• Systemic risks don’t come only from biggest banks
• No need to break up banks if “too big to fail” problem solved
• Difficult in practice to split investment, commercial banks

‘Thinks’ being the key word here… or is it ‘days’?.

Ekathimerini  was reporting earlier that the  3 way coalition is under increasing strain to find the remaining cuts needed to satisfy the ‘troika’ officials and  that any decision today was unlikely

Stournaras was speaking to reporters in Athens after a meeting with PM Samaras (Bloomberg reporting)

Target amount for this mornings’ auctions was 4.5 bln.  Spain raised total of 4.799 bln.

Sold 3940 mln of new 3 year bond, 859 mln of 10 year bond.

Average yield new 3 year bond 3.845%

Average yield 10 year bond 5.666% vs 6.647% at previous auction.

Bid-to-cover ratio for new 3 year bond 1.6

Bid-to-cover ratio for 10 year bond 2.8 vs 2.4 on August 2.

Well, that all went very well

EUR/USD trade relatively steady after the early volatility, presently at 1.2970.

Yer!!!,  squeeze those Southern Europeans until they pop

• Better for any euro zone bailout plan to be decided unanimously
• Creating banking union to take time

-Aug Retail Sales -0.2% m/m; +2.7% y/y; median -0.3% m/m; +3% y/y
-Aug Retail Sales ex fuel -0.3% m/m; 3.1% y/y; median -0.4% m/m;3.2% y/y

LONDON (MNI) – Retail sales fell on the month in August as shoppers
chose to watch the Olympics rather than shop online, figures from
National Statistics showed Thursday.

Given the impact of recent events on the retail data, it is
difficult to gauge strength in retail and these latest figures suggest
sales volumes have been broadly flat over the past two months, with the
Jubilee and the Olympics affecting sales.

Retail sales fell 0.2% on the month in August and were up 2.7% on
the year, slightly above the median for a fall of 0.3% on the month and
increase of 3% on the year.

Sales excluding fuel, which give a better picture of the underlying
strength of the sector were down 0.3% on the month and up 3.1% on the
year. This was also a little higher than the median for a 0.4% monthly
drop and rise of 3.2% on the year.

Sales at non-store retailing and repair stores, which consists of
mainly internet retailers, plunged 6.7% on the month. National
Statistics said that they had received feedback from this sector that
sales were hit by consumer watching television rather than purchasing
goods online.

The decline in non-store retailing alone knocked monthly growth in
overall retail by 0.4 percentage point on the month.

Sales at household goods stores were also down 2.7% on the month,
with retailers reporting that they expected to see an increase in
volumes during and after the Bank Holiday.

There was also a 0.7% monthly fall in non-specialised stores
(mainly department stores).

The main rises were in textile, clothing and footwear, where sales
rose 1.6% on the month and other store sales which increased 1.5%.

Sales at predominantly food stores and non-food stores both rose by
0.2% on the month.

The trend growth rate in retail sales ex-fuel remained firm in
August, rising 1% in the three months to August compared with the
previous three months. Including fuel, the three monthly growth rate
stood at 0.6%.

Retailers, however, have been forced to keep prices low in the
current environment. The retail sales deflator ex fuel fell to 0.3% on
the year in August, down from 0.5% in July and the lowest since
September 2009.

-London bureau: +44 20 7862 7491; email: puglow@marketnews.com

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

BERLIN (MNI) – The European Union’s Internal Market Commissioner
Michel Barnier on Thursday insisted that centralized banking supervision
should gradually begin operating by January next year, a stance that
Germany is publicly opposing.

Barnier told reporters here that he believed he could find a
“dynamic compromise” with Germany on the matter, without providing any
details of what this compromise might look like.

The commissioner insisted that the European Central Bank should
start supervising the first banks already by January 1 of next year. By
July 1, all systemically relevant banks in the Eurozone should be under
the supervision of the ECB, he said. And by Jan 1, 2014 all banks have
to be supervised by the ECB, he reaffirmed.

German Chancellor Angela Merkel said on Monday she believes it is
unlikely that a joint banking supervision system in the Eurozone will be
operable by the start of 2013. She reiterated that there cannot be any
direct bank recapitalisation from Europe’s permanent bailout fund, the
European Stability Mechanism, until a centralized bank supervisor is
fully operable.

Barnier also reaffirmed today that direct banking recapitalisation
is only possible once European banking supervision is working.

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

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

UK DATA: Aug Retail Sales -0.2% m/m; +2.7% y/y; median -0.3% m/m;+3% y/y
-Aug Retail Sales ex fuel -0.3% m/m;+3.1% y/y; median -0.4% m/m;3.2% y/y
————————————————————————
Aug retail sales fell m/m as shoppers chose to watch the Olympics
rather than shop online. Given the impact of recent events on the retail
data, it is difficult to gauge strength in retail and these latest
figures suggest sales volumes have been broadly flat over the past 2
months, with the Jubilee and the Olympics affecting sales. Retail sales
fell 0.2% m/m in Aug and were up 2.7% y/y, slightly above the median for
a fall of 0.3% and 3% respectively. Sales excluding fuel, which give a
better picture of underlying strength of the sector were down 0.3% on
the month and up 3.1% on the year. This was also a little higher than
the median for a 0.4% m/m drop and rise of 3.2% y/y. Sales at non-store
retailing and repair stores, which consists of mainly internet
retailers, plunged 6.7% m/m.

Slightly better than Reuter’s median forecast of -0.4. Y/Y rise +2.7%, as expected.

ONS:  Retailers reported that London Olympics had negative impact on online sales.

Yer, blame it on the Olympics……..

ITALY DATA: July SA industry orders +2.9% m/m; NSA -4.9% y/y, up from
-2.2% m/m; -10.8% y/y in June, ISTAT said.
- July SA domestic orders +2.3% m/m; foreign orders +3.7% m/m
- July SA industry turnover +1.2% m/m; workday adjusted -5.3% y/y

Below Reuters consensus of 46.6 and the lowest reading since June 2009

Flash Manufacturing PMI 46.0 up from 45.1 in August (poll 45.5), services PMI down to  46.0 from 47.2 in Aug (poll 47.5) lowest since July 2009

• China’s development has offered a big market for Eurozone states
• EU firms  are making rich returns from Chinese investments
• China supports European integration
• Regrets China’s lack of full market economy status, and that the EU hasn’t lifted its arms embargo against China.

The Premier was speaking at a China-EU summit in Brussels this morning

• Basis for compromise will be extensive decentralsation of banking supervision

Compromise is good.

Disagreement is bad.

Factor to be watched.

Whoopie!!!

Up nicely from 47.0 in August.

Highest read since April.

EUR/USD recovers it’s poise a bit, back up at 1.2970.

Manufacturing PMI 47.3, up from 44.7 in August

Services PMI 50.6, up from 48.3 in August

While the German numbers are encouraging, the disparity between France and Germany certainly isn’t.

France also, but I can’t be bothered with them.

Spain looking to raise total of 4.5 bln

3 bln from 3 year auction and 1.5 bln from 10 year auction.

Results due around 08:40 GMT.

FRANKFURT (MNI) – The European Central Bank will not hesitate to
use its new bond buy program, but it may not need to be engaged for very
long, European Central Bank Governing Council member Christian Noyer
said in a interview published Wednesday in German daily Frankfurter
Allgemeine Zeitung.

“It is a weapon of deterrence,” Noyer told the newspaper. “It may
be tested, and we will not hesitate to use it to demonstrate our
determination.”

“I hope the program will demonstrate its effectiveness very
quickly,” Noyer added. “I would be surprised if such a program was still
in existence in a few years.”

Noyer also underlined the promise from other Governing Council
members that the ECB “will not hesitate to stop the bond buys” if a
country is failing to meet conditions in its program with the European
Stability Mechanism, which is a prerequisite for the ECB to intervene.

Noyer noted that the announcement of its new Outright Monetary
Transactions program on September 6 had already succeeded in calming the
markets as investors were reluctant to put the central bank to the test.

“My feeling is that the markets will understand very quickly that
they cannot win against the ECB,” he said.

Noyer reiterated the ECB was staying within its mandate to
“guarantee price stability in the entire Eurozone,” but he said an
inability to transmit monetary policy evenly across the currency bloc
meant the central bank was “no longer in a position to guarantee price
stability” without the new measures.

On common EMU bank supervision, Noyer insisted the ECB was not
attempting to create an “army” of regulators. He noted that 95% of
supervision would still take place in the euro area member states.

Banking union will “allow the ECB to carry out inspections with
identical standards in the entire Eurozone. That would make supervision
more credible,” he said.

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

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

As the lower 78.20 parameter of yesterdays’ poll is now history, let’s do another one

We sit at 78.08

What’ll we see first 77.00 or 79.00?

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

We’re at 1.2945 after those truly awful French PMI numbers.

What’ll we see first 1.2850 or 1.3050?

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

• Australia has monetary and fiscal capabilities to respond to any adverse shocks, current monetary policy is appropriate and should remain accommodative
• Tighter fiscal policy and  accommodative rates  should help ease AUD strength
• Banks are sound, resilient well managed, and  positioned to meet Basle 111 requirements
• Near-term growth will be  largely determined by the resources sector, with global commodity prices having peaked but remaining high

From 48.0 in August (ughhhh!!)

A three and a half year low!!

EUR/USD lower at 1.2965.

Flash manufacturing PMI falls to 42.6 from 46.0 in August.

Flash services PMI falls to 46.1 from 49.2 in August.

• Did more than expected
• Easing will help to combat deflation