UK unemployment claims climbed the most in more than two years in July and sales of clothing and household goods dropped, government reports showed this month.
A leading Nobel economist has backed Labour’s warnings that the UK is slashing spending too fast and risks tipping a fragile economy into another downward leg. “Britain has jumped on the band-wagon of fiscal tightening in a big way,” said Professor Edmund Phelps from New York’s Columbia University. Prime Minister David Cameron argues the plan has made Britain a haven from the debt crisis engulfing the euro region and that it’s also protecting its top credit rating after Standard & Poor’s downgraded the US this month. Critics say the cuts will prove self-defeating by hampering the growth required to narrow the deficit.
GREECE’S central bank has activated an emergency liquidity assistance scheme so that it is available if banks need to draw from it, although banks have not requested funds from it yet.
GERMANY’s Dax Index closed 1.7% lower yesterday, after losing 4% during one 15-minute stretch, as traders rushed to sell futures to hedge equities amid speculation bans on short selling would be extended. After European markets closed, French, Italian and Spanish stock market regulators extended bans on short selling introduced earlier this month.
European shares are set to open flat to lower on Friday, with investors staying cautious ahead of a widely-watched speech by US Federal Reserve Chairman Ben Bernanke, and waiting to see if he announces any measures to help the fragile economic recovery. Bernanke is due to address central bankers at an annual symposium in Jackson Hole, Wyoming, at 1400 GMT. His speech last year laid the groundwork for the Fed’s $600 billion bond-buying program to revive the economy.
The dollar Index, which tracks the US currency against those of six major trading partners, fell for the first time in three days, losing 0.3%. A slump in German stocks resulted in a second day of losses for the euro against the dollar yesterday, but Moody’s and Standard & Poor’s affirmation of Germany’s AAA credit rating has helped it gain ground through the night.
Oil for October delivery slipped as much as 0.6% to $84.83 a barrel in New York, before trading at $85.05. Prices are 3.4% higher this week and up 16% in the past year. Analysts predict that crude prices may drop next week as Libyan rebels consolidate their hold on the country and begin taking steps to restore crude exports.
GOLD for immediate delivery has climbed through the night having dropped as much as 0.9% to $1,757.80 an ounce. Overall, it is down 4% this week after reaching a record $1,913.50 on Tuesday. Copper for three-month delivery fell 0.6% to $8,972 a metric ton on the London Metal Exchange.