World financial news

A surprisingly big rebound in a closely watched U.S. manufacturing survey continued to shore up markets Wednesday, particularly in continental Europe where traders returned to their desk after the May Day public holiday to the news that Dow Jones industrial average closed at its highest level in five years.

The Institute for Supply Management reported that U.S. manufacturing expanded last month at its strongest pace since June, with orders, hiring and production all up. That news came on top of a similar report out of China, the world’s No. 2 economy and has helped boost optimism about the state of the global economy, despite the ongoing debt-related problems in much of Europe.

“Just as I am getting really concerned about the depths of Europe’s economic slowdown, and the lack of policy measures to combat it, global financial markets have a spring in their step thanks to better surveys in the U.S. and elsewhere,” said Kit Juckes, an analyst at SG Securities.

In Europe, Germany’s DAX was up 0.8 percent at 6,810 while the CAC-40 in France rose 1.2 percent to 3,250. The FTSE 100 index of leading British shares, which was open Tuesday and reacted to the ISM upside rise unlike its counterparts in Frankfurt and Paris, was down 0.3 percent at 5,793.

Wall Street was poised for further modest gains, a day after the Dow Jones industrial average closed at its highest mark since 2007 _ both Dow futures and the S&P 500 futures were up 0.1 percent.

The focus over the rest of the week is likely to center on the U.S. economy in the run-up to Friday’s release of March nonfarm payrolls data _ the figures often set the market tone for a week or two after their release payday loan.

Later Wednesday, investors will have the monthly private payrolls report from ADP to assess. The ADP figures often provide a guide toward the actual government report.

“A strong reading would follow on nicely from yesterday’s data, and would set the stage for a positive report on Friday,” said Chris Beauchamp, market analyst at IG Index.

In the currency markets, the euro was giving up some recent gains and trading 0.8 percent lower at $1.3136 as figures showed the parlous state of the eurozone economy. Eurostat, the EU’s statistics office, reported that unemployment across the 17-country eurozone rose to 10.9 percent in March, its highest level since the euro was launched in 1999.

Earlier in Asia, Japan’s Nikkei 225 rose 0.7 percent to close at 9,380.25 after a sharp tumble the day before. Hong Kong’s Hang Seng gained 1 percent to 21,309.08.

Mainland Chinese shares advanced after authorities said that China’s two stock exchanges would cut fees charged for trading yuan-denominated shares by 25 percent from June 1. The benchmark Shanghai Composite Index rose 1.8 percent to 2,438.44 and the Shenzhen Composite Index gained 1.7 percent.

Benchmark oil for June delivery was down 34 cents to $105.82 per barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

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Governments committed more than $400 billion in fresh money to the International Monetary Fund to help it protect the world economy against deepening debt turmoil in Europe.

That sum is contained in the draft of a statement obtained by Bloomberg News which will be released by Group of 20 finance ministers and central bankers after a meeting now under way in Washington. Specific country contributions will be decided ahead of a Mexican summit of G-20 leaders in June, Brazilian Finance Minister Guido Mantega said.

The near-doubling of the fund

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The leader of Cyprus’ Orthodox Christian Church says it wants to invest in the country’s energy sector.

Archbishop Chrysostomos II said Monday the Church is looking primarily at solar panel manufacturing and building a power plant as part of investment plans that could run in the “tens and possibly hundreds of millions” of euros (dollars).

Chrysostomos II says the Church’s investment is aimed at boosting the country’s economy.

Eurozone member Cyprus is relying on a (EURO)2.5 billion ($3.27 billion) low-interest loan from Russia to see it through this year after a string of credit rating downgrades have left it unable to borrow from international markets.

Officials hope the discovery of a sizable, offshore natural gas field will help turn the economy around.

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A panel of cancer experts rejected an experimental Merck drug for a rare form of cancer on Tuesday while recommending approval of a GlaxoSmithKline treatment for the same disease. Neither drug appears to help patients live longer, but panelists said Glaxo’s Votrient helped delay tumor growth in the most vulnerable patients.

The FDA panel reviewed the two drugs submitted to treat sarcoma, a rare class of tumors that form in the fat, muscles and bone in the limbs and abdomen. An estimated 11,000 people in the U.S. were diagnosed with the soft tissue cancer in 2011 and 3,900 died from the disease, according to the National Cancer Institute.

Many cancer drugs approved by the FDA do not actually extend survival, but instead slow the growth of tumors or their spread to other parts of the body. In recent years, cancer experts have debated the significance of such results, particularly given the potentially dangerous side effects.

The panel voted 11-2 that the benefits of Glaxo’s pill Votrient outweighed its risks, noting there are few other treatment options for patients.

“There are no drugs approved by the FDA specifically for this indication and that’s what drove my decision to vote yes,” said Dr. Mikkael Sekeres of the Cleveland Clinic.

GlaxoSmithKline plc, based in the U.K., studied Votrient in sarcoma patients whose cancer has spread to other parts of the body after unsuccessful treatment with chemotherapy drugs, the standard treatment for the disease. Such patients usually survive only a year to 18 months.

While patients taking Votrient didn’t live longer than those taking chemotherapy alone, they did see a three-month delay in growth of their tumors, on average. Some patients experienced an even longer delay, which panelists said supported the drug’s benefit.

“I feel the effect is marginal but there does appear to be a group of patients who have benefited from this for longer periods of time,” said panel chair Dr. Wyndham Wilson of the National Cancer Institute.

The panel saw less potential for Merck’s ridaforolimus, which the company acquired through Ariad Pharmaceuticals Inc. The group voted 13-1 against the drug, saying its significant side effects _ which affected 60 percent of patients _ outweighed its benefits.

Merck & Co. Inc. of Whitehouse Station, N.J., submitted the drug as a maintenance therapy, meaning it would be used to help repress sarcoma of the bone and tissue in patients whose cancer is already in remission. Since such patients are healthier than patients with active disease, panelists said they wanted to see a more dramatic benefit to justify putting patients on a drug with major side effects. The FDA has only approved a handful of cancer drugs for maintenance use.

Company trials showed no survival benefit and a meager seven-week delay in disease progression compared with patients not taking the drug. Panelists were also troubled by the high rate of side effects in patients, which led 14 percent to drop out of the study. Side effects included lung irritation, kidney failure and high blood pressure

“I didn’t see anything that would indicate it should be recommended based on the information we have today,” said Lee Helman of the National Cancer Institute.

The FDA is scheduled to make a decision on Glaxo’s drug by May 6 and Merck’s drug by June 5.

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The ratings agency Moody’s downgraded Greece to the lowest rating on its bond scale late Friday, following a deal with private investors that would see them ultimately lose an estimated 70 percent of their holdings in Greek debt.

Moody’s lowered Greece’s sovereign rating to C from Ca, arguing that the risk of default remains high even a bond-swap deal with banks and other private investors, due to be completed this month, is successful.

It said it would “re-assess the credit risk profile” after Greece issues the new bonds.

Ratings agency Standard & Poor’s took similar action on Feb. 27.

The swap deal aims to cut euro107 billion ($144 billion) from the country’s debt, and would see private investors lose more than half the face value of their Greek bonds in exchange for new ones issued with more favorable repayment terms for the crisis-hit country.

The exchange is an integral part of a second bailout package for Greece by other eurozone countries and the International Monetary Fund.

“Looking ahead, the EU program and proposed debt exchanges will reduce Greece’s debt burden, but the risk of a default even after the debt exchange has been completed remains high,” Moody’s said.

“Moody’s believes that Greece will still face medium-term solvency challenges: its stock of debt will still be well in excess of 100 percent of gross domestic product for many years, the country is unlikely to be able to access the private market once the second assistance package runs out, and its planned fiscal and economic reforms will still face very significant implementation risks.”

Greece has been relying since May 2010 on rescue loans from eurozone partners and the IMF. But despite receiving euro73 billion from its initial euro110 billion bailout and pushing through tough austerity measures in return, the country has consistently missed its reform targets.

To limit a threat to Europe’s single currency, its leaders have agreed to extend the country a second bailout, this time worth euro130 billion ($172 billion), which is accompanied by the debt reduction deal.

So far, the eurozone has agreed in principle to release the first batch of bailout loans to Greece to finance the bond-swap, with the final green light to due till come next week.

But harsh austerity has pushed the country into a fifth year of recession and seen the unemployment rate reach nearly 21 percent.

Earlier Friday, provisional figures from the finance ministry figures showed Greece posting a deficit in January of euro490 million ($652 million), in contrast to last year’s equivalent surplus of euro154 million.

The ministry’s General Accounting Office said revenues during the month were hit by the expiry of a one-off business tax, as well as reduced revenues from consumption.

Revenues in January totaled euro4.87 billion ($6.48 billion). Though a little bit better than the government’s latest target, it’s markedly worse than last year’s equivalent of euro5.12 billion.

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Haiti’s biggest employer has named a new chief executive to run Digicel, the mobile phone company announced Wednesday.

The Jamaica-based private company is bringing in Damian Blackburn to replace Maarten Boute, who will be leaving in March to spend more time with his family, Digicel spokeswoman Antonia Graham said.

Boute added in an email message that he was going “to do a deep recharge of (his) batteries” as he and his wife await the birth of their second child.

The new head, Blackburn, recently CEO for Digicel Honduras, has more than 14 years of experience in the telecommunications industry. He will oversee operations for the company’s largest market, Haiti, which accounts for about a quarter of its 11.1 million subscribers.

Digicel, whose Irish CEO Denis O’Brien promoted development in Haiti before the 2010 quake, has invested $600 million in the impoverished Caribbean nation since it began work in 2006 short term personal loan. The company’s foundation has also done charitable work such as building schools and helping with other infrastructure projects.

In recent months, the company erected street signs in the capital and road signs in the countryside and last year spent $18 million to renovate the historic Iron Market damaged in the quake.

In November, Digicel and Marriott International announced plans to build a $45 million, 173-room hotel in Port-au-Prince. The hotel is slated to open in 2014.

Digicel’s competitors include Voila and Natcom, a joint venture created last year between Vietnam’s Viettel and the Haitian government to replace the state-run Teleco.

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The addition of 200,000 new jobs in December shows that the economy is strengthening, Labor Secretary Hilda Solis said on Friday.

“We have seen a steady firming up of our economy” in recent months with two million jobs created in the private sector of the past year, she told CNBC television.

“Now we are seeing a better trajectory, we are moving in the right direction.”

“In the last few months, on the whole I have seen good incremental increase in the private sector jobs, so on that side of the factor I would say, ‘Hey, that is not a bad thing at all,” she said free business cards.

But she urged the extension of the payroll tax cut and further measures to support continued improvement in the jobs market.

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Best Buy has alerted some customers that it will not be able to fill their online orders, just days before Christmas.

The largest U.S. specialty electronics retailer said late Wednesday that “overwhelming demand for some products from Bestbuy.com has led to a problem redeeming online orders made in November and December.

The Minneapolis company declined Thursday to specify how many orders are affected or which products are out of stock.

The shortages are a black eye for Best Buy, which has beefed up its online campaign to fight off intense competition from online retailers and discount stores. And the holiday season is crucial for retailers like Best Buy because it can make up to 40 percent of annual sales.

Some glitches should not be a surprise with such a massive surge in online shopping this year, analysts said, but there is a risk of a backlash.

“It is a hiccup for the company,” said Morningstar analyst R.J. Hottovy. “They were kind of behind the curve building out their online channel. They’ve done a good job investing in it, but if you make a lot of rapid changes, inevitably there are going to be growing pains.”

The canceled orders probably won’t make a big difference for Best Buy’s holiday sales this year, but it may lead to more customers looking elsewhere in the future, he said.

“The risk is any consumers affected by canceled orders will be willing to explore other alternatives for online shopping in years to come,” Hottovy said.

Online sales are up 15 percent to $32 billion so far this holiday season, while total sales are up just 2.5 percent.

Even though online sales are a huge boon for retailer, the shift has already created some problems. Discount retailer Target Corp’s site crashed in September because of overwhelming demand for Missoni for Target, a limited designer line of clothing, home goods and accessories.

Best Buy benefitted when its now-defunct rival Circuit City went out of business more than a year ago, but its suffering as Americans hold off on big ticket items and search for deals online and at discounters.

In order to compete, Best Buy has expanded its online offerings, cut back on square footage in the U.S. by closing stores and sought to expand internationally. In its most recent third quarter ending Nov. 26, Best Buy said its net income fell 29 percent as it cut prices in popular categories such as tablets and TVs to drive sales and traffic during the holiday season.

Best Buy shares rose 8 cents to $22.96 in midday trading.

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The leaders of France and Germany called forcefully Monday for a new European Union treaty that would automatically punish countries that use the euro if they violate existing limits on overspending.

Stocks and the euro rose while European government bond yields dropped sharply as investors viewed the proposal for a closer fiscal union among the 17 countries as an important step to save the euro.

Implementing treaty changes could take months, but a commitment to tighter coordination could open the way for further emergency aid from the European Central Bank, the International Monetary Fund or some combination.

“Our wish is to go on a forced march toward re-establishing confidence in the eurozone,” French President Nicolas Sarkozy said at a press conference alongside German Chancellor Angela Merkel. “We don’t have time. We are conscious of the gravity of the situation and of the responsibility that rests on our shoulders.”

Investors have been hopeful that the pair will get what they want at a summit in Brussels on Friday, where failure could doom the euro.

There is a risk that implementing the proposals won’t move fast enough for markets or the most heavily indebted countries. Countries like Italy and Spain need help now to keep their bond yields _ the cost of their borrowing _ down.

Sarkozy said he and Merkel would prefer that the treaty be agreed by all 27 members of the European Union, but he left the door open to one that just covers the eurozone and anyone else “who wants to join us.”

Sarkozy and Merkel made several proposals, some of which could be enshrined in a new treaty. They included:

_ automatic punishment for any government that allows its deficit to exceed 3 percent of GDP. Governments are supposed to follow this rule already, but many, including France, have flouted it;

_ requiring countries to enshrine in law a promise to balance their budgets;

_ never again asking private investors to take losses, as a bailout of Greece did;

_ making Europe’s bailout fund permanent by the end of next year, rather than mid-2013;

_ and holding monthly European summits until the crisis is over.

Worries about the stability of the euro reached a high in recent weeks as Italy’s bond yield, indicative of the rate it would pay to borrow on markets, jumped to record peaks above 7 percent. That level is considered unsustainable and has eventually forced Greece, Ireland and Portugal to require financial aid. By comparison, bond yields in Germany, Europe’s largest and most stable economy, are roughly 2 percent.

But Europe can’t afford to rescue Italy, the eurozone’s third-largest economy, so the crisis went into high gear in recent weeks when it looked like the country might need a lifeline.

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