World Bank cuts Chinese growth forecasts
Equities began the week under pressure on news that the World Bank had cut its growth outlook for the Pacific and East Asian economies. The region was predicated to suffer as the bank reduced its forecasts for China’s GDP to 7.7% this year, from its prediction of 8.2% back in May, a scenarios that has a knock on effect for host of Asian countries that export into China. Whilst it also warned that the slowdown in the world’s second biggest economy could accelerate, it suggested the risk of a hard landing remained small. In the UK, the major corporate news was objection to the proposed BAE Systems/EADS merger from both the UK government and BAE’s largest shareholder, Invesco Perpetual. The fund management group, which owns more than 13% of the company, expressed “significant reservations” surrounding the terms of the deal and the level of state control, with both the French and German governments maintaining significant ownership. The Defence Secretary, Philip Hammond, also suggested the UK Government could use its ‘Golden Share’ or veto power to block the deal if the Franco-German national shareholding wasn’t reduced. Shares in BAE closed down 0.55% to 326.3p in London. In Europe attention was also focused on a meeting of eurozone Finance Ministers convening in Luxembourg, top of the agenda was unsurprisingly Spain and Greece. Today also marked the official launch of the European Stability Mechanism (ESM), the region’s new bailout fund, currently equipped with €500bn of firepower. Greece has also upped police presence in Athens and declared a ban on protests ahead of a visit from Germany’s Angela Merkel to the Greek capital tomorrow. The FTSE finished the day off its lows, closing down 0.5% at 5841, outperforming its French and German counterparts that were lower by almost 1.5%.
This was posted in Bdaily's Members' News section by James .