THE HAGUE, Netherlands (AP) — Australia is urging the United Nations' highest court to ban Japan's annual whale hunt.
Lawyers for Australia will argue at the International Court of Justice on Wednesday that Japan harpoons minke whales each year in the icy waters around Antarctica in breach of a 1986 moratorium on commercial whaling.
Japan will respond next week by telling judges that the hunt is for scientific research and is allowed under the 1946 International Convention for the Regulation of Whaling.
Opponents say the program is a guise for keeping Japan's dwindling whaling industry alive because the whale meat from the hunt is sold for consumption.
The court will take months to issue a final and binding decision.
BERLIN (Reuters) - Morale among German consumers rose to its highest level in almost six years heading into July thanks to a robust labor market and strong wage hikes, adding to signs that Europe's largest economy is slowly recovering after a weak start to 2013.
GfK market research group said on Wednesday its forward-looking consumer sentiment indicator, based on a survey of around 2,000 Germans, climbed to 6.8 going into July - its highest level since September 2007 - from 6.5 in June.
That was well above the consensus forecast in a Reuters poll of economists for a reading of 6.5 and beat even the highest estimate for a reading of 6.7.
The improvement will be welcome news for the government, which is relying on domestic demand to prop up growth this year as foreign trade, the economy's traditional growth driver, suffers from the euro zone crisis and a slowdown in China.
It should also offer some hope to struggling euro zone states which are seeking to offload more of their goods on wealthy Germans as they seek to rebalance trade with Germany.
"Optimism appears to be unbroken," said Rolf Buerkl, a researcher for Nuremberg-based GfK.
"The income outlook of Germans has improved further from an already high level on account of the stable employment situation and good collective bargaining agreements, which have also benefited economic expectations," he added.
German workers have secured hefty wage hikes of up to 6.6 percent this year. That, combined with moderate inflation, has boosted shoppers' purchasing power at a time when the paltry interest rates being offered by banks give no incentive to save.
The survey nonetheless showed Germans' willingness to buy dipped in June, though GfK stressed that it remained at a high level overall.
GfK said the stable labor market and strong wage deals were giving Germans the planning security they needed to splash out on big-ticket items like property, especially because they were currently able to take out loans and mortgages on good terms.
Household spending was the German economy's saving grace in the first three months of this year, managing to bring Europe's growth engine back from the brink of recession after it shrunk in late 2012 due to weak investments and slow foreign trade.
GfK reiterated its prediction that private consumption, which makes up nearly 60 percent of German gross domestic product (GDP), would rise by about 1 percent in real terms this year as long as the euro zone crisis does not worsen.
For a third straight month Germans expected their incomes to rise as the unemployment rate remains near a post-reunification low in stark contrast to euro zone peers like Greece and Spain where around one in four are out of work.
Consumers also expected their economy to slowly regain momentum, though a sluggish global economy and the lingering recession in many euro zone states is seen stopping it from recovering faster.
Other recent data has pointed to the German economy is gradually regaining traction, with business and investor sentiment improving, foreign trade and output increasing and the private sector expanding slightly, though industrial orders have slumped and unemployment has edged up.
The economy has not become a major election issue ahead of a national vote on September 22 and is unlikely to if consumer morale remains strong so the GfK survey bodes well for German Chancellor Angela Merkel as she seeks a third term in office.
Data due out later this week is expected to show retail sales increased slightly on the month in May.
(Reporting by Michelle Martin; editing by Ron Askew)
LONDON (Reuters) - June's global markets quake suggests little positive in a rising interest rate environment but the flip side is significant relief for pension funds that may itself may provide a stabilizing mechanism into the bargain.
Bonds, equities and emerging markets have all lunged violently since the U.S. Federal Reserve last month started signaling a timeline for a reduction in its latest bond-buying program, in what some see as the beginning of the end of its four-year-old policy of quantitative easing.
Hyper-sensitive to a big turning point in the U.S. monetary policy cycle, benchmark 10-year Treasury yields have jumped up to a full percentage point - to more than 2.5 percent - since the first week in May - pushing up long-term interest rates across the globe and puncturing buoyant world equity.
This, of course, could be an overreaction by short-term markets. With little change of economic information and only minor tweaks to policy guidance, they have lurched within weeks from the euphoria of endlessly cheap money to conjuring up the gloom of ever-spiraling interest rates.
Policymakers themselves seem to think so. Bank of England Governor Mervyn King said on Tuesday investors had "jumped the gun". Dallas Fed chief Richard Fisher was blunter on Monday in referring to markets as "feral hogs" and "manic-depressive mechanisms."
But on a more measured view there is a positive side to at least normalizing interest rate levels, if not higher borrowing costs per se.
The most obvious is the one highlighted by Fed chief Ben Bernanke himself. "If interest rates go up for the right reasons — that is, both optimism about the economy and an accurate assessment of monetary policy — that's a good thing."
And if the monetary policy pullback is indeed commensurate with economic recovery, then equities could well resume their rise alongside higher interest rates and have done historically.
Yet a much more direct positive from higher interest rates, however comes via the impact on savers - and final salary pension funds in particular where average liabilities have in recent years been far higher than the assets in those funds.
"We may find everyone's going around with glum faces except pension schemes," said Kevin Wesbroom, senior partner at pensions consultant Aon Hewitt.
CLOSING THE GAP
According to JPMorgan, the bond selloff to the end of May alone pushed the accounting deficits of U.S. and UK "defined benefit" or final salary pension funds to their lowest since 2011. The subsequent rise in yields this month - another 40 basis points on 10-year Treasuries for example - will have helped further, outweighing the drop in equities.
And crucially, assuming asset prices such as equities hold steady from here, they reckoned defined benefit deficits would again be fully covered with a further increase of about 80-90 basis point in yields in the UK and slightly less in the U.S..
As defined benefit pension fund liabilities to pensioners and prospective retirees are pre-determined and bond-like, the discount rate used to calculate them is the yield on top-rated corporate bonds - which have also risen about 80 basis points since early May.
And so extraordinarily low yields have not only depressed returns on asset returns of bond-heavy funds, they also lead to a bigger liability calculation as the pension funds are deemed to need even more assets to pay retirees - leaving companies sponsoring the schemes to stump up more cash for the pot.
So the bounceback in bond yields is a big relief.
Aon Hewitt calculates that the cumulative deficit of the UK's FTSE 350 company pension schemes fell from 86 billion pounds ($132 billion) on May 2 to 65 billion pounds on Friday.
More dramatically, it calculated cost to these sponsoring companies of offloading their pension liabilities to insurance companies or banks - a costing that uses government rather than corporate bond yields as reference - has fallen by about 100 billion pounds to 320 billion over that same period.
The additional silver lining for the marketplace overall is that the yield shift may also see subsequent pension fund behavior act as a stabilising force in any further market turbulence.
As yields rise, the more nimble pension funds - who remain innately risk averse into peak retirement periods over the next 10 years amid considerable regulatory and sponsor pressure to better match their liabilities - will likely buy even more bonds to quickly lock into higher long-term rates.
"We've had a pent up demand for de-risk for an awful long time," said Wesbroom at Aon Hewitt.
"Rather than the 'Great Rotation' from bonds to equities, we could well see pension funds do a 'contra rotation'."
(Additional reporting by Natsuko Waki. Editing by Jeremy Gaunt)