Overnight Markets-Leading News -Update 3

France’s centre-Left is on the march, but so are darker forces from the far-Right National Front-MI6 Agiprop

“Even Sarkozy used to speak a few words of English to us,” says one shadow cabinet member. “Mainly to complain about British food.” Despite the bonds that have been forged, Labour can afford no exultation….

http://www.telegraph.co.uk/news/worldnews/europe/france/9221228/Frances-centre-Left-is-on-the-march-but-so-are-darker-forces-from-the-far-Right-National-Front.html

China Tire Demand Slows as Economy Decelerates, Bridgestone Says

 http://www.bloomberg.com/news/2012-04-24/china-tire-demand-slows-as-economy-decelerates-bridgestone-says.html

Ex-Prime Minister of Iceland Convicted on Charge Related to Financial Crisis

http://dealbook.nytimes.com/2012/04/23/icelands-ex-prime-minister-convicted-of-one-charge-related-to-financial-crisis/?src=dlbksb

European Credit Markets

..The (Italian) Treasury sold 2.5 billion euros ($3.3 billion) of the zero-coupon 2014 debt to yield 3.355 percent, up from 2.352 percent at the previous auction on March 27. Investors bid for 1.80 times the amount offered, down from 1.86 times last month. The Rome-based Treasury also sold 943 million euros of inflation-linked bonds due in 2017 and 2019 to yield 3.88 percent and 4.32 percent, respectively. The auction’s maximum target was 3.5 billion euros..

http://www.bloomberg.com/news/2012-04-24/italy-borrowing-costs-rise-at-auction-on-crisis-concerns.html

Weidmann Says Bundesbank Is Preserving Euro Stability

Bundesbank President Jens Weidmann said the German central bank wants to ensure that the euro remains on a stable foundation.

“What we are doing is preserving the stability foundation of the single currency,” Weidmann said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “If the stability foundation of the euro is eroded, then we will also see the acceptance of the single currency eroded.”

he Bundesbank has faced criticism, including from billionaire George Soros, for speaking out against some European Central Bank crisis-fighting measures such as government bond purchases. Weidmann said Soros’s charge that the Bundesbank is preparing for the end of the euro is “ridiculous.”

“We shouldn’t get so excited about bond yields rising for a limited period of time,” Weidmann said. “They also constitute an incentive to reform, to embark on consolidation.”

The ECB, which has pumped more than 1 trillion euros ($1.3 trillion) into the banking system since December in a bid to avert a credit crunch, has “done its job,” Weidmann said. He added that governments must now press on with budget cuts and structural reforms to encourage economic growth.

“It’s important to get the message to governments, ‘this is your job now,’” Weidmann said.

The interview is scheduled to be broadcast at 2:35 p.m. Frankfurt time today.

http://www.bloomberg.com/news/2012-04-23/weidmann-says-bundesbank-is-preserving-euro-stability.html

China Banks Post 39% Profit Growth in 2011 Even as Economy Slows

China’s banks posted their fastest profit growth in at least four years for 2011 as income from loans and fee-based financial services outpaced an increase in defaults triggered by a slowing economy.

Financial institutions in China including policy banks, commercial lenders, rural credit cooperatives and foreign banks, earned a combined net income of 1.25 trillion yuan ($198 billion) last year, a gain of 39 percent from a year earlier, the China Banking Regulatory Commission said in its annual report today.

Shares (1398) of China’s eight largest commercial banks have rallied an average 54 percent since a 2 1/2-year low in October as concern that Europe’s debt crisis would deepen the economic slowdown eased. The Asian nation’s efforts to bolster banks’ risk buffers and curb inflation have pushed up funding costs, weakened the property market and spurred defaults.

China’s economy expanded 9.2 percent last year after growing 10.4 percent in 2010.

Chinese lenders advanced 7.47 trillion yuan of new loans last year, 6 percent less than the amount offered in 2010. Banks need to keep appropriate credit growth in 2012 and boost lending to smaller enterprises and key infrastructure projects, the regulator said today…

http://www.bloomberg.com/news/2012-04-24/china-banks-post-39-profit-growth-in-2011-even-as-economy-slows.html

England- Deficit Continues to Expand

Britain’s budget deficit unexpectedly widened in March, intensifying pressure on Chancellor of the Exchequer George Osborne to keep squeezing spending as austerity strains governments across Europe.

Net borrowing excluding support for banks was 18.2 billion pounds ($29.4 billion), up from 18 billion pounds a year earlier and the most since November 2010, the Office for National Statistics said in London today. The median of 20 forecasts in a Bloomberg News survey was for a shortfall of 16 billion pounds. Spending rose 4.2 percent and tax revenue climbed 1.4 percent….

http://www.bloomberg.com/news/2012-04-24/u-k-posted-larger-than-forecast-budget-deficit-in-march-1-.html

Europe Stocks Rebound From Three-Month Low; Nordea Gains

European stocks resumed their gains, rebounding from a three-month low, as U.S. reports showed sales of new homes and manufacturing in the region covered by the Federal Reserve Bank of Richmond exceeded forecasts.

TeliaSonera AB (TLSN) rallied 6.4 percent after saying it will receive 22 billion kronor ($3.3 billion) from selling shares in OAO MegaFon and a special dividend as Russia’s second-largest mobile-phone operator prepares for a London initial public offering. Nordea Bank AB (NDA), the Nordic region’s biggest lender, rose 3.8 percent after profit topped estimates. Michelin & Cie. climbed 6.9 percent on increased revenue.

The benchmark Stoxx Europe 600 Index (SXXP) gained 0.7 percent to 253.51 at 3:11 p.m. in London. The measure has advanced 3.6 percent this year as the European Central Bank disbursed $1.3 trillion to the region’s lenders to spur the availability of credit and boost the economy.

“Equities are stronger than in the fall, as central banks have moved to support the market with liquidity and removing the structural risks to banks, so markets should weather the recent turmoil better than last year,” said Hans Peterson, the chief investment officer of SEB Private Bank in Stockholm. “Investors are concerned about growth prospects, which may turn into a drag on the market, but that’s not the case yet.”

National benchmark indexes gained in 15 of the 18 western European markets. France’s CAC 40 rose 1.6 percent, the U.K.’s FTSE 100 increased 0.6 percent and Germany’s DAX Index added 0.8 percent.

Yesterday’s Drop

The Stoxx 600 fell 2.3 percent yesterday to the lowest since Jan. 16 as reports showed that manufacturing contracted in the euro area and China and the Dutch Cabinet resigned after struggling to clinch an austerity deal. The gauge has lost 3.8 percent in April amid renewed concern that the euro-region debt crisis is yet to be contained.

The backlash against austerity in Europe has expanded, generating fresh doubts about the German-driven strategy for getting to grips with the two-year-old debt crisis. French President Nicolas Sarkozy lost the first round of his re- election bid on April 22 and Greece’s politicians are facing anti-austerity rumblings.

German Chancellor Angela Merkel won’t budge from her insistence on budget austerity in Europe as unavoidable to resolving the debt crisis, a senior lawmaker in her party said.

‘Deficits Everywhere’

“The chancellor is pretty resistant to pressure,” Peter Altmaier, the chief whip of Merkel’s Christian Democratic Union, said in an interview today in Berlin. France’s presidential vote and the Dutch government’s fall don’t change the fact “there’s no money in Europe, only deficits everywhere you look.”

The Netherlands sold 2 billion euros ($2.6 billion) of bonds maturing in July 2014 and January 2037 today. The government had aimed to issue as much as 2.5 billion euros of the securities.

Spain auctioned 1.9 billion euros of debt, missing the maximum target even after reducing the goal, and its borrowing costs almost doubled. The nation sold three-month bills at an average rate of 0.634 percent, compared with 0.381 percent at an auction on March 27, and six-month bills at 1.58 percent, up from 0.836 percent.

http://www.bloomberg.com/news/2012-04-24/europe-stock-futures-gain-teliasonera-novartis-may-move.html

Hollande Meets German Resistance in Anti-Austerity Push

http://www.bloomberg.com/news/2012-04-23/hollande-blames-europe-s-austerity-only-plan-for-le-pen-s-rise.html

BOJ To Ease

Reuters) – The Bank of Japan is likely to ease monetary policy on Friday by boosting asset purchases by up to 10 trillion yen ($123 billion) and in doing so may extend the maturity of government bonds it targets to around three years, according to sources familiar with the central bank’s thinking.

The action, which would be the central bank’s second easing in just over two months, would serve to show the BOJ’s determination to overcome deflation and reach the 1 percent inflation target adopted at its February meeting.

The central bank has been under constant pressure from politicians to do more to rev up the world’s third biggest economy, and BOJ policymakers have signalled their readiness to provide more stimulus.

But there is no consensus yet within the central bank on whether it should increase its 30 trillion yen asset-buying program by the usual 5 trillion yen increment, or by double that amount – as it did in February – for greater market effect…

http://www.reuters.com/article/2012/04/24/us-japan-economy-boj-idUSBRE83N0A220120424

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