On the 28th of February, the Dollar went one step lower to reach a record low against the Euro. The dollar has been doing very badly in the recent past against the euro. On Thursday it came down a bit too low to make a record. The reason for the decline in dollar value on the 28th was because of some of the depressing economic reports about the US economy that came out. Another reason for the drop in dollar value is because of the wide spread belief that the Federal Reserve is going to keep cutting the interest rates.

The Euro during the day hit a sequence of highs of which $1.5087 was the highest. The Euro finally settled at $1.5059 when trade closed in the evening. The value of Euro on Tuesday in the late trading session in New York was $1.4967. The dollar also took a fall against the Japanese Yen. It fell from 107.26 yen to 106.07 yen by the end of trade on the 28th of February.

The effect the low of dollar is going to create is rather harsh on the Americans who will be visiting the European continent. The rising value of pound along with the euro is going to mean that the Americans will find it very difficult indeed. They would end up paying a lot more than what they are used to paying during their stay in Europe.

On the contrary the high value of Euro against the dollar would mean good news for the Europeans. They would be able to buy more than what they would have usually done so because of the high value. Another positive thing for the Europeans about the euro gaining more value against the dollar is that the goods that are coming from the continent would become more expensive for the customers who are living outside it. This would then hack into the manufacturer’s profit if they try to keep the price of products at a constant level as that of US Dollar.

This prompted the budget minister of France to call the Euro a ‘handicap for their exports’. The strength of the euro is not expected to create any lasting impact on the German economy as per the words of the chief economist of Germany’s Chamber of Commerce.

Many economists in the continent feel that the Euro is not going to lose value anytime soon. The main reason that is attributed for this is because of the worsening in the American interest rate differentials. This in the process would then take out an important support for the US dollar. Over that the possibilities of many other countries switching a part of their foreign currency reserves out of the US dollars in some time is very high.

Since the US economy is trying to keep a recession out of the country by any means the fears of inflation are very high in the country. All this put together hints that the US economy is not going to recover anytime soon. This would also mean that the US dollar is going to stay in a weak position for quite a while.

Tags: Exchange Rates News, European Economy News by Michael Greene
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On the 28 of February, the chairman of the largest bank in Switzerland had to face the demand of majority of the shareholders in the bank for his resignation. The angry shareholders were asking for his resignation as a result of him admitting some of the mistakes the bank had made as a result of the sub prime crisis. The demands for his resignations were made when his controversial SFr13bn (£6.1 billion) fund raising got the approval from most of the investors during a specially called meeting.

During the specially convened meeting the bank’s chairman announced that the ongoing sub prime crisis in the US market had caused him to go through a lot of stress and that the bank during this period of time had made some mistakes. While facing an audience of almost 6,500 shareholders in the city of Basel Marcel Ospel admitted that the largest money lender in Switzerland had not been doing too good in the recent past. He said that it was a result of the economic turbulences that were happening in the country of USA.

He acknowledged the fact that the bank had been completely unable to recognize the signs that were coming from the US housing market at the right time. The fact that UBS was a very cautious and careful bank, which was even averse to risky banking, makes the situation even more depressing. He admitted that the bank had faltered in reading the signs well. However he waived off the cries for his resignation by saying that he would not go away until he had brought UBS back into the path of success.

UBS till date was one of the worst affected banks in Europe as a result of the credit crunch in the USA. Through a series of declaration, the bank has been forced to get $18 billion (£9.1 billion) of fees. This was because the investment bank suffered a lot of losses trying to compete with the rivals on Wall Street in many fast credit markets which collapsed almost completely last summer. This was a major blow to the bank and resulted in UBS having to declare a loss for the year 2007. This was the first time the bank reported a loss since it was formulated almost 10 years ago.

As if to make thing worse, the bank took another blow when HSH Nordbank, a lender in Germany claimed for losses from UBS. The claim was on $500 million of guaranteed debt obligations that the German lender says UBS abandoned on them just before the markets crashed.

Now the bank is trying to raise a huge capitol to enhance its capital position and to retain the big rich clients it had always had. The plan however has not pleased many investors as the move would mean they will have a portion of their stock diluted. Whatever the move is going to be, it is going to create a lot of tension amongst the shareholders of the company.

Tags: European Stocks & Shares News, European Economy News by Michael Greene
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On the 29th of February it was confirmed that the economic sentiment in the Euro zone has deteriorated a lot more than what was forecasted for the month of February. But inflation has remained at the forecasted level itself although many economic data suggests that energy and food costs triggered a record shoot up in the month of January.

The monthly economic survey conducted by the European Commission on the monthly economic sentiment showed that the sentiment had fallen by 1.6 to reach 100.1 in the month of February from 101.7 in the month of January. This fall was a lot bigger drop than what the economists were expecting. The leading analysts that had forecasted for the month of February predicted the sentiment to drop to 101.2 and not less than that.

The reason behind the massive drop in sentiment is because of the ever decreasing optimism that exists in the Euro zone’s service segment. This sector accounts for generating more than 65 percent of the 15-member region’s gross domestic product.

When the consumer optimism remained at the same state, the construction and industry sentiment took a fall. The fact that the economy is not doing well is reflected from the fact that the only sector which showed an improvement in the sentiment was the retail sector.

The survey conducted by the European Commission however showed that the people’s expectation of inflation had remained unchanged. This is a closely watched indicator by the European Central Bank. This is the fourth month for which the expectations of inflation have remained unchanged. In the last 4 months the expectation has remained at a steady 28 points. Even though the expectation has remained stable, it is still more than the long term average, which is 23 points.

The expected selling price among businesses also remained unchanged at 14 points according to the Commission’s survey. The European Central Bank recently said that cementing inflation expectations was very essential to control the growth in price after it had taken off in the closing months of the previous year. The ECB in its recent announcement had said that it wanted the inflation to be not more than 2 percent.

On the 29th of February the European Union’s information office said that the prices in the Euro zone had fallen by 0.4 percent in the month of January as compared to the month of December. The year-on-year rise was by 3.2 percent. This was a confirmation of the previous annual predictions and other market expectations.

This annual gain was essentially due to energy prices which just shot up in the year. It had gone up by an incredible 10.6 percent. This rise was as expected by the economists.

Measuring the nucleus inflation helps the European Central Bank to determine how much the increase in the volatile apparatus influences the prices of other items in other sectors. Another thing the ECB has been trying to achieve was to get the wages to develop more than productivity. But since the unemployment in the euro zone is at a record low this is something that does not seem to happen anytime in the future.

Tags: European Economy News by Vanessa Clark
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The job market of Germany seems to be heating up because the unemployment rate in the country slid down to lowest in February this year since November 1992. Pleasant weather and worldwide demand in cars and machinery forced companies to increase their number of workers. The Federal Labor Agency in Nuremberg said that the unemployment rate managed for the seasonal fluctuations declined to 8% from its earlier 8.1 percent in January. This unemployment rate for Germany is the lowest since November 1992 and it also confirms to be the average forecast of about thirty eight estimates carried out by Bloomberg News survey.

The managed number of individuals who did not have jobs dropped by 75,000 to 3.34 million. Strong exports and national investment are supporting payroll growth in the German economy which is the biggest economy of Europe and it managed to achieve this drop in unemployment in the face of sluggish economic growth worldwide, highest oil prices in the international market as well as the robust value of the euro. There was also a surprise rise in investor confidence and business sentiment. As per the German weather service the month of February was strangely warmer and dry. Federal Labor Agency’s president Frank-Juergen Weise also confirmed that the unusually pleasant weather helped in the drop of unemployment in the country.

The president during the television interview also said that the demand in the country is steadying at a great level with small and mid sized companies hiring workers and the companies are mostly involved in machine making. The rate of hiring workers is greater than the rate in job cuts he further added. A soft winter is helping construction companies to keep people and this is strengthening the dropping unemployment rate in the country. According to meteorologist at the Offenbach-based weather service DWD, Andreas Friedrich, at 3.6 degrees Celsius the standard temperature for February was 3.3 degrees greater than the long term average temperature in the country. The world’s biggest car component manufacturer, Robert Bosch GmbH, is in need of filling up 1,500 jobs for the current year according to Andreas Kempf, the spokesman for the company; the new jobs will be an addition to the 1,800 new workers hired in the last year by the company. The spokesman further elaborated that there is no sign of export orders stopping.

Rising employment for the people means enhancement in consumption which is the greatest part of the German economy. The disposable incomes of households grew by one percent for the fourth quarter according to the statistics office. There is also an improvement in retailer sentiment the Ifo index confirmed. As per the Bloomberg purchasing managers’ index retail sales in Germany grew for the first time in five months in February this year which is also helped by pleasant weather conditions. Given this encouraging development the highest $1.5144 per euro drop of the dollar is making the German goods less aggressive outside Europe. Fuel prices have risen to over $100 a barrel and it is restricting companies and a person from spending and it is also feeding inflation.

Tags: European Economy News by Michael Greene
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Deutsche Telekom AG recorded a slight loss for the fourth quarter on Thursday; the company said that its business was now getting steadier after it went through drops for many quarters owing to a great loss from fixed line of customers. Rene Obermann, the Chief Executive Officer of the company said in a press conference when the figures were announced that the year 2007 for the company was pretty challenging but still it was the most successful year for the company. The CEO further added that the current year is without doubt not a bed of roses; as competition has become even more dynamic but the company has significantly enhanced its competitive capacity in 2007 and this is what has strengthened the company for the new year.

The Bonn head quartered Deutsche Telekom had suffered losses of about 757 million euros that is $1.1 billion in October-December last year which is quite small when compared against its earlier year loss of about 898 million euros. Sales for the company had dropped to 15.8 billion euros or $23.7 billion from 15.9 billion euros a year earlier. The company further added that except for a big charge of cutting down its employee strength it has an adjusted profit of about 808 million euros that is $1.2 billion in the fourth quarter. This profit of the company for the fourth quarter was lower than 2% than the profits it earned in the earlier year which was about 824 million euros, however the current fourth quarter profit of the company was quite high than the 609 million euros or $916.2 million which analysts surveyed by Dow Jones had estimated to stand at for the fourth quarter. The adjusted profits of the company exclude the expenditure of about 1.4 billion euros that is $2.1 billion it made on cutting down the work force and in payments that went towards early retirement compensations.

In trading at Frankfurt the Deutsche Telekom shares dropped by 2.9% to 12.54 euros or $18.87. Deutsche Telekom is also planning to shed 32,000 jobs as it is trying to reshuffle its facilities so that it can efficiently fight with its competitors not only within Europe but also in the United States and other parts of the world. The net profit for Deutsche Telekom for the entire year 2007 declined to 569 million euros or $856 million from its earlier 3.2 billion euros in 2006. The drop according to the company is because of the income tax hike. In 2007 the sales for the company climbed by 1.9% to 62.5 billion euros or $94 billion from 61.3 billion euros in 2006. The mobile communications operations of the company were largely the driving force behind the annual sales growth.

The company also said that in Germany T mobile had as many as 962,000 new customers which brought the company’s total customer base in Germany to about 36 million. Given this customer base the company said that earnings from the mobile subscribers in Germany dropped to 2.7% which is 8 billion euros or $12 billion in the last year.

Tags: European Economy News by James Gardner
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The European Commission has punished American software giant Microsoft and has ordered the company to pay a staggering amount of 899 million euros, that is about $1.35 billion on Wednesday this week. The fine was imposed as the company did not follow the sanctions imposed on it for the antitrust breach and the latest fine for the company goes far beyond the original fine imposed on Microsoft. The executive body of the European Union, the European Commission has now penalized Microsoft to the tune of 1.68 million euros for the company’s original breach as well as for not observing the sanctions. The fine by the EU for Microsoft is greater than any other company ever had to bear.

The European Commission has also added that Microsoft was the only company that overlooked the sanctions and every other firm complied with the sanctions. Neelie Kroes, the competition commissioner said in a statement that in the fifty years of the EU competition policy Microsoft was the only company which the European Commission had to penalize for not complying with the antitrust judgment. A statement issued by Microsoft said that the fines ordered by the commission were in relation to past issues and it now looks to the future.

In a 2004 milestone judgment, which was also sustained by the EU court last year, the European Commission had said that Microsoft had denied the required information about interoperability to its rival manufacturer of the work group server software. The work group server software runs printers and sign-on for the small office groups and it must work together with the desktop Windows machine. The commission came to know that Microsoft withheld the important interoperability codes to competitors because of which the market shares of the firms shrunk in value whereas the product of Microsoft gained in the market. Microsoft was told to share the information and it also promised to share the information but put in place great royalties citing innovation.

The commission instead came to know that the information Microsoft was withholding did not have any great innovation and it was more of a lock to the combination for which the company was not sharing. The commission also ruled that that the royalties Microsoft wanted were quite disproportionate. Neelie Kroes, the competition commissioner hoped that this ruling of the EU will close the gloomy phase in Microsoft’s history of nonconformity with the European Commission’s judgment of March 2004.

Microsoft has had a record of penalties by the EU, and in 2004 Microsoft was fined e497 million and it again was fined in 2006 for not complying with sanctions to the tune of e280.5 million. And the fresh fine for Microsoft relates to the fine which was imposed in 2006 and the fine is for the period extending from June 21, 2006 until October 21, 2007 following which the company promised to cut down the royalties and share the vital information. In the last week when Microsoft felt that there is going to be the possibility of a huge fine, it came with a public promise that it would publish the vital information so that competitor programs work with windows.

Tags: European Union News by Vanessa Clark
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Finance Ministers from the European Union are likely to caution Latvia to bring down its expenditure and also to trim down the inflation to prevent getting into an “abrupt slowdown”. The information is based on the European Union’s Economic and Finance Affairs Committee’s draft document. The government of Latvia is relying on decelerating consumer demand so that the rate of growth can be brought down to 6.8% by the year 2010. The efforts of the Latvian government came in the wake of warnings issued by the economists as well as by credit rating agencies that said that the economy risks overheating.

The draft document of the EU’s Economic and Finance Affairs Committee was created for a meeting between the finance ministers of the European Union scheduled on the 4th of March. The draft document pointed out that the inflation in the Baltic country of Latvia speedily grew to as much as 15.8% in January this year which was the fastest inflation in the European Union. Further according to this draft document there will be an addition to the quickest inflation, the problem of sluggishness in the lending of banks as well as the declining property prices which endangers household expenditure greater than the government expected, the draft document further cautioned.

The EU draft document adding further says that the Latvian government’s economic situation is also accompanied with greater dangers to its macroeconomic constancy which also includes economic overheating along with a significant danger of an “abrupt slowdown” at a later point. Latvia, the former Soviet Republic experienced an economic growth of a record 13.1 percent in the first quarter of 2006, which generated fears of the economy getting overheated. In the next year that is in 2007 the gross domestic product or the GDP of the country increased by 11.2%, dropping to 9.6% for the fourth quarter. Credit judges as well as banks, which also included Goldman Sachs and also Standard and Poor’s have warned that Latvia runs even a greater risk of a severe slowdown.

The executive body of the of 27-nation union, the European Commission notified the potential risk to Latvia that its economy may have to suffer a “hard landing” on February 13. The European Commission further added that evidence of some slowdown is noticeable in Latvia’s housing market as well as in its domestic consumption however such slowdowns in the economy are not enough to eliminate the negative aspect of a hard landing for the economy. The finance ministry of Latvia declared that it managed to talk into the member states of the EU to take to milder economic jargon in its draft document during the EU finance ministers’ meeting in Brussels on March. 4. As per the request of the Latvian finance ministry, changes have been made in the draft document and the wording “hard landing” has been dropped for a “much softer variant,” spokeswoman for the Latvian Finance Ministry, Daiga Reihmane confirmed.

Tags: European Economy News by James Gardner
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The Eurozone business borrowing registered a record growth rate in January this year and this adds to the evidence that the fifteen-country Eurozone is preventing any credit shortage following the financial chaos all over the world. The percentage of lending to non-financial agencies at a yearly rate of 14.6% in January was the greatest since the introduction of the euro in 1999 and this data is as per the European Central Bank (ECB). The rate for the same in December of the previous year was 14.5%. Following the unexpected surge in the German business confidence the fresh figures may let the European Central Bank’s reluctance to cut interest rates grow even stronger and this even if the euro has moved beyond $1.50 for the first time.

There is a surprise rise in business borrowing even if there is enough proof that the banks have intensified their credit limits. And this seems to indicate that the eurozone companies were not restricting their plans for investment or expansion even if there is a gloomy US prospect. The Vice President of the European Central Bank Lucas Papademos, while speaking in New York expressed that the latest indications seem to suggest that the effect on the eurozone economy due to the turmoil in the financial market will not be great in proportion. The Vice President further added that there were no indications which suggested a credit shortage or even a slowing down in the rate of loan credit growth to the private sector. On the contrary, the Vice President said that, the rate of loan credit growth to the private sector has been quite strong especially the speed of credit expansion in non-financial institutions.

Mr. Papademos further said that the restricted credit limits put in force by the banks has happened from quite a lose level and it also has not considerably restricted the accessibility of credit. Economic analysts are of the opinion that the great growth in lending figures can be the sign of the difficulty banks have experienced to shift loans off their books. However the European Central Bank led by President Jean-Claude Trichet has out rightly rejected this as a factor. The ECB has maintained its main policy rate at 4% from June last year. Unicredit’s Marco Kramer, in Munich told that uncertainties and doubts regarding credit shortage or a drop in credit demand are mostly blown out of proportion and they are just a part of the explanation by the ECB President. He further said that he expected the first cut in the benchmark rate to come towards the end of the second quarter.

The ECB is expected to conduct the meeting for fixing the interest rates in the next week and is happy about the moderate slowdown in the housing markets of eurozone. The fresh data indicated slower rate of mortgage lending which had increased at a yearly rate of 6.9% in January which is a drop from its earlier 7.1% in December last year.

Tags: European Economy News by Vanessa Clark
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EasyJet Plc is the second largest low cost airline of Europe which has to do a tight rope walk in the face of rising fuel prices in the market. According to Andy Harrison, the Chief Executive officer of EasyJet the low cost air carrier is under pressure which has prompted the company to purchase contracts for jet fuel at great prices for the next year. The CEO said that if the fuel prices maintain their current price levels it will cause a great stress on almost all airlines during an interview on Wednesday. He further said that the company at present is hedging for the next year but the price it has to pay is much higher.

The single largest cost for EasyJet is fuel and oil which has been over $100 a barrel over the five of last seven days at the Mercantile Exchange in New York. EasyJet is planning a 20% increase in its pretax profit for the financial year from September 30 and it is 40 percent hedged at about $735 a metric ton of jet fuel when evaluated against its last year’s average of $688. The CEO, Harrison while speaking at the company’s base at London Luton airport said that EasyJet is striving hard on its non fuel expenditure, he further said that it is difficult to immediately come up with new ways of cost cutting when the fuel prices rise. The company plans a 50% hedge which means that the airline will purchase contracts which promise a constant fuel price on a regular twelve month basis, the CEO further explained. This strategy of the company according to the CEO is safer and better than guessing about the direction the oil prices will take to.

The CEO also added that the aim of the company is not to have an outlook of the market and said that the company will be purchasing 1.3 million metric tons of jet fuel for the current year. The strategy of hedging is in place to ensure that there is a cushioning against the volatility of the oil prices in the market. In the stock market the shares of EasyJet also recorded a drop as they declined by 2.8% or by 12.5 pence to 442.5% and this was the share’s greatest decline in 20 days.

The shares of EasyJet were the most unsuccessful shares on the Bloomberg Airlines Index for the day. The net worth of EasyJet is about 1.86 billion pounds or $3.7 billion. In the last 12 months the stocks dropped by 33% as against the 26% decline on the European airlines index. The largest low cost airline of Europe, Ryanair Holdings Plc jumped by 49% at the market. An analyst with Ryanair Holdings Plc Chris Avery said that many of the published forecasts for the airlines do not state a barrel of oil at $95 to $100 and the fallout can be financially bad for many carriers. EasyJet CEO Harrison also pointed out that each ten dollar rise for the oil barrel results in 60 million pounds or $119 million in the operating costs of the airlines.

Tags: European Economy News by Michael Greene
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The central bank of Slovakia maintained its benchmark rates for the tenth consecutive month so that inflation can be kept to its minimum which in turn will let Slovakia embrace the euro in the next year. The Vice Governor of the central bank Viliam Ostrozlik after a meeting in Bratislava, Slovakia, told reporters that the policy makers will be maintaining the two week repurchase rate at 4.25%. The bank’s decision to maintain the rates was expected by the thirteen economists whom Bloomberg had surveyed. The pressure on Slovakia to control its inflation is great because it is going to adopt the euro currency in 2009 after Slovenia, which was the first communist nation to take to the euro.

Economists are of the opinion that even price growth has increased its speed and has been tamed by the improving currency and the growth is also not that fast so that increase in rates can be justified. The central bank also has to manage borrowing overheads to the euro zone. The economist with Slovenska Sporitelna AS in Bratislava, Maria Valachyova says that monetary conditions are being made restrictive by the strengthening of Koruna and the restrictive monetary conditions will assist in fighting the risks of inflation. The economists further held that the Slovak central bank will be maintaining the rates unless the EU decides about the euro-adoption bid.

The Koruna traded against the euro at 32.765. Koruna’s gain this year is about 2.5% based on the expectations that Slovakia will appreciate the central rate by which Koruna is attached to the euro. Peter Sevcovic, the board member said that the Koruna’s latest temporary volatility will have little effect on the inflation. The credentials needed for countries to switch to the euro state that nations must maintain their 12-month standard yearly inflation rates within 1.5% points of the standard of the three European Union nations with the most sluggish growth of price.

Although growing prices of food and energy pressed the rate of inflation to 3.8% in January which was the highest in thirteen months, the standard price growth is going to stay down in the European Union’s standards. The governor also said that the highest economic growth of 14.1% for the fourth quarter does not indicate demand pressures in the economy. The Governor of the central bank of Slovakia Viliam Ostrozlik further added that that development of the economy is in accordance with the expectations of the bank and there is no need to make any changes in the monetary policy. If the EU accepts Slovakia’s currency switchover bid in the current year the central bank will have to meet its interest rates with that of the euro regions zones. As per the average estimate of twenty four economists, Bloomberg surveyed the European Central Bank which is likely to bring down its standard two-week rate by half-a-point for the current year from its 4%. The improving prospect earlier this year made the National Bank of Slovakia to cut its standard rate by half a point.

Tags: Interest Rates News by Michael Greene
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The Munich based Siemens which is the biggest engineering and technology company will be cutting as much as 3,800 jobs all over the world following its failure to attract a buyer for its unit called Siemens Enterprise Communications or SEN. The company confirmed the announcement of the job cuts on Tuesday at its Munich HQ. The proposed job cuts of Siemens in Germany alone will be 2,000. In addition to this job cut the company is also planning to cut down on its 3,000 workers in two ways, it will either sell its factories or can also enter into partnerships with companies. Among these proposed cuts, job cuts in Germany are expected to be 1,200. Siemens seems to be reshuffling the communications division so that it can woo a buyer and also avoid the repetition that afflicted its mobile unit.

By the time Siemens sold the unit to Benq of Taipei in 2006 it was suffering losses amounting to €1 million every day. The Taiwanese company also had to suffer from bankruptcy after it bought the company which resulted in great layoffs. The company told that it will begin negotiations with the representatives of the employees very soon and would attempt to come up with a social plan for the workers who would be suffering from job cuts. Joe Kaeser, the chief financial officer of Siemens told in a statement that the company will speed up the reshuffling of Siemens Enterprise Communications and the other related reorganizing measures which are under Siemen’s control so that the personnel steps related to the reshuffling could be socially optimum. There are as many as 17,500 individuals who work for the SEN telecommunications unit. The SEN earlier was known as Siemens Enterprise Networks and Siemens had been trying to sell the unit for quite a long time now. The engineering and technology giant also said that it was talking to three potential buyers for the unit.

The unit’s Munich head quarters will be the worst sufferers by the job cuts and as many as 1,700 workers will be handed over their walking papers. Siemens said that SEN would let go of its manufacturing activities either by selling or getting a third party to operate its Leipzig factory which employs 530 workers. The company further added that it would also sell or get new partners to run its production units located in Thessaloniki, Greece and Curitiba, Brazil. A statement issued by the company said that there is also the possibility of closing down the facilities located in these regions. The savings program initiated by the company seemed to be approved by the German stock market on Tuesday because the shares of the company gained by 2% in the early trading hours. The corporate sector of Germany in 2006 witnessed the largest corruption scandal at Siemens which affected it badly. The corruption scandal of Siemens forced the Siemens CEO Klaus Kleinfeld to resign. Former Chairman Heinrich Von Pierer also had to put down his papers owing to the scandal.

Tags: European Economy News by James Gardner
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The highest court of Europe ruled that the right to market cheese under the name Parmesan should go to the Italians. The court also dismissed the German’s claim that they can use the same name for their own variations of cheese. The Parmesan cheese is used as a topping in pasta. European Court of Justice in Luxembourg held that only those varieties of cheeses which bear the protected designation of origin `Parmigiano Reggiano’ can be allowed to sell in the market bearing the name Parmesan.

This ruling by the highest court in Europe will help the European Union in its efforts to expand marketing security for food items that come from particular regions in Europe like Roquefort cheese and Prosciutto di Parma. The argument regarding the range of the supposed geographical indications has set the European Union against nations like Australia, Argentina, and the United States in the global trade discussions. Author of `Italian Cheese: A Guide to Its Discovery and Appreciation, Piero Sardo seemed very elated with this court ruling and said that is was a totally wonderful news and further added that this dispute has been going on without any result in site for as long as 12 years.

Paolo De Castro, the Italian Agriculture Minister expressed that with this ruling by the court thus the doubts and suspicions surrounding the name Parmesan are removed. De Castro offered a big piece of the debated cheese to reporters at the press conference in Rome and said that now in Europe consumers can find authentic Parmesan. However, he further added that outside the European Union the case is quite different and consumers run the risk of buying Parmesan which is not Parmesan at all. In Italy there are five hundred Parmesan producers who all are certified which the Consortium of Parmigiano-Reggiano Cheese represents. These certified parmesan producers firmly adhere to the 800 year old method of making the Parmesan cheese. In the last year the official sales figure of the Parmesan cheese had stood at 1.5 billion euros which is $2.2 billion and the 16% of the total Parmesan sold was in the form of exports.

Parmigiano Reggiano is secured as the geographical indication since 1996 in the twenty seven nation strong European Union. The protection means that the name can only be used for the cheese produced, grated and packaged in the regions surrounding the cities of Parma and Reggio in Italy. The executive agency of the European Union, the European Commission went to court against Germany when it did not punish the cheese makers who used the name and it also argued that that name was generic. The European Commission had said that Parmesan is the rendition of the protected phrase Parmigiano Reggiano. A Parmesan producer Paolo Carra coming from the nearby region of Mantova, Italy expressed that the name Parmesan should be protected because not only the consumers but also the producers are cheated. When consumers buy Parmesan which actually is not a Parmesan cheese, producers run the risk of losing customers who are not satisfied with the quality of the cheese.

Tags: European Union News by Vanessa Clark
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The Safilo Group SpA holds the distinction of being the world’s second biggest eyeglass frame maker climbed to its highest position in over seven weeks when the group announced that it anticipated significant growth in its dividends. The growth which Safilo registered was almost 16.8% and it grew by 34 cents, the stocks closed up at 10.8% at 2.23 euros in Milan. The fresh increase in the stocks is the highest since last month and with this increase the total market worth of the group stands at about 636 million euros or $943 million. Head of equities with Centrobanca in Milan Pio De Gregorio said that such levels of the stock are good-looking in the medium term especially for luxury items and the supplementary demand coming from Asia is a significant balancing element for the sluggish US and European demands.

Claudio Gottardi, the Co-Chief Executive Officer of the group during her interview in Milan expressed that the company wants to increase its dividends by as much as 36% which was also the company’s net profit increase last year. The Safilo group is improving the margins by reorganizing its methods of producing eyewear; the group is also focusing on the expansion of its retail activities by acquisitions and also having its own stores. The Co-Chief Executive further added that the company is waiting for the final figures and he also added that the group will be capable of presenting a significant raise for the current year’s dividend. Claudio Gottardi further added that the increase can be even a bit higher than the percentage growth in net income. The Co-CEO further added that that company expected flat sales for itself in the US for the current year. Sales for the Safilo group in Spain and Italy can decline but sales in the other European nations either improved or remained stable.

The net income for the Padua Italy based group increased by 36% to 51 million euros from 37.5 million euros in 2007. The company recorded revenue of 1.19 billion euros from its earlier 1.12 billion euros in 2006. The group also told that income before interest, taxes, depreciation and amortization can rise to 18% of the sales for 2008 which will be an increase from 15% recorded last year. Safilo and its competitor company Luxottica Group SpA are cashing in on demand for luxury items through signing agreements so that they can make eyeglass frames under license. For the Safilo group its net income comes from accords signed with companies like Gucci Group NV, Giorgio Armani SpA and LVMH Moet Hennessy Louis Vuitton SA.

The Safilo is also putting in investments in the brands owned by the group itself such as Carrera sunglasses. The group will be opening a factory in China in the current year and there will be old as well as new stores opened in Shanghai, Beijing and Hong Kong. However the retail expansion of the group will be done with its brand called Solstice sunglass.

Tags: European Economy News by Michael Greene
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The fear of globalization is not only haunting developing nations but also continents like Europe. However with the study of the European labor market the picture of Europe against the backdrop of globalization is quite encouraging. Globalization means increased trade and the burning issues like outsourcing and offshoring instead of job cuts can increase more jobs in the advanced economies such as in West Europe. The European Economic Advisory Group, which comprises of academics from Europe and the Ifo institute in Munich which organizes this group argued in favor of globalization and said that even if globalization means decline in the demand of particular skills but at the same time this phenomenon can clear the rigidities in labor market which destroy jobs. The result of the study by the group indicates that the positive outcomes of globalization far outnumber the negative aspects of globalization.

Even though the group’s statistical data is unfinished it does indicate that globalization will definitely result in long term increase in employment. The report also said that given the results of the study globalization instead of being a curse to employment in Western Europe can in fact be a blessing for the continent. However the thing to worry about according to the study of EEAG is that the gains secured from globalization are most likely to be unevenly distributed in the region. Individuals with higher skills and riches stand to benefit from globalization and individuals with lower skills can turn losers and will have to face tough competition foreign labors as well as immigrants. If nations profit from trade it will also have its side effects in the form of growing inequality.

The European Economic Advisory Group urged to the governments that they should not have policies which strive to maintain equality in employment and wages against the background of competition from abroad. The group also suggested that the government on the contrary should see that the profits gained from globalization are distributed fairly in their nations and the other responsibility which the governments must perform is to see that the sections of society which will otherwise lose in the wake of globalization get their share of the profits secured from globalization. The group was highly critical and even attacked German leadership’s policies that gave higher minimum wages which according to the group would tempt people to opt for unemployment. The higher benefits gained from unemployment will make unemployment attractive to people, the group also added. Instead of such policies the group recommends lessening the impact that would result for individuals who will be doing jobs which are no longer viable in rich nations.

The EEAG also recommends that leaderships should concentrate more on retraining schemes, and compensation for individuals who would be accepting new employment that offer lower wages, as well as support severance compensation for displaced employees. However some past economic studies have found that there is a definite link between loss of employment and globalization and the group argues that such results were incomplete.

Tags: European Economy News by James Gardner
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According to a survey of economists the central bank of Hungary is quite likely to continue with its standard interest rates and this is because the Hungarian economy is the slowest moving economy of the European Union and another reason why the central bank will not change its interest rates is that it wants to reduce the pressure caused by rising inflation. There are 12 policy makers of the central bank and President Andras Simor leads this group of policy makers in Hungary. Sixteen out of the 27 surveyed economists are of the opinion that the policy makers will continue with the two-week deposit rate at 7.5%. Seven of the surveyed economists anticipated that the interest rates will increase to 7.75% as well as 4% to 8%.

The decision of the policy makers will be declared in Budapest. The economic growth of Hungary is the slowest in over eleven years following the steps taken to rein in the highest deficit in budget which resulted in preventing consumer spending and also hampered investment. These things analysts say may overshadow the dangers of speeding inflation which is caused by costly oil and a sluggish currency. An economist with Danske Bank A/S in Copenhagen Lars Christensen opined that the decline in the economy is the most important reason why the central bank will not increase the rates. He also said that macro data was not expected to be weak and the central bank has experienced a steady hand and it is very likely that it will maintain it that way. The forward rate agreements indicate that investors are all set for higher rates in the coming six months. The increase between the six-month forward rate and the base rate increased to 72 basis points and this gain is highest since October 2006. A basis point is equal to 0.01 percentage point.

The money market rate for three months is 7.92% which is almost 42 basis points greater than the rate of the central bank of Hungary. The forint of Hungary has also registered a weakness by as much as 2% as against the Euro since the last rate judgment which was on January 21.On February 11th the forint dropped to its fifteen month low. The weakness of forint is attributed largely to investors who are wary of potentially high risk assets due to fears that the US economy would slip into recession. This opinion was shared by economist Illes Toth at DZ Bank AG in Budapest among others. The economist also said that the weakness in forint and high costs of oil following crude oil is reaching its record price of $100 on the 20th of February and this will force the central bank of Hungary to increase its inflation estimate for the year 2009 to greater than its 3% target. Toth further added that this recession is not the only reason for the bank to raise the rates but there is the danger of downward inflation by way of demand and the retail and wage data indicate this fact.

Tags: Interest Rates News by Vanessa Clark
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The financial markets once again suffered from a sluggish week following news that the US economy is slipping into recession. Investors were also left anxious due to the blow rocketing commodity prices will have and there were also added fears among investors as financial sector did not come up with encouraging results. There was in particular greater chaos in the credit markets owing to unwinding positions taken by investors in structured products added to this was the $2.8bn write-down revealed by Credit Suisse for investments backed by assets. Credit spreads expanded to their highest levels in Europe and the US but remained stable as the week ended. A still more worrying trend about the US economy was that of slipping into more recession of a regional indicator of manufacturing activity.

Worries about rising inflation were fueled by a strong US consumer price data and a sharp rise in commodities in which oil, gold and platinum reached to their record levels. North American economist at Merrill Lynch David Rosenberg expressed that economic recession is no longer the point of debate it is about how hard the blow will be. The situation got further gloomy when the Federal Reserve announced cut in its growth estimates which triggered the futures market to increase odds of a 50 basis point cut in US rates for March to 94%. Although the trend in the credit market was gloomy but in the equity markets the scene was quite stable all through the week. However speculators say that this disparity between the two markets will not last long. Stocks in Europe were able to record steady growth, the Eurofirst 300 Index of FTSE gained by 0.8% for the week and the London FTSE 100 rose by 1.7%.

European government bonds suffered instability in the week owing to investor’s reaction to the data of US economy as well as the expanding credit spreads. Economist at UBS, Larry Hatheway was of the opinion that he found weak trends in bond markets for some weeks and also said that sustained higher returns are hard to justify. The economist further added that global and US economic growth will remain slow for a considerable period which in turn will maintain low real rates and would also help in taming inflation stress. Larry Hatheway also said that short rate returns of US seem promising in the light of Fed policy results and the rate expectations in Europe will not be relaxed by the central banks.

The return on the two-year note increased by 6bp and stood at 1.96% for the week but the ten year Treasury note dropped by 3bp and came to 3.74%. The government bond return curve in Europe dropped greatly; it fell to 84bp from 67bp. reduced expectations from investors in the cut of eurozone interest rates was the reason cited by analysts. Comments by the president of the European Central Bank, Jean-Claude Trichet also affected the drop. The ECB is likely to cut down interest rates as it finds more evidence of rising economic slowdown.

Tags: European Stocks & Shares News by Michael Greene
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The Koruna of Czech is experiencing great prospects and it recorded gain for the fifth week trading against the Euro. The Czech currency also registered a record gain on the 22nd of February. This buoyancy of the Koruna is attributed to expectations that the Central Bank will be increasing interest rates. The Koruna of Czech gained the most as against the 16 most traded notes in the week that concluded. The gain of Koruna came when the policy makers increased the standard lending rate of 1.25 percentage points to 3.75% which for the EU is still the lowest rate. The forward rate agreements indicated that the bank will relax borrowing expenses still further in the face of accelerated economic growth for the fourth quarter which stood at 6.9%.

The strategist for emerging-market currency with 4Cast Ltd. in London Nicholas Kennedy said that the gain by Koruna is quite positive and he further added that traders are looking for a single reason to hold back but they cannot find one. At the end of the week, the Koruna gained by 24.990 per euro which is the record level for the Czech currency since the common currency for Europe was introduced in 1999. In Prague the Koruna stood at 25.060 and in the earlier week it had recorded 25.206. Another distinction the Koruna has gained is that it became the world’s most successful currency for this year while trading against the Euro. The Czech Koruna recorded a gain of almost 6%. The Koruna as well gained by 16.906 per dollar from its February 15 gains of 17.168. On February 18 the Czech currency moved to 24.944 however traders in the market are of the opinion that this advancement of the Koruna was mainly because of a single trade.

A trader at the biggest bank in Czech by assets Ceskoslovenska Obchodni Banks AS, David Sykora expressed that the gain is possibly a botch and it is called as the miss hit deal and cannot be termed as the record. The forward rate agreements indicate that the central bank in Prague is likely to hike to its key rate by another twenty five basis points in the coming six months. In order to curb inflation the central bank has maintained its tight monetary policy, the inflation had shot to 7.5% in January which the highest inflation in nine years.

In the other currency trading, the Lira of Turkey dropped by 0.4% in the week and stood at 1.2063 per dollar on Friday following the deployment of 10,000 troops into northern Iraq to fight terrorists of the PKK or the Kurdistan Workers’ Party. An economist with UniCredit MIB in Vienna Simon Quijano-Evans told his clients that the lira would find support from the investors residing in the country since the people supports this decision of the government. The zloty of Poland moved to 3.5692 per euro from its earlier week’s 3.5770 position. However the leu of Romania and forint of Hungary dropped against the euro.

Tags: Exchange Rates News by James Gardner
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The notes of European government recorded the greatest drop in four years as traders were concerned about speeding inflation rates in the region which will affect the policy makers of central bank in their scope for cutting rates on interest. The impact was mostly felt in the two year government notes because they are most vulnerable to rate changes. The two year government notes dropped lowest for a second consecutive week owing to investors backed up citing that the ECB will decrease its main rate which earlier stood for a six year high. According to the reports for the week the rate of inflation especially in countries like France and Germany accelerated at a faster rate which was more than economists had estimated.

The increase in the prices of food and energy was the main reason for the accelerating inflation in these countries the report also stated. Chief of investment grade debt strategy at ING Bank NV in Amsterdam Padhraic Garvey said that the figures of inflation led investors to back up their bets wagered on interest rate cuts. The chief also added that this drop does not affect his views on the bigger picture and he also said that he expected the current year to be a sluggish environment for growth and returns will further begin to drop from its current standing. The return on the two year note increased by 23 basis points and stood at 3.34% which was the highest position for it since April 2004. The value of the 4% security which will mature in 2009 also dropped to 0.40 that is 4 euros per 1,000-euro or $1,484 face amount, to 101.12 and stood at 101.12. According to Garvey’s estimate the return on the notes will decline to 3% by month of June in the current year. Returns progress opposite to bond prices.

Germany is Europe’s biggest economy where as per a government report, annual producer prices increased by 3.3% which was the fastest rise in thirteen months. Consumer prices in France shot by an annual 3.2% which was a rise from its earlier 2.8% in December according to the national statistics bureau Insee and this data is calculated on EU harmonized system. This rise is the fastest since the year 1996. The return on the ten year Bund of Germany, which is considered as the standard for Europe gained by four basis points and stood at 4%. The longer dated bonds generally give higher yields as against the shorter dated bonds and this is when the traders calculate that the central banks will maintain their higher rates to tame inflation.

ECB’s borrowing costs dropped when the expected returns on the Euribor futures contract for June rose to 18 basis points and stood at 4.09% in last week. The inflation prospects increased as calculated by the return difference between nominal and index-linked bonds. The breakeven rate for the ten year inflation protected notes of France, which is also the standard for Europe gained by as much as 2.22% which is the record gain since last month.

Tags: European Economy News by Vanessa Clark
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The European Commission cut its forecast for economic growth and raised its projection for inflation, reflecting the dilemma facing the European Central Bank. The economy of the 15 nations that share the euro will expand 1.8 percent this year, which is 0.4 percent below the rate predicted in November and the weakest since 2005. Inflation will average 2.6 percent, which is an increase from the previous estimate of 2.1 percent, the strongest since the euro began trading in 1999. The lethal combo of weakening expansion and rising inflation complicates the work of ECB, as it seeks to shield its economy from a US slowdown, without surrendering its campaign to restrain price pressures. The commission announced that economic activity is set to moderate, but the risks to the growth forecast remains sizeable.

The U.S slowdown is combining with costlier credit along with oil prices rising to about $199 a barrel and a rising euro to curb expansion. At the same time, higher energy prices and more expensive food are fanning inflation. Such risks prompted ECB President Jean–Claude Trichet to warn that stronger inflation and weaker growth, both were risks to economy. This was in stark contrast to his previous view that price pressures were the greatest threat. The central bank has left it’s benchmark interest rate at a six-year high of 4 percent since June and investors predict it will follow the Federal Reserve in easing credit by the end of second quarter.

Heineken NV, the Dutch brewer, announced that second-half profit fell by a third as slower economic growth in the US prevented the company from increasing prices in an effort to offset the rising cost of barley, metal and power. As a result, shares posted the biggest drop since 2003. The jump in credit costs from the collapse of the US subprime–mortgage market has sparked losses in stock markets around the world as Wall Street firms revealed $146 billion in losses on their debt holdings. Global stocks have lost more than $6 trillion this year. The commission’s growth forecast is more optimistic than the 1.6 percent prediction of the International Monetary Fund and the 1.7 percent median estimate of economists surveyed by Bloomberg News.

ECB releases new forecasts on March 6. Record–low unemployment, a balanced current account and “comparatively” low government budget deficits have cushioned the economy, the commission had said. In a review of individual economies, the commission slashed its forecast for growth in Italy by half to 0.7 percent amid a decline in confidence among executives. It predicted Spain would witness a “soft landing”, even as its real-estate market fades, with a growth of 2.7 percent this year, which is lower than its previous estimate of 3.0 percent. The commission said that weaker international growth explained its decision to cut its prediction for expansion in Germany from 1.6 percent to 2.1 percent and that for France from 1.7 percent to 2.0 percent.

Tags: European Economy News, European Union News by Michael Greene
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Mobile phones have long begun conquering parts of the world that are far from the nearest electrical substation. However, the rising oil prices are causing a great concern for operators. In the far reaches of places like Africa and Pakistan, companies such as Ericsson or Nokia Siemens Networks are installing new cellular base stations at a rapid pace. These facilities almost always get their power from diesel–powered generators. Fuel accounts for as much as two-thirds of base-station operating costs. In addition, there are the transport charges for trucking diesel over poor roads to remote areas and guarding it against thefts. As a result, green energy is all of a sudden transforming from just a feel-good project to a serious workable option for the mobile service providers. As mobile networks are fast expanding beyond the reach of power grids, they need to find a less expensive alternative to diesel. After years of experimentations on base stations powered by wind, solar energy and biofuel equipment, suppliers are preparing to roll out alternative energy technology in significant numbers.

Two Asian network operators are expected to announce plans for more than 500 new base stations which are powered by a combination of sun and wind. Solving the power problem has all of a sudden become a key factor in maintaining the growth of the mobile industry. The number of mobile subscribers is expected to climb to a mind staggering 5 billion by 2015. A large proportion of those new users will be in rural areas that have little infrastructure. Flexenclosure, a Swedish firm that makes shelters for base staion equipment, estimates that in Africa alone 40,000 new base stations will be located beyond the reach of reliable electrical grids during the next few years. Thanks to advances in technology, it’s becoming more practical to run base stations with renewable energy. For instance, it requires only one fourth as many solar cells to power a base station from five years ago.

Equipment producers have also put more effort in reducing the amount of power that a base station needs in the first place. Ericsson buries the battery for base stations about 20 feet underground, reducing the need for energy gulping cooling equipment (besides it also reduces the risk of theft). Installing the radio equipment at the top of the tower next to the antenna also helps to save power. The shorter the cable connecting the radio to the antenna, lesser is the power lost in transmission. Nokia Siemens is working on software that shuts down part of the base station at night, when there is less demand. Power conservation is turning out to be a major area of competition, and mobile service providers are racking their brains to come up with the base station that consumes the lowest amount of power. In fact, someday, green powered base stations may start popping up even in developed countries where the power grid is everywhere and reliable, but the pressure is mounting to reduce carbon emissions.

Tags: European Economy News by James Gardner
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