Archive for November, 2011

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SANAA, Nov 30 (Reuters) – At least 26 people were wounded on Wednesday when Shi’ite rebels in northern Yemen shelled Salafi Sunni Islamists, a spokesman for the Salafis said, in the latest round of fighting between the two sides.

The bloodshed on the border with oil giant Saudi Arabia is just one of the internal conflicts threatening a plan to stave off civil war and hold an election after President Ali Abdullah Saleh bowed to 10 months of protests demanding he step down.

It comes as the new prime minister attempts to form a government, in line with the deal brokered by Yemen’s wealthier Gulf neighbours under which Saleh agreed to step aside after a 33-year rule that also saw a civil war in the country’s south.

An official of the Salafis — Sunnis who espouse a puritanical creed with followers in Saudi Arabia — said Houthi fighters attacked his side early on Wednesday in Damaj, 150 km (90 miles) north of the capital Sanaa.

The official, Abu Ismail, spoke by telephone with explosions audible in the background, and said several students of the Dar al-Hadith Sunni religious school affiliated with the Salafis had been injured in the fighting.

The Houthis, members of the Zaidi branch of Shi’ism who draw their name from a tribal leader, effectively control the northern Saada province and are deeply wary of Saudi Arabia’s promotion of Salafi creeds that class Shi’ites as heretics.

Saleh’s forces struggled to crush the Houthi rebellion — which Saudi forces also intervened against militarily — before a ceasefire last year.

(Joseph Logan) Keywords: YEMEN FIGHTING/NORTH

(joseph.logan@thomsonreuters.com)(+971 4 391 8301)(Reuters Messaging: joseph.logan.thomsonreuters.com@reuters.net)

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BEIJING, Nov 30 (Reuters) – China’s central bank cut the reserve requirement ratio for its banks on Wednesday by 50 basis points for the first time in nearly three years to ease credit strains and shore up activity in the world’s second-largest economy.

STEPHEN GREEN, CHINA ECONOMIST AT STANDARD CHARTERED BANK IN HONG KONG:

‘We thought it would come in December. This is a big move — this is easing.

‘We think the PBOC wants to provide more liquidity for December. It’s a clear signal that China is on loosening mode. The next move will be another RRR cut in January. We don’t think they will do anything on interest rates next year.’

QIU GAOQING, ECONOMIST WITH BANK OF COMMUNICATIONS IN SHANGHAI:

‘The move will help to promote reasonable growth in bank credit, and in turn, overall economic development.

‘The central bank is expected to cut RRR as many as five times by the end of 2012.

‘The 0.5 percentage points cut in RRR will release about 400 billion yuan worth of liquidity, and that is set to help bank profitability.’

LIU JUNYU, BOND AND MONEY MARKET ANALYST AT CHINA MERCHANTS BANK IN SHENZHEN:

‘The RRR cut is mainly due to the negative growth of China’s foreign exchange purchase positions, which means the PBOC is unable to expand its monetary base by injecting money by purchasing foreign exchange.

‘Now that the PBOC has started making RRR cuts, the market will expect it to keep doing so in the future. So the market will become quite optimistic about an easing of monetary policy, although an interest rate cut is not expected to occur until at least the first quarter.

‘Bond yields will fall amid the optimism, although money market rates will drop more slowly since those rates are affected by money supply, which needs time to pick up despite the RRR cut.’

ZHIWEI ZHANG, CHINA ECONOMIST AT NOMURA IN HONG KONG:

‘I think the move is partially driven by capital outflows in November. Also, it may indicate that the economy has weakened quite bit and that the official PMI reading does not look very good.’

SHI CHENYU, ECONOMIST WITH THE INVESTMENT BANKING UNIT OF INDUSTRIAL AND COMMERCIAL BANK OF CHINA:

‘It’s a surprising move — the market was not expecting the central bank to (cut RRR) so fast.

‘The move sends a clear message that the central bank is ready to relax its policy stance. The rare capital outflow in October may become a frequent thing next year, and the decision-makers have to adjust to these changes.’

HUA ZHONGWEI, ANALYST WITH HUACHUANG SECURITIES IN BEIJING:

‘It’s the start of a relaxation cycle, and the central bank is expected to take more steps.

‘The economic slowdown is there, and capital inflows are set to fall further, and many banks are finding liquidity shortages.

‘However, I still don’t think China will cut benchmark interest rates in the coming months because that would mark a fundamental change rather than a fine-tuning.’

(Reporting by China newsroom; Editing by Don Durfee)

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DUBLIN, Nov 30 (Reuters) – Banks based in Ireland suffered a near 3 billion euros outflow in deposits in October, reversing two months of inflows, as the deepening euro zone debt crisis spooked some savers, central bank data showed on Wednesday.

Irish banks, including local units of foreign banks, had nearly 350 billion euros in deposits from residents and non-residents at the end of October compared to 352 billion euros at the end of September.

The annual rate of deposit decline in Ireland ticked up to 11 percent in October from 10.5 percent the month before as insurers and pension funds upped their withdrawals.

Irish consumers, companies and pension funds have been withdrawing cash from Irish-based banks for the past year but the rate of decline in household deposits eased to 4.5 percent year-on-year in October after falling 4.7 percent in the previous month.

The rate of decline in deposits among pension funds, insurers and non-bank financial insitutions increased to 25 percent year-on-year in October from 22.9 percent in September.

Ireland’s government is hoping the latest recapitalisation of its banks, which was completed in July, will restore investor and customer confidence, reverse deposit outflows and reduce the sector’s reliance on loans from the European Central Bank (ECB).

Overall, banks based in Ireland had 100.9 billion euros of outstanding loans with the ECB at the end of October, of which 71.5 billion was held by banks servicing the local economy such as Bank of Ireland, Allied Irish Banks and Ulster Bank, up from 71.1 billion a month ago.

After years of reckless lending, Irish banks have sharply cut the supply of credit to consumers as they seek to maintain their capital bases. The annual rate of decline in loans to households eased slightly to 3.9 in October compared to 4.0 percent a month earlier. ($1 = 0.693 Euros)

(Reporting by Conor Humphries; Editing by Catherine Evans) Keywords: IRELAND ECONOMY/CREDIT

(conor.humphries@thomsonreuters.com)(+353 1 500 1518)(Reuters Messaging: conor.humphries.thomsonreuters.com@reuters.net)

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The New Zealand dollar extended its gains today as the positive sentiment continues to reign the Forex market, bolstering the demand for the currencies linked to growth.

Italy auctioned its debt today and the results were quite good, at least nothing compared to the disastrous outcome of the German auction. There is the speculation that China is going to shift its focus from slowing the economic growth to stabilizing it near the current level. The Asian stocks rallied, helping the New Zealand currency. The MSCI Asia Pacific Index rose 1.7 percent today, following yesterday’s advance.

NZD/USD was up from 0.7549 to 0.7611 and NZD/JPY traded at 59.15, rising from the opening rate of 58.84, today as of 13:41 GMT.

If you have any questions, comments or opinions regarding the New Zealand Dollar,
feel free to post them using the commentary form below.

Earlier News About the New Zealand Dollar:

• NZ Dollar Climbs as Key Wins Elections (2011-11-28)
• NZ Dollar Drops as Sentiment Remains Unfavorable (2011-11-23)
• Retail Sales Boost New Zealand Dollar (2011-11-14)
• NZ Dollar Falls as Greece Hurts Market Sentiment (2011-11-02)
• RBNZ Signals About Possible Interest Rates Hike, NZD Higher (2011-10-27)

This entry was posted on TopForexNews
on Tuesday, November 29th, 2011 at 1:42 pm and is filed under New Zealand Dollar.
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The positive sentiment is still present on markets, allowing the Canadian dollar to rise, reaching the highest level since September against the euro.

The improving outlook for Europe was followed by the favorable news from the United States (the biggest trading partner of Canada). The US consumer confidence index improved from 40.9 in October to 56.0, ending its decline. The good sales during Thanksgiving holiday period were also positive.

The positive mood was felt almost everywhere. The Standard Poor’s 500 Index gained 0.2 percent. The Standard Poor’s/TSX Composite Index rose 0.6 percent. Futures on crude oil, the main export of Canada, advanced as much as 2.2 percent to $99.86 per barrel in New York.

USD/CAD was down from 1.0343 to 1.0303 today as of 21:14 GMT and the intraday low was 1.0257. EUR/CAD dropped from 1.3778 to 1.3736, falling for the fifth straight session, while earlier today it reached 1.3705 — the lowest prices since September 22. CAD/JPY went higher from 75.34 to 75.50.

If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.

Earlier News About the Canadian Dollar:

• Canadian Dollar Falls as Risk Aversion Rises (2011-11-25)
• Loonie Makes Way Higher as Tensions Recede (2011-11-18)
• Canadian Dollar Finds Strength as Eurozone Fears Ease (2011-11-17)
• Canada’s Dollar Goes Down as Sentiment Prevails Over Fundamentals (2011-11-16)
• Canadian Dollar Falls as Sentiment Shifts to Pessimism (2011-11-15)

This entry was posted on TopForexNews
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The Mexican peso advanced today as the nation’s central bank pledged to support the currency in case it would decline too much.

Mexico’s currency exchange commission, which is made up from representatives of the central bank and Finance Ministry, said its going to use $400 million from its $140 billion reserves in case the peso would decline more than 2 percent in one day. The Mexican currency already has slumped 16 percent in the past six months. The Mexican peso is the worst performer among the currencies of Latin America and desperately needs support.

Mexico is not the first emerging economy to be worried about the weakness of its currency and that outlines the interesting difference between emerging economies and developed ones. The developed countries are trying to weaken their currencies, while emerging nations are attempting to support their currencies. The issues are opposite, but the reason for them seems to be the same: the global economic slowdown. The riskier currencies lose their value as investors prefer the safety of the developed nations’ currencies.

USD/MXN was at 13.7890 today as of 00:37 GMT after it fell yesterday from 14.0210 to 13.8120. EUR/MXN was down from 18.4081 to 18.3884.

If you have any questions, comments or opinions regarding the Mexican Peso,
feel free to post them using the commentary form below.

Earlier News About the Mexican Peso:

• Mexican Peso Down for Second Week (2011-11-12)
• Mexican Peso Little Changed After Yesterday’s Decline (2011-01-26)
• Mexican Peso Declines as Interest Rates Remain Unchanged (2011-01-24)
• Mexico’s Peso Rises on Crude Oil US Stocks (2010-09-13)
• Mexican Peso Fluctuates on Growth Concern Favorable Outlook (2010-07-13)

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TOKYO, Nov 30 (Reuters) – Japan’s industrial output

rose 2.4 percent in October after a steep decline in the

previous month, but debt woes in Europe, sluggish global growth

and the yen’s strength cloud the outlook.

The rise was bigger than a median market forecast of a 1.0

percent gain and followed a 3.3 percent decline in September,

which was the first fall since the devastating March earthquake.

Manufacturers surveyed by the Ministry of Economy, Trade and

Industry expect output to fall 0.1 percent in November and

increase 2.7 percent in December, data from the Ministry of

Economy, Trade and Industry showed on Wednesday.

(Reporting by Leika Kihara; Editing by Chris Gallagher)

((leika.kihara@thomsonreuters.com)(+81-3-6441-1828)(Reuters

Messaging: leika.kihara.reuters.com@reuters.net))

Keywords: JAPAN ECONOMY/OUTPUT

(For Japanese economic coverage click: — Real-time Japanese indicator diary — Japanese macro economic news — Japanese economic indicator news — Economic indicator news in Japanese — Bank of Japan news Web sites for Japanese economic agencies — Cabinet Office http://www.cao.go.jp/ — Ministry of Internal Affairs http://www.soumu.go.jp/ — Ministry of Finance http://www.mof.go.jp/ — Ministry of Economy (METI) http://www.meti.go.jp/ — Bank of Japan http://www.boj.or.jp/ For more economic news click: — Top News for the global economy — Global macroeconomic data coverage For graphs for economic data click, right-click on the data you want to look at, select ‘Related Graph’ (3000 Xtra) or ‘Show”Chart’ (Trader). Access to some items may depend on permissioning)

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By Richard Cowan

WASHINGTON, Nov 29 (Reuters) – Republicans in the U.S. Congress on Tuesday threw their support behind a payroll tax cut extension, trying to blunt charges ahead of 2012 elections of favoring wealthy Americans over middle-class workers.

Until Tuesday, Republicans had been lukewarm on extending President Barack Obama’s payroll tax cut for workers, indicating they were open to negotiating it but never explicitly backing a measure, which the White House says will boost the country’s sputtering economic recovery.

The move by Republicans could help avert an end-of-year battle with Democrats after months of bitter budget battles that brought the country to the edge of default in August and cost it its coveted AAA rating from Standard Poor’s.

Some analysts estimate the payroll tax cut is estimated to boost economic growth by as much as 1.5 percentage points.

‘In all likelihood we will agree to continue the current payroll tax relief for another year,’ Senate Republican leader Mitch McConnell said after a closed-door meeting of his colleagues.

McConnell said there was now ‘a majority sentiment’ among Republicans for continuing the temporary tax cut.

The Republican leader said the Senate and House of Representatives also would work to strike a deal on another contentious issue: Democratic demands to extend unemployment benefits that begin to expire on Dec. 31.

‘First we need to do the payroll tax. It’s like a puzzle. It will fit together,’ a Democratic aide said of the tax cut and jobless benefit extensions.

By early next year, 2.1 million people will lose their unemployment insurance if the program is not extended for those who have been unable to find work for an extended period, amid a 9 percent jobless rate.

Without congressional action by Dec. 31, the payroll tax that workers pay would revert to 6.2 percent, up from the current, temporary 4.2 percent tax.

2012 ELECTION MANEUVERS

In political maneuvers foreshadowing the 2012 presidential and congressional election debates, Democrats are arranging a Senate vote later this week to extend and expand the payroll tax cut.

They want to offset the lost revenue with a 3.25 percent tax on income over $1 million a year, but Republicans vehemently oppose raising taxes on the rich, arguing that would hurt job creation.

If Republicans block the measure, as expected, Democrats would paint them as the party of the rich.

Trying to get ahead of the game, McConnell proclaimed Republican support for the payroll tax cut extension and told reporters his party would soon propose its own ideas for covering the cost of the tax cut.

‘The Democrats put them in a box,’ said Andrew Taylor, a North Carolina State University political science professor. ‘I think many Republicans realized this is a bad side of the argument to be on.’

The Democratic measure due to be voted on on Thursday would not only extend the payroll tax cut for a year. It also would further cut the tax to 3.1 percent, from the current 4.2 percent, and also put employer payroll tax payments at the low rate too.

Top White House economist Alan Krueger said on Tuesday that extending the tax cut would strengthen the U.S. economy.

‘This is a critical time for the economy and I think it’s a time when the economy could use more medicine to strengthen and sustain the recovery,’ Krueger told a news briefing.

McConnell did not provide details on how Republicans would offset the cost of extending the tax cut. There has been speculation among some Democratic aides in Congress that Republicans could take aim at new federal subsidies under President Barack Obama’s overhaul of the healthcare system.

While that likely would prompt Democratic opposition, a new round of ideas later in December could find bipartisan backing.

Among the ways to potentially cover the cost of renewing the payroll tax cuts are: cutting federal farm subsidies, selling some government assets, reducing federal pensions and administrative savings in the Medicare healthcare program for the elderly. All these ideas have been discussed in past budget negotiations.

(Additional reporting by Donna Smith and Thomas Ferraro; editing by Anthony Boadle) Keywords: USA TAXES/

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TOKYO, Nov 30 (Reuters) – Japan’s industrial output

rose 2.4 percent in October after a steep decline in the

previous month, but debt woes in Europe, sluggish global growth

and the yen’s strength cloud the outlook.

The rise was bigger than a median market forecast of a 1.0

percent gain and followed a 3.3 percent decline in September,

which was the first fall since the devastating March earthquake.

Manufacturers surveyed by the Ministry of Economy, Trade and

Industry expect output to fall 0.1 percent in November and

increase 2.7 percent in December, data from the Ministry of

Economy, Trade and Industry showed on Wednesday.

Following is a table of Japan’s industrial output, with

economists’ median forecast in parentheses:

(adjusted month/month): OCT SEPT AUG OCT INDEX

Output +2.4(+1.0) -3.3 +0.6 92.7

Shipments +0.6 -2.0 +0.2 93.3

Inventories +0.8 -0.1 +2.1 103.5

Inventories/shipments -1.1 +3.8 -1.4 117.9

(unadjusted year-on-year):

Output +0.4 -3.3 +0.4 95.6

Manufacturers surveyed by METI forecast output as follows

(seasonally adjusted month-on-month percentage change):

NOV (PREV F’CAST) DEC

-0.1 (+1.8) +2.7

To view the full tables, click on

http://www.meti.go.jp/statistics/tyo/iip/result/pdf/press/h2a1010j.pdf

(Reporting by Leika Kihara; Editing by Chris Gallagher)

((leika.kihara@thomsonreuters.com)(+81-3-6441-1828)(Reuters

Messaging: leika.kihara.reuters.com@reuters.net))

Keywords: JAPAN ECONOMY/OUTPUT

(For Japanese economic coverage click: — Real-time Japanese indicator diary — Japanese macro economic news — Japanese economic indicator news — Economic indicator news in Japanese — Bank of Japan news Web sites for Japanese economic agencies — Cabinet Office http://www.cao.go.jp/ — Ministry of Internal Affairs http://www.soumu.go.jp/ — Ministry of Finance http://www.mof.go.jp/ — Ministry of Economy (METI) http://www.meti.go.jp/ — Bank of Japan http://www.boj.or.jp/ For more economic news click: — Top News for the global economy — Global macroeconomic data coverage For graphs for economic data click, right-click on the data you want to look at, select ‘Related Graph’ (3000 Xtra) or ‘Show”Chart’ (Trader). Access to some items may depend on permissioni)

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