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Brazil central bank quickens pace of currency swap rollover

August 02, 2014 - reuters.com

RIO DE JANEIRO, Aug 1 (Reuters) - Brazil's central bank on Monday will kick off the rollover of currency swaps that expire early in September by offering more daily contracts than it did last month, a sign it wants to slow a recent weakening of the real. The bank said in a statement that it will auction as many as 8,000 currency swaps - derivatives that provide protection against losses in the real - as part of its strategy to renew $10.1 billion worth of swaps that expire on Sept. 1. Last month, it offered as many as 7,000 contracts per day to roll over some $9.5 billion worth of swaps that expired on Aug. 1, renewing about 70 percent of those contracts. If the central bank keeps the new rollover pace intact until the end of the month, it will be able to renew about 80 percent of the Sept. 1 maturities. The regular sale of swaps has been part of a successful central bank program of intervention in the foreign exchange market, which has helped the real BRL= BRBY gain more than 4 percent so far this year. The central bank has succeeded in stabilizing the real largely within 2.20 to 2.25 per dollar since April, but the currency weakened past that level this week as fears of higher U.S. interest rates increased globally. The real closed on Friday at 2.2572 per dollar. (Reporting by Walter Brandimarte and Patrícia Duarte; Editing by Dan Grebler) ((walter.brandimarte@thomsonreuters.com)(+55 21 2223 7149)(Reuters Messaging: walter.brandimarte.thomsonreuters.com@reuters.net)) Keywords: BRAZIL CURRENCY/SWAPS

RPT-UPDATE 1-Moody's raises Greek rating to Caa1, citing improved fiscal position

August 02, 2014 - reuters.com

(Repeating to additional subscribers) * Moody's upgrades Greece by two notches * Cites improved economic outlook, fiscal position * Rating still in junk territory By Karolina Tagaris ATHENS, Aug 1 (Reuters) - Moody's raised Greece's sovereign credit rating on Friday and gave it a stable outlook, saying it believed the government's fiscal position had improved significantly. The positive comments boost expectations that Greece's government may tap bond markets again this year after two sales in April and July following a four-year exclusion since it was bailed out by the European Union and the International Monetary Fund. "The first factor behind the upgrade of Greece's rating is Moody's strengthened expectation that the general government debt to GDP ratio will start declining in 2015," Moody's said. "The government's progress in fiscal consolidation under its economic adjustment program underscores the improvement in the debt trajectory," it said in a statement raising its rating by two notches from 'Caa3' to 'Caa1'. Fitch assigns Greece a B credit rating, while S&P rates it B-/B. All three credit ratings are still in junk territory, reflecting a high debt level of about 175 percent of the country's gross domestic product. Moody's expects Greece's debt to GDP ratio to decline in 2015 after peaking this year at around 179 percent of GDP. The ratings agency said Greece's short-term debt rating is unaffected and remains "Not Prime." Greece, which has been bailed out twice by the EU and the IMF with nearly 240 billion euros ($320 million) in rescue loans, is expected to begin negotiating further debt relief in the fall. In September, it will undergo the latest checkup by inspectors from its foreign lenders on whether it is meeting the commitments attached to its bailout before further aid is disbursed. Moody's said Greece's structural reform drive had "mixed results" to date, but praised the government's efforts on labor market reforms and in liberalizing some areas of the product markets. "These reforms have led to wage and price adjustments, which far outstrip adjustments elsewhere in the euro area periphery," it said. Greece has enjoyed a turnaround in investor sentiment in recent months as it begins to emerge from a protracted recession. After nearly crashing out of the euro zone in 2012, the country expects to return to economic growth this year following a six-year depression that has shrunk its economy by a quarter. In April, it raised 3 billion euros after attracting offers of about 20 billion euros. That was followed by a second sale in July, when it raised 1.5 billion euros with the sale of a three-year bond, though less than the 2.5 billion to 3 billion euros expected. Still, Moody's warned that a "continuing, high level of political uncertainty" in the country constrained its rating at the Caa level and did not rule out early elections in the first quarter of 2015. "The prospect of early elections, the result of which are highly uncertain, increases the risk of delays in policy implementation at a critical juncture of the economic adjustment program," Moody's said. (1 Euro = $1.3429) (Editing by Jonathan Oatis) ((karolina.tagaris@thomsonreuters.com)(+30 210 337 6438)(Reuters Messaging: karolina.tagaris.reuters.com@reuters.net)) Keywords: MOODY'S RATINGS

UPDATE 1-Moody's raises Greek rating to Caa1, citing improved fiscal position

August 02, 2014 - reuters.com

* Moody's upgrades Greece by two notches * Cites improved economic outlook, fiscal position * Rating still in junk territory By Karolina Tagaris ATHENS, Aug 1 (Reuters) - Moody's raised Greece's sovereign credit rating on Friday and gave it a stable outlook, saying it believed the government's fiscal position had improved significantly. The positive comments boost expectations that Greece's government may tap bond markets again this year after two sales in April and July following a four-year exclusion since it was bailed out by the European Union and the International Monetary Fund. "The first factor behind the upgrade of Greece's rating is Moody's strengthened expectation that the general government debt to GDP ratio will start declining in 2015," Moody's said. "The government's progress in fiscal consolidation under its economic adjustment program underscores the improvement in the debt trajectory," it said in a statement raising its rating by two notches from 'Caa3' to 'Caa1'. Fitch assigns Greece a B credit rating, while S&P rates it B-/B. All three credit ratings are still in junk territory, reflecting a high debt level of about 175 percent of the country's gross domestic product. Moody's expects Greece's debt to GDP ratio to decline in 2015 after peaking this year at around 179 percent of GDP. The ratings agency said Greece's short-term debt rating is unaffected and remains "Not Prime." Greece, which has been bailed out twice by the EU and the IMF with nearly 240 billion euros ($320 million) in rescue loans, is expected to begin negotiating further debt relief in the fall. In September, it will undergo the latest checkup by inspectors from its foreign lenders on whether it is meeting the commitments attached to its bailout before further aid is disbursed. Moody's said Greece's structural reform drive had "mixed results" to date, but praised the government's efforts on labor market reforms and in liberalizing some areas of the product markets. "These reforms have led to wage and price adjustments, which far outstrip adjustments elsewhere in the euro area periphery," it said. Greece has enjoyed a turnaround in investor sentiment in recent months as it begins to emerge from a protracted recession. After nearly crashing out of the euro zone in 2012, the country expects to return to economic growth this year following a six-year depression that has shrunk its economy by a quarter. In April, it raised 3 billion euros after attracting offers of about 20 billion euros. That was followed by a second sale in July, when it raised 1.5 billion euros with the sale of a three-year bond, though less than the 2.5 billion to 3 billion euros expected. Still, Moody's warned that a "continuing, high level of political uncertainty" in the country constrained its rating at the Caa level and did not rule out early elections in the first quarter of 2015. "The prospect of early elections, the result of which are highly uncertain, increases the risk of delays in policy implementation at a critical juncture of the economic adjustment program," Moody's said. (1 Euro = $1.3429) (Editing by Jonathan Oatis) ((karolina.tagaris@thomsonreuters.com)(+30 210 337 6438)(Reuters Messaging: karolina.tagaris.reuters.com@reuters.net)) Keywords: MOODY'S RATINGS

Moody's upgrades Greece's bond rating to Caa1 from Caa3

August 02, 2014 - reuters.com

Aug 1 (Reuters) - Moody's Investors Service upgraded Greece's government bond rating to Caa1 from Caa3, citing the progress in implementing structural reforms. The outlook on the rating is stable. The ratings agency said Greece's short-term debt rating is unaffected and remains "Not Prime". Moody's said it expects the general government debt-to-GDP ratio to decline in 2015, after peaking this year at around 179 percent of GDP. (http://bit.ly/1qQrGrp) Moody's said the improvement in Greece's economic outlook, based on both a cyclical recovery and the progress made in implementing structural reforms and rebalancing the economy, supports the downward trajectory of the public debt ratio. Moody's has also raised the local and foreign-currency country ceilings for long-term debt and deposits to Ba3 from B3. (Reporting By Tanvi Mehta in Bangalore) ((tanvi.mehta@thomsonreuters.com)(+1 646 223 8780 Extn 4756)(from the U.S.)(+91 80 67494756)(Direct)(Reuters Messaging: Reuters Messaging: tanvi.mehta.thomsonreuters.com@reuters.net)) Keywords: MOODY'S RATINGS/

FOREX-Dollar slips after U.S. jobs report signals dovish Fed

August 01, 2014 - reuters.com

* U.S. nonfarm payrolls rise 209,000 in July * Data shows low U.S. wage inflation * ISM U.S. factory activity rises to 57.1 in July (Updates prices, adds comments) By Sam Forgione NEW YORK, Aug 1 (Reuters) - The U.S. dollar was on track for its biggest daily loss against a basket of major currencies in over three weeks on Friday after the U.S. government's July employment report showed no signs of wage inflation, supporting a continued dovish stance from the Federal Reserve. The Labor Department said U.S. nonfarm payrolls increased 209,000 last month, below economists' expectations for an increase of 233,000, while the unemployment rate unexpectedly rose to 6.2 percent. Data for May and June were revised to show a total of 15,000 more jobs created than previously reported. ID:nL2N0Q62Q0 Analysts said the increase in the labor force participation rate, to 62.9 percent from 62.8 percent, and roughly flat average hourly earnings growth were critical because they indicated a lack of wage inflation, which the Fed is closely monitoring as a potential signal of reduced slack in the economy. Increasing wage inflation could prompt the central bank to raise rates. "Low wage growth may buy the Fed a bit more time," said Jens Nordvig, head of G10 FX strategy at Nomura Securities International. "It is the one good excuse they have left for not normalizing" monetary policy, he said. He added, however, that the dollar's "underlying strengthening trend" was "hardly in question." The U.S. dollar index .DXY was last down 0.16 percent at 81.327, retreating further from Thursday's 10-1/2-month high of 81.573. The index, however, posted its third straight weekly gain, largely on the view that recovering U.S. economic growth would pave the way for a more hawkish Fed. The dollar had little reaction to The Institute for Supply Management reporting its index of national factory activity rose to 57.1 in July, holding its losses. The ISM reading was the highest since April 2011. ID:nZON008D00 Consumer sentiment for July, meanwhile, was slightly below expectations. Thomson Reuters/University of Michigan's final July reading on the overall index on consumer sentiment came in at 81.8, a touch below the 82.0 estimate. "None of these numbers matter because Janet Yellen appears to not look at anything other than wage inflation, and she is looking at the wage inflation numbers that say everything is fine," said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments. The euro EUR= was last up 0.28 percent against the dollar at $1.3426 after hitting a session high of $1.3444. Against the yen JPY= , the dollar was last down 0.21 percent at 102.57 yen after hitting a low of 102.35 yen, and was down 0.31 percent against the Swiss franc CHF= at 0.9057 franc after hitting a session low of 0.9042 franc. The yield on benchmark 10-year U.S. Treasury notes US10YT=RR dipped to 2.51 percent, from 2.56 percent late Thursday. (Reporting by Sam Forgione; Editing by Dan Grebler) ((Sam.Forgione@thomsonreuters.com)(646-223-6189)(Reuters Messaging: sam.forgione.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

UPDATE 1-Italy's Buzzi sees improved core profit this year, despite Ukraine worries

August 01, 2014 - reuters.com

(Adds further details) MILAN, Aug 1 (Reuters) - Italian cement maker Buzzi UniCem BZU.MI expects an "improvement" in recurring earnings before interest, tax, depreciation and amortisation (EBITDA) this year to just above 400 million euros ($538 million), it said on Friday, despite sales being hit by the Ukranian crisis. Buzzi said a writedown of goodwill on its operations in Ukraine due to the "worrisome" situation there contributed to a first-half net loss of 20.8 million euros ($28 million), which compared with a net loss of 34.9 million euros in the same period last year. The company, which generated 13.5 percent of its revenue in Ukraine and Russia last year, said despite the "political tensions" there the two markets kept growing in the first six months of 2014 but revenue dropped because of the fall in exchange rates for the hryvnia and rouble. Group sales in the first half rose 2.7 percent to 1.18 billion euros, in line with analysts' forecasts according to Thomson Reuters data, and helped by a recovery in construction activity in the United States, although Buzzi said its domestic market in Italy remained weak. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 28 percent in the period to 138.5 million euros. Originally the company reported total EBITDA for last year of 481 million euros, up from 455 million in 2012, according to its annual report. Shares in Buzzi closed down 3 percent against a 1 percent fall in Italy's blue-chip stock index .FTMIB . ($1=0.7442 euros) (Reporting by Valentina Za; Editing by Oleg Vukmanovic and Greg Mahlich) ((valentina.za@thomsonreuters.com, +39 02 6612 9526)) Keywords: BUZZI UNICEM RESULTS/

Ghana 91-day bill yield rises to 25.0104 percent

August 01, 2014 - reuters.com

ACCRA, Aug 1 (Reuters) - The Bank of Ghana said the yield on its 91-day bill rose to a fresh three-year high of 25.0104 percent at Friday's auction, from 24.9713 percent at the last sale. The Bank said it accepted 580.47 million cedis ($173.27 million) out of the 585.68 million cedis worth of bids tendered for the 91-day paper. For full details please click here: http://www.bog.gov.gh/privatecontent/Treasury/Auctresults%201392.pdf ($1= 3.3500 cedis) (Reporting by Kwasi Kpodo; Editing by Daniel Flynn) ((emma.farge@thomsonreuters.com)(+221 33 864 5077)(Reuters Messaging: emma.farge.thomsonreuters.com@reuters.net)) Keywords: GHANA BONDS/

UPDATE 1-S&P raises outlook for Slovak credit-rating to positive

August 01, 2014 - reuters.com

(Adds details from S&P statement) PRAGUE, Aug 1 (Reuters) - Standard and Poor's raised its credit-rating outlook for Slovakia to "positive" from "stable" on Friday, flagging that it might boost the rating over the next two years. The euro zone country's A rating is already near the top of investment grade rankings. The agency said Slovakia's fiscal position would benefit from broader economic growth, making reduction in the budget deficit more sustainable. "The positive outlook indicates a one-in-three probability that we will raise the ratings over the next two years if Slovakia's fiscal and economic measures outperform our expectations," S&P said. "The ratings on Slovakia reflect our view of its moderate government debt burden, the economy's robust growth prospects, and low net external debt. We believe these strengths are offset by economic challenges including high structural and youth unemployment, as well as low income levels and labour activity rates, where Slovakia lags its euro zone peers." The agency said it saw average Slovak economic growth at 2.8 percent annually in 2014-2017 on the back of stronger domestic demand, helping tax revenue as well as debt levels, which it saw peaking below 54 percent of gross domestic product (GDP) in 2015. It forecast a public sector deficit at 2.8 percent of GDP this year, falling to 2.6 percent in 2015 and 2.5 percent in 2016, well with the European Union's target ceiling. (Reporting by Jan Lopatka; Editing by Ruth Pitchford) ((jan.lopatka@thomsonreuters.com)(+420224190474)(Reuters Messaging: jan.lopatka.thomsonreuters.com@reuters.net)) Keywords: SLOVAKIA RATINGS/

Sterling still wobbly despite weak U.S. jobs data

August 01, 2014 - reuters.com

(Updates euro price) * Sterling set for biggest daily loss against euro in 5 months * Pound weakened by soft UK factory data * Sterling index lowest in over a month * U.S. jobs data comes in below expectations By Jemima Kelly LONDON, Aug 1 (Reuters) - Sterling clawed back some ground against the dollar on Friday after U.S. data showed jobs growth slowing and unemployment rising in July, lessening the impetus for the Federal Reserve to raise interest rates any time soon. At the end of a week in which figures showed the world's largest economy powering back in the second quarter, the latest U.S. data showed nonfarm payrolls increasing by a smaller than expected 209,000 last month, while unemployment crept up to 6.2 percent from 6.1 percent in June. ID:nL2N0Q62Q0 Sterling was dealt a blow earlier on Friday by data showing British manufacturing growing at its slowest rate in a year, dropping almost a cent on the day against the dollar and hitting a 2-1/2-week low against the euro. Though it pared losses against the dollar after the soft U.S. data, the pound was still on track for a fourth consecutive week of losses, the weakest run since the start of 2013, shedding almost 1 percent over the past five days. "There's probably some scope for some modest reversal on the dollar gains we've had, but I would emphasise the word modest," said Derek Halpenny, European head of markets research at the Bank of Tokyo-Mitsubishi in London. "Generally the data is consistent with an improving labour market, and in that sense it keeps the potential there for the Fed to signal at some point over the coming months that rates might have to start moving sooner rather than later." At 1500 GMT sterling was trading at $1.6833 GBP=D4 , recovering from an earlier trough of $1.6812 but still down 0.3 percent on the day. Some traders said that because the market already expected the Bank of England to be the first major central bank to raise interest rates since the financial crisis, it would need to see more evidence of the British economy's relative strength before sterling could go higher. "We think the correction that is ongoing will extend," said Alvin Tan, a currency strategist at Societe Generale. "The market is quite long sterling - a lot of good news is baked into sterling's price at the moment, in terms of market expectations of growth and also about the pace of BoE tightening." The pound had fallen almost 0.2 percent against the dollar on Thursday after figures showed British consumer confidence falling in July for the first time in six months, with other data showing that the housing market may be starting to cool. The euro hit a one-month high of 79.85 pence EURGBP=D4 having risen steadily since the U.S. data, putting it up almost 0.7 percent against the pound, its biggest daily gain since early March. One dealer said there had been talk in the market of a large portfolio order going through to the benefit of the euro against sterling. Euro zone data showed manufacturing growth failing to accelerate as much as expected, offering sterling some support against the euro. But any gains evaporated on the back of the weak British and U.S. data. The trade-weighted sterling index fell to 88.2, its lowest in over a month =GBP . British government bond yields showed little reaction to the manufacturing PMI but fell sharply immediately after the U.S. jobs data, with the 10-year gilt yield GB10YT=RR ending at 2.583 percent, down 2 basis points on the day. (Editing by Alison Williams/Nigel Stephenson) ((jemima.kelly@thomsonreuters.com, +44 20 7542 7508, Reuters Messaging: jemima.kelly.thomsonreuters@reuters.net)) Keywords: MARKETS STERLING/CLOSE

U.S. jobs data offers South Africa rand a reprieve

August 01, 2014 - reuters.com

JOHANNESBURG, Aug 1 (Reuters) - South Africa's rand snapped a four-day losing streak against the dollar on Friday, helped mostly by U.S. jobs data which supported the case for loose monetary policy in the world's biggest economy. On the local front however, vehicle sales data pointed to suppressed consumer demand, dulling prospects of the Reserve Bank hiking domestic rates further this year. The rand ZAR=D3 hit a session low of 10.7700 to the dollar in nervous trade prior to the U.S. jobs data, but recovered afterwards to trade at 10.6690 by 1517 GMT, up 0.34 percent on the day. The U.S. numbers offset the rand-negative impact of a report showing South Africa's new vehicle sales fell 1.5 percent year-on-year in July. ID:nJ8N0OC03G Export sales of vehicles for the month fell 16.1 percent year-on-year, the trade and industry department said. "Rand fragility is underscored by weak growth conditions and a wide cumulative trade deficit," Tradition Analytics said, referring to a 48.27 billion rand trade deficit in the first six months of the year compared to 35.57 billion rand in 2013. "A dollar-rand upside bias holds, with a sustained break of 10.74 targeting 10.80." Government bonds yields were mixed, with longer-dated 2026 debt ZAR186= inching up a basis point to 8.33 percent while paper at the shorter end of the curve ZAR157= shaved off 3 basis points to 6.69 percent. (Reporting by Stella Mapenzauswa; Editing by Ed Stoddard) ((stella.mapenzauswa@thomsonreuters.com)(+27117753161)(Reuters Messaging: stella.mapenzauswa.thomsonreuters.com@reuters.net)) Keywords: MARKETS SAFRICA/CURRENCY

Portuguese bond yields rise on BES concerns, weigh on periphery

August 01, 2014 - reuters.com

* Portuguese bonds suffer, drag peripheral yields up * Weak U.S. jobs data helps stem sell-off * Expectations of ratings upgrade cap rise in Greek yields (Adds fresh quote, updates prices) By Emelia Sithole-Matarise and John Geddie LONDON, Aug 1 (Reuters) - Portuguese bond yields rose on Friday, weighing on other lower-rated euro zone sovereigns, amid expectations Lisbon will bail out the country's biggest bank after it reported massive losses. Banco Espirito Santo's problems intensified this week, when it posted a worse-than-forecast 3.6 billion-euro loss and saw its top officials suspended over suspected harmful management. Its shares BES.LS fell to record lows before being suspended. ID:nL6N0Q74FV "The Banco Espirito Santo problems don't seem to be going away that easily," said Alessandro Giansanti, an ING strategist. Portuguese 10-year yields hit highs of 3.78 percent in early trading, up some 14 basis points on the day. They pared losses in the afternoon after a lower-than-expected reading of U.S. nonfarm payrolls. Weak jobs data in the world's largest economy makes it less likely the United States will raise interest rates soon - a move investors fear would push up government borrowing costs globally. As European markets drew to a close on Friday, Portugal's yields were 6 bps higher at 3.70 percent PT10YT=TWEB . Italy and Spain equivalents were 4 bps and 3 bps higher respectively, at 2.73 and 2.54 percent IT10YT=TWEB ES10YT=TWEB . Irish yields were 2 bps up at 2.25 percent. IE10YT=TWEB Analysts said the Bank of Portugal would prefer that BES raise capital from private sources, but shaken investors may not stump up the full amount, leaving the government to fill the gap. "Portugal have said they want capital for BES from private investors, but I don't think it will be enough. They will need to use the money set aside for banks and that should be enough to cover any further recapitalisation of the bank," said ING's Giansanti. Portugal, which just emerged from a sovereign bailout in May, has 6.4 billion euros of funds for bank recapitalisations. But while BES' problems seem manageable in isolation, some in the market fear the wider repercussions of bank stress tests due to be published in October. "I don't think the latest BES news is particularly negative for the sovereign ... but maybe people are thinking there could be more of these. Maybe the AQR (Asset Quality Review) will make us more focused on the bank-sovereign link in the coming months," said Steven Major, global head of fixed income research at HSBC. ANTICIPATING MOODY'S Greek 10-year bond yields GR10YT=TWEB , which usually see larger swings because of their low liquidity, were up 4 bps at 6.09 percent. They fell earlier as investors anticipated a credit ratings upgrade from Moody's later in the day. Moody's has an extremely speculative Caa3 rating on Greece, the worst in the euro zone. It is scheduled to review the rating on Friday, although any announcement will come after the market closes. Some market participants say an upgrade looks possible. Greece's economic outlook has improved and it held two successful debt sales this year, after its 2012 default. Moody's one-notch upgrade of Portugal's ratings despite the problems facing its biggest bank fuelled expectations of similar action for Greece. "Moody's is still lagging the other rating agencies, so a bit of a catchup upgrade for Greece by about up to two notches is very possible," said Rainer Guntermann, a strategist at Commerzbank. "It won't come as a big shock to the market, but as always with official confirmation some accounts may feel more comfortable in adding to their positions (on Greek bonds)." (Editing by Larry King) ((emelia.sithole@thomsonreuters.com; +44 207 542 6752; Reuters Messaging: emelia.sithole.thomsonreuters.com@reuters.net))

Keywords: MARKETS BONDS/EURO

POLONIA Rate rises 0.01 pp.

August 01, 2014 - reuters.com

WARSAW, Aug 1 (Reuters) - POLONIA the reference rate for Overnight deposits amounted to 2.52 percent. The volume of transactions concluded till 16:30 by banks participating in POLONIA fixing amounted to 2,810 mln PLN. Note: Description of reference rate at: http://www.acipolska.pl/ ((warsaw.newsroom@reuters.com))

Sterling still wobbly despite weak U.S. jobs data

August 01, 2014 - reuters.com

* Sterling set for biggest daily loss against euro in 5 months * Pound weakened by soft UK factory data * Sterling index lowest in over a month * U.S. jobs data comes in below expectations By Jemima Kelly LONDON, Aug 1 (Reuters) - Sterling clawed back some ground against the dollar on Friday after U.S. data showed jobs growth slowing and unemployment rising in July, lessening the impetus for the Federal Reserve to raise interest rates any time soon. At the end of a week in which figures showed the world's largest economy powering back in the second quarter, the latest U.S. data showed nonfarm payrolls increasing by a smaller than expected 209,000 last month, while unemployment crept up to 6.2 percent from 6.1 percent in June. ID:nL2N0Q62Q0 Sterling was dealt a blow earlier on Friday by data showing British manufacturing growing at its slowest rate in a year, dropping almost a cent on the day against the dollar and hitting a 2-1/2-week low against the euro. Though it pared losses against the dollar after the soft U.S. data, the pound was still on track for a fourth consecutive week of losses, the weakest run since the start of 2013, shedding almost 1 percent over the past five days. "There's probably some scope for some modest reversal on the dollar gains we've had, but I would emphasise the word modest," said Derek Halpenny, European head of markets research at the Bank of Tokyo-Mitsubishi in London. "Generally the data is consistent with an improving labour market, and in that sense it keeps the potential there for the Fed to signal at some point over the coming months that rates might have to start moving sooner rather than later." At 1500 GMT sterling was trading at $1.6833 GBP=D4 , recovering from an earlier trough of $1.6812 but still down 0.3 percent on the day. Some traders said that because the market already expected the Bank of England to be the first major central bank to raise interest rates since the financial crisis, it would need to see more evidence of the British economy's relative strength before sterling could go higher. "We think the correction that is ongoing will extend," said Alvin Tan, a currency strategist at Societe Generale. "The market is quite long sterling - a lot of good news is baked into sterling's price at the moment, in terms of market expectations of growth and also about the pace of BoE tightening." The pound had fallen almost 0.2 percent against the dollar on Thursday after figures showed British consumer confidence falling in July for the first time in six months, with other data showing that the housing market may be starting to cool. The euro hit a 2-1/2-week high of 79.74 pence EURGBP=D4 after the U.S. data, putting it up 0.5 percent against the pound, its biggest daily gain since early March. One dealer said there had been talk in the market of a large portfolio order going through to the benefit of the euro against sterling. Euro zone data showed manufacturing growth failing to accelerate as much as expected, offering sterling some support against the euro. But any gains evaporated on the back of the weak British and U.S. data. The trade-weighted sterling index fell to 88.2, its lowest in over a month =GBP . British government bond yields showed little reaction to the manufacturing PMI but fell sharply immediately after the U.S. jobs data, with the 10-year gilt yield GB10YT=RR ending at 2.583 percent, down 2 basis points on the day. (Editing by Alison Williams) ((jemima.kelly@thomsonreuters.com)(+44)(0)(20 7542 7508)(Reuters Messaging: jemima.kelly.thomsonreuters@reuters.net)) Keywords: MARKETS STERLING/CLOSE

FOREX-Dollar slips after U.S. jobs report signals dovish Fed

August 01, 2014 - reuters.com

* U.S. nonfarm payrolls rise 209,000 in July * Data shows low U.S. wage inflation * ISM U.S. factory activity rises to 57.1 in July (Updates prices, adds comments, changes dateline; previous LONDON) By Sam Forgione NEW YORK, Aug 1 (Reuters) - The U.S. dollar dipped against a basket of major currencies on Friday after the U.S. government's July employment report showed no signs of wage inflation, supporting a continued dovish stance from the Federal Reserve. The Labor Department said U.S. nonfarm payrolls increased 209,000 last month, below economists' expectations for an increase of 233,000, while the unemployment rate unexpectedly rose to 6.2 percent. Data for May and June, meanwhile, were revised to show a total of 15,000 more jobs created than previously reported. ID:nL2N0Q62Q0 Analysts said the lower-than-expected jobs growth still showed solid momentum when combined with the upward revisions for the prior two months. They also said the increase in the labor force participation rate, to 62.9 percent from 62.8 percent, and roughly flat average hourly earnings growth were more critical, because they indicated a lack of wage inflation. "If wage inflation is falling, that gives the Fed more room to keep interest rates at zero," said Jose Wynne, global head of FX research at Barclays in New York. The Fed is closely monitoring wage inflation as a potential signal of reduced slack in the economy, which could prompt the central bank to raise rates. Wynne said the dollar's dip was mild since traders continued to chase an upward trend in the currency. The dollar climbed more than 2 percent in July to notch its best monthly gain in nearly 1-1/2 years, largely on the view that recovering U.S. economic growth would pave the way for a more hawkish Fed. The U.S. dollar index .DXY , which measures the dollar against a basket of six major currencies, was last down 0.18 percent at 81.312, retreating further from Thursday's 10-1/2-month high of 81.573. The dollar index held losses after The Institute for Supply Management (ISM) said its index of national factory activity rose to 57.1 in July. That was the highest since April 2011. ID:nZON008D00 "The ISM reflects underlying strength in the U.S. economy" but was overshadowed by the employment report, said Shaun Osborne, currency strategist at TD Securities. Consumer sentiment for July, meanwhile, was slightly below expectations. Thomson Reuters/University of Michigan's final July reading on the overall index on consumer sentiment came in at 81.8, a touch below the 82.0 estimate. The euro EUR= was last up 0.28 percent against the dollar at $1.3424 after hitting a session high of $1.3433. Against the yen JPY= , the dollar was last down 0.12 percent at 102.68 yen after hitting a low of 102.65 yen, and was down 0.31 percent against the Swiss franc CHF= at 0.9057 franc after hitting a session low of 0.9054 franc. The yield on benchmark 10-year U.S. Treasury notes US10YT=RR edged down to 2.53 percent, from 2.56 percent late Thursday. (Reporting by Sam Forgione; Editing by Dan Grebler) ((Sam.Forgione@thomsonreuters.com)(646-223-6189)(Reuters Messaging: sam.forgione.thomsonreuters.com@reuters.net)) Keywords: MARKETS FOREX/

London gold 1500 fix - Aug 1 - 1291.25 dlrs

August 01, 2014 - reuters.com

Russia has reserves to ride out sanctions - assuming no panic

August 01, 2014 - reuters.com

* Russian reserves are fifth largest in the world * Reserves cover maturing foreign debt three times over * But sharp drop could accelerate capital flight * Sanctions likely to tighten amid confrontation * Central bank might try to halt any rouble slide By Marc Jones and Lidia Kelly LONDON/MOSCOW, Aug 1 (Reuters) - Mathematically Russia has enough reserves to hold out for at least two years before Western sanctions start to choke the economy, but it must avoid reawakening the "sleeping dragon" of investor panic. At first glance the stockpile - $472 billion of hard currency reserves and nearly $1.5 trillion of assets overall - is more than enough to keep banks, firms and the economy going as the West tries to punish Moscow over the Ukrainian crisis. But this ignores the psychological effect. Russia burned through $200 billion in six months during its last major crisis in 2008-09; if reserves were to start draining away again, panic could quickly set in among people inside and outside the country, accelerating a flight of capital. The United States and European Union first imposed sanctions after Russia annexed Crimea from Ukraine in March and have since tightened them. This week the EU froze five state-controlled banks out of its capital markets in measures targeted at Russia's financial, military and energy industries. While Russia is on the verge of recession, analysts and investors generally agree with officials there that its finances can withstand a tightening of the screws for now. "They have reserves of almost half a trillion dollars. Given the minimal refinancing needs of the sanctioned banks, they're in a reasonably comfortable position," said Brett Diment, head of emerging markets funds for Aberdeen Asset Management. Those needs are in the range of $7-8 billion in the next year and the central bank has said it will support any domestic bank hit by the sanctions. Analysts at Morgan Stanley calculate the reserves, which are the fifth largest in the world, could cover all maturing external debt three times over and imports for around 17 months. That's much longer than the six months threshold, below which alarm bells usually start ringing with emerging economies. Reuters calculations based on central bank data show big Russian banks must refinance around $50 billion of debt this year and next, while companies' needs are closer to $100 billion. This seems manageable, but many factors are not clear-cut. About a third of the reserves are in two oil wealth funds earmarked for countering drops in international oil prices rather then funding banks or firms. Roughly $40 billion is in gold, while $13 billion is parked at the IMF, official data show. Russia also needs to keep income flowing from energy exports. While the EU sanctions target European exports of equipment to the Russian oil industry, those for gas production are exempt. This underlines a basic interdependence: Europe needs Russian gas, just as Russia needs the money it earns. WAKING THE DRAGON Nevertheless, most Russia experts believe the sanctions are likely to get tougher in the next few months. Neither side appears ready to back down in the crisis, which deepened after a Malaysian airliner was brought down over territory in eastern Ukraine controlled by pro-Moscow rebels last month. At the very least, the number of banks and firms needing help as they are hit by sanctions is likely to grow. One of the biggest unknowns is how many foreign investors and Russians will move their money out of the country if relations with the West, and the economy, sour further. Russia was badly hurt during the global financial crisis six years ago, with capital fleeing abroad and the central bank burning rapidly through its reserves as it tried to slow a one-third drop in the rouble's value against the dollar. Recent central bank data have shown Russians again ditching the rouble for dollars and other foreign assets, at the fastest pace in more than four years. Around $75 billion poured out of Russia in the first six months of this year and Morgan Stanley expects a similar amount will leave in the second half. One economist said the question was whether "the sleeping dragon of demand for dollars and other foreign assets would be woken up again", adding that it probably would be to a certain extent. While the central bank managed the rouble's slide during the last economic crisis, it might react differently if the current geopolitical confrontation worsens. Timothy Ash, head emerging markets strategist at Standard Bank in London, said that the central bank may try to hold the line if capital flight accelerates. "Once that starts, reserves would melt pretty quickly, and I think that unlike in 2008/2009 the central bank would be loath to let the currency weaken amid geopolitical risks," he said. The authorities could reimpose capital controls, but earlier in the crisis the central bank made clear it opposed such action, which would reduce Russians' demand for foreign currency but also raise borrowing costs for corporations. ID:nL6N0MF1FK While it is difficult to judge what everyday Russians would do, the exodus of investors may not turn into the stampede some fear. Foreigners hold almost $200 billion of Russian equities, according to the central bank. But with many emerging market funds benchmarked to indexes such as MSCI's .MSCIEF , where Russian stocks account for around 5 percent, it means they cannot pull all their money out. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC: Crude oil vs. Russia foreign currency reserves http://link.reuters.com/dax96s Russian central bank stats http://www.cbr.ru/eng/statistics/print.aspx?file=credit_statistics/schedule_debt_e.htm&pid=svs&sid=vd_GVD Russia's International Investment Position http://www1.minfin.ru/en/macroeconomics/dissemination/national_summary/ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> PLUS POINT Another plus point is that with $1.47 trillion in total assets - reserves plus those held both at home and abroad by Russians - versus $1.34 trillion of liabilities, Moscow's finances are in the black. The biggest difference between now and the 2008-09 crisis is that this time the oil price, which brings in much of Russia's wealth, is not suffering from a global financial crisis. However, Moody's rating agency warned on Thursday that the current turbulence could leave Russia exposed if oil prices were to fall sharply after all. "If capital outflows continued at a similar pace as in the first half of 2014 because of the Ukraine conflict and sanctions, the level of reserves with which Russia would face an oil shock would be significantly lower than in 2008," Moody's said in a report. But for now, while the situation remains unpredictable, the better global economic environment than in 2008-09 should mean Russia's finances deteriorate at least at a slower pace. "If the corporates and banks lose access (to capital markets) you will have to keep an eye on the currency reserves because they would have to rely on the Russian central bank to provide the dollars to fund their external debt," said Viktor Szabo, a Russian specialist that works alongside Diment at Aberdeen Asset Management. "But it is not a short-term issue, it is more of a 2-3 year horizon." (Writing by Marc Jones; editing by David Stamp) ((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net)) Keywords: RUSSIA/RESERVES

GLOBAL MARKETS-Shares trim losses, dollar dips after jobs report

August 01, 2014 - reuters.com

* Payrolls increase 209,000 in July, less than expected * Expectations of early interest rate hike had hit stocks * US Treasuries yields drop, gold bounce back By Blaise Robinson PARIS, Aug 1 (Reuters) - Shares trimmed losses and the dollar dipped on Friday after the U.S. reported job growth slowed more than expected in July and the unemployment rate unexpectedly rose, easing worries that interest rates will rise soon. U.S. Treasuries yields dropped, with benchmark 10-year notes US10YT=RR last up 2/32 in price to yield 2.55 percent, down from 2.58 percent before the jobs data was released, while gold XAU= bounced back from a recent slide. The Labor Department said on Friday nonfarm payrolls increased by 209,000 last month after surging by 298,000 in June, missing economists' expectation of an increase of 233,000 jobs. ID:nL2N0Q62Q0 "The number was a fairly big miss, but it means the Americans may hold off a little bit longer from raising rates," said Joe Neighbour, trading analyst at London-based firm Central Markets. While encouraging for the global economy at large, the prospect of strong job numbers had fuelled expectations the Fed would raise rates soon. The U.S. central bank's ultra-loose monetary policy has helped drive a two-year rally in equity markets. U.S. stock index futures SPc1 DJc1 NDc1 trimmed losses after the data. The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.9 percent, partly recovering from a 1.3 percent loss before the data was released. The MSCI All-Country World index .MIWD00000PUS was down 0.4 percent. The dollar, which had been hovering just below a 10-month high against a basket of currency .DXY earlier on Friday, dipped after the data. FRX/ Despite the lower-than-expected jobs data, investors remained cautious. A strong U.S. GDP figure earlier this week and conflict in Ukraine and the Middle East were keeping them on edge. "The market now believes the Fed will move sooner rather than later, and the momentum is turning against the 'safe play of being long equities'," said Steen Jacobsen, chief investment officer at Saxo Bank, in Copenhagen. Those views got some confirmation when Dallas Federal Reserve Bank President Richard Fisher told a television interviewer it was "very possible" the Fed would start raising rates early next year if the economy kept improving. Speaking on CNBC on Friday, Fisher declined to specify when he expects the Fed to move ID:nU5N0MO01L . In addition, the threat of a conflict between Russia and Ukraine appears to be affecting the euro zone economy. A survey showed on Friday the region's manufacturing growth easing in July. ID:nL9N0O5016 "The slowdown from the confidence peak earlier this year is noticeable," Christian Schulz, senior economist at Berenberg Bank in London. "Especially in Germany, it reflects the Putin factor, which has aggravated the problems of an already troubled Russian economy." The cautious mood was also felt in the bond market, where yields on the riskier Spanish ES10YT=TWEB and Italian bonds IT10YT=TWEB edged higher. Portuguese bond yields PT10YT=TWEB also rose on Friday, amid expectations Lisbon will bail out the country's biggest bank after it reported massive losses. ID:nL6N0Q72M2 Brent crude oil LCOc1 lost ground, as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. ID:nL4N0Q711O (Additional reporting by Sudip Kar-Gupta in London; Editing by Larry King) ((francesco.canepa@thomsonreuters.com)(00442075423871)(Reuters Messaging: francesco.canepa.thomsonreuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

London platinum/palladium 1400 fix - Aug 1

August 01, 2014 - reuters.com

UPDATE 1-Indian rupee posts biggest weekly loss since record lows in Aug

August 01, 2014 - reuters.com

* Rupee ends at 61.18/19 per dlr vs 60.55/56 on Thursday * All eyes on U.S. jobs data for next cues * RBI policy review on Tuesday (Updates) By Gaurav Pai MUMBAI, Aug 1 (Reuters) - The Indian rupee posted its biggest weekly fall since record low levels in August last year as the rally in the dollar in global markets spurred banks to buy the U.S. currency for corporate clients, prompting mild intervention by the central bank. The falls were especially pronounced on Friday, when the partially convertible rupee INR=D2 almost breached the 60.19 level, last seen on April 23, tracking broader falls in Asian currencies. It ended down with its biggest daily decline since Jan. 24. EMRG/FRX Whether the dollar sustains those gains depends on U.S. monthly jobs data due later in the day. Strong U.S. employment data would strengthen the case for an early interest rate increase by the Federal Reserve and could benefit the dollar at the expense of emerging currencies such as the rupee. "The market was in a complacent mode with elevated asset prices and this is just a correction of the same," said Samir Lodha, managing director at QuantArtMarket Solutions, a currency advisory firm in Mumbai. "If the U.S. employment data turns out strong, we will see further correction in the rupee, which will then look for RBI support," he added. Traders cited suspicions of modest dollar sales by state-run banks, as a part of the Reserve Bank of India's efforts to support the rupee. The rupee ended at 61.18/19 per dollar against Thursday close of 60.55/56. The local currency fell 1.02 percent on the day, its biggest fall since Jan. 24, during a period when emerging markets were gripped by risk aversion over China's economy. For the week, the rupee fell 1.8 percent, its biggest weekly fall since late August, when it hit its last record low against the dollar because of waning confidence in its economy and its ability to narrow its current account deficit. Weakness in shares also dampened sentiment, with the 50-share NSE index .NSEI falling 1.5 percent tracking weaker global markets. .BO Little impact was seen from a private survey on Friday showing factory activity expanded at its fastest pace in 17 months in July and data late on Thursday showing annual infrastructure sector growth ININFR=ECI hit a nine-month high in June. ID:nS7N0MG059 ID:nD8N0PQ04A In the offshore non-deliverable forwards PNDF , the one-month was at 61.50/60, while the three-month was at 62.13/23. FACTORS TO WATCH * Emerging stocks hit 12-day lows EMRG/FRX * Nonfarm payrolls data is next focus FRX/ * Weak euro zone manufacturing data hits sentiment MKTS/GLOB * Foreign institutional investor flows INFII INFII01 * For data on currency futures INRFUTURES DIARIES & DATA: Indian Data Watch ECONIN European diary WEU/EQTY2 Indian diary IN/DIARY US Diary US/DIARY (Editing by Subhranshu Sahu and Robert Birsel) ((gaurav.pai@thomsonreuters.com/)(gaurav.pai.thomsonreuters.com @reuters.net)) Keywords: MARKETS INDIA FOREX/

SNAPSHOT-India stocks, bonds, rupee, swaps, call at close

August 01, 2014 - reuters.com

STOCKS .BSESN .NSEI ----------------------- The benchmark BSE index ended down 1.6 percent and the broader NSE index closed 1.50 percent lower, as blue-chips such as Reliance Industries slumped tracking weaker global markets ahead of U.S. jobs data later in the session. .BO GOVERNMENT BONDS IN088323G=CC -------------------------------- India's soon-to-be benchmark 10-year bond yield ended 2 basis points higher at 8.52 percent, while the existing benchmark 10-year bond yield up 3 basis points at 8.75 percent, after the central bank did not fully sell its allotment of debt at the 140 billion rupees ($2.29 billion) auction, with the devolvement to traders including the new 10-year bond introduced last week. IN/ RUPEE INR=D2 -------------- The partially convertible rupee ended at 61.18/19 per dollar from Thursday's close of 60.55/56, marking its biggest fall in half a year, as the rally in the dollar in global markets spurred banks to buy the greenback for their corporate clients, prompting mild intervention from the central bank. INR/ INTEREST RATE SWAPS INROIS MIOIS= ------------------------------------- The benchmark 5-year swap rate closed up 1 bp at 7.90 percent while the 1-year rate ended flat at 8.37 percent. CALL MONEY INROND= --------------------- India's cash rate ended at 7.10/7.15 percent against Thursday's close of 7.95/8.05 percent. ---------------------- Double click on codes in <> Reuters MIOR/MIBOR MIBR= NSE MIBID/MIBOR MIBR=NS Reuters Corporate Bond Yield/Spread 0#AAAINBMK= For Reuters Benchmarks IN/BENCH (Compiled by Dipika Lalwani) ((dipika.lalwani@thomsonreuters.com)(+91-22-6180-7098)(Reuters Messaging: dipika.lalwani.thomsonreuters.com@reuters.net)) Keywords: INDIA SNAPSHOT/

Indian rupee hits 3-month low on global dollar rally

August 01, 2014 - reuters.com

* Rupee ends at 61.18/19 per dlr vs 60.55/56 on Thursday * All eyes on U.S. jobs data for next cues * RBI policy review on Tuesday By Gaurav Pai MUMBAI, Aug 1 (Reuters) - The Indian rupee posted its biggest fall in half a year on Friday, as the rally in the dollar in global markets spurred banks to buy the greenback for their corporate clients, prompting mild intervention from the central bank. The partially convertible rupee INR=D2 almost breached the 60.19 level, last seen on April 23, tracking broader falls in Asian currencies. EMRG/FRX Whether the dollar sustains those gains depends on U.S. monthly jobs data due later in the day. Strong U.S. employment data would strengthen the case for an early interest rate hike by the Federal Reserve and could benefit the greenback at the expense of emerging currencies such as the rupee. "The market was in a complacent mode with elevated asset prices and this is just a correction of the same," said Samir Lodha, managing director at QuantArtMarket Solutions, a currency advisory firm in Mumbai. "If the U.S. employment data turns out strong, we will see further correction in the rupee, which will then look for RBI support," he added. Traders cited suspicions of modest dollar sales by state-run banks, as a part of the Reserve Bank of India's efforts to support the rupee. The rupee ended at 61.18/19 per dollar against Thursday close of 60.55/56. The local currency fell 1.02 percent on the day, its biggest fall since Jan. 24, during a period when emerging markets were gripped by risk aversion over China's economy. For the week, the rupee fell 1.8 percent, its biggest weekly fall since late August. Weakness in shares also dampened sentiment, with the 50-share NSE index .NSEI falling 1.5 percent tracking weaker global markets. .BO Little impact was seen from a private survey on Friday showing factory activity expanded at its fastest pace in 17 months in July and data late on Thursday showing annual infrastructure sector growth ININFR=ECI hit a nine-month high in June. ID:nS7N0MG059 ID:nD8N0PQ04A In the offshore non-deliverable forwards PNDF , the one-month was at 61.50/60, while the three-month was at 62.13/23. FACTORS TO WATCH * Emerging stocks hit 12-day lows EMRG/FRX * Nonfarm payrolls data is next focus FRX/ * Weak euro zone manufacturing data hits sentiment MKTS/GLOB * Foreign institutional investor flows INFII INFII01 * For data on currency futures INRFUTURES DIARIES & DATA: Indian Data Watch ECONIN European diary WEU/EQTY2 Indian diary IN/DIARY US Diary US/DIARY (Editing by Subhranshu Sahu) ((gaurav.pai@thomsonreuters.com/)(gaurav.pai.thomsonreuters.com @reuters.net)) Keywords: MARKETS INDIA FOREX/

TABLE-NSE Currency Futures traded on Aug 1

August 01, 2014 - reuters.com

GLOBAL MARKETS-Shares sink, dollar up before U.S. jobs data

August 01, 2014 - reuters.com

* Investors trim stock holdings before U.S. jobs data * Rising expectations of early interest rate hike * Weak euro zone manufacturing survey further hits sentiment By Blaise Robinson PARIS, Aug 1 (Reuters) - Shares tumbled worldwide and the dollar rose on Friday amid expectations a U.S. jobs report would strengthen the case for an early interest rate rise by the U.S. Federal Reserve. U.S. non-farm payrolls, due at 1230 GMT, are expected to show the United States added 233,000 jobs last month and the unemployment rate held steady at 6.1 percent. ID:nL2N0Q31WJ While encouraging for the global economy at large, strong job numbers would fuel expectations the Fed will raise rates soon. The U.S. central bank's ultra-loose monetary policy has helped drive a two-year rally in equity markets. "The market now believes the Fed will move sooner rather than later, and the momentum is turning against the 'safe play of being long equities'," said Steen Jacobsen, chief investment officer at Saxo Bank, in Copenhagen. Those views got some confirmation when Dallas Federal Reserve Bank President Richard Fisher told a television interviewer it was "very possible" the Fed would start raising rates early next year if the economy kept improving. Speaking on CNBC on Friday, Fisher declined to specify when he expects the Fed to move ID:nU5N0MO01L . The MSCI All-Country World index .MIWD00000PUS was down 0.5 percent and the pan-European FTSEurofirst 300 index .FTEU3 dropped 1.3 percent, hitting a 3 1/2-month low. Worries over Argentina's default and sanctions against Russia also weighed on the market. .EU U.S. stock index futures were also sharply lower. .N Stocks had started to retreat as expectations of monetary tightening rose, following strong data on U.S. GDP and labour costs earlier this week. Tensions in Ukraine and the Middle East also pulled shares lower. "Markets are fairly effectively pricing in future rate increases. As long as that's the case, we are confident we won't see any cataclysmic event on the fixed-income side of our risk parity portfolio," said Stuart MacDonald, managing director of hedge fund Aquila Capital. Also rattling investors, the threat of a conflict between Russia and Ukraine was starting to affect the euro zone economy. A survey showed on Friday the region's manufacturing growth easing in July. ID:nL9N0O5016 "The slowdown from the confidence peak earlier this year is noticeable," Christian Schulz, senior economist at Berenberg Bank in London. "Especially in Germany, it reflects the Putin factor, which has aggravated the problems of an already troubled Russian economy." The dollar .DXY hovered around 10-month highs against a basket of currency, on track to record a third strong week. FRX/ The cautious mood was also felt in the bond market, where yields on the riskier Spanish ES10YT=TWEB and Italian bonds IT10YT=TWEB edged higher. Portuguese bond yields PT10YT=TWEB also rose on Friday, amid expectations Lisbon will bail out the country's biggest bank after it reported massive losses. ID:nL6N0Q72M2 Brent crude oil LCOc1 fell to a two-week low on Friday, slipping towards $105 a barrel as oversupply in the Atlantic basin and low demand outweighed worries over political tensions in the Middle East, North Africa and Ukraine. ID:nL4N0Q711O Also on the commodities front, Gold XAU= held near a six-week low and was on track for a third straight weekly loss. The prospect of tighter monetary policy curbed appetite for the yellow metal, which has historically been considered an inflation hedge. PREMTL Nickel prices fell to their lowest in more than a month on Friday as inventories rose. Other base metals were muted before the U.S. jobs report. ID:nL6N0Q72X2 (Additional reporting by Francesco Canepa in London; Editing by Larry King) ((francesco.canepa@thomsonreuters.com)(00442075423871)(Reuters Messaging: francesco.canepa.thomsonreuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

Sri Lanka rupee ends little changed; seen gaining further

August 01, 2014 - reuters.com

COLOMBO, Aug 1 (Reuters) - The Sri Lankan rupee ended little changed on Friday, but dealers expect the currency to strengthen further due to lack of strong private credit growth and importer dollar demand amid investors pricing in another policy rate cut in the near future, dealers said. The rupee LKR=LK closed at 130.21/24 per dollar, compared to Thursday's close of 130.21/22. "We see rupee further strengthening in the absence of private sector credit and on import demand," a currency dealer said. The dealer said yield on one-year treasury bill has now fallen to slightly less than the central bank's repurchase rate in the secondary market. "I think investors are pricing in another rate cut in the near future," he said. Dealers said the central bank's dollar buying from the market has increased rupee liquidity and sent yields on government securities lower amid lack of strong demand for private credit and imports. The central bank has absorbed more than $750 million from the market to prevent a sharp appreciation in the rupee and support exporters. Dealers said the two state banks bought dollars at 130.21 rupees for imports amid inflows from remittances and exporter dollar sales. The International Monetary Fund (IMF) on Wednesday urged Sri Lanka to limit its intervention in the foreign exchange market. ID:nL4N0Q518J The IMF said the central bank's intervention may create a perception that the rupee was implicitly fixed and could lead market participants and firms to hold un-hedged foreign exchange risk on their balance sheets. Finance Secretary P.B. Jayasundera said last week that Sri Lanka was building up its foreign exchange reserves while keeping its currency stable as the island nation sees more dollar inflows. ID:nL4N0PY3VX (Reporting by Shihar Aneez and Ranga Sirilal; Editing by Sunil Nair) ((shihar.aneez@thomsonreuters.com)(+94-11-232-5540)(Reuters Messaging: shihar.aneez.thomsonreuters.com@reuters.net twitter:@shiharaneez)) Keywords: MARKETS SRI LANKA/FOREX

TABLE-Romania FX reserves edge down in July

August 01, 2014 - reuters.com

London gold 1030 fix - Aug 1 - 1284.50 dlrs

August 01, 2014 - reuters.com

Mongolia H1 foreign investment dips 70 pct on uncertainties

August 01, 2014 - reuters.com

ULAN BATOR, Aug 1 (Reuters) - Foreign direct investment in Mongolia fell 70 percent in the first half of the year, central bank data showed on Friday, with investors wary of the country's position on the foreign ownership of its resources. Mineral-rich Mongolia has made it easier for foreign companies to gain majority stakes in mining, finance and other sectors, but protracted disputes with some multi-nationals are putting investors off despite the government's efforts to resolve them, including changes to controversial legislation aimed at limiting foreign ownership in "strategic sectors". The central bank said investment into Mongolia fell a total of $873.2 million from January to June against a year earlier. Mongolia has sought to attract billions of dollars of foreign capital to transform its remote pastoral economy into a regional mining powerhouse, but giant projects such as the Oyu Tolgoi copper-gold mine and the Tavan Tolgoi coal project have been subject to long delays. The central bank said that Mongolia's earnings from coal exports dipped 17 percent in the first half of the year, with volumes down 143 percent over the period. Over the same period, copper exports rose 144 percent to become the country's biggest earning commodity over the period, driven by Oyu Tolgoi, a joint venture between the Mongolian government and mining giant Rio Tinto RIO.AX RIO.L . Rio Tinto and Mongolia have been at loggerheads over Oyu Tolgoi, with the government complaining that the mine's development costs have been too high, suspending the project's underground expansion and delaying as much as $5.1 billion in foreign investment. The project is also embroiled in a tax dispute with the Mongolian authorities, which is also expected to delay the release of a feasibility study for the mine's expansion. (Reporting by Terrence Edwards; Editing by David Stanway and Jacqueline Wong) ((david.stanway@thomsonreuters.com)(+86 10 6627 1289)(Reuters Messaging: david.stanway.thomsonreuters.com@reuters.net)) Keywords: MONGOLIA INVESTMENT

GLOBAL MARKETS-Shares fall, dollar up before U.S. jobs data

August 01, 2014 - reuters.com

* Shares fall, dollar up * Investors nervous ahead of U.S. jobs data * Weak euro zone manufacturing survey further hits sentiment By Francesco Canepa LONDON, Aug 1 (Reuters) - Global shares fell on Friday and the euro eased against the dollar, hit by weak euro zone manufacturing data and nerves ahead of a key U.S. jobs report. While encouraging for the global economy at large, strong U.S. employment data would strengthen the case for an early interest rate hike by the Fed, whose monetary largesse has helped fuel a 45 percent rally in global stocks over the past two years. "I still think good data is good for the stock market in the long term because it means the global recovery is still on track," Farhan Ahmad, a trader at Tradenext, said. "Short term, however, we may see some reverberation in the stock market and some further weakening." The MSCI All-Country World index .MIWD00000PUS was down 0.5 percent, while the pan-European FTSEurofirst 300 index .FTEU3 fell 1.1 percent, also weighed down by some downbeat corporate updates and manufacturing data. .EU The MSCI All-Country World recorded its steepest monthly loss since February last month, falling 1.3 percent on the back of concerns about a Fed rate hike after strong U.S. GDP and labour costs data earlier this week, as well as geopolitical tensions in Ukraine and the Middle East. The threat of a conflict between Vladimir Putin's Russia and Ukraine were starting to affect the euro zone economy, with the bloc's manufacturing growth easing in July, a survey showed on Friday. ID:nL9N0O5016 "The slowdown from the confidence peak earlier this year is noticeable," Christian Schulz, senior economist at Berenberg Bank in London. "Especially in Germany, it reflects the Putin factor, which has aggravated the problems of an already troubled Russian economy." The euro EUR= fell for a fourth straight session against the dollar to trade at $1.3383. The greenback .DXY hovered around 10-month highs against a basket of currency, on track to record a third strong week. FRX/ The cautious mood was also felt in the bond market, where yields on the riskier Spanish ES10YT=TWEB and Italian bonds IT10YT=TWEB edged higher. Greek bond yields, however, slipped as investors anticipated a credit ratings upgrade from Moody's later in the day GVD/EUR . Copper prices CMCU3 were caught in the slipstream of other asset classes and gave away early gains, which had been fuelled by better-than-expected Chinese factory data. Gold XAU= held near a six-week low and was on track for a third straight weekly loss as the prospect of a tighter monetary policy dented appetite for the yellow metal, traditionally seen as an inflation hedge. PREMTL Brent crude LCOc1 held near $106 a barrel as ample supply continued to drag on prices a day after the benchmark posted its worst monthly performance since April 2013 O/R . (Reporting By Francesco Canepa; Editing by Toby Chopra) ((francesco.canepa@thomsonreuters.com)(00442075423871)(Reuters Messaging: francesco.canepa.thomsonreuters.com@reuters.net)) Keywords: MARKETS GLOBAL/

London platinum/palladium 0945 fix - Aug 1

August 01, 2014 - reuters.com

Australia's mining minnows see some light after long dark spell

August 01, 2014 - reuters.com

By James Regan SYDNEY, Aug 1 (Reuters) - For the first time in two years, Kerry Stevenson has had to turn people away from seminars she runs on investing in Australia's small-cap mining companies. The seminars have quickly swelled to capacity numbers, underscoring, Stevenson says, renewed hunger for Australian penny mining stocks after a long hiatus. "People are finally saying to me they are ready to get their toes wet again in this end of the market," she said. The end of Australia's decade-long mining boom turned dozens of exploration companies and small miners into "penny dreadfuls" - all but ignored by institutional lenders and private equity finaciers. Funding remains a key concern for most of the sector, with a survey by Ernst & Young indicating little has changed in the past 12 months for many juniors and explorers, which remain "cash-starved and focused on survival." Still, says Morgans Stockbroking analyst James Wilson, "green shoots are appearing across the sector." The S&P/ASX 300 Metals & Mining Index .AXMM sits near a 6-month high, having jumped 11 percent in the past seven weeks, although it is still more than 40 percent below its peak in mid-2008. Investors are starting to fund some miners, but are being more selective and are wary of commodities that show little promise. Pilbara Minerals PLS.AX , which is looking in Australia for electronics component tantalum and capitalised at just A$10.6 million ($9.8 million), raised more than A$3.5 million in recent weeks. "That's more than we could have raised in the last three years," said Chief Executive Neil Biddle. Macphersons Resources Ltd MRP.AX , which is exploring for silver and zinc in Australia, this week raised A$8 million via a placement. "The thinking is the market has turned the corner for the right projects with a future," Macpherson's managing director, Morrie Goodz said. Companies exploring for graphite - used to improve the effficiency of electric cars - have posted hefty share price gains, jumping more than 200 percent on average over the past year, according to Pattersons Securities. A flurry of takeovers and asset acquisitions also suggests valuations sit at a cyclical low, and at some stage equity market sentiment will catch up, says Morgan's Wilson. One of the biggest deals in the sector, a friendly $570 million offer by Canada's B2Gold BTO.TO for Papillon Resources PIR.AX , valued the Australian gold explorer at A$1.72 a share - more than twice its price at the start of the year. Miners will get a chance to gauge interest in the sector next week at the annual Diggers and Dealers Mining forum in the outback mining town of Kalgoorlie. Nearly 50 companies prospecting and mining for everything from gold in Senegal to graphite in Mozambique to iron ore in Australia are due to attend, in line with recent years, say organisers. "We consider this to be a reasonable result given the explorers have no money," said John Langford, a forum director. Commodity markets are also entering the second half on a positive note, with long-suffering metals like nickel, zinc and aluminium showing strong price gains. But, cautions Australia & New Zealand Bank, any recovery is likely to be far more gradual than in the past, tempered by lower liquidity and a stronger U.S. dollar. ($1 = 1.0774 Australian Dollars) (Editing by Richard Pullin) ((jim.regan@thomsonreuters.com)(+612 9373-1814)(Reuters Messaging: jim.regan.reuters.com@reuters.net)) Keywords: MINING AUSTRALIA/

Vietnam domestic market commodity prices-Aug 1

August 01, 2014 - reuters.com

Aug 1 (Reuters) - Following are domestic prices of Vietnam's key commodities. Unit: million dong VND= per tonne. Item July 28-Aug 1 July 21-25 Location Robusta beans 39.1-41.6 38.9-40.3 Central Highlands Cocoa 58.6 57.7-58.2 Daklak Black pepper 183.0-188.0 180.0-185.0 Southern region Refined sugar 13.0-15.0 13.0-15.5 Southern region Summer-autumn paddy 5.20-6.40 5.20-6.30 Mekong Delta ___________________ SJC gold 3.661-3.676 3.668-3.687 Hanoi, HCM City NOTES: Gold prices are low/high selling prices quoted in million dong during the week by top manufacturer SJC per 3.75-gram ingot. Coffee export prices COFFEE/ASIA1 Rice export prices RICE/ASIA1 Historical data VNCOMM01 Central bank's gold auction SBVGOLD2013 ($1=21,200 dong) (Compiled by Hanoi Newsroom) ((ho.minh@thomsonreuters.com +844 3825 9623)) Keywords: VIETNAM COMMODITIES/PRICES

INDICATORS - Kazakhstan - Aug 1

August 01, 2014 - reuters.com

India Morning Call-Global Markets

August 01, 2014 - reuters.com

MUMBAI, Aug 1 (Reuters) - EQUITIES NEW YORK - The U.S. S&P500 stock index posted its worst daily fall since April and its first monthly drop since January on Thursday, as economic data sparked concern the Federal Reserve could raise interest rates sooner than some have expected. The Dow Jones industrial average .DJI fell 317.06 points or 1.88 percent, to 16,563.3, while the S&P 500 .SPX lost 39.4 points or 2.0 percent, to 1,930.67 and the Nasdaq Composite .IXIC dropped 93.13 points or 2.09 percent, to 4,369.77. For a full report, click on .N - - - - LONDON - Britain's top equity index fell on Thursday as Lloyds Banking Group LLOY.L pulled down financial stocks, and concerns about the impact on Europe of new sanctions on Russia also made traders wary. The blue-chip FTSE 100 index .FTSE closed down by 0.6 percent, or 43.33 points, at 6,730.11 points. For a full report, click on .L - - - - TOKYO - Japan's Nikkei share average dropped on Friday morning after U.S. shares languished on concerns that interest rates could rise sooner than expected, but strong earnings from Sony Corp 6758.T and Panasonic Corp 6752.T limited the losses. The Nikkei .N225 dropped 0.3 percent to 15,581.03 in mid-morning trade. For a full report, click on .T - - - - HONG KONG - Hang Seng Index .HSI set to open down 0.7 percent. For a full report, click on .HK - - - - FOREIGN EXCHANGE SYDNEY - Dollar bulls took a breather early on Friday ahead of a closely watched jobs report that has the potential to make or break a rally that saw the greenback post its best monthly performance in over a year. The dollar index was steady at 81.449 .DXY , having risen 2.1 percent in July to a 10-1/2 month peak of 81.573. For a full report, click on USD/ - - - - TREASURIES NEW YORK - Most U.S. Treasuries were steady on Thursday, overcoming earlier price losses, as investors sought out lower risk debt for month-end rebalancing. U.S. government debt has weakened since gross domestic product data on Wednesday showed a strong rebound in the second quarter from a weak start to the year. For a full report, click on US/ - - - - COMMODITIES GOLD SINGAPORE - Gold was stuck near a six-week low on Friday and headed for a third straight weekly loss, as U.S. economic optimism offset any safe-haven demand from geopolitical tensions and lower equities. Spot gold XAU= was little changed at $1,282.79 an ounce by 0017 GMT, after falling 1 percent in the previous session. It hit $1,280.76 on Thursday - its lowest since June 19. For a full report, click on GOL/ - - - - BASE METALS SYDNEY - London copper eased on Friday after a rout on Wall Street over Argentinian default soured risk appetite and ahead of a deluge of economic indicators out later in the session, including an assessment of activity in China's vast manufacturing sector. Three-month copper on the London Metal Exchange CMCU3 edged down by 0.3 percent to $7,096.50 a tonne by 0040 GMT, reversing losses from the previous session. For a full report, click on MET/L - - - - OIL NEW YORK - U.S. crude oil tumbled more than $2 on Thursday, going below $98 a barrel, hitting the lowest level since March on news of a potentially lengthy shutdown at a Kansas oil refinery, while Brent also slipped amid signs of robust OPEC oil production Brent crude for September delivery LCOc1 settled down 49 cents at $106.02 a barrel. For a full report, click on O/R (Compiled by Indulal PM) ((indulal.p@thomsonreuters.com)(+91-22-6180-7183)(Reuters Messaging: indulal.p.thomsonreuters.com@reuters.net)) Keywords: MORNINGCALL INDIA

RPT-In cat-and-mouse game, India uncovers new gold smuggling route

August 01, 2014 - reuters.com

(Repeats to fix formatting) * The world's second-biggest gold importer imposed high duty to curb imports * Last year's rules have caused an explosion in gold smuggling * New scam uncovered to smuggle gold in using tax-free zone - sources By Krishna N Das and A. Ananthalakshmi NEW DELHI/SINGAPORE, Aug 1 (Reuters) - India is scrambling to crack down on a new gold smuggling tactic that it fears could accelerate a flood of illegal imports of the precious metal into the world's second-biggest buyer. India - whose appetite for gold is only rivalled by China - last year imposed a record 10 percent import duty and made it mandatory to export a fifth of all bullion imports, seeking to curb bullion demand that has blown out the trade deficit. With the lure of big profits from avoiding duty, smugglers have come up with innovative ways to bring in gold ranging from swallowing nuggets to hiding bars in dead cows. In the latest smuggling case, a gold exporting firm attempted to use a tax-free special economic zone to try to bypass restrictions and sell to the local market. The scam was uncovered after police stopped a car trying to take 25 gold bars, worth about $1 million, out of a tax-free special economic zone in Surat in June to sell to the domestic market, according to a government document seen by Reuters. The owner of the firm was arrested. The new government of Narendra Modi had been expected to loosen the policies, but its first budget maintained the tough stance, which has resulted in an explosion of gold smuggling and cast doubt on how accurately official data reflects gold flows in the world's second-biggest buyer. ID:nL4N0JD1WQ Government figures show that only 2.34 tonnes of smuggled gold was retrieved last year, while the World Gold Council estimated 200-250 tonnes of gold illegally entering India. "Since the import restrictions are still in place, smuggling will remain rampant and that will distort total import figures," said Carsten Fritsch, an analyst with Commerzbank AG. The June arrest was the first time authorities had seized gold being smuggled out of a special economic zone, according to a government source, and appears to reveal a more sophisticated scam to get gold into the local market. "We had intelligence report and intercepted the car, with the manager of the firm in it. The manager said the gold was concealed by the proprietor of the firm," said another senior government official with direct knowledge of the case, adding that the gold was to be illegally sold in the domestic market. "The authorities know that such things are happening and intelligence gathering has been strengthened," the source said. The ministry of commerce, which is in charge of special economic zones, did not reply to requests for comment. FAKE RECEIPTS Illustrating the extent of smuggling, India's junior civil aviation minister said this week staff of the national carrier, Air India AIN.UL , had been found smuggling in gold in 13 instances in the last few years. But special economic zones could be especially vulnerable since exporters do not pay duty to bring gold into India, and thus can make a huge profit by diverting supplies to the domestic market. There are 185 such zones in India. Last year's restrictions on imports have curbed supply and pushed up domestic premiums - the difference between local and global prices XAU= - to a record $160 an ounce last December. Indian gold imports plunged by a fifth last year to 825 tonnes though jewellery and investment demand rose 13 percent. One of the government sources said that others are likely to be using special economic zones to bring in gold. "After all how would you know if somebody is taking out gold in their cars?" To account for the disappearance of the gold, exporters are likely to be using either fake receipts or imitation copper jewellery, according to the official. Some exporters also buy back supplies that they have sold into the market when premiums fall, thus making a profit off the premium arbitrage, said Sudheesh Nambiath, a senior analyst at Thomson Reuters GFMS in Mumbai. "Policymakers are increasingly aware of such practices. So I wouldn't be surprised if we see further tightening of rules around exporters in tax-free zones," said Nambiath. (Additional reporting by Siddesh Mayenkar in Mumbai; Editing by Ed Davies) ((ananthalakshmi.as@thomsonreuters.com)(+65 6870 3726)(Reuters Messaging: ananthalakshmi.as.thomsonreuters.com@reuters.net)) Keywords: INDIA GOLD/SMUGGLING

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