The ECB reduced its bond purchases last week to 14.3bn from 22bn a week earlier, scaling back its market intervention after its first bout of buying helped ease Italian and Spanish debt.
German central bankers sharpened their criticism of the Eurozone’s bond buying policy, warning that the stability efforts were in danger of increasing states’ tendency to build up debts and will weaken incentives for pursuing orderly fiscal policies. The criticism puts further pressure on German chancellor Angela Merkel, who is trying to drum up support for the bond-buying scheme.
CHINA has urged the Eurozone to take drastic action to restore confidence in its economy to prevent the “Black Death” of its sovereign debt crisis from damaging the world economy. Chinese state media warned that the bloc’s surging debt costs will lead to a decline in demand for exports that will have a “far-reaching impact” on China’s real economy and further afield.
MARKETS:
EUROPEAN stocks rose 0.8% on Monday in thin trade, led by oil shares on hopes a new political regime in Libya will quickly restore oil production activities to former levels.
US STOCKS ended slightly higher on Monday after four weeks of losses, although investors were reluctant to take big risks without a clear catalyst for buying.
ASIAN shares are rebounding from the lowest levels since September on speculation that US central bankers will take steps to bolster the weakening US recovery when they meet on Friday. Fed Chairman Ben Bernanke’s hint of a second round of asset purchases last year triggered a 28% rally in the S&P 500.
BENCHMARK indexes are expected to inch higher on Tuesday, adding to the previous day’s tentative recovery rally, and mirroring small gains on Wall Street and in Asia. But investors, wary of another false start after last week’s rebound quickly fizzled out, could be tempted to stay on the sidelines until US Federal Reserve Chairman Ben Bernanke’s key speech on Friday.
CURRENCIES:
YEN traded at 76.80 per dollar, little changed from yesterday. It strengthened to a post-World War II record of 75.95 on August 19th. Japanese Finance Minister Yoshihiko Noda said excessive movements in the yen can hurt the nation’s recovery, raising prospects officials will act to curb gains.
ENERGY:
Oil for October delivery added 0.7% to $85 a barrel in New York, extending yesterday’s 2.4% gain. A government report tomorrow may show gasoline inventories shrank last week while crude stockpile rose.
COMMODITIES:
GOLD surged past the $1,900 mark in after-hours trading last night, setting yet another record high for the safe-haven asset. COPPER for three-month delivery climbed to $8,792 a metric ton on the London Metal Exchange after data yesterday showed Chinese imports rebounded to the highest level since January.
