News Archive


Reduced Fed support reflected in January bond-buying plan


NEW YORK (Reuters) – The Federal Reserve plans to purchase about $40 billion in longer-dated federal government debt in 18 operations next month, the New York Fed said on Monday, reflecting the U.S. central bank’s decision to trim its support for the economy.

In what came as a surprise to some investors, earlier this month the Fed decided to cut its bond-buying program, known as quantitative easing, by $10 billion to $75 billion per month. It reduced purchases of both Treasuries and mortgage bonds by $5 billion each.

The Fed cited a stronger job market and economic growth in its landmark decision, which amounts to the beginning of the end of the largest monetary policy experiment ever.

The New York Fed, which carries out monetary policy in financial markets, will pare purchases broadly across a spectrum of securities maturing between 2018 and 2043, according to the plan. For the detailed schedule, see here

To recover from the recession, the central bank has held interest rates near zero since late 2008 to spur growth and hiring. It also has quadrupled the size of its balance sheet to around $4 trillion through three rounds of massive bond purchases aimed at holding down longer-term borrowing costs.

Fed Chairman Ben Bernanke, who is scheduled to step down on January 31, told reporters after the December 18 decision that this gradual rate of reductions would likely be maintained over the course of 2014.

Nearly all economists polled by Reuters now expect the Fed to continue to pare its bond-buying throughout 2014, until it is completely wound down before the start of 2015.

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)

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U.S. cracks open skies to testing, use of aerial drones


NEW YORK (Reuters) – The U.S. aviation regulator took a step toward opening the skies to aerial drones on Monday, authorizing six sites where unmanned aircraft can be tested for a variety of uses.

The Federal Aviation Administration already has approved limited use of drones in the U.S. for law enforcement, surveillance, atmospheric research and other applications.

But Monday’s move will give companies, universities and other entities locations at which to test much broader use, such as crop spraying, catching exotic-animal poachers or delivering packages.

“It provides the platform for this research to be carried out on a very large scale across the country,” Federal Aviation Administration Administrator Michael Huerta told reporters.

The first test site is expected to be open in six months and the sites will operate at least until February 2017.

The FAA said the test sites will be developed by the University of Alaska, the state of Nevada, Griffiss International Airport in New York state, the North Dakota Department of Commerce, Texas AM University at Corpus Christi, and Virginia Polytechnic Institute and State University, which includes locations in New Jersey.

The FAA is required to write initial rules governing commercial operation of drones by 2015. The test sites will operate longer, allowing rules to evolve with further testing, Huerta said.

Drones are smaller and less costly alternatives to manned aircraft, and are a growing business for aerospace companies such as Boeing Co, Northrop Grumman Corp, Lockheed Martin Corp and AeroVironment Inc.

Beyond military capabilities, they also offer uses to businesses and researchers. Amazon.com Inc recently unveiled plans for drones to deliver small packages to homes.

Global spending on unmanned aircraft will almost double to $11.6 billion a year by 2023, according to the latest estimate by aviation and aerospace industry research firm Teal Group.

The Association for Unmanned Vehicle Systems International (AUVSI), an industry group, estimates the industry could contribute more than $80 billion to the U.S. economy over a decade and create more than 100,000 jobs.

But the vehicles also have raised privacy and safety concerns, since they could be used for spying or could interfere with already crowded airspace.

The FAA chose the six sites from 25 applications it received from 24 states.

“These test sites will give us valuable information about how best to ensure the safe introduction of this advanced technology into our nation’s skies,” Transportation Secretary Anthony Foxx said in a statement.

Huerta said the FAA would first address the use of drones in small civil applications and expected to issue a proposed rule in early 2014.

(Reporting by Alwyn Scott; Editing by John Wallace and Diane Craft)

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Cooper Tire terminates $2.5 billion sale to India’s Apollo


MUMBAI (Reuters) – U.S.-based Cooper Tire Rubber Co (CTB.N) said it was terminating a proposed $2.5 billion sale to Apollo Tyres Ltd (APLO.NS), with both sides threatening legal action over a deal plagued by obstacles from the start.

Cooper Tire said on Monday it was walking away after being informed by the Indian tire maker that financing was no longer available for a takeover that would have been India’s second biggest in the United States.

Cooper added it would pursue legal steps to protect the company. Apollo responded by saying it was “disappointed” that Cooper had prematurely ended the agreement, and that it would pursue legal remedies of its own.

Those threats could continue a legal stand-off between the two sides, whose relationship descended into acrimony soon after Apollo agreed to buy Cooper for $35 a share in June, hoping to transform itself into the world’s seventh-largest tire maker and cut its dependence on domestic sales.

The dispute is likely to focus on whether either company is liable to pay a break-up fee. Under the deal terms, Apollo would have been liable to pay a $112.5 million fee, while Cooper could be held responsible for break-up fee of $50 million.

“Cooper does not believe the $50 million termination fee applies. As to the $112.5 million reverse termination fee from Apollo, Cooper is pursuing this and other possible damages,” Chief Financial Officer Bradley Hughes said on a conference call.

Despite the threat of legal action, the collapse of the deal may be welcomed by Apollo investors who had expressed concern over the debt-funded acquisition of a company nearly three times its stock market value at that time.

Soon after the offer was made, Apollo sought a price cut of as much as $9 a share, citing Cooper’s U.S. labor trouble and disruption at a Chinese joint venture.

“It is a positive for Apollo,” said Nishant Vass at ICICI Direct, part of ICICI Securities, in Mumbai.

“The question remains whether there can be a penalty or some kind of financial liability on Apollo because of any legal recourse that Cooper wants to take.”

APPEAL DISMISSED

Analysts were surprised Cooper had announced the termination before the offer from Apollo was set to expire on December 31.

The outcome itself was less of a surprise. Expectations the deal would unravel rose after a court in Delaware in November ruled the Indian tire maker had not breached its obligations, delivering a setback to Cooper’s attempt to compel Apollo to close the deal.

An appeal by Cooper was dismissed by the Delaware Supreme Court this month. The case returned to the lower court, which asked for an update on January 10 on the status of the deal.

The two sides have been at loggerheads for months, with Cooper accusing Apollo of suffering a case of buyer’s remorse.

The Indian tire maker has blamed Cooper for its difficulties in securing financing for the deal, after initially lining up funding from Deutsche Bank (DBKGn.DE), Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Standard Chartered (STAN.L).

At the heart of the dispute has been Apollo’s failure to reach contract agreements with Cooper’s United Steelworkers union as mandated by a U.S. arbitrator in September.

At the same time, Chengshan Group, Cooper’s partner in China, has opposed any merger with Apollo, filing a lawsuit against the U.S. tire maker to dissolve their joint venture.

Apollo has said these two developments were not expected at the time of the deal, but Cooper maintains the issues are a result of the merger and says Apollo was aware of the risks.

“While Cooper’s lack of control over its largest subsidiary and inability to meet its legal and contractual financial reporting obligations has considerably complicated the situation, Apollo has made exhaustive efforts to find a sensible way forward over the last several months,” the Indian tire maker said in its statement.

“However, Cooper has been unwilling to work constructively to complete a transaction,” it added. “Cooper’s actions leave Apollo no choice but to pursue legal remedies for Cooper’s detrimental conduct.”

Meanwhile, Cooper Chief Executive Roy Armes said in his statement that addressing the joint venture in China and restoring normal operations was the company’s top priority.

“We are open to all business paths including possible business combinations that further our strategy,” CFO Hughes said on the call.

“Frankly though, until we address the situation at CCT (Chengshan) and restore our regular financial reporting for Cooper, we do not believe this is something that can be pursued in any meaningful way.”

Larry Hamermesh, a professor at Widener University School of Law in Wilmington, Delaware said the failure to get Chengshan to agree to the deal had been the key factor that unraveled the deal.

“I think that’s what really ultimately did the deal in. They (Cooper) just lost control of their Chinese joint venture,” he said.

“Any purchaser who is looking at a target with significant Chinese operations has to find ways to gather assurances that the transition to the acquisition will be welcomed and not boycotted.”

The collapse leaves Apollo to focus on a slowing home market, which provides two-thirds of its revenue. The tire maker in November said domestic sales had fallen 7 percent in July through September.

Indian companies are looking overseas as the domestic economy grows at its slowest in a decade, but have struggled to convince investors after debt-fueled takeovers like Tata Steel’s $13 billion purchase of Anglo-Dutch Corus in 2007 fared poorly.

Apollo shares hit a record 104 rupees on Monday and are up over 10 percent since it first announced the deal in June. Cooper shares were at $23.99, well below the offer price.

(Additional reporting by Mridhula Raghavan in Bangalore, Swati Pandey in Mumbai, and Tom Hals in Delaware; Editing by David Holmes and Louise Heavens)

(This story was refiled to correct paragraphs 6 and 22 to attribute the quotes to CFO Bradley Hughes, not CEO Roy Armes)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/OJzy6k9ypPE/story01.htm

Orange to take legal action after report of spying via its cable


PARIS (Reuters) – Orange (ORAN.PA) is preparing its legal response to a report alleging the U.S. National Security Agency (NSA) accessed customers’ data transmitted by a submarine cable partly used by the French telecoms operator.

German website Spiegel Online said it had seen documents showing the NSA had tapped telecoms data from the cable running from Marseille to North Africa and Asia.

Orange uses the submarine cable along with 13 other telecoms companies, which collectively operate the cable.

A steady drip of allegations from former NSA contractor Edward Snowden about NSA snooping over the past months has raised widespread concern about the reach of the agency’s operations and its ability to pry into the affairs of private individuals in the United States and abroad as well as the communications of foreign leaders.

“We will take legal action in the next few days because we want to know more about the eventuality that Orange data may have been intercepted,” an Orange spokeswoman said on Monday, adding that Orange had had no role whatsoever in the spying.

Under the French legal system, a company or a person can file a complaint, not necessarily against a particular person or organization, to trigger an investigation and kick-start a legal process.

Orange has not decided yet whether it will launch an individual action or whether it could join an existing legal action launched in July by the International Federation of Human Rights, the spokeswoman added.

A White House-appointed panel has proposed curbs on some key NSA surveillance operations, recommending limits on a program to collect records of billions of telephone calls, and new tests before Washington spies on foreign leaders.

(Reporting by Muriel Boselli; Editing by Alison Williams)

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Wells Fargo agrees to $541 million loan settlement


(Reuters) – Wells Fargo Co will pay a net $541 million to Fannie Mae to settle claims over defective home loans, completing the government-controlled mortgage company’s efforts to have banks buy back troubled loans made before the financial crisis.

Fannie Mae said on Monday it has reached settlements worth roughly $6.5 billion over loan buybacks with eight banks, including Wells Fargo, the nation’s largest mortgage lender and fourth-largest bank by assets.

The settlements include a $3.6 billion accord in January with Bank of America Corp over loans from that bank and the former Countrywide Financial Corp. Fannie Mae Chief Executive Timothy Mayopoulos was once general counsel at Bank of America.

It also includes a $968 million accord in July with Citigroup Inc.

In the Wells Fargo settlement, the San Francisco-based bank will pay Fannie Mae $541 million in cash after adjusting for credits from prior repurchases. Before adjustments, the settlement totaled $591 million.

The accord resolves substantially all repurchase claims against Wells Fargo over loans sold to Fannie Mae that were made before 2009.

“We have closed out our legacy repurchase reviews with this agreement,” Mayopoulos said in a statement. “This agreement represents a fitting conclusion to our year of hard work to put legacy issues in the rear view mirror and begin 2014 focused on improving the future of housing finance.”

Wells Fargo agreed in September to pay a net $780 million to the smaller Freddie Mac to resolve similar repurchase claims. It said it had set aside sufficient funds for the Fannie Mae settlement.

Fannie Mae and Freddie Mac were directed by its regulator, the Federal Housing Finance Agency (FHFA), to reduce outstanding loan repurchase demands by year end, and have been reaching many agreements with individual lenders.

Banks can be forced to buy back home loans if representations and warranties concerning the underwriting and whether borrowers could afford to make payments prove false.

Freddie Mac did not immediately respond on Monday to a request for comment on its repurchase efforts.

The FHFA is also pursuing lawsuits against many banks over mortgage securities sold to Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac own or guarantee two-thirds of U.S. home loans. The government seized them on September 7, 2008 and put them into a conservatorship. As of last month, taxpayers had nearly broken even on the bailout.

(Reporting by Jonathan Stempel in New York and Varun Aggarwal in Bangalore; Editing by Sriraj Kalluvila and Jeffrey Benkoe)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/pFgQdHtwAbU/story01.htm

U.S. pending home sales end slide, hint at stabilization


WASHINGTON (Reuters) – Contracts to purchase previously owned U.S. homes edged up in November, marking the first increase in six months and providing a hopeful sign the sector has begun to stabilize after its momentum was sapped by rising mortgage rates.

The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, rose 0.2 percent from October, to 101.7. But contracts were 1.6 percent below last November’s levels.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 1.0 percent.

“Several housing indicators have improved recently and the very modest increase in pending home sales in November is a tentative sign that activity is stabilizing, or perhaps even picking up,” said Daniel Silver, an economist at JPMorgan in New York.

Housing sales had been dampened by a rise in mortgage rates, which began to climb earlier this year as investors bet the Federal Reserve would start to reduce the stimulus it provides the U.S. economy.

The rise in borrowing costs helped push home resales down in November to their lowest level in nearly a year, but other recent indications of the sector’s health have brightened.

Housing starts rose in November to the highest level in six years and sales of new homes dipped only slightly following a big jump in October.

Along with the latest reading on pending home sales, those reports provided an encouraging sign that housing was adjusting to mortgage rates that have advanced by more than a percentage point since May, to almost 4.5 percent.

The signs of stabilization have been accompanied by other signals showing improvement in the U.S. labor market and manufacturing that have reinforced hopes the economy will deliver broad growth in 2014.

Expectations of stronger growth and a decision by the Fed to begin scaling back its bond-buying stimulus have led long-term borrowing costs higher, with the yield on the 10-year U.S. Treasury note breaching 3 percent last week.

The central bank announced on December 18 that it would scale back bond purchases by $10 billion in January to $75 billion and it is expected to maintain this moderate pace of tapering over the course of the year.

The Fed’s move confirmed its confidence in the underlying momentum of the economy and helped push Wall Street stocks to record highs.

“With home prices continuing to rise, labor markets slowly recovering and mortgage rates still low from a historical perspective, we expect the housing sector to continue its path toward gradual recovery in the coming year,” wrote Gennadiy Goldberg, U.S. strategist with TD Securities.

(Reporting by Alister Bull; Editing by Chizu Nomiyama, Diane Craft and Dan Grebler)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/x_8aesgxMUg/story01.htm

World share markets rise to six-year high, euro gains


NEW YORK (Reuters) – World stock markets rose to a six-year high on Monday on optimism about the global economy heading into 2014, while the euro strengthened against the dollar and yen on comments by European Central Bank chief Mario Draghi.

U.S. benchmark yields slipped below the 3 percent threshold after they hit a two-year high last week on expectations of improving domestic growth as the Federal Reserve begins to pare its massive bond-purchase stimulus in January.

Views on economic improvement further reduced the appeal of gold, which will record its biggest annual loss in 32 years.

Oil prices fell to near $111 a barrel in London on signs crude exports from Libya might return to normal due to a possible end to a four-month blockage of a key port.

MSCI’s all-country world equity index .MIWD00000PUS edged up 0.1 percent to 407.30 points, its highest since late 2007. It was poised to gain almost 10 percent for the year, following a 13.4 percent rise in 2012.

Wall Street stocks were little changed, with the Standard Poor’s 500 index on track to book a 29.1 percent annual rise this year, its biggest since 1997. .N

“We certainly have had quite an impressive year, and obviously a lot of that was helped by the central bank stimulus. Given what we’ve seen so far, the path of least resistance has been to go higher,” said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago.

The Dow Jones industrial average .DJI closed up 25.88 points, or 0.16 percent, at 16,504.29. The Standard Poor’s 500 Index .SPX ended down 0.33 points, or 0.02 percent, at 1,841.07. The Nasdaq Composite Index .IXIC finished down 2.40 points, or 0.06 percent, at 4,154.20.

After years in which financial markets lurched from the debt crisis in Europe to U.S. political deadlock, investors are generally becoming more upbeat on the global economic outlook.

Most European stock indexes fell but stayed on track to post their biggest annual gains in four years on support from the ECB and a strengthening economic recovery.

The FTSEurofirst 300 .FTEU3 index of top European shares provisionally closed down 0.2 percent at 1,311.76 but was still set to post a gain of 16 percent for the year, its best annual performance since 2009.

Japan shares .N225 ended 2013 with a flourish, up 0.7 percent – 56.7 percent for the year. Tokyo’s Nikkei index has posted its strongest run-up since 1972 as aggressive government and central bank policies have driven the plunge of its currency in an effort to help exporters and stimulate domestic demand.

“This year has seen the renaissance of equities as the financial crisis ended. Next year should see the end of the economic crisis, and it should bring more opportunities for stock investors,” said David Thebault, head of quantitative sales trading at Global Equities in Paris. .EU

Thin year-end conditions made for more lively moves in the currency market.

The euro last traded up 0.4 percent to $1.3796, short of $1.3892 set on Friday – which was the highest since October 2011. The single currency also strengthened against the yen, rising 0.4 percent to 144.99 yen after hitting a five-year peak of 145.675 yen on Friday. FRX/

Comments by European Central Bank President Mario Draghi in Germany’s Der Spiegel that he saw no urgent need to cut interest rates again and no signs of deflation supported the euro.

“At the moment we see no need for immediate action. We don’t have Japanese conditions,” he said.

U.S. YIELDS FALL

Yields on the U.S. benchmark 10-year Treasury note slipped to 2.97 percent as bargain-hunting emerged two days before the end of 2013. The 10-year yield climbed to its highest in more than two years at 3.02 percent last week.

Federal borrowing costs had risen in reaction to the U.S. central bank’s decision earlier this month to dial back its bond purchases next week by $10 billion a month, to $75 billion.

Fed Reserve officials have expressed cautious optimism on improving domestic growth in 2014, helped by other major economies showing signs of improvement.

The U.S. housing recovery has supported the overall economy, with pending home sales edging up 0.2 percent in November. ID: nL2N0K90R1

Global growth hopes lifted copper and aluminum to four- and two-month highs. Aluminum clung to a 0.7 percent rise to close at $1,822 a tonne but copper nearly erased its early gains, closing up 0.03 percent at $7,380 a tonne.

Safe-haven gold fell 1.3 percent to $1,196.91 an ounce in late trading as the precious metal headed toward its biggest annual loss in over three decades. GOL/

In the oil market, Brent crude settled 97 cents or 0.86 percent lower at $111.21 a barrel, while U.S. oil futures settled down $1.03 or 1 percent at $99.29. O/R

(Additional reporting by Chuck Mikolajczak, Curtis Skinner in New York, Blaise Robinson, Marc Jones in London and Wayne Cole in Sydney; Editing by Catherine Evans, Dan Grebler and Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SGGaE7LI_c4/story01.htm

Swatch fire seen affecting other watchmakers


ZURICH (Reuters) – A fire that destroyed a workshop at a Swatch Group (UHR.VX) factory will affect other watchmakers it supplies more than the Swiss firm itself, as a break in production is likely to cut the availability of parts to an industry already facing bottlenecks.

Sunday’s fire at a part of the plant that treats metals to protect them from rust could stop production of some components for several weeks, Swatch’s chief executive said on Monday.

Swatch chief Nick Hayek said watchmakers that buy watch parts from its ETA Manufacture Horlogere unit, based in Grenchen, western Switzerland, would be most affected, rather than Swatch itself.

“It is a bigger problem for them than for us,” Hayek told Reuters by phone.

Swatch, the world’s biggest watch parts supplier has a near-monopoly on “movements”, the mechanisms that drive the moving parts of a watch, and counts rival luxury groups Richemont (CFR.VX) and LVMH (LVMH.PA) among its customers.

The world’s biggest luxury group, LVMH, which owns the Tag Heuer, Hublot and Zenith watch brands, said it had no immediate comment, while a spokesman for Richemont could not be reached on Monday.

“ETA is by far the most important production site,” said Kepler Cheuvreux analyst Jon Cox. “The structure of the building will have to be inspected for safety reasons, which means the whole complex will be out of action for a while, so there could be shortages of components.”

Tired of its role as the industry’s “supermarket”, Swatch was granted the go-ahead by the Swiss antitrust authority WEKO in October gradually to reduce its deliveries to rivals.

BOTTLENECKS

The move could cause supply shortages for some players in the industry already exposed to bottlenecks due to the shortage of firms able to make the delicate internal mechanisms of watches as well as a lack of investment in training.

Hayek said third parties supplied by ETA would be advised by letter that there may be some delays to the deliveries of certain watch components.

“We need to clean all the machines and reorganize. There will be a small delay of three or four weeks to production, maybe a bit more,” Hayek said.

The Swiss watchmaker, known for its colorful plastic timepieces and the high-end Omega brand, said it had another 150 factories it could fall back on.

Hayek played down the impact on Swatch Group of the fire, which gutted a 150 square meter workshop and damaged another with smoke, calling it a “relatively minor event” for the Swiss watchmaker.

Shares in Swatch pared losses slightly on Hayek’s comments and were trading down 1.26 percent by 1515 GMT.

The cost of rebuilding the galvanic workshop destroyed by the fire, whose cause is unknown, would cost around 4 to 5 million Swiss francs ($4.5-5.6 million), Hayek said.

Police, who said on Sunday the cause of the blaze was unclear, did not comment further on Monday.

($1 = 0.8881 Swiss francs)

(Additional reporting by Astrid Wendlandt in Paris; Editing by Giles Elgood)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/1ReD9vUZ6wU/story01.htm

World shares end bumper year, Japan sees best gains since 1972


LONDON (Reuters) – World stocks were putting the finishing touches to a bumper year on Monday, steady at a six-year peak as rising benchmark bond yields and commodity prices underscored expectations of firmer global growth in 2014.

Wall Street was set for a quiet start to its final full session of 2013 – its best year since 1997, with a near 30 percent gain.

After years in which financial markets lurched from the debt crisis in Europe to U.S. political deadlock, investors are generally becoming more upbeat on the global economic outlook.

In Europe, Britain’s FTSE 100 .FTSE, Germany’s DAX .GDAXI and France’s CAC 40 .FCHI all made minor downward adjustments with annual gains running at 14, 26 and 17 percent.

Japanese shares .N225 ended 2013 with a flourish, up 0.7 percent – 56.7 percent for the year – as the yen skidded to a fresh five-year low for a third straight session.

Jeremy Whitley, head of European equities at Aberdeen Asset Management, said one reason for the market optimism was that company earnings should improve next year.

“Our belief is that earnings will recover given the improving macroeconomic environment as policy remains very accommodative,” he said, regarding Europe.

“However, it is important to be cognizant of the potential headwinds, which include the strength of the euro, austerity fatigue … and the need for an overarching banking union to provide confidence in the banking system.”

Thin year-end conditions made for some more lively moves in the currency market. The euro vaulted as high as $1.3892 on Friday before falling back, and on Monday it was last at $1.3776 having dived as low as $1.3727 in Asia.

Support for the single currency came from comments by European Central Bank President Mario Draghi in Germany’s Der Spiegel that he saw no urgent need to cut interest rates again and no signs of deflation.

“At the moment we see no need for immediate action. We don’t have Japanese conditions,” he said. (here)

WEAK YEN

The rouble fell following a second bombing in as many days in the Russian city of Volgograd, though equity investors largely shrugged off the unrest.

The dollar was steady at 105.20 yen after reaching a peak at 105.415. The yen has posted nine consecutive weeks of falls against the dollar, the longest such run since 1974.

Like the huge rise in the Nikkei .N225, which has seen its best performance since 1972 this year, it is the aggressive policies of Japan’s government and its central bank that have been driving the plunge in the yen.

In another promising sign for the country’s economy, the Asahi newspaper reported that Japan’s most influential business lobby has agreed to encourage its members to raise workers’ pay for the first time in six years.

Japan’s competitors, however, have been complaining about the weak yen. South Korea’s deputy finance minister warned on Monday the yen was falling too fast, and the head of China’s National Development and Reform Commission said the impact on neighbors needed to be monitored.

ITALY IN FOCUS

Underpinning both the dollar and euro in recent weeks have been widening yield premiums over Japanese debt.

Yields on the U.S. benchmark 10-year Treasury note have climbed to their highest in more than two years at 3.02 percent since the Federal Reserve said on December 18 it would start to taper its monetary stimulus. The comparable Japanese yield is just 0.735 percent.

Analysts at RBS note that yields on the 30-year Treasury bond were approaching an important level at 4.05 percent, which marks the top of a bull channel going back two decades. A breach there would be viewed as very bearish for bonds.

The only new factor for European debt markets on Monday was a 5.5 billion euro Italian debt sale. Rome paid 4.11 percent to sell its March 2024 benchmark, up slightly from 4.01 percent at a similar auction a month ago.

The sale came as Italy’s third-biggest bank, Monte dei Paschi di Siena, (BMPS.MI) was forced to delay a 3 billion euro ($4.1 billion) share sale because of shareholder opposition.

Global growth hopes lifted copper and aluminum to four- and two-month highs, while safe-haven gold edged down to $1,202 per ounce as it trudged towards its biggest annual loss in over three decades, at nearly 30 percent.

Brent and U.S. crude oil were steady at $112.17 and $100.23 a barrel respectively.

(Additional reporting by Wayne Cole in Sydney; Editing by Catherine Evans)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SGGaE7LI_c4/story01.htm