Global

· World Bank Cuts Global Growth Forecast. The World Bank has cut its global growth forecast, warning the US alone cannot drive an economic recovery. In its bi-annual report, the Bank predicted global growth of 3% this year and 3.3% next year, below its June forecast of 3.4% and 3.5% respectively. "The global economy is running on a single engine...The American one. This does not make for a rosy outlook," chief economist Kaushik Basu warned. However, it said lower oil prices would benefit some countries. (BBC)

Malaysia

· 2015 Budget May Be Restructured: PM. There is a possibility the 2015 Budget will be restructured, said Prime Minister Datuk Seri Najib Razak. “I will come out with a statement (on this) next week,” he told reporters after receiving the flood relief assistance from China here today. Najib was asked whether the government would undertake a budget reallocation for this year given several unexpected major events such as the falling global oil prices as well as the floods that hit the east coast of Peninsular Malaysia. (Bernama)

Asia

· Japan Will Use Sales Tax Hike Revenue To Expand Welfare Spending. Japan's government agreed on Tuesday to use revenue from a sales tax increase to boost welfare spending in the coming fiscal year to help citizens in its rapidly aging society cope with higher costs. Prime Minister Shinzo Abe's government expects an additional 8 trillion yen ($67.6 billion) in tax revenue for the next fiscal year after raising the nationwide sales tax to 8% from 5% in April 2014. In the fiscal year that will begin April 1, the government will spend around 1.35 trillion yen on cash handouts for families with children and to help cover health-care costs, according to a statement from a government advisory panel. (Reuters)

· Japan Service Sector Sentiment Improves In December. Japan's service sector sentiment index rose to 45.2 in December, a Cabinet Office survey showed on Tuesday. The survey of workers such as taxi drivers, hotel workers and restaurant staff - called "economy watchers" for their proximity to consumer and retail trends - showed their confidence about current economic conditions climbed from 41.5 in November. The Cabinet Office started compiling the data in comparative form in August 2001. The outlook index, indicating the level of confidence in future conditions, rose to 46.7 in December from 44.0 the previous month. (Reuters)

· Japan's Government Says Doesn't Expect Boj To Meet Price Target Due To Falling Oil. Japan's economics minister said on Tuesday the Bank of Japan is unlikely to meet its inflation target next fiscal year because the collapse in oil prices puts downward pressure on consumer prices. Economics Minister Akira Amari spoke one day after the government said it expects overall consumer prices to rise 1.4% in fiscal 2015, well below the BOJ's target of 2% inflation. "Lower oil prices aren't necessarily a bad thing for the economy, but they are a negative factor for the BOJ's price target." It is up to the BOJ to make its own decisions about the outlook for prices, Amari said. (Reuters)

· China December Trade More Robust Than Expected, But Concerns Linger. China's December trade data beat expectations as demand from a stronger U.S. economy helped offset weakness in Europe and Japan, while Chinese bargain-shopping in commodities markets put a floor under sliding imports. But while exports grew faster and imports shrank less than forecast, trade officials warned of more headwinds to come in the first quarter if global demand remains uneven. Exports in December rose 9.7% from a year earlier in dollar-denominated terms, data from the General Administration of Customs showed on Tuesday, handily beating a Reuters poll by nearly three full%age points. Imports dropped by only 2.4%, where analysts' consensus was for a far steeper decline of 7.4%. (Reuters)

· Indonesia To Inject US$4bil Into State-Linked Companies. Indonesia unveiled plans to inject nearly US$4bil into statelinked companies in the infrastructure sector and the biggest bank by assets, in a bid to deploy for growth the money it will save by slashing fuel subsidies. Indonesia would inject 48 trillion rupiah (US$3.82bil) this year into state-owned enterprises mainly in the infrastructure sector as the government’s move to slash fuel subsidies would give it more fiscal flexibility, President Joko Widodo said yesterday. “After we redirect the fuel subsidies, there’s a lot of room in our budget,” Widodo said. (Reuters)

USA

· U.S. Small Business Confidence At Eight-Year High; Job Openings Rise. U.S. small business optimism jumped in December to its highest level in more than eight years, the latest sign of strength in the economy even as dark clouds settle over global growth. The outlook was further bolstered by other data on Tuesday showing job openings approached a 14-year high in November. The National Federation of Independent Business said its Small Business Optimism Index increased 2.3 points to 100.4 last month, the highest reading since October 2006. In a separate report, the Labor Department said job openings, a measure of labor demand, increased 2.9% to a seasonally adjusted 4.97 million in November, the highest level since January 2001. (Reuters)

Europe

· Germany Balances Budget For First Time Since 1969. Germany has balanced the federal budget for the first time in almost half a century, helped by strong tax revenues and rock-bottom interest rates, but the extra leeway is unlikely to translate into spending that could boost weak euro zone growth. Berlin had been aiming to achieve the so-called "schwarze Null" in 2015 - but the finance ministry announced on Tuesday it had got there in 2014, a year ahead of schedule. It was the first time since 1969 that Germany had achieved the feat and is both a domestic and European political fillip for Chancellor Angela Merkel's government, which wrote the goal into a coalition agreement in late 2013 and has preached budget discipline to the likes of Greece. The government had originally planned to take out 6.5 billion euros ($7.7 billion) in net new debt last year but ended up not needing to take any, and even managed to pay off old debts worth 2.5 billion euros.

(Reuters)

· UK Inflation Rate Falls To 0.5% In December. The UK inflation rate fell sharply to 0.5% in December, the joint lowest on record, official figures show. Inflation as measured by the Consumer Prices Index fell from 1% in November to its lowest rate since May 2000, helped by cheaper fuel prices. Low inflation could mean lower interest rates for longer, Bank of England governor Mark Carney told the BBC. A fall of inflation below 1% triggers a letter of explanation from Mr Carney to the chancellor. This is because the CPI rate is more than one percentage point away from the Bank's 2% target. The Office for National Statistics (ONS) also said that the Retail Prices Index (RPI) measure of inflation fell to 1.6% from 2%. (BBC)

· Greek Deflation Picks Up In December, Prices Fall For 22nd Month. Greek consumer prices fell 2.6% in December, with the annual pace of deflation accelerating from a 1.2% drop in November, data from the country's statistics service showed on Tuesday. Greece's EU-harmonized deflation rate also picked up, showing a 2.5% fall in December from a 1.2% drop in November. For last year as a whole, Greece's consumer prices fell by an average 1.3% compared to 2013. (Reuters)

Currencies

· Ringgit Falls To Lowest Since July 2009 As Oil Prices Extend Decline. The ringgit fell to the lowest level in more than five years on concern that a protracted slump in crude prices would erode the oil-exporting nation's revenue.Brent crude sank to levels not seen since 2009 on speculation US crude stockpiles would increase, exacerbating a global supply glut. The currency depreciated 0.7% to 3.5918 a dollar as of 2:50pm in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.5947, the lowest since July 2009. The currency has fallen in six of the last eight days and lost 9% in the past three months, the worst performance in emerging Asia. (Bloomberg)

· Oil Slide Fuels Dollar’s Retreat Against Yen. The U.S. dollar extended its gains against the euro, but surrendered earlier gains against the yen and the pound as Nymex-traded crude oil futures clung to the $45-a-barrel level and the U.S. Energy Information Administration said oil supplies will outpace demand through 2016. The pound hit a low of $1.5076 after priceinflation data for the U.K. registered the weakest reading in 14 years. It recovered to $1.5152, flat compared to its level of $1.5172 Monday afternoon. Falling oil prices and a dour supply outlook also dragged the dollar lower against the yen. The dollar traded at ¥117.7400, compared with ¥118.35 late Monday in New York. The euro slipped to $1.1773, from around $1.1800 late Monday, recovering from the nine-year low of $1.1750 hit earlier in the global day. The ICE Dollar index which measures the greenback’s strength against a trade-weighted basket of six rival currencies rose 0.35% to 92.2980. In other currency trading, the dollar rose to 7.76 Norwegian krone, compared to 7.75 Monday afternoon. The Canadian dollar continued to trade flat against the dollar despite the falling oil price. (Marketwatch)

Commodities

· Oil Near 6-Year Low; Brent Trades At Par To U.S. Crude. Oil tumbled 5% to near six-year lows before recovering ground on Tuesday, and Brent briefly traded at par to U.S. crude for the first time in three months as some traders moved to take advantage of ample storage space in the United States. Traders were searching to store the glut of oil, which has knocked prices down 60% in the last six months. So far this week, Brent has lost 7% and U.S. crude 5%. Brent settled down 84 cents at $46.59 a barrel, after falling to $45.19, its lowest since March 2009. U.S. crude closed down 18 cents at $45.89, after hitting an April 2009 low of $44.20. (Reuters)

· Gold Steadies In Choppy Dealings, Silver Rallies. Gold was little changed on Tuesday, paring gains after hitting technical resistance at a 12-week high, moving in choppy trading as the dollar returned near its session highs and as crude oil prices pared steep losses. Silver rose 4% to a one-month high on potential supply concerns. Spot gold was down 0.1% at $1,231.60 an ounce by 3:06 p.m. EST (2006 GMT), while U.S. gold futures for February delivery settled 0.1% higher at $1,234.40. Silver was up 3% at $17.03 an ounce, after rising 4% to $17.19, the highest since Dec. 12, garnering support from potential supply concerns as the price of copper tumbles. Silver is a byproduct of copper mining. Platinum returned to parity with gold after spending most of the past 18 months at a premium to the yellow metal. Spot platinum was down 0.1% at $1,236.98 an ounce, while spot palladium was 0.6% higher at $810.98 an ounce. (Reuters)