LONDON, May 18 (MNI) - The euro recovery continued through European morning trade Tuesday with euro-dollar edging up to $1.2431 although it was reported to have met decent real-money supply that countered corporate and macro demand. Underlying sentiment remains euro negative, due to eurozone debt issues, but the recovery in European equity markets allows the single European currency some respite from recent downside pressure. EURO SUMMARY: Opened in early Europe around $1.2334 $1.2401 before coming under fresh downside pressure from Japanese sales of euro-yen, with the rate dropping to $1.2314 (61.8% $1.2254/1.2415). The fresh risk aversion was prompted after the US Senate passed a measure overnight that would require the Treasury to certify that IMF loans to certain countries are repaid. The rate recovered, edging to $1.2340/45 before fresh selling emerged to take the rate back to retest lows. The second recovery was able to extend above $1.2345 to $1.2362, with the rate holding these gains into early Europe. Russian names were noted buyers from the $1.2330 level upwards, with demand into early Europe targeting stops through $1.2410/15, taking it to $1.2421. Real money accounts were seen willing sellers into the rallies, taking the rate back to $1.2365 before it spiked back to $1.2432. Slippage to $1.2400 into ZEW/EZ data with mixed reaction, dipping to $1.2380, snapping back to $1.2422 before fresh real money sales took it back toward $1.2365/60. EUROZONE: Reported comments from eurozone officials Tuesday, * AUSTRIA FINMIN: Hope to implement global financial transaction tax * GERMANY MERKEL: Europe must be more competitive - Austerity measures also important for Germany, France - Regulation of financial markets urgently needed - EL Pais interview * GERMANY: Lower house to pass EU rescue bill this week * ZEW: Inflation expectations are very moderate - Sees strong reduction in rate hike expectations - Euro expected to decline further over next 6 months. EUROZONE: Data released in the eurozone Tuesday, * EMU: EMU Apr HICP unrev +1.5% y/y, Mar +1.4%, Feb +0.9%, Jan +1.0% - Apr HICP y/y matches MNI median Forecast * EMU: EMU Mar sa trade balance +E0.6bn vs Feb rev +E3.4bn (+E3.3) - Mar sa trade balance below all forecasts (median +E3.9bn) * GERMANY: ZEW; May economic sentiment index 45.8 vs Apr 53.0 - May current situation index -21.6 vs Apr -39.2 * FRANCE: 1Q non-farm private payrolls -0.1% q/q, -1.3% y/y - Below expected; MNI analysts survey median forecast: flat q/q * FRANCE: 1Q monthly salaries +0.7% q/q, +1.8% y/y; 4Q +1.9% y/y - 1Q hourly wages +0.8% q/q, +2.0% y/y; 4Q +1.9% y/y * ITALY: Mar world trade deficit E1.342bln vs Mar'09 surplus E69mln * SPAIN: Mar services sector sales +5.6% y/y; Feb -0.9% y/y YEN: Opened in early Europe around Y92.46 and Y114.04 and this has seen dollar-yen test the topside up from it's low at Y92.40 to Y92.98 stalling ahead of offers at Y93.00. Traders report there has been decent demand for cross-yen from Corporates and European names as well as spec accounts looking for the shorts to be squeezed. Offers in euro-yen around Y115.00 provided resistance initially but stops at Y115.00 and Y115.30 proved magnetic and drew the cross higher. Decent selling around Y115.40-50 area (Y115.44 the high) saw euro-yen capped and the cross moved back sub Y115.00. A brief blip higher once again after better than expected ZEW provided the sellers another chance to sell and the cross moved lower once again. Dollar-yen offers still at Y93.00 and Y93.40 area whilst bids start around Y92.40 with larger Y91.90-00 area. JAPAN: Press pick-ups in Japan Tuesday, * JAPAN: The finance minister was cited by wires saying he expects the yen to gradually stabilize, suggesting he sees little need to act to weaken the domestic currency for now. "Although our nation's economy is recovering, stock markets have declined and the yen has temporarily strengthened because of the impact of the situation in Europe," Naoto Kan said at a press conference following a regular Cabinet meeting. "But I think (stocks and the yen) will gradually stabilize." * BOJ: The Bank of Japan board is considering measures to increase banks' incentives to extend loans to innovative firms in growth sectors, both in the immediate future and over the longer term, Market News International has learned. As part of the new lending facilities being considered, the central bank may be willing to take on some credit risk, which it has refused to do previously. - See Exclusive BOJ Insight story on MNI MainWire at 0140 GMT. * JAPAN PRESS: Many analysts predict that the Nikkei Stock Average will not fall below 10,000, echoing the optimistic view that euro zone woes will have only a limited impact on earnings at Japanese companies, The Nikkei reports. JAPAN: Data released in Japan Tuesday, * March tertiary index -3.0% m/m vs Feb revised -0.3% - Tertiary index posts 2nd m/m drop in row - March tertiary index +1.6% y/y vs Feb revised +0.8 - Tertiary index posts 2nd y/y rise in row * April Unadj Consumer confidence at 42.0 vs 40.9 in March.

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