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Head of Germany's central bank criticises ECB stimulus plan

September 21, 2014 - reuters.com

BERLIN, Sept 21 (Reuters) - The head of Germany's Bundesbank has criticised the European Central Bank's (ECB) recent cut in borrowing costs and its pledge to buy repackaged debt, saying they took pressure off governments to implement needed reforms. Jens Weidmann told Der Spiegel magazine that the moves went beyond previous attempts to encourage banks to lend more, and could free banks of risk at the cost of the taxpayer. "In my view the recent decisions by the ECB Council (are) a fundamental change of course and a drastic change for the ECB's monetary policy," he said in an interview published on Sunday. "No matter how you think about the content of the decisions, the majority of the ECB Council members are signalling with it that monetary policy is ready to go very far and to enter new territory." Though this is not the first such criticism of the ECB from Germany's influential central bank, the forthright tone underscores the challenges for the ECB should it ever need to extend its programme of asset purchases to government bonds. The comments come at a difficult time for the ECB, just days after an offer of cheap credit to banks fell flat, calling into question a central plank in its plans to shore up the euro zone's flagging economy. While economic recovery is in full swing in the United States and the central bank there has started to withdraw support, the ECB has stepped up efforts to unblock lending to firms and boost growth, for example by buying repackaged loans. As part of its stimulus, the ECB plans to buy tranches of low-risk asset-backed securities (ABS). The central bank said it would also buy riskier tranches if governments guaranteed them, but that idea was swiftly rejected by France and Germany. Weidmann warned that depending on the exact design of the plan, "banks could be freed of risks at the cost of taxpayers", arguing that therefore it was key that no "significant risks of individual banks of countries should be taken on." The ECB should only buy assets with little risk, Weidmann said, but doubted there was enough volume of those on the market to reach the proposed targets. Previous rounds of cheap ECB loans for banks and borrowing costs close to zero have done little to boost lending to companies, with much of the money instead spent on government bonds. Critics fear a similar fate for the new scheme. Some banks were reluctant to participate in the first round of cheap credit on Thursday, possibly for fear that it could single them out as struggling just weeks before the results of an ECB-led asset quality review (AQR) and stress tests. Weidmann reiterated he saw the likelihood of deflation as "very low". Asked about France and Italy, Weidmann said the euro zone would not emerge from its troubles while the two countries did not implement tough structural reforms. "The longer (these) two big countries do not create the conditions for growth and stability, the longer weakness in the euro zone will continue and with it the pressure on monetary policy," he said. (Reporting by Annika Breidthardt; Additional reporting by John O'Donnell in Frankfurt; Editing by Mark Potter) ((annika.breidthardt@thomsonreuters.com; +49 30 2888 5166; Reuters Messaging: annika.breidthardt.reuters.com@reuters.net)) Keywords: ECB POLICY/WEIDMANN/

New Zealand PM storms to third term but faces slowing growth ahead

September 21, 2014 - reuters.com

* Key promises status quo after winning third term * Govt to maintain economic prudence but economists see China risk * Strong economy, personal popularity help Key to easy win By Naomi Tajitsu WELLINGTON, Sept 21 (Reuters) - Prime Minister John Key secured New Zealand's first majority government in almost 20 years on a promise to maintain a strong economy, but slowing growth in China may challenge his outlook and also threaten fiscal discipline. Key's centre-right National party stormed to a third straight term in general elections on Saturday after promising to stay on the path of economic growth and fiscal prudence, despite one of the roughest campaigns in recent years. National steered New Zealand's economy back to growth after the global financial crisis, with rising immigration and building projects in the largest city, Auckland, and in the earthquake-hit Canterbury region also boosting demand and investment. Dairy exports, which account for a quarter of all goods New Zealand sells overseas, have also soared. New Zealand's relatively small economy has outperformed many of those in developed countries, with data in the past few days showing growth at an annualised 3.9 percent in the second quarter, its fastest pace in a decade. The government and economists expect growth to moderate in the coming years as New Zealand feels the impact of rising interest rates and an historically strong domestic currency. A slump in global prices for dairy products is seen knocking the terms of trade from a 40-year high. Slowing growth in major trading partner China could also sting the New Zealand economy if it curbs demand for agricultural exports, economists say. "It's still not clear how much the Chinese economy is slowing ... China is an issue for New Zealand because they're our largest trading partner and impact our commodity prices," said Darren Gibbs, chief economist at Deutsche Bank New Zealand. The government has pledged to maintain the status quo on economic policy, but Gibbs said Key's plan to balance the books from next year onwards could be challenged by external factors, along with rising incomes. "National is pretty committed to achieving a surplus, but it will be very difficult to build extra surpluses. As the labour market tightens, pressure is going to build to pay public servants more," he said. In August, Key's government trimmed its growth forecast to 3.8 percent for the year to March 2015 from 4 percent in its May budget, while it also cut the budget surplus forecast for each year through to 2018 by NZ$500 million. ID:nL4N0QO1T6 Key also enjoys enormous personal popularity ratings and survived a sometimes rough-and-tumble campaign to secure an outright majority for the first time since New Zealand adopted its German-style proportional voting system in 1996. New Zealand's strong economic performance meant voters overlooked allegations of dirty politics, and reports that Key's government had planned mass domestic surveillance. "It was the most astonishing election campaign in living memory, but none of the issues that came up could really trump the economy in the end," political scientist Bryce Edwards said. Key is a former currency trader with an estimated wealth of around NZ$50 million ($41 million) but Edwards said Key's easy-going personal style helped him connect with ordinary voters. "He doesn't look and sound like a member of the establishment," Edwards said. "He looks and sounds like someone at the rugby club down the road." (1 US dollar = 1.2309 New Zealand dollar) (Reporting by Naomi Tajitsu; Editing by Paul Tait) ((naomi.tajitsu@thomsonreuters.com; +6448027979; Reuters Messaging: naomi.tajitsu.thomsonreuters.com@reuters.net)) Keywords: NEWZEALAND ELECTION/

MIDEAST STOCKS - Factors to watch - September 21

September 21, 2014 - reuters.com

DUBAI, Sept 21 (Reuters) - Here are some factors that may affect Middle East stock markets on Sunday. Reuters has not verified the press reports and does not vouch of their accuracy. INTERNATIONAL/REGIONAL * GLOBAL MARKETS-Shares end flat, closing out strong week MKTS/GLOB * U.S. crude falls on worries about glut, Brent gains O/R * MIDEAST STOCKS-UAE, Qatar up on FTSE index review; Medinet Nasr lifts Egypt MEAST-STX * PRECIOUS-Gold down, silver at 4-year low on strong dollar, equities GOL-SLVR-RTRS * U.S. Congress approves arming Syrian rebels, funding government US-SY-WAR * About 60,000 Syrian Kurds flee to Turkey from Islamic State advance SY-WAR-TR * Turkey secures release of hostages held by Islamic State TR-IQ * United States says role for Iran in tackling Islamic State IR-US-IQ-POL * Egypt to host Palestinian-Israeli Gaza talks in days -state news agency EG-IL-PS-POL * Bomb explodes at Hezbollah checkpoint in eastern Lebanon LB-BOMB * Iran moving to comply with extended nuclear deal with powers-IAEA IR-NUCL * Yemeni government and Houthi rebels reach agreement, UN envoy says YE-POL EGYPT * Egypt awards oil and gas exploration blocks EG-CRU * U.S. to deliver 10 Apache helicopters to Egypt -Pentagon US-EG-DEFBUY * Egypt's GASC buys 55,000 tonnes of U.S. wheat EG-WHT * Egypt must cut red tape to win investors in second Suez canal - law firm EG-CLJ * Egyptian pound steady on official and black markets EG-FRX SAUDI ARABIA * Saudi role against Islamic State turns on relief for Arab Sunnis SA-US-IQ-POL UNITED ARAB EMIRATES * UAE's Ithmar Capital picks CS, Deutsche for $436 mln Dubai float -sources AE-IPO * Abu Dhabi's Mubadala posts 23 pct profit rise on higher JV income MUDEV.UL KUWAIT * Kuwait Investment Authority says to expand Germany investments KW-DE QATAR * Industries Qatar shelves multi billion dollar petrochemicals project IQCD.QA BAHRAIN * Bahrain says parties find common ground but Shi'ites say demands not met BH-POL (Compiled by Dubai newsroom) ((dubai.newsroom@reuters.com)) Keywords: MIDEAST FACTORS

REFILE-BOJ's Kuroda vows to stick to easing plans

September 21, 2014 - reuters.com

((Fixs format for story link)) CAIRNS, Sept 21 (Reuters) - For highlights of the G20 news conferences click on ID:nG20HIGH (Reporting by Wayne Cole) ((Wayne.Cole@thomsonreuters.com; 612 9373 1813; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net)) Keywords: G20 AUSTRALIA/BOJ

UPDATE 1-New Zealand's National Party marches back to power

September 20, 2014 - reuters.com

(Adds detail, quotes, background) By Gyles Beckford WELLINGTON, Sept 20 (Reuters) - New Zealand's ruling National party stormed to a third term in government in the country's general election on Saturday with the centre-right party securing an outright election night majority on a platform to continue tight economic policies. Prime Minister John Key's party won 48.1 percent of the vote, translating into 61 of 121 parliamentary seats and improving its performance from the 2011 vote. "I think people saw the country was on the right direction and they rewarded us," Key told reporters as he headed to a victory rally. "What you saw was people saying they were going to vote for the future of the country and the issues that mattered, and not be distracted." National was set to make electoral history under the proportional voting system by being able to govern on its own, but Key said he would look to renew support deals with three minor parties in the previous coalition government. The 53-year-old former foreign exchange dealer emerged untouched from allegations of dirty political tactics involving government ministers, and claims a government spy agency had planned mass secret domestic surveillance. "We've never seen a government grow in popularity into a third term. In many respects it's an extraordinary result," said Grant Duncan, associate professor of public policy at Massey University. He said National had offered nothing much in the election campaign apart from the prospect of tax cuts in the next couple of years, and it looked to be "business as usual" with tight government spending. The main opposition centre-left Labour Party slumped to its lowest share of the vote in more than 80 years on 24.7 percent of the vote, with leader David Cunliffe conceding they had lost to a "formidable political machine". "We have to reflect very, very carefully on the result," he told dejected supporters. MIDDLE NEW ZEALAND Key, known for his relaxed style, had unrivalled personal support levels going into the vote, and was seen epitomising middle New Zealand. "This is a victory for those who kept the faith ... New Zealanders didn't want people interfering with their election," he said. Key said National had a great chance of getting a fourth term in 2017, but it would have to earn it over the next three years. He confirmed he would talk to the small free-market Act Party, centrist United Future, and indigenous Maori Party, who together have four seats, to rejoin the government. The surprise of the night was the defeat of the Internet-Mana Party's one lawmaker. The party had been bankrolled by internet entrepreneur Kim Dotcom, who took responsibility for the failure. "The brand Dotcom was poisoned...and I did not see that before the last couple of weeks," he said. The strength of Key's victory also removed the possibility that veteran New Zealand First leader Winston Peters, whose party gained 8.8 percent of the vote, would emerge as king maker. (Additional reporting by Naomi Tajitsu; Editing by Rosalind Russell) ((Gyles.Beckford@thomsonreuters.com; +64 4 802 7977 ; Reuters Messaging: gyles.beckford.reuters.com@reuters.net)) Keywords: NEWZEALAND ELECTION/RESULTS

Britain must honour pledge to grant Scotland powers, Gordon Brown says

September 20, 2014 - reuters.com

EDINBURGH, Sept 20 (Reuters) - Former Prime Minister Gordon Brown told British leaders on Saturday that they must honour their promise to grant further powers to Scotland after voters backed staying in the United Kingdom in an independence referendum. Just days before the Sept. 18 vote, Brown appeared to be making British policy by announcing that laws granting further devolution to the Scottish parliament would be drafted by the time Scots celebrate the birthday of their most revered poet, Robert Burns, on January 25. "The eyes of the world have been upon us and now I think the eyes of the world are upon the leaders of the major parties in the United Kingdom," Brown told supporters in Fife, Scotland. "These are men who have been promise makers and they will not be promise breakers and I will ensure as a promise keeper that these promises that have been made are upheld," he said. During the campaign, Prime Minister David Cameron, Labour leader Ed Miliband and Liberal Democrat leader Nick Clegg promised to guarantee Scotland high levels of state funding and grant Scots greater control over healthcare spending. After Scots rejected independence, Cameron said the issue of Scottish independence had been settled "for a generation" but pledged a swift constitutional shake-up for all parts of the United Kingdom. (Reporting by Guy Faulconbridge; editing by Michael Holden) ((guy.faulconbridge@thomsonreuters.com; +442075424758;)) Keywords: SCOTLAND INDEPENDENCE/

New Zealand PM Key on cusp of third term as polls close

September 20, 2014 - reuters.com

WELLINGTON, Sept 20 (Reuters) - Voting in New Zealand's election closed on Saturday with the centre-right government of Prime Minister John Key in the box seat for a third successive term, but likely to need the support of small parties to guarantee a majority. Wet and stormy weather lashed many parts of New Zealand, where 3 million people were eligible to vote in a contest that had Key's National Party, in power since 2008, set to attract the most votes. A Reuters survey of five major opinion polls put National well out in front with about 46 percent support, with the main opposition centre-left Labour Party a distant second on 25 percent. NZPOLL New Zealand's proportional voting system will likely mean National does not gain an outright majority and will need to renew its coalition deal with three minor parties to gain a majority in the 120-seat parliament. Key delivered pizza to reporters waiting outside his house in Auckland, where he was watching the results, and said it might be "tricky" to get a clear result on Saturday. Key stood on his government's record of economic management and strict controls on spending, which helped New Zealand post decade-high growth. The 53-year-old former foreign exchange dealer emerged largely untouched despite allegations of dirty political tactics involving government ministers, and claims that a government spy agency had planned mass secret domestic surveillance. "There's been all these distractions and different issues going on but polling hasn't really moved," Key said at the end of the campaign. A tight result could see the king-making role again fall to populist maverick Winston Peters, leader of the economic nationalist New Zealand First Party. However, Peters has refused to give any hint which side he might back. "He'll wait to see the upshot of the vote and what policy concessions he can ring out of the main parties before he anoints anyone," said political scientist Bryce Edwards. Exit polling is not allowed in New Zealand but early returns put National and its allied parties on track to retain power. (Reporting by Gyles Beckford; Editing by Paul Tait) ((Gyles.Beckford@thomsonreuters.com; +64 4 802 7977 ; Reuters Messaging: gyles.beckford.reuters.com@reuters.net)) Keywords: NEWZEALAND ELECTION/CLOSE

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