Please wait...

Reuters News

UPDATE 1-RBNZ's Wheeler says more rate cuts likely, NZ dlr needs to fall

July 29, 2015 - reuters.com

(Updates with quotes, market reaction) * RBNZ Gov reaffirms prospect of more rate cuts * NZ dollar needs to fall further, rallies after speech * RBNZ Gov. douses forecasts of large rate cuts By Gyles Beckford WELLINGTON, July 29 (Reuters) - New Zealand faces further rate cuts and needs a lower exchange rate to support its economy, the head of the central bank head said on Wednesday, sending the currency to a two week high. Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler said the economy was growing below its potential in the face of falling commodity prices, and low inflation. "Some further monetary policy easing is likely to be required to maintain New Zealand's economic growth around its potential, and return CPI inflation to its medium-term target level," Wheeler said in a speech to a business group. He said the economy was growing at around 2.5 percent a year, below its potential, but was being supported by high migration, strong employment, construction and services sectors. Wheeler said local forecasts of further large rate cuts "could only be consistent with the economy moving into recession". Last week the RBNZ cut its official cash rate to 3 percent because of a slowing economy and weak inflation and said further cuts was likely. ID:nL3N1030WA A further 25 basis point rate cut is expected in the Sept 10 monetary policy statement with another cut to 2.5 percent is expected by the end of the year. NZ/POLL "The key message is they want lower rates and exchange rate, but they don't want to be rushed," said Deutsche Bank chief economist Darren Gibbs. The New Zealand dollar NZD=D4 pushed to a two-week high of $0.6739 after the speech before easing back to around $0.6715. Wheeler said the kiwi dollar had fallen about 14 percent over the past three months but was still overpriced given current conditions. "Further exchange-rate depreciation is necessary given the weakness in export commodity prices and the projected deterioration in the country's net external liabilities over the next two years," he said, adding that likely rate rises by the U.S. Federal Reserve and Bank of England would pressure the currency. The RBNZ has been challenged by a near 40 percent fall in prices for key dairy exports so far this year, wiping billions from the economy, while business and consumer sentiment have sunk to three-year lows, while the economy slows. Inflation was 0.3 percent in the year to June 30, but Wheeler said the RBNZ saw a gradual return over the next nine to 12 months as an "appropriate" time frame to reach the midpoint of the RBNZ's 1-3 percent target range. (Reporting by Gyles Beckford; Editing by Andrew Hay) ((Gyles.Beckford@thomsonreuters.com; +64 4 802 7977 ; Reuters Messaging: gyles.beckford.reuters.com@reuters.net)) Keywords: NEWZEALAND RBNZ/WHEELER

UPDATE 5-Brazil investment grade rating is at risk, S&P warns

July 29, 2015 - reuters.com

(Adds planning minister comment, poll with market participants) By Walter Brandimarte SAO PAULO, July 28 (Reuters) - Standard & Poor's on Tuesday said Brazil could lose its coveted investment-grade rating in the coming year if fallout from a number of corruption investigations further stymies economic growth and implementation of austerity measures. The warning is a setback to Finance Minister Joaquim Levy's efforts to win back investor confidence in Latin America's largest economy, headed to a steep recession. S&P affirmed Brazil at BBB-minus, its lowest investment grade rating, and revised the outlook on that rating to negative from stable, signaling a downgrade is possible over 12 to 18 months. The Brazilian real BRL= slid 2 percent after S&P's announcement to 3.43 per dollar, the weakest in more than 12 years. It trimmed most of those losses to close at 3.37 after the ratings agency's analysts said the country could still head off a downgrade. ID:nE5N0V802E "We're assuming an even weaker fiscal story (in 2016), but we're also assuming that it will improve and that Brazil will avoid a rating downgrade," S&P analyst Lisa Schineller said on a conference call, citing the example of India. India, also rated at BBB-minus by S&P, last year avoided a downgrade to junk after Prime Minister Narenda Modi unveiled an ambitious reform agenda. Still, Schineller said there was significant risk that Congress may not approve the austerity policies. Investors said the threatened downgrade should be a wake-up call to the government. "This is the consequence of years of bad fiscal policies. They are finally taking their toll on Brazil," said Will Landers, who oversees $2.1 billion in Latin American equities at BlackRock Inc. "We need to see how the government deals with this decision." Although some Brazilian government officials had fretted about the country's ratings, few saw the S&P revision coming so soon. "This caught the team by surprise," a Finance Ministry official said. Asked about S&P's decision, Planning Minister Nelson Barbosa said the government is working to improve the economy and that those efforts will bear fruits. Levy himself considered the S&P warning an incentive for Congress to speed up the approval of austerity measures, a government source who heard the minister's remarks said. ID:nE4N0WY01I Some lawmakers seemed to agree. Senator Romero Juca, a leader with Brazil's largest party, the PMDB, said Congress "needs to act fast not to let the situation deteriorate even further." Yet most market participants now expect Brazil to lose its investment grade from S&P and at least one other rating agency by the end of 2016, a Reuters poll showed. ID:nL1N1082NY Levy has been trying to retain Brazil's investment grade rating through spending cuts and tax increases aimed at curbing fiscal deficits that ballooned during President Dilma Rousseff's first term. But his strategy has fallen short. Last week, the government slashed its budget savings target for this year and the next. Government revenues have plunged since the beginning of the year. The economy is expected to shrink this year and possibly in 2016. Inflation remains above target, forcing the central bank to raise interest rates. A massive corruption scandal at state-run oil company Petrobras PETR4.SA has also damaged investor sentiment, along with a growing political crisis which included calls for Rousseff's impeachment. Loss of the investment-grade rating would boost financing costs for Brazil's government and companies. It also would hurt dollar inflows to the country since many investors are barred from buying junk-rated securities. S&P was the first of the Big Three ratings agencies to raise questions about Brazil's investment grade. Both Moody's Investors Service and Fitch Ratings have the country at BBB, two notches above junk, with a negative outlook. (For S&P's statement, see http://bit.ly/1D64qMG) (Additional reporting by Alonso Soto in Brasilia and Guillermo Parra-Bernal in Sao Paulo; Editing by David Gregorio and Lisa Shumaker) ((walter.brandimarte@thomsonreuters.com; +55 21 2223 7149; Reuters Messaging: walter.brandimarte.thomsonreuters.com@reuters.net)) Keywords: BRAZIL RATINGS/S&P

CORRECTED-RBNZ's Wheeler says more rate cuts likely, NZ$ needs to fall

July 29, 2015 - reuters.com

(Corrects headline to cuts not rises) WELLINGTON, July 29 (Reuters) - New Zealand faces further rate cuts to support the slowing economy and return inflation to its target band, the head of the central bank said on Wednesday. Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler said the bank expected inflation to return to its target point around the middle of next year, while the New Zealand dollar needed to fall further. "The future path of the OCR will be driven by the flow of incoming data, our assessment of the economic outlook, and judgements as to what level of interest rates is needed to achieve the Bank's price stability goal," Wheeler said in a speech to a business group. Last week the RBNZ cut its official cash rate to 3 percent because of a slowing economy and weak inflation and said further cuts was likely. ID:nL3N1030WA The full speech text is at: http://www.rbnz.govt.nz/research_and_publications/speeches/2015/some-thoughts-on-inflation-and-monetary-policy.html (Gyles Beckford) ((Gyles.Beckford@thomsonreuters.com; +64 4 802 7977 ; Reuters Messaging: gyles.beckford.reuters.com@reuters.net)) Keywords: NEWZEALAND RBNZ/WHEELER

New Zealand dollar rises after RBNZ speech

July 29, 2015 - reuters.com

WELLINGTON, July 29 (Reuters) - The New Zealand dollar rose on Wednesday after the head of the central bank said further interest rate cuts were likely to be needed to support an economy facing strong headwinds, and get inflation back to its target level. Reserve Bank of New Zealand Governor Graeme Wheeler also said the New Zealand dollar needed to fall further, prices for dairy products, a key export earner, were also seen falling further, while likely rate rises in Britain and United States would add pressure to the exchange rate. The New Zealand dollar NZD=D4 rose to a high of $0.6739 from around $0.6675 before the speech. (Gyles Beckford) ((Gyles.Beckford@thomsonreuters.com; +64 4 802 7977 ; Reuters Messaging: gyles.beckford.reuters.com@reuters.net)) Keywords: MARKETS NEWZEALAND/FOREX

GLOBAL MARKETS-Stocks rally as China fears dwindle, oil prices steady

July 28, 2015 - reuters.com

* European, U.S. equities rise 1 percent or more * Investors shrug off China's falling stocks * U.S. Federal Reserve in focus * Oil prices steady after touching six-months low By Michael Connor NEW YORK, July 28 (Reuters) - U.S. and European stock markets climbed 1 percent or more on Tuesday, reversing five days of declines, as investors looked past China's equities sell-off and took buying cues from earnings and mergers news. Prices of safe-haven government bonds eased, while the dollar rallied on growing expectations the Federal Reserve, in a policy statement due on Wednesday, could take a hawkish bias toward raising interest rates. Oil prices recovered from six-month lows and steadied on hopes U.S. crude stockpiles were shrinking. Wall Street's Dow Jones industrial average .DJI finished ahead 189.68 points, or 1.09 percent, at 17,630.27, the S&P 500 .SPX rose 25.61 points, or 1.24 percent, to 2,093.25 and the Nasdaq Composite .IXIC added 49.43 points, or 0.98 percent, finishing at 5,089.21, according to preliminary data. United Parcel Service UPS.N shares rose 4.8 percent and Ford F.N gained 2 percent after each reported higher-than-expected profits. The S&P energy sector index .SPNY added 3 percent. "The S&P has had five down days in a row and a lot of people are starting to nibble," said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio. Merger news helped lift European stocks, with the FTSEuroFirst 300 index of leading European shares closing up 1.1 percent at just under 1,546 points .FTEU3 . RSA Insurance Group RSA.L rose 18 percent after Zurich Insurance ZURN.VX said it was considering a bid for the British group. Shares of Kering PRTP.PA surged 5.6 percent after Gucci, the flagship brand of the French group, reported a 4.6 percent increase in underlying second-quarter sales. The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent. The Shanghai market benchmark .SSEC closed 1.7 percent lower. The Fed kicked off a two-day policy meeting. Since no immediate change in interest rates is expected, attention centered on whether Fed Chair Janet Yellen would signal September or December as the most likely date for a rate increase, the first since 2006. U.S. stock market sentiment reflected expectations the Fed would wait until December, Matousek said. Oil prices steadied, with U.S. crude rising more than 1 percent as bets for a drop in U.S. crude stockpiles offset worries about a global supply glut and China's market meltdown. Brent futures LCOc1 settled down 17 cents, or 0.3 percent, at $53.30 a barrel. They earlier fell to $52.28, the lowest since early February. U.S. crude futures CLc1 settled up 59 cents, or 1.2 percent, at $47.98 a barrel. They rose more than $1 at the session high after touching their lowest since March at $46.68. In currency markets, the dollar rose against some major counterparts, including the euro and yen, as traders bet that the first U.S. rate increase in almost a decade is still likely to come in September. The euro fell 0.4 percent to $1.1045 EUR= , after touching a two-week high of $1.1129 on Monday. The dollar was up 0.30 percent against the yen at 123.57 yen JPY= . Bond yields edged higher, with the 10-year U.S. Treasury off 7/32 in price and yielding 2.2553 percent US10YT=RR . The comparable UK yield rose a basis point, while the yield on the 10-year German Bund was also up 1 basis point. (Additional Reporting by Jamie McGeever; and Lionel Laurent; Editing by Meredith Mazzilli, David Gregorio and Steve Orlofsky) ((michael.connor@thomsonreuters.com; 646 223 6309; Reuters Messaging: michael.connor.reuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

Brazil's Levy says S&P outlook review is wake-up call -source

July 28, 2015 - reuters.com

BRASILIA, July 28 (Reuters) - Finance Minister Joaquim Levy told his aides that Standard & Poor's threat to strip Brazil of its investment-grade rating could serve as a wake-up call for Congress to speed up the approval of austerity measures, a government source who heard Levy's remarks told Reuters. S&P earlier on Tuesday revised its outlook on Brazil's credit at BBB-minus rating to negative from stable, signaling a downgrade is possible over 12 to 18 months. "Levy said this is a wake up call that could increase the sense of urgency to approve measures that are in Congress," said the official, who asked not to be named because the government had not yet made an official comment on the revision. (Reporting by Alonso Soto; Editing by Christian Plumb) ((alonso.soto@thomsonreuters.com; +55 61 34267027; Reuters Messaging: alonso.soto.thomsonreuters.com@reuters.net)) Keywords: BRAZIL LEVY/S&P

Brazil's Levy cancels press conference after S&P decision

July 28, 2015 - reuters.com

BRASILIA, July 28 (Reuters) - Brazilian Finance Minister Joaquim Levy called off a press conference scheduled for later on Tuesday at the ministry's tax appeals court, his press office said, without citing the reasons for the cancellation. Although the press briefing was about the tax court, many investors expected Levy to comment on Standard & Poor's threat to strip Brazil of its coveted investment-grade rating. ID:nL3N108553 (Reporting by Alonso Soto; Editing by Andrew Hay) ((alonso.soto@thomsonreuters.com; +55 61 34267027; Reuters Messaging: alonso.soto.thomsonreuters.com@reuters.net)) Keywords: BRAZIL LEVY/BRIEFING

FOREX-Dollar rebounds against euro, yen as focus turns to Fed

July 28, 2015 - reuters.com

(New throughout, updates prices and market activity, adds new analyst comments) * Traders eye Fed statement Wednesday * Limited Chinese share weakness helps dollar * Remaining China worries cap dollar's gains * Weak U.S. consumer confidence weighs on dollar By Sam Forgione NEW YORK, July 28 (Reuters) - The U.S. dollar rebounded against the euro and yen on Tuesday after traders took profits from gains in those currencies and favored the greenback on expectations that the Federal Reserve could take a hawkish bias in a policy statement on Wednesday. Traders said anticipation that the central bank could reinforce expectations for a September rate hike helped boost the dollar after the biggest dive in Chinese equity markets in eight years weighed on the greenback in the previous session. On Monday, the euro hit a two-week high against the dollar of $1.11295 and the dollar hit a nearly two-week trough of 123.010 yen. "I don't think you want to be short dollars going into the FOMC," said Win Thin, currency strategist at Brown Brothers Harriman in New York, referring to the meeting of central bankers on the Federal Open Market Committee. Fed rate hikes are expected to boost the dollar by driving investment flows into the United States. Shanghai shares .SSEC closed 1.7 percent lower on Tuesday after plunging 8.5 percent on Monday. The slide had led some traders to buy the safe-haven yen and close short bets against the euro, which in turn had sent that currency higher. Tuesday's less dramatic move in Chinese shares allowed the dollar to regain some ground. The dollar hit its highest level against the Swiss franc in over three months of 0.96740 franc CHF=EBS early in the session. Still, analysts said uncertainty as to whether the Chinese stock market's weakness would affect the Fed's timeline for hiking rates kept a lid on the dollar's gains. "There is a possibility that China weakens more than we expected...and that tilts the Fed into delaying hikes," said Jose Wynne, global head of FX research at Barclays in New York. He said, however, that he still expected the Fed to hike in September. Data showing U.S. consumer confidence weakened in July to its lowest level since September 2014 also weighed on the greenback. ID:nZON05IE00 The euro was last down 0.41 percent against the dollar at $1.10430 EUR=EBS . The dollar was up 0.31 percent against the yen at 123.620 yen JPY=EBS . The dollar was last up 0.11 percent against the franc at 0.96350 franc CHF=EBS . The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.25 percent at 96.745 .DXY . That marked a rebound from a nearly two-week low of 96.288 touched on Monday. (Reporting by Sam Forgione; Editing by Meredith Mazzilli and David Gregorio) ((Sam.Forgione@thomsonreuters.com; 646-223-6189; Reuters Messaging: sam.forgione.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

Brazil's Levy says gov't needs to monitor public debt dynamics

July 28, 2015 - reuters.com

BRASILIA, July 28 (Reuters) - The Brazilian government needs to watch how public debt evolves as it knows it cannot raise taxes excessively, Finance Minister Joaquim Levy said on Tuesday. As public debt grows, the government is also aware it cannot continue increasing expenditures, Levy added at event with finance authorities. (Reporting by Alonso Soto; Writing by Silvio Cascione; Editing by Chizu Nomiyama) ((silvio.cascione@thomsonreuters.com; +55 61 3426 7015; Reuters Messaging: silvio.cascione.thomsonreuters.com@reuters.net)) Keywords: BRAZIL ECONOMY/LEVY DEBT

PRECIOUS-Gold edges higher as investors await Fed meeting

July 28, 2015 - reuters.com

* Dollar gains ahead of Fed's two-day policy meeting * China stocks rout fails to spark safe-haven bids * Coming up: Fed statement Wednesday at 1800 GMT (Updates prices; adds comment, second byline, NEW YORK dateline, graphic link) By Marcy Nicholson and Jan Harvey NEW YORK/LONDON, July 28 (Reuters) - Gold firmed on Tuesday but remained near 5-1/2-year lows as markets braced for this week's Federal Reserve meeting, at which policymakers are expected to give further clues on the timing of a U.S. rate increase. The Fed suggested earlier this year that a near-term rate rise was on the cards if economic data supported such a move, but slowing growth in China and a drop in commodity prices have led some to question whether it will be pushed back. Spot gold XAU= was up 0.2 percent at $1,095.28 an ounce at 2:26 p.m. EDT (1826 GMT), not far from Friday's low of $1,077, its weakest since early 2010. U.S. gold futures GCv1 for August delivery settled down 20 cents an ounce at $1,096.40. "Until the Fed provides some clarity on Wednesday, it's difficult to say that we've hit a floor," ING analyst Hamza Khan said. "The volumes we're seeing suggest that this could just be short covering in case the Fed announces some firmer vocabulary." Rising interest rates pressure gold by lifting the opportunity cost of holding bullion, while boosting the dollar. Expectations a near-term hike may be possible are making investors hesitant to bid up gold despite a price slide, with its failure to benefit from jitters over Greece this year undermining its appeal as a haven from risk. ID:nL5N1021SE The dollar rose 0.5 percent against the euro as investors focused on the Fed meeting. "Gold is treading water despite a slight improvement in the dollar and U.S. Treasury yields," Mitsubishi analyst Jonathan Butler said. "That would seem to indicate some pricing in of the Fed pushing out interest rate rises further into the future." GFMS researchers at Thomson Reuters said in a report that global gold demand hit its lowest since 2009 in the second quarter. ID:nL3N10822D <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on GFMS data: http://link.reuters.com/buj35w Graphic on asset performance: http://link.reuters.com/dub25t ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> Also weighing on sentiment, China's net gold imports from main conduit Hong Kong fell to a 10-month low in June. ID:nL3N1073E0 ID:nL3N1074L9 Spot platinum XPT= was up 0.1 percent at $980.25 an ounce, near last week's 6-1/2-year low. "With the situation between labor unions and miners getting tenser, we believe that there is an increasing risk of strike action at South Africa's platinum mines," said Capital Economics in a note, pegging prices to rise to $1,060 at the end of the year. Silver XAG= was up 0.9 percent at $14.67 an ounce and palladium XPD= was up 0.9 percent at $617.50 an ounce. (Additional reporting by Maolo Serapio Jr in Manila; Editing by Susan Thomas and Cynthia Osterman) ((Marcy.Nicholson@thomsonreuters.com, +1 646 223 6043; Reuters Messaging Marcy.Nicholson.ThomsonReuters.com@reuters.net)) Keywords: MARKETS PRECIOUS/

BRIEF-S&P says assumes Brazil will avoid a rating downgrade

July 28, 2015 - reuters.com

July 28 (Reuters) - * S&P assuming Brazil's fiscal story will improve and that country will avoid a rating downgrade - Schineller * S&P says may downgrade Brazil if it sees government is backtracking from policy commitment in the next year * S&P analyst Schineller says monitoring whether Brazil Congress will further water down austerity measures * S&P analyst Schineller says Brazil's politics have become more fluid, likely to weigh on the execution of fiscal policies * S&P analyst Schineller says potential impeachment of Brazil's president Dilma Rousseff "is not our base case scenario" * S&P sees "limited" impact from contingent liabilities from Brazilian banks - SchinellerFurther coverage: ID:nL3N108553 Instant view: ID:nL1N1081Q0 ((walter.brandimarte@thomsonreuters.com;))

GLOBAL MARKETS-Stocks rally after losing streak as China fears dwindle

July 28, 2015 - reuters.com

(New throughout, updates prices and market activity to European close, U.S. midday) * European, U.S. equities shrug off China's falling stocks * U.S. Federal Reserve in focus * Brent oil turns up By Michael Connor NEW YORK, July 28 (Reuters) - U.S. and European stocks rose on Tuesday, and were on track to snap five-day losing streaks as investors focused on earnings and mergers news and looked past another fall in Chinese equities. Prices of safe-haven government bonds eased, while the dollar rallied on growing expectations the Federal Reserve could take a hawkish bias toward raising interest rates in a policy statement due on Wednesday. Oil prices turned up on hopes U.S. crude stockpiles were shrinking. Wall Street's Dow Jones industrial average .DJI was up 128.01 points, or 0.73 percent, to 17,568.6 in midday New York trade, the S&P 500 .SPX gained 18.45 points, or 0.89 percent, to 2,086.09 and the Nasdaq Composite .IXIC added 32.60 points, or 0.65 percent, to 5,072.38. United Parcel Service UPS.N shares jumped 5.2 percent and Ford F.N gained 2 percent after each reported better-than-forecast profits. Merger news helped lift European stocks, with the FTSEuroFirst 300 index of leading European shares closing up 1.1 percent at just under 1,546 points .FTEU3 . RSA Insurance Group RSA.L jumped 18 percent after Zurich Insurance ZURN.VX said it was considering a bid for the British group. Shares in Kering PRTP.PA , meanwhile, surged 5.6 percent after Gucci, the flagship brand of the French luxury and sportswear group, posted a 4.6 percent rise in underlying second-quarter sales. "The market has been preoccupied with uncertainties related to China in the last couple of days, but those concerns are taking a back seat today and equities are getting some support from company earnings and M&A," said Gerhard Schwarz, head of equity strategy at Baader Bank in Munich. The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent plunge. The Shanghai market benchmark .SSEC closed 1.7 percent lower. The Fed kicked off a two-day policy meeting. No immediate change in interest rates is expected, so attention centered on whether Fed Chair Janet Yellen would signal September or December as the most likely date for a rate increase. Oil bounced up from near six-month lows, as bets for a drop in U.S. crude stockpiles offset worries about a global supply glut and equity market meltdown in China. O/R Brent LCOc1 was up 10 cents, or 0.2 percent, at $53.57 a barrel after hitting $52.28, the lowest since early February. The price of copper CMCU3 , heavily influenced by demand from key consumer China, recovered from Monday's six-year low and was up 2.3 percent at $5,306 a tonne on the London Metal Exchange. In currency markets, the dollar rose against many of its key rivals, including the euro and yen, as traders bet that the first U.S. rate hike in almost a decade is still likely to come in September. The euro fell 0.4 percent at $1.1045 EUR= , after on Monday touching a two-week high of $1.1129. The dollar was up 0.35 percent against the yen at 123.66 yen JPY= . Bond yields edged higher, with the 10-year U.S. Treasuries off 7/32 in price and yielding 2.2553 percent US10YT=RR . The comparable UK yield rose a basis point, while the yield on the 10-year German Bund was also up 1 basis point. (Additional Reporting by Jamie McGeever; and Lionel Laurent; Editing by Meredith Mazzilli and David Gregorio) ((michael.connor@thomsonreuters.com; 646 223 6309; Reuters Messaging: michael.connor.reuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

As China stocks dive, global investors worry more about yuan

July 28, 2015 - reuters.com

* Yuan currency had seemed a one-way upward bet * Foreigners assumed yuan rise would augment returns * But derivatives indicate 1 pct weakening in a year * Weaker yuan would help flagging Chinese economy * But Beijing may be far from allowing big devaluation By Sujata Rao LONDON, July 28 (Reuters) - While local Chinese fret over the bursting of the Shanghai stock bubble, global investors are more worried about the yuan currency which once seemed destined to rise inexorably. A decade after China released the yuan from its peg to the dollar, ever more international money managers no longer regard the currency as a one-way appreciation bet that will augment their returns on stocks and bonds in dollar terms. "For years, one of the arguments was that the yuan was undervalued and it would go up," said Zsolt Papp, client portfolio manager at JPMorgan Asset Management. This argument has been weakening for some time, he said. "That's added more volatility and uncertainty to your investment decision." Foreigners have been fairly sanguine about the $2 trillion wiped off the value of mainland Chinese shares as they collectively hold less than 2 percent of the market. They likewise hold only an estimated 2 percent of the $6 trillion local bond market. But they have major holdings in H-shares, the $3.7 trillion market in Hong Kong-listed stock of mainland companies, and "dim-sum" bonds, the $70 billion-plus market for yuan-denominated debt issued and traded offshore. For years, many of these investments were built on the assumption that the yuan, as the lynchpin of Beijing's strategy to rebalance its economy away from exports and towards domestic consumption, would move higher. Those bets have been rewarded: since 2005, the yuan has risen about 30 percent CNY= in nominal terms against the dollar. But this course is likely to be less smooth from now on. Last week a statement from the cabinet saying China would widen "two-way fluctuation" in the exchange rate to support trade provoked short-lived volatility. This sent yuan traded offshore to two-week lows against the dollar CNH= . The People's Bank of China allows yuan traded domestically to rise or fall only 2 percent from a midpoint rate it sets daily. Offshore yuan trade is not constrained by this band, although in practice the two exchange rates usually move in lockstep. Non-deliverable forwards, derivatives used to lock in future exchange rates, indicate the onshore yuan 1 percent weaker in a year CNY1YNDFOR= . China could probably benefit from a weaker currency. Its economy is growing at the slowest pace in 25 years and rival exporters, Japan and South Korea, may enjoy an upper hand thanks to the weak yen and won. By contrast the yuan is near record highs in real effective (REER) terms - versus the currencies of trading partners and adjusted for inflation - having risen steadily since its fixed peg was loosened in July 2005, as this graphic shows: http://link.reuters.com/gef35w Barclays calculates the yuan is 18 percent overvalued and sees it at 6.35 per dollar by the end of this year compared with 6.2 now, assuming the trading band is widened to plus/minus 4 percent. Expectations that the currency will depreciate could increase demand for hedging yuan-denominated assets or cash flows, while reducing appetite for dim-sum bonds and H-shares, Barclays predicted. NO BIG BETS Beijing may be far from sanctioning big devaluations, however. It is keen for the yuan to be included in the International Monetary Fund's SDR basket of reserve currencies following a review in November and is therefore unlikely to allow sharp exchange rate swings in the meantime. In the past, China has come under pressure to let the yuan appreciate, particularly from U.S. politicians who believed it was keeping the currency artificially weak to gain a trade advantage. Beijing would probably be anxious to avoid reviving such criticism. Another sticking point is the $1.7 trillion in total Chinese foreign debt, of which 70 percent is classed as short-term. A weaker yuan would make it harder for Chinese borrowers to service this debt. Perhaps most importantly, devaluation expectations risk scaring away capital following huge recent outflows. About $400 billion may have fled China this year, Goldman Sachs calculates. Outflows and the resulting instability will outweigh any export gains a weaker yuan delivers, many argue. Also, a weaker currency will not boost trade much because China, already the world's biggest exporter, wants to move into higher-value goods, says Ronald Chan, chief investment officer for Asian equities at Manulife in Hong Kong. "By depreciating your currency, you are just going down the chain, not up the chain," said Chan, who does not hedge yuan risk. RECONCILED Investors have become more reconciled to yuan volatility since early 2014, when authorities engineered falls in the currency to discourage speculators betting on yuan gains. (http://reut.rs/1d0Q8gZ) The yuan fell about 2 percent to the dollar last year, its first year in the red since a tiny 2009 loss. Chinese policymakers' inability to stem the equity rout has also been a revelation, said Salman Ahmed, global fixed income strategist at Lombard Odier. "Until a year ago yuan was seen as a one-way street. Everyone knew about issues in the economy but also that they had $3.9 trillion (in reserves) to backstop any spillovers. Trust in that shield has been shaken," he said. Ahmed is willing nonetheless to hold bonds, betting on interest rate cuts. China's yield premium, or carry, also remains alluring - 10-year government bonds yield 120 basis points above U.S. Treasuries with similar maturities, for instance. David Buckle, head of quantitative research at Fidelity Worldwide Investment, says the carry will offset the impact of a small 3 percent band widening. But he sees risks in 18-24 months' time if China continues cutting interest rates. "It's highly likely the U.S. will have raised rates by that time and that's when I can see an environment where the yuan weakens," Buckle added. (Additional reporting by Michelle Chen in Hong Kong and Karin Strohecker in London; graphic by Vincent Flasseur; editing by David Stamp) ((sujata.rao@thomsonreuters.com; 44 20 7542 6176 ; Reuters Messaging: sujata.rao.thomsonreuters.com@thomsonreuters.net)) Keywords: CHINA MARKETS/YUAN

S.Africa's rand moves up from 14-year lows vs dollar, awaits US Fed

July 28, 2015 - reuters.com

JOHANNESBURG, July 28 (Reuters) - South Africa's rand gained slightly against the dollar on Tuesday, pulling away from the previous day's 14-year lows after a sell-off traders and analysts said looked to have been overdone. The rand ZAR=D3 hit a session high of 12.5250/dollar and was trading 0.42 percent firmer at 12.5645 by 1619 GMT compared with Monday's close. The rand had stumbled to 12.69 on Monday, its weakest since December 2001, taking the brunt of an emerging market sell-off triggered by expectations that U.S. interest rates are set to rise this year. "The rand looked a tad oversold at those levels, but I would not rule out renewed pressure if the Fed comes out hawkish this week," a Johannesburg currency trader said. The U.S. Federal Reserve will issue a policy statement on Wednesday which could put more pressure on high-yielding but higher-risk assets like the rand if the U.S. central bank gives any signal on the timing of a rate increase. Government bonds were mostly steady across the curve, with the yield for the 2026 benchmark ZAR186= ending the day flat at 8.2 percent. (Reporting by Stella Mapenzauswa. Editing by Jane Merriman) ((stella.mapenzauswa@thomsonreuters.com; +27 11 775 3161; Reuters Messaging: stella.mapenzauswa.thomsonreuters.com@reuters.net)) Keywords: MARKETS SAFRICA/CURRENCY

UPDATE 1-Kenya central bank chief says `fiscal prudence' needed for stability

July 28, 2015 - reuters.com

(Updates with more details) NAIROBI, July 28 (Reuters) - Kenya needs to rein in its debt and current account deficit to stabilise economic fundamentals, including the exchange rate, the head of the central bank said in a presentation to the senate's finance committee. The shilling KES= is trading near 3 1/2-year lows and down 11.5 percent against the dollar this year, although the central bank has hiked rates 3 percentage points since June. "The most important measure that is before you is to underscore fiscal prudence in order to restore macro stability. The central bank cannot deal with the entire problem by itself," Governor Patrick Njoroge told the senators on Monday. A recording of the presentation was obtained by Reuters on Tuesday. The shilling has weakened as the dollar surged, tourism dwindled after frequent attacks by Islamists from neighbouring Somalia and demand grew for imports like machinery. Njoroge, who joined the bank last month from the International Monetary Fund, said a larger-than-expected budget deficit in the fiscal year ended last month had also contributed to the pessimism. "The concerns about fiscal pressures have been rising," he said. The budget deficit for the 2014/15 fiscal year was close to 9 percent of the gross domestic product, after being forecast at 6.5 percent, he said. Finance Minister Henry Rotich set the deficit for this fiscal year at 8.7 percent, making investors uneasy. "You can see investors looking at this will wonder where 2015/16 will turn out. That is really the concern" he said, adding debt to GDP stood at 51 percent last month. The country was already paying the price of the higher spending and borrowing, the governor said, citing the yields on the country's Eurobonds XS102895240=TE XS102895185=TE , which have been rising in recent weeks. "Investors want higher yields and that is really a concern. It is like betting, they are not willing to bet that much on our economy," he said. Kenya's government has been racing to build new roads, a modern railway, power plants and other infrastructure facilities, thus driving up spending and borrowing. (Reporting by Duncan Miriri, editing by Larry King) ((duncan.miriri@thomsonreuters.com; Tel: +254 20 4991239; Reuters Messaging: duncan.miriri.thomsonreuters.com@reuters.net)) Keywords: KENYA ECONOMY/

S.African stocks in 3-session losing streak, gold shares dive

July 28, 2015 - reuters.com

JOHANNESBURG, July 28 (Reuters) - South African stocks fell for a third straight session on Tuesday with gold mining shares among the biggest decliners as the price of bullion remained near its lowest level in more than five years. AngloGold Ashanti ANGJ.J was the biggest loser on the blue-chip Top-40 index, dropping 5.8 percent to 79.15 rand. Smaller rival Gold Fields GFIJ.J , which is not in the Top-40 stocks, plunged 7.9 percent to 34.27 rand. Gold remained near 5-1/5-year lows on Tuesday as markets braced for this week's Federal Reserve meeting, where policy makers are expected to give further clues on the timing of a U.S. rate increase. "Until the Fed provides some clarity on Wednesday, it's difficult to say that we've hit a floor," ING analyst Hamza Khan said. The JSE Top-40 index .JTOPI lost 1.05 percent to 45,290 and the broader All-share index .JALSH was down by the same margin to 50,758. MTN Group MTNJ.J shares tumbled 6 percent to 200.30 rand after Africa's biggest mobile operator said its first-half earnings likely fell by as much as 15 percent after a weaker exchange rate hurt its international business. ID:nL5N1081CI On the upside, Kumba Iron Ore KIOJ.J climbed 3.9 percent to 109 rand as the price of iron ore climbed more than 3 percent to hit a one-week high. Trading volumes on the bourse were robust, with more than 230 million shares changing hands, well above last year's daily average of 183 million shares. (Reporting by Tiisetso Motsoeneng; Editing by James Macharia) ((tiisetso.motsoeneng@thomsonreuters.com; +27 11 775 3122; Reuters Messaging: tiisetso.motsoeneng.thomsonreuters.com@reuters.net)) Keywords: MARKETS SAFRICA/STOCKS

POLONIA Rate falls 0.27 pp.

July 28, 2015 - reuters.com

WARSAW, Jul 28 (Reuters) - POLONIA the reference rate for Overnight deposits amounted to 0.92 percent. The volume of transactions concluded till 16:30 by banks participating in POLONIA fixing amounted to 5,390 mln PLN. Note: Description of reference rate at: http://www.acipolska.pl/ ((warsaw.newsroom@reuters.com))

FOREX-Dollar rebounds against euro, yen as focus turns to Fed

July 28, 2015 - reuters.com

(Updates prices, adds comments; changes byline, dateline, previous LONDON) * Fed begins two-day policy meeting * Traders eye Fed statement Wednesday * Reduced China concerns help dollar * Dollar pares gains on weak U.S. consumer confidence By Sam Forgione NEW YORK, July 28 (Reuters) - The U.S. dollar rebounded against the euro and yen on Tuesday after traders took profits from gains in those currencies and favored the greenback on expectations that the Federal Reserve could take a hawkish bias in a policy statement on Wednesday. Traders said anticipation that the central bank could reinforce expectations for a September rate hike helped boost the dollar after the biggest dive in Chinese equity markets in eight years had weighed on the greenback in the previous session. The dollar hit a two-week low against the euro and a nearly two-week trough against the yen Monday. "Anybody who bought euros amid the 1 percent rally yesterday is likely to take some money off the table ahead of tomorrow's event risk," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Fed rate hikes are expected to boost the dollar by driving investment flows into the United States. Shanghai shares .SSEC closed 1.7 percent lower on Tuesday after plunging 8.5 percent on Monday. The plunge had led some traders to buy the safe-haven yen and close short bets against the euro, which in turn sent the currency higher. Tuesday's less dramatic move in Chinese shares allowed the dollar to regain some ground. The dollar hit its highest level against the Swiss franc in over three months of 0.96740 franc CHF=EBS early in the session. "It's going to be all about looking for signs for the timing of a rate hike," said Alfonso Esparza, senior currency Strategist at Oanda in Toronto, said in reference to the upcoming Fed statement. Data showing U.S. consumer confidence weakened in July to its lowest level since September 2014, however, led the greenback to pare some gains. ID:nZON05IE00 The euro was last down 0.37 percent against the dollar at $1.10465, after hitting a two-week high of $1.11295 on Monday EUR=EBS . The dollar was up 0.29 percent against the yen at 123.600 yen JPY=EBS after hitting a nearly two-week low of 123.010 yen on Monday. The dollar was last up 0.26 percent against the franc at 0.96490 franc. The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.34 percent at 96.827 .DXY . That marked a rebound from a nearly two-week low of 96.288 touched on Monday. (Reporting by Sam Forgione; Editing by Meredith Mazzilli) ((Sam.Forgione@thomsonreuters.com; 646-223-6189; Reuters Messaging: sam.forgione.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

GLOBAL MARKETS-Stocks end losing streak as China fears ease

July 28, 2015 - reuters.com

(Adds North American trading, quotes and changes byline and dateline; previous LONDON) * European, U.S. equities shrug off China's falling stocks * U.S. Federal Reserve in focus * Brent oil hits 6-month low By Michael Connor NEW YORK, July 28 (Reuters) - U.S. and European stocks were on track to snap five-day losing streaks on Tuesday, as investors focused on earnings news and mergers and looked past another fall in Chinese equities and sliding oil prices. Safe-haven government bonds eased in price, while the dollar rallied on growing expectations the Federal Reserve could take a hawkish bias toward raising interest rates in a policy statement due on Wednesday. Wall Street's Dow Jones industrial average .DJI rose 37.21 points, or 0.21 percent, to 17,477.8 in early trade, the S&P 500 .SPX was up 5.8 points, or 0.28 percent, to 2,073.44 and the Nasdaq Composite .IXIC added 1.78 points, or 0.04 percent, to 5,041.56. United Parcel Service UPS.N shares jumped more than 3.5 percent and Ford F.N gained 1.5 percent after each reported better-than-forecast profits. Merger news helped lift European stocks, with the FTSEuroFirst 300 index of leading European shares up 0.90 percent at 1,543 points .FTEU3 . RSA Insurance Group RSA.L jumped 11 percent after Zurich Insurance ZURN.VX said it was considering a bid for the British group, which has a market capitalization of 4.4 billion pounds ($6.9 billion). Shares in Kering PRTP.PA meanwhile surged 6.6 percent after Gucci, the flagship brand of the French luxury and sportswear group, posted a 4.6 percent rise in underlying second-quarter sales. "For me, China is a short blip rather than a real slowdown. What we are hearing from company management is pretty buoyant," said Ingo Speich, portfolio manager at Union Investment in Frankfurt. The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent plunge. The Shanghai market benchmark .SSEC closed 1.7 percent lower. The Fed kicked off a two-day policy meeting on Tuesday. No immediate change in interest rates is expected, so attention will focus on whether Fed Chair Janet Yellen signals September or December as the most likely date for a rate increase. Oil remained under pressure. Brent crude futures hit a new six-month low after Monday's Chinese stock market crash stoked worries the world's biggest energy consumer may cut back demand, adding to a global supply glut. O/R Brent fell as much as 2 percent to $52.28 LCOc1 , a level not seen since Feb. 2. U.S. crude CLc1 was down 0.35 percent to $47.27 a barrel after touching its lowest since late March. The price of copper CMCU3 , heavily influenced by demand from key consumer China, recovered from Monday's six-year low and was up 1 percent at $5,245 a tonne on the London Metal Exchange. In currency markets, the dollar rose against many of its key rivals, including the euro and yen, as traders bet that the first U.S. rate hike in almost a decade is still likely to come in September. The euro fell 0.5 percent at $1.1035 EUR= , almost a full cent down from Monday's two-week high of $1.1129, and the dollar was up 0.35 percent against the yen at 123.66 yen JPY= . Bond yields edged higher, with the 10-year U.S. Treasuries off 8/32 in price and yielding 2.2571 percent US10YT=RR . The comparable UK yield rose 3 basis points, while the yield on the 10-year German Bund was up 2 basis points. (Additional Reporting by Jamie McGeever; and Lionel Laurent; Editing by Larry King and Meredith Mazzilli) ((michael.connor@thomsonreuters.com; 646 223 6309; Reuters Messaging: michael.connor.reuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

UPDATE 2-Sterling rises above $1.56 as UK growth gathers pace in Q2

July 28, 2015 - reuters.com

(Adds quote on BoE split, updates prices) By Anirban Nag LONDON, July 28 (Reuters) - Sterling rose against the dollar and the euro on Tuesday after data showed the British economy picking up pace in the second quarter, supporting a view that the Bank of England could start raising interest rates in the coming months. Gross domestic product grew 0.7 percent on the quarter in the April-June period -- in line with forecasts -- after a first-quarter expansion of 0.4 percent. Second-quarter output was 2.6 percent higher than a year earlier, also reflecting expectations. ECONGB Sterling rose to a high of $1.5618 GBP=D4 having traded at around $1.5535 beforehand, up 0.3 percent on the day. The dollar was also hurt by weaker-than-expected U.S. consumer confidence data for July, with focus now turning to the Federal Reserve's two-day policy meet that will end on Wednesday. ID:nL1N1010UE The euro EURGBP=D4 extended losses to trade at 70.86 pence, having traded at 71.22 pence before the growth data was released. "As steady growth points to improving living standards, and with the concerns around Greece finally begin to subside, the temptation for Governor Mark Carney to hike interest rates is increasing by the month," said Dennis de Jong, managing director at UFX.com. "However, a subsequent strong pound could adversely affect manufacturing and exports. The interest rate decision will continue to be a balancing act for Carney." The interest rate swaps market is pricing in a chance of a rate rise in January, broadly chiming with recent comments from Carney who said the first rate hike could come around the turn of the year. GBPOIS=ICAP The BoE meets next week, with no interest rate change expected although the vote could expose the first split on the nine-member monetary policy committee (MPC) this year. Vatsala Datta, a UK rates strategist at RBC Capital Markets, expected a decent chance at the August meeting of a 6-3 split in favour of no rate hikes. The BoE will also release its quarterly inflation report early next month and some traders expect the central bank to sound hawkish and prepare the ground for an eventual rate rise. "Despite the rising voices against the stronger pound, and its negative impacts on manufacturing and industrial exports, UK exports remain well in line with their mid- to long-term average," London Capital Group analyst Ipek Ozkardeskaya said. "UK businesses would better get used to the idea of a stronger pound, because all indicators point to the decisive BoE step into the monetary policy normalisation." (Reporting by Anirban Nag; Editing by Mark Heinrich) ((anirban.nag@thomsonreuters.com)(+44 20 7542 8399)(Reuters Messaging: anirban.nag.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/STERLING

Brazil real weakens to 3.4/dlr for first time in 12 years

July 28, 2015 - reuters.com

SAO PAULO, July 28 (Reuters) - The Brazilian real weakened sharply on Tuesday, trading at 3.4 per dollar for the first time in over 12 years, on fears that Brazil is poised to lose its investment-grade rating as economic growth disappoints. The real BRL= has tumbled nearly 7 percent since the government slashed its fiscal savings goals last week. The decision was taken because tax revenues plunged as a result of a sharp economic recession, government officials said. Fears of an upcoming interest rate hike by the U.S. Federal Reserve also weighed on the real. (Reporting by Walter Brandimarte; Editing by Chizu Nomiyama) ((walter.brandimarte@thomsonreuters.com; +55 21 2223 7149; Reuters Messaging: walter.brandimarte.thomsonreuters.com@reuters.net)) Keywords: BRAZIL REAL/DROPS

Kenya c.bank chief says fiscal prudence needed for macro stability

July 28, 2015 - reuters.com

NAIROBI, July 28 (Reuters) - Kenya needs to rein in its debt and current account deficit in order to stabilise economic fundamentals, including the exchange rate, central bank governor Patrick Njoroge said in a presentation to the senate's finance committee. The shilling KES= is trading at close to 3-1/2 year lows and down 11.5 percent against the dollar this year, although the central bank has hiked rates 3 percentage points since June. "The most important measure that is before you is to underscore fiscal prudence in order to restore macro stability. The central bank cannot deal with the entire problem by itself," Njoroge told the senators on Monday. A recording of the presentation was obtained by Reuters on Tuesday. (Reporting by Duncan Miriri) ((duncan.miriri@thomsonreuters.com; Tel: +254 20 4991239; Reuters Messaging: duncan.miriri.thomsonreuters.com@reuters.net)) Keywords: KENYA ECONOMY/

Brazil's Levy says may raise fiscal targets

July 28, 2015 - reuters.com

BRASILIA, July 28 (Reuters) - Brazil's government may raise its budget savings targets for coming years depending on how bills to be analyzed by Congress will affect tax revenues and spending, Finance Minister Joaquim Levy said on Tuesday. Levy said the current market volatility is temporary, although uncertainties surrounding the economy have made firms "reticent" about paying taxes. (Reporting by Luciana Otoni; Writing by Silvio Cascione; Editing by Chizu Nomiyama) ((silvio.cascione@thomsonreuters.com; +55 61 3426 7015; Reuters Messaging: silvio.cascione.thomsonreuters.com@reuters.net)) Keywords: BRAZIL ECONOMY/LEVY

UPDATE 1-Britain's economy bounces back, despite currency hit to exporters

July 28, 2015 - reuters.com

* GDP up 0.7 pct in second quarter, 2.6 pct higher on year * 'Two speed economy' after first factory output fall since 2010 * Economists see Bank of England rate rise ??? * GRAPHIC: GDP growth since 1970 http://link.reuters.com/cub87s (Adds economist and market reaction) By David Milliken and William Schomberg LONDON, July 28 (Reuters) - British economic growth got back on track in the second quarter but the strength of the pound hurt manufacturers, putting the Bank of England in a tricky spot as it gets closer to raising interest rates. The economy grew by 0.7 percent in the three months to June, the Office for National Statistics said on Tuesday, in line with forecasts and above the long-run average. It followed an unexpected slowdown to 0.4 percent in the first three months of 2015. But the figures showed an increased reliance on domestic demand, with business and financial services powering ahead, while factory output suffered a rare quarterly fall. "Sterling strength has clearly been a key driver behind the re-emergence of the two-speed economy, making life more difficult for export-focused UK manufacturers," Investec economist Victoria Clarke said. Oil and gas output had one of its biggest leaps in a generation, after a tax cut for the sector in March. Sterling rose almost a cent against the dollar GBP= as traders bet that the data kept the BoE on track for a rate rise early next year. Last year Britain recorded its fastest growth in eight years and BoE Governor Mark Carney said this month that the decision on when to raise interest rates from their record low 0.5 percent would come into focus around the end of the year. Economists expect a minority of policymakers to vote to raise rates as soon as next week's BoE meeting, encouraged by signs of stronger wage growth and an economy close to full capacity. But other policymakers have said sterling strength is likely to keep a lid on prices, reducing the need for higher rates, leaving Carney with a difficult balancing act when he presents the BoE's latest economic forecasts. "A hawkish slant ... aimed at preparing markets for normalisation, would likely make matters worse for externally focused UK manufacturers, potentially driving sterling higher still," Clarke said. PER-CAPITA OUTPUT BACK TO PEAK The ONS said that in the year to June, British economic output rose by 2.6 percent, and output per head finally returned to around its pre-crisis level. The preliminary data covered the run-up to a national election which delivered a shock outright victory to Prime Minister David Cameron's Conservative Party. Tuesday's figures underscored how Britain's dominant services sector is driving growth. Output in services, which make up more than three quarters of the economy, was up 0.7 percent on the quarter after a 0.4 percent rise in the first three months of 2015. Domestic demand is likely to stay strong, with households bolstered by higher wages and temporarily low inflation, and signs that firms are investing more as the recovery matures. But demand from the euro zone has remained weak. On Monday an industry survey pointed to the weakest outlook for exporters in nearly four years. ID:nU8N0YV00Q The ONS figures on Tuesday showed factory output dropped by 0.3 percent, its first quarterly fall in over two years. But overall industrial output rose by 1.0 percent, the biggest increase since late 2010, helped by a 7.8 percent quarterly rise in the component which includes oil and gas extraction, the largest jump since 1989. Construction was flat on the quarter, recovering from a fall in the previous quarter. Official data continues to remain weaker than more robust private-sector surveys. ID:nL9N0OK040 (Editing by Jeremy Gaunt) ((david.milliken@reuters.com; +44 20 7542 5109; Reuters Messaging: david.milliken.thomsonreuters.com@reuters.net)) Keywords: BRITAIN ECONOMY/

Bank of England ends "drip-feed" news, but will clarity result?

July 28, 2015 - reuters.com

By William Schomberg LONDON, July 28 (Reuters) - The Bank of England runs the risk of sending mixed messages next week when it changes the way it announces its monetary policy decisions, designed as part of the Bank's push for greater clarity. On Aug. 6, the BoE will simultaneously publish its monthly decision on interest rates, the breakdown of how its policymakers voted along with a summary of their debate, and its quarterly forecasts for Britain's economy, including inflation. Until now, the announcements have been made on separate days, in what BoE Governor Mark Carney called "a drip-feed of news". This is changing because he wants the Bank's policy signals to be as clear as possible. Yet the timing of the first combined announcement could complicate the BoE's communication task, coming as speculation is growing about the timing of a first rate hike in more than eight years. With Britain's economy set to outpace other major advanced economies for a second year in a row, a split in the Monetary Policy Committee over rates appears imminent, with many analysts expecting the division to begin in August. That would add to expectations that a first rate increase is not far off, especially if the MPC's two most hawkish members - Martin Weale and Ian McCafferty - are joined by a third member voting for a rate hike. But at the same time, the Bank is likely to trim its inflation forecasts because of a new fall in world oil prices and a stronger pound which will make imports cheaper. Lower inflation forecasts would normally be taken as a signal by investors that a rate hike is less urgently needed. Ross Walker, an economist with RBS, said markets might be confused whether to put more weight on a split vote or lower forecasts for inflation in two to three years' time. "Whilst we all understand that the minutes and the Inflation Report are conveying slightly different things, I think there is a risk, on the day, that there are rather mixed signals," Walker said. CLARITY Carney has struggled to give a steer on rates in the past. In June 2014, he said they could go up sooner than expected, just before oil prices tumbled and took inflation to zero where it currently sits. More than a year on, and with prices set to start rising again soon, Carney said on July 16 that a decision about raising rates would come into sharper relief at the end of the year. Carney is likely to use his news conference on Aug. 6 to stress that the timing of a first hike is less important than the Bank's guidance that when rates do go up, they will rise slowly and to a lower level than before the financial crisis. Rob Wood, an economist at Bank of America/Merrill Lynch, said the volume of information being released meant investors might find it hard to draw out the message quickly. "Mark Carney will have a job to do," he said, adding the key thing to look for would be any changes to the Bank's longer-term inflation forecasts. (Additional reporting by Jonathan Cable Editing by Jeremy Gaunt) ((william.schomberg@thomsonreuters.com; +44 207 542 7778; Reuters Messaging: william.schomberg.reuters.com@reuters.net)) Keywords: BRITAIN ECONOMY/BOE

UPDATE 1-German advisers say euro zone exit should not be taboo

July 28, 2015 - reuters.com

* Say euro zone exit should be possible as "last resort" * Favour further reforms, including insolvency procedure * Warn against European finance ministry * ZEW economists propose common European insurance scheme (Adds fresh quotes from media call, details of ZEW study) By Caroline Copley BERLIN, July 28 (Reuters) - The German government's panel of independent economic advisers favours creating an insolvency mechanism for euro zone states and says countries should be able to leave the single currency as a last resort. The Greek crisis has called into question the future of the euro. Wrangling over a third bailout for the heavily indebted country almost sending Athens crashing out of the euro zone. In a report published on Tuesday, the council of five experts, known as the "wise men", said the Greek crisis showed further reforms were needed, such as an insolvency procedures, to make the euro zone more stable. But the council stressed that it should still be possible for a country to drop the euro as a "last resort", to avoid threatening the existence of the single currency. "In a currency union, the basic rules must be adhered to and for this reason the exit of a member state should not be taboo, for otherwise partners are susceptible to blackmail," council member Lars Feld told reporters on a media call. Feld also said the council viewed a third bailout for Greece as the "right step" as long as Athens implemented reforms. He said an insolvency mechanism would work by assessing whether a country requesting aid from the euro zone's bailout fund was caught in an extreme budget crisis. If so, debt restructuring would be needed, for example through a one-off extension of maturities or a haircut. Nonetheless, the council said an insolvency mechanism would only be possible once states had dealt with current debt levels. They also warned against "quick-win" fiscal policies, such as the creation of a euro zone treasury, a European unemployment insurance scheme or an economic government for the bloc. "Making the euro area collectively responsible for potential costs without member states giving up any national sovereignty over fiscal and economic policies would - sooner or later - make the currency union more unstable," they wrote. The council's stance conflicted with a study from the ZEW think tank, also published on Tuesday, that proposed a common unemployment insurance scheme and an insolvency process for countries threatened with bankruptcy. The economists envisaged granting heavily indebted states a three-year period to access funds from the euro zone's bailout mechanism before negotiations over debt restructuring start. Both sets of proposals come as politicians look for lessons from the Greek debt crisis. Over the weekend, the German magazine Der Spiegel reported that Germany was willing to discuss naming a euro zone finance minister who would have his own budget and the power to raise extra taxes. ID:nL5N10509X (Editing by Madeline Chambers, Larry King) ((Caroline.Copley@thomsonreuters.com; +49 30 2888 5214; Reuters Messaging: caroline.copley.thomsonreuters.com@reuters.net)) Keywords: EUROZONE GREECE/GERMANY BANKRUPTCY

GLOBAL MARKETS-Stocks rebound, ignoring decline in Chinese markets

July 28, 2015 - reuters.com

* European, U.S. shrug off China's falling stocks * UK GDP, U.S. Fed in focus * Brent oil 6-month low By Jamie McGeever LONDON, July 28 (Reuters) - European stocks snapped a five-day losing streak on Tuesday, with merger activity and earnings news lifting major markets by more than 1 percent, as investors shrugged off another fall in Chinese stocks and Brent oil's slide to a six-month low. The rebound in Europe looked set to extend to the United States. Futures markets pointed to a rise of more than 0.5 percent on Wall Street. Britain published the first snapshot of second quarter economic activity of any G7 country earlier on Tuesday, reporting gross domestic product grew 0.7 percent, up from 0.4 percent in the first quarter. The U.S. Federal Reserve begins its two-day policy meeting later. No change in interest rates is expected, so attention will focus on whether Fed chair Janet Yellen signals September or December as the most likely date for a rate increase. "For me, China is a short blip rather than a real slowdown. What we are hearing from company management is pretty buoyant, even if we see the dramatic impact on stock prices and on the wealth effect," said Ingo Speich, portfolio manager at Union Investment in Frankfurt. "The earnings outlook in the euro zone is rising compared to the U.S. and companies are reporting pretty decent numbers," he said. At 1100 GMT, the FTSEuroFirst 300 index of leading European shares was up 1.2 percent at 1,548 points .FTEU3 . Germany's DAX .GDAXI was up 1.4 percent at 11,211 points, France's CAC 40 .FCHI up 1.2 percent at 4,988 points and Britain's FTSE 100 .FTSE up 1 percent at 6,563 points. Shares in Kering PRTP.PA surged 6.6 percent after Gucci, the flagship brand of the French luxury and sportswear group, posted a 4.6 percent rise in underlying second-quarter sales. And RSA Insurance Group RSA.L jumped 11 percent after Zurich Insurance ZURN.VX said it was considering a bid for the British group, which has a market capitalization of 4.4 billion pounds ($6.9 billion). In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ended the day 0.2 percent higher after falling nearly 1 percent early on, touching its lowest level since July 9. ID:nL3N1081IT Tokyo's Nikkei .N225 ended 0.1 percent lower. The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent plunge. The Shanghai market benchmark .SSEC closed 1.7 percent lower. After hitting a peak in early June, China's main indexes dropped by a third in less than a month, rebounded by a quarter, then saw their biggest one-day decline since 2007 on Monday. ID:nL3N1081IT Authorities in Beijing said they would redouble their efforts to shore up the market, something that could help soothe nerves in Western markets as well. DOMESTIC FOCUS Oil remained under pressure. Brent crude futures hit a new six-month low after Monday's Chinese stock market crash bred worries the world's biggest energy consumer may cut back demand, leading to a global supply glut. O/R Brent fell as much as 2 percent to $52.28 LCOc1 , a level not seen since February 2. U.S. crude CLc1 was down 1 percent just below $47 a barrel, its lowest since late March. The price of copper CMCU3 , heavily influenced by demand from key consumer China, recovered from Monday's six-year low and was up 1 percent at $5,245 a tonne on the London Metal Exchange. The broader Thomson Reuters CRB commodities index .TRJCRB also hit a six-year low overnight. In currency markets, the dollar rose against many of its key rivals, including the euro and yen, as traders bet that the first U.S. rate hike in almost a decade is still likely to come in September. "Undoubtedly the Fed has had its eye on China - and the other on Greece - when it comes to watching overseas developments," said Steve Barrow, head of G10 strategy at Standard Bank. "There's been some concern that either could blow away any thoughts of lift-off this year, but we very much doubt it. We think the Fed will stay focused on the domestic economy and will start to lift rates in September." The euro was down 0.5 percent at $1.1035 EUR= , almost a full cent down from Monday's two-week high of $1.1129, and the dollar was up almost 0.5 percent against the yen at 123.75 yen JPY= . Investors will also be looking to U.S. earnings on Tuesday and economic data releases, including Markit PMIs for July and CaseShiller house prices for May. Bond yields edged higher, with the 10-year U.S. Treasuries yield up 2 basis points at 2.25 percent US10YT=RR and UK and German yields up around 1 basis point. (Reporting by Jamie McGeever; Additional reporting by Lionel Laurent; Editing by Larry King; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub) ((jamie.mcgeever@thomsonreuters.com)(+44 0 207 542 8510)) Keywords: MARKETS GLOBAL

GLOBAL MARKETS-Stocks rebound, shrugging off volatile and weak China

July 28, 2015 - reuters.com

* European, U.S. stocks shrug off China fall * UK GDP, U.S. Fed in focus * Commodities under pressure By Jamie McGeever LONDON, July 28 (Reuters) - Stocks rose on Tuesday, with Europe snapping a five-day losing streak as investors shrugged off further weakness in commodity markets and Chinese shares to focus on more encouraging merger activity and earnings. Oil languished at four-month lows and China's benchmark stocks fell for a third straight day, but developed market equities and commodity currencies recovered. In early European trading the FTSEuroFirst 300 index of leading European shares was up 0.5 percent at 1,537 points .FTEU3 . Germany's DAX .GDAXI , France's CAC 40 .FCHI and Britain's FTSE 100 .FTSE were all up around 0.5 percent too, while S&P futures pointed to similar gains at the open on Wall Street SPc1 . "The latest count on our earnings monitor shows earnings-per-share beats at 76 percent," said Jim Reid, market strategist at Deutsche Bank. Among the main movers, RSA Insurance Group RSA.L surged 12.9 percent after Zurich Insurance ZURN.VX said it was weighing up a bid for the British group with a market capitalization of 4.4 billion pounds ($6.85 billion). ID:nL5N108159 Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ended the day 0.2 percent higher after falling nearly 1 percent early on, touching its lowest level since July 9. ID:nL3N1081IT Tokyo's Nikkei .N225 ended 0.1 percent lower. The main China indexes fell again, although by nowhere near as much as Monday's 8.5 percent plunge. The Shanghai market benchmark .SSEC closed 1.7 percent lower. Since hitting a peak in early June, Chinese shares have gone through a roller-coaster ride with main indexes plummeting by a third in less than a month before rebounding by a quarter, only to then have their biggest one-day fall since 2007 on Monday. ID:nL3N1081IT Authorities in Beijing said they will step up efforts to shore up the market, something which could help soothe nerves in Western markets as well. "The recent debasement seems to have revived hopes of having the central bank putting more money on the table, not only to support the stock prices but to prevent stock price volatility from hitting the real economy," said Ipek Ozkardeskaya Market Analyst, London Capital Group. OIL SLIDES The main economic indicator for investors on Tuesday will be Britain's first snapshot of economic activity in the second quarter. Economists expect gross domestic product to have expanded by 0.7 percent, up from 0.4 percent in the first quarter. The U.S. Federal Reserve begins its two-day policy meeting. No move on rates is expected this week, so close attention will be paid to whether Fed chair Janet Yellen signals September or December is the most likely date for "liftoff". The dollar was higher against many of its key rivals, including the euro and yen, with the consensus for the first U.S. rate hike in almost a decade still revolving around September. The euro was down a quarter of a percent at $1.1060 EUR= , slipping back from a two-week high of $1.1129 overnight, and the dollar was up a third of one percent against the yen at 123.60 yen JPY= . The greenback was under pressure against commodity currencies such as the Australian AUD= and New Zealand dollars NZD= , however, which were up around 0.5 percent and 1.0 percent, respectively. Sterling was steady at $1.5545 GBP= ahead of Q2 GDP, the first of all G7 GDP reports. Oil struggled at four-month lows after the Chinese stock market crash fuelled worries the world's biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut. O/R U.S. crude CLc1 was down more than 1 percent at $46.83 a barrel, its lowest since late March, while Brent was down almost 2 percent at $52.40 LCOc1 . The price of copper CMCU3 , heavily influenced by demand from key consumer China, recovered slightly to $5,213 a tonne on the London Metal Exchange. On Monday it fell to $5,177 a tonne, a six-year low. The broader Thomson Reuters CRB commodities index .TRJCRB also hit a six-year low overnight. Bond yields edged higher, with the 10-year U.S. Treasuries yield up 2 basis points at 2.25 percent US10YT=RR and similar rises in UK and German yields. (Reporting by Jamie McGeever; Editing by Mark Heinrich; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub) ((jamie.mcgeever@thomsonreuters.com)(+44 0 207 542 8510)) Keywords: MARKETS GLOBAL

Global Q2 gold demand weakest since 2009, Chinese buyers stay away-GFMS

July 28, 2015 - reuters.com

By Manolo Serapio Jr MANILA, July 28 (Reuters) - Global gold demand shrank to its lowest level since 2009 in the second quarter as China poured funds into equities, which had promised better returns, and imports by India dropped to the lowest in five quarters, an industry report showed on Tuesday. A plunge in Chinese share prices from mid-June has not helped bullion, GFMS said in a quarterly report, although it was cautiously optimistic that global demand and prices could start to pick up in the final quarter of the year. China and India are the world's top gold consumers. Physical demand there has not picked up strongly despite a sell-off last week that pushed global prices XAU= to their lowest since 2010. GFMS, a division of Thomson Reuters, said demand for gold bars and coins fell 12 percent year-on-year in April-June and was around 63 percent below the peak in the second quarter of 2013. In the largest consuming sector, jewellery, consumption dropped 9 percent and production declined 6 percent, GFMS said. Overall physical demand stood at 858 tonnes in the second quarter, down 14.2 percent from a year before. "Stock market growth was the story of the first five months in China and this saw substantially lower gold purchases," the report said. "The retreat in June and July did not help gold purchasing, either, as some investors were locked in and others were nervous about asset allocation." Gold prices have lost more than 7 percent this year as the dollar strengthened on expectations it would only be a matter of time before the U.S. Federal Reserve raised interest rates. A deep sell-off from New York to Shanghai last week dragged bullion as low as $1,077 an ounce and investors, worried prices could fall further, have hesitated to buy it back. Chinese purchases of gold bars and coins fell 26 percent year-on-year to 35 tonnes in the second quarter, the lowest since 2009, GFMS said. Jewellery buying dropped 23 percent to 102 tonnes. While jewellery consumption in India increased 2.5 percent to 158 tonnes during the period, gross imports fell 10 percent to the lowest in five quarters, the report said. China and India consumed almost the same amount of gold in January-June, with China a tad higher at 394 tonnes against India's 392 tonnes, it said. GFMS forecast gold would average $1,135 an ounce in the third quarter against $1,192 in April-June, before recovering to $1,175 in the last quarter of the year. "It remains our view that a U.S. rate hike this year is already priced into the market and that an increase could well prompt a review of asset allocations that leads to an increase in gold holdings," the report said. (Reporting by Manolo Serapio Jr.; Editing by Alan Raybould) ((manolo.serapio@thomsonreuters.com)(+632 841 8972)(Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net Twitter: @MannySerapio)) Keywords: GOLD DEMAND/GFMS

PRECIOUS-Gold not far from 5-1/2-year low as investors eye Fed

July 28, 2015 - reuters.com

* Dollar gains ahead of Fed's two-day policy meeting * China stocks rout fails to spark safe-haven bids * Coming Up: U.S. consumer confidence; 1400 GMT (Adds Valcambi outlook on China imports, updates prices) By Manolo Serapio Jr MANILA, July 28 (Reuters) - Gold hovered near its weakest level since early 2010 on Tuesday, reflecting investor hesitation to bid up bullion amid growing expectations of a near-term hike in U.S. interest rates. The Federal Reserve begins a two-day meeting later in the day where policymakers are likely to signal that a rate hike later in the year is certain as the U.S. economy strengthens. A further tumble in Chinese equities after their deepest rout since 2007 on Monday has barely affected trading in gold, typically seen as a safe haven. .SS "If anything it's a little bit surprising that we haven't had the safe-haven bid in gold even though you've had these big risk-off moves in the Chinese equity market," said Victor Thianpiriya, commodity strategist at ANZ Bank in Singapore. Spot gold XAU= was up 0.3 percent at $1,096.96 an ounce by 0615 GMT. Bullion fell to as low as $1,077 on Friday, its cheapest since February 2010, stretching its losing run to a fifth week. The earlier rout in Chinese stocks this month as well the Greek debt crisis had failed to spark any safe-haven bid for gold, with investors largely focused on a looming U.S. rate hike. That has strengthened the dollar and dimmed the appeal of non-interest bearing assets such as bullion. Investor confidence in gold remained shaky after last week's slide accompanied by big trading volumes in New York and Shanghai. The metal lost more than 3 percent last week, the most since March. HSBC, which has slashed its gold price forecasts for this year and next, said the precious metal is likely to remain under pressure in the short term and "could move to within striking distance of $1,000/ounce before recovering". ID:nL3N10756O The big driver for more price losses for gold is an impending U.S. rate increase and analysts are awaiting more confirmation from the Fed towards that end when this week's policy meeting wraps up on Wednesday. "We're still expecting a fourth-quarter lift-off in the Fed funds rate and that's when you'll see the trough in gold or we could potentially see gold take another leg lower," said Thianpiriya, pegging the next major support at $1,045 if $1,080 is breached again. U.S. gold for August delivery GCcv1 was flat at $1,097 an ounce. Spot platinum XPT= and palladium XPD= rose slightly. Also weighing on sentiment, China's net gold imports from main conduit Hong Kong fell to a 10-month low in June, reflecting weak demand from the major consuming nation. ID:nL3N1073E0 China's gold imports could fall as much as 40 percent this year as demand for bullion used to back domestic financing deals decreases, said Michael Mesaric, head of the world's biggest refiner Valcambi. ID:nL3N1074L9 (Editing by Himani Sarkar) ((manolo.serapio@thomsonreuters.com)(+632 841 8972)(Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net Twitter: @MannySerapio))

Keywords: MARKETS PRECIOUS/

INDICATORS - Kazakhstan - July 28

July 28, 2015 - reuters.com

China's gold imports to plunge as financing deals unwind-Valcambi

July 28, 2015 - reuters.com

By Rajendra Jadhav MUMBAI, July 28 (Reuters) - China's gold imports could fall as much as 40 percent this year as demand for bullion used to back domestic financing deals decreases, the world's biggest refiner Valcambi said. A lot of the gold China imported in the last three years was used to secure cheaper loans due to a liquidity crunch, but that is now flowing back into the market as lending rates drop. "All this gold that was used for financing has been given back as there is liquidity in the market and liquidity is cheap," Valcambi Chief Executive Michael Mesaric told Reuters. "There is no need to use gold anymore," Mesaric said. Lower demand from China, which accounts for nearly a fifth of global consumption, may add pressure on global prices XAU= that tumbled last week to $1,077 an ounce, the lowest since 2010, and have yet to recover strongly. Chinese firms may have locked up as much as 1,000 tonnes of gold in financing deals, the World Gold Council said in a report last year. But Mesaric said after China's central bank has continuously cut lending rates to support the economy, China's gold imports had been dropping. "The market is supplied by itself by gold coming out of loans, financing," he said. China's gold imports via main conduit Hong Kong dropped to a 10-month low in June, data showed on Monday. Imports fell to 813.13 tonnes last year from a record 1,158.16 tonnes in 2013. ID:nL3N1073E0 China does not provide official trade data on gold and the Hong Kong numbers serve as a proxy for flows to the mainland. The Hong Kong data, however, does not provide a full picture as Chinese imports also come directly through Shanghai and Beijing. Mesaric was referring to China's imports via all routes in estimating the fall in this year's purchases. The decline in China's appetite is evident in modest premiums on the Shanghai Gold Exchange over the global benchmark, said ANZ Bank commodity strategist Victor Thianpiriya. "In the past two years we've seen a big pickup in the Shanghai premium which makes it profitable for traders to import gold and sell them on the domestic market and we're not seeing that premium pick up this year," said Thianpiriya. Lower imports from China could pull gold towards $1,025 an ounce, said Mesaric. "I think $1,025 is a good support. In worst case scenario gold can drop to $950, but I don't think at the moment that is going to happen." (Additional reporting by Manolo Serapio Jr in Manila; Editing by Anand Basu) ((rajendra.jadhav@thomsonreuters.com)(+91-22-6180-7153)(Reuters Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net)) Keywords: CHINA GOLD/IMPORTS

MIDEAST STOCKS - Factors to watch - July 28

July 28, 2015 - reuters.com

DUBAI, July 28 (Reuters) - Here are some factors that may affect Middle East stock markets on Tuesday. Reuters has not verified the press reports and does not vouch for their accuracy. INTERNATIONAL/REGIONAL * GLOBAL MARKETS-Asian stocks hit 3-week lows as China gloom spreads MKTS/GLOB * MIDEAST STOCKS-Oil, earnings and global equities weigh on Gulf ID:nL5N10728Z * Oil prices fall close to four-month lows on China, glut worries O/R * Gold stuck near 5-1/2-year low as Fed rate hike looms ID:nL3N1080OK * India to sell high-grade iron pellets to Iran as ties strengthen ID:nL3N10817A * Turkey, U.S. aim for zone cleared of Islamic State in northern Syria ID:nL5N107474 * Kerry heads for Egypt and the Gulf to discuss Iran deal, ISIS ID:nL5N10747Y * Saudi Arabia accuses Iran of making threats to neighbours ID:nL5N10748L * UN hopes to boost aid to Aden as Yemen frontline moves north ID:nL5N107206 * Foreign insurers taking cautious look at Iran after nuclear deal ID:nL5N1041RC TURKEY * Turkey may revise economic targets once government is formed - finance minister ID:nI7N0ZA03S * Spain's BBVA sees bigger hit from Garanti buy due to weak lira ID:nS8N0ZO03U EGYPT * Egypt could import less wheat, to start new local wheat buying system in 2016 ID:nL5N10736T * Egypt's Pioneers plans IPO of real estate developer Rooya -CEO ID:nL5N1071C2 SAUDI ARABIA * Brazil looking to open Canadian, Saudi Arabian fresh beef markets ID:nE6N0ZF03E * Saudi's PetroRabigh Q2 net profit nearly triples ID:nD5N106005 * Saudi's Tasnee slumps to Q2 net loss as costs rise and sales prices fall ID:nD5N106004 * Saudi's Sipchem Q2 net profit down 55 pct as plant closures, falling prices weigh ID:nD5N106003 * Saudi's Mouwasat Medical services Q2 net profit falls 6 pct, misses forecasts ID:nD5N106002 UNITED ARAB EMIRATES * Standard Chartered audit head to become UAE chief executive ID:nL5N1072Q3 * TABLE-UAE central bank June foreign reserves rise 1.5 pct y/y ID:nL5N1072XH * UAE to cut state spending by 4.2 percent this year -central bank ID:nL5N1072PL * RBS ends plan to sell UAE transaction services to ADCB -sources ID:nL5N1072HP * Dubai Financial Market Q2 net profit drops 48 pct ID:nD5N106009 * Dubai developer Nakheel says H1 profit jumps 53 pct ID:nL5N10727A * TABLE-UAE central bank May foreign reserves rise 5 pct y/y ID:nL5N1071PP QATAR * Moody's: Al Khalij Commercial Bank (al khaliji) Q.S.C.'s asset quality and capital strengths moderated by high reliance on market funding ID:nMDY3qfcJ7 * TABLE-Qatar June trade surplus tumbles 52.5 pct y/y ID:nL5N1071VE (Compiled by Dubai newsroom) ((dubai.newsroom@reuters.com)) Keywords: MIDEAST FACTORS/

PRECIOUS-Gold stuck near 5-1/2-year low as Fed hike looms

July 28, 2015 - reuters.com

MANILA, July 28 (Reuters) - Gold languished near its weakest level since early 2010 on Tuesday, with no meaningful recovery seen as expectations for a U.S. interest rate increase grow. The Federal Reserve begins a two-day meeting later in the day where policymakers are likely to signal further that a rate hike later in the year is certain as the U.S. economy strengthens. FUNDAMENTALS * Spot gold XAU= was flat at $1,093.45 an ounce by 0051 GMT. Bullion fell to as low as $1,077 on Friday, its cheapest since February 2010, stretching its losing run to a fifth straight week. * U.S. gold for August delivery GCcv1 slipped 0.3 percent to $1,093 an ounce. * Amid weaker gold prices, holdings of the world's biggest gold-backed exchange-traded fund, the SPDR Gold Trust GLD , fell for a seventh day on Friday to 21.87 million ounces, the lowest since September 2008. GOL/ETF * Also weighing on sentiment, China's net gold imports from main conduit Hong Kong fell to a 10-month low in June, reflecting weak demand from the major consuming nation. ID:nL3N1073E0 * Money managers, who have been cooling on gold for some time, last week held more short positions than long ones in the precious metal for the first time in nearly a decade, Bank of America said, suggesting an expectation prices will continue to fall. ID:nL1N1071HY * Speculators have confirmed what everyone else has been thinking: expect more falls in commodities, as worries about China and higher interest rates combine with waning sentiment to suggest markets are heading further south. ID:nL5N1072VQ * For the top stories on metals and other news, click TOP/MTL or GOL/ MARKET NEWS * Asian stocks retreated, waiting nervously to see how Chinese shares fare later in the session after Monday's slump all but erased risk appetite. MKTS/GLOB * The safe-haven yen held firm as investors remained cautious ahead of the Federal Reserve meeting. USD/ DATA/EVENTS AHEAD (GMT) 1300 U.S. S&P/Case-Shiller housing index May 1345 U.S. Markit services PMI flash July 1400 U.S. Consumer confidence July 1400 U.S. Richmond Fed composite index July Federal Open Market Committee begins two-day policy meeting (Reporting by Manolo Serapio Jr.; Editing by Himani Sarkar) ((manolo.serapio@thomsonreuters.com; +632 841 8972; Reuters Messaging: manolo.serapio.thomsonreuters.com@reuters.net Twitter: @MannySerapio))

Keywords: MARKETS PRECIOUS/

Login required

Please note that, in order to view the full text, you must be logged-in at our system.

Please login at the easy-forex homepage (new users need registration).

Thank you.