Protesters in Greece have gone again in rebellion in the aftermath of the suicide of a pensioner depressed over the economic crisis. The retiree said that the state was moving toward fascism., a photo by Pan-African News Wire File Photos on Flickr.
Greece overshadows Merkel, Hollande talks
Germany and France tested their historic bond on Tuesday when new French President Francois Hollande went to Berlin for talks on the eurozone crisis now endangering growth, Greece and many banks.
Hollande landed late in the German capital after his plane was apparently struck by lightening and had to return to Paris and he changed aircraft.
It was the final leg of a day that began with his inauguration in Paris to succeed Nicolas Sarkozy, an ally on austerity of German Chancellor Angela Merkel.
But their talks were overshadowed by grim news from Athens, where efforts on forming an emergency government foundered and parties agreed to hold new elections on June 17, setting up yet another month of brinkmanship at the crippled heart of the eurozone.
The do-over polls come in the wake of May 6 elections when a majority of Greeks voted against the austerity measures which Athens agreed to in return for a massive EU-IMF bailout late last year.
With the future of that deal uncertain, International Monetary Fund head Christine Lagarde raised the possibility on Tuesday that Greece could leave the currency union in the clearest sign yet that leaders are preparing the ground for the exit.
"If the country's budgetary commitments are not honoured, there are appropriate revisions to do ... which in this case must be an orderly exit," Lagarde said in an interview with France 24.
France's new socialist president has vowed to make economic growth a key component of eurozone austerity efforts to reduce debts, a view strongly resisted by Merkel.
Meanwhile, across the Atlantic Hollande got a timely boost from US Treasury Secretary Timothy Geithner.
"We should welcome this new debate about growth in Europe," Geithner said at a conference in Washington.
The European Commission announced earlier that growth in the eurozone stagnated, with zero growth in the first quarter, surprising analysts who had expected a fall of 0.2 percent.
The eurozone was saved from recession largely by the "pull" effect from Germany which reported first-quarter growth of 0.5 percent.
By contrast, France reported zero first-quarter growth and revised down slightly growth in the last quarter of last year to 0.1 percent.
In Greece, at imminent risk of being forced from the eurozone if a new government rejects tough debt rescue conditions, political leaders failed in a last-hope effort to form a government of non-political experts, as in Italy.
"We are going again towards elections, in a few days, under very bad conditions," socialist Pasok party leader Evangelos Venizelos said after the talks.
"The Greek people must now make the right decisions for the good of the country," said Venizelos, who supported the EU-IMF deal in a technocrat government formed last November.
A statement from the president's office read on state TV noted simply that efforts to form a government had failed and that talks would be held Wednesday on setting up a caretaker administration.
In Germany, Chancellor Merkel, a conservative, has said she will greet Hollande with open arms in the tradition of the special relationship between the two driving forces of the European Union and eurozone.
But she insists that countries struggling with debt, which include France, must concentrate on deep reforms to cut spending, maybe raise taxes and certainly raise efficiency.
Hollande accepts the need to correct budgets but wants far greater emphasis on stimulus.
On Greece, Merkel insists that the next government respect tough rescue conditions already agreed under the second rescue worth 240 billion euros ($308 billion).
The gaps between the two leaders appear wide, although compromise is in the air as the eurozone crisis reaches another climax.
The head of the eurozone finance ministers Jean-Claude Juncker sought to shore up confidence late Monday and condemned talk that Greece might leave the eurozone as nonsense.
Juncker said no eurozone minister had taken this line at a meeting on Monday, and stressed the "unshakeable desire" to keep Greece in the group.
Stock markets worldwide fell on Tuesday, in large part because of the dire situation in Greece and the uncertainty this is generating over the future of policy in the eurozone.
"Investors are pricing in a Greek exit from monetary union with a risk that it could turn out to be disorderly," said VTB Capital analyst Neil MacKinnon.
Analyst Mike McCudden at online brokerage Interactive Investor said: "Faced with the ongoing turmoil in the eurozone, nerves are shredded and traders are particularly sensitive to any news which comes their way.
"Reaction to news of the Greek election was enough to confirm to traders that Greece is indeed heading for the exit," he said.
Gold hits new low on Greece turmoil
1:03am EDT
By Lewa Pardomuan
SINGAPORE (Reuters) - Gold extended losses on Wednesday to slip to its weakest level since late December after efforts to form a new government in Greece collapsed, prompting investors to cut their exposure to the precious metal.
Bullion has this year been moving in tandem with assets that are perceived to be risky, casting off its status as a safe-haven in times of economic instability.
Concerns about upheaval in the euro zone hit the euro and sent share prices lower across Asia as Greek political leaders meet Wednesday to form a caretaker government that will lead the country into its second election in just over a month.
U.S. June gold futures, which often dictate spot gold, dropped more than 1 percent to a low of $1,532.7 an ounce, their lowest since December 29. Cash gold was also at a 4-1/2 month low.
"Everybody is rushing to buy the U.S. dollar. A strong dollar is negative for gold for the time being," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that demand from jewellers was limited due to volatile prices.
"Jewellers don't know what to do. Maybe when the price has stabilized at some levels, they will start to reenter the market. There's a bit of scale-down buying."
Spot gold was down $9.90 an ounce to $1,534.20 by 0422 GMT, having hit an intraday low of $1,532.09.
Gold rallied to a record of around $1,920 an ounce in 2011, when investors turned to the metal as a safe haven during the debt crisis in Europe. But bullion is moving with riskier assets this year as investors turn to the safety of the dollar and the euro hits multi-month lows.
Money managers in gold futures and options slashed their net long positions by 20 percent to the lowest level since December 2008, as investors aggressively unwound their bullish bets in the precious metal after a sharp price pullback.
The euro hit a four-month low on Wednesday, a day after Greece called a new election that may hand victory to leftists opposed to the terms of an EU bailout and raise the risk of the country exiting the euro zone.
Party leaders will convene at the presidential palace at 2 p.m. (1100 GMT) but said they had little hope President Karolos Papoulias's offer would resolve a political crisis that has fuelled speculation Greece's days in the euro zone are numbered.
In equity markets, MSCI's broadest index of Asia-Pacific shares outside Japan extended losses for the fourth consecutive day, sliding 2 percent to a new 4-month low after retreating as much as 1.1 percent on Tuesday. The index has dropped more than 8 percent since May 2.
In the physical market in Singapore, jewelry makers from Thailand snapped up gold on the lower prices, while buyers from top consumer India could also return after buying some gold overnight.
"Definitely physical buying has gone up, although demand is not overwhelming. Indonesia has slowed down because there's a public holiday tomorrow, while Thailand is buying," said a dealer in Singapore.
"India did buy gold last night. They are not really in the market yet today, but I am sure they will be buying."
The wedding season is underway in India and will taper off by the end of the month. Gold jewelry is an essential part of the dowry basket Indian parents give their daughters at weddings.
(Editing by Joseph Radford)
Wall St slips for 3rd straight day on Greece political woes
US stocks fell for the eighth day in the past 10 on Tuesday as uncertainty stemming from the political stalemate in Greece gave investors another reason to be cautious and sellers came out in force late in the session.
The S&P 500 fell for the third straight session as attempts to form a government in Greece fell apart, raising the possibility of a rejection of the bailout terms spelled out by the European Union for the fiscally troubled nation.
After holding near the unchanged mark for much of the session, stocks moved lower in the absence of positive news to turn the tide of negative sentiment.
"Those who are looking for a little bit of a bounce off the last eight trading sessions lost their nerve because there is really nothing out there to indicate the broader story has changed," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
The concerns about upheaval in the euro zone and its effect on the global economy weighed on energy and materials stocks, with US crude down for the third straight day. The S&P energy index and the S&P materials index each dropped 1.5%.
Quarterly results helped boost retailers TJX , up 6.9% at USD 42.45, and Dick's Sporting Goods , up 5.9% at USD 50.05.
US retail sales rose 0.1% in April, slightly below expectations. However, details in the Commerce Department's report indicating underlying strength in demand and a rebound in manufacturing activity in New York State calmed concerns that the economy was stalling.
The declines on Tuesday pushed the S&P 500 down more than 6 percent from its early April high, leaving some investors optimistic that the pullback may be nearing an end as stock prices become more attractive.
"We could go a little lower, but not much lower. It's hard to ignore the fundamentals - and clearly there are some good fundamentals and prices," said Mark Martiak, senior wealth strategist at Premier/First Allied Securities in New York.
Data showing an index of home builders' sentiment at a five-year high in May helped lift the sector's shares. The PHLX housing index advanced 0.6%. But Home Depot shares lost 2.4% to USD 48.67 and ranked as the biggest drag on the Dow after the home improvement retailer posted quarterly sales that fell short of Wall Street's expectations.
The Dow Jones industrial average dropped 63.35 points, or 0.5%, to 12,632.00 at the close. The Standard & Poor's 500 Index lost 7.69 points, or 0.57%, to 1,330.66. The Nasdaq Composite Index fell 8.82 points, or 0.30%, to 2,893.76.
JPMorgan Chase & Co rose 1.3% to USD 36.24, mostly unchanged this week after falling more than 11% last week after disclosing a trading loss of at least USD 2 billion. Pressure mounted on the bank to reclaim some of the millions of dollars it paid to the executives who oversaw the wrong-way trades.
Avon Products Inc tumbled 9.7% to USD 18.71 after Coty Inc withdrew its USD 10.7 billion takeover bid for the company, saying it had missed a deadline to start discussions.
Chesapeake Energy Corp shares dropped as much as 7.8% to USD 14.31, their lowest since March 2009, after a credit rating downgrade and news that the natural gas producer will increase its borrowing to USD 4 billion from the planned USD 3 billion as it faces a liquidity crunch. Chesapeake shares finished the session down 5.6% at USD 14.65.
Facebook Inc increased the price range of its initial public offering, aiming to raise more than USD 12 billion and giving the world's largest social network a valuation potentially exceeding USD 100 billion.
The indications of high demand for Facebook's IPO prompted some buyers to snap up other social media companies' shares, such as online game maker Zynga Inc , up 7.7% at USD 8.56.
Volume was active with about 7.22 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.78 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of nearly 2 to 1, while on the Nasdaq, about 14 stocks fell for every 11 that rose.
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