NEWS,13.12.2012

Mild pick-up for US economy next year

The US economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a  poll showed.Most consensus forecasts for the first half of 2013 were downgraded to their lowest since  began polling for this period more than a year ago. The forecast for the current quarter was slashed again.That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine."Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior US economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year.""US exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff", a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.Indeed, the poll showed growth is expected to have slowed to just 1.2% on an annualised basis in the quarter that ends this month, down sharply from 1.6% in the November poll, and well below the economy's potential.Weak exports have dragged on growth, not to mention superstorm Sandy, which hit the US east coast in October and shut down most of New York City and surrounding area for days, damaging business and infrastructure.The outlook for all of 2013 has been chopped to 1.9%, far below the Fed's September prediction of 2.5%-3.0%, and also the lowest consensus for 2013 polled so far this year.Despite a third round of bond purchases from the Federal Reserve to boost the jobs market, employment expectations remained tepid. The consensus for average monthly non-farm payrolls growth was mostly unchanged at 127 000 for the first three months of 2013. That comes despite a strong majority of forecasters, 47 of 51, expecting the central bank to buy more US Treasuries when its Operation Twist program expires at the end of December.The Fed is expected to buy $45bn of Treasuries every month in addition to the already-announced purchases of $40bn every month in mortgage-backed securities. But these new purchases will further expand the Fed's balance sheet.The poll also showed the Fed is likely to continue its monetary stimulus for at least a year, making for an additional $1 trillion of purchases. The Fed has bought bonds worth $2.3 trillion in two prior rounds of quantitative easing.A majority, 31 of 49, also expect the Fed eventually to adopt numerical thresholds for inflation and unemployment, similar to results of a survey taken last week.So far, markets have been sanguine that Washington will avoid the fiscal cliff. US stocks have erased all their losses after the November 6 presidential election and the S&P 500 is up almost 1% so far this month.But signs from lawmakers have been mixed with nothing concrete to indicate a deal will be reached by the end-of-the-year deadline.US House of Representatives Speaker John Boehner offered no signs of progress on Tuesday but said he remains hopeful that both sides would reach an agreement.But Senate Democratic leader Harry Reid said it would be difficult to get a deal before Christmas.If a deal is not reached it could lead to $600bn being sucked out of the economy in 2013 in what is essentially a self activating austerity program built into current law.

EU approves budget for 2013

EU lawmakers gave final approval on Thursday for a European Union budget of nearly €133bn ($172bn) for 2013, removing some uncertainty around the bloc's future funding after talks on spending for 2014-2020 broke down.The vote by the European Parliament in Strasbourg brought some clarity to EU finances at least for next year, and saw off a threat that some EU programmes, including the Erasmus student exchange scheme, would run out of money this year."We have managed to avoid a budgetary crisis on top of the economic crisis," Goran Farm, a Swedish socialist member of the European Parliament, said in a statement. However, doubt still surrounds the EU's long term spending plans. EU leaders were unable to reach a compromise last month on a proposed budget of some €1 trillion between 2014-2020. Under the 2013 deal, EU payments next year will be limited to a maximum of €132.84bn, which represents a just-above-inflation rise of 2.9% from the original budget agreed on for this year. The vote will also unlock an extra €6bn in spending for this year.The €6bn will fill a spending gap in research, education and employment programmes and means total EU spending in 2012 of €135bn, the highest level ever.About three-quarters of the EU's annual budget is spent on farm subsidies and funding for new motorways, bridges and other public infrastructure projects in poorer eastern and southern European member countries.EU leaders will hold further talks, possibly in February, to try to agree on the bloc's long-term funding.

EU, IMF agree to lend Greece €49bn

Eurozone finance ministers and the International Monetary Fund have agreed to release €49.1bn in aid to Greece by the end of March, with most of that sum flowing immediately, senior EU officials said on Thursday."Money will be flowing to Greece as early as next week," eurogroup chairman Juncker told a news conference after a meeting of ministers from the single currency bloc. "We are convinced the programme is back on a sound track."A eurogroup statement said €34.3 bn would be paid out in the coming days and the remainder in the first quarter of 2013.Agreement to release the funds hinged on the success of a debt buyback launched by Greece last week, which will enable Athens to retire nearly €20bn in bonds repurchased at a third of their face value from private holders.Juncker said he was not sure that additional measures would be needed to reach an agreed goal to bring Greece's debt down to 124 percent of gross domestic product (GDP) by 2020, but the bloc stood ready to take new steps if necessary.

Oil curbs spark new rivalry

 

A new rivalry at the top of the Opec oil group has emerged, pitting up-and-coming Iraq against undisputed cartel heavyweight Saudi Arabia. Having overtaken Iran as Opec's second biggest producer, a rejuvenated Iraq is beginning to worry Riyadh.At Wednesday's meeting of the Organization of the Petroleum Exporting Countries the opening salvos were fired in the struggle over who takes responsibility for cutting output if oil prices, now at a comfortable $108 a barrel, start falling.After 20 years of war, sanctions and civil strife that left its oil industry in disarray, Iraq is in no mood to consider curtailing output, especially as it starts to take off."Iraq will never cut production," said Iraq's Opec governor Falah Alamri. "Some countries that have increased their production in the last two years - they should do so. This is a sovereign issue, not an Opec issue."That was a clear reference to Saudi Arabia, which this summer lifted output to a 30-year high above 10m barrels a day to prevent oil prices ballooning after Western sanctions on Iran halved its production.The view from Riyadh, said delegates at the meeting, is that Iraq should contribute to the next round of Opec supply curbs. If Saudi pushed that line there would be "dark days ahead" warned a senior Iraqi official, saying Baghdad would not even consider output restraints until 2014.Opec delegates said ministers agreed to retain its 30m bpd output target, but many market observers think supply restrictions may be needed sooner rather than later if producers want to prevent slow global growth sending prices tumbling. "Every additional barrel that Iraq produces reinforces its confidence and its expectations that higher production is achievable and it will negotiate on that basis," said Raad Alkadiri of Washington consultancy PFC Energy. "Now Opec is dealing with a much more confident Iraq and Baghdad is looking at regional politics and is less willing to compromise.""Iraq is impervious to arguments. It says that it was subject to sanctions for so long that it has a free pass to rebuild its economy," said Neil Atkinson, director of energy research at Datamonitor.Output from Opec is already down sharply from the highs of the summer when the Saudi surge took the 12-member group to nearly 32m bpd. Production in November was down to 30.8m bpd with Saudi easing to 9.5m bpd. But Opec may need to ease further to balance the market in the first half of next year when, demand depressed by a stagnant economy, its own forecasts indicate the requirement for Opec crude will come in at only 29.25m bpd."We're concerned by the drop in demand and the high level of stocks," said Algerian energy minister Youcef Yousfi."There is rising oil from places like the US and Iraqi output is rising quite sharply. There's a risk that we see a sharp drop in price next year," said Atkinson.Iraq risesThe world's fastest growing crude exporter, Iraq expects more gains next year as foreign companies push production towards the highest level ever, Iraqi oil minister Abdul-Kareem Luaibi told reporters on Sunday ahead of the Vienna meeting.Output began to rise in earnest in 2010 after Baghdad secured service contracts with companies such as BP, Eni, Exxon Mobil and Royal Dutch Shell.Flows have now reached 3.4m bpd, up nearly a million bpd from when companies got down to work three years ago. Luaibi said output in 2013 is expected to average 3.7m bpd, just shy of an all-time high of 3.8m reached in 1979 with exports running at 2.9m bpd, including 250,000 bpd contributed by the semi-autonomous northern Kurdistan Regional Government (KRG).The changing shape of Middle East politics after the US led overthrow of Saddam Hussein in 2003 and the 2011 Arab Spring plays into Opec dynamics."Political issues sit behind this rivalry," said PFC's Alkadiri. "Regional alliances are pitting Saudi Arabia, Iraq and Iran against each other."That was illustrated in Wednesday's meeting by a quarrel over the appointment as Opec's next secretary-general, the group's public face and head of its Vienna headquarters.Iran dropped its nomination to back Iraq's candidate against Saudi Arabia.Adding to the heat is the dramatic rise in oil output from the US, spurred by hydraulic fracturing of shale reserves.The US Energy Information Administration said on Tuesday that US output will increase 760,000 bpd in 2012, the fastest pace since commercial oil production began in 1859.After years outside Opec's quota system because of low output, Iraq was brought into the fold a year ago when it set the 30m bpd target for all 12 producers. But unlike previous Opec deals no individual quotas were assigned.That suited Saudi Arabia, leaving it free to balance the markets by using its spare capacity as it saw fit. But in the event of a build in inventories that hits prices, Opec may need to restore quotas if it is to enforce a credible production cut. That is likely to prove very difficult, not just because of Iraq but because Iran is very unlikely to accept a quota anywhere near its sanctions-constrained production. Venezuela too could resist a lower quota after disputing independent estimates of its output for years."Quotas would become a big issue if we see a price drop and then everyone would have to come to the table," said Datamonitor's Atkinson. "That would cause enormous problems for Iran and Venezuela."Opec can only hope that a difficult decision is postponed by a continued stand-off between Western powers and Iran over Iran's nuclear programme, and the threat of Israeli military action, keeping oil prices high.That could mean a repeat of 2012, with oil prices supported in 2013 for fear of an attack on Iran, even if demand is poor and market fundamentals weaken."Lady luck has been a huge help for Opec because the macro numbers do not add up to 2012 being a successful year," said oil brokers PVM. "She has come in the form of geopolitical tensions and supply uncertainties which have kept speculative interest in oil lively and stimulated stock building."

NEWS,12.12.2012

UN condemns North Korean missile launch

The UN Security Council has condemned North Korea's missile launch and will continue discussions on how to respond to Pyongyang's violations of a UN ban on North Korean ballistic missile development, the council president said."Members of the Security Council condemned this launch, which is a clear violation of Security Council resolutions 1718 and 1874," Moroccan UN Ambassador Mohammed Loulichki, president of the Security Council this month, told reporters."Members of the Security Council will continue consultations on an appropriate response," he said after a closed-door meeting on the North Korean missile launch.Loulichki recalled the council's April 2012 warning to Pyongyang that the council would act in the event of any further rocket launches.UN Secretary-General Ban Ki-moon also strongly condemned the launch as a "provocative act" in breach of Security Council resolutions banning Pyongyang from developing ballistic-missile and nuclear technology.Several council diplomats said they hoped the 15-nation body would consider adopting a binding resolution, possibly expanding existing UN sanctions against Pyongyang."We support a strong reaction by the council, it's a clear violation," French UN Ambassador Gerard Araud told reporters before the council meeting. "But we have to see what our friends want.""We do consider it logical to sooner or later have a resolution," he added.British Ambassador Mark Lyall Grant echoed that sentiment: "In our view (the council) should react, it should react quickly, and it should react strongly to this provocation."A senior Western diplomat said on condition of anonymity that the United States, Europe, Japan and South Korea were among those who would like to see UN sanctions expanded.That could include adding more entities to the UN blacklist, banning travel and freezing assets of individual North Korean officials and tightening the cargo-inspection regime.Whether or not the council can agree a resolution - with or without expanding the sanctions will depend largely on China and its diplomatic ally on the Security Council, Russia. Both nations have veto powers and tend to support each other and vote the same way on issues important to either of them.China traditionally acts as the protector of neighbouring North Korea on the Security Council."Exactly what the Chinese will be prepared to accept in form and substance is not yet clear," the diplomat said. He hoped they could have a resolution agreed by the end of next week.North Korea successfully launched a rocket on Wednesday, boosting the credentials of its youthful new leader, Kim Jong-un, who took power a year ago, and stepping up the threat the isolated and impoverished state poses to opponents.The rocket, which North Korea says put a weather satellite into orbit, has been labelled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far away as the continental United States.It was Japan that first appealed to the Security Council to take up the issue of North Korea's missile launch.Ban, a former South Korean foreign minister, expressed concern that the launch could negatively impact prospects for peace and security in the region.A statement issued by his office said the launch was "a clear violation of Security Council resolution 1874, in which the Council demanded that the DPRK not conduct any launch using ballistic-missile technology."The statement said Ban had urged North Korea's leaders not to launch a missile but "instead to build confidence with its neighbours while taking steps to improve the lives of its people.""The Secretary General is concerned about the negative consequences that this provocative act may have on peace and stability in the region," the statement said, adding that Ban was in touch with "concerned" governments.North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the UN Security Council to stiffen sanctions that it originally imposed in 2006 after Pyongyang's first nuclear test.

Euro zone recovery hopes fade further into 2013

Chances of a recovery for the euro zone economy have faded further into 2013, according to a poll of economists who say the recession has deepened over the last three months. Huge questions over the health of some of the region's biggest economies make any kind of major rebound for the euro zone extremely unlikely next year. That may have to wait until 2014, and quite possibly later. The currency union will see no better than stagnation early next year, before finally achieving paltry growth of around 0.2% in the second quarter, today's poll of more than 70 economists showed.The outlook represents a new low since started polling on the 2013 outlook in January. No economist in the survey now believes the euro zone economy grew in the current quarter.Overall, economists expect a full year average growth rate of zero for next year.The region as a whole is reliant on Germany as the biggest driver of economic growth, and the signs from there have been ominous."Key German surveys have shown few signs of recovery in Q4 so far and industrial production collapsed by 2.6% in October," said Philip Shaw, chief economist at Investec, in a research note."Hence the upturn is further away than seemed to be the case and we have slashed our 2013 euro area GDP forecast to -0.4% from 0.3% previously."Economists now believe the economy has shrunk this quarter by 0.3% rather than the 0.2% forecast last month, which would mean the recession has deepened from the 0.1% decline reported for the third quarter.Despite a clear consensus on the poor health of the economy, respondents were split right down the middle over what else the European Central Bank will do about it, if anything.Thirty-nine economists think it will hold its main refinancing rate at its current record low of 0.75% through the first quarter of next year, while 38 believe the ECB will cut it to 0.5%.That analysts are so divided is little wonder as the ECB's Governing Council members are similarly split."At least one member of the Governing Council has voted for a rate cut, which ECB President Mario Draghi said could happen if the outlook deteriorates further," said Azad Zangana, economist at Schroders, who thinks the ECB is more likely to stay on hold.Whatever the ECB eventually decides to do, inflation looks unlikely to stand in its way.The poll showed inflation falling beneath the bank's 2% target ceiling in the second quarter next year, where it looks set to stay through to midway next year.Economists put only a median 25% chance on Greece leaving the euro zone next year, echoing the findings of an October poll which found that just eight of 34 fund managers foresaw such an event.

IEA sees sluggish oil demand in 2013

Global oil demand will be sluggish throughout 2013 as economic expansion remains tepid and oil supply levels comfortable, which could alleviate oil price pressures on consumers, the West's energy agency said on Wednesday."Global demand growth is expected to stay relatively sluggish through 2013, based on the continued assumption of tepid global economic expansion," the International Energy Agency said in a monthly report.It forecast global oil demand growth for 2013 at 865 000 barrels per day, 110 000 bpd higher than in its previous report, taking consumption to an average of 90.5 million bpd.On the supply front, the IEA said spectacular growth in US production on the back of a boom in shale oil will be one of the top developments for the market in 2013.The United States will contribute around two thirds of an aggregate increase of 890 000 bpd in non-OPEC output in 2013, for  a total of 54.2 million bpd, IEA said."If confirmed, this would be the fourth-largest annual growth for nonOPEC supplies in the last decade. In fact, growth could exceed expectations in the US if prices remain high and if producers of light tight oil are able to find economic transport options for their incremental barrels," it said.The IEA also said its estimate of demand for OPEC oil was unchanged for 2013 at 29.9 million bpd, much lower than the group's current production of 31.22 million in November.It said, however, that it did not expect OPEC ministers, who were meeting in Vienna on Wednesday, to decide on any production cuts but that they would probably roll over their current 30 million bpd target, given relatively robust oil prices."Indeed, Brent futures prices are on track to surpass 2011 record levels this year, buoyed by heightened political risks in key producing countries, both in OPEC and nonOPEC countries," it said.The IEA said it believed Iranian production had edged lower in November, down 20 000 bpd to 2.70 million bpd, and that preliminary shipping data indicated volumes may fall further in December due to international sanctions.Shipments of Iranian crude, based on arrival data, fell to multi-year lows of 1.07 million bpd in September but recovered to 1.3 million in November as reduced oil buying from China and India was offset by a rise in purchases from Malaysia, Taiwan and the UAE, the IEA said."Iranian crude exports are expected to turn lower next month and into the New Year - reaching a level closer to 1 million bpd - as EU and Asian countries reduce further their crude imports from Iran in order to secure continued access to the US financial system," it said.The IEA expected top global exporter Saudi Arabia to cut shipments in coming months due to increased demand for crude supplies at its domestic and international refinery operations.It said it believed Saudi Arabia's output edged higher in November, by 100 000 bpd to 9.9 million, significantly higher than data given by Saudi Arabia to OPEC earlier this week showing output of 9.49 million.The IEA said that, although on the surface the oil market appeared calm, recent data showed radical structural changes including an apparent acceleration in the eastward shift of global oil demand growth.In the third quarter of 2012, European oil demand went through its steepest year-on-year contraction since the 2008/2009 financial crisis, while Asian oil demand remained robust.Oil demand by the European members of the OECD plummeted by 895 000 bpd in the quarter to 13.8 million bpd due to a combination of near record product prices and a weak economy."The last time European oil demand nosedived as it did this summer, international oil prices had been in freefall. Not only are crude prices holding up, but European consumer prices hovered near record highs this summer, buoyed in part by a weakening currency. This was likely part of the reason for the dip in demand," the IEA said.It also noted that five of the world's top 10 oil consumers were now nonOECD countries. While the United States still leads the top 10, Brazil, Russia, India, China and Saudi Arabia together took five of the next six spots, the IEA said.

Eurozone recovery hopes fade further

Chances of a recovery for the eurozone economy have faded further into 2013, according to a poll of economists who say the recession has deepened over the last three monthsHuge questions over the health of some of the region's biggest economies make any kind of major rebound for the eurozone extremely unlikely next year. That may have to wait until 2014, and quite possibly later.The currency union will see no better than stagnation early next year, before finally achieving paltry growth of around 0.2% in the second quarter, Wednesday's poll of more than 70 economists showed.The outlook represents a new low since started polling on the 2013 outlook in January. No economist in the survey now believes the eurozone economy grew in the current quarter.Overall, economists expect a full year average growth rate of zero for next year.The region as a whole is reliant on Germany as the biggest driver of economic growth, and the signs from there have been ominous."Key German surveys have shown few signs of recovery in Q4 so far and industrial production collapsed by 2.6% in October," said Philip Shaw, chief economist at Investec, in a research note."Hence the upturn is further away than seemed to be the case and we have slashed our 2013 euro area GDP forecast to -0.4% from +0.3% previously."Economists now believe the economy has shrunk this quarter by 0.3% rather than the 0.2% forecast last month, which would mean the recession has deepened from the 0.1% decline reported for the third quarter Despite a clear consensus on the poor health of the economy, respondents were split right down the middle over what else the European Central Bank will do about it, if anything. Thirty-nine economists think it will hold its main refinancing rate at its current record low of 0.75% through the first quarter of next year, while 38 believe the ECB will cut it to 0.5%.That analysts are so divided is little wonder as the ECB's Governing Council members are similarly split."At least one member of the Governing Council has voted for a rate cut, which ECB President Mario Draghi said could happen if the outlook deteriorates further," said Azad Zangana, economist at Schroders, who thinks the ECB is more likely to stay on hold. Whatever the ECB eventually decides to do, inflation looks unlikely to stand in its way.The poll showed inflation falling beneath the bank's 2% target ceiling in the second quarter next year, where it looks set to stay through to midway next year.Economists put only a median 25% chance on Greece leaving the eurozone next year, echoing the findings of an October poll which found that just eight of 34 fund managers foresaw such an event

China's drugs market to grow by $165bn

Drug companies are spending record amounts on acquisitions in emerging markets, with China the most attractive target nation, reflecting sharply rising sales of western medicines in the country.Overall expenditure by both overseas and domestic pharmaceutical companies in emerging markets has reached $20bn so far this year, up two-thirds on the 2011 total, according Thomson data. An analysis of year-to-date deals by law firm Freshfields Bruckhaus Deringer, published on Wednesday, showed China accounted for $6.8bn of the total.Spending by overseas acquirers alone in key growth markets is running at $3.5bn so far this year, an increase of 95% on 2011.The sharp upturn in emerging market activity contrasts with an overall decline in pharmaceutical mergers and acquisitions (M&A) worldwide to $146bn from $225bn last year.After a flurry in 2011, which took deal-making back to pre-recession levels, drug companies been wary of hitting the takeover trail in a big way in Western markets in 2012."Instead, pharma investments in fast growing economies are gathering steam," said Freshfields corporate partner Jennifer Bethlehem. "While M&A is an expensive remedy, 'pharmerging' markets are obvious investment choices for cash-rich drug companies." Emerging markets are expected to account for the bulk of growth in the global pharmaceuticals market in the next few years, as sales in Europe and United States slow due to a wave of patent expiries. China's drugs market, in particular, is forecast to grow by 15-18% annually to between $155bn and $165bn by 2016, making it the world's second-largest market after the US, according to consultancy IMS Health.Freshfields said it expected investment in China's pharmaceuticals sector to pick up further in 2013, following a smooth transition of political leadership in the country.

Mild pick-up for US economy next year

The US economy is expected to remain sluggish next year, despite widespread expectations for more monetary stimulus from the Federal Reserve later on Wednesday, a poll showed. Most consensus forecasts for the first half of 2013 were downgraded to their lowest since began polling for this period more than a year ago. The forecast for the current quarter was slashed again.That underscores a very fragile world economic outlook, given sharp slowdowns in many big emerging economies such as Brazil and India and only a tentative sign of re-emergence of China's economic growth engine."Too much of the global economy is stumbling to support export demand," said Carl Riccadonna, senior US economist at Deutsche Bank. "It's Europe, it's recession in Japan, (and) softer growth out of China for much of the year.""US exports are likely to pose a drag on growth in the current quarter, which is something we haven't see since the collapse in trade during the recession," he said.Much depends on whether politicians can sort out a deal to avoid the "fiscal cliff", a series of automatic tax hikes and spending cuts next year. Uncertainty around that has already damaged business confidence and curtailed hiring.Indeed, the poll showed growth is expected to have slowed to just 1.2% on an annualised basis in the quarter that ends this month, down sharply from 1.6% in the November poll, and well below the economy's potential.Weak exports have dragged on growth, not to mention superstorm Sandy, which hit the US east coast in October and shut down most of New York City and surrounding area for days, damaging business and infrastructure.The outlook for all of 2013 has been chopped to 1.9%, far below the Fed's September prediction of 2.5%-3.0%, and also the lowest consensus for 2013 polled so far this year.Despite a third round of bond purchases from the Federal Reserve to boost the jobs market, employment expectations remained tepid. The consensus for average monthly non-farm payrolls growth was mostly unchanged at 127 000 for the first three months of 2013.That comes despite a strong majority of forecasters, 47 of 51, expecting the central bank to buy more US Treasuries when its Operation Twist program expires at the end of December.The Fed is expected to buy $45bn of Treasuries every month in addition to the already-announced purchases of $40bn every month in mortgage-backed securities. But these new purchases will further expand the Fed's balance sheet. The poll also showed the Fed is likely to continue its monetary stimulus for at least a year, making for an additional $1 trillion of purchases. The Fed has bought bonds worth $2.3 trillion in two prior rounds of quantitative easing.A majority, 31 of 49, also expect the Fed eventually to adopt numerical thresholds for inflation and unemployment, similar to results of a survey taken last week.So far, markets have been sanguine that Washington will avoid the fiscal cliff. US stocks have erased all their losses after the November 6 presidential election and the S&P 500 is up almost 1% so far this month.But signs from lawmakers have been mixed with nothing concrete to indicate a deal will be reached by the end-of-the-year deadline.US House of Representatives Speaker John Boehner offered no signs of progress on Tuesday but said he remains hopeful that both sides would reach an agreement.But Senate Democratic leader Harry Reid said it would be difficult to get a deal before Christmas.If a deal is not reached it could lead to $600bn being sucked out of the economy in 2013 in what is essentially a self activating austerity program built into current law.

NEWS,11.12.2012

  Italy petrol strike threatens to hit economy

Italian petrol stations began a 60-hour strike today to protest against rising costs and falling profits, causing long queues as drivers rushed to fill up before pumps closed.Hitting at the peak shopping period before Christmas, the strike comes at unwelcome time for retailers.Weak consumer spending has been a key factor in Italy's sluggish economy, which has been dipping in and out of recession since 2008."It is incredible, with all that petrol costs us nowadays, that they can even think of going on strike," Rome resident Ida Lauro said as she queued in her car.Unions have agreed to maintain minimum service on motorways, with at least one station open every 100 km.In a joint statement, unions said they called the strike to combat "a true aggression against the roughly 24,000 small businesses and 120,000 workers in the sector".They say oil companies have forced stations to absorb the costs of discounting campaigns, allowing them a profit of just one euro for every 100 euros ($155) or 55 litres of petrol sold.Oil distributors in Italy Esso and Shell were not immediately available for comment. A government attempt to come to an agreement with the unions this week fell through.Workers will demonstrate outside government buildings in Rome later today to pressure the state to intervene.The strike will end on Friday morning on ordinary roads and late on Thursday on motorways.Between December 17 and 22 the petrol stations will refuse to pay oil companies for refills. Then, between Christmas and New Year, they will refuse credit and debit card payments in protest at bank charges on electronic payments.Mario Monti's technocrat government has cut spending and raised taxes since it was appointed last year to pull Italy out of a debt crisis, and is the focus of increasing protests.The government was thrown into crisis last week when the party of former Prime Minister Silvio Berlusconi withdrew its support, prompting Monti to announce he would resign once the 2013 budget bill is passed before Christmas.

US to keep strong presence in Mideast

The US military will retain a "strong presence" in the Middle East despite a strategic shift to Asia, Defence Secretary Leon Panetta said on Tuesday during a visit to Kuwait. The US plans to deploy a majority of its naval fleet to the Asia-Pacific along with other advanced weaponry but Panetta insisted that a robust American force would remain in place in the Middle East.Panetta spoke to journalists aboard his plane travelling to Kuwait City on a two-day visit to discuss bolstering security ties amid tumult in the region and tensions with Iran."Let me assure you that the United States is strong enough that we can maintain a strong presence in the Middle East as well as in the Pacific," he said.He acknowledged that the US had to be "flexible" in managing its forces in a more austere era and that it would have only one aircraft carrier in the Middle East for about two months to allow for maintenance work on another carrier, the USS Nimitz.The American military still had nearly 50 000 troops and warships positioned across the region, he said."But in the end, I am very confident that we're going to be able to maintain the ships and forces we need in order to respond to any contingency."The US has deployed more ships and aircraft in the strategic Gulf over the past year after Iran threatened to close the strategic Strait of Hormuz if Western countries boycotted Iranian oil exports.Kuwait's emir, Sheikh Sabah al Ahmad al Sabah, held talks at his residence with Panetta in the presence of the crown prince, the prime minister, defence minister and senior officials, the state-run Kuna news agency reported.Kuna provided no details about the talks.During the visit, which ends on Wednesday, Panetta also plans to meet some of the 13 500 US troops stationed in the Gulf state to thank them for their service ahead of the Christmas holidays.His visit is the first to the emirate by a Pentagon chief in five years."We share a history of co-operation that goes back to the first Gulf War," in 1991 that ousted Iraqi occupation forces, Panetta said of Kuwait, calling the country an "important partner"."I look forward to discussing with the government of Kuwait how can we enhance that co-operation in the face of regional security challenges in the area," he said."Our presence in Kuwait and throughout the Gulf helps enhance the capabilities of partner nations, deters aggression and helps ensure that we're better able to respond to crises in the region."Panetta's visit coincides with a wave of protests in the oil-rich Gulf state, with thousands of opposition demonstrators demanding fresh elections due to a bitter dispute over amendments to the country's electoral law.Kuwaiti activists have called for protesters to camp outside parliament next Saturday on the eve of its opening session.

N Korea removes rocket from launch pad

North Korea has removed a long-range rocket from its launch pad for repair, South Korean media reported on Tuesday, a day after Pyongyang extended the widely-criticised mission's launch window.According to analysis of the latest satellite imagery, the entire three-stage Unha-3 carrier has been removed to a nearby assembly facility, Yonhap news agency quoted a military source as saying."It seems that North Korea has pulled down the rocket from the launch pad to fix technical problems," the source said.The defence ministry refused to confirm the report which, if true, would signal a lengthy delay in the launch schedule.North Korea says the rocket is being used to put a satellite into orbit, but the United States and its allies insist the launch is a disguised ballistic missile test.North Korea had originally provided a 10-22 December window for launching the rocket, but that was extended by another week on Monday when a "technical deficiency" was discovered in the first-stage engine.Yonhap's military source said Pyongyang was expected to go ahead with a launch after repair works are completed.The North's decision to try and launch the rocket in winter has led analysts to suggest a political imperative behind the timing, which may have overruled technical considerations.New leader Kim Jong-Un is believed to be extremely keen that the launch falls around the first anniversary of the death of his father and former leader Kim Jong-Il on 17 December.The possibility that the launch has been rushed has been backed by missile experts, sceptical that the problem which resulted in the failure of the North's last rocket launch in April could have been resolved in just eight months.North Korea is banned from conducting missile tests under UN resolutions triggered by Pyongyang's two nuclear tests in 2006 and 2009.The latest planned launch has been condemned by the United Nations, as well as the United States and its main military allies in Asia, Japan and South Korea.Russia has joined international calls for Pyongyang to cancel the mission, while China, North Korea's sole major ally and its biggest trade partner and aid provider, has expressed concern.EU foreign ministers said on Monday that an eventual launch would be a "provocative act" in breach of UN resolutions and require an international response.UN diplomats inside and outside the Security Council have started consultations behind the scenes on what action to take if Pyongyang goes ahead with the launch.According to Japanese reports, Japan, the United States and South Korea have agreed to demand the UN Security Council strengthen sanctions on North Korea to levels that match those on Iran.That would include increasing the list of financial institutions, entities and individuals already subject to asset freezes.

Berlusconi, Monti set fiery campaign tone

Italy's Silvio Berlusconi on Tuesday set the tone for his election campaign saying nobody should care about bond spreads, and accusing Mario Monti of being "German-centric" as the prime minister said he had spared Italy from the same fate as Greece."Who cares about the spread?" the 76-year-old Berlusconi, who is running for the sixth time in two decades, said in an interview with Canale 5 television part of his media empire."The spread is a trick and an invention with which they tried to bring down the majority that ruled this country," said the three-time prime minister and billionaire, referring to his last government which collapsed in November 2011 following a parliamentary revolt and panic on the markets.The spread is the differential between Italian and benchmark German 10-year sovereign bonds  a closely watched measure of investor confidence.The spread had narrowed to below 300 points last week but has widened since Berlusconi's People of Freedom (PDL) party said on Thursday that it was withdrawing its support for Monti's government.Berlusconi then announced he would run for prime minister and Monti said he would resign as soon as parliament approves next year's budget, bringing forward the likely date for elections to February.There is growing speculation that Monti will also decide to run in the election although he has so far declined to comment, saying only that he is not considering the option "at this stage".The spread was around 349 points on Tuesday, while the stock market inched up 0.64% in afternoon trading - a day after it trailed other European bourses reacting to the weekend of political drama and the re-emergence of Berlusconi.Polls say the favourite to win is centre-left leader Pier Luigi Bersani, a cigar-chomping former communist and two-time minister who spearheaded a liberalisation drive when he was in office.Berlusconi on Tuesday also criticised Monti as "too German-centric" and said that all the main economic indicators had worsened since the former Eurocrat was installed in power.He continued saying that Italy's record-high public debt of nearly $2.6 trillion, or around 120% of gross domestic product, was "not as high as they want to make you think".Monti also gave an interview to Rai public television in which he said that the government had to be "very careful" and "calm" about bond spreads.In a rare moment of candour on his personal life, he revealed his own grandson had been nicknamed "spread" at his kindergarten and recognised the word as his own name when he heard it on television.Monti also warned about rising populism ahead of the elections, saying: "There is a tendency to over-simplify things, to present magical solutions."And he defended his record in government saying: "We have made great progress but at a cost. In the short term, there has not been growth."I would appreciate it if someone could explain to me how it would have been possible financially to spare Italy from suffering the same fate as Greece and make it grow at a rapid rate," he said.Newspaper Il Fatto Quotidiano's online edition said the contrasting interviews with Monti and Berlusconi on Tuesday were a "head-on clash"."Each one used their own language, but this really is a challenge at a distance," the paper said.Berlusconi also announced that only 10% of the party's candidates in elections now expected in February would be chosen from current lawmakers.Fifty percent of the candidates will come from the business community, 20% from local government and 10% from the world of culture, he said, without explaining where the remaining 10% would come from.The PDL has been riven by infighting and hit by a series of fraud investigations since Berlusconi stepped down last year and retreated from the political fray before suddenly returning last week to the dismay of several dissident party members. Berlusconi also said he would be holding talks later on Tuesday with Roberto Maroni, leader of the populist Northern League party, on forming a possible coalition.Berlusconi's PDL and the Northern League won the last general election in 2008 but there have been tensions between the two parties in recent years.

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.