The state of New York has agreed to a $340 million settlement of its case against Standard Chartered. The U.K.-based international bank had been accused of handling $250 billion in Iranian funds in violation of U.S. sanctions against Iran. The settlement will not end U.S. federal agencies' investigations of the bank's dealings with Iran. 

India reports sub-7% inflation, but rate outlook is unclear

At 6.9% in July, India's inflation is the lowest it has been since late 2009. Some analysts, however, doubt the reliability of the government figure, noting core inflation was higher even as food prices were reported easing. Forecasts of whether the central bank is now likely to cut rates differed, with some seeing a half-point cut in the near future and others predicting no action. 

Indian exports plunge in July

Indian exports were down nearly 15% in July for the sharpest falloff in three years. Commerce Secretary S.R. Rao cited the severe fiscal crisis in the eurozone and slackening demand from the U.S. as contributing factors. Rao said it now will be a "stiff challenge" to achieve the full-year export target of $350 billion. 

Second-quarter shrinkage casts gloom over eurozone

The economy of the 17-nation eurozone shrank 0.2% in the second quarter, burdened by budget cuts and the intractable debt crisis. The main problem lies in the struggling economies of the so-called periphery, said Martin Van Vliet, an economist at ING Bank in Amsterdam. "Any recovery will likely remain sluggish and fragile. There are a lot of things that could go wrong on the crisis resolution that could derail the envisaged recovery," Van Vliet said. 

Germany tops forecasts with 0.3% growth

Marking a significant departure from the eurozone contraction, Germany's economy grew at a 0.3% pace in the second quarter, topping analysts' estimates. "Positive contributions came from both consumer spending and from net foreign trade," commented Destatis, Germany's statistics office. 

France barely avoids a 2nd-quarter contraction

With boosts from the private and public sectors, France's economy narrowly avoided contracting in the second quarter, with no growth. Economists had expected a 0.1% pullback, but the better result allows some room for the government to pare the country's budget deficit. 

Struggling Spain posts 2nd month of rising inflation

Despite a deeply mired economy and soaring unemployment, Spain's core consumer inflation rate edged up for the second month in July, to 1.4%. Separately, European Economic and Monetary Affairs Commissioner Olli Rehn suggested that the Spanish government is open to the idea of requesting a sovereign bailout. 

With successful debt sale, Greece ensures no August default

Greece ensured it will have enough money next week to repay bonds held by the European Central Bank with a successful debt sale, its largest in two years. About €3.1 billion out of the more than €4 billion raised will repay ECB-held bonds that mature Aug. 20, thus helping Greece avoid default. 

U.S. retail sales jump 0.8% in July

Reversing three months of decline, U.S. retail sales jumped 0.8% in July, pointing to a stronger third quarter and indicating that a slowdown in the second quarter may have been temporary. However, signals were mixed in two other indicators, with business inventories rising in June as companies anticipated higher consumer demand but with business sales dropping for the third month in a row.

Market Activities

INTERNATIONAL MARKETS OVERVIEW

Stronger-than-expected German growth figures and a surprising jump in U.S. retail sales helped lift European stocks Tuesday, with the Stoxx Europe 600 index adding 0.7%. The same data also provided an early impetus for U.S. shares, but the market eased later in the day and the S&P 500 ended a fraction of a point lower in light trading. Here is a continuously updated list of global stock indexes.

Economic Trends & Outlook

Fears grow that Japanese recovery may be sidetracked

Although the Japanese government is predicting continued recovery over the second half of the year, new concerns are being raised that the imperiled European economy and, domestically, the end of subsidies for eco-friendly vehicles will contribute to further slowing in the current quarter. In addition, poor economic conditions could work to delay implementation of a tax increase just passed into law. 

China's 2012 growth is now pegged at 8.0% by Morgan Stanley

An absence of economic stimulus and faltering external demand were cited by Morgan Stanley as it cut its growth forecast for China to 8.0% this year and 8.6% in 2013. Morgan does see an easing policy in the next one to two months, as well as a quarter-point interest-rate cut before the end of the year. 

China may be preparing sharper clampdown on property market

With inspection teams back in Beijing and preparing their reports on how well provincial governments have acted to restrain their property markets, expectations are growing that further curbs will be introduced. Some governments have already been warned that they haven't done enough to implement past measures.

South Korea posts 6th month of trade surplus

South Korea's trade surplus in July was down a sharp 40% from the previous month but remained strongly positive at $2.76 billion, according to the Korea Customs Service. July's was the sixth consecutive month of surplus, although exports and imports both declined. Separately, Nomura predicts lower inflation in South Korea for the second half. 

National Australia Bank predicts a rate boost in 2013

An increase in interest rates may be in store for the coming year in Australia, according to National Australia Bank, which changed its forecast to become the first major bank predicting a boost. If the central bank does raise its rate, it will mark the first increase since November 2010. 

Indonesia consumer confidence, outlook hard to beat

Indonesia's consumer confidence as measured by KADIN-Roy Morgan at 150.5 points in July topped by a wide margin comparable measures in every other Group of 20 country. "While global gloom is taking its toll on China and India, Indonesia continues to swim against the tide," said KADIN Chairman Suryo Sulisto. The survey also found that 79% of Indonesians are optimistic about the country's economy over the next 12 months. 

Capital Markets & Financial Products

EU calls for more Indian "stability" to pull in investment

Noting that EU investment to date in China, Russia and other countries far surpasses investment in India, a visiting EU delegation called for more "stability and predictability" in the Indian market. "Though economic relations between India and EU have been multi-dimensional and have expanded over time, they are far below the potential," commented delegate Joao Cravinho. The EU and India are negotiating a trade accord that would lower duties and spur investment. 

China's yuan funds for foreign exchange decline amid global slowdown

Reduced trade and foreign direct investment contributed to a decline in China's yuan funds outstanding for foreign exchange in July. The total of 25.66 trillion yuan was down nearly 3.82 billion yuan from the previous month, the central bank said. The drop also suggests a strong outflow of foreign capital amid the global debt crisis and slowing economy.