Aurelia Butler

MILAN (Reuters) – Prosecutors in Milan are probing allegations of false accounting in relation to the crisis of Italian life insurer Eurovita, a person with knowledge of the matter said on Friday.Owned by Cinven, Eurovita this year became the first Italian insurer to be placed under special administration by the country’s authorities after the British investment firm failed to inject enough cash to replenish Eurovita’s capital buffers. Speaking on condition of anonymity because they are not authorised to talk to the press, the person said prosecutors were also looking into allegations of a crime which entails “unlawful transactions involving the shares of a company or holding company”.No individuals are currently under investigation, the person said.Eurovita, Cinven and lawyers for Cinven declined to comment.Under Italian law, false accounting can carry a prison sentence of between three and eight years. The other crime can be punished with a sentence of up to one year.Reuters last week was first to report Milan prosecutors had opened an investigation into the Eurovita crisis following input from the country’s insurance supervisor IVASS.In common with other life insurers who invested people’s money into government bonds, Eurovita’s capital buffers have been eroded by the falling value of those bonds as interest rates rose.Adding to the problem, the higher rates prompted savers to redeem their policies to reinvest the cash.In Eurovita’s case, news of IVASS’ decision to appoint a special commissioner to run it hastened redemptions, prompting IVASS to impose a freeze which is still in place.To shield policyholders Italy has orchestrated a rescue which is expected to be announced later on Friday and that involves the country’s top insurers and the dozens of lenders that distributed Eurovita’s products. More

LONDON (Reuters) – Global shares stocks were firmer on Friday after data showed that inflation in the euro zone continued to fall this month, and attention turned to U.S. prices figures before the opening bell on Wall Streeet.Oil was poised for its fourth straight quarterly decline amid concerns over sluggish global economic activity and fuel demand. The dollar and U.S. stock index futures were firm ahead of the U.S. Personal Consumption Expenditures (PCE) index reading due at 1230 GMT, the Fed’s favoured inflation gauge.Federal Reserve Chair Jerome Powell signalled on Thursday that the U.S. central bank was likely to resume its monetary tightening campaign after a break earlier this month.Euro zone inflation fell to 5.5% in June as the cost of fuel tumbled, with Germany the only country to report an increase, with the European Central Bank still on course for a ninth consecutive rate hike next month, sending euro zone government bond yields higher.”The ECB thinks it is more costly to do too little in terms of hikes than to do too much, which means that we expect the ECB to continue hiking in July and September,” ING bank said.The MSCI All Country stock index was slightly firmer and heading for first-half gains of about 11.5%, recouping over half of last year’s losses, thanks in part to the AI boom lighting a fire under Big Tech.”Despite rising rates and worries of a recession, the market continues to climb a wall of worry and I think earnings will justify the multiples expansion that we’ve seen this year,” said Patrick Spencer, vice chair of equities as RW Baird.”We have got to accept that we’re moving into a period of normalised interest rates of 3, 4 or 5%, and historically they are not particularly high rates… but the disinflationary argument is very much there,” Spencer said.In Europe, the STOXX index of 600 companies was 1% ahead, and ahead 7.5% so far this year.CHINA STIMULUS?Stocks in Asia inched higher as weak factory activity data from China stoked expectations of fresh stimulus.Copper prices were set for their biggest quarterly fall since September 2022 on the weak Chinese data and prospects of further U.S. rate hikes.The yen remained fragile after hitting the psychologically important barrier of 145 per dollar, fuelling intervention worries as Japan’s Finance Minister Shunichi Suzuki issued another warning against excessive weakening of the currency. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat but on course to eke out a gain of 1.3% in the first half of the year. “There is a growing divergence in the path of inflation across the region, which is leading to some disagreement about the right path for policy,” said Rob Carnell, ING’s regional head of research, Asia-Pacific.China’s blue-chip CSI300 Index and the Shanghai Composite Index rose about 0.6%, while Hong Kong’s Hang Seng Index was flat.Japan’s Nikkei ended slightly lower but surged 27% in the first half, driven by a boom in chip-related companies and inflows into trading houses. (T) Strong U.S. economic data sent Treasury yields higher, with the yield on 10-year Treasury notes touching a three-month high on Thursday. It was last at 3.8740%. U.S. crude eased to $69.77 per barrel and Brent was flat at $74.34.[O/R]Gold was set for its worst quarter since September last year on expectations of more rate hikes. Spot gold was slightly weaker at $1,905 per ounce, after briefly dropping below the key $1,900 level on Thursday for the first time since mid-March. More

SINGAPORE/LONDON (Reuters) – The yen briefly weakened past the closely watched 145 per dollar level on Friday although traders’ fears of intervention by Japanese authorities kept it in check, while the dollar was also strong more broadly ahead of U.S. inflation data. Barring unexpected interventions, the day’s main event for FX markets is the U.S. personal consumption expenditure price index, which will be released at 0830 EDT (1230 GMT) and will give the latest indicator of whether prices are slowing in the world’s largest economy. Thursday data showing the resilience of the U.S. economy suggested the Federal Reserve has a cushion to raise interest rates further if inflation data requires it, and U.S. benchmark 10 year yields rose 14 basis points on Thursday as a result, their most since late March. [US/]FX markets followed suit and the dollar index rose 0.35% on Thursday as the U.S. currency made ground on the euro, which dropped 0.45%. Markets were steadier on Friday with the euro down 0.15% at $1.0847 near a two-week low, and sterling was up 0.3% at $1.2648, helped by a tick up in British government bond yields and just off the previous day’s two-week low. [GBP/] The pound is one of the best performing developed market currencies in the second quarter up, 2.5%, while the dollar index, which tracks the unit against six major peers, is up 0.8% on the quarter, set for its first quarterly gain since the third quarter of 2022. “One of the big themes over the past few weeks has been the positive surprises in U.S. data, and underwhelming data in the rest of the world, which is maybe bending markets back to the Fed’s messaging that we could see a second hike in Q4,” said Simon Harvey, head of FX analysis at Monex Europe. Another 25 basis point interest rate hike by the Fed in July is all but priced in by markets, but Fed policy makers’ projections, released earlier this month, are for a further rate hike on top of that before the end of the year. Harvey said that while Thursday data showed a revision in U.S. first-quarter GDP, that data is backward-looking so the question for markets is how consumers are coping now, something on which the PCE data will shed light. The dollar’s gains also helped it to as high as 145.07 yen in Asia trade Friday, its highest in seven months, and into territory at which Japanese authorities intervened to prop up their currency last autumn. However, the dollar failed to hold those gains and was last flat on the day at 144.88 yen. Japan’s Finance Minister Shunichi Suzuki on Friday warned against excessive yen weakening, the latest such comment from government ministers and officials, but Suzuki stopped short of saying he was ‘deeply concerned’ or declaring an intention to take ‘decisive steps’, the phrases he used as a prelude to the last time authorities intervened in the currency market.”The measures that were taken towards the back end of last year are working. Markets are looking at dollar/yen and thinking what’s the point of chasing this a bit higher in case 4% of your position gets wiped out overnight,” said Harvey. Data on Friday showed core inflation in Tokyo perked up in June and remained above the BOJ’s 2% target for the 13th month.The other numbers in focus on Friday were euro zone inflation data which showed a further decline in headline inflation, but only the smallest drop in underlying price changes. Also on Friday, official surveys showed China’s factory activity declined for a third straight month in June and weakness in other sectors deepened, data which initially sent the yuan lower.China’s yuan softened to its weakest since November with the currency traded onshore at 7.2675 per dollar , and offshore at 7.2845 per dollar. More

The world’s second-biggest economy lost momentum in the second quarter following a strong post-COVID rebound in consumption, spurring calls for further stimulus.Friday’s move will reduce financing costs, promote and expand employment and support economic recovery, according to a statement from the central bank.Outstanding relending and rediscounting for the agricultural sector and small firms amounted to 2.6 trillion yuan as of the end of the first quarter, a record high, according to the central bank.Official data on Friday showed China’s factory activity declined in June for a third straight month, with weaknesses in other sectors deepening.The cabinet said on Thursday it planned to take measures to promote household consumption. Earlier this month, China cut key lending benchmark rates to shore up economic activity.($1 = 7.2635 Chinese yuan renminbi) More