Headlines

Euro zone manufacturing growth accelerated to a six-year high in February as a weaker euro helped drive strong demand for its exports, with inflationary pressure showing further signs of recovering, a business survey showed. While the upturn in euro zone factory activity was not shared by all major economies, particularly France, prices rose faster across most countries in the region, Reuters reported.

Finland’s economy stagnated in the last quarter of the year, with GDP growth falling flat at just 0 per cent in the three months to the end of December, the Financial Times reported. Outside its peers in the southern eurozone, Finland’s economy has been one of the worst performing in the 19-member bloc since the financial crisis struck in 2008.

Struggling French nuclear reactor maker Areva on Wednesday reported a €665m net loss for 2016, which was an improvement on the previous year but still highlighted the scale of the problems facing the group, the Financial Times reported. The state-controlled company is undergoing a far reaching restructuring in a government-backed deal after losses brought it to the brink of collapse. The company recorded a net loss of €2bn for 2015 and €4.8bn for 2014.

There’s been sharp selling pressure on eurozone government bonds lately, led by Italy and concerns about its future in the Eurozone, The Wall Street Journal reported on an editorial. By the beginning of the year Italian government yields rose 40 basis points over German Bunds, a 25% increase. The main pro-European Union party, Matteo Renzi’s Democrats, are on the verge of a breakup. Euroskeptic parties are on the rise.

Indian stressed-asset deals will increase this year as bad loans rise and reforms pushed by Prime Minister Narendra Modi’s government start to bear fruit, according to the nation’s top investment banker, Bloomberg News reported. Interest will come from both strategic buyers and private equity firms, said Vishal Kampani, managing director of JM Financial Ltd., the former joint venture partner of Morgan Stanley in India. JM Financial was the No.

Canada’s financial industry is urging the federal government to consider alternatives to proposals that could require them to take on a greater share of mortgage defaults through a deductible -- calling it one of the biggest shakeups to hit housing finance in 50 years, Bloomberg News reported. "This submission has questioned whether a deductible is the most effective way to rebalance risks within the housing finance system,” the Canadian Bankers Association said in a report on Tuesday.

China’s central bank faces a dilemma: Whether to raise borrowing costs and potentially undermine the nascent economic recovery, or hold firm and risk spurring capital outflows as Federal Reserve policy tightening cuts into the country’s interest-rate advantage. The People’s Bank of China is trying to take the middle road, boosting money-market rates as a way of containing company leverage, while allowing bank borrowing to largely continue unchecked, Bloomberg News reported.

A surge in bankruptcy cases in Chinese courts last year is welcome progress, the Financial Times reported. The lack of creative destruction in China has been a perennial problem, exacerbating industrial overcapacity and piling mountains of bad loans on to the banking system. But the cull of zombie companies, while positive, still falls a long way short of the thorough restructuring that China’s economy needs. The zombie hunt did not aim at the big, lossmaking state-owned enterprises.

Teams of officials from the EU and the International Monetary Fund start work in Athens today knowing that euro area finance ministers and the international financial markets are keen for signs of progress on the next tranche of Greece’s €86bn bailout, the Financial Times reported. At stake is whether a deal can be struck on tax and pension reforms that would clear a big obstacle to the IMF’s becoming a full partner in the bailout.

The emergence of Martin Schulz as the centre-left Social Democrats’ candidate for chancellor has fundamentally altered the dynamics of German politics, the Financial Times reported. It is also changing the debate in Germany on inequality and the future of Europe in ways that will have a significant impact across the continent. Germany is regarded as an economic success story. Unemployment is at its lowest level since reunification in 1990; the trade surplus has reached a record high.