European Stocks Climb for a Fourth Week on EU Agreement

European stocks rose for a fourth week as the region’s leaders agreed to address flaws in their bailout programs to ease the sovereign-debt crisis.

CRH Plc rallied 12 percent, leading a gauge of construction companies to the biggest gain in six months. Colruyt NV (COLR) jumped 16 percent as Belgium’s biggest discount food retailer reported a surprise increase in profit. Barclays Plc (BARC) slumped 19 percent after paying a record fine to settle claims it sought to rig the London and euro interbank offered rates.

The Stoxx Europe 600 Index (SXXP) climbed 1.9 percent to 251.17 this past week, extending the longest stretch of gains since January, after policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion economic growth plan. The advance pushed the measure to the highest level since May 11 and trimmed the second-quarter decline to 4.6 percent.

“The results were as good as we could have expected from the summit,” said Derry Pickford, who helps oversee $1.7 billion at Ashburton Ltd. in Jersey, the Channel Islands. “There are two important caveats: expectations were very low and the measures are short-term analgesics rather than fundamental cures.”

National benchmark indexes climbed in all 18 western European markets this week. The U.K.’s FTSE 100 increased 1 percent, France’s CAC 40 rose 3.4 percent and Germany’s DAX added 2.4 percent. Norway’s OBX (OBX) surged 5.9 percent for the biggest gain this year.
Monthly Rally

The Stoxx 600 rallied 4.8 percent this month, the most since October. The increase brought the index’s advance in the first half of 2012 to 2.7 percent.

After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels yesterday, leaders of the 17 euro nations dropped the requirement that governments get preferred-creditor status on crisis loans to Spain’s banks and opened the door to recapitalizing lenders directly with bailout funds once Europe sets up a single banking supervisor. They also discussed reducing the market pressure on Italy and Spain by allowing them to access rescue loans without relinquishing control of their economies.

Attention will now turn to the European Central Bank, which holds its next policy meeting on July 5. The bank has acted following political progress before, buying bonds after the establishment of bailout programs in 2010 and giving banks unlimited three-year loans following last year’s pledge to deliver fiscal discipline.
Rate Cut

Officials will lower their benchmark interest rate by 25 basis points to a record low 0.75 percent, according to the median forecast in a Bloomberg survey of 57 economists. Five predict a cut of 50 basis points and 12 foresee no change.

“Equities have put on a good showing at the end of the first half of the year,” said Jeremy Batstone-Carr, head of research at Charles Stanley & Co. in London. “Investors are pinning their hopes on additional monetary easing. But we are still fading rallies and not yet looking to buy the dips.”

In the U.S., data released on June 27 showed durable-goods orders and pending home sales beat economists’ forecasts. The Institute for Supply Management-Chicago Inc. said yesterday its business activity barometer increased to 52.9 this month from 52.7 in May. A reading of 50 is the dividing line between growth and contraction. Economists in a Bloomberg survey had projected a decline.

Construction companies led gains in the Stoxx 600 this week, climbing 4.5 percent as a group. CRH, the world’s second- biggest maker of building materials, advanced 12 percent in London trading, the most since December. Lafarge SA, the largest cement maker, rose 6.1 percent.
Colruyt Climbs

Colruyt jumped 16 percent as the Belgian retailer reported a surprise increase in profit amid heightened price awareness among consumers. Earnings in the fiscal year that ended March 31 rose to 2.18 euros a share from 2.14 euros. Analysts had projected a decline to 2.09 euros, according to the average of 21 estimates compiled by Bloomberg.

Fertilizer makers rallied as corn prices surged after inventories tumbled the most in 16 years and hot, dry weather eroded prospects for crops in the U.S.

Yara International ASA, the world’s biggest publicly traded nitrogen-fertilizer maker, and K+S AG, Europe’s largest potash producer, each surged 12 percent. Syngenta AG, the biggest maker of crop chemicals, rose 5.2 percent.

Marine Harvest ASA (MHG), the world’s biggest salmon farmer, advanced 12 percent. Norway’s salmon-export prices increased 6.4 percent in a week, according to Statistics Norway in Oslo.
Banks Decline

Even after the measures announced at the European Union summit, bank shares posted the second-worst performance among the 19 industry groups in the Stoxx 600.

Barclays Plc, Britain’s second-largest bank by assets, slumped 19 percent for the biggest decline since August. The company will pay a record 290 million-pound ($455 million) fine after investigators found traders and senior managers “systematically” tried to manipulate Libor, the benchmark rate for $360 trillion of securities. Royal Bank of Scotland Group Plc declined 11 percent.

Infineon Technologies AG slid 14 percent after Europe’s second-largest semiconductor maker said sales in the current quarter would miss its prediction. The company will probably reduce its profit forecast again, according to JPMorgan Chase & Co., which downgraded the stock to neutral.


From Bloomberg

Spanish, Italian Bonds Surge as EU Leaders Move to Stem Crisis

Spanish and Italian bonds jumped after euro-area leaders expanded steps to stem the debt crisis by easing repayment rules for emergency loans to Spain’s banks and relaxing conditions on potential help for Italy.

Spain’s 10-year yield fell the most since August after leaders of the euro nations also scrapped the requirement that governments get preferred-creditor status on crisis loans to the country’s banks. German 10-year yields rose the most since November as optimism the financial turmoil will be contained sapped demand for the region’s safest assets. Spanish and Italian bonds still made quarterly losses.

“The key positive thing here is that we see some traction despite Germany digging its heels in on using bailout funds to support the market,” said Richard McGuire, a senior fixed- income strategist at Rabobank International in London. “The solution will be fiscal unity and that’s a step in that direction. There is an implementation risk, but for now risk-on is the order of the day and that will underpin demand for peripheral bonds.”

Spain’s 10-year yield fell 61 basis points, or 0.61 percentage point, to 6.33 percent at 4:41 p.m. London time. The 5.85 percent bond due in January 2022 gained 4.09, or 40.90 euros per 1,000-euro ($1,258) face amount, to 96.59. The yield dropped as much as 62 basis points, the most since Aug. 8, when the European Central Bank started buying the securities to cap borrowing costs.

Spanish two-year yields tumbled as much as 116 basis points to 4.26 percent, the lowest since June 11. Italy’s 10-year yield fell 39 basis points to 5.81 percent, and two-year rates slid 81 basis points to 3.50 percent.
‘All Options’

After almost 14 hours of talks ending in Brussels early today, chiefs of the euro countries also agreed that banks can also be recapitalized directly with European bailout funds rather than being channeled through governments.

“We agreed on short-term measures that should apply to Spain and Italy,” said Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro finance ministers. “We will keep all options open to do the interventions that need to be done to calm the situation. There is a whole array of possible interventions and measures.”

German Chancellor Angela Merkel said after the summit that she maintained her rejection of issuing joint bonds.

The euro strengthened 1.9 percent to $1.2681, and the Stoxx Europe 600 Index (SXXP) of shares climbed 2.8 percent.
Bunds Decline

Germany’s 10-year bund yield jumped seven basis points to 1.58 percent after climbing by 18 basis points, the most since Nov. 23. Europe’s benchmark yield has still declined 141 basis points over the past year and remained below its average of 3.53 percent for the past decade.

German bonds fell even after a government report showed retail sales in Europe’s biggest economy unexpectedly dropped for a second month in May.

Sales, adjusted for inflation and seasonal swings, slid 0.3 percent from April, when they declined 0.2 percent, the Federal Statistics Office said. Economists forecast a gain of 0.2 percent, a Bloomberg News survey showed.

Irish bonds rallied as Prime Minister Enda Kenny said the EU accord marked a seismic shift in policy that may ease the burden on the nation’s taxpayers. The yield on the country’s bond due in October 2020 fell 64 basis points to 6.47 percent.

Volatility on Irish government debt was the highest in developed markets today followed by Spain and Italy, according to measures of 10-year bonds, the spread between two-and 10-year securities, and credit-default swaps.
Quarterly Move

Spanish 10-year yields, which climbed to a euro-era record 7.29 percent on June 18, have still risen 98 basis points this quarter. They remain about two percentage points above the 4.30 percent average of the past decade. Similar-maturity Italian yields have increased 60 basis points since March 31.

“In the short term, risk assets especially those related to the financial sector will bounce,” David Roberts, joint head of fixed income at Kames Capital in Edinburgh, wrote in a note to clients. “Longer term, it remains to be seen if these baby steps are the first on the path to European politicians addressing the fundamental problems of a single currency and diverse fiscal policies.”

A Spanish Treasury report showed banks and foreign investors cut their holdings of Spanish debt in May. Banks’ holdings of government bonds fell to 28.7 percent of the total outstanding amount from 29.6 percent in April. The proportion of foreign ownership declined to 37.5 percent from 38.1 percent.

Spanish bonds have handed investors a loss of 7.4 percent this quarter as of yesterday, while Italian debt dropped 4.6 percent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds returned 2.1 percent.

From bloomberg

Barclays Big-Boy Breaches Mean Libor Fixes Not Enough

The blueprint regulators gave Barclays Plc (BARC) and other banks for correcting Libor-rate abuses may not be enough to salvage a benchmark so discredited it needs to be overhauled.

The U.S. Commodity Futures Trading Commission ordered Barclays on June 27 to keep thorough records on how it determines its London interbank offered rate submissions and to erect so-called Chinese walls between traders and rate-setters. It also said lenders should expect random checks from regulators on whether their submissions reflect actual borrowing costs. Investors say the plans are little more than window-dressing.

“As long as banks are allowed in the henhouse, then the system is ripe for abuse,” said Tim Price, who helps oversee more than $1.5 billion at PFP Group LLP, an asset-management firm based in London. A better system would be to take random samplings from all the transactions, he said. “If there is any message of the last few years, it’s that banks and bankers simply cannot be trusted.”

Barclays, the U.K.’s second-largest lender, was fined a record $451 million and its top executives agreed to forgo bonuses after investigators found traders and senior managers “systematically” tried to rig the Libor and Euribor, its equivalent in euros. With other lenders facing similar sanctions, the British Bankers Association, which oversees Libor, is under pressure to prove the rate is fit for purpose.
‘Actual Transactions’

“The idea that one can base the future calculation of Libor on the idea that ‘my word is my Libor’ is now dead,” Bank of England Governor Mervyn King said at a press conference to present the central bank’s Financial Stability Report in London today. “It will have to be based in the future, in my judgment, on actual transactions in order to bring back credibility to the system.”

Libor is determined by banks’ daily estimates of how much it would cost them to borrow from one another for different time frames and in different currencies. Because banks’ submissions aren’t based on real trades, the potential exists for manipulation by traders. At least a dozen firms are being probed by regulators worldwide for colluding to rig the rate, the benchmark for more than $360 trillion of securities, including mortgages, student loans and swaps.

Barclays employees overseeing Libor and Euribor submissions routinely accommodated requests that benefited traders at their own and other banks, the CFTC said.
‘Big Boy’

On Sept 13, 2006, a senior Barclays trader in New York e- mailed the person who submitted the rate, “Hi Guys, We got a big position in 3m libor for the next 3 days. Can we please keep the lib or fixing at 5.39 for the next few days. It would really help,” according to a CFTC document.

In another exchange, from April 7, 2006, a submitter responded to a request for low U.S. dollar Libor submissions from a swaps trader with “Done ... for you big boy,” the commission said.

Barclays fell 1.7 percent in London trading today after tumbling 16 percent yesterday as U.K. lawmakers put pressure on Chief Executive Officer Robert Diamond. Prime Minister David Cameron said that the bank has questions to answer, while Ed Miliband, leader of the opposition Labour Party, has demanded a criminal investigation. Shares in Royal Bank of Scotland Group Plc (RBS), which is also being investigated for suspected Libor manipulation, dropped 11 percent.

Chancellor of the Exchequer George Osborne gave the first indication that there could be a criminal investigation in the U.K. when he addressed lawmakers yesterday and said British fraud prosecutors are now involved in the probe. The Serious Fraud Office is in contact with the Financial Services Authority and is considering whether to open a formal investigation, SFO spokesman David Jones said in an interview.
‘Improper Communications’

As part of its settlement, the CFTC ordered Barclays to amend how it sets Libor. Submissions should be based on actual trades if possible. Where no trades have taken place, the rate- setter can consider factors including how much competitors paid to borrow and market conditions, the CFTC said.

Rate-setters should be prohibited from “improper communications” and not work within earshot of derivatives traders, according to the commission. Barclays must keep extensive records on all its Libor submissions, including details on who the rate-setter was and how the figure was derived. The bank must also undergo annual audits and be willing to provide data to regulators on demand.
‘Serious Implications’

The CFTC requirements will provide a blueprint for what might be required of other banks once the BBA completes its review, said Owen Watkins, a former regulator at the FSA.

“You’ve got to have everybody playing the game by the same rules,” said Watkins, now a lawyer at Lewis Silkin LLP in London. “It’s like playing baseball with some guys throwing proper baseballs, while some guys throw golf balls.”

The Barclays settlement has “extremely serious implications, which need to be carefully considered,” the BBA said June 27 in an e-mailed statement. “The investigation findings will be fully included in the current review of Libor.”

Joseph Eyre, a spokesman for the U.K.’s Financial Services Authority, which levied the fine against Barclays along with the CFTC and the U.S. Justice Department, said “the BBA’s review is continuing and we will consider any recommendations arising from that exercise.”

The proposals may not go far enough, said Rosa Abrantes- Metz, an economist with Global Economics Group, a New York-based consulting firm, and an associate professor at New York University’s Stern School of Business.
‘Trust Me’

“You will have some unease going forward if they do not impose some drastic changes,” said Abrantes-Metz, the co-author of a 2008 paper on Libor manipulation. “We need to have Libor reflect true borrowing costs and I just don’t see any more efficient way to do so but to base it on actual borrowing costs.”

The market isn’t going to settle for “the trust-me approach,” said Ron D’Vari, CEO of New York-based advisory firm NewOak Capital LLC and a former BlackRock Inc. (BLK) managing director. “Changing wheels while driving is tough, but it has to be done.”

Diamond has agreed to appear at a meeting of U.K. lawmakers to highlight “what we have done and are doing to put things right,” he said in a letter yesterday to Andrew Tyrie, chairman of Parliament’s cross-party Treasury Committee.
‘Many Questions’

“I appreciate that the nature of the settlements disclosed yesterday raises many questions, and I welcome the opportunity to provide answers,” Diamond wrote.

The BBA, which has overseen Libor for 26 years, created a steering group of bankers and regulators in March to consider reforms in light of the probes. The BBA was aware that banks including Barclays were low-balling their Libor submissions during the financial crisis to avoid the perception they were struggling to borrow cash, according to CFTC documents.

In an April 2008 phone call, a senior Barclays manager told a BBA representative, “We’re clean, but we’re dirty-clean, rather than clean-clean,” according to the CFTC report. The BBA employee responded, “No one’s clean-clean.”
Incremental Changes

Barclays is on the BBA steering committee reviewing Libor. The bank’s chairman, Marcus Agius, is also chairman of the BBA. Other lenders on the steering committee include Credit Suisse Group AG (CSGN), HSBC Holdings Plc (HSBA), Lloyds Banking Group Plc (LLOY) and Royal Bank of Scotland, all of which are being investigated as part of Libor probes. Spokesmen for the banks declined to comment.

Three members of the steering committee interviewed by Bloomberg News this month said changes to Libor would be incremental because structural modifications in how the rate is calculated could invalidate trillions of dollars of contracts and result in litigation. They ruled out stripping the BBA’s oversight and scrapping the survey system in favor of a rate based entirely on actual trades.

“You wouldn’t ask for someone’s opinion on the closing price of a share when there is an actual price available,” said Daniel Sheard, chief investment officer of GAM U.K. Ltd., which manages about $60 billion in assets. “What better way to restore credibility than having a transaction-based index?”
‘Significant Resources’

The British government will emphasize to the BBA at the steering group’s next meeting that only drastic changes will suffice, according to a person with knowledge of the matter, who asked not to be identified because the talks are private. Chancellor of the Exchequer George Osborne, speaking to lawmakers in London yesterday, said the FSA is “committing significant resources” to investigate “systemic failures” over the manipulation of Libor.

PFP Group’s Price said he’s skeptical that the BBA review or increased oversight by regulators will improve Libor.

“Whenever you’ve got a regulator battling against well- paid bankers, we know who’s likely to win,” Price said. “I would feel better if some completely independent body was just compiling data from the banks and just spitting out a number.”

From Bloomberg

Coty Seeks Up to $700 Million in IPO After Avon Bid Fails

Coty Inc. is seeking as much as $700 million in an initial public offering after the maker of perfumes by Beyonce Knowles and Heidi Klum pulled a takeover offer for Avon Products Inc. (AVP)

All the shares in the IPO will be offered by existing shareholders, the New York-based company said today in a filing. Coty withdrew its sweetened $10.7 billion bid for Avon on May 15, citing the cosmetics seller’s refusal to negotiate.


After failing to gain control of Avon’s global door-to-door sales network, Coty is working to spur revenue by entering new regions and expanding distribution of brands in emerging markets such as Rimmel and Adidas body-care products in China. The company said it also seeks to use additional distribution channels including direct television sales and e-commerce.

Coty projects net revenue of more than $4.5 billion in the fiscal year 2012 and anticipates to generate cash flow from operations of more than $550 million, an increase from $417.5 million in the previous year, according to the filing. In the 12 months ended March 31, the company had operating income of $304 million.

Coty, which holds perfume licenses for brands including Calvin Klein and Marc Jacobs, was founded in 1904 in Paris by Corsican-born Francois Coty. The company helped develop perfume into a mass product, with 36 million consumers two decades later. Coty’s previous purchases include $400 million for a majority stake in Chinese skin-care company TJoy Holdings Ltd. in December 2010.
Potential Acquisitions

The IPO is set to be the biggest in the U.S. so far this year in the consumer sector, according to data compiled by Bloomberg. Coty hired Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley (MS) to manage the offer.

Coty may also seek to make acquisitions, with potential targets including Natura Cosmeticos SA of Brazil, Oriflame Cosmetics SA, the beauty care unit of Japan’s Kao Corp. and France’s Yves Rocher Group, Vivienne Rudd, a personal-care industry analyst at Mintel International, said last month.

JAB Holdings II BV holds 80.5 percent of Coty, according to the filing. Entities affiliated with Berkshire Partners LLC, a private-equity firm based in Boston, owns 7.5 percent, as do entities affiliated with the Rhone Group LLC.

Coty Chairman Bart Becht had targeted Avon to add a door- to-door distribution channel for its cosmetics and more than double its annual sales from brands including Cerruti and Wolfgang Joop.
Global IPOs

After “continued delay and unwillingness” by Avon to engage in discussions, “it is time for Coty Inc. to move on and pursue other opportunities,” Becht said last month, as the company announced it was pulling its $24.75 a share offer for Avon.

IPOs globally raised $41.3 billion this quarter through yesterday, the worst April-June period since 2009, data compiled by Bloomberg show. At least 50 companies shelved sales as Europe’s debt crisis spread and growth prospects in China dimmed.

From Bloomberg

Stocks, Euro Jump While Oil Posts Best Gain Since 2009

Global stocks and the euro surged the most this year, oil had its biggest gain since 2009 and Spanish bonds rallied after European leaders reached an agreement that eased concern banks will fail.

The MSCI All-Country World Index climbed 3 percent, the most since November (MXWD), while the Standard & Poor’s 500 Index advanced 2.5 percent to cap its best June since 1999. The euro appreciated 1.7 percent against the dollar and rallied as much as 2 percent, the most since Oct. 27. Spain’s two-year yield plunged more than a full percentage point. The S&P GSCI gauge of 24 commodities rose 5.6 percent, its biggest gain since April 2009, as oil surged 9.4 percent to $84.96 a barrel.

After talks ended at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly, while relaxing conditions on potential help for Italy. Before today, more than $4.9 trillion had been erased from global equities this quarter amid concern a worsening debt crisis will stifle the global recovery.

“It’s a relief rally,” said Ann Miletti, fund manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. Her firm manages $201 billion. “The agreement at least brings some clarity and stabilization in the short term. More positive news out of Europe is all you need in a market that’s been depressed given all the uncertainty out there.”

The gain in the S&P 500 today was its biggest since Dec. 20 and trimmed its retreat for the quarter to less than 3.3 percent. The index rose 4 percent in June and 2 percent for the week.
Constellation Rallies

Constellation Brands Inc. (STZ) rallied 24 percent, the most since at least 1986, after agreeing to buy the other half of its Crown Imports joint venture with Grupo Modelo SAB for about $1.85 billion, becoming the sole U.S. importer of top-selling Corona beer. Bank of America Corp., Cisco Systems Inc. and United Technologies Corp. surged more than 4 percent to lead gains in the Dow Jones Industrial Average, which rallied 277.83 points to 12,880.09.

Research In Motion Ltd. plunged after 19 percent in New York trading after posting a loss and delaying the next BlackBerry operating system.
Economic Data

Stocks rallied even as Commerce Department data showed U.S. consumer spending stalled in May, with household purchases, which account for about 70 percent of the economy, unchanged after a 0.1 percent increase the previous month. The median estimate of 75 economists surveyed by Bloomberg News called for no change in so-called nominal sales.

The Institute for Supply Management-Chicago Inc.’s business barometer showed business activity in the U.S. unexpectedly expanded in June at a faster pace as production and employment rebounded. The index increased to 52.9, topping the median estimate of 52.3. The Thomson Reuters/University of Michigan final index of sentiment fell to 73.2, trailing the median estimate of 74.1.

The yield on the 10-year U.S. Treasury note advanced seven basis points to 1.65 percent, leaving the rate 23 basis points lower this year.

The Stoxx 600 (SXXP) advanced the most since November and extended this month’s rally to 4.8 percent. The gauge still retreated 4.6 percent in the quarter. National Bank of Greece SA, Bank of Ireland Plc and UniCredit SpA surged at least 13 percent to lead gains in 45 of 46 lenders in the index.

After markets closed in Europe, Germany’s lower house of parliament approved the euro-area’s permanent bailout fund, the European Stability Mechanism. The measure won a two-thirds majority in the chamber.
Asia, Emerging

The MSCI Asia Pacific Index rose 2 percent, reversing a 0.4 percent drop after the agreement was announced. Stocks fell earlier as a report showed Japan’s factory output dropped the most since the March 2011 earthquake last month.

The MSCI Emerging Markets Index (MXEF) rose 3.6 percent, the biggest gain since September and trimming this quarter’s decline to 9.8 percent. Russia’s Micex Index climbed 3.3 percent. India’s Sensex and the Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares both jumped 2.6 percent. The yield on ruble-denominated government bonds due in 2018 fell 29 basis points to 8.02 percent after Russia’s Financial Markets Service said it will give foreign depositaries including Euroclear Bank SA direct access to domestic sovereign debt markets.
Euro, Dollar

The euro surged 2.2 percent against the yen. Its gain versus the dollar left it 5.2 percent weaker since the end of March. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, tumbled 1.4 percent for its biggest drop since October. The Australian and New Zealand dollars jumped at least 1.6 percent against the greenback. The yen weakened against all 16 of its most traded peers.

Spain’s two-year yield sank 114 basis points to 4.27 percent and 10-year rates slid 61 basis points to 6.33 percent, with the extra yield investors demanding to hold the securities instead of benchmark bunds narrowing 68 basis points to 475 basis points. The yield on the equivalent maturity Italian security dropped 38 basis points to 5.82 percent.

Volatility on Irish government debt was the highest in developed markets today followed by Spain and Italy, according to measures of 10-year bonds, the spread between two-and 10-year securities and credit-default swaps. Irish bonds rose as Prime Minister Enda Kenny said the EU accord marked a seismic shift in policy that may ease the burden on the nation’s taxpayers.

Crude in New York led gains in the S&P GSCI index before an embargo on Iran starts. The EU agreed to ban the purchase, transportation, financing and insurance of Iranian oil starting July l. The sanctions are being imposed because western nations say Iran is hiding a nuclear weapons program. All 24 commodities tracked by the S&P GSCI advanced as lead, zinc, silver and copper rallied more than 4 percent.

The S&P GSCI dropped 13 percent in the second quarter and oil tumbled 18 percent, the biggest plunge for both since 2008. 

Gross Says Europe in Debt Trap After Relief Plan: Tom Keene

Pacific Investment Management Co.’s Bill Gross said a “debt trap” remains in place even after European leaders reached an agreement that alleviated concern the region’s banks will fail.


Pimco continues to avoid the debt of nations including Spain and Portugal in favor of U.S. Treasuries and mortgage securities, Gross, who runs the world’s biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

“The peripherals and even the core union nations have too much debt,” Gross said. “The marginal cost of that debt is far above nominal GDP growth in respective nations. That continues a debt trap unless the cost of debt can come down.”

Five-year notes of Spain, with $935 billion of debt and an 8.5 percent deficit, yield 5.5 percent. The nation’s gross domestic product is forecast to shrink 1.7 percent this year and 0.5 percent in 2013, according to the median estimate of economists surveyed by Bloomberg.

European policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion growth plan for the region’s economy at a summit in Brussels. They dropped a requirement that their governments get preferred-creditor status on crisis loans to Spain’s lenders.
Fiscal Union

“We need some sense that the family can get along going forward,” Gross said. “That is a union of some sort. Not just a monetary union but a fiscal union that can have an actual impact going forward.”

Gross raised the proportion of U.S. government and Treasury debt in the $261 billion Total Return Fund (PTTRX) to 35 percent in May, the first increase since January and up from 31 percent of its holdings in April. Mortgages remained the largest holding in the fund at 52 percent last month, according to data on the website.

“Mexico and Brazil, they’re all attractive markets with clean balance sheets,” Gross said. “They’re much more safe, so to speak, than some of those peripherals,”

Brazil has a deficit of 2.4 percent while Mexico’s is 0.92 percent. Bonds of Brazil have returned 2.1 percent this month, and Mexico’s have gained 3 percent, according to Bank of America Merrill Lynch index data.

Pimco’s Total Return Fund gained 7.2 percent over the past year, beating 74 percent of its peers, according to data compiled by Bloomberg.

Vivendi Said to Plan Sale of Stake in Activision Blizzard

Vivendi SA (VIV), the media and telecommunications company that ousted its chief executive this week, has decided to seek a buyer for its $8.1 billion stake in Activision Blizzard Inc. (ATVI), a person with knowledge of the situation said.

Should no buyer emerge for the 61 percent holding in the Santa Monica, California-based video-game publisher, Paris-based Vivendi plans to sell a partial holding on the open market, said the person, who declined to be named because the plans are private.

Vivendi Chairman Jean-Rene Fourtou is under pressure from investors to restructure his company and boost the stock price from a near nine-year low. The board had discussed a sale of part or all of its stake in publicly held Activision, maker of the “World of Warcraft” and “Call of Duty” titles, people with knowledge off the talks said earlier this month.

A Vivendi spokesman didn’t immediately respond to an e- mailed request for comment outside of business hours in France. Cassandra Bujarski, an outside spokeswoman for Activision, had no immediate comment.

Activision, the largest U.S. video-game publisher, rose 4.4 percent to $11.99 at the close in New York. The shares have declined 2.7 percent this year. Vivendi gained 3.1 percent to 14.63 euros in Paris, and is down 11 percent this year. The stock hit a nine-year low of 12.01 euros on April 19.
Vivendi Downgrades

Moody’s Investors Service and Fitch Ratings warned Vivendi this week that its debt ratings could be threatened if it doesn’t reduce liabilities. Fourtou this week ousted Chief Executive Officer Jean-Bernard Levy, who had resisted major changes in Vivendi’s structure.

A shifting market for video games may limit Activision’s attraction to buyers.

Activision trades at 14.4 times trailing earnings, according to data compiled by Bloomberg, below the 25.4 in fiscal 2010 and a five-year of high of 67.6 in 2007. Electronic Arts Inc. (EA), the second-largest game company, trades at 30 times trailing profit.

The multiples reflect investor concern over growth prospects during a transition phase for the video-game industry with the introduction of the first new consoles in seven years, said Edward Woo, an analyst with Ascendiant Capital Markets LLC in Irvine, California.
Online Growth

Industry growth is now taking place on social-media websites such as Facebook.com and away from traditional family room consoles from Microsoft Corp. (MSFT), Sony Corp. (6758) and Nintendo Co. U.S. sales of packaged games like those played on Xbox or PlayStation fell 6 percent to $8.83 billion last year, according to researcher NPD Group Inc.

“The problem is there are no readily apparent buyers for Activision,” Pachter said. “The only option left to Vivendi is to lever up Activision’s balance sheet and pay out all of its cash as a dividend, then spin the company off.”

Both Pachter and Woo recommend buying Activision stock.

Activision had $3.48 billion in cash and short-term investments as of March 31 and no debt, according to a quarterly filing. Last year, the company returned $886 million to shareholders in stock repurchases and dividends, the annual report shows.

From Bloomberg

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June consumer sentiment drops to six-month low

(Reuters) - Consumer sentiment dropped to a six-month low in June as Americans' view of the economy soured, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment fell to 73.2 in June from 79.3 in May.

It was the lowest level since December and fell short of economists' expectations for the index to hold at the same level as June's preliminary reading of 74.1.

The deterioration in consumers' attitudes came mostly from households with incomes above $75,000; sentiment among lower-income households was little changed, according to the survey.

"While the overall level of consumer sentiment is substantially above last summer's low -- which would normally indicate a growth slowdown, not a downturn -- the buying plans of upper-income households have also sharply declined," survey director Richard Curtin said in a statement.

"Since these households account for a large share of total spending, if the declines continue in the months ahead, it could have a substantial impact on total spending."

Wealthier households were also less upbeat about their income prospects, with 24 percent expecting their finances to improve in the year ahead, down from 37 percent in May.

Just 9 percent of all households expected to see gains in their income once adjusted for inflation.

The overall measure of buying plans for durables and vehicles fell to 125 from 132.

The data was eclipsed in financial markets by an agreement from euro zone leaders to allow rescue funds to be used to stabilize the region's banks.

"It wasn't a huge miss, and the average investor should be able to look beyond this and see that we continue to recover," said Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.

News of economic developments heard by consumers was increasingly negative. When asked about their expectations for the unemployment rate, survey respondents were more likely to expect increases rather than declines.

Consumers were also more likely to report economic conditions had weakened recently and less likely to expect them to improve in the coming year.

The survey's barometer of current economic conditions fell to 81.5 from 87.2, and the gauge of consumer expectations slid to 67.8 from 74.3. Both indexes were at their lowest levels since December.

The survey's one-year inflation expectation rose for the first time since March to 3.1 percent from 3.0 percent, while the survey's five-to-10-year inflation outlook climbed to 2.8 percent from 2.7 percent.


From Reuters

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Stock Rise, Euro Gains Most This Year on EU; Bonds Climb

Stocks rose, the euro strengthened the most this year and Spanish bonds rallied after European leaders reached an agreement that alleviated concern banks will fail. Commodities jumped as the dollar sank.

The MSCI All-Country World Index (MXWD) climbed 1.1 percent at 9:25 a.m. in London and the Stoxx Europe 600 Index advanced 1.6 percent. Standard & Poor’s 500 Index futures increased 1.3 percent. The euro appreciated 1 percent after rising by the most since Nov. 30. Spain’s two-year yield plunged the most since Aug. 8, with the German 10-year bund yield jumping to the highest in more than eight weeks. The S&P GSCI gauge of 24 raw materials rose the most in three weeks.

After talks ended at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly without bailout funds. More than $4.9 trillion was erased from global equity values this quarter amid deepening concern the debt crisis will worsen and stifle the global recovery.

“It was a moment of high drama,” said Jonathan Garner, Hong Kong-based chief strategist at Morgan Stanley. “France sided with Spain and Italy and all three of those countries made it very clear they weren’t pursuing with the long-term goals around fiscal union and or growth measures unless one dealt with the short-term problem of stability in the bond markets and the Spanish banks problem.”

The Stoxx 600 (SXXP)’s advance extended this month’s rally to 3.8 percent. The gauge has still retreated 5.5 percent this quarter. Italy’s UniCredit SpA, Spain’s Banco Bilbao Vizcaya Argentaria SA and France’s BNP Paribas SA climbed more than 5 percent today as a gauge of banks in the Stoxx 600 increased the most in more than two weeks.
RIM Loss

The gain in U.S. index futures indicated the S&P 500 will pare this quarter’s retreat to 5.6 percent. Research In Motion Ltd. plunged 14 percent in German trading today after posting a loss and delaying the next BlackBerry operating system.

A report today may show U.S. consumer spending stalled in May as slowing job growth and subdued wage gains. Household purchases, which account for about 70 percent of the economy, were unchanged after a 0.3 percent gain in April, according to the median estimate of 75 economists surveyed by Bloomberg.

Other data are forecast to show that business activity in the U.S. expanded at a slower pace in June and consumer sentiment dropped to a six-month low.
Emerging Markets

The MSCI Emerging Markets Index (MXEF) rose 2 percent, the biggest gain since Jan. 17. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-traded Chinese shares jumped 2.6 percent and benchmark indexes in Russia, Hungary and India gained at least 2 percent. The yield on ruble-denominated government bonds due in 2018 fell 10 basis points to 8.23 percent, the biggest drop since June 15, after Russia’s Financial Markets Service said it will give foreign depositaries including Euroclear Bank SA direct access to domestic sovereign debt markets.

The euro surged as much as 1.7 percent against the yen to 100.52. Its gain versus the dollar left it 5.9 percent weaker since the end of March, on course for its worst quarterly performance since September. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, tumbled 0.8 percent. The Australian and New Zealand dollars both jumped 1.2 percent against the greenback. The yen weakened against all 16 of its most traded peers.

Crude in New York led gains in the GSCI index, rising 2.6 percent to $79.64 a barrel before an embargo on Iran starts. The EU agreed to ban the purchase, transportation, financing and insurance of Iranian oil starting July l.

Natural gas jumped 2.2 percent and copper gained 2 percent. The GSCI has dropped 16 percent in the second quarter, the most since the final three months of 2008. New York oil has declined 23 percent this quarter.

From : bloomberg

Monetary developments in the euro area

29 June 2012

PRESS RELEASE

MONETARY DEVELOPMENTS IN THE EURO AREA: MAY 2012

The annual growth rate of the broad monetary aggregate M3 increased to 2.9% in May 2012, from 2.5% in April 2012.1  The three-month average of the annual growth rates of M3 in the period from March 2012 to May 2012 stood at 2.8%, compared with 2.7% in the period from February 2012 to April 2012.

Twelve-month percentage changes; (adjusted for seasonal and end-of-month calendar effects)	MARCH 2012	APRIL 2012	MAY 2012	MARCH 2012 - MAY 2012 (AVERAGE)
M3	3.0	2.5	2.9	2.8
M1	2.8	1.8	3.3	2.6
Loans to the private sector	0.6	0.2	-0.1	0.3
Loans to the private sector, adjusted for sales and securitisation	1.2	0.8	0.4	0.8

M3 components

Regarding the main components of M3, the annual growth rate of M1 increased to 3.3% in May 2012, from

1.8% in April. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased  to 2.3% in May, from 3.3% in the previous month. The annual growth rate of marketable instruments (M3-M2) increased to 3.4% in May, from 2.5% in April. Among the deposits included in M3, the annual growth rate of deposits placed by households stood at 2.4% in May, compared with 2.5% in the previous month, while the annual growth rate of deposits placed by non-financial corporations was less negative at -0.2% in May, from -0.8% in the previous month. Finally, the annual growth rate of deposits placed by non-monetary financial intermediaries  (excludinginsurance corporations and pension funds) increased to 0.4% in May, from -0.8% in the previous month.

Counterparts to M3: credit and loans

1   The annual growth rates presented in this press release refer to aggregatesadjusted for seasonal and end-of-month calendar effects.

- 2 -

Turning to the main counterparts of M3 on the asset side of the consolidated balance sheet of Monetary

Financial Institutions (MFIs), the annual growth rate of total credit granted to euro area residents stood at

1.5% in May 2012, compared with 1.4% in the previous month. The annual growth rate of credit extended to general government increased to 9.0% in May, from 7.6% in April, while the annual growth rate of credit extended to the private sector decreased to -0.2% in May, from 0.0% in the previous month. Among the components of credit to the private sector, the annual growth rate of loans decreased to -0.1% in May, from 0.2% in the previous month (adjusted for loan sales and securitisation2, the rate decreased to 0.4%, from 0.8% in the previous month). The annual growth rate of loans to households decreased to 0.3% in May, from 0.5% in April (adjusted for loan sales and securitisation, the rate decreased to 1.3%, from 1.5% in the  previous  month).  The  annual  growth  rate  of  lending  for  house  purchase,  the  most  important component of householdloans, decreased to 0.7% in May, from 1.0% in the previous month. The annual growth rate of loans to non-financial corporations decreased to 0.1% in May, from 0.4% in the previous month (adjusted for loan sales and securitisation, the rate decreased to 0.2% in May,  from 0.6% in the previous  month).  Finally,  the  annual  growth  rate  of  loans  to  non-monetary  financial  intermediaries (excluding insurance corporations and pension funds) was more negative at -2.1% in May, from -1.4% in the previous month.

Other counterparts

Over the 12 months up to May 2012, the net external asset position of the euro area MFI sector decreased by €36 billion,compared with a decrease of €39 billionover the 12 months up to April. The annual growth rate of longer-term financial liabilities of the MFI sector decreased to -0.1% in May, from

0.7% in April.

Notes

•  Further predefined tables, statistical data and methodological notes, as well as the advance release calendar,are available on the ECB’s website at  http://www.ecb.europa.eu/stats/money/aggregates/aggr/html/index.en.html.

European Central Bank

Directorate Communications, Press and Information Division

Kaiserstrasse 29, D-60311 Frankfurt am Main

Tel.: +49 69 1344 7455, Fax: +49 69 1344 7404

Internet: http://www.ecb.europa.eu

Reproduction is permitted provided that the source is acknowledged.

2   Adjusted for the derecognition of loans from the MFIs’ statistical balance sheets due to their sale or securitisation.

TABLE 1

MONETARY DEVELOPMENTS IN THE EURO AREA: MAY 2012

DATA ADJUSTED FOR SEASONAL EFFECTS (EUR billions and annual percentage changesa))

	END-OF- MONTH LEVEL	MONTHLY FLOW b)			ANNUAL GROWTH RATE
	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012
COMPONENTS OF M3 c) (1)         M3 (= items 1.3, 1.6 and 1.11) (1.1)            Currency in circulation (1.2)             Overnight deposits (1.3)     M1 (items 1.1 and 1.2) (1.4)             Deposits with an agreed maturity of up to two years (1.5)            Deposits redeemable at notice of up to three months (1.6)         Other short term deposits (items 1.4 and 1.5) (1.7)     M2 (items 1.3 and 1.6) (1.8)             Repurchase agreements (1.9)             Money market fund shares/units (1.10)           Debt securities issued with a maturity of up to two years (1.11)       Marketable instruments (items 1.8, 1.9 and 1.10)	9911 857 4016 4872 1888 1997 3885 8757 422 513 219 1154	56                     -48                      86 -5                         2                         7 34                     -58                      65 29                     -56                      72 4                      12                   -34 7                         7                      14 11                      19                     -20 40                     -37                      52 -19                       -9                      35 10                         4                      11 25                       -6                     -12 16                     -12                      34			3.0                       2.5                     2.9 5.5                       5.5                     5.5 2.2                       1.0                     2.9 2.8                       1.8                     3.3 3.9                       3.9                     1.6 2.5                       2.7                     3.0 3.2                       3.3                     2.3 3.0                       2.5                     2.9 4.3                      -0.7                    -1.3 -3.1                      -1.6                     1.6 20.2                    21.5                   21.3 3.7                       2.5                     3.4
COUNTERPARTS OF M3 MFI liabilities: (2)         Holdings against central government  d) (3)         Longer-term financial liabilities vis-à-vis other euro area residents  (= items 3.1 to 3.4) (3.1)          Deposits with an agreed maturity of over two years (3.2)          Deposits redeemable at notice of over three months (3.3)         Debt securities issued with a maturity of over two years (3.4)         Capital and reserves MFI assets: (4)         Credit to euro area residents (= items 4.1 and 4.2) (4.1)        Credit to general government Loans Securities other than shares (4.2)          Credit to other euro area residents Loans e) loans adjusted for sales and securitisation f) Securities other than shares Shares and other equities (5)         Net external assets (6)         Other counterparts of M3 (residual) (= M3 + items 2, 3 - items 4, 5)	312 7645 2483 113 2756 2293 16686 3263 1168 2095 13424 11166 ND 1521 737 941 240	-9                     -30                      22 -36                       -4                    -42 -29                     -12                   -32 -1                         1                       -1 -25                       -9                    -28 18                      16                      18 36                     -57                      33 31                       -7                      32 3                         0                        9 29                       -6                      22 4                     -51                        1 -6                     -21                     -11 -5                     -22                     -11 -4                     -14                         6 14                     -16                         7 -2                     -13                      12 -22                     -12                      21			11.1                     -4.1                   10.7 1.3                       0.7                    -0.1 1.2                       0.2                    -1.1 -5.2                      -4.6                    -5.1 -2.5                      -3.5                    -4.6 7.0                       7.3                     7.4 1.8                       1.4                     1.5 7.4                       7.6                     9.0 -4.3                      -2.9                    -0.9 15.3                    14.4                   15.4 0.5                       0.0                    -0.2 0.6                       0.2                    -0.1 1.2                       0.8                     0.4 1.1                       0.3                     0.6 -2.3                      -4.5                    -3.4 ND                      ND                   ND ND                     ND                   ND

a) Figures may not add up due to rounding. The information in this table is based on consolidated balance sheet statistics reported by monetary financial institutions

(MFIs). These include the Eurosystem, credit institutions and money market funds located in the euro area.

b) Monthly difference in levelsadjusted for reclassifications, exchange rate variations, other revaluations and any other changes which do not arise from transactions. c) Liabilitiesof MFIs and specificunits of the central government (post offices,treasury) vis-à-vis non-MFI euro area residents excluding central government.

d) Includes holdings of the central government of deposits with the MFI sector and of securities issued by the MFI sector.

e) For further breakdowns see Table 4.

f) Adjusted for the derecognition of loans from the MFI statistical balance sheet due to their sale or securitisation.

TABLE 2

BREAKDOWN OF DEPOSITS IN M3 BY HOLDING SECTOR AND TYPE: MAY 2012

DATA ADJUSTED FOR SEASONAL EFFECTS (EUR billions and annual percentage changesa))

	END-OF- MONTH LEVEL	MONTHLY FLOW b)			ANNUAL GROWTH RATE
	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012
BREAKDOWN OF DEPOSITS IN M3 Total deposits (=items 1, 2, 3, 4 and 5) (1)        Deposits placed by householdsc) (1.1)             Overnight deposits (1.2)             Deposits with an agreed maturity of up to two years (1.3)            Deposits redeemable at notice of up to three months (1.4)            Repurchase agreements (2)         Deposits placed by non-financial corporations (2.1)             Overnight deposits (2.2)             Deposits with an agreed maturity of up to two years (2.3)            Deposits redeemable at notice of up to three months (2.4)            Repurchase agreements (3)         Deposits placed by non-monetary financial intermediaries excluding  insurance corporations and pension funds (3.1)             Overnight deposits (3.2)             Deposits with an agreed maturity of up to two years (3.3)            Deposits redeemable at notice of up to three months (3.4)            Repurchase agreements of which: with central counterpartiesd) (4)         Deposits placed by insurance corporations and pension funds (5)         Deposits placed by other general government	8323 5166 2272 987 1891 16 1561 1036 433 78 15 1074 416 271 14 374 291 212 309	25                    -48                      81 20                      15                         3 -1                      10                         5 15                        1                     -10 6                         6                       11 -1                        -2                       -2 -2                     -12                         6 3                       -3                       14 -5                        -8                    -11 0                         1                         3 0                       -1                         0 -6                     -49                      56 29                    -61                      35 -14                       17                    -14 1                         0                       -1 -22                       -4                       36 -10                         2                       35 -6                         5                         5 20                       -8                      11			2.8                     2.0                       2.4 2.2                     2.5                       2.4 -0.4                     0.2                        0.4 9.6                     9.5                       8.2 2.5                     2.8                       2.9 -36.4                 -45.1                   -52.7 -0.2                   -0.8                      -0.2 1.1                     1.0                       3.3 -1.8                   -3.3                      -6.4 -6.7                   -5.3                      -1.6 -4.2                 -19.0                    -25.4 4.4                    -0.8                       0.4 16.9                     2.2                      12.3 -15.1                 -12.0                   -18.0 32.0                   37.3                     19.4 7.9                     5.5                       5.3 14.6                   12.5                        8.3 16.8                   14.0                     18.2 14.9                   12.5                     15.4

a) Figures may not add up due to rounding. The information in this table is based on consolidated balance sheetstatistics reported by monetary financial institutions

(MFIs). These include the Eurosystem, credit institutions and money marketfunds located in the euro area.

b) Monthlydifference in levelsadjusted for reclassifications, exchange rate variations, other revaluations and any other changes which do not arise from transactions. c) Includes depositsby non-profit institutions serving households.

d) The series is not adjusted for seasonal effects.

TABLE 3

CONTRIBUTIONS OF M3 COMPONENTS TO THE M3 ANNUAL GROWTH RATE: MAY 2012

DATA ADJUSTED FOR SEASONALEFFECTS (contributions in terms of the M3 annual percentage changea))

	MARCH 2012	APRIL 2012	MAY 2012
(1)         M1 (1.1)   of which : Currency (1.2)   of which : Overnight deposits (2)         M2 - M1 (= other short-term deposits) (3)         M3 - M2 (= short-term marketable instruments)	1.4 0.5 0.9 1.2 0.4	0.9 0.5 0.4 1.3 0.3	1.6 0.5 1.2 0.9 0.4
(4)         M3 (= items 1, 2 and 3)	3.0	2.5	2.9

a) Figures may not add up due to rounding.

TABLE 4

BREAKDOWN OF LOANS BY BORROWING SECTOR, TYPE AND ORIGINAL MATURITY: MAY 2012

DATA ADJUSTED FOR SEASONAL EFFECTS (EUR billions and annual percentage changesa))

	END-OF- MONTH LEVEL	MONTHLY FLOW b)			ANNUAL GROWTH RATE
	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012	MARCH 2012	APRIL 2012	MAY 2012
BREAKDOWN OF LOANS c) (1)         Loans to households d) loans adjusted for sales and securitisation e) (1.1)   Credit for consumption (1.2)    Lending for house purchase (1.3)   Other lending of which: sole proprietors f) (2)         Loans to non-financial corporations loans adjusted for sales and securitisation e) (2.1)   up to 1 year (2.2)   over 1 year and up to 5 years (3.3)   over 5 years (3)         Loans to non-monetary financial intermediaries except  insurance corporations and pension funds of which: reverse repos to central counterparties f) (4)         Loans to insurance corporations and pension funds	5252 ND 621 3802 830 418 4698 ND 1150 845 2704 1133 181 82	7                             7                           2 6                            6                           1 -2                           -2                           1 10                             7                           1 -2                             1                         -1 -1                           -1                         -1 -8                             7                       -10 -7                            7                         -9 -5                          18                         -5 0                           -1                         -1 -2                         -10                         -4 -8                         -28                         -4 2                         -11                           6 4                           -7                           1			0.6                      0.5                        0.3 1.7                      1.5                        1.3 -2.1                    -2.4                      -1.9 1.1                      1.0                        0.7 0.7                      0.7                        0.1 2.0                      1.7                        1.0 0.3                      0.4                        0.1 0.5                      0.6                        0.2 -0.4                      0.9                        0.2 -2.9                    -2.2                      -2.5 1.6                      1.1                        0.8 2.3                    -1.4                      -2.1 34.4                   18.4                      10.3 -0.2                    -6.5                      -6.3

a) Figures may not add up due to rounding.

b) Monthly difference in levels adjusted for write-offs/write-downs, reclassifications, exchangerate variations and any other changes which do not arise from transactions. c) Loansgranted by monetary financial institutions (MFIs) to non-MFI euro area residents excluding general government.

d) Includes loans to non-profit institutions serving households.

e) Adjusted for the derecognition of loans from the MFI statistical balance sheet due to their sale or securitisation. f) The series is not adjusted for seasonal effects.

From ECB