-Must back Spain on reform path -Merkel
-Spanish 10 year bond yield down 10bp to 5.59%
-Bid-to-cover ratio rises sharply at German auction

FTSE-100: 0.01%
Dax-30: 0.56%
Cac-40: 0.36%
FTSE Mibtel 30: 0.86%
Ibex 35: 0.87%
Stoxx 600: 0.20%

European equity markets have cut back on their gains as the US open has approached. That as investors digest the German Constitutional Court's (GCC) decision on the legality of the European Stability Mechanism (ESM). As expected by most, it has been approved, albeit with conditions. Thus, the country's parliament has been given permission to ratify the ESM, but any liability over the 190bn euro mark will have to be voted on.

Acting as a back-drop, overnight Chinese authorities indicated that further economic stimulus could be forthcoming should it be deemed necessary.

Hence, and barring any surprises, investors' focus will now move on to the Dutch elections, this evening, and tomorrow's US Federal Reserve policy meeting.

From a sector stand-point the best performance is now being put in by the following industrial groups on the DJ Stoxx 600: Banks (1.30%), Technology (1.26%) and Automobiles (1.16%).

Vestas is off by 4% at the moment after a downgrade from Sanford Bernstein.

Spanish utility group Iberdrola has reiterated that it will maintain its dividend pay-out.

Shares of Santander are higher following an upgrade out of Morgan Stanley.

IP data comes in ahead of expectations



Eurozone industrial production rose by 0.6% month-on-month in July (Consensus: 0.1%).



Euro at 1.29



Front month Brent crude futures are now higher by 0.603 dollars to the 116.10 dollar mark on the NYMEX.

The euro/dollar is now rising by 0.44% to the 1.2910 dollar mark.




AB

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