Risk assets retrace some of Thursday's losses and Portugal's BES remains halted

Need to Know

- National Association of Business Economists (NABE) Mid-Quarter Survey: Expects Fed liftoff sooner, 2014 GDP growth cut to 1.6% vs 2.5% prior in June; Sees Q2 GDP at 3.0% vs 3.5% prior

- Whirlpool enters into agreements to acquire majority interest in Italy's Indesit for €758M

- ECB's Nouy (head of SSM): Banks in Europe should not wait to act - Sole 24 Ore

- Imperial Tobacco confirms they are in talks with Reynolds American and Lorillard on possible acquisition of certain assets and brands from said firms

- IEA Monthly Report: Raises 2015 global oil demand growth to 1.40M bpd from 1.23M bpd in 2014

- Portugal 10-yr yield lower by approx 3bps, below 3.93%; first gain for bond prices in 5 sessions

- Portugal PM Coelho: Investors should not worry about stability of financial system; Bank of Portugal: Reiterates Banco Espirito Santo has enough capital

Equities

- Market Focal Points: Portugal's PSI-20 gains over 1.5% (Portugal Telecom +4%), Equity markets open slightly higher following sharp losses on Thursday's session as Espirito Santo continues to be in focus (shares still halted), Mota-Engil Africa cancels IPO due to market conditions (Espirito Santo was the joint book runner), Tobacco sector M&A (Imperial Tobacco confirmed talks with Reynolds American and Lorillard), Visual solutions firm Barco declines on profit warning, Chemicals firm Symrise gains on takeover speculation, UK-listed resource shares lag, Wells Fargo to report Q2 results (first large US bank to report)

- Indices [Stoxx50 +0.6%, FTSE 100 +0.3% at 6,691, DAX +0.2% at 9,681, CAC-40 +0.6% at 4,325, IBEX-35 +1% at 10,645, FTSE MIB +1.2% at 20,725, SMI +0.1% at 8,482, S&P 500 Futures +0.2% at 1,962]

By Sector

- Industrials [Rheinmetall RHM.DE +3% (merger speculation), EMS Chemie EMSN.CH +1% (H1 results rose)]

- Consumer Discretionary [Imperial Tobacco +3% (merger talks)]

- Stoxx50 Sectors [Industrials +0.6%, Consumer Cyclical +0.4%, Energy +0.4%, Consumer Non-Cyclical +0.3%, Financials +0.4%, Telecom +0.1%, Utilities flat, Basic Materials flat; Technology -0.7%]

Fixed Income/Forex

- Peripheral bond yields are lower with Portuguese yields leading the way (down 10bps) as risk-on sentiment dominates as fears over BES.PT contagion wanes

- Major currencies are little changed with the US dollar giving back some gains on a return to risk assets

- USD/KRW: Has largest gain since Feb, currently +0.3%

- Italy sells €7.5B in 2017 (record low yield), 2021 (yield rises) and 2030 BTP bonds

Key Economic Data

- UK May Construction Output M/M: -1.1% V +0.9%E (lowest since Feb 2014); Y/Y: 3.5% V 5.6%E (lowest since Nov 2013)

- Spain June CPI M/M: 0.0% V 0.0%E; Y/Y: 0.1% V 0.1%E

- France May Current Account: -€3.1B V -€2.3B PRIOR

- Germany June Final CPI M/M: 0.3% (3-month high) V 0.3%E; Y/Y: 1.0% V 1.0%E

- Germany June Wholesale Price Index: M/M: -0.1% V -0.1% PRIOR; Y/Y: -0.8% V -0.9% PRIOR

Looking Ahead

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

- 06:00 (IE) Ireland May Industrial Production M/M: No est v 0.1% prior; Y/Y: No est v 2.1% prior

- 06:00 (IS) Iceland to sell Bills

- 06:00 (EU) ECB announces 3-Year LTRO Repayment

- 06:10 (UK) DMO to sell combined £4.0B in 1-month, 3-month and 6-month Bills

- 06:45 (US) Daily Libor Fixing

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

- 07:30 (IN) India Forex Reserves w/e Jun 27th: No est v $315.8B prior

- 08:00 (IN) India May Industrial Production Y/Y: No est v 3.4% prior

- 08:00 (ES) Spain Debt Agency (Tesoro) to announce bonds in upcoming auction

- 08:15 (US) Baltic Dry Bulk Index

- 12:00 (DE) German Fin Min Schaeuble on Euro Region debt crisis

- 14:45 (US) Fed's Lockhart and Evans to speak on U.S. Economy in Jackson Hole