China GDP, euro zone jitters take toll on FTSE
* Banks drop on Moody’s France warningBy Tricia WrightLONDON, Oct 18 (Reuters) - Britain’s top shares fell on
Tuesday, pressured by miners after Chinese data raised fears
about demand for the world’s top metals consumer, while revived
concerns over the euro zone debt crisis unleashed further
volatility.Miners bore the brunt of the sell-off, tracking
metals prices lower, after China’s growth slowed in the third
quarter to its weakest pace since early 2009.Xstrata was among the worst off, down 4.8 percent,
after the global miner issued a third-quarter production report
showing copper output down 4 percent on the same period a year
ago, while in line with the second quarter.”The market is suddenly very nervous again,” said Lex van
Dam, hedge fund manager at Hampstead Capital, which manages $500
million of assets. “The iron spot price is the big worry right
now, which is indicating a hard landing in China, something that
could unravel the whole global economy.”Wolfgang Schaeuble, Germany’s finance minister, helped spur
a turnaround in market sentiment when he played down heightened
expectations that European governments will resolve the region’s
sovereign debt crisis at an EU summit on Oct. 23.Banks , particularly sensitive to the vagaries
of the euro zone debt story, fell sharply, also knocked after
Moody’s late on Monday warned it may slap a negative outlook on
France’s AAA credit rating in the next three months.Standard Chartered led the sector lower, down 4.2
percent, with traders citing the impact of Temasek Financial
launching a S$650 million ($512 million) bond exchangeable into
shares of the London-listed bank.The FTSE 100 was down 54.61 points or 1 percent at
5,382.09 by 0818 GMT, with Monday’s 0.5 percent dip putting it
back below the technically important levels around 5,450 which
it breached for the first time in 10 weeks on Friday.”I think (market volatility) is here with us to stay at the
moment until we’ve got some clear and … concrete proof that
there is a method of resolving the European crisis,” Martin
Dobson, head of trading at Westhouse Securities, said.Atif Latif, director of equities and derivatives at Guardian
Stockbrokers, noted an increase in “put” protection — options
to hedge against downside risk — looking to take advantage of a
FTSE 100 fall down to around 5,000-5,100.Whitbread managed to outperform the weaker market,
off only 0.4 percent, as Britain’s biggest hotel and coffee shop
operator reported a higher-than-expected first-half pretax
profit and hiked its dividend by over 50 percent.
German private banks call Greece bankrupt -magazine
Schmitz called for a change in Basel III regulations, which
spell out the amount of capital reserves that banks must set
aside for so-called risk-weighted assets.Under the current Basel II rules and EU guidelines, all euro
zone sovereign debt can be assigned zero risk, which has
provided a strong incentive for banks to buy and hold government
bonds.”The current situation shows that zero (risk weighting)
accounting doesn’t accurately reflect reality,” Schmitz said.”Politicians are not tackling this issue, since it concerns
them,” he added, explaining that this exemption has helped
sovereign borrowers market their debt to banks.Hesse, the German federal state home to the country’s
banking centre of Frankfurt, said late in September it would
push for an end to the exemption of capital reserves for central
government debt.”The exemption distorts investment markets and sweeps under
the carpet the actual inherent risks,” said Hesse’s finance
minister, Thomas Schaefer, and its economy minister, Dieter
Posch, at the time.At the same time, Schmitz opposed a forced recapitalisation
of German banks, because it would only cause further uncertainty
in the markets.”Compulsory recapitalisations do not solve the political
crisis of confidence,” he said.
Getting down to business at U.N. climate talks a hard task
A U.N. concession to delegates at this week’s climate talks in Bonn to take off jackets and ties due to recent high temperatures may be going to some participants’ heads.
Breaking the back of negotiations for a new climate pact after the Kyoto Protocol expires in 2012 is proving hard work even though the talks’ chair hopes to have a new negotiating text on the table by the end of the week.
Developing nations are still blaming the rich for global warming and the issue of who will contribute most to climate financing is still a matter for debate.
A year-end meeting in Cancun looms closer and the pressure is on to get the job done.
Yet, the acronyms being bandied around — LULUCF, CDM, AAU, AWG-KP, AWG-LCA, REDD, to name a few — are enough to make your head swim.
Even a Chinese negotiator on Tuesday admitted he did not understand a complicated forestry and land use presentation the previous day by the European Union.
Talks kicked off on Monday with a three-hour session during which countries spent an inordinate amount of time thanking the chair and congratulating the new U.N. climate chief Christiana Figueres on her post.
Delegates didn’t manage to finish the day’s business by the evening and had to continue into Tuesday, despite calls from the chair of the talks to keep to a very tight schedule.
Getting down to business was hampered further after the Saudi Arabia delegation withdrew calls for Oxfam and WWF to be banned from the talks for five years.
At the last conference in June, activists broke the nameplate in front of the Saudi delegation, threw the bits down a toilet and took photos.
The incident, though carried out by two individuals who have since been barred from talks, created a furore which threatened to overshadow the June meetings.
“Saudi Arabia is a forgiving society, and our culture allows us to forgive whoever commits a wrong against us, as long as he or she admits it and apologises,” said the country’s head negotiator Mohammad Al-Sabban this week.
Now wrapped up and hopefully forgotten, it is hoped that the talks can get down to getting some kind of consensus on emissions cuts and how much countries need to spend to help developing nations affected by climate change.
