-Progress in Greek talks with Troika -Reports
-Spain could accelerate pension system reform
-Spain in contingency planning with European officials
-IMF not willing to take write-downs on Greek debt-FTD
-Italy/Spain will only ask for rescue if water up to their necks-Bbg

FTSE-100: 0.49%
Dax-30: 0.28%
Cac-40: 0.57%
FTSE-Mibtel 30: 0.80%
Ibex 35: 0.80%
Stoxx 600: 0.52%


European equities are moving higher after the appearance of various news reports according to which Spain may be laying the groundwork for an eventual petition for an aid package.

EU authorities are busy working behind the scenes, helping Madrid to craft an economic reform programme that will be unveiled next week. However, what is being discussed is a sort of 'pre-planning' should the need arise for a full rescue package. Said reform programme centres on structural reforms but the commission could require further austerity measures next month to meet existing EU targets, which Madrid is expected to miss, the Financial Times reports.

In a similar vein, Reuters says that Spain is planning to accelerate the reform of its country´s pensions system, by moving more quickly to increase the retirement age and by eliminating inflation indexing. The measures could save Madrid at least 4bn euros a year, economists estimate.

Nevertheless, Bloomberg cites the Italian Vice-Finance Minister as having said that Spain and Italy will only ask for aid when the water is up to their necks. That may be just what markets fear and follows on very weak second quarter growth figures out yesterday in Ireland (and a large fall in France´s manufacturing PMI).

Not by coincidence, the Italian government yesterday evening announced that the economy will contract by twice as much (-2.4%) as previously forecast (-1.2%) this year, hobbling its plans to pare back public borrowing and dealing a blow to the Prime Minister, Mario Monti.

All of the above may be seen by some as corroborating some economists´ criticism to the effect that -to a certain extent- excessive austerity may be self- defeating.

Overnight, in the US, the President of the Federal Reserve Bank of Cleveland last night indicated that the third round of quantitative easing by the US central bank may give less stimulus than previous programs. Some market commentary, on the other hand, is highlighting that QE3 is being carried out at higher inflation breakevens than was the case with the previous two rounds.

M&A lives

German athletic goods manufacturer Adidas has slashed its 2015 sales target for its struggling unit Reebok to €2bn from €3bn after losing a major American football contract.

The world's largest agricultural firm, Swiss outfit Syngenta, will acquire
Belgian hybrid seed firm Devgen for €403m, as it seeks to expand its footprint in rice-growing.

From a sector stand-point the best performance within the DJ Stoxx 600 is now to be seen in the following industrial groups: Basic resources (1.08%), Insurance (0.98%), and Financial Services (0.77%).

Euro and oil rise in tandem

The euro/dollar is now up by 0.14% to the 1.2985 dollar mark.

Front month Brent crude futures are now up by 0.64 dollars to the 110.74 dollar level on the ICE.

AB

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