Greek financial crisis

German Finance Minister Wolfgang Schaeuble said that Berlin refuse to give Greece an actual debt cut when he arrived at a meeting with his counterparts in the 19-country Eurozone.

He said that without an aid program it is not possible to help Greece within the framework of the Eurozone. Berlin is reluctant to consider a debt cut for Greece. The Greece is asking for a debt relief to be near the top of bailout discussions. It doesn't necessarily mean an actual reduction in the amount owed but an extension to the country's repayment schedule.

Schaeuble said actual debt cuts are banned under European rules.

Lithuania just began using the euro currency this 2015 and doesn't want the 19-country single currency club to start losing members now. Lithuanian Finance Minister Rimantas Sadzius said a Greek exit "is not an option for us," as arrived for the meeting of Eurozonefinance ministers in Brussels to discuss a possible new bailout deal for Athens.

Sadzius said he believes common ground can be found. Greece's new finance, Euclid Tsakalotos is set to unveil new proposals to his peers in the Eurozone.

"In politics, there is always room for compromise," said Sadzius. "We believe that the Eurozone should expand rather than contract."

UK markets Lost more than £30 billion, Euro dips to 9-yr low, Brent crude oil drops below $50

The world economy is in chaos as the value of UK firms plunge losing more than £30 billion on Monday as world markets felt the effects of Greece potentially leaving the euro currency.

London’s FTSE 100 index lost 130.64 points closing at 6417.16, wiping out around £33.2 billion from the UK’s leading blue chip firms.

The euro has fallen to a 9-year low since the beginning of 2015, as recessions continue to hit the weakest countries in Europe, which includes France, Portugal and Spain. The euro is now worth around $1.186 US dollars. The collapsing oil prices didn't help as investors put their money in safe-haven sovereign debt. Brent crude drops below the $50 barrier, losing more than a dollar to $49.92 a barrel just before 3. a.m. ET, it has reached the levels last seen in May 2009, although prices went back above $50 later.

U.S. futures CLc1 lost 75 cents to under $47.20 a barrel, their lowest since April 2009, after already completing the drop below $50 earlier in the week.

France Failed to Meet its EU budget deficit target

France announced that they will not make the EU-designated budget deficit target next year, they can only aim for 3% of national output only in 2017.

French finance minister Michel Sapin said on Wednesday the budget deficit would only be reduced to 4.3% of gross domestic product in 2015 after a level of 4.4% this year, the latter also a big overshoot of earlier estimates and the first annual rise in the deficit for four years.

He blamed the slow rate of economic growth and low inflation, saying France demanded that the EU “collectively take into account” an economic situation “unprecedented in recent European history”.

Sapin insisted France was not seeking to change or suspend the rules but wanted the deteriorating outlook for growth and inflation this year and next to be taken into account.

Paris has led calls for a more flexible interpretation of EU budget regulations along with Italy, but German Chancellor Angela Merkel has rejected any bending of the rules and said on Wednesday euro zone countries should stick to their commitments.

Dollar Gains vs Yen in Asia

The US dollar soar against Yen to a 5-year high in trading in Asia Thursday because of a strong Japanese share prices. US dollar climb to 104.85 yen in early trade, its highest since October 2008, before settling at 104.71 yen.

On Wednesday, it was 104.39 Yen. Trading in New York is close for Christmas holiday. The Euro stands at $1.3679 and 143.27 yen against $1.3668 and 142.71 yen on Wednesday in Tokyo.

Strong Japanese stock prices were a major market-moving factor. The benchmark Nikkei index ended at a six-year high of 16,174.44, up 1.03 per cent.

Many stock markets globally have been rising as more signs of a US economic recovery emerge.

In other news, China will aim for 7.5% growth in 2014 as exports recover. Their growth will rely on a steady recovery of China's exports next year, they benefited on the stronger demand from developed economies, the commerce ministry said.

Euro Area Resumes Growth German Investor Confidence went Up

German investor confidence went up in August as the recovery in Europe’s largest economy helped pull the euro area out of its longest-ever recession.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 42 from 36.3 in July. That’s the highest level since March. Economists predicted 39.9, according to the median of 42 estimates in a Bloomberg News survey.

Growth in Germany may have exceeded economists’ forecasts in the second quarter, according to a government estimate, coaxing the 17-nation region out of a six-quarter slump. Paired with accelerating growth in the U.S. and a pickup in Chinese exports and manufacturing, signs of a global economic recovery are increasing.

“Better-than-expected data from China and the U.S. are reflected in investor confidence,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “The fundamentals of the German economy are healthy and that should help other European countries grow. But there’s still a risk that the debt crisis will flare up again.”
Stronger Growth

ZEW’s gauge of the current situation jumped to 18.3 from 10.6 in July, while an indicator of euro-area investor confidence increased to 44 from 32.8. The group surveyed 252 investors and analysts from July 29 to Aug. 12.

“First signs of an end to the recession in important euro-zone countries may have contributed to the indicator’s rise,” ZEW said in a statement. “This is also reflected by the strong increase of economic expectations for the euro zone. Furthermore, the economic optimism is supported by the robust domestic demand in Germany.”

The euro rose after the report and traded at $1.3302 at 11:07 a.m. in Frankfurt.

The German economy probably expanded about 0.75 percent in the second quarter, the Economy Ministry estimates. Economists project growth of 0.6 percent, according to the median of 47 forecasts in a separate survey. The Federal Statistics Office will release the data at 8 a.m. tomorrow.
Rekindling Growth

The country’s benchmark DAX index has risen more than 5 percent since July 4, when European Central Bank President Mario Draghi pledged to keep interest rates low for an extended period to rekindle growth in the euro area. Gross domestic product in the region rose 0.2 percent in the three months through June, economists predict. That report is due at 11 a.m. tomorrow.

While parts of southern Europe remain mired in a slump and almost one in four young people in the euro area are without a job, German industrial production, factory orders and exports all rose in June, and business confidence improved for a third month in July. The data bode well for Chancellor Angela Merkel, who is seeking a third term in Sept. 22 elections.

Kloeckner & Co SE, a German steel trader part-owned by the Knauf family, said on Aug. 7 it expects profit to revive next year on gains in the U.S., an improvement in prices and restructuring efforts after lowering its 2013 earnings outlook.

Henkel AG, the German maker of Loctite glue and Fa soap and deodorant, reported second-quarter profit that beat estimates, helped by revenue growth in its home-care and laundry division in emerging markets.
‘Lackluster’ Sales

At the same time, Adidas AG cut its 2013 revenue forecast last week because of “lackluster” sales of sporting goods in Europe and unfavorable currency impacts after reporting second-quarter profit that trailed analysts’ estimates.

European countries accounted for 69 percent of German exports last year, according to the Federal Statistics Office. About 16 percent of goods went to Asia and 12 percent to the U.S.

The Bundesbank predicts Germany’s economy will grow 0.3 percent this year and 1.5 percent in 2014. That compares with a 0.6 percent contraction in the euro area in 2013 and growth of 1.1 percent next year, according to the latest ECB forecasts.

“The German economy has gained traction and continues to be a stable anchor in Europe,” said Lothar Hessler, an economist at HSBC Trinkaus & Burkhardt AG in Dusseldorf. “Low unemployment is supporting private consumption. The question is when investment activity will pick up again.”

Source: Bloomber.com

Asian shares ease, Easter slows trade (Chikako Mogi)

TOKYO (Reuters) - Asian shares and the euro are down on Monday in choppy trade with exchanges closed in several Asian markets, including Australia and Hong Kong, as well as in Europe for Easter holidays.

Investors will look for market direction from Markit's U.S. final manufacturing PMI for March and the Institute for Supply Management's March manufacturing index due later in the session.

Analysts have said a growth trend in the U.S. is crucial to maintain global risk-positive sentiment. It is the outperformance in U.S. equities on solid U.S. economic reports that has helped drive global shares and other risk asset prices generally higher in the first quarter.

From Asia, surveys showed that stronger domestic demand helped China's factory activity to rebound in March, with new orders up sharply in a sign that the underlying economic recovery is strong enough to weather risks from patchy export performance.

The official manufacturing purchasing managers index (PMI) for March showed China's factory output ran at its fastest in 11 months at a reading of 50.9, below 52.0 forecasts by economists but still signaling economic recovery may be accelerating.

A private HSBC final PMI survey also rose to 51.6, roughly in line with a flash reading of 51.7 and up from February's 50.4.

Oil markets focused on the official PMI missing market projections as raising concerns about easing demand, sending U.S. crude futures down 0.5 percent to $96.78 a barrel and Brent down 0.3 percent to $109.66.

"The data came in below market expectations, which could indicate that oil demand growth may not expand quite as quickly as we would like it to," said Carl Larry, president of Oil Outlooks and Opinion, based in Houston.

"But China's still growing and that continues to be an underlying support factor long-term for the market. Whether they are at 6 percent or 7 percent they are growing."

The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, with South Korean shares falling 0.5 percent and Shanghai easing 0.1 percent. The pan-Asian index ended the first quarter with the smallest gain in three quarters with a 1.4 percent rise, after reaching a 1-1/2-year high in February.

The Australian dollar eased 0.1 percent to $1.0392, showing limited reaction in the absence of Australian investors. China is Australia's largest trading partner and Australian markets tend to move on Chinese economic indicators.

"While the rebound of sub-indices appears broad-based, it is still much lower than the average gain seen in past years," ANZ said in a research note on the Chinese PMI data.

Elsewhere, South Korean exports last month barely grew from a year earlier while inflation unexpectedly eased to a 7-month low on weak domestic demand, data showed on Monday, reinforcing expectations for a central bank rate cut as early as next week.

The HSBC Taiwan Purchasing Managers' Index for March rose, while manufacturing activity in Indonesia and new export orders increased last month, an HSBC Markit survey showed. Indonesia's trade deficit widened by more than double the forecast in February as exports slumped.

In Japan, investors kicked off the country's new fiscal year by taking profits in Japanese stocks, sending the Nikkei stock average down 1.4 percent to a two-week low after it had posted its best quarterly performance in nearly four years.

Expectations for strong monetary stimulus measures to be announced by the Bank of Japan at its meeting on April 3-4 under the new leadership have supported Japanese equities and underpinned the dollar against the yen.

The BOJ's closely-watched tankan quarterly survey showed that business sentiment improved in the first three months of 2013. Rising expectations for Prime Minister Shinzo Abe's aggressive reflationary policies to beat deep-rooted deflation and steer Japan back to growth drove the result.

The dollar was likely to be choppy leading up to the BOJ meeting, with speculators looking to book profits from the rally of the past several months, regardless of the gathering's outcome.

"The cap on dollar/yen for now is removed, with repatriation flows related to Japan's fiscal year-end completed at the end of March, so speculators will be looking to build long dollar/yen positions leading up to the BOJ meeting," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, adding that the euro remained top-heavy.

The dollar fell 0.3 percent to 93.90 yen. The euro dropped 0.2 percent to $1.2789, hovering near a four-month low of $1.2750 touched last week.

The euro was pressured with Italy struggling to break a political stalemate lasting more than a month after elections and fallout from the Cyprus bailout.

Sentiment was also weighed by the Xinhua news agency saying on Saturday that Beijing and Shanghai will implement strict property cooling measures as part of a central government crackdown on the overheated property market.

Spot gold firmed 0.1 percent to $1,600 an ounce, partly supported by tension in the Korean peninsula.

"Normally a strong PMI from China would tend to draw investors towards stocks and not support gold prices, but this time we see a reverse. The North Korea tension is adding to the market uncertainty," said Brian Lan, managing director of GoldSilver Central Pte Ltd.

Global shares slip ahead of central bank moves

The euro maintained it's place near an eight-week high on Wednesday, helped by expectations the European Central Bank will act decisively to tackle the debt crisis and of more monetary easing in the United States.

But global growth worries weighed on equity markets, dragging world shares lower, while oil prices eased after Hurricane Isaac in the Gulf of Mexico looked set to spare local production facilities from significant damage.

US stock index futures pointed to a slightly lower open on Wall Street on Wednesday.

Moves in major risk asset markets are being limited by hopes that Fed Chairman Ben Bernanke will signal an easier U.S. monetary policy in a speech to international central bankers gathering in Jackson Hole, Wyoming, at the end of the week.

There is also rising optimism that the ECB, which will meet on September 6, is close to producing a decisive bond-buying plan to bring down high Spanish and Italian borrowing costs, and ease Europe's three-year-old debt crisis.

But with the risk of disappointment on both fronts high, investors were adopting a cautious approach.

Concerns about the global economic outlook were firmly outweighing any potential positive impact of central bank actions in the equity markets, pulling the FTSEurofirst 300 index down 0.4 percent to 1,083.80 points.

The euro area's blue-chip Euro STOXX 50 index was also down 0.6 percent at 2427.95 points.

A mixed session in Asia, where evidence of slowing activity in China has been weighing on sentiment, left the MSCI world equity index facing a sixth day of losses. It was down 0.1 percent at 323.27 points.

Emerging stocks also hit their lowest levels in nearly four weeks due to the sharp drop in Chinese shares, which are the largest component of the index.

source business-standard com