• Cypriots reject bank deposit levy and consider options
• Osborne to deliver another austerity budget today
• ECB wins role as EU banking watchdog
• New UK state pension to be introduced early
• UK inflation hits 9-month high
• US stocks dip on fresh Eurozone worries
• Asian stocks surge led by China
• Euro weakens as investors turn to safe haven currencies
• Brent oil recovers from lowest levels in three months
• Industrial metals lure bargain hunters
The Cypriot parliament yesterday rejected a proposed financial bailout
that would have included an unprecedented and controversial levy on
bank deposits, throwing the country’s financial future into doubt and
forcing the government and its creditors back to the negotiating table.
Kathleen Brooks, a strategist at Gain Capital, has suggested that the
Cypriot government my turn to Russia for cash in return for access to
Cypriot natural gas reserves, adding that the two appear to be
mutually exclusive. “While Russian money could help Cyprus to avoid
bankruptcy, it could be the nail in the coffin for Nicosia’s relationship
with the rest of the European Union,” said Brooks.
British finance minister George Osborne faces the daunting task of
delivering another austerity budget today to a country impatient with
near-zero growth. Osborne will make more cuts to day-to-day public
spending as he tries to free up some cash for investment. He is also
likely to announce another round of weaker economic forecasts.
The European Union agreed yesterday to let the ECB police Eurozone
banks, taking its first step towards a banking union just as a levy
imposed on Cypriot savers showed that the bloc will struggle to
respond in a united way to bank problems.
The new simplified UK state pension will be introduced a year ahead
of schedule in April 2016, the government confirmed yesterday. The
decision to implement the £144-a-week flat payment earlier than planned will mean the government has to provide fewer
national insurance rebates on contracted-out pensions, boosting Treasury coffers by around £5.5bn.
Inflation hit a nine-month high in February and looks set to rise further, but many economists said they still expect the
Bank of England to give more help to the stagnant economy. Annual consumer price inflation rose to 2.8%, in line with
economists’ forecasts, after holding steady at 2.7% since October, the Office for National Statistics said. Inflation has
exceeded the central bank’s 2% target since December 2009. Economists said Tuesday’s figures would probably not
reduce the chances that the Bank of England will sooner or later pump more money into Britain’s economy.
Yesterday, US stocks mostly ended with mild losses after the Cypriot parliament rejected a proposed financial bailout
plan, forcing the government and its creditors back to the negotiating table.
Overnight, China shares were headed for their best daily showing in two weeks, led by gains for real estate stocks as
more clarity about fresh property curbs eased investor uncertainty and helped buoy the Hong Kong market. A report
detailing Beijing city’s plan to adapt more curbs first announced by the central government earlier this month eased
uncertainty for investors as it provided more clarity about the specific measures.
The euro weakened toward the lowest in almost four months against the dollar after the Cypriot parliament voted down a
bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc. The yen and dollar rose
against most major peers as investors sought havens on concern Europe’s crisis may worsen.
Brent oil rebounded from the lowest level in three months, widening its premium to West Texas Intermediate crude for the
first time in four days. Brent’s premium fell to the narrowest in almost eight months yesterday after Cyprus rejected a
bank levy linked to a bailout, sparking concern Europe’s debt crisis will worsen.
Industrial metals climbed from the lowest level in four months as an 8% drop since the start of February lured investors.
Copper dropped to its lowest since August yesterday, and has lost 4.5% in 2013. Analysts reported that this may be
nothing more than bargain hunting, as there is no change in supply and demand.