BBC News - China trade surplus hits new record as exports grow

China's monthly trade surplus hit a record $60.6bn (£40.3bn) in February, as exports grew and imports slid back.

Premier Li Keqiang has announced a lowered growth target of around 7%

Exports were up 48.3% year on year to $169.2bn, and imports dropped by a fifth to $108.6bn, said the country's General Administration of Customs.

The growth in exports was well ahead of analyst expectations.

China's economy grew by 7.4% in 2014, its weakest for almost a quarter of a century, and recent indicators show signs the slowdown is continuing.

Holiday factor

Customs officials put the surge in exports down to a flurry of activities by companies to get orders processed before the Chinese New Year, which fell in the middle of February this year.

"Affected by the Spring Festival factors, export companies in the country again rushed to export ahead of the holiday and only resumed working after it," a statement said.

The surplus figure stood at $8.9bn in the same period last year.

But he Lunar New Year had fallen on 31 January in 2014, followed by a week-long national holiday, which meant it provided a weak comparison with this February.

For the first two months of the year, China's trade surplus has totalled $120.7bn, following the $60bn surplus in January.

"We still see strong headwinds facing China's exports this year," said ANZ economists Liu Ligang and Zhou Hao in a research note.

Premier Li Keqiang on Thursday announced a lowered growth target of "approximately 7%" for this year, and cut the trade growth target for 2015 to "around 6%".

Bloomberg News - Creditors Reject Greece's Reform Proposals

Greek Flag Outside Parliament

A Greek national flag flies outside the national parliament in central Athens. Photographer: Angelos Tzortzinis/Bloomberg

(Bloomberg) -- Greece’s provisional agreement with creditors to avert a default started to crack as European officials said the country’s latest proposals fell far short of what was put forward two weeks ago and Greek ministers floated the prospect of a referendum if their reforms are rejected.

The list of measures Greece’s government sent to euro region finance ministers last Friday, including the idea of hiring non-professional tax collectors such as tourists, is “far” from complete and the country probably won’t receive an aid disbursement this month, Eurogroup Chairman Jeroen Dijsselbloem said on Sunday.

Greece’s anti-austerity government, elected in January on a promise to renegotiate the terms of a 240 billion-euro ($260 billion) bailout, has to present detailed proposals to European creditors or risk running out of cash as soon as this month. The renewed tensions threaten to temper a rally in Greek bonds sparked by optimism over the provisional accord.

“It seems their money box is almost empty,” Dijsselbloem told reporters at an event on Sunday organized by Dutch newspaper de Volkskrant in Amsterdam.

Greece must adhere to its commitments as a “first step to restore trust” among its euro-area peers, Valdis Dombrovskis, European Commission vice-president for euro policy, said in interview with Finnish newspaper Helsingin Sanomat.

Bonds Decline

Greek bonds fell, with the yield on 10-year government bonds gaining 21 basis points to 9.6 percent. The Athens Stock Exchange index declined 0.9 percent as of 10:31 a.m. local time.

The country is seeking the disbursement of an outstanding aid tranche totaling about 7 billion euros. Without access to capital markets, its only sources of financing are emergency loans from the euro area’s crisis fund and the International Monetary Fund. Its banks are being kept afloat by an Emergency Liquidity Assistance lifeline, subject to approval by the European Central Bank.

“I can only say that we have money to pay salaries and pensions of public employees,” Greek Finance Minister Yanis Varoufakis told Italy’s Il Corriere della Sera in an interview Sunday. “For the rest we will see.”

Referendum Considered

Varoufakis said on the weekend that if the country’s creditors raise requests that aren’t acceptable to the government, then the people of Greece may have to decide on how to break the deadlock. Prime Minister Alexis Tsipras also signaled the referendum option is being considered.

“If we were to hold a referendum tomorrow with the question, ‘do you want your dignity or a continuation of this unworthy policy,’ then everyone would choose dignity regardless of difficulties that would accompany that decision,” Tsipras told Der Spiegel Magazine in an interview published Saturday.

Tsipras is walking a tightrope between sticking to his election pledges, which found resonance in a country with a 26 percent unemployment rate, and avoiding default and a possible exit from the euro region.

The last time a Greek leader mooted the idea of a referendum it didn’t go down very well in the euro region. Former Prime Minister George Papandreou suggested his people have a say on the bailout agreement he’d reached in October 2011. Within a month, he’d lost his job and a new interim government was in place.

‘Mission Impossible’

Some of Tsipras’s post-election glow is starting to fade, one opinion poll showed. A survey conducted by Marc for the Efimerida Ton Syntakton newspaper on Saturday showed 64 percent of Greeks had a positive opinion of the government, down from 83.6 percent in February.

“Maintaining the unity of the anti-bailout coalition, while striking a deal which would ease the immense pressure on the economy, is proving to be almost a ‘Mission Impossible,’” said George Pagoulatos, a professor of European politics and economy at the Athens University of Economics and Business.

Tsipras’s administration sent a set of commitments Friday to Dijsselbloem, in the hope that the policy proposals would pave the way for the disbursement of aid.

Two officials representing creditor institutions said the proposals, which include tackling tax avoidance through non-professional inspectors and equipping citizens with chipped smart cards, aren’t enough to unlock bailout funds. The plans are amateurish and don’t signal substantial progress to meeting the commitments it made on Feb. 20, they said, asking not to be identified as negotiations are private.

Greek Letter

In its letter requesting an extension to the bailout last month, Greece’s government had committed to streamline sales tax rates, with a view to limiting exemptions, implement a comprehensive review of government spending in every sector, and auction digital frequencies used by TV channels.

The letter, which was sent to euro area finance ministers on Feb. 23, and got their approval the day after, also included a commitment to pension reform, the elimination of loopholes and incentives that give rise to an excessive rate of early retirements, and the removal of barriers to competition in its goods and services markets.

With about 2 billion euros of debt-servicing payments, including Treasury bill redemptions and IMF obligations coming due on March 13, Greece’s government has little room to maneuver. If talks between finance ministers in Brussels fail, the government may have to decide its next step fast.

“Time is running short for Greece,” ECB Executive Board member Benoit Coeure said in interview with Cypriot newspaper Politis published Sunday.

To contact the reporters on this story: Nikos Chrysoloras in Athens atnchrysoloras@bloomberg.net; Eleni Chrepa in Athens at echrepa@bloomberg.net

Reuters News - Sturdy U.S. jobs report seen, could keep June rate hike on table

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014.

CREDIT: REUTERS/SHANNON STAPLETON

(Reuters) - U.S. employment likely rose strongly in February with the jobless rate slipping, signs that could encourage the Federal Reserve to consider hiking interest rates in June.

A Reuters survey of economists forecast a 240,000 increase in nonfarm payrolls after a 257,000 gain in January. That would mark the 12th straight month of job increases above 200,000, the longest such run since 1994.

"The jobs picture remains extraordinary healthy," said Jacob Oubina, an economist at RBC Capital Markets in New York.

The jobless rate was forecast to fall one-tenth of a percentage point to 5.6 percent, while average hourly earnings were seen rising 0.2 percent after jumping 0.5 percent in January.

Fed officials are monitoring pay closely to help determine when enough pressure is building in the jobs market to merit higher borrowing costs to keep the economy from overheating.

The Labor Department will release the jobs data at 8:30 a.m. on Friday, little more than a week before the U.S. central bank's March 17-18 policy meeting. Many economists expect the Fed could signal its openness to a June rates lift-off by dropping a pledge to be "patient" in considering a hike.

The anticipated pullback in earnings growth will probably not be an issue for the Fed given other signs that wage pressures are building, economists say.

Wal-Mart (WMT.N), the world's largest retailer, announced last month it would spend more than $1 billion this year to increase pay for about 40 percent of its U.S. workforce. Other companies, like TJX Cos Inc (TJX.N) and health insurer Aetna (AET.N), have also announced wage increases.

SNOWY WEATHER

"We have started to see the potential for an increase in wages. That's really what the Fed is looking for," said Tim Hopper, chief economist at TIAA-CREF in New York.

The Fed has kept overnight rates near zero since December 2008. The economy added more than one million jobs between November and January, the strongest three-month stretch since 1997, while the number of jobs seekers for each open position hit its lowest level since 2007 in December.

Cold and snowy weather that blanketed large parts of the country in February is likely to have a minimal impact on the job count as the adverse conditions set in after the government surveyed employers, economists said.

A strike by 5,200 workers at some petroleum refineries is also likely to have a marginal effect.

"The snowstorms ... may depress payrolls modestly, likely by less than 10,000 jobs," said Daniel Silver, an economist at JPMorgan in New York.

A sturdy report would reinforce the view that a recent slowdown in economic growth reflects temporary factors, such as the weather and a now-settled labor dispute at West Coast ports.

The economy has also taken a hit from cuts in capital spending by oil companies, whose profits are being squeezed by lower crude prices. Oil and gas extraction employment likely declined further after falling 1,900 in January.

Overall, private payrolls are expected to have increased 229,000, with manufacturing employment rising 12,000. Further increases in construction payrolls are expected, though bad weather could have curbed gains.

Government payrolls are seen rising 10,000.

(Reporting by Lucia Mutikani; Editing by Meredith Mazzilli)

Bloomberg News - Greece Struggles to Make Debt Math Work in Bailout Standoff

Photographer: Virginia Mayo/AP Photo

The Greek, left, and EU flag flap in the wind outside the Greek embassy in Brussels on Friday, Feb. 20, 2015. Eurozone finance ministers meet for a crucial day of talks to see whether a Greek debt relief proposal is acceptable to Germany and other nations using the common currency. (AP Photo/Virginia Mayo)

(Bloomberg) -- As talks over the disbursement of bailout funds for Greece drag on into their seventh consecutive month, the deadlock threatens to pull the country back into a recession this quarter, or even a possible default within weeks.

Greece needs to refinance or repay about 6.5 billion euros ($7.2 billion) in debt and interest in the next three weeks, including Treasury bill redemptions, according to data compiled by Bloomberg. To top that, its budget forecasts a 2.1 billion euros cash deficit in March. A tax-revenue shortfall opened a hole of 217 million euros in January, derailing budget targets.

Having lost market access, Greece’s only lifeline is emergency loans extended by euro-area member states and the International Monetary Fund. Failure to secure an agreement with them on the disbursement of funds has triggered a liquidity squeeze, raising doubts about the country’s solvency, as well as the sustainability of its nascent economic recovery.

“There’s no chance the quarrel won’t affect the economy” said Haris Theoharis, a lawmaker for Greece’s River party and a former secretary of public revenue. “Every investment has been put on hold, pending the result of the talks,” he said by phone on Wednesday.

Greek Finance Minister Yanis Varoufakis said that the country has an alternative plan to plug its financing shortfall in March, without specifying what it was.

“We go into the negotiations with optimism, with especially good preparation, and I believe there won’t be a development,” Varoufakis said in Athens, on Wednesday. The answer to the question of whether “there is an alternative is that there is one,” he said.

Paris Talks

Investors have shown confidence a solution will be found. Greek bonds have delivered a 3.4 percent return this year, among the best returns out of 34 sovereign indexes tracked by Bloomberg. The benchmark Athens Stock Exchange General Index has gained 2.8 percent this year.

Greece’s month-old anti-austerity government led by Prime Minister Alexis Tsipras has yet to agree with its creditors on the terms for the disbursement of an outstanding aid tranche totaling about 7 billion euros. Negotiations that started in Paris in early September between the previous government and the troika of the European Commission, the IMF and the European Central Bank didn’t yield any results. A snap election in January put an abrupt end to the talks.

Two officials directly involved in Greece’s 240 billion euros bailout said the country could potentially use its available reserves to make it past the end of this month. A third official said Greek financing needs, including debt repayments to the IMF, are only safely covered for another two weeks. The officials asked not to be named while negotiations continue. A spokesman for Greece’s finance ministry declined to comment on when the country may run out of cash.

Pension Reserves

Greece’s government has so far been covering its cash deficit by tapping the reserves of public entities, including pension funds, hospitals, and universities. It also rolls over treasury bills, forcing Greek banks to make a choice between participating in liquidity-draining auctions or letting their sovereign default.

Greece’s biggest pension fund, said in a statement Wednesday that repurchase agreements with the central government are not an extraordinary event.

Reports to the contrary “do not contribute positively in this crucial period for the economy, and exacerbate climate of insecurity and uncertainty among Greek pensioners,” IKA said.

The internal recycling of reserves to tap liquidity shortages is not always benign.

Cash Recycling

“When short of cash, governments increase their arrears, delay tax rebates, and hold public investment payments,” said Panos Tsakloglou, a professor at the Athens University of Economics and Business.

In the case of Greece this asphyxiation, if prolonged, could dampen economic growth, he said.

Uncertainty over Greece’s financing amid a protracted standoff with creditors over the terms attached to the country’s bailout, has already taken its toll on the economy. Greece’s gross domestic product shrank in the last quarter of last year after nine months of growth, and a purchasing managers’ index showed manufacturing activity kept contracting in the first two months of 2015 and depositors withdrew about 20 billion euros from the country’s banks.

As Greece prepares for a repayment of 300 million euros to the IMF on Friday, which will further deplete its buffers, creditors warn that no bailout disbursements will be made unless the new government meets economic reform milestones. “Before any money flows we need to check whether Athens meets the agreed terms,” German Finance Minister Wolfgang Schaeuble said in a Wednesday interview with Stuttgarter Zeitung.

Debt Repayments

Greek banks’ exposure to treasury bills has already reached the limit acceptable to regulators in Frankfurt, and won’t bailout the government with more short-term notes, unless the ECB allows them.

Prime Minister Tsipras called Bank of Greece governor Yannis Stournaras ahead of an ECB Governing Council meeting Thursday, asking him to contribute to the restoration of liquidity in the Greek economy “through all available means,” a government official said in an e-mail to reporters.

The clock is ticking for Europe’s most-indebted state. Greece needs to refinance treasury bills totaling 1.6 billion euros next week, and pay about 420 million euros in IMF amortization and interest on its debt. The bill rises to 3.1 billion euros the week after, of which 913 million euros are due to the IMF.

Even if the Greek state somehow manages to pay its bills this month without a bailout tranche, the country’s private sector, in which more than a quarter of the workforce is without a job, may not be resilient enough to withstand a long delay.

“The standoff hurts the most productive sectors of the economy,” Theoharis said.

To contact the reporters on this story: Nikos Chrysoloras in Athens atnchrysoloras@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net; Vassilis Karamanis in Athens at vkaramanis1@bloomberg.net

BBC News - Ukraine raises interest rates to 30%

Ukraine's central bank has sharply raised interest rates from 19.5% to 30% in an effort to curb inflation and prop up its beleaguered currency.

People walk past a board showing currency exchange rates in central Kiev at the end of February

The new benchmark refinancing rate takes effect on Wednesday.

It comes as the government in Kiev is seeking a $17.5bn (£11.4bn; €15.6bn) assistance programme from the International Monetary Fund (IMF).

Inflation is expected to hit at least 26% this year and the hryvnia has tumbled against the dollar.

The currency has lost 80% of its value since last April, when pro-Russian separatists took up arms in the country's eastern Donetsk and Luhansk regions, a month after Russia annexed Ukraine's southern Crimea peninsula.

Last week, the hryvnia hit a record low of 33.75 to the dollar before recovering some ground.

The conflict has taken its toll on Ukraine's economy, which is forecast to shrink by 5.5% in 2015.

The interest rate increase is the second in two months, after the central bank raised the rate from 14% in February.

On Monday night, Ukraine's parliament approved a package of reforms that could determine whether it will avoid economic meltdown in the coming weeks.

They include changes to the tax and energy laws and the government's budget.

The passing of the reform package was a condition for the IMF rescue package.

The IMF's executive board will meet on 11 March, when it will make its decision. If it says yes, the first tranche of some $5bn will become available within days.

BBC News - Singapore remains world's most expensive city

Singapore has retained its position as the world's most expensive city, according to research by the Economist Intelligence Unit (EIU).

The top five most expensive cities in the world remain unchanged from a year earlier and include, in descending order, Paris, Oslo, Zurich and Sydney.

The EIU's survey comprises 133 cities worldwide and uses New York as a base.

It compares the cost of more than 160 services and products including food, clothing and utility bills.

Singapore was found to be 11% more expensive than New York for basic groceries.

And together with Seoul, it was found to be the most expensive place in the world for clothes, "with prices 50% higher than New York", the EIU said.

"Most significantly, Singapore's complex Certificate of Entitlement system makes car prices excessive, with Singaporean transport costs almost three times higher than in New York."

The information gathered for the survey is designed to be used onlineas a way to calculate the cost of relocating and living for expatriates and business travellers.

Continue reading the main story

Most expensive cities

Singapore

• 2. Paris, France
• 3. Oslo, Norway
• 4. Zurich, Switzerland
• 5. Sydney, Australia

Source: Economist Intelligence Unit

AFP

Currency moves

The EIU said it was "very rare" to have an unchanged top five in their survey, especially considering the worldwide drop in oil prices together with deflationary pressures in many markets.

Foreign currency movements and falling oil prices had an effect on the cost of living in several cities.

Most notably, a weaker currency in Venezuela saw Caracas slide 124 places in the ranking, from the sixth most expensive city last year, to one of the cheapest this year.

However, the survey does not take into account the recent jump in value of the Swiss franc.

The EIU said that Zurich would top the list if that was included in the cost analysis.

In 2014, Singapore replaced Tokyo, which topped the list in 2013.

Japan's capital fell to 11th place this year as its currency weakened against the dollar and deflation continued to impact the economy.

Continue reading the main story

The cheapest cities

Karachi

Pakistan

• Bangalore, India
• Caracas, Venezuela
• Mumbai, India
• Chennai, India

Source: Economist Intelligence Unit

AFP

Value for money

Some of India's cities stand out as the least expensive in the world, with Bangalore, Mumbai and Chennai included in the five cheapest.

The EIU said low wages and price subsidies on some staples had contributed to Indian cities' place in the survey.

Asia's third-largest economy has continued to battle an economic slowdown as well as deflationary pressure in recent years.

Last month, the country's central bank said it had seen a sharper-than-expected decline in the price of fruit and vegetables since September last year. It used this factor as one reason for cutting its benchmark lending rate in a surprise move earlier this year.

Reuters News - Stimulus swells as China eases, India spends

(Reuters) - The tide of global stimulus is swelling as China cut interest rates and India launched an expansionary budget over the weekend, even as a mixed bag of manufacturing surveys underlined the challenges facing the region.

The Reserve Bank of Australia (RBA) holds its March policy meeting on Tuesday and there is a real chance it will cut rates for a second time in as many months. [TOP/CEN]

Investors seemed encouraged enough by all this policy action to nudge most share markets higher while giving a fillip to commodities such as copper.

Cuts to benchmark lending and deposit rates announced by the People's Bank of China(PBOC) on Saturday evening pre-empted official data showing a second consecutive month of shrinking manufacturing activity (PMI).

There was better news from the private HSBC/Markit version of the PMI on Monday, which climbed to a seven-month top of 50.7 in February, from 49.7 in January, as new orders picked up.

But it also showed China's manufacturers were struggling to cope with erratic export demand and deflationary pressures.

Thus, analysts suspect the PBOC's easing, its third major policy move since late November, will not be the last.

"The priority has been shifted to safeguard growth," wrote analysts at OCBC Bank. "We still expect one more interest rate cut in the second quarter and the next possible move is likely to be a reserve requirement ratio cut."

They also saw scope for fiscal policy to play a part with government spending likely to pick up after the National People's Congress meeting this week.

Over the weekend, India's reform-minded prime minister, Narendra Modi, released a budget that pleased economists and investors with pledges to spend more on modernizing aging roads and railways while keeping borrowing in check.

Ratings agency Moody's judged that the budget prioritized growth over deficit reduction.

"Recent policy announcements, including the budget, support Moody's expectation that India's growth will remain stronger than the global average, and more robust than the median for similarly rated sovereigns," the agency concluded.

The February HSBC PMI for India dipped to a five-month low in but at 52.9 still pointed to solid growth in the sector.

Japan's Markit/JMMA PMI faded a little to a final 51.6 in February, from January's 52.2 in January, but new export orders rose for the eighth straight month in a promising sign.

South Korea's PMI held at a 20-month peak of 51.1 in February with output and new export orders expanding, data from Markit Economics showed.

The survey helped offset news that industrial output suffered to worst monthly drop in six years n January, a downturn officials blamed on one-off factors and holidays.

There were fewer excuses for Indonesia as its PMI fell to 47.5 in February, the lowest reading since the survey began in April 2011. The result added to speculation of another rate cut there after a surprise move last month.

Final PMIs will be released for other global economies later in the day, with marginal growth in activity expected in the euro zone but continued strong growth in the United States.

BY WAYNE COLE