A day before its expected decision on interest rates, the Reserve Bank of India laid out a grim scenario of lower growth and higher inflation for the nation's economy. It also urged quicker stimulus action from the government. Separately, Deloitte forecast Indian growth below 6.5% and persistent inflation worsened by food prices in a spotty monsoon season.

Eurozone sentiment declines as Morgan Stanley predicts grim future

The July economic sentiment indicator for the eurozone declined to 87.9 from 89.9 in June, and The consumer confidence index dropped to -21.5 from -19.8, according to the latest reading from the European Commission. Meanwhile, Morgan Stanley's new outlook for the eurozone is for continued austerity measures taking a harsh toll across most of Europe, with only a few bright spots to relieve the broadly grim picture. 

Spain posts third consecutive quarter of falling GDP

Spain recorded a third consecutive quarter of economic contraction, with output declining 0.4% in the latest period, principally due to lagging domestic demand. For the full year, the government now predicts a 1.5% shrinkage in gross domestic product, to be followed by a further 0.5% pullback in 2013. 

Despite gloom, U.K. central bank isn't expected to budge on rates

Despite recent indicators that the U.K. economy remains in the mire and upcoming manufacturing figures that are projected to be dismal, the Bank of England's Monetary Policy Committee is expected to leave interest rates at 0.5%. It is widely hoped that London's staging of the Olympics will provide a boost in the third quarter, but any stimulus is believed unlikely to prevent overall economic shrinkage for the year. 

Shanghai hopes to oust Hong Kong as Asia's top financial center

Shanghai has formidable obstacles to overcome before it has a chance of achieving its goal of replacing Hong Kong as Asia's most important financial center. 

Banks reportedly help in Euribor case; U.K. seeks quick action on Libor

A number of banks suspected of manipulating the euro interbank offered rate are reported to be working with EU authorities to avoid heavy penalties. Meanwhile, the U.K. government is pursuing swift Libor reform to limit damage to London's standing as a financial center.

Market Activities

INTERNATIONAL MARKETS OVERVIEW

U.S. investors largely marked time Monday awaiting word from central banks this week on what, if any, action they intend to take to stimulate the global economy. The S&P 500 ended the day nearly flat. In Europe, however, the mood was more buoyant in anticipation, with the Euro Stoxx 50 climbing 1.7%. Here is a continuously updated list of global stock indexes.

Economic Trends & Outlook


Japan's low industrial output surprises; Korean confidence ebbs

In a surprise to economists who projected a 1.5% gain for Japanese industry for June, the final reading showed a 0.1% decline, partly undermined by the strength of the yen in a struggling global economy. Meanwhile, South Korea's manufacturer confidence index looking ahead to August is pegged at 70, down from 81 for July, the country's central bank reported. 

List of S. Korea's top companies undergoes transformation over 7 years

The seven years since 2005 have seen a nearly two-thirds turnover in the list of the 20 leading large-cap companies on South Korea's Kospi. Rapidly changing economic trends and the global economic meltdown are believed to have contributed to the wide-scale change.

China offers selective aid to carefully boost real estate market

Despite wariness over the tendency of China's real estate market to overheat, the China Banking Regulatory Commission is offering credit backing for new buyers in the market looking to build modest homes. "Previously, speculators dominated the market, but the government has stepped up efforts to change that. ... Such selective easing will ensure that prices don't rise too much," said Joe Zhou, head of research for Jones Lang LaSalle in Shanghai. 

Commercial property defaults in South Korea raise concern

In a worrying sign, South Korea's default rate for loans backed by commercial property reached 1.44% at the end of May for six leading banks, topping even the 0.93% for housing-related loans. The high rate is seen as a troubling indicator for the South Korean economy as a whole, given commercial property's closer links to economic activity.

Business sentiment drops in South Korea

Europe's unresolved debt crisis has weighed on business sentiment in South Korea, with July's Business Survey Index falling to 71, down from 82 in June. It was the third consecutive of decline, with weaker domestic demand also a factor. 

Capital Markets & Financial Products


Despite gains in Asia, HSBC posts lower net income

Asia was a bright spot for London-based HSBC Holdings as it posted an overall 8.3% decline in net income for the first half. The result was weighed down by $2 billion set aside for penalties associated with allegations that the bank helped launder Mexican drug money. In Asia, however, pretax profit excluding Hong Kong climbed 17% to $4.37 billion.

Beijing clears first provincial bond issue since 1994

Beijing has approved the planned issue of 10.4 billion yuan in bonds by China's Zhejiang province, the first of an expected series of local issues. The plan is the first since 1994, when the central government barred bonds and budget deficits by local governments amid concerns over the debt they were running up. 

2012 may be record year for Chinese investment in U.S.

After reaching a record $3.6 billion in the first half of 2012, China's investments in the U.S. are expected to set a full-year record as well, according to a report by Rhodium Group. The inflow could help the U.S. economy during its current stretch of low growth. "Chinese investment in the U.S. offers great potential and will help stabilize growth in the next decade," said Ge Shunqi, deputy head of the Institute of International Economics at Nankai University in Tianjin. 

Hang Seng Bank posts strong 14% gain in profit

Hong Kong lenders may be riding out Europe's debt troubles better than expected, as suggested by a wider-than-anticipated 14% jump in Hang Seng Bank's profit for the first half. "Hang Seng's lending profitability continued to widen in the first half after improvements in the second half of last year, which is very encouraging, given the current operating environment," said Ivan Li, deputy head of research at Kim Eng Securities Hong Kong. 

U.S.-based SkyBridge plans Hong Kong office, Asia fund

SkyBridge Capital, a U.S. fund of hedge funds, has laid plans for an office in Hong Kong as it looks to a vibrant future in China's hedge fund industry. The tentative 2014 opening would follow SkyBridge's planned launch of a Singapore office early next year and the introduction of an Asia-focused fund of $250 million to $500 million by the end of 2013.

People & Personalities


Ravneet Gill to head Deutsche Bank's Indian operations

Ravneet Gill has been tapped as chief of Deutsche Bank's India operations. Gill, formerly head of capital markets and treasury solutions, succeeds Gunit Chadha, who took on a larger role at the bank last month.