BBC News - Japan's trade deficit quadruples in March

Japan's trade deficit quadrupled in March as export growth slowed and energy imports continued to rise.

Japan's energy imports rose after the 2011 earthquake and tsunami

A weak Japanese currency, which pushed up the cost of imports, also contributed to the widening gap.

The deficit rose to 1.45 trillion yen ($14bn; £8.4bn), up from 356.9bn yen during the same month a year ago.

Japan's energy imports have been rising after it shut all its nuclear reactors in the aftermath of the earthquake and tsunami in 2011.

According to the latest trade data, imports of Liquefied Petroleum Gas (LPG) rose more than 8% in March, compared to the same month last year. Meanwhile, imports of Liquefied Natural Gas (LNG) rose nearly 4%.

And Japan is having to pay more for those imports after a series of aggressive policy moves aimed at spurring economic growth - including a huge boost to the country's money supply - have weakened the yen sharply.

The Japanese currency fell nearly 10% against the US dollar between March 2013 and March this year.

The latest figures show that while LPG imports rose 8.1% in volume during March, the value of those imports rose more than 18%.

Similarly, the volume of LNG imports rose nearly 4%, while the value of those shipments jumped 14%.

Sales tax impact?

Japan's overall imports rose 18.1% in March, compared to a year ago, while exports rose at an annual rate of 1.8%.

Some analysts suggested that Japan's recent sales tax hike also played a part in boosting imports during the month.

The rise in the sales tax - also known as consumption tax - came into effect on 1 April.

The sales tax has been increased to 8% from 5% and it will rise again, to 10%, in October 2015.

Analysts said the hike had seen increased demand among Japanese consumers in March, as they looked to buy goods ahead of prices rising once it had been implemented.

Marcel Thieliant, Japan economist at Capital Economics, said that looking ahead "consumers are likely to rein in spending in the wake of this month's consumption tax hike, which should reduce import demand".

There has also been growing speculation that Japan is looking to restart some of its nuclear reactors. If that happens, such a move is likely to help reduce its energy imports as well as its trade deficit.

"The trade shortfall is likely to narrow in the second quarter, which should provide some support to GDP growth even as domestic demand is set to plunge," Mr Thieliant said.

Bloomberg News - Dollar Falls as Yellen Pledges to Support Economy; Pound Gains

The dollar fell against most of its Group of 10 peers after Federal Reserve Chair Janet Yellen said the central bank has a “continuing commitment” to support the economic recovery.

The pound rose to the highest in more than four years after data yesterday showed the U.Kunemployment rate fell to the lowest since 2009, adding to signs the economy is gaining traction. The yen strengthened, snapping a four-day decline versus its U.S. peer before Japan’s Cabinet Office releases its monthly economic report. The Australian and New Zealand dollars erased earlier gains and are set to drop this week.

“It looks like people are pretty keen to go short on the U.S. dollar again, and that’s having positive ramifications across a number of currencies today,” said Chris Weston, the chief market strategist at IG Ltd. in Melbourne. “Sterling looks reasonably strong. The U.K. continues to look relatively healthy compared with other regions.”

The dollar fell 0.2 percent to $1.3844 per euro as of 7:02 a.m. in London. It slid 0.2 percent to 101.99 yen, after rising 0.7 percent in the previous four days. The Japanese currency fetched 141.18 per euro from 141.24 yesterday.

The pound gained 0.2 percent to $1.6831, after reaching $1.6837, the highest since November 2009. The Australian dollar lost 0.1 percent to 93.61 U.S. cents, set to fall 0.4 percent this week. New Zealand’s kiwi was little changed at 86.32 U.S. cents after gaining as much as 0.3 percent. It has fallen 0.6 percent since April 11.

Financial markets in the U.S., U.K., Germany, Hong Kong, Singapore, Australia and New Zealand are among those that will be closed for a holiday tomorrow.

‘Take Profits’

“Before the Easter long weekend in the U.S. and Europe, and after U.S. stocks fell in after-hours trading, traders are selling the dollar to take profits,” said Yuji Saito, a director of foreign exchange at Credit Agricole SA in Tokyo.

Yellen, in her first major speech on her policy framework as Fed chair, said U.S. central bankers must be mindful of how short the Fed is of its goals of full employment and price stability.

“The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Yellen told the Economic Club of New York yesterday. The employment shortfall “remains significant, and in our baseline outlook, it will take more than two years to close,” she said.

Fed Outlook

The Fed chief said in March that the central bank may start to increase borrowing costs from near zero “around six months” after concluding its asset-buying program, which economists forecast will end in October.

The pound climbed after data yesterday the unemployment rate dropped below the 7 percent threshold that Bank of England Governor Mark Carney set as an initial guide for considering a boost in interest rates.

The jobless rate, as measured by International Labour Organization methods, dropped to 6.9 percent in the three months through February from 7.2 percent in the quarter through January, theOffice for National Statistics said yesterday. The median forecast in a Bloomberg News survey of economists was a decline to 7.1 percent.

Best Performer

The pound rose 5.2 percent in the past six months against a basket of nine other developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, the biggest gain within the group. The dollar rose 0.6 percent and the euro climbed 2 percent, while the yen dropped 3.8 percent.

Bank of Japan Governor Haruhiko Kuroda said the central bank will examine both upside and downside risks and make policy adjustments if needed. He spoke today at the central bank’s branch manager meeting in Tokyo.

Standard Chartered Plc revised its forecast for the yen against the dollar, predicting it will be at 100 by June 30 from a previous estimate of 104.

“In the absence of a serious downturn in the economy, the central bank may prefer to remain on the sidelines,” Standard Chartered analysts including Callum Henderson, the Singapore-based global head of foreign-exchange research, wrote in an e-mailed note to clients dated yesterday. “There is potential for some investors expecting further easing by the BOJ in the near term to be disappointed.”

The BOJ will expand what is already unprecedented easing by July, according to 72 percent of economists surveyed by Bloomberg. Policy makers announce their next decision on April 30.

To contact the reporters on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net; Kristine Aquino in Singapore at kaquino1@bloomberg.net

BBC News - China gold demand to rise, World Gold Council says

China's demand for gold is set to rise by about 20% over the next few years, the World Gold Council has estimated, as the population becomes more wealthy.

China's demand for gold shows no sign of letting up

The council estimates private sector demand for gold in China will rise to at least 1,350 tonnes by 2017.

Chinese customers bought 1,132 tonnes of gold last year, in jewellery as well as gold bars and coins for investment.

The forecast comes as China becomes the world's largest gold-consuming nation since last year, overtaking India.

The World Gold Council says China is at the "centre of the global gold eco-system", as rapid urbanisation creates a rising middle class.

Albert Cheng, from the World Gold Council, said: "The cultural affinity for gold runs deep in China and when this is combined with an increasingly affluent population and a supportive government, there is significant room for the market to grow even further.

"Whilst China faces important challenges as it seeks to sustain economic growth and liberalise its financial system, growth in personal incomes and the public's pool of savings should support a medium term increase in the demand for gold, in both jewellery and investment."

According to the council, consumers bought a record amount of gold last year, with Asia's economic heavyweights China and India in the top two spots.

In Western markets demand for the precious metal remained strong, particularly in the US, where people bought a lot of gold jewellery as well as gold bars and coins.

Reuters News - World trade picture improves but 2014 still below trend: WTO

World Trade Organization (WTO) Director-General Roberto Azevedo attends a news conference on world trade in 2013 and prospect for 2014 in Geneva April 14, 2014.

CREDIT: REUTERS/DENIS BALIBOUSE

(Reuters) - The World Trade Organization slightly raised its 2014 forecast for growth in global goods trade to 4.7 percent on Monday, saying it did not expect a return to the historical trend level of 5.3 percent until 2015.

"If GDP forecasts hold true, we expect a broad-based but modest upturn in the volume of world trade in 2014 and further consolidation of this growth in 2015," WTO Director General Roberto Azevedo told a news conference in Geneva.

Although the 2014 forecast represents a brighter picture than the 4.5 percent growth that the WTO expected at the time of its last forecast in September, it is still gloomier than its predictions a year ago because the European Union's economic recovery took longer to materialize than expected.

"EU demand has been weighing on world imports for the past couple of years but it's starting to turn around," said WTO economist Coleman Nee.

"We will be watching very closely to see if the recovery in the EU disappoints," Azevedo added.

Azevedo said it was unclear if trade had permanently stopped growing at twice the speed of gross domestic product, which had been the trend until the global economic crisis.

He said 80 percent of the protectionist policies implemented since 2008 were still in place but he hoped they would be removed as economic growth improved.

"It's not on the level - not even nearly close to the level - that we had after the 1929 crisis. But it's measurable and regrettable."

The WTO does not forecast trade in services, but said that the dollar value of global services exports grew 6 percent to $4.6 trillion in 2013, against two percent growth in 2012.

(Reporting by Tom Miles; editing by Stephanie Nebehay, John Stonestreet)

BBC News - Putin warns Europe of gas shortages over Ukraine debts

Russian President Vladimir Putin has warned European leaders that Ukraine's delays in paying for Russian gas have created a "critical situation".

Pipelines transiting Ukraine deliver Russian gas to several EU countries and there are fears that the current tensions could trigger gas shortages.

Pro-Russian separatists are holed up in official buildings in Donetsk and Luhansk, eastern Ukraine.

Meanwhile, a European human rights body has stripped Russia of voting rights.

The Parliamentary Assembly of the Council of Europe (PACE) monitors human rights in 47 member states, including Russia and Ukraine.

Protesting against Russia's annexation of Crimea last month, PACE suspended Russia's voting rights as well as Russian participation in election observer missions.

The Russian delegation had boycotted the meeting. Its leader, Alexei Pushkov, described the proceedings as a "farce.

Activists inside the Donetsk government building have proclaimed a "Donetsk Republic"

Russian state gas giant Gazprom says Ukraine's debt for supplies of Russian gas has risen above $2bn (£1.2bn; 1.4bn euros).

Gazprom said on Wednesday it could demand advance payments from Kiev for gas but President Putin said the company should hold off, pending talks with "our partners" - widely believed to mean the EU.

In a letter to European leaders, President Putin warned that the "critical" situation could affect deliveries of gas to Europe, his spokesman Dmitry Peskov said.

The letter released by the Kremlin says that if Ukraine does not settle its energy bill, Gazprom will be "compelled" to switch over to advance payment, and if those payments are not made, it "will completely or partially cease gas deliveries".

Mr Putin adds that Russia was "prepared to participate in the effort to stabilise and restore Ukraine's economy" but only on "equal terms" with the EU.

And he says that while Russia has been subsidising the Ukrainian economy with cheap gas, Europe has been exploiting its raw materials and worsening its trade deficit.

The US state department later said it condemned "Russia's efforts to use energy as a tool of coercion against Ukraine".

Spokeswoman Jen Psaki said the price Ukraine was being charged for its gas was "well above the average price paid by EU members".

Nearly a third of the EU's natural gas comes from Russia.

Previous Russian gas disputes with Ukraine have led to severe gas shortages in several EU countries. The EU says it has extra gas supplies and reverse-flow technology to deal with any such disruption now.

Buildings occupied

In Kiev, the authorities said Ukraine would not prosecute pro-Russian activists occupying official buildings in Donetsk and Luhansk if they surrendered their weapons.

The separatists in the east - a mainly Russian-speaking region with close ties to Russia - are demanding referendums on self-rule. In Donetsk they have declared a "people's republic". Gunmen have been seen among the protesters in Luhansk.

Ukraine has accused Russia of stirring up the unrest, a claim Moscow denies.

Meanwhile, Nato has unveiled satellite images it says show some 40,000 Russian troops near the Ukrainian border in late March and early April, along with tanks, armoured vehicles, artillery and aircraft.

British Brigadier Gary Deakin, speaking at Nato military headquarters in Belgium, said it was a force that was "very capable, at high readiness, and... close to routes and lines of communication".

A Russian military officer said the images dated from August last year and denied there had been a build-up of troops along the border, Russia's Ria Novosti news agency reported.

Several satellite images have been released by the Supreme Headquarters Allied Powers Europe of the Russia/Ukraine border areas. This photo, which Nato says was taken on 22 March, appears to show Russia's elite Spetsnaz forces stationed at Yeysk in southern Russia, near the border

This image purports to show a Russian artillery battalion at a military base near Nonocherkassk, east of the Sea of Azov in southern Russia

This apparently shows Russian tanks at a base near Kuzminka on 27 March

Ukraine fears that the Russian separatist actions are a provocation similar to the protests that gripped Crimea days before Russian troops annexed the peninsula last month. Russia denies the claim.

President Putin said on Thursday his decision to annex Crimea was taken after secret opinion polls and had not been planned in advance.

Speaking to political supporters near Moscow, he said the first poll showed 80% of the Crimean population wanted to join Russia. He said he had not made any decision until it was "clear what the mood of the people was".

Russia, the US, Ukraine and the EU are to hold talks in Geneva next Thursday to try to resolve the impasse, EU diplomats have said.

They will be the first four-way talks since the crisis began.

Russian Foreign Minister Sergei Lavrov told US Secretary of State John Kerry by telephone on Wednesday that the meeting should focus on fostering dialogue among Ukrainians and not on bilateral relations among the participants.

In another development, the Kremlin announced that President Putin had sacked 14 generals. They were sacked from the emergencies ministry and prison service, as well as regional branches of the interior ministry and the Investigative Committee (Russia's equivalent of the FBI).

It was not immediately clear if the move was a routine step. Russia has some 800 generals in its army alone.

Bloomberg News - Greek Bond Sale Said to Top $4 Billion in Market Return

Photographer: Angelos Tzortzinis/Bloomberg

A Greek national flag flies above the national parliament building in Athens. The Greek government had been shut out of bond markets since March 2010 and kept afloat with bailouts totaling 240 billion euros from the euro area and the IMF

Greece is ending a four-year exile from international markets with a bond sale of 3 billion euros ($4.2 billion), more than the government estimated, according to a person familiar with the matter.

The order book for the issue, which carries a coupon of 4.75 percent, exceeded 20 billion euros, said the person, who asked not to be identified because he isn’t authorized to speak about it. A Greek government official told reporters in Athens yesterday that Greece sought to raise 2.5 billion euros in the five-year bond issue.

“Greece returns to the bond markets under the same or even better terms than Ireland and Portugal,” Greek Deputy Prime Minister Evangelos Venizelos told reporters in Athens today after meeting with Prime Minister Antonis Samaras.

Greece, which has been bailed out twice, carried out the world’s biggest sovereign-debt restructuring and teetered on the brink of exiting the euro, had been shut out of bond markets since March 2010 and kept afloat with aid totaling 240 billion euros from the euro area and theInternational Monetary Fund.

Those funds necessitated the regular presence in Athens of officials from the so-called troika of the European Commission, the European Central Bank and the IMF, which became associated with austerity measures that triggered a political and social backlash.

‘Important Milestone’

“We welcome this,” Poul Thomsen, the IMF’s mission chief to Greece, said yesterday. “It’s a fundamental objective of the program to bring Greece back to market and this is an important milestone in this regard, and that clearly speaks to the success of the program.”

The yield on Greek 10-year bonds climbed three basis points, or 0.03 percentage point, to 5.92 percent at 11:10 a.m. London time. The rate fell 27 basis points yesterday, and touched 5.80 percent, the least since February 2010.

Greek securities returned 33 percent in the year through yesterday, the most among sovereign-debt markets tracked by the Bloomberg World Bond Indexes.

A car bomb exploded outside one of the Bank of Greece’s offices in central Athens this morning as a reminder of the upheaval that continues to rock the country almost four years after it resorted to calling for outside aid. Police said no one was injured in the bombing.

Some Damage

Protests, strikes and even bombings have been regular occurrences in Greece since then. Today’s device exploded at about 6 a.m. outside a building belonging to the Bank of Greece, causing some damage to surrounding buildings, a police spokeswoman said by phone.

Greece won approval this month from euro-area members for an 8.3 billion-euro aid payment, the first disbursement from its bailout program since December. The government and European Union predict that the Greek economy will expand 0.6 percent in 2014 after six consecutive years of contraction that has cost about a quarter of the nation’s economic output and sent theunemployment rate surging.

“The real economy is showing encouraging signs of recovery,” Greek Finance Minister Yannis Stournaras said at a conference in Athens today.

Greece’s unemployment rate dropped to 26.7% in January from 27.2% in the previous month, according to data today from the Athens-based Hellenic Statistical Authority.

The country still faces challenges including deflation. Consumer prices calculated using a harmonized EU method dropped 1.5 percent in March from a year earlier, the 13th straight decline. Non-performing loans ballooned to 31.7 percent of total lending at the end of 2013, according to data provided by the Bank of Greece.

To contact the reporters on this story: Marcus Bensasson in Athens atmbensasson@bloomberg.net; Hannah Benjamin in London at hbenjamin1@bloomberg.net

Reuters News - G20 to focus on boosting global growth, not Crimea: official

International Monetary Fund (IMF) Managing Director Christine Lagarde speaks at a news conference during the G20 Central Bank Governors and Finance Ministers annual meeting in Sydney, February 23, 2014.

CREDIT: REUTERS/JASON REED

(Reuters) - Global financial leaders will thrash out details of individual country pledges to boost growth and overhaul their economies at this week's meetings in Washington, a senior Australian official said on Tuesday.

Group of 20 countries promised at their last meeting in Sydney in February to lift global output by an extra 2 percent over five years, with individual action plans due later this year.

Although geopolitical risks stemming from the crisis in Ukraine were also on the table, growth would take center stage, Australia's G20 Finance Deputy Barry Sterland said in a telephone interview.

"To build momentum on those growth strategies is really a key goal for this meeting," he said. "A big focus of this meeting is going to be building on that growth ambition, discussing the sorts of measures that are needed to meet the Sydney growth goal."

Australia chairs the bloc of advanced and developing economies this year and has asked for firm plans to address gaps in each country's policy settings in the second half of 2014.

According to a document prepared for the G20 by European Union finance ministers, reform drafts so far have fallen short and more ambitious work is needed in areas including investment, employment and competition.

The International Monetary Fund forecast global growth at 3.6 percent this year while warning of geopolitical risks amid a tug of war between Russia and Western countries over Ukraine.

Russia, also a G20 member, has been hit with EU and U.S. sanctions over its annexation of Ukraine's Crimea region.

G20 officials have said they expect the group's communiqué, to be issued after Friday's meeting, will not specifically mention the crisis in Ukraine.

Sterland said there would be a discussion of the "full range" of geopolitical risks, but noted that Ukraine had already been an issue at the last G20 just six weeks earlier, and there was no plan for joint action against Russia.

"That sort of theme would not be on the agenda for this meeting," Sterland said.

Australia's Foreign Minister Julie Bishop has said it depends on G20 member countries whether Russia is invited to the G20 leaders' summit this year.

DEFLATION EYED

At Friday's meeting, emerging markets are again expected to raise concerns about spillover effects from central banks normalizing policy in advanced economies, a worry which featured prominently at the Sydney meetings.

The U.S. Federal Reserve is on track to wind up bond purchases by the end of this year as the U.S. economy recovers, although the European Central Bank is under pressure to do more to support growth.

The G20's February communiqué said that the timing of monetary policy withdrawal should be conditional on the outlook for price stability as well as growth - sounding a note of caution given the euro zone's extremely low inflation.

"Those comments in Sydney seem to remain appropriate. We are taking an approach to keep the communiqués relatively tight," Sterland said.

The ECB has so far resisted calls from the IMF to ease monetary policy further although it said last week it was ready to start asset purchases, also known as quantitative easing, if inflation proved persistently low.

A German government official said Germany planned to tell the IMF and G20 partners it sees no deflation tendencies in Europe, noting instead that low inflation came from lower energy prices and moderate wage hikes.

(Reporting by Krista Hughes in Washington and Cecile Lefort in Sydney; Additional reporting by Jan Strupczewski in Brussels, Lidia Kelly in Moscow and Gernot Heller in Berlin; Editing by Lisa Shumaker)