International Monetary Fund convinced that the global economy is on the up while investors remain cautious.

According to the, the International Monetary Fund (IMF) the world economy is showing some very positive signs and may be eventually starting to pull out of recession. So convinced are the IMF that the recovery is on its way, which they have begun to re-examine their growth forecasts for 2009 as well taking a whole new stance on bank losses for the future.
Sadly their optimism is not being shown by investors who have signalled their disagreement by selling off shares in commodities, notably oil and gold

The confusion continues with news that the U.K. trade deficit narrowed in May to its lowest level in three years. Imports continued to drop, an indication that the demand for foreign produced goods is being affected by the recession and the weak pound
The goods-trade gap in May was 6.3 billion pounds, the lowest level since June 2006, compared with 7.1 billion pounds in April.

The pound’s 18 percent slide against the dollar in the past year is making British exports more competitive and encouraging companies to shun imports.

The Bank of England surprised a lot of financial analysts on Thursday with the announcement that they would not be increasing their £125, quantitative easing programme for the time being, without giving any indication when it would add the extra funds
On the news, UK government bonds sold off sharply.

On the retail markets, Primark is taking advantage of the UK public’s shortage of cash as consumers opt for their low-cost fashion items. Associated British Foods, owner of the budget chain, announced on Thursday that like-for-like sales growth had been “excellent” in the third quarter. While sales growth slowed at all the other AB Foods arms in the same period, total revenue increased by eight percent.

On the FTSE, retailers and the service sector had a good day. Shares in Marks & Spencer gained 2.5 percent to 313.75 pence.

U.K. car insurer Admiral Group Plc added 22.5 pence, to 887.5, while
Babcock International Plc, the support-services company saw their shares increase by 18 pence, to 470, on the announcement that it’s trading was consistent with forecasts it made in May.

The world’s biggest maker of ceramic linings for metal smelters Cookson Group Plc climbed 4.5 pence to 225.75. On news of a recovery in the U.S. steel industry.

PartyGaming Plc, owners of the PartyPoker.com gambling brand saw their shares rise 4.5 pence to 245, on reports of strong second-quarter sales.

Booker, the cash-and-carry group has reported that sales have been boosted by the warm weather. The company specialises in distributing soft drinks and ice creams to more than 400,000 corner shops, pubs and restaurants in the UK.
In the quarter up to the end of June, sales at Booker rose 7.8 per cent compared with the same period last year, with non-tobacco sales up 10.4 per cent.

On Thursday, the FTSE 100 index rose for the first time in three trading days yesterday, up 18.46 points, to 4,156.66. The FTSE 250 also rose by 38 points closing on 7,234.00

Sterling rose against the Euro, Swiss Franc and the Yen yet continued to stutter against the dollar.

Pound/US dollar 1.6259
Pound/Euro 1.1685
Pound/Japanese Yen 150.7566
Pound/Swiss Franc 1.7729

There were some heated clashes in the US Congress on Wednesday as the possibility of a further US fiscal stimulus was being discussed. Despite forecasts to the contrary, unemployment continues to climbs towards the 10 per cent mark in spite of the current $787 billion package.

While administration officials believe that further stimulus might eventually be required, it looks like the decision will be postponed to later this year or even early I 2010.

The Dow Jones finished the day up, but only by 4.76 points to 8183.17 while the NASDAQ rose 5.38 points to close on 1752.55

Confused statistics seem to abound these days, and one is that the number of US workers claiming unemployment benefits dropped to the lowest level since January in the last week. This could mean that the pace of redundancies might be slowing down.

Another piece of good news from Europe was that the volume of goods leaving German factories in May had surged more than any month since 1993, adding to hopes that the economy is beginning to claw its way back from a deep recession in Europe’s largest centre of production.

According to the German economics ministry industrial production was 3.7 per cent higher in May 2009 than in April, although overall volumes were still 17.9 per cent below the May 2008 level.

An interesting statistic that may have a significant effect on the global economy over the coming years is that car sales in China have risen by almost 50% in June from the same month last year, The figure is boosted by a combination of government incentives as well as the continued resilience of the Chinese economy.

According to the China Association of Automobile Manufacturers, sales hit 872,900 vehicles in May, the largest increase since February 2006,
Coming as the Chinese economy continues to grow at more than 6% annually.

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