China, In­dia of­fer re­prieve from euro debt fears

The Pak Banker - - International3 -

BEI­JING: Fac­to­ries in China and In­dia cranked pro­duc­tion up a gear last month, of­fer­ing a small boost to the global econ­omy faced by a spread­ing debt cri­sis in the euro zone and slug­gish re­cov­er­ies in the United States and Ja­pan.

But man­u­fac­tur­ing sur­veys in both Asian giants also high­lighted a worry that has clouded the out­look for in­vestors: ris­ing in­fla­tion­ary pres­sure and the need for more mon­e­tary tight­en­ing in fast­grow­ing de­vel­op­ing economies. That could be a bit­ter pill to swal­low with Europe tee­ter­ing on the brink of more se­ri­ous debt trou­bles. The euro sta­bi­lized on Wed­nes­day af­ter fall­ing a day ear­lier on con­cern that mem­ber states may ul­ti­mately be forced to de­fault.

Deputy fi­nance min­is­ters from the Group of 20 economies dis­cussed "the fi­nan­cial sit­u­a­tion in Europe" on Mon­day Asia time in a tele­con­fer­ence ar­ranged last week, a se­nior G20 source in Asia said. The man­u­fac­tur­ing sec­tor in Asia pro­vided some so­lace from the gloomy prog­no­sis in Europe. Two pur­chas­ing man­agers' in­dexes in China reg­is­tered their strong­est read­ings in more than half a year and helped lift Asian shares out­side Ja­pan by 0.6 per­cent.

The story was sim­i­lar in In­dia, where the HSBC Markit PMI climbed to a six-month high. While a rise in out­put and new or­ders drove the PMI gains in China, the biggest in­creases came in in­put prices.

"Good news from the econ­omy may not be that good for the mar­ket as it is concerned about more tight­en­ing," said Ting Lu, an econ­o­mist with Bank of Amer­ica-Mer­rill Lynch. -Reuters

MANEJA: In­dia's Gu­jarat state CM Naren­dra Modi, CEO of Siemens En­ergy Sec­tor South Asia A.K. Dixit, VP of Siemens Oil, Gas Di­vi­sion Carsten S. Berend­sen and MD of Siemens Ar­min Bruck ar­rive at the com­pany. Modi in­au­gu­rated the sec­ond phase of Siemens com­pany's Steam tur­bine and com­pres­sor man­u­fac­tur­ing fa­cil­ity. -Afp

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