China cuts banks’ reserve requirements
China’s central bank cut the amount of cash that commercial lenders must hold as reserves yesterday for the second time in nearly three months, the latest step to shore up the slowing economy. The People’s Bank of China (PBOC) is on the course of gentle policy easing to cushion the world’s second-largest economy against stiff global headwinds, although it has been treading warily. The PBOC delivered a 50-basis-point (bps) cut in banks’ reserve requirement ratio (RRR), effective from Friday, after repeatedly defying market expectations for such a move.
It would cut the RRR for the biggest banks to 20.5 per cent from 21 per cent, injecting an estimated 400 billion yuan (US$63.5 billion) into the banking system that could be used for lending. “It’s not a big surprise. Although they (Chinese leaders) stress policy stability, an RRR cut is necessary. Trade and monetary data in January pointed to some downward pressure on the economy,” said Hua Zhongwei, an economist at Huachuang Securities in Beijing.
“But policy easing will be gradual given the central bank sounded cautious about inflation in its fourth-quarter monetary policy report.” China’s once turbo-charged economy is likely to slow to 8.2 per cent in the first quarter from 8.9 per cent in the previous quarter, according to the latest Reuters poll. The central bank announced its first cut in RRR in three years on November 30, 2011. That move took the rate down from a record 21.5 per cent. The lower reserve ratio has been followed by a gradual relaxation of some controls on credit at smaller regional institutions in recent months to support the slowing economy.
Investors had expected an RRR cut ahead of the Chinese Lunar New Year, but they were wrong-footed as the central bank opted for open market operations to provide short-term cash for banks. A Reuters poll conducted in January showed the central bank may cut the reserve ratio by a total of 200 bps throughout 2012 to 19 per cent.
The government is reluctant to give the green light to another bout of big bank lending, with inflation risks lingering and, more importantly, policymakers are determined to cool down the property sector to ward off a speculative bubble. Few analysts believe the central bank will cut interest rate cuts this year, with annual inflation staying stubbornly higher than the one-year deposit rate of 3.5 per cent.
UK and France sign nuclear energy agreement
The UK has signed a deal with France to strengthen co-operation in the development of civil nuclear energy.
The government said it reiterated the UK's commitment to nuclear energy "as part of a diversified energy mix".
The coalition said the agreement would create a number of commercial deals in the nuclear energy field, worth more than £500m and creating 1,500 UK jobs.
The deal was signed at a summit between PM David Cameron and President Nicolas Sarkozy in Paris.
'Joint framework'
"This joint declaration will signal our shared commitment to the future of civil nuclear power, setting out a shared long term vision of safe, secure, sustainable and affordable energy, that supports growth and helps to deliver our emission reductions targets," a statement from Downing Street said.
The two governments will work together with the International Atomic Energy Agency (IAEA) "to strengthen international capability to react to nuclear emergencies and establish a joint framework for cooperation and exchanging good practice on civil nuclear security".
The move comes 11 months after a tsunami in Japan wrecked the nearby Fukushima Daiichi nuclear plant, leaking radioactive material into the air and sea.
UK and French public and private sector bodies in the civil nuclear power industry will also work more closely in a number of areas.
These include education and training, research and development, and security.
"As two great civil nuclear nations, we will combine our expertise to strengthen industrial partnership, improve nuclear safety and create jobs at home," said Mr Cameron.
Eight sites
Last June, ministers announced plans for the next generation of UK nuclear plants.
The government confirmed a list of eight sites it deems suitable for new power stations by 2025, all of which are adjacent to existing nuclear sites.
The sites are: Bradwell, Essex; Hartlepool; Heysham, Lancashire; Hinkley Point, Somerset; Oldbury, Gloucestershire; Sellafield, Cumbria; Sizewell, Suffolk; and Wylfa, Anglesey.
Rolls-Royce is expected to win a £400m ($632m) share in the building of the first of the planned power plants.
France's Areva will supply the core of the nuclear reactors and Rolls-Royce will supply other engineering work.
"Rolls-Royce will become our prime manufacturing partner to supply some £100m of key critical components of the reactor for each EPR [next generation nuclear power plant] that's constructed in the UK," said Robert Davies from Areva UK.
Rolls-Royce plans to build a factory in Rotherham to meet orders resulting from the deal.
Earlier this month, the US Nuclear Regulatory Commission approved the first nuclear reactors to be built in the country since 1978.
Positive economic data spark rally on Wall Street
A latest bunch of positive economic data sparked a rally on Wall Street on Thursday, pushing major indexes to fresh multi-year closing highs.
The Dow Jones industrial average gained 123.13 points, or 0.96 percent, to 12,904.08, only about 100 points away from the 13,000 key mark.
The Standard & Poor's 500 rose 14.81 points, or 1.10 percent, to 1,358.04, and the Nasdaq Composite Index rallied 44.02 points, or 1.51 percent, to 2,959.85, a new 12 year closing high.
Thursday' s data continued to show the U.S. economic recovery was picking up.
The Labor Department said that the number of people applying for jobless benefits dropped 13,000 to a seasonally adjusted 348,000 last week, the lowest level in almost four years.
The four-week moving average of new jobless claims declined 1, 750 to 365,250. The average has remained below the 400,000 mark since November, a positive sign of improvement for the sluggish jobs market.
Meanwhile, the Commerce Department reported housing starts jumped 1.5 percent to an annual rate of 699,000 units last month, beating previous expectations.
A closely followed index of manufacturing activity in the Philadelphia area reached a four-month high in February in further evidence of the continued strength in the manufacturing sector.
According to the Federal Reserve Bank of Philadelphia, its manufacturing index climbed to 10.2 in February from 7.3 in January to reach the highest level since October.
Investors were also heartened by some reports that the European central bank had agreed to swap Greek bonds for new bonds, spurring hopes that a complete Greek bond swap deal could be reached in the near term.
Now, Greece is scrambling to get the 130-billion- euro bailout at the Monday meeting of euro zone finance ministers to avert a chaotic default when 14.5 billion euros in debt repayments fall due on March 20.
Among stocks in focus, General Motors surged about 9 percent after the company reported a record 7.6-billion-dollar profit last year, two years after it nearly collapsed.
In other markets, the U.S. dollar fell against major currencies in late New York trading and oil prices rose on hopes for a Greek debt deal.
Light, sweet crude for March delivery gained 51 cents, or 0.50 percent to settle at 102.31 dollars a barrel on the New York Mercantile Exchange.
Canadian stocks rally on positive U.S. data
The Canadian stock market was higher on Thursday as positive U.S. economic data helped traders balance doubts as to whether Greece will get the bailout money needed to head off bankruptcy and the possibility of downgrades involving some of the world's biggest banks, including Royal Bank of Canada.
The S&P/TSX Composite Index rose 123.88 points, or 0.06 percent, to close at 12,362.03 while the S&P/TSX Venture Composite Index gained 3.55 points, or 0.22 percent, at 1,633.58.
Moody's Investors Service said it may lower the ratings of some of the world's largest banks as well as those of some securities firms because their long-term prospects for profitability and growth are shrinking.
Banks under review for downgrades include Royal bank of Canada, one of the Canada's five biggest banks, Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley.
The announcement comes just days after the ratings agency said that it was cutting the ratings of Italy, Portugal and Spain, partly because of Europe's weakening economy.
Royal Bank of Canada's stock was off 10 percent at 53.36 Canadian dollars.
Investors are gradually reassessing their assumption that Greece will get a bailout worth 130 billion euros and an accompanying 100-billion debt euros writedown by private bondholders.
On Wednesday evening, after a conference call between the 17 euro zone finance ministers, more hurdles were put in front of Greece. One involves the possibility of setting up an account, separate from Greece's general budget that would be dedicated to paying off Greece's massive debt.
But Investors felt relieved by the U.S. economic data, especially the index of manufacturing activity in the Philadelphia area. The Philadelphia Federal Reserve's manufacturing index reached a four-month high of 10.2 in February in further evidence of the continued strength in the manufacturing sector.
The base metals and mining sector led the gainers, up 1.15 percent as the March copper contract approached 0.16 percent to 3. 82 U.S. dollars a pound. Teck Resources advanced 2.34 percent to 39.38 Canadian dollars.
The energy sector was up 1.34 percent as the U.S. economic reports pushed the March crude oil contract on the New York Mercantile Exchange ahead 0.51 percent to 102.32 U.S. dollars a barrel. Canadian Natural Resources rose 1.84 percent to 37.07 Canadian dollars.
Canada's third largest insurance giant Sun Life Financial Inc. reported it lost 525 million Canadian dollars in the latest quarter. Its share lost 0.05 percent to 20.88 Canadian dollars.
Economically speaking, Statistics Canada said on Thursday that the Canadian manufacturing sales improved 0.6 percent in December to 49.9 billion Canadian dollars, the fifth hike in six months.
On the currency front, the Canadian dollar improved from early lower levels amid positive U.S. data and rose 0.22 U.S. cents to 100.29 U.S. cents. One U.S. dollar was buying 0.9971 Canadian dollars at 5 p.m. local time (2200 GMT) on Thursday, compared with 0.9993 Canadian dollars on Wednesday.
US Congress backs payroll tax cut
The US Congress has voted in favour of extending a payroll tax cut until the end of 2012, ending months of debate.
The bill now moves on to President Barack Obama, who has promised to sign it into law.
The deal would extend a payroll tax cut the White House says saves middle-class Americans some $1,000 (£630) a year.
Republicans had demanded that the tax cut be offset by budget cuts elsewhere, but later agreed to add the estimated $100bn cost to the US budget deficit.
Correspondents said the deal was a compromise by fiscally conservative House Republicans, who had fought last December for a deal that did not increase the deficit.
Bipartisan vote
The Senate approved the $143bn measure by a 60-36 vote.
Moments earlier, the House of Representatives passed the bill by a broad 293-132 vote.
The law also extends jobless benefits to people who have been out of work for more than six months, and prevents a significant cut in reimbursements for doctors who treat patients on Medicare, a goverment-sponsored health programme.
The payroll tax debate sparked an impasse in Congress at the end of 2011.
Republicans in the House were put on the defensive as the year drew to a close after negotiations broke down on how to pay for the cut.
After a climbdown by Republican House Speaker John Boehner, Republicans eventually agreed to a two-month extension while a House and Senate panel brokered a year-long deal.
Compromises
Extending the cut, which was originally passed in 2010, was part of a wide-ranging jobs plan launched by President Barack Obama in September 2011.
As part of the year-long deal, Democrats dropped requests for new tax breaks.
Republicans had wanted to reduce the extension of unemployment benefits from 99 weeks to 59 weeks. The White House wanted a 79-week extension as a compromise.
The eventual deal settled on 73 weeks of in states with high unemployment.
The Republicans also dropped a condition that potential recipients of unemployment benefits must be drug-tested first.
Fake US bonds worth trillions seized
Italian prosecutors say they have broken up an organised crime ring that was hiding trillions of dollars of fake US bonds.
Worth $6 trillion, the bonds were found in three metal boxes in a warehouse in the Swiss city of Zurich.
Italian authorities have arrested eight people and are investigating them for fraud and other crimes.
Prosecutors are not sure what the gang was planning, but think they intended to sell the counterfeit bonds.
Investigators, based in Potenza in southern Italy, say the fraud posed "severe threats" to international financial security.
In cooperation with Swiss police, they tracked down three metal boxes to a warehouse in Zurich. The crates contained thousands of fake US bonds that gave the appearance they had been issued by the US Federal Reserve in 1934.
US officials confirmed that the bonds were counterfeit.
Fake US securities have been seized in Italy before and there were at least three cases in 2009.
But this case is on a different scale to previous investigations, as the fake bonds have a value equivalent to almost half of the entire US debt pile.
"Everything began with an investigation into mafia clans in the Vulture-Melfese area in the southern Basilicata region," said Giovanni Colangelo, the head of the prosecutor's office in Potenza.
Houston funeral, stories of faith, courage and love
Whitney Houston went to church one last time Saturday.
She was welcomed by family, friends and a virtual audience of millions who watched as the pop superstar was remembered as a child of God with the voice of an angel.
A voice that never forgot its roots.
"Jesus Loves Me" was the last song Houston sang in public before her death February 11 in Beverly Hills, California, at the age of 48.
So it was fitting that the mourners -- comforted and encouraged by the likes of Stevie Wonder, Alicia Keys and R. Kelly -- heard the simple, but powerful, "Jesus Loves Me," this time performed by CeCe Winans.
Saturday's homegoing service was held at New Hope Baptist Church, where Houston, nicknamed "Nippy," was soloing in the junior choir by age 11.
Even with her ensuing fame, which brought six Grammy Awards, glamorous living and parties on the West Coast, and seven consecutive No. 1 singles, Houston never forgot her Newark, New Jersey, hometown.
Actor Kevin Costner, who starred with Houston in her first movie, "The Bodyguard," recounted how both of them grew up in the Baptist faith and had family members who sang in the choir.
"Church was our bond," Costner said.
Houston, the actor said, overcame her doubts about having what it took to earn the role in "The Bodyguard." She alone, Costner said, was the right choice.
"Now you are gone, too soon, leaving us with memories of a little girl who stepped bravely in front of this church, in front of the ones that loved you first," Costner said. "In front of the ones who loved you the best and loved you the longest. And boldly you stepped into the white hot light of the world's stage."
During the three-and-a-half-hour service, Houston's casket, covered with a large spray of flowers, rested in front of the altar.
While many of her fans lamented the fact that Houston's service was invitation-only, Pastor Marvin Winans, who delivered the eulogy, thanked Cissy Houston, Whitney's mother, for having the service at New Hope.
"That took a lot of courage. And because of that you brought the world to church today," Winans said during his eulogy.
The six-page funeral program contained color family photos and a letter from Cissy Houston.
The letter included the message, "God said 'It's time, Nippy. Your work is done.'" It was signed, "Thanks for being such a wonderful daughter. Love, Mommie."
Houston also left behind a daughter, Bobbi Kristina Brown, 18.
Through the tears and occasional laughter, performers and speakers spoke of Houston's loyalty.
Gospel singer and longtime friend BeBe Winans was visibly emotional as he recalled a memory of Houston's sense of humor.
With his sister, CeCe, by his side, he told the story of how Houston, then a major celebrity, informed them of her intent to sing background vocals on their new tour. When they told her she was too big a star to do that now, Houston responded, "You're my brother and sister, right?"
The exchange went on for a few minutes and then Houston told them, "Y'all broke, right? I'm rich, right? So I can buy what I want to for y'all."
Winans said that was the Whitney Houston he would remember. Then he sang, "I Really Miss You."
A "who's who" of musical performers adapted lyrics in tribute to Houston.
Gospel singer and friend Kim Burrell sang a reworked version of Sam Cooke's "A Change is Gonna Come," adding glimpses of Houston's life to the lyrics. After finishing, she walked down to the pew where Cissy Houston sat and embraced her.
One of the most emotional moments in the service came when Keys sang "Send Me an Angel," her voice soaring into the rafters of the sanctuary.
Oprah Winfrey, Mary J. Blige, Mariah Carey, New Jersey Gov. Chris Christie, Spike Lee, and Houston's former husband, Bobby Brown, were among those in attendance. Brown walked by Houston's casket with his head down before the service began. Police said Brown and his entourage later left the church during the service.
At the time of her death, Houston was in the Los Angeles area for the 54th annual Grammy Awards and was to attend a party hosted by her longtime mentor and record producer, Clive Davis. She was discovered dead in her hotel suite. A cause of death has not been determined.
Mourners heard only a few indirect references to her personal battles. A close family friend told CNN on Tuesday that Houston had not used "hard drugs" for several years. Investigators are examining prescription drugs found in her hotel room.
Through her turmoil, speakers said, Houston remained true to her faith.
"In her final days, she held on to what you taught her to believe in," said Patricia Houston, Whitney's sister-in-law and former manager. "I promise you she did."
Ray Watson, Houston's bodyguard, recalled some of his last interactions with the singer.
"In our final days, she came in my room and she began to speak biblically," he said. "She laid her head on my shoulder and said, 'We are gonna be all right.'
Speakers, including Bishop T.D. Jakes and director-producer Tyler Perry, spoke of the promise of tomorrow.
"Death has not won. Your tears may flow. The flowers might wither," Jakes said. "You will find people you love may leave you outwardly, but (they) will not leave you inwardly."
At the conclusion of the service, Houston's iconic recording of "I Will Always Love You" was played as her coffin was removed from the sanctuary. Her mother leaned on her escorts as they helped her down the aisle.
Houston will be laid to rest Sunday at the Fairview Cemetery in Westfield, just south of Newark.
She has come home.
CNN
Rio carnival street parade draws record numbers
One of Rio de Janeiro's oldest and most popular carnival street parties has attracted a record 2.2 million revellers, police say.
The Cordao da Bola Preta parade is famous for attracting a diverse crowd, spanning all ages.
For the first time in its 93-year history, the event allowed electric sound systems and reversed its normal route.
Police said that despite the large crowds, the event had been peaceful.
Dressed as the cartoon character Asterix, Elson de Deus, 65, told Brazilian newspaper O Globo he had been attending the parade ever since he was 13.
This year, he had taken his son along to the parade to continue the family tradition.
Elizete Vieira, 77, said she had waited for four hours to secure her spot in the parade.
Denisa Chagas told the AFP news agency she liked the Bola Preta parade because it "brings everybody together, people from all districts and neighbouring towns".
Reflecting the name of Bola Preta, or Black Dot, many revellers wore clothes with black polka dots on a white background.
Others dressed as their sports heroes or donned wigs and tutus.
Police said they had detained 15 people for urinating in the street, but that there had been no serious incidents.
Some 400 street parties have been scheduled for the Rio carnival, but organisers say the Bola Preta parade, which dates back to 1918, is the most traditional.
Iran 'may boost nuclear programme', diplomat warns
Iran may be poised to expand its nuclear programme at an underground site near the city of Qom, a Vienna-based diplomat has told the BBC.
It appears to be ready to install thousands of new-generation centrifuges at the fortified underground plant, the diplomat said.
They could speed up the production of enriched uranium - required for both power generation and nuclear weapons.
The United Nations nuclear watchdog, the IAEA, has not commented.
Its inspectors are due to visit Tehran this week for another round of talks on Iran's nuclear activities, after they were denied access to certain nuclear sites and scientists on a visit last month.
Iran says its nuclear work is for purely peaceful purposes, but Western countries express fears that Iran is secretly trying to develop a nuclear bomb.
Tensions rise
This is another warning that Iran may be stepping up its controversial nuclear work, despite increasing international sanctions, says the BBC's Bethany Bell in Vienna.
According to other accounts by diplomats requesting anonymity, the Qom facility now contains the electrical circuitry, piping and supporting equipment required for the new centrifuges - though they add that the centrifuges have not yet been fitted and there is no certainty about if and when they will be.
Three days ago, Iran itself said it had advanced its nuclear know-how, including developing centrifuges able to enrich uranium faster.
The developments come against the backdrop of rising tensions over the issue, following an IAEA report in November which claimed that Iran had "carried out activities relevant to the development of a nuclear device", including:
- On Saturday, UK Foreign Secretary William Hague warned Iran's nuclear ambitions could trigger a nuclear arms race in the region - where at present the only country believed to possess such weapons is Israel
- Speaking in Tokyo, Israeli Defence Minister Ehud Barak called for sanctions on Iran to be tightened still further, saying only "crippling" measures would force it to give up its nuclear programme. But he reportedly added that Israeli military action against Iran was not on the table for the time being
- Iranian warships entered the Mediterranean Sea for only the second time since the 1979 revolution, in what navy chief Admiral Habibollah Sayari told Irna agency was a show of might and a "message of peace"
- Israel earlier accused Iran of masterminding attacks on its embassies in India, Thailand and Georgia - an accusation denied by Iran.
Several rounds of increasingly punitive UN and Western sanctions - the latest targeting Iran's oil and financial sectors - have failed to force Iran to give up its nuclear ambitions.
Instead, there is increasingly feverish media speculation that Israel is planning a military strike on Iran's nuclear facilities.
On Saturday, Israel's military chief of staff, Lt Gen Benny Gantz told a state TV station the country would ultimately make any decision to strike on its own, reported AFP news agency, saying it was "the central guarantor of its own security".
US national security adviser Tom Donilon has arrived in Israel for talks with officials on a range of issues including Iran.
Deadly shooting at Damascus funeral
Syrian troops have fired on mourners during a funeral that turned into a demonstration in Damascus, killing at least one person, activists say.
The shooting occurred at a funeral for people killed during a protest against President Bashar al-Assad on Friday.
The violence comes during a visit by a Chinese envoy, who urged dialogue in a bid to defuse the 11-month crisis.
State TV quoted him as saying he backed government plans for a referendum on a new constitution followed by elections.
The opposition has called for a boycott of the 26 February referendum, saying it cannot be held as violence continues.
Appeal for calm
Activists say there was a huge turnout for Saturday's funeral in the Mezzeh district on the western edge of Damascus. Mourners were burying three youths shot dead during protests following Friday prayers.
The funeral procession turned into one of the biggest demonstrations the capital has seen, with thousands of people chanting slogans calling for an end to the Assad regime.
According to activists, security forces opened fire, killing at least one protester and injuring several others.
Despite the current crackdown, there were similar protests after Friday prayers in many parts of the country.
Opposition activists say government forces on Saturday renewed their bombardment of the restive central city of Homs.
The violence came after Chinese envoy Zhai Jun held talks with President Assad in Damascus.
Syrian TV quoted Mr Zhai as saying: "The position of China is to call on the government, the opposition and the rebels to halt acts of violence immediately.
"We hope that the referendum on a new constitution as well as the forthcoming parliamentary elections pass off calmly."
After the meeting, Mr Assad was quoted as saying: "What Syria is facing is fundamentally an effort to divide it and affect its geopolitical place and historic role in the region."
China was one of the nations that voted against a recent UN General Assembly resolution calling on Mr Assad to stop his 11-month crackdown on dissent and step down.
Beijing, along with Moscow, has insisted outsiders cannot force regime change in Syria.
'Torture'
Opposition activists said government forces were continuing their two-week rocket and artillery attack on the opposition stronghold of Baba Amr in Homs on Saturday.
Activist Mohammad al-Homsi told Reuters news agency: "Troops have closed in on Baba Amr and the bombardment is mad, but I don't know if they are willing to storm the neighbourhood while it is snowing.
"There is no electricity and communications between districts are cut, so we are unable to get a death toll."
The BBC's Jim Muir in neighbouring Lebanon says the Syrian government clearly wants to quell all armed resistance and seal its borders to prevent supplies to the opposition.
Meanwhile the human rights group Amnesty International said it had obtained new evidence of torture being used by Syrian forces against opponents.
Amnesty researcher Neil Sammonds said one man told him that part of his hand was blown off with explosives after he refused to pray to a photograph of President Assad.
Other Syrians at a camp in Jordan said detainees were subjected to protracted beatings. One prisoner said he had been forced to witness the rape of another male detainee.
Syria restricts access to foreign media and it is often not possible to verify some reports and casualty figures.
Human rights groups say more than 7,000 people have died throughout Syria since last March.
The government says at least 2,000 members of the security forces have been killed combating "armed gangs and terrorists".