US wholesale inventories drop 0.8%

Inventories fell 0.8% in December, a downer for GDP. The market expected a 0.5% rise.

Also crossing the wires is the IDB/TIPP economic optimism index. It fell to 46.8 in Feb from 48.8 in Jan

Citigroup outlook revised to negative from stable by S&P

Risk aversion may be hiked by news that S&P has changed its outlook on Citigroup from stable to negative.

Wall Street follows Europe higher

The S&P is up 1.2% at the open, following European bourses higher. EUR/USD bounced from a dip into the 1.3730s and is now at 1.3753.

Most of the “risk assets” are solidly higher on the day with Gold up to $1075 after falling as low as $1044 last Friday. Oil is up $0.82 at 72.70 after a brief probe below $70 last week.

Risk may not be “on” but risk aversion is easing…

Spiegel: Goldman helped Greece hide true debt

They have their tentacles into everything, don’t they? Here’s the story.

Swedish FinMin opens door to IMF

It should not be Taboo to to mention the a role for the IMF in the Greek situation, Swedish FinMin Borg says.

The EU’s Almunia calls the Greek macroeconomic projections “optimistic”. That’s not good, as it suggests they will not be achievable. Greece should stand ready to adopt additional measures, Almunia says.

EUR/USD is easier, trading now at 1.3735. Stops are seen in the 1.3680 area now.

Italian Foreign Minsiter: Iranian militia tried to attack embassy

Pro-government militias tried to attack the Italian Embassy in Tehran today, the Italian foreign minister says.

Given the US experience in 1979/1981, this is not to be taken lightly. Iran has been increasingly bellicose toward the west in recent days.

EC president tamping down specuation

EU Commission president Barroso is on the wires saying this is not the first time Trichet has come to an EU summit. Barroso says he will discuss the economic situation with Trichet.

EUR/USD has eased back below 1.3750 mid reports of further central bank sales into strength. The BIS was spotted at 1.3770, traders report. We’d expect bids to be solid toward the 1.3715 level on dips.

Lagarde pleased with stronger dollar

We have always wanted a strong dollar and and it has appreciated so European exporters can only be pleased, The Frecnh Finance Minsiter says.

ECB’s Nowotny says that contagion risk has to be taken seriously ad says the Greek situation is different from Spain and Portugal. EUR exchange rates are currently not a matter of concern, Nowotny says. Nowotny decries the actions of hedge funds in the crisis and says they should try and take action against it.

EUR/USD trades at 1.3750.

Lagarde: Premature to comment on Trichet’s successor

French Finance Minister Lagarde says it is premature to comment on Trichet’s successor at the ECB when his term expires next year.

No it ain’t, sweetheart. It’s what we do!

Also crossing the wires, ECB’s Nowotny says the ECB has no clear bailout clause, so it cannot intervene on Greece. He can think of ways to cooperate with Greece regarding EU structural funds.

ECB’s Liikanen: Trusts Greek government will follow-through

Finnish ECB rep Liikanen says that he trusts Greece will follow-through on its economic plans. It is very important that countries adhere to Stability Pact guidelines. ECB rates are currently appropriate, Liikanen said.

Also crossing the wires are comments from the Greek PM. He says the priority is to rescue the economy and reduce debt. Speeding up the economy is required, otherwise the costs of the crisis will be higher.

Greek rate spreads are tightening, down to 313 bp from over 400 bp last week. This is helping give the EUR a boost.