20120130 1020 Global Market Related News.

Global Economy, Recession Risk Are Bankers’ Main Concern, Survey Reports (Source : Bloomberg)
The fragility of the global economy is the greatest threat to the banking industry as a return to recession could mean more losses from bad loans and bank failures, according to an industry survey. Macro-economic risk rose to become the number-one concern among bankers, the Centre for the Study of Financial Innovation, a forum for bankers and regulators funded by institutions including the Bank of England, reported in a survey today. The amount of debt some countries have, access to liquidity and a scarcity of capital were their next worries, it said. Standard & Poor’s downgraded nine European nations on Jan. 13, saying recent policy steps may prove “insufficient” to contain the fiscal crisis, already in its third year. France and Austria were both cut by one level to AA+. S&P also lowered the rankings of Malta, Slovakia and Slovenia by one rank, and Italy, Spain, Portugal and Cyprus by two.

GLOBAL MARKETS-Portugal, Greek concerns weigh on world stocks
LONDON, Jan 27 (Reuters) - World stocks fell from a 5-1/2 month high on Friday as gains spurred by the Federal Reserve's pledge of low interest rates gave way to concerns about Portugal, seen as the next domino in the euro zone crisis, and uncertainty over Greek debt talks.
"With all the focus on Greece, attention has also started to shift to Portugal, whose own bond yields are continuing to rise sharply, with 10-year yields pushing on towards 15 percent, as fears rise that it could well need a second bailout," said Michael Hewson, market analyst at CMC Markets in London.

Asian Stocks Swing Between Gains, Losses (Source : Bloomberg)
Asian stocks swung between gains and losses ahead of a European summit on the region’s debt crisis and after the U.S. economy expanded less than forecast in the fourth quarter. James Hardie Industries SE (JHX), a building materials supplier that counts the U.S. as its biggest market, fell 1.5 percent in Sydney. Mitsubishi Electric Corp., a maker of industrial machinery and home appliances, slumped 12 percent in Tokyo after admitting it overcharged the government for some defense and aerospace contracts. Advantest Corp., a maker of memory-chip testers, jumped 9.8 percent after doubling its second-half dividend payout. The MSCI Asia Pacific Index (MXAP) slipped 0.1 percent to 122.95 as of 10:31 a.m. in Tokyo, having swung between gains and losses at least three times. The measure has risen the past six weeks, the longest streak since a seven-week stretch that ended Oct. 15, 2010, amid bets China will ease lending curbs and signs the U.S. economy is improving and Europe is containing the region’s debts crisis.

Japanese Stocks Decline Third Day as U.S. Economic Growth Misses Forecast (Source : Bloomberg)
Japanese stocks fell for a third day after the U.S. economy expanded less than forecast in the fourth quarter, dimming the earnings outlook for Asia’s exporters. Sony Corp. (6758), which depends on the U.S. for a fifth of its sales, fell 0.9 percent. Nippon Electric Glass Co. tumbled 9.3 percent after saying profit may fall by more than half. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. slid after a report the shipping lines may post losses amid falling cargo rates. Mitsubishi Electric Corp., which last week said it overcharged the government on contracts, dropped the most on the Nikkei 225 Stock Average. “The U.S. growth number was below forecast and that’s a negative,” said Toshiyuki Kanayama, a market analyst at Tokyo- based Monex Group Inc. “The market looks overheated, so investors are likely to use the report as an excuse to sell.”

U.S. Stocks Fall as American Economy Grows Less Than Forecast (Source : Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second day, after a report showed the world’s largest economy expanded less than forecast in the fourth quarter as consumers curbed spending. Ford Motor Co. (F) slumped 4.2 percent as profit missed estimates on overseas challenges. Chevron Corp. (CVX), the second- largest U.S. energy company, slid 2.5 percent after reporting its biggest earnings decline in two years. T. Rowe Price Group Inc., the asset manager that has posted a profit every quarter since going public in 1986, dropped 2 percent as earnings fell. Banks in the S&P 500 rose 1.1 percent as optimism grew that Greece will reach an agreement with bondholders. The S&P 500 decreased 0.2 percent to 1,316.33 as of 4 p.m. New York time. The benchmark gauge for American equities still capped a four-week gain. The Dow Jones Industrial Average retreated 74.17 points, or 0.6 percent, to 12,660.46 today.

European Stocks Post First Weekly Drop in Six; Petroplus Leads Declines (Source : Bloomberg)
European stocks declined for the first week in six after a report showed the U.S. economy grew slower that forecast in the fourth quarter and talks continued between Greece and its creditors for a debt-swap deal. Petroplus Holdings AG plunged the most ever after filing for insolvency. Royal KPN NV, the biggest Dutch telephone company, dropped 6 percent after predicting a decrease in 2012 profit and cash flow. Greek banks jumped on reports that debt- reduction talks have made progress, with EFG Eurobank (EUROB) Ergasias SA surging 79 percent. The benchmark Stoxx Europe 600 Index fell 0.2 percent this week. The gauge rallied 20 percent from its most-recent low on Sept. 22 through Jan. 26, satisfying the typical definition of a bull market by analysts. Stocks rebounded as the U.S. economy maintained its recovery and speculation grew that the euro area will contain the sovereign-debt crisis.

QE3 ‘Very Good’ for Emerging Stocks: Mobius (Source : Bloomberg)
Emerging market stocks would benefit from the cash injection created by a third round of U.S. asset purchases, with China, Russia and Taiwan looking “attractive,” Templeton Asset Management’s Mark Mobius said. Federal Reserve Chairman Ben S. Bernanke laid the groundwork last week for a third round of so-called quantitative easing, or QE3, saying that the Fed is prepared for further “accommodation.” The central bank, which bought $2.3 trillion of debt as part of QE1 and QE2, also reiterated a commitment to keep rates low until at least 2014. “QE3 is very, very good for emerging markets because it means there’s lots of cash in the system,” Mobius, who oversees about $40 billion as executive chairman of Templeton’s emerging markets group, said in a phone interview from Bangkok on Jan. 27. “I would expect more institutional flows into stocks, generally, and of course, emerging markets as well.”

U.S. Economy Grows 2.8%, Less Than Forecast (Source : Bloomberg)
Restrained spending by consumers held growth in the U.S. economy to a 2.8% annual pace in the fourth quarter, slower than economists forecast while still the fastest pace in more than a year. Gross domestic product, the value of all goods and services produced, climbed at a 2.8 percent annual pace following a 1.8 percent gain in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 79 economists surveyed by Bloomberg News called for a 3 percent increase. Growth excluding a jump in inventories was 0.8 percent. Federal Reserve officials this week said they were concerned about the economy’s lack of vigor two years after the recession ended, prompting a pledge to keep interest rates low at least until late 2014. The biggest gain in GDP since the second quarter of 2010 shows that the world’s largest economy has so far withstood the effects of the debt crisis in Europe.

Hiring Probably Climbed in January as U.S. Companies Gained Confidence (Source : Bloomberg)
Employers probably added workers to payrolls in January, showing companies are gaining confidence the U.S. expansion will weather Europe’s slump, economists said before reports this week. Employment grew by 150,000 after rising by 200,000 in December, according to the median forecast of 68 economists surveyed by Bloomberg News. The jobless rate may have held at an almost three-year low of 8.5 percent. Other reports may show manufacturing accelerated this month and consumer confidence picked up. “The labor market is on firmer footing and manufacturing entered the year more upbeat,” said Ellen Zentner, a senior economist at Nomura International Securities LLC in New York. “Improvement in the labor market will go far in supporting the economic recovery in 2012.”
More hiring and larger wage gains are needed to ensure that consumer spending, which accounts for about 70 percent of the economy, strengthens after growing at the weakest pace of any post-World War II expansion. Concern that the jobless rate remains too high is among reasons the Federal Reserve last week said it will keep interest rates low for a longer period.

Treasury Five-Year Note Yields Decline to Lowest Ever on Fed Strategy (Source : Bloomberg)
Treasury five-year note yields fell to the lowest level ever after Federal Reserve officials unexpectedly said their benchmark interest rate will stay low until at least late 2014. Yields on the securities set three consecutive records after Fed Chairman Ben S. Bernanke said Jan. 25 that the central bank is considering additional asset purchases to boost growth. U.S. government debt rose for a third day yesterday as a report showed the U.S. economy grew at a slower-than-forecast 2.8% annual pace in the fourth quarter. The Labor Department is expected to report on Feb. 3 that unemployment remained at 8.5 percent this month. “Preparation for, and reaction to, the Fed’s low-rate commitment was the dominant trading trend of the week,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, said in a telephone interview.

China Preserves Monetary Ammunition (Source : Bloomberg)
China (CNGDPYOY) signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirements that some economists had predicted would come before a week-long holiday ending Jan. 28. Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that ratios were likely to fall ahead of the Lunar New Year festival, which boosts demand for cash. The central bank instead used reverse-repurchase contracts to add money to the financial system. Premier Wen Jiabao seeks to steer the world’s second- biggest economy through a property market slowdown and the weakest export growth since 2009 without re-inflating asset bubbles or driving up consumer prices. The central bank has left benchmark interest rates unchanged for the past six months, while making a single cut to reserve requirements, the first since 2008, that became effective in December.

South Korea Current-Account Surplus Narrows to 3-Month Low as Exports Slow (Source : Bloomberg)
South Korea’s current-account surplus narrowed to a three-month low in December as the trade surplus shrank on slowing exports and a jump in energy imports. The surplus was $3.96 billion, compared with a revised $4.56 billion in November, the Bank of Korea said in today’s statement in Seoul. The current account is the broadest measure of trade, tracking goods, services and investment income. Weak external demand is set to “weigh on Korean exports,” Ronald Man, a Hong Kong-based analyst at HSBC Holdings Plc. said before today’s data. At the same time, “Korean manufacturers are well positioned to remain price competitive on the global stage given input price growth has continued to ease alongside a weak won,” he said.

Indonesia’s Economy to Maintain ‘Upward Trajectory,’ Trade Minister Says (Source : Bloomberg)
Jan. 29 (Bloomberg) --Indonesia may sustain its economic growth, Trade Minister Gita Wirjawan said, as “fiscal prudence” helps improve the business climate and counter the impact on exports of the European debt crisis. The nation’s gross domestic product is “likely to stay on the upward trajectory,” Wirjawan said in a Bloomberg TV interview yesterday from Davos, Switzerland. “We’re not yet too much affected by what’s happening in Europe and also in the U.S., because exports only make up 26 percent of GDP unlike some other countries in Asia-Pacific.” Indonesia may trim debt to less than 20 percent of GDP in the next three years, from 24.5 percent last year, improving the business climate and leading to a higher rating, Wirjawan said. Moody’s Investors Service raised its sovereign rating on Indonesia to an investment grade Baa3 on Jan. 18

Euro Falls Versus Dollar Before EU Leaders Gather in Brussels on Crisis (Source : Bloomberg)
The euro failed to extend last week’s advance against the dollar before European Union leaders meet in Brussels today to discuss the region’s debt crisis. The yen maintained a two-day gain versus the 17-nation euro as Italy prepares to sell bonds today after its credit grade was downgraded by Fitch Ratings. Demand for the euro was supported amid speculation Greece and its private-sector creditors will reach an agreement on a debt swap this week. “Even with a resolution, the bottom line is that there’s going to be tough medicine having to be swallowed by Europe,” said Gavin Stacey, chief interest-rate strategist at Barclays Capital in Sydney. “There is a greater risk of a pullback in euro strength.”

Sarkozy May Increase French Value-Added Tax Rate to 21.2%, Le Monde Says (Source : Bloomberg)
French President Nicolas Sarkozy plans to announce tomorrow the value-added tax will be increased by 1.6 percentage points to 21.2 percent, Le Monde reported on its website today, without saying where it got the information.

Euro Officials Said to Discuss Veto Powers Over Greek Budget Decisions (Source : Bloomberg)
European policy makers are discussing plans to directly intervene in Greek budget decisions as the country struggles to cut its deficit, two euro-region government officials said today. Under the proposals, European institutions would have powers to implement austerity measures agreed under the terms of Greece’s bailout agreements, said one of the officials, who declined to be identified because the talks are confidential. The plan would accelerate decision making and strengthen the power of officials overseeing Greece’s budget as part of the so- called troika of the European Commission, the European Central Bank and the International Monetary Fund, the person said.
European leaders meet in Brussels on Jan. 30 as they draw up a fiscal compact to strengthen governance of the euro region after Greece (GDBR10) sparked a wave of financial turmoil that still threatens to splinter the bloc. With Greece struggling to meet the terms of bailout agreements struck over the past two years, European officials are trying to work out how to deal with countries that can’t meet the terms of bailout agreements.

Italy, Spain Are Among Five Euro-Zone Nations Downgraded by Fitch Ratings (Source : Bloomberg)
The credit ratings of Italy, Spain and three other euro-area countries were cut by Fitch Ratings, which said the five nations lack financing flexibility in the face of the regional debt crisis. Italy, the euro area’s third-largest economy, was cut two levels to A- from A+. The rating on Spain was also lowered two notches, to A from AA-. Ratings on Belgium, Slovenia and Cyprus were also reduced, while Ireland’s rating was maintained. The downgrades, flagged a month ago by Fitch, come as Greece negotiates with creditors on how to avoid a default and other euro nations struggle to bolster the region’s defenses against contagion should those talks fail. While sovereign-bond yields have fallen in Italy, Spain in recent weeks as the European Central Bank added liquidity, the countries downgraded yesterday still lack financial flexibility, Fitch said.

Greek Debt Talks Risk Derailing EU Summit Plan (Source : Bloomberg)
European Union leaders gather for their first summit of 2012 as a deteriorating economy and struggle to complete a Greek debt writeoff risk sidetracking efforts to stamp out the financial crisis. EU chiefs arrive in Brussels about 2 p.m. today to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year. Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings. Efforts to hold the 17-member euro area together with bolstered fiscal rules and a stronger firewall are colliding with stalled progress in Greece, where the crisis began in 2009. To prevent a financial collapse, Greek bondholders have been pushed to cede more ground after agreeing in October to take a 50 percent cut in the face value of more than 200 billion euros ($263 billion) of debt.

EU banks halt Iran grain trade finance -traders
LONDON/HAMBURG, Jan 26 (Reuters) - Major European Union banks have pulled back from financing grain shipments destined for Iran, hampering trade with the major importer of maize, banking and trade sources said on Thursday.
"It is now a fact that no EU banks will do trade financing for Iran destination cargoes of grains, oilseeds or whatever," one European grain trader said.