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90 seconds at 9 am: Central banks preparing for coordinated emergency intervention as Euro-crisis deepens ahead of Greek elections; Dow rises 1.2% on QE III hopes; NZ$ at 78.2 USc
Here's my summary of the key news overnight in 90 seconds at 9 am, including news from Reuters that the world's central banks are preparing to intervene in a coordinated way to stabilise financial markets early next week after Greek elections are held.
G20 officials told Reuters central banks are ready to intervene in markets to provide emergency supplies of US dollars and cash to ensure credit lines remain open. An emergency meeting of ministers from the world's 7 largest economies could be held on Monday or Tuesday in Los Cabos in Mexico, depending on the severity of any market response to the Greek elections. Central bank governors would join the meeting by phone, Reuters reported.
The coordinated intervention could include increased swap lines from central banks for US dollars and special lending from central banks to banks.
Fears deepened over the Euro-zone debt crisis overnight as reports of heavy withdrawals of deposits from Greek banks came as bond yields spiked in Spain to unsustainable levels.
Britain acted overnight to flood its banking system with cash to try to free up credit, Reuters reported. The Bank of England announced it would provide cheap long term loans to encourage them to lend to businesses and consumers and Governor Mervyn King indicated the bank could print more money to buy government bonds. The FT.com reported the plan coordinated by the Bank of England and the UK Treasury was a 100 billion pound programme of emergency loans to banks.
Elswhere, the Swiss National Bank threatened to impose capital controls to staunch the flood of funds into Swiss francs as European investors flee large parts of the Eurozone. See more here at Reuters.
Spain and Italy said overnight they were planning new measures to try to regain the confidence of markets as their bond yields rose sharply. The Spanish 10 year bond yield rose over 7%, which was the level that forced Greece, Portugal and Ireland to ask for bailouts. See more here at Reuters.
However, the Dow rallied more than 1% overnight after fresh economic figures reinforced hopes the the US Federal Reserve would further ease monetary policy next when it meets next Wednesday. There are hopes the US Federal Reserve may activate a third round of Quantitative Easing or money printing to buy government bonds.
Jobless claims figures rose 6,000 last week to 386,000 last week, disppointing economists who had expected a drop. US consumer prices also fell 0.3% last month, their biggest fall since December 2008.
In China, Deutsche Bank and Credit Suisse said China's economic growth is likely to fall below 8% and could prove a drag, rather than a boost, to the global economy.
The New Zealand dollar rose to 78.2 USc on talk the US Federal Reserve would engage in more money printing, therefore devaluing the US dollar vs other currencies that are not printing money.