Saturday, 13 February 2010

China tightens again

China has taken yet another step to rein in lending. From AFP/CNA:

China's central bank on Friday ordered financial institutions to increase the amount of money they keep in reserve, as authorities seek to rein in rampant lending amid fears of asset bubbles.

The People's Bank of China said the deposit reserve ratio would be raised by 50 basis points as of February 25, the second reported increase since the start of the year...

The increase will bring the rate for large banks to 16.5 percent, according to Dow Jones Newswires.

Economic data on Friday were mostly positive.

The US reported a rise in retail sales in January. From Bloomberg:

January sales at U.S. retailers climbed more than anticipated, while consumer confidence unexpectedly fell this month from a two-year high, showing a recovery in household spending may be gradual.

Retail purchases increased 0.5 percent, the third gain in the past four months, Commerce Department figures showed today in Washington. The Reuters/University of Michigan’s consumer sentiment gauge dropped to 73.7 from 74.4 the prior month.

There were also positive signals on Japanese consumption. Bloomberg reports:

Japan’s household sentiment rose for the first time in four months as concerns the economy will slip into another recession receded.

The confidence index climbed to 39 last month from 37.6 in December, the Cabinet Office said today in Tokyo. The median estimate of seven economists surveyed by Bloomberg News was for sentiment to rise to 38.

Not so positive, however, was fourth quarter GDP growth in Europe. Bloomberg reports:

Europe’s recovery almost stalled in the fourth quarter as waning spending and investment in Germany unexpectedly brought growth in the region’s largest economy to a halt.

Gross domestic product in the 16-nation euro region rose 0.1 percent from the third quarter, when it gained 0.4 percent, the European Union’s statistics office in Luxembourg said today. Economists forecast expansion of 0.3 percent, the median of 34 estimates in a Bloomberg survey showed. The recession in Greece deepened, with GDP falling 0.8 percent in the fourth quarter after a 0.5 percent slump in the previous three months.

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