European Market Update

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Economic Data:

(EU) ECB: €809M borrowed in overnight loan facility €839M prior; €762.4B parked in deposit facility v €785.1B prior

(JP) Japan Apr Nationwide Dept. Sales Y/Y: 1.3% v 14.1% prior; Tokyo Dept. Store Sales Y/Y: 6.7% v 26.7% prior

(IN) India Apr CPI Y/Y: 10.4% v 9.4% prior

(DE) Germany Apr Producer Prices M/M: 0.2% v 0.3%e; Y/Y: 2.4% v 2.5%e

(HU) Hungary Mar Avg Gross Wages Y/Y: 2.7% v 6.5%e v 6.9% prior

(RU) Russia Narrow Money Supply w/e May 14th (RUB): 6.93T v 6.88T prior

(ES) Spain Central Bank (BOS): Mar Bad Loan Ratio at 8.37% v 8.16% prior; - Lending -3.1% y/ym, Deposits -4.2% y/y

(IT) Italy Mar Industrial Orders M/M: 3.5% v 1.0%e; Y/Y: -14.3% v -13.2% prior

(IT) Italy Mar Industrial Sales M/M: 0.0% v 2.3% prior; Y/Y: -3.1% v -1.5% prior

(PL) Central/Eastern European May ZEW Indicator: 14.6 v 5.4 prior

(PT) Portugal Apr Producer Prices M/M: 0.6% v 0.4% prior; Y/Y: 3.6% v 3.7% prior

Fixed Income:

(IN) India sold total INR150B vs. INR150B target in 2020, 2024, 2030 and 2041 Bonds

(ZA) South Africa sold total ZAR800M in I/L 2017, 2022 and 2028 Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Notes/Observations

Moody's cuts 16 Spanish banks and Santander UK (as expected)

Moody's cut 4 Spanish Regions

Fitch would place all Euro-zone sovereign ratings on Rating Watch Negative (RWN) following the Greek elections should the risk of a Greek exit from the EU seem probable in the near term.

G8 Summit at Camp David; market seeks guidance

ECB and EU said to be working on emergency scenarios for Greek euro exit

Recent Greek Poll shows pro-bailout parties regaining a majority in Parliament

Spain's banking sector said to be calling on market regulator for renewed ban on short-selling

Equities:

FTSE 100 -1.2% at 5273, DAX -0.50% at 6276, CAC-40 -0.70% at 2989, IBEX-35 -0.40% at 6513, FTSE MIB -0.50% at 13,026, SMI -0.90% at 5820

European equity indices opened lower, but have since moved off of the worst levels for the session. Spanish banks have rebounded from the prior session's losses, as shares of Bankia [BKIA.ES] have traded higher by over 20%, amid speculation that Spain could seek to reinstate its short-selling ban related to financial shares. The government ended the prior short-selling ban in mid Feb. The gains in the Spanish banks have come despite the rise in their debt insurance costs to fresh record highs, as Moody's downgraded more than 15 Spanish banks. Amid the concerns about the Spanish banking sector, data from the Bank of Spain showed that the March bad loan ratio rose to highs not seen since at least the mid 1990s. In terms of upcoming event risks for equity markets, shares of Facebook are due to begin trading publicly later today (approximate opening time is 11:00 AM ET). Also, a G8 summit is due to be held over the weekend.

Shares of the London Stock Exchange [LSE.UK] have risen by over 3%, following the release of its FY earnings report. Small cap silicon wafer producer PV Crystalox [PVCS.UK] has gained over 100%. The company announced a settlement agreement related to the termination of a long-term wafer supply contract, which will result in a €90M payment for the company. Pub manager, Mitchells & Butlers [MAB.UK] has declined by approx. 1%, after issuing its first half results.