Spanish economy has stopped growing in 3rd quarter, as GDP remained unchanged compared with 2nd quarter. On yearly basis economy added 0.8%. Stoppage of economy amid unemployment above 25% creates doubts, if Spain will be able to meet its budget deficit targets. As yield on Spain's 10-year bonds is 5.9%,Ben May, Capital Economics economist, warns that Spain may get into recession.
A set of growth-facilitating measures were approved by Italian Senate today, including privatization of public real estate, changes in taxation and potential reforms in order to ease bureaucracy. PM Berlusconi has promised to step down as soon as the document package is passed through the lower house, where the budget bill is scheduled for scrutinizing on Saturday.Senate approved significant 2012 budget amendments in a
According to People's Bank of China, a domestic lending in October increased by 17.5 bn yuan compared to 2010, reaching 586.8 billion yuan ($92.7bn). New loans have surged rapidly from 470 bn yuan in previous month. PBOC told that M2 (money supply covering all deposits and currency in circulation) has increased 12.9% on yearly basis, attaining 81.7 trillion yuan.
On Friday regulators of Chinese foreign exchange told that it had permitted trading of put and call currency options to support investors and traders who want to hedge against currency fluctuations. State Administration of Foreign Exchange said the options will stimulate hedging flexibility and decrease transaction costs for China's firms. Trading of currency options will be allowed starting from December 1.
Today Italian government will vote on austerity measures to regain investor confidence and prepare for the new government supposed to be headed by Mario Monti, a former EU Competition Commissioner. According to Gianfanco Fini, speaker of the parliament, Berlusconi is expected to resign immediately after the vote. Fini points out that unity government can be formed only if Berlusconi supports Monti's technocrat government.
Obama administration on Thursday said it has delayed the verdict on controversial Keystone pipeline as public and Nebraska lawmakers required an alteration in route of pipeline. Review of pipeline project is expected to take place until 2013. While protesters express their satisfaction with Obama's decision, John Boehner, parliament speaker criticized suspension saying that about 20,000 new jobs have been given up favouring political campaign.
Anibal Cavaco Silva, Portuguese President, suggests European Central Bank must act as a last resort lender and stop the expansion of crisis by unlimited and transparent buying of Italian and other national bonds. According, to Silva the ECB bond acquisitions in secondary market will end both speculation and distrust in Spanish, Irish, Portuguese or Italian bonds.
According to Chinese research made in 2008, South China Sea may contain 213 bn barrels of crude oil or 80% Saudi Arabia oil resources. China claims unquestionable sovereignty regarding most of the South China Sea including areas that Exxon Mobil and Gazprom are examining. Disagreements have raised tension between China and its neighbours and threat maritime security.
On Friday Asian markets gained as export oriented companies and retailers receive positive news from euro region. Hong Kong's Hang Seng Index increased 1.1%, South Korea's Kospi surged 2.4%, while Japan's Nikkei Stock Average added 0.5%. Australia's S&P/ASX 200 index rose 0.8% and China's Shanghai Composite improved by 0.6%.
In September the growth of industrial production in India was the slowest in two years as rapid increase in interest rate together with stumbling economic recovery hurt demand. Output at plants, mines and utilities added 1.9% compared to September 2010. It is 1.6% less than predicted by economists questioned by Bloomberg. Bank of India suggests it might end the monetary tightening in the nearest future.
Sarkozy and Merkel initiated speculation of euro area contracting on November 2 in Cannes, when they alerted exiting Prime Minister Papandreou a proposed referendum on Greek bailout is a vote whether Greece is willing to keep euro currency. As a response investors are starting to gamble on which countries might quit. Such betting might impose threat to troubled euro countries to persuade investors they can
On Thursday US equities recaptured some losses of earlier trading sessions after receiving news of record low unemployment claims in October and halted concerns about euro area debt turmoil. S&P 500 Index added 0.9% or 10.6 points, reaching 1,239.70, Dow Jones Industrial Average closed at 11,893.79 gaining 1% or 112.85. Nasdaq Composite Index ended at 2,625.15 increasing by 0.1% or 3.5 points.
President Obama urges Americans to pay more attention to Asia and also to reason as Asians do. Obama is going to promote Pacific orientation by participating in East Asia Summit and in Asia-Pacific economic cooperation summit. In his previous speeches President has pointed out spending by South Korea, China and other countries on infrastructure and education as good examples of creating jobs and stimulating growth.
According to the Bank of Italia, domestic banks sold ECB bonds worth €41.3 bn euros in June, €104.7 bn in September and €111.3 bn in October. The five biggest bond issuers are Banco Popolare SC, Intesa Sanpaolo, Banca Monte dei Paschi di Siena SpA, UBI Banca ScpA and UniCredit SpA. They account for 61% of Italy's bonds sold to ECB. Italy's total debt of $ 2 trillion is bigger
President of Italy announced there is no doubt that PM will resign. There will not be any delays in accepting economic reforms and election of a new government, he added. However, analysts stressed that end of political crisis will not necessarily solve problem with debt issues. Current Italy's debt is 1.9tn euros with 7.28% cost of borrowing.
China's imports grew by 28.7% in October-much faster than 22.2 % expected by economists. Analysts claimed that increase in import does not indicate sustainability of domestic demand as manufacturers took opportunity of lower commodity prices for stock buildup. Average commodity prices decreased by 3.03% in October.
According to PM Fredrik Reinfeldt, Sweden's effort to impose strict requirements on financial institutions has resulted in tax payer protection and has helped to circumvent debt crisis. He told that in 2006 Sweden and UK had similar ratio of domestic debt to GDP. However at the moment, UK's ratio has doubled while Sweden is below 40%. Reinfeldt claims Swedish success is the result of transparency
Chinese export growth fell by 2% in October raising worries about prospects of the China's export based economy. Analysts predicted further decline in export as two major China's goods consumers suffer from financial distress: Eurozone's debt crisis continues to spread and US fights against 9% unemployment rate.
According to Greece's Presidency, Lucas Papademos, former vice president of ECB will lead the national unity government. Papademos directed Greece into euro area about 10 years ago and helped country to achieve growth rates that surpassing those of France and Germany. In 2002, Lucas Papademos moved to ECB. Spyros Economides London School lecturer suggests Papademos can lead Greece during distress, nevertheless he lacks political base.
ECB officials alerts the bank is unable halt debt crisis by purchasing more bonds to decrease Italy's bond yields. Klaas Knot, executive of Dutch central bank said that Eurozone should not expect additional extensive bond buying and national governments should take responsibilities of their debts. Two ECB officials who wanted to stay anonymous, admitted, the bank won't intervene further.
On Thursday the central bank's Monetary Policy Committee decided to leave its lending interest rate untouched at two-year low at 0.5%. BOE officials also left unchanged the plan of bank's asset purchases worth $437.3 bn. Bank of England expects the extra purchases take place in three months in order to complete its quantitative-easing program.
Asia stock markets descended on Thursday as Italian borrowing rates skyrocketed, rising concerns about the euro area debt crisis. Japan's Nikkei Stock Average lost 2.8%, South Korea's Kospi plunged 3.9% and Hong Kong's Hang Seng Index dropped 4.5%. China's Shanghai Composite gave up 1.1% and Australia's S&P/ASX 200 index fell 2.8%.
The Pound is about to reach one-month record high against Eurozone currency. The appreciation of Pound takes place ahead of Berlusconi's budget vote and suggest British assets to be safe investment. On Nov 1 EUR/GBP reached 0.8548, the highest since Oct 4. Today the Sterling traded 0.8574 pounds per euro at 9.06 a.m London trading session.
Today Italy traded €5 bn in 12-month Treasury bills, for the highest yield since September 1997. Rome Treasury sold 12-month notes at 6.087%, about 2.5 percentage points more than in last auction in October. 10-year bond yields dropped subsequently reaching 6.983%. Italian markets will be challenged again in auction for five-year debt in November 14.