Global

 Emerging Nations Save $2.9 Trillion Reserves In Rout. Developing nations from Brazil to India are preserving a record $2.9 trillion of foreign reserves and opting instead to raise interest rates and restrict imports to stem the worst rout in their currencies in five years. Foreign reserves of the 12 biggest emerging markets, excluding China and countries with pegged currencies, fell 1.6 % this year compared with an 11 % slump after the collapse of Lehman Brothers Holdings Inc. in 2008, data compiled by Bloomberg show. (Bloomberg)

 IMF: Emerging Economies Vulnerable. Advanced economies led by the United States will increasingly drive global growth, with emerging countries at risk of slowing due to tighter US monetary policy, the International Monetary Fund said in a note prepared for the Group of 20 meeting in St. Petersburg. In its surveillance note, obtained by Reuters, the IMF urged strengthened global action to revitalise growth and better manage risks, warning some downside risks have become more prominent. Emerging economies are seen particularly vulnerable to a tightening of US monetary policy, and the IMF recommended policy makers be ready to handle a rise in financial instability. “Policy makers should allow exchange rates to respond to changing fundamentals but may need to guard against risks of disorderly adjustment, including through intervention to smooth excessive volatility,” the IMF said. (Reuters)

Malaysia

 Malaysia Ranked 24th Most Competitive By World Economic Forum. The World Economic Forum (WEF) has ranked Malaysia as the 24th most competitive nation among 148 countries in its Global Competitiveness Report (GCR) 2013-2014. Last year, Malaysia was ranked 25th out of 144 countries, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said in a statement. He said Malaysia remained the second most competitive among Asean and has improved to seventh position among 25 Asia-Pacific countries. (Bernama)

 Moody’s: Call For More Tweaks In Subsidies, Reforms. Moody’s says fuel price hike a positive step but more adjustments to Malaysian govt fiscal plan needed. The fuel price hike is a positive step but more tweaks in subsidies and other fiscal reforms are needed if the government is to address its overall fiscal deficits. Global rating agency Moody’s Investors Service Inc said the lack of additional reforms would place the government’s fiscal targets “increasingly out of reach”. The government expects savings from this round of fuel subsidy revisions to reach RM1.1 billion for 2013 and RM3.3 billion for 2014. However, Moody’s said this is dwarfed by the RM37.6 billion allocated for the total subsidy bill, which accounts for 18.6 % of current (or operating) expenditures in this year’s budget. (Business Times)

Asia Pacific

 BOJ May Consider More Policy Easing. The Bank of Japan (BoJ) will consider further monetary easing if Prime Minister Shinzo Abe decides to raise the sales tax as planned to 8% from 5% in April, the Asahi newspaper reported yesterday. BoJ governor Haruhiko Kuroda suggested to a government panel that the central bank could ease policy if the economic outlook worsened at the time of next year’s scheduled tax hike, the Asahi said, citing sources who were on the panel. The government panel, which met last week, recommended proceeding with the sales tax hike, but proposed some form of stimulus to cushion the blow. (Reuters)

 Australia's Economic Growth Better Than Forecast. Australia has reported better-than-forecast growth numbers for the April to June quarter, boosted by gains in consumer spending. Its gross domestic product (GDP) expanded 2.6% during the quarter, from a year earlier. Compared with the previous quarter, growth was 0.6%. Most forecasts were for an annual growth closer to 2.5%. (BBC)

USA

 Widening Trade Gap Signals Improving U.S. Demand. The trade deficit in the U.S. widened in July from an almost four-year low as Americans imported more fuel and automobiles, showing the world’s largest economy is picking up. The gap increased 13.3 % to $39.1 billion from $34.5 billion in June that was the smallest since October 2009, the Commerce Department reported today in Washington. Purchases from abroad climbed 1.6 %, while sales of American goods to foreign buyers cooled to the second-highest on record. (Bloomberg)

 Mortgage Applications Rise For 1st Time In 4 Weeks. Applications for U.S. home loans rose for the first time in four weeks as mortgage rates fell from their highest level this year, although demand for purchase loans slipped, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.3 % in the week ended Aug. 30, after sliding 2.5 % the prior week. (Reuters)

Europe

 Euro-Area Exports Drive Rebound After Record Recession. The euro-area economy returned to growth in the second quarter after a record-long recession, driven by a rebound in exports from the 17-nation currency bloc. Gross domestic product rose 0.3 % from the previous three months, in line with an Aug. 14 estimate, the European Union’s statistics office in Luxembourg said today. From a year earlier, the economy shrank a revised 0.5 %. The European Central Bank forecasts a 0.6 % contraction this year before the region returns to growth in 2014. (Bloomberg)

 Euro Zone Business Activity Strongest In 2 Years. Euro zone business activity in August was at its strongest level since June 2011, figures released on Wednesday showed, offering hope that the region is on its way to a sustainable recovery. Markit's Eurozone Composite Purchasing Managers Index (PMI) will add to the case for the European Central Bank (ECB) to leave interest rates on hold when it meets on Thursday. The figure came in at 51.5 for August, up from 50.5 in July. (CNBC)

 Spain Services Grow For First Time In Over 2 Years In August. Spain's service sector grew in August for the first time since June 2011, a survey showed on Wednesday, in the latest sign the beleaguered economy may emerge from a two-year recession in the third quarter. Markit's Purchasing Managers' Index (PMI) of service companies stood at 50.4 in August, up from 48.5 in July, marking its first rise above the 50 line separating contraction from growth in more than two years. (Reuters)

 UK Services Sector Growth At Six-Year High. The UK service sector grew at its fastest pace in six years in August, according to the latest survey by Markit and the Chartered Institute of Purchasing and Supply (CIPS). The business activity index registered 60.5 in August, the highest reading in more than six-and-a-half years. It also showed that backlogs of work are running at the highest level in more than 13 years. But despite the extra work, there was only a small increase in employment. (BBC)

 Italy’s Bonds Fall As Services Output Shrinks More Than Forecast. Italy’s 10-year government bonds declined after a report showed the nation’s service sector, based on a survey of purchasing managers, shrank more last month than economists forecast. Italian 10-year yields rose seven basis points, or 0.07 %age point, to 4.42 % at 4:17 p.m. London time. The rate reached 4.48 % on Aug. 28, the highest since July 18. The 4.5 % bond maturing in May 2023 fell 0.545, or 5.45 euros per 1,000-euro ($1,320) face amount, to 100.99. Italy’s services index was at 48.8 from 48.7 in July, Markit Economics said. Analysts in a Bloomberg News survey forecast a reading of 49.9. A figure below 50 indicates contraction. (Bloomberg)

Currencies

 Dollar Drops; Aussie, Pound Rally On Recovery. The U.S. dollar edged lower against some rivals Wednesday as investors avoided big moves ahead of the European Central Bank meeting Thursday and the U.S. jobs report Friday. The British pound and Australian dollar climbed on separate economic reports. The British pound rose to $1.5628 from $1.5559 late the previous day on the latest signs that the economy there is recovering. The Aussie dollar advanced to 91.76 U.S. cents, up from 90.40 U.S. cents late Tuesday. The ICE dollar index which tracks the greenback against six rivals, fell slightly to 82.143 from 82.344 late Tuesday in North America. Meanwhile, the Bank of Canada on Wednesday kept its benchmark rate at 1% as expected. The U.S. dollar traded at 1.0491 Canadian dollars, down from C$1.0534 late Tuesday. The dollar fetched 99.75 yen, more than ¥99.30 late Tuesday. The euro bought $1.3210, up from $1.3166 late Tuesday, with the European Central Bank due to hand down a policy decision Thursday. Among the emerging-market currencies, the Indian rupee moved higher in recent trade, sending the dollar down to 67.09 rupees from 67.63 late Tuesday, according to FactSet data. (Market Watch)

Commodities

 Oil Lower As Syrian Strike Seen Limited. Brent crude oil settled lower on Wednesday, but with a less dramatic drop than U.S. oil, as it appeared a military strike against Syria would remain limited, quelling fears of supply disruptions in the Middle East. Frontmonth Brent crude oil futures settled 77 cents lower at $114.91, after trading as high as $116.09 and as low as $114.40. U.S. crude oil for October delivery settled at $107.23 a barrel, $1.31 lower, or 1.2 %, after trading between $106.77 and $108.61. (Reuters)

 Gold Down On Economic Hopes And As Syria Fears Fade. Gold fell 1.5 % on Wednesday, slipping below $1,400 an ounce as strong U.S. auto sales boosted economic hopes and fears of a Western-led military strike against Syria lost some of their urgency. Spot gold dropped 1.5 % to $1,390.61 an ounce by 3:25 p.m. EDT (1925 GMT). Silver dropped 3.1 % to $23.42 an ounce, its biggest daily drop since July 17. Platinum fell 2.4 % to $1,492.28 an ounce, its largest one-day drop since June 26. Palladium fell below $700 an ounce for the first time in about two months, down 2.9% to $695.47 an ounce, also its biggest daily decline since June 26. (Reuters)