Eurozone inflation rose to another record high in July and its peak could still be months away, keeping pressure on the European Central Bank to opt for another big interest rate increase in September.

WION Dispatch: Eurozone inflation at record high; consumer prices jump 8.9% in July

The European Central Bank (ECB) on Thursday (July 21) went for an aggressive benchmark deposit rate hike. This is a first since 2011 and has brought an end to the era of negative interest rates in the eurozone. The half point hike is bigger than expected. It has come amid soaring inflation and looming energy crisis in the wake of conflict in Ukraine.

The ECB said its new "assessment of inflation risks" justified taking "a larger first step on its policy rate normalisation path than signalled at its previous meeting" in June when policymakers shared their intent to raise rates by a more modest 25 basis points or a quarter of a percentage point.

In June, inflation in the eurozone hit 8.6 per cent. This was the highest ever level and it was well above ECB's target of two per cent.

The ECB also unveiled the first details of a new crisis tool to fight bond market stress in parts of the eurozone.

The instrument is a response to recent increases in the borrowing costs for governments in more highly indebted, usually southern eurozone members, such as Italy.

Dubbed the "Transmission Protection Instrument (TPI)", the targeted bond-buying scheme "can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area," the ECB said in a statement.

The rate hike has lifted ECB's deposit facility from negative to zero.

The rate on its main refinancing operations climbs to 0.50 percent and on its marginal lending facility to 0.75 percent.

With prices taking off, the euro weak against the dollar and other central banks racing ahead with bigger hikes, the ECB was under pressure to think about making a bigger move at the meeting on Thursday.

Future rate hikes "will be appropriate", the ECB said, as it looks to catch up with the US Federal Reserve and the Bank of England which both&nbsp; 
started raising rates earlier and more aggressively.

(With inputs from agencies)

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The European Central Bank (ECB) on Thursday (July 21) went for an aggressive benchmark deposit rate hike. This is a first since 2011 and has brought an end to the era of negative interest rates in the eurozone.

The European Central Bank (ECB) on Thursday (July 21) went for an aggressive benchmark deposit rate hike. This is a first since 2011 and has brought an end to the era of negative interest rates in the eurozone. The half point hike is bigger than expected. It has come amid soaring inflation and looming energy crisis in the wake of conflict in Ukraine. The ECB said its new "assessment of inflation risks" justified taking "a larger first step on its policy rate normalisation path than signalled at its previous meeting" in June when policymakers shared their intent to raise rates by a more modest 25 basis points or a quarter of a percentage point. In June, inflation in the eurozone hit 8.6 per cent. This was the highest ever level and it was well above ECB's target of two per cent. The ECB also unveiled the first details of a new crisis tool to fight bond market stress in parts of the eurozone. The instrument is a response to recent increases in the borrowing costs for governments in more highly indebted, usually southern eurozone members, such as Italy. Dubbed the "Transmission Protection Instrument (TPI)", the targeted bond-buying scheme "can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area," the ECB said in a statement. The rate hike has lifted ECB's deposit facility from negative to zero. The rate on its main refinancing operations climbs to 0.50 percent and on its marginal lending facility to 0.75 percent. With prices taking off, the euro weak against the dollar and other central banks racing ahead with bigger hikes, the ECB was under pressure to think about making a bigger move at the meeting on Thursday. Future rate hikes "will be appropriate", the ECB said, as it looks to catch up with the US Federal Reserve and the Bank of England which both started raising rates earlier and more aggressively. (With inputs from agencies) You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

ECB goes for aggressive rate hike for first time since 2011

Croatia formally became the 20th member of the euro common currency as European Union finance ministers on Tuesday approved the country's request. The approval will come into being at the start of 2023. The European Council, the grouping of 27 EU governments, adopted three legal acts required to allow Croatia - an EU member since 2013 - to introduce the euro on January 1. One of those acts set the conversion rate for entry at one euro to 7.53450 Croatian kuna, with Croatia now having a few months to prepare the practicalities for the currency switch, as reported by Reuters.

European Commission Vice-President Valdis Dombrovskis said the use of the European currency would bring economic benefits to Croatia - the first country to join the euro since Lithuania in 2015. "It will help stabilize interest rates, making it easier and cheaper for people and companies to borrow and it brings a positive impact on growth thanks to the full integration into EU single market," he said.

To adopt the euro, Croatia had to fulfil criteria of price and exchange rate stability, sound public finances and moderate long-term interest rates, all measured against EU benchmarks. "I know that it's a wonderful club to be a member of but it requires commitment, dedication, and continued respect of the rules," European Central Bank President Christine Lagarde said at a signing ceremony, reports Reuters.

Also Read:<a href="https://www.wionews.com/photos/in-pics-no-more-sushi-for-japan-fatty-katsuo-fish-may-foreshadow-climate-change-heres-how-496614">&nbsp;In pics: No more sushi for Japan? Fatty 'katsuo' fish may foreshadow climate change, here's how</a>

Matthias Kullas of the Centre for European Policy (CEP) points out that Croatia's debt level of just under 80 per cent of gross domestic product (GDP) is below the average of the euro countries, which climbed to a good 95 per cent in the wake of the Covid crisis. But the Stability Pact actually sets the maximum limit at 60 per cent. Among the eight EU members that have not yet joined the monetary union, Croatia has the highest debt, as reported by Daily Express.

The European Commission examined Croatia's economic convergence with the rest of the eurozone, including balance of payments trends and the integration of its labour and financial markets, and verified that Croatian legislation is compatible with EU laws governing the European Central Bank. Croatia, in southeastern Europe, has been an independent country since 1991 when it left then-federal Yugoslavia. Neighbouring Slovenia, also an ex-Yugoslav republic and now EU member, adopted the euro in 2007.

(with inputs from agencies)

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Croatia formally became the 20th member of the euro common currency as European Union finance ministers on Tuesday approved the country's request. The approval will come into being at the start of 2023.

Croatia formally became the 20th member of the euro common currency as European Union finance ministers on Tuesday approved the country's request. The approval will come into being at the start of 2023. The European Council, the grouping of 27 EU governments, adopted three legal acts required to allow Croatia - an EU member since 2013 - to introduce the euro on January 1. One of those acts set the conversion rate for entry at one euro to 7.53450 Croatian kuna, with Croatia now having a few months to prepare the practicalities for the currency switch, as reported by Reuters. European Commission Vice-President Valdis Dombrovskis said the use of the European currency would bring economic benefits to Croatia - the first country to join the euro since Lithuania in 2015. "It will help stabilize interest rates, making it easier and cheaper for people and companies to borrow and it brings a positive impact on growth thanks to the full integration into EU single market," he said. To adopt the euro, Croatia had to fulfil criteria of price and exchange rate stability, sound public finances and moderate long-term interest rates, all measured against EU benchmarks. "I know that it's a wonderful club to be a member of but it requires commitment, dedication, and continued respect of the rules," European Central Bank President Christine Lagarde said at a signing ceremony, reports Reuters. Also Read: In pics: No more sushi for Japan? Fatty 'katsuo' fish may foreshadow climate change, here's how Matthias Kullas of the Centre for European Policy (CEP) points out that Croatia's debt level of just under 80 per cent of gross domestic product (GDP) is below the average of the euro countries, which climbed to a good 95 per cent in the wake of the Covid crisis. But the Stability Pact actually sets the maximum limit at 60 per cent. Among the eight EU members that have not yet joined the monetary union, Croatia has the highest debt, as reported by Daily Express. The European Commission examined Croatia's economic convergence with the rest of the eurozone, including balance of payments trends and the integration of its labour and financial markets, and verified that Croatian legislation is compatible with EU laws governing the European Central Bank. Croatia, in southeastern Europe, has been an independent country since 1991 when it left then-federal Yugoslavia. Neighbouring Slovenia, also an ex-Yugoslav republic and now EU member, adopted the euro in 2007. (with inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Why is croatia's joining of Eurozone a matter of concern for other EU countries?

The euro struck parity with the dollar for the first time in nearly 20 years on Tuesday as a cut in Russian gas supplies to Europe heightened fears of a recession in the eurozone. Molly Gambhir tells you more.

WION Fineprint | Eurozone recession fears mount as Euro strikes dollar parity

Eurozone inflation accelerated to another record high in June, official data showed on Friday, as Russia's war in Ukraine drives up energy prices and hammers the European economy.

The EU's Eurostat data agency said the increase in consumer prices in the 19 countries that use the euro reached 8.6 percent in June, leaping from the previous record of 8.1 percent a month earlier.

Consumer prices in the eurozone have hit records since November, buffeted by sky-high energy prices, which jumped by 41.9 percent over one year, caused by the fallout of Russia's invasion of its neighbour Ukraine.

But analysts also pointed to the rise in food prices, which accelerated by 8.9 percent, showing that the inflation problem was spreading through the economy.

"Historically, we have never had such a high figure for the contribution of food. It will have a big impact," said Philippe Waechter of Ostrum Asset Management.

The European Central Bank has said it will do whatever it takes to bring inflation back to its target level, with political pressure high to bring energy and food prices into check.

"With eurozone inflation now becoming more broad-based in nature, the outlook for the Eurozone for the rest of 2022 continues to look bleak," warned Pushpin Singh, Economist at the Centre for Economics and Business Research.

"This comes amid a mounting possibility of a severe gas crisis in Europe, with Russia using gas exports as a means to counter sanctions," he added.

Rate hike

As the conflict rages on, Russia has shown an increased willingness to cut off gas supplies to Europe, a danger that has raised the prospect of energy rationing in the eurozone to get through next winter.

Some analysts took solace in the core inflation data, which excludes energy and food prices and came in at 3.7 percent, a tiny drop from the previous month.

But this would not be enough to change the course decided at the ECB's last meeting, when policymakers agreed to the bank's first interest rate hike in more than a decade.

The quarter-point raise, set to take place at its next meeting on July 21, will raise rates from their historic lows.

"We will go as far as necessary to ensure that inflation stabilises at our two percent target over the medium term," ECB head Christine Lagarde said on Tuesday.

The ECB is being pressured by some to go faster in halting inflation and choose a path more akin to the United States where the Federal Reserve has warned it may trigger a recession to cool prices.

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Eurozone inflation accelerated to another record high in June, official data showed on Friday, as Russia's war in Ukraine drives up energy prices and hammers the European economy.

Eurozone inflation accelerated to another record high in June, official data showed on Friday, as Russia's war in Ukraine drives up energy prices and hammers the European economy. The EU's Eurostat data agency said the increase in consumer prices in the 19 countries that use the euro reached 8.6 percent in June, leaping from the previous record of 8.1 percent a month earlier. Consumer prices in the eurozone have hit records since November, buffeted by sky-high energy prices, which jumped by 41.9 percent over one year, caused by the fallout of Russia's invasion of its neighbour Ukraine. But analysts also pointed to the rise in food prices, which accelerated by 8.9 percent, showing that the inflation problem was spreading through the economy. "Historically, we have never had such a high figure for the contribution of food. It will have a big impact," said Philippe Waechter of Ostrum Asset Management. The European Central Bank has said it will do whatever it takes to bring inflation back to its target level, with political pressure high to bring energy and food prices into check. "With eurozone inflation now becoming more broad-based in nature, the outlook for the Eurozone for the rest of 2022 continues to look bleak," warned Pushpin Singh, Economist at the Centre for Economics and Business Research. "This comes amid a mounting possibility of a severe gas crisis in Europe, with Russia using gas exports as a means to counter sanctions," he added. Rate hike As the conflict rages on, Russia has shown an increased willingness to cut off gas supplies to Europe, a danger that has raised the prospect of energy rationing in the eurozone to get through next winter. Some analysts took solace in the core inflation data, which excludes energy and food prices and came in at 3.7 percent, a tiny drop from the previous month. But this would not be enough to change the course decided at the ECB's last meeting, when policymakers agreed to the bank's first interest rate hike in more than a decade. The quarter-point raise, set to take place at its next meeting on July 21, will raise rates from their historic lows. "We will go as far as necessary to ensure that inflation stabilises at our two percent target over the medium term," ECB head Christine Lagarde said on Tuesday. The ECB is being pressured by some to go faster in halting inflation and choose a path more akin to the United States where the Federal Reserve has warned it may trigger a recession to cool prices. You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

Eurozone inflation hits record, as gas crunch looms

Eurozone economic growth deteriorated sharply to a 16-month low in June, according to preliminary PMI data by S&amp;P Global, an American publicly traded corporation, &nbsp;reflecting a fall in demand growth.&nbsp;

Manufacturing output contracted for the first time in two years and the expansion in service sector activity came down considerably, easing most notably for consumer-facing services.

The survey by S&amp;P Global revealed that companies also scaled back their business expectations for output over the coming year to the lowest since October 2020.&nbsp;

“Economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost-of-living shock and slumping business and consumer confidence,” S&amp;P Global economist Chris Williamson said in a statement, as reported by Bloomberg.

Both the stagnation of demand and worsening outlook were widely blamed on the rising cost of living, tighter financial conditions and concerns over energy and supply chains linked to the Ukraine war and ongoing pandemic disruptions.

Also Read:&nbsp;<a href="https://www.wionews.com/world/mass-graves-being-prepared-for-earthquake-victims-in-afghanistan-491083">Mass graves being prepared for earthquake victims in Afghanistan</a>

The survey of purchasing managers continued to show elevated price pressures, including a “worrying increase in costs growth in the service sector.” The cooling of demand, however, pointed to a calming of goods prices, “bringing a tentative hint of a peaking of inflation in the near future,” Williamson said.

The euro retreated against the dollar on Thursday as economic data pointed to increased prospects of a recession in Europe. Global stock markets wobbled after another battering this week, while oil prices slid further.

Government bond yields also fell in another indication that investors are more worried about the prospect of a recession, removing some of the financial stings on governments from rising interest rates.

(with inputs from agencies) 
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Eurozone economic growth deteriorated sharply to a 16-month low in June, according to preliminary PMI data by S&P Global, an American publicly traded corporation, reflecting a fall in demand growth.

Eurozone economic growth deteriorated sharply to a 16-month low in June, according to preliminary PMI data by S&P Global, an American publicly traded corporation, reflecting a fall in demand growth. Manufacturing output contracted for the first time in two years and the expansion in service sector activity came down considerably, easing most notably for consumer-facing services. The survey by S&P Global revealed that companies also scaled back their business expectations for output over the coming year to the lowest since October 2020. “Economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost-of-living shock and slumping business and consumer confidence,” S&P Global economist Chris Williamson said in a statement, as reported by Bloomberg. Both the stagnation of demand and worsening outlook were widely blamed on the rising cost of living, tighter financial conditions and concerns over energy and supply chains linked to the Ukraine war and ongoing pandemic disruptions. Also Read: Mass graves being prepared for earthquake victims in Afghanistan The survey of purchasing managers continued to show elevated price pressures, including a “worrying increase in costs growth in the service sector.” The cooling of demand, however, pointed to a calming of goods prices, “bringing a tentative hint of a peaking of inflation in the near future,” Williamson said. The euro retreated against the dollar on Thursday as economic data pointed to increased prospects of a recession in Europe. Global stock markets wobbled after another battering this week, while oil prices slid further. Government bond yields also fell in another indication that investors are more worried about the prospect of a recession, removing some of the financial stings on governments from rising interest rates. (with inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Eurozone economy at a 16-month low in June due to Ukraine war and pandemic disruptions: Report

The European Central Bank (ECB) on Monday (June 20) said that the arrival of Ukrainian refugees into the European Union could gradually solve labour shortage issues. ECB noted that some of those fleeing the war are likely looking to settle permanently.&nbsp;

Russia announced the invasion of Ukraine this year on February 24, with Moscow calling it special military operations. The Russia-Ukraine war led to the displacement of people on a very large scale.&nbsp;

According to the United Nations refugee agency (UNHCR), a total of 8.3 million refugees could have left Ukraine by the end of the year. More than 7.5 million have fled Ukraine and millions more have been displaced inside the country. Those who entered the neighbouring countries, hope to find durable employment opportunities in the 27-nation EU.&nbsp;

The situation is expected to benefit both, as the euro zone has been struggling with increasing labour shortages and on the other hand, those who entered Europe, are looking for work. The ECB said that the influx of refugees could "slightly ease" labour market tightness.&nbsp;

The ECB said in an Economic Bulletin article: "Under all of the assumptions detailed thus far, back-of-an-envelope calculations point to a median increase of between 0.2% and 0.8% in the euro area labour force in the medium term."&nbsp;

"This corresponds to an increase of between 0.3 and 1.3 million in the size of the euro area labour force as a result of the Ukrainian refugee crisis," it added.&nbsp;

The ECB further added that getting people to work may prove difficult due to administrative barriers. "Barriers to the labour market and other frictions remain significant impediments to refugees, making it difficult for them to integrate into host countries’ labour markets, especially in the short term," it said.&nbsp;

(With inputs from agencies)&nbsp;

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The European Central Bank (ECB) on Monday (June 20) said that the arrival of Ukrainian refugees into the European Union could gradually solve labour shortage issues.

The European Central Bank (ECB) on Monday (June 20) said that the arrival of Ukrainian refugees into the European Union could gradually solve labour shortage issues. ECB noted that some of those fleeing the war are likely looking to settle permanently. Russia announced the invasion of Ukraine this year on February 24, with Moscow calling it special military operations. The Russia-Ukraine war led to the displacement of people on a very large scale. According to the United Nations refugee agency (UNHCR), a total of 8.3 million refugees could have left Ukraine by the end of the year. More than 7.5 million have fled Ukraine and millions more have been displaced inside the country. Those who entered the neighbouring countries, hope to find durable employment opportunities in the 27-nation EU. The situation is expected to benefit both, as the euro zone has been struggling with increasing labour shortages and on the other hand, those who entered Europe, are looking for work. The ECB said that the influx of refugees could "slightly ease" labour market tightness. The ECB said in an Economic Bulletin article: "Under all of the assumptions detailed thus far, back-of-an-envelope calculations point to a median increase of between 0.2% and 0.8% in the euro area labour force in the medium term." "This corresponds to an increase of between 0.3 and 1.3 million in the size of the euro area labour force as a result of the Ukrainian refugee crisis," it added. The ECB further added that getting people to work may prove difficult due to administrative barriers. "Barriers to the labour market and other frictions remain significant impediments to refugees, making it difficult for them to integrate into host countries’ labour markets, especially in the short term," it said. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Ukrainian refugees in eurozone could join workforce, ease labour shortage: ECB

Inflation in the 19 countries of the eurozone soared to 8.1% in May from 7.4% in April. Rising prices have been exacerbated over recent months by the war in Ukraine, particularly food and energy costs.

Eurozone inflation hits record 8.1% amid rising food and energy costs

The European Union's official statistics agency Eurostat said on Wednesday (March 2) that Eurozone inflation had soared to a record high in February. The inflation was at 5.8 per cent and energy prices surged.

The acceleration, from 5.1 percent in January, was announced as oil and gas prices rocketed even higher over fears about the impact on supplies from Russia's invasion of Ukraine.

Brent crude touched USD 110 a barrel for the first time since 2014. WTI followed suit hours later. It hit its highest level since 2013. European natural gas prices similarly hit a record level.

Also Read | <a href="https://www.wionews.com/world/russian-talkshows-describe-reports-of-military-losses-as-fake-458218">Russian talkshows describe reports of military losses as 'fake'</a>

The surge in inflation comes at a difficult time for European leaders as they warn their citizens of the "price to pay" from tough sanctions imposed on Russia, the EU's leading foreign gas supplier.

Policymakers fear soaring inflation could choke off the EU's recovery from the coronavirus pandemic.

Eurostat said energy prices in February jumped 31.7 percent, faster than the 28.8 percent recorded in January.

Food prices were up 4.1 percent in February, compared with 3.5 percent the previous month.

Analysts at Capital Economics predicted inflation would hit six percent in the coming months before falling back to around four percent, "most likely" at the end the year.

That is still double the European Central Bank's target of around two percent.

Capital Economics warned that not only energy prices, but also food prices could rise further due to the conflict in Ukraine, a major wheat exporter.

The EU and Western allies have imposed sweeping sanctions on Moscow over President Vladimir Putin's invasion.

They have unleashed turmoil on Russia's economy and forced the Kremlin to impose capital controls.

(With inputs from agencies)

The European Union's official statistics agency Eurostat said on Wednesday (March 2) that Eurozone inflation had soared to a record high in February. The inflation was at 5.

The European Union's official statistics agency Eurostat said on Wednesday (March 2) that Eurozone inflation had soared to a record high in February. The inflation was at 5.8 per cent and energy prices surged. The acceleration, from 5.1 percent in January, was announced as oil and gas prices rocketed even higher over fears about the impact on supplies from Russia's invasion of Ukraine. Brent crude touched USD 110 a barrel for the first time since 2014. WTI followed suit hours later. It hit its highest level since 2013. European natural gas prices similarly hit a record level. Also Read | Russian talkshows describe reports of military losses as 'fake' The surge in inflation comes at a difficult time for European leaders as they warn their citizens of the "price to pay" from tough sanctions imposed on Russia, the EU's leading foreign gas supplier. Policymakers fear soaring inflation could choke off the EU's recovery from the coronavirus pandemic. Eurostat said energy prices in February jumped 31.7 percent, faster than the 28.8 percent recorded in January. Food prices were up 4.1 percent in February, compared with 3.5 percent the previous month. Analysts at Capital Economics predicted inflation would hit six percent in the coming months before falling back to around four percent, "most likely" at the end the year. That is still double the European Central Bank's target of around two percent. Capital Economics warned that not only energy prices, but also food prices could rise further due to the conflict in Ukraine, a major wheat exporter. The EU and Western allies have imposed sweeping sanctions on Moscow over President Vladimir Putin's invasion. They have unleashed turmoil on Russia's economy and forced the Kremlin to impose capital controls. (With inputs from agencies)

Eurozone inflation hits record high due to soaring energy prices

Eurozone inflation accelerated to 3.4 per cent year-on-year in September, reaching a 13-year high, according to an estimate published by Eurostat, the statistical office of the European Union (EU).

Eurozone accelerated to 3.4 per cent, inflation hits 13-year high

Business activity in the&nbsp;eurozone&nbsp;shot ahead at its fastest rate in 21 years in July, a closely watched survey said on Friday, as the economy went into full throttle with loosened <a href="https://www.wionews.com/topics/coronavirus">COVID-19</a> restrictions.

But the survey showed that the spread of the <a href="https://www.wionews.com/world/delta-is-the-fastest-covid-19-variant-and-will-pick-off-the-most-vulnerable-who-393278">Delta variant </a>was beginning to chip away at business confidence, with concern that new measures could again sow chaos in the economy.&nbsp;

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The PMI composite index from economic data group IHS Markit said activity rose from 59.5 in June to a strong 60.6 in July, well above the 50-point level that indicates growth.

With the summer in full swing, Chris Williamson, chief economist at IHS Markit, said that the tourism and hospitality sectors were especially responsible for pushing the economy to historic growth levels.

However, for manufacturers, supply chain delays remained a "major concern", hurting production and pushing costs higher.&nbsp;

This, he warned, would likely "feed through to higher consumer prices in coming months" and make itself felt in the inflation data.

Also read |&nbsp;<a href="https://www.wionews.com/world/eurozone-enters-double-dip-recession-in-first-quarter-381725">Eurozone enters double-dip recession in first quarter</a>

Pointing to a darker days ahead, Williamson said the delta variant posed "a major risk to the outlook".&nbsp;

"Not only have rising case numbers led to a slide in business optimism to the lowest since February, further covid waves around the world could lead to further global supply chain delays and hence ever higher prices."

Business activity in the eurozone shot ahead at its fastest rate in 21 years in July, a closely watched survey said on Friday, as the economy went into full throttle with loosened COVID-19 restrictions.

Business activity in the eurozone shot ahead at its fastest rate in 21 years in July, a closely watched survey said on Friday, as the economy went into full throttle with loosened COVID-19 restrictions. But the survey showed that the spread of the Delta variant was beginning to chip away at business confidence, with concern that new measures could again sow chaos in the economy. The PMI composite index from economic data group IHS Markit said activity rose from 59.5 in June to a strong 60.6 in July, well above the 50-point level that indicates growth. With the summer in full swing, Chris Williamson, chief economist at IHS Markit, said that the tourism and hospitality sectors were especially responsible for pushing the economy to historic growth levels. However, for manufacturers, supply chain delays remained a "major concern", hurting production and pushing costs higher. This, he warned, would likely "feed through to higher consumer prices in coming months" and make itself felt in the inflation data. Also read | Eurozone enters double-dip recession in first quarter Pointing to a darker days ahead, Williamson said the delta variant posed "a major risk to the outlook". "Not only have rising case numbers led to a slide in business optimism to the lowest since February, further covid waves around the world could lead to further global supply chain delays and hence ever higher prices."

Eurozone economy booms at fastest rate in 21 years

The eurozone fell into a double-dip recession in the first three months of the year as a third wave of Covid-19 took hold and countries struggled to roll out their vaccination programmes.

Eurozone plunges into double-dip recession

The&nbsp;eurozone&nbsp;economy fell into a second recession in less than&nbsp;a year in the first quarter, data showed on Friday, as slow vaccinations and pandemic lockdowns stopped a rebound.

The data was in stark contrast to the US, where the economy roared forward in the same period, posting annualised growth of 6.4 per cent.

China has also turned the corner from the <a href="https://www.wionews.com/search?q=Coronavirus">coronavirus pandemic</a> with an 18.3-per cent explosion in gross domestic product growth on an annual basis.

Also read |&nbsp;<a href="https://www.wionews.com/business-economy/recession-of-historic-proportions-eurozone-economy-predicted-to-contract-77-296990">'Recession of historic proportions': Eurozone economy predicted to contract 7.7%</a>

Europe has been hit hard by a second and third wave of the coronavirus pandemic, with multiple attempts to reopen the economy cut short by new outbreaks.

More recent data has given Europeans confidence that the recession will be short-lived, however, with surveys showing that manufacturing is now booming.

And with the vaccination campaign finally getting into swing, pent-up demand is expected to follow as Europeans begin to spend more in shops, at reopened restaurants and on tourism.

The EU's slow-moving recovery plan is also expected to finally get on track, giving a much-needed boost to southern countries crushed by the pandemic, such as Italy or Spain.

Germany was the major drag on growth in January to March period, with exports unable to overcome a steep drop in demand by discouraged consumers, analysts said.

The&nbsp;eurozone's consumer prices meanwhile rose in April by 1.6 per cent, moving closer to the European Central Bank's (ECB) target of two per cent.

The rise in prices, again largely fuelled by energy costs, came after five months of inflation in negative territory at the end of 2020 and a gradual turnaround earlier this year.

But core inflation, which strips out volatile components such as energy or food, actually dipped in April meaning demand is not yet fully recharging the economy.

Unemployment has largely been spared the worst ravages of the crisis that were initially feared when the pandemic froze the global economy in early 2020.

Eurostat said&nbsp;eurozone&nbsp;unemployment dipped to 8.1 per cent in March, though this was one percentage point more than a year before.

EU-wide, unemployment slipped to 7.3 per cent in March.

The eurozone economy fell into a second recession in less than a year in the first quarter, data showed on Friday, as slow vaccinations and pandemic lockdowns stopped a rebound.

The eurozone economy fell into a second recession in less than a year in the first quarter, data showed on Friday, as slow vaccinations and pandemic lockdowns stopped a rebound. The data was in stark contrast to the US, where the economy roared forward in the same period, posting annualised growth of 6.4 per cent. China has also turned the corner from the coronavirus pandemic with an 18.3-per cent explosion in gross domestic product growth on an annual basis. Also read | 'Recession of historic proportions': Eurozone economy predicted to contract 7.7% Europe has been hit hard by a second and third wave of the coronavirus pandemic, with multiple attempts to reopen the economy cut short by new outbreaks. More recent data has given Europeans confidence that the recession will be short-lived, however, with surveys showing that manufacturing is now booming. And with the vaccination campaign finally getting into swing, pent-up demand is expected to follow as Europeans begin to spend more in shops, at reopened restaurants and on tourism. The EU's slow-moving recovery plan is also expected to finally get on track, giving a much-needed boost to southern countries crushed by the pandemic, such as Italy or Spain. Germany was the major drag on growth in January to March period, with exports unable to overcome a steep drop in demand by discouraged consumers, analysts said. The eurozone's consumer prices meanwhile rose in April by 1.6 per cent, moving closer to the European Central Bank's (ECB) target of two per cent. The rise in prices, again largely fuelled by energy costs, came after five months of inflation in negative territory at the end of 2020 and a gradual turnaround earlier this year. But core inflation, which strips out volatile components such as energy or food, actually dipped in April meaning demand is not yet fully recharging the economy. Unemployment has largely been spared the worst ravages of the crisis that were initially feared when the pandemic froze the global economy in early 2020. Eurostat said eurozone unemployment dipped to 8.1 per cent in March, though this was one percentage point more than a year before. EU-wide, unemployment slipped to 7.3 per cent in March.

Eurozone enters double-dip recession in first quarter

Mario Draghi, former European Central Bank chief on Friday formally accepted Italy's prime ministerial post. He will now lead the government set to&nbsp;replace Giuseppe Conte's centre-left coalition that collapsed a month ago. Draghi, the 73-year-old economist, spoke with Italy President Sergio Mattarella and spoke only to list the names of his ministers, a mix of politicians and technocrats. Draghi will return to the presidential palace at midday on Saturday to be formally sworn in, a spokesman for Mattarella said.

The senior deputy governor of Bank of Italy, Daniele Franco, was named as the new economy minister, while Roberto Speranza and Luigi Di Maio stay on at health and foreign affairs, respectively.

Draghi will take the reins when Italy has not fully recovered from the blow of coronavirus pandemic.

More than 93,000 people with coronavirus have died in Italy since it became the first European country to face the full force of the pandemic one year ago, and the toll is still rising by the hundreds each day.

Also Read | <a href="https://www.wionews.com/world/eu-to-spare-turkey-from-tax-blacklist-sources-say-363228">EU to spare Turkey from tax blacklist, sources say</a>

Shutdowns and coronavirus restrictions have plunged Italy, eurozone's third-largest economy into its worst recession since second world war. More than 420,000 people have lost their jobs.

Coalition, for now?

President Sergio Mattarella asked Draghi to form a new government on February 3, and the respected economist has spent the last nine days assembling the widest possible majority in parliament.

Almost all the main parties are behind him, from leftists to Matteo Salvini's far-right League, and including the populist Five Star Movement (M5S), the centre-left Democratic Party (PD) and Italia Viva, who shared power before.

Draghi was expected to present a list of ministers to Mattarella, before being formally sworn in on Saturday.

M5S, the biggest party in parliament which began life as an anti-establishment movement, was split over whether to support a government led by an unelected technocrat.

But in an online vote, members backed Draghi by 59 per cent, after it claimed to have secured the promise to set up a new super-ministry for "ecological transition".

Uphill challenges

Italy has high hopes for its new leader, dubbed "Super Mario" after vowing to do "whatever it takes" to save the euro single currency during the 2010s debt crisis.&nbsp;

His arrival was greeted with delight by the financial markets, and Italy's borrowing costs dropped to a historic low this week.

But "it is difficult to overstate the scale of the challenges that Draghi and Italy face", said Luigi Scazzieri, of the Centre for European Reform.

The economy shrank by a staggering 8.9 per cent last year, while Covid-19 remains rife and restrictions including a night curfew and the closure of bars and restaurants in the evening remain in place.

(With AFP inputs)

Mario Draghi, former European Central Bank chief on Friday formally accepted Italy's prime ministerial post. He will now lead the government set to replace Giuseppe Conte's centre-left coalition that collapsed a month ago.

Mario Draghi, former European Central Bank chief on Friday formally accepted Italy's prime ministerial post. He will now lead the government set to replace Giuseppe Conte's centre-left coalition that collapsed a month ago. Draghi, the 73-year-old economist, spoke with Italy President Sergio Mattarella and spoke only to list the names of his ministers, a mix of politicians and technocrats. Draghi will return to the presidential palace at midday on Saturday to be formally sworn in, a spokesman for Mattarella said. The senior deputy governor of Bank of Italy, Daniele Franco, was named as the new economy minister, while Roberto Speranza and Luigi Di Maio stay on at health and foreign affairs, respectively. Draghi will take the reins when Italy has not fully recovered from the blow of coronavirus pandemic. More than 93,000 people with coronavirus have died in Italy since it became the first European country to face the full force of the pandemic one year ago, and the toll is still rising by the hundreds each day. Also Read | EU to spare Turkey from tax blacklist, sources say Shutdowns and coronavirus restrictions have plunged Italy, eurozone's third-largest economy into its worst recession since second world war. More than 420,000 people have lost their jobs. Coalition, for now? President Sergio Mattarella asked Draghi to form a new government on February 3, and the respected economist has spent the last nine days assembling the widest possible majority in parliament. Almost all the main parties are behind him, from leftists to Matteo Salvini's far-right League, and including the populist Five Star Movement (M5S), the centre-left Democratic Party (PD) and Italia Viva, who shared power before. Draghi was expected to present a list of ministers to Mattarella, before being formally sworn in on Saturday. M5S, the biggest party in parliament which began life as an anti-establishment movement, was split over whether to support a government led by an unelected technocrat. But in an online vote, members backed Draghi by 59 per cent, after it claimed to have secured the promise to set up a new super-ministry for "ecological transition". Uphill challenges Italy has high hopes for its new leader, dubbed "Super Mario" after vowing to do "whatever it takes" to save the euro single currency during the 2010s debt crisis. His arrival was greeted with delight by the financial markets, and Italy's borrowing costs dropped to a historic low this week. But "it is difficult to overstate the scale of the challenges that Draghi and Italy face", said Luigi Scazzieri, of the Centre for European Reform. The economy shrank by a staggering 8.9 per cent last year, while Covid-19 remains rife and restrictions including a night curfew and the closure of bars and restaurants in the evening remain in place. (With AFP inputs)

Mario Draghi formally accepts Italy's prime ministerial post

The resurgence in coronavirus cases is the biggest threat to the recovering eurozone economy. Growth and inflation are more likely to create negative surprises over the coming year than positive ones.

Resurging cases of COVID-19 pose big challenge to Euro Zone economy

A slowdown in economic growth in the eurozone since last year may be sharper than expected, but that does not necessarily mean a recession is looming, Klaus Regling, head of the euro zone's bailout fund, said on Tuesday.

"We are in a phase of slowdown but not of recession," Regling told a conference in Nicosia.

The euro zone's gross domestic product expanded by 0.2 per cent&nbsp;in the second quarter, after a 0.4 per cent&nbsp;expansion in the first three months of the year, Eurostat data in September showed.

It confirms a gloomy outlook for the 19-nation currency bloc which is facing twin threats and uncertainty from Brexit and global trade wars.

Regling, who heads the European Stability Mechanism, an organisation which offers aid to faltering euro area economies, said the eurozone had strong economic fundamentals and that growth was close to potential.

"We have to remember that not every cyclical slowdown leads to a recession, and not every recession implies another crisis," Regling said.

"It is important to look at the underlying dynamics. This slowdown in growth relates mainly to external factors, while domestic demand remains resilient."

He said the single currency area was better equipped now to deal with any future crises than it was a decade ago, but that more could be done to strengthen its financial architecture.

Common deposit insurance, a fiscal capacity for macroeconomic stabilisation,&nbsp;what he described as a key element missing in the architecture of the eurozone,&nbsp;and the need to create a European 'safe asset' should be discussed, Regling said.

A slowdown in economic growth in the eurozone since last year may be sharper than expected, but that does not necessarily mean a recession is looming, Klaus Regling, head of the euro zone's bailout fund, said on Tuesday.

A slowdown in economic growth in the eurozone since last year may be sharper than expected, but that does not necessarily mean a recession is looming, Klaus Regling, head of the euro zone's bailout fund, said on Tuesday. "We are in a phase of slowdown but not of recession," Regling told a conference in Nicosia. The euro zone's gross domestic product expanded by 0.2 per cent in the second quarter, after a 0.4 per cent expansion in the first three months of the year, Eurostat data in September showed. It confirms a gloomy outlook for the 19-nation currency bloc which is facing twin threats and uncertainty from Brexit and global trade wars. Regling, who heads the European Stability Mechanism, an organisation which offers aid to faltering euro area economies, said the eurozone had strong economic fundamentals and that growth was close to potential. "We have to remember that not every cyclical slowdown leads to a recession, and not every recession implies another crisis," Regling said. "It is important to look at the underlying dynamics. This slowdown in growth relates mainly to external factors, while domestic demand remains resilient." He said the single currency area was better equipped now to deal with any future crises than it was a decade ago, but that more could be done to strengthen its financial architecture. Common deposit insurance, a fiscal capacity for macroeconomic stabilisation, what he described as a key element missing in the architecture of the eurozone, and the need to create a European 'safe asset' should be discussed, Regling said.

Eurozone slowdown doesn't mean recession: ESM's Regling

Companies' demand for bank loans held up in the eurozone in the third quarter, the European Central Bank found in a survey published Tuesday, in a mildly positive sign amid fears of a slowdown.

"Net demand for loans to enterprises remained broadly unchanged in the third quarter," the ECB said in its quarterly survey of 144 banks across the single currency area.

But the steady interest in loans disappointed financial firms' hopes earlier this year that the third quarter would bring growth in demand.

"Demand slightly increased for loans to small- and medium-sized enterprises, but decreased for loans to large firms," the ECB added.

Many of the central bank's measures to stimulate the economy in recent years have aimed at increasing bank lending, a more significant factor for growth in Europe than other advanced economies like the US.

But the Frankfurt institution and organisations like the International Monetary Fund were forced to slash eurozone growth forecasts in recent weeks, as external factors such as trade wars and Brexit weigh on the bloc.

ECB economists now expect an expansion of 1.1 per cent this year and 1.2 per cent in 2020.

It was unclear Tuesday whether British MPs would vote through a last-minute divorce deal with the European Union.

And a truce in the US' damaging trade conflict with China remains elusive, while Washington last week slapped new tariffs on $7.5 billion of EU imports.

The ECB in September responded to slowing growth and mounting risks with a fresh and controversial big-bang package of measures.

It relaunched mass bond-buying and further lowered a key interest rate into negative territory.

Even before then, banks reported in the third-quarter survey that "the ECB's negative deposit facility rate continued to contribute to an increase in lending volumes and a decrease in lending rates" for companies and households.

Looking elsewhere in the results, lenders said they eased slightly the criteria they use to evaluate potential home mortgage and business borrowers in July-September.

But they tightened up the terms and conditions in their loan contracts for both companies and home buyers over the same period.

Companies' demand for bank loans held up in the eurozone in the third quarter, the European Central Bank found in a survey published Tuesday, in a mildly positive sign amid fears of a slowdown.

Companies' demand for bank loans held up in the eurozone in the third quarter, the European Central Bank found in a survey published Tuesday, in a mildly positive sign amid fears of a slowdown. "Net demand for loans to enterprises remained broadly unchanged in the third quarter," the ECB said in its quarterly survey of 144 banks across the single currency area. But the steady interest in loans disappointed financial firms' hopes earlier this year that the third quarter would bring growth in demand. "Demand slightly increased for loans to small- and medium-sized enterprises, but decreased for loans to large firms," the ECB added. Many of the central bank's measures to stimulate the economy in recent years have aimed at increasing bank lending, a more significant factor for growth in Europe than other advanced economies like the US. But the Frankfurt institution and organisations like the International Monetary Fund were forced to slash eurozone growth forecasts in recent weeks, as external factors such as trade wars and Brexit weigh on the bloc. ECB economists now expect an expansion of 1.1 per cent this year and 1.2 per cent in 2020. It was unclear Tuesday whether British MPs would vote through a last-minute divorce deal with the European Union. And a truce in the US' damaging trade conflict with China remains elusive, while Washington last week slapped new tariffs on $7.5 billion of EU imports. The ECB in September responded to slowing growth and mounting risks with a fresh and controversial big-bang package of measures. It relaunched mass bond-buying and further lowered a key interest rate into negative territory. Even before then, banks reported in the third-quarter survey that "the ECB's negative deposit facility rate continued to contribute to an increase in lending volumes and a decrease in lending rates" for companies and households. Looking elsewhere in the results, lenders said they eased slightly the criteria they use to evaluate potential home mortgage and business borrowers in July-September. But they tightened up the terms and conditions in their loan contracts for both companies and home buyers over the same period.

Eurozone firms keep borrowing as growth fears mount

Eurozone inflation slowed in September by more than previously estimated to its slowest pace in nearly three years, the European Union statistics agency said on Wednesday, in a new warning on the state of the bloc's economy.

Eurostat said prices in the 19-country currency area grew by 0.8 per cent&nbsp;on the year, revising down its earlier estimate of a 0.9 per cent&nbsp;rate. That also defied the market consensus of a 0.9 per cent&nbsp;growth.

In a separate release, Eurostat said on Wednesday that the bloc's trade surplus with the rest of the world rose to $16.2 billion&nbsp;in August, from 11.9 billion the previous year, as euro zone's imports dropped more than its declining exports.

The revised inflation reading marked a more pronounced slowdown from the 1.0 per cent&nbsp;growth in August and was the lowest rate since November 2016 when prices grew by 0.6 per cent&nbsp;in the bloc.

The new drop is likely to raise new concerns on the state of the eurozone economy and could reignite the debate within the European Central Bank on how to pursue its goal of keeping inflation below, but close to 2 per cent&nbsp;over the medium term.

The revision was due to lower-than-expected inflation for industrial products, in a fresh worrying sign for the bloc's manufacturing sector which faces drops in output and a fall in confidence.

Prices for industrial goods, excluding energy, went up by a mere 0.2 per cent&nbsp;on the year in September, Eurostat said, revising its earlier estimate of a 0.3 per cent&nbsp;increase.

Energy prices were confirmed falling by 1.8 per cent, while inflation in the service sector, the largest in the bloc, rose by 1.5 per cent&nbsp;in line with previous estimates.

A narrower inflation indicator which strips out volatile energy and unprocessed food prices, and is monitored closely by the ECB for its policy decisions, rose to 1.2 per cent&nbsp;in September from 1.1 per cent&nbsp;in August, in line with Eurostat's earlier estimates released on October&nbsp;1.

Excluding energy, food, alcohol and tobacco, inflation grew 1.0 per cent&nbsp;in September, Eurostat said, confirming its previous figures.

On the month, headline inflation grew 0.2 per cent&nbsp;in the bloc, also in line with earlier estimates.

Eurozone inflation slowed in September by more than previously estimated to its slowest pace in nearly three years, the European Union statistics agency said on Wednesday, in a new warning on the state of the bloc's economy.

Eurozone inflation slowed in September by more than previously estimated to its slowest pace in nearly three years, the European Union statistics agency said on Wednesday, in a new warning on the state of the bloc's economy. Eurostat said prices in the 19-country currency area grew by 0.8 per cent on the year, revising down its earlier estimate of a 0.9 per cent rate. That also defied the market consensus of a 0.9 per cent growth. In a separate release, Eurostat said on Wednesday that the bloc's trade surplus with the rest of the world rose to $16.2 billion in August, from 11.9 billion the previous year, as euro zone's imports dropped more than its declining exports. The revised inflation reading marked a more pronounced slowdown from the 1.0 per cent growth in August and was the lowest rate since November 2016 when prices grew by 0.6 per cent in the bloc. The new drop is likely to raise new concerns on the state of the eurozone economy and could reignite the debate within the European Central Bank on how to pursue its goal of keeping inflation below, but close to 2 per cent over the medium term. The revision was due to lower-than-expected inflation for industrial products, in a fresh worrying sign for the bloc's manufacturing sector which faces drops in output and a fall in confidence. Prices for industrial goods, excluding energy, went up by a mere 0.2 per cent on the year in September, Eurostat said, revising its earlier estimate of a 0.3 per cent increase. Energy prices were confirmed falling by 1.8 per cent, while inflation in the service sector, the largest in the bloc, rose by 1.5 per cent in line with previous estimates. A narrower inflation indicator which strips out volatile energy and unprocessed food prices, and is monitored closely by the ECB for its policy decisions, rose to 1.2 per cent in September from 1.1 per cent in August, in line with Eurostat's earlier estimates released on October 1. Excluding energy, food, alcohol and tobacco, inflation grew 1.0 per cent in September, Eurostat said, confirming its previous figures. On the month, headline inflation grew 0.2 per cent in the bloc, also in line with earlier estimates.

Eurozone September inflation unexpectedly revised down to 0.8%

Eurozone inflation slowed in September to near a three-year low because of cheaper energy although core inflation edged higher, highlighting the challenges facing the European Central Bank.

The divergence between the headline and core figures underlines the split of opinion over the state of the eurozone economy among the governors of the ECB. It wants to keep inflation below, but close to 2 per cent over the medium term but has so far failed to boost price growth despite years of unconventional steps.

Eurostat said on Tuesday that consumer prices in the 19 countries sharing the euro rose 0.2 per cent month-on-month in September for a 0.9 per cent year-on-year gain. Economists polled by Reuters had expected an unchanged reading of 1.0 per cent.

The weaker than expected September number, the lowest year-on-year figure since November 2016, was mainly due to a 1.8 per cent year-on-year fall in energy prices.

Excluding energy and equally volatile unprocessed food, price growth accelerated to 1.2 per cent in September from 1.1 per cent in August. This number is called core inflation by the ECB which it monitors for monetary policy decisions,

An even more narrowly defined core inflation measure, which excludes energy, food, alcohol, and tobacco and looked at by many market economists, also accelerated to 1.0 per cent from 0.9 per cent year-on-year.

"It should continue to rise slightly in the coming months. However, the strong increase in underlying inflation hoped for by the ECB is still not in sight," said Christoph Weil, economist at Commerzbank.

The ECB decided on September 12 to resume asset purchases to inject more money into the slowing economy and in this way make prices grow more quickly.

But the decision was opposed by a third of ECB policymakers, including Germany's Sabine Lautenschlaeger who resigned before the end of her term last week.

ECB chief economist Philip Lane said last week the division was due to "ambiguity" over the state of the eurozone economy among ECB governors.

"We expect the central bank to take time to assess the impact of last month's easing package before taking further action," a team of Morgan Stanley economists said in a note.

They saw only a minimal boost to the economy even once quantitative easing restarted in November, with inflation remaining subdued. There were also a variety of downside risks to growth.

"With fiscal policy remaining reactive for now, we expect the ECB to take further action. Our base case is for another 10 bp cut in March, though the timing remains rather uncertain at this stage," the Morgan Stanley note said.

Eurozone inflation slowed in September to near a three-year low because of cheaper energy although core inflation edged higher, highlighting the challenges facing the European Central Bank.

Eurozone inflation slowed in September to near a three-year low because of cheaper energy although core inflation edged higher, highlighting the challenges facing the European Central Bank. The divergence between the headline and core figures underlines the split of opinion over the state of the eurozone economy among the governors of the ECB. It wants to keep inflation below, but close to 2 per cent over the medium term but has so far failed to boost price growth despite years of unconventional steps. Eurostat said on Tuesday that consumer prices in the 19 countries sharing the euro rose 0.2 per cent month-on-month in September for a 0.9 per cent year-on-year gain. Economists polled by Reuters had expected an unchanged reading of 1.0 per cent. The weaker than expected September number, the lowest year-on-year figure since November 2016, was mainly due to a 1.8 per cent year-on-year fall in energy prices. Excluding energy and equally volatile unprocessed food, price growth accelerated to 1.2 per cent in September from 1.1 per cent in August. This number is called core inflation by the ECB which it monitors for monetary policy decisions, An even more narrowly defined core inflation measure, which excludes energy, food, alcohol, and tobacco and looked at by many market economists, also accelerated to 1.0 per cent from 0.9 per cent year-on-year. "It should continue to rise slightly in the coming months. However, the strong increase in underlying inflation hoped for by the ECB is still not in sight," said Christoph Weil, economist at Commerzbank. The ECB decided on September 12 to resume asset purchases to inject more money into the slowing economy and in this way make prices grow more quickly. But the decision was opposed by a third of ECB policymakers, including Germany's Sabine Lautenschlaeger who resigned before the end of her term last week. ECB chief economist Philip Lane said last week the division was due to "ambiguity" over the state of the eurozone economy among ECB governors. "We expect the central bank to take time to assess the impact of last month's easing package before taking further action," a team of Morgan Stanley economists said in a note. They saw only a minimal boost to the economy even once quantitative easing restarted in November, with inflation remaining subdued. There were also a variety of downside risks to growth. "With fiscal policy remaining reactive for now, we expect the ECB to take further action. Our base case is for another 10 bp cut in March, though the timing remains rather uncertain at this stage," the Morgan Stanley note said.

Euro zone inflation slows to three-year low on cheaper energy

The dollar charged to its highest in more than two years on Thursday after the <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/business-economy/stormy-sterling-sinks-again-stocks-wilt-before-fed-239448&amp;sa=U&amp;ved=2ahUKEwjO-ZbLuOHjAhUBr48KHSApDvgQFjAFegQIBBAC&amp;usg=AOvVaw3Y8jTTDaVY7qnK939Bej7w">Federal Reserve</a> spoiled hopes of a run of US interest rate cuts.

A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running. Powell said the first US rate cut in over a decade was "not the beginning of a long series of rate cuts".

The dollar’s reaction said it all. The DXY index surged to its highest in more than two years, euro/dollar dropped below $1.11 for the first time since May 2017, and Brexit-hobbled sterling hit 30-month lows just above $1.21.

World stocks had recoiled overnight and emerging markets had their longest run of falls in almost a year.

"Markets interpreted the Fed’s communication as slightly hawkish and therefore further rate cuts in the immediate future were somewhat priced out," said David Milleker, senior economic advisor at Union Investment. "And the dollar strengthened. All in all, the Fed did not achieve what it presumably wanted."

US Treasuries were sold off as investors scaled back their pre-Fed expectations for at least 100 basis points of cuts in the near term. Yields on 10-year notes climbed as high as 2.058% in Europe from a US close of 2.007%.

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Core eurozone bond yields were rising, too, although -0.428% German Bund levels were still extraordinary. "I didn’t say it’s just one rate cut," Powell had been careful to emphasise after Wednesday's 25-basis-point move.

Instead, he characterised it as "a mid-cycle adjustment to policy", citing signs of a global slowdown, US trade tensions and a desire to boost inflation.

Wall Street fell afterwards and E-minis futures for the S&amp;P 500 were pointing 0.15% lower.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%, extending losses for a fifth day to the lowest since mid-June and posting its biggest one-day percentage drop in a month.

Japan's Nikkei rose, reversing early declines. Australian shares declined 0.4%. Losses by Chinese shares ended down 0.8%.

"We believe the Fed is trying to thread the needle, balancing market jitters about slowing global growth with robust consumer spending and a strong job market in the US," said Nick Maroutsos, co-head of global bonds at Janus Henderson.

"In other words, by cutting just 25 bps, the Fed is trying to bolster market confidence while also keeping some dry powder in reserve in case of an economic shock."

Trade Talks

Adding to worries, the United States and China on Wednesday ended a brief round of talks without much progress in ending their year-long trade war.

Downbeat data and factory surveys on Thursday had also pointed to further weakness for Asia's trade-reliant economies.

South Korea's exports fell for an eighth straight month in July amid weak global demand and a dispute with Japan. New export orders shrank the most in about six years.

South Korea, the world's sixth-largest exporter, is the first major industrial economy to release trade data each month, providing an early assessment on the health of global demand.

Pressure on Chinese factories eased slightly, but manufacturing activity continued to shrink.

"The broader global trade dynamic remains a challenge," Morgan Stanley strategist Michael Zezas said. "Trade should continue to drag on corporate confidence, CapEx and global growth in the near term."

In Europe's foreign exchange markets, sterling dropped as low as $1.2101 before a Bank of England meeting that's expected to leave its 0.75% interest rate unchanged but result in plenty of interesting discussions.

Fears of a <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/britain-to-spend-an-extra-26-billion-on-no-deal-brexit-planning-239860&amp;sa=U&amp;ved=2ahUKEwjd24uDu-HjAhUW8XMBHSfID2IQFjAAegQIBhAC&amp;usg=AOvVaw05e85f7pwO51L5lCnpMiS3">no-deal Brexit</a> now that Boris Johnson is prime minister continue to afflict the pound, although it was fractionally higher against a weakening euro at 91.17 pence.

"Sterling remains vulnerable to a further escalation in Brexit tensions and we anticipate the market will likely discount higher risks of a ‘no deal’ outcome in the weeks ahead," said Roger Hallam, currency chief investment officer at JP Morgan Asset Management.

Elsewhere, the Aussie dollar slipped below key chart support of $0.6832 to as low as $0.6828, a level not seen since an early January "flash crash".

The kiwi hit a six-week trough of $0.6535 on expectations the Reserve Bank of New Zealand will cut rates next week.

US crude futures fell 76 cents to $57.82 per barrel after comments on the rating outlook. Brent was down 71 cents at $64.34.

Spot gold also fell, to $1,405.26.

The dollar charged to its highest in more than two years on Thursday after the Federal Reserve spoiled hopes of a run of US interest rate cuts. A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running.

The dollar charged to its highest in more than two years on Thursday after the Federal Reserve spoiled hopes of a run of US interest rate cuts. A blizzard of global data and events was going on, but it was Fed Chair Jerome Powell's remarks on Wednesday that set the markets running. Powell said the first US rate cut in over a decade was "not the beginning of a long series of rate cuts". The dollar’s reaction said it all. The DXY index surged to its highest in more than two years, euro/dollar dropped below $1.11 for the first time since May 2017, and Brexit-hobbled sterling hit 30-month lows just above $1.21. World stocks had recoiled overnight and emerging markets had their longest run of falls in almost a year. "Markets interpreted the Fed’s communication as slightly hawkish and therefore further rate cuts in the immediate future were somewhat priced out," said David Milleker, senior economic advisor at Union Investment. "And the dollar strengthened. All in all, the Fed did not achieve what it presumably wanted." US Treasuries were sold off as investors scaled back their pre-Fed expectations for at least 100 basis points of cuts in the near term. Yields on 10-year notes climbed as high as 2.058% in Europe from a US close of 2.007%. WATCH VIDEO × Core eurozone bond yields were rising, too, although -0.428% German Bund levels were still extraordinary. "I didn’t say it’s just one rate cut," Powell had been careful to emphasise after Wednesday's 25-basis-point move. Instead, he characterised it as "a mid-cycle adjustment to policy", citing signs of a global slowdown, US trade tensions and a desire to boost inflation. Wall Street fell afterwards and E-minis futures for the S&P 500 were pointing 0.15% lower. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%, extending losses for a fifth day to the lowest since mid-June and posting its biggest one-day percentage drop in a month. Japan's Nikkei rose, reversing early declines. Australian shares declined 0.4%. Losses by Chinese shares ended down 0.8%. "We believe the Fed is trying to thread the needle, balancing market jitters about slowing global growth with robust consumer spending and a strong job market in the US," said Nick Maroutsos, co-head of global bonds at Janus Henderson. "In other words, by cutting just 25 bps, the Fed is trying to bolster market confidence while also keeping some dry powder in reserve in case of an economic shock." Trade Talks Adding to worries, the United States and China on Wednesday ended a brief round of talks without much progress in ending their year-long trade war. Downbeat data and factory surveys on Thursday had also pointed to further weakness for Asia's trade-reliant economies. South Korea's exports fell for an eighth straight month in July amid weak global demand and a dispute with Japan. New export orders shrank the most in about six years. South Korea, the world's sixth-largest exporter, is the first major industrial economy to release trade data each month, providing an early assessment on the health of global demand. Pressure on Chinese factories eased slightly, but manufacturing activity continued to shrink. "The broader global trade dynamic remains a challenge," Morgan Stanley strategist Michael Zezas said. "Trade should continue to drag on corporate confidence, CapEx and global growth in the near term." In Europe's foreign exchange markets, sterling dropped as low as $1.2101 before a Bank of England meeting that's expected to leave its 0.75% interest rate unchanged but result in plenty of interesting discussions. Fears of a no-deal Brexit now that Boris Johnson is prime minister continue to afflict the pound, although it was fractionally higher against a weakening euro at 91.17 pence. "Sterling remains vulnerable to a further escalation in Brexit tensions and we anticipate the market will likely discount higher risks of a ‘no deal’ outcome in the weeks ahead," said Roger Hallam, currency chief investment officer at JP Morgan Asset Management. Elsewhere, the Aussie dollar slipped below key chart support of $0.6832 to as low as $0.6828, a level not seen since an early January "flash crash". The kiwi hit a six-week trough of $0.6535 on expectations the Reserve Bank of New Zealand will cut rates next week. US crude futures fell 76 cents to $57.82 per barrel after comments on the rating outlook. Brent was down 71 cents at $64.34. Spot gold also fell, to $1,405.26.

Mind your backs, dollar coming through!

Economic growth in the eurozone slowed to 0.2 per cent in the second quarter of the year, down from 0.4 per cent in the previous three months.&nbsp;

Eurostat's figures, published Wednesday, also showed inflation in the 19-nation single currency group dropping from 1.3 per cent in June to 1.1 in July.

This falls even further short of the European Central bank's 2.0 per cent target for a healthy economy and amounts to further evidence of a worrying slowdown.&nbsp;

The seasonally adjusted unemployment rate nevertheless also fell, from a revised 7.6 per cent in May to 7.5 in June, its lowest level in ten years.

The wider 28-member European Union, which includes countries outside the euro, also saw second-quarter growth shrink to 0.2 per cent, down from 0.5 in the previous period.

All these figures were in line with market expectations as estimated by data firm Factset.

Economic growth in the eurozone slowed to 0.2 per cent in the second quarter of the year, down from 0.4 per cent in the previous three months. Eurostat's figures, published Wednesday, also showed inflation in the 19-nation single currency group dropping from 1.

Economic growth in the eurozone slowed to 0.2 per cent in the second quarter of the year, down from 0.4 per cent in the previous three months. Eurostat's figures, published Wednesday, also showed inflation in the 19-nation single currency group dropping from 1.3 per cent in June to 1.1 in July. This falls even further short of the European Central bank's 2.0 per cent target for a healthy economy and amounts to further evidence of a worrying slowdown. The seasonally adjusted unemployment rate nevertheless also fell, from a revised 7.6 per cent in May to 7.5 in June, its lowest level in ten years. The wider 28-member European Union, which includes countries outside the euro, also saw second-quarter growth shrink to 0.2 per cent, down from 0.5 in the previous period. All these figures were in line with market expectations as estimated by data firm Factset.

Eurozone growth slows to 0.2% in second quarter

Global shares slipped on Thursday on growing signs that a trade dispute between the United States and China was taking a toll on corporate earnings, with nerves spreading from Wall Street through Asia to European markets.

MSCI world equity index, which tracks shares in 47 countries, fell 0.2% to its lowest in nine days, while the Euro STOXX 600 slipped 0.5% to its lowest in almost three weeks.

The earnings season, kicking off this week brought bad signs as rail freight giant CSX Corp, cut its revenue forecast as it warned of the impact of the US-China trade war, pushing down Wall Street indexes on Wednesday.

In Europe, too, earnings were top of the agenda. Tech stocks led the slide as software firm SAP, Europe's most valuable tech stock by market cap, reported poor results, also flagging the impact of the US-China trade war.

With nerves already on edge over when face-to-face talks between the United States and China will resume, US President Donald Trump on Tuesday maintained pressure on Beijing with a threat to put tariffs on another $325 billion of Chinese goods.

Investors also cited a report that progress toward a US-China trade deal has stalled as the Trump administration works out how to address Beijing's demands that it ease restrictions on Huawei Technologies.

"It's still about the US and China dispute," Christophe Barraud, chief economist and strategist at Market Securities. "The trade war is creating uncertainty, weighed on capEx, and clearly on trade flows."

"There are also problems with guidance, especially in the transportation sector. The fact is that one of the key stories of this year is global trade flows contraction," he said.

Adding to the concerns over corporate health, Netflix shed US subscribers for the first time in 8 years, sending shares falling over 10% after the close of the market.

Compounding the trade concerns were concerning signs for the economy emerging from Japan to the United States.

Japan's exports slumped yet again, falling 6.7% in June, while manufacturers' confidence fell to a three-year low in July on the back of the trade tensions and slowing China's growth.

US housebuilding fell in June for a second consecutive month, with building permits also falling, in a possible sign of more trouble ahead for the housing market.

The earnings anxiety and macro data boosted demand for safe-haven assets, with yields on benchmark 10-year and 30-year US Treasuries climbing overnight.

Eurozone government bond yields slipped back towards record lows on Thursday as economic indicators and corporate earnings deepened gloom on the global economy and increased bets on interest-rate cuts by major central banks.

Amid the gloomy outlook, bets for further monetary policy easing from major central banks have grown, with speculation on whether the US Federal Reserve will be cut by 25 basis points or 50 basis points in July.

While markets take comfort from central banks' willingness to support growth, said Sunil Krishnan, head of multi-asset funds at Aviva Investors, there were concerns for equity markets that have rallied on the back of stimulus expectations.

The weak start to the Q2 earnings season may spill over into the outlook for the remainder of the year, threatening equity markets' stellar rally this year.

"We are probably in the middle of analysts downgrading Q3 company earnings expectations," he said.

Earlier in the day, MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3%, with Tokyo's benchmark Nikkei tumbling 2.0%, its biggest one-day fall in four months.

POUND TO PARITY?

In currencies, the dollar edged lower against its rivals on the softer US&nbsp;Treasury yields, with investors focusing their attention on the Fed's meeting next week.

Against a basket of its rivals, the dollar edged 0.1% lower to 97.195.

Sterling was a shade higher at $1.244, off its lowest since April 2017 touched on Wednesday amid growing risks of Britain leaving the European Union in a no-deal Brexit.

Major British banks, such as HSBC, are already talking of the possibility of the pound breaching post-Brexit referendum lows of $1.149, with some asking whether the pound is headed for parity against both the dollar and the euro.

Oil prices were mixed, with US&nbsp;crude extending losses after data showed U.S. stockpiles of gasoline and other products rising sharply last week, suggesting weak demand.

Brent crude futures were up 6 cents, or 0.1%, at $63.71 a barrel by 0755 GMT. They fell by 1.1% on Wednesday.

Global shares slipped on Thursday on growing signs that a trade dispute between the United States and China was taking a toll on corporate earnings, with nerves spreading from Wall Street through Asia to European markets.

Global shares slipped on Thursday on growing signs that a trade dispute between the United States and China was taking a toll on corporate earnings, with nerves spreading from Wall Street through Asia to European markets. MSCI world equity index, which tracks shares in 47 countries, fell 0.2% to its lowest in nine days, while the Euro STOXX 600 slipped 0.5% to its lowest in almost three weeks. The earnings season, kicking off this week brought bad signs as rail freight giant CSX Corp, cut its revenue forecast as it warned of the impact of the US-China trade war, pushing down Wall Street indexes on Wednesday. In Europe, too, earnings were top of the agenda. Tech stocks led the slide as software firm SAP, Europe's most valuable tech stock by market cap, reported poor results, also flagging the impact of the US-China trade war. With nerves already on edge over when face-to-face talks between the United States and China will resume, US President Donald Trump on Tuesday maintained pressure on Beijing with a threat to put tariffs on another $325 billion of Chinese goods. Investors also cited a report that progress toward a US-China trade deal has stalled as the Trump administration works out how to address Beijing's demands that it ease restrictions on Huawei Technologies. "It's still about the US and China dispute," Christophe Barraud, chief economist and strategist at Market Securities. "The trade war is creating uncertainty, weighed on capEx, and clearly on trade flows." "There are also problems with guidance, especially in the transportation sector. The fact is that one of the key stories of this year is global trade flows contraction," he said. Adding to the concerns over corporate health, Netflix shed US subscribers for the first time in 8 years, sending shares falling over 10% after the close of the market. Compounding the trade concerns were concerning signs for the economy emerging from Japan to the United States. Japan's exports slumped yet again, falling 6.7% in June, while manufacturers' confidence fell to a three-year low in July on the back of the trade tensions and slowing China's growth. US housebuilding fell in June for a second consecutive month, with building permits also falling, in a possible sign of more trouble ahead for the housing market. The earnings anxiety and macro data boosted demand for safe-haven assets, with yields on benchmark 10-year and 30-year US Treasuries climbing overnight. Eurozone government bond yields slipped back towards record lows on Thursday as economic indicators and corporate earnings deepened gloom on the global economy and increased bets on interest-rate cuts by major central banks. Amid the gloomy outlook, bets for further monetary policy easing from major central banks have grown, with speculation on whether the US Federal Reserve will be cut by 25 basis points or 50 basis points in July. While markets take comfort from central banks' willingness to support growth, said Sunil Krishnan, head of multi-asset funds at Aviva Investors, there were concerns for equity markets that have rallied on the back of stimulus expectations. The weak start to the Q2 earnings season may spill over into the outlook for the remainder of the year, threatening equity markets' stellar rally this year. "We are probably in the middle of analysts downgrading Q3 company earnings expectations," he said. Earlier in the day, MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3%, with Tokyo's benchmark Nikkei tumbling 2.0%, its biggest one-day fall in four months. POUND TO PARITY? In currencies, the dollar edged lower against its rivals on the softer US Treasury yields, with investors focusing their attention on the Fed's meeting next week. Against a basket of its rivals, the dollar edged 0.1% lower to 97.195. Sterling was a shade higher at $1.244, off its lowest since April 2017 touched on Wednesday amid growing risks of Britain leaving the European Union in a no-deal Brexit. Major British banks, such as HSBC, are already talking of the possibility of the pound breaching post-Brexit referendum lows of $1.149, with some asking whether the pound is headed for parity against both the dollar and the euro. Oil prices were mixed, with US crude extending losses after data showed U.S. stockpiles of gasoline and other products rising sharply last week, suggesting weak demand. Brent crude futures were up 6 cents, or 0.1%, at $63.71 a barrel by 0755 GMT. They fell by 1.1% on Wednesday.

Global Markets: Stocks slide as US-China trade war takes toll on earnings

Expressing concern over the large public debt in Italy, the European Commission has asked the government of Italy to address worries about its big-spending 2019 budget by November 13.

The European Commission also called the debt as a source&nbsp;of concern for the entire Eurozone,&nbsp;

Italy is locked in a tussle with the EU executive, which earlier this month rejected the government's expansionary budget and asked Rome to submit a new one within three weeks.

The Italian Prime Minister Giuseppe Conte met with his economy minister on Tuesday to discuss the Italian budget.

Italian banks have lost nearly 40 billion euros ($45 billion) of market capitalisation since May, with small and mid-sized lenders worst-hit by a sell-off on concerns that Rome's budget crisis will lead to a capital crunch in the third-largest euro zone economy.

Faced with the government's unwillingness to accommodate European Union demands for fiscal discipline, investors have been dumping Italian government bonds, which account for about 10 per cent of Italian banks' total assets. That has forced lenders into costly write-downs, lifted funding costs and darkened their profit outlook.

The hefty loss in market capitalisation comes as the eurozone banking watchdog releases results of its latest stress test of European lenders, with Italian banks under the greatest scrutiny.

(With inputs from Reuters)

Expressing concern over the large public debt in Italy, the European Commission has asked the government of Italy to address worries about its big-spending 2019 budget by November 13.

Expressing concern over the large public debt in Italy, the European Commission has asked the government of Italy to address worries about its big-spending 2019 budget by November 13. The European Commission also called the debt as a source of concern for the entire Eurozone, Italy is locked in a tussle with the EU executive, which earlier this month rejected the government's expansionary budget and asked Rome to submit a new one within three weeks. The Italian Prime Minister Giuseppe Conte met with his economy minister on Tuesday to discuss the Italian budget. Italian banks have lost nearly 40 billion euros ($45 billion) of market capitalisation since May, with small and mid-sized lenders worst-hit by a sell-off on concerns that Rome's budget crisis will lead to a capital crunch in the third-largest euro zone economy. Faced with the government's unwillingness to accommodate European Union demands for fiscal discipline, investors have been dumping Italian government bonds, which account for about 10 per cent of Italian banks' total assets. That has forced lenders into costly write-downs, lifted funding costs and darkened their profit outlook. The hefty loss in market capitalisation comes as the eurozone banking watchdog releases results of its latest stress test of European lenders, with Italian banks under the greatest scrutiny. (With inputs from Reuters)

Debt a worry for whole Eurozone: EU Commission tells Rome 

The eurozone bailout fund ESM decided on Friday to hold off the disbursement of a 1 billion euro loan tranche for Greece to wait for confirmation from Athens it fulfilled the condition of arrears clearance for the release of the money.

An ESM spokesman said Greece made satisfactory progress to meet the conditions for the release of the loan but not quite.

"Confirmation from the Greek authorities is still needed that some payments for arrears clearance are fully executed. This is necessary in order to take the decision on the release of the remaining 1 billion euros," the spokesman said.

"Therefore the ESM Board of Directors decided today in Paris to postpone its decision on this issue," he said.

The money is available until June 15.

Greece made satisfactory progress to meet the conditions for the release of the loan but not quite

The eurozone bailout fund ESM decided on Friday to hold off the disbursement of a 1 billion euro loan tranche for Greece to wait for confirmation from Athens it fulfilled the condition of arrears clearance for the release of the money. An ESM spokesman said Greece made satisfactory progress to meet the conditions for the release of the loan but not quite. "Confirmation from the Greek authorities is still needed that some payments for arrears clearance are fully executed. This is necessary in order to take the decision on the release of the remaining 1 billion euros," the spokesman said. "Therefore the ESM Board of Directors decided today in Paris to postpone its decision on this issue," he said. The money is available until June 15.

Eurozone holds off on 1 billion euro tranche for Greece

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