Friday, 22 July 2011

Europe offers new aid for Greece

European leaders managed to reach an agreement on Greek sovereign debt. Bloomberg reports:

Euro-area leaders redoubled efforts to end the 21-month sovereign bond crisis as they erected a firewall around Spain and Italy and risked temporary default to lighten Greece’s debt burden.

After eight hours of talks in Brussels, leaders announced 159 billion euro ($229 billion) in new aid for Greece late yesterday and cajoled bondholders into footing part of the bill. They also empowered their 440-billion euro rescue fund to buy debt across stressed euro nations after a market rout last week sparked concern the crisis was spreading. The fund can also aid troubled banks and offer credit-lines to repel speculators.

Meanwhile, however, the eurozone economy is decelerating fast. From Bloomberg:

European services and manufacturing growth weakened more than economists forecast to the slowest pace in almost two years, adding to signs the euro-region recovery is losing momentum as the debt crisis persists.

A composite index based on a survey of euro-area purchasing managers in both industries fell to 50.8 in July from 53.3 in June, London-based Markit Economics said today. That’s the lowest since August 2009. Economists forecast a drop to 52.6, the median of 17 estimates in a Bloomberg News survey showed. A reading above 50 indicates growth...

The euro-area services indicator fell to 51.4 this month from 53.7 in June, Markit said in the initial estimate. The manufacturing gauge decreased to 50.4 from 52.

Supposedly fast-growing China's manufacturing sector did even worse. From AFP/CNA:

Manufacturing activity in China contracted for the first time in a year in July to hit a 28-month low, early HSBC data showed Thursday, the latest sign monetary tightening measures are being felt...

HSBC's preliminary purchasing managers index fell to 48.9 in July from a final reading of 50.1 in June, the British banking giant said.

At least US economic data were positive on Thursday. From Bloomberg:

The index of U.S. leading indicators rose in June, confirming the Federal Reserve’s forecast that the economy will pick up in the second half of the year.

The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.8 percent gain in May, the New York-based research group said today. Jobless claims rose more than forecast and consumer confidence stagnated last week, while manufacturing in the Philadelphia area rebounded this month, other reports showed.

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