Home' Trinidad and Tobago Guardian : September 3rd 2013 Contents A15
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HONG KONG---Chinese manufacturing
improved last month, two surveys
showed, in the latest signs that a
painful and prolonged slowdown in the
world's No. 2 economy may be
stabilising. The private HSBC
purchasing managers' index released
Monday showed a slight expansion in
August after three months of
contraction while an official survey the
day before showed that output jumped
to the highest level in 16 months.
"The two series are both on an
improving trend, serving as another
confirmation of a much-strengthened
growth momentum in the third
quarter," Societe Generale's China
Economist Wei Yao said in a research
note. HSBC's PMI rose to 50.1 in
August, after falling to an 11-month low
in July, as output and new orders edged
up slightly and order backlogs rose at
the fastest pace in two years.
On Sunday, an official survey by the
China Federation of Logistics and
Purchasing showed manufacturing
expanded for the second month in a
row, rising to 51.0 from July's 50.3.
Both indexes use a 100-point scale on
which numbers below 50 indicate
Surveys: China manufacturing improves in August
Benchmark Brent crude oil
prices eked out a small gain yes-
terday, reversing a deep early
slide amid upbeat economic
data, North Sea output woes and
a new French report on Syria's
use of chemical weapons.
Oil had fallen by more than
US$2 a barrel in opening trade
after US President Barack Obama
said at the weekend that he will
seek congressional authorisation
for punitive military action
against Syria, almost certainly
pushing back any air strikes until
Washington's summer recess ends
on September 9.
But the market's mood turned
more bullish throughout the day,
with traders buoyed by improved
factory activity in China and the
euro zone, news of delays to
benchmark North Sea Forties oil
production and a French intelli-
gence report that may bolster the
case for military action to punish
Syrian President Bashar al-Assad
for a reported chemical weapons
attack on August. 21.
Brent futures rebounded from
a US$2 drop early in the day to
rise 35 cents or 0.3 per cent to
settle at US$114.36 a barrel. The
US benchmark fell 83 cents to
trade last at US$106.82 per barrel
at 1pm EST, the end of a thinly
traded, holiday-shortened day. It
had dropped as low as $104.21.
Due to the Labor Day holiday,
the US market will not issue a
settlement price for yesterday's
Brent rose nearly 3 per cent
last week, its biggest weekly gain
since July, on worries a strike
against Syria would disrupt Mid-
dle East oil exports at a time
when markets are already coping
with the loss of supplies from
Libya and Sudan.
While Obama's decision to seek
congressional approval on Syria
cooled pre-weekend speculation
of an imminent attack, a nine-
page report drawn up by France's
military and foreign intelligence
services---and released to law-
makers on Monday---listed five
points that suggested Assad's
fighters were behind the assault,
a government source told Reuters.
"The Syrian crisis has not gone
away," said David Hufton, man-
aging director of London broker-
age PVM Oil Associates.
"There is only so much uncer-
tainty that markets can take
before they go into full scale safe-
haven lockdown. With the Middle
East in such turmoil, we would
argue that oil will be regarded as
the commodity safe haven."
While hedge funds ramped up
bets on the possibility of future
supply disruptions in the Middle
East, immediate outages lent fur-
ther support to prices, analysts
Four cargoes of North Sea For-
ties crude oil---the largest of the
four grades that make up the
Brent benchmark---have been
delayed into October from Sep-
tember due to lower-than-
expected production, trade
sources said on Monday.
Tightening European markets
helped push the October Brent
premium to US WTI crude up by
more than US$1 to US$7.55 a bar-
rel, its widest since June.
A report by Deutsche Bank on
Monday estimated more than 2.7
million barrels per day of oil sup-
ply had been lost to the market
through civil war, unrest, sanc-
tions and disruption to produc-
tion in half a dozen countries
from Libya to Britain.
KUALA LUMPUR, Malaysia---
Malaysia's government said Monday
it will cut fuel subsidies for the first
time in nearly two years to save 3.3
billion ringgit (US$1 billion) annually
as part of crucial budget reforms.
Prime Minister Najib Razak said the
reductions are needed to trim the
budget deficit and strengthen eco-
nomic fundamentals to boost investor
confidence. The financial markets of
some Asian countries have come under
pressure as the anticipated scaling
back of U.S. monetary stimulus spurs
capital outflows from the region.
Najib, who is also finance minister,
said the government will cut the gaso-
line subsidy by 20 sen (6 cents) to 63
sen (19 cents) a liter and diesel by 20
sen to 80 sen a liter from Tuesday.
Malaysia spends 24.8 billion ringgit
a year on fuel subsidies. The reductions
announced Monday will reduce that
bill by 1.1 billion ringgit for the four
months through December and 3.3
billion ringgit next year.
Najib said savings from the subsidy
cut will help fund handouts for people
on low incomes, which will be
announced in the 2014 budget in
"It's a process of fiscal consolidation.
The market will feel more confident
if we can bring down our fiscal deficit,"
Malaysia's economy and financial
markets face risks from rising domestic
debt, a swollen fiscal deficit and a
shrinking current account surplus.
The central bank recently cut the
country's growth forecast this year to
4.5-5 per cent, while Fitch Ratings
lowered Malaysia's credit rating out-
look to negative from stable, citing a
lack of fiscal reforms.
The budget deficit hit 4.5 per cent
of gross domestic product last year.
Najib said the central bank is closely
monitoring the Malaysian ringgit,
which has shed more than 7 per cent
against the US dollar this year.
"It is not giving us any undue stress
for the time being. What we believe
in is to focus on strengthening the
fundamentals of the economy," he
Oil reverses decline
on Syria easing Malaysia cuts fuel
subsidies to fund welfare
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