: ECB borrowing spiked to €4.1B from €67M in the prior session*** The UKsold £900M in 2032 linkers with a respectable bid-to-cover 1.83x ***Belgium announced plans to tap its 5 year USD denominated issue foranother $500M

- In the Papers: FT article ElErian said deteriorating public finances may effect the global economymore than realised.
Countries will be forced to make difficultdecisions relating to higher taxation and lower spending. If these donot materialise on a timely basis, the universe of likely outcomes willexpand to include inflating out of excessive debt and, in the extreme,default and confiscation. El Erian that the importance of the shock topublic finances in advanced economies is not yet sufficientlyappreciated and understood.

- Geo-political: Ukrainian Pres Yanukovych's Party of Regions has formed a new coalitiongovernment to control the countries Parliament. Yanukovych proposedMykola Azarov as new PM, Azarov was subsequently approved by roll call vote.
Azarov, while the leader of the Party of Regions, is broadly seenas a technocrat, and served as Finance Minister under the previousruling administration. In that role Azarov was instrumental in theformulation of a number of fiscal, tax, regulatory and pension reformsthat led to successful loan negotiation talks with the IMF. Theseskills will be needed as Ukraine looks to move back into compliancewith outstanding lending covenants that have temporarily suspended IMFaid. *** Further waves of strikes have all but paralyzed services,travel, and government operations in Greece as labor unions continue toprotest austerity measures. The nationwide shutdown is the second heldin a 7-day period. Striking action is expected to accelerate intoFriday as police, coast guard and fire departments plan to join theaction.


Note

- British Petroleum [BP.UK] pay Devon Energy Corp. $7 billion for assets in Brazil, the Gulf of Mexico and Azerbaijan

- Swiss central bank interest rate decision later this morning. Likely to reiterate view to prevent excessive chf appreciation.

-China inflation a bit above expectations. PBoC has adjusted the Reserverequirement on the 12th of each month this year. All eyes on Friday inthis regard .

- Australia employment growth slows .


Looking Ahead

- 7:00 (BR) Brazil Jan Retail Sales M/M: 1.5%e v -0.4% prior; Y/Y: 8.7%e v 9.1% prior

- 7:00 (BR) Brazil Q4 GDP Q/Q: 2.2%e v 1.35 prior; Y/Y: 4.5%e v -1.2% prior; GDP Accumulated: -0.1%e v -1.0% prior

- 8:00 (SZ) Swiss Central Bank (SNB) Interest Rate Decision: Three-month LIBOR Traget rate expected to remain unchanged at 0.25%

- 8:00 (CZ) Czech Q4 Final GDP Q/Q: % v -0.6% prior; Y/Y: % v -4.2% prior

- 8:30 (US) Jan Trade Balance: -$41.0Be v -$40.2B prior

- 8:30 (US) Initial Jobless Claims: 460Ke v 469K prior; Continuing Claims: 4.500Me v 4.500M prior

- 8:30 (CA) Canada Q4 Capacity Utilization: 70.0%e v 67.5% prior

- 8:30 (CA) Canada Jan New Housing Price Index M/M: 0.4%e v 0.4% prior

- 8:30 (CA) Canada Jan Intl Merchandise Trade: C$0.2Be v -C$0.2B prior

- 10:00 (MX) Mexico Dec Gross Fixed investment: -5.0%e v -7.1% prior

- 10:30(US) Natural Gas Inventories

- 11:30 Fed's Baxter

- 13:00 (US) US Tsy to sell $13B in 30-year bonds

- 13:50 (CA) BOC Gov Carney