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In the struggle to explain this year's collapse in volatility and volume in financial trading, one newly-nominated culprit is central banks' intent to use every tactic available short of raising interest rates too soon. It sounded like a deeply contrarian view on Friday after comments by Bank of England Governor Mark Carney, but a study by analysts from market heavyweights HSBC this week argued that the use of macroprudential steps will make central bank interest rates in general less volatile in future. Implicitly that may mean markets see less marked swings. The global economy is right at the point, as the economic fates of Japan, Europe and the United States diverge, when an upturn in trading action could be expected due to the growing chances for arbitrage between future interest rates. Yet volatility, which traders depend upon for profits, is at rock bottom. Trading in currencies on the biggest platforms has fallen by a third to half in the past year; options contract

British construction output grew faster than previously thought in the first quarter, new figures showed on Friday, but could slow in the next three months, particularly after the government took steps to cool the housing market. Finance minister George Osborne said on Thursday that he would give the Bank of England stronger powers to curb mortgage lending, while BoE Governor Mark Carney said interest rates could rise sooner than financial markets expect. The comments sent sterling and short-dated British government bond yields soaring and caused shares to plunge, with housebuilders particularly hard hit. Some 1.7 billion pounds ($2.85 billion) has been wiped off the value of the six housebuilders and two property groups. Economists say Osborne's announcement means the Bank may adopt a more direct approach when trying to curb mortgage lending. It is expected to announce more controls after its Financial Policy Committee meeting next week. The moves should help take some heat o

The leader of South Africa's AMCU union said on Friday a wage deal with the top three platinum producers was imminent, signalling a possible end to a crippling five-month strike that has disrupted global output of the metal. Workers from the Association of Mineworkers and Construction Union (AMCU) begged leader Joseph Mathunjwa on Thursday to end the country's longest mining strike and sign the latest offer - an increase of about 20 percent, or 1,000 rand ($93) a month. Mathunjwa told Johannesburg radio he would take the offer to more AMCU members at mines on Friday, before meeting with management at Lonmin , Anglo American Platinum and Impala Platinum later or over the weekend to relay the response of his miners to their offer. "At least there is light at the end of the tunnel, which is not the light of a goods train," he told Talk Radio 702. The main outstanding sticking point was whether the wage deal should stretch over three or five years, he said. "W

Investors braced on Friday for a UK interest rate hike later this year, pushing sterling to five-year highs and hurting property stocks, after the head of the Bank of England said rates may rise sooner than markets predict. Governor Mark Carney's surprisingly stark warning late on Thursday prompted investors to bring forward expectations for a first BoE rate hike by nearly four months, to December from the first quarter of 2015. Sterling's trade-weighted index posted its biggest one-day rise in four months, hitting 5 1/2-year highs. Short-dated UK government bond yields were on track for their biggest daily gain in more than three years. A rate hike by the end of 2014 is likely to come at least six months before the U.S. Federal Reserve tightens policy. It would contrast sharply with the European Central Bank, which cut rates last week and is likely to ease policy in the coming months. "The BoE seems to be slightly ahead of the Fed as far as rate hikes are concerned,&

Britain could become the first major economy to tighten monetary policy since the 2008 financial crisis, Bank of England Governor Mark Carney has signalled, sending sterling shooting towards a five-year high against the dollar on Friday. British government bond yields soared, construction stocks tumbled and interest rate futures priced in a first hike by December after Carney said rates could rise sooner than markets had thought - his most hawkish comment to date. "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said in a speech late on Thursday alongside British finance minister George Osborne. "It could happen sooner than markets currently expect." Few economists had expected rates to increase until the second quarter of next year given the central bank's previous guidance that there was plenty of scope for Britain's economy to expand further without causing infla

Bartender Yoshiro Tsuneoka smiled with satisfaction between popping open bottles of champagne. It was midweek, 8 pm, and business was good at the tiny bar in downtown Tokyo. Watching a bevy of young professionals quaffing sparkling wine, there was little sign that an increase in Japan's sales tax in April caused anything more than a hiccup in the economy. "Sales have been doing well for a while now and we've noticed no change after the tax increase," Tsuneoka said above the sound of clinking glasses. "We get a broad range of customers, and their spending hasn't changed." Japan needs people spending with confidence if a radical strategy adopted by Prime Minister Shinzo Abe is to succeed in breaking the economy free of two decades of deflation and sub-par growth. Government data covering the period after the tax was increased to 8 percent from 5 percent at the start of April has begun to trickle in. Household spending and retail sales in April dropp

The U.S. Federal Reserve should suspend payments to the Treasury to avoid a potential cash crunch when the time comes to raise interest rates, according to former Richmond Fed policy adviser Marvin Goodfriend. Such a reversal in policy is critical to protecting the Fed's inflation-fighting credibility, Goodfriend said in an interview Thursday, because otherwise the central bank will find itself needing to print money to pay for its obligations as it raises interest rates, an untenable situation in his view. "It's not good idea for a central bank to ever put itself in the position of having to create money to stabilize the value of money against inflation," said Goodfriend, now an economics professor at Carnegie-Mellon University. "You are throwing fuel on the fire." The U.S. central bank has sent about $320 billion to the Treasury since 2010. The money comes from interest earned on the Fed's massive portfolio of bonds acquired in its ongoing effort

The U.S. Federal Reserve on Thursday proposed tougher conditions for banks to pay dividends or buy back shares as part of a number of changes to its annual stress tests to measure banks' ability to withstand financial shocks. _0"> Banks need to ask the Fed for approval for shareholder payouts each year, part of a set of new rules to make banking safer after the financial crisis. Banks must submit capital plans that disclose whether they intend to pay dividends or buyback shares, as well as any planned increases in capital through raising new debt or shares. The new rule would prevent banks from increasing dividends or buying back shares if they did not meet the capital increases that they had pledged to the Fed. "Some large bank holding companies included issuances of capital instruments in their capital plans, but did not execute these planned issuances," the Fed said. For instance, if a bank had planned a $50 million stock issuance, and combined dividends

Bartender Yoshiro Tsuneoka smiled with satisfaction between popping open bottles of champagne. It was midweek, 8 pm, and business was good at the tiny bar in downtown Tokyo. Watching a bevy of young professionals quaffing sparkling wine, there was little sign that an increase in Japan's sales tax in April caused anything more than a hiccup in the economy. "Sales have been doing well for a while now and we've noticed no change after the tax increase," Tsuneoka said above the sound of clinking glasses. "We get a broad range of customers, and their spending hasn't changed." Japan needs people spending with confidence if a radical strategy adopted by Prime Minister Shinzo Abe is to succeed in breaking the economy free of two decades of deflation and sub-par growth. Government data covering the period after the tax was increased to 8 percent from 5 percent at the start of April has begun to trickle in. Household spending and retail sales in April dropp

Six years after mind-blowingly complex securitized debt brought the global financial system to its knees, the bankers behind the market are wary of official efforts to rehabilitate it in Europe. In the years leading up to 2008, when loans were transformed into bonds, many were repackaged again and again, acquiring triple A ratings despite links to U.S. sub-prime mortgages, and earning the nickname "toxic sludge". Yet the European Central Bank (ECB) and Bank of England (BoE) say they want to revive more straightforward asset backed securities (ABS) in the hope of ramping-up lending to credit-starved businesses and rebooting the regional economy. Attendees at the industry's annual meeting in Barcelona say it will take more than positive words to overcome their pariah status in Europe and worry that official efforts to exclude the riskier parts of the market will make it unworkable. "Don't confuse words with action," James Hewer, a partner at PwC's st

Rising bond yields, mounting inflation and a weakening currency have taken the shine off Ghana, a country until recently hailed as a model for African growth. An oil boom helped fuel five years of GDP growth above 8 percent making Ghana an emerging market star, a stable democracy whose population of 25 million was moving steadily into middle income status. It is now, however, paying a steep price for not coming through with a new tranche of fiscal reforms. Political consensus is stymied, the public is dismayed by rising costs and the dream of new wealth is on hold. Analysts put the immediate difficulty down to a delay in announcing reforms, saying it makes it harder for the government to meet its 2014 economic targets and has increased the chance it will eventually need a bailout from the International Monetary Fund (IMF). It has also created a perception of policy drift at a time of economic trouble rather than decisive action to shore up gains made during the boom years in whic

Four months ago, Jean-Claude Juncker would have struggled to have his name recognized in much of Europe. Now he could be forgiven for wishing people would shut up about him. As the top candidate of Europe's largest center-right political group, which won the European elections last month, the former prime minister of Luxembourg is in pole position to become the next president of the European Commission. While Britain's David Cameron is adamantly opposed and The Sun tabloid has described him as "The Most Dangerous Man in Europe", Juncker remains on track to secure the powerful post, which has influence over policy from telecommunications to banking and trade affecting 500 million Europeans. Cameron's opposition is based on a belief that Juncker, 59, is an "old-school federalist" wedded to the concept of "ever closer union", not a modernizer who will shake up and refocus Brussels institutions regarded in London as bloated and opaque. After

German Chancellor Angela Merkel has not altered her view that Luxembourg's Jean-Claude Juncker should become president of the European Commission, a government spokesman said on Friday. _0"> "The German chancellor has very clearly said, including in her recent speech to parliament, that she is in favor of Jean-Claude Juncker becoming the next European Commission president and that she will work towards him getting a majority," Steffen Seibert said, adding that "nothing has changed" in this regard.   true       (Reporting by Stephen Brown and Michelle Martin)

class="mandelbrot_refrag"> Banks will return 3.712 billion euros ($5.05 billion) in long-term crisis loans to the European Central Bank next week, ECB data showed, after the ECB started to charge banks for holding their excess cash overnight and promised more long-term loans. _0"> The amount that class="mandelbrot_refrag"> banks will repay on June 18 is below this week's repayments of 10.588 billion euros, and misses the 7.5 billion forecast in a Reuters poll. The ECB cut interest rates to record lows - the deposit rate is now below zero - and launched a series of measures to pump money into the sluggish class="mandelbrot_refrag"> euro zone class="mandelbrot_refrag"> economy , pledging to do more if needed to fight off the risk of Japan-like deflation.   true       The measures also include a new 400 billion euro four-year loan scheme to give banks an incentive to increase lending to businesses in the class=&q

The European Union's banking watchdog will toughen up its guidelines on bankers' pay after a study uncovered wide variations in how lenders apply the rules across the 28-country bloc and how class="mandelbrot_refrag"> banks are avoiding the bonus cap. The European Banking Authority (EBA) did not say how it will toughen the rules but this is likely to include tighter supervision and more detail in how the rules should be applied. After the 2007-09 financial crisis sparked public anger over bonuses at class="mandelbrot_refrag"> banks that taxpayers had to rescue, the EU introduced curbs on the pay of top bankers earning a million euros or more. The current rules mean that 40-60 percent of a bonus must be deferred over 3-5 years, with the possibility to claw back the cash if problems like misconduct are later discovered. The curbs were toughened so that bonuses handed out from early next year can be no higher than fixed salary, or twice tha

Japan's exports likely fell for the first time in 15 months in May due to stagnant demand overseas, and with imports expected to rise the trade balance will probably remain in deficit, where it has been for nearly two years, a Reuters poll showed. In addition to weak demand from emerging nations, the benefit of a weak yen for exports appeared to have run its course. The Reuters poll of 28 economists forecast exports to show a 1.2 percent fall in the year to May, which would be the first decline since a 2.9 percent fall in February last year.   true       In April, Japan's exports rose 5.1 percent from a year earlier. The poll forecast a 1.7 percent increase in imports in May, largely led by higher demand for liquid class="mandelbrot_refrag"> natural gas . The trade deficit was forecast at 1.17 trillion yen. It would be 23rd straight monthly deficit. "Shipments to Europe are expected to stay solid, but those to Asia will probably continue to be stagn

India's new government kicked into gear this week, clearing billions of dollars worth of long-delayed defense projects, including a big navy base, as well as approving the scaling-up of one of the country's biggest dams. The decision to give the projects the go-ahead despite concern about their environmental and social impact signals Prime Minister Narendra Modi's no-nonsense approach to issues he considers to be important for national security. The clearances were made over several days and were the first major decisions from the government that swept to power on May 16 on promises of getting Asia's third-largest class="mandelbrot_refrag"> economy moving and building a stronger country. Environment Minister Prakash Javadekar said the government could not compromise on efforts to build military and civil infrastructure on the border with class="mandelbrot_refrag"> China as well the west-coast naval base in as an alternative to crowded

Brazilian economic activity rose slightly in April, in another lackluster showing for the once-booming class="mandelbrot_refrag"> economy that points to a sluggish second quarter. _0"> The central bank's IBC-Br economic activity index rose 0.12 percent in April from March in seasonally adjusted terms, the bank said on Friday. The median estimate in a Reuters survey of 19 analysts was for 0.0 percent growth. The Brazilian class="mandelbrot_refrag"> economy barely grew in the first quarter and a plunge in investment pointed to more weakness in the coming quarter. Economists have repeatedly revised down their economic growth estimates to just 1.4 percent this year from an expansion of 2.5 percent in 2013.   true       For Bradesco economists the slight increase in activity in April reinforced expectations that the second quarter will remain subdued. "It is compatible with our expectations for a slowdown in the second quarter," Brad

Britain could become the first major class="mandelbrot_refrag"> economy to tighten monetary policy since the 2008 financial crisis, Bank of England Governor Mark Carney has signalled, sending sterling shooting towards a five-year high against the dollar on Friday. British government bond yields soared, class="mandelbrot_refrag"> construction stocks tumbled and interest rate class="mandelbrot_refrag"> futures priced in a first hike by December after Carney said rates could rise sooner than class="mandelbrot_refrag"> markets had thought - his most hawkish comment to date. A Reuters poll of economists on Friday showed most expect a rise in the first three months of next year rather than before the end of 2014.   true       "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said in a speech late on Thursday alongside British cla