ROUND-UP
FT markets round-up: "Uncertainty over the situation in Cyprus made for another nervous session in the markets, as the country's parliament overwhelmingly rejected a tax on bank deposits, throwing into question plans for an international bailout. The ECB responded to the Cypriot vote by reaffirming its commitment to provide liquidity, within existing rules. That helped the euro pare an earlier fall that had seen it touch a four-month low against the dollar. Global equities also rallied off their lows, with the FTSE All-World index trading 0.3 per cent lower and the S&P 500 ending down 0.2 per cent. In Europe, where stock markets had already closed by the time the news of the vote emerged, the FTSE Eurofirst 300 finished with a loss of 0.4 per cent. Spanish and Italian stocks came under greater pressure amid fresh concerns about the potential for contagion from Cyprus. The Ibex 35 index in Madrid fell 2.2 per cent and the FTSE MIB in Milan shed 1.6 per cent." (Financial Times)
Cypriot parliament rejects bank levy: "Cyprus's finance minister arrived in Moscow on Tuesday night to try to wrest vital economic assistance from the Kremlin as his country's parliament rejected a €10bn EU-led bailout that requires €5.8bn to be seized from Cypriot bank accounts. The 11th-hour attempt to tap funds from Russia as an alternative to the deposit levy stunned leaders in Brussels, who said they were taken aback by the resistance of Cypriot lawmakers to shifting the tax's burden exclusively on to deposits over €100,000 – many of which are held by wealthy Russians." (Financial Times)
More bond investors bet against rate rise: "More US bond investors are seeking out new ways to hedge against the risk of a sharp rise in interest rates in case growth in the world's largest economy picks up and the Federal Reserve starts to wind up its current stimulus policies. More money has flowed into leveraged loan mutual funds in the first 10 weeks of this year than in the whole of 2012, according to the latest data from Lipper. Loans have floating interest rates and can be used as a hedge against sharply rising rates." (Financial Times)
Leading banks make big strides on Basel: "The world's biggest banks made significant progress in boosting their capital ratios last year and are now collectively short €208bn of the capital they will need to meet tougher Basel III requirements. The Basel Committee on Banking Supervision surveyed 101 very large banks on how close they are to achieving the minimum core tier one capital ratio of 7 per cent that will be required in 2018. It found that their cumulative shortfall had dropped €175.9bn, or 43 per cent, between December 2011 and June 2012." (Financial Times)
FURTHER FURTHER READING
- What would you do: Part 2, the island of Surpyc.
- Martin Wolf on Cyprus.
- Peter Spiegel on the Cyprus blame game.
- US oil production is booming. Here's the catch.
- America's most important industry is the best at keeping profits abroad.
- Further, further further reading.
