The Star Online: Business
The Star Online: Business |
- US stocks rise as Greece nears debt solution
- Oil rebound weakens effect of supply release
- EU proposes US$1.48 trillion budget for 2014-2020
| US stocks rise as Greece nears debt solution Posted: 29 Jun 2011 05:47 PM PDT NEW YORK (AP) - Stocks closed higher for the third day in a row Wednesday after Greece cleared a hurdle toward getting more emergency loans. Financial stocks rose after Bank of America reached a settlement with investors over failed mortgage securities. Greek lawmakers passed an austerity bill that brought the country closer to getting a financial backstop it needs to avoid defaulting on its debt. A default by Greece would shock global markets and freeze lending to other heavily indebted European countries. The $17 billion relief package from international lenders does not eliminate the possibility that Greece will default, but it does buy Greece and other European countries more time to repair their budgets. "The hope is that through the passage of time and slow improvement of finances, markets will become a little more forgiving," said Wasif Latif, a vice president at USAA Investment Management. The Dow Jones industrial average rose 72.73 points, or 0.6 percent, to close at 12,261.42 Wednesday. The Standard & Poor's 500 index rose 10.74, or 0.8 percent, to 1,307.41. The Nasdaq composite rose 11.18, or 0.4 percent, to 2,740.49. Financial companies in the S&P 500 rose 2.1 percent after Bank of America Corp. reached an $8.5 billion settlement with investors over claims it sold them bad loans. The investors said Bank of America violated agreements with them by selling them low-quality mortgage-backed securities that lost value when the housing market collapsed. Much of the losses stem from BofA's 2008 purchase of the troubled lender Countrywide. Bank stocks also got a lift from news that the Federal Reserve plans to limit the fees banks can charge retailers for swiping debit cards to 21 cents. That's higher than the 12 cents the Fed first proposed. Relief that Bank of America settled with investors sent the lender's stock up 3 percent. Bank of America is still down 24 percent over the past year, far more than any other major U.S. bank. It was the third and largest settlement Bank of America has struck this year over mortgage investments. The bank reached a $2.6 billion settlement in January over home loans sold to the government-backed mortgage agencies Fannie Mae and Freddie Mac. In April, the company agreed to pay up to $1.6 billion to an insurer that demanded the bank repurchase faulty mortgages it had been sold. Energy stocks rose more than 1 percent after oil prices rose above $95 on a report that U.S. crude supplies fell last week. The drop suggests demand for oil might be rising. Monsanto Co. gained 5 percent after the chemicals company reported earnings that beat analysts' expectations. BJ's Wholesale Club rose 4.6 percent after announcing that two private equity firms would buy the warehouse chain. More than two stocks rose for every one that fell on the New York Stock Exchange. Consolidated trading volume was an average 3.9 billion shares. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Oil rebound weakens effect of supply release Posted: 29 Jun 2011 05:46 PM PDT NEW YORK (AP) - An attempt by the U.S. and other non-OPEC governments to sway oil and gasoline prices appears to have petered out in less than a week. Benchmark crude for August delivery gained $1.88, or 2 percent, to settle at $94.77 per barrel Wednesday on the New York Mercantile Exchange. Over two days, oil has nearly recovered the loss from last Thursday when the U.S. and other oil-importing countries said they'd dump emergency oil supplies onto the market. Brent crude, which is used to price many international oil varieties, also rebounded. Although at $112.40 per barrel, it's still about 2 percent below where it was last week. Motorists anticipating a big discount at the gas pump will likely be disappointed. Gasoline futures recovered the 20 cents per gallon that were lost after the International Energy Agency, which includes the U.S., said it would make 60 million barrels of crude and other fuels available this summer. Gasoline for July delivery, which jumped 4.2 percent Wednesday to settle at $3.01 per gallon on the Nymex, is now 3.7 cents more expensive than before IEA's announcement. Initially after the IEA announcement, analysts were predicting a drop of as much as 25 cents in pump prices. Patrick DeHaan, a senior petroleum analyst at GasBuddy.com, said Wednesday the IEA's move cut no more than 2 to 5 cents off the price of retail gasoline in the last week. "The rest was negated because of the increase in oil during the last 24 hours," DeHaan said. The U.S. average gasoline price fell nearly a penny overnight to $3.543 per gallon (3.8 liters). Oil has this week as Greek lawmakers prepared for and passed financial reforms that were required for the country to receive the next installment of an international aid package. Without that money, the country risks defaulting on its debts. A bullish report on oil and crude supplies in the U.S. also boosted prices on Wednesday. "The IEA did move the market, but the lesson is that many other things can move it too," said Cameron Hanover analyst Peter Beutel. Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said the decision in Greece eased concerns about a spreading financial crisis in Europe. "Nobody wanted a regional collapse that would affect western banks," Kloza said. "There is a sense now that this is going to go away for a few months." The dollar lost ground to the euro and other major currencies, which boosted oil as well. Oil, which is priced in dollars, tends to rise as the greenback falls and makes crude barrels cheaper for investors holding foreign currency. Meanwhile, the Energy Information Administration said U.S. oil supplies dropped more than expected last week, losing 4.4 million barrels to a total of 359.5 million barrels in storage. That tally doesn't include the 30 million barrels that the U.S. is expected to release from the Strategic Petroleum Reserve in August. Gasoline supplies also fell unexpectedly by 1.4 million barrels, according to the EIA report. Oil demand in the U.S. fell by 1.7 percent while gasoline demand dropped 0.3 percent when compared with the same period last year. In other Nymex trading, heating oil for July delivery added 9.45 cents to settle at $2.9202 per gallon and natural gas for August delivery dropped 0.39 cents to settle at $4.315 per 1,000 cubic feet. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| EU proposes US$1.48 trillion budget for 2014-2020 Posted: 29 Jun 2011 05:44 PM PDT BRUSSELS (AP) - The European Union on Wednesday proposed a budget worth 1.025 trillion (US$1.48 trillion) for the seven years between 2014 and 2020, up 5 percent from the previous budget period. The budget outline from the European Commission, the EU's executive, kicks off months of wrangling with the 27 member states, which are determined to keep spending down and the European Parliament, which will seek as much input as possible on where the money goes. According to Wednesday's proposal, the biggest amount of money, about 376 billion, would go to boosting the EU's underdeveloped regions. That's followed by around 372 billion to support the region's farmers. "We are proposing an ambitious, and at the same time responsible budget," said European Commission President Jose Manuel Barroso. "It is a realistic proposal with which we can make a difference." For years, the EU has been under pressure, especially from rich member states like Germany and Britain, to keep spending in check as national governments are struggling to get their own budgets under control. In October, the leaders of Britain, France, Germany, Finland and the Netherlands demanded that the EU budget should be frozen, allowing increases only to make up for inflation. Britain's Treasury immediately came out against the commission's proposal, calling it "completely unrealistic." "It is too large, not the restrained budget they claim and incompatible with the tough decisions being taken in countries across Europe," it said in a statement. EU-skepticism has been on the rise, as taxpayers in richer countries are balking at spending hundreds of billions of euros on rescue loans for struggling euro countries like Greece, Ireland and Portugal - even though those bailouts are not funded through the EU budget. Citizens in the struggling states, meanwhile, are suffering from the austerity demanded in return for those emergency loans, which many see as an undemocratic imposition from Brussels. Overall, the EU budget only makes up about 1 percent of total economic output in the EU, compared with an average of 44 percent of gross domestic product going to national budgets, according to commission data. In an effort to show that it is embracing the message of austerity, the commission proposed some uncomfortable changes for its own staff, such as increasing working hours for EU officials to 40 hours a week from 37.5 hours currently, lifting the retirement age to 65 from 63, and cutting 5 percent of staff by 2018. For the first time, the commission is also hoping to raise money for pan-European infrastructure projects on financial markets through project bonds. Until now, the EU has not been allowed to take on debt or run a deficit, but the commission argues that issuing bonds for specific projects will increase the impact of its own funds. Among the most controversial items in the seven-year budget is a tax on financial transactions, through which the EU hopes to lower contributions from member states. The commission only gave a broad outline for a financial transaction tax, but Budget Commissioner Janusz Lewandowski said such a levy could raise up to 30 billion a year. Until plans for a financial transaction tax were revealed earlier this week, the EU had opposed its introduction in the EU only, saying that it could push banks and investment funds to move to financial hubs outside the bloc. Now, the commission hopes to encourage other states to opt for the tax by leading the way. "Let's create our own and then see if we can create better conditions for a financial transaction tax on a global level," Barroso said. The tax, together with changes to the way the EU collects its share of value-added tax, could more than double the EU's own resources to some 40 percent of the total budget, Lewandowski said. Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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