NEWS,07.05.2013

EU targets banks to help consumers

The European Commission will propose new rules to make it easier for consumers to open and switch bank accounts, as well as see what banking fees they are being charged.

The proposal, to be published on Wednesday and which could become law in the European Union in three years, also requires banks to shoulder the administrative burden when clients switch accounts, such as transferring direct debits.

Officials with knowledge of the draft law said it would also oblige banks to spell out their charges in a standardised way, making it easier for customers to compare.

The Commission wants at least one bank in each country to offer a basic account, allowing people currently outside the banking system to deposit cash and pay bills.

The EU executive will also suggest giving citizens the legal entitlement to open an account, acting out of a growing sense of frustration that efforts to cajole banks into better self-regulation is not working.

Studies by Commission officials showed that banks did not offer enough information on switching accounts and that consumers did not know what fees they paid for banking services.

The studies also found that 58 million citizens in Europe had no bank accounts - including half the populations of Bulgaria and Romania.

The Commission hopes introducing a standard guide to fees for people opening an account, as well as an annual summary of charges and establishing a national comparison website will change this.

Under the new rules, consumers wanting to switch banks would only have to inform the new bank, which would then be obliged to tell gas, electricity and other providers of the changes to account payments.

The proposal will go to EU member states for their approval or possible change before the changes can be introduced.

China braces for surge in gold imports

Chinese gold imports are likely to swell further after rising strongly for a second straight month in March, as investors seek safety from economic uncertainty and after prices plunged to a two-year low last month.

"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.

"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April. 

He said China's gold consumption in the first quarter probably rose 10% to 15% from 255.2 tonnes in 2012. Net gold flows from Hong Kong to China, the world's number two gold consumer after India, rose to 223.519 tonnes in March from 97.106 tonnes in February, data from the Hong Kong Census and Statistics Department showed on Tuesday (www.censtatd.gov).

In March, Shanghai gold futures fetched premiums of more than $30 to global prices, making it cheaper to buy the metal overseas. April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.   

Demand for gold from India and China is a major factor in global prices, with the World Gold Council saying the two countries account for more than a third of global appetite. China produced 403 tonnes of gold in 2012, but consumption was more than double at 832.2 tonnes.

Gold tumbled to around $1 321 an ounce on April 16, its lowest in more than two years, after a fall below $1 500 and fears of central bank sales led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds.

It stood at around $1 460 on Tuesday.

 "April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."

Heavy traffic 

The drop in gold prices has prompted a gold rush in China, with Chinese shoppers flocking to retailers to buy jewellery and gold bars.  

A spokesman for Hong Kong jewellery chain Chow Tai Fook , the world's largest jewellery retailer by market value, told that traffic at its China stores jumped by 50% during the May Day holidays.

The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50%, with total gold sales from April 29 to May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying. 

The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said.

With China's economy still on shaky ground, investors could increasingly be turning to gold as a so-called safe-haven investment. 

China's annual export growth may have picked up slightly in April due to a low comparison from a year ago, while import growth probably eased, a Reuters poll showed, suggesting the underlying momentum for both the domestic and global economies remains tepid. Gold exports to China from Hong Kong hit an all time high  of 557.478 tonnes in 2012.

Companies 'cooking books' to meet targets

Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young says in its latest Fraud Survey published on Tuesday.
One in five of almost 3 500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.
In addition 42% of board directors and top managers surveyed said they were aware of "some type of irregular financial reporting".
And despite scandals and regulatory failures in the wake of the credit crunch, almost a quarter of top financial services staff surveyed said they were aware of manipulation and almost 10% of all staff said their companies had understated costs, overstated revenues or used unprincipled sales tactics.
Meanwhile, almost half of the sales staff surveyed across all sectors did not consider anti-corruption policies to be relevant and more than a quarter thought it acceptable to offer personal gifts or services to win or retain business.
In India, over a third felt justified in offering cash - triple the number in Western Europe.
"Our survey shows that to find growth and improved performance in this environment, an alarming number appear to be comfortable with or aware of unethical conduct," said David Stulb, head of E&Y's fraud investigation and dispute services practice.
In Spain, ranked alongside Russia and just below Nigeria and Slovenia, 61% of staff believed companies often exaggerated results, compared with only 7% in Finland.
And E&Y said the vast majority of managers from Norway to Nigeria and Russia to Greece were feeling the pressure to deliver a good financial performance over the next 12 months, despite little optimism that business conditions would improve.
They were now forced to balance the risks of expanding into rapid-growth markets, where winning contracts can go hand-in-hand with corruption, cutting costs further and piling pressure on staff or suppliers - or distorting results, the firm said.
E&Y warned multinationals based in mature markets they could be more vulnerable to the risks of unethical behaviour. One quarter of those asked thought watchdogs in rapid-growth markets focussed more on the behaviour of foreign businesses.
The consultancy called on managers to ask more robust questions focus on key risks, such as poor due diligence accounting checks of intermediaries and associates, and punish unethical behaviour.

Egypt replaces economy ministers

Egypt announced a cabinet reshuffle on Tuesday that removed two ministers closely involved in talks with the International Monetary Fund (IMF) and increased the representation of President Mohamed Mursi's Muslim Brotherhood in government.

The opposition had been demanding the installation of a politically neutral cabinet to oversee parliamentary elections later this year.

Prime Minister Hisham Kandil announced nine changes to his cabinet. These included the appointment of Amr Darrag, a senior official in the Brotherhood's Freedom and Justice Party, as planning minister.

The outgoing minister, Ashraf al-Arabi, had played a central role in talks with the IMF over a $4.8bn loan seen as crucial to easing a deep economic crisis. Egypt has yet to seal a deal with the IMF.

Fayyad Abdel Moneim, a specialist in Islamic economics, was appointed as finance minister, replacing Al-Mursi Al-Sayed Hegazy, another expert on Islamic finance who was appointed in January, the last time Kandil reshuffled the cabinet.

Abdel Moneim received a doctorate from Al-Azhar University in Islamic economics in 1999.

The government has been widely criticised for failing to revive an economy that is in deep crisis because of more than two years of political turmoil.

Another Brotherhood member, Yehya Hamed, was appointed investment minister. The new cabinet includes at least 10 politicians affiliated to the Muslim Brotherhood or the FJP, compared to eight in the old one.

Ahmed Suleiman was named as justice minister, replacing Ahmed Mekky, who resigned last month in protest at efforts by Mursi's Islamist allies to purge the judiciary.

The ministers of interior, defence and foreign affairs were left unchanged.

Crisis sees rise in German immigration

An influx of people from crisis-hit southern European countries like Spain, Italy and Greece has led to the biggest surge in German immigration in nearly 20 years.

The Federal Statistics Office said 1.081 million immigrants flocked to Germany last year, up 13% from 2011 and the highest number since 1995.
Leading the way were arrivals from countries in eastern Europe and from southern eurozone countries, struggling with recession and high unemployment as a result of the currency bloc's three-year old debt crisis.
The number of immigrants coming from Spain, Greece, Portugal and Italy rose by 40% or more compared to the prior year.
"The rise in immigration from EU countries hit by the financial and debt crisis is particularly strong," the Statistics Office said.
Safe haven
Germany has been a rare pillar of strength during the crisis, benefitting from deep structural reforms introduced a decade ago, competitive small-and-medium sized companies and record low interest rates resulting from its status as a safe haven.
Unemployment, at 6.9%, is hovering just above a post-reunification low.
By contrast, more than one in four workers in Spain and Greece are without a job, and youth unemployment in these countries is close to 60%.
This has made Germany, Europe's largest economy, an increasingly attractive destination, despite barriers like the language.
Still, the numbers from southern Europe remain fairly small in total terms compared to those from the east.
A total of 34 109 people came from Greece and 29 910 from Spain in 2012.
That compared to 176 367 from Poland and 116 154 from Romania.

NEWS,14.,15.,16. AND 17.03.2013

1.7 m applications for 1 500 jobs

India's largest state-run bank has received 1.7 million applications for just 1 500 entry-level clerk jobs and has promised to examine all of them, a report said this week.State Bank of India chairperson Pratip Chaudhuri attributed the huge interest to good arketing and attractive employment terms, with the number of applications  underlining the appeal of "jobs for life" in the Indian public sector. "This time, we had given the advertisement a good profile, highlighting the position of SBI and describing the compensation package in detail, which attracted a lot of attention," Chaudhuri told The Times of India.For positions in Mumbai, the bank offered a starting package of 69 000 rupees ($1 270) a month for the "probationary officers" including a housing allowance - an attractive perk in the expensive local real estate market.Job opportunities in the Indian private sector have fallen in the last 18 months as economic growth has dropped to its lowest level in a decade due to declining business confidence and high interest rates.The government forecasts that India's once-booming economy will grow by just 5% in the current financial year to March 31.Last year, it grew by 6.2% but even that rate - while enviable by anaemic Western standards is insufficient to create the jobs India needs for its fast-growing young population.India's Prime Minister Manmohan Singh, a former economist, believes that India requires at least 8% growth to create enough jobs for its expanding population, with the government keen to promote the industrial sector.Chaudhuri said all 1.7 million applicants more than 1 100 per position available - would be assessed."We have conducted such examinations in the past by hiring schools across the country. This time, we may have to do two shifts," he told the newspaper. Nine out of ten Indians are currently employed in the "informal" sector in jobs that offer no security, few perks and often illegal working conditions, government data shows.

London's gold, silver in price fix probe

 

London's gold and silver markets face the possibility of a probe alongside other benchmarks into price setting, putting a century-old practice under the spotlight after the Libor rigging scandal that exposed widespread interest rate manipulation by banks.The US Commodity Futures Trading Commission has engaged in "a couple" of conversations about whether the daily setting of gold and silver prices in London is open to manipulation, Commissioner Scott O'Malia said on Thursday, although he said the situation is "fairly immature in its development."The Wall Street Journal, citing unnamed sources, reported on Wednesday that the CFTC was examining various aspects of gold and silver price-setting, including whether it is sufficiently transparent "What was stated in that story was more than I think we're doing," O'Malia told reporters at the annual Futures Industry Association conference in Florida on Thursday."I think we've had a couple of conversations. We're looking at energy, indexes, prices, how they're set. We'll look at all of the range of index-setting," O'Malia said.The CFTC declined to provide an official comment, while the chairs of the London Gold Fixing Company and London Silver Fixing Company were not available for comment.Another CFTC Commissioner Bart Chilton, known as an outspoken proponent of regulation to protect investors and consumers, declined to specifically address the report, saying: "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks - many other benchmarks are legit areas of inquiry."Britain's Financial Services Authority (FSA) also declined to comment on whether it was looking into gold and silver price setting, but said on Thursday it is feeding into a wider review of price benchmarks run by the International Organisation of Securities Commissions (Iosco) a global umbrella group for markets regulators.Iosco is set to publish a report in May with principles on how to compile important benchmarks to avoid rigging.The setting, or "fix", of the gold price in London dates back to 1919, originally involving NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co, Pixley & Abell and Sharps & Wilkins. Silver price setting started in 1897.Currently, gold fixing happens twice a day by teleconference with five banks: Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA, NA and Société Générale. The fixings are used to determine prices globally.Chairmanship of the Gold Fixing rotates annually among the member banks.At the start of each gold price-fixing, the chairperson announces an opening price to the other four members who relay that to their customers, and based on orders received from them, instruct their representatives to declare themselves as buyers or sellers at that price.The gold price is adjusted up and down until demand and supply is matched at which point the price is declared "Fixed".The fixings are used to determine spot prices for the billions of dollars of the two precious metals traded each day.Buyers and sellers can get insight on price changes and the level of interest during the fixing process. They can cancel, increase or decrease their interest based on that information.Gold and silver price setting has long been the subject of debate, and the CFTC looked at complaints about the silver market in 2008.But most believe that the process is transparent."The fix is open, consequential, transparent and has stood the test of time. It's not open to manipulation in the same way as Libor," said Ross Norman, chief executive of bullion broker Sharps Pixley.

Japan's PM set to push trade pact

Japan's hard-charging prime minister on Friday said he wanted in on talks to forge a huge trade pact, the latest bold move from a man who says he is determined to lick the frail economy into shape.With caveats aimed squarely at reassuring the cosseted farming industry, Shinzo Abe said Japan could not afford to miss negotiations on thrashing out the Trans Pacific Partnership (TPP).The announcement came just hours after his pick for central bank chief was approved by parliament, boosting the likelihood of more of the aggressive monetary easing he has been calling for to counter chronic deflation."A huge economic bloc that would account for roughly a third of the world economy is about to begin," Abe told a news conference."What the TPP is aiming to achieve is to make the Pacific Ocean a sea where goods, services and investment are freely exchanged."Supporters of the TPP say participation would give Japan's flagging economy a boost the government estimates by as much as $33bn over a decade and increase consumer choice.They say opening up Japan's cosseted markets is vital if its stumbling economy is going to pick up speed, a key campaign promise from Abe.But opponents claim it could be a body blow to the country's ageing farmers, removing the sky-high tariffs that have sheltered them and sending many to the wall, changing the face of the countryside in the process.Japan's rural heartland is a crucial source of support for Abe's brand of conservative nationalism and any suggestion that farmers will lose their unparalleled protection could be politically costly for him.But, said the premier, the agricultural sector could not stand still. He said it was already facing challenges and participation in the TPP presented an opportunity."I am sure that Japan's delicious and safe farm products will become popular all over the world," he said."The TPP is not a crisis but, rather, a huge chance. I have heard many who worry that Japan's agriculture would be devastated if we join."I promise that I will protect Japan's farm industry and Japan's food industry by any means."The TPP forms a vital plank in US President Barack Obama's vaunted "pivot" to Asia, and is seen by some as part of a US bid to contain China's rising economic might.Washington has been keen to get Japan on board because of the economic heft its participation lends to the project and Acting US Trade Representative Demetrios Marantis said the US welcomed Abe's "important announcement".But the US Alliance for American Manufacturing, which is backed by the US auto industry and is nervous of allowing Japanese rivals unfettered access to the huge auto market, was critical of the idea of Japan joining the talks."Japan's closed market, currency manipulation, and many other concerns stand in the way. It's not worth sacrificing American jobs and American manufacturing to secure a TPP agreement at any cost," said AAM president Scott Paul.The TPP has been on the global agenda for years, but a succession of politically weak leaders have been unable to commit Japan to involvement.The fact that Abe appears ready to take the plunge is a sign, say observers, of the momentum he has gathered in the less than three months since he came to power in landslide elections.He hit the ground running on taking office on December 26 and his calls for more monetary easing, coupled with threats to change the law governing the independence of the Bank of Japan, succeeded in driving down the painfully strong yen.Helped by the slide in the currency, which helps the country's many exporters, the stock market is at more than four-year highsFriday's upper house approval for Abe's slate of central bank chiefs Haruhiko Kuroda was confirmed as governor, while Kikuo Iwata and Hiroshi Nakaso got the nod as his deputies - boosts his efforts to pull Japan out of more than a decade of deflation.The BoJ's new management team, which was approved by the lower house on Thursday, is set to take up their positions next week with the focus now squarely on their first policy meeting next month."High hopes are resting on the ability of the Bank of Japan's new leadership to revitalise the economy," London-based Capital Economics said in a note.Kuroda, 68, is thought likely to back the premier's prescription of big spending and aggressive monetary easing, vowing during confirmation hearings to do "everything possible" to reverse years of falling prices.

IMF urges EU to clean up banks

The International Monetary Fund said on Friday that the European economy and financial system remained weak and urged the region to quickly clean up its banks in order to advance toward a banking union.In a first-ever assessment of the stability of the European Union financial system, the IMF said banks in the region were still weak and needed more capital strengthening."Much has been achieved to address the recent financial crisis in Europe, but vulnerabilities remain, and intensified efforts are needed across a wide front," the IMF report said."Financial stability has not been assured," it said, pointing to continued falls in asset prices, distrust of sovereign debt and the overall weak economy, which remains in recession.The first priority, the IMF said, is to shore up banks by cleaning up their balance sheets, weighed down by large but still-unclear levels of bad assets, and put them through more stress tests.Secondly, the EU must complete the establishment of a region-wide financial oversight mechanism, necessary to strengthen the eurozone currency union and the single market for banking, and then a regional resolution mechanism for winding up failed financial institutions.All that needs to be done this year, the IMF emphasized, stressing that market and economic threats continued to hang over the European economy.With those jobs tackled, it said, the region can move toward a banking union with, ideally, a road map laid down by the middle of this year."The crisis has shown that national decisions, even well-intended ones, have union-wide repercussions on financial stability, and that there is a need for single frameworks for crisis management, deposit insurance, supervision and resolution, with a common backstop for the banking system."The IMF acknowledged some significant progress toward a single supervisory mechanism and a banking union.However, it said, as long as EU members failed to unite on an EU-wide approach to financial stability, the system remains "vulnerable to shocks, and generates incentives for national ring-fencing and fragmentation."

IMF calls for Palestine breather

The International Monetary Fund (IMF) on Thursday called for "urgent action" to help revive the Palestinian economy, saying it had been choked by Israeli restrictions and political uncertainty."Urgent actions are needed by the Palestinian Authority (PA), by the government of Israel, and by donors to stabilsze the fiscal position and rekindle economic growth over time," the IMF said in a statement.The fund said the situation in the West Bank and the Gaza Strip had deteriorated in recent months, pointing to rising unemployment which had claimed nearly a quarter of the labour market in late 2012."Israeli restrictions on movement and access are virtually unchanged and continue to hamper growth prospects," the IMF said, noting that gross domestic product had risen by only 6% last year compared to an average of around 11% in 2010 and 2011.Further slippage in GDP to around 5% was possible this year, the IMF said, citing "increasing political uncertainty" in the region."The military confrontation between Hamas and Israel last November, continued settlement expansion, and recent outbreaks of unrest in the West Bank underline the common view that prospects for peace remain dim," the IMF said.The fund's analysis also said the Palestinian Authority faced a "liquidity crisis" with public spending on an "unsustainable" trajectory."If left unchecked, these trends will ultimately lead some to question the legitimacy of the PA and undermine its ability to govern effectively," the IMF remarked.The fund called on the international community to increase financial support to the Palestinian Authority while urging "enhanced economic cooperation with Israel".The IMF analysis echoed a report by the World Bank on Tuesday ahead of a meeting of international donors on March 19, which warned of "lasting damage" to the Palestinian Authority's economy wreaked by Israeli restrictions and the worsening fiscal situation.

US slaps sanctions on covert Iran oil net

The United States on Thursday slapped financial sanctions on a Greek businessman for secretly operating a shipping network on behalf of the Iranian government to get around international sanctions on the country's sale of oil."Today, we are lifting the veil on an intricate Iranian scheme that was designed to evade international oil sanctions," US Treasury undersecretary for terrorism and financial intelligence David Cohen said in a statement. The move named Dimitris Cambis and a number of front companies for buying tankers on behalf of the National Iranian Tanker Company, barring US citizens from doing business with them and freezing any of their assets under US jurisdiction.Cambis was identified in Reuters report last month that said Iran was using old tankers to ship oil to China. He denied that he had been involved.But a senior US administration official dismissed Cambis' denial in a telephone conference call with reporters on Thursday, and said the clandestine operation had been deliberately structured to conceal Iranian involvement.As the sanctions have had increasing impact, so have the efforts to evade them, the official said.Sanctions were introduced last year by the West to choke Tehran's funding of its nuclear program by targeting the country's oil exports.The West believes Iran is developing weapons, a charge Tehran denies.Sanctions halved Iran's oil exports in 2012 by more than 1 million barrels per day, about the amount that oil production grew in the United States during that time, and Washington has been at pains to keep up the pressure."We will continue to expose deceptive Iranian practices, and to sanction those individuals and entities who participate in these schemes," Cohen said.The targeted network bought and operated eight tankers, each able to carry roughly $200m of oil per shipment."These operations are conducted through a series of ship-to-ship transfers in an attempt to mask the fact that the true origin of the oil is from Iran and to introduce it into the global market as if it were non-Iranian oil," Treasury said.US officials stressed that the sanctions were not aimed in any way at the Greek government, other Greek shippers, or the Greek shipping industry in general.

Still hope for fiscal deal: top official

Senior congressional Republicans said on Sunday they see a chance for a broad deal with President Barack Obama on deficit reduction and reining in spending on vast government programs like Medicare and one senator signaled potential flexibility on taxes.Obama, who met with lawmakers of both parties last week, has been calling for more tax increases on the wealthiest taxpayers, coupled with new spending cuts, to help curb budget deficits that have exceeded $1 trillion in each of the past four years.House of Representatives Speaker John Boehner, the top Republican in Congress, and Obama failed to come to terms at the end of last year on an agreement to get America's fiscal house in order.Such a deal could include spending cuts, tax reform and curbing spending on costly entitlement programs like the Social Security retirement program and the Medicare health insurance program for the elderly and disabled.Speaking on the "Fox News Sunday" program, Senator Bob Corker, a Tennessee Republican, said: "There, by the way, is a chance on a deal. I know the president is saying the right things. And we have an opportunity over the next four to five months."Asked on the ABC programme "This Week" if prospects for a "grand bargain" were dead, Boehner said, "I don't know whether we can come to a big agreement. If we do, it'll be between the two parties on Capitol Hill. Hopefully, we can go to conference on these budgets and hope springs eternal in my mind."Boehner said that while the United States does not have "an immediate debt crisis" one is looming because entitlement programs are not sustainable in their current form. "They're going to go bankrupt," he said.Asked how long the country had to solve these problems, Boehner said, "Nobody knows where this is. It could be a year or two years, three years, four years."Obama has engaged in a couple of weeks of outreach to lawmakers - some have called it a "charm offensive" but the prospects of a large deficit reduction deal by midyear remained unclear. Corker underscored the importance of reform in the huge entitlement programs like Medicare."I think Republicans, if they saw true entitlement reform, would be glad to look at tax reform that generates additional revenue. And that doesn't mean increasing rates. That means closing loopholes. It also means arranging our tax system so that we have economic growth."Boehner said he has "a very good relationship" with Obama, they are "trying to bridge some big differences" and that he "absolutely" trusts the president.But Boehner said that if Obama "believes that we have to have more taxes from the American people, we're not going to get very far.""If the president doesn't believe that the goal ought to be to balance the budget over the next 10 years ... (I'm) not sure we're going to get very far," he said. Obama met last Wednesday with House Republicans and made little headway in persuading them to accept his demand for tax hikes as part of any deficit-reduction deal. Republicans and Democrats in Congress last Tuesday offered up vastly different plans to slash long-term deficits. On Thursday, a Senate bill to avert a federal government shutdown stalled under the weight of more than 100 proposed amendments as senators sought to attach pet provisions. Senate Democratic leaders postponed further votes on the government spending legislation until Monday and said they would work over the weekend to try to whittle down the number of amendments. They had hoped to pass the measure on Thursday.Democrat Dick Durbin of Illinois, the No. 2 Senate Democrat, said senators must pass the budget resolution "and then we're going to move to the next stage and that is the grand bargain stage. That's what the president has tried to set up."The added provisions in the Senate budget measure threatened to make the bill unacceptable to the Republican-controlled House, which last week passed a much less complicated version of the extension to government funding through September 30. Government agencies and programs face a broad shutdown if Congress fails to pass an extension by March 27.

NEWS,15. AND 16.02.2013

Foreign investors set to sue Spain

Foreign investors in renewable energy projects in Spain have hired lawyers to prepare potential international legal action against the Spanish government over new rules they say break their contracts.It is unclear how much claims might be worth, but international funds have more than €13bn of renewable energy assets in Spain and say that the government has reneged on the terms of their investment.The Spanish Parliament approved a law on Thursday that cuts subsidies for alternative energy technologies, backtracking on its push for green power.That measure, along with other recent laws including a tax on power generation that hit green energy investments especially hard, will virtually wipe out profits for photovoltaic, solar thermal and wind plants, sector lobbyists say.International commercial law firm Allen & Overy on Thursday that it is representing a group of investors in concentrated solar power plants in relation to potential claims under the international Energy Charter Treaty."International investment funds are consulting with legal advisers on how to proceed with action. There will be various lawsuits," Luis Crespo, secretary general of Spain's solar thermal association.He said that investors from the United States, Japan and the United Arab Emirates are among those pursuing action through the Brussels-based Energy Charter, an internationally ratified treaty that binds members to rules on energy and arbitration.Allen & Overy is already handling an earlier claim against Spain, filed in 2011 on behalf of photovoltaic investors. The investors it is representing for potential new claims are in the solar thermal industry.Spain's Industry Minister Jose Manuel Soria defended the law in Parliament on Thursday, saying that the measures were necessary to eliminate the accumulated €28bn tariff deficit in the electricity system.That deficit, built up through years of the government holding down electricity prices at a level that would not cover regulated costs including renewables premiums, is at the heart of Spain's energy sector woes.A spokeswoman for the ministry said that its policy was not to comment on legal issues."I don't know why anyone would put another penny in investment in the sector in Spain," said one leading investor whose firm is studying possible claims.The same source, who asked to remain anonymous, said that the reforms could drive some solar industry projects, particularly ones that are highly leveraged, into bankruptcy.Foreign investors poured money into Spanish wind and solar projects, drawn to generous subsidies during a decade-long economic boom that helped the country to become one of the biggest markets for investments in green energy.The problem was that the cost of the subsidies were not passed on fully to consumers because that would have pushed prices to unprecedented highs.Spanish companies such as Acciona and Abengoa have also been hit hard by the new rules, but because it is passed as a decree by the government, Spain-based companies have virtually no form of appeal and will not join the claims being studied by foreign investors.Listed foreign companies with investments in the sector include Germany's E.ON and Japan's Mitsubishi and Mitsui, several sources from the energy sector said.Some of the funds planning legal action are also among the 11 investors who sent a letter to Prime Minister Mariano Rajoy in July to complain of another energy reform with a retroactive impact on investments, the sources said.

 

EU finance trade tax applicable globally

A financial transactions tax to be adopted by 11 EU states should raise €30-35bn each year but the levy will apply worldwide, the European Commission said Thursday, sparking a sharp reaction from opponents led by Britain.The Financial Transaction Tax (FTT) imposes a tax of 0.1% on a trade in shares and bonds, and of 0.01% for derivative instruments.The Commission said that if any of these investments originate in one of the 11 FTT states, then they can be taxed wherever they are traded, giving them a global reach.The British government, which led opposition to the original 2011 proposal on concern over its impact on the giant London financial centre, said this "unilateral (tax) ... will hit growth for the countries taking part, which is why Britain was right not to participate in such a measure."Business organisation the Institute of Directors in London was scathing, rejecting any suggestion the 11 EU states could enforce the tax in Britain, which like all EU members, retains full national control over taxation."This is a daft idea which will throw grit in the wheels of the market, catching not just banks but also customers, pension funds and businesses," said Simon Walker, head of the group."Any attempt to extend it to the UK by the back door would violate the (EU) single market. We are fully entitled to transact business in financial products issued in France, Germany or the other countries on our own terms, under our own tax regime," Walker added.After failing to get support from all 27 EU states, France and Germany pushed ahead with the tax under the EU's Enhanced Cooperation procedure and they were joined by Austria, Belgium, Estonia, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.EU finance ministers last month cleared the tax, seen as a way of clawing back state money spent in propping up the banking sector during the debt crisis.EU Tax Commissioner Algirdas Semeta said the FTT "is an unquestionably fair and technically sound tax, which will strengthen our Single Market and temper irresponsible trading."Asked by reporters how the FTT could apply to countries refusing to sign up, Semeta said he saw no problem and that discussions would resolve such issues.The FTT has three main objectives, Semeta said in a statement, firstly strengthening the EU Single Market by "reducing the number of divergent national approaches to financial transaction taxation."Secondly, it will ensure that the financial sector makes a fair and substantial contribution to public revenues. "Finally, the FTT will support regulatory measures in encouraging the financial sector to engage in more responsible activities, geared towards the real economy," he said, highlighting the political drive to make the financial sector pay for some of the excesses blamed for causing the debt crisis.The statement said the FTT will to be based on a "residence principle" which could have far-reaching implications"This means that the tax will be due if any party to the transaction is established in a participating Member State, regardless of where the transaction takes place," it said.The "residence principle" is expressly aimed "to safeguard against the relocation of financial transactions," according to background notes provided.The tax will also incorporate an "issuance principle" as a further safeguard against avoidance of the tax, the statement said. "This means that financial instruments issued in the 11 Member States will be taxed when traded, even if those trading them are not established within the FTT-zone."Supporters of the tax such as Oxfam pressed for speedy adoption of the FTT."The smart design and the scope of the FTT ... will make it difficult for financial institutions to avoid or evade the tax," the charity said in a statement."It is vital that this proposal is adopted in full to ensure the financial sector contributes its fair share to the costs of the crisis, which is hurting hundreds of millions around the world."

The FTT proposals now go to the European Parliament and EU leaders for approval.

 

Gold demand losing its glitter

Demand for gold fell last year for the first time since 2009 as Asians bought less jewellery and Western investment dipped, the World Gold Council said in a report.Gold output fell by 21.2% in volume terms in December, Statistics South Africa said on Thursday.The WGC, which is funded by the gold industry, said on Thursday that gold consumption was expected to be steady this year but added that it may be some time before it revisits the high levels seen in the worst of the financial crisis."It's hard to see a major move up in demand (this year). I know there are bears out there who are starting to call the end of the bull market in gold, but we don't agree," said the WGC's managing director for investment, Marcus Grubb. "Demand will remain high, but we're talking small single-digit (percent) numbers in terms of growth from the current tonnage level," he said.In 2012 demand was down 4% from the previous year's total, the WGC report said. "The tonnage last year was 4 405 tonnes for consumer demand, and if you add in over-the-counter demand, it's another 100 tonnes higher," Grubb added. "We would expect 2013 to be quite similar."Grubb said he saw gold prices, which have traded between $1 625 and $1 695 an ounce this year, staying in their current trading range, although events that could destabilise the market, such as US budget talks, could push them higher.The gold price is down 1.4% so far this year after posting its biggest quarterly drop since 2008 in the last three months of 2012. Credit Suisse, Goldman Sachs and GFMS have all forecast a turn in gold's bull cycle this year."Unless something major changes in the macro landscape, this (report) does back up the idea that investors' attention is much more focused elsewhere at the moment," Credit Suisse analyst Tom Kendall said. Jewellery demand fell 3% last year to 1 908.1 tonnes, with the biggest absolute drop noted in India, the largest gold consumer, where a weak rupee led to record-high local prices.In the fourth quarter it rose 11%, however, helped by a 35% rebound in Indian jewellery demand. "Jewellery could have a good year in 2013," Grubb said. "Western demand might at last improve as the US economy and others improve."China, the second-biggest gold buyer behind India, saw a 1% drop in jewellery demand to 510.6 tonnes, its first annual decline since 2002.Overall demand was flat in China in the full year and fell 12% in India, although buying rose in the final quarter as buyers scrambled to avoid a widely anticipated rise in import duty that was announced in January."Provided we see no more increases in import duty, we still think we will see India continue to recover from what was a difficult year in 2012 overall," Grubb said. He said a higher number of auspicious gold-buying occasions in the first quarter of 2013 would probably favour the metal.When you look at the full year, we're anticipating that we'll see 865-965 tonnes of demand," he said. In China, demand is expected to recover to between 780 and 880 tonnes this year, against 776.1 tonnes last year."The jury's out on a major re-acceleration of growth in Chinese gold demand," Grubb said. "Last year we saw the first significant slowdown in the Chinese economy in years. That did affect these numbers. What you're seeing in January and February is a re-acceleration in the Chinese economy."Buying by various central banks continued its upward trend to hit a 48-year high at 534.6 tonnes. Grubb said he expected the official sector to match last year's buying in 2013, partly because monetary easing by developed countries was undermining confidence in the value of currencies."Emerging country central banks regard quantitative easing policies as divisive and (believe they) affect the value of the assets that they hold - the dollar and euro, for example," he told at the Global Gold Forum."They are diversifying away from traditional currencies and buying gold as a hedge." Bar and coin investment fell sharply in the United States and Europe last year, with US offtake dropping by more than a third and European buying down 29%. Overall investment demand last year fell 10% to 1 534.6 tonnes. Investment via gold-backed exchange-traded funds rose, however, with ETF demand up by more than half at 279 tonnes."Overall for the year (coin and bar demand) was weak, and it reflects the fact that in Europe the announcements by the European Central Bank took away tail risk in the mind of the investor," Grubb said."The announcement of (bond-buying) in Europe and quantitative easing in the United States also mitigated fears of a near-term crisis, and I think that's why bar and coin demand fell. Institutional investors and private wealth took a different view you see the ETF tonnages went up 51 percent and over-the-counter (demand) had a strong year." He said while more optimism over the outlook for the global economy was likely to encourage investment in other assets like stocks, the fact that much of that was driven by extremely loose monetary policy meant gold investment was unlikely to fall."Investors are trying to call a turn in the asset cycle," Grubb said. "The jury's still out on whether this will be the year when it actually happens. Even if you do start to look at the world more optimistically in 2013, it doesn't mean there isn't a role for gold in your portfolio."

US jobless claims drop

The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a continued steady improvement in labour market conditions.Initial claims for state unemployment benefits dropped 27 000 to a seasonally adjusted 341 000, the Labour Department said on Thursday. The prior week's claims figure was revised to show 2 000 more applications received than previously reported.Economists  had expected claims to fall to 360 000.A Labour Department analyst said claims for Illinois and snowstorm-hit Connecticut had been estimated.Nevertheless, because most claims are filed online, the blizzard that slammed the East Coast appeared to have little effect on the broader claims data, he said.While companies are no longer aggressively laying off workers, they appear to be in no hurry to step-up hiring against the backdrop of still lackluster demand.The economy has struggled to grow much more than 2% since the 2007 to 2009 recession ended.ob gains averaged 181 000 per month in 2012, far less than the at least 250 000 that economists say is needed to significantly reduce the ranks of unemployed.The four-week moving average for new claims, a better measure of labour market trends, rose 1 500 to 352 500.The prior week's drop to a near five-year low was probably exaggerated by difficulties at the start of the year smoothing out the data for seasonal fluctuations.The number of people still receiving benefits under regular state programs after an initial week of aid dropped 130 000 to 3.11 million in the week ended February 2. That was the lowest level since July 2008 and could reflect people exhausting their benefits.So-called continuing claims had hovered around 3.2 million since late November and economists had viewed that as an indication of little change in the unemployment rate. The jobless rate rose 0.1 percentage point to 7.9% in January.

Eurozone falls deeper into recession

The eurozone slipped deeper into recession in the last three months of 2012 after its largest economies, Germany and France, shrank markedly at the end of the year.It marked the currency bloc's first full year in which no quarter produced growth, extending back to 1995. Economic output in the 17-country region fell by 0.6% in the fourth quarter, the EU's statistics office Eurostat said on Thursday, following a 0.1% drop in output in the third quarter.The drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4% drop in a poll of 61 economists. For the year as a whole, gross domestic product (GDP) fell by 0.5%.Within the zone, only Estonia and Slovakia grew in the last quarter of the year, although there are no figures available yet for Ireland, Greece, Luxembourg, Malta and Slovenia. The big economies set the tone. Germany contracted by 0.6% on the quarter, official data showed, marking its worst performance since the global financial crisis was raging in 2009.France's 0.3% fall was also slightly worse than expectations. Worryingly for Berlin, it was export performance the motor of its economy that did most of the damage although economists expect it to bounce back quickly. "In the final quarter of 2012 exports of goods declined significantly more than imports of goods," the German Statistics Office said in a statement.The euro hit a session low against the dollar after the weaker than forecast German reading and dropped again after the release of full eurozone figures. Back revisions to the French figures showed its output fell by 0.1% in each of the first and second quarters of 2012, meaning the country has already experienced one bout of recession in the last twelve months.While the European Central Bank's pledge to do whatever it takes to save the euro has taken the heat out of the bloc's debt crisis, even its stronger members are gripped by an economic malaise that could push debt-cutting drives off track.French Prime Minister Jean-Marc Ayrault acknowledged for the first time on Wednesday that weak growth was putting his government's deficit goal for 2013 out of reach.Economists say the eurozone may also shrink in the first quarter of 2013 although more resilient Germany is expected to rebound."The chances that the (German) economy will return to growth at the beginning of this year are very good. The early indicators are all pointing upwards," said Andrea Rees, chief German economist at UniCredit."The question is how strong the first quarter will be. We expect growth of 0.3% but it could be more."Dutch GDP dropped 0.2% over the quarter, keeping it in recession, while the Austrian economy shrank at the same rate.For the more embattled members of the currency bloc, matters are of course worse.Italy suffered its sixth successive quarterly fall in GDP his time by a sharp 0.9% putting it into a longer slump than it suffered in 2008/2009.Its recession has been deepened by austerity measures that outgoing Prime Minister Mario Monti introduced to stave off a debt crisis.With an election due on February 24/25, all sides in a three-way race between Monti's centrist bloc, Pier Luigi Bersani's centre-left coalition and Silvio Berlusconi's centre-right are pledging to cut taxes to try to kickstart economic growth.Spain, the eurozone's fourth largest economy, released figures two weeks ago which showed it remained deep in recession after a 0.7% contraction in the fourth quarter.Madrid is also pressing on with harsh austerity measures to cut its debt but may be given more time to meet its deficit targets by the European Commission if its economy worsens further.There are signs that countries like Spain are starting to benefit from harsh internal devaluations marked by wage falls and job losses aimed at making companies leaner and more productive.The ECB predicts the eurozone will pick up later in the year although its currency, if it keeps strengthening, could quickly snuff out any of those hard-won competitive advantages for its high debt members.More recent data for January have already suggested some upturn in the first months of 2013, in the bloc's stronger members at least, and if improvement comes it is likely to be seen in Germany first."The debt crisis has ebbed significantly and the global economy has turned up," said Joerg Kraemer at Commerzbank. "Therefore all the important early indicators for Germany are pointing upwards. I expect noticeable economic growth again in the first quarter."

Dubai to build giant Ferris wheel

Dubai's ruler approved a $1.6bn island development project that would be home to what's billed as the world's biggest Ferris wheel.The project reflects a renewed appetite in Dubai for extravagance as the economy rebounds from a debt-driven slump during the past three years.The official WAM news agency said Wednesday that the Ferris wheel, dubbed the Dubai Eye, will stand 210 meters (688 feet), exceeding the London Eye's 135 meters (443 meters). Construction is set to begin this year.Dubai has proposed a series of mega projects reminiscent of its boom years before the downturn hit in 2009. The projects include theme parks and a satellite city named for Dubai's ruler, Sheik Mohammed bin Rashin Al Maktoum.

Strikes cripple German airports

A strike by security staff over pay hit two key regional airports in Germany for the second day in a row on Friday and was set to resume next week.At Hamburg airport, 147 flights were cancelled out of a total of 358 scheduled for Friday, a spokesperson for the northern German airport told AFP.The day before some 117 departures and arrivals had been cancelled in Hamburg.At Cologne/Bonn airport in the west of Germany, 107 flights were scrapped, or more than half of those scheduled for the day, according to a statement on its website.The Verdi services union called the strike for security staff responsible for checking passengers and hand luggage, in a dispute with management over pay deals.The union said the strike would be suspended over the weekend before resuming Monday.On Thursday, Duesseldorf airport had also been affected by the walkouts.

Luhabe: World needs economic revolution

In a world rife with inequality and unemployment there is a crying need for a new breed of entrepreneur who can combine profit with a social conscience, said acclaimed author and social entrepreneur Wendy Luhabe.Speaking at the Entrepreneurs Unite conference which took place in Stellenbosch this week, Luhabe said: "The global economy is at a crossroads in most parts of the world."We are experiencing an explosion of extreme wealth and inequality, and the confluence of these two factors is making it impossible to tackle poverty and address many vested interests in the economy."Luhabe pointed out that the widening gap between the top 1% and the rest of society - as well as the inequality of resource allocation and opportunity - are at their highest levels since the time of the Great Depression. Little wonder then that the World Economic Forum identified inequality as a global risk for 2013.But market forces, said Luhabe, do not exist in a vacuum. "We shape them by the decisions that we make... we shape them with poor leadership or we even shape them with moral bankruptcy."She lauded Brazil one of the world's fastest-growing economies for shaping market forces "in ways that have lowered inequality while creating more opportunities and higher growth".The worldwide trend of shrinking employment is not likely to change, said Luhabe. "We need an economic revolution therefore that can produce a new dynamic and innovative generation of entrepreneurs, but who in addition to creating great enterprises is prepared to determine a new socioeconomic contract. "The education system worldwide, said Luhabe, is "totally out of alignment with the reality of the 21st century". She identified inequality, unemployment and education as this century's biggest timebombs. "Time is running out," cautioned Luhabe. "The world needs a different economic logic where human capital, social and environmental objectives become a top priority. "Turning to Africa, Luhabe said the International Monetary Fund believes the economy of the continent has the potential to outstrip Brazil's growth over the next five years. "Much of that growth will come from startups which will bring the mobile internet to consumers" and businesses which until recently have not had internet access, said Luhabe. She further identified e-commerce, health and education as areas primed for growth."There is an entirely new generation of entrepreneurs that are changing the face of Africa.... Moral of the story is therefore that the future of the global economy will be shaped by entrepreneurs who are sensitive to the social challenges that exist in their environment."They will have the ability to create sustainable businesses which are profitable yet at the same time address social challenges, said Luhabe.

ECB officials rebuff FX targeting

The head of the European Central Bank and its two German policymakers pushed back against political pressure to target the euro's exchange rate ahead of meeting of Group of 20 financial leaders on Friday.Speaking ahead of the meeting in Moscow, ECB President Mario Draghi said recent loose talk on currencies was "inappropriate, fruitless and self-defeating".Bundesbank chief Jens Weidmann, a strong voice on the ECB's 23-man Governing Council with whom Draghi in the past has been at odds, earlier weighed in to say the euro was not seriously overvalued and that the ECB would not change monetary policy based on its impact on inflation alone."All this chatter that has been undertaken in the past few weeks is either inappropriate or fruitless in all cases it's self defeating," Draghi said in opening remarks at a news conference after meeting with Russian central bank officials.The Italian head of the bank had said last Thursday that the ECB would monitor the economic impact of the strengthening euro, feeding expectations the climbing currency could open the door to an interest rate cut.Both Weidmann and Joerg Asmussen, the German member of six-member Executive Board that forms the nucleus of the Governing Council, said the ECB would not target the euro's exchange rate."I don't think that Mario Draghi was trying to talk the euro up or down," Weidmann said, adding that the ECB "will abstain from manipulating or directly targeting the exchange rate."French President Francois Hollande last week raised the possibility of political interference in exchange rate policy when he called for a medium-term target for the euro's value, a move to counter its recent appreciation."I fear a politicization of the exchange rate," Weidmann told news agency Bloomberg in an interview."I saw indications of that in Japan but you could as well refer to recent statements by European politicians not too far from here," he added in a thinly veiled rebuff of Hollande's call for a currency target.The G20 forum, which put together a huge financial backstop to halt a market meltdown in 2009, is back in the spotlight after a week in which the Group of Seven rich nations tried, and spectacularly failed, to speak on currencies with one voice. The G7 issued a joint statement on Tuesday reaffirming "our longstanding commitment to market determined exchange rates". Yet the show of unity was quickly undermined by off-the-record briefings critical of Japan."In the last couple of days the Group of Seven biggest industrial nations made clear once again that currency exchange rates should be market-based and that we have no exchange rate targets and that's true for us at the ECB too," Asmussen told Germany's Deutschlandfunk radio.The euro hit a 15-month peak of $1.3711 on Feb. 1, before easing slightly. The euro's strength "is one factor among many in determining future inflation rates", Weidmann, who heads Germany's Bundesbank said in the Bloomberg interview conducted on Feb. 13.He added: "We will certainly not justify any monetary policy decision with one single factor".