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News : International Last Updated: Mar 4, 2011 - 6:31 AM


Markets News Afternoon: Euro rises in response to Trichet's inflation warning; Eircom workers/ shareholders to face 10% pay cut
By Finfacts Team
Mar 3, 2011 - 5:07 PM

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An optimistic backdrop to the first meeting of the Labour Party's new parliamentary team, Leinster House, Dublin, March 01, 2011.

Following the decision of the governing council of the European Central Bank to leave the key ECB interest rates unchanged at its meeting in Frankfurt today, the president, Jean-Claude Trichet said on Ireland in respect of the EU-IMF program, that that 'the plan is the plan'  and should be implemented. On inflation, he warned of the need for 'strong vigilance' and he said interest rates may be hiked in April.

Trichet said in response to a question on the fragile state peripheral economies, that the ECB is responsible for delivering price stability for 331m people in the Eurozone.

The euro rose in reaction to the press conference.

Trichet says on Ireland's EU-IMF program 'the plan is the plan'; Warns interest rates may be hiked in April

Aer Lingus: The former state airline said today that its liability to the Revenue in respect of a dubious redundancy/outsourcing scheme has been agreed at €29.5m compared with the estimate of €32.5m that was published last week.

The settlement covers PAYE, PRSI, interest penalties and related costs related to the so-called 'leave and return' scheme, which saw 715 staff who were made redundant, re-employed within weeks on lower salaries and conditions.

The overall cost of the redundancy package at the time was €117m, with an average lump sum per worker of €72,000. The €29.5m tax settlement will bring the final cost to €146.5m.

The staff had availed of a lower tax rate on the redundancy lump sum and the airline advised them that it was a legal scheme.

BSkyB: UK Culture Secretary Jeremy Hunt announced today that he intends to accept News Corp's plans to spin off Sky News as a separate unit in response to media competitor concerns of Rupert Murdoch's News group becoming a more dominant operator in broadcasting to match its influence in the print media.

News Corp will retain its 39.1% stake in Sky News.

The settlement with Rupert Murdoch suits him as he seeks to acquire the 61% of BSkyB News Corp does not own and is eager to avoid a full competition investigation.

Sky News will be controlled by independent directors and with an independent editorial board. News Corp will fund the news channel for 10 years and agree a seven-year licensing agreement for it to use the Sky News name.

Despite rising gas and food prices, US retailers are reporting solid gains for February, with Ed Yruma, Keybanc Capital Markets, and Ken Stumphauzer, Sterne Agee:

Irish Land Prices: The first ever 32-county agricultural land price report shows that prices have fallen by 57% since 2007, according to the Irish Farmers Journal.

The national average price for an acre of agricultural land in 2010 was just under €8,800 - - down 14.5% on the year before.

Last year the biggest dip in prices for agricultural land was experienced in counties Offaly, Sligo and Louth. In Cavan, Waterford and Kildare prices fell the least.

Agricultural land in Dublin costs more than any other county - - at €13,00 an acre, followed closely by Kildare. Land in Roscommon, Mayo and Offaly was the cheapest at close to €5,500.

The Irish Farmers Journal's report says the price of land in two counties - - Carlow and Leitrim - - increased.

In Northern Ireland the average price of an acre of agricultural land is €11,000.

The prices are determined by a very small turnover.

According to property agents, Savills, in 2007, in France, each field changes hands at least once every 70 years, but in Ireland on average a field changes hands every 555 years! Total annual turnover in Ireland was less than 0.2% of the total acreage.

Countries with sales restrictions, such as France, are cheapest. Land was about €6,000 a hectare, compared with almost €60,000 in Ireland, as French land must be offered first to young local farmers. During the bubble, demand was boosted by purchases of “lifestyle farms,” especially within 100 km of Dublin, coupled with the increasing trend of “off-farm” employment leading to commercial farmers in effect becoming “hobby farmers.”

Ray Dalio, founder & CIO of Bridgewater Associates, runs the world's largest hedge fund with $8.9 billion under management, returning more for the fund's investors last year than Google, Amazon, Yahoo and eBay combined:

Eircom: Staff at the former state telco, who are also shareholders, are due to vote on a cuts package that includes a 10% pay cut, with the goal to save the company €92m over the next three years.

The Communications Workers Union says its National Executive Council has decided reluctantly to recommend the Eircom rescue plans to members when they ballot on it over the coming fortnight.

The 10% pay cut will be implemented via a reduced hours formula whereby staff will work only nine days per fortnight. Further cost cuts will be negotiated over a short timeframe.

In a statement, the CWU said it expects if the changes are implemented, the workforce will recover the lost time within 18 months.

The union says the deal also envisages that the main shareholders in the company, Singapore telco, STT ,and the Eircom Employee Share Ownership Trust, will invest in Eircom by addressing its debt issues, and with new technology.

Commenting on the developments, Paul Donovan, CEO Eircom said, “Following very constructive discussions with the Trade Union Alliance, I am pleased that an ‘in principle agreement’ has been reached. This plan is a vital next step in the company’s transformation journey to secure the future of the organisation.”

Eurozone GDP:  GDP increased by 0.3% in the Eurozone (EA16) and by 0.2% in the EU27 during the fourth quarter of 2010, compared with the previous quarter, according to second unchanged estimates released by Eurostat, the statistics office of the European Union. In the third quarter of 2010, growth rates were +0.3% in the Eurozone and +0.5% in the EU27.

Compared with the fourth quarter of 2009, seasonally adjusted GDP increased by 2.0% in the Eurozone and by 2.1% in the EU27, after +1.9% and +2.2% respectively.

Irish Q4 data will be released later this month.

Variation in components of GDP

During the fourth quarter of 2010, household final consumption expenditure increased by 0.4% in the Eurozone and by 0.3% in the EU27 (after +0.1% and +0.2% respectively in the previous quarter). Gross fixed capital formation declined by 0.6% in the Eurozone and by 0.8% in the EU27 (after -0.1% and +0.4%). Exports grew by 1.8% in both zones (after +2.2% in both zones). Imports rose by 1.1% in the Eurozone and by 1.4% in the EU27 (after +1.4% and +1.6%).

United States' GDP increased while Japanese GDP decreased

In the United States GDP increased by 0.7% during the fourth quarter of 2010, after +0.6% in the third quarter of 2010. In Japan GDP fell by 0.3% in the fourth quarter of 2010, after +0.8% in the previous quarter.

Compared with the fourth quarter of 2009, GDP grew by 2.7% in the United States (after +3.2% in the previous quarter), and by 2.6% in Japan (after +4.7%).

GDP increased by 1.7% in the Eurozone and by 1.8% in the EU27 in 2010

Over the whole year 2010, GDP increased by 1.7% in the Eurozone and by 1.8% in the EU27, compared with -4.1% and -4.2% respectively in 2009.

Over the whole year 2010, GDP increased by 2.8% in the United States (-2.6% in 2009) and by 3.9% in Japan (-6.3% in 2009).

US Markets

In New York Thursday, the Dow rose 168 points or 1.39% to 12,234.

The S&P 500 is up 1.37% and the Nasdaq has gained 1.67%.

US services activity grew in February for the 15th straight month; Weekly jobless claims fell

Live US Indices

European Markets

The pan-European Dow Jones Stoxx 600 rose 0.26% Thursday.

In Dublin the ISEQ has risen 0.12%.

CRH which accounts for about 27% of the Dublin market's capitalisation, is up 0.85%; Elan has risen 0.39% and Grafton is off 5.16% after publishing its 2010 results today.

European benchmarks

Irish share prices

Euribor Interest Rates

Commodities

Crude oil for April delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $101.46 per barrel down 77 cents from Wednesday's close. In London, Brent for April is trading on the International Commodities Exchange at $114.66.

Currencies

The euro is trading at $1.3944 and at £0.8574.

Gold

Gold is trading at $1423.80 per oz in New York.

The Finfacts Gold Page


© Copyright 2011 by Finfacts.com

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