Global economic crisis hits China's exporters

Wedding dress maker Wang Lujia earns a living making brides happy, but the global economic crisis is casting a chill over her small business in southern China.

Banks boost lending as economy slowly warms up

After three years of Scrooge-like underwriting following 2008's financial crisis, banks have turned on the spigot, boosting lending at annual rates as high as 8.2% since July, according to Federal Reserve statistics.

Dollar Index Holds Loss Before Confidence, Manufacturing Reports

Dec. 27 (Bloomberg) -- The Dollar Index held losses from last week before U.S. data forecast to show consumer confidence rose to the most since July and regional manufacturing gauges increased, reducing demand for haven assets.

Spain economy shrinks, outlook bleak: minister

Spain's economy will shrink in the last quarter and faces a bleak outlook for the coming months, its new economy minister warned Monday, heightening fears of a fresh recession.

Euro's woes may lead to bargain imports

As the financial crisis worsens in Europe and the euro continues to lose value against the dollar, Nashville could soon see more bargain prices on products such as Italian olive oil, French wine and cheese or even German luxury cars.

Analysis: Germany faces recession risk as crisis hits confidence

BERLIN (Reuters) - After breezing through the euro zone debt crisis for the past two years, Germany's economy could fall into recession as anxious businesses hold off on investment and exports wither.

Italian Economy Shrinks In Q3, Signals Recession

(RTTNews) - The Italian economy contracted in the third quarter mainly led by a fall in domestic demand and investment, and likely entered a recession triggered by the Eurozone's deepening debt crisis, the latest official figures revealed Wednesday.

Euro in Crisis 8% Stronger Than Average Since 1999 as Losses Seen for 2012

The euro, after falling to its weakest level against the dollar since January, is poised to depreciate further as traders lose confidence in the ability of European leaders to contain the region’s debt crisis.

George Osborne urged to rethink reforms

George Osborne’s efforts to overhaul Britain’s financial regulation have been dealt a severe blow after a joint committee of MPs and Lords warned his draft proposal “needs significant amendments” to be fit for purpose.

Greece sinks deeper into job hell

Greek unemployment hit a record high this summer despite a rise in tourism.

Gold Prices Struggle to Stay Near $1, 700

Gold prices fell Wednesday on negative economic news from China and Europe plus concerns that the world's No. 1 economy is barely advancing.

Euro Area Faces Recession as Breakup Risk Remains, E&Y Says

Dec. 15 (Bloomberg) --The euro-area economy is likely to slip back into a recession and its leaders’ new plan to end the debt crisis hasn’t completely eliminated the risk of a breakup of the currency region, according to Ernst & Young LLP.

Speculation on France's Rating Persists

PARIS—French Foreign Minister Alain Juppé said Wednesday that a credit-ratings downgrade wouldn't be "cataclysmic," further fueling market expectations that the government is preparing for an imminent loss of its cherished triple-A ranking.

Euro’s woes boost sterling

The euro fell to a fresh nine-month low against the British pound on Tuesday.

European summit: Now it's up to the ECB

Judging Europe's fifth attempt at a comprehensive solution to the euro crisis requires reading the minds of Mario Draghi and the other leaders of the European Central Bank.

Europe pushes ahead with fiscal union, UK isolated

BRUSSELS (Reuters) - Europe secured an historic agreement to draft a new treaty for deeper economic integration in the euro zone on Friday, but Britain, the region's third largest economy, refused to join the other 26 countries in a fiscal union and was left isolated.

Can EU Heads of State Stabilize Euro Crisis? Will a Franco-German Consensus be Imposed on EU Member Countries?

Newswise — WASHINGTON, D.C. (December 8, 2011) – European heads of state are meeting for an EU summit aimed at trying to stem the deepening euro-area financial and sovereign debt crisis.

Euro Fluctuates Before Leaders’ Debt Crisis Summit, ECB Rate Statement

The euro fluctuated against the dollar, after erasing earlier losses, as optimism increased that European leaders will be able to agree on measures to help solve the region’s debt crisis.

Euro zone economy heading for steep contraction in Q4: PMIs

LONDON (Reuters) - The escalating sovereign debt crisis has already pushed the euro zone economy into a contraction that could be far worse than economists had expected, business surveys suggested on Monday.

Service Industries in U.S. Probably Expanded at Fastest Pace in Six Months

Service industries in the U.S. probably expanded in November at the fastest pace in six months, a sign the economy is accelerating in the final months of 2011, economists said before a report tomorrow.

Leaders Look to I.M.F., Again, as Euro Crisis Lingers

WASHINGTON -- European leaders are looking outside the Continent for help solving the longstanding crisis over the euro, but while the International Monetary Fund may be able to help, it will not be the magic wand they seek.

Sweden Is Safest as Crisis Upends Bond Market

Sweden is enjoying its lowest borrowing cost ever relative to Germany as investors reward the biggest Scandinavian economy for cutting its debt to less than half Europe’s average and enforcing discipline at its banks.

Britain blames euro crisis for lower growth

LONDON (AP) — The British government blamed the euro crisis for a big downgrade of the country's growth projections and warned that it will only achieve its deficit-reduction goals if European leaders deliver a big, bold solution soon.

OECD warns of European recession

The OECD has warned that the eurozone and UK could be entering a recession, and has cut its global growth forecast.

Italy again pays more to borrow

For the second time in as many market days, Italy paid sharply higher borrowing rates in an auction Monday, as investors continued to pressure the eurozone's third largest economy to come up with reforms urgently.

Euro Declines After Italian Debt Auction; Dollar, Brazilian Real Advance

The euro touched a seven-week low against the dollar, falling for a fourth week, as Italian borrowing costs jumped to the highest level since 1997, adding to speculation Europe’s sovereign-debt crisis is spreading.

Clegg: £1bn scheme will 'provide hope' to young jobless

Deputy Prime Minister Nick Clegg says a £1bn plan to provide subsidised work and training placements will "provide hope" to thousands of young people.

Euro zone crisis and celebritology - twin pillars of modern European life

Merkel continues to risk survival of euro with inflexible attitude while at a London hearing JK Rowling risks the survival of the tabloids with her heart-rending testimony.

Gold rebounds; Europe, US debt worry weigh

SINGAPORE (Reuters) - Spot gold gained half a percent on Tuesday, as a decline of more than 2 percent attracted some buyers, while worries about debt crises in both the United States and the euro zone are expected to keep sentiment fragile.

Many similarities in Arab Spring, European chaos

CNN) -- The victory of the opposition Popular Party in Spain's general election means that seven leaders or governments around the Mediterranean have been thrown out within the last year, amid an explosion of popular protest. Several more are fighting for their survival.

Euro zone not working, words alone won't fix it: Buffett

IWAKI, Japan (Reuters) - Billionaire investor Warren Buffett said Europe's debt crisis had shown up a "major flaw" in the 17-member euro zone system and it would take more than words to fix it.

Euro crisis 'opportunity for UK' to reclaim powers - PM

The current turmoil in Europe is an opportunity for the UK to "refashion" its relationship with Brussels, David Cameron has said.

Mario Monti prepares Italy for more pain as violence flares in Milan

The upper house of the Italian parliament has given a vote of confidence to the country's new prime minister by 281 to 25, with no abstentions, after he unveiled an ambitious programme of reform.

Dow slides 75 points on fears Europe's debt crises escalating

New York. The stock market fell Monday after a jump in Italy's borrowing costs reminded investors of how much work remains to be done to contain Europe's debt problems.

Why the euro crisis is an American problem

The Euro crisis is not just a Greek crisis, or an Italian crisis, or now even a French crisis.

Euro Gains From 1-Month Low on Optimism Europe Moving on Debt

Nov. 12 (Bloomberg) -- The euro rose from a one-month low versus the dollar amid optimism European leaders are tackling their debt crisis after Italy’s Senate approved an austerity bill yesterday and Greece swore in a new prime minister.

Asia-Pacific talks seek unity on euro crisis

Asia-Pacific finance ministers, increasingly alarmed by Europe's worsening debt crisis, sought a united front on Thursday to push for bolder European action as they shore up their own economies against the fallout.

David Cameron: 'British economy is getting worse as euro crisis goes unresolved'

The British economy is getting worse “every day” that the euro crisis goes unresolved, David Cameron has warned, as he told European leaders that the “world cannot wait” any longer for a rescue package to be agreed.

Italy Five-Year Yield Tops 7%, Berlusconi to Quit

Italian bonds slumped, driving the five-year note yield to more than 7 percent for the first time since the euro was started in 1999, after LCH Clearnet SA raised the deposit it demands for trading the nation’s securities.

Berlusconi's Main Ally Tells Him to Quit

Italian Prime Minister Silvio Berlusconi, under growing pressure to resign, suffered a potentially fatal blow on Tuesday when his main ally, Northern League party chairman Umberto Bossi, called on him to go. Berlusconi faces a crucial vote in parliament on Tuesday that could seal his fate.

RBS takes £142m hit on Greek bond portfolio

The spectre of the sovereign debt crisis cast a pall over Royal Bank of Scotland's third-quarter results yesterday when the bank admitted that it had taken more hits on its Greek bond portfolio and had sold most of its Italian debt.

Greek PM faces crucial confidence vote

Greek Prime Minister George Papandreou faces a parliamentary vote of confidence on Friday, one day after scrapping a controversial referendum that had angered world leaders who are trying to formulate a bailout fund for the cash-strapped country.

How might Greece leave the euro?

Greece's latest woes have raised something that was previously unthinkable - the possibility of the Greek people rejecting the euro.

Obama heads to G-20 amid questions on Greece

The U.S. has an important role to play in helping guide Europe through its financial crisis, but it is ultimately Europe's problem to solve, the White House said Wednesday as President Barack Obama readied for an economic summit in France.

The magic money tree

IT IS hardly surprising that the markets are having second thoughts about last week's euro zone rescue deal.

Investors to shift focus from Europe to US economy

Encouraging news from Europe helped ignite stock prices in October. This week, investors will shift their focus to U.S. economic data, which might temper their exuberance.

No quick deal with China: Euro bailout fund chief

The head of the euro zone bailout fund on Friday ruled out a quick deal with China on buying more of its debt.

Euro zone sovereign debt crisis not over: ECB President Jean-Claude Trichet

European Central Bank President Jean-Claude Trichet said in an interview in a German newspaper to be published on Sunday that the euro zone sovereign debt crisis was not yet over and that it was too early for the all-clear signal.

Record borrowing costs put Italy at centre of crisis

Fear made a swift return to the eurozone yesterday as Italy faced record borrowing costs in its first attempt to tap the markets since European leaders came up with new plans to rein in the sovereign debt crisis.

World stocks up on European rescue deal for Greece

World stock markets climbed again Friday, continuing to be buoyed by a European deal aimed at slashing Greece's massive debt and preventing the crisis from engulfing "too big to bailout" countries such as Italy.

French and German relief as Greek haircut not expected to trigger CDS

Major French and German financial institutions will be saved billions of euros in payouts if – as expected – the 50pc haircut on Greek government debt does not trigger credit insurance contracts

Euro zone rescue after marathon talks

Europe’s leaders have finally agreed a euro zone rescue plan after marathon talks lasting more than eight hours.

European banks need $150B in new capital

Europe's big banks will be forced to find €108bn ($150bn) of fresh capital over the next six to nine months under a deal to strengthen the banking system agreed by European Union finance ministers.

Eurozone crisis explained

The euro, the dream of many a politician in the years following World War II, was established in Maastricht by the European Union (EU) in 1992.

To join the currency, member states had to qualify by meeting the terms of the treaty in terms of budget deficits, inflation, interest rates and other monetary requirements.
Of EU members at the time, the UK, Sweden and Denmark declined to join the currency.
Since then, there have been many twists and turns for the countries that use the single currency.

1999

On 1 January, the currency oficcialy comes into existenceence

2001

Greece joins the euro.

2002

On 1 January, notes and coins are introduced.

2008

Malta and Cyprus join the euro, following Slovenia the previous year.
In December, EU leaders agree on a 200bn-euro stimulus plan to help boost European growth following the global financial crisis.

2009

Slovakia joins the euro.
Estonia, Denmark, Latvia and Lithuania join the Exchange Rate Mechanism to bring their currencies and monetary policy into line with the euro in preparation for joining.
In April, the EU orders France, Spain, the Irish Republic and Greece to reduce their budget deficits - the difference between their spending and tax receipts.
In October, amid much anger towards the previous government over corruption and spending, George Papandreou's Socialists win an emphatic snap general election victory in Greece.
In November, concerns about some EU member states' debts start to grow following the Dubai sovereign debt crisis. following the Dubai sovereign debt crisis.
In December, Greece admits that its debts have reached 300bn euros -  the highest in modern history.
Greece is burdened with debt amounting to 113% of GDP - nearly double the eurozone limit of 60%. Ratings agencies start to downgrade Greek bank and government debt.
Mr Papandreou insists that his country is "not about to default on its debts" insists that his country is "not about to default on its debts".

2010

In January, an EU reportcondemns "severe irregularities" condemns "severe irregularities" in Greek accounting procedures. Greece's budget deficit in 2009 is revised upwards to 12.7%, from 3.7%, and more than four times the maximum allowed by EU rules.
The European Central Bank dismisses speculation that Greece will have to leave the EU.
In February, Greece unveils a series of austerity measures aimed at curbing the deficit.
Concern starts to build about all the heavily indebted countries in Europe - Portugal, Ireland, Greece and Spain.

On 11 February, the EU promises to act over Greek debts and tells Greece to make further spending cuts. The austerity plans spark strikes and riots in the streets.
In March, Mr Papandreou continues to insist that no bailout is needed. The euro continues to fall against the dollar and the pound.
The eurozone and IMF agree a safety net of 22bn euros to help Greece - but no loans.
In April, following worsening financial markets and more protests, eurozone countries agree to provide up to 30bn euros in emergency loans.
Greek borrowing costs reach yet further record highs. The EU announces that the Greek deficit is even worse than thought after reviewing its accounts - 13.6% of GDP, not 12.7%.
Finally, on 2 May, the eurozone members and the IMF agree a 110bn-euro bailout package to rescue Greece.

The euro continues to fall and other EU member state debt starts to come under scrutiny, starting with the Republic of Ireland.
In November, the EU and IMF agree to a bailout package to the Irish Republic totalling 85bn euros. The Irish Republic soon passes the toughest budget in the country's history.
Amid growing speculation, the EU denies that Portugal will be next for a bailout.

2011

On 1 January, Estonia joins the euro, taking the number of countries with the single currency to 17.
In February, eurozone finance ministers set up a permanent bailout fund, called the European Stability Mechanism, worth about 500bn euros.

In April, Portugal admits it cannot deal with its finances itself and asks the EU for help.
In May, the eurozone and the IMF approve a 78bn-euro bailout for Portugal.
In June, eurozone ministers say Greece must impose new austerity measures before it gets the next tranche of its loan, without which the country will probably default on its enormous debts.
Talk abounds that Greece will be forced to become the first country to leave the eurozone.
In July, the Greek parliament votes in favour of a fresh round of drastic austerity measures, the EU approves the latest tranche of the Greek loan, worth 12bn euros.

A second bailout for Greece is agreed. The eurozone agrees a comprehensive 109bn-euro ($155bn; £96.3bn) package designed to resolve the Greek crisis and prevent contagion among other European economies.

In August, European Commission President Jose Manuel Barroso warns that the sovereign debt crisis is spreading beyond the periphery of the eurozone.
The yields on government bonds from Spain and Italy rise sharply - and Germany's falls to record lows - as investors demand huge returns to borrow.
On 7 August, the European Central Bank says it will buy Italian and Spanish government bonds to try to bring down their borrowing costs, as concern grows that the debt crisis may spread to the larger economies of Italy and Spain.
The G7 group of countries also says it is "determined to react in a co-ordinated manner," in an attempt to reassure investors in the wake of massive falls on global stock markets.
During September, Spain passes a constititional amendment to add in a "golden rule," keeping future budget deficits to a strict limit.

Italy passes a 50bn-euro austerity budget to balance the budget by 2013 after weeks of haggling in parliament. There is fierce public opposition to the measures - and several key measures were watered down.
The European Commission predicts that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011, growing just 0.2% and putting more pressure on countries' budgets.
Greek Finance Minister Evangelos Venizelos says his country has been "blackmailed and humiliated" and a "scapegoat" for the EU's incompetence.
On 19 September, Greece holds "productive and substantive" talks with its international supporters, the European Central Bank, European Commission and IMF.
The following day, Italy has its debt rating cut by Standard & Poor's, to A from A+. Italy says the move was influenced by "political considerations".
That same day, in its World Economic Outlook, the IMF cuts growth forecasts and warns that countries are entering a 'dangerous new phase'.

The gloomy mood continues on 22 September, with data showing that growth in the eurozone's private sector shrank for the first time in two years.

The sense of urgency is heightened on 23 October, when IMF head Christine Lagarde urges countries to "act now and act together" to keep the path to economic recovery on track.
On the same day, UK Prime Minister David Cameron calls for swift action on the debt crisis.
The next day US Treasury Secretary Timothy Geithner tells Europe to create a "firewall" around its problems to stop the crisis spreading.
A meeting of finance ministers and central bankers in Washington on 24 September leads to more calls for urgent action, but a lack of concrete proposals sparks further falls in share markets.

After days of intense speculation that Greece will fail to meet its budget cut targets, there are signs of a eurozone rescue plan emerging to write down Greek debt and increase the size of the bloc's bailout fund.
But when, on 28 September, European Union head Jose Manuel Barroso warns that the EU "faces its greatest challenge", there is a widespread view that the latest efforts to thrash out a deal have failed.
The sense that events are spinning out of control are underlined by Foreign Secretary William Hague, who calls the euro a "burning building with no exits".
On 4 October, Eurozone finance ministers delay a decision on giving Greece its next instalment of bailout cash, sending European shares down sharply.
Speculation intensifies that European leaders are working on plans to recapitalise the banking system.
On 6 October the Bank of England injects a further £75bn into the UK economy through quantitative easing, while the European Central Bank unveils emergency loans measures to help banks.
Financial markets are bolstered by news on 8 October that the leaders of Germany and France have reached an accord on measures to help resolve the debt crisis. But without publication of any details, nervousness remains.

Relief in the markets that the authorities will help the banking sector grows on 10 October, when struggling Franco-Belgium bank Dexia receives a huge bailout.
On 10 October, an EU summit on the debt crisis is delayed by a week so that ministers can finalise plans that would allow Greece its next bailout money and bolster debt-laden banks.

Source: www.bbc.co.uk

George Osborne: Eurozone crisis threatens all Europe

UK Chancellor George Osborne has said the eurozone debt crisis is a "real danger" to all of Europe as he arrived for a summit in Brussels.

All of Europe's finance ministers are meeting to try to find a solution to the bloc's ongoing economic problems.
The eurozone has already approved the next tranche of Greek bailout loans, potentially saving the country from a disastrous default.

But the French and German governments are divided over a lasting solution.
The finance ministers from all 27 European Union states are meeting for the talks. Heads of government will then gather on Sunday, and have announced plans for an extra meeting on Wednesday.

"We've had enough of short-term measures, sticking plaster that just gets us through the next few weeks," Mr Osborne said.
"The crisis of the eurozone is a real danger to all of Europe's economies, including Britain."
BBC business editor Robert Peston said that new forecasts from the bailout lenders - the so-called "troika" - showed that the current plan to revive the Greek economy had failed.

"The unavoidable implication is that the IMF will not provide any more bailout finance for Greece unless there are much bigger write-offs of Greek government debt by private sectors lenders," he said.
On Friday, the 17 nations that use the euro approved the next tranche of bailout loans to Greece - an 8bn-euro ($11bn; £7bn) loan that must still be signed off by the International Monetary Fund and that Athens should get in mid-November, officials said.

Debt-addled Greece has been bailed out - twice - along with the Irish Republic and Portugal. The eurozone is working on a third package for Greece now, as well as a solution that could help the huge-but-faltering economies of Spain and Italy.

But there have been widespread reports of deep divisions between France and Germany.

Greece 'not problem'

The German government has promised its taxpayers that its contribution will not go above 211bn euros so is looking for a way to increase the size of the fund without increasing the liabilities of German taxpayers.

In particular, France and Germany need to agree on how to increase the firepower of the eurozone's bailout fund, the European Financial Stability Facility (EFSF), from its current 440bn euros.

France has proposed turning the EFSF into a bank so that it could borrow from the European Central Bank (ECB), but Germany has refused to sanction such a move, arguing it would compromise the ECB's impartiality.

But that idea "is no longer an option," according to the Dutch Finance Minister, Jan Kees De Jager.
It is not clear how the eurozone would expand the fund now - which observers say needs to be closer in size to 2tn euros.

De Jager said two options remain for "leveraging" the rescue fund, but neither would involve the ECB. He did not say what those options are.
Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.

Germany has been leading the push for the private sector to take steeper losses, but France and the ECB fear that this would destabilise the banking sector and worsen market turmoil.
French and German banks hold much of external Greek debt, as do Greek banks - meaning they would need to be recapitalised.

"Greece is not a central problem for the eurozone," insisted Evangelos Venizelos, finance minister of Greece - which has been racked by strikes and numerous difficult parlaimentary votes on austerity measures.
"The point now is to adopt a general more constructive decision for the eurozone as a whole."

Negotiations have not yet begun properly with private sector lenders to Greece on a further reduction of what the Greek government will repay them.

Banks have already agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses. One diplomat told AFP that the eurozone wants banks to at accept an "at least 50%" loss on their Greek debt.

Jean-Claude Juncker, the chairman of the eurogroup and the prime minister of Luxembourg, said on Saturday that banks must share "a substantial increase" in Greece's debt burden.
And Sweden's Anders Borg said that banks should not expect "freebies" from taxpayers.
The European Banking Authority has estimated that between 80bn and 100bn euros is needed to boost the capital reserves of banks.

A deal on the euro had been expected to be signed on Sunday, but France and Germany said they would not be able to reach an agreement by then and announced that leaders would meet again on Wednesday.
Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan.



Source: www.bbc.co.uk

Euro crisis weighing on east European growth

A major development bank sharply reduced its growth forecast for Eastern Europe on Tuesday and warned of risks to the region’s banks, another example of how the sovereign debt crisis is radiating outside the euro zone.

The European Bank for Reconstruction and Development, which lends to businesses and governments in the former Soviet bloc and is underwritten by Europe and the United States, cut its growth estimate for Central Europe and the Baltics to 1.7 percent for 2012.

Merkel Says EU Summit Will Be Important, Not Final, Crisis Step

Oct. 18 (Bloomberg) -- German Chancellor Angela Merkel said that a European Union summit in five days will mark an “important step,” though not the final one in solving the euro-area sovereign debt crisis.

“These sovereign debts have built up over decades, so they won’t be ended with one summit,” Merkel told reporters in Berlin late today. While European officials recognize their responsibility to stop the crisis, “this will require tough, long-term work.”

UK CPI inflation rate rises to 5.2% in September

The rate of Consumer Prices Index (CPI) inflation in the UK matched its record high in September, rising to 5.2% from 4.5% the month before.

An increase in energy costs was behind a large proportion of the rise.

The 5.2% rate is the highest CPI measure since September 2008, and it has never been higher since the CPI measure was introduced in 1997.

European Stocks Fall on Debt Crisis, China

European stocks fell as concern that France may lose its top credit rating added pressure on the region’s leaders to find a solution to the debt crisis and as China’s economy grew at the slowest pace in two years. Asian shares dropped and U.S. index futures fluctuated.

BHP Billiton Ltd. (BHP) and Rio Tinto Group led mining shares lower as metals dropped. BNP Paribas (BNP) SA and Societe Generale (GLE) SA sank more than 6 percent as Moody’s Investors Service said France’s Aaa rating is under pressure. Dexia SA (DEXB) tumbled 13 percent as the European Commission opened an in-depth probe into Belgium’s takeover of its local consumer-lending unit.

European banks may need to raise 200bn euros

European banks may have to raise a collective 200bn euros ($276bn; £175bn) to boost their capital reserves.

The proposal is being made by the European Banking Authority (EBA), which wants the banks to have more funds in reserve to help protect them from any future shocks in the financial markets.

BBC business editor Robert Peston said banks may struggle to raise the money.

Slovakia's failure to ratify eurozone bailout expansion "no big drama": EU official

BRUSSELS, Oct. 12 (Xinhua) -- The European Union (EU) on Wednesday called on all parties in the Slovak parliament to rise above short-term politics, and support bolstering the eurozone's safety net European Financial Stability Facility (EFSF) in their next vote this week.

In a joint statement by European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, the two leaders urged Slovak parties to seize the next opportunity to ensure a swift ratification of expanded powers for the EFSF.

German exporters shrug off crisis as shipments rise

German exports rose in August for the first time in three months.

Shipments grew 3.5% over the month, according to seasonally adjusted data from the Federal Statistics Office.

About 90.5bn euros ($122.9bn, £78.5bn) of goods were exported. Imports were unchanged at 76.7bn euros.

Eurozone bailout fund faces key Slovakian vote

Slovakia faces a key vote later on measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis.

With one coalition party vowing to abstain, the goverment looks set to lose the vote, but may keep trying.

After Malta approved the plans late on Monday, Slovakia is now the last of the eurozone's 17 member states to vote.

Euro crisis: a torrent of words, but no clarity

Europe can't stop talking. Take yesterday. The German Chancellor, Angela Merkel, was in Brussels. Greece, she said, must remain part of the eurozone and get "a chance to get back on its feet".

Of course, to state the ambition that Greece should stay in the eurozone is the easy part. The more important questions, however, are these: Does Germany believe a Greek default inevitable? And, is Germany preparing a plan to manage such a default in the weeks ahead?

Merkel to hold talks on eurozone crisis

BRUSSELS — German leader Angela Merkel was to hold talks at the European Commission Wednesday amid efforts to contain the eurozone debt crisis, as markets reacted nervously to an EU plan to help troubled banks.

The talks come after two days of negotiations between EU finance ministers ended without a breakthrough and as Athens was again denied the next eight billion euro ($10.7 billion) tranche of bailout cash it needs to avoid default.

Euro Drops to Eight-Month Low Versus Dollar Before Europe Crisis Meeting

The euro fell to an eight-month low against the dollar as European finance ministers prepared to weigh the threat of a default in Greece, which is making fresh budget cuts to secure an international bailout.

The 17-nation currency slid after falling in the third quarter the most since June 2010. The yen rose against the dollar on demand for a refuge as sentiment at Japan’s biggest manufacturers remained below levels seen before a record earthquake struck in March. The Turkish lira approached a record low as inflation slowed in September.

In European Crisis, Experts See Little Hope for a Quick Fix

It has happened time and again in recent months as Europe’s debt crisis has played out. Stocks stage a strong comeback on expectations that a solution has been found. Then they quickly resume their decline as hopes dissipate, leaving investors puzzled and frazzled.

Yuan Forwards Drop Most in a Week on Euro-Debt Crisis Concern

Sept. 29 (Bloomberg) -- Yuan forwards declined the most in a week on concern European leaders will struggle to contain the region’s debt crisis, dimming the outlook for global growth.

China’s economic growth will slow to 5 percent by 2016, from 9.5 percent last quarter, a Bloomberg poll indicated. The European Commission is resisting a push to impose bigger writedowns on bank holdings of Greek sovereign debt than those previously agreed on, a European official said. China may peg the yuan to the dollar or to a basket of currencies again if there is a global recession, Huang Yiping, Barclays Capital’s chief economist for emerging Asia, said in Beijing today.

European Economic Confidence Declines More Than Forecast

ept. 29 (Bloomberg) -- European confidence in the economic outlook dropped more than economists forecast in September to the lowest in almost two years, reflecting growing concern that the worsening debt crisis could push the euro-area economy into a recession.

An index of executive and consumer sentiment in the 17- nation euro region fell to 95 from a revised 98.4 in August, the European Commission in Brussels said today. That’s the lowest since December 2009 and below the 96 projected by economists, according to the median of 31 estimates in a Bloomberg News survey.

Hope for new approach in euro crisis buoys markets

Hopes that European leaders will consider new ways to fight the debt crisis, including a contained Greek default, reassured investors on Monday, though analysts said more specifics will have to emerge before a rally gains traction.

Over the weekend, European officials said Germany and other rich EU countries are pushing for a new strategy to the debt crisis, which is threatening to take down the eurozone's larger economies.

Crude Oil Rises From Seven-Week Low on Hopes for European Rescue Measures

Oil rose from its lowest in almost seven weeks in New York on speculation that renewed measures by the European Central Bank may alleviate the region’s sovereign debt crisis, supporting economic growth and fuel demand.

Futures reversed losses of as much as 3.4 percent after a euro-region central bank official, who declined to be identified, said policy makers are likely to debate the resumption of covered-bond purchases next week. Saudi Arabia, the world’s largest crude exporter, may cut production to prevent prices falling below $90 a barrel in London, according to HSBC Holdings Plc.

Euro nears 8-mth low on doubts over EU crisis steps

The euro dropped sharply on Monday, moving toward an eight-month low hit last week, as riskier assets were hammered across the board with markets waiting for more details on fresh efforts from European officials to tackle the debt crisis there.

The euro started cautiously higher, bobbing up to $1.3585 amid reports that the E.U. leaders were considering beefing up the European Financial Stability Fund and new measures to ring-fence debt-ridden Greece, Portugal and Ireland.

Euro crisis: three perspectives

WASHINGTON D.C. (CNNMoney) -- George Soros, the billionaire hedge fund manager and philanthropist, warned Saturday that failing to resolve the sovereign debt crisis in Europe could lead to a "real meltdown" of the global financial system.

His remarks came while on a panel with Olli Rehn, the top economic and monetary official at the European Commission, and Gao Xiqing, the head of China's sovereign wealth fund, who also commented on the debt crisis in Europe.

Euro, Asian Stocks Fall on Debt Concern

The euro weakened against most of its major peers, Asian stocks dropped to a 15-month low, while U.S. futures and oil pared gains amid concern European policy makers will struggle to contain the region’s crisis.

Europe’s shared currency dropped 0.7 percent to 102.64 yen at 11:28 a.m. in Tokyo and slid 0.5 percent to $1.3433. The New Zealand dollar weakened for a sixth day and the won slumped 1.6 percent. The MSCI Asia Pacific Index lost 0.8 percent and the Nikkei 225 Stock Average sank 1.6 percent after Japan’s markets resumed after a holiday. Standard & Poor’s 500 Index futures rose 0.6 percent, paring gains of as much as 1.3 percent. Oil was little changed in New York and gold dropped a fourth day.

Banks Splinter on Europe Crisis as Tension Pervades Meetings

Sept. 26 (Bloomberg) -- Wall Street leaders, urging coordinated action from world governments to solve the European sovereign-debt crisis, struggled themselves during four days of meetings in Washington to agree on what’s needed to end it.

The chiefs of firms including JPMorgan Chase & Co., Goldman Sachs Group Inc., Deutsche Bank AG and Societe Generale SA met for three hours at the National Archives on Sept. 23. They differed on which government and private solutions may restore confidence in European debt and banks, and on some elements of regulation, said two participants who spoke on condition of anonymity because the meeting wasn’t public.

Europe's Debt Crisis Casts Cloud Over U.S. Economy

With all the worry over the ailing U.S. economy, Europe's debt crisis may have seemed a long way off.

But not anymore. The faint tinkle of alarm bells a few months ago are now clanging loudly. What began as a crisis in smaller countries, like Greece, Portugal and Ireland, is now creating serious issues in much larger economies like Italy, France and Germany.

Sarkozy told Obama euro zone to end crisis: source

French President Nicolas Sarkozy assured U.S. President Barack Obama on Wednesday the euro zone intends to resolve the euro crisis and support Greece, a French presidential source said.

The source, speaking on condition of anonymity, added the two leaders, who met in New York on the sidelines of the annual U.N. General Assembly session, also discussed the idea of including the Chinese yuan in the International Monetary Fund's special drawing rights (SDRs).

European stocks fall on Greek crisis

LONDON — European equities and the euro fell on Wednesday on fresh concerns over banks' exposure to indebted Greece, but losses were capped by expectations of more stimulus measures from the US Federal Reserve.

London's FTSE 100 index of leading shares slid 0.37 percent to 5,344.07 points in midday deals, Frankfurt's DAX 30 lost 0.98 percent to 5,517.05 points and in Paris the CAC 40 dropped 0.87 percent to 2,958.16.

Euro bonds are not the answer

Euro bonds are not the answer to the region’s raging financial crisis. The euro countries aren’t going to agree to guarantee each others’ debts in time to solve it. And, once it is over, neither euro bonds nor fiscal union is desirable. Market discipline is a better way of dealing with the current crisis as well as running monetary union in the long run.

One can understand why fiscally-challenged governments such as Italy’s and Greece’s are in favor of euro bonds. If they could issue debt which was guaranteed by all their partners in the euro zone, they wouldn’t find it so hard to borrow money. They would then no longer be under such pressure to do unpopular things like tighten their belts and reform their economies. One can also understand why investors are clamoring for the introduction of euro bonds. They would recoup the losses on their investments in fiscally-weak countries’ bonds.

Merkel’s Efforts in Euro Crisis Complicated by Berlin Vote

BERLIN — Chancellor Angela Merkel’s conservative party held its own in the closely watched Berlin regional election on Sunday. But her junior coalition partner is now in a political free fall, complicating her fight to contain the European debt crisis despite the infighting within her bloc.

As expected, Berlin’s popular mayor, Klaus Wowereit of the center-left Social Democrats, secured a third term, and his party received the most votes on Sunday for the Berlin city-state legislature with 28.3 percent, according to preliminary official results. That was down slightly from the 30.8 percent the party won in the previous election in 2006.

ECB's Weidmann Criticizes Political Inability To Solve Euro Crisis

(RTTNews) - European Central Bank policymaker Jens Weidmann on Tuesday said that the politicians' attempts to solve the problems in Europe and to erase the crisis symptoms are weakening people's confidence in authorities and in the deals agreed among institutions.

Geithner to take crisis message to European finance talks

Treasury Secretary Timothy F. Geithner plans to urge European Union finance ministers to step up their crisis-fighting strategy when he meets with them this week in Poland, a euro-area official said.

The official spoke on the condition of anonymity because preparations for the meeting, which takes place in Wroclaw, Poland, on Sept. 16 and 17, are confidential. It will be the first time Geithner has attended a session of Europe’s Economic and Financial Affairs Council, known as Ecofin.

Car industry urges bold action over euro debt crisis

Car industry executives from around the globe urged Europe's politicians to take bolder steps to solve the bloc's two-year-old debt crisis, warning its single currency could be derailed without more decisive action.

The euro was under pressure again on Tuesday with debt markets increasingly pricing in a Greek sovereign debt default and the U.S. government voicing its alarm at Europe's inability to get a grip on the crisis.

Debt crisis in euro zone likely to drive crude oil futures higher

Inventories of crude oil are likely to drop for a second-straight week in the U.S., pushing up oil prices on Tuesday, according to published reports.

In anticipation of a not-yet released report from the U.S. Department of Energy stating supplies dropped by as many as 3 million barrels because of tempests manifesting in the Gulf of Mexico, the energy commodity gained in value in the U.S., which is the globe's top consumer of oil. Bloomberg reports the immediate climb was roughly 2 percent within hours of the opening bell on Tuesday morning.

Euro crisis rains on UK bank reform's parade

Reforms proposed this week could make British bank shares attractive again, ringfenced from investment banking risk, but in the short term they are irrelevant to investors running scared of the euro zone debt perils.

A government-sponsored commission unveiled reforms on Monday that said banks should shield retail units from riskier investment banking and hold billions more in extra capital.

German court rejects challenge to eurozone bailouts

Germany's highest court has rejected a challenge to the country bailing out other nations in the eurozone.

The Constitutional Court was responding to a challenge brought by six prominent German Eurosceptics.

But the court did say the government must seek the approval of the German parliament before providing future assistance.

Swiss Central Bank's Gamble on Euro-Zone Crisis

Even the winners from the crisis are starting to suffer.

The Swiss National Bank has set out to halt the franc's relentless appreciation by pledging to buy unlimited amounts of foreign currency. After seeing the euro move close to one Swiss franc in August from 1.25 franc at the start of the year, the SNB has drawn a line in the sand at 1.20 franc. The euro zoomed 8.8% higher against the franc Tuesday, and the 1.20-franc level held. But this is a big gamble.

Barroso says Europe will avoid return to recession

Europe will not slide back into recession, and the euro remains "strong and resilient", the president of the European Commission has said.

Jose Manuel Barroso added that the Commission and national governments were "doing all it takes" to tackle the debt problems in the eurozone area.

Euro crisis requires market solution

Ultimately the euro crisis remains a pressure cooker building up steam despite the protestations of the currency system being saved by multiple political interventions. Yet after a half dozen supranational attempts to instil order within the sovereign nations of the EU, the markets are clearly not listening. Instead a market solution is now needed.

Many commentators have been suggesting a eurobond as the answer to Europe’s problems. However, given that Germany has so far rejected this option, the alternative needs to be a simple programme that rewards prudent debt levels, while providing a space for errant sovereign states to reorganise their finances.

Euro rate rise less likely after inflation and job data

Eurozone interest rates are likely to stay on hold following the release of official inflation data from Eurostat.

Inflation in the 17 countries that use the euro was 2.5% year on year in August, unchanged from July's figure.

While it is still above the European Central Bank's target of just under 2%, it means that prices are rising more slowly than earlier in the year.

Portugal plans biggest spending cuts for 50 years

The Portuguese government is planning the country's biggest spending cuts in 50 years, a move its finance minister described as "unprecedented".

Vitor Gaspar said the centre-right Social Democratic administration would reduce public spending from the current 44.2% of Portugal's annual economic output or GDP to 43.5% by 2015.

Euro crisis may be over in 2-3 years

VIENNA (Reuters) - The euro zone can conquer its crisis in the next few years if countries get their financial houses in order, the head of the bloc's rescue fund was quoted saying in Der Spiegel magazine, scolding Germans for being too pessimistic about the region's outlook.

"There is good reason to hope that the crisis is over in two to three years' time," European Financial Stability Facility (EFSF) chief Klaus Regling said, according to a preview of the weekly German magazine.

The Eurozone Crisis Then and Now

The expansion of the European financial crisis and its deepening into a political crisis has followed a clear causal chain produced by a series of missed opportunities.

The problem began in early 2009, as a knock-on effect from the 2008 global financial crisis, which had already claimed Iceland as a victim. Iceland was not an institutional issue for the EU, but in 2009 Eastern members of the EU not using the euro began to have balance-of-payments problems. They suffered effective devaluations of their national currencies and sought help from Brussels to resolve their mounting budget deficits. In response, the EU doubled the funds in an existing facility to address balance-of-payments problems.

ECB’s Trichet: Advanced Economies’ Crisis a ‘Formidable Challenge

By Luca Di Leo

The U.S., Europe and other advanced economies face new formidable challenges in dealing with high debt and low growth, European Central Bank President Jean-Claude Trichet said Saturday.

Speaking at the end of a two-day meeting of top central bankers, Mr. Trichet said Europe was particularly challenged by its governance problems. Responding to questions by policy makers such as World Bank President Robert Zoellick worried by Europe’s ongoing debt crisis, he cautioned that overhauling the continent’s institutions is a “complex process… we’re observing history in the making.”

Private investors say biggest risk is the euro

By Alice Ross

The strength of the euro is now the top concern of private investors, according to a survey, surpassing worries over inflation, recession and unemployment.

A crisis in the euro was cited as the economic outcome most feared by 26 per cent of 1,767 people surveyed by Dianomi, the financial marketing group. Just 9 per cent cited a euro crisis as their main concern when the survey was last carried out in January.

Euro-crisis continues to weigh on City

By Peter Ranscombe

FEARS over Germany's credit rating dragged down shares across Europe yesterday, wiping out early rises in London as worries over the European debt crisis began to re-emerge.

All three of the major credit ratings agencies denied rumours of a possible downgrade of Europe's powerhouse economy but that didn't stop Germany's Dax index losing 4 per cent in just 15 minutes.

European Parliament set to get tough on debt crisis

BRUSSELS: The European Parliament will press top officials face to face next week for firmer action to tackle the region's debt crisis, with common bonds and a stronger euro zone rescue fund likely to anchor the debate.

European Central Bank President Jean-Claude Trichet will be questioned on Aug. 29 alongside Eurogroup Chairman Jean-Claude Juncker and Olli Rehn, the European commissioner for economic and monetary affairs, in an extraordinary session of parliament's economic and monetary affairs committee.

Estonian Growth to Slow Due to Euro-Debt Crisis, Ligi Says

Estonia will reduce its growth forecast for next year due to the euro-area’s sovereign-debt crisis, Finance Minister Juergen Ligi said.

Ligi, speaking at a news conference in Tallinn today, didn’t elaborate. The Finance Ministry is due to publish its updated forecast in the middle of September, Katrin Reimann, a ministry spokeswoman, said in a phone interview today.

What Italy tells us about Europe's debt crisis

So we all know Italy is a mess. Its government debt to GDP ratio of 127% in 2010 is the third worst in the OECD (after Japan and Greece). Economic growth is practically nonexistent, with growth surpassing 2% only once since 2001. So is it any surprise that Italy has been tarred as one of the PIIGS and fallen into a debt crisis?

Actually, it is. Yes, Italy has its economic problems, but its government has not been fiscally irresponsible, with a much more conservative record than most other countries in the developed world. In other words, Italy has been gripped by Europe's debt crisis even though it really doesn't deserve to be. That scary fact tells us a lot about where Europe's debt crisis may be headed.

France's Sarkozy to discuss crisis with China's Hu

President Nicolas Sarkozy will seek support from Chinese President Hu Jintao on Thursday for Europe's handling of the euro zone debt crisis, amid signs of growing concern in Beijing.

Chinese Vice Foreign Minister Fu Ying warned on Tuesday that the euro zone could collapse if it did not pull together, just a day after China's leading official newspaper likened the bloc's debt crisis to the Black Death pandemic.

Does Merkel Need a 'Lehman Crisis' to Save Euro?

In 2010 former US Treasury Secretary Hank Paulson admitted that if had not allowed Lehman Brothers to fail, he would have not been able to win approval for the Troubled Asset Relief Plan (TARP) -- the bailout of the country's banks -- from Congress.

“We didn't have TARP without Lehman Brothers," Paulson said.

Could Europe be on the cusp of a Lehman moment?

The euro zone debt crisis has now spread from the sovereigns – after the ECB came in and purchased Italian and Spanish debt – to the banking sector. Although the EU authorities put in place a short-selling ban, which has another week to run, the banking sector is back at the pre-ban levels or in some cases even lower.

Europe’s banks are by and large less capitalised than their U.S. peers. They are also exposed to Europe’s sovereign debt and European loan books. Even if a member state manages to avoid a default, growth is now slowing and we could be in line for another recession that would most likely increase bad debts and further erode banks’ profits.

Greek Crisis Now Worse, Not Better: Analyst

On July 21, EU leaders agreed to a second bailout for Greece, one that was supposed to draw a line under the euro zone debt crisis and give the new government in Athens a chance come to grips with the huge debts it inherited when it was elected.

One month later, and the situation appears to be getting worse rather than better, according to Simon Derrick, the head of currency research at Bank of New York Mellon.

Franco-German call for 'true euro economic governance'

The French and German leaders have called for "true economic governance" for the eurozone in response to the euro debt crisis.

Speaking at a joint news conference, German Chancellor Angela Merkel and French President Nicolas Sarkozy urged much closer economic and fiscal policy in the eurozone.

Merkel and Sarkozy rule out talks on eurobonds

German Chancellor Angela Merkel and French President Nicolas Sarkozy will not discuss the controversial question of eurobonds when they meet on Tuesday to discuss the eurozone crisis, spokesmen for both governments said on Monday.

"Eurobonds will play no role in the talks," government spokesman Steffen Seibert said.

Crisis in euro zone could affect finances

GERRY MORIARTY, Northern Editor

NORTHERN IRELAND: THE EURO zone crisis and the financial pressure on the US economy could have an impact on the North’s public finances, Minister for Finance Sammy Wilson has warned.

The DUP minister issued his warning after an emergency meeting with industry, business and trade union representatives at Stormont yesterday to discuss the convulsions in the global economy.

George Osborne to make statement to MPs on economy

Chancellor George Osborne is to make a statement to MPs on Thursday about the economic situation.

Mr Osborne is taking advantage of the rare summer recall of Parliament, to outline the UK's view on the economy and to answer questions from MPs.

There have been heavy falls in stock markets over recent weeks and fears over some euro members' economies.

Yen, Franc Rise as U.S. Downgrade, Euro Crisis Spur Safety Bid

(Bloomberg) -- The Japanese yen and the Swiss franc strengthened as Standard & Poor's downgrade of the U.S., coupled with a deepening euro-region sovereign debt crisis, lifted demand for the safest assets.

The dollar dropped to a record low against the Swiss franc and fell for a second day versus the yen after S&P lowered the U.S. credit rating one level on Aug. 5. The yen gained versus all but one of 16 major peers as Asian shares slid for a fifth day and European equities dropped for a seventh. Gold jumped to an all-time high, rising to more than $1,700 an ounce. The euro advanced after the European Central Bank started buying Italian and Spanish bonds to curb the region's debt crisis.

Bank of Spain urges euro crisis action, warns on debt

(Reuters) - Spain's central bank urged euro zone leaders to act decisively over new crisis-fighting measures, warning that debt market turmoil risked choking off the country's economic recovery, which slowed in the second quarter.

With yields on Spanish 10-year bonds continuing to trade close to euro era highs at well above 6 percent on Friday amid a broad market selloff prompted by global growth fears, the bank said sovereign debt market tensions were the main risk to the country's outlook.

Europe's money markets freeze as crisis escalates in Italy and Spain

The European money markets have begun to seize up as pressure mounts on the Italian and Spanish banking systems, tracking the pattern seen during the build-up towards the financial crisis in 2008.

The three-month euribor/OIS spread, the fear gauge of credit markets, reached the highest level in two years today, jumping 7 basis points to 40 in wild trading.

Greece’s new bail-out helps, but should have gone further

WHEN Henry Paulson, America’s then treasury secretary, readied a plan to prop up Fannie Mae and Freddie Mac, two teetering housing agencies, in the summer of 2008, he spoke of having a “bazooka” in his pocket. In their response to the sovereign-debt crisis, Europe’s policymakers have tended to favour the peashooter. Their latest salvo in defence of Greece on July 21st produced some favourable initial reports, but the bang has faded. In a strange inversion of the crisis to date, the new bail-out plan seems to have helped the weaker peripherals and hurt the stronger ones.

Debt crisis puts $ on a tailspin

LONDON, July 29 (news agencies and on-line reports): The dollar fell to a four-month low against the yen and hovered near record lows versus the Swiss franc on Friday.

The euro also came under fresh pressure as investors sought safe-haven currencies on mounting sovereign debt problems.

Eurozone inflation unexpectedly slows in July to 2.5%

Eurozone inflation unexpectedly slowed in July to 2.5%, raising questions about when the European Central Bank (ECB) might raise interest rates again.

The preliminary estimate is down from 2.7% in June, according to the European Union statistics office Eurostat.

The July reading comes as a surprise after data earlier this week suggested inflation in Germany, Europe's largest economy, edged up to 2.4%.

Eurozone crisis fears continue as Italy forced to pay higher rates to borrow

The Italian government was forced to pay the highest borrowing costs for 11 years in a bond auction that underscored market fears that a new phase of the European debt crisis is set to be unleashed.

Italy successfully sold €2.7bn (£2.4bn) of 10-year bonds but only after yields had soared to 5.77pc – compared to 4.94pc at the last auction a month ago. Traders argued that last week's €159bn Greek bail-out was not enough to prevent contagion to the bigger European economies.

The Euro Crisis: Big Rescue, Big Doubts

This time is different. Really. That was the message from European leaders after the 11th debt-crisis summit in 17 months produced an additional €109 billion ($157 billion) in loans for deficit-bloated Greece, easier aid terms for Ireland and Portugal, and a retooled bailout fund to prevent markets from trashing Spain and Italy as well. The euro, as well as the distressed countries’ bonds, rallied.

Greece credit rating cut by S&P on 'likely default'

Ratings agency Standard & Poor's has cut Greece's credit rating, saying that eurozone plans to restructure the country's debts would constitute a "selective default".

Under the plans, Greece would be given longer to repay its debts and private investors would take a hit.

S&P said it had cut Greece's rating to CC from CCC.

UPDATE: Schaeuble Says Single Summit Can't Solve Debt Crisis

LONDON (Dow Jones)--The euro zone's debt crisis isn't over and discipline needs to be maintained to stop it spreading further, according to German Finance Minister Wolfgang Schaeuble.

In a letter to party comrades in the Bundestag, seen by Dow Jones Newswires, Schaeuble warned "it would be a mistake to think that the crisis of trust in the euro area can be solved by a single summit," although he argued that last week's decisions by heads of government were "an important step towards overcoming the Greek crisis and the preservation of financial stability."

German consumer confidence slips on euro debt crisis worries

BERLIN — A new survey finds that German consumer confidence is slipping amid unease about the potential impact of the eurozone debt crisis.

The GfK research group said Tuesday its forward-looking confidence indicator for August stands at 5.4 points. It is down from 5.5 in July, a figure that GfK revised down from its initial forecast of 5.7.

Greece aid package boosts stock markets

Shares have risen following the eurozone's agreement designed to resolve the Greek debt crisis.

UK and French markets gained more than 1% in morning trading, before slipping slightly, with the FTSE 100 index ending up 0.6% and the Cac 0.7% higher.

Eurozone leaders agreed a new package worth 109bn euros ($155bn, £96.3bn).

Players in a Greek Drama

Not only does he have the power to effectively put a “sell” on Uncle Sam, but on Friday he roiled global markets after he said the Greek rescue package would constitute a limited default on the country’s debt.

The analyst, who is based in London, oversees the 30-person government bonds team inside Fitch Ratings, which could soon downgrade the debt of the United States government from its historical, gold-plated, triple-A rating if politicians in Washington cannot agree to raise the debt limit.

Gold hits record high as euro crisis worsens

(Reuters) - Gold prices hit a record $1,578.50 an ounce on Wednesday as concerns over the euro zone debt crisis deepened, and after minutes to the Federal Reserve's June meeting suggested some members were pondering the possible need for additional easing.

Spot gold was bid at $1,572.99 an ounce at 1203 GMT against $1,565.25 late in New York on Tuesday. U.S. gold futures for August delivery were up $11.30 an ounce at $1,573.60, also off a record $1,579.70.

Gold is set for an eighth consecutive day of gains, something it has not achieved since mid-October 2006, when it rose for nine days in a row.

Yuan Weakens Most in July on Growth Concern, Euro Debt Crisis

China’s yuan dropped the most this month as concern growth in Asia’s largest economy is slowing and Europe’s debt crisis is worsening damped investor sentiment.

Data tomorrow will show the Chinese economy grew 9.3 percent last quarter, the least in almost two years, according to a Bloomberg survey. Twelve-month yuan forwards dropped by the most in four weeks after European finance ministers declined to rule out a temporary default on Greek bonds yesterday, struggling to contain the region’s debt crisis as bond yields in Italy and Spain surged. Annual Inflation reached a three-year high of 6.4 percent in June, a July 9 report showed.

Eurozone ministers meet to discuss debt concerns

Eurozone finance ministers are due to meet to discuss the continuing debt woes of some member states, with fears growing over Italy's situation.

The talks come amid growing concerns that Italy may be the next eurozone country to require a European Union led bail-out.

ECB raises eurozone interest rates to 1.5%

The European Central Bank (ECB) has raised interest rates to 1.5% from 1.25% in an attempt to cool inflation in the 17-nation eurozone.

ECB president Jean-Claude Trichet said that inflation, now 2.7%, was likely to remain "clearly" above the ECB's 2% target over the coming months.

German Exports Increase More Than Forecast as Nation Weathers Euro Crisis

German exports increased more than economists forecast in May, adding to signs the sovereign debt crisis isn’t harming Europe’s largest economy.

Exports, adjusted for work days and seasonal changes, increased 4.3 percent from April, when they fell 5.6 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 1.5 percent, according to the median of 12 estimates in a Bloomberg News survey. Imports rose 3.7 percent from the previous month.

Iceland's Euro Bid Hinges On Greek Crisis Outcome, Central Banker Says

AIX-EN-PROVENCE, France -(Dow Jones)- Policymakers in Reykjavik are closely watching the unfolding of the Greek debt crisis, for its outcome will be a key element of Iceland's decision to join the euro, the head of the country's central bank, Sedlabanki said, as he urged the currency bloc to improve its economic governance.

"The outcome of the Greek crisis will affect the attractiveness of being a member of the euro area," Mar Gudmundsson told Dow Jones Newswires in an interview here late Friday. "A monetary union needs much more economic integration, some elements of common economic and fiscal policy and a common financial stability framework. One needs to match an economic union with the monetary union for it to work," he added.

EURO GOVT-Bunds dip before ECB, Italy yields reflect crisis

LONDON , July 7 (Reuters) - German government bond yields were steady on Thursday, supported by fears the euro zone debt crisis was intensifying, with a solid Spanish bond sale doing little to relieve tension.

Two-year German yields were off lows hit in the previous session, with strategists saying a move to close to 1.54 percent looked overdone given the European Central Bank is poised to raise interest rates to 1.5 percent later in the day.

Euro Zone Status Quo 'Untenable': Economist

The current situation in the euro zone is "untenable" and policymakers will have to either pursue greater European economic integration or see countries exit the euro, George Magnus, Senior Economic Advisor, UBS told CNBC Tuesday.

"Every crisis takes us closer to the point where an existential decision has to be taken," Magnus said. "This sequential crisis that the euro zone has been through since the beginning of last year must be resolved."

Political incentives and the euro crisis

Several prominent economists have pointed out that some of the troubled countries in the Eurozone periphery may need to restructure their sovereign debts as soon as possible. Although debt restructuring will probably not spare these countries from a period of economic austerity and stagnation, it will at least provide some hope for the medium-term future. After some of the burden of the debt has been lifted, these countries will be able to channel more resources to economic recovery and will become more attractive destinations for investors. And, in any case, the sovereign debt of some of these countries, especially Greece, has reached such proportions that it is hard to see how it can be repaid without a significant restructuring.

Greek, Spanish, Italian Bonds Gain Amid Debt-Crisis Optimism

July 1 (Bloomberg) -- Greek two-year notes led gains by securities from the euro region's most indebted countries as speculation that the Mediterranean nation will default subsided, boosting demand for higher-yielding assets.

German 10-year government bonds snapped four days of declines as data showed growth in euro-region manufacturing slowed for a third month in June. Spanish bonds gained for a fourth day after Greece's lawmakers approved a budget-cutting package and banks lined up behind debt-rollover plans. Ten-year German yields have jumped 18 basis points this week, the biggest five-day increase in seven months.

Greece's economy to slump before rebounding on economic reforms: Finance minister

ATHENS - Greece's economy will slump further before starting to expand again next year thanks to fast injections of EU funds and reforms to spur growth, new Finance Minister Evangelos Venizelos told Reuters on Friday.

In his first interview to international media since being appointed last month, Venizelos pledged to accelerate efforts to sell off state companies and crack down on tax evasion, saying violent anti-austerity protests masked a high level of political consensus on the need to reform and keep Greece in the euro zone.

Contagion biggest threat to insurers in Greek crisis

(Reuters) - Greece's debt crisis has stirred fears of a wider euro zone sovereign credit meltdown that would be damaging for insurers, although the sector should be able to easily withstand any losses on its Greek debt, analysts said.

Most European insurers' holdings of Greek government bonds are small relative to their overall portfolios, enabling them to absorb any losses in the event of a default or restructuring, according to ratings agencies and equity analysts.

German unemployment rate dips to 6.9 percent in June as economy booms

BERLIN — Germany’s unemployment rate dipped to 6.9 percent in June as the booming economy bolstered the country’s labor market further, official figures showed Thursday.

The unadjusted jobless rate was down from 7 percent in May, and the number of people registered as unemployed was 2.893 million — the lowest figure for June since 1992. The total was 67,000 lower than the previous month and down 255,000 from a year earlier.

Dr. Alexander Mirtchev Discusses the U.S. Government's Measures to Deal With the Global Economic Crisis and Stresses the Imperative for Viable Exit Strategy on the Riz Khan Show

Dr. Alexander Mirtchev, founder and president of Krull Corporation, discussed the U.S. government's actions in response to the crisis in the economy on Al-Jazeera's Riz Khan Show. The complexities created by the precarious economic and financial situation are exacerbated by what is perceived as a "failure of the reigning 'social contract'" between Main Street, Wall Street and the U.S. government. "To put it simply, Main Street was relying on Wall Street to go about its business, with the government perceived as the arbiter and even guarantor of sure returns. Presently, the collapse of this 'contract' is giving rise to calls from different quarters for overhauling the whole system," according to Dr. Mirtchev.

ECB's Paramo says euro crisis won't end soon

The euro zone's debt crisis is far from over, European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo said on Friday and called for private sector help to ease Greece's debt problems.

On Thursday European Union leaders promised more money to help Greece stave off looming bankruptcy, provided its parliament enacts an austerity plan finalised in fraught last-minute talks with international lenders.

Europe hopes for ‘bail-in’ banks for Greek rescue

European officials have persuaded Greece’s politicians to squeeze more tax dollars out of the rich, the poor and even themselves. Now they have to prevent the country’s bondholders from pulling their money and running for the exits.

In a continent-wide series of sensitive talks over the next week, finance officials in Germany, France and other European countries will try to coax banks, pension funds and others who hold Greece’s bonds to keep their money invested in a nation regarded as an increasingly poor risk.

Samruk-Kazyna plans to acquire up to 25% in Alliance Bank, BTA Bank, Narodny Bank and Kazkommertsbank, advisor to Kazakhstan prime minister says

Samruk-Kazyna, a Kazakhstan state-owned fund, is planning to acquire up to 25% of the ordinary voting shares in the four largest banks in Kazakhstan, said Alexander Mirtchev, one of the directors of Kazyna Fund and advisor to the prime minister of Kazakhstan.

Deposits may shield Aussie banks from Greek debt crisis fallout

The Greek debt crisis is increasing the cost of funding for Australia's Big Four banks, but credit market experts say rising deposit rates are counteracting the threat.

As the sovereign debt crisis in Europe continues to drag on with a 12 billion Euro tranche of Greek bailout money delayed until next month at the earliest, the heads of Australian banks have voiced concerns.

Europe's crisis is not a euro crisis: Siemens CFO

WASHINGTON (MarketWatch) -- The fiscal troubles sweeping the capitals of the euro zone are unrelated to the 17-member currency, Joe Kaeser, chief financial officer of German industrial company Siemens AG (SI, SIE.XE), said in an interview with Dow Jones Newswires at The Wall Street Journal's CFO Network conference on Tuesday.

"We need to make sure we do not confuse the crisis of economies with a crisis of currency," he said. "The euro is fine. It's not in crisis."

BOE's Posen Says Euro Currency Will Get Through Current Crisis

June 20 (Bloomberg) -- Bank of England policy maker Adam Posen said the euro has been a success "as a monetary unit" and it will get through the crisis in the currency region.

"The euro has been a success as a monetary unit and as a monetary union, but people expected too much from it and it was never going to take the global role that some fantasized for it," Posen said at a conference in Madrid today. "The euro will get through it," he said, referring to the region's debt crisis.

SNB's Jordan: Worse euro crisis may hit Swiss: report

(Reuters) - Big Swiss banks have very little direct exposure to Greece but Switzerland may be affected if a Greek default destabilizes the whole financial system, the Swiss National Bank's vice chairman told a newspaper on Sunday.

In remarks similar to those he made at the SNB's monetary policy review on Thursday and in the SNB's annual Financial Stability Report, Thomas Jordan said a domino effect brought about by a Greek debt restructuring likely would cause further upwards pressure on the Swiss currency.

Battle lines drawn for a eurozone debt war

While Molotov cocktails burn on Athens’ streets, more vitriolic battles yet are blazing over Greece’s debt crisis behind the scenes, as financial markets and eurozone politicians fight their ground .

War has broken out in Greece. But the battleground is not on the streets, where rioters are venting their fury at planned spending cuts and painful social austerity. It’s on stock market floors and in the political corridors from Athens to Berlin and Brussels. The debt-ridden Mediterranean country is fighting for its future while, for the rest of Europe, Greece has become the frontline for the battle to save the euro.

Sarkozy urges European partners to reach compromise fast on euro crisis

PARIS — French President Nicolas Sarkozy on Thursday called on other European Union leaders to stop quarreling about how to help struggling Greece and instead display the unity that has underpinned the euro currency since its creation over a decade ago.

“What we need most today, is unity,” Sarkozy said. “We have to leave the national fights behind us to find our sense of common destiny again.”

Ten points on the Euro crisis

1. The EU leaders are at loggerheads over the issue: should Greece be allowed to do a soft, controlled, partial default on its debts which forces banks and pension funds to lose some of the money they lent to Greece? Germany says yes, the European Central Bank chief Jean-Claude Trichet says no.

2. The question arises because the first Greek bailout, 110bn euros, did not work. Greece now needs another 85bn euros from the EU/IMF, and has to sell at least 30bn euros of assets on top of that because it cannot borrow in the global markets.

French Bank Links to Euro Crisis Add Sovereign Worry, IMF Says

French banks’ exposure to Europe’s sovereign debt crisis has heightened concern about France’s own top-notch AAA credit rating, according to the International Monetary Fund.

Moody’s Investors Service said today in a separate statement that it may cut the credit ratings of BNP Paribas SA, France’s biggest bank, and local rivals Societe Generale SA and Credit Agricole SA because of their investments in Greece.

US Money-Market Funds Exposed To Euro Crisis Via Bank Paper

NEW YORK -(Dow Jones)- U.S. money-market funds' significant exposure to European banks underscores the threat that the risk of a Greek sovereign default poses to global financial markets.

As of February, U.S. money-market funds' holdings of short-term securities sold by European banks--including commercial paper, asset-backed securities and certificates of deposit--stood at 44.3% of their total assets, according to a recent research report from Fitch. The ratings agency said it will release updated data in several weeks.

ECB signals eurozone interest rates are set to rise

Earlier on Thursday, the ECB kept rates unchanged for the second month in a row, after increasing them in April for the first time in almost two years.

The central bank wants to raise rates again in July to curb inflation in some of the eurozone's 17 member states.

But it has to balance that against the need to leave rates low to boost growth in nations such as Greece and Portugal.

Germany at odds with ECB over Greece

In an open letter to European and international authorities, finance minister Wolfgang Schaeuble said: "Any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors."

He warned that if Greee does not get more funding before mid-July, "we face real risk of the first unorderly default within the eurozone".

Eurozone consumers keep shopping despite debt crisis

Retail sales in the 17 countries that use the euro rose more than expected in April, despite the debt crisis and an interest rate rise.

Retail sales rose 0.9% in April, compared with the previous month, the statistics office Eurostat said.

The increase was much bigger than had been expected, and made up for March's 0.9% decline.

Economic Crisis 'Successfully Exited'

HELSINKI—The euro zone's economic crisis is over and it is now enjoying a broad-based recovery, Bank of France Governor Christian Noyer said Monday.

"There are increasing signs that the economic recovery is on track," Mr. Noyer told a financial markets conference, pointing to a "brilliant" first quarter and strong business sentiment indicators. He added that he considered that financial conditions are now "favorable" and that there is no sign of credit rationing as demand for funds improves. "All in all, we have strong reasons to believe that we successfully exited the economic crisis."

Trichet seeks single EU finance ministry

(FT) -- Jean-Claude Trichet, president of the European Central Bank, has called on the European Union to take bolder steps towards controlling fiscal and economic policies, suggesting a long-term goal of establishing a European ministry of finance.

Redwood: The origins of the euro crisis

The euro crisis is following a predictable path. The bills have increased greatly, and are being passed around in the hope the problems will go away.

Unfortunately the countries in trouble are spending too much and earning too little. That has to be tackled, as there will be limits to the patience and the amount of money the EU and the IMF can throw at this problem.

Tory blasts ECB chief's dismissal of euro crisis

A claim by the president of the European Central Bank that the euro is not in crisis has been branded "absurd" by a Conservative MP.

ECB boss Jean-Claude Trichet was speaking in Aachen, Germany, after receiving the Charlemagne Prize for services to European understanding.

German chancellor says European debt crisis no euro problem

Singapore - The euro is a stable currency although high debt levels in some eurozone countries have evoked uncertainty about it, German Chancellor Angela Merkel said Thursday.

'I tell you very clearly: We don't have a euro problem in Europe,' she said at a forum in Singapore. 'Rather we have a debt problem to overcome.'

Currency Guru Stephen Jen Gives 4 Reasons The Euro Crisis Will Only Get Worse

Can't get enough Eurozone crisis? We've got you covered with the most recent commentary from Stephen L Jen, the former Morgan Stanley currency guru who's know running SLJ Macro Partners.

He spells out four non-cliche reasons why the situation in Europe is so challenging, and will only get worse.

Greece: Political Leaders To Meet On Economic Crisis

ATHENS (Dow Jones)--Greece's political leaders are due to meet Friday in a fresh bid to reach consensus on the country's economic crisis, amid growing fears of early elections and new worries of a potential Greek default.

The meeting, scheduled for 0930 GMT and called by Greece's president at the behest of Prime Minister George Papandreou, will include the heads of the four opposition parties and comes just days after similar talks failed to find common ground.

Federal Review Finds Rules to Live Without

WASHINGTON — The Obama administration said on Thursday that it would rewrite hundreds of regulations to save businesses and consumers hundreds of millions of dollars a year, the first fruits of a review process announced in January.

To highlight the effort, the administration announced it had repealed an environmental regulation that classified milk as a kind of oil that required elaborate safeguards to prevent spills that might contaminate waterways.

Europe faces hostile market over debts

# Geoffrey T. Smith and William Horobin
# From: The Wall Street Journal


THE European debt crisis loomed larger again today as officials worried that financial markets could thwart efforts to get countries such as Greece back on even fiscal footing.

Moody's Investors Service added to those concerns, warning that a Greek debt restructuring could affect the credit ratings of other European governments and would probably also lead to rating downgrades for Greek banks.

"The full impact on Europe's capital markets would be hard to predict and harder still to control. The fallout would have implications for the creditworthiness (and hence the ratings) of issuers across Europe," the Moody's report said.

The US dollar could be almost dead in 15 years

This week, the World Bank published a report predicting the demise of the US dollar as the major reserve currency by 2025. The transition will be driven by emerging market growth rates of 4.7% a year, compared to only 2.3% for developed countries. Six countries, Brazil, China, India, Indonesia, Russia, and South Korea, will account for half of the world economy by then.

Russia To Join OECD Anti-Bribery Group

by Tatiana Smolenskaya, Tax-News.com, Moscow

Russia has been asked to join a key Organization of Economic Cooperation and Development (OECD) group committed to the fight against bribery, and to accede to the Organization's Anti-Bribery Convention, a move seen as an important step in Russian membership negotiations.

Letters were exchanged between OECD Secretary General Angel Gurría, the Russian First Deputy Minister of Foreign Affairs Andrey Denisov, and the country's Minister for Economic Development during the OECD Ministerial Council Meeting on May 25, formally inviting Russian participation in both the OECD’s Working Group on Bribery and the Convention.

Inflation hits a record high in Vietnam

Inflation rates have reached a frightening level in Vietnam after extra currency flooded the market causing the domestic demand to shoot up. The devaluation of the Dong (national currency of Vietnam) did not help either. The current inflation rate in Vietnam is the highest in the last 22 months.

The Vietnam General Statistics Office informs that the inflation in December 2010 is the highest since Feb 2009. The increase in prices has been 11.75% compared to Dec 2009. Cost of things has increased compared to even last month. According to International Monetary Fund (IMF), Vietnam should aim for an inflation rate of 3%-4%.

Homebuilders Are Missing Out on the Economic Recovery

By DEREK KRAVITZ, AP Real Estate Writer

WASHINGTON -- For homebuilders, it hardly feels like an economic recovery.

Nearly two years after the recession ended, the pace of construction is inching along at less than half the level considered healthy. Single-family home building, the bulk of the market, has dropped 11% in that time.

Builders are struggling to compete with waves of foreclosures that have forced down prices for previously occupied homes. The weakness is weighing on the economy: Though new homes represent a small portion of overall sales, they have an outsized effect on jobs.

Focus Washington: Alexander Mirtchev, Krull Corporation

U.S. Unemployment Falls in 39 States in April

By JEANNINE AVERSA, AP Economics Writer

WASHINGTON -- The unemployment rate fell last month in more than three-quarters of nation's states, evidence that companies are feeling more confident about the U.S. economy.

The Labor Department said Friday that the unemployment rate dropped in 39 states in April. That's an improvement from March when 34 states had reported decreases. The rate rose in three states and the District of Columbia. It was unchanged in eight states.

A look at economic developments around the globe

By The Associated Press

LONDON -- Stock markets and the euro fell on a report that Greece may not get the next installment of its international rescue loans. Weak U.S. economic data further weighed on sentiment.

Jean-Claude Juncker, the chairman of the Eurogroup, said in Luxembourg that the International Monetary Fund may have to hold back the next tranche of its funding for Greece, according to an analyst.

Greek leaders fail to reach austerity consensus

ATHENS — Political leaders in Greece on Friday failed to find common ground on austerity measures needed to avert a new debt crisis, party chiefs who attended the emergency talks said.

"Sadly, some people have placed their posts above Greece," George Karatzaferis, leader of the nationalist Laos party, told reporters after the meeting between the country's main parties and President Carolos Papoulias.

European Economic Confidence Worsened in May on Debt Crisis

May 27 (Bloomberg) -- European confidence in the economic outlook weakened for a third straight month in May as the region's worsening debt crisis and surging commodity costs clouded growth prospects.

An index of executive and consumer sentiment in the 17- member euro region slipped to 105.5 from 106.1 in April, the European Commission in Brussels said today. Economists had forecast a drop to 105.7, the median of 27 estimates in a Bloomberg survey showed.

Could Japan’s Debt Lead to a Crisis?

Who would save Japan in a sovereign debt crisis? Ideally, it won’t have one. But given the country’s terrifying challenges, some senior Japanese financial executives and government bureaucrats are quietly considering a doomsday situation. In a theoretical credit collapse, even China could come to the rescue.

Greeks hold crunch austerity talks amid aid threat

ATHENS - Greece's prime minister held talks with opposition leaders in a last-ditch attempt to win their support for more austerity and free up EU/IMF aid needed to avert a debt default.

Financial markets were spooked when Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, warned that the International Monetary Fund could withhold its contribution to a €12 billion ($A16 billion) aid tranche Greece needs next month to service its massive debt mountain.

In U.S., Greek and Irish officials put forth plans for economic recovery

By Howard Schneider

Can America's senior citizens rescue the Greek economy? Will Google and other multinationals prop up Ireland?

That's the pitch top officials from the two countries brought to Washington last week as they sought to help their crisis-stricken economies move beyond bailouts and budget-cutting and toward some semblance of recovery.

Euro Crisis Looms for Group of 8

PARIS — The euro crisis hangs over the meeting of the Group of 8 industrialized countries that begins on Thursday, with Greece’s renewed problems destabilizing markets, worrying Washington and influencing the debate over who should be the next managing director of the International Monetary Fund.

Arab nations big worry for G-8 leaders

Arab uprisings are pushing aside deficits and austerity as the biggest worry of the leaders of the Group of Eight industrialised nations this year.

US President Barack Obama and the other leaders will seek to marshal their combined economic might behind the grass-roots democracy movements that have swept the Arab world - and driven away tourists and investors.

U.S. Personal Income And Spending Both Rose 0.4% In April

(RTTNews) - U.S. personal income and spending figures released by the Commerce Department on Friday will come as little surprise to most market watchers, with the key benchmarks all increasing in line with economists' expectations.

Global recovery gathers steam but faces negative risks

The global recovery is becoming broader-based and more self-propelled, the OECD says, but the risks are mostly on the negative side.

In its latest Economic Outlook it forecasts world gross domestic product growth of 4.2 per cent this year, rising to 4.6 per cent next year.

World trade is back above its pre-crisis peak and expected to gather pace, from growth of 8.1 per cent this year to 8.6 per cent next year.

"Most risks are on the downside, however, including further increases in oil and other commodity prices which could feed into core inflation, a deeper slowdown in China, an unsettled fiscal situation in the United States and Japan, and renewed weakness in housing markets," OECD chief economist Pier Carlo Padoan said.

The weaker peripheral members of the euro zone are not out of the financial woods yet, either. "A concern is that if downside risks interact, their cumulative impact could weaken the recovery significantly, possibly triggering stagflationary developments in some advanced economies."

The OECD forecasts New Zealand's GDP to grow just 0.6 per cent this year but 4.1 per cent next year as the rebuilding of Christchurch gets under way.

But it notes large uncertainties around those forecasts. "Renewed carry trade may push up the value of the currency, the large external debt position carries risks in a still volatile global financial market, persistently high house prices are vulnerable to correction and reconstruction may experience delays."

It estimates the country's potential (or sustainable non-inflationary) growth rate to be just over 2 per cent a year for the next 15 years, driven more by productivity growth than employment growth.

Among advanced economies generally it worries about high unemployment becoming entrenched especially as governments wrestle with unsustainable levels of public debt. It worries, too, about the risk of a substantial rise in oil prices if the political instability in the Middle East and North Africa spreads.

That would magnify the adverse effects on incomes and demand of the oil price rise which has already occurred, as well as increasing the upward pressure on inflation. Another risk is that the adverse consequences of the disaster in Japan could prove greater or more prolonged than expected.

Yet another is that the tightening under way in China as it confronts inflationary pressures will lead to a harder landing than the easing to 9 per cent growth in the OECD's central forecasts।

By Brian Fallow

www.nzherald.co.nz

Crisis-hit Ireland backs Lagarde to lead IMF

Ireland, whose economy has been among the worst hit by the global financial crisis, yesterday threw its support behind French Finance Minister Christine Lagarde to become the next director of the International Monetary Fund.

The move comes as something of a surprise, given French-Irish tensions over the terms of Ireland's EU-IMF bailout.

Ireland's support adds to the growing European momentum for Lagarde to succeed her countryman Dominique Strauss-Kahn, who quit last week after he was accused of attempting to rape a New York hotel maid.

Lagarde called a Paris press conference for today, amid increasing speculation that she will formally announce her candidacy.

However, the representatives of major developing nations on the IMF's board issued a joint statement yesterday urging the lending agency to abandon the practice of always choosing a European to head the IMF.

The decision on the next IMF leader will be made by the 24-member executive board, whose officials represent the 187 IMF member countries.

The executive directors representing Brazil, China, India, Russia and South Africa said they wanted to see the election of the next IMF chief be "truly transparent" and merit-based.

"This requires abandoning the obsolete unwritten practice of convention that requires that the head of the IMF be necessarily from Europe," the five executive directors from developing nations said. In the IMF's history, it has always been headed by a European while an American has always been head of the World Bank.

"We feel it is outrageous to have the post reserved for a European," said Nogueira Batista, IMF executive director from Brazil and one signatory of the joint statement. "We want it to be a truly open process, not just in words, but in reality."

Batista said his country and the other nations who joined in the statement have not picked a candidate yet. He said they will be watching to see the candidates emerge during the nomination process over the next three weeks.

The top three candidates in terms of the support they receive from the IMF board will go into a final round of interviews with the IMF board. The IMF has said it hopes to have the job filled by the end of June.

"We hope to have a managing director selected who is the best person for the job irrespective of nationality," Batista said.

Licinda Creighton, Ireland's minister for European affairs, said she believed that Lagarde would be an "excellent candidate, she's eminently qualified, and if she's nominated we're likely to support her."

Ireland's influence on the choice of the next IMF chief is limited, but European heavyweights including Germany and Britain have already backed Lagarde, making her the European frontrunner for a job she has yet to declare any interest in.

French government spokesman Francois Baroin said China is "favourable" to Lagarde's candidacy to run the IMF, which provides billions in loans to stabilise the world economy.

China's endorsement would provide a big boost to Lagarde. However China's IMF executive director signed the joint statement issued by major developing countries.

The head of the Organisation for Economic Cooperation and Development, Angel Gurria, said choosing a woman to lead the Washington-based fund would benefit diversity.

"That certainly is welcome," he said. The IMF has never had a woman managing director.

"Madame Lagarde herself would be the first one to say it is not a question of simply because you are a woman," Gurria said. "But if it's a formidable woman like she is, well of course then you're talking business."

Gurria, a former Mexican finance minister whose name has also been mentioned in connection with the post, played down suggestions he might run if nominated.

"When you're talking about merit, it's difficult to find somebody with more merit [than Lagarde]," he said। "The Europeans have clearly picked their best and the brightest."

www.nzherald.co.nz