dailyfx financial markets headlines

The Euro posted a modest retracement following yesterday's dive, settling above 1.2710 and ranging for during late Asian and early European trade.  The decline in EUR/USD came in anticipation of the US trade balance, which reported at -63.8, only  modestly better than the month prior.  The pair has since rallied off the 1.2674 low mid-day Wednesday to as high as 1.2733.  European economic data consisted of German and French CPI, which were slightly below expectations in both countries and helped to ease some of the recent inflation concerns.  EU Harmonized German CPI for June showed a 0.1% month over month increase  with an annual rate of 2.0%, in line with ECB targets and below the 2.1% mark for May.  French EU Harmonized CPI for June later showed no change from May, while the yearly rate declined from 2.4% to 2.2%.  Although further ECB rate hikes are expected before the end of the year, the new data gives the central bank something to ponder as it considers the timing on the increases.  Policymakers have noted that global monetary policy has been very accommodative for the past few years and notes that this may soon come to an end.  As of 9:00GMT EUR/USD traded at 1.2721, up from Wednesday's New York close at 1.2700.

European equity markets moved lower shortly after opening on Thursday as an upswing in violence in the Middle East and a surge in oil prices to record levels weigh on investor sentiment.  The FTSE Eurofirst 300 lost 0.6% to 1,304.57 while the German Xetra Dax dropped 1.2% to 5,574.60 and the French CAC40 fell 1% to 4,894.14.  Premiere surged 24.8% to €10.30 after the German pay-television operator reached a deal with rival Arena to show German premier league soccer.  Premiere share price has suffered badly since it lost the TV rights to Arena earlier this year.  Sony Ericsson announced strong second quarter results and raised its full-year sales forecast.  The cellular handset maker said net income rose 90.7% to €143m in the second quarter, but Ericsson dipped 0.9% to €22.10.  Carrefour, the French supermarket, announced a 2.7% increase in total same-store sales in the second quarter and reiterated its 2006 targets.  ABN Amro downgraded its recommendation to “hold”.  Carrefour was unchanged in early trade.

Benchmark 10 year German Bunds yields were down four basis points to 4.038% as prices hit 99.670.

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