Political Uncertainty In Europe Weighs On Risk Appetite; Major European PMI Data Disappoints: April 23, 2012

(EU) ECB: €311M borrowed in overnight loan facility v €335M prior; €775.7B parked in deposit facility v €746.5B prior.

(FR) France Apr Business Confidence: 95 v 96e; Production Outlook: -14 v -15 prior; Own-Company Production Outlook: -4 v +8 prior.

(FR) France Apr Preliminary PMI Manufacturing: 47.3 v 47.4e; PMI Services: 46.4 v 50.1e.

(CH) Swiss M3 Money Supply Y/Y: 6.6 v 6.4% prior.

(CH) Swiss Q1 Real Estate Index Family Homes: 410.4 v 404.6 prior.

(NL) Netherlands Apr Producer Confidence: -3.3 v -2.6 prior.

(DE) Germany Apr Advanced PMI Manufacturing: 46.3 v 49.0e; PMI Services: 52.6 v 52.3e.

(EU) Eurozone Apr Advanced PMI Manufacturing: 46.0 v 48.1e; PMI Services: 47.9 v 49.3e; PMI Composite: 47.4 v 49.3e.

(IT) Italy Apr Consumer Confidence: 89.0 v 96.5e.

(TW) Taiwan Mar Industrial Production Y/Y: -3.4% v -6.5%e v +8.4% prior; Commercial Sales Y/Y: -1.1% v +0.5%e.

(TW) Taiwan Mar Unemployment Rate: 4.1% v 4.2%e.

(HK) Hong Kong Mar CPI Composite Index Y/Y: 4.9% v 4.9%e.

(EU) Eurozone 2011 Govt Debt/GDP Ratio: 87.2% v 85.3% prior.

(IT) Italy March Non-EU Foreign Trade Balance: +€495M v -€3.1B y/y.

Fixed Income

(SL) Slovakia Debt Agency (ARDAL) sold €125.8M in 12-month Bills; Yield 1.0602% v 0.9798% prior; bid-to-cover: 2.33x vs. 2.08x prior.

(DE) Germany sold €1.96B in 12-Month BuBills; Avg Yield 0.0765% v 0.0765% prior; Bid-to-cover: 2.3x v 1.4x prior.

Notes/Observations

China HSBC Apr Flash PMI rises to 49.1 but remains below the key 50 level for the 6th straight month.

Netherlands budget talks collapse putting its AAA sovereign rating at risk.

France presidential candidate Hollande wins 1st round over Sarkozy (as expected). Run-off set for May 6th. Far Right party (led by Le Pen) posts strong 3rd place.

Lots of central bank meetings during the week with FOMC decision on Wed and BOJ on Friday.

ECB says it was not pressured at IMF meeting to lower interest rates.

Major European Advanced PMI data disappoint.

German PMI data at odds with recent IFO and ZEW readings.

Equities

Indices: FTSE 100 -1.7% at 5674, DAX -2.7% at 6568, CAC-40 -1.9% at 3128, IBEX-35 -3.1% at 6830, FTSE MIB -3% at 13,966, SMI -1.7% at 6130.

European equity indices opened the session lower and most indices have continued to trade lower by more than 1%. In Spain, the IBEX-35 has once again hit fresh 3-yr lows, with some dealers eying the 6,702 area. Banks are trading lower across the board, amid the rise in peripheral bond yields. Factors weighing on the indices include, PMI data out of China and Germany, political concerns related to France and the Netherlands and higher peripheral yields. Additionally, there have been some concerns that the IMF could face delays in deploying its newly expanded resources.

In Germany, automakers are trading lower across the board. BMW [BMW.DE] has declined by more than 2%, as the company said that it saw Chinese sales slowing in the coming months. BMW also noted that Europe continues to be challenging. Lufthansa [LHA.DE] is lower by more than 2% on speculation that the firm is planning to implement approx. €1B in cost cutting measures, while Man SE [MAN.DE] has lost over 3%, as the company is trading ex-dividend. Philips [PHIA.NL] is higher by over 4%, after reporting better than expected Q1 results.

Also, TomTom [TOM2.NL] has lost over 5%, after the company gained more than 10% on Friday's session on speculation that it could pursue a delisting. Italian names Fiat [F.IT] and Fiat Industrial [FI.IT] are both lower as the companies are trading ex-dividend. Cable & Wireless Worldwide [CW.UK] has gained over 16%, after receiving a bid worth more than £1B from Vodafone [VOD.UK]. In Switzerland, Nestle [NESN.CH] is lower by approximately 3%, after confirming plans to acquire Pfizer's infant-nutrition unit for $11.85B in cash.