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European Economics Preview: Eurozone Foreign Trade Data Due

Foreign trade figures from the U.K. and Eurozone are due on Friday, headlining a light day for the European economic news.
At 2.00 am ET, the European Automobile Manufacturers' Association is slated to release Europe's new car registrations for May. Sales were down 6.9 percent in April.
Sweden's AMV unemployment data is also due at 2.00 am ET. The jobless rate is expected to fall to 4.1 percent in May from 4.3 percent in April.
At 3.00 am ET, the Czech Statistical Office is scheduled to publish producer prices for May. Producer price inflation is seen slowing to 1.8 percent from 2.2 percent in April. In the meantime, Hungary's industrial output figures are also due.
External trade figures from Italy and Norway are due at 4.00 am ET. The Czech central bank is set to release current account data in the meantime. The balance is forecast to show a shortfall of CZK 3.55 billion in April compared to a surplus of CZK 10.65 billion in March.
Half an hour later, the Office for National Statistics is slated to publish April foreign trade figures. The U.K. visible trade deficit is seen at GBP 8.5 billion.
At 5.00 am ET, Eurozone foreign trade and employment reports are due. The trade surplus is expected to fall to EUR 4 billion in April from EUR 8.6 billion in March.


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UK Property Asking Prices At New High, Rightmove Says

Asking prices for a property in the United Kingdom rose to a new record high in June buoyed by strong price movements in London and South East, property website Rightmove said on Monday.
Prices of new property coming to market was GBP 246,235, a third consecutive national record. This was 1 percent higher than a month earlier and 2.4 percent above last years' level.
Strong rises in the south of the country have helped to push the national average asking price into new record territory, Rightmove Director Miles Shipside said.
The report, meanwhile, observed that sellers' prices are now 2 percent up on August 2007, the month before the UK economy faced the run on Northern Rock. They have fallen considerably in real terms when compared to retail price inflation over the same period.
London is the only inflation-proof hedge seeing average asking prices 3 percent ahead of the retail price index since August 2007. London and South East regions saw new asking price records in June.
"In these uncertain economic times, lenders feel safer to lend to those with a cash-cushion, and those sitting on that cash often feel more comfortable with it invested in tangible assets, including bricks and mortar," Shipside said.
June saw a weekly run-rate of 29,394 new sellers in the three weeks prior to the disruption of the Diamond Jubilee break. This was the highest new listing run-rate recorded for two years.
Rightmove said this suggested that further increases in asking prices are unlikely as fresh supply exceeds summer demand.
A report from the Nationwide Building Society showed last month that the U.K. house prices rose 0.3 percent from a month earlier in May, while demand remained subdued. Lloyds Banking Group's Halifax division said prices increased 0.5 percent in May.


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Europe Must Revive Economic Growth, IMF Says

The International Monetary Fund on Monday urged Europe to focus on reviving economic growth to help the recovery of the region's crisis-hit economies.
A paper published by IMF staff observed that Europe needs to revive economic growth to help break the vicious cycle of the feedback loop between weak government finances, weak banks, and weak growth that continually undermine each other.
IMF also noted that with the recession continuing, and unemployment high and on the rise in many countries, European policymakers needs to do more.
The staff said both short-term and long-term solutions are needed to tackle the problem of low growth in the continent. Large-scale reforms could boost GDP by 4.5 percent over five years, according to the report.
"Structural reforms should be implemented now to anchor medium-term growth prospects," said Rodrigo Valdes, a deputy director in the IMF's European Department. "But these reforms need to be complemented to sufficiently boost growth in the short term; hence policymakers must supplement them with policies to promote demand, external in some cases, internal in others."
Common pools of resources can be strengthened and better targeted, including more forceful interventions to improve labor market conditions, the report said.
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Moody's Lifts Turkish Credit Ratings

Moody's Investors Service on Wednesday raised its ratings on Turkish government bonds by one notch to Ba1 from Ba2 with a 'positive' outlook, citing improvement in public finances.
This is the highest non-investment grade rating. According to Moody's, the main drivers of the rating action are the significant improvement in Turkey's public finances and the policy actions that have the potential to address external imbalances.
Moody's said the improved public finances have increased shock-absorption capacity of the government's balance sheet. Also, the authorities' recent policy actions are capable of addressing the huge current account deficit, which is the largest credit risk facing the country.
The agency said the decision to maintain the 'positive' outlook on Turkey's ratings reflected its expectation that both of the drivers that led to today's rating upgrade will continue to improve the country's fiscal and macroeconomic resilience.
An upgrade to an investment-grade rating will depend on Turkey becoming more resilient to balance-of-payment shocks, given the already favorable public-finance metrics, Moody's noted.
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ECB's Coeure Says EFSF Can Be Used To Ease Tensions On Secondary Markets

Eurozone's rescue fund is big enough to ease temporary tensions on the secondary markets, European Central Bank Executive Board Member Benoit Coeure said in an interview to the Financial Times.
"It is big enough for the purpose for which it was created, which is to alleviate temporary tensions on secondary markets," he said while responding to a query.
The policy maker said the European Financial Stability Facility (EFSF) was allowed to undertake secondary market interventions almost a year ago but the "governments have not yet chosen to use that possibility."
Italy and France recently floated the idea of the bailout fund buying Eurozone sovereign bonds, especially debts of countries like Italy and Spain, which are facing very high borrowing costs. However, German Chancellor Angela Merkel denied that she had knowledge of any such discussions.
Coeure said euro area bond markets are under very severe strain at the moment, in particular, the market for Italian bonds and for Spanish bonds. " It is entirely an issue for governments to decide on, it's not really something the ECB can fix," he said.
"Current circumstances would probably warrant EFSF intervention in the secondary market - provided that this happens against the right background of political decisions and solutions to the underlying issues and strong conditionality," Coeure told FT.
"The EFSF is not big enough to finance permanently euro area countries. This is not the purpose it was created for, he told the newspaper.
Responding to another question on the possibility of an interest rate reduction, the policy maker said a rate cut was discussed at the previous governing council meeting and the next council may also discuss it. He noted that at present, there is no threat to medium term price stability.
Referring to the ECB's Long-Term Refinancing Operations (LTRO), the policymaker said a third LTRO is possible. "But it would probably be warranted only in the face of generalised liquidity challenges and it is probably not the best instrument in the case of localised difficulties for banks."
Coeure said fiscal union is a "necessity" and urged countries to take steps for fiscal union if they want to keep the euro and the benefits that the euro has brought to their economies.


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Eurozone's 'Big Four' Agree On Growth Plan

Eurozone's four biggest economies have agreed to boost economic growth up to one percent of the region's national output, in their latest effort to ensure the currency bloc's long-term sustainability.
The leaders of Germany, France, Spain and Italy vowed to set aside 130 billion euros for measures to support growth. However, they gave no indication of taking up common liabilities such as eurobonds. Italian Prime Minister Mario Monti, who hosted the mini-summit between him, German Chancellor Angela Merkel, Spanish Prime Minister Mariano Rajoy, French President Francois Hollande in Rome on Friday, suggested that Europe needs a better plan to restore market confidence.
The growth package has no new plans but the leaders said they expect more solid measures to be up for discussion at the EU summit next week.
The four leaders on Friday agreed to boost the capital of the European Investment Bank by 10 billion euros. Launching "project bonds" to co-finance public investment projects and redirecting unspent cash to European Commission's regional funds were also part of the package.
Meanwhile, on Sunday the German government won the approval of the Bundesrat, the upper house of parliament, for Germany's ratification of the EU fiscal compact and the European Stability Mechanism, Europe's permanent bailout fund.
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European Economics Preview: German GfK Consumer Confidence Data Due

Consumer sentiment from Germany and public sector finance from the U.K. are the major reports due on Tuesday.
At 2.00 am ET, Germany's GfK consumer confidence survey results are due. The forward-looking index is seen falling to 5.6 in July from 5.7 points in June.
In the meantime, Finland's unemployment and Swiss UBS consumption indicator reports are due.
The French statistical office Insee is scheduled to release consumer confidence survey results at 2.45 am ET. The confidence index is forecast to drop slightly to 89 in June from 90 in May.
Sweden's producer prices and Dutch final GDP reports are due at 3.30 am ET. Swedish producer price inflation is seen at 0.6 percent, compared to a flat rate in April.
Italy's statistical office Istat is set to publish retail sales for April. Retail sales are expected to fall 0.6 percent month-on-month, following a 0.2 percent drop in March.
The Office for National Statistics is slated to issue U.K. public finance figures at 4.30 am ET. Public sector net borrowing for May is seen at GBP 14 billion.
In the meantime, Spain's short-term debt auction results are due. The government plans to issue 3-month and 6-month T-bills to raise between EUR 2 billion and EUR 3 billion.


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New Zealand Trade Deficit NZ$301 Million In May

New Zealand posted a seasonally adjusted merchandise trade surplus of NZ$301 million in May, Statistics New Zealand said on Thursday, representing 6.8 percent of exports.
The headline figure topped forecasts for a surplus of NZ$300 million following the downwardly revised NZ$335 million surplus in March (originally called NZ$355 million).
It also follows surpluses of $906 million in May 2009, $770 million in May 2010 and $550 million in May 2011.
Exports were down 4.4 percent on year to NZ$4.42 billion, beating expectations for NZ$4.06 billion after coming in at a downwardly revised NZ$3.87 billion in the previous month.
By category, exports of meat and edible offal, logs, wood, and wood articles, and dairy products all declined in May 2012, as they did in April 2012. The trends for those commodities, which reflect how values change over time, have been falling for at least six months.
"New Zealand's top three export commodity groups were all down in May 2012, which is consistent with their recent trends," industry and labor statistics manager Neil Kelly said in a release accompanying the data. "Those falls in commodity values meant the trade surplus was lower than in the previous three May months."
Imports added an annual 1.1 percent to NZ$4.11 billion versus forecasts for NZ$3.80 billion after showing NZ$3.53 billion a month earlier.
Imports of capital and consumption goods increased, while imports of intermediate goods were down.
Year to date, the trade deficit is NZ$805 million (1.7 percent of exports), shy of forecasts for a shortfall of NZ$790 million after coming in at a downwardly revised NZ$557 million in April.
Upon the release of the data, the New Zealand dollar edged down against major rivals, trading near 0.7903 against the U.S. dollar, 62.84 versus the yen, 1.2738 against the Australian dollar and 1.5820 versus the euro.
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China to Allow Exchanging Yuan in Shenzhen Financial Zone

Chinese authorities have allowed exchanging yuan in Shenzhen financial zone, in a new step towards full capital account convertibility. China has been doing its work steadily to internationalize use of Yuan and promote it as global currency, especially among neighbors and strategic partners. International financial centers are also growing Yuan offshore markets while Chinese authorities steadily develops and deepen its financial markets to eventually take it to the global scale.
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EU Leaders Agree To Recapitalize Banks Directly Through Rescue Fund

The European leaders meeting in Brussels for a two-day summit have agreed to make use of Eurozone's bailout funds to recapitalize the region's banks directly once an effective single supervisory mechanism is established, relieving the governments of the burden of bailing out troubled lenders.
The European Commission will present proposals for a single supervisory mechanism soon. "We ask the Council to consider these Proposals as a matter of urgency by the end of 2012," the leaders said in a statement on Friday.
"We affirm that it is imperative to break the vicious circle between banks and sovereigns," the statement read.
The leaders also discussed ways to reduce the high borrowing costs faced by Spain and Italy. European Council President Herman Van Rompuy said the permanent bailout fund, the European Stability Mechanism, or ESM, will not gain a senior creditor status when it takes over the loans granted to Spain for its ailing banks from the European Financial Stability Facility, or EFSF.
The summit urged rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for the recapitalisation of its banking sector. The financial assistance will be provided by the EFSF and once the ESM becomes available, it will then be transferred to the permanent fund.
The decision to recapitalize banks directly through rescue funds emerged after strong words from leaders, particularly Italian Prime Minister Mario Monti along with Spanish PM Mariano Rajoy, who advocated more steps to reduce their countries' borrowing costs.
French President Francois Hollande threw his weight behind Spain and Italy, while German Chancellor Angela Merkel finally gave in to the pressure after her fierce resistance to direct bank aid at the start of the summit.
The leaders vowed to use the rescue funds "in a flexible and efficient manner" to ensure the financial stability of the euro area.
They welcomed the European Central Bank's decision to serve as an agent to the European Financial Stability Facility and later to the European Stability Mechanism, when it comes into force, in conducting market operations.
The EU vested on the Eurogroup the responsibility of implementing the decisions made at the summit by July 9, 2012.
Earlier during the summit, the leaders approved a 120 billion-euro package to promote growth in the debt-stricken Eurozone as well as across the broader 27-nation European Union.
The growth package includes a 10 billion euro capital boost for the European Investment Bank. It also redirects 60 billion euros of unused structural funds to help small enterprises and create youth employment in most needy countries.
The package also calls for launching EU project bonds worth 4.5 billion euros for infrastructure improvements focusing on energy, transport and broadband. The growth plan approved also includes tax-policy pledges and more focused use of EU funding.
Earlier this week, the EU unveiled a report containing proposals for securing the stability of the Union, which recommends enforcing tighter fiscal integration with budget controls across the Eurozone and establishing a European banking union.
The proposed measures enhance the existing power the European Union has over the fiscal policies of the member-states. Critics, however, have raised concerns the report does not contain any suggestion to address the current debt problems faced by eurozone members.
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