Money world

TD Economics has downgraded its forecast for global growth in a new report, issued Wednesday. Its economists warned that Canada could slip into recession if the U.S. economy continues to weaken.

Consumer confidence fell to its lowest level in two years, a decline that could have serious implications for spending and retail sales.

The downbeat mood spread even to Ontario Truckers, an industry that typically feels the first twitches of a downturn in the economy.

The Toronto Stock Exchange squeaked into positive territory amid the gloom

The price of gold surpassed $1,800 an ounce Wednesday for the first time as investors pulled their money out of stocks and snapped up precious metals contracts.

Gold is fast becoming a favorite port in a storm of uncertainty. Investors are clinging to what they see as a hedge against volatile stock and currency markets.

December gold contracts backed off their highs, and traded around $1,785 an ounce during midday trading after reaching a record $1,801 an ounce earlier in the day on the New York Mercantile Exchange.

Gold prices have shot past a series of milestones over the past two years on an uninterrupted climb. Gold was trading at about $900 in the summer of 2008, before the financial crisis unfolded that year.

Resulting turmoil in currency and stock markets has burnished gold’s luster.

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Working parents, take note: You could get some summertime tax relief from the IRS.

If you’ve enrolled your kids in summer day camps while you’re at work

Russia’s top sanitary official says the country is ending its blanket ban on vegetable imports from the European Union, starting with the Netherlands and Belgium.

Gennady Onishchenko was quoted by Russian news agencies as saying that he allowed the shipments to begin Tuesday, ending a blanket ban on imports to ensure an E. coli outbreak did not spread east.

He didn’t say when imports of vegetables from other EU nations will resume, but added that Poland, Lithuania, Spain, Denmark and the Czech Republic were to follow free credit report and score.

The EU called the ban disproportionate and the dispute has clouded Russia’s WTO accession talks.

Russia and the EU have reached agreement safety certification, and Onishchenko said EU producers must strictly comply.

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Asian markets dropped Monday amid fears of a spreading European debt crisis after a ratings agency placed Italian banks on a review for a possible downgrade.

Oil prices fell below $91 a barrel as a stronger U.S. dollar made crude more expensive for investors with other currencies. The greenback was higher against the euro and the yen on safe-haven buying.

Japan’s Nikkei 225 fell 0.7 percent to 9,609.64, South Korea’s Kospi lost 1 percent to 2,069.61, and Hong Kong’s Hang Seng slipped 0.7 percent to 22,025.35, amid worries over whether debt-drenched Greece would be able to enact a slew of harsh austerity measures in order to receive a chunk of its multibillion euro bailout.

If those measures fail to win parliamentary approval, the country would be at serious risk of defaulting on its debts, a prospect that could unleash financial shocks globally.

Tey Tze Ming, a trader at Saxo Capital Markets in Singapore, said the European debt crisis _ if it blows up and spreads beyond Greece to a major economy like Spain _ would be felt very keenly by Asian economies that are heavily dependent on exporting to Western Europe.

“In the short term, I think stocks in Asia are going to be in for a bit more pain. I think there’s a lot more downside,” Ming said.

Technology shares followed their U.S. counterparts lower. South Korea’s Hynix Semiconductor, one of the world’s leading computer chip makers, was 4.7 percent down. Japanese chipmaker Elpida Memory slipped 1.7 percent, and Taiwan Semiconductor Manufacturing lost 1.4 percent.

But tumbling oil prices, which translate into lower fuel costs, helped sustain airline shares. Air China Ltd. rose 5.3 percent in Hong Kong. Taiwan’s EVA Airways Corp. was 1 percent higher. Korean Air Lines Co. rose 0.4 percent.

Australia’s ASX/S&P 200 lost 1.1 percent to 4,457 amid a banking sector slip. Commonwealth Bank of Australia, the country’s largest lender, dropped 1.3 percent, while Westpac Banking Corp., which ranks No. 2, lost 0.4 percent.

Benchmarks in Singapore, Indonesia and Taiwan were also lower, while mainland China’s Shanghai Composite Index gained 0.4 percent to 2,757.31.

Meanwhile, Italian banks were down sharply Friday on the Milan stock exchange after ratings agency Moody’s said it was considering downgrading their credit worthiness.

Moody’s Investors Service placed the long-term debt and deposit ratings of 16 Italian banks and two Italian government-related financial institutions on review for a possible downgrade.

On Wall Street, stocks fell Friday after poor earnings reports from two major technology companies suggested that companies invested less in new technology as the economic recovery slowed.

The Dow Jones industrial average fell 1 percent to 11,934.58. The Standard & Poor’s 500 index fell 1.2 percent to 1,268.45. The Nasdaq composite fell 1.3 percent to 2,652.89.

The U.S. economy has cooled since late April. Recent reports on housing, employment, manufacturing and retail sales all have been weak. The debt crisis in Greece and fears that China’s growth is slowing have also pushed markets lower.

In energy trading, benchmark oil for August delivery was down 81 cents to $90.39 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to settle at $91.16 on Friday.

In currencies, the euro weakened $1.4125 from $1.4171 on Friday in New York. The dollar ticked up to 80.75 yen from 80.52 yen.

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The Canadian Auto Workers union says contract talks are moving slowly as it tries to get a deal to avert a strike at midnight Monday of its Air Canada ticket agents.

“There’s really been no change since yesterday,” said CAW president Ken Lewenza in an interview on Monday morning. “I’m very disappointed actually.”

The union made a counter-offer on pensions—one of the main sticking points—to the company and was expecting a response late Sunday night, but had not received anything as of 10:30 a.m. Monday. The union opposes a proposal to move to a defined contribution plan, limited to new hires only, from a defined benefit plan, which has a guaranteed payout.

The CAW has been talking tough, saying its 3,800 members across the country will walk off the job, at midnight Monday if there’s no new agreement.

Lewenza said last week that the CAW would not be considering rotating strikes or pushing back its deadline, arguing that the full threat of a labour disruption forces decisions.

Air Canada has insisted that it is confident it can get a settlement, but has made contingency plans in the event of a walkout, with management staff trained to do check-in and gate duties.

On its website, the airline is urging passengers who are flying in the coming days to familiarize themselves with online check-in and booking tools.

It is also asking travellers to check-in up to 24 hours before a flight, arrive early at the airport, and travel without any checked luggage, if possible.

Many of Air Canada’s employees are frustrated because they were expecting to make gains after making sacrifices to help the airline, which had been on the brink of bankruptcy.

The union wants to see a wage increase to make up for previous cuts and freezes, which, when inflation is factored in, it says has translated into a real drop of 10 per cent over the past decade free business cards.

The union points out that top executives received lucrative compensation packages, including president and CEO Calin Rovinescu, whose total compensation last year was $4.5 million, up from $2.6 million in 2009.

Pensions are an especially sensitive issue for the unionized workers, who previously made concessions to give the airline some breathing room on making payments to close the gap on past deficits. The company has been making regular contributions all along.

Air Canada has about $13 billion in pension commitments, with 26,000 active employees and 29,000 retirees. As of January, based on preliminary estimates, the pension plan is underfunded by about $2.1 billion.

The airline says the shortfall is too high, and it is not sustainable, putting “at risk both the viability of the company and the pensions of all employees.”

Air Canada is keen to avoid labour disruptions as it heads into the peak summer season, when it makes most of its money. Its other unions are in different stages of negotiations, but workers clearly aren’t happy.

The pilots rejected a tentative deal that included the proposed switch to a defined contribution pension system, for new hires only. They also balked at a plan for the creation of a discount airline to fly to vacation destinations in Europe and down south.

The flight attendants, which are represented by the Canadian Union of Public Employees, have filed for conciliation, and could be in a legal strike position in late August.

Baggage handlers and mechanics, represented by the International Association of Machinists and Aerospace Workers, are also in talks.

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OTTAWA

NEW YORK

China, the biggest foreign owner of U.S. Treasuries, trimmed its holdings for a fifth straight month in March as American lawmakers grappled with a government debt set to reach its legal limit. [bn:WBTKR=HOLDCH:IND]

The Asian nation owns $1.145 trillion [] of the debt, down $9 billion, or less than 1 percent, from the previous month, according to U.S. government data released yesterday. The holdings reached a record $1.175 trillion in October last year.

China’s concern that U.S. government securities may become more risky because of the nation’s deficits and debt burden prompted its call this month for President Barack Obama’s administration to lay “a solid fiscal foundation” for long- term growth. Former Chinese central bank adviser Yu Yongding said last month that China should stop buying Treasuries because of the risk that the U.S. may eventually default.

China may “gradually cut its U.S. Treasuries as it seeks to diversify its foreign-exchange holdings,” said Yao Wei, a Hong Kong-based economist with Societe Generale SA. She said “China is probably routing trades through other places such as London,” meaning U.S. data may not give a full picture.

The United Kingdom increased its holdings by $29.7 billion to $325.2 billion in March.

In the U.S., Republicans and Democrats have been arguing over when and how to raise a $14.3 trillion debt limit. Obama has said that a failure to act may disrupt the global financial system and plunge the nation into another recession.

Debt Ceiling

U.S. Treasury Secretary Timothy F. Geithner said yesterday that he has used accounting measures to extend the deadline until Aug. 2.

“China has kept on lending money to the U.S. to keep its export machine going, and to prevent losses” on its holdings of Treasuries, Yu said last month. “Perhaps it is too late to do anything about the existing stock without causing a serious political and financial backlash. But at least China should stop continuing building up its holdings.”

Officials including central bank adviser Li Daokui have urged diversification of the nation’s foreign exchange reserves away from U.S. debt.

Japan, the second-largest holder of Treasuries, increased its holdings by $17.6 billion to $907.9 billion in March from $890.3 billion in February. Hong Kong, counted separately from China, reduced its holdings by $2.5 billion to $122.1 billion from $124.6 billion.

–Zheng Lifei. Editors: Paul Panckhurst, Ken McCallum.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at +86-10-6649-7560 or lzheng32@bloomberg.net

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NEW YORK