Improvement on June ‘s -0.2% m/m and +2.7% y/y

Average annual inflation unchanged at 3.3%

If the euro is to survive some of the current members will have to leave the eurozone says Ex ECB chief economist Ottmar Issingin an interview with CNBC.

Which ones would they be Ottmar…?

More… e kathimerini

– Updates With Upper House Plenary Session Vote

TOKYO (MNI) – The Japanese parliament on Friday enacted by majority
vote legislation that would double the current 5% sales tax by 2015 and
improve social security services on condition that the economy continues
to recover steadily.

“Yes” votes for the bills came from many lawmakers in the House of
Councilors, including those from the main opposition Liberal Democratic
Party and the New Komeito.

Of the eight bills, the one that calls for a sales tax hike
received 188 “yes” votes from the 237 upper house members that were
present at a plenary session, while 49 lawmakers voted against it.

The move followed approval by the special committee on social
security and tax reforms at the opposition-controlled upper house of the
Diet earlier Friday as the ruling Democratic Party of Japan had won
support from the two opposition parties.

In exchange for the support, Prime Minister Yoshihiko Noda on
Thursday responded opposition demands and made a vague promise that he
will dissolve the lower house and call snap elections “in the near
future.”

In June the ruling coalition reached an agreement with the two main
opposition parties — the LDP and Komeito — to hike the current 5%
consumption tax rate to 8% in April 2014 and to 10% in October 2015 on
condition that the economy is growing roughly at a real 2% at the time.

Noda has repeated that a sales tax hike would be “fair” in sharing
higher social security costs among the public and offer a “reliable”
source of tax revenues that is less influenced by economic cycles and
demographic changes than income and business taxes.

He has extended the 150-day ordinary Diet session by 79 days until
Sept. 8 so that the opposition-controlled upper house will have enough
time to debate and vote on the bills.

But in the long process of debating the need for a tax hike, the
prime minister has faced stiff opposition from some lawmakers of his own
party.

In June when the House of Representatives (lower house) members
voted on the bills, some DPJ lawmakers, including former party leader
Ichiro Ozawa, voted against the bills or abstained, arguing that the DPJ
didn’t call for a tax hike in its August 2009 general election platform.

Ozawa and some of his allies then broke away from the DPJ and
formed a small political party.

The DPJ took power away from the LDP in 2009 by promising to boost
Japan’s fiscal health through slashing “wasteful” government spending
and reallocating tax money for projects that would support families with
children and reduce unemployment.

But the DPJ government soon hit a policy wall, realizing that there
was only so much it could do to trim spending in order to generate funds
for necessary public programs.

About a year ago, then Prime Minister Naoto Kan abruptly proposed a
sales tax hike as a way of enhancing public pension and medical
services, which he said would ease fears about the future among the
younger generation and thus help revive economic vitality.

Since taking over from Kan last September, Noda has repeatedly said
he is staking his political life on raising the sales tax in order to
fund growing social security costs of the rapidly aging population and
to reduce the huge public sector debt, at nearly 200% of GDP by far the
largest among developed countries.

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

[TOPICS: M$J$$$,M$A$$$,MGJ$$$,MT$$$$]

The Upper house has ratified the bill to double sales tax to 10% by 2015, the first rise since 1997, but the move may well damage PM Noda’s chances  of re-election.

The bill will initially  raise the tax to 8% by 2014 and to 10% by 2015

-Jul Producer Output Prices unch. m/m; +1.7% y/y
-Jul Core Producer Output Prices unch. m/m; +1.3% y/y
-Jul Input Prices +1.3% m/m; -2.4% y/y

LONDON (MNI) – Output price inflation continued to fall in July
hitting its lowest level since October 2009, figures released by
National Statistics showed Friday.

The data continue to show the unwinding of the rise in petrol
prices seen last year with price pressures having fallen sharply from a
peak of 6.3% on the year last year. This will certainly help to keep
prices at the consumer level in check over the coming months.

Producer output prices were flat on the month in July and up 1.7%
on the year, below the median forecast for a rise of 0.2% and 2.2%
respectively.

Between June and July the main upward impacts camne from clothing,
textile and and leather products and tobacco and alcohol. These were
offset by falls in chemical and pharmaceutical product prices.

Core output prices, which exclude food, beverages, tobacco and
petroleum, were also unchanged on the month and up 1.3% on the year, the
lowest inflation since September 2009. This was also below the median
forecast for a rise of 0.1% on the month and 1.6% on the year.

Input prices rose 1.3% on the month and down 2.4% on the year,
pushed up by a rise in the prices of crude oil and home produced food.
This was, though, a smaller rise than the 1.7% median forecast.

There was also a 0.6% rise in the price of imported metals.

Excluding the impact of food, beverages, tobacco and petroleum
input prices fell 0.3% on the month and were down 1.5% on the year on a
seasonally adjusted basis.

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

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

LONDON (MNI) — Overall growth in the UK economy could be revised
higher in the second quarter as construction output fell less sharply
than expected, figures from National Statistics showed Friday.

Along with the industrial production data released earlier this
week, Q2 GDP growth could be revised higher by 0.2 percentage point in
total which would see GDP down 0.5% on the quarter — more in line with
the Bank of England’s estimate published in the Inflation Report.

Construction output fell a seasonally adjusted 3.9% on the quarter
in Q2 and was down 9.5% on levels a year earlier. This compared with an
estimated fall of 5.2% in the preliminary GDP release last month. The
fall in output were widespread with 8 out of 9 sectors reporting
declines.

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

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

- But Geo-Political Tensions Could Give Prices A Floor

PARIS (MNI) – The International Energy Agency Friday revised down
its projections for global oil demand this year and next and left its
forecasts for non-OPEC supply growth largely unchanged, implying lower
demand for OPEC crude.

The revisions reflect baseline adjustments for previous years but
also weaker economic growth assumptions for China this year and next,
the agency explained in its monthly Oil Market Report.

“From a consuming country standpoint, this apparent easing in
expected market fundamentals through 2013 might initially seem
reassuring, particularly if it leads to some further relief from, by
historical standards, very high crude prices,” the IEA said.

“That of course overlooks the fact that a weaker demand outlook is
partly the result of a worrying slowdown in global economic activity,”
it noted.

“While the outlook for oil supplies is both relatively unchanged
from last month, and indicative of sustained growth potential, there are
worrying signs here too,” the IEA cautioned.

“In particular, the geopolitical dimension is likely to continue to
provide something of a floor for prices,” it ventured. “The issue of
Iran will likely continue to weigh heavy on the market” in the second
half of this year.

“Moreover, there is a risk that recent progress in restoring output
from Libya, Iraq and Nigeria could be jeopardised if recent political
and civil tensions worsen,” it added.

Total projected oil demand this year was revised down 300,000
barrels per day (kb/d) to an average of 89.6 mb/d and forecast demand
next year was revised down 400 kb/d to 90.5 mb/d.

Projections for non-OPEC supply were on average left unchanged,
showing growth this year of 800 kb/d to an average of 53.2 mb/d, rising
next year to 53.9 mb/d.

As a result, this year’s expected “call” on OPEC crude and/or
stocks was revised down 300 kb/d to 30.2 mb/d and next year’s call
revised down 400 kb/d to 30.1 mb/d – roughly in line with current OPEC
production.

OPEC crude supply fell 70 kb/d in July to 31.39 mb/d on declines
from Iran, Angola and Libya, the agency said, estimating effective spare
capacity at 2.57 mb/d. Crude imports from Iran fell to 1.0 mb/d.

The OPEC decline was more than offset by a 200 kb/d rise in
non-OPEC supply, boosting global supply by 300 kb/d to 90.7 mb/d.

OECD industry oil stocks fell counter-seasonally by 5.5 million
barrels in June to 2.683 billion barrels or 57.8 days of forward cover,
as a crude stock build failed to offset a draw in products, the IEA
said. The deficit to the five-year average stock level widened to 19.2
million barrels. July preliminary data suggest a 10.0 mb build, it said.

The implied global stock build in the first half of this year now
looks to have averaged 1.85 mb/d, rather than the 1.7 mb/d estimated in
July, the IEA noted.

- Paris newsroom +331 4271 5540: ssandelius@marketnews.com

[TOPICS: MI$$$$,MI$OI$,M$$CR$,MAUDS$]

UK DATA: Jul Producer Output Prices unch. m/m; +1.7% y/y
-Jul Core Producer Output Prices unch. m/m; +1.3% y/y
-Jul Input Prices +1.3% m/m; -2.4% y/y
————————————————————————
Output price inflation continued to fall in Jul hitting its lowest
level since Oct 2009. The data continue to show the unwinding of the
rise in petrol prices seen last year with price pressures having fallen
sharply from a peak of 6.3% on the year last year. This will certainly
help to keep prices at the consumer level in check over the coming
months. Producer output prices were flat on the month in July and up
1.7% on the year, below the median forecast for a rise of 0.2% and 2.2%
respectively. Core output prices were unchanged m/m and up 1.3% y/y,
lowest y/y since Sep 09. This was below the median for +0.1% m/m and
1.6% y/y. Input prices rose 1.3% on the month and down 2.4% on the year,
pushed up by a rise in the prices of crude oil and home produced food.

UK DATA: Q2 Construction Output -3.9% q/q; -9.5% y/y
-Construction data suggest upward revision to Q2 GDP q/q of 0.1pp
————————————————————————
Overall growth in the UK economy could be revised higher in the
second quarter as construction output fell less sharply than expected,
figures from National Statistics showed Friday. Along with the
industrial production data released earlier this week, Q2 GDP growth
could be revised higher by 0.2 percentage point in total which would see
GDP down 0.5% on the quarter — more in line with the Bank of England’s
estimate published in the Inflation Report. Construction output fell a
seasonally adjusted 3.9% on the quarter in Q2 and was down 9.5% on
levels a year earlier. This compared with an estimated fall of 5.2% in
the preliminary GDP release last month. The fall in output were
widespread with 8 out of 9 sectors reporting declines.

Well below forecasts of -1.5% y/y

July producer output prices unchanged m/m, +1.7% y/y (below expectations of +2.1% y/y)

July Core producer output unchanged m/m +1.3% y/y (below expectations of +1.6%), lowest for 3 years

Construction output fell 3.9% in Q2, which equates to a rise of 0.1% Q2 GDP

ITALY DATA: Final July HICP was revised down to -1.7% m/m, +3.6%
y/y the same y/y rise as in June. – M/m HICP decline on the summer
discount sales, lowest since July 2011 – The main domestic index (NIC)
was revised up to +0.1% m/m, +3.1% y/y slowing from +3.3% y/y in June,
on lower increases in energy goods and fresh food prices. – Core NIC
inflation was steady at +2.2% y/y – Net-of-energy rate also stable at
+2.3% y/y

Up from previous flat m/m and +3.0% y/y

July HICP revised to -1.7%m/m,+3.6% y/y,- down from -1.6% and +3.7%y/y

We dropped to 1.2261 earlier courtesy of  a major US bank apparently and with the european equity indices looking decidedly ‘squidgy’ i reckon we could see a move down towards the sell stops set through 1.2240.

(STOXX off around 0.9% now  with Spain’s IBEX down over 1.5%)

NB. There’s a 50% fibo level down around there (1.2042/43 of the recent upmove from July 24 lows to Aug 7 highs) just in front of the stops.

–Adds Quotes From Econ Min Monthly Report To Story Sent 06:37 GMT

BERLIN (MNI) – Germany’s Economics Ministry expects that German GDP
only picked up “moderately” in the second quarter and sees risks for a
further weakening ahead, it said in its monthly report released Friday.

Key parts of the report had already been leaked by German business
daily Handelsblatt.

The ministry characterized the German economy as still being “quite
robust.” Yet, “the debt crisis in some countries of the Eurozone
continues to be a burden by increasing uncertainties and restraining the
economy,” it cautioned.

“Thus, the further outlook for the German economy remains subdued
and subject to significant risks,” the ministry said. “Markedly
weakening German business sentiment signals the risk of a weaker
development over the coming months,” it added.

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

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

Spain’s IBEX is down around 1% with the Italian  FTSE MIB down around 0.6%.

UK FTSE is off about 0.2% with the CAC and DAX both down around 0.5%

• Crisis is leading to uncertainty in German companies
• German economy likely to have grown moderately in Q2
• Outlook for global recovery remains ‘fragile’
• See risks of weaker growth

O/n warning from the RBA that a strong AUD could become a drag on growth has led to some profit taking again along with the weaker Chinese trade data. Whilst i don’t think this pairings gonna collapse, we may well see a break down through 1.0500 at some point today although exporters will be happy to absorb in the mid 1.04′s.

EUR/AUD is now building support in the 1.1600/20 area which could see a bounce back to 1.1700/20 zone before another fall and AUD/JPY’s starting to get a touch of vertigo above 83.00, with a move back towards 81.80 looking a possibility.

Just my thoughts (i’m probably wrong), but have a look at the orderboard for where the stops are.

AUD’s sitting around 1.0520

..small improvement but below forecasts of +0.4%.

Q2 Industrial output fell 0.6%

Manufacturing Output  rose 0.1%m/m from a revised -1.1% in May, Q2 mfg output  fell 1.2%

FRANCE DATA: June industry output flat m/m, as expected; May -2.1% m/m
(-1.9%)
– 2Q industry output -0.6% q/q; 1Q -0.4% q/q
– June mfg output +0.1% m/m after May -1.1% m/m (-1.0%)
– Please see MNI Mainwire for further details

FRANCE DATA: 1H central govt deficit E56.7 bln vs 1H 2011 E61.3 bln
- 1H outlays +3.4% y/y; 1H revenues +4.1% y/y