*** ECONOMIC DATA ***

- (SZ) Swiss Nov Unemployment Rate: 4.2% v 4.2%e; Unemployment Rate SA: 4.1% v 4.2%e

- (GE) German Oct Trade Balance: €13.6B v €10.7B; Current Account: €11.0B v €9.4Be

- (GE) German Nov CPI M/M -0.1% v -0.2%e; Y/Y: 0.4% v 0.3%e

- (GE) German Nov Final CPI- EU Harmonized M/M: -0.2% v -0.1%e; Y/Y: 0.3% v 0.4%e

- (FR) French Oct Trade Balance: -€4.4B v -€2.3Be

- (HU) Hungary Q3 Final GDP Y/Y: -7.1 v -7.2% prior

- (CZ) Czech Q3 Final GDP Q/Q: 0.8 v 0.8% prior, Y/Y: -4.1 v -4.1% prior

- (CZ) Czech Nov CPI M/M: 0.2% v 0.0%e; Y/Y: 0.5% v 0.4%e

- (DE) Danish Oct Current Account (DKK): 5.5B v 6.5Be v 8.4B prior; Ex Shipping: 6.9B v 4.4Be

- (SW) Swedish Oct Industrial Production M/M: -2.7% v 0.9%e; Y/Y: -16.1% v -12.5%e

- (SW) Swedish Oct Industrial Orders M/M: 1.5% v 0.7% prior, Y/Y: -13.1% v -12.1% prior; Activity index: 101.1 v 101.7 prior

- (SA) South African Oct Retail Sales Constant Y/Y; -6.5% v -6.2%e

- (UK) Oct Visible Trade Balance: -£7.1B v -£6.9Be; Total Trade Balance:-3.2B v -£3.2Be; Trade Balance non EU: -£3.5B v -£3.5Be



*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

- European markets have had an erratic morning session as conflicted flowS and sentiments have led to mixed price action. Asian trading recorded a decidedly negative session following disappointing trade data from Australia and China along with a surprise downward revision to Japan's Q3 GDP. In corporate flows, VW [VOW.GE] confirmed that it would be taking a 19.9% stake in Suzuki [7269.JP] while Standard Chartered [STAN.UK] detailed its operations post Q3 and overall exposure levels to Dubai. UAE shares continue their multi-week plunge as press reports have stated that a unit of Dubai World had sold a W hotel property at fire sale prices. This action has furthered concerns about the region that divestments and additional writedowns could be enroute. Tech names have extended yesterday's gains following the aftermarket NY update out of Texas Instruments [TXN]. Sector rotation and movement has been split within inter-party lines as some financials trade higher, some lower. Industrials, pharma, autos and chemical names are similarly displaying such discrepancies. Markets are looking forward to a range of political and spending commentary from the UK pre budget, US attempts to extend TARP and the ongoing banter leaking from Copenhagen. Volumes in today's chop/chop section have been mixed.

- In individual equities: Standard Chartered [STAN.UK] continues to see strong performance YTD; Net interest margins have declined fractionally since the end of H1. StageCoach [SGC.UK] reported H1 Pretax £75M £68Me, Rev £1.08B v £1.1Be, interim dividend at 2p/share. VW/Suzuki [7269.JP/VOW.GE]: VW to take 19.9% stake in company for ¥222B, confirming press speculation, half of proceeds to be invested into shares of VW. Aeroports De Paris [ADP.FR] guided FY09 EBITA €850-880M v €853Me; Slight revenue growth seen in FY09. EADS [EAD.FR] Astrium unit may lose Galileo satellite navigation project contract, according to Les Echos.

- In speakers: Greek Fin Min Papaconstaninou stressed that there was "absolutely no risk" of default on Greece's government debt. He commented that the sovereign downgrades of its ratings made the country's position more difficult but noted Greece was under the protection of European umbrella. The official stressed Greece would have less borrowings in 2010 compared to 2009 levels. Greece relied on its own forces but will not wait on saviors. Lastly he commented that the Greek banking sector remained fundamentally sound. A Fitch sovereign analyst commented in a TV interview that he was not convinced that the ECB would do what was necessary to stop a Greek default. The analyst noted that the ECB's intention was not to let a euro-area country default, but questioned whether they (the ECB) was prepared to do what might be necessary to save Greece under certain circumstances. Greece was unlikely to be downgraded again and added that no other European sovereigns faced downgrade. In China, a PBoC economist monetary policy risks were accumulating and that a stable Yuan currency was key to asset price. The central bank economist noted that 2010 CPI to peak at 4.0% and need to control money and credit growth next year. The focus was to prevent excessive asset price increases. He saw monetary policy returning to normal after 2009 abnormal conditions. There was a small chance that 2010 could see strong rise in inflation. He forecasted 2009 GDP growth over 9%.

- In currencies: Sterling managed to rebound from its pre-European session lows ahead of the UK pre-budget release. The pound was initially lower over concerns whether Chancellor Darling would introduce a one-off tax on bankers' bonuses. However, GBP managed to recover the bulk of its losses as the session wore on aided by comments from UK Business Sec Mandelson that the UK pre-budget report would not be reckless nor painless and would not imperil the country's economic recovery. Overall dealers were expected the risk aversion theme to persist as sovereign rating concerns continue to simmer coupled with the debt debacle in Dubai. However, Greek Fin Min Papaconstaninou bluntly stated that there was "absolutely" no risk of default on its sovereign debt and added that Greece is under the protection of European umbrella. Markets seemed to take the comment at its face value and the Euro, GBP and CHF recovered their firm tone as European equity markets recovered the bulk of their session losses. The yen saw most of its earlier gains also whittle away as rising risk appetite replaced the aversion theme as the morning progressed. USD/USD was orbiting the pivotal 88 handle throughout the session but off its lows of 87.40.



- In fixed income: Sovereign hysteria continues to seep though the market. The Greek 10y yield spread tested fresh 8 1/2 month highs at 250bps over Bunds after conflicting comments from Fitch and the Greek finance ministry. The fact that Greek debt remains above the minimum threshold for next week's 12 month long-term repo has offered some solace to bargain hunters and seen spreads recover from the day's highs. Gilts have underperformed Euro Zone core markets ahead of arguably the most highly anticipated pre budget report in history. 10yr Gilts are 3bps wider against the Bund at 57bps with upward revisions to 2009/10 gilt issuance projections not being discounted. The City is nervously anticpating retribution with a one off windfall tax on bonuses widely expected to be announced in addition to a range of other possiblities as the government tries to shore up public finances without treading on too many toes ahead of next year's election. The financial community appears to be an easy target and press speculation suggests that even some form of tobin tax is not out of the question. Ahead of its own budget, Ireland's 10yr is also 12bps wider on the day at Bunds+181bps, with the announcement of €4B in savings doing little to reverse sentiment. Treasuries have not managed to escape the selling, with the 10yr note yield up 1bps at 3.39%.



- In energy: The IEA commented that it saw a continue glut in natural gas supplies and added that it expected to see prices in natural gas continue to push. IEA noted that US unconventional natural gas output would squeeze LNG supplies. The Era of cheap oil was closed, good level for oil stands at $70-80/bbl. Global recovery in 2010 will push oil prices higher. Saudi Oil Min Naimi comented that the Gulf economy remained strong despite difficulties of current financial strains. Aramco was drilling record number of wells and saw raw gas production exceeding 13B cubic feet by 2020. Targets to discover 5T cubic feet of associated gas annually and noted that a record gas discoveries yielded over 5T cubic feet of non-associated gas annually. Saudi gas reserves at 263T at end 2008; to be higher in 2010 and poised to increase quality and quantity of petrochem exports. Libyan Oil Min reiterated that he believed that OPEC will not make changes to oil quotas at Dec 22nd meeting in Angola.



***Notes:

- Lawmakers in the US agreed on a $447B spending bill that would fund large parts of the government for the current FY

- PBoC Dep Gov Zhu Min: External demand has disappeared; US consumption will not drive global growth; export to drop 16% this year, slump is a good reason to DEPRECIATE the Yuan

- Obama Administration may extend TARP until Oct 2010 vs current expected end of 12/31/2009

- Japan revises Q3 GDP YoY revised to 1.3% from preliminary 4.8% figure

- China to curb speculative house buying



***Looking Ahead:

- (RU) Russia Oct Trade Balance: $11.7Be v $11.6B prior; Exports: $30.5B v $29.2B prior; Import: $18.6Be v $17.6B prior

- 7:00 (US) MBA Mortgage Applications w/e Dec 4th: No est v 2.1% prior

- 7:30 (UK) Pre-Budget Report released

- 8:00 (HU( Hungary Central Bank Minutes

- 9:00 (BE) Belgian Q3 Final GDP Q/Q: No est v 0.5% prior, Y/Y; No est v -3.5% prior

- 10:00 (US) Oct Wholesale Inventories: -0.5%e v -0.9% prior

- 10:00 (MX) Mexico Nov Consumer Prices M/M: 0.6%e v 0.3% prior; Y/Y: 3.9%e v 4.5% prior; Core CPI M/M: 0.2%e v 0.3% prior

- 10:30 (US) DoE Crude Oil/Gasoline/Distillate Inventories: Crude:+500Ke; Gasoline: +1.8Me; Distillate -500Ke; Capacity Utilization 79.9%e

- 13:00 (US) Treasury re-opens $21B in 10y notes

- 15:00 (NZ) Reserve Bank of New Zealand Interest Rate Decision: Unanimous expectations to leave Cast rate at 2.50%

- 15:30 (MX) Mexico Oct Final Trade Balance: No est v 96.3M prior

- (BR) Brazil Central bank Interest Rate Decision: Unanimous analst expectation for the SELIC target to remain at 8.75%

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