PARIS (AFP) – France's Finance Minister Christine Lagarde said on Wednesday she is running as a candidate to head the International Monetary Fund, after she received wide European backing for the post.
"I have decided to present my candidacy" for the job, she told reporters, adding that she had made the decision "after mature reflection."
If appointed, she would be the first woman to head the global emergency lender which is currently deeply involved in the eurozone debt crisis.
An EU source said on Friday that Lagarde, 55, was practically certain to become Europe's candidate, although she has been dogged by a French judicial probe into allegations of abuse of power.
"I have a perfectly clear conscience" about that affair, she told reporters on Wednesday after her announcement.
Lagarde gained fresh endorsements on Wednesday, with the head of the European Commission Jose Manual Barroso saying he fully supported her decision.
EU Economic Affairs Commissioner Olli Rehn said that "Christine Lagarde is without doubt a figure who carries weight on the international stage," in remarks to French business daily Les Echos.
"Her reputation has grown further in recent months through her skill in managing the debt crisis in Europe and her good management of the French presidency of the G20" grouping of big economies, he added.
A French prosecutor called this month for a probe targeting Lagarde in connection with her handling of a high-profile scandal involving tycoon Bernard Tapie, amid allegations that she exceeded her authority in the case.
Lagarde has cut an impressive figure as the first female finance minister of a G7 power, earning a reputation for grace under fire during the global economic crisis.
The IMF's former chief economist Kenneth Rogoff told the New York Times Lagarde was so popular at finance meetings that she was "treated practically like a rock star."
Lagarde has received the backing of Germany, Britain and other European countries to take over as managing director of the International Monetary Fund, a global lender with a key role in calming the effects of the financial crisis on public finances in Europe.
The IMF's former head, Frenchman Dominique Strauss-Kahn, resigned last week after his arrest in New York on sexual assault charges.
The post is traditionally held by a European, but emerging economies complain that the post should be opened up to their candidates.
IMF directors from Brazil, Russia, India, China and South Africa -- the so-called BRICS economies -- said Europe's longstanding exclusive deal to lead the IMF "undermines the legitimacy of the Fund."
"We are concerned with public statements made recently by high-level European officials to the effect that the position of managing director should continue to be occupied by a European," they said in a declaration.
The 2008-2009 financial crisis in the United States and Europe showed the need to reform institutions like the IMF "to reflect the growing role of developing countries in the world economy," they added.
NEW YORK (Reuters) – Stock index futures pointed to a weak start for Wall Street on Wednesday, following a late sell-off in the previous session, with futures for the S&P 500, for the Dow Jones industrial average and the Nasdaq down 0.1 to 0.3 percent by 5:06 a.m. EDT.
Equities on Wall Street slipped in light volume on Tuesday on growing concerns over slower economic growth and worries about the euro zone debt crisis.
The S&P 500 closed at its lowest level in over a month and ended below its 50-day moving average for a second straight day.
Recent weak economic data, including soft manufacturing data from the Atlantic region and disappointing New York and Philadelphia Fed manufacturing surveys, pointed to a slowdown in the pace of economic growth.
Investors are likely to look for further evidence when U.S. durable goods orders for April is released at 8:30 a.m. EDT.
Durable goods orders are expected to have dropped 2.2 percent in April, a sharp correction from the gain of 4.1 percent the month before weighed down by weak aircraft orders.
Other data due includes home price numbers due at 10 a.m. EDT.
On the earnings front, Costco Wholesale Corp (COST.O) posted a higher quarterly profit as it sold more gasoline and got a boost from stronger foreign currencies.
Other quarterly earnings set for release include Computer Sciences Corp (CSC.N), seen reporting earnings per share (EPS) of $1.11 against $1.66 a year ago, and Polo Ralph Lauren (RL.N), seen reporting EPS of $0.79 against $1.14 a year ago.
The U.S. Treasury made a small profit when it sold a portion of its shares in American International Group Inc (AIG.N) on Tuesday, but it was unclear how its investment in the beleaguered insurer will ultimately fare. The shares were sold at $29 a piece.
U.S. regulators launched one of the biggest ever crackdowns on oil price manipulation on Tuesday, suing two well-known traders and two trading firms owned by Norwegian billionaire John Fredriksen for allegedly making $50 million by squeezing markets in 2008.
GE Capital (GE.N) is selling its A$5 billion ($5.3 billion) Australia and New Zealand mortgages books to Pepper Homeloans as concerns rise over a softening of the Australian housing market and rising cost of funds.
Chrysler on Tuesday paid back $7.6 billion in U.S. and Canadian government loans from its 2009 bailout, a move that allows the U.S. automaker to distance itself from an unpopular bailout and deepen its ties with Fiat (FIA.MI)
On the economic front, the OECD said global economic recovery is on track, helped by a stronger United States, but threats ranging from high oil prices to European sovereign debt crises could yet combine to create a bout of stagflation.
France's finance minister is set to declare on Wednesday she wants to be the next head of the IMF even though big emerging economies have decried Europe's "obsolete" grip on the top job.
In Europe, the pan-European FTSEurofirst 300 (.FTEU3) index of top shares edged up 0.1 percent, rebounding from falls at the open, investors bought beaten-down banking stocks.
(Editing by Louise Heavens)
WASHINGTON (Reuters) – The Federal Reserve should begin to hike interest rates in coming months, the Organization for Economic Cooperation and Development said on Wednesday, as it raised its outlook for U.S. economic growth.
In its semi-annual forecast, the OECD said it sees U.S. economic growth of 2.6 percent in 2011, up from its forecast last November for growth of just 2.2 percent.
The outlook, however, is much lower than the Fed's own "central tendency" estimates, which as of April 27 pegged growth for this year in the 3.1 percent to 3.3 percent range.
Despite what it sees as significant potential downside risks to expansion from higher energy and commodity prices, the OECD recommends the Fed begin slowly withdrawing some of its extraordinary aid to the economy as 2011 progresses.
"A modest reduction in monetary stimulus should get under way in the second half of this year," the OECD said in its report.
Alan Detmeister, the OECD Economics Department's U.S. desk officer, said in a press briefing the Fed should raise its benchmark federal funds rate to 1 percent from the current zero to 0.25 percent range before the end of the year.
Continued high levels of unemployment are not enough of a reason to keep rates at rock-bottom lows, the OECD said, since low rates raise the risk of future bubbles or inflationary shocks. The group predicts the U.S. jobless rate, currently at 9 percent, will remain close to 8 percent for much of 2012.
"At present there is little sign that continued extraordinarily loose monetary policy settings have increased inflation expectations more than a small amount or are resulting in another asset price bubble," the OECD added, citing oil and other commodities as a "possible exception."
The OECD expects the trend of subdued inflation to continue for the foreseeable future, predicting U.S. consumer price inflation of 1.9 percent for this year and just 1.3 percent next year -- well beneath the Fed's implicit target of 2 percent or a bit below.
The Fed looks set to complete its $600 billion bond-buying program aimed at keeping long-term rates down in June, as scheduled. Its balance sheet now stands at a record $2.74 trillion, but a large amount of bank reserves remain parked at the Fed rather than being lent out to businesses.
A LITTLE TOO LOOSE?
Still, the OECD's call for rate hikes, potentially controversial given a still-fragile U.S. recovery, appears to be based on the presumption that rates are so far below their normal levels that the tightening process must begin soon.
Detmeister believes a "neutral" U.S. benchmark rate that neither retards or stimulates growth should be around 4.5 percent.
"Tightening somewhat now would reduce the need for steeper, and potentially disruptive, increases in interest rates later," the OECD said.
At the same time, the group said long-term unemployment presents a dangerous challenge for the United States, since it risks becoming self-reinforcing and reducing the productivity of the labor force over time.
Just under half of the 13.7 million jobless Americans have been out of work for six months or longer, the highest ever.
The OECD noted that countries such as Germany and Japan, where firms were either reluctant to lay off workers or were able to reduce their hours through workshare arrangements, fared better than countries without such programs in place.
"The ability of these countries to cushion the employment impact of the crisis may offer lessons that could help improve labor market resilience to future shocks," the report said.
(Reporting by Pedro Nicolaci da Costa; Editing by Leslie Adler)