Losses from the credit crunch could total up to less than half the $170 billion estimated by markets according to the Bank of England's Financial Stability Report on Wednesday evening. Nevertheless, at a press conference, Monetary Policy Committee Member Sir John Gieve said that the market correction was proving to be "protracted and difficult". Gieve also said the most likely path of recovery would be one where confidence would gradually return to the marketplace.

Speaking in an interview with the Scotsman, David Blanchflower, a reputed dovish member of the Bank of England's Monetary Policy Committee, denied being pessimistic on the UK's economic outlook, adding that he was "absolutely hawkish" on inflation. Blachflower went on to explain his view that there was too much emphasis on the short- and medium-term risks to inflation and not enough focus on the downside risks to the economy.

According to NTC Research and the Royal Bank of Scotland, the UK's manufacturing sector continues to tread water, with the purchasing managers' index falling to 51.0 from March's 51.3. Economists had been expecting a reading of 50.8.

Japanese labour cash earnings rose 1.2% year-over-year in March, above expectations for a 1.0% gain. February's 1.3% increase was revised to a rise of 1.5%.

Japanese vehicle sales rose 6.9% in April compared to the previous year's level. The number was sharply above the previous month's 3.3% annual decline.

AiG's performance of Australian manufacturing index rose to a reading of 52.7 from the previous month's upwardly revised score of 52.3.

Australian building approvals fell 5.7% month-over-month in March despite calls for a 1.0% decline, and February's 0.1% gain was revised down to a loss of 0.8%. On an annual basis, approvals declined 0.7%, but February's annual 1.6% loss was revised up to a gain of 0.6%.

The Reserve Bank of Australia's commodity price index jumped to an annual 20.7% increase in April compared to March's upwardly revised 11.1% rise. Prior to revisions, the increase was 9.5% year-over-year.

Speaking in interviews with various televised news agencies, U.S. Treasury Secretary Henry Paulson said he was optimistic about U.S. economic growth in the long term, and refused to commit to a sentiment of weaker GDP next quarter. Nevertheless, he acknowledged that short-term concerns for the U.S. economy remain, adding that we were getting closer to the end of the problems. Paulson also repeated previous comments backing a strong U.S. dollar.

The U.S. dollar is stronger by about one cent against the euro to 1.5523 and about even to the pound sterling and Canadian dollar at 1.9869 and 0.9908. WTI crude oil is trading at $113.18.

AU AiG Performance of Mfg Index April 52.7 vs. Revised: 52.3 Prior: 51.2

JN Labor Cash Earnings (Y/Y) March +1.2% vs. Exp: +1.0% Revised: +1.5%

Prior: +1.3%

AU Building Approvals (M/M) March -5.7% vs. Exp: -1.0% Revised: -0.8% Prior: +0.1%

AU Building Approvals (Y/Y) March -0.7% vs. Revised: +0.6% Prior: -1.6%

JN Vehicle Sales (Y/Y) April +6.9% vs. Prior: -3.3%

AU RBA Commodity Index SDR (Y/Y) April +20.7% vs. Revised: +11.1% Prior: +9.5%

UK PMI Manufacturing April 51.0 vs. Exp: 50.8 Prior: 51.3

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