Europe open: Market speculating with a Spanish rescue

Date: Friday 08 Jun 2012

-Fitch cuts Spain credit rating to BBB
-Some speculate with imminent Spain rescue
-Banks deposit €756.6bn overnight at ECB
-EBF says Spanish banks urgently need capital
-Weaker than forecast economic numbers in Europe
-Speculation of weaker than expected Chinese data

FTSE-100: -0.86%
Dax-30: -1.06%
Cac-40: -1.30%
Stoxx 600: -1.09%
FTSE-Mibtel: -1.09%
Ibex 35: -1.35%

The main European equity benchmarks have begun today’s session firmly in the red, weighed down by the continued tensions in the Eurozone periphery after ratings agency Fitch downgraded Spain’s sovereign debt by 3 notches, to BBB.

Also weighing on sentiment perhaps, the lack of any fresh indications Stateside regarding the possibility of fresh policy stimulus on the monetary front. Some market commentary is also suggesting this morning that China’s decision to cut rates yesterday may foreshadow weak economic data releases this weekend.

It is against this backdrop that some reports (speculation) have emerged that Spain could ask for aid European aid tomorrow as soon as tomorrow.

Cyclicals take a hit

From a sector stand-point the worst performers now are: basis resources (-2.68%), banks (-2.43%) and automobiles (-2.06%).

H&M is down following a downgrade from Societe Generale to sell form hold.

Barclays has cut its rating on shares of Havas to equalweight from overweight.

Mixed economic data in France and Germany

France’s trade deficit deteriorated slightly in April, to -€5.8bn (Consensus: -€5.5bn), after -€5.6bn in March.

The French business confidence index for the month of May has come in at 93, versus 94 the month before (revised down from 95).

Germany’s trade surplus fell back to €14.4bn in April (Consensus: €13bn), versus the previous month’s €17.4bn.

Sharp falls in crude futures

Front month Brent crude futures are now off by 1.48 dollars to 98.47 dollars per barrel in ICE trading.

The euro/dollar is now down by 0.58% to the 1.2492 dollar mark.


AB

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