NEWS,10.12.2012

Slight gains on Wall Street

Wall Street moved higher amid promising data on China's economy, fuelling hopes that the world's second-largest economy is gathering steam again. China offered better-than-expected data on both industrial output and retail sales, welcomed by a market that is on tenterhooks about US budget talks aimed at avoiding the US$600 billion in tax increases and spending cuts scheduled to kick in on January 1. "China hit that trough and is starting to see an acceleration of growth," Tom Wirth, who helps manage US$1.6 billion as senior investment officer for Chemung Canal Trust, in Elmira, New York, told Bloomberg News.Meanwhile, no details were offered on yesterday's meeting between US President Barack Obama and Republican House Speaker John Boehner about an agreement to avoid the so-called fiscal cliff  and a potential recession for the world's largest economy.A study by the US National Intelligence Council, however, predicted that China's economy will take over the top spot from the US before 2030.In afternoon trading in New York, the Dow Jones Industrial Average was up 0.25%, the Standard & Poor's 500 Index gained 0.16%, while the Nasdaq Composite Index advanced 0.31%.Better-than-expected November sales data for McDonald's lifted its shares 1.3%, following a dismal October during which sales declined for the first time in nine years. Global sales at restaurants open at least 13 months increased 2.4% last month. "One month does not a trend make ... but it's a nice sign to see them rebound after a horrible October," ITG Investment Research analyst Steve West .Investors are eyeing a two-day meeting by Federal Reserve policy makers starting tomorrow. In Europe, the Stoxx 600 Index eked out a 0.1% gain from the previous close. It is at the highest level in 18 months, according to Bloomberg. National benchmark stock indexes also rose in London, Paris and Frankfurt. Italian Prime Minister Mario Monti's unexpected announcement over the weekend that he plans to resign soon after lawmakers approve his budget plan later this month sent the nation's stocks and bonds lower. Italy's FTSE MIB stock index dropped 2.2%, while the yield on the country's 10-year bond was last up 29 basis points at 4.82%. Elections may be held as early as February one to two months earlier than expected. European political and financial leaders today pressed for the next Italian government to hold fast on the reforms initiated by Monti. Still, the uncertainty may increase wariness among investors. "The underlying cracks within the euro zone are actually widening," Georg Grodzki, head of credit research at Legal & General Investment Management in London, told Bloomberg. "Investors will be reading Italian politicians' lips very, very closely."

Berlusconi lashes out at foreign leaders

Former Italian Prime Minister Silvio Berlusconi has reacted angrily to negative comments from foreign politicians and media about his decision to run as a candidate to lead Italy for the fifth time, calling it an offensive interference in domestic affairs.He said in a statement that he had always been a "convinced supporter of Europe" and that the comments criticising him were "out of place" and "offensive not so much to me personally but to the free choice of the Italians".He suggested that the "interference" in Italian affairs may be an attempt to weaken the share price of Italian companies and make them easier takeover targets.The current Italian Prime Minister Mario Monti has been attempting to reassure rattled financial markets that Italy will not be left adrift following his surprise decision to resign from - and Berlusconi's return to frontline politics.Monti's weekend announcement that he will quit after Berlusconi's People of Freedom (PDL) party withdrew its support for his technocrat government pushed up Italy's borrowing costs and prompted a stock market sell-off on Monday."I understand market reactions. They need not be dramatised," Monti told reporters in Oslo where he attended the award of the Nobel Peace Prize to the European Union and where other EU leaders queued up to praise him.The former European Commissioner said he was confident the elections would produce a responsible government "which should be in line with the huge efforts already pursued by Italy... markets should not fear a decision-making vacuum".He added: "Let me remind markets that the current government has not left - it's fully in charge and will be so until a new government comes in after the elections."The campaign for a vote expected in mid-February is likely to be fought over Monti's reform agenda, which Berlusconi, his predecessor as prime minister, said had condemned Italy to recession and forced him to reluctantly run for a fifth term.European leaders were anxious to stress that any new government must stick to Monti's economic reform agenda."Monti was a great prime minister of Italy and I hope that the policies he put in place will continue after the elections," said European Council President Herman Van Rompuy in Oslo.There were similar comments from policymakers ranging from French President Francois Hollande to the head of the European bailout fund Klaus Regling and European Commission President Jose Manuel Barroso.Spanish Economy Minister Luis de Guindos warned that instability in Italy could spill over and put Spain's fragile public finances at risk of further turmoil.Attention is now focused on whether Monti will enter politics himself, either as a candidate or by endorsing one of the centrist forces that have backed his reforms and made more or less explicit pleas for him to run."I'm not considering this particular issue at this stage. All my efforts are being devoted to the completion of the remaining time of the current government," he said in Oslo.Monti has repeatedly warned of the danger posed by the rise of populist, anti-European forces in the region and said he hoped such forces would not dominate the Italian election campaign.Monti's decision to resign once the 2013 budget is approved, probably before Christmas, has brought forward to February an election that had already been expected in March or April at the latest. Opinion polls suggest Berlusconi has little chance of re-election, and he has struggled to reassert a previously undisputed domination of rival factions and courtiers in his deeply divided centre-right party. In contrast, his enemies in the centre-left Democratic Party (PD) under Pier Luigi Bersani hold a strong lead and are likely to form the next government on a broadly pro-European platform, largely in line with Monti's agenda.Bersani who hopes that the former European Commissioner will stay on in some capacity, possibly as Italy's president said on Monday that "precisely because Monti should still be able to be of service to this country, it would be better for him to stay out of the (election) contest" .Berlusconi's strategy appears designed to ensure he retains influence in the next parliament with a substantial voting bloc that, among other things, can protect his business and personal interests .After several weeks of calm, markets bridled at the prospect of Berlusconi's return to lead the centre right, just over a year after a financial crisis drove the scandal-plagued billionaire from office to be replaced by Monti's technocrats. Berlusconi's reappearance and the prospect of a messy anti-Monti election campaign has galvanised attention in Italy and abroad, reawakening memories of the financial and sexual scandals that peppered the media magnate's last government.Not that such memories have had much chance to slumber. This week the prosecutor in Berlusconi's trial for allegedly having sex with a juvenile prostitute accused the 76-year-old of delaying tactics after the young woman failed to appear as a witness.The Roman Catholic Church made outspoken and thinly veiled criticism of the former premier that could influence the PDL's conservative voting base."What leaves one astonished is the irresponsibility of those who think of arranging things for themselves while the house is still burning," the head of the Italian bishops' conference, Angelo Bagnasco, told the Corriere della Sera.French Finance Minister Pierre Moscovici also weighed in."The direction that Italy has been going in for the last year and a half is a solid direction, there is no reason to worry," he said."Berlusconi is returning to politics, but I'm convinced that he will not return to power," he said.With a new government likely to be formed in a few months, Italy's European partners have now started to look more closely at Bersani, the overwhelming victor in a centre-left primary election last month.A no-frills former communist who is close to Italy's unions, Bersani has promised to stick to Monti's promises on fiscal discipline.While Italy's election laws are likely to give Bersani a strong majority in the lower house, the complicated rules may make it more difficult for him to take control of the Senate, posing a possible risk to the formation of a stable government.Whoever wins will have to confront a severe recession, record unemployment and a ballooning public debt expected to surpass 126% of gross domestic product this year.

Concerns over Japan's economy

On Monday confirmed that the world's third-largest economy shrank in the three months to September, stoking fears the country is slipping into a recession.Financial turmoil in Europe, a strong yen that has dented exports and a painful diplomatic row with major trade partner China have dented Japan's economy, dousing hopes it had cemented a recovery after the 2011 quake-tsunami disaster.Some economists have warned the current quarter is likely to see another contraction, meaning two successive quarters of negative growth that would reflect a technical recession.On Monday, official data confirmed earlier figures that showed Japan's economy shrank 0.9% in the July-September quarter, or down 3.5% on an annualised basis.Revised figures from the Cabinet Office also showed the nation's growth in the previous quarter was essentially flat, further underscoring recession fears.Separate data released Monday showed Japan's current account surplus was down about 30% on-year to ¥376.9bn ($4.56 billion) in October, although the latest figure beat market expectations for a ¥218bn surplus, according to Dow Jones Newswires.The current account is the broadest measure of Japan's trade with the rest of the world, including exports, tourism and overseas income.Japan's current account surpluses have been hit by a slowing global economy and a spike in fuel imports due to the shutdown of most of the country's nuclear reactors following last year's disaster which triggered a major atomic crisis.Last month, Tokyo approved $10.7bn in fresh spending to help boost the limp economy, more than double a package announced in October.The new package was announced as the nation prepares for December 16 elections which are expected to see Prime Minister Yoshihiko Noda and his Democratic Party of Japan defeated by the main opposition Liberal Democratic Party led by Shinzo Abe.Abe has vowed to spend heavily on public works and pressure the Bank of Japan into launching aggressive monetary easing measures to boost growth if his party wins the election.The BoJ has unveiled two policy easing measures in recent months as its counterparts in the US and Europe launched major moves to counter slowing growth.The yen has been weakening as speculation grows that the BoJ will usher in further easing measures after its policy meeting this month, with the central bank's closely-watched Tankan corporate sentiment survey due this week. "The BoJ will have no choice but to consider additional monetary easing in case its own Tankan survey shows worsening in near-term corporate sentiment," said RBS Securities chief Japan economist Junko Nishioka. 

China one of the most unequal nations

 

China's wealth gap has widened to a level where it is among the world's most unequal nations, a Chinese academic institute said in a survey, as huge numbers of poor are left behind by the economic boom.China's Gini coefficient a commonly used measure of inequality - was 0.61 in 2010, the Survey and Research Center for China Household Finance said, well above what some academics view as the warning line of 0.40.A figure of 0 would represent perfect equality, and 1 total inequality."Currently, China's household income gap is huge," said the institute, founded by the Southwestern University of Finance and Economics and the Institute of Financial Research, which operates under China's central bank."The Gini coefficient is as high as 0.61, rare in the world."China's growing wealth gap is a major concern for Communist authorities, who are keen to avoid public discontent that could lead to social unrest in the country of 1.3 billion people.In a sign of the sensitivity surrounding the issue the government has not released an official Gini coefficient for the country as a whole for more than a decade, since it put the statistic at 0.412 in 2000.A figure of 0.61 would put China at the top of a list of 16 countries by 2010 Gini coefficient on the World Bank website. The largest set of figures available on the site is for 2008, covering 47 countries and headed by Honduras on 0.613.The Global Times newspaper, which reported the latest survey results on Monday, said China's wealth gap had reached an "alarming" level.But the research centre played down its own findings, saying such a phenomenon was common in rapidly developing economies.It called on the government to use its vast financial resources to support low-income earners in the short term, while improving education to help address the imbalance in the long term."The Gini coefficient certainly points to the serious issue of income inequality," the director of the Chengdu city-based centre Gan Li said."But more importantly about the interpretation of the figure is that it does not necessarily indicate imbalance in China's economy," he said, adding it was normal for greater resources to flow to developed areas."There's no need to make a big fuss about it."The government-backed Chinese Academy of Social Sciences estimated China's Gini coefficient at nearly 0.47 in 2005.Another research institute, the Centre for Chinese Rural Studies, in August put the Gini coefficient at around 0.39 for rural residents last year, but gave no figure for the overall national level.

NEWS,09.12.2012

World week ahead: heading for a cliff

As investors return to their screens in anticipation of the Federal Reserve's final meeting of the year, time is running short on a budget deal in the US.On Friday, Wall Street received a boost from better-than-expected jobs data, which more than offset even more doom and gloom from House Republican leader John Boehner on the prospects of reaching a tax and spending accord.Employment in the US advanced by a better than expected 146,000 in November, the Labor Department said. The unemployment rate dropped to 7.7%, the lowest in four years, as some people stopped looking for work. Economists had braced for a tougher report in the wake of Superstorm Sandy's late October devastation.But there wasn't good news everywhere. Consumer confidence went south, according to the Thomson University of Michigan preliminary index, also released on Friday. Sentiment for December dropped more than expected to 74.5 from 82.7 the previous month.Sideways appeared to be the best description of where the US budget talks stood heading into the weekend. Boehner said on Friday that the White House had "wasted another week".Investors will be eyeing a two-day meeting by Fed policy makers starting on Tuesday for fresh guidance on the outlook for the world's biggest economy and its stimulus efforts.Operation Twist, in which the Fed buys longer-dated Treasuries and sells some of its shorter-dated ones in an effort to stimulate the economy by lowering longer-term borrowing costs, is scheduled to end this month."The real question is whether the November jobs data changes the Fed's attitude toward more stimulus. It doesn't remove the need for stimulus but might convince the Fed to opt for a smaller program," Kathy Lien, managing director of BK Asset Management in New York.Some believe that if Republicans and Democrats fail to reach a budget deal in the coming days, the odds of triggering about US$600 billion in automatic tax increases and spending cuts on January 1 are significantly higher. The result: shares are in line for a hit."After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take centre stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management in New York."I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year." Meanwhile, the US Treasury is scheduled to auction US$66 billion in Treasuries in the coming days. It is offering US$32 billion in three-year notes, US$21 billion in 10-year debt and US$13 billion in 30-year bonds. Additional clues on the US economy will arrive in reports on international trade, retail sales as well as the producer price index and the consumer price index.In the past five days, the Dow Jones Industrial Average climbed 1%, while the Standard & Poor's 500 Index eked out a 0.1% gain. The Nasdaq Composite Index, however, shed 0.4% for the week, dragged lower by a drop of almost 9% in Apple's shares.In Europe, the Stoxx 600 Index rose 1.2% in the past five days.The US needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, said International Monetary Fund managing director Christine Langarde.My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending," she said.America is more vulnerable to its own domestic troubles than to anything else happening in the Eurozone or China, she said. 

Skycrapers go green, slash energy costs

Chicago's skyline is going green, as property managers install energy efficient tools like motion-detectors on office lights, in a project officials hope will inspire changes across the United States.At the riverside Sheraton hotel, chief engineer Ryan Egan cannot get over what his new thermostats can do or the $136 000 a year in savings they are producing.First off, they're tied into the booking management system, which means he can let the room temperature drift beyond standard comfort levels until the moment a guest checks in.An infrared sensor means the savings don't stop there. Once the guest leaves the room, the temperature starts to drift again, giving the heating or cooling system a break until it's needed again.It's not a random drift the thermostat is programmed to only allow the room to warm up or cool down to the point where it can get back to the pre-set temperature within 12 minutes of the guest's return."The brains behind how much it can drift is really interesting," Egan said. "If you're on the shady side (in the summer) it'll drift more because it knows it can recover faster."The Sheraton is one of 14 major commercial buildings that signed onto the Retrofit Chicago challenge to cut energy use by 20% over the next five years, for savings estimated at more than $5m a year.If they succeed, it will be like taking 8 000 cars off the road."The fact that this is the city that built the first skyscraper, we love that we're trying to green the skyline," Karen Weigert, chief sustainability officer for the city of Chicago, told AFP.Some 70% of greenhouse gas emissions in the Windy City come from the electricity and gas used to heat, cool and power homes, businesses, schools and other government buildings.In addition to the greening in commercial buildings, the city plans to cut energy use by 20% in hundreds of municipal buildings, for an estimated monetary saving of $20m a year and emissions savings equivalent to taking about 30 000 vehicles off the road.It has also launched a program to help retrofit residential properties and expects more big commercial buildings to join the challenge."Fighting climate change can take all sorts of forms. This one happens to also save building owners a lot of money," said Rebecca Stanfield, a senior energy advocate for the Natural Resources Defense Council."We're excited about the potential for big property owners who are in the Chicago initiative to use what they learn here in buildings across the country."A similar program is being promoted by the Department of Energy, which has racked up commitments from schools, cities and businesses to reduce energy use by 20% in 2 billion square feet."They used to run heating and cooling all year"AT&T, the first company to sign up for Chicago's challenge, is testing out a host of new energy efficiency technologies at its downtown office tower.It's just one test kitchen for the telecom giant, as it searches for best practices in its quest to cut emissions company-wide by 20% by 2020.The results so far have been impressive.They've swapped out ceiling lights with more efficient bulbs and set up motion detectors so the lights aren't burning when technicians and sales staff are away from their desks.They've put insulated shutters on the air intake system to keep the chill out in winter and the heat out in summer.They've installed regulators on the big fans that push heated or cooled air through the 1960's era building so they only operate when needed instead of running all day and most of the night.They've even swapped out the belts on the fan's motors to cut down on energy-sucking slippage. "There's no question we've identified enough opportunities to save 20%," said John Schinter, AT&T's executive director for energy.All the improvements tested in Chicago will pay for themselves in three years or less, and most will be rolled out to the 1 000 corporate and 500 retail buildings that AT&T is targeting in its sustainability plan, Schinter said."If a project doesn't have scalability for an enterprise as large as ours, we don't spend much corporate time on it," he said in an interview.Jim Javillet is amazed at how attitudes have changed in the 43 years he's been managing buildings like the AT&T tower. "In the 60s and 70s they used to run (both) heating and cooling all year why not," he recalled.Another big advance came when buildings installed systems to turn most overhead lights off at a set time so they didn't burn all night.Now, even in the middle of the day, he can see who's away from their desks by the dark spots in the room. And when he walks down an empty hall, he creates a tunnel of light.These types of innovations are common in countries like Spain and Japan, where energy is more costly and governments have been more aggressive in pushing energy efficient building codes.But Americans are ready to accept change, said Dan Tishman, whose realty company owns the Sheraton Chicago and nine other major US hotels."Consumers in this country are comfortable with motion detectors on lights and other technologies that save energy, like low flush toilets or green roofs, and they appreciate it," said Tishman, who is also chairman of the National Resource Defense Council and heads a leading construction firm."I do think that when we implement the changes we are planning, we will be successful and other large hotel properties will follow suit."

China's factory output jumps to new high

 

Growth in China's factory output and retail sales jumped to eight-month highs in November as consumer inflation bounced off 33-month lows in the latest sign that its economy is snapping out of a protracted slump.Analysts said Sunday's data showed China is enjoying an enviable mix of benign inflation and rebounding economic growth that allows Beijing to stand still on monetary and fiscal policies, or switch to an easier stance if needed. "The Chinese economy is now in a sweet spot and can stay in the sweet spot through the first half of 2013," said Ting Lu, an economist at Bank of America-Merrill Lynch. "Beijing will be happy to sustain the current policy stance."Data from the National Bureau of Statistics showed output from Chinese factories beat forecasts to climb 10.1% in November from a year ago, its best performance since March.Annual growth in retail sales also surprised by jumping 14.9% in November, while fixed asset investment rose 20.7% in the first 11 months of the year, a shade below forecasts.The batch of activity data came after an inflation report out earlier on Sunday showed China's consumer price index rose 2% in November from a year ago just under forecasts for a 2.1% gain as vegetable prices soared.But economists said the rise in consumer prices from near three-year lows was far from worrying, especially since it is well under Beijing's annual 4% inflation target."We expect consumer inflation to not see a big rebound until the first quarter of next year," said Jiang Chao, an analyst at Guotai Junan Securities in Shanghai."Therefore, the central bank may stick to its current policy stance and we see little chance of further (policy) loosening towards the year end.""Durable recovery"China's economy has slowed for seven consecutive quarters, hurt by wilting export growth and lackluster domestic demand. Growth hit a low of 7.4% between July and September and is poised this year for its weakest annual showing since 1999.But things are looking up, due in part to policy easing by the central bank.The People's Bank of China cut interest rates twice in June and July and lowered banks' reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan ($193bn) for lending."We expect such (economic) recovery to be durable and will at least extend into the first half of next year, though the pace of recovery will remain mild," said Sun Junwei, an economist at HSBC in Beijing.As growth revives, the central bank is keeping an eagle eye on inflation, its policy priority in normal times.It has not cut interest rates or RRR since July and has instead added short-term cash to the banking system through open market operations, a move analysts say underlines its worries about consumer and property price inflation.As China's economy breaks away from central planning and as wages rise on average at least 10% each year, the central bank has warned inflation will be the biggest long-term risk, a point reiterated by Governor Zhou Xiaochuan last month.Indeed, November's data showed price momentum was gathering even in factories.Factory-gate prices fell 2.2% in November from a year earlier, its ninth straight month of declines but easing from October's 2.8% annual drop, boding well for firms struggling with falling profits.

Libya eyes olive oil

Libya is turning to olive oil the green gold of the Mediterranean - to compete with its North Africa neighbours, conquer European markets and diversify its hydrocarbon-dependent economy."Libya has decided to promote the quality of its olive production to make its olive oil more competitive and increase exports to Europe," an official of the export promotion centre in Tripoli told AFP."The centre's new strategy involves all stakeholders in the production chain of the olive tree, particularly the private sector to boost its productivity and conquer foreign markets," said Taher al-Zweibek.Libya ranks as the world's 12th largest olive oil producer, accounting for 0.25% of global production, according to the UN Food and Agriculture Organisation (FAO).The North African nation lags well behind the world's top producer Spain (43%) and its regional neighbours Morocco (4th, 10.6%), Tunisia (6th, 4.4%) and Algeria (8th, 1.7%).It has 8 million olive trees and produces 160 000 tons of olives for 32 000 tons of oil, according to figures provided by the country's agriculture ministry.Libya, a desert country with an area of 1.76 million square kilometres (680 000 sq miles), has 3.6 million hectares (8.9 million acres) of arable land, just two percent of the total area of the country.But the olive tree, a traditional crop of the Mediterranean region which easily tolerates spells of drought, is a perfect fit for the arid Libyan climate.The North African nation is currently experimenting with a new kind of olive imported from Spain, the Arbequina, which is famous for its highly aromatic fruit, said agriculture ministry official Saad al-Kunni.Introduced in Europe during the 17th century, this variety is mostly grown in Spanish Catalonia. "After an experiment that yielded encouraging results, some 1 900 hectares were planted with this variety in two agricultural projects," added Kunni.Libya, which relies exclusively on the export of hydrocarbons for its revenues, has failed to diversify its economy despite sectors with enormous potential for development such as tourism and fisheries.Both the former regime of Moamer Kadhafi, who was toppled and killed last year, and the new authorities have repeatedly expressed the desire to diversify Libya's revenues without implementing specific strategies.Speaking on the sidelines of a Tripoli exhibition of Libyan dates and olives, Zweibek noted that the new strategy also focuses on improving the packaging of finished products to make them more attractive."A national label will be created and used to identify Libyan products in order to facilitate marketing while establishing a relationship of trust with the consumer," he said.The new authorities, Zweibek added, are trying to break away from the policies of the Kadhafi regime, during which bureaucracy prevented the promotion of any exports other than hydrocarbons.Until now, the exportation of olive oil was the initiative of a few individual farmers and owners of olive presses.Zweibek stressed that the state "will become more involved in assisting the whole production chain, from making the choice of which variety to plant to the transformation of the packaging process.""The centre will also conduct studies on the European market and ensure the collection of data for the benefit of Libyan exporters to help them conquer these markets," he said.

NEWS,01.07.2012

Investors' eyes on European Central Bank

The month of June finished on a high note, with investors opting to trust that the most recent agreement by European leaders on dealing with the 2 1/2-year-old sovereign debt crisis will finally stem the bleeding for both the region's and the global economy.The European Central Bank this week might help sustain the momentum of optimism by opting to ease interest rates, already at a record low. Most economists polled by Reuters expect the central bank to lower borrowing costs at its meeting on Thursday.Investors will closely watch for the latest indicators on the strength of the US economy including the Labor Department's report on nonfarm payrolls in June, due on Friday, though expectations are low.Economists forecast an increase of 90,000 jobs and the US unemployment rate holding steady at 8.2%. Estimates in a Bloomberg survey of 59 economists ranged between 35,000 and 165,000 more jobs.Other US data due in the coming days include the Institute for Supply Management's manufacturing index and construction spending on Monday, as well as weekly jobless claims and mortgage data, ADP's private-sector payrolls report and the ISM's services-sector index on Thursday."We really need to see job creation pick up, which is the only thing that's going to get households spending on a sustained basis," Paul Dales, a senior US economist at Capital Economics in London, told Bloomberg News. "The economy isn't going to get exceptionally weak from here, but neither is it going to get much stronger."Wall Street will be closed on Wednesday, the Fourth of July, in observance of Independence Day.In the past five days on Wall Street, the Dow Jones Industrial Average advanced 1.9%, the Standard & Poor's 500 Index gained 2%, while the Nasdaq Composite Index rose 1.5%.For the month of June, the Dow gained 3.9% while the S&P 500 climbed 4% and the Nasdaq added 3.8%. In Europe, the Stoxx 600 Index posted a gain of 1.9% for the week, as national benchmark indexes advanced in all 18 western European markets. London rose 1%, Paris increased 3.4% and Frankfurt moved 2.4% higher in the past five days.Some analysts warned that the optimism and the gains might be short-lived."Investors have to be cautious because the market may be getting ahead of itself. We really don't have any details. The big question is still what direction the ECB takes [this] week," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters. On Friday, euro-zone leaders agreed to allow their joint emergency funds to be tapped by the region's banks, aimed at reducing the pressure on sovereign debt. They also pledged to create a single banking supervisor for euro-zone banks based around the ECB in a move toward a European banking union."[The EU deal] is certainly not a silver bullet for the debt crisis, but the market is kind of acting like it is. It may set us up for another push down in the weeks ahead," Esiner said.Others agreed. "People had pretty low expectations of the summit and are a little bit more optimistic now," Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group, told Bloomberg News. "The devil is in the details on most of this stuff."In the coming days, Spain and France will test investors' appetite for their debt again. Spain is set to auction three-year, four-year and 10-year bonds on Thursday, the same day as France who is planning to sell between 7 billion and 8 billion euros in long-term bonds.

ECB official: Greece must deliver '100 pct'

 

Greece must fulfill the targets of its austerity and reform program "100 percent" to stay in the euro, a top European Central Bank official said Sunday offering little hope of substantial wiggle room for Athens and questioning whether it can be given more time to comply.Greece's new government wants to lower some taxes, freeze public sector layoffs and extend by two years the mid-2014 deadline for austerity measures demanded by creditors in exchange for loans that are keeping the country afloat, conditions that are hugely unpopular in the country.But ECB executive board member Joerg Asmussen told Germany's ARD television that there can be no departure from the aims of consolidating Greece's budget and restoring its competitiveness."The so-called mix of measures in other words, how do I reach the target one can talk about that," he said. But that, he added, means that "if the government intends to lower a tax, it will have to increase another tax by the same amount."Asked whether Greece would get more time to comply, Asmussen replied: "I don't think so." He noted that any extension would lead to a need for more external financial help "that means that the other 16 eurozone states and the IMF would then have to provide more financing."The ECB is part of the so-called "troika" of debt inspectors overseeing the Greek program, along with the European Commission and the International Monetary Fund. On Monday, the inspectors are expected to start their review of the country's finances and meet with the new government. Their conclusions will be critical to whether Greece will be able to renegotiate parts of its international bailout conditions."My preference and the preference of the ECB is very clearly that Greece remain in the eurozone," Asmussen said. "For that, the country must implement 100 percent the program targets that were agreed."An exit, he said, would make things economically difficult not just for the country leaving the eurozone but also for all the others.Other eurozone countries in particular Germany, the bloc's biggest economy have appeared cool to giving Greece much of a break on its targets or timeline."From Germany's point of view, a substantial loosening of the program, of the reform agreements, does not come into consideration," Foreign Minister Guido Westerwelle said Sunday. He insisted that Greece must implement those agreements "step by step, solidly and reliably."At a European Union summit last week, German Chancellor Angela Merkel made concessions to Italy and Spain notably agreeing to allow countries that pledge to implement reforms demanded by the EU's executive Commission to tap rescue funds without having to go through the kind of tough austerity measures demanded of Greece.But officials insist that help to struggling countries and banks will still come with strings attached, and that Germany has no intention of agreeing to share government debt through jointly issued eurobonds in the foreseeable future. Berlin fears that would cut struggling countries' borrowing costs at its expense and also take pressure off them to get their finances and economies in order.Westerwelle, a member of the pro-market Free Democrats the junior partner in Merkel's coalition insisted Sunday that eurobonds should stay off the table permanently."Too little solidarity endangers Europe, but too much solidarity does not endanger Europe any less," he said."Even if we already lived in a European federal state, I would be strictly against us Germans taking on liability for all debts in all of Europe."