View Full Version : Empire Global FX ECN Broker: Trading research & Money Management Center

09-15-2011, 05:05 AM
Empire Global FX ECN broker grants you access to deep liquidity pools with MT4 and MAM platform and over 200 CFD'S for unlimited trading, including currencies, commodities, metals, indices, shares and etf's.

Among the various advantages you will find in our broker you can count:

- Pure ECN environment, with a broker that stands by your side.
- Money Management Center.
- Over 200 instruments for trading.
- Unlimited trading, no restrictions.
- Ea's allowed.
- FREE EA! Through partnership with Danish developers Straticator.
- Lightning execution, ideal for agressive scalpers.
- Slippage control.
- Pre-paid card for withdrawals.
- Tight, variable spreads.
- Very deep liquidity, from 10 liquidity pools.
- Day trading managed accounts with full liquidity.
- MAM module for money managers.


Welcome to Empire Global FX! :cool:

09-15-2011, 05:13 AM
Empire Global FX on the cutting edge with Trading Research and Money Management Centre.

Our brokerage features its very own Trading Research Centre in Varna, Bulgaria. The Centre works with our Money Management Department to develop and apply new trading strategies under real market conditions.

What the Centre does.
The Research Centre is divided into two different departments. One department aims to develop and improve trading strategies, while the second works on how best to apply the new trading techniques.

Our research is applied exclusively by our Money Managers. This means that as our client, you benefit from the latest trading systems with the best possible results for your account, including:

Risk mitigation at almost insignificant levels

Day- trading systems, with daily results for you

Constant improvement of market conditions, resulting in even better results in Money Management

Improvement of our ECN environment to get better liquidity and prices daily.

09-15-2011, 05:17 AM
Money Management.

Apply for our Money Management Service and start benefiting from a professional trading service. The latest research, the best ECN connection and our professional Money Managers will work for you so you profit from the markets.

Why choose a Money Management Service?

It is often the case that people new to market trading trade blindly or irrationally. Our professionals can help you grow your investment while you learn the latest trading techniques. If you do not have the time to trade the markets, we can assist you. Our service has real-time monitoring and full liquidity so you can withdraw funds or profits at any time. For your security, funds are fully audited on every deposit or withdrawal.
If you want to diversify your investments, we are here to help you. You can benefit from potentially large earnings in the market while reducing risk and increasing the possibility of profit.

09-15-2011, 05:22 AM
Grow your expertise in the financial industry with us. Empire Global FX offers a unique opportunity to join our growing our team of professionals while you run your own representative office.

What do I need to run a representative office of Empire Global FX?

In order to set up an associate office, you require:

To have a business profile and knowledge of financial services

To be at least bilingual (to speak English and you local language if applicable)

To be a team player, reliable in your duties and to have leadership skills

To have the ability to form and run customer portfolios

To have the ability to reach the goals set by the brokerage

To be a neat professional, and to apply all the rules and procedures set by the brokerage

The benefits of starting an associate office include:

Running a your own professional ECN brokerage office

Offering a top service to customers, including global market access and the latest technology in pure a ECN environment

Exclusive payment services and solutions for traders

A unique Money Management service provided by our Trading Research Team

Generating significant revenue by running customer portfolios, while customers benefit from the best market conditions and Money Management available

The possibility of renewing your partnership upon accomplished goals

We are currently looking to establishing representative offices in locations in Europe and Asia.

09-15-2011, 07:55 AM
Empire Global FX ECN now allows you to make deposit in 6 new different currencies.

Apart from facilities to deposit locally all over Europe in EUR; GBP, USD (england), and CHF (switzerland), our Broker now allows deposits in Japanese Yen, Hong Kong Dollar, Australian Dollar (with local deposit), New Zealand Dollar, Swiss Krone (with local deposit) and Thai Baht.

Credit card deposits will be available soon, with more currencies and local deposit facilities!

09-18-2011, 12:48 PM
Great news for our friends and customers from Hungary, Poland, Bulgaria and Malaysia! Apart from the new correspondent banks in different countries and new currencies ( EUR; GBP, USD (england), and CHF (switzerland), Japanese Yen, Hong Kong Dollar, Australian Dollar (with local deposit), New Zealand Dollar, Swiss Krone (with local deposit) and Thai Baht). , our Broker is now working with local Banks in these 4 new countries!

This means that if living in any of these 4 locations, you can now invest in the world markets through local deposits with our new correspondent banks.

We expect to have our corporate website translated soon into your local languages for your comfort and convenience.

Good trades!!!

09-18-2011, 03:59 PM
(Reuters) - Even after a rare four-day rally in world stocks, investors are unlikely to let their guard down in a week filled with heavy U.S. and euro zone policy risks that could potentially disappoint again and trigger a sell-off.

There is no doubt gloom is widespread. However, investors are also beginning to realize that betting too strongly on a collapse of financial markets with policymakers poised for action to combat global crisis may be unwise.

Thursday's coordinated action by five major central banks to add liquidity to a European banking system struggling with its dollar funding needs has lifted world stocks, measured by MSCI .MIWD00000PUS, from a one-year low.

Focus in the coming week will be on a policy meeting of the U.S. Federal Reserve. The Fed is posed to increase downward pressure on long-term interest rates to spur the recovery, reviving "Operation Twist," first undertaken in the 1960s.

Despite the rally in the past week, the MSCI index is still down more than 9 percent since January and the third quarter performance looks set to be the worst since the June-September period in 2010.

Furthermore, against conventional wisdom, total returns on a 10-year rolling basis on government bonds are higher than on equities. This is providing much food for thought for long-term investors.

"In a very short term, positive news may come out and policymakers will announce something. Economic data is not as bad as falls in the market would've suggested. So over the next 4-6 weeks we could get slightly higher," said Jeremy Beckwith, chief investment officer at wealth manager Kleinwort Benson.

"Everyone is hoping policymakers are coming up with good ideas, although it's hard to see what good ideas are... The euro zone is such a huge issue and one day you could wake up and find out Greece has defaulted and get caught out. So our position is to underweight risk."

The euro rose more than 1 percent against the dollar last week, its biggest weekly gain since July. But analysts expect the single currency to come under pressure again in the coming week as EU finance ministers again failed to eliminate fears of Greek sovereign default at their weekend meeting.

EU finance ministers broke no new ground in dealing with the euro zone debt crisis and made no decision on whether to give more firepower to the 440-billion euro bailout fund, suggested by U.S. Treasury Secretary Timothy Geithner.

"The euro zone's medium term structural issues of excessive sovereign debt and banks' exposure remains unresolved," UBS said in a note to clients.

"Thus investors will continue to worry about the risk of Greece defaulting on its bonds over the next couple of quarters as well as the efforts of Spain, Portugal and Italy to tackle their own public finances. This will also keep investors fearful over the solvency - not just liquidity - of euro zone banks."

The coming week promises a heavy dose of policy actions.

Finance ministers of the BRIC emerging countries -- Brazil, Russia, India and China -- meet in Washington on Thursday, on the sidelines of the International Monetary Fund meeting, to discuss steps to offer support to the euro area.

If they buy euro-denominated bonds -- as suggested in preliminary talks -- this may help turn around sentiment, after the European Central Bank's 70 billion euro operation failed to stop the crisis from spreading to Spain and Italy.

Investors will also keep a close eye on U.S. President Barack Obama who is presenting a deficit-reduction plan on Monday that will cover the cost of his recent jobs bill.


There are signs monetary policy is shifting from withdrawing stimulus toward further easing at a global level -- which would also be supportive for asset markets in the long term.

The Fed has already pledged to keep its policy rate at record lows until at least mid-2013 and, in Operation Twist, may introduce a program involving buying long-dated Treasuries to lower mortgage rates and other long-term borrowing costs.

The Bank of Japan eased policy in August by boosting asset purchases and the ECB has signaled that it had halted a cycle of interest rate rises begun just five months ago.

Even in emerging markets, the tightening cycle seems to be nearly over. Brazil and Turkey have cut interest rates, Mexico and Chile's central banks have left the door open for easing, Israel and South Africa are expected to cut rates.

"Risk markets will rebound when everyone is short risk, the worst is priced in, data stop surprising on the downside and policymakers take decisive counter action," JPMorgan said in a note to clients.

"Our perception is that most investors are sitting on the fence and that there is no surplus of risk underweight positions... Policymakers across the world will likely try their best to prevent another contraction, and it is here that upside surprises could come from."

09-18-2011, 04:29 PM
(Reuters) - Greek Prime Minister George Papandreou chairs a cabinet meeting on Sunday to decide on more austerity measures to secure continued funding under an international bailout.

EU and IMF inspectors are holding a conference call with Finance Minister Evangelos Venizelos on Monday to hear what measures Greece will take to plug this year's shortfall in the budget before they release an 8 billion euro ($11 billion) loan tranche it needs by October before it runs out of money.

Papandreou canceled a planned visit to the United States on Saturday to deal with the deepening crisis at home as euro zone partners made clear further funding for the debt-ridden country would hinge on adhering to agreed fiscal targets.

"The meeting is set to examine measures from public sector layoffs to more pension cuts," said a government official on condition of anonymity.

Last week, the government blamed the shortfall on a deeper-than-expected recession and decided to put a new tax on real estate in the hope of collecting about 2 billion euros annually.

But international inspectors, known as the troika, expressed doubts this one-off tax measure would work and demanded more details on how the government hoped to catch up this year and the next.

"The troika thinks the recently announced property levy will not suffice to plug the budget hole and is pressing for measures on the spending side -- cuts in public sector wages and employment," said a second government official who asked not to be named.

The conservative New Democracy opposition has criticized the government for overtaxing the economy and driving it into a tail spin.

Its leader, Antonis Samaras, called for snap elections on Saturday saying the policy mix was wrong and was not yielding any results despite peoples' sacrifices.

"A renegotiation with our lenders to restart the economy is a condition to get out of this crisis," Samaras told a news conference on Sunday.

International lenders are also concerned with the lack of political consensus in Greece on the measures needed to emerge from the crisis.

The conservatives have been buoyed by growing public discontent after two years of austerity measures and are proposing tax cuts and growth boosting measures instead.

Papandreou's socialists have a majority in parliament but political analysts say internal dissent and public unrest, such as strikes and violent protests, may force snap elections.

Lenders have long warned against one-off measures and more taxes as a way out of the crisis shaking the euro.

They have asked for urgent reforms and privatizations to make the economy more competitive and a reduction in the bloated public sector.

09-19-2011, 04:52 AM
(Reuters) - President Barack Obama, in a rallying call to his Democratic base, will vow on Monday to veto any cuts in Medicare if Congress fails to raise taxes on corporations and wealthy Americans to curb the deficit.

Obama's recommendations to a congressional "super committee" would deliver deficit savings of more than $3 trillion over the next decade, his aides said, with roughly half of those savings coming from higher tax revenues.

Under fire from Democrats to defend Medicare and Medicaid healthcare programs as he seeks to galvanize supporters ahead of the election next year, Obama will demand that all Americans share the burden of controlling the budget.

"He will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share," a senior administration official told reporters.

Medicare, for elderly and disabled Americans, and Medicaid for the poor, are viewed by analysts as the biggest contributors to the long-term deficit.

The so-called super committee of six Democrat and six Republican lawmakers is seeking at least $1.2 trillion in new budget savings by November 23. That is on top of $917 billion in 10-year savings agreed in an August deal to raise the debt limit.

Obama will lay out his recommendations in the White House Rose Garden at 10.30 a.m. EDT on Monday.

"In his remarks tomorrow, the president will make clear he is not going to support any plan that asks everything of some Americans, nothing of others," the official said.

The plan will include a "Buffett Rule," named after billionaire investor Warren Buffett, that would set a minimum tax rate for anyone making more than $1 million a year.

A clearly populist step, the tax would only apply to a tiny minority of the millions of Americans who file tax returns every year. But White House aides said it would set a standard of fairness that would yield more revenue if it became law.

Congress can ignore his suggestions. With the House of Representatives controlled by Republicans who oppose any tax hikes, they are likely to be declared dead on arrival.

Obama's opening bid to find deficit savings by December 23 to head off painful automatic cuts will be under close scrutiny.

09-20-2011, 04:31 AM
(Reuters) - Standard and Poor's cut its unsolicited ratings on Italy by one notch on Monday, warning of a deteriorating growth outlook and damaging political uncertainty, in a move that took markets by surprise and added to pressure on the debt-stressed euro zone.

S&P's downgraded its unsolicited ratings on Italy to A/A-1 from A+/A-1+ and kept its outlook on negative, sending the euro more than half a cent lower against the dollar.

The agency, which put Italy on review for downgrade in May, said that the outlook for growth was worsening and there was little sign that Prime Minister Silvio Berlusconi's fractious center-right government could respond effectively.

Under mounting pressure to cut its 1.9 trillion euro debt pile, the government pushed a 59.8 billion euro austerity plan through parliament last week, pledging to balance the budget by 2013.

But there has been little confidence that the much-revised package of tax hikes and spending cuts, agreed only after repeated chopping and changing, will do anything to address Italy's underlying problem of persistent stagnant growth.

"We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," S&P's said in a statement.

"Furthermore, what we view as the Italian government's tentative policy response to recent market pressures suggests continuing future political uncertainty about the means of addressing Italy's economic challenges," it said.

Berlusconi's coalition has been plagued by infighting and policy disagreements and the prime minister himself has been battling a widening prostitution scandal which has distracted the government and badly damaged his personal credibility.

On Monday, Italian sources said the government was preparing to cut its growth forecast to 0.7 percent in 2011 from a previous forecast of 1.1 percent and cut the 2012 forecast to "1 percent or below."


Italy, the euro zone's third largest economy, has been dragged to the center of the debt crisis over the past three months as concern has grown over a debt burden equal to some 120 percent of gross domestic product.

But the move from S&P came as a surprise as the market had thought Moody's was more likely to downgrade Italy first. Moody's last week said it would take another month to decide on its action.

"Was it anticipated tonight? No. But again is it really shocking given what yields have done?" said James Paulsen, Chief Investment Strategist, Wells Capital Management.

Only the European Central Bank, which has been buying Italian bonds to prop up the market, has kept Rome's borrowing costs from spiraling out of control, but yields have crept back up steadily since the ECB stepped into the market in August.

On Monday, yields on Italian 10 year bonds stood at 5.59 percent, within sight of the levels above 6 percent they reached just before the ECB intervention.

The intervention has caused growing strain within the central bank, causing Chief Economist Juergen Stark to announce his resignation and prompting open opposition from the Bundesbank.

The S&P downgrade, which came as Greece struggles to meet demands from lenders for yet more austerity measures, underlined the mounting seriousness of the euro zone crisis, which has seen global markets hammered.

"It's just more of the same negative news," said Stephen Roberts, a senior economist at Nomura in Sydney.

"It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here," he added, pointing to a sharp fall in the Australian dollar on the news. The Aussie dollar is influenced by expectations for commodity prices and so sensitive to the outlook for global demand.

S&P 500 futures also dropped 0.7 percent and early hopes for a bounce in Asian shares on Tuesday looked to be still-born now.

European stocks had already slid on Monday, while yields on Italian and Spanish bonds rose sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks.

International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid running out of money within weeks as investors spooked by political setbacks in Europe dumped risky euro zone assets.

09-21-2011, 05:33 AM
(Reuters) - Gold's rally will extend beyond $2,000 an ounce in the next year, but won't match the record-breaking 50 percent surge of the last 12 months, according to an annual survey of gold investors and analysts at the world's biggest bullion traders event.

With no let up seen in the financial markets uncertainty that fanned the safe-haven investment spree, bullion is expected to rise to $2,019 an ounce by November 2012, according to an anonymous survey of delegates at the conclusion of the London Bullion Market Association's (LBMA) annual conference on Tuesday. That is about 12 percent above current levels.

If history is any guide, the consensus view from the biggest gathering of gold market traders, experts and users may prove too conservative -- for the past three years, prices have outpaced the survey. A year ago delegates predicted gold would rise to $1,450 in 12 months; on Tuesday it hit $1,800.

Most were optimistic on the outlook in spite of the past month's extraordinary volatility, which has caused some traders to question gold's credentials as a haven of stability. But few expect a repeat of the past year's torrid rally.

"We've heard so much about the perfect storm that has driven gold to where it is now, that the odds of it increasing a similar amount have to be a lot less," Robin Bhar, an analyst at Credit Agricole, told Reuters at the conference.

"There are good reasons why gold has been taken to where it has, but can we really assume that those factors are going to remain, for it to power on to $3,000, $4,000? We are assuming global GDP will grow and the fear factors will lessen, so there will be less reason to be owning gold."

Well over 500 analysts, traders, fund managers, refiners and miners, as well as official sector and wider industry delegates, attended the meeting, one of the most significant in the precious metals calendar.

Attendance at the meeting has swelled as gold has become an increasingly sought-after asset in recent years, with prices hitting a record $1,920.30 an ounce on September 6. They have since retreated, however, and are down 2.5 percent so far this month after a period of intense volatility.

The view was largely similar at a simultaneous conference of major gold miners halfway across the continent, in Colorado Springs, where executives from the likes of Newmont Mining Corp (NMC.TO) (NEM.N) and AngloGold Ashanti Limited (ANGJ.J) saw prices rising to $2,200 an ounce and beyond.

"I'm a big believer that all of the ingredients for a higher gold price are there: geopolitical risk, economic uncertainty, inflation," Yamana Gold (YRI.TO) Chief Executive Peter Marrone said on Monday. "It just seems natural to me for gold prices to go to substantially higher levels."


Analysts have suggested this volatility pointed to overstretched conditions, but delegates disputed that it marked the start of a deeper correction.

"The higher levels of volatility is a function of increased economic uncertainty... but it doesn't portend a reversal of the gold market," HSBC analyst Jim Steel, who has a 2012 gold forecast of $2,025 an ounce, said on the sidelines of the conference.

"The macroeconomic climate remains positive for gold. The fact that there's a high level of volatility in the market doesn't take away from its safe-haven status. You've got to look at it over time compared to paper assets. If it were treated as a currency, it would have outperformed every other currency in the last 12 months."

John Fallon, president of hedge fund Pia Capital Management, said gold is "in an orbit by itself" among commodities and remains his favorite investment in the sector, due to its high liquidity and the support offered by solid physical demand.

"Gold still has our undivided interest," he told Reuters at the conference. "We favor both the (gold) ETFs and the actual spot OTC market."

There were few outright bearish views.

Christoph Eibl, CEO and founding partner of the $2 billion Swiss commodity hedge fund Tiberius Group, was a rare voice of stern caution, warning that gold could fall back below $1,000 an ounce in line with production costs for miners.

But even Eibl, who considers himself a converted contrarian after years as an unabashed gold bug, wasn't prepared to bet big against bullion's newfound popularity.

"We know it's too dangerous to stand in front of a truck that may run you over," he said.

Unsurprisingly, delegates expected leading gold consumers China and India to remain main demand drivers for the yellow metal, with the World Gold Council estimating that Chinese demand could grow 10 percent this year.

Chinese consumers are willing to spend more on gold jeweler as product quality and disposable income increase, and due to the investment function of gold, Wai-Chan Chan, a partner at China's OC&C Strategy Consultants, said.


Among other precious metals, delegates forecast a platinum price of $2,163 an ounce in November next year, giving it a touch more upside than gold from its current price near $1,770 an ounce. Palladium was forecast at $826 an ounce, compared to its current $710.

Platinum group metals prices will have to rise, or the rand to weaken, to ease pressure on South African platinum miners, Aquarius Platinum chief executive Stuart Murray argued in a well-received presentation on Monday.

Once tax, royalties, costs and investments were taken care of, he said, shareholders and capital providers were seeing a return of less than 3 percent.

"The reality is that for us, for the risks that are taken, for the effort that goes into mining an ounce of platinum, returns greater than 3 or 4 percent are needed," he said.

Delegates forecast silver prices at $47 an ounce next year.

Silver was favored by Claymore Investments president Som Seif, who argued in a presentation on Monday that rising demand from the industrial and investment sectors and supply constraints argued for higher prices.

However, analysts said investors were likely to remain wary of silver after its sharp correction from record highs earlier this year. Prices lost a third of their value in the six trading sessions after they peaked near $50 an ounce in April.

Nonetheless, the Royal Canadian Mint said its silver bullion sales were on track for a 30 percent rise this year, taking them to 25 million ounces.

09-22-2011, 07:45 AM
(Reuters) - The Nikkei stock average lost more than 2 percent on Thursday after the Federal Reserve cited significant risks to the U.S. economy, while Softbank Corp (9984.T) plunged to its lowest since July 2010 on a report it would lose exclusive rights to sell the iPhone in Japan.

Some strategists said selling could intensify after September 27, which is the last day for investors to buy many Japanese stocks and still get dividends on them for the April-September half year.

"Once the dividend-buying factor is no longer supporting the market next week, we could see a tough situation, and the Nikkei could break below 8,500," said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities.

Market participants said Tokyo's losses were also due in part to domestic position adjustments ahead of the end of the April-September half-year this month, when investors often lock in profits.

But market players say attractive valuations still support the Tokyo market. The Nikkei has lost more than 15 percent since early July, when it last traded above 10,000, while the Standard & Poor's 500 Index markets/index?symbol=us%21spx">.SPX lost about 13 percent in the same period.

The Nikkei finance/markets/index?symbol=jp%21n225">.N225 ended down 2.1 percent at 8,560.26. It was trading below its 25-day moving average of 8,756, but remained above support at its September 14 low of 8,499.34, which was its lowest intraday level since March.

The broader Topix index .TOPX slipped 1.7 percent to 744.54.

Also weighing on Japanese shares on Thursday were reports from China that suggested the world's No. 2 economy may not be able to pick up the slack from flagging U.S. and European growth.

A preliminary survey showed China's manufacturing sector contracted for a third consecutive month in September, while separate indicator showed inflation picked up.

"The China data just adds to negative factors already on everyone's mind, such as U.S. economic worries, the yen's strength against the dollar and the euro, as well as Europe's debt problems and whether Greece will default," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.


The decline in the Nikkei was, however, more moderate than Wall Street, which slid 3 percent for its worst drop in a month after the Fed's announcement, with selling accelerating as volume spiked in the last hour of trading.

The Fed said there were significant risks to an already weak U.S. economy, including strains on global financial markets, even as it launched a new plan to lower long-term borrowing costs and bolster the battered housing market.

The U.S. central bank said it would sell $400 billion of short-term Treasury bonds to buy the same amount of longer-term U.S. government debt.

Shares of Softbank, which has long been the sole provider of Apple Inc's (AAPL.O) iPhone in Japan, plunged 12.3 percent to 2,282 yen. It earlier sank as low as 2,271 yen, its lowest point in 14 months, on a report that rival KDDI Corp (9433.T) will start selling the iPhone 5 in November.

KDDI initially rose, but then gains unraveled and its shares fell 0.8 percent to 624,000 yen. Softbank and KDDI were the heaviest-traded shares by turnover.

Financial shares fell after a slide in their U.S. counterparts, after Moody's Investors Service lowered debt ratings for Bank of America Corp (BAC.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) on Wednesday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.

Sumitomo Mitsui Financial Group (8316.T), the fifth-most traded issue by turnover, fell 1.8 percent to 2,089 yen, while Mitsubishi UFJ Financial Group (8306.T) shed 1.5 percent to 332 yen. Nomura Holdings (8604.T) lost 4.8 percent to 281 yen.

Volume was slightly below recent daily averages, with about 1.70 billion shares trading on the Tokyo Stock Exchange's main board. That fell short of last week's average of 1.75 billion shares, but topped Wednesday's volume of about 1.44 billion.

09-23-2011, 10:02 AM
(Reuters) - Greece's finance minister has told lawmakers he sees three scenarios to resolve the debt crisis, including one involving an orderly default with a 50 percent haircut for bondholders, two Greek newspapers reported on Friday.

A government spokesman dismissed the reports, which said the other scenarios would be a disorderly default or the implementation of a second, 109 billion euro ($146 billion) bailout plan agreed between Greece and its lenders on July 21.

Newspaper Ta Nea, citing a person who heard a speech by Finance Minister Evangelos Venizelos to ruling Socialist party lawmakers, quoted him as saying "it would be dangerous to request" the 50 percent haircut.

He also said: "This would require an agreed and coordinated effort by many," the paper reported.

A finance ministry spokeswoman said she could not comment on the reports, but deputy government spokesman Angelos Tolkas said the government would stick to the bailout plan agreed between Greece and its lenders two months ago.

"What we are choosing is (for Greece) to stay in the heart of Europe by implementing the July 21 decisions," he said. "The big challenge is to avoid any default or collapse."

Two Socialist deputies who said they were present at the speech in which Venizelos tried to rally support among the ruling party for a new wave of austerity measures, denied that he had floated the 50 percent haircut scenario.

"I categorically deny it. There is no such scenario," lawmaker Theodora Tzakri told Reuters.

Venizelos is traveling to Washington for a weekend meeting with inspectors from Greece's lenders, the International Monetary Fund and the European Union.

The reports came as Moody's Investors Service cut the credit ratings of eight Greek banks. It cited a struggling domestic economy and falling deposits among reasons for the move, which markets had expected.

Moody's said the outlooks for all the ratings remained negative. The downgrade concluded a review begun on July 25.

Some European banks in July agreed to contribute to a rescue plan for Greece by taking a 21 percent loss on bonds maturing before 2020.

The deal, which involves banks swapping debt for longer maturity bonds of 15 or 30 years, prompted banks to take a loss on their bonds in second-quarter results.

The European sovereign debt crisis has kept banks hostage to market worries about their capital strength and access to funding.

Earlier this month, Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann said many European banks could go under if they had to accept a haircut at current market valuations on their entire sovereign debt holdings instead of the 21 percent writedown that has been proposed on Greek sovereign debt.

09-26-2011, 07:47 AM
(Reuters) - Gold and silver prices tumbled on Monday, led by a nearly 10 percent drop in spot silver prices, as investors liquidated their positions on fears of an impending recession.

Spot gold fell more than 3 percent to $1,604.29 an ounce, wiping off gains over the past two months.

U.S. gold dropped 2 percent to $1,607.2, tracking the weakness in spot prices.

U.S. silver shed 6.6 percent to $28.10.

09-26-2011, 08:07 AM
(Reuters) - World stocks fell toward the previous week's 14-month low on Monday and the euro hit a 10-year low against the yen as doubts grew over how effective Europe's latest crisis-battling steps would be in containing the continent's sovereign debt problems.

European policymakers began working on new ways to stop fallout from Greece's near default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a U.S. economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

"Overall it's still an inconclusive situation -- no tangible action plan coming out of the weekend gathering so the net result will still be risk aversion," said Rainer Guntermann, strategist at Commerzbank.

MSCI world equity index fell 1.1 percent, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

"The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around," said Herv Goulletquer, analyst at Credit Agricole.

U.S. crude oil dropped 1.8 percent to $78.40 a barrel.

Bund futures were up nine ticks before trimming gains.

The dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361.

09-26-2011, 05:48 PM
(Reuters) - Global equities rose and bond prices fell on Monday on hopes that Europe was tackling Greece's debt woes.

Wall Street stocks recovered from early declines but European shares pared gains of more than 2 percent as concerns about Europe's ability to contain the crisis persisted. Markets have whipsawed for months over fears of European debt contagion and hopes that officials will finally contain the long-simmering crisis.

Still, European shares closed higher and broad indexes on Wall Street climbed more than 1 percent after a weekend meeting of European policymakers buoyed hopes for a larger bailout fund and the injection of money into weaker banks.

But euro zone officials played down reports of nascent plans to halve Greece's debts and recapitalize European banks, saying no such plan is yet on the table.

"Europe is a day-to-day story, it seems like we flip-flop back and forth over whether Greece is going to get the bailout they want and how concerned the markets are about Greece," said James Newman, head of Treasury and Agency trading at Keefe, Bruyette and Woods in New York.

"I don't see that ending any time soon," he said.

The euro extended losses and damped risk appetite after data showed U.S. new home sales fell 2.3 percent in August to a six-month low, a fresh sign of the struggling housing market -- a pillar of the U.S. economy.

The euro rebounded at midday to trade near break-even at $1.3507.

MSCI's all-country world equity index .MIWD00000PUS was little changed, down 0.01 percent.

The FTSEurofirst 300 markets/index?symbol=gb%21FTPP">.FTEU3 added 1.7 percent, following a 0.8 percent gain on Friday.

A broad measure of the U.S. stock market, the S&P 500 index, climbed into positive territory after an early loss, as did the tech-rich Nasdaq, while the Dow traded higher.

After three hours of trading, the Dow Jones industrial average finance/markets/index?symbol=us%21dji">.DJI was up 143.42 points, or 1.33 percent, at 10,914.90. The Standard & Poor's 500 Index .SPX was up 9.96 points, or 0.88 percent, at 1,146.39. The Nasdaq Composite Index .IXIC was up 1.00 points, or 0.04 percent, at 2,484.23.

Government debt prices on both sides of the Atlantic fell on reports the European Union was looking at boosting the region's 440 billion euro rescue fund and other ways to avert a Greek debt default.

The benchmark 10-year U.S. Treasury note was down 18/32 in price to yield 1.89 percent. The December Bund future shed 72 ticks to 137.40.

Brent and U.S. crude oil futures turned positive in volatile trading as the U.S. dollar weakened against a basket of currencies, improving investors' risk appetite.

Brent crude oil slipped below $104 a barrel as investors worried European governments and banks would be unable to resolve the euro zone debt crisis and avert wider financial contagion.

Brent futures for November rose 62 cents to $104.59.

U.S. light sweet crude oil rose 52 cent to $80.37 a barrel.

"These are very critical days and weeks ahead, reminiscent very much of the touch-and-go situation we were in back in 2008," said Edward Meir, senior commodities analyst at brokers MF Global. "The key difference this time around is that it is countries and not companies that are in danger of going bust."

Gold futures fell, on course for their largest monthly slide in three years as investors scrambled for cash in the face of mounting fear over the impact of a potential Greek default.

Spot gold prices fell $55.30 to $1,599.90.

09-27-2011, 10:57 AM
(Reuters) - European shares climbed to their highest in nearly a week on Tuesday on renewed hope that European policymakers will act to contain Greece's debt problems and resolve a regional debt crisis threatening to derail the world economy.

Financials, previously hard hit because of their exposure to peripheral euro zone economies, were among the top gainers, with the STOXX Europe 600 banking index .SX7P up 3.6 percent and insurers .SXIP up 4 percent. The indexes are still down 32 percent and 19 percent, respectively, in 2011.

"Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.

"But there are still a lot of concerns. Investors remain skeptical about the success of the measures being planned to resolve the euro zone credit crisis."

Thomson Reuters Datastream data also highlighted weak investor sentiment, with the ratio of put/call open interest on the Euro STOXX 50 markets/index?symbol=de%21SX5E">.STOXX50E -- down to 1.1139 to hover near a 10-month low -- showing that investors still have little faith in the rebound.

However, the FTSEurofirst 300 finance/markets/index?symbol=gb%21FTPP">.FTEU3 was up 2.3 percent at 918.57 at 0859 GMT, after hitting 921.63, the highest since September 21. It gained 1.8 percent on Monday on talk policymakers were drawing up plans to boost the size of the regional bailout fund, halve Greece's debts and recapitalize banks.

Despite the rally, the 30-day implied volatility for many European indexes rose, indicating investors' wariness of the situation.

The market awaited a policy meeting of the European Central Bank next week, with ECB officials saying on Monday they were keeping their options for a rate cut open. There were signals the bank could start offering 12-month, limit-free loans to banks again.

Auto shares rose on hopes a solution for the euro zone crisis could bring the global economy back on track and improve demand for vehicles. The sector index .SXAP rose 4.3 percent, while Daimler (DAIGn.DE) gained 5.1 percent after Credit Suisse upgraded its stock to "outperform" from "neutral."


The Euro STOXX 50 .STOXX50E, the euro zone's blue-chip index, was up 2.9 percent at 2,142.57 points, after climbing to its highest in more than a week earlier in the session.

Analysts said the index was likely to stay in a 2,000-2,200 range in the coming session. If the price stays above 2,098 -- a gap on the daily candlestick chart -- on a sustained basis, the index could test 2,200.

"It is worth noting a possible double-bottom formation on the daily chart should the price recover above 2,200, which has the measuring targets at 2,343 and 2,436. It is important to watch the next three closes," Dmytro Bondar, technical analyst at RBS, said.

Charts indicated that if the index closed below 2,000 in coming days, the move could suggest a drop to 1,810.

Equity investors face two major headwinds -- the European sovereign debt crisis which undermines the banking sector, and the threat of a global economic slowdown, with the former affecting the banking sector and the latter hurting miners.

"While the European problem has a lower probability of materializing but a massive tail risk, the potential for a premature end to this global expansionary cycle is much more probable," said Lothar Mentel, chief investment officer at Octopus Investments, which manages nearly $4 billion.

"Long-term investors should not get too stressed by mistiming concerns, given risk assets are much, much cheaper than they have been, which is what counts rather than miraculously hitting the absolute low of markets in this cycle," Mentel said.

Europe's STOXX 600 index currently trades at 8.4 times its expected earnings, below a 10-year average of 13.2, according to Datastream. This compares with a price-to-earnings ratio of 11 for U.S. S&P 500 index .SPX.

09-28-2011, 10:41 AM
(Reuters) - The euro edged up against the dollar on Wednesday after a top EU official indicated more would be done to resolve the debt crisis but was vulnerable to selling in the absence of concrete steps to beef up region's rescue fund.

In his State of the Union address European Commission President Jose Manuel Barroso said he expected the European Central Bank would ensure the stability of the euro area and indicated Greek banks could receive more help.

He also said the euro zone could issue jointly underwritten bonds once there was deeper integration.

The single currency rose to last trade up 0.2 percent on the day at $1.3623, and off a low of $1.3541. It pared some of the previous day's gains when it hit a high of $1.3668.

But market players warned the lift from Barroso's comments and a bounce the previous day on talk of proposals to leverage up the 440 billion euros European Financial Stability Facility, could just be temporary.

"Barroso sounded very optimistic but I don't think he will be able to give much lasting impetus to the FX market," said Lutz Karpowitz, currency analyst at Commerzbank.

"The recovery in euro/dollar and in equity markets amid speculation we might see leveraging of the EFSF was overdone. I cannot see how that proposal will work and there is likely to be some disappointment ahead in the market."

Event risk remains high for the euro this week, with the Finnish parliament voting on proposals to enlarge the EFSF as agreed back in July later on Wednesday, while Germany's parliament votes on Thursday.

Technical charts showed as long as the euro remained stuck below resistance at $1.3670/1.3710 the risk was for a break of $1.3540 support. A move below $1.3470 would open the door to new lows in the $1.3250/00 area.


Meanwhile, the yen rose, buoyed by Japanese fund repatriation and buying by Japanese exporters ahead of the quarter-end and the end of Japan's financial half-year.

The dollar slipped 0.5 percent to 76.42 yen, not far from a record low of 75.941 yen hit in August on trading platform EBS. Traders cited heavy system fund stops layered under 75.90 yen and real money stops under 75.70 yen.

The euro fell 0.3 percent to 104.13 yen paring some of the previous day's gains, when it climbed 1.1 percent. The euro had hit a decade-low versus the yen near 101.95 earlier in the week.

Some market players had been speculating Japan could intervene this week ahead of its financial half-year end, to offer some relief to Japanese exporters, which have been stung by the dollar's 5.9 percent drop versus the yen so far in 2011.

Tsutomu Soma, senior manager at Okasan Securities' foreign securities department in Tokyo said that while yen-selling intervention may be a possibility, it would probably only happen if moves in the yen turned particularly violent.

"If the dollar falls below its record low near 75.95 yen, triggers some stops and the move becomes volatile, I think there is the possibility of another one-off intervention," he said.

The Australian dollar edged 0.1 percent higher to $0.9911, although selling by model funds weighed on the currency, traders said. It struck a 10-month trough of $0.9622 earlier in the week.

The dollar index firmed slightly, up 0.15 percent at 77.618 as risk sentiment remained fragile.

Federal Reserve Chairman Ben Bernanke gives a speech at 2100 GMT and might offer some reaction to the market's mostly negative response to last week's Operation Twist. Any hint that even more easing is possible could help underpin risk appetite.

09-28-2011, 10:12 PM
(Reuters) - Commodity-related stocks drove Wall Street lower on Wednesday as stiff declines in energy and metals prices underscored investor concerns about global economic weakness and Europe's raging debt crisis.

A sharp 7 percent dive in the price of copper, seen as a leading indicator for the economy, rattled investors and led to a drop of 4.5 percent in the S&P materials index. Freeport-McMoRan Copper & Gold Inc fell 7.3 percent to $32.29.

Investors were on a knife edge as inspectors from the EU and IMF headed to Greece to scrutinize austerity plans while German Chancellor Angela Merkel worked to defuse a revolt within her government ahead of a vote to expand Europe's bailout fund on Thursday.

Wednesday's declines put the S&P 500 on course for its worst quarter since the high noon of the financial crisis in the fourth quarter of 2008. The drop also illustrates how sensitive the market has become to news on Europe's troubles.

"There is certainly a lot of headline risk and a lot of weak hands that hold stocks after this big rally we've had in the last three days," said Robert Francello, head of equity trading for Apex Capital, a hedge fund in San Francisco.

"Traders who have either gotten long during the rally or covered their shorts are probably going just to flatten themselves out, either taking profits or getting out of the market," he said.

Brent crude resumed its downward trend, falling more than $3 in afternoon trade, sending an S&P index of energy stocks down 3 percent. Chevron fell 1.9 percent to $91.74.

News early in the afternoon that bans on short-selling stocks in France, Italy and Spain have been extended highlighted the regulatory risk faced by investors and increased selling pressure.

The Dow Jones industrial average dropped 179.79 points, or 1.61 percent, to 11,010.90. The Standard & Poor's 500 Index dropped 24.32 points, or 2.07 percent, to 1,151.06. The Nasdaq Composite Index dropped 55.25 points, or 2.17 percent, to 2,491.58.

Traders said volume would likely be light and market movements accentuated during the rest of the quarter due to the Jewish New Year holiday of Rosh Hashanah.

So far, the S&P 500 has fallen 12.8 percent this quarter, its worst decline since the fourth quarter of 2008 when it fell 22.6 percent.

In the commodities sector, Cliffs Natural Resources Inc sank 8.4 percent to $55.66. Gold prices fell more than 2 percent.

"It's fear of a global slowdown," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "It's a pure flight to safety into the dollar here, and that's killing commodities."

A push to solidify a euro-zone rescue fund and alleviate the region's sovereign debt crisis lifted stocks on Tuesday for a third consecutive session, following four straight days of losses for the benchmark S&P 500. The S&P gained more than 4 percent over that three-day period.

Amazon.com Inc gained 2.5 percent to $229.71 after it unveiled a new tablet computer with a $199 price tag. Apple Inc, which makes the popular iPad tablet, fell 0.6 percent to $397.01.

Microsoft Corp dipped 0.4 percent to $25.58 after Samsung Electronics Co Ltd unveiled software pacts with the company.

In earnings news, Jabil Circuit Inc advanced 8.2 percent to $18.81 a day after reporting fourth-quarter earnings that beat expectations, while Family Dollar Stores Inc fell 1.6 percent to $53.31 after its results.

In economic news, orders for long-lasting U.S. manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending suggested the economy would avoid another recession.

About five stocks fell for every one that rose on both the New York Stock Exchange and the Nasdaq. About 7.96 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, in line with this year's average.

09-28-2011, 10:30 PM
(Reuters) - EU and IMF inspectors will return to Greece on Thursday to decide whether Athens has done enough to secure a new batch of aid vital to avoid bankruptcy, while Germany suggested a new bailout may have to be renegotiated.

Facing a wave of strikes and protests, Greece's Socialist government is accelerating budget measures to meet the terms of an International Monetary Fund and European Union rescue deal so it can receive a new loan next month.

The "troika" team of inspectors, which had threatened to cut off aid if Athens did not move faster, will hold talks on a plan to deepen budget cuts and raise taxes which has driven protesters back onto the streets for the first time since June.

"I can confirm the Eurogroup (of euro zone ministers) will hold an additional meeting as soon as possible, still in October, to discuss the situation of Greece and consider the disbursement of the next tranche," a European Commission spokesman said in Brussels, announcing the troika's return.

German Chancellor Angela Merkel suggested that parts of a planned new 109-billion-euro ($148.6 billion) rescue for the debt-laden country could be reopened, depending on the outcome of the troika's audit.

"We have to wait and see what the troika ... finds and what it will tell us (whether) we will have to renegotiate or not," she told Greek state television NET, without elaborating.

Several hundred activists affiliated with the Greek Communists converged on the finance ministry on Wednesday waving a banner saying "We won't pay!." They burned bills for a new one-off income tax introduced this summer, while Athens and other parts of the country were hit by transport strikes.

If deemed adequate by the inspectors, the new austerity drive will secure an 8-billion-euro loan Greece needs to pay bills and salaries in October and bring it closer to moving on to a second bailout agreed in July.

As a condition of the visit and to resolve the row with the lenders, the Greek government had promised to send a written assurance outlining its new plan to meet its bailout targets. Its contents have not been made public.

"Instead of coming and going, the troika should spend a month with a pensioner, a family-man and then tell us whether these measures are human," said 50-year-old aviation worker, Costas Papalambros, a father of two.

"The next tranche will just be an aspirin, it won't cure the patient. What we need is growth and I don't see it happening They need to change policies," he told Reuters.

Even Deputy Prime Minister Theodoros Pangalos, who said he faced selling real estate to pay a new property tax, admitted Greeks' pain threshold was being tested.

"I think that the tax-paying limits of Greek society have been exhausted. I would say they have been exhausted for some time now," he told Mega TV. "But I think that we should act on the other side of the problem which is spending."

Germany has repeatedly said negotiations about the details of the second rescue deal can begin only when the troika says Greece has qualified to receive the tranche expected in October, the sixth under a first bailout agreed in 2010.

At the same time, leaders from around the world have urged euro zone capitals to end a tortuous debate and create a safety net big enough to prevent Greece's problems from spreading to other euro members and triggering a fresh global downturn.


The second bailout aims to ease Greece's debt burden by imposing a 21 percent loss on private Greek bondholders.

After intensifying debate among economists and policymakers that only a 50 percent loss would make the country's debt viable, more investors have signed up to the bond exchange plan, Greek financial daily Naftemporiki reported.

Citing an unidentified finance ministry official, it said Greece's weeks-long struggle to lure private bondholders into the rescue plan had ended with it reaching the 90 percent participation target.

The finance ministry declined to comment on the report.

There is no agreement yet among euro zone governments on whether a renegotiation is needed, including more pain for Greece's bank creditors, or on a U.S.-sponsored plan to leverage the bloc's rescue fund to give it more firepower.

Germany's Bundestag (lower house) will vote on Thursday on widening the scope of the European Financial Stability Facility bailout fund, as agreed by the EU leaders on July 21.

Merkel faces a revolt within her conservative camp and may have to rely on support from the opposition Social Democrats and Greens to get the measure approved, damaging her authority.


Late on Tuesday, police dispersed about 1,000 anti-austerity protesters with tear gas in Athens' Syntagma Square, the epicentre of anti-austerity protests.

Taxi drivers, bus and tram operators staged strikes on Wednesday, causing long traffic jams leading into the ancient city center and forcing luggage-hauling tourists scrambling to find rides to the airport.

Other trades ranging from craftsmen, printers and tax officials also staged stoppages and activists planned marches on

parliament and the port of Piraeus later in the day.

"I've been trying to find a job for a year now and it's impossible," said Maria Kappa, a graduate of the School of Philosophy in Athens. "I don't see the rich people hurt by this austerity, it's always the poor who have to pay."

Lawmakers opened the way to the troika visit on Tuesday by passing a property tax bill. That piles the pressure on Greeks suffering from several waves of belt-tightening and deepens an economic downturn heading into its fourth year.

Prime Minister George Papandreou's 154 Socialist deputies forced the measure through in the 300-seat parliament.

In the accelerated strategy, the government will cut the 730,000 public workforce by a fifth, reduce the public wage bill by 20 percent, as well as lower overall pensions by 4 percent in addition to a 10 percent cut already agreed in previous plans.

It will also now extend the new real estate tax until 2014, two years longer than originally planned, after the troika judged Greece's estimate that it would raise 2 billion euros a year to be too high.

09-29-2011, 06:14 AM
(Reuters) - Asian shares and commodities fell on Thursday on growing worries that Europe's intractable debt problems will plunge the world into a second global financial crisis.

Copper fell 3 percent, gold slipped toward $1,600 an ounce to stand more than $300 below its record high earlier this month, and commodities-related stocks such as global miner Rio Tinto were dumped on worries that demand will weaken as the international economy slows.

The past week has seen a broad sell-off of commodities, equities and emerging markets bonds and a rally in the dollar that has been reminiscent of the rout surrounding the collapse of Lehman Brothers investment bank three years ago.

"It seems periods of optimism are getting shorter and the pessimism is getting longer," said David Land, analyst at CMC Markets in Sydney.

"This is being driven by the clear realization that while there are many plans as to how to deal with the Euro situation, the reality of getting agreement will be that much harder."

Tokyo's Nikkei share average fell 1 percent, while MSCI's broadest index of Asia Pacific shares outside Japan dropped 0.8 percent, with its materials sub-index shedding more than 2 percent.

S&P 500 index futures were mildly negative, after Wall Street's broad benchmark dropped 2.1 percent on Wednesday.

"The market situation is still tough, with worries about global growth," said Fujio Ando, senior managing director at Chibagin Asset Management in Tokyo.


The latest source of nervousness was a vote in Germany's parliament at 0900 GMT on Thursday to approve new powers for the euro zone's 440 billion euro ($598 billion) rescue fund.

While opposition votes will ensure the bill passes, a big rebellion within Chancellor Angela Merkel's own center-right coalition could weaken her politically and cloud future policy making at a time when financial markets and other nations are urging euro zone leaders to act boldly and decisively.

The euro was a little firmer around $1.3555, while the dollar rose 0.2 percent against a basket of currencies.

"You would suspect weakness until Germany votes, given that it is the big guy that has to fund it," said Gavin Stacey, head of Australia and New Zealand research at Barclays Capital.

"The euro is most likely to continue its trend deterioration until it gets really bad, forcing a resolution to come."

Commodities continued to slide, with copper, which is highly sensitive to expectations for global growth, falling 3 percent to $7,036.75 a tonne.

U.S. crude oil futures fell 0.6 percent to $80.70 a barrel and Brent crude lost 0.4 percent to $103.37.

Gold, which has seen a shift from a negative to a positive correlation with riskier assets over the past week or so as investors seeking safety have turned their back on the metal in favor of the dollar and U.S. Treasuries, fell 0.2 percent to around $1,605 an ounce.

Japanese government bonds were in demand for their safe haven appeal, with the benchmark 10-year yield falling 1 basis point to 0.995 percent following similar moves in Treasuries, where the 10-year yield dipped back below 2 percent on Wednesday.

10-01-2011, 11:54 AM
(Reuters) - Shares in major European economies suffered their biggest quarterly loss in nine years, hit by concerns the global economy was slipping into recession and the euro zone debt crisis was deepening with Greece facing possible default.

The steep sell-off this quarter, wiping $1.2 trillion off European share values, was sparked by an intensification in the euro zone sovereign debt crisis and concerns the United States could be heading for a recession.

U.S. and German government bonds, however, were in demand as investors sought shelter in safe-haven assets.

Karen Olney of UBS said European stock valuations may be cheap but investors would remain cautious until euro zone politicians can come up with a decisive plan to finally put to rest the bloc's debt crisis, now threatening Italy and Spain, its third and fourth largest economies.

"Politicians tend to react better when the markets are falling than rising. If we don't get a solution imminently, we could have another leg down," said Olney, head of European thematic research at UBS.

"In a rising market, they are not going to come up with a grand slam plan. If the markets are suffering again, they may be pushed to come up with a solution that we need. This is why some people consider Europe difficult to invest in, almost uninvestable at the moment."

Among the worst to suffer in the recent sell-off was Germany's DAX finance/markets/index?symbol=de%21daxx">.GDAXI which had outperformed all other European markets in the first half of the year.

The German blue-chip index, home to conglomerate Siemens (SIEGn.DE) and automakers Daimler (DAIGn.DE) and BMW (BMWG.DE), lost 25.4 percent in July-September, its worst quarterly performance since the third quarter of 2002.


France's CAC 40 .FCHI, and Spain's IBEX 35 .IBEX also posted their biggest three-month fall since the third quarter of 2002, despite their regulators, along with those from Italy and Belgium, banning short selling of financial stocks starting on August 12.

The CAC 40 fell 25.1 percent in July-September, with French bank Societe Generale (SOGN.PA) losing 51 percent over the same period -- its biggest quarterly loss ever.

The IBEX 35 index, meanwhile, was off 17.5 percent, while Italy's FTSE MIB .FTMIB was down 26.5 percent.

Britain's FTSE 100 .FTSE was down 13.7 percent, faring better than other major European markets but still posting its worst three-month performance in nine years.

That compared with a 17.1 percent fall over the same period for the pan-regional STOXX Europe 600 .STOXX index, which was its biggest quarterly loss since the fourth quarter of 2008 after the global economy was sent into a tailspin following the collapse of Lehman Brothers.

In terms of valuations, the DAX and the CAC 40 carried a 12-month forward price-to-earnings ratio of 8 and 7.7 respectively, slightly cheaper than the FTSE 100's 8.8 and the U.S. S&P 500's .SPX 10.9, data from Thomson Reuters Datastream showed.

"You don't get a sustainable rally until either the growth outlook improves or you get substantial progress on the sovereign debt crisis. In the absence of either of those things, investors should remain cautious and defensive positioned," said Ronan Carr, European equity strategist at Morgan Stanley.

Morgan Stanley was "overweight" telecoms .SXKP and healthcare .SXDP, and "underweight" banks .SX7P and industrials .SXNP.

However, RBS analysts said both the DAX and the FTSE 100 looked hard done by, based on their index composition, with German auto stocks and UK oil stocks among the most attractive on a relative value basis.

10-01-2011, 12:05 PM
(Reuters) - Oil prices slumped on Friday on renewed global economic worries, pushing back Brent more than 10 percent this month for its biggest quarterly decline in five quarters.

U.S. crude futures fared even worse, posting their weakest quarterly performance since the financial crisis of 2008 as a wobbly economy sparked more demand worries.

Crude futures fell with a broad array of commodities, led by copper, which with U.S. equities tumbled to its worst quarter since 2008. <.

In London, ICE crude for November delivery settled at $102.76 a barrel, dropping $1.19, or 1.14 percent, after touching a session low of $101.78.

For the quarter, Brent crude fell $9.72, or 8.64 percent, the biggest percentage loss since the second quarter of 2010. For the month, front-month Brent dropped $12.09, or 10.53 percent, the biggest monthly decline since May 2010.

U.S. November crude settled at $79.20 a barrel, falling $2.94, after dropping to an intraday low of $78.77.

For the quarter, U.S. crude fell $16.22, or 17 percent, the biggest percentage loss since the fourth quarter of 2008. For the month, it dropped $9.61, or 10.82 percent, the biggest monthly decline since May 2010.

Brent's premium against U.S. crude rose back to $23.56, after dropping to $21.81 on Thursday.


The day's sell-off began after data showed that China's manufacturing sector contracted for a third consecutive month in September, adding to doubts about Europe's ability to solve its debt crisis.

That drove investors to sell riskier assets such as equities and commodities. Trading was volatile on quarter-end booksquaring, traders said.

The dollar rose while the euro sank, curbing risk sentiment across many commodities markets. <USD/> .DXY

A gloomy economic outlook and weak demand in the United States have dragged markets down this quarter, while the expected return of oil exports from Libya, cut off by the civil war, added a bearish spin this month.

"Declines in the stock market and the euro prompted much of today's weakness amidst reduced risk appetite," said Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois.

Trading in Brent was more hectic than U.S. crude, reaching 701,000 contracts as of 3:45 p.m. EDT (1945 GMT), which was 33 percent above its 30-day average.

U.S. crude volume hit nearly 599,000 contracts, down 5.3 percent from its 30-day average.


Supply from all 12 members of the Organization of the Petroleum Exporting Countries is forecast to average 30.25 million barrels a day this month, up from 30.15 million in August, according to a Reuters survey. <OPEC/O>

Libya's output has begun to recover after falling to almost nothing in the civil war, the survey found. The country exported one small crude cargo on September 25 and is reported to be sending some oil to refineries.

"If the current positive reports from Libya are confirmed, then domestic production could reach 1.3 million barrels per day by the end of next year," JP Morgan said in a note.

"On an annual average, this would lead to exports of around 0.6 mbd of light sweet crude, which together with rising Iraqi and non-OPEC output could lift supply by around 1.9 million bpd above today's levels."

10-02-2011, 07:17 AM
(Reuters) Eastman Kodak Co shares lost more than half their value on Friday as the company hired a law firm well-known for bankruptcy cases, triggering speculation that the photography pioneer could file for bankruptcy.

Kodak, which delivered the first consumer camera in 1888, denied it had a bankruptcy plan, saying it was committed to meeting its obligations and is still looking for ways to "monetize" its patent portfolio.

Once synonymous with photography, Kodak has struggled with the move to digital cameras and failed to turn a profit since 2007. It has been exploring a sale of its digital imaging patents, worth an estimated $2 billion, and hired investment bank Lazard in July to explore options.

Rochester, New York-based Kodak said it has "no intention of filing for bankruptcy," after its shares plunged as much as 68 percent to 54 cents before recovering slightly to close down 53.8 percent at 78 cents on the New York Stock Exchange.

The company's market value plummeted to roughly $210 million on Friday, down from a lofty height of $31 billion in February 1997, as shown by regulatory filings. The cost to insure Kodak's debt with credit default swaps (CDS) surged on Friday as investors priced in greater bankruptcy risk.

Kodak had already scared markets on Monday when it tapped a credit line but refused to divulge its cash position. The stock dived to a 38-year low that day.

Then investors took fright again Friday after Bloomberg reported that potential buyers for its patent portfolio were cautious about going ahead with a bid as they could risk having Kodak creditors sue them after a bankruptcy filing.

Mark Kaufman, an analyst at Rafferty Capital Markets, said that Kodak urgently needed to seal a patent deal.

"I don't believe bankruptcy is inevitable. This is a pretty valuable portfolio, they should get a good price," he said. "They need to get this (sale) out of the way. They need to sell this portfolio, raise some type of cash."

The company said in July that it hired Lazard to advise on strategic options for its patents -- increasingly seen as lucrative assets. Bankrupt Canadian company Nortel fetched $4.5 billion in a patent sale in June, also run by Lazard. Google Inc agreed in August to buy Motorola Mobility for $12.5 billion primarily for its patent portfolio.

One expert -- Robert Miller, a professor at Villanova University School of Law -- said filing for bankruptcy may actually end up boosting the value of a patent sale.

Even if the company holds a robust, public auction outside of bankruptcy, the headache of litigation still looms if Kodak goes bankrupt later, said Miller.

Selling the assets as part of a bankruptcy court-supervised auction would solve that concern, Miller said.

Kodak confirmed that it has hired Jones Day but did not explain why, beyond saying it was "not unusual for a company in transformation to explore all options."

Investors for the company have been up in arms about everything from its share price decline to its management.

One shareholder had asked the company's board on Thursday to start a sales process while others sharply criticized Chief Executive Antonio Perez.

The company's board is not considering replacing Perez at this time, according to a story in the Wall Street Journal, which cited two people familiar with the matter.

Kodak CDS costs rose to 70 percent Friday from 61 percent Thursday, data provider Markit said. That means it would cost $7.0 million in upfront payments, plus $500,000 a year to insure $10 million debt if Kodak debt for five years.

"This is pretty expensive insurance at this point and the reason it's so expensive is that people believe there's a high likelihood of default," said Markit analyst Otis Casey.

10-02-2011, 10:41 AM
(Reuters) - Qatar's sovereign wealth fund will invest $1 billion in European Goldfields (EGUq.L) (EGU.TO) including $600 million to finance operations in Greece, where the London-based firm has a permit to mine gold, the fund's head said on Saturday.

It was the second major investment in Greece by the Gulf state in two months. Qatar struck a deal in August to provide funding for a merger of two of the recession-hit country's largest banks.

Greece, which is in dire need of private investment as its worst recession in four decades is seen extending into next year, has long sought to convince the wealthy emirate to invest in its private and public companies.

Qatar Holdings will buy a 10 percent stake in European Goldfields from Greek building firm Ellaktor (HELr.AT) and has a call option to buy another 5 percent, CEO Ahmad al-Sayed said after a meeting between Greek and Qatari officials in Athens.

"In total, we will invest in the company about $1 billion," Sayed told reporters.

Sayed also said Qatar was "examining different opportunities in the country."

Greece granted European Goldfields a long-awaited permit in July that allows it to mine for gold in the north of the country, a move set to turn the London-based firm into the European Union's largest primary gold producer.

The European Goldfields deal was announced after Qatar's Emir Sheikh Hamad bin Khalifa al-Thani met Prime Minister George Papandreou in Athens on Saturday.

"Qatar's investments show trust in the Greek economy," Papandreou told a news conference after the meeting.

Qatar's investment in Greek banks in August will give it about 17 percent of the lender that will be created by the merger of Alpha Bank (ACBr.AT) and Eurobank (EFGr.AT).

Paramount, a company controlled by Qatar, will own the stake after taking part in a 1.25 billion euro rights offer and fully taking up a 500 million euro convertible bond issue.

10-03-2011, 04:26 AM
(Reuters) - The Nikkei average dropped 2.3 percent on Monday, as fears of slowing global growth and the spreading impact of Europe's credit woes encouraged investors to pull funds out of risk assets.

Bank shares slipped after news that Greece will miss a deficit target set just months ago in a massive bailout package. Government draft budget figures released on Sunday showed that drastic steps taken to avert bankruptcy may not be enough.

"The October-December quarter begins today, so there is hope for domestic fund buying, but right now the market's focus is Greece's problems and how Europeans will address the situation, as well as U.S. data this week that will show us more about the economy," said Fujio Ando, senior managing director at Chibagin Asset Management.

The Bank of Japan's tankan survey released before the market open showed business sentiment turned positive in the third quarter as companies restored supply chains hit by the March earthquake, even as a strong yen and the euro zone debt crisis clouded the outlook.

"The results show that the domestic economy is holding up even with the strong yen, and the biggest concerns are external, not internal, such as the impact of Europe's debt problems on global growth," said Yutaka Shiraki, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.

The Nikkei markets/index?symbol=jp%21n225">.N225 fell 2.3 percent to 8,503.88 by the midday break. The benchmark gained 1.6 percent last week but lost 2.8 percent for the month and 11.4 percent for the quarter, turning in its worst quarterly performance since June 2010.

The broader Topix index finance/markets/index?symbol=jp%21ixj">.TOPX declined 2.7 percent on Monday to 740.46.


U.S. investment bank Morgan Stanley (MS.N) plummeted on Friday on concerns about its exposure to European banks, leading financial shares lower, and that weighed on their counterparts in Japan.

Mitsubishi UFJ Financial Group (8306.T) fell 4 percent to 340 yen and Sumitomo Mitsui Financial Group (8316.T) slipped 3.9 percent to 2,120 yen.

Major Japanese producers of electric cables and wires extended their slide into Monday, led by Sumitomo Electric (5802.T), which was down 9.7 percent at 828 yen on more than twice its average 30-day volume, after Furukawa Electric (5801.T) agreed on Friday to a $200 million fine to settle investigations into price-fixing in the United States.

Analysts said Sumitomo and Fujikura (5803.T), which are also under investigation by U.S. authorities, risk similar fines. Furukawa declined 6.6 percent to 199 yen while Fujikura was 4.3 percent lower at 246 yen.

Shares of Mitsui OSK Lines (9104.T) slumped to their lowest since March 2003 after the shipping company slashed its first-half earnings outlook to a net loss of 17 billion yen ($221 million) from a profit of 1 billion yen. Rival Kawasaki Kisen (9107.T) fell 4.3 percent and Nippon Yusen (9101.T) dropped 5.2 percent.

Softbank Corp (9984.T) rose 3.3 percent to 2,367 yen and was the heaviest-traded issue by turnover, after Jack Ma, CEO of China's e-commerce leader Alibaba, said he was keen on buying Yahoo Inc (YHOO.O). Softbank owns about 30 percent of Alibaba Group, and holds 42 percent in Yahoo Japan (4689.T), which is owned 35 percent by Yahoo.

Promise Co (8574.T), a Japanese consumer lender, remained untraded as buy orders outnumbered sell offers after the company said on Friday that SMFG would launch a tender offer to buy the outstanding shares of Promise it does not already own for 780 yen each.

Promise shares closed at 659 yen on Friday, 18 percent below the tender offer price. They were bid at 759 yen on Monday.

Aiful (8515.T), a consumer lender affiliated with Mitsubishi UFJ Financial, rose 3.5 percent to 117 yen, while Acom (8572.T), a lender which had sought rescheduling of debt repayments, rose 6.5 percent to 1,598 yen.

Volume was moderate, with 790 million shares traded on the Tokyo Stock Exchange's main board, suggesting the daily total could fall short of last Friday's 2 billion shares.

10-03-2011, 04:39 AM
(Reuters) - The euro sank to an eight-month low against the dollar on Monday and is poised to fall further after the Greek government said the debt-ridden country will miss a deficit target set just months ago in a massive bailout package.

Traders and analysts said that with Europe divided over the best cure for the debt crisis and with the possibility of a Greek default looming larger than ever, the euro was likely to grind lower in the coming days.

"A Greek default is a sort of Pandora box no one wants to open. While some markets seem to have priced in such possibility, it looks like euro has still some way to go should it happen," said Teppei Ino, a currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

The euro dived as deep as $1.3323, from $1.3418 in New York on Friday, before nudging back up to $1.3344. The single currency lost 7 percent in September, its largest monthly drop since November 2010.

It also fell to a one-week low against the yen at 102.98, moving a notch closer to a decade low at 101.95 yen.

If Greece defaults on its debt, Ino said he thought the euro could initially fall to $1.32 and would then quickly move toward $1.30.

Underscoring jitters over European financial institutions, reports emerged that ministers from France and Belgium would meet to shore up the balance sheet of troubled financial services group Dexia.

Making matters worse, Germany's finance minister ruled out a higher contribution to the euro zone's rescue fund beyond an already approved 211 billion euros ($281.3 billion), while a key German coalition member of parliament said "Greece is bankrupt."

For now, technical support for the single European currency lies at January lows around $1.3250-80 and then in the $1.3250-00 zone, formed by trend channels, internal wave targets and Fibonacci projection objectives.

This support area combined with the strong resistance on the dollar index at 78.75-90, formed by a cluster of highs and lows on the daily charts, has the capacity to provoke a correction to the euro's decline from $1.4939.

Greece will miss a deficit target despite severe austerity measures, although inspectors from the IMF, EU and European Central Bank --the troika--are widely expected to release the next aid package.

While all eyes will be on the inspectors' forecasts for 2012-2014, Greek bond holders may have to take even larger haircuts, according to some reports. [ID:nL5E7KU270]

Euro zone finance ministers are expected to discuss various plans about Greece and the rescue fund later on Monday.

Dexia, which received a combined 6 billion euro bailout from Belgium and France at the height of the financial crisis in 2008, has been badly hit by its huge exposure to Greece as well as the freeze in the inter-bank lending markets.


The dollar index hit an eight month high, edging up 0.5 percent to 78.888.

The greenback also gained a little on the yen, adding 0.1 percent to 77.10 yen after breaking above its 55-day moving average at 77.17 for the first time since its spike after intervention on August 4. Stop losses loom around 77.30 yen, traders said.

Although the dollar failed to maintain early gains above 77.17, a close above the mark could improve sentiment toward the pair, especially as seasonal selling before end-Sept book-closings by Japanese exporters has run its course.

Tokyo dealers also reported macro funds building dollar-long positions and analysts said that if the current crisis deepened, this time the yen could weaken versus the dollar, unlike the global financial crisis in 2008.

"Contrary to what happened during the global financial crisis in 2008, this time the yen carry trade has not been as active," said Junya Tanase, chief strategist at JPMorgan Chase in Tokyo, adding that the dollar may strengthen to 78-79 yen over the next two weeks, although other yen crosses were likely to soften.

PMI numbers from China and the export numbers from Korea suggest global demand has not eased as quickly as some investors had feared in recent weeks, but this failed to make much of an impact on financial markets.

The Australian and New Zealand dollars were off to a rocky start on Monday with the Aussie at $0.9665.

European manufacturing PMI will be released on Monday and another deterioration below the key 50 level could see the euro sink further. It is also a big week for U.S. data with ISM Manufacturing on Monday and non-farm payrolls on Friday.

10-03-2011, 02:36 PM
(Reuters) - Gold headed for its largest one-day rise in nearly a month on Monday and silver climbed almost 5 percent after Greece warned it will miss deficit targets set to avoid bankruptcy, unleashing a sell-off in equities and commodities.

European stocks slid nearly 2 percent .STOXX, while U.S. crude futures fell 2.1 percent and palladium dropped 3.3 percent to hit one-year lows after Greece said it will miss the deficit targets set in July.

Gold has assumed a more habitual trading pattern of rising in times of uncertainty after staging its largest monthly drop since the credit crunch of 2008 in September as the escalating Greek crisis prompted investors to seek safety in the dollar.

Spot gold was up 2 percent at $1,655.19 an ounce at 1350 GMT. U.S. gold futures for December delivery were up 2.2 percent to $1,657.40 an ounce.

"The environment for gold is still kind of perfect," said Ronald Stoeferle, gold analyst at Erste Group. "We have negative real interest rates more or less all over the world, there's extreme systemic risk, and there is a very fundamental need for a safe-haven currency."

Gold's status as a haven has not been damaged by last month's sharp correction, he added.

"We're still up (16.5 percent) in 2011. Compared to the equity markets, that's a pretty nice outperformance," he said. "Corrections like this are healthy for the long-term uptrend."

On the currency markets, the euro slipped to within sight of an eight-month low against the dollar as mounting concerns of a Greek default deepened investor worries about the health of the euro zone's banking sector.

Financial markets are awaiting a spate of events this week, including key U.S. non-farm payrolls data on Friday and the European Central Bank's interest rates decision on Thursday.

The ECB is expected to leave benchmark euro zone rates on hold this week and signal a shift in its interest rate-rise cycle after a raft of weak economic data and a deterioration in funding conditions for some of the bloc's indebted nations.

Also on the slate, Federal Reserve chairman Ben Bernanke is scheduled to testify on the economic outlook to the Joint Economic Committee on Tuesday.

The head of the U.S. central bank put markets on notice last week, signaling that despite already having spent trillions of dollars to stimulate growth, the Fed would do more if inflation falls too far and the threat of deflation grows.


The gold price fell nearly 11 percent in dollar terms in September, its largest one-month fall since October 2008. On a quarterly basis, however, the third three months of 2011 marked gold's strongest performance since the last quarter of 2010.

Gold's 20 percent fall from September's record high at $1,920.30 an ounce has tempted physical consumers of the metal back into the market, even though speculators cut their investment the precious metal in favor of owning U.S. dollars.

The latest data from the Commodity Futures Trading Commission on holdings of gold futures shows speculators cut their position to its lowest since the second quarter of 2009, highlighting the move from hard assets to U.S. dollars.

"After the recent washout, gold positioning is far from extended and this is quite a bullish signal for price strength ahead," said UBS in a note. "The 'clean' nature of current spec positions, along with physical and long-term demand, is creating a very healthy foundation for gold to climb from."

Markets are closed in number two gold consumer China for a public holiday. But demand from other key gold-buying regions has picked up in the last couple of weeks, pushing Asian premiums to their highest since the start of the year.

In the world's third largest consumer, Turkey, gold imports hit 18.23 tonnes in September, their highest in three years, data from the Istanbul Gold Exchange showed.

Silver was up 2.7 percent at $30.68 an ounce, having earlier risen as high as $31.38. It fell by nearly 28 percent in September, its biggest one-month drop since the early 1980s.

Echoing weakness in other industrial commodities, platinum fell 1.9 percent to $1,495.74 an ounce, while palladium dropped 3.4 percent to near one-year lows at $589.25.

10-03-2011, 06:54 PM
* US stocks fall more than 1 pct as financials weigh

* Euro drops to 8-1/2 month low versus dollar

* Bank shares down in Europe on fears of Greece default

NEW YORK, Oct 3 (Reuters) - World stocks fell on Monday and the euro slid to an 8-1/2 month low versus the dollar as growing fears of a Greek default stoked appetite for safe-haven U.S. Treasury bonds.

Better-than-expected U.S. economic data initially cushioned a fall in U.S. stocks as Wall Street indexes briefly turned positive after the release of a key manufacturing activity index. But they fell more than 1 percent in the afternoon as financials weighed.

Bank shares were also battered in Europe as investors feared the impact of a Greek default on holders of the country's bonds, such as Franco Belgian financial group Dexia (DEXI.BR), whose stock slumped more than 10 percent.

Greece admitted it will miss its deficit target of 7.6 percent this year, making a Greek debt default look more likely. In a draft budget sent to parliament on Monday, the government forecast a deficit of 8.5 percent of gross domestic product for 2011.

"This news isn't surprising, but if Greece continues to have problems, that could really drag Europe into recession, and possibly the U.S. as well," said Randall Warren, chief investment officer of Warren Financial Service in Exton, Pennsylvania.

European policymakers appeared no nearer to agreeing on a definitive solution to the crisis. Officials meeting on Monday were discussing ways to leverage the bloc's rescue fund and pressure Greece to implement agreed structural reforms. For details, see [ID:nL5E7L20LD].

"Ultimately, Greece would need to see its debt written down by more and with that you need probably some kind of shoring up of the banking sector," said Alec Letchfield, chief investment officer at HSBC Asset Management.

U.S. stocks extended losses in the afternoon as the KBW bank index .BKX fell 2.4 percent. On Friday, stocks closed their worst quarter since 2008.

The Dow Jones industrial average .DJI lost 184.02 points, or 1.69 percent, at 10,729.36. The Standard & Poor's 500 Index .SPX was down 22.41 points, or 1.98 percent, at 1,109.01. The Nasdaq Composite Index .IXIC was down 53.89 points, or 2.23 percent, at 2,361.51.

The MSCI All-Country World index .MIWD00000PUS was 2 percent lower, near a 14-month low set in September. The FTSEurofirst 300 .FTEU3 of top European shares ended 1.2 percent lower.

The October-December period is, traditionally, the best quarter for equities. Reuters data shows that since 1971, world stocks have on average risen 3.7 percent in the fourth quarter.

Dexia closed 10.16 percent lower after credit agency Moody's announced a rating review for possible downgrade on concerns about liquidity. French daily Les Echos said on Friday that Belgian and French finance ministers would meet to discuss ways of shoring up the firm's balance sheet.

U.S. crude oil CLc1 fell 1.5 percent to $77.99 a barrel.

The euro EUR=EBS fell as low as $1.32372 EUR=EBS on trading platform EBS, a fresh 8-1/2-month low. It was last down 0.9 percent at $1.3261.

Against the safe-haven yen, the euro was down 0.9 percent at 102.194 yen EURJPY=EBS on EBS, not far from its decade low of 101.946 struck in September.

"Euro zone bank issues remain a big issue and we expect the euro's downside to continue," said George Saravelos, G10 FX strategist at Deutsche Bank.

The benchmark 10-year U.S. Treasury note US10YT=RR was up 33/32 in price, causing its yield to fall to 1.802 percent. Treasuries prices were also supported by the Federal Reserve's first bond purchase for Operation Twist, its latest bond program aimed at helping the U.S. economy.

10-05-2011, 04:26 AM
(Reuters) - Moody's lowered its rating on Italy's bonds by three notches on Tuesday, saying it saw a "material increase" in funding risks for euro zone countries with high levels of debt and warning that further downgrades were possible.

The agency downgraded Italy to A2 from Aa2, a lower rating than it holds on Estonia and on a par with Malta and kept a negative outlook on the rating.

The euro pared gains against the dollar and Japanese yen immediately following the announcement which comes after Moody's rival Standard and Poor's cut its rating on Italy by one notch to A/A-1 on September 19.

The cuts underline growing investor concern about the euro zone's third largest economy, which is now firmly at the center of the debt crisis and dependent on help from the European Central Bank to keep its borrowing costs under control.

"The negative outlook reflects ongoing economic and financial risks in Italy and in the euro area," Moody's said in a statement.

"The uncertain market environment and the risk of further deterioration in investor sentiment could constrain the country's access to the public debt markets," it said.

It added that Italy's rating could "transition to substantially lower rating levels" if there were long term uncertainty over the availability of external sources of liquidity support.

Italy's mix of chronically low growth, a public debt mountain amounting to 120 percent of gross domestic product and a struggling government coalition has caused mounting alarm in financial markets.

Moody's decision came as little surprise after the agency said on September 17 that it would finish a review for possible downgrade of its rating on Italy within a month.

But it highlights the growing vulnerability of the euro zone, which is already struggling to contain the crisis in the far smaller Greek economy and which would be overwhelmed by a crisis of a similar scale in Italy.

"It's not that unexpected but it doesn't help the situation at all," said Robbert Van Batenburg, Head of Equity Research at Louis Capital in New York.

"They have already traded as if there was somewhat of a downgrade in the works, so it will probably force Italian policymakers to embark on more austerity programs. It will put another fiscal strait-jacket on them."


Moody's said the likelihood of a default by Italy was "remote" but it said the overall shift in sentiment on the euro area funding market implied a greater vulnerability to a loss of market access at affordable rates.

Italy's relatively modest budget deficit, conservative financial system and high level of private savings had kept it on the sidelines of the euro zone crisis while countries like Greece and Ireland were sucked down.

"Italy is being punished not because its finances suddenly deteriorated, but because investors have become more sensitive to its long-standing weaknesses," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.

He said markets appeared to be focusing on the weakened center-right government's lack of progress in stimulating the stagnant economy, which many analysts expect to stall or even slip into recession next year.

"The bond markets are more concerned about Italy's ability to grow than its commitment to reducing a fiscal deficit that is already one of the smallest in the euro zone," he said.

Prime Minister Silvio Berlusconi shrugged off the downgrade immediately, saying the Moody's announcement had been expected and the government was committed to its public finance target, which sees the budget being balanced by 2013.

The government last month pushed through a 60 billion euro austerity package -- bringing forward its original balanced budget target by one year -- in return for support for its battered government bonds from the ECB.

Berlusconi's center-right coalition has been deeply divided over policy and personal issues and further distracted by an array of scandals surrounding the prime minister.

Opposition leaders have called repeatedly for the government to resign over its handling of the economy and there is widespread speculation that Berlusconi could be forced out of office before his term expires in 2013.

Italy's borrowing costs have soared over the past three months and have only been kept under control by the ECB support but in recent weeks they have begin to climb back to potentially dangerous levels.

An auction of long term bonds last month saw yields on 10 year BTPs rise to 5.86 percent, their highest level since the introduction of the euro more than a decade ago.

The center-right government has been under heavy pressure over its handling of the escalating crisis and recently cut its growth forecasts through 2013.

It is now expecting the economy to expand by just 0.6 percent next year, down from a previous projection of 1.3 percent.

10-05-2011, 04:48 AM
(Reuters) - Investors rushed in to buy technology and other beaten-down sectors as the S&P 500 dipped in and out of a bear market on Tuesday, and a late rally drove the index to its largest gain in more than a week.

Markets once again turned on news out of Europe.

Reports that European finance ministers agreed to prepare action to safeguard their banks, following the first lender bailout as a result of the crisis, were cited as giving stocks a boost heading into the close.

Others pinned the comeback on technical levels and on bargain hunting after the broad S&P 500 briefly fell more than 20 percent from its 2011 closing high set four months ago.

"To me, it looked mostly technical. It looked like the capitulation on the sell side," said Keith Springer, president of Springer Financial Advisors in Sacramento, California.

He said the reports out of Europe just added to the buying frenzy that had started earlier.

"You could see it (the market) starting to turn anyway and that gave people an excuse" to buy, he said.

Chip makers and large-cap technology companies led the way even after Apple Inc fell 0.6 percent to $372.50 as the unveiling of its latest iPhone didn't live up to the hype. Apple shares had earlier fallen more than 5 percent.

Volume increased late in the day - with nearly 15 percent of the day's composite trading taking place in the last half hour of the session. The Dow industrials rose 345 points in the last hour of trading.

The Dow Jones industrial average gained 153.41 points, or 1.44 percent, to 10,808.71. The S&P 500 gained 24.72 points, or 2.25 percent, to 1,123.95. The Nasdaq Composite gained 68.99 points, or 2.95 percent, to close at 2,404.82.

Despite the large gains, it is still not clear whether the latest reports mean there is progress in Europe's effort to keep its sovereign debt crisis from spreading out of Greece and into the banking system.

The European finance ministers put their heads together for a plan to shore up their banks after collapsing confidence in municipal lender Dexia forced France and Belgium to rush to its aid.

The Dexia bailout came as euro-zone finance ministers delayed a vital aid payment to debt-stricken Greece, which could run out of cash shortly.

Investors fear that a Greek default will force banks to write down billions of dollars from their books and kick-start another credit crisis like the one that brought lending to a halt three years ago and generated a recession.

The U.S. bank sector index, down nearly 30 percent since the 2011 market high hit on April 29, posted strong gains. The index finished the session up 4.1 percent.

Morgan Stanley shares gained 12.3 percent to $14.01 but are still off 48.5 percent this year. Shares of Bank of America rose 4.2 percent Tuesday to $5.76.

About 13.1 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq -- more than 60 percent above the daily average so far this year of 8 billion shares.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, about three stocks rose for every one that fell.

10-06-2011, 08:44 AM
(Reuters) - World stocks rose for a second day Thursday while government bonds fell as expectations grew policymakers would take steps to support European banks, under threat from the impact of a possible Greek default.

German Chancellor Angela Merkel said Wednesday Berlin was ready to recapitalize its banks if needed, adding to pledges by European finance ministers to safeguard banks in the face of mounting concerns about a Greek default [ID:nL5E7L53W7]

The Financial Times reported Thursday that the European Banking Authority, mid-way through a two-day crisis meeting to assess the potential hit of mass sovereign restructurings, is re-examining the strength of the region's banks.

Investors are focusing on euro zone and UK central bank policy meetings for hints on future monetary easing.

A majority of analysts predict the European Central Bank will refrain at least until next month from cutting interest rates and the Bank of England from pumping more money into the economy. But there are those in both markets who see a risk of such moves already Thursday and the ECB is expected to take further steps to help banks.

Hopes for near-term policy measures -- both from politicians and central banks -- are helping investors to take a break from a sell-off triggered by growing concerns about the damage to the banks from any Greek sovereign default.

"Significant talk of bank recapitalization is certainly the driving factor behind positive sentiment," said Keith Bowman, equity analyst at Hargreaves Lansdown.

"But there is still a lot of uncertainty. Speed is of the essence and that would make a difference. If we see another week or so go by without some significant step forward, that is likely to inject nerves back into the markets."

The MSCI world equity index .MIWD00000PUS was up 0.9 percent, having hit a 15-month low earlier this week. The index is around 5.6 percent above this low.

U.S. stock markets also finished higher Wednesday. VIX index .VIX, Wall Street's fear gauge, fell 7 percent to 37.81 Wednesday, down sharply from this week's peak of 46.88, lending support to investors cautiously putting some risk back on in the near-term.

European stocks .FTEU3 rose 0.4 percent and emerging stocks .MSCIEF added 2.2 percent.

U.S. crude oil gained a quarter percent to $79.91 a barrel.

Bund futures fell slightly on the day.

Spain will sell up to 4.5 billion euros of bonds, with comments from the IMF that it may buy peripheral bonds seen helping, although the fund later stepped back from a firm pledge to do this.

The dollar .DXY against a basket of major currencies

The euro fell 0.2 percent to $1.3324.

"Inflation fears may not allow the ECB to cut rates, but we're bound to see some form of support for Europe's banking system -- and that should help the euro rise," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking in Tokyo.

10-06-2011, 09:01 AM
(Reuters) - The euro held steady against the dollar on Thursday as uncertainty gripped markets before an ECB meeting that could see rates cut or the rebirth of long-term lending to banks, while Europe's efforts to resolve its debt crisis and solid U.S. data provided tentative support for riskier assets.

The euro, last at $1.3331, maintained most of its overnight gains made after Germany said it would help its own banks if necessary and opened the possibility of using a regional bailout fund to strengthen the euro zone banking system.

Investor focus now shifts squarely to the European Central Bank's monetary policy meeting, whose outcome -- due at 7:45 a.m. EDT -- seems increasingly uncertain.

The ECB has been widely expected to keep rates unchanged at 1.5 percent, but calls for a cut have grown louder amid signs the euro zone economy is deteriorating further and as Greek default fears weigh heavily on confidence in the bloc's banks.

"Inflation fears may not allow the ECB to cut rates, but we're bound to see some form of support for Europe's banking system -- and that should help the euro rise," said Katsunori Kitakura, chief dealer at Chuo Mitsui Trust and Banking.

Kitakura cited measures such as more liquidity, bringing back the ECB's 12-month tender last used at the end of 2009, and, possibly, the resurrection of its program for buying covered bonds.

In a Reuters survey taken last week, 56 out of 75 economists said they expected the ECB to hold rates this time around, though 13 saw a 25 basis-point cut and 7 predicted a 50 basis-point cut.

JP Morgan Chase is forecasting a drastic 50 basis point cut by the ECB saying the bank's move to "balanced" inflation risk at the last meeting came sooner than expected especially since the "inflation hump" is far from over.

"Because the market remains split in its views on what the ECB should do, it's hard to say to what extent any move is already priced in the euro," said a trader for a Japanese bank.

He added that if there is no cut, but additional measures like more liquidity are implemented, the euro could jump to take out stop losses looming between $1.3400 and $1.3450.

A decisive break above that level could pave the way for a correction toward $1.3680 -- the 38.2 percent retracement of the $1.4550-$1.3145 slide.

The single currency has lost about 10 percent against the dollar since that late August peak at $1.4550, but stands well-off a nine-month trough of $1.3145 struck this week.


European finance ministers agreed to safeguard banks, many of which could face heavy losses if a planned second bailout package for Greece does not go ahead, after France and Belgium agreed to bail out the debt crisis' first banking casualty, Dexia.

The countries are expecting to finalize the rescue of the troubled lender, but disagreements remain over details of the plan as the two countries try to defend their respective national interests.

"The crisis is far from over and I'm still negative on the euro looking beyond the ECB," said Minori Uchida, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, adding that the currency may eventually drift below $1.30 in the coming days.

The Netherlands votes on widening the role of the EFSF euro zone bailout fund, as agreed in July, after Malta delayed its ratification of the facility, while Slovakia -- the last country to vote on the issue next week -- is bitterly divided over it.

"They are voting over it, but these measures are already seen as not satisfactory and the wholistic structural solution is still far away," said Uchida.

The British pound shed 0.3 percent to $1.5425 as the Bank of England was due to meet on Thursday amid talk it may open the way for more quantitative easing.

The single currency hovered around 1.2318 Swiss francs, having hit its highest since May on Wednesday.

With markets highly concerned about the threat of a systemic shock in Europe, they barely took notice of another round of better-than-expected U.S. data showing the economy is still growing, albeit slowly.

The recent flow of data suggests fears of recession in the U.S. and a hard landing in China are possibly overdone. A good number from Friday's U.S. non-farm payrolls could set the stage for a rally in risk assets.

The dollar index came off a nine-month high of 79.838 earlier in the week to last trade at 79.028. It was steady against the yen at 76.74, off a three-week peak of 77.26 struck on Monday.

10-06-2011, 09:57 AM
Barroso comments on recapitalising banks push euro to session high

* Rates seen on hold, liquidity measures likely from ECB

* Euro spikes versus Swiss franc, traders cite media report

LONDON, Oct 6 (Reuters) - The euro climbed versus the dollar on Thursday after a top euro zone official said policymakers are proposing coordinated action to recapitalise banks, raising expectations the region's banking sector would be ringfenced from the Greek debt crisis.

The euro was last up 0.3 percent on the day versus the dollar, near a session high of $1.3397. It jumped sharply following European Commission President Jose Manuel Barroso comments, and stops were cited above $1.3420.

Investors were also focused on the European Central Bank meeting where policymakers are expected to provide longer-term funding to banks and keep interest rates on hold.

But there was some speculation of a rate cut and that uncertainty meant some investors were more likely to go into the announcement at 1145 GMT with positions squared.

Some market players were reluctant to initiate fresh positions ahead of ECB President Jean-Claude Trichet's last policy meeting. He could pave the way for a cut before year-end, even if rates are kept on hold at 1.5 percent today.

"We expect there will be no rate cut today which should be some kind of support for the euro as long as the market does not come to the conclusion the ECB is behind the curve and not taking action quickly enough," said Lutz Karpowitz, currency analyst at Commerzbank.

Calls for a cut have grown louder amid signs the euro zone economy is deteriorating further and as Greek default fears weigh heavily on confidence in the bloc's banks.

In a Reuters survey taken last week, 56 out of 75 economists said they expected the ECB to hold rates this time around, though 13 saw a 25 basis-point cut and 7 predicted a 50 basis-point cut.

Analysts said other measures to support Europe's banking system could include more liquidity, bringing back the ECB's 12-month tender last used at the end of 2009, and possibly the resurrection of its programme for buying covered bonds.

A trader at a Japanese bank said if there was no cut, but additional measures like more liquidity are flagged, the euro could rise, taking out stop losses between $1.3400 and $1.3450.

A decisive break above that level could pave the way for a correction towards $1.3680 -- the 38.2 percent retracement of the late August to early October slide from $1.4550 to $1.3145, a nine-month trough struck this week.


Optimism that Germany was taking steps to safeguard the financial sector and improved U.S. economic data provided some support for the single currency after a volatile week in which the French and Belgian governments pledged to rescue troubled bank Dexia .

European finance ministers have agreed to safeguard banks, which could face heavy losses if a planned second bailout package for Greece does not go ahead, but analysts said event risk for the euro remained high.

"The crisis is far from over and I'm still negative on the euro looking beyond the ECB," said Minori Uchida, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, adding that the currency may eventually drift below $1.30 in the coming days.

The single currency jumped to a four-month high of 1.2430 Swiss francs . Traders cited media reports quoting a senior Swiss official as saying a higher exchange rate floor in euro/Swiss would be better for the economy.

Sterling fell 0.2 percent versus the dollar to $1.5438 ahead of a Bank of England rate decision, also on Thursday, amid talk policymakers may open the way for more quantitative easing.

Once ECB and BoE rate decisions are out, market attention is likely to focus on the U.S. economy. A good number from Friday's U.S. non-farm payrolls could set the stage for a rally in risk assets.

The dollar index came off a nine-month high of 79.838 earlier in the week to last trade at 79.055. The greenback was steady against the yen at 76.71 , off a three-week peak of 77.26 struck on Monday.

10-06-2011, 02:29 PM
(Reuters) - World stocks kept a firmer tone on Thursday after the Bank of England surprised the market by launching a fresh round of monetary easing this month, before cutting gains as the European Central Bank left interest rates on hold.

The euro hit the day's low and German government bonds rose after the ECB held interest rates at 1.5 percent, disappointing some who had expected a cut in borrowing costs this month.

Such expectations grew after the Bank of England pledged to buy a bigger-than-expected 75 billion pounds in assets to bolster the UK economy -- a move that pushed sterling to a 14-month low against the dollar.

Investors are now focusing on ECB President Jean-Claude Trichet's news conference at 1230 GMT -- his last, and at which he is expected to announce a set of fresh liquidity measures to help banks.

Growing hopes that policymakers would take coordinated steps to support European banks, under threat from the impact of a possible Greek debt default, kept the underlying tone positive for risky assets.

European Commission President Jose Manuel Barroso proposed a coordinated recapitalization of banks to restore confidence, while the European Banking Authority said it was examining the resilience of lenders' capital positions.

Optimism over near-term policy measures -- both from politicians and central banks -- are helping investors to take a break from a sell-off triggered by growing concerns about the damage to the banks from any Greek sovereign default.

"It's a good injection of capital. We now just need to see a coordinated effort from the rest of Europe to sort out the recapitalization of European banks and it should form a decent base to move forward," said IG Index sales trader Yusuf Heusen.

"It takes away quite lot of risk. This is positive for the market."

The MSCI world equity index .MIWD00000PUS rose 1 percent, off the day's highs, having hit a 15-month low earlier this week. The index is now around 6 percent above that point.

U.S. stock futures were up 0.1 percent, pointing to a slightly higher open on Wall Street.

European stocks .FTEU3 rose 1 percent and emerging stocks .MSCIEF added 2.6 percent.

The dollar .DXY rose 0.3 percent against a basket of major currencies. The euro fell 0.5 percent to $1.3264.

"The ECB is now likely to prepare an interest rate cut within the next four months, by March at the latest," said Berenberg Bank economist Holger Schmieding.

Sterling hit a 14-month low of $1.5270 after the BoE announcement.

Bund futures erased earlier losses to rise 17 ticks on the day.

The cost of insuring peripheral euro zone debt against default fell earlier. Five-year credit default swaps on Italian government debt fell 18 basis points to 450 bps, according to data monitor Markit.

Equivalent CDS prices fell for Spain, Portugal and Belgium.

U.S. crude oil gained 0.7 percent to $80.28 a barrel.

10-07-2011, 02:21 PM
(Reuters) - Stocks opened higher, rising for a fourth day on Friday after stronger-than-expected payrolls data suggested the economy may avoid another recession.

The Dow Jones industrial average .DJI gained 80.19 points, or 0.72 percent, to 11,203.52. The S&P 500 .SPX rose 4.50 points, or 0.39 percent, to 1,169.47. The Nasdaq Composite .IXIC added 0.71 points, or 0.03 percent, to 2,507.53.

10-07-2011, 06:04 PM
(Reuters) - Gold will stay strong due to a lack of alternative havens for investors operating in a slowing global economy, top performing commodity fund managers told Reuters after taking a defensive approach and going into cash during September's gold sell off.

"We consider the current weakness in gold as temporary and also the slump in commodity prices should come to an end soon," said Kurt Hug, an investment adviser for the Antares Precious Metals Fund.

The fund came third in the Lipper Global commodity sector rankings in the third quarter of 2011 by keeping a high percentage of "strategic liquidity" in Swiss francs in anticipation of "a severe, but short-lived commodity shock."

Fund research and analysis organization Lipper, a Thomson Reuters company, covers more than 108,000 funds. The commodity segment covers funds investing in both commodities futures and natural resources-related equities.

Reuters approached the best performers to ask for details of their winning strategies.

Also staying defensive was Paula Bujia, manager of the $330 million Schroders Gold and Precious Metals Fund, which came fourth. Steering clear of precious metals other than gold, and investing in mid-cap gold miners rather than seniors and juniors, helped her outperform, she said.

The gold price has risen by nearly 17 percent so far this year, having hit a record $1,920.20 an ounce in early September before correcting sharply downwards. It was around $1,655 an ounce on Friday.

Bujia said gold's correction from its peak was still only half of its declines in 2008 and she would wait for more selling of gold, particularly in exchange traded funds (ETF), before she felt able to resume aggressive buying of other precious metals and of mining equities.

"In this environment, it's very difficult to believe that other precious metals could do well," she said. "Until we see more capitulation in gold and more ETF outflows it is not the right time to turn aggressive."

Bujia is sticking with her gold tilt, saying the recent correction has been meaningful, but gold is not yet at a capitulation point. She believes gold may trade sideways for another couple of months, or come off another 10 percent.

Precious metals funds dominated the upper end of the Lipper league table of over 130 funds in the third quarter.

The LGT Dynamic Gold Fund came first, returning 9.36 percent over a quarter which saw the commodity index S&P GSCI fall 11.69 percent.

Peter Sigg, head of investment management for commodities at LGT Capital Management, said the $73 million fund had been invested between 96 percent and 115 percent over the quarter.

"We have been slightly leveraged during the move to (gold at) $1,900 (an ounce) and we were slightly invested in cash during the sell-off in September," he said.


Reuters' analysis of the Lipper data showed that the third quarter was testing for all commodity managers, with the average actively-managed fund in the Lipper Global commodity sector down 8.34 percent.

S&P said equity market weakness and U.S. dollar strength had culminated in the worst quarter for the S&P GSCI since the fourth quarter of 2008.

Energy prices came under pressure due to fears of slowing demand and even precious metals did not escape, with profit-taking overwhelming the market in September. The S&P Precious Metals index ended September down more than 14 percent.

"Our conclusion of the last month is that gold is not immune in a very negative global commodity and equity market environment, which was similar to the autumn 2008 experience," said LGT's Sigg.

But, like Bujia and Hug, he remains relatively bullish on gold, saying that whilst the recent sell off had washed out the CFTC net long positions held by professional investors, individual investors had only marginally reduced their physically-backed gold ETF holdings.

Bujia also noted that an equity exposure of just 20-25 percent may have protected her from stock market losses, helping her outperform those with higher equity tilts.

There is still a big gap between the performance of gold futures and gold mining stocks, which she said is partly because the miners are unable to decouple from overall equity markets.

"When you have a fear trade, gold can perform well but not the equities," she said.

She believes gold equities offer great value, with record earnings and cash levels and increasing dividends, but these fundamentals will not come good until the stock market calms down.

Bujia remains cautious, focusing on mid-caps such as Randgold Resources, Yamana Gold and Eldorado which she said have good production growth.

Among the more diversified funds, Neuberger Berman's $100 million Enhanced Commodities fund, managed by Gresham Investment Management, also acquitted itself well largely due to a fairly high exposure to precious metals.

Douglas Hepworth, director of research at Gresham, added that a tilt to crude oil over natural gas, and to meats over grains and softs, had helped.

"Macroeconomic factors have been the drivers of the entire commodities asset class for several months, and nothing there looks particularly encouraging," he said.

The worst-placed funds were the BI Basic Long Commodity Fund, which invests in natural resource equities and futures and cannot go short, and the BBGI Commodities fund which invests in a mix of commodity ETFs and commodity equities.

10-08-2011, 04:28 AM
(Reuters) - Fitch Ratings on Friday cut Italy's sovereign credit rating by one notch and Spain's by two, citing a worsening of the euro zone debt crisis and a risk of fiscal slippage in both countries.

The cuts underline the growing vulnerability of the euro zone, which is already struggling to contain the turmoil in the far smaller Greek economy and which would be overwhelmed by a crisis of a similar scale in Italy.

Fitch cut Italy's rating to A+ from AA- and lowered Spain to AA- from AA+.

It kept both countries, respectively the third and fourth largest in the euro zone, on a negative outlook suggesting further downgrades could come in future.

Italy and Spain are embroiled in the region's debt crisis and are reliant on the European Central Bank to buy their government bonds to prevent yields rising to unsustainable levels.

"A credible and comprehensive solution to the (euro zone) crisis is politically and technically complex and will take time to put in place," the ratings agency said in separate statements explaining its downgrades of both countries.

Fitch's rating for Italy is now at the same level as it rates Malta and Slovakia.

After remaining on the fringes of the euro zone crisis until the summer, Italian benchmark 10-year bonds now yield around 5.5 percent, having overtaken Spain's yield of around 5 percent in a sign of markets' increasing unease about Italy.


Both yields would be higher but for the ECB, which was cited by traders as supporting both countries' bonds in the market again on Friday.

Fitch, the third ratings agency to downgrade Italy in recent weeks following similar moves by Standard & Poor's and Moody's, said market confidence in Italy had been eroded by the government's initially hesitant response to the rise in yields.

The euro fell against the dollar and the yen following the downgrades and U.S. shares fell, but analysts said the move on Italy was largely discounted.

"Fitch's motivations do not differ much from what the other two agencies said. I don't foresee big moves in the markets as a reaction," said BNP Paribas strategist Alessandro Tentori.

ING analyst Paolo Pizzoli said the downgrade should be seen as further pressure on the government to adopt growth enhancing structural reforms which were lacking from a recently approved austerity plan aimed at balancing the budget in 2013.

"There has been a chorus of appeals from the ECB, the EU and the IMF. They have all asked for structural reforms for growth and this (Fitch) is another element in that direction."

Silvio Berlusconi's scandal hit government plans to present a package of measures to help growth later this month but his coalition is so weak and divided that few analysts have any confidence in its ability to adopt the deep reforms required.

Spain's Socialist government has slashed its budget deficit with a series of austerity reforms, although much of the country's debt lies in its autonomous regions which are still implementing cuts.


"We respect the decision but we don't agree with it," said a spokesman at Spain's economy ministry.

Italian officials sought to make light of the downgrade. Foreign Minister Franco Frattini said it was fully expected and added dismissively that "markets don't care much about the role of Fitch, Moody's and company."

Fabrizio Saccomanni, deputy governor of the Bank of Italy, said ratings agencies "move like a herd, they all go in the same direction and at the same time." Fitch's move "doesn't change the picture," he added.

Berlusconi flew to Russia on Friday to celebrate Prime Minister Vladimir Putin's birthday, but a statement from his office said Fitch's comments were more positive than the other agencies', and Italy's fiscal efforts were widely appreciated.

Fitch said both Spain and Italy were solvent but pointed to their weakening economic growth prospects and urged Italy, one of the world's most sluggish economies for over a decade, to make "a more radical and sustained economic reform effort."

10-09-2011, 09:39 PM
(Reuters) - The leaders of Germany and France promised Sunday to unveil a new comprehensive package for solving the euro zone's debt crisis by the end of the month, but offered no details and papered over differences on how to shore up European banks.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said after talks in Berlin their goal was to come up with a sustainable answer for Greece's woes, agree how to recapitalize banks and present a plan for accelerating economic coordination in the euro zone by a G20 summit in Cannes on November 3-4.

"We are very conscious that France and Germany have a particular responsibility for stabilizing the euro," Sarkozy told a joint news conference.

"We need to deliver a response that is sustainable and comprehensive. We have decided to provide this response by the end of the month because Europe must solve its problems by the G20 summit in Cannes."

Sarkozy will host the Cannes summit and is keen to deliver a big success that might bolster his flagging chances of winning re-election in a presidential vote next year.

But even if the two leaders can agree on a way forward, the experience of the past two years has shown that they could struggle to get the other 15 countries in the euro zone on board in a timely fashion.

Pressed by reporters, both leaders refused repeatedly to discuss details of their plan. Sarkozy said he and Merkel were in "total agreement" on the recapitalization of European banks, even though officials in Paris and Berlin have made clear in recent days that the countries are far apart.

The two euro zone heavyweights have come under pressure worldwide to resolve a crisis which is roiling markets.

U.S. President Barack Obama Thursday urged Europe to "act fast," calling the common currency bloc's crisis the largest obstacle to a recovery in the United States. World Bank President Robert Zoellick told German magazine Wirtschaftswoche magazine that there was a "total lack" of vision in Europe and Germany in particular needed to show more leadership.

Following the news conference, the leaders of the euro zone's two biggest economies were due to hold a working dinner at the Chancellery.


The implosion of Belgian lender Dexia, the first bank to fall victim to the two-year-old euro zone debt crisis, has added a sense of urgency to the talks.

The prime ministers of France and Belgium and the finance minister of Luxembourg agreed a rescue plan for Dexia Sunday ahead of the meeting in Berlin. [ID:nL5E7L903A]

Other French banks have come under intense pressure because of their exposure to Greece and other weak countries on Europe's southern periphery.

BNP Paribas and Societe Generale denied a report Sunday that they could seek to raise a combined 11 billion euros as part of a broader European recapitalization plan.

Ireland estimated at the weekend that European banks may need more than 100 billion euros ($135 billion) to withstand the debt crisis. The International Monetary Fund (IMF) has said they need double that figure.

Paris wants to tap the euro zone's 440-billion-euro European Financial Stability Facility (EFSF) to shore up its banks, worried that pouring its own money into them could compromise its coveted triple-A credit rating.

Officials in Berlin have made clear that they believe the fund should be used only as a last resort, when euro zone member states don't have the means to support their banks on their own.

Another area of contention is how to use a new, enhanced EFSF to buy sovereign debt -- an issue that would become particularly crucial if Greece failed to secure its next tranche of aid.

Greece is expected to run out of cash as soon as mid-November. Inspectors from the European Commission, the IMF and the European Central Bank -- the so-called "troika" -- are currently assessing whether Athens has fulfilled the criteria for more aid.

"We are working closely with the troika which is currently in Greece and we expect them to present a sustainable solution for Greece that keeps it in the euro zone and also ensures the financial stability of the euro zone," Merkel said.

European Commission head Jose Manuel Barroso told German newspaper Bild at the weekend that a Greek default would have unforeseeable consequences and may cause the crisis to spread.

"This is new territory for us and we are discussing solutions which have not really been tested before," he said.

Merkel said France and Germany were working on steps to boost economic coordination in the euro zone and said their proposals would necessitate changes to the bloc's Lisbon Treaty.

Sarkozy made clear, however, that Europe needed to "take decisions now," rather than announce new long-term plans that would take time to implement. Changing the treaty could take several years.

"Comprehensive, sustainable and rapid responses before the end of the month. That is the result of this Franco-German meeting," he said.

10-10-2011, 12:13 AM
* Euro up 1/4 cent on Germany, France pledge to recap banks

* Thin trading expected due to Japan holiday

* Key China data due this week

SYDNEY, Oct 10 (Reuters) - The euro inched up in Asia on Monday after leaders of Germany and France promised a new comprehensive plan to recapitalise euro zone banks by the end of the month, though markets remain wary as they have been disappointed many times before.

The euro eked out a gain of around a quarter of a cent to $1.3390 , from $1.3375 on Friday when it had come under pressure following ratings downgrades of Italy and Spain.

Hourly resistance is found at $1.3423 and a break above should ease the downward pressure, according to a trader. Against the yen, the euro eased to 102.84 yen , off a one-week peak of 103.85 on Friday.

The meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy offered no details, but drew a pledge to do what is necessary to shore up banks, settle the Greek crisis and help growth in Europe, giving a gentle boost to risk sentiment. .

Markets, however, are cautious as EU leaders have promised to resolve the debt crisis before and that could keep the common currency within Friday's range of $1.3360-$1.3525. Trading is expected to be thin with Japan off while the U.S. celebrates Columbus Day.

France, Belgium and Luxembourg agreed a rescue plan for Dexia, while other French banks have come under intense pressure because of their exposure to Greece and other weak European countries. BNP Paribas and Societe Generale denied they would seek to raise a combined 11 billion euros as part of a broader European recapitalisation plan.

Adding to pain, the next aid tranche for Greece is far from being a done deal with the IMF indicating the nation is at a crossroads and will need to implement "much stricter structural reforms" than seen so far.

Athens could run out of cash as soon as mid-November without the new 8 billion euro aid installment, increasing the risk of a default that would drag the region deeper into a debt crisis already shaking financial markets worldwide.

The dollar index was steady at 78.718, having fallen to a 9-day trough of 78.061 on Friday, despite better-than-expected U.S. payrolls. The dollar, at 76.71 against the yen, remained stuck in the 77.29-76.09 range of the past month.

This week's focus will be on key China data with trade and CPI due Thursday and Friday. Strong trade numbers and a lower CPI would be the best combination to ease concerns of a hard landing and boost risk sentiment.

10-10-2011, 04:25 PM
(Reuters) - The euro jumped to its highest in over a week against the yen and the dollar on Monday after Germany and France pledged to deliver a plan soon to protect banks and the euro region from its sovereign debt crisis.

The single currency was on track for its best daily rise against the greenback since July 2010, helped by buying to exit short positions and on unexpectedly strong industrial output data from France and Italy.

After their weekend meeting, German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to present a plan before a G20 summit in early November to shore up euro zone banks, settle the Greek debt crisis and help growth in Europe.

"Certainly Merkel and Sarkozy pledging a plan to support European banks by November helped. So we're seeing risk coming back on and that's helping the euro and this rally could go on given the extent of short positioning in the market," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

The euro climbed 2 percent to $1.3648, above a nine-month low of $1.3145 set last week on trading platform EBS, as investors closed out their short positions initiated earlier.

It was also up 2 percent on the day versus the yen after touching 100.74 yen a week ago, which was the lowest since May 2001, according to Reuters data.

Investors had piled into the U.S. and Japanese currencies in a safe-haven move on fears over the euro zone debt crisis.

The euro's rebound could fade if no comprehensive plan emerges in coming weeks, with the risk of renewed bickering between euro zone policymakers seen as a threat to a decision.

"But at the end of the day Greece still has problems," Chandler said.

Officials of the European Union, International Monetary Fund and the European Central Bank met with Greece's finance minister on Monday to complete talks on 8 billion euros worth of aid so Athens could avert a default in November.

Stronger-than-expected French and Italian output in August reduced fears of sharp economic pullbacks in euro zone's second- and third-biggest economies. That helped propel the euro higher on the day.

Trading volume was muted due to holidays in Canada and United States.


The pledge from Merkel and Sarkozy, albeit short on details, boosted the euro and other currencies perceived as risky.

Improved sentiment led to a selling of the U.S. dollar against the Swiss franc and the Canadian and Australian dollars.

Traders will now focus on voting in Slovakia and Malta to ratify changes to the European Financial Stability Facility, a 440 billion euro bailout fund. They are the remaining euro zone countries still to approve the changes. Any delay on passing the legislation could affect sentiment toward the euro.

Adding to traders' concerns for the euro, the next aid tranche for Greece is far from a done deal. The IMF said Greece is at a crossroads and would need to implement "much stricter structural reforms" than seen so far.

"Short positions against the euro have been stopped out, which is why the euro has bounced," said Adam Myers, senior currency strategist at Credit Agricole.

The euro slipped against the Swiss franc after touching a 4-1/2 month high at 1.24358 francs on EBS. It had risen on lingering speculation Swiss authorities could raise the floor on euro/Swiss franc from 1.20 francs currently.

The dollar was little changed against the yen at 76.65 yen while it fell 2.6 percent against the Swiss franc at 0.9028 francs.

The dollar index declined 1.6 percent against a basket of currencies at 77.47.

10-11-2011, 04:10 AM
(Reuters) - The euro held huge gains in Asia on Tuesday after hopes for a new EU debt plan sparked a correction in a deeply bearish market, though sentiment remains fragile as European leaders have disappointed many times before.

The euro rose three cents to a peak of $1.3698 on Monday, its biggest daily gain versus the U.S. dollar in 15 months. It last traded at $1.3627. It also flew to 104.99 yen, the highest in three weeks, showing a rise of 1.65 percent, before steadying at 104.46.

The rally followed an Franco-German pledge on Sunday that they would do what is necessary to shore up banks, settle the Greek crisis and help growth in Europe.

Commodities, stocks and high yielding currencies joined the "risk on" wave with copper close to 13 percent higher in just one week. The Australian dollar enjoyed the biggest one-day rally in over a year, surging 2.3 percent after briefly touching parity at $1.0016. It was last at $0.9980.

The revival in risk flushed out long positions in the U.S. dollar across the board, including the Swissy. It collapsed 2.5 percent to 0.9032 francs. The dollar index fell sharply to near three-week lows at 77.561, down 1.48 percent.

Major resistance for the euro is found at $1.3680-90, the 38.2 percent Fibonacci retracement of the $1.4550/$1.3145 move and the September 28 trend high. A clear break above $1.3700 targets $1.3845.

Dealers were surprised by the scale of the reaction given EU leaders have disappointed many times before.

"Unfortunately, Europe has a history of delivering far too little far too late," said Robert Rennie, chief currency strategist at Westpac.

"Europe doesn't have the political will, the cohesion and the sense of what needs to be done."

He said the rally was temporary and would be looking to sell the euro into strength which means in the $1.365-$1.385 range.

Investors were looking for an excuse to price out bad news that have been gripping markets since September. While there is little doubt the problems in Europe will resurface at some stage, recent economic data was better than feared, countering the danger of a global recession.

Traders will focus on voting in Slovakia on Tuesday, the only country among the bloc's 17 members that has yet to ratify changes to the euro zone's 440-billion-euro bailout fund. Any delay on passing the legislation could affect sentiment toward the euro. Malta gave its backing earlier on the day.

The dollar remained stuck at 76.65 yen, within the tight 77.29-76.09 range of the past month.

UK industrial production and minutes of the FOMC meeting will be released later on Tuesday.

This week's focus will be on key China data with trade and CPI due Thursday and Friday. Strong trade numbers and a lower CPI would be the best combination to ease concerns of a hard landing and boost risk sentiment.

10-11-2011, 11:01 PM
(Reuters) - U.S. stocks took a breather on Tuesday after the best five days for the S&P 500 in more than two years as investors look to earnings for a reason to extend the market's rebound.

Stocks wavered between gains and losses throughout the session. Markets have been reacting to news from the euro zone where officials are trying to contain a debt crisis that threatens large European banks and global financial stability.

The focus now will shift to earnings season, which begins with Alcoa Inc's (AA.N) report after the close of trading. U.S. economic indicators have shown signs of slow growth and investors are waiting to see how this has affected company profits.

"Earnings are always important but even more so here after several quarters of solid earnings across many industry sectors. I think investors are going to want to see that continuing or solidifying itself. Otherwise you could see further selloffs," said Michael Cuggino, president and portfolio manager of Permanent Portfolio Funds in San Francisco.

Materials stocks fell throughout the third quarter on worries about global growth slowing. Alcoa gained 2 percent to $10.30 in regular trading but is down 35 percent since the beginning of the third quarter.

After the market closed, Alcoa said third-quarter profit jumped from a year ago, but earnings and revenue slipped from the second quarter as economic growth slowed from the first half of this year.

A delay in a key vote by Slovakia on expanding the euro zone rescue fund has also kept investors cautious.

With 16 of 17 euro zone states having ratified a pact to boost the size and powers of the European Financial Stability Facility bailout fund, all eyes turned to Slovakia. The country's finance minister said the country was expected to approve the changes this week.

Any more delays in coming up with a plan intended to head off crisis could give the market an excuse to sell. Stocks have reached the top of a recent range, hitting resistance around 1,195 on the S&P 500. Another area of resistance is seen at 1,215 on the S&P 500, said Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc in Boston.

"The bounce we've had is kind of getting us close to resistance levels ... we're looking to see if it can break through," he said.

Apple (AAPL.O), which gained 3 percent to $400.29, lifted the Nasdaq and S&P 500.

The Dow Jones industrial average markets/index?symbol=us%21dji">.DJI was down 16.88 points, or 0.15 percent, at 11,416.30. The Standard & Poor's 500 Index .SPX was up 0.65 point, or 0.05 percent, at 1,195.54. The Nasdaq Composite Index .IXIC was up 16.98 points, or 0.66 percent, at 2,583.03.

After the close, Alcoa, the largest U.S. aluminum company, dipped slightly $10.03 after it posted results.

In the past week, analysts have lowered their consensus earnings estimates for Alcoa, citing a precipitous drop in metals prices in recent months sparked by global economic concerns.

About 6.90 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq for the day, well below the year's daily average so far of 8.03 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of roughly 16 to 13, while on the Nasdaq, advancers beat decliners by about 3 to 2.

10-13-2011, 12:29 PM
(Reuters) - Italy's sale of 6.2 billion euros in bonds on Thursday eased investors' immediate concerns about its funding in the euro zone debt crisis, but stock markets were hit by weaker Chinese trade data.

European shares fell 0.9 percent after recent gains and Wall Street looked set to open lower following data showing China's trade surplus narrowed for a second straight month in September, with both imports and exports lower than expected.

It reflected global economic weakness, which along with the euro zone debt crisis has kept investors avoiding aggressive risk taking over the past months.

In Europe, there appeared some traction to the idea that policymakers were working on a cogent plan to solve the debt crisis, or at least reduce its threat.

Jose Manuel Barroso, president of the European Commission, outlined a broad plan on Wednesday to tackle the euro zone's two-year debt crisis, fuelling optimism.

"Maybe the political decisions are finally coming through," said Justin Urquhart Stewart, director at Seven Investment Management.

The sale of Italian bonds went relatively smoothly, although a lot of the buying may have been prompted by cheaper prices ahead of the sale.

Traders said the European Central Bank began buying Italian bonds focused around the 10-year sector shortly after the release of auction results.

Earlier 10-year yields rose to 5.87 percent, their highest since the central bank began purchasing Italian debt in August as part of an effort to cap the country's rising cost of borrowing. The 10-year yield was last at 5.80 percent, 6 basis points higher on the day.


On stock markets, the FTSEurofirst 300 finance/markets/index?symbol=gb%21FTPP">.FTEU3 fell but was still heading for its third straight week of gains, something it has not achieved since March/April.

World stocks as measured by MSCI .MIWD00000PUS were down a bit.

Earlier, Japan's Nikkei .N225 rose nearly 1 percent, catching up with U.S. and European gains from Wednesday.

The euro fell broadly, pulling back from a one-month high versus the dollar after the European Central Bank warned about the impact on the currency and the region's banks of involving bondholders in euro zone bailouts.

The euro hit a session low of $1.3711 after an article in the ECB's monthly report said forcing private bondholders to accept losses on euro zone sovereign debt could damage the euro's reputation, prompting traders to take profits on a rally which has been built on investors backing off bets for further euro weakness rather than betting on future gains.

The euro had rallied earlier in the week, climbing to $1.3834 on Wednesday after German Chancellor Angela Merkel and French President Nicolas Sarkozy late last week said they would announce a plan to solve the euro zone debt crisis by the end of the month.

10-16-2011, 07:53 PM
(Reuters) - An improvement in manufacturing, employment and retail sales data in the United States, and mounting signs that Europe will agree on a rescue plan large enough to contain the Greek debt crisis, have lifted some of the gloom overhanging the global economy.

But the gains are highly tentative and policy mistakes in Brussels this week could easily upend the outlook.

Over the past three months, political gridlock in Washington over the U.S. budget deficit and infighting in European capitals resulted in the biggest falls in the prices of risk assets since the collapse of Lehman Brothers in late 2008.

Global stock prices have since stabilized, and in Europe even posted gains over the past week, easing fears that the developed world would drive the global economy off a cliff.

"Despite the dark policy backdrop, not all is bad," said Joachim Fels, head of global economics at Morgan Stanley.

Energy and commodity prices also have fallen sharply, boosting spending power, particularly in the United States where crude oil has tumbled 14 percent since July.

The relaunch of unusual liquidity measures by the Federal Reserve, European Central Bank, and Bank of England has alleviated strains in bank funding and calmed markets, buying politicians some extra time to sort out their fiscal woes.

"Things are looking a little bit brighter out there, but there are still enormous out-sized risks," said Nigel Gault, U.S. chief economist for IHS Global Insight.

Prime among them is Europe. If European Union leaders fail at their summit next weekend to deliver a comprehensive plan to resolve its sovereign debt crisis and recapitalize its banks, market volatility will return with a vengence, analysts warn.

Even the extraordinary steps that central banks have taken to prevent the crisis worsening have brought large risks.

Global liquidity, as measured by foreign exchange reserves and central bank balance sheets, has soared to $18.3 trillion, equal to 30 percent of global GDP, from $10.4 trillion three years ago, Bank of America/Merril Lynch has estimated. This massive monetary policy easing has stirred inflationary fears.

There is only one solution. "Better policy decisions on both sides of the Atlantic are needed to get us out of this fix," said Fels.

Otherwise the negative feedback loop will resume, where bad policy decisions intensify risk aversion and worsen the sovereign debt crisis by destabilizing financial markets, undermining bank solvency, and upending world economic growth.


In the United States, there are few signals that lawmakers have the appetite for a medium-term resolution to the budget deficit before November 2012 elections.

The U.S. Senate this week rejected President Barack Obama's $447 billion jobs package after disagreement over how to fund the minor stimulus measure, with two Democrats facing tough re-election joining Republicans.

Senators next week may agree to vote on some piecemeal jobs measures such as extending jobless benefits and cutting payroll taxes.

Joel Prakken, economist at Macroeconomic Advisers in St. Louis, calculates that extending unemployment benefits for the long-term jobless would add 0.25 percent to real GDP growth in 2012, and support 200,000 jobs. Continuing the payroll tax holiday for employees would add 0.50 percent to GDP over the year and raise employment by 600,000, he said.

"It is modest at best," Prakken said.

But combined with recent improvements in auto sales, retail sales in August and September, and better manufacturing and employment reports, the U.S. economy looks on more solid footing than a few months ago, he said.

That would be good news for China, which relies heavily on its exports to the United States and where economic growth is clearly slowing. The question is by how much.

Figures on Tuesday are expected to show China's third-quarter GDP up 9.2 percent from a year earlier, according to a Reuters poll of economists. That would be down only modestly from the second quarter, when China recorded 9.5 percent growth.

A less closely watched indicator, urban investment, may provide a better signal. Last week's disappointing trade figures underscored China's vulnerability to a global slowdown. Domestic growth has cushioned the blow so far, and investment is a big reason why.

The data on Tuesday is expected to show urban investment up 24.8 percent from a year earlier, only slightly below the second quarter's 25 percent rise. If external demand weakens dramatically, economists think China will compensate by ramping up investment, which accounts for the bulk of its GDP.

10-18-2011, 06:52 AM
Euro off 1-mth high after Germany undercuts hope on crisis plan

* Short-covering of euro may ebb, positions seen more square

* Bearish engulfing candlestick may bode ill for euro -trader

* Traders cite talk some offshore funds turning bearish on yen

SINGAPORE, Oct 18 (Reuters) - The euro rose on Tuesday but remained below the previous day's one-month high, having taken a hit after Germany tempered hopes that European leaders would soon come up with a quick, comprehensive solution to the euro zone's debt crisis.

The euro regained some ground after a 1 percent drop the previous day, with market positioning and some technical signals suggesting that its recent short-covering rally may be running out of steam.

German Finance Minister Wolfgang Schaeuble poured cold water on the euro's rally on Monday, saying an Oct. 23 European Union summit would not provide a "definitive solution" to the region's debt crisis.

While some gauges of market positioning suggest speculators may still be short the euro, the amount of their euro bearish bets is likely to have declined over the course of the recent rally, and the euro may now be more vulnerable.

"The rise we saw recently was just a result of markets having gotten ahead of themselves," said Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo.

"I think we will start to see it fade," Karakama said, referring to the euro's recent upward momentum. "The euro's outlook from here looks weak," Karakama added.

The euro edged up 0.3 percent from late U.S. trade on Monday to $1.3780 , but remained below a one-month high around $1.3914 hit on Monday on trading platform EBS.

Traders said there were a mixture of buy orders and stop-loss offers in the euro at levels below $1.3750.

Risky assets and the euro have bounced in the past week as investors pared bearish bets after the leaders of Germany and France pledged to unveil a comprehensive package by the end of the month to resolve the euro zone's debt crisis, including an agreement on how to recapitalise banks.

While European leaders may decide on an overall stance to beef up banks' capital at the Oct. 23 EU summit, they will probably opt to decide on specifics at a later date, said Mizuho Corporate Bank's Karakama.

In any event, efforts to recapitalise euro zone banks can carry a cost. If countries in the euro zone were to shoulder the burden their fiscal conditions could worsen, and if money from the euro zone's EFSF (European Financial Stability Facility) rescue fund were to be used, that could rekindle the issue of whether the size of the rescue fund is sufficient, Karakama added.

The Australian dollar edged up 0.4 percent to $1.0218 , supported by short-covering after a 1.7 percent drop the previous day. The Aussie dollar has retreated after hitting a one-month high of $1.0372 on Monday.

A batch of Chinese data were broadly in line with market expectations, confirming that China's economic growth was moderating but not weakening sharply, and had limited impact on the Australian dollar.

The Aussie dollar can be sensitive to shifts in China's economic fundamentals since China is a major buyer of Australia's commodity exports.


In a development that could come back to haunt the euro in coming months, Moody's warned on Monday it may slap a negative outlook on France's Aaa credit rating in the next three months if the country fails to make progress on crucial fiscal and economic reforms.

One factor that may bode ill for the euro in the near-term outlook is a bearish engulfing candlestick pattern that appeared on charts on Monday, said Tsutomu Soma, senior manager for Okasan Securities' foreign securities department in Tokyo.

The euro may come under pressure if it drops below last Friday's intraday low near $1.3720, Soma said.

A bearish engulfing candlestick pattern appears on a day when a currency closes below its opening level, after an opposite move the day before. In addition, the gap between the opening and closing levels must be wider than the previous day.

When such a pattern appears after an uptrend, it can be a sign that the trend may start to reverse.

The dollar held steady against the yen at 76.84 , having hit a one-month high near 77.48 yen last week.

"We've heard a number of funds and a number of investors talking about going long dollar/yen," said Rob Ryan, FX strategist at BNP Paribas in Singapore.

Still, it is unclear what types of factors may push dollar/yen higher at this stage, Ryan said. For example, it seems unlikely that Japanese institutional investors will turn aggressive about taking on foreign exchange risk when the yield gap between Japanese and U.S. bonds is pretty narrow.

Indeed, Japan's Fukoku Mutual Life Insurance has said it will cut its net buying of U.S. and German bonds in the half-year to March from its original plan and shift to domestic bonds instead as the yield gap between overseas and Japanese bonds has narrowed sharply.

"We've gone short from 77.40, we're looking for a break lower," said Ryan at BNP Paribas.

10-19-2011, 03:44 AM
(Reuters) - A double-notch downgrade to Spain's credit ratings has piled more pressure on European leaders to make rapid progress on solving the region's debt crisis or face unbearable borrowing costs.

The fresh blow from Moody's Investors Service came just a day after the agency warned France its triple-A rating could be at risk and overshadowed a report that Germany and France were nearer a deal on leveraging the euro zone's rescue fund.

"If the euro zone can't figure a way to handle the situation, you are going to see Spanish yields continue to go up, and they are going to have a problem to funding themselves," said Jessica Hoversen, currency and fixed income analyst at MF Global in New York.

Investors are counting down to a summit of EU leaders this weekend that was originally hailed as a watershed event.

Britain's Guardian newspaper on Tuesday said Germany and France had agreed to leverage the euro zone's bailout fund to over 2 trillion euros as part of a "comprehensive plan" but a senior euro zone source poured cold water on the report, telling Reuters that there had been no mention of such a deal.

The report initially caused a sharp rally in shares and the euro, only to be snuffed out by the downgrade to Spain.

Moody's cut the country's bond rating to A1, from Aa2, the third of the major agencies to act in recent weeks and taking it a notch below the ratings of Standard & Poor's and Fitch.

Moody's reasoning made worrying reading for those hoping for a speedy resolution to country's troubles.

"Since placing the ratings under review in late July 2011, no credible resolution of the current sovereign debt crisis has emerged and it will in any event take time for confidence in the area's political cohesion and growth prospects to be fully restored," the agency said.

In the meantime, Spain's large sovereign borrowing needs, heavily indebted banking system and challenging growth outlook left it vulnerable to further downgrades, a judgment that would encompass all too many of EU members.


The Guardian, citing senior European Union diplomats, had reported the euro zone would endorse a five-fold increase in the 440-billion-euro bailout fund to help troubled governments and banks survive should Greece or any other member default.

The much-touted idea would be for the European Financial Stability Facility (EFSF) to insure the first 20-30 percent of any losses on new government debt.

Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey, said an expanded $2 trillion bailout fund would be about the right size to restore come confidence.

But he added: "I have to take it with a grain of salt. We've seen a lot of these European reports that something was imminent only to be disappointed the next morning."

Indeed, German policy makers have been doing their best to play down the chances of a ground-breaking deal anytime soon.

German Chancellor Angela Merkel on Tuesday warned that leaders would not solve the debt crisis at a single meeting.

"These sovereign debts have been built up over decades and therefore one cannot resolve them with one summit but it will take difficult, long-term work. Nonetheless, I do think we will also be able to take relevant, important decisions," she said.

Markets have been on edge for fear European leaders would not agree on a plan to address the crisis, which has already forced Greece, Ireland and Portugal to seek bailouts and has driven up borrowing costs in Italy and Spain.

France saw its borrowing costs jump on Tuesday after Moody's warned it may slap a negative outlook on the country's Aaa rating in the next three months if slower growth and the costs of helping to bail out banks stretch its budget too much.

Economy Minister Francois Baroin insisted the rating was not at risk but acknowledged that the 1.75 percent growth forecast on which the government had based its 2012 budget was over-optimistic and would have to be revised down.

"The triple-A is not in danger because we will be even ahead of schedule on passing deficit reduction measures," Baroin said on France 2 television.

"We will do everything to avoid being downgraded."

10-19-2011, 04:03 AM
(Reuters) - The Nikkei stock average rose on Wednesday after a media report raised expectations that Europe will act to strengthen the euro zone's rescue fund, though skepticism about whether it can put such a bold step into practice limited further gains.

The market also lacked momentum on caution about a mixed batch of U.S. earnings after Apple (AAPL.O) reported a rare miss in quarterly results, with sales of its flagship iPhone falling short of Wall Street expectations.

The Nikkei finance/markets/index?symbol=jp%21n225">.N225 was up 0.6 percent at 8,789.83 by the lunch break, while the broader Topix index .TOPX gained 0.3 percent to 754.04. Trade was extremely light, with turnover at 398 billion yen at midday, just 4 percent above the same time on Tuesday, when it hit the lowest level since December.

Wall Street rallied in its last hour of trade on Tuesday after Britain's Guardian newspaper said France and Germany will increase the euro zone's rescue fund to 2 trillion euros as part of a plan to resolve the sovereign debt crisis.

A senior euro zone source told Reuters there had been no mention of such a deal and many market players doubt whether such a huge increase is immediately possible given how policymakers have had a tough time getting the current 440 billion euro bailout scheme ratified in the euro bloc.

"If they can boost the bailout fund to 2 trillion euro, that would be a perfect score markets have been looking for. But the reality is that will be difficult to pull off," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

While the news prompted short position holders to cover their positions, many investors are still not excited, as manifested in low trading volume, and they preferred to wait until what European leaders will do at their summit on Sunday.

"I'm sure there will be a lot of headlines on the euro zone plan toward the summit and speculators will jump on them, swinging the market this way or that. But real money investors are waiting for the summit. That's why volume is slow," said Mitsubishi's Fujito.

Apple's (AAPL.O) latest results undermined tech shares, although an upbeat earning forecast from Intel Corp (INTC.O) helped counter the impact.

Ibiden (4062.T), a major supplier of integrated circuit packages to the U.S. firm, rose 2.9 percent to 1,896 yen.

Olympus (7733.T) remained the most actively traded share on the Tokyo Stock Exchange's main board for the fourth day in a row as the company suffers from allegations by its former CEO that it made improper M&A fee payments.

Olympus fell 3.2 percent to 1,372 yen, though it has so far managed to stay above Tuesday's 2- year low of 1,281 yen.

Some players were short-selling the stock aggressively while there were bids from investors who saw value in the company's strength in its endoscope business.

Still, doubts about the company's governance is making the stock untouchable for many investors.

"Foreign investors had snatched up the shares after they hired a foreign CEO and they haven't offloaded their holdings yet," said a trader at a Japanese firm.

10-19-2011, 10:46 PM
(Reuters) - The euro was little changed against the dollar and yen on Wednesday due to nagging doubts that European leaders will take aggressive steps at a summit this weekend to resolve the region's debt crisis.

Officials dismissed a report in Britain's Guardian newspaper on Tuesday that France and Germany had agreed to a deal enlarging the European Financial Stability Facility (EFSF), while French President Nicolas Sarkozy said talks to boost the bailout fund have stalled. But investors still clung to the newspaper report as a reason to pare back bets against the euro.

Optimism that a definitive plan would be in place by a European Union summit on Sunday had sparked a rally in the euro last week from 8-1/2-month lows. Germany later tamped down enthusiasm by saying the summit would not provide an ultimate solution to the debt crisis.

"At the end of the day, the market is nervous, waiting to see anything substantial coming out of the summit," said Tom Fitzpatrick, chief technical strategist at CitiFX in New York. "We are getting to a point that there have been so many false promises so they really need to deliver something big."

The euro was last up 0.09 percent at $1.37480 after bouncing between $1.3735 and $1.3870 on trading platform EBS. It touched a one-month high of $1.39148 on Monday.

Wavering confidence about a crisis plan has increased the euro's volatility against the dollar this week. The one-month euro/dollar volatility index ended flat on Wednesday but is up 2.4 percent so far on the week.

The Guardian, citing senior European Union diplomats, said the euro zone would endorse a five-fold increase in the 440 billion euro bailout fund.

But a senior euro zone source told Reuters there had been no mention of such a deal. A spokesman for the German Finance Ministry said the bailout fund will not be raised beyond the 440 billion euros already approved nor will Germany's participation rise beyond 211 billion euros.

German Chancellor Angela Merkel talked down expectations of a deal for a "bazooka" solution coming out of the summit, adding that past errors will not be solved in one stroke.

Germany, the euro zone's strongest economy, has been reluctant to back aggressive measures to contain the crisis due to worries it has already overextended itself as its economy is slowing.


As traders struggle to position for this weekend's EU summit, analysts said there are positive factors for the euro.

Chris Turner, FX strategist at ING, said demand to cover short positions in the euro remained high given that the average entry level of such positions in September was around $1.37. The euro's rally above $1.39 earlier this week put investors at risk of a loss on those positions.

Going into the summit, Turner said, the euro may rally toward $1.40 if more mainstream press reports suggest EU leaders are nearing agreement to take decisive actions.

The euro briefly extended gains against the dollar after data showing U.S. housing starts in September topped expectations boosted the appetite for risk.

Sovereign demand from the Middle East and Asia likely also boosted the euro, traders said, although some doubted it was the dominant driver behind gains.

Against the yen, the euro was up 0.09 percent to 105.61 yen, paring earlier gains.

The single European currency rose 0.5 percent against the Swiss franc to 1.2418 francs, having hit 1.2475 on EBS, the highest level in five months, on persistent, though unconfirmed, market talk of the Swiss National Bank raising the euro/Swiss target rate from 1.20 francs.

Investors shrugged off a double-notch downgrade of Spain's debt rating.

The dollar index was flat at 77.112, while the greenback was flat against the yen at 76.80 yen.

10-21-2011, 06:01 AM
(Reuters) - Gold prices rebounded on Friday, boosted by arbitrage buying interest from Shanghai market, but gains could be limited as uncertainty remains on whether European policymakers would agree on a definitive solution to euro zone's debt crisis.

Deep division among European leaders on strengthening the bloc's rescue fund has dampened hopes that Europe was close to finding a solution, rattling commodities and sending gold down more than 1 percent in the previous session.

Conflicting voices from the euro zone over the past few days have directed the ups and downs of the financial market, and participants are now eyeing the European Union summit this Sunday for further trading cues.

The sharp price drop in the previous session has provided an opportunity for arbitrage trading from Shanghai market, traders said. The most-active Shanghai gold futures contract traded around 336 yuan a gram, or $1,638 an ounce, at a premium of $13 over spot gold prices.

"There was quite some buying from Shanghai after market opened there," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

"Prices appear to be consolidating within the range of $1,550 and $1,700."

Spot gold gained 0.4 percent $1,625.12 an ounce by 0253 GMT, but was headed for a drop of 3.2 percent from a week earlier, its biggest weekly decline in nearly a month.

U.S. gold rose as much as 1.1 percent to $1,630.9, before easing to $1,626.90, on course for a 3.3 percent weekly decline.

Technical analysis suggested spot gold could rebound to $1,650 during the day, said Reuters market analyst Wang Tao.


The price dip to near $1,600 in the previous session triggered some physical buying, dealers said.

"There was a fair bit of buying but nothing frantic," said a Singapore-based dealer. "Perhaps the market is expecting a lower price to come."

Physical demand in Asia, mainly India and China, has entered its traditional peak season of the year, but such demand alone is unlikely to lift prices above the current range.

"The main drivers behind prices still remain in the ETF holdings, hedge funds and COMEX market," said the dealer.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, have remained constant at 1,227.511 tonnes for the past five sessions, down a modest 4.4 tonnes from the end of September.

And holdings of the world's largest silver-backed exchange-traded fund, iShares Silver Trust, edged lower from the previous session to 9,874.05 tonnes, lowest in nearly a month, as silver prices retreated 23 percent from a month earlier.

Spot silver inched up half a percent to $30.65, on course for a weekly decline of 4.7 percent, its biggest one-week fall in a month.

10-21-2011, 05:12 PM
(Reuters) - The U.S. dollar fell broadly on Friday and hit a record low against the yen on hopes Europe was closer to solving its debt crisis and talk the Federal Reserve may take new measures to boost growth.

France and Germany said in a joint statement that European leaders would discuss a solution to the crisis on Sunday, but no decisions would be adopted before a second meeting to be held by Wednesday at the latest.

Optimism European leaders will take more measures to contain the crisis kept investor appetite for risk alive, sending U.S. stocks sharply higher and dampening demand for the safe-haven greenback.

Adding to losses in the dollar, Fed Board Governor Daniel Tarullo said Thursday there is need for additional stimulus measures and the Fed should consider buying more mortgage bonds to boost the weak housing sector and economy. Fed easing is seen negative for the dollar because it lowers U.S. yields.

"It is very much a dollar negative environment. Risk is on," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

Against a basket of major currencies, the dollar last traded down 0.8 percent at 76.357, having hit a low of 76.249, the lowest level since mid-September.

Paresh Upadhyaya, head of Americas G10 FX strategy at Bank of America Merrill Lynch in New York, said the currency market followed equity prices.

The U.S. dollar has shown a strong inverse relationship with stocks in recent trading. The 25-day correlation between the dollar index and the Standard & Poor's 500 Index hit negative 0.927 on Friday.

The euro rose 0.7 percent to $1.3876, having hit $1.3900 on Reuters data and recovering from a low of $1.3703.

"The market is giving the benefit of the doubt that they are going to come up with some sort of a meaningful stop gap measure in Europe," said Boris Schlossberg, director of currency research at GFT in New York.

But Bank of America's Upadhyaya said: "whatever might be announced, I don't think it would be enough to satisfy the markets." He expects the euro/dollar to decline to $1.30 by the end of the year.

The euro dropped 0.3 percent to 105.58 yen. It also slipped 0.3 percent against sterling and lost 0.6 percent versus the Swiss francs.


The dollar fell as low as 75.78 yen on trading platform EBS, surpassing its previous record low of 75.941 set in August, bringing back into focus the threat of official intervention to weaken the Japanese currency.

Traders reported initial large selling of dollars from a U.K. clearer and macro funds, and losses accelerated after the pair broke through a series of stops around 76.30 and 75.90.

It last traded down 0.9 percent at 76.18 yen, coming off lows on reported buying from Japanese banks at the 76.00 level. At current levels, it was on pace for its biggest daily fall since August 26.

Talk that Japanese authorities may follow the footsteps of the Swiss National Bank in putting a floor in dollar/yen had buoyed the currency pair in recent sessions, but investors resumed yen buying after market speculation failed to materialize.

"I do think we are increasingly vulnerable to (Bank of Japan) interference. Irrespective of whether it's going to be effective or not, they're going to come in at 75," said GFT's Schlossberg.

10-23-2011, 08:04 PM
(Reuters) - Bankers have offered to stretch the voluntary haircut on Greek debt to 40 percent, while politicians demand the private sector agree to writedowns of at least 50 percent, senior German banking source said on Sunday.

Politicians, including German finance minister Wolfgang Schaeuble have asked private creditors to Greece to accept steeper writedowns on their holdings than the 21 percent losses agreed last July.

Politicians and bankers are still wrangling over how to restructure Greek debt as part of negotiations to reform the common currency.

EU officials have also demanded that banks prop up their capital cushions to meet a core tier one capital ratio of 9 percent, in a bid to make the financial system more able to withstand a restructuring of Greek debt.

Banks are seen needing just under 100 billion euros with the bulk required by banks in Greece, Spain and Portugal.

Big name banks caught in the crossfire will have to raise less than they feared two weeks ago, and should be able to raise it privately, through existing shareholders or sovereign funds, bankers and analysts said.

To meet the more stringent capital requirements, even large lenders like Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) are being asked to bulk up their capital position.

Deutsche needs an additional 2 billion euros which it can raise via retained earnings, shedding risk weighted assets, and via a small capital increase if needed, the senior German banking source, who declined to be named, said on Sunday.

The private sector is still striving to reach a deal on Greek debt writedowns by Sunday, another source said.

In July, banks and insurers agreed to contribute 50 billion euros ($69 billion) to reducing Greece's debt via a debt buyback and swap agreement, which equated to a 21 percent writedown. That is now seen as insufficient to make Athens' debt sustainable.

Deutsche Bank (DBKGn.DE) analysts last week outlined a way for banks to contribute a 40 percent "haircut" on Greek sovereign debt without substantially changing the terms of July's debt-relief deal.

10-24-2011, 07:06 AM
(Reuters) - Spot gold prices edged higher on Monday, after European leaders moved closer to a concrete plan to solve euro zone's debt crisis during a weekend meeting, lifting sentiment in commodities and equities.


Spot gold edged up 0.2 percent to $1,642.99 an ounce by 0022 GMT, after losing more than 2 percent last week.

U.S. gold gained half a percent to $1,645.

European Union leaders made some progress toward a strategy to fight the euro zone's sovereign debt crisis on Sunday, but the final decision was deferred until a second summit on Wednesday.

Money managers, including hedge funds and other large speculators, slashed their bullish bets in gold futures and options, as the price of bullion fell on a lack of safe-haven buying.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, remained unchanged, while holdings of iShares Silver Trust edged lower from the previous session.


The euro held its ground against the dollar early in Asia on Monday with markets still clinging to hopes that European policy-makers were moving a step closer to resolving the region's debt crisis.

The S&P 500 posted its third straight week of gains on Friday, lifted by optimism before this weekend's summit of European leaders and strong earnings from blue-chip stocks.

10-25-2011, 07:09 AM
(Reuters) - The euro edged lower on Tuesday but still held near a six-week high hit the previous day, supported by market expectations for European leaders to come up with broad measures to contain the region's debt crisis at a summit on Wednesday.

European leaders had neared a deal over the weekend on bank recapitalization, and euro zone officials have said that France and Germany were close to agreement on how to leverage a euro zone rescue fund to stop bond market contagion.

Hopes that euro zone leaders would soon decide on a framework to ease the debt crisis have given a boost to risky assets and the euro over the past couple of days.

"Market players seem to be closing out positions, which had been betting on a rise in risk aversion. It seems like the unwinding of such bets rather than aggressive risk-taking," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.

The euro appears to be getting support from such position unwinding, Fukaya said, adding that the euro may sag toward $1.35 or so once such short-covering runs out of steam.

The euro dipped 0.2 percent to $1.3901, hovering near a six-week high of $1.3957 hit on Monday on trading platform EBS.

Data from the U.S. Commodity Futures Trading Commission released last week shows that currency speculators still held a large net short position in the euro of 77,720 contracts in the week that ended on October 18.

The euro faces resistance near $1.3989, its 200-week moving average, with additional resistance near $1.4040, which is roughly a 50 percent retracement of the single currency's May to October decline.

On the downside, there was talk of stop-loss euro offers at levels around $1.3750.


The single currency's recent rally has weighed on the dollar. The dollar index, which measures the dollar's value against a basket of currencies, stood at 76.176, near a six-week low of 75.985 hit this week.

The dollar held steady against the yen at 76.10 yen, hovering near a record low of 75.78 yen hit late last week on EBS.

Japanese Finance Minister Jun Azumi on Tuesday kept up his warning to markets about pushing up the yen too much, saying he was ready to take firm steps if the currency's appreciation becomes excessive.

One factor that has helped support the yen this year is a narrowing of yield spreads between Japanese debt and their U.S. and European counterparts, which has made overseas bond investment less attractive to Japanese investors.

"There has been a dearth of (capital) outflows from Japan," said Fukaya at Credit Suisse, adding that institutional investors such as Japanese life insurers seem unlikely to aggressively step up their overseas investment at this juncture.

Indeed, Japanese life insurers have sounded cautious about investing in foreign bonds. For example, Sumitomo Life recently said foreign debt has become unattractive after sharp drops in yields, while Asahi Mutual Life Insurance said it plans to cut its investment in foreign bonds in the six months to next March.

Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore, said his bank's forecast was for the dollar to stand at around 76 yen at the end of the year, little changed from its current level.

"It will only start trending higher when the market looks for tightening by the Fed, and that isn't going to happen for a long time," Henderson said, referring to dollar/yen.

U.S. Federal Reserve policymakers have recently stepped up their debate over how far the Fed should go to support an anemic recovery, with some doves calling for fresh monetary stimulus.

10-26-2011, 09:16 AM
(Reuters) - Spot gold rose nearly 1 percent on Wednesday to its highest level in more than a month, as safe-haven demand returned on growing doubts over a resolution to the euro zone debt crisis ahead of a key European Union summit later in the day.

Deep disagreement remained on critical aspects of the potential agreement among European policymakers on how to solve the debt crisis, dimming prospects for a comprehensive deal at the summit.

"In the last few days gold has shown that it is well supported, and uncertainty on European debt situation has turned investors' interest to gold," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Some arbitrage buying from Shanghai also underpinned the market sentiment, said Fung. The popular Shanghai gold forward contract jumped more than 3 percent to about 352 yuan a gram, or $1,721 an ounce.

Spot gold rose 0.9 percent to a one-month high of $1,715.51 an ounce, before easing to $1,711.59 by 0319 GMT, on course for a fourth straight session of gains.

U.S. gold hit $1,716.9, its highest since September 23, and stood at $1,713.50, up 0.8 percent from the previous close.

Fresh buying from funds and short-covering also helped gold's rally, traders said.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.9 percent to a one-month high of 1,244.156 tonnes by October 25.

Trading volumes were thin, as market participants await for the result of the EU summit, traders said.

"It is still a guessing game and all will be unraveled tonight," said a Singapore-based trader, adding that a disappointing outcome would likely further boost gold's safe-haven appeal.

Adding to the uncertainty on economic outlook, U.S. consumer confidence dropped unexpectedly to its lowest level in two-and-a-half years in October.

Spot silver lost 0.5 percent to $33.05, easing from a 4.6-percent rise in the previous session, its largest one-day rise in nearly three weeks.

Spot platinum rose to a 1-1/2-week high of $1,573 earlier, and eased to $1,571. The precious metal has already gained more than 4 percent so far this week, but remained in a deep discount of more than $140 to spot gold prices.

Investment interest in platinum group metals remained low due to uncertainties on the global economic outlook, as they are widely used in making autocatalysts.

The holdings of physically-backed exchange-traded platinum funds fell 3 percent from the end of September, and those in palladium ETFs dropped nearly 7 percent.<GOL/ETF>

Markets in Singapore, Malaysia and India are closed for the Diwali holiday.

10-27-2011, 08:01 AM
(Reuters) - Euro zone leaders struck a deal with private banks and insurers on Thursday for them to accept a 50 percent loss on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the two-year-old euro zone crisis.

The agreement was reached after more than eight hours of hard-nosed negotiations involving bankers, heads of state, central bankers and the International Monetary Fund. It aims to draw a line under spiraling debt problems that have threatened to unravel the European single currency project.

Under the deal, the private sector agreed to voluntarily accept a nominal 50 percent cut in its bond investments to reduce Greece's debt burden by 100 billion euros, cutting its debts to 120 percent of GDP by 2020, from 160 percent now.

At the same time, the euro zone will offer "credit enhancements" or sweetners to the private sector totaling 30 billion euros. The aim is to complete negotiations on the package by the end of the year, so Greece has a full, second financial aid program in place before 2012.

The value of that package, EU sources said, would be 130 billion euros -- up from 109 billion euros when a deal was last struck in July, an agreement that subsequently unraveled.

"The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis that is sweeping across the euro zone," French President Nicolas Sarkozy told reporters afterwards.

As well as the deal on deeper private sector participation in Greece -- which emerged after Sarkozy and German Chancellor Angela Merkel engaged in the negotiations with bankers -- euro zone leaders also agreed to scale up the European Financial Stability Facility, their 440 billion euro ($600 billion) bailout fund set up last year.

The fund has already been used to provide help to Ireland, Portugal and Greece, leaving around 290 billion euros available. Around 250 billion of that will be leveraged 4-5 times, producing a headline figure of around 1.0 trillion euros, which will be deployed in a variety of ways.

Leaders hope that will be enough to stave off any worsening of the debt problems in Italy and Spain, the region's third and fourth largest economies respectively.

Riskier assets across the board rallied in Asia, with stocks outside Japan up nearly three percent at 0600 GMT (2 a.m. EDT) in response to the agreement. The euro hit a seven-week high.

Earlier, U.S. stocks rallied after news emerged of the intention to boost the power of the EFSF fund.

The EFSF will be leveraged in two ways, either by offering insurance, or first-loss guarantees, to purchasers of euro zone debt in the primary market, or via a special purpose investment vehicle that will be set up in the coming weeks and which is aimed at attracting investment from China and Brazil.

The methods could be combined, giving the EFSF greater flexibility, the euro zone leaders said.

"The leverage could be up to one trillion (euros) under certain assumptions about market conditions and investors' responsiveness in view of economic policies," said Herman Van Rompuy, the president of the European Council.

"There is nothing secret in all this, it is not easy to explain but we are going to more with our available money, it is not that spectacular. Banks have been doing this for centuries, it has been their core business, with certain limits."


Japan and Canada welcomed the euro zone agreement. China's official Xinhua news agency said the outcome was "positive but filled with difficulties."

As with the July 21 agreement, which quickly broke down when it became difficult to secure sufficient private sector involvement and market conditions rapidly worsened, the concern is that Thursday's deal will only work if the fine print can be promptly agreed with the private sector, represented by the Institute of International Finance.

Charles Dallara, the managing director of the IIF, said those he represented were committed to making the deal work.

"On behalf of the private investor community, the IIF agrees to work with Greece, euro area authorities and the IMF to develop a concrete voluntary agreement on the firm basis of a nominal discount of 50 percent on notional Greek debt held by private investors with the support of a 30 billion euro official ... package," he said in a statement.

"The specific terms and conditions of the voluntary PSI (private sector involvement) will be agreed by all relevant parties in the coming period and implemented with immediacy and force. The structure of the new Greek claims will need to be based on terms and conditions that ensure (net present value)loss for investors fully consistent with a voluntary agreement."

Euro zone leaders will be hoping the agreement, which will also be accompanied by a recapitalization of the European banking sector by around 106 billion euros, will finally draw a line under a crisis that has roiled financial markets and threatened to tear apart the euro single currency project.

"While the headlines look good, the devil is in the details," said Damien Boey, equity strategist at Credit Swisse in Sydney.

"It's great news that they've managed to increase the bail-out fund to 1 trillion euros plus agree on some sort of haircut arrangement for the private investors in Greek debt.

"The problem is, we don't actually know how they are planning to increase the bail-out fund size from 440 billion euros to a trillion. On top of that, there are some questions as to whether one trillion euros in itself is enough."

Jose Manuel Barroso, the president of the European Commission, said the final details on the Greek package, which follows a program of 110 billion euros of loans granted to the country last year, would only be worked out by year-end.

And EU finance ministers are not expected to agree on the nitty-gritty elements of how the scaled up EFSF will work until some time in November, with the exact date not fixed.

As part of efforts to attract investors into the special purpose vehicle attached to the EFSF, Sarkozy said he would talk to Chinese President Hu Jintao in the coming days. Beijing has so far been a big buyer of bonds issued by the EFSF, which is triple-A rated by credit agencies.


As well as the three-way package to strengthen their crisis fighting powers and try to resolve the situation in Greece, euro zone leaders called on Italy to take more rapid action on pension reforms and other structural measures to try to avoid the economy heading the same way as Greece.

Prime Minister Silvio Berlusconi has promised to raise the retirement age to 67 by 2026, and pursue other adjustments to the country's economic model, steps the EU praised but said would only be positive if they were implemented.

"The key is implementation. This is the key. It is not enough to make commitments, it is necessary now to check if they are really implementing," said Barroso.

10-27-2011, 03:14 PM
(Reuters) - Stocks rallied in early trading on Thursday after European leaders agreed to boost the region's bailout fund and struck a deal with banks and insurers to accept 50 percent losses on Greek bonds.

The S&P 500 rose more than 2 percent, breaking out of a trading range of around 1,230-1,250. The broad index has been struggling to push past the levels for weeks as uncertainties over Europe persisted.

Reached after more than eight hours of hard-nosed talks between European heads of state, the International Monetary Fund and bankers, the deal also foresees a recapitalization of hard-hit European lenders and a leveraging of the bloc's rescue fund to give it firepower of 1.0 trillion euros ($1.4 trillion).

"We are rallying today because the active players, mostly hedge fund managers and tactical investors, have been very neutral to even short until now. The market is up a lot, but they are rushing into getting long because they are capitulating," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

"Investors will now focus on data for November, which is expected to get weak, and possibly worse in December. That could bring up a lot of questions and predictions on the Fed move."

The Dow Jones industrial average jumped 232.57 points, or 1.96 percent, at 12,101.61. The Standard & Poor's 500 Index rose 30.20 points, or 2.43 percent, at 1,272.20. The Nasdaq Composite Index shot up 64.07 points, or 2.42 percent, at 2,714.74.

Exxon Mobil Corp was up 0.7 percent to $81.64 after the U.S. oil and gas major said profit rose 41 percent in the third quarter, helped by gains in crude oil prices and higher refining margins.

Dow Chemical Co rose 5 percent at $28.22, even as it narrowly missed quarterly profit expectations.

10-28-2011, 12:41 PM
(Reuters) - Global stocks advanced and headed for their best week in over two years Friday, bolstered by EU leaders' efforts to contain the euro zone debt crisis which have stoked appetite for riskier assets, although the euro lagged the rally.

The single currency came under slight pressure after yields at the sale of 10-year Italian bonds hit a euro-era high above 6 percent. Despite higher yields, demand was lower than previous auctions, underlining how cautious investors are on peripheral debt despite the EU rescue deal and pledges by Italy to reform.

With investors for the time being shrugging off the lack of detail in Thursday's anti-crisis measures in Europe, the region's shares extended the previous session's sharp rally.

The FTSEurofirst 300 .FTEU3 index of leading European shares was up 0.15 percent at 1,021.63 points in early trade. The index is up 11 percent this month and is on track for its biggest monthly rise since April 2009.

Solid third-quarter sales from French car maker Renault (RENA.PA) also lifted the broader index. Banking shares .SX7P, which have been battered by contagion fears from a possible Greek default, advanced 1.8 percent, extending their 8.9 percent surge Thursday.

World stocks as measured by the MSCI index rose 0.4 percent to 319.09 -- having hit the highest level in nearly three months of 319.78 earlier in the day.

U.S. stock index futures pointed to some signs that the stock market euphoria was flagging. Futures for the S&P 500, the Dow Jones and the Nasdaq 100 were all down 0.4 to 0.5 percent.

Fredrik Nerbrand, global head of asset allocation at HSBC, said the lack of details out of the European summit was causing some discomfort to investors.

"I find it curious and if anything rather worrying that Italian bond yields are up to the level as they were before the summit, while the equity markets are completely decoupled from that," he said.

Euro zone leaders are now under pressure to finalize details of their plan to slash Greece's debt and strengthen the European Financial Stability Fund (EFSF), possibly through investment by emerging economies like China and Brazil.

The head of the fund, Klaus Regling, said Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing.


Investors' focus is also shifting to a Group of 20 meeting next week in Cannes, southern France.

Edmund Shing, equity strategist at Barclays Capital, said stocks were likely to recover further next week ahead of the G20 summit on November 3 and 4 as investors would not want to bet against policymakers for now. But he advised investors not to chase the market too aggressively.

The euro slipped to $1.4170, taking a breather from a rally Thursday which sent it to a seven-week high of $1.4248. It fell to near session lows of around $1.4158 after the Italian bond auction results.

"Although we're getting somewhere with EFSF, the Italian auction shows the market is sending signals that the crisis hasn't been solved by a long shot," said Stephen Gallo, head of market analysis at Schneider FX.

The dollar index .DXY was up 0.15 percent after falling some 1.6 percent, its biggest one-day fall since May 2009.

Analysts said with stocks looking to advance further, the sell-off in the dollar is expected to continue.

Brent crude slipped to around $111.09, but prices were on track to post a weekly gain.

Spot gold retreated from a one-month high of $1,751.99 at $1,736.69 an ounce, down 0.4 percent from the previous close. But it was still on course for a gain of around 6 percent from a week earlier, the biggest one-week rise in two months, according to Reuters graphics.

10-31-2011, 01:28 PM
(Reuters) - Oil prices eased on Monday, with Brent slipping below $110, as the dollar rose against the yen after Japan intervened in the currency markets to stem the rise of the yen.

Investors and analysts said the oil market may be swayed by

a spate of economic events this week including a U.S. Federal Reserve on Wednesday, a European Central Bank press conference on Thursday and a G20 meeting mid-week amid deepening concerns over the euro zone debt crisis.

Brent crude fell 51 cents to $109.40 a barrel by 0949 GMT after closing at $109.91 on Friday.

U.S. crude fell 82 cents to $92.50 per barrel.

The dollar climbed to a three-month high against the yen on Monday after Japan's intervention. The U.S. dollar index .DXY also rose against a basket of currencies. A stronger dollar makes oil more expensive in other currencies.

"This morning, it is the Japanese intervention in the foreign exchange market. On the macro front, it is a big week this week," Olivier Jakob with Petromatrix said.

Jakob also said trading of the price spreads between U.S. crude and Brent and of the forward curve might continue to influence the market this week.

In the middle of last week U.S. crude rallied on trading of its spread with Brent, while Brent was held back as backwardation of the curve flattened. Both got a brief boost from a deal struck by the euro zone to recapitalize its banks and strengthen its rescue fund.

But persistent doubts about the plan have put pressure on the market, and the outright price of Brent crude ended Friday little changed from the week before.

The oil market reaction to euro zone inflation and jobs data on Monday was limited. Consumer prices in the 17-nation euro area stayed at 3 percent in October, according to a first estimate by the European Union's statistics office Eurostat, roughly in line with a 2.9 percent forecast in the Reuters poll of economists.

Eurostat in a separate report said the jobless rate in the euro zone rose slightly to 10.2 percent in September from a revised 10.1 percent in August.

11-02-2011, 03:06 PM
(Reuters) - U.S. and European stocks stabilized and the euro rose on Wednesday as buyers emerged after a steep sell-off on fears that Greece's referendum on its bailout could push the country into default.

Greek Prime Minister George Papandreou won his cabinet's backing on Wednesday to hold a referendum on a 130-billion-euro bailout package for the euro zone.

Investors will likely remain nervous about the solvency of Greece and the euro zone's financial stability until Greece's referendum vote, which would take place in early 2012, analysts said.

"After yesterday's sell-off, some bounce was expected, but we think there are a lot of hurdles for the euro to clear and given the risk events, we do not see it rallying much," said Adam Myers, senior currency strategist at Credit Agricole in London.

Papandreou will later face the leaders of France and Germany, who summoned him for crisis talks in Cannes before a G20 summit of major world economies to push for quick implementation of the bailout deal.

Rejection of the package could lead to a disorderly default for Greece with the fallout affecting the European banks that hold Greek debt.

The euro rose 0.8 percent against the dollar to $1.3807 and gained 0.4 percent versus the yen to 107.66 yen.

The MSCI world equity index .MIWD00000PUS rose nearly 1 percent after losing 6 percent the previous two sessions.

Less dismal data on the U.S. job market and hopes of more policy easing from the U.S. Federal Reserve and the European Central Bank also supported stocks and the euro and exerted selling pressure on German Bunds and U.S. Treasuries.

On Wall Street, at around 10:15 a.m. ET (1415 GMT), the Dow Jones industrial average finance/markets/index?symbol=us%21dji">.DJI gained 129.57 points, or 1.11 percent, to 11,787.53. The S&P 500 .SPX added 14.61 points, or 1.20 percent, to 1,232.89. The Nasdaq Composite .IXIC rose 17.59 points, or 0.67 percent, to 2,624.55.

European stocks .FTEU3 rose 0.2 percent by 10:15 a.m. ET (1415 GMT), recovering early losses ahead of the U.S. open.

In Tokyo, the Nikkei .N225 closed down 2.2 percent following the sell-off on Wall Street and in Europe.

The stabilization in stocks and euro led investors to reduce their safehaven holdings of U.S. and German debt.

Bund futures fell 77 basis points to 137.38 after touching a near one-month high on Tuesday, while the benchmark 10-year U.S. Treasury note fell 12/32 in price to yield 2.04 percent.

In the commodities market, Brent crude futures in London were up $1 at $110.55 a barrel, while U.S. crude futures were 72 cents higher at $92.89.

Spot gold rose about 1 percent to $1,738.20 an ounce.

11-03-2011, 02:18 PM
(Reuters) - The European Central Bank cut interest rates by a quarter point to 1.25 percent in a surprise move Thursday, acting boldly to support the ailing euro zone economy at President Mario Draghi's first policy meeting in charge.

The move gave an immediate boost to stock markets, which will be looking for any signal at Draghi's first post-policy meeting news conference on whether the ECB is ready to boost its bond purchases to calm tensions in the euro area.

The Italian has walked into a maelstrom in his first week at the ECB's helm, with euro zone leaders contemplating a future without Greece and economic policy paralysis in his home country threatening to push Rome into the eye of the storm.

The decision to cut rates was unexpected and came despite inflation in the 17-country euro zone staying at 3.0 percent for a second month running in October, well above the ECB's target of just below 2 percent.

"What a starter. It is obvious that the ECB has caught the crisis virus and is trying everything it can to prevent a full-fledged recession," ING economist Carsten Brzeski said.

"Now, the big question for the press conference is whether the ECB is also willing to do everything to prevent a further escalation of the sovereign debt crisis, becoming the unconditional lender of last resort of the euro zone."

The euro fell after the rate decision and stock markets caught a tailwind, with an index of European top shares up 2.3 percent on the day. German 2-year bond yields fell and December Euribor future jumped 13 basis points.

European leaders said earlier they were prepared for Greece to leave the euro zone to preserve their 12-year-old single currency if Athens does not decide quickly to implement a bailout program, putting the likes of Italy and Spain, and even France, firmly in the markets' sights.

Draghi will join the leaders in Cannes, France, after his debut news conference as ECB president at 1330 GMT at which he will give a statement on the Governing Council's policy decision before taking journalists' questions.

Crucial will be any indication Draghi gives about carrying on, or even scaling up, the ECB's bond-buy program, a controversial tool that has led to the resignation of two German policymakers.

Europe's ultimatum to Greece, after Prime Minister George Papandreou's decision to call a referendum on a bailout plan, has deepened the crisis and raised pressure on the ECB, which many analysts see as the only institution with the firepower to bring calm.


Draghi succeeded France's Jean-Claude Trichet as ECB chief Tuesday -- a day that saw the ECB buy Spanish and Italian bonds but barely manage to cap a rise in yields on the debt of the euro zone's third largest economy.

"I'm looking for something but I expect him to stick to the Trichet language and say 'it's still ongoing'," Brzeski said of the bond-buy program.

Draghi must balance an eagerness to curry favor with the German contingent at the ECB against growing financial market pressure to intervene on a bigger scale to lower the borrowing costs of Italy and Spain.

The premiums investors have to pay to hold Italian and French 10-year government debt over benchmark German Bunds rose to their highest in the euro era Thursday with signs growing that the Greek government may fall.

Draghi appeared to indicate last week that he stood ready to help tackle the debt crisis by going on buying the bonds of troubled states, though Trichet told Reuters the Italian's remarks had been over-interpreted.

Trichet had signaled previously that the ECB was keen to withdraw from the bond-buying policy once the euro zone's EFSF rescue fund gained new powers to intervene on bond markets.

11-04-2011, 03:02 PM
(Reuters) - European shares drifted higher in choppy trade on Friday as signs Greece would seek political consensus on a new aid package and dump a referendum helped cap some fears of an imminent default, although the outcome remains uncertain.

Banks, many of which have a significant exposure to the peripheral euro zone economies and have taken a hit on their balance sheets, were among the top gainers, while miners got some support from firmer metals prices that rose on hopes of an improvement in demand for raw materials.

The STOXX Europe 600 banking index .SX7P rose 1 percent, while the basic resources index .SXPP was up 1.2 percent. Royal Bank of Scotland (RBS.L) rose 4.3 percent on its third-quarter profits and robust capital position.

However, Commerzbank (CBKG.DE) fell 2.5 percent after it took a Greek impairment hit, forcing it to abandon its 2012 operating profit target.

The FTSEurofirst 300 finance/markets/index?symbol=gb%21FTPP">.FTEU3 index of top European shares was up 0.3 percent at 993.06 points at 0956 GMT (5:56 a.m. EDT), after climbing 1.9 percent in the previous session, on hopes the referendum, which could be the beginning of an exit for Greece from the euro zone, could be avoided.

Greek Prime Minister George Papandreou bowed to cabinet rebels and agreed to step down and make way for a negotiated coalition government if his Socialists back him in a confidence vote on Friday, government sources told Reuters.

"Even if Greece doesn't have a referendum, you have got several weeks of political instability there. They could very well have to form a new government, which delays the ratification of the whole process.

"It seems a Greek drama has been avoided for the time being as there are some signals that the proposed referendum on the bailout package will be scrapped," said Koen De Leus, strategist at KBC Securities, in Brussels.

"But the situation is far from clear yet and there is a possibility that the Greek government might fall, which would mean that no bailout money will be available to them for some time. Any such outcome would create more uncertainties."

Investors kept a close eye on a meeting of G20 leaders in Cannes that discussed increasing the International Monetary Fund's resources and building a financial firewall to protect vulnerable euro zone economies Italy and Spain from a possible Greek default.

Fund managers said that investors would stay highly cautious unless there was some clarity on the Greek situation.

"Even if Greece doesn't have a referendum, you have got several weeks of political instability there. They could very well have to form a new government, which delays the ratification of the whole process," said Felicity Smith, fund manager at Bedlam Asset Management that manages $700 million.

"We are trying to see if, in the panic, some otherwise perfectly good and sound companies get unduly knocked back. Some of those industrial stocks, which have a variety of businesses and where the end demand is likely to be robust, could be interesting," she said, giving an example of British engineer Invensys (ISYS.L).

Investors awaited data on U.S. employment growth, which is expected to show that it was too weak in October to pull down the nation's lofty jobless rate, though it may have been strong enough to suggest some economic momentum is building.

The 30-day implied volatility for Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI fell for a second straight session on Thursday, according to data from Thomson Reuters Datastream, indicating that investors were gradually increasing their exposure to riskier assets.

The Euro STOXX 50 volatility index .V2TX, Europe's main fear gauge, also fell 4.5 percent on Friday, suggesting an improvement in investors' sentiment.

11-07-2011, 05:26 PM
(Reuters) - Brent crude oil jumped more than $2 per barrel to more than an seven-week high on Monday on hopes Greece and Italy could resolve their debt crises and minimize the chances of a further slowdown in global economic growth.

Brent futures for December rose $2.91 to a high of $114.88, their highest since mid-September, before easing back to trade around $114.50 by 1440 GMT. Brent settled $1.14 higher on Friday, rising for a second week.

U.S. December crude oil futures rose $1.20 to $95.46 a barrel. The contract rose 1 percent last week, posting a fifth straight weekly gain.

The market rose through early European trade and took another step higher as U.S. traders came into the market, brokers said.

"We started strong today, then there was a slight fall in prices, and now we see a positive spin with news on Greece and Italy," said Robert Montefusco, a senior broker at Sucden Financial Ltd.

Italy, with debts amounting to 120 percent of gross domestic product, has the biggest government bond market in the euro zone. An Italian financial collapse would pose a huge risk to markets but might bring an administration that would be better able to handle the debt crisis, some investors say.

Italian Prime Minister Silvio Berlusconi on Monday denied reports he was about to resign.

In Greece, political change is also on the agenda as leaders set to choose who will lead a new coalition and push through a bailout before the country runs out of money in mid-December.

The dollar and gold rose on Monday as investors looked for safe havens, while many stock markets, base metals and other risky assets fell. The MSCI world equity index .MIWD00000PUS shed 0.7 percent and the FTSEurofirst finance/markets/index?symbol=gb%21FTPP">.FTEU3 fell 0.5 percent.

"Economic news around Italy and Greece is dominating the market," said Christophe Barret, global oil analyst at Credit Agricole.

Prime Minister George Papandreou and opposition leader Antonis Samaras agreed to form a new coalition government, but details of a deal to resolve Greece's debt crisis remained sketchy, while the country was due to run out of money in a few weeks.

The European Union told Greek leaders to explain by Monday evening how they would form a government to get 130 billion euros ($180 billion) in emergency funding.


Market attention, meanwhile, shifted to Italy as its government bond yields hit their highest levels since 1997 and political turmoil threatened to drag the economy deeper into crisis.

Italy faces a vote on public finance in parliament on Tuesday, and the center-left opposition said it was preparing a motion of no-confidence that would bring Berlusconi down even if he should survive Tuesday's vote.

Seasonal factors offered some support to oil.

Low fuel inventories in the world's top oil consumer, the United States, amid signs of an earlier-than-usual onset of winter may prompt refiners to ramp up output. That may further squeeze an already tight crude market coping with disruption in supplies from Libya and the North Sea.

Investors watched the unfolding bankruptcy of MF Global (MFGLQ.PK). CME Group (CME.O) and IntercontinentalExchange Inc (ICE.N) moved over the weekend to limit the fallout from the bankruptcy filing on futures markets by lowering margin requirements on some accounts.

The CME said on Monday it asked brokers who have taken over customer accounts from MF Global, which filed for bankruptcy protection on October 31, to not disburse any of the money until the close of business on Tuesday as it looks to verify the amounts involved.

11-08-2011, 03:39 PM
(Reuters) - McDonald's Corp (MCD.N) reported a higher-than-expected rise in worldwide October sales at established restaurants, aided by a popular promotional game in the United States.

The world's largest hamburger chain, whose shares rose nearly 1 percent on Tuesday in premarket trading, said sales at restaurants open at least 13 months rose 5.5 percent globally. Analysts were looking for a 4.1 percent gain, according to Consensus Metrix and McDonald's had previously forecast a 4 percent to 5 percent increase.

Same-restaurant sales rose 5.2 percent in the United States, beating analysts' expectations for an increase of 3.7 percent and helped by the Monopoly game promotion. In Europe -- McDonald's largest market -- the company reported a 4.8 percent increase, better than the analysts' call for a 3.4 percent rise.

Sales in Asia/Pacific, Middle East and Africa rose 6.1 percent, beating the analysts' call for a 4.3 percent rise.

McDonald's has been outpacing rivals such as Wendy's Co (WEN.N), Burger King Corp BKCBK.UL and Yum Brands Inc's (YUM.N) KFC by attracting a broader range of diners than fast-food's typical young adult males.

It has done that with menu items like kids' meals, premium Angus beef hamburgers and a selection of high-margin drinks ranging from lattes to fruit smoothies. It also is renovating its dining areas to be more modern and comfortable.

McDonald's shares were at $95 in premarket trading, up from Monday's New York Stock Exchange close of $94.62.

11-08-2011, 04:49 PM
Tuesday, October 8th, 2011.

Gold has risen above USD 1790 on European crisis, supported by a safe-haven demand as Italy is in the spotlight on Eurozone debt crisis. With this gold rises to its highest in six weeks.

The debt problems of Italy, the third largest economy of the Eurozone represent a much bigger risk to the markets than Greece. The surprise interest rate cut by the European Central Bank last Thursday also helped gold to post its second consecutive weekly gain last week.


Precious metals prices 0007 GMT

Spot Gold 1792.09 -2.70 -0.15 26.25
Spot Silver 34.87 0.01 +0.03 12.99
Spot Platinum 1648.49 -7.01 -0.42 -6.73
Spot Palladium 657.00 -1.49 -0.23 -17.82
TOCOM Gold 4501.00 52.00 +1.17 20.70 25489
TOCOM Platinum 4161.00 28.00 +0.68 -11.39 5362
TOCOM Silver 86.70 1.20 +1.40 7.04 140
TOCOM Palladium 1656.00 -9.00 -0.54 -21.03 105
COMEX GOLD DEC1 1793.90 2.80 +0.16 26.21 1843
COMEX SILVER DEC1 34.91 0.08 +0.24 12.83 986

11-11-2011, 05:37 PM
Friday, November 11th, 2011.

Gold and Euro rose in line this Friday backed by optimism as Italy has approved the austerity measures to reduce debt.

Spot gold rose 0.7 percent to $1,770.79 an ounce by 1525 GMT and was on course for a third straight week of rises with a 1.0 percent gain. U.S. gold rose 0.8 percent to $1,775.00

Since ECB will have to create more money to cover the debt burden in Eurozone, the increasing liquidity will make gold even more attractive as seen as an asset that holds its value better than paper currencies in times of high inflation.

The euro also rose, staying high from the low 1.3484 touched on Tuesday.

European indices also end higher today Friday thanks to the political progress of the Italian Goverment, calming down fear on the immediate outlook for the debt crisis.

At the provisional close, the FTSE Eurofirst 300 .FTEU3 index of leading European shares was up 2.1 percent at 983.73 points, led by Italian lender Intesa Sanpaolo (ISP.MI), which rose 8.8 percent.

Italy’s 10-year benchmark government debt yields fell to 6.4 percent, comfortably below the 7 percent level seen by many as unsustainable.

(Source: Reuters).

11-14-2011, 01:50 PM
(Reuters) - Italy paid a euro-era high price to sell five-year bonds on Monday, with investors wary of buying its debt until the country's new leadership undertakes profound economic reform.

The 3 billion euro sale, small by Italian standards, met slightly improved demand compared with a month ago, but the 6.29 percent cost of borrowing was seen as unsustainable as Italy tries to refinance its 1.9 trillion euro debt.

However, the yield was below secondary market levels, reflecting expectations of a more reform-friendly Italy after European Commissioner Mario Monti was asked to form a government on Sunday.

"(Monti) is perceived to be a positive change for the country," said Annalisa Piazza, rate strategist at Newedge.

"Cautiousness on the future developments in Italy is fully justified. Credibility has been lost and it will take a while for market participants to believe that the country is back on the right track."

Italian yields soared above 7 percent last week -- levels that ultimately led Greece, Portugal and Ireland to seek international aid.

Yet Italy is too big to be bailed out with currently available resources and preventing it becoming the next victim of the two-year old euro zone debt crisis is seen as crucial to future of the single currency itself.

Bids at Monday's auction were 1.469 times the amount on offer, compared with 1.344 percent at last month's sale, when gross yields were just 5.32 percent.

"(The results) just basically tell us in the short term that we are not (spiraling) out of control," said Marc Ostwald, strategist at Monument Securities in London.

"But in the long run, paying 6.29 percent for five-year paper is just not an option, it's not sustainable over the long term. You would need to be back below 5 (percent) before we get there and that looks very far away still."

Yields on benchmark Italian 10-year bonds climbed to 14-year highs of around 7.5 percent last week before Prime Minister Silvio Berlusconi, seen by many in the market as an obstacle in the way of reforms, said he would resign.

The political change -- and European Central Bank debt purchases -- pushed yields back to 6.40 percent early on Monday, but the improved sentiment seemed fragile -- yields last stood at 6.64 percent, up 14 bps on the day.

"We've seen a substantial move in yields over the past few days and the 6.40 percent level, where the first (ECB) intervention took place, is a big one, and people have started to book some profits at around that level," one trader said.

Five-year yields stood close to 10-year levels at 6.63 percent.

11-15-2011, 07:59 PM
Tuesday, November 15th, 2011.

Italian 10-year yield bonds have risen above the key 7 percent level after the new Italian goverment failed to calm fears on the eurozone debt crisis, giving the perception of Italy being economically unsustainable.

Euro tumbles as well agains greenback and hits a five-week low against Yen. The euro fell 0.7 percent to $1.3527, having dropped to a session trough of $1.3495 according to Reuters data. Key downside support lies around $1.3481, a one-month low set last week.

The euro zone common currency also lost 0.9 percent to 104.17 yen, after sliding as low as 103.95 — the weakest since October 10.

Finally, safe-haven buyers have lifted gold after the Eurozone turmoil, the worries over an economic slowdown and the fears that France could be sucked into a spiraling crisis.

Spot gold was off 0.6 percent to $1,769.09 an ounce at 11:38 a.m. EST (1638 GMT), having traded as low as $1,760.04 an ounce early on Tuesday. U.S. gold for December delivery stood $8.40 lower at $1,770 an ounce. Silver eased 0.3 percent at $34.12 an ounce.

(Source: Reuters).

11-16-2011, 07:16 PM
Wednesday, November 16th, 2011.

The euro has fallen for the thirds straight session against the usd, hitting a five-week low as investors doubt of the abbility of Eurozone goverments to contain the crisis.

Despite the ECB (European Central Bank) buying Italian and Spanish bonds, this has only brought temporarily relief to the markets. The euro was down 0.3 percent at $1.3501, oil prices in London fell and stocks on Wall Street were lower.

French borrowing costs rose, with the yield premium of the French 10-year government bond over German Bunds rising to a euro-era high near 2 percent.

Wall Street has fallen. Analysts called a 0.1 percent drop in the U.S. Consumer Price Index in October a non-event for markets.

The Dow Jones industrial average .DJI was down 74.43 points, or 0.62 percent, at 12,021.73. The Standard & Poor’s 500 Index .SPX was down 7.50 points, or 0.60 percent, at 1,250.31. The Nasdaq Composite Index .IXIC was down 16.30 points, or 0.61 percent, at 2,669.90.

Gold has also fallen this Wednesday, after the greenback strenghtened. Selling gold also continued, after more Eurozone headlines negatively affected the outlook for economic recovery, being that more portfolio managers are preferring cash rather than entering into risks.

Gold, a traditional safe haven which has recently performed more like a riskier asset, was about 1 percent lower in the last three sessions.

(Source: Reuters).

11-17-2011, 04:11 PM
MADRID, Nov 17 - Spain paid the highest rate to sell its 10-year debt since 1997 Thursday, just shy of the 7 percent mark seen as unsustainable, as the country is swept deeper into the euro zone's debt crisis ahead of a Parliamentary election Sunday.

The euro fell and demand for safe haven German bonds jumped after auction as investor fears about the stability of the whole the currency bloc grew.

"The result was dreadful. They didn't manage to raise the full amount and the bid-to-cover is really poor. The fiscal profiles of Spain and Italy are different but their yields seem to be aligning now," said Achilleas Georgolopoulos, rates strategist at Lloyds in London.

Countries at the fringes of the euro zone saw their financing costs leap this week over fears Italy could eventually default, and the tensions spilled over into core euro zone countries such as France. That was despite ongoing support from the European Central Bank's bond purchases of periphery debt.

The Treasury managed to sell 3.6 billion euros of a new 10-year 5.85 percent coupon benchmark bond, in the middle of its 3 billion to 4 billion euro target at the auction.

Spain's government was forced to pay an average yield of 6.975 percent for the bond, the highest since 1997 when the average yield was 7.26 percent. The highest paid this year on a separate 5.5 percent coupon 10-year bond was 5.986 percent on July 21.

The bid-to-cover ratio in the Spanish auction, an indicator of investor demand, was 1.5, down from 1.8 in October for a similar bond.

A separate auction of saw France's cost of borrowing over two and four years jumped by around half a percentage point at an auction Thursday, reflecting growing concerns it may be dragged into the euro zone's sovereign debt crisis.

Spain faces a Parliamentary election Sunday, which polls show the center-right People's Party winning by a wide margin. Leader Mariano Rajoy will quickly be tasked with assuring markets Spain can take the right measures to avoid a bailout like Portugal.

11-24-2011, 12:33 PM
(Reuters) - The euro recovered from steep falls against the dollar on Thursday as market participants took profit on short positions, but more weakness was expected as investors fretted the euro zone crisis was spreading to Germany.

The single currency slid to a seven-week low of $1.3320 on Wednesday as a weak German government bond auction sparked fears that even the safe-haven status of Europe's biggest economy could be under threat.

Short-covering helped the euro recover to trade up 0.25 percent at $1.3370 and analysts said it could edge higher short-term, particularly given that trade is thin due to the U.S. Thanksgiving holiday.

However, the extent of bearish sentiment toward the single currency left it on track to retest the October low of $1.3144, having retraced more than 78.6 percent of the rally from that level to the late October high of $1.4247.

"Short-covering may continue for a bit and we look for a correction perhaps to $1.3430 but thereafter it is heading south. It is a case of two steps down and one step up for the euro," said Carl Hammer, currency strategist at SEB in Stockholm.

The euro was also helped by a better-than-expected German business climate survey on Thursday, though traders said the data was unlikely to temper fears about the possibility the euro zone economy could face recession.

It rose briefly above $1.3400 but traders said this only provided better levels to sell the currency and reported offers between $1.3415 and $1.3450 that were likely to cap any rise.

The market looked to a meeting of leaders of Germany, France and Italy on Thursday, although few players expected progress in steps to deal with the crisis.

"With any rally in the euro there will be a lot of investors looking for new opportunities to set new short positions," said Niels Christensen, currency strategist at Nordea in Copenhagen.

"Going forward there will be a lot of focus on bond auctions and no one would be surprised if investors were reluctant to buy aggressively."

Germany's bond sale on Wednesday was its least successful since the launch of the single currency. Although unattractively low yields played a part, investors worried about the rising cost of bailouts as more euro zone countries come under attack.

German Bund futures fell to their lowest level in nearly a month, though Italian, Spanish and French bonds benefited from a slight rebound in riskier assets as European shares finance/markets/index?symbol=gb%21FTPP">.FTEU3 gained more than 1 percent. <GVD/EUR>


The euro was at 103.09 yen, having earlier hit a seven-week low of 102.92 yen, opening the way for a test of the decade low of 100.77 yen hit in early October.

Investors have also been unnerved by a rise in Belgian bond yields as the country -- without a formal government since elections last June -- struggles to agree on a deficit-slashing budget for next year.

The euro's recovery helped other riskier currencies, with the Australian dollar up 0.6 percent at $0.9744, having slid to a seven-week low of $0.9664 on Wednesday on concerns about a deteriorating global growth outlook.

The dollar slipped 0.25 percent against the yen to 77.09 yen, with its rise to a near two-week high on Wednesday, when Tokyo was on holiday, luring Japanese exporters to sell.

11-28-2011, 01:48 PM
(Reuters) - Germany and France stepped up a drive on Monday for intrusive powers to reject national budgets in the euro zone that breach EU rules, as a market rout of European debt eased temporarily on hopes of outside help for Italy and Spain.

The OECD rich nations' economic think-tank said the European Central Bank should cut interest rates and step up its purchases of government bonds to restore confidence in the euro zone, which it said now posed the main risk to the world economy.

In Brussels, finance ministers of the 17-nation currency area meeting on Tuesday are due to approve detailed arrangements for scaling up the European Financial Stability Facility rescue fund to help prevent contagion spreading in bond markets, and to release a vital aid lifeline for Greece.

Berlin and Paris aim to outline proposals for a fiscal union before a European Union summit on December 9 increasingly seen by investors as possibly the last chance to avert a breakdown of the single currency area.

"We are working intensively for the creation of a Stability Union," the German Finance Ministry said in a statement. "That is what we want to secure through treaty changes, in which we propose that the budgets of member states must observe debt limits."

It also dismissed a report by the newspaper Die Welt that Germany and the five other euro zone states with top-notch AAA credit ratings could issue joint bonds.

Finance Minister Wolfgang Schaeuble acknowledged on Sunday that it may not be possible to get all 27 EU member states to back treaty amendments, saying agreement should be reached among the 17 euro zone members.

"That can be done very quickly," he told ARD television, adding that it only required changing an additional protocol to the EU's Lisbon Treaty.


In France, Agriculture Minister Bruno Le Maire said euro zone countries would have to give up some budget sovereignty to save the euro from hostile "speculators."

"We won't be able to save the euro if we don't accept that national budgets will have to be a bit more controlled than in the past," Le Maire told Europe 1 radio.

"We are in an economic war with a number of powerful speculators who have decided that the end of the euro is in their interest," he said.

Handing over fiscal sovereignty to the executive European Commission is politically sensitive in France, which has a strong Gaullist, nationalist tradition.

President Nicolas Sarkozy's office sought to quash a weekend newspaper report that Berlin and Paris were planning to confer "supranational powers" on Brussels, suggesting such intrusion would only apply to countries such as Greece that were under EU/IMF bailout programs.

But Le Maire, asked whether the Commission would be granted more powers over national budgets in the euro zone, said: "Why not? The French people have to realize what is at stake -- the preservation of our common currency and our sovereignty.

"We'll see if it's the council (of ministers) or some other European institution (that exercises these powers). What matters is that we ensure that budget discipline is respected within the euro zone. Otherwise the euro itself is threatened."

He acknowledged that France and Germany were still at odds over greater ECB intervention to rescue the euro but said: "We will have to find a compromise."

On financial markets, the euro regained ground after slipping below $1.33 in Asia. Italian, Spanish, French and Belgian bond yields fell, as did the cost of insuring those countries' debt against default.

But relief may be short-lived as the rally was partly due to an Italian newspaper report that the International Monetary Fund was in talks to lend Italy up to 600 billion euros -- more than its entire available war chest -- which the IMF denied.

"There are no discussions with the Italian authorities on a program for IMF financing," a spokesperson for the global lender said.

The European Commission also said Italy had not asked for any amount of money and there were no discussions at European level on aid for Rome.

IMF inspectors are due in Rome this week to study Italy's public finances after former Prime Minister Silvio Berlusconi agreed earlier this month to submit to regular monitoring of his promised austerity measures and economic reforms.


EU officials say some sort of IMF program could make sense for both Italy and Spain as part of a multi-pronged response involving the ECB and the euro zone rescue fund to implement reforms and restore market confidence in their debt.

A senior EU source confirmed that both Berlusconi and the European authorities had rejected an IMF offer of a 50 billion euro precautionary credit line for Italy in talks on the sidelines of the Cannes G20 summit on Nov 3. The source said the sum would have been insufficient to convince markets.

Reuters reported exclusively last week that Spain's People's party, due to form a new government by mid-December, is considering applying for IMF aid as one option for shoring up public finances. [ID:nL5E7MP2R0]

In its world economic outlook, the Organization for Economic Cooperation and Development forecast growth in the euro area will slow -- under a baseline scenario of "muddling through" -- to 0.2 percent in 2012 from an estimated 1.6 percent in 2011. The bloc's economy will then expand by 1.4 percent in 2013.

With unemployment set to rise and inflation to fall, the OECD said the choice for the ECB was clear.

"This calls for ... a substantial relaxation of monetary conditions," the OECD said.

Banks would need to be well capitalized and policies put in place for sovereigns to finance themselves at reasonable rates.

"This calls for rapid, credible and substantial increases in the capacity of the EFSF together with, or including, greater use of the ECB balance sheet," the OECD said.

OECD chief economist Pier Carlo Padoan said current plans to leverage the euro zone bailout fund were insufficient.

"The numbers we have seen floating around are not enough," Padoan told a news conference, adding that what was needed was a multiple of what was currently on the table.

Euro zone leaders initially planned to leverage the EFSF up to 1 trillion euros, but the fund's head has said it is now unlikely to achieve that. The fund has had trouble selling its own bonds to raise funds and has yet to attract the pledges it hoped to get from countries with sovereign wealth to invest.

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