Italy's rating cut, China's growth slows

There have been mixed news on Europe.

A report on Thursday showed that eurozone industrial production unexpectedly rebounded by 0.6 percent in May after having fallen 1.1 percent in April.

Also on Thursday, the Italian government sold 361-day Treasury bills at 2.697 percent, down from 3.972 percent at the previous sale.

However, on Friday, Moody’s Investors Service lowered Italy’s government bond rating by two notches to Baa2 from A3 and warned that it could be downgraded further.

Europe's problems may be compounded by slowing economic growth in the rest of the world.

China reported on Friday that its economy grew 7.6 percent in the second quarter from a year earlier, a three-year low and down from 8.1 percent in the previous quarter.

Elsewhere in Asia on Friday, Singapore reported that its economy shrank at an annualised rate of 1.1 percent in the second quarter after having grown at a 9.4 percent rate in the first quarter.

Some central banks are already adjusting monetary policies in anticipation of weaker economic growth.

The Bank of Korea cut its benchmark interest rate by 25 basis points to 3.00 per cent on Thursday, its first reduction in three years, while Brazil cut its benchmark interest rate by half a percentage point to 8.0 percent on Wednesday, the lowest on record.

However, the Bank of Japan held off on further policy easing, leaving its policy rate unchanged at a range of zero to 0.1 percent.