Despite above-expected inflation........>

EGB SUMMARY: Despite above-expected inflation data, core EGBs have recovered

early losses while periphery instruments are off their highs.

- Eurozone flash HICP registered 2.2% Y/Y in Oct vs 2.1% median forecast; while

energy prices drove headline, core was 1.1% Y/Y vs 1.0% median.

- Regardless, and despite equity strength, the Dec 18 Bund future is up 30 ticks

from the 160.01 low seen earlier, last down 13 ticks at 160.31.

- Meanwhile Italian BTPs are outperforming but off intraday highs: Dec 18 BTP

future is up 36 ticks at 121.58, off 121.89 high.

- Fin Min Tria reiterated that the government does not seek EU/euro exit, and

that it would stick by its budget plans which he called sustainable.

- However Bank of Italy Governor Visco warned that the coalition's spending

plans would not solve Italian economic growth underperformance.

- Euribor strip pretty flat; Blues off 0.5-1.0 ticks.

- In ECB speak, Olli Rehn said Oct inflation was broadly in line with

expectations; separately Ewald Nowotny reiterated Dec as the last month of APP,

downplaying recent economic weakness.