Gold rises for fourth day on inflation worries

CHICAGO, May 7 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange ended higher for the fourth straight session on Thursday as the European Central Bank (ECB) cut its benchmark rate to a record low, sparking inflation concerns. Silver and platinum gained, too.

Gold price for June delivery climbed 4.50 U.S. dollars, or 0.5 percent, to settle at 915.50 dollars an ounce. Earlier in the session it touched 926.50 dollars, the highest level in five weeks.

The ECB announced to cut its interest rate 0.25 point to a record low level of 1 percent on Thursday. It also suggested to take more measures to push money into the euro zone's financial system and support its economy, including increasing maturities on central bank credit to private banks and purchasing euro denominated covered bonds.

The Bank of England also intends to step up efforts to increase the money supply to shore up the economy although its interest rates left unchanged at 0.5 percent.

The ECB's rate cut raised the worries that the global economy may see inflation in the near future, and gold's appeal was strengthened as investors hope to buy the precious metal as an alternative of safe-haven.

As dollar rebounded in the morning, gold retreated from its 5-week peak of 926.50 dollars. By the end of gold floor trading time, dollar rate against euro rose about 1 cent, or 0.7 percent, to 1.3357 dollars, putting much pressure on the precious metal.

July silver finished at 14.03 dollars per ounce, up 32 cents. July platinum rose 14.20 dollars to 1157.30 dollars an ounce.

EU economy forecast to shrink 4% this year

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BRUSSELS, May 4 (Xinhua) -- The economies of the European Union (EU) and the euro zone are both set to shrink by four percent this year and by a further 0.1 percent in 2010, the European Commission said on Monday.

"The European economy is in the midst of its deepest and most widespread recession in the post-war era," said Joaquin Almunia, EU Commissioner for Economic and Monetary Affairs.

It was sharply revised down from a January estimate, which forecast a contraction of 1.8 percent for the EU and 1.9 percent for the euro zone this year before positive growth for both areas next year.

The main factors behind the recession are the worsening of the global financial crisis, a sharp contraction in world trade and ongoing housing market corrections in some member states, the commission said.

Due to a weak economic outlook and an assumed decline in commodity prices, inflation in both the EU and the euro zone has fallen sharply in recent months and is projected to continue to do so during the second and third quarter of this year.

For the whole year of 2009, inflation is projected to be slightly lower than 1 percent in the EU and 0.5 percent in the euro zone, and to reach a trough in the third quarter in both regions. It is expected to gradually pick up to about 1.25 percent next year, still well below the 2 percent ceiling preferred by the European Central Bank (ECB) to maintain price stability.

But with the economies in a deeper recession, European labor markets are cooling. Employment is expected to contract by about 2.5 percent in both the EU and the euro zone this year and by a further 1.5 percent in 2010, resulting in about 8.5 million job losses for the two years, in contrast to the net job creation of 9.5 million from 2006 to 2008.

Unemployment is forecast to reach 10.9 percent in
the EU in 2010 and 11.5 percent in the euro zone.

Bulgaria sees no need for immediate introduction of euro

SOFIA, April 9 (Xinhua) -- Bulgarian Finance Minister Plamen Oresharski has taken a stance against the immediate introduction of the euro, saying this would have no significant economic impact, local press reported Thursday.

Oresharski's remarks came in response to International Monetary Fund (IMF) calls on central and eastern European countries to consider scrapping their currencies in favor of the euro even without formally joining the eurozone.

In a confidential IMF report, which leaked earlier in the week, the fund said the eurozone could relax its entry rules so countries could join as quasi-members, without European Central Bank board seats.

"Give me just one reason for concluding a new agreement with the IMF at this stage," Oresharski said, adding that Bulgaria has been considering the adoption of the euro and its impact on the economy for more than 10 years.

"We will do that if we have to, I can see no drama here," he added.

"Bulgaria's entry into the eurozone will have no dramatic consequences," the minister said.

He pointed out that Bulgaria's economy has been adjusted to a fixed currency rate in 1997-2000 at times of cataclysms, fluctuations and problems.

Bulgaria's entry in the eurozone, initially scheduled for 2010,has been set back for some time around 2012. Experts say it is conditional on continued fiscal prudence and lower inflation.

In fact, Bulgaria has yet to join the Exchange Rate Mechanism, the "waiting room" for euro membership, amid concerns about its inflation rates and external trade imbalances. Stricter application of membership criteria has also been a factor in the delay.

Euro zone 4th quarter GDP falls 1.6%, EU down by 1.5%

BRUSSELS, April 7 (Xinhua) -- The euro zone's GDP fell 1.6 percent quarter-on-quarter in the last three months of 2008 because of weakening investments, consumption and exports, the EU's official statistics agency Eurostat said Tuesday.

Growth rate slipped 1.5 percent in the European Union (EU) in the period, according to Eurostat's second estimates.

Growth rates declined 0.3 percent in the euro zone and EU in the third quarter of last year.

Compared with the same period in 2007, the seasonally adjusted GDP in the 15-nation euro zone and the 27-nation EU contracted respectively by 1.5 percent and 1.4 percent.

In the wake of the financial crisis, the euro zone's three major "engines" -- personal consumption, investments and exports -- all saw slippage.

Fourth-quarter household final consumption expenditures declined by 0.3 percent month-on-month and by 0.4 percent in the EU, according to Eurostat.

Investments fell by 4.0 percent in the euro zone and by 3.3 percent in the EU. Exports fell by 6.7 percent and 6.1 in the two zones respectively, while imports decreased by 4.7 percent in the euro zone and by 5.0 percent in the EU.

In the last three months of 2008, among EU member states with available seasonally adjusted GDP data, Slovakia grew by 2.1 percent, the highest growth compared with the previous quarter, followed by Cyprus with 0.6 percent, Greece and Poland both with 0.3 percent.

Slovakia joined the euro zone on Jan. 1.

Ireland recorded a growth contraction of 7.1 percent, the steepest decline among EU member states compared with the third quarter of 2008.

Germany, the largest economy in Europe, plunged by 2.1 percent, while France shrank by 1.1 percent.

Economic growth in both regions was hit hard by the global financial crisis.

The GDP grew by 0.8 percent in the euro zone and by 0.9 percent in the EU for all of 2008, compared with an increase of 2.6 percent and 2.9 percent for 2007, Eurostat said.