German chancellor Angela Merkel with former foreign minister Hans-Dietrich Genscher, Günther Krause, a former East German official, Lothar de Maizière, the first and last freely elected prime minister of the German Democratic Republic (East Germany) Lothar de Maizière and current finance minister Wolfgang Schäuble (from left to right), at the ceremony to mark the twentieth anniversary of the signing of the Unification Treaty, Aug 31, 2010.

Hewlett-Packard Co. (HP) is suing to block its former CEO from joining rival Oracle  as a president and board member, claiming Mark Hurd's hiring breaches his exit agreement and will lead to a transfer of its trade secrets to a competitor.

“Oracle has long viewed HP as an important partner,” said Oracle co-founder and CEO Larry Ellison in a statement Tuesday. “By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees.  The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace."

The HP suit says Hurd is "is violating and will continue to violate his legal obligations" as a result of his Oracle appointment, according to the complaint. H-P also asked the court to appoint a "special master" to regularly review Hurd's compliance with his confidentiality agreement.

Hurd was fired last month because of an affair with a former porn actress who was hired as  HP contractor.

Oracle completed a $7.4bn acquisition of server-computer and software company Sun Microsystems earlier this year and Larry Ellison has said he intends to buy more computer companies. HP is one of the world's largest computer hardware makers by revenue, selling servers, storage systems and personal computers.

Economic View: Bond vigilantes forcing the issue again; Goodbody's chief economist, Dermot O’Leary, comments  -- "We seem to be saying this a lot recently but yesterday was yet another bad day for the Irish sovereign, with the ten-year bond yield rising to over 6% at one stage before falling again. The yield stands at 3.65% above the German equivalent this morning, a record high.

Although the deterioration in Ireland over the past month has been more severe, these moves are also part of a renewal of a wider concern around Europe, with Greece and Portugal seeing similar trends. The question now is what comes next? There are domestic and European dimensions to this question. Domestically, one piece of the September banking uncertainty was put to bed yesterday with the confirmation of the extension of the guarantee, while there was also confirmation by Finance Minister Lenihan that clarity will be provided soon on expectations of losses and associated Government costs for Anglo. Press reports this morning suggest that a statement could be made on the issue as soon as today. Then there is the issue of bond issuance. While Lenihan was asked yesterday about the use of the European Stabilisation Fund, it is too early to even discuss such a move, given that the state is already funded into Q2 2011.

A more important question is whether the NTMA will want to skip one of its regular monthly auctions, given current yields in the market. A bill auction is to take place tomorrow while the next bond auction is due to take place on Tuesday 21st September. The government must also continue on its fiscal path, with the Budget less than three months away. From a European perspective, with spreads now higher than prior to the EU/ECB/IMF rescue announcement in May, efforts must now be intensified. The ECB must therefore step up to the plate and revive its government bond purchasing plan which has been small in recent months. Plans for tighter budget surveillance are also set to be unveiled in the coming weeks. The bond vigilantes may force some of these actions, domestically and in Europe, sooner rather than later."

Bank capital on both sides of the Atlantic has to be reinforced, European Central Bank President Jean-Claude Trichet tells CNBC's Maria Bartiromo:

Consumer confidence edges back in August as Irish 10-year bond yields drift to 6%; Davy economist, Aidan Corcoran, comments - - "The KBC/ESRI consumer sentiment index registered a fall in August, to 61.4 from 66.2 in July. Taking a three-month average in order to derive a stronger signal, the index fell to 65.2 from 66.5 in the three months to end-July. While the level is still consistent with a recovery in consumption and the wider economy, the fall comes on top of recent similar movements in indicators such as retail sales, the trade surplus and the Live Register, adding weight to the perceived moderation in the pace of recovery.

The fall in Irish consumer confidence comes against the backdrop of rising sentiment elsewhere: the American Conference Board consumer confidence index beat forecasts to post a three-point gain, rising to 53.5 in August from 51.0 in July, while the European Commission's economic sentiment indicator for the EU rose to 102.7, up 0.6. The fact that the Irish consumer bucked this trend suggests that domestic woes are behind the move, with the €25bn — give or take a few billion — Anglo bill a likely candidate.

Spreads on Irish bonds widened again, showing that investors are as concerned as consumers at the prospect of rising sovereign debt. Yields rose to over 6%, the highest in more than a year, before retreating to 5.98% at yesterday's close. Exchequer returns for August, showing an on-target consolidation of the underlying fiscal position, have done little to soothe fears but will help to ease spreads over the medium term. "

Oracle hires former HP CEO Mark Hurd, with Andrew Ross Sorkin, New York Times, and Brendan Barnicle, Pacific Crest:

US Markets

In New York Tuesday, the Dow fell 107 points or 1.03% to 10,341.

The S&P 500 slid 1.15% and the Nasdaq slipped 1.11%.

Asia Markets

The MSCI Asia Pacific Index fell 1.1% Wednesday.

The Nikkei 225 dipped 2.18%; China's Shanghai Composite climbed 0.77%; Australia's S&P/ASX 200 Index fell 0.79% and India's Sensex Index advanced 0.09%.

The election of a minority government in Australia carries risks for investors in the nation’s share market, according to JPMorgan Chase & Co.

Bloomberg reports the biggest risk will be pressure on the central bank to raise interest rates if the government increases spending to accommodate a disparate group of lawmakers that helped it win power, JPMorgan said in research note. An inherently unstable administration might also increase spending to boost its popularity ahead of a possible fresh election.

Asia benchmarks

In Europe, the Dow Jones Stoxx 600 fell 0.45% Wednesday.

The ISEQ has dipped 0.52% in Dublin.

CRH is off 0.97%; Elan is up 0.64%; AIB  has declined 0.79%.

Recruitment group CPL Resources today reported pre-tax profits of €5.3m for the year ending June 2010 compared with €1.7m reported the same time last year.

Revenues fell by 11% to €189.9m from €212.4m and the company said the past year had seen the most severe labour market conditions and operating environment in its 20 year history.

United Drug, a provider services to healthcare manufacturers and pharmaceutical retailers, announced today that it had completed a financing exercise in relation to its debt facilities.

The company's group finance director, Barry McGrane, said the purpose of the move is to lengthen the company's debt maturities and provide additional facilities to the United Drug.

European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Irish Financials: Shorter term guarantees extended; Goodbody's Eamonn Hughes comments  -- "The rise in spreads of 10-year Irish bonds against bunds from of over 70bps since July 1 until yesterday captures the stresses building up in the domestic banking/sovereign markets in recent weeks. This spread now resides at 363bps. See economics section above, but the potential rise in the capital cost of Anglo Irish, the roll off of the all-encompassing State guarantee in late September, coupled with general concerns around the periphery – Portuguese 10- year spreads are up 349ps above bunds - had raised speculation recently that the Government would seek EU permission to roll some aspects of the generic State guarantee. Under the revised ELG scheme which replaced the generic guarantee, short term deposits (mainly corporate as retail less than €100k covered under the Deposit Guarantee Scheme) and interbank funding were excluded, but yesterday’s announcement sees the guarantee for short term bank liabilities, including corporate and interbank deposits as well as debt securities to be extended from 29/09 to 31/12. The final details on the guarantee extension are to be agreed over the coming days.

The move is hardly unexpected and highlights the stresses in the domestic financial system, giving it an extra quarter of breathing space. However, its hardly likely all the stresses will be addressed within the next 3 months, though at that stage the final Anglo bill will more than likely be “outed” as NAMA will have bulk of its transfers completed by then, AIB should have its capital raise away and we’ll be beyond the September roll, where term debt roll figures over the next 12 months are very modest.

Term funding rolling in September and possible deposits outflows through Q4 would have probably seen greater reliance on say, ECB drawings. The extension staggers the stresses somewhat. In terms of our margin models, we have deposit outflows in Q4, which in theory now should likely drift in 2011. Naturally, any rise in ECB dependence would actually be margin positive in the short term, though would act as a headwind over the medium term as the banks wean themselves off the support – so help to H2 margins, but maybe headwinds on FY11. We still only see BOI achieving its margin target of 175bps 12 months after its 2013 guidance and similarly for AIB at 180bps. While clearly a lot of assumptions lie behind these figures, the risk bias for the shorter term margins still remains to the downside given the recent spike in yields, should they remain elevated.

From a valuation perspective, it’s hard to argue paying more than 1x NAV (net asset value) if our normalised margins are achieved, with the risk it’s more of a struggle, hence lower valuations. In the last bout of market turmoil, around the time of BOI’s rights issue in April to early June, BOI’s look-through-TNAV multiple traded down to a 40-45% discount to the sector, though at the height of a capital raise. Our look-through-TNAV is 108c, putting the stock on 0.67x presently. So a 40-45% discount range to the sector on 1.1x would imply somewhere in a 0.6-0.65x times TNAV range where the market may get some comfort given the last bout of jitters. The move yesterday on the guarantee could be a short term fillip, but more work lies ahead for all parties - the banks and the sovereign."