June 19, 2012 1:16 pm
Brics to create financial safety net - Financial Times
June 19, 2012 5:16 am
STOCKS NEWS EUROPE-M.Stanley:"low conviction preference" for stocks - Reuters UK
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Most Asian Stocks Drop on Record Spanish Borrowing Costs - Bloomberg
Most Asian stocks fell, with the regional benchmark index retreating from a one-month high, as Spain’s borrowing costs climbed to a euro-area record and optimism faded that Greece’s election result will calm the debt crisis.
Esprit Holdings Ltd. (330), a clothier that counts Europe as its largest market, declined 2 percent in Hong Kong. Pacific Basin Shipping Ltd. slid 6.3 percent after Hong Kong’s biggest operator of dry-bulk ships predicted a first-half loss. Lynas Corp. jumped 8.6 percent in Sydney after a Malaysian parliamentary committee said the Australian miner should be allowed to start refining rare earths in the Southeast Asian country once it fulfills and health and safety conditions.
The MSCI Asia Pacific Index was little changed at 115.77 at 7:52 p.m. in Tokyo, with about five shares falling for every four that rose. More than $5 trillion has been erased from global equities since March amid concern growth is slowing in the U.S. and China, and as Europe’s debt crisis intensified.
“We see Europe escalating rather than solving its problems,” said Tim Riordan, of Parker Asset Management Ltd., a hedge fund in Sydney that has about $200 million under management. “The focus is rolling on to Spain, and with bond yields going over 7 percent, this has been a red flag in the past. You’re in a bit of a downward spiral and this leads us to be fairly cautious.”
Japan’s Nikkei 225 Stock Average (NKY) fell 0.8 percent. Australia’s S&P/ASX 200 Index slid 0.3 percent. Hong Kong’s Hang Seng Index lost 0.1 and China’s Shanghai Composite Index both slid 0.7 percent. Trading volumes were below the 30-day moving average across the region, except in India, according to data compiled by the Bloomberg News.
Spanish Yields
Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The gauge added just 0.1 percent yesterday as optimism about Greece’s attempts to form a coalition government was tempered by a surge in Spanish bond yields to a euro-era record of 7.29 percent.
German Chancellor Angela Merkel said Greece should not be given more leeway to comply with austerity measures needed to secure international aid after pro-bailout parties won enough seats to form a majority in parliament.
Companies that do business in Europe fell as Spain, which has asked euro-region governments for as much as 100 billion euros ($126 billion) to help shore up its banks, reported a jump in bad loans in April to 8.72 percent of total lending, the highest since 1994.
Esprit slipped 2 percent to HK$10.04. Hutchison Whampoa Ltd., which operates ports in Germany and Spain, fell 0.7 percent to HK$66.4 in Hong Kong. Canon Inc. (7751), a camera maker that gets about 31 percent of sales from Europe, dropped 1.2 percent to 3,200 yen in Tokyo.
G-20 Meeting
Group of 20 chiefs, who began a two-day meeting in Mexico yesterday, focused their response to Europe’s financial crisis on stabilizing the region’s banks, raising pressure on Merkel to expand rescue measures as contagion engulfed Spain.
The MSCI Asia-Pacific Index (MXAP), which lost 10 percent through yesterday from this year’s highest level in February, traded at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
Pacific Basin dropped 6.3 percent to HK$3.25. The shipping company predicted a first-half loss after writing down the value of its vehicle-carrying fleet by $190 million as a global glut of vessels and the European debt crisis damped rates.
Tsingtao, Fairfax
Tsingtao Brewery Co. slumped 7.8 percent to HK$46.60 in Hong Kong, the most since May 2010, as billionaire investor Chen Fa Shu agreed to sell HK$1.5 billion ($193 million) in shares of the Chinese beer maker at a discount.
Fairfax Media Ltd. sank 8.5 percent in Sydney amid reports Gina Rinehart, Asia’s richest woman, is seeking three seats on the publisher’s board and power to fire editors. The company closed at 59.5 Australian cents in Sydney. Rinehart yesterday raised her stake in the publisher of the Sydney Morning Herald to 19 percent, the Herald reported today.
“What this will do is destroy the credibility of the Fairfax mastheads,” Communications Minister Stephen Conroy told reporters yesterday. “And if you were to start turning it into just a pro-mining industry gazette, well, I don’t think you would say the rest of the shareholders in Fairfax would be too excited.”
Among stocks that rose, Lynas jumped 8.6 percent to A$1.105. Radiation exposure at the world’s biggest rare-earths refining facility it is building in Malaysia is “low and safe,” a committee headed by Higher Education Minister Khaled Noordin said in a report tabled in parliament today.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
European Stocks, Euro Pare Gaines on Greece - Businessweek
European stocks rose for a third day and the euro rebounded as Spanish bond yields declined after the government met its target at a bill auction and as the Federal Reserve prepared to meet to consider stimulus measures.
The Stoxx Europe 600 Index (SXXP) added 0.8 percent at 8:33 a.m. in New York. Standard & Poor’s 500 Index (SPX) futures climbed 0.3 percent, reversing a 0.3 percent drop. The euro strengthened 0.4 percent to $1.2623. The yield on Spain’s two-year note dropped 11 basis points and the cost of insuring the country’s debt fell from an all-time high.
Spain sold 3.04 billion euros ($3.8 billion) of bills, compared with a target of 3 billion euros. Fed policy makers will begin a two-day meeting today as Group of 20 leaders focus their response to Europe’s financial crisis at a summit in Mexico. Stocks and the euro pared gains earlier after Greek leaders said they would seek to renegotiate the terms of an international bailout.
“The best thing about today’s bill auction is that they’ve sold the target volume,” said John Davies, a fixed-income strategist at WestLB AG in London. “While there might be some knee-jerk relief that they’ve managed to sell the paper I doubt that will extend too far.”
Three shares advanced for every one that declined in the Stoxx 600, putting the gauge on course for the highest close in a month. Home Retail Group Plc surged 23 percent as first- quarter sales at the Argos chain beat estimates. Danone tumbled 7.1 percent after the world’s biggest yogurt maker cut its profitability forecast.
Housing Starts
The S&P 500 has climbed for three straight days, reaching the highest level since May 11. Housing starts dropped 4.8 percent to a 708,000 annual pace from a revised 744,000 rate in the prior month that was the highest since October 2008, the Commerce Department said today.
Oracle Corp., the world’s largest maker of database software, rose 3.6 percent in pre-market trading after fiscal fourth-quarter profit topped analysts’ estimates, buoyed by sales of new software licenses. FedEx Corp., operator of the world’s largest cargo airline, fell 1.3 percent after predicting lower first-quarter earnings than analysts anticipated.
The yield on the 10-year Spanish bond fell 11 basis points to 7.05 percent, after climbing to a euro-era record 7.29 percent yesterday. The government sold 2.4 billion euros of 12- month bills at an average rate of 5.074 percent, up from 2.985 percent paid on May 14. It also sold 639.3 million euros of 18- month debt at 5.107 percent, compared with 3.302 percent last month, the Madrid-based Bank of Spain said today.
ECB Move
“There is a building expectation” that the European Central Bank will step in, Don Smith, a London-based economist at ICAP Plc, the biggest interdealer broker, said in a radio interview today on “Bloomberg The First Word” with Ken Prewitt. “Yield levels now are so high for Spain and, in particular, spreads against Germany and other AAA euro-zone countries have moved so wide, there is an expectation an ECB move will be imminent.”
The yield premium investors demand to own Spanish debt over benchmark German bunds narrowed 16 basis points to 559 basis points. Credit-default swaps on Spain fell eight basis points to 616. The contracts reached an all-time high of 633 basis points yesterday.
The Italian 10-year bond yield fell 12 basis points, while the equivalent-maturity Greek yield declined two basis points.
Denmark sold 1.55 billion kroner ($262 million) of a 2 percent note due 2014 to yield minus 0.08 percent today, according to the central bank, the first time it has auctioned the debt at a negative yield.
The euro gained against most of its 16 major counterparts, strengthening 0.1 percent versus the yen. The Dollar Index dropped 0.3 percent.
The MSCI Emerging Markets Index climbed 0.4 percent, gaining for a third day. India’s Sensex gauge advanced 0.9 percent, Russia’s Micex Index added 0.2 percent and Turkey’s benchmark gauge jumped 1 percent. Egypt’s EGX 30 Index tumbled 4.6 percent as a power struggle between civilian politicians and the ruling generals threatened to derail the country’s transition to democracy.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
G20 to endorse growth plan and urge more financial integration in Europe - The Guardian
Leaders of the G20 economies are preparing to endorse a communique pledging further action on growth, increased resources for the International Monetary Fund and fresh commitments by the European Union to do more to integrate to solve its problems.
The G20 leaders representing 80% of the world economy are meeting in the luxury resort of Los Cabos, Mexico, against a backdrop of incessant economic storms, mainly coming from the eurozone.
Plans for an after-dinner meeting between the US president, Barack Obama, and the leading four eurozone countries attending the G20 were scrapped officially because the issue of the eurozone had been discussed enough.
There may also have been fears that tensions were starting to escalate between eurozone leaders, notably the two EU figureheads, José Manuel Barroso and Herman Van Rompuy, and other G20 countries about the slowness with which the EU was addressing its problems.
In a sign of the tensions, the Italian prime minister, Mario Monti, said no one thought the EU was "the only source of the problem". The crisis "had its origins in imbalances in other countries, including the US", he said.
Among the commitments in a draft G20 communique, which emerged on Tuesday, was a pledge to consider concrete steps towards a "more integrated financial architecture" in Europe that would include common banking supervision and firm guarantees to repay bank depositors.
The G20 communique states that euro-area members of the G20 "will take all necessary policy measures to safeguard the integrity and stability of the area, improve financial markets and break the feedback loop between sovereigns and banks".
The US, the IMF and European commission have been urging EU member states to press ahead with a banking union.
The term banking union does not appear in the text, but the wording suggests Germany may be willing to shift a little in further talks due to be held between EU leaders both in Rome on Friday and then at a full gathering of EU heads of state in Brussels next week.
In the most substantive development, the emerging countries agreed to increase funding for the IMF in a move that will see changes in the composition in the board of the IMF in return.
China, Brazil, Mexico, India and Russia all announced contributions to the IMF to bolster a "second line of defence". China will contribute $43bn (£27.4bn), the official Xinhua news agency reported. The others' share was $10bn each.
In total, the IMF's crisis intervention fund has been increased to $456bn.
Britain is not making any further contributions after already increasing its funding in the spring.
There were fears though that the resources would still not be enough to deal with the crisis.
"There is concern that the firewall available may not be adequate to deal with contagion," the Indian prime minister, Manmohan Singh, said at the summit. "The resources currently expected to be mobilised by Europe and the IMF are less than was estimated a year ago, and the crisis is actually more serious."
He added: "Financial markets normally favour austerity, but even they are beginning to recognise that austerity with no growth will not produce a return to a sustainable debt position."
In a message to Germany, he added: "Austerity in the debt-ridden members of the eurozone can work only if surplus members are willing to expand to offset contraction elsewhere in the currency area."
Conflicting messages were coming from Germany as to whether it was willing to delay Greece's current bailout plan.
The German chancellor, Angela Merkel, took a tough line, saying there could be no backsliding in the previously negotiated timetable, but other German leaders sounded a more flexible note.
Greece must achieve a budget surplus, excluding debt-service costs, of around 4.5% of gross domestic product from 2014 onwards, compared with a deficit of 5% in 2011. Athens is expected to ask to be given until 2016 to achieve the target. A slower timetable would add to borrowing needs in the meantime.
Obama met Merkel on the fringes of the summit to press her to do more. With the US election only five months away, he is desperate to see the gloom lift from world markets.
"The president was encouraged by what he heard regarding ongoing discussions in Europe about the paths they are pursuing to address the crisis," the White House spokesman Jay Carney said.
David Cameron, the British prime minister, is due to lead a G20 discussion on trade on Tuesday, warning of the dangers of protectionism, and arguing that ending trade barriers may be one of the best ways to boost growth at a time when governments cannot afford to boost spending.
The Russian president, Vladimir Putin, showed a determination to go in the opposite direction, saying: "It is time to stop pretending and come to an honest agreement on the acceptable level of protectionist measures that governments can take to protect jobs in times of global crisis," he said.
"This is particularly important for Russia as our country will join the WTO this year and we intend to take an active part in the discussions on the future rules for global trade."
Europe Stocks, Euro Gain Ahead of Fed Meeting; German Bunds Drop - San Francisco Gate
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June 19 (Bloomberg) -- European stocks and the euro gained before Federal Reserve officials consider measures to stimulate the world's biggest economy and as G-20 leaders focus on fixing Europe's banks. German bunds fell. The Stoxx Europe 600 ...Children's breakfast club director, 31, stole £6,000 from parents so she could spend the money on wine and meals out - Daily Mail
- Mother-of-four Michela Golden escapes jail after admitting theft
- Kids@Play - which ran before and after school clubs - was forced to shut after the thefts
- Golden, 31, was given a company bank card after she offered to take control of the company's finances
- An audit revealed she had stolen 6,000 over a year and she was arrested
By Rob Cooper
|
Thief: Mother-of-four Michela Golden, 31, admitted taking 6,000 from the childcare company and escaped jail
A director of a children's breakfast club stole 6,000 and spent the money on wine and paying for meals out for herself, a court heard.
Mother-of-four Michela Golden, 31, took the funds from a not-for-profit childcare company to buy alcohol, clothes, fuel and pay for food.
The cash, which was stolen over the course of a year, had been given by parents to pay for children's clubs in Rossendale, Lancashire.
When questioned, Golden denied she had taken the money and instead said the founder of Kids@Play Child Care must be responsible, Burnley Crown Court heard.
The company, which ran before and after school sessions, was forced to close after the thefts which happened and eight members of staff lost their jobs.
Golden, who admitted two counts of theft, escaped jail and was given a 10 month suspended sentence when she appeared before the court.
Kids@Play was set-up in 2008 to provide childcare outside school hours and had initially received funding grants from bodies such as Sure Start.
Nicholas Courtney, prosecuting, said the thefts started in July 2009 and went on for a year.
Golden took control of the company's finances at her own suggestion after they opened a second site in Newchurch, near Rossendale in September 2009.
She was issued with a company bank card so she could make purchases on their behalf.
But Lindsey Foster, the company's founder, noticed a series of unusual transactions when she looked at the bank statements in April 2010.
She also noticed that some of the money parents had given never turned up in their account.
A full audit was carried out before Golden was arrested and suspended.
When police searched her home in June last year they found paperwork which said the mother had several thousands of pounds in debts and her mortgage and council tax was in arrears.
Mr Courtney said that Golden, from Bacup, Lancashire, blamed the company's founder for the missing money.
Child care: Kids@Play ran before and after school classes for children in Rossendale, Lancashire
He said: 'She suggested Lindsey Foster may be responsible for missing funds, saying she seemed to be living an extravagant lifestyle at the time.
'Lindsey Foster was very upset by that suggestion, which it seems was made not just to the police in interview, but to various other people.'
In mitigation Bob Elias, defending, said the defendant's marriage had failed.
He said: 'She has issues both as to her younger years and marriage and possibly alcohol, which would benefit from engaging with a trained individual.'
Sentencing, Judge Jonathan Gibson said: 'This was, of course, mean offending. I accept it was to fund household expenditure, at least to a significant extent and it’s right to say there was evidence, when police came to investigate you, of a significant quantity of debt.
'I also accept you had difficulties with an abusive relationship. It’s particularly troubling a great deal of the money appears to have been spent on alcohol.'
The judge gave her a suspended sentence and ordered her to carry out 150 hours unpaid work. She was also given a 12 month supervision order.
MONEY MARKETS-Banks' borrowing at ECB rises as Spain stress grows - Reuters UK
* Banks increase borrowing at ECB's seven-day tender
* Rise in demand reflects growing Spanish stress
* Growing ECB rate cut speculation seen weighing on Euribor
LONDON, June 19 (Reuters) - Bank borrowing from the European Central Bank rose on Tuesday as turmoil in the euro zone government bond markets pushed more banks to take up the ECB's regular offering of seven-day loans.
Demand for the funds, currently used largely by banks who can no longer borrow money affordably elsewhere, rose by 36 billion euros to 167 billion euros. The number of banks bidding at the auction rose to 101 from 94.
"The rise in the number of bidders points to signs of new stress. I would say Spanish names are behind that," said Matteo Regesta, strategist at BNP Paribas in London.
Spain has become the focus of the euro zone debt crisis over the last week after a bank rescue plan worth up to 100 billion euros failed to win market confidence and propelled 10-year bond yields above the 7 percent danger level.
Spanish banks have suffered huge losses on souring portfolios of property loans and most have been frozen out of the interbank market where banks borrow money to lend on at a profit. Data released on Monday showed Spanish banks' bad loans hit their highest since April 1994.
The increase in seven-day borrowing may herald rising market stress but is unlikely to have a major impact on money market rates, which have been pushed to rock-bottom levels by the huge amount of excess liquidity in the system.
Banks' total borrowing from the ECB is 777 billion euros more than their estimated needs, according to Reuters data , with most locked into long-term loans offered by the ECB in December and February to calm a previous bout of stress.
That excess of liquidity, along with growing speculation that the ECB may cut interest rates to boost the region's flagging economy, saw the benchmark interbank Euribor rate fall for a third successive session, to 0.657 percent.
The equivalent Libor rate, set by a smaller panel of banks based in London, also fell to a new record low at 0.56557 percent.
The prospect of cuts to the ECB's deposit and refinancing rates, boosted by recent comments from ECB policymakers, was the main factor driving rates lower, analysts said.
Barclays Capital analysts revised their ECB rate outlook to forecast a 50 basis point cut in the refinancing rate, to 0.5 percent, and a fall in the deposit rate to zero from 0.25 percent.
"In a scenario of the refi rate at 50 (basis points) and the deposit facility at zero, we would expect EONIA to fix at 10-15 bps in the reserve period, with three-month Euribor likely to decline to 40-45 bps," the bank said in a note.
The Eonia overnight rate fixed at 0.334 percent on Monday.
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