-Italian PM Monti says bank recap possible without without ECB supervision
-Merkel says banking recap only when supervisor is in place
-Merkel says joint EZ debt out of the question
-German CSU leader Seehofer says more time for Greece a possibility

FTSE-100: -0.17%
Dax-30: -0.48%
Cac-40: -0.67%
FTSE Mibtel 30: -1.46%
Ibex 35: -1.64%
Stoxx 600: -0.48%

European markets are trading moderately lower this morning, although the selling pressure in the periphery is currently more pronounced. Contrary to some initial reports European leaders do seem to have achieved tangible progress at yesterday's summit. Thus, the way seems to have been opened for the European Stability Mechanism (ESM) to recapitalise banks directly at some point next year.

As regards the creation of a banking union, EU leaders confirmed last night in Brussels their goal to get an agreement on the legislative framework of the Single Supervisory Mechanism in place before the end of the year for a gradual implementation over the course of 2013.

In the opinion of Barclays Research "the result is a compromise between the German and the French position and we believe it is probably the best we could have expected before the summit." Nevertheless, its analysts do admit that, there has been no clear arbitrage between the French and the German position.

Another point worth highlighting is that there was discussion about increasing the size of the common European budget, something which Barclays describes as "significant...on paper."

The aim would seem to be to allow for so-called "fiscal transfers", the lack of which is considered to be one of the main short-comings of the current set-up in the Eurozone by most experts.

Good news for Italian banks

Meantime and on the corporate front, the Chief Executive of UniCredit, Italy's biggest bank by assets, said on Thursday he expects growth in bad loans for Italian lenders to be nearing its peak.

Valeo, the French auto parts maker said third-quarter sales rose 7% as its expansion in Asia and emerging markets more than offset slumping European demand.

From a sector stand-point the best performance in the DJ Stoxx 600 is now to be seen in the following industrial groups: Banks (-1.25%), Utilities (-0.54%) and Basic resources (-0.54%).

German price pressures slight above forecasts
German producer prices rose by 0.3% month-on-month (1.7% year-on-year) in September (Consensus: 0.3%, 1.6%).

Italian industrial orders rose by 0.7% month-on-month in August, versus the 2.9% increase in the month before.

Single currency near unchanged
The euro/dollar is now down by 0.11% to the 1.3054 dollar mark.

Front month Brent crude futures are rising by 0.293 dollars to the 112.75 dollar mark.



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