Economic data negative, France downgraded

Economic data on Friday were mostly negative.

In the US, consumer confidence cooled in July. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 83.9 from 84.1 in June.

Another report on Friday showed that US producer prices rose 0.8 percent in June, the biggest increase since September, after having risen 0.5 percent in May.

In China, data from the People's Bank of China on Friday showed that M2 money supply rose 14.0 percent in June from the previous year, down from 15.8 percent the previous month. New local-currency bank loans rose to 860.5 billion yuan last month though from 667.4 billion yuan in May, so non-traditional sources of finance took the brunt of the credit slowdown.

Slowing credit growth could hurt China's economic growth. Economists surveyed by Bloomberg estimated that China's economy grew 7.5 percent in the second quarter from a year ago, down from 7.7 percent growth in the first quarter.

And Finance Minister Lou Jiwei reportedly said in Washington on Thursday that the “expected GDP growth rate this year is seven percent”.

Meanwhile, Asia's other large emerging economy may be hurting even more. A report on Friday showed that India's industrial output shrank by 1.6 percent in May from a year ago. It had grown 1.8 percent in April.

Industrial production also shrank in the euro area in May, falling by 0.3 percent. It had risen by 0.5 percent in April.

Meanwhile, Europe's sovereign debt remains a lingering concern in financial markets. Portuguese 10-year yields rose 61 basis points to 7.51 percent on Friday amid concern a political dispute will result in new elections and endanger the nation’s financial-aid programme.

And the concern continues to spread to the core eurozone countries. Fitch Ratings downgraded France's credit rating to AA+ from AAA on Friday, citing its lack of growth and the build-up of debt.