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World markets see little change as Greece awaits latest bailout

Tuesday, March 13, 2012
AP and AFP


LONDON/HONG KONG--Markets were steady Monday ahead of a meeting of European finance ministers that is expected to pave the way for a second massive bailout for Greece that will prevent the debt-ridden country's imminent bankruptcy.

Ministers from the 17 countries that use the euro are meeting later and Greece will again be at the top of the agenda. After last week's broadly successful bond swap with its private creditors, Greece will hope that it has met the conditions its partners in the eurozone attached before they finally rubber-stamp the country's 130-billion-euro (US$171.48 billion) financial rescue.

Though the bond swap, which shaves some 105 billion euros (US$138 billion) off Greece's 368-billion-euro (US$485 billion) debt mountain, is likely to give the country some breathing room to enact another round of austerity and reform measures, many analysts think the country's debt remains unsustainable.

The country, which has seen its economic output shrink by around a fifth since the financial crisis began in 2008, also faces elections sometime over the next two months and there are some concerns in the markets that the outcome may dent the zeal for austerity and reform.

Sentiment was also tempered by news that Greece's debt-reduction deal with private creditors could cause losses for banks after the International Swaps and Derivatives Association (ISDA), the private organization that rules on such cases, ruled that a “restructuring credit event” occurred.

That means Greece's debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds. But the ISDA said overall payouts will be significantly below the US$3.2 billion in net outstanding credit default swap contracts linked to Greece. The exact level of payouts will be determined on March 19.

In Europe, the FTSE 100 index of leading British shares was flat at 5,886 while Germany's DA-- rose 0.3 percent to 6,903. The CAC-40 in France was 0.1 percent higher at 3,450.

Wall Street was poised for a steady opening with Dow futures and the broader S&P 500 futures broadly unchanged.

Asian shares fell on Monday as better-than-expected U.S. jobs data was overshadowed by figures indicating a sharp slowdown in the Chinese economy.

Tokyo closed 0.4 percent lower, giving up 39.88 points to 9,889.86, Sydney was off 0.36 percent, or 15.3 points, at 4,196.7 and Seoul shed 0.78 percent, or 15.8 points, to 2,002.5.

Shanghai lost 0.19 percent, or 4.6 points, to 2,434.86 but Hong Kong reversed earlier losses to end up 0.23 percent, or 48.18 points, at 21,134.18.

Asian sentiment was knocked Monday after China at the weekend revealed a huge trade deficit of US$31.48 billion in February owing to the economic woes in its key U.S. and European export markets.

The deficit was the largest for at least 12 years, according to Dow Jones Newswires — the extent of its archived data — and far in excess of the median forecast of US$8.5 billion among 15 economists it surveyed.

Oil prices slipped, with New York's main contract, West Texas Intermediate crude for delivery in April, shedding 71 cents to US$106.69 per barrel while Brent North Sea crude for April was down 78 cents at US$125.20 in the afternoon.

Gold was at US$1,704.50 an ounce at 1100 GMT, compared with US$1,699.10 late Thursday.

In other markets:

— Singapore was flat, edging down 0.97 points to 2,962.18.

United Overseas Bank shed 0.11 percent to SG$17.70 while commodities firm Olam International was 0.44 percent lower at SG$2.28.

— Manila fell 0.11 percent, or 5.54 points, to 4,975.17.

Keppel Philippines Properties slumped 18.2 percent to 1.80 pesos while Philippine Long Distance Telephone Co. was unchanged at 2,758 pesos.

Aboitiz Power rise 0.15 percent to 33.25 pesos.

— Wellington rose 0.54 percent, or 18.55 points, to 3,452.37.

Fletcher Building was up 0.9 percent at NZ$6.69, Telecom gained 1.26 percent to NZ$2.42 and retailer The Warehouse Group slipped 3.21 percent to NZ$2.71.

— Jakarta slipped 0.11 percent, or 4.20 points, to 3,987.35.

Telkom fell 2.2 percent to 6,800 rupiah, heavy equipment company United Tractors lost 1.9 percent to 29,250 rupiah and Bank Mandiri rose 1.5 percent to 6,700 rupiah.

— Kuala Lumpur finished 0.9 percent, or 14.25 points, off at 1,564.75.

Petronas Chemicals lost 4.1 percent to 6.56 ringgit, while Malayan Banking shed 1 percent to 8.65 ringgit. Mobile service provider Maxis inched up 0.2 percent to 5.94 ringgit.

— Mumbai rose 0.48 percent, or 84.43 points, to 17,587.67.

— Bangkok fell 0.74 percent, or 8.53 points, to 1,150.18.

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