Stocks, euro fall before Europe bank stress tests
LONDON, July 15 (Reuters) - Banks led losses for European shares and the euro fell on Friday as investors worried financial sector stress tests will throw up some unwanted surprises to add to the region's debt crisis.
"We have still got a cocktail of uncertainties for investors," said Keith Bowman, equity analyst at Hargreaves Lansdown.
POLL-World economy to keep strong but risks abound
LONDON, July 14 (Reuters) - The world economy should expand steadily this year and next thanks mainly to prospering emerging powers, a Reuters poll showed, but fiscal troubles lurking in Europe and potentially the United States risk blowing this view apart.
The quarterly survey of more than 350 economists from all over the world showed a dimmer outlook for most of the rich-world Group of Seven economies since the last survey in April.
Bernanke warns spending cuts could derail recovery
WASHINGTON, July 14 (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke warned on Thursday that overzealous cuts to government spending in the short term could derail a shaky recovery and said a U.S. debt default could wreak financial havoc.
"I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery," Bernanke told the Senate Banking Committee.
S&P warns of US downgrade if no debt deal reached
SYDNEY, July 15 (Reuters) - Ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon.
Putting the U.S. on negative watch, S&P warned that it could cut the rating as soon as this month if talks between the White House and Republicans remain stalemated. Any cut would be by one or more notches, it added.
U.S. Home Sales, Construction Probably Rose (Source: Bloomberg)
Home sales and construction in the U.S. probably rose in June from depressed levels as the industry struggled to gain traction in the face of foreclosures, falling prices and rising unemployment, economists said before reports this week.
Obama Presses Congress for U.S. Debt Deal While Dismissing Republican Plan (Source: Bloomberg)
While President Barack Obama publicly presses congressional leaders for a multitrillion- dollar agreement in deficit-cutting talks he said are “running out of time,” aides privately are negotiating the framework of a possible compromise.
Obama Says Congress Should Be Willing to Raise Revenue to Reduce Deficit (Source: Bloomberg)
President Barack Obama said Republican lawmakers should agree to raising revenue in any deficit-cutting deal, noting he has agreed to consider cuts to entitlement programs such as Medicare. “I’m willing to do what it takes to solve this problem, even if it’s not politically popular,” Obama said in his weekly radio and Internet address. “I expect leaders in Congress to show that same willingness to compromise.”
Income Expectations Point to Slowdown in U.S. Consumer Spending (Source: Bloomberg)
Consumers are turning more pessimistic about their income prospects, an indication that household spending will grow at a slower pace compared with a year earlier. The share of Americans foreseeing a drop in wages over the next six months topped the proportion projecting an increase by 2.6 percentage points in June, data from the Conference Board, a New York research group, showed. That is the lowest reading since October 2010, according to Lynn Franco, director of the group’s consumer research center.
U.S. Consumer Prices Excluding Food, Energy Climb as Manufacturing Stalls (Source: Bloomberg)
A measure of consumer prices climbed more than forecast in June and manufacturing stalled, highlighting the dilemma faced by Federal Reserve policy makers as they seek to boost growth without stoking inflation. Consumer prices excluding food and energy climbed 0.3 percent for a second month, the biggest back-to-back gain in three years, the Labor Department said today in Washington. Factory production was unchanged last month, data from the Fed showed.
U.S. Consumer Confidence Unexpectedly Declines to 63.8 From 71.5 in Index (Source: Bloomberg)
Confidence among U.S. consumers unexpectedly fell in July to the lowest level in more than two years, adding to concern that weak employment gains and falling home prices may keep households from spending. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month. The gauge was projected to rise to 72.2, according to the median forecast of 62 economists surveyed by Bloomberg News.
Japanese Equities Beating World as Industrial Output Rebounds With Toyota (Source: Bloomberg)
Equities in Japan are rising more than any other developed country on speculation earnings will improve as the country recovers from its strongest earthquake. The Nikkei 225 (NKY) Stock Average climbed 2.9 percent since the start of June, posting the biggest increase among 24 developed countries in the MSCI World Index, according to data compiled by Bloomberg. Toyota Motor Corp. climbed 4.9 percent since June 17 after saying production is rebounding faster than expected. A measure of transport-equipment makers in the broader Topix index rose 3.6 percent as the government said June 29 that May industrial production expanded the most in 50 years.
U.K. Economy to Grow Less Than Previously Forecast on Consumer, Greek Risk (Source: Bloomberg)
Ernst & Young LLP’s Item Club will cut its U.K. economic growth forecasts for the second time this year as weak consumer spending and Europe’s sovereign-debt crisis cloud the outlook for the recovery. Gross domestic product will increase 1.4 percent in 2011, compared with an April projection of 1.8 percent, the London- based Item Club, which uses the same forecasting model as the U.K. Treasury, will say in a report to be published in London tomorrow. It will rise 2.2 percent in 2012, instead of 2.3 percent. The Item Club also reduced its forecasts in April.
Trichet Says Europe Can Surmount Debt Crisis (Source: Bloomberg)
European Central Bank President Jean-Claude Trichet said Europe can surmount its sovereign debt crisis by showing the will and determination to do so. “Naturally the Europeans can manage the issue,” Trichet said in an interview with the Financial Times Deutschland, according to a transcript released yesterday by the Frankfurt- based ECB. “It is not a question of technique. It is a question of will and determination.” Trichet said the euro is not in danger and remains “a highly credible currency.” He reiterated that the ECB will not accept as collateral bonds from a nation that defaults.
Europe's banks brace for some health test failures
LONDON, July 15 (Reuters) - A health check of European banks is expected to show that as many as 15 lenders need more capital to withstand a prolonged recession, with criticism growing that the tests do not encompass the impact of a Greek default.
Europe's bank "stress test", to be published at 1600 GMT, will make 90 lenders reveal for the first time their profit forecasts, a breakdown of their sovereign bond holdings and funding costs, and will force the weakest to recapitalise.
Euro Falls Before Summit as Debt Concern Mounts (Source: Bloomberg)
The euro fell against most of its major counterparts on speculation European leaders will fail to come up with sufficient measures to contain the region’s debt crisis at a summit this week.
FOREX-Euro in range vs dollar before EU bank stress tests
LONDON, July 15 (Reuters) - The euro steadied against the dollar on Friday, as fears the results of European bank stress tests due later in the day could further sour sentiment towards the currency were tempered by concerns about U.S. debt after a rating agency warning.
With worries about the euro zone and the United States roughly offsetting each other, the euro was left stuck in a range above a four-month low of $1.3838 hit earlier this week and below Thursday's high of around $1.4282.
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