Greece’s latest cycle of talks with its creditors start with a quarrel.]]> |||
Athens - Greece’s latest cycle of talks with its creditors started with a quarrel, as officials argued over which up-front commitments the government has yet to implement in order to tap emergency loans next month.
Technical experts from the European Central Bank, the International Monetary Fund, the European Stability Mechanism and the European Commission are in Athens to negotiate with their Greek counterparts. The list of policies that must be legislated over the next three years is in exchange for a lifeline of as much as 86 billion euros ($95 billion).
A so-called Memorandum of Understanding would need to be agreed upon in the next two weeks, so that a bailout can be in place before a payment on bonds held by the ECB comes due on August 20. Failure to do that might force another bridge loan to avert default, which may also come with strings attached.
The latest talks will focus on changes to the Greek pension system, labor market, fiscal policy, and market regulation, the Finance Ministry said on Monday.
“An agreement by the second fortnight of August is possible,” EU Commission spokeswoman Mina Andreeva told reporters in Brussels today. “Talks only started yesterday so it’s premature to specify any actions or deadline.”
Creditors want Greek Prime Minister Alexis Tsipras to restore trust by legislating more belt-tightening measures now, before a disbursement from the new ESM-backed program can be made. In two votes earlier this month on so-called prior actions required for negotiations to begin, about a quarter of his Syriza-party lawmakers defected, stripping the premier of his parliamentary majority and forcing him to rely on opposition support.
A Greek Finance Ministry official on Monday told reporters that Greece has already voted through Parliament all the measures it needed to implement before a deal can be reached.
“More reforms are expected as part of the statement from the Greek authorities, to allow for a swift disbursement,” Andreeva told reporters on Monday. “Continuing the pace of reforms will also help reinforcing the trust between all partners.”
Greece imposed capital controls in June following a government decision to hold a referendum on a bailout plan offered by the euro area. After voters delivered a resounding “no” vote to the economic conditions attached, Tsipras, who turned 41 on Tuesday, went on to agree to a plan on similar terms under the threat of financial collapse.
Syriza’s political secretariat will convene for a second day on Tuesday, in order to prepare a party congress this fall, after Tsipras asked his backbenchers to clarify their positions.
Demands for further prior actions from creditors, including tax increases for farmers and pension cuts, could add more strains to the governing coalition.
“We proceed in an organised manner and we hope that everything will go well at the end,” Finance Minister Euclid Tsakalotos said in a statement on Monday, as talks with creditors started.
Demand for gold slid to its lowest in six years in the second quarter of this year.]]> |||
Manila - Demand for gold slid to its lowest in six years in the second quarter of this year as buyers from top consumer China poured funds into its now troubled equities market, an industry report showed on Tuesday.
Retail investment from China fell by a quarter and jewellery demand by 23 percent in the April to June period as stock markets there soared, GFMS said in a quarterly update.
However, a subsequent plunge in Chinese share prices from mid-June has not helped bullion, it said, as some investors were locked in and others nervous about switching to different asset classes while financial markets are so volatile.
After a 12-year bull run peaked in 2011, global prices of the safe haven metal have struggled to gain traction. Last week, gold sank to $1 077 per ounce, its lowest in 5-1/2 years, after a sudden sell-off in New York and Shanghai, as investors worried about Chinese growth and the prospect of US interest rate rises made the dollar more attractive.
“Gold has certainly moved out of favour in China in recent quarters,” GFMS analyst Andrew Leyland said.
“I think Chinese demand was a reaction to weak price performance, rather than a cause. Both the equity market, and the US dollar have promised stronger returns than gold, and this put investors off the yellow metal.”
GFMS was cautiously optimistic that both demand and prices could start to pick up in the final quarter of the year.
“Chinese purchasers tend to buy into rallies, so when gold gets some upward momentum Chinese purchasing should support this,” Leyland said.
China and India are the world's top gold consumers. Physical demand there has not picked up strongly despite a sell-off last week that knocked global prices to 5-1/2 year lows.
That contrasts to the explosion in physical demand seen after gold prices dropped sharply in the second quarter of 2013.
GFMS, a division of Thomson Reuters, said global demand for gold bars and coins fell 12 percent year-on-year in April-June and was around 63 percent below the peak two years ago.
In the largest consuming sector, jewellery, consumption dropped 9 percent and production declined 6 percent, GFMS said. Overall physical demand stood at 858 tons in the second quarter, down 14.2 percent from a year before.
Central banks remained net buyers of gold, but their purchases fell 62 percent year on year.
That helped push the physical surplus in the gold market to its highest in five years at 196 tons, more than double the total of a year before.
While jewellery consumption in India increased 2.5 percent to 158 tons during the period, gross imports fell 10 percent to the lowest in five quarters, the report said.
China and India consumed almost the same amount of gold in January-June, with China a tad higher at 394 tones against India's 392 tons, it said.
GFMS forecast gold would average $1 135 an ounce in the third quarter against $1 192 in April-June, before recovering to $1 175 in the last quarter of the year.
“It remains our view that a US rate hike this year is already priced into the market and that an increase could well prompt a review of asset allocations that leads to an increase in gold holdings,” the report said.
Strong company results and acquisitions announcements lift European shares on Tuesday.]]> |||
London - European shares bounced back on Tuesday, lifted by strong company results and news of acquisitions after falling in the previous five sessions on concerns over China's growth.
The FTSEurofirst 300 index of top European shares was 0.4 percent higher at 1,536.23 points by 08h04 GMT after hitting a two-week low in the previous session. The broader STOXX Europe 600 index also rose 0.4 percent.
Shares in Kering surged 6.6 percent after Gucci, the flagship brand of the French luxury and sportswear group, posted a 4.6 percent rise in underlying second-quarter sales.
RSA Insurance Group surged 11.3 percent after Zurich Insurance said it was weighing up a bid for the British group with a market capitalisation of 4.4 billion pounds ($6.9 billion). Zurich fell 3 percent.
Melrose jumped 10.7 percent after saying it would sell its Elster business to Honeywell for 3.3 billion pounds ($5 billion), while engineering firm GKN gained 7.8 percent after agreeing to acquire Netherlands-based Fokker Technologies for 706 million euros to strengthen its position as a supplier to aeroplane makers.
“The market has been preoccupied with uncertainties related to China in the last couple of days, but those concerns are taking a backseat today and equities are getting some support from company earnings and M&A,” Gerhard Schwarz, head of equity strategy at Baader Bank in Munich, said.
In the past five days, concerns about China's growth dominated the market. Shanghai shares fell again on Tuesday even after Beijing pledged to lend support. Stocks sank 8 percent on Monday.
“We are in an environment where you have a lot of volatility in the market and there is a Federal Reserve meeting, which may provide further hints about a US rate hike cycle. The market is still in a wait-and-see attitude,” Schwarz said.
Investors awaited the two-day US Federal Reserve meeting beginning later in the day, with some expecting that the central bank will make its case for hiking rates as early as September.
Germany's Gerresheimer jumped nearly 15 percent to a record high after the company said it will buy US pharmaceutical packaging company Centor, expanding its footprint in the largest primary pharma packaging market.
Norwegian oil major Statoil rose 2.3 percent after posting second-quarter adjusted operating profit that was better than forecast and maintained its quarterly dividend.
British power producer Drax, which has converted some of its power plant capacity to run on cleaner biomass, rose 12 percent after saying it has started a strategic review of its business after the government indicated changes to renewable energy subsidies.
Britain’s top share index edges higher after falling for five sessions in a row.]]> |||
London - Britain's top share index edged higher on Tuesday after falling for five sessions in a row, with RSA Insurance Group leading the gains on bid interest from a Swiss-based rival.
RSA surged 11 percent after Zurich Insurance said it was weighing up a bid for the British group with a market capitalisation of 4.4 billion pounds ($6.85 billion).
“We have not been keen on the break-up story on RSA due to the pension scheme deficit... However, a bid for the whole group is much more likely and today sees the first indication that such a bid may be on the cards,” Shore Capital analyst Eamonn Flanagan said in a note.
In other top gainers, GKN added more than 6 percent after the British engineering company said it had agreed to acquire Netherlands-based Fokker Technologies for 706 million euros ($781 million), including debt, to strengthen its position as a supplier to aeroplane manufacturers.
Hikma Pharmaceuticals was also on the rise, up nearly 6 percent after saying it would buy German drugmaker Boehringer Ingelheim's US specialty generic drug business for about $2.65 billion in cash and stock to bolster its presence in the United States.
On the downside, Royal Mail fell 3 percent after Britain's postal regulator Ofcom said Royal Mail had breached competition law by proposing wholesale prices that were designed to be more expensive for any firm looking to run a rival mail delivery service.
The blue-chip FTSE 100 index was up 0.6 percent at 6,544.11 points by 0737 GMT. It closed 1.1 percent lower on Monday, tumbling for the fifth session in a row in its longest losing streak so far in 2015.
The FTSE hit a record 7,122.74 points in April but is now more than 8 percent below that high and down 0.5 percent in the year to date.
Hang Seng Index rises after touching a three-week low early on Tuesday.]]> |||
Hong Kong - Hong Kong blue chip stocks rose on Tuesday, bucking falls for mainland shares, on hopes for a stabilising China market as Beijing hinted at further monetary easing.
The Hang Seng Index, which touched a three-week low early on Tuesday, rose 0.6 percent, its biggest daily gain since July 17, to 24,503.94.
The China Enterprises Index slid 0.5 percent to 11,173.04 points, the lowest close in three weeks.
Hong Kong's growth board GEM gained 0.5 percent.
Mainland stocks declined in Tuesday's volatile session, even as Beijing pledged to lend further support after shares sank 8 percent in the previous session.
China central bank said it would use “various monetary tools” to maintain “appropriate levels of liquidity”, a signal that the further monetary easing that many analysts have predicted could be in store.
China Resources Enterprise led gains in the blue chip index, surging 2.9 percent. It was followed by CNOOC Ltd and AIA, which were up 2.7 percent.
New China Life Insurance led the falls in the Chinese enterprises index, sliding 5.3 percent.
China Eastern Airlines' Hong Kong shares dropped 4.4 percent on dilution concerns after Delta Air Lines agreed to buy a 3.55 percent stake for $450 million.
South Africa's rand recovers slightly in early trade on Tuesday after touching a fresh 14-year low the previous session.]]> |||
Johannesburg - South Africa's rand recovered slightly early on Tuesday after touching a fresh 14-year low in the previous session as emerging markets wobble on concerns over China's economy.
At 06h30 GMT the rand edged 0.18 percent firmer to 12.5945 per dollar, recovering from a low of 12.69 on Monday when the unit failed to breach the key 12.70 technical support.
“Worth noting that the last time the rand traded at these levels, the ensuing correction saw us revisit 12.0550 before the bull trend resumed,” said Oliver Alwar of Standard Bank.
Chinese equity markets plunged by their most in 8 years on Monday, threatening to drag emerging markets with them as appetite for riskier assets suffered, a day ahead of a US Federal Reserve monetary policy announcement.
Bets that the US central bank will lift rates in September have seen the greenback rally, and in early trade the dollar index had ticked 0.15 percent firmer.
The rand may struggle to hold on to the gains, according to traders, with unemployment, trade and government budget data due in the week posing some downside risks.
Yields on government bonds fell, with the benchmark issue due in 2026 dropping 1 basis point to 8.19 percent.
The dollar recovers slightly against the yen as investors remain on edge after a sharp plunge in Chinese markets.]]> |||
Tokyo - The dollar recovered slightly against the yen on Tuesday, although gains were limited as investors remain on edge after a sharp plunge in Chinese markets hit risk sentiment, but the euro was supported by upbeat German data.
In Tokyo, the greenback fetched 123.55 yen, up from 123.24 yen in New York late on Monday, although it is still off the 123.75 yen earlier in Asia.
The euro changed hands at $1.1076 and 136.79 yen, against $1.1091 and 136.69 yen in US trade, where it rallied thanks to a rise in German business confidence and signs of a pickup in lending in Europe.
Global markets were jolted Monday after Shanghai stocks plunged 8.48 percent - the steepest fall in eight years - as data showing more weakness in the Chinese economy mixed with fears government support measures for the mainland market will not last.
The losses continued Tuesday, with Shanghai losing five percent at one point, despite renewed government vows to boost buying, before ending the morning one percent lower.
The collapse followed almost three weeks of relative calm after Beijing unveiled a series of measures to put an end to a month-long rout that saw Shanghai slump more than 30 percent.
“Yen-buying sentiment was strong as players were trying to avoid risk as the Chinese market slumped,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.
The yen is considered a safe investment in times of uncertainty.
However, the dollar ticked up as the morning progressed and Chinese shares pared losses.
Traders are awaiting the Federal Reserve's two-day policy meeting that starts later on Tuesday.
While the central bank is not expected to raise interest rates, dealers are hoping for some forward guidance, with most analysts tipping a hike in either September or December.
“Players remain cautious ahead of the Fed meeting - they want to see its statement before taking positions,” Uchida said.
Oil prices fall further in Asia as plunge in Chinese stocks jolts global markets.]]> |||
Tokyo - Oil prices fell further in Asia on Tuesday after a plunge in Chinese stocks jolted global markets and added to fears about an oversupply of the commodity.
The US benchmark, West Texas Intermediate for September delivery, fell 43 cents to $46.96 and Brent crude for September lost 55 cents to $52.92.
Both contracts closed lower on Monday.
Shanghai dived 8.48 percent on Monday, its biggest fall in more than eight years, on worries the Chinese government will pull back on support measures put in place at the start of the month to prevent a meltdown in the face of a market rout.
The losses continued on Tuesday, falling four percent in the morning despite renewed government pledges of support.
“When the Chinese market drops to such an extent, it sparks a lot of fear among investors. The drop in crude oil prices is because of that fear,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
“We really have to see how the China market will move going forward,” he told AFP.
Analysts fear the turmoil in China's stock market will affect demand in the world's second biggest economy and top energy consuming nation.
“We would be watching the Chinese equity markets closely,” said Bernard Aw, market strategist at IG Markets Singapore.
“More specifically, it would be interesting to see what else the Chinese government can roll out to defend the markets.”
Oil prices have also been depressed due to a global crude oversupply coming from strong production in the United States and the Organisation of the Petroleum Exporting Countries led by Saudi Arabia.
Chinese shares sink more than three percent in early trade on Tuesday.]]> |||
Shanghai - Chinese shares sank more than 3 percent on Tuesday, as Beijing scrambled once again to stabilise a stock market whose wild gyrations have heightened fears about the financial stability of the world's second biggest economy.
After a plunge of more than 8 percent in major indexes on Monday, Chinese regulators said they were prepared to buy shares to stabilise the stock market, while the central bank injected cash into money markets and hinted at further monetary easing.
Despite that, the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.1 percent in early trade on Tuesday, while the Shanghai Composite Index lost 3.4 percent.
Monday's dramatic slide shattered three weeks of relative calm for Chinese equities, secured through heavy government intervention in which authorities pumped liquidity into the market while effectively barring many investors from selling.
The rapid sell-off, which saw China's major indexes suffer their biggest one-day loss in more than eight years, may have been partly due to authorities testing the water for withdrawing some of that heavy-handed support.
Three people in the banking industry with direct knowledge told Reuters on Monday that the state-run margin lender had returned ahead of schedule some of the funds it borrowed from commercial banks to stabilise the stock market.
“The authorities picked an inopportune time to float a trial balloon about scaling back market support operations,” wrote Tim Condon, head of research Asia for ING Bank in Singapore, in a note on Tuesday.
“Lesson learned: sentiment manifestly remains fragile. We expect a show of force from the authorities today to ensure the market closes higher.”
The wild volatility in China's markets has stoked fears among global investors about the broader health of the Chinese economy, hitting prices of growth-sensitive commodities such as copper, which hit a 6-year low on Monday.
The renewed slump helped drag shares elsewhere in Asia to three-week lows on Tuesday, and sent investors scurrying for safe-haven assets such as government bonds and the Japanese yen.
But, while recent stock market weakness will have caught out many Chinese retail investors and companies, the relatively low rate of stock ownership by households and a disconnect between valuations and economic fundamentals mean the impact on the economy is likely to be less than it would be in other markets.
The People's Bank of China said on Tuesday it would inject 50 billion yuan ($8.05 billion) into money markets in its biggest liquidity boost since July 7, near the trough of the last market sell-off.
The central bank also said, in a statement before the stock market opened, that it would use “various monetary tools” to maintain “appropriate levels of liquidity”, a signal that the further monetary easing that many analysts have predicted could be in store.
China's main stock indexes had more than doubled over the year to mid-June, when a sudden swoon saw shares lose more than 30 percent of their value in a matter of weeks.
Markets finally began stabilising again in the second week of July after a barrage of official support measures.
China's central bank cut interest rates, brokerages formed stabilisation funds and regulators lifted restrictions on pensions and insurers investing in stocks, an implied combined total verbal commitment of almost $800 billion.
Beijing also cracked down on “malicious” short-sellers in the futures market, froze IPOs to prevent a liquidity drain and looked the other way as around 40 percent of companies suspended trading in their shares to escape the rout.
Asian stocks fall to three-week lows as a deepening rout in Chinese stocks erases risk appetite.]]> |||
Hong Kong - Asian stocks fell to three-week lows on Tuesday as a deepening rout in Chinese stocks erased risk appetite - sending investors flocking to safe-haven instruments such as government bonds and the Japanese yen.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8 percent in early deals, its lowest level since July 9 as mainland Chinese indexes opened 2-5 percent lower.
“Volatility is the enemy of investor appetite,” said the head of index trading at a US fund. “Any sign of government support to prop up the market will be used by investors to exit the market completely rather than add fresh positions.”
Since hitting a peak in early June, Chinese shares have gone through a roller-coaster ride with main China indexes falling by a third in less than a month before rebounding by a quarter, only to stage its biggest one-day fall since 2007.
While broader Asian markets have been initially resilient to the fireworks in Chinese stocks, they have started to move more closely in step with the mainland over recent days in the absence of fresh triggers elsewhere.
Correlations between the MSCI gauge for regional stocks and the Shanghai index has risen to 0.5 - its strongest in nearly a year - indicating the market rout is starting to have a broader regional impact.
Tokyo's Nikkei fell more than 1 percent, with a strong yen accelerating the decline. Australian shares fell 0.9 percent and South Korea's Kospi shed 1 percent.
Investor sentiment was also cautious ahead of a two-day US Federal Reserve meeting beginning later today where some investors believe the Fed's rate-setting Open Market Committee will make its case for hiking rates as early as September.
Overnight, the Dow dropped 0.7 percent and Nasdaq fell 1 percent while share indices in Frankfurt and Paris tumbled more than 2.5 percent.
In currencies, the dollar was on the back foot at 123.12 yen as safe-haven assets were boosted by market jitters, offsetting upbeat U.S. durable good orders data.
The euro was little changed at $1.1091 after surging to a two-week high of $1.1129 overnight thanks to a bullish Ifo survey of German business sentiment.
Bonds were the solitary bright spot in Asia with US Treasuries and Japanese government debt standing tall in a sea of red across stock markets as investors dumped riskier bets.
Ten-year Japanese bond yields held firm at 0.40 percent, from 0.55 percent two weeks earlier, a large move for the markets while 10-year US Treasuries held at 2.2 percent.
Oil struggled at four-month lows after the Chinese stock market crash fuelled worries the world's biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut.
US crude was down nearly a percent at $46.98 a barrel, near $46.91, its lowest since late March.
Copper, heavily influenced by demand from key consumer China, languished near a six-year low of $5,164 a ton on the London Metal Exchange.
The broader Thomson Reuters CRB commodities index also hit a six-year low.