Financial news: Economic, Markets and Commerse

Money markets us repo rates tick lower, but near recent highs


* Benchmark euro interbank rates hit record lows ADVISORY - Reuters plans to discontinue its daily report on the money markets in New York as of Oct. 15. Instead, we will include coverage of U.S. money markets in our daily reports on U.S. Treasury bonds. Significant developments in money markets will be reported separately by Reuters. For any comments, please write to: william.this site NEW YORK, Oct 3 U.S. overnight lending rates dipped on Wednesday, but remained near recent highs as investors looked ahead to key U.S. payrolls data due on Friday for direction as to the strength of the economic recovery. The interest rate on overnight repurchase agreements was last quoted at 0.32 percent, down from 0.35 percent late Tuesday. Repo rates have generally been rising since touching a low of 0.03 percent in July, 2011. The median of forecasts from analysts polled by Reuters is for the government on Friday to announce U.S. employers added 113,000 new jobs in September, up from 96,000 new jobs in August. The unemployment rate is expected to have edged higher to 8.2 percent last month from 8.1 percent in August. Meanwhile, key Euribor and Libor bank-to-bank rates hit fresh record lows on Wednesday, as the huge volume of cash pumped into the banking system by the European Central Bank and the prospect of further cuts in its interest rates extended a year-long slide. The three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, fell to 0.218 percent from 0.220 percent. The equivalent Libor rate, settled in London at a record low of 0.14643 percent, versus Tuesday's 0.14857 percent. Shorter term one-week rates ticked down to 0.082 percent after overnight Eonia rates also hit a record low of 0.087 percent. Bank-to-bank lending rates have been in virtual free-fall since November last year when news broke that the ECB was going to flood the banking system with ultra-cheap, three-year cash. The bank's decision in July to stop paying interest on overnight deposits has allowed the slide to continue by removing the natural 0.25 percent floor for the money market. In contrast to euro rates, dollar-priced bank-to-bank Euribor lending rates inched higher, with three-month rates up to 0.63769 percent from Tuesday's 0.63692 percent and overnight dollar rates edging up to 0.31846 percent from 0.31769 percent. Three-month dollar Libor rates fixed at 0.35250 percent, down from 0.35400 percent on Tuesday. The amount of excess cash in the euro zone banking system remains extremely high at 726 billion euros, according to Reuters calculations. With liquidity set to remain high for the foreseeable future money market experts are instead focused on whether the ECB could copy Denmark's example and start charging banks to deposit cash overnight with it. It is an idea that has been floated by a number of ECB policymakers but it would be a complicated move and add extra complexity to an already dysfunctional money market. Euribor rates are fixed daily by the Banking Federation of the European Union

Money markets weak us jobs data renew qe bets


* U.S. Treasury sells 3-, 6-month bills* Traders push back outlook on Fed hike into late 2014* U.S. rates futures steady after Friday jump on jobs dataBy Ellen FreilichNEW YORK, April 9 Disappointing U.S. job growth reported last Friday favored safe-haven assets and supported short-term rates futures contracts on Monday as another round of large-scale bond purchases to support the U.S. economy looked more likely. On Friday, government data showed U.S. payrolls grew by 120,000 jobs last month, fewer than the 203,000 new jobs predicted by economists. The jobless rate fell to a three-year low of 8.2 percent, largely because discouraged workers stopped looking for jobs.

The sluggish pace of job creation since the end of the worst recession in 70 years has remained a top concern for the Fed and has fueled speculation whether the U.S. central bank would undertake a third round of quantitative easing, nicknamed QE3, to prevent the economic recovery from fading. The Dec 2014 Eurodollar contract traded unchanged at 98.835. On Friday it recorded its biggest one-day rise since Jan 25 when it rose 17.5 basis points. This implied traders see the unsecured funding cost for three-month dollars for banks and Wall Street at the end of 2014 at 1.165 percent.

The U.S. Treasury sold $31 billion three-month bills at a high rate of 0.085 percent, awarding 51.12 percent of the bids at the high."Recent auctions had been aggressively bid, but with the larger-than-expected announcement of 4-week bills, buyers took a small step back and the 4.2 ratio of bids received over those accepted was the weakest since August 8," said Thomas Simons, money market economist at Jefferies & Co. in New York. Dealers got 60.8 percent of the sale, just above their average since June 2009 of 59.3 percent.

"The buyside backed off in this auction after very strong takedowns in the last two weeks," Simons said. The Treasury's auction from buyside investors helped to generate the short stops in the bidding."The Treasury sold $29 billion six-month bills at a high rate of 0.150 percent with the 4.37 bid-to-cover ratio the weakest since Feb. 27, 2012, Simons said. Dealers got 50.6 percent of the sale, their smallest portion since December 12. On Thursday, the benchmark London interbank offered rate on three-month dollars was fixed at 0.46915 percent. Many European financial markets were closed on Friday and Monday for the Easter holiday.

New malaysia cbank facility may lure gulf banks


Malaysia's central bank is introducing an Islamic overnight funding facility which could encourage commercial banks from the Gulf to trade more in the country's sharia-compliant money market. The collateralised murabaha facility, announced last week, "will add diversity to the existing liquidity management tools and further promotes greater liquidity in the Islamic financial market," the central bank said. The new facility will allow Islamic banks to obtain funds from the central bank by pledging high investment grade sukuk as collateral, a Malaysian-based Islamic banker told Reuters by telephone.

Currently, Islamic banks can obtain funds from the Malaysian central bank through a deferred-payment sale agreement, but this structure is not considered permissible by some sharia scholars outside Malaysia so banks from the Gulf have been reluctant to use it. Because it involves murabaha, a common cost-plus financing structure in Islamic finance, as well as collateral, the new facility is likely to be more acceptable to banks from the Gulf, the Malaysia-based banker said. It may also be more cost-effective, he added.

Last June the United Arab Emirates central bank introduced a similar facility to provide liquidity to banks in its own money market: a collateralised murabaha facility in which banks can use Islamic certificates of deposit as collateral.

Al Rajhi Bank, Kuwait Finance House, Bank Alkhair and Elaf Bank are among the Middle Eastern institutions already active in the Malaysian market. In addition to stimulating Malaysia's Islamic money market activity, the new facility could encourage banks' investment in sukuk by increasing demand for the use of sukuk as collateral. The facility is in line with increasing allocations of funds into sukuk by Islamic banks, said Srinivasan Gopalakrishnan, assistant vice president at Bahrain-based Al Salam Bank.

Press digest australian business news jan 3


Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)James MacKenzie, chairman of Gloucester Coal, has announced that the miner's board will wait until Yanzhou Coal Mining Company completes due diligence on Gloucester before deciding whether to recommend the Chinese firm's A$8 billion merger offer to shareholders. Shares in Gloucester have climbed by 22 percent since news of Yanzhou's "merger proposal deed" with the Australian miner was announced to the market on December 23.- - - - - Toby Marchant, chief executive of PaperlinX, has revealed that the paper manufacturer is in negotiations with a number of potential suitors, including an unknown private equity fund which has already submitted a conditional offer for the group. "We had a small hiatus over Christmas but we are in the process of due diligence and are weighing up other offers to the company," Mr Marchant said. Page 13.- - - - John Skellern, chief executive of U-nited Group, yesterday said 2011 had been the most difficult year for the warranty provider, with sales of extended warranties on electronics like computers and flat-screen televisions down by 20 percent. The company is planning on growing revenue by launching an online platform to allow consumers to purchase extended warranties after they have left a store, while also broadening its warranty coverage to items like medical equipment, trucks and earth-moving equipment. Page 13.- - - - The Federal Government's national broadband network is expected to continue to drive consolidation among internet service providers (ISP) this year. Perth-based group iiNet recently announced a A$105 million deal to acquire rival ISP Internode, which will boost the former's subscriber base by 190,000. "The two companies are clearly a good fit with their strong cultural alignment, industry-leading customer service and shared commitment to innovation," Michael Malone, chief executive of iiNet, said. Page 15.- - - - THE AUSTRALIAN (this site)Westpac Banking Corporation has been forced to reclassify A$28.8 billion in property loans after incorrectly recording the loans as belonging to owner-occupiers instead of being used for investment purposes. The error started in late 2008 amidst the turmoil of the global financial crisis and was only recently discovered through an internal review. "When we told [the Australian Prudential Regulation Authority] about the way we found out I don't think they were happy about it," a spokesperson for the bank said. Page 23.

- - - - The Australian Competition and Consumer Commission has asked for public submissions on natural gas infrastructure firm APA Group's hostile A$1.8 billion cash and scrip offer for pipeline rival Hastings Diversified Utilities Fund. Hastings' board has dismissed the bid as being too low, while the competition regulator has raised concerns about whether the merger would limit customers' ability to bargain or result in higher gas prices. Page 23.- - - - The chief executive of the Stockbrokers Association of Australia industry body, David Horsfield, has warned that 2012 was not shaping up to be a "great cocktail for equities" courtesy of the combination of the debt crisis in Europe, the carbon and mining taxes and the high Australian dollar. Some observers predicted more consolidation in the local stockbroking sector, with Charlie Aitken from Bell Potter suggesting that some global firms could downsize or cull their Australian operations entirely. Page 23.- - - - Russell Clark, chief executive of Grange Resources, has said that the miner would consider selling a stake in its Tasmanian and Western Australian iron ore ventures in order to fund the development of the latter, estimated at A$2.57 billion. "We recognise it's a big project and we're not a big company  by selling part of Southdown, up to 30 percent perhaps, you immediately reduce your debt and equity requirements by that amount," Mr Clark said. Page 24.

- - - - THE SYDNEY MORNING HERALD (this site)Anecdotal figures from travel agency franchise Flight Centre has found that passenger flights to the United States' (US) New York and Los Angeles have become more expensive over 2011. The rise in fares has not deterred travellers, however, according to figures from the Federal Government, with seat utilisation on the trans-Pacific route for Qantas Airlines and Virgin Australia averaging 91 percent and 90 percent respectively. The route has been unprofitable for airlines over the last several years recently due to heavy discounting. Page B19.- - - - The operator of Kentucky Fried Chicken and Sizzler restaurants in Australia, Collins Foods, has become a target for fund manager Orbis Investment Management, which recently increased its holding in the company to 11.89 percent. Collins was the second largest float on the local stockmarket last year, but a steep profit downgrade three months later saw investors dump the stock. Page B19.- - - -

Administrators for the National Rugby League and the Australian Football League are eagerly awaiting the Federal Court's ruling on its copyright lawsuit against Optus . Lawyers for the codes have argued that the telecommunications group's TV Now product, which allows users to stream recorded television to mobile devices, is a violation of their copyright. Optus argued that TV Now was a modern version of the video recorder and has sought legal protection under copyright legislation. A ruling is expected next month. Page B20.- - - - Observers have criticised the Federal Government's draft reforms to tackle the illegal practice of "phoenixing" - the act of shutting down a company and founding a new one with the same clients and assets to avoid paying debts - for being too limited in scope. Figures from the Australian Taxation Office reveal that around 6000 phoenix corporations exist in Australia. As many as 9000 directors would also be hit with personal liabilities under the proposed reforms, although critics say the legislation does not resolve the cost of debt collection. Page B21.- - - - THE AGE (this site)Anecdotal figures from travel agency franchise Flight Centre has found that passenger flights to the United States' (US) New York and Los Angeles have become more expensive over 2011. The rise in fares has not deterred travellers, however, according to figures from the Federal Government, with seat utilisation on the trans-Pacific route for Qantas Airlines and Virgin Australia averaging 91 percent and 90 percent respectively. The route has been unprofitable for airlines over the last several years recently due to heavy discounting.- - - - The operator of Kentucky Fried Chicken and Sizzler restaurants in Australia, Collins Foods, has become a target for fund manager Orbis Investment Management, which recently increased its holding in the company to 11.89 percent. Collins was the second largest float on the local stockmarket last year, but a steep profit downgrade three months later saw investors dump the stock.- - - - Administrators for the National Rugby League and the Australian Football League are eagerly awaiting the Federal Court's ruling on its copyright lawsuit against Optus. Lawyers for the codes have argued that the telecommunications group's TV Now product, which allows users to stream recorded television to mobile devices, is a violation of their copyright. Optus argued that TV Now was a modern version of the video recorder and has sought legal protection under copyright legislation. A ruling is expected next month.- - - - Observers have criticised the Federal Government's draft reforms to tackle the illegal practice of "phoenixing" - the act of shutting down a company and founding a new one with the same clients and assets to avoid paying debts - for being too limited in scope. Figures from the Australian Taxation Office reveal that around 6000 phoenix corporations exist in Australia. As many as 9000 directors would also be hit with personal liabilities under the proposed reforms, although critics say the legislation does not resolve the cost of debt collection.