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Prospects Daily: Global equities advance… German factory orders up…Russian inflation picks up.

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Financial Markets…Global equities extended their gains, with the benchmark MSCI global stock index nearing its June 2008 highs, as European and Japanese shares rallied. U.S. equities are also expected to open higher after the S&P 500 index set another record high yesterday on the back of financial stocks rally.

Portugal is selling its first 10-year government bonds since 2011 bailout as the country’s borrowing costs are at the lowest since 2010 and growing search for yield boosted demand for higher-yielding securities. The country is planning to issue €3 billion of debt maturing in February 2023 with a yield of 400 basis points over the mid-swap rate.

Net foreign purchase of Indian local stocks rose to $802 million in the week ended May 3, the most since the week ended February 8, as the country benefited from lingering low yields in G3 countries. Foreign funds have purchased a net $12 billion of Indian shares thus far this year.

High-income EconomiesGermany's manufacturing orders increased in March supported by strong demand from the euro area, raising hopes that the Eurozone is slowly emerging from the ongoing slump.   New orders were up 2.2% (m/m sa) in March, the same as in February and were up 1.7% (q/q saar) in Q1 led by a 9.5%  increase in domestic orders compared to a 4% drop in overseas orders.

Australia’s central bank cut its benchmark cash rate to a record low, by 25 basis points to 2.75% on concerns of weak credit demand and an unusually strong Australian dollar which is at 30 year highs. The economy slowed toward the end of last year amid sharp declines in industrial commodity prices, and consumer prices in the first quarter were up 2.5% from a year earlier, within the central bank's 2% to 3% target range for inflation.

French industrial production fell by 0.9% (m/m sa) in March reversing a 0.8% gain February reflecting a drop in refining activities. Overall, the rate of decline moderated from -8.0% (q/q saar) in December to -1.7% in March.

Developing Economies…East Asia and the Pacific: China’s State Council indicated that it will propose plans for capital-account convertibility this year. This comes after a March statement by the State Council that it would roll out measures to promote interest-rate and exchange- rate liberalization this year as well.

Europe and Central Asia: Russia’s inflation accelerated in April to 7.2% (y/y), up from 7.0% (y/y) in the previous month led by pick up in food inflation (8.8% y/y) while core inflation remained unchanged at 0.4 (m/m). Headline inflation, however, remains above the central bank’s target band of 5-6%.

Latin America and the Caribbean: Chile’s index of economic activity was flat in March (m/m sa) after falling 0.2% (m/m sa) in February. The index is monthly gauge which measures more than 90 percent of the components comprising Chile's gross domestic product, which is published quarterly. Growth of economic activity slowed in 2013Q1 to 4.2% (q/q saar), down from growth of 5.9% (q/q saar) in 2012Q4.

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