- Surprising on the downside, the Ifo business climate index for Germany declined to a reading of 94.8 in August despite expectations for a small decrease to 97.2 from July's 97.5. The current assessment index fell to 103.2 from 105.7 despite forecasts for a 104.4 reading. The expectations index declining to 87.0, failing to rise to 90.5 from the previous month's 90.0 level as predicted by the consensus forecast,

- In an interview with Bloomberg TV following the announcement, Gernot Nerb, an economist at the Ifo Institute, said that while the German economy was slowing significantly, there is no danger of recession in Germany. Nerb warned that lower oil prices had yet to affect all German companies, and a weakening euro would probably have a positive impact on the export sector, which had weakened further in August. As a consequence, the European Central Bank is more likely to deliver a rate cut down the road, Nerb added.

- German bonds rallied sharply on the announcement, with two-year government bonds falling as much as 8 bps to 3.93% and 10-yr Bunds losing as much as 5 bps to 4.083%. Meanwhile, the euro lost over one cent to the greenback, reaching session lows of 1.4596.

- A final look at second-quarter GDP results from Germany confirmed preliminary assessments of a 0.5% quarter-over-quarter contraction and an annual 1.7% weighted-day-average (WDA) growth rate. On a non-seasonally adjusted basis, annual GDP rose 3.1% in Q2, also in line with preliminary estimates and the consensus forecast.

The figures contrast sharply with first-quarter results, which indicated a downwardly revised 1.3% quarterly growth rate, a 2.6% annual WDA GDP growth and a 1.8% non-seasonally adjusted annual rate of expansion. Prior to revisions, first-quarter GDP was up 1.5% on the quarter.

- According to the GfK on Tuesday, the German consumer confidence index fell to a reading of 1.5 in September, despite expectations for a 2.0 level. August's 2.1 reading was revised down to a 1.9 score.

- The British Bankers' Association said that UK mortgage approvals in July rose to 22,448 from June's revised 22,369.

- According to the French housing ministry on Tuesday, annual housing starts over the last three months to July declined 11.8%, short of expectations for a 26.0% contraction and the previous month's 28.2% fall. Meanwhile, housing permits contracted 16.6% year-over-year in the three months leading to July compared to the previous month's 15.3% fall.

- The Swedish Statistics Office reported that producer prices in the country rose 0.7% month-over-month despite forecasts for a 0.5% increase and the previous month's 0.5% gain. On an annual basis, Swedish PPI advanced 3.3%, also above forecasts for a 3.1% increase and the previous month's 3.0% rise.

- Unemployment rates in Finland fell sharply in July, according to a report from the statistics office on Tuesday, which said total unemployed persons fell to 144,000 from 195,000 in June. Overall, the statistics translate into a 5.2% unemployment rate for July compared to June's 6.8% rate. The result marks the lowest unemployment rate for Finland in nearly 18 years.

- As expected, the Slovakian Central Bank held its benchmark interest rate unchanged at 4.25% on Tuesday, in line with the European Central Bank's main refinancing rate, and ahead of Slovakia's adoption of the euro on Jan. 1, 2009.

- The National Hurricane Center reported that Tropical Storm Gustav has been upgraded to hurricane status and is heading towards Haiti and into the Gulf of Mexico. WTI crude oil remains down over $2 at $112.90.

- The Japan corporate services price index (CSPI) came in at +1.3% year-over-year in July, in line with June's figure which was revised up to +1.3% from +1.2%. The index decreased monthly by 0.1% from June's figure of +0.5%. The preliminary figures were released by the Bank of Japan on Tuesday morning (Monday night EDT). Expectations were for the index to rise 1.2% year over year, according to a consensus forecast.

JP Corp Service Price (Y/Y) July Exp: +1.2% Prior: +1.2%

DE GDP (Q/Q) (SA) Q2 Final -0.5% vs. Exp: -0.5% Revised: +1.3% Prior: 1.5%

DE GDP (Y/Y) (WDA) Q2 Final +1.7% vs. Exp: +1.7% Prior: +2.6%

DE GDP (Y/Y) (NSA) Q2 Final +3.1% vs. Exp: +3.1% Prior: +1.8%

DE Private Consumption Q2 Final -0.7% vs. Exp: -0.4% Revised: -0.4% Prior: +0.3%

DE Government Spending Q2 Final +0.3% vs. Exp: +0.3% Revised: +1.1% Prior: +1.3%

DE Capital Investment Q2 Final -1.9% vs. Exp: -1.5% Revised: +3.4% Prior: +3.7%

DE Construction Investment Q2 Final -3.5% vs. Exp: -4.0% Revised: +5.7% Prior: 4.5%

DE Domestic Demand Q2 Final -1.0% vs. Exp: -1.3% Revised: +1.6% Prior: +1.9%

DE Imports Q2 Final -1.3% vs. Exp: -3.0% Revised: +3.2% Prior: +3.5%

DE Exports Q2 Final -0.2% vs. Exp: -1.0% Revised: +2.1% Prior: +2.4%

DE GfK Consumer Confidence Survey September +1.5 vs. Exp: +2.0 Revised: +1.9 Prior: +2.1

FR Housing Starts 3M (Y/Y) July -11.8% vs. Exp: -26.0% Prior: -28.2%

FR Housing Permits 3M (Y/Y) July -16.6% vs. Prior: -15.3%

DE IFO - Business Climate August 94.9 vs. Exp: 97.2 Prior: 97.5

DE IFO - Current Assessment August 103.2 vs. Exp: 104.4 Prior: 105.7

DE IFO - Expectations August 87.0 vs. Exp: 90.5 Prior: 90.0

GB BBA Loans for House Purchase July 22448 vs. Revised: 22369 Prior: 21118

By Erik Kevin Franco, This email address is being protected from spam bots, you need Javascript enabled to view it with contributions from Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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