Greece licks wounds after bailout vote, ECB move expected

ATHENS - Greece awoke with a political hangover on Thursday after parliament approved a stringent bailout program, thanks to the votes of the pro-European opposition, amid the worst protest violence this year.

The vote, vital to unlocking emergency financing from European partners as early as Thursday, left Prime Minister Alexis Tsipras weakened by a revolt in his leftist Syriza party but clinging to power for now.

The European Central Bank's governing council, meeting in Frankfurt, was expected to ease its funding squeeze on shuttered Greek banks, the first step toward permitting them to reopen after nearly three weeks' closure while cash rationing and other capital restrictions will remain in place.

European finance ministers were to hold a conference call on Thursday morning to agree on a plan for 7 billion euros in bridging funds to enable Greece to meet its immediate debt service needs and avoid defaulting on the ECB next Monday.

All 28 EU countries are expected to contribute, despite the reluctance of non-euro members such as Britain and the Czech Republic, after a compromise was found to use euro zone funds to guarantee their ring-fenced contributions.

Tsipras won 229 out of the 300 parliamentary votes in favor of the agreement he struck on Monday with euro zone partners on austerity measures and liberal economic reforms tougher than those rejected by voters in a July 5 referendum.

Some of the key measures, including an increase in value added tax, take effect immediately, although it will only be extended to hotels in October, after the tourist season.

But 32 out of his radical left Syriza's 149 lawmakers voted against the plan, six effectively abstained and one was absent, leaving the government without a majority of its own supporters.

"Tsipras continues wounded, until further notice," the front page of left-leaning Efimerida Ton Syntakton said. "Governments fall when they lose the support of the people, he says."

Among the dissenters were four members of the government, one of whom resigned, the speaker of parliament, and outspoken ex-finance minister Yanis Varoufakis, who compared the Brussels deal to the 1919 Versailles Treaty that imposed unpayable reparations on a defeated Germany after World War One.

'FORCED TO ACCEPT'

Tsipras told lawmakers he had accepted a package he did not believe in and which would harm Greece, but the only alternative was a disorderly bankruptcy that would be more catastrophic.

"I acknowledge the fiscal measures are harsh, that they won't benefit the Greek economy, but I'm forced to accept them," he said before the vote in the early hours of Thursday.

He is expected to reshuffle his cabinet to remove dissident leftists but he has ruled out early elections and said this week the captain does not leave the ship in a storm.

German Finance Minister Wolfgang Schaeuble, one of the toughest critics of Greece in the euro zone, said on German radio he still believed Athens would do better to leave the currency area temporarily to receive a debt writedown.

But Schaeuble said he would vote in favor of opening talks on a third bailout loan for Greece "with full conviction" when the German Bundestag debates the plan on Friday.

"We are a step further," Schaeuble told Deutschlandfunk radio after the Greek parliament voted to approve the entire package demanded by European partners. "This is an important step."

He said it would be hard to make Greece's debts sustainable without a "haircut" or writedown on the principal by European lenders, which Berlin says would be illegal under EU treaties.

The International Monetary Fund highlighted the issue in a stark report released this week, saying the only alternatives to "deep upfront haircuts" would be for European lenders to grant Athens a 30-year debt service holiday on present and future loans or make large annual fiscal transfers to the Greek budget.

All those options are deeply unpalatable to German and other euro zone creditor governments that do not want to tell their taxpayers that the money lent to Greece is not coming back.

Klaus Regling, head of the euro zone's bailout fund, said he expects it to contribute 50 billion euros to the third bailout of up to 86 billion euros.

"If everything should fail, then the Greek banking system will collapse," Klaus Regling, head of the European Stability Mechanism, told German broadcaster ARD.

The rest would come from 16 billion euros in remaining undisbursed IMF funds, once Athens has cleared arrears to the global lender, as well as privatization receipts and possible limited borrowing on the market near the end of the three-year program.

In Athens, cleaners removed overnight the debris of a pitched battle on the central Syntagma Square outside parliament between black-masked anti-bailout militants and riot police.

Protesters threw dozens of petrol bombs and hurled stones at the police, who responded with clouds of tear gas.

Tsipras won the vote thanks to the support of the center-right New Democracy, center-left Pasok and centrist To Potami opposition parties.

"The responsible opposition assumed the burden to rescue the country as did the prime minister, even though it was at the last minute," the conservative daily Kathimerini said in an editorial. "He deserves credit for this, but he lost the support of a large part of his party's lawmakers."

"He now has the big responsibility to ensure the country will have a government that keeps its pledges to creditors and implements them. Otherwise, his bold step will stall and with it the country’s European prospects," the paper said.

source: www.abs-cbnnews.com

Euro dips, markets mostly up as Greece talks drag on

HONG KONG, China - The euro edged down Monday but stock markets mostly rose as European leaders presented Greece with a painful set of demands to secure a debt bailout or face a eurozone exit.

Traders also took some support from figures showing a pick-up in Chinese exports that tempered worries about the country's economy and provided some stability to Shanghai stocks after weeks of fierce volatility.

During the high-stakes summit talks, Germany and other eurozone leaders handed Greece a brutal ultimatum for desperately needed bailout cash Sunday, with Chancellor Angela Merkel pushing for a temporary euro exit -- or "time out" -- if it does not agree.

However, there was still no agreement early Monday morning despite more than 10 hours of talks, with Greece's economy and banking system at risk of imminent collapse.

Athens said the plans were "very bad", but with its lenders on the brink it looked to have little choice but to bow to reform demands that effectively rob it of control of much its finances.

In Japanese trade the euro dipped but managed to stave off heavy losses as the talks continued in Brussels.

It eased to $1.1125 from $1.1149 in New York late Friday. In earlier electronic trading, the single currency fell as low as $1.1089. It was also at 136.40 yen compared with 136.58 yen in US trade.

"Market reaction in the euro is surprisingly muted," said Steven Englander, global head of Group-of-10 currency strategy at Citigroup.

"The absence of agreement and toughness of terms are eye-catching, but investors are waiting for the outcome more than trying to anticipate it."

On share markets Tokyo was up 1.21 percent, Seoul added 0.52 percent and Sydney gained 0.41 percent.

China trade boost

Shanghai rose 0.52 percent, extending a rebound at the end of last week that came after weeks of extreme volatility, with investors settled by government moves last week to prevent a market crash.

But Hong Kong lost 0.50 percent after climbing almost six percent over Thursday and Friday.

While Greece's future in the eurozone hangs in the balance, attention is also on China, which releases its crucial trade statistics later in the day.

China's stock market rose in the previous two sessions but dealers remain nervous after a month of massive selling that has seen the Shanghai Composite index fall about 30 percent, wiping trillions of dollars off valuations.

Investors welcomed an upbeat trade report that showed exports increased more than expected in June.

"Imports improved significantly in June because of lower import duties," said Liu Xuezhi, an economist with Bank of Communications Co. in Shanghai, told Bloomberg News. "Exports are expected to maintain modest growth in coming months to help the economy."

But Sam Tuck, a senior currency strategist in Auckland at ANZ Bank New Zealand Ltd., added: "We've got a watching brief on China. It's positive that the authorities didn't feel the need to do anything over the weekend but markets are still clearly nervous and we need to see most of the stock market open.

"There's still lots of halts."

The sell-off spread to other regional markets on fears for the world's number two economy and key driver of global growth.

On oil markets, US benchmark West Texas Intermediate for delivery in August fell 80 cents to $51.94 and Brent dropped 87 cents to $57.86.

Gold fetched $1,162.32 compared with $1,163.50 late Friday.

source: www.abs-cbnnews.com

Asian shares edge up, euro gains after new Greek proposals

TOKYO - Asian shares and the euro gained in early Asian trade on Friday after Greece offered new reform proposals to creditors, raising hopes of a cash-for-reform deal at a weekend summit of European leaders.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, but still on track for a weekly loss over 4 percent in a period marred by a savage correction in Chinese stock markets.

U.S. stock futures also rose, with S&P 500 mini futures ESc1 jumping as high as 2061.75, up 1.0 percent from late U.S. levels. They were last up 0.7 percent.

But Japan's Nikkei stock index dropped 0.3 percent, headed for a weekly loss of over 3 percent.

The euro extended gains, adding 0.4 percent to $1.1072, while the dollar gained 0.3 percent against the safe-haven yen to 121.71 yen.

The euro surged 0.7 percent to 134.81 yen, recovering from a six-week low of 133.30 yen plumbed on Wednesday.

New measures Greece offered included a tax hike on shipping companies and scrapping tax breaks for its islands, higher value added tax for restaurants and a firm timetable for privatizations.

The Greek government will ask for parliament's approval on Friday to negotiate on the text of "prior actions" that could form the basis of a cash-for-reforms deal with creditors, a government source said.

Germany, Athens biggest creditor, also made a small concession on Thursday by acknowledging that Greece will need some debt restructuring as part of the new program to make its public finances viable in the medium-term.

Hopes on a deal for Greece is likely to support Asian shares, though volatility in Chinese shares will likely need to ease off further before many investors step up buying.

"U.S. futures are higher, but we are waiting to see if stocks in Shanghai continue to recover, and if the VIX comes off its highs, before we can say that risk sentiment has improved, even as the Greek news has raised hopes," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

Beijing's increasingly frantic attempts to stem a stock market rout were finally rewarded on Thursday as Chinese shares bounced around 6 percent.

But investors are not sure if the worst is over in the short term, and the costs of heavy-handed state intervention in the stock market are likely to weigh on the market for a long time.

In commodities trading, crude oil futures were steady but remained on track for steep weekly losses. U.S. crude was trading up 0.2 percent at $52.89 per barrel, more than 7 percent below last Friday's close. Brent crude was slightly higher on the day at $58.63 a barrel, but still more than 2 percent down for the week.

source: www.abs-cbnnews.com

Lagarde: A new Greece program needs debt restructure

WASHINGTON. United States - International Monetary Fund Managing Director Christine Lagarde said Wednesday that a new program to prop up Greece's finances would require creditors to restructure debt.

In addition to the reforms Athens needs to undertake, she said, "the other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability."

"Greece is in a situation of acute crisis which needs to be addressed," she told a conference in Washington.

Despite the fact that Greece defaulted on its debt to the IMF on June 30, Lagarde assured that the institution "remains fully engaged in order to help find a solution."

In a report last week the IMF said Greece's official EU creditors should double the payback period for Greece's debts and stump up another 36 billion euros ($40 billion) to ensure the country's finances remain sustainable.

But the European Commission and the European Central Bank are pressing the country hard to accept a package of austere fiscal and policy adjustments that Athens has so far refused to accept.

Lagarde said the numbers themselves "will have to be revisited," but added that Greece, which no longer has access to IMF resources since its default, should not benefit from any special treatment.

"It is certainly my view that the IMF has to follow its rules, should not bend its rules and should be always even-handed."

She justified the Fund's continued participation in new aid talks for Greece even if Athens has been a severe critic of the institution.

"I have heard talk here and there in France saying, 'but what is the IMF doing in this situation? It should be handled by the Europeans,'" she told reporters.

"At the time when I was (France's) finance minister I also supported this viewpoint."

But, she said, the IMF is involved "because the IMF was asked by Greece to be involved."

source: www.abs-cbnnews.com

Greece faces last chance to stay in euro as cash runs out

BRUSSELS/ATHENS - Greek Prime Minister Alexis Tsipras is expected to present new proposals to an emergency euro zone summit on Tuesday, under pressure from European leaders to come up with credible ideas as his country's banks face potential meltdown.

With Greek lenders down to their last few days of cash and the European Central Bank tightening the noose on their funding, Tsipras must persuade the bloc's other 18 leaders, many of whom are exasperated with five years of crisis, to open negotiations fast on a new loan to rescue Greece.

The leaders of Germany and France, the currency area's two main powers, said after conferring on Monday that the door was still open to a deal to save Greece from plunging into economic turmoil and ditching the euro.

But Chancellor Angela Merkel, under pressure in Germany to cut Greece loose, made clear it was up to Tsipras to come up with convincing proposals after Athens spurned the tax rises, spending cuts and pension and labor reforms that were on the table before its 240 billion euro bailout expired last week.

European Commission President Jean-Claude Juncker, under suspicion from both sides for trying to broker a last-minute deal, told the European Parliament: "There are some in the European Union who openly or secretly are working to exclude Greece from the euro zone."

He did not name names but may have been referring to German Finance Minister Wolfgang Schaeuble, who has made no secret of his scepticism about Greece's fitness to stay in the euro.

From the Greek side, the key to making any deal politically acceptable will be to win a stronger commitment from Merkel and other lenders to reschedule Greece's giant debt burden, which the International Monetary Fund says is unsustainable.

Without some firmer pledge of debt relief, neither Greece nor the IMF is likely to accept a deal. But that may be more than Germany and its northern allies can swallow.

"The door is open to negotiations, but there isn't much time left and the situation is urgent both for Greece and for Europe," French President Francois Hollande said in a joint media appearance with Merkel in Paris.

At stake at the emergency summit beginning at 6 p.m. (2.00 p.m. EDT) in Brussels is more than just the future of Greece, a nation of 11 million that makes up just 2 percent of the euro zone's economic output and population.

If Greek banks run out of money and the country has to print its own currency, it could mean a state leaving the euro for the first time since it was launched in 1999, creating a precedent and fuelling doubts about the long-term viability of an incomplete European monetary union.

"Even if it did not trigger a short-term domino effect, the integrity of the euro zone would come under fresh threat with each episode of political uncertainty within member countries," said Thibault Mercier, an analyst at BNP Paribas.

CONCESSIONS UNCLEAR
Strengthened by the overwhelming 61.3 percent 'No' vote in Sunday's referendum, the leftist Tsipras won the unprecedented support of all other Greek party leaders on Monday and replaced his abrasive Finance Minister Yanis Varoufakis with the soft-spoken negotiator Euclid Tsakalotos.

"They (creditors) wanted a 'Yes' to prevail so they could humiliate the Greek prime minister, to go weakened, under these conditions of funding asphyxiation, and be a pushover. That didn't happen," Labour Minister Panos Skourletis told Antenna TV.

In an intensive round of telephone diplomacy, Tsipras spoke to the heads of the ECB, the IMF and the European Commission, as well as Merkel, Russian President Vladimir Putin and U.S. Treasury Secretary Jack Lew.

But he gave little clue of what reform concessions he would make to try to convince deeply sceptical European leaders to lend Athens more money after five months of acrimonious and fruitless negotiations with his leftist administration.

His proposals were not expected to go much beyond a letter he sent to euro zone partners last week, accepting most of the terms of a creditors' offer that was no longer on the table, but still seeking some loopholes for social or coalition reasons.

The United States, China and Japan all called for a solution in which Greece stays in the euro zone.

Juncker told EU lawmakers in Strasbourg he was working night and day to get negotiations reopened but he chided the Greeks for their confrontational approach, saying it was unacceptable to accuse the EU of behaving like "terrorists", as Varoufakis did last week.

"Throwing Greece out of the monetary union or indeed the European Union is not something we want or indeed should want," said the EU's chief executive, who was heckled by leftists and Eurosceptics when he said Greeks hadn't been properly informed about what they were voting on.

European Central Bank policymaker Ewald Nowotny suggested the bank might be able to provide some sort of bridge funding while Greece negotiated a longer-term conditional loan to see it over a crucial July 20 bond redemption to the ECB.

Greek newspapers dramatized the make-or-break nature of the Brussels showdown.

Centrist daily Ethnos headlined: "Time has run out for a solution before catastrophe," while the center-right Eleftheros Typos said: "Tsipras’ games finish at today's council: Time of crisis: deal or Grexit."

Greek newspapers said the proposals would be based on ideas that Juncker put forward at the end of June with a few tweaks and would not differ much from the last plans presented by Athens itself last week.

Euro zone national officials were irritated that Juncker had gone beyond the agreed negotiating mandate of the three creditor institutions in his last-ditch diplomacy, and it is not clear that they will be more receptive to his ideas now.

A clear majority of Greece's 18 partners favor a hard line at the summit, arguing that they too are democracies and that Greeks should not get easier money because they had rejected the austerity terms, casting further doubt on whether they would implement any reforms agreed now.

The ECB left unchanged its emergency liquidity lifeline for Greek banks but raised the discount it charges on collateral they have to present for funds - a measure banking sources said was largely symbolic since the total they could borrow was capped.

A bank closure in force since the talks collapsed was prolonged until Thursday at least, and cash withdrawals remain limited to 60 euros a day, with 20 euro notes running out.

The Athens stock exchange was also ordered closed for two days in Tuesday and Wednesday to throttle speculation.

Even with the country on the brink of economic collapse, Greek newspapers reported the government was still seeking exceptions from its reform pledges for special interests.

Athens wants to keep a 30 percent discount on value added tax on Greek islands and protect defense spending from cuts, which rightist junior coalition partners the Independent Greeks have called "red lines".

source: www.abs-cbnnews.com

Greece votes in referendum with future in euro in doubt

ATHENS - Greece votes on Sunday on whether to accept more austerity in exchange for international aid, in a high-stakes referendum likely to determine whether it leaves the euro-currency area after seven years of economic pain.

Staged against a backdrop of shuttered banks and threats of financial apocalypse, the vote is too close to call and may not produce the clear mandate for negotiations that Athens' creditors seek.

Greeks are split on whether to accept an offer by creditors that Prime Minister Alexis Tsipras calls a "humiliation" and is urging people to reject. Investors and European policymakers say a rejection would set Greece on a path out of the euro, destabilizing the global economy and financial markets.

"On Sunday we should all send a message of democracy and dignity to the world," Tsipras told tens of thousands of Greeks rallying for a 'no' vote before campaigning ended.

Voting on whether to accept more taxes and pension cuts would be divisive in any nation, even at the best of times.

In Greece, the choice is faced by an angry and exhausted population who, after five years of crippling austerity, have now suffered through a week of capital controls imposed to prevent the collapse of the nation's financial system.

Pensioners besieging bank gates to claim their retirement benefits, only to leave empty-handed and in tears, have become a symbol of the nation's dramatic fall over the past decade.

Eleven years ago, in the early morning of July 5, 2004, Greeks poured into the streets, united in celebration of their country's victory in the European Cup soccer tournament. Today, Greece is divided -- and scared -- as rarely before.

"There is an atmosphere of fear. You can just feel it," said Sarafianos Giorgos, a 60-year-old teacher in Athens, who says he will vote in favour of the creditors' proposals.

Polls open at 7 a.m. local (0400 GMT) and shut at 7 p.m, with the first official projection of the result expected at 9 p.m.

Four opinion polls published on Friday showed the 'Yes' vote marginally ahead. A fifth put the 'No' camp 0.5 percentage points in front. All were well within the margin of error.

Anxious Greeks rallying for a 'Yes' vote agree Greece has been handed a raw deal but say the alternative, a collapse of the banks and a return of the old drachma currency, would be worse.

Those pledging to deliver a rousing 'No' to tax hikes and pension cuts in return for more loans say Greece cannot afford more of the austerity that has left one in four without a job. They agree with Tsipras that Europe is "blackmailing" Greece.

"As a Greek woman, I am embarrassed at those who are going to vote 'Yes' for fear of leaving the euro. They are asking us to accept unending slavery. I am offended," said Tenekidou Ermioni, a 54-year-old teacher.

NIGHTMARE RESULT

Greeks are likely to face more financial and political turmoil in the days and weeks ahead.

"All in all, Prime Minister Alexis Tispras' early exit from office is still more likely than Grexit," wrote Wolfgang Piccoli of Teneo Intelligence.

"Regardless of Sunday's result, significant levels of political volatility are here to stay."

Finance Minister Yanis Varoufakis promised Greeks on the eve of the vote that European creditors would immediately have to grant Athens better terms, including massive debt relief and less austerity, if they voted 'No'. EU ministers and officials have warned that his pledge is a cruel illusion.

If Greeks vote 'Yes' to the bailout, both Tsipras and Varoufakis are expected to resign -- triggering a new chapter of uncertainty as political parties try to cobble together a national unity government to keep talks with lenders going until elections are held.

European creditors have said a 'Yes' vote will resurrect hopes of aid to Greece. But capital controls, and default last week to the IMF, have undermined Greece's economic standing and creditworthiness, so a new bailout package would probably entail harsher terms than those on offer even last week.

A 'No' vote would bring even greater uncertainty, and the prospect of a sudden financial collapse.

European policymakers have openly warned such a result would be read as a rejection of talks with creditors and the euro, leaving Greece to fend for itself without any realistic prospect of funds to avoid bankruptcy.

Much would depend on the European Central Bank, which will review on Monday morning its policy on emergency liquidity, which Greek lenders rely on.

The ECB could decide to freeze the liquidity or cut it off altogether if Greeks vote 'No', or if Athens subsequently defaults on a bond redemption to the ECB on July 20.

There is concern that an inconclusive result might sow further confusion, and possibly lead to violent protests, rather than sending a clear signal about Greek intentions.

"The nightmare result would be 51-49 percent in either direction," a senior German official said. "And the chances of this are not insignificant."

(Additional reporting by Noah Barkin in Berlin and Lefteris Karagiannopoulos; Writing by Deepa Babington; Editing by Alessandra Galloni and Andrew Roche)

source: www.abs-cbnnews.com

Crying Greek pensioner: The story behind the poignant photo

THESSALONIKI, Greece - Retiree Giorgos Chatzifotiadis had queued up at three banks in Greece's second city of Thessaloniki on Friday in the hope of withdrawing a pension on behalf of his wife, but all in vain.

When he was told at the fourth that he could not withdraw his 120 euros ($133), it was all too much and he collapsed in tears.

The 77-year-old told AFP that he had broken down because he "cannot stand to see my country in this distress".

"That's why I feel so beaten, more than for my own personnel problems," Chatzifotiadis said.

The image of him sitting outside the bank, openly crying in despair with his savings book and identity card on the floor, was captured by an AFP photographer illustrating how ordinary Greeks are suffering during the country's debt crisis.

Athens had imposed capital controls and shut all banks since Monday to stem a haemorrhage of cash, but on Wednesday allowed some branches to reopen for three days so retirees who have no bank cards could withdraw their pensions -- capped at 120 euros.

Recounting how he had gone from bank to bank in a futile attempt to collect his wife's pension, Chatzifotiadis said when he was told at the fourth "that I could not get the money, I just collapsed".

Both he and his wife, like many Greeks in the north of the country, had spent several years in Germany where he "worked very hard" in a coal mine and later a foundry.

And it is to Berlin, which is being blamed by many in Greece for its hardline stance in demanding the government impose more austerity measures for fresh international aid, that Chatzifotiadis is sending his wife's pension.

"I see my fellow citizens begging for a few cents to buy bread. I see more and more suicides. I am a sensitive person. I cannot stand to see my country in this situation," he said.

"Europe and Greece have made mistakes. We must find a solution," he added.

But Chatzifotiadis feels he can do little to change the situation, and he is not even sure if he would be able to vote at Sunday's referendum on whether to accept international creditors' bailout conditions.

European leaders have warned that a 'No' vote would also mean no to the eurozone.

Pointing out that the polling station is 80 kilometers (50 miles) away, Chatzifotiadis said: "I have no money to go there, unless perhaps if my children would take me in their car."

source: www.abs-cbnnews.com

Market shrugs off Greece debt default

MANILA, Philippines - Share prices rebounded yesterday, joining the uptrend in markets across the region despite news Greece became the first developed economy to default on a loan with the International Monetary Fund (IMF).

The Philippine Stock Exchange index (PSEi) posted a modest gain of 0.14 percent or 10.65 points to reverse losses in the morning session and close at 7,575.15.

The broader All Shares index also added 0.25 percent or 10.78 points to finish at 4,330.37.

Analysts said yesterday’s late surge was fueled by bargain hunting.

“Fund managers continued to anchor themselves on Greece, spotting for attractive bargains as most investors take another glance on the Philippine’s fundamental merits,” said Grace Cerdenia, research head at F Yap Securities.

The PSEi was well on its way to its third day losing session after falling 0.46 percent in the morning trade before catching up to the rest of its regional counterparts to end in the positive territory.

Most Asian shares advanced on Wednesday led by Japan’s Nikkei which climbed 0.4 percent.

Industrial and financial companies were down, slipping 0.33 percent and 0.06 percent, respectively.

Advancers overwhelmed decliners, 87 to 78, while 46 stocks were unchanged.

Turnover value, however, slowed down to P6.48 billion from the previous day’s P10.68 billion.

Read more on Philippine Star.

source: www.abs-cbnnews.com

Global shares rise as investors hold nerve after Greek default

LONDON - European shares and peripheral euro zone bonds rose on Wednesday and the euro held its own as some investors kept faith with expectations that, despite defaulting on an IMF loan, Greece will find a way to stay inside the currency zone.

While an unwelcome milestone for Athens, the default came as no surprise to markets after weeks of debt-talk brinkmanship, and news that the bloc's finance ministers were to hold another teleconference later, show the drama is far from over.

Stocks in London, Paris and Frankfurt as well as Italy, Spain and Portugal opened 0.6 percent to 0.9 percent higher, while the euro hovered just above $1.1110 versus the dollar.

There was plenty of uncertainty though. The failure to reach a deal kept Greece on course for a referendum at the weekend on whether to accept the euro zone/IMF demands for more swingeing spending cuts.

Arguably the biggest focus of the day was whether the European Central Bank would begin cutting the emergency funding it is providing to Greek banks following the missed payment to the IMF.

"It is very difficult to see how one could conclude that banks that are basically closed because they have no access to cash, operating under a government that has just defaulted to the IMF, could possibly be solvent," said Gary Jenkins, chief credit analyst at LNG Capital.

"So it really becomes a political decision as to whether the ECB sticks to its rules or decides to keep everything as it is."

With the feeling that the ECB would not want to deliver the fatal blow to Greece and investors still harboring hopes of a deal at some stage, Italy, Spain, Portugal and Ireland -- the other high-debt countries that were in the crosshairs of the euro zone crisis a few years ago -- saw their bonds hold firm.

Currency markets were also relatively rangebound.

The U.S. dollar index was up 0.08 percent at 95.568, having bounced from Tuesday's low of 94.847. Against the yen, the dollar stood at 122.57, up from a five-week low of 121.93 plumbed on Tuesday.

CHINA ROLLERCOASTER

There was a flurry of European economic data too.

France's manufacturing sector grew in June for the first time since early 2014 while the equivalent data from Spain and Italy dipped as factory growth remained tepid in the euro zone overall.

Underlining Greece's woes, manufacturing activity there shrank for the 10th month in a row, as export orders and production slumped anew.


"The accelerated contraction in goods production in June ended the worst quarter for the Greek manufacturing sector for two years," said data complier Markit economist Phil Smith.

Asia had been generally calmer overnight after two days of wild swings.

MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.6 percent. Malaysian shares rallied 1.8 percent after Fitch unexpectedly raised the country's outlook to "stable".

Japan's Nikkei added 0.4 percent, a second day of modest gains as it stabilized after Monday's steep fall.

There was unexpectedly upbeat news from the Bank of Japan's latest survey of manufacturers which improved in the three months to June, supporting the bank's view that growth is gathering momentum.

Chinese shares went on another rollercoaster ride. They had looked like they had recovered from another erratic start before a late plunge left them down 5 percent in their fourth fall in the last five sessions.

Data was mixed from China where surveys showed sluggish factory activity but a pick-up in the service sector, a sign the transition to a more consumer-led economy remained on track.

Beijing's efforts to stem recent market selling are struggling to gain traction. A combination of cuts in interest rates, allowing local government pension funds to buy stocks and talk of behind-the-scenes "window guidance" to institutional investors, has yet to calm a skittish mood.

In commodities, safe-haven gold nudged up while oil fell after bouncing strongly on Tuesday to end the second quarter with hefty gains. Brent was quoted down 55 cents at $62.84 a barrel, while U.S. crude eased 89 cents to $58.57.

source: www.abs-cbnnews.com

Oil prices down as Greece default looms

SINGAPORE - Oil prices extended losses in Asia Tuesday on expectations Greece will miss a key debt repayment later in the day and edge closer to a eurozone exit, analysts said.

US benchmark West Texas Intermediate (WTI) for August delivery fell 23 cents to $58.10 while Brent crude for August eased 15 cents to $61.86 in late-morning trade.

WTI sank $1.30 and Brent lost down $1.25 Monday.

Crude tracked losses in global equity markets Monday after Greek Prime Minister Alexis Tsipras stunned the world at the weekend by breaking off bailout reform talks and calling for a referendum on austerity conditions demanded by its creditors.

The move means Athens is unlikely to agree a deal to unlock bailout funds to repay an IMF debt by the end of Tuesday, putting it in default and in danger of crashing out of the eurozone.

Top European leaders including Germany's Angela Merkel France's Francois Hollande and Italy's Matteo Renzi called on the Greek people to vote for the creditors' proposals, warning a "no" would mean exiting the eurozone.

"This display of volatility comes from the uncertainty with Greece," said Daniel Ang, investment analyst with Phillip Futures in Singapore.

Ang said with the US dollar holding firm due to investors viewing it as a safe haven, oil prices would remain pressured. A stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies.

Dealers were also waiting to see if Iran and major world powers can reach a deal on curbing Tehran's nuclear program by the end of Tuesday, a deadline set by both sides.

Such an agreement would allow Western powers to remove sanctions, paving the way for more Iranian crude to hit the already oversupplied international market.

US Secretary of State John Kerry warned Monday that "it was too early to make any judgements" on whether the deal will be agreed by the deadline.

source: www.abs-cbnnews.com

EU tries to look beyond Greece to deepen China ties

BRUSSELS - The European Union will briefly put aside worries about Greece to broaden its relations with China at a summit in Brussels on Monday, hoping for Chinese investment in Europe's new infrastructure fund and support for a global climate deal.

As China seeks to move Sino-European ties beyond trade and win a bigger role in international affairs, the European Union is relieved to find a more cooperative partner, agreeing to play down tensions that have bedevilled relations in the past.

"This meeting will send a positive signal that China and the EU can push growth through reform and innovation," said Chinese Deputy Commerce Minister Wang Shouwen before the first summit between China's premier, Li Keqiang, and the new heads of the European Commission, Jean-Claude Juncker, and the European Council of EU leaders, Donald Tusk.

An expected multi-billion euro pledge by Beijing to invest in European telecoms infrastructure, reported first by Reuters earlier this month, is the most concrete sign that trade disputes and issues about China's human rights are no longer dividing Brussels and Beijing at the highest level.

While the amount is still to be decided, the pledge will mark the latest step in China's efforts to shape global economic governance and follows decisions by major EU governments to join the Chinese-led Asian Infrastructure Investment Bank (AIIB) in defiance of Washington.

Underscoring the change in tone, China's Li may hold a news conference at the EU summit, diplomats said.

In the past, the unwillingness of senior Chinese officials to hold news conferences following high-level meetings in Brussels was a source of conflict because the European Union prides itself on its openness to the media.

Monday's summit is also expected to be the occasion for China to boost its environmental credentials and voice solidarity with the European Union's push for a new global deal on climate change at U.N. talks late this year hosted by France.

China, the world's biggest polluter, has shifted its stance since the U.N. summit of 2009, the last attempt to reach a climate deal, as it faces social unrest because of pollution.

Beijing had said it will submit its plans for emissions reduction to the United Nations in the first half of this year. People familiar with the issue in both China and the European Union say Monday could be the day Beijing chooses, although it is unclear if the announcement will be made in Brussels.

TRADE TENSIONS STILL LURK

China, responsible for around 25 percent of all greenhouse gas emissions, has already said its emissions will peak "around 2030, with the intention to try to peak early". Diplomats have said China could also announce a new target for the carbon intensity of its economy for 2030.

Jos Delbeke, director general of the European Commission's
climate department, said the significance of a formal Chinese pledge to the United Nations would be that "we are going to see more than half of the emissions in the world covered".

There are still trade tensions, however, as many in Europe refuse to see China as anything but a state-led and subsidised economy. That sets up a dispute next year over Beijing's bid to win a different status at the World Trade Organisation that would make it harder for Europe to protect local industry.

The WTO recognised when Communist China joined the trade body in 2001 that its local prices are not set by market forces but expected that 15 years after the date of accession, Beijing would play less of a role in directing the economy.

"China is considered in the WTO setting as a developing country and at the same time, wants market economy status," said Italy's deputy economy minister Carlo Calenda, who is responsible for trade. "It is clear that it is not a market economy. So what are we debating?"

source: www.abs-cbnnews.com

PH shares rebound ahead of rate decision

BANGKOK - Most Southeast Asian stock markets rose in light volume on Wednesday as investors cautiously built positions amid hopes of a Greek debt deal, with Philippine large-caps rebounding a day ahead of the central bank's meeting on interest rates.

The Philippine composite index was up 0.5 percent after a 0.8 percent fall on Tuesday to a near one-week low. Metropolitan Bank and Trust Co., the most actively-traded stock, gained 1 percent.

All 16 economists in a Reuters poll predicted the central bank would leave the overnight borrowing rate unchanged at 4 percent, confident that increased government spending would help the economy regain steam.

Trading volume in Manila fell to just 28 percent of the full-day average over the past 30 days, similar to most others in the region.

In Bangkok, the SET index was up 0.8 percent at midday, recovering from the previous day's weakness.

Oil prices, which edged higher on hopes of stronger-than-expected U.S. crude demand, helped lift energy shares such as PTT and PTT Global Chemical.

"Both will continue to benefit from higher crude oil prices and are expected to post robust second-quarter earnings and will be window-dressing targets," strategists at broker Krungsri Securities wrote in a note to clients.

Investors chose to be optimistic on the chances of a Greek debt deal, helping Asian shares rally for a sixth straight session while the dollar held broad gains as the prospect of US rate rises came back on the radar.

source: www.abs-cbnnews.com

Greece: What happens when a country defaults on IMF

WASHINGTON - The prospect of Greece missing a 1.5 billion euro ($1.7 billion) payment to the IMF due by the end of June theoretically places the country on track to Fund expulsion.

But that extremely rare consequence of a default on the world's crisis lender could take some time to play out, under the International Monetary Fund's official procedures.

On Thursday IMF Managing Director Christine Lagarde said that Greece would have no grace period if it does not make the scheduled debt payment by June 30.

Under Fund procedures, that means Athens, which has relied almost exclusively on a IMF and European Union bailout for the past five years, would see its access to Fund resources suspended immediately.

The main impact would be to freeze disbursement of the IMF's share of about half of the 7.2 billion euros in aid from the Fund, the European Commission and the European Central Bank.

According to official figures, Greece has to repay more than 5.4 billion euros to the Fund this year on borrowing.

Greece already missed a 300 million euro payment on June 5, but was not called in arrears or default after it invoked an obscure IMF rule that allowed it to roll together four scheduled June payments into one, to be remitted at the month's end.

With that Athens earned a few extra weeks to negotiate with its official bailout creditors. But if the June 30 deadline is missed, Lagarde made clear Thursday that there would be no more relief time.

"There will be no period of grace," she told reporters in Luxembourg.

According to IMF procedures, 30 days after a missed payment, Lagarde has to formally inform the executive board, which represents its 188 member countries.

After two months, the managing director would have to issue a formal complaint on the issue to the board.

At the end of three months, the board would consider the complaint, which could lead to it depriving the country in default of its right to use SDRs, the IMF currency.

The board would continue periodic reviews of the situation, and if it persists, make a declaration of noncooperation, which could then lead to a suspension of the borrower's IMF voting and representation rights.

That step would have little concrete impact but serve to further isolate the country within the Fund. Moreover, within six months of the suspension of voting rights -- or up to 24 months after the default -- the board would have to begin procedures on "compulsory withdrawal" or expulsion of the country from the IMF.

But that fate is unlikely. Expulsion would require support of a large majority of the Fund's members, comprising 85 percent of IMF voting rights.

The members have preferred to avoid an extreme outcome. After falling deeply into arrears on their IMF loans, Zimbabwe, Sudan and Somalia were not threatened with expulsion.

Only one country in IMF history has been kicked out: Czechoslovakia, which was forced out during the Cold War in the 1950s.

source: www.abs-cbnnews.com

Asia shares, euro numbed by Greek drama

SYDNEY - Asian shares had a muted session Friday as Greek debt talks took yet another confusing turn, while the dollar held firm in the wake of reassuringly upbeat U.S. retail data.

Activity was sparse with MSCI's index of Asia-Pacific shares outside Japan up 0.2 percent, but only just above three-month lows. Japan's Nikkei barely budged, though it found some support in a dollar bounce against the yen.

China's market built on its long bull run as the Shanghai index rose 0.8 percent to its loftiest level since early 2008, with property shares firmer on signs of a revival in real estate demand.

Wall Street had been tentative on Thursday with the Dow ending up 0.22 percent, while the S&P 500 added 0.17 percent and the Nasdaq 0.11 percent.

Sentiment was bolstered by a solid rise in U.S. retail sales which, combined with upward revisions, suggested the economy was warming nicely after a chilly start to the year.

If the momentum is sustained, the Federal Reserve could begin to hike interest rates later in the year, with September increasingly seen by markets as the lift-off date.

All of which sets the scene for the Fed's meeting on June 16 and 17 which will include a news conference from Chair Janet Yellen.

"We don't think the Fed will explicitly reference September, but we do think they will harp on their data dependence and give a nod that a hike this year is likely if the data remain constructive," said Tom Porcelli, chief economist at RBC Capital Markets.

"And so far both the data and the market are on the right track."

The improving U.S. data helped the dollar index up to 95.173, and away from a near one-month low of 94.322 set on Wednesday. Against the yen, the greenback bought 123.46 yen, well off this week's trough of 122.46.

The euro had less luck as talks on Greece showed no sign of reaching a deal. The single currency was off at $1.1232, from a high of $1.1387 set on Wednesday.

The dip followed the International Monetary Fund's surprise decision to leave negotiations in Brussels and fly home because of major differences with Athens.

The move came as the European Union told Greek Prime Minister Alexis Tsipras to stop gambling with his country's future and take crucial decisions needed to avert default.

Adding to the air of caution, German newspaper Bild reported Berlin was holding "concrete consultations" on what to do in the case of a bankruptcy of the Greek state, citing several people familiar with the matter.

This includes discussions about introducing capital controls in Greece if the crisis-stricken country goes bankrupt.

In commodity markets, oil prices dipped after Saudi Arabia said it was ready to raise output further to meet strong demand.

Brent crude oil for July fell 38 cents to $64.73 a barrel, while U.S. crude lost 45 cents to $60.32.

source: www.abs-cbnnews.com

Worries about Greece debt, US jobs report drag Asian markets

MANILA – Greece's failure to pay a debt on time, a key jobs report in the US, and an OPEC meeting happening in Vienna kept many investors on edge on Friday.

For the first time in the five years of Greece's economic crisis, Athens failed to pay on time.

Three hundred million euros owed to IMF was due Friday.

Unfortunately, the Greek government failed to unlock fresh bailout funds from its creditors.

The cash-strapped nation instead asked that the amount be bundled with three other payments due in June into a single 1.6-billion euro lump sum to be paid by the end of the month.

Meanwhile, nervousness ahead of the release of the May jobs report in the US, which could affect the timing of the Fed rate hike, and results of the meeting of the 12-nation oil cartel, which could determine the direction of oil prices also caused many investors to stay in the sidelines.

Except for Shanghai stocks, most Asian stocks fell led by the Hang Seng which slipped 1 percent followed by the Nikkei and the Philippine Stock Exchange index.

Philippine shares fell a third of a percent, dragged by Universal Robina, which plunged over 3 percent, and San Miguel and Emperador, which slipped over 1 percent each.

For the week, the index fell 7-tenths of a percent, its third weekly loss.

source: www.abs-cbnnews.com

Philippine index snaps losing streak

BANGKOK - Malaysian index hit a near two-week closing low on Thursday as tariff reduction concerns weighed on index heavyweight power firm Tenaga Nasional while the Philippine index ended two days of falls before the central bank decided to keep rates.

Kuala Lumpur composite index finished down 0.6 percent at 1,789.07. It rebounded from an intraday low of 1,780.21, backed by better-than-expected economic data.

Malaysia's economy grew a faster-than-expected 5.8 percent in the fourth quarter from a year earlier even as falling oil prices and sluggish global demand hit exports.

Tenaga shares shed 5.3 percent, the worst drop since October 2008, after the government said it cut electricity tariff in Peninsular Malaysia and the Borneo state of Sabah following declines in prices of feedstock and crude oil.

The Philippine index rebounded 0.4 percent after a 0.5 percent loss on Wednesday. The central bank said after market close that it left its benchmark interest rate on hold, as expected, and signalled it can stay on the sidelines for some time.

Stocks in Singapore snapped two days of gains, while Thailand, Indonesia and Vietnam rose marginally amid caution over the ongoing Greek debt negotiations.

source: www.abs-cbnnews.com

Greece, creditors report progress in debt talks

ATHENS — Greece and its creditors reported progress on a major debt writedown deal after fresh talks on Friday, as Athens seeks to escape a looming default and stem further turmoil in the eurozone.

Charles Dallara and Jean Lemierre, the lead negotiators for banks, insurers and other private investors, met Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos for talks lasting two hours.

The Private Sector Involvement (PSI) deal under discussion would see the creditors agree to a discount or "haircut" of at least 50 percent on the 200 billion euros in debt they hold.

A Greek finance ministry reported "great progress concerning technical and legal matters" but underlined there "is still a lot of work left to do."

And in a statement late Friday, the creditors said: "Important understandings were reached on legal and technical issues ... Progress was made and discussions will continue tomorrow (Saturday)."

Venizelos, before the start of talks, said: "We are a step away from concluding procedures on the PSI", adding the negotiations "were difficult and delicate".

The third round of talks between Athens and private creditors, which began Thursday, seeks agreement on a voluntary exchange of bonds that would wipe 100 billion euros ($130 billion) off the country's debt of 350 billion euros.

Athens faces a critical bond reimbursement worth 14.5 billion euros on March 20.

It had hoped to present European Union leaders a framework agreement on the debt writedown at their summit on Monday, and sign an agreement by February 13 so there is sufficient time for the writedown to be achieved.

Sources have indicated a potential shortfall of up to 15 billion euros ($20 billion) if Athens is to meet an EU-IMF target for debt sustainability, with banks playing hardball over a big debt writedown from their side.

"If our Greek friends do their bit, we must support them," European Commission chief Jose Manuel Barroso said, implying that governments would have to step in where banks would not.

Barroso argued that a messy default would signal a "major problem" not only for Greece but for the eurozone as a whole.

A new analysis will be conducted by the IMF and the eurozone to ensure that the writedown returns Greece's debt to a sustainable level, according to a Greek finance ministry official.

The IMF, which is bound by rules to lend only to countries that have sustainable debt levels, has insisted that the level of Greek debt be reduced to no more than 120 percent of gross domestic product.

It currently stands at around 160 percent and sources close to the talks said proposals on the table would only get the figure down to about 130 percent.

Jean-Claude Juncker, head of the Eurogroup of eurozone finance ministers, said Friday that Greece's creditor countries should also waive a portion of the country's debt, as cutting private debt alone was not enough.

The European Central Bank (ECB), which holds around 45 billion euros' worth of Greek bonds, has so far ignored calls for it to accept losses.

IMF chief Christine Lagarde also warned Wednesday that European public creditors would need to pitch in and help Greece.

If a deal with private creditors is reached, Athens can pursue talks with EU partners on a second public aid package worth about 130 billion euros.

But the Financial Times reported that Germany wants Greece to surrender sovereignty over fiscal policy to a eurozone commissioner before it gets a fresh bailout.

"Budget consolidation has to be put under a strict steering and control system," the FT quoted from the proposal, which it said had been circulated by Germany on Friday to other eurozone officials.

German Finance Minister Wolfgang Schaeuble, meanwhile, called on Greece to move quickly on economic reforms.

"We've had enough announcements, the government in Athens must act now," he was quoted as saying in an interview with the Stuttgarter Zeitung newspaper.

Greece has implemented austerity measures but has been slow to implement structural reforms and push ahead with privatizations that are considered necessary for the country to get growth back on track and pay its debts. — AFP

source:gmanetwork.com