Australia PM puts economy at heart of re-election

July 15 (Reuters) – Australian Prime Minister Julia Gillard sought to sell her Labor government’s economic credentials on Thursday, warning that the conservative opposition’s policies could risk a robust economy.

In her first major economic speech since becoming prime minister on June 24, Gillard set out her platform for re-election at polls expected within months, centering on job creation.

“I believe a strong economy is the foundation of everything else that as prime minister I want for this great country of ours,” Gillard told the National Press Club in Canberra.

“As prime minister I will make my economic judgments based on what gives Australians the best opportunity for access to work.”

The government, on course for a narrow election victory according to opinion polls, tweaked its economic forecasts on Wednesday, predicting robust commodity prices due to Chinese demand will ensure the budget returns to surplus in 2012/13, far ahead of most other rich nations.

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For Reuters Poll Tend [ID:nSYU010167]

For updated economic forecasts [ID:nSGE66D04I

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It also forecast unemployment would fall to 5 percent in 2010-11 and 4.75 pct in 2011-12.

Gillard said the economy had emerged from the global financial crisis stronger than many other developed nations due in part due to the government’s A$52 billion ($46 billion) stimulus package in 2009.

“I say to the Australian people, now is not the time to take risks with the Australian economy,” said Gillard, Australia’s first female prime minister who appears far more at ease dealing with the media than her predecessor Kevin Rudd.

“It is a time for prudent and careful economic management, not a time to take risks with a Liberal Party that got it wrong on the global financial crisis, that opposed (stimulus) action to support Australian jobs and that would have allowed hundreds of thousands of jobs to be destroyed.”

Gillard said a new mining tax, which is forecast to raise A$10.5 billion in revenue from 2012, would fund a cut in corporate tax and a rise in pensions but would be dumped by conservative leader Tony Abbott if he was elected.

“Remarkably, my opponent would deny Australians these benefits because he is refusing to accept the tax that our biggest mining companies have agreed to pay,” she said.

PM SELLS ECONOMIC CONSERVATISM

Economic management is traditionally a major issue in Australian elections. And while Australia’s healthy economy, in its 17th year of growth, should be a winning ticket for the government, voters still believe the opposition has the edge in economic management, according to opinion polls this week.

The opposition, which ruled for 12 years before Labor was elected in 2007, is also committed to achieving a budget surplus, and has said it would put downward pressure on interest rates, cut debt and cap spending.

But it differs from the government over its opposition to a new mining tax and a planned carbon price to fight climate change.

Despite her left-wing background, Gillard has sold herself as an economic conservative, dismissing concerns her government would be an old-style, big-spending Labor administration.

Gillard said growth in spending would be capped at 2 percent a year once the economy was growing above trend.

She also said Australia could not rely solely on its resource sector for future economic prosperity, warning doing so could create a two-speed economy of haves and have nots.

“Australia today is a great beneficiary of the economic growth in China and the demand for our mineral resources in our region. But if anyone thinks that gives us a free ticket to easy prosperity, they are mistaken,” she said.

She said a re-elected Labor government would push for micro-economic reforms to ensure Australia remained a competitive and modern economy, but also provided social dividends.

“The microeconomic challenges of the future are not a simplistic choice between the market and the state,” said Gillard.

“Simply applying the extreme free-market medicine of liberalisation and privatisation without thought or care is not a solution. Maintaining an instinctive hostility towards the public sector and all it provides is equally wrong.” ($1 = 1.131 Australian Dollar) (Editing by Ed Davies and Sugita Katyal)

TEXT-Australia central bank July statement on rates

July 6 (Reuters) – Following is the text of the Reserve Bank of Australia’s statement on Tuesday after its monthly monetary policy meeting.

“At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per cent.

“The global economy has continued to expand over recent months, consistent with a trend pace of growth. The expansion remains uneven, with the major advanced countries recording only modest growth overall, but growth in Asia and Latin America, to date, very strong. There are indications that growth in China is now starting to moderate to a more sustainable rate. In Europe, while output in some key countries has been improving recently, prospects for next year are more uncertain given the budgetary constraints governments face and the pressure on euro area banks. US growth has looked stronger in the first half of 2010 but the pace of labour market improvement is slow.

“Caution in financial markets has been evident in the past couple of months, driven principally by concerns about European sovereigns and banks but also by some uncertainty about the pace of future global growth. Financial prices have been more volatile and equity prices and government bond yields in major countries have declined. Some tightness in funding markets is evident, though not on the scale seen in late 2008. Commodity prices are off their peaks but those most important for Australia remain at very high levels, and the terms of trade are approaching their peak of two years ago.

“With the high level of the terms of trade expected to add to incomes and demand, output growth in Australia over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing. Consumption spending is recording a modest increase at present, with households displaying a degree of caution, but most indicators suggest business investment will increase over the coming year. Business credit appears to have stabilised, though credit conditions for some sectors remain difficult. Credit outstanding for housing has continued to expand at a solid pace, but dwelling prices are rising more slowly than earlier in the year.

“The labour market has continued to firm gradually, and after the significant decline last year, growth in wages has picked up a little, as had been expected. Underlying inflation appears likely to be in the upper half of the target zone over the next year. The rate of CPI increase is likely to be a little above 3 per cent in the near term, due to the effects of increases in tobacco taxes announced earlier in the year and significant increases in prices for utilities.

“The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate. (Reporting by Balazs Koranyi)

South African Markets – Factors to watch on June 10

June 10 (Reuters) – The following company announcements, scheduled economic indicators, debt and currency market moves and political events may affect South African markets on Thursday.

- – - -

GLOBAL MARKETS

Asian stocks rose on Thursday on better-than-expected Chinese exports and assurances from Federal Reserve Chairman Ben Bernanke that the U.S. economic recovery was on solid footing. [ID:nSGE659058]

SOUTH AFRICAN MARKETS

South African stocks jumped on Wednesday, halting a recent decline, led by miners after China’s booming export data boosted commodity prices, while the rand was little changed as importers kept the upside move in check. [.J]

MTN Group (MTNJ.J)

MTN ended talks with Egypt’s Orascom Telecom (ORTE.CA) about a potential acquisition, sinking a deal that could have created the world’s third-largest mobile phone operator. [ID:nSGE65902J]

Life Healthcare (LHCJ.J)

The private hospital group is set to debut on the Johannesburg Stock Exchange following its $687 million IPO. The company may struggle in its debut, some analysts say, as risk- averse investors shy away from new offerings. IPO price was 13.50 rand per share. [ID:nLDE6581D5]

Standard Bank (SBKJ.J)

South Africa’s largest lender by assets said it is in not in talks to sell its business in Argentina, denying a local magazine report. [ID:nLDE6582JR]

CURRENCY

South African Finance Minister Pravin Gordhan this week met key manufacturers to discuss their calls for the government to weaken what they say is a an overvalued domestic currency. [ID:nLDE6582LR]

GOLD XAU=

Gold regained some footing on Thursday after being pressured by comments from Federal Reserve Chairman Ben Bernanke, but a firm stock market and steadier currencies are likely to cap gains. Spot gold XAU= was at $1,232.60 an ounce by 0254 GMT, up $2.25 from New York’s notional close on Wednesday. [GOL/]

WALL STREET

U.S. stocks fell on Wednesday in another late-day roller-coaster ride, dragged lower by BP and other energy shares as the U.S. probe of the oil spill in the Gulf of Mexico deppened.

The Dow Jones industrial average .DJI dropped 0.4 percent to 9,899.25. The Nasdaq Composite Index .IXIC lost 0.54 percent to 2,158.85. [.N]

EMERGING MARKETS

For the top emerging markets news, double click on [nTOPEMRG]

- – - -

Some of the main stories out of the South African press:

BUSINESS DAY

-Vodacom sale of WBS stake near finalty

-Search for missing link between economics and football success

BUSINESS REPORT

-Deeds scandal spreads

-Collective World Cup sickie may cost R750 mln

-World Cup gives SMEs a boost

THE STAR

-Bafana fan frenzy

(Reporting by David Dolan)

Glencore may put gold assets on market, mulls IPO

LONDON, June 7 (Reuters) – Commodities trader and miner Glencore [GLEN.UL] is considering putting its gold assets on the market as gold prices remain robust while other metals prices tumble, a source close to the situation said on Monday.

One option was listing the assets, which mainly consist of the largest gold mine in Kazakhstan, Vasilkovskoe, said the source, who declined to be named.

The source declined to put a value on the assets, but they produce almost as much gold as recently-listed African Barrick Gold (ABGL.L), which has a market value of $3.7 billion.

“Glencore is considering monetising the gold assets in the group,” the source said.

Swiss-based Glencore International AG said in March it planned about $1 billion in disposals in three to six months after it bought back the Prodeco coal operations in Colombia for around $2.5 billion from mining group Xstrata (XTA.L). [ID:nLDE6240AK]

Privately-held Glencore, which has taken initial steps towards a public listing valuing it at more than $35 billion, made the promise of disposals in March after discussions with credit rating agencies about its liquidity.

Liquidity at Glencore — the world’s biggest commodity trader — has improved to near record levels after it signed $10.2 billion in credit facilities in May and after working capital was released due to lower commodity prices, the source added. (Reporting by Eric Onstad; Editing by David Cowell)

Commodity prices skyrocket as Manipur blockade enters 55th day

Imphal, June 6 (PTI) The indefinite economic blockade of lifeline routes NH 39 (Imphal-Dimapur) and 53 (Imphal-Silchar) in Manipur by agitating Naga groups entered the 55th day today as prices of essential commodities have skyrocketed with hundreds of trucks remaining stranded. The All Naga Students” Association (ANSAM) launched the blockade on April 12 to protest against holding of elections to six autonomous district councils in the Hills which, it alleged, were given not enough power to carry out development works.

The charge was, however, denied by the state government. Due to the blockade, which was intensified after the state refused entry to NSCN (IM) general secretary Thuingaleng Muivah on May 3, regular supply of essential commodities have been stopped, causing the prices to shoot up.

A litre of petrol now costs between Rs 120 and Rs 150, onion Rs 28 and rice Rs 26 per KG. But despite the exorbitant prices, many essential commodities were not simply available, official sources said. Before the blockade, between 300 to 400 trucks carrying the essentials were plying daily on the two national highways, the sources said.

On May 12, the Manipur government had decided to bring hundreds of stranded trucks, loaded with essential items, from Silchar to Imphal via Jiribam, a distance of 212 Kms, by providing security

CANADA STOCKS-TSX closes higher on GDP data, commodities

May 31 (Reuters) – Toronto’s main stock index closed higher on Monday as firm commodity prices and robust first-quarter GDP data underpinned market confidence.

Stocks | Global Markets

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE unofficially closed up 61.36 points, or 0.53 percent, at 11,732.80. (Reporting by Claire Sibonney; Editing by Peter Galloway)

BRIEF-Statoil affirms 2010 targets after Q1

OSLO, May 5 (Reuters) – Statoil ASA (STL.OL) said:

Stocks | Energy

* Affirms 2010 oil and gas production guidance of 1.925-1.975 mln boed

* Affirms 2012 oil and gas production guidance of 2.1-2.2 mln boed

* Planned turnarounds to limit output by 30 mln boed in Q2, by avg of 50 mboed in 2010

* Affirms 2010 capital expenditure target of $13 bln

* 2010 unit production cost goal of NOK 35-36 per barrel of oil equivalent

* Gas market to stay challenging in near term, sees volatile commodity prices

* Refining margins have improved slightly, but to remain at low levels in near term

* Affirms 2010 exploration budget of $2.3 bln, plans to drill some 50 wells

(Reporting by Oslo newsroom)

Experts warn interest rate peak still to come

Economists are forecasting more and possibly bigger interest rate rises to come after Tuesday’s Reserve Bank decision.

The RBA put rates up 0.25 per cent for the sixth time in eight months, but it has signalled it is now ready to pause.

The rise will add about $48 a month to mortgage repayments on a $300,000 loan with a 25-year term, with the big four banks already moving to pass on the rise in full.

The decision was influenced by the strength of the mining boom and a higher-than-expected inflation rate and came despite the sovereign debt woes in Europe.

RBA governor Glenn Stevens says the increase puts interest rates for most borrowers back at average levels, but many believe any pause will be short-lived.

Macquarie Bank interest rate strategist Rory Robertson says the Reserve Bank declared phase one of monthly tightening.

“It’s now moved six times in seven meetings and has essentially said that lending rates, including mortgage rates, are about at average levels,” Mr Robertson said.

“That was basically the purpose of the significant tightening we’ve seen since last October.

“I think sooner or later, probably within the next few months, the Reserve Bank will marshal new arguments about why policy doesn’t need to be neutral-average-normal.

“It needs to be somewhat restrictive given the extent to which the economy has bounced from last year’s disasters, the extent that house prices, commodity prices, share prices have all moved up and all suggest the economy is moving forward quite nicely.”

Mr Robertson says Australia already has a template for tight monetary policy after mortgage rates were pushed to 9 per cent before the global financial crisis.

“When the economy was overheating the Reserve Bank was very worried about the up-shift in inflation to a 4 or 5 per cent rate,” he said.

“The Reserve Bank did put the cash rate to 7.25 per cent and it did give a green light for mortgage rates to reach 9 per cent.”

And before the landscape changed due to the global financial crisis, it was contemplating pushing interest rates even higher.

Expect the RBA to pause next month at the very least, but it may just be the pause that refreshes.

Commonwealth Bank chief economist Michael Blythe says after three rate rises in a row the RBA has hinted at pausing to assess what impact those moves are having.

“What comes through very clearly in [the] commentary again is the importance of that commodity price story and the way that’s going to inject a lot of income into the economy at a time when it’s already running close to full capacity,” Mr Blythe said.

“That means increased inflation risks and it probably means a move into restrictive policy settings as we get towards the end of this year.

“[The] policy rate will be around about 5 per cent by late 2010 and will be pushing towards 6 per cent in 2011.”

Mr Blythe does not think Australia will see mortgage rates up at the 9.5 or 10 per cent levels, but he says it will be uncomfortable nonetheless.

Deja vu

The economic conditions are similar to 2007 before the global financial crisis hit, when a mining boom was boosting the terms of trade, showering the nation with income and demand and inflation were being stoked by capacity constraints and a lack of skilled labour.

“Each month’s jobs report is going to give us some sort of guide as to the pressure on the Reserve Bank to do more or not,” Mr Robertson said.

“To the extent the unemployment rate continues to trend down, full-time employment continues to trend up, then the Reserve Bank will have a bias to tighten further.”

The statement by Mr Stevens noted that headline and underlying inflation rates are about 3 per cent, much higher than earlier expected.

And the Reserve Bank is likely to revise up its inflation forecasts when it releases its quarterly statement on monetary policy on Friday.

“I think the Reserve Bank will pause at least one meeting. They’ve done three in a row so I think June probably [there] will be nothing done,” Mr Robertson said.

“But as early as July the Reserve Bank may have marshalled the arguments as to why policy doesn’t need to just be at a neutral setting – it needs to be somewhat restrictive.

“So I think the Reserve Bank from here is one careful step at a time, but there’s a clear and growing bias for rates to go substantially higher.”

That is provided the China bubble does not burst and the sovereign debt woes in Europe do not spread.

Likely yuan rise to stoke commodities prices, demand

(Reuters) – The likelihood of a rise in the value of China’s yuan currency is growing daily, sharpening expectations for commodity markets to see price gains as Chinese consumers exploit their increased buying power.

China

Beijing faces international pressure to scrap the yuan’s peg, especially from Washington, which says the currency is seriously undervalued, sparking reports China may be about to revalue the yuan.

Raising the value of the yuan versus other currencies would cut the cost of China’s imports of dollar-denominated commodities such as oil, copper and iron ore, while making Chinese exports more expensive, but analysts said the net impact would be positive for commodity demand and prices.

The greatest impact will probably be seen in bulk commodities such as iron ore, metals such as copper and in soy, where China is a big importer and consumes most of the products made from those imports at home.

“The currency rise will hurt exports but will make imports cheaper. But that won’t matter to China and the net impact will be positive for commodities,” Jonathan Barrat, managing director of Commodity Broking Services in Sydney said.

“Long-term infrastructure development plans become cheaper and this will help focus on domestic markets and domestic growth. I think the yuan will continue to appreciate in the long term and will only serve to boost primary imports and that means a bull trend for these commodities.”

Even a rise of 3 percent in the value of the yuan, the range of increase discussed by a number of analysts, to around 6.60 to the dollar from last year’s average, would have a profound effect on China’s $244 billion commodity bill.

Last year the country spent around 607 billion yuan ($88.97 billion) on importing oil, 343 billion yuan ($50.28 billion) on iron ore and 206 billion yuan ($30.20 billion) on copper.

An increase of 3 percent in the yuan would have saved the nation some 56 billion yuan ($8.21 billion) on its commodity purchases, or enough to buy more than 1 million tonnes of copper.

China uses its centrally-planned economic power to control prices of certain products such as fuel but when international prices climb substantially the government has no option but to raise domestic prices, as it did this week for diesel and gasoline.

But analysts said it might be hard to reflect further rises in crude oil, unless the yuan strengthened.

“With the government suppressing domestic fuel prices, Chinese consumers will have little motivation to conserve, thus demand growth could accelerate,” said Gordon Kwan, Head of Regional Energy Research of Mirae Asset in Hong Kong.

“I don’t think this is yet priced in as global crude prices are still down 40 percent from their peak, and China’s prior mergers and acquisition deals are beginning to look like genius moves amidst rebounding crude prices. This could also translate into lesser oil product exports on a percentage basis.”

GONE FOR GOOD?

While viewed as a positive for most commodities, analysts said the effect on demand would vary depending on the product.

“When you are looking at consumption of food items, it is not such a huge impact as compared to something like manufacturing goods,” said Toby Hassall, an analyst at CWA Global Markets in Sydney.

But the longer-term implications of a stronger yuan may eventually be negative for commodities demand, said Nick Moore, global head of metals strategy at RBS.

The last time China raised exchange rates back in 2005, commodities saw a steady rally for more than a year after the revaluation.

In that time copper prices doubled to a then record high of $8,800 a tonne in 2006, chipping around half a million tonnes off copper consumption annually, analysts estimated.

“A revaluation could be a sell signal rather than a buy. Higher prices in the West won’t help people trying to boost their businesses and there should be no excuse for producers not to turn on the taps or face the wrath of consumers,” Moore said.

A second weight could land on commodity markets in the form of price-induced demand destruction, he added.

China has the luxury of lifting rates to curb imported inflation, which other nations cannot do, so higher prices could mean demand destruction.

“Already before any further recovery we face the specter of demand destruction. Consumers already view current prices with some concern, and as we saw in nickel and copper in the last run up … once it’s gone it’s gone forever.”

($1=6.822 Yuan)

(Additional reporting by Naveen Thukral and Judy Hua; Editing by Michael Urquhart and Clarence Fernandez)

Firmer commodity stocks lift FTSE; Intel pleases

LONDON, April 14 (Reuters) – Strong results from U.S. chip giant Intel (INTC.O) boosted sentiment on the global demand outlook, helping bolster commodity stocks to push Britain’s top share index up in early trade on Wednesday.

By 0811 GMT, the FTSE 100 .FTSE was up 24.31 points at 5,785.97 after it fell 15.99 points or 0.3 percent on Tuesday, back close to Monday’s 22 month intra-day peak.

Intel’s sales and margin forecasts far outpaced market expectations when they were released after the Wall Street close on Tuesday reinforcing hopes for an acceleration in the recovery. [ID:nN1382801]

This helped prompt a rise in commodity prices on increased demand hopes from the recovery which bolstered heavyweight miners and energy companies.

Rio Tinto (RIO.L), Xstrata (XTA.L), Lonmin (LMI.L), Anglo American (AAL.L), Kazakhmys (KAZ.L) and BHP Billiton (BLT.L) added 1 to 2 percent.

BG Group (BG.L), BP (BP.L), Royal Dutch Shell (RDSa.L), Tullow Oil (TLW.L), Cairn Energy (CNE.L) gained 0.1 to 1 percent.

“The market has the hope, or perhaps the expectation, that Q1 earnings will be good enough to keep equities moving higher and this is pushing (worries about) Greece to the backburner,” said Peter Dixon, economist at Commerzbank.

Chipmaker Arm Holdings (ARM.L) gained 1.5 percent as the Intel results boosted the outlook for the tech sector, while software firm Autonomy (AUTN.L) also benefited from the improved sentiment.

Telecoms carrier BT Group (BT.L) added 1.7 percent, in demand as Morgan Stanley released a note saying that it looks substantially cheaper than its U.S. peers such as AT&T (ATT.N).

BAE Systems (BAES.L) gained 1.3 percent, supported by a report in the Daily Telegraph that said the firm has won a Ministry of Defence contract, worth $25 million, to supply anti-missile technology for Chinook and Tornado aircraft in Afghanistan.

Among a relatively limited list of fallers, Associated British Foods (ABF.L) fell 1.8 percent after Deutsche Bank downgraded the food to retail group to “sell” from “hold”, citing valuation concerns over Primark.

Ex-dividend factors knocked 1.91 points off the FTSE 100 index on Wednesday, with BG Group (BG.L), Capita (CPI.L), Legal & General (LGEN.L) and Tullow Oil (TLW.L) all losing their payout attractions.

Investors will refocus on earnings from the U.S. banking sector later on Wednesday with JP Morgan Chase (JPM.N) posting results before the U.S. open.

No major domestic economic data will be released on Wednesday, so the main macro focus will be on a key batch of U.S. data due in the afternoon, notably March consumer prices and retail sales numbers, both scheduled for 1230 GMT.

U.S. business inventories for February will be released at 1400 GMT, and the latest Federal Reserve Beige Book will be published after the London close at 1800 GMT.

Federal Reserve chairman Ben Bernanke will deliver his latest Congressional testimony on Wednesday. (Editing by Jon Loades-Carter)

Firmer commodity stocks lift FTSE; Intel pleases

LONDON, April 14 (Reuters) – Strong results from U.S. chip giant Intel (INTC.O) boosted sentiment on the global demand outlook, helping bolster commodity stocks to push Britain’s top share index up in early trade on Wednesday.

By 0811 GMT, the FTSE 100 .FTSE was up 24.31 points at 5,785.97 after it fell 15.99 points or 0.3 percent on Tuesday, back close to Monday’s 22 month intra-day peak.

Intel’s sales and margin forecasts far outpaced market expectations when they were released after the Wall Street close on Tuesday reinforcing hopes for an acceleration in the recovery. [ID:nN1382801]

This helped prompt a rise in commodity prices on increased demand hopes from the recovery which bolstered heavyweight miners and energy companies.

Rio Tinto (RIO.L), Xstrata (XTA.L), Lonmin (LMI.L), Anglo American (AAL.L), Kazakhmys (KAZ.L) and BHP Billiton (BLT.L) added 1 to 2 percent.

BG Group (BG.L), BP (BP.L), Royal Dutch Shell (RDSa.L), Tullow Oil (TLW.L), Cairn Energy (CNE.L) gained 0.1 to 1 percent.

“The market has the hope, or perhaps the expectation, that Q1 earnings will be good enough to keep equities moving higher and this is pushing (worries about) Greece to the backburner,” said Peter Dixon, economist at Commerzbank.

Chipmaker Arm Holdings (ARM.L) gained 1.5 percent as the Intel results boosted the outlook for the tech sector, while software firm Autonomy (AUTN.L) also benefited from the improved sentiment.

Telecoms carrier BT Group (BT.L) added 1.7 percent, in demand as Morgan Stanley released a note saying that it looks substantially cheaper than its U.S. peers such as AT&T (ATT.N).

BAE Systems (BAES.L) gained 1.3 percent, supported by a report in the Daily Telegraph that said the firm has won a Ministry of Defence contract, worth $25 million, to supply anti-missile technology for Chinook and Tornado aircraft in Afghanistan.

Among a relatively limited list of fallers, Associated British Foods (ABF.L) fell 1.8 percent after Deutsche Bank downgraded the food to retail group to “sell” from “hold”, citing valuation concerns over Primark.

Ex-dividend factors knocked 1.91 points off the FTSE 100 index on Wednesday, with BG Group (BG.L), Capita (CPI.L), Legal & General (LGEN.L) and Tullow Oil (TLW.L) all losing their payout attractions.

Investors will refocus on earnings from the U.S. banking sector later on Wednesday with JP Morgan Chase (JPM.N) posting results before the U.S. open.

No major domestic economic data will be released on Wednesday, so the main macro focus will be on a key batch of U.S. data due in the afternoon, notably March consumer prices and retail sales numbers, both scheduled for 1230 GMT.

U.S. business inventories for February will be released at 1400 GMT, and the latest Federal Reserve Beige Book will be published after the London close at 1800 GMT.

Federal Reserve chairman Ben Bernanke will deliver his latest Congressional testimony on Wednesday. (Editing by Jon Loades-Carter)

Growing number of Australians could shape 2010 election

(Reuters) – Explosive population growth is shaping as a pivotal issue for Australian elections later this year, with most voters not sharing Prime Minister Kevin Rudd’s preference for a “Big Australia,” a survey showed on Thursday.

World

Major business groups, fearing labor shortages, urged the government to ignore a survey showing two-thirds of Australians did not want the population of 22 million to swell to an expected 36 million by 2050.

“In the wake of a recovering economy, and what we expect to be some global recovery during 2010-11, the likelihood is we will need to increase our skilled migration intake,” said Australian Chamber of Commerce and Industry chief executive Peter Anderson.

Rudd last year backed a bigger Australia after Treasury Department Secretary Ken Henry said current high rates of immigration and childbirth were creating profound economic policy challenges, with population growth of 61 percent seen by 2050.

In contrast, the world population was forecast to grow by only 38 percent over the same period, from 6.8 billion to 9.4 billion, making Australia the world’s fastest growing industrialized country, ahead of even India.

Policy think-tank the Lowy Institute released a survey on Thursday showing that while 72 percent of respondents supported a rise in Australia’s population, almost the same number (69 percent) wanted it clamped below a modest 30 million ceiling.

“Some of the concerns about overcrowding, about house prices, about the environmental strain that 36 million Australians would cause, are also starting to bite,” Lowy Institute executive director Michael Wesley told national radio.

Australia’s economy skirted the worst of the global downturn thanks to high commodity prices, a rush of foreign investment and soaring real estate costs that convinced the Reserve Bank of Australia to start raising interest rates last October, the first major global central bank to do so.

The RBA lifted its key cash rate by another 25 basis points this week to 4.25 percent, its fifth hike in seven months, and more increases are expected as the economy continues to gather strength and price pressures build along with it.

Strong jobs figures on Thursday showed 19,600 extra positions were added in March, holding the jobless rate at 5.3 percent, far below levels in other advanced countries.

The government will in days release a sweeping review of taxation designed to cope with economic and population shifts, and possibly including a controversial new tax on big miners like BHP Billiton and Rio Tinto.

The Business Council of Australia, representing the country’s 100 largest companies, said population was inextricable from continued economic growth, with president Graham Bradley promising to fight any plan to cut immigrant numbers.

Strong population growth would be a boon for property firms like Lend Lease, Stockland and Mirvac, building materials group Boral Ltd and CSR and engineering giant Leighton Holdings, while continued migration would also help ease mining labor shortages.

Rudd’s popularity has stabilized following a fall in recent months, though he remains well ahead in the polls and is favored to win a second term.

But the resurgent opposition, divided internally over whether to support cutting immigration, said the Lowy survey pointed to the need for a debate about population and immigration ahead of elections later this year.

“(Voters) are not prepared to sign up to the level of growth that Kevin Rudd is championing,” conservative immigration spokesman Scott Morrison said.

Immigration and surging asylum seeker numbers have split Australians and helped turn recent national elections, with tough border controls and a military blockade of refugee hopefuls in 2001 propelling conservatives to an unexpected electoral victory.

Newly appointed Population Minister Tony Burke said the government had no firm population target, with the 36 million figure being only a projection based on current policies.

“We continue in the budget each year to take account of the employment needs of the nation and to tailor those figures in a considered way,” Burke told reporters.

(Editing by Michael Perry & Kim Coghill)

Greek debt worries pull Australian market lower

The Australian market has mirrored a slide on Wall Street overnight, with falling commodity prices pulling the broader market down 0.5 per cent.

Renewed fears about Greek debt sent the interest rate on that country’s borrowing even higher, leaving investors even more worried it cannot rollover its loans.

Back in Australia, even today’s reasonably robust employment figures were not enough to lift the share market.

There was an increase of 20,000 jobs overall – the best news was that there were 30,000 more full-time jobs, and a slight fall in part-time employment. That left unemployment steady at 5.3 per cent.

The mining sector was today’s biggest loser, declining a little more than 1 per cent.

BHP Billiton was down almost 2 per cent at $43.75, and Rio Tinto finished 1 per cent lower at $80.00.

Energy stocks also fell, because West Texas crude oil had edged off recent highs to $US85.66 a barrel by about 5:00pm (AEDT). Tapis was also lower at $US86.99.

Woodside Petroleum closed down 1 per cent at $47.14.

Only one major commodity has benefited from the Greek debt woes – that is the safe haven of gold. It rose to just under $US1,150 an ounce by 5:00pm.

Lihir Gold was almost 2 per cent higher at $3.96.

All the major banks were down, except the Commonwealth. CBA gained 0.8 per cent.

The National Australia Bank closed down almost 1.5 per cent at $27.61.

Overall, the All Ordinaries index slipped 23 points to 4,960, and the ASX 200 also lost 23 points to close at 4,938.

The Australian dollar hit fresh records against the euro for the third straight day, with 70 euro cents seeming to be the next major psychological barrier.

At about 5:00pm the local currency was fetching 69.54 euro cents.

It was also fetching 92.62 US cents, 86.32 Japanese yen, 60.98 British pence, and $NZ1.315.

RBA tackles back-to-the-future scenario

It’s deja vu all over again. Look at the economy and the direction of monetary policy, and it’s as if we’re back in 2007-2008.

The threat of recession has been rapidly replaced by a resurgent mining boom and rising commodity prices that are boosting national income and business investment.

You could almost be forgiven for thinking the GFC and the domestic downturn never happened.

Imagine someone waking from a coma after three years – a sleeping beauty macro-economist. They might not know they’d slept.

Once again, the talk is about the soaring demand for labour and looming capacity constraints.

The Reserve Bank isn’t spelling it out quite so boldly and brutally, but its officials are worried that the unemployment rate – low by the standard of recent decades and falling – is too low to be compatible with its inflation target over the medium term.

So up and up the cash rate goes, where it stops …?

The worry in this back-to-the-future scenario is that the problems that dogged the economy pre-GFC are back, too.

Before the GFC hit, at a minimum, tens of thousands of households here were facing a fate worse than debt: the prospect of having to sell their homes because they couldn’t cope with rising interest rates.

Some localities were hit by an unprecedented wave of forced sales and defaults, particularly in parts of western and south-western Sydney.

Overall, default rates on housing loans remained low. But I suspect that was because the GFC saved us.

The majority of heavily geared households could struggle through when mortgage interest rates were in single digits but how far were they from the tipping point?

What would have happened if inflation pressures had led the Reserve Bank to keep on lifting the cash rate and variable interest rate mortgages had hit 10 per cent or 11 per cent?

Remember, back then, the inflation rate was stubbornly high and, at 4 per cent, above the RBA’s target.

Perhaps Australia would have suffered a home-grown recession as rising interest rates crunched demand and consumption.

Perhaps the nation would have experienced the house price correction that, by and large, Australia avoided.

Instead, we had a hiccup, and the debt binge continues.

Look at the level of housing debt now. It’s at record levels compared to disposable income – more than 138 per cent, nearly two-and-a-half percentage points above the previous peak in March 2008.

That doesn’t mean that we are back near the precipice.

The rapid cuts in interest rates, delivered by the RBA to ward of recession after the GFC hit, allowed many households to pay down debt and get ahead on their mortgages.

But one wonders how many of the first home buyers – lured into the market by boosted government subsidies and low interest rates – will find themselves in trouble if interest rates keep rising.

The trajectory of house prices and household debt is unsustainable.

The simple maths tells you that real estate “values”, for want of a better word, can’t keep on outstripping incomes in the way that they are doing.

Yet dwelling prices are being driven up by a chronic undersupply, exacerbated by record rates of immigration.

And, once again, the market has the whiff of mania, so evident in the past decade when prime time television was flooded with shows about real estate and the enormous capital gains to be had in the renovation nation.

At auctions, buyers are telling reporters they paid more than they should have but feared that if they missed out now, they’d never break in.

The Reserve Bank boss is trying to calm things down. Glenn Stevens has even gone a step further than his predecessor, appearing on breakfast television to caution Australians against taking on too much debt.

His warning was salient and informed by more than his professional status.

“I think it is a mistake,” Glenn Stevens said, “to assume that a riskless, easy, guaranteed way to prosperity is just to be leveraged up into property. You know it isn’t going to be that easy.

“And I think if we think about property prices as parents – and you’re parent as am I – I’ve got kids that within not too many more years are going to want somewhere of their own to live. And you wonder you know how is that going to be afforded because these prices are getting quite high.”

As the RBA lifts the cash rate and borrowing costs rise, it may dampen housing demand. The risk is that it could also diminish supply.

The housing industry is warning that higher interest rates will deter new building and make it more difficult for developers to finance projects.

And where it stops, nobody knows. Not even the RBA can say with any certainty whether interest rates will rise a little more or a lot more.

But it’s not hard to imagine this scenario: A positive terms of trade shock from rising commodity prices and continuing falls in the unemployment rate increase demand and consumption, encouraging the central bank to keep on ratcheting up the cash rate over time to contain inflation.

Yet high levels of net migration put a floor under the real estate market, and render housing even less affordable.

At some stage, something has to give.

Nikkei climbs 1.4 percent; Dai-ichi Life gains in debut

(Reuters) – Japan’s Nikkei average rose 1.4 percent to close at an 18-month high for a third straight day, buoyed after the yen hit a three-month low against the dollar and resource shares rose on gains in commodity prices.

A survey showing improvement in Japanese business confidence as well as a strong debut by Dai-ichi Life Insurance (8750.T), which opened 14 percent above the price in its $11 billion IPO, also boosted market sentiment.

“The weaker yen is a big help,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But the market is definitely overbought, and it really needs a bit of consolidation. This is going to leave it vulnerable to profit-taking.”

The benchmark Nikkei .N225 gained 154.46 points to 11,244.40, although it earlier rose as far as 11,272.73.

The Nikkei’s relative strength index (RSI) shows the benchmark has crossed over the key 70 line, above which it is considered overbought. But longer-term direction indicators such as MACD and the daily Ichimoku chart suggest the Nikkei’s uptrend still has a while to run.

The Nikkei’s next major upside target lies near 11,310. That would be roughly a 38.2 percent retracement of the drop from a peak in 2007 to a trough in 2008.

The broader Topix rose 0.7 percent to 985.26.

Dai-ichi, whose debut was the world’s largest in two years, opened at 160,000 yen. Trade was halted immediately after the first price was settled, a special measure taken by the Tokyo bourse to make sure the listing went smoothly. The shares will trade normally on Friday.

“The shares opened up 14 percent at 160,000 yen so everyone made a profit. I think this is positive for investor sentiment,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

The dollar was up 0.1 percent against the yen at 93.52 after hitting a three-month peak at 93.65 yen.

The euro was flat against the yen at 126.21 yen, after earlier climbing to a high of 126.62 yen, with some analysts saying the euro’s rebound as worries about Greece subside was also a major factor contributing to recent gains in the Tokyo stock market.

GOOD MORALE

The Bank of Japan’s tankan survey showed that Japanese business morale improved in March for the fourth consecutive quarter, a result broadly in line with market expectations.

The headline index for big manufacturers’ sentiment improved to minus 14 in March from minus 25 in December, compared with the median market estimate for minus 13 in March.

The tankan also showed that large manufacturers were forecasting recurring profits to climb 49.3 percent year-on-year in the financial year that started on Thursday, another result that was in line with expectations.

Market players said that hopes for the new quarter and business year were supporting buying, though wariness remained.

“We saw the Nikkei make strong gains in March, when it rose 10 percent, but trading volume was thin, so it’s not as bullish a situation as it could have been,” said Daiwa SB’s Ogawa.

Pump maker Ebara Corp (6361.T) jumped 5.0 percent to 501 yen in active trade after Deutsche Securities upgraded the shares to “buy” from “hold” and raised their target price to 600 yen from 300 yen, saying the visibility for future earnings has improved.

Yahoo Japan (4689.T) gained 2.9 percent to 35,050 yen after the company said it is in talks with China’s Taobao to link their Internet shopping sites, seeking access to the rapidly growing Chinese online retail market.

But banking group Resona Holdings (8308.T) fell 1.8 percent to 1,161 yen after Credit Suisse downgraded it to “neutral” from “outperform,” saying lower income expectations would limit the upside.

Volume picked up, with 2.4 billion shares changing hands on the Tokyo exchange’s first section, the strongest in three weeks.

Advancing shares beat declining ones, 947 to 576.

(Additional reporting by Masayuki Kitano; Editing by Edwina Gibbs)

Rescue package for farmers ruled out

The state’s Agriculture Minister has ruled out any government rescue package for farmers in the Wheatbelt.

Terry Redman says the next month is critical for farmers as they decide how to proceed this season in the face of a strong Australian dollar, low wheat prices, below average yields and high input costs.

He says many farmers are facing significant challenges in what will be a very difficult year but he has ruled out any financial assistance from the government.

“There have been some calls for government to look at a bailout package.

“Governments typically support communities, we don’t typically support funds directly into businesses.”

Mr Redman says the next month is critical for farmers as they make decisions about the year ahead.

“It’s very, very difficult given that commodity prices are down, input costs are up, the dollar’s high.

“Most of those things are out of control of government so therefore it’s a case of us supporting farmers making good decisions in the next month or so to get through this year.”

The government has set up a telephone hotline for farmers seeking business or personal advice.

Australian shares flat, Rio up in London

The Australian share market has finished broadly flat, as gains in mining stocks were offset by weakness in health stocks and the major supermarkets.

The All Ordinaries index closed a mere 2 points higher at 4,907, and the ASX 200 ended dead flat at 4,897.

Metal prices rose at the end of last week, as the EU’s tentative deal on a Greek bailout helped boost confidence on financial markets, including the commodities markets.

Panoramic Resources had the best of the mining gains, rising 10 cents to $2.39.

BHP Billiton was up 0.25 per cent, and Rio Tinto gained 7 cents to close at $78.39.

Rio Tinto has advanced more strongly in London, despite jail terms of between seven and 14 years handed to its four executives on trial in a Chinese court for bribery and stealing commercial secrets.

Australian, Stern Hu, received a 10-year jail sentence.

However, Rio Tinto’s share price had gained 1.6 per cent during the first half hour of trade in London. Other mining stocks were also gaining strongly on rising commodity prices.

Back to the Australian market, and the gold miners advanced after strong gains in the precious metal’s price in New York on Friday.

Eldorado gained more than 2.5 per cent to $13.34, and Newcrest rose more than 1 per cent to $33.30.

Spot gold was fetching about $US1,107 an ounce at around 5:00pm (AEDT).

The major supermarkets lost ground: Woolworths closed down about 1 per cent at $28.38; and Wesfarmers, which owns the Coles supermarket group, lost more than 0.5 per cent to $31.45.

Telstra ended the day flat at $3.06 cents, despite announcing a management shake-up.

However, iiNet surged almost 7 per cent after announcing a $40 million takeover of rival internet service provider Netspace.

iiNet says the takeover will give it an extra 70,000 broadband customers, taking its total broadband subscriptions to more than half a million.

West Texas crude oil was worth $US80.44 a barrel at around 5:00pm, while Tapis was fetching a touch over $US82.

The Australian dollar has recovered some of its dip at the end of last week, to be fetching 90.88 US cents.

On the cross rates it was at 84.13 Japanese yen, 67.63 euro cents, 60.86 British pence, and $NZ1.284.

Farm stocks rebound but still low

A new survey has revealed farm confidence in Western Australia has improved slightly but still remains at very low levels.

The Rabobank survey found 75 per cent of the State’s producers expect conditions to improve this year after a very disappointing 2009 season.

The State Manager, Crawford Taylor, says while grain producers remain the least confident about their situation, livestock producers have been buoyed by high red meat prices.

Mr Crawford says many farmers are struggling to break even with a high Australian dollar, fluctuating commodity prices and high input costs.

“Things can’t really get much worse than what they are,” he said.

“We’re at a base, so hopefully things won’t get any worse than what they were in 2009.”

Shares fall on weak commodities

Local shares are losing value, with weaker commodity prices dragging the market down.

The All Ordinaries Index was down 35 points, or 0.75 per cent to 4,855 just before midday (AEDT), and the ASX 200 was 34 points lower at 4,838.

Shares in Arrow Energy have fallen more than 3 per cent, despite an improved takeover offer from Royal Dutch Shell and PetroChina.

BHP Billiton and Rio Tinto were both down around 1.5 per cent shortly after midday.

The big four banks are also under pressure.

ANZ had the biggest losses in the morning, down 0.9 per cent just after midday, while NAB was performing best – it was down only 2 cents at $26.88.

The Australian dollar was also weaker at 91.42 US cents.

Struggling farmers get bi-partisan support

The State Opposition has offered the government its support to find solutions for struggling farmers.

Hundreds of farmers attended a crisis meeting in the Wheatbelt town of Kulin yesterday to discuss rising costs and falling commodity prices.

Many are warning this season could make or break them.

The meeting urged the state government to set up an emergency assistance package for this season.

Opposition spokesman Ken Travers says the Labor Party will assist the government in getting any necessary legislation through parliament.

“It was very clear to me that it is an urgent matter and it requires urgent action from the government.”

Local MP Terry Waldron represented the government at the meeting and told the gathering that the government understood what farmers were going through.

The Agriculture Minister Terry Redman will hold talks with the Farmers Federation next week.