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from MacroScope:

Nearer to the brink

De-escalation?  Forget it. Ukrainian forces killed up to five pro-Moscow rebels in the east yesterday and Russia launched army drills near the border in response.

The big question now is whether Russian troops will cross into eastern Ukraine following a constant stream of warnings from Moscow about the security of Russian speakers there.

Foreign Minister Sergei Lavrov is expected to have a telephone conversation with U.S. Secretary of State John Kerry, following last week’s Geneva accord which aimed to pull things back from the brink. Kerry said yesterday that Russia’s “window to change course is closing” and U.S. President Barack Obama said tougher sanctions were ready to go. There is no question of Western military intervention.

According to our sources, Obama – on an Asian tour - will hold a conference call with British Prime Minister David Cameron, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi.

from Breakingviews:

GE/Alstom deal rumours test French reform drive

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By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

In an ideal world where free people would roam across free markets, there would be much to like in a takeover of engineering group Alstom by General Electric. The French turbine and train maker, bailed out by taxpayer money 10 years ago, has been hit hard by the economic slump and Asian competition. Its future as a standalone company is in doubt. It needs cash that its shareholders - including Bouygues, with a 29 percent stake – are loath to fork out. Being folded into much larger GE would help it through bad times while some of its assets would fit nicely into the U.S. group.

from MacroScope:

Will French numbers add up?

French President Francois Hollande’s cabinet meets to adopt a new debt reduction plan.

After outlining 50 billion euros of savings for 2015-2017 to help pay for consumer and business tax cuts, the government is due to sign off on already delayed deficit reductions to bring it, eventually, to three percent of output as demanded by Brussels.

from MacroScope:

Five days on, Ukraine accord at risk of unravelling

An international agreement to avert wider conflict in Ukraine, brokered only five days ago, is teetering with pro-Moscow separatist gunmen showing no sign of surrendering government buildings and Kiev and Moscow trading accusations over who was responsible for killings over the weekend.

Washington, which signed last week's accord in Geneva along with Moscow, Kiev and the European Union, said it would decide "in days" on additional sanctions if Russia does not take steps to implement the agreement. U.S. Vice President Joe Biden is in Kiev where he is expected to announce a package of technical assistance.

from Photographers' Blog:

Remembering Verdun

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Verdun, France

By Charles Platiau

Verdun was the site of one of World War I’s bloodiest battles. Hundreds of thousands of French and German soldiers lost their lives in this north-eastern corner of France, where fighting raged for months in 1916.

Yesterday’s enemies are now united on the battleground. Members of French and German historical associations, all keenly interested in the First World War and all passionate about historical re-enactments, gather in Verdun every year to take part in a commemorative march.

from MacroScope:

A question of gas

Vladimir Putin will meet senior Russian government officials to discuss Russia's economic ties with Ukraine, including on energy after state-controlled natural gas producer Gazprom said Kiev missed a deadline to pay a $2.2 billion bill.

In previous years, gas disputes between Moscow and Kiev have hurt supplies to Europe. The Ukraine government has said it would take Russia to an arbitration court if Moscow failed to roll back gas price hikes.

from MacroScope:

Ukraine inching back to the brink

Pro-Moscow protesters in eastern Ukraine took up arms in one city and declared a separatist republic in another yesterday and the new build-up of tensions continues this morning.

The Kiev government has launched what it calls “anti-terrorist” operations in the eastern city of Kharkiv and arrested about 70 separatists. Moscow has responded by demanding Kiev stop massing military forces in the south-east of the country.

from Breakingviews:

Lafarge-Holcim share jump has gone far enough

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By Quentin Webb and Chris Hughes

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Lafarge and Holcim’s share rally has gone far enough. The Franco-Swiss duo’s planned 37 billion euro ($50 billion) mega-merger, which would create the world’s biggest cement maker, has already added 3.3 billion euros in combined market capitalisation since the deal leaked on Friday. Cost savings and revenue boosts could in time be worth a lot more. But the market’s caution is justifiable.

from MacroScope:

To QE or not to QE?

ECB Vice-President Vitor Constancio testifies to the European Parliament prior to attending the IMF Spring meeting in Washington at the back end of the week along with Mario Draghi and other colleagues. Jens Weidmann, Yves Mersch and Ewald Nowotny also speak today.

There has undoubtedly been a change in tone from the ECB, which is now openly talking about printing money if inflation stays too low for too long (no mention of deflation being the required trigger any more). Even Bundesbank chief Weidmann has done so.

from MacroScope:

Reasons to do nothing

It’s ECB day and the general belief is that it won’t do anything despite inflation dropping to 0.5 percent in March, chalking up its sixth successive month in the European Central Bank’s “danger zone” below 1 percent.

The reasons? Policymakers expect inflation to rise in April for a variety of reasons, one being that this year's late Easter has delayed the impact of rising travel and hotel prices at a time when many Europeans take a holiday. Depressed food prices might also start to rise before long.

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