ECB announces combined new measures to fight downturns

FRANKFURT, May 7 (Xinhua) -- The European Central Bank (ECB) on Thursday renewed its efforts to fight against economic downturns, with combined measures including cutting its key interest rate to a new low and buying up bonds, surprising most market players.

RATE CUT

The ECB cut its key interest rate by 25 basis points to a record-low 1 percent on Thursday.

ECB President Jean-Claude Trichet told reporters after the ratecut this was not necessarily the lowest point of the cycle, which has slashed the main refinancing rate by 325 basis points since October.

The ECB said the rate cut is due to the fact that the inflation threat to the eurozone continue easing, while the recession deepens.

According to the International Monetary Fund, the 16-nation economy will shrink 4.2 percent this year, more than the projected2.8 percent contraction in the United States and 4.1 percent in the United Kingdom.

Inflation was 0.6 percent in April. The ECB, which aims to keep the rate just below 2 percent, said the figure may drop below zero in 2009.

Gold edges lower as unexpected job data ease economic worries

CHICAGO, May 8 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange ended slightly lower on Friday after gaining for 4 straight sessions this week, as the economy concerns were further mollified by better-than-expected job data. Silver and platinum fell, too.

Gold price for June delivery dropped 60 cents, or 0.5 percent, to settle at 914.90 U.S. dollars an ounce.

The Labor Department released on Friday that nonfarm payrolls fell 539,000 in April, the smallest decline since last October and well below economists' expectations of 610,000. However, the country's unemployment rate rose by 0.4 percent to 8.9 percent, the highest level since 1983.

The slowing pace of layoffs for April reflected an easing in the massive job destruction during the previous five months despite the higher jobless rate, which is considered to be another sign the economy is bottoming out and recovering gradually, limiting gold's appeal as an asset to hedge the recession risk.

However, worries over inflation helped keep the precious metal loss limited especially after the European Central Bank announced on Thursday to cut its interest rate by 0.25 points to a record low level of 1 percent and the Bank of England also plans to step up efforts to increase the money supply to shore up the economy.

A much weaker dollar was another supportive factor to gold. By the end of gold floor trading time, the rate against euro plummeted more than 2 cents to 1.3594 dollars, the lowest level since March 26.

July silver finished at 13.955 dollars per ounce, down 7.5 cents. July platinum lost 10.20 dollars to 1,147.10 dollars an ounce.

Yuan sets at 6.8232 against USD

China's central bank set the mid point of the yuan's exchange rate against the US dollar at 6.8232 on Wednesday. That's a rise from the rate of 6.8201 a day earlier.

It has appreciated 18.86 percent since it stopped its peg with the US dollar in July 2005.

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