Financial Page International

6 March 2010 - Global Markets Review
Good Morning Ladies & Gentlemen,
 
Eyes were on China this week as the People's Congress started with Wen Jiabao's opening comments widely scrutinised.
 
China will maintain its expansionary monetary and fiscal policies, Wen Jiabao, the nation's premier pledged on Friday, even as the government attempts to tackle risks of overheating in the economy with "strict controls" over new infrastructure investment.
 
Speaking at the opening in Beijing of the National People's Congress, the country's legislature, Mr Wen said the economic recovery was still "insufficient" and warned of "latent risks" in the banking system while promising to reduce speculation in booming property markets.
 
Delivering his annual "work report" to the NPC, a mixture of the US's State of the Union address and the UK's Budget speech, Mr Wen faced the delicate task of easing growing ­concerns that China risks a property bubble and inflation, while reassuring the many officials who are worried the recovery is still fragile.
 
He told the NPC's 3,000 delegates that "we must not interpret the economic turnround as a fundamental improvement in the economic situation" and "there is insufficient internal impetus driving economic growth".
 
To meet the target of 8% growth, he said the government would maintain a "pro- active fiscal policy and moderately easy monetary policy", which has been the official policy formulation for months.
 
China's economy grew strongly last year, driven by a surge in state bank lending, largely for infrastructure. This is in stark contrast to the US, Europe and Japan, which are all still struggling in the wake of the financial crisis.
 
The announcement of a slowdown in investment projects will alleviate fears that the government is readying another cycle of infrastructure spending this year, leading to an even larger build-up in borrowing and industrial capacity. The number of new investment projects is a closely watched indicator of whether policy in China is being tightened.
 
Mr Wen, who last week referred to property markets in some cities as being like a "wild horse", said the government would increase spending on low-income housing and rein in property speculation. "We will resolutely curb the precipitous rise of housing prices in some cities," he said. The high cost of housing has been one of the most prominent issues among delegates to the NPC, this year.
 
The budget deficit is forecast to be 2.8% of gross domestic product this year, compared with 2.2% of GDP in 2009, meaning that fiscal policy still remains very expansionary.
 
However, the deficit figures mask a marked slowdown in the rate of growth of government spending, from 21% last year to 11% this year. The rate of increase in social spending is also set to slow.
 
Mr Wen gave no real hint of a move on China's currency policy, in spite of strong international pressure for Beijing to appreciate the RMB.
 
China won't heed any overseas pressure on the RMB's appreciation, Wen said (tell us something we didn't know and when will the world learn to stop pushing.  China will only appreciate the RMB in their own time.)
 
Wen said the global financial crisis hasn't passed, and the world faces possible "new economic storms,".
 
I would look to some market-moving comments next week perhaps coming from the Congress as it picks up a head of steam.  My personal view is that there will be some interesting releases possibly over this weekend or most certainly in the early part of next week.
 
Staying on the 'China Theme' this week, Shanghai's economy exceeded the size of Hong Kong's for the first time in at least three decades after stimulus spending helped China skirt the global crisis and lead the world out of recession.
 
Shanghai's gross domestic product grew 8.2% to the equivalent of $218.3 billion in 2009 compared with a 2.7% contraction to $210.7 billion for Hong Kong, according to data compiled by Bloomberg. The preliminary reading on Shanghai was published in January and Hong Kong's release came last week.
 
The figures highlight 30 years of free-market policies that have spurred China to become the world's third-largest economy and its No. 1 exporter. Shanghai's rise may fan concern in Hong Kong that the mainland city will regain its position as China's dominant financial center, after surpassing the former British colony as the nation's biggest port and stock-market operator.
 
Bloomberg data giving US Dollar comparisons for the cities' economies back to 1981 showed Hong Kong previously leading Shanghai.
 
Hong Kong has helped mainland firms get international listings, while Shanghai has an edge in tapping domestic Chinese funds, the Financial Services and the Treasury Bureau said in a statement Thursday.
 
Shanghai will let foreign companies list on its stock exchange "as soon as possible," Mayor Han Zheng said, according to a 1 February report in the Hong Kong Economic Journal.
 
Hong Kong Exchanges & Clearing Ltd. said Thursday it plans to introduce new products linked to the "increasing internationalization" of the Chinese currency.
 
The figures indicate Shanghai's economy surpassed Hong Kong's seven years earlier than projected by the government- backed Hong Kong Trade Development Council in a 2001 report.
 
So, on to the numbers for the week:     
US Markets 
How the US did this week .....

 US SummaryThe Standard & Poor's 500 Index gained for a sixth day after a smaller-than-estimated loss of jobs boosted confidence the economic recovery is strengthening.
 
American Express Co. and Boeing Co. climbed at least 3.4% to lead gains in the Dow Jones Industrial Average after the Labor Department said payrolls dropped by 36,000 last month, compared with a decrease of 68,000 estimated in a Bloomberg survey of economists. Alcoa Inc. advanced the third-most in the Dow as metal prices increased. All 40 companies in the S&P 500 Energy Index rose as oil surged to a seven-week high.
 
The S&P 500 rose 1.4% to 1,138.70 at 4:08 p.m. in New York. The Dow Jones Industrial Average climbed 122.06 points, or 1.2%, to 10,566.20. The S&P 500 climbed 3.1% this week, while the Dow increased 2.3%.
 
The benchmark index for US stocks has rallied 68% from a 12-year low almost a year ago as the economy returned to growth following a yearlong contraction. The gains were led by a 144% rally in financial shares, while consumer- discretionary and industrial companies have almost doubled. The advance trimmed to 27% the S&P 500's drop from a 2007 record.
 
The S&P 600 Smallcap Index climbed 1.9% Friday to its highest level since October 2008. The gauge of smaller US companies jumped 5.4% this week, its biggest advance in five months.
 
Nine stocks rose for one that fell on the New York Stock Exchange after the jobless rate in the US held at 9.7% in February, figures from the Labor Department in Washington showed Friday. The economic expansion that began last year has yet to generate sustained gains in employment, raising the risk that the recovery will cool as households keep a lid on spending.
 
Two regional Federal Reserve Bank presidents said before Friday's jobs report they believe the central bank should keep rates low until the recovery picks up.
 
Chicago Fed President Charles Evans said Thursday he needs evidence of "highly sustainable" growth before supporting tighter monetary policy, while James Bullard of the St. Louis Fed said the central bank should remain "accommodative."
 
The job market is "still facing stresses, though these stresses are easing," said Alan Krueger, assistant Treasury secretary for economic policy.
 
JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. each jumped at least 1.8% as financial companies to the highest increase among 10 major industries. Borrowing by US consumers unexpectedly rose in January for the first time in a year, the Federal Reserve said Friday in Washington.
 
American International Group Inc. climbed 5.1% after saying it will sell its remaining stake in Transatlantic Holdings Inc. in a public offering after the reinsurer's fourth- quarter profit surged.
 
Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, gained 2.4% to $80.71. Alcoa climbed 3.1% to $13.84. Copper advanced as China said it will increase state reserves and stockpiles fell, easing concerns that supply may outpace demand. Lead, nickel and tin prices also rose on the London Metals Exchange.
 
Coal producers rallied after the Financial Times reported Essar Group has agreed to acquire Trinity Coal for $550 million to $600 million from Denham Capital Management LP. The potential transaction will spark investment interest in the group, FBR Capital Markets wrote in a note to clients.
 
Massey Energy Co. climbed 6% to $49.32. Patriot Coal Corp. surged 14% to $21.67. James River Coal Co. advanced 9.8% to $18.54.
 
TiVo Inc. advanced 5.9% to a 10-year high of $17.50. JPMorgan advised buying the shares, citing a ruling in favor of the company Thursday in a patent infringement case.
 
CF Industries Holdings Inc. lost 3.2% after saying it was offering $37.15 in cash and 0.0953 share for each share of Terra Industries Inc., calling its bid superior to one by Yara International ASA.
 
Dean Foods Co. climbed 6.2%, the most in a year, to $16 and trading of options to purchase shares surged to an eight-year high. The advance was fueled by speculation that Groupe Danone SA may bid for the company.
 
Nuance Communications Inc. jumped 6.7%, the most in three months, to $15.87 on speculation it will be acquired. Nuance, which has boosted sales for at least four straight years, is an attractive target for an acquisition, said UBS AG analyst Brent Thill. Richard Mack, a Nuance spokesman, said the company doesn't comment on rumors or speculation.
 
Tyson Foods Inc. slipped 1.5%. BB&T Corp. cut its rating on the meat producer to "hold" from "buy" after the shares rose 43% this year through Thursday's close.
 
Ciena Corp. surged 15% after Cowen & Co. upgraded the shares. The maker of fiber-optic gear was the biggest gainer in the S&P's Midcap 400 Index, which extended its winning streak to eight days, the longest since September.
 
Chesapeake Utilities Corp. rose 1.8% to $31.44, the highest level in six weeks, after reporting fourth-quarter profit that beat analysts' estimates. Of the 469 companies that reported earnings since Jan. 11, 75% have beaten expectations, helping fuel a 7.8% rebound in the S&P 500 from this year's low last month.  

European Markets 
What has been happening in Europe this week .....

 Europe SummaryEuropean stocks posted the biggest weekly gain since July as investors speculated that the European Union will assist Greece with its finances if required and a smaller-than-estimated drop in US jobs added to evidence the global economic recovery is accelerating.
 
National Bank of Greece SA surged 13%, pushing the nation's ASE Index to the biggest advance since October. Basic- resource stocks rallied with metal prices, led by Rio Tinto Group Plc and Xstrata Plc. Royal Ahold NV, the Dutch owner of the US Stop & Shop supermarket chain, gained 7% after increasing its dividend.
 
The Stoxx Europe 600 Index rallied 4.6% this week to 257.09, erasing its loss for the year. The measure retreated for the first two months of 2010 as concerns mounted over budget deficits in Greece, Spain and Portugal and as China moved to restrict lending and stop its economy overheating. 
 
GERMANY
 
German stocks gained, extending the benchmark DAX Index's biggest weekly advance since July, after a US government report showed the unemployment rate held at 9.7% and employment declined less than forecast.
 
Commerzbank AG, Bayer AG and Siemens AG led gains on the DAX, Europe's largest producer of potash, advanced 2.8% after the Financial Times Deutschland said one of its units exceeded an operating profit forecast.
 
The DAX climbed 1.4% to 5,877.36. The measure rallied 5% this week as Deutsche Lufthansa AG posted a smaller-than-estimated loss for 2009 and the Greek government announced measures to trim its budget deficit and sold bonds.
 
German factory orders surged in January, more than canceling the previous month's decline, boosted by demand for big-ticket investment goods.
 
Commerzbank gained 3.4% to 5.86 Euros. Bayer advanced 1.2% to 52.30 Euros, while Siemens climbed 1.5% to 67.46 Euros.
 
Deutsche Bank AG rose 2.5% to 50.95 Euros as Germany's biggest bank said there will be no "material impact" after Moody's Investors Service downgraded its credit ratings because of the company's dependence on the securities unit.
 
K+S advanced 2.8% to 47.33 Euros. Its Morton Salt unit had a "very good" year in 2009 and exceeded its targets for operating earnings, Financial Times Deutschland said, citing a letter from the management to employees.
 
FRANCE
 
French stocks rallied after a report showed US payrolls declined less than forecast and the European Union was said to be developing a rescue plan for Greece.
 
CAC 40 Index jumped 82.01, or 2.1%, to 3910.42 in Paris, the steepest advance since December, led by a rally in bank shares. The broader SBF 120 Index gained 2%.
 
A Labour Department report showed payrolls in the world's largest economy fell 36,000 last month after a 26,000 decrease in January. Economists had forecast a drop of 68,000.
 
ArcelorMittal increased 1.15 Euros, or 3.9%, to 30.91 Euros, tracking gains in European basic resource stocks as base metal prices climbed in London.
 
Essilor International rose 88 cents, or 2%, to 45.72 Euros. Oddo Securities upgraded the world's largest maker of eyeglass lenses to "buy" from "add."
 
Legrand slid 17 cents, or 0.7%, to 23.49 Euros, a fourth day of declines. Goldman Sachs Group Inc. downgraded the world's largest maker of electrical switches and plugs to "sell" from "neutral."
 
NicOx gained 6 cents, or 1%, to 5.98 Euros. The drugmaker said its net loss narrowed to 60.4 million Euros in 2009 from 73.9 million Euros a year earlier.
 
Separately, Aurel BGC upgraded the shares to "hold" from "sell."
 
Veolia Environnement dropped 1.07 Euros, or 4.3%, to 23.94 Euros. The world's biggest water company reported full-year net income of 584 million Euros, missing analysts' estimates of 616 million Euros. Sales fell 3.4%. 
 
BELGIUM
 
In Brussels the Bel 20 closed out the week at 2,611.03, up 1.09% for the session.
 
Belgian brewer Anheuser-Busch Inbev Thursday reported an increase in net income for the fourth quarter, helped by a 5.1% revenue growth. Looking ahead, the company sees first quarter of fiscal year 2010 volumes will be challenging.
 
Profit for the quarter attributable to equity holders of the company was US$ 1.28 billion or US$ 0.81 per share, up from US$ 29 million or US$ 0.03 per share in the prior year.
 
For the quarter, the company recorded nonrecurring items of US$ 1.00 billion, largely consisting of the gain on its Central European operations.
 
Excluding items, normalized earnings improved to US$ 877 million or US$ 0.55 per share from US$ 435 million or US$ 0.44 per share in the comparable quarter.
 
Consolidated revenues grew 5.1% to US$ 9.30 billion from US$ 6.88 billion recorded a year ago.
 
Total volumes increased to 101.72 million hectoliters, or hls, from 85.42 million hls last year. Total beer volumes rose to 88.34 hls from 72.71 hls reported in the previous year. Non-beer volumes also increased to 13.38 million hls from 12.71 hls recorded a year earlier.
 
Cost of sales for the quarter declined 0.3%, with cost of sales per hl slightly lower by 1.2%. Gross margin improved to 53.7% from 51.9% reported last year.
 
For fiscal year 2009, profit attributable to shareholders of the company improved to US$ 4.61 billion or US$ 2.91 per share from US$ 1.93 billion or US$ 1.93 per share a year earlier. Annual revenues grew to US$ 36.76 billion from US$ 23.51 billion generated in the prior year.
 
Looking ahead, the company expects first quarter of fiscal year 2010 volumes will be challenging, due to tough comparisons in the US exacerbated by unusually bad weather and a fourth quarter stocking effect ahead of excise taxes in Russia. Meanwhile, the company expects underlying 2010 global volume trends to remain generally stable with the fiscal 2009 fourth quarter rates. Despite all this, the company expects to solid operating performance in 2010.
 
Belgian holding company NPM/CNP returned to profit in 2009 and hiked its dividend by 7%, but reduced the number of shares it planned to buy back.
 
The company, owned by Belgian billionaire Albert Frere, said it swung to a net income of 296.5 million Euros ($404.9 million), beating a Thomson Reuters I/B/E/S consensus of 232 million, from a loss of 174.4 million in 2008.
 
NPM/CNP said it would propose a gross dividend of 0.835 Euros per share but said it would spend 5% less on buying back shares than it did last year -- 89.4 million Euros worth or 0.828 Euros per share.
 
The company's operating results, taking only dividends and interest from assets into account, rose a modest 1% to 179.6 million Euros.
 
The Belgian group said its consolidated result in 2010 could suffer from low interest rates. NPM has a net cash position of 0.7 billion Euros.
 
NPM/CNP owns stakes in blue-chip companies such as oil major Total, Spanish utility Iberdrola and French television station M6. 
 
THE NETHERLANDS
 
Amsterdam's AEX finished Friday on 338.68, a gain of 1.87% for the day.
 
Dutch-listed insurer Delta Lloyd sees growth opportunities and potential for margin improvement in the year ahead after posting a 19% rise in 2009 core profit.
 
The insurer, controlled by British group Aviva, also expected to pay a 2010 interim dividend of 0.40 to 0.45 Euro if it meets its targets, chief executive Niek Hoek told reporters.
 
Delta Lloyd, which listed in November when Aviva sold almost 42% of its common shares, expects to further cut costs to support earnings, he said.
 
"We also think there will be margin improvement in some areas. We are seeing that for instance for car insurance products. We also expect a recovery of returns on our investments," Hoek said.
 
The company, the Netherlands' fourth-largest life and property insurer based on gross premium income, proposed a 2009 dividend of 0.50 Euro.
 
Shares in Dutch construction and civil engineering firm BAM Group fell sharply Thursday after the company said it will tap investors for more cash, while other European construction firms, including Balfour Beatty and France's Vinci, posted gains after their results.
 
BAM said it wants to raise around 250 million Euros ($341 million) through a rights issue -- a type of discounted share sale to existing investors -- to strengthen its equity position.
 
The extra cash should help finance its involvement in Public Private Partnership initiatives, which are a method for financing public sector facilities such as schools and hospitals. BAM said there's an increasing demand for PPP projects in the current economic environment.
 
Dutch life sciences and materials firm DSM was downgraded to underweight from equal weight on Thursday at Morgan Stanley, which said the company has underperformed the sector by 28% since December 2008. On a 2010 price/earnings ratio of 13.9 times and 12 times for 2011, DSM is at a 21% and 8% discount to the European chemical sector, but is at a 12% premium to its historical average.
 
They advise investors looking at its material science businesses for cyclical recovery to invest in Lanxess or BASF and those attracted to the defensive profile of its nutrition profile to invest in Linde or Croda, all of which are rated overweight at Morgan Stanley.
 
The Netherlands' Central Bureau of Statistics said on Thursday that the consumer price index rose 0.8% year-on-year in February, slowing from the 0.9% increase in the previous month.
 
The small decrease in inflation in February was mainly due to lower prices of clothing, the statistical office said. Clothing was 1.5% cheaper compared to a year ago in February.
 
Dutch annual inflation according to the European harmonized consumer price index was unchanged at 0.4% in February, compared to the 0.9% rate in the whole of the Eurozone. 
 
AUSTRIA
 
Vienna's ATX ended the day Friday on 2,455.78, up 1.92%.
 
UniCredit Bank Austria AG, or Bank Austria, said Thursday its Italian parent company has cleared a Eur2 billion capital increase in the Austrian lender at an extraordinary meeting of shareholders.
 
UniCredit SpA will acquire 29 million new shares at a price of Eur68.5 each, to strengthen the capital base of its Austrian subsidiary, which is also responsible for UniCredit's Eastern European business.
 
With the transaction, UniCredit is now allocating half of the Eur4 billion it recently raised in a rights issue to Bank Austria. The move is designed primarily to financially strengthen its vast network of banks in Eastern Europe, where it ranks as the number one lender.
 
Of the Eur2 billion, Eur212 million will be allocated to the bank's equity, while the remainder will be used for reserve endowment, Bank Austria said in a statement.
 
"With this capital increase, UniCredit Bank Austria will be well prepared for the future. This measure will further strengthen the bank's structure to allow for a continuing focus on the core task of financing companies and private households in Austria as well as in CEE," UniCredit Chief Executive and Bank Austria supervisory board Chairman, Alessandro Profumo, said.
 
Austrian biotech company Intercell posted worse than expected fourth quarter results and gave a cautious outlook as demand for its Ixiaro vaccine against Japanese Encephalitis disappointed.
 
Sales edged up 6% to 32.2 million Euros ($43.5 million), trailing a forecast for 37 million in a Reuters poll.
 
Intercell expects sales for Ixiaro to pick up from the second quarter, but it cautioned it was likely to post a 2010 net loss comparable to the 18.4 million loss recorded in 2009. Intercell posted a fourth-quarter net profit of 7.5 million Euros, also falling short of expectations.
 
Austrian power generator and grid operator Verbund Tuesday said its 2009 net profit fell 6.2%, more than analysts had expected, after a better return on investments and increased water supply for hydropower production failed to compensate lower spot market and forward electricity prices.
 
Verbund, Austria's largest electricity producer, meanwhile surprised the market by proposing a 2009 dividend of Eur1.25 a share, up 19% from 2008's dividend of Eur1.05 a share.
 
The company, however, also cautioned that it expects the difficult economic environment and weaker sales price level to continue through 2010 and cut into its 2010 earnings as well as next year's dividend payment.
 
"On the basis of the sustained difficult conditions and due to the achieved significantly lower forward prices for electricity, Verbund expects a considerably lower operating result and group result as well as lower dividends in 2010 despite the restructuring measures and the reduced capex program," the company said in a statement. Restructuring and cost-cutting measures should shave about Eur40 million of costs in 2010, the company said.
 
On the investment side, Verbund has put planned projects in Slovenia, Croatia and Montenegro on hold for the time being, but will press ahead with its planned capital expenditures in Austria, Turkey, Italy and France, it said. It plans capital expenditure of Eur2.7 billion over the 2010-2015 period, with Eur2 billion being invested in mainly ramping up infrastructure and adding production capacity in its home market of Austria. The remainder is to be invested in Turkey, Italy and France.
 
According to one trader, the dividend proposal was a positive surprise that will offer some support to the share price Tuesday, but won't be able to compensate the weak longer term outlook. He said the share price will come under pressure as analysts start revising their earnings projections downwards as a result of Tuesday's outlook. 
 
SWITZERLAND
 
The SMI in Zurich completed a mixed week on 6,847.78, rallying 0.63% Friday.
 
The Swiss economy grew at a better than expected pace in the fourth quarter, as trade figures contributed positively, official figures showed Tuesday.
 
Gross domestic product rose 0.7% sequentially in the fourth quarter, the State Secretariat for Economic Affairs, or SECO, said. Economists had forecast a 0.4% rise. The economy exited recession in the third quarter by growing 0.5%, revised up from 0.3%, ending four quarters of negative GDP.
 
Exports of goods increased 2.3% after rising 4.1% in the previous three months. Services exports fell 0.2%. Shipments of goods excluding valuables like precious metals, jewellery, objects of art and antiquities grew 3.2%. Total exports rose 1.6% compared to 3.3% growth in the previous quarter.
 
On the other hand, total imports grew at a slower pace of 0.3% compared with 2.9% rise in the prior quarter. Merchandise imports fell 0.1%, reversing the 3.6% growth in the third quarter, while imports of services increased at a faster pace of 1.8% compared with 0.5% growth in the previous quarter.
 
Details of data showed that growth in general government spending accelerated to 1.7% from 1.5%. Meanwhile, households' private consumption grew 0.4% sequentially in the final quarter, slower than 0.8% rise in the third quarter.
 
Growth in investment slowed to 1.4% from 3.4%, led by a 1.5% fall in construction sector capital formation. Domestic demand edged up 0.1%, unchanged from the third quarter. Total exports rose 1.6%, slower than third quarter's 3.3% rise.
 
On an annual basis, fourth quarter GDP increased 0.6%, ending three consecutive quarters of declines. In 2009 as a whole, the Swiss economy contracted 1.5% versus 1.8% growth in 2008.
 
Prospects for this year are forecast to be better compared to 2009. The Zurich-based KOF said on February 26 that Swiss year-on-year GDP growth rates will remain in positive territory this year.
 
In December, KOF had raised its 2010 outlook for the economy. The think tank sees 0.6% expansion this year, up from just 0.1% growth predicted in September. Recently, the UBS bank said the Swiss economy is likely to grow at a rate close to its potential of around 2% this year.
 
The Swiss National Bank is due to hold its quarterly monetary policy review on March 11. In December, the central bank left its key interest rate unchanged for a third time to support the economy. The central bank forecasts real GDP growth of between 0.5% and 1% in 2010.
 
Switzerland's gross domestic product or GDP increased a seasonally adjusted 0.7% sequentially in the fourth quarter, faster than the 0.5% growth in the previous quarter, the State Secretariat for Economic Affairs SECO said on Tuesday. The third quarter GDP was revised from 0.3% growth estimated initially. The Swiss economy grew for the second quarter in a row. Economists expected an increase of 0.4%.
 
Year-on-year, the GDP was up 0.6% in the fourth quarter, compared to the 1.3% fall in the previous quarter. This was the first year-on-year growth after four quarters of contraction. Economists were looking for a decline of 0.5%. 
 
SWEDEN
 
The OMX in Stockholm rounded out the week's trading at 998.07, up 1.40%.
 
Thursday, Riksbank Governor Stefan Ingves said the central bank now expects to begin raising the repo rate this year as stability returns to financial markets and the economic recovery becomes more evident.
 
"We are expecting to begin raising the repo rate with effect from the summer or the beginning of the autumn this year," Ingves told the Riksdag Committee on Finance according to the text of his speech. "This is slightly earlier than assumed in our earlier forecast."
 
The Executive Board of the Riksbank had decided to leave the repo rate unchanged at 0.25% on February 11. Among the six members of the board, Deputy Governor Lars Svensson entered a reservation against the decision and advocated cutting the repo rate to zero%.
 
"We are also approaching a situation where it is time to leave the crisis interest rate behind us and take steps towards an interest rate that is normal for a "regular" economic downturn," Ingves said.
 
Meanwhile, official data released on Monday showed that the Swedish economy slid back into recession in the fourth quarter of 2009. The Swedish economy contracted 0.6% quarter-on-quarter in the three months through December, following a 0.1% decline in the September quarter. Initially, the economy was estimated to have grown 0.2% in the third quarter.
 
"We are on safer and firmer ground now than we were a few months ago," Ingves said. "The acute crisis is behind us."
 
The road ahead is certainly not an easy one, the central bank chief said. In the hearing on monetary policy, he said that the work on preventing future crisis is both important as well as urgent. The lessons from the crisis must not be forgotten, he urged.
 
Wednesday, the Statistics Sweden announced that the current account surplus stood at SEK 40.8 billion in the fourth quarter, down from SEK 54 billion surplus in the previous quarter. A year earlier, the current account surplus was SEK 70.6 billion.
 
The capital account showed a deficit of SEK 0.5 billion in the fourth quarter, narrowing from SEK 1.2 billion deficit in the third quarter. Similarly, the financial account deficit narrowed to SEK 16.5 billion from SEK 175.1 billion.
 
In the whole year of 2009, the current account surplus stood at SEK 225.2 billion, narrowing from SEK 299.8 billion surplus last year. The total trade in goods and services amounted to SEK 209.2 billion, smaller than the SEK 232.2 billion in 2008. 
 
NORWAY
 
The OBX in Oslo headed into the weekend on 335.72, up 1.85%.
 
Thursday, the Statistics Norway said total investments in oil and gas extraction and pipeline transport for 2010 were estimated at NOK 135.6 billion, down NOK 3 billion from the estimate conducted in the survey last quarter.
 
For 2009, total investments in oil and gas extraction and pipeline transport stood at NOK 135.1 billion. This was NOK 6.1 billion lower than the estimate conducted in the survey last quarter, but an increase of NOK 11.2 billion compared with the final investments in 2008.
 
The final investment for exploration activity came in at NOK 27.9 billion in 2009, up NOK 3.5 billion from final investment in 2008. At the same time, final investments in field development and fields on stream for 2009 totaled NOK 100.2 billion. This was a NOK 7.3 billion increase compared with final figures for 2008.
 
Norway's purchasing managers index for manufacturing stood at 49.4 in February, down from 50.1 in the previous month, a survey conducted by logistics association NIMA and Fokus Bank showed on Monday. Economists expected a reading of 50.5. A reading above 50 indicates expansion, while one below 50 suggests contraction.
 
Wednesday, the Statistics Noway announced that the current account surplus stood at NOK 98 billion in the fourth quarter, up from NOK 74 billion surplus in the previous quarter. A year ago, the current account surplus was NOK 141 billion.
 
During the period, the trade in goods and services amounted to NOK 94 billion, while surplus from the interest and benefit balance totaled NOK 4 billion.
 
In the whole year of 2009, the current account surplus amounted to NOK 333 billion, down from NOK 473 billion surplus last year. 
 
FINLAND
 
Helsinki's OMX brought to a close the week on 6,965.61, up 1.01% for the day.
 
Thursday, the Statistics Finland announced that the number of new motor vehicle registrations increased 0.1% year-on-year to 11,726 in February, of which 8,399 were automobiles.
 
At the same time, the number of new passenger cars registrations climbed 5.6% to 7,589, while the share of new diesel-driven passenger cars was 45.2%.
 
For the January to February period, the number of new motor vehicle registrations totaled 29,220, which was an increase of 0.3% from the previous year. During the period, the number of new passenger cars registrations climbed 6.5% to 19,972.
 
The most common passenger car makes first registered in the January to February were Volkswagen, Toyota and Ford, the statistical office said.
 
Monday, the Statistics Finland announced that the gross domestic product or GDP dropped 5.1% year-on-year in the fourth quarter, slower than the 8.9% decline in the third quarter, revised from 9.1% fall reported initially.
 
Sequentially, the GDP remained unchanged in the fourth quarter, after a 0.3% growth in the third quarter.
 
In 2009, the GDP was down 7.8% from the previous year. The decline of output was the largest for an individual year since 1917 and 1918, the statistical office said. In 2008, the GDP was up 1.2%.
 
Separately, the statistical office said, the general government budget deficit at 2.2% of GDP in the whole year of 2009. A year ago, the government budget surplus was 4.2% of the GDP. In 2009, the GDP share of the debt rose from the previous year's 34.2% to 44%. 
 
DENMARK
 
Copenhagen saw its OMX mixed throughout the week, closing on 371.10, up 1.78% for the Friday session.
 
Statistics Denmark said on Thursday the country's unemployment rate stood at a seasonally adjusted 4.2% in January, unchanged from December.
 
A total of 118,000 Danes were without a job by the end of January, compared to 118,200 in December. The unemployment rate among males stood at 5% and that among females stood at 3.4%.
 
The unemployment rate among under 25s was unchanged at 3%.
 
Monday, the Statistics Denmark announced that the retail sales dropped 0.9% on a monthly basis in January, compared to the 0.3% growth in the previous month.
 
Retail sales for food and other groceries fell 0.9% month-on-month in January, while retail sales for clothing etc declined 2.6%. Retail sales for other consumer goods fell 0.4%.
 
On an annual basis, retail sales slipped 3.2% in January, in contrast to the 0.7% increase in the previous month. 
 
SPAIN
 
In Madrid, the IBEX rounded off the week on 11,019.80, a rise of 2.55%.
 
Spain's unemployment increased 82,132 or 2.03% in February from the previous month, the Labour Ministry reported Tuesday. The expected increase was only 62,200. The registered unemployment reached 4.13 million in February. From February 2009, the increase in unemployment was 18.6%.
 
The Spanish government plans to generate 350,000 jobs in the housing sector over the next two years, the country's Finance Minister Elena Salgado said Monday.
 
Listing out the government's plans to promote economic growth and the labor market, Salgado told reporters that there will be a VAT reduction for house restoration works.
 
She said a reduction in revenues related with VAT reduction would be compensated by generating employment in the housing sector.
 
According to a report released by the Eurostat Thursday, Spain's total jobless rate was 18.8% in January. It compares with a rate of 9.9% in the whole of Eurozone.
 
Further, Salgado said the government is due to unveil its plan for rationalizing government expenditures in the first week of April. She added that reducing budget deficit to below the EU ceiling of 3% of GDP is imperative.
 
Spain's index for consumer sentiment slumped to 71.1 in February from 78.7 in January, the Instituto Credito Oficial said on Wednesday. The index was still 22.5 points above the February 2009 level.
 
The index measuring consumers' perception of the current economic situation slid to 40.9 in February from 48.8 in January, and that measuring expectations for the next six months fell to 101.3 from 108.5.
 
The index measuring sentiment on the current employment situation deteriorated to 26.5 from 33.7, while that measuring sentiment in the jobs front for the next six months slipped to 103.9 from 110.1. 
 
PORTUGAL
 
Portugal's PSI General headed into the weekend on 2,731.93, up 2.02%.
 
Tuesday, the Statistics Portugal announced that the industrial output rose 0.6% year-on-year in January, compared to the 1.5% fall in the previous month. A year ago, industrial output was down 15.5%.
 
On a monthly basis, industrial output dropped 2.2% in January, after rising 1.3% in December.
 
Tuesday, it was also announced that the retail sales increased 0.7% year-on-year in January, slower than the 2.8% growth in the previous month. A year ago, retail sales were down 0.8%.
 
On a monthly basis, retail sales were up 5.2% in January, after falling 1.9% in December. 
 
ITALY
 
Italy's benchmark FTSE MIB gained for a sixth session, adding 2% to 22,278.12 in trading in Milan.
 
Banca Ifis sank 22.5 cents, or 3.2%, to 6.85 Euros, ending a six-session increase. Banca Akros cut its recommendation to "sell" from "accumulate," after the company posted "disappointing fourth-quarter results" and announced an "unexpected 50 million-Euro ($67.9 million) rights issue."
 
Banca Italease advanced 2.95 cents, or 3.9%, to 79.4 cents, the steepest increase since Dec. 30, after market regulator Consob set the price for a residual offer by Banco Popolare SC (BP IM) at 79.7 cents.
 
Buzzi Unicem increased 41 cents, or 4.3%, to 9.94 Euros, the highest in almost a month. "Having bottomed out in the first half of 2009, leading indicators now point to a small rebound in business activity in 2010," Natixis Securities wrote in a note on the European building materials industry. "The real upturn in the cycle, and therefore in volumes, is expected to begin in the second half of 2010."
 
Italcementi, Italy's largest cement maker, rose 18 cents, or 2.1%, to 8.58 Euros.
 
ERG advanced for a third day this week, increasing 34 cents, or 3.6%, to 9.90 Euros. Italy's biggest exporter of refined oil products said its fourth-quarter loss widened to 27 million Euros, from a loss of 12 million Euros a year earlier. ERG said it expects no general shutdown of coastal refining this year and it forecasts a recovery in refining margins in 2010. UniCredit Research reiterated a "buy" rating, citing "the good combination of a compelling valuation and speculative appeal.'
 
Fiat gained 39 cents, or 4.6%, to 8.92 Euros, a fifth straight increase. Fiat's auto unit may be worth between 3.5 billion Euros and 5 billion Euros if it's spun off by the Italian company, Il Sole 24 Ore reported Friday, citing its own calculations.
 
A spinoff could take place within a year, helped by expected improvement in global demand for cars, the newspaper said.
 
Exor, Fiat's main shareholder, increased 44 cents, or 3.7%, to 12.46 Euros.
 
Maire Tecnimont surged 18.5 cents, or 7.7%, to 2.58 Euros, the highest in more than a month. Santander Private Banking reiterated a "buy" rating on the energy-services company, saying that the acquisition of Sofipart was "quite cheap" and "may generate remarkable industrial synergies."
 
Piaggio & C. dropped 11.5 cents, or 4.9%, to 2.24 Euros after Immsi SpA sold a 2.5% stake in the company. Banca Akros, which has a "buy" rating on the scooter maker, said in a note that "the placement is likely to have a negative impact on the stock shortly."
 
Prysmian reversed previous losses, gaining 57 cents, or 4.3%, to 13.77 Euros. Prysmian (Lux) II and Goldman Sachs International said in a statement that they concluded their sale of a 16.2% stake in Prysmian SpA. Equita Sim SpA, which has a "buy" rating on the stock, said that "the overhang risk will disappear thanks to this placement." Separately, JPMorgan Cazenove and Royal Bank of Scotland Group Plc increased their price projections on the stock.
 
Toscana Finanza jumped 22.6 cents, or 18.3%, to 1.46 Euros as Banca Ifis offered to buy the Florence-based company at 1.5 Euros per share.
 
UniCredit rose for a fourth session, increasing 5.5 cents, or 2.8%, to 2.01 Euros. BofA- Merrill Lynch Global Research, which resumed coverage of Italian banks, set a "buy" recommendation on UniCredit and Intesa Sanpaolo SpA (ISP IM). Intesa shares advanced 12 cents, or 4.5%, to 2.84 Euros. 
 
GREECE
 
In Athens, the much troubled Athex brought proceedings to a close at 2,082.06, up 1.66%.
 
Under pressure from the European Union (EU) to deal with mounting debt crisis, the Greek government has announced sweeping new austerity measures, saying it will freeze pensions, slash civil service bonuses and increase sales tax on fuel, tobacco and alcohol.
 
The Socialist government of Prime Minister George Papendrou had no other option but to adopt additional cost-cutting measures for the third time in as many months, in hopes of convincing fellow EU members and investors that it can tame the region's biggest budget gap.
 
The new package of public-sector pay cuts and tax increases was approved at a Cabinet meeting in Athens Wednesday, reports said.
 
It would save an extra €4.8-billion ($6.6 billion), equivalent to 2% of gross domestic product (GDP), Deputy Citizen Protection Minister Spyros Vougias told reporters.
 
Other measures include an increase of value-added tax from 19% to 21%.
 
As anticipated by trade unions, the government will also cut by 30% three bonus salary payments civil servants receive at holiday times.
 
Papandreou said after the Cabinet meeting that the decision was "difficult" but necessary for "the survival of our country and our economy. We are now justifiably expecting EU solidarity."
 
The government is facing a spate of protests at home by agreeing to greater austerity measures.
 
Greece's biggest public-sector union ADEDY Tuesday called for a general strike on March 16 to protest the new austerity measures. It has also called for a four-hour work stoppage next Monday.
 
It is the third industrial action this year to protest the government's cost-cutting measures.
 
Cab drivers abandoned their vehicles Tuesday and marched down the streets of capital Athens to protest a tax imposition.
 
The latest attempts at cost-cutting follows the visit by EU Economic Affairs Commissioner Olli Rehn, who called on the Greek government to do more to rein in a budget deficit that has shaken the confidence in the Eurozone.
 
"I trust that the additional measures will meet the deficit targets in order to regain credibility," Rehn said in Athens Monday.
 
Papendrou is scheduled to travel to Bonn for a meeting with German Chancellor Angela Merkel Friday as part of the efforts to drum up further support from Germany. He will also meet French President Nicolas Sarkozy Sunday to discuss Greece's financing woes.
 
Greece's budget deficit has crossed 30 billion Euros ($41 billion) or 12.7% of the GDP in 2009, four times higher than Eurozone rules allow. The Socialist government has pledged to bring it down to EU mandated levels of 8.7%. All EU member states are required to keep their budget deficits to 3% of GDP or under.
 
The 27-nation-bloc is devising a plan to grant Greece about 25 billion Euros in aid should the need arise, as EU officials have said that Greece's financial woes pose a threat to the entire Euro area and the strength of the region's single currency.
 
An informal EU summit in Brussels last month had decided that it "will take determined and coordinated action if needed to safeguard stability in the Eurozone as a whole."
 
Although EU rules prevent the Eurozone from collectively bailing out Greece, the bloc gave top priority to Greek crisis as there are fears it could threaten Europe's hesitant economic recovery and the stability of the Euro itself.
 
Papandreou assured in Brussels that his government would continue with the recently-enforced fiscal and economic policies aimed at reducing the nation's burgeoning debt and massive deficits.
 
He reportedly told the Cabinet Wednesday that if the EU did not provide financial support now, Greece had the option of turning to the International Monetary Fund.
 
Wednesday, Moody's Investors Service said that the additional fiscal measures announced by the Greek government are consistent with the current A2 rating, with a negative outlook, for Greece's government bonds.
 
Sarah Carlson, VP-Senior Analyst in Moody's Sovereign Risk Group and lead analyst for Greece said, "The onus is on the government to demonstrate that it does not merely announce ambitious plans, but is also able to deliver on these commitments." Carlson added that the government needs to be given time to allow it to follow through on its plan.
 
Going forward, maintaining the government bond rating at the current A2 will, according to Moody's, be contingent upon the government executing its austerity programme and delivering the quantum of deficit reduction that has been promised.
 
Monday, the General Secretariat of the National Statistical Service of Greece announced that the retail sales, except automotive fuel dropped 0.5% on an annual basis in December, compared to the 8.7% fall in the previous month.
 
Retail trade volume index, including automotive fuel, decreased by 0.2% on an annual basis in December, after falling 11.1% in November.
 
Meanwhile, the turnover index in retail trade, except automotive fuel, increased 0.6% year-on-year in December, compared to the 7.8% fall in the previous month.       

The UK Market 
Did it follow the Global trend .....
 UK MarketsThe FTSE 100 has hit its highest level since the collapse of Lehman Brothers in September 2008 as investors bet that the international operations of UK blue-chips would insulate them from political and fiscal uncertainty at home.
 
Boosted by better-than-expected US jobs data, the stock market benchmark powered to an 18-month peak of 5,599.76 points, 1.3% higher on the day and up almost 11% from a three-month low reached last month.
 
This week also marked the one-year anniversary of the index's crisis-related nadir, since when blue-chips have gained almost 60%.
 
Falls in Sterling have been a big driver of recent gains, making stocks relatively cheap and lifting the value of companies' overseas earnings.
 
At current levels, the FTSE 100 companies were trading on prices equivalent to 12 times their forecast 2010 earnings - still below the long-run average of 14 times.
 
The mid-cap FTSE 250 hit a 21-month peak on Friday at 9,774.72, but is only up 8.5% from its February low, reflecting investor concerns about the higher reliance of its companies on the UK market.
 
This week, fears of a hung parliament helped send Sterling tumbling 4 cents against the Dollar to a 10-month low of $1.4780 and a fourth-month trough of £0.9148 against the Euro. On Friday, the Pound steadied at $1.5049 against the Dollar and £0.9035 to the Euro.
 
Miners led the way on Friday as the FTSE 100 reached its highest level in 18 months.
 
The sector was bolstered by news that JFE Holdings, the Japanese steelmaker, had agreed to pay BHP Billiton $200 a tonne for coking coal for the quarter ending June.
 
That was up 55% on its previous annual contract, and higher than the 2010 settlement of around $185 per tonne analysts had anticipated.
 
BHP itself took on 3.8% to £22.07, also helped by an investor roadshow to introduce new chairman, Jac Nasser. He was bullish on China, forecasting growth and industrialisation to last a further 10 to 15 years, and played down the chances of big acquisitions during his first 12 months in the chair.
 
Meanwhile, Xstrata rose 5.6% to £11.87 after Glencore, its largest shareholder, exercised an option to buy back the Prodeco coal mine in Colombia. The move, though broadly expected, eased fears that Xstrata would buy the mine straight back at an inflated price.
 
It also provided some oxygen to speculation that Xstrata might use the $2.4bn received to make another bid for Lonmin , up 2.1% to £19.63.
 
Better than expected US payrolls data lifted the FTSE 100 by 1.3%, or 72.6 points to 5,599.76. That gave the index a 3.6% gain for the week.
 
Wider benchmarks also hit new highs. The FTSE 250 closed at 9,774.72 its best level since June 2008.
 
Financials stocks mirrored the market trend, led by Schroders on a gain of 6.6% to £13.96 for its voting shares. On the back of recent results, Credit Suisse said the fund manager was "back on the upgrade cycle" and the shares looked "increasingly attractive."
 
Brokers were also positive on Standard Chartered , which rose 3.5% to £17.60½ following results this week. Nomura, Evolution Securities and Matrix Corporate Capital all repeated "buy" advice.
 
But Resolution was off 1.9% to 68¾p as Footsie relegation looked certain at next week's index review, and on fears the stock had dropped too far to be used as used as an acquisition currency.
 
Elsewhere among the fallers, GlaxoSmithKline eased 0.5% to £12.38½ after UBS estimated that compensation claims over its Avandia drug could cost between $1bn and $6bn.
 
More than 13,000 lawsuits have been filed since a US congressional committee last month criticised GSK's handling of safety data for the diabetes treatment, UBS said. Nevertheless, the broker retained "buy" advice and said consensus forecasts for the drugmaker looked "implausibly low".
 
Share sales by its chairman led Shire lower by 0.4% to £14.72. Matthew Emmens raised £5.3m after exercising options.
 
With defensive stocks sidelined, Centrica lost 0.7% to 282½p after competitor Scottish & Southern Energy said it was cutting gas tariffs.
 
Petrofac , which posts results on Monday, slid 1.3% to £10.72 following its proposal this week to spin off its North Sea oil fields into a new company. Traders said the decline reflected a lower than expected valuation of the assets, along with dilution from Sweden's Lundin Petroleum taking the majority stake of the venture.
 
Premier Oil lost 1.2% to £11.18 on news that Lundin plugged and abandoned a well in the North Sea that is 30% owned by Premier.
 
Dublin-based Kenmare Resources dropped 26.5% to 15¼p after the company announced plans to raise £180m via an equity issue to fund the expansion of its titanium mine in Mozambique.
 
Traders said the market had taken fright at the size of the discount - the new shares would be offered to investors at 12p - and a warning from the company that failure to complete the cash call would mean it could not access a new financing facility and therefore it might have to sell inventory to meet debt repayments.
 
West China Cement moved up 14.2% to 585p after the company outlined plans to move its listing from the junior Aim market to the Hong Kong stock exchange, where traders believe it would command a higher rating.
 
Caledon Resources Caledon Resources added 8.6% to 41p and Western Coal Corporation added 6.8% to 265½p after BHP Billiton secured a 55% increase in the contract price for coking coal with a major Japanese steelmaker. "We had conservatively expected a price for hard coking coal of $185 a tonne to be agreed in 2010 negotiations, therefore this agreement is an 8% improvement on our expectations," said Arbuthnot Securities, reiterating its "buy" ratings on both stocks.
 
Alexon , the women's clothing retailer, fell 32% to 23p as it outlined plans to raise £20.2m via an issue of new shares at 20p. Over half of the cash will be used to cover the costs of a property reorganisation plan, with the rest invested to correct outdated systems 
Asia Pacific Regional Markets 
Did they set the tone or follow the lead .....
Asiapac IndicesJAPAN

Japanese shares closed higher on Friday, with sentiment lifted by a lower Yen, Wall Street gains overnight and hopes that the central bank will ease monetary policy further, analysts said.
 
The Tokyo Stock Exchange's benchmark Nikkei-225 index rose 223.24 points or 2.20% to 10,368.96. The Topix index of all first-section issues gained 13.17 points or 1.47% to 910.81.
 
Stocks were lifted by a report in the Nikkei business daily that said the Bank of Japan will likely consider more steps to increase liquidity and stimulate the economy through to April.
 
If the bank, which has already dropped rates near zero, takes such steps, it "will have a healing effect on the economy as a whole", Nikko Cordial Securities equity general manager Hiroichi Nishi said.
 
Sentiment was also lifted by Wall Street's gains overnight on a drop in the number of Americans filing new claims for unemployment benefits.
 
The Labour Department said fewer Americans claimed jobless benefits in the week to February 20, a good sign ahead of a much anticipated government report Friday on the unemployment situation in February.
 
The Yen fell to 89.28 to the Dollar in Tokyo late afternoon trading from 88.43 a day earlier, giving a boost to earnings prospects for Japanese exporters.
 
Sony surged 3.38% to Y3,205, benefiting from the weaker Yen and its reported development of new portable devices.
 
The Japanese electronics giant is developing a new lineup of handheld products to counter Apple's stable, the Wall Street Journal reported.
 
Sony refused to confirm the report, only issuing a statement that said: "It is not our strategy to discuss future products or business plans before we make a formal announcement."
 
Other electronics counters also closed higher, with Canon gaining 3.32% to Y3,890 and Panasonic up 2.09% to Y1,271.
 
SOUTH KOREA
 
Seoul shares rose on Friday fueled by firm rises in tech heavyweights including Samsung Electronics, while Kumho Asiana Group issues rallied amid strengthening Daewoo E&C sale hopes.
 
The Korea Composite Stock Price Index finished up 1.01% at 1,634.57 points.
 
Foreign investors bought a net 46 billion won ($40.30 million) worth of stocks and institutions purchased a net 212.9 billion won.
 
Listed companies of Kumho Asiana Group advanced as hopes for the sale of stakes in unit Daewoo Engineering & Construction strengthened, analysts said.
 
Kumho Industrial jumped 8.24%, while Asiana Airlines advanced 7.5%. Daewoo E&C ended up 2.51%.
 
Samsung Electronics, the world's No.1 memory chip maker, climbed 1.84% and Hynix Semiconductor the world's No.2, advanced 1.35% after the US semiconductor index posted gains on Thursday.
 
Shipbuilders posted firm rises on a 7.2% spike in Baltic Dry Index, which tracks the cost of shipping key commodities.
 
Shares in Hyundai Heavy Industries advanced 2.1% and Daewoo Shipbuilding & Marine Engineering finished up 2.21%.
 
Shares in CJ CGV, a cinema operator, gained 2.4 on expectations for higher revenues from 3D movies like 'Avatar.'
 
HONG KONG
 
Hong Kong shares rose at midday on Friday with exporter Li & Fung leading gains on hopes of a recovery in the US economy, while Premier Wen Jiabao reaffirmed China's monetary and fiscal policies which aided a recovery in Chinese banks and lifted China stocks.
 
Consumer goods exporter Li & Fung, which in January forged a sourcing agreement with Wal-Mart, surged 4.2% on Friday to an all-time high of HK$40 on hopes that it will benefit from a recovery in the US economy after better-than-expected retails sales which pointed to a stablisation in the economy.
 
Chinese banks recovered from a sell-off in the previous session, after China reaffirmed its loose monetary policy.
 
China will stick to an appropriately easy monetary stance and a proactive fiscal policy as it seeks to counter the lingering impact of the international credit crunch, Premier Wen Jiabao said on Friday.
 
China's second-largest lender China Construction Bank was up 0.50% at HK$5.99 by the lunch break.
 
Top lender ICBC was up 0.35% at HK$5.77 after rising 1.4% in the early session. ICBC said on Friday that it was not facing pressure to raise new capital, even as many of its peers announced fundraising plans to bolster their balance sheets.
 
The benchmark Hang Seng Index .HSI had trimmed gains and advanced 0.87% or 178.52 points to 20,754.30 at midday, poised to snap three straight sessions of losses. The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks was up 0.72% at 11,860.09.
 
Brokers said investors switching away from disappointed index heavyweights such as China Mobile  slowed the rise with shares of the China mobile carrier edging down 0.07% to HK$72.80 at midday. The stock fell 2.4% on Thursday after news that it was in talks to buy a stake in Shanghai Pudong Development Bank.
 
Turnover fell to HK$32.75 billion ($4.2 billion) against midday Thursday's HK$34.35 billion.
 
PetroChina rose 2.7% to HK$9.01 after its Chairman Jiang Jiemin said the company expected profit to improve this year compared with 2009.
 
Selling pressure on Hong Kong Exchanges & Clearing remained after the world's second-largest exchange operator by market value posted lower-than-expected quarterly earnings. The stocks, which fell 2.03% on Thursday, lost a further 0.54% by the lunch break.
 
CHINA
 
China's key stock index edged up 0.07% on Friday, with brokerages boosted by news of an imminent start to stock index futures trade, while the index stabilised after Premier Wen Jiabao reaffirmed China's monetary and fiscal policies.
 
The Shanghai Composite Index .SSEC ended the morning at 3,025.530 points, regaining its footing after a 2.38% fall on Thursday, its biggest one-day fall in five weeks spurred in part by worries over the possibility of more policy tightening.
 
Losing Shanghai stocks outnumbered gainers by 438 to 421, while turnover dropped to 58 billion RMB ($8.5 billion) from Thursday morning's 74 billion RMB.
 
Haitong Securities rose 1.80% to 16.97 RMB while Everbright Securities advanced 3.69% to 27.25 RMB and CITIC Securities was up 1.99% at 27.16 RMB.
 
China's top securities regulator said the long-awaited launch of stock index futures trade was likely in mid-April and a planned pilot programme for margin trading and short selling of shares would start before that.
 
The index is heading for a 0.9% fall for the week, with last week's 1.12% gain not seen supported by improvements in fundamentals such as the balance of share supply and demand, with regulators continuing to approve a steady stream of share offerings to the market, traders said.
 
The market has also been pressured by policy moves to tighten liquidity, including two increases in banks' reserve requirements since the beginning of the year.
 
They added that the market was expected to remain in a narrow range in the short term but was likely to test a key psychological support level at 3,000 points.
 
FAW Car, a subsidiary of major Chinese automaker FAW Group, jumped 5.53% to 23.29 RMB after saying its net profit rose 49.8% last year to 1.6 billion RMB.
 
The property sector was soft, with China Vanke, the country's largest listed property developer, falling 0.53% to 9.34 RMB after saying its turnover from housing sales in February fell 35.4% on year to 2.51 billion RMB. 
 
TAIWAN
 
Taiwan's share prices closed higher Friday with the weighted index, the market's key barometer, moving up 96.46 points, or 1.27%, to close at 7,666,26.
 
The local bourse opened at 7,659.76 and fluctuated between 7,694.89 and 7.618 during the day's trading. Market turnover totaled NT$90.75 billion (US$2.83 billion).
 
All eight major stock categories gained ground, with textile issues moving up the most at 2.4%, followed by foodstuff shares at 1.8%.
 
Paper and pulp shares and banking and financial stocks both advanced 1.5%. They were followed by machinery and electronics at 1.3%, and plastics and chemical stocks at 1.0%.
 
Both cement and construction stocks advanced 0.2%.
 
Gainers outnumbered losers 1,872 to 944, with 409 remaining unchanged.
 
Foreign investors and Chinese QDIIs bought a net NT$10.89 billion-worth of shares.
 
THE PHILIPPINES
 
Local stocks rebounded on Friday as investors shared the buoyant Wall Street sentiment in turn fueled by favorable reports on retail sales as well as improvement in jobless claims and productivity.
 
The main-share Philippine Stock Exchange index gained by 1.19% to close at 3,040.92 on selective buying of blue chips.
 
The rebound from the previous day's losses was led by the industrial, property and financial sectors whose counters went up by 2.1%, 2% and 1.39%, respectively, outpacing the gain of the main index. These had offset the weakness in the holding firms and mining/oil counters.
 
Value traded, however, was relatively thin at about P2.67 billion as trading was marred by some technical glitch. Trading was extended up to 1 p.m. to compensate for the delays caused by the technical problems earlier in the session.
 
Despite the overall index gains, there were more decliners (50) than advancers (43) while there were 58 unchanged stocks.
 
The index was supported by the gains of Philippine Long Distance Telephone Co., The Philippine Stock Exchange Inc., Metropolitan Bank and Trust Co., Ayala Land Inc., Energy Development Corp. and SM Investments Corp.
 
On the other hand, there was some profit-taking on Universal Robina Corp. and Globe Telecom Inc.
 
SINGAPORE
 
Singapore's STI gained 0.78% Friday.
 
Hopes over the number of visitors to Genting's Resorts World Sentosa casino in Singapore boosted interest in Genting shares.
 
Genting Singapore jumped 7.1% and its Malaysian parent, casino operator Genting, surged 6.4%.
 
INDONESIA
 
The Jakarta Composite Index posted a solid increase in light trade on Friday to record its biggest weekly gain since mid-January.
 
The JCI rose 13.13 points, or 0.5%, to close the week at 2,578.8. The benchmark gained 1.2% on the week, its biggest gain since the week ended Jan. 15.
 
However, volume was light on Friday, as it was most of the week, as investors remained reluctant to take big positions because of the possible political fallout of the Bank Century investigation.
 
Some 3.9 billion shares worth Rp 2.3 trillion ($248.4 million) changed hands. Gainers outnumbered decliners 97 to 54.
 
Meanwhile, the rupiah advanced on speculation the central bank would gradually raise interest rates this year as an economic recovery takes hold, spurring demand for higher-yielding local assets.
 
The Rupiah traded at 9,235 against the Dollar as of the stock market's close on Friday, compared with 9,275 on Thursday. 
 
MALAYSIA
 
Share prices on Bursa Malaysia closed sharply higher on Friday with the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index surging 15.69 points to 1,299.78, the highest level since Jan 25.
 
Gains in banking stocks, lead by Maybank propelled the market indices.
 
This follows Friday's announcement of an increase in the overnight policy rate (OPR) to 2.25% which was within expectation against the backdrop of an improving economy.
 
TA Securities Senior Technical Analyst Stephen Soo said banks were looking forward to better margins with the increased OPR.
 
Overnight gains on Wall Street, prompted by easing unemployment rates in the United States, also bolstered market sentiment in regional bourses.
 
The Finance Index surged 212.22 points to 11,537.66, the Industrial Index added 13.09 points to 2,604.03 and the Plantation Index gained 20.13 points to 6,396.06.
 
The FBM Emas Index jumped 95.891 points to 8,737.28, the FBM70 advanced 49.771 points to 8,549.37 and the FBM Ace Index increased 35.32 points to 4,299.04.
 
Gainers led losers 548 to 194 while 235 counters were unchanged, 358 untraded and 26 others were suspended.
 
Turnover was higher at 941.55 million shares worth RM1.56 billion from 726.72 million shares worth RM1.267 billion Friday.
 
Among heavyweights, Sime Darby gained two sen to RM8.55, Maybank surged 39 sen to RM7.40, CIMB Group Holdings rose 14 sen to RM13.72, Public Bank earned 10 sen to RM11.32 while Maxis declined one sen to RM5.42.
 
Among active stocks, Malaysian Resources Corp was unchanged at RM1.48, LCL Corporation rose 3.5 sen to 23 sen, D.B.E Gurney Resources increased 2.5 sen to 30.5 sen and SAAG Consolidated eased one sen to 12.5 sen.
 
Turnover on the Main Market increased to 823.326 million shares worth RM1.541 billion from 654.41 million shares worth RM1.256 billion.
 
The ACE Market volume increased to 61.418 million shares worth RM11.2 million from 44.055 million shares worth RM6.54 million.
 
Warrants increased to 48.792 million units worth RM7.876 million from 25.44 million units worth RM3.07 million.
 
Consumer products accounted for 42.8 million shares traded on the Main Market, industrial products 169.8 million, construction 69.8 million, trade and services 327.3 million, technology 29.3 million, infrastructure 11.2 million, finance 90.9 million, hotels 546,600, properties 61.1 million, plantations 18.8 million, mining 74,000, REITs 992,900 million and closed/fund 174,000.
 
THAILAND
 
In Bangkok, the SET index fell 0.94%, extending losses into a second day, on late selling in telecom shares amid continuing concern over possible changes to their operating concessions.
 
The country's top mobile phone operator, Advanced Info Service, slumped 5.5% and second-ranked Total Access Communication lost 2.9%.
 
The telecom stocks have been hit this week due to concern over the fallout from a court ruling against former Prime Minister Thaksin Shinawatra, who founded Shin Corp, which owns 43% of AIS.
 
Thailand gained 0.4% on the week but was Southeast Asia's worst performer. Political concern played a part, as anti-government supporters of Thaksin plan mass rallies later in the month, but so did the drop in telecom shares and the fact that some big stocks traded ex-dividend this week.
 
Despite the weak performance, foreign investors have poured a net $323 million into Thai equities in the week, becoming net buyers this year for the first time since 18 January.
 
INDIA
 
The key benchmark indices ended slightly higher in a volatile trading session as profit taking emerged in frontline stocks after strong intraday gains. The BSE 30-share Sensex was up 22.79 points or 0.13%, off 103.22 points from the day's high and up 58.37 points from the day's low.
 
The barometer index settled below the psychological 17,000 mark after alternatively moving above and below that level in intraday trade. Global cues were positive with European and Asian markets and US index futures trading firm.
 
The market breadth was strong. Realty shares extended Thursday's gains on follow-up buying. Banking and telecom stocks advanced on fresh buying. IT stocks were mixed. Metal stocks declined mirroring a fall in metal prices on the London Metal Exchange (LME) on Thursday. Index heavyweight Reliance Industries (RIL) also edged lower.
 
The market was volatile. The market opened on a firm note tracking gains in Asian stocks. It moved in a narrow range till mid-morning trade. The market cut gains in early afternoon trade after the government sought additional spending plan for the current year. The market slipped into the red later. The market regained strength in mid-afternoon trade as world stocks rose. The market pared gains in late trade.
 
India VIX, a volatility index based on the S&P CNX Nifty index option prices, shed 1.14% to 20.74. The index has witnessed a steep fall in the last few trading sessions after the government tabled the Union Budget for 2010-2011 in the parliament on Friday, 26 February 2010. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. Typically, volatility surges ahead of a major event such as the Budget. It falls after the event.
 
The government said on Friday it will seek parliamentary approval to spend an extra Rs 31780 crore for the fiscal year to end-March 2010, which it plans to fund through savings. There is no risk that the government will borrow more than planned to fund supplementary spending, Revenue Secretary Sunil Mitra said on Friday. Of the additional spending, Rs 12000 crore would be spent on oil subsidy, Rs 8000 crore on fertiliser subsidy and Rs 2459 crore on food subsidy, among others. The government also sought parliament's nod for Rs 13.67 lakh crore of debt repayment in 2009-10.
 
Prime Minister Manmohan Singh said on Friday the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009-10, he told parliament. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.
 
He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.
 
A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.
 
In global fund news, investors pulled money out of Chinese and European equity funds last week following policy risks and fears about Greece's debt problems, EPFR Global said on Friday. Emerging equity funds had a third straight week of inflows, with a relatively modest $240 million flowing into the funds. Year-to-date net inflows have grown to $2.2 billion. Asia ex-Japan, Latin America and EMEA Equity Funds had net inflows ranging from $42 million to $169 million.
 
China equity funds had $17 million moving out of the door, while BRIC equity funds enjoyed inflows. The year-to-date average weekly inflow into BRIC funds however is less than half of the $190 million averaged in the fourth quarter of 2009.
 
Banking shares led gains in European stocks on Friday. The key benchmark indices in UK, Germany and France were up by between 0.49% to 0.76%.
 
In meetings held on 4 March 2010, both Bank of England (BOE) and European Central Bank (ECB) left their key lending rates at record low levels amid sluggish and uncertain economic recovery. BOE maintained its key lending rate at 0.5% while ECB left its key lending rate unchanged at 1%.
 
Economic growth in the 16 countries that use the Euro slowed in the fourth quarter, revised official data showed on Thursday, 4 March 2010. Quarterly gross domestic product growth slowed to 0.1% in the final three months of last year from 0.4% in the three months to the end of September, the European Union's Eurostat statistics agency said. However, the yearly drop in GDP in the third quarter was revised to show a deeper decline of 4.1% from the previous reading of 4%.
 
AUSTRALIA
 
The Australian share market closed marginally in the black after gains in the resources and energy sectors, although investors were tentative ahead of US employment figures.
 
The benchmark S&P/ASX200 index was up 16.7 points, or 0.35%, at 4,767.2 points, while the broader All Ordinaries Index gained 15.8 points, or 0.33%, to 4,773.4 points.
 
On the Sydney Futures Exchange at 1631 AEDT, the March share price index contract was 27 points higher at 4,775 points, on volume of 20,351 contracts.
 
BHP Billiton was up 22 cents at $42.50 and Rio Tinto had added 61 cents to $75.01.
 
The spot price of gold in Sydney was $US1,134.00 per fine ounce at 1637 AEDT, down $US2.50 from Thursday's closing price of $US1,136.50.
 
Gold miner Lihir Gold said it had agreed to sell its Ballarat mine in Victoria to junior explorer Castlemaine Goldfields for $4.5 million cash and royalties capped at $50 million.
 
Lihir will place the poorly performing operation on care and maintenance.
 
Shares in Lihir were down three cents at $2.91, while Castlemaine shares were in a trading halt and last traded at four cents.
 
Gold miner Newcrest was up 47 cents, or 1.4%, at $33.97.
 
In other headlines on Friday, Fortescue Metals Group, Aquila Resources and a Chinese heavyweight have submitted their concept plan for a multi-billion-Dollar new port development in Western Australia.
 
Shares in Fortescue were down 10 cents to $4.78 and Aquila shares added 33 cents, or 3.23%, to $10.55.
 
Shares in plaintiff law firm Slater and Gordon were up four cents, or 2.5%, to $1.64 after it won an action against global pharmaceutical giant Merck & Co.
 
Among retail stocks, Coles owner Wesfarmers was down 24 cents to $32.71 and Woolworths put on 25 cents to $28.05.
 
In the energy sector, Woodside was 23 cents firmer at $44.52, Santos inched three cents higher to $13.43 and Oil Search gave up four cents to $5.24.
 
The top traded stock by volume was Anteo Diagnostics, with 449.88 million shares worth $31.28 million changing hands.
 
Anteo's stock was up 1.4 cents, or 27.45%, to 6.5 cents.
 
NEW ZEALAND
 
The New Zealand sharemarket rose for an eighth successive trading day to a six-week high but brokers described it as a quiet day.
 
The benchmark NZX-50 index closed up 1.086 points, or 0.034%, at 3214.643. Overall market turnover was worth $59.5 million. There were 41 rises and 31 falls among the 111 stocks traded.
 
Restaurant Brands fell 5c to 193 after saying fourth-quarter sales rose 5.3%.
 
Leaders were little changed with Fletcher Building down 2c at 810 and Contact Energy down 3c at 608.
 
Telecom eased a cent to 225 on a day in which former boss Theresa Gattung got good coverage from selective media interviews ahead of the release of her book.
 
SkyTV eased 4c to 508 as TVNZ said it would partner in a New Zealand content channel on the Sky pay television platform.
 
NZOG rose 2c to 157 and investors are keeping an eye on its Hoki-1 exploration well now that the Kan Tan IV drilling rig is on location in the offshore Taranaki basin.
 
Guinness Peat Group ended unchanged at 92 but the stock has had a good run this week.
 
Nuplex eased 3c to 333 and TrustPower eased 3c to 727. Air NZ eased 1c to 131 and NZX eased 6c to 196.
 
Pan Pacific Petroleum rose 4c to 35 and New Zealand Experience rose 1c to 29. Smartpay fell 0.2c to 4 and Allied Farmers fell 0.3c to 7.6. Wellington Drive Technologies fell 0.3c to 8.            
Global Commodities 
'Food for thought' or 'a Grain of truth' .....
 CommoditiesA groundbreaking deal for a 55% increase in coking coal prices, a key input in steelmaking, has been agreed between BHP Billiton, the world's largest miner, and JFE Steel of Japan. The contract, which will run only for the quarter between April and June, marks a break with decades of tradition under which contracts were agreed on an annual basis.
 
This new deal with see JFE pay $200 a tonne for coking coal instead of the $129 a tonne under its current annual contract which expires at the end of the month.
 
The sharp increase in coking coal along with rising iron ore costs is set to push up steel prices, possibly by around 30%, according to analysts.
 
Earlier this year, BHP Billiton said that it wanted to shift to quarterly contracts that track spot prices more accurately and away from the annual negotiations under which the first deal agreed between a miner and a steelmaker created a benchmark which was then followed by the industry that year.
 
Analysts said JFE's acceptance of a quarterly contract was likely to force others to follow. Miners and steelmakers, including ArcelorMittal, Baosteel of China, Nippon Steel and South Korea's Posco, have begun their frequently acrimonious discussions to settle prices for the 2010-11 contracts, due to start on April 1.
 
However, JFE said that it still wanted to negotiate an annual contract.
 
The deal for a 55% increase is the strongest sign of tightness in the coking coal market and bodes well for miners from BHP Billiton to Xstrata.
 
Spot coking coal prices have risen sharply to about $220-$240 a tonne after a drop in China's domestic production forced Chinese steelmakers to import.
 
China imported about 30m tonnes of coking coal last year, up from only one tonne in 2008. Beijing's shift to an importer follows a clampdown on illegal and unsafe mining operations.
 
Commodities in general finished Friday higher, regaining ground lost in Thursday trading, as both gold and oil finished higher.
 
Gold for April delivery added $2.10, or 0.2%, to close at $1,135.20 an ounce. Crude oil futures for April delivery also closed higher finishing up $1.39, or 1.73%, to $81.60.
 
Gold rose as the Dollar lost strength as Greece's parliament passed proposed austerity measures.
 
In other metals, March silver futures gained $0.20 to $17.38 an ounce. March copper rose $0.05 to $3.42 a Pound, retracing much of the gains that put it nearly 1.5% higher earlier. Platinum for April delivery slid $4.50 to $1,579.10 an ounce, while palladium for June delivery added $13.50 to $476.70 an ounce.
 
As for crude, futures surged to a 17-month higher after US employment declined less than forecast in February, boosting optimism that fuel demand will climb in the US
 
Earlier in the day, the Labor Department reported US nonfarm payrolls fell by 36,000 in February and the unemployment rate held at 9.7%. The employment report was better than expected, as economists surveyed by MarketWatch were forecasting a drop of 90,000. They expected the unemployment rate to rise to 9.8%.
 
The Organization of Petroleum Exporting Countries is scheduled to meet in Vienna on March 17. Saudi Arabia's King Abdullah has targeted $75 as a fair price for consumers and producers.
 
Heating oil futures were up 1.41%, or $2.91, to $209.78. Natural gas futures were also up 0.44%, or $0.02, to $4.59.
Global Currencies 
In for a Penny, in for a Pound .....
UK Markets
 Sterling tumbled to a 10-month low against the Dollar this week as concerns over the UK's record fiscal deficit escalated.
 
In a dramatic trading session on Monday the Pound plummeted nearly four cents against the Dollar, dropping through the $1.50 level for the first time since May as opinion polls pointed to the possibility of a hung parliament after the UK general election, expected in May.
 
Such a prospect drove negative sentiment towards the Pound as traders reasoned that an incoming government would lack the authority to make the tough decisions necessary to put the UK's finances back in order. Sterling's fall was given added impetus as Prudential, the UK insurer, announced a deal to buy the Asian unit of AIG, the beleaguered US insurer, for $35bn.
 
The Pound dived to a low of $1.4780 against the Dollar and hit a fourth-month trough of £0.9148 against the Euro.
 
The Pound did recover some poise later in the week, with astronger-than-expected survey of the UK services sector helping to allay fears over the potential for a double-dip recession in the UK.
 
Over the week, the Pound fell 1.3% to $1.5049 against the Dollar, lost 0.5% to Y136.16 against the Yen and slid 1.1% to £0.9035 against the Euro.
 
Meanwhile, the Euro lost ground against the Dollar, hitting a fresh nine-month low, despite the announcement by the Greek government of new austerity measures to rein in its fiscal deficit which enabled it to issue a €5bn bond to shore up its finances.
 
But the Euro was undermined after Angela Merkel, the German chancellor, dashed hopes of an imminent bail-out for Greece and Jean-Claude Trichet, president of the European Central Bank, said in the press conference following the central bank's policy meeting that the Eurozone's recovery remained "fragile". Over the week the Euro fell 0.2% to $1.3597 against the Dollar.
 
But the Euro rose 1.7% to Y123.15 against the Yen as the Japanese government stepped up the pressure on the Bank of Japan to loosen monetary policy. The Yen also lost ground as theJapanese government said it was raising its borrowing limit for foreign exchange intervention for the first time in six years, sparking speculation that it was gearing up to step in and stem the recent rise in the Yen.
 
Furthermore, Friday's stronger-than-expected US jobs report also weighed on haven demand for the Yen.
 
The Yen fell 1.9% to Y90.40 against the Dollar on the week.
 
Elsewhere, the Australian Dollar rose 1.6% to $0.9088 against the US Dollar on the week after the the Reserve Bank of Australia raised interest ratesby 25 basis points to 4% after its policy meeting.
 
The South African Rand extended its biggest its biggest weekly rally in almost four months after a report showed the central bank hasn't been buying foreign reserves to weaken the currency, easing concern of intervention to stem rand gains.
 
The currency appreciated as much as 0.5% to 7.4410 per Dollar, the strongest level since Feb. 3. The Rand traded 0.3% stronger at 7.4560 by 4:16 p.m. in Johannesburg, from a close of 7.4763 Thursday, extending its weekly gain to 3.5%, the biggest since the five days ended 6 November.
 
And finally on currencies, here in China the RMB was steady against the US Dollar Friday after Chinese Premier Wen Jiabao's remarks on the country's exchange-rate policy suggested Beijing will likely keep its currency stable in the near term.
 
On the over-the-counter market, the Dollar was at CNY6.8265 at 0930 GMT, almost unchanged from CNY6.8264 late Thursday. It traded in a narrow range of CNY6.8263 to CNY6.8269. Offshore, one-year Dollar-RMB nondeliverable forwards were at 6.6500/6.6550, down from 6.6550/6.6600 late Thursday.  
China 
Key news eminating from China this week .....
 China MarketsThis time last year, when the global economy seemed to be in freefall, Wen Jiabao, the Chinese premier, described 2009 as the most "difficult" year China had faced in a decade. This year he says the conditions are the most "complicated".
 
Near the top of Mr Wen's list of challenges is how to exit from the massive monetary stimulus that China engineered last year, which saw credit expand 30% while the economy grew 7% in nominal terms. Mr Wen needs to move soon to prevent inflation from taking off but not so hastily that the economy slumps again.
 
The situation is complicated for Chinese policymakers by record levels of bank deposits. For the past few weeks, global markets have focused intently on the amount of new credit that Chinese banks are issuing, looking for signals on potential tightening.
 
Yet looking at it, high bank deposits are just as important because they could indicate that the authorities have less control over monetary policy than many investors think. It is an issue that has attracted the attention of China's State Council.
 
The Chinese economy depends not so much on credit but on deposits and where they are located in the economy; household and corporate deposits in the banking system are now equivalent to a record 150% of gross domestic product.
 
China's central bank has more tools than most other countries to manage credit levels in the economy, including the ability to decide lending quotas for commercial banks, which it has set at Rmb7,500bn ($1,098bn, €811bn, £735bn) this year, down from Rmb9,600bn in 2009. But the impact that bank deposits have on the economy depends less on the government than on the decisions of millions of households and companies.
 
On the corporate side, the concern is that Chinese companies are sitting on huge volumes of unused loans. Ha Jiming, an economist at China International Capital Corporation, has analysed the figures that the central bank releases for long-term corporate loans and the figures from the National Bureau of Statistics for loans for fixed-asset investment in the current year. In most years there is a modest gap between the two but last year the gap was Rmb1,200bn by the end of the year. That gap, he says, is money companies have borrowed but not yet used.
 
The dilemma for the authorities is that if they started to scale back lending because of inflation worries, the corporate sector could still be able to invest heavily because of all the unused loans. "The big risk is that infrastructure spending could actually be stronger this year even if credit growth slows," says Mr Cavey. However, Mr Ha adds that the volume of unused loans at the end of last year was down from a previous high of Rmb1,600bn, so this danger for policymakers could be diminishing.
 
With household deposits, the risk to monetary policy lies in consumer expectations of inflation. Chinese consumers hold a large part of their savings in bank accounts, in part because there are few other options. But when they start to fear inflation, which will reduce their returns to negative rates, they have in the past shifted funds into equities or property, sending asset prices much higher.
 
As a result, asset market bubbles can occur even when the central bank is slowing the amount of new credit in the economy. Rising property prices also encourage more new investment, even if the official stance is to slow lending.
 
So far, however, this risk has not materialised. Although consumer prices have risen since November and some economists are warning of a spike in inflation this year, the housing market appears to have slowed and the stock market has been stable.
 
There are no signs yet of a flood of household deposits out of the banking sector into other markets.
 
Yet Mr Wen will be watching household deposits closely. If it becomes clear that inflationary expectations are starting to take root, prompting depositors to propel stock and property prices much higher, the Chinese authorities will need to take decisive action to nip the process in the bud.
 
That would mean some combination of higher interest rates, increased reserve requirements for banks, a significantly lower quota for lending and currency appreciation. A "complicated" prospect, indeed.
 
**************************************
 
China's manufacturing activity grew less than expected in February, data released on Monday showed, as the government reined in spending while purchasing managers became more cautious in the face of rising wages.
 
But economists said that while China's recovery faced some uncertainties, industrial activity would continue to grow in the coming months.
 
China's official purchasing managers' index fell from 55.8 in January to 52.0 last month, according to the China Federation of Logistics and Purchasing. Economists polled by Reuters had expected PMI to be 55.45. A reading of more than 50 indicates expansion.
 
The HSBC China PMI, compiled by Markit Economics, dropped to a three-month low of 55.8 in February, down from a record 57.4 a month earlier.
 
Chinese authorities have been forced to take measures to rein in credit growth after both lending and property prices surged.
 
Exports, meanwhile, rose 20% year on year in January, primarily thanks to robust demand in developing economies. But some factories are finding it difficult to hire enough workers to service the orders because of acute labour shortages.
 
"Despite the moderation in the headline China manufacturing PMI, growth momentum for China's manufacturing sector remains strong, pointing to a further acceleration in industrial activities in the coming quarters," said Qu Hongbin, chief China economist at HSBC.
 
A breakdown of the official PMI data showed that new orders fell 6.2 percentage points to 53.7 while new export orders fell 2.9 percentage points to 50.3.
 
Zhang Liqun, a government economist, said the outlook for exports would remain cautious, adding that the decline in new export orders warranted close attention.
 
"China's economy is moving from a government-led growth to an independent, sustainable development. There are still uncertain factors," said Mr Zhang.
 
Elsewhere in the region, India's HSBC PMI index for February showed the country's manufacturing sector growing at its fastest pace in 20 months, thanks to new orders. The index rose to 58.5 in February from 57.7 in January.
 
Robert Prior-Wandsforde, senior Asian economist with HSBC, said the data made a strong case for unwinding monetary stimulus in India.
 
"There is more and more evidence of emerging supply-side constraints in labour and product markets. The breakdown of the PMI, for example, indicates that the balance of companies are now hiring again and at a historically robust rate," he said.
 
In the 2010-11 federal budget released on Friday, the government left fiscal stimulus measures firmly in place to propel Asia's third-largest economy towards 10% economic growth.
 
Inflation is now the main issue that India's policymakers need to address, as pressure on prices is increasing. With the government in no hurry to roll back stimulus, the Reserve Bank of India is likely to accelerate its tightening of monetary policy in the coming months. Forecasts range from policy rates increasing from between 150 and 300 basis points this calendar year.
 
Also on Monday, data from South Korea showed that manufacturing activity expanded by the fastest pace in more than two years in February. The HSBC Korea PMI data rose from 55.6 in January to 58.2 last month - the highest since December 2007.
 
South Korea's exports in February rose 31% year on year, according to data released on Monday, better than a Reuters forecast of 22.7%.
 
"South Korea's economy looks set for another quarter of strong sequential growth, with output continuing to accelerate from already very robust levels. Strong gains in new orders, rising backlogs of unfulfilled orders, and rising employment suggest that the current pace of growth will be sustained for the next several months," said Frederic Neumann, senior Asian economist at HSBC.
 
In Taiwan, the HSMC PMI data rose from 61.7 in January to 62.5 in February.
 
**************************************
 
One of China's premier investment zones is expected soon to replicate its successful development model near the southern approaches to the Suez canal, according to Egypt's investment minister.
 
 Egyptian government is negotiating with the Tianjin Economic-Technological Development Area, which it is courting to help build the Suez Economic Zone. Under Egyptian law, TEDA could take up to a 49% stake in the $1.5bn (€1.1bn, £1bn) project.
 
"SEZone is going to be the first of its kind linked to a big investor," Mahmoud Mohieldin told the Financial Times in an interview. "The final negotiations will hopefully be taking place very soon."
 
The attraction for the Chinese is partly the large number of preferential trade agreements that Egypt has with Europe, Africa and the Middle East.
 
The extractive nature of Chinese state companies' involvement in sub-Saharan Africa and the Middle East, where they seek natural resources in return for infrastructure investments, has courted controversy. Critics fear that China is more concerned with fuelling its own fast-growing economy than fostering development in the region.
 
Chinese companies have also proven adept at seizing market share for everything from cheap consumer goods to telecom equipment in Africa.
 
But SEZone's manufacturing focus would make TEDA's investment much less controversial. The zone's success back in its home city of Tianjin makes it a natural partner as Egypt seeks to position itself as an export gateway to both Europe and Asia.
 
"We are not rich in natural resources - they are not after our oil or natural gas," Dr Mohieldin said on the sidelines of an investment conference in Hong Kong. "Manufacturing is an easier sell because every country likes to see more factories and more workers."
 
While foreign direct investment into Egypt fell 40% last year to $8.1bn, China continued to pour money into the north African country, becoming its largest investor for the first time.
 
Situated to the east of Beijing on the Bohai Bay, TEDA has secured major investments from multinationals such as Akzo Nobel, IBM and Toyota. Dr Mohieldin is optimistic that SEZone will attract up to $3.5bn in investment over its first three years of operation, with TEDA expected to establish its first China marketing office for the new Egyptian zone by June.
 
"We want [the Chinese] to create jobs for Egyptians," said Tarek Kamel, minister for communications and information technology. "They can use the growth of the market and enjoy the growth but also help us with our social-economic development."
 
The investment minister credited SEZone's genesis to a China visit by Egypt's president, Hosni Mubarak, in the late 1990s. It took the Egyptian government three years to draft the legal framework for the zone and another two to acquire its initial six sq km of land from previous owners. An international tender for a zone development partner was issued in late 2007.
 
SEZone is intended as the first in a series of state-led development zones targeting manufacturing investment. Egypt is in discussions with Singapore, which has built large-scale development zones in China and India, about a similar project on its Mediterranean coast near Alexandria.
 
An Egyptian government delegation is also scheduled to visit India on March 15. There they will pitch a project linking three cities on the Nile to the Red Sea via a 412km expressway. "We are unleashing our potential through competition," Dr Mohieldin said.
 
**************************************
 
Imagine a nation where husbands are required to pay their wives to be homemakers, internet cafés are banned and all problems are solved using a magical political formula known as "scientific development theory".
 
These were just some of the ideas on show on Wednesday when China kicked off its annual political pageant in Beijing, the Chinese People's Political Consultative Conference.
 
The political advisory body has no power but that does not stop its handpicked members - film stars, ethnic minorities in national dress, sports stars, billionaire entreprenEurs and other "representatives of the masses" - parading their ideas about how the country should be run. It comes before the annual meeting of the National People's Congress, the Chinese legislature, which starts on Friday.
 
The conference, held at the Great Hall of the People in the centre of Beijing, ostensibly provides a platform for members of China's United Front Democratic Parties but in truth is an elaborate political show staged to give the impression that the ruling Communist party is a consultative, democratic body.
 
China has eight democratic parties but their leadership, operations and funding are all provided by the Communist party.
 
"The CPPCC has always walked in step with the People's Republic, advanced bravely together with the people of the whole country, and followed an extraordinary, glorious course," said Jia Qinglin, the Poliburo member who chairs the CPPCC.
 
The policy ideas uncovered in a random sampling of delegates in the Great Hall of the People by the Financial Times on Wednesday were all in line with current government policy or were so vague as to be meaningless.
 
Among the proposals this year was one from delegate Zhang Xiaomei, editor of the China Beauty Fashion newspaper, who proposed legislation to force husbands to compensate their wives for doing housework.
 
One delegate suggested banning internet cafés because of their bad influence on the nation's youth, while another wanted to outlaw sales of dog or cat meat.
 
Liu Xiang, the 2004 Olympic gold medallist hurdler and CPPCC delegate, suggested that top athletic coaches should get better training and more pay.
 
But Mr Liu, 26, admitted that he had been too busy training to write the proposal himself, adding that a self-penned suggestion would have focused more on the welfare of athletes.
 
Mr Liu emerged from the Great Hall of the People in the centre of Beijing after Wednesday's ceremony, and dashed across Tiananmen Square to avoid the scrum of reporters chasing him.
 
The annual gathering is regarded with scorn by many Chinese who see the exercise as a networking event for wealthy, famous and politically connected people. Even some of the CPPCC delegates, and state-controlled media, have complained that the conference has become a club for celebrities where delegates network, carouse and get free publicity from the thousands of journalists who attend.
 
Many delegates' suggestions are often viewed as frivolous or mere echoes of Communist party policies.
 
All delegates received a Lenovo laptop on their arrival in Beijing for the meeting this year. In contrast to previous meetings when they were supposed to return the computers, Ms Zhang said on her Chinese microblog that they would be able to keep them.
 
One slick delegate approached an FT reporter about his proposal to use Chinese President Hu Jintao's theory of "scientific development" to solve most of the problems facing the nation.
 
But not all of the 2,374 delegates take their political responsibilities so seriously.
 
"I didn't feel very well this year," said one dejected delegate, rubbing his stomach, "so I didn't make any suggestions."   
Summary  
The coming week looks like .....
Commodities Indices
 Next week is shaping up to be a busy one for market debuts with four companies planning IPOs - a sign that the battered sector is again picking up steam. Still, the deals are generating little buzz and the companies may have to cut the amounts they hope to raise.
 
The more than $600 million that Texas Instruments spin-off Sensata Technologies is looking to raise would make it the largest initial public offering so far this year. But analysts who follow the IPO market say that its heavy debt load of more than $2 billion and erratic sales may lead the maker of sensors for everything from automobiles and airplanes to refrigerators, to slash its price dramatically.
 
The company, based in the Netherlands, plans to sell 31.6 million shares between $18 and $20 apiece and trade under the symbol "ST."
 
Investors have become weary of companies with weak balance sheets, private equity firms looking to cash in and deals designed to pay down debt.
 
So far this year, companies that have made it to market have largely had to accept lower prices for their shares due to a volatile stock market and concerns about the economic recovery. Others have postponed or canceled their IPOs altogether.
 
Next week may be no exception.
 
Biotechnology company Aveo Pharmaceuticals plans to raise $98 million, selling 7 million shares at $13 to $15 each. The company, which is focused on developing cancer therapies, will likely meet the same fate as Anthera Pharmaceuticals. It had to slash its price when it went public last week and raised less than 60% of what it had hoped.
 
Meanwhile, two bulk shippers incorporated in the Marshall Islands - Baltic Trading and Crude Carriers Corporation - are competing against one another for investor interest.
 
Neither company currently has ships; both plan to use the proceeds of the IPO to purchase vessels. Go figure that one if you will!
 
It's a quieter week next week on the US economic front.
 
The US monthly trade deficit generally has been increasing since the middle of last year as the economy recovers, but little change is expected for January from the month before. The government report is due Thursday.
 
A day later, the government will detail February retail sales and January business inventories, while the Reuters/University of Michigan issues its preliminary reading for the March consumer sentiment index.
 
Of more interest in the US will be the latest round of Treasury bond issuance. This time another US$74bn of three-, ten-, and thirty-year bonds are up for grabs for those who still think the US deficit is a great long term investment.
 
While shorter term Treasury debt is still well bid as a safe haven, the risk of inflation is beginning to weigh on longer dated demand.
 
Foreign central bank interest has been falling alarmingly of late.
 
Its a busier week in Australia with Thursday's release of unemployment numbers the highlight.
 
Bank economists will be busy with the release of ANZ's job ad numbers and NAB's business sentiment index on Tuesday, and Westpac's consumer confidence numbers on Wednesday.
 
January home loan numbers will also be of interest to the RBA.
 
It's time for some more monthly Chinese economic data next week, with Thursday down for the release of inflation, sales, investment and industrial production numbers.
 
The releases will be closely watched given recent moves by Chinese authorities to slow economic growth ahead of inflation fears.
 
The Reserve Bank of New Zealand will make a rate decision on Thursday.
 
Next week's Japanese economic calendar includes the March 8th release of January current account expected at ¥0.84trln compared to ¥0.90trln last month. February money supply will also be released on March 8th expected unchanged at 0.2%.
 
On Tuesday January leading indicators will be released expected at 3.7% compared to 3.6% last month. On Wednesday February CGPI will be released expected to rise by 0.1% compared to 0.3% last month. January machinery orders will be released expected at -5.2% compared to 20.1% last month along with Q4 preliminary GDP expected at 1.1%.
 
Finally in Japan on Friday, January revised industrial output will be released expected at 2.5% compared to 1.9% last month. 
 
Next week's EU economic calendar includes the Monday release of the March EU Sentix index along with German industrial production. The Sentix index is expected at -7.8 compared to -8.2 last month. January industrial production is expected at -2.8% compared to -2.6% last month.
 
On Wednesday EU CPI and current account balance will be released. On Friday EU January industrial production will be released expected at -1.5% compared to -1.7% last month.
 
In the UK we see the Tuesday release of the January trade balance expected at -7.4bln compared to -7.2bln last month along with February retail sales expected at -0.5% compared to -1.8% last month.
 
Wednesday sees January industrial production released and NIESR GDP estimate. The January industrial production is expected at 0.3% compared 0.5% last month. NIESR GDP estimate is expected at 0.3%.
 
All told, there is a global swathe of data to be released next week but as mentioned at the outset, I think eyes will be on China and either over this weekend or early next week, I would expect to see some 'surprise' announcements coming out of the People's Party Congress in Beijing.
 
'Watch this space' as they say ......    
As always, I will keep you posted with major developments as/when they occur in the week ahead.
 
In the meantime, I wish you all a very pleasant weekend.
 
Market Newsletter Written By 


Adrian Page

Managing Director
Financial Page International
 
In This Issue
US Markets
European Markets
The UK Market
Asia Pacific Markets
Global Commodities
Global Currencies
China This Week
Summary
Quick Links
Services
Our Services 
Personal Banking
Useful Tools