BBC News - Greece submits new reform plan to EU and IMF

Greece has submitted a revised reform plan to the European Union (EU) and International Monetary Fund (IMF).

It comes days after Greek Prime Minister Alexis Tsipras rejected a set of reforms put forward by EU Commission President Jean Claude Juncker.

The EU and IMF want further economic reforms before they release €7.2bn (£5.3bn) of bailout funds.

It is believed Athens has conceded ground on VAT reforms, pensions and the country's primary surplus target.

The reform plan comes a day before Mr Tsipras meets the French president and German chancellor.

Last week, Greece "bundled up" a €300m (£221m) payment to the IMF, delaying the payment until the end of June when a total of €1.5bn is due to be paid.

Among the plans being put forward by the government, it is believed Greece is willing to increase VAT, but still maintain three rates: a standard rate, a reduced rate for food and medicine and a further reduced rate for books and hotel accommodation.

The government has proposed increasing its three rates of VAT, according to Greek newspaper Ekathimerini.

Athens is also willing to move closer to creditor demands over the primary surplus as well, the newspaper reports.

The EU and IMF want the economy to run a primary surplus of 1% of GDP this year and 2% next year. Athens prefers a target of 0.6% of GDP this year and 1% next year.

Time running out

Another possible measure being put forward is thought to include a proposal to increase pensioner contributions to healthcare from 4% of their monthly income to 6%.

Creditors "are now in the process of studying" the list of "counter-proposals", sources told the AFP news agency.

Mr Tsipras warned earlier on Tuesday that a failure to reach a deal on Greece's bailout, which expires at the end of the month, would be the beginning of the end for the eurozone.

He is due to meet Germany's Angela Merkel and France's Francois Hollande on the sidelines of an EU-Latin America summit in Brussels on Wednesday.

Speaking at the G7 Summit in the Bavarian Alps in Germany, Mrs Merkel echoed the Greek premier's sentiments, warning that time was running out for a deal to keep Greece in the eurozone.

Europe would show solidarity but only if Greece "makes proposals and implements reforms", she said.

Greek Finance Minister Yanis Varoufakis, meanwhile, said it was time to stop finger-pointing and find an agreement.

The counter-proposals arrived two days after Mr Juncker complained the Greek prime minister had not fulfilled a pledge made at a meeting last week to send Brussels his plans.

He also accused Mr Tsipras of failing to respect "minimal rules" in their negotiations and refused to take a call from the Greek leader at the weekend, saying the Greek prime minister had to submit the promised alternative reform plan first.

Reuters News - German yields rise again, stocks dip

Tokyo Stock Exchange (TSE) staff members work at the bourse at TSE in Tokyo October 16, 2014.

REUTERS/YUYA SHINO

More sales of German government bonds weighed on European stock markets on Monday, while the dollar retreated after a report - later denied - that President Barack Obama had expressed concern over its strength after a year-long rally.

In Turkey, the main stock index .XU100 tumbled 8 percent at the start of trade on Monday and the lira TRYTOM=D3 slid to a record low after the ruling AK Party failed to win a majority in parliamentary elections, unnerving investors.

The rise in 10-year Bund yields since mid-April has made them a central driver of global markets and they gained 4 basis points in the first hour of trade in Europe, rattling stock markets.

However, Deutsche Bank shares bucked the trend to jump 6 percent (DBKGn.DE) after it replaced its leadership and industrial output numbers suggested stronger better growth in Europe's biggest economy. ECONDE

The German data added to the sense that Europe is edging away from the deflationary spiral that has driven the interest generated by a number of mainstream debt and money market contracts below zero.

Higher yields on bonds make stocks, which hit 8-year highs in April right before Bunds started to move, less attractive, drawing more money back into the bond market. But if signs of improved economic growth are one driver of that move, that should help share values.

"Rising bond yields have triggered a correction in the Euro Stoxx 50 index of around 8 percent, close to the size during the 'taper tantrum' (fear of U.S. interest rates rises) in 2013," Goldman Sachs analysts said in a note to clients.

"This time, however, Europe is in the driving seat. Stronger growth is generating a reflationary rotation. Short-term volatility is likely, but we expect the equity market to

shrug off higher yields in time."

Germany's DAX .GDAXI and France's CAC .FCHI both fell 0.3 percent, and the blue chip Euro Stoxx 50 index was down 0.2 percent.

STRONG DOLLAR TROUBLE?

The dollar dropped almost half a percent against both the euro and yen after a news agency, citing an unnamed French official, reported that Obama had called the strong dollar "a problem" in conversation at the G20 summit in Germany.

The White House denied the president had made the comment, helping the currency recover, but it was still down 0.2 percent at 125.40 yen and $1.1133 per euro.

"The direction is clear: Dollar/yen will maintain its rally," said chief trader at a Japanese brokerage. "But I think it's too early to say that the dollar will test 130 yen soon."

Asian shares earlier extended losses as weak Chinese imports increased concerns over a slowdown in the world's second largest economy, although Chinese shares, the subject of a substantial correction to this year's rally in May, were up 2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.4 percent, while Japan's Nikkei stock index .N225 recovered some ground from early lows.

China's exports fell less than expected last month, but imports tumbled at a greater pace, stoking speculation that the economy's slowdown will give Beijing more reason to take further stimulus steps.

The downbeat Chinese import figure was unsupportive for an oil market already concerned about oversupply after exporter group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday.

Brent crude futures LCOc1 slipped about 0.5 percent to $63.04 a barrel, after skidding 3.6 percent last week.

(Additional reporting by Kevin Yao in Beijing; Editing by Ruth Pitchford)

BBC News - Greece delays 5 June IMF debt payment

Greece has told the International Monetary Fund it will delay Friday's €300m (£216m) debt repayment and bundle all four of its June payments together.

The Athens government will have until 30 June to pay the €1.5bn total, which is also the day on which its bailout deal with the EU and IMF runs out.

Prime Minister Alexis Tsipras is trying to reach a deal to unlock final bailout funds before Greece runs out of money.

But Greece's creditors say differences remain between the two sides.

IMF spokesman Gerry Rice said that under a precedent dating back to the late 1970s, governments could ask to bundle together "multiple principal payments falling due in a calendar month... to address the administrative difficulty of making multiple payments in a short period."

The last country to bundle together payments to the IMF was Zambia in the mid-1980s.

BBC economics correspondent Andrew Walker says the €300m payment would have been difficult for the Greek government but reports suggest it had identified money that could have been used.

The decision to delay it may also be a negotiating tactic, he adds, intended to put pressure on the IMF and the EU in negotiations over the bailout.

Mr Tsipras said after talks in Brussels in the early hours of Thursday that an agreement with Greece's international creditors was "in sight".

However, the head of the eurozone's finance ministers Jeroen Dijsselbloem, who was involved in the negotiations, said later the gap was "still quite large".

High-level talks were expected to resume on Friday, although Mr Tsipras was due to brief the Greek parliament rather than return to Brussels.

'In sight'

Mr Tsipras rejected elements of proposals put forward by his country's international creditors in talks with Mr Dijsselbloem and European Commission chief Jean-Claude Juncker.

He said the sides were now "very close to an agreement" on the key sticking point of primary surpluses - the amount by which tax revenues exceed public spending.

The head of the Eurogroup said key differences still remained between Greece and its creditors

But he said there were "points that no-one would consider as a base for discussion", citing cuts to pensions and a raise in sales tax for electricity.

Mr Dijsselbloem said the talks had been successful in narrowing down the remaining issues, although key differences still remained.

He expected Greece to "look at our proposals more carefully, probably come up with some alternative proposals that they want," Reuters quoted him as saying.

Greece debt talks - main sticking points

• International creditors want pension cuts, slimmer civil service, VAT reform, fewer tax rebates and more private sector investment, reports say
• Mr Tsipras rules out increased VAT on energy and reduced supplementary payments for poorer pensioners
• Athens wants lower primary budget surplus targets, but both sides appear close to agreement. According to reports, creditors want a budget surplus of 1% of GDP this year and 2% next, while Greece has proposed 0.8% for 2015 and 1.5% for 2016

Greece in numbers

€320bn

Greece's debt mountain

€240bn

European bailout

• €56bn Greece owes Germany
• 177% country's debt-to-GDP ratio
• 25% fall in GDP since 2010
• 26% Greek unemployment rate

Source: ECB, IMF, Greek National Statistics Agency

Reuters

Greece's cash-strapped government has been haggling since February over the release of the last €7.2bn in funds, but its current bailout arrangement with the IMF, European Central Bank (ECB) and European Commission runs out at the end of June.

Failure to reach a deal could trigger a Greek default and a potential exit from the eurozone.

Speaking to the BBC on Thursday, German Chancellor Angela Merkel said: "We want Greece to stay in the euro but in order to achieve that, Greece has to make the necessary efforts, and these are the subject of our ongoing discussions, and I want to see them come to a positive result."

Bloomberg News - U.S. Creates Russia Sanctions Loophole to Counter Kremlin Spin

The U.S. has quietly created a loophole in its sanctions against Russia to allow exports of communications software to Crimea so that its people can take to the Internet and chip away at the Kremlin’s efforts to control information.

The rule lets companies export social media software for blogging, photo-sharing, instant messaging and other forms of communication in an effort to reduce Russia’s ability “to control the narrative of local events,” the Commerce Department said.

Moscow’s “weaponized propaganda,” in one Pentagon official’s words, has put the U.S. and European Union at a disadvantage, officials and analysts say, even as economic sanctions hit the Russian economy. The Crimea initiative is part of a broader U.S. push to help people worldwide get free access to news and information.

Some critics say it’s a mistake to fight the information battle on Russia’s terms, but others say the Commerce Department’s move, which gives software companies the legal assurances they need to sell in an area ruled by Russia, provides ammunition for Crimeans who oppose Russia’s annexation of their peninsula in March 2014.

The Commerce Department rule appeared May 22 in the Federal Register, where the government publishes agency regulations. That was days before President Barack Obama met with NATO Secretary-General Jens Stoltenberg to denounce Russia’s actions in Ukraine and reiterate U.S. support.

Alec Ross, the State Department’s former senior adviser for innovation, said the Commerce Department move is consistent with steps the Obama administration took in 2010 in Iran, Syria, Cuba and Sudan. “Technology companies often avoid markets where there is any question whatsoever about the legal terrain,” he said.

‘Flooding the Zone’

“The Russians have done an excellent job flooding the zone in Crimea with their propaganda. They commandeered broadcast, radio and local social media,” said Ross, now a senior fellow at Columbia University’s School of International & Public Affairs. “It is in America and Ukraine’s interests for there to be technologies and media platforms in Crimea and Eastern Ukraine that the Russians can’t control.”

Clifford Gaddy, a biographer of Russian President Vladimir Putin and a senior fellow at the Brookings Institution, a Washington policy group, called the move a waste of money.

“It’s like going into hand-to-hand combat with Marquess of Queensberry rules, when they have nunchucks.” Gaddy said, contrasting the 1867 rules governing boxing with Japanese martial-arts weapons.

The Commerce Department said in a statement that the rule is in U.S. national security interests because it will help Crimeans “describe their situation directly and counter any false messages being propagated by those currently exercising control over the Crimea region of Ukraine.”

Russian Support

The U.S. and its allies accuse Putin’s government of continuing to provide separatist elements in eastern Ukraine with arms, cash and personnel, even after a February cease-fire agreement. Russia denies the allegations and says many of the fighters are “volunteers” on leave from the military.

Now the truce may be facing the most serious test in three months as the government in Kiev said pro-Russian rebels are staging a major offensive. The U.S. is disturbed by reports of the offensive, State Department spokeswoman Marie Harf said on Wednesday in Washington. “Russia bears direct responsibility for preventing these attacks,” she said.

The Commerce Department’s move is part of a larger effort to address what Lieutenant Colonel Joe Hilbert, an Army field artillery officer, said is a “lack of a good information policy or information strategy” when it comes to Russia.

Hilbert was speaking at the Center for Strategic and International Studies in Washington about a U.S.-Russia war game conducted by the U.S. Army War College in Carlisle, Pennsylvania. Another speaker, Lieutenant Colonel Christopher Lay, said Russia isn’t “constrained by international norms” and can spin narratives the West can’t easily counter.

Competing Narratives

“It takes a good bit of lead time in order to gather the facts and figures” to respond with a “truthful message,” Lay said May 18. That delay, he said, gives Russia “quite a bit more flexibility” to create competing narratives about whether Russian troops are in Ukraine or who shot down Malaysian Airlines Flight 17.

Gaddy said trying to counter the Russian narrative means the U.S. falls into the trap of reinforcing Moscow’s central message: That the U.S. has chosen Ukraine as a new front in a long-running battle to weaken its rival.

“By engaging in this, through the government, in any form, we just reinforce the Russian narrative that this whole thing, everything about Ukraine and Crimea, it’s not Russia against Ukraine, no, it’s about the U.S. against Russia,” Gaddy said.

U.S. Effort

The U.S. effort to report what’s happening in Ukraine is directed by the State Department and the Broadcasting Board of Governors and includes U.S.-generated content such as American Embassy Twitter accounts and Russian-language news programming.

The new Crimea export rule fits into a U.S. information policy focused on giving people tools to communicate safely. That effort includes TechCamps that have trained 23,000 participants from 125 countries over the past four and a half years.

A recent camp in Riga, Latvia, brought 68 journalists from countries on Russia’s periphery to teach them how to operate in environments where they need secure communication tools. Participants also were taught how to verify content on social media, an increasingly useful skill given documented efforts by Russian groups to plant fake news.

“It’s fairly clear we’re seeing more efforts from the Kremlin to distort and undermine independent journalism,” said Macon Phillips, coordinator of the Bureau for International Information Programs at the State Department.

The camps are about supporting U.S. “priorities such as a vibrant and independent media,” entrepreneurship or countering violent extremism, Phillips said. An equally important aspect, he added, was that the camps help participants connect to each other and “build a network.”

by Nicole Gaouette and Brian Wingfield

BBC News - Australia's economy grows faster than expected

Australia's economy grew at a better-than-expected 0.9% in the first quarter of 2015, compared to the previous quarter, boosted by mining together with financial and insurance services.

Consumer spending and home construction only just offset an ongoing slump in Australia's mining investment, said economist Shane Oliver from AMP Capital.

Forecasts were for quarterly growth of between 0.5% and 0.7%.

Official statistics also showed that household consumption expenditure boosted the quarterly growth numbers.

But economist Shane Oliver told the BBC the numbers were "well below potential".

On an annual basis the economy expanded 2.3%, beating expectations for 2.1%.

Economic growth in the March quarter of 2014 was 2.9%.

'Not out of the woods'

"The March quarter GDP [gross domestic product] growth was far better than feared just a few days ago," said Mr Oliver, who is chief economist with AMP Capital in Sydney.

"However, Australia is still not out of the woods, as annual growth at 2.3% is well below potential, and a full 0.8% percentage points of the 0.9% growth came from higher inventories and trade."

He said domestic demand remained "very weak with consumer spending and home construction only just offsetting the ongoing slump in mining investment".

"So the Australian economy has not crashed - as many had feared would happen after the end of the mining boom - but it is continuing to grow at a sub par pace," he added.

Under pressure

A rising Australian dollar has been a cause for concern for Australia's big exporters

Australia's economy has been adjusting to a post mining-boom landscape. It saw its economy grow 0.5% in the October to December 2014 period from the quarter before, when growth was 0.4%.

On Tuesday, the country's central bank, the Reserve Bank of Australia (RBA), did not cut its lending rates further to help boost the economy, despite pressure from businesses to do so.

The decision saw Australian stocks fall 1.72% as investors saw little hope of a further cut in the near future.

However, Evan Lucas from IG Markets in Melbourne said "the collapse of [Australian stocks] on the back of the RBA not having an explicit easing bias... was a bit of an overreaction".

In May, the RBA cut its benchmark lending rate by 25 basis points to an all-time low of 2%.

Rising property prices in Australia's biggest city, Sydney, a strong currency and a drop in iron ore prices were among the reasons for the RBA's rate cut last month

Rising property prices in Australia's biggest city, Sydney, a strong currency and a drop in iron ore prices were among the reasons for the cut.

The May rate cut was the second this year, following a previous 25 basis point cut in February and followed similar action from central banks in China, Canada, Singapore, Korea and India.

A rising Australian dollar had also been cause for concern, particularly for Australia's big mining and energy exporters.

Mr Oliver said more help would likely to be required "in the form of an even lower Australian dollar - and to ensure this happens the RBA may yet still have to cut interest rates further into record low territory."

Reuters News - Greek uncertainty hits Europe shares, inflation lifts euro

A general view of the Frankfurt stock exchange March 16, 2015.

REUTERS/RALPH ORLOWSKI

European shares dipped on Tuesday while German bond yields rose, with investors scrabbling for clarity over whether a high-level meeting on Greece's debt crisis might herald a significant breakthrough.

The euro rose nearly 1 percent against the dollar, which earlier hit a 12 1/2-year high against the yen, but traders said this was related to an above-forecast rise in euro zone inflation rather than to the Greek drama.

U.S. stocks looked set to open lower, according to index futures.

The leaders of Germany and France and Greece's international creditors agreed late on Monday to work with "real intensity" as they try to reach a deal that would prevent Athens from defaulting and potentially leaving the euro zone.

Greek Prime Minister Tsipras said Athens had sent creditors a "comprehensive" and "realistic" package of reforms and urged Europe's leaders to accept it.

"The fact that five such political and financial heavyweights met about Greece means they are trying to force a break in the political deadlock and that's a positive development that's likely to lift risk sentiment. But we will have to wait to see the Greek reaction," said KBC strategist Mathias van der Jeugt.

Athens is due to make a 300 million euro debt repayment to the International Monetary Fund on Friday.

The pan-European FTSEurofirst 300 stock index fell 0.5 percent. Germany's DAX was down 0.6 percent, as was the main Athens stock index.

"The real money is still sitting on the sidelines because God knows what's going to happen to Greece," said Justin Haque, a trader at brokerage Hobart.

Yields on safe-haven German 10-year bonds rose 8.5 basis points to 0.6 percent, while those on lower-rated Spanish, Italian and Portuguese debt touched their highest of the year after the data showing inflation resumed in the euro zone last month.

Prices rose 0.3 percent, beating forecasts of a 0.2 percent increase.

Earlier, Asian shares fell for a second day as a strong dollar weighed on commodity prices.

MSCI's main index of Asia-Pacific shares, excluding Japan, fell 1.1 percent and Tokyo's Nikkei closed down 0.1 percent.

China's CSI300 index of the biggest listed companies in Shanghai and Shenzhen rose 1.7 percent. After rising almost 5 percent on Monday, Chinese indexes have regained nearly all the ground lost in a sell-off last Thursday.

The euro was up 0.9 percent at $1.1022.

"A spike higher in the euro near the 50-day moving average, helped by the better Euro-area consumer price inflation, is putting pressure on the dollar," said Keng Goh, a strategist with RBC Capital Markets in London.

Earlier, the dollar rose to more than 125 yen for the first time since 2002, peaking at 125.07, before retreating. It last stood at 124.74 yen, flat on the day.

AUSSIE

The Australian dollar was up 1 percent at $0.7680 after the Reserve Bank of Australia kept interest rates steady and did not offer a clear bias to ease policy again.

Oil prices rose as strong demand outweighed expectations that the Organization of the Petroleum Exporting Countries (OPEC) would not cut production when it meets in Vienna on Friday. Brent crude was up 41 cents at $65.29 a barrel.

Gold held steady at $1,190.46 an ounce, down from Monday's peak above $1,200.

(Additional reporting by Emelia Sithole-Matarise, Francesco Canepa and Jamie McGeeverin London, Lisa Twaronite in Tokyo; editing by John Stonestreet and Gareth Jones)

BBC News - Economic growth 'up several gears' - says CBI

The speed at which the British economy is growing is increasing, the Confederation of British Industry says.

Research by the CBI suggests business activity increased markedly in the three months to May.

Rain Newton-Smith, the CBI's director of economics, said growth had "cranked up several gears".

In April official figures revealed the UK economy grew by 0.3% in the first three months of 2015, which marked the slowest quarterly growth for two years.

BBC business correspondent Joe Lynam said those April figures stoked fears that the country might be set for a slowdown.

'Stellar increase'

But now the CBI is suggesting that all sectors of the economy are growing.

Its latest survey of more than 800 companies suggests the services sector - which ranges from restaurants and plumbing to banking and finance - stood out in particular.

This sector recorded its fastest growth in business volumes since February 2006 and was the main driver of the overall acceleration, the survey concluded.

The CBI said growth could be boosted further as things improve economically in the Eurozone, which is the UK's largest trading partner.

Ms Newton-Smith added: "As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue.

"This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.

"A stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power.

"UK exports are likely to be helped by renewed momentum in the euro area but the stronger pound and weak demand in many overseas markets continue to pose challenges."

Earlier in the month the CBI urged businesses to "speak out early" in favour of remaining in a reformed European Union.

Its president Sir Mike Rake said there were "no credible alternatives" to EU membership.