Stocks tumbled, paring a weekly advance for the Standard & Poor's 500 Index, after weaker-than- forecast growth in company payrolls suggested a rebound in corporate profits may stall.
 
JPMorgan Chase & Co. and International Business Machines Corp. led the Dow Jones Industrial Average lower after private- sector payroll growth fell short of estimates. EOG Resources Inc. tumbled 3.1% following earnings that trailed estimates. Equities pared losses as the Federal Housing Administration said it plans to begin accepting applications for a program to help struggling mortgage borrowers.
 
The S&P 500 Index fell 0.4% to 1,121.64 at 4 p.m. in New York, paring its weekly advance to 1.8%. The Dow dropped 21.42 points, or 0.2%, to 10,653.56 after earlier tumbling as much as 160 points. Treasury yields slid, sending the two-year rate below 0.5% for the first time, on lower expectations for economic growth and inflation.
 
US index futures erased gains before the open of exchanges as the government said the number of Americans on company payrolls rose by 71,000 in July after a gain of 31,000 in June that was smaller than previously reported. Economists projected a 90,000 rise in private-sector jobs last month, according to the median estimate in a Bloomberg News survey.
 
Overall employment, including government workers, fell by 131,000 as the Census Bureau cut temporary jobs, and the unemployment rate held at 9.5%.
 
JPMorgan Chase, the second-biggest US bank by assets, declined 2% to $40.44. IBM, the world's biggest computer- services company, dropped 0.8% to $130.14.
 
EOG Resources fell 3.1% to $99.26. The oil and natural gas producer reported second-quarter profit excluding some items of 18 cents a share, 31% less than the average of 23 analyst estimates in a Bloomberg survey.
 
Harman International Industries Inc. declined 12% to $29.88 for the biggest drop in the S&P 500. The maker of audio systems for homes and vehicles posted fourth-quarter profit excluding some items of 30 cents a share, trailing the average analyst estimate by 6.3%.
 
Washington Post Co. fell 7.6% to $377.56, its biggest drop since May 2009. The newspaper publisher said proposed US Department of Education rules could "have a material adverse effect" on its Kaplan unit, which makes up more than 60% of earnings.
 
Activision Blizzard Inc. slid 6.5% to $10.99. The largest video-game publisher said sales this quarter will be $725 million, excluding changes in deferred revenue. Analysts estimated sales of $914.5 million on average. The company forecast adjusted earnings of 8 cents a share, below the 12-cent average estimate.
 
Equities pared losses late in the session as the Federal Housing Administration said it will begin accepting applications Sept. 7 for its program to help borrowers who owe more on their mortgages than their homes are worth. The Short Refinance program encourages lenders to forgive 10% or more of the balance of a mortgage so the loans can be refinanced at a lower interest rate. That would remove the troubled loans from the lender's books and allow borrowers to lower their payments.
 
The S&P 500 advanced this week as companies from Humana Inc. to Allergan Inc. reported profit that topped analyst estimates. Earnings beat the average analyst estimate at more than three-quarters of the S&P 500 companies that have reported second-quarter results so far, helping send the benchmark up as much as 10% from its low for the year on July 2.
 
Kraft Foods Inc. and American International Group Inc. gained Friday after reporting better-than-expected results. Kraft Foods, the maker of Oreo cookies and Maxwell House coffee, rose 2.4% to $30.36. AIG, the insurer rescued by the US in November 2008, gained 2.6% to $40.93. Separately, AIG Chief Executive Officer Robert Benmosche said the insurer is in talks with regulators to become independent.
 
PerkinElmer Inc. rose the most in the S&P 500, climbing 11% to $22.29. The provider of equipment for genetic screening and drug research boosted its full-year forecast after second-quarter profit beat analysts' estimates.
 
The 443 companies in the S&P 500 that have reported second- quarter results earned an aggregate $21.45 a share excluding some items, the highest total since the second quarter of 2007, when index operating profit peaked at $24.06 a share, according to data compiled by Bloomberg and S&P.
 
Sales per share, forecast by S&P to total $235.54 this quarter, have recovered less than 7% from a three-year low of $221.8 a share in the first quarter of 2009, according to data compiled by S&P. The peak, in the second quarter of 2008, was $278.53 a share.
 
The US economy has expanded for four straight quarters after shrinking for five of the previous six as the collapse of the subprime mortgage industry triggered the worst contraction since the Great Depression. Growth slowed to 2.4% in the first quarter from 3.7% at the end of 2009, spurring concern the nation is at risk of entering another recession as government stimulus programs expire.
 
Earlier this week, reports on consumer spending, pending home sales and factory orders in June were all weaker than economists estimated. The Federal Reserve will provide an update on interest rate policy and its assessment of the economy on Aug. 10.
 
Nobel Prize-winning economist Joseph E. Stiglitz said the US economic recovery is "anemic" and called for a second round of "better-designed" stimulus.
 
"The recovery is so weak that it is not strong enough to generate new jobs for the new entrants in the Labour force, let alone to find jobs for the 15 million Americans who would like a job and can't get one," Stiglitz told Bloomberg Television in an interview in Sydney Thursday.

 European stocks climbed this week as earnings from HSBC Holdings Plc to BNP Paribas offset weaker- than-forecast US data that reignited concerns about the strength of the recovery in the world's biggest economy.
 
HSBC, the region's largest bank, BNP Paribas and Lloyds Banking Group Plc all climbed after posting profit that topped analysts' estimates.
 
Aviva Plc jumped 6.8% after the insurer reported higher profit. Yara International ASA led gains in agriculture-related companies after wheat prices surged to the highest level in almost two years.
 
The Stoxx Europe 600 Index gained 1.3% to 258.71, extending last month's gain of 4.9% as company earnings helped alleviate concern about global growth. About 55% of the gauge's members that have posted results since July 12 have topped estimates for net income.
 
GERMANY
 
German stocks retreated from a two- year high after a bigger-than-estimated decrease in jobs in the US added to evidence the economic recovery is slowing.
 
HeidelbergCement AG led declines on the benchmark DAX Index, falling 3.8%. E.ON AG and RWE AG, Germany's biggest utilities, dropped at least 1% as UBS AG downgraded its rating on the industry. Fertilizer producer K+S AG gained after wheat reached its highest price in almost two years following an export ban by Russia.
 
The DAX fell 1.2% to 6,259.63 at the 5:30 p.m. close of trading in Frankfurt, paring this week's increase to 1.8%. The measure rallied 3.1% in July, its biggest increase since March, as demand at bond auctions in Greece, Spain and Portugal eased concern that Europe's sovereign-debt crisis will derail the economic recovery. The broader HDAX Index slid 1.1% Friday.
 
Stocks erased earlier gains after the US Labour Department said private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported. Economists projected a 90,000 rise in private jobs, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and the jobless rate held at 9.5%, the report said.
 
HeidelbergCement, the world's largest maker of aggregates used to produce concrete and asphalt, tumbled 3.8% to 38.09 Euros. The stock was cut to "hold" from "buy" at Royal Bank of Scotland Group Plc.
 
E.ON slid 2% to 23.06 Euros and RWE slipped 1% to 55.26 Euros. UBS analysts Nick Nelson and Karen Olney cut their rating on utility shares to "neutral" from "overweight," saying profit growth will be slower than any other industry in 2011 as companies such face new taxes on nuclear fuel and hydropower.
 
K+S, Europe's biggest producer of potash, climbed 1.4% to 44.11 Euros after wheat prices surged. Russia, the world's third-biggest grower of wheat, banned exports of the grain from Aug. 15 to Dec. 31, as the country's worst drought in half a century cut yields.
 
Lanxess rallied 3.6% to 40.14 Euros. Germany's largest publicly traded specialty chemicals maker raised its 2010 forecast for earnings before interest, tax, depreciation and amortization to 800 million Euros ($1.06 billion) from a previous prediction of 650 million Euros to 700 million Euros.
 
Kinghero, the China-focused fashion company which traded in Frankfurt for the first time Friday, rose 0.7% to 15.10 Euros. The Munich-based company said Thursday it had placed 15 million shares at 15 Euros each.
 
Germany's seasonally adjusted services business activity index rose to 56.5 in July from 54.8 in June, a final report from Markit Economics showed Wednesday.
 
The final reading was lower than the flash figure of 57.3 for July. Economists were expecting the reading to remain unchanged. A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.
 
The July reading pointed to a rise in service sector output for the twelfth consecutive month. The pace of growth picked up to the sharpest since August 2007, and the latest reading highlighted an acceleration of activity growth for the first time in three months, Markit said. The final Composite Output Index, that covers both manufacturing and services purchasing managers' indexes, or PMIs, was at 59 in July, up from 56.7 in June. The combined output of the manufacturing and service sectors increased at the fastest pace since April.
 
The latest PMI data for Germany's manufacturing sector had shown that the index rose to a seasonally adjusted 61.2 in July, the highest reading in three months, from 58.4 in the previous month.
 
Meanwhile, official figures showed that German economy expanded 0.2% in the first quarter as well as in the fourth quarter of 2009 on a sequential basis. In the third quarter of 2009, the gross domestic product grew 0.7%. 
 
FRANCE
 
France's CAC 40 Index fell 48.14, or 1.28%, to 3716.05 at the close in Paris. The SBF 120 Index also dropped 1.22%.
 
Archos fell 12.4% to 3.62 Euros, the biggest drop since December. The maker of portable music and video players said its first-half loss narrowed to 3.2 million Euros ($4.2 million) from 5.1 million Euros a year earlier.
 
Catering International & Services gained 2% to 60.70 Euros. The catering-services group said second- quarter revenue rose 16% to 47.8 million Euros.
 
Dexia fell 4.7% to 3.78 Euros. The Paris- and Brussels-based bank said second-quarter profit declined 12%, hurt by a loss at its Slovak operations.
 
ESR decreased 10% to 99 cents, the biggest drop in more than a year. The engineering company said first- half revenue fell to 31.5 million Euros from 36.1 million Euros a year earlier.
 
Natixis rose 2.8% to 4.408 Euros. The investment-banking unit of France's second-biggest bank by branches posted second-quarter net income of 522 million Euros, from a year-earlier loss of 819 million Euros.
 
Synergie gained 3.2% to 20.09 Euros. The temporary-employment agency said first-half revenue rose to 548.4 million Euros from 429.6 million Euros a year earlier.
 
Veolia Environnement declined 2.4% to 21.185 Euros. The world's biggest water utility said a recovery in waste treatment is "limited."
 
French service sector activity expanded at a faster pace in July, a final report by Markit Economics showed on Monday.
 
The purchasing managers index, or PMI, for services increased to a two-month high of 61.1 in July from 60.8 in the previous month. The current sequence of rising service sector output now extends to eleven months. The flash reading for July was 61.3. A reading above 50 indicates expansion, while one below 50 suggests contraction.
 
The Composite Output Index reached 59.7 in July, up from 59.6 in the previous month. The latest reading was revised from 59.9 reported initially. Manufacturing output rose at the slowest pace for eleven months in July.
 
Growth in the service sector was mainly influenced by rising levels of incoming new business as economic conditions continued to improve with panellists receiving work from both new and existing clients, Markit said. However, manufacturers showed a declining trend in employment in July, with the pace of job shedding accelerating to the sharpest since September 2009. Input price inflation increased in July albeit at the slowest rate since February.
 
"Strong growth of services activity continued to drive the French economic recovery in July," Jack Kennedy, an economist at Markit said. "An improving Labour market is likely to bolster consumer spending, offering encouragement regarding the sustainability of the upturn in the second half of the year." 
 
BELGIUM
 
The Bel 20 in Brussels ended the week at 2,549.82, a dip of 1.40% on the day.
 
Belgian financial services group KBC (KBC.BR) beat expectations in the second quarter due to healthy interest income and sharply lower provisions for bad debts and despite reduced earnings from its dealing rooms. KBC, which has received 7 billion Euros in state aid to help it through the global financial crisis, said on Thursday it expected loan losses to decline in 2010 from 2009, with healthy revenue although costs could increase.
 
Many of Europe's top banks have beat earnings forecast this week as bad debts have shrunk more than expected, outweighing a slowdown in investment banking, which was hit by sovereign debt fears.
 
KBC's net profit before one-offs rose 35% year-on-year to 554 million Euros ($732.9 million) in the second quarter, versus an expected 459 million Euros.
 
However, around 400 million Euros of exceptionals, a number linked to its wind-down programme and some related to sovereign credit spreads, left the absolute net profit at 149 million Euros, a 51% drop, albeit still higher than expected.
 
In return for the state aid it received, KBC has pledged to downscale its capital market activities and businesses outside its core of Belgium and emerging Europe, where it is the fifth largest by assets.
 
UK drug maker Shire Tuesday said it agreed to acquire Belgium's Movetis N.V. (MOVE.BT) for Eur428 million in cash, in a deal that adds to its stable of medicines for gastrointestinal conditions.
 
Shire said the deal will boost earnings after 2012 and will add revenue immediately from sales of constipation treatment Resolor, which won the backing of the UK's National Institute for Health and Clinical Evidence earlier this week.
 
Movetis, which was spun out of Johnson & Johnson, raised Eur100 million in an initial public offering late last year to provide funds to market Resolor and develop new drugs.
 
Shire said the deal also adds two drugs in early-stage clinical testing to its pipeline and promising preclinical comPounds, Shire said.
 
The UK drug maker agreed to pay Eur19 a share to acquire Turnhout, Belgium-based Movetis, a premium of 74% to its closing price Monday and valuing it at Eur428 million. Movetis had Eur100 million in cash at March 31.
 
Shire said it will fund the deal with the cash it has on its balance sheet.
 
Shire added shareholders with 38.9% of Movetis's share capital agreed to back the deal.
 
58.5% of the money spent to employ a typical Belgian worker goes to paying various taxes, according to a pan-European study of employment taxes, making August 3rd that employee's "tax freedom day"  - the calendar date on which one has finished paying tax obligations and begins to keep his or her earnings.
 
The study, published by L'Anglophone in May, analysed income tax, social security and VAT rates for salaried employees earning an average wage in each of the EU member states. From average wage data published by the Organisation for Economic Co-operation and Development (OECD) and Eurostat, income and social security tax obligations were calculated by Ernst & Young.
 
The average gross salary of a Belgian employee in the industry and services sector in 2006, according to Eurostat, was 37,674€. In addition to this salary, an employer Friday would pay 11,501€ in social security contributions, thus making the total cost of employment (or "real" gross) 49,175€. The employee's net pay would be 21,903€, or 44.54% of the total employment cost; taxes and social security contributions thus comprise 55.46% of real gross income.
 
If the employee then spends 35% of his take-home pay on rent (around 550 Euros per month), and half of what remains on items not subject to VAT (groceries, for example), he pays an additional 1,495€ in VAT at the cash register each year. In this scenario, his total tax burden rises to 28,767€ or 58.5% of his "real" gross salary.
 
For the sake of simplicity in comparing tax burdens in the 27 EU countries, the study used figures for an unmarried "Average Joe" with no children who rents his home (thus neither paying property taxes nor benefitting from a mortgage interest deduction).
 
Additional taxes such as those on petrol and cigarettes were not taken into account, though these levies can be costly; smoking 20 cigarettes a day in Belgium adds 1241€ to one's annual tax bill - or 7 more days at work for the public coffers.
 
Among the EU-27, only in Hungary - where the tax freedom day is August 6th - are the typical worker's wages taxed at a higher rate. The earliest tax freedom days calculated by the study were in Cyprus (March 13th), Malta (April 9th), Ireland (April 27th) and the United Kingdom (May 13th).
 
THE NETHERLANDS
 
In Amsterdam the AEX headed into the weekend on 331.19, 1.6% to the red for the session.
 
An indicator of growth in the Dutch manufacturing sector fell slightly in July but remained strong, new figures showed on Monday.
 
The Markit / NEVI purchasing managers' index - an indicator of health at 500 manufacturing companies across the Netherlands - fell to 55.7 from 55.9 in the previous month. A reading above 50 indicates expansion while one below suggests contraction.
 
New order receipts at Dutch manufacturers rose for the 13th month running in July, supported by improving economic conditions. However, the pace of growth eased to its weakest since last December. Output also rose more slowly during the month.
 
Despite a weaker increase in new work, employment at Dutch manufacturers rose at the fastest rate for over three years in July. This was mainly due to improved market demand, according to survey respondents.
 
Both input and output price inflation eased in July, but the former remained substantial. Respondents cited input price inflation to greater fuel and raw material costs.
 
Gemma Wallace, economist at Markit, said: "It is becoming clearer that Dutch manufacturing activity and new order growth peaked in March, and has been generally cooling ever since. As movements in employment tend to lag those of output, it is likely that we will see some slowdown in the pace of job creation during the coming months from the current three-year high."
 
Dutch game maker Playlogic has been declared bankrupt, eight years after its launch, the NRC reports on Wednesday.
 
Playlogic, with operations in Rotterdam and Breda, is the biggest Dutch company to make games for the Xbox 360 and Sony Playstation, the paper says. The company applied for court protection from creditors last week.
 
The bankruptcy follows a disappointing reception for the long-awaited Fairytale Fights game which has not sold as well as expected. Delayed contracts and increasing debts added to the pressure on the company, the paper said.
 
The company's parent, Playlogic Entertainment, was listed on the US Nasdaq exchange. According to an SEC filing last week, the company lost $20m last year and a further $2.2 m in the first quarter of 2010.
 
'2009 was a difficult year for the entire game industry,' founder Rogier Smit told the paper. 'Hardly any game makers made a profit, even the big internationals.'
 
Chemicals and pharmaceuticals company DSM booked turnover from continuing operations of nearly €2.3bn in the second quarter of 2010, up 28% on 2009.
 
Profit before tax and interest was up nearly 300% at €246m, far above the expectations of analysts questioned by financial news agencies.
 
CEO Feike Sijbesma said it had been a 'very strong quarter'.
 
'DSM remains vigilant about the broader macro economic developments. Based on the current positive business environment we expect 2010 to be a strong year for DSM,' the CEO said in a statement.
 
Twelve of the Netherlands 37 professional football clubs are in such poor financial state that they have been put under the supervision of the Dutch football association, RTL news reports.
 
The problems are due not only to the wages bill but the economic crisis, RTL said, quoting a KNVB report which will be published on Wednesday.
 
The KNVB has divided the clubs into three categories: those under formal KNVB supervision, those where the finances need improving and those which are in a healthy financial state. Just four clubs - FC Volendam, Telstar, SC Heerenveen and Go Ahead Eagles - fall into that last category.
 
Two top premier division sides - Rotterdam's FeYenoord and NEC Nijmegen - are in the danger zone, RTL news says.
 
Earlier this year, the KNVB published a set of proposals to improve football financing.
 
Haarlem and Veendam, both first division sides, were declared bankrupt last season. Premier division side Willem II and first division club MVV were bailed out by their local councils.
 
SWITZERLAND
 
Zurich's SMI drew a line under the trading week at 6,321.36, off 0.84% for the Friday session.
 
Switzerland's consumer prices declined in July for a third month, data from the Federal Statistical Office showed Tuesday. Consumer prices dipped 0.7% month-on-month, bigger than the 0.4% decrease seen in June and 0.1% fall in May. Economists had expected only 0.5% decline.
 
The decline in July was largely led by a 10.7% drop in clothing and footwear segment. Oil prices were down 5.3%, while the decrease in food and non alcoholic beverages was 0.5%. Housing and energy and transportation charges fell 0.3% each.
 
Annual inflation, at the same time, eased unexpectedly to 0.4% in July from 0.5% in June. Consensus forecast was for 0.7%.
 
Swiss retail sales decreased by a real 0.4% in June from the previous month, reversing a monthly 1.2% rise in May, the Federal Statistical Office reported Monday. Real turnover in the retail trade excluding fuel remained practically unchanged in June compared with the previous month.
 
Year-on-year, retail turnover rose 0.9% in June, sharply smaller than the 3.9% rise seen in May. Total retail, excluding fuel also increased at a slower pace of 1.3% after recording 3.7% growth. Retail sales of food, drinks and tobacco grew by a real turnover of 1%. The non-food sector registered positive growth of 1.8%.
 
In nominal terms, overall retail sales dipped 0.8% on a monthly basis and fell 0.7% from the previous year. Excluding fuel, nominal turnover dropped 0.5% in all major groups compared with May.
 
Switzerland's Purchasing Managers' Index rose to an all-time high in July, a joint report by the SVME Association of Purchasing and Materials Management and Credit Suisse showed Monday.
 
The indicator came in at 66.9 in July, up from 65.7 in June. The index remained consistently above the 50-point growth threshold for eleven months. The expected reading was 65. The PMI reading confirmed the assessment that industrial activity will recover this year from its steep drop.
 
The survey found that three of the five sub-components that feed into the PMI calculation advanced in July. Further, all indicators remained in the growth zone. The output index registered the strongest increase of 4.7 points, now at 69.1 points.
 
At the same time, the suppliers' delivery times component climbed a further 2.5 points to reach a new peak of 83.1 points. The rapid recovery is clearly pushing current capacity utilization to the point of supply bottlenecks, the survey showed. The index for backlog of orders dipped to 67.1. Further, the employment subcomponent was down for the month as hiring has evidently slowed. 
 
AUSTRIA
 
The ATX in Vienna rounded out the Friday session and the week at 2,498.10, down 1.66%.
 
OMV managed to raise earnings and turnover in the first half of this year.
 
The Vienna-headquartered oil and gas firm said Wednesday turnover soared by 31% to 11,015 billion Euros compared to the first six months of 2009. Analysts expected the company's turnover to increase by just 25% year on year.
 
The company - one of the largest oil and gas firms in Europe - also announced earnings before interest and taxes (Ebit) rose year on year by a whopping 170% to 1.357 million Euros in the first half of 2010.
 
OMV explained higher mineral oil price rates and the regaining strength of the US Dollar compared to the Euro helped it to significantly improve business figures in the first two quarters of this year.
 
"I think it's fair to call our performance solid," company chief Wolfgang Ruttenstorfer said.
 
OMV currently has around 32,500 employees of which 26,700 work for its Romanian subsidiary Petrom. This means the company has lowered its staff numbers by around 13% compared to 2009.
 
The firm's deputy general director Gerhard Roiss will succeed Ruttenstorfer as CEO next March. Ruttenstorfer - a former Social Democratic (SPÖ) state secretary - has been heading OMV since 2002 after 10 years as its CFO.
 
Hypo Tirol Bank bosses have claimed they are satisfied despite Moody's decision to lower its estimation of the bank.
 
The New York City-headquartered rating agency announced Tuesday that it had changed Hypo Tirol Bank's soundness ranking from Aa1 to A2.
 
CEO Wilfried Stauder stressed in a first reaction Friday he was "satisfied" considering the difficult economic development.
 
Moody's explained its decision was based on the Innsbruck-based institute's "weak capitalisation".
 
The rating agency announcement comes weeks after Austria's biggest banks passed the European Union's (EU) "stress test".
 
Raiffeisenzentralbank (RZB), Erste Bank and UniCredit subsidiary Bank Austria (BA) did well in the check.
 
Seven of the 91 examined bank houses failed the test in which experts tried to find out whether they would manage to survive a dramatic economic downturn.
 
Anti-corruption officials raided the offices of an Upper Austrian industrial company this week.
 
Police said Kremsmünster-based foam producer Eurofoam was suspected of illegal price-fixing activities with rivals across Europe in a possible breach of European competition rules.
 
The firm, which is part of the Upper Austrian Greiner Group, pledged to cooperate with investigators.
 
Eurofoam runs 39 facilities with 2,400 employees in 16 European countries. 
 
SWEDEN
 
The OMX in Stockholm completed a hectic trading week on 1,065.22, shedding 0.85% in the process.
 
Swedish manufacturing activity expanded robustly in July, led by strong growth in new orders and production, a survey by Swedbank and SILF showed Monday.
 
The headline seasonally adjusted purchasing managers index, or PMI, rose to 64.2 in July from 62.4 in June. A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction. The July reading was slightly above the seven-month average of 63.
 
Meanwhile, economists were looking for a reading of 63.5. An increase in new orders and production contributed positively to the overall rise in activity. The index of new orders rose to 67.3 in July from 61.1 in the previous month. Order intake grew both for the domestic and export markets. The indicator for stock orders advanced to 63.4 from 60.9.
 
The production index rose to 72.2, the highest reading on record, from 66.8 in the previous month. The indicator for employment in the sector slipped to 56.3 in July from 60.3 in June, still suggesting a strong improvement. Supplier's delivery times, which measures demand pressure in the industry, also rose at a slower pace than June. The index reading was 66.4, down from 69.2 in June.
 
Meanwhile, the survey found that most of the Swedish manufacturing firms are planning to increase their production in the coming six months, suggesting a fairly good economic outlook. However, the corresponding index recorded a reading of 72 in July, down from 73.1 in June.
 
A larger number of manufacturers signaled a rise in crude and intermediate goods prices in the coming months. However, they said input costs had stabilized in the last three months. The indicator for price changes recorded a modest drop to 70 in July from 71.1 in June. The gauge measuring the stocks of purchased materials rose to 51.4 from 50.4 in the previous month.
 
A social insurance fraud ring in southern Sweden is thought to have stolen about 75 million kronor ($10.5 million) from Sweden's social security system by faking serious illnesses. In many cases, the frauds involved entire families.
 
The claims come after a 32-year-old man who employed an assistant to help him cope with cerebral palsy, was shown to be completely fit.
 
The fraud centre around a company in Halmstad which provided personal assistants to people with disabilities. Police say they suspect that twelve people supposedly being cared for by assistants supplied by the company were in fact using it as a front to siphon off money from the state.
 
"They've had the same modus operandi in each case. Parents, relatives or friends have been employed. They've declared working hours and taken out money," said Karl-Arne Ockell at Halland police.
 
The company was responsible for processing wages and receipts, providing significant incomes to a large number of people for every supposed patient.
 
A family falsely claiming to have three disabled children was paid 500,000 kronor per month. In another case a couple were paid 220,000 per month each to care for a man with cerebral palsy, despite the fact that one of the supposed carers was simultaneously working in a pizzeria.
 
All those involved in the fraud were foreign citizens. The 41-year-old owner of the company had recruited willing accomplices with medical histories that were hard to trace. This made it easier for him to fool the Swedish Social Insurance Agency (Försäkringskassan).
 
"If you were born in Sweden and have lived here your whole life, then you know it's not true if you suddenly say in your twenties that you have cerebral palsy," said Ockell.
 
The 41-year-old, who lives in Malmö, was recently jailed for two-and-a-half years for aggravated fraud and aggravated false welfare fraud.
 
Police calculate that his company had an annual turnover of between 15 and 18 million kronor for the past five years, meaning he defrauded the state of a total of around 75 million kronor.
 
Many European countries are facing austerity measures in the wake of the financial crisis. Now it's time for the EU itself to get serious about tackling waste, writes Anna Kinberg Batra, chair of the Swedish Parliament's Committee on EU Affairs.
 
On July 23rd, the European Union's so-called stress test of banks was published. The tests assess the ability of the EU's payment systems to withstand shocks. But if the EU is to emerge stronger from the economic crisis, it will require more than improved regulation of our payment systems: the EU and its member states will have to pursue responsible economic policies. Unfortunately, the political will to do this currently appears to be lacking.
 
Earlier this summer, only three EU countries had budget deficits and national debts within the allowed limits. Several countries are finding it hard to turn deficits and crisis situations into stable public finances. Sweden is one of the few countries that will this year meet the European Union's requirements for stable public finances. This is good news, as it means that we can now talk about possible improvements to public services or tax cuts instead of presenting austerity measures. That we can do this is thanks to the fact that the Alliance government has pursued responsible economic policies, instead of buying car factories and putting money into the banks.
 
Work is now underway on next year's EU budget, and the promised review of the union's long-term budget will hopefully soon become reality. Sweden has run a credible campaign for better discipline, with support on both sides of the political divide. But it seems that many governments believe that subsidies and protectionism at the EU level can continue, even while member states are taking drastic measures at home. This would be dangerous, not only for the economy, but also for the credibility of the EU. In recent years we have discussed toughening the rules and imposing sanctions on countries that don't follow the budget rules. All this is worthwhile and important, but it also means that the EU's own budget can't escape the pressure to change - and not just within agriculture or regional policy, but also within administration.
 
There are problems in the EU with money that doesn't reach its intended recipients and with huge administrative costs - the travelling circus of the European Parliament, for example. This is estimated to cost over €200 million per year. But there are further examples of costs that need to be examined: two advisory bodies, the Committee of the Regions and the European Economic and Social Committee, are expected next year to cost €90 and €140 million respectively, despite the fact that they do not have the power to legislate and despite the fact that the matters they deal with are also dealt with by other institutions, including national parliaments.
 
If all the member states had Sweden's budget deficit and our attitude to the subsidy systems, the EU's finances would be well-managed and the budget could be reduced, despite more members and more duties. The whole of the European Union needs to think carefully about how we can start to cut our coat according to our cloth in a tougher environment. Despite the fact that the world has gone through the biggest financial crisis since the thirties, with public finance crises as a result, stable finances in Europe are a long way off. Unreformed subsidies are not the way to stability in any country, and are no better at the European level. This is why the Swedish government has criticized the Commission's budget proposal.
 
Negotiations with the European Parliament and other member states will continue after the Swedish elections in September. A responsible government, which takes responsibility for public finances and plays an active part in the EU, is needed now more than ever. We in the Moderate Party will continue to pursue responsible economic policies, both at home and in the EU. Discipline in the EU's own finances must be a part of this.
 
DENMARK
 
Copenhagen's OMX closed out the Friday trading session on 419.48, a drop on the day of 1.26%.
 
A panel of independent lawyers determined that there was no gross mismanagement on the part of Fionia Bank's executives
 
Top executives at bankrupt Fionia Bank will not face charges of wrongdoing related to their involvement in the bank's collapse, reports FYens Stiftstidende newspaper. A preliminary investigation determined the crash was due to 'not unusual' factors related to the financial crisis.
 
After a devaluation of 2.5 billion kroner in the first half of 2009, a legal panel investigated the Odense-based bank's operations. However, the panel found the heavy losses were due to 'weak credit organisation and poor credit management' of its loans that totalled 17 billion kroner.
 
In November, Nordea Bank was able to purchase part of the bank from the state's Financial Stability Company. The remainder of the bank's operations were reorganised and are now known under the Nova Bank Fyn name.
 
A new report by consultancy firm Copenhagen Economics has estimated that Denmark has missed out on earnings of 10 billion kroner, and 16,000 potential jobs in tourism, since 2000 because it has failed to keep up with its EU neighbours.
 
While tourist numbers here have dipped by more than a fifth since 2000, neighbouring countries such as Germany and Sweden have seen the number of holidaymakers visiting their countries rise by 33 and 26% respectively over the same period.
 
According to the report, which was commissioned by a number of unnamed companies in the industry, Denmark has lost more tourists than any other EU country over the last decade. Relative increases in prices and exchange rates explain some of the loss, but unfavourable taxation and a lack of marketing is also part of the explanation, state the authors.
 
'There is no doubt that things are going in the wrong direction,' Lars Liebst, the general manager of Tivoli amusement park, told national broadcaster DR. 'The report documents the huge economic consequences that occur when we as a nation do not take tourism seriously enough.'
 
If Denmark follows trends in other EU countries it could by 2015 increase the number of overnight stays by 17% and add 9,300 tourist industry jobs, according to the report.
 
However, the authors say that this would require greater political will, better conditions for the industry, and more effective marketing of the country abroad.
 
Danish retail sales dropped in June from the previous month, a report by the Statistics Denmark showed on Monday.
 
Retail sales dropped a seasonally adjusted 1.4% month-on-month in June, compared to a 4.2% rise in the previous month, which was revised from 3.7% growth reported initially. Retail sales for food and other groceries rose to 1.2% from 1.1% in May, while sales growth for clothing etc.. eased to 0.7% from 3.8%. Retail sales for other consumer goods fell 4.2% in June, compared to a 7.2% growth in the previous month.
 
Year-on-year, retail sales rose 0.2% in June, slower than a 0.3% growth in the previous month. Food and other groceries rose 0.1%, after falling 3.1% in May. Sales for clothing etc.. increased to 2.3% from 2.4% fall in May, while sales for other consumer goods fell 0.2% after a 4.5% rise in May. 
 
FINLAND
 
In Helsinki the OMX finished the week at 6,793.12, down 0.76%.
 
Finnish office furniture maker Martela said Friday its net loss widened to Eur1.5m in the first half of 2010 from Eur784,000 a year earlier.
 
Revenue rose by 6.6% year-on-year to Eur48.3m, while operating loss doubled to Eur1.6m from Eur800,000.
 
In the first six months of 2010, cash flow from operations was negative and amounted to Eur2.2m, compared to a positive cash flow of Eur7.1m in January-June 2009.
 
In the second quarter of 2010, Martela's net loss shrank to Eur527,000 from Eur563,000 and revenue grew by 21.3% year-on-year to Eur25.7m.
 
In June 2010, the furniture maker agreed to acquire the used furniture business of office furniture recycling and sales company Pa-Ri Materia Oy. The business operates under the name Martela Poistomyynti in Helsinki and Tampere.
 
The company expects that low demand will have an effect on its revenue and operating result in 2010.
 
Finnish new motor vehicle registrations increased in July from the previous year.
 
The new motor vehicle registrations increased 0.7% on an annual basis in July, a report by the Statistics Finland showed on Thursday. The number of new motor vehicles totaled 14,906 in July, of which 8,157 were automobiles. In June, the new motor vehicle registrations climbed 25.8%.
 
In July, the number of new passenger cars registration rose 6.4% over a year earlier, smaller than 54.6% in the previous month. The number of new passenger cars registered was 7,307. The share of new diesel-driven passenger cars was 41.8%, slightly higher than 41.2% in the preceding month.
 
In the January to July period, new motor vehicle registrations increased 8.7% compared to the same period of the previous year. The total number of new motor vehicle registered was 125,699 during the period. The number of passenger cars first registered was 69,752, which was 18.3% higher than a year before. The most common passenger car makes first registered were Volkswagen, Toyota and Skoda.
 
Finnish leisure trips or cruises with overnight stays to neighboring countries totaled 254,000 in June, which was 27% higher than a year ago, a report by the Statistics Finland showed on Tuesday. At the same time, domestic trips with paid accommodation rose 1% to 445,000.
 
The large number of Finnish residents made a trip abroad to Estonia or Sweden, the statistical office said. Finnish residents made 469,000 overnight leisure trips abroad. In all, 357,000 of them included one or more overnights in the country of destination, 24% in Estonia and 17% in Sweden.
 
The latest data are based on Statistics Finland's Finnish Travel Survey for which 1,249 persons aged 15 to 74 permanently resident in the nation were interviewed in July, the statistical office said.
 
Recently imposed restrictions on the export of Finnish dairy products to Russia are to be lifted at the end of the week.
 
Following on-site inspections of 23 Finnish meat and dairy companies in May, the Federal Service for Veterinary and Phytosanitary Surveillance in Russia imposed temporary export restrictions on 14 plants. These came into force on 23 July.
 
Now the Russian authorities have agreed to lift the restrictions on 6 August following discussions with the Finnish Food Safety Authority (Evira).
 
The two sides agreed that the collection of milk from Finnish farms will continue as before while certain Labouratory tests will be adjusted to meet the requirements of Russian legislation. 
 
NORWAY
 
Oslo's OBX pulled the curtains on the trading session Friday at 343.11, practically flat with a minor drop of just 0.01%.
 
Norwegian forest products company Norske Skogindustrier said Friday its net loss widened to NOK874m in the second quarter of 2010 from NOK538m in the corresponding period a year earlier.
 
The result was impacted by the sale of excess electricity and negative currency effects within financial items, the company said.
 
Gross operating profit slumped to NOK275m from NOK568m, mainly due to a sharp fall in prices in Europe from the beginning of 2010, higher prices for recovered paper and market pulp, and a stronger Norwegian crown.
 
Both production and sales volumes are higher in 2010, despite the closure and sale of units in 2009, Norske Skog stated, adding that this means that capacity utilisation has increased considerably to 89% in April-June 2010 from 75% in the second quarter of 2009.
 
Norske Skog's operating revenue fell to NOK4.577bn in April-June 2010 from NO 5.16bn a year earlier.
 
Diluted loss per share stood at NOK4.6 versus NOK1.9.
 
In the first half of 2010, Norske Skog's net loss also widened to NOK2.027bn from NOK1.649bn in the same period of 2009. Operating revenue was NOK9.031bn compared to NOK10.419bn.
 
Norway's M2 money supply increased 2.6% year-on-year in June, faster than the 1.1% growth in the previous month, the statistical office said on Monday. The increase in the M2 growth came from enterprises and households.
 
The total money supply amounted to NOK 1.57 trillion in June, up from NOK 1.52 trillion in the previous month.
 
Meanwhile, the non-financial enterprise money supply increased to minus 1.8% annually in June from minus 3.9% in the previous month. Non-financial enterprise money supply constituted 41% of their gross domestic debt measured by the credit indicator C2, the Statistics Norway said.
 
Other financial enterprise money supply grew 12% in June, faster than 5.2% in the preceding month. Similarly, the twelve-month growth in household money supply rose to 3.9% in June from 3.4% in May. Thus, the growth in household money supply was lower than the growth in household gross domestic debt, which was 6.2% at the end of June.
 
Norwegian manufacturing sector continued to expand in July, largely driven by a strong growth in new orders, a survey by Fokus Bank and the Norwegian Association for Purchasing and Logistics, or NIMA, said Monday.
 
The seasonally adjusted purchasing managers' index rose to 54.9 in July, the highest reading since February 2008, from a revised 52 in June. Meanwhile, economists were expecting PMI to remain unchanged at 52. The previous estimate had shown a reading of 51.2 for June. A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.
 
At the same time, the gauge measuring new order growth rose to 58.3 from a revised 53.7 in the previous month. This is the highest reading since the May 2007. Production also continued to grow during the month. The corresponding index rose to 57.5 in July, highest reading since February 2008, from a revised 54.6 in June.
 
Employment in Norwegian manufacturing sector fell slightly in July with the indicator dropping to 46.9 in July from 48.4 in the previous month. The index for supplier's delivery times rose to 57 from 52.4. The indicator for stocks of purchased goods recorded a positive reading of 50.6 in July following 47.4 in June. 
 
SPAIN
 
The IBEX in Madrid drew to a close Friday on 10,651.10, down 1.74%.
 
Spanish unemployment dropped for the fourth consecutive month in July and the decline was the biggest for the month since 1998.
 
The number of unemployed decreased by 73,790 or 1.9% in July from the previous month to 3.91 million, the Labour Ministry reported Tuesday. The decline in unemployed was just 20,794 in July 2009. On a yearly basis, the number rose 10.3%.
 
The number of unemployed is expected to ease back further during August, with the tourism season providing a fillip to short-term service-sector employment, said Raj Badiani, an economist at IHS Global Insight. "Beyond the summer tourism season, the outlook for employment remains very challenging."
 
The tourism sector raised hiring, which led to a strong fall in unemployment in the services sector. Among the major sectors, a 2.6% fall was recorded in industry. Unemployment dropped 2.2% in construction and by 1.9% in services. Male unemployment fell 2.2% in July and female unemployment was down 1.5%. Unemployment among under 25s fell 3.7%.
 
Unemployment could stabilize in the months ahead before peaking up again after summer, said Philippe Sabuco, an economist at BNP Paribas. The jobless rate could average 20.5% in 2011, after 20% in 2010, the economist added.
 
The Euro area jobless rate in June was 10%, the largest since August 1998. Spain has the highest unemployment rate in the Euro area, at 20% in June. According to statistical office INE, the Spanish unemployment rate was 20.09% in the second quarter. The number of unemployed increased by 32,800 during the quarter to total 4.65 million.
 
Spanish import price inflation eased in June from the previous year, but export price inflation climbed, a latest report by the National Institute of Statistics showed on Wednesday.
 
The import price index increased 10.1% year-on-year in June, slower than a 10.2% growth in the previous month. However, import prices increased for the seventh consecutive month. A year earlier, import prices slipped 10.8%.
 
On a monthly basis, import prices rose 0.8% in June, slower than a 1.7% growth in the previous month. Import price index for consumer goods grew 0.9% and for durable consumer gods rose 0.6%. The price index for capital goods rose 0.3% and intermediate goods grew 1.3%. The price index of energy climbed 0.3%.
 
Meanwhile, export price index increased 5.8% on an annual basis in June, faster than a 5.6% growth in the previous month. Export prices climbed for the seventh successive month. Export prices for capital goods rose 0.3% and for intermediate goods surged 9.4%. Export prices for consumer goods rose 2.4%. Month-on-month, export prices growth eased to 0.6% from 1.2% in May.
 
Spanish consumer confidence indicator improved in July as household's economic expectations and current situation increased.
 
The consumer confidence index stood at 73.6 in July, up from 65.9 in the previous month, a report by the state-run Official Credit Institute said on Tuesday. A year earlier, the indicator was 76.1.
 
The current situation index rose to 50.4 in July from 42.7 in the previous month. The indicator was 48.5 a year ago. Similarly, households' faith in the future economic situation also improved with index rising to 96.8 from 89.1 in the previous month.
 
However, the consumer confidence index dropped to 69.7 in the second quarter from 74.2 in the previous quarter. During the period, the consumers' perspective on current situation fell to 44.4 from 45.1 in the first quarter, while the expectations index slipped to 95 from 103.2. 
 
PORTUGAL
 
Lisbon's PSI General concluded the week Friday at 2,636.10, declining 1.78% over the course of the session.
 
Telemar Norte Leste SA, Brazil's biggest fixed-line telephone company, has less to gain from an alliance with Portugal Telecom SGPS SA than its European suitor, trading in the companies' bonds shows.
 
Yields on Telemar's 9.5% bonds due in 2019 fell 23 basis points, or 0.23 percentage point, to 5.88% Thursday from 6.11% on July 27, the day before Portugal Telecom agreed to pay as much as $4.8 billion for a stake in Telemar. The yield on 5% bonds due the same year from Portugal's largest telecommunications company fell 32 to 5.08% Thursday. The gap widened 10 in the week through Thursday, the most since the five-day period ended June 28, according to data compiled by Bloomberg.
 
Portugal Telecom will pay a maximum of 8.4 billion reais for about 22% of Telemar, according to a July 28 company filing. As part of the agreement, Rio de Janeiro-based Telemar plans to sell 12 billion reais in stock to existing shareholders and acquire 10% of Portugal Telecom, replacing Madrid- based Telefonica SA as the Portuguese company's biggest investor.
 
Telemar shares tumbled 23% in the two days following the announcement of the deal, the biggest two-day drop in almost four years, on concern issuing more stock will dilute earnings.
 
The transaction offers "limited" benefits to Telemar, according to a report from Barclays Capital on July 30.
 
Portugal's minority Socialist government has struggled on multiple fronts this year as it faced growing fiscal and economic challenges from the spreading Euro zone debt crisis.
 
Prime Minister Jose Socrates has had to break an election promise and raise taxes and now relies on the opposition Social Democrats (PSD) to pass legislation in parliament after a pact with the party to overcome the crisis. The pact has recently become shaky as the PSD has gained sharply in opinion polls.
 
Market contagion has been especially tough on Portugal, hitting the country first because it is seen as another small risky southern European country like Greece, with a high deficit, mounting debt and a loss of competitiveness, and second because of its proximity to troubled bigger neighbour Spain.
 
ITALY
 
Italy's benchmark FTSE MIB Index dropped for a fourth day, losing 218.50, or 1.03%, to 21,084.47 in Milan.
 
A2A declined 2 cents, or 1.7%, to 1.16 Euros, ending a two-day increase. Morgan Stanley downgraded Italy's biggest municipal utility to "equal weight" from "overweight," as second-quarter results "marked the third consecutive weak quarter."
 
Brembo advanced 18.5 cents, or 3.4%, to 5.72 Euros. Banca IMI SpA upgraded the world's largest manufacturer of disk brakes to "buy" from "hold."
 
Davide Campari-Milano, Italy's biggest distiller, lost 5 cents, or 1.2%, to 4.098 Euros as food & beverage stocks were the worst performers in Europe Friday. Parmalat SpA (PLT IM), Italy's biggest dairy-food company, fell 1.8% to 1.83 Euros.
 
Diasorin jumped 1.9 Euros, or 6.2%, to 31.88 Euros, the biggest gain in five months. The supplier of diagnostic tests released "stronger-than-expected second- quarter results at all levels," Cheuvreux said. Diasorin said it's had no contact with US private equity firm KKR & Co. and controlling shareholders don't plan to sell, denying a report in weekly magazine Il Mondo.
 
Fondiaria-SAI rose for the first day in four, gaining 38 cents, or 4.7%, to 8.52 Euros. Cheuvreux upgraded Italy's second-biggest insurer to "outperform" from "underperform." The brokerage said in a note that "the stock is cheap with an improving operating trend."
 
Geox lost 3.4% to 4.27 Euros, paring Thursday's gain. Goldman Sachs Group Inc. cut its price estimate on the shoemaker to 3.9 Euros from 4.8 Euros and reiterated a "sell" rating.
 
Telecom Italia gained 1.6 cents, or 1.6%, to 1.02 Euros, paring a 4.3% drop Thursday.
 
"Telecom Italia's first-half earnings were slightly better than the market expected," Natixis Securities, which has a "buy" rating, said in a note. "In our view, the consensus believes that the guidance, despite it's being confirmed Thursday, will not be achieved in full."
 
Goldman Sachs Group trimmed its price estimate on the ordinary shares to 1.37 Euros from 1.38 Euros, with a "buy" rating unchanged, and on the savings shares to 1.07 Euros from 1.09 Euros, with a "neutral" recommendation. The savings shares rose 1% to 81.9 cents.
 
Tenaris dropped 52 cents, or 3.5%, to 14.51 Euros, extending losses of 5.1% Thursday. UBS AG downgraded the world's biggest maker of seamless steel tubes for oil and gas extraction to "neutral" from "buy," citing "disappointing guidance."
 
Tenaris was cut to "neutral" also at Natixis Securities, while BofA Merrill Lynch Global Research lowered its price estimate for Tenaris's American Depositary Receipts to $52 from $54 and kept a "buy" rating.
 
Italy's center-right government under Prime Minister Silvio Berlusconi survived a no-confidence motion against a junior minister implicated in a corruption scandal on Wednesday, marking a major political victory for the ruling coalition since last week's breakup with a powerful ally.
 
The Lower House of parliament rejected a no-confidence motion in a 299 to 229 vote, with 75 lawmakers abstaining from voting on the measure. The lawmakers who abstained from voting included 33 members from the breakaway bloc led by Chamber Speaker Gianfranco Fini.
 
The decision of the breakaway bloc to abstain from voting virtually decided the fate of the no-confidence measure, which ultimately fell short of the 316 votes needed for an absolute majority in the 630-seat lower house.
 
The no-confidence motion was presented by the opposition lawmakers against against junior justice minister Giacomo Caliendo, who is currently under criminal investigation for corruption. The move came after Caliendo denied any wrongdoing and refused to resign.
 
The vote effectively leaves Berlusconi's government safely in place at least until the parliament re-convenes in September after the holiday break. It was the ruling coalition's first real test after the breakup with the bloc led by Fini
 
Fini had ended his 16-year-long alliance with Berlusconi last week after falling out with the Italian premier over a draft law to limit wiretapping and on issues related to morality and legality in politics, following the drastic increase in number of scandals involving coalition members. He has since set up a group called Future and Freedom for Italy (FLI).
 
Fini wanted Berlusconi to take a harsher stand against politicians implicated in court cases, and insisted that public officials suspected of corruption should resign from their posts. The public rift between the two leaders has caused Berlusconi's popularity to fall to a record low since he came to power in May 2008.
 
Berlusconi and Fini came together in 1994, when their Forza Italia and National Alliance parties became coalition allies. They then jointly founded the People of Freedom (PDL) party, the largest in Italian politics. Italy's current ruling coalition is made up of the PDL and its smaller right-wing ally, the Northern League.
 
Italian service sector activity contracted for the first time since November last year, led by a decline in new work, which was the steepest in eleven months, a survey by Markit Economics said Wednesday.
 
The headline seasonally adjusted Markit/Italian Association of Purchasing Management, or ADACI, business activity index fell marginally to 49.6 in July from 51.5 in June. The expected reading was 51.4. A PMI reading above 50 indicates expansion while one below 50 suggests contraction. Italian service providers reported a solid decline in new business during July, following seven months of expansion. The pace of contraction was the strongest since August last year. Demand for service sector products had deteriorated markedly since June, Markit said.
 
"Of greater concern going forward will be weakening flows of new business, which declined despite another marked reduction in average tariffs, pointing towards weak domestic demand," Andrew Self, an economist at Markit said. "The fall in activity also contrasts markedly with the trends seen in France and Germany, where preliminary data showed accelerating growth."
 
Nevertheless, majority of the firms maintained a positive outlook for activity growth over the coming year, Markit said. Service providers continued to cut staffing levels for the twenty-second month as part of their cost reduction policies. Even so, the pace of job shedding was the weakest in the current sequence of decline and was only fractional.
 
In response to the decline in new orders, backlogs depleted modestly and for the second successive month. Firms sharply cut their charges during the month, eying new contracts. Nonetheless, prices continued to rise.
 
Input costs rose for the twelfth straight month during July, albeit at a moderated pace, mainly due to higher wages and fuel price inflation. Some of the firms also cited unfavorable exchange rates as the reason for inflation. The service sector data sharply contrasted with the business conditions in the Italian manufacturing sector, which improved at the fastest pace since May 2007 in July along with accelerated output growth and higher employment level.
 
The seasonally adjusted Markit/ADACI purchasing managers index for manufacturing edged up to 54.4 in July from 54.3 in the previous month. The Italian economy expanded 0.4% sequentially in the first quarter, following 0.1% contraction in the fourth quarter. 
 
GREECE
 
In Athens, the Athex Composite ended both the session and the week Friday on 1,713.01, off 1.85%.
 
Greek economic sentiment strengthened for the second straight month in July on the back of improved outlook in services and industry, a survey by the Foundation for Economic and Industrial Research, or IOBE, showed Wednesday.
 
The headline economic climate index rose to 66.3 in July from 63.8 in June. The index covers expectations in industry, construction, retail trade and services as well as consumer confidence and is calculated after surveying more than 1,000 firms and 1,500 consumers.
 
Overall business expectations stabilized during the month with the widespread discontent about the course of economic activity remaining strong, the report said. Expectations in industry improved modestly in July as firms expect production to increase in the next twelve months.
 
Business outlook of the service sector also improved slightly, as a negative assessment of the current situation was offset by a less pessimistic view of the short-term demand outlook as well as current demand situations.
 
Meanwhile, there was a considerable deterioration in business climate for the construction and retail trade sectors. Though, there was a small betterment in consumer confidence, the relevant indicator stood close to record low levels posted in the previous two months, the survey pointed out.
 
Households were more pessimistic about their personal financial situation and their saving intentions declined further in July.
 
Business conditions in Greek manufacturing industry remained dull in July, a survey by Markit Economics said Monday. However, there were signs that the rate of deterioration is easing.
 
The headline seasonally adjusted Markit purchasing managers' index climbed to 45.3 in July, the highest reading in six months, from 42.2 in June, pointing to further moderation in the decline in industrial activity.
 
Contractions in output and total new orders slowed sharply, while volumes of outstanding work and input stocks also fell less severely, Markit said. New orders placed with Greek manufacturers continued to fall for the twenty-first month in July due to poor economic conditions and weak demand.
 
Nonetheless, the decline was the mildest since January with a drop in new export orders recording a sharp slowdown. New export orders from abroad fell only slightly on the month, the survey found. The contraction in manufacturing output also slowed during the month, despite remaining considerably strong.
 
"These improvements appear to have been driven principally by a weaker fall in foreign demand," Gemma Wallace, an economist at Markit said. "This suggests that efforts by Greek manufacturers to increase their international competitiveness are starting to take effect, although they have not yet led to a rise in new export business."
 
In July, employment fell further. Job shedding accelerated to a rapid pace that was the most pronounced since March 2009 as employers rationalized workforces due to lower production requirements and to cut costs, Markit said.
 
Input price inflation faced by Greek manufacturers moderated again in July. However, upward pressure on input costs remained marked, due to higher fuel and raw material prices. Purchasing costs have been rising since July 2009.
 
Poor market demand and strong competition prevented the manufacturers from increasing their charges in July. Output prices fell at a robust rate as a result, albeit at a fractionally weaker pace than in June.