EU: European,Market Environment,Macro Real Time News items

• European Midday Report: Positive European Data no Relief for EquitiesPosted:12/07/2009 0:16 GMT by NeedToKnowNews
  European shares traded sharply lower at midday, dragged down by financials, after rating agency Moody's said it may downgrade banks with units in Eastern Europe. The FTSEurofirst 300 dropped 2%, the FTSE 100 fell 2.4% and the DAX lost 2.6% with heavy-weight Daimler off 1.7% after fourth-quarter earnings fell short of analysts' estimates. In Paris, the CAC-40 lost 2.7%. European equities took little comfort from a number of positive European reports. The UK January Consumer Price Index (CPI) fell to 3.0% y/y from 3.1% prior, just inside the Bank of Englandâs (BOE) target range but much less pronounced than analysts' estimate of 2.7%. The EZ trade balance was reported at a seasonally adjusted E-3bln, clearly higher than the E-5.3bln forecast. The ZEW economic sentiment indicator for Germany was up to -5.8, much better than the expected -30. The ZEW added that Q1 will be the worst quarter and that the German economy is likely to improve from mid-2009. The unexpected strong improvement in the ZEW weighed on the European bond prices, while supporting the euro off session lows against the dollar. European bonds are currently mixed, with the lead March contract up 11 ticks to 125.30, while the 10yr bund was down 2bp to 3.02% and the 2yr Schatz fell 3bp to 1.19%. In the UK debt market, the 2yr Gilt yield was up 5bp to 1.36%, while to the 10yr fell 3bp to 3.47%. The US 10yr T-note declined 13bp to 2.76%. In the currency markets, the euro/dollar tested its two-month low around $1.26 in early trading, after Ewald Nowotny, head of the Austrian CB, said the ECB was discussing alternative policy tactics. The euro/dollar briefly popped up after the better-than-expected ZEW data, but the rally was short-lived with the euro falling back to 1.2630 in midday trading, down 160 pips. EUR/JPY shed 141 pips to 115.99. EUR/GBP lost 109 pips to 88.42. Cable was down 33 pips to 1.4253. GBP/JPY fell 10 pips to 131.06. Oil was mixed with WTI down 36 cent to $37.15 on fears of a deepening recession in Europe and Asia. Brent was up 16 cents to $43.44. Spot gold hit seven-month high on reports Russia's central bank will buy more gold.