March Industrial output falls to -8.5% y/y from -8.3% in February

No signs of any improvement  just yet in Greece…

There’s only one thing to do to lift one’s spirits………yes that’s right, toast a hot cross bun and smother it in butter and just gobble it right up!!

What do you like to do to lift your spirits?

Smutty replies won’t get past moderation.

LONDON (MNI) – UK mortgage rates moved higher across the board in
April, against a backdrop of increases in bank funding costs, according
to the latest Bank of England data.

The BOE’s “Quoted Rates” survey covers a wide spectrum of mortgage
deals and the latest survey shows mortgage rates climbing despite no
change in central bank policy – a de facto monetary tightening.

The average sterling 2 year 75% loan-to-value fixed rate mortgage
rose to 3.65% in April from 3.44% in March. Back in September the
average rate was just 2.92%.

The rate on the average sterling 3 year 75% LTV fixed rate mortgage
rose to 4.04% from 3.91% and on a 5 year 75% LTV fixed rate mortgage it
climbed to 4.28% from 4.19%, a marked rise from the trough of 4% back in
September last year.

The rate on a standard variable mortgage was 4.1% in April, up from
4.0% in March.

An increase in mortgage rates will add to the pressure on household
finances, with pay growth still subdued.

–London newsroom: 4420 7862 7491; email: drobinson@marketnews.com

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

Sorry Chris  in Sweden, seems there’s someone else trading Cad as well as you…!.

Hearing the Bk of Korea maybe behind this recent blip up to 1.0028.. Some tech resistance above lying at the 200 day MA around 1.0058, and support towards the daily Ichimoku cloud top curently around 0.9995

–Adds Graphs On Monetary Policy, Price Stability, Nonstandard Measures

VIENNA (MNI) – The European Central Bank will be vigilant to ensure
the preservation of stable prices in the euro area, ECB Chief Economist
Peter Praet said Thursday.

Speaking at a conference of the Austrian National Bank, Praet said,
“as in the past, the Governing Council will be vigilant in order to
contain upside risks to price stability.”

Monetary liquidity is measured by the balance sheet of the banking
sector, not of the Eurosystem, he emphasized in this connection, as only
the former “shows the interaction with the real economy.”

“This interaction is captured by monetary and credit data which,
despite the recent stabilization…are still very subdued,” he added.
“If these conditions were to change in a way that entailed upside risks
to price stability, the Governing Council would use all the instruments
at its disposal to continue delivering on its primary mandate.”

As for non-standard measures implemented to counter the crisis,
Praet noted reiterated that they are temporary “and will be withdrawn if
upward pressures to price stability materialize.”

Turning to the two three-year long-term refinancing operations
conducted by the ECB in recent months, Praet said that their “full
supportive impact…will need time to unfold.”

“Any assessment of their impact on the economy can only be
preliminary at this stage,” he continued. “However, the data available
to date give some encouraging signals.”

In particular, these data include “a broad stabilization of
financial conditions and thereby the avoidance of an abrupt and
disorderly adjustment in the balance sheets of credit institutions.”

Moreover, “funding conditions for banks have generally improved,
and there has been increased issuance activity and a re-opening of some
segments of funding markets.”

However, Praet repeated that credit demand remains weak in the face
of ongoing deleveraging by the non-financial sector and weak economic
activity.

If the ECB were to hike its main refinancing rate, then the
interest rate charged on the LTROs would automatically rise for the
remainder of the term since it is indexed to the refi rate, he pointed
out.

“Hence, the three-year liquidity allocation does not stand in the
way of an increase in short-term interest rates; rather, it would allow
such an increase to be immediately translated into the outstanding
liquidity operations,” he noted.

Praet sought to leave no doubt that the monetary policy of the ECB
remains “firmly and unambiguously anchored in our primary objective of
maintaining price stability.”

Medium-term inflation expectations remain consistent with this
objective and thus confirm the credibility of the ECB, he said.

The bank faces a “delicate balancing act” in that “decisive action”
is needed to counter inflation risks from “a possible financial
meltdown,” while at the same time crisis mitigation “can alter
incentives for the different actors to correct the imbalances that
undermined financial stability in the first place,” he noted.

“If the central bank does not react forcefully, it risks losing its
ability to deliver on its mandate of price stability,” he cautioned.

However, the root causes of the crisis can only be addressed by
governments and excessively leveraged economic agents, he said.

“If domestic policy-makers and other economic actors delay
necessary reforms and adjustments on the expectation that the central
bank may have to provide renewed support should market conditions
deteriorate, monetary policy may end up being subject to a short-term
bias,” he said.

Under such circumstances, monetary policy would be dominated more
and more by short-term financial market stability concerns, he
explained.

Avoiding this requires that extraordinary monetary policy measures
be temporary and certain of being unwound as soon as conditions improve,
he said.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$S$$,M$$EC$]

–Mar manufacturing output +0.9% m/m; -0.9% y/y
–Mar industrial production -0.3% m/m; -2.6% y/y

LONDON (MNI) – Manufacturing output bounced back strongly in March,
but growth remained lacklustre in the first quarter as a whole, figures
released by National Statistics revealed Thursday.

The latest data on production imply no revision to first quarter
GDP which fell 0.2% on the quarter, prompting some economists to
forecast further Quantitative Easing by the Bank of England at today’s
Monetary Policy Committee meeting.

Manufacturing output rose 0.9% on the month in March and was down
0.9% on the year, above the median for a 0.5% monthly gain and yearly
fall of 1.2%. This followed a downwardly revised fall of 1.1% in
February.

In statistical terms this means that the manufacturing sector is
not in a technical recession, but output was only flat in Q1 compared
with Q4 2011.

The wider measure of industrial production fell 0.3% on the month,
as the record hot weather during March curbed output of the utilities
companies, which fell 6.4% on the month compared with a rise of
5.7% in February. This was mainly due to a 17.6% fall in gas production.

Over the quarter, industrial production fell 0.4% compared with the
previous quarter, in line with the estimate used in the calculation of
Q1 GDP figures.

Data from the CIPS manufacturing PMI had pointed to a bounceback in
output in March but the survey measure eased back in April, pointing to
weaker growth.

Most analysts think the BOE will hold fire on further monetary
easing following its meeting today, but many described the decision as
being on a knife edge. Seven out of 34 analysts said they expected to
see the BOE opt for further QE this month.

–London newsroom 4420 7862 7491 email: puglow@marketnews.com

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

UK DATA: Mar manufacturing output +0.9% m/m; -0.9% y/y
–Mar industrial production -0.3% m/m; -2.6% y/y
————————————————————————
Manufacturing output bounced back strongly in Mar, by 0.9% m/m,
above the 0.5% median forecast. Industrial production was in line with a
fall of 0.3% m/m. The latest data on production imply no revision to Q1
GDP which fell 0.2% q/q. This means the figures will have little impact
on analysts think ahead of the BOE’s policy announcement today, with
only a minority going for further QE. The bounceback in manufacturing
will be welcomed, but does follow a sharp 1.1% fall in February. While
technically this pulls the sector out of recession, output was flat in
Q1, not exactly the export-led recovery that many had hoped for.
Over the quarter, industrial production fell 0.4% compared with the
previous quarter, in line with the estimate used in the calculation of
Q1 GDP figures.

Well Barclays are still bearish the cross, seeing more weakness ahead.

Initial target is 0.7960, medium and long-term targets 0.77 and 0.73.

Bank says will hold view while the 0.8075-0.8100 area caps any recovery attempts.

We sit presently at .0.8035.

March Manufacturing production +0.9% m/m (expected +0.5%) from +1.0% in Feb, -0.9% y/y

Cable sold off ahead of the numbers to dip under 1.6100, but improved Mfg production now underpinning

The ex-ECB council member and now UBS chairman speaking in London.

• Spanish problems carry extremely high contagion risks
• Rescue measures only bought time
• Cautious revival of U.S. economy is glimmer of hope

Read all about it…!

It’s a best seller …

Better than Reuter’s median forecast of -0.2%.

EUR/USD sits exhausted at 1.2952.  It’s been a hard few days…….

• Dutch budget measures are in line with the stability pact
• Netherlands must pursue fiscal consolidation

BERLIN (MNI) – German Chancellor Angela Merkel on Thursday
reaffirmed her opposition to any debt-financed growth stimulus programs
in the Eurozone to overcome the sovereign debt crisis.

“Debt-financed growth would throw us back to the starting point of
the crisis,” Merkel said in a government declaration in the German
parliament. “That is why we must not do this and we won’t do this,” she
stressed

“Growth via structural reforms — that is necessary, that makes
sense,” the Chancellor asserted.

Merkel once again argued that there won’t be one big bang solution
to the debt crisis. Rather, “overcoming the crisis will be a long and
exhausting path,” she said.

The Chancellor said the debt crisis will be a focus of the upcoming
summit of the G-8 states.

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

[TOPICS: MGX$$$,M$X$$$,M$$CR$,M$G$$$,MFX$$$]

VIENNA (MNI) – The European Central Bank will be vigilant to ensure
the preservation of stable prices in the euro area, ECB Chief Economist
Peter Praet said Thursday.

Speaking at a conference of the Austrian National Bank, Praet said,
“as in the past, the Governing Council will be vigilant in order to
contain upside risks to price stability.”

Monetary liquidity is measured by the balance sheet of the banking
sector, not of the Eurosystem, he emphasized in this connection, as only
the former “shows the interaction with the real economy.”

“This interaction is captured by monetary and credit data which,
despite the recent stabilization…are still very subdued,” he added.
“If these conditions were to change in a way that entailed upside risks
to price stability, the Governing Council would use all the instruments
at its disposal to continue delivering on its primary mandate.”

As for non-standard measures implemented to counter the crisis,
Praet noted reiterated that they are temporary “and will be withdrawn if
upward pressures to price stability materialize.”

Turning to the two three-year long-term refinancing operations
conducted by the ECB in recent months, Praet said that their “full
supportive impact…will need time to unfold.”

“Any assessment of their impact on the economy can only be
preliminary at this stage,” he continued. “However, the data available
to date give some encouraging signals.”

In particular, these data include “a broad stabilization of
financial conditions and thereby the avoidance of an abrupt and
disorderly adjustment in the balance sheets of credit institutions.”

Moreover, “funding conditions for banks have generally improved,
and there has been increased issuance activity and a re-opening of some
segments of funding markets.”

However, Praet repeated that credit demand remains weak in the face
of ongoing deleveraging by the non-financial sector and weak economic
activity.

If the ECB were to hike its main refinancing rate, then the
interest rate charged on the LTROs would automatically rise for the
remainder of the term since it is indexed to the refi rate, he pointed
out.

“Hence, the three-year liquidity allocation does not stand in the
way of an increase in short-term interest rates; rather, it would allow
such an increase to be immediately translated into the outstanding
liquidity operations,” he noted.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$S$$,M$$EC$]

• LTRO won’t stand in the way of  raising short-term interest rates
• Impact of 3 yr loans will need time to unfold
• Funding conditions have improved , but credit demand is weak, economic actuvity remains subdued
• ECB remains “vigilant” and will contain upside risks to inflation

Speaking at a conference in Vienna

VIENNA (MNI) – Successful stabilization programs need to consider
growth as well as austerity, European Central Bank Governing Council
member Ewald Nowotny said Thursday.

Speaking at a conference of the Austrian National Bank, which he
heads, Nowotny said, “There is a growing consensus that successful
stabilization programs will need not only an ‘austerity part’ but also a
‘growth part.’ The latter may encompass ‘structural reforms’ with regard
to the labor and the goods and services markets or/and special measures
to fight youth unemployment, e.g. by enhancing vocational training or
launching special job programs.”

“It is possible and necessary to combine consolidation and growth
strategies,” Nowotny continued.

“But one has to be aware that there may be different time lags as
to when the different strategies are showing effects. This could create
‘credibility gaps.’ To overcome these gaps is the role of external
policy intervention…But it is important, as has been underlined
frequently, also by ECB President Mario Draghi, that strategies to
restore confidence and to ensure refinancing are consistent, oriented
toward the long term and based on a reliable political support by the
country concerned.”

Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$S$$,M$$EC$]

VIENNA (MNI) – Whether financial markets can refinance the large
sovereign rollover needs in the months ahead will depend on borrowers’
credibility, European Central Bank Governing Council member Ewald
Nowotny said Thursday.

Speaking at a conference of the Austrian National Bank, which he
heads, Nowotny said with an eye toward those rollover needs that “in
‘normal times’ markets would be able to refinance even such impressive
amounts. In ‘nervous’ times, as we are experiencing now, much depends on
the credibility of borrowers in the eyes of private lenders.”

A lesson of fiscal consolidation is “that consolidation programs
must be seen in the context of growth prospects,” he said.

“Unfortunately, especially in the most affected countries, these
strong increases in unemployment and the implied deterioration in public
finances via automatic stabilizers have persisted until now, and the
growth prospects for many euro area economies have been revised downward
substantially (implying also a deterioration in governments’ revenue
prospects),” he noted.

Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$S$$,M$$EC$]

PARIS (MNI) – France’s central government deficit at end-March
amounted to E29.4 billion, down E4.2 billion from the previous-year
level, the Budget Ministry said Thursday.

Outlays in 1Q totaled E87.2 billion, E4.9 billion more than a year
ago. This was mainly due to a new financial management system that
allowed ministries to hit the ground running at the start of the year,
the ministry explained.

Revenues through March were E2.9 billion higher on the year at
E68.2 billion, due in part to the one-off sale of new airways
frequencies at the start of the year. Thanks to the dynamism of VAT and
income tax receipts, tax revenues alone were up E1.9 billion or +3.0% on
the year, in line with budget projections, the ministry said.

The full-year deficit target of the outgoing government was E78.7
billion plus a contribution of more than E6 billion to the EFSF bailout
fund. The overall public deficit ratio was to be trimmed by 0.8 point of
GDP to 4.4%.

As president-elect Francois Hollande has pledged to stick to the
public deficit target of 3% for next year and is well aware that
financial markets are on the alert for any potential slippage, he is
likely to take a cautious approach to the tax reforms planned this
summer.

One of the first moves of the new government will be to demand an
audit of public finances by the Accounting Court. While this would allow
it to blame its predecessor for any risks revealed, it could hardly be
used as an excuse in the eyes of investors.

According to the business daily Les Echos, the Budget Ministry now
estimates the upside risks on the spending side at around E1 billion,
compared to a reserve fund of more the E5 billion. Debt service charges
have so far been less than generously projected last year. Budget
Minister Valerie Pecresse asserted Monday that accounts to dates were
“totally in line” with budget targets — comments confirmed in today’s
budget report.

Most of the tax hikes planned by Hollande, notably those on higher
incomes, will not take effect until next year, although the advanced
corporate tax payment at year’s end could be affected.

–Paris newsroom +331 4271 5540; Email: ssandelius@marketnews.com.

[TOPICS: MFFBU$,M$F$$$,M$X$$$,MGX$$$,MFX$$$]

VIENNA (MNI) – Bond markets have made clear that the Eurozone
sovereign debt crisis has not yet ended, Governing Council member Ewald
Nowotny said Thursday.

Speaking at a conference of the Austrian National Bank, which he
heads, Nowotny said, “Recent developments in international bond markets
indicate that unfortunately, the fiscal problems in the euro area cannot
be considered to be completely solved yet.”

With regard to market reactions during the crisis to the lack of
confidence in fiscal sustainability of Eurozone member countries,
Nowotny said that “the size and intensity” of these “appear to be, in
part, unjustified.”

“In such a sensitive environment, both policy reactions and the
absence of such reactions may lead to sever consequences,” he added.

Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: M$X$$$,MT$$$$,MGX$$$,M$$CR$,M$$S$$,M$$EC$]