Economic & Investing | Financial site

Money markets us cp outstanding grows for 3rd straight week

* US seasonally adjusted CP outstanding grows for 3rd week * ECB move on Greek banks a warning to other countries * Worries over health of Spanish banks grow By Chris Reese and Kirsten Donovan NEW YORK/LONDON, May 17 The U.S. seasonally adjusted commercial paper market grew for the third straight week this week, suggesting rising interest in lending to finance inventories and payrolls and to fund short-term corporate debt, Federal Reserve data showed on T hur sday. The size of the U.S. commercial paper market grew by $27.2 billion to $993.6 billion on a seasonally adjusted basis in the week ended May 16 from a seasonally adjusted $966.4 billion outstanding a week earlier. However, the size of the market without seasonal adjustments shrank by $2 billion in the latest week, to $1.027 trillion from $1.029 trillion. U.S. not-seasonally adjusted foreign financial commercial paper outstanding shrank by $1.4 billion in the latest week to $200.9 billion, from $202.2 billion. Three-month dollar-denominated London Interbank Offered Rates (Libor) held steady o n T hursday at 0.46685 percent. Dollar Libor has been holding relatively steady since mid-April, after dipping from the recent high near 0.58 percent at the beginning of the year. Separately, analysts said the European Central Bank's move to stop providing liquidity to some Greek banks is a warning for other countries to take the steps needed to get their banking systems in order. The ECB confirmed on Wednesday that some severely undercapitalised Greek banks could no longer fund themselves at the euro zone central bank and had moved to Emergency Liquidity Assistance (ELA) funded by the national Bank of Greece. "The ECB is now shielding itself much more than was previously the case. They won't destroy their balance sheet for a single country - their actions underpin that," said London-based Commerzbank rate strategist David Schnautz. "The ECB is playing hardball with Greek banks ... we may also see undercapitalised banks in Spain, where you can't take it for granted that the ECB will grant access to all Spanish banks, no matter what." Spain has stepped up efforts to soothe concerns over its banking sector, ordering lenders to set aside 30 billion euros in addition to the 54 billion euros ordered in February to provision against losses on loans that are still performing, as well as against bad ones. But the government's takeover of Bankia has rattled markets. The bank's shares fell 20 percent o n T hursday after a newspaper report - denied by Spain's economy secretary - that its customers had withdrawn more than 1 billion euros from their accounts over the last week. The prospect of yet more state liabilities accruing from the Spanish banking system due to bad loans from a burst property bubble is weighing heavily on Spanish government bond yields. "The ECB is now intent to ... actively put pressure on some institutions, and particularly on political leaders to step up to the plate," said James Nixon, chief European economist at Societe Generale in London. "The bigger game is the ECB feels euro zone leaders haven't done enough to increase the size of the stability mechanism and there's reluctance to use those official channels. The ECB are basically going to force them to do that." The ECB's most recent weekly financial statement showed 11 billion euros of longer-term low-cost funding had been repaid to it before maturity - an unusual move, and only possible if a bank loses its eligibility as a counterparty or falls short of collateral to post against what it has borrowed. Weekly borrowing in the same period also fell by around 12 billion euros, with the corresponding entry accounting for emergency loans rising almost 20 billion euros, suggesting a link to Greek banks losing access to ECB funding. Spain's banks have borrowed over 300 billion euros from the ECB, almost a third of its outstanding financing operations. As the effects of the ECB's injection of nearly one trillion euros of cash into the banking system fade, euro zone three-month bank-to-bank lending rates edged higher on Thu rsday - the first rise seen since the two three-year financing operations kicked off in December.

Money markets us rates little changed before bernanke

* Futures show view of Fed holding rates into 2015 * Fund managers pare chances on QE3-Reuters poll * U.S. repo rate ticks up before supply settlement By Richard Leong NEW YORK, Aug 30 Short-term U.S. interest rates were little changed on Thursday, as traders awaited possible clues from Federal Reserve Ben Bernanke on whether the central bank is preparing more stimulus to bolster a sluggish economy. Low trading volume in cash and futures markets underscored reluctance among some traders to accumulate bets on further policy easing. A Reuters poll showed fund managers now see less than a 50 percent chance the Fed will embark on a third round of quantitative easing next month. Still expectations remain high the Fed would do something at its Sept. 12-13 policy meeting. U.S. interest rates futures signaled a market outlook that the Fed would stick to a near zero interest rate policy into 2015, longer than the Fed's current guidance of keeping rates near zero until late 2014. "Everyone is expecting a shift in an extension of the forward rate guidance," said Bret Barker, portfolio manager at TCW in Los Angeles, which manages $127 billion in assets. U.S. Treasury bill rates were modestly lower with three-month rates at 0.095 percent, down 0.5 basis point from Wednesday's close. The overnight rate on repurchase agreements was last at 0.18 percent, up from 0.16 percent from late on Wednesday. Repurchase agreements are a key source of funding for Wall Street where Treasuries and other investments are used as collateral in exchange for cash. Wall Street firms will likely need cash on Friday to settle their purchases of new Treasuries sold this week, analysts said. The U.S. Treasury Department will sell $29 billion in seven-year notes at 1 p.m. (1700 GMT) after selling a combined $35 billion in two-year supply and $35 billion in five-year debt on Tuesday and Wednesday. In unsecured lending, the London interbank offered rate on three-month dollars fell for a sixth straight session to 0.42075 percent, its lowest since October.FED SEEN HOLDING RATES NEAR ZERO The Fed adopted a policy rate target of zero to 0.25 percent in December 2008 at the height of the global credit crisis. On Thursday, rates futures implied traders place roughly a 66 percent chance the central bank would leave rates near zero at the end of 2014. This compared with 28 percent chance last Tuesday, a day before the Fed released its minutes on its July 31-Aug 1 meeting where most policy-makers reckoned more stimulus would be "fairly soon" unless the economy improves at a "substantial and sustainable" pace. In the wake of the minutes, traders have been anticipating more clues in Chairman Ben Bernanke's opening remarks at 10 a.m. (1400 GMT) on Friday at a gathering of global central bankers in Jackson Hole, Wyoming. Most of the traders' focus has been on whether he will hint at a third round of quantitative easing (QE) in the form of large scale bond purchases. Two years ago at the same event, he laid the groundwork on the second bout of QE that involved the Fed buying $600 billion in long-dated federal debt. In a Reuters poll published on Thursday, only 44 percent of fund managers now think the Fed will announce a third round of quantitative easing after recent data showing a modest improvement in U.S. economy. This was lower than from 70 percent in the same poll last month. There has also been chatter the Fed might lower the interest it pays on excess reserves to banks, although analysts see such a move as remote due to the possible disruption to money markets. Any of the above measures should keep short-term rates low.

Money markets us treasury sold four week bills

* Solid bid for U.S. four-week bills * 3-month Euribor rates hit lowest level since June 2010 * Traders push back outlook on Fed hike into late 2014 By Ellen Freilich NEW YORK, April 10 The U.S. Treasury's $30 billion sale of four-week notes on Tuesday drew solid demand with nearly five times as many bids offered as accepted. The ratio of bids offered over those accepted was 4.71, just below last week's ratio of 4.75, with 21.07 percent of the bids accepted at the high rate of 0.080 percent. The indirect takedown of 30.8 percent was a bit lower than last week's, but well above the recent averages, said Thomas Simons, vice president and money market economist at Jefferies and Co. The indirect takedown of 30.8 pecent is a bit lower than last week's takedown, but well above the recent averages. Dealers captured just 56.9 percent of the issue, their lowest portion since March 6. Direct bidders took 12.2 percent, their lowest takedown since March 13. Simons said the weekly settlements of bill auctions continue to generate pay downs. "We do not think that the reductions in auction supply are finished despite the pause this week," he said. The auctions occurred in the context of worries about slowing U.S. growth and worry about whether Europe's fiscal problems could plague its banks. KEY EURO ZONE BANK-TO-BANK LENDING RATES HIT LOWS Yet overseas, key euro zone bank-to-bank lending rates hit new 21-month lows on Tuesday, pulled down by the torrent of cash the European Central Bank has flooded financial markets with since late last year. The ECB, which left official euro zone interest rates at 1.0 percent last week (click ), has poured over one trillion euros of ultra-cheap, 3-year funding into the banking system since the end of December, a move which has sparked a 45 percent drop in the prices at which banks lend to each other. Three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, continued to fall on Tuesday, hitting 0.764 percent, the lowest level since June 2010. Six-month rates fell to 1.061 percent from 1.064 percent and 12-month rates dropped to 1.398 percent from 1.402 percent. Shorter term rates followed suit. The one-week rate , which continue to bump around all-time lows, inched down to 0.316 percent. Overnight rates eased to 0.352 percent from 0.353 percent. Dollar-priced bank-to-bank Euribor lending rates increased . Three-month rates rose to 0.971 percent from 0.961 percent, while overnight rates climbed to 0.329 percent from 0.326 percent. Despite the sharp fall in interbank rates over the last few months, the benchmark euro-priced three-month rate remains some way above the euro-era low of 0.634 percent hit in early 2010. With the ECB expected keep limit-free liquidity available and interest rates at their record low for the foreseeable future, further falls in Euribor rates are expected, but part of the reason for the higher rates is that lending markets remain impaired. High excess liquidity in the banking system has led to high use of the ECB's overnight deposit facility, with banks last parking 785 billion euros there. In normal times the amounts are minimal. The 0.25 percent the ECB offers banks for overnight deposits continues to act as a floor for money market rates as banks know they can get that level of interest no matter what.

Press digest australian business news march 26

Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Chinese technology company Huawei Technologies was prevented from becoming a supplier to the national broadband network after receiving endorsement from the Australian government-owned NBNCo that was followed by advice from the Australian Security Intelligence Organisation apprehensive over cyber attacks instigated from China. Huawei currently has significant network-building contracts with Vodafone and Optus. Page 1.-- Coal seam gas producing companies operating in Queensland are likely to face additional expenses as the incoming Liberal National Party government has a policy of "full and fair" compensation relating to the effect of mining on landowners such as farmers. "This looks to us as if it will increase the amount of that compensation," said Tim Jordan, specialist in environment and governance at Deutsche Bank. Page 6.-- The A$8 billion Cross River Rail project of the outgoing government in Queensland is likely to be extensively scaled back as the incoming Liberal National Party (LNP) government leader Campbell Newman has publicly identified the project as a candidate for reduction as the party moves to a budget surplus. Tim Nicholls, LNP Treasury spokesman, said "the only way we can deliver our positive, practical plans to get Queensland back on track is by making some tough decisions." Page 6.-- Washington H Soul Pattinson and New Hope chairman Robert Millner said the result of the Queensland election demonstrated that the carbon tax and minerals resource rent tax of the federal government should be removed. "I think this is a big backlash against those federal issues," Mr Millner said yesterday. He was supported by David Farley, chief executive of the Australian Agricultural Company, who said the outcome in the state was "definitely because of issues beyond the state." Page 7.-- THE AUSTRALIAN (this site)Mike Smith, chief executive of Australia and New Zealand Banking Group, yesterday announced that the lender is closely watching Australia's diplomatic relations with Burma as it views the resource-rich country as a platform for expanding its footprint in Asia. "We can't do anything until the Australian Government lifts its restrictions (on doing business in Burma) but hopefully that will be a positive," Mr Smith said. Page 19.--

Joe Barr, head of commercial builder Hansen Yuncken, yesterday said in an interview that the "cultural differences between how people deal with each other" in Dubai and Australia "really hits you in the face". Despite critics questioning the strength of the offshore construction industry, Hansen Yuncken has recorded a yearly turnover of approximately A$1.2 billion, with A$2.3 billion of contracts yet to be completed. "I think the general market is tight, the subcontractors are tight, the margins are tight," Mr Barr added. Page 19.-- John Rice, vice-chairman of global industrial conglomerate General Electric, yesterday described the Federal Government as "gutsy" for holding firm on its commitment to introduce a A$23 a tonne price on carbon. "I applaud the Australian government for having the courage to go through with it because I think over the long run, the world is going to be better served if there is a cost associated with the production of carbon," he said. Page 20.-- Mike Smith, chief executive of Australia and New Zealand Banking Group, yesterday declared that the lender will increase its trading in the yuan after the Reserve Bank of Australia and the People's Bank of China unveiled a A$30 billion currency swap agreement last week. "The Government and the Reserve Bank of Australia have done a very good job ... It makes sense for Australia to play a part in this because of the natural trade flow with China and, with trade flow, comes investment flow," he added. Page 20.--

THE SYDNEY MORNING HERALD (this site)The rollout of the national broadband network is being slowed down by the federal government requirement that NBN Co take responsibility for installing fibre in new housing estates that include the remote mining villages growing in response to the mining boom. "Taking on the wholesale universal service obligation for these development estates before we have a network built is obviously not easy is taking some time," Mike Quigley, chief executive of NBN Co, testified last month to a Senate committee. Page B1.-- The research and development tax incentives currently worth billions of dollars to some of the largest companies in Australia may be cut as a panel instigated by Federal Treasurer Wayne Swan evaluates potential changes to the business tax system intended to allow this year's budget to provide benefits for small businesses. "We will have to continue to find substantial savings in the budget," said Mr Swan yesterday in an economic note. Page B1.-- The franchising sector currently contributes A$128 billion to the Australian economy and in opposition to the hype over the problems some small-time operators experience with major franchise brands, the executive director of the Franchise Council of Australia, Steve Wright, pointed out that " genuinely is one of the few situations in business where the partners' relationship is symbiotic." The Asia-Pacific Centre for Franchising Excellence at Griffith University stated that a prerequisite for taking on a franchise was extensive due diligence. Page B6.--

Alister Haigh, chief executive of Adelaide confectionary maker Haigh's Chocolates, said that in a time when Lindt, the Swiss chocolate maker, was selling its wares for a much lower price than the comparable Haigh family-business offerings, "We're finding that the customers  are spending as much as they were previously, but there's just less of them." The company's double-digit growth prior to the global financial crisis has dropped to 5 percent for 2011-12 but a new store in Sydney will open later this year. Page B6.-- THE AGE (this site)The corporate bond market in Australia could be significantly boosted if changes to give retail investors more scope to enter the market were implemented, according to Australia and New Zealand Banking Group. Adam Vise, head of structured products at the bank said, "We believe up to A$40 billion is readily accessible from the retail market, allowing corporates to diversify and expand their funding base." Page B3.-- MaxiTrans, which operates the Colrain truck and trailer parts business through South Australia and Victoria, is expected to acquire Queensland Diesel Spares for about A$20 million, perhaps as early as today. The acquisition will give MaxiTrans access to the expanding resources and mining sector in Queensland. Page B3.-- In the Melbourne metropolitan area, average net face rents have gone up 4.1 percent over the last six months as demand from tenants has proved stronger than an increase of 0.5 percent in vacancy rates, stated Amita Mehrotra, research manager at Colliers International. Similarly, in the south east, a new state government office building in Dandenong contributed to a 2 percent increase in the vacancy rate, but rental growth also increased by 6.7 percent. Page B8.0-- Despite the 1.2 percent drop in home loan approvals for January reported by the Australian Bureau of Statistics, consulting company URS reports that Australia is experiencing growth in the importation of softwoods. Figures from URS for December show a 12.8 percent fall in approvals for new dwellings and a 1.1 increase in imports of softwood timber. The strong Australian dollar was a contributing factor, said URS in its Timber Market Survey covering the last quarter of 2011. Page B8.--