The situation in Europe is still forming its shape, as the U.K economy seems to be heading the same way the U.S economy went in already, as house prices continue to fall weighing down on economic growth.

U.K house prices fell the most since 1991 according to the Nationwide house price index today, prices fell in May by 2.5 percent after falling 1.1% the prior month and much below median estimates, while compared with a year earlier prices fell by 7.9% the same as the previous drop and slightly below the 7.8% expected drop.

The housing sector in the U.K might become a new American story, as the slowdown in the U.S was mainly ignited and attributed to the falling housing sector, the U.K housing sector has been booming for the last decade and a correction to house prices seems rather a logical thing to happen, yet should this correction extend beyond expectations, the BOE might just follow the lead of their counterparts the Feds in easing their policy substantially!

Moving on to the Germany, the ILO unemployment rate was released today for April, unemployment rose in Germany to 7.4% slightly above the 7.3% expected rise and the same rise back in March, while the official unemployment rate rose 7.9% in May inline with the prior rise and slightly above the 7.8% expected rise.

Moreover the Bloomberg retail PMI rose in May in Germany unexpectedly to 56.6 from 44.6 reported back in April, while for the Euro Zone the Bloomberg retail PMI rose to 53.1 from 41.8, this could highlight ongoing growth in consumer spending and should that proves to be right, expectations of a rate cut to be delivered from the ECB later this year might as well vanish!

More news from the Euro Zone continued to come out, as the M3 money supply rose in April by 10.6 percent above the prior and the expected rise of 10.3%, though this should highlight more inflationary pressures for the ECB, but it also hints for ongoing growth in money supply in the Euro area, hinting the U.S credit meltdown didn't stop the flow of money in the 15-nation economy.

As for confidence in the 15-nation economy, the business climate indicator rose in May to 0.45 from the prior 0.44 and above the expected 0.41, while consumer confidence dropped to -15 from the prior -12, but the economic confidence rose however to 97.1 unchanged from the prior reading and above the 96.8 expected drop.

Rising food and energy prices continue to weigh up to a certain extent on consumers in the Euro area, yet the elevated Euro levels had been able so far to limit the downside effects of rising inflation on Europeans spending, but still the Euro area needs strong domestic demand in order to be able to overcome the current disruptions in the financial markets and their downside effects on the growth prospects for the 15-nation economy.

Later today the U.S Commerce Department will probably report that the U.S economy grew an annual 0.9% in the preliminary estimate for the first three months of this year, yet surprises might emerge since the upward revision seems rather ambitious, but it could also materialize in ground.

The Europeans will be looking forward to see what developments could emerge from the world's largest economy to anticipate the aftermath on their own economies, should the severe slowdown hit the 15-nation economy after hitting the U.K's remain unknown, but till then keep your eyes wide open as the wind carries the scent of change!