Factory activity in Europe, Asia cools; demand lull a concern
By Sumanta Dey and Wayne Cole BANGALORE/SYDNEY (Reuters) - Factory activity in Europe and Asia cooled in August after a strong July, as new orders dwindled in the face of escalating tensions in Ukraine and a patchy recovery in China, purchasing managers indexes showed. Despite euro zone manufacturers barely raising their prices, growth in the region slowed slightly more than initially thought, and activity in China's vast factory sector slackened on weak foreign and domestic demand, stoking speculation that further policy stimulus would be needed. "A concerted slowdown in the China, euro zone and UK manufacturing PMIs as the second quarter gets under way raises alarm bells about global demand conditions," said Lena Komileva, chief economist at G+ Economics in London.
Investors look past Ukraine, focus on ECB
By Marc Jones LONDON (Reuters) - World markets advanced on Monday despite the conflict in Ukraine, focusing on whether the European Central Bank will announce plans for economic stimulus when it meets this week. Ukraine reported its forces were under fire from Russian tanks again on Monday, as new signs emerged that the turmoil was damaging the European economy. Latin American stocks mostly rose, with Brazil's benchmark Bovespa index leading gains after an opinion poll showed declining re-election chances for President Dilma Rousseff, accused by investors of being excessively interventionist in the economy. Ukrainian President Petro Poroshenko accused Russia on Monday of "direct and undisguised aggression", after warning over the weekend of a possible "full-scale war." European Union leaders were drawing up new sanctions against Moscow.
U.S. inflation bonds back in vogue
Fund managers said the rising cost of housing - which accounts for as much as a third or more of various measures of inflation and is outpacing other consumer cost increases - has revived price pressure in the economy. "TIPS have had a good tail wind this year.
Central European PMIs point to slowdown as sanctions hit sentiment
By Jason Hovet PRAGUE (Reuters) - Polish manufacturing activity shrank for a second straight month in August and Czech expansion slowed more than expected, adding to signs weaker euro zone economies and crisis in Ukraine are cooling growth in the EU's east. Economies in central Europe have rebounded strongly from a sharp slowdown or even contraction in the past year but are starting to slow, and analysts expect that to continue for the rest of the year even while a longer-term recovery stays on track. Hungary's seasonally-adjusted PMI, calculated using a different methodology, dropped to 51 from 56.6. Central Europe's economies, which share trade links with Russia, are only just beginning to feel the impact of tit-for-tat sanctions between the European Union and Russia over pro-Moscow separatists fighting in Ukraine.
Hollande, Draghi agree on threat of deflation: official
French President Francois Hollande and European Central Bank chief Mario Draghi agreed on Monday that deflation and weak growth were threatening the European Union's economy, an official in the president's office said. Draghi called last week for greater emphasis on fiscal stimulus over austerity - comments that irritated German leaders but were welcomed in France because they hinted at a shift away from a current emphasis on budgetary austerity. "I think the diagnosis is a shared one," an advisor to Hollande told reporters after an hour-long meeting between the Socialist president and Draghi at the Elysee presidential palace. The two men shared the view that weak growth and a threat of deflation in the European Union were problems that needed to be addressed, the advisor added.
Twenty years on, Schaeuble pleads again for core Europe
German Finance Minister Wolfgang Schaeuble renewed a call for a core group of European Union countries to move ahead faster with economic and political integration, 20 years after his ground-breaking proposal fell on deaf ears in key partner France. In an article published in the Financial Times on Monday, Schaeuble proposed creating an EU commissioner with the power to reject national budgets that breach the bloc's fiscal rules, and establishing an inner-core parliament for the euro zone. "In order to make progress in all of these areas, we should keep using the approach that proved its mettle back in 1994: to establish cores of co-operation within the EU that enable smaller, willing groups of member states to forge ahead," Schaeuble wrote in the article, co-authored by fellow German Christian Democrat Karl Lamers. They acknowledged that many EU countries remain reticent about closer political union that would involve transferring more sovereignty to Europe.
Imperial Tobacco closes $13 billion of loans
By Alasdair Reilly LONDON (Reuters) - British cigarette maker Imperial Tobacco has closed loans of about $13 billion to back its acquisition of selected brands and assets from Reynolds American Inc, the lead banks said on Monday. The jumbo financing covers the $7.1 billion acquisition and refinances Imperial's existing core bank borrowings, which provide working capital and funds for general corporate purposes. Fourteen banks joined underwriters, mandated lead arrangers and bookrunners on the financing: BNP Paribas, Royal Bank of Scotland and Banco Santander. ...
Frances Moscovici set for EU economy role, under supervision
Former French finance minister Pierre Moscovici has a "good chance" of being named to the European Commission's top economic and monetary job, a French diplomatic source said on Monday, as attention turned to the line-up of the next EU executive. EU leaders on Saturday appointed Polish Prime Minister Donald Tusk as the next president of the European Council, chairing and preparing policymaking EU summits, and Italian Foreign Minister Federica Mogherini as foreign policy chief. European Commission President-elect Jean-Claude Juncker, who was chosen in July, is expected to unveil the new EU executive team early next week, a Commission source said. Juncker is still battling member states to get more women nominees to avert a possible clash with the European Parliament.
Euro zone factory growth slows in August amid Ukraine tension: PMI
By Jonathan Cable LONDON, (Reuters) - Euro zone manufacturing growth slowed slightly more than initially thought last month as new orders dwindled and factories suffered amid rising tensions in Ukraine, a business survey showed on Monday. Factories barely increased prices last month, and manufacturing activity in France fell at the fastest pace in 15 months, in disappointing news for the European Central Bank before Thursday's monetary policy-setting meeting. Markit's final August manufacturing Purchasing Managers' Index came in at 50.7, the lowest in over a year and below both July's 51.8 and an earlier flash estimate of 50.8. "Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible," said Rob Dobson, senior economist at Markit.
Retreat in Chinas PMIs heightens calls for policy easing
By Koh Gui Qing BEIJING (Reuters) - Growth in China's vast factory sector cooled in August as foreign and domestic demand slowed, two surveys showed on Monday, spurring new calls for more policy easing to prevent the economy from stumbling once more. A purchasing managers' index (PMI) published by the National Bureau of Statistics fell from a 27-month high to 51.1 in August, slightly less than forecast as factories shed jobs for at least the 24th consecutive month. The declines in both PMIs prompted some analysts to re-state their support for more policy action to lift the fading growth momentum in the world's second-biggest economy. He said the central bank could cut interest rates or reduce the amount of reserves that banks must hold as deposits to re-stoke the economy.
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