Dangote refinery seeks US crude boost    Taiwan's tech sector surges 19.4% in April    France deploys troops, blocks TikTok in New Caledonia amid riots    Egypt allocates EGP 7.7b to Dakahlia's development    Microsoft eyes relocation for China-based AI staff    Beyon Solutions acquires controlling stake in regional software provider Link Development    Asian stocks soar after milder US inflation data    Abu Dhabi's Lunate Capital launches Japanese ETF    K-Movement Culture Week: Decade of Korean cultural exchange in Egypt celebrated with dance, music, and art    MSMEDA chief, Senegalese Microfinance Minister discuss promotion of micro-projects in both countries    Egypt considers unified Energy Ministry amid renewable energy push    President Al-Sisi departs for Manama to attend Arab Summit on Gaza war    Egypt stands firm, rejects Israeli proposal for Palestinian relocation    Empower Her Art Forum 2024: Bridging creative minds at National Museum of Egyptian Civilization    Niger restricts Benin's cargo transport through togo amidst tensions    Egypt's museums open doors for free to celebrate International Museum Day    Egypt and AstraZeneca discuss cooperation in supporting skills of medical teams, vaccination programs    Madinaty Open Air Mall Welcomes Boom Room: Egypt's First Social Entertainment Hub    Egypt, Greece collaborate on healthcare development, medical tourism    Egyptian consortium nears completion of Tanzania's Julius Nyerere hydropower project    Sweilam highlights Egypt's water needs, cooperation efforts during Baghdad Conference    AstraZeneca injects $50m in Egypt over four years    Egypt, AstraZeneca sign liver cancer MoU    Swiss freeze on Russian assets dwindles to $6.36b in '23    Climate change risks 70% of global workforce – ILO    Prime Minister Madbouly reviews cooperation with South Sudan    Egypt retains top spot in CFA's MENA Research Challenge    Egyptian public, private sectors off on Apr 25 marking Sinai Liberation    Debt swaps could unlock $100b for climate action    Amal Al Ghad Magazine congratulates President Sisi on new office term    Egyptian, Japanese Judo communities celebrate new coach at Tokyo's Embassy in Cairo    Financial literacy becomes extremely important – EGX official    Euro area annual inflation up to 2.9% – Eurostat    BYD، Brazil's Sigma Lithium JV likely    UNESCO celebrates World Arabic Language Day    Motaz Azaiza mural in Manchester tribute to Palestinian journalists    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Europe eyes quick move on stress tests
Published in The Egyptian Gazette on 17 - 06 - 2010

BRUSSELS/PARIS – Germany joined major European partners on Thursday in backing the publication of bank "stress tests" and the euro rose on a successful Spanish bond sale as EU leaders met to agree on tighter budget rules.
Berlin, which had been skeptical about revealing details of tests on the financial health of its banks, dropped its objections after both France and Spain came out in favor of a move the Obama administration has pressed Europe to take.
"Germany is positive on the idea of publishing the results of EU stress tests," said Finance Ministry spokesman Michael Offer. "We see that markets are unsettled and that confidence among banks has taken a hit.
Earlier French Economy Minister Christine Lagarde, speaking to Reuters Insider television in Paris, had thrown her weight behind rapid publication of stress tests, saying French banks had strong balance sheets and nothing to hide.
The run-up to Thursday's EU summit in Brussels was dominated by concern that Spain, the euro zone's fourth biggest economy, might be forced to tap a 500 billion euro ($613.2 billion) EU safety net set up to halt contagion after a bailout of Greece.
But leaders sought to play down Spain's troubles and said the country was not on the agenda at the one-day meeting.
Markets across Europe received a boost when Madrid succeeded in selling 3.5 billion euros in 10- and 30-year bonds, squeezing investors who had shorted the single currency.
The euro shot toward $1.24, its highest level in three weeks, and the premium investors demand to hold Spanish bonds rather than German benchmark issues narrowed from a record high of over 230 basis points to 212.
European shares gained for a seventh straight session, riding bullish bank shares to a near five-week peak.
"The strong demand for Spanish bonds should help restore confidence," said Ciaran O'Hagan, a strategist at Societe Generale.
To reassure investors, Spain, France and other euro members have announced a flurry of austerity measures and structural economic reforms in recent days, helping the euro recover from four-year lows against the dollar.
LESS STRESS
The publication of bank stress tests could also help calm jittery investors as long as the results don't reveal unexpected holes in banks' books. A European Union source told Reuters the tests would not be unveiled this month, but both France and Spain said the sooner they were out there, the better.
"If someone suspects you have an illness, it's all very well to say 'No, no, no I'm very healthy,' but it's even better if you say 'OK fine, take my blood and make sure that I'm healthy'," Lagarde said, saying the results should be made public ideally before the end of July.
Germany, home to regional Landesbanken that were hit hard by the global financial crisis and have yet to fully recover, had been concerned it could be forced to recapitalise ailing institutions.
European Central Bank Governing Council member Erkki Liikanen said trust would return if the stress tests were made public and his French colleague Christian Noyer said they should be broken down by country and bank.
At their summit, the EU leaders hope to overcome differences on how to strengthen budget discipline and economic policy coordination to convince financial markets they can prevent a repeat of the debt crisis which started in Greece.
German Chancellor Angela Merkel and French President Nicolas Sarkozy reached a compromise after talks in Berlin on Monday, pledging unity to defend the euro in the worst crisis since its founding 11 years ago.
Sarkozy bowed to German demands for tougher budget rules and accepted that euro zone states which persistently breach deficit limits should have their voting rights in the bloc suspended, even if that requires treaty changes.
He also accepted at Merkel's insistence that all 27 EU member states and not just the 16 that share the euro, should be involved in "economic government" to coordinate policies and he dropped French demands for dedicated euro zone secretariat.
The leaders were also expected to try to agree a common EU stance on a bank levy and financial transaction tax ahead of a G20 meeting on June 26-27, but may struggle to win support for those measures from other G20 members, including host Canada.
UNPOPULAR REFORMS
On Wednesday, Spain and France announced politically unpopular labor and pension reforms in the face of financial market pressure on euro zone states to clean up their finances.
Both are the sort of structural reforms recommended by the executive European Commission and by economists to adapt European economies to global competition and an aging population, and to make public finances more sustainable.
But they face opposition from trade unions which see them as an assault on workers' rights and plan protest strikes.
"Spain has adopted a very courageous package of fiscal measures and now it has also presented labor market reforms which are important," OECD chief economist Pier Carlo Padoan told reporters in Rome. "Its situation is difficult but completely manageable."


Clic here to read the story from its source.