RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Archive | November, 2016

Spain’s ‘bad bank’ Sareb doubles losses

Posted on 31 March 2015 by

Sareb, Spain’s so-called bad bank, doubled its losses in 2014 even as the country’s broader real estate sector continues to recover.

The asset management company reported losses of €585m over 2014, compared with €261m a year ago, on the back of €719m in provisions on some of its assets after consultation with the Bank of Spain.

    Sareb, created in late 2012 following Spain’s real estate collapse and financial crisis, was designed to absorb and eventually resell soured property assets.

    Just over €50bn of assets were transferred from the country’s bailed out banks in two tranches in late 2012 and early 2013. Of particular importance were assets from Bankia, which embodied Spain’s crisis following its ill-fated 2011 flotation. The bank has since returned to profitability and in February said it would pay a dividend.

    Sareb, which has 15 years to sell off its assets, has whittled its portfolio down to just over €44bn as of the end of 2014.

    Although the company made a loss last year, it said it stands to benefit from Spain’s broader recovery. The government forecasts that the country’s gross domestic product will grow 2.4 per cent in 2015, while at the end of last year Spanish house prices rose at the fastest rate in six years.

    “Sareb is now in a position of greater strength and less uncertainty in facing the coming years of activity and in benefiting as much as possible from the emerging market recovery,” said Jaime Echegoyen, the asset manager’s chairman who took on the post after Belén Romana’s resignation in January.

    “Demand is a lot more solid than before,” he added at a Madrid press conference on Tuesday.

    Without taking into account the effect of provisions, Sareb made a loss of only €45m — a significant reduction on 2013. It said activity picked up, although added that almost half of its sales came from just four provinces — Madrid, Barcelona, Valencia and Málaga.

    Late last year, the bank hired four servicing companies to assist it in selling assets — Haya Real Estate, Altamira, Servihabitat and Solvia. Sareb said these companies would help make its operations more efficient and profitable.

    The asset management company’s gross income was flat compared with 2013, at €1.6bn. Mr Echegoyen did not say when Sareb would become profitable.

    Lenders face probe by ECB bank watchdog

    Posted on 31 March 2015 by

    Daniele Nouy, member of the Supervisory Board of the European Central Bank (ECB) addresses the media during a press conference in Frankfurt/Main, Germany, on February 3, 2014. AFP PHOTO / DANIEL ROLAND (Photo credit should read DANIEL ROLAND/AFP/Getty Images)©AFP

    Danièle Nouy, Single Supervisory Mechanism chief

    The eurozone’s new banking watchdog has begun to bare its teeth, investigating for the first time three “significant” lenders across the currency bloc for breaching EU law.

    A total of 11 alleged breaches had been reported to the European Central Bank’s Single Supervisory Mechanism in the past four months, with three “appropriate for follow-up”, according to the watchdog’s first annual report published on Tuesday.

      The SSM, set up in 2013, has never yet sanctioned a company or launched enforcement proceedings, but has expressed a desire to be tougher and more intrusive. It has the power to fine companies for misconduct and it can demand lenders put away more capital to mitigate against risk. Fines can be as high as 10 per cent of annual turnover.

      “This paints a picture of the SSM as a full-scale regulator that has appropriate teeth,” said Gerald Podobnik, head of capital solutions at Deutsche Bank.

      No details of the breaches were given, although the SSM — which checks the safety and soundness of 123 banks across the eurozone — said the remaining eight reports related to alleged breaches of national rather than ECB rules.

      The ECB declined to comment further.

      The report on the SSM’s first full year of operations since it took over supervisory duties from national regulators last year forms an expression of intent for the new banking supervisor. It put lenders on notice that leveraged corporate loans — particularly those issued by banks in countries hit hardest by the euro crisis — would come under particular scrutiny in 2015, with the supervisor examining how corporate defaults are managed by lenders, according to Tuesday’s report.

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      The SSM has sweeping powers that focus not only on how sound lenders’ balance sheets are but also on issues such as risk management and who sits on their boards.

      The SSM will also make harmonisation of rules across the eurozone a priority over the next 12 months, according to the report, focusing on discrepancies that allow banks to define capital in different ways. Danièle Nouy, who heads the SSM, told the Financial Times in February that this drive could lead some of the eurozone’s biggest banks to raise more capital.

      The SSM will examine banks’ internal models and how they define risk-weighted assets, the report says. This is important because such assets are used to calculate banks’ capital ratios. Regulators around the world suspect that banks can play the system by using their own approaches to measuring risk, and work is being undertaken at a global level by the Basel Committee on Banking Supervision to try to iron out these differences.

      “If Basel and the SSM change the rationale for how risk-weighted assets are calculated, this could have a meaningful impact on the European banking sector,” said Mr Podobnik.

      The door to China’s riches remains locked

      Posted on 31 March 2015 by

      This picture shows the traditional Chinese gate. This tye of gates, were frequently used at royal palaces and the garden of rich persons. Photo taken on: February 03rd, 2009

      Deng Xiaoping’s historic programme of opening up to the outside world, started in the early 1980s, is also referred to as China’s “Open Door” policy. But some cynics suggest that “Open Gate” would have been more accurate.

      As in a traditional Chinese courtyard home, they argue, one may enter through the compound’s main gate only to find all the doors to its various buildings closed.

        It is an experience that can seem familiar even today.

        Want to enter so-called “strategic” industries currently dominated by Beijing’s 120-odd centrally administered state-owned enterprises? Sorry, the doors leading to China’s energy, rail and telecommunications sectors — to cite just a few examples — are firmly locked.

        Want to manufacture and sell cars in the world’s largest automotive market? Then the only way through that door is with a 50-50 local joint venture partner.

        Some of the doors that foreign investors can walk through today were formally opened 14 years ago, when China acceded to the World Trade Organisation. However, for the multinational companies that so welcomed China’s accession, subsequent negotiating rounds failed to further open member nations’ markets. To foreign investors and Chinese reformers, the result was a “lost decade” in which Beijing’s appetite for bold market reforms dissipated.

        This lost decade had its compensations. Double-digit economic growth, an unprecedented infrastructure investment programme and soaring urban incomes transformed China into a very lucrative market for many foreign companies.

        Then, during the global financial crisis of 2008-09, the Rmb4tn stimulus unleashed by Beijing poured more fuel on the fire. Some executives now refer to the period as a “golden era”, the likes of which may never be seen again.

        Had China been included in the US-led Trans Pacific Partnership trade negotiations, Beijing could — in theory — have signed up to its first significant new liberalisation regime since joining the WTO.

        But Beijing is the toughest of negotiators, and Washington decided that it could get, say, 90 per cent of what it wanted in a “high-quality” trade agreement that initially excluded China. According to the Obama administration’s calculation, that was better than getting 60 per cent of what it wanted in a TPP pact that included Beijing.

        To try to force open some of China’s closed doors, the US is instead seeking a Bilateral Investment Treaty. This BIT is supposed to secure equal treatment for US and Chinese companies in both countries’ markets, with exceptions spelt out in a narrowly defined “negative list”.

        China’s rise confounds a splintered west

        Ingram Pinn illustration

        The transatlantic spat about China’s new Asian investment bank tells a cautionary tale. This latest collision between geoeconomics and geopolitics is a harbinger of battles to come.

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        In essence, the negative list is the investment equivalent of the more recent political compact between the ruling Chinese Communist party and the people of China. Where Mao Zedong tried to control all facets of people’s lives, Deng decided it was easier to ensure they did not cross certain lines — public criticism of the party being the most obvious. Similarly, a commercial negative list can specify the few sectors that foreign companies cannot enter — with everything not on the list theoretically open to investors.

        China’s negative list, however, has been delayed for so long now it risks becoming an almost mythic document.

        Western diplomats say the delay is not surprising given the vested interests at stake. Once a certain industry is opened to foreign investment, it is almost impossible to go back. A senior US Treasury official told reporters in Beijing on Monday that Washington “made clear it has to be an ambitious negative list”.

        One of the reasons the once vaunted Shanghai free-trade zone has been such a disappointment, investors suggest, is the lack of just such a negative list.

        The EU, meanwhile, is pursuing an even more ambitious Bilateral Investment Agreement with China. For Brussels, it is not enough for European companies to enjoy the same treatment as Chinese firms. The EU wants Beijing to liberalise the way it regulates all companies, Chinese included.

        Because of its loftier goals, Brussels’ agreement is expected to take longer to craft than Washington’s, as was acknowledged by China’s commerce minister at the recent session of the National People’s Congress.

        But until a robust Sino-US BIT and Sino-EU BIA finally do appear, many American and European companies will continue to find themselves stuck in the courtyard of China’s marketplace, knocking on closed doors.

        Quindell founder builds stake in broker

        Posted on 31 March 2015 by

        Rob Terry of Quindell

        Quindell founder Rob Terry

        Rob Terry, the founder of Quindell, who sold out most of his stake in the controversial insurance claims processor in December, is backing the struggling broker that helped list the company on Aim.

        Mr Terry has built up a 7.4 per cent stake in Daniel Stewart, according to a notice to the stock exchange. As nominated adviser to Quindell, the broker was paid to list the company, advise it and help it raise cash.

          Quindell has been in turmoil since Gotham City Research, a short selling research group, published a dossier of allegations about its history, governance and business model. PwC has started an investigation into the company’s accounts.

          In November, three Quindell directors, including Mr Terry, revealed a complex share dealing, which it was later revealed involved the sale of nearly £9m of their shares in the company with a commitment to repurchase them in two years.

          Mr Terry was ousted as chairman of the claims processing business that month and sold 25m shares in the company — most of his stake — in December. At the time he retained a 2.99 per cent stake, which he would be able to sell further without making disclosures to the stock market.

          The emergence of Mr Terry’s stake in Daniel Stewart comes just a day after Quindell agreed to sell its professional services arm to Australian law firm Slater & Gordon for about £700m.

          City stockbroker Daniel Stewart is not without its own problems. In October, it admitted it lacked the regulatory capital required by the Financial Conduct Authority, the UK regulator. It missed the deadline for filing its accounts and suspended its Aim-quoted shares that month, and then had to relinquish its licence as “nominated adviser” to Aim companies late last year.

          On March 6, Daniel Stewart finally published its annual report and its shares were restored to trading that day. However, it is still no longer a nomad.

          Before it gave up its nomad licence, Daniel Stewart’s illustrious list of clients included the likes of strife-torn Rangers International Football Club and Naibu, a Chinese sports shoe maker, which last month was forced to admit it had lost all contact with the company’s chairman and senior executive.

          Reserves in emerging markets shrink

          Posted on 31 March 2015 by


          Foreign currency reserves in emerging markets fell last year for the first time in two decades, as developing economies found themselves beset by waning competitiveness, capital outflows and concerns over US monetary policy.

          Nine out of 10 emerging market economists polled by the Financial Times said emerging markets had passed a period of “peak reserves” and might continue to see their stashes of foreign currency shrink for months.

            That decline could hamper emerging economies’ ability to carry on buying US and European debt, a trend that has been an engine of growth in the west over the past decade.

            “We are past the peak forex reserves in emerging markets,” said Maarten-Jan Bakkum, senior emerging market strategist at ING Investment Management. “The peak was in June last year. Since then we have seen declines in all major EM countries apart from Mexico, India and Indonesia.”

            The International Monetary Fund said on Tuesday that total foreign currency reserves in emerging and developing economies fell $114.5bn year on year in 2014 to $7.74tn — the first annual decline since the IMF data series began in 1995. At their peak, emerging market reserves reached $8.06tn at the end of the second quarter last year.

            Data collected by ING for the leading 15 emerging economies indicate that the decline accelerated in January and February this year, when reserves contracted by a total of $299.7bn. The ING data also showed that reserves shrank year on year for an unprecedented three months in December, January and February.

            “The first quarter of this year is also likely to show a decline in emerging market reserves year on year,” said Mr Bakkum. “This is a really significant change.”

            This all points to something more worrying. If emerging markets are no longer accumulating forex reserves, the world’s savings glut may be more apparent than real

            – Frederic Neumann, HSBC economist

            The rise in emerging market reserves from $1.7tn at the end of 2004 has been a foundation stone in the global economy for a decade. Much of the capital that emerging markets absorbed from trade surpluses, portfolio inflows and direct investments was recycled into US and European debt markets, helping to finance debt-fuelled growth in developed economies.

            This dynamic may now be going into reverse, economists said. “This all points to something more worrying. If emerging markets are no longer accumulating forex reserves, the world’s savings glut may be more apparent than real,” said Frederic Neumann, economist at HSBC. The world will “sorely miss” the recycling of emerging market reserves when the west’s easy monetary policy turns tighter, he added.

            Mr Neumann and other economists pointed to China’s influence in the declining reserve trend. The unwinding of the “China carry trade” — in which Chinese speculators slashed their foreign borrowing as the renminbi weakened this year — propelled net outflows from the country’s capital account of a record $91bn in the fourth quarter of last year.

            But such capital outflows are by no means confined to China. Fears of Washington tightening monetary policy in a strong dollar environment has also prompted emerging market borrowers to reduce their exposure to loans denominated in the greenback. In addition, developed market investors have cut their risks in some emerging markets.

            IMF report affirms dollar’s supremacy

            Posted on 31 March 2015 by

            Euros and US dollar bills©AFP

            The dollar’s supremacy in the foreign exchange market was affirmed by official data on Tuesday, showing an increase among the currency reserves of central banks, while the euro’s share declined.

            Quarterly data from the International Monetary Fund revealed the dollar’s share rising from 62.4 per cent in the third quarter of 2014, to 62.9 per cent by the end of the fourth quarter.

              Further gains for the dollar are expected given the strong performance of the world’s reserve currency since January. The past three months has been marked by a surge in demand for the dollar, the start of quantitative easing in the eurozone and the Swiss Central Bank’s dramatic abandonment of its peg to the euro.

              As the first three months of the year drew to a close on Tuesday, the euro was set for its steepest quarterly drop against the US dollar since the launch of the single currency in 1999.

              The IMF’s report on the currency composition of official foreign exchange reserves, known as Cofer data saw the euro’s share of currency reserves fall from 22.6 per cent to 22.2 per cent for the final three months of 2014. On a year-by-year basis, reserve holdings in euros declined by 11 per cent and the gap in reserves held in the world’s two biggest currencies is expected to widen when the next Cofer data are published in June.

              Alan Ruskin of Deutsche Bank said he expected Cofer first quarter data to show holdings in the euro down to below 20 per cent, while the dollar’s share should rise to 65 per cent.

              The fourth quarter data suggested central banks were not especially active in buying the dollar and selling the euro, once valuations were taken into account, said Mr Ruskin.

              “Instead they have passively accepted the valuation effects on their portfolio that are propelling the dollar’s share up, and the euro’s share down,” he said.

              Holdings in the Japanese yen dropped by only $3.4bn, a size of fall that surprised Steven Englander, global head of FX strategy at Citigroup.

              “Given how much the yen dropped, that level should be much lower, so it looks as if some central banks were buying,” he said.

              Tuesday saw the dollar resume its downward pressure on the euro, bolstered by a report showing stronger US consumer confidence. There were signs of a euro recovery against the dollar at various stages in the past week, but the dollar rally appears to have resumed ahead of the monthly employment data due on Friday.

              Although the euro remains above the 12-year low of $1.046 reached on March 16, most strategists believe further selling of the single currency is likely.

              For one thing, the European Central Bank’s €60bn-a-month bond buying programme is having the effect of weakening the euro and easing deflation in the eurozone.

              The diverging monetary policies between the Federal Reserve and the ECB have prompted a number of currency strategists to call for the euro-dollar pair to go to parity later this year or early in 2016.

              Sireen Harajli, FX strategist at Mizuho Bank, said: “Shaky eurozone fundamentals, tight credit conditions and an aggressive ECB have set the backdrop for the downtrend in the euro.

              “This first quarter’s decline, and the prospect of the euro remaining weak, will cheer the ECB as well as eurozone companies exporting to the US.”

              Lloyds Banking Group: words and bonds

              Posted on 31 March 2015 by

              A logo illuminated at dawn outside a Lloyds Bank branch©Bloomberg

              Lloyds Banking Group has angered its bondholders with a plan to redeem at par £700m of so-called enhanced capital notes it issued as part of its 2009 recapitalisation following its disastrous acquisition of HBOS.

              Lloyds issued £8.3bn of the notes that turn into equity if its core tier one capital ratio falls below 5 per cent. The Financial Services Authority, the regulator of the day, treated the notes as capital in its stress tests. Lloyds called £5bn of them last year. It no longer needs them and they are costly.

                Bondholders are angry because the notes, with coupons of between 6.4 and 16.1 per cent, have been a boon while rates are low. They are also upset by Lloyds’ reading of the terms. The bank says it can call the notes at par if there is a “capital disqualification event” — for example if they “cease to be taken into account” in its core tier one ratio.

                Roll forward to last year’s tests by the Prudential Regulation Authority, the FSA’s successor, and capital metrics and definitions have changed. Its stress hurdle rate was a common equity tier one (not the same as core tier one) capital ratio of 4.5 per cent. Lloyds passed, with a ratio of 5 per cent — without the ECNs. They were not disqualified, just not needed. Because of today’s changed capital definitions, the original 5 per cent core tier one conversion trigger is probably closer to a 1 per cent common equity tier one ratio now. After the stress test results, Lloyds (not the PRA) decided a capital disqualification event had occurred.

                Yet it is hard to avoid the impression that the bank is using the tests (and the PRA’s blessing to call the notes) to justify redeeming costly debt. BNY Mellon, trustee for the notes, wisely wants a declaratory judgment on the ECN terms from the court.

                It should not have come to this. Lloyds, with £12bn already set aside for payment protection insurance claims, can ill-afford reputational self-harm. That it is braving the court smacks of a bank whose returning capital strength is now matched by a worrying swagger.

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                A mishap should not seal Greece’s fate

                Posted on 31 March 2015 by

                Ingram Pinn illustration

                Since the election of Greece’s Syriza-led government, negotiations over its place in Europe have gone terribly, with posturing on one side and annoyance on the other. An accidental exit from the eurozone has become quite likely. This is not because Greece wants it nor because its partners are set upon it. It is because Greece is running out of hope, its partners are running out of patience and the negotiations are running out of time. A fork in the road does indeed lie ahead. But the choice of direction has to be deliberate, not accidental.

                A looming liquidity crisis is the reason for fearing a precipitate decision. Greece’s creditors want the country to implement reforms before they unlock some €7.2bn in undisbursed bailout funds. Greece needs this money to meet domestic spending obligations and a €450m loan repayment due to the International Monetary Fund. Since the European Central Bank is curbing credit from Greek banks, the country’s government could run out of money. That might trigger a run by Greek depositors. While the ECB could manage this, it might feel unable or unwilling to do so.

                  A country is most likely to leave the euro if its government cannot meet its obligations, its banks close their doors, its economy is depressed and its politics are turbulent. Greece might soon be in this state. A chaotic exit may then occur. It is vital to avoid such a “Greccident”.

                  It has been evident since the government was elected that it would take time to learn whether a fruitful agreement could be reached. It is necessary to “buy” that time. In seeking to reach a deal, it would also be helpful to put destructive moralism to one side. The creditor side considers its generosity to profligate Greeks exemplary. The Greeks believe that private lenders were guilty of irresponsible lending, that the “rescue” was not of Greece but of those selfsame careless lenders and, above all, that Greeks have suffered enough. Both positions have merit. But no good will come from hurling such charges at one another.

                  Assume that an accident is avoided. Then the eurozone faces a big choice and a smaller one. The big choice is whether to keep Greece inside the eurozone or help it leave. The smaller choice is between alternative ways of keeping it inside. Keeping Greece in leaves the option of exit open, but exit is probably irreversible.

                  What are the arguments in favour of exit? One is that the costs of contagion to other members are far lower than earlier, as the divergent spreads in yields on government bonds indicate. Another is that Greece has proved unable to reform. Yet another is that Greece remains internationally uncompetitive, as shown by the sluggishness of its exports. External balance has come at the price of massive unemployment — a huge “internal imbalance”. (See charts.)

                  Martin Wolf chart

                  Against this, exit would transform the eurozone from an irrevocable currency union into a regime of hard exchange-rate pegs. That would be the worst of both worlds: neither as credible as a union nor as flexible as floating rates. Moreover, exit — particularly if unassisted — could cause grave economic and geopolitical consequences. Greece might plunge into an economic abyss. Abandoned by Europe, it might turn towards unfriendly powers. This would be a strategic disaster. Finally, Greece has already suffered the pains of austerity. From now on, things should get better, provided policy improves.

                  Trying to keep Greece inside the eurozone looks the better choice. I can identify two options.

                  Martin Wolf chart

                  The first would be a further rescue programme, one that promised relief from Greece’s debts after the reforms are completed. The second option would be to end the policy of “extend and pretend”. Instead, debt service obligations would be reduced to manageable levels. But there would be no further assistance. Greece would be on its own. The Greek government would keep the euro, but might need to impose controls on the currency’s use. In the short run, the government might also supplement euros with domestic IOUs that can be used to meet obligations to the Greek state. It would then have turned the euro into a parallel currency, either temporarily or semi-permanently.

                  The other big option is for the eurozone to agree that for Greece continued membership cannot work. The best justification for this would be that the Greek economy will be unable to be competitive inside the eurozone. Yet Greece would not just crash out; it should be helped out, instead.

                  Martin Wolf chart

                  That help would, once more, have to include permanent reductions in debt service. Controls on withdrawals from banks would again be needed. In addition, Greece would require further loans to prevent an overshoot in the value of the new currency. Greece would of course remain in the EU. The possibility might even be left open that it could return to the euro in the distant future.

                  None of these options is without risk. All are going to create significant problems. But there are at least two fundamental points to be borne in mind. The first is that the decision must be deliberate, not the result of running out of time. The second is that the choice to be made is a strategic one, both for the eurozone and for Greece.

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                  On balance, I believe the right choice — and certainly the one the Greeks themselves want — is to discover a mutually satisfactory way to keep Greece inside the eurozone, along with generous but conditional debt relief and further time-limited support. But a case can also be made for exit, provided it is done in a way that contains chaos and achieves a permanent improvement in Greek competitiveness. But this, too, would require substantial debt relief.

                  Now is not the time to make the big decision on whether to keep Greece inside the eurozone and, if so, how. But it will come soon. So prepare properly.


                  German MP quits in Greek bailout revolt

                  Posted on 31 March 2015 by


                  Angela Merkel received a sharp reminder of the need to maintain a firm line in bailout talks with Greece after a prominent opponent of the German chancellor’s eurozone rescue policies quit his seat in the Bundestag on Tuesday.

                  Peter Gauweiler, a leading eurosceptic and member of Ms Merkel’s conservative alliance, said he had felt pressured to vote in favour of bailout programmes that he opposed.

                    Mr Gauweiler, 65, is a wealthy lawyer who has launched several legal challenges to the single currency, which he once described as “Esperanto money”.

                    “It has been publicly demanded of me that I support in the Bundestag, the contrary of what I have advocated for years before the federal constitutional court, and to my voters,” he said in a statement.

                    His departure underlines the unease over eurozone rescues within Ms Merkel’s conservative bloc in the German parliament, and comes at a difficult moment in Athens’ negotiations with its eurozone creditors over desperately needed financing.

                    The so-called Brussels Group of negotiators broke up on Tuesday after five days of talks, with little progress and uncertain prospects for reconvening.

                    Creditors have insisted that Greece implement economic reforms before they will unlock €7.2bn in remaining bailout funds. Measures presented by the Greek team in recent days have been deemed woefully short of detail.

                    Speaking before the European Parliament, Daniéle Nouy, the new pan-EU bank supervisor, said Greek banks continued to be solvent, but noted that the Frankfurt-based agency was holding “frequent conference calls” to monitor the financial system, including “the outflows of deposits”. “We do what we have to do as supervisors to ensure their liquidity,” Ms Nouy said.

                    Mr Gauweiler represents a deep vein of German public opinion that has become increasingly hostile to the Greek bailout. He was one of 29 members of Ms Merkel’s Christian Democrats and its sister party, the Christian Social Union, of which he was deputy chairman, who last month voted against extending the bailout by four months.

                    Though the extension was passed by a wide majority of 541 out of 586, it marked the biggest rebellion to date over a bailout, and signalled the dangerous footing for the chancellor.

                    In depth

                    Greece debt crisis

                    Greece debt crisis

                    The Syriza government faces resistance to its plans to tackle the country’s massive debt burden
                    Read more

                    Ms Merkel is also under pressure from anti-euro Alternative für Deutschland party, which has won over disaffected CDU voters.

                    “This resignation indicates that Merkel is very constrained, not simply from the AfD, but also within her own party,” said Mujtaba Rahman, analyst at the Eurasia Group risk consultancy. “It suggests Merkel will need to maintain a hard line, which means no money without material reform from Greece on pensions and labour.”

                    A poll published this month by broadcaster ZDF showed 52 per cent of Germans now favour a Greek exit from the single currency, up from 41 per cent in February. Relations between the two countries have been further soured by a Greek demand for war reparations.

                    That tension has fed into the financing talks, which have gained urgency as the Greek government runs short of cash. Some eurozone officials believe it will be unable to cover a €450m payment to the International Monetary Fund due next week.

                    Eurozone negotiators continued to raise concerns on Tuesday that their Greek counterparts have failed to provide details on the fiscal assumptions made in a list of proposed economic reforms, which Athens had hoped would be quickly approved.

                    One official involved in the talks said they were likely to resume only after Athens provides “expert explanations” of their proposals, and gives more information to representatives from bailout monitors on the ground in Greece.

                    Healthcare and techs to seal quarter gains

                    Posted on 31 March 2015 by

                    A pedestrian walks past the Wall Street street sign in front of the New York Stock Exchange (NYSE) in New York, U.S., on Tuesday, Feb. 28, 2011. U.S. stocks were little changed, after the Standard & Poor's 500 Index rose to an almost four year high, as a better-than-estimated consumer confidence report offset disappointing home and durable goods orders data. Photographer: Scott Eells/Bloomberg©Bloomberg

                    It was a choppy ride but US equities are poised to end the first quarter of the year higher as strong gains from the healthcare and technology sectors help offset the retreat in energy stocks.

                    Although the S&P 500 fell 0.2 per cent to 2,082.36 on Tuesday, the large-cap index is still on track for a 1 per cent gain for the first three months of the year.

                      The advance marks the index’s ninth straight quarter of gains and its longest winning streak since 1998.

                      The Dow Jones Industrial Average and the technology-heavy Nasdaq Composite are also set to advance 0.4 per cent and 4.1 per cent, respectively, for the quarter, despite dipping lower on Tuesday.

                      Healthcare stocks were this quarter’s big winners thanks to the flurry of deals that has helped propel the S&P 500 healthcare index 7.1 per cent higher.

                      The consumer discretionary and consumer staples sectors have also outperformed with the rebound in US consumer spending boosting retailers and dealmaking between major food producers turbocharging shares of companies such as Kraft.

                      But with the dollar bull run showing little sign of abating and valuations for many stocks running at multiyear highs, US stocks could see more corrective pauses in the months ahead.

                      Investors are braced for a sharp slowdown in first-quarter earnings from S&P 500 companies, which start reporting in the middle of April.

                      According to Frost Investment Advisers, which manages $10bn, earnings are expected to drop 4.6 per cent in the quarter from a year earlier as the strong dollar — up 9 per cent this year — takes a bite out of companies’ overseas earnings and profits from major energy groups continue to slide.

                      “We continue to see US equities underperforming as we approach Fed tightening,” said analysts at Barclays.

                      In the meantime, investors looking for more clues on the timing of the first US interest rate increase had a couple more economic data points to pore over on Tuesday.

                      The latest reading from the S&P/Case-Shiller index showed that home prices in the 20 largest US cities were up 4.6 per cent in January from a year earlier, the biggest gain since September.

                      Elsewhere, a report on US consumer confidence showed a rebound in March that topped expectations as Americans grew more optimistic about future incomes and job prospects.

                      A consumer sentiment index from the Conference Board rose to 101.3 from an upwardly revised 98.8 in February, tracking less than 3 points below a seven-and-a-half-year high hit in January.

                      Among the major movers on Tuesday, Charter Communications was up 7.6 per cent to $197.03 after it struck a deal to buy US cable company Bright House Networks for $10.4bn.

                      CBRE Group, the world’s largest commercial real estate services company by revenue, jumped 5.5 per cent to $38.40 on news that it has agreed to acquire Johnson Controls’ facilities management business for $1.47bn.