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WORLD> Global General
China, UK data upbeat; Russia to cut US debt share
(Agencies)
Updated: 2009-06-11 09:36

NEW YORK/LONDON - Data from three major economies suggested on Wednesday the worst of the global recession may be over, although a sign that confidence in US government debt may be slipping cast a shadow across the world's biggest economy.

A Russian senior central bank official said Russia will reduce the share of US Treasuries in its foreign exchange reserves. Russia is the third-largest single country holding Treasuries and the news drove the dollar broadly lower.

Related readings:
 China's CPI falls 1.4% in May
 UK output offers silver lining
 China to keep buying US Treasuries: central banker
 US economy slowly improving, challenges remain

 China economy poised for 'sustainable' growth

Russia has been questioning the role of the dollar as the world's main reserve currency. It holds about 30 percent of its reserves, which total $404.2 billion, in Treasuries.

The move fueled worries about a possible reduction in confidence in America's fiscal health amid concerns about its massive deficit stemming from bailout and stimulus spending as it tries to pull out of recession.

US Treasuries are typically seen as a safe haven investment, and sentiment will be tested by an auction of benchmark 10-year T-bonds later on Wednesday.

In the auto sector, Chrysler LLC completed the sale of its strongest assets to a group led by Fiat SpA, completing a fast-track reorganization directed by the Obama administration.

The new company, known as Chrysler Group LLC, will begin operations immediately. Chrysler filed for bankruptcy protection at the end of April and parts of the automaker not involved in the sale will remain in bankruptcy to be sold or closed.

CHINA OUTPUT PACE UP

In China, an engine of world growth in recent years, newspapers said factory output rose in May at the fastest pace since last September, while official data showed British industrial output rose in April for the first time in more than a year and Italian output rose after 11 straight monthly falls.

Global economic data has improved in recent weeks from a nadir in March, partly spurred by trillions of dollars of government stimulus. Stock markets have rallied on hopes an end might be in sight to the deepest recession in six decades.

However, policymakers have suggested risks remain and any recovery will be take hold only slowly.

Underlining the risks, Sweden's central bank said on Wednesday it was taking out a hefty loan from the European Central Bank to safeguard financial stability, although the country's financial watchdog said Swedish banks could cope with "extreme" pressures.

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