June 9th, 2010 07:55:12 GMT

Merkel, Sarkozy: EU Shld Consider EU-Wide Naked Short Sell Ban

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BERLIN (MNI) – German Chancellor Angel Merkel and French President
Nicolas Sarkozy in a joint letter have urged European Commission
President Jose Manual Barroso to speed up efforts to introduce stricter
controls for CDS markets and uncovered short-selling and to consider an
EU-wide ban of these instruments.

“All measures possible in this field should be presented before the
July meeting of the Council of [EU] Finance and Economics Ministers,”
Merkel and Sarkozy wrote in their letter released by the German
government on Wednesday.

The two leaders pressed for more transparency regarding
short-selling positions on stocks and bonds, especially on government
bonds.

“The work of the European Commission should also extend to the
possibility of an EU-wide ban of uncovered short selling of all or
certain stocks or government bonds as well as all or certain uncovered
CDS on government bonds,” Merkel and Sarkozy said in the letter.

Germany’s cabinet recently adopted a bill which widens the
government’s new national ban on uncovered short-selling of certain
assets and makes them permanent.

The draft foresees a ban of naked short-selling on all shares of
German businesses listed on German exchanges. Moreover, uncovered
short-selling is to be prohibited on all bonds issued by Eurozone
federal, regional or local governments.

The bill also stipulates the prohibition of credit default swaps on
government bonds of Eurozone states if there is no hedging purpose
detectable.

Furthermore, the Finance Ministry as well as the financial watchdog
BaFin together with the Bundesbank are to be empowered to prohibit via
statutory order currency derivatives on the euro which have no hedging
purposes as well as derivatives which emulate the short-selling of
German shares and bonds of Eurozone governments.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: MT$$$$,MGX$$$,M$X$$$,M$G$$$,MFX$$$,M$$CR$,M$F$$$]

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June 9th, 2010 07:45:19 GMT

Japan Average Regular Gasoline Price Drops For 2 Wks In Row

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TOKYO (MNI) – The average price of regular gasoline in Japan this
week fell to Y138.3 ($1.51) per liter, or $5.74 per gallon, from Y139.3
last week, posting the second consecutive weekly drop, according to data
released by the Oil Information Center on Wednesday.

But it was still much higher than the Y120.8 price of a year
earlier and the highest since Y141.0 marked on Nov. 4, 2008.

Retail gasoline prices have been on a general uptrend since
mid-January 2009 until the week ended May 29.

The national average price of Y106.0 marked on Jan. 13, 2009 was
the lowest level since the Y100.8 recorded on March 29, 2004.

This week the average price of high-octane gasoline stood at Y149.1
per liter, down from Y150.1 last week. It hit a record high of Y196.0 on
Aug. 4, 2008.

The average price for diesel oil stood at Y116.8 per liter this
week, down from Y117.5 last week. It compared with the record high of
Y167.4 hit on Aug. 4, 2008.

The average over-the-counter price of kerosene for heating stood at
Y1,431 per 18 liters, down from Y1,437 last week. It posted a record
high of Y2,378 on Aug. 11, 2008.

The average home-delivery kerosene price this week was at Y1,549
per 18 liters, down from Y1,555. It hit a record high of Y2,484 on Aug.
11, 2008.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833**

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

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June 9th, 2010 07:45:18 GMT

Japan MOF Noda: Excessive FX Moves Bad But Won’t Guide Rates

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TOKYO (MNI) – Japanese Finance Minister Yoshihiko Noda on Wednesday
said excessive fluctuations in foreign exchange rates would hurt
economic growth and financial system stability but also vowed not to
guide forex rates in any direction.

Markets misinterpreted comments made last year by then-finance
minister Hirohisa Fujii, who sounded as if he would tolerate the
appreciation of the yen against major currencies, Noda told reporters in
his first interview Wednesday after assuming the post the day before.

“He (Fujii) was referring to an international call for avoiding
competition among countries in lowering the value of their currencies,
and he was not talking about guiding exchange rates in a certain
direction. My position is the same,” said Noda.

“Excessive changes (in foreign exchange rates) would have an
adverse effect on the economy and financial stability. Based on this
view, our stance is to watch the markets closely,” he said.

He declined to comment on how current yen exchange rates will
affect Japan’s exports or imports.

Before stepping down as finance minister for health reasons in
January, Fujii made comments that were interpreted to suggest that he
was calling for a stronger yen. He denied it, but did say it was wrong
to look at only the advantages of a weaker yen.

Then-deputy prime minister Naoto Kan, who replaced Fujii, later
said excessive forex moves would not be desirable for Japan’s sustained
growth and suggested that Japanese exporters favor the current dollar
level around Y90.

Noda said the Bank of Japan’s credit-easing and liquidity-injecting
policy measures aimed at fighting deflation “have been flexible and
appropriate.”

Asked about the BOJ’s loose goal that Japan’s annual inflation
should settle somewhere above zero and under 2% in the long term, Noda
replied; “In effect, the BOJ has a guideline for a desirable inflation
rate between zero and 2%, with its mid-point at around 1%. I think it’s
appropriate.”

The BOJ leadership argues that adopting a rigid inflation target
would be harmful to flexible monetary policymaking.

Noda said he agrees with Kan’s view that, on average, the long-term
inflation rate should be a little over 1% in Japan.

“I think the Japanese public’s sense of prices has changed from
favoring sub-zero inflation to just above zero, so if you count this
factor in, the mid-point of a desirable rate should be a little over
1%,” Noda explained. “But I would not impose my idea on the BOJ.”

He said the government and the BOJ share the goal toward overcoming
deflation as a crucial issue for Japan’s self-sustaining economic
growth.

Naoto Kan took over from Yukio Hatoyama, who resigned as prime
minister last week after failing to deliver the key election campaign
promise to relocate a controversial U.S. air base outside of Okinawa.

Kan was elected the 94th prime minister of Japan in parliament on
Friday and formed his cabinet earlier Tuesday. Noda, who served as
deputy finance minister under Hatoyama and was a close ally of Kan’s,
was promoted to head the Ministry of Finance.

msato@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

[TOPICS: M$J$$$,M$A$$$,MGJ$$$,MMJBJ$,MT$$$$]

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June 9th, 2010 07:34:08 GMT

Wow, the joint is really hopping!!!

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Yer right. Lacklustre trade continues. EUR/USD up at 1.1975. 

Added to talk of stops above 1.2010 now getting reports of stops above 1.2000.

Talk also of 1.1900, 1.1950, 1.1975, 1.2000 option expiries today.

EUR/JPY up at 119.60 from early 119.35.

Talk of stops just above 110.00.

Whole lotta talk, just not much action.

23 Comments

June 9th, 2010 07:25:16 GMT

BOE Offers Unltd Usd In 7-Day Repo, Fixed Rate 1.20%

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LONDON ((MNI) – The Bank Of England said Wednsday it was offering
an unlimited supply of U.S. dollars in a 7-day repo operation,
settlement date June 10 maturing June 17 2010.

The Bank said the repo would be at a fixed-rate, with the rate to be
set at 1.23%.

–London Bureau; Tel: +442076341655; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,M$$BE$]

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June 9th, 2010 07:25:14 GMT

ECB: E56.162 Bln Covered Bond Purchases Settled Jun 8

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FRANKFURT (MNI) – The European Central Bank said Wednesday that a
total of E56.162 billion Eurosystem covered bond purchases had settled
as of June 8.

As of June 7, settled acquisitions had totaled E55.995 billion, the
ECB said Tuesday. The ECB plans to buy a total of around E60 billion
covered bonds by the end of June 2010 at the latest.

The program is aimed at revitalizing a market segment that has been
exceptionally hard hit by the financial turmoil.

–Frankfurt Bureau tel.: +49-69-720 142, email: frankfurt@marketnews.com

[TOPICS: MT$$$$,M$$EC$,M$$FI$,M$X$$$,MGX$$$]

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June 9th, 2010 07:17:51 GMT

AUD/USD little firmer

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Underpinned by news of China’s burgeoning exports.  What’s good for China is good for Oz. We’re presently at .8255 from around .8220 when I arrived 3 hours ago.  Just a reminder, Sean overnight mentioned stops placed just above .8290 and sell orders up at .8335/50.

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June 9th, 2010 06:36:46 GMT

EUR/USD ticks little higher

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General sentiment has received a marginal boost from the news that China’s exports surged around 50% y/y in May to around $130 bln.  Shanghai stock index up around 3%.  Global demand for China’s exports is an encouraging sign.

EUR/USD up at 1.1962.  Someone wake me if we happen to get above 1.2000.

5 Comments

June 9th, 2010 06:35:05 GMT

Germany’s Labour Costs Accelerated In 1Q

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FRANKFURT (MNI) – Labour costs in Germany continued upwards in the
first quarter of 2010, as both salaries/wages and social contributions
accelerated, and 4Q’s change was revised up sharply, the Federal
Statistical Office reported on Wednesday.

After a 0.1% uptick in 4Q (revised up from -0.5%), the 0.7%
increase in 1Q left labour costs 1.0% higher on the year after +0.4% in
4Q.

Gross salaries and wages jumped 0.6% in 1Q after stagnating in 4Q,
resulting in an annual rise of 0.8%. Social contributions were up 0.9%
on the quarter and 1.7% higher on the year.

These pay gains have so far had little evident impact on
employment, which has remained remarkably resilient since the onset of
the financial crisis.

According to Eurostat, Germany’s jobless rate fell for the second
consecutive month in April to 7.1%, the lowest of the four largest
Eurozone economies and well below the EMU average (10.1%). The number of
employed jumped by 45,000 in April, adding to the 86,000-gain since
January.

The robustness of the German labour market is in large part due to
labour market reforms, which have enabled employees to work off saved
overtime hours, as well as the government subsidies that have helped
firms hold onto staff instead of cutting their workforce. As these
subsidies are scheduled to be phased out towards the end of the year,
some firms may have to lay off workers to stay competitive.

Falling production and stable employment brought a sharp rise in
labour costs last year. Assuming “only moderate” wage growth of 0.7%
this year and 1.1% next year and a marginal contraction in employment,
the European Commission expects real unit labour costs to fall back 2.6%
by 2011, retracing most of increase in 2009.

The recent pick-up in activity has bolstered hiring and brightened
employment prospects for the near term, surveys suggest.

Firms in the service sector reported further employment growth in
May due to expectations of new work over the next 12 months, with the
pace of job creation reaching its highest level since July 2008, Markit
Economics said, citing the results from its latest purchasing managers
index (PMI). The manufacturing sector also saw additional hiring,
extending its run to three months.

Manufacturers and services providers polled by the European
Commission also revised up their employment outlook last month, with
expected hiring trends in both sectors well above the long-term average.

“Leading indicators, historical evidence and latest promising
recruitment plans all suggest that the current positive trend on the
German labour market will continue in the coming months,” ING Wholesale
Banking senior economist Carsten Brzeski said. “It should only be a
matter of a few months before the unemployment rate returns to its
pre-crisis level.”

– Frankfurt newsroom: +49 69 720 142 Email: frankfurt@marketnews.com –

[TOPICS: M$G$$$,MAGDS$,MT$$$$,M$$EC$]

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