WASHINGTON (MNI) - The following are events and news reported Tuesday ET related to the financial crisis and other top news in the global financial system:

* The People's Bank of China said Tuesday that the economy slowed in the second quarter but that the possibility of a double dip is small, downplaying the potential impact of Europe's fiscal problems. In its second quarter economic review, the central bank also said that inflation is easing but warned about potential price pressures ahead. It highlighted possible risks to the economy, but said it is "cautiously optimistic" about its overall direction. [06:57 ET]

* The Chinese Minister of Finance said Tuesday that his department will continue to implement the government's expansionary fiscal policy in the second half of this year to boost domestic consumption. Xie Xuren told a work meeting that policy stability will set the tone for the second half as the government continues to implement its nearly-two year old policy stance. But he also said that the ministry will take a flexible approach to policy and that the government will promote the stable growth of domestic demand, particularly consumption growth. [02:52 ET]

* The German Finance Ministry is "absolutely" confident that in autumn there will be an agreement reached by the Basel Committee on new Basel III banking rules, spokesman Martin Kreienbaum told Market News International on Tuesday. "We are on the road to a joint, undisputed target and there exist no hurdles which cannot be overcome," Kreienbaum said. The spokesman said the final agreement needed to satisfy the special interests of Germany's three-pillar banking system, which consists of public savings banks, cooperative banks and private banks. [06:23 ET]

* Eurozone M3 broad money supply growth surprised to the upside in June, registering its first annual rise since a marginal gain January, while loans to the private sector accelerated on the year, the European Central Bank reported on Tuesday. Reaching a 14-month high of E9.423 trillion at the end of June, M3 was up 0.4% compared to May and was 0.2% higher on the year. The growth of loans to the private sector also picked up speed, posting a 0.3% rise on the year after +0.2% in May. [04:00 ET]

* While the data released Friday showed investors that the European banking system is in better shape than many feared, economists warn that many issues surrounding Europe's financial system will take longer to address, particularly with regards to sovereign debt and the impact of financial regulatory reform. It will take European countries several years to work their way out of the crisis, predicted Phillip Suttle, chief economist for the Washington-based Institute of International Finance. [08:15 ET]

* German Banks that participated in the recent stress tests have bowed to criticism from European regulators and agreed to publish the full details of their European sovereign debt holdings, Germany's business daily Handelsblatt reported Tuesday. Deutsche Bank on Tuesday became the first of those banks to publish the information, detailing European sovereign debt it held on its balance sheet at the end of the first quarter. [03:34 ET]

* There is a serious risk that as much as 20% of the RMB7.7 trillion Chinese banks have lent to local Chinese government entities could default, Chinese regulators have warned, according to a report in Tuesday's Financial Times. A preliminary self-examination by banks identified RMB1.55 trillion in loans to local government financing vehicles whose repayment is in question. [Repeated 07:12 ET]

* The International Monetary Fund has concluded that the Chinese yuan is "substantially undervalued," the Wall Street Journal reported Tuesday. The report cited two officials familiar with an executive board debate about a long-delayed report on the Chinese economy which was held Monday. It said that the finding about the currency was backed by the U.S., Germany, France, the U.K. and "and many others." [06:08 ET]

* The ICSC-Goldman Sachs (ICSC-GS) chain store sales index for the week ending July 24 again rose on a week-over-week basisup 0.6%. On a year-over-year seasonally-adjusted basis, the pace of spending moderated to 3.8% in the latest week. For the fiscal month of July, ICSC Research expects sales will increase by between 3% and 4% as easy comparisons boost reported growth, though declining prices may continue to drag down sales growth. [07:45 ET]

* UK retail sales volumes rose to their highest level since April 2007 in July, driven higher by warm weather discounting and World Cup, football, the Confederation of British Industry said Tuesday. The July sales volume balance spiked to 33 from -5 in June, while the expectations balance for August shot up to 45 from 11 - the largest monthly swing in expectations since September 1989. [06:02 ET]

* The inspiring play of Germany's national soccer team in the World Cup combined with very warm summer temperatures and positive news on the employment front put German consumers in a cheery mood in July, the GfK research institute reported Tuesday. The Nuremberg-based company, which tracks consumer behavior, predicts a sentiment indicator of 3.9 in August, 0.3 point above July's upwardly revised 3.6 (3.5). [02:10 ET]

* The Reserve Bank of India raised its reverse repurchase rate by a larger-than-expected 50 basis points to 4.50% Tuesday, as it sought to keep inflation under control amid strengthening growth. In a statement on its website, the RBI also said it raised the repo rate by 25 basis points to 5.75%. The decision to increase policy rates further was aimed at keeping inflation in check by "reining in demand pressures and inflationary expectations," the RBI said. [Repeated 07:12 ET]

* Due to declines in the market value of Gilts bought under the Bank of England's Asset Purchase Facility, the APF's debt holdings showed a marked-to-market loss in the year to February 2010. In the APF Fund's Annual 2009/2010 Report, the Fund's directors noted that any losses incurred by the APF -- the BOE's vehicle for conducting its quantitative easing programme -- would be covered by a UK Treasury Indemnity. The APF Fund -- which holds the Gilts and other instruments bought under the BOE QE programme -- is structured so that it never shows either a loss or a surplus. [Updated 08:07 ET]

* Japan's corporate service price index fell 1.0% in June from a year earlier, the 21th consecutive year-on-year drop, with the pace of decline accelerating slightly from the 0.8% decline posted in May, Bank of Japan data released Tuesday showed. The larger y/y decline in June was due mainly to drops in transportation costs, down by 0.2% y/y, following a 1.0% rise in May, a BOJ official told reporters. [Repeated 07:12 ET]

* Iceland Tuesday began negotiations to enter the European Union, paving the way for the country to join the 27-nation bloc as soon as 2012. Iceland's application -- which it made in July 2009 -- is being fast-tracked following the country's economic crisis in 2008, when banking sector problems resulted in a rapid deterioration in the value of its currency and a E10 billion bailout from the International Monetary Fund. [06:28 ET]

* The European Central Bank did not advise Estonia to delay Eurozone membership despite concerns about the country's ability to maintain inflation at a level consistent with EMU entry criteria, Estonia Central Bank Governor Andres Lipstok told Market News International in an interview conducted late last week. [05:38 ET]

* Private consumption in Germany will pick up over the course of this year, boosted by sinking unemployment and low inflation rates, German Economics Minister Rainer Bruederle said Tuesday. [05:11 ET]

* The ongoing decline in French housing starts and the slowdown in housing permits in recent months suggest that sector is not out of the woods yet. Housing starts declined 0.6% in June in seasonally adjusted terms, confirming the trend of the previous two months, the Ministry for Ecology and Development said Tuesday. This gave a 1.7% decline for 2Q. [02:45 ET]

** Market News International Washington Bureau: 202-371-2121 **