Reuters News - ECB's Weidmann says bond buy conditions problematic: paper

President of German Bundesbank Jens Weidmann speaks on the podium during the Frankfurt Euro Finance Week in Frankfurt November 19, 2012.

Credit: Reuters/Lisi Niesner

FRANKFURT | Sun Jan 20, 2013 7:01pm EST

(Reuters) - The European Central Bank's demand for governments to reform their economies as a condition for the ECB buying their debt could compromise central bank independence, governing council member Jens Weidmann was quoted as saying on Monday.

Weidmann, who also heads Germany's Bundesbank, was the only ECB policymaker to vote against the Outright Monetary Transactions (OMT) program, which enables the ECB to buy government bonds of heavily-indebted countries against reform promises.

Commenting on the reform conditions in the yet-to-be-activated OMT program, Weidmann told Swedish daily Dagens Nyheter: "It is an attempt to get governments to tackle the causes."

"This makes it dependent on governments, which is problematic," he said.

He made the comments in a joint interview with Finnish newspaper Helsingin Sanomat. On its website, the Finnish paper reported on Sunday he warned against relying on the ECB as the only crisis manager.

(Reporting by Sakari Suoninen; Editing by Sophie Hares)

BBC News - Australian amateur prospector finds massive gold nugget

An amateur prospector in the Australian state of Victoria has astonished experts by unearthing a gold nugget weighing 5.5kg (177 ounces).

The unidentified man, using a handheld metal detector, found the nugget on Wednesday, lying 60cm underground near the town of Ballarat.

Its value has been estimated at more than A$300,000 ($315,000: £197,000).

Local gold experts say gold has been prospected in the area for decades, but no such discovery had been made before.

"I have been a prospector and dealer for two decades, and cannot remember the last time a nugget over 100 ounces (2.8kg) has been found locally," said Cordell Kent, owner of the Ballarat Mining Exchange Gold Shop.

"It's extremely significant as a mineral specimen. We are 162 years into a gold rush and Ballarat is still producing nuggets - it's unheard of."

A video of the Y-shaped nugget was posted on YouTube on Wednesday by user TroyAurum.

He wrote that the man who found it had said it "sounded like the bonnet of a car through the headphones.

"It was lying flat (broad side up) and he carefully dug it up."

Gold currently trades in Australia at about A$1,600 per ounce, meaning the discovery would be worth about A$283,200, but its rarity and the fact it weighs more than a kilogram would add a premium, said Mr Kent.

He told Australian media the prospector had been using a state-of-the-art metal detector, which meant he was able to find the gold relatively deep underground in an area which had been searched many times in the past.

The man had only made small finds before, he said, but was a "person that really deserved it".

"A finding like this gives people hope. It's my dream to find something like that, and I've been prospecting for more than two decades," the Ballarat Courier quoted him as saying.

"I've got no doubt there will be a lot of people who will be very enthusiastic about the goldfields again, it gives people hope," said Mr Kent.

"There's nothing like digging up money, it's good fun."

Reuters News - Greece not out of woods, must stick to reforms: finance minister

1 of 7. Greek Finance Minister Yannis Stournaras is seen in his office in Syntagma square in Athens January 16, 2013 during an interview with Reuters. Greece must resist internal political pressure to slow economic reforms in a year that will dictate whether it avoids bankruptcy, Stournaras told Reuters in an interview. Picture taken January 16, 2013.

Credit: Reuters/Yannis Behrakis

By Dina Kyriakidou

ATHENS | Thu Jan 17, 2013 6:08am EST

(Reuters) - Greece must resist internal political pressure to slow economic reforms in a year that will dictate whether it avoids bankruptcy, Finance Minister Yannis Stournaras told Reuters in an interview.

With EU partners starting to praise Greek efforts to exit its worst crisis in decades and some economic indicators showing fledgling signs of recovery, demands are increasing on the government to give up crippling austerity and reforms.

"What scares me is the big pressure from society, media and parliamentary deputies from all parties to ease the programme. We must resist ... it's too early to declare victory," he said from his office on Syntagma square overlooking parliament.

Stournaras, an economist recruited by Prime Minister Antonis Samaras's conservative-led coalition after it won elections in June, said there were signs Greece was starting to exit the three-year debt crisis that shook theeuro zone.

Money is returning to Greek banks, bond prices are rising and the 2013 primary budget will do better than the troika of international lenders predicted for the year, registering a 0.4 percent surplus, despite a crippling recession.

"The primary deficit is what we are judged on. The troika expects it at zero but we believe we will do slightly better," he said. "This means that there is a good chance our partners may further reduce our debt."

The International Monetary Fund agreed on Wednesday to pay the next aid tranche under the country's 240-billion-euro international bailout and said Athens was moving in the right direction. But IMF chief Christine Lagarde urged it to do more to boost productivity and lower prices.

Greece's euro area partners agreed last year to extend the maturities and reduce the interest on the nation's bailout funds to help cut its debt mountain to a more sustainable level of 124 percent of GDP in 2020, from an estimated 173 percent this year.

More debt relief might follow if Greece hits its fiscal targets and posts a balanced budget in 2013, they said.

Stournaras ruled out this including another debt buyback and said there was no discussion of a haircut of the country's debts to its euro area partners. Debt reduction may instead come in other ways such as cutting interest rates, he said.

He acknowledged unemployment, the euro area's highest at 26.8 percent in October, would take longer to start declining and only after the economy starts to grow, which is expected in late 2013. GDP is expected to decline 4.5 percent this year, the country's sixth consecutive year of contraction.

"Unemployment is our big thorn," he said. "There is a time lag between GDP growth and unemployment decreasing and it's a serious problem, both economic and social."

A public fed up with waves of tax hikes and salary cuts has taken to the streets, in often violent protests, and lashed out at politicians they hold responsible for the crisis.

Stournaras, who served as chief economist for the socialist government that brought Greece into the single currency in 2001, said people must show patience and solidarity for one more year.

"We are facing a huge crisis, we have not yet left the hot zone of bankruptcy," he said. "We are doing better but we can't say that we have escaped all danger. The year 2013 will determine whether we will."

GOOD NEWS

Greece expects to meet this year's privatisation revenue target of 2.6 billion, with investor interest coming mainly from China and Russia for state companies going on the block, including natural gas distributor DEPA and gambling firm OPAP (OPAr.AT), Stournaras said.

The banking sector has almost completed its consolidation through a wave of mergers and may not need all of the 50 billion set aside from Greece's massive international bailout for bank recapitalization.

"Synergies from mergers have not been taken into account - National with Eurobank, Alpha with Emporiki, Piraeus with Agricultural and General. In the end, they may need less than 50 billion," Stournaras said.

It will be more difficult to keep the lenders in private hands as investors seem reluctant to put up cash for the 10 percent requirement to avoid nationalization.

Stournaras said the government did not want to manage state banks but would take them over if needed, not to run but supervise them.

"If the crisis has taught us something, it's that supervision was lacking," said Stournaras, who has also served as head of Emporiki bank.

The minister dismissed concerns the shaky ruling coalition may buckle under pressure, saying Samaras and his junior leftist partners were fully committed. The government has seen its majority in parliament fall as deputies have been leaving in protest of harsh legislation.

But he said he was more fortunate than others in the government because, as a technocrat, he did not have to face a political cost.

"I'm not a politician and that's an advantage in a crisis, Stournaras said. "Right now, I am under pressure from media, social groups, professional groups, special interest groups and even MPs on whatever you can imagine -- not to shut down tax offices, to lower the tax on heating oil, to raise salaries, to relax the programme.

"I will not be the one to destroy what we have achieved with sweat and tears in the last six months," he said. "Credibility is very hard to build and easy to lose."

(Editing by Mike Peacock/Jeremy Gaunt)

BBC News - The 100 firms from emerging nations helping to drive growth

The speed at which companies from emerging economies are expanding on the international stage has been underlined in a new report.

Qatar Airways joined the list as one of the companies tipped for global market leadership

Boston Consulting Group identified 100 firms it said are reshaping global industries and eclipsing traditional multinationals from the US and Europe.

Combined, these 100 had a better record of jobs growth and financial success than most of New York's S&P 500 index.

Yet many of the "challenger" firms are unknown in the West, the report said.

"If ever there was a wake-up call for business leaders in the West, this is it," said David Michael, co-author of the report. "We have been monitoring the rise of global challenger companies for nearly a decade, and the ambition of these companies... has never been stronger."

In its latest report, Boston Consulting Group (BCG) said that the 100 fast-growing, fast-globalising companies are spread across 17 rapidly developing economies. Companies from Colombia and Qatar join the list for the first time.

New sectors that make the list include companies in financial services, electronics and healthcare.

The list includes 30 companies from China and 20 from India. But there are also two from Indonesia (Golden Agri-Resources and Indofood), two from Chile (Falabella and Latam Airlines Group) and one each from Egypt and Argentina (El Sewedy Industries and Tenaris).

The report's authors say that it would be foolish in the West to underestimate the competitive threat, as the track record of such fast-growing firms lays bare the potential challenge.

In the past five years challenger companies have added 1.4 million jobs, while employment among S&P 500 firms - excluding financial companies - has been flat.

Long-term leaders

In addition to 100 "challenger" companies, BCG identified seven firms with long-term leadership in their global markets:

• Vale (Brazil)
• Wilmar (Indonesia)
• Cemex (Mexico)
• Anglo American (S Africa)
• SAB Miller (S Africa)
• Saudi Aramco (S Arabia)
• Emirates Group (UAE)

'Seismic shifts'

Average revenues among the 100 challenger firms in 2011 was $26.5bn (£16.5bn), against an average $20bn across the entire S&P 500 and an average $21bn for the S&P excluding financial firms. Also in 2011, challenger companies bought more than $1.7 trillion of goods and services, the report estimates.

Rather than fight what the authors call these "seismic shifts" in the global economy, traditional multinationals should embrace them in partnership.

The report highlights, for example, successful partnerships between Germany-based Merck and Dr Reddy's Laboratories, an Indian pharmaceutical company, and also an alliance between India's Bajaj Auto and Japan's Kawasaki.

"Global challengers bring far more to the table than a low-cost structure," said the report's co-author Tenbite Ermias. "Multinationals [in the West] that view global challengers only as low-cost competitors misunderstand their competitive threat and their potential for partnership."

Of the 100 companies on the latest list, 26 are new entrants. Many new names have displaced firms from Brazil, Russia, India and China. These BRIC nations once had 84 firms on the list, but now have 69.

The number of state-owned companies has also fallen, to be replaced by faster-growing private enterprises, the report said.

It said that several state-controlled enterprises, although successful in their domestic markets, have struggled when expanding overseas.

Reuters News - World Bank cuts growth outlook as advanced nations drag

A man is silhouetted against the logo of the World Bank at the main venue for the International Monetary Fund (IMF) and World Bank annual meeting in Tokyo October 10, 2012.

Credit: Reuters/Kim Kyung-Hoon

By Lesley Wroughton

WASHINGTON | Tue Jan 15, 2013 9:37pm EST

(Reuters) - A frustratingly slow economic recovery in developed nations is holding back the globaleconomy, the World Bank said on Tuesday, as it sharply cut its outlook for world growth in 2013.

The World Bank forecast that global gross domestic product will inch up 2.4 percent this year, from 2.3 percent in 2012. In its last forecast in June, the bank projected global growth would reach 3.0 percent in 2013.

Andrew Burns, lead author of the bank's Global Economic Prospects report, said that a recovery the bank had anticipated last year was now expected "closer to the end of the first quarter and into the second quarter of 2013, rather than beginning a little earlier."

The Bank warned that a drawn-out political battle in the United States over raising the government's borrowing limit and spending cuts could hit growth, spark a loss of confidence in the U.S. dollar and unnerve financialmarkets.

The World Bank also cut its forecast for developing countries, which last year grew at their slowest pace in a decade, to 5.5 percent in 2013 from 5.9 percent in the June forecast. It said growth in these countries should slowly pick up, reaching 5.7 percent next year and 5.8 percent in 2015.

Before the global financial crisis hit in 2007, developing countries as a whole were chalking up growth rates of around 7.5 percent, with China growing at an annual rate of 10 percent.

The World Bank forecast that Chinese growth would reach 8.4 percent this year, slowing to 7.9 percent by 2015.

In comparison, growth in advanced economies should reach a very weak 1.3 percent this year, weighed down by spending cuts, high unemployment and weak consumer and business confidence, the World Bank said. Activity should strengthen next year to 2 percent and 2.3 percent in 2015.

While financial markets were buoyed by measures adopted last year to address the euro-zonedebt crisis, the World Bank urged Washington to outline a credible medium-term fiscal plan that "avoids episodes of brinkmanship" over raising the country's self-imposed debt ceiling.

The White House and the U.S. Congress did agree at the beginning of January to extend tax cuts for American families earning less than $450,000 a year as part of a deal over the so-called fiscal cliff. But lawmakers must still navigate the debt limit as well as thrash out a deal over drastic automatic spending cuts that were postponed until March 1.

"Policy uncertainty (in the United States) has already dampened growth," the World Bank said. "Should policymakers fail to agree such measures, a loss of confidence in the currency and an overall increase in market tensions could reduce U.S. and global growth by 2.3 and 1.4 percent respectively."

Burns urged developing countries to "maintain a steady hand on monetary policy" and not to react too forcefully to changes in developed countries. He said developing nations should focus on structural policies and investments to support sustained growth.

The Bank said most developing countries were operating at or near "full capacity" and additional efforts to boost output risk hitting inflation speed bumps.

Meanwhile, the World Bank said a decline in China's unusually high investment rate was not likely to affect global growth over the medium to long term, but warned that a sharp decline could have domestic and global consequences.

World Bank economic simulations suggest that a 10 percentage point deceleration in Chinese investment would cause Chinese GDP growth to slow by about 3 percentage points.

The Bank said a bitter territorial row between China and Japan over islands in the East China Sea has had an impact on Japanese exports to China.

(Reporting by Lesley Wroughton; Editing by David Brunnstrom and Christopher Wilson)

Reuters News - First take on 2013 Detroit auto show: Sportscars trump EVs

The 2014 Chevrolet Corvette Stingray is introduced at the North American International Auto Show in Detroit, Michigan January 14, 2013.

Credit: Reuters/Rebecca Cook

By Paul Lienert

DETROIT | Mon Jan 14, 2013 9:50pm EST

(Reuters) - The message from automotive CEOs at the opening of this year's Detroit auto show is deceptively simple: Sportscars are hot, electrics are not.

As General Motors Corp CEO Dan Akerson unveiled a new 450-horsepower Chevrolet Corvette and Fiat SpA CEO Sergio Marchionne extolled the Italian automaker's $130,000 Maserati Quattroporte luxury sedan, their counterpart, Carlos Ghosn, chief executive of Japan's Nissan Motor Co, announced a stunning $6,000-plus price cut on the slow-selling Nissan Leaf electric vehicle.

Despite that hiccup, executives generally seemed upbeat about the mood of the U.S. auto industry as it enters a fourth year of recovery from the 2009 meltdown and bankruptcies of GM and Chrysler.

"Without trying to read tarot cards and tea leaves, 2013 is structurally going in the right direction. It will be the best year on record since I've been here," said Fiat's Marchionne, whose company was handed control of Chrysler four years ago.

If U.S. consumers' views of green cars remains skeptical, their unabated appetite for performance and luxury models is widely evident on the show floor at Detroit's Cobo Center, even to industry officials from overseas.

"The U.S. auto market has revitalized itself with amazing speed and dynamism," said Matthias Wissmann, head of Germany's carmaker association (VDA). "The fascination of the car is again alive and well in the U.S."

Part of that fascination is being driven by foreign brands such as Maserati, like Chrysler part of the Fiat group. But not every out-of-town executive is sanguine about prospects in the U.S. market.

The Detroit show has lost its luster for Lamborghini, the Italian supercar maker owned by Volkswagen AG, which quit the most significant U.S. auto show after 2009.

"For us, a return to the show isn't on the agenda at the moment," CEO Stephan Winkelmann said in an interview, noting the scarcity of Lamborghini customers in and around the Detroit area. "You have to spend your marketing budget wisely. The Detroit show isn't marked red in our calendar."

Still, the United States remains Lamborghini's biggest market where the brand boosted sales 53 percent last year and will premiere its new Aventador roadster at a special event in Miami in early February, the CEO said.

Not quite in the same league as Lamborghini, but drawing considerably more interest from the hometown crowd, is the new 2014 Corvette, which goes on sale later this year.

"It's got a little bit of the Ferrari 599 in the front, a little bit of the Nissan GTR on the side, and a little bit of the (Chevrolet) Camaro in the back - elements from exotic cars blended into a package that is much more modern and aggressive than the previous generations of the Corvette," said veteran designer Naga Tandjung, who was worked for Ford, GM and BMW.

On the show's first media preview day, GM elicited much attention, not only for the new Corvette, but for its redesigned pickup trucks, the Chevrolet Silverado and GMC Sierra. And a jury of U.S. and Canadian journalists on Monday recognized GM's Cadillac ATS as the 2013 North American Car of the Year.

Another new Cadillac, the 2014 ELR plug-in hybrid, will be unveiled at the show Tuesday. But its potential appeal to consumers may be driven as much by the car's luxury trappings and sporty styling as by its gasoline-electric drivetrain, which the ELR shares with the Chevrolet Volt.

The ELR, which is expected to be priced from $60,000 to $70,000, is one of the few overtly green cars being introduced at this year's event.

At the opposite end of the pricing spectrum, the 2013 Nissan Leaf is being repositioned as one of the most affordable electric cars in the United States, with a new starting price below $30,000. Now that the car and its battery pack are being assembled locally to benefit from the weaker U.S. dollar, "we are making the consumer benefit as soon as possible from the cost reduction," Ghosn said.

Bucking the general apathy toward green cars is Toyota Motor Corp, which is featuring a variety of new hybrid models on its show stand and said sales of its gasoline-electric hybrid vehicles climbed 7 percent to 350,000, more than two-thirds of them wearing the Prius badge.

(Reporting By Paul Lienert, Jennifer Clark, Andreas Cremer, Yoko Kubota and Norihiko Shirouzu in Detroit; Editing by Matt Driskill)

BBC News - Germany's economic growth slows sharply in 2012

The German economy grew by 0.7% in 2012, a sharp slowdown on the previous year, preliminary figures show.

Germany is Europe's largest economy and the world's second largest exporter

The figure was well below the 3% growth seen in 2011 and suggests the economy contracted in the fourth quarter.

"In 2012, the German economy proved to be resistant in a difficult economic environment and withstood the European recession," the federal statistics office Destatis said.

Some analysts believe the German economy will enter recession itself.

Destatis said economic activity "slowed down considerably" in the second half of the year, and particularly in the final quarter.

"The full-year growth figure [of 0.7%] implies a contraction of around half a percentage point in the fourth quarter," the office's top statistician Norbert Raeth said.

Last month, Germany's central bank, the Bundesbank, cut its growth forecast for this year to 0.4% and warned that the economy may have contracted in the final three months of 2012, and may do so again in first quarter of 2013.

The eurozone economy as a whole is already in recession, having contracted in both in the third and fourth quarters of last year.

Spending boost

For 2012 as a whole, Destatis said foreign trade was "very robust", with exports up 4.1% on 2011. Imports grew by 2.3%. The positive trade balance was "once again the main driving force for economic growth in Germany".

Household expenditure increased by 0.8%, while government spending was up 1%.

The figures also showed that while the service sector of the economy expanded, industry and construction contracted.

Destatis will publish official fourth-quarter growth figures on 14