European Market Update

Markets Quiet Following US Holiday

ECONOMIC DATA

SP Dec Services Sector Turnover Y/Y: 4.2% v 5.8%

SW Jan Headline CPI: M/M -0.8% v -0.4%e || Y/Y 3.2% v 3.6%e
SW Jan Underlying CPI: M/M -0.8% v -0.5%e || Y/Y 2.1% v 2.3%e

IT Dec Total Trade Balance: -€1.97B v -€1.57Be || Prior revised from -€53M to -€283M
IT Dec Trade Balance EU: -€853M v - €535Me || Prior revised from €522M to €291M

SPEAKERS/COMMENTS

Bank of France: Warns against rushing into adopting new regulation of credit agencies activities || Credit agencies should suggest own measures to restore investor confidence || Says Fed overreacted to market declines

GE Merkel: The ECB''s price stability aim is the right goal

FIXED INCOME/FX/COMMODITIES/ERRATUM

Front month crude futures continue to trade higher in the session on the back of supply concerns as uncertainty surrounds the Exxon/Venezuela situation. Additionally, are some reports of a possible natural gas shortage in Iran, which has some market participants speculating that this could impact Iranian crude oil production. The general outlook for the remainder of the week seems to indicate that the market expects choppy trading ahead of the inventories data, which has been pushed back to Thursday, on continued recessionary fears in the US. Elsewhere, the metals are trading higher in the session, buoyed by platinum, which continues to push record highs.

The European indices are currently trading in negative territory in the session after a brief serge into positive territory following a lower open. Credit Suisse announced overnight that it will write down $2.85B in asset backed securities, noting that the estimated net impact on net income estimated at $1.0B. Elsewhere shares of Cadbury were lower after the company reported mixed results; the same is true for shares of Barclays. Looking ahead, focus in the US will certainly fall upon earnings results from Wal-Mart, which are due out in the US pre-market.

In fixed income futures are trading higher in Europe on the back of lower equities. There is a little bit of a steepening on between the 2''s and 10''s in Germany as the spread has widened by around 1.0% since yesterday. Over in the UK there has been a slight narrowing in the yield curve as all was quiet overnight. Focus in the UK will rest upon the Bank of England minutes, which are due out during tomorrow''s session.

Trade The News Staff
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