MARKETS OUTLOOK:
FOREX:
Economic growth in the euro zone came in slightly better than consensus forecasts, but only just. Earlier France and Germany managed to impress with less-bad-than-feared GDP numbers, but the Netherlands and Italy ruined the party with a 0.7% contraction each. The euro was steadfastly ignoring the data. Employment numbers from the U.K. failed to impress, but the pound maintained a stiff upper lip ahead of the BOE's Quarterly Inflation Report.
At 0512 ET, the euro stood at $1.3178, the dollar was at Y78.50 and the pound was at $1.5699.
BONDS:
Treasurys trimmed long-end gains in response to rising uncertainty around the Greek bailout and Tuesday's softer-than-expected U.S. retail sales results, according to Morgan Stanley. With the minutes of the January FOMC meeting out Wednesday, traders will be looking for more clarity on fed fund rate forecasts as well as "qualitative information regarding participants' expectations for the Federal Reserve's balance sheet," Morgan Stanley noted.
The cost of insuring European sovereign debt against default was mostly higher, after euro-zone finance ministers cancelled a meeting to discuss Greek debt. The SovX Western Europe index, which investors can use to buy or sell credit default swaps on a basket of 15 sovereign borrowers, was at 330/335 basis points, according to data-provider Markit.
The iTraxx Europe index, which comprises 125 high-grade borrowers, 25 of which are banks and insurers, was at 136/137 basis points. The Crossover index of 40 mostly sub-investment-grade European corporate borrowers was two basis points tighter at 594/598 basis points.
EQUITIES:
Stocks are called to open higher, following China's pledge to support Europe in tackling the debt crisis, said David Morrison, senior market strategist at GFT, adding that this isn't the first time Chinese officials have promised to help the euro zone. Greece remained in focus, after EU finance ministers replaced Wednesday's planned meeting in Brussels with a conference call, noted Morrison. "There are doubts that Greek policymakers will follow through on their commitments, once April's election is out of the way," he said.
The Dow front-month futures contract and the S&P 500 futures were both up 0.6% at 12916.00 and 1355.80, respectively.
COMMODITIES:
Oil futures were higher, as fundamentals have recently improved "quite a bit," said Amrita Sen, Barclays Capital oil analyst. Tensions over Iran's nuclear program and reports of a pipeline explosion in Syria and a strike at Yemen's largest oil field provided support to crude prices, Sen added. The situation in the euro zone will also be in focus during the day, she noted.
Gold was "another step closer" to regaining its credibility as a diversifier of risk, following the metal's strength Tuesday amid broad risk aversion, said UBS analyst Edel Tully. "With risk appetite under pressure and peripheral bond spreads widening against bunds, gold managed to better hold its ground while equities and industrial metals headed south," she noted. Tully said the easing of gold's relationship with risk was a welcome development for bulls, "especially those who were disappointed by the difficulties encountered in trading the yellow metal during its hybrid state towards the end of 2011."
PBOC Says China To Boost Euro Holdings
People's Bank of China Gov. Zhou Xiaochuan gives the euro zone a vote of confidence, saying China will increase holdings of euro-denominated assets.
Late Snags Push Back Greek Deal
Greek bailout talks enter a new round of brinkmanship as euro-zone finance ministers delayed a meeting to approve a new bailout and debt restructuring for Athens, which worked to assure them it is committed to new austerity measures as a debt-redemption deadline looms.
Japan Economy Expected To Stay Flat
The Bank of Japan maintained its economic assessment, saying the Japanese economy has been flat and is expected to remain so for the time being.
BNP Paribas Profit Hit By Greece, Restructuring
French bank BNP Paribas reported a sharp drop in fourth-quarter net profit, hit by write-downs on its Greek bonds and restructuring costs it said will impact earnings further in 2012.
German Economy Contracts In 4Q But Beats Estimates
The German economy, the largest in Europe, contracted in the fourth quarter of last year slightly less than expected, confirming expectations that it is not heading into a recession this year.
UK Jobless Claimant Total Hits 2-Year High
The number of people claiming unemployment benefits in the U.K. rose much faster than expected in January, pushing the total to its highest in two years.
China To Fine Tune Monetary Policy As Appropriate
China's central bank pledged to maintain its current "prudent" monetary policy stance, but also to fine-tune policy as and when appropriate.
French Economy Posts Surprise Expansion
The French economy expanded in the last quarter of 2011, the national statistics office said, countering expectations for a moderate contraction and suggesting a surprising resilience to Europe's grinding debt crisis.
Italy Enters Recession
Italy's economy contracted sharply in the fourth quarter, shrinking 0.7% from the previous three months and signaling the country is now in technical recession, the national statistics institute Istat said.
OECD Warns Norway Of Risks To Economy
While Norway has a strong and well-managed economy, high household debt and elevated house prices "pose a risk," the OECD said.
Banks' ECB Overnight Deposits Close To Record
Overnight deposits with the European Central Bank hit their second-highest level on record, indicating the euro-zone banking system remains awash with liquidity after the bank's first three-year loan operation.
Dutch Economy Falls Back Into Recession
The Netherlands fell back into recession in the fourth quarter, with the national statistics agency estimating that gross domestic product shrank for the second consecutive quarter.
BP Allowed To Explore For South China Sea Gas
BP said it has received approval from China's Ministry of Commerce to explore for natural gas in the South China Sea. It will hold a 40% stake in the exploration project.
Airbus To Keep A380 Production Pace
Airbus will maintain a higher rate of production of its A380 super jumbo and aim to deliver 30 such planes this year, Chief Executive Tom Enders said.
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