Market Rumours

2010/04/19 18:05DJ Min To Meet Industry Leaders Over Disruption Caused By Ash Cloud
BERLIN -The country's economics minister said he planned to meet Monday afternoon with leaders from domestic companies hit by air traffic disruptions caused by the volcanic eruption in Iceland. Economics Minister Rainer Bruederle said in a statement that continuing closure of airports and airspace in Germany has already interrupted the flow of customers and goods for many companies in sectors including tourism, logistics and postal services. The eruption that began Wednesday and has sent a massive cloud of volcanic ash billowing over much of Europe 'is impairing the economy's value-added chain to a formidable degree,' Bruederle said.

2010/04/19 18:03*DJ Germany's Bundesbank: GDP Probably Fell In 1Q 2010

2010/04/19 17:06=DJ Forex Focus: Euro/Dollar Fall Will Come--But Slowly
LONDON -Blowing the euro/dollar down and out of its recent narrow trading range could take some time. Last week's news that Greece is about to seek an actual bailout on its debt is hardly good news for the euro. However, disappointment that the Fed isn't closer to hiking interest rates in the U.S. isn't good news for the dollar either. As a result, the currency pair has once again shown little momentum in either direction and has slumped back into trading either side of $1.36. See the euro's recent moves against the dollar: http://www.dowjoneswebservices.com/chart/view/3839 Nevertheless, a downside break in the euro still remains more likely as, with U.S. data still showing a strengthening economic recovery, it will only be a matter of time before dollar yields start to discount a rise in interest rates. The timing, of course, will probably depend very much on any increase in inflationary pressures as much as anything else. San Francisco Fed President Janet Yellen helped to drive this point home at the end of last week with her suggestion that current 'subdued' inflation levels aren't distorted too much by weak house prices. Her comments very much echoed the dovish stance taken by Fed Chairman Ben Bernanke earlier in the week when he repeated that interest rates will remain at their current low levels for an extended period. Many had hoped he was going to use his latest appearance in front of Congress to signal that tighter policy is on its way. So, anyone expecting yield differentials to move in favor of the U.S. currency were disappointed. The euro, though, was hardly able to capitalize on that as Greece edged ever closer to activating its debt rescue package. Until last week, the hope was that the package would reassure the investment community enough to allow Greece to continue funding its budget deficit by raising competitively-priced funds in the market. However, a small note auction last week proved that while investors may be prepared to continue lending to Greece they will only do so at a high price. By the end of the week, Athens was admitting that another bond auction due to be offered to U.S. investors was hardly likely to be successful and that it is now requesting formal negotiations with the European Union and the International Monetary Fund. In essence, such a move suggests that all the negotiations aimed at ensuring that Greek could help itself have now failed. This not only means that the rather vague promise by the E.U. and the IMF to make EUR45 billion available to Greece will now have to be hammered out in more detail, but that Germany, the main provider of the funds, will now have to gain constitutional court permission to participate. Hans Redeker, head of global foreign exchange strategy at BNP Paribas in London, said it all: 'Greece activating the aid package is a sign of failure and will be watched by the German government with horror.' 'The Merkel administration has hoped that the pure existence of the aid package would prevent funds from the package being drawn, but now as the aid package is likely to be activated it will only take a number of days before the German constitutional court swings into action,' Redeker warned. If that happens, then it isn't just Germany's key participation in the package that will be put in doubt, but the whole future of its participation in the euro could be in question. Early Monday in Europe, the euro was coming under pressure, as were most other high-yielders, as investors once again headed for safe havens. Tumbling stocks, driven by the news that Goldman Sachs has been charged with fraud by the Securities and Exchange Commission and fears that this will impact other U.S. banks, and a delay in an Athens meeting of E.U. and IMF officials because of European airport closures, are both driving sentiment lower. By 0645 GMT, the euro was down at $1.3439 from $1.3506 late Friday in New York, according to EBS. The single currency was also down at Y123.34 from Y124.47, while the dollar fell to Y91.79 from Y92.15. Bloomberg TNI FRX POV Reuters USD/DJ Thomson P/1066 or P/1074

2010/04/19 14:58DJ Forex Options: Dlr/Yen Options Up After Spot Hits 3-Week Low
TOKYO -Dollar/yen currency options rose Monday in Asia as the underlying exchange rate declined to a three-week low, causing players to buy both upside and downside protection. The greenback fell to Y91.83, its lowest since March 25, during the early Asian session due to an uncertain outlook on the U.S financial market following last week's news the U.S. Securities and Exchange Commission's is filing charges against Goldman Sachs on allegations it defrauded investors in mortgage securities markets. Benchmark one-month at-the-money dollar/yen implied volatilities gained to 10.20%/10.90%, compared with 9.75%/10.45% in New York Friday. As of 0300 GMT, the U.S. unit stood at Y92.08. On mounting views the spot market may extend its losses, some players bought at-the-money dollar/yen straddles, which benefit from greater volatility, expiring later in the day, an options trader said. The number of contracts was unknown. Meanwhile, one-month at-the-money euro/dollar currency options also gained to 10.10%/10.50% from 9.95%/10.35% in New York Friday after the euro marked a one-week low at $1.3446. A market participant sold one-week euro-call/dollar-put options with a $1.3500 strike price, the options trader said. Such protection makes money for holders when the euro rises above the strike price.

2010/04/19 10:05DJ UK's Brown Calls Emergency Meeting On Air-Travel Crisis
LONDON (AFP) --U.K. Prime Minister Gordon Brown called an emergency meeting of ministers Sunday to discuss how to respond to the volcano ash cloud that has grounded flights across Europe, his office said. Ministers including Transport Secretary Andrew Adonis gathered in Brown's Downing Street residence for the talks, which come ahead of a European Union ministerial video conference on the crisis Monday. The meeting was called to 'discuss the ongoing situation resulting from the presence of volcanic ash in the atmosphere, and look at what more the government can do to mitigate its effects,' said a Downing Street spokesman. The talks also covered issues including 'the assistance being provided to those Britons who have been unable to travel home, and the implications for industry.' 'They will also look at what more can be done on a European level,' the spokesman added, ahead of Monday's video conference of European Union transport ministers called by the 27-nation bloc's current Spanish presidency. The British meeting came shortly after London extended a ban on all flights in its airspace until 0600 GMT on Monday, and as British Airways flew a test flight to assess the impact of the volcanic ash. Brown is currently campaigning for May 6 elections in which his governing Labour Party is struggling to hang on to power after 13 years in office. Shortly after Brown succeeded Tony Blair in 2007, his handling of a series of crises, including foiled car bombings, floods and a major foot-and-mouth disease outbreak, was credited with a surge in his poll ratings, which then collapsed after he canceled widely anticipated snap elections.

2010/04/19 09:40=DJ FOREX VIEW: : Greece At Fore Of A Busy Week
NEW YORK -Major currencies are in for a volatile week as events surrounding debt-laden Greece will likely continue to dominate trade. Investors will also watch for any further fallout from the Securities and Exchange Commission's charges against Goldman Sachs (GS), which prompted a flight to the safety of the dollar and the yen Friday. With a host of major companies reporting first-quarter results next week, the stock market could also have a decisive role to play in the currency markets. Beyond these factors, the possibility of a yuan revaluation--widely expected sometime in the next three months--will also keep investors on their toes. Given all the uncertainty, analysts see the euro fluctuating next week between $1.30 and $1.35 and the dollar holding between Y90 and Y95. Late afternoon, the euro was changing hands at $1.3505 from $1.3577 late Thursday, according to EBS via CQG. The dollar was at Y92.13 from Y93.04. 'Greece is definitely casting a shadow over trading right now,' said Brian Kim, currency strategist at UBS in Stamford, Conn. The market exited trade Friday in a distinctly risk-averse mood, with investors clearly favoring the dollar and the yen over growth-sensitive currencies. Investors increasingly expect Greece will be forced to tap emergency loans, but there's widespread uncertainty about whether the loans will be sufficient. Athens has yet to request support for its debt woes, despite a EUR30 billion aid package the European Union and International Monetary Fund crafted for it. 'There are no clear gauges on what's going to happen or what's going to be the spark to activate that package,' Kim said. Representatives from the European Union and the European Central Bank as well as International Monetary Fund officials are due to meet in Athens Monday to start formal discussions on an aid package for Greece. On Friday, Jean-Claude Juncker, head of the euro group of finance ministers and the Prime Minister of Luxembourg, said nothing 'noteworthy' will happen Monday regarding the Greek bailout package. The yen, the ultimate safe-haven currency, gained against its rivals Friday as investors fled risky assets after the SEC charged Goldman with fraud. Goldman shares plunged, and other bank shares suffered, too, pressuring the overall stock market. Jitters could persist after the SEC said it will look at other structured finance deals put together by Wall Street that are similar to the Goldman offering. Goldman is just one of several big banks due to report earnings in the week, as earnings season continues. Citigroup posts Monday before the opening bell in New York. Morgan Stanley, Wells Fargo, Bank of New York Mellon and U.S. Bancorp are up later in the week. The global economy will also be on investors' radar screen as global financial leaders gather end-week in Washington for the IMF and World Bank Spring meetings. Stronger-than-expected economic growth data in China this week heightened expectations that China will allow its currency to rise against the U.S. dollar, which would help address global imbalances. The yuan has been held roughly fixed against the dollar since July 2008. In other currencies, the U.K. pound continues to face downward pressure at a time of political uncertainties ahead of the country's general election next month. In Britain's first televised election debate on Thursday, Liberal Democrat Leader Nick Clegg outshone his two front-running rivals, fomenting fears of a hung parliament, an unauspicious outcome from a currency market standpoint. In Canada, investors stand ready to parse a Bank of Canada policy statement, due out Tuesday, for hints of future rate hikes. The central bank has promised to maintain its current benchmark overnight lending rate of 0.25% until July. A stream of better-than-expected economic indicators in Canada has prompted widespread speculation about when the Bank of Canada will raise interest rates, and by how much.

2010/04/19 09:08DJ ECB's Noyer: Europe Is In Period Of Fragile Economic Growth
PARIS -A senior European monetary official reaffirmed Saturday that the European economic recovery remains fragile and 2010 will be a year of redressing post recessionary economic growth.European Central Bank governing board member Christian Noyer said nations must beef up the capacity of their economies to grow. The economies are still faced with uncertainties, he added.Noyer reiterated that the fiscal measures undertaken by Greece to bring its budget deficit and public debt into order have been rigorous and credible.But he cautioned that if governments continue spending at rates that exceed economic growth, public sector deficits and debt will become unmanageable.Noyer is also the head of the French central bank.The official also said he is hopeful employment will resume growing in France and elsewhere within a few months, as economies grow this year.

2010/04/19 07:38=DJ DATA SNAP: UK Rightmove Mar House Price Index +2.6%MM, +6.0%YY
LONDON -U.K. house prices rose sharply in early April from March boosted by activity among cash-rich buyers paying premium prices for homes in desirable areas, despite an increase in the number of properties available for sale, a survey by Rightmove showed Monday.According to Rightmove's latest index, house prices in mid-April rose 2.6% on the month and were 6.0% higher compared with a year earlier.That compares with a minimal 0.1% rise on the month and a 5.3% increase on the year in March.The increase in asking prices is being maintained by still high demand for more desirable--and typically more expensive--properties of which there are still fewer available for sale, the survey shows."Rarer property types in desirable locations are achieving record prices," said Miles Shipside, commercial director of Rightmove. "There is increasing divergence between these different markets, with agents reporting some pockets where a couple of viewings find a cash-rich buyer, whereas a few miles down the road it's taking over 20 viewings to achieve a sale".Rightmove added that so far, pre-election jitters are not stopping sellers entering the housing market."The run up to the election appears to be having little effect on the housing market," Rightmove said. "However, some opinion polls suggest that a hung parliament is still a real possibility, and the uncertainty over who will form the next government may continue for much longer than usual."The ongoing pickup in house prices is in line with other indexes, with lenders Nationwide and Halifax both reporting significant monthly price gains in March.But, the price rises are not expected to continue in the second half of the year as looming tax increases and government spending cuts weigh on confidence and finances."This year more than ever the traditional spring seller window is a price sensitive one, if asking prices continue to rise, all but the most popular locations are building themselves up for some of the gains to be lost later in the year," Shipside said.The average amount of time a property is taking to sell rose to 70 days in early April from just 63 days a month earlier, Rightmove said. The data also show that the average number of properties for sale per estate agent rose for a second straight month to 68 in March from 65 in February. By region, prices rose from March in nine of the 10 regions. The largest gains were a 4.9% monthly price rise in East Anglia, a 4.5% increase in the West Midlands of England and a 3.7% pickup in South-East England in April from March.The only reported house price fall was a 0.7% monthly decline in North-West England, the survey shows.Rightmove measured 129,898 asking prices of properties put on sale by estate agents between Mar 7 and Apr 10.A separate survey also released Monday, suggests that while consumption is set to recover only slowly and cautiously from the deepest recession since World War II, a more upbeat export sector will probably be the engine behind continued economic expansion in 2011."There are good reasons to be optimistic about exports and overseas demand," said Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club. "The immediate prospects for the economy remain dismal and we still think that the U.K. will struggle to achieve 1% growth this year," Spencer said.Web site: www.rightmove.co.uk