Eurozone PMIs Remain In Contraction, Merkozy Awaited

Merkozy to meet today in France over their differences on Eurozone stability pact, Italy announces new austerity budget, Eurozone Nov Services PMI slowed to 47.5 from 47. 8, UK Services PMI set to slip back, China Services PMI drops, US ISM non-manufacturing also due. Premium Intermarket Insights due ahead of the US session.

Ezone Nov Services PMI slowed to 47.5 from 47. 8. 47.8 was expected. Germany services PMI slowed to 50.3 from 51.4 vs exp 51.4. Yet the German composite services PMI did fall below 50 at 49.4. Italy Nov services PMI rose to 45.8 above the expected 44.1, France services PMI rose to 49.6 vs. expected 49.3.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are set to meet in Paris today to agree on closer political and economic integration and attempt to resolve their differences over ensuring and enforcing transgressors. Sarkozy remains opposed to the idea of enforcement by the European Commission & European Court of Justice. Merkel is insistent on treaty changes to ensure compliance.

Italian Prime Minister Monti announced a new austerity budget of around 30bn with about 20bn in cuts between 2012 and 2014, including increasing value added tax, reintroducing a property tax, and raising the state pension age.

UK Nov services PMI will be key, given that the services sector accounts for over two thirds of the UK economy Expectations are for a weakening from 51.3 to 50.5, not great but still better than the majority of our European peers.

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Less than week after China manufacturing dipped into contraction for the 1st time in 3 years, services PMI data dropped to 49.7 in Nov from Octobers 57, increasing expectations of further easing after last weeks reserve requirements cut. This mornings HSBC services PMI also showed weakness but not to the same extent dropping from 54.1 to 52.5. In the US the slow recovery is economic data is expected to continues this afternoon with the latest ISM Non-manufacturing data for November.