Friday, June 19, 2009


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Friday, June 19, 2009

Asian stocks rose, paring the MSCI Asia Pacific Index’s biggest weekly decline since March, as better-than-estimated U.S. economic reports boosted the dollar and Goldman Sachs Group Inc. upgraded Japanese banks.

Canon Inc., which gets 28 percent of its sales from the Americas, jumped 3.6 percent as a weaker yen lifted prospects for overseas earnings. WorleyParsons Ltd. climbed 6.7 percent, leading energy stocks higher, after forecasting “good growth” for fiscal 2009. Mitsubishi UFJ Financial Group Inc., the country’s biggest listed lender, climbed 3.4 percent after Goldman Sachs raised its recommendation to “buy.”

The MSCI Asia Pacific Index gained 0.8 percent to 101.43 as of 2:45 p.m. in Tokyo, with three stocks rising for every two that fell. The gauge has lost 3.6 percent this week, paring its rally from a five-year low on March 9 to 44 percent. The index is down 41 percent from its November 2007 record.

“It’s a tug of war between the bulls and bears,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “There’s the belief that this is the start of the upturn and that things will keep improving, and on the flip side that things have come too far too fast.”

Japan’s Nikkei 225 Stock Average rose 0.2 percent, paring earlier gains. Industrial-plant builder Chiyoda Corp. led the advance, rising 4.1 percent, after the Nikkei newspaper said the company won an order in Saudi Arabia. Elpida Memory Inc., Japan’s biggest maker of memory chips, jumped 3.4 percent after the Nikkei said the company may apply for funding from the Development Bank of Japan.

Treasuries Advance

Among stocks that fell, Jiangxi Copper Co. dropped 2.2 percent in Hong Kong after Zhejiang Honglei Copper Co. said prices of the metal are likely to fall. The Hang Seng Index gained 0.6 percent, while Singapore’s Straits Times Index climbed 1.3 percent.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent, while Treasuries advanced as yields near the highest level in a week lured some investors.

The S&P 500 climbed 0.8 percent yesterday as the New York- based Conference Board said its leading economic index rose 1.2 percent last month, exceeding the 1 percent gain estimated by economists. The Federal Reserve Bank of Philadelphia’s general economic index jumped to the highest level in nine months.


(Bloomberg)


Friday, June 19, 2009

BEIJING: Massive policy stimulus should keep China growing at a respectable rate this year and next, but a robust recovery is unlikely given global weakness and soft non-government investment, the World Bank said on Thursday. In a quarterly update, the bank raised its forecast for gross domestic product growth this year to 7.2 percent, still below Beijing's official target of 8.0 percent but up from the 6.5 percent it projected in March.

Growth in 2010 was likely to be just a bit stronger, at 7.7 percent, the report said. The bank expects China's foreign exchange reserves to grow by $218 billion this year, the smallest increase since 2005, after leaping by $419 billion in 2008 and $462 billion in 2007.

That is largely because the bank is now forecasting a whopping capital account deficit of $170 billion this year, driven by a variety of financial outflows including undisclosed transactions between the central bank and financial institutions and a growing stream of outbound foreign direct investment.

These outflows already totalled $109 billion in the first quarter, limiting the increase in FX reserves in the January-March period to just $8 billion. China's reserves were $1.95 trillion at the end of the first quarter, the world's largest stockpile. "There seems to have been an intention to let capital flow out of China in these various guises," Louis Kuijs, an economist in the World Bank's Beijing office, told a news conference.

He said such outflows would chime with China's oft-stated desire to diversify the country's foreign assets. Beijing is hunting in particular for energy and commodity investments. The forecast on reserves brings the World Bank broadly into line with those of private-sector economists. HSBC, for example, expects reserves to grow by $154 billion in 2009. The report welcomed an unfolding surge in government-influenced investment, triggered by a 4 trillion yuan ($585 billion) stimulus package announced in November.

"However, it is unlikely to lead to a rapid, broad-based recovery in China, given the current global environment and the subdued short-term prospects for market-based investment. China's economic growth is unlikely to rebound to a high single-digit pace before the world economy recovers to solid growth," it said.

A boom in bank lending in the first five months of the year would also support growth in coming quarters. While the full-year outcome might not meet the official target, it would be "very respectable" given the global setting, the report said. "On current projections it is not necessary, and probably not appropriate, to add more traditional fiscal stimulus in 2009," the bank said.

With its budget deficit set to leap to 4.9 percent of GDP this year from 0.4 percent in 2008, the government should instead keep some powder dry in case it is needed next year. Policymakers should also have the confidence to emphasise forward-looking policies and structural reforms to promote service-driven consumption and energy efficiency in the world's third-largest economy, the bank said.


(Reuters)

Friday, June 19, 2009

OSLO: Norway cut its key interest rate Wednesday by a quarter-point to a record low 1.25 percent, as the central bank said it saw no quick end to the economic crisis that has pushed the oil-rich country into a deeper recession than expected. "Uncertainty with regard to developments ahead is still high. So far, the fall in global activity has been more pronounced than expected," the bank's deputy governor, Jan Qvigstad said in a statement, explaining the bank's seventh rate cut since October.

The interest rate is now at its lowest level since the central bank gained its independence in 1983. A majority of economists had expected the bank to keep the interest rate unchanged amid signs that the Norwegian economy, which has been relatively spared from the crisis thanks to its oil wealth, was beginning to see a recovery.

Household consumption, property prices and inflation have recently bounced back, with oil prices on the rise and oil sector investments looking promising in the Scandinavian country, one of the world's biggest exporters of black gold.

But the central bank focused on the continued deterioration in global momentum and revised downward its growth forecast, predicting the Norwegian economy would contract by 1.5 percent this year compared to the 1.0 percent foreseen in March. The figures concern Norway's mainland gross domestic product (GDP), which excludes the oil and gas sectors and the shipping industry. It is considered a better indicator of the country's economic health, since the oil and gas sector represents 25 percent of its economic growth but employs only about one percent of its working-age population.

While analysts had expected the central bank to soon begin raising its rates, the bank suggested it saw things differently and may even lower them further. "The key policy rate can remain close to 1.0 percent for a period ahead," it said.

"The global economic downturn continues. Activity is also contracting in Norway and unemployment is rising," it added. Unemployment remains relatively low in Norway compared to other western countries but has risen sharply in recent months and was at 2.6 percent in May.


(AFP)

Friday, June 19, 2009

MUMBAI: The Indian rupee dropped to fresh one-month lows on Thursday as the stock market fell for the fifth time in six sessions, with gains in the dollar versus the euro also adding to the downward pressure. The partially convertible rupee closed at 48.21/22 per dollar, 0.2 percent weaker than its previous close of 48.13/14.

It fell as low as 48.32 during trade, its weakest since May 18. "The rupee was broadly tracking the stock market today. There was also demand for some 150 million dollars from a private sector bank for one of its clients, which weighed on the rupee," a senior dealer with a private bank said. Dealers said the dollar's gains versus major currencies also weighed. The US unit edged up against the euro as European shares turned lower, while sterling fell sharply after weak UK retail sales and public finance data.


(Reuters)


Friday, June 19, 2009

NEW YORK: The rates banks charge one another for loans fell again on Thursday, with the three-month lending rate marking a fresh low for a fifth straight session, while short-term lending rates for euros also eased. Ongoing action by central banks world-wide to provide financial institutions with massive short-term liquidity has helped take the pressure off the interbank money markets, allowing rates to drift lower.

Even Standard & Poor's move on Wednesday to cut its credit ratings on 18 US banks failed to stall the downtrend in rates. S&P said increased regulation and market volatility would hurt the already weakened sector. "Central bank support and the prospect for the low yield environment to stay have helped these fixings to come in lower and lower," said Christoph Rieger, rate strategist at Dresdner Kleinwort in Frankfurt.

However, ICAP's New York Funding Rate (NYFR) rose again amid some jitters about potential funding pressures at the end of the first half of the year. The three-month NYFR rose 1.75 basis points to 0.6306 percent versus a 0.125 basis point decline in three-month Libor to 0.60875 percent.

In a further effort to encourage banks to lend money, the European Central Bank is offering 12-month funds for the first time next week at its longer-term refinancing operations and analysts expect money market rates to fall even further.

The three-month Euribor rate, traditionally the main gauge of interbank euro lending, has already dropped to a new all time low of 1.235 percent. The three-month euro London interbank offered rate was set at 1.23438 percent, near the record low of 1.23188 percent on May 19, while the equivalent dollar Libor was fixed at an all-time low of 0.60875 percent.

Analysts and traders said lenders could borrow up to 600 billion euros at next week's ECB 12-month refinancing operation, although many believe a more conservative figure of 200 to 400 billion euros was likely. Given the potential for such a large liquidity inflow, short-term rates such as the Euro Overnight Index Average (Eonia) are likely to fall even further.

Eonia, the weighted average of all overnight unsecured lending in the interbank market, was last set at 0.852 percent and analysts expect in the weeks to come it could retest the low of 0.486 percent seen in May. A gauge of money market stress - the spreads between Libor and the equivalent overnight index swap rate, or expected central bank rates - continued to improve.

The dollar spread contracted to 39 basis points, the narrowest since early 2008, well off the highs of around 360 basis points hit in the aftermath of Lehman's collapse. But it remained above the pre-credit-crisis level of around 10 basis points seen consistently before July 2007.


(Reuters)

Friday, June 19, 2009

CLERMONT-FERRAND: French tyre maker Michelin said on Wednesday it would shed 2,800 jobs through early retirement and voluntary redundancies in the next three years, sparking concern from the government. The company said it will also shut down one of its plants in northern France at Noyelles-les-Seclin but will boost research and development funding at its Clermont-Ferrand plant by more than 100 million euros (139 million dollars).

"We're in a logic of consolidation in France and we want to continue to produce amid very aggressive competition," Thierry Chiche, Michelin's industrial director for Europe, told AFP. France's junior employment minister Laurent Wauquiez told reporters: "It's clearly a report that worries us a lot." He added that the government would ensure "that no-one is left by the wayside." The downsizing will include 1,093 job cuts from 2010 and a programme to allow 1,800 voluntary redundancies over the next three years, the company said, insisting that none of the planned redundancies would be forced.

The company said it also planned however to hire 500 people a year over the next three years in order to ensure a turnover in the workforce. Michelin rival Continental earlier announced the closure of its factory in Clairoix, north of Paris, with the loss of 1,120 jobs, while Goodyear Dunlop has laid off 820 workers at its Amiens plant in the north.


(AFP)

Friday, June 19, 2009

NEW DELHI: Italian car maker Fiat on Wednesday unveiled plans to increase its share of India's growing automobile market and hinted it may also offer Chrysler models to the country's middle class. Launching the Grande Punto in India, Fiat-India CEO Rajiv Kapoor told reporters he hoped the hatchback would help the company "capture a market share of 11-12 percent."

The car has been priced at 400,000 rupees (8,900 dollars) in a move designed to challenge the dominance of mid-sized models of Maruti Suzuki. Kapoor said Fiat projected a monthly sale of 2,500 units of the four-door Punto, which has sold 1.6 million units since its 2005 launch in Europe.

Fiat, which recently sealed a deal to sell bankrupt Chrysler's top assets, also raised the possibility of offering Chrysler models to the Indian market in future. "Why not?" chief operating officer Silverio Bonfiglioli replied to reporters' questions.


(AFP)

Friday, June 19, 2009

NEW DELHI: India's wholesale price index fell in early June on an annual basis for the first time in at least three decades, but analysts said this did not signal a weakening economy and would not prod the central bank to cut rates further. The central bank and analysts had forecast negative trends in the price index mainly for statistical reasons, rather than calling it deflation that follows a sharp contraction in demand.

The widely watched wholesale price index fell 1.61 percent in the 12 months to June 6, the government said, sharply below previous week's rise of 0.13 percent. The drop was bigger than 1.52 percent median forecast by analysts. "This is due to the high statistical base, but going forward inflationary risks are already in sight," said Rupa Rege Nitsure, chief economist at Bank of Baroda. The price index has been rising on a week-on-week basis since March reflecting a pickup in demand and ensuing price pressures in Asia's third largest economy.

"The inflation momentum has been picking up and a continued rise in commodity prices will exert upward pressure on input costs," said Sonal Varma, an economist with Nomura. India's factory output unexpectedly rose in April, reviving hopes the economy turned a corner and sparked speculation the central bank may not cut rates again in near future.

The Indian economy expanded 6.7 percent in the 2008/09 year ended in March, slower than a scorching 9 percent in the previous year but faster than many other emerging economies, but policy makers say it could rebound to at least 7 percent this year.

Analysts said the annual fall in WPI had little implication for monetary policy, and firm consumer price inflation, which stood at 8.7 percent in April, has kept policy makers cautious. "I think monetary policy will gradually start building into the inflationary expectation some time around October essentially because of rising commodity prices," said Jyotinder Kaur, economist at HDFC Bank. India's central bank has cut its lending rate by 4.25 percentage points between October and April, while government has slashed duties and increased public spending to stimulate the economy hit by the global slump and falling domestic demand.

(Reuters)

Friday, June 19, 2009

NEW DELHI: India's wholesale price index fell in early June on an annual basis for the first time in at least three decades, but analysts said this did not signal a weakening economy and would not prod the central bank to cut rates further. The central bank and analysts had forecast negative trends in the price index mainly for statistical reasons, rather than calling it deflation that follows a sharp contraction in demand.

The widely watched wholesale price index fell 1.61 percent in the 12 months to June 6, the government said, sharply below previous week's rise of 0.13 percent. The drop was bigger than 1.52 percent median forecast by analysts. "This is due to the high statistical base, but going forward inflationary risks are already in sight," said Rupa Rege Nitsure, chief economist at Bank of Baroda. The price index has been rising on a week-on-week basis since March reflecting a pickup in demand and ensuing price pressures in Asia's third largest economy.

"The inflation momentum has been picking up and a continued rise in commodity prices will exert upward pressure on input costs," said Sonal Varma, an economist with Nomura. India's factory output unexpectedly rose in April, reviving hopes the economy turned a corner and sparked speculation the central bank may not cut rates again in near future.

The Indian economy expanded 6.7 percent in the 2008/09 year ended in March, slower than a scorching 9 percent in the previous year but faster than many other emerging economies, but policy makers say it could rebound to at least 7 percent this year.

Analysts said the annual fall in WPI had little implication for monetary policy, and firm consumer price inflation, which stood at 8.7 percent in April, has kept policy makers cautious. "I think monetary policy will gradually start building into the inflationary expectation some time around October essentially because of rising commodity prices," said Jyotinder Kaur, economist at HDFC Bank. India's central bank has cut its lending rate by 4.25 percentage points between October and April, while government has slashed duties and increased public spending to stimulate the economy hit by the global slump and falling domestic demand.

(Reuters)

Friday, June 19, 2009

LONDON: British retail sales fell in May, major lenders have slashed credit lines to firms and export demand slumped at its sharpest rate in more than a decade, taking the shine off recent optimism about economic recovery. There have been signs Britain could emerge from recession before any other big economy, with some forecasters saying the recession may even have ended this quarter - but policymakers are much more cautious and expect a sluggish return to growth.

As such, there has been speculation that the Bank of England could expand its 125 billion pounds ($205 billion) asset-buying programme. The Office for National Statistics said on Thursday retail sales fell 0.6 percent in May after a 0.9 percent rise in April and below forecasts for a reading of 0.4 percent growth. Sales were 1.6 percent lower than a year ago.

"The fundamental drivers of consumer spending including labour earnings and the saving ratio will continue to act as a headwind for household spending growth," said Amit Kara, economist at UBS. The BoE's Trends in Lending report, which takes data from the biggest banks, showed the biggest fall in lending to businesses since June 2000 - down 5.4 billion pounds in April.

"The various policy measures undertaken by both the Bank of England and the government to boost bank lending are still to feed through to have a major impact," said Howard Archer, an economist at Global Insight. "This is worrying for recovery prospects and further increases belief that the Bank of England will have to further extend its quantitative easing programme."

In the minutes to this month's interest rate meeting, BoE policymakers highlighted ongoing credit constraints as a key downside risk to recovery. The Confederation of British Industry said factory orders fell slightly more than expected in June, with the export orders balance falling to -52 this month from -46 in May - the lowest since October 1998.


(Reuters)

Friday, June 19, 2009

TOKYO: Japanese manufacturers have grown much less gloomy about business over the last month, a Reuters poll showed, but consumer reluctance to spend has reinforced concerns the recovery from a deep recession will be slow. The survey may point to a healthy rebound in the quarterly Bank of Japan tankan survey due out on July 1 from a record low hit in the first quarter, when businesses were reeling due to sliding global demand and a severe squeeze in corporate funding.

But any improvement would come from a very low base and is unlikely to prompt the BoJ into ending its unconventional steps aimed at easing corporate funding strains, analysts say. "Business sentiment may improve sharply and capital spending plans may be revised up in the BoJ tankan," said Naoki Iizuka, senior economist at Mizuho Securities.

Signs that the worst of the recession has passed have led to a global debate about when policy makers should cut stimulus spending and exit the unconventional measures they implemented in the eye of the global financial storm. Rising exports and industrial output have fuelled talk that the world's No 2 economy is over the worst, and that fed into a much higher reading in the Reuters Tankan for both manufacturers and the service sector.

Manufacturers and non-manufacturers expect conditions to improve more in the next three months, the survey showed, but the upbeat tone is partly due to government stimulus spending at home and abroad, raising questions about whether demand for Japanese goods will last.

The Reuters Tankan's index of manufacturer sentiment rose 19 points from May to minus 50, and was up 28 points from a record low hit three months ago. The headline figure has around a 95 percent correlation with the influential BoJ tankan. Confidence among non-manufacturers stood at minus 31 in the Reuters survey, up from a record low of minus 44 in May and 6 points up from three months ago.


(Reuters)


Friday, June 19, 2009

ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tarin has said that the National Finance Commission (NFC) would be reconstituted in July and new distribution formula of resources would be announced within three months time.

Responding to the concerns raised by members of the Senate Standing Committee on Finance here on Thursday, the Advisor said that he had discussed the matter with the Prime Minister and the commission would be reconstituted in July. The members of the Committee wanted within two months the re-constitution of the Commission as well as its first meeting.

Tarin said that after NFC award, four percent CVT on immovable property would be converted into Capital Gains Tax (CGT) on real estate and transferred to the provinces. The committee also wanted that the tax refund cases processing period should be reduced from 90 days to 60 days.

The Senate body on Finance met to take up the recommendations of the members and was attended by the Ministry of Finance and Federal Board of Revenue officials. The advisor apprised the committee that he would be holding a meeting with the representatives of Chambers today (Friday) to address their concerns about budget.

He agreed with legislators that Internally Displaced Persons (IDPs) tax to be treated as advance tax and to be collected in four quarterly instalments during 2009-10 and the final adjustment would be made on filing of final return for the income year.

It was agreed that bonus be taxed during July-September period of 2010-11. The advisor agreed with the legislators that tax could not be imposed with retrospective affect. Tarin said that increase in withholding tax at import stage from two per cent to four per cent would not be applicable on food items and edible oil with a view to keep their prices at a reasonable level.

The advisor opposed imposition of more taxes on telecommunication sector, saying it has promised an investment of $2 billion in its network in 2009-10 and would contribute Rs 110 billion to Rs 115 billion in terms of revenue in the coming fiscal.

He assured the Committee that the government would look into fixing tax holiday period for Independent Power Producers (IPPs) as the members strongly protested against giving them unlimited period of tax holidays, saying they were earning huge profits.

Secretary Finance Salman Siddeque assured the Senator from Swat that the government would look into the matter of discouraging the import of coal. Option to impose 15 per cent federal excise duty on import of coal or regulatory duty was also discussed in the meeting. Senators were of the view that coal reserves in NWFP and Fata as well as in Swat would provide much-needed employment to the people of the areas.

The committee opposed the proposal to allow use of confiscated vehicles to tax authorities. The Finance Ministry agreed that misuse of green channels at international airports should be checked by putting in place exemplary punishment.


(BRecorder)

Friday, June 19, 2009

ISLAMABAD: Austrian Ambassador, Dr Michael Stigelbauer on Thursday called on the Minister for Water and Power, Raja Pervez Ashraf and discussed various matters of mutual interest and possibilities of investment and technical co-operation in water and power sector.

The Minister briefed the current energy situation and the measures being taken to meet the future water and power requirements. He gave him details of the water and power sector projects being initiated by the present government. He said that the government had planned to change its energy mix and now focusing on hydel, coal, wind and solar generation to provide cheaper and reliable power to the consumers.

He said that the government would welcome the Austrian investment and facilitate the investors. The Ambassador said that Austrian companies already working in Pakistan in energy sector were keen to expand their business while the new ones were also interested in this sector.

In this connection, Austria will hold a conference in Vienna in July next, which will further strengthen the co-operation with Pakistan in the field of energy. He said that this moot would provide a good opportunity of exploring and discussing ways and means to further strengthen economic co-operation between Pakistan and Austria.

He extended an official invitation to the Minister in this regard on behalf of the Austrian Minister for Economy. The Minister thanked the Austrian Ambassador and said that this initiative of the Austrian business community for Pakistan will supplement the economic and bilateral relations. He said that Pakistan will participate in Vienna conference being organised for it and will get benefit the Austrian expertise in the hydropower generation.-PR


(BRecorder)


Friday, June 19, 2009

KARACHI: The rupee adopted divergent trend against dollar on the currency market on Thursday, dealers said. On the interbank market the rupee gave up gains in relation to dollar, losing eight paisa for buying and selling at 81.13 and 81.18, they said.

Huge payment requirement pushed dollar up against the rupee and this trend may maintain in the near future, they said. During the fourth Asian session dollar was steady against euro, hovering near lows struck the previous day after tame US inflation data further dampened speculation the Federal Reserve would raise interest rates by year end.

Earlier this month the market had fully priced in an increase in US interest rates by the end of the year after improving economic data, pushing the dollar up broadly and to a one-month high versus euro earlier this week.

Open Market Rates: The rupee appreciated in terms of the US currency gaining 20 paisa for buying at 81.00 and 10 paisa for selling at 81.20, they said. The rupee, however, drifted lower against euro, losing 50 paisa for buying at Rs 112.50 and Rs 113.50, they said.

Open Buying Rs 81.00
Open Selling Rs 81.20

Interbank Closing Rates: Interbank Closing Rates For Dollar On Thursday.

Buying Rs 81.13
Selling Rs 81.18


(BRecorder)




Friday, June 19, 2009

ISLAMABAD: The government on Thursday withdrew the decision of levying carbon surcharge on Compressed Natural Gas (CNG) by deleting the word "carbon" from the head of the levy. Now "surcharge" will be used for taxing petroleum products from the next financial year ie 2009-10 after severe drubbing from different quarters.

Prime Minister Syed Yousuf Raza Gilani announced in the National Assembly to withdraw the decision of imposing carbon surcharge on CNG and directed the Finance Minister to review the levy as a whole taking into account other petroleum products.

Speaking in the National Assembly, the Prime Minister said that the government has withdrawn carbon surcharge on CNG worth Rs 12 billion and "I have directed the Ministry of Finance to review the decision of carbon surcharge and come up with a transparent taxation mechanism."

On the occasion, majority of members in the National Assembly lauded the decision of the government and hailed the Prime Minister's view to look into what the members termed anti-poor tax. The government has recently introduced carbon surcharge in the budget 2009-10, which was widely criticised by the lawmakers of both the Houses of the Parliament.

Majority of the opposition lawmakers were of the view that the decision to impose carbon surcharge was taken to counter the verdict of the Supreme Court that directed the government to reduce petroleum prices in line with global price mechanism.

Meanwhile, Advisor to Prime Minister on Finance Shaukat Tarin informed the Senate standing committee on finance that the government had taken the decision to exempt the CNG industry from the carbon surcharge.

Members of the committee demanded exemption of the kerosene oil from the carbon surcharge. But the advisor said that the government feared adulteration of kerosene oil with other petroleum products if the government exempted it from the surcharge.

The government has taken this decision after members of the Senate body on finance on Wednesday strongly criticised carbon surcharge saying it was to be imposed for friendly environment but use of CNG had no chance of polluting environment.

Analysts are of the view that after exempting CNG from carbon surcharge and its possible imposition on petroleum products would result in price differential that would lead to increase in sale of CNG. CNG dealers are criticising the government to maintain reasonable difference between prices of CNG and petroleum products. Government has targeted collection of carbon surcharge on petroleum products at Rs 122 billion in next financial year ie 2009-10 that would possibly be used to bridge the budget deficit, one analyst said.


(BRecorder)

Friday, June 19, 2009

FRANKFURT (updated on: June 18, 2009, 21:24 PST): Germany might have to take on 310 billion euros (432 billion dollars) in debt by 2013, according to finance ministry documents cited on the Internet site of the magazine Der Spiegel.

For 2010, the ministry's medium-term financing plan has pencilled in 86 billion euros in new debt, a record compared with the roughly 48 billion euros forseen for this year.

Another 72 billion euros would be added in 2011, 59 billion euros in 2012 and 45 billion euros in 2013 to reach the total, according to the documents consulted by spiegel.de.

In 2008, the government took on 11.5 billion euros in new debt to balance its budget as it sought to pull the economy out of the worst recession since 1945.

This year, Germany's public deficit will probably reach 4.4 percent of gross domestic product, Finance Minister Peer Steinbrueck told a panel discussion in Berlin on Wednesday.

Under the European Union's Stability and Growth Pact, eurozone governments are supposed to run deficits of no more than 3.0 percent of GDP and to work towards a balance or even a surplus in times of economic growth.

The European Commission, which polices EU countries' deficits, forecasts that 13 out of the 16 euro countries will break the three-percent rule in 2009 and 2010.

German government spending next year is expected to reach a record 328 billion euros owing to economic stimulus packages needed to fight the global economic crisis, Der Spiegel said.

The labour ministry's budget, which covers unemployment payments, is set to become the biggest spending item again at 153 billion euros.

Receipts of 28 billion euros per year are expected as a result of privatisations but according to the report, the government no longer has enough holdings to generate such a sum.

Germany's general elections scheduled in late September are likely to result in a whole new set of figures, Der Speigel added.


(AFP)

Friday, June 19, 2009

LONDON: The dollar fell against the euro Thursday after better-than-expected US data bolstered investor confidence in the outlook, prompting a switch into higher risk assets, dealers said.

During the worst global slump since the 1930s, investors have been buying into the dollar on the basis that even if the US economy is at the epicentre of the crisis, it remains the most powerful and largest in the world, they said.

This traditional safehaven status of the dollar, however, can be less attractive if data suggests the economy is picking up, offering wider investment opportunities in currencies considered riskier than the greenback.

The dollar had been firmer in recent days after weak US statistics sparked doubts about recent signs of an improvement in the economy. But the trend changed direction Thursday on the latest figures.

In late London trade, the European single currency was at 1.3963 dollars, off early lows and up from 1.3943 dollars in New York late on Wednesday. At one point, the euro broke resistance at 1.40 dollars but then fell back.

Against the Japanese currency, the dollar rose to 96.23 yen from 95.71 yen on Wednesday.

Earlier, the Conference Board said its May index of leading economic indicators, a measure of economic conditions in the coming months, rose 1.2 percent from April, beating forecasts for 1.0 percent.

The index, which had been on a downward trend since hitting a peak in July 2007, "has risen sharply in the past two months amid widespread strengths among its components," the Conference Board said.

"With these large and extensive increases, the six-month change in the index has become positive for the first time" since April 2007.

At the same time, US new jobless claims rose marginally last week -- to 608,000 from a revised 605,000 -- while the four-week moving average continued to drop and continuing claims fell sharply.

"This week's claims data provided among the clearest signals yet that labor market contraction is easing," said Andrew Gledhill at Moody's Economy.com.

Dealers said the dollar was also pressured after US inflation data on Wednesday suggested that the US Federal Reserve will be very unlikely to raise interest rates for some time.

In London trade on Thursday, the euro was changing hands at 1.3963 dollars against 1.3943 dollars late on Wednesday, at 134.32 yen (133.44), 0.8545 pounds (0.8499) and 1.5096 Swiss francs (1.5055).

The dollar stood at 96.23 yen (95.71) and 1.0816 Swiss francs (1.0795).

The pound was at 1.6336 dollars (1.6401).

On the London Bullion Market, the price of gold rose to 940.50 dollars an ounce from 930.50 dollars an ounce late on Wednesday.


(AFP)

Friday, June 19, 2009
LONDON (updated on: June 18, 2009, 22:17 PST): European stock markets edged higher Thursday after a key US indicator suggested that recovery in the world's leading economy could be taking hold.

The London FTSE 100 index added 0.06 percent to close at 4,280.86 points while in Paris the CAC 40 rose 1.04 percent to 3,194.06. The Frankfurt Dax gained 0.78 percent to end the day at 4,837.48.

Elsewhere there were gains of 0.82 percent in Brussels, 1.11 percent in Milan, 1.41 percent on the Swiss Market Index and 1.09 percent in Madrid.

In mid-day trading on Wall Street the Dow Jones Industrial Average was up 0.81 percent at 8,565.88 while the tech-heavy Nasdaq was moving in the opposite direction and was down 0.27 percent at 1,803.11.

The stronger trends reflected investor response to the US Conference Board's index of leading indicators, a measure of economic conditions in the coming months.

The board said its May reading rose 1.2 percent from the prior month, eclipsing market expectations for a gain of 1.0 percent.

The Conference Board noted that its index had increased in April for the first time in seven months, by a revised 1.1 percent.

The index, which had been on a downward trend since hitting a peak in July 2007, "has risen sharply in the past two months amid widespread strengths among its components," the board said.

"With these large and extensive increases, the six-month change in the index has become positive for the first time in two years," since April 2007.

US authorities expect the world's largest economy to resume modest growth in the second half of the year after sliding into recession in December 2007.

The Federal Reserve forecasts the US economy will contract between 1.3 to 2.0 percent in 2009 and post modest 2.0 to 3.0 percent growth in 2010.

In other news deemed positive for market sentiment, the US Labor Department reported that initial claims for unemployment insurance benefits rose to 608,000 in the week that ended June 13, surpassing analysts' forecasts of 604,000 new claims.

But the report nonetheless showed a surprise decline in the number of continuing jobless claims from the prior week's all-time high.

"This is still a disconcertingly high level of continuing claims, but in terms of this series it qualifies as relatively good news today since it marks the first decline in continuing claims since the week of January 3," said Patrick O'Hare of Briefing.com.

"It is clear now that the pace of layoffs has slowed. It is also quite clear that the labor market can still be considered weak despite that consideration."

In Paris leisure group Club Mediterranee gained 6.93 percent on news that financier Bernard Tapie had bought a stake of just over 1.0 percent.

European aerospace giant EADS added 1.38 percent after Hungarian low cost airline Wizz Air signed a draft agreement to buy 50 medium-haul planes from EADS aircraft unit Airbus. The order would have a catalogue price of 3.8 billion dollars.

Tyremaker Michelin moved in the opposite direction, shedding 1.73 percent. Company head Michel Rollier warned that the tyre market was unlikely to pick up before the middle of next year.

In Frankfurt energy group EON rose 2.31 percent, Deutsche Telekom 2.89 percent and Deutsche Bank 3.45 percent on upbeat assessments of global economic prospects.

But BASF, the world's leading chemicals group, fell 1.02 percent. Company boss Jurgen Hambrecht insisted there was still no reason to assume that the worst of the global economic crisis had passed.

Earlier Thursday in Asia, Tokyo closed down 1.39 percent as exporters were hit by a stronger yen, dealers said.


(AFP)


Friday, June 19, 2009

ISLAMABAD (updated on: June 18, 2009, 22:38 PST): The Government of Pakistan has signed an MoU, with the Government of China on Thursday to reconstruct and rehabilitate three major cities of AJK destroyed in the 2005 earthquake, under AJK Urban Development Programme. The umbrella contract for this project has already been signed between ERRA and the Two Chinese Construction Companies.

In order to assist the Government of Pakistan to complete the development work in the earthquake affected areas of Muzaffarabad, Bagh and Rawalakot, the Government of China offered credit worth US$ 300 million, whereas the Government of Pakistan contributed additional US$ 53 million to complete various reconstruction projects under AJK Urban Development Project.

For smooth and effective implementation of MCDP, a Steering Committee” has been constituted under the Deputy Chairman ERRA Lt. Gen Sajjad Akram, which has the mandate to give policy direction for Project Implementation and ensure timely and effective coordination of all inputs.

The contract signing is in line with ERRA’s Mission of “Build Back Better”.

The AJK Urban Development Programme aimed at providing safe housing, improved city environment, modern physical and social infrastructures with the target to boost economic and social growth in the Earthquake affected areas.

For Muzaffarabad City, an amount of US$ 190.62 million has been allocated for completion of 90 projects.

In Bagh 50 projects worth $ 123.55 million and in Rawalakot city, 30 projects with a cost of US$ 38.83 million will be completed in the next 4 and half years.

These projects will provide all modern day facilities including construction of Government buildings, roads bridges, shopping centers, Satellite towns, play grounds, parks, education and health facilities, wholesale markets, slaughterhouses, transport terminals, neighborhood centers, designing and Laying of infrastructure facilities like water supply, sewerage, underground electricity and telecom cables. These facilities will be developed by Chinese Companies.

(APP)

Friday, June 19, 2009

SINGAPORE: Oil prices lingered above 71 dollars a barrel in Asian trade Friday spurred by hopes that the worst is over for the ailing global economy, analysts said.

New York's main futures contract, light sweet crude for delivery in July, gained nine cents to 71.46 dollars a barrel.

Brent North Sea crude for August delivery advanced 15 cents to 71.21 dollars.

"I think the general mood is that we're past the worst of the downturn," said Mark Pervan, a senior commodities analyst with ANZ Bank in Melbourne.

"It continues to be a pre-emptive market in a sense that they are pricing on positive news."

Positive US data and stronger energy demand energised the market, analysts said.

The US Department of Energy reported a sharper-than-expected fall in crude inventories last week.

On Thursday, a US business research firm said the index of leading economic indicators, a measure of conditions in the coming months, increased 1.2 percent in May from the previous month, beating market expectations.

The index had been on a downward trend since hitting a peak in July 2007, the Conference Board said.

Developments in the recession-hit US economy are closely monitored because it is the biggest in the world and is a major buyer of the world's exports.

Pervan said crude prices were also closely pegged to the value of the US dollar, which has been under pressure.

"I think there's still a high correlation with the dollar... instead of on market fundamentals like supply and demand," he said.

A weaker US currency makes dollar-priced crude cheaper for buyers holding stronger currencies. That tends to stimulate demand and push the market higher.

After plunging from record highs above 147 dollars last July on supply concerns, oil prices touched multi-year lows of around 32 dollars in December as the economic slowdown crushed demand for energy but they have slowly clawed back since.


(BRecorder)