Global

IMF Reduces Global Growth Outlook As U.S. Expansion Weakens. World economic growth will struggle to accelerate this year as a U.S. expansion weakens, China’s economy levels off and Europe’s recession deepens, the International Monetary Fund said. Global growth will be 3.1 % this year, unchanged from the 2012 rate, and less than the 3.3 % forecast in April, the Washington-based fund said today, trimming its prediction for this year a fifth consecutive time. The IMF reduced its 2013 projection for the U.S. to 1.7 % growth from 1.9 % in April, while next year’s outlook was trimmed to 2.7 % from 3 % initially reported in April. (Bloomberg)

Asia 

China Faltering Demand Proved As Producer Prices Slump. China’s inflation stayed subdued in June while a decline in factory-gate prices extended its longest streak in a decade, underscoring weaker demand in an economy that probably decelerated for a second quarter. The consumer price index rose 2.7 % from a year earlier, the National Bureau of Statistics said today in Beijing, compared with a median estimate of 2.5 % in a Bloomberg News survey and a 2.1 % gain in May. Producer prices fell 2.7 %. (Bloomberg)

China's Inflation Rate Rises To 2.7%. China's inflation rate rose by more than expected in June, increasing to 2.7% from 2.1% the month before. Food price inflation was 4.9% in June, compared with 3.2% in May, with rising pork prices partly to blame. While the headline inflation number was above analysts' expectations, it remains below the government's target figure of 3.5%. (BBC)

USA

More Job Openings Signal Optimism About U.S. Growth. Job openings climbed in May and hiring picked up as U.S. companies grew more upbeat about the economy’s prospects for the second half of the year. The number of positions waiting to be filled increased to 3.83 million from the prior month’s revised 3.8 million, which was higher than initially estimated, the Labor Department said today in Washington. Openings are hovering close to a five-year high of 3.9 million reached in February. Another report showed more small businesses signaled they plan to add workers. (Bloomberg)

Obama Sees 2013 Deficit Lowest In Five Years, GDP Growth At 2.0%. The Obama administration projects that the federal budget deficit will drop to the lowest level in five years, $759 billion for the year ending Sept. 30, as the economy improves and tax collections increase. The Office of Management and Budget said in an update of its forecasts that the economy may grow 2 % this calendar year. That’s slower than the 2.3 % growth rate predicted three months ago. The median forecast of 86 analysts surveyed by Bloomberg is for a 1.9 % gain. (Bloomberg)

Europe

Italy's Credit Rating Has Been Downgraded By S&P. Italy's credit worthiness has been downgraded by the ratings agency S&P. It said the continued weakness of the Italian economy was behind the cut, which saw the rating of government debt lowered to BBB from BBB+. Italy, the eurozone's third largest economy, has been in recession since the middle of 2011 and unemployment is currently running at more than 12%. S&P said it expects the Italian economy to contract by 1.9% this year, much worse than its previous forecast. The agency said that a lack of reform is partly to blame for Italy's poor performance. (BBC)

Greek Outlook Bleaker Than Lenders Think. Greece's economy could shrink by as much as 5 % this year, the Athens-based IOBE think tank said on Tuesday, revising down its previous projection and offering a more pessimistic forecast than the country's foreign lenders. Athens, which has been limping along on bailout funds since 2010, secured its latest lifeline from its European Union and International Monetary Fund lenders on Monday but was told it must keep its promises on cutting public sector jobs and on selling state assets to get all the cash. But the austerity prescribed by these lenders to shore up Greek finances is expected to keep the economy in depression for a sixth consecutive year and push already soaring, record unemployment to yet new highs. (Reuters)

IMF raises UK Economic Growth Forecast. The International Monetary Fund (IMF) has lifted its economic growth forecast for the UK this year from 0.7% to 0.9%. Not since April 2012 has the IMF raised its UK forecast. A Treasury spokesman said it showed that the economy was moving from "rescue to recovery". In April this year, the Fund cut its forecast to 0.7% from 1%, sparking wide debate about whether Chancellor George Osborne should alter his policies. (BBC)

U.K. House-Price Index Rises As Demand At Four-Year High. A U.K. house-price gauge rose in June as government measures to help the property market pushed demand to the highest in almost four years, the Royal Institution of Chartered Surveyors said. A price index increased to 21, the highest since January 2010, from 5 in May, London-based RICS said in an e-mailed report today, citing a monthly poll of property surveyors. A positive number means more respondents saw values increase rather than decline. A measure of new buyer enquiries rose to 38, the highest since August 2009, from 30. (Bloomberg)

British Manufacturing Decline Casts Doubt On Recovery. U.K. manufacturing unexpectedly shrank in May amid a drop in pharmaceuticals and metals output, casting doubts on the strength of the economic recovery in the second quarter. Factory output fell 0.8 % from April, when it declined 0.2 %, the Office for National Statistics said today in London. The median forecast of 25 economists in a Bloomberg News survey was a 0.4 % increase. Total industrial production was unchanged, thanks to an increase in oil and gas production. Separate data showed the goods-trade gap was little changed at 8.5 billion pounds ($12.6 billion). The trade data showed that exports rose 1.5 % in May and imports climbed 1.3 %. An improvement in the deficit with European Union nations offset a deterioration in trade with the rest of the world. (Bloomberg)

Libor Interest Rate To Be Controlled By NYSE Euronext. The owner of the New York Stock Exchange is set to take control of a key scandal-hit bank interest rate. NYSE Euronext has won the contract for setting the London Inter-bank Offered Rate (Libor), a government-backed committee announced. Libor is used to set trillions of dollars of financial contracts. The move follows the revelation that banks had been manipulating the rate. Barclays, UBS and RBS have all been fined for their roles in the scandal. They were found to have colluded in fixing the Libor setting in order to boost the profits of traders in the run-up to the financial crisis. The new rate-setting body, to be known as NYSE Euronext Rate Administration, will be based in the UK and regulated by the Financial Conduct Authority (FCA). (BBC)

Currencies

Dollar Scores 3-Year High Vs. British Pound. The contrast between a Federal Reserve that is expected to begin tapering its stimulus efforts and European central banks seen headed toward further loosening of monetary policy sent the dollar on Tuesday to a threemonth high versus the euro and a three-year high versus the British pound. The pound exchanged hands at $1.4861 in recent action, after dropping as low as $1.4811 after a round of weaker-than-expected industrial-production data and marking sterling’s weakest level versus the dollar since June 2010. The  euro traded at $1.2781 after dropping to a three-month  low at $1.2760 after Joerg Asmussen, a member of the European Central Bank’s Governing Council, said in an interview with Reuters that the central bank’s guidance that it would maintain low interest rates for an “extended period” extended beyond 12 months. The ICE dollar index rose as high as 84.750, its highest level since June 2010, and was last seen at 84.598. The hard-hit Australian dollar rebounded to trade at 91.80 U.S. cents. It had traded at 91.18 cents just before the National Australia Bank said its survey of business conditions hit a morethan-four-year low and painted “a worrying picture” of Australia’s economy. Against the Japanese yen, the dollar traded at ¥101.05, up slightly from ¥100.96. (Market Watch) 

Commodities

Oil Prices End Moderately Higher, Stifled By Dollar. Crude oil prices on both sides of the Atlantic ended with moderate gains on Tuesday, supported by a stock market advance and worries over Egypt. But gains were limited by a strong U.S. dollar and supplies were brought back online. Brent crude oil futures ended the day 38 cents higher at $107.81 per barrel. U.S. crude oil futures settled 39 cents higher at $103.53, after trading as low as $102.31. (Reuters)

Gold Rises 1 Pct On Physical Buying, China Inflation. Gold hit a one-week high on Tuesday, gaining 1 % on strong physical demand, and as Chinese inflation data boosted the metal's appeal as a hedge. Spot gold touched its highest since July 2 at $1,260.01 an ounce earlier. It traded at $1,245.90 an ounce, up 0.9 % by 3:34 PM EDT (1934 GMT). Among other precious metals, silver climbed 0.9 % to $19.21 an ounce. Platinum rose 0.4 % to $1,363 an ounce and palladium gained 0.3 % to $697.22 an ounce. (Reuters)