European morning wrap: A funny thing happened while we were waiting for Bernanke………

ECB's Nowotny: Economic uncertainty in Europe is "growing massively" More Nowotny:  Any ECB govt bond buying on secondary markets should be with conditions. ECB govt bond buying on primary markets would be problematic Bundesbank spokesman declines to comment on Bild report that Weidmann considered resigning German govt spokesman: Merkel believes it is good Bundesbank's Weidmann warns politicians, she favours strong Bundesbank influence in ECB.  Merkel, Weidmann speak on phone regularly German govt spokesman:  A full rescue programme for Spain is not on agenda ECB's Coeure:  Euro is the guarantee of Europe's presence among the great global markets. There is no Europe without the euro ECB's Coeure:  ECB studying ways of intervening in the short-term bond market based on strict conditionality and EFSF/ESM programme Merkel asks Italy to delay bailout request. And she's gonna ask same of Spain - El Mundo Germany's ForMin Westerwelle: The euro is 'stable'  Reforms needed for effective governance in Greece. Greece can't be allowed to weaken reform agenda German July prelim retail sales -0.9% m/m, -1.0% y/y, demonstrably weaker than Reuter's median forecasts of +0.2%, +0.4% respectively UK Nationwide house prices +1.3% m/m, -0.7% y/y, demonstrably stronger than Reuter's median forecasts of flat m/m, -2.2% y/y.  Biggest month on month rise since January 2010 Euro zone July unemployment 11.3%, unchanged from revised 11.3% in June (prev 11.2%) and in line with median forecast Euro zone August inflation estimated at 2.6% y/y vs 2.4% in July, stronger than median forecast of 2.5% Bernanke may hint at stimulus without boxing Fed in - Reuters "Don't count your hahnchen": 40% chance German court does not ratify ESM - Zerohedge Yes a funny thing indeed!! We got bloody busy, well certainly busier than of late :) Bit of risk appetite about, which is always nice to see.  European stocks having started out weak saw a robust rebound throughout the morning. Periphery markets led the way, with Italy's FTSE MIB up +1.95% and Spain's IBEX up +1.75%. Active morning for EUR/USD.   While EUR/USD has seen decent gains, it hasn't been all one way.  We're up at 1.2577 from early 1.2515, but inbetween we've been down to 1.2493 before rebounding strongly.  Comments from ECB's Nowotny and weak German retail sales put a dampner on the single currency early. Talk had buy orders clustered down at 1.2480/90 and they proved a brickwall to the downside and as European stocks rebounded so EUR/USD got its' mojo back.  Asian and Middle Eastern sovereign buying was notable and the rally accelerated when buy stops were tripped through 1.2540. Barrier option interest remains up at 1.2600 and defence of said interest has helped cap the EUR/USD rally to 1.2594 so far.  Buy stops seen above 1.2600. Cable up at 1.5840 from early 1.5795.  EUR/GBP up at .7940 from early .7923 having been as high as .7953.  Usual month-end buying has helped support the cross. USD/JPY up marginally at 78.55 from early 78.40, better risk appetite and slightly firmer US treasury yields will have helped lend some much-needed support.  Benchmark 10 year treasury yield up at 1.6540% from early 1.6335%. AUD/USD up at 1.0335 from early 1.0295, having been as high as 1.0345.  Asian central bank buying reported early.