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Euro zone states plus 6 others will sign intergovernmental treaty

Friday, December 9, 2011 2:00 PM GMT

Good Morning

  • Asia stocks fell, sending the regional benchmark to the biggest drop in a month, while the South Korean won declined after cooling Chinese inflation signaled weaker economic growth. U.S. stock futures briefly rose after European Central Bank President Mario Draghi said leaders have laid out a new "fiscal compact" to fight the debt crisis.
  • Moody's Investors Service today cut ratings on Societe Generale SA, BNP Paribas SA and Credit Agricole SA, citing worsening liquidity and access to funding. The ratings service said in a statement that the probability that Societe Generale will get systemic support is very high. Each of the three banks had their long-term debt and deposit ratings cut by one step.
  • EU's Van Rompuy said that EU leaders agreed on a new fiscal compact for the euro zone. Euro-zone will make available additional fund of up to EUR 200bn to the IMF. ESM should into force in July 2012. Will strictly adhere to IMF practices in PSI. Euro zone states plus 6 others will sign intergovernmental treaty. No agreement reached on euro-zone bonds.
  • UK and Hungary opted not to take part in the treaty change - EU Diplomats told Reuters that leader will reexamine ESM ceiling in July 2012. ESM will have ceiling of EUR 500bn. ESM will not have a banking license. Leaders failed to get backing from all 27 states for treaty changes. Agreed to explore option of bilateral loans to IMF totaling EUR 200bn, with EUR 150 bn from euro zone.
  • Sarkozy said ECB will manage the EFSF and futur ESM, said EU leaders have accepted all the Franco-German proposals.
  • Merkel says need to get credibility back in euro. EU commission needs to get more responsibility. we are moving towards fiscal union. EU needs to be a stability union and non euro states have an interest in seeing stability in Europe.
  • Bank of Spain says lenders can meet EBA capital requirements - Japan large manufacturers business sentiment fell 6.1 in Oct-Dec compared with +10.3 in Q3.
  • Japan Q3 GDP revised to 1.4%qq, 5.6& annualized - Japan's FinMin Azumi: This week's EU summit could affect next year's world economy. Want Europe to produce results to put the markets and the world at ease. - Japan needs to watch impact of strong JPY, Europe woes- official - Japan's trade minister Edano: no requests for funds have been made TEPCO. says its not the case that govt. is making arrangements in the direction of injecting public funds.
  • RBA's governor Glenn Stevens said that US corporate sector is in very good shape; said that Australia's economy remains resilient and should be able to resist shocks; said that Australia has been implementing policies to protect the economy; said that emerging countries feel uncomfortable with EU and US exposure; said that large reserve nations would prefer to see the IMF to support the Euro Zone countries; said that regulators need to have a clear vision concerning risk taking.
  • NZ consumer confidence index declined by -0.6%mm in Dec from -2.9% mm in November.
  • NZ house price index increased by 1.1% mm in November from -0.3% mm in October.
  • NZ's card spending fell by -0.5% mm from a revised 1.6% in October
  • China's inflation reached a 14-month low and industrial production rose less than forecast, bolstering the case for more stimulus measures to shore up growth in the world's second-largest economy. Consumer prices rose 4.2 percent from a year earlier, the statistics bureau said on its website. Output gained 12.4 percent, the least since August 2009 and below a median forecast of 12.6 percent. A separate report showed passenger-car sales rose the least in six months. Premier Wen Jiabao 's government may telegraph at an annual economic works conference in coming days that growth is now a greater concern than inflation, given risks posed by Europe's crisis and a domestic property-market slowdown. Investors have been paring back expectations for gains in the yuan as China slows, with 12-month non-deliverable forwards today suggesting a 0.8 percent decline against the dollar.

Today's Figures

10.30 SW Industrial Production
10.30 UK PPI input/output
10.30 UK Trade Balance
14.30 CA Trade Balance
14.30 CA Imports/ Exports
14.30 CA Labor productivity rate
14.30 US International trade
15.55 US U.Michigan sentiment

Have a good weekend!

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