Thursday, July 5, 2012

BBC News - Japan approves merger of Tokyo and Osaka exchanges


Japan's competition watchdog has approved the planned merger of the Tokyo Stock Exchange and Osaka Securities Exchange.
People walking past a stock market board in TokyoTokyo Stock Exchange's benchmark Nikkei 225 index has been declining for some years
Once completed, it will create the world's third-largest and Asia's largest stock exchange.
The move comes as demand for new share sales in Japan has been falling amid an overall slowdown in its economy.
Meanwhile, other regional bourses, especially in China and Hong Kong, have seen a growth in new listings.
The Japan Fair Trade Commission said in its ruling that "given the remedies proposed by the parties concerned, competition in any particular field of trade might not be substantially restrained".
The two exchanges are scheduled to merge on 1 January next year.
Fading charm
Japan's growth has been slowing in recent years and it lost its position as the world's second largest economy to China last year.
The slowdown in its economy has also resulted in a decline in the number of companies looking to list on stock exchanges in Japan.
According to data compiled by Ernst & Young, only 22 companies carried out an initial public offering (IPO) of their shares in Japan, down from 198 firms in 2006.
The amount of money raised also fell to $15bn (£9.6bn) in 2010 from $19bn in 2006.
On the other hand, stock exchanges in Hong Kong and China have seen a surge in IPOs.
Bourses in the two countries saw as total of 440 companies carry out share sales in 2010, up from 123 in 2006.
These firms raised a combined $130bn in new capital through the share sales, compared with $54bn in 2006.

Wednesday, July 4, 2012

Bloomberg News - Draghi’s Giant Leap On Rates May Be Small Step For Euro


European Central Bank President Mario Draghi
Hannelore Foerster/Bloomberg
Mario Draghi, president of the European Central Bank (ECB).

By Jana Randow and Gabi Thesing - Jul 4, 2012 10:48 AM GMT+0200
European Central Bank President Mario Draghi may take a giant leap in monetary policy tomorrow for limited economic gain.
ECB officials meeting in Frankfurt will not only take the benchmark interest rate below 1 percent for the first time to a record low of 0.75 percent, they will also cut the deposit rate to zero, according to Bloomberg News surveys of economists. The easing will do little to aid an economy sliding into recession and may fuel speculation about what the ECB can do after its conventional policy options are spent, some economists said.
“It’s a bold move and will lead the ECB into uncharted territory,” said Julian Callow, chief European economist at Barclays Capital in London. “With soaring unemployment and few signs of the economy recovering, some strong monetary medicine is needed. But let’s be honest, a rate cut by itself will not end the recession, we need much more for that.”
Europe’s sovereign debt crisis, which has forced five of the 17 euro nations to seek bailouts, is curbing growth across the continent and damping the global economic outlook. While ECB rate cuts might not stimulate demand, they would lower borrowing costs for troubled banks. They could also build on the confidence boost that euro-area governments provided last week when they took steps toward a deeper economic union.

‘Signaling Effect’

The ECB will announce its rate decision at 1:45 p.m. in Frankfurt tomorrow. Of 62 economists surveyed by Bloomberg, 46 predicted a quarter-point cut in the benchmark rate, five forecast a half-point reduction and 11 projected no change. In a separate survey of 22 forecasters, 12 said the 0.25 percent deposit rate will be cut to zero, two predicted a reduction to just above zero and eight expected no change.
“A rate cut will have a very, very limited effect on inflation and activity,” said Jens Sondergaard, senior European economist at Nomura International Plc in London, who nevertheless predicts the ECB will lower rates. “You may ask why bother in the first place, but it’s wrong to dismiss rate cuts. They have an important signaling effect, and markets want reassurance that measures are being taken.”
Bond and equity markets rallied last week after euro-area leaders opened the way to recapitalizing banks directly with bailout funds once Europe sets up a single banking supervisor. They also dropped the requirement that taxpayers get preferred creditor status on aid to Spain’s crippled lenders.
Yields on Spanish 10-year bonds fell to 6.25 percent yesterday from 6.94 percent on June 28, while the Italian equivalent dropped to 5.63 percent from 6.19 percent.

Global Action

Europe’s debt crisis has pushed central banks around the world into action to protect their economies.
The Bank of England last month committed to activate a sterling liquidity facility to aid banks, and economists predict it will expand stimulus further at its policy decision tomorrow. It will increase its target for bond purchases by 50 billion pounds ($78 billion) to 375 billion pounds, according to the median forecast in a survey of 41 economists.
The Federal Reserve said on June 20 it will expand the Operation Twist program to extend the maturities of assets on its balance sheet, a move that will lower longer-term interest rates in financial markets.
The central banks of ChinaAustralia, the Czech RepublicKazakhstanVietnam and Israel also cut rates in June, while the Swiss National Bank is buying euros to defend its franc ceiling.
Draghi last month questioned the effectiveness of cutting ECB rates, arguing that “price signals” have a “relatively limited immediate effect” amid financial-market tensions.

‘No Inflation Risks’

Since then, the euro-area economic data have deteriorated. Unemployment rose to a record 11.1 percent in May, economic confidence slumped to the lowest in more than two and a half years in June, and data today confirmed that services and manufacturing output contracted for a fifth month. The euro economy will shrink 0.3 percent this year, according to the European Commission.
While inflation is at 2.4 percent, in breach of the ECB’s 2 percent limit, Draghi said on June 15 that there are “no inflation risks in any euro-area country.”
“The economic case for a 50 basis-point rate cut is pretty watertight, but for now it’s easier to just cut by 25 basis points,” said Ken Wattret, chief euro-area economist at BNP Paribas in London. “That is enough to show you are standing ready to do something. And it will definitely help the banks that have borrowed in the LTRO.”

Three-Year Loans

The ECB has lent banks more than 1 trillion euros ($1.26 trillion) for three years in its so-called Longer Term Refinancing Operations, with the interest determined by the average of the benchmark rate over the period of the loans. Societe Generale SA estimates that cutting the key rate by 50 basis points would save banks 5 billion euros a year.
Cutting the deposit rate may also lower money-market rates and encourage banks to lend to other institutions, companies or households instead of parking excess cash in the ECB’s overnight deposit facility. Almost 800 billion euros is currently being deposited with the ECB each day.
On the other hand, there is a risk that lower money-market rates could hurt banks’ profitability, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to each other.
The deposit rate has steered market borrowing costs since the ECB started to provide banks with unlimited liquidity after the collapse of Lehman Brothers Holdings Inc. in 2008. That policy removed the need for banks to lend to each other to meet their reserve requirements, pushing down interest rates. The euro overnight index average, or Eonia, stood at 0.33 percent yesterday.

Rewarding Governments

The impact of lower borrowing costs on the economy may be too small for the ECB to expose itself to the perception that it’s rewarding governments for their latest crisis-fighting efforts, said economists at UBS AG in London and Helaba Trust GmbH in Frankfurt, who predict no change in rates.
“We acknowledge that the decision is close, but on balance, given the marginal benefit of a small rate cut and the perception that a rate cut will be interpreted as a quid pro quo for good behavior, the Council will stay on hold,” UBS economists including Amit Kara wrote in a note to clients.
Draghi said after the last policy meeting on June 6, when the ECB kept rates on hold, that “there has never been a quid pro quo between monetary policy and government policy.”
Still, the ECB doesn’t have a compelling reason not to act, said Marco Valli, chief euro-area economist at UniCredit Global Research in Milan. “There is no big reason to hold fire even if the benefit is small,” he said. “To me, having a little benefit is better than having no benefit at all.”

‘What Next?’

If the ECB moves closer to zero with rates, it may face questions on what else it can do to stimulate the economy.
Elga Bartsch, chief European economist at Morgan Stanley in London, advocates “large scale asset purchases,” while Christian Schulz, senior economist at Berenberg Bank in London, suggests yield caps for “reform-compliant and solvent sovereigns” and another round of “very long-term” loans.
“They will have no more ammunition in terms of their interest-rate weapon,” said Sondergaard at Nomura. “And if we continue to have disinflationary pressures, the question will be: ‘What can you do next?”’

Reuters News - Spain to unveil new austerity steps soon -sources


Wed Jul 4, 2012 1:43pm BST
(Reuters) - Spain's government is putting finishing touches to an up to 30 billion euro (24.3 billion pounds) package of spending cuts and tax hikes to help it meet this year's deficit targets, sources with knowledge of the matter said.
Running over several years, the programme could involve raising Spain's main consumer tax, a new energy levy, reforms to the pension system, pay cuts for civil servants, new motorway tolls and another drastic reduction in ministry and regional spending, the sources said.

Some measures may be announced next week, when the EU is likely to grant the government an extra year to cut its deficit below 3 percent of output, and others could be presented over the summer and included in a multi-year budget plan due to be prepared in August.
Spain's highly-indebted regions and banks badly hit by a property crash four years ago have put the country firmly in the sights of investors who fear that, given its size, it could derail the entire single currency project if its economy collapses.
The new austerity drive aims to put Spain back on track to meet its deficit goals for 2012, though some questioned whether it would simply add to the country's problems by entrenching its recession even more deeply.
Data for the first five months of the year revealed spending and revenue slippage that makes the current objective unattainable without new cuts.
"The idea is to implement cuts worth three percent of gross domestic product. Everything is under review," said one of the sources with knowledge of the government's thinking.
With Spain's nominal GDP totalling about 1 trillion euros ($1.26 trillion) a year, the cuts would be worth up to 30 billion euros over several years and would come on top of savings plans of about 48 billion euros already passed.
"The idea is to cut the cost of the public service, freeze pensions, cut unemployment benefits," the source said, adding that an increase in sales tax was a matter of intense debate with the government.
Three other sources confirmed the measures were being looked at but said no decision had been yet taken on specific reforms or cuts, and that the package could fall well under 30 billion euros.
THE WRONG MEDICINE?
Spain is negotiating an up to 100-billion-euro European rescue for its banks and pressing for an EU intervention on its bond market to cut soaring borrowing costs.
But it is unclear if the new austerity plan will be well received by markets wary that too much belt-tightening would choke off any hope of economic recovery.
"More austerity will only make things worse in the short-term," said Nicholas Spiro, from Spiro Sovereign Strategy.
"The market does not need to be convinced that (Prime Minister Mariano) Rajoy's government is serious about fiscal retrenchment. While there are serious doubts about the government's ability to enforce discipline in the regions, the real worry is the lack of growth," he said.
Both the European Commission and the International Monetary Fund have said Spain should not rush to cut its public deficit after the economy fell into its second recession in three years in the first quarter.
The Commission has repeatedly called on Spain to shift the tax burden towards indirect consumer and energy taxes and to better control its devolved regions.
In its latest economic assessment, the IMF also urged Spain to raise its VAT rate - one of the lowest in Europe - and implement pay cuts for civil servants.
Rajoy said on Monday he would speed up his structural reform and spending cuts drive, especially in the regions, while Foreign Minister Jose Manuel Garcia-Margallo said the government would soon implement "severe" budget cuts.
Economy Minister Luis de Guindos, who pledged to take any necessary additional step to meet the deficit targets, said the possibility of relaxing the deficit reduction path would be discussed at the monthly meeting of euro zone finance ministers next Monday in Brussels.
A European source said Spain is set to accept on that occasion the offer of the European Commission to take an extra year, until 2014, to cut its public deficit below the European limit of 3 percent of GDP.
Madrid has so far stuck to a pledge to cit the deficit to 5.3 percent of GDP in 2012 and 3 percent in 2013, from 8.9 percent in 2011.
"A decision will be taken in this direction. There is no other choice," said the European source.
"The idea is to have more realistic objectives and at the same time take steps to show that Spain is really serious about achieving them."
(Editing by Paul Day)

Tuesday, July 3, 2012

Reuters News - ECB expected to cut, may take more to sustain markets


FRANKFURT | Tue Jul 3, 2012 5:50am EDT
(Reuters) - The European Central Bank is expected to cut interest rates to a record low on Thursday but may need to do more to satisfy financial markets already starting to wonder about the solidity of last week's summit measures to tackle the euro zonecrisis.
Steady inflation and a dire batch of economic performance indicators, including signs of weakness in euro zone powerhouse Germany, give the ECB cover to back up the EU summit deal with a quarter-point cut in its benchmark rate to 0.75 percent.
The ECB has never cut its main refinancing rate below 1 percent but policymakers say there is nothing to stop them doing so and they may want to bolster euro zone leaders, even if they never admit to such 'quid pro quo' deals.
At the summit, ECB President Mario Draghi strolled into the middle of the media zone to declare his satisfaction with the agreement to speed up cross-border banking supervision and to allow the euro zone rescue fund to recapitalize banks directly thereafter.
"I think Draghi saying that he is happy with the summit results is a strong sign that the ECB is ready to do something," said Christian Schulz at Berenberg Bank, forecasting a quarter-point cut.
But Schulz, a former ECB economist, added: "We think if it's just a rate cut, that would be a disappointment for markets because a rate cut would not do very much at all for the peripheral economies ... that's why something else is needed."
Markets have rallied since the EU meeting, which also empowered the ECB to lead the supervision of European banks and opened the way for the rescue fund to intervene on debt markets to support troubled members, though Finland and the Netherlands have questioned this bond-buying provision.
Even with political backing, there are questions over the rescue fund's capacity to lower borrowing costs. It has a maximum 500 billion euros capacity with 100 billion already earmarked for Spanish banks, a sum which could quickly dwindle.
Those limitations put a spotlight back on the ECB's readiness to take 'non-standard' measures - such as reactivating its own bond-buy program or offering banks fresh liquidity.
The ECB calmed investors earlier this year by unleashing over 1 trillion euros into markets with twin 3-year funding operations, or LTROs. Andrew Bosomworth at bond fund Pimco expected the bank to hold off any further such measures.
"I don't think the ECB will do more super-long LTROs or impose spread caps as a quid pro quo for what EU leaders agreed at the summit," said Bosomworth, a senior portfolio manager.
"If they are going to go down that route, then hopefully it would be in response to fending off deflation, not that we hope for deflation, rather than as a gift to the Italian government for passing a mediocre labor market reform," he said.
DEPOSIT RATE
A Reuters poll of economists showed the majority expected the ECB to cut its main rate to 0.75 percent.
The ECB board member in charge of economics, Peter Praet, said last Wednesday there was nothing to stop the bank cutting rates further, firming expectations for a cut.
In addition to the main refinancing rate, the ECB has two other interest rates: the marginal lending rate that banks use for emergency overnight borrowing which now stands at 1.75 percent, and its deposit rate - now at 0.25 percent.
A cut in the deposit rate, which acts as a floor for the money market, to as low as zero could encourage banks to lend to each other rather than simply parking funds of up to 800 billion euros back at the ECB every night.
But even if the ECB cuts the deposit rate, banks may still be unwilling to lend to peers in euro zone periphery countries if they are not convinced of their creditworthiness.
Money market traders are evenly split on whether the ECB will cut the deposit rate, a Reuters poll showed.
Policymakers have deep reservations about taking other measures, such as reactivating the bank's bond-buy plan - a tool many investors would like it to use to cap the bond yields of countries embroiled in the euro zone crisis.
The ECB spent some 210 billion euros in the last two years to buy Greek, Irish, Portuguese, Spanish and Italian bonds without achieving any lasting improvement.
With the ECB's bond program such a hot potato, Draghi is likely to be asked at Thursday's post-meeting news conference about another crisis response option: allowing the ESM fund to have access to the central bank's ultra-cheap loans.
That would boost the ESM's firepower and allow it to intervene with real impact on bond markets, where Spain's benchmark yields are still well above 6 percent. So far, both Germany and the ECB are opposed.
(Editing by Mike Peacock)

Reuters News - Best evidence yet found for "God particle:" U.S. physicists


A night view of Fermilab's Tevatron accelerator outside Chicago, Illinois is seen in a February 8, 2011 handout photo.REUTERS/Fermilab/Reidar Hahn/Handout
A night view of Fermilab's Tevatron accelerator outside Chicago, Illinois is seen in a February 8, 2011 handout photo.
Credit: Reuters/Fermilab/Reidar Hahn/Handout
BATAVIA, Illinois | Tue Jul 3, 2012 12:53am EDT
(Reuters) - Physicists at a U.S. laboratory said on Monday they have come tantalizingly close to proving the existence of the elusive subatomic Higgs boson - often called the "God particle" because it may bring mass and order to the universe.
The announcement by the Fermi National Accelerator Lab outside Chicago came two days before physicists at CERN, the European particle accelerator near Geneva, are set to unveil their own findings in the Higgs hunt. CERN houses the world's most powerful particle accelerator, the Large Hadron Collider (LHC).
The Fermilab scientists found hints of the Higgs in the debris from trillions of collisions between beams of protons and anti-protons over 10 years at the lab's now-shuttered Tevatron accelerator.
But the evidence still fell short of the scientific threshold for proof of the discovery of the particle, they said, in that the same collision debris hinting at the existence of the Higgs could also come from other subatomic particles.
"This is the best answer that is out there at the moment," said physicist Rob Roser of Fermilab, which is run by the U.S. Department of Energy. "The Tevatron data strongly point toward the existence of the Higgs boson, but it will take results from the experiments at the Large Hadron Collider in Europe to establish a firm discovery."
Scientists have worked long and hard to prove the existence of the Higgs boson, the final piece of a model proposed four decades ago laying out the basic building blocks of matter in the universe.
The Higgs particle's presumed power to confer mass seems to endow it with the power of creation itself, which helped lead to its "God particle" nickname. Many physicists loathe the term, fretting that it makes their discipline seem self-aggrandizing.
Physicists not connected to Fermilab expressed cautious optimism that the long-sought particle had finally been found.
"These intriguing hints from the Tevatron appear to support the results from the LHC shown at CERN in December," said Dan Tovey, professor of particle physics at the University of Sheffield in Britain.
"The results are particularly important because they use a completely different and complementary way of searching for the Higgs boson. This gives us more confidence that what we are seeing is really evidence of new physics rather than just a statistical fluke," Tovey added.
Tovey said scientists will have to wait until Wednesday for the latest results from the European scientists before "getting the full picture" concerning the Higgs boson.
'A NICE RESULT'
CERN spokesman James Gillies called Fermilab's findings "a nice result," but added that "it will be interesting to see how it lines up with CERN's results on Wednesday. Nature is the final arbiter so we'll have to be a little more patient before we know for sure whether we've found the Higgs."
Tom LeCompte, a scientist at the Department of Energy's Argonne National Laboratory in Illinois who works at CERN and knows the results, said he was confident the Higgs would be shown to exist, or not exist, this year. But he would not say if the findings to be unveiled Wednesday would be definitive.
"I know 2012 is the year. I can't tell you July is the month," LeCompte said.
Others were less cautious. "This is the most exciting week in physics history," said theoretical physicist Joe Lykken of Fermilab.
The Higgs particle is the final quarry in a hunt that began some 40 years ago, when physicists assembled what is now known as the Standard Model. The model is considered the culmination of a quest for the fundamental constituents of matter and the forces that determine how they interact, a search that began some 2,400 years ago with Greek philosopher Democritus' hypothesis that everything is composed of indivisible atoms.
According to the Standard Model, matter is composed of various combinations of six leptons, including the well-known electron and the ghostly neutrino, and six quarks, to which physicists have given whimsical names such as "charm," "bottom," and "strange." The protons at the core of atoms, for instance, are composed of two "up" quarks and one "down" quark.
The Standard Model also includes particles dubbed bosons, which carry nature's four basic forces.
The best-known boson is the particle of light, the photon. It carries the electromagnetic force, which is responsible for such everyday phenomena as the scent of a rose and the pull of a magnet.
Another boson is called the gluon. It binds together the quarks that constitute protons. Without gluons, quarks would stick together no better than an undercooked soufflé, atoms would not exist, and neither would stars, planets or life.
Particle accelerators such as those at CERN and Fermilab methodically discovered all the particles predicted by the Standard Model except one.
SQUARE ONE
The hold-out is the Higgs boson, and its refusal to show itself has long frustrated physicists. The Higgs particle is needed to complete and validate the Standard Model, since if it turns out not to exist scientists would have to figure out the constituents and mechanics of the universe from square one.
Just as importantly, the existence of Higgs was postulated in 1964 to serve a crucial function: conferring mass on some particles that would otherwise have none. Technically, the Higgs particle itself does not provide mass; the particle is, instead, a little knot of matter squeezed out of a force field like a curd forming in soured milk.
The force field is called - of course - the Higgs field.
The Higgs field gives mass to some particles but leaves others alone, in a process one might compare to making cotton candy. As the wand is passed through the gossamer cloud of spun sugar, it holds onto more and more of the pink strands.
In much the same way, particles passing through the Higgs field picked up more and more mass, until they became the quarks and leptons and bosons that constitute the stuff of today's cosmos. In this analogy, some wands are oiled, preventing sugar from sticking; these particles remain without mass. Other wands are super-sticky, picking up more than their fair share of mass.
The particle is named after Peter Higgs, now 83, of the University of Edinburgh in Britain, but five other physicists came up with the same idea almost simultaneously.
"The God Particle" was the title of a 1993 book by Leon Lederman, a Nobel-winning physicist and former head of Fermilab, and science writer Dick Teresi. The publisher vetoed titles with "Higgs" or anything else too esoteric. Lederman later said he wanted to call the book "The Goddamned Particle" because the Higgs was so elusive.
Fermilab began its Higgs quest 10 years ago, using its four-mile circumference Tevatron to smash together protons and their anti-matter twins, anti-protons. When matter meets anti-matter, the two annihilate, leaving behind pure energy.
Out of that energy crystallize new particles. It was in this debris that the Tevatron scientists sought evidence of the Higgs boson.
Because the Higgs is hypothesized to exist for a mere fraction of a second before decaying into other particles, the strategy was to look for these "daughter" particles.
CERN's 16.7-mile circumference LHC, which smashes protons against protons at nearly the speed of light, looks for two high-energy photons. The Tevatron looked for two bottom quarks. Before budget cuts forced it to shut down last September after trillions of proton-anti-proton collisions, it found as many as 1,000 pairs that could have come from Higgs particles.
"It is a real cliffhanger," said physicist Gregorio Bernardi of the Nuclear Physics Laboratory of High Energies in Paris and leader of one of the Tevatron experiments. "We know exactly what signal we are looking for in our data, and we see some evidence for the production and decay of Higgs bosons in a crucial decay mode with a pair of bottom quarks. So we are very excited."
The Tevatron results indicate that the Higgs particle has a mass between 118 and 132 giga-electron volts (the unit of mass-energy used in physics in which 1 GeV is about the mass of the proton). Last year, the LHC pegged the mass at between 115 and 127 GeV.

Monday, July 2, 2012

Reuters News - Russia's first-half oil output up despite June slip


Russian President Vladimir Putin speaks before a state dinner with Israeli President Shimon Peres (not pictured) in Jerusalem June 25, 2012. REUTERS/Lior Mizrahi/Pool
Russian President Vladimir Putin speaks before a state dinner with Israeli President Shimon Peres (not pictured) in Jerusalem June 25, 2012.
Credit: Reuters/Lior Mizrahi/Pool
MOSCOW | Mon Jul 2, 2012 7:14am EDT
(Reuters) - Top oil producer Russia is on course for its highest output in the post-Soviet era this year helped by new fields after a 1.1 percent rise in the first half, Energy Ministry data showed on Monday.
Russia is aiming to increase its overall 2012 crude production by around 1 percent after adding 1.2 percent last year to reach a post-Soviet era high of 10.27 million barrels per day (bpd), or 511 million tonnes.
Crude output in the first half of 2012 increased by 1.1 percent to 10.33 million bpd on average.
"I believe we will reach a 1 percent rise for the year. The pace slowed in June, but further production will depend on oil prices. Another tool for crude output increase, tax regime changes, is unlikely to happen," Sergei Vakhrameyev from brokerage Metropol said.
The first-half rise came despite slipping in June by 0.2 percent to 10.32 million barrels per day (bpd) from 10.34 million bpd in May. In tonnes, the ministry said crude production last month stood at 42.228 million.
Still, that remained ahead of Saudi Arabia, which produced 10.1 million bpd in June.
Gazprom Neft, the oil arm of the world's top natural gas producer Gazprom, increased oil output by around 3 percent without acquisitions in the first half, Metropol's Vakhrameyev said.
He said that reflected its continued efforts to speed up extraction at new fields in West Siberia.
Russia is moving east from West Siberia, its traditional oil region, in an attempt to keep crude production at no less than 10 million bpd over the next 10 years.
TIGHT GAS
But some analysts see big potential in West Siberia, rich with untapped resources of so-called unconventional, or tight, oil, hidden deeper down than traditional oil layers.
Forecasts for steady crude production growth in Russia were propped up by OPEC last week when the cartel said it expected global oil demand to show steady growth, particularly from big developing countries, despite the economic slowdown.
Oil prices dipped sharply in the second quarter when front-month Brent fell by $25.08 a barrel, or 20.4 percent, in its biggest quarterly percentage loss since the last quarter of 2008 when it plunged by 53.6 percent.
But prices rose significantly on Friday and analysts say the move could portend stronger fundamentals for oil for the rest of the year as sanctions against Iran cut the OPEC member's output.
GAS OUTPUT DOWN
Daily gas production continued to slide, decreasing to 1.54 billion cubic metres (bcm) in June from 1.67 bcm in May.
Output at Gazprom declined to 1.11 bcm a day last month from 1.21 bcm in May amid a seasonal fall in demand.
The company said on Friday it was sticking to its production forecast of 528 bcm (1.44 bcm a day) for the year.
Gazprom so far has been upbeat about its operational data, expecting exports to Europe, its key source of revenue, to remain steady this year, at 150 bcm.
But analysts doubt the company's ability to keep its 27-percent share of the European gas market given unfavourable financial conditions in the euro zone and rivalry from the spot market and cheaper fuel such as liquefied natural gas.

BBC News - Mexico's Enrique Pena Nieto 'wins' presidential poll


Enrique Pena Nieto told supporters there would be no return to the past
Mexico's old ruling party, the PRI, is set to return to power as early official results indicate its candidate Enrique Pena Nieto has won the presidential election.
Mr Pena Nieto, 45, is on about 37%, several points ahead of Andres Manuel Lopez Obrador, who has not conceded.
Thousands of police were on duty for the vote, amid fears of intimidation from drug gangs.
Mexicans were also electing a new congress and some state governors.
'New face'
Celebrations at the headquarters of the PRI (Institutional Revolutionary Party) started after the polls closed.
Mr Pena Nieto declared: "We all won in this election. Mexico won."
"This is just the start of the work we have before us."
He thanked Mexican voters for giving the PRI a second chance, saying his administration would have a "new way of governing".
The election campaign was dominated by the economy and the war on drugs.
"There will be no pact nor truce with organised crime," Mr Pena Nieto said.
He had been presented as the new face of the PRI, a break with the party's long and at times murky past that included links with drug gangs.
The party held on to power for 71 years until it was defeated in 2000.
Mr Pena Nieto built his reputation on the "pledges" he set out for his governorship in Mexico state, focusing on public works and improvement of infrastructure.
Outgoing President Felipe Calderon has congratulated Mr Pena Nieto and promised to work with him during the transition to his inauguration in December.
"I sincerely hope for the smooth running of the next government for the benefit of all Mexicans," Mr Calderon said, in a televised address.
Andres Manuel Lopez Obrador, running for the leftist Party of the Democratic Revolution (PRD) is in second place with about 33% of the vote.
The official quick count, published by the electoral authorities (IFE), is based on returns from a sample of around 7,500 polling stations across Mexico.
Mr Lopez Obrador, who was the runner-up in the 2006 election, has not conceded victory.
"The last word hasn't been spoken yet," he said.
"We simply do not have all the facts. We are lacking the legality of the electoral process."
In 2006, he refused to recognise Mr Calderon's victory and led street protests for months afterwards.
Josefina Vazquez Mota, the candidate of the governing National Action Party (PAN) had already accepted defeat.
The initial results from IFE put her on some 25%.
Security display
Almost 80 million people were eligible to cast their ballots on Sunday.
Police and army were deployed to protect voters from intimidation by drug cartels at polling booths.
Officials said the voting was largely peaceful, but reported some initial problems as a number of stations opened later than planned.
"Everything has been very good," one voter in Mexico City told the BBC. "But people aren't very motivated to vote, perhaps because the candidates make so many promises but we're always worse off."
With nearly half the Mexican population living in poverty, the economy was one of the main issues in the campaign.
Unemployment remains low at roughly 4.5%, but a huge divide remains between the rich and the poor.
Another issue dominating the campaign was the war on drugs, launched nearly six years ago by President Calderon, who is constitutionally barred from seeking re-election.
The main opposition candidates have been critical of Mr Calderon's policies.
They point out that more than 55,000 people have been killed in drug-related violence since 2006.
Mexicans were also electing 500 deputies, 128 senators, six state governors, the head of government in the Federal District (which includes Mexico City) and local governments.