Ahead European summit June 28-29 2012 : European Union leaders hold their next meeting on June 28-29. Hopes for concrete and believable plans to disippate fears are likely to backfire once again. As a result, the UBS expects the euro to weaken again if the EU summit is unable to make strong progress on any of the core solutions.
that next week's event is unlikely to be a 'magic summit' for investors - in particular as political support in Germany for bail-outs of fellow Eurozone members and joint bond issuance is falling not rising and is set to continue to weaken ahead of next year's general election in Germany in October 2013.
In terms of the key issues likely to be discussed at the summit next week, "first, eurobonds, Eurozone T-bills or a European Redemption Pact (ERP) are unlikely to gain agreement until Germany feels there are more controls over how Eurozone governments conduct fiscal policy" says UBS research note.
Pre-summit document presses EU banking union
European leaders will discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund at a summit on June 28-29, according to a document prepared for the meeting.
Two officials familiar with the 10-15 page document, drawn up over the past month and which is still being revised ahead of the summit, said it sets out in detail the four "pillars" required for a strong economic and monetary union which leaders believe is necessary to secure the currency project's future.
As well as progress towards a banking union, the paper discusses the need for a more integrated budget policy, steps required for deeper economic integration, and how to retain "democratic legitimacy" if countries give up some sovereignty.
The document has been drafted by European Commission President Jose Manuel Barroso, European Council President Herman Van Rompuy, European Central Bank chief Mario Draghi, and Jean-Claude Juncker, head of the Eurogroup countries using the euro.
European leaders have already said the first area they need to work on is a banking integration as they try to break the link between bad banks and indebted governments, with the worsening situation in Spain an immediate concern.
EU officials believe that could be achieved in a year, although Berlin wants to see much more progress towards fiscal integration first, something that would require much longer due to the need to change the European Union treaty to achieve it.
The document goes into most detail on the banking proposals, setting out the need for a single European banking supervisor, a common EU deposit-guarantee scheme and a single bank-resolution fund to wind down the region's bad banks, the officials said.
The paper sets out options under each heading, saying that when it comes to a single banking supervisor it could either be charged with overseeing all EU banks, or else look after the major systemic banks with cross-border operations, while another body looks after broader, day-to-day oversight.
The expectation is the ECB will eventually be given sole responsibility for overseeing Europe's biggest banks, while the European Banking Authority watchdog retains a broader oversight role along with coordinating the work of national regulators.
On a common deposit insurance mechanism, the paper suggests that there needs to be a strengthening of and closer integration among national guarantee schemes to provide a more reassuring backstop across the whole European Union.
On a resolution fund to deal with failing banks, it calls for a single mechanism "with a large envelope" that would be financed via levies on the banking sector, such as a financial transaction tax, and would offer "an integrated EU solution for resolution".
The document, which draws heavily on proposals made by the European Commission on June 6, says an "immediate and permanent mutualisation" of risk may be required to backstop the banking sector. It suggests the euro zone's permanent ESM bailout fund could be used to recapitalise banks directly, rather than having to lend to governments for on-lending to banks.
All of those proposals would be possible under existing EU treaties and could be implemented relatively rapidly, the document indicates.
Even if it took only a year, this will probably not come quick enough to ease market pressure on Spain and Italy that is now reaching danger levels, although some analysts believe a strong signal of intent could help. That could also persuade the ECB to step in.
"Short term, there is clearly a risk that the summit will disappoint markets yet again. If that were to be the case, I have no doubt that the ECB will step in," said Erik Neilsen, global chief economist at Unicredit.
That could take the form of an interest rate cut, further easing of collateral rules for Spanish banks so they can continue to access ECB funds or even a resumption of the bank's bond-buying programme, which several of its policymakers oppose, he said.
BUDGET INTEGRATION
In a second section examining the steps required for closer fiscal coordination, the document says there is a need to go beyond existing legislative proposals such as the fiscal treaty, which 25 of the EU's 27 countries have signed up to and which commits them to a balanced budget.
The paper says that as closer banking and fiscal integration is achieved, the issue of mutualisation of debt will become more immediate and it raises the option of a debt redemption fund along the lines of that proposed by Germany's "wise men".
That is an idea that France, Italy and others have pushed hard for but which German Chancellor Angela Merkel opposes.
Merkel has not ruled out a sharing of debt per se, but has said any discussion on it can only happen at the end of a long process of integration that is likely to take many years. In contrast, France will find it difficult to stomach the loss of sovereignty that fiscal union would demand.
"The political leaders are now trying to move to a degree of fiscal and political union within a very short period of time. In democracies, such changes usually take a few years, and whether enough can be achieved in time remains to be seen," Neilsen said.
"However, in my mind, this does not imply an imminent risk of a breakdown of the euro zone ... It's a political project, and political leaders are unlikely to throw in the towel because markets don't like the policies."
Other sections of the document discuss the broader aims of greater EU labour mobility, efforts to improve pan-EU competitiveness, and to examine common taxation such as a common corporate tax base and a financial transactions levy.
There is likely to be heated discussion on issues such as debt mutualisation and any pooling of liability under a banking union, with Germany adamant that it will not be put on the line to underwrite the liabilities of other euro zone countries.
No decisions are expected at the summit, but if leaders agree that there are grounds to push ahead, Barroso, Van Rompuy and the others will be given a further mandate to develop the ideas in greater detail, including more specific timelines.
Van Rompuy has said he hopes to have a more thorough set of plans drawn up by the next EU leaders' summit in October or possibly the one after in December.
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27 Haziran 2012 Çarşamba
Ahead European summit June 28-29 2012
Asian stocks market june 25 2012
Asian stocks market june 25 2012 : Asian stocks opened mixed on Monday ahead of a key European summit later in the week. Tokyo stocks opened higher with expectations of more European action to help solve the eurozone's relentless debt crisis.
In Japan, the Nikkei 225 index at the Tokyo Stock Exchange rose 39.48 points, or 0.45 per cent, to 8,837.83.
Meanwhile, Hong Kong stocks opened marginally weaker, despite strong leads from Wall Street on Friday, helped by a deal on a €130 billion ($A163.34 billion) stimulus plan for the eurozone.
The benchmark Hang Seng Index slipped 30.27 points, or 0.16 per cent, to 18,964.86 in the first few minutes of trade.
The yen has fallen in recent days with investors expecting policy measures at this week's European Union summit, said Hideyuki Ishiguro, supervisor at investment strategy at Okasan Securities.
Ahead of the EU summit in Brussels from Thursday, "there are certainly those who will avoid aggressive trading, but there are also expectations that some measures will be announced", he told Dow Jones Newswires.
The European Central Bank said last week it would widen the range of securities it would accept from eurozone banks in exchange for its loans with the aim of helping boost lending to companies and households.
US stocks rebounded Friday, helped by European leaders agreeing a €130 billion ($A163.34 billion) stimulus plan for the eurozone economy.
The Dow Jones Industrial Average gained 67.21 points, or 0.53 per cent, on Friday to end at 12,640.78.
The euro bought $1.2539 and ¥100.91 in early Asian trade, down from $1.2569 and ¥101.10 in New York late Friday. The dollar firmed to ¥80.55 from ¥80.43.
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Dow Jones futures prediction june 25 2012
Dow Jones futures prediction june 25 2012 ; U.S. stocks closed higher Friday, lifting the Nasdaq Composite Index back into the black for the week, after the European Central Bank said it would take further steps to ease loan collateral for banks.
The Dow Jones Industrial Average (US:DJIA) rose 67.21 points, or 0.5%, to 12,640.78. It lost 1% for the week, after posting gains for the past two.
support: - 12600.00, 12577.55 and 12510.16(main), where a delay and correction may happen. Break of the latter will give 12477.30, where correction also can be. Then follows 12452.70. Be there a strong impulse, we shall see 12417.30. Continuation will bring 12403.13 and 12375.00.
resistance: - 12692.77, 12770.14 and 12836.27 (main), where a delay and correction may happen. Break would bring 12875.62, where a correction may happen. Then follows 12916.20, where a delay and correction could also be. Be there a strong impulse, we'd see 12936.50. Continuation would bring 12957.44.
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European Stocks market june 25 2012
European Stocks market june 25 2012 : European stocks are expected to edge a little lower at the open Monday, as caution sets in ahead of this week's European Union summit. FTSE 100 index up one point at 5515, Germany's DAX index to start down 19 points at 6244 and Paris's CAC-40 index to open down nine points at 3082.
Equity markets are expected to remain fairly range-bound in the run-up to the summit, which takes place on Thursday and Friday. Various issues are on the agenda such as a potential renegotiation of Greece's bailout terms, and proposals to a create fiscal and banking union. Some form of growth stimulus is also expected to be announced. At pre-summit talks in Rome, German, French, Italian and Spanish leaders agreed that the EU should implement a series of growth measures worth around 1% of the euro area's gross domestic product, or 130 billion euros.
Overall, though, expectations for the summit are pretty low. "We suspect investors will walk away disappointed once again," said Standard Chartered. "We do not expect anything which will soothe the renewed sovereign debt tensions--in particular over Spain and Italy."
As far as Greece is concerned, officials from the troika of its creditors--the European Commission, International Monetary Fund and European Central Bank--have postponed a visit that was due to start Monday, after both the prime minister and the finance minister were hit by health problems.
As for Spain, its government is due to make a formal request for financial assistance from the EU later Monday, with the funds to be provided firstly through the European Financial Stability Facility and then through the European Stability Mechanism, once it is up and running.
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China stock market june 25 2012
China stock market june 25 2012 : The Shanghai Composite Index fell 1.60 percent, or 36.76 points, today to close at 2,224.11 points on transaction value of 54.81 billion yuan. The Shenzhen Component Index plunged 268.47 points, or 2.77 percent, to close at 9,414.21 points on transaction value of 58.17 billion yuan. Opening down, the two bourses extended losses in the afternoon session, with coal, real estate, steel, cement, non-ferrous metal and brokerage sectors all down.
Reports said fund inflows were concentrated in the bio pharmaceutical, banking and public utitlies sectors, while outflows hit the non-ferrous metal, brokerage and trust and equipment production sectors.
According to Chnia's Ministry of Human Resources and Social Security, 12 provinces have either filed or published salary guides, a majority of which sharply cut the rate of pay increases. Some experts attributed the drop in growth rates to a decline in profits for enterprises amid an overall economic slowdown.
CICC said in a report that the Chinese economy will go through a complicated bottoming process in the second half of 2012, though it would be near a bottom with policy support. The bank anticipated GDP growth of 7.8 percent in 2012 and 8.3 percent in 2013, while inflation in 2012 is estimated to hit 2.8 percent. CICC also believes the stock market will rebound in July and August as policies are relaxed, in addition to improved liquidity. CICC said that the Shanghai bourse might climb as high as between 2,500 points and 2,600 points, while a 15 times forward P/E ratio for the overall market corresponds to a level of 2,540 points.
Zhang Yujun, general manager at Shanghai Stock Exchange, said that the exchange projects to achieve annual turnover of 100 trillion yuan as it looks to double its market scale to 30 trillion to 40 trillion yuan by the end of the 12th Five Year Plan period. During the five year period, the exchange hopes to become the second-largest exchange worldwide, while turnover could hit 70 trillion to 80 trillion yuan. At present, the Chinese stock market capitalization is 21.48 trillion yuan, ranking third globally.
According to Guodu Securities, open-end stock funds had average stock positions of 79.22 percent last week, down 1.07 percentage points from a week ago. It was reported by the brokerage firm that mutual funds actively cut stock holdings by 0.81 percentage points last week, reflecting their cautious attitude. Last week, 53.6 percent of mutual funds cut their stock holdings, including 45.8 percent that lowered stock holdings by less than three percent and 7.8 percent of funds that cut holdings by three to five percent.
Equity Movers
Cement makers were the worst-performing stocks today on concern that the Chinese economy will not bottom by the end of the second quarter; top losers were BBMG Corporation (601992, 6.99, -8.27%), Sichuan Shuangma Cement (000935, 7.39, -8.20%) and Tangshan Jidong Cement (000401, 14.17, -8.17%).
Coal-related companies took more heavy losses today, with Wintime Energy (600157, 8.78, -7.48%), Guizhou Panjiang Refined Coal (600395, 25.51, -6.45%) and Yang Quan Coal Industry (Group) (600348, 15.07, -7.72%) losing more than five percent.
With the exception of China Merchants Bank (60036, 10.99, +0.83%), Industrial and Commercial Bank of China (601398, 3.94, +0.77%) and Industrial Bank (601166, 12.80, +0.09%), most financial firms edged lower.
The most bearish financial firms were Hong Yuan Securities (000562, 16.20, -10.00%), Soochow Securities (601555, 8.53, -6.06%) and Western Securities (002673, 16.60, -5.79%).
Non-ferrous metals companies mostly retreated and the top losers included Shengda Mining (000603, 19.95, -8.49%), Huludao Zinc Industry (000751, 3.43, -3.92%) and Zhuzhou Smelter Group (600961, 9.98, -5.31%).
China Vanke (000002, 8.75, -3.10%), Poly Estate Group (600048, 10.94, -4.87 %) and Gemdale Corporation (600383, 6.39, -6.44%) were hit hard.
Both Sinopec (600028, 6.37, -0.47%) and PetroChina (601857, 9.08, -0.44%) dropped for two consecutive trading days.
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