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German economic fears growing but Merkel strong
BERLIN (AP) ? Ordinary Germans are spooked about the future. Businesses are starting to see black clouds on the horizon. And an economy that has been the envy of Europe is showing cracks, shrinking unexpectedly last quarter amid the conflict in Ukraine.
Euro zone inflation dips as expected in August
By Martin Santa BRUSSELS (Reuters) - Euro zone inflation dropped as expected to a fresh five year low in August, data showed on Friday, but it was not likely to force the European Central Bank into immediate policy intervention next week, Consumer prices in the 18 countries using the euro rose by just 0.3 percent year-on-year in August, the smallest increase since October 2009, the European Union's statistics office Eurostat data showed. Inflation, which dropped unexpectedly to 0.4 percent in July, has been locked in what ECB President Mario Draghi called a 'danger zone' of below 1 percent since October last year. Vanishing inflation strengthens poses problems for the ECB as it tries to respond to the bloc's stalled recovery, which is facing additional struggles because of economic sanctions imposed against Russia in July over its involvement in the deepening conflict in Ukraine. Any immediate action coming at the ECB's Sept. 4 policy meeting is not considered likely, according to ECB sources talking to Reuters earlier this week.
Weak Japan data heap pressure on policymakers
Japan's economy slowed markedly last month as consumer spending dropped and factory output ran out of steam, data showed Friday, underscoring concerns about the state of the country's recovery. The weak figures come after Japan suffered its biggest quarterly contraction since the 2011 quake-tsunami disaster, as an April sales tax rise slammed the brakes on growth in the world's number three economy. The recent data will also force Prime Minister Shinzo Abe's administration to take a hard look at whether to raise sales taxes again, after the April 1 hike -- seen as crucial to shrinking Japan's mammoth debt -- dented growth. "Today's data on industrial production and retail sales show that the economy continued to stagnate at the start of the third quarter," Marcel Thieliant from Capital Economics said in a note.
With economy sinking, Mugabe sets hopes on "old friend" China
By Cris Chinaka and Michael Martina HARARE/BEIJING (Reuters) - Snubbed by a U.S.-hosted gathering of African leaders this month, Zimbabwe's veteran President Robert Mugabe has turned again to "old friend" China, but even Beijing's support may not be enough to rescue his country's sinking economy. Mugabe, at 90 Africa's oldest leader and one of its longest ruling, received a warm welcome on a visit to China this week, something he hasn't received for many a year in the West, where he is reviled as a despot. China says its focus is on growing trade and aid with Africa, not meddling in internal affairs like the West, but this leaves it open to charges of turning a blind eye to conflicts and rights abuses.
Virgin Australia annual net loss triples
Virgin Australia on Friday posted an annual net loss of Aus$355.6 million (US$332 million) as intense competition led by Qantas, weak consumer sentiment and high taxes hurt its bottom line. The country's second largest carrier also announced the sale of a 35 percent stake in its frequent flyer programme to private equity firm Affinity Equity Partners, boosting its cash balance by Aus$336 million. The result was more than triple the Aus$98.1 million loss it reported in the 12 months to June 30 the previous year, and follows huge annual losses by Qantas on Thursday. The carrier, which is majority owned by Singapore Airlines, Air New Zealand and Etihad, blamed excess market capacity, weak consumer sentiment, economic uncertainty and Aus$51.6 million in carbon tax costs for the poor numbers.
Japan household spending slumps, output flat as tax pain persists
By Leika Kihara and Stanley White TOKYO (Reuters) - Japanese household spending fell much more than expected and factory output remained weak in July after plunging in June, government data showed, suggesting that soft exports and a sales tax hike in April may drag on the economy longer than expected. While the Bank of Japan is in no mood to expand monetary stimulus any time soon, the data undermines the BOJ's rosy economic forecasts and will keep it under pressure to act if the economy fails to gather momentum, analysts say. The soft readings may also fuel speculation that the government could delay a second sales tax increase scheduled for next year, or try to compile another fiscal stimulus package, which would further worsen Japan's debt burden. "Production and consumption are both stagnating, and the economy is clearly undershooting projections of the government and the BOJ," said Taro Saito, senior economist at NLI Research Institute.
Turkey's new cabinet unlikely to spell major policy shift
By Gulsen Solaker ANKARA (Reuters) - Turkey's new Prime Minister, Ahmet Davutoglu, will announce his cabinet on Friday, a day after Tayyip Erdogan was sworn in as president, with the new government not expected to signal any major changes in policy direction. The current economic team, including Deputy Prime Minister Ali Babacan and Finance Minister Mehmet Simsek, is expected to remain largely intact. EU minister Mevlut Cavusoglu is seen as leading contender for foreign minister. Erdogan aide Yalcin Akdogan was also expected to take up a position in cabinet, possibly as a deputy prime minister.
India's new government spurs faster growth: forecasts
Figures out Friday are expected to show India's faltering economy grew at its fastest pace in over two years in the first financial quarter, as the election of a new right-wing government spurred confidence. India has been mired in its longest spell of sub five-percent growth in a quarter-century. Economists surveyed by India's Economic Times newspaper expect the official data will show a 5.8-percent rise in the gross domestic product of Asia's third-largest economy in the three months to the end of June. "Confidence has lifted with the election result," said Glenn Levine, senior economist at Moody's Analytics, part of global ratings agency Moody's Corp. "Industrial production is growing at a solid pace and should be mirrored in the cyclical upturn in GDP." Prime Minister Narendra Modi, who took power in May, is perceived as more business friendly than the previous left-leaning Congress government.
China funds cut suggested equity allocations as hopes for recovery evaporate: Reuters poll
Chinese fund managers will cut the proportion of their portfolios invested in stocks over the next three months, following July's upward trend, as hopes for a quick economic recovery falter, a Reuters poll shows. "China's recovery is not at all stable. It is still possible that things will get worse, so market sentiment is volatile," a fund manager based in south China said. Chinese fund managers reduced their suggested equity allocation for the next three months to 77.2 percent from 81.9 percent a month earlier, according to a poll of nine China-based fund managers conducted this week.
With eye on China, Japan defense planners seek spending boost
By Kiyoshi Takenaka TOKYO (Reuters) - Japan's defense planners are seeking their biggest budget ever for the coming fiscal year to pay for stealth fighters, drones and a hi-tech submarine, as Prime Minister Shinzo Abe bolsters the military amid an intensifying rivalry with China. The Defense Ministry on Friday requested a 3.5 percent increase to 5.05 trillion yen ($48.7 billion) for the year starting next April. By testing the constraints of Japan's pacifist postwar constitution, Abe has angered some neighbors, especially Beijing, which accuses him of reviving the nation's wartime militarism. Japan, in turn, is wary of the rapid military buildup in China, which has overtaken Japan in recent years as the world's second-biggest economy.
U.S. openly accuses Russia of sending combat troops to Ukraine
By Roberta Rampton and Steve Holland WASHINGTON (Reuters) - The United States openly accused Russia on Thursday of sending combat forces into Ukraine and threatened to tighten economic sanctions, but Washington stopped short of calling Moscow's intensified support for separatist forces an invasion. President Barack Obama again ruled out U.S.
South Korea industrial output up for two straight months
Vanishing euro zone inflation seen intensifying ECB policy headache
By Martin Santa and Eva Taylor BRUSSELS/FRANKFURT (Reuters) - If euro zone inflation falls deeper into the 'danger zone' as expected on Friday, it will at the very least complicate the European Central Bank's plans to wait and see whether its recent policy move to ignite the euro zone economy will work. Together with updated projections from ECB staff, the data is likely to lead to a lively discussion at the ECB's Sept. 4 policy meeting about whether to accelerate existing policy measures because of the danger of deflation. New action is unlikely though not impossible, according to ECB sources, who told Reuters the ECB is unlikely to act at next week's meeting unless the inflation figures show the euro zone sinking significantly toward deflation.
Obama touts revised economic growth numbers
Stocks, bond yields slip as Ukraine crisis deepens
By Richard Leong NEW YORK (Reuters) - Stock markets around the world fell on Thursday after Ukraine said Russia had moved more troops into the country, deepening the regional crisis, as nervous investors shifted money into gold and U.S. and German government bonds. The euro hit a 21-month low against the Swiss franc and fell against the yen as worries about intensified fighting between the Ukrainian military and pro-Russian separatists in eastern Ukraine drove investors to seek safe-haven currencies. ...
Ukraine tensions pull US stocks modestly lower
US stocks fell modestly Thursday as rising fears about renewed tensions between Ukraine and Russia outweighed a batch of encouraging US economic data. The Dow Jones Industrial Average fell 42.44 points (0.25 percent) to 17,079.57, while the tech-rich Nasdaq Composite dropped 11.93 (0.26 percent) to 4,557.69. The indices finished off their lows of the morning, when shares were pressured by news that Russian forces were inside Ukraine helping support pro-Kremlin separatists who have been fighting against Kiev's rule since April. NATO said at least 1,000 Russian troops were on the ground in Ukraine.
Brazil's Mantega says opposition win could wreck economy
By Alonso Soto BRASILIA (Reuters) - Brazil's finance minister waded into the country's presidential campaign on Thursday, warning that an opposition victory in the October election could push the economy into recession and undo a decade of social gains under the ruling Workers' Party. The comments by Guido Mantega, which the opposition and some analysts criticized as unbecoming of a sitting finance minister, came on the eve of the release of official data that is expected to show that Brazil, Latin America's largest economy, is already in recession. Brazil's once high-flying economy has slowed sharply in the last four years under President Dilma Rousseff, complicating her chances for re-election in October.
West Africa Ebola outbreak could infect 20,000 people, WHO says
By Stephanie Nebehay and Tim Cocks GENEVA/LAGOS (Reuters) - The Ebola epidemic in West Africa could infect over 20,000 people and spread to more countries, the U.N. health agency said on Thursday, warning that an international effort costing almost half a billion dollars is needed to overcome the outbreak. The World Health Organisation (WHO) announced a $490 million strategic plan to contain the epidemic over the next nine months, saying it was based on a projection that the virus could spread to 10 further countries beyond the four now affected - Guinea, Liberia, Sierra Leone and Nigeria. With the IMF warning of economic damage from the outbreak, Nigeria reported that a doctor indirectly linked to the Liberian-American who brought the disease to the country had died of Ebola in Port Harcourt, Africa's largest energy hub. "This is not a West African issue or an African issue.
ECB's Coeure says action needed for euro zone recovery
Economic recovery in Europe requires action both on the demand and supply sides and persistence with structural reforms, European Central Bank Executive Board member Benoit Coeure said on Thursday. "What we have been saying, what particularly the ECB President (Mario Draghi) has been saying last week in Jackson Hall is that the European economy is at a point where action is needed both on the demand and the supply side," Coeure told Greek Skai TV in an interview. Coeure said the ECB was committed to maintaining a high level of liquidity in the European economy. The ECB is committed to play its part by maintaining its very accommodative monetary conditions for an extended period of time," he said.
European stocks drop as Ukraine crisis flares up
European stock markets sank on Thursday as claims of Russian troops actively fighting in east Ukraine raised fears of an outright military confrontation between Kiev and its former Soviet master. In London the benchmark FTSE 100 index dropped 0.36 percent to 6,805.80 points and the Paris CAC 40 lost 0.66 percent to 4,366.04 compared with Wednesday's close. "The stand-off between Russia and Ukraine has flared up once again with reports coming out of Kiev suggesting fresh military incursions across the border," said analyst Tony Cross at trading firm Trustnet Direct. The Russian ruble sank to a five-month low of 36.75 against the dollar, and Russian financial stocks plunged on fears of the West unleashing new sanctions.