Although not desirable, a Greek exit from the euro could be managed, Eurogroup President Jean-Claude Juncker said in an interview. But when asked how long the possibility of an exit could be categorically excluded, Juncker said, "At least until the end of the autumn -- and after that, too." 

Analysis: Sept. 12 may be judgment day for the euro

A German court decision Sept. 12 may determine the Germany's ability to help its debt-ridden neighbors, and perhaps the future of the euro itself. 

Eurozone slowdown hits German factory orders

Lower demand from eurozone countries led to a 1.7% drop in German factory orders in June from the month before. The decline was more than double the forecast of economists. "Exports are badly hit by the current cyclical slowdown, and the export-led German industrial sector is not going to be spared from the slump in trade activity," said Annalisa Piazza, an economist at Newedge Strategy in London.

 
Italy's recession now a year long with 0.7% 2nd-quarter contraction

Italy's recession has extended to a full year, with the economy contracting a steeper-than-expected 0.7% in the second quarter. "These are perilous times for Italy, particularly given the uncertainty about the credibility and effectiveness of measures to help shore up Italian sovereign debt in the likely event of a renewed deterioration in market sentiment," commented Nicholas Spiro, managing director of Spiro Sovereign Strategy. 

China says private investment encouragement is working

Swifter approvals of investment projects have helped stabilize China's economy, according to the National Development and Reform Commission, China's top economic planner. "Those measures encouraging private capital to enter fields such as oil and gas exploration and education have been playing an active role since the beginning of this year," a commission official said. Separately, the government said that figures expected to show no growth in July electricity consumption are more indicative of a switch to less energy-intensive service industries than a slowdown in manufacturing.

Market Activities

INTERNATIONAL MARKETS OVERVIEW

U.S. stocks ended the day generally higher as hopes rose that central banks will soon step in, and European shares gained in light trading despite gloomy economic indicators and a sharp loss for Standard Chartered. The S&P 500 was up 0.51%, and the Stoxx Europe 600 rose 0.75%. Here is a continuously updated list of global stock indexes. 

System problem shuts down Tokyo derivatives trading

A system problem forced the suspension of all derivatives trading on the Tokyo Stock Exchange on Tuesday. The 93-minute halt in trading marked the second interruption this year. 

Economic Trends & Outlook

China's state enterprises are warned to tone down investments

With China's state-owned enterprises posting lower profits, the State-owned Assets Supervision and Administration Commission issued a warning against ill-advised investment, particularly "for the purpose of expansion in scale." Instead, the companies were advised to upgrade technologies, products and business models and focus on more discriminating management of investments and acquisitions. 

Current, future indicators for Japan's economy point down

A basket of coincident economic indicators in Japan was off for the third consecutive month in June, edging down 2 points. Meanwhile, the leading CI, which looks to coming months, was also down for the third month with a 2.6-point decline. 

Fitch lowers outlook for India's retail sector

With consumer spending hitting a 7-year low, ratings agency Fitch lowered its outlook for India's retail sector from stable to negative. Fitch said its action was prompted by "a sustained deterioration in the discretionary spending ability" among consumers in the face of domestic and international economic troubles. 

India's new finance minister faces hurdles to win action

The appointment of P. Chidambaram as India's finance minister and his call to action have won applause, but it is not clear the measures he urges will win parliamentary cooperation.

Australian central bank sees growth signs from earlier rate cuts

Emerging signs in Australia's economy suggest that earlier rate cuts by the central bank are beginning to bear fruit, said the bank's governor, Glenn Stevens. The remark indicates no further cuts are likely soon, leaving Australia's official borrowing costs the highest in the developed world. 

Taiwan exports fall as inflation climbs

For the fifth month in a row Taiwan's exports in July were lower than a year before, weighed down again by a struggling world economy, the Ministry of Finance said. Meanwhile, the rise in Taiwan's consumer price index, at a 2.46% annual rate in July, was the highest in four years.

Capital Markets & Financial Products

China discounts concerns that foreign investment might soon dry up

Foreign direct investment in China may continue to erode a bit but there will be no sudden exit of foreign capital, said Zhang Xiangchen, director of the Department of Policy Research at China's Ministry of Commerce. Although the U.S. is aiming to pull some investment back from China, "sharp declines ... will not happen in the next year or two," Zhang said. As for China's declining stock market, analysts say what's needed is confidence, rather than the fee cuts offered by regulators. 

Refinancing pressure grows for many Chinese banks

Despite currently sufficient capital, Chinese banks are under increasing pressure to maintain cash flow and refinance, according to a report by The Chinese Banker. Increasing difficulties with refinancing and a growing difference between assets and liabilities are cited among the problems faced by many banks. 

South Korean funds' net asset value tops 300 trillion won

The net asset value of South Korean funds has topped the 300 trillion won mark for the first time in nine months, reaching 308.2 trillion won in July. "The NAV of funds jumped last month thanks to the central bank's key rate cut and inflows of standby capital into funds amid mounting hopes for a bullish stock market, resulting in a rise in the valuation and the NAV of funds," the Korea Financial Investment Association reported.

Industry & Regulatory Update

Citigroup forms investment-banking joint venture in China

Following Goldman Sachs and UBS, Citigroup is forming an investment-banking joint venture in China. Shanghai-based Citi Orient Securities will start with registered capital of $126 million. 

Hong Kong unit of Daewoo to set up $1 billion private-equity fund

With an investment portfolio focused on social overhead capital projects in Asia and Europe, Daewoo Securities' Hong Kong Corp. is setting up a $1 billion private-equity fund. Daewoo says it will establish the fund in cooperation with a U.S. private-equity fund, with Daewoo raising half the capital from Korean institutional investors and the U.S. partner providing the other half.

Ethics & Standards

New York allegations deal a hard blow to Standard Chartered

New York regulators' sudden and sharp attack on Standard Chartered for alleged dealings with Iran has shocked the industry and threatens to ruin the reputation of one of the few major banks left untarnished by a run of recent scandals. News of the allegations sent the bank's shares plunging 16% Tuesday, knocking $17 billion off its value. 

Top brokers in Japan tell how they'll crack down on leaks

Responding to a scandal of insider-trading-related leaks at Nomura Holdings and Daiwa Securities Group, the leading 12 brokerage firms in Japan are suggesting steps to tighten control over sensitive information. Many maintained that their security measures were already tight but said they would increase monitoring of e-mails and entertainment expenses as well as educate their employees better on what constitutes nonpublic information.