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G-20 approval of Japan's easing drives markets up

Written By Unknown on Selasa, 23 April 2013 | 00.24

PARIS — A global stamp of approval for Japan's aggressive monetary policy and the re-election of the Italian president pushed world stocks higher Monday.

Upending expectations, finance ministers and central bank governors from the world's largest economies gave their blessing this weekend for Japan's monetary easing, which has driven the value of the yen against the dollar down more than 20 percent since October.

That sent Japan's Nikkei 225 index to its highest close in nearly five years, encouraging other stock markets to follow suit.

European investors were also relieved to see that Italy had re-elected the widely respected Giorgio Napolitano to the presidency, ending weeks of uncertainty. But analysts cautioned the solace could be short-lived.

In afternoon trading in Europe, the FTSE index of 100 leading British shares ended the day up 0.3 percent at 6,305. France's CAC-40 was flat at 3,652, and Germany's DAX added 0.2 percent to 7,478.

EU statistics showed government deficits across the 17-country eurozone declined in 2012. However, the figures also showed deficits rose in countries imposing the toughest austerity measures, such as Greece, Spain and Portugal.

Sebastien Galy of Societe Generale cautioned that the good mood in markets may not last long. In Europe, the results of the Italian election may pave the way for an unstable coalition government, shaking confidence again.

"A coalition government, born more out of political necessity than a popular mandate, is unlikely to be able to pursue the necessary structural reforms to the Italian economy, and is also likely to be short-lived," said Galy.

He advised clients to be wary of the euro. The single currency fell 0.03 percent against the dollar Monday to $1.3048.

Wall Street was largely in a holding pattern Monday, ahead of the publication of earnings of several U.S. companies this week. The Standard & Poor's index was up slightly, 0.16 percent, at 1,557, while the Dow Jones industrial average was off 0.2 percent at 14,521.

Earlier in Asia, the Nikkei closed 1.9 percent higher at 13,568.37. South Korea's Kospi added 1 percent to 1,926.31, and Hong Kong's Hang Seng closed 0.1 percent higher at 22,044.37. Australia's S&P/ASX 200 rose 0.7 percent to 4,966.60. Shares in mainland China were mixed.

Oil was also buoyed by the enthusiasm. Benchmark crude for May delivery was up 58 cents at $88.85 per barrel in electronic trading on the New York Mercantile Exchange.

The decline of the yen has stirred up concerns among Japanese exporters' key rivals, such as the U.S. and South Korea that Japan's real goal is to weaken the yen as a way to gain trade advantages. But officials at the G-20 meeting were reluctant to voice any opposition to the Bank of Japan's monetary stimulus program.

Other countries may now feel free to rein in their own currencies.

"The rapid weakening of the yen, as a direct result of the ultra-loose monetary policy, has led to suggestions that the BoJ (Bank of Japan) would be warned about future easing, which could prompt other central banks to act in order to limit the appreciation of their own currency," said Craig Erlam, a market analyst with Alpari Research.

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Associated Press Business Writer Youkyung Lee in Seoul, South Korea, contributed to this story.


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Michelin sales slump in 1st quarter

PARIS — French tire-maker Michelin says its sales slumped 8.1 percent in the first quarter on weak car markets in Europe and North America.

Michelin says it made revenue of €4.88 billion ($3.36 billion) in the January-March period, down from €5.3 billion in the same period a year earlier.

In a statement Monday, the Clermont-Ferrand, France-based tire maker said the sales slump was in-line with its February forecast of achieving flat sales volume over the full year. Growth in emerging markets, like China and South America, will offset morose markets in North America and Europe, Michelin said.


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Massachusetts gas prices drop three cents

Bay State gas prices are down another three cents this week, according to AAA Southern New England.

Self-serve, regular unleaded gas is currently averaging $3.44 a gallon, seven cents less than the national average of $3.51.

Local prices are down 19 cents over the past month. A year ago at this time the Massachusetts average price was 41 cents more at $3.85.

Midgrade unleaded is down a penny this week to $3.70 a gallon. Both premium unleaded and diesel are down two cents to $3.82 and $3.95 a gallon, respectively.

The range in prices in the latest AAA survey for unleaded regular is 40 cents, from a low of $3.29 to a high of $3.69.


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BIND Therapeutics, AstraZeneca partner on cancer nanomedicine

Cambridge-based BIND Therapeutics and AstraZeneca said today they have entered into a strategic collaboration to develop and commercialize a cancer nanomedicine.

Under terms of the agreement, the companies will work together to complete new drug-enabling studies of an Accurin, a targeted and programmable cancer nanomedicine from BIND's medicinal nanoengineering platform, based on a molecularly targeted kinase inhibitor developed and owned by AstraZeneca, identified from a previously completed feasibility program.

AstraZeneca will then have the exclusive right to lead development and commercialization and BIND will lead manufacturing during the development phase.

BIND could receive upfront and pre-approval milestone payments totaling $69 million, and more than $130 million in regulatory and sales milestones and other payments as well as tiered single- to double-digit royalties on future sales, officials said.

"One year ago, BIND started several feasibility projects with major pharmaceutical companies. Our collaboration with AstraZeneca is the first one completed and had very successful results," said BIND President and CEO Scott Minick. "Due to the advanced nature of this program, we now plan to move an Accurin with optimized therapeutic properties quickly into product development."


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Bits of Health raises money for One Fund Boston

Local nutrition company Bits of Health said today it has launched a fund-raising effort called "Go The Distance," whereby the business will give a 10 percent discount off every purchase made online that uses the promotional code BOSTONSTRONG.

Additionally, every time the code is used, the company will donate the distance of a marathon — $26.20 — to The One Fund, which was established by Mayor Thomas M. Menino and Gov. Deval Patrick to support those affected by the Boston Marathon bombings.

Bits of Health is best known for its ENERGYbitsR algae tabs, which help fuel runners on the go. The discount code BOSTONSTRONG works on all products, officials added.


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Israeli-based Gizmox raises $7.5M for Hub headquarters

Gizmox, an Israeli-based company that focuses on HTML5 for new and existing business applications, said today it has raised $7.5 million in funding to build and staff its new headquarters in Boston.

The funding round was led by Atlas Venture with participation from existing investors Citrix, IVC, Consolidated Investment Group and others. Jeff Fagnan and Christopher Lynch of Atlas Venture will join the startup's board of directors, officials said.

Gizmox said its HTML5 platform has two components — VisualWebGUI, a web and mobile HTML5 framework for enterprise apps, and InstantCloudMove, which migrates from client-server to pure HTML5 and the cloud.

In conjunction with the financing, Gizmox has named Eugene Kuznetsov as CEO. Kuznetsov was founder and president of DataPower, a SOA appliance company acquired by IBM, as well as co-founder and CEO of online privacy company Abine.


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FairPoint announces changes in Vt. leadership

MONTPELIER, Vt. — Vermont's predominant landline telephone and telecommunications company is making changes at the top.

FairPoint Vermont President Mike Smith will be stepping down in August. He will be succeeded by Beth Fastiggi, the company's vice president of government relations for Vermont.

The North Carolina-based FairPoint serves 17 states, including Vermont, New Hampshire and Maine.

FairPoint CEO Paul Sunu says Smith, who joined FairPoint in January 2010 helped transform FairPoint into a leading communications provider in Vermont.

Smith led FairPoint's regulatory reform efforts in Vermont, enabling the company to compete on a more level playing field and respond to the needs of the customers.

Fastiggi has worked for FairPoint and its predecessor companies for 26 years.


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European austerity yields meager results in 2012

LONDON — The austerity pain pursued by a number of European countries led to very little gain in 2012.

Figures Monday from Eurostat, the European Union's statistics office, showed that many of the countries hit hardest by Europe's financial crisis, such as Portugal and Spain, saw their budget deficits increase last year — even though they have pursued strict austerity policies designed to get their public finances back into shape.

Though Europe's combined deficit level fell during the year — largely thanks to Germany swinging into a budget surplus — countries continue to reel from the impact of austerity. The overall debt of the 17 EU countries that use the euro rose from 8.2 trillion euros ($10.7 trillion) to 8.6 trillion euros as the region sank back into recession.

After the European crisis over too much debt broke out in late 2009, the region's governments slashed spending — either to meet conditions for bailout loans, or to reassure jittery bond markets. But austerity has also inflicted severe economic pain. Slashing spending and raising taxes have proved to be less effective at reducing deficits than initially thought — and perhaps counter-productive. As economies shrink, so do their tax revenues, potentially making it harder to close budget gaps.

"The news that the eurozone budget deficit shrank again last year will be hailed as evidence by some that austerity is working," said Ben May, European economist at Capital Economics. "But the fact that most economies' deficits have fallen by less than expected and that the consolidation has coincided with deeper-than-anticipated recessions confirms that the costs have been large."

One of the key economic justifications for austerity is under attack. In 2010, U.S. economists Kenneth Rogoff and Carmen Reinhart wrote a paper arguing that growth slows once a government's debt tops 90 percent of its economic output. Their findings suggested that reducing debt, as Europe's most troubled economies have been pressed to do, could increase growth.

But economists at the University of Massachusetts who studied Rogoff and Reinhart's calculations have pointed to errors and omissions that cast doubt on the idea that high government debt will significantly slow economic growth.

Overall in the eurozone, the deficit dropped in 2012 to around 353 billion euros ($460 billion) from 391 billion the year before. Germany was largely behind the improvement as it swung back into surplus.

As a result, the budget deficit of the whole eurozone fell to 3.7 percent of the region's annual gross domestic product from the previous year's 4.2 percent. Countries in the EU are supposed to keep deficits at or below 3 percent. Nevertheless, overall borrowing in the eurozone is lower than in the U.S., which has a budget deficit of around 7 percent of annual GDP.

In 2012, eurozone debt was worth 90.6 percent of the region's GDP, up from 87.3 percent the year before.

Here's a look at the performance of some of the eurozone countries during 2012:

GREECE — The bailed-out country at the epicenter of the region's debt crisis — it was first bailed out in 2010 and has received up to 270 billion euros in assistance — saw mixed results in 2012. Though the government managed to reduce its annual borrowing to 19.4 billion euros from 19.8 billion the year before, the deficit swelled to 10 percent of GDP from 9.5 percent because of a deepening recession. Even so, the country has lately been winning plaudits for its progress — in 2009, Greece's annual borrowing stood at over 36 billion euros. When not counting the cost of paying interest on its existing debt, the government hopes to post a surplus over the coming year. Public debt fell in 2012 to 156.9 percent of GDP from 170.3 percent, partly because private holders of Greek bonds agreed to a big writedown.

IRELAND — The second euro country to receive a bailout is widely viewed as the poster child of austerity and its performance in 2012 showed further improvements. As well as reducing annual borrowing to 12.5 billion euros from 21.3 billion, Ireland saw its deficit shrink to 7.6 percent of annual GDP against 13.4 percent the year before. Unlike fellow bailout recipients, Ireland has managed to post some economic growth for most of the past three years and is ahead of its target to prune the budget deficit to 3 percent by 2015. In a further sign of its reputational rebound, Ireland has resumed limited auctions of long-term bonds at a relatively low cost and is confident of exiting its bailout program later this year.

PORTUGAL — In spite of winning praise from its international creditors, Portugal's deficit swelled to 6.4 percent of annual GDP from 4.4 percent the year before. However, the 2011 figure was flattered by the transfer of private banks' pension funds to the Treasury, which temporarily improved the balance sheet. In 2012, the government's plan to use 3.1 billion euros from the privatization of airport management company ANA to lower its deficit fell foul of Eurostat, which didn't allow the inclusion of that revenue in the deficit calculation.

SPAIN — In spite of efforts to get a handle on its debts, Spain saw its budget deficit rise to 10.6 percent of GDP in 2012, the highest in the eurozone. It rose from 9.4 percent the year before as the country took 40 billion euros in rescue loans to help its banks. Excluding the rescue funds, Spain says its deficit last year improved to just below 7 percent, but still above the initially pledged target of 6.3 percent.

FRANCE — At first glance, the public finances in Europe's second-biggest economy appear to be in relatively good health — its deficit in 2012 fell to 4.8 percent of annual GDP from 5.3 percent the year before. However, there are growing concerns over the outlook as growth has stalled. The French government originally promised to reduce its deficit to 3 percent this year, bringing it in line with European rules. But slow growth has knocked it off track, and the government has said the deficit will be 3.7 percent. France has a history of overly rosy forecasts, and some say the government's numbers are still too optimistic.

GERMANY — While many of its euro partners are struggling to get a grip on their public finances, Germany has done so and more. In 2012, it posted a budget surplus of 4.1 billion euros, in contrast to the 20.2 billion euros deficit the year before. A number of factors helped, including restrained spending, lower debt servicing costs and falling unemployment, which means less outlays for jobless benefits. But economists said state income was also significantly boosted by so-called "bracket creep" — the failure of the government to move tax rates up along with inflation. That means workers who are increasingly winning pay raises in the country's tight job market are pushed into paying higher rates — and more tax.

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Elena Becatoros in Athens, Sarah DiLorenzo in Paris, Ciaran Giles in Madrid, Barry Hatton in Lisbon, David McHugh in Frankfurt, Shawn Pogatchnik in Dublin and Paul Wiseman in Washington contributed to this report.


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New Balance, Simon Property Group donate to One Fund Boston

New Balance Athletic Shoe Inc. today announced a $1 million donation to the One Fund Boston.

The Boston running shoe maker also will match its employees' contributions to the fund, which was set up by Gov. Deval Patrick and Boston Mayor Thomas M. Menino to support victims of the Boston Marathon bombings.

"The events at the Boston Marathon shook the streets of Boston, but not the spirit of our city," Anne Davis, executive vice president of administration for New Balance, said in a statement. "In the aftermath of this tragedy and the remarkable scenes of heroism and bravery, we have never been more proud to be a part of the landscape of Boston. Our thoughts and prayers are today and always will be with the victims of this tragedy."

Simon Property Group is donating $100,000 to the One Boston Fund.

It's also encouraging shoppers to donate to the fund through May 31 at the guest services areas of its many New England malls and Wrentham Village Premium Outlets.


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Caterpillar 1Q profit shrank; cuts 2013 outlook

MINNEAPOLIS — A slowdown in the mining business is digging a hole in Caterpillar's profits.

First-quarter profit shrank 45 percent. Caterpillar lowered its expectations for full year sales and profit because its mining business is slowing. Sales of Caterpillar-branded mining machines will drop by half this year, the company said on Monday.

Caterpillar, based in Peoria, Ill., said mining customers placed big orders for equipment last year, just as mining profits fell, so now those customers are cutting back. Dealers who would normally be stocking up on Caterpillar gear to get ready for a busy summer instead cut inventory during the first quarter.

Caterpillar has already started cutting costs. On April 5 it said it would lay off more than 460 employees at a mining truck plant in Decatur, Ill. Caterpillar also announced mining-related layoffs in Milwaukee and plans to cut 1,300 of 3,400 jobs at a plant near Brussels that makes excavators, loading vehicles, and engine parts. This year's capital spending — which covers big-ticket items like factories and computer systems — will fall below $3 billion, down from $3.4 billion last year.

"We're definitely in a down-cycle right now, but long-term it's a great business for us," Chairman and CEO Doug Oberhelman on a conference call.

The reduced outlook wasn't entirely unexpected and Oberhelman did note some bright spots. Sales in China rose compared to a year ago. And the company is "becoming more optimistic" on the U.S. housing sector. And the company announced it plans to buy back shares — about $1 billion worth — for the first time since 2008, following an 11 percent drop in the price this year.

That helped Caterpillar shares rise on Monday. They gained 94 cents to $81.37.

Caterpillar's net income dropped to $882 million, or $1.31 per share. Revenue fell 17 percent to $13.21 billion, from $15.98 billion a year ago. Both missed analyst expectations. Analysts surveyed by FactSet were expecting a profit of $1.36 per share on revenue of $13.79 billion.

It also cut its 2013 guidance. Caterpillar now expects to earn $7 per share, down from $7 to $9 previously. It forecast revenue of $57 billion to $61 billion, down from $60 billion to $68 billion. Analysts were expecting a 2013 profit of $7.67 per share on revenue of $62.48 billion.


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