European Equity Market Update

European stocks climbed today but then declined this afternoon and are currently trading flat. Italy was required to pay lower borrowing costs in the most recent debt sale and the market has become more comfortable with Italy’s finances for 2012. They sold EUR 9Bln of six month Treasury Bills at 3.251 percent, much lower than the 6.504 percent they had to pay on November the 25^th. Again we are seeing the Euro Zone macro picture and concerns guiding markets in the short term although there are still many uncertainties.

There has been some focus on a recent report by the Chartered Institute of Personnel and Development warning that “The UK jobs market will be weaker than at any time since the recession of the early 1990s” due to job shortages, inflation and job insecurity. Conversely UK shoppers have been returning to the high street with a 22 percent rise in footfall compared to this time last year and record spending in the post Christmas sales. The FTSE 100 is trading higher today, currently 0.7 percent up, led by the retail sector which is up 1.81 percent.

Volumes have been higher today now that London is back from the Christmas holidays but they are still low; 65 percent less than the 20 day average and 72 percent less than the 100 day average.

European Sectors have traded mixed today with financials trading down 0.51 percent and Health Care gaining 0.49 percent.

Home Retail Group is trading 6.04 percent higher thanks to the news from the UK high street. Banca Carige SPA is trading up 4.72 percent on the news of reduced Italian borrowing costs and a decrease in the number of short positions in the shares.