Brown backs away from new stimulus Gordon Brown signalled that Britain would not announce a big fiscal stimulus in next month's budget, as the failure of a gilts auction on Wednesday underscored concerns about the impact of further borrowing on the deteriorating public finances. His admission that the UK had little room for a second wave of tax cuts or spending increases appeared to respond to pressure from Alistair Darling, his chancellor, and Mervyn King, Bank of England governor. See FT Alphaville on 'swinging gilts'. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54043/brown-backs-away-fro
| Public finance fears hit gilts auction A UK government bond auction failed for the first time in seven years on Wednesday as investors refused to buy the securities amid worries over deteriorating public finances. Alarm over rising UK debt levels and renewed fears over inflation saw investors shun the auction, with bids for the long-dated bonds, due to mature in 2049, falling short of the £1.75bn wanted. A warning by Bank of England governor Mervyn King against further stimulus spending in next month's Budget also rattled bond markets. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54042/public-finance-fears
| Dollar dips on Geithner's 'loose talk' The dollar fell briefly by 1.3% against the euro on Wednesday after US Treasury secretary Tim Geithner suggested the US was open to exploring a Chinese proposal to reduce reliance on the dollar as the world's reserve currency. Geithner told the Council for Foreign Relations that he had not studied the proposal by Zhou Xiaochuan, China's central bank governor, for greater use of special drawing rights – a synthetic currency maintained by the IMF – in global reserves, but added: "We are quite open to that." See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54041/dollar-dips-on-geith
| Geithner to seek more regulatory powers US Treasury secretary Tim Geithner will ask Congress to bring large hedge funds, private-equity firms and derivatives markets under federal supervision for the first time as part of a revamp of US financial rules, reports Bloomberg. The Treasury chief will present his proposed framework at a House Financial Services Committee hearing in Washington on Thursday. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54040/geithner-to-seek-mor
| BofA plans to repay Tarp funds Bank of America has joined the growing list of US banks that are seeking to repay funds borrowed under the government's bank recapitalisation scheme as quickly as possible. Ken Lewis, BofA chief executive, told the LA Times this week he hoped to start repaying $45bn in taxpayer funds in late April, after results of the Treasury's first round of "stress tests" for banks are issued. Ideally, BofA wants to repay the entire $45bn by the end of 2009, he added. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54039/bofa-plans-to-repay-
| Citi plans fund to buy bank debt A Citigroup investment management unit is to start fundraising for a new fund that will look to buy up the debt of banks. The new fund under the bank's fixed income investment management unit - a new platform for its fixed income investment funds - will start marketing to investors next week with the aim of raising about $250m, under a mandate for buying up undervalued bank bonds issued by top banks. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54038/citi-plans-fund-to-b
| ICBC secures Goldman pledge Industrial and Commercial Bank of China on Wednesday secured a promise from Goldman Sachs that it would hold the majority of its stake in the Chinese lender for at least another year. Goldman, which holds 4.9% of ICBC, some on behalf of investors, said it would sell no more than 20% of that stake before April next year, even though the lock-up for its shares ends in April and October this year. ICBC, the world's largest financial institution by market cap, on Wednesday reported a 35.2% rise in full-year net profit to Rmb111bn ($16.2bn). See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54037/icbc-secures-goldman
| Lloyds offers bond swap Lloyds Banking Group has taken further steps to bolster its capital strength with a £7.5bn bond swap offer as it also raised an extra $5bn (£3.4bn) in government guaranteed funding in the bond markets. The bank, in which the UK taxpayer has a large stake, on Wednesday offered junior bond holders the chance to get out of their investments at a loss of 20p to 55p in the pound. Bondholders will be offered new senior unsecured bonds instead. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54036/lloyds-offers-bond-s
| BPM seeks Italian state aid Banca Popolare di Milano became the fourth Italian bank to announce that it would seek state-backed funding from Italy's €12bn bank aid scheme with at least one more bank expected to follow suit in the next few days. BPM said Wednesday it would tap the government scheme for €500m, a move that should give one of Italy's largest regional banks a core tier one capital ratio of about 8%. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54035/bpm-seeks-italian-st
| Regulator clears Chinalco's Rio deal Australia's competition regulator has cleared Chinalco's planned $19.5bn investment in Rio Tinto, ruling that the transaction was unlikely to "unilaterally decrease global iron ore prices below competitive levels". The Chinese aluminium group's proposed investment in the Anglo-Australian miner, however, still requires approval of Australia's Foreign Investment Review Board, which has until mid-June to complete its assessment. Separately Bloomberg reports that Rio said it will consider selling shares or bonds should shareholders or regulators reject Chinalco's planned investment. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54033/regulator-clears-chi
| Pearl angers bond holders Hugh Osmond's Pearl Group has deferred making a £33m interest payment on some of its bonds, angering some holders of the debt. The deferred payment was on £500m of bonds issued by life assurance investor Resolution before it was taken over by Pearl in 2007. The bondholders, including prominent blue-chip UK money managers, had already complained about a lack of information about the company's restructuring plans. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54034/pearl-angers-bond-ho
| GSK in talks over Aspen stake GlaxoSmithKline is poised to take a significant minority stake in Aspen Pharmacare of South Africa. GSK is in talks over the likely acquisition of about 10% of the drug producer in a deal that could be completed in coming weeks. The move could see further restructuring of the generic medicines sector, as big pharmaceuticals companies such as GSK, traditionally focused on patented medicines, diversify into cheaper, off-patent generic drugs. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54032/gsk-in-talks-over-as
| Letter says AIG paid bonuses early AIG paid more than $40m in controversial retention bonuses to staff at its troubled financial unit in December, three months ahead of schedule, according to the resignation letter of an AIG executive, Jake DeSantis. News of the troubled insurer's decision to pay bonuses of $165m to staff sparked protests in the US Congress. Before the letter's publication, however, momentum on draconian legislation to claw back bonuses had begun to slow. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54031/letter-says-aig-paid
| IBM set to cut 5,000 jobs IBM, which has the largest workforce in the US technology sector, is set to lay off about 5,000 staff in its North America operations. The company, which declined to comment, is expected to tell staff of the job losses on Thursday. The group has more than 100,000 staff on its payroll. IBM executives indicated recently that more jobs would be cut in the first half of 2009 than in the second half. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54030/ibm-set-to-cut-5000-
| UK banks warned after attack In Categories: People Posted at 04:46 by Gwen Robinson UK banks were warned on Wednesday to take security precautions for staff after vandals attacked the Edinburgh home of Sir Fred Goodwin, former chief executive of Royal Bank of Scotland. Three ground-floor windows of the detached house were smashed and a Mercedes car in the driveway was vandalised. Police, alerted by a burglar alarm at 4.35am, said Sir Fred was not home at the time of the attack. A group claiming responsibility for the attack later emailed a local newspaper warning of further action against bankers. See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/54029/uk-banks-warned-afte
| Overnight markets: Fresh heart Asian stocks rose on Thursday, lifting the region's benchmark index to a two-month high, as better-than- expected US economic data fuelled optimism that government stimulus measures are having an effect on global growth. Futures on the S&P 500 Index climbed 0.8% after the gauge gained 1% on Wednesday. Asian markets (Thurs)
04:35am GMT
Nikkei up 79.33 (0.94%) at 8,559.32
Topix up 3.59 (0.44%) at 822.08
Hang Seng up 303.56 (2.23%) at 13,925.67 US markets (Wed)
DJIA up 89.84 (1.17%) at 7,749.81
Nasdaq up 12.43 (0.82%) at 1,528.95
S&P500 up 7.76 (0.96%) at 813.88 European markets (Wed)
FTSE100 down 11.21 (-0.29%) at 3,900.25
Eurofirst 300 up 3.11 (0.42%) at 743.94 Currencies
04:37 GMT
€/$ 1.3573 (1.3479)
$/¥ 97.72 (97.77)
£/$ 1.4600 (1.4681) Commodities (updated)
04:40 GMT
Brent Crude (May09) up $0.75 at $52.50
Light Crude (May09) up $0.56 at $53.33
100 Oz Gold (Apr09) down $2.10 at $933.70
Copper (3M 24hr) up $45.00 at $4,015.00 10-year government bond yields (%)
US 2.78 (2.69)
UK 3.26 (3.32)
Germany 3.17 (3.15)
Japan 1.31 (1.26) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/03/26/53980/overnight-markets-fr
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