20121214 0942 Global Markets Related News.

Asia FX By Cornelius Luca - Thu 13 Dec 2012 17:59:01 CT (CME/www.lucafxta.com)
The appetite for risk was mixed on Thursday after briefly flaring up the previous day on news that the Federal Reserve targeted a 6.5% unemployment rate before tightening borrowing. All eyes are on the "fiscal cliff" game of politics. The Eurozone finance ministers confirmed the next round of aid for Greece, as expected. The foreign currencies ended divergently, with only euro and franc gaining. The yen remains soft after sliding to a new low for its downtrend and is approaching the neckline of a long-term head –and-shoulders in the 1.1960 area. The US stock indexes fell. The short-term outlook for the financial currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on all European currencies. Good luck!

Overnight
US: Retail sales increased by 0.3% in November following a 0.3% decrease in October.
US: The PPI fell by 0.8% in November following a 0.2% drop in October. The core PPI edged up by 0.1% in November after dipping by 0.2% in October.US: Initial jobless claims decreased 29,000 to 343,000 last week from the previous week's revised figure of 372,000 (370,000 originally reported).
US: Business inventories rose 0.4% in October, less than +0.7% in September. Business sales fell 0.4% after surging 1.2% in the previous month.
Canada: Capacity utilization was unchanged at 80.9% in the third quarter.
Canada: The New Housing Price Index rose again by 0.2% in October.

Today's economic calendar
China: HSBC manufacturing PMI for December
China: FDI - Foreign direct investment  for November
Japan: Tankan large all industry for the fourth quarter
Japan: Industrial production for October

Asian Stocks Snap 11-Day Rally Amid U.S. Budget Deadlock (Bloomberg)
Asian stocks fell, with the regional benchmark index heading for its first decline in 12 days, amid a deadlock in U.S. budget negotiations and as investors awaited a report on Chinese manufacturing. Samsung Electronics Co. (005930), the world’s biggest smartphone maker, retreated 1.1 percent in Seoul after closing at a record yesterday. Tohoku Electric Power Co. slipped 1.6 percent in Tokyo after Jiji News Agency reported its Higashidori nuclear plant is on an active fault line. APN News & Media Ltd. sank 6.4 percent in Sydney after the newspaper publisher forecast lower second-half revenue. The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 127.01 as of 9:33 a.m. Tokyo time. Markets in China and Hong Kong have yet to open. The gauge advanced 12 percent this year through yesterday amid signs the world’s biggest economies are improving and optimism U.S. lawmakers will agree on a budget deal to avert the so-called fiscal cliff.
“It’s very hard to gauge a handle on what’s happening with the fiscal cliff,” said Stephen Corry, a Hong Kong-based chief investment strategist at LGT Group, a private banking and asset management group that manages about $102 billion. “Valuations don’t look particularly excessive to me. With the reacceleration of the Chinese economy and a better cyclical outlook for the first half of next year, people are more confident in the price- earnings multiples that they’re paying.”

Japan Stocks Swing Between Gains, Losses on Tankan Survey (Bloomberg)
Japanese shares swung between gains and losses after the central bank’s Tankan survey of large manufacturers showed more pessimism than expected, and as an opposition party calling for more easing is poised to return to power in an election this weekend. The Nikkei 225 Stock Average (NKY) fell 0.1 percent to 9,733.41 as of 9:16 a.m., breaking a two-day rally. The price for December futures and options contracts, also known as the “special quotation,” settled at 9,720.36, according to data compiled by Bloomberg. The broader Topix Index gained 0.1 percent to 799.99, with about four stocks falling for every three that gained.

U.S. Stocks Fall as Budget Impasse Offsets Jobless Claims (Bloomberg)
U.S. stocks retreated, snapping a six-day advance in the Standard & Poor’s 500 Index, as the standoff in federal budget negotiations overshadowed a decline in jobless claims and a rebound in retail sales. Newmont Mining Corp. and Mosaic Co. dropped at least 1.4 percent to pace losses in commodity shares. Phillips 66, the crude refiner that was spun off from ConocoPhillips in May, declined 1.6 percent on plans to raise as much as $400 million in an initial public offering for a minority interest in some of its pipeline and logistics assets. CVS Caremark Corp. (CVS) climbed 2 percent after forecasting profit that beat estimates. Best Buy Co. jumped 16 percent on a report that founder Richard Schulze will offer to take the company private by Dec. 15.
The S&P 500 fell 0.6 percent to 1,419.45 at 4 p.m. New York time. The Dow Jones Industrial Average dropped 74.73 points, or 0.6 percent, to 13,170.72. About 6.1 billion shares changed hands on U.S. exchanges, or in line with the three-month average, according to data compiled by Bloomberg. “It’s going to be a bumpy ride until we see some type of deal on the fiscal cliff,” said Matt McCormick, who helps oversee $7.3 billion as a money manager at Cincinnati-based Bahl & Gaynor Inc. “Speeches and speculation are the drivers of the market right now. I’m hopeful that we’ll see a resolution, but the politicians seem to be going a different tune.”
U.S. House Speaker John Boehner repeated his insistence that President Barack Obama’s budget proposal is “anything but” balanced and accused the president of being “not serious” about cutting spending. Obama said the negotiations are “still a work in progress.” The deadlock in talks to avoid more than $600 billion in tax increases and spending cuts will start taking effect in January unless Congress averts them.

European Stocks Drop on Bernanke’s Fiscal-Cliff Warning (Bloomberg)
European stocks fell from an 18- month high as Federal Reserve Chairman Ben S. Bernanke said the central bank’s plan to buy $45 billion a month of Treasuries will fail to offset the effects of the fiscal cliff. Deutsche Bank AG (DBK) slid 2.7 percent after Germany’s biggest lender said fourth-quarter profit will fall short of estimates. Centamin Plc (CEY) tumbled 47 percent after a fuel dispute halted production at its gold mine in Egypt. Volvo AB (VOLVB) retreated 4.3 percent as Renault SA (RNO) sold its remaining stake in the Swedish truckmaker to increase funding. The Stoxx Europe 600 Index lost 0.4 percent to 279.63 at the close, its first decline this month. The equity benchmark has still increased 14 percent in 2012, closing at the highest level since May 2011 yesterday, as the European (SXXP) Central Bank pledged to buy the bonds of nations who seek aid.
“What Bernanke said is true: the extension of the program can’t offset the fiscal drag,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “Interest rates are already very low and any additional monetary stimulus is marginal. All the focus is still on the ongoing negotiation between the U.S. government and the majority leader of the House of Representatives. The sentiment is still cautious.” National benchmark indexes retreated in 11 of the 18 western European markets. The U.K.’s FTSE 100 (UKX) slid 0.3 percent and Germany’s DAX declined 0.4 percent. France’s CAC 40 decreased 0.1 percent.

Most Emerging Stocks Fall on U.S. Fiscal Cliff Deadline (Bloomberg)
Most emerging-market stocks declined, as consumer and energy companies fell amid wrangling between U.S. lawmakers over a solution to avert more than $600 billion in spending cuts and tax increases. Paper maker Klabin SA dropped the most since May, leading a slump in raw-material producers in Brazil. National Societe Generale Bank (NSGB) plunged 9.9 percent in Cairo after the biggest shareholder sold its stake in the Egyptian lender for less than market value. Samsung Electronics Co. (005930) climbed 2.9 percent to a record, boosting a gauge of developing-nation technology stocks to its highest level since April 2000.
The MSCI Emerging Markets Index (MXEF) was little changed at 1,042.56 in New York, with 390 stocks falling and 384 rising, after advancing over the past six days. Commodities plunged the most in a week and oil dropped for the first time in three days after Republican House Speaker John Boehner said the White House is not serious about cutting spending to prevent the cuts and tax increases that are due to come into force at the start of January. Data today showed U.S. retail sales climbed less than expected in November. “There’s a lot of concern about the fiscal cliff in the U.S.,” Seth Freeman, chief executive officer at EM Capital Management LLC, said by phone from San Francisco. “It’s just classic uncertainty. Investors, no matter how experienced, are more cautious.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, lost 0.4 percent to $43.19 in New York. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, increased 0.4 percent to 21.22.

Air Cargo Slowdown Puts Squeeze on Specialist Carriers (Bloomberg)
Dedicated air-freight operators are struggling to remain viable as a sluggish economy undermines their ability to compete with the cargo space on offer from carriers focused on the more buoyant passenger market. Companies such as Cargolux Airlines International SA, Europe’s top freight-only carrier, are reviewing their business models, while Deutsche Lufthansa AG (LHA), which runs a cargo-only unit alongside its passenger routes, has idled planes. The utilization of freighter aircraft has slumped below 42 percent as capacity far outstrips demand, the International Air Transport Association said yesterday. That’s forcing cargo specialists to target marginal markets where they don’t have to compete with hold space available from passenger operators. “For the pure freight guys it is going to be tough,” Niko Herrmann, an aviation specialist at Oliver Wyman in Zurich, said in an interview. “Carriers may be forced to seek partnerships and consolidate to gain scale, or to exit the market.”
Forecasts from IATA, which represents 240 airlines, suggest there’s little chance of an earnings rebound in the $70 billion market any time soon, with cargo yields, a measure of prices, expected to drop 2 percent this year and 1.5 percent in 2013. As the economic crisis drags into a fifth year, planes are flying with only 44 percent of cargo space taken up, including belly capacity on passenger jets, with the market essentially “stagnant,” IATA Chief Executive Officer Tony Tyler said.

Yen Hits 9-Month Low as Election, Tankan Spur Easing Bets (Bloomberg)
The yen touched the weakest level since March against the dollar on bets that Shinzo Abe’s Liberal Democratic Party will win Japanese elections this weekend and push the central bank to expand monetary easing. The Japanese currency headed for a weekly loss versus all of its 16 major counterparts as the Bank of Japan’s Tankan survey showed large manufacturers were the most pessimistic in almost three years. The euro traded near a one-week high after the currency bloc’s finance ministers approved 49.1 billion-euro ($64.2 billion) of rescue payments to Greece yesterday.
“The extent of the dollar-yen rally is quite striking,” said Sean Callow, a Sydney-based senior currency strategist at Westpac Banking Corp. (WBC) “It’s reasonable to think that there would be some impact on BOJ policy from a change of leadership. If Abe wins a comfortable mandate, he will certainly be keen to appoint somebody who is willing to take more aggressive steps” he said referring to the position of central bank governor. Incumbent Masaaki Shirakawa’s five-year term ends in April. The yen touched 83.68 per dollar, the lowest level since March 21, before trading little changed at 83.66 at 9:12 a.m. in Tokyo from the close yesterday. It fetched 109.38 per euro from 109.39, after yesterday weakening to 109.54, the least since April 4. The Japanese currency has lost 1.4 percent versus the greenback this week, while dropping 2.5 percent against the euro. Europe’s shared currency bought $1.3074 from $1.3077. It rose to as high as $1.31 yesterday, the strongest since Dec. 5.

Australian Dollar Slides From 3-Month High Amid U.S. Deadlock (Bloomberg)
The Australian dollar remained lower after declining yesterday as a standoff in U.S. budget negotiations sapped investor appetite for risk. The currency has dropped from its highest level in three months, while its New Zealand counterpart has retreated from a nine-month high. The so-called Aussie and kiwi dollars were poised to advance for a second week before a private report that may show Chinese manufacturing is improving. The currencies rallied following a decision this week by the Federal Reserve to implement further asset purchases, a move that tends to debase the greenback. The U.S. budget standoff has “probably contributed to the Aussie coming off a little,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “I’m not overly convinced that both currencies are going to continue moving up against the U.S. dollar.”
The Aussie bought $1.0526 as of 11:19 a.m. in Sydney after dropping 0.3 percent to $1.0528 yesterday. It’s set for a 0.4 percent weekly gain, having touched $1.0586 on Dec. 12, the strongest since Sept. 14. The New Zealand currency was at 84.26 U.S. cents from 84.31 yesterday when it reached as high as 84.61, the most since Feb. 29. The yield on Australian 10-year debt rose as much as four basis points, or 0.04 percentage point, to 3.34 percent, the most since Sept. 19. In the U.S., Republicans and Democrats remain deadlocked over how to avoid more than $600 billion in tax increases and spending cuts that will take effect from January unless Congress averts them, a scenario that threatens to throw the world’s biggest economy back into recession.
Risk sentiment was buoyed ahead of a report from HSBC Holdings Plc and Markit Economics that may indicate an expansion in Chinese manufacturing this month. Economists surveyed by Bloomberg News predict that a flash estimate of the gauge will show a reading of 50.8, up from last month’s final reading of 50.5.

Retail Sales Rebound as Jobless Claims Decline in U.S. (Bloomberg)
Retail sales rebounded in November and applications for jobless benefits fell more than forecast last week, pointing to strength in U.S. consumer demand as the holiday-shopping season gets under way. Purchases climbed 0.3 percent following an October decrease of 0.3 percent, Commerce Department figures showed today in Washington. Unemployment claims fell by 29,000 to a nine-week low of 343,000, the Labor Department said. Economists forecast 369,000 first-time claims, according to the median estimate in a Bloomberg survey. “We’re off to a fairly strong holiday-spending season,” said Millan Mulraine, senior U.S. strategist for TD Securities in New York, who correctly projected the November sales gain. “Consumer spending could offset some of the weakness” in other areas such as corporate investment, he said. Americans snapped up clothes and electronics at stores and online last month, while vehicle sales jumped as some Northeast residents sought replacements for autos damaged by superstorm Sandy.
Another report  showed consumer confidence cooled, underscoring the effects of limited job opportunities that prompted the Federal Reserve yesterday to boost record monetary stimulus. Stocks fell, snapping a six-day advance in the Standard & Poor’s 500 Index, amid a standoff in federal budget negotiations. The S&P 500 dropped 0.6 percent to 1,419.45 at the close in New York. Ten of 13 major categories in the retail sales report showed November gains, led by a 1.4 percent increase at auto dealers, a 2.5 percent jump at electronics outlets and a 0.9 percent gain at clothing stores.

S&P Cuts U.K. Outlook to Negative on Risks From Weak Economy (Bloomberg)
Standard & Poor’s lowered its outlook on Britain’s top credit rating to negative, citing weak economic growth and a worsening debt profile. The outlook on the AAA grade, revised from stable, means there is a one-in-three chance that S&P could cut the rating in the next two years, it said in a statement in London today. This could happen if the U.K.’s economic and fiscal performance “weaken beyond our current expectations,” it said. “We expect economic growth to accelerate slowly, but the risks to our growth assumptions are weighted to the downside however, with associated risks to government finances,” the ratings company said.
The revision increases political pressure on Chancellor of the Exchequer George Osborne, who has promised investors he would stick to plans for the biggest fiscal squeeze since World War II even as the economic recovery struggles to gain traction. Still, investors often ignore such actions, evidenced by the drop in French 10-year bond yields following a downgrade last month and a rally in Treasuries after the U.S. lost its top rating at S&P in 2011. S&P forecast today that Britain’s ratio of debt to gross domestic product will continue to rise in 2015 and peak that year at 92 percent. It sees a risk it could approach 100 percent if the economic recovery is weaker than currently projected.

Consumer Comfort Stagnates as U.S. Lawmakers Debate Budget (Bloomberg)
Consumer confidence in the U.S. stagnated last week, showing a lack of improvement since October as lawmakers continue to search for common ground on taxes and government spending in 2013. The Bloomberg Consumer Comfort Index slipped to minus 34.5 in the period ended Dec. 9, the lowest level in six weeks, from minus 33.8. The reading was the 12th straight above minus 40, the level associated with recessions and their aftermath. The decrease was within the margin of error of 3 percentage points. Appreciating property values and cheaper gasoline have given consumers reason to be upbeat as the year draws to a close. At the same time, limited wage gains associated with a 7.7 percent jobless rate will probably do little to help households should lawmakers fail to avert a broad-based increase in taxes in 2013.
“Households are likely coming around to estimating the risk associated with a decline in after-tax income that would result due to the fiscal shock,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York. “The risk to the economic outlook is that the recent improvement in consumer sentiment will see retrenchment, similar to what was observed during the debt-ceiling debate in summer 2011, that will offset the stabilization in the housing market and falling gasoline.” Other reports today showed jobless claims fell last week to the lowest level since early October, while retail sales rebounded in November. A 0.3 percent gain in purchases reflected more demand for autos, electronics and clothes after a 0.3 percent drop in October, according to Commerce Department data.

Jobless Claims in U.S. Decline to a Nine-Week Low (Bloomberg)
First-time claims for unemployment insurance payments declined more than forecast last week to the lowest level since early October, adding to evidence the labor market is improving. Applications for jobless benefits fell by 29,000 to 343,000 in the week ended Dec. 8, the fewest since reaching a four-year low in the period ended Oct. 6, Labor Department figures showed today. Economists forecast 369,000 claims, according to the Bloomberg survey median. The number of people on unemployment benefit rolls declined for a fourth straight week. Jobless claims have dropped 108,000 in the latest four weeks after a superstorm Sandy-related surge, indicating companies are comfortable with current staffing levels. To help encourage more hiring, the Federal Reserve said yesterday that it intends to keep policy accommodative until unemployment falls to 6.5 percent from the current 7.7 percent.
“The job market is holding up reasonably well,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, the best forecaster of claims in the past two years, according to Bloomberg data. At the same time, “expectations are tempered somewhat by the uncertainty surrounding the fiscal cliff” of tax increases and budget cuts in 2013, he said. Other reports today showed a decline wholesale prices and a rebound in retail sales in November. The 0.3 percent gain in purchases reflected stronger sales of automobiles, electronics and clothes, according to Commerce Department data. Stock-index futures were little changed after the figures. The contract on the Standard & Poor’s 500 Index expiring this month fell 0.1 percent to 1,426.3 at 8:54 a.m. in New York.

Obama Meets Boehner at White House for Budget Talks (Bloomberg)
President Barack Obama and House Speaker John Boehner met for 50 minutes today at the White House on the budget stalemate. Treasury Secretary Timothy Geithner also attended the meeting, according to an administration official who sought anonymity. The White House and Boehner’s office released almost identical statements that said the meeting was “frank” and that “the lines of communication remain open.” Earlier today, Boehner repeated his insistence that the president’s budget proposal is “anything but” balanced, and accused Obama of not being serious about cutting spending. Still, the speaker, during his weekly news conference, didn’t rule out allowing a House vote on extending tax cuts for income up to $250,000 a year for married couples, as Obama has demanded, if a broader tax-and-spending deal isn’t reached soon.
“The law of the land today is that everyone’s income taxes are going to go up on Jan. 1,” Boehner said when asked by reporters if he would rule out such a vote. “I have made it clear I think that is unacceptable. Until we get this issue resolved, that risk remains.” Obama and Boehner have been stymied in negotiations over how to avert more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff, scheduled to start taking effect in January. Also today, Senate Majority Leader Harry Reid said the Senate won’t consider a limited bill to avoid an expansion of the alternative minimum tax or a cut in Medicare reimbursements to physicians if a broader budget deal isn’t reached.

Americans Back Obama Tax-Rate Boost Tied to Entitlements (Bloomberg)
A majority of Americans say President Barack Obama is right to demand that tax-rate increases for the highest earners be a precondition for a budget deal that cuts U.S. entitlement programs, a Bloomberg National Poll shows. Just over half say Obama and Democrats are more on their side in the debate over taxes and government spending than House Speaker John Boehner and other Republicans, in a survey conducted Dec. 7-10 that suggests the president has broad public backing for his stance in the deficit-reduction talks. While Americans are divided over solutions to avoid spending cuts and tax increases slated to take effect in January if no deal is reached, majorities want the wealthy to bear the burden of such a compromise. And while more than half say Republicans were right initially to sign a pledge never to raise taxes, that includes about one-third who say things have changed and lawmakers should back away from the promise.
The results indicate a sense of urgency among Americans for an accord between Obama and Congress to avert a fiscal crisis, and a willingness to make sacrifices to strike a deal. J. Ann Selzer of Selzer & Co., the Des Moines, Iowa, firm that conducted the poll, says the findings encapsulate American views on the fiscal debate. “Obama won the election promising to raise taxes on the wealthy,” Selzer says. “Republicans who refuse to budge from their pledge not to raise taxes are wrong-headed. Failure to strike a deal would put the national economy and the people who live in it at risk.”

Japan Tankan Business Confidence Falls to Near 3-Year Low (Bloomberg)
Big Japanese manufacturers are the most pessimistic in almost three years after a diplomatic dispute with China and Europe’s austerity measures dragged exports to a fifth monthly decline in October. The quarterly Tankan index for large manufacturers fell to minus 12 in December from minus 3 in September, the Bank of Japan (8301) said in Tokyo today, a fifth straight negative reading and the lowest since March 2010. The median estimate of 25 economists surveyed by Bloomberg News was for minus 10. A negative figure means pessimists outnumber optimists. The slide in sentiment gives the central bank an extra reason to ease policy on Dec. 20 after the Federal Reserve moved this week. JPMorgan Chase & Co. sees a 10-trillion yen ($120 billion) expansion of an asset-purchase program and the pressure for further loosening is likely to mount if opposition leader Shinzo Abe’s party wins an election in two days’ time.
“The focus is on whether the economy will show any improvement after the election,” said Hideo Kumano, chief economist at Daiichi Life Research Institute who correctly predicted today’s reading. “Given that exporters’ confidence has weakened so much, calls for a cheaper yen will mount.” At the next BOJ policy meeting, officials will also consider an extension of currency-swap arrangements involving the Fed, European Central Bank, and the central banks of Canada, England and Switzerland, the Japanese central bank said last night.

King Said to Have Faced Revolt on U.K. Credit Plan Talks (Bloomberg)
Bank of England Governor Mervyn King faced a revolt this year from policy makers he kept out of the loop on an emergency plan to spur U.K. economic growth, said two people with knowledge of the matter. Monetary Policy Committee members Ben Broadbent, David Miles, Adam Posen and Martin Weale wrote to King after finding out he and key aides were privately designing the Funding for Lending Scheme, said the people, who declined to be named because the matter is confidential. The letter was written in the days before the plan to boost credit was announced June 14, the people said. The complaint of the four so-called external MPC members, who are part-time officials appointed by the government, was that failing to inform them undermined the committee’s legitimate control over monetary policy and their ability to gauge and manage the economic outlook, one of the people said. King then shared information on the program before unveiling it, the people said.
The letter’s existence provides a glimpse of the factors at play when policy makers were torn on whether to expand stimulus amid questions over the potency of quantitative easing, three years after the bank began buying bonds and as the economy was in the throes of a double-dip recession. It also follows recent criticism in probes of the central bank ordered by its governing panel, known as the Court, which questioned its governance. The confrontation over the FLS highlights the management challenge Bank of Canada Governor Mark Carney, 47, will inherit when he succeeds King, 64, in July.

Europe’s Headway on Greece, Banks Masks Deeper Divisions (Bloomberg)
European policy makers made headway in fighting the three-year-old debt crisis, keeping Greece’s lifeline intact and laying the groundwork for a bank supervisor to prevent financial miscues. Finance ministers declared the two-front victory hours before a summit of European leaders that is set to expose differences between a German-led bloc and France and its allies over the long-term retooling of the euro zone. “We have achieved a lot,” German Chancellor Angela Merkel, the dominant figure in the crisis management, said on her way into the Brussels summit. “It was a very laborious year but it was also a year in which we made great progress.”
The decisions underscore the move away from the austerity- driven measures that characterized European leaders’ first attempts to counter the crisis that emerged in Greece in 2009. Financial-market tensions have abated, thanks mainly to a pledge by the European Central Bank, first made in late July and yet to be acted on, to put a floor under the bond markets of vulnerable countries such as Spain or Italy. Greek bonds rallied, with the 10-year yield dropping 17 basis points to 13 percent, near the lowest since a March debt restructuring. The euro was little changed at $1.3085 at 5:40 p.m. in Brussels. With the summit deadline looming, finance ministers from all 27 European Union countries opened a packed day and night of decision-making with a 4:30 a.m. accord to make the ECB the hub of bank supervision in the euro area.

Greek Debt-Relief Debate Flares After Release of Fresh Aid (Bloomberg)
European governments geared up to provide extra aid or debt relief for Greece after releasing the country’s first loan payment in six months, signaling renewed battles over how to stabilize the euro economy. Euro-area finance ministers approved the payout of 49.1 billion euros ($64 billion) of loans through March and committed to “additional measures” in case Greece’s debt reduction veers off track. While another cut in bailout-loan rates and an increase in infrastructure funding would top the list of extra measures, the policy makers hinted that outright debt relief -- still a taboo topic in creditor countries led by Germany -- would be on the table as well. “Other tools are possible and it doesn’t make any sense to be more precise on these possible tools,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing the meeting on the Greek package in Brussels.
Today’s meeting concluded what European Union Economic and Monetary Affairs Commissioner Olli Rehn called an “odyssey” that started with two Greek elections in the first half of the year and concerns that popular opposition to bailout terms would force Greece out of the euro. Greece will get 34.3 billion euros in coming days, covering 16 billion euros for bank recapitalization, 7 billion euros for the government’s budget and 11.3 billion euros to finance a bond buyback that was used to retire debt. Another 14.8 billion euros will flow in the first quarter of 2013 as long as Greece meets conditions to be agreed on with creditors. That sum consists of 7.2 billion euros for bank recapitalization in January, plus three monthly tranches for the budget.

Greek Aid Payments Approved by Euro Finance Ministers (Bloomberg)
Euro-area finance ministers approved 49.1 billion-euro ($64 billion) of rescue payments to Greece to keep the recession-wracked country solvent. Finance chiefs at a meeting in Brussels today rubber stamped the next tranches of aid after wrapping up a 14-hour negotiation on banking union at 4:30 a.m. Of the funds, 34.3 billion euros will be released within the next few days with the remaining money doled out in the first quarter. “The disbursement agreed to today will allow for liquidity to flow back into the Greek economy,” European Union Economic and Monetary Affairs Commissioner Olli Rehn said at a press conference. The Greek government this week said it plans to pay 11.29 billion euros to buy back 31.9 billion euros of bonds to reduce its debt burden and retain the support of the EU and the International Monetary Fund. The buyback underscores a move away from the austerity-first measures European leaders have embraced since the financial crisis began in 2009.
To repurchase all the debt tendered, Greece needed approval to spend more than the 10 billion-euro loan from Europe’s bailout fund earmarked for the buyback.