Forex: EUR/USD steadies above 1.2500 - NASDAQ Forex: EUR/USD steadies above 1.2500 - NASDAQ

Friday, May 25, 2012

Forex: EUR/USD steadies above 1.2500 - NASDAQ

Forex: EUR/USD steadies above 1.2500 - NASDAQ

FXstreet.com (Córdoba) - The euro slipped below the 1.2500 level to hit its lowest rate in almost 2 years at 1.2495 at the beginning of the New York session, weighed down by new concerns about Spain, although it managed to quickly bounce.

However, the recovery stalled at the 1.2545 area, where the 20-hour SMA offered resistance, confining the cross to a stage of sideways consolidation between those levels. At time of writing, EUR/USD is trading around 1.2515, down 0.1% on the day.

Volume is expected to remain low and ranges to persist through rest of the session as investors seem unwilling to take new positions ahead of the US Memorial Day weekend.

Having cracked the 1.2500 level, next key support can be spotted in the 1.2330-1.2350 area, the 2008 low and support pivot that brought about a strong bull run, according to Fan Yang, analyst at FXTimes. Below this, the next key support is at the 1.20 psychological support, and the 1.19 support pivot and 2010 low.

"The market remains bearish. The 1.26 level is turning out to be key resistance, so if the market manages to push above it, we should be looking at some more significant consolidation or corrective rally but still within the bearish outlook", said Yang.



Accusations that climate science is controlled by money are mistaken - Wired.co.uk

Ars Technica

One of the unfortunate memes that has made repeated appearances in the climate debate is that money isn't just influencing the public debate about science, but it's also influencing the science itself. The government, the argument goes, is paying scientists specifically to demonstrate that carbon dioxide is the major culprit in recent climate change, and the money available to do so is exploding.

Although the argument displays a profound misunderstanding of how science and science funding work, it's just not going away. Just this week, one of the sites where people congregate to criticise mainstream climate science once again repeated it, with the graph accompanying this story. That graph originated in a 2009 report from a think tank called the Science & Public Policy Institute (notable for using the serially confused Christopher Monckton as a policy advisor).

The report, called " Climate Money: The climate industry: $79 billion (£50.4 billion) so far -- trillions to come" (PDF) and prepared by Australian journalist Joanne Nova for the Science & Public Policy Institute, claims to show how money has distorted climate science. There are several aspects to this argument, but we'll start with the money itself.

Who's got the money?
Many discussions have focused on the fact that businesses with a large carbon output (like fossil fuels extractors) have funded PR and lobbying efforts that, in part, have attempted to undercut the scientific case for human-driven climate change. It notes that there is now significant money being made by companies that build carbon-neutral energy sources and energy efficient technology, some coming from tax incentives and subsidies. In addition, carbon-trading markets are predicted to grow rapidly over the coming decades. Combined, the report asserts, this money provides an incentive to keep the spotlight focused on carbon.

In short, some of the green industries are now in the same position as their fossil fuel counterparts, in that they have an incentive to shape policy and the public support for it. There's a definite element of truth to this, although there are clearly reasons other than climate change -- ocean acidification, energy security, extending the lifetime of finite resources -- for promoting efficiency and green energy.

But the key thing here is that, at best, these companies can influence things like public perception and policy responses. They don't influence the underlying science because almost none of them are paying any scientists to gather data. So, although a focus on the income of various companies might tell us something about public opinion, it doesn't really say much about the science.

The false assertion that money is distorting the science comes, in part, from a spectacular misreading of the graph that accompanies this article.

The graph ostensibly shows how the US has gone from essentially funding nothing in the way of climate research to spending over $7 billion (£4.47 billion) a year. But the vast majority of that money is in the form of "Climate Technology," and a careful reading of the report indicates that this goes to things like wind and solar power, biofuel production, and things of that nature. None of that money goes to the researchers who are actually generating the results that point to anthropogenic warming, so it can't possibly provide an incentive to them.

The money that is actually going to climate science is on the bottom of the graph, in purple. And, as that shows, funding has been essentially flat since the early 1990s. (Funding has gone up slightly in recent years, but is still in the neighbourhood of $2 billion (£1.2billion) annually.) A lot of that money doesn't actually go to scientists, either, as it pays to support everything from some of NASA's Earth-monitoring satellites to land and ocean temperature monitoring.

The other issue with this graph is that it gives the false impression that funding shot up from nowhere around 1990. The truth of the matter is that the US has been funding climate science for decades. It's why we have things like a record of CO2 levels that goes back to the 1950s, temperature records that span over a century, and a detailed history of periods like the ice ages. People didn't just suddenly start studying this stuff in 1990 -- and much of the work from before that date was funded by the government. What changed was the accounting. There are over a dozen different branches of the government that fund some sort of science, but it wasn't until 1990 that the government formed the Climate Change Science Program, which started aggregating the expenditures across agencies.

There has never been any sudden boom in government funding for climate research that is luring people onto the research track, much less inducing them to support the consensus view. If anything, many years of flat funding would provide an incentive for people to look to getting out of the field. The graph, held up as evidence that climate scientists are being led around by money, actually shows the exact opposite.

Where's that money going?
But maybe that money is somehow being directed in a biased manner, distributed in a way that ensures the current consensus is supported. "Where is the Department of Solar Influence or the Institute of Natural Climate Change?" Nova asks, elsewhere claiming, "Thousands of scientists have been funded to find a connection between human carbon emissions and the climate. Hardly any have been funded to find the opposite."

This displays an almost incomprehensible misunderstanding of how science research works. Thereare institutes that are dedicated to studying the Sun -- the Naval Research Laboratory has one, as does NASA. But those institutes are focused on learning about what the Sun actually does, not squeezing what we learn into some preconceived agenda. For decades, solar activity has been trending downwards, even as temperatures have continued to rise. It's not that the researchers are being induced or compelled to some sort of biased interpretation of the data. Reality just happens to have a bias.

The same thing works in other areas as well. A number of countries have spent large sums of research dollars to put Earth-monitoring satellites in orbit, not with the intent of finding anything in particular, but because monitoring the Earth can tell us important things. This hardware has imaged the Greenland ice sheet -- again, not because of some sort of bias, but because the sheet is very big and very significant. Most of these studies have suggested that ice loss is accelerating, but a recent one concluded, "sea level rise from Greenland may fall well below proposed upper bounds."

The researchers weren't from some sort of "Institute to discover a stable sea level." They were from departments focused on polar research and Earth sciences. What Nova doesn't seem to get is that the people who study the planet actually pay attention to what the planet tells them, not to what their institute may be titled.

(Incidentally, this paper is also a clear indication that research that indicates things aren't as bad as they could be not only gets published, but makes it into very prestigious journals.)

Like many other self-proclaimed skeptics, Nova also has the bizarre idea that research normally proceeds by "auditing" existing studies. "Auditing AGW research," she writes "is so underfunded that for the most part it is left to unpaid bloggers who collect donations from concerned citizens online." But nobody audits the JPL to see if it's handling the Cassini probe properly; geneticists aren't being asked to open their books so that other scientists can see if they're fudging the numbers.

Science simply doesn't proceed through audits. The Greenland paper linked above provides a much more typical picture of how things work. The researchers behind it didn't simply reanalyse what others had done; they got new (and, in many ways, better) data that addressed the same issue and provided a more comprehensive picture of what was going on at the ice sheet's glaciers.

In short, you generally don't make an impression on science by auditing past data; you do it by coming up with better data.

It's pretty strange that people find in the graph (which shows research stuck in neutral for decades) evidence of a flood of money into climate science that distorts its conclusions. But it's unfortunately typical that an argument focused on climate science leaves the facts behind from the start.

Source: Ars Technica



FOREX-Euro falls vs dollar on fears debt crisis may spread - Reuters UK

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.



Black Money: Institutional lacunae boosts the menace - Economic Times

The paper underlines the centrality of institutions in arresting black money. The paper does mention that estimating the shadow economy 'is a challenge'. One method is the currency demand approach. The reasoning is that since most transactions in the shadow economy are conducted in cash - so as to evade taxes, not disclose income, etc - the excess demand for notes can well reveal the extent of black money sloshing around. Another method cited is the electricity demand pattern, where the difference between growth rate of electricity consumption and the official economic growth rate can offer scope for estimating the extent of the underground sector.

And then there is the multiple indicators multiple causes, or MIMIC, model, with such observed variables as direct tax rates, the regulatory burden, per-capita income levels, etc. The MIMIC model is now used widely for estimating black money. The paper adds that the mavens gauge the size of the shadow economy in most advanced economies in the range of 14-16 per cent of total economic output - about 10 per cent in the US and Japan, 32-35 per cent of output in the emerging markets and far higher - often greater than 40 per cent of official output levels - in other developing countries.

The study cites earlier studies to show that there is considerable debate on the role of the burden of taxation in egging on black-money generation. It mentions of one piece of research that found that when the tax burden of corporates becomes more daunting, going up by one point on a scale of 1 to 7, the size of the shadow economy tends to rise by 11.7 percentage points. But other studies find that higher tax rates can well reduce the size of the underground economy. The explanation is that higher taxation implies stronger revenue streams, which can mean better provision of public goods including a more robust legal and judicial setting, thus discouraging black money. But convoluted labour market rules and restrictions can well boost informal employment and so rev up the underground economy.

What's underscored is that black money has a way of being inversely related to the regulatory burden, the extent of lax governance and the general absence of the rule of law. The paper uses cross-country regression analysis to show that controlling for taxes, inflation and per-capita incomes, institutional issues are the most important determinant of the size of the unofficial sector the world over. To combat black money, what's required is discernable improvement in governance, concludes the paper.

By (Inclusive Growth, Institutions and the Underground Economy, by Anoop Singh et al, IMF working paper, February 2012)



Money and morality - New Statesman

All money tends to corrupt, and absolute money corrupts absolutely.  This is an ancient message.  You can find it in the Bible ("the love of money is the root of all evil"), in the writings of ancient Greek philosophers and Renaissance moralists, and more recently in the Occupy movement that set up camp last year outside St Paul's Cathedral.  This Wednesday, the cathedral was packed for a rather more sedate explanation of the same ideas featuring the Harvard philosopher Michael Sandel.

Sandel, currently plugging his new book What Money Can't Buy, has been difficult to avoid in recent days.  His central thesis is twofold.  Firstly, when you put a price on something you alter its intrinsic properties, and this can be morally corrosive.  Secondly, the past few decades have seen a market economy replaced by a "market society" in which "everything is up for sale".  Markets, he says, "are not neutral instruments, they crowd out values worth caring about" - values like altruism, human dignity and the common good.  As a result we have seen a great hollowing-out of communality and public political discourse.

He asks such questions as: is it right to create a market in blood, rather than rely on altruistic donors?  Should unhealthy people be given financial incentives to adopt healthier lifestyles?  Should school pupils be "bribed" to read books or achieve higher marks?  To all these questions Wednesday's audience answered an emphatic "no", which suggests that Sandel is, at least in terms of public opinion, pushing at an open door.  

This may explain the tremendous popularity he now enjoys.  (The Guardian described him the other day as "currently the most effective communicator of ideas in English" and suggested that his latest book "should be the bedside companion of every Miliband aide".)  The free market "experiment" of the past few decades has led to rising inequality and an economic disaster, the only beneficiaries of which would seem to be a handful of already wealthy bankers.  We should not be surprised if Sandel's deeply traditional complaints about the corrosive effect of money on the human soul find a ready echo, especially when voiced in a cathedral whose history and location give it a somewhat ambiguous relationship with wealth.

The idea that money has destroyed all vestige of civic virtue was hackneyed already in Roman times.  For all Sandel's current vogue on the progressive Left, his message is inherently a conservative one, in that it implicitly looks back to a Golden Age before money ruined everything.  Another way of saying this is that there's nothing new about the "market society".

One of Sandel's examples relates to privately-run prisons in California in which convicts with sufficient means can upgrade to a better cell.  This was standard practice in 18th century London.  Also popular in the 18th century was the "tontine", a form of gambling in which a group of people pooled their resources and the last one left alive collected the jackpot: not too dissimilar, in essence, from the market in third-party life insurance that Sandel criticises today.

But then to talk about the 18th century is to realise just how much more thoroughgoing the marketisation of society used to be.  From the horrors of the slave-trade and the near-slavery of indentured labour, to the open purchase of Parliamentary seats through "rotten boroughs", almost everything was up for sale.  Commissions in the British army and civil service appointments were bought, rather than given on merit, well into the 19th century.  What we think of as basic public services such as policing and the upkeep of roads were wholly private or at best put out to tender. And it's unlikely to be a coincidence that prostitution in the 18th century was vastly more extensive and exploitative than anything seen today.  

The present-day "market society", for all its deficiencies, is a pale shadow of the ruthless and money-driven world of two or three centuries ago.  Sandel is squeamish about students hiring out their foreheads to advertisers or paying homeless people to stand all day in queues so that a richer and busier person can get into Congressional hearings.  There used to be an actual trade in human beings.  Things aren't likely to get that bad again, however badly things go in Greece.

At least when something has a price it shows that someone puts a value on it.  Not charging for goods or services can lead to problems of a different order.   The BBC's Stephanie Flanders, taking part in the debate at St Paul's, pointed out that in the age of the internet, many goods and services which would in the past have been paid for are available for free.  The thought struck me that perhaps not charging for a service, or expecting things to be free, can be at least as morally corrupting of basic goods as Sandel believes money is.  

If people expect to, and can, receive their news and entertainment for free, why should they pay for it?  And how can the producers make an honest living?  The Bank of England's Andrew Bailey contends that free banking distorts the market, is less transparent and leads to poorer service to consumers. It is at least an arguable case.  And as regards to "free" internet services like Google and Facebook, it has well been said that the non-paying users are not the customers, but are themselves the product.

Is money the source of the problems Sandel identifies, or rather a convenient scapegoat for human beings who can't bear too much reality?  You can't buy a friend, he points out, because if you know you've paid someone to be nice to you it ceases to be a "real" friendship.  Has he never noticed that rich people tend to have more "friends" than poor ones?  Sandel also raised the example of a professionally written wedding speech.  Would the bride and groom feel quite the same way, he wondered, if they knew that the best man had spent $150 dollars on buying a speech rather than investing his heart and soul by writing it personally?  Perhaps not, but it's not obvious to me why the payment of money in itself is corrupting.  

The problem, surely - if there is a problem - is that the speech is not the best man's own; not that he has paid for it.  I rather doubt that the newlyweds would be happier to learn that the best man had found the speech on a website and simply downloaded it for free.



Personal finance apps, ranked by Mobilewalla - Fort Worth Star-Telegram

Cash management can be a tricky business, unless you consistently stay on top of all of your incoming and outgoing transactions. Apps can help you track your spending, set goals and keep all of your accounts in one place.

Apple apps

Mint.com Personal Finance (Free)* -- One of the most popular money-management apps. You can create a razor-sharp view of your accounts, track your budgets and better manage your expenses. (Mobilewalla score: 99/100)

CheckPlease Lite Tip Calculator (Free)* -- Adjust the tip rate on your checks, split the bill among your friends or round up your tip. Take the guesswork out of it. Includes a tutorial to show you options. (Score: 93/100)

My Eyes Only -- Secure Password Manager (Free) -- Having trouble keeping track of all the passwords to your accounts? Keep them in one place and recover them easily. You'll never be locked out again. (Score: 89/100)

SplashMoney -- Personal Finance Manager ($4.99) -- You can connect to your bank accounts and sync to your PC or Mac to track all of your different accounts, from credit cards to money markets. Includes charts to help the budgeting process. (Score: 82/100)

Adaptu Wallet: Personal Finance and Money Management (Free)* -- Manage your cash flow, stay apprised of your monthly budget and enter photos of all your cards to free up your wallet. (Score: 69/100)

Android apps

PayPal (Free)* -- Millions of individuals and small businesses trust PayPal with their daily transactions and credit-card processing. Easily manage your transactions, or simply send your friends money via this simple and secure platform. (Mobilewalla score: 89/100)

Google Finance (Free) -- Keep track of your entire stock portfolio with real-time alerts from Google Finance. A must-have for day traders and stock junkies. (Score: 87/100)

EasyMoney -- Expense Manager (Free) Manage and track all of your personal or work expenses with ease. Quickly assess your monthly spending levels with graphic displays or instant reporting for that demanding boss. (Score: 86/100)

E*TRADE Mobile Pro (Free)* -- Manage your E*TRADE account securely and effectively from this feature-rich platform. Get quotes, make trades or chat directly with E*TRADE representatives. (Score: 84/100)

mooLa! Platinum Edition ($4.99) -- Track and manage all of your "moola" in one simple-to-use interface. Pay bills, manage investments, even balance your checkbook. (Score: 69/100)

Apps with an asterisk* denote availability on Apple and Android.

Mobilewalla is a search and discovery engine using breakthrough technology to score every app to help consumers navigate the mobile application marketplace. Apps are scored using an algorithm that weighs several characteristics, including user ratings, position within category and staff recommendations. For more app intel, go to www.mobilewalla.com.

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Ship Finance Restores Double-Digit Dividend Yield After Frontline Agreement - Seekingalpha.com

Ship Finance International Ltd. (SFL) has released its first quarter results and the big news for income investors is the restoration of the quarterly dividend rate to previous levels following a one quarter decrease. The shipping sector has been a train wreck - ship wreck? - since 2008 when an oversupply of new ships purchased by aggressive shipping companies sent charter rates to below breakeven for many companies. Ship Finance is one of the few companies to have made it out through the bad times with the current ability to pay a decent dividend and provide the potential for share appreciation returns to investors.

Ship Finance works as a leasing company in the shipping industry. It buys ships and leases them out on long-term bare boat contracts. The customer companies typically pay a minimum per day lease rate with a profit-sharing clause if the shipper is able to earn above a certain threshold. Ship Finance was spun out of Frontline Ltd (FRO) in 2004 and initially just owned crude oil tankers. Over the years, Ship Finance has expanded away from tankers and the Frontline leased vessels now account for one-third of the fleet. Offshore drilling and support ships are now the largest portion of the fleet accounting for 46% of the assets. Ship Finance also owns container and drybulk ships, accounting for 13% and 8%, respectively, of the fleet.

Historically, Ship Finance has paid out the majority of net income as dividends. In late 2008, the formerly steadily increasing quarterly payout was cut in half to 30 cents per share. The company resumed a path of increasing dividends in the first quarter of 2010 and the payout was up to 39 cents in the 2011 third quarter. Late in 2011, Frontline was in trouble with its loan covenants and was challenged to just stay profitable. Frontline made some moves to reduce its daily operating cost, including adjusting its lease terms, with Ship Finance. The result is a reduced debt load for Frontline and reduced daily lease rates on the tankers owned by Ship Finance. In return, Ship Finance received a $105 million up front payment and 100% profit share up the old lease rates. The new agreement runs through 2015.

Ship Finance reduced the dividend to 30 cents for the 2011 fourth quarter and now has re-raised the quarterly distribution to 39 cents for the 2012 first quarter dividend to be paid in June. The new dividend rate puts the yield at 9.8%, after the 6% share price increase following the announcement of the new dividend rate. A 10% yield is a reasonable return from Ship Finance based on the current soft tanker rates market. With some firming of tanker rates and better forward visibility on Frontline's earnings, Ship Finance's yield should slide to around 8%, which would result in a 20% share price increase. Ship Finance's shares should be viewed as over-priced anytime the yield slips below 8%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.



Forex: GBP/USD ends the week below 1.5700 - FXStreet.com
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EU finance ministers haggle over bank rules - Yahoo Finance

BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.

The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.

But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.

On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.

"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."

Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.

The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.

The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.

"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.



FOREX-Euro wallows at 2-year lows as EU worries rattle markets - Reuters UK

Fri May 25, 2012 7:29am BST

* EUR option barriers at $1.2500; stops at $1.2480

* Break of $1.25 targets June 2010 low of $1.1876

* USD/JPY supported by importers, short-covering

* DXY at its highest since Sept 2010

* Sell-off in Asian currencies weighs on Aussie

By Antoni Slodkowski

TOKYO, May 25 (Reuters) - The euro wallowed at two-year lows against the dollar on Friday and was poised to end the week two percent weaker, weighed down by weak German manufacturing data and worries about a messy Greek exit from the euro zone.

The risk-sensitive Australian dollar dipped 0.2 percent to $0.9741, coming close to the six-month low of $0.9690 hit on Wednesday as a sell-off in emerging market currencies picked up steam.

Rattled by worries over lack of growth in the euro area, the fragile situation of the region's banking system and a potential messy Greek exit from the single currency bloc, the euro is poised to chalk up its biggest weekly loss since the first week of April.

Macro funds and real money investors have ramped up selling of the currency, which is now down more than 5 percent in May, as concerns about Greece leaving the zone rose after an inconclusive election that heightened the risk of its bankruptcy.

Greeks are voting again on June 17, with polls showing a close race between parties supporting and opposing terms of the its international bailout, keeping markets on tenterhooks.

The euro fetched $1.2535, a stone's throw from $1.2516, its lowest level since July 2010 plumbed the day before. Against the yen, it recovered from a four-month trough of 99.37 yen to last stand at 99.90.

"The pace of the euro's fall has been very quick and the market is looking for a level to consolidate around - it may well be around 1.25," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

"U.S. markets are closed on Monday, and that too is likely to prevent traders from any excessive risk-taking," Ino said.

But with the euro zone economy in dire straits and its politicians openly talking about a Greek exit, traders said that the common currency would sooner or later have to yield to the pressure and pierce the nearest support at $1.2500.

A break of that level would target the June 2010 low of $1.1876 with not much in the way of technical support this side of $1.2000. For now, traders cite a formidable option barrier at $1.2500 with large stop-loss orders looming around $1.2480.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Global manufacturing PMIs: link.reuters.com/byv24s

German IFO and GDP: link.reuters.com/bum65s

Asset performance since Greek elections:

link.reuters.com/keh38s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

DARKENING PICTURE

Darkening the picture further, European Central Bank data showed 35.4 billion euros of net direct portfolio investment flowed out of the euro zone in March, as investors shunned the region's assets.

Investor skittishness is well-reflected in the options market, where euro/dollar one-month at-the-money implied volatility spiked to 13.13 percent, its highest in more than four months.

With the euro on the backfoot, the dollar has been the big winner with its index against a basket of major currencies edging up to 82.411, its highest since September 2010.

Against the yen, the greenback was 0.1 percent higher at 79.67 yen, supported by Tokyo importers and short-covering ahead of the long weekend in the United States. Sell offers around 80.00 yen are poised to cap any further gains, traders say.

The dollar muscled in on the Korean won 0.2 percent to 1,183.2 won, at one point pushing it to the lowest level since October last year, and 0.5 percent on Indonesian rupiah, pressuring it to 9,300 - the lowest level since May 2010.

"The rupiah is really taking the beating today. More than repatriation by European banks, I think this is a simple 'risk off' move as investors look for safety in the dollar," said a trader for a Japanese bank.

The move is reminiscent of September 2011 when emerging market positions were slashed en masse as investors lowered their exposure to the region's bonds -- an asset class that has until now been resilient to swirling global risks.

Barclays Capital said in a report citing EPFR Global data that in the week to May 23, emerging markets-dedicated bond funds saw $478 million in net outflows, the first net redemptions in 19 weeks. (Additional reporting by Hideyuki Sano in Tokyo and Masayuki Kitano in Singapore; Editing by Sanjeev Miglani)


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