A source from the Ministry of Commerce in Beijing said talks on a China-Japan-Republic of Korea free trade agreement (FTA) are expected to start in the first half of this year, with May seen as the earliest date, following the conclusion in Dec of studies and research into its potential consequences. ROK President Lee Myung-bak starts an official three-day visit to China on Monday, during which economic and trade relations will be on the agenda. During the visit China and the ROK are reportedly set to announce bilateral FTA talks this year. (China Daily)
Euro: Merkel says budget rules to stem Europe’s debt woes may be done this month
Euro-area leaders may complete their new budget rulebook by 30 Jan, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy outlined the increased pace of their response as the financial crisis that began in Greece in 2009 entered its third year amid concern that the future of the single currency itself was in doubt. (Bloomberg)
Euro: ECB financing to Portuguese lenders rose to 46bn Euros in December
The European Central Bank’s financing to Portuguese lenders rose for a second month in December, the Bank of Portugal said. ECB financing increased to EUR46.0bn (USD58.7bn) from EUR45.69bn in November, the Lisbon-based central bank said on its website. ECB financing levels peaked at EUR49.1bn in August 2010. (Bloomberg)
Euro: Banks can go below minimum Basel liquidity levels during financial crisis
Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties. “During a period of stress, banks would be expected to use their pool of liquid assets, thereby temporarily falling below the minimum requirement,” the Basel Committee on Banking Supervision’s governing board said in a statement on its website yesterday, following a meeting in the Swiss city. The aim of the measure, known as a liquidity coverage ratio, is to ensure that lenders hold enough easy-to-sell assets to survive a 30-day credit squeeze. (Bloomberg)
Euro: Draghi may copy Bernanke over Trichet on path to record-low interest rates
European Central Bank President Mario Draghi may act more like Ben S. Bernanke than Jean-Claude Trichet in 2012. With the euro area’s debt crisis pulling its economy into a second recession in three years, Draghi soon may cut the ECB’s benchmark interest rate below 1% for the first time and help banks by further inflating its balance sheet, which already has ballooned 17% since he took office. Such activism would mark a reversal from a year ago when the Trichet-led ECB was pivoting towards higher rates. (Bloomberg)
EU: Sarkozy Wins Merkel Backing for Financial Transaction Tax
At a joint press conference in Berlin with Sarkozy today, German Chancellor Angela Merkel threw her weight behind the financial transaction tax. The European Commission in September suggested a tax of 0.1% on equity and bond transactions, and 0.01% on derivatives, which it said could raise 55bn euros ($71bn) a year. European Union finance ministers are due to discuss the levy in Mac. French Prime Minister Francois Fillon said today in Paris that France may present a bill on such a tax in February, hoping that other countries follow. (Bloomberg)
EU: Budget rules may be fast-tracked
Euro-area leaders may complete their new budget rulebook by Jan 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis. Merkel said at a joint press conference with Sarkozy that there is a good chance that they can sign the debt brakes and everything that’s connected to it already in Jan, but at the latest in Mac, and that there is really good progress in negotiations. At their first meeting of 2012, they repeated their endorsement of a financialtransaction tax and urged Greece to complete its debt writedown with creditors as soon as possible. (Bloomberg)
EU: New deficit-control powers face test in Belgium clash
Europe’s newfound powers over national taxing and spending face a first test when the European Commission prods Belgium to make deeper savings just over a week into the budget year. Under authority granted last month, the commission will on Jan 11 decide whether an emergency Belgian spending freeze is enough to drive the deficit below the euroarea limit in 2012. A negative verdict would expose Belgium, saddled with Europe’s fifthhighest debt, to potential sanctions in a precedent-setting trial of rules designed to overcome investors’ skepticism about the euro area’s response to the two-year-old debt crisis. (Bloomberg)
EU: ECB says banks’ overnight deposits increased to record high
The ECB said overnight deposits from commercial banks rose to a record. Euro-area banks parked 463.6bn euros ($591bn) with the Frankfurt-based ECB on Jan 6, up from the previous record of 455.3bn euros set a day earlier. That’s the most since the euro was introduced in 1999. The surge in deposits suggests banks are placing excess cash back with the ECB at the overnight rate of 0.25%, incurring a loss rather than lending it for more elsewhere. (Bloomberg)
Germany: Industrial output drops in sign growth stalling
German industrial output declined in Nov as factories produced fewer investment and consumer goods, adding to signs that growth in Europe’s largest economy may have stalled. The Economy Ministry in Berlin said production fell 0.6% from Oct, when it rose 0.8%. Economists forecast a 0.5% drop, according to the median of 30 estimates in a Bloomberg News survey. In the year, production rose 3.6% when adjusted for working days. (Bloomberg)
Germany: Exports rebounded in November, bolstering economy
German exports rebounded in Nov from a slump, helping bolster Europe’s largest economy as the debt crisis clouds growth prospects. The Federal Statistics Office in Wiesbaden said exports, adjusted for work days and seasonal changes, rose 2.5% from Oct. Economists forecast a gain of 0.5%, the median of 13 estimates in a Bloomberg News survey showed. Imports declined 0.4% from Oct, when they rose 0.1%. (Bloomberg)
US: More part-timers find full-time jobs
More Americans are moving from part-time to full-time jobs, adding to evidence a strengthening labor market will bolster household confidence and spending. The number of people putting in a full week rose to 113.8m in December, the most since February 2009, the Labor Department’s monthly employment report showed last week. At the same time, 8.1m worked fewer hours because they couldn’t find a full-time job, the least since January 2009. (Bloomberg)
US: Consumer credit rises by most in decade
Consumer borrowing in the US surged in November by the most in 10 years, showing households are optimistic enough to take on debt and banks are willing to lend. The advance was almost twice as big as the highest forecast of 31 economists surveyed by Bloomberg News. (Bloomberg)
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