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Euro off 1-mth high as crisis plan optimism ebbs

 

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.

 

BEARISH ENGULFING PATTERN

 

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.

[EmpireGlobalfx]

EU short of time as Spain downgraded

 

(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.

 

PINCH OF SALT

 

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."

[EmpireGlobalfx]

Nikkei gains on euro zone bailout hopes

 

(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.

[EmpireGlobalfx]

Euro flat on doubts over EU delivering crisis plan

 

(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.

 

SHORTCOVERING, SOVEREIGN DEMAND

 

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.

[EmpireGlobalfx]

Gold edges up on arbitrage buying

 

(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.

 

PHYSICAL DEMAND STEADY, BUYERS EYE FURTHER PRICE FALL

 

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.

[EmpireGlobalfx]

Risk rally hammers dollar, yen hits record high

 

(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.

 

RECORD HIGH YEN

 

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.

[EmpireGlobalfx]

Banks raise Greek haircut offer to 40 percent in talks

 

(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.

[EmpireGlobalfx]

Gold inches up on hopes for Europe debt deal

 

(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.

FUNDAMENTALS

 

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.

 

MARKET NEWS

 

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.

[EmpireGlobalfx]

Euro slips but still supported ahead of EU summit

 

(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.

 

DOLLAR/YEN

 

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.

[EmpireGlobalfx]

Gold hits one-month high ahead of EU summit

 

(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.

[EmpireGlobalfx]

Euro zone strikes deal on 2nd Greek package, EFSF

 

(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."

 

PROOF OF THE PUDDING WITH MARKETS

 

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.

 

ITALIAN INTENT

 

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.

[EmpireGlobalfx]

Wall Street rallies on euro zone deal

 

(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.

[EmpireGlobalfx]

Global stocks at 3-month highs, euro underperforms

 

(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.

 

FOCUS ON G20 MEET

 

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.

[EmpireGlobalfx]

Oil eases as dollar strengthens

 

(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.

[EmpireGlobalfx]

Stocks, euro rise; wariness over Greece lingers

 

(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.

[EmpireGlobalfx]

ECB cuts rates in surprise move

 

(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.

 

BOND BUYING

 

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.

[EmpireGlobalfx]

Euro shares edge higher on Greece consensus hopes

 

(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 s****ped," 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.

[EmpireGlobalfx]

Brent crude climbs over $114 on euro zone hopes

 

(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.

 

ITALY

 

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.

[newbie111]

You guys can't even use the English language correctly, your website is embarrassing.

 

But you wouldn't know that.

 

conglo, will you recomend a good broker for usa citizens. I'm looking for a broker that will offer 1:500 leverage and decent execution time with mt4 platform.

[EmpireGlobalfx]

McDonald's October same-store sales rise 5.5 percent

 

(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.

[EmpireGlobalfx]

Commodities news: Gold rising and steady on European crisis.

 

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.

 

PRICES

 

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

[EmpireGlobalfx]

Analysis: Gold rising, greenback losing to EUR: Italy approves austerity measures.

 

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).

[EmpireGlobalfx]

Italy pays euro-era high cost to sell its 5-year debt

 

(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.

[EmpireGlobalfx]

Analysis: Europe debt fears grow, Gold rising, Italian 10-yr yields above 7 percent.

 

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).

[EmpireGlobalfx]

Analysis: Stocks and Euro slide. Gold drops on USD rise.

 

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).