European Market Update: May 9, 2012

(EU) ECB: €1.5B borrowed in overnight loan facility v €1.0B prior; €823.3B parked in deposit facility (near record level) v €782.3B prior

(DE) Germany Mar Current Account: €19.8B v €18.0Be; Trade Balance: €17.4B v €14.3Be; Exports M/M: +0.9% v -0.5%e; Imports M/M: 1.2% 1.0%e v 3.6% prior (revised from 3.9%)

(FR) France Mar Trade Balance: -€5.7B v -€6.0Be

(HU) Hungary Mar Preliminary Trade Balance: €608.2M v €815.0Me

(MA) Malaysia Mar Trade Balance (MYR): 10.5B v 10.0Be; Exports Y/Y: -0.1% v +3.0%e; Imports Y/Y: 1.6% v 7.0%e

(SE) Sweden Apr Average House Prices (SEK): 1.995M v 2.000M prior

(CZ) Czech Apr International Reserves: $43.6B v $43.0B prior

(GR) Greece Apr Consumer Price Index Y/Y: 1.9% v 1.7% prior; CPI - EU Harmonized Y/Y: 1.5% v 1.4% prior

Fixed Income:

(EU) ECB allotted $326.3M in 7-Day USD Liquidity Tender at fixed 0.65% vs. $1.2B prior

(SE) Sweden sold SEK10B vs. SEK10B indicated in 3-month Bills; avg yield 1.3111%

(UK) DMO sold £2.0B in 4.5% Dec 2042 Gilts; avg Yield 3.224% v 3.431% prior; Bid-to-cover: 2.22x v 1.71x prior; Tail 0.4bps v 0.2bps prior

(DE) Germany sold €4.032B in new 0.5% Apr 2017 BOBL; avg Yield 0.56% (record low) v 0.80% prior; Bid-to-cover: 1.4x v 1.8x prior

Notes/Observations

Spain govt said to have plans to require banks to set aside additional €25-40B in provisions; announcement expected on Friday, May 11th.

Australia 10-year Givt yield approaching 60 year lows.

Greece continues to struggle to build a coalition govt; France incoming President said to be at odds with structural reform partners.

Spain 5-year CDS at record levels above 510bps; spread between 10-year Bund at widest level since late November 2011.

Equities

European equity markets opened the session slightly higher following the losses seen on Tuesday's session. However, most indices have resumed their declines. Spain's IBEX-35 has underperformed on the session, as the country's 5-yr credit default swaps (CDS) have hit new record highs. Factors which have negatively impacted markets include the ongoing concerns about Spanish banks and Greece. Ahead of today's EU equity open, a unconfirmed report said that the Troika (EU/IMF/ECB) was said to have to have canceled its mid-May mission to Greece, amid the political turmoil in the country.

UK companies including Inmarsat [ISAT.UK], Carphone Warehouse [CPW.UK], Prudential [PRU.UK], ITV [ITV.UK], Sainsbury [SBRY.UK] and Easyjet [EZJ.UK] are all trading higher following the release of their respective financial figures. Shares of Sage Group [SGE.UK] and Weir Group [WEIR] are both trading lower after issuing their financial results. In Germany, Commerzbank [CBK.DE] is trading higher by over 2%, as the company's Q1 operating profit beat analyst expectations.

E.ON [EOAN.DE], Kuka [KU2.DE] and Kloeckner [KCO.DE] are all trading lower after reporting Q1 figures. Lanxess [LXS.DE] is higher by approx. 4%, as the company's Q1 results exceeded market expectations. Dutch banking name ING [INGA.NL] has gained over 2%, after reporting its Q1 results. Bekaert [BEKB.BE] has gained over 11%, as the company's Q1 sales beat analyst expectations, while Agfa [AGFB.BE] has lost over 15% following the release of its Q1 earnings.

Additionally, Dexia [DEXB.BE] has declined by over 5% after reporting a Q1 net loss. Mediaset [MS.IT] has declined by over 8%, after reporting weaker than expected Q1 sales. Italian banking name Banca Monte Paschi [BMPS.IT] is lower by over 2%, following reports that the firm's headquarters have been searched by tax officials in Italy. In France, Credit Agricole's [ACA.FR] shares have continued to trade near record lows, amid broad weakness in the European banks. Transgene [TNG.FR] is lower by more than 8% after reporting disappointing Phase II data on its HPV vaccine.