Market Rumours

ECB Nowotny: Greece Problem Must Still Be Solved By Greece
VIENNA -- The credit support package for Greece agreed by the European Union and the International Monetary Fund Sunday will be tied to strict terms and make sure Greece maintains its budgetary reforms, European Central Bank governing council member Ewald Nowotny Tuesday said Tuesday. Speaking to journalists in the Austrian city of Linz, Nowotny welcomed the credit package, which means Greece will have access to EUR45 billion in three-year credits this year, and that further aid can be negotiated down the line, but he also underlined that Greece still faces unpleasant reforms and budget tightening. "It's important to underline that the primary responsibility for solving Greece's problems still lies with Greece," Nowotny said. The credits foreseen in the support package for Greece to help ensure its ability to roll over its refinancing needs and interest payments, will be granted, if necessary and requested, by the European Commission and IMF jointly, he added. "Greece cannot choose to receive help from EU and not from IMF or the other way around. It's one package, and credit requests will be dealt with by a joint work group," Nowotny said. An important function of the package will be to create room for Greece to carry out structural reforms and thereby ensure positive long-term effects, Nowotny said. With the deal, the EU has freed itself and Greece somewhat from the immense importance of the rating agencies, Nowotny said.
Germany's FDP Proposes EUR16 Billion Tax Cuts From 2012
BERLIN -- The junior partners of Germany's coalition government Tuesday proposed EUR16 billion in tax cuts by 2012, pushing back a key policy objective in light of the slow pace of economic recovery and a budget burdened by continued stimulus measures. Last October, as the new government assumed power, the Free Democratic Party proposed a EUR24 billion cut in 2011. But the slow recovery of Europe's largest economy and looming commitments to meet European Union debt targets have squeezed the budget, allowing little room to implement a tax cut so early. Leaders from Chancellor Angela Merkel's Christian Democrats and Christian Social Union have suggested that the cuts might have to wait, or be more modest. Hermann Otto Solms, a financial policy expert for the Free Democrats, said at a press conference Tuesday that the overall tax relief would be EUR16 billion rather than EUR24 billion because some tax relief has been included already in measures passed for 2010.
France Lagarde: Greek Plan Is New Mechanism For Other Crises
PARIS -- The financial aid plan worked out by euro-zone states over the weekend to support Greece could serve as a mechanism for dealing with future such crises, French finance minister Christine Lagarde said Tuesday. The terms of the EUR30 billion package are "very, very clear" and there is "no room for questions, queries or doubts," she told a group of journalists. All 16 euro-zone states have signed on to the plan, she said. Lagarde said that there is a clear determination by the euro zone to stand behind other members that may fall into crisis, although she hoped this won't be necessary. Euro-zone states are ready to activate the Greek plan if asked, she said, stressing that the wording of the statement Sunday on that score was "very strong." There was no ambiguity about the Greek plan's interest rates, amounts and activation, she said. Lagarde said she's worried about the multiple derivatives that are "under the radar and over-the-counter" and are destabilizing commodity markets because of their massive amounts. She called for the European Union to set up a body similar to the U.S. Commodities and Future Trading Commission to control the use of such derivatives.
European Stocks Seen Opening Lower
2010-04-13 02:35 LONDON -- European stocks are expected to open lower Tuesday, taking their cue from a downbeat session in Asia, as investors adopt a cautious stance ahead of more U.S. earnings reports after Alcoa's results disappointed the market."The Dow may have posted a finish above the key 11,000 level last night but there's not much else around to cheer investors after Alcoa's earnings disappointed, and we're also eyeing up falling resource prices--something that will have the potential to hit the London heavyweights to a degree," said Ben Potter, research analyst at IG Markets.After Monday's U.S. market close, Alcoa reported a first-quarter loss that matched Wall Street expectations as the aluminum producer booked a raft of special charges. The company's shares fell 0.6% in after-hours trade.Potter called London's FTSE 100 index to open down 13 points at 5765, Frankfurt's DAX index seven points lower at 6244, and the CAC-40 index in Paris 12 points lower at 4039.Elsewhere, Greece is set to remain in focus ahead of what many are seeing as the country's first real market test since concerns about its debt problems came to a head. Investors will be eager to gauge demand for Greece's EUR1.2 billion Treasury bill auction Tuesday, particularly in the wake of Sunday's news on the euro-zone rescue package, traders said.On the economic calendar, U.K. trade figures are due at 0830 GMT while, in the U.S., import prices and trade data are due at 1230 GMT and the Redbook is published at 1255 GMT. However, all eyes will be on U.S. earnings reports. "With the whole sovereign-debt issue in Europe close to resolution, attention now is turning towards the U.S. reporting season. Solid recent stock-price gains have set earnings expectations relatively high. By the end of the week, we'll have a pretty good idea whether or not these lofty expectations have been warranted," said Potter.On Wall Street Monday, the Dow Jones Industrial Average closed above 11,000 for the first time since September 2008, with Caterpillar, Alcoa and Chevron in the lead. The Dow climbed 8.62 points, or 0.1%, to 11,005.97, its highest close since Sept. 26, 2008.The Nasdaq Composite rose 0.2% to 2457.87, its highest close since June 19, 2008, while the Standard & Poor's 500 index added 0.2% to 1196.48, its highest close since Sept. 26, 2008.Still, gains were small as investors shied away from making big bets ahead of the first-quarter earnings reports.In Asia, markets traded down Tuesday, with technology stocks broadly lower, although Chinese banks advanced as concerns over credit tightening receded.Japan's Nikkei 225 was down 0.8%, Hong Kong's Hang Seng Index fell 0.6% and the Shanghai Composite was 0.4% lower."Greece-related risk has been already discounted into currencies and stock markets," said Kazuhiro Takahashi, general manager at Daiwa Capital Securities Markets in Japan. "We are now looking for other factors to improve stock-buying appetite," such as U.S. earnings reports.In the European currency markets, the euro edged lower amid doubts about the endurance of its recent rally. At 0725 GMT, the euro was quoted at $1.3591, barely changed from $1.3592 in late New York trade Monday. The single currency's outlook rests on Greece's planned debt auction later in the day, said Tokyo Forex & Ueda Harlow foreign-exchange manager Yuzo Sakai. If the results of the tender are poor, it may add to concerns about fiscally-strapped Greece, which "may encourage profit-taking" by short-term players, he said. The dollar was quoted at Y92.85, down from Y93.24.Among commodities, spot gold was trading at $1153.30 per troy ounce, down $2.75 from the New York close, while May Nymex crude oil futures were down 26 cents at $84.08 per barrel.Elsewhere, the European government bond markets opened higher, with the June bund future up 0.08 at 122.75.

German CPI Rises On Higher Energy Prices
2010-04-13 02:16 FRANKFURT -- German consumer price inflation picked up in March, mainly due to higher energy prices, the Federal Statistics Office, or Destatis confirmed Tuesday.Consumer prices rose by 0.5% on the month and by 1.1% on the year, according to final figures, Destatis said, confirming its preliminary figures published in late March. The data are also in line with economists' forecasts in a Dow Jones Newswires survey.Destatis cited energy prices as a key reason behind the relatively higher consumer price index, saying that energy prices rose 4.0% on the year.Consumer prices in February rose 0.4% on the month and 0.6% on the year.Although prices have increased, the inflation rate remains below 2%, the threshold for monetary policy, Destatis said.The European Union-harmonized reading in March showed a rise of 0.6% on the month and an increase of 1.2% on the year. The annual inflation figure was slightly downwardly revised from a previous estimate of 1.3%.

UK Firms More Confident About Prospects
2010-04-12 23:43 LONDON -- U.K. firms are more upbeat about their business prospects than they have been for more than two years, but less optimistic about the economy than they were at the start of 2010, a monthly survey by Lloyds TSB showed Tuesday.The poll of more than 200 companies showed 54% expected their levels of activity to increase during the next 12 month in March, 36% expected no change, and 5% expected a decrease, leading to a balance of +49, the highest level since January 2008. The remainder didn't express an opinion.In February, 50% expected an increase and 4% a decrease, giving a balance of +46.But asked whether they were more optimistic about the economy than they were three months before, the balance sank to +43 in March from +55 in February. The balance is the difference between the percentage of firms seeing an increase and those seeing a decrease."Although many firms are still cautious about the broader outlook for the economy, confidence levels are still above average," Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said in a note."Given that optimism does seem to be returning, we can expect the recovery to continue throughout the first half of the year at least," he said.Lloyds said business confidence among distribution firms hit a two-and-a-half-year high, fueled by transport and communication firms.The survey also showed that a balance of +50 of smaller firms were more optimistic about their trading prospects in the year ahead, compared with a balance of only +14 among bigger firms with a turnover of more than GBP25 million.

Darling Says Labour Not Against Foreign Takeovers
2010-04-13 00:16 LONDON -- The U.K. government isn't against foreign takeovers of U.K. companies, Chancellor of the Exchequer Alistair Darling said late Monday, hours after his Labour party promised to toughen up takeover rules.Speaking to Sky Television News, Darling said, "I am not against inward investment, far from it.""Indeed, this country is one of the major destinations in the world for foreign investment. That creates jobs in this country," he said.Earlier Monday, the governing Labour party unveiled its election manifesto, setting out its plans for a fourth-term in government if it wins an election on May 6.In the wake of the controversial takeover of Cadbury PLC (CDSCY) by Kraft Foods Inc (KFT), the manifesto included a promise to give the government a veto on takeovers of U.K. utilities and infrastructure firms.It also said a future Labour government would raise the majority needed for takeovers to 66% from 50%. The U.K.'s Takeover Panel is currently reviewing the rules.Darling said it is "right for us to look at the rules that apply in relation to these takeovers," and that there was "a lot of concern" about what had happened with Cadbury.Meanwhile, in a further signal Labour could collaborate with the smaller, opposition Liberal Democrats after the election, Darling said his party "has got a number of things we might see eye-to-eye on" with the Liberal Democrats' Treasury spokesman, Vince Cable.Darling also said Labour is campaigning with the message that "the Labour government is best placed to secure our recovery and secure jobs."With polls giving the opposition Conservatives a solid lead, a Labour coalition with the Liberal Democrats may be needed if Prime Minister Gordon Brown's party hopes to stay in power.Late Monday, an ICM poll in The Guardian showed the Conservatives with a modest 6-point lead.The poll, which was taken before the Labour manifesto launch, showed the Conservatives with 37%, Labour 31% and the Liberal Democrats 20%.Political analysts have said the Conservatives could need a 10-point national lead to be sure of a parliamentary majority after the next election.Meanwhile, a ComRes poll for ITV News and The Independent late Monday showed the Conservatives with a 7-point lead.The telephone poll, which was conducted April 10-11, showed the Conservatives ahead with 37%, Labour 30% and the Liberal Democrats 20%.