South Korea: Inflation breaches BOK target for fifth month
South Korea’s inflation exceeded the central bank’s target for a fifth straight month in May, adding pressure on the bank to raise interest rates next week. Consumer prices rose 4.1% from a year earlier, after a 4.2% gain in April, Statistics Korea said yesterday in Gwacheon, south of Seoul. Prices were unchanged from April. South Korean President Lee Myung Bak has declared “war” on inflation, which has weighed on his public support ratings. (Bloomberg)
India: Growth slows to 7.8%; pressure for rate increase stays
India’s economy grew at the slowest pace in five quarters as manufacturing and services cooled, a moderation that has yet to curb pressure for more increases in interest rates to damp inflation. Gross domestic product rose 7.8% in the three months ended March 31 from a year earlier, after a revised 8.3% gain in the previous quarter, the Central Statistical Office said in a statement in New Delhi yesterday. That’s the slowest pace in five quarters. India’s inflation rate is the fastest after Russia among major emerging economies, and the Reserve Bank of India this month signaled further tightening as it raised rates for the ninth time since March 2010. (Bloomberg)
China: To clean up billions worth of local debt
China's regulators plan to shift 2-3trn yuan (USD308-463bn) of debt off local governments, sources said, reducing the risk of a wave of defaults that would threaten the stability of the world's second biggest economy. As part of Beijing's overhaul of the finances of heavily-indebted local governments, the central government would pay off some of their loans and state banks including some of the “Big Four” would be forced to take some losses on the bad debt, said the sources, both of whom have direct knowledge of the plans. Part of the debt would also be shifted to newly created companies, while private investors would be welcomed in projects previously off-limits to them, sources said. (StarBiz)
EU: Greek aid package to be decided by end of June
European Union leaders will decide on additional aid for Greece by the end of June and have ruled out a “total restructuring” of the nation’s debt, said Jean-Claude Juncker, head of the group of euro-area finance ministers. Inspectors from the EU, the International Monetary Fund and the European Central Bank are set to wrap up a review of Greece’s progress in meeting the terms of last year’s EUR110bn (USD158bn) bailout in the next few days. The EU will then formulate its plan for further aid to Greece, which remains shut out of financial markets a year after the rescue. (Bloomberg)
Spain: Central deficit narrows as Salgado urges regional cuts
Spain’s central government budget deficit fell by more than half in the first four months of the year, Finance Minister Elena Salgado said while calling on regional governments to accelerate their austerity measures. The central government reported a EUR2.45bn (USD3.53bn) deficit, or 0.22% of GDP, compared with EUR5.27bn or 0.5% of GDP, a year earlier, Salgado said at a news conference in Madrid yesterday. (Bloomberg)
US: Confidence unexpectedly drops to 6-month low Consumer sentiment unexpectedly decreased in May to the lowest level in six months as Americans grew concerned over the outlook for jobs and the economy, while a measure of home prices dropped to a nine-year low. The Conference Board’s confidence index dropped to 60.8 from a revised 66 reading in April, figures from the New York- based private research group showed today. Home prices decreased 5.1% in the first quarter from the same time in 2010, according to data from S&P/Case-Shiller. A separate report yesterday showed manufacturing cooled. Consumer finances have been squeezed by rising costs of food and fuel and erosion in home equity, causing spending to slow. (Bloomberg)
US stocks advance amid speculation about bailout for Greece
US stocks advanced, trimming the biggest monthly drop since August for the Standard & Poor’s 500 Index, amid speculation about additional aid for Greece. Apple Inc. rallied 3.1% after saying Chief Executive Officer Steve Jobs will introduce a cloud-computing product and new software next week. Intel Corp. gained 1.4% as the world’s largest chipmaker seeks to challenge tablet makers with a new type of thinner laptop called an “ultrabook.” General Dynamics Corp. climbed 4.2% after receiving a USD 744m contract from the US Navy. The S&P 500 rose 1.1% to 1,345.20 at 4pm in New York, for its fourth consecutive day of gains. The index declined 1.4% in May. The DJIA added 128.21 points, or 1%, to 12,569.79. Equities advanced even as data on consumer confidence and business activity trailed economists’ estimates. (Bloomberg)
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