06/08/2012 World Business Report

BBC World News. Now for the latest financial news

with Alice Baxter and World Business Report.

Hello and welcome to World Business Report.

Europe faces a psychological breakup as the crisis turns member

states against each other. That's the warning from Italy's prime

minister Mario Monti. Markets head higher in Asia on

hopes of brighter prospects for the global economy. Plus the falling

price of gold takes its toll on the mining giants. AngloGold Ashanti is

the latest to report plunging Italy's Prime Minister Mario Monti

has warned that Europe risks a psychological breakup. In an

interview with the German news magazine Der Spiegel to be

published this morning, he suggests the eurozone crisis has created

resentment between nations that could trigger resentment between

nations that could trigger the breakup of the EU if not contained.

The comments come amid growing tensions between Germany and Italy

and Spain over the policy response to the debt crisis. We'll talk

about that in more depth in a moment. But first, financial

markets have begun the new week strongly despite the ongoing fears

over Europe. Sharanjit Leyl is in the BBC's Singapore office. Markets

are concerned about this issue. How are they faring this morning?

Remarkably well. Gains of over 1% fall of the market here in Asia.

That is after that stronger than expected jobs report on Friday,

which lifted sentiment. We also saw economies like Indonesia releasing

its growth figures, showing a much better than expected 6.4% growth in

its second quarter. There is also the weaker yen, giving a boost to

Japan's firms. Twitter made gains after its huge rise in quarterly

net profits. -- toy motor. They also were lifted by its four-year

production forecast. Gains as well for other firms in the region

including Singapore's Fraser and knee. Its shares jumped to a record

after accepting an offer. Its shares had been suspended due to

that announcement just last week. Losses speculation now. A break-up

is likely. It is a conglomerate with interests in everything from

beer to property. In spite of all of these strong gains investors are

braced for a lot of news this week. Data from China on Thursday. We

will get more clues on where Asia's largest economy is headed. It will

release inflation, industrial production and retail sales data.

It is a big week for rate decisions in Asia. Australia, Japan,

Indonesia, South Korea and Sri Lanka will give clues on where

their monetary policy is headed to as the global economy starts to

slow. Many thanks.

We are joined by the head of a investment firm. Le talked about

more about Mario Monti's comments in that article.

The debate around the central issue of whether the ECB should be

allowed to buy up the bonds of indebted countries in order to

reduce borrowing costs. Jenny's insists it is not it is the job of

the bank to bail-out government. There is probably some room for

compromise. Something that is limited in terms of time which may

be tied to deficit ceilings. Maybe the limits will be modified to

allow the ECB to do something for those governments which are not in

excess of a certain amount. But it seems at the moment very difficult

to imagine the eurozone falling apart because of a lack of

compromise, but also it seems difficult to imagine the ECB will

be given carte blanche to do as much as it wants to. There are

concerns which need to be addressed. That means compromises. Gazing into

the crystal ball is tricky. On Friday Spain's leader said he did

not rule out the possibility for his country going for a fall bail-

out. Italy said it will never go for a fall bail-out. The President

of the ECB says he does not know what will happen and it is in the

hands of the market. What do you think will happen? The Spanish

leader was realistic. He had a bit ECB President on Thursday saying

they will not step in until the country has applied for support.

The message is clear. Even Spain which so far of course would have

loved to receive support without undergoing a formal programme would

have to formally submit a request for support. Before going on

holiday he felt he had to put the record straight and prepare the

country, even Spain, which has worked quite hard to get its

deficit down, may have to ask for support. It could be 100 billion in

total. If you think of their refinancing needs and also the

needs of the regions in Spain. At 100 billion is difficult to come by.

He is quite right to put the writing on the wall. It interesting.

A Reuters poll said that and 50 economists found that most expect

Spanish bonds come September. This article talked about Italian

magazines referring to the Fourth Reich. A character about Angela

Merkel there. Perpetuating the idea that European policy is being

orchestrated in Germany. Are we nearing the break-up of the

eurozone? Are the fears justified? You are right. The euro at the

moment is driving Europe apart. Eurozone is not working well

together. The Inn on the eurozone EU members are having a relatively

relaxed time. Think of Sweden, Denmark for example. Good growth,

low unemployment and low deficit. 3 and euros itself is tearing itself

apart. Something is not quite right. -- the eurozone itself. The

question is, should it become the opposite of what it was intended to

be 12 years ago? No bail-out and no central bank money printing to fund

government? Or will it go headlong into a different kind of eurozone,

which for example the German taxpayer has signed up for? Mario

Monti is right to say the euro is becoming almost a dangerous

poisoned chalice for Europe. In my view they also have to ask

themselves, is it worth hanging on to the common currency if it is

doing more harm than good? Many fans.

-- many thanks. The price of gold is down some 16%

this year - and well off the peak it hit last year of 19 hundred

dollars an ounce. Gold mining companies have been bearing the

brunt of the fall. AngloGold Ashanti, one of the world's largest

gold miners, reports its second quarter earnings later today. It

has already announced profits will be down 40% or so. Jeremy Howell

reports. With gold fetching around $1,600 an

ounce who would not want to be in the business of mining? African-

based Anglo Gold Ashanti made record profits last year of $1.3

billion. Yet it failed to impress the markets. Investors in the

world's financial centres normally highly into gold mining stocks. The

price of gold starts rising. That is because beyond the break even

the price for producing gold, every dollar added to the price is a doll

of your profits. Earnings can get very high indeed. -- a dollar of.

But this does not happen this time round. Last year gold surged to 19

Hackford dollars an ounce, but investors steered clear of gold

mining shares. -- $1,900. P blog concern they might be a major

crisis in the eurozone that could cause a collapse in the global

equity markets. All of the equity will be affected by such problems.

And the equities which are the mining stocks as the sector will be

affected. Over the past year the price of gold has fallen by 16%, to

around $1,600 an ounce. Still very high. But the share prices of Anglo

Gold Ashanti and its competitor harmony have both fallen by 20%.

All of these companies are hoping for a price rally before the year

is over. Will it happen? Things happening in the US will get the

markets excited. A lot of people fear inflation could be stirred up

in the future. More immediately it could feed through to dollar

weakness. Both of those being stronger. Another round of

quantitative easing would give US investors more cash to put into

commodities like gold. Inflation and a weakening dollar might prompt

them to buy it as a safe haven. But while all of this would boost the

price of gold, it may not be eased investor appetite for the gold

producers. Time for a brief look at the