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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (7089)	9/8/2003 11:26:17 AM
From: Proud_Infidel	Respond to of 25522

Central Bankers See a Global Upswing Monday September 8, 9:43 am ET By Thomas Atkins and Stella Dawson BASEL, Switzerland (Reuters) - The global economy is improving with U.S. companies poised to resume capital investment, a crucial component in lifting world growth, the world's top central bankers said on Monday. But risks remain for an incipient recovery, with question marks about the sustainability of current strong business and consumer sentiment, while rising fiscal deficits also pose a threat, the chairman of the Group of 10 central bankers said. "We were very encouraged by developments and the accumulation of signs in the major economies in the world," said Jean-Claude Trichet, who was chairing his first meeting of the world's top central bankers and in November takes over the presidency of the European Central Bank. "We see some perspective for a (U.S.) investment acceleration and that is certainly the element that is most important," he added at a news conference after a bi-monthly central bankers' meeting at the Bank for International Settlements (News - Websites) in Basel. His report was far more upbeat than two months ago when the top central bankers said the global economy was stuck in an uncomfortable rut with no clear evidence of an upswing. Since then, the International Monetary Fund (News - Websites) and World Bank (News - Websites) both have said they see tentative signs of recovery. While the U.S. is improving and "things were moving" in the right direction in Japan, the euro zone would likely disappoint this year with growth possibly falling below the 0.7 percent mid point that ECB staff are forecasting, Trichet said. Risks to the outlook are that consumer and business confidence falters and a pickup in capital investment fails to materialize. Fiscal deficits, with the United States and euro zone running red ink, also pose a threat, Trichet said. Central bankers at the meeting did not discuss calls for lower interest rates in the euro zone if growth falters, Trichet said. But one ECB policymaker tried to dampen expectations for further cuts. "We have stability of interest rates at a very low level. It is not a time to speculate about a new cut in interest rates. It is time to invest," ECB Governing Council Member Guy Quaden told reporters in Basel late on Sunday. JAPAN TO MAINTAIN EASY TONE Central bankers in both the United States and Europe in the past week have started to send signals they intend to keep rates steady at present low levels for some months whilst a recovery takes hold. Trichet said the sharp rise in long-term bond yields in financial markets is being "watched carefully" by central bankers. "We would not consider that the present level of long rates is a risk." he said, but it would be monitored. Central bankers welcomed mounting signs of economic strengthening in Asia. China's exchange rate policy was discussed but no pressure was brought to bear for that country to let its currency float freely. Japan also sent a message it will keep rates low. "The BOJ's basic stance is to continue current easing measures. There will be absolutely no possibility of the BOJ discussing tightening in this week's meeting," Bank of Japan Governor Toshihiko Fukui told reporters. Signs of a recovery in Japan's economy have raised talk the BOJ might be willing to scrap its so-called "quantitative easing" policy, under which the BOJ floods the money market with liquidity and keeps short-term interest rates near zero. But Fukui sounded cautious about the outlook for the recovery: "It is too early to assess the outlook for Japan's recovery, but we have to make sure the recovery stays on track." Financial markets also are displaying confidence that three years of bruising losses are over and recovery is taking firm hold. Stock markets have rebounded and bond yields in the United States and Europe have shot higher on recovery hopes. Yet growth is tentative. Corporations have been preoccupied with repairing their balance sheets, damaged by the huge amounts of debt they took on during the technology boom years. New investment so far remains scant. Trichet said that now may be turning around. Companies are "entertaining ideas of spending on capital goods and managers have more and more confidence in the economy."