FBD said in a trading update today that has continued to perform strongly, building on its first half to deliver strong earnings and profit after taxation in the second half of 2012 to date. The firm said it has performed ahead of market guidance, primarily due to the continuation of the first half claims performance in the underwriting business.

FBD Holdings: H2 IMS (interim management statement) raises Operating EPS guidance by 10c to 155-165c; Eamonn Hughes of Goodbody comments  -- "A better than anticipated claims performance in H2 allows FBD to raise its Operating EPS guided range by 10c (+7%) to 155-165c. Our previous 150c EPS estimate lifts to 162.7c. Elsewhere, our gross written premium estimates are unchanged though we raise our net earned premiums.

FBD is expected to generate a 23% ROE in FY12. We recognise the benign backdrop for large and weather related claims this year and model a higher claims ratio in FY13. However, this still drives a 16% ROE compared with UK and European peers offering 12%. Capital accretion dilutes returns at FBD with a pay-out ratio of just 25-30% compared to peers closer to 50% This provides scope for stronger growth over the medium term (dividend yield of 4% versus c.6%+ average for the peers)."

Economic View 1: A big punt on Ireland; Dermot O'Leary of Goodbody comments - - "The story of one US fund manager’s massive bet on Ireland makes it into this morning’s Financial Times. According to the story, Franklin Templeton increased its holdings to €8.4bn in Q3 and now owns c. 10% of outstanding Irish treasury bonds. In one bond (October 2020), the fund owns over 15% of the issue. The fund started its investment in Irish bonds last summer when yields were in double-digit territory and have clearly performed excellently over that time period.

As Ireland attempts its full return to markets over the coming months, its aim must be to broaden its investor base. While it is positive that fund managers have taken a more positive view on Ireland and acted upon it, the concentrated nature of ownership has its pitfalls if it is forced to sell down some of its holdings."

Economic View 2: Greek plan is still wishful thinking; Dermot O'Leary added  - -"Ahead of tomorrow’s special summit on the issue, there appears to be some complacency in the markets about the approval of the next tranche of aid to Greece. From our reading of the various comments from both EU policymakers and the IMF it is difficult to see how an agreement will be reached in the near future at least.

EU finance ministers can continue to throw good money after bad at the situation in Greece. However, it would be much better for everyone if a credible agreement can be reached. Given its record we are not optimistic of such an occurrence."

Progress in negotiations to avert US fiscal cliff buoys sentiment: Conall MacCoille of Davy comments - - "The S&P500 rose 0.5% on Friday (November 16th) but with the Euro Stoxx 50 Pr falling 1.4%. On Friday, US market sentiment was buoyed by some positive signs that Democrats and Republicans may secure agreement to avert the fiscal cliff. So some catch-up for European indices seems likely today, with European stock index futures pointing to gains close to 1% at the open.

Following talks with President Obama on Friday, Republicans conceded that revenue-raising measures will likely form part of any deal. Furthermore, comments over the weekend by President Obama, expressing confidence that a budget deal can be reached, have also buoyed market sentiment, with Asian indices up overnight. With few significant macroeconomic data releases, the market's attention will now shift to the more intractable problem of Greece. EU finance ministers are scheduled to meet on Tuesday to discuss Greece's programme.

Today's US home sales release is expected to be flat at 4.75m in October. Friday's release of US industrial production showed an unexpected 0.4% decline in October, attributed to the disruptive effects of Hurricane Sandy. So both today's existing home sales and tomorrow's housing starts data could also be affected by temporary negative effects from the storms."

Justin Doyle, Investec Bank Ireland, said today:

1.       The same two big issues look set to sway market sentiment this week: the US fiscal cliff and Greece. Fears over the fiscal cliff weighed heavily on markets through much of last week as it became clear just how much ground needed to be covered in reaching a deal.

2.       Nevertheless, the White House, meeting at the end of last week, signalled the real start to talks. It delivered some optimism given the conciliatory tone of post-meeting comments from both sides of the negotiating table.

3.       Closer to home, Greece remains the big headache with Troika talks continuing as Greece continues to push for its €31bn aid payment

4.       There is another Eurogroup meeting on Tuesday but the ongoing disagreement between the IMF and European Commission over the debt dynamics doesn’t look to have eased up, so we are doubtful of a firm conclusion from this meeting.

5.       Finally, note that the US week is curtailed because of the Thanksgiving holiday which sees markets closed on Thursday and close early on Friday too. The Thanksgiving weekend will be bringing various ‘Black Friday’ retail reports, which equity markets are likely to track closely, whether accurate or not.