Bloggy Business Today

By Jan Strupczewski

BRUSSELS |
Sun Feb 5, 2012 9:16am EST

BRUSSELS (Reuters) – Euro zone finance ministers told Greece it could not go ahead with an agreed deal to restructure privately held debt until it guaranteed to implement reforms to secure a second financing package from the euro zone and the IMF.

Euro zone ministers had hoped to meet on Monday to finalize the second Greek bailout, which has to be in place by mid-March if Athens is to avoid a chaotic default, but the meeting was postponed because of Greek reluctance to commit to reforms.

Instead, the ministers held a conference call on Saturday to take stock of progress on the second financing package, which euro zone leaders set at 130 billion euros back in October.

“There was a very clear message that was conveyed from all participants of the teleconference … to the Greeks that enough is enough,” one euro zone official said. “There is a great sense of frustration that they are dragging their feet.

“They should get their act together and start talking honestly, decisively and speedily with the Troika on the aspects of the programme that remain to be finalized – on fiscal and labor market reforms,” the official said.

The Troika are the representatives of the European Commission, the European Central Bank and the International Monetary Fund, who have prepared a Greek debt sustainability analysis on which the second financing programme will be based.

“The main issue is the lack of reform, or prior action, in Greece,” a second euro zone official said.

Euro zone ministers were also dissatisfied with Greek Finance Minister Evangelos Venizelos because they believed the minister was paying more attention to his position within his party ahead of the April elections than to talks about reforms.

“There is a great sense of frustration with Minister Venizelos, who is very hard to get hold of because he is very busy campaigning for the leadership of (the Greek party) PASOK, so he is not available to meet with Troika members,” the first official said.

The Greek finance ministry said that comment seemed “ridiculous, if not suspicious, to all those who have a basic knowledge of the minister’s daily schedule.”

The ministry said his schedule included long meetings with troika representatives, constant contacts with counterparts and heads of institutions involved in the troika, meetings with the prime minister, teleconferences, contacts with the Institute of International Finance on a planned bond swap and generally “superhuman efforts made 24 hours a day” by a small

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By Angeliki Koutantou and George Georgiopoulos

ATHENS |
Sat Feb 4, 2012 9:45am EST

ATHENS (Reuters) – Greece’s government on Saturday struggled on in talks with lenders to secure a 130 billion euro ($171 bilion) bailout before turning to the trickier task of persuading political leaders to back the unpopular reforms involved in the rescue.

On the brink of bankruptcy, Athens must wrap up talks with foreign lenders on the bailout and get political approval for it soon to ensure funds begin flowing in time for the country to pay back 14.5 billion euros of bonds falling due in mid-March.

But negotiations with its ‘troika’ of international lenders have stumbled over their demands that include cutting labor costs by axing holiday bonuses and lowering the minimum wage – proposals strongly opposed by Greek political party leaders.

Athens failed to reach a deal with the European Union, European Central Bank and the International Monetary Fund in marathon negotiations that ended early on Saturday, with crucial issues still unresolved.

“The troika is not backing down on wages, holiday bonuses and supplementary pensions,” a Greek government official said after ministers met to discuss the reforms on Saturday.

“None of these issues have been resolved. They are all open and the onus is on political leaders.”

Finance Minister Evangelos Venizelos was due to continue talks with lenders on Saturday in a bid to clinch agreement before technocrat Prime Minister Lucas Papademos calls the socialist, conservative and far-right leaders in his coalition to seek their blessing.

That meeting of party chiefs, initially scheduled for Saturday, has now been put off until Sunday early afternoon, a government source said.

Euro zone finance ministers are also holding a conference call on Saturday to discuss Greece’s rescue, Venizelos has said.

“There are issues to be resolved but we expect the negotiations to be concluded by tomorrow,” a senior government official told Reuters on Saturday on condition of anonymity.

PROOF OF COMMITMENT

Increasingly frustrated with Athens’ inability to enact the reforms needed to reshape the recession-hit Greek economy, foreign lenders have demanded proof of the country’s commitment to spending cuts before doling out any more funds.

They want all the country’s political chiefs – who are keen not to be linked directly with the painful reforms as they gear up for elections expected in April – to back the measures, irrespective of the outcome at the polls.

“Greek political leaders must offer their commitment to the program,” said a source close to the lenders.

“No more loans will be approved if they don’t.”

The lenders have

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By Richard Hubbard

LONDON |
Fri Feb 3, 2012 11:10am EST

LONDON (Reuters) – After a blockbuster January for both equities and bonds – rallies that caught many in the market by surprise – investors will be paying keen attention to the world’s central banks in the coming week for signs of continued easy money.

They will also be closely watching negotiations over a second bailout deal for Greece, while Chinese data on trade and inflation and a heavy week of corporate earnings all lie ahead.

Investors are having to adjust quickly to signs that global economic growth, though very fragile, may be turning out to be better than many had thought likely.

“We expected the equity market to weaken in Q1 before staging a strong recovery around Q2 at the weakest point of the economic cycle,” said Peter Oppenheimer, chief global equities strategist at Goldman Sachs.

“We have been wrong so far,” he said, adding that significant headwinds remain, and corporate profits and activity are likely to be stagnant at best.

The European Central Bank, the Bank of England and the Reserve Bank of Australia all hold policy meetings during the week, on the heels of the U.S. Federal Reserve’s commitment to keep rates on hold until the end of 2014 at the earliest.

Tighter financial conditions as banks and households continue to shed debt are expected to keep policymakers on an easier footing despite the improvement in economic data and an easing up of the euro zone debt crisis.

The improved data was itself brought on by a large influx of low interest three-year loans from the ECB.

ECB TO WAIT

The ECB is set to add to this with another interest rate cut, but probably not in the week ahead. It is likely to wait until its March meeting to move its current record low of 1.0 percent down to 0.75 percent, according to a Reuters poll.

The success of the ECB’s three-year lending operation in December, which saw banks borrow 489 billion euros ($644 billion) at very low interest rates, has been a key factor in encouraging the view that the central bank will wait.

“The ECB’s action in December averted a major credit crunch,” said Christel Aranda-Hassel, director of European economics for Credit Suisse.

A second tender due at the end of February adds to the likelihood the central bank will adopt a ‘wait and see’ approach to rates next week.

The next loan offering could attract higher demand but even if it doesn’t, plenty of money will be

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By Ryan Vlastelica

NEW YORK |
Fri Feb 3, 2012 10:31am EST

NEW YORK (Reuters) – Stocks rallied more than 1 percent on Friday, extending a rally in equities, after a report showed U.S. job growth surged in January.

Nonfarm payrolls jumped by 243,000 in January, the Labor Department said, the most since April and far exceeding forecasts. The unemployment rate dropped to a near three-year low of 8.3 percent.

“People have been underestimating the economic recovery and the expansion we’re going through,” said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. “This report was really solid and continues a string of solid numbers. Things are better than people have expected.”

In another upbeat report, the pace of growth in the services sector unexpectedly accelerated in January to its highest level in nearly a year.

The steady stream of positive reports has helped fuel a rally in stocks. The SP 500 is up more than 6 percent so far this year and almost 25 percent since an October low.

“We’re starting to get extended in the near term, so it wouldn’t be surprising to get a little bit of a pullback soon,” Sorensen said, adding that he would use it to add to positions.

The Dow Jones industrial average .DJI jumped 163.52 points, or 1.29 percent, at 12,868.93. The Standard Poor’s 500 Index .SPX was up 17.17 points, or 1.30 percent, at 1,342.71. The Nasdaq Composite Index .IXIC rose 41.01 points, or 1.43 percent, at 2,900.69.

So far this week the SP is up 1.6 percent and on track for its fifth week of gains. The Dow has risen 1.2 percent and the Nasdaq, also set for a fifth straight winning week, is up 2.5 percent.

Tyson Foods Inc (TSN.N) rose 3.4 percent to $19.26 after quarterly earnings beat expectations.

Aon Corp (AON.N) also reported higher-than-expected profit that just beat estimates. Its shares fell 1.2 percent to $48.77.

Gilead Sciences Inc (GILD.O) climbed 10 percent to $54.39 a day after announcing promising early results from a trial of a hepatitis C drug. It also said adjusted fourth-quarter profit was below consensus.

Of the 283 SP 500 companies that have reported results thus far, 60 percent have posted results that beat expectations, a lower rate than in previous quarters.

Earnings this season have been mixed, with fewer companies beating expectations than in recent quarters. Many technology names, including Qualcomm Inc (QCOM.O) and Apple Inc (AAPL.O), have posted blowout quarters, contributing to the recent strength in the Nasdaq.

(Reporting by

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By Lucia Mutikani

WASHINGTON |
Fri Feb 3, 2012 9:25am EST

WASHINGTON (Reuters) – The economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to a near three-year low of 8.3 percent, providing some measure of comfort for President Barack Obama who faces re-election in November.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The gain in overall employment was the largest since April and outpaced economists’ expectations for a rise of only 150,000.

The report pointed to underlying strength in the economy, despite expectations that growth will slow in the first quarter.

Economists had expected the jobless rate to hold steady at 8.5 percent. The rate is the lowest since February 2009 and has dropped 0.8 percentage point since August.

The decline last month reflected large gains in employment in the separate household survey from which the unemployment rate is derived.

“It’s certainly supportive of the U.S. recovery and suggests that momentum is gathering pace,” said Brian Dolan, chief market strategist at FOREX.com in Bedminster, New York.

U.S. Treasury debt prices fell sharply on the report, while stock index futures surged. The dollar rose against the yen.

The continued labor market improvement could be a relief for Obama who faces a tough re-election.

The report contrasted with a glummer assessment of the economy’s prospects offered by the Federal Reserve last week and it could lessen chances of the central bank launching another round of asset purchases to spur a stronger recovery.

Chairman Ben Bernanke said the Fed was mulling further purchases to speed up the recovery. It has already bought $2.3 trillion in bonds to keep rates low and spur the economy.

“Certainly the Fed will welcome it but they remain worried about other areas of the economy, namely housing. This should not change its view on the economy,” said Andrew Wilkinson, chief economic strategist at Miller Tabak Co. in New York.

The U.S. central bank said it would probably hold interest rates near zero at least through 2014, citing still-high unemployment.

BROAD JOB GAINS

Job gains last month were widespread, with even the transportation and warehousing sector increasing payrolls.

The tenor of the report was further strengthened by revisions to November and December payrolls data, which showed 60,000 more jobs created than previously reported.

In addition, average hourly earnings rose four cents, which should help to support spending. The report suggested that expectations of a slowdown in U.S. economic growth in the first

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