GERMANY DAYBOOK: Trichet Says ECB Isn’t Turning Into Bad Bank

European Central Bank President Jean- Claude Trichet said speculation that the bank is turning into a so-called bad bank is “absurd.”

The Frankfurt-based ECB intends to keep the bonds it acquired in its books, he told German public broadcaster ZDF last night, adding that purchases have been “undoubtedly significant.” The ECB bought at least 2 billion euros of distressed nations’ debt yesterday, Boersen-Zeitung reported.

ECONOMY:

*Europe’s best bet to escape the debt crisis threatening to engulf Italy and Spain is to implement measures already agreed on immediately instead of searching for new tools, Finland’s Prime Minister Jyrki Katainen said.

*ECB’s reserve maintenance period ends today.

IN THE PRESS:

*Bayer AG (BAYN GY) and Merck KGaA (MRK GY) must grant more than 2 billion euros in discounts on prescription drugs this year: Handelsblatt

*Germany’s Free Democratic Party lawmaker Frank Schaeffler said the European Central Bank is putting the savings of millions of citizens on the line by buying Italian and Spanish bonds yesterday: Handelsblatt

*Christian Lindner, General Secretary of Germany’s Free Democratic Party, said he’s against increasing the region’s rescue fund: Handelsblatt

*Moritz Kraemer, head of Standard & Poor’s European debt evaluation team, said a stable rating outlook for the U.K. and France suggests the firm doesn’t expect to downgrade the two countries within the next two years: Handelsblatt

*ECB bought at least 2 billion euros of government bonds yesterday: Boersen-Zeitung

EQUITIES:

*Daimler AG (DAI)’s Mercedes-Benz sold 109,510 vehicles in the first seven months of the year, an increase of nearly 50 percent from a year earlier.

*RWE AG (RWE GY) said it will replace its chief executive officer and raise 2.5 billion euros as the costs of shifting away from nuclear energy hurt this year’s earnings.

*RWE 1H recurrent net EU1.67b; analyst est. EU1.71b, 1H sales EU27.5b; analyst est. EU27.2b

*Heidelberger Druck 1Q sales EU544m, 1Q order entry EU665m

GENERAL NEWS:

*A strike by German air-traffic controllers was forestalled when Deutsche Flugsicherung GmbH the air-navigation agency, sought mediation minutes after a Frankfurt labor court ruling cleared the way for the strike to proceed.

*European regulators are unlikely to follow Greece’s unilateral ban on short-selling, implemented as benchmark equity indexes for Europe tumbled.

WHAT TO WATCH:

*Germany reports export, import, current account and trade balance data for June at 8 a.m.

*ECB calls for bids in emergency 6-month tender at 3:30 p.m.

EARNINGS: Preliminary ests., when available. All times CET

*RWE 1H recurrent net EU1.67b; analyst est. EU1.71b, 1H sales EU27.5b; analyst est. EU27.2b

*Heidelberger Druck 1Q sales EU544m, 1Q order entry EU665m

*Demag Cranes (D9C GY), 7:30 a.m., 3Q, Sales Eu260M, EBIT 10.1M

*Aareal Bank (ARL GY), 7:30 a.m., 2Q

*Leoni (LEO GY), 8 a.m., 2Q, Sales EU916M, Ebit EU62M

*Delticom (DEX GR), 8 a.m., 2Q, Sales EU117M, Ebit EU12.1M

*Rational AG (RAA GY), 10 a.m., 2Q, Sales EU94.5M, EU27M

MARKETS:

*The DAX Index fell 5% to 5,923.27

*The MSCI Asia Pacific Index was down 2.85% to 119.40 as of 6:46 a.m. in Frankfurt.

*The Stoxx Europe 600 lost 4.1% to 228.98

*German 10YR bond yield: 2.244%

*Euro -- U.S. $1.4227

To contact the reporters on this story: Rajiv Sekhri in Frankfurt at rsekhri1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net.

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