· European peripheral 10-year bond yield spreads with respect to bunds widened in early European trade but retraced much of the move following market talk of the ECB buying peripheral bonds · Market talk that the Portuguese government has reached an agreement on the 2011 budget with all the concerned parties · Markets look ahead to key economic figures from the US later in the session for further cues regarding potential QE from the Fed · EU's Barroso said there is going to be no suspension of EU voting rights · RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=2iXkvAPJTBo Overnight News Proactiveinvestors recommends Helius Energy: filling the energy gapChurchill Mining secures a big partner for a big projectCluff Gold’s Baomahun – a potential company maker?ASIA JGBs edged up overnight on weaker Tokyo shares and after lacklustre industrial output data underlined views that the economy’s recovery is losing momentum. However, as the session progressed JGBs pared back earlier gains and moved into minor negative territory. Nikkei fell 1.8% to a seven-week closing low as disappointing earnings hit shares of companies such as Sharp, with downward momentum accelerating after the index breached a key technical support level. Investors were keen to lighten long positions ahead of the weekend and before a blizzard of earnings report due after the close on Friday and a highly anticipated Federal Reserve policy setting meeting on November 2nd-3rd. (RTRS) US Foreign central banks overall holdings of US marketable securities at the Federal Reserve rose USD 18.55bln in the week ended Oct. 27 to stand at USD 3.300trl. Also, the US Federal Reserve’s balance sheet shrank to USD 2.278trl in the week ended Oct. 27 from USD 2.288trl the previous week. (RTRS) Bar Cap US Treasury month-end extension: +0.06 years (RTRS) Bonds EUROPEAN GOVERNMENT BONDS Bunds traded higher for most of the European session on the back of weakness in equities, a sharp drop in German retail sales figures, month-end buying, and ahead of the FOMC meeting next week. European peripheral 10-year bond yield spreads widened across the board, with particular widening observed in the Irish/German spread, partly due to a sharp decline in Irish retail sales data. The Portuguese/German spread widened following news that the Portuguese opposition party has extended lead over the ruling Socialist Party, with a 40% backing of voters as opposed to 37% in June. The Greek/German spread also crossed the key 800BPS level, however as the session progressed most peripheral spreads have retraced some of the earlier widening, which has been attributed to market talk of the ECB buying in European peripheral bonds, as well as unconfirmed market chatter that the Portuguese government has reached an agreement on the 2011 budget with all the concerned parties. Moving into the North American open, bunds have come off their best levels but are still trading in positive territory as the market looks ahead to key economic figures from the US later in the session. In other news, EU leaders agreed in principle to back calls by Germany and France for limited changes to the bloc’s main treaty to shore up Europe’s defences against a new financial crises. EU’s Van Rompuy said the leaders agreed to explore changes to the EU treaty to create a permanent mechanism for crisis resolution while keeping the no-bailout principle. He further added that the leaders would examine the issue of suspending voting rights of countries that violate the single currency area’s rules if the are a permanent threat to the stability of the Eurozone as a whole. However, EU's Barroso said there is going to be no suspension of EU voting rights, and it has been ruled out. (RTRS) · German Retail Sales (Sep) M/M -2.3% vs. Exp. 0.5% (Prev. -0.2%) · German Retail Sales (Sep) Y/Y 0.4% vs. Prev. 2.2% · Eurozone CPI Estimate (Oct) Y/Y 1.9% vs. Exp. 1.8% (Prev. 1.8%) · Eurozone Unemployment Rate (Sep) M/M 10.1% vs. Exp. 10.1% (Prev. 10.1%, Rev. to 10.0%) (RTRS) Bar Cap Euro Sovereign month-end extension: +0.08 years (RTRS) GILTS NYSE LIFFE Gilt futures traded in tandem with bunds and moving into the North American open are trading sideways in positive territory. · Net Consumer Credit (Sep) M/M 0.3bln vs. Exp. 0.0bln (Prev. -0.1bln, Rev. to 0.0bln) · Net Lending Sec. on Dwellings (Sep) M/M 0.1bln vs. Exp. 1.0bln (Prev. 1.7bln, Rev. to 1.6bln) · Mortgage Approvals (Sep) M/M 47.5K vs. Exp. 46.0K (Prev. 47.4K, Rev. to 47.5K) · GfK Consumer Confidence Survey (Oct) M/M -19 vs. Exp. -22 (Prev. -20) (RTRS) Bar Cap Sterling Index month-end extension: +0.04 years EQUITIES European equities traded lower throughout the session amid risk-averse trade with basic materials remaining the worst performing sector due to the strength in the USD index, despite strong corporate earnings from Total and British Airways. Of note BP shares are trading 0.5% higher today following yesterday's announcement that the concrete Halliburton used to seal the Macondo well was unstable and may have contributed to the blowout, and that both companies knew of this before the explosion. Moving into the North American open, equities are trading in minor negative territory with industrials and basic materials as the worst performing sector. Kindly note that details regarding the US corporate earnings can be found at ransquawk.com website, or alternatively in the Ransquawk’s US Equity Opening News sheet, which will be sent out shortly. FX The USD index retraced most of yesterday’s losses ahead of key economic figures from the US later in the session as well as the FOMC meeting due next week, which in turn weighed upon EUR/USD and GBP/USD, with EUR/USD under further pressure following a sharp decline in German retail sales. In other news, weakness in commodities exerted downward pressure on commodity linked currencies like AUD, CAD and NZD. Also, overnight USD/JPY came in sight of its 15-year low of 80.41, however as the European session progressed and the USD index recovered, the pair pared back some of its earlier losses. In other news, according to the IMF, the USD remains on the stronger side of its fundamental value, while the EUR, JPY and GBP are reasonably valued. IMF also said that Australia may need to tighten monetary policy further to contain inflation pressures being generated by a mining boom. (WSJ/RTRS) COMMMODITIES WTI crude futures have traded lower during the European session, under pressure following a rebound in the USD Index. (+0.7%) Oil & Gas News: · A strike by workers at the Fos-Lavera oil port in France is now in its 33rd day and is blocking 38 crude oil tankers and 20 oil product tankers. Also in France, Total has said that strikes have ended at the Dunkirk and Gonfreville refineries, and the strikes at Donges, Grandpuits and Feyzin will end at midday, the CGT union have said that workers at Ineos’ Lavera refinery have voted to end their strike, and ExxonMobil have said they have restarted the pumping of oil from Le Havre to their Port Jerome refinery. · Two Oil pipelines in Nigeria's Niger Delta have been attacked with explosives by saboteurs, causing some oil production to be shut in. · The head of Brazil’s ANP petroleum regulator has said that the Libra oil field in Brazil’s Santos basin may have as much as 16bln barrels of crude oil, which are double previous estimates. Geopolitical News: · The EU’s foreign policy chief Ashton has said that Iran is prepared to hold talks of its Nuclear programme with the six major powers at any time after November 10th. · The Yonhap newswire is reporting that North Korea has fired across the border, towards a South Korean military unit, which has returned fired.

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