Tuesday, April 3, 2012

20120403 1014 Global Market Related News.

Japanese Stock Futures Gain on U.S. Confidence, Spending (Source: Bloomberg)
Japanese stocks declined as the yen’s gain to its highest level in three weeks against the dollar overshadowed stronger-than-forecast growth in U.S. manufacturing. Honda Motor Co. (7267), a carmaker that gets almost 85 percent of its sales abroad, fell 0.8 percent. Olympus Corp. (7733) sank 2.1 percent after Kyodo News reported the company will pare its lineup of digital cameras. Mitsui Chemicals Inc. (4183) gained 1.2 percent after Jefferies Group Inc. raised its rating to “buy.” “Investors may avoid buying blue chips such as carmakers and other exporters until they get more visibility on the direction of the currency’s moves,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Investors aren’t in a rush to buy” before a U.S. jobs report to be released at the end of the week.
The Nikkei 225 Stock Average (NKY) fell 0.6 percent to 10,051.33 as of 9:47 a.m. in Tokyo, with volume about 30 percent lower than the 30-day average. The broader Topix (TPX) Index slid 0.6 percent to 850.86, with about 2.5 times as many shares declining as advancing.

Most Asia Stocks Fall as Yen Drags Japan Before H.K. Open (Source: Bloomberg)
Most Asian stocks fell as the yen at its highest in almost a month versus the U.S. dollar tempered the outlook for Japan’s exporters after a better-than-expected U.S. manufacturing report. Honda Motor Co. (7267) and Toyota Motor Corp. were among the biggest drags on the MSCI Asia Pacific Index as the yen advanced, damping their earnings outlook. Metcash Ltd. , an Australian grocery distributor, dropped 3.5 percent after announcing store closures and job cuts. Billabong International Ltd., a surfwear maker that gets about 50 percent of revenue from the Americas, advanced 1.1 percent in Sydney.
The MSCI Asia Pacific Index rose 0.19 point, or 0.2 percent, to 127.35 as of 9:37 a.m. in Tokyo, with more than four stocks falling for every three that climbed. The measure gained 0.4 percent yesterday, extending its best quarterly rally since the third quarter of 2010. Japan’s Nikkei 225 Stock Average dropped 0.5 percent. Korea’s Kospi index advanced 0.6 percent, as Hyundai Motor Co. and Samsung Electronics Co. increased. Australia’s S&P/ASX 200 Index added 0.3 percent in Sydney.

S&P 500 Beating Gold Most Since 1999 on Positive Earnings (Source: Bloomberg)
The best first-quarter gain for the Standard & Poor’s 500 Index since 1998 sent U.S. stocks above gold by the most in more than a decade, a sign of growing investor confidence in corporate profits as analysts raise earnings estimates for the first time this year. The S&P 500 climbed 12 percent, 5.3 percentage points more than gold for the widest gap to start a year since 1999, according to data compiled by Bloomberg. The S&P GSCI Total Return Index (SPGSCITR) of 24 commodities gained 5.9 percent over the three months, while Treasuries slipped 1.3 percent, trailing equities by the most since 2009. Corporate bonds increased 2.4 percent and the dollar fell 1.6 percent.
Stocks are diverging from defensive investments such as gold as appetite for risk increases. While bulls see it as a sign profits and the economy are gaining traction, bears point to Federal Reserve Chairman Ben S. Bernanke’s warnings that more stimulus may be needed as evidence that the rally has gone too far. To money manager Laszlo Birinyi, slower gains in precious metals signal pessimism is starting to fade. “The problem with gold now is that people are starting to accept the economy recovery,” Birinyi, president of Westport, Connecticut-based Birinyi Associates Inc., said in a March 29 phone interview. Even as confidence builds, “people are still too focused on the concerns and the fact that this looks similar to last year, where everyone said sell in May and go away,” he said. “That’s exactly the kind of thing we look for.”

European Stocks Gain as U.S., China Manufacturing Expand (Source: Bloomberg)
European stocks climbed the most in almost three weeks, erasing earlier losses, as reports showed manufacturing expanded more than forecast in the U.S. and China. Oriflame Cosmetics SA gained 2.6 percent after Coty Inc. offered to buy Avon Products Inc. for $10 billion. Cookson Group Plc (CKSN) jumped 6 percent after the Sunday Times said the company may spin off a unit. Novo Nordisk A/S (NOVOB) led a gauge of health-care companies to the largest increase since November, rallying 5.6 percent in Copenhagen. The benchmark Stoxx Europe 600 Index (SXXP) advanced 1.5 percent to 267.16 at the close, the biggest gain since March 13. The measure erased losses in the final two hours of trading, after earlier dropping as much as 0.4 percent. The gauge climbed 7.7 percent in the first quarter, its best start to a year since 2006, boosted by the European Central Bank’s 1 trillion euros ($1.3 trillion) in loans to the region’s financial firms.
“Equity markets ended the first quarter well,” said Simon Denham, managing director of Capital Spreads in London. “That’s enough to make even the most skeptical of bulls mildly optimistic.” National benchmark indexes advanced in 12 out of 18 western-European markets. France’s CAC 40 Index climbed 1.1 percent, the U.K.’s FTSE 100 Index rose 1.9 percent while Germany’s DAX Index rallied 1.6 percent.

Dow Rises to Highest Level Since 2007 on Manufacturing (Source: Bloomberg)
U.S. stocks rose, sending the Dow Jones Industrial Average to its highest level since December 2007, on stronger-than-forecast growth in manufacturing. All 10 groups in the Standard & Poor’s 500 Index advanced. Freeport-McMoRan Copper & Gold Inc. (FCX) and Alpha Natural Resources Inc. (ANR) added more than 1.7 percent, pacing gains among commodity shares. Financial companies rose as Bank of America Corp. (BAC) and Morgan Stanley (MS) climbed at least 0.9 percent. Avon Products Inc. (AVP) jumped 17 percent after Coty Inc. sought to acquire the door-to- door cosmetics seller. The S&P 500 rose 0.8 percent to 1,419.04 at 4 p.m. New York time. The index on March 30 completed its biggest first-quarter rally since 1998. The Dow gained 52.45 points, or 0.4 percent, to 13,264.49 today. About 6.6 billion shares changed hands on U.S. exchanges, 3.6 percent below the three-month average.
“We have solid gains that are likely to be sustained, maybe with some slight pullbacks over coming months,” Eric Teal, Raleigh, North Carolina-based chief investment officer at First Citizens Bancshares Inc., which oversees $4.5 billion, said in a telephone interview. “The manufacturing data continue to show signs of improvement. It supports our modest pro- cyclical position.”

Emerging Stocks Extend Quarterly Rise on Manufacturing (Source: Bloomberg)
Emerging-market stocks rose, extending their first-quarter gain, after gauges of U.S. and Chinese manufacturing advanced, showing expansion in the world’s largest economies. The MSCI Emerging Markets Index (MXEF) added 0.6 percent to 1,047.72 at the close in New York, led by consumer discretionary companies. Apparel retailer Cia. Hering (HGTX3) rose the most in a week in Brazil, helping the Bovespa index end a four-day retreat. China Railway Construction Corp. (1186) rallied 8.3 percent in Hong Kong after better-than-expected profits. Industrias Penoles SAB (PE&OLES*), Mexico’s largest silver producer, pushed the country’s IPC index to a record high. A Purchasing Managers’ Index (CPMINDX) compiled by China’s logistics federation and the National Bureau of Statistics rose to 53.1 in March from 51 in February. The Institute for Supply Management’s factory index climbed to a 53.4 last month in the U.S., exceeding the median forecast in a Bloomberg survey. Readings above 50 signal expansion.
“If you have strength in a massive developed economy, then emerging markets follow that,” Michael Gayed, chief investment strategist at Pension Partners LLC, said by phone from New York. “The market probably is overestimating the probability that you will have that hard landing, that you will have some kind of collapse in China’s economy.” The MSCI Emerging Markets Index rose 14 percent in the first quarter, the best start to a year since 1992. It outperformed the MSCI World index of developed-market shares for the first time since the third quarter of 2010. The developing- nation benchmark trades for 10.8 times estimated earnings, compared with a 13.2 ratio for developed-country stocks.

Dollar Remains Lower Before U.S. Factory Orders (Source: Bloomberg)
The dollar declined against most of its major peers as signs of recovery in the U.S. economy sapped demand for the relative safety of the world’s reserve currency. The greenback slid versus the New Zealand dollar before a government report today forecast to show U.S. factory orders rebounded in February, extending a drop from yesterday when an index showed manufacturing growth accelerated in March. Australia’s currency maintained a gain before the central bank meets today in Melbourne. The yen gained amid speculation traders pared bets that the currency will weaken. Strong U.S. data are “certainly helping global growth in terms of stability in economic outlook,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The U.S. dollar tends to generally underperform in that environment.”
The dollar weakened 0.4 percent to 81.78 yen as of 9:39 a.m. in Tokyo. The greenback was at $1.3334 per euro from $1.3321. The U.S. currency lost 0.1 percent to 82.44 cents per New Zealand dollar after dropping 0.6 percent yesterday. The yen advanced 0.3 percent to 109.04 per euro. Orders (TMNOCHNG) to U.S. factories probably rose 1.5 percent in February after a 1 percent drop in the previous month, according to the median estimate of economists in a Bloomberg News survey. The Commerce Department releases the figures today.

FOREX-Yen eases, Aussie boosted as risk appetite improves
LONDON, April 2 (Reuters) - The yen eased and riskier currencies like the Australian dollar rose after surprisingly strong Chinese factory activity data eased fears about a hard landing by the world's second-biggest economy.    
"There's a brighter footing for riskier currencies but I would take the China data with a note of caution as small and medium-sized companied are underperforming and in the bigger picture there are still signs of a moderate slowdown in China," said Lee Hardman, currency strategist at BTM-UFJ.

Japan Monetary Base Slides for the First Time Since August 2008 (Source: Bloomberg)
The Bank of Japan (8301)’s liquidity supply dropped in March for the first time in more than three years, fueling politicians' complaints that the central bank should be doing more to end deflation. The monetary base fell 0.2 percent in March after it climbed 11.3 percent from a year earlier in the previous month, a Bank of Japan report showed today. The average amount outstanding rose to 112.46 trillion yen from 112.44 trillion yen in February. The figures may give lawmakers more ammunition to pressure the BOJ to add more stimulus in February after Governor Masaaki Shirakawa and the policy board said they would pursue “powerful easing” until 1 percent inflation is in sight. The yen’s fall since touching a World-War II high in October wasn’t enough to boost confidence among companies, a central bank survey showed yesterday while tighter money supply could strengthen the currency again, said economist Yuji Shimanaka.
“A shrinking monetary base is equivalent to monetary tightening,” said Shimanaka, chief economist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. The monetary base is the currency supplied by the Bank of Japan and its total current account balance as well as banks notes and coins in circulation. It surged 16.9 percent in March 2011 and peaked the following month after the BOJ poured a record amount of cash into the financial system to stabilize the economy after the record earthquake and tsunami.

Yen Climbs Against Dollar, Euro in Early Asia Trading (Source: Bloomberg)
The yen gained against the dollar and euro in early Asia trading. Japan’s currency reached 81.56 per dollar, the strongest since March 9, before trading at 81.59 at 8:59 a.m. in Tokyo, 0.6 percent stronger than yesterday’s close in New York. The yen added 0.5 percent to 108.83 against the euro.

Volatility Lowest Since ’07 in Stocks, Bonds, Currencies (Source: Bloomberg)
Markets for equities, bonds and currencies are the calmest they’ve been since 2007, and that’s making some investors nervous. Options that protect against Standard & Poor’s 500 Index losses plunged 64 percent in the last two quarters, the most ever, data compiled by Bloomberg show. Interest-rate volatility is near a five-year low, while demand for hedges against extreme moves in the dollar is close to the weakest since 2008. Bank of America Corp.’s Market Risk cross-asset volatility index reached a level not seen since November 2007. Becalmed markets have fooled investors before. The Chicago Board Options Exchange Volatility Index fell to a 13-year low of 9.89 in January 2007 before the financial crisis of 2008 wiped $37 trillion from share prices worldwide. As the gauge of options prices slipped within 5 points of that level last week following a 28 percent S&P 500 rally, demand has risen fivefold for exchange-traded products whose value increases should volatility rebound.
“Nobody is scared right now, but the fear will come back,” Sean Heron, who manages options strategies at Glenmede Trust Co., said in a March 30 phone interview. The Philadelphia- based firm oversees about $20 billion. “All bets are off as soon as we get beyond the next three months. Europe could rear its ugly head again and it’s an election year in the U.S.”

Treasuries Drop for Second Day After China Manufacturing (Source: Bloomberg)
Treasuries snapped a gain from yesterday before a government report economists say will show orders for goods from U.S. factories rose by the most in three months. The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, was 2.38 percentage points. The average over the past decade is 2.14 percentage points. An improving job market and rising stock prices are lifting U.S. consumer confidence and spending. “Yields are too low,” said Kei Katayama, who invests in U.S. bonds at Tokyo-based Daiwa SB Investments Ltd., which oversees the equivalent of $60.7 billion including Asia’s second-largest mutual fund. “Equities will stay strong. There’s a fixed-income bubble. The 10-year yield rose one basis point to 2.19 percent as of 9:28 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2022 slid 2/32, or 63 cents per $1,000 face amount, to 98 10/32.
The yield fell three basis points, or 0.03 percentage point, yesterday. Orders to U.S. factories increased 1.5 percent in February after a 1 percent decline in January, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department reports the figure today.

Manufacturing in U.S. Grew at Faster Pace in March: Economy (Source: Bloomberg)
Manufacturing in the U.S. expanded at a faster pace in March, driven by gains in employment and production that signal the world’s biggest economy is underpinning global growth. The Institute for Supply Management’s factory index climbed to 53.4 last month from 52.4 in February, the Tempe, Arizona- based group’s report showed today. Readings greater than 50 signal growth. The median forecast in a Bloomberg News survey called for a gain to 53. Another report showed spending on construction projects unexpectedly dropped in February. Pent-up demand for autos and sustained gains in business investment on new equipment may continue to bolster American manufacturers like Deere & Co. (DE) that account for about 12 percent of the economy. The acceleration comes as manufacturing in Europe shrank for an eighth consecutive month, showing a slowdown in sales overseas remains a risk.
“We are seeing a broadening in the improvement across the economy,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York, who projected the index would climb to 53.8. “I’m encouraged by the backlog of orders which remains quite supportive of stronger momentum.” Stocks rose, sending the Dow Jones Industrial Average to its highest level since December 2007, on the improvement in manufacturing. All 10 groups in the Standard & Poor’s 500 (SPX) Index advanced, with the gauge climbing 0.8 percent to 1,419.04 at the close in New York. The yield on the benchmark 10-year Treasury note fell to 2.18 percent from 2.21 percent on March 30.

U.S. Manufacturing, Household Spending Probably Rose (Source: Bloomberg)
Manufacturing probably picked up in the U.S. in March, showing it is weathering a slowdown in global growth, economists said before a report today. The Institute for Supply Management’s factory index climbed to 53 from 52.4 in February, according to a median estimate of 55 economists surveyed by Bloomberg News. Readings greater than 50 signal growth. Construction spending rose in February, other data may show. “Manufacturers are benefiting from a variety of positive catalysts, including the need to replace a fleet of motor vehicles,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “And we just haven’t got back to the previous peak in inventory that should benefit the sector and the national economy for some time.”
Increased auto sales, sustained corporate purchases of equipment and inventory rebuilding are underpinning the industry that led the U.S. out of the recession more than two years ago. At the same time, less demand from overseas customers remains a risk for manufacturers, which account for about 12 percent of the economy. The Tempe, Arizona-based ISM’s manufacturing report is due at 10 a.m. New York time. Estimates ranged from 51.7 to 54.5. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

Stocks, Commodities Gain on U.S. Manufacturing Growth (Source: Bloomberg)
U.S. stocks gained, with the Standard & Poor’s 500 Index returning to an almost four-year high, and commodities reversed early losses following a report showing stronger-than-forecast growth in American manufacturing. Oil rallied the most in six weeks. The S&P 500 advanced 0.8 percent to close at 1,419.04 at 4 p.m. in New York, adding to its 12 percent first-quarter rally. The Dow Jones Industrial Average increased 52.45 points to 13,264.49, the highest since December 2007. The S&P GSCI (SPGSCI) Index rose 1.7 percent as heating oil, gasoline and copper led gains in 19 of 24 commodities. Ten-year Treasury yields lost two basis points to 2.19 percent after decreasing as much as five points.
Stocks and commodities recovered from earlier losses after the Institute for Supply Management’s manufacturing index increased to 53.4 last month and a gauge of factory employment climbed to the highest level since June. The data helped assuage concern about the global economy after earlier reports showed European unemployment rose to a 14-year high in February and manufacturing contracted for an eighth month in March. “Here in the United States, things have stabilized,” Barry James, who helps oversee $3.3 billion as president of James Investment Research in Xenia, Ohio, said in a telephone interview. “The manufacturing side has been the strength of our economy and the exporting has been huge -- that’s what has sustained us the past several years.”

Malaysia Reports Investment Exceeding Target as Election Nears (Source: Bloomberg)
Private investment in Malaysia exceeded the government’s target last year as companies including Carrefour SA and General Electric Co. pledged to expand in Southeast Asia’s third-biggest economy. Investment rose to 94 billion ringgit ($31 billion), surpassing the government’s 83 billion-ringgit goal by 13 percent, Prime Minister Najib Razak announced in a live televised address to the nation late yesterday ahead of elections due by early next year. The result is a sign that the nation is making progress on its economic and government transformation programs, he said. “We have full confidence in the wisdom to choose and make the right decision,” said Najib. “They can tell the difference between real and fake diamonds. We believe that the people will chose and government with a proven track record.”
Najib, who became leader when Abdullah Ahmad Badawi stepped down in 2009, spent the past three years trying to revive flagging support for the ruling National Front coalition by boosting investment and giving cash handouts to low-income families. The government is considering an election in May or June, months before the early 2013 deadline, according to four officials who spoke on condition of anonymity last month. Malaysia’s benchmark FTSE Bursa Malaysia KLCI Index closed at a record high on March 30. Najib, who said in December preparations for an election had begun, told the Wall Street Journal in January that he would call a vote once he’s shown the government’s economic and political revamp efforts are working.

China Manufacturing Gain Masks Exporters’ Woes (Source: Bloomberg)
A stronger reading for a Chinese manufacturing gauge failed to end predictions for policy loosening as analysts described the gain as seasonal and a separate survey showed exporters struggling. A Purchasing Managers’ Index (CPMINDX) rose to a one-year high of 53.1 in March, China’s logistics federation and the National Bureau of Statistics said yesterday. The gauge has a pattern of rising each March. In contrast, a PMI from HSBC Holdings Plc and Markit Economics showed manufacturing contracting and export orders falling. Premier Wen Jiabao has pledged to “fine-tune” economic policies as needed as weakness in export demand and a cooling housing market restrain an economy that probably grew at the slowest pace in almost three years in the first quarter. Analysts in a Bloomberg News survey last week unanimously said that banks’ reserve requirements will fall this year, while nine of 20 predicted lower benchmark borrowing costs.
“Policy easing is still needed to avoid a hard landing,” said Shen Jianguang, a Hong Kong-based economist for Mizuho Securities Asia Ltd., who previously worked for the International Monetary Fund and European Central Bank. Fiscal spending will be “the driving force” and more cuts in bank reserve requirements are needed, he said.

Passport’s Burbank Sees U.S. Recession as China Slows (Source: Bloomberg)
John Burbank, founder of $3.8 billion hedge fund Passport Capital LLC, said he expects a U.S. economic recession this year or in early 2013, according to a letter to investors. Passport is “very bearish” and anticipates “a major retrenchment in risk assets,” Burbank said in the March 27 letter, a copy of which was obtained by Bloomberg News. The San Francisco-based firm increased its short positions, or bets that security prices will fall, added to gold holdings and bought Brent oil starting in the second half of last year, he said. “We see a recession in 2012 or early 2013 for the U.S. which will be difficult to avoid as Europe contracts and China moderates to 7 percent to 8 percent targeted growth,” Burbank said in the letter. “The equity market is confused about true economic growth in the developed world -- we believe it will be much lower than forecast.”
Passport last month fired 14 employees following losses in 2011. The fund slumped 18 percent last year, compared with an average loss of 5.8 percent for all hedge funds, according to data compiled by Bloomberg. Passport, which has gained 3.7 percent this year through February, expected redemptions of $560 million or less on March 31, Burbank said in the letter. The firm has reduced its illiquid investments and commodities equities, while increasing its holdings of Saudi Arabian stocks and mortgage-backed securities, according to the letter.

Israel’s Fischer Says China Can Maintain Growth Momentum (Source: Bloomberg)
Bank of Israel Governor Stanley Fischer said the Chinese government has tools including monetary policy to protect growth should the pace of economic expansion be threatened. “Every time they’ve been faced with a growth challenge, they’ve responded very quickly and gone back to growth very rapidly,” Fischer said in a Bloomberg Television interview yesterday at the Boao Forum for Asia on the tropical island of Hainan in southern China. “They can’t keep growing at anything like these rates forever, but forever looks a little while off at the moment.” Premier Wen Jiabao plans to “fine-tune” policies as needed, as weakness in exports and a cooling housing market restrain an economy that probably grew at the slowest pace in almost three years in the first quarter. The size of the nation’s gross domestic product means that shaving 1 percentage point off growth would cost the world economy $50 billion, Fischer said.
A so-called hard landing of Chinese growth below 6 percent “would certainly put a dent in the global economy,” said Fischer, 68. “There are scenarios where you can see that happening.” Wen on March 5 set the annual growth target at 7.5 percent, the first time below 8 percent since 2004. Fischer said he’s been told that, based on previous years when the target was exceeded, this year’s goal means the actual expansion may be 8.5 percent or 9 percent.

Japan Must Overhaul Tax to Avoid Bond Rout, Bank Lobby Says (Source: Bloomberg)
Japan must quickly overhaul the tax system to prevent government borrowing costs from spiraling in the next decade, the new head of the nation’s bank lobby said. “The risk of a tumble in government bond prices would increase if taxation and social security reform are left unsolved for years,” said Yasuhiro Sato, whose tenure as chairman of the Japanese Bankers Association began yesterday. “The country’s financial assets are dwindling with the aging population dipping into savings.” Japanese banks hold a record amount of the nation’s bonds, prompting central bank Governor Masaaki Shirakawa to warn in February that lenders risk incurring trillions of yen in losses if yields rise. Prime Minister Yoshihiko Noda faces opposition to his plan to double the sales tax by 2015 to pay for swelling welfare costs and contain the world’s biggest public debt.
“Any delays to the reform that’s being debated may raise concern that bonds may be unable to be absorbed domestically in the long run, say, in 2022,” Sato, president of Mizuho Financial Group Inc. (8411), said in an interview last month. “But there are no signs of a JGB price plunge in the near term.” Japan’s benchmark bond yields have remained below 1.1 percent this year. The yield on 10-year notes rose 2.5 basis points to 1.01 percent at 1:52 p.m. in Tokyo. The cost to insure Japan’s debt against nonpayment has been falling, with CMA data showing five-year credit default swaps declined to 99.8 basis points on March 30 from a record 154.8 on Oct. 4, indicating perceptions of creditworthiness are improving.

Italy’s Jobless Rate Increases to Highest Since 2001 (Source: Bloomberg)
April 2 (Bloomberg) --Italy’s jobless rate rose to the highest in more than a decade in February as austerity measures meant to fight the debt crisis helped push the euro area’s third-largest economy into a recession. Unemployment (ITMUURS) increased to 9.3 percent in February, the highest since the first quarter of 2001, from a revised 9.1 percent in January, Rome-based national statistics institute Istat said in a preliminary report today. The jobless rate matched the median forecasts of six economists surveyed by Bloomberg News. Prime Minister Mario Monti is implementing a 20 billion- euro ($26.7 billion) package of spending cuts and tax increases to eliminate the budget deficit next year and trim the nation’s 1.9 trillion-euro debt. Those measures are weighing on growth, with the European Commission forecasting on Feb. 23 that the Italian economy will contract 1.3 percent this year.
Euro-region unemployment rose to 10.8 percent in February the highest in more than 14 years, the European Union’s statistics office n a separate report today. Joblessness among the Italians between ages 15 and 24 increased to 31.9 in February from a revised 31 percent in January, Istat said today. Unemployment in the fourth quarter reached 8.8 percent, up from 8.4 percent in the third, Istat said today.

Euro-Region Unemployment Surges to 14-Year High, Nears Record (Source: Bloomberg)
Euro-region unemployment rose to the highest in more than 14 years and manufacturing contracted for an eighth month, adding to signs the economy probably slipped into a recession in the first quarter. The jobless rate in the 17-nation euro area rose to 10.8 percent in February from 10.7 percent a month earlier, the European Union’s statistics office in Luxembourg said today. That’s the highest since June 1997 and close to the record of 10.9 percent. A manufacturing gauge, based on a survey of purchasing managers, fell to 47.7 in March from 49, Markit Economics said. “Unemployment is lagging economic developments and the situation on the labor market will likely remain difficult through 2012,” said Jens Kramer, an economist at NordLB in Hanover, Germany. “Domestic demand is hurt by the difficult labor market and tougher austerity measures. The first and second quarters will show a contraction followed by a slight recovery.”
Europe’s economy has been mired in a fiscal crisis for more than two years, forcing companies to cut jobs and pushing economies from Spain to Ireland into recessions. While leaders awarded Greece a second aid package last month to help restore confidence, economic sentiment unexpectedly dropped in March. The European Commission forecasts the euro-area economy to shrink 0.3 percent this year.

Euro Leaders Seek Global Help After Firewall Boosted (Source: Bloomberg)
Efforts to resolve the two-year-old European debt crisis swung back to world leaders after euro-area officials boosted a firewall designed to overcome doubts about their crisis response and to lure additional emergency aid. Finance ministers from the 17-member monetary union unveiled a package over the weekend that included 500 billion euros ($667 billion) in fresh bailout funds on top of 300 billion euros already committed to rescue programs, which together topped the symbolic $1 trillion mark. The total doubles when more than 1 trillion euros lent by the European Central Bank to aid the region’s banks is included. “The political commitment to the euro zone is increasingly clear, and the ECB has shown that, in the final analysis, they’ll do what they have to do,” Erik Nielsen, chief global economist at UniCredit SpA (UCG), wrote in a note yesterday.
Group of 20 nations that rebuffed German-led pleas for more aid in February will be asked to decide this month whether European leaders have done enough to warrant increased resources from the International Monetary Fund. Euro-area finance ministers insisted at a meeting that ended March 31 in Copenhagen that they’ve fulfilled their side of the bargain.

Suu Kyi Win Risks Myanmar Army Backlash Without Economic Gains (Source: Bloomberg)
Myanmar dissident Aung San Suu Kyi’s sweeping by-election win risks invigorating hardliners opposed to change if she fails to join reformers in implementing policies that boost incomes in one of Asia’s poorest countries. Suu Kyi yesterday called for a “new era” after her National League for Democracy rejoined the political system and claimed victory in 43 of 44 seats it contested in April 1 by- elections. It boycotted a 2010 election won by President Thein Sein’s army-backed party, which along with the military still controls more than 80 percent of parliamentary seats. The victory “will definitely scare a number of people who were expecting the government party would do better than this,” said Hans Vriens, managing partner of Vriens & Partners, a Singapore-based political risk firm. “I don’t think the army is in a position to roll back reforms now, but the reformers have to point to successes, which ultimately means jobs.”
Myanmar lawmakers are pushing to revamp the financial system and attract investment to revive an economy hindered by decades of military rule and sanctions from the U.S. and European Union. The central bank yesterday implemented a managed float of its currency to improve the business climate in the country of 64 million people that borders China and India.

No comments: