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Archive for February 4th, 2011

India services PMI up modestly, input prices at 30-mth high

Posted by Admin on February 4, 2011

http://in.finance.yahoo.com/news/India-services-PMI-modestly-reuters-3999984247.html

A waiter serves coffee to college students surfing the internet at a cafe in Bangalore in this April 6, 2000 file photo. REUTERS/Stringer/Files

 

On Thursday 3 February 2011, 10:31 AM

BANGALORE (Reuters) – Business activity in India’s services sector grew at a faster clip in January than in the previous month, boosted by new orders and expectations of solid growth, but costs also soared, a survey showed on Thursday.

The HSBC Markit Business Activity Index, based on a survey of around 400 firms, rose to 58.1 in January after falling to 57.7 in December from November’s four-month high.

It was the 21st consecutive month the key index of the service sector in Asia’s third largest economy has been above the 50 mark that separates growth from contraction.

“India’s service sector saw a slight acceleration in the momentum in January, with activities, orders, and employment growing a bit faster and readings staying firmly in expansionary territory,” said Leif Eskesen, chief economist for India & ASEAN at HSBC.

The PMI’s employment index and the business expectations index climbed to their highest in seven months, indicating Indian firms were more optimistic about the year ahead.

However, the input price index hit a 30-month high of 61.99 in January and prices charged were at a nine-month high, underscoring the threat that higher raw material prices are rapidly filtering into the broader economy, fueling inflationary pressures.

“As we saw for the manufacturing sector, however, the supply side is struggling to keep pace with the strong momentum in domestic demand, which is manifesting itself in accelerating input prices and is spilling over to prices charged,” Eskesen said.

India’s manufacturing sector expanded at a slightly faster pace in January but input prices jumped, adding to pressure from food inflation that the government and central bank are already struggling to contain.

“The current strong pace of activity is clearly not compatible with comfortable and stable levels of inflation, underscoring the urgency of continued monetary policy tightening and the need to prepare a budget for the next fiscal year, which is consistent with an appropriately contractionary fiscal policy stance,” Eskesen said.

India’s central bank raised interest rates on Jan. 25 by a quarter of a percentage point, bringing the repo rate to 6.5 percent, in an attempt to suppress stubborn inflation. The increase was its seventh rate rise over the past year and more hikes are expected to follow later in 2011.

The Reserve Bank of India has lifted inflation projections for March 2011 to 7 percent.

(Reporting by Ruby Cherian; Editing by Kim Coghill)

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World food prices seen at record high in January

Posted by Admin on February 4, 2011

http://in.finance.yahoo.com/news/World-food-prices-seen-record-reuters-194064327.html

A vendor sorts tomatoes at a wholesale vegetable and fruit market in Chandigarh January 29, 2011. REUTERS/Ajay Verma
On Thursday 3 February 2011, 6:12 AM

 

By Svetlana Kovalyova

MILAN (Reuters) – Surging food prices are on Thursday expected to push the United Nations ‘ food price index to a record high in January for a second straight month, further above the levels which prompted food riots in 2007/2008.

The Food Price Index of the UN’s Food and Agriculture Organisation (FAO), which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, hit a record in December, above a previous high set in June 2008 during the food crisis.

A mix of high oil and fuel prices, growing use of biofuels, bad weather and soaring futures markets pushed up prices of food in 2007/08, sparking violent protests in countries including Egypt , Cameroon and Haiti.

The Rome-based agency has warned food prices could climb even higher, expressing concern about global weather patterns.

Severe drought in the Black Sea last year, heavy rains in Australia and dry weather in Argentina and anticipation of a spike in demand after unrest in north Africa and the Middle East has helped power grain prices to multi-year highs.

The worst winter storm for decades in the U.S. grain belt kept up pressure on wheat futures on Wednesday.

Surging food prices have come back into the spotlight after they helped fuelled protests that toppled Tunisia’s president in January and have spilled over to Egypt and Jordan, raising speculation other countries in the region would secure grain stocks to reassure their populations.

Algeria on Jan.26 confirmed it had bought almost a million tonnes of wheat, bringing its bread wheat purchases to at least 1.75 million since the start of January, and ordered an urgent speeding up of grain imports, a move aimed at building stocks.

World leaders at the World Economic Forum in Davos last week warned rising food prices could stoke more unrest and even war. French President Nicolas Sarkozy reiterated calls for regulation to rein in speculation and volatility.

Multi-year highs for grain and sugar futures in January helped push higher spot and physical prices which the FAO uses to calculate the index.

(Reporting by Svetlana Kovalyova; editing by Keiron Henderson)

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Global imbalances returning, could fuel unrest – IMF chief

Posted by Admin on February 4, 2011

http://in.finance.yahoo.com/news/Global-imbalances-returning-reuters-1199879621.html

Dominique Strauss-Kahn, Managing Director, International Monetary Fund (IMF) smiles during a Thomson Reuters Newsmaker event at the Newseum in Washington, December 16, 2010. REUTERS/Molly Riley/Files
On Tuesday 1 February 2011, 12:44 PM

 

By Kevin Lim

SINGAPORE (Reuters) – The world economy has begun improving but is beset by problems such as high unemployment and rising prices which could fuel crippling trade protectionism or even lead to war within nations, the head of the International Monetary Fund warned on Tuesday.

Rising food and fuel prices in recent months have already hit poorer countries and are one of the factors behind massive anti-government protests in Egypt and in Tunisia, whose president was ousted last month.

The United Nations ‘ food agency (FAO) said last month that global food prices hit a record high in December, above 2008 levels when riots broke out in countries as far afield as Egypt , Cameroon and Haiti.

“The pre-crisis pattern of global imbalances is re-emerging,” Dominique Strauss-Kahn said in a speech in Singapore.

“Growth in economies with large external deficits, like the U.S., is still being driven by domestic demand. And growth in economies with large external surpluses, like China and Germany, is still being powered by exports,” he said.

“As tensions between countries increase, we could see rising protectionism — of trade and of finance. And as tensions within countries increase, we could see rising social and political instability within nations — even war.”

Over the next decade, 400 million young people would join the global labour force, posing a daunting challenge for governments, he added.

“We face the prospect of a ‘lost generation’ of young people, destined to suffer their whole lives from worse unemployment and social conditions. Creating jobs must be a top priority not only in the advanced economies, but also in many poorer countries.”

Unemployment stands at 9.4 percent in the United States while a number of European countries are also struggling to create jobs in a global economy where much of the growth is coming from emerging market countries.

DEVELOPED COUNTRIES ALSO AT RISK

Concerns about rising debt in developed countries, meanwhile, have increased in recent months.

Ireland was engulfed by Europe’s debt crisis late last year, Greece continues to struggle despite a rescue package and many market watchers fear Portugal and Spain may be next.

Last week Standard & Poor’s cut Japan ‘s credit rating and Moody’s warned it may place a negative outlook on the United States unless it can reduce its gaping budget deficit.

In Asia, the worries centre around inflation and analysts say central banks in countries such as Indonesia need to respond faster to contain rising prices.

Strauss-Kahn also said foreign exchange rate adjustments have an important role to play in addressing global economic imbalances and should not be resisted.

“Holding back such adjustment in one country also makes it harder, and more costly, for other countries to let their exchange rate adjust,” he said.

“For this adjustment to take place, time is of the essence, but asking for time only makes sense if there is a significant and regular move in the right direction.”

Chinese policymakers were moving in the right direction by taking steps to bolster domestic demand, he noted, though the United States and many other Western countries continue to push Beijing to let its yuan currency appreciate faster.

Strauss-Kahn said the IMF expected subdued growth of 2.5 percent for advanced economies this year as high unemployment and household debt weighed on domestic demand.

“Without jobs and income security, there can be no rebound in domestic demand — and ultimately, no sustainable recovery,” he said.

Emerging markets would grow at a faster pace of 6.5 percent, with Asia excluding Japan expanding by 8.5 percent, he said.

“Monetary policy in the advanced economies should remain supportive as long as inflation expectations are well anchored and unemployment stays high,” while Asia may need to do more to address the threat of overheating and a possible hard landing, he said.

(Editing by Kim Coghill)

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Tens of thousands march against Yemen president

Posted by Admin on February 4, 2011

http://news.yahoo.com/s/ap/20110203/ap_on_re_mi_ea/ml_yemen

SANAA, Yemen – Tens of thousands of demonstrators, some chanting “down, down with the regime,” marched Thursday in several towns and cities in Yemen against the country’s autocratic president, a key U.S. ally in the fight against Islamic militants.

Police opened fire and tear gas to break up one of the marches, witnesses said, and security officials confirmed a demonstrator was critically wounded by police fire. Two others were also hurt in the eastern town of Mukalla, but further details were not immediately available.

In the capital of Sanaa, scuffles and stone-throwing briefly erupted between thousands of anti-government demonstrators and supporters of President Ali Abdullah Saleh, who has ruled for more than 30 years. However, police stepped in and there were no reports of injuries.

Security forces deployed in large numbers around the Interior Ministry and the Central Bank, and military helicopters hovered over some parts of the city.

Anti-government protests have erupted in several Arab countries in recent weeks. In Egypt, embattled President Hosni Mubarak is trying to cling to power until the end of his term in September, despite more than a week massive street protests demanding his immediate resignation.

In Yemen, protests erupted in several towns Thursday after Saleh moved earlier this week to defuse demands for his ouster by pledging not to seek another term in 2013 and not to allow his son inherit power.

Anti-government protesters said they don’t trust Saleh and demanded that he quit immediately.

“Thirty years of promises and thirty years of lies,” read one banner raised by marchers in Sanaa. Protesters chanted: “Down, down with the regime.”

In a counter demonstration, supporters of the president carried banners warning that the opposition was trying to destabilize Yemen.

Mohammed al-Sabri, a spokesman for a coalition of opposition groups, said hundreds of thousands took to the streets Thursday. He said the opposition is ready to engage in a dialogue with the president, but wants concrete proposals for change.

“We welcome this decision (not to seek another term), but if the people want the president to leave, we will adopt their demand,” al-Sabri said. “We have had political demands which we discussed with the regime for the past three years, but unfortunately failed.”

He said peaceful protests would continue for the next three months.

The United States has taken a sharp tone on Egypt, urging Mubarak to move swiftly to meet the demand for democratic reform. But it has cautiously praised pledges of reform in Yemen.

State Department spokesman P.J. Crowley on Wednesday welcomed Saleh’s “positive statements.”

The Yemeni president is seen as a weak but increasingly important partner of the United States, allowing American drone strikes on al-Qaida targets and stepping up counterterrorism cooperation.

In Brussels, Yemen’s foreign minister, Abu Bakr al-Qirbi, warned that interference from outside countries — of the sort in Iraq, Afghanistan or Pakistan — would be counterproductive.

He said frustration of the young generation was widespread across the Arab world, including in his country. “I think the frustrations of younger generations are universal in the Arab world,” al-Qirbi told The Associated Press in Brussels, where he had come to seek development aid.

However, he said Yemen’s government never severed contacts with opposition parties and civil groups, and for that reason it was better placed to hold a constructive internal dialogue than other countries in the Middle East.

In Yemen, where the population is overwhelmingly very young, unemployment is 35 percent and poverty is endemic. About 40 percent of the population lives on less than $2 (euro1.45) a day.

Saleh’s government controls little of the impoverished country beyond the capital; it is facing a serious challenge from a secessionist movement in the south and a rebellion in the north.

The U.S.-born radical cleric Anwar al-Awlaki, thought to be hiding in Yemen, is believed to have inspired and even plotted or helped coordinate recent attacks on the U.S. Those include the failed Christmas Day 2009 bombing of a Detroit-bound airliner and the unsuccessful plot to send mail bombs on planes from Yemen to the U.S. in October.

Al-Awlaki also is believed to have inspired the deadly 2009 shooting rampage at Fort Hood, Texas, and had ties to some of the 9/11 hijackers.

In Thursday’s marches, thousands of anti-government protesters also took to the streets in the city of Aden. They defied security forces and armored personnel carriers that tried to close the main streets to prevent them from gathering.

Protesters there shouted: “People want the downfall of the regime, the downfall of the president.”

All big shops in Sanaa and Aden closed their doors and major companies hired guards to protect against possible looting.

Protesters also scuffled with security forces in the town of Jaar in the southern province of Abyan, where al-Qaida militants have been active.

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Severe drought threatens millions in Somalia

Posted by Admin on February 4, 2011

http://news.yahoo.com/s/ap/20110203/ap_on_he_me/af_somalia_drought

GAROWE, Somalia – A severe drought has plunged millions of Somalis into crisis after rains failed for several consecutive seasons in this Horn of Africa nation, and the U.N. and aid groups are warning of the possibility of a looming catastrophe.

The drought has increased the number of malnourished children in some regions, displaced thousands of people and killed thousands of animals. Officials in a central Somali region said 18 people died of drought-related effects.

“The situation is dire. It is an added vulnerability to an already extremely vulnerable people,” the U.N.’s humanitarian chief, Valerie Amos, told The Associated Press after touring camps for displaced people in Somalia’s semiautonomous region of Puntland on Wednesday.

Amos’s one-day trip was intended, she said, “to remind the people that there is still a long, ongoing problem in Somalia. I don’t want the people to forget Somalia. When you have an ongoing problem anywhere in the world, it is easy to slip it from the agenda.”

The drought is the latest in a long line of problems for Somalia, which has been mired in conflict since 1991, when warlords toppled the country’s last central government and then turned on each other.

According to the U.N., the malnutrition rate among children has jumped to 30 percent in Somalia’s southern Juba region, a figure that is double the emergency threshold. Food prices have soared up to 80 percent in some regions.

The price increase in the south is attributable in part to traders who are hoarding the food to profit off the drought, said Grainne Moloney, the head of the U.N.’s food security and nutrition analysis unit in Nairobi, Kenya.

Many drought-affected families are fleeing their homes in search of food. In the Galmudug region of central Somalia, officials said they haven’t seen such drought conditions since 1974.

Citing a recent survey conducted by his administration, Omar Mohamoud, a local government official, said the drought has killed 18 people and displaced thousands.

Mohamoud said his community has seen about 70 percent of its sheep and goats, 50 percent of its cattle and 30 percent of its camels die in the last three years.

“We are appealing to the international community to respond to the crisis and provide the people with water, food, medicine and shelter,” said Mohamoud. “If the international community does not respond to the crisis urgently, a catastrophe of huge proportions is staring us right in the eyes.”

The British aid group Oxfam says Somalia’s current drought could be as serious as one in the early 1990s, when thousands of people died.

“The situation is bad now, but with more months of no rainfall it could become an absolute catastrophe,” said Alun McDonald, the group’s spokesman in Nairobi. He noted that weather predictions suggest that the next rains “will also be poor or even fail.”

The poor rains are even affecting marriages. In a makeshift camp in Garowe town, Nura Farah, a mother of seven children, told AP that the lack of rains led to a divorce from her husband.

“When the drought hit us we quarreled,” Farah said. “I told my husband, ‘Look, you are a man. So go to town and look for ways to support your family.’ But he rejected my request and divorced me and left.”

Farah said she quit the nomadic life after her family’s one male camel and 200 sheep and goats died in a month. Poverty has forced her and her children to seek shelter in relatives’ homes in Garowe, the capital city of Puntland. Her 15-year-old son contracted tuberculosis because of a lack of food, she said.

The U.N. has released $4.5 million from its emergency fund to respond to the drought and is likely to release more in coming weeks, said Mark Bowden, U.N.’s Somalia humanitarian coordinator. This figure is separate from the $530 million the U.N. appealed for this year to finance its aid projects in Somalia.

The drought’s effects are worsened by the fact aid agencies’ work is restricted in many regions where Islamist insurgents are in control.

Peter Smerdon, the spokesman for the World Food Program, called on all parties to the Somali conflict to allow his agency free access to help the needy population. He said WFP has had to feed more than 130,000 additional people in Somalia because of the drought. Of Somalia’s estimated population of around 8 million people, about 2.4 million need food aid and about 1.5 million are internally displaced.

Amos urged Somali politicians to inject “a sense of urgency to their discussions” to end decades of warfare.

Kiki Gbeho, the head of the U.N.’s office for the coordination of humanitarian affairs in Somalia, warned that if spring rains expected in April fail, the country “is in a huge problem.”

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