-European leaders leaders agree to implement banking supervisor in 2013
-European budget to be expanded
-Roubini Economics sees Greece exit in 2013

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European markets are trading slightly 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, European Council President Herman Van Rompuy said the 27 leaders agreed at a Brussels summit to adopt a legal framework by the end of this year giving the European Central Bank overall responsibility for banking supervision.

That would seem to open the way for the European Stability Mechanism (ESM) to recapitalise banks directly at some point next year. Interestingly, there do also seem to be clear differences between France and Germany over the exact date by which the above will be feasible. Nevertheless, and in the German chancellor Angela Merkel's own words, she does expect the supervisor to be up and running "over the course of 2013."

Even so, and as some experts are pointing out, important issues such as if the ESM will be allowed to invest in so-called legacy debt have yet to be resolved.

Also of interest, Greece's Prime Minister received the unanimous support of his peers. Even so, some observers, such as economists at Roubini Economics, continue to expect a negotiated exit of Greece from the single currency area in the course of 2013.

One last point worth highlighting is that there was discussion about increasing the size of the common European budget. 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%).

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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