The Star Online: Business
The Star Online: Business |
- Oil rises on stronger consumer spending
- Italy revamps austerity plan
- Gold and silver fall as stock market rallies
| Oil rises on stronger consumer spending Posted: 29 Aug 2011 06:08 PM PDT NEW YORK: Oil prices rose Monday after the U.S. government said consumers spent more in July, easing concerns about another recession. It was the latest in a series of reports that indicated the economy improved last month, which could strengthen demand for oil and gasoline. Benchmark oil rose $1.90, or 2.2 percent, to finish at $87.27 per barrel in New York. Brent crude, used to price international varieties, increased 52 cents to end at $111.88 per barrel in London. The Commerce Department said July consumer spending increased by the biggest amount in five months. Consumer spending accounts for 70 percent of the nation's economic activity. The report is an encouraging sign about the U.S. economy despite weak demand for gasoline, PFGBest analyst Phil Flynn said. Energy analyst Jim Ritterbusch cautioned not to read too much into one report. A batch of economic news is expected this week that could provide a clearer picture of where the economy is headed - including unemployment numbers and manufacturing activity. In the Northeast, there will be a bigger drop in gasoline demand over the next week or so because so many drivers filled up their tanks ahead of Hurricane Irene, said Tom Kloza, chief oil analyst at Oil Price Information Service. "It strained the system but the system will recover very, very quickly," he said. There have been few reports of shortages at gas stations. "There should not be problems and people shouldn't worry that it's going to take forever to catch up," Kloza added. "We'll catch up in a couple of days in terms of reasonable supply." Most refineries in the Northeast were spared significant damage from Irene. New York Harbor, a major terminal for oil and gasoline imports, also escaped damage. ConocoPhillips said one of its refineries in New Jersey was shut down temporarily, and two Sunoco refineries in Pennsylvania were operating at reduced rates. In other Nymex contracts, heating oil rose less than a penny to finish at $3.0173 per gallon, gasoline futures fell 1.65 cents to end at $2.7695 per gallon and natural gas fell 8.2 cents to finish at $3.830 per 1,000 cubic feet. - AP |
| Posted: 29 Aug 2011 06:06 PM PDT ROME: Premier Silvio Berlusconi and his allies on Monday revamped emergency austerity measures demanded by the European Central Bank, deciding to scrap a special tax on high earners and to spare small town governments after widespread public anger at the plans. The premier's office said coalition leaders meeting at Berlusconi's villa near Milan came up with the new proposals - which the government insists will still amount to 45.5 billion ($65 billion) in new taxes and spending cuts and helps achieve a balanced budget by 2013. Next week Parliament returns from vacation and starts examining the measures. The government is pressing for approval before the end of September to calm markets. The new changes "must be approved by lawmakers within the original time frame and achieve the same overall savings," Berlusconi's office said. The original emergency austerity measures, announced on Aug. 12 on the eve of Italy's big summer holiday, triggered deep resentment from the public and set Berlusconi's already squabbling allies bickering even more. The political opposition, which has been struggling to find a leader charismatic enough to take on Berlusconi or his conservative successor in the next election ridiculed the government's revision of its austerity plan as an exercise in confusion. "I don't see how they're going to balance the books," a center-left leader, Pierluigi Bersani told reporters. "Altogether, it appears to me to be a lame solution. I hope it isn't judged too harshly by those watching us in the world," Bersani said, in an apparent reference to financial markets and ratings agencies. Unions and business lobbies had contended that the original measures penalized honest taxpayers given widespread tax evasion by the self-employed. Original plans called for those earning above 90,000 ($130,000) to pay an extra 5 percent income tax over the next three years, while those over 150,000 ($215,000) would pay 10 percent. Monday's huddle scrapped that in favor of cracking down on property taxes. To make up for the shortfall, the new plan would crack down on the many Italians who own second or third homes at the sea or in the countryside and put them in relatives' names to avoid paying taxes. Citizens can own one home without paying property taxes. Parliament's members would pay a special "solidarity" tax on their pay to help the state's coffers. With the public resentful over high salaries and privileges for lawmakers, including chauffeured cars and sharply discounted meals in Parliament's restaurant, Berlusconi and his allies say they want to slash the number of lawmakers by 50 percent, a proposal that has been suggested many times before. That change would start with the next election, due in 2013, assuming lawmakers make the necessary constitutional changes in time. Particularly outraged had been citizens of towns with fewer than 1,000 citizens which would have been put out of existence by the first plan. Some towns began scrambling for ways to survive, with one enterprising place near Rome exploring the possibility of becoming a principality to escape abolishment. Berlusconi's main coalition partner, the Northern League, which considers itself a grass-roots party, was buffeted by protests from small town League officials, worried they would lose their power base. The revised austerity plan calls for smaller town councils and eliminates pay for council members. Italy has long debated eliminating its provincial governments and their largely duplicating functions compared to larger regions. The new plan effectively does just that, by removing state functions from provinces and giving them to regions. - AP |
| Gold and silver fall as stock market rallies Posted: 29 Aug 2011 06:05 PM PDT NEW YORK: Metals prices closed lower Monday as increasingly confident investors move money out of hard assets and into stocks. Gold and silver fell as the Standard & Poor's 500 index rose 2.8 percent. Investors often buy gold as a last resort when they're fearful of holding stocks. The reverse also holds true: investors often dump gold once stocks start looking promising again. Gold prices also fell because investment managers sold contracts to lock in gains made over the last month, said George Gero, vice president of global futures at RBC Capital Markets. Gold is still up 9.8 percent this month on fears about inflation and uncertainty over the economy. Traders feel that gold and silver are a safer bet than stocks or currencies during times of weak economic growth. By selling appreciated gold contracts at the end of August, traders can take their profits and put them into other investments to make their portfolios look more diverse. Gold for December delivery fell $5.70 to settle at $1,791.60 an ounce. September silver lost 40.6 cents to $40.546 per ounce. Other metals also fell. September copper fell 1 cent to $4.089 per pound, October platinum fell $1.90 to $1,825 an ounce and September palladium dropped $2.40 to $753.95 an ounce. While industrial metals often rise with the stock market, trading was weak in part because London exchanges were closed because of a bank holiday there. Gero said demand was higher for stocks, so metals contracts mostly stagnated in weak trading. Grains were mixed. December wheat lost 2 cents to finish at $7.95 a bushel. December corn increased 3 cents to $7.70 a bushel and November soybeans rose 23.5 cents to $14.47 a bushel. Oil prices rose after the government said consumers spent more in July, easing concerns about another recession. It was the latest in a series of reports that indicated the economy improved last month, which could strengthen demand for oil and gasoline. Benchmark crude rose $1.90 to end at $87.27 per barrel on the New York Mercantile Exchange. In other Nymex trading, heating oil rose 0.15 cents to $3.0173 per gallon, gasoline fell 1.65 cents to finish at $2.7695 per gallon and natural gas lost 8.2 cents to settle at $3.83 per 1,000 cubic feet. - AP |
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