9 Feb 2012: Greece still deadlocked; Chinese inflation up

INDICES POINTS CHANGE
FTSE 100 5893 Up 30bp
S&P 500 1349 Up 22bp
NIFTY 50 India 5412 Up 82bp

Major Stories

  • Greek debt talks still deadlocked
    • Greek politicians have still not been able to agree on all austerity measures but have been given some breathing space on the Euro 130bn rescue package
    • By the weekend, Greece must find a way to cut an extra Euro 325mn to complete a Euro 3bn austerity package as agreed upon by the international lenders; the major issue at the moment is cutting pensions
    • ECB has considered various alternatives on its Euro 40bn holding of Greek debt, but all of them require the EFSF to raise extra cash or bear a loss, which may prove impossible
  • Chinese inflation rises
    • Chinese inflation has risen to 4.5% after 5 consecutive months of decline
    • The main factors involved are seasonal; the price rise is not expected to sustain
    • The CPI rose from December- the main reason was the increased shopping just prior to Chinese New Year
    • The IMF warned China, that its economic growth could drop by as much as half in the event of a recession in Europe due to trade linkages
  • Markets
    • Euro trades at highest level against Dollar in 2 months (1 Euro = $1.33)
    • Commodities: Brent Crude is up to $118/barrel; Gold is at $1732/ounce
    • Stocks: FTSE All-World is up 0.2%; FTSE Eurofirst is up 0.4% while S&P’s reversal of losses left it 7.3% up in 2012 so far
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