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Money markets us 3 mo bills sell at lowest interest rate since june


* US bill rates pushed down by Fed stimulus program * Three-month Euribor rate rises for first time in 3 months * European money markets give up on the idea of deposit rate cut By Chris Reese and Marius Zaharia NEW YORK/LONDON, Oct 1 The U.S. Treasury on Monday sold $32 billion of three-month bills at the lowest interest rate since June, as a Federal Reserve stimulus program put some downward pressure on shorter-dated rates. The Treasury sold the three-month bills at a high rate of 0.085 percent, down from a high rate of 0.11 percent at a similar sale last week and the lowest since a three-month bill sale on June 11. One of the Fed's stimulus program, nicknamed "Operation Twist" because the central bank is selling shorter-dated Treasuries to buy longer-dated Treasuries, was seen as dragging on shorter-dated rates. "Data on primary dealer bond positions show that their holdings of Treasuries have climbed since the start of Operation Twist last October," said Alex Roever, short-term rates strategist at J. P. Morgan Securities in New York, adding "of that increase, 75 percent were concentrated in coupons maturing in three years or less." "With the Fed extending Operation Twist to the end of this year, dealers continue to be cluttered with short Treasuries," Roever said. A Treasury auction of $28 billion of six-month bills on Monday brought a high rate of 0.135 percent, down from a high rate of 0.14 percent in a similar sale last week but up from a high rate of 0.13 percent in an auction two weeks ago. Meanwhile in Europe, key Euribor interbank lending rates rose on Monday for the first time in three months as expectations that the European Central Bank could cut interest rates this week are fading. Money markets are also in the process of pricing out the possibility that the deposit facility rate will ever be cut into negative territory from the current zero percent. Only a minor chance of such a move is factored in for the start of next year, but some banks are recommending clients to exit such bets or position for a rise in January-dated rates. Economists polled by Reuters expect the ECB to leave its main refinancing rate flat at 0.75 percent at its meeting on Thursday. The three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, rose to 0.223 percent from 0.220 percent. "This points to more uncertainty creeping into the market with regards to any future rate cuts," said Elwin de Groot, senior market economist at Rabobank in Utrecht, the Netherlands. "Rates are very low already and there's basically only one thing that could push down money market rates even further, and that would be a cut in the deposit rate. But that seems not to be a subject of discussion within the ECB." ECB Executive Board Member Benoit Coeure said last week that a cut in the deposit rate, a move that would effectively charge banks to hold money with the ECB overnight, may not be beneficial for all segments of the market. Imposing a penalty for parking cash at the central bank could shake things up in the dormant euro zone money markets and sway banks to take the risk of lending to each other more to get a return on their cash. Healing money market segments that have been frozen by the euro zone debt crisis is seen as an important step towards restoring sustainable economic growth in the region. However, the low level of short-term rates is already making some asset managers take cash out of money markets and put it in other assets such as bonds. The forward Eonia market, showing where investors expect the overnight Eonia rate to be at certain points in the future, is completely dismissing the probability of a deposit rate cut in October. The Eonia rate dated for the October meeting last traded at 0.09 percent. Eonia has fixed at an average of around 8 basis points over the deposit rate in the past few months.

Money markets us rates futures briefly turn positive


NEW YORK Jan 22 Short-term U.S. interest rates futures rose briefly early Thursday after the European Central Bank outlined a bond purchase program worth 60 billion euros a month to help stimulate spending and investments in a bid to avert deflation. The ECB plan will start in March and run until the end of September 2016. Shortly after the ECB's stimulus move, the Danish central bank cut its key policy rate for the second time this week to defend its currency peg to the euro. On Wednesday, the Bank of Canada stunned markets when it lowered interest rates by a quarter point to 0.75 percent in an attempt to counter the negative impact from the recent drop in oil prices.

This recent stretch of sometimes surprising policy measures stoked speculation that the Federal Reserve could abandon a possible plan to lift short-term interest rates from near zero percent in 2015, analysts said. In choppy trading, federal funds futures for December delivery touched a session high of 99.57 before turning lower at 99.55, down 1.5 basis points from Wednesday's close.

Money markets volumes in overnight euro zone lending plunge


* Eonia volumes drop by a third y-o-y in November* Traders note increased activity in longer-term rates* But overall volumes still subdued, euro crisis weighsBy Marius ZahariaLONDON, Dec 4 Euro zone banks have cut their overnight lending to each other in favour of longer-term loans but still lack the confidence to be more active in money markets due to concerns about the bloc's debt crisis. Since the European Central Bank cut the rate on its deposit facility to zero in July, driving overnight Eonia rates to just a few basis points, some banks have opted to lend for longer periods, trying to attract higher interest rates. That led to a drop in overnight volumes, with traders saying the move offset the greater activity in longer-term rates. The fact that overall lending volumes is unchanged indicates there has been no fundamental improvement in the confidence banks have in each other and that lenders are only taking more risk because they want a slightly higher return on their cash.

"It's mostly moving peas on the same plate. Nobody is doing much," a money market trader said. "The whole of Europe is not exactly in equilibrium and that state seems to be quite stable at the moment."He said the ECB's massive cash injections have left many euro zone banks with more liquidity than they need. Their cautious stance makes them hold on to cash rather than lending them to other banks or to businesses. The daily average volumes in trades using the overnight Eonia rate was about 20 billion euros in November, down by a third from the same month of last year, according to Reuters calculations. They have declined from 23.6 billion in October and 26.3 billion in September. Another trader said most of the activity is still in maturities of less than three months, with the rest of unsecured lending largely frozen.

Despite reassurances from policymakers that they will do whatever necessary to save the euro zone, money markets remain closed for many banks in the bloc's lower-rated states. Eonia rates settled at 0.077 percent on Monday. The benchmark three-month interbank Libor rate for euros settled at 0.12714 percent on Tuesday. TRANSMISSION

The low money market rates are not being transferred to the real economy. Banks are not confident of their own market access longer term and therefore not lending to businesses. Loans to the private sector fell by 0.7 percent in October from a year before, the latest ECB data shows. ECB President Mario Draghi proposed a central bank sovereign bond buying programme named OMT, or Outright Monetary Transactions, as a way of better transmitting the bank's ultra-loose monetary policy to the crippled euro zone economy. The idea behind it is to bring down indebted countries' short-term borrowing costs and ease their debt burdens. As long as sovereigns can stay afloat the chances of a banking sector meltdown are reduced. The OMT activation -- pending a request for a bailout from one of the euro zone states, most likely Spain -- is expected to further encourage banks to take more risks in lending markets. But without a reduction in overall euro zone debt levels and more reforms to fix the bloc's underlying economic problems, banks are unlikely to suddenly start lending more to the real economy, analysts say."In case of activation of the programme there might be a slight improvement (in money market sentiment)," Barclays Capital rate strategist Giuseppe Maraffino said. "But it will not be a normalisation of the market. It would all still be based on ECB support. Normal markets function on their own."

Press digest australian business news jan 13


Jan. 13 Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)Western Australian Premier Colin Barnett yesterday said the state government would support James Packer's move to expand the Crown Perth casino in a development that could cost up to A$1 billion. "Over time we want to build up more and more attractions such as a golf course  we want to do more and more cool things so people want to come here and have fun," Mr Packer said at a function last month. Page 33.-- The chief executive of Echo Entertainment Group, Larry Mullin, yesterday said the combination of casinos alongside five-star hotels was a winning bet. "The opportunity to build a five-star hotel doesn't always come across unless you have gaming  one thing that's been missing in Sydney and in Australia is the five-star hotel," Mr Mullin said. He added that rival casino operator Crown's intention to broaden its Crown Perth location would increase competition. Page 33.-- Forge Group yesterday rebuffed criticism of its decision to pay chief executive and managing director David Simpson A$2.75 million in his first year, saying it was a requirement due to the competition in the market for qualified executives. "There's a big shortage of people of this calibre around  mining services is a bit of a hot spot, so everybody is trying to get guys like David," Peter Hutchinson, founder of the construction contractor, said. Page 34.-- Mining entrepreneur Chris Wallin is reportedly considering a share placement and partial trade sale of his exploration company's A$1.85 billion coal developments in Queensland. The former geologist, who is also the ninth richest Australian according to BRW's Rich 200 last year, wants to develop QCoal's Byerwen Coal Project to allow production to begin in two years. QCoal is also looking to develop the Drake Coal Project at a cost of A$350 million-plus, with production scheduled to start by 2014. Page 35.-- THE AUSTRALIAN (this site)The value of QBE Insurance Group yesterday plunged by A$2 billion, after investors reacted angrily to the insurer's shock announcement which will see the company's annual profit halve in what is QBE's worst performance since the terrorist attacks on September 11, 2001. Chief executive Frank O'Halloran admitted that "we have made mistakes", but he said the company was "absolutely determined to make up this shortfall". The news comes a day after it was revealed that QBE's main United States subsidiary, Balboa, was being investigated by authorities. Page 15.

-- Analysts have warned investors against looking for short-term profits in the insurance sector following QBE Insurance Group's shock profit downgrade yesterday. "It doesn't matter how many actuaries you employ to crunch numbers and calculate risk  ultimately nature is and always will be an unpredictable beast," Frank O'Halloran, chief executive of QBE, said. Ross Curran, analyst at Commonwealth Bank of Australia, said "you can't look at the profits gained from one year to the next and make a judgement  some years are worse than others". Page 15.-- The Australian Investments & Securities Commission has reportedly launched an inquiry into claims of mismanagement at listed mining junior Paynes Find Gold after money was allegedly siphoned out of the firm while Peter Salter was chief executive. The new management is reportedly working alongside the corporate regulator, while the Australian Securities Exchange has asked the company to explain its recent record of poor disclosure. Page 15.-- Stephen Hester, chief executive of Royal Bank of Scotland (RBS), yesterday confirmed that the bank was thinking about the "sale or closure options for our cash equities, corporate broking, equity capital markets, and mergers and acquisitions businesses". The bank is understood to be searching for a buyer for its Asia-Pacific business, of which up to 32 percent of revenue is created by RBS Australia, formerly known as ABN Amro. Observers have warned that the Australian business may close if it is not sold alongside the Asian division. Page 15.

-- THE SYDNEY MORNING HERALD (this site)A parliamentary committee has heard from wealth managers that the Federal Government's proposed reforms to financial advisers will have little benefit for consumers, despite costing millions to implement. Diversified insurer Suncorp Group, which owns the Asteron Life advisory business, yesterday said "an unresponsive or disengaged client is more commonly a reflection of temporary issues rather than a reflection of a genuine need to cease the advice relationship". Page B13.-- Mineral sands producer Iluka Resources yesterday told investors that a drop in production and sales of zircon would be offset by a jump in the price and volumes of titanium dioxide. The company also revealed that Chinese demand for zircon weakened in the last quarter, due to a variety of economic factors. Shares in Iluka fell by A20 cents to close at A$16.70. Page B14.--

A proposal by Nathan Tinkler's Hunter Ports infrastructure group to construct a A$2.5 billion coal loader in Newcastle will be discussed by the New South Wales government next week. The plan pitches the mining magnate's company against Newcastle Ports Corporation, which has also filed a proposal to build new port facilities on the site of the former BHP Steelworks with the state's Department of Planning. Steve van Barneveld, head of Hunter Ports, however, said the company was "open to working with Newcastle Ports Corporation". Page B14.-- Commonwealth Bank of Australia and Australia and New Zealand Banking Group are reportedly considering making an offer for the local arm of Royal Bank of Scotland (RBS), after the diversified financial group announced it would exit the investment banking business. The adviser of RBS, Lazard, has reportedly spoken to Australian lenders about a possible sale of RBS' cash equities unit and a portion of the investment banking and retail equities divisions. Suitors are expected to submit their bids by as early as today. Page B14.-- THE AGE (this site)The S&P/ASX 200 Index fell 6.52 points to close at 4181 points yesterday, with gains nullified by a surprise profit downgrade from QBE Insurance Group. QBE's stock fell 12.7 percent to close at A$11.35 after the insurer warned its after-tax profit for the 2011 calendar year could be halved due to a record level of claims. "There won't be too many brave investors stepping in to catch this falling knife," Peter Esho, chief market analyst at contracts for difference provider City Index, said. Page B11.-- Around 21 internet service providers have signed year-long commercial agreements with NBN Co, the government agency tasked with rolling out the national broadband network, following months of negotiations. NBN Co earlier this week said new end-customers would not be processed unless carriers accepted the wholesale agreement. Companies were holding out over a variety of issues, including NBN Co's limited liability should accidents occur. Telecommunication giants Optus and Telstra are expected to sign the new contract soon. Page B14.-- The Australian Communications and Media Authority will impose a reserve price later this year on its auction of the wireless spectrum, although a spokesperson could not confirm if the auction would be delayed should the global economy continue to suffer. The telecommunications industry is already set to spend around A$1 billion this year renewing current spectrum licences, while any interested parties are required to register for the auction by September. Page B14. -- A former associate at investment bank JPMorgan, Elisa Maree Rietbergen, is scheduled to be arraigned today in the New South Wales District Court on insider trading charges. Ms Rietbergen, alongside her boyfriend Joseph Levi, a former National Australia Bank employee, pleaded guilty to the charges last month. According to a statement of facts, Ms Rietbergen overheard colleagues discussing a takeover of Valad Property Group, information later used by Mr Levi to purchase 30,000 securities before Valad's share price jumped 52 percent. Page B16.