3 April 2010 - Global Markets Review

Good Morning Ladies & Gentlemen,

It has been a holiday-shortened week pretty much around the world with the majority of markets closed for Good Friday and for the handful of markets still open, trading was thin to say the least.

In general, US job figures and UK fourth quarter growth (revised of course) spurred optimism as markets seemed more focused on the extended weekend holidays; needless to say, as always going into a holiday weekend, global markets ended the week on a positive note.

But this week in light of limited news, I wanted to mention 'Ireland' and in particular its main bank.

With Greece suffering of late and Portugal/Spain having a torrid time of things, the only vowel in the 'PIGS' countries is, contrary to the belief of many, not Iceland (already bankrupt) but indeed Ireland.

Bank of Ireland, the only Irish bank likely to avoid majority government ownership under the rescue package unveiled on Tuesday, has reported a pre-tax loss of €1.8bn for the nine months to December 31 - compared with a loss of €23m for the 12 months to March 31 2009.

The results include an impairment charge for loan losses of €4.5bn, including €2.2bn related to loans being transferred to the government's "bad bank", the National Asset Management Agency (Nama).

Bank of Ireland shares rose in early trading - up 27% by 10am - on the back of the results and comments after markets closed on Tuesday by Brian Lenihan, the Irish finance minister, that Bank of Ireland had a "sound future".

The bank said it could raise the bulk of the €2.7bn identified by the financial regulator as needed to meet new capital adequacy minimum requirements in the private markets. It added that it had been working with a syndicate of investment banks to raise capital privately, and expects to make a further announcement when discussions with the European Commission to approve its restructuring plan are complete.

The bank announced in February it was changing its year end, and would report nine-month figures to December instead of March, which was interpreted as a prelude to launching a rights issue in early summer.

Richie Boucher, chief executive, said: "This nine-month trading period was very difficult for both our customers and our business and this has been reflected in the substantial increase in credit losses."

He added:"With hindsight, it is clear that the bank's growth ambitions in previous years had been framed against an overly optimistic view of the outlook for the Irish economy and it was too exposed to the property sector and too reliant on wholesale funding."

Underlying operating profit before impairment charges was just more than €1bn for the period, a 28% fall from the same period in 2008.

Nama announced on Tuesday that Bank of Ireland would transfer €1.9bn as part of the first tranche of €16bn owed by the country's top 10 property developers. The discount on the loans was set at 35%, the lowest of the five Irish institutions participating in the rescue, reflecting the better quality of Bank of Ireland's loan book.

The bank said on Wednesday it expects to transfer a total of €12.2bn, leaving about €3bn of land and development loans - and related liabilities - on its books.

Mr Boucher told a local radio station that the bank had guided the markets "appropriately" on the loss on disposal of the Nama-bound loans.

"We gave the market guidance that our losses on disposal to Nama would be within €4.8bn, that remains the case," he told Newstalk.

Added to banking woes, the insurance sector is faring no better.

The European Insurance Forum, held in Dublin Monday and Tuesday, was dominated by the fiscal crisis that has hit Ireland particularly hard. Although the country's insurance industry remains a bright spot in an otherwise fairly bleak landscape, even it is not immune.

As the conference was winding up on Tuesday afternoon, Ireland's financial regulator announced that it was taking over control of Quinn Insurance, Ireland's second largest insurance company, as its accounts showed a massive deficiency.

Ireland's banks lent massively during the boom times, funding both home and commercial building projects, which are now unable to pay back the loans.

The government created the National Asset Management Agency (NAMA) to deal with the problem, but as time goes by more and more "toxic assets" have come to light.

Speaking at the conference, Wells Fargo described the situation as a "collateral crisis." Because mortgages and other loans aren't being repaid, the banks have less money to make new loans. In addition the value of the investments - mainly property - that secures those loans has also dropped dramatically, as there are far fewer potential buyers able or willing to acquire distressed property.

In a conversation shortly after Wells Fargo's presentation, a conference delegate described a shopping complex, which was built for around €34 million ($45.82 million) and was eventually sold for €7 million ($9.434 million) after the bank turned down an offer of €6 million ($8.08 million).

Quinn Insurance's problems are also related to Anglo-Irish Bank, as the insurer's founder, Sean Quinn, a construction magnate, eventually obtained a 15% stake in the bank through a network of complex financial transactions. Most of the funds came from Quinn Insurance, which suffered a near total loss on the investment when the bank was taken over.

Matthew Elderfield, the newly appointed Head of Financial Regulation, Central Bank and Financial Services Authority Ireland has both the experience, and the courage to deal with the problem. He previously headed the Bermuda Monetary Authority, after a position with the UK's Financial Services Authority (FSA). In his address to the EIF, which dealt mainly with Solvency II and insurance regulation, he nonetheless made it clear that his office would employ "rigorous scrutiny," not just of financial models, but for the entire industry.

Taking over Ireland's second largest insurer, after discovering a potential €454 million ($612 million) shortfall in its accounts, was a bold step. According to news reports, it's estimated the move could cost an average €2000 ($2695) for every person in Ireland, as a result of increased levies on insurance premiums to settle Quinn Insurance claims.

The company, a direct writer of personal lines, especially car insurance, has never been a member in good standing of the Irish insurance community. Over the years it has been accused of "sharp practices," and has had more than one run in with insurance regulators. Nevertheless, the failure of the second largest all-Irish based insurer is a further blow the country's faltering economy.

However, as Sarah Goddard, CEO of the Dublin International Insurance Marketing Association (DIMA) pointed out; "The fact that the regulator acted quickly and decisively with Quinn shows the strength of financial regulation in Ireland." That reliability will continue to be tested, but it is one of the country's greatest assets, as a number of speakers at the conference pointed out.

But no matter how good a country's regulatory system is, this alone is not going to sustain a country.

Ireland's taxpayers will hand over €8.5bn (£7.6bn) to buy the toxic loans of the country's crisis-ridden banks, it was announced Tuesday.

The Irish state will also become the majority shareholder in the republic's largest bank, the Allied Irish Banks, as the Dublin government attempts to clear up the mess from years of reckless lending that has capsized the country's economy. This is the second major bank the government has in effect nationalised since the financial crisis began.

The republic's newly formed "bad bank" - called the National Asset Management Agency (NAMA) - has also demanded a 47% discount on the loans, which have a book value of €16bn.

Most of them relate to the property market, which has halved in value in Ireland over the past two years. More than €3bn of loans relate to deals in Britain, where the property market has also been hit hard.

NAMA will absorb €81bn of distressed property loans, aiming to clean up the books of troubled Irish lenders. The amount is about half the size of the Irish economy.

The agency will now try to recover as much of the money as possible but the Irish taxpayer is still potentially on the hook for billions more because the banks will only absorb an extra €500m of losses. So, for example, if NAMA only retrieves €6bn for those loans, the programme will cost the taxpayer another €2bn.

The banks were also ordered to raise more capital to fund the expected losses they will incur after the sale of toxic loans to NAMA at such a discount. The Irish regulator said that Allied Irish Bank needed to raise €7.4bn of fresh capital to meet the new requirements, Bank of Ireland needed to find €2.66bn, and Anglo Irish Bank would require an additional €8.3bn.

This will almost certainly mean the government taking a bigger stake in AIB with an injection of taxpayer funds. It could also be given money from the national pension reserve fund. Brian Lenihan, the finance minister, told the Irish parliament that the country was now "on a firm path to economic recovery".

Speaking in the Dáil, Lenihan also launched a blistering attack on senior bankers, who he said had created a "horrifying" situation for the Irish banking system.

He said the banks' behaviour was "truly shocking ... our worst fears have been surpassed. They played fast and loose with the economic interests of this country."

The minister said the banks' bosses had made "appalling lending decisions that would cost the taxpayer dearly for years to come".

The state would remain a minority shareholder in the Bank of Ireland but take a majority stake in the AIB, he said. The European commission would have to approve the latter measure.

The AIB would also have to sell off assets in Britain, the United States and Poland to meet some of the costs of recapitalisation.

The Anglo Irish Bank - the favoured bank of property tycoons - will be given €5bn as part of the rescue package. But Lenihan warned that it may take a further €10bn from the taxpayer to keep the bank afloat in the long run. He also told the Dáil that it could take between five and seven years before Anglo Irish was able to leave the state's control and move into the private sector.

He also announced a package of billions of Euros to buy up the debts of the country's main building societies.

The details of the bailout for the banks are:

· Bank of Ireland will receive €1.26bn.

· Allied Irish will be handed €1.88bn.

· Anglo Irish will get €5bn.

· The Republic's two main building societies will obtain about €370m.

Despite the huge costs of the rescue plan, the governor of the Central Bank of Ireland, Patrick Honohan, insisted that the country could afford the massive injection of cash to the banks.

He said: "After a period of great uncertainty, these actions and announcements create a secure platform on which confidence will be built.

"While the costs that are Friday revealed are certainly significant, they are manageable and affordable for the Irish state.

"They are certainly a necessary measure to put the banking crisis behind us and provide for a stronger economy."

North of the Irish border, an MP said that banks doing business in Northern Ireland that were rescued along with southern Irish taxpayers must protect assets in the province.

Alasdair McDonnell, SDLP South Belfast MP, said: "There must be no attempt to sell off northern assets more quickly or at lower prices than in the south.

"Hard-pressed Irish taxpayers are now rescuing the banks from the consequences of their greed and folly. In return, we must now insist that they go back to basic business, and that means keeping every fundamentally profitable company in business.

Add to the banking woes, Ireland fell deeper into recession in the fourth quarter of last year, with the economy shrinking 2.3% as a result of devastating floods in the west and the continuing decline in building after the property market crash, writes John Murray Brown in Dublin.

Output figures for the third quarter, which had shown an increase in gross domestic product of 0.3% - prompting predictions Ireland had come out of recession - were also revised downwards to a decline of 0.1%.

Brian Lenihan, finance minister, said last week the year-on-year GDP decline of 7.1% was "marginally better" than the estimate at the time of the December budget of 7.5%.

If the decline in new house building was stripped out "GDP was roughly unchanged in the fourth quarter", the minister said.

Unlike in many EU countries, the Irish slowdown was exacerbated by a contraction in government spending, which declined 1.2% following the emergency budget last April.

The one piece of good news was that the current account deficit continued to decline and now stands at 0.5% of GNP.

Hopefully that has given you an idea of the scale of the problem in Ireland and reminded you that Iceland is not the only country in Europe beginning with the letter 'I' that is suffering extensive economic problems.

On to the numbers for the holiday-shortened week:

US Markets

How the US did this week .....

US Summary US stock-index futures, yields on 10-year Treasuries and the Dollar advanced after employers added the most jobs in three years, boosting optimism that the economic recovery is accelerating.

Standard & Poor's 500 Index futures expiring in June rose 0.3% to 1,177.30. US stock exchanges were closed for Good Friday. Treasuries fell, driving the yield on 10-year notes up 0.08 percentage point to an almost 10-month high of 3.95%. The US Dollar reached 94.70 Yen, the strongest since August, at 9:45 a.m. in New York.

Payrolls rose by 162,000 last month, less than anticipated, after a revised 14,000 decrease in February that was smaller than initially estimated, figures from the US labour Department in Washington showed Friday. The March increase included 48,000 temporary workers hired by the government to help conduct the 2010 census. The unemployment rate held at 9.7%.

"It's a good, solid report," Treasury Secretary Timothy F. Geithner said in a Bloomberg Television interview in New York. "It shows we're getting stronger, and the economy is now creating jobs."

Caterpillar is among companies adding staff, indicating the recovery that began in the second half of 2009 is starting to foster the job gains needed to lift consumer spending and sustain the economic expansion. Unemployment may be slow to recede as formerly discouraged employees enter the labour force looking for work, signaling the Federal Reserve will keep interest rates low in coming months.

Employers eliminated 8.32 million jobs in the US from January 2008 through October 2009, labour Department data show. Since then, 117,000 positions have been created.

Friday's report makes it "pretty clear" the deepest US recession since the 1930s has ended, said the head of the group charged with making the call.

"I personally put lots of emphasis on employment," Robert Hall, who heads the National Bureau of Economic Research's Business Cycle Dating Committee, said in an interview. "I would say 'pretty clear' is a good description" for whether the economic contraction has ended, he said.

Among the top indicators the group uses is payrolls, according to its Web site.

The Dollar Index, which measures the US currency against the Euro, Yen, Pound, Canadian Dollar, Swedish krona and Swiss franc, rose 0.5% to 81.205 at 4:19 p.m. in New York, erasing three-fifths of its losses from the past two days.

The Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 1.8 basis points to 85.12 basis points, according to Markit Group Ltd.

European Markets

What has been happening in Europe this week .....

Europe Summary European stocks advanced for a fifth straight week, the longest stretch of gains in almost a year, as basic resource stocks rallied with climbing metal prices.

BHP Billion Ltd. rose as copper traded at a 20-month high in London and the company said it plans to sell iron ore to Asian steel mills on short-term contracts. UBS AG gained as Switzerland's biggest bank by client assets was said to have generated about $2.3 billion of fixed-income revenue in the first quarter. Bank of Ireland Plc rose in Dublin as the government announced fund-raising requirements for lenders.

The Stoxx Europe 600 Index rose 1.5% to an 18-month high at 267.62, helping to extend the measures advance into a fifth straight quarter as central banks maintained record low interest rates and the European Union agreed a contingency rescue plan to help prevent Greece from defaulting on its debt. Since March 9 last year, the gauge has surged 69%.

Germany's DAX advanced 1.9% this week, while France's CAC 40 increased 1.1%. The UK's FTSE 100 climbed 0.7%.

Gains in Europe were limited as Standard & Poor's downgraded Iceland's local currency credit ratings, reigniting concern that deteriorating government finances may derail a recovery. In Greece, Moody's Investors Service lowered the deposit and debt ratings of five banks, citing anticipated additional pressures stemming from the country's challenging economic prospects.

BHP led a measure of mining shares to the highest level since September 2008 this week, as copper climbed in London on speculation expanding manufacturing in China, the world's largest consumer, and dwindling stockpiles indicate reviving demand. Nickel, aluminum, tin and zinc also rose on the London Metal Exchange.

Separately, the world's largest mining company announced plans to end a 40-year system of setting annual prices, helping products benefit from surging spot prices.

Bank of Ireland Plc also rose, climbing 15% as the lender said it expects to be able to raise a substantial amount of its 2.7 billion-Euro ($3.6 billion) capital target from private investors and avoid state control.

The government's National Asset Management Agency said Ireland's banks need $43 billion in new capital after "appalling" lending decisions left the financial system on the brink of collapse. The central bank set new capital buffers for Allied Irish Banks Plc and Bank of Ireland, giving them 30 days to say how they will raise the funds.

Shares of Allied Irish still sank 29% amid concern the government will take a majority stake in the lender.

GERMANY

Germany's DAX Index rose, climbing to the highest level since the bankruptcy of Lehman Brothers Holdings Inc. in September 2008, as manufacturing in the US expanded more than anticipated in March.

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, and Volkswagen AG increased as analysts recommended the shares. ThyssenKrupp AG, Germany's largest steelmaker, followed metal prices higher.

The DAX Index rose 1.3% to 6,235.56, the highest close since Sept. 8, 2008. The gauge has climbed 1.9% this week. The measure gained 3.3% in the first three months of 2010, a fourth straight quarterly gain, as the European Union agreed a contingency rescue package to help Greece cut Europe's biggest budget deficit and the Federal reserve pledged to keep interest rates low for an extended period. The broader HDAX Index gained 1.4% Thursday.

BMW advanced 2.9% to 35.16 Euros after the shares were raised to "outperform" at Credit Suisse Group AG, and the company's US chief said he wants the BMW brand to overtake Toyota Motor Corp.'s Lexus as the top-selling luxury line in the US by 2012.

Daimler AG, the world's second-biggest maker of luxury cars, increased 1.6% to 35.41 Euros.

Volkswagen rose 2.4% to 69.52 Euros as the preferred shares of Europe's largest carmaker were rated "buy" in resumed coverage at BofA Merrill Lynch Global Research.

ThyssenKrupp climbed 1.6% to 25.87 Euros as copper, lead, nickel and zinc all rose on the London Metal Exchange.

Deutsche Lufthansa AG, Europe's second-biggest airline, rose 3% to 12.65 Euros. Ryanair Holdings Plc, Europe's biggest low-cost airline, said annual profit beat its forecast, sending the stock to the highest in more than two years.

Aixtron AG rose 3.7% to 27.60 Euros as the stock was rated "buy" in new coverage at UBS AG.

"In the short term, growth is being driven by increasing penetration of LED backlighting in LCD TVs, which should support order demand into 2011," the brokerage said. UBS has a price forecast of 31 Euros on the German maker of equipment used to produce LED screens.

ElringKlinger AG climbed 4.3% to 19.24 Euros as UniCredit SpA lifted its price forecast 26% to 21.50 Euros on the automotive-equipment supplier.

ProSiebenSat.1 Media AG rose 4% to 13.01 Euros. Germany's biggest private broadcaster has received several bids for its N24 news channel, Der Spiegel reported Friday.

Bidders include the owners of Germany's ddp news agency, Martin Vorderwuelbecke and Peter Loew, as well as Jan Mojto, a former manager of Kirch Media Group, according to Der Spiegel. Rupert Murdoch's News Corp. has also signaled interest in the TV station, according to the magazine.

Hugo Boss AG's preferred shares rose 2% to 28.78 Euros as DZ Bank AG raised its recommendation to "buy" from "sell" on Germany's largest clothing maker.

The International Monetary Fund slashed its growth estimate for Germany on Tuesday citing weakness in banking sector and possibility of weaker-than-expected global trade. The IMF said economic recovery is likely to be moderate and fragile.

The economy is forecast to grow 1.2% in 2010, down from the previous estimate of 1.5%. The recovery is set to continue at a moderate pace after contracting 4.9% in 2009, said the Washington based lender. In 2011, gross domestic product will rise 1.7% compared to the 1.9% previous estimate. "There are substantial downside risks," IMF added.

According to IMF, implementation of stimulus measures and additional tax cuts and transfers are projected to bring the deficit to around 5.5% of GDP, nearly twice the limit set by the European Union's Stability and Growth Pact. The authorities now face the challenge of sustaining recovery while preparing to exit from stimulus as part of an international coordinated strategy.

The lender urged the government to make more permanent improvements to the framework of institutions designed to safeguard financial stability and manage financial crisis in concert with ongoing EU initiatives. Special policies introduced to maintain employment during crisis will need to be phased out and structural reforms undertaken to raise longer-term growth.

Further, annual inflation is estimated to average 0.9% this year and 1% in 2011.

Last week, the Organization for Economic Cooperation and Development projected the largest Eurozone economy to expand 1.3% this year and 1.9% in 2011.

Markit Economics reported on Thursday that the Germany BME manufacturing purchasing managers' index stood at a seasonally adjusted 60.2 in March, up from 57.2 in the previous month and also above the earlier flash estimate of 59.6.

A reading above 50 indicates expansion, while one below suggests contraction. This marks the highest reading in the index since April 2000.

Manufacturing output grew at a record pace in March, driven by a surge in new order levels. Overall new business received by manufacturers rose for the ninth consecutive month and at a record pace. Respondents cited improved economic conditions and restocking by clients to the latest rise in new work.

New export orders also rose at a record pace, with respondents citing particularly strong demand from Asia and the US

Inflationary pressure continued to build in March. Input prices increased considerably, while output prices were raised only marginally, reflecting intense competition.

FRANCE

The CAC-40 in Paris closed Thursday at 4,034.23, up 1.52% before the long Easter weekend.

Societe Generale SA, France's second-largest bank by market value, is probing "anomalies" discovered in a client account overseen by one of its private bankers in Singapore.

The Paris-based bank found the irregularities in February, and "immediately" informed clients who might be affected and began an internal audit, a spokeswoman for Societe Generale's private banking unit in Singapore said in an e-mailed response to questions Thursday.

Societe Generale, which two years ago blamed former employee Jerome Kerviel for a record 4.9 billion-Euro ($6.6 billion) trading loss, has been relying on private banking and consumer lending to rebuild profitability after writedowns and provisions tied to toxic assets.

The bank rose 1.7% to 47.345 Euros in Paris trading Thursday, valuing it at 35 billion Euros. The shares are down 3.3% this year, compared with a 2.6% gain in the 52-company Bloomberg Europe Banks and Financial Services Index.

The French statistical office INSEE confirmed Tuesday the 0.6% sequential growth in gross domestic product in the fourth quarter of 2009. Economic growth quickened from 0.2% recorded in the third quarter. That was in line with economists' expectations.

A breakdown of data showed that households' consumption expenditure growth accelerated to 1% in the final three months from just 0.1% in the third quarter. General government's consumption expenditure growth stood at 0.7%, slightly up from third quarter's 0.6%.

Gross fixed capital formation declined 1.3%, unchanged from the third quarter, of which households' contribution dropped 2.4% and government's by 0.4%. French exports stagnated in the final quarter after registering 1.8% in the previous quarter. On the other hand, imports climbed 3.2%, stronger than just 0.2% growth marked in the prior three-month period. Inventory changes buoyantly contributed to the economic growth. It was up 1 point after a fall of 0.1 point.

In 2009 as a whole, GDP fell by 2.2%, the largest drop since the Second World War. That was a reversal from 0.3% growth logged in 2008 and 2.3% expansion in 2007.

Last week, INSEE downwardly revised its growth outlook for the first quarter, while maintained its projection for the second quarter. The statistical agency said the second-biggest Eurozone economy is expected to grow 0.2% sequentially in the first quarter. It compares with the 0.4% growth predicted earlier. Meanwhile, the outlook for the second quarter was maintained at 0.3%.

The statistical agency noted that the economy should grow between 0.5% and 0.6% in both third and fourth quarters to achieve the government's full year target of 1.4% for this year.

INSEE forecasts are much optimistic than those released by the European Commission in February. According to the commission, the French economy would grow 0.4% in the first three months of this year, then stagnate in the second quarter, before rising by 0.1% in the third quarter. In the final quarter of 2010, growth may pick up to 2.3%, taking the whole year growth to 1.2%.

BELGIUM

The Bel 20 in Brussels closed out the week at 2,680.56, up 1.21%.

Belgium's power grid operator Elia System Operator said Wednesday that French energy giant GDF Suez is selling a 12.5% stake in the company to Belgian energy holding Publi-T for Eur159.9 million.

Elia also said GDF Suez will sell its remaining 11.85% stake in Elia.

"Details of the agreement will be finalized in the near future so that the boards of the parties can ratify it in the coming weeks and the offering can be organized before June 30," the company said in a statement.

Carrefour is mulling a partial reversal of its plan to close 21 Belgian stores and cut 1,672 jobs, the world's No. 2 retailer said on Thursday following talks with unions.

Carrefour Belgium said in a statement that nine of the 21 threatened stores could stay open under certain conditions.

Socialist union ABVV/BBTK said in a statement that the group would now franchise three of the seven supermarkets it had initially planned to close.

Carrefour added it was also prepared to retain four out of the 14 threatened hypermarkets and would consider transforming a further two hypermarkets into smaller stores rather than close them.

The group said in February it wanted to cut costs in Belgium to restore profitability in the country amid intense competition from local rivals, but unions said they would fight the planned job cuts.

Carrefour Belgium's stores have seen a fall in turnover, the group said, attributing the drop in earnings to the effect of the announced job cuts on productivity over recent weeks.

The group will next meet with unions on April 12, when it will discuss a possible transfer of a further 17 supermarkets and three hypermarkets to Groep Mestdagh, which runs the Champion supermarket chain in Belgium.

Belgium's annual inflation rose to 1.66% in March from 0.7% in February, data from the Economics Ministry showed Tuesday. Consumer prices rose for the fourth consecutive month after falling 0.12% in November.

Inflation accelerated for the third month. The rise in inflation rate was driven largely by higher energy prices. The prices of fuel, heating oil, vegetables, electricity and natural gas recorded an increase.

On a monthly basis, prices rose 0.37% in March after gaining 0.42% in the previous month.

THE NETHERLANDS

In Amsterdam the AEX finished the trading session Thursday, prior to the holiday, on 351.44 - up 2.10%.

Royal DSM, the global Life Sciences and Materials Sciences company headquartered in the Netherlands, and Orascom Construction Industries Friday announce that they have reached an agreement for the sale of DSM Agro and DSM Melamine to OCI for Eur 310 million on a cash and debt-free basis with effect from 1 January 2010. The intended sale is expected to close in Q2 2010, subject to regulatory and other customary approvals and notifications.

For DSM the intended sale of both business groups is an important step forward in the realization of its Vision 2010 ambitions to focus on Life Sciences and Materials Sciences. The transformation of DSM's portfolio is an important prerequisite for achieving these ambitions. As announced in September 2007, DSM Agro and DSM Melamine do not fit with this focus.

With the acquisition of DSM Agro, the OCI Fertilizer Group expands its customer base in key European markets to which the group will be able to offer a wider range of products including urea, ammonia, Calcium ammonium nitrate (CAN), urea ammonium nitrate (UAN), and ammonium sulphate (AS). OCI believes that healthy synergies exist through a wider product portfolio and distribution infrastructure in Europe.

Dutch semiconductor manufacturer NXP, a portfolio company of private equity firms KKR and Silver Lake, is preparing to list, according to reports.

The company's initial public offering, which posted sales of $5.4bn in 2008, could raise up to $1bn. A number of banks, including Morgan Stanley, Barclays, Credit Suisse, Deutsche Bank and Goldman Sachs, are reportedly on board for the sale.

Business conditions across the Dutch manufacturing economy improved further during March, a survey conducted by Markit Economics showed on Thursday.

The seasonally adjusted NEVI Purchasing Managers' Index rose for the sixth straight month to 57.8 in March. This was the highest reading since July 2007. A reading above 50 suggests expansion in the manufacturing sector.

The survey found that faster expansions of new orders and output led manufacturers to maintain their workforces and raise their charges respectively for the first times since August 2008 and October 2008. Although buying activity improved considerably in March, this was insufficient to build up raw material holdings.

Markit said, "All in all, the latest PMI data suggest that manufacturing employment will recover in coming months as demand, charges and capacity pressures are all increasing."

Output prices in the Dutch manufacturing industry rose 6.1% year-on-year in February, faster than the 4.8% rise in January, the Central Bureau of Statistics said Tuesday. Prices increased for the second straight month.

The rise was largely driven by higher prices in the petroleum processing industry, which rose 45% from a year ago, led by an increase in crude oil prices.

On a monthly basis, prices rose 0.9%, slower than the 1.5% rise in January. It was the fifth monthly increase in the index.

SWITZERLAND

Zurich's SMI headed into the extended weekend Thursday evening at 6,888.92, a gain of 0.23% on the day.

The US taxman moved a step closer to getting his hands on the names of more than 4,000 of UBS's American clients after a crucial decision by the Swiss government.

The Swiss cabinet - the Swiss Federal Council - said it no longer backed earlier rulings by two Swiss courts which ruled that to hand over the names of the Swiss bank's clients to the Internal Revenue Service (IRS) would be illegal.

Under a deal brokered last summer after a long-running investigation into tax avoidance by its clients, UBS avoided criminal charges in return for paying a $780m (£510m) fine, admitting criminal wrongdoing, and agreeing to hand over the name of 4,450 of its American offshore clients. The investigation was part of a wider probe by the IRS into US citizens using offshore bank accounts to dodge taxes back home.

The details of approximately 250 of the wealthiest people on the list were handed over last year, with August 19, 2010 the deadline for the remainder under the agreement signed with the IRS and the US Department of Justice.

Following the decision by the Swiss cabinet, the final hurdle to release the names is for the Swiss parliament - the Federal Assembly - to approve the disclosure, with a vote expected to be held later this month.

If the vote affirms the release of the names, it will lead to a break in the centuries-old Swiss laws which have protected the secrecy of the country's banks and their clients.

Tuesday, the UBS bank said in a report that its consumption indicator for Switzerland fell slightly in February, marking a return to the December 2009 level.

The consumption indicator dropped to 1.20 in February from 1.32 in January, due to deteriorating business activity in the retail sector. UBS expects growth in private consumption of 1.7% for 2010.

On March 22, UBS had raised its 2010 growth forecast for Switzerland from 2.0% to 2.5%. The favorable economic situation is expected to lead to a decline in the unemployment rate, but also to increasing inflationary pressure, rising interest rates as well as a strengthening of the Swiss franc, it said.

The bank now sees the unemployment rate at 4.2% on average in 2010, down from 4.9% estimated previously. Due to solid economic growth and rising oil prices, UBS also increased its 2010 inflation forecast from 0.6% to 1.3%.

The bank had also said that it expects the Swiss National Bank to raise interest rates in September. This single-handed move by the SNB may lead to the further strengthening of the Swiss franc against the Euro, it added.

Wednesday, the KOF Economic Institute said the Switzerland economic barometer stood at 1.93 in March, up from 1.90 in the previous month, revised from 1.87 reported initially. This was the highest reading since December 2007. Economists expected a reading of 1.9 for March.

According to the barometer, the annual growth rate of Swiss GDP should continue in positive territory, but not accelerate further.

Thursday, Credit Suisse said the SVME Purchasing Managers' Index, or PMI, for Switzerland rose at a record pace in March, taking the reading to the highest level since November 2006.

The PMI climbed 8.1 points to 65.5 points in March. The increase was the strongest since the survey began in 1995, and the index is now higher than at any point since November 2006. The seasonally-adjusted PMI has thus remained consistently above the 50-point growth threshold for the past six months.

Credit Suisse said for the first time, the PMI exceeded the figures recorded amid lively economic activity around the turn of the millennium and those of the boom that lasted until mid-2008.

A breakdown of data showed that output grew for an eighth consecutive month in March and the momentum is picking up. The corresponding indicator climbed to 70.2 from 61.5. March saw a surge in orders, with the corresponding indicator marking its sharpest-ever recorded rise of 14.5 points to a new all-time high of 74.4.

Corporate purchasing was higher than in the previous month for the seventh period in a row. The quantities of purchases component even reported a significant 9.7-point increase within the growth zone, climbing to its highest level, 71.4 points, since the survey began in 1995.

The purchasing prices sub-index edged up by 0.4 points to 62.8 points last month. This is its highest level since August 2008. The index has now remained above the 50-point growth threshold for seven successive months. The market is obviously feeling a certain amount of price pressure, Credit Suisse said.

The suppliers' delivery times component made significant gains, with a 7.1 points rise to 67.5 points for March. This is its highest level since July 2007. The extension of delivery times since mid-2009 is a sign of increasing capacity utilization.

The stocks of purchases sub component yielded 4.4 points to slip back out of the growth zone after only a month. The corresponding indicator is now at 47.7, down from 52.1 in February. The stocks of finished goods component fell by 4.3 points to 45.4 points in March. Inventories for sale have now been contracting for sixteen successive months.

For the first time in 17 months, the employment index moved above the 50-mark to suggest a possible turnaround. The employment component rose to 53.7 from 48.8.

AUSTRIA

The ATX in Austria rounded off the week on 2,658.30, up 0.92%.

Brau-Union Austria boss Markus Liebl said profit and turnover soared last year, while the company suffered market share losses.

The firm, which unites beer brands such as Schwechater, Zipfer, Gösser and Puntigamer, suffered a two% decrease in market share to 48% in Austria, Liebl announced Thursday.

Turnover however increased by 0.7% year on year to 509 million Euros despite the fact 2008 was an exceptionally good year since Austria co-hosted the European Football Championships.

Liebl announced the plan for 2010 was to sell around 4.7 million hectolitres of beer this year, around 100,000 hectolitres more than last year.

He stressed price hikes could be ruled out.

Brau-Union Austria reduced its number of employees by 2.7% to around 2,200, and Liebl said this trend would continue. He pointed out that the firm invested seven million Euros less last year than it had in 2008 with 50 million Euros.

Banca Comerciala Romana is taking out a new loan of 10 million Euros from the European Bank for Reconstruction and Development, according to the Romanian Times.

The online newspaper reports Friday that the bank - a subsidy of Austria's Erste Group and market leader in Romania - would spent the money on energy-efficiency programmes

The loan supplements one similar to a 20-million-Euro credit line given by EBRD to BCR in 2008.

BCR has financed 14 energy-efficiency projects. Since the beginning of its operation in Romania, EBRD has invested 4.5 billion Euros in 270 projects, and its investments have attracted additional investment of over 8.3 billion Euros.

Russia's Sistema Group, which an owner of Russia's MTS group, is apparently looking to expand to Austria. The company is reportedly looking to buy Telekom Austria Group in a deal worth in excess of $6 billion.

According to the Austrian Krone newspaper, Sistema was prepared to pay significantly over the current share price, which values the company at around $6 billion. In comparison, when Egypt's Orascom Telecom tried to acquire Telekom Austria in September 2008, it was valued at $9.8 billion.

The Austrian state-owned holding company, OeIAG holds 27% of the carrier, but doesn't have a mandate to unload its stake at the moment. However, with three-quarters of the company available on the stock market, it would be possible for Sistema to buy the company regardless of OeIAG's and the government of Austria's intentions.

Austria's manufacturing purchasing managers' index or PMI rose to 56.7 in March from 55.4 in February, a report by the Markit Economics showed on Tuesday. A PMI reading above 50 indicates expansion in the sector while below 50 suggests contraction.

The latest PMI reading signals the fastest improvement in business conditions since February 2007, the Markit said.

Production at Austrian manufacturing firms increased for the ninth consecutive month in March as higher new business. Further, the rate of expansion accelerated to the sharpest in nearly four years.

New orders increased as demand strengthened and firms introduced new products in March, while new export orders climbed for the ninth straight month. Backlogs of work improved for the third month running.

Employment still dropped slightly in March, but the pace of job cuts slowed for the ninth month running. Input cost inflation accelerated and the fastest since August 2008.

SWEDEN

Stockholm's OMX completed the week on 1,036.93, up 1.55%.

Swedish telecoms equipment maker Ericsson said Friday that it has completed the acquisition of the North American GSM business of Canadian bankrupt sector player Nortel Networks for USD70m.

In November 2009, Ericsson announced that it and Austrian sector company Kapsch CarrierCom AG, part of the Kapsch Group were chosen to buy Nortel's GSM business. Kapsch paid USD33m for the GSM assets outside North America.

Ericsson expects the acquired operations to have a positive effect on its earnings within a year after closing.

Sweden's manufacturing activity growth slightly eased in March, a report from the Swedbank/SILF said on Thursday.

The seasonally adjusted purchasing managers index or PMI for manufacturing stood at 61.1 in March, down from 61.5 in the previous month. Economists expected a reading of 62. A year earlier, the PMI reading was 36.7. A reading above 50 indicates expansion, while one below 50 suggests contraction.

Production,employment made negative contributions to the PMI, while the stock developments and suppliers' delivery times increased. The corporate demand for staff continued to increase even if the index stabilized at 55 mark.

The index for crude and intermediate stages stood at 65.7 in March. The index increased for the first time since March 2008. However, the purchasing managers screwed up its production plans for the next six months.

Wednesday, Sweden's National Institute of Economic Research lowered its 2010 growth outlook for the economy, while raising the forecast for next year.

The think tank now sees 2.4% growth this year, a downward revision from the 2.7% growth predicted in December. In the next year, the economy is predicted to expand by 3.8%, better than the 3.3% growth estimated previously.

"Service industries will contribute strongly to GDP growth in the next few years. Domestic demand will thus play a greater role in the current recovery than after previous economic downturns," NIER said.

With the economy in a severe slump, an expansionary fiscal policy will be appropriate, particularly in 2010, but also in 2011. The NIER is expecting further unfunded measures totaling SEK 8 billion this year, in addition to already adopted unfunded measures. In 2011, another SEK 40 billion in

The jobless rate is forecast to be at 9.1% this year and next. It compares with a December prediction of 10.1% for this year and 10.4% for 2011. The Swedish economy will not return to cyclical balance until 2014, when the unemployment rate will be around 6.8%, the think tank warned.

NIER sees inflation at 1% this year and move up to 1.6% next year. In December, the think tank had seen the rate at 0.5% in 2010 and at 1.7% in 2011. Further, it said the Riksbank will gradually begin raising interest rates starting in September. At the end of 2011, the repo rate will be 1.75%.

In its last Executive Board meeting, held in November, the Riksbank left its repo rate unchanged at 0.25%. Earlier in March, Riksbank Governor Stefan Ingves said the central bank now expects to begin raising the repo rate this year as stability returns to financial markets and the economic recovery becomes more evident.

Monday, the Statistics Sweden announced that the retail sales volume dropped a seasonally adjusted 1% on a monthly basis in February, in contrast to the 0.7% growth in the previous month, revised from 0.8% rise reported initially. Economists were looking for an increase of 0.3%.

For the December to February period, retail sales volume climbed 0.4% compared to the previous three months period.

On an annual basis, retail sales volume increased a working day adjusted 2.3% in February, slower than the 3.3% growth in the previous month. A year earlier, retail sales were down 2.8%. Retail sales for consumables increased 1.1% while retail sales for durables grew 3.2%.

DENMARK

Copenhagen's OMX ended the day Wednesday at 383.04, a drop of 0.05%. The market was closed both Thursday and Friday for the Easter Holiday.

Citigroup upgraded Friday its recommendation on Danish insurer Trygvesta to "hold" from "sell", while initiating coverage on rival Topdanmark with a "buy" rating.

The broker also upgraded its share price target on Trygvesta to DKK360 from DKK320 and set the target on Topdanmark at DKK825.

The market is generally positive towards Trygvesta, as in a recent analyst poll by SME Direkt the stock got six "buy", three "neutral" and only one "sell" rating. At the same time, five analysts rated "buy", six recommended "neutral" and two -- "sell" on Topdanmark.

Denmark's seasonally adjusted jobless rate stood at 4.1% in February, down from 4.2% in the previous month, the Statistics Denmark said on Wednesday. Economists expected the jobless rate to be 4.3%.

The number of unemployed totaled 115,700 persons in February, smaller than the 116,600 persons in the previous month.

Wednesday, the Statistics Denmark said in a final report that the gross domestic product or GDP increased 0.2% sequentially in the fourth quarter, slower than the 0.4% growth in the previous quarter. The fourth quarter GDP was unrevised from the preliminary report.

On an annual basis, the GDP dropped 3.2% in the fourth quarter, revised from 3.4% fall estimated initially.

In the whole year of 2009, the GDP was down 4.9% in 2009, revised from 5.1% decline reported initially.

Denmark's seasonally adjusted industrial confidence indicator stood at 8 in March, up from 6 in February, a report by the Statistics Denmark showed on Tuesday. A year ago, the confidence indicator was minus 30.

In March, expectations for production in the next three months increased to 25 from 17 in February. Expectations regarding the finished goods stocks rose to minus 18 from minus 28.

NORWAY

The OBX in Oslo also signed off for the week Wednesday, closing at 342.61, up 1.17%.

Norwegian group Eltek said Friday its Singapore-based unit Nera Telecommunications, or NeraTel, will supply microwave radio equipment to Indonesia and Asia, in two deals, worth a total SGD21.6m.

NeraTel has signed a SGD12.4m agreement with an unnamed mobile operator in Indonesia, while a governmental organisation in Asia has placed an order, valued at SGD9.2m.

The contracts include delivery and installation of the technology.

The orders are not expected to have a significant impact on the performance of the group for the current financial year.

Eltek holds 50.5% in NeraTel.

Morgan Stanley has raised the share price target on Norwegian aluminium major Norsk Hydro to NOK49 from NOK45 and confirmed the "equal weight" recommendation.

The stock in Norsk Hydro closed at NOK45.30 on Wednesday, up 1.96%, on the Oslo Stock Exchange.

So far this year Norsk Hydro shares have lost 7.72% of their value, but seen over the past 12 months, the current value corresponds to a 85% rise.

Tuesday, the Statistics Norway announced that the retail sales volume dropped a seasonally adjusted 0.1% on a monthly basis in February, in contrast to the 0.8% growth expected by economists. Meanwhile, retail sales, excluding petrol stations increased 0.3%.

On an unadjusted basis, retail sales volume, including petrol stations grew 2.3% annually in February, while the sales volume index excluding petrol stations rose 3.3%.

Further, retail sales value index including and excluding petrol stations rose by 3.9% and 4% respectively in February.

Prices of new detached houses in Norway increased 0.3% in the December quarter compared to the September quarter, Statistics Norway said on Monday.

Compared to a year earlier, detached house prices were up 1%.

From 2008 to 2009, the annual price index for new detached houses increased by 3.1%.

FINLAND

Helsinki's OMX closed the day's session Thursday on 7,392.98, up 1.17%.

UAE-based telecoms operator Emirates Integrated Telecommunications Company (Du) has signed a Eur200 million (USD270 million) financing deal with Finnish telecoms equipment vendor Nokia Siemens Networks (NSN), AME Info reports.

The agreement - which is backed by the Finnish Export Credit Agency, Finnvera - will see Eur200 million of vendor financing provided to Du through Nordea Bank for the purchase of NSN equipment. Under the deal, NSN will provide its end-to-end portfolio of equipment to enhance and expand Du's network infrastructure with new base transceiver stations (BTSs) and associated technologies.

The Finnish economy is likely to grow this year at a better pace than initially estimated, driven by the recovery of private consumption and exports, the Finance Ministry said Tuesday.

The ministry expects 1.1% growth in gross domestic product, or GDP, this year, up from 0.7% growth predicted in December 2009. Output growth in 2011 is expected to average just over 2%, it added. According to preliminary figures from Statistics Finland, GDP plunged by 7.8% in 2009.

"Next year private investment will also start growing, and at the same time exports and consumption will continue to rise," the ministry said in a report.

The forecast for 2010 projects a 5.5% increase in exports. In 2011, exports are expected to slow somewhat despite the accelerating global economy, due to non-recurring factors, such as the timing of ship deliveries.

The ministry said inflation will accelerate to 1.5% this year because of rising prices in energy and other raw materials. Next year, prices are expected to increase by about 2.5%, reflecting increases in energy taxes and other commodity prices.

Further, the ministry said the number of people out of work will continue to rise this year despite the trend of output growth, and the unemployment rate is expected to climb to 10.2%. The highest monthly unemployment rates will probably be recorded late in the spring. However, the situation will improve in 2011, when the employment rate is expected to edge up to 67% and the unemployment rate to fall back to 9.6%.

On Finland's public finances, the ministry said the legacy of the recession will continue to impact public finances in the years to come. This year, the budget deficit is estimated to slide to 4% of GDP and then to 2% of GDP in 2011, below the EU ceiling of 3% of GDP set under the Stability and Growth Pact.

Finland's general government EMU debt increased by Eur 12.2 billion and the GDP share of the debt rose to 44% from 34.2%, the Statistics Finland said Wednesday.

The amount of general government EMU debt increased during the fourth quarter of 2009 by Eur 6.3 billion to Eur 75.2 billion. Of the consolidated general government debt Eur 65.4 billion was central government debt and the remaining Eur 9.8 billion local government debt, the statistical agency said.

It noted that the growth in debt in the last quarter of 2009 came from increased central government debt, of which bond debts made up Eur 3.2 billion and short-term debt securities Eur 1.9 billion. Local government debt grew by Eur 0.5 billion in the last quarter. Local government debt mainly consists of long-term loans, which stood at Eur 9.6 billion at the end of the year.

Further, the statistical agency said internal debt amounted to Eur 4.4 billion at the end of 2009, of which good one half consisted of central government bonds held by employment pension schemes.

Rising expenditure and falling revenue have weakened the Finnish general government's financial position in the fourth quarter of 2009, the Statistics Finland also said Wednesday.

General government revenue decreased by 7.6% year-on-year in the fourth quarter of 2009 on a seasonally unadjusted basis. The revenue items that fell most were income tax, property income, received social contributions and taxes on production and imports. Consequently, general government expenditure rose by 4.6%.

Due to the fallen revenue and risen expenditure, the financial position of general government weakened by Eur 2.9 billion from the corresponding quarter of the year before and stood at minus Eur 3.8 billion, the statistical agency said.

SPAIN

In Madrid, the Ibex rounded off a hectic week on 11,067.90, 1.81%.

The Bank of Spain has predicted the Spanish economy to contract 0.4% this year, with severe corrections in household consumption and high debt accumulated by the private sector weighing down on growth.

The economy is then projected to grow 0.8% in 2011.

Spain remains the last major economy to still be mired in recession. Economic data for the three months through December showed that GDP shrank by 0.1%, which is not as severe as the 0.3% decrease in the September quarter. In the whole of 2009, the economy shrank 3.6%.

The central bank also called the government's fiscal consolidation programme - intended to bring down the government's budget deficit to under 3% of GDP by 2012 from the current 11.3% - "very ambitious".

Spain's current account deficit stood at Eur 6.53 billion in January compared to the Eur 6.16 billion deficit a year ago, the Bank of Spain reported on Wednesday.

The central bank said the trade balance recorded a deficit of Eur 4.13 billion in January, wider than the Eur 4.08 billion deficit in the previous year.

On the other hand, the services account logged a surplus of Eur 1.50 billion, with the surplus in the tourism account standing at Eur 1.62 billion.

The income account registered a deficit of Eur 2.20 billion, and the current transfers account showed a Eur 1.70 billion deficit.

Meanwhile, the financial account surplus stood at Eur 5.58 billion in January.

Spanish manufacturing output increased at a solid pace as new order levels expanded at the fastest rate since July 2007, a survey conducted by Markit Economics revealed on Thursday.

The Purchasing Managers' Index stood at 51.8, the highest reading since August 2007. Operating conditions in the manufacturing sector improved for the first time in twenty-eight months, the report showed. The reading was 49.1 in February. A reading above 50 suggests expansion in the sector, while a reading below 50 indicates contraction.

New orders increased for the first time since August 2009, which was mainly driven by strengthening exports. At the same time, backlogs of work were broadly stable in March. Despite a rise in production, employment dipped at a solid pace.

Further, the survey showed that the rate of input cost inflation accelerated in March to the steepest in nineteen months. But manufacturers continued to cut their output charges, largely reflecting intense competition for scarce demand.

PORTUGAL

Lisbon's PSI General entered the weekend early Thursday on 2,805.22, up 1.05%.

Monday, the Statistics Portugal announced that the interest rate on housing loans stood at 1.873% in February, down from 1.919% in the previous month. This was the lowest interest rate since the time series initiated in November 2003.

The interest rate on housing loans decreased for the fourteenth consecutive month in February. A year ago, interest rate was 5.315%.

The average loan repayments stood at Eur 251 in February, smaller than the Eur 252 in the previous month. At the same time, the implicit interest rate on contracts signed over the last 3 months dropped by 0.024 percentage points to 2.034%.

Tuesday, the Bank of Portugal lowered its economic growth outlook for this year and next, citing prevailing weakness in private consumption and domestic demand.

The central bank now sees 0.4% growth in gross domestic product, or GDP, this year, down from 0.7% rise forecast previously. The outlook for 2011 was lowered to 0.8% from 1.4%. The economy had contracted 2.7% in 2009.

Harmonized consumer price inflation would be at 0.8% in 2010, up from an earlier forecast of 0.7%. In the next year, the rate is expected to move to 1.5%, revised down from 1.6% predicted earlier.

Tuesday, the Statistics Portugal announced that the economic sentiment indicator stood at minus 0.5 in March, up from minus 0.8 in the previous moth. A year ago, the economic sentiment indicator was minus 3.2.

The confidence indicator on manufacturing industry increased to minus 15 in March from minus 18.6 in the previous month. The confidence indicator was minus 33.7 a year earlier.

The service confidence indicator rose to minus 5.8 in March from minus 7.2 in February, while the confidence indicator on trade increased to minus 7.7 from minus 9.7. But, the confidence indicator on construction and public works dropped to minus 47.8 from minus 47.

Meanwhile, the consumer confidence indicator stood at minus 35.4 in March, down from minus 34.4 in the previous month.

ITALY

In Milan the FTSE MIB Index closed the shortened week at 23,206.66, up 1.57%.

Italy's seasonally adjusted jobless rate stood at 8.5% in February, unchanged from January's revised rate, statistical office Istat said Wednesday. Economists had forecast a rate of 8.7%.

Istat estimated that 22.8 million persons were employed in February 2010, with the employment rate at 56.8% and inactivity rate at 37.8%.

The jobless rate for males was at 7.7% and that for females stood at 9.7%.

Italy's losses from swaps used to manage its finances had a growing impact on the the country's budget deficit in 2007 to 2009.

Swaps added 0.07% of gross domestic product to boost last year's shortfall to 5.3% of GDP, according to Istat, Italy's national statistics office. That compares with a swaps effect of 0.04% of GDP in 2008 and 0.02% in 2007.

Eurostat, the Luxembourg-based statistics office requires the 16 Euro countries to include the effect of swaps in deficit figures. Istat Friday stripped out that number, reporting a deficit of 5.2% for 2009.

Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in interest rates or weather. Interest-rate and currency swaps are derivatives used to hedge against sudden changes in rates and excessive exchange-rate volatility.

GREECE

In Athens, the Athex Composite finished the trading session and the week Thursday on 2,095.02, up 1.33%.

Rating agency Fitch said on Monday that the Euro area leaders' decision to act as a "lender of last resort" for Greece positive for the country's credit profile. It noted that rescue-package for Greece would enhance its near-term financing options and flexibility as well as reaffirm the support of Euro Area Member States for economic and fiscal reform in Greece.

Fitch noted that the mechanism through which such support would be provided in a timely fashion remains opaque and would be policy conditional and on 'non-concessional' terms. Thus, while the EU statement released on March 25 showing the willingness to act as a 'lender of last resort' is important, it does not in itself materially lessen the risks associated with the implementation of Greece's fiscal consolidation programme and requirement on the Greek government to raise substantial funds in the coming weeks as well as over the medium-term.

However, Greece's rating outlook remains negative because of continued uncertainty over the medium-term economic and fiscal adjustment as well as the continuing lack of clarity over the fiscal financing strategy, Fitch said.

Further, the rating agency said given that the Greek government faces relatively large near-term financing needs to cover more than Eur 20 billion of maturing debt in April and May as well as the on-going budget deficit, it is encouraging that the authorities have moved swiftly to raise funds in the market with a Eur 5 billion 7-year bond issue on Monday. However, Fitch said further debt issues will be required to fully meet near-term funding needs.

Fitch currently rates Greece's long-term foreign currency and local currency issuer default ratings at 'BBB+'. The outlooks for both ratings are negative.

Greek manufacturing purchasing managers' index, or PMI, posted weakest reading for almost a year, signaling a sharp deterioration in the sector, survey data released by the Markit Economics showed Thursday.

Markit Greece manufacturing PMI sank to an eleven-month low of 42.9 in March from 44.2 in February. Manufacturing production decreased at a substantial pace during March, mirroring the downward trend in new orders. Incoming new business contracted sharply on the month, as demand from both domestic and external sources receded.

"Business conditions faced by Greek manufacturers appear to be going from bad to worse as the year progresses," Markit Economics said.

Markit said there was evidence of spare capacity at manufacturing plants in March. Stocks of both pre- and post-production goods declined markedly during the latest survey period.

Greek manufacturers released more staff at the end of the first quarter, extending the current sequence of contraction to almost two years. Moreover, the decrease accelerated to a considerable rate. Anecdotal evidence suggested that falling activity levels and cost pressures were the primary reasons for the latest round of job shedding.

Input price inflation eased in March, but remained marked, with around one-fifth of companies noting an increase. Panel members indicated that higher fuel and raw material prices drove the latest rise. Despite incurring greater input costs in March, Greek manufacturers continued to trim their charges. Output prices fell at a marked and accelerated pace on the month.

Greek retail sales volume grew 5.8% year-on-year in January after a 0.2% fall in December, official data showed Wednesday. Excluding automotive fuel, retail sales volume increased 5.4% compared to a 0.5% fall in the previous month.

Retail trade turnover rose 8.1% yearly in January, after a 2.6% rise in the previous month. Turnover rose for a second month. Stripping out automotive fuel, retail trade turnover stood 5.3% higher compared to 0.6% in December.