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• Spanish govt will inject 9 bln euros to recapitalize nationalized lender Bankia - Luis de Guindos, Economy Minister
• This will cover capital needs of 7.1 billion euros to comply with two banking reforms presented by the government in Feb
• He added that bank's directors will present a plan that "will indicate the capital needs to comply with all regulatory requirements."

News

• Chancellor Angela Merkel said will propose strengthens EIB, and deepening the bloc's internal market
• However, he expects no decisions at a summit focused on boosting growth.
• She also reiterated her opposition to jointly-issued euro bonds

News

• EU shares snaps tow day gains on worries over Greece that it might leave EZ
• The FTSEurofirst 300 index provisionally closed down 2.1 pct at 973.12 points
• The euro zone's blue-chip Euro STOXX 50 index was down by 2.7 pct.
• Germany's DAX was down by 2.3 pct while France's CAC-40 index fell 2.6 pct and the Spanish IBEX slid by 3.3 pct.

News

• EU's euro antitrust chief said EZ must gradually move towards metalized EZ debt to overcome the sovereign debt crisis
• Almunia also stressed the need for an EU-wide deposit guarantee scheme for banks
• He also said recent Spanish measures to increase provisions against real-estate assets and to enhance transparency were steps in the right direction.

 Quotes

"We must gradually advance towards the mutualisation of public debt at euro-area level."

Joaquin Almunia, EU Competition Commissioner

News

• SEB head, Annika Falkengren,said that markets should not view a possible Greek exit from the EZ as an isolated problem
• She said Nordic banks have little to no exposure to Greece or other EZ countries which have sovereign debt problems
• However, Falkengren also warned that even unexposed banks in Sweden were vulnerable to the currency bloc's woes.

Quotes

 "We are as a bank as prepared as possible. I guess if (a Greek exit) would happen, of course it would be very, very challenging times."

 "I think more of the secondary wave ... if there would more countries and more challenges for the euro,"

Annika Falkengren, CEO, SEB

News

• Domestic stocks of crude rose by 883,000 barrels to 382.53 million barrels. Markets expected a build of 1 mln bbl
• Domestic gasoline inventories fell by 3.3 million barrels to 201.01 million barrels.
• Distillate inventories fell by309,000 barrels to 119.49 million barrels marking the seventh straight week of draw downs.
• Crude stockpiles at NYMEX oil delivery hub Cushing, Oklahoma rose by1.67 million barrels to 46.8 million barrels
• Refinery utilization fell by 0.2 percentage points to 88.1 pct ofcapacity.

News

• Italy govt to request EU commission to lower vat on online media to 4 pct from 21 pct by June 15 - govt source
• The reduction would bring the VAT rate on online media in-line with traditional books and newspapers.

Quotes

 "The govt is studying a request to the European Union to modify VAT on electronic media, bringing it in line with the 4 percent rate on the printed pres."

 Govt Source

News

• IEA executive director, Maria van der Hoeven, said that the world oil market has lost about 300,000 bpd of Iranian oil
• She hoped a recent fall in oil prices would benefit the global economy, which she described as fragile.

News

• The US home sales increased 3.3 pct y/y to a SA 343,000-unit from 332,000-unit pace in March.
• Signs of life in the housing market were also bolstered by a 0.7 pct rise in the median price of a new home last month to $235,700 from March.
• While the inventory of new homes on the market rose 1.4 pct to 146,000 units last month
• New home sales last month were buoyed by a 28.2 pct jump in the Midwest.
• Sales in the Northeast rose 7.7 pct, to the highest level in over a year, while in the West sales soared 27.5 pct.

Quotes

"It is a little better than expected, but housing is still stuck in a rut here. Mortgage applications in the first few weeks of this month indicate we should remain around this level here, if not slightly lower. With all the news coming out of Europe, this is really below-the-radar data."    

Jacob Oubina, Senior U.S. Economist, RBC Capital Markets, New York 

News

• Spanish Prime Minister Mariano Rajoy believes it is best that Greece stays in EU

Quotes

 "I simply hope that the euro group doesn't have a lot of work to do on this and that Greece stays in the euro. I sincerely think that is the best for Greece and for Europe,"

Mariano Rajoy, Spanish Prime Minister

Quotes from Barclays Capital:

-We expect the EUR/CHF floor to hold, even if pressure persists. 

ƒ-So near-term USD/CHF will likely behave similarly to USD/EUR in the near termƒ

-If EA issues improve, EUR/CHF should rise and EUR/USD to stay under pressure, helping USD/CHF

ƒ-Risks to the trade: Failure of the EUR/CHF floor

Quotes from Barclays Capital:

-CAD vs. 50/50 basket of AUD and SEK is a less directional trade on the current risk environment: it does well in downdrafts and doesn't lose much in updrafts

ƒ-Risks to the trade: stall in US recovery

Quotes from Barclays Capital:

-Scope for easier ECB policy means EUR/USD downside is likely

ƒ-Near-term downside risks: runs on deposits, a negative election outcome in Greece

ƒ-Near-term upside risks: a pro-euro election outcome in Greece and bold policy measures by authorities

ƒ-Put spreads the best way to trade the grind lower in EUR/USD.