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Pre Market Briefing, including 'Euro-zone investor confidence improved in February'

UK Market Snapshot

UK markets finished mixed yesterday, as investors awaited the developments from Greek talks on austerity measures. Glencore International and Xstrata declined 4.5% and 1.7%, respectively, amid reports that Glencore International might pay a bigger-than-anticipated premium to acquire Xstrata. Other miners, Vedanta Resources, Antofagasta and Kazakhmys retreated between 2.0% and 3.1%, in line with a fall in metal prices. French Connection Group tumbled 12.1%, after the company announced that its Christmas sales were disappointing and warned that its full-year pretax profit would be lower than analysts estimates. Randgold Resources climbed 2.2%, after it posted a more than four-fold rise in fourth-quarter net profit. Vodafone, which gained 1.6%, announced that the company had abandoned plans to merge its Greek operations with Largo. The FTSE 100 shed 0.2% to close at 5,892.2, while the FTSE 250 rose 2.6 points to settle at 11,237.7.

US Market Snapshot

US markets closed lower yesterday, amid concerns that Greece might be unable to avoid a default as it struggles to reach terms on a new bailout package. Financial sector stocks, Travelers, American Express and Citigroup declined between 0.7% and 1.3%. Boeing slid 1.1%, as the company ordered inspections of its 787 Dreamliners after finding signs of fuselage delamination. Medco Health Solutions dropped 8.1%, amid worries that its proposed acquisition by Express Scripts might be blocked. Humana retreated 5.4%, after the companys fourth quarter earnings and revenue missed analysts expectations. Homebuilders, KB Home, Lennar and Toll Brothers fell between 2.4% and 3.5%, after an analyst cut its recommendation for the homebuilders. The DJIA fell 0.1% to settle at 12,845.1, while the NASDAQ slid 0.1% to close at 2,902.0. The S&P 500 slipped 0.6 points to settle at 1,344.3.

Europe Market Snapshot

Other European markets finished lower yesterday, amid concerns that Greece would fail to come up with the political commitments needed to reach a deal with its international creditors. Air France dropped 4.1%, after the companys labour unions went on strike in France. Julius Baer Group declined 3.8%, after the company reported a 27.0% fall in its full-year profit and warned that it might have to pay a fine to resolve tax matters in the US. Banks, Societe Generale, Credit Agricole and Commerzbank dropped between 1.2% and 2.9%, amid renewed fears of Greek debt default. Deutsche Post fell 2.4%, after a broker downgraded its rating on the stock to Neutral from Outperform. The FTSEurofirst 300 index declined 0.1% to close at 1,075.2. Among other European markets, the German DAX Xetra 30 fell 1.8 points to close at 6,764.8, while the French CAC-40 shed 0.7% to settle at 3,405.3.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning, as Greece struggles to meet conditions for a bailout, reviving concern that the nation might default. In Japan, exporters, Citizen Holdings, Pioneer and Canon are trading 1.7%, 1.7% and 0.6% lower, respectively. Nippon Telegraph & Telephone is trading 0.8% lower, after the company posted a 56.0% decline it its third-quarter profit. In Hong Kong, realty sector stocks, China Resources Land, China Overseas Land & Investment and Cheung Kong Holdings are trading 1.8%, 1.4% and 0.4% lower, respectively. In South Korea, Woongjin Holdings is trading 14.9% higher, after the company stated that it was mulling the sale of its subsidiary, Woongjin Coway. The Nikkei 225 index is trading 0.4% lower at 8,893.2. Hang Seng index is trading 0.2% down at 20,677.1, while the Kospi index is trading 0.1% higher at 1,974.1.

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0434GMT today, Brent Crude Oil one month futures contract fell 0.22% or $0.26, to trade at $115.67 per barrel, on worries that Greeces steps to avert a financial collapse might fall short, threatening Europes economy and demand for fuel. Yesterday, the contract rose 1.18% or $1.35, to settle at $115.93 per barrel, on concerns about supply disruptions.


At 0434GMT today, gold futures contract lost 0.13% or $2.30, to trade at $1,722.60 per ounce. Yesterday, the contract fell 0.88% or $15.40, to close at $1,724.90 per ounce, on strength in the dollar amid lack of progress in the Greek bailout talks.


At 0434GMT today, the EUR weakened against the USD, losing 0.13%, to trade at $1.3101, ahead of a meeting between the Greek Prime Minister and the nations political leaders to discuss the implementation of additional fiscal measures required to secure a second bailout. Yesterday, the EUR fell 0.19% versus the USD, to close at $1.3118, amid global investor jitters about a potential Greek default as the leaders of Greeces main political parties were unable reach an agreement on further austerity measures demanded by international creditors.

At 0434GMT today, the GBP weakened slightly against the USD, losing 0.03%, to trade at $1.5807, after the British Retail Consortium reported that on an annual basis, like-for-like retail sales in the UK fell 0.3% in January, compared to a 2.3% rise posted in the same period last year. Yesterday, the GBP remained unchanged against the USD, to close at $1.5812.

Fixed Income

In the US, long term treasury prices rose yesterday, pushing the yields on 30-year bonds lower, on lack of a political agreement in Greece and after Greeces Prime Minister requested the countrys Finance Ministry to prepare a document on the implications of a Greek default. Yesterday, yields on 30-year bonds fell 5 basis points to 3.08%, while yields on 10-year notes declined 4 basis points to 1.93%. However, at the short end, yields on 2-year notes increased 1 basis point to 0.24%.

Key Economic News

UK new car sales rose slightly in January, indicates SMMT

The Society of Motor Manufacturers and Traders (SMMT) reported that on a year-on-year basis, new car registrations in the UK increased a marginal 0.03% to 128,853 units in January.

UK house prices rose in January, indicates Halifax

Lloyds Banking Group's Halifax division reported that, on a monthly basis, the House Price Index in the UK rose 0.6% in January, following a 1.0% decline recorded in December.

UK retail sales decline

The British Retail Consortium has reported that on an annual basis, like-for-like retail sales in the UK fell 0.3% in January, the second-worst January performance since 1995, and compared to a 2.3% rise posted in the same period last year.

German factory order rose more-than-estimated in December

On a monthly basis, German factory orders rose 1.7% in December, following a 4.9% fall recorded in November. Market had expected the factory orders to rise 1.0% MoM in December. Additionally, on a working day adjusted annual basis, factory orders remained flat in December, compared to a 4.3% drop recorded in November. Market had expected the factory orders to fall 0.4% YoY in December.

Euro-zone investor confidence improved in February

The Sentix Investor Confidence Index in the Euro-zone rose sharply to a reading of -11.1 in February, following a reading of -21.1 posted in January. Market had expected the index to rise to a reading of -16.5 in February.

Papademos set to meet leaders

Greek Prime Minister, Lucas Papademos, is set to meet the nations political leaders, today, to discuss the implementation of additional fiscal measures required to secure a second bailout.

Canadian Ivey PMI rose unexpectedly in January

On a seasonally adjusted basis, the Ivey Purchasing Managers Index (PMI) in Canada rose unexpectedly to a reading of 64.1 in January, compared to a reading of 63.5 posted in December. Market had expected the index to fall to a reading of 59.5 in January.

RBA retains benchmark interest rate

The Reserve Bank of Australia (RBA) has kept its key cash rate on hold at 4.25%, as opposed to market expectation of a rate cut.

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