Euro zone business growth accelerates as new orders pour in

By Jonathan Cable

LONDON, (Reuters) – Euro zone business activity accelerated in March at its fastest pace for nearly a year as customers took advantage of ongoing price discounting to place new orders at a rate not seen since mid-2011, a survey found.

The upbeat survey will provide welcome news for the European Central Bank just weeks after it embarked on a trillion-euro asset-purchase programme to try and spur growth and inflation.

Markit’s final March Composite Purchasing Managers’ Index (PMI), seen as a good indicator of growth, stood at 54.0, a touch below the preliminary estimate of 54.1 but well ahead of February’s 53.3. A reading above 50 implies growth.

“The PMIs are indicating somewhat sluggish GDP growth of 0.3 percent for the first quarter. However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months,” said Chris Williamson, Markit’s chief economist.

Markit’s growth projection is slightly less than the 0.4 percent predicted in a Reuters poll taken last month.

A sub-index measuring new orders leapt to 54.1 from 52.5, its highest since May 2011. That suggests a healthier outlook although the survey also showed companies have now been cutting prices for three years, although not as sharply in March.

Euro zone consumer prices fell again in March, as expected, but the decline was the smallest this year.

That price-cutting helped drive service industry activity up at its fastest pace in eight months. The March service sector PMI rose to 54.2 from 53.7, just below the flash 54.3 estimate.

With the recovery gathering steam and confidence growing because of the ECB’s QE programme, service companies were at their most optimistic since May 2011. The business expectations sub-index came in at 64.8 compared with February’s 64.1.

“With the ECB’s policy of quantitative easing also set to provide a boost to the nascent recovery in coming months, the economic outlook is therefore brightening as we expect to see more upward revisions to growth forecasts for the year,” Williamson said.

Sterling weaker on subdued inflation outlook, looming election

By Ahmed Aboulenein

LONDON, March 25 (Reuters) – Sterling fell against the euro on Wednesday, hitting a one-month low as investors pushed back expectations of interest rate hikes amid growing talk that inflation in Britain will stay low for sometime to come.

Annual inflation in Britain dropped to zero in February and investors are factoring in the chance of a first rate hike in mid-2016, having pushed it back from early 2016 last week.

BoE policymaker Kristin Forbes said on Wednesday that the low rate of inflation was unlikely to persist, so interest rates would need to rise as the economy recovers, but her comments appeared to have little impact on the pound.

Bank of England Chief Economist Andy Haldane said last week the bank should be ready to cut rates further if inflation looked likely to stay below its 2 percent target. The next policy move was as likely to be a cut in rates as a hike, he said.

Those comments echoed a cautious tone from the BoE’s monetary policy committee in minutes from its latest meeting released last Wednesday, where members flagged the impact of a strengthening pound on inflation.

The pound was down 0.1 percent to 73.66 pence per euro and against the dollar it was up 0.4 percent at $ 1.4900. The euro was also helped by a robust survey of German business morale.

“Our view is that the BoE won’t be hiking interest rates until February 2016 at the earliest and the current inflation outlook suggests the hike can come later rather than earlier. Consequently you have a movement higher in euro/sterling,” said Jane Foley, senior currency strategist at Rabobank in London.

“There is another factor: the approach of the British general election. The market is becoming more aware as we get closer that there could be, potentially, a significant period of time before a coalition is in place.”

Britain holds a parliamentary election on May 7 and the latest opinion polls point to a ‘hung parliament’, in which no single party can form a government on its own.

“Sterling is going to weaken in the next month because of election risk. Our forecast for cable (dollar/sterling) is $ 1.42 and for euro/sterling to trade higher in the short term. It will recover after the election,” said Phyllis Papadavid, senior global FX strategist at BNP Paribas in London.

“There is a lot of political news coming out of the UK, there is some economic news. The BoE Monetary Policy Committee members have sounded more dovish as well.” (Editing by Crispian Balmer)

FOREX-Euro gains against dollar on robust PMI surveys

* Robust French, German PMIs help euro

* Fed’s Williams repeats mid-year rate rise may be appropriate

* Dollar still feeling impact of last week’s dovish Fed statement

* Aussie slips briefly after weak China flash HSBC PMI

By Ahmed Aboulenein

LONDON, March 24 (Reuters) – The euro rose for the third day running against the dollar on Tuesday, bolstered by better-than-expected euro zone business surveys that pointed to a broader recovery taking place in the currency bloc.

The dollar was under pressure, with investors awaiting consumer price inflation data later in the day. A softer number, as was registered earlier on Tuesday in Britain, could boost expectations that the Federal Reserve will be in no hurry to raise interest rates.

San Francisco Fed chief John Williams weighed in on the debate over the dollar’s gains, saying the U.S. economy could handle a stronger currency and pointing to the chance of an interest rate rise in June.

Other Federal Reserve officials, and new forecasts from the U.S. central bank, have cast doubt on how much more appreciation of the dollar the Fed will easily tolerate and raised speculation it will push back any tightening of monetary policy.

The euro was up 0.4 percent at $ 1.0984, having risen to $ 1.10 after the business surveys were released. In a sign the European Central Bank’s bond buying programme may already be paying dividends, the composite purchasing managers’ survey for the 19 members of the euro zone jumped to a near four-year high of 54.1 in March, well above forecasts.

“Any positive surprises from the euro area are further adding to this euro/dollar rally. However, we think this is temporary; we still believe in the dollar strength trend going into the second half of the year,” said Nikolaos Sgouropoulos, FX strategist at Barclays in London.

Many major bank strategists forecast the euro to fall close to parity with the dollar this year, but the pace of its dive to $ 1.05 earlier this month took many by surprise and prompted JP Morgan and HSBC to suggest the rally may be coming to an end.

“The bigger question of whether the economic recovery has any legs remains unanswered,” Societe Generale analysts said in a note.

“In the meantime, after breaking above key resistance at $ 1.0940 yesterday, the euro’s next technical target is $ 1.1070 and we’d be more interested in re-selling there than in looking for much follow-though from this morning’s initial weakness.”

The Swiss franc, meanwhile, rose to a three-week high against the dollar and a six-week peak versus the euro .

Against the yen, the dollar eased 0.3 percent to about 119.40 yen, near the bottom of its 122.04 yen to 119.29 yen range seen over the past couple of weeks.

(editing by John Stonestreet)

GLOBAL MARKETS-Strong euro zone business growth pushes euro to $1.10

* Better-than-expected European PMIs boost euro, hurt dollar

* Gauge shows China factory activity skids to 11-month low

* Cautious Fed view on rate hike keeps dollar off recent highs

By Jemima Kelly

LONDON, March 24 (Reuters) – The euro rose and European shares steadied on Tuesday, responding to signs the euro zone economy is gaining momentum, while a slowdown in factory activity in China kept oil and commodities-linked assets under pressure.

U.S. stock index futures edged higher ahead of a data deluge including measures on inflation, home prices and sales, and factory activity, starting at 1230 GMT.

In an indication that the European Central Bank’s 1 trillion euro bond-buying programme may already be having a positive impact, a composite purchasing managers’ survey for the 19 members of the euro zone jumped to a near four-year high of 54.1 in March, well above forecasts.

The euro gained 0.4 percent in European trading to hit a six-day high of $ 1.1003, adding to a recent rally after the single currency last week registered its best performance against the dollar in 3-1/2 years.

“Any positive surprises from the euro area are further adding to this euro/dollar rally, however we think this is temporary,” said Nikolaos Sgouropoulos, FX strategist at Barclays in London. “We still believe in the dollar strength trend going into the second half of the year.”

The dollar plunged last week after the U.S. Federal Reserve cut its inflation outlook and its growth forecast and the market pushed out its consensus of when the Fed will raise rates to at least September.

On Tuesday the dollar was down 0.3 percent against a basket of major currencies at 96.759, well below its 12-year peak of 100.390 struck on March 13.

San Francisco Federal Reserve Bank President John Williams said on Tuesday the strong dollar would drag on U.S. growth this year, though the economy was strong enough to handle it.

At 1150 GMT, the FTSEurofirst 300 index of top European shares had steadied near a recent 7-1/2-year high at 1,600.76 points after falling earlier in the session on the Chinese data.

CHINA GROWTH WORRIES

Brent crude fell under $ 56 a barrel on the signs of slowing growth in China and as Saudi Arabia said its production was close to an all-time high.

The China flash HSBC/Markit Purchasing Managers’ Index (PMI) dipped to 49.2 in March, below the 50-point level that separates expansion from contraction. Economists polled by Reuters had forecast a reading of 50.6, slightly weaker than February’s final PMI of 50.7.

The private survey is likely to add to calls for more monetary easing from Beijing.

“China is the big risk,” said Ian Stannard, head of European FX strategy at Morgan Stanley in London. “It can put the whole of Asia ex-Japan under pressure and there is some feed-through to G10 through the commodity currencies.”

The Shanghai Composite share index ended slightly higher, gaining for a 10th straight day in a rally that has pushed major Chinese indexes to their highest levels in nearly seven years.

Japan’s Nikkei stock average slipped 0.2 percent, pulling away from the previous session’s 15-year highs.

In Japan, a similar manufacturing survey added to concerns that its slowly recovering economy may also be losing momentum, with activity expanding at a much slower clip as domestic orders contracted.

Spain’s bond yields lagged a broad rally in euro zone bonds as investors queued up for a rare sale of inflation-linked debt. Yields on the country’s 10-year bonds were up 1 basis point at 1.27 percent, while most other equivalents in the euro zone were 1-2 basis points lower.

(Additional reporting by Ahmed Aboulenein, Patrick Graham and John Geddie in London, Blaise Robinson in Paris and Lisa Twaronite in Tokyo; Editing by Mark Trevelyan)

GLOBAL MARKETS-Strong euro zone business data sends euro, shares higher

* Better-than-expected European PMIs boost euro, hurt dollar

* Gauge shows China factory activity skids to 11-month low

* Cautious Fed view on rate hike keeps dollar off recent highs

By Jemima Kelly

LONDON, March 24 (Reuters) – The euro rose and European shares edged up on Tuesday, responding to signs the euro zone economy is gaining momentum, while a slowdown in factory activity in China kept oil and commodities-linked assets under pressure.

In a sign the European Central Bank’s bond buying programme may already be paying dividends, a composite purchasing managers’ survey for the 19 members of the euro zone jumped to a near four-year high of 54.1 in March, well above forecasts.

The euro gained 0.4 percent in early European trading to hit a six-day high of $ 1.1001, adding to a recent rally after the single currency last week registered its best performance against the dollar in 3-1/2 years.

At 0850 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,602.56 points, having lost 0.7 percent on Monday.

“The environment for the euro zone is getting extremely positive: low interest rates, a weakening euro and falling commodity prices, coupled with strong action from the ECB,” said Christian Jimenez, fund manager and president of Diamant Bleu Gestion, in Paris.

“The only big risk seen in the medium term is the prospect of a rate hike by the Fed, but that’s mostly priced in already.”

San Francisco Federal Reserve Bank President John Williams said on Tuesday the strong dollar would drag on U.S. growth this year, though the economy was strong enough to handle it.

The dollar plunged last week after the Fed cut its inflation outlook and its growth forecast and the market pushed out its consensus of when the Fed will raise rates to at least September.

On Tuesday the dollar was down 0.3 percent against a basket of major currencies at 96.759, well below its 12-year peak of 100.390 struck on March 13.

CHINA GROWTH WORRIES

Brent crude oil held close to $ 56 a barrel on the signs of slowing growth in China and as Saudi Arabia said its production was close to an all-time high.

The China flash HSBC/Markit Purchasing Managers’ Index (PMI) dipped to 49.2 in March, below the 50-point level that separates expansion from contraction. Economists polled by Reuters had forecast a reading of 50.6, slightly weaker than February’s final PMI of 50.7.

The private survey is likely to add to calls for more monetary easing from Beijing.

“China is the big risk,” said Ian Stannard, head of European FX strategy at Morgan Stanley in London. “It can put the whole of Asia ex-Japan under pressure and there is some feed-through to G10 through the commodity currencies.”

The Shanghai Composite share index ended slightly higher, gaining for a tenth straight day in a rally that has pushed major Chinese indexes to their highest levels in nearly 7 years.

Japan’s Nikkei stock average slipped 0.2 percent, pulling away from the previous session’s 15-year highs.

In Japan, a similar manufacturing survey added to concerns that its slowly recovering economy also may be losing momentum, with activity expanding at a much slower clip as domestic orders contracted.

Ahead of a closely watched Spanish inflation-linked debt sale, Spanish and Italian 10-year bond yields rose 4 basis points in early trading to 1.30 and 1.33 percent, respectively.

German equivalents – the euro zone benchmark – were flat at 0.22 percent.

(Additional reporting by Patrick Graham and John Geddie in London, Blaise Robinson in Paris and Lisa Twaronite in Tokyo; editing by John Stonestreet)

FOREX-Dovish Fed hands euro best weekly gains in 18 months

* Market consensus has all but ruled out June hike to U.S. rates

* Euro on track for best weekly performance since Sept 2013

* BNP Paribas revises down euro/dollar forecasts

By Jemima Kelly

LONDON, March 20 (Reuters) – The euro inched up against the dollar on Friday and was on track for its best weekly performance in 18 months, boosted by a sell-off in the greenback after the U.S. Federal sounded a cautious tone on interest rates.

The greenback plunged across the board on Wednesday after the Fed downgraded its economic growth and inflation projections, signalling it is in no rush to push borrowing costs to more normal levels and pouring cold water on investor expectations of a June rate hike.

Having dived to as low as 96.628 against a basket of major currencies in the wake of the Fed, the dollar was trading at 98.952 on Friday, down 0.1 percent on the day on track for its first week of falls in five.

The euro was 0.2 percent higher against the dollar at $ 1.0683, well below Wednesday’s high above $ 1.10 but still leaving the single currency on track for its best weekly performance since September 2013 with a 1.7 percent rise.

“The FOMC announcement was, on margin, more dovish than expected. So the weakness that we saw in the dollar in the aftermath of that translated into some rebounds in euro/dollar,” said Phyllis Papadavid, senior global FX strategist at BNP Paribas in London.

Papadavid said she expected the euro downtrend to resume, and BNP Paribas yesterday revised down their euro forecasts to parity with the dollar by the end of this year from $ 1.05 previously and to $ 0.95 by the second quarter of 2016.

But an overwhelming consensus among major banks that the euro will continue to fall against the dollar found a doubter on Thursday. In contrast to a slew of downward euro revisions, British bank HSBC on Thurday revised up its forecast for the single currency to $ 1.20 by 2017.

Against the yen, the dollar was 0.1 percent higher at 120.88 yen, comfortably above its Wednesday post-Fed low of 119.29.

“Pressure will remain on the yen as before. Today, there is a shortage of fresh trading incentives, so the yen has come back a bit,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.

The Bank of Japan stood pat on policy earlier this week, as it has every month since expanding its massive stimulus programme in October last year.

(Additional reporting by Lisa Twaronite in Tokyo; Editing by Toby Chopra)

FOREX-Euro continues bounce; Fed eyed for interest rate clues

* Euro gains against dollar for second straight day

* Traders taking risk off table ahead of Fed policy meeting

* BOJ stands pat on policy, market reaction limited

By Ahmed Aboulenein

LONDON, March 17 (Reuters) – The euro rose for a second day against the dollar on Tuesday as investors awaited the start of a two-day U.S. Federal Reserve policy meeting that will test expectations of a mid-2015 rise in U.S. interest rates.

The single currency had come under pressure after the European Central Bank began a bond-buying programme last week that will pump more than one trillion euros of newly created money into the euro zone economy.

But the euro won some relief on Monday after weaker-than-expected U.S. manufacturing, industrial output and housing data pushed down U.S. debt yields and cooled the dollar’s advance.

The U.S. currency’s surge since early March has been driven by growing speculation that the Fed’s Open Market Committee (FOMC) will point towards a June rate rise by dropping a pledge to be “patient”.

The dollar has gained around 20 percent against a basket of major currencies over the past six months as investors bet the Fed will be the first major central bank to raise rates since the financial crisis. But some reckon the Fed cannot ignore how much that rise reduces pressure on inflation.

“Our view is that the Federal Reserve will indeed drop the word ‘patient’ from the statement but it will be very cautious nonetheless,” said Alvin Tan, currency strategist at Societe Generale in London.

“The profit-taking continues from yesterday following the poor U.S. data that we had and the market is being cautious ahead of the FOMC meeting.”

Having hit a 12-year low of $ 1.0457 at the start of the week, the euro was up a third of a percent at $ 1.0603. The dollar was around 0.1 percent lower against a basket of major currencies.

Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ in London, said investors were keen to take risk off their books ahead of the Fed meeting.

“If you’ve been short euro over the past week, you’ve had a good week, and why would you bother running the risk into what is a difficult event to predict?”

The dollar was up 0.05 percent to 121.28 yen, stuck in a relatively narrow range since advancing to an eight-year high of 122.04 on March 10.

The Bank of Japan concluded its two-day policy meeting on Tuesday, at which the central bank stood pat on monetary policy and maintained its massive stimulus. Market reaction was limited because the outcome was as expected.

(Additional reporting by Jemima Kelly in London; Editing by Mark Trevelyan)

Plunging Euro May Help Draghi More Than Week-Old QE Program

(Bloomberg) — He may be reluctant to admit it, but the biggest benefits from Mario Draghi’s bond purchases are likely to come from the plunge in the euro.

The European Central Bank’s quantitative-easing program will boost euro-region inflation by 0.3 percentage point this year, with a weaker exchange rate doing most of the work, according to economists surveyed by Bloomberg. The euro tumbled to a 12-year low as the purchases, which increase the money supply, entered their second week.

“That’s the transmission mechanism that might be the most powerful,” Hans Joerg-Naumer, head of capital-markets analysis at Allianz Global Investors GmbH, which oversees $ 412 billion, said by phone from Frankfurt on March 11. “They want to keep the euro exchange-rate low.”

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ECB President Draghi is counting on his 1.1 trillion-euro ($ 1.16 trillion) QE plan to rescue an economy that’s barely out of a recession and where consumer prices have been falling for three months. While he acknowledges the economic benefits a weaker euro can bring, Draghi has consistently denied targeting the exchange rate, which smacks of unfair advantage among the global policy community.

Economic Impact

In addition to stoking inflation, a weaker currency makes exports more competitive. While the other main effect of QE — tumbling bond yields from Germany to Spain — may help governments’ borrowing costs, it’s less likely to have a direct impact on growth.

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“The euro weakening is probably the strongest case for a better economy in Europe,” said Poul Kobberup, chief investment officer at PFA Pension A/S in Copenhagen, which oversees about $ 60 billion. “It’s been weakening quite dramatically.”

The euro slid as low as $ 1.0458 on Monday, the weakest since January 2003, and has plunged 13 percent this year, putting it on track for its biggest ever quarterly decline. The euro zone’s reliance on exports — overseas shipments account for almost half of the 19-nation region’s gross domestic product — makes that slide particularly helpful.

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Europe’s shared currency has been falling for months as Draghi prepared markets for his bond purchases and the dollar rallied on the Federal Reserve’s plans to raise interest rates as soon as this year. The average rate on euro-area sovereign debt has also shrunk, declining to 0.424 percent on March 11, the lowest since at least 1995, Bank of America Merrill Lynch indexes show.

Predicting Parity

Goldman Sachs Group Inc. cut its forecast March 13 on the euro, predicting it will fall about 3 percent to $ 1.02 in three months and reach parity in six months. The median of 34 responses to Bloomberg’s economist survey also calls for euro-dollar parity, with many respondents saying the decline will benefit the economy.

“As the recovery gains steam, there should be a notable upward tick in headline and core inflation, supported by the depreciation of the euro,” Christopher Matthies, an economist at Sparkasse Suedholstein in Neumuenster, Germany, wrote in his response to Bloomberg’s QE survey, conducted March 6-12. The currency decline “is mainly caused by the upcoming tightening of the Fed and the QE program of the ECB,” he wrote.

Driving Growth

A 10 percent slide in the euro against its major peers adds 0.3 percentage point to GDP, according to an estimate by ING DiBa AG, and the shared currency is already down 9.6 percent in the past three months versus a basket of its Group of 10 counterparts.

Even so, Draghi has a ways to go before he translates these losses into tangible economic benefits. Euro-zone GDP grew just 0.9 percent last year, while consumer prices dropped 0.3 percent in February from the same month in 2014.

Not everyone thinks he’ll be successful, either. Peter Dixon, an economist at Commerzbank AG, said the cheaper euro may struggle to boost growth given the weakest peripheral economies aren’t big exporters and global demand remains poor.

“It’s not much point having a weaker currency if demand isn’t that dynamic,” Dixon said by phone from London. “Demand matters.”

Questions are being asked as to whether the euro is falling too fast. QE risks “overshooting,” and the “exchange-rate decline is larger than we had expected,” Bank of Italy Governor Ignazio Visco said over the weekend. He also said the bond-buying program reduces economic uncertainty.

Improving Outlook

The ECB is becoming more optimistic about the economy and boosted its outlook for 2015 growth to 1.5 percent this month, from a previous estimate of 1 percent.

Options trading should give policy makers confidence that further euro losses are in store, too.

The premium for three-month options to sell the euro over contracts allowing for purchases widened to a 2 1/2-year high of 2.6 percentage points in February and was at 2.04 percentage points as of 9:26 a.m. London time on Monday, data compiled by Bloomberg show. That shows traders are betting additional declines are more likely than a rally.

QE programs ‘‘definitely drive the currency down,’’ said Ben Pace, the New York-based chief investment officer at HPM Partners LLC, which oversees $ 5.5 billion. ‘‘Market participants think it’s going to help exports and eventually help the economy.’’

(An earlier version of this story was corrected to fix the spelling of Copenhagen.)

To contact the reporters on this story: David Goodman in London at [email protected]; Andre Tartar in London at [email protected]

To contact the editors responsible for this story: Paul Dobson at [email protected] Paul Armstrong, Caroline Salas Gage

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Euro sinks close to 12-year low versus dollar

London (AFP) – The euro tumbled Tuesday towards a 12-year dollar low, hit by eurozone stimulus, growing US rate hike speculation and Greek debt concerns, dealers said.

In morning London deals, the European single currency sank to $ 1.0735 — the lowest level since mid-April 2003. The region’s stock markets were lower.

“The US dollar scored multi-year highs … amid starkly diverging outlooks for interest rates globally,” said analyst Daniel Sugarman at trading firm ETX Capital.

The shared eurozone unit continues to flounder one day after the European Central Bank launched its 1.1-trillion-euro ($ 1.2-trillion) quantitative easing (QE) stimulus “bazooka”.

The dollar neared an eight-year high against the yen as dealers bet on an interest rate hike from the Federal Reserve after bright US payrolls data.

The greenback surged in Asian trading hours to a high of 122.03 yen, a level not seen since July 2007. It later stood at 121.65 yen in London.

“Renewed upward momentum for the US dollar in the near-term has been reinforced by the stronger than expected US employment report for February which has supported investor expectations that the Fed remains on course to begin raising rates from the middle of this year,” said economist Derek Halpenny at Bank of Tokyo-Mitsubishi UFJ.

– Record-low bond yields –

Meanwhile, the yield on German, Italian and Spanish 10-year government bonds fell to new record lows on the ECB bond-buying programme to combat deflation and boost growth.

The rate of return to investors on 10-year German government bonds fell to 0.279 percent from 0.312 percent on Monday.

The yield on 10-year Italian government bonds fell to 1.220 percent from 1.280 percent and those of Spain to 1.231 percent from 1.275 percent.

Europe’s main stock markets fell into the red, mirroring losses in Asia, as concerns lingered over Greek debt talks, while official data showed fresh weakness in economic powerhouse China.

In late morning deals on Monday, London’s benchmark FTSE 100 index of leading companies slid 1.15 percent to 6,797.60 points.

Frankfurt’s DAX 30 shed 0.82 percent to 11,487 points and the CAC 40 index in Paris lost 0.86 percent to 4,894.70 points compared with Monday’s close.

“European equity markets are … moderately lower this morning (on) renewed concerns that Greece might be running out of money soon,” said analyst Markus Huber at London-based broker Peregrine & Black.

“With negotiations between Greece and the Eurogroup finance ministers still not having yielded a result and time is running out fast, Greece appears once again destined to take centre-stage.”

– ‘Athens dragging heels’ –

Greece has agreed to start urgent technical talks on Wednesday on extending its crucial bailout after its eurozone partners accused debt-stricken Athens of wasting time in previous negotiations.

The main talks will be in Brussels but teams from Greece’s creditors will also be on the ground in Athens, Eurogroup chief Jeroen Dijsselbloem said, despite the new left-wing government’s earlier insistence that they should not return.

The announcement came after a meeting of eurozone finance ministers in Brussels on Monday, at which the Greek government outlined the reforms demanded by lenders in exchange for further cash.

“Athens is dragging its heels over reforms and patience is running low in Brussels,” added IG analyst David Madden.

“The Greek government is pushing the envelope with its creditors and the market is scared by the prospect of another long drawn-out debt negotiation.

“The ECB’s government bond-buying scheme is being overshadowed by Greece, and if Athens keeps pushing its creditors around it may receive a rap on the knuckles.”

Euro Falls as Italy Bonds Gain; S&P 500 Futures Drop

(Bloomberg) — The euro weakened while Spanish and Italian bonds gained as a gauge of business activity grew less than estimated before the European Central Bank meets to work on details of its bond-buying program. European stocks erased gains and U.S. equity-index futures fell.

Europe’s shared currency slid 0.4 percent to $ 1.1129 at 10:14 a.m. in London. The yield on 10-year Spanish notes fell two basis points to 1.37 percent and Italy’s rate dropped to 1.38 percent. U.K. 10-year yields rose to the highest this year. The Stoxx Europe 600 Index slipped less than 0.1 percent and Standard & Poor’s 500 Index futures declined 0.3 percent.

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While a purchasing managers index for the manufacturing and services industries in the euro area rose to a seven month high, it was less than initially estimated, according to Markit Economics. Investors are looking for Thursday’s ECB meeting for details on its 1.1 trillion-euro ($ 1.2 trillion) quantitative-easing program announced in January.

“It’s worth noting that the market may want to increase their short-euro exposure ahead of the ECB actually starting their QE program,” said Sam Lynton-Brown, a currency strategist at BNP Paribas SA in London. “While the announcement led to euro weakness, we also think the flow impact of QE is going to be very important.”

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U.S. Jobs

Global equities have added almost $ 5 trillion of market value during the past six months amid a wave of monetary easing and signs of strength in the U.S. economy. A private jobs report from the ADP Research Institute will probably show U.S. companies added more workers to payrolls in February, while the Institute for Supply Management’s non-manufacturing index slipped.

The euro fell against all but one of its 16 major peers. It declined 0.6 percent to 133.04 yen, and fell to a record against New Zealand’s dollar.

Portugal’s bonds rose with Spain’s and Italy’s. The yield on 10-year securities declined five basis points to 1.88 percent, approaching the record 1.739 percent set on Monday.

German 10-year bonds were little changed, with the yield at 0.36 percent. The rate on 10-year gilts increased two basis points to 1.86 percent and touched 1.88 percent, the highest since Dec. 29.

Standard Chartered Plc gained 5.2 percent after saying capital will rise enough to leave the dividend unchanged even after a drop in full-year profit. Total SA advanced 1 percent. ITV Plc added 4.4 percent after saying it plans a special dividend.

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Henkel Profit

Henkel AG fell 4.2 percent. The maker of Persil detergent reported fourth-quarter profit that missed analyst predictions as the ruble’s drop held back growth in Russia. It forecast further burdens there this year. Elekta AB slid 9.2 percent as quarterly profit missed projections.

Russia’s Micex slipped 0.8 percent, falling for the first time in three days, and the ruble was little changed. Russia’s services activity shrank for a fifth consecutive month in February, at its fastest rate of decline since March 2009 as demand weakened. A report later this week will probably show inflation climbed to a 13-year high of 16.7 percent.

Ukraine’s hryvnia strengthened 8.1 percent, extending a 9.3 percent advance yesterday. The National Bank of Ukraine raised its refinancing rate to 30 percent from 19.5 percent, effective Wednesday, to “stabilize the situation on the money and lending markets,” Governor Valeriya Gontareva told reporters in Kiev. That’s the highest benchmark among all countries tracked by Bloomberg.

The Shanghai Composite Index added 0.6 percent while the Hang Seng China Enterprises Index lost 1.6 percent. as Bank of China Ltd. slid to a three-week low.

China Growth

The Services Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics climbed to 52 last month from January’s 51.8. Premier Li Keqiang is expected to announce a 2015 economic growth goal of about 7 percent on Thursday, when the National People’s Congress starts its annual meeting, down from last year’s 7.5 percent.

Oil rose 0.6 percent and traded above $ 50 a barrel. Saudi Arabia increased the pricing terms for its Arab Light grade to Asia by the most in three years after the kingdom’s oil minister said last month that demand is growing. U.S. stockpiles probably expanded by 3.95 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration report Wednesday.

Copper for delivery in three months on the London Metal Exchange slid 0.4 percent. Gold and silver for immediate delivery were little changed.

To contact the reporters on this story: Emma O’Brien in Wellington at [email protected]; Stephen Kirkland in London at [email protected]

To contact the editors responsible for this story: Stephen Kirkland at [email protected]; Stuart Wallace at [email protected] Stuart Wallace

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