• Home ::
• Technical ::
• Market View ::
• Daily Analysis

• Send
• Print
• Add To
• Rss

Daily Analysis

4e3909d4-9557-4645-afda-4f35c4b88c30

9

0

The UK government may buy extra shares in RBS and Lloyds

Mon, Nov 2 2009, 09:16 GMT
by Benny Menashe

Finotec Group Inc.

The UK government will unveil plans this week to spend 30 billion pounds, buying further shares of rescued banks Royal Bank of Scotland and Lloyds, The Daily Telegraph newspaper reported on Monday. The UK newspaper said British Finance Minister Alistair Darling has agreed to spend about 25 billion pounds on shares in part nationalized RBS and 5.5 billion pounds on shares in Lloyds in a move expected to be announced on Tuesday. The government's stake in RBS would rise to 84 percent from 70 percent as a result of the move.RBS declined to comment when contacted by Reuters. A Lloyds spokesperson was not available. The report comes as the UK government is preparing to announce a banking overhaul this week as carve-up plans for the two rescued banks are finalized. The government hopes to attract new players to the market following a process that will see the country's largest retail lenders selling off assets, including a string of high street bank branches, and shrinking back their balance sheets. The GBP/USD is currently trading at $1.6430 as of 7:50am, GMT.

The euro rose against the yen and the dollar as signs the global economy is recovering trimmed demand for the relative safety of the U.S. and Japanese currencies. The Australian dollar climbed against all 16 most-traded currencies as Treasurer Wayne Swan said economic growth will be faster than expected and a government report showed house price increases accelerated. Japan’s currency earlier rose to the strongest level in three weeks against the dollar and the euro after New York-based CIT Group Inc. filed for bankruptcy. “Global data still suggest that the economy is on the mend,” said Minoru Shioiri, chief manager of foreign exchange trading at Mitsubishi UFJ Securities Co. “The underlying need to invest in higher-yielding currencies through carry trades remains intact.” The EUR/USD is currently trading at 133.00 as of 8:15am, GMT.

Investors should take advantage of any dips in emerging-market bonds by adding to their holdings because global funds are likely to pump more money into the securities through early next year, according to Morgan Stanley. Morgan Stanley said the overall risk adopted by emerging- market investors remains low as its internal indicators show the share of investment-grade credits has increased as a proportion of total allocations in funds dedicated to emerging markets. “This suggests that emerging-market funds will still need to add exposure to be in line with their benchmark,” the strategists wrote.

Today's Economic Events

Published on  Mon, Nov 2 2009, 12:42 GMT