Italy pays record debt interest on new bonds

The cost of borrowing for Italy's government has touched a new eurozone record of 6.29% in its latest bond auction. It is alarming situation for Italy.

The news came as the yield on traded Spanish government bonds increased above 6% for the first time since August.

And official figures from Eurostat look eurozone industrial production for September decrease 2% from August.

European markets touched with uncertainty to the news, with the FTSE closing nearly 0.5% decrease on the day.

Frankfurt's Dax index ended 1.2% down, while the Cac-40 index in Paris lost 1.3%. In New York, the Dow Jones fell 0.5% in morning trade.

Investors are in wait to see if Italy can form a new government under the leadership of economist Mario Monti.

Italy sold 3bn euros ($4.2bn, £2.6bn) of 5-year bonds at a 6.29% yield on Monday.

Spanish debt is trading at its highest level since the European Central Bank intervened to decrease the cost of borrowing in August.

A high yield directs investors may not have confidence in the government to fully repay its debts.

The yield on existing Italian debt, traded in the market, topped 7% last week before falling back, after parliament passed new austerity measures and Prime Minister Berlusconi resigned.

High interest rates - or yields - become a main problem for the government if it is forced to pay them when it issues new debt.

Now Italy is paying 6.29% rate on new debt since 1997.

It compares with a rate of 5.32% at a similar auction in October.

Spain did not issue any debt on Monday but its government will be concerned by the increasing

Around 200bn euros worth of Italian debt will need to be refinanced by April next year.

Obama outlines pan-Pacific trade plan at Apec summit

US President Barack Obama has submit the broad outlines of a plan to create a trans-Pacific free trade zone at an annual regional summit in Hawaii.

"I'm sure we can get this done," Mr Obama said at the Asia-Pacific Economic Co-operation (Apec) talks.

Nine Apec nations are participate in the Trans-Pacific Partnership (TPP), but China has not agreed  so far expressed interest in joining the talks.

In all, 21 Apec countries account for more than 44% of global trade.

They also make up some 40% of the world's population.

Speaking in Honolulu on Saturday, Mr Obama said: " this combination boost exports and create more goods available for our consumers, create new jobs. Compete, capture new markets in future"

Italy crisis: Lower house to vote on austerity law

The lower house of Italy's parliament is due to vote on a package of austerity measures required by the EU and designed to restore markets' confidence in the country's economy.

The vote will pave the way for PM Silvio Berlusconi to resign.

A technocrat government run by ex-EU commissioner Mario Monti seems likely.

The Senate on Friday withdraw the plan, which includes a increase in the pension age, a fuel price hike and the sale of state assets.

Following the vote, shares in most European markets has been increased 2-3%, and the interest rate paid on Italy's 10-year bonds dropped.

IMF chief Christine Lagarde has appreciated the "significant progress" made in tackling the political instability in Italy and Greece, where interim Prime Minister Lucas Papademos was sworn in at the head of a new cabinet on Friday.

"What we wanted at the IMF was political stability and a clear policy in Italy and Greece. I believe this progress has been made," she said on Saturday during a visit to Tokyo.

Italy crisis: Senate to vote on austerity measures

The Italian senate has start a debate - to be followed by a vote - on austerity measures designed to avoid a bailout of the eurozone's third biggest economy.

The measures are likely to be sanctioned, with the lower house voting at the weekend and paving the way for Prime Minister Silvio Berlusconi to resign.

A technocrat government possibly led by former EU commissioner Mario Monti is being debated.

On Thursday, Italy increased 5bn euros (£4.3bn) from new government bonds.

But this was at an interest rate of 6.087% to borrow the money for one year. 

A vote in the upper house is expected on Friday afternoon or evening.

Mr Berlusconi, who lost his parliamentary majority in a vote on Tuesday, has promised to leave Prime Minister seat after the austerity measures are passed by both houses of parliament.

Forex Business Trend: Italy borrowing costs hit record 7%

Forex Business Trend: Italy borrowing costs hit record 7%

Italy borrowing costs hit record 7%

Italy's cost of borrowing has increased to a new record, a day after Prime Minister Silvio Berlusconi said he would resign after budget reforms are passed.

The yield on 10-year government bonds reached more than 7%, the highest since the euro was founded in 1999.

Investors hasitate that Italy could become the next victim of the debt crisis.

The 7% cost of borrowing is widely viewed as unsustainable and was the level at which Portugal, Greece and the Irish Republic were forced to seek a bailout.

In comparison, Germany's implied cost of borrowing for 10 years is 1.73%.

In this scenario "No one agrees to lend to a country when that country would use the loan to pay the interest on previous loans - that's throwing good money after bad."

The debt was also pushed up as a clearing house asked for a larger deposit to trade Italian bonds - to cover the raised risk of default.

Economic Affairs Commissioner Olli Rehn called the situation in Italy "very worrisome". A team from the European Union is due in Rome on Wednesday to start monitoring how Italy plans to cut its soaring debt burden.

It is expected that Italy's parliament could sanction a package of budget reforms by the close of the month, after the Italian president engages in consultations with the political groups on the way forward.

Italian crisis: Silvio Berlusconi faces calls to resign

Italian PM Silvio Berlusconi is facing growing calls to resign from PM seat, after apparently losing his majority in the lower house of parliament.

He won a budget vote, but got votes of less than half of MPs.

After the vote, opposition leader Pierluigi Bersani urged him to resign. Allies including the Northern League had already said he should resign.

Borrowing rates have shot up in recent days, raising concerns over whether Italy can service its debts.

While Italy's deficit is relatively low, investors are concerned that the combination of Italy's low growth rate and 1.9tn euro (£1.63tn; $2.6tn) debt could make it the next country to down in the eurozone debt crisis.

The European commissioner for economic affairs Ollie Rehn said the country's economic and financial situation as "very worrying".

Rival demonstrators gathered outside parliament, some shouting "Resign", others "We are not Greece".

Italy borrowing rates hit new record as vote looms

The Italian government's cost of borrowing has increased to a new record ahead of a crucial vote for Prime Minister Silvio Berlusconi.

The yield on Italian 10-year bonds increase to 6.73%, the highest since the euro was founded in 1999.

Investors hesitate that the eurozone's third-largest economy could become the next victim of the debt crisis.

Markets briefly rallied on Monday on bogus reports that Mr Berlusconi would step down.

Italy's benchmark 10-year debt has been increasing sharply and the yield is now past the point that forced other eurozone countries to seek a bailout.

The country's cost of borrowing has been increased than the 1.8% interest rate currently faced by Germany.

Greece, the Irish Republic and Portugal have all been bailed out.

Japan buys 10% of eurozone bailout fund's bond issue

Japan's Ministry of Finance has announced that Japan bought 10% of the latest bonds issued by the eurozone's rescue fund.

Japan finance ministry said Japan purchased 300m euros ($413m; £257m) of bonds issued by the European Financial Stability Facility (EFSF).

Japan's purchase is the smallest amount it has bought so far from the fund. It will be healthy sign for euro zone.

Eurozone leaders have been seeking raised investment in the fund to help finance debt-laden economies.

Previous month, they confirmed to raise the size of the bailout fund to 1tn euros.

Japan has purchased bonds from the EFSF on three previous occasions taking its holdings to 2.975bn euros.

Pressure on Greece ahead of G20

The Greek prime minister faces increasing international pressure as financial crisis talks start on the eve of the G20 summit.

George Papandreou's surprise decision to call a referendum on the eurozone rescue plan agreed last week has continued to unsettle the markets.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are set to start talks shortly ahead of a meeting later with Mr Papandreou.
Leaders heading for France urged the eurozone to put its house in order.
The two-day meeting in Cannes of government heads from the Group of 20 major world economies formally starts on Thursday.

G20 finance ministers in day two of eurozone talks

Finance ministers of the G20 group of nations are meeting in Paris to continue talks to find the solution of eurozone debt crisis.

One solution is whether the IMF Fund should rise in size as part of a broader global response to the current situation.

US resist to increase IMF find to solve this current situation.

On Friday, US President Barack Obama and German Chancellor Angela Merkel spoke by phone to discuss the current crisis.

US officials said Mr Obama had warned of the risks posed to the US economy, and also discussed preparations for a G20 summit in Cannes scheduled for early coming month.

G20 ministers meeting to discuss eurozone debt crisis

To find a solution to the debt crisis in the eurozone, Finance ministers of G20 group of nations arrange meeting in Paris

main discussion is about Greece remains, fears remain that the crisis could spread to other highly indebted eurozone countries such as Spain and Italy, and exposed European banks.

To protect  defaulting on its debt Greece needs next bailout loan in coming month

Spain was hit by a further credit rating down on Thursday.

Standard & Poor's reduced Spain's long term rating by one notch, citing weak growth and high levels of private-sector debt.

It came a week after fellow credit rating agency Fitch also cut Spain's rating. Fitch also downgraded the creditworthiness of UK banks Lloyds and RBS, and also Switzerland's UBS

Eurozone industrial production sees surprise rise

Industrial production in the 17 countries of Europe rose unexpectedly about 1.2% in August.

The EU's statistics office, Eurostat, said it meant industrial production had been risen by 5.3% on an yearlyl basis.

The rise in industrial production might be easy because eurozone is getting release from recession in the third quarter.

Economists had forecast a rise of 2.2% on an yearly basis, and fall of 0.7% on the month. August's increase follows a rise of 1.1% in July.

Developed countries like Germany output fell by 1% month-on-month, but was 7.8% higher than 12 months ago.

Meanwhile the Irish Republic, which is implementing an austerity programme, saw its industrial production rise 4.4% in August and jump by 10.1% year-on-year.

Chinese bank shares rise after Beijing ups stake

Shares big banks in China have moving toward higher when the country's sovereign wealth fund announced it was rising its stake in them.

Central Huijin, the domestic arm of China Investment Corporation, invest funds in four major banks on Monday, said the official Xinhua news agency.

Investment in share is the first since the global financial crisis in 2008.

Analysts said the move was aimed at boosting investor confidence shaken by foreign markets and local policy.

Shares in Agricultural Bank of China increased more than 12% on Hong Kong's main index, while Industrial and Commercial Bank of China increase 7% in early trade.

Bank of England governor fears crisis is 'worst ever'

Bank of England governor Mervyn King has said this financial crisis could be more worst the UK has ever seen.

He passed His comments after the Bank authorised the injection of a further £75bn into the economy through quantitative easing (QE).

"This is the most worst financial crisis we've seen at least since the 1930s, if not ever," governor said

Despite criticizing the use of QE in the past, Chancellor George Osborne said it was now the right move to make.

The Bank has already injected £200bn into the economy, under the previous Labour government.

It has done this by buying assets such as government bonds, in an attempt to boost lending by commercial banks.

Mr Osborne also said he is agreed King's view on the severity of the financial crisis.

Bank of England injects further £75bn into economy

The Bank of England has said bank will inject a further £75bn into the economy through quantitative easing (QE).

The Bank has already invested £200bn into the economy by buying assets such as government bonds, in an attempt to boost lending by commercial banks.

First time it has added to its QE programme since 2009. There have been recent required for it to step in again to aid to the Economy.

At 0.5% interest rates at the record low is held by bank.

On Wednesday, data showed the UK economy grew by 0.1% between April and June, which was less than previously thought.

"In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated,"

"The deterioration in the outlook has made it more likely that inflation will reduce the 2% target in the medium term.

"This injection will shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the committee feel need that more monetary funds required to inject further monetary stimulus into the economy."

Sterling fell by almost two cents after the announcement to $1.5280, its lowest since late July 2010.

European markets

European stocks were once again down on Friday, contributing towards one of the worst quarterly falls for the markets in the past decade.

In this quarter stock market in France and Germany extreme fallen, about 25% of stocks fallen in Germany and France.

Shares in London's FTSE are down 13.7%, It is worst quarterly performance since 2002.

Friday's falls follow an unexpectedly  rise in the eurozone inflation rate for September to 3%.

Investors are hoping that European Central Bank would decrease in interest rates in the eurozone, after unexpectedly  rise in inflation upto 1.5%.

However, the latest inflation figures may make such a move less likely.

US durable goods orders slip back on weak car demand

Orders for big manufactured goods in the US drop down slightly in August after a sharp jump in the previous month, due in part to drop down in demand for cars.

Durable goods orders drop by 0.1% to $201.8bn, roughly in line with expectations, after a 4.1% rise in July, the Commerce Department said.

However, plane orders increased strongly for the second month in a row.

The figures come a day after weak housing and consumer confidence data reinforced concerns for the US economy.

On Tuesday, the closely-watched S&P Case Shiller index showed stagnant house prices in July, while the Conference Board's consumer confidence index for September indicated no recovery from August's weak level.

UBS 'rogue trader': Loss estimate raised to $2.3bn

UBS estimated loss has raised due to alleged unauthorised trading to $2.3bn (£1.5bn) from an initial $2bn.

The bank also said the alleged activity by trader Kweku Adoboli was not recoverable after UBS began making inquiries.

That prompted Mr Adoboli to admit the losses on Wednesday, UBS said. The trader was charged with fraud and false accounting at a London court on Friday.

The bank's statement comes as UBS boss Oswald Gruebel insisted he might not resign over the incident.

"I have done everything that happens at the bank," Mr Gruebel told Swiss Sunday newspaper, der Sonntag. "if you ask me whether I feel guilty, then I would say no."

Central banks act as economy hits 'dangerous new phase'

 

Five central banks have moved to boost the liquidity of commercial lenders, as the boss of the International Monetary Fund warns of a "dangerous" new economic threat.

The central banks will provide the commercial banks with three additional tranches of dollar loans to provide ease funding pressures.

Banking stocks growing sharply, with BNP Paribas up as much as 22%.

IMF managing director Christine Lagarde said "bold steps" was needed.

Speaking in Washington, she said: "Uncertainty hovers over sovereigns across the advanced economies, banks in Europe, and households in the United States.

"Without collective, bold, action, there is a real risk that the major economies going back instead of moving forward."