-French and Italian industrial output surprises on the upside
-Noyer says rate cuts not a pertinent question now
-Noyer says first need to fix transmission mechanism
-Noyer refutes Draghi pledge on ECB's senior creditor status-Reports
-Contradictory reports on Noyer's remarks -FT
-Successful 11bn euro Italian bill auction
-Spanish 10 year bond yields down 2bp to 5.80%
FTSE-Mibtel 30: -0.41%
Ibex 35: -1%
Stoxx 600: -0.55%
European equities ended the day moderately lower. That following some new profit-warnings Stateside this morning and despite the positive economic data out in the Eurozone.
All of the above comes after the largest US aluminum producer, Alcoa, last night cut its forecast for growth in global consumption of the metal by 1 percentage point, to 6 per cent, due to a slowing in Chinese demand. This seems to have stoked renewed worries over the potential for economic weakness in the Asian giant.
Acting as a backdrop, the International Monetary Fund's (IMF) Financial Stability report -published yesterday- is also receiving some further attention added today. That after the Director of the Washington-based lender's Monetary and Capital Markets Department, Jose Vinals, warned of the increasing tensions within the single currency area. Under the review's worst scenario, premised on a lack of appropriate policy action by authorities, European banks could see themselves forced to sell up to $4.5tn in assets [given the impossibility their balance sheets at their current size], well above the $3.8tn which it estimated just last spring.
Naturally, the above would have a "cost" in economic terms: 4 percentage points less in economic growth next year in Greece, Cyprus, Ireland, Italy, Portugal and Spain.
On a more positive note perhaps, following his meetings yesterday with the German chancellor, Angela Merkel, the Greek Prime Minister seems to have received signals that the country will obtain access to its next tranche of aid.
Of interest, at one point this morning some reports held that European Central Bank (ECB) council member Christian Noyer had essentially refuted an earlier promise from Mario Draghi that the ECB was willing to abandon its senior creditor status in any hypothetical debt restructuring that might affect debt purchased under its new OMT regime. That would have constituted a very hard blow to efforts to contain the spreading periphery crisis. As it turns out, those reports have later proven to be misleading.
As regards this morning's macro data surprise in France, this is what Barclays told clients: "The August increase, despite being driven to some extend by the volatile transport component, is still a very positive development. It mirrors and amplifies the positive surprise in German IP earlier this week (...) Given the resilience of hard data during the last quarters relative to weak surveys, we expect some improvement in sentiment in the coming months as political uncertainties (domestic and European level) recede."
Technology led losses
UniCredit was down after being named by the IMF as one of the banks needing to sell off assets.
Moody's downgraded its rating on Fiat.
Volkswagen retreated despite positive comments out from Citigroup.
From a sector stand-point the worst performing industrial groups on the DJ Stoxx 600 were: Technology (-1.95%), Construction and Materials (-1.19%) and Media (-0.93%).
Strong industrial production figures in France and Italy
Italian industrial production increased at a 1.7% month-on-month clip in August (Consensus: -0.5%). Seasonal factors seem to be the main reason for such an unexpected outcome, economists at Barclays Research pointed out.
French manufacturing output rose by 1.8% month-on-month in August (Consensus: -0.7%).
Euro and oil steady
Front month Brent crude futures are now up by 0.218 dollars to the 114.76 dollar
per barrel level on the ICE.
The euro/dollar is up by 0.01% to the 1.2886 dollar mark.