11/06/2012 World Business Report


11/06/2012

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who are unbeaten in 21 games. Now for the latest financial news with

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World Business Report. Spain's Prime Minister calls the 100

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billion euro bail-out of its banks a victory. But many ask, is this

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another rescue of a flagging economy through the back door?

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Asian markets are two reacting positively to the rescue package.

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Plus Europe's airlines will make a combined loss of over a billion

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dollars this year, warns the International Air Transport

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Association. The euro has strengthened and share markets in

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Asia are rallying today following the agreement reached between the

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Spanish government and the EU on the rescue of its banks. Over the

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weekend eurozone ministers agreed to lend Madrid up to 100 billion

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euro's - or $125 billion - to help its debt-stricken lenders. Spain

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has now become the fourth eurozone economy to seek an international

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bail-out. But the agreed EU loans for the banks is solely for their

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recapitalisation and therefore Spain avoids the inspection of

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government books that came with bail-outs of other economies such

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as Greece. Still the European Commission is expected to impose

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tough new measures on the overhaul of Spain's financial sector.

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Spanish Prime Minister Mariano Rajoy hailed the decision as a

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victory for the single currency. The TRANSLATION: Yesterday be

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credibility of the euro and the future of the euro and the solidity

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of the financial sector won the day. Asian investors so far see this as

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a step in the right direction. The share markets are heading higher

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today. Absolutely. We are getting a thumbs

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up from Asian investors. But some traders think it could be short-

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lived. Shias, commodities nb 8 are rising in my day training. -- and

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the euro currency. US stock futures are up more than 1% at the moment.

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Some traders are spectacle, saying that any boost today could be

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short-lived unless Europe comes forward quickly with more bold

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action to a Shure the international community that it has a grip on its

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debt crisis. If the result does not go the euros and's way, this could

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depress the Asian markets again. More policy easing to support a

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slowing economy in China is also adding to the positive out Grocke.

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The euro is strengthening against the dollar and the yen. Its highest

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level since 23rd May. In commodities, oil prices are getting

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a lift. More than $2 per barrel. Hopefully this good news will

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continue. That is how the markets have

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reacted, but to what extent has the rescue of Spanish banks really

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fixed beat eurozone debt crisis? The bail-out is larger than many

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expected it to be. Does it really fix the problem? It fixes this

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particular symptom, of the Spanish debt. If you look at the sums

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involved, we are dealing with property. Although they wrote the

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value down, the value of property were still dropping. Good for

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confidence, as reflected in the markets. But remember sorting be

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euro issue out is a larger issue, making sure you have the fiscal

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discipline in place. In terms of the loans to builders

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and other elements in the Spanish economy, we is that going? Do we

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know yet? Are not yet. This is coming of the government's debt

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position, said this is 15% added. The central government has got it

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so that gives them extra pressure. We are not sure whether this is

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coming through the stability found - we will need further details..

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They will assess some other banks to find out what they situation is?

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This is primarily a domestic issue. Spain is nothing like Greece. The

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Spanish economy has its problems, but this was a bank loans problem.

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The Irish will be upset because they have had to go through a lot

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of the paint and the Spanish have very definitely dance their way in.

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We will be looking at the newspapers later. Europe's airlines

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will make a combined loss of $1.1 billion this year, warns the

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International Air Transport Association, IATA. That's double

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the scale of losses it forecast back in March. IATA says their

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passenger numbers are likely to be hit hard by the developing crisis

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in the Eurozone. But carriers elsewhere in the world could see

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profits pick up thanks to the recent fall in crude oil prices.

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Jeremy Howell reports. For the past year, with the price of Brent crude

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up to $120 per barrel, many airlines have plunged into loss.

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Although the price has fallen 20% since spring, I doubt it precedes

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the losses of European carriers will top $1 billion. -- i Out --

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Ita TA. France is undergoing a painful restructuring. Until the

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European economies pick up the airlines exposed to that economy

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will continue to find business tie- up. Airlines like Ryan near Hythe

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port dozens of their planes out of service duty subdued demand. But

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there is still cut throat competition for customers so

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airlines will be under pressure to bring down fears as fuel prices

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fall. It will play its way through because people are desperate to

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keep their cabins fall. If the import price goes down they will

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pass that on straight away. Airlines tend to buy their fuel and

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advance to hedge against rising prices. That means that most will

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have all they need for the rest of this year. They are by now for

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delivery at the start of next year, meaning they could be several

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months before lower costs and lower fares start to come through. The EU

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is always the possibility that crude or will prices could rise

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again. BBC News. China's export growth has increased while

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inflation has slowed. Last month exports jumped by just over 15%

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from a year earlier, beating expectations. In April they were up

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by 4.9%. But despite the surge in exports in May industrial output

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and retail sales figures were disappointing and explained China's

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surprise cut in interest rates last week in a move to boost growth.

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Spain's Telefonica has announced it will sell almost half of its stake

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in Hong Kong listed China Unicom for $1.4 billion. The buyer is

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China Unicom's parent company China United Network. The deal, which

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needs regulatory approval, is expected to close before the end of

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July and will reduce the debt of Spain's largest phone company. The

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markets in Asia have been rallying on the back of that larger-than-

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expected bail out of the Spanish banks. Investors in Asia are happy

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for now and we will see how long the sentiment last. In Europe, D

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DAX and be FTSE and the French markets could be up well over 1%.

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The euro has been gaining ground this is the Japanese yen and the US

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