World financial news

A 5-month-old boy was laid to rest Monday at the first funeral for the victims of New Zealand’s devastating earthquake, as the confirmed death toll rose to 148 and the government considered a nationwide levy to help pay for reconstruction.

Dozens of family and friends gathered at a small chapel in the stricken city of Christchurch for Baxtor Gowland, who was sleeping peacefully at home when he was struck by masonry shaken loose by the magnitude 6.3 quake last Tuesday. He died in a hospital, the family said in a statement read to The Associated Press by the child’s great-uncle, Peter Croft.

Inside the chapel, a slideshow of the smiling infant’s photographs flashed on a screen, as Sarah McLachlan’s song “Angel” echoed throughout the room.

“We have all been thankful of the support and good wishes expressed from New Zealand and around the world,” Croft said, his voice shaking with emotion as he read the statement. “However, we would like to think that today is for family and friends so that we can farewell Baxtor with peace and dignity.”

Authorities have named just eight victims of last week’s disaster _ Gowland and another infant among them.

Superintendent David Cliff said Monday that the death toll had reached 148, based on the number of bodies recovered from the rubble. Officials say the task of identifying the dead is slow and difficult, and that unidentified bodies are included on a list of people considered missing, which currently numbers around 200.

Cliff said “grave fears” are held for about 50 of those counted as missing, signaling the final death toll could be around 200.

The multinational team of more than 600 rescuers scrabbling through wrecked buildings in the decimated central area of the city last pulled a survivor from the ruins at mid-afternoon Wednesday, making it six days without finding anyone alive.

Police have said up to 120 people may have been killed in the downtown CTV building, where dozens of foreign students, mostly Japanese and Chinese, from an international language school were believed trapped. And up to 22 people may be buried in rubble at Christchurch Cathedral, most of them believed to be tourists climbing the bell tower for its panoramic views of the southern New Zealand city.

Prime Minister John Key was meeting with his Cabinet on Monday to discuss an aid package for an estimated 50,000 people who will be out of work for months due to the closure of downtown.

Key said measures being considered include an extra levy on all householders under New Zealand’s compulsory quake insurance system to raise the estimated $4 billion needed to cover an insurance shortfall.

The package, to be announced later Monday, would also likely include wage subsidies and cash grants to Christchurch residents to ensure businesses have cash flow and can continue to operate.

Engineers and planners say the city’s decimated central area may be completely unusable for months to come and that at least a third of the buildings must be razed and rebuilt. The government has said that virtually all services conducted in the downtown area will have to operate from elsewhere during the rebuilding period.

Officials estimated that one in three of the central business district’s buildings were severely damaged in the quake and will have to be demolished.

“It’s quite clear that a lot of buildings are going to have to come out of the CBD, so where a building is condemned it will need to be taken down,” Key told TV One on Monday.

He said he expected much higher building code standards for new buildings so they will be able to withstand very strong earthquakes.

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Ameren Missouri on Friday challenged state regulators’ authority to roll back electric rates by hundreds of million of dollars, as a consumer advocate is urging.

The action would threaten the ability to provide reliable electric service, the St. Louis-based utility asserted. The arguments came in response to requests by Missouri Public Counsel Lewis Mills Jr. and a group of big industrial customers to reset electric rates based on a court order by former Cole County Circuit Judge Paul C. Wilson.

Mills contends that Wilson’s order requires the Public Service Commission to reduce electric rates for Ameren’s customers by $226 million a year.

A group of four companies that belong to the Missouri Industrial Energy Consumers believes rates should be rolled back further. The companies - Anheuser Busch, Doe Run, Noranda and Enbridge - argue that rates should be rolled back to 2007 levels, because a prior rate increase of $163 million that was awarded by the PSC is also still under judicial review.

The companies’ request would undo $390 million of rate increases over the past two years as well as $140 million in fuel surcharges that were authorized by the 2009 rate case. A rate rollback would immediately lower rates. But it would almost certainly not provide refunds of money already paid to Ameren for previous months.

Ameren said the rate rollback requests are both outside of the PSC’s jurisdiction and a misstatement of the legal effect of Wilson’s order payday loans.

A rollback would cut off needed cash flow and leave no choice but to “drastically reduce its spending on items critical to providing reliable service,” Ameren said in a filing.

The company estimated in a regulatory filing last week that it stands to lose $300 million between now and August if the PSC rolls back rates to 2007 levels. Any rollback could be moot in August, when the commission is expected to rule on the utility’s most recent request to boost electric rates.

In Friday’s response to the PSC, Ameren questioned whether a rate increase can be voided in its entirety because parts of it are challenged in court, and whether a stay of a rate increase can be applied to all of its 1.2 million customers when only a few customers appealed it in court.

The companies that appealed the 2010 rate increase in Cole County had to post $430,000 in bonds with the court to make the judge’s decision effective. Ameren would get that back if Wilson’s order is overturned on appeal. But it would have no way to collect millions of dollars from its other 1.2 million customers.

Mills dismissed Ameren’s arguments and disagreed that the rollback being sought would affect its ability to serve customers. “I think it could cause a crimp in cash flow, but it should not prevent the provision of safe and reliable service,” he said.

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WASHINGTON

Parasitic nematodes are pesky microscopic worms that cause about $80 billion in crop damage around the world each year and remain one of the most stubborn pests in agriculture.

But biotech giant Monsanto aims to put a dent in their impact.

On Tuesday, the Creve Coeur-based company announced it had snapped up Divergence Inc., a neighboring biotechnology company in Creve Coeur that has worked for the past dozen years on products that control crop parasites. The companies have worked together since 2004 on nematode-resistant soybeans, and in 2008 released the sequence of the soybean cyst nematode genome Payday Loan for Bad Credit. Going forward, research and development will focus on a seed treatment product to prevent damage from soybean cyst nematodes.

“It’s a great fit,” said Derek Rapp, CEO of Divergence Inc. “… We’ll come together to make great things happen.”

For the biotechnology business community in the St. Louis area, the acquisition represents a major success.

Divergence Inc.

Chancellor of the Exchequer George Osborne said the Bank of England is right to support the U.K.’s economic recovery by looking beyond quicker inflation to maintain interest rates at a record low.

The Treasury’s effort to reduce the deficit in part by increasing value-added tax has added to consumer prices and the central bank should focus on price stability further in the future, Osborne said.

The bank last week said inflation, already at a two-year high of 4 percent, will quicken further to about 4.4 percent before easing by the middle of 2012.

“Any monetary authority and, certainly one with the competence and capability of the Bank of England, can see through temporary increases in price levels and look to permanent threats,” Osborne told reporters in Paris yesterday following talks with Group of 20 finance ministers.

Osborne’s words add to the erosion of decade-old conventions of U.K. economic policymaking in which finance ministers refrained from commenting on interest rates and central bankers have held back from commenting on fiscal policy. Bank of England Governor Mervyn King last week was attacked by the opposition Labour Party for endorsing Osborne’s deficit- reduction plan.

Inflation

The pound retreated from an almost three-week high against the dollar today, falling 0.2 percent to $1.6229 as of 8:37 a.m. in London. It reached $1.6263 at the end of last week, the most since Feb. 3.

Osborne said the bank’s remit, which is to keep inflation at 2 percent without undermining growth and jobs, is the right one and that he’s not thinking of changing it.

“The remit is the correct one and I have got absolutely no plans or thoughts about changing it,” Osborne said. “I am happy with the approach that they are taking and I trust the judgment of the Monetary Policy Committee.”

King last week said investors are “running ahead of themselves” by suggesting the bank is preparing to raise its interest rate. Instead, policy makers may need to keep borrowing costs at a record low to aid a recovery that is “unlikely to be smooth.”

Pressure on King

Osborne and Prime Minister David Cameron say they are relying on King’s monetary policy to support growth as the biggest squeeze on government spending since World War II eliminates 330,000 jobs, exacerbating unemployment. That puts pressure on King to restrain efforts by some members of the bank’s MPC to boost borrowing rates.

Osborne attacked the Labour Party Treasury spokesman, Ed Balls, for being “a little immature” in his attack on King.

Balls, in an interview with the Financial Times published Feb. 17, said that King should avoid being “drawn into the political arena” and associating himself “too closely” with the government’s “extreme” deficit-reduction plans.

“It’s a little immature frankly,” Osborne said in Paris. “What Ed Balls needs to come to terms with is the fact that he is isolated on this issue of the British deficit.”

Bank of England policy maker Adam Posen said in November he was “uncomfortable” with the bank’s support last year for the government’s deficit plan. Nobel Prize-winning economist Paul Krugman said last week that King has “stepped way over the line” by being a “cheerleader” for the program.

King said on May 12, a day after Cameron’s Conservatives formed a coalition with the Liberal Democrats, that he was “very pleased” with the new government’s budget proposals.

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China led resistance to making bulging foreign-exchange reserves a measure of economic imbalances as Group of 20 finance officials struggled for consensus on realigning the skewed world economy.

Sparring over early warning indicators reflected the split among fast-growing emerging countries and debt-laden advanced economies over how to prevent a repeat of the harshest recession since World War II. A deal remained elusive as of early afternoon, two G-20 officials said.

“G-20 discussions to date have revealed a limited willingness of countries genuinely to coordinate over policies outside a global crisis,” Bank of England Governor Mervyn King said as the two-day Paris meeting got under way yesterday. “The major surplus and deficit countries are currently pursuing economic strategies that are in conflict.”

With the world recovery entering a second year, the unity forged during the crisis is dissipating as up-and-coming powers challenge the deficit-scarred West’s formula for managing the international economy.

China will remain the world’s fastest growing major economy in 2011, with a 9.6 percent expansion, the International Monetary Fund predicts. The Washington-based lender sees 3 percent growth in the U.S. and 1.5 percent in the 17-nation euro area.

‘Reasonable Forecast’

“Most people see a world in which the emerging world’s growing 5, 6 percent; we’re growing between 3 and 4 percent, Europe and Japan somewhere between 1 and 2 percent,” U.S. Treasury Secretary Timothy F. Geithner said in Paris yesterday. “That seems a reasonable forecast.”

In a concession to U.S.-led pressure to push up its currency, China raised bank-reserve requirements yesterday for the eighth time in a year and indicated that a four-month old cycle of interest-rate rises will go on.

The yuan advanced to 6.5732 per dollar, the highest since late 1993, and Chinese officials signaled that further gains are in the offing to muffle domestic inflation and spur export-led growth in the U.S. and Europe.

Higher reserve standards are not “the only method that we’ll use to battle inflation, it’s about using all means including rates and currency,” People’s Bank of China Governor Zhou Xiaochuan said in an interview in Paris yesterday. “One method doesn’t exclude the other.”

Defusing Tension

While the Chinese moves may have defused some tension at the meeting, western officials continued to push for a longer- term yuan boost and a realignment of the global economy to stoke growth.

China’s “moves with respect to their currency have been relatively minor,” Canadian Finance Minister Jim Flaherty told Bloomberg Television yesterday. “It’s important as part of rebalancing they are more flexible with respect to their currency. China promised to do more.”

Finance ministers and central bankers from the G-20, representing about 80 percent of world output, came with scaled- back ambitions guaranteed unsecured personal loan. French President Nicolas Sarkozy welcomed them to Paris by dropping last year’s talk of a relaunch of the global monetary system to end the U.S. dollar’s supremacy.

France’s main aim for the meeting, which ends in late afternoon, is to move toward an accord on the use of economic indicators to monitor the trade and investment distortions that pitched the world into crisis.

‘Endless Discussion’

“I hope that your discussions will avoid getting bogged down in endless discussions on these indicators,” Sarkozy told the finance officials late yesterday at his Elysee Palace.

European Union officials want the scorecard to include the current-account balance, public deficit and debt, savings ratio, net foreign assets, reserve adequacy, real effective exchange rate and private debt, according to an EU position paper.

Chafing at restraints imposed by the richer world, the rapidly growing BRIC states — Brazil, Russia, India and China - - don’t want the scorecard to include the current account, the broadest measure of trade in goods and services.

China has “its own view” on the current account, Flaherty told reporters. He said it is “likely” that the imbalance measure will include public and private debt. Germany plumped for those two along with current account, the real exchange rate and currency reserves.

Russia refused to make management of its foreign-exchange reserves — the world’s third-biggest stash, at $449 billion — the subject of international bargaining.

Imbalances Ebbing

“If the U.S. and the U.K. will put an amount of reserves as a kind of indicator, that’s our biggest concern,” Russian Deputy Finance Minister Dmitry Pankin told reporters in Paris yesterday.

In any event, imbalances are ebbing. The IMF predicts that China’s current-account surplus will narrow to 5.1 percent of gross domestic product in 2011 from as high as 10.6 percent in 2007, while the U.S. shortfall slims to 2.6 percent from 5.1 percent.

Moves are also afoot to bind China more closely into the world economy by adding the yuan to the IMF’s synthetic currency basket, known as special drawing rights.

Created in 1969 and last reweighted in November, the SDR is a composite of the dollar, euro, Japanese yen and British pound, though its role in financial markets is minimal.

Current SDR rules would require China to first make the yuan fully convertible, a step that would put it on the upward track desired by the U.S. and Europe.

“We will discuss ways to enlarge the SDR basket,” German Deputy Finance Minister Joerg Asmussen said in a Bloomberg Television interview yesterday. “One might think of adapting the rules in order to ease the way for more currencies to be part of the SDR.”

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World stock markets were mixed Friday, as benchmarks in Asia followed Wall Street’s upward lead but shares in Europe stalled.

Oil prices hovered above $86 a barrel as violent protests in the Middle East kept investors on edge about possible crude supply disruptions. In currencies, the dollar rose against the yen and the euro.

European bourses were mixed in early trading. Britain’s FTSE 100 was down 1.3 percent to 6,085.86, while Germany’s DAX was flat at 7,400.64. France’s CAC-40 rose 0.2 percent to 4,158.40.

In New York, Dow Jones industrial futures were up 7 points to 12,295 and S&P 500 futures rose marginally to 1,338.30 ahead of the opening bell.

Japan’s Nikkei 225 stock average rose 6.16 points to close at 10,842.80 _ ending at a 10-month high for the fifth session in a row, thanks in part to a growing appetite among foreign investors for Japanese shares. But a reinvigorated yen dragged down some exporters _ notably Toyota Motor Corp., down 0.6 percent; Hitachi Corp., down 0.4 percent; and Sony, lower by 0.7 percent.

South Korea’s Kospi jumped 1.8 percent to 2,013.32 with tech shares among the day’s best performers, including Samsung Electronics, up 0.6 percent and Hynix Semiconductor Inc. up 1 percent.

Benchmarks in Taiwan, Singapore and New Zealand also advanced.

“I think the lead overnight from the U.S. was pretty positive,” said Tey Tze Ming, a trader at Saxo Capital Markets in Singapore. “There’s more of a feel-good factor than anything else today” moving the markets.

While anti-government strife across the Middle East was having an impact on oil prices and currencies, Ming said equities were “a little slower to respond” to immediate news; the most recent developments _ including a violent crackdown on demonstrators in Bahrain on Thursday _ were not enough to fluster stock investors.

Meanwhile, China shares struggled amid the release of newly calculated data that showed property prices rose in most cities in January despite renewed efforts to cool the overheated market. Major developer China Vanke Co. Ltd. dropped 1.7 percent.

The National Statistics Bureau figures for 70 of the country’s largest cities showed prices declining from a year earlier in only two cities and unchanged in five. Compared with December, 10 cities saw increases of 10 percent or more. The benchmark Shanghai Composite Index dropped 0.9 percent to 2,899.79 while the Shenzhen Composite Index for China’s smaller, second market was down 1 percent at 1,273.42.

India’s benchmark Sensex index was also down.

Australia’s S&P/ASX 200 was flat at 4,936.70. Shares of ANZ Banking Group Ltd., one of Australia’s biggest banks, tumbled 3 percent despite reporting a 27 percent rise in first quarter profits. Investors reacted negatively to lackluster lending figures. In all, three of Australia’s four major banks saw stock prices drop.

In New York on Thursday, stocks finished higher after a strong manufacturing report overshadowed a bigger-than-expected rise in the number of people applying for unemployment benefits. Two stocks rose for every one that fell on the New York Stock Exchange.

The Dow Jones industrial average rose 29.97 points, or 0.3 percent, to 12,318.14. The Dow has been rising steadily and is up 3.6 percent for the month. One big gainer was Coca-Cola Co. _ up 1.8 percent after it announced that it increased its dividend.

The broader Standard & Poor’s 500 index rose 4.11, or 0.3 percent, to 1,340.43. The Nasdaq composite rose 6, or 0.2 percent, to 2,831.58.

Benchmark crude for March delivery was down 23 cents at $86.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $86.36 on Thursday.

In currencies, the dollar fetched 83.36 yen, up from 83.33 yen late Thursday. The euro fell to $1.3584 from $1.3604.

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Home construction rose at the fastest rate in 20 months, pushed up by a spike in apartment building. But construction of single-family homes declined, a sign that demand for housing remains weak.

Builders broke ground on new homes and apartments at a seasonally adjusted annual rate of 596,000 units, a 14.6 percent jump from December.

Single-family homes, which make up nearly 70 percent of new construction, fell 1 percent to an annual rate of 417,000 units. Multifamily construction, a more volatile category, skyrocketed 80 percent to an annual rate of 171,000 units.

Last year, builders worked on 587,600 new homes, just barely better than the 554,000 started in 2009. In a healthy economy, builders start about 1 million homes a year. The housing industry is coming off the worst two years for home construction dating back to 1959.

Snowstorms that fell in most parts of the country likely slowed some construction last month. But Michael Gapen, senior U.S. economist with Barclays Capital, said home building is unlikely to see a turnaround until builders can sell off most of the homes sitting idle on the market and there are fewer foreclosures to compete with.

Economists are watching the pace of multifamily construction, which includes housing with five or more units, to see if it continues to rise throughout 2011.

“If the home ownership rate is falling back to normal levels, it’s fair to say we’d see an increase in rentals,” Gapen said. “That’s something we’re all watching but multifamily is very volatile and we will want to wait a few months to see where it goes.”

Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.

Building permits, an indicator of future construction, fell more than 10 percent in January. Code changes in California, Pennsylvania and New York caused an artificial spike the month before. Builders in those states rushed to file new permits before those changes went into effect in the new year.

The flat-lined housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Single-family home construction was uneven across the country, falling 12.8 percent in the Northeast and 7.7 percent in the South. It jumped 5.4 percent in the West and 25.5 percent in the Midwest.

The trade association reported Tuesday that its index of builder confidence remained stuck at 16 in February, where it has been for four straight months. A reading of 50 signifies a positive outlook about the future.

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Major uranium miner Cameco Corp., which signed two supply contracts last year with Chinese utilities, said Monday it would like to expand its relationship with the growing Asian market.

Chief executive Jerry Grandey says there were the 65 new uranium-powered reactors under construction worldwide at the beginning of the year and more than 25 of those are in China.

The U.S. trade deficit widened in December for a second month as the cost of imported oil climbed to the highest level in two years.

The gap grew 5.9 percent to $40.6 billion, in line with the $40.5 billion median forecast in a Bloomberg survey of economists, Commerce Department data showed today in Washington. Excluding petroleum, the shortfall shrank to $15.3 billion, the smallest since March.

For all of 2010, the trade gap surged 43 percent, the biggest jump in a decade, as the recovery in spending led to record imports of consumer goods. At the same time, manufacturers like Caterpillar Inc. benefited from a drop in the value of the dollar that drove the biggest annual increase in exports in two decades, capped by record demand in December from China and newly industrialized Asian nations.

“The world has still got strong demand for American manufactured goods, with robust growth in countries like China,” said David Semmens, an economist at Standard Chartered Bank in New York. Additionally, “American consumers are coming back, which means imports will keep rising.”

Another report today showed consumer confidence rose in February to the highest level in eight months, a sign falling unemployment and rising stock prices may be comforting households. The Thomson Reuters/University of Michigan preliminary February index of consumer sentiment increased to 75.1 from 74.2 in January.

Economists projected the gauge would rise to 75, according to the median forecast in a Bloomberg News survey.

Share Prices

Stocks fell on concern the unrest in Egypt will escalate following yesterday’s decision by President Hosni Mubarak’s not to step down. The Standard & Poor’s 500 Index maturing dropped 0.2 percent to 1,319.37 at 10:20 a.m. in New York.

The trade gap was projected to widen, according to the median forecast of 77 economists surveyed. Estimates ranged from deficits of $37.4 billion to $43.5 billion. The Commerce Department didn’t revise the November shortfall of $38.3 billion.

The trade gap climbed to $497.8 billion in 2010 from $374.9 billion the prior year. The shortfall was still below the $698.8 billion shortfall registered in 2008.

Exports increased 17 percent in 2010, the biggest one-year gain since 1988. Imports also improved 20 percent, the most since 1984.

Influence on Growth

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit increased in December to $46 billion from $45.2 billion.

Imports rose 2.6 percent to $203.5 billion, the most since October 2008 business