From 86.1 in August, weaker than Reuters’ median forecast of 86.1.

Aug sa M3: +2.9% y/y
M3 sa 3-mo avg: +3.2% y/y
SA private loans: -0.6% y/y

MNI survey medians:

Aug sa M3: +3.4% y/y
SA private loans: -0.3% y/y

MNI survey ranges:
Aug sa M3: +2.9% to +4.1% y/y
SA private loans: -0.3% to -0.2% y/y

July sa M3: +3.8% y/y
M3 sa 3-mo avg: +3.4% y/y
SA private loans: +0.1% y/y

–

FRANKFURT (MNI) – Eurozone private sector loan growth fell sharply
in the year through August, the fourth decline in as many months after a
downward revision to the July figure, while M3 broad money supply growth
slowed to +2.9%, the European Central Bank reported on Thursday.

Loans to the private sector fell 0.6% on the year from a downwardly
revised -0.4% the previous month, pushing down overall private sector
credit to -1.2% after -0.9% in July.

MNI’s median survey of analysts had expected a 0.3% decline in
private sector loans for August. Adjusting for sales and securitisation,
private sector loans were still down 0.2% after +0.1% in July.

Household loans were up 0.2% on the year after a 0.3% rise in July,
with mortgages – the most important component – unchanged at +0.8% on
the year.

Loans extended to non-financial corporations fell E10 billion on
the month, resulting in an annual rate of -0.8%, down from July’s -0.4%.

Loan growth is likely to remain subdued in the near term, as
capital constraints for banks and financial market segmentation hinder
credit supply.

Should the ECB decide to apply a negative rate on its deposit
facility, banks could feel a stronger incentive not to simply park money
at the central bank.

However, the option of a negative rate seems less likely based on
recent comments from a number of Governing Council members. Furthermore,
such an option would do little to address credit demand, which should
remain weak on the back of rising economic uncertainty and a worsening
outlook.

Broad money (M3) was up 2.9% on the year in August, the rate down
sharply from 3.6% in July, leaving the three month moving average at
+3.2%, well below the ECB’s guideline of +4.5%.

Over the same period, narrow money (M1) rose 5.1% after +4.5% in
July, while short-term deposits other than overnight deposits fell to
+0.8% from +2.2% the previous month. Marketable instruments fell to
-0.5% from a downwardly revised +4.3% in July.

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

[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$]

What’ll we see first 1.2818 or 1.2918?

We sit at 1.2868.

Don’t bother with the reason/s, I don’t want to bloody hear them

LONDON (MNI) – Market perceptions of the threat from the euro zone
have eased in recent months, the Bank of England’s interim Financial
Policy Committee noted in the minutes for its Sept. 14 meeting.

“The Committee noted that market perceptions of the near term
probability of acute stress in the euro area had fallen somewhat, not
least following recent policy announcements by the European Central
Bank.”

“The improvement in market sentiment had also reduced perceptions
of risks to UK banks,” the minutes continue.

But the committee cautioned that “undelying concerns” about
sovereign debt and the strength of banks persisted.

“…Data suggested a weaker outlook for activity, both domestically
and in a range of key markets for UK banks internationally”.

While UK banks had made progress on reducing exposure to the most
vulnerable euro zone economies, these still “remained large” – at an
average of 70% of UK banks’ core Tier 1 capital.

The FPC cited the particular challenges at the current juncture of
strengthening capital while at the same improving credit availability.

The job of the FPC would have been easier if banks had already
built up a counter-cyclical capital buffer in lie with the incoming
Basel III regime. As it was banks had to raise capital to meet the
requirements of the new regime while at the same being called on to
boost lending.

The FPC also advised banks to exploit the improvement in market
sentiment to try and raise capital externally.

“Recent improvements in market conditions should help … with the
options including debt conversion and the issuance of suitable
contingent capital instruments as well as conventional equity”.

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

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

–Q2 Current Account Deficit Stg20.767bn Vs Stg15.366bn Q1

LONDON (MNI) — The UK’s current account deficit ballooned in Q2 to
its highest level on record, driven by falling profits abroad, figures
released from National Statistics showed Thursday.

The latest figures, along with a massive revision to the previous
quarter, show a staggering deterioration in the current account. Not
only is it the highest on record in cash terms but it is now 5.4% of
GDP, also a record level.

The current account deficit rose to Stg20.767 billion in Q2 from a
heavily revised Stg15.366 billion shortfall in Q1, as the deficit on the
income account rose significantly.

The income accound deficit hit Stg5.15 billion in Q2, up from a
deficit of Stg1.918 billion in Q2. The deterioration was mainly due to a
large fall on earnings on direct investment abroad with profits reported
by foreign subsidiaries of UK private non-financial corporations
falling.

–London newsroom: 44 20 7634 1655; email: puglow@marketnews.com

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

-Q2 GDP revised up to -0.4% q/q; -0.5% y/y from -0.5% q/q; -0.5% y/y

LONDON (MNI) – UK economic growth was revised slightly higher in
the second quarter, with household spending not falling by as much as
previously reported, figures from National Statistics showed Thursday.

The figures don’t really add much more to the policy debate but
does put growth more in line with the latest forecasts from the Bank of
England who had been forecasting stronger than initially estimated
growth in Q2. One chink of light came from a 1.9% rise in real household
disposable income, the largest since Q2 2009, although this came from a
strong rise in state benefits which looks odd against a backdrop of
spending cuts.

GDP was revised up to show a fall of 0.4% on the quarter, compared
with the previous estimate and median forecast of a 0.5% decline.
Compared with Q2 last year, growth remained unrevised at 0.5%.

The small upward revision came from an upward revision to
industrial production and construction.

On an expenditure basis there was also an upward revision to
household expenditure although it was still down 0.2% on the quarter,
compared with the initially estimated fall of 0.4%.

Net exports, which were previously estimated to have cut quarterly
growth by 1 percentage point are now estimated to have cut output by 0.8
percentage point.

In its August Inflation Report, the Bank of England forecast growth
in Q3 to bounceback by around 1% in Q3, but revised down overall GDP
growth for the year to around flat. It had previously said it expected
special factors to hit Q2 growth by around 0.5 percentage point.

–London newsroom: 44 20 7862 7491; email: puglow@marketnews.com

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

LONDON (MNI) – Market perceptions of the threat from the euro zone
have eased in recent months, the Bank of England’s interim Financial
Policy Committee noted in the minutes for its Sept. 14 meeting.

“The Committee noted that market perceptions of the near term
probability of acute stress in the euro area had fallen somewhat, not
least following recent policy announcements by the European Central
Bank.”

“The improvement in market sentiment had also reduced perceptions
of risks to UK banks,” the minutes continue.

But the committee cautioned that “undelying concerns” about
sovereign debt and the strength of banks persisted.

“…Data suggested a weaker outlook for activity, both domestically
and in a range of key markets for UK banks internationally”.

While UK banks had made progress on reducing exposure to the most
vulnerable euro zone economies, these still “remained large” – at an
average of 70% of UK banks’ core Tier 1 capital.

The FPC cited the particular challenges at the current juncture of
strengthening capital while at the same improving credit availability.

The job of the FPC would have been easier if banks had already
built up a counter-cyclical capital buffer in lie with the incoming
Basel III regime. As it was banks had to raise capital to meet the
requirements of the new regime while at the same being called on to
boost lending.

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

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

UK DATA: Q2 Current Account Deficit Stg20.767bn Vs Stg15.366bn Q1
————————————————————————
The UK’s current account deficit ballooned in Q2 to its highest
level on record, driven by falling profits abroad, figures released
from National Statistics showed Thursday. The latest figures, along
with a massive revision to the previous quarter, show a staggering
deterioration in the current account. Not only is it the highest on
record in cash terms but is now 5.4% of GDP, also a record level. The
income accound deficit hit Stg5.15 billion in Q2, up from a deficit of
Stg1.918 billion in Q2. The deterioration was mainly due to a large fall
on earnings on driect investment abroad with profits reported by foreign
subsidiaries of UK private non-financial corporations falling. The size
of the deterioration looks set to hit Sterling.

UK DATA: Q2 GDP Revised Up On Production, Construction
-Q2 GDP revised up to -0.4% q/q; -0.5% y/y from -0.5% q/q; -0.5% y/y
————————————————————————
UK economic growth was revised slightly higher in the second quarter,
with the household spending not falling by as much as previously
reported, figures from National Statistics showed Thursday. The figures
don’t really add much more to the policy debate but does put growth more
in line with the latest forecasts from the Bank of England who had been
forecasting stronger than initially estimated growth in Q2. One chink of
light came from a 1.9% rise in real household disposable income, the
largest since Q2 2009, although this came from a strong rise in state
benefits which looks odd against a backdrop of spending cuts. GDP was
revised up to show a fall of 0.4% on the quarter, compared with the
previous estimate and median forecast of a 0.5% decline. Compared with
Q2 last year, growth remained unrevised at 0.5%.

• Weak economy, redress for mis-selling has hit earnings
• Banks exposure to sovereign debt is still large
• Clearer asset valuations would aid capital raising

Just joshing

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Y/Y in line with expectations

Q2 current account deficit -£20.18 bln from -£15,4 in Q1 (expected -£12.40 bln) , highest deficit on record

LONDON (MNI) – The UK’s latest recession likely ended in the third
quarter of 2012, a leading Bank of England policy maker says, believing
GDP growth in the period will be “very strong.”

Paul Fisher told The Sun that the UK had suffered the biggest fall
in economic output since the 1930′s, but said the economy was set for a
sharp rebound.

The economy was set for “a very strong Gross Domestic Product
number” in the third quarter. The BOE’s implied forecast in its August
Inflation Report was for Q3 growth of around 1.0%, with Q2 GDP having
been artificially depressed by the extended holidays for the Jubilee.

Fisher, however, also said there was more to do to embed the
recovery. Alluding to the Olympic Games, recently held in London and
seen by some as a boost to the economy, Fisher said:

“Getting the economy back on track won’t be a 100m sprint – it will
be more Steve Ovett than Usain Bolt.”

Fisher, a member of the Bank’s interest setting committee, also
noted inflation will likely remain in the current area around 2.5% for
“two to three years.”

– London Bureau (+20 7862 7499); e-mail: lcommons@marketnews.com

[TOPICS: M$$BE$]

SA Unemployment: +9k (pan-German), +9k (West), 0k (East)
–

FRANKFURT (MNI) – The ranks of the unemployed in Germany rose as
expected in September, leaving the jobless rate unchanged at 6.8% as
forecast, while August’s gain was revised upwards, the Federal Labour
Office reported on Thursday.

After climbing by 11,000 persons to 2.902 million in August, the
unemployment level gained an additional 9,000 jobseekers to reach a
seasonally-adjusted 2.911 million in September, the highest since
September 1991. Unemployment has risen consistently since a brief
decline in March.

In unadjusted terms, the jobless rate fell 0.3 percentage point to
6.5%, reflecting 2.788 million persons compared to August’s 2.905
million level.

Job vacancies fell by 4,000 units following August’s 5,000-unit
decline. Payroll jobs, the data for which are lagged by one month, rose
by 4,000 units in August after +16,000 in July.

In International Labour Organisation (ILO) terms, German employment
fell for the first time in just over two and a half years in August to
41.614 million persons.

While Germany’s labour market has helped to prop up consumer
sentiment over the past several months, the further rise in unemployment
has already begun to weigh on households’ income expectations. The
preliminary September PMI report signalled renewed job cutting in the
private sector, despite stable output levels in September.

Looking ahead to 2013, the German Labour Agency’s IAB research
institute expects unemployment to rise to 2.934 million from a projected
average level of 2.897 million in 2012, with employment forecast to rise
to 41.848 million from 2012′s expected 41.644 million.

A recent report by the Organisation for Economic Cooperation and
Development lauded the success of past German labour market reforms but
stressed that there was still room for improvement.

“This success should be an encouragement to address the substantial
challenges that still lie ahead for the German labour market,” the OECD
said, advocating an increase in labour market participation of both
women and older workers.

“The urgency of progressing further in these areas is exemplified
by rapid population aging, which will have a profound impact on the
economy and the labour market,” the OECD said.

“It will reduce GDP per capita growth, due to its negative effects
on different growth drivers: the labour force, productivity growth,
investment capacity, wages and domestic demand.”

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

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

GBP/USD’s sitting just under 1.6180 ahead of the 0830 GMT release of final Q2 GDP, but this morning’s rally has again been capped by offers from UK clearers just above the level  at 1.6205.

BOE’s Fisher has added to his earlier comments saying that Q3 GDP will be strong, inflation is currently higher than the BOE expected and that  world energy prices were boosting inflation pressures

The cable is also being somewhat underpinned by the talk of the  farmers rebate we mentioned earlier in the week with EUR/GBP   remaining vulnerable to a break lower. Currently around 0.7953.

Ughhhhh

Lowest level since April 2008….

THAT’S NOT GOOD!!

Elsewhere,  Greek bank deposits down -0.3% while Italian bank deposits up +0.1%.

EUR/USD down at 1.2867.

Buy orders clustered 1.2825/40, sell stops through 1.2820.

GERMANY DATA: September sa unemployment +9k m/m; MNI median fcst +9k
– Germany September sa unemployment rate 6.8% vs August 6.8%
– Germany September sa unemployment 2.911 mln vs August 2.902 mln
– Germany September nsa unemployment rate 6.5% vs August 6.8%
– Germany September nsa unemployment 2.788 mln vs August 2.905 mln
– Germany August sa payroll jobs +4k vs July +16k
– Germany September sa job vacancies -4k vs August -5k
– Please see MNI Mainwire for further details

Pretty much in line with Reuter’s median forecast of 10k.

Jobless rate unchanged at 6.8%, as expected.

German labour office says weaker economy is impacting labour market, but labour market remains “robust” overall.

• Dollar, Euro and Yuan should be the future of FX
• Yuan likely to be fully convertible and China’s capital account to be opened by 2020

• Global economic outlook grim even with QE3
• PBOC has big challenges in pursuing policy targets