EU: European banks need to raise EUR106bn
European Union leaders have set a deadline of 30 June 2012, for banks to have core capital reserves of 9%after writing down their holdings of sovereign debt. This translates into some capital raising of EUR106bn by Europe's biggest banks to comply with requirements agreed by European leaders in the Brussels summit meeting. To note, Greek banks need to raise EUR30bn. (MarketWatch, Bloomberg)
EU: To leverage bailout fund to EUR1trn
Euro-zone leaders plan to leverage the region's EUR440bn bailout fund to give it EUR1trn in firepower according to sources. The fund has between EUR250bn to EUR275bn still available after bailouts for Greece, Ireland and Portugal. The plan is to leverage the fund by around four times through a special investment vehicle and a debt-insurance plan. (Reuters)
EU: No deal on 'any element' of Greek writedowns
There is no agreement between euro-zone governments and international banks on the size of losses banks and other private bond holders should take on Greek government debt, Institute of International Finance MD Charles Dallara said in a statement. European governments are seeking writedowns of 50% or more on Greek debt. A July agreement had envisioned a 21% voluntary writedown in the value of Greek debt held by private bondholders. (MarketWatch)
EU: Sarkozy plans to tap China for Europe help
French President Nicolas Sarkozy plans to call Chinese leader Hu Jintao tomorrow to discuss China contributing to the European Financial Stability Facility (EFSF) fund, said a person familiar with the matter. Sarkozy's plea to his Chinese counterpart would come the day before a planned visit to Beijing by Klaus Regling, CEO of the EFSF, to court investors. (Sydney Morning Herald)
Italy: Pledges asset sales, later retirement to reduce debt
Italy’s Prime Minister Silvio Berlusconi vowed to raise EUR5bn annually from asset sales, increase the retirement age and relax labor laws to convince European leaders Italy can reach its budget goals. However, the proposals fell short of the comprehensive plan European leaders had sought, whereby a blueprint to boost growth and tackle the euro-region’s second largest debt was expected to be delivered to comply with the EU requests. (Bloomberg)
US: Durable goods orders help sustain expansion
Orders for US durable goods other than transportation gear rose in Sept by the most in 6 months, indicating manufacturing will help sustain an economy hobbled by 9.1% unemployment. Demand for goods meant to last at least 3 years, excluding airplanes and automobiles, climbed 1.7%. (Bloomberg)
US: Purchases of new homes increase more than forecast
Purchases of new US houses rose more than forecast in Sept as discounted prices lured buyers in some parts of the country. Sales climbed 5.7% to a 313,000 annual pace. (Bloomberg)
US: Stocks end higher on reports of help for Europe
Stock indexes finished higher on Wednesday following reports that China will come to the aid of Europe by investing in a financial rescue fund. Agence France-Presse reported that China has agreed to invest in Europe's financial rescue fund, which will be used to support struggling countries and banks in the EU. The Dow Jones industrial average jumped more than 100 points after the report came out in the early afternoon. Stocks had been mixed for much of the day as investors weighed stronger earnings from Boeing and Corning with uncertainty about the outcome of a key meeting among European leaders. (Bloomberg)
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