Business And Personal Finance

The European Central Bank (ECB) will maintain interest rates at their lowest historical levels for at least another year to try to promote economic recovery and to bring inflation level it deems appropriate, the latest survey shows monthly Reuters.

None of the 79 economists surveyed this week are expected to change the ECB's refinancing rate set at 1.0% since May 2009, following its policy meeting on Oct. 7, or even before April next.

The median of their forecasts shows that the estimated probability of a rate hike before the end of this year is only 5%.

This probability reaches 25% by mid-2011 but the survey results show that the ECB shall initiate probably not tightening monetary policy until October of next year at the earliest.

The refinancing rate could reach 1.25% in late 2011 and then increase by a quarter point per quarter until the end of 2012, say economists.

"The economy is slowing, which will reduce inflationary pressures and help keep rates low for an extended period," said Ken Wattret, BNP Paribas.

A year ago, while the euro zone economy was just beginning to emerge from recession, analysts saw as acquired a first rate hike by the ECB before the end of 2010.But this prediction was based on the assumption of a swift economic recovery, which has not occurred.

RESUME TWO-SPEED, LOW INFLATION

Instead, a Reuters poll of economists conducted from earlier this month showed that growth in the euro area is expected to slow in the coming quarters, mainly because of the austerity measures implemented by many states to reduce deficits.The risk of a relapse into recession, however, is considered low.

More worrying for the ECB officials: recent indicators suggest a two-speed recovery in the region, Germany and France, the two largest economies in the euro area, recording the results well above those of countries "peripheral" in difficulty like Greece or Ireland.

Meanwhile, inflation in the euro area remains low, while the ECB's goal of stabilizing slightly below 2.0%, the first estimate of the price increase in September, expected Thursday, should the give 1.8% against 1.6% in August.

Yves Mersch, a member of the Board of Governors of the central bank, said Tuesday that inflation should remain below target for several more years, around 1.5%.

Michelin announced Tuesday the launch of a capital increase of about 1.2 billion euros to fund major investments to meet demand from emerging countries in coming years.

The world's largest tire, with Japan's Bridgestone will bring its annual investment to about 1.6 billion euros on average in 2011 to "strengthen its technological edge," Ensuring the competitiveness of production facilities in developed countries and give "a new dimension to its development in the fast-growing countries.

"This is not about financial, it's a matter of order of development and growth," said Michel Rollier, one of the managers of the group, during a press conference."We do not need a capital increase for purely financial matters, we need to grow."

At the same time, the market will call Michelin to strengthen its credit rating and increase its financial flexibility.

The group intends to increase its sales volume by 25% by 2015 and 50% in 2020 and aims, by 2015, operating profit before nonrecurring items significantly higher than two billion euros.

He also wants to ensure "a sustainable manner" a return on capital employed (ROCE) of more than 9%, generating significant free cash flow positive throughout the 2010-2015 period and maintain a dividend payout ratio of about 30%.

A NEW PLANT BY YEAR

Michelin said that its need for additional capacity to meet strong demand from emerging markets will exceed 150,000 tons per year, equivalent to a new plant each year.

By 2020, the group believes it will achieve 45% of its sales volume in emerging markets like China, India and Brazil, against 33% this year.

Michelin chose a capital increase to finance its development, unlike Continental, which has opted for the bond.The German competitor announced Tuesday the placement of 1.25 million through a bond issue in two tranches, the third such operation since the beginning of the year.

The capital increase will be Michelin with maintenance of preferential subscription rights (DPS) for two new shares for 11 existing ones, the price of subscription is set at 45 euros.

The subscription price reflects a discount of 31.0% over the closing price of the Michelin share Monday (65.26 euros) and 27.6% compared to the theoretical ex-rights.

The subscription period runs from 30 September to 13 October inclusive.

The group used the press conference to confirm its 2010 targets, namely a volume growth of 10% to 12% operating margin close to 9% before nonrecurring items and free cash flow positive.

The euro has increased its gains against the dollar Friday after the American Statistical durable goods orders and touched a new high since April.

The euro hit 1.3443 dollars and 1.3455 dollar. It traded at 1.3410 before the announcement of Statistics.

Orders for durable goods in the U.S. fell 1.3% in August, more than expected. Orders for capital goods excluding defense and aircraft, considered a barometer of business investment rebounded 4.1% after falling 5.3% in July.

The Paris Bourse started slightly lower Friday, facing down for the fourth straight session in a background of renewed concerns about growth and in anticipation of a series of indicators.

Around 9.50 am, the CAC 40 Index tested the helm of the 3,700 points and a loss of 0.28% to 3700.05 points.

Investors expect the Ifo index of business climate in Germany this morning, then durable goods orders and new home sales in the United States.

Bénéteau largest increase in DTH, wins more than 5% after the publication of a turnover from 2009 to 2010 exceeded expectations.Several brokers have raised their recommendation, which Oddo and Natixis.

Soitec yields 2.3%, largest drop in DTH, while AMD has announced that it expected a decline of 1 to 4% of its turnover in the third quarter compared to $ 1.65 billion achieved in the second quarter.

Remy Cointreau is 2.7%. JPMorgan raised its recommendation from "neutral" to "overweight".

EADS wins 2.3%. JPMorgan raised its recommendation from "neutral" to "overweight".

Other major European markets are also slightly lower: London and Frankfurt lost 0.4% 0.3%. Of the European indices, the EuroStoxx 50 and yields 0.4% Eurofirst 300 lost 0.47%.

The dollar is trading at 1.3324 / 27 1.3312 against the euro yesterday.

The bank tax will yield 504 million euros to the French state in 2011, 555 in 2012 and 810 in 2013, says Economy Minister Christine Lagarde in an interview published Thursday in the Echoes.

This tax, which will apply from next year to a score of banks, credit institutions and investment firms, aims to prevent excessive risk-taking that could cause a new crisis.

"The principle is clear: most banks take risk, the more it will be taxed," said Minister of Economy.

"The tax will abound the state budget, amounting to 504 million euros next year from 555 million in 2012 and 810 million by 2013.Sitting on risky assets, it will swell as increasing the capital requirements set by the Basel Committee, "she adds.

Christine Lagarde said that this tax will add upward of 90 million euros per year for the participation of banks in guarantee fund deposits and 125 million euros that represent the contribution to cost control.

A comparable tax would yield about 1.5 billion euros in 2013 in Germany and 2 billion pounds in Britain.Christine Lagarde believes that once the three French taxes added, the effort made by banks will be equal in all three countries.

The tax will affect the French banks under their international business and foreign banks under its French business.

It will be deductible from corporate tax, said Christine Lagarde, who adds that agreements are being negotiated to avoid double taxation of businesses hit in Paris and London under the same assets.

As in Great Britain and Germany, the tax will not affect hedge funds (hedge funds).

Questioned the hypothesis of a possible future additional capital requirement for banks represent a systemic risk, she replied: "Add a new layer of equity at some schools is not the panacea."

"Another option is to develop mechanisms to resolve crises that can manage the difficulties of a large institution without jeopardizing the entire banking system," she says.

"A third runway is finally strengthened in a very rigorous or inquisitorial powers of regulators in the supervision of institutions regarded as systemic. I would rather for these last two options," said Christine Lagarde.

A U.S. senator from the Republican Party on Monday accused Barack Obama's administration of politicizing the issue of bidding for tankers for the U.S. Air Force who is competing Boeing and Airbus, the EADS subsidiary.

"Politics should not interfere in this process of tendering but this is what happens in the Pentagon and the White House," said Richard Shelby at the Washington summit organized by Reuters .

"This administration is determined to award the contract to Boeing if there is a way to achieve this," he added.

The U.S. Department of Defense has denied any political motive behind the government and reaffirmed its determination to ensure a fair and open competition.

Tensions are increasing around the highly publicized case of tankers as the U.S. Air Force must make its decision soon to renew its fleet of tanker aircraft, its third attempt in the space of nine years.

Analysts, politicians and industry experts expect an outcry whatever the winner and a candidate's official appeal seems likely unhappy with the campaign's key supporters in the media.

Senator Richard Shelby, who represents the state of Alabama where the devices are assembled in case of victory of EADS, argues that the U.S. Air Force has a preference for the A330 made by Airbus compared to the Boeing 767, the smallest and oldest design.

Yet it is likely that the American manufacturer out victorious in the tender for policy issues, argues the Republican.

John McCain, another Republican senator, who stopped a previous agreement between the U.S. Air Force and Boeing, said at the summit organized by Reuters that he was watching closely the progress of the proceedings but that he had no worries for now.

"We're very attentive almost daily but I never saw anything inappropriate for the moment," he said.

WHEREAS VERDICT TO FALL

McCain added that he had confidence in Defense Secretary Robert Gates, the only member of the old Republican administration have remained in office under the Presidency of Barack Obama.

Geoff Morrell, spokesman for Defense Secretary, said the Air Force was still studying the offers that were submitted.

"But I can assure Senator Shelby and all other members of Congress that the policy has certainly not interfered in the tendering process," he said in an email."Here at the Pentagon, we remain committed to a fair and open competition which offers the best equipment for our fighter aircraft at the best price for taxpayers."

EADS won in February 2008 a tender for 179 tanker planes, but the Pentagon later rescinded the agreement in response to complaints from Boeing.

The Air Force should make its decision on the new tender this autumn.

Richard Shelby said he was skeptical about the conduct of the proceedings and expressed confidence that the new rules call for tenders had been clearly altered to support the unit of Boeing.

He also warned against the possible international repercussions if the proposal was not selected EADS.

"There are business issues.Europe buys us a lot of things, "he said.

Democratic Senator Patty Murray, who represents the state of Wisconsin where Boeing would build 767, on Tuesday plans to introduce an amendment to the bill on the 2011 defense budget that would require the Pentagon to take into account possible illegal subsidies to the manufacturer's choice of tankers.

The Senator said that the World Trade Organization concluded that Airbus had received billions of dollars of illegal subsidies, but the international organization has also found that Boeing had received grants from the federal government and several American States.

Tokyo stocks closed Friday at its highest level in six weeks, supported by the yen's decline as a result of massive intervention by Japanese authorities on currency markets Wednesday, but his progress has been limited pending possible new operations.

The Nikkei gained 116.59 points, or 1.23% at 9626.09 points.For the week, it was up 4.2%, its largest weekly increase since the beginning of the year, reflecting the decline of the yen caused by the intervention of the Bank of Japan.

The broader TOPIX took 7.38 points (0.87%) to 852.09 points.

Investors have seemed reluctant to open a lot of positions just before a weekend of three days, speakers stressed.

The export values have mainly benefited the decline in Japan's currency.Kyocera closed up 1.11% to 8,200 yen and Honda Motor took 1.86% to 3015 yen.

GS Yuasa has also advanced 3.34% to 619 yen after a source familiar with the talks reported that the battery maker was in talks with Magna International, the third global supplier, to produce lithium-ion batteries for electric cars in Europe.

The CAC 40 should finish the year 2010 on a note almost stable in a market still reeling from the crisis of sovereign debt that threatened to halt the fragile recovery of growth in the euro area based on a survey Reuters.

The index highlights of the Paris Stock Exchange is expected to 3,900 points at the end of 2010, up 4% from its closing level of 3755.64 points on Wednesday, but virtually unchanged (- 0.9%) compared to its level of late 2009, according to the median forecast of 25 analysts and managers surveyed last week.

Stakeholders surveyed anticipate an ACC 40-4100 points by the end of June 2011, up 9% from the close of Wednesday.

In a similar survey conducted in late June, said analysts and managers expect a CAC at 4,000 points and 4,200 points late 2010 mid 2011.

A series of quarterly results better than expected second quarter results and positive stress tests undergone by the French banks have supported investor sentiment late July before fears of a sharp slowdown in growth will weigh again the trend of equity markets.

"The recent results were better than expected, but they did not trigger wave upward revisions," said Emmanuel Morano, head of management at UFG-IFA, which expects a CWC 3430 points late 2010 and 3700 mid-2011.

"There are still many questions marks and the second semester is a transition period", he adds.

Since the beginning of the year, the Paris index was down nearly 5%, after having moved in a zigzag pattern in a limited margin of fluctuation since late April.

"We fear that the coming months bring more bad than good news," said Charles Dautresme, strategist at AXA Investment Managers, which anticipates an ACC 40-3640 points late 2010 and to 4,100 points in mid-2011.

Low valuation

"We integrate the particularly high degree of uncertainty about the recovery in the U.S. and worldwide," he said. "But we do not mean We position in the camp of relapse.We believe that the global recovery will continue to be fueled by the strong structural demand from emerging markets and the investment profitable companies around the world ".

Despite the lack of visibility on the macroeconomic front, most analysts and strategists surveyed believe that current prices are very attractive in an environment where interest rates are at their lowest.

The deal values the ACC to earnings ratios of 9.76 times the expected outcomes at 12 months, sharply down compared with the average ratio of the last 20 years is 15.5, while the CAC 40 in parallel offers yield of 3.76% on average, higher than the historical average of 3.09%.

In comparison, the yield on government bonds to 10 years lies at 2.726%.

"We believe that rates will remain low and stocks are valued very low," said Jean-Marie Mercadal, responsible for managing at OFI Asset Management, which sees the CAC at 3950 points at the end 2010 and 4250 mid-2011.

"Investors are certainly very chilly but we do not see how prices could fall further and we believe they should gradually rise with the success of companies," he said.

Total said Wednesday that its oil and gas would be stable in 2011 although it still intends to grow by 2% per year by 2014, thanks to the contribution of new projects.

The third European oil company by market capitalization, behind Royal Dutch Shell and BP, has also provided a presentation to investors that his production is projected up to a year in the second half.

During the first six months of 2010, total production was up 6.3%.

In this presentation on line, Total said that production should be stable next year and that its level will depend mainly on the evolution of oil prices, the policy of the Organization of Petroleum Exporting Countries (OPEC) and recovery of production in Nigeria.

Total states also target a net debt to equity (gearing) of 25% to 30% at end 2010. It was 23% at end June

The group estimates that global demand for oil is projected to grow by more than 1% per year on average, structural component supports the higher prices.

The action on the internet dating site Meetic is the subject of a speculative fever on Monday after its two main shareholders announced Sunday that it had given to the investment banking Jean-Marie Messier strategic thinking on society.

The two shareholders at the origin of this initiative are the group's founder Marc Simoncini and Match Pegasus, which have respectively 22.98% and 26.72% stake in Meetic.

At 11:50, the title clinching 10.12% to 23.50 euros.

"Expect that speculation has intensified," warned one trader, holding that the most likely scenario is that a sale to its shareholders or to match funds.

"We believe the most likely option is a sale of shares by Marc Simoncini," believes his side Ning Godement, an analyst at the intermediate Gilbert Dupont.

Meetic has however said in a statement that no decision had been taken for the time being.

"No takeover bid was received as part of this mandate," he timed the company, adding that "no decision to sell has been made".

The French sector of Internet media is in turmoil after the offensive launched by the German publisher Axel Springer to buy the group of ads SeLoger.com.