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EmpireGlobalfx

07-29-2011, 09:42 PM

(Reuters) - Stocks ended the worst week in a year as time runs out on Washington to reach agreement before the government loses its ability to borrow money.

The S&P 500 fell every day this week and was down 3.9 percent for the week as legislators failed to work out an agreement to raise the federal borrowing limit, which expires on Tuesday. Investors also worry about the likelihood of a U.S. credit downgrade.

The CBOE Market Volatility Index .VIX, a gauge of investor fear, jumped as much as 9 percent to its highest level since mid-March before paring its rise.

Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, said investors are taking a more defensive stance, possibly moving more into cash.

"It's frustrating for investors and for U.S. citizens to see this unfold in the way it has been," she said.

"From an overall asset allocation standpoint, in an environment like this, you get bigger moves into cash and safe havens."

The Dow Jones industrial average .DJI was down 96.87 points, or 0.79 percent, at 12,143.24. The Standard & Poor's 500 Index .SPX was down 8.39 points, or 0.65 percent, at 1,292.28. The Nasdaq Composite Index .IXIC was down 9.87 points, or 0.36 percent, at 2,756.38.

U.S. President Barack Obama told Republicans and Democrats to find a way "out of this mess." The United States will be unable to borrow money to pay its bills if Congress does not raise the debt limit by August 2.

A second attempt for a vote in the House of Representatives is expected after the close of trading on Friday after a bill was modified to try to win over more conservative lawmakers. The measure has little chance of passing in the Senate, however.

At least one credit rating agency has said it is likely to lower the United States' prized tripe-A rating if the cuts in Washington don't go far enough.

"Will the deal be enough to satisfy the credit rating agencies is really what's at stake here," Trunow said, whose firm manages about $14.8 billion.

The S&P utility index .GSPU is down 2.1 percent for the week, while the Dow is down 4.2 percent and the Nasdaq is down 3.6 percent for the week.

Major indexes also posted losses for the month: the Dow and S&P 500 each lost 2.2 percent while the Nasdaq fell 0.6 percent.

The S&P 500 briefly fell below its 200-day moving average, seen as key support, and bounced back from its worst levels of the day.

Weak economic data also weighed on equities. The U.S. economy stumbled badly in the first half of this year and came dangerously close to contracting in the January-March period.

Among declining stocks, Chevron Corp (CVX.N), the second-largest U.S. oil company, fell 1 percent to $104.02 despite reporting a 43 percent jump in quarterly profit that beat estimates.

Energy led declines on the Dow on Friday, but the industrial sector was among the hardest hit for the week. The S&P industrial sector .GSPI lost 6.1 percent this week, following disappointing results from companies including Illinois Tool Works (ITW.N).

"The industrial sector appears to be pricing in lower earnings ahead," said Chris Burba, a short-term market technician at Standard & Poor's in New York.

Some 8.58 billion shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 7.48 billion.

Declines outweighed advances on the NYSE by about 2 to 1, while on Nasdaq losers outpaced winners by about 7 to 5.

EmpireGlobalfx

07-30-2011, 03:54 PM

A bitter mood prevailed on Capitol Hill as lawmakers struggled on Saturday to find a compromise measure to lift the nation's $14.3 trillion debt, as talks to avert a ruinous default went down to the wire.

A day after the Republican-controlled House of Representatives passed a bill to cut the deficit and raise the ceiling on government borrowing, the debt saga shifted to the Democratic-led Senate where lawmakers scrambled for a deal.

Senate Democrats pushed ahead with their own plan, but sought to attract bipartisan support by adding some elements of a proposal offered by Senate Republican leader Mitch McConnell.

But Senate Republicans appeared to have the votes to block that bill and the House quickly crushed the Democrats' proposal before the Senate acted on it, rejecting the measure 246 to 173 in a fast-tracked vote set by the Republican leadership.

Back-channel talks held the best hope for a compromise.

President Barack Obama was to meet in the afternoon with Senate Democratic leader Harry Reid and the House Democratic leader Nancy Pelosi. McConnell also wants to meet with the White House.

Unless Congress raises the debt ceiling, the government would be barred from further borrowing after Tuesday, according to the U.S. Treasury, and could quickly run out of money to pay all its bills.

The world has watched with growing alarm as political gridlock in Washington has brought the world's largest economy close to an unprecedented default, threatening to plunge financial markets and economies around the globe into turmoil.

Forty-three Senate Republicans signed a letter rejecting Reid's plan, a sign the measure does not have the support needed to clear a 60-vote procedural hurdle in the Senate.

"What will they vote for? Do they have any ideas? Let me know," Reid said on the Senate floor.

Democrats hope to convince some Republicans who signed their letter to allow the bill to clear the hurdle, at which point they could change it, a Democratic aide said.

WHITE HOUSE TALKS

McConnell called on Reid to move up a vote on the Democratic plan that had been set for 1 a.m. EDT (0500 GMT) on Sunday so the two sides could begin talks with the White House.

"We can't do it by ourselves, it has to have the only person in America who can sign something into law," McConnell said.

Obama used his weekly radio and Internet address to urge lawmakers to strike a deal and head off what he has said would be an "inexcusable" default.

In a vote scheduled to send a message to Senate Democrats, the Republican-controlled House defeated a version of the Reid plan, which fell well short of the supermajority vote needed for quick passage.

The drawn-out standoff has put the United States at risk of losing its top-notch AAA credit rating. A ratings downgrade could prompt global investor flight from U.S. bonds and the dollar, raising borrowing costs for Americans when the economy is already frail, growing at an anemic rate of 1.3 percent in second quarter, according to government data.

U.S. stocks endured their worst week in a year as the uncertainty made investors shy away from riskier assets and the dollar slumped to a record low against the safe-haven Swiss franc. Much worse could be in store if a U.S. debt deal doesn't appear to be on track by the time markets open on Monday.

Senate Democrats' debt-limit proposal, which would cut deficits by $2.2 trillion over 10 years, was revised by Reid to incorporate parts of a "backup plan" first proposed by McConnell. As envisioned, Obama would be given authority to raise the debt ceiling in three stages to cover U.S. borrowing needs through the 2012 elections when he is running for a second term.

Senate Democrats and Republicans agree about the main contours of the deal. The main point of contention remains what sort of mechanism should be in place to ensure that Congress will agree to further budget savings after a special committee makes recommendations, an aide said.

Republicans want the enforcement mechanism to be another debt limit vote late this year or early next year, while Democrats have proposed automatic tax hikes and spending cuts.

Obama says any plan that would require another showdown over the debt limit in a few months would be unacceptable because it would lead to economic uncertainty, putting a damper on jobs and growth.

With Republicans pushing to have the White House join the talks, Vice President Joe Biden, who has a rapport with McConnell from his years in the Senate, could emerge as a key player in final negotiations.

Unless there is major progress toward a debt deal, the U.S. Treasury could be forced on Sunday before Asian markets open to detail plans on which bills the government would pay if Tuesday's deadline is missed. Analysts believe it will stop other government spending to ensure bondholders are paid to avert a wide-scale financial crisis.

EmpireGlobalfx

07-31-2011, 01:40 PM

(Reuters) - British and Japanese officials warned Sunday of disastrous consequences for the global economy if last-minute talks among lawmakers in Washington failed to agree on raising the U.S. borrowing limit and averting a debt default.

Governments across the world fear that because of the key role of the U.S. dollar in global banking and trading systems, there could be severe instability when Asian financial markets reopen Monday if a U.S. debt deal is not in sight by then.

In Washington, Senate Minority Leader Mitch McConnell, the top Senate Republican who is playing a key role in the debt talks, said "we're very close" to a $3 trillion deal that would raise the debt ceiling while cutting the U.S. budget deficit.

But a senior White House official warned that an agreement was "not there yet."

"If they get this one wrong and there's a default -- we don't expect that, we think that they will sort this out -- but if that were to happen, it has consequences for every family and every business in this country and all across the world," said Danny Alexander, Chief Secretary to the British Treasury.

"I think in the end the politicians on Capitol Hill can see that the precipice they are looking over is one that they are going to step back from," Alexander told BBC television.

"But it is something that would have a big effect on the global financial system and on the global economy, where the United States is one of our major trading partners, that could have really big implications for the United Kingdom."

In Tokyo, sources familiar with Japan's international and monetary affairs said they were increasingly concerned that markets might be too optimistic about prospects for a lasting solution to the crisis.

Japanese officials still hope Washington can strike a deal and if that proves impossible, will give priority to interest payments to international holders of U.S. Treasury debt to limit the immediate market impact, the sources said.

But Tokyo's concern is that if the crisis drags on without a clear and long-term solution, markets may be thrown into turmoil in the same way that they suffered when U.S. investment bank Lehman Brothers collapsed in September 2008.

"If there is a default, the impact on global markets will be huge," said one of the sources, who declined to be named because of the sensitivity of the matter.

Another Japanese source said, "Nobody thought Washington would let Lehman collapse. But look what happened."

U.S. lawmakers have set themselves a Tuesday deadline to reach agreement and the U.S. Treasury has said it will run out of borrowing room on that day, although analysts think the government may have enough cash to keep servicing its debt and paying its bills through the middle of this month.

CHINA

Britain is the third largest foreign holder of U.S. Treasury debt and Japan is the second largest. China is the biggest with well over $1 trillion invested in U.S. Treasuries; about two-thirds of its $3.2 trillion of foreign exchange reserves are estimated to be held in dollar assets.

Saturday the official People's Daily newspaper, the mouthpiece of the Chinese Communist Party, castigated the U.S. handling of the debt crisis in an editorial as "irresponsible" and "immoral."

It said the U.S. democratic system was to blame for the "farce," claiming that "not a single representative has considered the world, and even U.S. national interests are being banished from the mind."

Friday a senior economic policymaker in the euro zone, who declined to be named, told Reuters he was optimistic Washington would solve the problem but expressed surprise and anger that U.S. politicians were "playing chicken" with an issue of such importance for the global economy.

Euro zone leaders are struggling to control sovereign debt crises in several countries in their region, and the U.S. debt problem is making this more difficult by adding to upward pressure on the yields of government bonds in those weak states.

If there is no U.S. debt deal by Monday morning, central banks around the world are expected to stand ready to provide emergency supplies of money to commercial banks in case the banks become too nervous to lend to each other.

Japan's first defense will be to ensure that Japanese financial institutions have a sufficient supply of dollars, the sources in Tokyo indicated.

The Bank of Japan believes Japanese commercial banks have sufficient dollar cushions but will use its dollar swap arrangement with other central banks to prevent a dollar squeeze in case of market turmoil.

In late June, the U.S. Federal Reserve agreed to extend liquidity swap arrangements with other major central banks until August 1, 2012.

The Japanese central bank is also prepared to flood markets with yen through its open market operations in case interbank borrowing costs spike, BOJ officials say.

In Europe, there were minor signs of strain in the money markets last week with some banks becoming unable to take out longer-term dollar loans, but the effect was small since banks still expected Washington would reach a deal.

The European Central Bank already offers unlimited euro loans to banks in some of its money market operations as part of its response to past crises, and it could use that policy to cope with any market problems this week.

A spokesman for the Swiss central bank said, "The Swiss National Bank is ready to react appropriately at any time to market disruptions."

EmpireGlobalfx

07-31-2011, 04:08 PM

(Reuters) - HSBC Holdings Plc (HSBA.L) should unveil a half-year profit of near $11 billion (6 billion pounds) on Monday, flat from a year earlier as weak investment bank trading and wobbly U.S. and European economies offset growth in Asia.

New HSBC CEO Stuart Gulliver is overhauling Europe's biggest bank by slashing costs by up to $3.5 billion, selling its U.S. credit card arm and other assets, and retreating from countries where it is sub-scale.

The aim is to sharpen the focus on Asia and investors want to see progress made on that plan.

HSBC is the first of Britain's big banks to report and should show a pretax profit for the six months to the end of June of $10.9 billion, compared with $11.1 billion a year earlier, according to the average of forecasts from 12 banks and brokerages polled by Reuters.

Earnings will be hurt by a slump in fixed income trading in the second quarter, which has hit rivals including Credit Suisse (CSGN.VX) particularly hard. Revenue from HSBC's global banking and markets unit is likely to fall 8 percent on the year to $10 billion, analysts at Citi forecast.

A stuttering U.S. economy could also slow the improvement in bad debts at HSBC's U.S. consumer loans portfolio, which it is running down, analysts said.

Gulliver unveiled his far-reaching plan in May to slash costs and cut back in retail banking to revive flagging profits and returns.

Gulliver intends to sell HSBC's U.S. credit card portfolio, which has more than $30 billion in assets, a move which would free up capital. Capital One Financial Corp (COF.N) and Wells Fargo (WFC.N) are among the bidders, sources have said.

Another suitor could be Barclays (BARC.L).

HSBC is also looking to sell upstate New York branches as it shrinks its network of 475 U.S. branches. Altogether it is looking to sell, shut or slim down retail banking in 39 countries. So far, it has said it will exit Russia and Poland.

The bank is likely to axe thousands of jobs as part of the overhaul, but it is probably too early to see an improvement in the cost line, analysts said.

Pretax profit will include a negative adjustment on the value of debt the bank carries, expected to be around $600 million. Underlying profit of $11.5 billion would be up almost a fifth from a year ago.

EmpireGlobalfx

07-31-2011, 06:47 PM

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EmpireGlobalfx

08-01-2011, 12:17 AM

(Reuters) - President Barack Obama on Sunday announced a last-minute deal to raise the U.S. borrowing limit and urged lawmakers to "do the right thing" and approve the proposed agreement to avert a catastrophic default.

Laying out the endgame in the crisis just two days before a deadline to lift the U.S. debt ceiling, the White House and both Republican and Democratic leaders in Congress said the compromise would cut about $2.4 trillion from the deficit over the next 10 years.

Now that top lawmakers have sealed a deal, both the Senate and House of Representatives are expected to vote on Monday. While Senate approval is likely, the agreement's fate may be less certain in the House.

After weeks of acrimonious impasse and with the final outcome hinging on support from recalcitrant lawmakers, Obama pressured both sides to carry to fruition the accord hammered out behind closed doors.

"The leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default -- a default that would have had a devastating effect on our economy," Obama told reporters at the White House.

"I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days," Obama said.

The plan involved a two-step process for reducing the U.S. deficit. The first phase calls for about $900 billion in spending cuts over the next decade and the next $1.5 trillion in savings must be found by a special congressional committee. Congress must act by December 23, 2011, under the deal.

Republicans had insisted on deep spending cuts before they would consider raising the $14.3 trillion limit on U.S. borrowing, turning a normally routine legislative matter into a dangerous game of brinkmanship.

Financial markets showed immediate signs of relief after becoming unnerved in recent days as lawmakers neared an August 2 deadline to raise the limit on America's borrowing or risk the world's largest economy running out of money to pay its bills.

The Japanese stock index rose 1.8 percent, U.S. stock futures built on earlier gains and the U.S. dollar rose modestly against the yen and the Swiss franc. Gold fell more than 1 percent, indicating investors had begun to shift out of safe havens.

"For the rally to be durable, markets will need more than this downpayment agreement," said Mohamed El-Erian, co-chief investment officer at PIMCO, the world's biggest bond fund.

"They will look to a more coherent fiscal reform to emerge from the second step and, more generally, for additional measures to remove structural impediments to growth and jobs," he said.

While the deal means the United States is unlikely to default, it is far from certain whether the plan agreed by the White House and lawmakers goes far enough in reducing the deficit to appease credit ratings agency S&P, which has threatened to strip America of its top-notch AAA rating.

A deal would ease the immediate crisis but repercussions will be felt for years to come. Bitter brinkmanship has turned dysfunction seemingly into the norm in Washington, undercut America's stature as the world's capitalist superpower and set the stage for a deeply ideologically 2012 presidential race when President Barack Obama is seeking re-election.

SELLING THE DEAL

Congressional leaders will now have to gauge whether they have the votes to pass the deal -- which has sharp spending cuts and no new taxes -- in the Senate and the House. In the house the political calculus is complicated by the entrenched opposition of some members affiliated with the conservative Tea Party movement.

House of Representatives Speaker John Boehner, who will face opposition from those conservatives in his ranks, told Republicans he backed the accord but that it was not the "greatest deal in the world." Already, some conservatives in his party said they would not sign on.

Democratic Leader Nancy Pelosi, a leading liberal considered crucial to delivering enough Democratic votes to offset Republican defections, suggested earlier that the terms under negotiation would be a tough sell in her party.

But in the Senate, passage appeared more certain.

"I am relieved to say that leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise," Senate Democratic Leader Harry Reid said on the Senate floor.

Senate Republican Leader Mitch McConnell followed, saying: "We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations," McConnell said.

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08-01-2011, 10:23 AM

Aug 1 (Reuters) - The euro extended declines against the dollar to hit a more than one-week low on Monday, as stock losses and weak U.S. manufacturing data dented risk appetite.

The euro fell as low as $1.4190 on trading platform EBS EUR=EBS, the weakest since July 21. It was last at $1.4198, down 1.4 percent

EmpireGlobalfx

08-02-2011, 11:22 AM

(Reuters) - Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means "like a parasite" on the global economy and said dollar dominance was a threat to the financial markets

"They are living beyond their means and shifting a part of the weight of their problems to the world economy," Putin told the pro-Kremlin youth group Nashi while touring its lakeside summer camp some five hours drive north of Moscow.

"They are living like parasites off the global economy and their monopoly of the dollar," Putin said at the open-air meeting with admiring young Russians in what looked like early campaigning before parliamentary and presidential polls.

US President Barack Obama earlier announced a last-ditch deal to cut about $2.4 trillion from the U.S. deficit over a decade, avoid a crushing debt default and stave off the risk that the nation's AAA credit rating would be downgraded.

The deal initially soothed anxieties and led Russian stocks to jump to three-month highs, but jitters remained over the possibility of a credit downgrade.

"Thank god," Putin said, "that they had enough common sense and responsibility to make a balanced decision."

But Putin, who has often criticized the United States' foreign exchange policy, noted that Russia holds a large amount of U.S. bonds and treasuries.

"If over there (in America) there is a systemic malfunction,

this will affect everyone," Putin told the young Russians.

"Countries like Russia and China hold a significant part of their reserves in American securities ... There should be other reserve currencies."

U.S.-Russian ties soured during Putin's 2000-2008 presidency but have warmed significantly since his protégé and successor President Dmitry Medvedev responded to Obama's stated desire for a "reset" in bilateral relations.

EARLY CAMPAIGNING?

Casually dressed in khaki trousers and a striped white shirt, Putin flew by helicopter to the tented camp as part of a string of appearances that are being closely watched in the run-up to the elections.

He did not say whether he plans a return to the Kremlin or will stand aside for Medvedev, his partner in Russia's leadership tandem, to run for a second term.

But young people crowding round Putin, caught up in the campaigning spirit created by huge portraits of Putin hung from trees, were not shy about saying who they wanted as president.

"Russia's next president will be small, bald and look like Putin," 17-year-old Ilya Mzokov joked with reporters. Asked why Medvedev was not paying a visit to the summer camp, he said: "Only serious people come here."

Youngsters chanted Putin's name and applauded his remarks as he strolled round the camp, where US-style business seminars, extreme sports and political mudslinging were among the topics on offer.

Putin, whose macho image appeals to many Russians, briefly swung himself up the first half of a climbing wall, filmed by a gaggle of state television cameras.

Nashi, which means "Our People," was created by the Kremlin to counter popular dissent after youth activism helped topple a pro-Moscow government in Ukraine's 2005 Orange revolution.

The group has worked to spread a personality cult around Putin and regularly campaigns against Kremlin critics.

Opinion polls show Putin, still widely viewed as the country's paramount leader, retains near 70 percent approval.

But his United Russia party is trying to reverse a slide in popularity before December parliamentary polls, hoping to use a strong showing there to help Putin in the March 2012 presidential vote.

EmpireGlobalfx

08-02-2011, 05:17 PM

(Reuters) - Fitch Ratings does not rule out slapping a negative outlook on the U.S. AAA rating when it concludes a review of the country later this month, the agency's top analyst for the United States said on Tuesday.

David Riley told Reuters in an interview that the ongoing review will take into account the "positive" outcome of a debt agreement achieved by lawmakers on Tuesday and prospects for the U.S. economy, which have disappointed Fitch.

"The downward revisions of the GDP were bigger than we expected and a source of concern," Riley said. "There could be a rating action which could include a revision of the outlook. I certainly couldn't rule that out."

Riley stressed that the debt deal agreed by Republicans and Democrats in Washington -- which avoided an imminent debt default and promised deficit reduction measures of at least $2.1 trillion over 10 years -- is a positive development but "won't be enough to stabilize the level of public debt" in relation to the size of the U.S. economy.

He said Fitch gave a "partial thumbs up" to the plan.

The deal includes initial spending cuts of 917 billion and additional savings of $1.5 trillion that will be recommended by a congressional committee by the end of the year.

"Even if the congressional committee is successful and agree on 1.5 trillion (in deficit-reduction measures), more will likely be required to be agreed over the coming years," Riley said.

EmpireGlobalfx

08-02-2011, 06:39 PM

(Reuters) - Moody's Investors Service on Tuesday confirmed its Aaa rating of the United States, citing the decision to raise the debt limit, but assigned a negative outlook that could pressure lawmakers to cut the U.S. deficit.

Moody's decision came a few hours after rival Fitch Ratings upheld its AAA rating of the United States. Fitch also warned the world's largest economy must cut its debt burden to avoid a future downgrade.

Standard & Poor's, which many predict will cut its rating, has yet to give its opinion of the deficit reduction and debt ceiling deal hammered out in Washington and signed into law on Tuesday.

S&P, like Moody's prior to Tuesday's decision, also had the rating on review for a possible downgrade. Moody's negative outlook means a downgrade is still possible in the next 12 to 18 months.

The budget deal allows the U.S. Treasury to keep servicing U.S. debt obligations, pay soldiers and make social security payments.

"Today's agreement is a first step toward achieving the long-term fiscal consolidation needed to maintain the US government debt metrics within Aaa parameters over the long run," Moody's said in a statement.

With the debt ceiling issue solved, the agency is now focusing on the long-term challenges to U.S. public finances, burdened by a deficit that has reached about 9 percent of the country's economy -- close to the highest since World War II.

The Senate approved the $2.1 trillion deficit-reduction plan in a 74 to 26 vote. It passed the Republican-controlled House of Representatives on Monday, warding off the specter of a catastrophic U.S. debt default.

The bill lifts the debt ceiling enough to last beyond the November 2012 elections, calls for $2.1 trillion in spending cuts spread over 10 years and creates a bipartisan joint House and Senate committee to recommend a deficit-reduction package by late November. It does not include any tax increases.

Moody's said that while the combination of the congressional committee process and automatic triggers provides a mechanism to induce fiscal discipline, this framework is untested.

"They are simply saying they are waiting to see what develops with the new deficit budget commission. It is certainly reasonable given the U.S.'s fiscal position. Now that we are past the deficit issue, the fiscal issues over the long run will be the story," John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina.

U.S. markets were closed by the time Moody's issued its decision.

The dollar, already falling against the Swiss franc after weak economic data, fell to an all-time low in the wake of Fitch's statement. However, the greenback held steady against the euro, which is struggling with a sovereign debt crisis of its own.

"Because it had been discussed as a possibility, I think the market was ready for this (Moody's). The market is now much more focused on the employment number on Friday morning and economic fundamentals and how deep is this soft patch. The U.S. market is focused on Europe, the weakness in Europe and on Friday's number," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

On Friday the U.S. jobs report is forecast to show 85,000 new jobs were created in July, up slightly from the prior month with the unemployment rate holding steady at a hefty 9.2 percent.

"As the U.S. economy slows down, the deficit reduction is not a real deficit reduction, because GDP ends up being lower so the debt reduction ends up being smaller," said Aroop Chatterjee, currency strategist at Barclays Capital in New York.

"That is an additional factor on the minds of markets when they are looking at this, in terms of the debt deal, is what is done in Congress really meaningful in keeping the probability of a downgrade low? And in our view, the probability of a downgrade continues to be pretty high," he said.

EmpireGlobalfx

08-02-2011, 11:30 PM

(Reuters) - Japan tried to keep yen bulls on guard on Wednesday, with finance minister repeating his warning that he was closely watching markets after the currency shot near record highs early this week.

The yen held broadly steady against the dollar as recent repeated jawboning from Japanese authorities kept markets wary of intervention to weaken the currency while a deal to raise the U.S. debt limit eased the pressure on the U.S. currency.

Finance Minister Yoshihiko Noda said he welcomed the congressional approval of the deal and would monitor market reaction to the agreement that averted a catastrophic default but did not remove the risk of credit downgrades.

"I would like to closely watch how markets assess (the U.S. agreement on debt)," Finance Minister Yoshihiko Noda told reporters. He declined to comment on whether Tokyo would intervene in the currency market.

Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa may discuss steps to address the strong yen when they meet at a regular gathering of cabinet ministers to discuss risks to the economy, to be held around noon.

Noda and Economics Minister Kaoru Yosano will also be present at the meeting, which Shirakawa will attend as an observer.

Moody's Investors Service said it had confirmed the United States' top AAA rating but assigned it a negative outlook after lawmakers passed a deal to raise the U.S. borrowing limit and reduce the deficit.

The yen hovered around 77.25 to the dollar, after it soared on Monday within a hair's breadth of March's record high at 76.25 to the dollar.

Despite the debt agreement, the dollar was unable to make much headway, weighed down by worries about the health of the U.S. economy following a batch of dour data.

Markets also wait for possible action by ratings agency Standard & Poor's, which has yet to give its opinion of the debt deal hammered out in Washington that many predict will include a cut in its top rating for the world's biggest economy.

Japan has been priming the markets for currency intervention since the yen tested its record high, signaling it may try to tame the currency with a combination of yen-selling and monetary easing.

Noda has made plain that the yen was too strong for Tokyo's taste and has said he was in discussions with the Bank of Japan and international partners about the yen's strength.

Japanese officials fear that the currency's near 5 percent surge in the past month will harm the economy, which skid into its second recession in three years following the March earthquake and tsunami.

The Bank of Japan will probably ease its monetary policy if the finance ministry decided to intervene and sell yen, sources familiar with the central bank's thinking have told Reuters. The central bank is due to review its policy on August 4-5.

As renewed concerns about a slowing global economy rattled financial markets, Japan's Nikkei stock average fell for a second day on Wednesday, providing an additional headache to Japanese policy makers.

Japan last intervened in concert with the Group of Seven in March when expectations of fund repatriation after the earthquake pushed the yen to a record high.

This time, most market players believe Japan would have to go it alone since the yen's gains are more about dollar weakness than anything else. Tokyo last acted solo in September 2010, when it sold 2.1 trillion yen.

EmpireGlobalfx

08-03-2011, 06:08 AM

(Reuters) - The Swiss National Bank announced a shock cut in interest rates and threatened more action to cap a soaring Swiss franc, but was seen fighting a losing battle as investors seek respite from debt crises elsewhere.

The SNB said on Wednesday it would cut its target rate to "as close to zero as possible" from an already rock-bottom 0.25 percent, and said it would very significantly increase the supply of francs to the money market over the next few days.

It said it would not tolerate the effective tightening of monetary conditions imposed by what it called a "massively overvalued" franc which was threatening economic growth and increasing downside risks to price stability.

"The SNB is keeping a close watch on developments on the foreign exchange market and will take further measures against the strength of the Swiss franc if necessary," the bank said.

The euro shot up in response, gaining 2.5 percent on the day versus its Swiss counterpart after hitting a new record low before the SNB news. The dollar also rose sharply. But analysts said that trend could prove temporary.

"These measures will probably not bring a halt to the Swiss franc's appreciation," said Neil Mellor, currency strategist at Bank of New York Mellon. "It will be a hard fought battle for the SNB and at most this will slow the pace of appreciation."

With low-debt Switzerland seen as a safe haven from an escalating euro zone debt crisis and fears of a U.S. rating downgrade, the franc has surged 18 percent against the euro and 22 percent against the dollar in recent months.

The SNB is the first central bank to cut rates since the global economic outlook deteriorated with expectations for higher rates from the European Central Bank and U.S. Federal Reserve pushed back since signs emerged of a new slowdown.

"It's a very difficult situation for them with the ongoing issues in the periphery in Europe. The Swiss franc is a sort of default option here," said Henrik Gullberg of Deutsche Bank.

"That is unlikely to go away as long as we have these issues in Europe.

SWISS EXPORTERS SQUEEZED

Swiss exporters have called on both the SNB and the government to take action against its steep rise although the bank has also been criticized for the heavy losses it incurred in its post-crisis interventions in 2009 and 2010.

Nick Hayek, chief executive of watch maker Swatch, who has been one of the most outspoken about the impact of the strong franc, welcomed the SNB move. "This is wonderful. Speculators should brace themselves," he told Reuters.

In contrast to a fall on most European markets, the Swiss blue-chip index was up 0.6 percent after the SNB news.

The SNB said in a statement the global economic outlook had worsened since its last monetary policy meeting in June, while the sharp rise in the franc meant the outlook for the Swiss economy had "deteriorated substantially."

The euro was up 2.5 percent to 1.1116 at 0918 GMT after hitting a record low of 1.0794 on trading platform EBS before the SNB comments. The dollar rose to 0.7764 franc from around 0.7630.

After the Swiss franc rose about 12 percent against the euro in July alone, economists began to warn that a recession could be looming in Switzerland with forward-looking indicators such as the KOF economic barometer pointing to a slowdown.

The strong franc has also begun to hit the manufacturing sector, data for July showed on Tuesday.

Analysts said the SNB could resume the foreign exchange interventions it stopped in June 2010, even though its previous attempts were seen by many as an expensive failure.

"Maybe the threat of intervention will force people to look for other potential safe havens," said Lloyds Banking Group currency strategist Adrian Schmidt.

The SNB announced last week it suffered a 9.9 billion Swiss franc ($12.8 billion) first-half loss on its foreign exchange holdings due to the surging franc, increasing criticism of Chairman Philipp Hildebrand and making interventions politically more difficult.

Christoph Blocher, a leading figure in the right-wing Swiss People's Party, who has already called on Hildebrand to quit, launched a new attack on Sunday, saying the SNB boss behaved like a speculator and was not qualified for the job.

Before the big franc jump, Swiss interest rate futures had priced in the possibility of a first post-crisis rate hike for September, but Wednesday's news pushed back expectations for a rise in the rate target to 0.5 percent to June 2013.

To increase liquidity to the franc money market, the SNB also said it would expand banks' sight deposits at the SNB and would no longer renew repos and SNB bills that fall due and will repurchase outstanding SNB bills.

EmpireGlobalfx

08-03-2011, 03:08 PM

(Reuters) - Stocks bounced from earlier losses on Wednesday, looking to break a seven-day run of declines as technology shares gained ground .

Earlier in the day, pessimism about the U.S. economic outlook took the S&P 500 to a new low for the year and led to predictions of an extended down leg in the market. The Nasdaq briefly turned negative for the year.

"A lot of us are saying the market had reached a bit of an oversold area," said Rich Ilczyszyn, senior market strategist with MF Global in Chicago.

Technology shares led the bounce, with the S&P technology index .GSPT up 0.7 percent.

Traders also said buyers came into the market after comments from former Federal Reserve Vice Chairman Donald Kohn, who told the Wall Street Journal the Fed could consider a new round of stimulus to help the economy.

Driving the early losses was data showing the U.S. services sector fell in July to its lowest level since February 2010, while new U.S. factory orders fell in June, pulled down by weak demand for transportation equipment.

The news followed weaker-than-expected manufacturing data earlier this week, creating more angst about a pullback in the recovery.

"If anything (the stock market move) is probably just a short cover," said David Lutz, managing director of trading at Stifel Nicolaus Capital Markets, Baltimore. He said many traders were possibly searching for bargains after days of losses.

The Dow Jones industrial average markets/index?symbol=us%21dji">.DJI was down 25.47 points, or 0.21 percent, at 11,841.15. The Standard & Poor's 500 Index .SPX was up 0.57 point, or 0.05 percent, at 1,254.62. The Nasdaq Composite Index .IXIC was up 12.46 points, or 0.47 percent, at 2,681.70.

EmpireGlobalfx

08-04-2011, 03:33 AM

(Reuters) - Japan sold one trillion yen ($12.6 billion) and its central bank eased monetary policy on Thursday, joining Switzerland in efforts to tame currencies buoyed by safe-haven demand from investors fretting about the health of the global economy.

The intervention in Asia and London pushed the yen well beyond 79.50 yen to the dollar, a two week low, from around 77.10 and Japan's Economy Minister Kaoru Yosano said policymakers were likely to meet either at Group of Seven or Group of Twenty level to discuss currencies.

Tokyo's action followed days of official warnings that the yen had risen so much that it threatened to derail Japan's recovery from the destruction wrought by the March 11 magnitude 9.0 earthquake, a deadly tsunami and an ensuing nuclear crisis.

Finance Minister Yoshihiko Noda said Japan had consulted its international partners, but intervened on its own to stem what it considered speculative and disorderly currency moves.

Hours later, the Bank of Japan took its own action, boosting by half to 15 trillion yen the amount of financial assets it aims to buy under a scheme established in October 2010 to shore up market confidence and support the economy.

"The central bank seems to be working in sync with the finance ministry, and that is different from past times when they eased policy. It's a message that they are willing to act to stop the yen from appreciating further," said Koichi Ono, senior strategist at Daiwa Securities Capital Markets.

Analysts doubted though that even a combination of yen selling and monetary easing could stem a global shift away from the dollar and other riskier assets if Tokyo were to continue acting on its own.

"The yen's advance reflects the difficult economic and fiscal situation of both the U.S. and the euro zone, so even if Japan intervenes in the market, it won't be able to combat the yen's rise in the long run on its own," said Takashi Kamiya, chief economist at T&D Asset Management Co.

A show of coordinated action was important for Prime Minister Naoto Kan and his government, reeling from record low popularity ratings and struggling with the aftermath of Japan's worst disaster in generations and the world's gravest nuclear crisis since Chernobyl 25 years ago.

"Japan is just in the process of recovering from a natural disaster, so these currency moves are certain to have a negative impact on the economy and financial markets," Noda told reporters in justifying the intervention.

Traders said Japan had sold more than one trillion yen in intervention so far on Thursday, a day after the Swiss central bank surprised markets by cutting interest rates to try to weaken the Swiss franc.

Investors have seen the Swiss franc and the yen as a safer refuge among G10 currencies from a deepening euro debt crisis and speculation that the U.S. economy could be slipping into recession.

Analysts said the Swiss rate cut may have spurred Japan into action even as the yen traded below its record high of 76.25 per dollar hit shortly after the March quake.

"Yesterday's monetary easing by Switzerland provided the push because if Japan didn't respond this would push the yen still higher," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

"A response needed to be taken quickly to head off any further yen strengthening."

The moves by Switzerland and Japan could now put pressure on the European Central Bank, which reviews policy on Thursday, to resume bond buying or other measures, since the euro zone crisis is a major factor behind the rise in the franc and yen.

CENTRAL BANK MOVE

The Bank of Japan, which cut short its scheduled two-day meeting that started on Thursday, left its benchmark rate unchanged at 0-0.1 percent.

With rates pegged near zero, the central bank has been using the size of the asset buying pool as the main gauge of its policy stance.

The release of extra funds in addition to cash spent on foreign currencies, which the central bank looks certain to leave unabsorbed, is seen as a way of making the intervention more effective by boosting yen supply.

Until recently the central bank has sounded confident that it had done enough to support the economy and that Japan would exit recession later this year with the help of reconstruction spending and recovering exports.

But the yen's nearly 5 percent climb over the past month cast doubt on such a scenario and both the government and the central bank have been under growing pressure from Japanese exporters, including Toyota Motor Co, to tame the currency.

Noda declined to comment on the size of the intervention or

say what currencies Japan bought or sold. He would also not say whether Tokyo planned returning to the market, although traders said authorities continued sporadic intervention, including in London. Some said it could eventually add up to a similar amount as 2.1 trillion Tokyo sold in its last solo intervention in September 2010.

Thursday's action has knocked the Japanese currency down around 2.5 yen so far, compared with around 2.8 yen in intervention in September 2010 and in March, when Tokyo acted together with its G7 partners.

The ECB meets to review policy on Thursday with investors hoping President Jean-Claude Trichet will signal a more aggressive approach to fighting the euro zone crisis, for example by hinting at further buying of government bonds in the market.

It may seem ironic that Japan, saddled with public debt twice the size of its $5 trillion economy and struggling with the aftermath of its worst natural disaster in generations, would appeal to risk-shy investors.

However, with the euro area mired in its own debt crisis, Japan's deep financial markets make it one of few viable options, market analysts say.

EmpireGlobalfx

08-04-2011, 05:15 AM

(Reuters) - Euro zone sovereign bond markets steadied Thursday ahead of a crucial European Central Bank policy-setting meeting that investors hope will signal a more aggressive approach to fighting the currency area's debt crisis.

Yields of Italian and Spanish 10-year bonds fell in early trading before an auction in which Spain planned to sell up to 3.5 billion euros ($5 billion) of government paper after crisis telephone consultations with European Union authorities.

Japanese authorities acted to bring down the strong yen, joining Switzerland in efforts to tame currencies buoyed by safe-haven demand from investors fretting about the health of the global economy and the euro zone's debt woes.

All eyes were on the ECB, with the chief European economist of credit ratings agency Standard & Poor's urging it to re-activate its bond-buying program to stabilize battered euro zone sovereigns.

"Markets are still moving so we need someone to intervene," S&P's Jean-Michel Six said. "The only effective fireman capable of rushing out of the fire station at top speed is the European Central Bank, which has played an admirable role since the start of the crisis to calm markets.

He told France-Inter radio that until a contagion-fighting plan adopted by euro zone leaders last month came into effect, which requires parliamentary approval in some countries, the ECB had to play an interim role.

The controversial ECB program has been dormant for four months and there is strong opposition to reviving it among guardians of central banking orthodoxy in Germany who argue it compromises the core mission of fighting inflation.

The ECB bought 76 billion euros of sovereign bonds, believed to be only Greek, Irish and Portuguese, to stabilize markets last year but critics said the Securities Market Program had only limited, short-term impact and did not prevent any of those countries from requiring EU/IMF bailouts.

Spanish Economy Minister Elena Salgado, speaking on Wednesday night after a crisis meeting on the economy with Prime Minister Jose Luis Rodriguez Zapatero, said the bond sale would take place as scheduled despite a surge in Spanish and Italian bond yields to 14-year highs in the past several days.

"We think the tensions will last a few more days, but the bond auction will go ahead Thursday," Salgado said.

The yield on Spain's 10-year bonds climbed as high as 6.50 percent Wednesday because of investor doubts about Madrid's ability to continue financing its debt over the long term, before drifting back to close at 6.27 percent. It fell a further 21 basis points against benchmark German Bunds in early Thursday trading.

Italy's 10-year yield fell back below the psychologically important 6.0 percent threshold, with some traders saying they expected the ECB could act, either with a longer term repo or secondary market bond-buying.

"DESPERATE"

Analysts say that if yields go much higher and stay there, markets could force Spain, the euro zone's fourth biggest economy, to follow Greece, Ireland and Portugal in seeking an international bailout.

"Hearing Zapatero had canceled his holidays showed the situation was desperate. The 7 percent (yield) mark is a psychological barrier and is just not sustainable because it's far too costly to finance at these levels," said Jo Tomkins, analyst at consultancy 4Cast.

Euro zone leaders agreed at a summit last month to give the bloc's bailout fund sweeping new powers to help indebted states and intervene in the bond market, but the changes are unlikely to be passed by national parliaments until late September at the earliest.

If the ECB does not revive the program, central bank president Jean-Claude Trichet may at least indicate willingness to use it if the crisis worsens, some analysts believe.

The ECB, which has raised official interest rates twice this year, may also signal it will put any further tightening on hold because of slowing economic growth in the euro zone and globally, even though inflation is well above target.

Japan sold one trillion yen ($12.6 billion) and its central bank eased monetary policy Thursday to try to push down the yen against the dollar and euro.

Economy Minister Kaoru Yosano said policymakers of major economies needed to discuss currencies at either Group of Seven or Group of 20 level -- the first official call for multilateral action since twin crises over U.S. and euro zone debt became acute last month.

Official sources in several G7 countries said Wednesday they were not aware of any move so far to involve the G7 or G20, but that France, which holds the chair of both groups this year, might consult those forums if the turmoil persists.

In Italy, the euro zone's third biggest economy, Prime Minister Silvio Berlusconi promised Wednesday to step up economic reforms and called for a broad-based effort in the country to fight the market turmoil.

"The government and parliament will act, I hope, with a large political and social consensus to fight every threat to our financial stability. Today more than ever, we need to act all together," said Berlusconi, in a speech which did not give substantial new details on policy.

Berlusconi is due to meet employers' groups and unions on Thursday to try to thrash out a plan to stimulate the economy. But the head of the largest union, the left-wing CGIL, responded coolly to his speech.

Susanna Camusso said it lacked concrete proposals, and that negotiations were already "getting off on the wrong foot." The leader of the opposition Democratic party, Pierluigi Bersani, said Berlusconi should resign.

In addition to Italy and Spain, some investors are becoming jittery about the finances of France, the euro zone's second biggest economy. The spread of 10-year French government bonds above German Bunds hit a euro lifetime high of 0.81 percentage point Wednesday.

This is problematic partly because any lasting solution to the euro zone's crisis may have to involve a drastic expansion of its 440 billion euro bailout fund. That would put a greater financial burden on France, a big contributor to the fund, and could push up its yields further.

EmpireGlobalfx

08-04-2011, 08:41 AM

(Reuters) - General Motors Co's quarterly profit nearly doubled, beating expectations, as the top U.S. automaker took a larger share of sales globally and raised prices on its vehicles.

Coming out of bankruptcy, GM Chief Executive Dan Akerson and other executives said the company had stripped out enough costs to recession-proof the business so it could thrive even in a weak auto market. The industry's sales slump in the second quarter and the risk of a double-dip recession could provide the first major test for that claim.

GM Chief Financial Officer Dan Ammann called the quarter a "good building block" for the company.

GM is pushing heavily into smaller, more fuel-efficient cars like the popular Chevrolet Cruze, but a good portion of its profit still relies heavily on sales of more profitable trucks in the U.S. market.

Net income in the second quarter rose to $2.52 billion, or $1.54 per share, from $1.33 billion, or 85 cents per share, a year earlier.

Analysts polled by Thomson Reuters I/B/E/S had expected $1.20 per share on average.

Revenue rose 19 percent to $39.4 billion, above the $36.74 billion analysts had expected during a quarter in which U.S. auto sales hit a soft patch.

GM shares rose 2 percent in premarket trading.

The results represent the second full quarter since GM's initial public stock offering last November and a restructuring intended to keep the largest U.S. automaker profitable through the industry's punishing boom-and-bust cycles.

GM emerged from bankruptcy in 2009 after a $52 billion taxpayer-funded bailout orchestrated by the Obama administration. The U.S. Treasury still owns 32 percent of GM's common shares.

The company boosted its second-quarter earnings before interest and taxes by $1 billion by pushing through higher prices on its vehicles globally.

However, those gains came as its Japanese rivals, led by Toyota Motor Corp, struggled with fewer vehicles to sell due to the earthquake in Japan in March.

Analysts worry that if the U.S. recovery hits a pothole in the second half, GM could be forced to raise incentives on its vehicles to lure shoppers. GM's first-quarter results were marred by heavy incentives, but the automaker dialed back those deals.

EmpireGlobalfx

08-04-2011, 02:48 PM

Aug 4 (Reuters) - Italian prosecutors have seized documents at the offices of rating agencies Moody's and Standard & Poor's in a probe over suspected "anomalous" fluctuations in Italian share prices, a prosecutor said on Thursday.

The measure is aimed at "verifying whether these agencies respect regulations as they carry out their work," Carlo Maria Capistro, who heads the prosecutors' office in the southern town of Trani which is leading the probe, told Reuters.

The documents were seized at the Milan offices of the two agencies on Wednesday, he said, adding that prosecutors had also asked Italian market regulator Consob to provide documents relating to their registration in Italy.

S&P in Italy said in a statement it believed the probe was "groundless."

"We strongly defend our work, our reputation and that of our analysts," it said.

Moody's said it "takes its responsibilities surrounding the dissemination of market sensitive information very seriously and is cooperating with the authorities."

The Trani prosecutors have opened two probes -- one for each rating agency -- after a complaint by two consumer groups over the impact of their reports about Italy on Milan stock prices.

The first complaint was filed against Moody's after it published a report in May 2010 about the risk of contagion for Italian banks from the Greek crisis.

A second complaint filed in May this year targeted Standard & Poor's after it threatened to downgrade Italy's credit rating because of its huge public debt.

The prosecutors are also investigating whether any crimes were committed during a sell-off in Italian assets on July 8 and July 11 as fears spread that the euro zone's third largest economy is being sucked into the widening debt crisis.

One of the consumer groups behind the complaints said the probe was aimed at finding out whether the market's sharp drop was due to a "precise scheme by hedge funds and other unidentified players that could be linked to the negative comments about Italian public finances by the rating agencies."

Consob last month summoned Moody's and S&P for meetings and urged them not to release their statements during market hours.

EmpireGlobalfx

08-05-2011, 05:17 AM

(Reuters) - Japan's finance minister said he was closely watching yen moves on Friday, signaling a readiness to continue selling the currency after intervention on Thursday that likely totaled a record amount around 4.5 trillion yen ($56 billion).

Japanese authorities intervened on Thursday and the central bank eased monetary policy to reduce pressure on the export-reliant economy after the yen surged close to a record high with investors buying it as a refuge from the fiscal and economic woes in Europe and the United States.

"There's no change to our basic stance that we want to monitor markets closely," Finance Minister Yoshihiko Noda said on Friday.

"It's better to wait for a little while before judging the impact of intervention," he told a news conference.

Markets remained jittery.

The Japanese currency plunged nearly a full yen against the dollar at one point on Friday, spurring market talk that Japan had intervened again. It quickly bounced back, so traders said it was unlikely to have been the result of intervention. A Finance Ministry official declined to comment.

Earlier, a comment by Noda that he wanted to spend more time determining the effect of Tokyo's action briefly pushed the yen up against the dollar as market players interpreted it as a sign Tokyo may hold off intervention in the near future.

"Of course, we have to watch currencies, but the Dow (industrial average) fell a lot, so today I also want to watch the stock market."

Thursday's intervention briefly pushed the dollar above 80 yen. It fell back to trade around 78.45 yen.

Money market data released by the Bank of Japan late on Friday showed that Japan's yen-selling intervention the previous day may have totaled a record amount around 4.46-4.66 trillion yen.

World stocks plunged to new lows for the year on Thursday with a sell-off in markets accelerating sharply as investors fretted about the outlook for the global economy and piled into safe-haven bonds. The overnight sell-off pushed the Nikkei share average .N225 down sharply on Friday.

Noda offered no sign that financial officials from the Group of Seven or Group of 20 leading economies are considering discussing the global slowdown and market instability, or whether Tokyo may be initiating such discussions.

"I agree that these subjects should be discussed. We have the G20 meeting in September. I am sure these subjects will come up at a lot of international meetings," Noda said.

"Each problem is important, but how to prioritize these issues is something to discuss from here on," Noda said in response to questions on whether G20 needed to discuss currencies, the sovereign debt crisis and the U.S. economy.

Japanese officials have not been clear about whether they obtained consent from G7 counterparts to conduct solo intervention.

Asked about the cool reception of officials in Europe and the United States to Japan's intervention, Noda said: "We are communicating, but I won't comment on each country's stance."

Economics Minister Kaoru Yosano warned markets on Friday that they should not assume that Tokyo is done with stepping into the market, while stressing again the need for Japan, Europe and the United States to adopt common policies to contain the pessimism about the global economy. ($1 = 79.020 Japanese Yen)

EmpireGlobalfx

08-05-2011, 07:02 AM

(Reuters) - Where can investors hide when even gold and cash look dicey?

Some financial advisers were answering phone calls from panicky clients Thursday as stocks dropped 500 points, gold lost its safe-haven glitter and money markets got the jitters.

Michael Kay, a financial adviser at Financial Focus in Livingston, New Jersey, talked a client off the proverbial ledge in the morning as the market resumed its sharp downward trajectory. The client wanted to liquidate his portfolio and invest in gold.

Kay's advice? "If you think it's the end of the world, buy Progresso soup in pop-top cans because it's more valuable than gold. You can't eat gold."

So what should investors be doing as the markets zig and zag?

Alan Haft, a financial adviser in Newport Beach, California, is getting defensive. He has moved about $15 million of his client's portfolios into cash-like investments since early July. He's put much of that cash to work in the Vanguard Short-Term Treasury Fund.

"People are skittish, but the U.S. Treasury is still the safest place when you compare what is out there," Haft says.

Like the von Trapp family in the "Sound of Music," Haft sees Switzerland as a safe haven. He's parking money in Swiss fixed annuities, which are highly liquid but can only be purchased through an intermediary.

"The Swiss Franc has been rocking; many of my investors love the off-shore nature of it," Haft says. He also likes the CurrencyShares Swiss Franc ETF.

In the past few weeks, Haft says he also put $5 million into the WellsFargo Advantage Short-Term Muni Fund because the duration is "super-low" which means interest-rate risk is minimal.

"The whole thing about rising interest rates is that on one hand the economy is not getting any better (which means rates should stay low). But on the other hand with deficit stuff, rates should climb, so it's a quandary," Haft says.

FINDING ALTERNATIVES

Despite all of the turmoil in Italy and Greece, Bradley Bofford, a financial adviser at Financial Principles in Fairfield, New Jersey, says he has not received any client calls about the safety of money market instruments. But his firm has been reaching out to some clients with accounts that exceed the $250,000 FDIC limit. For these high-end clients, he recommends a Certificate of Deposit Account Registry Service, also known as CDARS.

CDARS (CDARS - The Certificate of Deposit Account Registry Service) work like super-sized CDs but offer insurance coverage up to $50 million. They rose in popularity during the 2008 financial crisis. Money is spread around in chunks across a network of "well-capitalized" banks, with maturities of four weeks to five years. The trade-off is a lower yields than traditional CDs.

According to Bankrate.com, the average one-year certificate of deposit is yielding 0.91 percent. One-year CDARS, by comparison, pay 0.26 percent, Bofford says.

TWO STYLES: STAY PUT OR ACT NOW

There are two main camps among advisers: the do-nothing crowd and the do-more crowd.

Over the last three weeks, financial adviser Rich Brooks says he has not had a single client conversation that didn't involve talking about market volatility.

So maybe that's why no one called during Thursday's big drop since it was not a huge surprise, says Brooks, who is vice president for investment management at Blankenship & Foster, which has $320 million under management for 225 clients in Solana Beach, California.

"The current sell-off hasn't really shaken our clients. If we were sitting here today asking why Congress didn't come to a budget deal, then maybe. But we've been working hard to prepare them for the headwinds," Brooks says.

Among the 'do-more' crowd is Pat Dorsey, Morningstar's former director of equity research and now vice chairman of Sanibel Captiva Trust Company, which has $500 million under management.

"My sense is that the best opportunities are going to be European multinationals…which get the bulk of revenue from outside Europe, like Siemens, Nestle or Novartis. It's not like Japanese consumers are going to stop eating chocolate," he says. "If you're willing to step up to the plate a little bit, there are interesting ways to take advantage of this volatility."

STOCKS MORE ATTRACTIVE?

Another make-a-move adviser is Tim Courtney, chief investment officer at Burns Advisory Group, with offices in Oklahoma and Connecticut. At a price-to-earnings ratio of 13.98, the S&P 500 is cheaper today on a trailing 12-month basis than it has been in the past 20 years. What's more, in 1990 you could buy a 10-year U.S. Treasury note that yielded 8.6 percent -- a full six percentage points higher than what you can get today.

Courtney says there's no question stocks offer a great relative value at these levels despite the continued downturn. (And he'd like to know where investors that are pulling out after a 10 percent drop are going to put their money, or when they plan to get back in.) If you can look past the next week or month, stocks are "super attractive," he says.

William Suplee IV, a financial adviser at Structured Asset Management in Paoli, Pennsylvania, says 20 percent of his clients are worried about their portfolios right now. But a whopping 70 percent are sitting tight, "having lived through this several times previously."

And the rest - well, they are using this dip as a buying opportunity," he says. Their secret? "Strong stomachs," he says.

EmpireGlobalfx

08-05-2011, 01:41 PM

(Reuters) - U.S. stocks rose in volatile trade on Friday as investors saw a buying opportunity following the sharp sell-off that took the S&P 500 down 10 percent over the last 10 sessions.

The stock market extended its rebound after Italian Prime Minister Silvio Berlusconi said his country will introduce a constitutional principle of a balanced budget, adding that: "We will accelerate measures" in an austerity program, with the "aim of a balanced budget in 2013."

Helping the market, sources said the European Central Bank was ready to buy Italian and Spanish bonds if Berlusconi commits to bringing forward specific reforms.

"You are making or have made a tradeable low and are going to get a throwback rally," said Jeffrey Saut, Raymond James Financial chief investment strategist, in St. Petersburg, Florida.

At Thursday's close, the S&P 500 was down about 10 percent for the last 10 trading sessions.

Stocks had been lower for much of the day as worries about slower global growth remained firmly intact despite stronger-than-expected U.S. jobs data.

Intense recent selling -- taking both the Dow and the S&P 500 down 4 percent and the Nasdaq down 5 percent on Thursday -- reflects frustration with politicians' inability to address pressing concerns over high public debt in Europe and the United States as growth in the world's large industrial economies shows signs of stalling.

Slower growth in manufacturing and services in the United States also have renewed concern about another U.S. recession.

Among the day's best-performing sectors were defensive ones: consumer staples and health care. The S&P consumer staples index was up 2 percent.

The Dow Jones industrial average was up 132.33 points, or 1.16 percent, at 11,516.01. The Standard & Poor's 500 Index was up 11.07 points, or 0.92 percent, at 1,211.14. The Nasdaq Composite Index was up 4.86 points, or 0.19 percent, at 2,561.25.

U.S. non-farm payrolls data showed a gain of 117,000 jobs in July compared with a forecast for an increase of 85,000, while the country's unemployment rate dipped to 9.1 percent last month from 9.2 percent in June, the Labor Department reported.

Also affecting stocks was talk of a possible S&P downgrade of U.S. debt after the close.

The recent steep sell-off has put all three major indexes in negative territory for the year.

Credit Suisse on Friday reduced its year-end view on the S&P 500 to 1,350 from 1,450, citing weaker-than-expected growth.

Other strategists saw the bearish mood as more temporary.

"If this is a market reaction to a crisis, then a bounce should be under way soon. Since WWII, there are only three instances where U.S. stocks fell 10 percent in 10 days outside of recessions," according to JPMorgan Chase strategist Thomas Lee, in a research note.

Reflecting the market's volatility, the CBOE Volatility Index or VIX whipped between positive and negative in early afternoon trading. It was last up 0.2 percent at 31.71, after earlier touching an intraday high at 39.25, its highest level since May 2010.

EmpireGlobalfx

08-07-2011, 12:32 PM

(Reuters) - The European Central Bank will decide later on Sunday whether to buy Italian bonds to try and prevent the euro zone debt crisis from widening, while global policymakers conferred on the twin financial crises in Europe and the United States.

After a week that saw $2.5 trillion wiped off world stock markets, political leaders are under searing pressure to reassure investors that Western governments have both the will and ability to reduce their huge and growing public debt loads.

ECB President Jean-Claude Trichet wants the policy-setting Governing Council to take a final decision on buying Italian paper after Prime Minister Silvio Berlusconi announced new measures on Friday to speed up deficit reduction and hasten economic reforms, one ECB source said.

The source said that if the ECB council opted to intervene on Italy at a crucial conference call starting at 1700 GMT (1 p.m. EDT), the ECB and national central banks would start buying Italian bonds when markets open on Monday.

That would likely prompt a sizeable relief rally on global markets. If it does not act, the reverse would be true.

Another source said the council would look too at possible emergency liquidity measures to prevent money markets freezing. The fourth anniversary of the global credit crunch which ushered in the financial crisis looms this week.

A third ECB source said the teleconference had been put back into the evening to see what measures the United States was ready to take to calm markets after credit ratings agency Standard & Poor's downgraded Washington's AAA rating to AA+.

The ECB reactivated its sovereign bond-buying program last Thursday but purchased only small quantities of Irish and Portuguese bonds, seeking tougher austerity measures from Italy. That did nothing to stem market attacks on Italian assets.

Berlusconi's plans entail moving up a balancing of the budget by one year to 2013, enshrining a balanced budget rule in the constitution and pushing through welfare and labor market reforms after talks with trade unions and employers.

He gave little detail about how that would be achieved and the measures will take some time to enact.

The debt crises on either side of the Atlantic, with the latest shock coming from Friday's U.S. downgrade, are whipping up market turmoil and stoking fears of the affluent world sliding back into recession.

Markets in the Gulf region and in Israel, among the first to trade since the U.S. credit downgrading, tumbled on Sunday on worries the U.S. ratings downgrade and European debt woes may trigger another global downturn.

G-20, G-7 CRISIS CONTACTS

South Korea said finance deputies from the Group of 20 big economies addressed the European crisis and U.S. sovereign rating downgrade in an emergency conference call on Sunday morning Asian time.

A Japanese government source said finance leaders from the Group of Seven big developed economies would also discuss the crisis and might issue a statement afterwards. The timing of a planned conference call was unclear, but was likely to be held before Asian markets reopen on Monday.

French President Nicolas Sarkozy, who chairs the G7 and G20 forums this year, conferred with Britain's Prime Minister David Cameron on Saturday.

"Both agreed the importance of working together, monitoring the situation closely and keeping in contact over the coming days," a spokesman for Cameron said.

A White House economic adviser castigated ratings agency Standard and Poor's for cutting the U.S. credit rating to AA-plus from AAA. The U.S. Treasury said the rating agency's debt calculations were wrong by some $2 trillion.

Over time, S&P's move could ripple through markets by pushing up borrowing costs and making it more difficult to secure a lasting recovery.

S&P chief David Beers told "Fox News Sunday" that the Treasury Department's criticism of the credit rating agency's analysis was a "complete misrepresentation." Even with the debt limit agreement passed by the U.S. Congress, he said, "the underlying debt burden of the U.S. is rising and will continue to rise over the next decade."

Asked about prospects for a further lowering of the U.S. rating, Beers said the agency's negative outlook meant that "risks are on the downside."

ALARM IN GERMAN, FRENCH MEDIA

Newspapers in Germany, the euro zone's reluctant bankroller, were both incredulous and gloomy on Sunday about the financial upheaval.

Welt am Sonntag dedicated an entire section to global economic uncertainties, entitled "Der Crash" and wrote: "No one could have foreseen this dramatic crash and now the situation can only be endured with gallows humor."

Der Spiegel magazine's front page featured euro and dollar banknotes going up in flames, with the headline "U.S. indebtedness, euro crisis, stock market chaos: Is the world going bankrupt?"

French newspapers carried grim headlines with Le Journal du Dimanche trumpeting "The world on the edge of collapse" with a sub-headline saying: "The week starting should be crucial. Markets from now on are living in fear of a crash."

Washington's Asian allies rallied round the battered superpower, with Japan and South Korea both saying their trust in U.S. Treasuries remained unshaken and urging investors not to panic.

"I expressed our country's position on the (G20 conference) call that there will be no sudden change in our reserve management policy," South Korean Deputy Finance Minister Choi Jong-ku told Reuters by telephone, referring to Seoul's heavy ownership of U.S. bonds.

"There's no alternative that provides such stability and liquidity," added Choi.

The most immediate concern for financial markets was the debt crunch in the euro zone, where yields on Italian and Spanish debt have leaped to 14-year highs on political wrangling and doubts over the vigor of budget cuts.

"The ECB has got to confront the speculators who are out to test the policymakers," said Mike Lenhoff, chief strategist at Brewin Dolphin in London. "(The U.S. downgrade) might cause some upheaval temporarily. The big issue is the euro zone and its implications for the banking system."

SPLITS IN ECB

The ECB remains divided over whether to buy bonds at all, with four German, Dutch and Luxembourg members of the 23-member council opposed, ECB sources said. Even some of those in favor say Italy should do more to front-load its reforms.

The danger is that further pressure on Italian and Spanish bonds could further undermine a damaged European banking system and lock Italy, the world's No. 8 economy, out of the market.

Indeed, doubts are growing in the German government that Italy could be rescued by the European emergency fund, even if the fund were tripled in size, according to Der Spiegel.

Italy's financial needs are so huge that it would overwhelm resources, according to government experts, Der Spiegel said in its online edition. Italy's public debt is about 1.8 trillion euros, or 120 percent of its national output.

Germany has consistently said troubled euro-zone governments should focus on spending cuts and internal reforms, not bailouts. The European Financial Stability Fund currently has 440 billion euros and would need to be expanded to cater for the likes of Italy and Spain.

China, the largest foreign holder of U.S. debt, took the world's economic superpower to task for allowing its fiscal house to get into such disarray.

On Sunday, a commentary in the People's Daily, the main newspaper of the ruling Communist Party, said Asian exporters, who depend on demand from the United States, could be among the biggest victims of the mounting U.S. economic woes.

"The lowering of the United States' long-term sovereign credit rating has sounded a warning bell for the international currency system dominated by the U.S. dollar," said economist Sun Lijian, writing in the paper.

EmpireGlobalfx

08-07-2011, 02:43 PM

(Reuters) - The U.S. dollar is likely to take a further beating against the Swiss franc and Japanese yen on Monday, while global stocks could tumble after the United States lost its top-tier credit rating from Standard & Poor's.

Losses against the euro, however, could be tempered by the euro zone's escalating debt crisis as officials there discuss ways to reduce borrowing costs for large euro zone economies Spain and Italy.

The dollar's fall against the safe-haven Swiss franc and yen could be limited by possible intervention by the Bank of Japan and Swiss National Bank to stem their surging currencies.

Stocks in Tel Aviv, one of the first global equity markets to open since the downgrade, dropped over 6 percent on Sunday in response to S&P's action late on Friday to cut the U.S. long-term credit rating by a notch to "AA-plus" from "AAA."

The move by S&P drew criticism from some of the world's largest investors.

"Obviously, we're going to get freaked out a little bit and the dollar will get hit, but it's only going to be for a couple of days," said John Taylor, chairman and chief executive officer of FX Concepts, the world's largest currency hedge fund.

Over the past month, the dollar shed 6 percent against the Swiss franc and about 4 percent against the yen.

"This downgrade is not that important and if you ask me, too silly. The U.S. is in a much better position than any, I repeat, any European country," Taylor added.

It was not yet clear whether European policymakers would be able to come up with measures to allay concerns about their own region's fiscal crisis, though all the signs were that they were keenly aware of the importance of reassuring markets.

Sources said the European Central Bank will hold a conference call at 1700 GMT to decide whether to buy Italian government bonds in the secondary market.

One ECB source said that if the ECB council opted to intervene on Italy, the ECB and national central banks would start buying Italian bonds when markets open on Monday.

The ECB last week resumed its purchases of government bonds in the secondary market after an 18-week hiatus, but its decision to restrict such purchases to Irish and Portuguese bonds led to sharp declines in Italian and Spanish bond prices, and borrowing costs soared to 14-year highs.

"There is no reason why the ECB cannot simply go ahead and imply that they are going to support the Italians and the Spanish," said Mike Lenhoff, chief strategist at Brewin Dolphin in London. "It is better that they don't say anything, but go in and show there is another side to the market."

Any ECB buying would offer relief to beaten-down Italian and Spanish bonds, although the extent of any rally in these bonds will depend on the size and persistence of the bank's bond purchases.

U.S. RECESSION FEARS

Worries of another U.S. recession and concern about the euro zone crisis have sparked a global stock market slump that wiped $2.5 trillion off companies' values in the past week.

The fall in global share prices, as measured by the MSCI All-Country World Index, was the biggest weekly decline since early October 2008, according to Thomson Reuters Datastream.

Consumer discretionary shares of firms dependent on external demand are likely to be singled out for more punishment.

Still, some investors believed the expected sell-off in stocks on the U.S. credit downgrade had been largely priced in and may not last long. Some expressed doubts about the S&P decision as they are well aware of questions on the S&P's calculations of the projected U.S. fiscal deficits.

"The U.S. track record -- over the past 200 years -- on its ability and willingness to fully service its debt is impeccable and the debt statistics should be interpreted not in isolation but in conjunction with the flawless track record of the U.S.," said Stephen Jen, managing director of SLJ Macro Partners in London, a global macro hedge fund.

"This will have no lasting effects on financial asset prices," he added.

U.S. Treasury debt yields are also expected to rise on Monday. Yields on benchmark U.S. 10-year Treasury notes rebounded to 2.56 percent on Friday, but were not very far from a record low of near 2 percent hit during the throes of the 2007-09 global financial crisis.

The sharp swings in financial markets have piled pressure on policymakers.

Finance ministers from the Group of Seven most developed economies are on Monday to discuss the U.S. sovereign rating downgrade and Europe's debt woes, Japanese news agency Kyodo reported on Sunday.

"Be wary (Monday) of irrational depression as markets take flight," said Justin Urquhart Stewart, a director at Seven Investment Management in London. "We are dealing with the knowns and not the unknowns, but what we have a shortage of at the moment is political leadership."

Goldman Sachs strategists said there was a one-in-three probability of a U.S. recession due to the worsening European crisis, the possible failure to extend payroll tax cuts and elevated levels of joblessness, despite a slight dip in the U.S. unemployment rate in July.

That would bode ill for the benchmark MSCI all-country index, which last week hit its lowest since September 2010 and has accumulated losses of more than 12 percent since late July.

"Market sentiment appears acutely vulnerable given the build-up of concern on a sharper U.S. slowdown and speculation on the appropriate policy response and lingering fears stemming from the sovereign debt crisis in Europe," Citigroup strategists said in a note.

EmpireGlobalfx

08-07-2011, 03:14 PM

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EmpireGlobalfx

08-07-2011, 03:39 PM

(Reuters) - The Euro system of central banks has decided to intervene decisively on markets to respond to the escalating debt crisis, a euro zone monetary source said after a European Central Bank conference call on Sunday.

Officials on the conference call carefully considered the situation in Italy and Spain, and took note of a statement by France and Germany which stressed their commitment to European financial reforms, the source said.

"The Euro system will intervene very significantly on markets and respond in a significant and cohesive way," the euro zone monetary source said, adding a statement by the ECB will be issued shortly.

EmpireGlobalfx

08-07-2011, 08:12 PM

(Reuters) - Political and financial leaders gave their first sign of readiness to battle a debt crisis gone global when the European Central Bank signaled on Sunday it would start buying Italian and Spanish debt, a critical move to quell a bond rout that has rocked financial markets.

The European Central Bank decision would be aimed at calming markets grown increasingly doubtful about Europe's ability to deal with its debt issues, a strikingly parallel concern to that which led ratings agency Standard & Poor's to knock U.S. debt down from "risk free" AAA status to AA-plus.

Meanwhile, finance chiefs from Group of Seven industrial nations were to confer by telephone late on Sunday-- and possibly issue a statement afterward -- to try to soothe anxious investors after a week in which $2.5 trillion of market value was wiped out.

Any statement would be timed to precede the opening of trading in Tokyo, the first major market to open on Monday, at 9 a.m. local time (0000 GMT/8:00 p.m. EDT Sunday).

ECB President Jean-Claude Trichet said in a statement after discussions with his Governing Council on Sunday that the central bank welcomes new steps taken by Italy and Spain on fiscal and structural reforms, and hence it would "actively implement" its bond-buying program. A monetary source said this means it is ready to start buying up the debt of these two countries.

"The Euro system will intervene very significantly on markets and respond in a significant and cohesive way," the source said.

Political leaders are under searing pressure to reassure investors that Western governments have both the will and ability to reduce their huge and growing public debt loads.

ECB President Jean-Claude Trichet wanted the policy-setting Governing Council to take a final decision on buying Italian paper after Prime Minister Silvio Berlusconi announced new measures on Friday to speed up deficit reduction and hasten economic reforms, one ECB source said.

LOOKING FOR A BOUNCE

Buying Italian bonds would likely prompt a sizable relief rally on global markets.

On Sunday afternoon, German Chancellor Angela Merkel and French President Nichola Sarkozy weighed in with a joint statement praising both Italy and Spain for their pledges to impose budget austerity.

They stressed that "complete and speedy implementation of the announced measures is key to restor(ing) market confidence."

The back-and-forth between Standard & Poor's and the Obama administration over whether the downgrade of Washington's rating was justified continued on U.S. Sunday-morning talk shows where a senior official from the ratings agency said its concerns about political impasse in Washington were valid.

John Chambers, an S&P managing director, said on ABC's "This Week" that years may be needed to regain AAA status and even them "it would take, I think, more ability to reach consensus in Washington than what we're observing now."

White House economic adviser Gene Sperling blasted the S&P ruling on Saturday night, saying it "smacked of an institution starting with a conclusion and shaping any arguments to fit it."

U.S. Treasury Secretary Timothy Geithner, who had indicated he might leave the administration once an increase in the debt ceiling was agreed, announced on Sunday that he was not doing so and would stay on.

That relieves President Barack Obama of the difficult prospect of finding a replacement who could win Senate confirmation in Washington's bitterly partisan atmosphere.

Treasury says that S&P's debt calculations were off by $2 trillion but the agency said that did not change the fact that the United States' longer-term debt prospects were worsening.

Twin debt crises in the United States and Europe had policy makers scrambling to keep financial markets from panic.

The ECB reactivated its sovereign bond-buying program on Thursday but purchased only small quantities of Irish and Portuguese bonds, seeking tougher austerity measures from Italy. That did nothing to stem market attacks on Italian assets.

Berlusconi's plans entail moving up a balancing of the budget by one year to 2013, enshrining a balanced budget rule in the constitution and pushing through welfare and labor market reforms after talks with trade unions and employers.

He gave little detail about how that would be achieved and the measures will take some time to enact.

G-20, G-7 CRISIS CONTACTS

South Korea said finance deputies from the Group of 20 big economies addressed the European crisis and U.S. sovereign rating downgrade in an emergency conference call on Sunday morning Asian time.

French President Nicolas Sarkozy, who chairs the G7 and G20 forums this year, conferred with Britain's Prime Minister David Cameron on Saturday.

"Both agreed the importance of working together, monitoring the situation closely and keeping in contact over the coming days," a spokesman for Cameron said.

Over time, S&P's move could ripple through markets by pushing up borrowing costs and making it more difficult to secure a lasting recovery.

S&P chief David Beers told "Fox News Sunday" that the Treasury Department's criticism of the credit rating agency's analysis was a "complete misrepresentation." Even with the debt limit agreement passed by the U.S. Congress, he said, "the underlying debt burden of the U.S. is rising and will continue to rise over the next decade."

Asked about prospects for a further lowering of the U.S. rating, Beers said the agency's negative outlook meant that "risks are on the downside."

ALARM IN GERMAN, FRENCH MEDIA

Newspapers in Germany, the euro zone's reluctant bankroller, were both incredulous and gloomy on Sunday about the financial upheaval.

Welt am Sonntag dedicated an entire section to global economic uncertainties, entitled "Der Crash" and wrote: "No one could have foreseen this dramatic crash and now the situation can only be endured with gallows humor."

French newspapers carried grim headlines with Le Journal du Dimanche trumpeting "The world on the edge of collapse" with a sub-headline saying: "The week starting should be crucial. Markets from now on are living in fear of a crash."

Washington's Asian allies rallied round the battered superpower, with Japan and South Korea both saying their trust in U.S. Treasuries remained unshaken and urging investors not to panic.

"I expressed our country's position on the (G20 conference) call that there will be no sudden change in our reserve management policy," South Korean Deputy Finance Minister Choi Jong-ku told Reuters by telephone, referring to Seoul's heavy ownership of U.S. bonds.

"There's no alternative that provides such stability and liquidity," added Choi.

SPLITS IN ECB

In some quarters including in the German government, there are doubts that Italy can be rescued by the European emergency fund, even if the fund were tripled in size, according to newsmagazine Der Spiegel.

Italy's financial needs are so huge that it would overwhelm resources, according to government experts, Der Spiegel said in its online edition. Italy's public debt is about 1.8 trillion euros, or 120 percent of its national output.

Germany has consistently said troubled euro-zone governments should focus on spending cuts and internal reforms, not bailouts. The European Financial Stability Fund currently has 440 billion euros ($632.5 billion) and would need to be expanded to cater for the likes of Italy and Spain.

China, the largest foreign holder of U.S. debt, took the world's economic superpower to task for allowing its fiscal house to get into such disarray.

On Sunday, a commentary in the People's Daily, the main newspaper of the ruling Communist Party, said Asian exporters, who depend on demand from the United States, could be among the biggest victims of the mounting U.S. economic woes.

"The lowering of the United States' long-term sovereign credit rating has sounded a warning bell for the international currency system dominated by the U.S. dollar," said economist Sun Lijian, writing in the paper.

EmpireGlobalfx

08-08-2011, 04:56 AM

(Reuters) - Italy and Spain's borrowing costs fell on Monday as reports filtered in that the European Central Bank was buying their bonds, lifting European shares and partly overcoming jitters about a rating downgrade for U.S. debt.

Five-year yields in Italy and Spain fell more than 80 basis points. Spreads with German debt narrowed and the cost of insuring against default dropped.

Gold nonetheless soared to a new record above $1,700 an ounce on safe-haven buying and the dollar weakened against a basket of major currencies.

Investors were digesting a weekend of talks between industrialized countries aimed at ensuring the smooth functioning of financial markets following agency S&P's cut in its U.S. rating late on Friday to AA-plus from AAA.

Focusing on the euro zone crisis, the ECB agreed to intervene in the Italian and Spanish debt markets to reduce borrowing costs that are close to prohibitive.

"The downgrade to the U.S. is not great. These markets are going to remain unsettled for a while, we had recommended investors to raise cash in anticipation of this volatility," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

"If the ECB is going to provide some support to the bond markets that could create some sort of relief, buying opportunities could emerge in the sold off cyclical areas, but we are looking for more stability first."

MSCI's all-country world index was down slightly, recovering as Europe gained. Last week's heavy bout of risk aversion chopped around $2.5 trillion off the value of the index.

Emerging market stocks were still being hit, losing around 2 percent on Monday.

European shares, as measured by the FTSEUrofirst 300 index shrugged off opening losses and moved into positive territory, rising a quarter of a percent as news filtered in that the ECB was buying Italian and Spanish bonds.

EASING PAIN

The ECB moves followed criticism last week that the bank had not addressed pressure on Spain and Italy when they bought Portuguese and Irish debt last week.

Traders said Monday's buying was focused on the 5-year sector of the curve, where Italian yields dropped to around 4.6 percent, while the Spanish equivalent was around 4.5 percent.

"They're doing 20 to 25 million (euro) clips and they're spreading it around the market," said a trader. "We expect them to do billions today."

The euro rose against the dollar and trimmed losses against other currencies.

The U.S. currency fell across the board after the S&P downgrade, struggling around record lows against the Swiss franc and the yen.

But the euro's gains were limited, and some analysts expected it would struggle to gain significantly, as bond purchases, while adding temporary liquidity to stressed bond markets, would do little to improve the fiscal problems in the region.

"(ECB bond buying) will have a short term effect. It won't have any lasting positive impact on the euro," said Richard Falkenhall, currency strategist at SEB in Stockholm.

"Even if the ECB buys Italian bonds, private investors will just sell and off-load their Italian risk ... The ECB will have to buy those bonds constantly just to keep yields stable," he said.

EmpireGlobalfx

08-08-2011, 10:59 AM

(Reuters) - Oil dropped more than 3 percent on Monday, as worry about an economic slowdown spread after Standard & Poor's cut the United States' top-tier credit rating late on Friday.

Fear gripped financial markets as the fallout from the historic downgrade of the U.S. debt rating by S&P drowned out pledges of assistance from Europe's central bank and soothing words from the Group of Seven.

U.S. stocks tumbled early, tracking a sharp drop in global equity markets following S&P's move. .N

Brent crude fell $3.60 to $105.77 a barrel by 10:34 a.m. EDT, after earlier falling as low as $105.45. U.S. crude fell $3.42 to $83.46 after sliding to its lowest intraday level since November at $82.52 a barrel in early trade.

"In the tumultuous aftermath of the U.S. downgrade from S&P, the world also is downgrading the oil market," said Phil Flynn, analyst at PFGBest Research in Chicago.

Goldman Sachs said on Monday it maintained overweight recommendation on commodities and oil relative to other assets, although it added that risk to its constructive commodity views had risen.

EmpireGlobalfx

08-09-2011, 12:17 AM

(Reuters) - Stock markets plunged on Tuesday and the Swiss franc held near a record high as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.

Major indexes across Asia tumbled between 2 and 7 percent, following a drop of more than 6 percent on Wall Street on Monday in the first trading session since the historic downgrade of the United States' AAA credit rating by Standard & Poor's.

S&P futures fell more than 3 percent at one point on fears that the fallout from the downgrade could help push the U.S. economy back into recession. By midday futures were down 2.1 percent ahead of the European market opening. .N

The panicked flight-to-safety lifted gold to the latest in a string of record highs, boosted the Swiss franc and the yen and lifted Japanese government bonds and, ironically, U.S. Treasuries -- the asset directly affected by the downgrade.

"We have been cautious about the unfolding events in Europe for some time and are concerned about China slowing more than what is priced into the market," said Alex Hill, co-founder of Singapore-based hedge fund Tantallon Capital, which manages more than $300 million in assets.

"The macroeconomic picture outside of Asia is bleak and Asia's ability to remain immune is doubtful in the extreme."

MSCI's All-Country World Index .MIWD00000PUS has fallen about 14 percent so far this month, wiping around $3.8 trillion off company values.

The worsening market turmoil puts significant pressure on the U.S. Federal Reserve at its regular policy meeting on Tuesday to announce some fresh measures of support for a damaged U.S. economy.

While the U.S. downgrade late on Friday was the most obvious blow to confidence, investors have also been spooked by data suggesting the U.S. economy was stalling and Europe's ever-worsening sovereign debt crisis.

There are also concerns about China's inflation rate, which analysts fear could curb Beijing's ability to stimulate demand to offset a global slowdown.

Chinese data on Tuesday failed to offer respite, showing consumer price inflation hugging three-year highs in July.

"This is the type of data that should have prompted the PBoC to hike interest rates, but given the current turmoil in financial markets, we expect them to delay it," said Wei Yao, an economist with Societe Generale in Hong Kong.

EMOTIVE TRADING

Japan's Nikkei share average .N225 was down 3.6 percent and MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS shed 4 percent by midday, but both were off early lows.

Australia's benchmark .AXJO fell 1 percent, Hong Kong's Hang Seng finance/markets/index?symbol=hk%21hsi">.HSI tumbled 5.6 percent and South Korea's KOSPI .KS11 slid 6.4 percent, also clawing back some initial losses.

Seoul shares slid more than 9 percent at one point but were supported by buying by state pension funds and other public funds. A stock exchange official said it may ban short selling of shares to stabilize markets.

"It's very emotive trading," said Simon Burge, chief investment officer at ATI Asset Management in Australia. "Fundamentals would have to deteriorate quite significantly to catch up with where share prices are."

Whilst traders in Asian markets such as South Korea and Japan reported foreign money fleeing stocks, many asset managers maintained that the region still offers the best prospects.

"From a macro, top-down perspective, we expect the relative strength of the region's fundamentals to continue to attract incremental foreign capital," said RBS Asia Pacific equity strategists in a note.

"From a sector standpoint, it still appears that the one sector standing above any other for the delicate trade-off between risk and reward is telecoms. Valuations or expectations cannot be said to be anywhere near excessive levels."

Telecoms was the least-hit .MIAPJTC00PUS sector in the MSCI Asia ex-Japan index, falling less than 3 percent as investors looked to defensive plays.

Financial stocks have been amongst the hardest hit globally, with some investors fearing that in a worst case scenario the debt crises on both sides of the Atlantic could prompt a repeat of the money market seizure that followed the collapse of Lehman Brothers in 2008.

"Market players are seeking emergency refuge and fleeing to safe assets," said a customer trader at a major Japanese bank in Tokyo. "In the money market, where there is heightened demand for dollars, dollar lenders are running away."

THIS TIME IT'S DIFFERENT

But while the steepling falls in equities reminded many of the shockwaves that swept through markets in the wake of Lehman's collapse, money and corporate credit markets are not yet seeing a repeat of the strains witnessed three years ago.

"The Lehman moment was based on a systemic risk to the banking sector," said Olivier d'Assier , managing director for Europe and Asia at Axioma, which provides risk models and portfolio construction tools for investors and fund managers.

"This isn't related to bad assets that the banking sector has on its books, it's related to the fact that the economic growth isn't there to support the kind of national debt levels and benefits payout that politicians have promised."

The dollar was down 0.7 percent at 0.7494 Swiss franc, near an all-time low around 0.7483 reached the previous day. The euro plunged to a record low of 1.0605 francs, then traded down 0.5 percent at 1.0651.

"The yen and the Swiss franc are drawing extremely strong demand as plunges in global shares are having a major psychological impact, forcing investors to refrain from holding risk assets," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

The dollar was down 0.8 percent at 77.15 after falling to an intraday low of 77.05, not far off the record low of 76.25 yen reached in mid-March.

Gold, a traditional refuge from financial storms, hit a record above $1,753 an ounce.

JP Morgan (JPM.N) said on Monday it expected spot gold to climb to $2,500 an ounce or higher by year-end, following the downgrade of U.S. debt. The U.S. bank said its previous estimate of $1,800 was "too conservative".

U.S. crude oil futures fell nearly $4, or around 4.5 percent, to trade around $77.60 a barrel.

But as many traders hit the sell button, Anthony Bolton, one of Britain's best known equity fund managers who now runs the firm's China Special Situations Fund (FCSS.L), saw a buying opportunity.

"History shows that normally extreme equity market volatility as we are now experiencing should be seen as a time of opportunity rather than a time to become more defensive," he said in a statement.

EmpireGlobalfx

08-09-2011, 12:37 AM

(Reuters) - Japanese policymakers voiced growing alarm on Tuesday as the yen inched back to highs scaled prior to last week's intervention and global stock markets crumbled under mounting fears of a new financial crisis.

Finance Minister Yoshihiko Noda said he would watch markets with a sense of urgency because they are in a severe state, while Bank of Japan Governor Masaaki Shirakawa said he needs to be particularly mindful of the risks that a strong yen poses to the Japanese economy.

The yen approached its highest level versus the dollar since Tokyo's intervention on August 4, while Asian shares went into a nosedive after a 6 percent decline on Wall Street as the U.S. government's loss of its top credit rating and a piecemeal response to Europe's sovereign debt woes frayed investors' nerves.

"I will pay close attention to market movements with a sense of urgency today," Noda told reporters when asked about the stock market falls and a persistently strong yen despite Japan's solo intervention last week to stem its rise.

The Japanese currency was trading at around 77.13 yen against the dollar, up about 0.8 percent on the day and close to a four-month high of 76.29 yen hit last week before Tokyo intervened and way off post-intervention levels beyond 80 yen to the dollar.

Japan sold a record of more than 4 trillion yen last Thursday to prevent the yen's climb from derailing the economy's recovery from the damage wrought in March by the triple-blow of a massive earthquake and tsunami and a radiation crisis at a damaged nuclear power plant.

The central bank also stepped in, loosening monetary policy by boosting its asset buying scheme by half to 15 trillion yen in a move aimed both at making the intervention more effective and shoring up market confidence.

The effects of the joint effort, Japan's third foray into currency markets in less than a year, have worn off quickly as fears that twin debt crises in the United States and Europe could tip the world economy back into recession drove investors into low-risk assets such as the yen, gold and the Swiss franc.

Additional solo intervention could also meet with limited success as Japan is unlikely to get the necessary cooperation from the Group of 20 and Group of Seven countries.

"For Japan, there aren't really any policy alternatives left to stop yen strength," said Junya Tanase, chief foreign exchange strategist at JPMorgan Bank in Tokyo.

"It is difficult for G20 to coordinate on policy because the group is so big. The G7 can coordinate to provide liquidity, but their basic stance is one that is critical of intervention."

BOJ Governor Shirakawa told parliament he still expects Japan's economy to return to moderate growth, but highlighted growing discomfort with a strong yen and increased overseas risks to the economy.

"It's happening against the backdrop of weakness in the global economic recovery, and uncertainty over U.S. and European fiscal problems," Shirakawa said, referring to the rising yen.

"These factors, coupled with the short-term downside effect from yen rises, hurt (Japan's business) sentiment."

Minutes of the central bank's meeting in July showed that its board was increasingly worried about the global economic outlook and two of its members were already advocating further monetary easing.

Despite Japan's own troubles with public debt twice the size of the $5 trillion economy, the post-quake recession and a political stalemate, its deep bond market is seen as one of the relatively few safe investments both by Japanese and foreign investors.

Global stock markets plunged on Monday as the G7 finance ministers' and central bankers pledge over the weekend to help smooth markets if needed provided little reassurance.

The European Central Bank swept into the bond market to buy up Italian and Spanish debt and sling a safety net under the euro zone's third- and fourth-largest economies. But bickering persisted in Europe over a longer-term rescue plan.

Noda said Monday's G7 statement helped to ease market uneasiness and he would keep in close contact with his G7 partners in the coming weeks.

Noda also told lawmakers he does not intend to resign his post, rejecting a report in the Sankei newspaper that he will give up the role of finance minister in a bid to replace the prime minister.

EmpireGlobalfx

08-10-2011, 03:43 AM

(Reuters) - World shares bounced back strongly from recent losses on Wednesday as investors took comfort from the Federal Reserve's pledge to keep interest rates near zero for two more years.

European equities gained at the open, with the FTSEurofirst 300 up 1 percent, adding to a 1.2 percent rise from Tuesday.

The MSCI all-country world index, which has fallen as much as 20 percent from a May high, was up 1.1 percent. Emerging market shares were up more than 2.3 percent.

Investor sentiment was boosted by the Fed's unprecedented announcement that it was likely to keep interest rates at extraordinary low levels through to mid-2013.

They also took comfort from data showing China's export growth accelerating in July, calming fears that weak demand from Europe and the United States would hit the world's second-biggest economy.

"Selling by short-term investors seems to have run its course," said Kenichi Hirano, a strategist at Tachibana Securities in Japan.

Goldman Sachs said a third round of asset-buying quantitative easing from the Federal Reserve was likely following Tuesday's statement.

"We now see a greater-than-even chance that (it) will resume quantitative easing later this year or in early 2012. We have changed our call because (the) statement suggests that the committee's reaction function to incoming economic news is more dovish than we had previously thought," Jan Hatzius, chief economist at the firm, said in a note.

DOLLAR STEADY AFTER FALL

The dollar fell three-quarters of a percent against major currencies, as prospects for minimal dollar-interest rates sent buyers elsewhere.

The Swiss National Bank said it was expanding measures to fight against the Swiss franc's strength. Investors have been pouring into the currency as a safe haven during recent market and economic weakness.

German government bonds opened higher, tracking moves in U.S. Treasuries.

Yields on shorter-dated U.S. debt plunged overnight with two-, three- and five-year notes all setting new lows and analysts speculated that the central bank would ultimately need to implement new stimulus measures.

"There's a fear that the outlook is very bad if they're committing until 2013," said a trader.

EmpireGlobalfx

08-10-2011, 10:28 AM

(Reuters) - Wall Street stocks fell sharply on Wednesday on fears over possible trouble in the French banking sector that has large exposure to shaky peripheral European debt.

U.S. financial stocks led the decline as the KBW bank index slid 6.2 percent. Large financial institutions fell sharply, with Bank of America Corp down 12.2 percent to $6.93.

French banks were hit hard in Paris trading. Societe General, where U.S. traders have focused their attention, fell 16 percent. BNP Paribas fell 13.2 percent.

"France owns $350 billion worth of Italy's debt on their banks' books," Dave Rovelli managing director of U.S. equity trading at Canaccord Adams, who said fears of a failure in the sector were hitting U.S. markets.

The Dow Jones industrial average dropped 342.96 points, or 3.05 percent, to 10,896.81. The Standard & Poor's 500 Index fell 33.66 points, or 2.87 percent, to 1,138.87. The Nasdaq Composite Index shed 72.56 points, or 2.92 percent, to 2,409.96.

Indexes gave up much of Tuesday's snap-back rally. The S&P 500 is down nearly 18 percent since a peak at the start of May. Worries about the U.S. economy and high levels of public debt in Europe have sent stock cascading over the last two weeks.

EmpireGlobalfx

08-10-2011, 10:09 PM

Asia stocks down but fall limited by U.S. futures

(Reuters) - Asian stocks fell 1-2 percent on Thursday as the fallout from Wall Street's 4 percent drop overnight limited by a rise in U.S. stock futures, while gold climbed above $1,800 an ounce to a new record, reflecting fears over Europe's worsening financial crisis.

The Australian dollar, often a measure of investors' willingness to take risks, rose toward $1.02 as Asian equities pulled back from their lows, suggesting traders and investors were being nimble rather than selling with blinders on.

Fast-moving rumors about a sovereign debt downgrade of France as well as talk doubting the health of French bank swirled in Europe, causing the biggest widening in the benchmark index of European credit default swaps since the credit crunch in 2008.

"The market is in a bit of heat-seeking missile mode looking for vulnerabilities around the world, and Europe is obviously in its sights at this point in time," said Grant Turley, senior strategist at ANZ in Sydney.

Japan's Nikkei share average rose 1.5 percent in early trade, still not far from the five-month low hit on Tuesday.

The benchmark MSCI Asia Pacific ex-Japan stocks index fell 1.2 percent, with commodity-related stocks hit hardest. The index has fallen 13 percent so far in August, in line with the all-country world index, suggesting investors are not being so discriminating in the equity sell-down.

The euro was still vulnerable, especially against the yen and Swiss franc, but recovered some ground as Asian equities edged up from their lows.

The euro was at $1.4175, largely unchanged on the day and locked within a tight trading range by a debt crisis in Europe and a U.S. slowdown.

The Australian dollar was up 0.3 percent to $1.0190, holding above Tuesday's drop to below parity but well off from $1.10 where the currency started the month.

Spot gold prices were up 0.5 percent to $1,802.89 an ounce after earlier hitting an all-time high of $1,813.79.

The undisputed safe haven has risen 11 percent so far this month and is up 27 percent in 2011.

EmpireGlobalfx

08-10-2011, 11:37 PM

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EmpireGlobalfx

08-11-2011, 07:03 PM

(Reuters) - These days, every day in the market is an adventure. But some daytraders are making a killing, taking advantage of wild market swings that have scared off even strong-stomached investors.

The Dow industrials have traded in a range of 400 points every day in the last five days, while the CBOE Volatility index has more than doubled from a recent closing low on July 22.

Fear has increased alongside signs of slowing growth and an unprecedented downgrade of the U.S. credit rating by Standard & Poor's. But swings have gone both ways: the S&P recently posted not only its worst day since 2008, but also its best.

"I trade the way the market tells me. And if you're like that, this is one of the best markets you'll ever have," said Joe Donohue, money manager at Dimension Trading in Red Bank, New Jersey, a proprietary trading services firm.

Donohue said his focus is more short-term to play this market. A few weeks ago he held positions for two or three days, but now he closes out positions at the end of a session.

"If you need to play, be squared out at the close," he said. "Don't carry much exposure overnight because you could be long and then have a 400-point drop at the open ... We're in such a risky market that anything could come out of Europe or Asia to change things completely."

Daytraders take a short-term outlook on the market, holding positions for less than a day. They often sell securities short to profit from both upward and downward movements, bringing the chance of big wins, or equally large losses.

Donohue said he primarily traded in the Direxion Daily Small Cap Bull 3X Shares ETF, which seeks returns of 300 percent of the daily performance of the Russell 2000, and the Direxion Daily Small Cap Bear 3X Shares ETF, which is trice-short the Russell, tapping into market volatility.

On Tuesday afternoon, markets swung madly as investors parsed comments from the U.S. Federal Reserve pledging two more years of near-zero interest rates. Indexes reversed course six times before ending more than 4 percent higher.

"After the market dipped, I sensed there would be a move to the upside so I went long," Donohue said. In Wednesday's similarly volatile session, "I was long in the morning then went to TZA late in the day."

BELLE OF THE BALL

Donohue isn't the only trader embracing favorite names to avoid the fluctuations of the broader market.

"Right now the belle of the ball is the FactorShares 2X: Gold Bull/S&P500 Bear ETF," said Joshua Brown, vice president of investments at Fusion Analytics in New York, referring to a fund that is double-short S&P futures and double-long gold prices.

Volume on the fund has surged in recent sessions, with the 10-day moving average more than triple the 50-day average.

It "was built for this moment," Brown said of the fund, which is up 76 percent from its July 1 recent closing low. "The chart looks like the Empire State Building."

Of course, the velocity of the changes in market direction means traders who are not nimble can get caught on the wrong side of a trade, exposing themselves to massive losses.

The FactorShares fund "is a momentum heavy story," Brown said. "if you're not quick on it, it's the kind of instrument that can wipe you out."

With sudden moves between gains and losses an ever-present concern, traders do what they can to find an edge.

SEIZE THE MOMENT

Chicago-based Bright Trading trains its traders to manipulate mechanics like the opening gap, where they take advantage of price gaps in the initial trading of the stock.

"The other day General Electric Co opened and moved up 40 cents within 60 seconds," said Donald Bright, one of the firm's directors.

"Traders made thousands of dollars on it right then, and when you see openings where the market moves 300 points, the returns are even bigger... Lately we've had the best days on (opening gap plays) that we've had in maybe a year."

Toward the close, the firm looks to take advantage of order imbalances, which are published 15 minutes before the market session ends and suggest which side of a trade will have greater demand.

Knowing the imbalance gives an edge that "works a lot of the time," Bright said. "Experienced traders at our firm dream of days like this," he added. "They make more in a week than they do in a month, normally."

But the recent price action can be too much of a good thing, even for traders who thrive on fast swings.

"I love volatility, But I don't think we wanted to get to this level of volatility every day," said Tony Battista, who co-anchors Chicago-based Tasty Trade's how-to show on trading techniques and was a market maker for 25 years.

"You don't like for the market to have this type of percentage move in a day," he added. "That's something nobody wants to see, even volatility buyers."

Battista's solution to trading losses was simple -- do something to change his luck. "I changed my pen this morning," he joked. "I had a $2 pen. I went to a 15-cent pen. It's back to basics now."

EmpireGlobalfx

08-12-2011, 03:50 AM

(Reuters) - China is worried about challenges that the European Union faces in the next two months and urged the bloc as well as the United States to hold down government debt, its trade minister said on Friday.

Speaking at a meeting of Southeast Asian trade ministers, Chen Deming called on governments in the United States and Europe, China's top two trading partners, to act responsibly and get their fiscal houses in order.

"We support stabilizing measures taken by relevant countries, but we hope these countries will take measures to control their government debt proportion and take bigger responsibilities," Chen said.

"We are also concerned about new challenges facing European countries in August and September," he said, but did not elaborate.

His remarks echo recent comments from Beijing, which has invested nearly all of its $3.2 trillion foreign exchange reserves, the world's largest, in dollars and euros and would loathe to see the currencies plummet on economic problems.

World financial markets have swung wildly in the past week on fears that Europe cannot contain its debt crisis and after a downgrade of the U.S. sovereign credit rating, which amplified concerns that the U.S. economy may slide back into another recession or a prolonged period of meager growth.

U.S. Deputy Trade Representative Demetrios Marantis, attending the meeting, said the United States was now on a path toward fiscal discipline, following a deal this month to lift its debt ceiling.

He brushed off concerns by trade ministers at the meeting worried about weaker U.S. demand for Asian goods.

"The U.S. is the biggest market in the world and will continue to be a driver of global growth," he told Reuters.

STRONGER YUAN

The U.S. Federal Reserve has vowed to maintain interest rates near zero until 2013 to prop up its economy, and Chen said Asian governments should work together to monitor the impact, after funds seeking higher yields have driven up Asian stocks and currencies in the past year.

Chen noted the world was still struggling with the excess cash left behind by the loosening of monetary and fiscal policies during the 2008 financial crisis, which was "like taking medicines that will have a side effect."

"Where would the excessive liquidity flow to? Commodities, stock markets or bond markets? We are not quite sure yet," Chen said.

On the yuan, a controversial issue among China and its trade partners, Chen reiterated Beijing's usual refrain that the currency should only rise gradually and said it will stick to restructuring reforms of the domestic economy.

"We will also stick to gradual and steady currency reform," he told Reuters, adding that yuan volatility would be greater when global markets were jumpy. "But looking from a longer term perspective, the yuan currency policy will not change."

Chen's remarks come amid market talk that China may be about to shift its policy stance on the yuan soon after guiding the currency to a series of record highs. <CNY/>

A flurry of Chinese media reports that predicted speedier gains in the yuan have also fueled speculation.

China keeps the yuan on a tight leash as it worries any sharp gains could hurt its exports and weigh on the world's second-biggest economy.

Its trade partners, however, accuse Beijing of deliberately suppressing the yuan for trade advantage, an allegation that China has always denied.

Indeed, new data from Washington that showed the U.S. trade gap with China grew almost 12 percent in the first six months of 2011 could fuel efforts in Congress to get tough with China's currency practices.

By contrast, export-dependent Southeast Asian countries, whose currencies have risen along with the yuan, would prefer to avoid a rapid rise in the Chinese currency which could curb their export competitiveness.

"That's a problem for everyone," Surin Pitsuwan, the secretary general of regional bloc ASEAN, told Reuters.

EmpireGlobalfx

08-12-2011, 06:17 AM

(Reuters) - U.S. stock index futures pointed to a weaker open on Wall Street on Friday after sharp gains in the previous session, with futures for the S&P 500, for the Dow Jones and for the Nasdaq 100 down 0.8 to 0.9 percent.

The Commerce Department releases July retail sales data at 8:30 a.m. EDT. Economists in a Reuters survey expect a 0.5 percent rise compared with a 0.1 percent increase in June. Excluding automobiles, sales are expected to rise 0.2 percent versus a flat reading in June.

Thomson Reuters/University of Michigan Surveys of Consumers release preliminary August consumer sentiment index at 9:55 a.m. EDT. Economists expect a reading of 63.0 compared with 63.7 in the final July report.

Bank of America Chief Executive Brian Moynihan met privately this week with Treasury Secretary Timothy Geithner and Federal Reserve governor Daniel Tarullo amid the campaign to calm investors and employees about the bank's share price fall, the Wall Street Journal reported.

The Commerce Department issues Business Inventories for June. Economists in a Reuters survey expect a 0.5 percent increase versus a 1.0 percent rise in May.

At 10:30 a.m. EDT, Economic Cycle Research Institute (ECRI) releases its weekly index of economic activity for August 5. In the prior week the index read 128.3.

China's yuan currency looks set for a speedier rise against the U.S. dollar in the coming months as Beijing tries to tamp down inflation and reduce its exposure to U.S. and European debt, Chinese media and traders said on Friday.

Dollar funding costs edged up on Friday, hovering around the highest levels since the 2008 financial crisis, as markets saw Europe's move to ban short-selling of shares as only a temporary fix that would not address deteriorating conditions within the euro zone.

Korean company Samsung Electronics will go to a German court on August 25 to try to overturn a ban on it selling flagship Galaxy tablets in most of the European Union. Earlier this week, a Duesseldorf court temporarily barred Samsung from selling its tablets, following an injunction filed by Apple which had said the Galaxy line of mobile phones and tablets "slavishly" copied its iPad and iPhone.

Department store chain J.C. Penney is set to announce results.

The FTSEurofirst 300 index of top European shares was up 0.7 percent on Friday, extending the previous session's gains of 2.7 percent.

U.S. stocks shot up 4 percent on Thursday as bargain-hungry investors overcame the recent wave of fear that drove selling over the last two weeks.

The Dow Jones industrial average surged 423.37 points, or 3.95 percent, to 11,143.31. The Standard & Poor's 500 Index shot up 51.88 points, or 4.63 percent, to 1,172.64. The Nasdaq Composite Index jumped 111.63 points, or 4.69 percent, at 2,492.68.

EmpireGlobalfx

08-14-2011, 11:35 AM

(Reuters) - Italy's second austerity package in less than a month met with a chorus of criticism a day after becoming law, with the largest union federation threatening a general strike over the "injustice" of the measures.

President Giorgio Napolitano on Saturday signed the emergency decree introducing sweeping austerity measures to cut the fiscal deficit by some 45.5 billion euros ($64.7 billion) and balance the budget in 2013, a year ahead of its previous schedule.

"A missed opportunity," was the comment by the chief economist of the Paris-based Organization for Economic Co-operation and Development, Pier Carlo Padoan, in daily La Stampa on Sunday.

Padoan said the plan was positive in the pledge to bring forward the balanced budget but it lacked measures to boost growth and tackle tax evasion. Employers' lobby Confindustria estimates Italy's tax evasion totals 120 billion euros.

CGIL union confederation leader Susanna Camusso told la Repubblica the package "hits only those who already pay their taxes," adding that the date of a general strike would be decided at an emergency union meeting on August 23.

The austerity plan sets a "solidarity tax" on those earning more than 90,000 euros per year, to be levied for three years.

Economists, unionists and business leaders agreed a tax on wealth rather than on labor income would have been better because it would have targeted tax evaders who do not declare their real income but often own large assets.

Ferrari Chairman Luca Cordero di Montezemolo told Corriere della Sera newspaper the solidarity tax was "a scandal."

"It's one thing to ask for a solidarity contribution from me or (media tycoon and Prime Minister Silvio) Berlusconi, but it's different to hit an executive supporting his family," he said.

Newspaper editorial comment was largely negative, with former European Commissioner Mario Monti telling Corriere della Sera the package lacked fairness, weighed too heavily on the middle classes and did too little to help growth.

TAX BURDEN

In an interview with business daily Il Sole 24 Ore Confindustria head Emma Marcegaglia said the new tax regime could force managers to seek employment abroad, adding to Italy's hemorrhage of talented workers.

"We are reaching an absolutely disproportionate tax rate on so-called high incomes," Marcegalia said.

She also called the so-called 'Robin Hood Tax', due to hit companies in the energy sector with more than 10 million euros in revenues and 1 million euro in taxable income, a "folly."

Marcegaglia called for an increase in value added tax and a reform of the system allowing early retirement on the basis of years of pension contributions. Pension spending in Italy is around two percentage points above the euro zone average.

The austerity decree must be passed by parliament within 60 days, during which it will almost certainly be amended. Debate will begin in the Senate on August 22.

Some 4 billion euros of the 20 billion euros of savings slated for 2012 and 12 billion euros of the 25.5 billion set for 2013 are to come through tax and welfare measures still to be drawn up.

French economist Jean-Paul Fitoussi told Rome daily Il Messaggero that market pressure had forced Italy to take steps which were of no real value and would damage its weak growth.

"Italy is like the protagonist of a Greek tragedy: forced to do things that will be useless and damaging in the long run, but necessary for survival in the short run."

EmpireGlobalfx

08-15-2011, 12:04 AM

(Reuters) - Asian equities bounced on Monday and safe-haven assets like gold and the Swiss franc fell as market players cautiously returned to pick up bargains after last's week wild ride, though concerns over the weak global economic outlook may keep gains in check.

A modest 0.4 percent rise in U.S. stock futures also encouraged some bargain hunting in Asian markets, but investors may be more likely to sell into rallies than buy into any dips ahead of fresh readings on the U.S. and euro zone economies this week.

Japan's Nikkei finance/markets/index?symbol=jp%21n225">.N225 rose 1.5 percent after main Wall Street .N indices advanced on Friday but without the wild intra-day swings that marked the first few days of trading last week after the U.S. credit rating was downgraded by Standard and Poor's.

Japanese shares were also boosted by data showing Japan's economy shrank less than expected in April-June following a devastating earthquake and tsunami in March. .T

Asian stocks outside of Japan rose by a similar margin .MIAPJ0000PUS, after tumbling nearly 4 percent last week, with key indexes in Hong Kong and Australia up nearly 2 percent.

Frances Cheung, senior strategist at Credit Agricole in Hong Kong, said a meeting between the leaders of France and Germany on Tuesday would be crucial to determining whether any longer term solution to the euro zone's sovereign debt crisis is in the works.

"There is still a huge focus on money markets ... and looking at them shows not everything is solved," she said.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to meet in Paris to hammer out a solution to the sovereign debt crisis which has shown signs of ensnaring the big euro zone economies like Italy and Spain and heightened strains in money markets to levels not seen during the 2008 crisis.

In recent days, France itself has come under attack from the markets.

While dollar funding costs evident from cross currency basis swap rates in dollar/yen and dollar/euros have cooled from last week's peaks, they are still at elevated levels.

On a valuation basis, the MSCI index of Asia stocks outside Japan trades at 11.5 times forward 12-month earnings, according to Thomson Reuters I/B/E/S, above the 7.9 times seen during the depths of the 2008 financial crisis.

That suggests investors may still not be in a hurry to buy despite the 13 percent decline over the last two weeks.

Markets also remain vulnerable to declines as debt cutting plans in Europe and the United States threaten to act as a further drag on already weak economic growth at a time when latest data has been patchy.

U.S. consumer sentiment plunged to its lowest level since 1980 in early August, data showed on Friday, though July retail sales rose 0.5 percent.

FRANC TUMBLES

Still, signs that equities might have marked a temporary bottom after last week's volatile moves and persistent chatter that Swiss authorities may peg the franc against the euro to battle its surge sent the safe-haven currency tumbling by two percent against the euro and the dollar.

The euro, which plumbed a record low around 1.0075 francs last week, climbed to a high of 1.1294 francs in morning trade, up from 1.1079 late in New York on Friday.

But Barclays Capital analysts warned expectations of a peg seemed overdone, believing the franc would rally once again this week if markets started to change their view on its probability.

"We remain CHF bears in the medium run - we agree with the SNB's view that it is "massively overvalued" - but, this week, we are not expecting the recent appreciation of EUR/CHF to hold," said Paul Robinson, strategist at Barclays Capital.

The drop in the franc rippled over into gold markets with the precious metal slipping after a 1.5 percent slide in the previous session. Before Friday's slide, gold had gained 9 percent so far this month.

U.S. crude futures were steady around $85.50 a barrel after settling down slightly on Friday.

Trading activity is expected to be thin with Korea and India out and Japan's summer "obon" holidays this week.

Gold fell more than 1 percent in early trade before paring most of its losses. By late morning it was at $1,744 an ounce, little changed from late Friday U.S. levels.

EmpireGlobalfx

08-15-2011, 03:48 AM

(Reuters) - World stocks climbed further out of their August hole on Monday, lifted by signs of earlier-than-expected recovery in Japan and a growing belief that shares may now be cheap.

European shares, however, failed to keep early gains and dropped into negative territory.

Gold and the Swiss franc, two of the main beneficiaries of recent global risk aversion, fell.

Investors were also weighing calls by Italian Economy Minister Giulio Tremonti for a more coordinated response to the euro zone debt crisis, including the creation of euro bonds, against an immediate rejection of the idea from Germany.

MSCI's all-country world stock index, a broad measure of global equity health, was up half a percent, ratcheting up roughly a six percent gain since hitting an 11-month low last Thursday.

"The markets have been technically very oversold and on that basis alone, they are due for a period of remission from the selling," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Bank of America-Merrill Lynch said a "buy" signal had been triggered last week as outflows out of risky assets hit significant levels.

"We note that since 2004, global equities have rallied an average 6.7 percent (in the four weeks that followed the trigger)," the bank's strategists wrote in a note.

Nonetheless, the pan-European FTSEurofirst 300 stocks index was slightly lower.

Shares in Asia were boosted by data showing Japan's economy shrank less than expected in April-June following a devastating earthquake and tsunami in March.

Japan's Nikkei closed up 1.37 percent.

SPILL OVER

The albeit tentative rise in confidence spilled into other assets.

The euro extended its gains against the Swiss franc to more than 3 percent after a Swiss newspaper report said the Swiss National Bank was poised to set a limit for the euro-Swiss franc exchange rate and will use all means to defend it.

The dollar also rallied against the franc, surging 2.7 percent to 0.79883.

Otherwise the U.S. currency was down around a quarter of a percent against a basket of major currencies.

On the euro zone crisis front, Tremonti's call for common euro zone debt issuance was rejected by German Finance Minister Wolfgang Schaeuble, who said such euro bonds would undermine the basis for the single currency by weakening fiscal discipline among member states.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to meet in Paris on Tuesday to discuss the crisis.

Core euro zone debt was mixed with yields rising on longer-term bonds.

EmpireGlobalfx

08-16-2011, 03:22 AM

(Reuters) - The leaders of France and Germany face a stark choice in talks on Tuesday over whether to begin steering the embattled euro zone toward closer fiscal union or risk watching the bloc unravel.

French President Nicolas Sarkozy and German Chancellor Angela Merkel meet in Paris to discuss what further measures they can take to contain Europe's debt crisis, which is now spreading to the continent's core.

Italy has been forced to ramp up its austerity measures and financial market jitters hit France last week with French banks' shares subject to panic selling following rumors that the country could be next to lose its prized AAA debt rating.

Many experts say the only way to ensure affordable financing for the bloc's most financially distressed countries would be for the euro area to issue joint euro zone bonds -- although officials in Paris and Berlin said Tuesday's talks would not address that possibility.

Although the German government has long opposed the idea, support is beginning to emerge, with the country's export association saying on Monday that all other means of fighting the crisis had run out.

Italian Economy Minister Giulio Tremonti said on Saturday that euro bonds would be the best solution to Europe's debt crisis, and some economists say that the euro zone will inevitably come around to accepting the idea.

Ordinary Germans have opposed more help for their weaker neighbors even while their economy has been roaring along. Figures on Tuesday showing German GDP barely grew in the second quarter suggests a slowdown is starting to grip there, making underwriting of euro zone debt an even harder sell politically.

"While German politicians are currently racking their brains on the pros and cons of common Euro bonds, the luxury of having an economy running at "wonder" speed is fading away," said Carsten Brzeski at ING.

The German economy grew by just 0.1 percent in the second quarter, while the French economy stagnated.

"EURO ZONE COLLAPSE"

French economist Jacques Delpla, who co-authored a paper proposing how euro bonds could work, said the euro zone faced collapse unless leaders went beyond an agreement reached at a July 21 emergency summit on the debt crisis.

"If we just stick to the July 21 agreement then, before the end of the year, there will be no euro zone, unless the ECB buys everything."

At the July summit, euro zone leaders agreed to a second bailout package for Greece and to give their European Financial Stability Facility rescue fund broader powers, but the moves provided only a brief respite in the debt crisis, forcing the European Central Bank to buy Italian and Spanish bonds last week.

Euro bonds aside, Sarkozy and Merkel will focus on proposals to improve the euro zone's economic governance, which they told fellow leaders in the bloc at last month's summit that they would issue by the end of August.

In particular, they could discuss holding regular euro zone summits, as France has long sought, or ways of improving peer monitoring of fiscal policies.

Economist Frederic Bonnevay at French think-tank Institut Montaigne said more radical measures were needed even if they did not include euro bonds for now.

"The size and powers of the EFSF need to be expanded dramatically -- that's a secret to no-one," he said, suggesting that its firepower should be raised to as much as one trillion euros from 440 billion euros currently.

Sarkozy, who broke off his summer holiday last week to deal with the market meltdown in French stocks, is to meet with Prime Minister Francois Fillon over lunch to fine tune France's position before he meets Merkel from 10 a.m. EDT.

A joint news conference is due at 12 p.m. EDT.

EmpireGlobalfx

08-16-2011, 03:44 AM

(Reuters) - Stagnant growth in Europe's powerhouse Germany knocked stocks lower on Tuesday and hit the euro, adding to investor fears that the world economy is slowing more than expected.

Focus was also on a meeting in Paris between French President Nicolas Sarkozy and German Chancellor Angela Merkel, with investors looking for any signs of new measures to contain the spreading euro zone debt crisis.

Germany's gross domestic product grew just 0.1 percent in April-June from the previous quarter, below market expectations for an expansion of 0.5 percent.

"The global slowdown is gradually reaching Germany," said Andreas Scheuerle, economist at Dekabank.

The data showed Germany was actually growing at a slower pace than battered, debt-ridden Spain, where gross domestic product grew by 0.2 percent in the second quarter.

Germany's slowdown sent European stocks lower, dragging world equities with them.

The FTSEurofirst 300 was down more than 1 percent and MSCI's all-country world stock index lost a third of a percent.

Stocks have been rebounding somewhat from a battering that took the MSCI index down as much as 20 percent from a three-year high in May.

The U.S. S&P 500 index gained 2.18 percent on Monday. Japan's Nikkei closed up 0.23 percent on Tuesday.

EURO ANGST

The euro was down against both the Swiss franc and the dollar, extending losses after the German data.

It was down 0.8 percent against the Swiss franc at 1.1232 francs and 0.4 percent against the dollar at $1.4301.

The Swiss franc has been a key safe haven for investors during recent market turmoil.

Gold, the other major choice and one of the best-performing assets this year, was up around half a percent at $1773 an ounce.

German government bonds firmed after the growth data, with short-dated paper outperforming.

Some investors were hoping the Franco-German meeting later in the day would come up with ways to improve euro zone governance.

Talk of common euro zone bonds -- increasingly seen as a powerful tool against the region's debt hurdles -- in some of the German media in recent days has lifted hopes before the meeting in Paris.

Both countries have said, however, that euro bonds are not on the agenda.

EmpireGlobalfx

08-16-2011, 12:14 PM

(Reuters) - The leaders of France and Germany, under pressure to counter a debt market crisis in Europe, have agreed to float proposals in September for a tax on financial transactions and push for closer joint governance of economic policy, French President Nicolas Sarkozy said on Tuesday.

After talks in Paris, Sarkozy said he and German Chancellor Angela Merkel were also proposing that all 17 euro zone countries commit to balanced finances and write that goal into their constitutional law by summer 2012.

Among other measures announced, he said they would also seek to ensure better cross-border economic government for the euro zone via twice-yearly meetings of leaders and the creation of a two-and-a-half-year presidency to steer this forum.

"We want to express our absolute will to defend the euro and assume Germany and France's particular responsibilities in Europe and to have on all of these subjects a complete unity of views," Sarkozy told a news conference at his Elysee Palace offices, where he was flanked by Merkel.

The two are under pressure to come up with plans to shore up the euro zone and restore financial market confidence after a year and a half of turmoil that has refused to die down despite bailouts of Greece, Ireland and Portugal and the creation of an anti-contagion fund.

EmpireGlobalfx

08-17-2011, 12:44 AM

(Reuters) - Japanese shares fell on Wednesday, dragged down mainly by hi-tech firms, while the euro wobbled after French and German leaders failed to deliver a solution to the euro zone debt crisis and restore investor confidence after a global market rout.

Electronics stocks were weak across Asia after computer maker Dell slashed its 2012 sales forecast late on Tuesday, a deeply bearish signal not only for the shaky state of

global demand but for other hi-tech manufacturers, many of which are listed in Tokyo, Seoul and Taipei.

Japan's Nikkei fell 1 percent, with bellwether tech exporter Sony sliding 2.7 percent after it cut the price of its Playstation 3 gaming console to boost sales.

In South Korea, LG Electronics tumbled 4.5 percent, though the benchmark KOSPI stock index was little changed.

Adding to the cautious mood in Asia, S&P stock futures fell almost half a percent, extending losses on Wall Street overnight.

"Investors have been dumping emerging markets stocks across the board for the first time in the post-Lehman era," said a market report from TrimTabs Investment Research. "Investors are selling Asia without discrimination."

The euro fell to $1.4370 from Tuesday's session high of around $1.4470, as traders expected more downward pressure once markets in Europe open later in the day.

A hotly anticipated meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel fell short of producing a plan of dramatic action to tackle the euro zone's debt crisis, an outcome many market watchers had anticipated.

While long-term deficit reduction has become a pressing problem for many developed economies, many investors fear that calls for immediate spending cuts in many euro zone countries and the United States could retard global growth further.

Germany reported on Tuesday that its economy came close to stalling in the second quarter, though other data showed U.S. industrial output rose at its fasted pace in seven months in July, perhaps indicating the economy started the second half of the year on better footing than many analysts had feared.

ASIAN DEMAND

Still, many fund managers see Asian markets as more promising investment targets than the United States and Europe.

"Asia is not immune to the developed world woes, as the region remains a key exporter," said a survey of investment managers published on Wednesday by Singapore-based Russell Investments.

"However, the domestic story is becoming more and more powerful as countries look inward to drive future growth."

MSCI's broadest index of non-Japanese Asia Pacific shares edged higher, supported by gains in Hong Kong and Australia.

The index has lost around 10 percent since the start of the year, much of it in recent weeks, as sovereign debt problems in Europe and the United States and fears that the U.S. could slide back into recession prompted investors to sell equities and other riskier assets in both emerging and developed markets.

Shares in Hong Kong were boosted by a speech by Chinese Vice-Premier Li Keqiang in which he promised to open more sectors for investment from Hong Kong, while a rise in Australia's main index was tempered by global concerns.

DOLLAR

The dollar index against major currencies rose 0.1 percent. Against the yen, the dollar traded around 76.76, down from more than 80 yen earlier in August.

Gold, attractive to some investors as a refuge from turmoil in currencies, bonds and shares, is one of the best-performing assets this year. It traded at $1,785 per ounce on Wednesday, little changed from the previous session around $30 below the peak it touched last week.

U.S. crude oil futures were up 11 cents to $86.75 per barrel after sliding on Tuesday on worries that flagging global growth will dampen energy demand.

EmpireGlobalfx

08-17-2011, 01:50 AM

(Reuters) - Brent crude rose on Wednesday, staying above $109 a barrel as a larger-than-expected drawdown in U.S. gasoline stocks and positive U.S. economic data trumped concerns over the euro zone debt crisis.

A meeting between French and German leaders didn't result in any concrete measures to try and find a way out of Europe's sovereign debt problems, but better-than-expected U.S. industrial production numbers helped bolster sentiment.

Brent crude for October rose 55 cents to $109.68 by 0455 GMT. U.S. crude was up 78 cents at $87.41 a barrel, after slipping $1.23 on Tuesday to settle at $86.65.

"The meeting between Sarkozy and Merkel didn't amount to too much and that will cap gains in oil futures," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

French President Nicolas Sarkozy and German Chancellor Angela Merkel proposed a tax on financial transactions and closer joint governance of economic policy, but did not propose increasing the euro zone bailout fund or selling euro zone bonds.

Asian shares fell on Wednesday and the euro wobbled after the meeting, while safe-haven asset gold held steady near a record high.

U.S. stockpiles of gasoline fell 5.4 million barrels in the week to August 12, well above analyst expectations for a 1.3 million barrel draw, data from the American Petroleum Institute (API) showed on Tuesday. <API/S> The U.S. Department of Energy will release inventory data later on Wednesday.

"The API numbers were quite supportive as gasoline supplies have come down, but risks continue to be on the economic front," said Shum.

ECONOMIC OUTLOOK

Concerns about the debt crisis have weighed on oil markets in recent weeks, adding to worries about weak U.S. economic data that could hit fuel demand.

The euro zone economy slowed sharply in the second quarter, hobbled by sluggish growth in Germany and stagnation in France, raising fears of a longer-term dip.

There was more upbeat data out of the U.S., with industrial output at the world's top oil consumer recording its best gain in seven months in July.

Also boosting sentiment were comments by China's top state planner on Wednesday that the world's second-largest economy is expected to expand by 7 percent annually over the next five years.

Brent crude may end its rebound at around $109.57 a barrel, while U.S. oil is unlikely to reach $90 per barrel as it faces a strong resistance at $88.17, Reuters technical analyst Wang Tao said.

The conflict in Libya and Syria could further disrupt supplies and support oil prices, analysts said.

"The scale of disruption to Syrian oil production remains unclear, but Syria is reportedly importing gasoline from companies operating in the Mediterranean despite the existing sanctions," said analysts at J.P. Morgan in a report on Tuesday.

"As highlighted by recent statements by the US, even tougher sanctions may be required to limit Syria's ability to participate in the oil market."

Syrian tanks fired on low-income Sunni Muslim districts in the port city of Latakia on Tuesday, the fourth day of an assault which has killed 36 people and forced thousands of Palestinian refugees to flee, activists said on Tuesday.

EmpireGlobalfx

08-17-2011, 02:51 AM

The measures taken thus far by the Swiss National Bank (SNB) against the strength of the
Swiss franc are having an impact. Nevertheless, the Swiss franc remains massively
overvalued. The SNB has therefore decided to expand again significantly the supply of
liquidity to the Swiss franc money market. In so doing, it is increasing the downward
pressure on money market interest rates with a view to further weakening the Swiss franc
exchange rate. With immediate effect, it aims to expand banks’ sight deposits at the SNB
further, from CHF 120 billion to CHF 200 billion. In order to achieve this new target level
as quickly as possible, it will continue to repurchase outstanding SNB Bills and to employ
foreign exchange swaps. Furthermore, the SNB reiterates that it will, if necessary, take
further measures against the strength of the Swiss franc

EmpireGlobalfx

08-18-2011, 02:49 AM

(Reuters) - European shares looked set to follow Asia lower on Thursday as investors in that region locked in profits on worries about faltering global demand, while the Swiss franc fell sharply on speculation the Swiss central bank was intervening in the forwards market.

Commodity and technology shares dragged the region's shares lower as investors skimmed off some of this week's gains amid lingering worries on the outlook for the U.S. economy and euro zone debt.

European stocks were set to track their Asian peers lower, with Germany's DAX seen opening as much as 1.7 percent lower by financial bookmakers.

Underscoring the cautious mood in Asia, S&P stock futures lost 0.82 percent.

With market sentiment still fragile, investors will closely watch a flurry of U.S. economic data later in the day including weekly jobless claims, existing home sales and business conditions in the Mid-Atlantic region.

Investors' demand for safe-havens has remained so strong that an announcement by the Swiss National Bank (SNB) on Wednesday that it would expand its liquidity policy failed to bring down the franc as markets had expected more radical measures such as an exchange rate peg.

"What drove the Swiss stronger is less speculation and more fear of things going wrong in the euro zone. Until that's fixed, it's very difficult to see how the SNB can win," said Rob Ryan, FX strategist at BNP Paribas in Singapore.

The SNB has been adding billions of francs in additional liquidity, pushing short-term interest rates down via the forwards. Its actions have pulled rates into negative territory.

On Thursday, traders cited talk that the SNB was at it again, flooding the market with liquidity.

The dollar traded at 0.7969 Swiss francs, still below a two-week high on Wednesday around 0.8011, while the euro stood at 1.1455 francs, down from Wednesday's peak around 1.1554.

Markets are a lot calmer compared with last week, when a crisis of confidence swept through global financial markets after Standard & Poor's cut the United States triple-A credit rating, pushing investors into safe havens such as gold and the Swiss franc.

John Woods, chief investment strategist at Citi in Hongkong, told Reuters Insider that a strong gap has begun to emerge in the market performance of export-oriented Asian countries such as Taiwan compared to markets that are driven by domestic demand like China or Indonesia.

"I suspect there will be an outperformance both in terms of equities and currency of the more inward, domestically oriented countries," he said.

GARDEN VARIETY UNCERTAINTY

"The mood has improved over the past week from sheer panic to a more garden-variety uncertainty about the future," said Bricklin Dwyer, economist at BNP Paribas.

Japan's Nikkei stock average slipped 1.2 percent, while stocks elsewhere in Asia as measured by MSCI fell 1.3 percent.

Taiwan's tech-heavy index lost 2 percent, making it the biggest loser in the region's major markets, tracking a fall in U.S. tech shares on Wednesday after Dell's disappointing sales outlook heightened worries about the economic growth outlook.

Meanwhile, gold traded at $1,790 an ounce, holding not far from a record high around $1,813.79 set last week. U.S. crude was a touch softer at $87.16 a barrel.

The dollar continued its gradual decline against the yen, slipping to 76.65 yen, well off a high above 80.00 set earlier this month after Japanese authorities intervened to weaken the yen.

Japanese Finance Minister Yoshihiko Noda said on Thursday he will closely watch market moves, when asked by reporters about the yen's strengthening against the dollar overnight.

"The Bank of Japan is caught between a rock and a hard place," said Jessica Hoversen, FX analyst at MF Global in New York. "Intervention did not work earlier this month, but investors also do not want to be caught on the wrong side."

EmpireGlobalfx

08-19-2011, 12:26 AM

(Reuters) - The head of Bank of China, the country's biggest foreign exchange bank, said on Friday he was concerned about the debt crisis in the United States but expected Washington to deal with the issue.

"We are a little concerned, but we are confident that the U.S. government should be able to solve this problem," said bank president Li Lihui, when asked whether he was concerned about the stability of the dollar and the U.S. debt situation.

Li told reporters at a business roundtable.

EmpireGlobalfx

08-19-2011, 06:59 AM

(Reuters) - A selloff in global stocks gathered pace on Friday, reflecting mounting concerns the U.S. economy is heading into another recession and as some European lenders faced a short-term funding crunch, highlighting the risk of a banking crisis.

Nervous investors fled to the safety of core government bonds, Swiss francs and gold, which hit a record high, with many seeking to unwind holdings of riskier assets such as stocks, commodities and higher-yielding currencies before the weekend.

European shares extended steep losses from Thursday, when they suffered their biggest daily slide in 2-1/2 years, with key indexes in Britain, France and Germany deep in the red.

U.S. stock index futures pointed to a sharply weaker open for equities on Wall Street, a day after the Nasdaq shed more than 5 percent and the S&P 500 tumbled 4.5 percent on rising recession fears.

Futures for the S&P 500, the Dow Jones and the Nasdaq 100 were down by between 1.4 and 1.5 percent.

A short selling ban imposed on financial stocks by some European stock markets last week has had little impact. Shares in Europe's biggest banks fell to their lowest in more than two years on funding fears, taking the weekly fall to near 10 percent and leaving the battered sector on course for a fourth straight week of declines.

"There has been a panic about European banks. European governments are guaranteeing European banks, but if the governments are not stable themselves, that means the banks aren't stable," said Lothario Mendel, chief investment officer at Octopus Investments, which manages $4 billion.

Worries about a European banking crisis kept the euro under pressure and it was last down 0.1 percent against the dollar at $1.4310.

The MSCI world equity index was down 1.4 percent. It has matched the losses in European stocks since the start of the month, with $1.4 trillion being wiped off valuations on Thursday and early on Friday -- equivalent to the size of the Spanish economy.

"At the moment the market is just looking for relative safe havens," said Mitsui Precious Metals analyst David Jollie. "You can see that in the selloffs across equity markets. The strength of gold is the other side of the coin from that."

Exane BNP Paribas, in a note, said a global recession was far from priced in by financial markets. Another global slump could see corporate earnings plunge 35 percent from peak to trough, implying a 50 percent cut to consensus earnings per share estimates.

The sharp decline in stock markets is expected to have an adverse impact on household wealth, further undermining consumer confidence and demand in coming months. Heightened uncertainty over growth could also see producers delaying decision-making, hitting global output.

Those concerns are likely to see investors cut exposure to stocks, metals and oil, and growth-linked currencies such as the Australian dollar in the coming days, unless the U.S. Federal Reserve signals more quantitative easing or European politicians take decisive actions to stem contagion risk from the euro zone debt crisis.

CRUNCH TIME

While investors fled stocks, spot gold hit a record high of $1,867.30 an ounce, putting it on track for the largest weekly gains since February 2009. The metal has rallied nearly 14 percent so far this month -- its best month since September 1999 -- benefiting from a deluge of safe-haven flows.

Oil prices fell, with Brent crude extending losses on renewed expectations of weak demand from the world's top oil consumer after a slew of lackluster U.S. data.

Brent fell as low as $105.06 a barrel, and has lost more than 9 percent this month, the worst slide since a near 15 percent drop in May 2010.

A string of data on Thursday revived concerns the United States could be heading for another recession, led by a sharp drop in factory activity in the U.S. Mid-Atlantic region to its lowest level since March 2009, which stunned investors.

An unexpected fall in existing U.S. home sales in July and a bigger-than-expected rise in new claims for jobless benefits in the latest week also added to a fresh bout of risk aversion.

Renewed fears that the euro zone debt crisis could engulf the region's financial system put pressure on short-term funding markets, forcing some European banks to pay higher rates for dollar loans and reviving memories of the dark days of late 2009 after the collapse of Lehman Brothers.

German Bund futures fell, but were still in sight of record highs as worries over a global slowdown and the euro zone debt crisis provided underlying support.

EmpireGlobalfx

08-22-2011, 03:30 AM

(Reuters) - Spot gold surged more than 1 percent to a third consecutive all-time high on Monday, as investors fled to the safety of bullion amid fears of another U.S. recession and the euro zone's debt crisis.

Spot gold struck a record at $1,888.90 an ounce, after staging its biggest weekly gain in 2- years last week. It traded at $1,888.76 by 2:40 a.m. EDT.

U.S. gold jumped more than 2 percent to an unprecedented $1,895.3.

A murky economic outlook given a persistent flow of weak macro data out of the United States and fears about the euro zone's fiscal health have propelled gold up by more than a quarter since July.

"We are not expecting anything supporting the U.S. economy or the macro data for at least a couple of months," said Tom Price, Global Commodity Analyst at UBS.

"Europe we regard as even weaker. We are thinking $1,900-$2,000 over a very short period of time is a likely target."

Investors are waiting for signs of further stimulus from the U.S. Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week, one year after Chairman Ben Bernanke launched a second round of quantitative easing to revive the economy.

Additional bond purchase by the Fed could raise the inflation outlook and further boost gold, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy.

Technical analysis suggested that gold could pierce through $1,900 over the day, said Reuters market analyst Wang Tao.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to 1,290.762 tonnes by August 21, the highest in a week and half.

But speculators scaled back their bullish bets in U.S. gold futures and options for a second week last week, as bullion's rapid rally prompted some investors to liquidate positions, data showed.

"Key resistance in gold will be found at $1,946. However, the market may need an extraordinary event to take it above that level," said MF Global in a research note.

Other precious metals tracked gold's strength.

Spot silver rose as much as 2.5 percent to a three-month high of $43.93, extending a 10-percent rise last week -- its best week since December.

Spot platinum hit a three-year high of $1,890.25, on course for its 10th consecutive session of rise.

EmpireGlobalfx

08-22-2011, 09:28 AM

(Reuters) - Stocks surged more than 1 percent in early trading on Monday following four weeks of equity losses as stocks rebounded globally.

Equities have been pressured of late by growing concerns about the economy, given a string of weak economic data and the ongoing sovereign debt crisis in Europe.

European stocks gained 2.1 percent, while the MSCI world equity index rose 0.3 percent. .EU

"Recent data has been inconclusive about whether we're going into recession, so the market bounces back and forth daily based on mood swings," said Andrew Slimmon, managing director of global investment solutions at Morgan Stanley Smith Barney in Chicago.

"However, with interest rates being where they are, stocks are very cheap, and that's a very powerful and positive indicator."

The Dow Jones industrial average markets/index?symbol=us%21dji">.DJI jumped 176.15 points, or 1.63 percent, at 10,993.80. The Standard & Poor's 500 Index .SPX was up 19.92 points, or 1.77 percent, at 1,143.45. The Nasdaq Composite Index .IXIC advanced 47.32 points, or 2.02 percent, at 2,389.16.

The S&P has fallen more than 13 percent so far in August, with volatility driving the index down at least 4 percent for six days over the past two weeks. Some investors believe the speed and size of the drops suggested the market could be oversold. The CBOE Volatility index .VIX sank 5.2 percent but remained at elevated levels.

Investors looked ahead to a speech by U.S. Federal Reserve Chairman Ben Bernanke on Friday at the central bank's annual meeting in Jackson Hole, Wyoming.

Some investors hope the Fed will announce new stimulus after the central bank promised earlier this month to keep interest rates near zero for at least two more years, and said it would consider further steps to help growth.

"It's certainly possible that we could see more stimulus, but my worry is that as the week progresses, expectations will be built into the market that could lead to our having another decline if nothing is announced," Slimmon said.

U.S. crude futures rose 2.3 percent on a rebound in equities, and helped lift the S&P energy index .GSPE by 1.2 percent.

But Brent crude fell 1 percent, on expectations Libyan oil exports might resume after the civil war ends. Libyan rebels swept into the heart of Tripoli and met scattered resistance.

Tensions in the Middle East and a spike in oil prices contributed to equity weakness earlier this year.

About 45,000 striking Verizon Communications Inc (VZ.N) employees were set to go back to work on Tuesday after the company and unions agreed to resume bargaining. Shares of the Dow component rose 1.1 percent to $35.11.

EmpireGlobalfx

08-22-2011, 03:46 PM

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EmpireGlobalfx

08-23-2011, 04:57 AM

(Reuters) - World stocks, the euro and commodity prices advanced on Tuesday after gauges of Chinese and German manufacturing activity were not as weak as some had feared.

Investors took heart from the flash purchasing managers' indexes from Germany and China, which, although showing the factory sector was likely to slow, indicated the motors of the global economy in recent years were still growing robustly.

"Any data that just hints that the world is not ending is going to be well received by the markets," Ian Richards, European equity strategist at RBS, said.

Financial markets have stabilized in the past two sessions after two weeks of turmoil which reignited fears of a new crash to match that of 2008.

World stocks measured by MSCI All-Country World Index advanced 1 percent, though the benchmark is still down more than 12 percent this month.

Europe's FTSEurofirst 300 index rose 1.8 percent, extending the previous session's 0.8 percent rise, while Tokyo's Nikkei average ended 1.2 percent higher.

Some investors were also hoping the U.S. Federal Reserve would flag further stimulus when central bankers gather in Jackson Hole, Wyoming, late this week, a year after Chairman Ben Bernanke launched a second round of government bond buying program, known as quantitative easing, to revive the economy.

"There is also the fact that much of the gains being seen here seem to be coming off the expectation that the Fed will serve up further stimulus measures, possibly as soon as the end of this week," said Cameron Peacock, market analyst at IG Markets.

"Clearly with this being priced in, failure to deliver here will see traders heading for the exits once again."

For now investors seemed to be happy chasing riskier assets after recent sell-off on worries over global economic growth and the euro zone sovereign debt crisis.

The euro was up 0.5 percent at $1.4436 on Tuesday, while the Australian dollar edged 0.9 percent higher to $1.0491.

The dollar was down 0.2 percent at 76.66 yen, still holding above record low of 75.94 yen struck late last week as market players were wary of any yen-selling intervention by Japanese authorities.

Copper gained 1.4 percent to trade above $8,800 a tonne, and crude prices rose 0.5 percent to below $109 a barrel as fighting in Libya continued and in anticipation of a fall in U.S. crude stockpiles.

Nevertheless, gold struck another record high above $1,910 an ounce before slipping 0.7 percent to below $1,900.

EmpireGlobalfx

08-24-2011, 04:33 AM

Inside the News: Rebound runs out of steam, Thomson Reuters: Reuters Insider

http://insider.thomsonreuters.com/link.html?cn=uid372021&cid=254615&shareToken=MzpkZTkxNTY2YS00ZGM0LTQyY2MtYmZhNy01Yzh lMzViMTNhNzc%3D&start=0&end=240

EmpireGlobalfx

08-24-2011, 12:29 PM

(Reuters) - To reach their goal of turning the yuan into a global currency, China's leaders are willing to push for full convertibility and eventually swing open the country's capital account.

That was the apparent message Chinese Vice Premier Li Keqiang delivered on his visit to Hong Kong last week, when he outlined a series of steps to boost the territory as a place where the yuan can trade with fewer constraints.

The measures, which include allowing foreign investors to buy up to 20 billion yuan ($3.1 billion) of mainland Chinese stocks and bonds, encourage foreign demand for yuan by giving investors more places to invest the currency.

To be sure, a freely convertible yuan isn't right around the corner -- China's leaders face an arduous journey that will involve numerous political and economic pitfalls.

"Things are all going as planned but an international yuan is four or five years away, at the earliest," said Mark Williams from Capital Economics in London. "To say right now how China's future currency regime would look is pure speculation at best."

China has already made significant progress in Hong Kong, its testing ground. The yuan is nearly convertible in that territory.

But, among other steps, China needs to first free its interest rate market, relax investment curbs in its equity and bond markets, and allow investment funds to leave and enter China with ease before the yuan can be made convertible.

Last week's announcements merely add up to another stride in China's long march toward the internationalization of the yuan, a goal that academics predict the country will reach by 2020.

"Li's visit sent a positive message. It set in stone the trend of yuan internationalization," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.

Having a convertible yuan -- or one that can be readily bought or sold with few restrictions -- is a precondition for Beijing's long-sought goal of promoting the Chinese currency as one used for global trade and investment.

That would burnish China's rising economic prowess and could also help China kick its dollar addiction by staunching a rapid build-up in its dollar reserves.

By encouraging the free trade of the yuan in Hong Kong and creating new channels for that money to flow in and out of the mainland, Beijing is refining a template that could prove valuable once it decides to liberalize the currency more widely.

"It is an important step to develop the offshore yuan market Hong Kong," said Wang Jun, an economist at CCIEE, a government think-tank in Beijing. "The yuan can now go out of mainland China and also flow back."

NEW URGENCY

Even before Standard & Poor's triggered a rout in world financial markets this month by stripping the United States of its top-notch debt rating, Beijing had already made clear it intended to relax its grip on the yuan.

Under the five-year plan unveiled in March, Beijing aims to expand the use of the yuan in international markets and "gradually make the yuan convertible on the capital account."

Its latest actions, including this week's move to let merchants across China settle trades in yuan, shows Beijing is acting on its yuan ambitions as planned, analysts said.

But the unprecedented cut in the U.S. debt rating made the task more urgent, since China keeps an estimated 70 percent of its $3.2 trillion foreign exchange reserves in dollar assets.

In theory, letting the yuan rise sharply would slow the accumulation of foreign exchange reserves, but such a move would threaten the country's export sector.

Enabling China's customers to use yuan to pay for imports is naturally more attractive -- if an American company pays for its shipment of toys in yuan, that transaction wouldn't lead to more dollars being added to China's foreign exchange reserves.

To get to the point where the yuan can be a truly international currency, China wants to use affluent Hong Kong to create a deep and liquid offshore yuan market where investors can trade yuan freely and get decent returns, and use the territory as a test-bed for nurturing global yuan demand and easing capital controls, analysts say.

Beijing is making progress.

The yuan is already fully convertible in Hong Kong, where the pool of yuan deposits is estimated to hit 2-3 trillion yuan in coming years, paving the way for the yuan's full convertibility and setting the benchmark for China's reforms to make the onshore yuan rate more market-driven.

"They will first open up channel between the offshore and onshore yuan market, allow markets forces to find an equilibrium rate for the yuan on the offshore market, and then influence the onshore market," said Chen Xingdong, chief China economist at BNP Paribus in Beijing.

Until then, analysts say it is to early to judge if Beijing would allow a free yuan to emulate the Singapore dollar and trade in a managed float as that depends on how U.S. and European economies recover from their debt in coming years.

RISKS

Of course, risks abound.

A top concern is that Hong Kong's exploding offshore yuan market may complicate Beijing's fight against inflation by attracting waves of speculative hot money into China.

"Along with increased renminbi convertibility and the opening of the domestic financial market, cross-border capital inflows would increase, posing a challenge to China's financial stability," a group of Chinese officials and researchers said in book on the internationalization of the yuan.

Another worry is that the plan could backfire: rather than shrink, Beijing's foreign exchange reserves might actually balloon.

With few of China's trade partners holding enough yuan on hand to pay for goods, more merchants might use the yuan to pay for Chinese imports than exports, said Mark Williams from Capital Economics.

This leave China's central bank saddled with even more foreign currencies -- mostly dollars.

But China appears willing to try its luck.

"China is building this step by step," said Dong Tao, an economist at Credit Suisse on Hong Kong.

"If you get your currency internationalized, you don't have to keep buying foreign currencies and you will have less reserves."

EmpireGlobalfx

08-25-2011, 09:29 AM

(Reuters) - Gold tumbled nearly 3 percent on Thursday to more than $200 below Tuesday's record highs, as investors cashed in scorching gains in the precious metal after the CME Group hiked gold trading margins for a second time this month.

Investment appetite for gold has cooled ahead of a widely awaited central bankers' meeting at Jackson Hole, Wyoming, as speculation grows over whether or not the Federal Reserve will signal a further round of U.S. monetary easing.

More quantitative easing -- or money printing -- from the Fed could significantly lift gold, but it could have further to correct if no additional action is signaled.

Spot gold was down 1.6 percent at $1,722.50 an ounce at 9:51 a.m. EDT in volatile trade, having earlier touched a low of $1,702.44.

Investors cashed in on gold's latest rally after the yellow metal surged nearly 20 percent in early August to record highs at $1,911.46 an ounce.

Spot prices fell 4.3 percent on Wednesday, their biggest one-day drop since December 2008, after U.S. durable goods data beat expectations. U.S. gold futures also posted their sharpest slide since 1980.

"Gold seemed to be running ahead of where equity markets were pointing to in terms of downside risks -- those markets were stable and gold kept wanting to push higher and higher," said Macquarie analyst Hayden Atkins. "Once we got an upside surprise in data, we saw some of those longs washed out."

Any recovery from these lows will be dependent on what happens in the next few days. "It's not really clear what the Fed's intentions are," said Atkins. "People are waiting and watching."

Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, declined by more than 27 tonnes on Wednesday, their biggest one-day outflow since January 25. They have dropped nearly 60 tonnes this week, worth around $3.25 billion at today's prices.

Gold's losses were exacerbated late on Wednesday after the CME Group, the world's largest commodities exchange, raised margins on gold futures by about 27 percent, the biggest hike in more than 2-1/2 years and the second increase in a month.

But the metal's overall uptrend, which has seen it climb more than 20 percent this year, is still intact, analysts said.

"To be convinced you'd seen the top of the market you would have to see more signs of the issues that had lifted gold being resolved, such as the euro zone crisis, and U.S. growth coming back," said Mitsubishi analyst Matthew Turner.

Assets seen as cyclical or higher-risk than gold rose on Thursday as gold declined. European shares climbed after a raft of positive corporate results, oil prices firmed and the euro strengthened against the dollar.

U.S. gold futures for August delivery were down $29.40 an ounce at $1,727.90.

EXPECTATIONS SCALED BACK

All eyes are now on Jackson Hole. Fed chief Ben Bernanke's speech on Friday is being closely watched for hints of a fresh round of quantitative easing, which some have speculated could be necessary to kick-start growth.

Bernanke is likely to use his speech to acknowledge disappointment over the pace of the recovery and explain how the Fed will tackle sluggish growth.

"It is fair to say that gold should be one of the bigger beneficiaries of another round of quantitative easing; anticipation of such has been a driver of gold's strength recently given worries about financial stability and a deteriorating economic outlook," said UBS in a note.

"That yesterday's U.S. durable good data release surprised on the upside raised a red flag, along with equities trading again in positive territory, and climbing Treasury yields.

"As expectations of what Fed Chairman Bernanke can say at Jackson Hole tomorrow are scaled back, gold should be one of the assets that reacts most," it added. "But there is also a positive aspect to this, in that gold appears to have already discounted disappointment at Jackson Hole."

Among other precious metals, silver was down 0.1 percent at $39.64 an ounce, spot platinum was up 0.1 percent at $1,804.74 an ounce, and spot palladium rose 0.8 percent to $749.50 an ounce.

EmpireGlobalfx

08-26-2011, 05:06 AM

(Reuters) - As far as investors can see, the outlook for Apple's shares remains as bright as an iPad screen despite the resignation of Steve Jobs, the company's legendary co-founder, as chief executive.

But many investors worry that the outlook for the medium- to long-term has become very cloudy.

Jobs exits as CEO at Apple's high, with revenues having steadily grown each quarter over recent years and analysts expecting a terrific performance in the next holiday season. Shares fell just 0.65 percent on Thursday, withstanding steep falls in the broad market.

But with many equating Jobs' vision with Apple's success, there is a fear that competition will finally gain on the company years down the road.

"In the long term, if Steve Jobs' health deteriorates or if he becomes more disengaged and does not lead the strategic aspect of the company, we will probably cut back our position by half," said Channing Smith, co-manager at Capital Advisors in Tulsa, Oklahoma. "Guys like Jobs don't come very often."

While Apple's product lineup should hold an edge over the competition in the next couple of years, it is the long-term outlook that has investors worried.

"The impact of Steve Jobs' absence will be limited at least for the next two years because all the products that come out during this period will have his finger prints all over," said James Meyer, chief investment officer at Tower Bridge Advisors in West Conshohocken, Pennsylvania.

Even after passing the baton to Tim Cook, Apple's chief operating officer, Jobs will remain on investors' radar. Most still hope that from seat as the company's chairman he will provide guidance on key projects.

But the stock could take a dive if it becomes clear that he is no longer able to contribute to Apple's strategy.

"In the long-run, considering that he is an irreplaceable icon, ... is Tim Cook the man? We don't know," Meyer said.

"We're witnessing a business legend moving toward the exit door. Time only will tell if the company maintains the innovation and the creativity that he put in place there," said Keith Wirtz, chief investment officer at Fifth Third Asset Management, with $16.3 billion in assets.

Wirtz, who like many other fund managers has Apple as one of the largest holdings in its portfolio of large-cap companies -- about 6 percent -- is sticking with his existing commitment to Apple shares. He is betting that Jobs' culture will continue to inspire the company, especially if in his new role as chairman he remains involved in major development projects.

And a number of investors said they'd be more likely to buy shares if the stock stumbled.

David Rolfe, chief investment officer at Wedgewood Partners, said he was buying on the dips for his new Riverpark/Wedgewood Fund.

"It just so happened that we got some cash inflows in the last 24 hours so we have been buying Apple in the fund. If the stock had been hit harder, we would have added to it in our separate accounts as well," he said.

Bank analysts overwhelmingly kept "buy" recommendations on the stock, with price targets ranging from $460 to $525 for the next 12 to 18 months, although many warned of increased volatility risk.

So far, selling Apple's stocks after each of Job's health scares has proved to be a bad investment decision. The stock has taken a hit right after the announcement of each of his three health-related absences, but quickly recovered.

In January 2009, the shares dropped almost 11 percent within the first week after Jobs announced his medical leave, but by end of that month they had more than recovered all their losses.

"This is the lesson for the last seven and a half years because Steve Jobs has been sick or recovering or in remission for all of it: Wall Street cares less about Steve Jobs' health than it does about Apple's health and Apple is healthier than its ever been," said Stephen Coleman, founder of Daedelus Capital LLC, which manages $4 million, 75 percent of which is in Apple.

EmpireGlobalfx

08-29-2011, 04:05 AM

(Reuters) - European shares gained in early trade on Monday, tracking a late rally in Wall Street on Friday, as Federal Reserve chairman Ben Bernanke raised hopes for more stimulus for the economy at the U.S. central bank's September meeting.

At 0706 GMT (3:06 a.m. ET), the FTSEurofirst 300 markets/index?symbol=gb%21FTPP">.FTEU3 index of top European shares was up 0.7 percent at 925.81 points, after falling 0.7 percent on Friday. The index has lost more than 17 percent so far in 2011.

Trading volume was set to be lighter, with London markets closed for a holiday.

Heavyweight banks to gain included Credit Suisse (CSGN.VX), Societe Generale (SOGN.PA) and UBS (UBSN.VX), up between 2.9 percent and 3.4 percent.

"It's one of these days when you go back to the underlying valuations of the companies - and say it looks good. We have oversold this market. It's a bounceback from lower prices, not based on anything fundamental. Bernanke has pushed it back to the politicians," Justin Urquhart Stewart, at Seven Investment Management, said.

EmpireGlobalfx

08-29-2011, 04:52 AM

(Reuters) - Global stocks jumped almost one percent on Monday while the dollar struggled after Federal Reserve Chairman Ben Bernanke left the door open for further action to stimulate the U.S. economy and fight unemployment.

World shares .MIWD00000PUS rose 0.9 percent, with Asian markets tracking a strong bounce for Wall Street, which closed up 1 percent following Bernanke's keynote speech in Jackson Hole on Friday.

IMF chief Christine Lagarde also added to market pressure for policymakers to do more to prop up a flagging global economy at the meeting of central bankers, telling officials they must "act now" to save the recovery.

European stocks finance/markets/index?symbol=gb%21FTPP">.FTEU3 also gained, up 0.7 percent, and U.S. stock futures rose around 1 percent after Hurricane Irene, downgraded to tropical storm status, spared the nation's financial center the worst.

London markets are closed on Monday for a holiday.

Bernanke gave no details of further action to boost the U.S. recovery but said the central bank's policy panel would meet for two days next month instead of one to discuss additional monetary stimulus, offering some hope to investors of a move then.

Analysts said a bad run of data before the Fed's meeting may prove crucial.

"The change to a two-day meeting to 'allow a fuller discussion' is something that will likely keep market expectations elevated about the possibility of further monetary policy stimulus," Barclays Capital economist Michael Gapen said in a note to clients.

"Mr Bernanke said the Fed is in a data-dependent mode and there will be many discussions at the two-day FOMC in September."

BARRIERS

Both the dollar and euro gained around 1 percent against the Swiss franc, in which investors are now facing negative rates of return following the Swiss National Bank's moves to flood the market with liquidity.

But the possibility of more monetary stimulus in the U.S. kept the dollar broadly under pressure, down 0.3 percent .DXY against a trade-weighted basket of currencies.

Against the yen, the greenback traded at 76.62 yen, recoiling from a recent high around 77.69.

"The fact that Bernanke did not talk about inflation risk has helped equity markets and put pressure on the dollar," said Manuel Oliveri, currency strategist at UBS in Zurich.

"But there is not much more potential for the dollar to sell-off with markets now focusing on FOMC minutes and the U.S. employment report this week," he said.

Debt troubles and political issues on both sides of the Atlantic make monetary policy the only viable short-to-medium-term policy response to slowing growth, said Viktor Shvets, regional strategist at Samsung Securities in Hong Kong.

But following through with another round of bond buying will be harder this time around, some analysts say, citing rising core inflation in the U.S. and a split regarding policy within the Fed as obstacles.

"He (Bernanke) has a much, much harder decision this time," said Jim Walker, founder of Asianomics and former chief economist at CLSA Asia-Pacific Markets, in a Reuters television interview.

"What he's got to do is convince the dissenting voices in the Fed and there are now three of them that economic growth is so bad that it is time to use even more extraordinary measures," said Walker.

Japan's Nikkei .N225 closed up 0.6 percent on subdued volumes. South Korea's KOSPI .KS11, the Asian market considered to be the most geared to a global economic recovery, jumped more than 3 percent, then cooled to be up 2.8 percent.

MSCI Asia Pacific ex-Japan .MIAPJ0000PUS rose 2.1 percent. It is down 11 percent so far this month in its worst performance since October 2008, reflecting the scale of concern over global growth and its impact on the region's energy and commodity stocks.

Brent crude traded just above $111 on Monday, dipping as oil refiners and terminals along the U.S. east coast weathered the worst of tropical storm Irene, easing fears of fuel supply disruptions.

NYMEX crude for October delivery was up 0.2 percent.

EmpireGlobalfx

08-30-2011, 03:40 AM

(Reuters) - Bank of America Corp is selling about half its stake in China Construction Bank for $8.3 billion, in its latest effort to shed assets and boost capital.

A group of investors is buying 13.1 billion CCB shares from Bank of America, with the deal expected to close in the third quarter. The U.S. bank declined to name the investors but two sources said Singapore state fund Temasek was among the buyers.

Bank of America needs to boost capital by some $50 billion in the coming years to meet new global rules, according to multiple analyst estimates.

CCB is the second-largest bank by market value in the world, and Bank of America's ties with the Chinese bank are seen as an important source of future growth, particularly as economic growth in the United States is likely to be tepid for now.

Bank of America's willingness to sell part of its CCB investment as soon as it was contractually able to shows how far it must go to meet new capital requirements, analysts said.

"Bank of America's decision to sell that stake is wrong strategically in the long run, but they need money," said Josef Schuster, founder of Chicago-based IPO research and investment house IPOX Schuster.

The bank has said it can raise the capital it needs through earnings and selling off assets, but a number of investors have expressed concern that the bank will need to issue more common shares.

Those dilution concerns helped push the bank's shares this month to their lowest level in two-and-a-half years. Investors are also concerned about the bank's potential losses from mortgages and related litigation. Bank of America's 2008 purchase of Countrywide has brought it billions of dollars of losses and legal payouts.

Bank of America shares gained 8.1 percent to close at $8.39 on Monday.

A $5 billion investment from Warren Buffett's Berkshire Hathaway last week stopped the fall in Bank of America's shares.

For CCB, analysts said the sale helps soothe investor worries about when a sale might take place.

"This removes an uncertainty that's been hanging on China Construction Bank for a while now," said Ivan Li, deputy head of Hong Kong research at Kim Eng Securities.

In the CCB deal, Bank of America sold each share for HK$4.93, an 11 percent discount to the Chinese bank's most recent closing price of HK$5.55.

As lock-up provisions expire on a number of Chinese financial stocks, big investors will have the contractual right to start selling shares. Fears of those transactions have weighed on the sector, along with concerns about the Chinese economy's growth trajectory.

A START

Bank of America will record a $3.3 billion gain in the third quarter as a result of the sale, and a $3.5 billion increase to its core capital under current rules, a spokesman said.

Under proposed Basel III rules, the sale will generate an $8.3 billion gain for Bank of America.

The deal could add 0.3 percent to the bank's core capital until current industry rules and 0.2 percent under proposed Basel III rules, wrote David George, Robert W. Baird & Co bank analyst, in a research note to clients.

For Basel III, the bank's tier one capital levels after the deal are about 5.7 percent, while the bank is targeting somewhere around 6.75 percent or 7 percent by 2013, George said.

In recent weeks, Bank of America has also agreed to sell an $8.6 billion Canadian credit card portfolio to TD Bank Group and is in talks to sell $1 billion of real estate assets to Blackstone Group.

In the last six quarters, Bank of America has generated some $30 billion of proceeds from asset sales.

Fears about the bank's ability to meet its capital requirement have cut the bank's stock price by a third since the beginning of August, including a 20 pct plunge on August 8.

TAPPING INTO GROWTH IN 2005

Temasek has a history of buying CCB shares. In November, it bought Bank of America's entitlement to buy 1.79 billion CCB shares in the Chinese bank's rights offering.

The Singapore fund has another link to Bank of America -- Greg Curl, the U.S. bank's former chief risk officer, is now president, overseeing the financial services sector for the fund.

A Temasek spokesman declined to comment.

Before CCB's IPO in 2005, Bank of America paid $3 billion for a 9.9 percent stake in the Chinese bank.

At the time, then Bank of America Chief Executive Kenneth Lewis said the partnership was designed to give the bank increased access to roughly 1.3 billion Chinese consumers, while CCB would benefit from Bank of America's U.S. retail banking experience.

The U.S. bank increased its holdings in following years to 25.6 billion shares, including 23.6 billion that came out of lock-up on August 29. After the share sale, Bank of America will still have about 12.1 billion CCB shares, worth nearly $9 billion.

Last week, CCB President Zhang Jianguo told Reuters the two companies were in talks to extend their current cooperation agreement for another five years.

EmpireGlobalfx

08-31-2011, 10:25 AM

(Reuters) - The Swiss franc leaped against the euro and the dollar on Wednesday as the absence of new measures to contain the currency's strength from the Swiss National Bank and euro zone debt worries spurred a relief rally.

Demand for the safe-haven Swiss franc returned with the SNB conspicuous by its absence from the currency forwards market since last week. The SNB announced no new measures after making an announcement on three of the four Wednesdays in August.

The euro was last down 1.9 percent to 1.1620 francs, while the dollar slumped 1.9 percent to 0.8048 franc, retreating from a recent high of 0.8239 struck on Monday. Traders cited Swiss franc buying by U.S. and Swiss investors.

Switzerland's economy minister said the currency is "massively overvalued.

Mounting concerns about European sovereign debt and the prospect of additional U.S. Federal Reserve stimulus drove investors back into the safety of the Swiss franc, according to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"While the threat of SNB intervention may slow the franc's rise, it is unlikely to meaningfully deter investors from the safe harbor offered by the franc."

The SNB's intervention in the swap market and moves to flood the Swiss banking system with francs and cut interest rates to near zero has toppled the Swiss franc from record highs hit earlier this month.

Investors took profits after the euro failed to break through 1.2000 francs earlier this week, analysts said, while the Swiss franc looked oversold on daily charts, having hit its lowest level since early July on Monday.

In the United States, data showed the pace of U.S. private sector job growth slowed in August for the second month in a row.

The ADP data precedes Friday's key U.S. Labor Department report on August's unemployment and payrolls.

The labor market is key to U.S. Federal Reserve monetary policy and continued weakness could increase the likelihood of another round of bond buying by the Fed.

A German cabinet decision that set policymakers on course for parliamentary ratification of changes to the euro zone's bailout fund helped push the single currency briefly to a session high of $1.4470 versus the dollar.

But it was last down 0.2 percent at $1.4412. Traders said month-end demand for dollars from investors rebalancing their stock and bonds portfolio was weighing on the euro.

"The difficulty the market has at the moment is finding a reason to buy any currency. The euro zone has got a peripheral problem, the U.S. has got a potential QE problem," said Daragh Maher, deputy head of FX research at Credit Agricole.

"The Swiss franc remains a safe play. If numbers do not improve, people remain nervous and the euro zone situation remains grim, we can expect to see the franc strengthen again."

Minutes from the Fed's August 9 meeting showed policymakers discussed a range of unusual tools they could use to help the economy, adding to expectations the Fed may flag a third round of quantitative easing at its two-day meeting in September.

The dollar was up 0.1 percent at 76.74 yen.

With the yen hovering near a record high against the dollar of 75.941 hit earlier in August on trading platform EBS, market players remain wary of the potential for Japanese authorities to intervene to sell the yen.

EmpireGlobalfx

08-31-2011, 11:48 PM

(Reuters) - Asian stocks rose on Thursday following gains on Wall Street, with technology and consumer shares outperforming, and credit spreads tightened on optimism central banks around the world will have to do more to support industrial activity.

Slumping exports slowed factory activity in some of Asia's biggest economies in August, although China managed modest improvement thanks to solid domestic demand, a series of surveys released on Thursday showed.

Brazil shocked investors by slashing its key interest rate to 12 percent from 12.5 percent on Wednesday citing concern over the mounting global slowdown as well as weaker growth in Latin America's largest economy.

But investors cautioned that gains would likely be limited ahead of key U.S. manufacturing and jobs data due later this week. Signs of a weakening economy have led to speculation the Fed will step in with a new round of monetary expansion.

"The China PMI data gave some immediate relief to the market, but the U.S. data, particularly the employment numbers, are still to come," said Yutaka Shiraki, senior equity strategist at Mitsubishi UFJ Morgan Stanley Securities.

The MSCI Asia Pacific ex-Japan index .MIAPJ0000PUS rose 1.4 percent, having fallen 9 percent in August when global markets were roiled by a sovereign downgrade in the United States, persistent debt problems in the euro zone and downward revisions in growth expectations.

In Japan, the Nikkei .N225 gained 1.4 percent to clear the key 9,000 level for the first time in two weeks, while South Korea's KOSPI .KS11 added 2.2 percent despite economic data showing the country's manufacturing sector shrank in August for the first time in 10 months.

Credit spreads on Asia ex-Japan iTraxx investment grade index have tightened in early deals to 143.5/144 basis points compared with Wednesday's close of 147.86 bps, after recording their worst monthly performance of 2011 in August, IFR reported.

CHINA REASSURES

China's official PMI offered some reassurance about the pace of growth, rising on Thursday to 50.9 in August from a 28-month low of 50.7 in July and signaling some stabilization in the manufacturing sector on solid domestic demand.

However, the result was just below expectations and the sub-index for new export orders dipped to 48.3 from 50.4, suggesting that exports may weaken in the future.

In Australia, signs of a recovery in retail sales lifted retail stocks, with department store Myer (MYR.AX) adding more than 4 percent.

U.S. economic data overnight showed the economy continues to struggle, and the U.S. Institute for Supply Management's national manufacturing index is due at 8:30 a.m. EDT, followed by the U.S. Labour Department's employment report on Friday.

Fears that the ISM index may fall below 50 have been eased by a brighter than expected reading of manufacturing activity in the Chicago area released on Wednesday.

Among currencies, the Swiss franc held on to gains made the previous day after a top government official said Switzerland would have to live with a strong currency, while commodity currencies steadied after an initial dip on Brazil's rate cut.

The Australian dollar was at $1.0697, below from a one-month high of $1.0722 hit on Wednesday.

The euro eased slightly to $1.4370, slipping further from a two-month high at $1.4550 hit at the start of the week, though traders say the currency is essentially playing in a range.

In commodity markets, spot gold held steady to be little changed at 1,824.54 an ounce, to be up 29 percent this year.

U.S. crude oil futures were steady after a slight decline the previous day on the back of a larger-than-expected build in U.S. crude inventories.

EmpireGlobalfx

09-01-2011, 08:47 AM

(Reuters) - The euro fell broadly on Thursday, hammered by a fall in manufacturing across the euro zone and at risk of more losses if U.S. figures later in the day offer a similar picture.

Weak readings from the purchasing managers surveys highlighted economic weakness, boosting the Swiss franc against the euro and the dollar as investors looked to test the resolve of the Swiss National Bank to stem the safe haven currency's strength.

The euro fell around 0.8 percent on the day to a session low around $1.4260.

Ahead of U.S. ISM manufacturing PMI at 1400 GMT and key jobs data on Friday, the single currency is seen as having the most to lose from signs of weakness both in the European and global economy, given that the region remains far from a solution to its debt crisis.

Data showing contractions in the manufacturing sectors of most euro zone countries was the driver of broad euro selling, analysts said. This weakness extended to Germany, the euro zone's biggest economy, where manufacturing barely expanded in August and weakened from July.

Confidence about the euro zone's stability has been shaken by signs that officials are dragging their feet on steps to ease debt problems in Greece and other countries, creating tensions in funding markets and raised worries about the health of financial institutions in the region.

"Concerns about Greece's debt burden in general is the main factor weighing on the euro, and complicating that today has been the euro zone economic data flow," said Stephen Gallo, head of markets analysis at Schneider FX.

Not helping the euro's cause was sluggish demand at a Spanish bond auction, days after a weak response to an Italian sale, highlighting increased investor wariness about two of the euro zone's biggest countries.

The euro broke below technical support in the $1.4320-1.4365 range, where many of the single currency's moving averages were clustered.

It sank below trendline support at $1.4280 -- drawn from lows hit in July and August -- and a slight recovery from the day's low was capped by offers from a U.S. investment bank around that level.

The franc rallied across the board, up roughly 1.5 percent lower to 1.1377 francs.

The euro's tumble from a session high around 1.1615 gained traction after stop-loss sell orders were triggered below 1.1500 francs and 1.1450, with traders citing selling by Swiss names and macro funds.

Broad franc strength pushed the dollar 1 percent lower to 0.7958 francs, just above bids seen at 0.7950 francs.

The yen stayed under pressure on dollar buying by Japanese accounts, lifting the U.S. currency to around 77 yen and soothing jitters that another round of intervention by Tokyo authorities may be on the way.

WEAK ISM EXPECTED

The U.S. ISM manufacturing index is due later in the session and analysts expect a reading of 48.5 in August versus 50.9 in July, indicating a contraction of the sector.

"There is a risk of a sub-50 reading in the U.S. ISM manufacturing index. If that happens, cyclical and commodity linked currencies will underperform," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.

"The global economy is clearly going through a marked slow-down in economic activity, and the market is trying to assess whether this will be just a soft patch or whether we are heading toward a recession."

Such concerns are driving more investors into the perceived relative safety of currencies such as the Swiss franc and the yen.

The franc extended gains following a rally on Wednesday, after a top government official said Switzerland would have to live with a strong currency and there was little sign of action from the Swiss central bank.

The SNB has been quiet since mid-August, when it flooded the market with francs, cut rates to near zero and intervened in the swap market to bring the franc down from record highs.

Traders cited chatter that the SNB was checking rates in the Swiss franc forward market, although it was not seen actively intervening to drive down forward rates. Analysts said some traders considered its absence in the forwards market as a green light to push the franc higher.

"The SNB's sight deposit target of 200 billion francs has likely been reached by now and, given the silence from the SNB, investors might now try to test the SNB's resolve," said Chris Walker, currency strategist at UBS.

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09-04-2011, 07:57 PM

China bought back a lot of BofA assets: report

(Reuters) - A consortium that included the Chinese government was the biggest buyer of a 5 percent stake in China Construction Bank Corp sold last month by Bank of America, the Financial Times reported on Sunday.

The State Administration of Foreign Exchange, the National Social Security Fund and Citic Securities bought the CCB shares, the FT said, citing unnamed sources.

The Chinese government role has been a closely guarded secret as it comes amid fears that Chinese bank stocks will raise additional capital and dilute the stakes of current investors, the FT said. There has been concern that loans and other assets held by CCB and other Chinese banks are vulnerable to losses in a possible slowdown of the Chinese economy.

CCB has been the world's second-largest bank by market value.

Bank of America agreed to sell 13.1 billion CCB shares -- half of its stake -- because of its own drive to raise capital to make up for losses from mortgage loans made during the U.S. housing boom. Bank of America, the biggest U.S. bank by assets, will get $8.3 billion cash from the sale.

Trading volume in CCB shares surged after the sale, suggesting to some in the market that about one-third of the shares sold by Bank of America went to hedge funds and other institutional investors.

Temasek Holdings, a Singapore state investor, and Seatown, a related investment firm, were among previously reported buyers of the CCB shares.

EmpireGlobalfx

09-04-2011, 08:58 PM

EmpireGlobalfx

09-05-2011, 01:50 AM

(Reuters) - Europe faces a string of political and legal tests this week that could hurt efforts to resolve its sovereign debt crisis and increase pressure for governments to try more radical solutions.

A court ruling may reduce the freedom of the German government, the biggest contributor to the euro zone's bailout fund, to finance rescues of crisis-hit countries such as Greece.

The European Central Bank, internally split over its bond market intervention to protect Italy, is expected to review the program. And Greece will find out how successful it has been in persuading private investors to take part in a bond swap designed to cut its 340 billion euro debt mountain.

None of these challenges looks likely to doom policymakers' frantic attempts to keep indebted euro zone countries afloat while they try to regain the confidence of financial markets.

But this week's events may underline how vulnerable those attempts are to worsening political currents in the euro zone, and how far the 17-nation bloc remains from finding a lasting solution to the debt crisis.

COURT RULING

On Wednesday morning, Germany's Federal Constitutional Court will deliver its ruling -- awaited for over a year -- on suits claiming Berlin is breaking German law and European treaties by contributing to multi-billion euro bailouts of Greece, Ireland and Portugal.

Legal experts think the court is highly unlikely to block the contributions altogether. But it is expected to give the German parliament a bigger say in approving them.

With German public opinion turning against providing more aid to Europe -- a survey published last week suggested two-thirds of Germans think parliament should not ratify more money for the bailout fund -- that could be a dangerous concession. At the very least, it might further slow and complicate Berlin's responses to the debt crisis.

It could also encourage parliamentary opposition to bailouts in other disillusioned euro zone states. In Slovakia on Sunday the head of a junior party in the ruling coalition said the Slovak parliament would not vote on expanding the powers of the regional bailout fund, the European Financial Stability Facility, before December at the earliest.

Euro zone officials have been hoping national parliaments around the bloc will finish approving the EFSF reforms by early October. The threatened delay in tiny Slovakia may not be disastrous -- diplomatic pressure may be put on Bratislava to speed up approval, or a legal subterfuge found for the EFSF to use its new powers pending Slovak approval -- but it underlines how the bloc's crisis plans rest on shaky political ground.

Politics have also turned ugly in some of the euro zone countries which need aid. The ECB's monthly policy meeting will grapple with this on Thursday as it debates how to handle Italy.

Early last month, the ECB's 23-member Governing Council decided to begin buying Italian government bonds to prevent a disastrous jump of their yields, overriding the opposition of a small minority of council members who felt this compromised the central bank's monetary policy.

The ECB's intervention was launched on the understanding that Italy would rush through an austerity plan to regain market confidence. But efforts by Prime Minister Silvio Berlusconi's embattled government to do this have been plagued by disputed figures, policy U-turns and cabinet rows.

Now the ECB will have to decide whether to continue its bond-buying -- or whether the purchases are actually worsening the situation by reducing pressure on Italy to reform its finances. Italian bond yields have started rising back in the past week; some traders think the ECB may deliberately be permitting this in an attempt to obtain leverage over Rome.

The ECB is widely expected to maintain a substantial level of bond-buying in coming weeks because an Italian yield surge could destabilize the whole region. But it may not purchase enough to keep yields at comfortable levels for Italy, especially if the strengthening of the EFSF is delayed and the fund is not able to take over buying in October as hoped.

Meanwhile, Greece has set a deadline of Friday afternoon for European banks to express their interest in its bond swap; the banks will be required to commit by mid-October.

Athens wants 135 billion euros of outstanding bonds to be swapped or rolled over, which translates to a high take-up rate of 90 percent. It has warned that the whole scheme, and conceivably even its plan to receive a second international bailout, could be threatened if that target is not hit.

Greece appears likely to come close enough to the 90 percent threshold to declare the operation a success; the chief executive of Intesa Sanpaolo, Italy's biggest retail bank, said on Saturday he was hearing positive indications from the Institute of International Finance banking lobby group.

But even if the debt swap is fully taken up, analysts think that combined with other planned measures, it will only produce a drop in the ratio of Greece's debt to its gross domestic product to around 120 or 130 percent over the next few years, from above 150 percent now. So another, more painful Greek debt restructuring may be inevitable down the road.

RADICAL STEPS

This helps to explain why markets are unlikely to react with much optimism even if events this week turn out positively -- and why a growing number of past and present policymakers are advocating more radical crisis steps.

European Commission President Jose Manuel Barroso insisted euro zone policymakers were doing everything possible to resolve the crisis.

"I want to be clear here. The European Union and the euro are strong and resilient. We are doing all it takes," he said on Monday in Australia after talks with Prime Minister Julia Gillard.

Still, Italian Economy Minister Giulio Tremonti repeated his call on Sunday for euro zone governments to issue bonds jointly, saying the measure was vital to resolve the crisis. Germany has strongly resisted the idea on the grounds that it would penalize financially responsible countries.

Former German chancellor Gerhard Schroeder on Sunday called for the creation of a "United States of Europe," saying the bloc needed a common government with a unified budget policy to avoid future economic crises.

Schroeder, a Social Democrat who ran Germany from 1998 to 2005, said European Union member states would have to return to the negotiating table and hammer out a new treaty covering the bloc's institutional framework.

Steen Jakobsen, chief economist at investment bank Saxo Bank, said governments had great political will to protect the euro zone, and were likely to take drastic action eventually to head off disasters such as an Italian exit from the zone.

But for this to happen, he said, "Germany needs to step up to the plate in a way it has not done so far."

EmpireGlobalfx

09-05-2011, 02:20 AM

(Reuters) - Spot gold edged lower on Monday, retaining most of its gains from the previous session, as a dismal growth outlook after the U.S. jobs data supported safe-haven interest in bullion.

U.S. employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy.

The bleak outlook of the world's largest economy sent anxious investors to safe haven assets including bullion.

"Even if you take out the effect from the Verizon strike, it is still a lousy number and people are concerned that growth is not there any more," said Dominic Schnider, head of commodity research of UBS Wealth Management in Singapore.

He expected the recession fear to send gold to test its record high above $1,911 hit in late August, and to $2,200 in the next three months.

Technical analysis echoed Schnider's expectations. Spot gold may rise toward the record of $1,911.46 later in the day, as it has resumed its long-term uptrend, said Reuters market analyst Wang Tao.

Spot gold edged down 0.3 percent to $1,877.45 an ounce by 0327 GMT, after surging 3.2 percent in the previous session. U.S. gold inched up 0.2 percent to $1,880.50.

Amid concerns about the resurgent debt crisis in Europe, European Commission President Jose Manuel Barroso on Monday said he still expected modest growth in Europe and did not anticipate a recession in Europe.

"The market has been a bit choppy -- some sold to book profit earlier and many are waiting for cues for further stimulus from the Fed," said a Hong Kong-based dealer.

Market participants will also closely watch President Barack Obama's speech on Sept 7 to unveil new economic proposals to Congress.

Money managers cut their net long positions in U.S. gold futures and options for a fourth week in a row in the week ended August 30, as bullion prices pulled off an all-time high set a week earlier, data showed on Friday.

Spot platinum hit a two-week high of $1,885.50, before easing to $1,869.99.

The platinum-gold spread dipped into negative territory on Friday and remained at a small discount of $7, which may have spurred investors to buy platinum.

Precious metals prices 0327 GMT

Metal Last Change Pct chg YTD pct chg Volume

Spot Gold 1877.45 -6.35 -0.34 32.27

Spot Silver 43.03 -0.16 -0.37 39.44

Spot Platinum 1869.99 -7.81 -0.42 5.80

Spot Palladium 775.00 -10.78 -1.37 -3.06

TOCOM Gold 4639.00 113.00 +2.50 24.40 93290
TOCOM Platinum 4654.00 59.00 +1.28 -0.89 10464

TOCOM Silver 105.50 2.90 +2.83 30.25 1307

TOCOM Palladium 1933.00 -13.00 -0.67 -7.82 253

COMEX GOLD DEC1 1880.50 3.60 +0.19 32.30 16838

COMEX SILVER DEC1 43.12 0.05 +0.11 39.35 1554

Euro/Dollar 1.4168

Dollar/Yen 76.73

TOCOM prices in yen per gram. Spot prices in $ per ounce.

COMEX gold and silver contracts show the most active months

EmpireGlobalfx

09-05-2011, 03:11 AM

(Reuters) - European shares fell on Monday, extending its previous session slide on concerns that the United States could be heading towards recession following Friday's weaker than expected U.S. nonfarm payroll data.

Banking stocks featured heavily among the worst performers on the growth outlook concerns, with the STOXX Europe 600 Banks index .SX7P down 2.6 percent.

"Sentiment seems to be playing a big move in these market swings, nothing happened over the weekend to install investor confidence," Mark Priest, senior equities trader at ETX Capital, said.

"There are concerns that growth is not what it is expected to be."

By 8:14 a.m., the pan-European FTSEurofirst 300 .FTEU3 index of top shares was down 2 percent at 929.41 points after dropping 2.5 percent on Friday after the economy failed to create any new jobs on a net basis for the first time in nearly a year.

EmpireGlobalfx

09-05-2011, 10:29 PM

(Reuters) - Asian shares fell and the euro slipped on Tuesday amid fears that Europe's sovereign debt troubles are worsening and could trigger a second full-blown banking crisis.

European stocks tumbled 4 percent on Monday, with financial shares falling to their lowest in more than two years. Wall Street was closed on Monday for a holiday, but S&P 500 futures traded in Asia were down 2.3 percent.

"It's the European disease that is infecting markets all around the world at the moment," said Michael Heffernan, senior client adviser and strategist at Austock Group in Australia.

Adding to the gloom are worries that the United States may be sliding back into recession, a concern heightened by a slew of downbeat data, most recently employment figures that showed the world's top economy failed to create any jobs last month.

Gold, traditionally seen as a safe asset in times of uncertainty, sat just short of $1,900 an ounce, not far off its record high, while the yield on 10-year Japanese government bonds(JGBs), another safe haven, fell below 1 percent.

Tokyo's Nikkei fell 1.2 percent, while MSCI's broadest measure of Asia Pacific shares outside Japan was off 1.1 percent, putting the index more than 18 percent down from its April high.

Hardest hit sectors in the MSCI index were materials and financials. Banks with heavy exposure to Europe were sold, including HSBC, whose Hong Kong listed shares dropped 2.8 percent.

EURO CRISIS

The latest focus of Europe's slow motion crisis is Italy, whose bonds were sold off on Monday on worries that Rome is not doing enough to bring its debt under control. Italian 10-year yields rose near 5.6 percent, their highest since early August.

While European leaders have been able to put together bailout packages for Greece, Ireland and Portugal, investors fear the consequences of a similar crisis engulfing a bigger economy such as Italy or Spain.

The chief executive of Deutsche Bank said on Monday that the euro zone sovereign debt crisis would stunt bank profits for years and could cause the collapse of weaker lenders.

The euro traded around $1.4070, having fallen as low as $1.4060. That helped the dollar index climb above 75.200, its highest in nearly a month.

The European Central Bank, the only major Western central bank to raise interest rates since the 2008/09 financial crisis, meets on Thursday but is expected to leave borrowing costs unchanged at 1.5 percent, which could put the single currency under further pressure.

"Without the support of a more hawkish central bank, the euro will look very vulnerable," Societe Generale strategists Kit Juckes and Sebastien Galy wrote in a note.

JGBs were in demand, as investors retreated from riskier assets, with September 10-year futures up 0.12 point at 142.91, after hitting a 10-month high, while the benchmark 10-year yield fell 1.5 basis points to 0.995 percent.

Brent crude oil rose 0.7 percent $110.82 a barrel, but U.S. crude, whose volume was trimmed by Monday's holiday was down nearly 3 percent, at just below $84.

EmpireGlobalfx

09-06-2011, 05:22 PM

(Reuters) - The Swiss franc plunged nearly 10 percent against the euro on Tuesday, posting its worst day ever, after Switzerland's central bank jolted markets by setting a limit on how much the franc can gain.

The euro surged after the Swiss National Bank said it would enforce a limit of 1.20 francs to the euro by buying foreign currencies in unlimited quantities. The dollar also rose sharply, gaining 9.6 percent against the franc.

Investors have poured money into the franc, which they see as one of the few safe places for assets amid global financial turmoil. The franc's rise sparked worries among Swiss officials that its export-driven economy will be damaged by the currency's strength.

"When a central bank communicates that it doesn't want its currency to strengthen, it's generally a bad idea to go against that central bank. Today is a reminder why," said Jonathan Lewis, founding principal at Samson Capital Advisors, with assets under management of $7 billion.

The euro rose as high as 1.22 francs on trading platform EBS, ending four days of losses.

The SNB's latest move comes after it cut its already low interest rate target to nil on August 3. It also flooded the banking system with francs, effectively driving money market and forward rates deep into negative territory and making holding Swiss francs a costly proposition for investors.

The SNB had made repeated warnings that it wouldn't tolerate a strong currency.

Many analysts believed the SNB may have finally instilled fear in investors still trying to seek shelter in the franc away from the euro zone's sovereign debt crisis. The SNB's ability, however, to hold the floor at 1.20 francs to the euro will very much depend on developments in the euro area.

"An intensification of the euro zone crisis is a reasonable prospect and such an event could yet result in a significant step up in demand for the Swiss franc," said Jane Foley, senior currency strategist at Rabobank in London.

However, since there is zero inflation in Switzerland, the SNB could potentially just print francs and sell them on an unlimited basis to counter the surge in currency inflows. For this reason, Foley believes the 1.20 cap on the euro/Swiss franc could hold in the near term.

In late trading, the euro was up 8.7 percent at 1.20550 francs, rising a low of 1.10200 and a closing level at 1.11000 on Monday,

The Swiss franc has dropped roughly 20 percent versus the euro in the past month as the single currency has soared from a lifetime low of 1.00750 hit on August 9 on EBS.

As a result, fund managers who took bets that the franc would fall around that time were sitting on hefty gains.

The U.S. dollar rose as high as 0.86250 franc on EBS and was last up 9.4 percent at 0.86150 franc, snapping a four-day drop against the franc.

FLOWS INTO NORWAY

The Swiss central bank action also funneled some safe-haven flows into the Norwegian crown, a currency with robust fundamentals -- an oil exporter and a country with a current account surplus. The euro fell 1.2 percent against Norway's crown to 7.5772.

One-month implied volatility on the euro/Norwegian crown pair, a measure of the market's expectations of future movements in either direction, jumped to 9.7 percent from 8.4 percent late on Monday, suggesting more trading action seen on this cross.

Despite the euro's steep gains against the Swiss franc, the single currency fell against the dollar, down 0.7 percent on the day at $1.39910. It fell to a low of $1.39720, trading below its 200-day moving average around $1.40150 for the first time since July 12.

Market players said the key risk for the euro this week was that the European Central Bank would signal a pause in its rate tightening cycle.

Concerns that the next tranche of bailout funds for Greece may be delayed, worries about European bank funding and rising Italian government bond yields on speculation Rome may struggle to implement new austerity measures kept the euro under pressure.

The dollar rose against the yen on EBS on speculation the SNB's measures could encourage Japanese authorities to intervene in coming days. The dollar was up 1.0 percent at 77.690, well off a record low of 75.941 struck on Aug 19.

EmpireGlobalfx

09-07-2011, 10:28 PM

(Reuters) - A rebound in Asian stocks ran out of steam on Thursday, as worries over the widening impact of the euro zone crisis and the faltering U.S. economy gnawed at investor confidence.

The euro edged down, and remained vulnerable to concerns that European efforts to contain a two-year-old sovereign debt crisis are flagging.

"Volatility still persists and the market is likely to continue to dance to the tune of policy risks involving the U.S. and European economies," said Kim Hyung-ryol, a market analyst at Kyobo Securities in Seoul.

Global equities suffered their worst correction since 2008 in August, on fears of renewed recession in the United States and worries about Europe's widening crisis, and the MSCI All-Country World index .MIWD00000PUS remains 16 percent below its 2011 high, reached in May.

Japan's Nikkei .N225 rose 0.5 percent, paring earlier gains, while MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS fell 0.2 percent.

Germany's top court on Wednesday rejected lawsuits aimed at blocking Berlin's participation in bailout packages for Greece and other heavily indebted euro zone countries, offering some temporary relief to global markets.

European stocks rose 3.1 percent markets/index?symbol=gb%21FTPP">.FTEU3 and on Wall Street the S&P 500 rose 2.9 percent .SPX.

The euro, after jumping on the German court decision, eased on Thursday to around $1.4060, as traders awaited a European Central Bank rate-setting meeting later.

CHANGE OF TACK

The ECB is the only major Western central bank to have raised rates since the global financial crisis, but is expected to signal a change in policy tack and halt its tightening cycle in response the sovereign debt crisis.

Market players will also be closely watching for any comment from ECB President Jean-Claude Trichet on the central bank's buying of Italian and Spanish bonds to force down yields, a policy that has deeply divided its governing council.

"If Trichet makes cautious remarks on bond buying, Italian and Spanish spreads could rise again and hurt investor sentiment," said Junya Tanase, chief strategist at JPMorgan Chase.

Federal Reserve Chairman Ben Bernanke is due to speak later on Thursday, at 1730 GMT, and President Barack Obama will outline to Congress his plans for reviving the faltering economy at 2300 GMT. With unemployment stuck above 9 percent, Obama will lay out a plan to spur job creation.

Many analysts expect Bernanke to hint at further easing steps to try to stimulate the economy, which could put downward pressure on the dollar.

The U.S. currency was a little firmer against the yen at around 77.40, while the dollar index .DXY, which measures its performance against a basket of major currencies, edged up around 0.2 percent.

Gold rebounded 1 percent to trade around $1,835 an ounce, after tumbling 3 percent in the previous session.

The precious metal has hit a succession of records, most recently at $1,920.30 on Tuesday, driven by its appeal as both a safe haven in times of economic uncertainty and as a hedge against inflation, which some fear will be the eventual consequence of the ultra-loose monetary policies being pursued in much of the developed world.

"Concerns about economic growth in the United States and euro zone will keep supporting gold prices. Even though we may see liquidation repeatedly along the way, gold will rise toward $2,000," said a dealer at a Tokyo-based bullion house.

Oil was little changed, with U.S. crude flat at $89.33 a barrel and Brent crude down 0.2 percent at $115.60.

EmpireGlobalfx

09-09-2011, 12:17 AM

(Reuters) - The euro bounced off a two-month low against the dollar on Friday but the risk of a break below its July trough is seen rising after a deepening debt crisis forced the European Central Bank to drop its tightening policy bias, a key driver in the euro's rally this year.

The market showed a mostly muted response to U.S. President Barack Obama's $447 billion package on jobs that is made up largely of tax cuts for workers and business, amid doubts over whether he can push it through a divided Congress.

"The euro now doesn't have the support of expectations for rising interest rates, which clearly points to the higher possibility that the euro will fall below (its July low near) $1.38. In addition, strains on European banks' funding are rising. Given all this, the euro looks likely to fall further," said Minori Uchida, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

For now though, sizable buying in the euro against the yen, thought to be from Japanese investors, lifted the euro 0.4 percent against the dollar and the yen in Asia.

The euro rose to $1.3933, after dropping to $1.3873 on Thursday, its lowest in two months. The common currency also gained to 108.00 yen, about a half-yen above its six-month low of 107.54 yen hit on Thursday.

Traders expect the currency to head toward the July low of $1.38376, a break of which could send a strongly bearish signal, with $1.35 cited as its next possible target.

"The euro is unequivocally bearish. It broke through its long-term support and is likely to go significantly lower," said David Scutt, a trader at Arab Bank Australia.

The European Central Bank held rates steady at its policy meeting on Thursday, saying inflation risks are no longer skewed to the upside and that economic growth in the region will be slow at best, prompting money markets to fully price in a rate cut by the year-end.

Dollar funding strains for European banks showed no sign of abating with the euro/dollar basis swap spread on Thursday hitting its highest since last 2008.

POTENTIAL PITFALL

Another potential pitfall for the euro is uncertainty over Greece's debt swap plan as Friday is the deadline Athens has given investors in Greek bonds to say whether they intend to take part in its debt exchange offer, a key part of a second 109 billion euro bailout package it clinched on July 21 to avoid bankruptcy.

Greece had threatened to cancel the deal unless it got 90 percent participation, a stance some banks think may just be tactics by Athens to get most bondholders on board. Still, a low participation rate in Greece's debt swap could mean reluctant euro zone partners will have to cough up more cash for the overall package to work.

But the dollar also lacked traction after Obama's long-awaited job proposals failed to boost hopes of a U.S. recovery. U.S. jobless claims unexpectedly rose last week, highlighting the fragile state of the U.S. job market.

"To some extent, this was largely in line with the chatter we heard before it's release. It may even be a bit smaller than needed given the gravity of the problem. That could prevent markets from reacting too positively," said Omer Esiner, senior market analyst at Commonwealth Foreign Exchange in Washington.

"And at the end of the day, it depends on what the finished product will be. A lot of this will be chopped up before it is passed. We've seen a lot of political paralysis in Washington."

Federal Reserve Chairman Ben Bernanke offered little new insight as to what the central bank will do at its policy meeting on Sept 20-21 in his speech on Thursday, though most players remain convinced that the bank will start buying longer-dated bonds in a bid to try to lower longer bond yields.

The dollar index slipped to 76.09, having surged to two-month highs of 76.319 on Thursday. Against the yen, the dollar stood flat at 77.48 yen.

The Australian dollar gained 0.3 percent to $1.0620, but lacked the energy to tackle a resistance-packed zone from $1.0630, its 55-day moving average, through $1.0648, the 100-day average, to $1.6057, a 61.8 percent retracement of its decline earlier this month.

EmpireGlobalfx

09-09-2011, 03:26 AM

(Reuters) - Brent crude edged up toward $115 a barrel on Friday, after falling more than a dollar in the previous session, supported by storm threats and uncertainty about President Barack Obama's latest plan to revive the world's largest economy.

Brent for October delivery was on track for a weekly gain of more than 2 percent, trading up 10 cents at $114.65 a barrel by 0627 GMT.

U.S. crude oil fell seven cents to $88.98 a barrel and was set for a gain of more than 3 percent this week.

Concerns over economic growth and tepid demand for oil remain the main pressure points for the oil markets, blunting bullish sentiment from Libya's civil war, hurricanes and a battered U.S. dollar.

"The question for the oil market is demand destruction and how confident the consumer is, both of which are very uncertain," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

"If European and U.S. policymakers can find some compromise and willingness to work together before economics force their hand, then that is bullish for oil. But I think we will probably see the market grind sideways," he added.

JOBLESS PROBLEM

Obama unveiled a $447-billion package of tax cuts and new spending to revive a stalled job market but he faces an uphill fight with Republicans.

Federal Reserve Chairman Ben Bernanke also highlighted the elevated jobless rate and sluggish underlying growth at a speech on Thursday, but disappointed investors by stopping short of laying out a plan for action at the central bank's policy-setting meeting this month.

The U.S. dollar index .DXY barely reacted to Obama's job package, trading down 0.4 percent to 76.214.

Oil continued to find support from the busy 2011 hurricane season in the Atlantic and supply outages in OPEC member Libya.

Tropical Storm Nate, the 14th named storm, was gaining strength and could become a hurricane on Friday or Saturday, the U.S. National Hurricane Center said. The tropical storm has prompted producers in the Gulf of Mexico to begin another round of evacuations of nonessential workers.

The U.S. Energy Information Administration said commercial oil inventories fell nearly 4 million barrels last week, far deeper than the forecast for a 1.9 million barrel drawdown.

Inventories dropped as imports slid more than 1 million barrels per day with offloading hampered by Hurricane Irene's passage through the East Coast that also compelled refineries to cut utilization rates by more than a quarter.

In Libya, the man tasked with running the country, interim Prime Minister Mahmoud Jibril, reminded his forces that the war was not over yet as the latest deadline for the surrender of pro-Muammar Gaddafi towns loomed and fighters massed on both sides.

"The consensus is that with the Libyan civil war essentially over, market pressures are easing, but the reality is that we are at the peak point of Libyan stress -- without crude production, but with high imports to meet internal fuel needs," analysts at J.P. Morgan said in a research note.

EmpireGlobalfx

09-11-2011, 05:14 PM

(Reuters) - The euro and growth-linked currencies may fall on Monday, hit by a lack of concrete measures from Group of Seven finance chiefs to address either faltering growth, the escalating euro zone debt crisis, or exchange rate volatility.

The dollar, yen and, to a lesser extent, Swiss franc are set to advance with more investors seeking safe-haven currencies on the back of rising financial market stress.

That will raise the risk of more solo intervention from Japanese and Swiss authorities.

The flight to safety should drive core government bonds like German Bunds and British gilts higher, leading to wider spreads over euro zone peripheral debt, while European banking shares may ease on mounting worries about contagion engulfing bigger economies like Italy and Spain.

Finance ministers and central bankers from the Group of Seven industrialised nations pledged to respond in a concerted matter to a global slowdown. However, they offered no specific steps and differed in emphasis on Europe's debt crisis.

That will likely offer little solace to investors who had expected some sort of coordinated policy response from G7 policymakers at a time when stock markets have been falling and global growth in showing increasing signs of stalling.

"As this falls short of any commitment to undertake co-ordinated action in currency markets, investors are likely to react with disappointment when trading resumes on Monday," said Mansoor Mohi-uddin, head of foreign exchange strategy at UBS.

He expected Japan to stay on intervention watch.

Japan's finance minister, Jun Azumi, said he met with little resistance to further intervention at the G7 meeting. Japan last intervened in the currency market on August 4 to topple the yen from a record high against the dollar.

"We expect Japan's authorities will act again unilaterally if dollar/yen tests its post-war lows of 75.95 yen. As a result we think investors should instead keep favouring the dollar now when they seek safe-haven currencies," UBS's Mohi-uddin said.

The dollar index .DXY, which measures its performance against a basket of six currencies which includes the euro, yen and sterling, rose to its highest in six months at 77.276 on Friday.

In a bullish signal, it closed above its 55-week moving average at 77.01. Resistance was seen at the base of the weekly Ichimoku cloud around 78.05, while strong resistance was at the 38.2 percent retracement of the index's fall from a high of 88.71 on June 7, 2010 to a low of 72.696 on May 4, 2011 which comes in at 78.80.

The dollar is set to make strong gains against the euro, which last week fell to its lowest in six months, at around $1.3627. The euro posted its biggest weekly fall since mid-August last year, with many looking for it to test $1.35 in the near term.

EURO ON THE WAY DOWN

The euro also fell sharply against the safe-haven Japanese yen on Friday, dropping to its lowest in nearly a decade. It ended the week at 105.85 yen, and a break below the psychologically key 105.00 level could see it drop towards 100 yen in coming weeks, analysts said.

Howard Wheeldon, a strategist at BCG Capital Partners, said the weekend's developments provided little confidence to investors in the euro zone, and the coming week will see increased volatility in stock markets.

That could hurt the euro more in coming days.

The euro was sold off last week after European Central Bank President Jean-Claude Trichet shifted the monetary stance from a hawkish bias to a more neutral one.

The shock resignation of ECB board member Juergen Stark, which highlighted sharp divisions within the central bank over purchases of government bonds in the secondary market and concerns that Greece may not secure its latest aid tranche from the IMF/European Union, also added to the euro's woes.

Investors will also likely be unsettled by a weekend report from Der Speigel magazine that the German finance ministry was looking at scenarios that included Greece abandoning the euro.

Indeed, latest data from the Commodity Futures Trading Commission showed speculators added to their bearish bets against the euro in the week to September 6.

"With $1.40 going last week, I think the euro could fall to $1.35 in the next few days," said Michael Derks, chief strategist at FXPRO. "The dollar be will the currency that will gain from safe-haven inflows given the risk of intervention in the yen and the line in the sand that has been drawn on the Swiss franc by the Swiss National Bank."

On the charts, near term support was seen at $1.3426, a low hit on February 14 and from where the euro started its move to a 17-month high at $1.4939 struck on May 4.

EmpireGlobalfx

09-11-2011, 07:53 PM

(Reuters) - Asian stocks fell and the euro remained under pressure on Monday after the resignation of a top German European Central Bank board member cast further doubt on Europe's ability to tackle its worsening sovereign debt crisis.

Oil prices slipped and the dollar gained broadly as the worries about euro zone's woes combined with fears about flagging world growth to ensure no let up in the gloom that has gripped global markets for much of the past six weeks.

"People are quite nervous about Greece and other countries in the European area, so that is why investors are escaping to the dollar," said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd. "It's risk aversion."

Juergen Stark's plan to resign from the ECB's board underscored the internal divisions over its bond-buying program -- one of the central bank's main weapons in fighting the debt crisis by forcing down yields of country's under pressure from the bond markets.

Japan's Nikkei .N225 fell 2.2 percent, while the MSCI's broadest index of Asia Pacific shares outside Japan fell around 1 percent.

Data from Lipper showed a brief flirtation with stocks at the end of August has waned, with less than a net $600 million flowing into U.S. equity funds in the ended September 7, compared with a net inflow of $6.3 billion in the previous week.

MSCI's All-Country World index is now 19 percent below its 2011 high set in May, not far from the 20 percent decline that is the rule-of-thumb definition of a bear market.

The euro was struggling at around $1.36, after a sharp slide at the end of last week, while the dollar index .DXY, which tracks the greenback against a basket of major currencies, firmed around 0.3 percent.

U.S. crude slid by 87 cents on Monday to $86.37 a barrel and Brent crude eased as much as 97 cents to $111.80.

Gold, a traditional safe haven at times of market volatility, was steady around $1,856 an ounce.

EmpireGlobalfx

09-12-2011, 06:24 AM

(Reuters) - World shares tumbled nearly 2 percent on Monday with European equities at 26-month lows, down more than 20 percent this year, as investors worried Greece would default amid signs of rifts among euro zone policymakers.

Japan's Nikkei closed at a 2-1/2 year low.

Yields on long-term core euro zone debt, home to safety plays during times of strife, fell sharply and the euro slumped against the dollar and yen.

The cost of insuring peripheral euro zone debt against default rose, to record levels for Greece and Portugal.

Markets were partly reacting to the failure over the weekend of the Group of Seven industrialized nations' finance ministers to come up with more than a stated commitment to help turn the world economy around.

But they were mainly focused on the euro zone debt crisis.

"Europe is not just lurching from one crisis to another. It is lurching into a new one before the previous one is solved," said Makoto Noji, senior strategist at SMBC Nikko Securities.

The pan-European FTSEurofirst was down 2.6 percent.

German policymaker Juergen Stark's resignation from the European Central Bank's board on Friday underscored internal divisions over its bond-buying program -- one of the bank's main weapons in fighting the debt crisis, by forcing down yields on debt of countries under pressure from the bond markets.

At the same time, worries bubbled up again over Greece's ability to meet commitments to qualify for more bailout money.

Fears about a Greek default rose last week after senior politicians in German Chancellor Angela Merkel's center-right coalition started talking openly about it. Greece, meanwhile, confirmed on Monday that the country has cash for only a few more weeks.

International lenders threatened last week to withhold the sixth bailout payment of about 8 billion euros ($11 billion) because of the country's repeated fiscal slippage.

The Greek government announced on Sunday a new property tax to make sure it would meet its budget targets and qualify for the tranche.

"The Greek situation is dominant, chances of some sort of default have increased -- the Germans seem to be hinting at that," one bond trader in Europe said.

EURO SINKS

The euro dived to a seven-month low against the U.S. dollar and a 10-year trough versus the yen.

"The outlook for Greece is almost completely unknown. Support for the country appears to be shaking. The market is starting to think the worst could happen," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking.

"It's as if policymakers are starting to prepare for that," Kitakura said.

The euro fell as low as $1.34949, its lowest since February.

On bond markets, Italian and Spanish government bond yields rose, feeling the pressure of upcoming debt supply and the rising concern over Greece.

EmpireGlobalfx

09-13-2011, 01:03 AM

(Reuters) - Asian stocks rose and the euro edged off a seven-month low on Tuesday after a report that Italy may get financial support from China sparked a bout of short-covering but did nothing to ease fears that Europe is sliding into another banking crisis.

Growing expectations of a Greek debt default, sharp drops in European shares -- especially French banks due to their sovereign exposure -- and a surge in Italian bond yields meant sentiment remained fragile and any rally was likely to be short lived.

"There are still enormous challenges facing the European system at this point and fears around a default in Greece are very high and it's hard to see that changing any time soon," said Greg Gibbs, a strategist at RBS in Sydney.

The dollar eased broadly, helping lift dollar-denominated commodities such as gold, copper and crude oil.

Japan's Nikkei share average .N225 rose 1 percent and Australia's benchmark index .AXJO gained 0.9 percent, while MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent. .T .AX

The MSCI index is nearly 20 percent below its 2011 high reached in April. A fall of 20 percent or more is the generally accepted definition of a bear market.

U.S. stocks bounced back late in Monday's session after a report that Italy could get financial support from China tempered investors' worst fears over the euro zone debt crisis. .N

S&P 500 index futures rose 0.3 percent in Asia on Tuesday.

Market sell-offs like those of the last six weeks -- driven by the euro zone crisis and fears of renewed recession in the United States -- are often punctuated by "short-covering" rallies, when traders buy to realize profits on bets that an asset would fall in price.

EURO CRISIS

The Financial Times reported that Italy had asked China to make "significant" purchases of Italian debt. Italy has seen its borrowing costs spike in recent weeks on doubts about the political will in Rome to tackle its swollen debt.

Greece warned on Monday it would run out of cash next month without the next tranche, around 8 billion euros, of a bailout loan. Euro zone policymakers have threatened to withhold the money as patience with Athens' repeated fiscal slippages wears thin.

A growing number of policymakers, as well as market economists, are convinced it is only a matter of time before Greece, which keeps falling behind on its fiscal targets after two EU/IMF bailouts, will have to default.

"The contagion impact of a default will be severe, because next in the firing line will be Italy, Spain and it will take in the whole of the European banking sector too," Suki Mann, a strategist at Societe Generale, wrote in a note.

In currency markets, the euro climbed to around $1.3685 against the dollar after falling to a seven-month low of $1.3495 in the previous session, though weak demand at an Italian bond auction later in the day may see the single currency fall back again.

"All eyes are squarely on that seven-month low around $1.35 hit overnight," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.

"The downtrend in the euro will surely continue, but my sense is that unless the Italian bond auction goes extremely badly, this level may hold today."

The dollar index .DXY, which tracks the U.S. currency against a basket of major peers, fell 0.7 percent.

The weaker greenback made dollar-denominated assets cheaper for holders of other currencies.

Copper rose 1 percent to $8,840 a tonne and oil also gained, with U.S. crude up 0.9 percent at $89 a barrel and Brent crude rising 0.6 percent to $112.90, although traders remained wary.

"This is a shallow bounce because of Wall Street ending higher, so there is some confidence returning, but I don't think anybody would be putting any big positions given the global situation," said Victor Say, an analyst at Informa Global Markets in Singapore.

Gold bounced about 1 percent to around $1,831 an ounce, after dropping by more than 2.5 percent in the previous session, also supported by the safe-haven appeal that drove it to a record high of $1,920.30 last week.

"There is a slow-motion train wreck going on in Europe at the moment, which is going to be relatively supportive of gold," said Nick Trevethan, senior commodities strategist at ANZ.

"All the factors that have been supporting gold for the past few months are still there. Nothing has changed."

EmpireGlobalfx

09-13-2011, 10:17 PM

(Reuters) - Spot gold edged higher on Wednesday, supported by worries about a worsening debt crisis in euro zone, while short-term bearish technicals are likely to cap gains.

FUNDAMENTALS

* Spot gold inched up 0.2 percent to $1,837.44 an ounce by 0026 GMT. U.S. gold rose 0.6 percent to $1,841.80.

* Technical analysis suggested that U.S. gold could move sideways in the next few weeks, while commodities as a whole may correct moderately by the end of the year, said Reuters market analyst Wang Tao.

* Fears over the euro zone's debt crisis hit new heights on Tuesday, with U.S. President Barack Obama pressing the bloc's big countries to show leadership as talk of a Greek default escalated and markets heaped pressure on Italy.

* Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, edged lower to 1,241.311 tones by September 13 from a 2-1/2-week high of 1,241.917 tones on September 9.

* Barrick Gold, the world's largest gold producer, plans to invest $550 million in Peru by 2013, the head of Barrick Misquichilca, the company's Peruvian subsidiary, said on Tuesday.

MARKET NEWS

* U.S. stocks gained on Tuesday as investors bought shares beaten down in recent weeks and bet European leaders would take action soon to ease the Greek debt crisis. .N

* The euro held onto modest gains against the greenback in Asia on Wednesday, as bears trimmed short positions just in case EU leaders surprised by making progress on Greece in a conference call later in the day.

EmpireGlobalfx

09-14-2011, 10:54 PM

(Reuters) - Asian stocks bounced on Thursday yet investors remained wary that obstacles which policymakers face in Europe could weigh on the euro and Asian currencies in the medium term.

The early gains in Asia, tracking the rise in global markets, came one day after the MSCI Asia ex-Japan index .MIAPJ0000PUS hit a 14-month low.

On Thursday, that index was up 1.2 percent. Japan's Nikkei markets/index?symbol=jp%21n225">.N225 was up 1.7 percent with chipmaker Elpida (6665.T) up 6.1 percent.

The euro rebounded to $1.3750, easing back from a high above $1.3800 reached after Germany and France voiced their commitment to keeping Greece in the euro zone, giving traders a chance to find better levels to short the common currency.

Optimism over tentative steps to resolve Europe's debt crisis trumped weaker-than-expected retail sales data in the U.S., helping the S&P 500 finance/markets/index?symbol=us%21spx">.SPX close up over a percent.

Some traders attributed the gains on Wall Street to short-covering ahead of inflation numbers in the U.S. with Europe still the clear focus.

European finance ministers have been warned confidentially of the danger of a renewed credit crunch as a "systemic" crisis in euro zone sovereign debt spills over to banks, according to documents obtained by Reuters on Wednesday.

The gains in Asian stocks put safe-haven bets like U.S. Treasuries and gold on the backfoot.

Spot gold steadied around the $1,820 an ounce level after having fallen nearly one percent in the previous session. It hit a lifetime high of around $1,920 an ounce last week.

Yields on ten-year U.S. notes held at 1.99 percent, not far away from its lowest levels in at least 60 years of around 1.91 percent tested last Friday.

Brent crude for October delivery settled at $112.40 a barrel on Wednesday, gaining 51 cents, snapping four days of losses while U.S. October crude held below the $89 per barrel line.