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Europe midday: ECB's Draghi sees a recovery in the second half

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Europe midday: ECB's Draghi sees a recovery in the second half

Fri, 25 January 2013

- Draghi (ECB) expects economy to recover in second half
- Italian 10 year bond yields down 8 basis points to 4.08 per cent
- Banks to pay back 137.2bn euros of LTRO next week

FTSE-100: 0.11%
Dax-30: 1.28%
Cac-40: 0.66%
FTSE Mibtel 30: 0.41%
Ibex 35: 0.42%
Stoxx 600: 0.21%

By the midday mark the major European equity market averages were still trading slightly in the blue, with the exception of the German Dax, which was still registering large gains.

The above came on the back of an equally large – although not entirely unexpected – rise in the IFO institute’s business climate index for the month of January.

Worth noting as well, according to the latest data from the European Central Bank Eurozone lenders will repay €137.2bn of their 3 year long-term loans (LTROs) on January 30th. Roughly €84bn was the amount expected. 278 banks will participate.

Today, the Spanish Cabinet is expected to approve a law aimed at reducing the fragmentation of the country’s internal market. It should also approve an extension of current support measures to the unemployed.

A survey among CEOs of Germany’s largest firms, held in Davos, shows a return of confidence in the cohesion of the euro area and cautious optimism about the economic outlook in Germany.

The EU-ECB-IMF troika has suggested a line of “comfort funding” could be available to the Irish Government to ensure there is no disruption to the public finances at the end of the bailout, according to that country’s press.

Speaking at the World Economic Forum, in Davos, European Central Bank President Mario Draghi commented that he expect the recovery to continue next year in the Euro area.

Back on the equity front, and from a sector stand-point, the best performing industrial groups are: Chemicals (1.26%), Automobiles (0.92%) and Banks (0.64%).

Better than expected IFO reading
The German IFO Institute’s business climate index for the month of January has risen to 104.2 points, to its best level since last June, after a reading of 102.4 for the previous month and against a consensus view of 103.0.

The improvement was led by the expectations sub-index, which rose to a reading of 100.5 from 98 previously. Sentiment improved most in manufacturing and construction.

Other asset classes trading mixed
The euro/dollar is now higher by 0.62% to the 1.3462 dollar mark.

Front month Brent crude futures are now higher by 0.457 dollars to the 113.80 dollar mark on the ICE.


AB

FTSE 100 Top Risers

Name Last Chg.% Time
Sports Direct International 787.50 5.63 17:00
International Consolidated Airlines Group SA (CDI) 395.20 5.05 16:47
Ashtead Group 888.00 5.03 16:45
Travis Perkins 1,775.00 3.74 17:07
ITV 180.00 3.69 17:00

FTSE 100 Top Fallers

Name Last Chg.% Time
BAE Systems 376.00 -4.06 17:07
Barratt Developments 365.00 -2.17 17:07
Fresnillo 884.00 -1.94 17:00
Aggreko 1,502.00 -1.70 16:45
Smith & Nephew 860.50 -1.26 17:12