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Investment banks are to shrink their balance sheets by another $1tn or up to 7 per cent globally within the next two years, says a report that foresees a shake-up of market share in the industry. Higher funding costs and increased regulatory pressure to bolster capital will force wholesale banks also to cut 15 per cent, or up to $0.9tn, of assets that are weighted by risk, a joint report by Morgan Stanley and consultants Oliver Wyman predicts.http://www.ft.com/intl/cms/s/0/750ddd86-7507-11e1-90d1-00144feab49a.html#axzz1qCBjoSth

Germany is poised to bow to international pressure and allow a temporary increase in the eurozone’s financial “firewall” this week, to prevent the crisis in the region’s periphery preading to other member states. Officials in Berlin signalled on Sunday that the government would allow funds to be boosted as a way of calming financial market pressures. Angela Merkel, Germany’s chancellor, had resisted any increase, despite pressure from most of her eurozone partners and the US administration, because she risks a political backlash from sceptical allies in her ruling coalition if it means any increase in Germany’s overall financial guarantees for its partners. But the thinking in Berlin is that she cannot resist the international pressure indefinitely.http://www.ft.com/intl/cms/s/0/85911faa-767f-11e1-8e1b-00144feab49a.html#axzz1qCBjoSth

François Hollande has accused President Nicolas Sarkozy of failing to live up to law-and-order promises, in a bid to regain the initiative after the terrorist drama in Toulouse last week. The run-up to the first round of voting in the French presidential election on April 22 is set to prove a gruelling test for the opposition Socialist candidate, whose long-standing lead in the opinion polls is under pressure from both Mr Sarkozy and Jean-Luc Mélenchon, the candidate of the hardline Left Front. http://www.ft.com/intl/cms/s/0/cb8e16d8-766c-11e1-8e1b-00144feab49a.html#axzz1qCBjoSth

After months of surging speculation about a possible strike against Iran, Israel is seeing the first stirrings of a domestic anti-war movement. About 1,000 protesters took to the streets of Tel Aviv on Saturday night, urging the government not to attack Iran’s nuclear facilities. They chanted anti-war slogans, and waved posters with messages such as “Talk, Don’t Bomb”. http://www.ft.com/intl/cms/s/0/6598b044-768b-11e1-8e1b-00144feab49a.html#axzz1qCBjoSth

Mitt Romney will be rounding up donors in the traditionally Democratic strongholds of Hollywood and Silicon Valley this week, in an attempt to maintain his fundraising momentum and lay the groundwork for the delegate-rich California primary in June. Despite losing in Louisiana to Rick Santorum on Saturday, the former Massachusetts governor is feeling sufficiently confident about his prospects in the contests looming closer in the calendar including Wisconsin, which votes on April 3 that he can avoid barnstorming them with rallies and town hall meetingshttp://www.ft.com/intl/cms/s/0/b43c3720-7695-11e1-8e1b-00144feab49a.html#axzz1qCBjoSth

Most Asian stock markets were slightly higher in a cautious nod to modest gains on Wall Street Friday, with a mixed performance for exporters capping markets in Seoul and Tokyo. Japan’s Nikkei Stock Average rose 0.2%, Australia’s S&P/ASX 200 gained 0.1%, South Korea’s Kospi Composite lost 0.3% and New Zealand’s NZX-50 climbed 0.7%. Dow Jones Industrial Average futures were up 17 points in screen trade.http://online.wsj.com/article/SB10001424052702303404704577304364278305448.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

After the Federal Reserve hinted at a shift in its mind-set two weeks ago, the currency market still is looking for clarity on whether U.S. monetary policy will get softer or tighter in coming months. And a number of data releases and speaking engagements for Fed officials this week should help in that effort. Further evidence that the U.S. economy continues to strengthen or that the Fed is becoming more comfortable with its trajectory should support the dollar, especially if economic news elsewhere in the world is negative, as it was this past week. Information to the contrary could puthttp://online.wsj.com/article/SB10001424052702304724404577299943759846030.html?mod=WSJASIA_hpp_LEFTTopWhatNews

President Barack Obama gave a stern warning to North Korea after arriving here Sunday for a nuclear-security summit and promised to press Chinese President Hu Jintao to toughen Beijing’s approach to Pyongyang. Mr. Obama, who got his first peek at the secretive nuclear power Sunday during a visit to the demilitarized zone dividing the Korean peninsula, spoke as concerns mount in the region over North Korea’s plans for a satellite launch. The U.S. and its allies believe the launch is intended as a test firing of a missile. Mr. Obama is set to meet with Mr. Hu on Monday. “My suggestion to China is that how they communicate their concerns to North Korea should probably reflect the fact that the approach that they’ve taken over the last several decades hasn’t led to a fundamental shift in North Korea’s behavior,” Mr. Obama said during a news conference with South Korean President Lee Myung-bak.http://online.wsj.com/article/SB10001424052702304636404577302672284719302.html?mod=WSJEurope_hpp_LEFTTopStories

The U.K. has asked the Chinese government to launch an investigation into the death of a British businessman who claimed to have close links to the family of Bo Xilai, the Communist Party leader whose downfall has thrown Chinese politics into turmoil. The mysterious death of Neil Heywood in the Chinese city of Chongqing last year is emerging as a key element in the drama surrounding Mr. Bo, who was sacked as Chongqing’s Communist Party chief this month. http://online.wsj.com/article/SB10001424052702304177104577303740612604260.html?mod=WSJEurope_hpp_LEFTTopStories

Three global central-bank leaders warned that decision makers needed to be on alert for an array of risks associated with their easy-money policies. Most notably, the threeBank of Japan governor Masaaki Shirakawa, former European Central Bank president Jean-Claude Trichet and Jaime Caruana, who runs the Bank for International Settlementsall cautioned in different ways against banks and governments taking advantage of low interest rates to avoid taking hard steps to repair their own finances after years of aggressive borrowing.  “While aggressive monetary easing is definitely needed after the bursting of bubbles, its side effects and limits should also be taken into http://online.wsj.com/article/SB10001424052702303816504577303610328669888.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Mario Draghi, the European Central Bank president, likes to keep things simple. Asked by the best-selling German daily paper, Bild, in an interview this week if he had a message for the German people, Draghi replied succinctly: “Keep it up!” He was speaking about fighting inflation, which he called “a German virtue” all part of a strategy to win friends in the heartland of the euro. In an intensifying war of words over the ECB’s priorities, Draghi has come under attack from a battery of Bundesbankers to maintain a hard line against inflation. Whisper it softly, but the ECB chief is far from discomfited by the Feb. 29 letter from Bundesbank President Jens Weidmann which somehow found its way into the conservative Frankfurter Allgemeine Zeitungcomplaining about the ECB’s looser policies on collateral. http://www.marketwatch.com/story/in-face-of-crisis-draghi-keeps-things-simple-2012-03-26

Brent crude edged below $125 on Monday as a possible resumption in crude production from South Sudan offset supply worries on news of a sizeable drop in Iranian oil exports due to Western sanctions. Brent crude edged down 29 cents to $124.84 by 0304 GMT after posting a 68-cent weekly loss on Friday, a second straight weekly decline. U.S. crude fell 30 cents to $106.57. “The geopolitical risk has been overly built into oil prices as we are in a low demand period where inventories are rising,” said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.http://www.reuters.com/article/2012/03/26/us-markets-oil-idUSBRE82B04920120326

Gold prices hit a one-week high on Monday before paring gains to trade near the previous closing price, with investors closely watching the oil and currency markets for trading cues. A short-squeeze pushed prices to $1,669.26 in the early hours, but the pressure eased after the Shanghai Gold Exchange opened and the discount in Shanghai prices prompted some selling on the London market, traders said. In the short term gold may remain under pressure from a brighter U.S. economic recovery, high real interest rates and sluggish physical demand, they said.http://www.reuters.com/article/2012/03/26/us-markets-precious-idUSTRE82403220120326

The good news: China’s government will engineer a soft landing. The bad news: Even a soft landing is painful for industries that have become dependent on the world’s fastest-growing major economy as their main profit engine. Analysts at Deutsche Bank AG, Nomura Holdings Inc. and Daiwa Capital Markets raised forecasts this month for 2012 expansion to as high as 8.6 percent, partly on anticipation of looser monetary policy. The projections, still below last year’s 9.2 percent rate, offer little comfort for Australian mining company BHP Billiton Ltd. (BHP), seeing slower steel production in China, or German automaker Daimler AG (DAI), whose Mercedes dealers in the nation are giving record discounts. http://www.bloomberg.com/news/2012-03-25/china-s-soft-landing-still-may-be-hard-for-commodity-exporters.html

China’s benchmark money-market rate rose the most in more than a month on speculation banks are boosting capital to meet regulatory requirements as the quarter- end approaches. The People’s Bank of China didn’t gauge demand for bill sales today and asked banks to submit orders for 28-day and 91- day repurchase contracts this morning, according to a trader who takes part in the auctions and didn’t want to be identified because the information isn’t public. The central bank boosted rural credit by cutting reserve-requirement ratios for an additional 379 branches of Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value, last week. http://www.bloomberg.com/news/2012-03-26/china-s-money-rate-jumps-most-in-a-month-as-banks-hoard-cash.html

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the Federal Reserve will probably signal it plans to arrange a third round of debt purchases when policy makers meet in April. The end of tax breaks enacted by President George W. Bush and $1 trillion of mandatory federal budget cuts are raising concern that declining unemployment will give way to slower economic growth that requires support from the central bank. Policy makers under Chairman Ben S. Bernanke have purchased $2.3 trillion of Treasuries and mortgage debt in two rounds of so- called quantitative easing, known as QE1 and QE2, as they try to sustain the expansion. http://www.bloomberg.com/news/2012-03-25/pimco-s-gross-says-fed-may-hint-at-qe3-at-april-meeting.html

Few communities have started to think long term about how to plan and redesign services for aging baby boomers as they move out of the workforce and into retirement. Even more troubling, dwindling budgets in a tight economy have pushed communities to cut spending on delivering meals to the homebound and shuttling folks who can no longer drive to grocery stores and doctor’s offices. These cuts, advocates for older Americans say, are coming when the services are needed more than ever. And those needs will grow tremendously over the next two decades. The nation’s population of those 65 and older will double between 2000 and 2030, according to the federal Administration on Aging. That adds up to one out of every five Americans 72.1 million people. http://www.cnbc.com/id/46844877

A report suggesting India’s government lost $210bn in revenue by underpricing coal assets also reveals a catalogue of wider delays and mismanagement, deepening pressure on the nation’s embattled coalition government. The draft document from India’s comptroller and auditor-general, which provoked a furore when leaked last week, suggests that the provision of coal to businesses without competitive auctions resulted in significant production shortfalls.http://edition.cnn.com/2012/03/25/business/india-underprices-coal/index.html?hpt=ibu_c2

Even after the worst rout since 2010, the U.S. bond market shows the economy is unlikely to maintain its strength without help from the Federal Reserve. While the Fed triggered this month’s 2.2 percent loss in 10-year Treasuries when policy makers raised their assessment of the economy following a March 13 meeting, everything from derivatives to mortgage securities indicate that investors don’t expect a repeat of the bear markets seen in 1994 and 2009, two of the worst years ever for bonds. Declining unemployment, rising consumer confidence and strength in manufacturing may give way to more sluggish growth as George W. Bush-era tax breaks end and $1 trillion of mandatory federal budget cuts kick in. Even with oil back above $100 a barrel, the Fed’s preferred measure of gauging the outlook for inflation show consumer prices will rise at half the pace of 2008 when it accelerated to 5.6 percent.http://washpost.bloomberg.com/story?docId=1376-M1GFSS1A74E901-64II2S722S8DGSLNMSNLG3U2F7

The Irish prime minister has said that the Republic of Ireland and China have a “surprisingly similar business culture”. At the start of the four-day trade mission to China, Taoiseach Enda Kenny said both economies were centred on enterprise and innovation. He is to meet business leaders in Shanghai before talks in Beijing with Chinese Premier Wen Jiabao. Mr Kenny is aiming to increase Chinese investment in Ireland.http://www.bbc.co.uk/news/business-17504052

Indian airlines will not comply with the European Union’s (EU) carbon charging scheme, according to civil aviation minister Ajit Singh. The EU has directed Indian carriers to submit the emissions details of their aircraft by 31 March. But Mr Singh told parliament that “no Indian carrier is submitting them in view of the position of the government”. Last month, China said its airlines would not pay the EU charge.  Many other countries, including Russia and the US, have also objected to the scheme, under which airlines that exceed tight emission limits must buy carbon credits.http://www.bbc.co.uk/news/business-17485738

A fortnight since the launch of the NewBuy Guarantee scheme under which the Government stands behind loans for new house builds small companies are struggling to win business, building organisations have claimed.  The House Builders Association (HBA) has claimed that seven major builders had agreements in place when the scheme launched and another big developer, Crest Nicholson, has since signed on. “If you are going to give government guarantees this scheme has to be universally available you cannot give a competitive advantage to half a dozen house builders,” said Roger Humber, strategic policy adviser to the HBA. Smaller housebuilders are struggling even to get information on the scheme, he said.http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/9166290/Housing-scheme-favours-big-builders.html

Lord Browne, the former BP chief executive, said Lancashire has the potential to be the capital of Europe’s emerging shale gas industry, in a scenario he predicted could help to create as many as 50,000 jobs across the UK. Now a director of the shale gas “fracking” company Cuadrilla, Lord Browne said Lancashire had the potential to do for the fledgling hydrocarbon industry what Aberdeen has done for the oil sector. Technically known as hydraulic fracturing, fracking is the process used to dislodge natural gas from shale by blasting a mixture of sand, water and chemicals into the rock.http://www.independent.co.uk/news/business/news/fracking-could-bring-uk-50000-jobs-says-browne-7585027.html

Developed nations are pulling out of the economic slide seen at the end of 2011, according to new data based on hundreds of millions of financial transactions. Swift, which acts at the platform for more than 10,000 financial institutions and businesses in 210 countries, began producing forecasts for the 34 mainly Western members of the Paris-based OECD thinktank last year. Its latest figures point to a recovery of the OECD economies in the first quarter of 2012, with 0.5 per cent growth pencilled in for the current quarter and a 0.6 per cent expansion predicted for the second quarter of 2012.http://www.independent.co.uk/news/business/news/richest-nations-pulling-out-of-economic-slide-7585034.html

Prime Minister Stephen Harper has given a big jolt to his ambitious trade liberalization agenda by announcing free-trade negotiations with Japan, but critics are already questioning whether the policy will bear real fruit. During a weekend meeting in Tokyo, Mr. Harper and Japanese Prime Minister Yoshihiko Noda announced the formal launch of talks aimed at reaching a treaty to spur trade and investment between the nations. “This is a truly historic step that will help create jobs and growth for both countries,” Mr. Harper said, noting that Japan is the world’s third-largest economy and Canada’s fourth-largest export market. But the negotiations will be long and difficult, especially if the Canadian side aims to reduce the complex web of non-tariff barriers that pose serious hurdles for foreign companies trying to compete in Japan. http://www.theglobeandmail.com/news/politics/canada-japan-launch-free-trade-talks/article2380647/

The World Bank said it had approved loans worth US$522 million (S$660 million) to help Vietnam develop its infrastructure and energy sector, as well as conserve its forests, the international lender said.  International donors in December pledged US$7.4 billion in official development assistance to Vietnam for 2012, a drop of 6.5 per cent from pledges for 2011 of US$7.9 billion.  US$292 million of the latest credit would go towards improving roads, drainage, canals, water supply and other services in six southern cities in the Mekong Delta, the World Bank said in the statement released in Washington dated March 22. http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_780884.html

China will expand the scope of value-added tax reforms in a bid to accelerate structural adjustments in the economy, Xiao Jie, director of the State Administration of Tax (SAT) said Sunday. Xiao Jie said China would continue to extend the current pilot program in Shanghai to more areas and sectors. To avoid double taxation, China started replacing its turnover tax with a value-added tax (VAT) in the transport sector and some service sectors in Shanghai from Jan. 1 this year. Turnover tax refers to a tax on the gross revenue of a business, while a VAT refers to a tax levied on the difference between a commodity’s price before taxes and its cost of production. http://www.cs.com.cn/english/ei/201203/t20120326_3294334.html

China`s 17 assets managers published the annual reports for 211 mutual funds in 2011, the total loss hit 84.6 billion yuan, according to the data compiled by the market researcher TX Investment Consulting Company on Sunday. The stock funds lost 51.66 billion yuan while the hybrid funds lost 23.76 billion yuan. The two species funds account for 90 percent of the total loss, said TX. http://www.cs.com.cn/english/ei/201203/t20120326_3294320.html

Sinopec Corp. (600028.SH), Asia’s biggest refiner, said on Sunday that its net profit added only 1.4 percent year-on-year to 71.7 billion yuan (11.38 billion U.S. dollars) in 2011 under China’s accounting standards amid a slowing world economy and volatile global financial markets. Its earnings per share stood at 0.827 yuan last year, up 1.3 percent from previous year, the company said in its annual report filed with the Shanghai Stock Exchange. Revenue climbed 31 percent year-on-year to 2.5 trillion yuan, according to the report. The company said that its crude oil output dropped 1.9 percent from a year earlier to reach 322 million barrels last year due to rising oil prices. http://www.cs.com.cn/english/ei/201203/t20120326_3294317.html

India’s New Delhi is at present in the limelight for the upcoming fourth BRICS Summit slated for March 28 to 29, where leaders of major emerging economies will gather to discuss topics like global governance, sustainable development and cooperation. Though still a relatively young mechanism, BRICS has showed its strength as a rising economic clout with prominent contribution to world economic growth since the outburst of financial crisis, laying solid foundation for future global economic recovery. http://www.cs.com.cn/english/ei/201203/t20120326_3294269.html

Prime Minister Manmohan Singh on Monday asked South Korean businessmen to help India expand its burgeoning solar and nuclear power sectors by investing in these environment-friendly technologies. “We are committed to increasing energy efficiency and the share of renewables, including solar and nuclear power, in our energy mix,” Dr. Singh told a group of top Korean CEOs here. Among the CEOs present was Kim Joong-Kyum of the Korea Electric Power Corporation (KEPCO) which has interests in nuclear power that meets 45 per cent of Korea’s electricity requirements.http://www.thehindu.com/news/national/article3225421.ece?homepage=true

Maintaining that there was no trust deficit between the government and industry, Finance Minister Pranab Mukherjee on Sunday said the Centre will make all efforts to implement the decisions it has taken. Addressing CII members here, the Mr. Mukherjee said the trust deficit between industry and government might have been a “concept” in 1970’s but the issue has been settled long back. “I can assure, perhaps I can speak on behalf of the government, that no question of trust defict…we are firmly convinced that in the task of the nation building we are partners and there cannot be any trust deficit between the partners,” Mr. Mukherjee said. The government will make efforts to reach consensus on important issues, he added.http://www.thehindu.com/business/article3222851.ece

World Bank has said it will extend full financial support to India to help enhance the abysmal level of infrastructural development in the country in the12th Five Year Plan that begins next fiscal. The World Bank president Robert B Zoellick, who begins his fifth and last official visit to India on Monday, has expressed intent to discuss innovative methods of financing with Indian leaders during his stay. “India’s needs are great, so I am here to explore with theGovernment of India innovative ways in which our joint financial capacities can be leveraged, especially in infrastructure financing, so that India can build the roads, highways, railway lines and power plants needed to propel growth,” Zoellick said.http://economictimes.indiatimes.com/news/economy/finance/world-bank-to-help-fire-up-indias-infrastructure-development/articleshow/12408354.cms
The amount of cargo processed at South Korea’s seaports gained 7.6 percent last month from a year earlier, fueled by more international trade, the government said Monday. The volume of cargo handled at the country’s seaports came to just under 101.96 million tons in February, according to the Ministry of Land, Transport and Maritime Affairs. “The increase was helped by a rise in the export of automobiles and textiles as well as inbound shipments of oil products and iron ore,” the ministry said in a press release. Export and import cargo rose 8.3 percent on-year to 72.22 million tons. The volume of automobiles and minerals handled by local ports gained 31.7 percent and 25.0 percent, respectively. The figure for oil products also rose 4.9 percent, while the volume for steel and sand declined last month compared to the year before, the report said.http://english.yonhapnews.co.kr/business/2012/03/26/56/0501000000AEN20120326001200320F.HTML
The Reserve Bank will probably keep its repo rate at its current three decade lows next week to give the struggling economy more leeway, although higher electricity and fuel costs could force it to start tightening policy later in the year.  All 24 economists polled by Reuters expect the Reserve Bank’s Monetary Policy Committee to keep the repo rate at which it lends to commercial banks unchanged at 5.5 % next Thursday, with 12 seeing no change throughout 2012. The majority view is that the next move for rates will be up, with ten analysts expecting 50 basis points to be tacked on before the end of this year.http://www.fin24.com/Economy/SAs-repo-rate-seen-steady-at-55-20120325

Bank of Japan Governor Masaaki Shirakawa said central bankers must consider the dangers of keeping interest rates low for too long as they seek to strengthen the global recovery from the 2008 financial crisis. “If low interest rates induce investment projects that are only profitable at such interest-rate levels, this could have an adverse impact on productivity and growth potential of the economy by making resource allocation inefficient,” Shirakawa said at a Federal Reserve conference in Washington. http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2012/March/business_March528.xml&section=business