Bank's Tucker says recovery not on sure footing - report

Deputy Governor of the Bank of England, Paul Tucker, attends the Financial Reform Conference co-hosted by the South Korean government and the Financial Stability Board (FSB), in Seoul September 3, 2010.

LONDON (Reuters) - The Bank of England's deputy governor Paul Tucker said the economy in Britain and globally was yet to find a "sure footing," a newspaper reported.

In an interview in the Daily Mail on Thursday, he also said that while activity has slowed "the labour market hasn't softened particularly."

"The macro-economy globally, regionally (the euro zone), even domestically isn't on a sure footing as yet," he was quoted as saying.

"The commercial property market in many parts of the world is still a source of risk."

Unemployment in Britain is running at 7.7 percent, and the number of Britons claiming jobless benefits rose for a second month in September.

The Bank of England is having to weigh up whether to pump more money into a sluggish economy or raise rates to counter inflation which remains stubbornly above target.

The Mail said that Tucker had changed his emphasis on the issue. Until recently, he felt inflation was "uncomfortably high" and would have been expecting at this stage "to be thinking about withdrawing the stimulus."

But with the economy showing some signs of weakness, "I'm more balanced about that than I expected to be," the report quoted Tucker as saying.

His fellow MPC member Andrew Sentance repeated his call on Wednesday night for rates to rise from their record low of 0.5 percent.

Tucker, who is responsible for financial stability, gave a cautious welcome to the Basel III bank capital rules.

"We, the Bank of England, would have liked it to be a bit tougher," Tucker said, during an interview conducted on the fringes of the International Monetary Fund meeting in Washington last weekend.

"But it should deliver a better capitalised banking system over the medium term, and it will get rid of a lot of funny money in banks' capital."

(Writing by Avril Ormsby; Editing by Keith Weir, John Stonestreet)