While Spanish bonds weakened for a second day and Catalonia added its name to the list of regions requiring a Spanish government bailout, fears mounted over a possible Greek exit from the euro as international creditors prepared to meet in Athens. Compounding worries were remarks by German Vice Chancellor Philipp Roesler that Greece's prospective departure from the common currency "long ago lost its terror." The growing anxieties helped send the euro to new lows against the dollar. 

Bundesbank sees mixed future for German economy

Moderate growth in the latest quarter and a cloudy picture moving forward have led the Bundesbank to temper its forecast for the German economy. "The outlook for further economic development is marked by great uncertainty," the central bank said in its monthly report. Germany's Ifo business-sentiment indicator last month fell to its lowest level in two years. 

Eurozone crisis hits British manufacturing hard

The eurozone crisis is taking a heavy toll in British manufacturing, which is forecast to contract 0.3% this year while the overall British economy posts 0.2% growth, according to the manufacturers organization EEF. Looking ahead, the EEF said an exit of even one country from the eurozone would deal a severe blow to future British output.

Japan continues to see modest recovery, though clouds gather abroad

With indications of further trouble in the Chinese and U.S. economies, the danger to the Japanese economy is growing, the government's Cabinet Office says in its latest report. Nonetheless, further reconstruction efforts and strong consumer spending domestically continue to fuel a moderate recovery, the office said. 

Market Activities
Euro fears drive U.S. Treasury bonds to record-low yield

Investors rushed to the safety of U.S. Treasury bonds Monday as fears grew over the crisis in the eurozone. The frenzy pushed yields on 30-year U.S. Treasurys to a record-low 2.476%. 

INTERNATIONAL MARKETS OVERVIEW

European stocks took a broad hit Monday as worries grew over Spain's borrowing costs and the likelihood of another bailout, as well as the increasing possibility that Greece will leave the euro. The Stoxx Europe 600 index was down 2.49% for the day. The U.S. market joined in the downward trend, with the S&P 500 falling 0.89%. Here is a continuously updated list of global stock indexes. 

Economic Trends & Outlook
Revenues for India's leading industries surge in years of global trouble

India's leading industries have doubled their overall revenue in the past five years even as the global economy has struggled. Leading the way over the period were metals, technology, telecom, power, refining, automobiles, banking, pharmaceuticals and finance.

Rise in food prices might prove vexing for Indian economy

India may well be in for higher food prices, with all the attendant negative implications for inflation and the nation's economy. Monsoon rains have been uneven so far, and indications are that South Asia will see extended dryness.

Australia's economy grows 3.2% over latest 12 months

Marking the 21st consecutive year of economic growth, Australia's economy expanded 3.2% in the year ended last month, according to the Deloitte Access Economics Business Outlook. Separately, on the inflation front, Australia's central bank is expected to report a rate Wednesday that's below its target range. 

Taiwan reports a decline in industrial output

Citing the problematic global economy, Taiwan's Ministry of Economic Affairs reported that the industrial output index edged back 2.44% to 128.59 last month. The steepest declines were recorded in the machinery equipment, computer, electronics and optical product sectors, noted Lin Lee-jen, director of the ministry's statistics department. 

China's property market heats up again

New danger signs are emerging in China's housing market, with 25 cities seeing price gains last month out of the 70 monitored by the Chinese Academy of Social Sciences, up from just six in May. Looking ahead, "the top priority is to change the market expectation," the CASS report said, urging better regulatory measures. 

South Korean finance minister warns to prepare for the worst

South Korea's finance minister warns that the country should prepare for the worst as the euro crisis drags out but says more-efficient spending and improvements in the tax system should suffice. "To improve our financial soundness, we must make sure not even a penny is wasted while building up enough means to spare in case of a crisis," Bahk Jae-wan told a government committee on fiscal management. 

Myanmar, Thailand reach broad development accords

Accelerated development of a special economic zone in Dawei, Myanmar, is part of a series of cooperation agreements reached between Myanmar and Thailand in a meeting between the two countries' leaders. Memorandums on technical cooperation and economic development were also signed that should mean "consumer goods and capital goods will soon be freely transported without tax barriers," observed Somjai Phagaphasvivat, an independent academic on economics and finance. 

A youthful Southeast Asia takes spotlight from rest of region

Low wages and, above all, youth are increasingly luring major investment from Asia's leading but aging economies to the Philippines and other developing nations in Southeast Asia, and booms in consumer and property markets in the region are following. "The demographic dividend is over for Japan and Korea, and it will be over for China soon. It's happening now in the ASEAN area, and it will continue for some time," observed Yoshimasa Maruyama, chief economist at Itochu. 

Capital Markets & Financial Products
China mutual fund profits rise, QDII funds post loss for 2nd quarter

The second quarter saw a significant improvement for China's mutual fund industry, with profits up 63% across 1,003 funds. However, QDII funds posted losses of 4.1 billion yuan for the period, reversing profits of 5.1 billion yuan in the first quarter. 

In record deal for China, Cnooc agrees to acquire Canada's Nexen

In what would be China's biggest foreign acquisition to date, the state-controlled Cnooc oil company has agreed to acquire Nexen, a Canadian energy producer, for $15.1 billion. The deal, if approved, would give Cnooc key abilities in the complex energy field of shale gas and oil sands. 

Indonesia taps yuan bonds to diversify its reserves

With an uncertain short-term outlook for the euro and long-term outlook for the U.S. dollar, Indonesia has become the latest country to buy yuan-denominated bonds to diversify and strengthen its foreign-exchange reserves. The move also comes as China seeks new avenues to open up its currency for global trade and development. 

Industry & Regulatory Update
Indian government likely to cap FDI in pharmaceuticals

A 49% cap on FDI ownership in the Indian pharmaceutical sector is likely to emerge as a Finance Ministry group meets today to decide on how the government should guide investment moving forward. The government has been concerned over a surge in acquisitions by foreign pharmaceutical companies and seeks to limit their influence to ensure continued access to inexpensive drugs domestically. 

Ethics & Standards
JPMorgan casts doubt on suspected CD rate rigging in South Korea

JPMorgan has come to the defense of South Korean banks and brokerages suspected of manipulating interest rates on certificates of deposit. South Korea's Fair Trade Commission launched an inquiry into the allegations last week. JPMorgan says there was little potential benefit or motivation for such rigging as the suspected banks and firms have relied less on CDs for funding.