Forex School - Forex Learning » Plan

Report: Germany has proposed a plan to protect banks in case Greece defaults.

admin — Sat, 10 Sep 2011 08:16:55 +0000

Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
FXDD provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record.
Past performance is no guarantee of futures results and FXDD specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

forex.fxdd.com

Europe’s Greek plan gets lukewarm market response (AP)

admin — Sun, 28 Mar 2010 06:03:30 +0000

LONDON – The euro rebounded from a 10-month low on Friday but European stocks dropped, as markets gave an initially lukewarm response to the eurozone’s bailout program for
, which would extend loans only as a last resort and involve the International Monetary Fund.
Investors’ reaction was mixed because while the program does provide a backstop, it rules out any immediate loans and lays bare the structural problems in Europe’s economic union. Furthermore, while the crisis may be averted, several EU countries face years of slow growth as they try to balance their budgets.
By late afternoon London time, the euro was up 1 percent on the day at $1.3404 — above its ten-month low of $1.3268 earlier.
Stocks, however, showed less enthusiasm. Britain’s FTSE 100 benchmark stock index closed down 24.63 points, 0.4 percent at 5,703.02 while
fell 12.9 points, or 0.2 percent, at 6,120.05. The CAC-40 in France ended 11.55 points, or 0.3 percent, lower at 3,988.93.
traded slightly higher, with investors seemingly unaffected by figures showing that the U.S. economy grew by less than anticipated in the fourth quarter of 2009 — government figures showed the world’s largest economy grew by an annualized rate of 5.6 percent in the fourth quarter, down on the 5.9 percent rate previously estimated, but still more than double the 2.2 percent rate seen in the previous three month period.
was up 3.03 points, or less than 0.1 percent, at 10,844.24 around midday New York time while the broader Standard & Poor’s 500 index rose 0.14 point to 1,165.87.
However, the main focus in the markets remained on Greece following Thursday’s confirmation of a financial package for the debt-laden country from its 15 partners in the eurozone.
The deal would provide individual loans from other eurozone countries and funding from the International Monetary Fund. However, it sets out strict conditions, saying it could only be used as a last resort, and requires unanimous agreement of all eurozone members.
borrowing costs, allowing the country to tap the
from about 330 a day ago.
In the long run that sort of premium would not be acceptable for the Greek government, so all involved parties will be watching how the bond markets move over the coming week or two.
.
Much rests on Greece’s next bond sale in the coming weeks; a positive response in the markets could help take the heat off the country as it tries to bring its massive deficit down while a poor response would make it more likely that Greece will have to take advantage of Thursday’s agreed package.
and this could intensify the pressures on the new support mechanism, on
and on the euro,” said Jane Foley, research director at
Forex.com
.
“The euro is thus not out of the woods yet,” added Foley.
ratings agency gave Portugal some breathing space by affirming its A+ rating on its sovereign debt though it continued to warn that the outlook was negative. Earlier this week, Fitch had downgraded Portugal’s debt.
agency was the uncertainty created by the political wrangling that preceded the deal — from week to week the message coming out of the eurozone seemed to change.
“The key credit question is whether, over the coming weeks and months, market confidence will be strengthened by the support package or whether it will be weakened by contentious conditions under which this package was agreed,” said Pierre Cailleteau, managing director for sovereign risk at
in London.
In Asia, stocks were mixed in early trade before turning higher later in the day. Japan’s benchmark
stock average gained 167.52 points, or 1.6 percent, to 10,996.37.
rose 252.02, or 1.2 percent, to 21,030.57 and South Korea’s Kospi added 9.33 points, or 0.6 percent, to 1,697.72. Markets in Australia, Indian and
also gained.
contract for May delivery was down 56 cents at $79.97 a barrel.
AP Business Writer Carlo Piovano in London contributed to this report.

us.rd.yahoo.com

Euro up on Greece plan; Nikkei hits 18-month high (Reuters)

admin — Sat, 27 Mar 2010 13:01:21 +0000

, lifting some pressure on the single currency.
, tempering market reaction.
The deal offers Athens loans and cash but only as a last resort and can only be disbursed with unanimous euro zone approval.
Major European markets (.FTEU3) were expected to open slightly lower, according to financial spreadbetters, with some dealers looking to take profits after
finished slightly lower overnight. (.N)
The euro initially weakened on news of the Greece deal as investors took the view that IMF involvement suggested the 16-country euro zone was unable to handle its problems by itself. But dealers later began to close out some of the bets they had made against the euro, pushing the currency up against the dollar. Dollar weakness, in turn, helped lift
toward $81 and boosted gold.
“Basically, it seems the problem will be settled without much turmoil, so things should calm. The only concern is if more problems arise with Portugal and Spain,” said Kenichi Hirano, operating officer at Tachibana Securities in
.
Adding to worries about government bonds, investor demand at auctions of U.S. Treasuries waned for the third day in a row.
The euro was up 0.45 percent to $1.3335 after plumbing a low just below $1.3280. Under pressure from the
debt crisis, the euro has fallen 6.8 percent so far in the first quarter against the dollar, on track for the biggest quarterly decline since the third quarter of 2008, when
collapsed.
The U.S. dollar index (.DXY), a gauge of the dollar's performance against six other major currencies, slipped 0.3 percent.
UBS currency strategists said in a note that the dollar will likely remain supported against the euro thanks to positive incoming U.S. economic data.
“Many of these same factors — especially growth differentials and the diminished status of the euro owing to sovereign uncertainty — are likely to remain intact into 2011,” they said.
ex-Japan stocks (.MIAPJ0000PUS) recouped early losses to rise 0.7 percent, with gains fairly spread out across the sectors. The index is up around 1 percent in the first quarter.
Japan's Nikkei share average (.N225) outperformed the region, rising 1.6 percent to the highest since October 2008, helped by buying of large exporters and technology stocks.
U.S. stock futures flipped to positive as the
gained, rising 0.2 percent, after the
overnight (.
) briefly hit an 18-month high in the cash market.
The benchmark yield on the 10-year U.S. Treasury note was down 2
, to 3.86 percent.
A series of poor U.S. debt auctions this week has helped to push up the yield 17 basis points.
. The 10-year JGB yield rose to a four-month high of 1.385 percent.
U.S. crude futures rose 0.6 percent to $81 a barrel, with bulls hoping the U.S. dollar will keep correcting lower.

us.rd.yahoo.com

UAE stocks seen surging if Dubai government backs debt plan (Reuters)

admin — Tue, 23 Mar 2010 11:15:04 +0000

, with markets poised to rally if the deal includes guarantees, analysts said.
's index has been resurgent, gaining 12.8 percent in 12 trading days, as investors bet a restructuring deal would be more favorable to creditors than once thought, but it is down 15.2 percent since November 25, the day
said it would seek a debt standstill.
The government conglomerate is trying to restructure about $26 billion in debt, while Dubai's total debt pile is estimated at around $100 billion.
“It all depends on what the restructuring entails — if Dubai World offers a seven-year rollover and full repayment, then this is already discounted in the market, but if there's a government guarantee the market will fly,” said Haissam Arabi, chief executive at Gulfmena
.
“If the offer is as expected, then banks won't have to increase provisions and so bank stocks like Emirates NBD and the
should pick up.”
are the two domestic lenders on a Dubai World creditors committee, with both stocks on the rise after slumping to multi-year lows in late January.
“Compared to other regional markets we're way behind in valuations,” said Arabi. “Companies such as Aramex are fundamentally as strong as their regional peers, but are trading at a big discount, so I think the market is ripe for the rally to continue.”
Robert McKinnon, ASAS Capital chief investment officer, was more cautious.
“I don't think there will be much of a rally, it's likely to be anticlimactic because the market has pretty much priced everything in — there has been a good amount of news flow coming out of the negotiations,” said McKinnon.
Dubai's problems have caused the emirate's index to massively underperform, rising a mere 16 percent in the past year, when the
gained 79 percent.
Dubai has also lagged other regional markets, with the Saudi benchmark rising 52 percent in 12 months. Neighboring
is up 19 percent, with many investors treating the UAE as a
.
“The market has been running on rumor and speculation, so when something official comes out, it could trigger a rally,” said Ayman el-Saheb, Darahem Financial Brokerage director of operations, adding a government guarantee would boost UAE equities further.
Even if a debt offer disappoints, stocks should be steady because it will remove some of the uncertainty over the emirate's finances.
“People want a resolution so they can start doing some fundamental analysis,” said Keith Edwards, head of asset management at Doha-based
The First Investor.
Foreign investors are likely to remain wary, with the dominant property sector continuing to struggle and a restructuring offer still not answering how Dubai will pay off its debts in the long term.
Dubai house prices are down around 60 percent from 2008 peaks and are forecast to fall another 10 percent in 2010, according to a Reuters poll.
“The property sector has such a large weighting on the market and I don't see the light at the end of the tunnel for real estate — it's going to be stagnant for quite a while,” said McKinnon.
“There is over-supply and a lot of burned investors. There are also other issues for investors to consider such as the lack of liquidity.”
Another major drag is the ongoing merger of mortgage providers Amlak and Tamweel, McKinnon said, with the two companies' shares suspended since November 2008. Little information has emerged since, although the UAE economy minister was quoted Thursday as saying that a merger would happen soon.
“The Amlak-Tamweel merger has wider implications for the market — people have been trapped in those stocks for more than a year and foreign investors are worried that could happen again,” McKinnon added.
.
in the world,” said Gulfmena's Arabi.
.

us.rd.yahoo.com

UAE stocks seen surging if Dubai government backs debt plan

admin — Sat, 20 Mar 2010 20:58:04 +0000

(Reuters) – Dubai’s debt restructuring proposal will determine the fate of UAE equity markets as the ailing emirate seeks support from Abu Dhabi, with markets poised to rally if the deal includes guarantees, analysts said.
Dubai’s index has been resurgent, gaining 12.8 percent in 12 trading days, as investors bet a restructuring deal would be more favorable to creditors than once thought, but it is down 15.2 percent since November 25, the day Dubai World said it would seek a debt standstill.
The government conglomerate is trying to restructure about $26 billion in debt, while Dubai’s total debt pile is estimated at around $100 billion.
“It all depends on what the restructuring entails — if Dubai World offers a seven-year rollover and full repayment, then this is already discounted in the market, but if there’s a government guarantee the market will fly,” said Haissam Arabi, chief executive at Gulfmena Alternative Investments.
“If the offer is as expected, then banks won’t have to increase provisions and so bank stocks like Emirates NBD and the Abu Dhabi lenders should pick up.”
Emirates NBD and Abu Dhabi Commercial Bank are the two domestic lenders on a Dubai World creditors committee, with both stocks on the rise after slumping to multi-year lows in late January.
“Compared to other regional markets we’re way behind in valuations,” said Arabi. “Companies such as Aramex are fundamentally as strong as their regional peers, but are trading at a big discount, so I think the market is ripe for the rally to continue.”
Robert McKinnon, ASAS Capital chief investment officer, was more cautious.
“I don’t think there will be much of a rally, it’s likely to be anticlimactic because the market has pretty much priced everything in — there has been a good amount of news flow coming out of the negotiations,” said McKinnon.
Dubai’s problems have caused the emirate’s index to massively underperform, rising a mere 16 percent in the past year, when the MSCI emerging markets index gained 79 percent.
Dubai has also lagged other regional markets, with the Saudi benchmark rising 52 percent in 12 months. Neighboring Abu Dhabi
is up 19 percent, with many investors treating the UAE as a single market.
“The market has been running on rumor and speculation, so when something official comes out, it could trigger a rally,” said Ayman el-Saheb, Darahem Financial Brokerage director of operations, adding a government guarantee would boost UAE equities further.
Even if a debt offer disappoints, stocks should be steady because it will remove some of the uncertainty over the emirate’s finances.
“People want a resolution so they can start doing some fundamental analysis,” said Keith Edwards, head of asset management at Doha-based investment company The First Investor.
Foreign investors are likely to remain wary, with the dominant property sector continuing to struggle and a restructuring offer still not answering how Dubai will pay off its debts in the long term.
Dubai house prices are down around 60 percent from 2008 peaks and are forecast to fall another 10 percent in 2010, according to a Reuters poll.
“The property sector has such a large weighting on the market and I don’t see the light at the end of the tunnel for real estate — it’s going to be stagnant for quite a while,” said McKinnon.
“There is over-supply and a lot of burned investors. There are also other issues for investors to consider such as the lack of liquidity.”
Another major drag is the ongoing merger of mortgage providers Amlak and Tamweel, McKinnon said, with the two companies’ shares suspended since November 2008. Little information has emerged since, although the UAE economy minister was quoted Thursday as saying that a merger would happen soon.
“The Amlak-Tamweel merger has wider implications for the market — people have been trapped in those stocks for more than a year and foreign investors are worried that could happen again,” McKinnon added.
Dubai World’s offer will also boost sentiment on other regional exchanges.
“Regional markets are decoupling from the rest of the world and year-to-date we’re one of the best performing asset classes in the world,” said Gulfmena’s Arabi.
He added this would prompt some international institutions to relocate cash from other emerging markets such as China and India to the Middle East.

feeds.reuters.com

Euro gains on Greece’s bailout plan

admin — Tue, 16 Mar 2010 17:52:13 +0000

Tue, Mar 16 2010, 18:57 GMT
The 16-nation currency gained severely against the Dollar as E.U finance ministers drafted a blueprint to aid Greece with its ballooning deficit, in addition news from the Standard & Poor’s of affirming Greece’s credit rating at BBB+ despite its debt issues while downgrading the country from “creditwatch Negative”, where it stated that the country’s budget cuts that was passed by Greece’s government “was the appropriate thing to do”, thus investors turned into Greek Bonds along with the high yielding assets and sent the Dollar to suffer in today’s trading session along with pushing commodities and stocks higher where the S&P 500 index is currently trading at 17 month high.
The U.S dollar index, which tracks the performance of the Dollar against a basket of currencies, sank in today’s trading session where it’s currently trading at 79.878, compared with the opening levels of 80.110 where it managed to reach the highest levels for today at 80.326 and the lowest at 79.746.
The euro-dollar pair managed to gain against the Dollar as its showing on the daily and four hour scale where the pair is currently in attempt to test the 50% Fibonacci levels at $1.3735 that was breached yesterday, which was considered a strong support levels in today’s trading session and converted to resistance in today’s trading session. the pair is currently trading at $1.3725 where expectations show that the pair will continue to ascend further if trading remains above $1.3610, due to the positive signs provided by the Stochastic Oscillator. The pair reached the highest for today at $1.3771 and the lowest at $1.3655 meanwhile the upcoming support and resistance levels they are set at $1.3715 and $1.3770 respectively.
Moving to the Sterling, the pair slashed all yesterday’s losses where its currently trading at $1.5187 where its testing a strong resistance levels at $1.5210, expectations show that if the pair managed to breach those levels that it will continue to rise further supported from the positive signs that is provided by the Stochastic Oscillator, therefore the upcoming targets for the pair is set on those resistance levels in order for the pair to continue to rise on the daily scale, the pair managed to reach the highest at $1.5206 and the lowest at $1.4975 meanwhile the upcoming support and resistance levels can be witnessed at $1.5130 and $1.5210 respectively.
Finally talking about the USDJPY pair, expectations show that the pair will decline but maintain its sideway trading as the RSI indicator is providing further signs of narrow trading in the upcoming period, given the fact that the Stochastic Oscillator is signaling a drop in the daily scale as the pair’s trading in an overbought areas. Meanwhile the pair is rising on the daily scale with targets at the resistance levels at $90.90. The pair is currently trading at $90.66 where it managed to reach the highest for today at $90.73 and the lowest at $89.97, as for the upcoming support and resistance levels can be witnessed at $90.10 and $91.25 respectively.

fxstreet.com

FCC backs plan to speed up Internet

admin — Tue, 16 Mar 2010 16:08:14 +0000

(Reuters) – Communications regulators submitted to Congress a national broadband plan that aims to expand access, increase Internet speeds and shift airwaves to mobile services.
The five members of the Federal Communications Commission unanimously approved on Tuesday a summary of the plan that will need action by Congress, the commission and the communications industry to become reality.
Its recommendations include boosting Internet speeds by up to 25 times the current average, freeing 500 megahertz of airwaves for mobile broadband services over the next decade and pouring billions of dollars into subsidized service for the poor and rural areas.
The Senate Commerce Committee has scheduled a March 23 hearing on the proposals. A panel of the House Energy and Commerce Committee is due to examine the plan on March 25.
FCC Chairman Julius Genachowski is expected to testify at both hearings.
Details of the plan were released on Monday. It comes as the Internet increasingly delivers everything from telephone service to movies, music and banking services.
FCC officials have repeatedly said that the United States lags countries in Europe and Asia in terms of adoption rates and Internet speed.
The plan aims to have 100 million American households get Internet speeds of 100 megabits per second (Mbps) by 2020 — a speed that would allow a consumer to download a two-hour, high-definition movie in less than 10 minutes.
Congress requested the report as part of the economic stimulus bill enacted in February of 2009.
The plan also proposes that broadcasters like CBS Corp give up some of their airwaves for auction to wireless broadband providers, with broadcasters getting some of the proceeds. The FCC wants additional authority from Congress to conduct those auctions.
“I think we’ll seem them (the FCC) move quickly,” on the details of the spectrum reallocation plans, said Chris Guttman-McCabe, vice president of regulatory affairs at the CTIA wireless trade group.
CTIA represents AT&T Inc; Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc; Sprint Nextel Corp and Deutsche Telekom AG’s T-Mobile USA unit.
FCC officials declined to say which of the recommendations they will tackle first. The FCC is scheduled to hold its next open meeting April 22.
“Today marks the beginning of a long process, not the end of one,” FCC member Robert McDowell told Tuesday’s meeting.
Public interest groups largely voiced support for the plan but urged the FCC to focus on fostering competition to drive down prices and drive up speeds.
“This will require confronting the market power of the cable and telephone giants that control the broadband market,” Free Press Executive Director Josh Silver said in a statement.
“The problems caused by the lack of competition are what led the Congress to order up a National Broadband Plan,” said Silver.

feeds.reuters.com

Euro ministers say have Greek aid plan if needed

admin — Mon, 15 Mar 2010 11:10:21 +0000

(Reuters) – Finance ministers from the 16-country euro zone agreed on Monday to mobilize financial aid for Greece rapidly if needed but revealed little of how their standby plan for the debt-stricken nation would work.
After talks in Brussels, the ministers published a statement saying they had agreed the technicalities of what would be the first rescue in the history of the monetary union that gave birth to the euro in 1999.
“It (the Eurogroup of ministers) clarified the technical modalities enabling a decision on coordinated action and which could be activated swiftly in the case of need,” the statement said.
“The objective would not be to provide financing at average euro zone interest rates, but to safeguard financial stability in the euro area as a whole.”
Jean-Claude Juncker, Luxembourg prime minister and chairman of the talks, said Athens had not requested help and that such aid, if deployed, would not involve loan guarantees, one of the options mooted ahead of the Brussels gathering.
“We think the question (of aid for Greece) will not arise,” Juncker told a news conference.
European Monetary Affairs Commissioner Olli Rehn said Greece was taking bold action to reduce its deficit and rein in a debt that is worth more than its economic output.
He and Juncker stuck to the statement’s terms and fended off questions about how much money would be involved or what constituted the so-called technical modalities.
Austrian Finance Minister Josef Proell said Monday’s talks did not focus on how much money to have on standby.
“Today there was no discussion at all of sums,” he said.
Greece this month unveiled extra austerity measures to knock its deficit from 12.7 to 8.7 percent of gross domestic product, including cuts in public sector pay and tax hikes. A poll on Sunday showed most Greeks saw it as a good step.
The measures and the euro zone’s verbal backing have helped ease the premium Greece must offer over benchmark German bonds as it seeks to refinance some 20 billion euros ($27.5 billion) in debt that it has to roll over in April and May.
But the so-called spread, or debt financing premium, remains unsustainable, analysts say, and policymakers are looking at what could be done to insulate Athens against market turbulence and a risk of default that has hurt the euro.
French Economy Minister Christine Lagarde said the aim had been to agree “the technical modalities of the plan which would be put into effect if the need was to be felt, that is to say if markets do not understand the reality and the depth of the austerity plans.”
“This is not a mechanism that is necessary today,” she said. “We indicated that the examination of the technical modalities is a work of anticipation but there is no reason to anticipate implementation. So I won’t go into the technical details.”
Dutch Finance Minister Jan Kees De Jager said any help would be tied to tough conditions of the kind that the International Monetary Fund applies when rescuing countries in trouble.
“If we talk about measures, for example about loans, they will follow the same kind of methodology as the IMF,” he said.
Germany, Europe’s biggest economy and the country that would be the linchpin of any support, is reluctant to bail out Greece and above all to rush into anything before Athens shows it is willing to take the painful steps needed to fix its finances.
Market prices for Greece’s debt initially rose on hopes of a more detailed commitment by the meeting, but analysts said a failure to give one could spark more selling.
Officially, the final decision on any aid for Greece would be for EU leaders if it came to that, Juncker said.

feeds.reuters.com

EU executive to put Greek plan to finance ministers

admin — Sun, 14 Mar 2010 19:02:54 +0000

(Reuters) – The European Union’s executive said on Monday it was ready to propose a framework that could be used to aid Greece, despite signs of continuing reluctance from France and Germany to make concrete commitments.
Ministers were expected to discuss the possibility of providing loan guarantees or bilateral loans to help Athens finance its debts if needed, but officials signaled no figure would be put on the amount of help that could be extended.
European Monetary Affairs Commissioner Olli Rehn confirmed the Commission had succeeded in drawing up proposals for a mechanism that could be put to a meeting of the euro zone’s 16 finance ministers in Brussels.
“I would expect that Europe would endorse the assessment of the Commission on Greece’s bold set of measures which would mean that Greece is on track to meet the 4 percent target of deficit reduction this year.
“We will also discuss how to safeguard financial stability in the euro area as a whole,” he said. “The Commission is ready to table a proposal for a European framework for coordinated and conditional assistance.”
The 16 countries that use the euro single currency have provided strong verbal and political support to Greece since its debt and deficit problems exploded three months ago, but have been unable to agree on the need for financial aid.
Germany, Europe’s biggest economy and the country that would be the linchpin of any support, is reluctant to bail out Greece, saying the country’s priority must be to get its own finances in order and make deep structural adjustments to rein in spending.
The 16 finance ministers gather in Brussels from around 1500 (1400 GMT) for a meeting that begins at 1700.
Market prices for Greece’s debt rose on hopes of a more detailed commitment by the meeting, but analysts said a failure to do so could spark more selling.
“No political decisions will be made,” a German government spokesman said of Monday’s meeting.
Those comments played down widespread talk over the weekend that a detailed plan could be in the offing but it was not clear whether they left room to announce a deal on the technical details of how aid could be given.
The German spokesman reiterated that Greece had not asked for support and was working to resolve its problems by itself.
Greece this month unveiled a set of new austerity measures, including cutting public sector pay and raising taxes. A poll on Sunday showed most Greeks saw it is as a good step.
The measures and the euro zone’s verbal backing have helped ease the premium Greece must offer over benchmark German bonds as it seeks to refinance some 20 billion euros in debt in April and May.
But the spread remains unsustainable, analysts say, and officials are looking at what could be done to insulate Athens against market turbulence and a risk of default that has hurt the euro.
Under EU rules, neither the bloc nor individual states can assume the debts of other countries, but loan guarantees or similar measures would circumvent those restrictions.
French Economy Minister Christine Lagarde said over the weekend she did not expect any figure for aid to be announced.
“I’m certainly not expecting any decision being made, or any button being pressed… it’s totally premature,” she told reporters late on Saturday.
She said Greece had “delivered enormously” with its austerity steps, which include promised spending cuts equal to 2 percent of gross domestic product.
On Saturday, Britain’s Guardian newspaper quoted sources as saying the meeting would agree up to 25 billion euros of support. A senior EU source said that was not on the table.
The German government spokesman said Monday’s meeting would also not get into the details of funding for a European Monetary Fund, an idea that has been proposed by Berlin as another measure to help protect euro zone countries with debt troubles.
Discussing reforms needed to shore up the group’s rules, German Finance Minister Wolfgang Schaeuble reiterated that it should eventually be made possible, in extreme cases, for a state to leave the euro zone if it fails to manage its finances.
“We need tighter rules,” he told daily Bild. “That means in an extreme case, the possibility that a country that does not get its finances in order at all leaves the euro group. Such a prospect alone would ensure a totally different kind of discipline.”
, editing by Patrick Graham)

feeds.reuters.com

Allied Irish sees first FY loss, capital plan vague

admin — Mon, 01 Mar 2010 22:04:10 +0000

Allied Irish sees first FY loss, capital plan vague
ALBK.I
) posted its first ever full-year net loss, after being burned in a property market crash, and did not offer any exact guidance on when or how it would restore profits and its capital base.
Allied Irish, in which the government last year acquired a 25 percent indirect stake and which is also participating in a “bad bank” scheme, repeated on Tuesday it was looking at options to replenish its capital, with more state help a last resort.
“There isn’t a specific outline of exactly how much we are going to raise and how we are going to raise it,” Alan Kelly, general manager, group finance, told Reuters.
Ireland’s second-biggest bank by market value said it would transfer property loans worth up to 23 billion euros ($31 billion) to the National Asset Management Agency (NAMA), Ireland’s bad bank, slightly below an earlier estimate of 24 billion euros.
To plug the resulting hole in its capital base, Allied Irish said it would look at selling assets, carrying out a rights issue and talk to companies that have expressed interest in taking a strategic stake in it.
If needed, it may also ask the state for more assistance, the bank said.
“These results were always likely to fall short in detail of what the market needed to make a fuller assessment of AIB’s investment case, particularly with so much uncertainty ahead of the NAMA transfer and the capital requirements that will result,” Bloxham Stockbrokers said in a note.
“In the ‘pre NAMA vacuum’, certainty is not plentiful,” Bloxham said, referring to the NAMA loan transfers, which the government expects to start later this month.
The bank said the outlook was still extremely challenging.
“In 2010, AIB will prioritize restructuring and restoring its businesses to underpin viability, and renewing the group’s credibility amongst all its stakeholders,” it said.
Allied Irish’s volatile shares were up 3.5 percent at 1.035 euros by 0944 GMT, still well below a peak of 3.4 euros last year when the government unveiled the details of the bad bank plan and more than 24 euros in 2007 at the end of the Celtic Tiger boom. The wider Irish market
was 0.3 percent lower.
Allied Irish’s net loss of 2.3 billion euros ($3.1 billion), its first time in the red since its foundation in 1966, compared with 2.9 billion euros in a Thomson Reuters I/B/E/S poll and an 890 million euro profit in 2008.
The bank’s operating profit before provisions increased slightly from the previous year to almost 3 billion euros. It swung into the red after 5.4 billion in provisions, mainly on loans to the construction and property sector. (Editing by Mike Nesbit and Karen Foster)
($1 = 0.7395 euro)

feeds.reuters.com