Europe close: Samaras demands an end to talk of Grexit
Posted on: 23 Aug 2012 by Polly York

-Fed´s Bullard says FOMC minutes stale
-Samaras demands end to talk of Grexit
-Schaeuble equates more time for Greece to more money
-Spanish 10 year bond yields rise 7bp to 6.35%
-LCH raises margin requirements on some French bonds

FTSE-100: 0.04%
Dax-30: -0.97%
Cac-40: -0.84%
FTSE-Mibtel 30: -1.37%
Ibex 35: -0.79%
Stoxx 600: -0.59%

The main European equity benchmarks have finished the day with moderate losses, despite a somewhat ‘bullish’ set of Federal Reserve minutes released last night Stateside.

Tempering gains were the weak manufacturing numbers out in China, also overnight.

Another potentially (very) negative factor for investors were the remarks out from Germany´s Finance Minister, Wolfgang Schaeuble, reiterating his stance against granting Greece more time to meet its commitments. In his opinion doing so would be tantamount to providing more financing to the country.

For now however investors seem to be clinging to the hope that Greece may yet be given ‘one last chance’ (even if not until October), as the chief of the Eurozone´s finance ministers -Jean Claude Juncker- put it, to meet its commitments. In reality however Mr. Juncker seems to have taken a rather hard stance on Greece.

In a similar vein, and according to Die Welt, the European Central Bank (ECB) has collected views on intervention from national central banks and, according to the article, a favorite possible option could be an informal cap on the government bond yields or on the spreads over bunds. Naturally, for now all of this just seems to be simple speculation on the possible options at the ECB´s disposal.

Nevertheless, does that mean more time for Greece? Not likely say economists at Barclays Research this morning. ‘While we cannot rule out a future extension completely, we think the concession most likely to be given to Greece in the short term is a relaxation of financial program conditions,’ they write.

Meanwhile, and in Greece itself, Ekathimerini reports that some members of Democratic Left – which together with PASOK and New Democracy form a government coalition – strongly oppose reducing public sector employment.

From a sector stand-point the worst performing sectors on the DJ Stoxx 600 were: utilities (-1.43%) and real estate (-1.15%).

More specifically, Ahold, the Dutch supermarket operator, has said that second-quarter operating profit undershot expectations.

EADS, the parent company of Airbus SAS, was dragged down by Qantas Airways, which cancelled an order for rival Boeing Co. planes worth $8.5bn at list prices.

Bank of America has upgraded Heineken to buy from neutral.

German expansion buoyed by growth in consumption

German second quarter GDP growth has been confirmed at a 0.3% quarter-on-quarter rate, buttressed by a 0.4% quarter-on-quarter rise in private consumption.

The Eurozone composite purchasing managers´ index (PMI) for the month of August has come in at 46.6 points (Consensus: 46.5), versus last month´s reading of 46.5. That led by a slower rate of contraction in manufacturing.

The services PMI on the other hand has come in slightly below forecasts.

Euro edges up on Fed minutes

Front month Brent crude futures are now down by 0.192 dollars to the 114.67 dollar per barrel mark on the ICE.

The euro/dollar is still higher, by 0.30%, at 1.2570.

AB

Tags: barclays | bond yields | bullard | bunds | european equity | eurozone | finance minister | finance ministers | fomc minutes | futu | margin requirements | mibtel | mr juncker | wolfgang schaeuble