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Fed's Lockhart: Economy Recovering, Weaknesses Still Remain

Atlanta Federal Reserve President Dennis Lockhart said Wednesday that the U.S. is clearly showing signs of an economic recovery, but that substantial issues still remain. He warned that high inventories threaten a housing market that is being propped up by government programs, and pointed out that the labor market remains weak.

Speaking at the University of South Alabama, Lockhart said the vital signs of the economy were mixed, stressing that although an optimistic view of the economy is warranted, it should be recognized that it is still relying on the support of government programs.

"I agree with all who are declaring that a technical recovery is underway," he said in prepared remarks. "We are technically in recovery when a contracting economy gives way to growth. But even vigorous growth off a low bottom does not necessarily bring back prior activity levels for some time. By most estimates, it will be the second half of 2010 before the 2007 levels of national output are reached."

The Atlanta Fed chief went on to outline the weaknesses that still remain in the economy, paying particular attention to the housing market. He stressed that a recovery in this area is essential to an economic turnaround.

"The housing market has begun to improve as measured by sales volumes, prices, and new home starts," he said. "Yet, new and existing house inventories remain high, suggesting a weak residential construction outlook. And house sales are being supported by two government programs."

Earlier in the day, new industry data showed that mortgage application volume slipped last week. The Mortgage Bankers Association said total volume was down 2.8 percent, despite mortgage interest rates falling to their lowest levels since May.

In his remarks, Lockhart also said that the unemployment rate, which is currently at 9.7 percent, is likely to rise again before it begins to fall.

"The consensus among forecasters is something approaching a jobless recovery," he said. "The administration's stimulus program has helped soften the pace of job loss. But a recent inquiry of Southeast state budget officials, conducted by the Atlanta Fed, suggested much of the benefit, in infrastructure construction at least, has been front-ended in 2009 and early 2010."

Lockhart also gave the Fed credit for helping to stabilize the economy after last year's financial crisis, lauding the actions the regulator - along with the Treasury Department - took to stem "financial market dysfunction."

Commenting on the prospects of recovery beyond near-term growth, Lockhart said he and other members of the Atlanta Fed would remain cautious about assuming strong medium-term growth.

"To elaborate, I see as uncertain the time required for the housing market to return to health, the potential commercial real estate drag on the financial system, the sustainability of recovery in the absence of government supports, and the resurgence of private demand," he said.

Speaking on inflation at the end of his speech, the Atlanta chief said that inflationary pressures were "well contained," concerns over the growth the reserves in the Fed's balance sheet are exaggerated and that the regulator is more than capable of exiting the current monetary policy when it becomes necessary.

"When the time comes, I am confident the Fed has the tools to reverse the assumed monetary stimulus and exit the policies put in place in reaction to the financial crisis and the recession," he said.

Atlanta Federal Reserve President Dennis Lockhart said Wednesday that the U.S. is clearly showing signs of an economic recovery, but that substantial issues still remain. He warned that high inventories threaten a housing market that is being propped up by government programs, and pointed out that the labor market remains weak. (Market News Provided by RTTNews)
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EU's Juncker: Eurozone Economy Broadly Stabilized

The Eurozone economy has broadly stabilized after the crisis, but the situation remains fragile and outlook is uncertain, chairman of the euro group of nations, Jean-Claude Juncker reportedly said Tuesday.

He told members of the European parliament in Brussels that it can now express moderate optimism with regard to the economy's performance in the second half of the year. At the same time, Juncker warned that the growth potential of the euro area is likely to deteriorate seriously.

Moreover, he stated that Eurozone countries should begin gradual withdrawal of fiscal stimulus measures in 2011.

The Eurozone economy has broadly stabilized after the crisis, but the situation remains fragile and outlook is uncertain, chairman of the euro group of nations, Jean-Claude Juncker reportedly said Tuesday. (Market News Provided by RTTNews)
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UK Revises M4 Money Supply Growth For August

Tuesday, the Bank of England said in a final report that the M4 money supply increased 12.5% year-on-year in August, slower than the 14.4% growth in the previous month. The August money supply growth was revised from 12.6% increase reported initially.

On a monthly basis, the money supply rose 0.1% in August, unrevised from the previous month. In July, the money supply was up 1.3%.

Meanwhile, the M4 lending, excluding the effects of securitisations etc. increased 8.5% on an annual basis in August and it was a flat reading from the previous month.

Tuesday, the Bank of England said in a final report that the M4 money supply increased 12.5% year-on-year in August, slower than the 14.4% growth in the previous month. The August money supply growth was revised from 12.6% increase reported initially. (Market News Provided by RTTNews)
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China Manufacturing Sector PMI For September Falls Slightly To 55.0

Wednesday, Markit Economics announced that the HSBC China Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 55.0 in September, down 0.1 percentage points from August. A reading above 50 indicates expansion, while one below 50 suggests contraction. This is the sixth consecutive month that the manufacturing PMI has expanded.

Manufacturing output expanded for the sixth consecutive month, although the latest expansion was marginally lower than August's reading.

Levels of new businesses placed at Chinese manufacturers rose for the sixth straight month, while growth of new businesses eased slightly. Also, foreign order levels and employment rose for the fourth successive month.

Wednesday, Markit Economics announced that the HSBC China Manufacturing Purchasing Managers' Index stood at a seasonally adjusted 55.0 in September, down 0.1 percentage points from August. A reading above 50 indicates expansion, while one below 50 suggests contraction. This is the sixth consecutive month that the manufacturing PMI has expanded. (Market News Provided by RTTNews)
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Swiss Current Account Surplus Expands In Q2

Switzerland's current account surplus widened to CHF 13.2 billion in the second quarter from CHF 8.5 billion recorded in the first quarter, data released by the Swiss National Bank showed Wednesday.

The current account surplus increased mainly due to goods trade surplus that rose to CHF 5.1 billion in the second quarter from CHF 1.5 billion in the first quarter and an increase in the investment income surplus to CHF 4 billion from CHF 2.2 billion. Moreover, the current transfers deficit narrowed to CHF 2.8 billion from CHF 4 billion.

At the same time, the surplus on services trade contracted to CHF 10.2 billion from first quarter's CHF 12.1 billion surplus and the deficit on labor income remained unchanged at CHF 3.3 billion.

Switzerland's capital account deficit was stable at CHF 0.9 billion and the financial account balance turned to a deficit of CHF 26 billion from a surplus of CHF 20.9 billion.

Switzerland's current account surplus widened to CHF 13.2 billion in the second quarter from CHF 8.5 billion recorded in the first quarter, data released by the Swiss National Bank showed Wednesday. (Market News Provided by RTTNews)
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French Producer Prices Increase More Than Expected

Wednesday, the French statistical office INSEE said in a report that the producer price index or PPI in the domestic market increased 0.4% year-on-year in August, after falling 0.1% in July. Economists' expected an increase of 0.3%.

The increase in PPI was mainly due to rise in coke and refined petroleum products prices, the INSEE said.

On an annual basis, the domestic producer prices decreased 8.5% in August. Economists were looking for a decline of 8.9%.

Similarly, producer prices for non-domestic market increased 0.4% on a monthly basis in August, after a 0.4% decline in July. The PPI was down 5.6% compared to the previous year.

The overall producer price index rose 0.5% month-on-month in August, compared to the 0.2% fall in the previous month. Year-on-year, the PPI decreased 7.5%.

Meanwhile, import prices increased 1.2% on a monthly basis and it was down 8.2% compared to the previous year.

Wednesday, the French statistical office INSEE said in a report that the producer price index or PPI in the domestic market increased 0.4% year-on-year in August, after falling 0.1% in July. (Market News Provided by RTTNews)
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Crude Oil Slips Ahead Of Inventory Data

Crude oil slipped slightly on Tuesday as traders looked ahead to the weekly inventory report as well as some key economic reports on Wednesday.

Light sweet crude finished at $66.71 per barrel, down 13 cents on the session. Prices earlier fell as low as $65.82.

Energy traders will also watch for the Energy Information Administration's inventory report at 10:30 a.m. ET. Analysts are predicting a build of about 2.1 million barrels for the week ended September 25.

Last week's report showed crude oil inventories increased by 2.8 million barrels in the week ended September 18. Total motor gasoline inventories increased by 5.4 million barrels last week.

Also tomorrow morning, ADP employment data for August is planned for release at 8:15 a.m. ET. A drop of 200,000 jobs is projected, compared to the 298,000 decline last month.

Gross domestic product data is expected at 8:30 a.m. ET. Final second-quarter GDP is expected to drop 1.2%, compared to a 1% drop last quarter.

On the economic front on Tuesday, the Conference Board said its consumer confidence index slipped to 53.1 in September from a revised 54.5 in August. Economists had been expecting the index to increase to 57.0 from the 54.1 originally reported for the previous month.

(Market News Provided by RTTNews)
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Japanese Manufacturing PMI At 3-Year High In September

Japan's seasonally adjusted Nomura/ JMMA purchasing manager's index or PMI for the manufacturing sector climbed to 54.5 in September from 53.6 in August, remaining in expansion for the third consecutive month, a report by Markit Economics said Wednesday. Moreover, this was the most marked improvement in the manufacturing operating conditions in three years.

A reading above 50 indicates expansion, while a reading below 50 signals a contraction.

Production expanded for the fourth consecutive month and at the fastest pace since February 2006, reflecting rising sales volumes and new product developments. Incoming new business received by Japanese manufacturers expanded for the third consecutive month, and was also at the most marked pace in 43 months. New export orders increased at the fastest pace in 31 months, reflecting increased new work from China.

Staffing levels in the manufacturing sector continued to fall for the 14th consecutive month, but the latest pace of job cuts being the second-weakest in the last few months.

With regard to prices, output prices fell for the tenth successive month in September, mainly due to stronger competitive pressures and requests for discounts from clients. Input prices fell further in September. However, the pace of reduction eased to the second-weakest in the current sequence of deflation, which now extends to ten months, Markit said. The decline in input prices was mainly due to a fall in raw material prices, particularly that of steel.

(Market News Provided by RTTNews)
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Broadband Task Force Submits Status Report - Update

The task force developing the National Broadband Plan issued a status report to the Federal Communications Commission, or FCC, on Tuesday. The report said the task force conducted 26 workshops and hearings and another six have been scheduled. About 230 witnesses testified during these sessions, the report added.

FCC has to deliver the Plan to Congress on February 17, which addresses broadband deployment, adoption, affordability, and the use of broadband to advance solutions to national priorities.

In the presentation, the task force said about 41,000 pages of written comments have been filed with the FCC in response to its National Broadband Plan Notice of Inquiry and another 143 response to Public Notices requesting more focused information. Nearly 40 blogs have been posted on the FCC's new Blogband page, which have prompted over 300 comments.

The presentation includes an initial report on the current state of broadband in the U.S., and describes the framework the team will use to analyze gaps in broadband's reach and find solutions to close those gaps.

With regard to application, the task force found that actual broadband speeds lag advertised speeds by as much as 50% to 80%. About 1% of users drive 20% of traffic, while 20% of users drive up to 80% of traffic, it noted.

Regarding deployment, the presentation said, ''The incremental cost to universal availability varies significantly depending on the speed of service, with preliminary estimates showing that the total investment required ranging from $20 billion for 768 Mbps-3Mbps service to $350 billion for 100 Mbps or faster.''

It found that nearly 2/3 of Americans have adopted broadband at home, while 33% have access but have not adopted it. Another 4% say they have no access to broadband where they live. The task force has commissioned its own survey to learn how attitudes toward broadband and technology, affordability and personal context affect adoption. Results are expected in November.

(Market News Provided by RTTNews)
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Regaining Confidence Of Market Players In Banks Key To Recovery From Financial Crisis: Riksbank's Ingves

Regaining and preserving confidence of the public and the market in banks is essential to resolve financial crises, Sweden's central bank governor Stefan Ingves said in a speech Tuesday.

"This should be done by acknowledging the losses and dealing with the bad assets", the Riksbank governor said. Moreover, to prevent the financial crisis from repeating itself, the confidence regained should not be allowed to dissipate again, and this could be done by reforming of liquidity and capital regulation, he said.

Ingves noted that a loss of market confidence was the main driver of the liquidity crunch, with bad quality assets, also known as a lemon, explaining the breakdown of the market. "Normality will not return until the impaired assets are dealt with. Consequently, we convincingly need to go and get the lemons", the governor said.

Ingves pointed out that resolving bad assets could be done through various asset relief measures. Further, to restore confidence, a process of stress testing was necessary, but with the tests being credible and adequately disclosed, he said.

In the long run, liquidity and capital regulation could provide for a safer financial system. Liquidity buffers would provide a cushion for banks, while the quality and amount of capital would improve the resilience of individual banks, he said. Moreover, building trust between authorities of various countries was important to enhance cross-border crisis management, the governor added.

The Swedish central bank governor has a long experience in dealing with financial crises and was instrumental in resolving the banking crisis in Sweden in the early 1990s.

(Market News Provided by RTTNews)
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Japan Aug Industrial Output +1.8 Percent On Month

Industrial output in Japan was up 1.8 percent on month in August, the Ministry of Economy, Trade and Industry said in a preliminary report on Wednesday, posting a seasonally adjusted index score of 84.1.

The result was in line with analyst expectations following a 2.1 percent monthly increase in July, and it marked the sixth consecutive month of increase.

On an annual basis, industrial output was down 18.7 percent compared to forecasts for an 18.8 percent decline following the 22.7 percent contraction in the previous month. Industries contributing to the increase include steel and iron, transportation equipment and electronic parts.

Shipments were up 1.0 percent on month in August, rising for the sixth straight month to a seasonally adjusted index score of 84.5 thanks to gains among steel and iron, general machinery and petroleum and coal products. Shipments were down 18.6 percent on year.

Inventories were flat on month with a seasonally adjusted index score of 95.0 in spite of gains among the electronics parts and machinery, as well as transportation equipment. Inventories were down 10.4 percent on year.

The inventory ratio was down 0.8 percent on month in August, falling for the third consecutive month with a seasonally adjusted index score of 122.6. The ratio was up 11.4 percent on year.

Output is forecast to climb 1.1 percent on month in September and 2.2 percent in October, according to a survey of large companies. Spurring the gains in September are orders for transportation equipment, general machinery and chemicals, while the October reading is spurred by gains among information and communications equipment, general machinery and steel and iron.

As a result of the data, the METI has left its assessment for industrial output unchanged.

(Market News Provided by RTTNews)
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Australian Retail Sales Rise In August; Building Permits Drop Unexpectedly

Australian retail sales increased in August after two months of declines, the Australian Bureau of Statistics announced Wednesday. The bureau also released building permits statistics for August, with construction permits for dwelling units declining unexpectedly after increases in the last two months.

Retail trade climbed a seasonally adjusted 0.9% month-on-month in August, in contrast to the revised 0.9% drop in the previous month and the 0.8% fall in June. Economists were looking for 0.5% growth in sales. Retail turnover totaled A$19.81 billion compared to A$19.64 billion in the preceding month. The growth in retail sales was largely a result of rising sales in food in August.

Food retailing, which contributes about 40% to total retail turnover, climbed at a monthly rate of 1.8% in August, rebounding from the 1.5% decline in the previous month. Household goods retailing grew 0.9% in contrast to the 3.6% drop in July. Further, department store sales were up 2.4%, and cafes, restaurants & takeaway food services retailing was up 1.9%.

On the other hand, other retailing declined 3% after the 0.8% rise in the previous month, while clothing, footwear & personal accessory retailing remained flat.

Excepting Northern Territory, retail sales were up across all territories in August. Retail sales grew 1.4% in Queensland, while sales in Victoria and New South Wales were up 0.8% and 0.6%, respectively. Retailing in South Australia increased 1.1%. On the other hand, retail sales in Northern Territory declined 0.7%.

In a separate report, the bureau announced that construction permits for dwelling units in Australia decreased unexpectedly in August by a seasonally adjusted 0.1% on month, following growth in the last two months. Economists had expected a 2.5% rise in approvals.

The total number of private sector housing permits were up 3.1% in August, faster than the 1.6% rise in the previous month. This was the eighth consecutive month in which housing permits increased sequentially. On a yearly basis, total housing permits were up 10.8%.

The value of buildings approved increased 32.6% on month compared to the 6.4% rise in the previous month. This was mainly because of a rise in the value of non-residential buildings, up 68.7%, while the value of residential buildings was down 0.6% in August.

Also, The Reserve Bank of Australia announced today that total credit provided to the private sector by financial intermediaries increased a seasonally adjusted 0.1% month-on-month in August, after the 0.2% rise in the previous month. Economists were looking for a 0.2% rise. On a yearly basis, private sector credit increased 2.5%, coming below economists' expectations of a 2.7% rise.

Housing credit increased 0.6% sequentially in August, the same rate of growth as in the previous month. Other personal credit was up 0.5%, while business credit declined 0.6%.

Earlier in the day, the Conference Board's Leading Economic Index for Australia was released, with the index rising 0.7% in July, while the corresponding coincident index remained unchanged.

Five of the seven components in the Conference Board Leading Economic Index increased in July. The private sector think tank said that the Leading Index was boosted by large positive contributions from stock prices, the yield spread and building approvals. Those factors more than offset negative contributions from gross operating surplus and exports of rural goods.

The Coincident Index, which measures current economic activity, was flat, following the 0.1% rise in the previous month.

Meanwhile, the Australian dollar edged higher against its major opponents on Wednesday morning in Asia as the encouraging domestic economic have made the higher-yielding currencies more attractive.

The aussie climbed to a near 14-month high against the euro and moved above a 13-month high versus the U.S. dollar. Against the currencies of Japan and New Zealand, the Australian dollar advanced to new multi-day highs.

Australian retail sales increased in August after two months of declines, the Australian Bureau of Statistics announced Wednesday. The bureau also released building permits statistics for August, with construction permits for dwelling units declining unexpectedly after increases in the last two months. (Market News Provided by RTTNews)
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Eurozone Economic Sentiment Continues To Rise

Eurozone economic sentiment rose to 82.8 in September, up from a revised reading of 80.8 in August and the expected level of 82.5, a monthly survey from the European Commission showed Tuesday. However, the indicator stood well below its long-term average.

The consumer confidence index climbed to minus 19 from minus 22 in the previous month. At the same time, industrial sentiment improved to minus 24 from minus 25 and confidence in services moved up to minus 9 from minus 11.

Further, the improvement in business climate indicator was less marked than in the prior month. The index stood at minus 2.07 in September compared to minus 2.18 in August. Economists were expecting a reading of minus 1.99.

Eurozone economic sentiment rose to 82.8 in September, up from a revised reading of 80.8 in August and the expected 82.5, a monthly survey from the European Commission showed Tuesday. (Market News Provided by RTTNews)
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India Needs N-Energy To Overcome Power Shortage: Finance Minister

India should make more efforts to tap nuclear energy to overcome the shortage of power and ensure economic growth, as conventional sources of energy are limited, reports PTI, quoting Finance Minister Pranab Mukherjee.

Releasing commemorative coins to mark the birth centenary of nuclear pioneering scientist Homi Bhabha at New Delhi on Tuesday, he said that the country should consider tapping nuclear and non-conventional sources of energy.

The minister reiterated that nuclear power programme with a long-term vision was a must as quality power was required for growth. He cautioned that conventional sources of energy were not enough to meet the target.

He also noted that coal resources were running out, while hydel power potential was limited with the increasing environmental concerns. In contrast, nuclear energy was clean and self-alternating compared to fossil fuel, he added.

(Market News Provided by RTTNews)
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Portugal Sept. Consumer Confidence Improves

Tuesday, the Statistics Portugal announced that the consumer confidence indicator stood at minus 29.5 in September, up from minus 34.3 recorded in August, revised from minus 39.3 reported initially. The consumer confidence was minus 36.5 a year earlier.

The confidence indicator on manufacturing sector rose to minus 20.7 in September from minus 27.1 in August. The confidence indicator for August was revised from minus 29.4 estimated initially.

In September, services confidence increased to minus 5.8 from minus 9 in August, while the confidence indicator on trade rose to minus 12.4 from minus 12.9.

Meanwhile, the economic sentiment indicator stood at minus 0.8 in September, up from minus 1.2 in August. A year ago, the indicator was 0.1.

Tuesday, the Statistics Portugal announced that the consumer confidence indicator stood at minus 29.5 in September, up from minus 34.3 recorded in August, revised from minus 39.3 reported initially. The consumer confidence was minus 36.5 a year earlier. (Market News Provided by RTTNews)
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Conditions In UK Retail Sector Stabilizes: CBI Survey

Tuesday, the Distributive Trades Survey from the Confederation of British Industry showed that conditions in the retail sector are beginning to stabilize.

Around 39% of retailers said annual sales volume increased in September, while 36% reported decline. The resulting balance of 3% was better than expected and follows four straight months of falling sales. Further, retailers expect sales to remain broadly flat in October.

Chairman of the CBI Distributive Trades Panel and Chief Operating Officer of Asda, Andy Clarke said, "However, with unemployment rising, wage growth low, and consumers building up their savings, spending is likely to remain subdued for some time."

Retailers said the volume of orders placed with suppliers eased modestly and expect it to stabilize next month.

Tuesday, the Distributive Trades Survey from the Confederation of British Industry showed that conditions in the retail sector are beginning to stabilize. (Market News Provided by RTTNews)
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EBRD Seeks 50% Rise In Capital To Assist Central And Eastern Europe - FT

The European Bank for Reconstruction and Development has appealed for a 50% capital increase to mitigate the impact of the global economic crisis on central and eastern Europe, the Financial Times reported Monday.

The bank is asking for an extra EUR 10 billion to allow it to expand its lending and compensate for a sharp decline in private capital flows into the former communist countries.

In a letter to the bank's shareholder governments, EBRD president Thomas Mirow reportedly warned that while the region's economies have begun to stabilize, they have not done so uniformly and it would be premature to say that a general turnaround has begun. The crisis will have lasting repercussions.

The European Bank for Reconstruction and Development has appealed for a 50% capital increase to mitigate the impact of the global economic crisis on central and eastern Europe, the Financial Times reported Monday. (Market News Provided by RTTNews)
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Air Traffic Demand Down 1.1% In August, IATA Finds

The International Air Transport Association (IATA) released a report Tuesday detailing the international scheduled traffic results for August, with the report showing a slowdown in the annual rate of decline in passenger demand.

According to the IATA, August passenger demand was down 1.1% compared to August 2008, which was a slight improvement over the 2.9% decline from July. Freight demand was down 9.6%, also an improvement over the 11.3% drop in July.

The report also found that, compared to August 2008, passenger load factors saw an overall improvement of 1.2% to 80.9%. Average fares continued downward, however, with fares for premium seats declining 22% and fares for economy seats down 18%.

To match capacity with demand, the IATA said, airlines have reduced daily aircraft utilization in recent months. As an example, the IATA noted that average daily hours for the global Boeing 777 fleet dropped by 2.7% to 11.1 hours per day through the first eight months of the year.

"Demand continues to improve, but profitability remains ever distant," said IATA CEO and General Director Giovanni Bisignani.

"Fares have stabilized, but at profitless levels. Meanwhile cost pressures are mounting from reduced aircraft utilization and rising oil prices," Bisignani added. "The industry is not out of the woods yet."

Further, the IATA found that, compared to the low point of March 2009, seasonally adjusted passenger demand has improved by 6%, but traffic levels remain 5% below May 2008, when the drop in demand began.

Meanwhile, compared to the low point of December 2008, seasonally adjusted freight demand has improved by 12% but remains exceptionally weak at 16% below April 2008, when the drop in demand began.

"Even with improving demand, there are few bright spots in the industry," Bisignani said. "This must point us to the need for some fundamental re-thinking. At the top of the list for change are the industry's antiquated rules of the game which restrict access to markets and to international capital."

The International Air Transport Association (IATA) released a report Tuesday detailing the international scheduled traffic results for August, with the report showing a slowdown in the annual rate of decline in passenger demand. (Market News Provided by RTTNews)
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Euro Slips To Two-Week Low Versus Dollar

The euro declined against the dollar on Tuesday in New York as global stocks slipped, reducing risk appeal. The euro also backed off a multi-month high against the pound.

The Eurozone economy has broadly stabilized after the crisis, but the situation remains fragile and outlook is uncertain, chairman of the euro group of nations, Luxembourg Prime Minister Jean-Claude Juncker reportedly said Tuesday.

Economic sentiment in the Eurozone rose to its highest level in a year as the economy continues to recover from its worst recession.

The euro fell to a two-week low of 1.4532 against the dollar, moving further from the yearly high from last week. The European currency bounced back slightly later in the morning after a disappointing consumer confidence report in the U.S.

The Conference Board said its consumer confidence index slipped to 53.1 in September from a revised 54.5 in August. Economists had been expecting the index to increase to 57.0 from the 54.1 originally reported for the previous month.

The euro dropped away from a six-month high against the sterling, moving near 0.9130. The 16-member currency had reached 0.9300 earlier in the week.

The latest quarterly national accounts report from the Office for National Statistics showed UK gross domestic product fell 0.6% during the second quarter. This decline was revised up from the preliminary estimate of 0.7%.

The euro remained in a range with the yen, moving near 131.50. The European currency had reached a two-month low of 129.78 earlier this week.

In economic news, the Cabinet Office revealed that Consumer prices declined 2.2% year-over-year in August, further triggering fears of deflation. The result matched forecasts exactly following the 2.2% annual fall in July. However, on a monthly basis, inflation was up 0.3%.

In the Eurozone, the economic sentiment indicator rose to 82.8 in September from 80.8 in August, according to the results of the latest business and consumer survey by the European Commission. That is the highest reading since September 2008. Economists had forecast the index to log 82.5.

(Market News Provided by RTTNews)
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Dollar Uncertain Versus Majors Amid Encouraging Housing Data

The dollar barely budged against other major currencies on Tuesday, as traders shrugged off a mixed bag of economic data, including a relatively upbeat report on the beleaguered housing sector.

Trading was subdued ahead of the pivotal monthly jobs report set for release on Friday.

Consumer confidence unexpectedly decreased in the month of September, according to a report released by the Conference Board on Tuesday, as Americans continued to express anxiety about the employment situation.

The Conference Board said its consumer confidence index slipped to 53.1 in September from a revised 54.5 in August. Economists had been expecting the index to increase to 57.0 from the 54.1 originally reported for the previous month.

Meanwhile, home prices continue to show a notable decline compared to a year ago. Standard and Poor's released a report showing that the pace of decline in home prices slowed for the sixth consecutive month in July.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 13.3 percent in July compared to the 15.4 percent drop reported for June.

The dollar held its ground versus the euro, inching to a new 2-week high of 1.4526 before leveling off. With the modest advance, the dollar moved further away from a yearly low of 1.4843.

The Eurozone economy has broadly stabilized after the crisis, but the situation remains fragile and outlook is uncertain, chairman of the euro group of nations, Jean-Claude Juncker reportedly said Tuesday.

The buck remained uncertain for a second day versus the sterling, edging slightly lower to 1.6000. Earlier this week, the dollar hit a 4-month high of 1.5769.

The buck was little-changed versus the yen, holding just below 90. The dollar plummeted to 88.21 on Monday, moving closer to a 13-year low of 87.08 before finding support.

Japan's Finance Minister Hirohisa Fujii said the government may need to intervene in the foreign exchange market if the yen continues to soar, reversing the comments made yesterday.

(Market News Provided by RTTNews)
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Fed's Fisher: Market Forces Must Replace Gov't Housing Support

Dallas Federal Reserve President Richard Fisher said Tuesday said that the country should exercise cautious optimism in the coming months as the economy recovers, as the housing industry is "still on life support."

Speaking before members of the Texas Christian University Business Network in Dallas, Fisher said while there are signs that the housing market has reached a bottom, it will not fully recover until market forces replace the massive amount of government support being used to keep the market stable.

"We have thus indicated to the marketplace that, for our part, the FOMC expects we will complete the execution of our $1.25 trillion intervention in the mortgage backed securities market by the end of the first quarter of next year," he said in prepared remarks.

The Dallas Fed chief also addressed inflation concerns posed by the expansion of the Fed's balance sheet during the financial crisis.

Fisher reiterated his past statements on inflation dangers and reminded those in attendance that he has voted in the past against monetary policy that he felt was "too accommodative."

"Given the lag between the time monetary policy is initiated and when it impacts the economy, that wind-down process needs to begin as soon as there are convincing signs that economic growth is gaining traction and that the lending capacity of the banking system is capable of expansion," he said.

"I am not alone on this front. I have faith my colleagues on the Federal Open Market Committee will stand and deliver in a timely way," Fisher added. "And I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation."

Dallas Federal Reserve President Richard Fisher said Tuesday said that the country should exercise cautious optimism in the coming months as the economy recovers, as the housing industry is "still on life support." Speaking before members of the Texas Christian University Business Network, Fisher said while there are signs that the housing market has reached a bottom, it will not fully recover until market forces replace the massive government support being used to stabilize the market (Market News Provided by RTTNews)
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Consumer Confidence Shows Unexpected Deterioration In September

Consumer confidence unexpectedly decreased in the month of September, according to a report released by the Conference Board on Tuesday, although the consumer confidence index remains well off the lows set earlier this year.

The Conference Board said its consumer confidence index slipped to 53.1 in September from a revised 54.5 in August. Economists had been expecting the index to increase to 57.0 from the 54.1 originally reported for the previous month.

Despite the unexpected decrease, the index remains well off the low of 25.3 set in February of 2009. However, Peter Boockvar, equity strategist for Miller Tabak, noted that the move off the lows was almost all due to an improvement in expectations.

A notable deterioration in the assessment of current conditions contributed to the unexpected decrease in September, with the present situation index falling to 22.7 from 25.4 in August.

The report showed that those claiming current business conditions are "bad" rose to 46.3 percent in September from 44.6 percent in August, although those claiming conditions are "good" also edged up to 8.7 percent from 8.5 percent.

With regard to the labor market, those claiming jobs are "hard to get" increased to 47.0 percent in September from 44.3 percent in August and those claiming jobs are "plentiful" fell to 3.4 percent from 4.3 percent.

The Conference Board said consumers' short-term outlook was also slightly more pessimistic, with the expectations index edging down to 73.3 in September from 73.8 in the previous month.

Consumers expecting business conditions to improve over the next six months fell to 21.3 percent in September from 22.2 percent in August, while those expecting conditions to worsen decreased to 15.0 percent from 15.2 percent.

At the same time, the outlook for the labor market was nearly unchanged, with those expecting more jobs in the months ahead edging down to 17.9 percent in September from 18.0 percent in August and those expecting fewer jobs unchanged at 23.1 percent.

Those expecting an increase in their incomes increased slightly to 11.2 percent in September from 10.8 percent in August.

Lynn Franco, Director of the Conference Board Consumer Research Center said, "While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes."

"With the holiday season quickly approaching, this is not very encouraging news," Franco added.

Consumer confidence unexpectedly decreased in the month of September, according to a report released by the Conference Board on Tuesday, although the consumer confidence index remains well off the lows set earlier this year. The Conference Board said its consumer confidence index slipped to 53.1 in September from a revised 54.5 in August. Economists had been expecting the index to increase to 57.0 from the 54.1 originally reported for the previous month. (Market News Provided by RTTNews)
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Pace Of Decline In Home Prices Continues To Slow In July

While home prices continue to show a notable decline compared to a year ago, Standard and Poor's released a report Tuesday morning showing that the pace of decline in home prices slowed for the sixth consecutive month in July.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 13.3 percent in July compared to the 15.4 percent drop reported for June. Economists had expected the index to be down 14.2 percent year-over-year.

David M. Blitzer, Chairman of the Index Committee at Standard & Poor's said, "The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets."

"But we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," Blitzer added.

While prices in all twenty metro areas continued to show annual declines, Cleveland, Dallas and Denver are closing in on positive territory, with July prices down 1.3 percent, 1.6 percent, and 2.9 percent, respectively.

On a monthly basis, 16 metro areas reported price growth in excess of 1.0 percent, with prices in Minneapolis and San Francisco showing the strongest monthly growth. Only Seattle and Las Vegas showed monthly price declines.

The 20-City Composite Home Price Index was up 1.6 percent on a monthly basis in July following a 1.4 percent increase in June.

Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, "This data is not seasonally adjusted and combining the seasonal strong time of the year with the $8,000 first time home tax credit and a moderation in the pace of foreclosures and we have continued stabilization in the home price data."

"With an expected pick up in foreclosures, continued compression in higher end home prices and the uncertain fate of the tax credit, we'll see if the improvements in pricing can continue in the face of this," he added.

Looking ahead, Boockvar said, "The worst of the financial crisis will end when home prices stop going down and I don't believe we've seen the worst of the price declines in this cycle notwithstanding the recent government induced bounce."

While home prices continue to show a notable decline compared to a year ago, Standard and Poor's released a report Tuesday morning showing that the pace of decline in home prices slowed for the sixth consecutive month in July. The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 13.3 percent in July compared to the 15.4 percent drop reported for June. Economists had expected the index to be down 14.2 percent year-over-year. (Market News Provided by RTTNews)
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New Zealand Firms Focusing On Customers First: PwC Survey

Businesses in New Zealand are putting customers first to generate higher revenue, a survey by PricewaterhouseCoopers said Tuesday.

The Clever Companies Insight survey of 620 respondents carried out in July showed that 44% of the employed respondents plan to focus on better customer relations to increase revenues in the next 12 months. Further, about 35% are planning to increase revenue through new markets and 23% by cutting operating costs.

PricewaterhouseCoopers partner Robbie Gimblett said the survey highlighted a shift in attitude among business leaders as eight months back business leaders' focus was mainly on cost cutting and short term survival. The survey also said that over the past one year, the biggest factors influencing business performance were customer focus, technology improvement, and improving human resources through recruitment and training.

The survey further revealed that the biggest positive impact on performance over the last year was gained through better customer focus, followed by technology improvements and improving staff capability through recruitment and training.

(Market News Provided by RTTNews)
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Romania Central Bank Lowers Key Policy Rate As Expected

Romania's central bank reduced its key policy rate by 50 basis points on Tuesday. The decision came in line with economists' expectations.

The Board of the National Bank of Romania lowered its key interest rate to 8% from 8.5%, with effect from September 30. The central bank had slashed its key policy rate by 50 basis points from 9% in the previous month.

But, the central bank decided to hold the minimum reserve requirements ratios on leu-denominated and foreign currency commercial deposits at 30%.

The National Bank also decided to ensure an adequate management of liquidity in the banking sector in order to consolidate monetary policy transmission channels.

Romania's gross domestic product or GDP decreased a seasonally adjusted 1.1% sequentially in the second quarter, after falling 4.6% in the first quarter.

The consumer price inflation eased to 4.96% in August from 5.06% in July. The central bank inflation target is 3.50% for 2009.

Romania's central bank reduced its key policy rate by 50 basis points on Tuesday. The decision came in line with economists' expectations. (Market News Provided by RTTNews)
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No Need To Rush To Exit From Monetary Stimulus Measures: ECB's Liikanen

The European Central Bank's governing council member Erkki Liikanen said as long as the output growth in countries remained modest and the output gap continued to grow, the risk of domestically generated inflation remains remote and the inflation outlook would be subdued.

"Consequently, there is no need to rush to exit from monetary stimulus", he said in a Bank of Finland press conference on Tuesday. Liikanen heads the Banks of Finland.

In its latest report, released on Tuesday, the bank lowered the 2009 growth forecast for Finland due to weaker than expected performance in the first half of the year. The central bank governor said although the downtrend could end in the third quarter, the recovery could be slow with a possibility of temporary setbacks.

The bank expects the Finnish economy to contract 7.2% this year, remain unchanged in 2010 and grow 1.6% in 2011. According to the latest estimates from Statistics Finland, the GDP contracted 2.6% sequentially in the second quarter, after a 3% fall in the first quarter.

The Finnish economy has been particularly hard hit as it is heavily dependent on exports for growth. The scale of the slump in the exports was due partly because Finland's export industry specializes in the production of capital goods and their components. The international demand for these goods would be slow to recover and could be the reason also for slower recovery in the economy, the bank said.

Further, government measures in other countries would support domestic demand and not imports, the bank noted. The country's exports and industrial output will, however, begin to grow gradually, provided the global economy recovers as expected.

Meanwhile, the Finnish central bank said the world GDP could contract by just under 2% this year, whereafter the global economy is expected to recover slowly in 2010 and 2011. "This means the strongest phase of decline in the global economy and world trade is now over", the bank said. World trade is forecast to decline by around 13% this year, and to be lacklustre next year and based primarily on growing demand in the developing countries.

On the labor market, the bank said there would a marked deterioration in employment in this year and the next, with the situation likely to improve in 2011. Finland's jobless rate is expected to climb above 10% during the 2009-11 period. Labor productivity would decline raidly this year, but would pick up and become positive in 2010 and 2011.

(Market News Provided by RTTNews)
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Eurozone Economic Sentiment Highest In A Year

Economic sentiment in the Eurozone rose to its highest level in a year as the economy continues to recover from its worst recession.

Rising for the sixth straight month, the economic sentiment indicator rose to 82.8 in September from 80.8 in August, results of the latest business and consumer survey by the European Commission showed Tuesday. That is the highest reading since September 2008. Economists had forecast the index to log 82.5.

"The index is therefore now close to the pre-Lehman-bankruptcy level again," said Commerzbank analyst Christoph Weil. In the coming months, the indicator will continue to edge towards 100, irrespective of how strong the upturn proves to be, the analyst added.

Among the sub-indicators of the economic sentiment indicator, a measure for consumer confidence grew more than expected to minus 19 from August's minus 22. The industrial confidence indicator climbed to minus 24 from minus 25.

Sentiment indicator for the services sector climbed to minus 9 from minus 11 and that for the construction sector improved to minus 31 from minus 32. The only sector that registered a decline in sentiment was retail trade, where the indicator fell to minus 15 from minus 14 in the previous week.

Economic sentiment indicator for the European Union increased to 82.6 in September from 81 in August, with confidence rising in all sectors except services, where it stabilized.

A separate survey from the European Commission showed that the business climate index for Eurozone improved to minus 2.07 in September from August's revised reading of minus 2.18. The report noted that the level of the index remains very low, which suggests that year-on-year growth in industrial production was strongly negative in August. The modest rise in indicator was mainly due to an improving assessment of stocks of finished products, with slightly more optimistic views on production in recent months and production expectations than in the previous month.

Recent improvements in economic indicators suggest that the 16-nation economy is likely to recover in the second half of the year. The European Commission said in its interim forecast that the euro area is expected to grow 0.2% in the third quarter after contracting 0.1% in the second quarter. In the final quarter, the economy would be expanding at a slower pace of 0.1%. However, for the full year, it is forecast to contract 4%.

Elsewhere on Tuesday, the European Central Bank's governing council member Erkki Liikanen said as long as the output growth in countries remained modest and the output gap continued to grow, the risk of domestically generated inflation remains remote and the inflation outlook would be subdued. "Consequently, there is no need to rush to exit from monetary stimulus", he said in a Bank of Finland press conference.

Economic sentiment in the Eurozone rose to its highest level in a year as the economy continues to recover from its worst recession. (Market News Provided by RTTNews)
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India's Logistics Biz Likely To Touch $125 Bln.:Assocham

India's Logistics business is likely to become a $125 billion industry by next year, a rise of about 17% from the current level, reports PTI quoting Assocham, the industry body. It estimates Indian logistics industry to be $125 billion by next year, from the present $105 billion.

Assocham said that the outsourcing of third-party logistics business (3PL) in India could touch $90 million by 2012 from the current $58 million, as about 55% of Indian companies are outsourcing logistics services like supply chain management and warehousing, which varied between 10%-15% a decade ago.

It said this concept was introduced in the U.S. and Europe, and was growing at a fast pace to increase the efficiency of domestic corporates through better logistic functions.

This indirectly indicates that manufacturing, retail and real estate, which are presently under stress, will revive soon, resulting in a robust growth in the logistics industry in the next two years, said the paper 'Building Logistics for Competitive Business'.

D.S. Rawat, Assocham Secretary General, said that Value Added Tax (VAT) was likely to drive Indian industry towards using more 3PL services.

(Market News Provided by RTTNews)
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U.K. Building Society Gross Lending Remains Subdued In August

Tuesday, the Building Societies Association announced that gross lending by U.K.'s building societies stood at a seasonally adjusted £1.52 billion in August, down from £2.65 billion in the same month of the previous year.

In August, mortgage approvals amounted to £1.34 billion compared to £2.89 billion a year ago.

However, comparison with previous data must be made with caution as August's data excludes Britannia, which merged with The Co-operative Financial Services at the start of the month and is no longer classified as a building society.

"Gross lending was subdued in August, but appears to be at broadly similar levels to recent months after seasonal factors are adjusted for. However, the market remains very depressed compared to previous years," BSA Director-General Adrian Coles said.

The BSA expects lending to remain subdued until funds for mortgage lending are more widely available to building societies and other lenders.

Tuesday, the Building Societies Association announced that gross lending by U.K.'s building societies stood at a seasonally adjusted £1.52 billion in August, down from £2.65 billion in the same month of the previous year. (Market News Provided by RTTNews)
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England And Wales House Prices Fall In August - Land Registry

House prices in England and Wales dropped 0.1% on a monthly basis in August, the Land Registry said on Monday. The average house price amounted to GBP 155,968 in August.

On an annual basis, house prices fell 9.4% in August. This is a significant improvement from the record decline of 16% in February.

Meanwhile, the monthly house prices for London and West Midlands increased 0.8% each, in August.

In June, the number of completed house sales in England and Wales decreased 17% year-on-year to 48,903 from 58,636 a year ago.

House prices in England and Wales dropped 0.1% on a monthly basis in August, the Land Registry said on Monday. The average house price amounted to GBP 155,968 in August. (Market News Provided by RTTNews)
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Slovak Producer Prices Decline In August

Monday, the Statistical Office of the Slovak Republic announced that the producer price index or PPI decreased 7.9% in August, compared to the 8.2% fall in the previous month.

Producer prices for manufacturing dropped 7.3% on an annual basis in August, while the PPI for mining and quarrying fell 9.8%. At the same time, the domestic producer prices were down 4.6%.

On a monthly basis, the PPI remained unchanged in August, after falling 0.4% in July.

For the January to August period, producer prices decreased 6.7% compared to the same period of the previous year.

Monday, the Statistical Office of the Slovak Republic announced that the producer price index or PPI decreased 7.9% in August, compared to the 8.2% fall in the previous month. (Market News Provided by RTTNews)
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Hungary June To August Unemployment Rate Rises

Monday, Hungary's Central Statistical Office announced that the unemployment rate stood at 9.9% in the June to August period, up from 9.7% in the May to July period. The unemployment rate came in line with economists' expectations.

For the June to August period, the number of unemployed persons totaled 418,800, larger than the 407,200 persons in the May to July period. The number of employed persons decreased to 3.80 million from 3.81 million.

At the same time, the labor force participation rate stood at 54.9, slightly up from 54.8 in the May to July period.

Monday, Hungary's Central Statistical Office announced that the unemployment rate stood at 9.9% in the June to August period, up from 9.7% in the May to July period. The unemployment rate came in line with economists' expectations. (Market News Provided by RTTNews)
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Chief Executives Of NZ's Pvt. Infrastructure Sector Earn Highest

Heads of engineering companies in New Zealand are paid the highest, while public sector executive have the lowest pay, the Strategic Pay's survey of executives showed, reports said Monday.

In the largest organizations in the private sector, on average bosses received more than NZ$ 1 million as wages, while those in the largest public sector organization received only an average of NZ$404,000.

In smaller public sector organizations with less than NZ$15 million in turnover, chief executives earned about NZ$ 166,000, the same as their counterparts in private sector organizations.

The survey said despite the government pumping in so much money into infrastructure projects, the public sector heads in the large infrastructure projects received only nearly half of what their counterparts in the private sector got, who had a median pay of NZ$300,000.

(Market News Provided by RTTNews)
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Japan Inflation On Tap For Tuesday

Japan is scheduled to release August numbers for its consumer price index on Tuesday, headlining a light day for Asian economic news. Overall nationwide inflation is expected to remain flat at -2.2 percent on year, while CPI minus fresh food is expected to ease an annual 2.4 percent after shedding 2.2 percent on year in July. Excluding fresh food and energy, inflation is expected to remain unchanged at -0.9 percent on year.

Tokyo inflation, which is considered a leading indicator for the nationwide trend, is forecast to ease 1.8 percent on year for September after easing 1.6 percent in August. Minus fresh food, CPI is tipped to shed 2.0 percent on year after falling an annual 1.9 percent in August. Excluding fresh food and energy, inflation is expected to decline an annual 1.3 percent after falling 1.1 percent in the previous month.

Hong Kong will announce retail sales data for August. By value, sales are expected to decline 3.5 percent on year after the 5.5 percent annual contraction in July. By volume, sales are predicted to shed 3.3 percent on year following the 5.4 percent annual decline in the previous month.

(Market News Provided by RTTNews)
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Gold Prices Finish Slightly Higher Ahead Of Key Data

Gold prices inched higher on Monday and approached the $1,000 per ounce mark. A choppy U.S. dollar limited the hedge appeal of the metal.

December-dated gold rose to $994.10 per ounce, up $2.10 on the session. Prices hit as high as $998.00 and as low as $986.70.

The dollar moved near its overnight levels against the euro, remaining near a 13-day high. The greenback was also uncertain versus the sterling.

Traders remained on the sidelines with employment and gross domestic product looming later this week. A string of jobs data kicks off Wednesday with the ADP report and culminates on Friday with the Labor Department data. The second quarter GDP data is also due Wednesday.

On Tuesday, the Case-Shiller housing price index is due at 9 a.m. ET. A drop of 14.2% is expected to July, compared to a drop of 15.44% in June.

At the same time, the Conference Board will announce its consumer confidence data for September. A reading of 57.0 is expected, compared to 54.1 in August.

On Friday, gold dropped to $991.60 per ounce, down $7.30 for the session. Prices dipped as low as $990.40 earlier in the session.

(Market News Provided by RTTNews)
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BoE's Dale: British Economy Appears To Have Stabilized

The British economy has turned a corner but households and businesses face a long road to recovery, Bank of England Chief Economist Spencer Dale said in an interview published on Monday.

"Things look like they've stabilized and we have turned a corner, but it looks like we are in for a long haul," Dale told the Exeter Express & Echo newspaper. "There's still a long way to go before things are bouncing back to where they were, and it's going to take us a while to get there, but things feel quite a bit better than they did six or nine months ago."

He noted that confidence levels have stopped falling. Many businesses, even if they haven't seen the recovery have seen the bottom, but there's still a sense of quite realistic caution, Dale said.

"Going forward we may well see employment levels continue to remain low, or fall further, before we start to see a pick up, so I do think the pick up in employment may well be relatively slow and gradual," he said.

Dale noted that this is in part because the falls off in employment haven't been so great, so there's more slack within firms to use up before they need to go and employ additional workers.

The British economy has turned a corner but households and businesses face a long road to recovery, Bank of England Chief Economist Spencer Dale said in an interview published on Monday. (Market News Provided by RTTNews)
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Euro Turns Higher Against Dollar As Stocks Climb

The euro recovered its overnight losses against the dollar as higher stocks in the U.S. and Europe boosted risk appeal. The common currency saw little change against the yen and pound.

Traders mulled over data showing Italy's consumer confidence indicator rose to its highest level since December 2006 in September.

The euro saw moderate strength against the dollar, approaching 1.4670 in mid-day trading after falling to a 13-day low of 1.4572 overnight. Last week, the European currency hit a yearly high of 1.4822.

There was no major economic news due on Monday from the U.S., leaving traders to look ahead to key jobs day a later this week.

The euro was little-changed against the pound, moving near 0.9010. The 16-member currency hit a five-month high of 0.9300 last week before drifting lower.

The British economy has turned a corner but households and businesses face a long road to recovery, Bank of England Chief Economist Spencer Dale said in an interview published on Monday.

The euro was slightly higher against the yen, moving near 131.00. The European currency hit a two-month low of 129.78 yesterday.

In economic news in the Eurozone, the ISAE consumer sentiment indicator for Italy climbed to 113.6 in September from 111.8 recorded in August, while economists were expecting a reading of 112.2.

(Market News Provided by RTTNews)
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Greenback Steadies Near 13-Year Low Versus Yen

The dollar held its ground versus its major counterparts on Monday, recovering from an 8-month low versus the yen. While there were little first-tier economic data from the US to consider, traders positioned themselves ahead of this week's pivotal monthly jobs report.

It has been a brutal few months for the dollar versus most majors. While higher-yielding currencies like the euro have been supported by rising stocks and risk appetite, those looking for a safe haven have preferred the yen to the dollar due to concerns about the long-term impact of massive government spending measures.

On Monday, the dollar found support against the yen after plunging toward a 13-year low. The dollar fell as far as 88.21, its lowest level since January, but snapped back to 89.70 by mid-day. A move below 87.08 would take the dollar to its lowest since 1995.

Meanwhile, the dollar firmed up a bit versus the euro, staying near 1.4600. With the advance, the buck pulled away from last week's yearly low of 1.4866.

Against the slumping sterling, the dollar remained within a cent of a 4-month high of 1.5769.

UK faces a greater threat from inflation than any other developed country, the Financial Times said in a report on Monday citing market rates. The report noted that the Bank of England's GBP 175 billion purchase of government bonds, among others, is likely to drive up prices in the long term, higher than in the U.S, continental Europe, or Japan.

The San Francisco Federal Reserve released an economic letter Monday, saying that creating an early-warning system that would predict the timing of potential world financial crises would be a daunting task because of the different factors that contribute to such problems in different countries.

"If the causes of the crises differ across countries, there is little hope of finding a common statistical model to predict them," wrote San Francisco Fed researchers Andrew Rose and Mark Spiegel.

On Tuesday, the S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 AM. Economists expect a 14.20% year-over-year decline in the 20-city composite house price index for July.

(Market News Provided by RTTNews)
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SF Fed: Creating An Early Warning System For Crises Could Be Difficult

The San Francisco Federal Reserve released an economic letter Monday, saying that creating an early-warning system that would predict the timing of potential world financial crises would be a daunting task because of the different factors that contribute to such problems in different countries.

"If the causes of the crises differ across countries, there is little hope of finding a common statistical model to predict them," wrote San Francisco Fed researchers Andrew Rose and Mark Spiegel.

The letter noted that economists have not previously been successful at predicting the timing of financial crises, even though they have made improvements in predicting the severity of such crises across countries.

Rose and Spiegel also wrote that measurable pre-existing conditions on the relative severity of the current financial crisis differed among various world countries, increasing the difficulty of being able to create an effective early-warning system.

"Almost none of our posited variables [GDP growth, percentage changes in stock markets] are statistically significant determinants of crisis severity," they wrote. "While we can model the incidence of the crisis reasonably well, we are unable to link the severity of the crisis across countries to its causes."

A letter written earlier this month by San Francisco researcher Bharat Trehan suggested that there were economic indicators based on asset market developments [credit gaps, asset prices] that could provide advance warnings of "potentially dangerous financial imbalances."

Rose and Spiegel, however, also gave an alternative explanation for the difficulty of being able to create an effective early-warning system; they said that the 2008 financial crisis could have been the result of a "global shock," meaning that the crisis varied across countries varied in a way that was unrelated to country-specific "regulatory, financial and macroeconomic 'fundamentals.'

"The same [difficulty in finding a common statistical model] holds in cases of common or contagious shocks if a country's ability to withstand it is unrelated to fundamentals," they wrote.

The San Francisco Federal Reserve released an economic letter Monday, saying that creating an early-warning system that would predict the timing of potential world financial crises would be a daunting task because of the different factors that contribute to such problems in different countries. "If the causes of the crises differ across countries, there is little hope of finding a common statistical model to predict them," wrote San Francisco Fed researchers Andrew Rose and Mark Spiegel. (Market News Provided by RTTNews)
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UK To Extend Car Scrappage Scheme: Reports

The UK business secretary Peter Mandelson is set to announce the government's decision to extend the car scrappage scheme, British media reports said on Monday.

The BBC and Sky News reported that Mandelson is expected to make the announcement in his Labour Party conference speech. Carmakers have been calling for an extension of the scheme to support sales and save jobs.

The existing British car scrappage scheme offers an incentive of GBP 2,000 to motorists who buy a new car, scrapping their old vehicles, which are used for more than ten years. The scheme that was introduced in May 2009 is set to last until the end of February 2010, or until government funding of GBP 300 billion runs out. The funding is available to scrap up to 300,000 vehicles.

The Sky News reported that the government is set to announce that an extra 100,000 will now be eligible. Further, Mandelson is also expected to say that vans need only be eight years old before they can be traded in.

In a recent letter, various industry associations led by engineers' group EEF urged the Chancellor to extend the car scrappage scheme or run the risk of undermining any nascent recovery and sending UK manufacturing into a double dip recession. The trade associations pointed out that the UK scheme, together with those in other EU countries, has been successful in stemming the decline in production in a key industrial sector, whilst helping to retain significant numbers of skilled employees directly and in key supply chains.

"It is far from certain that consumer demand for motor vehicles can be sustained in the near future at these levels without government and industry providing incentives to replace older vehicles," the EEF said in the letter dated September 27. "As such, there are clear risks that the recent upward trend will go into reverse once the current scrappage scheme expires."

The scrappage incentive scheme has had a positive impact on car production with one in three cars built in the UK last month for the home market and total volumes starting to stabilise, the Society of Motor Manufacturers and Traders chief executive, Paul Everit said on September 25. However, underlying demand remains weak and the recovery is still extremely fragile, he said. "A continuation of the scrappage incentive scheme through to the original close date of 28 February 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount."

France was the first country in Europe to implement the scrappage scheme in December last year. On September 2, Germany ended its EUR 5 billion scrappage scheme. The U.S. closed its $3 billion "cash for clunkers" scheme late August.

(Market News Provided by RTTNews)
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UK Chancellor Pledges To Introduce Laws To Curb Bank Bonuses

Monday, British Chancellor of the Exchequer Alistair Darling said the government will introduce legislation to end bankers' reckless culture that puts short-term profits over long-term success, in the next few weeks.

Speaking at the Labour Party annual conference in Brighton, he said, "Let me assure the country, and warn the banks, that there will be no return to the business as usual for them. So in the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success."

"It will mean an end to automatic bank bonuses year after year. It will mean an end to immediate payouts for top management. Any bonuses will have to be paid over years, so they can be clawed-back if not warranted by long-term performance," the Chancellor said. "We won't allow greed and recklessness to ever again endanger the whole global economy and the lives of millions of people," he added.

Regulation on bankers' pay is associated with the decisions taken in last week's G-20 meeting meeting held in Pittsburgh. At the meeting, Darling met French Finance Minister Christine Lagarde, who is also expected to announce bank regulations in her country.

The Chancellor is set to hold a secret meeting with the chairmen of the remuneration committees of UK's four big banks this week, the Sunday Times newspaper said. According to the schedule, Darling will speak to Richard Broadbent, chairman of Barclays Plc's remuneration committee, Colin Buchan of Royal Bank of Scotland Group Plc, Mark Moody-Stuart of HSBC Holdings Plc and Wolfgang Berndt of Lloyds Banking Group Plc.

Further, the newspaper said the Financial Services Secretary Paul Myners will meet representatives of foreign-owned banks in London. This will include the world's biggest investment banks.

Sunday, British Prime Minister Gordon Brown said on BBC's Andrew Marr Show that he will "ban the old bonus system" and force banks to act in a more responsible manner. He criticized banks for not understanding the damage they had done to the economy and noted that his government would be introducing tough measures to bring them into line. He added that the measures will "represent the toughest action of any country in the world."

The Chancellor also stated that the government will introduce a new Fiscal Responsibility Act to keep public borrowing under control. "We must keep the public finances on a sustainable path. The long-term health of our economy depends on it," he said. But, it should be done rationally, in a way that is right for the economy, not driven by dogma.

Moreover, Darling said he is proud of the way his government addressed the crisis in the past twelve months and the difference made in the country over the past twelve years. He criticized Tories' approach saying it as wrong, naïve, and down right dangerous. "It will damage our economy now and in the future."

As a result of the global intervention to avert the crisis, Germany, France and Japan started showing signs of growth and many independent forecasters now believe that the UK too is coming out of recession. But, Darling said, "I think it is too early to say so with total confidence." He chose to stick with his budget prediction that, as long as the government continues to support the economy, recovery will be underway in the UK by the turn of the year.

Monday, British Chancellor of the Exchequer Alistair Darling said the government will introduce legislation to end bankers' reckless culture that puts short-term profits over long-term success, in the next few weeks. (Market News Provided by RTTNews)
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Taiwan Leading Index Rises Further In August

Taiwan leading index increased to a seasonally adjusted 100 in August from 98.2 in July, the Council for Economic Planning and Development or CEPD said on Monday.

The annualized six month rate of change climbed by 4.4 points to 18.1%.

The increase in leading index was mainly due to the positive cyclical movements in average monthly overtime in industry and services, the index of export orders, producer's inventory, real monetary aggregates M1B, building permits, and stock price index, the CEPD said.

In August, the coincident index increased to 92.5 from 92 in July. The trend adjusted index rose by 1% to 97.3.

Meanwhile, monitoring index stood at 18 in August, unchanged from the previous month.

Taiwan leading index increased to a seasonally adjusted 100 in August from 98.2 in July, the Council for Economic Planning and Development or CEPD said on Monday. (Market News Provided by RTTNews)
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Finnish Sept. Manufacturing Confidence Shows Further Improvement

Finland's manufacturing confidence improved in September, posting a reading of minus 17 compared to a revised reading of minus 25 in August, the Confederation of Finnish Industries EK said Monday.

The recovery was mainly due to a decline in stocks. At the same time, order books remained below average and production volume is expected to decrease over the next few months.

The confidence indicator in the construction sector stood at minus 45, better than the minus 54 in August, but still lower than the long term average of minus 5. Order books remained below average levels, and personnel are expected to decrease in future months.

In the service sector, the confidence indicator moved up to minus 22 from a revised minus 27 in August, and in the retail trade sector, the confidence indicator was minus 14, up one point from the preceding month.

(Market News Provided by RTTNews)
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UK Rental Property Market Stabilizing: ARLA

The rental property market in the UK is showing signs of stabilization, with the property oversupply decreasing, a report by the Association of Residential Lettings Agents or ARLA said Monday.

The report said about 83% of the ARLA members signed up for 10 or more tenancies during the September quarter compared to only 79% in the preceding three months. Each agent had an average of 36 new tenancies compared to 32.6 previously.

About 33% of agents thought supply and demand conditions were back in balance in the September quarter compared to 19% in the second quarter. The survey also indicated that the shift suggest that confidence was rising among prospective tenants, with people feeling unsecured about setting up homes 12 months back feeling more secure now. Further, the average period a property was empty for between tenants came down to 4 weeks in August from 4.3 weeks in May.

(Market News Provided by RTTNews)
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Malta Q2 Current Account Surplus Widens

Monday, Malta's National Statistics Office announced that the current account surplus stood at EUR 212.7 million in the second quarter, up from EUR 156 million surplus in the previous quarter. A year earlier, the current account was a deficit of EUR 147.03 million.

The capital account deficit amounted to EUR 0.43 million in the second quarter, in contrast to the EUR 8.1 million surplus a year ago. At the same time, the financial account deficit was EUR 655.47 million, down from EUR 250.44 million surplus last year.

Meanwhile, the capital and financial account deficit stood at EUR 655.9 million in the second quarter, down from EUR 258.55 million surplus a year ago.

Monday, Malta's National Statistics Office announced that the current account surplus stood at EUR 212.7 million in the second quarter, up from EUR 156 million surplus in the previous quarter. A year earlier, the current account was a deficit of EUR 147.03 million. (Market News Provided by RTTNews)
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European Economics Preview: Hungarian Central Bank Decision Due

Monday, Hungary's central bank is set to announce its monetary policy decision.

Finnish statistical office would be releasing results of the consumer confidence survey for the month of September at 2.00 am ET.

Labor market data for January to August is due from Hungary's statistical office at 3.00 am ET.

At 3.30 am ET, Italian economic think tank ISAE is likely to publish consumer confidence survey. The consumer indicator is forecast to rise to 112.2 in September from 111.8 in August.

Iceland's consumer price index data is due at 5.00am ET.

Thereafter, Hungary's central bank is expected to announce its monetary policy decision at 8.00 am ET. Economists expect the central bank to cut the rate to 7.5% from 8%.

(Market News Provided by RTTNews)
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CBI: Balancing Public Finances Must Be Top Priority For Next Govt

Monday, the Confederation of British Industry set out a new agenda for the next government in the UK, stressing the need to make an effort to get public finances balanced by 2015 with a "clear and credible plan".

The business lobby released a 12-point agenda spelling out the priorities for a new administration to put the economy on a path to sustainable growth, with suggestions ranging from tackling youth unemployment to developing a strong banking system.

"The major political parties really need to focus on the public finances, even though this requires tough decisions," CBI Deputy Director-General John Cridland said.

Cridland also emphasised the need for a newly elected government to act swiftly, noting that swift action will not only put "the right priorities in place quickly, but also help win confidence."

The next general elections in the U.K. are set to be held by June 2010.

(Market News Provided by RTTNews)
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Macau June-August Unemployment Rate Edges Up

Macau's unemployment rate stood at 3.8% in the June to August period, up 0.1 percentage points from the May to July period, the Statistics and Census Service said Monday.

Compared to the previous year, the unemployment rate increased by 0.8 percentage points. There were 12,600 unemployed persons during the three-month period to August, rising by 400 from the previous period. Fresh labor force entrants looking for their first job accounted for 13.8% of the total unemployed.

The underemployment rate remained unchanged at 1.9%, but climbed 0.3 percentage points from the previous year.

In the June to August period, there were 331,400 persons in the labor force, of which 318,800 were employed. The labor force participation rate fell by 0.2 percentage points compared to the May to July period to 72.6%, and slipped 0.6 percentage points from the preceding year.

Macau's unemployment rate stood at 3.8% in the June to August period, up 0.1 percentage points from the May to July period, the Statistics and Census Service said Monday. (Market News Provided by RTTNews)
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Hungary's Central Bank Lowers Key Policy Rate As Expected

Hungarian central bank lowered its key policy rate by 50 basis points on Monday. The rate cut came in line with economists' expectations.

The Monitory Council of Magyar Nemzeti Bank reduced its base rate to 7.5% from 8%, with effect from September 29. In August, the central bank had slashed their interest rate by 50 basis points from 8.5%.

Meanwhile, the new overnight central bank deposit rate is 7% and overnight collateralised loan rate is 8%.

Hungary's statistical office had revised Q2 GDP data on September 8. The gross domestic product or GDP decreased a seasonally adjusted 2% sequentially in the second quarter, compared to the 2.6% decline in the previous quarter.

Inflation rate continued to ease in August. The consumer price index or CPI rose 5% year-over-year in August, slower than the 5.1% increase in the preceding month.

But, the jobless rate increased to 9.9% in the June to August period from 9.7% in the May to July period.

Hungarian central bank lowered its key policy rate by 50 basis points on Monday. The rate cut came in line with economists' expectations. (Market News Provided by RTTNews)
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Dollar Nearing 13-Year Low Versus Surging Yen

The greenback was mixed versus other majors Monday morning, having plunged to an 8-month low against the surging yen on option-led dollar selling.

Traders flocked to the yen over the past few days after Japanese officials signaled they would not step in to devalue the soaring yen at current levels.

There are no important economic reports scheduled to be released on Monday, leaving traders to pay close attention to movements in equity markets.

The dollar dropped to 88.21 yen late Sunday night, hitting its lowest mark since January. A move below 87.08 would take the dollar to its lowest level since 1995. The yen has become the currency of choice among those looking for a safe haven.

Against the euro, the dollar hit a 2-week high of 1.4556 overnight, but fell from there to 1.4660.

Meanwhile, the dollar hit a 4-month high of 1.5769 against the slumping sterling, then eased a bit to 1.5870. While slumping to yearly lows versus a number of other currencies, the dollar has gained ground against the sterling amid deep concerns about the UK economy.

House prices in the UK rose for the second consecutive month in September and to its highest level in two years, the property information company Hometrack said Monday.

The dollar rose to a 3-week high of C$1.1000 versus the loonie, staying away from a yearly low of C$1.0590 set earlier this month.

On Tuesday, the S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 AM. Economists expect a 14.20% year-over-year decline in the 20-city composite house price index for July.

(Market News Provided by RTTNews)
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Zoellick: U.S. Dollar's Reserve Currency Status Not Certain

The U.S. would be mistaken to take for granted the dollar's place as the world's predominant reserve currency, World Bank Group President Robert Zoellick warned. He noted that there will be other options to the dollar in the future. The World Bank chief's warning comes as China, Russia, Brazil and India repeat calls for a replacement to the dollar as the global reserve currency.

In excerpts from a speech to be delivered on Monday at the Paul H. Nitze School of Advanced International Studies in Washington, DC, Zoellick said a new level of international cooperation and coordination will be required to form a new framework for strong, sustainable and balanced growth. He applauded the decision taken at last week's G-20 Summit to initiate a new peer review system.

"As agreed in Pittsburgh last week, the G-20 should become the premier forum for international economic cooperation among the advanced industrialized countries and rising powers," he said.

With regard to the current economic crisis, Zoellick said central banks failed to address risks building in the new economy. "They seemingly mastered product price inflation in the 1980s, but most decided that asset price bubbles were difficult to identify and to restrain with monetary policy."

According to him, central banks argued that damage to the "real economy" of jobs, production, savings, and consumption could be contained once bubbles burst, through aggressive easing of interest rates. But, they turned out to be wrong.

Moreover, he said in the U.S., it will be difficult to vest the independent and powerful technocrats at the Federal Reserve with more authority. "My reading of recent crisis management is that the Treasury Department needed greater authority to pull together a bevy of different regulators," he said.

The U.S. would be mistaken to take for granted the dollar's place as the world's predominant reserve currency, World Bank Group President Robert Zoellick warned. He noted that there will be other options to the dollar in the future. The World Bank chief's warning comes as China, Russia, Brazil and India repeat calls for a replacement to the dollar as the global reserve currency. (Market News Provided by RTTNews)
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Finland Consumer Confidence Rises In September

Monday, the Statistics Finland announced that the consumer confidence indicator stood at 11.7 in September, up from 8.2 in August. The confidence indicator was 8.1 a year ago.

In September, among the four components of the consumer confidence, the indicator measuring own economic situation in 12 months time increased to 6.6 from 6.2 in August. Consumers' assessments on household's saving possibilities in the next twelve months rose to 47.8 from 47.3 in August, while the indicator measuring on Finland's economic situation in the 12 months time, climbed to 19.5 from 10.8 in the previous month.

Finland's economy improved in September compared to the previous month, and views on the country's economic development were the brightest since 1997, the statistical office said.

Meanwhile, consumers' assessment on nation's unemployment situation in 12 months time, stood at minus 27 in September, up from minus 31.5 in August.

Monday, the Statistics Finland announced that the consumer confidence indicator stood at 11.7 in September, up from 8.2 in August. The confidence indicator was 8.1 a year ago. (Market News Provided by RTTNews)
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UK Sept House Prices Rise Most Since June 2007: Hometrack

House prices in the UK rose for the second consecutive month in September and to its highest level in two years, the property information company Hometrack said Monday.

The average asking price for a home in England and Wales rose 0.2% month-on-month in September, after a 0.1% growth in the preceding month, marking the fastest monthly growth since June 2007. The average asking prices stood at GBP 156,100 in September.

Annually, house prices dropped 5.6% in September, versus a 6.7% fall in August. The latest decline is the smallest in a year. Hometrack said a lack of housing for sale was providing support for prices, while the talk of a general improvement in property and equities was leading to increased market confidence.

Among the regions, London and the South East showed the maximum rise in prices. House prices climbed 0.4% in London and were up 0.3% in the South East. Hometrack attributed the rise in prices to a shortage of quality homes on sale. Prices rose in 15% of the postcodes in September, but they remained unchanged in 84% of the regions.

On September 21, property website Rightmove said house prices rose 0.6% on a monthly basis in September, reflecting rising confidence and a decrease in the stock of properties. This came after a 2.2% fall in August.

The Building Societies Association revealed earlier last month that cautious optimism was prevailing in the housing market, with lesser people saying access to mortgage was a barrier to property and more number saying it was a good time to buy. At the same time, a report by the Ernst & Young Item Club warned that the recent stabilizations in the market was a false dawn, with prices rising mainly due to lack of properties available for sale.

A report British Bankers' Association showed last month that mortgage approvals for house purchase by UK banks fell for the first time in eight months in August, to 38,095 from 38,186 granted in the previous month. Meanwhile, house prices details for September from Nationwide are due later this week. Economists expect the Nationwide survey to show a 0.9% monthly rise in house prices, but a 0.1% decline on a yearly basis.

Economists and policymakers are of the view that the UK will have a slow recovery, with many risks in the process. The Bank of England's Kate Barker warned last month that there was a risk that the pace of UK recovery could falter, with output likely to remain uneven in the coming quarters. The BoE's Spencer Dale voiced a similar concern when he said the economic recovery could be slow and protracted, as unemployment continues to rise and firms face sluggish demand. Moreover, the Confederation of the British Industries said the constraints on demands could make recovery fragile next year.

In its latest forecast, the CBI said the UK economy could grow 0.9% next year, after contracting 4.3% this year.

House prices in the UK rose for the second consecutive month in September and to its highest level in two years, the property information company Hometrack said Monday. (Market News Provided by RTTNews)
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RBA Governor: Australia's Medium-Term Prospects Are Good; May Raise Rates

Australia's medium term prospects remain good, with various policy measures being effective in supporting domestic demand, Reserve Bank of Australia Governor Glenn Stevens said Monday. He also noted that the central bank may raise interest rates as the economic recovery continues.

In his opening statement to the Senate Economics References Committee, Stevens said the recession in Australia was mild in comparison to those seen in the 1970s, and in the early 1980s and 1990s, and was also better than outcomes seen in other countries. The economy contracted 0.7% in the final quarter of 2008 and managed to avoid a recession by growing 0.4% in the first quarter of this year. In the second quarter, the economy grew 0.6%.

The governor said various economic indicators have shown improvements in recent months, like business and household confidence, which showed substantial pick up from their low points. Moreover, house prices were rising, and the share market was also showing increases. "People are realizing that, though things have been tough, the worst has not occurred and the future is looking brighter", he said.

On the external front too, the Australian economy was doing well, with terms of trade remaining high by historical standards and exports growth supported by demand for resources. Further, the country's other Asian trading partners have also been performing well, he said.

Stevens said in recent months the economic growth forecasts have been revised up to reflect the effectiveness of the various policy measures in supporting demand. He said the peak effect of the various stimulus measures have probably passed now, and the extent of the support would be decreased further over the next year, if private demand shows an increase.

"In the case of monetary policy, the Bank has already signaled that interest rates can be expected, at some point, to move off their current unusually low levels, as recovery proceeds," Stevens said. The RBA lowered its key interest rate by a record 4.25 percentage points between September and April to bring the rate to its current level of 3%. The central bank chief said he is extremely pleased and fortunate to not to cut official interest rates to zero per cent.

At present the recovery is broadly in line with the central bank's expectations, Stevens said and noted that in this case the fiscal and monetary policy were acting broadly consistently, as they did when they moved into expansionary mode when the economy was slowing. According to him, a certain amount of policy discipline would be required now.

On the fiscal side, the governor said restraint was needed to bring back budget to balance and eventually a surplus, as required by the medium term fiscal commitment. On September 18, Australia's treasurer Wayne Swan said the country's budget balance would return to a surplus by 2016.

The inflation target band would help to guide the interest rates, Stevens said. "These will be timely and ahead of a build-up of imbalances that would occur if interest rates were kept low for too long", he added.

Australia's medium term prospects remain good, with various policy measures being effective in supporting domestic demand, Reserve Bank of Australia Governor Glenn Stevens said Monday. He also noted that the central bank may raise interest rates as the economic recovery continues. (Market News Provided by RTTNews)
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New Zealand Mortgagee Sales At All Time High

Mortgagee sales in New Zealand hit a record high in July, signaling that the economic downturn is still hurting property owners, a report released by a property and land information firm Terralink revealed Monday.

Monthly mortgagee sales exceeded 300 for the first time since records began 15 years ago, amounting to a total of 321 sales in July, in contrast to a total of 109 sales recorded in the previous year. The number is ten times greater than a mere 33 sales recorded in July 2007. Mortgagee sales account for 5% of all property sales in New Zealand, up from just 0.003% two years ago, the agency said.

Though recent reports show the New Zealand economy is in recovery, the rising number of mortgagee sales show individual New Zealanders are still being hit by the effects of the recession, Terralink Managing Director Mike Donald said. He noted that months of financial stress and the affects of job losses resulted in some people failing to meet their mortgage payments and one in 20 of all property sales are now mortgagee sales.

In terms of territories, Auckland recorded a total of 144 mortgagee sales, up from 53 in the previous year, while sales in Wellington and Canterbury totaled 26 and 24, respectively. Year-to-date, the total mortgagee sales stood at 1,809, have already overtaken the 1,304 sales for the entire year in 2008, the firm said. Although latest figures show that export volumes and much of the industry is up, many New Zealanders will still be feeling the recession for some time yet, Donald said.

Mortgagee sales in New Zealand hit a record high in July, signaling that the economic downturn is still hurting property owners, a report released by a property and land information firm Terralink revealed Monday. (Market News Provided by RTTNews)
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A Rough Ride To Recovery?

The just concluded week was a reminder that a recovery cannot be taken for granted and it may not be a cakewalk through a return to growth. There are likely to be hiccups, given the fact that despite all stimulus measures, the fundamental problems faced by the economy still remain. With the markets having run up sharply in reaction to recent positive data points, they are likely to be much more sensitive to downside economic surprises. The jitteriness over growth was clearly evident in the steep decline in commodity prices in the past week.

Even as the Fed announced a status quo stance in terms of interest rates, existing and new home sales came in below expectations.

After its two-day meeting, the Federal Open Market Committee announced last week that it would maintain the target rate for the federal funds rate at 0 to 0.25%, while it continued to believe that economic conditions warrant exceptionally low levels of the federal funds rate for an extended period.

In line with expectations, the FOMC gave an upbeat assessment about growth by saying that economic activity is picking up following its severe downturn a change from its previous meeting's assessment that economic activity is leveling out. The committee appended a statement pertaining to the housing sector, stating that activity in the housing sector has increased. On businesses, the central bank noted that pace of cut backs on fixed investment and staffing by businesses is slowing down.

The FOMC also made a slight change to its statement regarding its growth expectations, with the committee suggesting that policy actions, fiscal and monetary stimulus and market forces will support strengthening of economic growth and a gradual return to high level of resource utilization as opposed to its earlier view of these actions facilitating a gradual resumption of sustainable economic growth.

On inflation, the FOMC added the statement that longer-term inflation expectations are stable, while retaining its view that inflation will remain subdued for some time.

Discussing its quantitative easing measures, the Committee said it would gradually slow the pace of the purchases of agency mortgage-backed securities and agency debt in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010, which is in contrast to an earlier timeframe estimate of the end of the year. The Fed confirmed that its $300 billion worth of Treasury securities would be completed by the end of October 2009.

In another positive data, the Conference Board said its leading indicators index rose for the fifth straight month in August. The index rose 0.6%, a tad below the expected growth of 0.7%. However, the previous month's growth was revised upwards by three tenths of a percentage points to 0.9%. Interest rate spread, stock prices and the pace of deliveries were the strongest positive contributors to the index, while the M2 money supply served as the biggest drag. While the coincident economic index was unchanged in August, the lagging economic index eased 0.1%.

Initial jobless claims fell to 530,000 in the week ended September 19th from an upwardly revised reading of 551,000 in the previous week. Continuing claims also declined for the week ended September 12th. However, noting that the extended benefits rose by 3,000 and emergency unemployment compensation advanced by 82,000 to a fresh record, Peter Boockvar from Miller Tabak said that the trend showing a slowdown in the pace of firing and reluctance on the part of the businesses to hire continues.

The housing reports were slightly disappointing. The National Association of Realtors reported that existing home sales fell 2.7% month-over-month to a seasonally adjusted annual rate of 5.1 million units in August compared to 5.24 million in July. However, annually, existing home sales were 3.4% higher. About 30% of the buyers were first time buyers and 31% of the sales were distressed.

The median sales price of an existing home was at $177,700, down 12.5% year-over-year and 2.1% lower than in the previous month. Inventories measured in terms of months supply fell to 8.5 in August from 9.3 in the previous month, with the metric now at its lowest levels since April 2007.

At the same time, new home sales rose to 429,000 in August from a revised rate of 426,000 in July. The months supply of new homes declined to 7.3 in August from 7.6 in the previous month, with the level representing the lowest inventory to sales ratio since January 2007. New home inventories also slid to 262,000 from 270,000 in July.

The consumer reading released last week was upbeat, as the final reading of the University of Michigan's consumer sentiment index for rose to 73.5 in September from the mid-month reading of 70.2 and also higher than the August reading of 65.7. The current conditions index as well as the outlook index increased from the month-ago levels.

The non-farm payroll employment report for September is likely to headline the economic data of the unfolding week. Traders may also closely watch the speeches of Fed officials, the S&P Case-Shiller home price index for July, the initial jobless claims report for the latest reporting week, the Conference Board's consumer confidence index for September, the results of the ISM's national survey and the ISM-Chicago's regional survey.

Apart from these, some degree of importance may also be attached to the Bureau of Economic Analysis' final second quarter GDP report and personal income and outlays report, factory goods orders report for July and the weekly crude oil inventory report.

The pace of decline in non-farm payroll employment is likely to moderate further in September, although the rate of decline in job losses continues to be painfully slow. Jobless claims have not improved adequately enough to support rebound in job market conditions. The unemployment rate is likely to edge up further towards the 10% level. According to Meny Grauman of CIBC World Markets, it would take longer time for the job market to find a bottom.

The continued improvement in the manufacturing sector is likely to be reflected by the ISM's manufacturing survey. The manufacturing index is expected to hold above the 50 cut-off mark, aided by inventory replenishments.

Incentive-induced auto sales gain is likely to have bolstered personal spending August, while personal income is likely to reflect the lingering weakness in the job market and the reawakening of retail demand in some pockets. That said, sustainability of consumer demand is in question, as income stagnates. The savings rate may have dropped further, as people used up savings to buy new cars in August. However, lower new vehicle prices are likely to have restrained inflation, with the core PCE deflator expected to show a small 0.1% gain, rendering the annual increase to 1.3%.

The consumer confidence index of the Conference Board is likely to show an improvement, although it may remain way off its long-run norm of 95. The employment measure of the survey may be closely watched to gauge the jobless rate for September.

Monday

There are no important economic reports scheduled to be released on Monday.

Tuesday

The S&P/Case-Shiller home price index, which tracks monthly changes in the value of residential real estate in 20 metropolitan regions across the U.S., is scheduled to be released at 9 AM. Economists expect a 14.20% year-over-year decline in the 20-city composite house price index for July.

Dallas Federal Reserve Bank President Richard Fisher is scheduled to give a status report on the economy to the Texas Christian University Business Network of Dallas at 9:50 AM ET.

The Conference Board is scheduled to release its consumer confidence report for September at about 10 am ET. The report, which is based on a survey of 5,000 U.S. households, is expected to show that the consumer confidence index rose to 57 in September.

In August, the consumer confidence index rose to 54.1 from 47.4 in July. Economists had expected a more modest increase to 47.9. The bulk of the improvement was in the expectations index, which jumped 10 points, while the present situations index rose merely 1.6 points.

Philadelphia Federal Reserve Bank President Charles Plosser is due to speak on the Fed's role in the economy at the Lehigh Valley Economic Outlook in Easton, Pennsylvania at 7 PM ET.

Wednesday

The ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 AM ET. The report is usually released two days prior to the Labor Department's employment report. The private sector is expected to have lost 200,000 jobs for September.

The Bureau of Economic Analysis is due to release its final second quarter GDP report at 8:30 AM ET. The report is likely to show that the U.S. economy contracted at a 1.2% rate in the quarter.

Preliminary estimates showed that the U.S. economy shrank at a 1% rate in the second quarter, unrevised from its previous estimate, but smaller than the 6.4% contraction in the first quarter. Economists had expected a sharper 1.5% GDP decline for the second quarter.

The decline in second quarter GDP reflected negative contributions from non-residential fixed investment, personal consumption expenditures, residential fixed investment, private inventory investment and exports. The weakness was offset to some extent by positive contributions from federal government spending and in state and local government spending. Imports, which are a deduction from GDP calculations, declined.

The results of the Institute of Supply Management-Chicago's business survey for September are scheduled to be released at 9:45 AM ET. Economists expect the business barometer index based on the survey to come in at 52.

The business barometer index rose to the break-even level of 50 in August from 43.4 in July. Economists had expected a more modest improvement to 48. The production index climbed about 10 points to 52.9 and the new orders index rose 4.5 points to 52.5, while the index of backlog orders surged up to 45.8 in August from 32.1 in July. The employment index was in contraction zone for the twenty-first consecutive months, although it improved to 38.7 from 35.3. The prices paid index also rose, climbing 15 points to 50.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET.

The EIA's weekly oil inventory report for the week ended September 18th showed that crude oil stockpiles rose by 2.8 million barrels. Inventories were above the upper boundary of the average range for this time of the year.

Gasoline inventories increased by 5.4 million barrels, remaining above the upper limit of the average range. Meanwhile, distillate fuel stockpiles also rose, increasing by 3 million barrels, and were above the upper boundary of the average range. Refinery capacity utilization averaged 86.7% over the four weeks ended September 18th compared to 86.3% in the previous week and 79.5% in the year-ago period.

Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak on the U.S. economic outlook on the University of South Alabama in Mobile at 10:30 AM ET.

Thursday

Individual automakers will report their sales, comprising unit sales of domestically produced cars and light duty trucks.

The Bureau of Economic Analysis is due to release its personal income & outlays report for August. Economists estimate the report, which is due out at 8:30 AM ET, to show that personal income rose 0.1% and the personal spending increased 1.1% in the month.

Personal income remained unchanged in July compared to the previous month following an upwardly revised 1.1% drop in June. Economists estimated a 0.1% increase in personal income. At the same time, personal spending climbed 0.2%, in line with economists' estimate.

Real personal income, excluding current transfer receipts remained unchanged, while real disposable personal income edged down 0.1%. The PCEI, excluding food and energy, rose 1.4% from a year-ago in July, slower than the 1.5% increase in the previous month.

The Labor Department is due to release its customary weekly jobless claims report for the week ended September 26th at 8:30 AM ET. Economists estimate claims to have fallen to 535,000 in the week.

Initial jobless claims unexpectedly decreased in the week ended September 19th compared to the previous week. Jobless claims fell to 530,000 from the previous week's revised figure of 551,000. Economists had been expecting jobless claims to edge up to 550,000 from the 545,000 originally reported for the previous week.

The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 AM ET. Economists expect the index to show a reading of 54 for September.

The manufacturing index rose to 52.9 in August from 48.9 in July, with the reading showing an expansion for the first time in a year and a half. Economists had estimated a reading of 50.5. . Eleven of the eighteen manufacturing industries showed expansion. The new orders index climbed to 64.9, its highest level since the end of 2004, and the production index rose 4 points to 61.9. Jumping 10 points to 65, the prices paid index moved to its highest reading in a year.

The Commerce Department's construction spending report to be released at 10 AM ET is expected to show a 0.2% decline in spending for August.

In July, construction spending declined 0.2% month-over-month, in line with expectations. Spending on single-family home building climbed 7%, marking the sharpest advance since 1983, while multi-family construction spending declined 3.3%. Private construction spending edged up 0.1% compared to a 0.7% drop in public construction spending.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. The index is expected to rise 1% in August.

Pending home sales index rose 3.2% in July compared to the previous month, marking the sixth straight month of growth. The index, considered a leading indicator for existing home sales, should bode well for the measure.

Lockhart will also speak on the U.S. economic outlook at Macon State College in Macon, Georgia at 5:30 PM ET. Around the same time, Cleveland Federal Reserve Bank President Sandra Pianalto is due to speak to Market News International seminar in New York.

Friday

The Labor Department is scheduled to release its monthly non-farm payroll report at 8:30 AM. The report sheds light on the number of paid employees working part time or full time in the nation's business and government establishments, the number of hours worked in the non-farm sector, the basic hourly rate for major industries and the number of unemployed as a percentage of the labor force. Economists estimate that the U.S. economy lost 180,000 jobs in September and look for an unemployment rate of 9.8%.

Non-farm payroll employment fell by 216,000 in August following a revised decline of 276,000 in July. Economists had expected a decrease of about 230,000 jobs compared to the decrease of 247,000 originally reported for the previous month.

The continued decrease in jobs reflected declines in employment in both the good-producing and service-providing sectors. While goods-producing sectors lost 136,000 jobs, service-providing sectors lost 80,000 jobs, a slower pace of decline than the 154,000 rate in the previous month. At the same time, the Labor Department said that the unemployment rate edged up to 9.7% from 9.4% in July. The rate came in higher than the 9.6% rate expected by economists.

The Commerce Department is due to release its report on factory goods orders for August at 10 AM ET. Orders for manufactured goods are likely to have increased 0.5% in the month.

The durable goods orders, making up the bulk of factory goods orders, fell 2.4% month-over-month in August following a downwardly revised 4.8% growth in July. Excluding transportation orders, new orders were down slightly. Transportation orders declined 9.3%, dragged by notable weakness in orders for non-defense aircrafts and parts. Shipments of durable goods fell 1.4% and unfilled orders edged down 0.4%, while inventories at the end of the month were down 1.3%.

Shipments of non-defense capital goods, excluding aircrafts inched up 0.3%, while orders for this category of goods fell 1.9% following 0.3% growth in the previous month.

The just concluded week was a reminder that a recovery cannot be taken for granted and it may not be a cakewalk through a return to growth. There are likely to be hiccups, given the fact that despite all stimulus measures, the fundamental problems faced by the economy still remain. With the markets having run up sharply in reaction to recent positive data points, they are likely to be much more sensitive to downside economic surprises. (Market News Provided by RTTNews)
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