Friday, Jean-Claude Trichet, President of the European Central Bank said public authorities, executive branches, and central banks must do everything possible to restore confidence and support growth. Meanwhile, official data showed that the euro area trade deficit narrowed more than expected in February from the previous month, lifted by declining imports.


ECB chief Trichet cautioned that ambiguity in policy direction will delay recovery. Regarding the ECB rate-setting session on May 7, Trichet said in a speech in Tokyo that it is important not to create or encourage expectations. He added, Be sure that what we will decide will fully take into account the financing structure of the euro area economy and will be fully in line with our medium-term strategy.

The Eurostat reported that the trade deficit narrowed to EUR 2 billion in February from January's revised EUR 10.9 billion deficit. Economists had expected the deficit to contract to EUR 5 billion. After adjusting for seasonal variations, the trade balance recorded a deficit of EUR 4 billion in February versus EUR 5.4 billion shortfall in January. The adjusted deficit narrowed more than the expected deficit of EUR 4.9 billion.

Eurozone's construction output fell a seasonally adjusted 1.8% month-on-month in February, following a 1.6% rise in the previous month, the Eurostat said in a separate report.

Italy's statistical office ISTAT said industrial orders dropped 1.5% month-on-month in February, taking the annual decline to 32.7%. Meanwhile, economists had forecast a monthly fall of 2.6% and an annual drop of 30.7%. Industrial turnover in February was down 24.6% year-on-year.

Italy's current account deficit increased to EUR 3.8 billion in February from EUR 3.41 billion in last year, a report by the Bank of Italy showed. In January, the current account deficit stood at EUR 7.24 billion.

Finland's producer prices for manufactured products fell 6.1% year-on-year in March, faster than a 4.6% decline in February, the Statistics Finland said.

Producer prices in Austria increased 0.7% year-on-year in February, at a slower pace compared to a 0.9% rise in the previous month, data from the Statistics Austria revealed.

In other news, Moody's Investors Service placed Ireland's Aaa government bond ratings on review for possible downgrade.

Rest of Europe

In the United Kingdom, a report released by the Council of Mortgage Lenders said around 900,000 home-owners in the UK presently have some degree of negative equity, although the majority of these, about two thirds face only modest shortfalls of less than 10%.

According to provisional results issued by the Federal Statistical Office, Swiss retail sector turnover adjusted for inflation dropped 3.8% in February over the year ago level, much larger than the expected decrease of 0.2%. Meanwhile, adjusted for working days, retail turnover grew 0.2%.

Elsewhere, the Swiss National Bank's Governing Board Chairman, Jean-Pierre Roth said the central bank would continue to buy foreign currencies on the foreign exchange market to avoid further appreciation of the Swiss franc against euro and inject additional liquidity into the economy.

The Hungarian Central Statistical Office said the average monthly gross earnings grew 2.5% year-on-year in February, reversing the 5.2% fall in the previous month. Economists expected wages to rise 3.5%.

Norway's trade surplus decreased to NOK 30.27 billion in March from NOK 39.64 billion in the previous year, the Statistics Norway reported.

Iceland's jobless rate climbed to 7.1% in the first quarter from 2.3% in the corresponding period last year, the Statistics Iceland announced. The number of unemployed persons increased to 12,700 from 4,200 in the previous year.

Sweden's Public Employment Service said in a report that the jobless rate stood at 4.8% in March. This came in line with economist's estimates.

Poland's average gross wages and salaries increased 5.7% year-on-year in March after rising 5.1% in February, the Central Statistical Office said. Economists had expected the growth to slow to 3.4%.

Estonia's current account deficit in 2008 narrowed to EEK 22.9 billion from EEK 43.16 billion deficit in 2007, the Bank of Estonia said.

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