***Economic Data***
- (HU) Hungary May Retail Trade Y/Y: -4.7% v -3.8%e
- (CZ) Czech Jul Business Confidence: 11.6 v 8.6 prior; Consumer Confidence: -7.3 v -7.5 prior; Consumer & Business Confidence: 7.8 v 5.4 prior
- (SP) Spain May Mortgages on Houses Y/Y: -2.9% v 0.2% prior; Mortgages-capital loaned Y/Y: -15.2% v -14.5% prior
- (SW) Sweden Jun Trade Balance (SEK): 11.4B v 6.5B prior
- (EU) Conference Board Jun Euro Zone Leading Indicator M/M: +0.5% v -0.5% prior
- (TT) Taiwan Jun M2 Money Supply M2 Daily Avg Y/Y: 3.8% v 3.5% prior

Fixed income
- (GE) Germany sold €2.28B in 12-month Bills; avg yield 0.6069% v 0.4511% prior; Bid-to-cover: 2.9x v 1.9x prior
- (TU) Turkey sold TRY648M in Apr 2013 Fixed rate Bonds; avg yield 8.57%

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM **
***Notes/Observations***
- Seven of the 91 European Union banks subject to 6% stress tests failed with a combined capital shortfall of €3.5B. There were 16 more banks in 6-7% range. The real test is securing funding
- Major banks now lining up to raise Euro forecasts from sub 1.20 to above 1.30 level

Equities
- As of 5:30am ET Euro Stoxx 50 Index +0.1% at 2,722 ; DAX Index -0.1% at 6,157; CAC-40 Index +0.1% at 3,610 and FTSE 100 Index is flat at 5,312

Industrials
- Wacker Neuson [WAC.GE] reported prelim Q2 Net €10.9M v €1.4M y/y, Rev €205.3M v €156.5M y/y
- Severstal [CHMF.RU] reported H1 crude steel output at 8.66M tons, +28% y/y

Healthcare
- Sartorius [DIM.FR] reported H1 net profit €19.5M v €15.4M y/y
- Sanofi Aventis [SAN.FR] guides FY10 EPS flat to down 4% (guided FY business EPS up 2-5% on April 29th)
- Cell Therapeutics [CTIC] sold approx $4.06M in Securities in private offering (less than 2% of market cap)

Consumer discretionary
- Pearson [PSON.UK] reported H1 Op profit £128M v £41M y/y, Rev £2.34B v £2.15B y/y
- Connaught [CNT.UK]concluded that net debt will be significantly in excess of the previously advised level of £120m at its year end of 31 August 2010 and that it will breach its banking covenants.
- WSP Group [WSH.UK] reported H1 operating profit £18.3M v £18.4M y/y, Rev £354.4M v £376.9M y/y
- Lufthansa [LHA.GE] expects 3-5% passenger decline as a result of air traffic tax
- Air Berlin [AB1.GE] Spokesman said draft law on airlines exceed worst expectations; expect price and job cuts
- Prosieben [PSM.GE] reported Q2 Net €74.5M v €45.5M y/y, Rev €760M v €693.9M y/y

Financials
- Aberdeen Asset Management [ADN.UK] reported 9-months AUM £164.7B,-3.6% than March 2010, Net new business +£400M
- Banco Espirito Santo [BES.PO]: Reported H1 net €282M vs analysts estimates of €126M

Energy
- Tullow Oil [TLW.UK] discoverd oil in new field in Ghana
- British Petroleum [BP.UK]: Weekend press speculated that company would announce management s early as Jul 27th when company reports H1 earnings; CEO Hayward likely to step down, to be replaced by Bob Dudley. Company issued comment that no final decision on management changes have been made. A Board meeting is being held on Monday evening ahead of the announcement of the second quarter results on 27th July. Any decisions will be announced as appropriate.

Technology
- Pace [PIC.UK] provided interim statement: H1 profit +46% y/y, Rev +21% to £635M; proposes acquisition of 2Wire Inc. Expected supply-chain shortages to last for 18 months.

Utilities
- Terna [TRN.IT] reported H1 Net €233.5M v €204Me, Rev €760.8M v €740Me

- Speakers:
- ECB's Bini Smaghi: Defending the Euro Zone is in everyone's best interest - opinion piece in FAZ
- ECB's Gonzalez-Paramo: Stress tests were demanding; Results indicated the strength of the banking sector
- BOE publishes Q2 Asset Purchase facility report; corporate bond purchases rose on Euro-Area concerns
- EU foreign minister's might impose new sanctions against Iran

- Currencies: The USD began the European session on a soft note as the Stress tests results suggested that the European banking system was in a "stable and promising position". Overall the risk appetite theme underpinned the recent economic recovery hope. The mid-morning saw a slight change in sentiment. The market attention turned towards the institutions that "just passed" the stress tests, which included Deutsche Postbank, Greece's PiraeusBank, Allied Irish Banks, Italy's Monte dei Paschi di Siena, and UBI Banca, Spain's Bankinter and eight smaller Spanish banks. Some aversion also ensued after Morgan Stanley's Roach commented on the 'new normal' and stated that global growth might average between 3.25% to 3.5% over the next three to five years compared to 4.7% average leading up to 2008 recession. The EUR/USD moved off its session high of 1.2960 to probe below the 1.29 area. The JPY was firmer against the major pairs ahead of the NY morning.
- The peripheral spreads tightened in the Session. The spread between Spain/Germany 10-year Gov't Bonds below 155bps, tightest level since late May

- Geopolitical:
Britain's Financial Policy Committee (FPC), the institution responsible for looking at macroeconomic and financial issues that threaten stability, is to meet four times a year with external members to be appointed by the Chancellor of the Exchequer.
- Following last week's support from two of the largest unions, a third, Unite union supported Ed Miliband for the role as Labour leader as a result of the committee's overwhelming support yesterday.
-Ahead ad of an EU foreign ministers meeting, there was speculation reported that they might impose new sanction against Iran.

In The Papers:
- FT: Greece Fin Min Papaconstantinou stated that Greece has met the demand of its austerity plan and will receive the second tranche of its bailout fund as reported in the Financial Times. ***In the Independent, according to the British Chamber of Commerce Poll, 64% of businesses support the balance between spending and tax raises; 66% believe that the cuts will hurt their profitability.
- The Independent also reported that UK Business Secretary Cable and Chancellor Osborne warned banks to start lending to businesses or they will face an increase in government regulation.

***Looking Ahead ***
- (BE) Belgium Debt Agency to sell up to €2.8B in bonds
- To sell 2.75% March 2016 OLO; avg yield % v 2.783% prior; Bid-to-cover: x v 2.1x prior
- To sell 3.75% Sept 2020 OLO avg yield % v 3.571% prior; Bid-to-cover: x v 1.8x prior
- 6:00 (PD) Poland to sell up to PLN1.8B in 52-week Bills
- 8:30 (US) Jun Chicago Fed National Activity Index: No est v -0.21 prior
- 9:00 (FR) France Debt Agency (ATF) to sell €8.0B in Bills
- 9:30 (BR) Brazil Jun Current Account: No est v -$2.0B prior; Foreign Investment: No est v $3534M prior
- 09:30 (TU) Turkey Jul Capacity Utilization: No est v 73.6% prior; Industrial Confidence: No est v 111.7 prior
- 10:00 (US) Jun New Home Sales:320Ke v 300K prior; New Home Sales M/M: 6.7%e v -32.7% prior
- 10:30 (US) Jul Dallas Fed Manufacturing Activity: No est v -4.0% prior-
- 10:30 (IS) Israel Central Bank Interest Rate Decision: Consensus expectation is the leave the Base Rate unchanged at 1.50%.
- 12:00 (US) Treasury's Brainard address.

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