Bloomberg News

World Stocks, U.S. Futures Climb as China Ends Yuan Dollar Peg

The People’s Bank of China said it will end a two-year currency peg adopted during the global financial crisis to protect exporters, a sign policy makers expect the world economy to strengthen. China, the world’s largest copper consumer and second-biggest user of oil after the U.S., signaled the change before the G-20 summit in Toronto on June 26 to 27.

“It’s a vote of confidence in Asia and in risk appetite and a reduction in the dangers of a trade war,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “The currencies of Asian nations, which are close competitors with China on the trade front, should do well.”

Gains in Asia were led by the Shanghai Stock Exchange Composite Index, which surged 2.9 percent. Toyota Motor Co., the world’s biggest automaker, rose 1.7 in Tokyo while Mitsubishi Corp. jumped 6.6 percent. Posco, South Korea’s biggest steelmaker, rallied 5.9 percent in Seoul.

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Geithner's Europe Trip Highlights Focus on World Economy

Treasury Secretary Timothy F. Geithner’s trip to Europe today shows how his focus is shifting to global economic threats as Congress puts the finishing touches on its overhaul of financial regulations and the U.S. winds down bailout programs.

Geithner has two days of meetings in London, Berlin and Frankfurt with leaders including European Central Bank President Jean-Claude Trichet to discuss the nearly $1 trillion rescue package aimed at stopping the Greek debt crisis from spreading. The trips were tacked on to Geithner’s visit to China, which ended yesterday, as the euro fell to the lowest in almost nine years against the yen.

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Gulf States Face `Difficult Reality' of Hurricane-Whipped Oil

As oil, tar balls and dead wildlife wash up on the coast of Louisiana from a leaking well at the bottom of the Gulf of Mexico, another threat looms on the horizon -- hurricane season, which officially starts June 1.

“It is a very difficult reality for people to fathom right now,” said Courtney Howell, 32, the executive director of Bayou Grace Community Services in Chauvin, Louisiana. “They know how big this threat is, but trying to think about that on top of a hurricane is too much to bear.”

Forecasters are calling for 14 to 18 storms with sustained winds of at least 39 miles (62 kilometers) per hour to form in the Atlantic before Nov. 30. Sitting in the Gulf is the slick created by the April 20 explosion aboard the Deepwater Horizon drilling rig, leased by BP Plc from Transocean Ltd. Source

Euro Falls to Lowest Level Since Lehman Collapse as Breakup Concern Grows

The euro fell to its lowest level since the collapse of Lehman Brothers Holdings Inc. on concern that the 16-nation currency may be headed for disintegration.

The shared currency fell for a fourth week versus the dollar and a third week versus the yen, the longest losing streaks since February, as German Chancellor Angela Merkel said that Europe is in a “very, very serious situation” despite a rescue package for the region’s most indebted nations. European Central Bank Governing Council member Axel Weber speaks on financial-market regulation next week in Berlin.

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Euro Erases Gains as Bailout Optimism Wanes

The euro fell back already losing all of the gains from yesterday on a continuing concern that the almost $1 trillion lending plan to bail out European nations that are heavily in debt will fail to avert a slowdown in the region. Asian stocks, copper, and U.S. index futures also fell after China’s inflation rate hit an 18-month high.

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China's April Manufacturing Expands at Faster Pace

In April, Chinese manufacturing grew at a faster pace, marking increasing risks of a bubble bursting in one of the world’s fastest-growing economies.

According to the Federation of Logistics and Purchasing the Purchasing Managers’ Index rose to a seasonally adjusted 55.7 from 55.1 in March. This number is less than the median 55.9 estimate in a Bloomberg News survey of 14 economists, yet it still indicates an expansion since readings above 50 are indicative of such growth.

In reaction China has been attempting to control the formation of asset bubbles and constrict inflation by cracking down on property speculation. This is after the economy grew 11.9 percent in the first quarter.

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