Reducing borrowing costs was set as a goal for eurozone members of the Group of 20 nations. Under one plan, rescue funds would buy sovereign debt as long as struggling countries abide by reform agendas. Meanwhile, G-20 leaders called on Europe to speed up financial integration, the subject of talks scheduled next week among European leaders.

Conservative takes office as prime minister in Greece

Pro-bailout conservative Antonis Samaras was expected to name a unity government after being sworn in as Greece's prime minister. The government will be an alliance of longtime rivals: the New Democracy party, headed by Samaras, and the Panhellenic Socialist Movement. Both promised to negotiate a relaxation of austerity measures imposed as part of the nation's bailout by the EU and the International Monetary Fund.

Fed launches modest expansion of bond-buying program

The Federal Reserve said it will extend the life of Operation Twist with the purchase of $267 billion in long-term Treasurys over the next six months to drive down borrowing costs and prop up the struggling U.S. economic recovery. Chairman Ben Bernanke said the central bank needs more information on the U.S. recovery and events in Europe before launching any major stimulus programs. 

U.K. will give shareholders a binding vote on executive pay

British Business Secretary Vince Cable said the government will adopt rules guaranteeing the right of shareholders of publicly traded companies to vote on executive compensation once every three years. He said rules will be binding on management. 

Coordination could help exchanges avoid mishaps, exec says

Joseph Mecane, an NYSE Euronext executive, said exchanges should have the power to suspend trading in a specific security across all venues to avoid issues such as the problems that arose with Facebook's initial public offering. Exchanges can halt trading on their own platforms, but don't have the ability to do so on other markets. "Sometimes as much testing as you do, there are situations that come up that you can't plan for," Mecane said at an industry conference. "A lot of this increased speed and automation and infrastructure and complex routing comes at a cost." 

LEI system is ready to go, experts say

Regulators and industry groups have noted progress being made for a system of legal-entity identification. Robin Doyle, co-chairwoman of the LEI Trade Association Group, said the system is poised to launch. At an industry conference, Depository Trust & Clearing executive Mark Davies demonstrated the online portal that market participants will use to register and obtain identification codes as well as search for other entities' codes. Scott O'Malia of the Commodity Futures Trading Commission said the U.S. will move forward with the system despite a delayed global agreement. 

Market Activity
Weak Chinese factory data drive down most Asian-Pacific markets

Most Asian-Pacific share markets declined Thursday after data showed that China's manufacturing sector is still contracting. Australia's S&P/ASX 200 fell 1.1%. South Korea's Kospi declined 0.8%. Hong Kong's Hang Seng Index dropped 1.3%. China's Shanghai Composite decreased 1.4%. India's Sensex was down 0.3% shortly after midday. Japan's Nikkei 225 bucked the trend, advancing 0.8%.

Spain pays euro-era record high to sell short-term debt

Spain was forced to pay 5.07% to sell 12-month Treasury bills and 5.11% for 18-month paper, a euro-era record. The country is lurching toward being shut out of credit markets. The situation shows a €100 billion rescue for Spanish banks hasn't calmed investors.

Monti suggests tapping rescue funds to buy government bonds

Italian Prime Minister Mario Monti proposed at the Group of 20 summit in Mexico that the bloc's two rescue funds buy government debt of countries such as Spain and Italy. But such a tactic is unlikely to rally investors unless the European Central Bank acts.

Economics

Fed sharply lowers forecasts for economic growth and jobs

The Federal Reserve painted a much darker picture of the U.S. economy through 2014 and warned that unemployment will top 8% through 2013. The central bank expects the economy to expand 1.9% to 2.4% this year, compared with 2.4% to 2.9% predicted in April. 

Bank of England appears close to more quantitative easing

The Bank of England is expected to stimulate the economy by exercising another round of quantitative easing next month. While the majority of policymakers voted to keep QE stable, at £325 billion, the vote was close and is expected to go the other way soon. Those who wanted an increase pushed for an additional £25 billion or £50 billion. 

Preliminary data from HSBC Holdings and Markit Economics' purchasing managers index suggest that China is headed into its eighth month of manufacturing contraction, marking the longest continuous decline in its factory output since the 2008 financial crisis. The preliminary reading for June is 48.1, down from May's final reading of 48.4, on a scale in which any number below 50 indicates contraction. 

Analysis: Farm bill would cost U.S. taxpayers even more

The U.S. Senate agriculture committee proposed a farm bill that aims to cut subsidies. However, it could cost taxpayers considerably more than the program being replaced, according to The Economist. The proposal comes when crop prices are at a historic high, farm failure is less than 0.5% annually and farm income is the highest in nearly 40 years, the magazine notes.

Geopolitical/Regulatory
U.S. lawmakers call on SEC to reform IPO process

Facebook's initial public offering triggered bipartisan demand in the U.S. that the Securities and Exchange Commission reform IPOs to prevent small investors from being put at a disadvantage. Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee, and Sen. Jack Reed, chairman of a Senate banking subcommittee, separately called for IPO reform. 

China prepares tougher restrictions on rare-earth industry

China plans to increase regulation of mining, refining and exportation of rare-earth materials, according to a paper by the Information Office of the State Council. Exportation will continue, in compliance with World Trade Organization rules, the government said.

CFTC is told high-frequency trading should be broadly defined

A U.S. Commodity Futures Trading Commission working group said high-frequency trading should be broadly defined by securities regulators to prevent market participants from circumventing trading rules through regulatory arbitrage. "It is important to recognize that high frequency trading is a means rather than an end in itself, and that there are many types of market activity that can be potentially labeled as HFT," the working group said in a report to the commission's Technical Advisory Committee. 

U.S. regulator voices concern about banks' overseas activity

The U.S. is vulnerable to risky banking activity overseas, said Gary Gensler, chairman of the Commodity Futures Trading Commission. Gensler's comment comes in the wake of JPMorgan Chase's large trading loss, which stemmed from a London unit. "So often it comes right back here, crashing to our shores ... if the American taxpayer bails out JPMorgan, they'd be bailing out that London entity as well," he told U.S. lawmakers. Meanwhile, market participants and experts said criticizing London as a haven of regulatory loopholes could make it more difficult to align European and U.S. rules.

Financial Products
Huntington launches ETF with ecological focus

Huntington Asset Advisors brought to NYSE Arca an actively managed exchange-traded fund that buys stocks of ecologically focused companies. The Huntington EcoLogical Strategy ETF invests in companies that not only qualify as green but also offer affordable products, the company said.