RANsquawk's  Instablog

· PBOC governor Zhou has said that China is to expand its investments in Europe and is to become more involved with the EFSF.

· Greek Finance Minister Venizelos says some in Eurozone are "playing with fire", may even want Greece outside the Eurozone.

· Eurozone conference call on Greece scheduled for 1600GMT, according to a Finance Minister.

· RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=Z-bPYYxdwLY

Market Re-Cap

Heading into the North America open, equities are trading higher, buoyed primarily by comments from PBOC's Zhou who said that China will continue to invest in Euro zone government debt. PBOC governor Zhou said that China is to expand its investments in Europe and is to become more involved with the EFSF, as healthy growth in the EU benefits China. Zhou further commented that he hopes the EU can offer more attractive investment products in the future. In addition to that, the move higher was supported by better than expected GDP reports from Germany and France. As a result, EUR/USD is trading in positive territory and in close proximity to an intraday option expiry at 1.3150. Despite a firm stock market, Bunds are also trading up on the session, driven largely by cautious comments from Greek Finance Minister Venizelos who noted that some in Eurozone are "playing with fire", may even want Greece outside the Eurozone. He also said that Greece struggling to survive in Euroarea. Of note, Eurozone conference call on Greece scheduled for 1600GMT today. Finally, the BoE raised its inflation forecast for two years time to around 1.8%, higher than the consensus estimate, which in turn raised questions about future prospect for more QE. Still, King said that inflation rate to be below target for "good part" of forecast period and that there may be need for further stimulus.

Global Headlines

PBOC governor Zhou has said that China is to expand its investments in Europe and is to become more involved with the EFSF, as healthy growth in the EU benefits China. Zhou further commented that he hopes the EU can offer more attractive investment products in the future. The Chinese President Hu has further strengthened this sentiment, adding that China seeks deeper co-operation with Europe. (Sources)

US Headlines

Fed's Lockhart has commented that US policy is appropriate for an uneven recovery and is eyeing 2.5-3% growth in 2012, adding that he supports easy policy to late 2014, due to a flexible inflation target. (Sources)

US MBA Mortgage Applications (Feb 10) W/W -1.0% vs. Prev. 7.5% (Sources)

Asian Headlines

The BoJ has released its monthly Economic Report for February. It forecasts the Japanese economy to remain flat for the medium-term future due to a slowdown in overseas economies and an appreciation of the JPY, with reconstruction demand expected to strengthen gradually. (Sources)

EU and UK Headlines

Eurozone divisions threaten Greece aid. (FT-More) Eurozone officials have called off an emergency meeting of Finance Ministers to approve the EUR 130bln bailout amid a growing fight about the merits of allowing Greece to go bankrupt. Hardline officials in Germany, the Netherlands and Finland are increasingly urging a Greek default. (FT - More) Luxembourg's Prime Minister Juncker has said the cancellation of the meeting is due to the continued failure of Greek leaders to commit to the austerity measures after April's elections. Finance Ministers will hold a conference call today and reconvene at a scheduled meeting on Monday.

The Greek New Democracy Leader Samaras has sent his letter of commitment to austerity measures to the ECB, the IMF and the Eurogroup, according to a party source. This follows news from last night that PASOK party leader Papandreou has signed his letter of commitment. (Sources)

ECB's Weidmann has said he is sceptical on Greek reform prospects, adding that central banks cannot forsake claims against states and cannot take part in PSI. (Handelsblatt)

European markets are reacting positively to earlier GDP data from France, Germany and the Eurozone, all posting above expected levels of GDP growth, however only France managed to publish a positive GDP for Q4 of last year.

-German GDP SA (Q4 A) Q/Q -0.2% vs. Exp. -0.3% (Prev. 0.5%, Rev. to 0.6%)

-German GDP NSA (Q4 A) Y/Y 1.5% vs. Exp. 1.8% (Prev. 2.5%, Rev. to 2.6%)

-German GDP WDA (Q4 A) Y/Y 2.0% vs. Exp. 1.9% (Prev. 2.6%, Rev. to 2.7%)

-French GDP (Q4 P) Q/Q 0.2% vs. Exp. -0.2% (Prev. 0.3%)

-French GDP (Q4 P) Y/Y 1.4% vs. Exp. 1.1% (Prev. 1.5%)

-Eurozone GDP SA (Q4 A) Q/Q -0.3% vs. Exp. -0.4% (Prev. 0.1%)

-Eurozone GDP SA (Q4 A) Y/Y 0.7% vs. Exp. 0.7% (Prev. 1.3%) (Sources)

Earlier in the session, we saw a press conference from the BoE's King, presenting the quarterly inflation report for the UK. The report has predicted inflation to fall for a good part of the forecast period, with CPI dropping to around 1.8% in two years time. King has also said that forecasts suggest a possibility for further stimulus, adding that he does not believe that the asset purchase facility exhibits diminishing returns. (Sources)

EQUITIES

European indices have been performing strongly ahead of the North American open following renewed risk appetite over further commitment from China that they seek to deepen ties with Europe by expanding investment. Risk-on sentiment was buoyed by stronger than expected GDP figures posted for Q4 of last year from France, Germany and the Eurozone, however, France was the only economy that managed to post a positive figure.

Financials are the strongest performing sector in Europe today following moves into the riskier stocks and some strong corporate earnings from the banking sector.

In individual equities news, BNP Paribas are one of the strongest stocks today, currently trading up just under 7%. This follows the publication of their corporate earnings. The company reported an above expected net of EUR 765mln, with analysts expecting EUR 587mln for Q4 of last year. BNP Paribas' CEO has said the company has not decided yet whether it will tap into the upcoming ECB LTRO, but added that they do not need the funds. (Sources)

Top performing sectors in the BE500: Financials (+2.21%), Basic Materials (+1.28%), Technology (+1.15%)

Worst performing sectors in the BE500: Health Care (-0.14%), Oil & Gas (+0.03%), Utilities (+0.18%)

**Note: For US equity news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

FX

GBP/USD experienced volatile trading ahead of the North American open during a press conference by the BoE's King, commenting that inflation is set to show further declines, remaining below the 2.0% target level for a good part of the forecast period. (Sources)

EUR/USD has been trading upwards following overnight news from the PBOC governor Zhou, commenting that China seeks to expand investments in Europe. Chinese President Hu has strengthened these comments by adding that China seeks to deepen their co-operation with Europe. (Sources)

COMMODITIES

WTI and Brent Crude futures are facing upwards pressure ahead of the North American open following further forecasts of Chinese economic sustainability and supply concerns from the Middle East, as Iran continues to push forward with its nuclear programme, unveiling a new advance in their nuclear fuel usage today.

Oil & Gas News:

· A senior official in China's top economic planning agency has said China's economy will likely maintain a steady and fast rate of growth in 2012.

· China's PBOC have said global liquidity remains loose and oil prices face upward pressure.

· Middle Eastern fuel supplies earmarked for East Asia for March arrival are expected to be below month-average levels of 1mln tonnes.

· Brent Crude may rise to USD 120/BBL in the next three months amid a decline in spare production capacity and potential supply disruptions, according to Goldman Sachs.

· Saudi Arabia, the world's top oil exporter, has offered additional crude supplies to India, a move that could help Indian refiners replace supplies from sanctions-hit Iran.

Geopolitical News:

· A major oil pipeline near a large Sunni Muslim district in the Syrian city of Homs has been attacked, causing a fire, according to reports. Syrian activist group The Local Coordination Committees told the Associated Press the pipeline was hit this morning in the neighbourhood of Baba Amro, which has been shelled by regime troops for the past 12 days.

· Iran will present a new advance in its atomic programme today by loading domestically made nuclear fuel into a research reactor in Tehran, according to a senior Iranian official.

· Iran has said it will reply today to the EU Foreign policy Chief's letter regarding their ongoing nuclear programme.

· Iran have denied any link with explosions in Bangkok and have accused Israeli elements of being responsible.

US DOE Crude Oil Inventories (Feb 10) W/W Exp. 1500K, High 2700K, Low -1500K (Prev. 304K)

US DOE Gasoline Inventory (Feb 10) W/W Exp. 700K, High 2200K, Low -2000K (Prev. 1629K)

US DOE Distillate Inventory (Feb 10) W/W Exp. -1100K, High 800K, Low -3000K (Prev. 1174K)

US DOE Refinery Utilization (Feb 10) W/W Exp. -0.15%, High 0.50%, Low -1.00% (Prev. 1.00%)

US DOE Cushing OK Crude Inventory (Feb 10) W/W (Prev. 367K)

**Note: WTI Crude March options expiry (1930GMT/1330CST)

**Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

LOOKING AHEAD

Economic Releases

**Note: WTI Crude March options expiry (1930GMT/1330CST)

Prices taken at 1228GMT