Giving a pulse check on the day’s happenings in the European markets, Martin Baccardax, News Editor, CNBC Europe said the reaction hasn’t been as dismal as most expected it to be. According to him, European markets are holding in relatively firmly largely because of corporate earnings reports, many of which have been better than expected. However, according to him, it’s BHP Billiton’s improved USD 147 billion dollar offer for Rio Tinto that’s giving the markets support, at least in the short-term. “I think this has some investors encouraged that may be they would be able to ride an M&A wave,” he explained.

Excerpts of CNBC-TV18’s exclusive interview with Martin Baccardax:

Q: How have people in Europe approached what's happened overnight in the US and the way Asia has opened, and some of the markets that have already closed today?

A: Oddly enough, the reaction hasn’t been quite as dismal as one might have expected. We saw significant sell off in the US and as you know, one of the worst sessions in about 11-months for the S&P 500 - the broadest measure of US equity performance. That was followed through an Asian, in some cases a truncated session, because of holidays in different parts of the region.

But we haven’t followed through in the same way. We are off as you mentioned somewhere around 0.3% - that’s on the FTSE 100, that’s about 1.1% on the SMI in Switzerland. So we are holding in relatively firm and that’s largely because we have had a very busy session for corporate earnings this morning. Quite a few of them have been better than expected, particularly those in difficult industries such as commercial trucking, white durable goods, that sort of thing. Those numbers have been a little bit better. I want to mention companies such as Electrolux out of Sweden, one of the biggest white goods makers in the world and I also talk about France Telecom, one of the biggest telecom companies in the world - they sort of beat expectations from their quarterly earnings.

We saw a little bit better numbers from some insurance groups here in the UK as well as some media companies. But I think ultimately, what's giving us support, at least in the short-term, is BHP Billiton and their improved USD 147 billion dollar offer for Rio Tinto. This does indicate that there is still some strategic merger and acquisition activity to be had in the market place because stocks are looking incredibly cheap right now. I think this has some investors encouraged that may be they would be able to ride an M&A wave. At least in the equity markets in the short-term, there is some strategic buyers buying cheap assets.

But ultimately, the overall backdrop is, without caution, particularly after that ISM number out of the US, it’s probably the key measure, or at least to date the key measure, that has pointed unambiguously to the US recession. If that turns out to be the case, it’s going to have significant implications for asset prices across the board, the euro-dollar, crude oil, gold - pretty much everything. So this has investors in a very cautious mood, although we are relatively supported by some of this merger activity and some of the better corporate earnings this morning.