BBC News - Count will determine if Ireland accepts or rejects EU fiscal pact

Counting in the Republic of Ireland's referendum on whether to ratify the EU's Fiscal Pact, is due to begin at 09:00 BST on Friday.

Some 3.1m people are entitled to vote in the Irish Republic

The treaty sets strict limits for countries' budget deficits.

Rejecting it would bar Ireland from emergency EU funding when its current bailout package expires in 2013.

The turnout is believed to have been low. The results are not expected until late on Friday.

Ireland is the only EU state putting it to a national vote but only 12 of the 17 eurozone members need to ratify it, so a "No" would not block the treaty.

As polling stations closed on Thursday evening, the Press Association reported that in Dublin 38% of the electorate voted while in the north-west counties just 20% took part.

BBC Ireland correspondent Mark Simpson said the "Yes" camp feared people, angry with continuing austerity measures, would vote against the treaty to punish the government.

One man who voted "no" was Gerard Cunningham - he told the Associated Press: "Banks in Germany and Britain and elsewhere were just as responsible for the mess we're in. We're sick to the back teeth of being told it's all our own fault."

Another voter, Bridget Connolly voted "yes" on the grounds that "the treaty will solve nothing, but... we're going to need European money next year, plain and simple. We can't afford to be thumbing our noses at Europe right now".

'No to austerity'

The pact, signed by all EU members except the Czech Republic and the UK, allows EU member states to co-ordinate their budget policies and impose penalties on rule-breakers.

It commits all ratifying members to achieve budget deficits of less than 0.5% of economic output.

Last year, Ireland's deficit reached 13.1%.

The country's 3.1m voters have twice rejected European Union treaties - in referendums in 2001 and 2008 - though both votes were overturned in subsequent polls.

Those against the treaty argue that austerity is not working and suggest that the country should instead default on debts at five nationalised banks.

Reuters News - Job growth seen stepping up in May

Job seekers speak with with job recruiters while they attend the Coast to Coast job fair in New York, May 7, 2012.

Credit: Reuters/Eduardo Munoz

By Lucia Mutikani

WASHINGTON | Fri Jun 1, 2012 12:06am EDT

(Reuters) - Jobs growth probably snapped back in May from weather-related distortions that had slowed hiring, suggesting the economy was still expanding moderately despite strong headwinds from Europe.

Employers probably created 150,000 jobs last month, according to a Reuters survey of economists, after generating a paltry 115,000 positions in April - the fewest in six months.

That would bring nonfarm employment growth closer to its 176,000 a month average of the past three months and temper fears that economic activity could be stagnating.

"The labor market is getting better, but the glass is still half empty. I think a big part of the weather and seasonal issues that have been weighing on the jobs numbers is now behind us," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Unseasonably warm weather brought forward hiring into the winter months, causing the labor market's recovery to take a step back in March and April.

If the forecasts are accurate, the government's jobs report on Friday could shore up confidence that has been shaken by a raft of soft regional factory surveys and a worsening of the debt crisis in Europe.

Economists have blamed Europe's prolonged financial crisis and slowing Chinese growth for sluggish U.S. factory activity in May, which has evoked among investors memories of the slackening of job growth in the summer of 2011 when the U.S. recovery nearly stalled.

That fear has pushed the yield on the 10-year U.S. Treasury note to a record low, while punishing stocks. The Standard & Poor's 500 index shed 6 percent of its value in May.

The anticipated job gains would be consistent with economic growth of between a 2 percent and 2.5 percent annual rate. U.S. GDP grew at a 1.9 percent pace in the first quarter.

While the rise in employment would still be subpar by historical standards, the data is not expected to have a major impact on the monetary policy outlook. Economists said it would take a payrolls number below 100,000 to jolt the Federal Reserve into action.

LITTLE ENTHUSIASM FOR MORE MONETARY EASING

However, it likely will not be strong enough to ease the pressure on President Barack Obama, who faces a tough re-election vote in November. The level of employment is still 5 million jobs below where it was in December 2007, when the economy fell into recession.

Analysts say the economy needs to create roughly 125,000 jobs a month just to keep the unemployment rate steady. While the jobless rate has dropped by 1 percentage point since August, that has largely been due to people leaving the labor force.

Economists expect the jobless rate to hold at a three-year low of 8.1 percent in May, although it could decline further if the exodus from the labor force continues. That exodus has reflected both baby boomers reaching retirement age and disenchanted unemployed people giving up the hunt for work.

The labor force participation rate - the share of working-age Americans who either have a job or are looking for one - dropped to a 30-year low in April.

The private sector is expected to account for all the job gains for a third straight month, adding 160,000 positions. Government payrolls are seen dropping by 10,000, dragged down by ongoing belt-tightening by local governments.

Construction employment is expected to rebound in May after declining in the prior three months, driven by an increase in residential construction.

Manufacturing, the recovery's star performer, is expected to show another month of gains.

In light of the high unemployment rate, average hourly earnings are seen rising a slight 0.2 percent.

"Given the current pace of growth, we are not going to see average hourly earnings increase in any significant way," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

(Editing by James Dalgleish)

Reuters News - Spain debt woes spur flight from risk assets to U.S. bonds, dollar

By Chikako Mogi

TOKYO | Thu May 31, 2012 1:45am EDT

(Reuters) - Asian shares and commodities slid while the euro fell to its lowest in almost two years against the dollar on Thursday, as surging borrowing costs in troubled Spain raised fears that it could fail to rescue its banks and may need to seek a bailout.

Investors fled from risk assets to U.S. government bonds, with the benchmark 10-year Treasury yield falling below 1.6 percent in early Asian trade on Thursday, its lowest in at least 60 years. The 10-year Japanese government bond yield hit a nine-year low of 0.810 percent.

The dollar and the yen were also beneficiaries of escalating risk aversion although gold, a traditional safe-haven asset, struggled in the face of the greenback's strength.

MSCI's broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS tumbled as much as 1.6 percent, and was set for its worst month in eight months with a drop of nearly 12 percent. The pan-Asia index was down 0.3 percent for the year.

The index was dragged down as some key Asian bourses - Hong Kong .HSI, Australia .AXJO and Korea .KS11 - temporarily fell to negative territory for the year.

Japan's Nikkei .N225 was down 1.4 percent on the day and on track for its biggest monthly drop in two years. .T

European shares were likely to tread lower, with spreadbetters predicting major European markets .FTSE .FCHI .GDAXI would open down as much as 0.2 percent. U.S. stock futures were nearly unchanged. .EU .L .N

"The situation in Spain at the moment is untenable, not only is there concern over the state of its banking sector but there is little confidence its government will actually be able to bail them out," said Michael Creed, an economist at the National Australia Bank.

A caution by Spain's central banker that Madrid will miss deficit targets for this year pushed Spanish 10-year yields above 6.7 percent, close to 7 percent, a level seen as unsustainable and which could push Spain to seek a bailout just as Greece, Portugal and Ireland have done.

The cost of insuring against a Spanish default scaled a record high near 600 basis points whileItaly, which is also struggling with huge public debt, saw its 10-year yield top 6 percent for the first time since January.

Yields on all German bond maturities hit record lows on Wednesday, pushing the premium investors demand to hold Spanish debt over German debt to its highest since the launch of the euro at around 543 basis points.

FIRM DOLLAR SLAMS COMMODITIES

Oil prices extended losses and copper hit 2012 lows near $7,422 a metric ton (1.1023 tons) on Thursday. <MET/L>

U.S. crude futures eased 0.3 percent at $87.59 a barrel and were set for their worst month since late 2008. Brent crude fell 0.3 percent at $103.15 a barrel, on track for its worst month in two years. <O/R>

"Investors were already exposed to the problems in Spain, but what really disturbed the market were oil prices and U.S. bond yields which broke out of range to hit long-period lows," said Lee Seung-wook, an analyst at Kiwoom Securities.

The dollar index .DXY, measured against a basket of major currencies, extended its rally to 83.11, its highest since September 2010.

The strong dollar and intensifying risk aversion sent the Thomson Reuters-Jefferies CRB index .CRB, a global benchmark for commodities, tumbling 1.7 percent to its lowest levels since September 2010 on Wednesday. A stronger dollar typically weighs on dollar-based commodities.

The dollar index was on the verge of closing above its 100-month moving average at 81.82, which would generate a buy signal which in turn could spur a sustained period of dollar strength for the next couple of years to as high as 101.00-106.00, some analysts said.

The index has in the past 30 years generated four successful buy signals which have resulted in significant dollar moves, they added.

EURO UNDER FIRE

The euro fell to a 23-month low of $1.2358 and a 4-1/2 month low against the safe-haven yen at 97.36.

"There is no exit in sight currently for the euro to get out of this downtrend because there is no shortage of negative news," said Hisamitsu Hara, chief FX manager at Bank of Tokyo-Mitsubishi UFJ.

"Problems in Spain, a large euro zone economy, heighten fears while the risk of Greece leaving the euro bloc raises contagion concerns. The euro remains depressed, with players cautiously testing the downside".

Hara added that the euro could weaken until support at the$1.19 level. The euro last dipped below $1.19 in June 2010.

The yen rose to a 3-1/2 month high against the dollar at 78.71.

Hara said wariness over Japanese authorities intervening to prop up the dollar was likely to prevent the U.S. currency from falling sharply further.

The European Commission threw Spain two potential lifelines, offering more time to reduce its budget deficit and offering direct aid from a euro-zone rescue fund to recapitalize distressed banks.

But any relief from the news was quickly offset by the latest Greece polls showing parties for and against a bailout neck-and-neck or very close to each another, ahead of a June 17 election that may decide whether Greece remains in the euro.

Asian credit markets weakened, with the spread on the iTraxx Asia ex-Japan investment-grade index widening by 8 basis points.

(Additional reporting by Reuters FX analyst Krishna Kumar in Sydney, Joonhee Yu in Seoul and Luke Pachymuthu in Singapore; Editing by Ed Lane)

BBC News - India growth rate slows to 5.3% in first quarter of 2012

 Yogita Limaye reports from Gujarat on the problems caused by the weak currency

The Indian economy grew at the slowest rate since 2003 in the first three months of 2012, due to a widening trade gap and poor investment.

India's gross domestic product (GDP) rose 5.3% in the first three months of 2012, down from 7.8% in the same period last year, official figures show.

The growth figure was well below market expectations of 6.1%

India is the third-largest economy in Asia but has been struggling with inflation and currency weakness.

Since July last year, the Indian rupee has seen one of the biggest declines among Asian currencies, dropping more than 27% against the US dollar.

"Shocking numbers as growth was even lower than lows witnessed during the financial crisis," said Anubhuti Sahay from Standard Chartered Bank in Mumbai.

The BBC's Yogita Limaye in Mumbai said that just a year ago India was aspiring for double digit growth.

But a global slowdown has reduced external demand, and high inflation coupled with a weak rupee has made things more expensive within the country.

BBC News - Spain in focus as EU readies euro zone economic strategy

European Commission President Jose Manuel Barroso gives a thumbs-up as he makes a speech during The State of the Union conference in Florence May 9, 2012.

Credit: Reuters/Giampiero Sposito

By Jan Strupczewski and Francesco Guarascio

BRUSSELS | Wed May 30, 2012 1:52am EDT

(Reuters) - The European Commission will set out its economic strategy for the euro zone on Wednesday, spelling out measures to balance growth with unpopular fiscal consolidation that will be particularly pointed for Spain and Italy.

The Commission will issue specific recommendations for each of the 27 European Union members, as well as for the 17 sharing the euro. Once endorsed by EU leaders in June, the executive's plans will become binding for the 27-nation bloc.

Italy, the euro zone's third biggest economy and a country under close market scrutiny because of its large debt and slow growth, is likely to get praise for its fiscal consolidation efforts under technocrat premier Mario Monti, a draft document obtained by Reuters shows.

"The policy response to ensure sound public finances and tackle Italy's long-standing structural weakness has been determined and wide-ranging," reads the draft, which may be yet changed before adoption.

"Italy has been implementing a bold fiscal consolidation strategy which should allow correcting the excessive deficit by 2012 and achieving ... a broadly balanced budgetary position in structural terms by 2013, one year earlier than recommended."

Spain, struggling to wrestle down its deficit and recapitalize its debt-laden banking system, is unlikely to get such a positive write-up.

There has been speculation that the Commission, the guardian of EU rules, will shift its emphasis from austerity to growth, without which euro zone debts cannot be reduced.

New French President Francois Hollande has championed a greater focus on growth over budget cuts and Commission President Jose Manuel Barroso reiterated on Tuesday that the euro zone needed both to regain investor confidence.

He also said the EU's budget rules, the Stability and Growth Pact, should take into account differences between states - a possible shift in emphasis towards growth, one that could benefit countries such as Spain and Italy, whose excessive debts could yet pose a threat to the future of the currency bloc.

"We will ... set out our line on implementing the Stability and Growth Pact in a growth-friendly and differentiated way applying its in-built scope of judgment," Barroso said in a speech, comments that imply a degree of flexibility.

While Spain has repeatedly said it does not want to be cut any slack, it would make its budget consolidation efforts more manageable if it had longer to meet the target. Similar flexibility would help several other strapped euro zone states.

Spanish 10-year borrowing costs have surged to 6.5 percent on investor concerns about the cost of rescuing the country's banking sector and supporting its indebted regions. A seven percent yield was the tipping point that pushed Ireland and Portugal into taking EU/IMF bailouts.

SHIFT OF EMPHASIS?

Some economists expect a switch in the Commission's focus to structural budget deficits, which exclude one-off items and the effects of the economic cycle, from headline deficits, which at a time of recession are larger.

"The Commission will monitor the impact of tight budget constraints on growth, enhancing public expenditure, and on public investment," Barroso said.

"If necessary, the Commission will give guidance on the scope for possible action within the boundaries of the European Union and national fiscal frameworks."

The draft report on Italy says the priority areas for Rome are its public finances, reforming labor markets, education and market regulation, as well as making taxation more growth friendly and a more efficient organization of the judiciary.

It calls on Italy to adopt laws that would implement an agreed balanced budget rule and urges the government to tackle Italy's grey economy - such as undeclared work. But it says Rome's reform plans are ambitious and relevant.

Spain has vowed to reduce its budget deficit, which stood at 8.9 percent of GDP last year, to 5.3 percent in 2012 and 3 percent in 2013. With its economy in recession, many officials believe the targets are overly ambitious.

Some policymakers have said Madrid could get more time to reduce its deficit if it presented a credible 3-4 year plan of fiscal adjustment.

The need for more time was underlined last week, when previously undisclosed data showed Spain's 17 autonomous regions will need to refinance 36 billion euros of debt this year, rather than the 8 billion euros initially expected. It also faces a 19 billion euros bill to rescue troubled lender Bankia.

(Reporting By Jan Strupczewski, editing by Mike Peacock)

BBC News - China and Japan to start direct yen-yuan trade in June

China will allow direct trading of the yuan and the Japanese yen, in a move aimed at promoting trade between Asia's two biggest economies.

China has said it is looking to make its tightly controlled currency fully convertible

This means the two countries will not be using the US dollar as an intermediary.

China, which sometimes has a tense relationship with Japan, is the country's biggest trading partner.

China's central bank said the China Foreign Exchange Trade system would launch this trade, starting next month.

"This is part of China's broader strategy to reduce dependence on the dollar," said Dariusz Kowalczyk from Credit Agricole CIB in Hong Kong.

He added that the yen was chosen because of the large amount of trade between the two countries and that "this could lead to an expansion of trading with other currencies".

In December, the leaders of Japan and China agreed to mutually promote direct trading between the two currencies based on market principles.

The People's Bank of China said the move would help lower currency conversion costs and help facilitate bilateral trade and investment.

Japanese Finance Minister Jun Azumi told reporters that trading under a new regime will start in Tokyo and Shanghai on 1 June, according to Reuters News agency.

"By conducting transactions without using the third country's currency, it will bring merits of reducing transaction costs and lowering risks involved in settlements at financial institutions," said Mr Azumi.

"That will contribute to improve convenience of the both countries' currencies and reinvigorate the Tokyo market."

Japanese media are reporting that this is the first time China has let a major currency other than the US dollar trade directly with the yuan.

BBC News - Rare Martian Pink diamond at auction in Hong Kong

A rare pink diamond is expected to fetch at least $8m (£5m) when it goes under the hammer in Hong Kong.

The Martian Pink is an extremely rare stone

The Martian Pink diamond is about 12 carats in size. Pink diamonds as large as this are extremely rare.

The gem was named by famed American jeweller Ronald Winston in 1976, the same year the US sent a satellite to Mars.

The most famous pink diamond in the world belongs to Queen Elizabeth II.

The Williamson Pink was given to the British queen for her wedding in 1947 - the cut, 23.6-carat round stone was later set in a brooch.

The Martian Pink is estimated to be worth $8-12m, says Christie's auction house.

It is the largest round fancy intense pink diamond to ever go under the hammer, says Christie's.