Economic Update

The British Retail Consortium reported that, on a year-on-year basis, shop price index in the UK increased 1.1% in February, compared to a 0.6% increase recorded in January.

EU finance ministers outvoted the UK in limiting bankers' bonuses as part of a planned package of EU legislation on bank capital rules, which is expected to be put in place from January 2014. While finance ministers from 26 European Union nations backed the plan that strictly limits bankers' bonuses to the equivalent of their salary or two times their salary on agreement with the shareholders, the UK resisted the move as it feared the new rules could hurt London's role as a major financial hub.

Markit Economics reported that on a seasonally adjusted basis, the Purchasing Managers' Index for the construction sector in Germany dropped to a reading of 43.80 in February, compared to a reading of 47.70 recorded in January.

Eurostat reported that, on a QoQ basis, the Gross Domestic Product (GDP) in the eurozone fell 0.6% in 4Q12, compared to 0.1% fall recorded in 3Q12. On a yearly basis, the GDP contracted 0.9% in 4Q12, compared to 0.6% fall reported in the previous quarter.

The Standard & Poor's (S&P) rating agency has revised Portugal's “BB” sovereign credit outlook to “Stable” from “Negative”, citing hopes that the European lenders would to extend their support to help make the nation’s fiscal tightening “more sustainable.”

Automatic Data Processing, Inc reported that, private sector employment in the US rose by 198,000.00 jobs in February, following an upwardly revised increase of 215,000.00 jobs recorded in January.

The Commerce Department reported that, on a monthly basis, the factory orders in the US fell 2.0% in January, following a revised 1.3% rise recorded in the previous month.

The latest Federal Reserve Beige Book survey has indicated that the US economy has continued to expand at a modest to moderate pace in January and early February, helped by strong auto sales, sustained housing recovery and modest improvement in labour market conditions.

The US House lawmakers have approved a bill to fund the government through fiscal year ending September 2013 in an attempt to prevent a government shutdown at the end of the month. However, the bill has retained $85.00bn in spending cuts from the so-called sequester that began on 1 March 2013.

The Bank of Japan has held its benchmark interest rate steady in the range of 0.0% to 0.1% and also decided to maintain the size of the asset purchase programme.

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