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Morning briefing: Russia drought, China flooding cause jump in food prices

*Russia's worst drought in at least half a century and China's worst flooding in more than a decade are boosting some food prices. Russia's national weather center said the drought threatens sowing plans for winter grains. Wheat jumped to a 22-month high in trading in Chicago Monday, following a 38 percent jump in July that was the biggest since 1973. U.S. farmers may benefit from the higher prices.

Analysts said flooding in China may cut production of rice, cotton and pork in the world's largest producer and may hamper government efforts to keep inflation under control.

*Britain's financial services regulator fined the Royal Bank of Scotland $8.9 million for failing to properly screen customers and transactions according to rules meant to prevent banks from lending to entities on government ban lists.

The Financial Services Authority said Tuesday that RBS's actions resulted in an "unacceptable risk that RBS could have facilitated transactions involving sanctions targets, including terrorist financing."

*European producer-price inflation slowed unexpectedly in June. The cost of imported goods rose but was offset by a stronger euro.

*China expanded its efforts to promote the yuan as an alternative to the dollar and euro Tuesday as the central bank announced it would encourage yuan-denominated gold derivatives trading.

By Ariana Eunjung Cha  |  August 3, 2010; 6:42 AM ET
Categories:  *Morning briefing  
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