:00:02. > :00:12.BBC World News. Now for the latest financial news
:00:12. > :00:17.with Alice Baxter and World Business Report.
:00:17. > :00:19.Hello and welcome to World Business Report.
:00:19. > :00:24.Europe faces a psychological breakup as the crisis turns member
:00:24. > :00:32.states against each other. That's the warning from Italy's prime
:00:32. > :00:37.minister Mario Monti. Markets head higher in Asia on
:00:37. > :00:40.hopes of brighter prospects for the global economy. Plus the falling
:00:40. > :00:50.price of gold takes its toll on the mining giants. AngloGold Ashanti is
:00:50. > :00:53.
:00:53. > :01:01.the latest to report plunging Italy's Prime Minister Mario Monti
:01:01. > :01:04.has warned that Europe risks a psychological breakup. In an
:01:04. > :01:06.interview with the German news magazine Der Spiegel to be
:01:06. > :01:13.published this morning, he suggests the eurozone crisis has created
:01:13. > :01:16.resentment between nations that could trigger resentment between
:01:16. > :01:19.nations that could trigger the breakup of the EU if not contained.
:01:19. > :01:22.The comments come amid growing tensions between Germany and Italy
:01:22. > :01:24.and Spain over the policy response to the debt crisis. We'll talk
:01:25. > :01:27.about that in more depth in a moment. But first, financial
:01:27. > :01:37.markets have begun the new week strongly despite the ongoing fears
:01:37. > :01:39.
:01:39. > :01:47.over Europe. Sharanjit Leyl is in the BBC's Singapore office. Markets
:01:47. > :01:52.are concerned about this issue. How are they faring this morning?
:01:52. > :01:56.Remarkably well. Gains of over 1% fall of the market here in Asia.
:01:56. > :02:01.That is after that stronger than expected jobs report on Friday,
:02:02. > :02:08.which lifted sentiment. We also saw economies like Indonesia releasing
:02:08. > :02:13.its growth figures, showing a much better than expected 6.4% growth in
:02:13. > :02:20.its second quarter. There is also the weaker yen, giving a boost to
:02:20. > :02:26.Japan's firms. Twitter made gains after its huge rise in quarterly
:02:26. > :02:32.net profits. -- toy motor. They also were lifted by its four-year
:02:32. > :02:37.production forecast. Gains as well for other firms in the region
:02:37. > :02:47.including Singapore's Fraser and knee. Its shares jumped to a record
:02:47. > :02:47.
:02:47. > :02:53.after accepting an offer. Its shares had been suspended due to
:02:53. > :02:57.that announcement just last week. Losses speculation now. A break-up
:02:57. > :03:02.is likely. It is a conglomerate with interests in everything from
:03:02. > :03:07.beer to property. In spite of all of these strong gains investors are
:03:07. > :03:12.braced for a lot of news this week. Data from China on Thursday. We
:03:12. > :03:16.will get more clues on where Asia's largest economy is headed. It will
:03:16. > :03:20.release inflation, industrial production and retail sales data.
:03:20. > :03:24.It is a big week for rate decisions in Asia. Australia, Japan,
:03:24. > :03:28.Indonesia, South Korea and Sri Lanka will give clues on where
:03:28. > :03:38.their monetary policy is headed to as the global economy starts to
:03:38. > :03:45.slow. Many thanks.
:03:45. > :03:49.We are joined by the head of a investment firm. Le talked about
:03:49. > :03:53.more about Mario Monti's comments in that article.
:03:53. > :03:56.The debate around the central issue of whether the ECB should be
:03:56. > :04:02.allowed to buy up the bonds of indebted countries in order to
:04:02. > :04:06.reduce borrowing costs. Jenny's insists it is not it is the job of
:04:07. > :04:11.the bank to bail-out government. There is probably some room for
:04:11. > :04:18.compromise. Something that is limited in terms of time which may
:04:18. > :04:22.be tied to deficit ceilings. Maybe the limits will be modified to
:04:22. > :04:30.allow the ECB to do something for those governments which are not in
:04:30. > :04:33.excess of a certain amount. But it seems at the moment very difficult
:04:33. > :04:38.to imagine the eurozone falling apart because of a lack of
:04:38. > :04:42.compromise, but also it seems difficult to imagine the ECB will
:04:42. > :04:47.be given carte blanche to do as much as it wants to. There are
:04:47. > :04:54.concerns which need to be addressed. That means compromises. Gazing into
:04:54. > :04:57.the crystal ball is tricky. On Friday Spain's leader said he did
:04:57. > :05:03.not rule out the possibility for his country going for a fall bail-
:05:03. > :05:06.out. Italy said it will never go for a fall bail-out. The President
:05:06. > :05:10.of the ECB says he does not know what will happen and it is in the
:05:10. > :05:15.hands of the market. What do you think will happen? The Spanish
:05:15. > :05:19.leader was realistic. He had a bit ECB President on Thursday saying
:05:19. > :05:24.they will not step in until the country has applied for support.
:05:24. > :05:29.The message is clear. Even Spain which so far of course would have
:05:29. > :05:32.loved to receive support without undergoing a formal programme would
:05:32. > :05:36.have to formally submit a request for support. Before going on
:05:36. > :05:39.holiday he felt he had to put the record straight and prepare the
:05:39. > :05:44.country, even Spain, which has worked quite hard to get its
:05:44. > :05:47.deficit down, may have to ask for support. It could be 100 billion in
:05:48. > :05:53.total. If you think of their refinancing needs and also the
:05:53. > :05:58.needs of the regions in Spain. At 100 billion is difficult to come by.
:05:58. > :06:01.He is quite right to put the writing on the wall. It interesting.
:06:02. > :06:11.A Reuters poll said that and 50 economists found that most expect
:06:11. > :06:17.Spanish bonds come September. This article talked about Italian
:06:17. > :06:22.magazines referring to the Fourth Reich. A character about Angela
:06:22. > :06:25.Merkel there. Perpetuating the idea that European policy is being
:06:25. > :06:29.orchestrated in Germany. Are we nearing the break-up of the
:06:29. > :06:33.eurozone? Are the fears justified? You are right. The euro at the
:06:33. > :06:38.moment is driving Europe apart. Eurozone is not working well
:06:38. > :06:43.together. The Inn on the eurozone EU members are having a relatively
:06:43. > :06:47.relaxed time. Think of Sweden, Denmark for example. Good growth,
:06:47. > :06:53.low unemployment and low deficit. 3 and euros itself is tearing itself
:06:53. > :06:57.apart. Something is not quite right. -- the eurozone itself. The
:06:57. > :07:02.question is, should it become the opposite of what it was intended to
:07:02. > :07:05.be 12 years ago? No bail-out and no central bank money printing to fund
:07:05. > :07:11.government? Or will it go headlong into a different kind of eurozone,
:07:11. > :07:16.which for example the German taxpayer has signed up for? Mario
:07:16. > :07:20.Monti is right to say the euro is becoming almost a dangerous
:07:20. > :07:23.poisoned chalice for Europe. In my view they also have to ask
:07:23. > :07:33.themselves, is it worth hanging on to the common currency if it is
:07:33. > :07:34.
:07:34. > :07:40.doing more harm than good? Many fans.
:07:40. > :07:44.-- many thanks. The price of gold is down some 16%
:07:44. > :07:46.this year - and well off the peak it hit last year of 19 hundred
:07:46. > :07:49.dollars an ounce. Gold mining companies have been bearing the
:07:49. > :07:52.brunt of the fall. AngloGold Ashanti, one of the world's largest
:07:52. > :07:54.gold miners, reports its second quarter earnings later today. It
:07:55. > :08:01.has already announced profits will be down 40% or so. Jeremy Howell
:08:01. > :08:06.reports. With gold fetching around $1,600 an
:08:06. > :08:12.ounce who would not want to be in the business of mining? African-
:08:12. > :08:17.based Anglo Gold Ashanti made record profits last year of $1.3
:08:17. > :08:20.billion. Yet it failed to impress the markets. Investors in the
:08:20. > :08:24.world's financial centres normally highly into gold mining stocks. The
:08:24. > :08:30.price of gold starts rising. That is because beyond the break even
:08:30. > :08:35.the price for producing gold, every dollar added to the price is a doll
:08:35. > :08:40.of your profits. Earnings can get very high indeed. -- a dollar of.
:08:40. > :08:43.But this does not happen this time round. Last year gold surged to 19
:08:43. > :08:49.Hackford dollars an ounce, but investors steered clear of gold
:08:49. > :08:53.mining shares. -- $1,900. P blog concern they might be a major
:08:53. > :08:59.crisis in the eurozone that could cause a collapse in the global
:08:59. > :09:02.equity markets. All of the equity will be affected by such problems.
:09:02. > :09:07.And the equities which are the mining stocks as the sector will be
:09:07. > :09:12.affected. Over the past year the price of gold has fallen by 16%, to
:09:12. > :09:19.around $1,600 an ounce. Still very high. But the share prices of Anglo
:09:19. > :09:22.Gold Ashanti and its competitor harmony have both fallen by 20%.
:09:22. > :09:30.All of these companies are hoping for a price rally before the year
:09:31. > :09:38.is over. Will it happen? Things happening in the US will get the
:09:38. > :09:42.markets excited. A lot of people fear inflation could be stirred up
:09:42. > :09:48.in the future. More immediately it could feed through to dollar
:09:48. > :09:52.weakness. Both of those being stronger. Another round of
:09:52. > :09:55.quantitative easing would give US investors more cash to put into
:09:55. > :10:00.commodities like gold. Inflation and a weakening dollar might prompt
:10:00. > :10:04.them to buy it as a safe haven. But while all of this would boost the
:10:04. > :10:10.price of gold, it may not be eased investor appetite for the gold
:10:10. > :10:20.producers. Time for a brief look at the
:10:20. > :10:22.