FRANKFURT (MNI) – The European Central Bank said Wednesday that it
has allotted $6.2502 billion in its 84-day USD liquidity providing
operation.

The central bank said it received 15 bids.

Today’s operation was carried out at a fixed rate of 0.63%. The
Euro/USD rate was set at 1.3326.

–Frankfurt Bureau tel.: +49-69-720 142, email: frankfurt@marketnews.com

[TOPICS: MT$$$$,M$$EC$,M$$FI$,M$X$$$,MGX$$$]

FRANKFURT (MNI) – The European Central Bank said Wednesday that it
has allotted $2.8809 billion in its 7-day USD liquidity providing
operation.

The central bank said it received 6 bids.

Today’s operation was carried out at a fixed rate of 0.63%. The
Euro/USD rate was set at 1.3326.

–Frankfurt Bureau tel.: +49-69-720 142, email: frankfurt@marketnews.com

[TOPICS: MT$$$$,M$$EC$,M$$FI$,M$X$$$,MGX$$$]

LONDON (MNI) – The Bank of England said Wednesday it received no
bids at either its 7-day or 84-day repo ops.

–London newsroom: 00 44 20 7862 7499; e-ml: ukeditorial@marketnews.com

[TOPICS: M$B$$$,M$BDS$,M$$FI$,MT$$$$,M$$BE$]

–FPC Agrees Should Avoid Excessive Activism, Fine Tuning

LONDON (MNI) – Minutes for the Bank of England Interim Financial
Policy Committee’s March 16 meeting showed the committee in agreement
that while the near-term outlook for financial stability had improved,
financial sector conditions remained ‘fragile’.

Largely reprising the statement issued by the committee last week,
the minutes also noted the ‘positive spillovers’ for UK banks from the
ECB’s 3-year long-term repo operations (LTROs) and that funding
conditions had improved.

The minutes also noted the progress by UK banks in building capital
to levels which would be resilient in the face of prospective risks, but
added that this progress had seen significant variations.

Capital at the three largest banks with no state involvement had
increased by stg1.5bn in H2 2011, but “capital levels had fallen for the
UK banks that had a major element of public ownership” – although the
FPC noted that “had been affected by restructuring actions” agreed with
the government.

“Some members” of the FPC were of the view that the committee’s
recommendations that banks restrain cash distributions in the interest
of building capital could prove “counter productive” in that it could at
“some point” affect their ability to raise fresh equity capital, an
important given the emphasis now on raising external equity capital.

The FPC as a whole recognised that there was limited scope for
further capital building via limitation of distributions.

The committee also welcomed progress in limiting the “cash element
of variable compensation” (cash bonuses) “in favour of newly issued,
loss-absorbing equity” since the November meeting.

During a discussion on which macroprudential tools the committee
should recommend to the Treasury to bestow upon it, the FPC also agreed
that it would “need to avoid an excessively activist, fine-tuning
approach in setting any sectoral capital requirements”.

“That suggested an approach that allowed requirements to be
specified for a small set of broad sectors such as residential
mortgages, commercial property, other corporate lending and
intra-financial sector activity”.

The committee also stated that it might be “desirable” to vary
capital requirements for mortgage or other property-linked lending to
vary according to loan-to-value ratio.

–London newsroom: Tel+44 207 862 7492; email: dthomas@marketnews.com

[TOPICS: M$$BE$,MT$$$$]

LONDON (MNI) – National Statistics said that the combined effect of
the measures announced in the recent Budget would add 0.17 percentage
point to consumer price inflation this year.

In the Budget, Chancellor George Osborne announced a number of
measures which would push the prices of goods and services up. These
includes increases in tobacco, fuel, vehicle excise and air passenger
duties. In total these would add 0.02 percentage point to the annual
rate in April if passed on to consumers in full.

The main upward impact, though, comes in August when an increase in
road fuel duty adds a further 0.12 to the yearly CPI rate.

By October, due to changes in some VAT measures, the cumulative
impact of all measures if passed on in full comes to a total of 0.17
percentage point.

–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

[TOPICS: MT$$$$,M$B$$$,MABDS$]

NRW CPI

March: +0.4% m/m, +1.8% y/y
February: +0.6% m/m, +1.9% y/y
—
Pan-German CPI

MNI median forecast: +0.4% m/m, +2.2% y/y
MNI forecast range: +0.3% to +0.6% m/m

February: +0.7% m/m, +2.3% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
North Rhine-Westphalia rose 0.4% in March, dampening the annual
inflation rate to 1.8% from +1.9%, the state statistics office said
Wednesday.

The monthly result is in line with the median forecast of +0.4% for
pan-German CPI in a MNI survey of analysts.

Excluding heating oil (+0.8% m/m, +9.0% y/y) and motor fuel (+3.2%
m/m, +9.6% y/y), core inflation came to a more modest +0.3% on the
month and +1.4% on the year.

Due to sticky high oil prices, analysts expect annual inflation to
remain above 2% for the near future. However, core inflation is seen
rising only modestly due to weak wage growth over the past two years.

Last week, International Monetary Fund managing director Christine
Lagarde said that recent developments in oil had overtaken the Eurozone
sovereign debt crisis as the biggest concern for global growth.

The German Finance Ministry last week warned of inflation risks
from the oil price rise. “The resulting burden on purchasing power could
impair the momentum of consumption growth by private households,” it
cautioned.

Import prices in Germany maintained their upward trend in February
on the back of costlier energy, though the pace of increase declined,
the Federal Statistical Office reported on Tuesday.

ECB president Mario Draghi said on Monday that inflation in the
Eurozone was under control.

“Market indicators of inflation expectations overall show no signs
of inflation above our medium-term objective,” Draghi said. “Market
expectations of long-term inflation are fully consistent with our
definition of medium-term price stability.”

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

February sa M3: +2.8% y/y
M3 sa 3-mo avg: +2.3% y/y
SA private loans: +0.7% y/y

MNI survey median:
February sa M3: +2.3% y/y
M3 sa 3-mo avg: +2.2% y/y
SA private loans: +1.1% y/y

MNI survey range:
January sa M3: +1.7% to +2.7% y/y
M3 sa 3-mo avg: +2.1% to +2.3% y/y
SA private loans: +1.1% to +1.3% y/y

January sa M3: +2.5% y/y
M3 sa 3-mo avg: +2.0% y/y
SA private loans: +1.1% y/y
—

FRANKFURT (MNI) – Eurozone private sector lending unexpectedly
slowed in February to its weakest annual rate since June 2010, while
money supply growth surprised to the upside, the European Central Bank
reported on Wednesday.

After a modest acceleration in January, annual loan growth slowed
to +0.7%, dampening overall credit growth to the private sector by half
to +0.3%. Adjusting for sales and securitisation, loans were up 1.1% on
the year in February after +1.5% in January.

Credit granted to households rose 1.2% on the year after +1.3% in
January. with mortgage loans, the most important component of consumer
borrowing, steady at +1.8%.

Loans to non-financial corporations slowed more sharply to +0.4% in
February, down 0.3 percentage point compared to January.

Annual M3 money supply growth jumped to a five-month high of +2.8%
in February, surpassing all forecasts to lift the three-month moving
average to +2.3%. Nevertheless, the rate remains well below the ECB’s
target of +4.5%.

Among the components of M3, M1 narrow money rose 2.5% on the year,
while the annual growth rate of short-term deposits other than overnight
deposits picked up to +3.1%. Conversely, marketable instruments slowed
to an annual growth rate of 3.1%.

In its latest monthly bulletin, the ECB estimated that it would
take several months for the full impact of its two longer-term
refinancing operations to show up in monetary data. “Thus, money and
credit growth may remain subdued for some time before strengthening as a
result of these three-year LTROs,” the ECB said.

Still, comments from a number of board members indicate that the E1
trillion in ECB funds is already having an effect.

“At present, we are seeing some encouraging, albeit early, signs of
normalization across financial market segments,” ECB Executive Board
member Benoit Coeure said at a conference over the weekend.

ECB Board member Peter Praet stressed in a recent interview that
the central bank’s non-standard measures were not feeding into consumer
price developments.

But the ECB remains “very vigilant,” Praet said, adding that,
should inflation risks emerge, the central bank has the necessary
instruments to act.

–Frankfurt newsroom +49 69 720 142; e-mail:frankfurt@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$,MTABLE]

–Q4 Current Account Deficit Stg8.451bn Vs Stg10.515bn Q3

LONDON (MNI) — The UK’s current account deficit narrowed
in Q4 following a sharp downward revision to the shortfall in the
previous quarter, figures from National Statistics revealed Wednesday.

The current account deficit narrowed to Stg8.451 billion in Q4 from
Stg10.515 billion in Q3, in line with the median forecast.

Revisions to UK investment abroad data meant that the Q3 shortfall
was revised lower from an initially estimated Stg15.226 billion figure.

–London newsroom: 44 20 7634 1655; email: puglow@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]

–Q4 2nd Revision GDP -0.3% q/q; +0.5% y/y

LONDON (MNI) – UK economic growth was revised lower in the final
quarter of 2011, as services output fell for the first time in a year,
figures released by National Statistics showed Wednesday.

While the figures are backward looking, they show growth running
further below where the Bank of England thought it would be, and will
raise further concerns about how robust the economic recovery is.

GDP was revised down to show a fall of 0.3% on the quarter and
an increase of 0.5% on the year, compared with the previous estimate for
a quarterly fall of 0.2% and annual rise of 0.7%. Analysts had expected
there to be no revision to the data.

Forecasts from the February inflation report suggested the Bank of
England thought GDP fell 0.1% in Q4 before rising to 0.5% in Q1 2012
according to Market News’ calculations. Recent weaker economic data
suggests that the Q1 forecast may be looking a little optimistic.

The main reason for the lower GDP figures, was a downward revision
to services output which was revised down to show a fall of 0.1% on the
quarter against the earlier estimate of unchanged. This was the first
fall since Q4 2010.

On an expenditure basis there were large revisions which changed
the growth breakdown in Q4. Household spending was revised down slightly
to show a rise of 0.4% in Q4 from the initially estimated 0.5%. But
investment (gross fixed capital formation) was revised up sharply to
show a fall of 0.6% in contrast to the initially estimated 2.8% fall.

The upshot was a downward revision to net exports which now added
just 0.2 percentage point to quarterly growth against the previously
estimated 0.6 percentage point.

Inventories cut 0.8 percentage point from quarterly GDP growth.

Real household disposable income fell 0.2% on the quarter and by
0.3% on the year. The 2011 fall was 1.2% compared with 2010, the largest
decline since 1977 showing clearly just how much households have been
squeezed in 2011.

–London newsroom: 44 20 7862 7491; email: puglow@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]

Baden-Wuerttemberg CPI

March: +0.3% m/m, +2.4% y/y
February: +0.9% m/m, +2.5% y/y
—
Pan-German CPI

MNI median forecast: +0.4% m/m, +2.2% y/y
MNI forecast range: +0.3% to +0.6% m/m

February: +0.7% m/m, +2.3% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
Baden-Wuerttemberg rose 0.3% in March, dampening the annual inflation
rate to +2.4% from +2.5%, the state statistics office said Wednesday.

The monthly result is below the median forecast of +0.4% for
pan-German CPI in a MNI survey of analysts.

Upward pressure on monthly inflation was again marked by rising
fuel prices. Motor fuel spiked 4.0%, though heating oil fell 1.0%.

Clothing and shoes were 3.1% more expensive than a month ago. Food
prices were up 0.4%, with seasonal produce unchanged.

After the end of the winter holiday season, prices for package
holiday tours fell 2.9% on the month. Restaurant and hotel services were
down 1.0%.

Annual price developments were again driven by energy price
increases, with heating oil up 9.7% and motor fuel up 7.2%.

Food prices climbed 3.2% on the year, with seasonal produce down
3.5%. Alcoholic drinks and tobacco products increased by 4.0%. Clothing
and shoes were up 3.6%.

Due to sticky high oil prices, analysts expect annual inflation to
remain above 2% for the near future. However, core inflation is seen
rising only modestly due to weak wage growth over the past two years.

Last week, International Monetary Fund managing director Christine
Lagarde said that recent developments in oil had overtaken the Eurozone
sovereign debt crisis as the biggest concern for global growth.

The German Finance Ministry last week warned of inflation risks
from the oil price rise. “The resulting burden on purchasing power could
impair the momentum of consumption growth by private households,” it
cautioned.

Import prices in Germany maintained their upward trend in February
on the back of costlier energy, though the pace of increase declined,
the Federal Statistical Office reported on Tuesday.

ECB president Mario Draghi said on Monday that inflation in the
Eurozone was under control.

“Market indicators of inflation expectations overall show no signs
of inflation above our medium-term objective,” Draghi said. “Market
expectations of long-term inflation are fully consistent with our
definition of medium-term price stability.”

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

UK DATA: Q4 Current Account Deficit Stg8.451bn Vs Stg10.515bn Q3
–In line with median forecast
————————————————————————
The UK’s current account deficit narrowed in Q4 following a sharp
downward revision to the shortfall in the previous quarter, figures from
National Statistics revealed Wednesday. The current account deficit
narrowed to Stg8.451 billion in Q4 from Stg10.515 billion in Q3, in line
with the median forecast. Revisions to UK investment abroad data meant
that the Q3 shortfall was revised lower from an initially estimated
Stg15.226 billion figure.

UK DATA: Q4 2nd Revision GDP -0.3% q/q; +0.5% y/y
–GDP revised down on lower services output
————————————————————————
UK economic growth was revised lower in the final quarter of 2011,
as services output fell for the first time for a year. While the figures
are backward looking, they show growth running further below where the
Bank of England thought it would be and will raise further concerns
about how robust the economic recovery is. GDP was revised down to show
a fall of 0.3% on the quarter and increase of 0.5% on the year, compared
with the previous estimate for a quarterly fall of 0.2% and annual rise
of 0.7%. Analysts had expected there to be no revision to the data. The
main reason was a downward revision to services output which was revised
down to show a fall of 0.1% on the quarter against the earlier estimate
of unchanged. This was the first fall since Q4 2010.

Biggest fall since Q4 2010 and against revised -0.2% q/q and +0.7% y/y

Q4 Current account deficit – £8.451 bln  from Q3 -£10.515 bln(expected -£8.5 bln)

Cable pressing lower on the disappointing data with the sell stops taken out through  1.5920 to lows of 1.5904

Cross looks to have turned the corner now with a move up through 1.2800 which popped some buy stops to 1.2806. There are more buy stops up through 1.2830 with the Dec 29 highs of 1.2873 above there offering some technical resistance.

The move has left AUD/USD lagging far behind the EUR/USD this morning , and month-end yen demand is weighing as well through AUD/JPY sales from  Japanese banks. Aussie-yen bids at  86.10/15 have so far stemmed the outflow ahead of sell stops down through 86.00. Offers sit up at 86.80/00

AUD/USD has bids  from 1.0420 down to 1.0400, with some stops expected on abreak of the 200 day MA at 1.0399 and the 100 day MA at 1.0379. Offers remain ahead of 1.0450 with some buy  stops just above ahead of better offers at 1.0490/00

Being told this latest bout of euro strength is linked to conversion of IMF’s Greek aid payments.

I have to say I’ve heard this talk before, and not too long ago.  Ummm.

We’re at 1.3365 having been as high as 1.3373.

Hesse CPI

March: +0.2% m/m, +2.0% y/y
February: +0.8% m/m, +2.2% y/y
—
Pan-German CPI

MNI median forecast: +0.4% m/m, +2.2% y/y
MNI forecast range: +0.3% to +0.6% m/m

February: +0.7% m/m, +2.3% y/y
—

BERLIN (MNI) – Consumer prices in the western German state of
Hesse rose 0.2% in March, dampening the annual inflation rate to
+2.0% from +2.2%, the state statistics office said Wednesday.

The monthly result is below the median forecast of +0.4% for
pan-German CPI in a MNI survey of analysts.

Excluding energy (+1.6% m/m, +6.3% y/y), core prices were unchanged
on the month to give an annual rise of 1.5%.

Within the energy component, the strongest gains were seen in
heating oil (+7.9% y/y), which helped to boost household energy prices
5.8% on the year. Motor fuel prices also saw significant upward movement
in March, rising 7.3% y/y and lifting transport prices 3.2% over the
same period.

Due to sticky high oil prices, analysts expect annual inflation to
remain above 2% for the near future. However, core inflation is seen
rising only modestly due to low wage growth over the past two years.

Last week, International Monetary Fund managing director Christine
Lagarde said that recent developments in oil had overtaken the Eurozone
sovereign debt crisis as the biggest concern for global growth.

The German Finance Ministry last week warned of inflation risks
from the current oil price rise. “The resulting burden on purchasing
power could impair the momentum of consumption growth by private
households,” it cautioned.

Import prices in Germany maintained their upward trend in February
on the back of costlier energy, though the pace of increase declined,
the Federal Statistical Office reported on Tuesday.

ECB president Mario Draghi said on Monday that inflation in the
Eurozone was under control.

“Market indicators of inflation expectations overall show no signs
of inflation above our medium-term objective,” Draghi said. “Market
expectations of long-term inflation are fully consistent with our
definition of medium-term price stability.”

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

Brandenburg CPI

March: +0.2% m/m, +2.1% y/y
February: +0.8% m/m, +2.5% y/y
—
Pan-German CPI

MNI median forecast: +0.4% m/m, +2.2% y/y
MNI forecast range: +0.3% to +0.6% m/m

February: +0.7% m/m, +2.3% y/y
—

BERLIN (MNI) – Consumer prices in the eastern German state of
Brandenburg rose 0.2% in March, dampening the annual inflation rate to
+2.1% from +2.5%, the state statistics office said Wednesday.

The monthly result is below the median forecast of +0.4% for
pan-German CPI in a MNI survey of analysts.

Upward pressure on monthly inflation came again from the energy
side. Motor fuel spiked 3.8%, while heating oil, electricity and gas all
rose by 0.1%.

Clothing and shoes were 1.5% more expensive than a month ago. Food
prices were up 0.3%, with seasonal produce up 0.2%.

After the end of the winter holiday season, prices for package
holiday tours fell 2.9% on the month. Restaurant and hotel services were
down 0.4%.

Annual price developments were again driven by energy price
increases, with heating oil up 10.4%, motor fuel up 5.6%, gas up 7.6%
and electricity up 1.9%.

Food prices climbed 3.3% on the year, with seasonal produce down
0.8%. Alcoholic drinks and tobacco products increased by 4.0%. Clothing
and shoes were up 2.9%.

CPI excluding heating oil and motor fuel was unchanged on the month
and 1.8% higher on the year.

Due to sticky high oil prices, analysts expect annual inflation to
remain above 2% for the near future. However, core inflation is seen
rising only modestly due to weak wage growth over the past two years.

Last week, International Monetary Fund managing director Christine
Lagarde said that recent developments in oil had overtaken the Eurozone
sovereign debt crisis as the biggest concern for global growth.

The German Finance Ministry last week warned of inflation risks
from the oil price rise. “The resulting burden on purchasing power could
impair the momentum of consumption growth by private households,” it
cautioned.

Import prices in Germany maintained their upward trend in February
on the back of costlier energy, though the pace of increase declined,
the Federal Statistical Office reported on Tuesday.

ECB president Mario Draghi said on Monday that inflation in the
Eurozone was under control.

“Market indicators of inflation expectations overall show no signs
of inflation above our medium-term objective,” Draghi said. “Market
expectations of long-term inflation are fully consistent with our
definition of medium-term price stability.”

For detailed information see data table on MNI MainWire.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$G$$$,MAGDS$,M$X$$$,M$XDS$,MT$$$$]

ITALY DATA: March business confidence fell to 92.1 from 91.7 in
February, as a result of worsening order expectations, improving
sentiment on export-related orders and a decline in current inventory
levels. The index posted its highest levels since January 2012, ISTAT
said. –March current orders fell to -37 from -36 in February, while the
3-month outlook for output rose to +2 from +1 the previous month.
–Current inventory levels fell to +1 (February +2) –See headlines on
main wire.

Up from 91.7 in February and better than Reuter’s median forecast of 91.5.

Better than the Reuters poll of 2.4%

M3 moving average Dec-Feb 2.3% from 2% Nov-Jan

Feb annual Private loan growth 0.7% ( vs Reuters poll of 1.2%)