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European leaders are drawing up a series of crisis-fighting proposals to raise at an informal EU summit this week that have in the past been rejected by Germany putting further pressure on Chancellor Angela Merkel. The proposals, which could include empowering the eurozone’s €500bn rescue fund to directly recapitalise faltering European banks and commonly backed eurozone bonds, have been backed by some leaders in the past but forced off the agenda by the German chancellor’s objections.


Hedge funds and private equity firms have amassed almost €60bn to buy loans from stricken European banks in coming years as many of the continent’s lenders seek to shrink their way to health, according to a PwC survey.  PwC, which is advising many banks on asset sales, estimates European banks have almost €2.5tn of “non-core” assets they could sell.


Chinese consumers of thermal coal and iron ore are asking traders to defer cargos and – in some cases – defaulting on their contracts, in the clearest sign yet of the impact of the country’s economic slowdown on the global raw materials markets. The deferrals and defaults have only emerged in the last few days, traders said, and have contributed to a drop in iron ore and coal prices.

Once again, the wise guys sold the top. In 200 Goldman Sachs went public, in 2007 Blackstone went public, in 2011 Glencore went public, and the latest top seller is Facebook. Congratulations to the smart guys…

…and yes, FB is below the IPO price already.

Asian markets moderated gains after an early bounce in early trading Monday as investors digested comments by leaders of the Group of Eight major economies affirming they want Greece to remain in the euro and Chinese Premier Wen Jiabao raising hopes of further policy easing. Japan’s Nikkei was up 0.3%, Australia’s S&P ASX 200 gained 0.3%, and Korea’s Kospi climbed 0.8%.  Other key markets bucked the trend, with Singapore’s Straits Times Index dropping 0.2%, Hong Kong’s Hang Seng Index was down 0.7%, and the China Shanghai SE Composite falling 0.3%.


…and much more below.



Italy’s technocratic Prime Minister Mario Monti said Europe and Greece will find a solution that will protect the euro zone and potentially keep Greece in the monetary union. “I think as we approach the 17th of June election day, the feeling in Greece that it’s crucial for their country … to stay in the euro will focus minds and political programs on putting together a collective willingness to do so,” Mr. Monti said in an interview with Fareed Zakaria’s GPS program aired on CNN Sunday. “Europe cannot abandon or even substantially undermine and reduce the commitments it asked of Greece” as part of its emergency loan programs. Still, he said. “I think an equilibrium will be found.”


Pressure mounted on Germany to soften its opposition to growth-promotion efforts at a weekend summit of leaders of major economies, as momentum gathered for another idea to ease Europe’s debt crisis that Berlin has long resisted—the issuing of common bonds by euro-zone governments. The meeting of leaders of the Group of Eight at the U.S. presidential retreat here ended with a message, reinforced by President Barack Obama, that growth is a priority—particularly in the beleaguered euro zone, where austerity measures have left economies battered and raised questions about whether some governments will be able to service their debts. It isn’t clear what, if any, tangible changes in policy will follow. Germany, the euro zone’s chief paymaster and main architect of the bloc’s austerity strategy, would pick up a large part of the bill for efforts to promote growth and for mutual euro-zone bonds, and there has been no sign that Chancellor Angela Merkel’s resistance to the approach is wavering.


The Nasdaq Stock Market said on Sunday it bungled Facebook Inc.’s initial public offering, acknowledging that technology problems affected trading in millions of shares. The trading glitches, coupled with underwhelming investor appetite for Facebook shares on Friday, fueled doubts about Wall Street’s ability to handle hot IPOs. “This was not our finest hour,” said Nasdaq OMX Group Chief Executive Robert Greifeld. The main problem, he said, was a malfunction in the trading-system’s design for processing order cancellations. Extensive testing Nasdaq had performed ahead of the deal failed to unearth the problem, he said.


Chinese Premier Wen Jiabao declared that policies meant to prevent a rapid economic slowdown must be applied decisively, suggesting that Beijing is leaving the door open for more-aggressive measures. “No matter the fiscal policy or the monetary policy, we cannot afford to wait and see and miss the right timing,” he said in a state radio broadcast on Sunday. “We must implement the policies in a timely manner if we believe they’re right.” In a shift in rhetoric, Mr. Wen vowed earlier in the weekend to make growth a higher priority, state media reported. The state-run Xinhua News Agency on Sunday quoted him as saying, during a visit to Hubei province from Friday to Sunday, that China will put more emphasis on ensuring steady growth while maintaining a proactive fiscal policy and a prudent monetary policy.


Chief executives of Apple Inc. AAPL +0.05%and Samsung Electronics Co. will meet in San Francisco Monday in a court-directed session aimed at settling their smartphone patent war. But a deal seems unlikely, people familiar with the matter and others tracking the battle say. Apple has said CEO Tim Cook and General Counsel Bruce Sewell will lead its team at the meeting. Samsung CEO Choi Gee-sung and Chief Legal Officer Kim Hyun-chong, a former South Korean trade minister and U.N. ambassador, will head its delegation. Both companies declined interview requests for this article.


The U.S. dollar and the yen are likely to find support against their counterparts this week as the tensions over Greece’s membership in the euro zone keep investors in a cautious mood. With Greece headed toward another election in June, it isn’t evident to market participants how a new—and likely politically divided—government would be able to commit to austerity plans needed to lock it into the euro zone. A Group of Eight summit yielded only a lukewarm statement Saturday in which the leaders said, “We affirm our interest in Greece remaining in the euro zone, while respecting its commitments.”

Gold inched up on Monday to extend last week’s rise, tracking a steady euro after world leaders pledged to combat financial turmoil, although worries about Greece and the euro zone debt crisis continued to feed caution in the financial markets. Spot gold edged up 0.3 percent to $1,596.56 an ounce by 11.26 p.m. EDT, after prices gained 0.8 percent last week. Cash gold rebounded swiftly in the past two sessions from a 2012 low below $1,530 an ounce and tested $1,600, which has proved to be a key resistance level. U.S. gold inched up 0.3 percent to $1,596.70.


Crude oil futures fell more than 1 percent on Friday, down for the sixth straight session, as worsening problems in Greece and Spain raised worries of contagion in the euro zone. Oil futures fell on the drumbeat from global stock markets, which erased the year’s gains as investors pared holdings for safe-haven assets such as gold, on growing concerns about the euro zone debt crisis. On the New York Mercantile Exchange, crude for June delivery, which expires on Tuesday, settled at $91.48 a barrel, falling $1.08, or 1.17 percent. For the week, it slid $4.65, or 4.84 percent, down for the a third in a row. In three weeks, front-month U.S. crude has slumped $13.45, or 12.82 percent, the biggest three-week loss since the week to August 14, 2011, when prices dropped 14.54 percent. In London, ICE JulyBrent crude settled at $107.14 a barrel, edging down 35 cents, or 0.33 percent, the lowest close for front-month Brent since the December 20, 2011 settlement at $106.73 and extending losses to a third straight week.

China will work to speed up approvals of qualified foreign institutional investors looking to buy into its domestic securities, as part of reforms to add depth to the country’s capital markets. The foreign exchange regulator has already accelerated approvals for long-term foreign investors such as pension funds, raising their initial investment quotas and simplifying procedures after the government last month more than doubled quotas for QFIIs to $80 billion from $30 billion, according to a statement on the State Administration of Foreign Exchange’s website yesterday.


Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans.  Money managers reduced net-long positions across 18 U.S. futures and options by 15 percent to 616,841 contracts in the week ended May 15, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Gold bets fell for a second week and to the lowest since December 2008, while copper holdings tumbled 69 percent, the most in five weeks. Cotton wagers dropped to the lowest in five years.


A top surrogate to Mitt Romney said making money — rather than creating jobs — was the primary goal of the presumed Republican Party presidential nominee when he was running Bain Capital LLC, saying he “acted responsibly” as chief executive officer of the private-equity firm.  “The role of private equity as fiduciaries is certainly to make money,” said Tom Stemberg, the founder of Staples Inc. (SPLS), in an interview on Bloomberg Television’s “Political Capital,” airing this weekend. Bain also helped businesses grow, so “these things had redeeming social value, in addition to making Mitt and his investors a lot of money.”

A record-breaking pay deal will give millions of German workers their biggest rise in wages in two decades, boost consumption in Europe’s biggest economy and help towards adjusting the regional imbalances that have caused severe tensions within the euro zone, analysts said on Sunday. Germany’s largest industrial union IG Metall agreed to a 4.3-percent pay rise from employers just before dawn on Saturday — giving the 3.6 million car and engineering industry workers their biggest wage increase since a 5.4 percent deal in 1992.

Business economists predict the U.S. will grow at a moderate 2.4% rate in 2012 and companies will hire workers at a somewhat faster pace than previously forecast. In its second-quarter survey, the National Association for Business Economics raises its estimate of monthly job growth for 2012 to 188,000 from 170,000 in its first-quarter forecast. The group’s prediction for gross domestic product was unchanged at 2.4%, but business economists project U.S. growth will rise to 2.8% in 2013, the NABE said in a quarterly survey released Monday morning.

European taxpayers face having to bankroll a new wave of bailouts amid growing funding problems at state-backed borrowers across the region, according to senior bankers. Financiers are becoming increasingly concerned that many taxpayer-backed borrowers are losing their ability to access private funding markets. The development raises the prospect of already heavily indebted eurozone national governments being forced to take on hundreds of billions of euros of additional debts. “Cracks are appearing in the funding markets for these institutions. If you don’t like the sovereign risk, why would you take the risk of buying the debt of the institutions they support,” said one credit banker.


When it comes to contingency planning for a eurozone break-up, it is typically a German company that has been ahead of the game. Industrial conglomerate Siemens acquired a banking licence in December 2010. That allowed it to access directly European Central Bank funds, so cutting its exposure to swings in jumpy currency markets. It also took to parking cash at the ECB, once depositing €500m after withdrawing them from riskier French lenders. Now, with just about everyone reckoning Greece is heading for the exit, the treasury operations of multinational companies have gone into overdrive. WPP, Reckitt Benckiser and Diageo, to name just three, have taken to a daily sweep of euros from their accounts to reduce the risk of any overnight devaluation.


Hard-pressed households will be offered some respite this week when inflation falls back sharply to take some of the pressure off family finances. Official figures from the Office for National Statistics (ONS) are expected to show that the consumer prices index (CPI) dropped from 3.5pc in March to 3.1pc in April, the lowest it has been since September 2010. Any relief would be welcomed by households. Separate surveys published today showed that wages are growing at their slowest rate in a year and that household finances are deteriorating at the fastest pace of 2012, as the double dip recession takes its toll.

Spain’s banking system will have to be bailed out in the coming months, with lenders jettisoning overseas assets to survive, according to one of Europe’s leading fund managers. Dominic Rossi, chief investment officer for equities at Fidelity Worldwide Investment, likened the ensuing collapse, which will include the exit of Greece from the euro, to the 1990s Latin American meltdown. “I don’t think it will be long before Spain will need to seek official assistance in the recapitalisation of its banks from both the European Central Bank and the International Monetary Fund.” he said.


The wettest April on record “battered” retailers and drove the sharpest drop in footfall since the end of 2009. The number of shoppers on the high street plummeted by 12.6 per cent last month, although the almost incessant rain benefited shopping centres, which saw footfall rise by 0.4 per cent in April. The economic downturn and bad weather contributed to an overall 2 per cent fall in footfall over the three months to 30 April, according to the survey from the British Retail Consortium, Springboard and the Association of Town Centre Management

A second Greek vote next month backing parties opposed to the European Union‘s bailout package would be a decisive vote to leave the euro for which contingency plans have to be made now, David Cameron warned on Sunday in a dramatic raising of the stakes. Speaking in Chicago after two days of talks with world leaders on the euro crisis, he said: “We now have to send a very clear message to people in Greece: there is a choice – you can either vote to stay in the euro, with all the commitments you’ve made, or if you vote another way you’re effectively voting to leave.” His remarks are in effect an attempt to make next month’s vote a referendum on continued membership of the euro.


A Greek exit from the single currency threatens to plunge Britain into a second recession equal in ferocity to the record postwar slump of 2008-09, according to the expert responsible for the government’s economic forecasting. Robert Chote, chair of the Office for Budget Responsibility, who was speaking to the Guardian as world financial markets staggered to the end of a week that rekindled memories of the collapse of Lehman Brothers in 2008, warned that there was risk that a fresh downturn would do irreparable damage to the UK. Britain has made up less than half the ground lost when output plunged by more than 7% in 2008-09, and Chote said there was a risk that “you go down and you never quite get back up to where you started”.

As the spectre looms ever larger of a Greek exit from the euro zone, economists have been making highly complex calculations of how much that bombshell would cost – with estimates as high as US$1 trillion (S$1.28 trillion). The approximations vary widely with the one thing most analysts agree on being that the cost of a Greek exit – or ‘Grexit’ – is ‘incalculable’ and depends how many knock-on effects are taken into account. The direct costs, analysts at German lender DekaBank, relate to the hit other European countries and the International Monetary Fund would have to take on their holdings on Greek debt if Greece were to default and leave the euro.


Iran on Sunday announced an upward revision of its annual budget, as a rise in oil prices appeared to mitigate the impact of international sanctions on its economy. The Islamic republic’s Guardians Council approved the budget for Iran’s calendar and fiscal year to March 2013 at 5,560,000 billion rials (S$579 billion), the official Irna news agency reported.  President Mahmoud Ahmadinejad presented his government’s annual budget to parliament in February, asking for 5,100,000 billion rials. 

The Philippine government on Sunday welcomed the lower Philippine inflation forecast by Singapore- based DBS Bank Ltd., calling it an “affirmation of the prudent management” of the country’s economy. Presidential Spokesman Edwin Lacierda said in an interview with state-run radio station Radyo ng Bayan that inflation in the country has remained under control and within the government’s target range even when oil prices were climbing, due to good fiscal management.


South Korean companies’ direct financing through issuing stocks and bonds shrank 21.7 percent last month due to a drop in corporate bond issuance caused by tighter regulation, the financial watchdog said Sunday. Corporate financing through public offers such as equity issuance and bond sales amounted to 10.3 trillion won (8.8 billion U.S. dollars) in April, down 21.7 percent from a month earlier, according to the Financial Supervisory Service (FSS). For the first four months of this year, the fund raising reached 46.93 trillion won, down 3.4 percent from the same period of last year.


South Korea’s exports to the United States jumped 11.3 percent for two months right after the implementation of the South Korea-U.S. free trade agreement (FTA), a customs data showed Sunday. Shipments to the United States reached 11.18 billion U.S. dollars over the period between March 15 and May 14, up 11.3 percent from the same period of last year, according to Korea Customs Service (KCS). The free trade deal was effective in March 15. Over the cited period, imports from the United States grew 2 percent to 7.73 billion dollars, sending the trade surplus with the United States to 3.45 billion dollars that accounted for around 80 percent of the total surplus of 4.4 billion dollars.


South Korea’s corporate bankruptcies grew last month due mainly to an increase in defaults of service companies, the central bank said Sunday. The number of companies that went belly-up stood at 110 in April, up 20 from a month earlier, according to the Bank of Korea (BOK). The April figure was the highest in 4 months. The number of failures for service firms jumped 10 in April from a month before, leading the overall increase in corporate bankruptcies. The figure for builders increased 5 over the cited period, and the manufacturers’ defaults grew 2 last month.


The Asian Development Bank (ADB) has approved the release of 480 million pesos (about 11.18 million U.S. dollars) for the Philippine government’s anti-poverty initiatives particularly for the province of Albay, a senior government official said on Saturday. Deputy Presidential Spokesperson Abigail Valte, in an interview over state-run radio station, said that the amount that Albay will be receiving from the ADB will be for the implementation of Kapit- Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) program.

More cities in China saw property prices decline last month on an annual basis, but rebounding sales could push up prices in the coming months, analysts said. Out of 70 major cities tracked by the government, 46 recorded a year-on-year price fall in April, eight more than in March, the National Bureau of Statistics said on Friday. Month-on-month, 43 cities recorded a price fall, while 24 remained flat. In March, 46 cities posted a price decline from the previous month.

Since the global financial crisis of 2008, India’s IT industry has been unable to recreate the magic of its halcyon years from 2003 to 2008, when exports grew at a phenomenal 26 per cent compounded annual growth rate (CAGR), making it the darling of equity investors and creating blue chip behemoths such as Infosys, TCS, and Wipro. After a brief recovery following the 2008 crisis, the global economy again appears to be going into a tailspin that has adversely affected both the U.S. and Europe, the Indian IT industry’s key markets. This has led to heightened client caution on IT spends. Intensified competition within the sector is exacerbating the pressure, which has impacted growth in billing rates and, consequently, revenues. These factors are taking a toll on the Indian IT industry’s growth, and causing a shakeout at the top, if the January-March 2012 quarterly results of leading players are any indication.


Calling the depreciation in the rupee’s dollar value “a matter of grave concern”, Union Finance Minister Pranab Mukherjee on Sunday said the Centre was watching the situation and working towards arresting the steep fall. “I know there are certain areas of grave concern including the [fall in the] rupee. The way it is depreciating against [the U.S.] dollar is a matter of grave concern,” Mr. Mukherjee told journalists outside his residence in the city. Emphasising that the government was working to ease the crisis, Mr. Mukherjee said the depreciation in the rupee was due to the prevailing fiscal situation in the eurozone. “We are watching the situation but it is closely linked with the uncertainties in the eurozone,” he said.

After clocking a record food grain production of over 252 million tonne in 2011-12, the government now targets 250 million tonne of production in the crop year of 2012-13. “We have set a conservative food grain production target of 250 million tonne for 2012-13 crop year. We expect to exceed the target the way we did in the last season,” said agriculture secretary PK Basu in an exclusive chat with ET. Last year, the government had set a production target of 245 million tonne. But on the back of good monsoon, it exceeded the target by over 7 million tonne with record production of wheat and rice.


The union government has approved an assistance of Rs 575 crore to Maharashtra towards drought relief work. “The decision was taken on Friday by a high-level committee comprising finance ministerPranab Mukherjee, home minister P Chidambaram, agriculture minister Sharad Pawar and planning commission deputy chairman Montek Singh Ahluwalia,” said an official who was part of the meeting.

The Maharashtra government had sought a financial assistance of Rs 2,281.37 crore from the central government to undertake relief measures in 15 districts facing severe drought in the state.

The growth of electricity consumption by South Korea’s industrial sector slowed in April from a year earlier due mainly to less working days and weaker exports, the government said Monday. Sales of industrial electricity moved up just 1.7 percent on-year to 21.22 billion kilowatt-hours in the cited month, according to the Ministry of Knowledge Economy. The gain marks a slowdown from a 9.1 percent increase a year earlier, although total output rose from 20.86 billion kilowatt-hours. Power output, however, fell slightly from 21.94 billion kilowatt-hours tallied in March.

Heavyweight Chinese infrastructure investors are moving toward putting their money into big projects across Russia, a market they described as “empty” during a presentation in Moscow Friday. Russian government officials are pushing the foreign corporations toward the regions, particularly the North Caucasus, but no agreements have yet been signed. Top executives from infrastructure, construction, tourism and leisure investors Dalian Wanda Group and China Oceanwide Holdings Group concluded a second visit to Russia in less than a year this week.  Moscow, Krasnodar region, the Dagestan republic and Irkutsk are particularly promising, vice president of China Oceanwide Holding Group Tszysin Tsi told reporters.  “We have made initial agreements with local authorities from these towns, so we have made the first step toward investment,” he said, speaking through a translator.

Europeans are avoiding vacations to Greece this summer fearing instability sparked by the debt crisis, industry sources say, inflicting a hard blow to the country’s already devastated economy. “From the aftermath of the elections on May 6, we have experienced a 50% drop in bookings,” said George Drakopoulos, director general of the association of Greek tourism enterprises (SETE). Though tourism from Germany this year is back on the rise, overall booking numbers are still plummeting ahead of the busy summer season, Drakopoulos said.