US & World News

The members of the G20 meeting in Paris should acknowledge the commitment of Europeans Saturday to introduce in the next few days a package of measures to restore stability in the euro area, amid fears over the health of the global economy.

France and Germany have promised to present at the European Summit of 23 October a plan to recapitalize banks, responding to the situation worse than expected in Greece, increasing the firepower of the European financial stability and reforming the governance of the euro area.

"We will over the coming days to continue our discussions but we already have on contractual agreements that will be very important," said French Finance Minister, Baroin, after a meeting Friday with his German counterpart Wolfgang Schäuble and Nicolas Sarkozy.

Meanwhile, European leaders are putting added pressure on banks to force them to recapitalize and enable them to withstand greater losses than expected on the sovereign debt of the most fragile area.

The European plan will be included in a series of commitments that will be announced at the summit of Heads of State and Government of the G20 3 and 4 November in Cannes, which will close the French presidency of the Forum of 20 major economies.

Many measures discussed by finance ministers and central bankers of the G20 meeting in Paris on Friday and Saturday were referred to this deadline.

SUMMIT OF CANNES

In Paris, important steps were expected Saturday on the reduction of major global financial and economic imbalances, a priority for the French Presidency, with the objective that the seven countries identified as major sources of the imbalances present in Cannes "two or three significant steps "in this sense.

"We need fiscal consolidation measures for countries in excessive deficit and measures to support global activity for those who have surplus," explained a French source before the meeting.

According to an official of the G20 countries, the Chinese have thus expressed their readiness to "ensure that growth in China does not slow down, even if there is a risk of inflation through expansionary fiscal policy."

No major breakthrough is expected, however in Paris on the Chinese currency, the yuan, which the strict control by Beijing is considered one of the major causes of global imbalances.

The "path integration" of the yuan in the currency basket of Special Drawing Rights International Monetary Fund, a discussion underpinned by the loosening of the Chinese currency, is among the priorities of Cannes, with the objective of A schedule.

BANK CASH

The draft G20 communique obtained by Reuters Finance reaffirms that its members will ensure that banks have sufficient liquidity, in particular through central banks, as they undertook to do at the recent G7 Finance in Marseille.

The debate on the proposed increase of IMF resources, defended by almost all emerging G20 but faces opposition from the United States and Japan, will also resume in Cannes.

Discussions were still Saturday on whether to publish the list of banks considered to be running in size a systemic risk the global financial system, where the G20 should agree on capital surcharges.Again, final decisions will be taken in Cannes.

"Principles" for emerging economies suffering from speculative capital movements must also be finalized for the upcoming summit of the G20, to help control these flows in order to avoid destabilization of the economy.

Europe should recapitalize its banks on an individual basis and not applied uniformly to all measures in the industry, said Tuesday the German BDB banking association.

"It would be absurd to book the same treatment to all banks," said Michael Kemmer, CEO of the BDB, in an interview on ARD television channel.

If the recapitalization is needed, they must be implemented in the right tempo, he added.

"First, banks themselves must make use of capital markets, although it is very difficult if not impossible, right now," said Michael Kemmer.

"Then, each country must see if we recapitalize banks and only if it is unable to do that EFSF should intervene," he added, referring to the European Stability Financial.

France and Germany have given themselves until the end of October to overcome many obstacles on the recapitalization of banks, the euro and its sickest member, Greece, and on European Governance, at where the sovereign debt crisis has put down the bank Dexia.

German banks, which have increased their level of capital in recent months, are stable and doing well, said Michael Kemmer.

He added that European leaders should stick to the agreement July 21 on Greece, which provides that private creditors pass a discount of 21% on Greek bond holdings.

Many experts believe that this level of discount ("haircut") is insufficient, forcing banks to take further writedowns in the third quarter.

Deutsche Bank, one of the most important members of the BDB with Commerzbank, said late September that the discount that private investors have agreed to take on Greek sovereign debt in the second bailout of Greece could be greater than 21% retained.

Last week, the German IDW auditors are said German banks could follow the example of Deutsche Bank in the third quarter by re-evaluating their market prices Greek bonds.

Investors weary of the impact of the crisis in the euro area financial markets will have something else to put in their mouths this week: the results of business.

As each "earnings season" quarterly, the aluminum producer Alcoa, which will open the ball, his numbers are expected in the third quarter after the close of Wall Street Tuesday.

Business performance and prospects announcing they are considered an important barometer of the state of the global economy and are also likely to give an indication of the impact of the crisis in the euro area on profits companies.

But, having risen sharply over the whole of last week, Wall Street may have difficulty continuing to rise even if corporate earnings are better than expected.

Technical analysts have said in effect that the moving average of 50 days S & P 500, currently at 1178 points, could represent a significant resistance.

In the past week, the S & P benchmark for fund managers, has gained 2.1% to 1155.46 points, buoyed by the feeling that European leaders are now determined to solve the problems of their banks weakened by the debt crisis.

Nicolas Sarkozy traveled to Berlin on Sunday for talks with Angela Merkel of crisis, with a priority to overcome their differences on how to recapitalize European banks.

"Over the next three weeks, attention will focus on results – even if the situation in Europe will always be present in people's minds," said Ken Polcari, an analyst at ICAP Equities.

In addition to Alcoa, next week will also see the results of PepsiCo, Google, JPMorgan Chase and Mattel.

CONSERVATIVE ANALYST ESTIMATES

In light of the debt crisis of the area, but also signs announcing a slowdown in the global economy, many corporate earnings forecasts were revised downward by analysts in recent months .

"The forecast for the quarter just ended were very conservative so there are chances that companies do at least as well as the consensus," said Marc Pado, technical analyst at Cantor Fitzgerald.

In terms of macroeconomic indicators, market players expect including the minutes of the last meeting of the Federal Reserve, retail sales for the month of September and the feeling of households for the month of October, according to Index Thomson Reuters / University of Michigan.

The latest U.S. statistics have been rather better than expected, which has banished the specter of a return to recession in the United States and contributed to the rebound on Wall Street last week.

But, and this also applies to any positive impression left by the business results, although some indicators of the coming week confirm this trend, the positive effect could be negated if further deterioration of the debt crisis the euro area.

Economic growth in Germany this year will be closer to 3% to 2.5%, on Friday said German Chancellor Angela Merkel.

The statement came after the German banking association BdB on Wednesday cut its forecast 2.8% growth in the country for 2011, while the RWI Institute said that the risk of a recession had increased.

While the EU finance ministers meet Friday in Poland to discuss among others the debt crisis, Merkel reiterated her opposition to Eurobonds and felt that Europe should consider the possibility of intervening in the medium term to States that fail to meet their duty of fiscal consolidation.

The Tokyo Stock Exchange ended Wednesday on a sharp decline, yielding 1.14% in a climate of anxiety about the continuing debt crisis of the Greek, which encouraged profit taking after Tuesday's rebound.

The Nikkei lost 97.98 points to 8518.57, a lowest level in two and a half years, and Topix, broader, sold 8.13 points (1.08%) to 741.69.

The highest exposure to Europe were particularly hard hit.Canon has lost 4.08% to 3,295 yen.

In early trading, some purchases on the cheap recently battered shares pushed the Nikkei up to 8671.24, but profit-taking quickly reversed the trend.

The values ​​of the video game industry, fell sharply Tuesday after a presentation judged disappointing by Nintendo, have recovered slightly.Square Enix has made 0.48% to 1,475 yen after losing 3.9% on Tuesday.

Also on the rise, Sharp has benefited from the announcement of an expected increase in sales in Indonesia to gain 3.3% to 595 yen.

Ricoh has instead plunged 1.67% to 648 yen after lowering its target price of 900 yen to 600 yen by Macquarie Securities, who expects weak demand for copiers in the second half of the fiscal year.

Audi, the premium brand of the Volkswagen group, plans to exceed this year's Mercedes-Benz, the luxury brand of the Daimler group, reaching 1.3 million sales, said Tuesday the chief executive of Audi.

"We will exceed Mercedes this year and move from place to number three to the number two," said Rupert Stadler to the press on the sidelines of the Frankfurt Motor Show.

Audi is also optimistic about the prospects for the sector as a whole.

"There are two warning signs. Sales to fleets of vehicles and sales of used cars. Neither reports of headwinds," said commercial director Peter Schwarzenbauer.

European shares regain some ground Tuesday morning, after two sessions of fall in fear of a worsening debt crisis euro and its impact on the banking system.

At 9:13, the CAC 40 index takes 0.54%.

London rose by 0.4% and 0.3% of Milan, Frankfurt rebounds by 0.4% and the EuroStoxx 50 returned 0.46%.

Stoxx index of bank takes 0.53%.

Brent crude was down more than $ 3 Monday, passing below 106 dollars, while the progress of Libyan rebel suggests a possible resumption of oil exports of the country.

Rebel fighters swept into the night from Sunday to Monday in Tripoli, the Libyan capital, where thousands of people took to the streets deserted by the forces of Muammar Gaddafi who have appeared against little resistance to the insurgents.

At 6:50 GMT, Brent North Sea yielded 3.40 dollars (3.13%) to 105.25 dollars.For his part, U.S. crude gave up about a dollar to 81.18 dollars, also sealed by the gloomy outlook of the global economy.

Before the outbreak of the uprising in Libya, the country, a member of OPEC produced about 1.6 million barrels per day (bpd), nearly 2% of world production.

Most of Libyan crude supplied European refineries and disruption of those exports has pushed the price of Brent crude to a peak of two and a half dollars to 127.02 in April.

Full recovery of Libyan production could take years but the rebels said they hoped a quick return to normal. Analysts said a production of one million bpd could be achievable in a few months.

Hewlett-Packard has made a bid Thursday to the British publisher of Autonomy software and mentioned the possible split in the group with his branch of PC.

HP has offered to buy all outstanding shares of Autonomy for the price of 42.11 dollars per share for a total transaction of $ 10.3 billion (7.1 billion euros).

He also announced the abandonment of its shelf TouchPad who has not had the expected success.

The group also sees a possible split with the PC industry, faced with slow growth and low margins.This is one of the largest divisions of HP but also one of the least profitable of the group.

The American manufacturer has announced a little earlier than expected revenues rose for the third quarter to $ 31.2 billion (2.17 billion euros) against 30.7 billion a year earlier in accordance with the expectations of Wall Street.

The group lowered its annual forecast for the third consecutive time.It now expects an annual turnover of between 127.2 and 127.6 billion dollars, against a previous estimate of between 129 and 130 billion.

The forecast of earnings per share was also down, with a range from 3.59 to 3.70 dollars against a previous forecast of at least 4.27 dollars.

The title, which closed down 6%, down 2.1% after closure of the exchanges on Wall Street.

The Japanese economy contracted less than expected from April to June thanks to the quick restoration of supply chains after the earthquake of March, but the soaring yen and slower global growth darken the hopes of recovery.

Economists expect the third world economy sketch a rebound from July to September, with probably the growth rate the highest in developed countries, as exports and industrial production will return to their levels before the earthquake and tsunami that devastated the north.

According to official figures released Monday, the gross domestic product (GDP) fell 0.3% in the second quarter, after 0.9% from January to March.Economists on average had expected a contraction of 0.7%.

On an annualized basis, the economy contracted by 1.3%, while economists expected a decline of 2.6%.

These figures better than expected boosted the Tokyo Stock Exchange, which in turn took the road to recovery from the European and U.S. markets late last week with a gain of 1.37% for the Nikkei.

However, the impact of the debt crisis in the euro zone on global growth might deprive Japan of export opportunities they need to start from the front, while pushing up the yen, safe haven, which will complicate doubling the equation for exporting companies.

"The economy will show a recovery in the shape of 'V' between July and September when supply chains are recovering and will help boost exports," notes Yoshiki Shinkai, economist at Dai-ichi Life Research Institute.

"But the momentum will weaken from October to December with the slowdown in the pace of recovery in external demand, even if (GDP) will not fall back into contraction.In fact, it is even possible that the global economy begins to sputter. "

Restocking AND PUBLIC INVESTMENT

In this context, the Japanese Minister of Economy Kaoru Yosano urged the Bank of Japan (BoJ) to help save the recovery by maintaining its strong liquidity injections and ultra-accommodative policy.

"We will closely monitor the impact that Japan's economy on the rise in the yen and the increasing uncertainty about global growth," he told reporters.

The yen, buoyed by the weak dollar, has appreciated by about 5% in just one month, approaching its historic high of 76.25 yen to the dollar, a level not taken into account by companies Japanese to build their profit forecasts.Around 0930 GMT Monday, the greenback was trading at 76.85 yen.

In the second quarter, the Japanese economy has performed better than expected thanks to the restocking of business and higher public investment, since the first six quarters, as part of the reconstruction effort.

Consumer spending, which accounts for 60% of the economy, fell 0.1% from April to June, down less than expected in favor of special items such as the transition to digital television that fueled TV sales.

But external demand – net exports – have reduced GDP by 0.8 percentage point, the disaster of March 11 that prevented some manufacturers deliver their products outside the archipelago.

And some analysts see the slow growth in business investment spending (+0.2% against 0.5% expected) a sign of their distrust of uncertainties about the economy.