Archive for May, 2011

China not indicating if supporting Lagarde – India

Wednesday, May 25th, 2011 | Finance News

NEW DELHI (Reuters) – China has not indicated it would support French Finance Minister Christine Lagarde for the International Monetary Fund's top job, India's IMF representative said on late Wednesday.

France's government has said China would back Lagarde, who announced her candidacy on Wednesday, hours after Brazil, Russia, India, China and South Africa criticised EU officials for suggesting the next IMF head must be a European.

The Chinese Foreign Ministry has declined to comment.

"There is no such communication to us from the Chinese ED (executive director) on these lines," Arvind Virmani, India's executive director at the IMF told Reuters in an interview.

"Obviously I am not privy to any private communication between the Chinese and the French governments."

In the first joint statement issued by their directors at the IMF, Brazil, Russia, India, China and South Africa -- the emerging economic powers known as the BRICS -- said on Tuesday the choice should be based on competence, not nationality, and called for "abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe."

Sources in New Delhi have said India is talking with other emerging countries to build support behind a common candidate from a developing market to head the IMF.

The BRICS countries, thus far, have failed to identify a consensus alternative candidate. Virmani, former chief economic adviser to India's Finance Ministry, said India would be open to supporting a candidate even outside the BRICS, if no consensus is reached.

"Clearly if there is no such consensus by the time nominations close on June 10, we will have to take a decision on which available candidate to support based on their merit, their inclination for independent thought and even-handed action, and motivation to reform the governance and quota structures of the IMF to reflect global economic reality," he said.

Emerging economies are trying to use the contest for the top IMF job to push reforms at the global financial institution, as the United States and European nations jointly have power at the global lender to decide who leads it.

"If there is no substantive change in the rules procedure and approach adopted in the past, then non-European candidates would merely be competing for second place," Virmani said.

(Reporting by Rajesh Kumar Singh; Editing by Leslie Adler)

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Oil hits 2-week high on U.S. distillate draw, dollar

Wednesday, May 25th, 2011 | Finance News

NEW YORK (Reuters) – Oil prices rose 2 percent on Wednesday, climbing to two-week highs as an unexpected drop in U.S. distillate inventories trumped a sharp rise in gasoline stocks and as a softer dollar supported fresh commodities buying.

Inventory data from the U.S. Energy Information Administration showed distillate stocks, which include heating oil and diesel fuel, fell 2.04 million barrels to 141 million barrels last week, the lowest since April 2009.

The data overshadowed a larger-than-expected 3.79 million barrel build in gasoline stocks and an unexpected modest gain of 616,000 barrels in crude stocks.

U.S. crude for July delivery settled $1.73 higher, or 1.74 percent, at $101.32 a barrel, the highest close since May 10.

In London, ICE Brent for July closed up $2.40, or 2.1 percent, at $114.93, also the highest settlement since May 10.

Prices had been lower in the early going on concerns about weak gasoline demand ahead of the U.S. driving season that kicks off on the U.S. Memorial Day holiday on May 30.

"The main component in today's rise in crude futures is the supportive drawdown in distillate stocks," said Rich Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

"We're also seeing a weaker dollar and higher prices in gold, silver and copper as supportive," he added.

The 19-commodity Reuters-Jefferies CRB index (.CRB), a global commodities benchmark, rose 1.6 percent, gaining the most in a week and extending Tuesday's rise of 0.7 percent.

Oil trading volumes were moderate, with U.S. crude down 18 percent from the 30-day average, with about an hour to go before the end of the day's trade. Brent crude volume was down about 8 percent from the 30-day average.

U.S. June heating oil finished up 7.06 cents, or 2.43 percent, at $2.9803 a gallon, also the highest since May 10.

Earlier, Brent rose on concerns about unrest in the Middle East and North Africa after violence escalated in Yemen while uncertainty over Libya's future festered as NATO strikes intensified.

South African President Jacob Zuma said he would visit Tripoli next week to discuss an exit strategy for Libyan leader Muammar Gaddafi in cooperation with the Turkish government.

SCHISM WIDENS ON MARKET'S COURSE

Sharp upward revisions of oil price forecasts by Wall Street giants Goldman Sachs and Morgan Stanley have deepened the schism between oil bears and bulls to levels unseen since oil prices peaked in 2008, a Reuters monthly poll showed.

While bears cited weak demand and ebbing geopolitical risk premiums as reasons for oil to plunge to $75 per barrel, bulls saw it soaring to $140 due to supply shortages and the limited ability of OPEC to cushion any new disruption.

Further signs of weaker economic demand in the U.S. appears to buttress bearish views about the future course of oil prices.

Data on Wednesday showed a larger-than-expected drop in new orders for long-lasting U.S. manufactured goods in April, the largest decline in six months.

The weak durable goods report could embolden economists to moderate their forecasts for the U.S. second-quarter growth, analysts said.

U.S. dependence on imported oil fell below 50 percent of total oil demand in 2010 for the first time in more than a decade due to the weak economy and the increasing number of fuel efficient vehicles, a report from the U.S. Energy Department showed on Wednesday.

In other news, global oil trading firm Arcadia Energy rejected claims by the U.S. Commodity Futures Trading Commission, the futures market regulator, of crude oil price manipulation by its traders in 2008, and said it would fight the futures market regulator in court.

(Additional reporting by Robert Gibbons in New York; Jessica Donati in London; and Francis Kan in Singapore; Editing by Marguerita Choy)

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Cal and Illinois probe robosigning allegations

Wednesday, May 25th, 2011 | Finance News

LOS ANGELES – The top prosecutors in California and Illinois are investigating allegations that one of the nation's largest mortgage processing companies engaged in the illegal practice of "robosigning" — signing thousands of foreclosure documents without checking their accuracy.

The attorneys general of both states said Wednesday that they've subpoenaed Lender Processing Services Inc. California ordered the company to produce documents and answer questions about its practices as far back as 2007.

Lender Processing is one of 16 banks and servicers that the federal government last month ordered to reimburse homeowners who were improperly foreclosed upon.

State prosecutors will investigate allegations that the company, which services half of all U.S. mortgages, rubber-stamped hundreds or perhaps thousands of documents it supplied to mortgage lenders to be used in foreclosure proceedings.

Messages left for a company representative weren't immediately returned.

California Attorney General Kamala Harris this week announced the formation of a task force to investigate mortgage fraud.

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