Europe midday: Germany cuts growth forecasts



LONDON (ShareCast) - - Germany cuts 2013 growth forecast
- Eurogroup Chief warns of strength in single currency
- Analysts expect Euro to make another attempt towards 1.35
- World Bank lowers global forecasts for 2013

FTSE -100: -0.62%
Dax (Xetra: ^GDAXI - news) -30: -0.38%
Cac-40: -0.31%
FTSE Mibtel 30: -1.53%
Ibex 35: -0.69%
Stoxx 600: -0.38%

European equities were still trading slightly lower by the midday mark on Wednesday following weakness in Asian bourses overnight, especially in Tokyo's, a warning from Eurozone officials regarding recent strength in the bloc's currency and the poor reaction to the latest earnings results out of JP Morgan (Other OTC: JPAAZ - news) Stateside.

Last night's the Chief of the Eurogroup, Jean Claude Juncker, issued a stark warning regarding the risks for the Eurozone stemming from what he judged as the excessive strength of its currency (not to mention the speed of the recent rise).

Interestingly, and despite the very significant short-term technical resistance which the single currency is facing, Michael Hewson, Market Analyst at CMC, has this morning pointed out that further strength in the euro may be the price which must be paid as periphery bond yields come down.

Further weighing on the 'risk' assets, overnight the World Bank lowered its forecasts for global growth in 2013.

Acting as a backdrop, and following yesterday's GDP release, Germany's Federal Office of Statistics today lowered its growth forecast for this year to 0.4%, albeit while at the same time highlighting that economic activity is expected to pick up to 1.6% next year.

Dividend pay-out to fall

Of interest, payouts to shareholders in the Euro Stoxx 50 (Zurich: ^STOXX50E - news) will fall by 3.3% to €115.48 a share this year, according to more than 500 analyst estimates compiled by Bloomberg. Reducing them by that much would cut the dividend yield to 4.3% from 6.3% in September 2011, even after cash on balance sheets climbed to the highest since 2008, the data show.

French retailer Casino (Paris: FR0000125585 - news) is up despite announcing that sales fell in the fourth quarter, as its shares benefit from an upgrade out of analysts at Bank of America (Other OTC: BACYL - news) -Merrill Lynch.

From a sector stand point the worst performance is now to be seen in the following sectors within the DJ Stoxx 600: Basic resources (-1.67%), Banks (-1.22%) and Insurance (-0.92%).

Also of interest, today's auction of new 10 year German debt has seen good demand, with the bid-to-cover ratio rising to levels of 1.7, the strongest since 2009.

CPI (Other OTC: CPIC - news) data as expected
Italy's trade surplus fell back slightly in November (Xetra: A0Z24E - news) , to €2.36b (Consensus: €2.66bn), after a reading of €2.4bn.

Final Eurozone consumer price data for the month of December was confirmed at 2.2% year-on-year, as expected.

Small bounce in the single currency
The euro/dollar is now edging lower by 0.17% to the 1.3276 dollar mark.

Front month Brent crude futures are now higher by 0.199 dollars to the 110.52 dollar mark on the ICE.