Greek debt talks drag on but banks signal progress on bond-swap deal to forgive some debt

Shoppers are seen on Athens' main commercial Ermou Street, on Monday, Feb. 6, 2012. Parties backing Greece's coalition government will hold a second day of emergency talks Monday on a vital austerity deal with rescue creditors, after a weekend of negotiations failed to produce the breakthrough needed to avert bankruptcy in March. (AP Photo/Dimitri Messinis)

ATHENS, Greece - Greece's private creditors signalled progress late Tuesday on a debt-relief deal but crucial talks between Greek coalition leaders about forcing more austerity upon a hostile public were again postponed.

Anger flared on the streets of Athens as more than 20,000 protesters marched through the Greek capital and unions called a general strike Tuesday against the new cuts in jobs and spending. The strike halted trains and ferries, closed down schools and banks and put state hospitals on short staffing.

Several hundred protesters clashed with riot police outside Parliament and set fire to a German flag — upset over Germany's role in demanding more austerity from Athens.

"They are committing a crime against the country. They are driving wage-earners into poverty and wiping out pensioners and the unemployed," said Vangelis Moutafis, a senior member of Greece's largest union, the GSEE. "They are selling off state assets for nothing. This cannot continue."

Greek Premier Lucas Papademos delayed a meeting with his coalition parties till Wednesday, staying in talks until late in the night with top bank negotiators as well as with debt inspectors from the European Union and the International Monetary Fund.

Greece is under massive time pressure to secure a new €130 billion ($170 billion) bailout from its partners in the euro and the IMF without which it will default in March on its massive debts.

Representatives of the Institute of International Finance, which has been leading the talks for private bondholders on forgiving Greece part of its debts, had a "constructive meeting" with Papademos, IIF spokesman Frank Vogl said.

Papademos and Finance Minister Evangelos Venizelos will soon brief the rest of the 17-nation eurozone on the proposed deal, Vogl said — a sign the bond-swap deal could be close.

The meeting of eurozone finance ministers could happen as soon as Thursday in Brussels, according to officials, although that will depend on finding agreement in Athens on the terms of the second bailout.

Greece has been kept solvent since May 2010 by payments from a €110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.

As well as passing new austerity measures, the second bailout depends on Greece's separate talks with banks and other private bondholders to forgive €100 billion ($132 billion) in Greek debt. The private investors are expected to swap their current bonds for new bonds worth 50 per cent less than the original face value, with longer repayment terms and a lower interest rate.

Without the new debt deals, Greece would face a disastrous default in late March.

The intense talks in Athens were supposed to be finished last weekend, but have dragged on over EU-IMF demands for a new round of austerity measures that include civil service job cuts and slashing Greece's minimum wage.

The Greek government has already accepted that it must cut 15,000 state jobs in 2012 to get the new bailout, as well cut 2012 spending by a further €3.3 billion ($4.3 billion), reduce wage costs in the private sector and recapitalize banks without nationalizing them.

But disagreement remains between Greek lawmakers on the extent of those cuts.

A government official said Papademos' draft agreement on the austerity deal would be sent to Greek party leaders for scrutiny early Wednesday. "It took much longer than expected," the official told the AP, speaking on condition of anonymity due to the sensitivity of the talks.

The government's coalition partners — the majority Socialists, main rival conservatives and the small right-wing LAOS party — are also at odds over whether to go ahead with plans for an early election in April.

The Socialists, who handed over power to Papademos in November, want him to stay through parliament's four-year term that ends in late 2013, while conservatives are demanding an April vote.

LAOS leader George Karatazferis also criticized eurozone heavyweights France and Germany on Tuesday, saying they were carrying out an "aggressive humiliation of Greece" with all their demands for new austerity measures.

A disorderly bankruptcy by Greece would likely lead to its exit from the eurozone, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal, Ireland and Italy.

But on Tuesday, the Neelie Kroes, one of the EU's 27 commissioners, said Greece's exit wouldn't be a disaster.

"It's always said: if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true," Kroes told Dutch newspaper De Volkskrant.

She added that "Greece is not living up to its promises: too few savings, too few reforms ... It's becoming a Greek mantra: 'We cannot. We won't'!"

But EU Commission President Jose Manuel Barroso quickly stepped in to counter her remarks.

"We are in a very decisive moment regarding the future of Greece and the future of the euro. We want Greece in the euro," he said. "The costs of a default by Greece, the costs of a potential exit of Greece from the euro would be a lot higher than the costs of continuing to support Greece."

While Greece remains cut off from international bond markets — where it would have to pay interest of about 35 per cent to sell 10-year issues — it maintains a market presence through regular short-term debt sales.

On Tuesday, Greek borrowing costs dropped slightly as the country raised €812 million ($1.06 billion) in an auction of 26-week treasury bills. The interest rate was 4.86 per cent, compared to 4.90 per cent in a similar auction last month. The auction was 2.72 times oversubscribed.

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Maldives VP sworn in, president quit after protests

By Bryson Hull

(Reuters) - President Mohamed Nasheed of the Maldives, widely credited with bringing democracy to the Indian Ocean archipelago, resigned on Tuesday after weeks of opposition protests erupted into a police mutiny, and handed power to his deputy.
Nasheed, the Sunni Muslim nation's first democratically elected president, handed over to Vice-President Mohamed Waheed Hassan Manik and said in a televised address "I believe that if the government were to remain in power it would require the use of force which would harm many citizens."
Protests last year over the faltering economy and scrambling ahead of this year's presidential election, have seen parties adopting hardline Islamist rhetoric and accusing Nasheed of being anti-Islamic.
Nasheed's Maldivian Democratic Party said in a statement that "rogue elements" in the police force and supporters of his predecessor Maumoon Abdul Gayoom had overthrown the government and forced Nasheed to quit.
The MDP called for help from abroad to re-establish democracy and protect Nasheed and senior government members. A presidential aide told Reuters on condition of anonymity that Nasheed had been allowed to return to his home in Male and was no longer under military guard.
Hassan Saeed, leader of the DQP - a party in the opposition coalition - and an Indian diplomatic source in Colombo said Nasheed had asked India for help and been refused.
An Indian foreign ministry spokesman said the rebellion was an internal Maldives matter "to be resolved by the Maldives".
India helped foil a coup on the islands in 1988 by sending a battalion of soldiers to back the government.
Britain's Foreign Office said a team of diplomats was on its way there and that London viewed developments "with concern" and called on all groups "to find a peaceful way through these difficulties, in accordance with the Constitution".
U.N. Secretary-General Ban Ki-moon appealed for calm and said in a statement that the United Nations would remain a "close partner" of the Maldives.
A Commonwealth spokeswoman said the multinational body was "gravely concerned" and five Secretariat officials had arrived in the Maldives on Monday to see how the Commonwealth could help. "We urge all to respect the rule of law and the constitution and to refrain from acts of violence," she said.
Late on Tuesday, tourists and air traffic were moving without disruption at the islands' main airport. People whizzed about on mopeds in the streets of the capital Male as usual.
The official presidential bungalow showed no signs of activity and a handful of Maldivians sauntered around shopping and civic centre Republic Square, which also houses the Grand Mosque and police headquarters, with no sign of security forces.
DEMOCRACY
Nasheed swept to victory in 2008, pledging to bring full democracy to the low-lying islands and speaking out passionately on the dangers of climate change and rising sea levels.
But he drew opposition fire for his arrest of a judge he said was in the pocket of Gayoom, who ruled for 30 years.
Protests at the arrest set off a constitutional crisis that had Nasheed - jailed in all for six years and arrested 27 times by Gayoom's government while agitating for democracy - defending himself against accusations of acting like a dictator.
The new president told Reuters that Nasheed was in protective police custody for his security and said calling the day's events a coup was a "misrepresentation".
"The people have been out on the street demonstrating for weeks now and finally it came to a point where the crowds (were) too overwhelming and the president tried to negotiate, was too late and the people prevailed on him to resign," Waheed said.
There had been a brief conflict between the military and the police, he said. "The situation is now resolved. Both the police and the armed forces fully supported my taking office."
He said one priority was to create a "durable environment for tourism since it's our main industry... We can assure all visitors to the Maldives the situation is perfectly normal".
In an address after being sworn in, Waheed said the rule of law had been fully established. "I will not order the police, military or any person to do anything against the law ... Everyone will have the protection of the constitution and laws."
He called upon all political parties, the military and citizens to "put aside personal hatreds" and pledged to "work to restore peace and prosperity of the nation, to deliver a harmonious and peaceful living to the people".
Waheed is expected to run a national unity government until the presidential election.
Thomas Cook Germany, part of the London-listed group (TCG.L), said it was discouraging its 900 customers now in the Maldives from travelling to Male. Airlines reported no cancellations of scheduled flights to the Maldives.
Germany advised against all but essential travel to Male, while Britain's advice to tourists was to "exercise caution, avoid demonstrations and beware of spontaneous gatherings".
The trouble has been largely invisible to the 900,000 or so tourists who come every year to visit desert islands swathed in aquamarine seas, ringed by white-sand beaches.
Most tourists are whisked to their island resorts by seaplane or speedboat, where they are free to drink alcohol and get luxurious spa treatments, insulated from the everyday Maldives, a fully Islamic state where alcohol is outlawed and skimpy beachwear frowned upon.
Nasheed sought international help to stop the sea engulfing his nation and in 2009 held a cabinet meeting underwater, with ministers in scuba gear, to publicise the problem.
An Asian diplomat serving in Male told Reuters on condition of anonymity: "No one remembers the underwater cabinet meeting. They remember Judge Abdulla Mohamed," a reference to Nasheed having the military arrest the judge accused of being in Gayoom's pocket.
(Additional reporting by C. Bryson Hull in Male, Ranga Sirilal in Colombo, Frank Jack Daniel in New Delhi and Peter Maushagen in Frankfurt; Writing by Nick Macfie; Editing by Tim Pearce)

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Rankings: Azhar placed alongside Tendulkar

Azhar (R), who scored 157 in the third Test, was rewarded with a leap of 12 places and now has 749 points. PHOTO: AFP

After a match-winning century, Azhar Ali has not only claimed a career-best place in the International Cricket Council (ICC) Player Rankings for Test batsmen but also shares the 10th position with India’s maestro Sachin Tendulkar.

According to information provided by the ICC, Azhar, who scored 157 in the third Test, was rewarded with a leap of 12 places and now has 749 points. Younus Khan’s ton helped him make a leap of five places which puts him back in the fifth position. However, captain Misbahul Haq lost four places to slide to 17th.

In the ICC Rankings for Test bowlers, left-arm spinner Abdur Rehman has maintained an upward movement and gained two spots to be placed seventh. Saeed Ajmal also narrowed the gap with leader Dale Steyn and is placed second with a difference of 61 ratings points. Fast-bowler Umar Gul also gained a place and is now in 15th position.

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India tv response After Pakistan 3rd test Against England on 6th feb 2012

Reaction of Indian Media After Pakistan 3rd test Against England on 6th feb 2012

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FOREX-Euro dips as Greece delays debt deal approval

NEW YORK, Feb 6 (Reuters) - The euro dropped against
the dollar on Monday as Greece's political leaders
delayed a decision on a new bailout package, raising concerns of
a disorderly default that could spread to other debt-ridden
countries in the region. 
    A European Commission spokesman said Greece was already past
the deadline for finalizing talks on a second financing package
and needed to move urgently.  
    German Chancellor Angela Merkel told Greece to make up its
mind quickly on accepting the painful terms for a new EU/IMF
bailout, but the country's political leaders responded by
delaying their decision for yet another day.  
    "Headlines out of Europe are affecting sentiment on the
euro. Earlier, we had hit stop losses in the euro and we saw it
trim some losses. But it's more of the same," said Brian Dolan,
chief currency strategist at Forex.com, as investors waited on
Greece. 
    Greece's coalition members must agree to painful terms of
the bailout before euro zone finance ministers next meet. A
meeting of  political leaders in Athens was postponed to
Tuesday. Greece needs the funds by March to meet big debt
repayments.   
    The euro was last down 0.1 percent at $1.3128
after hitting a low of $1.3026 after stop-loss orders were
tripped below $1.3050.  
    If the impasse in Greece persists, the euro could target
$1.3026, the Feb. 1 trough, and more stop-loss orders were said
to be below $1.3020. 
    Nomura Securities analysts said they believe a Greece deal
is close, both in terms of the private sector involvement
process and in relation to negotiations with its lenders around
key program parameters.  
    "Since the implications of bad versus good news is clearly
asymmetric (a bad outcome could have severe implications), it is
a tough set-up to trade with confidence," Nomura said.
"Nevertheless, we believe a 'good' outcome is likely in the very
short term. We are therefore inclined to keep a risk
constructive bias within our portfolio at this time."  
    Nomura said EUR/USD at $1.25 is a reasonable target for the
first quarter, adding it would not be surprised to see a squeeze
higher in the very short term given the still very elevated
speculative shorts. 
    
  
    The IMF's chief economist, Olivier Blanchard, said on
 Monday it looks like the "haircut" on Greek private debt
will be "very large" as negotiations between bondholders and the
government drag on.   
    CitiFX, a division of Citigroup, said even with all the
uncertainty about Greece, the euro has still managed to hold its
ground pretty well.  
    CitiFX saw two potential explanations. First, investors may
still expect an agreement will ultimately be reached. Second,
they may think Greece is too small to matter.  
    "We have long argued that investors are ignoring Greece at
their own risk," the bank said. "We think that the risks of a
credit event in Greece are non-negligible and that the
uncertainty about both the second Greek bailout package and
(private sector involvement) is here to stay. 
    "We also suspect that a potential Greek default could
unleash contagion to other fiscally weak countries in the euro
zone periphery and lead to extensive FX volatility for a period
of time." 
    Against the yen, the euro fell 0.1 percent to 100.54 yen
 while against the safe-haven Swiss franc, it was 0.1
percent lower at 1.2062 francs, not far from the Swiss
central bank's cap at 1.20 francs per euro. 
    The dollar was little changed against the yen at 76.58 yen
, having earlier risen to 76.79 yen, its highest in
over a week.

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Europe crisis could halve China's growth: IMF

A Chinese paramilitary policeman standing guard outside the European Union Delegation in Beijing in 2011 (AFP/File, Peter Parks)

WASHINGTON — An escalation of Europe's debt crisis could slash China's economic growth in half this year, the International Monetary Fund said Monday, urging Beijing to prepare stimulus measures in response.
The IMF, in an economic outlook report on the world's second-largest economy, highlighted China's vulnerability to global demand.
"The global economy is at a precarious stage and downside risks have risen sharply," the IMF said, citing the possible deep crunch in the financial sector in Europe that would be felt around the globe.
"Should such a tail risk of financial volatility emanating from Europe be realized, it would drag China's growth lower."
The IMF outlined the negative impact if the eurozone crisis tipped Europe into a deep recession, dragging China's growth lower mainly due to shocks through trade.
In that "downside scenario" China's growth would fall by around 4.0 percentage points this year from the 8.2 percent rate the IMF projected in January.
"The risks to China from Europe are, therefore, both large and tangible."
In that case, "China should respond with a significant fiscal package."
China's exposure to financial spillovers is limited, it said, noting foreign assets, including sovereign debt, represent only 2.0 percent of Chinese bank assets.
However, the export-dependent economy is highly exposed through trade linkages. Nearly half of China's exports go to Europe and the United States.
Lower global demand would further reduce investment and employment and may trigger a decline in China's property market.
The IMF recalled that China's vulnerability was revealed in the 2008-2009 global financial crisis, when global growth plunged.
China launched a huge credit and fiscal stimulus in response, limiting the sharp impact on the domestic economy -- and yet growth still sank by five percentage points.
"However, a track record of fiscal discipline has given China ample room to respond to such an external shock," the IMF said.
If the euro area falters, the IMF recommended Beijing launch a substantial stimulus program, equivalent to roughly 3.0 percent of gross domestic product spread out over 2012-2013.
That would limit the decline in growth to around 1.0 percent, cushioning the negative fallout on employment and people's livelihoods, the IMF said.
The stimulus measures could include reductions in consumption taxes, advancing plans for social housing and scaling up investments in the social safety net, among others.
"Unlike in 2008, the stimulus package... should pass through the budget and not be reliant upon a public infrastructure," the IMF said, referring to the way the spending boost was previously dealt through the banking system, state enterprises and local government financing vehicles.
"The weak external outlook underscores the importance of accelerating the transformation of China's economy to reduce its vulnerability to the vagaries of global demand," it added.

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