European Market Update 3/12 UK PPI Surprise to the Upside

Discussion in 'Trading' started by TradeTheNews, Mar 12, 2007.

  1. TradeTheNews

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    - The European indices are currently trading near session lows after a strong open. Indices opened higher on merger news and speculation. Indices slowly declined throughout the rather quiet session.
    - European government bonds are currently trading lower in the session following comments from the ECB’s Liebscher ahead of the European open. Over in the UK, gilts are trading lower after stronger than expected PPI data was released in the UK.
    - Comments from an interview held with the ECB’s Liebscher on Friday were published today. Liebscher said that the ECB cannot consider the job done on interest rates. Liebscher said that he sees inflation risks on the horizon, and reiterated that the ECB is not pre-committed on interest rate hikes. Finally, Liebscher noted that, thus far, rate hikes have not curbed economic growth.
    - Swedish inflation was slightly ahead of estimates on an annual basis, reaching their highest level since April of 2003. Inflation has held below the central bank’s 2.0% limit for nearly two years. The current data challenges the Bank’s forecast for low inflation, and the forecast for one interest rate hike in 2007.
    - Italian industrial production fell near six-year lows on a monthly basis as demand for durable goods declined. The biggest drops were seen in the transport/vehicles industry, and the electrical equipment industry.
    - Core PPI Output reached its highest level since October of 2004 in the UK as raw material prices increased. While most of the numbers resulted in an upside surprise, there were downward revisions to the back month PPI input numbers.
    - In energy news overnight a representative from Qatar said that a nuclear crisis is a concern for the oil market. The UAE oil minister said overnight that the US economy remains robust with oil prices around $60/barrel. Hamli said that OPEC’s compliance with cuts are improving, and noted that the five year average of stockpiles is still high.