IRISH BORROWING COSTS STILL RISING - The President of the European Commission Jose Manuel Barroso said that the European Union is able to take action to support Ireland if needed. He made his comments to reporters ahead of the G20 summit in Seoul in South Korea. He did not speculate as to whether Brussels would need to act to support Ireland, but he said all the instruments were in place should the European Union and the euro zone need to act. His comments came as Irish borrowing costs mount after a dramatic sell-off in Irish bonds yesterday, and Patrick Honohan, the Central Bank Governor, admitted that the bank recapitalisation programme had failed to reassure investors.
Ciaran O'Hagan, of Société Générale, says that there are other methods of borrowing available to the Government, such as bond renegotiation. He says he does not think the recent rises on Irish borrowing costs is due solely to domestic issues, but what is being said by the likes of German Chancellor Angela Merkel about debt resolution. He says that some clarification around these comments would be very welcome.
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MORNING BRIEFS - Borrowing costs mounted yesterday after a dramatic sell-off in Irish bonds. This was caused when London's biggest clearing house, LCH Clearnet, introduced a 15% deposit against all Irish bond positions as insurance against default. Traders unable to meet the new requirements dumped their positions, causing a fire sale as bond holders and banks were forced to sell. The move, which comes into effect today, will make it more expensive to trade Irish government bonds cleared by LCH.
*** As well as Irish bonds, the price of oil keeps going up too. Oil reached a 25-month high this morning, as a surplus in the world's top consumer - the US - subsided, and strong industrial output in China sent demand to a record. US crude rose 40 cents to $88.21 cents a barrel in Asia, after earlier touching its highest level since October 2008. Crude inventories in the US unexpectedly fell last week, while declines in fuel stockpiles exceeded forecasts, as the nation's oil demand increased by 2.9% on a rolling four-week basis.
*** Telecoms firm BT has reported results for the six months to September. For Ireland north and south they show revenue fell by 4% to £373m sterling, in challenging market conditions. Profit rose by 14%, but BT do not say to what, on the back of contract wins and cost cutting.
*** China's industrial production grew by 13.1% in October from a year earlier. This boosted oil consumption by 12% from a year earlier to a record 8.92 million barrels per day there.
*** On the currency markets the euro is trading at $1.3773 cents and 85.33 pence sterling.
