Above the  targeted Eur 1.5-1.75 bln

Sold Eur 709 mln  of Mar 2013 T bills, yield 1.7% from 2.292%, cover 3.1 from 3.8 last

Sold Eur 1.901 bln of March 2014 T bills , yield 2.967% from 4.537%, cover 2.4 from 2.6 last

The Troika’s looking for Eur 11.5 bln of cuts of which it’s thought Eur 7.5 bln  have been agreed.

PM Samaras is meeting tomorrow with coalition leaders to finalize measures  ahead of a conclusion of talks with the troika on Sunday.

More.… ekathimerini

‘Agreement’ is good

• Unknown if Spanish yield drop sustainable
• Market should appreciate Spain actions
• Must find way to help markets price in budget measures
• Situation is not fair for Spain
• Spain actions should result in lower yields
• Finland wants to sever link between banks and sovereigns
• Finland has no detailed banking union stance yet

FRANKFURT (MNI) – The European Central Bank said Wednesday that it
has allotted $3.720 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 0.64%. The
Euro/USD rate was set at 1.3066.

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

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

July: -0.3% m/m, -4.7% y/y
June: -0.6% m/m (revised from -0.5%)
May: +0.2% m/m (revised from -0.2%)
April: -3.4% m/m (unrevised)
March: +10.9% m/m (revised from +11.0%)
February: -9.5% m/m (revised from -9.7%)
–

FRANKFURT (MNI) – Construction output in the Eurozone continued to
contract in July, reaching a five-month low, as only Germany reported
any kind of improvement, Eurostat reported on Wednesday.

Taking into account June’s downward revision, July’s 0.3% monthly
decline widened the annual shortfall to 4.7% from -2.8% previously, and
brought production down 0.6% from 2Q, which in turn was 0.4% lower than
1Q.

Building activity decreased by 0.8% on the month in July, its third
decline in four months, resulting in an annual slide of 4.6%.
Conversely, civil engineering rebounded 1.1% following June’s modest
slip, but was 3.3% lower on the year.

The ongoing Eurozone debt crisis and worries about an eventual
Greek exit, along with a worsening economic outlook, are likely to
hamper construction investment in the months ahead.

Forward-looking indicators, including recently-granted building
permits, already point to further weakness in construction output for
3Q, the European Central Bank noted in its most recent monthly bulletin.

The European Commission’s latest survey also underscored a bleak
short-term outlook for the sector, with respondents revising down
further their order book assessments in August.

Earlier this summer, Euroconstruct, a network of research
institutes specializing in construction analysis and forecasting,
revised its projections for growth in the sector both this year and
next down to -2.1% and +0.4% from -0.3% and +1.8%, respectively.

In Germany, construction output recovered 1.9% to a four-month
high, lifting production 2.2% on the year.

A strong willingness to spend on the part of consumers, record low
borrowing costs and rising house prices in Germany all augur well for
the country’s construction sector. However, the sector’s business
climate continued to deteriorate in August, as a further decline in
expectations offset modest improvement in the current situation, an Ifo
poll showed.

After a brief recovery in June, French construction output dipped
0.1% on the month to end 2.0% lower on the year.

An INSEE survey showed a slight upturn in the building industry’s
morale last month, but the main driver was an improvement in past
activity, while near-term expectations were more pessimistic.

“The turning-point indicator is again in the unfavorable zone,”
INSEE said.

Italian construction output suffered a drastic 2.2% m/m drop to a
five-month low, and was down 14.2% y/y.

A Commission poll showed that construction sector morale in Italy
maintained its downward trend, with a growing majority of firms seeing
no improvement in their order books.

As in Italy, Spanish construction also saw a marked decline,
falling 2.1% on the month to a new record low. In annual terms, output
in the sector was down 16.1%.

Spanish house prices fell for the eighth consecutive quarter in 2Q
and suffered their worst drop on record in annual terms, Spain’s
national statistics office reported late last week. With possibly as
many as 1.1 million new homes still unsold, prices are likely to fall
further, hampering any sustained turnaround in the sector for the near
term.

– Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@mni-news.com

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

BERLIN (MNI) – The economic panel of the German Banking Association
(BDB), consisting of the chief economists of the main private banks in
Germany, on Wednesday forecast German GDP to grow by 0.9% this year and
by 1.1% next year.

“The European sovereign debt crisis is currently dampening the
German economy,” BDB board member Hans-Joachim Massenberg said. “The
economic outlook for the German economy for the second half of 2012 is
anything but friendly.”

Due to the expected weak second half year, the economists don’t see
a positive statistical overhang for the economy next year.

Currently, many businesses are holding back on investments,
Massenberg remarked. “As soon as the negative effects of the debt crisis
will be fading, this blockade will end,” he predicted, though.

Equipment investments are forecast by the economic panel to
contract by 2.2% this year and to grow by 1.0% next year. Construction
investment is seen expanding by 0.1% in 2012 and by 1.7% in 2013.

Private consumption is expected to increase by 0.9% this year and
by 1.3% next year. Government consumption is tabled at +1.1% in 2012 and
+0.8% in 2013.

Annual average unemployment is forecast at 2.885 million this year
and 2.907 million next year. The country’s public deficit is tabled at
0.4% of GDP in 2012 and 0.5% in 2013.

The joint forecasts are based on the assumption that the debt
crisis will ease somewhat over the coming months and next year,
Massenberg explained.

The economists have “mixed feelings” towards the European Central
Bank’s new bond-buying program, the OMT, the BDB board member said. “A
sustainable relaxation [of the crisis] will only occur if the Eurozone
member states determinedly continue their reform path,” he reasoned.

The state of the global economy will remain “very fragile” for the
time being, the bank economists remark in their joint report.

They don’t expect the recession in the Eurozone to end already this
year. “Due to the continued consolidation measures and the still
unsolved structural problems, a recovery process will only begin very
slowly and moderately,” the panel predicts.

The economists forecast a contraction of Eurozone GDP of 0.5% this
year and moderate growth of 0.3% next year. Eurozone inflation is seen
at 2.4% in 2012 and 1.9 in 2013. German inflation is expected at 2.0%
this year and 1.9% next year. The ECB’s definition of price stability is
inflation of below but close to 2%.

Due to the difficult economic situation and the modest outlook, the
economists expect the ECB to cut rates this year again by another 25
basis points to 0.5%. “The majority of chief economists expects that the
current rate cutting cycle will be ended” at that level, the report
states. The panel expects the ECB to keep rates unchanged next year.

The economists believe that the euro’s foreign exchange rate will
remain volatile “in a difficult economic and political environment.”
They forecast an euro foreign exchange rate of $1.23 at the end of this
year and of $1.22 at the end of next year. A range of between $1.20 to
$1.30 is a fair valuation for the euro, they said.

–Berlin bureau: +49-30-22620580; email: twidder@marketnews.com

[TOPICS: MT$$$$,M$X$$$,M$G$$$,M$$FX$,MFX$$$,M$$CR$,M$$EC$]

EMU DATA: July construction output -0.3% m/m, -4.7% y/y
– EMU June construction output rev down -0.6% m/m (-0.5%)
– EMU July avg const output -0.6% vs 2q, 2q rev -0.4% q/q (-0.1%)
– EMU 3mm avg const output (May-July vs April-June) -0.2%
– EMU July structural const -0.8% m/m;civil engineering +1.1% m/m
– Please see MNI Mainwire for further details

LONDON (MNI) – Employment intentions suggest job creation in the
private sector is going to be pretty weak over the next six months,
according to the latest Bank of England Agents’ report.

The report, published alongside the BOE’s September Monetary Policy
Committee minutes, painted a picture of rising borrowing costs and weak
employment growth.

“Employment intentions indicated that there would be little job
creation in the private sector over the coming six months,” the survey
said.

The survey said that consumer price inflation remains moderate and
that labour costs continue to fall. The survey also noted construction
output had declined, suggesting the weakness in the official
construction numbers is not entirely illusory.

–London newsroom: 4420 7862 7491 e-mail: ukeditorial@marketnews.com

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

–BOE MPC Most Members – Policy Decision Relatively Straightforward
–Of Those Some Saw Additional Stimulus Likely Needed In Due Course
–Others Saw Inflation Risks More Balanced Around Target In Medium Term
–But One Member Saw Decision ‘More Finely Balanced’
–Worries EZ Uncertainty, Risk Aversion Could Limit FLS Impact
–Substantial Risks In EZ Which Could Impact Global Bank Stability

LONDON (MNI) – The Bank of England Monetary Policy Committee voted
unanimously for both unchanged asset purchases and Bank Rate at its
September meeting, with only one member seeing the decision on asset
purchases as ‘more finely balanced’.

The minutes show most members of the MPC viewing the decision as
“relatively straightforward” but some of these saw the need for fresh
stimukus at some stage as more likely than not.

“For most members this decision was relatively straightforward,
although some of these members felt that additional stimulus was more
likely than not to be needed in due course, while others saw the risks
to inflation in the medium term as being more balanced around the
target”.

The majority opted to wait for “the next few months” in order to
gain “further insight into the underlying paths of supply and demand”.

Markets are still largely expecting that the MPC could take a
decision to extend further its asset purchases when it meets in November
to discuss its next set of quarterly inflation and growth forecasts.

The minutes of the meeting strike a more wary note on the likely
impact of the Funding for Lending on lending and borrowing – noting that
the plan is in its “early stages”.

“It had the potential to reduce funding costs and to encourage the
supply of credit. Set against that, heightened uncertainty, stemming
especially from the euro area, risk aversion on the part of households
and businesses might limit the demand for credit, making the impact of
the FLS difficult to predict”.

That said, the committee said it had been “encouraging that there
had been further cuts announced by some banks on some of their lending
products”. Monitoring the progress of the FLS in the short term would
best be done by looking at lending rates rather than credit volumes.

The committee also took a guarded view of the recent buoyant
seeming industrial production data for July, saying that this required
“further study” but along with other indicators suggested “some modest
underlying expansion”.

But more forward-looking surveys had been weaker and the rise in
energy prices would mean that there the squeeze on household incomes
would not ease further in the short term.

The MPC also reiterated its usual concerns on the risks emanating
from the euro zone even if the worst might be avoided.

“Very substantial risks were likely to remain for some time to
come, which if they crystallised, could have a considerable impact on
the stability of the global banking system”.

The minutes continued:

“Even if a disorderly outcome were avoided, it was probable that
the threat of such an event would continue to weigh on domestic activity
for some time.”

Overall, a snap assessment of these minutes suggest an MPC which is
very much reserving its judgement despite recent signs of a Q3 bounce.
The underlying picture is one of only modest expansion at best while the
euro zone’s travails could still stymie all committee’s best efforts to
boost activity.

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

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

Indeed Italy’s FTSE MIB is fractionally in the red.

EUR/USD has come down to 1.3028 at writing.

Big UK real money fund and macro funds among notable sellers in this leg lower apparently.

Earlier had reports of buy orders clustered 1.3000/20.

Will they turn back the tide? We’re about to see. New session low 1.3023.

EUR/USD’s leading the way lower  in the earlier mentioned bids in the 1.3020/30 zone along with a break down through 1.2100 in the EUR/CHF.

The EUR/JPY stops lie on a break of 102.80 with more down through 102.50

EUR/JPY’s currently at session  lows around 102.84

–BOE MPC Most Members – Policy Decision Relatively Straightforward
–Of Those Some Saw Additional Stimulus Likely Needed In Due Course
–Others Saw Inflation Risks More Balanced Around Target In Medium Term
–But One Member Saw Decision ‘More Finely Balanced’
–Worries EZ Uncertainty, Risk Aversion Could Limit FLS Impact

LONDON (MNI) – The Bank of England Monetary Policy Committee voted
unanimously for unchanged asset purchases and Bank Rate at its
September meeting, with only one member seeing the decision on asset
purchases as ‘more finely balanced’.

The minutes show most members of the MPC viewing the decision as
“relatively straightforward” but some of these saw fresh stimulus as
more likely than not to be needed at some stage.

“For most members this decision was relatively straightforward,
although some of these members felt that additional stimulus was more
likely than not to be needed in due course, while others saw the risks
to inflation in the medium term as being more balanced around the
target”.

The majority opted to wait for “the next few months” in order to
gain “further insight into the underlying paths of supply and demand”.

Markets are still largely expecting that the MPC could take a
decision to extend further its asset purchases when it meets in November
to discuss its next set of quarterly inflation and growth forecasts.

The minutes of the meeting strike a more wary note on the
likely impact of the Funding for Lending on lending and borrowing -
noting that the plan is in its “early stages”.

“It had the potential to reduce funding costs and to encourage the
supply of credit. Set against that, heightened uncertainty, stemming
especially from the euro area, risk aversion on the part of households
and businesses might limit the demand for credit, making the impact of
the FLS difficult to predict”.

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

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

But seems  some felt that more QE would likely be needed in the future

• One member  thought there was good case for more QE in September, although most felt it was ‘relatively straightforward’ to leave QE unchanged this month
• Oil price rise and rises in food and utilities points to  a higher short term inflation outlook
• Middle  East tensions may lead to higher oil prices
• Bank lending rate cuts were encouraging but benefits would take time to be noticed

• To propose that European-wide rules on banking restructuring should only apply to systemically-relevant banks
• To propose that bank deposit insurance should not be harmonised Europe-wide

Reuters reporting.

Smacks of watering down to me.  EUR/USD has dipped to 1.3057.  Guess some feel the same.

EUR/USD sits at 1.3070 (totally unchanged on the day, yawn)

What’ll we see first 1.3020 or 1.3120?

Reason/s for choice always welcome, but not obligatory.

Tough times call for tough measures, I guess.

Back in the markets, EUR/USD is stomping up and down on the spot. Presently at 1.3062.

Who wud have thought forex could be sooo exciting…….

TOKYO (MNI) – The average price of land in Japan for all purposes
measured on July 1 fell 2.7%, posting the 21st straight annual drop, but
the pace of decline slowed from -3.4% last year, the Ministry of Land,
Infrastructure, Transport and Tourism said on Wednesday.

The ministry estimates the average land price by surveying 22,264
locations in Japan every year.

The average land price showed the smallest fall since -1.2% in
2008.

Land prices fell on year in 18,655 points this year, down from
20,564 for last year, while prices rose in 658 points this year, up
from 88.

Rises in land prices were seen in newly developed areas and areas
where the population increased or public transportation systems
improved, the ministry said.

Low mortgage rates and the government’s subsidy program for buying
greener homes helped boost residential land prices, it said.

The Real Estate Economic Institute forecast that 53,000 units of
condominiums will be supplied in 2012 in Tokyo and surrounding cities,
up 19.5% from last year, when the supply fell 0.1%.

The Land Ministry data showed that the average price of real estate
for residential use in Japan fell 2.5% this year after falling 3.2% in
2011 while the average price of real estate for commercial use declined
3.1% following a 4.0% drop last year.

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-6860-4823 **

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

• But ongoing Island dispute with China  had no bearing on today’s decision
• Doesn’t think BOJ’s policy is any less bold than the Fed’s
• Europe’s debt crisis remains the biggest problem and threat to the Japanese economy
• Has downgraded main scenario for  outlook of Japan’s economy
• BOJ will remove floor rate for ‘Rinban operations ‘ (bond buying which targets level of bank reserves)
• US economic outlook remains uncertain

The central bank governor was speaking to reporters in Tokyo

Portugal auctioning 6 month t-bill maturing March 22 2013 and 18 month t-bill maturing March 17 2014.

Total target amount 1.5-1.75 bln.

Results due around 09:45 GMT.   I can’t wait, I’m soooo excited I’m nearly peeing my pants…..