• ECB has ‘reached limit’ of mandate with tools
• It’s ‘illusion’ to think euro bonds will fix crisis
• Debate on euro bonds ‘irritates me a bit”, growth requires structural reform
• Greek aid should stop if Athens does not respect commitments

Official made comments in interview with Le Monde.

BERLIN (MNI) – The German government has devised a six-point plan
to stimulate economic growth in the Eurozone member states hit by the
debt crisis, German weekly Der Spiegel reported Friday, without citing
sources.

The government recommends setting up special economic zones with
lower tax rates in the crisis-hit states, loosening labor market
restrictions, and creating agencies to sell state assets similar to
Germany’s “Treuhandanstalt” used after national reunification, the
newspaper said.

Most of the points are not new and have been already proposed by
Germany before.

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

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

I tell ya, the lights are going off all over the World!!

We’re about to enter a new Dark Age……..

MILAN (MNI) – Recent tensions that compromise the integration of
financial markets in the Eurozone must be countered, European Central
Bank Executive Board member Peter Praet said on Friday.

“We have to lead against the forces which are disintegration
forces,” Praet told The International Capital Market Association’s
Annual General Meeting and Conference. “At this juncture, it is very
important to re-emphasize the benefits of financial market integration
in Europe and the world.”

“A united Europe, especially one that has decided to have a single
currency, needs united financial markets as well to operate as a single
entity,” he stressed.

Praet said that “a highly integrated financial system” is key for a
properly functioning single monetary policy, since “integrated markets
ensure a smooth and balanced transmission of monetary policy throughout
the euro area.”

Financial market integration has been thrown into reverse as a
result of the crisis. Credit conditions diverge widely as investors
demand huge risk premiums for holding debt issued by the governments and
banks of peripheral countries, even as yields in Germany hit record
lows.

Banks also have cut cross-border businesses after taking heavy
losses on local acquisitions and on their holdings of peripheral bonds.

The ECB has recently stressed the importance of financial market
integration for the health of the common currency union. “It is during
times of crisis that we should not allow our commitment to the cause of
furthering market integration to fade,” ECB President Draghi said
earlier this month.

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

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

• Greek key is for ‘everyone’ to pay their taxes
• It’s a mirage for Greece to keep euro, ditch cuts

From the 44 I jotted down first thing.

Dutch 10 year bond yield currently at record low 1.814%.

EUR/USD has continued it’s climb. Been as high as 1.2603,  presently at 1.2595 as it runs into those sell orders mentioned earlier.

I wish we could just fast forward to 1.2650 (ala poll) so I could show you all just how clued-up I am     But that’s unlikely to happen

Saxony CPI

May: -0.2% m/m, +1.9% y/y
April: +0.1% m/m, +2.0% y/y
—
Pan-German CPI

April: +0.2% m/m, +2.1% y/y
—

FRANKFURT (MNI) – Consumer price inflation in the eastern German
state of Saxony slipped below 2% in May for the first time since the
start of last year, while cheaper energy and tourism offset monthly
price increases in other categories, the state’s statistics office
reported on Friday.

After a 0.1% rise in April, consumer prices in Saxony fell back
0.2% in May, dampening the annual increase to 1.9% from 2.0%.

Downward pressure on monthly inflation came from motor fuel, which
fell 3.2%, and heating oil, which declined 2.7%. Electricity remained
unchanged, while gas was up 0.1%. Packaged holiday tours fell 2.7%,
while airline tickets dropped 1.9%. Food prices were up 0.3%, with
seasonal produce up 1.1%.

Excluding household energy and motor fuel prices, core CPI was
unchanged on the month and up 1.6% on the year.

Annual price developments were again driven by energy price
increases, with heating oil up 10.8%, gas up 7.4%, motor fuel up 2.9%
and electricity up 1.0%. Food price inflation slowed to 2.0%, while
alcoholic drinks and tobacco were 3.2% more expensive.

Upward price pressures from energy on annual inflation rates should
wane due to favourable base effects and the current downward trend in
Brent crude prices.

Expecting that further declines in oil prices may be premature,
however, the International Energy Agency said this month that slightly
higher-than-expected demand and lower non-OPEC supply had led to a
“marginally tighter picture” on the oil market. While OPEC supply has
thus far filled the gap, “there is no room for complacency,” the IEA
warned.

“The path of market fundamentals for the rest of the year remains
highly uncertain and geo-political risks will likely continue to keep
prices high,” the agency said.

The latest PMI polls show price pressures in Germany growing, with
input and output price inflation rising in May.

Consumers’ appear less concerned about inflation, a recent GfK poll
said, noting recent wage negotiations in both the public and
metal-working sectors. “However, recent debate may once again unsettle
consumers as there is a real threat that inflation may at times lie well
above the 2% mark in Germany too,” the market research firm said.

The latest forecasts of the Organisation for Economic Cooperation
and Development point to German HICP rising 2.3% on average this year
and slowing to +2.0% in 2013.

For detailed information see data table on MNI MainWire.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com –

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

ITALY DATA: March nominal retail sales fell 0.2% m/m in seasonally
adjusted terms, and gained an unadjusted 1.7% y/y, up from +0.5% y/y in
February and the strongest y/y gain since April 2011. The m/m decline
follows gains of 0.9% in February and 1.1% in March.
–Food sales and non-food sales both fell 0.2% m/m (seas.adjusted).
–The 3-month moving average gained 0.8% in the January-to-March period
compared with the previous three months.
–Italy’s NIC consumer price index rose 0.5% m/m, 3.3% y/y in March.

GERMANY DATA: Saxony May CPI -0.2% m/m, +1.9% y/y; April +2.0% y/y
– Saxony May CPI ex-seasonal foods -0.2% m/m, +2.1% y/y
– Saxony May CPI ex-fuel/heating oil unch m/m, +1.8% y/y
– Saxony May CPI ex-energy/seasonal foods unch m/m, +1.7% y/y
– Saxony May motor fuel prices -3.2% m/m; heating oil -2.7%
– Saxony May package vacations -2.7% m/m; other svcs -0.4%
– Saxony May alcohol/tobacco unch m/m; healthcare +0.1%
– Saxony May food prices +0.3% m/m; seasonal foods +1.1%
– Saxony May clothing/shoes -0.8 m/m; education -0.1%
– See MNI MainWire for details

• Portugal needs at least one more year to meet budget goals under bailout
• Portugal will stay in euro even if Greece leaves

– See Separate Tables For Details of Results

TOKYO (MNI) – Basic profits at all of Japan’s eight largest life
insurers rose in the last fiscal year ended on March 31, thanks to lower
costs of covering valuation losses triggered by weak stock prices and
smaller capital losses, their earnings results released Friday showed.

Higher returns from fund investment also contributed to boosting
profits in fiscal 2011.

The results were better than an improvement in basic profits at
only two firms in fiscal 2010.

Aggregate basic profits made by Japan’s eight major life insurance
firms totaled Y1.84 trillion during the last fiscal year, up from Y1.57
trillion in fiscal 2010.

Basic profit comes from an insurer’s core operations, representing
the total of premium revenues and returns on invested premiums minus
insurance payouts and operating expenses.

Basic profits at Nippon Life, the country’s largest life insurer in
terms of assets, rose to Y544.3 billion in fiscal 2011from Y516.3
billion in fiscal 2010.

The second largest life insurer Dai-ichi Life’s basic profits rose
to Y319.9 billion fiscal 2011 from Y273.5 billion a year earlier.

The eight firms also include Meiji Yasuda Life Insurance, Sumitomo
Life Insurance, Fukoku Life Insurance, T&D Holdings (Taiyo, Daido and
T&D Financial life insurance firms), Mitsui Life Insurance and Asahi
Mutual Life Insurance.

Insurance premium revenues, equivalent to sales at private firms,
increased at four of the eight life insurers.

Aggregate insurance premium revenues earned by the eight firms
totaled Y19.69 trillion in fiscal 2011, up from Y18.78 trillion a year
before.

Unrealized profits in securities also improved at all of the eight
firms, thanks to a better performance of domestic stock markets compared
with a year before and firm Japanese government bonds on the Bank of
Japan’s monetary easing.

Aggregate unrealized profits in securities held by the eight firms
totaled Y6.86 trillion, up from Y3.92 trillion.

Nippon Life’s unrealized profits in securities stood at Y2.70
trillion at the end of March, up from Y1.91 trillion a year earlier.

As a result of the rise in unrealized profits in securities, the
solvency margin ratio rose at all of the eight firms.

Solvency margins are a key gauge of an insurance company’s ability
to meet its obligations to policyholders and roughly correspond to the
ratio by which the company’s assets exceed its liabilities.

The Financial Service Agency had decided to revamp the method
starting in fiscal 2011.

The financial watchdog required insurance firms to take into
account risks that could arise once in 20 years, instead of the previous
once-in-10-year criteria. This would double the amounts of capital
insurers are required to set aside.

Nippon Life avoided a negative spread for a second straight year in
the year ended on March 31, thanks to higher investment returns.

Meiji Yasuda also benefited from higher investment returns and
avoided a negative spread for the first time in 20 years in fiscal 2011.

A negative margin is caused by sales of high-yield policies during
the asset bubble in the late 1980s.

Nippon Life plans to boost its kikin funds, which are equivalent to
capital in stock companies, by about Y50 billion, this fiscal year.

As for fund investment, officials at the major firms said they will
mainly invest in yen assets, such as Japanese government bonds, seeking
a stable return.

Despite the European debt crisis, major life insurance firms
continued to hold assets denominated in the euro but most of them have
only a limited amount of government bonds issued by Greece, Italy,
Portugal or Spain.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

MILAN (MNI) – Recent tensions that compromise the integration of
financial markets in the Eurozone must be countered, European Central
Bank Executive Board member Peter Praet said on Friday.

“We have to lead against the forces which are disintegration
forces,” Praet told The International Capital Market Association’s
Annual General Meeting and Conference.

“At this juncture, it is very important to re-emphasize the
benefits of financial market integration in Europe and the world,” he
added.

Financial market integration has been thrown into reverse as a
result as the crisis. Credit conditions diverge widely as investors
demand huge risk premiums for holding debt issued by the governments and
banks of peripheral countries, even as yields in Germany hit record
lows.

Banks also have cut cross-border businesses after taking heavy
losses on local acquisitions and on their holdings of peripheral bonds.

The ECB has recently stressed the importance of financial market
integration for the health of the common currency union. “It is during
times of crisis that we should not allow our commitment to the cause of
furthering market integration to fade,” ECB President Draghi said
earlier this month.

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

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

DAX and CAC 40 both up around  +0.7% presently.

EUR/USD at session high 1.2566.

As mentioned earlier, sell orders seen clustered 1.2600/20, buy stops through 1.2625.

TOKYO (MNI) – The following are the median forecasts for Japanese
economic data due in the coming week provided by economists surveyed by
MNI.

Both production and spending data for April are forecast to show
that the economy made a good start to the current quarter but solid to
high growth on the year reflects the depressed economic activity a year
before caused by the earthquake disaster.

Economists expect industrial production, a coincident indicator of
the economy, to show a second straight month-on-month gain in April
thanks to rises in output of general machinery, chemicals and
automobiles.

This indicates that manufacturers have been recovering from the
impact of slower global demand and the yen’s rise while government
subsidies for buying low-emission vehicles have supported new car sales.

April data for personal consumption, labor conditions and housing
starts are also expected to show that the economy is moving gradually
toward a recovery, as the government and the Bank of Japan have said.

Meanwhile, a quarterly business survey by the Ministry of Finance
is expected to show that capital investment posted a slower year-on-year
rise of +1.0% in January-March compared with +7.6% in the previous
quarter.

But that would be still better than a nominal 0.3% fall on the year
in capex seen in preliminary GDP data released on May 17, which might
lead to an upward revision to Q1 GDP growth.

The survey, which also covers private-sector inventories, is the
last piece of data from the demand side used to compute revisions to
gross domestic product for the first quarter due out on June 8. Capex in
preliminary GDP data is based solely on the supply side estimate.

In the preliminary data released on May 17, GDP rose a real 1.0%
q/q (annualized +4.1%) in the first quarter of 2012 while capex fell
3.9% q/q (annualized -14.8%).

Tuesday, May 29, 0830 JST (2330 GMT Monday): The Ministry of
Internal Affairs and Communications releases the unemployment rate and
the Ministry of Health, Labor and Welfare releases the ratio of job
offers to job seekers, both for April. Forecast: Unemployment at 4.5%,
unchanged from March. The job offers index at 0.77, up from 0.76 in
March and reaching the highest level since 0.79 in October 2008.

Tuesday, May 29, 0830 JST (2330 GMT Monday): The Ministry of
Internal Affairs and Communications releases April household spending.
Forecast: +2.5% y/y in real terms, posting a third straight rise after
+3.4% in March and +2.3% in February.

Tuesday, May 29, 0850 JST (2350 GMT Monday): The Ministry of
Economy, Trade and Industry releases April retail sales. Forecast: +6.0%
y/y in April, posting a fifth straight rise after +10.3% in March and
+3.4% in February.

Thursday, May 31, 0850 JST (2350 GMT Wednesday): The Ministry of
Economy, Trade and Industry releases April industrial output. Forecast:
+0.5% m/m, posting a second consecutive gain after +1.3% in March and
-1.6% in February. It would be weaker than METI’s forecast for +1.0%.

Thursday, May 31, 1400 JST (0500 GMT): The Ministry of Land,
Infrastructure, Transport and Tourism releases April housing starts.
Forecast: +3.5% y/y, a third straight rise after +5.0% in March and
+7.5% in February; an annualized 837,000 units, down from 848,000 in
March.

Friday, June 1, 0850 JST (2350 GMT Thursday): The Ministry of
Finance releases Q1 capital investment in its business survey, Financial
Statements Statistics of Corporations by Industry. Forecast: +1.0% y/y,
a second consecutive quarterly gain after +7.6% in Q4 of 2011.

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

Down to 102 bps from the 114 I jotted down first thing.

Spanish/German 10 year govt bond yield spread narrows to 460 bps from 477

Italian/German 10 year govt bond yield spread narrows to 400 bps from 417

European stocks up into positive territory,  DAX and CAC 40 both up +0.3%.

FRANCE DATA: May consumer morale 90; April 89 (88)
– Above expected; MNI analysts survey median forecast 88
– Buying-propensity unchanged
– Future inflation worries down seven points
– Jobless fears down five points
– See MNI MainWire for details

Up from upwardly revised 89 in April (prev 88)

I’m game.  It’s been a tough week, why don’t we pack up and head outside and start the weekend early.  Weather here in sunny Suffolk is truly glorious, shame to waste it.

Guess I should say something market related……

EUR/USD sits at 1.2538, where it closed out in North America Thursday.

Well-documented barrier option interest down at 1.2500 continues to be stoutly defended.

Sell stops seen through 1.2500 and more through 1.2480, before more barrier option interest at 1.2450.

Topside,  sell orders clustered 1.2600/20, buy stops seen through 1.2625.

Summertime and the livin is easy, fish are jumpin and the cotton is high……

–Says Mexico Is “Outperforming” US In Many Economic Areas

FRANKFURT (MNI) – U.S. policymakers “appear incapable” of
implementing fiscal reforms, Dallas Federal Reserve President Richard
Fisher said in a comment published in the Financial Times Friday that
focused on lessons the United States can learn from its southern
neighbour Mexico.

Fisher said Mexico is “outperforming” the U.S. in many economic
areas, noting in particular its lower government budget deficit and debt
levels and its quicker recovery from the 2008-09 recession.

Fisher said the Mexican government “has implemented greater fiscal
discipline than the U.S., without hindering the economic recovery.”

“By comparison, U.S. policymakers appear incapable of fiscal
reform,” Fisher said. “They have not created a budget that restores
confidence and encourages investment, job creation and risk-taking while
also controlling long-term deficits and unfunded liabilities.”

By contrast, the Mexican government’s performance since the
financial crisis should “allay the fears of those who doubted Mexico’s
capability to reform,” Fisher said. He cited fiscal and monetary reforms
that have cemented the independence of the country’s central bank.

Mexico “is outperforming the U.S. in many economic areas and
provides several important lessons for Washington policymakers that seem
unable to make a start on ever more urgent reforms,” Fisher said.

Fisher suggested one of the lessons for the U.S. is that Mexico
approved a balanced budget rule in 2006. He also cited the central
bank’s earlier adoption of an explicit inflation target.

“Mexico has a sound macroeconomic footing and is addressing the
microeconomic problems still holding it back,” Fisher said. “The same
cannot be said for the U.S.”

–Frankfurt bureau: +49 69 72 01 42; e-mail: ccermak@marketnews.com

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MGX$$$]

From upwardly revised 5.7 in May (prev 5.6)

Slightly better than Reuter’s median forecast of 5.6.