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News : International Last Updated: Feb 15, 2011 - 5:42 AM


Markets News Afternoon: Rehn says interest rate on Ireland's EU-IMF bailout could be cut
By Finfacts Team
Feb 14, 2011 - 4:45 PM

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Brian Lenihan, Irish Minister for Finance, arriving for the Eurogroup meeting, Brussels, Feb 14, 2011

Eurogroup: The European commissioner for Economic and Monetary Affairs, Olli Rehn, said today that a unilateral Irish re-negotiation of the EU/IMF deal is not feasible but he signalled that the interest rate could be adjusted.

Rehn was speaking in Brussels, ahead of the monthly meeting of the Eurogroup of Eurozone finance ministers.

The commissioner said the EU had signed a Memorandum of Understanding with the Irish State and "we expect continuity" from the next government.

But he said there could be "changes to the pricing policy," and he made clear that this would be as a result of an EU agreement rather than Irish political pressure.

In Berlin, Fine Gael leader Enda Kenny, said after meeting German chancellor, Angela Merkel, that he told her Ireland wouldn’t consider changing its corporation tax rate as part of a proposed pact of competitiveness agreed by Merkel and Nicolas Sarkozy, the French president.

Speaking to Reuters, Kenny said corporate tax was fundamental to attracting foreign direct investment to Ireland.

He said his party had “signed on” to discuss other issues proposed in the pact such as increasing the pension age and greater fiscal consolidation and regulation in the Eurozone.

In Brussels, Finance Minister Brian Lenihan said there is "no leeway" to re-negotiate the EU/IMF deal and to suggest it's possible was "very misleading."

Also speaking to reporters as he arrived for the Eurogroup meeting, German Finance Minister Wolfgang Schäuble said his government is seeking agreement on a package of measures to strengthen fiscal policy by the end of March. The German government is linking agreement on that package to an expansion of the European Financial Stability Facility (EFSF) bailout fund.

"On the sidelines we will probably discuss whether there is a need to discuss additional measures for the EFSF in the short term, but the markets are so stable that we probably won't upset them with unnecessary discussion," he said.

"We'll discuss all these questions but it's clear that we won't take any decisions," he added.

"Everybody knows that some of these economies on Europe's periphery are much more vulnerable than being talked about at the moment and as soon as there is any slight movement in the global situation, it's noticed here in Europe," Edward Hugh, independent economist and blogger told CNBC after Portuguese yields rose to Euro-area records last week:

Pension Funds: The global financial crisis of the past two years continues to reverberate throughout the investment world, introducing a number of important “new realities and challenges” for institutional investors as they consider their strategies for 2011 and beyond, according to global pension consultants, Mercer.

However, recent market conditions have been good, and the ‘financial health’ of many investors will have improved significantly in recent months. “For pension funds, the improvement in funding levels allows schemes to face the challenges of 2011 in a proactive and decisive manner,” according to Noel Collins, senior consultant with Mercer. Mercer data shows that pension funds’ investment returns have averaged c. 12.5% in the 12 months to end-January 2011, whilst liability values will generally have declined due to rising bond yields. The combination of these factors provides a very good opportunity now for many schemes to consider de-risking their investment strategy.

However, the scale of the challenge should not be underestimated. The Mercer data also shows that even with the recent recovery in markets, pension funds have lost money over the last three years, down 2% p.a. “Although economic and financial confidence is tentatively returning to some Western countries, the crisis has wreaked havoc on a number of nations’ balance sheets and disrupted the credit allocation process in Western economies, and added to the potential for global tensions,” commented Brian Griffin, head of Mercer’s Investment Consulting business in Ireland. Accordingly, investors and pension funds face a number of new realities in 2011.

Three key realities are: The whole approach to bond investing needs to be revisited. Growth in major developing economies such as China and India raises fundamental questions about a two-speed world for investment.

Inflation is a growing concern longer-term with regards to whether current investment portfolios are adequately protected.

“Investors should start to focus more attention on the longer term fallout and implications from the crisis, and consider how to reflect this in their portfolios. Some of the outcomes have greater visibility, others less. This means ensuring that those managing investment portfolios retain the flexibility to respond to developments, and seek to ‘win by not losing,” according to Griffin. “Mercer believes that the new realities of the investment environment will create many opportunities, but that they also call for fresh thinking, the ability to make quick decisions, and resilience in the face of a distinct lack of certainty,” he added.

President Barack Obama discusses the importance of education in allowing the U.S. to compete in a global economy, from Parkville Middle School in Baltimore , Maryland:

Dr. Peter Morici: Budget demagoguery; White House says deficit in current year to spike to $1.65trn - - the largest dollar amount ever

Zurich: Zurich Life Assurance plc (formerly Eagle Star) today announced what it termed "another market beating set of annual new business results for the year ended 31st December 2010." This followed Zurich Financial Services Group reporting last Thursday that it performed well with its Global Life division contributing to the Group’s profitability through steady top-line growth coupled with strong profit margins.

  • Zurich Life’s Irish new business performed strongly in a competitive market with total new business APE (excluding investment only business) up 1% to €177.9m for the year ended 31st December 2010 (€176.3m 2009) beating an average market fall of 6%;

  • Zurich Life grew its total market share to 18% (excluding investment only business) compared to 16% at the end of 2009;

  • Single premium pensions business (excluding investment only business) increased by 22% to €757.4.m (€622.8m 2009). Zurich’s entry into the Group Annuity Buy-out market and demand for Personal Retirement Savings Accounts (PRSAs) and Buy-out Bonds contributed to this strong pensions performance;

  • Continued strength in PRSAs - with annual premium PRSA new business up 6% to €22.7m for 2010 (€21.5m 2009). Single premium PRSA new business increased by 7% to €166.1m (€155.1m 2009);

  • Zurich’s European Manufacturing Hub established in Ireland in 2009 "is delivering significant cross border new business APE growth from products produced in Ireland and launched into the UK, Italian and German markets. Total new business APE from the European Hub more than doubled to €82.3m for the year ended 31st December 2010 (€28.8m 2009)."

Boeing on Sunday unveiled its new 747-8 Intercontinental, the new high-capacity passenger airplane that it says offers airlines the lowest operating costs and best economics of any large passenger airplane while providing enhanced environmental performance. Approximately 10,000 guests, including customers, Boeing employees, government officials, partners and suppliers, gathered in the factory in Everett, Washington State, to witness the premiere of the Intercontinental.

The model when first launched in 1970, a year after men first landed on the moon, was the first widebody jet. It became a potent symbol of American technology - - Michael Hennigan.

US Markets

In New York Monday, the Dow fell 18 points or 0.15% to 12,255.

The S&P 500 rose 0.01%, and the Nasdaq gained 0.20%.

Live US Indices

European Markets

The pan-European Dow Jones Stoxx 600 rose 0.34% Monday.

In Dublin the ISEQ has risen 0.31%.

CRH which accounts for about 27% of the Dublin market's capitalisation, is down 0.78%, Elan has added 3.33%; BoI has slipped 2.12.

European benchmarks

Irish share prices

Euribor Interest Rates

Commodities

Crude oil for March delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $85.70 per barrel up 12 cents from Friday's close. In London, Brent for March is trading on the International Commodities Exchange at $103.64.

Currencies

The euro is trading at $1.3476 and at £0.8416.


© Copyright 2011 by Finfacts.com

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