BRUSSELS (MNI) - The UK's emergency budget outlines cuts will be challenging to implement but will strengthen confidence in the country's economy, the European Commission said on Tuesday.

The European Commission -- as the EU's executive arm -- advises the 27 member states on how quickly they should trim their budget deficits. Its rules stipulate that no budget deficit should be more than 3% of annual GDP. The UK's current budget deficit of around 11% is the highest in the Group of 20 leading world economies.

PARIS (MNI) - French Finance Minister Christine Lagarde underscored Tuesday the "total determination" of her government to reduce the public deficit from 8% this year to 6% next year and to 3% by 2013.

These targets will be met "whatever the circumstances" even if further efforts are needed on the spending side, the minister told a Europlace conference here.

Source: U.S. Treasury Department Averages calculated by Market News International

Total Foreign Non- Bid/ amount Coupon add-on comps cover High % at Issue (Bln $) rate (Bln $) (Bln $) ratio Yield High

Average (Jan-97 to date) 0.121 2.26 2.493 59.66

FRANKFURT (MNI) - The European Central Bank Tuesday drained E59 billion from the banking system in a one-week liquidity-absorbing operation intended to sterilize the ECB's purchases of Eurozone government bonds.

The amount drained matched the total volume of government bonds purchased by the ECB and settled as of last Friday. It was the eighth consecutive weekly term deposit tender since the ECB announced in May that it would buy bonds to shore up sovereign debt markets.

PARIS (MNI) - French banks should do well in the stress tests to be applied in Europe, Bank of France Governor Christian Noyer said Tuesday.

"Stress tests are not finished yet, therefore it is too soon to talk about them," Noyer told reporters after a speech to a Europlace conference.

But, "I see no reason that the results for French banks would be different from those stress tests that we apply regularly in France and which have always been successful," he said.

FRANKFURT (MNI) - The European Central Bank on Tuesday called for bids in a one-week liquidity absorbing operation designed to sterilize the money that the bank had injected into the financial system through its purchases of bonds on the secondary market.

The operation is in the form of a variable-rate tender with a maximum bid rate of 1.00%, the bank said. It intends to mop up E59.0 billion in liquidity, corresponding to the amount of purchases under the Securities Market Programme that was settled at or before Friday, July 2.

FRANKFURT (MNI) - The European Central Bank on Tuesday allotted E229.0703 billion in its main seven-day refinancing operation at a fixed rate of 1.0%.

The ECB satisfied all of the 151 bids received.

Today's operation resulted in a net addition of E66.1583 billion after the ECB allotted E162.912 billion in its 7-day MRO last week.

FRANKFURT (MNI) - The German federal government called for bids Tuesday on its E5 billion top-up of the 3.00%-coupon July 2020, 10-year bund, the Bundesbank announced Tuesday.

Bids for the top-up are due by 09:00 GMT Wednesday, July 7, with results of the allocation to be announced shortly thereafter. The top-up tranche will settle on Friday, July 9.

Given the E17 billion of the 10-year bond already issued, the top-up will bring total volume outstanding to E22 billion for the security, which matures on July 4, 2020 and is strippable.