Asia

China Loses Growth Momentum As Manufacturing Pulls Back. China’s manufacturing slowed more than estimated last month, joining weaker-than-anticipated credit, production and investment data in suggesting the economy is losing momentum. The government’s Purchasing Managers’ Index was at 51.1 for August, missing the median 51.2 estimate in a Bloomberg survey. The final reading of a separate manufacturing gauge from HSBC Holdings Plc and Markit Economics was 50.2. Both readings fell from 51.7 in July and remain above 50, indicating expansion. (Bloomberg)

China Eases Rules On Bond Sales By Local Governments. China laid the legal framework to let more local governments sell bonds directly to raise funds for projects of public interest after top lawmakers passed an amendment to the country’s Budget Law. Under quotas approved by the State Council, local authorities can sell debt to invest in such projects. Bond sales to finance day-to-day expenditures remain prohibited, along with all forms of credit guarantees to individuals or entities, according to a statement issued yesterday by the standing committee of the National People’s Congress in Beijing. (Bloomberg)

India's Economic Growth Hits Two Year High. India's economy grew by 5.7% in the three months to June, its fastest pace in two-and-a-half years, according to an official estimate. The economy was helped by strong growth in electricity, gas and water supply, and financial services, the Ministry of Statistics said. The growth figure was higher than analysts had been expecting. India's new government has launched policies designed to encourage business investment, including changes to tax. (BBC)

Indian Factory Activity Expands At Slower Clip In August. Indian factory growth eased in August from July's 17-month record pace as new orders came in at a slower clip, a business survey showed on Monday. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, fell to 52.4 in August from 53.0 in July but chalked up its tenth month above the 50 mark that divides growth from contraction. The new orders sub-index fell to 54.5 from 55.9, still considered a healthy pace of expansion. (Reuters)

Indonesia’s July Surplus At US$123.7m. Indonesia’s trade balance returned to a small surplus in July due to a sharp fall in imports as economic activity slowed during the fasting month in Southeast Asia’s largest economy. Data from the statistics bureau showed Indonesia ran a small trade surplus of US$123.7mil in July, compared to a revised deficit of US$288mil the previous month. Analysts had expected a US$390mil deficit. The surplus stands in stark contrast to the record US$2.33bil trade deficit Indonesia posted in July last year. Imports tumbled 19.31% on a year-on-year basis, the steepest drop since the global financial crisis, and was worse than the 10% fall forecast by the Reuters poll. (Reuters)

Americas

US Consumers Pare Spending As Income Growth Slows. U.S. consumer spending unexpectedly fell in July as savings rose to their highest level in more than 1-1/2 years, a sign that households remain cautious despite an acceleration in economic and jobs growth. The Commerce Department said on Friday consumer spending dipped 0.1% last month, the first decline since January, after an unrevised 0.4% gain in June. Economists had expected consumer spending, which accounts for more than two-thirds of U.S. economic activity, to increase 0.2% in July. When adjusted for inflation, it slipped 0.2% after gaining 0.2% in June. (Reuters)

US Consumer Sentiment Rises August, Ignores Economy Jitters. U.S. consumer sentiment rose in August, while an index of current economic conditions hit its highest since July 2007, a survey released on Friday showed. The Thomson Reuters/University of Michigan's final August reading on the overall index on consumer sentiment came in at 82.5, up from 81.8 the month before. It was above the median forecast of 80.1 among economists polled by Reuters. (Reuters)

Brazil's Economy Falls Into Recession, Latest Figures Show. Brazil has fallen into recession, just a month before the general election, latest figures show. Economic output, GDP, fell by 0.6% in the three months to June, worse than analysts had predicted, and revised figures for the first quarter of the year also showed a fall of 0.2%. A recession is usually defined as two consecutive quarters of contraction. The news will be damaging for the government of President Dilma Rousseff. The World Cup, held in June and July, was not regarded as generally good for business, says the BBC's Wyre Davies in Rio de Janeiro. "There were more days off for employees and many traditional tourists stayed away," he says. (BBC)

Europe

Eurozone Manufacturing At 13-Month Low. Manufacturing growth in the eurozone slowed to a 13-month low in August, according to a closely-watched survey. The final Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dipped to 50.7 in August, down from 51.8 in July. A figure above 50 indicates expansion. New orders dwindled and factories suffered amid rising tensions between the EU and Russia over Ukraine. (BBC)

Eurozone Inflation Rate Nears Five-Year Low. The eurozone inflation rate has fallen to 0.3% in August, near a five-year low, adding to fears of a deflationary spiral, according to Eurostat figures. That compares with a rate of 0.4% in July. The drop, driven by lower food and energy prices, will add to pressure on the European Central Bank (ECB) to take action to stimulate the economy. Separate figures showed the unemployment rate remained near a record high at 11.5% in July. (BBC)

Weak Investment, Trade Drive Second Quarter Contraction In German Economy. Weak investment spending and slow trade led Germany to contract for the first time in over a year in the second quarter, data showed, suggesting Europe's largest economy is running out of steam just as the impact of the crisis in Ukraine starts to bite. Germany's Federal Statistics Office confirmed on Monday an earlier estimate showing a 0.2% contraction in seasonally-adjusted gross domestic product (GDP) on the quarter. Gross capital investment in Germany fell by 2.3% and construction investment dropped by 4.2%, in part due to a mild winter which boosted building activity in the first quarter. Foreign trade, traditionally the driver of German economic growth, subtracted 0.2%age points from growth while private consumption and inventories made a positive contribution. (Reuters)

Booming Budget Surplus Puts Pressure On Germany To Spend. Germany posted its biggest budget surplus since reunification in the first half of 2014, underscoring the strength of its finances just as it encounters growing pressure to spend more to bolster growth in Europe. Data showed on Monday that Germany's overall budget surplus - grouping federal, state and local governments and the social security system - amounted to 16.1bil euros ($21.2bil) or 1.1% of GDP in the first half the year. That is the strongest fiscal position since reunification in 1990 and puts Germany on track to a achieve a surplus in 2014 for a third straight year. It is the only euro zone state where the European Commission sees a surplus this year. (Reuters)

French Manufacturing Shrinks At Fastest Rate In 15 Months In August. French manufacturing activity shrank at the fastest pace in 15 months in August as new orders, employment and stocks of purchases all contracted more sharply, a survey showed on Monday. Data compiler Markit said its final purchasing managers' index for the sector fell to 46.9 in August from 47.8 in July. That was slightly higher than a preliminary reading of 46.5 but left the index well below the 50-point line dividing expansions in activity from contractions. (Reuters)

Spanish Manufacturing Grows For Ninth Straight Month In August. Spain's manufacturing sector expanded for the ninth straight month in August as new orders flooded in and firms took on more staff as the economy recovers, a survey showed on Monday. Markit's Purchasing Managers' Index (PMI) of manufacturing companies stood at 52.8 in August, down from 53.9 in July, but holding above the 50 mark separating growth from contraction. New orders came in at the fastest pace since before the country's six-year-long economic downturn. This meant employers hired more workers, with employment rising for the eighth month in a row. (Reuters)

UK Manufacturing Growth At 14-Month Low, PMI Survey Finds. Growth in the manufacturing sector has slowed, with both new orders and output increasing less rapidly than before, two surveys have suggested. The Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) edged down in August to 52.5 from 54.8 in July, its lowest reading for 14 months. However, the sector still grew as a PMI figure over 50 indicates expansion. A separate survey from the EEF trade body, conducted between 30 July and 20 August, also found growth had slowed. The EEF said that, because of the recent slowdown, it now expected the manufacturing sector to grow by 3.3% in 2014, down from its previous forecast of 3.5%. (BBC)

Currencies

Dollar Rises Slightly Against Yen. The dollar was slightly higher against the yen and the euro, with many investors shying away from making major moves ahead of big events later this week such as U.S. jobs data and the European Central Bank’s policy meeting. At last check, the dollar was at ¥104.28 compared with ¥104.08 late Friday in New York. Meanwhile, the euro was at $1.3135 from $1.3133. The U.K. pound traded at $1.6624, from $1.6598. Market participants were sitting on sidelines due to a lack of fresh cues and because of the Labor Day holiday Monday in the U.S. (Market Watch)

Commodities

Oil Prices Dip On Faltering Demand But Libya Chaos Threatens Output. Brent crude oil prices dipped on Monday as manufacturing growth faltered in Europe and China at a time of ample supply, although the risk of production setbacks remained high in Libya where the government has lost control of most of the capital. Brent crude was 47 cents lower at $102.72 a barrel by 1702 GMT. U.S. crude traded 10 cents lower at $95.86 a barrel, although floor trading in the United States was closed on Monday for the Labor Day holiday. (Reuters)

Palladium Hits 13-1/2 Year High Of $910/Oz On Ukraine Worries. Palladium rose to a 13-1/2-year high of $910 an ounce on Monday on fears that possible Western sanctions against Russia over the Ukraine crisis could hit supply from the world's top producer of the metal, while gold nudged higher. Spot palladium rose as high as $910 an ounce, the highest since February 2001, and was up 1% at $907.97 by 1449 GMT, heading for its fourth straight session of gains on worries the escalation of tensions over Ukraine could result in an extension of sanctions to include palladium producers. Spot gold was unchanged on the day at $1,286.90 an ounce, tentatively extending a small gain posted in the previous week. Spot silver was flat at $19.44 an ounce, while spot platinum lost 0.1% to $1,418.25 an ounce. (Reuters)