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  1. #41
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    Post Greece defaults - By Felix Salmon.

    The latest Greek bailout is done — the official statement is here — and it involves Greece going into “selective default,” which is, yes, a kind of default.

    I can’t remember a major financial story which has been covered so inadequately by the financial press. All the incomprehensible eurospeak seems to have worked, along with the fact that the deal was announced in Brussels, where the general level of journalistic financial literacy is substantially lower than it is in London or New York or Frankfurt. On top of that, statements are coming from so many different directions — Eurocrats, heads of state, the Institute of International Finance, Greek officials, Portuguese and Irish officials, you name it — that it’s extremely hard to put it all together into one coherent whole.

    Oh, and to complicate things even further, most of the day’s discussion was based on various widely-disseminated draft documents which differed substantially from the final statement.

    This is a bail-in as well as a bail-out: while Greece is getting the €109 billion it needs to cover its fiscal deficit, both the official sector and the private sector are going to take losses on their loans to the country.

    As such, it sets at least two hugely important precedents. Firstly, eurozone countries will be allowed to default on their debt. Secondly, a whole new financing architecture is being built for Greece; French president Nicolas Sarkozy called it “the beginnings of a European Monetary Fund.”

    The nature of massive precedent-setting international financing deals is that they never happen only once. There’s lots of talk today that this deal is for Greece and for Greece only, but some of the more explicit language to that effect was excised from the final statement. On thing is for sure: these tools will be used again, in future. They will be used again in Greece, since this deal is not enough on its own to bring Greece into solvency; and they will be used in other countries on Europe’s periphery too, with Portugal and/or Ireland probably coming next.

    As far as the public sector is concerned, the European Union will do four main things. First, it will extend the maturities on Greece’s debt from the current 7.5 years to somewhere between 15 years and 30 years: the loans that the EU is currently giving Greece aren’t designed to be repaid, in some instances, until 2041.

    Second, the interest rate on those loans will be extremely low — essentially, Greece is getting those EU funds at cost, currently about 3.5%. The EU is also extending these ultra-low financing rates to Portugal and Ireland, so as not to implicitly punish countries which don’t default.

    Third, the EU will put together its own stimulus plan for Greece. The phrase “Marshall Plan” was taken out of the final statement, but there’s still talk of “mobilizing EU funds” and building “a comprehensive strategy for growth and investment.” This is vague, of course, but it does at least constitute an attempt to help Greece through a period of very painful austerity.

    Fourth, the Maastricht treaty will get resuscitated, with all eurozone countries except Greece, Ireland and Portugal committing to bring their deficit down to less than 3% of GDP by 2013. Paul Krugman is screaming about this, but this was a central part of the eurozone project from the get-go, and clearly the eurozone needs some kind of fiscal straitjacket for its constituent members to prevent the rest of them from running up enormous deficits and then getting bailed out by Germany.

    Finally, the EU will provide “credit enhancement” for Greece’s private-sector bonds. This is a central part of the default plan, and it looks a lot like the Brady plan of the late 1980s. The official statement from the IIF, which is representing private-sector creditors in this matter, is a little vague, but essentially if you’re a holder of Greek bonds right now, you have three choices.

    1. You can do nothing, and hope that Greece pays you in full and on time.
    2. You can extend your maturities out to 30 years, and accept a modest coupon of 4.5%; in return, your principal will be guaranteed with an embedded zero-coupon bond from an impeccable triple-A-rated EU institution, probably the EFSF.
    3. You can extend your maturities out to 30 years, take a 20% haircut, and get a higher coupon of 6.42%; again, the principal is guaranteed with zero-coupon collateral.
    4. You can extend your maturities out to 15 years, take a 20% haircut, get a coupon of 5.9%, and have only a partial principal guarantee through funds held in an escrow account.

    The first option is by far the most interesting. No one has come out and said that Greece is going to default on bondholders who don’t exchange their bonds; instead, there’s just a lot of arm-twisting of big banks to do all this “voluntarily.” But that won’t stop the credit rating agencies giving Greece’s bonds a default rating — this is a coercive deal, which clearly reduces the value of banks’ Greek debt. (After all, just look at those haircuts.)

    Is it possible for other bondholders — those who haven’t had their arms twisted — to free-ride on the back of this deal and continue to get paid in full? I suspect that it probably is. Which is one reason why this Greek restructuring won’t be the last.

    Overall, this looks like a deal which can quite easily be scaled up and used as a framework for future default/restructurings. I don’t know if that’s the intent. But there’s nothing here to reassure holders of Portuguese and Irish bonds — or even Spanish and Italian bonds, for that matter — that they’re home safe. Greece will be the first EU country to default on its debt. But I doubt it’ll be the last.

  2. #42
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    Post Brent crude rises above $118 on Europe debt deal

    Brent crude oil jumped above $118 on Friday, supported by Europe's latest agreement to bail out Greece, but U.S. crude made only slight gains due to concern about talks to avert an unprecedented U.S. default

    The Brent futures contract for September rose 91 cents at $118.42 a barrel by 11:17 a.m. EDT. U.S. crude rose 25 cents at $99.38 a barrel, after earlier trading as low as $98.43.

    Analysts and traders said the preliminary solution to the euro zone debt crisis presented in Brussels on Thursday was still providing some support for Brent, but ongoing wrangling over the U.S. debt ceiling was impinging on U.S. crude.

    "The U.S. debt ceiling crisis hasn't been solved and there has been mixed economic data, so that might not be enough to keep crude above $100, even though we are up at the moment," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

    In the United States, efforts are continuing to secure a last-minute deficit-reduction deal before the August 2 deadline to raise the country's debt ceiling.

    Data showing that Chinese manufacturing contracted in July also has made some analysts and traders cautious. Commodity markets are focused on the economy of China as a major source of future demand growth.
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  3. #43
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    Thumbs up Empire Global Fx announces upcoming European FSA regulation.

    Empire Global Fx is proud to announce the upcoming Incorporation in Hungary with registration at FSA. Along with this structural growth, new headquarters in Hungary will be inaugurated.

    No doubt, great news to all our friends and customers. Thanks indeed for your support!
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  4. #44
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    Post Wall St Week Ahead: Markets edgy on debt talk stalemate

    Much of the United States may be frying in near-record temperatures but Wall Street has been feeling the heat for months. Wrangling over the debt ceiling has kept markets on edge, and investors are still waiting for a breakthrough that leads to a deal to avoid a devastating default.

    Investors have viewed as extremely unlikely the possibility of a U.S. default if the federal government does not agree to raise the debt ceiling. But the odds are growing, and Congress and the White House remained at odds just a few hours before Asian markets opened on Monday.

    "Unless during the course of the day there is a specific, concrete proposal that placates the market before Asian markets open, the worst-case scenario is that the markets just sell off -- sell off dramatically," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

    White House officials and Republican leaders scrambled on Sunday to reassure global markets the United States would avert a debt default, but the two sides gave no sign they were moving closer to a deal.

    White House Chief of Staff Bill Daley warned that there would be a "few stressful days" ahead for financial markets, with the deadline to lift the $14.3 trillion U.S. borrowing limit now only nine days away.

    "To some degree the outcome of there being no deal has been priced in, but the discounting is not fully in the market and this is adding to uncertainty that has already been coupled with the events in Europe and expectations that growth was already going to be weak," Krosby said.

    Wall Street is set to close its worst three months in a year as July draws to an end this week after a roller-coaster ride for markets.

    With euro zone leaders having reached a deal for yet another bailout for debt-laden Greece, investors will be free to chew over the rancor in Washington with even more attention.

    In addition, the corporate earnings season suggests other risks could dog the market. Despite generally good results so far, there have been some worrisome signs.

    The S&P 500 rallied 6 percent in the run-up to reporting season, but earnings misses from big industrial names like Rockwell Collins and Caterpillar Inc weighed on the Dow and S&P 500 on Friday.

    Earlier in the week several big consumer names such as Whirlpool and Pepsi warned about sluggishness in developed markets, sending their shares sharply lower.

    "The market still has a high degree of skepticism in it," said Nick Kalivas, an analyst at MF Global in Chicago, summing up the earnings season so far.

    Kalivas said he will be closely following earnings from sector and economic bellwethers this week. Those include the package delivery company UPS, chipmaker Texas Instruments, and online retailer Amazon.

    Around 30 percent of the S&P 500's $12.3 trillion market cap have reported earnings so far. They have outpaced consensus estimates by 3.8 percent, and only 7 percent have missed estimates, according to data from Morgan Stanley.

    But share prices of those that have fallen short of estimates have taken a severe beating. Given the fragile sentiment, a few more prominent misses could derail the market.

    "The market is punishing these misses more than it is rewarding beats, an asymmetry we have been calling for and we forecast will continue," Morgan Stanley's U.S. equity strategist Adam Parker wrote in a note to clients.

    "Our view remains that first half of the year numbers are achievable, but the second half of the year looks challenged," he said.

    This week is also a big week for economic data. Fears of a slowdown in the economy have been a large driver of market volatility over the last few months, and the coming releases will be parsed very closely.

    They include early regional manufacturing data from Chicago and New York, a reading of consumer sentiment, and a first reading of U.S. growth for the second quarter, expected to show the economy grew just 1.9 percent in the period.

    Bob Doll, chief equity strategist at BlackRock, one of the world's largest fund managers with around $1.6 trillion of equities under management, said last week that the U.S. economy is at a critical juncture.

    Doll points out that since 1960 every time year-on-year growth has fallen under 2 percent the U.S. economy has gone into recession.

    "Our bottom line view is that investors should maintain a reasonably constructive bias toward risk assets, but should also be prepared to scale back exposure if evidence of economic growth acceleration does not materialize," said Doll.

    And many believe economic activity will be depressed if a failure to raise the debt ceiling interrupts key government services such as social security and Medicare.

    The uncertainty is sure to stress markets further, and fund managers hitting the beach in August may find themselves fiddling with their BlackBerrys more than the little umbrella in their cocktails.

    "I need a vacation, man. After all the stuff that's happened in the last three months I'm pretty much shot, I'm getting weird, even my 6-year-old looks at me," said one New Jersey-based fund manager, who was packing his bags for a destination in the Caribbean as temperatures topped 100 degrees Fahrenheit in New York City.

  5. #45
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    Post Gold hits record with debt talks deadlocked

    Gold prices hit record highs on Monday after negotiations to lift the U.S. debt ceiling hit stalemate over the weekend, raising fears over a possible default and boosting the appeal of bullion versus assets like Treasuries and the dollar.

    Democrats and Republicans in Congress are bitterly divided over plans to cut the U.S. deficit, a necessary move before the debt ceiling can be raised.

    With the August 2 deadline for a resolution fast approaching, the world's largest economy is facing an unprecedented debt default. If this happens, investors could dump the dollar and U.S. Treasuries.

    While most investors believe a deal will be done, nervousness ahead of the decision is still pressuring the dollar, hurting long-dated U.S. Treasuries and benefiting gold.

    "Ultimately you need some sort of political resolution, some sort of acknowledgement that there are long-term financial problems that need to be dealt with," said Natixis analyst Nic Brown.

    "There are ultimately two options -- you either have monetization of debt, or you have a move toward fiscal consolidation, and a move toward fiscal sustainability. Until we get the latter, the market will assume the former. That is just a great bid for the gold market."

    Spot gold peaked at $1,622.49 an ounce and was up 1.1 percent at $1,615.74 an ounce at 9:54 a.m.

    It has reached record highs in each of the last five consecutive quarters, and is on track for its biggest monthly gain since April this month on concerns over euro zone debt levels as well as the U.S. negotiations.

    The stalemate in Washington led to safe-haven German Bunds outperforming U.S. Treasuries on Monday, as risks of a U.S. default outweighed worries over euro zone debt. U.S. Treasury yields rose and European shares slipped.

    Long-dated U.S. Treasury debt prices fell and the cost of insuring the country's debt from default rose on Monday on investor concern that the world's biggest economy could lose its prized top-notch credit rating after debt talks collapsed.

    The dollar dipped against a basket of currencies, while the Swiss franc, often seen as a haven for investors, rose against the euro and the U.S. unit. The euro slipped after Moody's downgraded Greece by three notches.

    "With little optimism on U.S. debt talks at the moment, the gold price acutely reflects investor nervousness that limited progress will be made before the August 2 deadline," UBS said in a note. "This nervousness is in many ways justified as the threat of a U.S. ratings downgrade is very real."

    "S&P has threatened that a ratings downgrade is possible even this month, if progress on the negotiations is insufficient. With just a few days left in the month, it is increasingly likely that investors will continue to buy gold as a defensive trade."

    Rating agency Standard & Poor's last week reiterated that there was a 50-50 chance the U.S. AAA credit rating could be cut within three months.


    Hedge funds and other large speculators last week boosted their bullish bets in U.S. gold futures to the highest in nearly two years as gold rallied on the euro zone's debt crisis and uncertainties around the U.S. debt talks.

    Managed money in COMEX gold added 16,135 lots in the week ended July 19, boosting their net long position to 238,319 lots, which marked the highest holding for the key speculator group since the week of October 18, 2009.

    U.S. gold futures for August delivery were up $16.80 an ounce at $1,618.30, off a high of $1,624.30.

    "The stumbling block for gold is the relatively large size of Comex specs," said UBS.

    "These are of course not normal times, so the extension in the Comex gold book can continue for a while longer. But the danger is that positive headlines out of the U.S. debt ceiling discussions could prompt recent gold specs to liquidate."

    Among other precious metals, silver was bid at $40.42 an ounce against $40.02, tracking gains in gold.

    The gold:silver ratio -- the number of ounces of silver needed to buy an ounce of gold: eased back below 40 on Monday as silver outperformed, approaching last week's two-month low.

    Spot platinum was bid at $1,787.50 an ounce versus $1,793, while spot palladium was at $796.97 an ounce against $804.25.

  6. #46
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    Post Dollar hits record low versus Swiss franc on debt standoff

    The dollar slumped to a record low against the Swiss franc and a four-month trough versus the yen on Monday, with more losses seen if U.S. lawmakers fail to compromise on a deficit reduction plan.

    With a little more than a week before the August 2 deadline to raise the $14.3 trillion U.S. debt ceiling, there is an ever-increasing threat of a ratings downgrade and default, an event that could cause a frenzy in financial markets.

    Congressional Democrats and Republicans pursued separate budget proposals with no clear path to bring them together.

    U.S. Senate Democrats would offer a $2.7 trillion spending-cut plan while U.S. House Speaker John Boehner, the top Republican candidate in Congress, introduced a new plan on Monday.

    President Obama will make an address on the debt limit at 9 p.m. EDT.

    "While investors still appear to be giving Washington lawmakers the benefit of the doubt that they will reach a deal, every day that passes without a resolution will likely see markets price in a higher risk premium into the dollar's valuation," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.


    Overall, the Swiss franc was the biggest beneficiary of the demand for safe havens, pushing the dollar to an all-time low of 0.80210 francs on trading platform EBS. The dollar has fallen in three of the last four sessions against the Swiss currency. It last traded at 0.8058, down 1.5 percent on the day.

    "While a deal is still likely to be reached in the 11th hour every day that passes is likely to see investors become increasingly unwilling to hold dollar denominated assets," Esiner said.

    The euro also fell versus the franc, dropping as much as 1.7 percent, as did sterling. Traders reported heavy selling of the pound ahead of Tuesday's UK gross domestic product data for the second quarter.

    The U.S. debt ceiling stalemate, however, helped the euro gain against the dollar. It last traded at $1.4374, up 0.2 percent on the day, according to Reuters data.

    Moody's further slashing of Greece's debt rating on Monday did not benefit the dollar much as a safe-haven alternative to the euro but instead boosted the Swiss franc and gold.

    Despite the new bailout introduced by the European Union last week, there are still unanswered questions on how the group plans to implement the unprecedented measures, according to David Song, currency analyst at DailyFX in New York.

    "In turn, the European Central Bank may show an increased willingness to keep the benchmark interest rate at 1.50 percent for the remainder of the year, and the Governing Council may have little choice but to maintain its unconventional tools as the EU struggles to address the sovereign debt crisis."

    Against the yen, the dollar fell as low as 78.055 yen, its weakest since mid-March.

    Many traders say the dollar could test a record low of 76.250 yen if concerns about the U.S. debt ceiling worsen, while they also expect the U.S. currency will keep plumbing all-time troughs versus the Swiss franc.

    In related news, global foreign exchange turnover rose in April from October, driven by increasing volume across spot, forwards, swaps and options activities, according to a semiannual survey released by major central banks on Monday.

    The ICE Futures' dollar index .DXY slipped 0.1 percent to 74.108, not far from a six-week low of 73.889 hit last week.
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  7. #47
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    Post Moody's warns Greek default almost certain

    Moody's cut Greece's credit rating further into junk territory on Monday and said it was almost certain to slap a default tag on its debt as a result of a new EU rescue package.

    It was the second rating agency to warn of a default after euro zone leaders and banks agreed last week that the private sector would shoulder part of the burden of a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.

    "The announced EU program along with the Institute of International Finance's statement implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100 percent," Moody's said in a statement.

    Bank lobby IIF, which led private sector negotiations, aims to attract 90 percent investor participation in the bond exchange plan which comes on top of the EU's new 109 billion euro bailout.

    Moody's cut Greece's rating by three notches to Ca, just one notch above default, to reflect the expected loss implied by the proposed debt exchanges.

    Greece now has the lowest rating of any country in the world covered by Moody's, which, like Fitch last week, said it would review Greece's rating after the debt swap is completed.

    "Once the distressed exchange has been completed, Moody's will reassess Greece's rating to ensure that it reflects the risk associated with the country's new credit profile, including the potential for further debt restructurings," it said.

    However, whereas Fitch pledged to quickly give Greece a higher, "low speculative grade" after its bonds had been exchanged, Moody's said it could not forecast when the rating would change or how.

    "It all depends how quickly the debt exchange takes place," said Alastair Wilson, Moody's Managing Director for EMEA Credit Policy. "Once we have greater visibility over that, we will reassess the credit profile quite quickly. Whether the rating will change, that's a different question," he told Reuters.

    A senior EU official said on Saturday that the aim was to start a voluntary swap of privately-held Greek bonds in late August and conclude it in early September.

    Greek bank shares and the broader stock market were unfazed by Moody's action. Analysts said the downgrade and the default warning were priced in and less worrying following assurances provided by the EU deal.

    "The EU Council last week effectively secured Greek banks' continued access to ECB liquidity, even in the case that PSI (private sector involvement) triggers a selective default," said Platon Monokroussos, an economist at EFG Eurobank.

    The government has repeatedly criticized ratings firms for their downgrades and its spokesman threatened on Monday to end its subscriptions to these agencies as the new rescue package means Greece will not issue new bonds for years.

    "All governments pay a subscription to these agencies. We, I think, do not need the reviews anymore. They have no practical value," Elias Mosialos told Radio 9. "Perhaps the finance ministry should end its subscription."


    Moody's said it would take into account the possibility of a second default while reassessing Greece's rating.

    "Our experience is that relatively small restructurings have often been followed by deeper defaults," Wilson said, adding that he could not say if this would be the case for Greece.

    The rescue package for Greece benefits other euro zone countries by containing near-term contagion risks but it was not necessarily positive in the longer run as it set a precedent for private sector involvement in rescue deals, Moody's said.

    "The support package sets a precedent for future restructurings should the finances of another euro area sovereign become as problematic as those of Greece. The impact of Thursday's announcement for creditors of Ireland and Portugal is therefore likely to be credit-neutral," it said.

    The cost of insuring most peripheral euro zone government debt against default rose on Monday on market doubts that the fresh aid package for Greece agreed last week will protect bigger economies from contagion.

    Standard & Poor's and Fitch rate Greece CCC, broadly in line with Moody's rating. S&P has not yet said how the EU summit deal will affect Greece's rating.

  8. #48
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    Post Ford profit tops expectations, shares up

    Ford Motor Co's quarterly profit beat Wall Street expectations, helped by higher prices and improved sales in North America.

    Ford, the only U.S. automaker that did not accept a government bailout, has posted a net profit for eight straight quarters. It had racked up net losses of $30 billion from 2006 through 2008 when it cut jobs, sold unprofitable brands and reshaped a lineup laden with large SUVs and pickup trucks.

    In North America, Ford's pretax profit for the second quarter rose 0.5 percent to $1.91 billion.

    North America was the only region where the company's profit improved. In Europe, where Ford's performance has been lagging in recent quarters, pretax profit was trimmed nearly in half to $176 million.

    Ford shares were up 1.7 percent at $13.40 in trading before the market opened on Tuesday.

    Chrysler also reported on Tuesday, posting a wider second-quarter net loss after the U.S. automaker repaid $7.6 billion in debt stemming from its 2009 federal bailout.

    Ford did not alter its North American production outlook or its 2011 U.S. auto sales forecast.

    However, Ford Chief Financial Officer Lewis Booth said the company now expects full-year U.S. industry auto sales to be at the low end of a range of 13 million to 13.5 million vehicles. It had expected 2011 sales at the high end of that range earlier in the year, he said.

    Ford's sales forecast includes medium and heavy trucks, which account for 250,000 to 300,000 in annual sales.

    Excluding one-time items, Ford's quarterly profit fell to 65 cents per share from 68 cents a year ago. Analysts on average had expected earnings of 60 cents per share excluding one-time items, according to Thomson Reuters I/B/E/S.

    Revenue rose 13 percent to $35.5 billion.

    Net income fell to $2.4 billion in the quarter, or 59 cents per share, from $2.6 billion, or 61 cents per share.

    "We delivered very good quarter results while growing the business globally and serving more customers in every region," said Ford Chief Executive Alan Mulally. "Despite an uncertain business environment, we further strengthened our balance sheet and continued to invest for the future."

    Booth said the company continued to lower its automotive debt, by $2.6 billion in the quarter to $14 billion.


    "This wasn't the easiest of quarters," Booth said. "We've got through the Japanese tsunami issues very well. We lost some units (vehicle production) in Asia Pacific, but managed to lose a lot less than we expected and we didn't really lose any significant units anywhere else in the world. It's just evidence that the plan's working."

    Ford is striving to return to an investment grade rating by the major ratings agencies. Booth said he could not predict when the company may return to investment grade.

    Most major agencies have Ford rated two notches below investment grade. Ford was last at investment grade in May 2005.

    However, Booth said he expected a re-examination by the agencies once labor talks with the United Auto Workers union are completed. Those talks will officially begin this Friday for Ford.

    The UAW represents about 41,000 Ford auto production workers.

    Ford's hourly "all-in" labor cost per worker is about $58, compared with about $50-$51 per hour for Chrysler and about $57 per hour at GM.

    The gap between Ford and its Japanese rivals with U.S. plants has narrowed from about $25 to $30 in 2007 to about $5 to $10 now, according to the Center for Automotive Research of Ann Arbor, Michigan.

    Ford's labor costs are higher than Chrysler mainly because it has hired fewer than 100 so-called second-tier workers who make about half the pay of veteran UAW-represented workers, while about 12 percent of Chrysler's 22,800 union auto workers make the lesser wage.

    The Ann Arbor consultant also said that Ford's estimated U.S. auto production labor costs are about $5.1 billion annually.


    Booth said that Ford's profit was hampered by higher commodity costs related mainly to higher oil prices. He said prices for plastics, steel, aluminum, cooper and precious metals are all on the rise and affecting profit margins.

    "As we continue to see growth in Asia, commodities stay under pressure," he said.

    In its home U.S. market, the No. 2 U.S. automaker had a 16.9 percent market share through the first half of this year, compared with 17 percent a year ago.

    Ford's sales in the first half of the year rose 12 percent versus a 17 percent rise for General Motors Co and 20 percent for Chrysler Group LLC.
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    Post Greece hopes for quick debt swap in August

    Greece wants a voluntary swap of government bonds for longer maturity paper to start in August and be completed fast to emerge rapidly from an expected default rating, its deputy finance minister said on Tuesday.

    Greece's private sector creditors will take a 21 percent loss on their bond holdings as part of a 37 billion euro ($53 billion) contribution to the country's latest bailout plan, agreed at a euro zone summit last week.

    "In the coming days, in collaboration with (bank lobby) IIF, talks outlining the exact procedure that will be followed so that holders of Greek government bonds choose one of four options and proceed to a debt swap will be completed," Deputy Finance Minister Filippos Sachinidis told Mega TV.

    "Yes, this procedure will start in August," he said.

    The International Institute of Finance (IIF) has estimated a take-up rate of about 90 percent for the voluntary program, which gives banks the option to swap Greek debt with new bonds with maturities of up to 30 years.

    "If the IIF will be the format that will be finally used, the 90 percent (assumed) participation rate does look optimistic," said Justin Knight, head of European rates strategy at UBS.

    Investment bank JPMorgan also questioned whether enough investors would take up the swap offer, and challenged the estimate that investors would take a 21 percent "haircut" under the scheme. It said the loss of capital investment would be more like 34 percent.

    Greece's creditors in banking, insurance and fund management are looking for more clarity on the options to swap debt for 15-year or 30-year bonds, paying interest Greece can more easily afford.

    "It's a complex matter and should be done sooner rather than later. The government is in talks to hire a team of banking and legal advisers," a senior Greek banker who declined to be named told Reuters.


    Credit rating agencies have said they will view the planned bond exchange as a partial default but have left the door open for the overborrowed country to emerge from the rating once the transaction is completed.

    Fitch has said it will place Greece in "restricted default" during the swap.

    On Monday, Moody's warned it will almost certainly slap a default tag on Greece, after downgrading it by three notches to Ca, just one notch above default, to reflect the expected loss implied by the proposed bond swap.

    The agency plans to review the rating after the swap is done, but unlike Fitch which has pledged to quickly raise Greece to a "low speculative grade," Moody's did not say when the rating would change or how.

    With a first working meeting on implementing the plan set to take place in Athens on Thursday, Greek officials hope the bond exchange can be done fast.

    "The goal is for this (bond swap) to last as briefly as possible," Sachinidis said. "It appears that we will manage to secure a satisfactory participation to proceed with the exchange."

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    Post Wall Street opens down in third day of losses

    Stocks fell for a third straight day on Wednesday as a political deadlock over raising the debt ceiling and a decline in durable goods orders kept investors away.

    The Dow Jones industrial average .DJI was down 73.38 points, or 0.59 percent, at 12,427.92. The Standard & Poor's 500 Index .SPX was off 9.18 points, or 0.69 percent, at 1,322.76. The Nasdaq Composite Index .IXIC dropped 18.98 points, or 0.67 percent, at 2,820.98.

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