Headlines

A task force set up to improve economic coordination in the euro zone and avoid fresh Greece-style debt crises said European Union governments with high debts should face greater pressure to cut budget deficits, The Wall Street Journal reported. The proposal—from a team led by EU President Herman Van Rompuy—would put more of a focus on high debts as a warning signal than in the past. Several countries, including Italy, Belgium and Greece entered the euro zone with debt levels way above the supposed government debt ceiling of 60% of gross domestic product.

China, the world’s largest foreign exchange holder, bought several hundred million euros of Spanish bonds last week as Asian investors returned to the eurozone peripheral market after a two-month hiatus, the Financial Times reported. China’s State Administration of Foreign Exchange, or Safe, which manages the reserves under the country’s central bank, was allocated up to €400m ($505m) of Spanish 10-year bonds in a debt deal last Tuesday, according to people familiar with the situation.

The hike of the key interest rate in Korea is expected to weigh on households and corporations with large debts, and further cool down already-chilly investor sentiment in the real estate market, The Korea Times reported. The Bank of Korea lifted the benchmark seven-day repurchase rate by 0.25 percentage points to 2.25 percent last week after maintaining it at a record-low 2 percent for almost two years to grapple with the global economic downturn.

Irish Nationwide plans to hire law firm McCann Fitzgerald and accountants Ernst Young to investigate lending policies and practices followed by the building society under the management of former chief Michael Fingleton, The Irish Times reported. The building society has been asked to develop a legacy plan by the Government. It has effectively been nationalised following the Government’s commitment to inject €2.7 billion into it.

Prepack administrations - a U.K. process in which a business on the brink of insolvency is sold on without liabilities, such as debt - could become a feature of the European commercial mortgage-backed securities market, a conference heard Thursday, Dow Jones Daily Bankruptcy Review reported. "I think you will see [CMBS deals] unwound quickly and cleanly through prepacks," Mark Nichol, CMBS analyst at Bank of AmericaMerrill Lynch, told a conference hosted by Fitch Ratings in London.

Germany's economy is growing. Global exports are booming. The euro is recovering. What's not to like? Plenty, according to a survey of German banks. Fully 60 percent fear that the euro crisis will worsen and jeopardize economic growth, Spiegel Online reported. According to the semi-annual "Bank Barometer" survey carried out by Ernst & Young in Germany, which was released on Thursday, only 39 percent of the 120 banks surveyed feel that the situation on the financial markets will improve in the next six months. In December, 65 percent thought it would.

The number of U.K. companies collapsing has fallen to pre-credit-crisis levels as firms and lenders work to manage liabilities and the economic recovery shows signs of trickling through to businesses, according to a new survey from financial-services firm Deloitte published Monday, The Wall Street Journal reported. The firm's analysis, which examined all U.K. administration figures, showed that 510 companies went into administration in the second quarter of 2010, 18% fewer than in the first quarter of the year. Administration is a procedure under U.K.

Dubai World has invited all its creditors to a July 22 meeting where the troubled conglomerate will seek to forge consensus behind backing for its multibillion-dollar restructuring proposal, people familiar with the matter say, the Financial Times reported. Creditors that hold about 60 per cent of the $14.8bn of the holding company’s debt – the seven banks on the co-ordinating committee of lenders – have already agreed initial terms on the restructuring proposal, which offers to pay back principle over five to eight years, the Financial Times reported.

A weak High Court bid to block the receiver’s sale of Allan Crafar’s 16 dairy farms will not continue unless Mr Crafar fronts up with $50,000 for security of legal costs, The National Business Review reported. Mr Crafar’s Plateau Farms failed in a High Court bid today to block receivers KordaMentha selling up the debt-ridden dairy empire – which owes back more than $200 million.

European Central Bank President Jean-Claude Trichet said strains in European financial markets are starting to ease, suggesting the ECB will continue to pare a program to help the region's most-vulnerable countries get back on their financial feet, The Wall Street Journal reported. Under the program, which was designed to jump-start dysfunctional segments of the financial markets, the ECB began purchasing government debt in May.