LCH Clearnet raises charges on clients trading Italian Govt bonds and Index linked securities

Italy’s Berlusconi: No alternative to early elections, sees voting in early Feb

Italy’s Berlusconi: Vows to carry out reforms demanded by EU. No alternative to early elections, opposed to any transitional govt

Greek socialist party source- EU court of Justice Pres Vassilios Skouris may be the next Greek PM.

France’s Budget deficit -92.7 bln euros at end Sep 2011

UK Sep global goods Trade balance – £9.814 bln (vs consensus -£8.0 bln)

HSBC Holdings PLC earnings- Pre tax profits $7.2 bln for Q3 2011

Riksbank’s Nyberg: Further Swedish rate cut path possible

BK oF Greece Gov Provopolous: Political delays damage credibility

Italian President Napolitano: Calls for immediate commitment to manage public finances

EUR/USD was wobbling in late Asia, opening in London at 1. 3818, and the move lower was triggered by an early announcement from the LCH to increases margins on Italian bonds.

This led a stampede which despite ECB buying through the SMP sent EUR/USD into a tailspin lower. Italian yields went to record highs.

Corporates and leveraged names set about attacking sell stops in EUR/USD from 1.3800, with little in the way of bids to slow the descent, as bonds led the way and European equities sharply reversed early gains of over 1%.

Major support at 1.3750/60 crumbled to 1.3740 with bounces very “dead-cat”in nature, further macro/leveraged sales leading another leg down through 1.3700 to 1.3627.

EUR/GBP collapsed from 0.8592 led by sales from a major German bank amid talk of very large selling interest into the 1100GMT fixing. (A UK pharmaceutical dividend trade apparently in the frame) . We went as low as 0.8517 and a close below 0.8530 now leaves the door open for a fall to test a 0.8500 (barrier) and 0.8460

GBP/USD’s fall was delayed by the EUR/GBP collapse but fell back sharply late morning as the EUR/GBP cross recovered recovered . Cable fell from 1.6116 to 1.5956

AUD/USD was swept along with the EUR/USD fall from 1.0365 taking out stops enroute through 1.0270 to lows of 1.0206

USD/JPY traded 77.54-73 with EUR/JPY collapsing from 107.29 to 105.76

Nymex Crude spilled over $2 from $97.15 to $95.00, Gold was steady through $1778-1790

European equities were all a sea of red- from early gains of 1%, to between 2.5-3% down at the time of writing with the exception of the FTSE MTB down over 4%.