Above expectations of  +0.2% and +1.6% and a strong m/m improvement from July PPI confirmed at -0.5% and +1.8 % y/y

-Aug CIPS PMI Construction Index 49.0 Vs 50.9 in July

LONDON (MNI) – The UK construction sector surprisingly contracted
in August, with clear evidence of weak demand as new business volumes
saw their fastest fall since back in 2009, according to the CIPS/Markit
PMI data series.

The headline August CIPS construction index fell to 49.0 from 50.9
in July, with new orders falling for the third consecutive month and
new business volumes posting their sharpest fall since April 2009.
Analysts’ median forecast was for a 50 outturn, which would have shown
the sector flatlining.

The 49.0 outturn was the second-lowest reading since February 2010,
with only Jubilee impacted June coming in worse.

Markit said survey respondents had noted lower spending from both
public and private sector clients.

“August data reaffirm that UK construction firms are suffering a
prolonged downturn in new work and there is little evidence to suggest
an imminent rebound in output levels. This has been the pertinent
message from the UK Construction PMI surveys throughout the summer,” Tim
Moore, Senior Economist at Markit, said.

Construction output has been a wildcard in the official UK economic
data series, subject to sharp quarterly moves and heavy revisions.
National Statistics in the second GDP estimate revised up construction
output to show a fall of 3.9% on the quarter from an initially estimated
5.2% drop.

The CIPS construction data have been more upbeat, with the recent
correlation between the two series very weak.

George Buckley, Chief UK Economist at Deutsche Bank, noted that
CIPS construction averaged 54 in Q1 but the official data showed a 5%
contraction that quarter. Buckley added, however, that the latest CIPS
construction numbers supported the view no recovery was imminent.

These figures, the second of CIPS’ August trilogy, followed the
manufacturing numbers which came in much stronger than expected, but
still showed the sector just in contractionary territory, with a
headline reading of 49.5.

-London newsroom 0044-207-862-7491; email:drobinson@marketnews.com

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

UK DATA: UK Markit/CIPS PMI Aug construction index 49.0 – Reuters

‘Roemer’s presence in a coalition could tip balance of the Netherlands’ approach to the euro-zone crisis’

….Output sharply down from 50.9 in July and below market forecasts of 50.0

New orders post fastest drop since April 2009

Cable so far virtually unmoved on the weaker data  around 1.5898

The daily high of 1.5909 also equates to a 61.8% retracement of the fall from 1.6304 at the end of April to the 1.5269 lows of June 1.  The trend does however remain firm after yesterday’s stronger than expected Mfg PMI and focus will be on the construction PMI reading in 8 mins or so with the market looking for 50.0

There’s also  a tech level at 1.5912 from late August but a break there should prompt some buy stops through 1.5915 and open a move up to offers in the 1.5950/60 area and 1.5990/00, which is rumoured to hold a 1.6000 barrier. Initial support is seen at the o/n lows around 1.5877 with bids below at 1.5850/60

GBP/USD’s sitting at 1.5903

Bond stratgeist George Goncalves’s take on the differences of the Eurozone bloc in comparison with the United States..

More….  Business Insider

Bloomberg reporting.

Spanish 10 year govt bond yield falls 5 bps to 6.84%

Italian 2 year govt bond yield falls 12 bps to 2.59%

Italian 10 year govt bond yield falls 4 bps to 5.75%

EUR/USD sits at 1.2610, a mere 5 pips lower than where I greeted it around two and a three quarter hours ago

Deep joy, yet another humdinger of a European session.

Elsewhere I notice Chinese shares shed 1.1%, the lowest close since March 2009

FRANKFURT (MNI) – This week’s meeting of the ECB Governing Council
and the informal meeting of EMU finance ministers September 14-15 should
provide clarity over the conditions for financial aid from European
bailout funds, Spanish Finance Minister Luis de Guindos said in a
newspaper interview published Tuesday.

“First of all the conditions must be clarified,” de Guindos replied
when asked by the German daily Handelsblatt when Spain would turn to the
bailout funds for aid. “I think we will already be able to see much more
clearly after this week and the next week.”

Reminded that the ECB has demanded that countries seeking its
intervention in bond markets to lower borrowing costs must first
formally request financial assistance, the minister said he shared the
central bank’s view that the reduction in public deficits and debt is
the medium- and long-term means of overcoming the crisis.

“But right now the priority is to dispel doubts over the euro and
make clear that the euro is irreversible,” he continued. “For this, it
may be necessary for the ECB to act.”

De Guindos said there was “great solidarity” with Spain within the
Eurogroup of finance ministers. “I believe my colleagues are also aware
that much of the battle for the euro is being fought in Spain. Spain is
currently the breakwater of the Eurozone, and that of course helps to
create solidarity.”

Asked about the risk that the German Constitutional Court might
delay the launch of the permanent bailout fund ESM, the minister
acknowledged the constitutional questions “in some countries” but
asserted that there is a “political consensus that the ESM must become
operational soon.”

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

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

Or by 38.179 to 4.63 mln. … that’s not good 

EUR/USD: Offers 1.2630/50 ahead of 1.2650 barrier option interest. Buy stops above there . Tech res/offers 1.2660/80.  Bids 1.2600/10 and 1.2570/80 (100 day MA 1.2573), possible sell stops through 1.2560

GBP/USD:  Offers 1.5890/5910 likely buy stops through 1.5915 ahead of tech res 1.5930/35 and large offers 1.5990/00 (1.6000 possible barrier). Bids 1.5850/60 and 1.5800/10, sell stops below.

EUR/GBP:   Bids 0.7925/30, tech supp 0.7900/10 (55 day MA 0.7910), likely sell stops below ahead of more bids /supp 0.7855/60. Offers 0.7950/60

USD/JPY: Strong bids 78.00/20 (importers,Japan life Ins co's) with large sell stops through 78.00 and 77.90. Offers 78.40/50 tech res 78.70 (cloud base) and more offers 78.80/00 (exporters, real money and US funds 78.95- 55 day MA), buy stops just above ahead tech res 200/100 day MA's at 79.29 and 79.32

EUR/JPY: Bids 98.50/60, tech supp  (98.12 cloud top), 98.00/10(tech supp below at 55 day MA 97.80). Sell stops down through 97.75.  Offers 99.00/20, buy stops just above ahead of larger offers 99.90/00 (100.00 barrier).

AUD/JPY: offers 80.60/70 and tech res 80.90/81.00 (80.90.00-100 day MA, 80.94 cloud top), more offers 81.40/50.  Bids 80.00/20 ahead of 80.00 barrier option interest, sell stops just below.

EUR/CHF: Bids 1.2000/10 (SNB), Offers 1.2025/30 buy stops up through 1.2040

AUD/USD:  Offers 1.0280/00, likely buy stops above ahead of 200 day MA at 1.0317. Bids 1.0230/40, some sell stops below ahead of stronger bids 1.0200/10 ahead of a barrier (1.0200)

EUR/AUD:  Offers 1.2320/30 (100 day MA 1.2325), tech supp 1.2240/45 and 1.2210/15

NZD/USD:  tech res/offers 0.7990/00 (0.8000- 200 day MA), offers above 0.8030/40. Bids 0.7955/65 and tech support 0.7925/35 (100 day MA 0.7929). Likely sell stops through 0.7885

BRUSSELS (MNI) – A single supervisory mechanism for all the
Eurozone’s 6000 banks should ensure a workable balance between
centralization under the authority of the European Central Bank and
direct involvement of national supervisors, EU Internal Markets
Commissioner Michel Barnier said late Monday.

Barnier’s remarks made to journalists after a closed-door
discussion with the European Parliament’s Economic and Monetary Affairs
Committee follows outspoken criticism about the scope of the
Commission’s plan by German Finance Minister Wolfgang Schaeuble.

The Commission’s proposal “will cover all banks in the Eurozone”
but will have an appropriate focus on the role of national supervisors,
Barnier said. “It is unimaginable to exercise direct, centralized
supervision from the summit,” he said, referring to the ECB.

Barnier said he was “convinced” the Commission would be able to
balance what it sees as the need for all Eurozone banks to be covered by
the mechanism and the concerns of member states such as Germany.

“I always listen very attentively to what Schaeuble has to say,” he
said.

The EU Commissioner also stressed that there should be no confusion
between common supervision for the Eurozone banks and regulation for all
the EU’s banks.

–Brussels newsroom: +324-9522-8374; pkoh@marketnews.com

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

Reuter’s headline/story.

Dutch daily Het Financieele Dagblad running story, citing unamed sources,  that Bundesbanks’ Weidman is completely isolated within the ECB as regards his opposition to bond buying.

Paper says other monetary hawks Klaas Knot and Joerg Asmussen are not opposed to restarting the bond buying programme.

• ECB’s monetary and supervisory policies will be strictly seperate
• Bank supervisory system will cover all euro zone banks
• Bank supervisor could oversee non-euro zone banks
• Sees bank supervisor operational by Jan 2013
• Banking union in 2013 possible

Dow Jones reporting.

Demonstrably weaker than Reuter’s median forecasts of +0.2%, +1.6% respectively.

Q1 data revised down, to +0.5% q/q from previous +0.7% and to +1.2% y/y from previous +2.0%.

Data will gird the SNB loins in defending the EUR/CHF peg. They seemed pretty determined anyways….

Profits for companies in the MSCI China Index (MXCN) may increase 1.8 percent this year and 8.6 percent in 2013, compared with previous growth estimates of 6 percent and 12.3 percent, Helen Zhu and Timothy Moe, analysts at the U.S. bank, wrote in a report dated yesterday…….

Bloomberg reporting

• More clarity expected in coming weeks (clarity would be a good thang)
• No doubt ESM to start work in coming months
• ECB help no substitute for fiscal reforms
• ECB action may be needed to show euro irreversible
• Absolutely respects independence of ECB

Yada, yada, yada……..

ft.com/alphaville

We’ll get a good idea just how ‘difficult’ come Thursday.