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European markets up on Italian politics and expectations ahead of ECB this week

FXstreet.com (Barcelona) - The German DAX 30 (+0.29%), the French CAC 40 (+0.69%), the Italian FTSE MIB (+1.40%) and the Spanish IBEX 35 (+1.10%) are trading strong as most of the European equity indexes as investors cheer this weekend’s news of an Italian coalition government, with PM Lette (PD) forming an alliance with Berlusconi’s PDL party (even though he is not assuming any senior ministerial positions, he remains popular and influential), while Grillo’s Five-Star party refused to join, as expected.

The ECB will announce its monetary policy this week and analysts are divided in regard to the decision. Many call for a rate cut and market consensus points to a 25bp drop to 0.50%, but German Chancellor Merkel made a controversial hint that she would prefer a rate hike.

Consumer confidence improved from -23.5 to -22.3, as expected, but economic sentiment indicator (from 90.0 to 88.6), business climate (from -0.75 to -0.93), industrial confidence (from -12.3 to -13.8) and services sentiment (from -7 to -11.1) all fell and disappointed market consensus of 89.3, -0.89, -13.5, and -7.0, respectively.

Portuguese consumer confidence rose from -55.3 to -54.2, and business confidence rose from -3.9 to -3.6. Italian business confidence eased from 88.6 to 87.6, below 88.9 consensus. Italian wage inflation remained unchanged at 0.0% (MoM) and 1.4% (YoY). The Greek PPI dropped from 0.8% to -1.5% in March.

Futures for the American S&P 500, Nasdaq 100 and Dow Jones 30 are signaling a higher NY opening ahead of US personal income and spending, as well as this week’s FOMC meeting.

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