The oil price fall has had a negative impact on a number of countries, the IMF says
The risks to global financial stability have risen, the International Monetary Fund (IMF) has said.
In a new report, the IMF says that countries that export oil and other commodities have been severely affected.
Some emerging economies have been hit by sharp moves in the global currency markets.
And the report says financial stability is still not "fully grounded" in the rich countries.
"Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address," said Jose Vinals, financial counsellor at the IMF.
The IMF acknowledges that recent declines in the prices of oil and other commodities are on balance helpful for global economic prospects.
But they create a major challenge for countries and firms that export them.
It says the strains in debt repayment capacity are apparent for oil and gas businesses in Argentina, Brazil, South Africa and Nigeria.
Debt servicing is also a concern for governments reliant on oil revenues such as Nigeria and Venezuela. Many other major oil exporters have sufficient reserves to enable them to cope with lower prices for some time.
Other developing nations, those that import commodities, do however benefit from these lower prices
Movements in the currency markets have also hit some emerging countries. The rise in the value of the dollar increases the repayment burden for firms and governments that have borrowed in the US currency. Some have also faced significant outflows of capital.
Interest rate hike fears
There is also a warning that there could be more of that when the US Federal Reserve starts to raise interest rates, which is expected later this year. It might happen smoothly, but the report says there is a danger that it might spark more volatility.
The report also says that there's a danger of property price declines in some countries, especially in China, which could spill over to emerging countries more widely.
In the rich countries very low interest rates - welcomed by the IMF for their economic benefits - do nonetheless pose some financial issues. Some European life insurers could struggle and low rates are reflected in more financial risk taking as investors seek better returns.
Some elements of this picture of rising risks reflects the aftermath of the financial crisis. The low interest rates in the rich countries, for example are part of the response to the economic damage, but they do create new risks.
The rising dollar is, indirectly, the result of the more rapid post-crisis rebound in the US compared with continental Europe. Six-and-a-half years on from the most intense phase of the crisis, its long shadow remains.
Still, the IMF does see some more encouraging developments. In particular economic growth is expected to be slightly higher this year and next, which would tend to promote financial stability.
By Andrew WalkerBBC World Service Economics correspondent
A new 20 Euro banknote is presented at the Austrian national bank in Vienna February 24, 2015.
REUTERS/LEONHARD FOEGER
(Reuters) - The euro fell against the dollar on Wednesday before a policy meeting at which the European Central Bank is likely to reiterate its dovish policy bias despite a recent pick-up in economic activity.
Bets against the euro are at a high level but investors are still looking to sell into rebounds, with ECB President Mario Draghi likely to say the bank intends to fully deliver previously announced stimulus measures as risks to growth remain and inflation is subdued.
That would quash talk the ECB might scale down its asset purchase programme sooner rather than later, and send the euro lower, traders said. Draghi may also address Greece's debt problems at his press conference scheduled for 1230 GMT.
The euro was down 0.4 percent at $1.0610 EUR= and pared its gains against the yen to trade at 126.85 yen EURJPY=. The common currency struck a one-month low against the dollar of $1.05205 on Monday and a two-year trough against the yen of 126.08 on Tuesday.
"It will be unrealistic to expect any changes (to the ECB's asset purchase programme) so soon. If anything, the ECB will probably reiterate they stand to do more depending on the data," said Peter Kinsella, currency strategist at Commerzbank.
"All this means the euro will be a sell on rallies."
The euro bounced on Tuesday, helped mainly by a weak dollar which faltered after U.S. retail sales data failed to meet the market's lofty expectations.
The data hit the dollar index .DXY, which had appeared to be back on track to test a 12-year high of 100.390 set last month, climbing as high as 99.990 on Monday. On Wednesday it stood at 98.893, up about 0.25 percent on the day.
The relatively strong market reaction to the sales numbers suggested dollar bulls were becoming frustrated with a recent run of unimpressive data and paring their long-dollar bets, as investors push back expectations of when the Federal Reserve will start raising interest rates to later this year from June.
Downbeat data from China hit the Australian dollar. China's annual economic growth slowed to a six-year low of 7.0 percent in the first quarter, with other key indicators slumping to multi-year lows.
"Pressure for more easing by the People's Bank of China will continue until some relief is given but the Chinese economy is less and less able to act as an engine of global growth," analysts at Societe Generale said in a note. "We'll stick with bearish Aussie trades."
The European Central Bank said its asset-buying program is spurring lending in the euro area as liquidity rises and market interest rates fall.
The central bank started buying private assets last year and expanded the program in March to include sovereign bonds and agency debt to revive inflation. In its bank-lending survey for the first quarter of 2015 published on Tuesday, the Frankfurt-based institution said the strategy is having an impact.
“Euro-area banks indicated that they have used the additional liquidity from their sales of marketable assets related to the asset-purchase program over the past six months in particular for granting loans,” the ECB said. “The asset-purchase program seems to be effective in supporting lending to the euro-area economy.”
ECB President Mario Draghi has said the plan to spend 60 billion euros ($63 billion) a month through at least September 2016 will boost consumer prices and spur credit supply as yields drop and investors are pushed to take more risk. The central bank’s 25-member Governing Council will hold a monetary-policy meeting in Frankfurt on Wednesday to assess its quantitative-easing strategy.
The survey showed that 28 percent of euro-area banks used the additional liquidity in particular to grant loans to companies, 17 percent said they used it for mortgages, and 18 percent for consumer credit and other lending to households. Most banks said they also intend to use the extra liquidity to increase loans in those categories over the next six months.
Almost half of banks in the survey said the asset-purchase program had a positive effect on their market-financing conditions. Even so, 18 percent said it will have a negative impact on their profitability over the next six months, largely because of a decline in net interest margins.
Chancellor George Osborne has said a Conservative plan to remove family homes worth up to £1m from inheritance tax "supports the basic human instinct to provide for your children".
It means more owners of homes in the UK would be able to pass them on to their children without paying tax.
Independent economists say it would "disproportionately" benefit well-off families and drive up property prices.
Labour said the Tories had promised such a move before and did not deliver.
Deputy leader Harriet Harman contrasted the idea with Labour's plan for a "mansion tax", saying "people face a big choice".
"It's becoming clearer and clearer as we get to the election how actually the Tories are helping a few people - and we want everybody to be better off," she told BBC One's Andrew Marr Show.
The Lib Dems have set out their plans to eliminate the deficit by 2017/18, through raising taxes by an additional £12bn, cutting public spending by £12bn and cutting welfare by £3bn
The latest BBC poll of polls has Labour on 34%, the Conservatives on 33%, UKIP on 14%, the Lib Dems on 8% and the Greens on 5%
UKIP leader Nigel Farage told the BBC his party would scrap inheritance taxand says details of how it would be financed would be unveiled in its manifesto on Thursday
Liberal Democrat Chief Secretary to the Treasury Danny Alexander said the Conservatives had "the wrong priorities".
Meanwhile, Paul Johnson, director of the the Institute for Fiscal Studies (IFS) said the debate from all parties around tax in the election campaign had been "deeply depressing".
He told the BBC: "You've had the main parties ruling out whole hosts of relatively straightforward ways of increasing tax, talking about raising tax from some other group, be they the rich or the non-doms or the tax avoiders, but this is all real money and has real effects on the economy - and no sense from anybody about a serious way forward for the tax system."
Of the inheritance tax policy, an IFS note said: "This (and in fact any) IHT cut will also go disproportionately to those towards the top of the income distribution", while Mr Johnson added: "Anything... which increases the tax privilege associated with an asset like housing will drive the price up in the long run."
The £1bn cost of the Conservative policy will be paid for by reducing tax relief on the pension contributions of people earning more than £150,000, says the party, which will make the the policy a key plank of its manifesto.
At present, inheritance tax is payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.
If the Conservatives win the general election, then from April 2017 parents would each be offered a further £175,000 "family home allowance" to enable them to pass property on to children tax-free after their death.
This could be added to the existing £325,000 inheritance tax threshold, bringing the total transferable tax-free allowance from both parents in a married couple or civil partnership to £1m.
The full amount would be transferable even if one spouse had died before the policy came into effect, the Conservatives say, and so would benefit existing widows and widowers.
For properties worth more than £2m, the new allowance would be gradually reduced so that those with homes worth more than £2.35m would not benefit at all.
Analysis, by Carole Walker, Conservative campaign correspondent
David Cameron will be hoping his pledge to take the family home out of inheritance tax will galvanise his campaign in a week which will be critical for his prospects of staying in power.
When George Osborne promised to raise the inheritance tax threshold to £1m back in 2007, he delivered a huge boost to Tory morale and put Gordon Brown off holding a snap election. Subsequent promises to take more people out of the tax have not been delivered. The threshold has been frozen since 2009 and rising property prices have dragged tens of thousands more families into the inheritance tax net.
His opponents are already questioning whether voters will believe this latest promise. The announcement is likely to appeal to middle-class voters, particularly in London and the South East. But it also opens the Conservatives to the charge they are helping the wealthy. David Cameron's team deny this - pointing out that it will be paid for by reducing pension tax relief for high earners and that many ordinary families now have to pay the tax.
It is, however, a marked contrast to the promises from Labour and the Liberal Democrats to impose a "mansion tax" on expensive properties.
Mr Osborne told BBC One's Andrew Marr Show: "Conservatives support the basic human instinct to provide for your children. And we believe that your home that you've worked for and you've saved for should belong to you and your family, not the tax man.
"So we will take family homes out of inheritance tax, we will effectively increase the inheritance tax threshold to £1m, so that only millionaires pay inheritance tax."
It was a message repeated in a speech by Mr Cameron, who said: "You should be able to pass it (your home) onto your children. And with the Conservatives, the tax man will not get his hands on it."
But shadow treasury secretary Chris Leslie, for Labour, said the policy was the latest "panicky promise" from the Conservatives.
He said: "The Tories made a promise on inheritance tax before the last election and they broke it.
"At a time when our NHS is in crisis and most working people are paying more under the Tories, it cannot be a priority to spend £1bn on a policy which the Treasury says would not apply to 90% of estates."
Danny Alexander said: "It is extraordinary that the Tories will go into great detail on a policy that will cut tax for a small number of estates, but steadfastly refuse to give any detail at all on the massive cuts to public services that they desire."
However, when asked whether the Lib Dems would block the proposals if they ended up back in coalition, he declined to say he would, instead saying: "I'm saying I strongly disagree with it. Our priority... is further increases in the income tax personal allowance... we've stopped things in this parliament including cuts to inheritance tax for millionaires."
A worker cuts steel billets at an iron and steel enterprise on June 9, 2014 in Ganyu County, China.
Photographer: ChinaFotoPress/Getty Images
China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country.
What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook.
“China’s metals demand is plummeting,” wrote Kenneth Hoffman, the metals analyst who spent a week traveling across the country, meeting with executives, traders, industry groups and analysts. “Demand is rapidly deteriorating as the government slows its infrastructure building and transforms into a consumer economy.”
The China Steel Profitability Index compiled by Bloomberg Intelligence barely rose in March, a time after the annual Lunar New Year when demand would usually surge, and so far this month has resumed its decline. Steel use this year is down 3.4 percent, after slumping as much as 4 percent in 2014, according to BI. It had steadily risen for more than a decade.
Prices for commodities from iron ore to coal are sinking as China’s leadership tries to steer the economy away from debt-fueled property investment and smokestack industries, embracing services and domestic-led consumption. At the same time, President Xi Jinping is stepping up efforts to combat pollution, further squeezing industry.
Interest Rates
Deteriorating economic data has led traders and analysts to speculate that China’s central bank will act to revive growth. The bank has said it will keep an “appropriate balance between loosening and tightening” of interest rates. It has cut interest rates twice since November and lowered lenders’ reserve-requirement ratios once.
Economists are forecasting 7 percent growth in China for this year, in line with government targets and down from 7.4 percent in 2014, according to the median of 59 estimates compiled by Bloomberg. That’s about half the last decade’s peak rate of 14.2 percent in 2007.
The slowing steel and metals activity suggests the outlook could be grimmer.
“There is a big fear this is going to get worse before it gets better,” Hoffman said in an interview. “It’s as bad as the data looks, if not worse.”
Iran's President Hassan Rouhani prepares to depart after the end of a press conference on the sidelines of the 69th United Nations General Assembly in New York September 26, 2014.
REUTERS/ADREES LATIF
(Reuters) - Iran will agree to a final nuclear accord with six major powers only if all sanctions imposed on the country over its disputed nuclear work are lifted, President Hassan Rouhani said in a televised speech on Thursday.
"We will not sign any deal unless all sanctions are lifted on the same day ... We want a win-win deal for all parties involved in the nuclear talks," Rouhani said.
The tentative deal between Iran and the six powers on curbing Iran's nuclear work, reached a last week in the Swiss city of Lausanne, revived hopes of an end to sanctions in
return for limits on the Iranian atomic program.
Iran wants sanctions to be lifted altogether and at once, but the United States made it clear on Monday that sanctions would have to be phased out gradually under the final nuclear pact.
A deadline for reaching the final agreement is June 30 and Iran, the United States,Germany, France, Britain, Russia and China are expected to meet in the coming days to discuss the deal.
Business lobby group, the Confederation of British Industry (CBI), estimated that the UK's economy expanded by 0.7% in the three months to March, up from 0.6% in the previous quarter.
The UK economy looks set to gain some growth momentum in the current period, CBI said
It also said growth would probably gather some momentum in the current quarter.
The main risk to the UK economy was related to ongoing eurozone worries and Greece's bailout package, it said.
It said businesses in the UK would also need to cope with a stronger pound, which was already weighing down weak export growth.
The lobby group's monthly private sector growth indicator showed an overall reading of 18% for the three months to March which was "almost unchanged from the three months to February (19%)".
The percentage reading indicates the number of firms reporting that business performance was up, compared to those reporting it was down.
The survey showed firms expect growth to strengthen in the coming months, with a pick up in business and consumer services, together with the manufacturing sector.
"The outlook for 2015 looks encouraging," said CBI's deputy director general Katja Hall.
"Our surveys show it's been a solid start to the year with the prospect of stronger growth to come.
"The benefits of lower oil prices should be increasingly felt; with cheaper petrol boosting households' incomes and spending power, and cutting costs for many businesses," she said.
The oil price fall has had a negative impact on a number of countries, the IMF says
