NEWS,31.01.2013

Income surge releaves US consumers

American income growth surged in December as companies rushed to make dividend payments before higher tax rates set in, while buoyant wage growth also gave a lift to households. US personal income rose 2.6% last month, the biggest increase in eight years, the Commerce Department said on Thursday. While much of the gain was due to special payments aimed at beating tax increases due to begin this month, wages still grew at one of the faster rates seen last year. That should lend support to consumer spending and provide some underlying momentum for the economy despite a surprise contraction in gross domestic product during the fourth quarter."Even abstracting from the one-off surge in dividend payments ... the general tone of this report was quite encouraging," said Millan Mulraine, an economist at TD Securities in New York.The increase in overall personal income was well above analysts' expectations for a 0.8% gain. However, another economic report showed an increase in new jobless claims last week, and US stocks traded lower as investors sifted through the mixed data, while prices for US Treasuries were higher.The big rise in incomes put consumers on stronger footing entering the new year, even if the gains may not have been distributed evenly throughout the workforce. Extra dividend payments likely went to the nation's wealthier households who derive more of their income from investments.Still, wages and salary payments grew 0.6% last month, building on a sizable 0.9% gain in November.The income gains helped push the saving rate, the amount of disposable income households socked away, to 6.5%, the highest since May 2009. That offers a cushion for consumer spending as the temporary boost in incomes from investments unwinds and households deal with higher tax rates that took effect this month.Last month, consumer spending rose a modest 0.2%, which was just below the pace expected by analysts.The Commerce Department report also showed cooling inflation, which could help the US Federal Reserve continue easy-money policies aimed at boosting employment.Prices rose 1.3% in the 12 months through December, down a tenth from the reading in November and well below the Fed's 2% target. A core price reading, which strips out volatile food and energy prices to provide a better sense of inflation trends, was up a tame 1.4% from a year ago. A separate report from the Labour Department showed initial claims for state unemployment benefits increased 38 000 last week to 368 000. However, the increase followed a week where new claims were at their lowest in five years and still pointed to an economy where employers are adding jobs, albeit at a lackluster pace. The four-week moving average for new claims, which provides a better sense of underlying trends, gained 250 to 352 000.A report on Friday is expected to show employers added 160 000 jobs to their payrolls in January after an increase of 155 000 in December. The unemployment rate is seen holding steady at 7.8%.The number of planned layoffs at US firms rose in January from the prior month, but declined from a year earlier, another report showed on Thursday. Employers announced 40 430 job cuts this month, up 24.2% from 32 556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were down 24.4% from January 2012.

Worldwide tablet sales soar

Worldwide tablet sales jumped in the fourth quarter beyond even some of the most optimistic forecasts to 52.5 million, with Android-powered devices pacing growth, a survey showed on Thursday.The preliminary survey by business research firm IDC showed the tablet market grew 75.3% year over year in the quarter and rocketed 74.3% from the previous quarter's total of 30.1 million.IDC said the strongest growth came from Android, including tablets made by South Korea's Samsung and Taiwan's Asus, which makes a Google-branded Nexus tablet.Apple remained the biggest seller, but its market share was under 50%, IDC said. The survey found that Microsoft, which launched its new Surface tablet in the quarter, failed to break into the top five sellers and shipped a modest 900 000 of the devices in the quarter.Overall, the market's strong gains came from a spate of new product launches, including the iPad mini, and lower prices, which encouraged buyers over the holiday shopping season, IDC said."We expected a very strong fourth quarter, and the market didn't disappoint," said IDC analyst Tom Mainelli."The record-breaking quarter stands in stark contrast to the PC market, which saw shipments decline during the quarter for the first time in more than five years."Apple's iPad held its top position with 22.9 million units shipped. That was up 48% from a year earlier, but lower than overall market growth.As a result, Apple's market share declined for a second quarter in a row to 43.6% from 46.4% in the third quarter.Samsung, the number two vendor, saw year-on-year growth of 263%, selling 7.9 million tablets and grabbing a 15.1% market share.IDC said Amazon, which does not provide its own sales data, delivered some six million tablets in the quarter to retain its spot as the number three vendor.That represented 26.8% growth, giving Amazon a market share of 11.5%, IDC said.Fourth place belonged to Asus, which sold 3.1 million tablets, year-on-year growth of more than 400%. That gave the Taiwan-based firm a 5.8% market share.Barnes & Noble sold one million of its Nook tablets and accounted to 1.9% of the market, the survey found.IDC analyst Ryan Reith said Microsoft will need to shift its strategy to compete better in the tablet market."There is no question that Microsoft is in this tablet race to compete for the long haul," he said, calling the market reaction to Surface "muted.""We believe that Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices. In the long run, consumers may grow to believe that high-end computing tablets with desktop operating systems are worth a higher premium than other tablets, but until then (selling prices) on Windows 8 and Windows RT devices need to come down to drive higher volumes."

Ukraine economy in official recession

 

Kiev Ukraine's economy plunged into recession in the final quarter of 2012 with GDP contracting 2.7%, the second quarter running of negative growth, the statistics office said.Gross domestic product in Ukraine contracted 2.7% in the fourth quarter of 2012 compared with the same period last year. The economy had already shrunk by 1.2% in the third quarter.For the whole of 2012, growth was almost stagnant at 0.2% compared with 5.2% in 2011 and the projection in the budget for growth of 3.9%.Ukraine, which was one of the European states worst hit by the 2009 economic crisis, is hugely vulnerable to the current global slowdown due to its dependence on metals exports.

Bitter taste for German chocolate makers

German antitrust authorities have fined 11 chocolate makers €60m for colluding to rig the price of confectionary.The Federal Cartel Office says the offences committed by companies, including Kraft and Nestle, occurred between 2004 and 2008.The offences include agreeing on how much to increase the price of chocolate bars when the cost of raw materials rose sharply in 2007.The cartel office said in a statement on Thursday that the companies "simply ceased competing with each other and piled the price rises on to consumers".It said that Mars avoided a fine by alerting authorities to the illegal practices.

Nappy hunters bare Norwegian bottoms

Southern Norway is in the midst of a nappy shortage after a supermarket price war lured enterprising bulk shoppers from eastern Europe who have cleaned out the shelves, customs officials and retailers said.Norway is one of the world's most expensive countries. However, supermarkets in the south trying to lure local customers by undercutting rivals on the price of nappies inadvertently made it profitable enough for residents of nearby countries to start trading in them."They buy every last diaper [nappy], I mean everything we have on the shelves, throw it in the back of their car and take them home, where they sell it for a nice profit," says Terje Ragnar Hansen, a regional director for retail chain Rema 1000."It's not stealing and it's not even criminal but it's a big problem, ... they leave nothing for our regular customers.Customers come into Norway from Sweden, drive along the coast to fill their cars, then take a ferry back to the continent, said Helge Breilid, the chief of customs in Kristiansand on Norway's southern coast.Some have been stopped with nappies worth up to $9 100, roughly 80 000 nappies, a legal shipment even though Norway is not part of the European Union. "They told us that the only reason they came to Norway was to drive around and buy nappies to bring back home and resell," Breilid said. "These people mainly come from Poland and Lithuania, and we have no reason to believe that they are part of any criminal gangs."Norwegian nappies cost as little as $5.47 for 50, less than half of the prevailing price in Lithuania. Coincidentally, the internet is heaving with Lithuanian sellers advertising Norwegian nappies.

French civil servants go on strike

French civil servants went on strike on Thursday for better pay in their first mass show of dissent since the Socialist Francois Hollande became president last year.Dozens of street protests were planned across the country as part of the day of action called by three of the several unions which represent France's 5.2 million state workers.The main complaint of the unions relates to the index used to calculate salaries, which has been frozen for three years.Raising the index by one point would cost €800m if applied only to central government workers or €1.8bn if applied to all civil servants, according to the state audit authority.Jean-Marc Canon of the CGT union said the situation was "absolutely catastrophic", and noted that nearly a million civil servants were being paid the minimum wage.The unions are seeking to put pressure on Civil Service Minister Marylise Lebranchu ahead of pay talks next Thursday.She has acknowledged "the difficult situation facing civil servants" but hinted that pay rises were unlikely given the budgetary constraints on the government.The government was due later on Thursday to announce how many civil servants had answered the strike call.

NEWS,17.12.2012

Putin touts record Russian arms sales

Russian arms exports reached a record $14 billion this year, President Vladimir Putin said today, extending a run of record-breaking sales in recent years. The world's second biggest exporter has cultivated new weapons clients in Southeast Asia and Africa, despite criticism that it is failing to deliver the technological benefits of Western suppliers or the low costs of emerging weapons exporter China. "Let's talk about our results they are positive. We are reaching a record level of weapons exports. Their total volume was above $14 billion," Putin said in a televised meeting with officials. He said Russia had signed over $15 billion in new export contracts this year alone. He did not spell out when deliveries on those deals were expected.Russia has faced Western criticism over its weapons sales to the Syrian government, worth nearly $1 billion in 2011.Moscow says its arms deliveries to Syria, a long-time ally, do not violate international law and are not intended to help President Bashar al-Assad's government fight a 21-month-old uprising, but rather to fulfil Soviet-era commitments. Russia has made clear it would use its UN Security Council Vote to veto an arms embargo against Damascus, contending such a move would be one-sided when rebels are able to obtain weapons via smuggling into territory they now control. Moscow has reported no major arms deals with Syria this year. A major order of fighter jets was not completed, although it remains unclear as to why. Putin gave no specifics on Russia's main weapons buyers.Top weapons clients also include Soviet-era client and regional Asian heavyweight India, as well as Vietnam and other Southeast Asian nations wary of China's growing military might.Putin said a major part of Russia's weapons business includes upgrades and refurbishment of Soviet-era technology and hardware. "We understand that competition in this sector of the international economy is very high and very serious," he said. Exports from the world's top producer, the United States, have hovered around $30 billion annually in recent years.State arms exporter Rosoboron export accounts for around 80% of all Russian arms sales in a given year and nearly 20 independent firms comprise the rest with sales of spare parts and upgrades.

EU holds back on eurozone overhaul

European leaders doused hopes of a radical eurozone overhaul on Friday, after brokering deals to control banks and refloat Greece seen as adequate to stem the immediate crisis.The last EU summit of a year that saw Greece close to bankruptcy and bigger Latin countries pressured to overhaul their economies in line with German demands saw a series of ambitious proposals effectively kicked into the long grass.Despite worries over political uncertainty in Italy, flagship plans to fix fundamental flaws criticised since the introduction of the single currency were put to one side until late 2014 at the earliest.Europe's effective paymaster, German Chancellor Angela Merkel, hinted that "financial aid" could in the future be given to countries committing to reforms as part of moves towards greater economic co-ordination in the bloc.In the eurozone alone, joblessness is heading towards the 20 million mark after a year of devastation and with recession set to last throughout much of 2013.However, the sense of imminent panic on financial markets that dominated much of 2012 decision-making has receded significantly since the European Central Bank (ECB) issued a long-resisted but near-unlimited guarantee in the summer to stand behind countries in financial difficulty." No doors were closed," said Jose Manuel Barroso, the head of the executive European Commission. Yet ideas heavily promoted by EU President Herman Van Rompuy over the last six months, including a central eurozone budget, seemed to fizzle out.Van Rompuy said he would present another report to leaders in June 2013, as well as proposing that national governments sign up to contracts with the EU on reforms."All the hard work is beginning to pay off. A lot has been achieved over the course of a year," he insisted. "This work is not over: the dynamic will carry on in the coming year," pledged Van Rompuy. French President Francois Hollande said that late-2014, when a new Commission is installed, "would be the time we could envisage a new phase with a modification of the treaties. "The resumption of loans to Greece followed a successful plan to wipe tens of billions of euros from the country's debt pile.A first payment of €34.3bn would be flowing to Athens "as early as next week," said outgoing Eurogroup chair and Luxembourg Prime Minister Jean-Claude Juncker.The accord prompted Greek Prime Minister Antonis Samaras to declare that "Grexit", the idea that Greece would be forced out of the 17-nation bloc, was "dead." "Greece is back on its feet," declared an ecstatic Samaras, who has pushed through painful economic reforms demanded by international creditors, sometimes in the face of violent street protests. Meanwhile, the deal for the eurozone's largest banks to come under the aegis of the ECB from March 2014 was hailed by its head Mario Draghi as "an important step towards a stable economic and monetary union, and towards further European integration".Despite a noticeably more bullish tone at the summit, fears over Italy lurked in the background, after Prime Minister Mario Monti, credited with important reforms there, said he was stepping down soon. Former leader Silvio Berlusconi had hinted that he might stand for a fourth time but appeared to row back, telling Belgian television that he had "so much to do" outside politics. Hollande downplayed the chance Berlusconi would run in a future election, saying: "I don't think there is a very serious likelihood" of this."Merkel underlined a closing of ranks at the summit. "I made clear that the government of Mario Monti has done a great deal of helpful work for the confidence that Italy is now enjoying again," she said. Leaders were to reconvene later Friday at 10:00am (09:00 GMT) to discuss moves towards a common security and defence policy as well as to take a position on the Syria crisis.

Greece's lenders warn of 'very large' risks to bailout

Political resistance and potential court challenges are among "very large" risks to reforms required for Greece's bailout programme, the country's European lenders said today. The long-awaited report from the European Commission and the European Central Bank details the findings of the "troika" of the EC, ECB and the International Monetary Fund on Athens' efforts to meet targets under its latest rescue package.The report formally confirmed that Greece deserved further aid under the 130 billion euro ($202-billion) bailout, and a Greek finance ministry source said Athens had received a long-delayed instalment of over 34 billion euros in aid today. But the lenders warned Athens still risked falling short on its commitments. "The key risks concern the overall policy implementation, given that the coalition supporting the government appears fragile and some components of the programme face political resistance, despite the determination of the government," the report said." Important budgetary measures are likely to be challenged in courts, which could lead to the need to fill a fiscal gap emerging as a consequence." Greece, which has been bailed out twice by the EU and IMF since the debt crisis erupted, has a long history of missed targets and failure to meet promises to overhaul its bloated state sector and liberalise its recession-hit economy. A separate report by an EU task force today said by the end of October Greece had completed only 88 of the targeted 300 audits of large tax payers and 467 of 1300 audits of high-wealth individuals. Despite the lingering doubts on Greece's commitment and ability to reform, the country's lenders last week agreed to disburse aid to Athens after it bought back its own debt at a fraction of face value, cutting its debt burden. The decision to unlock aid - expected to total over 52 billion euros by the end of March removed the spectre of a Greek bankruptcy and euro zone exit. Even so, Moody's ratings agency said only further debt relief from official creditors, such as governments, would put its debt back on sustainable footing. The agency classified the bond buyback scheme as a "distressed exchange" and, as a result, a default on the Greek government debt held by private bondholders. Prime Minister Antonis Samaras's conservative-led government has promised to restore the country's credibility but his coalition has faced attacks both from within and outside on its plan to push through a new round of austerity. The troika's report warned those spending cuts next year could hurt the weak economy more than expected, though that could be stemmed by the government paying bills that have been in arrears. Greece's economy will contract by about 6% this year its fifth in recession and by a further 4.2% next year before growing 0.6% in 2014, the report said. But growth would not return without a business reform drive. Criticising influential business lobbies, it said reviving the economy would require "breaking the resistance (to reform) of vested interests and the prevailing rent-seeking mentality of powerful pressure groups".The report acknowledged that privatisation proceeds had been disappointing so far but that the programme had gained some momentum since September. It forecast revenue of 8.5 billion euros by 2016 from the asset sales, roughly a billion lower than Athens' own estimates in a mid-term fiscal plan. "Doubts on the effectiveness of the governance of the privatisation process however continue to persist," it said.

Wall Street gains as Obama and Boehner meet

Wall Street gained as a meeting between US President Barack Obama and House Speaker John Boehner at the White House today bolstered optimism a budget agreement will be reached soon Wall Street took heart from the 45 minute gathering about which no further details were released. In afternoon trading in New York, the Dow Jones Industrial Average rose 0.62 %, the Standard & Poor's 500 Index gained 1.03%, while the Nasdaq Composite Index advanced 1.01%. The stakes are high for the budget talks aimed at avoiding US$600 billion of tax increases and spending cuts from taking effect on January 1; failure to reach an agreement might push the US into recession in the first half of next year.Indeed, a report today showed that manufacturing in the New York region contracted more than expected in December, underpinning the fragility of the economy that prompted the US Federal Reserve to expand its stimulus program last week."It's a historic tug of war: pulling on one side is the fiscal cliff, pulling the other side is continued global monetary easing," David Sowerby, a portfolio manager at Boston based Loomis Sayles & Co, told Bloomberg News. "The most positive thing for the market is valuation and an accommodative Fed policy. "In Europe, the Stoxx 600 Index finished the session with a 0.1% decline from the previous close. European Central Bank President Mario Draghi reminded investors of the challenges ahead, even as he predicted a recovery in the second half of 2013 in comments at the European Parliament's Economic and Monetary Affairs Committee. "We expect economic weakness to extend into next year with a very gradual recovery in the second half of the year," Draghi said. Still, "the medium-term outlook for economic activity remains challenging."The central bank's new supervisory powers over banks in the region will help restore confidence, Draghi said. Equity investors in Japan applauded the Liberal Democratic Party's victory as leader Abe Shinzo plans aggressive fiscal and monetary stimulus measures to revive the nation's economy that just tipped into recession. The Nikkei 225 closed with a 0.9% gain.It's considered bad news for the yen, however, which was last 0.4% weaker against the US dollar. Earlier in the session, the yen dropped as low as 84.48 per dollar, the weakest since April 12, 2011, according to Bloomberg. The Bank of Japan is scheduled to start a two-day policy meeting on Wednesday. Switzerland's UBS will pay around US$1.5 billion to settle charges that a group of traders at its Japanese unit rigged Libor interest rates, Reuters reported, citing a source familiar with the matter. UBS will admit that about 36 of its traders around the globe manipulated yen Libor between 2005 and 2010, according to the source, with a final deal not expected before Wednesday. Shares of Apple fell initially after Citigroup cut its rating for the stock amid concern about tapering demand for its iPhone 5. The stock rebounded, last up 1.2%.

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,26.909.2012

Clashes erupt as thousands of Greeks protest austerity

Greek police clashed with hooded rioters hurling petrol bombs as tens of thousands took to the streets of Athens on Wednesday in Greece's biggest anti-austerity protest in more than a year.Violence erupted after nearly 70,000 people marched to parliament chanting "We won't submit to the troika (of lenders)" and "EU, IMF Out!" on the day of a general strike against a new round of cuts demanded by foreign lenders.As the rally ended, dozens of black-clad youths threw stones, petrol bombs and bottles at riot police, who responded with several rounds of teargas. Police chased the protesters through Syntagma square in front of parliament as helicopters clattered overhead. Smoke rose from small blazes in the streets.About 120 people were detained after angry protesters smashed bus stop kiosks and set fire to garbage cans."We can't take it anymore - we are bleeding. We can't raise our children like this," said Dina Kokou, a 54-year-old teacher and mother of four who lives on 1,000 euros a month."These tax hikes and wage cuts are killing us."The 24-hour nationwide strike, called by the country's two biggest unions representing half the four-million-strong work force, is shaping up to be the first test of whether Prime Minister Antonis Samaras can stand his ground.Police officials estimated the demonstration was the largest since a May 2011 protest, and among the biggest since near-bankrupt Greece first resorted to aid from international lenders in 2010 - which has come at the price of painful austerity cuts.The traditional summer break has allowed the fragile conservative-led coalition to enjoy relative calm on the streets since narrowly coming to power on a pro-euro, pro-bailout platform, but unions say the lull is over."Yesterday the Spaniards took to the streets, today it's us, tomorrow the Italians and the day after - all the people of Europe," Yiorgos Harisis, a unionist from the ADEDY p u blic sector group told demonstrators."With this strike we are sending a strong message to the government and the troika that the measures will not pass even if voted in parliament, because the government's days are numbered."About 3000 police - twice the number usually deployed - stood guard in the centre of Athens, which last saw serious violence in February when protesters set shops and banks ablaze as parliament approved an austerity bill.Police formed a barricade outside parliament, and officers blocked a pensioner who tried to move towards Samaras's office holding a banner with pictures of Greek prime ministers under the title: "The biggest traitors in Greek history".Ships stayed docked, museums and monuments were shut to visitors and air traffic controllers walked off the job for a three-hour stoppage. Train service and flights were suspended, public offices and shops were shut, and hospitals worked on skeletal staff as part of the general strike."Destroying our lives" Much of the union anger is directed at spending cuts worth nearly 12 billion euros over the next two years that Greece has promised the European Union and International Monetary Fund in an effort to secure its next tranche of aid.The bulk of those cuts is expected from cutting wages, pensions and welfare benefits, heaping a new wave of misery on Greeks who say repeated rounds of austerity have pushed them to the brink and failed to transform the country for the better."We can't just sit by idly and do nothing while the troika and the government destroy our lives," said Dimitra Kontouli, a 49-year-old local government employee whose salary was cut to 1100 euros a month from 1600 euros previously."My husband has lost his job, we just can't make ends meet."A survey by the MRB polling agency last week showed that more than 90% of Greeks believe the planned cuts are unfair and burden the poor, with the vast majority expecting more austerity in coming years.Unions argue that Greece should remain in the euro but default on part of its debt and ditch the current recipe of austerity cuts in favour of higher taxes on the rich and efforts to nab wealthy tax evaders.But with Greece facing certain bankruptcy and a potential euro zone exit without further aid, Samaras's government has little choice but to push through the measures, which have also exposed fissures in his coalition.With Greece in its fifth year of recession and nearly one out of four jobless, analysts say patience is wearing thin and a strong public backlash could tear apart the weak government."What people want to tell Samaras is that they are hurt and Samaras could use this to demand concessions from the troika," MRB polling director Dimitris Mavros said."The people are willing to give the government time, but on certain conditions like cracking down on tax evasion and securing a bailout extension. If the government succeeds in that, its life will also be extended."

Greek protests cast shadow over the euro

Protests in Spain and Greece put the European sovereign debt crisis centre stage, renewing investors' worries about the risk the euro zone's problems pose to global growth and corporate profits.Those concerns are underpinning demand for fixed-income securities including US Treasuries, and helped fuel appetite for today's auction of US$35 billion of five-year bonds. "It was a good auction," Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York, which as a primary dealer is obliged to bid in US debt offerings, told Bloomberg News. "It is suggesting more and more fear - that things could spiral out of control in Europe. The demand for dollars and Treasuries continues to rise."All eyes are on Spain, which is scheduled to announce its budget tomorrow. And on Friday, Moody's will publish its latest review of the nation's credit rating. In contrast to rising demand for US government bonds, the yield on Spain's 10-year bond surged more than 30 basis points back through the 6% mark.Figures released on Tuesday suggested Spain will miss its public deficit target of 6.3% of gross domestic product this year, and on Wednesday the Bank of Spain said the economy continued to shrink markedly in the third quarter, according to Reuters.Spain's prime minister, Mariano Rajoy, has so far resisted the calls to ask for an EU financial bailout but may not be able to hold out much longer. In a speech in New York earlier today, Rajoy said all Spaniards were going to have to make sacrifices.Europe's Stoxx 600 Index ended the session with a 1.8% slide. National benchmark indexes in Germany, France and the UK dropped. So did Spain's IBEX 35 Index, closing 3.9% lower. In late afternoon trading in New York, the Dow Jones Industrial Average shed 0.16%, the Standard & Poor's 500 declined 0.38%, while the Nasdaq Composite Index fell 0.62%. Meanwhile, the latest indicator on the US housing market continued to underwrite the view that at least this part of the economy is gaining forward momentum.Sales of new homes eased 0.3% to a 373,000 annual pace in August after a revised 374,000 rate in July that was better than previously estimated and the strongest since April 2010, according to Commerce Department data. And the average price of a home in the US has now risen to its highest since March 2007."There are increased signs that the housing recovery is now on a more sustainable path, though its impact on overall economic activity will remain relatively modest at best over the near-term.

Spain unveils austerity budget

Squeezed by financial markets and denounced in the streets, Spain's government will adopt on Thursday a 2013 austerity budget which could be a precursor to a full-blown bailout.The final step before a rescue is likely to come a day later, analysts say, when Madrid unveils an independent audit of its limping banks to determine how much capital they need.Spain's eurozone partners have agreed to provide a rescue loan of up to €100bn to help the banks recover from bad loans built up after a 2008 property crash.But Madrid insists €60bn will be enough.Once that matter is dealt with, the eurozone's fourth-largest economy will have all the data it requires to seek a broader, sovereign rescue from the eurzone's bailout funds.If Spain bends to the will of the markets and some of its eurozone partners by formally requesting the bailout, it would trigger a bond-buying programme for troubled states outlined by the European Central Bank on September 6.That would have the effect of curbing Spain's borrowing costs.Before making the leap, however, Prime Minister Mariano Rajoy wants to know what the conditions would be.The conservative leader likely wanted to make progress on the budget for next year, also, before making the request.The basic outline for the budget has been known since July: the plan to be adopted by the cabinet on Thursday is expected to enact spending cuts and tax increases worth a combined €39bn.The government aims to claw back a total of more than €150bn between 2012 and 2014: €62bn this year, €39bn next year and €50bn in 2014.On the austerity menu for 2013: an increase in sales tax and other taxes is expected to rake in €15bn and nearly seven billion euros will be found from cuts in the regions, which manage health and education.Other savings come from lowering unemployment benefits and social assistance, as well as a freeze in public sector hiring.But Spain will probably have to go further, said Juan Ignacio Conde Ruiz, deputy director of the Foundation of Applied Economic Studies (FEDEA)."To be credible with the markets, which is the government's ultimate goal, it would seem hard to avoid touching retirement pensions, which account for 25 percent of total spending," he said.Rajoy's election campaign promise to maintain pensions by inflation would cost €3bn - €3.5bn, Conde Ruiz said."There won't be the means to do it"That, he said, would make it impossible for Spain to meet its commitment to slash the public deficit to 6.3% of gross domestic product this year from a runaway 8.9% last year."There won't be the means to do it," added Jesus Castillo, southern European specialist at French bank Natixis. "So we should not be surprised by a freeze in pensions," he said, or even a cut so as to stay on track with the 2013 target of a deficit equal to 4.5%.Despite the analysts' doubts, Spain's Popular Party government insists pensions are going up, not down, as it faces growing protests to the austerity measures including hundreds taking to Madrid's streets Tuesday.Deputy Prime Minister Soraya Saenz de Santamaria said the new level for pensions would be decided in November."Will pensions go up? Yes, pensions are going to go up. Pensions will obviously be adjusted for the cost of living," she said.At the Spanish investment bank Inversis, analysts predict the public deficit forecasts will be revised higher for 2012 and 2013 in line with a deeper than expected recession.On Thursday, a new package of reforms negotiated with Brussels to stimulate business activity and exports also will be announced, "which could be the stage prior to a bailout request", said a report by Spanish brokerage Renta4.If Spain fails to take convincing action, the verdict could come quickly.Moody's Investors Service has until Sunday to decide whether to downgrade Spain's debt after a review. If it does so, it could be the first agency to rate the nation's debt at the equivalent of a junk bond.Spain's hesitation before seeking a rescue could be "highly risky", European Competition Commissioner Joaquin Almunia warned on Monday in an interview with AFP.The country's budget and economic reform announcements on Thursday are aimed at addressing just those concerns, said Conde Ruiz."The idea is to anticipate the conditions the aid would impose, and thus to introduce them now in the budget," he said, adding that this would ease the political sting.

NEWS,09.08.2012

China's inflation slows to 1.8% low

Chinese inflation hit a two-and-a-half-year low in July, official data showed on Thursday, giving the government further policy leeway to boost weakening growth. The country's consumer price index (CPI) rose 1.8% year-on-year (y/y) last month, the National Bureau of Statistics said, the fourth straight month of y/y easing and the lowest level since January 2010.The slowdown potentially gives authorities more ammunition to light a fire under the world's second-largest economy, which grew 7.6% in the second quarter for its worst performance since the height of the global economic crisis in 2008-2009.Authorities this year have taken measures including the rare step of slashing interest rates twice in quick succession while also lowering requirements for how much money banks must keep in reserve.Chinese leaders, including Premier Wen Jiabao, have expressed concern over the weakness in the economy and have hinted that the government may need to take further action to bolster growth.Sun Junwei, China economist at HSBC in Beijing, said the figure was in line with expectations and confirmed that inflation overall is trending downward."In general, China's inflation will likely be moderate and controllable in the future, which offers room for China to further loosen its (monetary) policy," she said.Sun added that if other economic data due out later on Thursday comes in worse than expected there could be a further cut in interest rates or bank reserve requirement ratios in August.China is scheduled to announce July figures in industrial production, fixed asset investment and retail sales later Thursday.Helping suppress the overall consumer price index was a decline of 0.9% in prices for transportation and telecommunications, according to the data.Inflation for the first seven months of 2012, meanwhile, was 3.1%, the bureau said."Inflation continues to peel off rapidly, highlighting an output gap that the government is trying to plug with rising state investment," economists at IHS Global Insight said in a report after the release of the July data.Producer price inflation (PPI), a leading indicator, declined 2.9% in July from the same month last year for the fifth straight month of contraction.Producer prices "continue to highlight the severe deflationary pressure rippling across the country", IHS Global Insight said, noting that "deflation, not inflation, is the greatest short-term threat to the Chinese economy".

Eurozone GDP to fall by 0.3% this year

The eurozone economy will contract by 0.3% in 2012 before recovering more slowly than expected next year to expand by 0.6%, a poll conducted by the European Central Bank (ECB) revealed on Thursday. The data came from the Survey of Professional Forecasters which the ECB carries out on a quarterly basis. It was published in the Frankfurt-based bank's monthly bulletin.The previous SPF survey predicted a 0.2% contraction for eurozone gross domestic product (GDP) this year and a 1% expansion in 2013.Recession-inducing austerity measures in some euro countries and "higher uncertainty" over the resolution of the single currency's debt crisis were "the main factors behind the downward revisions," the ECB said.Forecasters also said that eurozone unemployment would stay at its current high of 11.2% throughout 2012 and increase to 11.4% in 2013. Inflation was projected to fall from 2.3% to 1.7% over the same period.The ECB said it expected "weak" economic activity both in the second and third quarter of 2012 and only a "very" gradual recovery afterwards. "Risks surrounding the economic outlook for the euro area continue to be on the downside," it noted.The European Union statistical office, Eurostat, is to publish GDP figures for the second quarter of the year on Tuesday.

India's shock fall in industrial output

India's industrial production contracted by a shock 1.8% from a year earlier in June, as manufacturing output shrank in Asia's third-largest economy, official figures showed on Thursday, The data underscored the massive job ahead for India's new pro-market finance minister, P. Chidamabaram, who pledged this week to "restart the growth engine" of India's sharply slowing economy.Manufacturing output, which accounts for three-quarters of the index of industrial production, fell 3.2% from a year earlier in June, according to the government data.Manufacturing has been undermined by high interest rates to combat stubbornly high inflation, falling business confidence and Europe's debt crisis which has hit exports.The 1.8% shrinkage in output by factories, mines and utilities in June was the third contraction in four months and followed a revised 2.5% production rise in May.The industrial output reading was far below analysts' expectations, which were for an increase of 0.80%, according to a Dow Jones Newswires poll.The weak performance is likely to pile pressure on the central bank to ease interest rates to spur growth.The bank has said it wants inflation to come down before cutting borrowing costs, but Chidambaram has already indicated he wants lower rates, saying "sometimes it is necessary to take carefully calibrated risks".The weak numbers come as the left-leaning Congress-led government is under pressure over a string of graft scandals and its attempts to liberalise the still inward-looking economy to spur growth have led to gridlock in parliament.India's once-booming economy grew just 5.3% between January and March, its slowest annual quarterly expansion in nine years.Capital goods output, an important investment indicator, slid 27.9% in June from a year earlier.Goldman Sachs economist Tushar Poddar, who recently pared his full fiscal year growth forecast to 5.7% in contrast to the central bank's expectation of 6.5% expansion, saw more tough times ahead."Weak monsoons are also likely to impact rural consumption demand and exacerbate weakness in investment demand," Poddar said ahead of the data.Citibank has said if a nationwide drought is declared, which would be the country's third in a decade, growth could be as low as 4.9% as hundreds of millions of farmers depend on the annual rains for their income.

NEWS,22.07.2012

Spaniards protest as crisis outlook darkens

Thousands of jobless Spaniards marched through Madrid Saturday in the latest angry demonstrations against economic crisis cuts, as fears rose for the country's financial stability.Young people thrown out of work by the recession converged on the capital, many of them having hiked hundreds of miles from around Spain, and walked through the city's central avenues, waving banners and whistling."Hands up, this is a robbery!" they yelled, their regular refrain over recent days of protests."Everyone get up and fight!"It was the latest in a string of protests that have erupted since Prime Minister Mariano Rajoy announced 65 billion euros ($80 billion) in fresh austerity measures on July 11, including cuts to pay and unemployment benefits."I am very disappointed and angry," said Alba Sanchez, 25, who had come by car from the northeastern region of Catalonia to join the demonstration."People cannot allow all these cuts by this government that hates us."The crowd marched peacefully to the sound of drums and trumpets and stopped at the Puerta del Sol square, the symbolic hub of numerous social protests, where demonstrators sat down and held a popular assembly.On Thursday hundreds of thousands of demonstrators massed there after a mostly peaceful protest march that ended with police firing rubber bullets to disperse small groups of protestors.Protestors say the efforts to cut Spain's deficit target the poor unfairly and will depress the recession-hit economy further."They pee on us and tell us it's raining," read one yellow sign waved by the jobless protestors on Saturday."I can't tighten my belt and drop my trousers at the same time," read another.Rajoy's measures raise sales tax (VAT) and cut benefits for the newly unemployed after six months from 70 percent of basic salary to 50 percent. Previously, the reduction had been to 60 percent."That's the final blow. They're cutting benefits to those who aren't working and raising VAT, which affects people who work," said protestor Rafel Ledo, who had walked 500 kilometres (310 miles) from the northern Asturias region.Saturday's protests came as Spain's economic and financial outlook darkened. The government cut its economic growth forecast for 2013 from 0.2 percent growth to a contraction of 0.5 percent.Stricken by the bursting of a construction bubble in 2008, Spain is struggling in its second recession in four years. Unemployment is running at more than 24 percent.Also on Friday Valencia, one of Spain's indebted regional authorities, reached out for emergency aid from a fund of 18 billion euros set up by the central government for struggling regions.In response, the Madrid stock exchange plunged by 5.8 percent.A eurozone rescue deal for Spanish banks finalised by finance ministers on Friday provided no relief.The return on Spanish 10-year bonds jumped above the 7.0 percent danger level and another key measure, the difference between the yields on Spanish and safe haven German bonds, moved dangerously high, topping 600 points.The indicators revived warnings that the banking bailout may not be enough to stabilise Spain's finances, a key concern for the future of the eurozone.

 

Ministers: Bank to pump €1.4bn into Greece

The European Investment Bank will pump around €1.4bn ($1.7bn) by 2015 to fund infrastructure projects in crisis-hit Greece, the ministers of finance and development said on Saturday."I believe the accords will be signed in the coming days. We aim to restart, to re-activate the EIB in the private sector as soon as possible," said Finance Minister Yannis Stournaras after talks with EIB chairman Werner Hoyer.Greece's private sector has been starved of funds as the country grinds through a five-year recession that has cut off bank loans and even state contract payments.EIB loans this year had been limited to just 10 million euros, Stournaras said, as Greece plunged into political uncertainty in May, requiring two elections before a coalition government could be formed to continue EU and IMF-mandated reforms."The agreement is a vote of confidence in Greece. Besides infrastructure projects and support for small and medium companies, the cooperation will be expanded to facilitate foreign investment and privatisation," said Development Minister Costis Hatzidakis, according to the state-run Athens News Agency.There was speculation in April that the EIB would seek to insert drachma clauses into its contracts with Greek firms to ward against a possible Greek euro exit.But Stournaras insisted on Saturday that repayment will be in euros.

European Central Bank's Head: Euro 'Absolutely Not' In Danger

 

Worries about the 17-nation eurozone's future health have been fueled lately by Greece's persistent troubles and by the financial woes of Spain, the bloc's fourth-biggest economy. European ministers this week signed a rescue package worth up to (EURO)100 billion ($122 billion) for its ailing banks, but concern flared about Spain's prolonged recession and the debts of its regions, and the country's borrowing costs rose.Asked in an interview with French daily Le Monde whether the euro is in danger, ECB President Mario Draghi replied: "No, absolutely not."When outside analysts draw up scenarios for an "explosion" of the eurozone, "that underestimates the political capital that our leaders have invested in this union, as well as the support of European citizens," Draghi said in the interview, which was posted on the ECB's website."The euro is irrevocable," he added.The ECB this month cut its benchmark interest rate to a record-low 0.75 percent but gave little sign of further action soon to ease the crisis. It already has made two rounds of three-year emergency loans to banks, but has shown little appetite to reactivate its government bond-buying program."Our mandate is not to resolve the financial problems of countries, but to ensure price stability and to contribute to the stability of the financial system in full independence," Draghi said in the interview with Le Monde, conducted Wednesday  emphasizing the ECB's primary task of fighting inflation.Asked whether the ECB should do more to ease the economy, Draghi replied: "We are very open. We do not have any taboos."He said the ECB decided to cut interest rates in July because it forecast that inflation would be at its target level – close to or below 2 percent – at the start of 2013."It now seems likely that it will fall sooner than expected, at the end of 2012," he said. "Our mandate is to maintain price stability in order to prevent both higher inflation and a generalized, broadly based fall in prices. If we see such risks of deflation, we will act."As for the eurozone economy, Draghi said that the situation "has gradually worsened, but not to the point of plunging the whole of the monetary union into recession.""We still expect a very gradual improvement in the situation by the end of this year or the beginning of next year," he said.

NEWS,30.01.2012.

Iran will stop oil sales to 'some countries'

Iran has sent conflicting signals in a dispute with the West over its nuclear ambitions, vowing to stop oil exports soon to "some" countries but postponing a parliamentary debate on a proposed halt to such sales to the European Union. The Islamic Republic declared itself optimistic about a visit by UN nuclear experts that began today but also warned the inspectors to be "professional" or see Tehran reducing cooperation with the world body on atomic matters. The International Atomic Energy Agency (IAEA) inspection delegation will seek to advance efforts to resolve a row about nuclear work which Iran says is for making electricity but the West suspects is aimed at seeking a nuclear weapon. Tensions with the West rose this month when Washington and the European Union (EU) imposed the toughest sanctions yet in a drive to force Tehran to provide more information on its nuclear programme. The measures take direct aim at the ability of OPEC's second biggest oil exporter to sell its crude. In a remark suggesting Iran would fight sanctions with sanctions, Iran's oil minister said the Islamic state would soon stop exporting crude to "some" countries. Rostam Qasemi did not identify the countries but was speaking less than a week after the EU's 27 member states agreed to stop importing crude from Iran from July 1."Soon we will cut exporting oil to some countries," the state news agency IRNA quoted Qasemi as saying. Iranian lawmakers had been due to debate a bill today that could have cut off oil supplies to the EU in days, in a move calculated to hit ailing European economies before the EU-wide ban on took effect. But Iranian MPs postponed discussing the measure."No such draft bill has yet been drawn up and nothing has been submitted to the parliament. What exists is a notion by the deputies which is being seriously pursued to bring it to a conclusive end," Emad Hosseini, spokesman for parliament's Energy Committee, told Mehr. Iranian officials say sanctions have had no impact on the country.” Iranian oil has its own market, even if we cut our exports to Europe," oil minister Qasemi said. Another lawmaker, Mohammad Karim Abedi, said the bill would oblige the government to cut Iran's oil supplies to the European Union for five to 15 years, the semi-official Fars news agency reported. By turning the sanctions back on the EU, lawmakers hope to deny the bloc a six-month window it had planned to give those of its members most dependent on Iranian oil - including some of the most economically fragile in southern Europe - to adapt. The Mehr news agency quoted Foreign Minister Ali Akbar Salehi as saying during a trip to Ethiopia: "We are very optimistic about the outcome of the IAEA delegation's visit to Iran ... Their questions will be answered during this visit.” We have nothing to hide and Iran has no clandestine (nuclear) activities.” Striking a sterner tone, Iran's parliament speaker, Ali Larijani, warned the IAEA team to carry out a "logical, professional and technical" job or suffer the consequences.” This visit is a test for the IAEA. The route for further cooperation will be open if the team carries out its duties professionally," said Larijani, state media reported.” Otherwise, if the IAEA turns into a tool (for major powers to pressure Iran), then Iran will have no choice but to consider a new framework in its ties with the agency."Iran's parliament in the past has approved bills to oblige the government to review its level of cooperation with the IAEA. However, Iran's top officials have always underlined the importance of preserving ties with the watchdog body. Before departing from Vienna, IAEA Deputy Director General Herman Nackaerts said he hoped the Islamic state would tackle the watchdog's concerns "regarding the possible military dimensions of Iran's nuclear programme”. The head of the state-run National Iranian Oil Company (NIOC) said late on Saturday that the export embargo would hit European refiners, such as Italy's Eni, that are owed oil from Iran as part of long-standing buy-back contracts under which they take payment for past oilfield projects in crude.

"The European companies will have to abide by the provisions of the buyback contracts," Ahmad Qalebani told the ISNA news agency. "If they act otherwise, they will be the parties to incur the relevant losses and will subject the repatriation of their capital to problems.” Italy’s Eni is owed $1.7-1.8 billion in oil for contracts it executed in Iran in 2000 and 2001 and has been assured by EU policymakers its buyback contracts will not be part of the European embargo, but the prospect of Iran acting first may put that into doubt.Eni declined to comment today. The EU accounted for 25% of Iranian crude oil sales in the third quarter of 2011. However, analysts say the global oil market will not be overly disrupted if parliament votes for the bill that would turn off the oil tap for Europe. Potentially more disruptive to the world oil market and global security is the risk of Iran's standoff with the West escalating into military conflict.Iran has repeatedly said it could close the vital Strait of Hormuz shipping lane if sanctions succeed in preventing it from exporting crude, a move Washington said it would not tolerate. The IAEA's visit may be an opportunity to defuse some of the tension. Director General Yukiya Amano has called on Iran to show a "constructive spirit" and Tehran has said it is willing to discuss "any issues" of interest to the UN agency, including the military-linked concerns. But Western diplomats, who have often accused Iran of using such offers of dialogue as a stalling tactic while it presses ahead with its nuclear programme, say they doubt Tehran will show the kind of concrete cooperation the IAEA wants. They say Iran may offer limited concessions and transparency to try to ease intensifying international pressure, but that this is unlikely to amount to the full cooperation required. The outcome could determine whether Iran will face further isolation or whether there are prospects for resuming wider talks between Tehran and the major powers on the nuclear row. Salehi said Iran "soon" would write a letter to the EU's foreign policy chief Catherine Ashton to discuss "a date and venue" for fresh nuclear talks.” Iran’s top nuclear negotiator Saeed Jalili in this letter, which may be sent in the coming days, also may mention other issues as well," Salehi said, without elaborating. The last round of talks in January 2011 between Jalili and Ashton, who represents major powers, failed over Iran's refusal to halt its sensitive nuclear work."The talks will be successful as the other party seems interested in finding a way out of this deadlock," Salehi said.

NEWS,26.01.2012.

Mahmoud Ahmadinejad brushes off EU sanctions on Iran oil

President Mahmoud Ahmadinejad has brushed off the threat posed to the Iranian economy by tighter sanctions including a European oil embargo even as he demanded the resumption of talks on its nuclear ambitions.

Mahmoud Ahmadinejad's comments strengthened fears that Iran would unilaterally halt oil sales to Europe. Iran's hardline leader said sanctions would not damage an economy that has dramatically reduced its exposure to European trade in favour of Asian trade. Sanctions measures adopted by the EU on Monday raised the prospect that Iran would loose some of its main markets for oil exports. European foreign ministers embraced the embargo to increase pressure on Iran to return to negotiations over its nuclear programme. But the Iranian leader claimed the measure would only hurt the European economy. "There was a time when 90 per cent of our trade was with the Europeans. It has now dropped to 10 per cent. We didn't call for this. Cut it (trade) and let's see who will incur the loss," he said. "It is the West that needs Iran and the Iranian nation will not lose from the sanctions." The comments strengthened fears that Iran would unilaterally halt oil sales to Europe, upending a compromise struck in Brussels that allowed Greece and Spain and other exposed economies to continue taking Iranian supplies for six months. A bill to be brought before parliament on Sunday would ban the sale of oil to Europe, a move that would disrupt the continent's most vulnerable economies. "All European countries that made Iran the target of their sanctions will not be able to buy even one drop of oil from Iran and oil taps will be turned off to them so that they will not play with fire again," said Nasser Soudani, an MP. Mr Ahmadinejad painted Iran as the wronged party in the dispute, claiming it was open to talks with Europeans and permanent members of the Security Council. "They claim that Iran doesn't want negotiations but it isn't so," he said. "Every time they seek pretexts and as we approach talks they issue resolutions so that perhaps negotiations don't take place." However Germany and Israel claim Iran has not sincerely responded to its demands that the talks be held with preconditions. German Chancellor Angela Merkel and Israeli Prime Minister Benjamin Netanyahu urged Iran to "accept the outstretched hand of the international community" in a phone call. Gulf officials issued fresh assurances to international markets that the flow of oil from the region can continue even if Iran carries out its threat to disrupt the Straits of Hormuz. "Iran is capable of fomenting tension in the region," said Dahi Khalfan, Dubai's chief of police. "We in the Gulf have cards in our hands that allow us to marginalise the role of the strait and undermine its importance." "We tell Iran if you try to close this place, we will open the other gates and nullify the importance of the Strait of Hormuz," he added. Carl-Henric Svanberg, the chairman of BP, said there should be no need for European countries to tap strategic oil reserves after the embargo cuts off supplies from Iran at midyear. "Generally the industry, including all the oil-producing nations, has shown the capability of adjusting for moments of up and down and I think that's what you're going to see this time as well," Mr Svanberg said