20120511 1127 Global Market Related News.

Asian Stocks Fall Third Day as JPMorgan Loses $2 Billion (Source: Bloomberg)
Asian stocks dropped for a third day after JPMorgan Chase & Co. said it had a $2 billion trading loss as positions in credit securities proved riskier than expected, overshadowing signs U.S. employment is improving. National Australia Bank Ltd. (NAB), the nation’s fourth-largest lender, slipped 1 percent in Sydney. Yamada Denki Co. sank 5.6 percent in Tokyo after the electronics retailer forecast lower first-half profit. Genting Singapore Plc slipped 4.2 percent after the theme park and casino operator reported a 33 percent decline in first-quarter net income. Nissan Motor Co., the carmaker that gets about one-third of sales from North America, climbed 2.4 percent. “Clearly JPMorgan got it wrong,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “I suspect it’s probably a one off, but it comes during a week where we’ve seen risk off in a big way.”
The MSCI Asia Pacific Index fell 0.6 percent to 118.99 as of 10:54 a.m. in Tokyo, with about three shares falling for each that rose. The measure is heading for its biggest weekly loss in almost six months as France’s political changes and instability in Greece threaten to derail austerity plans and worsen Europe’s debt crisis.

Japanese Stocks Advance on U.S. Jobs, Progress in Greece (Source: Bloomberg)
Japanese stocks snapped a two-day loss after U.S. jobless claims fell and Greek officials reported progress forming a government, boosting the outlook for exporters. Shares also advanced on positive earnings forecasts. Nissan Motor Co. (7201), a carmaker that gets half its revenue in North America and Europe, rose 2.3 percent. Nikon Corp. jumped 7.8 percent after the camera maker’s net-income forecast beat estimates. Chubu Electric Power Co. paced declines among utilities after it was among seven power companies whose ratings were cut by Moody’s Investors Service. The Nikkei 225 Stock Average (NKY) added 0.2 percent to 9,030.55 as of 10:18 a.m. in Tokyo. The measure headed for a 3.7 percent drop this week, falling for the sixth week, the longest streak of losses since July 2008. The broader Topix Index was little changed at 765.39.
“Greece is unlikely to choose to exit the euro or reject a bailout,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about 1.9 trillion yen ($23.5 billion). “Japanese companies have reported conservative but solid earnings and remain on the path toward higher profits. The more selling we see due to risk aversion, the more we realize stocks are cheap.”

European Stocks Advance; Deutsche Telekom, Repsol Climb (Source: Bloomberg)
European stocks rose, erasing an earlier decline, as companies from Deutsche Telekom AG (DTE) to Repsol YPF SA (REP) posted better-than-estimated quarterly profit. Deutsche Telekom AG added 3 percent and Repsol YPF jumped 8.2 percent as the companies posted earnings that exceeded analysts’ forecasts. National Bank of Greece SA (ETE) led gains by lenders. KBC Groep NV (KBC) surged after reporting a smaller-than- estimated drop in profit. Bankia SA (BKIA) slid after Spain’s government said it will take over the lender. The Stoxx Europe 600 Index climbed 0.6 percent to 251.1 at the close in London, erasing an earlier decline of as much as 0.7 percent and snapping two days of losses. The benchmark measure has still slumped 7.8 percent since its highest level this year on March 16.
“Earnings continue being very supportive,” said Henk Potts, an equity strategist at Barclays Wealth in London, which oversees $239 billion. “They continue to beat estimates despite the very difficult environment. Corporate positions still look very bright and profitability very strong. Valuations are undemanding.”

S&P 500 Rises From 2-Month Low on Greece Government Talks (Source: Bloomberg)
The Standard & Poor’s 500 Index (SPX) rose, rebounding from the lowest level in two months, as Greece attempted to form a new government and a decline in American jobless claims helped allay concern of a labor market setback. Wells Fargo & Co. (WFC) and U.S. Bancorp rose at least 1.4 percent to pace gains in banks. News Corp., the media company run by Rupert Murdoch, and Monster Beverage Corp. (MNST), an energy- drink maker, rallied more than 4.8 percent as earnings beat estimates. Cisco Systems Inc. (CSCO) sank 10 percent as its forecasts disappointed investors. S&P 500 futures fell 0.5 percent at 5:01 p.m. as JPMorgan Chase & Co. (JPM) slumped 3.8 percent after saying one of its divisions had “significant” mark-to-market losses.
The S&P 500 rose 0.3 percent to 1,357.99 at 4 p.m. New York time. The Dow Jones Industrial Average added 19.98 points, or 0.2 percent, to 12,855.04. The Nasdaq-100 Index (NDX) dropped 0.2 percent to 2,616.24, led by Cisco, which comprises 3.1 percent of the measure. About 6.6 billion shares changed hands on U.S. exchanges, almost in line with the three-month average. “They are still talking in Greece and that brings some relief,” said Walter “Bucky” Hellwig, who helps manage $17 billion at BB&T Wealth Management in Birmingham, Alabama. “The crash off the cliff in terms of an extreme political alliance didn’t play out today. In the U.S., jobless claims didn’t surprise negatively. That was seen as a positive.”

U.S. Stock-Index Futures Drop as JPMorgan Reveals Losses (Source: Bloomberg)
U.S. stock futures fell as investors assessed a disclosure by JPMorgan (JPM) Chase & Co., the biggest U.S. bank by assets, that it had a $2 billion trading loss after positions in credit securities proved riskier than expected. JPMorgan tumbled 6.7 percent after the close of regular trading as Chief Executive Officer Jamie Dimon said the bank made egregious mistakes and that trading losses were “self inflicted.” Bank of America Corp., Citigroup Inc. (C), Goldman Sachs (GS) Group Inc. and Morgan Stanley (MS) lost at least 2.3 percent. Standard & Poor’s 500 Index futures expiring in June slumped 0.7 percent to 1,347.70 at 9 a.m. Tokyo time. Financial companies in the S&P 500 had the biggest gain among 10 groups in 2012, surging 15 percent, or almost double the benchmark measure’s advance. Dow Jones Industrial Average futures dropped 80 points, or 0.6 percent, to 12,754.
“JPMorgan has held to a higher standard among the banks,” Walter Todd, who oversees about $950 million as chief investment officer at Greenwood Capital in Greenwood, South Carolina, said in a telephone interview. “If this happens to them, it raises the question: if they have these issues, who else does?” JPMorgan led a slump in financial shares after the close of regular trading. The group comprises 15 percent of the S&P 500 for the second-biggest weighting among 10 industries. The bank’s shares retreated 6.7 percent to $38.

Euro at 3-Month Low as Greek Concerns Weigh on Debt Sales (Source: Bloomberg)
The euro slid to a three-month low before Italy, Spain and France sell bonds next week amid concern the region’s debt crisis is deepening. The shared currency headed for a second weekly drop as Greek political leaders go into a fifth day of talks to form a government and before an official report forecast to show the euro region’s economy contracted for a second quarter. The dollar and the yen were poised to rise versus most major peers this week as concern Greece will be unable to stay in the euro bloc boosted demand for safer assets. “We can’t become positive and buy the euro,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “Regardless of whether Greece exits the euro, it will take a lot of time to resolve the region’s debt crisis.”
The euro weakened to $1.2907, the lowest since Jan. 23, before trading at $1.2909 as of 10:38 a.m. in Tokyo, 0.2 percent lower than the close in New York. It’s poised for a 1.4 percent decline this week. The common currency slid 0.2 percent to 103.16 yen, set for a 1.3 percent drop since May 4. The dollar was little changed at 79.92 yen. Italy will sell securities on May 14 maturing in 2015, 2020, 2022 and 2025, followed by Spanish and French debt sales on May 17. It will be the first French auction after Francois Hollande is sworn in as president on May 15.

Facebook IPO Said to Get Weaker-Than-Forecast Demand (Source: Bloomberg)
Facebook Inc. (FB)’s initial public offering has so far generated lower-than-expected demand from institutional investors who are concerned about the company’s growth prospects, people with knowledge of the matter said. Some investors expressed reluctance after Facebook said on May 9 that advertising growth hasn’t kept pace with the increase in users, said the people, who asked not to be identified because the process is private. Facebook is also telling analysts that sales may not meet their most optimistic projections, two people said. Facebook executives have another week to market the IPO, scheduled to price on May 17, and underwriters are stepping up efforts to drum up interest from large shareholders, one person said.
Underscoring concerns that growth may taper for the world’s biggest social network, 79 percent of respondents in the Bloomberg Global Poll of 1,253 investors, analysts and traders who are Bloomberg subscribers said Facebook doesn’t deserve a valuation at $96 billion, the high end of its projected range. Lackluster interest from institutional investors at this stage could compel the company to rely more on buying from retail investors, from whom demand remains robust, people said. The company could still elicit enough demand to sell shares at or above the high end of a projected range, people said.

FOREX-Euro wallows at 3 1/2-month low on Greek deadlock
TOKYO, May 10 (Reuters) - The euro wallowed near a 3 1/2-month low against the dollar on Thursday as political deadlock in Greece threatens its rescue deal and raises the spectre of the country risking insovency and leaving the euro zone.  
"Uncertainty over Greece is going to weigh on markets," said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

Korean Won Climbs, Bonds Fall on IMF Forecast, Spain (Source: Bloomberg)
South Korea’s won headed for its biggest weekly loss in five months and government bonds advanced as political changes in Europe heightened concern the region’s debt crisis will worsen, sapping demand for riskier assets. Greece’s political leaders enter a fifth day of talks today to carve out a government following a May 6 election. French Socialist Francois Hollande, who has called for a re-negotiation of the budget-discipline pact crafted by European leaders, was elected president. The Bank of Korea held its benchmark interest rate at 3.25 percent for an 11th month yesterday, citing a “mild” recession in Europe. Global funds cut their holdings of Korean stocks by $1.3 billion this month through yesterday and the Kospi (KOSPI) Index is set for its lowest close since January.
The won slid 1.1 percent this week to 1.143.45 per dollar as of 9:31 a.m. in Seoul, the biggest drop since the five days ended Dec. 9, according to data compiled by Bloomberg. The currency fell 0.1 percent today. One-month implied volatility for the won, a measure of exchange-rate swings used to price options, jumped 82 basis points, or 0.82 percentage point this week, to 8.2 percent.

Treasuries Head for Longest Weekly Rally Since 1998 (Source: Bloomberg)
Treasuries headed for an eighth weekly gain, the longest run since Russia devalued the ruble in 1998, as Europe’s debt crisis and signs of slower growth increased demand for the relative safety of U.S. securities. The Federal Reserve plans to buy as much as $2 billion of Treasuries due from February 2036 to February 2042 today, according to the Fed Bank of New York’s website. The purchases are part of the central bank’s effort to replace $400 billion of shorter-term debt in its holdings with longer maturities by the end of June to hold down borrowing costs. “The U.S. is our favorite bond market,” said Hiromasa Nakamura, who is based in Tokyo and invests Treasuries for Mizuho Asset Management Co., which oversees the equivalent of $41.2 billion. “The U.S. economy is very fragile.” Benchmark 10-year yields were little changed at 1.87 percent as of 9:40 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The price of the 1.75 security due in May 2022 was 98 30/32.
Ten-year yields declined two basis points this week, approaching the record low of 1.67 percent set Sept. 23. A basis point is 0.01 percentage point.

U.S. Posted Budget Surplus of $59.1 Billion in April (Source: Bloomberg)
The U.S. government posted a budget surplus in April, the first in more than three years, as tax revenue climbed and spending dropped. Receipts topped outlays by $59.1 billion compared with a deficit of $40.4 billion in April 2011, the Treasury Department said today. Economists projected a $35 billion surplus, according to the median estimate in a Bloomberg News survey. It was the first surplus since September 2008 and the biggest since April 2008. “The total federal budget deficit is slowly shrinking,” said Steven Wood, president of Insight Economics LLC in Danville, California. “However, this improvement has been halting, due largely to erratic economic and employment growth.” President Barack Obama, in his campaign to win a second term, is trying to make the case that while the recovery has been uneven, the U.S. is making progress. The administration has said won’t accept any of the dozen spending bills House Republicans are working on unless they agree to abide by a budget deal reached last year.
The dispute may lead to a government shutdown shortly before the November elections unless lawmakers agree on legislation to keep agencies operating in the 2013 fiscal year, which starts Oct. 1.

Jobless Claims Allay Concern on U.S. Job Market: Economy (Source: Bloomberg)
Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the U.S. labor market is faltering. First-time claims dropped by 1,000 to 367,000 in the period ended May 5, the Labor Department said today in Washington. Other reports showed that a gauge of consumer confidence declined to a three-month low, and the trade deficit widened on rising demand for imports from oil to autos. Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. Declines in dismissals point to a brighter labor market that would help sustain consumer spending after payroll growth slowed last month.
“The health of the labor market is improving,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. Hoffman is the most accurate forecaster of payrolls in the two years ended in March, according to Bloomberg data. “It gives me a little bit of encouragement that the May employment report won’t be a third-strike-you’re-out type of number.” Stocks rose as Greece attempted to form a new government to try and remain in the euro area. The Standard & Poor’s 500 Index climbed 0.3 percent to 1,357.99 at the close in New York.

Bernanke Speaks About Risks From End of Pro-Growth Plans (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke spoke to a group of senators today about the potential harm to the economy from the expiration of several pro-growth policies, according to senators who attended the meeting. Bernanke discussed the scheduled end of programs including the Bush tax cuts, the payroll tax holiday and extended unemployment benefits, as well as budget cuts that are set to take effect in January of 2013, said Kent Conrad, a North Dakota Democrat. “It’s clear to all of us and he stressed that if all of these things occur it could drive us back into a worse recession,” said Richard Durbin of Illinois, the chamber’s No. 2 Democrat, after the meeting. “The sooner we can resolve these issues, the more likely we are to give confidence to consumers and investors across America.”
Bernanke has warned before of a possible setback to growth from the expiration of tax cuts and reductions in federal spending. The policy changes could more than offset the economy’s progress in recovering from the longest recession since the Great Depression, he said in an April 25 press conference.

Fed’s Kocherlakota Sees ‘Persistent’ Damage to Job Market (Source: Bloomberg)
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said damage to the labor market may persist even as the expansion continues, holding U.S. unemployment higher than the usual rate since World War II. Central bankers must “contemplate the possibility that the erosion in labor market performance that we’ve seen in the United States over the past five years may be highly persistent, even under appropriate monetary policy,” Kocherlakota said today in a speech in Minneapolis. Accelerating inflation is “a signal that our country’s current labor market performance is much closer to ‘maximum employment’ than the post-World War II U.S. data alone would suggest.” The Fed in an April 25 statement affirmed a plan to keep its main interest rate near zero through at least late 2014, citing “elevated” joblessness. Kocherlakota added today that he believes interest rates may need to be raised earlier because the economy is improving.
“We have to be careful not to let things get ahead of ourselves in the sense that we might have to start to move as early as I indicated, in six to nine months,” the district bank head told reporters after the speech. The central bank would need to begin to “prepare the ground for raising rates” if “we continue to see inflation ticking upwards,” he said, citing his forecasts for 2 percent inflation this year and 2.3 percent in 2013.

Senator Blunt Says New Rules on Labor Data Risk Market Turmoil (Source: Bloomberg)
The Department of Labor’s move to restrict how journalists transmit market-sensitive economic data risks disrupting financial markets, Senator Roy Blunt said. In a letter to Secretary of Labor Hilda Solis, Blunt, a Missouri Republican, objected to the agency’s plan to have media organizations remove from the department computer software, hardware and communications lines used to transmit news on data such as the unemployment rate and consumer prices. “Given the market-moving impact of these numbers and the largely automated processes of today’s market institutions, even a minor flaw in the timing or accuracy of this data could result in a destructive impact on global markets,” Blunt wrote in his letter, dated today.
Reporters in so-called lockups are given data in advance of its release to the public, allowing time to prepare stories using their own hardware, software and data lines. The new system would force journalists, including Bloomberg News reporters, to use government-provided equipment and Internet access, with no guarantee they can send their stories at exactly the same moment.

Volcker Rule Proponents Say JPMorgan Loss Bolsters Case (Source: Bloomberg)
U.S. lawmakers and interest groups favoring tighter restrictions on proprietary trading said JPMorgan Chase & Co. (JPM)’s $2 billion loss on synthetic credit securities bolsters their case. Senator Carl Levin, the co-author of the so-called Volcker rule and chairman of the Permanent Subcommittee on Investigations, said the New York-based bank’s disclosure yesterday served as a “stark reminder” to regulators drafting the proprietary-trading ban required by the 2010 Dodd-Frank Act. “The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too-big-to-fail’ banks have no business making,” Levin, a Michigan Democrat, said in a statement.
The Federal Reserve, Securities and Exchange Commission and Federal Deposit Insurance Corp. are among regulators drafting the so-called Volcker rule to limit bets banks can make with their own funds. JPMorgan, with other Wall Street banks including Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), have lobbied regulators to expand exemptions included in a draft proposal released last year.

China’s April Consumer Inflation Slows to 3.4% (Source: Bloomberg)
China’s inflation was below the government’s target for a third month, giving Premier Wen Jiabao more room to ease policy to stimulate an economy that expanded last quarter at the slowest pace since 2009. Consumer prices rose 3.4 percent from a year earlier after a 3.6 percent gain in March, the National Bureau of Statistics said today. That matched the median estimate in a Bloomberg News survey of 35 economists and compares with the government’s 4 percent annual goal. Inflation under control may boost odds of additional monetary or fiscal stimulus after Wen’s campaign to rein in property and consumer prices slowed growth in the world’s second-largest economy. The government may also have an easier path to loosen controls on prices of resources and utilities.
“Moderating inflation will leave the window open for further policy easing in coming months,” Shen Jianguang, chief Asia economist for Mizuho Securities Asia Ltd. in Hong Kong, said before the release. “Authorities may gradually ease some restrictions on the property market and accelerate infrastructure projects and social housing construction to boost growth.”

China Confidence Unshaken by Bo Crisis in Global Poll (Source: Bloomberg)
China’s deepest political turmoil since 1989 has failed to shake confidence in the strength of its economy and allure of its markets, a Bloomberg poll indicated.
A 51 percent majority are confident in the policies of President Hu Jintao, the quarterly Bloomberg Global Poll of investors, analysts and traders who are subscribers showed. The share was the same as in January, unaffected by the aftermath of former Chongqing Communist Party boss Bo Xilai’s March ouster, which clouded the outlook for this year’s once-in-a-decade leadership change. China’s economy will either improve or remain stable this year, according to 68 percent of respondents, with the share anticipating a deterioration falling to 30 percent, the lowest level since the question was first included in the poll in September. Bo’s exit may prove positive by helping to rein in the type of debt-fueled growth that drove Chongqing’s expansion, according to Redward Associates Ltd.
“Chongqing highlighted that you can accelerate growth temporarily by ramping up debt and by driving state-directed capitalism,” said Peter Redward, 40, principal of Auckland- based Redward, an ex-head of emerging markets Asia research at Barclays Capital and participant in the poll. "A growth model of less state-owned enterprise and bank-directed growth and more private enterprise and social welfare is the way forward.”

Hong Kong Exchanges Said to Make Offer for London Metal Exchange (Source: Bloomberg)
Hong Kong Exchanges & Clearing Ltd. (388), Asia’s biggest bourse operator, submitted a takeover bid for the London Metal Exchange, two people with knowledge of the matter said. “LME is a big opportunity for all exchanges,” Kenneth Yue, an analyst at CCB International Securities Ltd., said in Hong Kong. “If Hong Kong Exchanges can win the bidding, it will definitely be good for the exchange in the long run. Many analysts think that the cash market is mature.” Hong Kong Exchanges, which this year was overtaken as the world’s largest market company, will be making its first overseas acquisition should it beat competing offers from CME Group Inc. (CME), NYSE Euronext (NYX) and IntercontinentalExchange Inc. (ICE) for the LME. The Asian bourse operator is seeking to stem two consecutive quarters of profit declines as trading volumes and initial public offerings slow.
Scott Sapp, a spokesman for Hong Kong Exchanges, declined to comment beyond an April 30 statement from the bourse that said it “continues to participate in the process.” The people familiar with the bourse’s bid asked not to be identified because the process is confidential. Hong Kong Exchanges has declined 5.6 percent in trading this year, valuing the company at $16.3 billion. Shares of Chicago-based CME, owner of the world’s biggest futures exchange, have gained 6.7 percent for the same period, increasing its market value to $17.3 billion.

Germany Examines Bank Use of ECB Loans on Bubble Fear (Source: Bloomberg)
German lenders’ use of cheap loans from the European Central Bank is under examination by the country’s top banking supervisor amid concerns the influx of funding may eventually create “a new bubble.” Banks that took “implausibly high” amounts have to explain how they plan to use the money, said Raimund Roeseler, head of banking supervision at the country’s financial regulator Bafin. The exercise is part of a strategy change focusing more on what banks plan for the future than looking at what they did in the past, he said. The ECB has flooded financial markets with more than 1 trillion euros ($1.3 trillion) of cheap cash to prevent credit markets from freezing up. European Union lawmakers have already demanded that banks disclose profits from carry trades derived from the so-called longer-term refinancing operations and exclude the money from bonus pools.
“In the short-term perspective, the main problem is the European sovereign-debt crisis; in the medium term it’s the question: what happens with all that liquidity?” Roeseler said in an interview at his office in Bonn. “If I see a huge number of banks all go into one field, I’m afraid of a new bubble.” Bafin will review whether borrowing is in line with refinancing needs, he said.

Greece Strives for Government After Election Raises Doubt (Source: Bloomberg)
Greece’s political leaders go into a fifth day of talks today to carve out a government with Evangelos Venizelos, the socialist Pasok leader, set to press counterparts on a proposal for a unity government that would avert a new election. Venizelos, who received the mandate to form a government yesterday, said there was a first “good omen” since the inconclusive May 6 election, after Democratic Left leader Fotis Kouvelis outlined a proposal designed to keep the country in the euro area. “Our views are very close,” Venizelos said to reporters in Athens after meeting with Kouvelis. “I will continue the effort, preparing the ground for the phase of negotiation that will be coordinated by the president of the republic.”
Greece’s political impasse has raised the possibility another election will have to be held as early as next month, threatening the implementation of austerity pledges. The standoff has reignited European concerns over Greece’s ability to hold to terms of its two bailouts negotiated since May 2010 and sparked concerns about the country leaving the euro.

Spain Stakes Credibility on Fourth Bank Cleanup in Three Years (Source: Bloomberg)
Spain will make a fourth attempt to convince investors its banking system is solid after failing to do so with three prior tries in as many years. “All the previous efforts have been announced with a drumroll and a big clash of cymbals but they weren’t credible in the end,” said Javier Diaz-Gimenez, an economics professor at the University of Navarra’s IESE business school in Madrid. “They must get it right this time.” Spain took control of the nation’s fourth-biggest lender on May 9 and Prime Minister Mariano Rajoy, who said for the first time he may use public money to save banks, will announce further measures today to help cleanse lenders of real estate assets. A failure to shore up the system and assuage investors’ concerns threatens to escalate Europe’s sovereign-debt crisis.
Rajoy said in a radio interview on May 7 his government would put forward plans to bolster confidence in Spanish lenders today. Economy Minister Luis de Guindos said on May 3 he was preparing rules that would allow banks to offload real estate that has been written down to market prices into separate management companies.

Italy Industrial Output Unexpectedly Rebounds Amid Slump (Source: Bloomberg)
Italian industrial production rebounded in March even as the country’s fourth recession since 2001 weighs on demand for manufactured goods. Output rose 0.5 percent from February, when it declined 0.7 percent, national statistics office Istat said in Rome today. Economists forecast a gain of 0.1 percent, according to the median of 18 estimates in a Bloomberg News survey. Production fell 5.8 percent from a year ago on a workday-adjusted basis. Mario Monti, the unelected premier who took over after Silvio Berlusconi’s resignation in November, has pushed through 20 billion euros ($26 billion) in spending cuts and tax increases in a bid to eliminate the budget gap. The austerity measures tipped Italy into a recession in the fourth quarter and Monti was forced last month to push back the government’s goal to balance the budget by one year to 2014.
“Recovery is becoming more distant as domestic demand declines more than forecast and the exports lost momentum compared with few months ago,” employers’ lobby Confindustria said in an-emailed statement. Industrial output declined 0.6 percent in April, while gross domestic product dropped 1 percent in the first quarter and “may fall” even more in the three months through June, the group estimated.