Wednesday, May 2, 2012

20120502 1112 Global Market Related News.

Asian Stocks Rise as U.S. Manufacturing Beats Estimates (Source: Bloomberg)
Asian stocks gained as manufacturing in the U.S. unexpectedly expanded in April at the fastest pace in 10 months, boosting the outlook for the region’s exporters. Samsung Electronics Co. (005930), the world’s biggest mobile-phone maker by sales, climbed 1.2 percent in Seoul. Japan Tobacco Inc. gained 2.6 percent after the cigarette maker said it will raise its dividend payout. Idemitsu Kosan Co. jumped 4.4 percent after Japan’s No. 3 oil refiner posted earnings that beat analysts’ estimates. Australia & New Zealand Banking Group Ltd. fell 1.2 percent in Sydney after posting net income that missed expectations. “There’s no doubt that this data is moving in the right direction,” said Angus Gluskie, managing director at White Funds Management in Sydney, who manages more than $350 million. “It’s a good indication of the health of the U.S. economy.”
The MSCI Asia Pacific Index rose 0.2 percent to 124.50 as of 9:54 a.m. in Tokyo, with almost two shares rising for each that fell. The gauge dropped 2.8 percent in March and April amid concern Europe will be trapped in a recession as debt-stricken nations such as Spain cut spending, and as Chinese economic growth slows.

Dow Rallies to Highest Level Since 2007 on Manufacturing (Source: Bloomberg)
U.S. stocks advanced, sending the Dow Jones Industrial Average to the highest level since December 2007, after a better-than-estimated manufacturing report bolstered investors’ optimism in the world’s largest economy. JPMorgan Chase & Co. (JPM), Intel Corp. (INTC) and Alcoa Inc. climbed at least 1.8 percent to pace rallies among the biggest companies. The Dow Jones Transportation Average, a proxy for economic growth, increased 1.1 percent. Sears Holdings Corp. (SHLD) soared 15 percent as it forecast a profit after selling some stores in the U.S. and Canada. Stocks pared gains after Apple Inc., the world’s most valuable company, reversed an earlier advance.
The Standard & Poor’s 500 Index advanced 0.6 percent to 1,405.82 at 4 p.m. New York time, the highest level since April 3. The Dow increased 65.69 points, or 0.5 percent, to 13,279.32. The Russell 2000 Index of small companies retreated 0.1 percent to 815.89. About 6.7 billion shares changed hands on U.S. exchanges today, or almost in line with the three-month average. “The economy is starting to get on its own two feet,” said Wayne Lin, a money manager at Baltimore-based Legg Mason Inc. His firm oversees $643.3 billion. “Manufacturing is forward-looking. It leads what the actual economic activity tends to end up being. It tells us that firms are being a bit less conservative. Confidence is starting to reemerge.”

U.K. Stocks Rally on Lloyds Earnings, U.S. Factory Data (Source: Bloomberg)
U.K. stocks jumped the most in two weeks after Lloyds Banking Group Plc (LLOY) reported profit that topped analyst estimates and U.S. manufacturing expanded at the fastest pace in 10 months. Lloyds, Britain’s biggest mortgage lender, climbed 8.3 percent as first-quarter profit more than doubled. Imperial Tobacco (IMT) Group Plc gained 3.7 percent as its earnings matched projections. Chemring Group Plc (CHG) rallied the most in 13 years after winning two orders. BP Plc (BP/) paced declining shares after net income dropped 19 percent. The FTSE 100 Index rose 74.45 or 1.3 percent, to 5,812.23 in London, the largest gain since April 17. The gauge fell 0.5 percent last month as Britain slipped into a double-dip recession and concerns grew that the euro-area debt crisis is deepening. The FTSE All-Share Index surged 1.2 percent today, while Ireland’s ISEQ Index climbed 1.1 percent.
“The market has been assisted by a number of factors that included a decent rally by bank stocks buoyed by better than expected first quarter numbers from Lloyds,” said Angus Campbell, head of market analysis at Capital Spreads in London. We’ve also seen “strength from U.S. markets where the news flow has been conducive to buying equities.”

Japanese Stock Futures Advance on U.S. Manufacturing (Source: Bloomberg)
Japanese stocks rose, snapping a two- day drop, after U.S. manufacturing unexpectedly expanded in April at the fastest pace in 10 months, boosting exporters’ outlook. Toyota advanced after its U.S. sales surged in April. Sony Corp. (6758), a consumer electronics company that gets 20 percent of its sales in the U.S., rose 1.2 percent after the yen weakened. Toyota Motor Corp. (7203), Asia’s largest carmaker, added 1.1 percent after posting a 12 percent U.S. sales rise last month. Japan Tobacco Inc. (2914) gained 3.4 percent after the cigarette maker said it will raise its dividend payout. The Nikkei 225 Stock Average (NKY) rose 0.4 percent to 9,391.32 as of 9:32 a.m. in Tokyo, with volume almost 30 percent lower than the 30-day average. The broader Topix Index gained 0.5 percent to 793.49, with more than two shares advancing for each that fell.
“There’s no doubt that this data is moving in the right direction,” said Angus Gluskie, managing director at White Funds Management in Sydney, who manages more than $350 million. “It’s a good indication of the health of the U.S. economy.” Futures on the Standard & Poor’s 500 Index (SPX) added 0.1 percent today. The gauge advanced 0.6 percent in New York yesterday after the Institute for Supply Management’s factory index unexpectedly rose in April. Economists surveyed by Bloomberg News had been expecting a drop.

FOREX-Aussie hit by RBA cut, U.S. dollar also struggles
LONDON, May 1 (Reuters) - The Australian dollar fell sharply on Tuesday after the Reserve Bank of Australia slashed rates by a deeper-than-expected 50 basis points while the U.S. dollar hit a fresh two-month low versus the yen as soft U.S data weighed on the greenback.  
"The Aussie has further to go down in the near term but I would be surprised if it went below the April lows around $1.0225," said Ian Stannard, Head of European FX Strategy at Morgan Stanley.

Dollar Remains Higher Against Yen Before ADP Employment Report (Source: Bloomberg)
The dollar maintained its rebound from a 10-week low against the yen before a private report today forecast to show U.S. companies added workers in April, easing speculation the Federal Reserve will add to stimulus. The greenback was higher against the euro after three voting members of the Federal Open Market Committee said they don’t see a need to ease policy further as the economy maintains its expansion. Demand for the 17-nation euro was also limited before data today that economists said will show the region’s manufacturing weakened last month. The European Central Bank meets tomorrow to decide on policy. “The combination of the commentary from Fed governors and the stronger-than-expected data asks the question, ‘Should we be putting more weight on the recovery in the U.S. economy,’” Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “That is something that clearly should be supporting the U.S. dollar.”
The dollar advanced 0.1 percent to 80.14 yen at 10:37 a.m. in Tokyo. It rallied 0.3 percent yesterday after touching 79.64, the weakest since Feb. 21. The U.S. currency gained 0.1 percent to $1.3220 per euro. The shared European currency was at 105.95 yen from 106.02.

Aussie Dollar Halts Drop Versus Yen Before U.S. Jobs Data (Source: Bloomberg)
The Australian and New Zealand dollars remained lower after a two-day decline before Spain auctions notes amid concern the euro region’s debt crisis is deepening, curbing demand for higher-yielding currencies. The New Zealand dollar, known as the kiwi, weakened against all of its 16 major counterparts after a private report showed prices for the nation’s commodity exports declined. Australia’s dollar dropped yesterday by the most in six weeks after the country’s central bank lowered borrowing costs more than most economists had estimated. “Concern about Europe’s debt crisis is simmering as Spain’s fiscal situation has yet to be resolved,” said Takuya Kawabata, a researcher at Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency-margin company. “People are reluctant to take risk aggressively,” weighing on Australia and New Zealand’s currencies.
The Australian dollar was at $1.0335 as of 11:32 a.m. in Sydney, little changed from yesterday when it fell 0.9 percent, the most since March 20. New Zealand’s currency lost 0.2 percent to 81.39 U.S. cents.

Korean Won Climbs, Bonds Fall on IMF Forecast, Spain (Source: Bloomberg)
The won rose to a four-week high after reports showed manufacturing in the U.S. and China grew at the fastest pace in at least 10 months, brightening the outlook for South Korea’s exports. Government bonds were little changed. The U.S. Institute for Supply Management’s factory index climbed to 54.8 in April, exceeding the most optimistic forecast in a Bloomberg News survey, while China’s Purchasing Managers’ Index signaled a fifth month of growth, figures showed yesterday. South Korea’s exports contracted for a second month in April, affected by fewer working days due to a parliamentary election, government data showed. The Kospi Index of shares rose the most in two weeks. “With the U.S. and Chinese manufacturing data, the overall atmosphere is favorable for the won,” said Lee Yong Hee, a Seoul-based currency dealer at Industrial Bank of Korea. “We see more exporters selling the dollar than importers buying, which also supports the won.”
The won gained 0.1 percent from its April 30 close to 1,128.58 per dollar as of 9:35 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1,127.65 earlier, the strongest level since April 5. The Kospi (KOSPI) rose 0.8 percent. South Korea’s local financial markets were closed yesterday for a holiday.

Treasuries Snap Gain on Bets Fed to Refrain New Stimulus (Source: Bloomberg)
Treasuries stayed lower following a decline yesterday before the U.S. announces today the sizes of 3-, 10-, and 30-year auctions scheduled for next week. The government will probably sell $32 billion of 3-year notes, $24 billion of 10-year securities and $16 billion of the so-called long bonds over three days starting May 8, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey. Treasuries fell yesterday after an industry report showed U.S. manufacturing unexpectedly gained in April. U.S. 10-year rates were little changed at 1.95 percent as of 9:40 a.m. in Tokyo, according to Bloomberg Bond Trader data. The 2 percent security due in February 2022 changed hands at 100 14/32. The 10-year yield slid to a record low of 1.67 percent Sept. 23. The average over the past decade is 3.83 percent.
“To argue that the bond market is suggesting optimism on the economy, with 10-year yields below 2 percent, is a little tough,” said Justin Hoogendoorn, a fixed-income strategist at Bank of Montreal (BMO) unit BMO Capital Markets in Chicago. He said the reaction to the manufacturing data showed “at the margin, there’s a little optimism.”

Greenspan Says U.S. Stocks ‘Very Cheap,’ Likely to Rise (Source: Bloomberg)
Former Federal Reserve Chairman Alan Greenspan said U.S. stocks offer good value and are likely to rise as corporate earnings increase over time. “Stocks are very cheap,” Greenspan said today at the Bloomberg Washington Summit hosted by Bloomberg Link, citing “a very low price-earnings ratio.” “There is no place for earnings to grow except into stock prices,” said Greenspan, who served as Fed chairman from August 1987 to January 2006. Stocks have rallied on better-than-forecast corporate profits and signs of economic strength. The Standard & Poor’s (SPX) 500 Index has risen more than 12 percent this year, the best start to a year since 1998. The index rose 1.1 percent to 1,413.83 at 12:57 p.m. in New York after a report showed that U.S. manufacturing unexpectedly expanded in April at the fastest pace in 10 months.

U.S. Manufacturing Grows at Fastest Pace in a Year (Source: Bloomberg)
Manufacturing grew in April at the fastest pace in almost a year, propelled by a pickup in orders that signaled factories will remain a source of strength for the U.S. expansion. The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey and the best reading since June, the Tempe, Arizona-based group’s report showed today. Readings greater than 50 signal growth. The world’s largest economy may pick up after slowing in the first three months of the year as the increase in bookings indicates American assembly lines will keep churning out more goods. Combined with a report showing manufacturing in China also accelerated, the figures sent the Dow Jones Industrial Average to the highest level since 2007 as the data eased concern global growth was slackening.
Manufacturing “continues to be a bright spot in the recovery,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York. “We have yet to see a drop-off in foreign demand for U.S.-manufactured goods, and that comes despite all the concerns of a slowdown in the global economy.”

Lacker Says Fed May Have to Tighten With Unemployment at 7% (Source: Bloomberg)
Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank needs to be ready to raise interest rates even if joblessness exceeds 7 percent. Speaking in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link, he said the Fed will probably have to raise rates in mid-2013. Adding more monetary stimulus now would raise inflation risks without doing much to boost growth, he said. Unemployment “could well be above 7 percent, and I think we have to prepare for that,” Lacker said. “I think it’s a misconception to think we have to get unemployment all the way down to five or some number like that before we raise rates.” Lacker has cast the only dissenting vote at each of the Federal Open Market Committee’s policy meetings this year. He has opposed the Fed’s statement that economic conditions will probably warrant “exceptionally low” levels of the federal funds rate at least through late-2014.

Higher Taxes Won’t Discourage Wealthy From Working Harder (Source: Bloomberg)
Atlas won’t shrug. That’s the view of economists Emmanuel Saez and Thomas Piketty: They argue higher taxes will not discourage the wealthy from working harder or slow the economy, unlike in Ayn Rand’s 1957 novel, “Atlas Shrugged.” Its hero, John Galt, led a strike by industrialists and others against the government, partly because they thought they were too highly taxed. “Top 1 percent earners now make 20 times the average, while they made only 10 times the average in the 1970s,” Saez, winner of the John Bates Clark young economist award in 2009, said in an e-mail. “If they worked hard then, they should continue working hard today, even if they are taxed at 50 percent.” The top federal tax rate is now 35 percent.
The two economists’ work is of more than just academic interest. President Barack Obama’s former budget director, Peter Orszag, has said their research on income inequality “helped to point the way for the administration in its pledge to rebalance the tax code.” Senate Republicans last month blocked Obama’s plan to raise taxes on the rich via the so-called Buffett rule, arguing it would hurt the economy.

Three Fed Policy Makers See No Need to Ease (Source: Bloomberg)
Three voting members of the Federal Open Market Committee said they don’t see a need to ease policy further as the U.S. economy maintains its expansion. Federal Reserve Bank of Richmond President Jeffrey Lacker said in Washington that more monetary stimulus risks stoking inflation while doing little to strengthen the recovery. San Francisco’s John Williams said the outlook he expects doesn’t warrant more bond buying, and Atlanta’s Dennis Lockhart repeated that he’s skeptical of the benefits of such action. The rate-setting committee left policy unchanged after its April 24-25 meeting, and Chairman Ben S. Bernanke signaled that further stimulus is unlikely unless the economy unexpectedly deteriorates. Bernanke said it would be “reckless” for the central bank to pursue policies that would drive up inflation when it’s already near the Fed’s goal of 2 percent, while noting he’s “prepared to do more” should conditions worsen.
“For us to provide more monetary stimulus at this point would likely raise inflation risks and not likely do much for growth,” Lacker said in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link. While “it’s not a gangbusters recovery by historical standards,” growth will accelerate, he said.

Fed Said to Criticize Banks on Risk Models in Stress Test (Source: Bloomberg)
The Federal Reserve criticized how some of the 19 largest U.S. banks calculated potential losses and planned dividends in this year’s stress tests, people with knowledge of the process said. The critiques will be part of feedback letters sent to the lenders this week that cover everything from data collection to risk measurement, said three of the people, who declined to be identified because communications with the Fed are private. Flaws included marking down all housing prices at the same rate, rather than matching them to specific regions, and planning dividends that could drain needed capital. “A 20 percent decline in national house prices would mean that prices would decline substantially more in some markets and less in others,” Daniel Tarullo, the Fed governor in charge of supervision, told a Chicago banking conference on April 10. “The result would be higher overall losses than if prices had declined by a uniform 20 percent everywhere.”
The letters arrive as tensions mount between the largest banks and the Fed over how new rules to make the financial system safer will be carried out. Bankers have complained the stress tests completed in March lack transparency and underestimate their underwriting abilities, resulting in higher losses on some asset classes than the lenders projected.

Engle Joins Krugman Suggesting Higher Inflation for U.S. (Source: Bloomberg)
New York University professor Robert Engle said policy makers should consider allowing slightly higher inflation as a way to spur the U.S. economy, joining fellow Nobel Prize winner Paul Krugman who says it could reduce unemployment. “A little bit of inflation would do a whole lot of good for the U.S. economy, would certainly do a lot of good for the housing market,” Engle, who won the Nobel Prize in economics in 2003, said at the Bloomberg Washington Summit hosted by Bloomberg Link today. “If we had just a little bit of inflation and house prices went up, all the sudden they’d be above the mortgages.” Krugman’s suggestion that the Federal Reserve tolerate inflation of 3 percent to 4 percent to boost the economy has been rejected by Fed Chairman Ben S. Bernanke, who said such a policy would be “reckless.”
The Bernanke-Krugman debate started with Krugman’s April 24 article in the New York Times Magazine, titled “Earth to Bernanke.” In it, Krugman, who won the Nobel Prize in 2008, argued that allowing a more rapid increase in consumer prices would align with Bernanke’s comment in 2000 that the Bank of Japan should pursue faster inflation to escape deflation.

China Commercial Property Deals Fueled by Cash-Poor Developers (Source: Bloomberg)
Shanghai and Beijing, the two cities with Asia’s fastest-growing office rents, are set to lead a surge in commercial property transactions in China as more developers sell assets to raise cash for housing projects. Sales of office and retail buildings in the two major Chinese cities will double this year to $10.4 billion, according to Cushman & Wakefield Inc., which doesn’t make nationwide projections. The number of deals being negotiated in Shanghai in the past six months rose 50 percent from a year earlier, Jones Lang LaSalle Inc. said. Chinese real estate companies are selling commercial buildings for funds to complete apartment projects after the government’s two-year effort to curb home prices tightened credit. The cash ratio, a measure of liquidity, for developers fell to the lowest since 2008 as of December, according to data on 146 listed builders in China and Hong Kong compiled by Bloomberg.
“Many Chinese developers today are more willing to sell their office buildings or retail space because they need to access capital for their residential projects,” said Jack Ye, Shanghai-based national director of investment at Cushman, the world’s biggest closely held property service company.

China Manufacturing Growth Accelerates, PMI Shows (Source: Bloomberg)
China’s manufacturing expanded at the fastest pace in a year, reducing pressure on policy makers to open the taps on credit in the world’s second-largest economy. The Purchasing Managers’ Index rose to 53.3 in April from 53.1 in March, China’s statistics bureau and logistics federation said in a statement yesterday. That’s the fifth straight reading above the 50 level dividing expansion from contraction and compares with the 53.6 median forecast in a Bloomberg News survey of 27 economists. The data signal China may be strengthening from the slowest pace of growth in almost three years, reached last quarter. At issue for Premier Wen Jiabao is whether to extend a two-month pause in lowering banks’ required reserve ratios, as he seeks to rein in property and consumer prices without sending the economy into a so-called hard landing.
“The need for aggressive policy easing is limited given the government’s desire to slow growth and the upside inflation risks,” said Chang Jian, a Hong Kong-based economist with Barclays Capital. “Fine-tuning measures such as easing credit, support for first-home buyers and expansionary fiscal policy to support infrastructure will gradually feed through, so the slowdown in growth will bottom out this quarter.”

Strategists Who Called Bottom in China Stocks Now Say Buy (Source: Bloomberg)
China’s longest bear market since 2005 is ending as government efforts to bolster the economy spur a rally in stocks, say the strategists whose buy recommendations two years ago preceded a 34 percent gain in the Shanghai Composite Index. (SHCOMP) While the Communist Party cut its economic expansion target in March, Morgan Stanley Huaxin Securities and Guotai Junan Securities Co. say growth is rebounding from the slowest pace since 2009 as policy makers ease lending curbs. Value Investment Principals predicts stocks that benefit most from a buoyant economy will lead gains after they tumbled during the Shanghai Composite’s 423-day bear market. The retreat ranks as the second-longest since 1990, according to Birinyi Associates Inc. “We’re definitely going to have a major bull market ahead,” Jerry Lou, the chief strategy officer at Morgan Stanley Huaxin in Shanghai, said in an April 24 phone interview.
The Shanghai Composite has rallied 12 percent from this year’s nadir on Jan. 5 as reports on bank lending and manufacturing spurred investors to snap up shares trading at the cheapest levels on record, according to data compiled by Bloomberg. The gauge of mainland-listed stocks restricted to local investors and qualified foreign institutional money managers is still 61 percent below its 2007 peak after closing at 2,396.32 on April 27. The index rose 0.7 percent to 2,414.08 at 9:56 a.m. local time today.

Chinese Stocks Rise to 7-Week High on Manufacturing, Cut in Fees (Source: Bloomberg)
China’s stocks rose to the highest in seven weeks after manufacturing in China and the U.S. expanded at a faster pace and the nation’s two stock exchanges said they will cut trading fees by 25 percent to attract investors. PetroChina Co. and Jiangxi Copper Co., the nation’s biggest oil and copper producers, gained more than 1 percent after the Purchasing Managers’ Index rose to 53.3 in April, the fastest pace in a year. Industrial & Commercial Bank of China Ltd. led an advance for lenders after net income climbed. China Eastern Airlines Corp. increased 1 percent after the carrier said it would buy 20 Boeing planes. The Shanghai Composite Index gained 27 points, or 1.1 percent, to 2,423.43 at 9:39 a.m. local time, heading for the highest close since March 13. The CSI 300 Index (SHSZ300) advanced 1.3 percent to 2,660.83. China’s markets were shut April 30 and May 1 for the holidays.
The Bloomberg China-US 55 Index (CH55BN), a measure of the most-traded U.S.-listed Chinese companies, advanced 1.1 percent to 104.65 at the close in New York yesterday. China’s PMI rose from 53.1 in March, the statistics bureau and logistics federation said in a statement yesterday. That’s the fifth straight reading above the 50 level dividing expansion from contraction.

Indonesia Chases China As Middle-Class Consumption Soars (Source: Bloomberg)
In May 1998, Indonesia was in turmoil. During the previous 10 months, the currency had plunged 80 percent in value and food prices had soared 200 percent. Rioters were marauding through Jakarta, torching businesses owned by wealthier ethnic Chinese, who were fleeing for their lives. Safely ensconced in Hong Kong, where he was on vacation, an Indonesian-Chinese retailer named Djoko Susanto could have sat tight. Instead, he flew home to defend his four supermarkets from the mob. As he transited Singapore, where planes were arriving from Indonesia full and returning empty, the airline’s crew stared at him in disbelief. “There were five people on my flight,” Susanto recalls. “And I was the only Chinese.” While he couldn’t save his stores -- all four were looted to the last light bulb -- Susanto was on hand to seize an opportunity that would make him a billionaire, Bloomberg Markets reports in its June issue.
More than 1,100 people died in the 1998 riots, and the economy contracted 13 percent that year. Doomsayers predicted that the world’s fourth-most-populous nation, a former Dutch colony spanning 17,500 disparate islands, would fragment.

Krueger Sees ‘Some Risk’ From European Debt Crisis (Source: Bloomberg)
Alan Krueger, chairman of the White House Council of Economic Advisers, said the European debt crisis poses “some risk” to the U.S. and global economy. Despite a “rise in some interest rates in some countries” over recent weeks European nations have made progress in resolving sovereign debt difficulties, Krueger said today at the Bloomberg Washington Summit. “It still looks a lot better than it did last summer,” Krueger said. “It remains to be the case that the countries in Europe have the capacity to address the problems.” Krueger also defended President Barack Obama’s record of working on behalf of U.S. middle-class families. Real median household income was down $4,300 since Obama took office in January 2009 and is down $2,900 since the recovery started in June 2009, according to an estimate from Sentier Research, an economic-consulting firm based in Annapolis, Maryland.

ECB Loans Plant Seeds of European Disintegration (Source: Bloomberg)
European Central Bank measures to stem the region’s debt crisis threaten instead to undermine the euro. ECB loans worth more than $1.3 trillion have been recycled into government bonds, capping borrowing costs. As Italy’s reliance on its local institutions increases and Spanish banks accelerate purchases of domestic government securities, however, the economic ties that bind the fate of euro members to each other loosen, weakening the incentives for cross-border support to defend the currency union. “As the local bond markets have become owned only by domestic institutions, there is less and less incentive for the other countries to support and bail out one of those,” said Stephane Monier, who helps manage more than $150 billion as head of fixed income and currencies at Lombard Odier Investment Managers. “Basically you’re planting the seeds for the disintegration of the euro zone.”
The ECB began two rounds of extraordinary three-year loans at an interest rate of 1 percent in December in its longer-term refinancing operations. Italian banks boosted their government debt holdings to 323.9 billion euros ($428.1 billion), from 301.6 billion euros in February and 247.4 billion euros in November, according to the ECB. Spanish banks own 263.3 billion euros of government securities, up from 245.6 billion euros in February and 177.9 billion euros in November.

U.K. Factories Weaken as World Relies on China Growth (Source: Bloomberg)
A U.K. manufacturing index fell more than economists forecast in April to show its weakest growth this year as export orders declined the most since May 2009. A gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5 from a revised 51.9 in March, Markit said on its website today. The median forecast of 27 economists in a Bloomberg News survey was for a decline to 51.5 from an initial estimate of 52.1 in March. A reading above 50 indicates growth. Bank of England officials will decide on May 10 whether to extend stimulus amid conflicting signals on the economy. While Britain is in its first double-dip recession since the 1970s, rising oil prices threaten to stoke an inflation rate in its third year above target. Factory output, which accounts for about 10 percent of gross domestic product, is being crimped as the euro-area debt crisis hits export demand.
“Manufacturers reported a slowdown in activity, characteristic of continued problems and poorer consumer confidence across the euro zone,” CIPS Chief Executive Officer David Noble said in the report. Also, an “easing of new orders from the U.S. and Asia is perhaps even more worrying as a potential risk to continued growth, as these have helped to balance out weaker demand in recent months.”

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