Browsing all articles tagged with Europe

Banks In The Dark Over $15 Billion of Promised Rosneft M&A business

Banks that assist Russian oil company Rosneft finance its $55 billion buyout of rival have been left waiting for their payback a share in $15 billion in asset sales projected to follow the deal.

State oil company Rosneft’s takeover of this year aimed to generate a major oil group producing more oil than however it also tightened the Russian government’s grip on the country’s energy sector.

The asset sales promised by Rosneft Chief Executive Igor Sechin would offload less-profitable businesses to turn the company into the major oil player the CEO has stated he wants it to be. The delay demonstrate Rosneft has a lot on its plate integrating and that the sales are on the back burner.

Rosneft had dangled the juicy divestment mandates at the banks in exchange for a $29.8 billion loan the largest in Russia’s history on good terms, all the lending banks are waiting. We thought asset sales and refinancing bonds would kick start straight following the closing.

Rosneft’s slow motion is annoying the banks as they would earn fat fees from advising the oil giant on the asset sales this year, which would assist boost M&A revenues in an otherwise arid deal making landscape.

M&A activity across all sectors is losing 7 percent in Europe, Africa and Middle East since January partly due to the impact of the euro zone crisis on business confidence.

Banks that uphold big balance sheets throughout the financial crisis have been hoping to use this muscle to win lucrative M&A advisory business from competitor which had to shrink partly to meet tough European capital rules.

Banks frequently use their balance sheets to offer cheap loans to corporate clients to secure higher margin business such as share or bond issues or M&A work.

Big balance sheets helped Deutsche Bank and Barclays to achieve number 2 and 3 rankings in M&A league tables previous year, challenging US rival Goldman Sachs which had the top slot.


Gold Fall, however 2.15 percent Weekly Rise Biggest in a Month

Precious metal turned modestly lower on Friday as some players exited positions ahead of a long US weekend however registered its largest weekly percentage gain in a month, supported by a fall in stock markets and a softer US dollar.

Comments from a Federal Reserve official that dampened talk the US central bank is set to restrain monetary stimulus also underpinned yellow metal prices, which stuck to a fairly tight range.

Spot gold was down 0.23 percent at $1,387.51 per ounce by 2:37 EDT (1837 GMT), slightly lower than $1,390.40 late on Thursday. It remained up 2.15 percent on the week, its largest weekly rise since late April.

COMEX June gold futures closed at $1,386.6 per ounce, drop $5.2 or 0.37 percent and held about those levels in after-hours business.

Bullion got a boost this week from declining equity markets, which in Europe on Thursday posted their largest one day drop in nearly a year. On Friday, US stocks knock down for a third day, putting indexes on track for their first negative week since mid-April.

Robin Bhar, metals analyst at Societe Generale Group in London, a weaker greenback combined with continued QE, some physical buying at the lower levels out to China in particular all of those factors have helped precious metal in the last few days.

QE refers to quantitative easing, or the Federal Reserve’s program of buying almost $85 billion per month in debt to keep US interest rates low and stimulate the economy.

The US dollar extended its decline against the yen and was on track for its largest weekly loss in three years against the Japanese currency. The euro climbed 0.7 percent this week against the dollar its first weekly addition in three periods.

During the US session, precious metal ventured into negative regions with some players reluctant to hang onto a long gold position over the extended Memorial Day weekend in the US, given the newest uncertainty about Federal Reserve policy.

Speculation the Fed would scale back its monetary easing program evaluate on yellow metal this week after Fed Chairman Ben Bernanke stated the central bank could start scaling back its $85 billion in monthly bond purchases in the next few meetings.

But, St. Louis Fed President James Bullard stated on Friday that US inflation would have to pick up before he voted to scale back stimulus.

Bhar said there’s a lot of uncertainty, there’s still no better than 50/50 chance that the Fed will unwind its stimulus or that the economy performs as they expect it will.


IMF, ECB Square off in Europe Severity Debate

An intense debate about Europe’s austerity drive flared back into life on Thursday with leading IMF and European Central Bank officials harshly at odds and Angela Merkel declaring that Germany required superior interest rates.

With the threat of the currency bloc’s break-up retreating; some euro zone officials are saying currently is the time to throttle back on debt cutting drives as calmer financial markets will not react badly.

The International Monetary Fund is also pushing that prescription for both the Britain and euro zone however Germany and the ECB are opposed.

IMF First Deputy Managing Director David Lipton told a conference in London that there is a risk that Europe could drop into stagnation, which would have very serious implications for households, banks, companies and other bedrock institutions.

He further said that to decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth.

However at the same conference, the Economist’s Bellwether Europe Summit, ECB Executive Board associate Joerg Asmussen urged governments to push on with budget consolidation and reforms.

Asmussen said delaying fiscal consolidation is not a simple way out. If it were, we would have taken it; holdup fiscal consolidation is no free lunch. It means superior debt levels and this has real costs in the euro area where public debts are already very high.

The ECB is expected to cut interest rates coming week, even though a quarter-point reduction is unlikely to lift the euro zone economy out of recession.

Lipton said it will perhaps require additional unconventional measures from the ECB, as Asmussen said monetary policy was not an all purpose weapon.

The ECB is in a difficult position, for Germany it would really have to lift rates slightly at the moment, however for other countries it would have to do even more for more liquidity to be made available, she said at a banking conference, in a strangely outspoken comment on central bank policy.


Banking Union a Priority For Lew in Europe

Europe’s economic weakness and financial disorder affect the US economy, Jack Lew, US Treasury Secretary told EU leaders on Monday, stressing the require to enhanced demand and move ahead with a euro zone banking union.

There economy’s strength remains sensitive to events beyond our shores and they have an huge stake in Europe’s health and stability, Lew informed reporters following talks with European Union leaders including European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

Lew further said in this circumstance he was particularly interested in their European partners plans to strengthen sources of demand at a time of growing unemployment, EU forecasts indicate the largest trading partner of the United States will remain in recession for the second year in a row this year.

Lew’s visit also comes shortly following messy negotiations among the euro zone, the Cyprus and International Monetary Fund on a bailout for the Mediterranean island, which in the end forced losses on large Cypriot bank depositors.

In his talks with Van Rompuy and Barroso, Lew highlight the significance of the euro zone moving ahead with plans for a banking union which will engaged handing over supervision to the European Central Bank and drafting bank resolution laws.

This would permit the 17-nation bloc to handle troubles like the resolution of banks in Cyprus more efficiently. Senior EU official said that they discussed the banking union a bit more than other things the Americans are keen for the process to move forward.

The surprise levy on bank deposits over 100,000 euros in Cyprus agreed as part of the country’s bailout has spoiled confidence that Europe will be united in tackling bank problems rather than leaving countries to struggle alone.

If anything, this crisis and recent events in Cyprus have exposed the absolute need to anchor, once and for all a logical scheme that would allow resolving failing financial institutions in an effective, consistent manner and predictable across the European Union.


Gold Fall to Near 4 week Low on US Economic Confidence

Precious gold knock down for a second straight day on Wednesday to strike its weakest in four weeks, with investors switching their money into risky assets for healthier returns on renewed optimism over the US economy.

Gold has slide more than 3 percent since striking a 1 month high in March as fears regarding the debt crisis in Europe subsided and Wall Street rallied on strong US economic statistics, limiting safe haven demand.

Yellow metal jump down as much as 0.8 percent to $1,563.06 per ounce on Wednesday, its lowest since March 8, following initially hitting an intraday day high of $1,576.91 per ounce on bargain hunting. By 0628 GMT, bullion was at $1,565.16 down $10.08 per ounce.

CIMB regional economist Song Seng Wun said that essentially all depends on the flavor of the day. Now he believe sentiment has shifted, maybe with the US economy on a stronger footing, it’s enhancement to be in equities.

Weaker bullion prices dragged down other metals, with silver declining to its lowest since July attracting physical buying from Thailand.

US data on Tuesday demonstrate February factory orders climbed 3 percent somewhat above then expectations.

Spot gold to jump down to $1,562 per ounce.

It was just a day earlier that gold reclaimed the $1,600  per ounce level, increasing $5.20 or 0.3%, to settle at $1,617.90 per  ounce, feeding off less than expected US manufacturing statistics.

Mark O’Byrne, executive director at gold dealer GoldCore said that risk appetite is progressing to pressurize bullion, however the metal’s fundamentals remain sound and smart money will continue to buy on the dip.

Possibly one should take a bit more risk, It is more of a case of people taking capital off the table from precious metal because they are not quite sure where the technical downside is for yellow metal at this point.

Gold future for June delivery jump down $25 or 1.6%, to settle at $1,575.90 per ounce.


Bank of Cyprus Re-opens it’s Banks Under Tight Restrictions

Banks were closed approximately two weeks ago because the government discuss a 10 billion euro which is equal to $13 billion bailout package, the first in Europe’s single currency zone to entail losses on bank depositors.

Bank employees turned up for job early in Nicosia as cash was delivered by armored trucks. At a branch of the second greatest lender, in central Nicosia the Popular Bank of Cyprus, workers were being briefed prior to opening at noon (1000 GMT).

Establishment said that the emergency rules forced to limit extraction and prevent a bank run will be temporary, however economists said that they will be difficult to boost as long as the economy is in crisis.

In Nicosia there was relief that the banks were reopening however some apprehension regarding what might happen.

Cyprus central bank source said that on Wednesday, container trucks full of cash pulled up inside the compound of the central bank in the capital Nicosia to organize for the reopening.

While in all countries that use the euro, Cyprus’s central bank supplies currency for its banks from the European Central Bank in Frankfurt. Administrator’s promised that enough funds will be on hand to cover demand. The ECB did not remarked on reports it had sent extra cash to the island.

A Finance Ministry ruling imposes strict controls limiting cash withdrawals to no more than 300 euros per day and prohibition the cashing of cheques.

The island’s central bank will review all commercial transactions about 5,000 euros and inspect transactions about 200,000 euros on an individual basis. People exit form Cyprus can take only 1,000 euros with them. An former draft of the decree had put the figure at 3,000.


Gold Hold Additions As Upbeat US Data Offsets Europe Uncertainties

Yellow metal float about $1,600 per ounce on Wednesday, because optimistic US data curbed safe haven demand as uncertainties regarding the euro zone’s fiscal health continued to support prices following Cyprus’s unprecedented rescue scheme.

Orders for lengthy US made commodities surged previous month and home prices posted their greatest year on year added in six and a half years in January, the current signs the US economy resume momentum early in the first quarter.

Merrill Lynch, Bank of America decreased its 2013 prediction for precious metal to $1,670 from $1,680 per ounce, a second cut in estimate this month. The bank was long on palladium and platinum in the medium term, expecting shortage for both metals this year.

Cyprus is expected to complete capital control process on Wednesday to prevent a run on the banks by depositors anxious regarding their savings following the country agreed a painful rescue package with international lenders.

Holdings of SPDR Gold Trust, the world’s greatest precious metal’s backed exchange traded fund, were unchanged at 1,221.260 tonnes for the third session on March 26.

Spot gold had climbed $1.23 to $1,599.82 per ounce by 0010 GMT, following diminishing for three sessions.

US gold increased 0.2 percent to $1,599.10 per ounce.

Strategist Xiao Fu at Deutsche Bank said that although the continued impact regarding the Cyprus bailout and its participation of bank deposits, yellow metal struggled to maintain the positive energy created in the first two weeks of March, now looks very probable to move lower, towards $1,580 per ounce.

Gold futures for April delivery climbed $2.50 to $1598.20 per ounce during the Asian trading hours.

The precious metal had plunged $8.80 or 0.6%, on the Comex division of the New York Mercantile Exchange on Tuesday. Greater than expected statistics on US durable goods orders facilitate grounds to dent the yellow metal’s safe haven appeal and contributing to a third straight session turn down.


Cyprus Bank vote Lift an Additional Uncertainty Regarding Euro Membership

The Cypriot parliament’s refusal of a bailout application has missing plans to shore up the country’s banking sector in disorder and opened the door a bit wider to the likelihood of its exit from the currency bloc.

Yet, markets emerged to be taking the dismissal of the 10 billion euro which is equal to $13 billion bailout plan which had at its center a contentious deposit tax, in their stride at current US stocks had typically ended slightly lower on Tuesday, and Asian stocks were split between losses and gains Wednesday.

One cause for the current comparatively optimistic market reaction, is that there is still time for officials to present an additional palatable contract to the Cypriot parliament, prior to bank branches revive on Thursday following an extended holiday.

Vassili Serebriakov, currency strategist at BNP Paribas said that they do not believe that the shift by the Cypriot parliament should be seen as the final, no vote to the bailout, banks in Cyprus are closed until Thursday and they look forward to a new deal to surface over the next 24 hours.

Serebriakov said that the particulars of a new tender stay highly doubtful at this point, while it appears that bank deposits under €100,000 i.e. those sheltered by deposit insurance will possibly not be part of the contribution to the bailout.

That plan would signify a change from the original tender announced on Saturday, when Cyprus and its institutional lenders stated that the country would obtain €10 billion of aid subject to certain conditions together with a €5.8 billion deposit levy.

Although taxing all depositors may be a step too far, analysts pointed to definite factors that set the Cypriot banking sector distant from the rest of Europe and made a conventional bank bailout further difficult.

Those include an overinflated banking system with liabilities and assets valued about 800% of GDP and a public debt of more than 85% of Gross Domestic Product by the end of 2012.


Christine Lagarde Said ECB should Cut Rates, Allow Higher Inflation

The head of the International Monetary Fund said on Friday that the euro zone may require superior inflation in countries like Germany and lower interest rates across the federation to make sure a persistent economic recovery fetch obvious benefits.

Christine Lagarde said as Europe had come a extensive way since previous summer and financial concerns have eased somewhat, further needed to be done to deal with harmfully known underlying issues.

Repeated a call in January for the ECB to keep its monetary policy easy, the ex- French finance minister stated there was scope for a further cut following Frankfurt kept rates at 0.75 percent this week.

Monetary policy should stay accommodative, and they believe that there is still some partial scope for the ECB to cut additional rates, Lagarde stated in comments prepared for a speech delivered in front of an audience that integrated Ireland’s representative on the ECB governing council.

Re-establish a logic of balance means lower inflation and wage growth in the south of the euro zone, however it also might mean permitted somewhat wage growth and higher inflation in countries like Germany, this too is an part of pan European harmony.

Lagarde has recommend countries to press forward with reform and fiscal promises, the swiftness of such modifications was crucial and the right balance was needed among placing the books in order and supporting the recovery.

The IMF chief said European leaders may required to focus less on headline deficit reduction targets to avoid damage economic growth and assist their recession hit people as well as looking for to reassure financial markets.


Europe Steadies Following Italy clears Auction Assessment

Euro bond and shares prices stabled on Wednesday following solid demand at an auction of Italian government debt facilitate calm fears that political stalemate in Rome could reignite the bloc’s debt crisis.

Though paying more than half a point additional interest previous to the vote, Italy sold all 6.5 billion euros of the 5 and 10 year bonds it presented investors two days following an election presented no party a majority and rehabilitated worries over its finances, It could have chosen to sell less.

European stocks and Italian bonds briefly increased following the sale. Bonds of other euro zone countries suffering worries over their creditworthiness were also helped. Save haven German bonds chop down before recouping losses, as the euro dropped having just strike a session high of $1.3114.

Michael Leister, a senior bond strategist at Commerzbank in London said that a very strong auction on all accounts, mutually when we look at the pricing side and the demand side. The Tesoro packed the maximum amount, with 4 billion allocated in the new 10-year which is very strong.

Italian 10-year yields chop down 7 basis points to 4.83 percent in the secondary market, the Bund future was 18 basis points up on the day at 145.09 following the sale.

The reinforcement over Italy was somewhat offset by statistics from the European Central Bank which demonstrate bank lending to euro zone firms contracted for the ninth month in a row in January although its record low interest rates.