Headlines

Inflation in the eurozone has edged further below the European Central Bank’s target, capping a difficult week for its officials as they edge towards removing some of the ultra-loose monetary policies in place during the financial crisis, the Financial Times reported. Annual inflation in the eurozone sank to 1.3 per cent in June, highlighting the delicate balancing act facing monetary policymakers in dealing with increasingly strong growth but weak price pressures. Eurostat, the European Commission’s statistics bureau, said inflation fell from 1.4 per cent in the year to May.

Finance Minister Pier Carlo Padoan on Thursday defended Italy's closure of two failed regional banks using public funds, saying the costs pale in comparison with the large sums that Germany and Britain pumped into their banks after the financial crisis, Reuters reported. Writing in German weekly magazine Wirtschaftswoche, Padoan said the decision to wind down the two banks at a possible cost of up to 17 billion euros was a necessary intervention to save the economy of the Veneto region.

A group of key Mozambique bondholders laid down terms to the embattled government ahead of restructuring talks, calling on it to revoke guarantees on loans taken on by two state-owned companies, Bloomberg News reported. The southern African nation, which defaulted on its only Eurobond in January, should also liquidate the two firms -- ProIndicus and Mozambique Asset Management -- as well as a third, the tuna-fishing company known as Ematum, the so-called Global Group of Mozambique Bondholders said.

Consumer credit continued to grow at a double-digit pace in May, underlining why Bank of England officials took action to protect banks against the risk of a debt bubble, Bloomberg News reported. Unsecured lending rose 10.3 percent from a year earlier, the same as in April and close to its fastest rate since 2005, the U.K. central bank said on Thursday. It grew 1.7 billion pounds ($2.2 billion) on the month, the biggest increase since November last year.

India’s benchmark index rose, snapping a three-session losing streak, on the expiry of monthly derivatives contracts as stocks across Asia advanced on optimism that a pick-up in global growth can withstand tighter financial conditions, Bloomberg News reported. The S&P BSE Sensex climbed 0.1 percent to 30,857.52 at 4:25pm in Mumbai as June derivative contracts expire. Private-sector lender Axis Bank Ltd. rose 4.1 percent after saying about 80 percent of its insolvent loans have been secured. The S&P BSE Metals Index and a gauge of consumer goods stocks were among top gainers.

A global sell off in the bond market spread to equities on Thursday amid fears that the post-crisis era of easy money from the world’s largest central banks was coming to an end. While bond yields remain exceptionally low, recent remarks by the heads of the European Central Bank, the Federal Reserve, the Bank of England and the Bank of Canada have convinced many investors the period of historically-low interest rates and unprecedented central bank bond buying will soon recede, the Financial Times reported.

Italy’s north-south disparity is one of its best-known economic problems — but awareness of the issue does not seem to make it any easier to solve. As the eurozone economy recovers, the Financial Times has analysed greenfield investment data for Italy, one of the bloc’s growth and employment blackspots. The analysis shows that Italy’s attractiveness to foreign investment has increased in the past year but still lags behind most of its peers, the Financial Times reported.

Financiers are set to take a tougher stance towards distressed shipping loans including more enforcement action to recoup funds, while capital on offer to the industry is expected to shrink further, a leading transport survey showed on Wednesday. The global shipping sector is reeling from a near-decade-long downturn, which has seen companies collapse and banks scale back exposure or exit entirely from providing finance, Reuters reported.

To keep senior bondholders happy as they rescued two failed banks over the weekend, Italian regulators found an elegant solution: they put them beyond the reach of EU law, Bloomberg News reported. That’s no cause for celebration, according to Paul Smillie, a Singapore-based analyst at ColumbiaThreadneedle, which manages about $467 billion globally including bank bonds of peripheral nations that rallied following the news. Instead, the decision revives concerns that the market for European bank debt might be ruled by the vagaries of individual political systems.

Tuesday in Venezuela, armed groups attacked Congress and a police helicopter may or may not have dropped grenades onto the Supreme Court. Wednesday’s reaction from traders? Mostly a shrug. Venezuela’s benchmark bonds due in 2027 edged higher, while notes from the state oil company coming due this year were a hair lower, Bloomberg News reported. The cost to insure sovereign debt from default dropped the most in a month.