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European Summary

Forex News Bond futures contracts headed lower Monday as European equity markets staged a recovery. Bunds extended Friday's steep price declines, while gilts outperformed, buoyed by weak UK housing data and dovish comments from MPC member David Blanchflower. With no key economic data on the agenda, bunds remained under pressure from rallying equity markets. At 1115 GMT, the September bund contract was down 0.45 at 110.40, within a 110.36-110.95 range. Meanwhile, December Euribor was down 0.005 at 94.815. September gilts surrendered early price gains as UK equities recovered lost ground.



The July Rightmove house price index, which fell by 2.0% on the year, offered early support, while known-dove Blanchflower warned of recession in the UK economy and suggested interest rates needed to fall. At 1115 GMT, September gilts were down 0.08 at 105.37, in a 105.30-105.84 range, while December short sterling was up 0.06 at 94.11. A quiet session for the foreign exchange markets with Japan closed for a national holiday. The euro strengthened against the US dollar to 1.5890 from 1.5840 in NY Friday, while sterling was little changed against the greenback at 1.9970 from 1.9972. USD/JPY slipped to 106.65 from 106.96 Friday. Oil traded around USD130.60, recovering some ground lost Friday as Tropical Storm Dolly looked set to disrupt supply from Mexico. European equity markets were up between 0.6%-0.9%.

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