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DAILY US OPENING NEWS - 27/02/12

· European leaders express concern on the future of Greece's finances, with the German Finance Minister saying he expects Greece will require a third bailout.

· The Eurozone is to examine whether to increase its rescue funds in March, paving the way for a boost in resources for the IMF.

· UK Chancellor Osborne has said the government has "run out of money" in the face of upcoming debt redemptions, dampening suspicions of tax cuts and spending increases in the next budget.

· RANsquawk European Morning Briefing Video: http://youtu.be/vvyogwR_sHw

Market Re-Cap

European bourses are trading amid risk-averse sentiment ahead of the North American open with all European indices trading in negative territory, this follows renewed hesitancy on the future of Greece's finances, with the German Finance Minister Schaeuble saying that he expects Greece to require a third bailout package in the future.

HSBC recorded a beat on their full year 2011 revenues this morning; however they further commented that they foresee an uncertain economic and geopolitical future, but expect a soft landing in China. Following the corporate results, company shares trade down 2.2%.

EUR-led currency pairs have also echoed the risk-averse sentiment, with EUR/USD trading down just above the 1.3400 level. This level is an option expiry for today's 10AM NY cut (1500GMT).

UK Chancellor George Osborne has raised speculation on the upcoming UK budget, dampening suspicions that he may cut taxes and increase spending. The Chancellor has said the government has "run out of money" which comes in the face of upcoming redemptions on the 7th March.

GLOBAL

The world's most powerful economies have said that the Eurozone has agreed to examine whether to increase its own rescue funds in March, which would pave the way for more resources for the IMF to build up its firepower. Eurozone countries will reassess the strength of their support facilities and provide an essential input into the ongoing consideration to mobilize resources for the IMF, according to a statement. (Sources)

-IMF officials have said that the G-20 has set a target to put together a firewall totalling USD 2trl, which includes the combined resources of Europe's temporary and permanent rescue funds, the existing IMF resources, and about USD 600bln in new loans to the IMF. (Sources)

-According to EU's Rehn, the combined European firewall could reach EUR 750bln. While OECD's Gurria said: "We must still build the mother of all firewalls" and proposed tripling what the EU and the IMF has so far pledged to create a EUR 1.5trl firewall. (Tages Anzeiger)

US Headlines

According to the latest NABE survey, private economists have revised forecasts for the US unemployment rate this year down to 8.3% and are seeing "strength" in recent economic data. The survey sees 2013 GDP at 2.8% and 2013 unemployment to fall further to 7.8%. (Sources)

US Treasury Secretary Geithner says the US economy seen growing 2-3% this year. (Sources)

Asian Headlines

A Chinese researcher has said that the Chinese economy can maintain relatively high growth at least before 2020, but that the 2012 trade surplus is likely to narrow. (Sources)

EU and UK Headlines

Greece approved the PSI terms on EUR 206bln of Greek bonds on Friday, the new Greek bonds are to have a 31.5% face value of old bonds according to a statement. (RTRS/WSJ) The Greek ministry stated that if at least 75% but less than 90% of the aggregate face amount of all bonds selected to participate in the PSI are validly tendered for the exchange, the ministry may exchange the tendered bonds without any proposed amendments. The EU Leaders will give the final sign-off for the deal at the EU summit between March 1-2.

German Finance Minister Wolfgang Schäuble admitted that Greece is likely to require a third bailout, before today's Bundestag MPs vote on Berlin's contribution to the second EUR 130bln package. (Irish Times) EU's Juncker also refused to rule out that Greece may need further financial aid although stated 'we should not start with the assumption that a third program would be required'. (ekathimerini)

- German finance minister says that the German government will decide whether to boost the European bailout fund in March and its parliament is very likely to support any decision for more resources. However German finance minister also said that the Eurozone cannot solve its debt crisis by pumping more money into rescue funds or printing money to finance governments. (Die Welt/RTRS/WSJ)

- The German CSU chairman Horst Seehofer in Munich announced that his party would accept the Greek aid package on Monday virtually closed. However his party colleague, Interior Minister Hans Peter Friedrich (the first of Chancellor Merkel's cabinet to openly do so), advised the Greeks, meanwhile, to leave the euro zone. (NYSEARCA:FAZ)

- However other press reports indicated that although German SPD lawmakers are to back Greek rescue, several MPs in the CDU and FDP parties have announced that they reject the bailout for Greece on Monday Because of the higher risks that Germany received for assistance to other euro countries. (Handelsblatt)

UK Chancellor Osborne said he is examining the case for tax cuts in next month's budget provided they can be financed without extra borrowing. (Mail/Sky News/FT-More)

Osborne said he "listening very carefully" to proposals put forward by Deputy PM Nick Clegg to eliminate income taxes for the lowest paid in an effort to spur growth. However, Osborne conversely ruled out any further fuel duty cuts. Separately, UK Chancellor George Osborne is drawing up plans to boost North Sea oil and gas production that could earn the Treasury tens of billions of pounds. The Chancellor is considering two significant tax changes in next month's Budget to extend new field allowances to more marginal fields and provide oil producers with more certainty on decommissioning costs.

EQUITIES

European markets are trading in negative territory as risk-averse sentiment dominates markets following hesitancy from European leaders on the future of Greece and the European recovery as a whole.

In individual stocks news, BP are performing against the general market trend, company shares currently trade up 1.7%. This follows the weekend news that the Macondo trial concerning the 2010 Deepwater Horizon spill has been delayed by one week, after BP and plaintiff representatives come closer to a settlement.

HSBC reported their full year earning reports earlier in the session, beating expectations on net income and revenues for 2011; however they have predicted an uncertain future with a soft landing expected in China. Alongside the rest of the financials sector, company shares trade down 2.5%.

Alongside the downward trend in European markets today, the traditionally defensive Health Care sector is seen as one of the market's worst performers. This follows reports from Fitch that pharmaceutical firms are facing sales and profit declines in the face of upcoming patent expiries. (Sources)

Top performing sectors in the BE500: Telecommunications (+0.15%), Oil & Gas (-0.09%), Consumer Services (-0.77%)

Worst performing sectors in the BE500: Technology (-1.78%), Financials (-1.56%), Health Care (-1.37%)

 

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6788.85

3428.36

5885.64

2498.44

6106.33

Change (ticks)

-75.58

-38.67

-49.49

-25.25

-77.8

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

FX

EUR/USD is trading down ahead of the North American open amid a generally risk-averse and cautious market. The currency pair is trading close to the 1.3400 level, an option expiry for today's 10AM NY cut (1500GMT).

USD/JPY is seen trading downwards amid market talk of US names selling the pair, however this remains unconfirmed. The pair may see further fluctuations in the session as it trades close to the 80.50 level, with touted bids at that point. Again, this remains unconfirmed.

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3399

1.5864

80.58

Change (pips)

-0.0049

-0.0011

-0.6200

COMMODITIES

WTI and Brent futures are heading downwards ahead of the North American open, following renewed hesitancy from market participants as European leaders appear more wary on a Eurozone recovery. In corporate news, the Macondo trial has been delayed by one week as BP come closer to a settlement with thousands of plaintiffs.

Oil & Gas News:

· US Senator Schumer has said that the US should do more to encourage Saudi Arabia to boost its oil production to make up for lost Iranian oil.

· The Obama Administration is coming under growing pressure to cool petrol prices by releasing emergency oil stocks.

· Iraq are to cut their exports of Basrah light crude in the first half of March by five cargoes, down from 19.

Geopolitical News:

· Israel have said the IAEA report is "added proof" that Tehran is trying to obtain nuclear weapons.

· According to the EU foreign policy chief's spokeswoman, the IAEA report contributes to increased concerns over the purpose of Iran's nuclear programme, in related comments the White House said the IAEA report confirmed that Iran is violating UN Security Council resolutions with their Uranium enrichment.

· North Korean leader Kim Jong-un threatened to launch a powerful retaliatory strike against South Korea if provoked, according to state media; as today marks the start of annual South Korean-U.S. military drills that Pyongyang called an invasion rehearsal.

**Note:

Nat Gas March futures expiry (1930GMT/1330CST)

Commodity

WTI Nymex

OTC Spot Gold

Level

108.61

1767.22

Change (NYSEARCA:USD)

-1.16

-5.24

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

LOOKING AHEAD

Economic Releases

CST

GMT

 

DATA

EXP

PREV

0900

1500

US

Pending Home Sales M/M (Jan)

1.0%

-3.5%

0900

1500

US

Pending Home Sales Y/Y (Jan)

 

4.4%

0930

1530

US

Dallas Fed Manuf. Activity M/M (Feb)

15.9

15.3

1750

2350

JN

Retail Trade SA M/M (Jan)

0.5%

0.3%

1750

2350

JN

Retail Trade Y/Y (Jan)

0.4%

2.5%

N/A

N/A

GE

Import Price Index M/M (Jan)

0.7%

0.3%

N/A

N/A

GE

Import Price Index Y/Y (Jan)

3.1%

3.9%

N/A

N/A

UK

Nationwide House Prices SA M/M (Feb)

 

-0.2%

N/A

N/A

UK

Nationwide House Prices NSA Y/Y (Feb)

 

0.6%

N/A

N/A

CH

Leading Index (Jan)

 

100.18

 

Speakers

0730

1330

EU

ECB's Praet, Germany's Kampeter speak in Berlin

0800

1400

GE

German Bundestag votes on Greek bailout package

1130

1730

EU

ECB's Asmussen

N/A

N/A

ES

Estonian Parliament votes on Greek bailout package

 

Auctions

0745

1345

FR

EUR 7.5bln combined 12-, 23- and 49-Week T-Bill Auctions

0830

1430

EU

ECB announcement of purchases under the SMP

0845

1445

UK

BoE APF GBP 1.5bln 2015-2018 Gilt Purchases

1000

1600

US

Fed's Outright Trea. Coup. Purch. Feb'18-'20 (USD 4.25-5.0bln)

1030

1630

US

USD 64bln 3- and 6-Month Bill Auctions

 

Earnings

UK

N/A

EU

N/A

SZ

N/A

US

N/A

                 

**Note:

Gold March futures expiry (1830GMT/1230CST)

Silver, Copper March futures expiry (1825GMT/1225CST)

Nat Gas March futures expiry (1930GMT/1330CST)

Greek Market Holiday

Prices taken at 1220GMT

'Market talk' - Signifies information that has not been formally tested through traditional journalistic channels and therefore is to be treated as unsubstantiated. Any interpretation of the talk is taken at the readers own risk and is a representation of the rumours within the market place and never generated by ourselves.