Reuters News - Obama, fresh from re-election, has little time to savor win

1 of 30. U.S. President Barack Obama, who won a second term in office by defeating Republican presidential nominee Mitt Romney, waves with his daughters Malia (R) and Sasha and wife Michelle (L) before addressing supporters during his election night victory rally in Chicago, November 7, 2012.

Credit: Reuters/Jeff Haynes

By Steve Holland and Matt Spetalnick

WASHINGTON | Wed Nov 7, 2012 8:36am EST

(Reuters) - Fresh from a decisive re-election win, President Barack Obama returns from the campaign trail on Wednesday with little time to savor victory, facing urgent economic and fiscal challenges and a still-divided Congress capable of blocking his every move.

Obama defeated Republican challenger Mitt Romney on Tuesday night after a grueling presidential race and used his acceptance speech in front of a huge cheering crowd in Chicago to strike a conciliatory note toward his political opponents.

But in the cold light of the election's morning-after, it was clear that even though voters have given their stamp of approval for a second Obama term, he could have a hard time translating that into a mandate to push forward with his agenda.

Americans chose to stick with a divided government in Washington by leaving the U.S. Congress as it has been since the midterm elections of 2010.

Obama's fellow Democrats retain control of the Senate and Republicans keep the majority in the House of Representatives, giving them power to curb the president's legislative ambitions.

This is the political reality that Obama - who won a far narrower victory over Romney than his historic election as the country's first black president in 2008 - faces when he returns to Washington later on Wednesday.

But that did not stop him from basking in the glow of re-election together with thousands of elated supporters in his hometown of Chicago early on Wednesday.

"You voted for action, not politics as usual," Obama said, calling for compromise and pledging to work with leaders of both parties to reduce the deficit, to reform the tax code and immigration laws, and to cut dependence on foreign oil.

Obama told the crowd he hoped to sit down with Romney in the coming weeks and examine ways to meet the challenges ahead.

But the problems that dogged Obama in his first term, which cast a long shadow over his 2008 campaign message of hope and change, still confront him. He must tackle the $1 trillion annual deficits, rein in the $16 trillion national debt, overhaul expensive social programs and deal with the split Congress.

The immediate focus for Obama and U.S. lawmakers will be to confront the "fiscal cliff," a mix of tax increases and spending cuts due to extract some $600 billion from the economy at the end of the year barring a deal with Congress.

House Majority Leader John Boehner moved swiftly on the fiscal cliff issue, saying he would issue a statement on it on Wednesday, citing "the need for both parties to find common ground and take steps together to help our economy grow and create jobs, which is critical to solving our debt."

Obama also faces looming international challenges like the West's nuclear standoff with Iran, the civil war in Syria, the winding down of the war inAfghanistan and dealing with an increasingly assertive China.

Romney, a multimillionaire former private equity executive, came back from a series of campaign stumbles to fight a close battle after besting Obama in the first of three presidential debates.

But the former Massachusetts governor failed to convince voters of his argument that his business experience made him the best candidate to repair a weak U.S. economy.

The nationwide popular vote remained extremely close with Obama taking about 50 percent to 49 percent for Romney after a campaign in which the candidates and their party allies spent a combined $2 billion. But in the state-by-state system of electoral votes that decides the White House, Obama notched up a comfortable victory.

By early on Wednesday, Obama had 303 electoral votes, well over the 270 needed to win, to Romney's 206. Florida's close race was not yet declared, leaving its 29 electoral votes still to be claimed.

Romney, 65, conceded in a speech delivered to disappointed supporters at the Boston convention center. "This is a time of great challenge for our nation," he told the crowd. "I pray that the president will be successful in guiding our nation.

He warned against partisan bickering and urged politicians on both sides to "put the people before the politics."

The Republican Party, after losing two presidential contests, is now likely to go through a period of painful soul-searching, especially over how it has alienated Hispanic voters, an important constituency in Obama's victory.

'FAILURES OR EXCESSES'

In the election aftermath, there were signs that partisan gridlock would persist in Washington.

Senate Republican leader Mitch McConnell gave no sign that he was willing to concede his conservative principles, in a sign of potential confrontations ahead.

"The voters have not endorsed the failures or excesses of the president's first term, they have simply given him more time to finish the job they asked him to do together with a Congress that restored balance to Washington after two years of one-party control," McConnell said.

Obama's win puts to rest the prospect of wholesale repeal of his 2010 healthcare reform law, which aims to widen the availability of health insurance coverage to Americans, but it still leaves questions about how much of his signature domestic policy achievement will be implemented.

Obama, who took office in 2009 as the ravages of the financial crisis were hitting the U.S. economy, must continue his efforts to ignite strong growth and recover from the worst downturn since the Great Depression of the 1930s. An uneven recovery has been showing some signs of strength but the country's jobless rate, currently at 7.9 percent, remains stubbornly high.

DIVIDED CONGRESS

In keeping control of the 100-member Senate, Democrats seized Republican-held seats in Massachusetts and Indiana while retaining most of those they already had, including in Virginia and Missouri.

The Republican majority in the 435-member House means that Congress still faces a deep partisan divide as it turns to the fiscal cliff and other issues.

"That means the same dynamic. That means the same people who couldn't figure out how to cut deals for the past three years," said Ethan Siegel, an analyst who tracks Washington politics for institutional investors.

While the Senate result was no surprise, Republicans had given themselves an even chance of winning a majority, so the night represented a disappointment for them.

U.S. stock futures slipped, the dollar fell and benchmark Treasuries rose after Obama's victory, which investors took to mean no dramatic shift in U.S. economic policy.

International leaders offered their congratulations. Israeli Prime Minister Benjamin Netanyahu, who has had a testy relationship with the U.S. leader, vowed to work with Obama "to ensure the interests that are vital for the security of Israel's citizens.

British Prime Minister David Cameron said Britain and the United States should make finding a way to solve the Syrian crisis a priority following Obama's re-election.

(Reporting by staff in Washington and other bureaus; Writing by Matt Spetalnick; Editing by Frances Kerry and Eric Beech)

BBC News - Greece braces for 48-hour strike amid crucial debate

Greece is braced for a 48-hour general strike across public and private sectors in protest at a proposed new wave of spending cuts.

Posters urging workers to join the 48-hour strike have been put up around Athens

Protest marches - which regularly end in running battles with police - are planned for the centre of Athens.

The action coincides with a debate in parliament on the austerity measures, with a vote by MPs due on Wednesday.

Greece must back the measures, and the 2013 budget, to receive the next part of a bailout and avoid bankruptcy.

The latest strike starting on Tuesday includes public transport workers, lawyers, air traffic controllers, taxi drivers, journalists and hospital staff.

Some transport and media workers downed tools on Monday as well.

The BBC's Mark Lowen in Athens says that with proposals for a fifth consecutive cut to pensions, an increase in the retirement age and reductions to salaries, benefits and healthcare, the fury among Greece's population is growing.

Greek ministers say the package should save a total of 13.5bn euros (£11bn; $17bn) by 2016.

Approving the tough reforms and passing the 2013 budget are key to receiving a 31.5bn-euro instalment from the International Monetary Fund and European Union that has been on hold for months.

However, the Democratic Left Party which is the junior member of the three-party governing coalition, is refusing to back the package.

The second biggest coalition party, the socialist Pasok, is also facing a rebellion by some MPs.

Prime Minister Antonis Samaras has tried to reassure the public, who have endured repeated rounds of austerity and a five-year recession.

"These will be the last cuts in wages and pensions," he said on Sunday.

"We promised to avert the country's exit from the euro and this is what we are doing. We have given absolute priority to this because if we do not achieve this everything else will be meaningless."

Reuters News - G20 seeks more wiggle room on austerity pledges

1 of 5. Security agents are seen inside of Hyatt hotel in Mexico City November 3, 2012.

Credit: Reuters/Edgard Garrido

By Julien Toyer and Louise Egan

MEXICO CITY | Mon Nov 5, 2012 10:37am EST

(Reuters) - Leading world economies plan to give themselves more time to meet their own targets for cutting budget deficits rather than risk aggravating a slowdown in many countries, chief among them the United States, G20 finance officials said.

Policymakers from the Group of 20 countries met on Monday in Mexico and were set to allow the advanced economies among them more flexibility on a target agreed in 2010 to halve their budget shortfalls by the end of next year.

"There may have to be some modification with respect to the deficit targets," said Canada's finance minister, Jim Flaherty.

"That may not be compatible for the Americans with their fiscal cliff solution, whatever it is, so there may have to be more time there," he told reporters late on Sunday, stressing countries need to show they can fix their fiscal problems over time.

The 2010 target was agreed by G20 leaders at a summit in Toronto at a time when the global economy seemed to be on the road to recovery after the financial crisis in the previous two years. But it now looks out of reach for many economies, including the United States, as growth has slowed.

Indeed, many G20 countries are anxious for the United States to avert a barrage of tax hikes and spending cuts from January 1 that were penciled in by Washington last year to show the country could tackle its fiscal problems.

Unless Congress can come to a deal quickly after Tuesday's presidential and congressional elections, the U.S. economy could go back into recession.

European policymakers led the way on Sunday in pressing the United States to act decisively to steer away from the so-called fiscal cliff which they see as the biggest short-term threat to global growth.

"The clock is ticking, the cliff is getting closer and closer. It is a question of less than 2 months and accidents can happen," a senior G20 official said, although he added the group is confident that Congress will find a bi-partisan solution.

Chile's finance minister, Felipe Larrain, also said there was an assumption that a deal would - and must - be found. "If we're not able to resolve the cliff, that could be the tipping point for a much more complicated scenario in the world economy."

The U.S. budget gap surpassed $1 trillion for the fourth year in a row in the fiscal year 2012. The deficit was equivalent to 7.0 percent of the country's economic output.

A senior European official attending the two-day G20 meeting of finance ministers and central bank governors in Mexico City said policymakers were trying to work out a way to reset the targets to match the problems in the economy.

"We'll work on the indicators so that we can keep the Toronto goals but evaluate them in the light of the current challenging economic environment," the official said, speaking on condition of anonymity.

Another European official said the G20 would aim to complete a new set of targets when the group's policy makers next meet in Moscow in February.

A draft communique being readied for the G20 policymakers said there were elevated risks facing the global economy, including Europe's crisis and potential problems in Japan.

"Global growth remains modest and risks remain elevated, including due to possible delays in the complex implementation of recent policy announcements in Europe, a potential sharp fiscal tightening in the United States and Japan, weaker growth in some emerging markets and additional supply shocks in some commodity markets," the draft said, according to a G20 source.

G20 officials said the wording of the communique on Europe referred to differences among European governments over how to build a banking union, considered an important way to bolster the bloc's shaky financial system, during 2013. France, Spain and Italy have been frustrated with German demands for the new scheme.

Few expect major agreements in Mexico with heavyweights such as U.S. Treasury Secretary Timothy Geithner - expected to stand down after the U.S. elections - European Central Bank chief Mario Draghi, and top Chinese officials skipping the meeting.

The final communique will be published once talks end on Monday.

The G20's consensus of four years ago, which helped stave off the risk of a new depression, has given way to persistent differences over issues such as spending to boost growth and the right pace of belt-tightening to tackle high debt levels.

(Additional reporting G20 team in Mexico City; Writing by William Schomberg; Editing by Kieran Murray)

Reuters News - Reversal of fortunes sends Spaniards to Latin America

By Gabriel Stargardter and Paul Day

MEXICO CITY/MADRID | Thu Nov 1, 2012 11:07am GMT

(Reuters) - After joining the euro in 1999, Spain's economic boom made it the land of opportunity for millions of Latin American migrant workers.

But since the decade-long boom turned to bust roughly four years ago, many of those immigrants have returned, joined by a growing number of disillusioned Spaniards who hope that Latin America, with its developing economies and low cost of living, has more to offer.

Spaniards are traditionally reluctant to emigrate and they are among the least likely in Europe to go abroad for work. But with the unemployment rate at 25 percent, more Spaniards are ready to leave behind the comforts of home.

"Europe has gone down the toilet," said 45-year-old Xavi Berdala, a former photographer from Barcelona who moved to Mexico in July to open a pizza restaurant. "People now see Latin America with more respect, more possibilities."

Roughly 370,000 people emigrated from Spain in 2011, 10 times more than before the economytanked in 2008.

Although about 86 percent of them were naturalized immigrants born abroad, there is also a growing number of native Spaniards saying "ya basta" ("enough is enough"). Over 50,000 left last year, up 80 percent since before the crisis hit.

More than 9,000 went to Latin America, up from about 3,600 in 2006, said Jesus Fernandez Huertas of Spanish think tank Fedea, citing data from the national statistics office.

The reasons for leaving are clear. Spain's economy is in recession for the second time since 2009 and half of all residents under 25 who are looking for work can't find a job.

More than one in five people live below the poverty line and unemployment benefits end after a maximum of 30 months.

"The situation in Spain won't get better for another five years at least," said Olmo del Paso, a cameraman who left Spain for Uruguay this month after being jobless for over two years and being forced to move back into his mother's house in the small northern town of Palencia.

When a hotel in Montevideo, Uruguay, offered him a job as caretaker over the summer months, the 34-year-old bought a one-way ticket and packed his bags.

"I'm nervous leaving my family and friends," he said. "But I can't carry on like this. I have to at least try."

Spain has based its budget plan for next year on a recession of 0.5 percent, but most economists say it is wildly optimistic. The International Monetary Fund, or IMF, expects the economy to contract 1.5 percent this year and another 1.3 percent in 2013.

By contrast, the IMF envisages a 3.9 percent expansion next year across Latin America and the Caribbean.

Between 2007 and 2011, the number of native Spaniards emigrating to Chile rose by 144 percent, to Mexico by 129 percent, to Venezuela by 114 percent, and to Portuguese-speaking Brazil, the biggest economy in Latin America, by 227 percent.

The number leaving for Ecuador soared 467 percent. Ecuadorean migrants had swarmed to Spain to work in the booming construction industry and, now that it is in crisis, many are returning, some with Spanish-born partners and children.

"It's sad that the Ecuadoreans are coming home, because they went to Spain for the same reasons I came here. Because there's no work and life is tough," said Miguel Sanchez, a 42-year-old former building site foreman who moved with his Ecuadorean wife and son to Ecuador in 2010.

In Spain, he went without work for eight months after the housing bubble, fed by cheap loans, burst in 2008, sending shockwaves throughout the economy. In Ecuador, he is now a bodyguard for a local businessman in the city of Guayaquil.

Far fewer Latin Americans are heading to Spain. In 2007, almost 314,000 were granted residency and by 2011 that was down to 119,416, according to official data.

'INTENSE PRESSURE'

Spain, the euro zone's fourth largest economy and the current focus of its almost three-year-long debt crisis, is under intense pressure to reduce its public deficit and prove to nervous investors it can put its finances in order.

Prime Minister Mariano Rajoy, in power since December, has responded to Spain's crisis by slashing spending. That has cut deeply in to education, training schemes and state-supported internships.

Critics say the policies will push Spain deeper into recession and optimists concede that things will get worse before they get better.

"The best solution for younger unemployed is unfortunately to leave Spain," JP Morgan said in a note.

Some of the young are listening. The vast majority of those leaving Spain are between 20 and 40 years old.

From 2000, Spain's population showed solid annual growth, almost entirely due to immigration, but the pace dropped sharply in 2008 and it began to shrink last year. Some estimates suggest its 46 million population could fall by 1 million by 2020.

During the dictatorship of General Francisco Franco, from the end of the civil war in 1936 to his death in 1975, hundreds of thousands of people fled oppression to Europe and the Americas.

The recent jump in Spanish emigration has prompted some to draw parallels, although that's a stretch.

"It's ridiculous to call this an exodus as it doesn't compare to the enormous levels of emigration in the years following the civil war and in the late sixties," said Fernandez Huertas at Fedea. "But the speed of the rise is certainly noteworthy."

Massive population drains can often be detrimental to an economy, but with the outlook already grim, it may help.

"It might net a positive if they're going to be sending remittances back to their families," said Bill Adams, senior international economist for U.S.-based bank PNC. "It's a strange inversion to think of Spanish immigrants in Latin America sending remittances back to Spain."

Between 2007 and 2011 remittances to Spain by Spanish migrants rose 7.5 percent to a record 5.7 billion euros.

Nieves Mendez, a Mexico City dance instructor originally from the Spanish island of Tenerife, emigrated to Mexico when she struggled to find anything better than retail work after graduation.

Back in Spain's Canary Islands, her mother and sister are unemployed. Her grandmother, who lives with them on a 200 euro a month pension, cares for Mendez's disabled aunt.

"And I'm here, doing everything I can to send them something, however small," said Mendez, 31. "Just a little so I know they're not doing too badly." (Additional reporting by Yury Garcia in Guayaquil and Malena Castaldi in Montevideo.; Editing by Dave Graham and Kieran Murray)

BBC News - World Bank to lend to Burma for first time in 25 year

The World Bank has approved an $80m (£50m) grant and pledged lending for Burma, the second poorest country in Asia, for the first time in 25 years.

As Burma reforms, investors have their eyes on its vast mineral resources

The money will go to rural communities to build roads, bridges, schools and health clinics, theWorld Bank said.

It comes after the current government began implementing economic, political and other reforms.

Last month, the US lifted sanctions and restrictions on financial institutions lending to Burma.

"I am heartened by the reforms that have been taking place in Myanmar [Burma] and encourage the government to continue to push forward with their efforts," said World Bank President Jim Yong Kim in a statement.

Another $165m will be made available to Burma once the country has cleared its overdue debt to the bank, said Pamela Cox, World Bank vice-president for East Asia and the Pacific, in a conference call to reporters.

Discussion will continue in coming months on how to allocate those funds.

"We want to target to creating opportunities for all the people of Myanmar, especially the poor and vulnerable," she added.

Reforms have been taking place in Burma since elections in November 2010 saw military rule replaced with a military-backed nominally civilian government led by President Thein Sein.

Under his administration, many political prisoners have been freed and some censorship lifted. The party of freed pro-democracy leader Aung San Suu Kyi has rejoined the political process - after boycotting the 2010 polls - and now has a small presence in parliament.

BBC News - China manufacturing activity at three-month high

Manufacturing activity in China expanded for the first time in three months, a sign that the country could be recovering from its slowest pace of growth in three years.

The Chinese economy expanded at its slowest pace in three years in the July to September period

The Purchasing Managers' Index (PMI) rose to 50.2 in October from 49.8 in September, government data showed.

China's economy has been suffering as demand for its exports dropped in key markets.

The positive number comes a week before the once-in-a-decade leadership change.

A reading above 50 indicates an expansion in activity, while a score below that mark signals a contraction.

Pick up

China's economy expanded 7.4% in the July to September period, its slowest pace in three years. Amid that broader slump, manufacturing activity contracted in August and September.

Policymakers have been taking steps to boost economic growth by way of infrastructure spending and monetary easing.

Analysts said those moves were starting to affect the economy positively.

"The return of the PMI to above 50 suggests economic momentum has indeed picked up," said Zhiwei Zhang of Nomura in an email.

"It indicates the effect of policy easing may have been stronger than the consensus expected."

Other official data pointing to a recovery includes an acceleration in exports, retail sales and industrial production.

Stability

A separate, private survey of manufacturing in China by HSBC also showed an improvement, although the reading remained in negative territory.

The HSBC purchasing managers' index showed a final reading of 49.5 in October, an increase from 47.9 in September.

"October's final PMI rose to an eight-month high, implying that China's industrial activity continues to bottom out following a modest pick-up last month," Qu Hongbin, chief China economist at HSBC, said in a statement.

How they handle the slowdown has been a political balancing act for China's leaders as they embark on a leadership change.

Strong growth has long been a point of pride for the current leaders, and analysts pointed out they would be eager to get the economy back on track before the handover.

Reuters News - Brent edges down toward $108 on U.S. fuel demand concerns after Sandy

A customer uses a petrol nozzle in a gas station in Nice August 8, 2012.

Credit: Reuters/Eric Gaillard

By Florence Tan

SINGAPORE | Thu Nov 1, 2012 1:43am EDT

(Reuters) - Brent crude edged down toward $108 a barrel on Thursday as investors focused on concerns that storm Sandy's rampage across the U.S. East Coast could reduce fuel demand and shrugged off data pointing to a recovery in China.

Industrial activity in China improved in October, confirming a trend toward recovering growth, though the recovery remains sluggish.

Investors also kept to the sidelines on an uncertain political outlook in the world's two largest oil consumers as Americans head to the polls and new top Chinese leaders take over.

Oil prices could continue trading sideways ahead of the U.S. elections just six days away, analysts said.

Brent crude for December delivery fell 20 cents to $108.50 a barrel by 0525 GMT. The front-month contract slipped for a second straight month in October on ample crude supply and worries about lower fuel demand as the global economy slows.

U.S. crude for December delivery was at $86.30 a barrel, up 6 cents.

"China's PMI is generally in line with expectations and the market has priced it in," said Natalie Rampono, a commodity strategist at ANZ.

"A lot of attention is dedicated to the United States after Sandy came through. The Northeast is a populated area, and with roads and infrastructure down, we're probably going to see less driving and gasoline use."

U.S. gasoline futures for December rose 0.2 percent to $2.6355 a gallon after strong gains on Wednesday as spotty electrical power and damage by flooding stymied the recovery of two New Jersey refineries.

Phillips 66 (PSX.N) confirmed it had restored power to its 238,000-barrel-per-day Bayway refinery in New Jersey, but officials gave no damage assessment or timeline for resuming output. Sources expect the plant to resume operations next week at the earliest.

Yet the destruction wrought by powerful storm Sandy affected millions of people across the eastern United States and could dampen fuel demand just as the world's largest economy was showing signs of recovery, analysts said.

U.S. oil demand in August was slightly stronger than estimated, but still down nearly 1 percent from a year ago, the U.S. government said.

Investors will scour weekly oil inventory statistics from the Energy Information Administration later on Thursday after industry data showed a rise of 2.1 million barrels in crude stockpiles last week. <API/S>

The Organization of Petroleum Exporting Countries was also keeping the global market well supplied.

OPEC oil output has risen slightly in October as extra supplies from Iraq, Angola and Libya have offset disruptions in Nigeria and a further decline in Iran to its lowest in two decades, a Reuters survey found on Wednesday.

(Reporting by Florence Tan; Editing by Clarence Fernandez)