OIL: U.S. oil prices up over $1/bbl as Libya tension hots up
SINGAPORE, Feb 21 (Reuters) - London April Brent crude and U.S. crude futures rose more than $1 a barrel on Monday as the threat of supply disruptions from OPEC member Libya grew, with protesters calling for the departure of the country's veteran ruler, Muammar Gaddafi.
In Bahrain, opposition leaders met on Sunday to discuss demands they will present to the Gulf Arab country's rulers, as scores of protesters returned to the city centre in Manama after four people were killed on Thursday's night-time raid by riot police.
COMMODITIES: China price policy hits copper, grains; helps gold
NEW YORK/LONDON, Feb 18 (Reuters) - China's efforts to curb inflation undermined copper and grains prices on Friday, and Mideast unrest sent gold up and silver to 31-year tops, while a tug-of-war for control of Ivory Coast's banks sent cocoa to a 14-month peak.
"These Chinese rate moves are just tapping on the brakes. It doesn't stop people from consuming. The Chinese populous will still want their dryers, their washing machines, air conditioners," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
GLOBAL: Asian shares ease as Middle East tensions spread
HONG KONG, Feb 21 (Reuters) - Asian stocks eased and oil prices jumped on Monday as a fresh round of policy tightening from China and spreading unrest in the Middle East encouraged some light profit-taking after last week's solid gains.
"The comments again highlighted that ECB officials are getting antsy about price pressures despite some notable concerns about the health of EU periphery nation's economic performances," said David Watt, strategist at RBC Dominion Securities.
Hoenig: Farm Price Surge May Be A Sign Of Fed-Driven Imbalances (Source: CME)
A farm country Federal Reserve official fretted before congress about the potential impact of monetary policy on the U.S. agricultural sector, which has seen strong growth and big increases in land prices. Federal Reserve Bank of Kansas City President Thomas Hoenig was speaking before the Senate Committee on Agriculture, Nutrition and Forestry in Washington. The central bank's most vociferous opponent of the policy to stimulate the economy via a large Treasury debt buying program, the official has long worried the effort will create financial imbalances. Rapidly rising prices for farm land could be one of those problem areas, in the view of some. "History has taught us that it is nearly impossible to determine how much of the farmland boom may be an unsustainable bubble driven by financial markets and how much results from fundamental changes in demand and supply conditions," Hoenig said in the prepared text of his testimony.
As a result, "it will surprise no one when I say we are watching the market closely, just as we are watching for imbalances emerging elsewhere in the economy. "My nagging concern remains that current distortions in financial markets are increasing the risk that imbalances in asset markets will catch agriculture--and the U.S. economy more generally--by surprise once again," the policymaker said. Thus far, the gains in farmland prices appear to the product of strong profit growth amid big demand for U.S. agricultural products, the official said. He added, agriculture is "benefiting directly from the rebounding economic strength of China and other emerging-market economies, where rapid income growth is driving up food demand." Hoenig expressed concern about the day the Fed does begin to push up interest rates. While agricultural balance sheets look good, a tightening cycle could be difficult to navigate, the central banker warned.
"Rising interest rates often coincide with falling farm revenues and higher capitalization rates, a depressing combination for farmland values," Hoenig said. "Even if crop prices remain high but capitalization rates return to their historic average, farmland values could fall by as much as a third, which most certainly would erode the financial health of the farm sector."
CBRC Says More Loans Needed For Water Projects To Ensure Grain Supply (Source: CME)
China's Banking Regulatory Commission said that banks should extend more loans to water conservation projects and drought-fighting efforts, in order to help ensure grain supply. Supporting water conservation and grain production should be banks' priority in rural lending, it said in a statement on its website. The banking regulator reiterated its financial commitment to the rural areas, shortly after the Ministry of Commerce Thursday released a draft measure on emergency management of food supply and China's central bank said Wednesday it will use monetary policy tools to promote grain production. Beijing has stepped up its fight against inflation, as soaring prices of food and other products have stoked price pressures that pose growing risks to the economy. Government departments have already undertaken several measures to keep food prices in check, such as programs aimed at boosting grain output, and creating reserves of vegetables.
Large- and medium-sized commercial banks should support key and large-sized watering facilities, while Agricultural Bank of China Ltd. should focus on lending to rural irrigation and hydropower construction. Agricultural Development Bank of China should take the responsibility of extending mid- and long-term loans to support medium- and small-sized watering projects. Banks should also expand credit support to manufacturers of seeds, machinery and fertilizers to prepare for spring ploughing and help drought-fighting work, the statement said. Banks facing capital shortage can apply to the central bank for relending. Prices of agricultural commodity futures have gained even faster than retail prices, which are capped by the government, with wheat, rice and sugar futures all hitting record levels recently. Wheat futures on China's Zhengzhou Commodity Exchange have risen around 6% this month due to concerns that prolonged drought may reduce wheat output.
Fed China raises banks' required reserves again
BEIJING, Feb 18 (Reuters) - China's central bank said on Friday that it would once again raise lenders' required reserves by 50 basis points, the second time this year and the eighth official increase since the start of last year.
In a short statement posted on its website, the People's Bank of China said the increase will be effective Feb. 24.
China steel prices seen rising in near term - CISA
SHANGHAI, Feb 18 (Reuters) - Steel prices in the Chinese domestic market will continue rising in the near term thanks to recovering demand and rising raw materials costs, the China Iron & Steel Association (CISA) said on Friday.
CISA said it expected a gradual pick-up in demand at home and abroad, with costs of raw materials such as iron ore, coke and scrap likely to keep surging, pushing steel prices upwards.
PRECIOUS-Gold hits 5-week high as Mideast concerns simmer
LONDON, Feb 18 (Reuters) - Gold hit five-week highs in Europe on Friday and silver its strongest since 1980 as growing unrest in the Middle East lifted interest in precious metals, though another reserve requirement hike from China curbed gains.
Gold's bounce-back after it fell more than 6 percent in January has wrong footed some investors who were waiting for lower price levels to buy into the market, analysts said.
FOREX-Euro slips, ECB data adds to mkt jitters
LONDON, Feb 18 (Reuters) - The euro slipped broadly on Friday on the view that euro zone debt problems will persist and as uncertainty about the cause of a spike in emergency borrowing from the European Central Bank added to market jitters.
The Australian dollar briefly hit a session low against the U.S. dollar after China's central bank raised its bank reserve requirement for the second time this year, following up on an interest rate rise earlier this month as it ratchets up its monetary tightening campaign.
China, oil worries knock equities from highs
LONDON, Feb 18 (Reuters) - World shares fell back from fresh 30-month highs against a background of rising oil prices and new attempts by China to curb its inflation pressures.
"There is just a greater conviction in the more promising outlook in global economic growth," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.
