The economic free fall in Greece continued in the second quarter, with an annualized 6.2% contraction in gross domestic product that renders it more difficult for the government to meet fiscal obligations. In Germany, meanwhile, a key parliamentary ally of Chancellor Angela Merkel said that any failure by Greece to meet its targets would bring a swift veto from Berlin for any additional assistance. 

Most U.K. companies plan layoffs if economy remains sour

If the U.K. economy doesn't turn around in the next year, nearly two-thirds of British companies say they plan to reduce their workforces, a survey finds. U.K. employment is somewhat better than the European average, but the survey revealed that nearly a third of British companies say they're currently keeping on more staff than they need; many of them are doing so to maintain their skill base in the event of an upturn. 

Japan's recovery looks frayed as growth rate declines

Although exports were up 4.8% in the latest quarter, Japan's growth in gross domestic product was down sharply at an annual 1.4%, dropping from a rate of 5.5% in the previous period. The global economic crisis figured strongly in the new figures, but so did a pullback in previously robust domestic demand. The government says the nation's recovery remains on track, but analysts say there are growing signs of fading optimism among both businesses and consumers. 

Taiwan nears accord with China on renminbi clearance

Taiwan is expected to join Hong Kong and Macao as the only global venues with offshore renminbi clearance banks when China and Taiwan sign a memorandum of understanding for cross-strait currency clearance. The signing could come as early as this week, pending reviews by the two central banks. 

Market Activities

INTERNATIONAL MARKETS OVERVIEW

European shares fell as worries over the eurozone and the global economic slowdown once again took hold in the absence of previously hoped-for central bank action. In the U.S., shares were down as well for much the same reason, with a particular focus on whether the market should expect any help from the Federal Reserve. The Euro Stoxx 50 index was down 0.3% for the day, and the S&P 500 ended 0.13% lower. Here is a continuously updated list of global stock indexes.

Economic Trends & Outlook

As economic numbers fade, Beijing may remain cautious

Analysts now expect China will fall short of its goal of 10% trade growth this year. Nonetheless, expert opinion is divided over whether Beijing will move more aggressively to stimulate the economy or wait to see whether previous measures bear fruit. Certainly, caution appears to be the order of the day in China's housing market, where Beijing is planning for higher property taxes. 

India central bank chief highlights inflation, blames government

Pointing a finger at the Indian government, the central bank's governor, Duvvuri Subbarao, said inflation remains a pressing concern and called on New Delhi "to generate supply so that we produce more, and that will bring down inflationary pressures." Subbarao also cited the problem of deficit spending that is "going into government expenditure, which is consumption expenditure that's going into people's hands," increasing demand and raising prices. 

With global gloom deepening, Hong Kong cuts growth forecast

Hong Kong has scaled back its growth forecast for the year to 1% to 2% after posting 1.1% annual growth for the second quarter. The export-heavy economy has been hit hard by the worldwide economic slowdown, especially in Europe. "With the crisis in the eurozone set to intensify, we expect global weakness to continue to depress Hong Kong's export sector, making a strong rebound in the economy unlikely," said Gareth Leather, an economist with Capital Economics Asia.

Having matured in their own markets, SE Asian companies reach out

Following a pattern set by powerhouse companies elsewhere in Asia, prosperous Southeast Asian firms are now looking for room to grow and expand outside their crowded home markets. The search is adding to asset prices across a range of industries and stepping up global competition. "There's a lot of economic power sitting in Southeast Asia, and this is being reflected in the companies," said Rajiv Biswas, Singapore-based chief Asia economist for IHS Global Insight.

Capital Markets & Financial Products

Australia plans sharper watch over automated trading

Taking a cue from market mishaps elsewhere, Australia is planning tighter controls over automated share trading, including regular tests to ensure systems operate properly.

Bank of Communications wins clearance for share sales

In a development described as freighted with "great significance" for China's financial sector, China's securities regulator has cleared Bank of Communications to sell as much as 56.6 billion yuan of publicly traded shares to private investors. The bank, which intends to replenish capital with the sale, has selected a number of investors, including the Ministry of Finance, the pension fund and large institutions such as HSBC. 

Julius Baer moves strongly into Asian markets with acquisition

Greatly expanding its presence in Asian growth markets, Julius Baer is acquiring Bank of America Merrill Lynch's overseas wealth-management business. The $882 million purchase means that half of the Swiss bank's business will be in emerging markets, mainly in Asia.

Global ills weigh heavily on results at South Korean securities firms

A sharp decline in stock trading value due to the eurozone crisis and global slowdown has proved costly for South Korean securities firms, whose net profits are down 72.7% in the latest quarter from a year before. And out of 62 brokerages, 21 reported losses for the period. 

PE funds help Chinese companies struggling in U.S. market

With many Chinese stocks struggling in the U.S. market, the state-owned China Development Bank is helping those seeking to go private by providing funds for private-equity groups. "If you can distinguish between a good company and a company that has issues, you can do very well investing in China," observed Kevin Pollack of Paragon Capital in New York. 

Yuan-against-dollar market bets reflect confidence in China

Securities that bet against the dollar and in favor of the yuan are selling well as volatility in the yuan-dollar exchange rate hovers near a 10-year low. The popularity indicates underlying confidence in the yuan and the Chinese economy despite recent signs of slowing.

Analyst sees China slowdown, bets on Europe

China's economy is in for a rough spell, and European stocks at the moment are worth buying, says Marc Faber, publisher of the Gloom Boom & Doom report. Faber says the time to consider Chinese shares is after waiting to see whether stimulus measures work. Meanwhile, "for the first time in my life, I've started to buy some European stocks, and I will buy more over time," Faber said.

Industry & Regulatory Update

CITIC Securities shares drop amid reports of arrest, overseas loss

CITIC Securities dismissed as unfounded rumor a report that its chairman, Wang Dongming, has been seized by police for investigation. A report also surfaced of a large loss on an overseas investment as the company's stock plunged more than 9%. 

Settlement talks under way with Standard Chartered

With New York state regulators and Standard Chartered said to be eager to reach agreement, the bank is seeking a settlement over allegations of illegal dealings with Iran.