By William Horobin 1:45amCDT
French CPI Falls Again
PARIS--French consumer prices fell further than expected in September, adding to concerns over persistently low inflation in the eurozone. Consumer prices in the eurozone's second-largest economy fell 0.4% in September from
August and were 0.3% higher than in September last year. Economists polled by The Wall Street Journal had expected a 0.2% decline on the month and a 0.4% increase on year. France's HICP--a harmonized measure of annual price changes used by the European Central Bank--rose 0.4% on year in September, marking a slowdown from the 0.5% year-on-year rise recorded in August. The consumer price reading in France comes as the ECB says it is ready to take further measures if required to bring inflation in the eurozone closer to its 2% target, from around
0.3% currently. The French government has also warned of the dangers of low inflation for public finances. Lower than expected inflation is one of the reasons the country is unable to deliver on its deficit reduction pledges, Finance
Minister Michel Sapin has said. Write to William Horobin at william.horobin@wsj.com
(END) Dow Jones
Newswires
By Jon Sindreu and Nick Winning 3:30amCDT
U.K. Inflation Falls
LONDON--A steep decline in the price of fuel led inflation in the U.K. to slow more than expected in September, easing pressure on the Bank of England for an early rise in interest rates. The annual headline rate of inflation-measured by the consumer-price index--fell to 1.2% during the month from 1.5% in August, figures from the Office for National Statistics said Tuesday. That was the lowest inflation rate recorded since September 2009 and was significantly below median forecasts by economists polled by The Wall Street Journal, which showed year-overyear inflation was expected to edge down to just 1.4%. In month-to-month terms, prices remained flat in September compared with 0.4% growth the previous month.
Sterling fell to a fresh one-week low against the dollar and one-month low against the euro after the inflation data.
Around 0840 GMT, the pound had fallen to $1.5978 from $1.6017, while the euro jumped to GBP0.7943 from
GBP0.7918.
The largest contributor to the slowdown was a 6% drop in the price of motor fuels, which in turn lowered the price for transport, followed by food. Core inflation, which excludes the price of energy, food, alcoholic beverages and tobacco, showed a 1.5% price increase--still the lowest figure since April 2009.
U.K. manufacturers benefited from cheaper fuels and materials--their cost fell for the 11th consecutive month-leading prices at the factory gate to go down by 0.4% compared with September 2013, the biggest fall in five years.
Weak price growth provides the BOE with extra room to decide when to start gradually raising interest rates. Last week, the central bank left its key rate unchanged at a record-low of 0.5%, as inflation has been below its 2% target every month this year. Market participants expect a rise in rates in early 2015, but a slowdown in British economic activity--as the country's eurozone partners show weak growth figures and rock-bottom inflation--could push it further back.
BOE Governor Mark Carney said Monday in an interview to CNN that the central bank has been expecting a
"modest deceleration in the U.K. economy toward the end of this year," which will determine when interest rates will go up. Gov. Carney admitted that the current economic stagnation in the eurozone is "an additional drag on growth," but underscored that it "doesn't dictate the monetary policy of the Bank of England."
Also Tuesday, ONS figures showed U.K. house prices continued to grow in August, albeit at a more moderate pace compared with the early months of the year. During August, prices for homes increased at the same pace as in July-
-at an annual 11.7%. London was still leading the race for prices in August, with houses recording an almost 20% increase in price. Write to Jon Sindreu at jon.sindreu@wsj.com and Nick Winning at nick.winning@wsj.com
Dow Jones Newswires October 14, 2014 04:41 ET (08:41 GMT) Copyright (c) 2014 Dow Jones & Company, Inc.
(END) Dow Jones Newswires

By Emese Bartha 4:51amCDT
Germany’s Sale of Linkers More Negative
FRANKFURT--Germany's borrowing costs on a long-dated inflation-linked government bond slid further into negative territory at auction Tuesday, amid low inflation in Europe's largest economy and the eurozone as a whole.
The German Finance Agency sold 694 million euros ($879.6 million) of its April 2023-dated inflation-linked Bund at the auction, the penultimate linker auction in Germany this year. The real yield came in at -0.38%, down from
-0.15% at the previous tap of the bond in June, the Bundesbank said. "The decreasing European inflation and deflation risks still weigh on linkers; the inflation market doesn't seem willing to trust the effectiveness of the credit easing measures introduce by the ECB," said Intesa San Paolo's rates strategist Chiara Manenti.
The annual rate of inflation in Europe's largest economy, measured according to a common European Union method, was 0.8% in September, the same as in August and July, according to the federal statistics office's first estimate. The statistics office is expected to release its second estimate on Wednesday.
Meanwhile, with a series of downbeat economic indicators from Germany, the country's near-term economic outlook has weakened, with exports collapsing in August and domestic demand falling. German government officials have started discussion about a limited amount of public spending, but no German stimulus program is in the cards any time soon. The "Bundesbank remains strongly opposed to calls for the ECB to implement a fullblown quantitative easing program," Capital Economics said an a quarterly European economic outlook.
The following are details of the auction, with amounts denominated in Euros. Figures in brackets are data from the previous auction held June 10.
Issue nine-year inflation-linked Bund
Coupon 0.10%
Maturity April 15, 2023
Amount on offer 1 bln
Bids received 1.159 bln
Bids accepted 694 mln
Bid-to-cover ratio 1.7 (1.8)
Average yield -0.38% (-0.15%)
Average price 104.17 (102.21)
Minimum price 104.12 (102.20)
Settlement date Oct. 16, 2014
The Bundesbank said all bids at the lowest price was accepted and it also accepted all the non-competitive bids at the weighted average price. The amount retained for market-tending purposes was about ER306 million, bringing the total issue size to EUR1 billion. The German Finance Agency manages the country's federal debt, while the
Deutsche Bundesbank is responsible for conducting the debt auctions. Write to Emese Bartha at emese.bartha@wsj.com
(END) Dow Jones Newswires

5:36amCDT
Oil Prices & History
Still haunted by its failed attempt to prevent a steep drop in oil prices by slashing production in the 1980s, Saudi
Arabia is determined not to make the same mistake again. The oil glut of the 1980s, the early days of the modern crude market and a distant memory for most traders, has resurfaced recently in conversations with Saudi officials and veteran analysts who see it as the defining moment behind the kingdom's new strategy to protect medium-term market share. While the latest 25% slide in oil prices to below $90 a barrel is so far modest compared with the
1980s slump that took crude from $35 to below $10, many observers see similarities in a global market that is on the brink of a pivotal turn from an era of scarcity to one of abundance. To read more [ID:nL6N0S80NX] Chart of oil prices and production: http://link.reuters.com/mym23w Pratima.Desai@ThomsonReuters.com
Copyright (c)
2014 Thomson Reuters – IFRMarkets

1059 GMT [Dow Jones] 5:59amCDT
Oh Greece!
Greek bond yields are up sharply, hitting levels last seen in March, as investors worry about the country's planned exit from its bailout and strong polling by anti-EU party Syriza. A new poll Tuesday showed a hefty lead for the party over Prime Minister Antonis Samaras' New Democracy. Greece's 10-year yield is hovering just shy of 7%, up from less than 6.5% on Friday, marking a significant setback for the country, which returned to bond markets in
April. Samaras, whose coalition government last week survived a confidence vote in parliament, is pushing for an early exit from Greece's bailout program. "Samaras doesn't have enough votes in parliament to appoint a new president-that could mean elections next year. With Syriza ahead in the polls it's not surprising the market is pricing in bigger risks," says Gareth Colesmith, a fund manager at Insight Investment. (tommy.stubbington@wsj.com)
Contact us in London. +44-20-7842-9464 markettalk@wsj.com
(END) Dow Jones Newswires
By Harriet Torry 6:30amCDT
Germany Lowers Growth Estimates
BERLIN--Germany slashed its growth forecasts for this year and next, citing a weak global economy amid a series of international crises, in a step that follows a slew of poor data for Europe's biggest economy. The economics ministry cut its forecast for economic growth this year to 1.2% from an earlier forecast of 1.8%, and to 1.3% for
2015 from 2% previously. "The German economy is in choppy waters concerning foreign trade," Sigmar Gabriel, minister for economics and energy, said in a statement.
The cut for 2014 was broadly expected after the economics minister warned in a radio interview in late September that growth could come in below the earlier 1.8% forecast, given the tensions between Russia and Ukraine. In
Tuesday's statement, the ministry said achieving better growth next year will depend on international factors improving, but added that Germany's robust jobs market and domestic demand remain intact.
The government's latest forecast comes after the closely watched ZEW survey showed a sharp drop in economic sentiment and follows several weak German data releases, notably August's steepest on-the-month fall in exports since the 2009 recession.
Mr. Gabriel, leader of the left-leaning Social Democrats, the junior partner in German Chancellor Angela Merkel's coalition, said Germany needs to invest "considerably more in its infrastructure" to generate growth.
Germany's leading economic think tanks last week also slashed their growth forecasts on the domestic economy for
2014 and 2015, citing weak demand at home and abroad, and a frail eurozone. The institutes said that Europe's largest economy will grow by only 1.3% this year and 1.2% next year, compared with April's forecasts of 1.9% and
2.0%, respectively. Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
By Kathleen Madigan 6:30amCDT
Small Business Confidence Falls
Small-business owners remained wary about economic conditions in September, according to a report released
Tuesday. The National Federation of Independent Business's small-business optimism index fell to 95.3 in
September from 96.1 in August. In May, the index reached a cycle high of 96.6, but it has lost momentum over the summer. "Optimism can't seem to get out of second gear," Tuesday's report said. Economists surveyed by the Wall
Street Journal expected the latest index to slip to 95.9.
The top-line index's September decline can be traced to steep drops in two components. The subindex covering hard-to-fill job openings fell five percentage points last month to 21%, while the capital outlays subindexes tumbled five points to 22%. Small business owners are cautious about their sales activity. The positive earnings trend declined two points to -19%, while the sales expectation subindex fell one point in September to 5%.
"Overall, these readings are more like a recession period than one of expansion," the NFIB said.
News on the labor front was more positive. Small firms hired more people in the three months ended in September.
On average, NFIB members increased employment by 0.24 worker per firm, the largest net gain so far in 2014.
But the trend may not hold in coming months, the NFIB warned. The job-creation subindex fell one percentage point to 9%, "suggesting weaker job creation ahead" the report said. Pricing power also continues to unravel for the small business sector. Seasonally adjusted, a net 4% of owners have raised selling prices recently. September's reading was down two points from August's index, which posted a large eight-point drop from the July level.

Looking ahead, a net 16% plan to raise prices in the next three months, down three points from the share planning price increase in August. "All is quiet on the inflation landscape," said the report. Write to Kathleen Madigan at kathleen.madigan@wsj.com
(END) Dow Jones Newswires
By Tess Stynes 6:45amCDT
ICSC Goldman Down
The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index eased 0.7% in the week ended Saturday from the previous week on a seasonally adjusted, comparable-store basis. "Business over the past week was strong across most segments--particularly at apparel stores and wholesale clubs," said Michael
Niemira, ICSC vice president of research and chief economist. "With gasoline prices at their lowest point nationally since mid-November of last year, discretionary spending should remain healthy." On a year-to-year basis, the weekly reading increased 3.8%. For October, ICSC expects retail sales to rise 3.5% to 4.5%.
Week Ended Index Yr/Yr Change Weekly Change
11-Oct-14 556.9 3.8% -0.7%
04-Oct-14 561.1 3.9% 0.1%
27-Sep-14 560.4 3.6% -0.2%
20-Sep-14 561.8 4.1% 0.1%
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
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