Global

OECD Sees Global Economy Held Back By Slow Eurozone. A slow recovery among nations using the euro is holding back the global economy, the Organisation for Economic Co-operation and Development has said. Conflicts in Ukraine and the Middle East and the referendum on an independent Scotland are areas of risk and uncertainty, it said. Its 2014 estimate is a 0.8% increase in the eurozone economy for 2014, compared with a forecast of 1.2% made in May. The UK's forecast was cut by 0.1 percentage points to 3.1%. US economic expansion for 2014 was cut to 2.1% from 2.6%. Japan's forecast was cut to 0.9% from 1.2%. Among countries which are not OECD members, China's forecast was unchanged at 7.4%. India was the only economy to be judged by the organisation as likely to grow quicker, with its forecast upgraded to 5.7% from 4.9% after voting in a new government that said it would pursue growth-oriented reforms and progress in containing inflation. (BBC)

Malaysia

IMF Commends Malaysia On GST. The International Monetary Fund (IMF) has given the thumbs up to Malaysia's ongoing fiscal reform by broadening the tax base with the implementation the Goods and Services Tax (GST) starting April 1, 2015. Fiscal Affairs Department Adviser, Kiyoshi Nakayama, said this shift of revenue source, from natural resource and corporate income to also include the GST, was a crucial policy direction to maintain Malaysia's long-term fiscal sustainability. In his presentation at the International Seminar on GST 2014, he said, the growth-friendly tax was less distortive for economic growth compared with income tax. (Bernama)

Asia

China Overseas Investment Soars. CHINA’S outbound investment more than doubled in August to US$12.62bil (RM41bil), data showed yesterday, far outstripping foreign direct investment (FDI) into the country, which fell to a four-year low. China has been actively acquiring foreign assets, particularly energy and resources, to power its economy, with firms encouraged to “go out” and make overseas acquisitions to gain market access and international experience. Officials have said overseas direct investment (ODI) could exceed FDI this year. The 112.1% year-on-year increase in ODI announced by the Commerce Ministry was a dramatic contrast to the 14% fall in FDI, which sank to US$7.2bil. Both sets of figures exclude investment in financial sectors. (AFP)

USA

Autos Weigh On U.S. Factory Output; Outlook Still Upbeat. U.S. manufacturing output fell for the first time in seven months in August, but the underlying trend remained consistent with a steadily expanding factory sector. Factory production dropped 0.4% last month as motor vehicle production fell sharply after surging in July, the Federal Reserve said. The drop, which followed a gain of 0.7% in July, confounded economists' expectations for a 0.3% rise. Excluding automobiles, manufacturing output gained 0.1% in August. So far in the third quarter, factory production is running at a 4.6% annual pace, a sign that manufacturing will continue to support economic growth. (Reuters)

Weak Gasoline, Food Prices Dampen U.S. Producer Inflation. U.S. producer prices were flat in August, pointing to muted inflation pressures that should allow the Federal Reserve to bide its time as it considers when to raise interest rates. The Labor Department said on Tuesday falling gasoline and food prices restrained its producer price index for final demand last month. Prices received by the nation's farms, factories and refineries had edged up 0.1% in July. Economists had expected producer prices to gain 0.1% last month. In the 12 months through August, they increased 1.8%, accelerating a bit from the 1.7% rise in the year through July. (Reuters)

Europe

Euro Zone Trade Surplus Rises In July On Growing Exports. The euro zone's trade surplus rose year-on-year in July as exports grew faster than imports, pointing to a positive contribution to economic growth at the start of the third quarter, the European Union's Statistics office data showed. Eurostat said the non-seasonally adjusted external trade surplus of the 18 countries sharing the euro was 21.2bil euros (27.39bil US dollar) in July, up from 18.0bil in July 2013. Exports increased 3% year-on-year while imports only 1%. Adjusted for seasonal swings, however, and on a month-on-month basis, exports edged 0.2% lower in July against June while imports rose 0.9%. The seasonally adjusted trade balance was a 12.2bil surplus, down from 13.8bil in June and 15.2bil in May. (Reuters)

Euro Zone Second-Quarter Labor Costs Jump Despite Stalling Economy. The rise in euro zone labor costs accelerated in the second quarter compared to the first three months despite a stalling economy, the European Union's Statistics Office said on Tuesday. Eurostat said total labor costs in the 18 countries sharing the euro rose 1.2% year-onyear,of which wages grew 1.2% and other costs, like social security contributions, increased 1.0%. The labor cost rise is twice as fast as in the previous three months, even though the 9.6 trillion euro economy stagnated quarter-on-quarter in the April-June period. The costs grew mainly as a result of a 1.7% increase in the labor costs in Europe's biggest economy Germany. (Reuters)

German Investor Confidence Falls For Ninth Month. Investor sentiment in Germany fell for the ninth month in a row as conflict in Ukraine and weak economic growth in the eurozone continue to undermine confidence, a survey has suggested. The ZEW economic sentiment index fell 1.7 points to 6.9 in September, well below its long-term average of 24.6. The fall was less than in August and less than analysts had expected. (BBC)

UK Inflation Rate Down To 1.5% As Food And Petrol Costs Fall. The annual rate of UK inflation fell in August as the cost of petrol, food and non-alcoholic drinks declined. Consumer Price Index (CPI) inflation fell to 1.5% from 1.6% in August, the Office for National Statistics said. It means the Bank of England remains under little pressure to raise interest rates in order to keep CPI inflation at or below its target rate of 2%. Retail Price Index (RPI) inflation also saw a reduction, to 2.4%, from 2.5% the previous month. (BBC)

Currencies

Paris, Beijing Work To Boost French Yuan Investments. Bank of China was appointed on Monday as a yuan clearing service in Paris and two French groups were awarded licenses enabling them to invest in China's mainland securities, in moves to expand yuan markets. Coinciding with a visit to Paris by Chinese Vice Premier Ma Kai, France announced that BNP Paribas Investment Partners, the asset management arm of BNP Paribas, and Carmignac had become the first French firms to obtain authorization to invest in China's mainland securities market via a RQFII license. Launched in 2011, the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme allows financial institutions to use offshore yuan to invest in mainland stock, bond and money market instruments. It is one of the very few channels through which foreigners can tap these markets. (Reuters)

Pound Lower Against Dollar After Inflation Data. The pound drifted lower against the dollar Tuesday after U.K. inflation data came in slightly below expectations, signaling the Bank of England may be able to leave interest rates steady. The pound traded at $1.6190 Tuesday, compared to $1.6227 Monday evening. The dollar traded at ¥107.17 Tuesday compared with ¥107.19 late Monday, hovering below a six-year high of ¥107.39 it recorded on Friday. The euro was at $1.2947 from $1.2941 Monday. (Market Watch)

Commodities

Oil Gains On OPEC Production Cut Talk, Libya Paring Output. U.S. crude futures rose by almost $2 and Brent by more than $1 on Tuesday on the prospect of a production cut by OPEC as well as on a weakening dollar and news that Libya had curbed output after rockets hit an area near a refinery. November Brent rose $1.17 to settle at $99.05 a barrel. The October contract expired and went off the board on Monday at $96.21. The front-month U.S. October crude settled $1.96 higher at $94.88 a barrel, after earlier touching a high of $95.15. The October contract expires on Sept. 22. (Reuters)

Gold Rises Before Fed As Weak Dollar, Oil Rally Help. Gold rose on Tuesday as a weaker dollar and rallying crude oil prices prompted bullion investors to cover bearish bets ahead of a closely watched policy statement by the Federal Reserve. Spot gold was up 0.2% on the day at $1,235.29 an ounce by 3:53 p.m. EDT (1953 GMT). Silver was up 0.6% at $18.68 an ounce. Platinum was up 0.2% at $1,362.74 an ounce, while palladium rose 0.6% to $839. (Reuters)