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EUROPEAN OPENING NEWS INCLUDING: Fitch said it sees the Cyprus economy in a deep recession in 2014

Published: 08:22 12 Nov 2013 GMT

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Asia

China may cut growth target next year to 7% in a sign of the government's determination to push through structural reforms and steer the economy on to a more sustainable path, according to CICC. (FT-more) China's current growth target lies at 7.5% Y/Y growth. A statement from the Chinese communist party is expected at the conclusion of the third plenary session today, however no set time has been announced.

China's Singles Day holiday has set the record for ecommerce sales in a single day, almost doubling the quantity sold on 'Cyber Monday' in the US last year. (FT-More)

JGBs closed down 10 ticks at 144.95, paring some of their earlier losses after breaking below the 145.00 handle, with under-performance seen in the long end of the curve with the 30y yield down as much as 3bps at one point, as participants awaited today's JPY 0.5trl 30y Bond auction. The auction was well received with the yield coming in lower than the prior auction and the 10 auction average. Demand was also better than previous. The Nikkei 225 extended yesterday's gains to close up 2.23%, benefiting from a weaker JPY. (RANsquawk)

Europe

The EU is expected to open an in-depth review of the German economy, according to sources. The sources added that the EU sees the German current account and trade surplus as a potential excessive imbalance. (Newswires) This follows similar comments from EU's Rehn yesterday, wherein Rehn cited the advantages of recognizing potential problems early as justification for a deeper analysis of Germany. 

ECB's Draghi is said to be concerned about deflation in the Eurozone, but would dispute that statement publicly, according to sources. (Allgemeine Zeitung)

German SPD's Nahles said at least 50% of coalition policy has been agreed. However, Nahles said "marathon" talks are still ahead in order to reach an agreement by Christmas. (Newswires)

Fitch affirmed Cyprus at B-; outlook negative. Fitch said it sees the Cyprus economy in a deep recession in 2014. (Newswires)

ECB's Weidmann said sovereign bonds should be risk-weighted. Weidmann said corporate bonds should be treated the same in medium-term and bank exposure should be limited to any one sovereign. (Newswires) 

UK

UK RICS House Price Balance (Oct) M/M 57% vs. Exp. 58% (Prev. 54%, Rev. 53%); Highest since June 2002. RICS says supply and demand imbalance "urgently needs to be addressed".

FX

In FX, continued USD-strength saw weakness across the major pairs, as the USD/JPY surged to its highest level in about two-and-a-half months. The pair broke above resistance eyed at 99.25 amid chatter of large option expiry around this level to post fresh session highs at 99.59 after overcoming further resistance seen at 99.50. AUD/USD fell earlier in the session in the wake of a softer than expected NAB monthly business survey as confidence slumped to +5 from +12. (RANsquawk)

Japanese finance minister Aso and US Treasury Secretary Lew reaffirmed the G7 and G-20 commitment on FX according to a Japanese Ministry of Finance official. Separately, US Treasury Secretary Lew says China needs to move faster toward market-set FX rate and Japan needs to respect G-20 pledge against targeting FX. (Newswires)

Global

Moody's sees G-20 real GDP growth of around 1.3% this year and sees relatively modest recovery in G-20 countries. Moody's sees major emerging markets GDP growth around 5% in 2013 and that biggest risks around economic outlook has dissipated. (Newswires) 

Commodities

Overnight, WTI crude futures fell USD 0.29 to trade at USD 94.85 amid mild USD strength and light newsflow. Last price taken at 0620GMT. (RANsquawk)

US

The US bond market was closed on the floor yesterday for Veteran's Day holiday, however electronic trade saw T-notes edge lower throughout yesterday, following moves in European fixed income, and ahead of USD 70bln in supply this week in 3s, 10s and 30s. On Friday US Treasuries tumbled as the October NFP report came in much better than expected, at 204k vs. Exp. 121k, defying expectations of an impact from the US government shutdown. This saw T-notes fall over 1 point as participants shifted their taper expectations which consequently saw the 10y yield break back up 2.70%. Overnight, T-notes fell 3 ticks to trade at 125.30 as positive Japanese equity markets pressed fixed income lower after the Dow Jones' record close yesterday. Last price taken at 0620GMT. (RANsquawk)

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