- Munich Re announces a dividend increase
- UBS announces debt buy-back
- KPN craters following results
- Spanish 10 year bond yields down 10bp to 5.37 per cent

FTSE-100: 0.10%
Dax-30: 0.19%
Cac-40: 1.04%
FTSE Mibtel 30: 1.22%
Ibex 35: 1.74%
Stoxx 600: 0.62%

European equities are bouncing slightly higher with Spanish equities registering a large bounce following yesterday's thrashing.

The latter came on the back of political uncertainty in Italy and Spain and despite news that at the conclusion of a quarterly review of Spain's financial reforms the Troika acknowledged that the country has already met the bulk of the strict conditionality attached to the memorandum.

The above comes against the backdrop of an increasing sense of weariness over the slow pace of the economic recovery in Spain.

In a strategy note published this morning Credit Suisse declares itself 'still constructive' on stocks, and goes on to point out how we have seen 59% of European sectors rotate (i.e. underperform after having outperformed in calendar year 2012, and vice versa) in January, versus an average of 74% in the previous two years.

"If a sector continued to outperform in January (i.e. does not rotate), then 83% of the time in the last 3 years it has continued to outperform for the rest of year. This would imply banks, semis, media and pharma outperform for the rest of the year," the broker goes on to explain. "We are overweight semis, media and drugs, and benchmark banks," they added.

KPN craters after results

Dutch telecoms group KPN is cratering after announcing plans to cut its debt with a €4bn cash call to shareholders. That was more than expected and came on the heels of much poorer than expected results for the fourth quarter. As if that were not enough, the firm announced that it would forego a dividend payment this year. The company unveiled a fourth-quarter net loss of €162m.

Nevertheless, and as a result of the above capital raising, analysts at RBS believe S&P may remove the company's debt from review for a downgrade.

UBS said it will buy back 5bn Swiss francs (€3.437bn) in senior debt as the reduction in its investment bank entails dramatically reduced liquidity and funding needs.

The world's biggest reinsurer, Munich Re, said it will increase its dividend for 2012 to €7 per share from €6.25 before.

From a sector stand-point the best performers today are: Banks (1.47%), Insurance (1.07%) and Utilities (1.0%).

Better than expected services PMI data
Eurozone retail sales dropped by 0.8% month-on-month in December (Consensus: -0.5%).

The Markit Eurozone January final composite PMI was revised up versus the "flash" estimate by 0.4 point to 48.6, increasing by 1.4 points from December 2012.

The Eurozone manufacturing sector purchasing managers index for the month of January was revised up by 0.7 point to 48.7.

The Eurozone service sector purchasing managers' index for the month of January has come in ahead of forecasts and at a 10 month high, at 48.6 points, versus a preliminary estimate of 48.3. The data nonetheless continue to sharp divergences amongst countries, albeit narrower than before.

Slight losses in other asset classes
The euro/dollar is now sitting at 1.3550, up by 0.30%.

Front month Brent crude futures are now higher by 0.841 dollars to the 116.58 dollar level on the ICE.



AB

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