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France and Britain have ruled out Friday to share the aircraft carriers in the near future but said they were ready to pool several defense equipment including the future A400M military transport aircraft assembled by EADS.

The Defence Minister Herve Morin, who received his British counterpart Liam Fox to Paris for a bilateral meeting devoted to the weapons programs of both countries, also stressed that the French and British companies were to cooperate more and that would make Paris and London joint proposals for NATO reform.

"We hope that our cooperation is in the background the ability (for France and Great Britain, ed) to make budgetary savings," he said during a brief press briefing.

France and Britain, both facing pressures on their finances, have decided to start saving measures, particularly in the defense sector.

"It is logical to examine the issues where we can share the assets rather than acting separately," explained Liam Fox."It's a purely pragmatic."

Herve Morin said, however, that France does not plan to share aircraft carrier with Britain at this time.

A source close to the Defense Ministry told Reuters that the technical characteristics of French and British aircraft made a pooling difficult but that nothing prevented the two armed boats to share logistics.

"The sharing of an aircraft carrier would not be realistic," confirmed Liam Fox.

Herve Morin assured that Paris and London had been exploring a range of issues of cooperation and mentioned as an example the tanker and the future A400M military transport aircraft, a program led by Airbus Military, a subsidiary of European aerospace and EADS Defence.

"We look very real, capacity by size, by industrial subject matter industry, we can do, either in cooperation, or we can decide who would lead us toward interdependence," he said.

"On the tanker (tankers), the maintenance in operational condition (OLS) of the A400M, the joint naval facilities, we can move towards greater pooling."

PROPOSALS

The contract for the A400M program delay of almost four years, must be revised so that some countries like Germany and Great Britain, dissatisfied with the delivery and anxious to reduce their expenses, considering scaling back their orders .

"On the A400M, it actually makes sense, then we have budgetary constraints, to achieve more together than separately and see where we can achieve economies of scale and use of shared assets," Liam Fox said.

Both ministers have not detailed how this sharing could take place.France has ordered 50 A400M while Great Britain could reduce its order for 25 aircraft to 22.

EADS has signed an agreement in March with the seven member countries of NATO to the origin of the A400M, which allows them to cancel up to 10 aircraft from the total 180 aircraft ordered.

Herve Morin also argues that he had discussed a reform of NATO with Liam Fox.

"France and Great Britain are the desire for a reform of the alliance with a reduction of bureaucracy, increased financial control, reduced staffs and physical footprints" he said before adding that France and Great Britain would submit proposals for savings in the next NATO summit in Lisbon in November.

The Minister also invited the French and British companies to enter into partnerships and alliances.

"We need to redefine a number of edges that we may not have the same research centers on both sides of the Channel '," he pleaded.

Retail sales are backed up against all odds by 0.3% in Germany in July, posting a second consecutive month of decline in monthly, announced Tuesday the Federal Office of Statistics.

Over a year, retail sales rose 0.8%.

Analysts polled by Reuters had expected a monthly increase of 0.5% and an increase of 1.4% over one year.

The Japanese consumer prices fell in July for the 17th consecutive month on an annual basis, a sign that deflation remains entrenched in the archipelago and Nippon will be difficult to fight for the government.

Tokyo seeks the method that will curb the rising yen, which this week hit a high of 15 years against the dollar and a high of nine against the euro, threatening to bring down a recovery that based on exports.

But the strong yen is likely to complicate efforts by the Japanese government to fight deflation.

Japanese Prime Minister, Naoto Kan, said Friday that reporters would act when necessary on the issue of the strong yen and he would meet the Governor of the Bank of Japan Masaaki Shirakawa on his return from a trip to the abroad.

Naoto Kan also said that excessive currency fluctuations could threaten financial stability and hoped that the BoJ would take the appropriate measures in terms of monetary policy.

Decisions will be made August 31 on these issues.

The Interior Ministry announced Friday that consumer prices, which include fuel costs but not those of fresh products, fell 1.1% yoy in July according to the median forecast of the market. In June, they were down 1%.

"TWO OR THREE YEARS OF DEFLATION"

"Given the appreciation of the yen, exports will plunge and temporarily slow the economic recovery in Japan.Japan will remain in deflation for the next two or three years, "said Takeshi Minami, chief economist at Norinchukin Research Institue.

Investors are betting on an intervention by the Bank of Japan to ease monetary policy in the country.

"The BoJ could expand its refinancing tools next month, but the effect on interest rates in the short term will be limited.She needs to take bolder decisions to fight deflation and the rising yen, as increasing outright purchases of government bonds, although it is very unlikely to happen, "said Takeshi Minami.

Two other indicators released Friday offers a contrasting vision of the Japanese recovery.

The unemployment rate adjusted for seasonal variations fell 5.2% in July against 5.3% in June while the median forecast was 5.3%, according to figures from the Ministry of Internal Affairs.

Household spending has in turn increased by 1.1% in July over a year in real terms, less than the market forecast of an increase of 1.3%.

For a chart comparing the evolution of consumer prices in Japan, the United States and the euro area, click on link.reuters.com/pum57n

The spectacular mergers and acquisitions announced in recent weeks nourish hopes of a general resumption of trading but the French bankers polled by Reuters remain cautious optimism for the fall.

The hostile bid of nearly $ 40 billion launched the world's leading fertilizer Potash or the stock market battle for control of the data storage company 3PAR have been seen by some analysts as a sign announcing a possible new cycle.

"Such operations raise a little mercato" judge a banker, a comparison of sports in the same vein as the one launched during the World Cup soccer player Cristiano Ronaldo by: "The goals is like ketchup: when they arrive, they all come together. "

Announcements and takeover rumors are linked together with a consistent and disturbing intended target size in almost all sectors: automobiles Alfa Romeo, the Australian brewer Foster's with the bank with Nedbank of South Africa, insurance with the UK's Aviva or energy with Polish ENEA.

Figures gathered by Thomson Reuters for the French market is also impressive, even excluding the approximately $ 20 billion Sanofi-Aventis would be willing to spend on the U.S. Genzyme.

THE CONTEXT IS BEST

Transactions involving at least one French company are, at August 25, two times larger in value than in 2009 although it remains far from achieving the speculative frenzy in 2006.

On August 25, 2006, volumes amounted to 239 billion dollars, against 105 billion reached Wednesday.

"Generally, we can say that the context is better than the last two years and the probability of operations is improving, although significant uncertainties remain," Thierry J. Silver, Global Head of 'M & A activity at Societe Generale.

"There is no reason to believe that the major cross-border operations will slow.They are now once again well received by shareholders when the companies have demonstrated their ability to cope with the crisis, "said the banker.

The poor market performance since the beginning of the year is still a risk factor and observers recall that many transactions or IPOs had to be canceled after the crash loosened markets in the first quarter .

MOTION FRAGILE

"We are seeing a recovery in 2010, but this movement will remain fragile until the current uncertainty about valuations persist," the judge for his part in a research note Rivalland Jean-Claude, a lawyer with Allen & Overy in Paris.

The degradation of the sovereign rating of Ireland by Standard & Poor's has also recalled Tuesday that the euro zone was not yet out of the rut and the specter of a relapse of the U.S. economy is also a source of concern.

"The problems on the sovereign credit may resurface, CFOs remain cautious because they do not want to take full credit crunch, they must restructure their debts after a major operation," noted for its share Philip Caraman, a banker from UBS to Paris.

"As long as there is no more visible on sovereign risk, the volumes remain as low as three or four years," Judge said.

For Monique Cohen, managing partner of private equity firm Apax, one of the keys to continued activity is the continued financing of transactions by banks, a vital issue for the private equity industry.

"We can not consider access to the debt as an asset of the moment," she said, noting however that "no new restrictions on debt, many LBO (leveraged transactions) should be provided be in September.

To some bankers, corporate strategic imperatives also explain that they go ahead even if the timing is not ideal.

Some major transactions announced or expected to emerge this logic rather than a genuine recovery in overall mergers and acquisitions, they believe.

"In pharma we got to a point where the economy is good or bad, the problems must be addressed," said a banker based in London.

Large groups such as Sanofi-Aventis and not have enough new molecules for activity in the coming years and must grow through acquisitions.

Similarly, some companies must gain control of new technologies or new markets and therefore have to attack even when conditions are not ideal.

"It's a matter of life or death," Judge the same banker.

The Paris stock exchange resumed on Tuesday the path of decline, concerns about slowing global growth had returned to second place the ads on mergers and acquisitions cause a rebound in European equities Monday.

Around 9:10, the CAC 40 lost 0.95% to 3519.44 points.

Accor (+1.5%) is the only value of the CAC 40 in the green after the group announced the sale of walls 48 of its hotels in Europe, allowing it to exceed its debt reduction targets for 2010.

Lafarge (-3.9%) shows the largest decreases of ACC. Bank of America-Merrill Lynch lowered its recommendation from neutral to underperform.

London fell by 0.7% and Frankfurt 0.63%.The European indices, EuroStoxx 50 and 300 Eurofirst yield more than 0.9%.

The dollar is trading around 1.2642 per euro against 1.2635 late Monday.

A barrel of U.S. light crude lost 88 cents to 72.22 dollars.

The Canadian group called Potash Monday its shareholders to reject hostile takeover bid from mining giant BHP Billiton and said he was discussing with other possible suitors for an alternative giving it a better value.

The world's largest producer of potash added in a statement expected to bring proposals have higher than 39 billion dollars (30.7 billion euros) made by BHP or other strategic options.

Discussions were held with several parties in order to generate higher offers, he said.

According to Bloomberg, Potash has been contacted by the Chinese and Brazilian Vale Sinochem.

The action Potash gained 1% in pre-market transactions on the New York Stock Exchange, to $ 151.

The action BHP gained about 2% in London, to 1858.5 pence.

The International Monetary Fund forecasts growth of 1.4% in France this year, as the government, but is more cautious thereafter, and questions whether the government deficit back below 3% of GDP before 2015.

In its annual report on France on Friday, the IMF welcomed the "ambitious reform program" implemented by the authorities, welcomed the "major reform" of pensions and notes that French banks are strong, as the Recent tests have shown the organized resistance in the European Union.

But he stressed the risks to future growth, although France has fared better than its neighbors to the recession, and recommends giving priority to a "substantial and credible rebalancing" of public finances.

After a contraction of 2.5% in 2009, the institution sees gross domestic product of France grow 1.4% this year – the same prediction that the government – and by 1.6% in 2011, 1.8 % in 2012 and 2.0% in 2013.

These estimates are similar to those published in the April World Economic Outlook of the IMF, while those on the deficit is more optimistic.

After 7.5% in 2009 and 8.0% in 2010 (again forecasting government), the deficit would decrease to 6.1% of GDP in 2011.In April the IMF was around 7%.

"This is the result of a conference on fiscal deficits in July and pension reform in June," Harris says one in Bercy where we judge the IMF and Paris "on the same wavelength" .

"It's a good report of the IMF for economic policy the government," says one.

IMF WANTS THE ASSUMPTIONS OF "REALISTIC"

However, the IMF is the deficit to 3.9% of GDP in 2013 and, according to his script, is that in 2015 he would return below the 3% limit set by the Maastricht Treaty.

The stability program of France plans to achieve the 3% deficit in 2013, subject to a growth of 2.5% from next year.

"To make the effort of more credible, it is important to establish the framework for budgetary planning on realistic macroeconomic assumptions," the IMF in his notes, echoing criticism by the European Commission issued in March when he was sent to the stability program.

During a conference call, one of the reviewers, Erik de Vrij, however relativized this message indicating that the deficit target reduced to 3% in 2013 could be achieved if the pension reform is completed.

"By including the pension reform, there is a good chance of reaching 3% deficit by 2013," he said.

Published annually after the visit of a mission, the IMF notes is rather complimentary to the government's economic policy but calls for greater efforts on reforms and fiscal consolidation.

"A fragile recovery is underway in France," it said.

Her limited exposure to international trade, the existence of a strong enough financial sector, the importance of social safety nets and measures to relaunch "well designed" have enabled France to resist the global crisis that most comparable countries, the IMF noted.

But, he adds, 'the characteristics of the French economy, which have protected partly during the recession are also those who probably will slow the recovery.

"PUSHED MORE INITIATIVES"

The unemployment rate of 9.5% in 2009 to reach 10.0% on average this year and peaking at 10.1% in 2011, before easing to 9.7% in 2012 and 9.2% in 2013 according to the IMF.

At the same time, public debt would reach 84.3 in 2010% of GDP against 78.1% in 2009 and would continue to deteriorate until 2013, when this ratio reach 90.3%.

"The imminent consolidation of public finances in France and most European countries will weigh on demand, and concerns that continue to generate sovereign risk require continued vigilance," said the Fund, requesting the authorities to "implement with their energy reform program to support the recovery. "

On the fiscal consolidation policy, the IMF considers that the measures already announced on revenues and expenditures are "large" but said that "further efforts are needed at all levels of government to achieve fiscal consolidation is the medium term ".

The institution also delivers a good report on the reform of banking regulation, acknowledging in particular the establishment of the supervisory authority which has for the month of March all supervisors and approval of the bank and insurance in France.

Electrolux reported an operating profit below expectations for the second quarter and reaffirmed its forecast of a rise in demand this year in its main markets.

Operating income was 1.5 billion kronor (157 million) excluding exceptional items, against one billion kroner in the second quarter of 2009.The 17 banks and brokerages surveyed by Reuters had expected a net profit of 1.6 billion kronor for the period Apr-Jun 2010.

At 7:36 GMT, yielded 5.0% to 158.70 kronor on the Stockholm Stock Exchange.

"The demand for appliances on the group's main markets should be growing during 2010," the Swedish group in a statement.

The second largest manufacturer of household appliances has been forced to sharply reduce its costs to cope with the slowdown in consumption last year but said its main markets had continued to recover in the second quarter.

Electrolux said the North American market had risen for the third consecutive quarter after 13 quarters of contraction.

"At the industry level, the supply of aircraft destined for the United States in the second quarter would have increased approximately 10%," the group said.

"The entire European market has stabilized during the quarter, with major markets such as Germany, France and Sweden showing positive trends," he added, while noting that southern markets Europe had suffered a sharp slowdown over the period.

'The demand in eastern Europe has increased somewhat, further stated Electrolux.

Lafarge said it had completed the sale of 11.2% of its business in Malaysia under the divestment program initiated by the world's number one cement.

The sale of this portion of Lafarge Cement Berhad, Malaysian (LMCB), the French giant holds indirectly through two subsidiaries, for a net amount of 141 million euros, Lafarge said in a statement.

Following this, the group will remain the principal shareholder of LMCB with a 51%, against 62.2% so far, and will retain management of the business.

Lafarge in May confirmed its target of selling 300 to 500 million euros of non-strategic assets throughout 2010.

In 2009, he has conducted more than 900 million euros from divestments as part of a package of measures to strengthen the company's financial response to the crisis, including reducing debt inflated between late 2007 and in late 2008 by acquiring the Egyptian Orascom.

Airbus said it was pursuing "greater good" talks with European states on the financing of the A350, its new long-haul, saying the talks were in no way affected by the opinion issued Wednesday by WTO on subsidies to the aviation industry.

"(…) The A350 is not affected by the outcome of the WTO. Together with the four states, we are moving at full speed, "said Rainer Ohler, communications director of Airbus, a subsidiary EADS, in an e-mail.

"The completion and timing of the announcements are the responsibility of States.Thus, we can not make any comment on that, "he added.

Justices of the World Trade Organization have inflicted a blow Wednesday to scathing EU ordering him to remove certain export subsidies provided to Airbus.

In his report of more than 1,000 pages, the "special" WTO believes that Airbus could launch a series of civilian aircraft thanks to subsidies from the EU and member states that are France, Germany, Spain and the United Kingdom. Without this aid, Airbus has been a society very different and much less powerful, the report said.