20120622 1011 Global Market Related News.

Asian Stocks Drop on Falling Commodity Prices, U.S. Data (Source: Bloomberg)
Asian stocks fell, with the regional benchmark index headed for a one-week low, as raw-material suppliers dropped after commodities entered a bear market and reports on U.S. home sales and manufacturing missed estimates. BHP Billiton Ltd. (BHP), the world’s biggest mining company, slipped 2.6 percent in Sydney. Samsung Electronics Co., the world’s largest mobile-phone maker by sales, fell 3 percent in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, lost 1.1 percent after 15 global banks were downgraded by Moody’s Investors Service. The MSCI Asia Pacific Index (MXAP) fell 1 percent to 114.41 as of 10:07 a.m. in Tokyo, heading for its lowest close since June 15. Almost 12 shares declined for each that rose in the gauge, which is paring this week’s advance. More than $5 trillion has been erased from global equities since March amid slowing economic growth in the U.S. and China, and a spreading European debt crisis that pushed Spain’s borrowing costs to a record.
“There will be further downside,” said Peter Elston, Singapore-based head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management, which oversees about $270 billion. “Things are still getting worse. When you have an essentially weak private sector, you’re relying on the government to step in and support things. You’re seeing a gradual weakening of the ability of governments to step in.” Japan’s Nikkei 225 Stock Average (NKY) fell 0.8 percent, while South Korea’s Kospi Index sank 2.1 percent. Australia’s S&P/ASX 200 Index slipped 1 percent. Markets in China are closed today for a holiday.

Japan Stocks Decline as U.S. Data Stoke Slowdown Concern (Source: Bloomberg)
June 22 (Bloomberg) --　Japanese stocks snapped a two-day rally, with shippers and brokerages leading the decline, as disappointing U.S. housing and jobs data stoked concern the global economy is slowing. Losses were limited as the dollar traded above 80 against the yen, lifting exporters’ outlook. Toyota Motor Corp. (7203), which gets 21 percent of its sales in North America, slid 0.5 percent. Mitsui & Co. (8031) led trading companies lower as commodities entered a bear market. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, lost 0.8 percent after 15 global banks were downgraded by Moody’s Investors Service. Olympus Corp. (7733) gained 1.7 percent on a report Sony Corp. (6758) is in final stages of talks to invest in the scandal- hit optics maker. The Nikkei 225 Stock Average (NKY) fell 0.8 percent to 8,749.95 as of 9:53 a.m. in Tokyo with volume 12 percent below the 30-day average. The gauge has added 2.1 percent this week, heading for a third weekly gain.
The broader Topix Index lost 0.8 percent to 747.74 today, with about five stocks dropping for each that rose. “Investors are getting jittery about a global economic slowdown stemming from Europe, where the debt crisis lingers,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc., Japan’s biggest brokerage. “Still, the yen is stabilizing and that provides a floor for Japanese stocks. Some makers of electronics and cars may edge higher with the currency’s impact on their earnings easing, limiting losses in the market.”

U.S. Stocks Tumble as Commodities Enter Bear Market (Source: Bloomberg)
U.S. stocks tumbled, while commodities entered a bear market, after signals of a global slowdown in manufacturing added to disappointing housing and labor market data at the world’s largest economy. Alcoa Inc. (AA) and Chevron Corp. (CVX) slumped at least 3.4 percent to pace losses in commodity shares. Bed Bath & Beyond Inc. (BBBY) plunged 17 percent as its earnings forecast trailed estimates. ConAgra Foods Inc. (CAG) rose 2.7 percent as the maker of Hebrew National hot dogs forecast profit that beat estimates. Standard & Poor’s 500 Index futures expiring in September rose 0.2 percent at 5:43 p.m. New York time as bank credit downgrades announced by Moody’s Investors Service matched expectations. The S&P 500 fell 2.2 percent to 1,325.51 at 4 p.m. in New York, its second-biggest loss in 2012. The Dow Jones Industrial Average slid 250.82 points, or 2 percent, to 12,573.57. Volume for exchange-listed stocks in the U.S. was about 7.2 billion shares, or 6.9 percent above the three-month average.
“It’s risk off,” said James McDonald, chief investment strategist at Northern Trust Corp. in Chicago, whose firm manages $717 billion. “The economy is losing momentum. The question will be how much the U.S. and China slow. On top of that, the Fed’s response yesterday was fairly tepid. While they indicated willingness to do more, they haven’t done it.”

European Stocks Decline; Invensys Shares Drop (Source: Bloomberg)
European stocks fell from their highest level in five weeks as the Federal Reserve cut its growth forecast for the U.S. economy and a survey indicated China’s manufacturing industry may shrink for an eighth month. BHP Billiton Ltd. (BHP) and Anglo American Plc (AAL) retreated as commodity prices decreased. Invensys Plc (ISYS) plunged 14 percent, its largest retreat in five months, after saying it’s no longer in talks with third parties. The Stoxx Europe 600 Index declined 0.5 percent to 248.4 at the close, after earlier climbing as much as 0.3 percent and dropping as much as 0.8 percent. The benchmark measure has fallen 8.8 percent from its high on March 16 amid concern that Greece will have to leave the euro currency union.
“The mood of market participants is still characterized by great uncertainty about future developments in Europe and the slowdown in China,” said Stefan Angele, head of investment management at Swiss & Global Asset Management Ltd. in Zurich, where he helps oversee about 80 billion Swiss francs ($84 billion). “On a positive note, with the current mood, all stocks have been pulled to the basement, even those companies that are profitable. There are some real bargains out there.”

German Stocks Retreat Most in Two Weeks on Manufacturing (Source: Bloomberg)
German stocks sank the most in two weeks as the nation’s manufacturing contracted more than expected, the Federal Reserve cut its U.S. growth forecast and factory output in the Philadelphia region shrank. Volkswagen AG (VOW), the world’s second-largest carmaker, fell 3.1 percent. SAP AG (SAP), the biggest maker of enterprise software, dropped 2.7 percent. Deutsche Boerse AG (DB1), the operator of the Frankfurt stock exchange, declined 2 percent. The DAX Index (DAX) slid 0.8 percent to 6,343.13 at the close of trading in Frankfurt, the largest drop since June 4. The benchmark gauge has fallen 11 percent from its 2012 high on March 16 amid growing concern that Greece will be forced to leave the euro. The broader HDAX Index lost 0.7 percent today.
Fed officials cut their estimate for economic growth in 2012 to 1.9 percent to 2.4 percent, down from an April forecast of 2.4 percent to 2.9 percent. The central bank expanded its so- called Operation Twist program at the end of a two-day meeting yesterday, replacing $267 billion of short-term bonds with longer-term debt through the end of 2012.

Emerging Stocks Drop Most in Three Weeks on China Data (Source: Bloomberg)
Emerging-market stocks dropped the most in four weeks as data signaled China’s manufacturing in June may contract for an eighth month and as commodities slumped. The MSCI Emerging Markets Index (MXEF) retreated 1.7 percent to 932.36 in New York, the biggest decline since May 23. Brazil’s Bovespa (IBOV) index sank 2.9 percent, led by Brasil Foods SA, the world’s biggest poultry exporter, and oil company OGX Petroleo & Gas Participacoes SA, as the S&P GSCI commodities gauge slid to the lowest level since 2010. The Shanghai Composite Index (SHCOMP) sank to the lowest level since March 29. Indian shares gained as JPMorgan Chase & Co. upgraded the nation’s equities.
A preliminary reading for a purchasing managers’ index from HSBC Holdings Plc and Markit Economics showed China’s manufacturing may shrink this month. Euro-area services and manufacturing output contracted for a fifth month in June, suggesting the economy may fail to grow in the current quarter. Federal Reserve Bank of Philadelphia’s economic index signaled the worst contraction in manufacturing in almost a year. “This will be perceived as short-term negative for risky assets, including global emerging markets,” Esther Law, a London-based director of emerging-markets strategy at Societe Generale SA, said in an e-mail. “Conditions of China’s manufacturing sector, especially the small- and medium-sized factories, continued to slip. The Fed just did the bare minimum with simply an extension of the operation twist.”

GLOBAL MARKETS-Growth worries hit shares and commodities
LONDON, June 21 (Reuters) - Rising concern about global growth triggered falls in shares and commodities  after data showed Chinese and European factory activity slowing, a day after the Federal Reserve extended its stimulus policy due to a weakening U.S. recovery.
"It is a worryingly steep downturn we are seeing (in Europe) and it is spreading from the periphery, which has been falling at an increased rate, through to Germany," said Chris Williamson, chief economist at Markit, which compiled the data.

Treasuries Remain Higher on Stocks as Gross Warns of Risk Assets (Source: Bloomberg)
Treasuries remained higher following a gain yesterday before German data forecast to show a gauge of business confidence in the euro region’s biggest economy slid to a two-year low. Demand for the safety of U.S. government securities was bolstered as Asian stocks extended a global rout. Bill Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co., said risk markets are vulnerable as the “monetary bag of tricks empties.” Moody’s Investors Service slashed credit ratings on 15 global banks, including Credit Suisse Group AG and UBS AG. “Even Germany can’t avoid a slowdown, showing the instability of Europe’s financial system is affecting the region’s economy,” said Hiromasa Nakamura, who helps oversee the equivalent of $42 billion as an investor at Mizuho Asset Management Co. in Tokyo. “The weakening global economy is leading to risk aversion among investors, putting downward pressure on Treasury yields.”
Ten-year yields were little changed at 1.62 percent as of 9:27 a.m. in Tokyo after falling four basis points in New York yesterday. They have gained four basis points since June 15. The 1.75 percent securities due in May 2022 traded at 101 6/32.

FOREX-Dollar gains, euro falls as German PMI disappoints
LONDON, June 21 (Reuters) - The dollar rose against the euro and growth-linked currencies  after the U.S. Federal Reserve disappointed investors who had expected it to opt for more aggressive easing - a move that would have boosted appetite for riskier currencies.
"The market has got used to terrible numbers from the euro zone. The focus is now on the Spanish auction, but the medium term outlook for the euro remains weak," said Geoff Kendrick, currency strategist at Nomura.

Dollar Heads for Weekly Gain Versus Peers on Stock Losses (Source: Bloomberg)
The dollar headed for a weekly gain against most of its major peers amid a worldwide slump in equities and signs of a global slowdown, boosting demand for safer assets. The euro maintained its biggest decline in six months versus the dollar before data today forecast to show German business confidence fell this month, a sign that the European debt crisis is hurting the region’s growth. Demand for the 17- nation currency was also limited after Moody’s Investors Service lowered credit ratings on 15 global banks, adding to concern that Europe’s fiscal woes are imperiling the world’s financial system. “Should global growth slow, that is likely to lead to buying of the dollar,” said Daisaku Ueno, a senior foreign- exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, a unit of Japan’s biggest listed bank. “In an ugly contest, the euro is likely to get more votes than the dollar because of the difference in their economic situations and monetary policy.”
The dollar traded at $1.2550 per euro as of 8:28 a.m. in Tokyo from yesterday, when it climbed 1.3 percent, the sharpest advance since Dec. 12. It has strengthened 0.7 percent this week. The greenback was at 80.18 yen from 80.28. The euro fetched 100.61 yen from 100.69, set for a 1.1 percent gain since June 15.

Aussie, N.Z. Dollars Climb as Data to Boost Easing Bets (Source: Bloomberg)
The Australian and New Zealand dollars climbed as U.S. reports next week may show slowing home sales growth and weakening confidence, boosting speculation the Federal Reserve will add to measures supporting growth. The so-called Aussie strengthened versus most of its 16 major peers this week after Fed Chairman Ben S. Bernanke said June 20 he may consider another round of asset purchases, or quantitative easing, after a two-day central bank meeting this week. Gains in both South Pacific currencies were tempered as Asian stocks extended a global equity rout and after Moody’s Investors Service lowered the ratings for 15 banks, including Credit Suisse Group AG and Morgan Stanley. “There are some prospects the Fed will embark on QE3 somewhere in the later part of the year,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There will still be interest to buy the Aussie and the kiwi on dips, but they’re still a sell on rallies.”
The Australian dollar rose 0.2 percent to $1.0053 as of 11:02 a.m. in Sydney. It was at 80.53 yen after falling 0.7 percent yesterday. New Zealand’s currency gained 0.2 percent to 78.81 U.S. cents. It bought 63.12 yen from 63.14 yesterday. The Aussie was little changed versus the U.S. dollar since June 15, after rising 3.7 percent the previous two weeks, the most since the period through Dec. 9. Its New Zealand counterpart also was little changed following a three-week gain of 4.5 percent.

Sales of Existing U.S. Homes Fell in May to 4.55 Million (Source: Bloomberg)
Sales of previously owned U.S. homes declined in May, showing an uneven recovery in residential real estate. Purchases of existing properties dropped 1.5 percent to a 4.55 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 4.57 million pace. The weakest employment gain in a year last month and limited access to credit are restraining a housing industry that’s been supported by record-low borrowing costs and cheaper properties that are drawing investors. The figures underscore Federal Reserve Chairman Ben S. Bernanke’s comments yesterday that the economy is failing to get a boost from a typical real- estate recovery. “There’s a gradual bleeding into the market of distressed properties,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. “It’s a bumpy trajectory” for housing. “It’s going to be a gradual recovery.”

Credit Suisse Cut 3 Levels as Moody’s Downgrades Banks (Source: Bloomberg)
Credit Suisse Group AG (CSGN)’s credit rating was cut three levels and Morgan Stanley (MS)’s was reduced by two as Moody’s Investors Service downgraded 15 banks in moves that may shake up competition among Wall Street’s biggest firms. Credit Suisse was cut to A2, the same as JPMorgan Chase & Co. (JPM) and BNP Paribas SA (BNP), as Moody’s completed a review of global banks with capital-markets operations it announced in February. Morgan Stanley and Zurich-based UBS AG (UBSN), the other firms singled out for three-level reductions, were lowered two steps instead, the ratings firm said yesterday in a statement. “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities,” Moody’s Global Banking Managing Director Greg Bauer said in the statement.
Lower ratings can lead to higher costs for borrowing and collateral. The downgrades leave Citigroup Inc. (C) and Charlotte, North Carolina-based Bank of America Corp. (BAC) as the lowest-rated banks among the 15 at Baa2, two levels above junk. Moody’s kept the long-term ratings of both lenders on negative outlook, which means they may be cut again.

U.S. Firings Stay Elevated and Factories Retrench: Economy (Source: Bloomberg)
More Americans than forecast filed claims for jobless benefits and manufacturing in the Philadelphia region shrank, adding to evidence the U.S. economic expansion is weakening. Applications for unemployment insurance payments fell by 2,000 to 387,000 in the week ended June 16, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for 383,000. The Federal Reserve Bank of Philadelphia’s factory index dropped to minus 16.6 in June, the lowest level since August. Stocks and bond yields fell as the data reinforced concerns the recovery is faltering after Fed policy makers yesterday cut their growth forecasts and extended a program to keep long-term interest rates low. Another report today showed sales of existing homes fell in May, indicating that tight credit and the weakest employment gains in a year are holding back residential real estate.
“The labor-market recovery appears to be stalling,” said Millan Mulraine, a senior U.S. strategist at TD Securities in New York. “We are likely to see further moderation in consumer spending, which suggests weakness in manufacturing. This provides confirmation of the Fed’s stance.”

Former Fed Chief Greenspan Says Economy ‘Very Sluggish’ (Source: Bloomberg)
Alan Greenspan, the former Federal Reserve chairman, said today the U.S. economy “looks very sluggish.” Greenspan, in a television interview on Bloomberg Surveillance with Tom Keene, also said he sees “global slack” in the economy. The Fed yesterday extended its Operation Twist program, which will swap $267 billion in short-term securities with longer-term debt through the end of 2012. Fed officials also downgraded their forecasts for growth and employment while noting “significant downside risks” to the economy remain. “It looks very sluggish to me,” Greenspan said when asked about the U.S. expansion. “We have a two-stage economy in this country.”
Referring to his recent writings, Greenspan said a little over 90 percent of the U.S. gross domestic product comes from producing assets with a life expectancy of less than 20 years. That part of the economy is “doing reasonably well.” He said the other approximately 8 percent, mainly the output of structures including single-family residences, is “down 50 percent.”

Bernanke Signals More Easing Likely if Job Growth Wanes (Source: Bloomberg)
Chairman Ben S. Bernanke is signaling the Federal Reserve will probably add to its record stimulus should the economy fail to make sufficient progress in creating jobs for 12.7 million unemployed Americans. The policy-setting Federal Open Market Committee yesterday extended its Operation Twist program and will swap $267 billion in short-term securities with longer-term debt through the end of 2012. Fed officials also downgraded their forecasts for growth and employment while noting “significant downside risks” to the economy. Bernanke, speaking at a Washington press conference, said policy makers are focusing “primarily” on the outlook for jobs in deciding whether to ease further, and more action would be needed without “sustained improvement in the labor market.” Payrolls grew at the slowest pace in a year in May, and the jobless rate has been stuck above 8 percent since February 2009.
“If job growth doesn’t pick up from the recent soft readings in the next few months, then the Fed would likely do more and do a full scale asset-purchase program,” said Dean Maki, chief U.S. economist at Barclays Plc in New York and a former Fed economist. “They’re prepared to take further action.” U.S. stocks slipped after the Fed cut its estimates for growth and Bernanke said progress in the labor market has slowed. The Standard & Poor’s 500 Index fell 0.2 percent to 1,355.69 in New York. The yield on the benchmark 10-year Treasury note rose four basis points, or 0.04 percentage point, to 1.66 percent.

Manufacturing in Philadelphia Region Shrinks at Faster Pace (Source: Bloomberg)
Manufacturing in the Philadelphia region shrank in June at the fastest pace in almost a year, showing the global economic slowdown is holding factories back. The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 16.6 in June, the lowest level since August, from minus 5.8 the previous month. Economists forecast the gauge would improve to zero, the dividing line between growth and contraction, according to the median estimate in a Bloomberg News survey. The report covers eastern Pennsylvania, southern New Jersey and Delaware. Manufacturing may keep ebbing as consumer spending, business investment and exports cool, reflecting the slowdown in global growth caused, in part, by the European fiscal crisis. The Federal Open Market Committee announced yesterday it would extend its efforts to keep long-term interest rates low in an effort to protect the expansion.
“It just reflects the sort of broader slowing we’re seeing,” Peter Newland, a New York-based U.S. economist for Barclays Plc, said before the report.

Index of U.S. Leading Economic Indicators Rises 0.3% (Source: Bloomberg)
The index of U.S. leading economic indicators rose more than forecast in May, propelled by a jump in home-building permits. The Conference Board’s gauge of the outlook for the next three to six months increased 0.3 percent after a 0.1 percent drop in April, the New York-based group said today. Economists projected the gauge would rise by 0.1 percent, according to the median estimate in a Bloomberg News survey. A labor market that’s lost momentum and more cautious spending among businesses are keeping economic growth from gaining speed. The Federal Reserve pledged yesterday to undertake further action to lower interest rates as a means of spurring growth.
“Everything is just growing at a really, really slow pace as decision makers in the U.S. keep a watchful eye on developments in Europe,” Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “When you look at various drivers of our forecast, there’s not one component that’s a major boost or a major drag.”

U.S. Firings Stay Elevated and Factories Retrench: Economy (Source: Bloomberg)
More Americans than forecast filed claims for jobless benefits and manufacturing in the Philadelphia region shrank, adding to evidence the U.S. economic expansion is weakening. Applications for unemployment insurance payments fell by 2,000 to 387,000 in the week ended June 16, Labor Department figures showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg News called for 383,000. The Federal Reserve Bank of Philadelphia’s factory index dropped to minus 16.6 in June, the lowest level since August. Stocks and bond yields fell as the data reinforced concerns the recovery is faltering after Fed policy makers yesterday cut their growth forecasts and extended a program to keep long-term interest rates low. Another report today showed sales of existing homes fell in May, indicating that tight credit and the weakest employment gains in a year are holding back residential real estate.

Americans Hold Dimmest View on Economic Outlook in Five Months (Source: Bloomberg)
The fewest Americans in five months said the economy was improving in June, signaling the slowdown in employment is seeping into consumer psychology. The share of households viewing the economy as heading in the right direction fell to 22 percent this month, the lowest since January, pushing the Bloomberg monthly expectations gauge to minus 11 from minus 1 in May. The weekly Bloomberg Consumer Comfort Index was minus 37.9 in the period ended June 17, down from a four-week high of minus 36.4. “The steady drip of dreary economic data and deteriorating labor market is reshaping public expectations,” said Bloomberg LP senior economist Joseph Brusuelas in New York. The decline “will likely result in slower spending, which in turn will likely have an adverse impact on business confidence.”
Growing pessimism raises the odds that retailers will continue to see demand cool after sales dropped over the past two months. Federal Reserve policy makers yesterday said they will expand a program aimed at reducing long-term interest rates in a bid to spur the world’s largest economy after lowering their outlook for growth and employment.

China Said to Propose Keeping Limit on Local Government Loans (Source: Bloomberg)
China’s banking regulator proposed keeping a cap on local government loans to curtail defaults while encouraging funding for railways, roads and affordable homes, a person with direct knowledge of the matter said. The China Banking Regulatory Commission suggested limiting loans to local government financing vehicles to levels reached at the end of 2011, according to a person with knowledge of the matter who asked not to be named because the proposal is confidential. The watchdog made the recommendation in a report sent to the cabinet after Premier Wen Jiabao’s call last month for the government to focus on growth, the person said. China is introducing stimulus measures to arrest a slowdown in the world’s second-biggest economy while enforcing risk controls. Bad debts rose for a second straight quarter for the first time since 2005 and banks’ earnings growth slowed in the three months to March 31, as steps to curb inflation pushed up funding costs and drove down property prices.
The CBRC’s proposal, which includes about 10 points and was submitted to the State Council, China’s cabinet, at the end of May, encourages banks to boost lending for “key” construction projects, toll roads, agriculture, export financing, consumer credit and small businesses, the person said. The regulator didn’t specify targets, the person said.

Made in China Not Worth Hassle for Small Firms Returning to U.S. (Source: Bloomberg)
When Sonja Zozula and Jerry Anderson founded LightSaver Technologies Inc. in 2009, everyone told them they should make their emergency lights for homeowners in China. After two years of outsourcing to factories there, last winter they shifted production to Carlsbad, California, about 30 miles (48 kilometers) from their home in San Clemente. “It’s probably 30 percent cheaper to manufacture in China,” Anderson says. Besides hassles including shipping, “it’s a question of, ‘How do I value my time at three in the morning when I have to talk to China?’” he says. As costs in China rise and owners consider the challenges of using factories 12,000 miles and 12 time zones away, many small companies have decided manufacturing overseas isn’t worth the trouble.
American production is “increasingly competitive,” says Harry Moser, founder of the Reshoring Initiative, a group of companies and trade associations trying to bring factory jobs back to the U.S. “In the last two years there’s been a dramatic increase” in the amount of work returning. An April poll of 259 American contract manufacturers -- which make goods for other companies -- showed 40 percent of respondents benefited this year from work previously done abroad, Bloomberg Businessweek reports in its June 25 issue. Nearly 80 percent were optimistic about 2012 sales and profits, according to the survey by MFG.com, a website that helps companies find manufacturers.

Canada’s Flaherty Tightens Mortgage Rules to Avert Bubble (Source: Bloomberg)
Canadian Finance Minister Jim Flaherty said he will tighten mortgage terms as the Group of Seven country with the soundest government finances tries to avert a household debt crisis. The government will shorten the maximum amortization period on mortgages the government insures to 25 years from 30 years, and lower the maximum amount homeowners can borrow against the value of their homes to 80 percent from 85 percent, Flaherty said in a statement delivered in Ottawa. Flaherty has been relying on regulatory steps to rein in mortgage borrowing, as concerns about a deepening debt crisis in Europe handicaps Bank of Canada Governor Mark Carney’s ability to raise historically low interest rates at home. The government has already reduced amortization limits twice since 2008, cutting them from 40 years.
“This will further reduce the total interest payments Canadian families make on their mortgages, helping them build up value in their homes more quickly and pay off their mortgage debt sooner,” Flaherty told reporters today in Ottawa. Government measures to reduce amortizations since 2008 will save a typical Canadian family with a C$350,000 ($342,064) mortgage about C$150,000 in debt costs, he said.

Samaras Names Banker to Greek Cabinet as Troika Prepares Return (Source: Bloomberg)
Greek Prime Minister Antonis Samaras appointed Vassilios Rapanos, head of the country’s biggest bank, to lead his finance team as the government prepares for talks with international creditors on relief from austerity measures. Rapanos, chairman of National Bank of Greece SA (ETE), was named as finance minister today after Samaras, the head of the New Democracy party, met with his coalition partners, socialist Pasok chief Evangelos Venizelos and Democratic Left leader Fotis Kouvelis. Demetris Avramopoulos, a former defense and tourism minister and mayor of Athens, was named foreign minister. “This government’s task is to tackle the crisis, open a path to growth and review terms of the loan agreement, without endangering the country’s European course or its place in the euro,” according to a joint statement issued by the three parties. “The goal is to create the conditions that will lead the country out of the crisis, and from the need to depend on loan accords in the future.”
The government, which includes 17 ministers and 21 deputy ministers, will be sworn in later today, to be followed by the first Cabinet meeting. Samaras was sworn in as prime minister yesterday, the country’s fourth premier since November, after New Democracy won a June 17 election with almost 30 percent.

Greece Faces Downgrade to Emerging-Market Status by MSCI (Source: Bloomberg)
Greece’s stock market was put under review for reclassification to emerging markets by MSCI Inc. (MSCI), a change that would make the European Union nation the first advanced country to be cut to developing status. The MSCI Greece Index (MXGR), which includes only two companies, is “structurally no longer in line with Developed Markets size requirements,” MSCI, whose stock indexes are tracked by investors with about $7 trillion in assets, said in a statement yesterday. The index provider said it may discontinue the calculation of the MSCI Greece Index should the stock valuations keep declining.
Greece completed the largest bond restructuring in history in March after holders forgave more than 100 billion euros ($127 billion) of debt. The MSCI Greece Index has lost 93 percent over the past five years as the economy contracted and politicians struggled to keep it within the 17-nation euro-region. Companies on the gauge trade at an average 8 times estimated earnings, a 34 percent discount to companies on the MSCI World Index. (MXWO) “The market has already made up its mind about Greek equities,” Michael Shaoul, the New York-based chairman of Marketfield Asset Management, wrote in an e-mail yesterday. “MSCI is simply bowing to the inevitable. In a sense they really need a new category, blown-up developed markets.”