12/01/2012 World Business Report

sale of debt in Italy and Spain and job losses, now time for the latest

financial news with world business Hello, a warm welcome. The

headlines - Spain prepares to auction 5 billion euros of bonds in

a major Tess of the investors risk appetite, Itpetite, Itelling debt.

Singapore, China's inflation rate down to a 15-month low which leaves

the Government more room the slowdown impact exports. Royal Bank

today as it moves away if investment bvestment ber pressure

from its main shareholder the UK bond auction for 2012 for Italy and

Spain the two eurozone economies causing most concern. Between them

they hope to sell as much as 17 billion euros worth of debt in a

few hours Tim and the Italian new Prime Minister urges investors to

reward Italy for its austerity efforts but needing to pay more

than 15 billion in bonds by the end of March will borrowinl borrowin

continue to surge if the new government? This is a rare view of

the anonymous-looking trading room

bonds. Centres like it across Europe work over time. It all kicks

off today and tomorrow when Spain and Italy try to borrow billions in

the next of some 60 sovereign auctions but wary markets will be

watching over the effect few weeks. The stay liquid and solvent whole

countries have no alternative but to keep rolling over their bonds at

auction and if they can not afford do that their only at sieve toys

seek a bailout and probably default as well. European bond prices and

the cost of borrowing, the yield, become a very public measure of a

country's ability to keep serviceing its debts without going

bust.. The one the market focuss on are the Italian an Spanish bond

Australia's because the borrowing costs have been riding aggressively

over the last few months. The Italian borrowing cost is reaching

a troubling level where it is possible it could be unsustainable

if they continue to borrow for these rates. But people are looking

at the French and German auction t reason they look at the French

auction is because the crisis appears to be spreading from the

privy countries to the core countries. That is a worry because

the Celine Dion survival in its present form depends on successful

auctions where commercial lenders are prepared to fund countries at

prices their treasuries can afford to repay. Key to success of the

debt auctions of course is the role of the European Central Bank which

has given the region's financial sector ultra-cheap loans in the

hope it will put the money back into the bond markets. We will hear

if the ECB today they hold their first meeting to decide on interest

rates this year. Most market watchers expect it to hold interest

rates at their record low of a per cent but what else might we hear

from them? Let's talk about the ECB meeting. I assume rates will remain

on hold, they will take it as a breather to see what is going on?

Is that the idea? That is it. We have had two exciting meetings in

November and December. Marrow entering office with two rate cuts

and now it is time for breather to see how the economy evolves and how

the financial sector evolves and what the Celine Dion crisis is

doing. In the next two months we should see another rate cut.

terms of what they are watching, on December 21 they gave banks in

Europe access to very, very cheap loans. There was a big uptake of

that. What has been going on with that money since then? It is hard

to say. We will see the inter--pang market, the market where -- inter-

bank market where they lend each other money is stuck. We have the

bank frost the peripheral countries that need money at the ECB and we

have called bank the core Celine Dion companies which have the like

This be German money market papers. Earlier this week we had an auction

of a six-month paper from Germany with a negative interest rate.

Obviously the ECB would want that money to be used to help today's

bond sale in Spain, Italy selling bills and bonds tomorrow. That is

not happening then? Is that what you are saying? Obviously the bank

rgs go for the fear factor keeping it in a says flavour ever place for

the ECB? We did see in 2008 and 2009 that it happened but this time

around it is different. Many banks need to improve their Capitol -

capital positions. Eurozone bonds are not risk-free which means banks

will be hesitant the invest in the assets they do not consider as

what is happening at the moment. When we hear if the European

Central Bank in terms of their rate decision and what else they have to

say we make sure you know. Let's talk about Royal Bank of Scotland

because today it is expected to announce major job cuts of between

3,000 and 4,000 investment chip banking positions which could be

going. RBS is 83% owned by the UK government after it pumped in some

$70 billion to keep the group afloat during the financial crisis.

It is now under pressure the focus more on domestic and business

banking and move away from more risky operations. Here is the BBC's

business editor on what today's restructure is likely to involve.

What it is eliminating is its business in share trading, advising

companies on takeovers. What is traditionally known as equities

business used to be done stock brokers and traditional merchant

banks. The reason it is getting out of that business is because it is

not really Division One player and it is not making any money there.

This is a bank that needs to become more profitable because it is under

a fair amount of pressure to get its profits and share price up so

we as taxpayers can get our money back. Our business editor. Has

China tamed inflation? They have their latest inflation numbers out

and it looks encouraging, doesn't it? Very encouraging and they have

basically painted to a certain extent, an inflation level this the

mainland has not seen in more than year. The consumer price index

easing to a 4.1% in the month of December after peaking at the high

of 6.5% last July. For all of 2011 though prices rose 5.4% which is

still higher than Beijing's target level of 4%. When you talk to the

economists they say prices may ease further in the first quarter of

this year and with inflation slipping, monetary policy makers

are now prioritising the economic showdown which could force them

basically did make more cuts in 2012. The reduction could be 2%

through the course of this year and many expect at least a half a per

cent interest rate reduction from the Central Bank before the lunar

new year holidays next week. Basically, possible say makers want

to fine-tune policy to be sufficient to keep the economy on

stable expansion path. After the inflation index has been released

markets will now focus on that key GDP data which will be unveiled in

less an week's time. China goat in the fourth quarter may have slowed

from 9.1% the previous quarter. will keep an eye on this as well.

Let's squeeze in some more stories. The biggest shake-up in in her net

addresss in more than two decades gets under way later. From today it

will being possible to enter any word as a top-level domain name.

Familiar endings could be joined by the likes of dot Pepsi and dot Nike.

The web regulator believes it has steered its 185,000 per application

will help discourage cyber squatters and opportunists. The