LONDON (ShareCast) - -Greece edging closer to deal with creditors.
-Reports that Greek ‘hair-cut’ could reach 70%.
-Deadline day for European bank capital disclosures.

FTSE-100: -0.22%
Dax-30: -0.18%
Mibtel: -0.13%
Ibex 35: -0.49%
Cac-40: -0.22%
Stoxx 600: -0.28%

European markets were mostly down at the close on Friday, having risen significantly since the start of the year, with some technical indicators implying both the DAX in Germany and the wider Stoxx 600 were nearing “over bought” conditions.

Rumours are circulating that Greece and its creditors may reach a deal on a debt swap tonight. Reports from Athens suggest creditors could be given new bonds which would mature in 30 years time. The interest rate on the bonds would rise incrementally from around 3% to just under 5%. These reports are unconfirmed although they imply a “hair cut” or loss on the original loans of around 70% in terms of net present value.

Today has been the final day for 31 distressed European banks to tell their regulators how they plan to raise new capital following stress tests in the summer of 2011.

Investors are still waiting to see the final package of measures Eurozone leaders will put together to ease the debt crisis. Some reports today have suggested Angela Merkel is considering making concessions on a financial transactions tax, hated by Britain, in an effort to win David Cameron’s support in creating a new EU budget rule book.

COMPANIES

The Chinese sovereign wealth fund, CIC, is said to be looking to invest in the UK’s Thames Water, as Britain tries to tempt Asian money into paying for much needed infrastructure investment.

Several US banks are being reported as finalists in the bidding process for Deutsche Bank’s asset management unit, Reuters reports.

Commerzbank had a second storming day in Frankfurt, rising 6.3% after yesterday revealing it had raised more than enough capital to meet new tier one capital requirements.

A notable faller in Paris was L’Oreal, the cosmetics company, which dropped 1.6% after a downgrade from Morgan Stanley.

In Italy, Mediobanca (-2%) and Unicredit (-1.4%) were both amongst the biggest fallers.

MACROECONOMY

Sales of previously owned US homes rose 5% in December to hit 4.61m according to figures from the National Association of Realtors. This was just below expectations but still demonstrates recovery in the US economy.

German producer prices fell by 0.4% between November and December (Consensus: 0.1%).

Spain’s trade deficit for the month of November improved to -€2.67bn from -€3.5bn in October.

Italian industrial orders rose 0.1% between October and November.

OTHER MARKETS

The Euro/dollar had dropped 0.25% by 6:25pm in Frankfurt to 1.2935 dollars.

Brent crude futures had fallen 1.34% to $110.06 per barrel by 5:21pm in London.

BS

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