- The European indices are currently rebounding after trading lower early on in the session led by HMV group after cutting the company cut its outlook, and Gaz de France after reporting poor results. - European government bonds are currently off of their best levels of the session. EGBs and gilts alike were trading higher in the session, but gave up gains after some inflationary comments from the IEA. - Spanish CPI rose by 0.1% m/m as expected during the month of February, and by 2.4% y/y, below estimates of 2.5%. Core CPI rose more than expected by 2.8% y/y above estimates of 2.7% led by economic growth. - In the UK the visible trade balance narrowed more than expected in January to a deficit of £6.23B, while the total trade balance narrowed to a deficit of £3.78B. - In Germany, both the ZEW current situation and economic sentiment surveys exceeded expectations on increasing evidence that the German economy will weather the VAT hike implemented in January. Similarly, in the Euro-Zone, economic sentiment exceeded expectations as well. ZEW economists noted that oil prices pose a risk to the German economy, and said that waning manufacturing orders from abroad could forecast a slowdown in global demand. - In energy news overnight, the IEA left its 2007 world oil demand/growth forecast unchanged overnight. According to the IEA, during the first two months of 2007, stocks fell at a rate of 1.26M bpd. The IEA noted that, if the trend continues, we may see the biggest January-March stock draw in ten years. The IEA indicated that the rapid decline in oil inventories in the OECD countries is worrisome. Furthermore, the IEA said that current stock trends, and prices signal that greater OPEC exports will be needed in the coming months, pointing out that sizable supply risks still exist. The IEA said that on the year Q1 demand growth is down 360K bpd, revising Q1 demand down to 85.9M bpd as a result of warm weather.