II:Strong Gains For European Equities, Currencies Mostly Steady
Euro slipped slightly in mid London trades, lingering around 1.3430 against the US dollar but the overall undertone remained supportive for the single currency amid buoyant moves in European equities. The single currency extended its bounce from one week lows yesterday as the Euro bounced against the US dollar on the possibility of that the EU officials may significantly boost the region's ability to fight the debt crisis by operating two bailout funds. The talks are focusing on the possibility of allowing the euro-zone's 440 billion euros ($590 billion) bailout fund to remain in operation when a new €500 billion facility comes into force in 2012, according to the media reports. The yields of the Spanish and Italian bonds slipped in the weak of these moves, extending their downward retreat after week's co coordinated central banking action. European equity markets are up by around 1-1.5% on the day, indicating a heavy amount of risk appetite.
The Euro slipped yesterday as after the ratings of 15 Eurozone countries were placed on credit watch by Standard & Poor's Rating, stating tightening credit conditions and failure to resolve the debt crisis and long-term economic challenges. The decision to put the countries on negative credit watch - - which signals a downgrade within 90 days has 50-50 odds- could affect six countries with the rating firm's highest, triple-A rating: Germany, France, the Netherlands, Austria, Finland and Luxembourg.
On economic front, Japan's coincident composite index (CI), which reflects current business conditions, rebounded by 1.3 points to 90.3 in October under, buoyed by higher power usage and industrial production, preliminary Cabinet Office data showed today. The coincident CI recorded its first rise in three months after falling 1.3 points in September, thanks to a temporary shift of production to Japan from flood-hit Thailand, which helped spur industrial output in October.
The central bank of China announced today that the country's forex reserves recently decreased by 20 billion Chinese Yuan, the first decline in 4 years. Chinese consumer confidence declined in November, falling back to near the historic low seen in September as consumer expectations about the economic outlook deteriorated, INTAGE China stated today, according to media reports. The headline index and all seven sub-indexes fell last month, the research company said, though without any suggestion of the panic falls seen in previous months.
