Europe debt fears hit mkts, Euro at year low

Europe debt fears hit mkts, Euro at year low


LONDON: European equities dived and the euro hit a new one-year dollar low on Tuesday, failing to win support after eurozone finance ministers agreed a 110-billion-euro (145-billion-dollar) Greek bailout.

In late morning deals, the London stock market slid 1.51 percent, Paris lost 2.04 percent and Frankfurt shed 1.36 percent. Elsewhere, Madrid tumbled 3.26 percent and Athens slumped by 3.71 percent.

In foreign exchange trade, the European single currency nosedived to 1.3088 dollars on Tuesday, plumbing the lowest level since April 28, 2009.

"Markets do not seem greatly impressed by the launch of the Greek rescue plan," said Unicredit analyst Marco Annunziata.

"The 110-billion-euro program... barely met expectations, without generating any positive surprise, and this probably helps explain the lukewarm reaction."

Over the weekend, eurozone finance chiefs approved an unprecedented three-year package of loans for Greece, struggling to shake off a crippling debt and deficit burden.

"The EU/IMF bailout of Greece provides enough funding for the next 12 months or so," said VTB Capital economist Neil MacKinnon.

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"However, the ability and willingness to bail out another eurozone fiscal miscreant is politically difficult," he added, hinting at other fiscally-challenged nations like Ireland, Spain and Portugal.

Of the 110 billion euros (145 billion dollars) to be made available to Greece, the eurozone would provide 80 billion and the International Monetary Fund 30 billion.

And in a policy U-turn, the European Central Bank agreed to accept Greece's junk-rated government bonds as collateral for loans.

In return, the Greek Socialist government will have to impose harsh austerity measures, as it seeks to slash its public deficit from nearly 14.0 percent of output last year to less than 3.0 percent by the end of 2014.

"The ECB's decision to suspend minimum collateral requirements for Greek bonds helps alleviate an imminent banking crisis but the ECB might find they end up doing this for other 'club Med' bonds," added MacKinnon.

More @ http://economictimes.indiatimes.com/markets/global-markets/Europe-debt-fears-hit-markets-Euro-at-year-low-against-dollar/articleshow/5890251.cms


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Src: EConomictimes

China may 'crash' in 9-12 months: Marc Faber

China may 'crash' in 9-12 months: Marc Faber


SINGAPORE: Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy”, Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen”, he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong on Monday.

“The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

Also Read

→ Bubble forming in the property maket of China: Mark Matthews

→ Risk of asset bubbles in emerging mkts: IMF chief

→ China sounds alert over new asset bubbles in world economy

An index tracking Chinese stocks traded in Hong Kong dropped 1.8% on Monday, the most in two weeks, after the central bank raised reserve requirements for the third time this year.

The Shanghai Composite has slumped 12% this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday on Monday.

Copper touched a seven-week low and BHP Billiton, the world’s biggest mining company, fell the most since February on concern spending in the world’s third-largest economy will slow and after Australia boosted taxes on commodities producers. Rio Tinto, the third-largest, slid as much as 6 %.

Chanos, Rogoff

Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China. China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month.

As much as 60% of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fuelled bubble in China may trigger a regional recession within a decade.


More @ http://economictimes.indiatimes.com/markets/global-markets/China-may-crash-in-next-9-12-months-Marc-Faber/articleshow/5887630.cms





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Heard on the Street: Tata Motors skids as US hedge offloads shares

Domestic fund goes ga-ga over Graphite India

An aggressive fund manager of a large domestic fund house is going bananas over Graphite India, a manufacturer of graphite electrodes.

According to the grapevine, this fund manager has bought a sizeable chunk of the stock recently, as he is betting on better prospects for the industry. On Monday, the stock, which has risen 16% in a month, closed at Rs 102, down almost 1% from the previous close.

According to analysts, growth of graphite electrodes, a key input in steel production through the electric arc furnace (EAF) route, will increase rapidly compared to EAF steel production in the next couple of years as steel manufacturers are stocking up graphite electrode inventory.

Further, the company is also expected to reap strong labour cost advantages as compared to its peers in the developed markets.

Tata Motors skids as US hedge offloads shares

Shares of Tata Motors snapped a three-day winning rally on Monday, ending at Rs 855.55, down almost 2%. According to the grapevine, a US-based hedge fund, whose Asia operations are run by a maverick fund manager, has offloaded a portion of their holding it had accumulated recently.

Brokers said the fund booked profits partly after the stock rose 6% last week compared to Sensex’s drop of 0.5%. The stock’s trating, which was a sell at most brokerages till recently, has been upgraded to a buy due to improvement in operations of Jaguar and Land Rover, which has been the cause of concern for most investors.

(Contributed by Apurv Gupta)

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Daily News Roundup - May 4 2010

Mumbai derailed, markets back on track

Biocon

Vijaya Bank

Subros

Indian Bank

Ashok Leyland Ltd

Src: Economictimes, DP blog and etc