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China has issued new guidelines to encourage the $1.2 trillion mutual fund industry to innovate, promising to let more foreign firms into the industry as part of Beijing's recent efforts to boost the stock market and the real economy. The guidelines will be a blueprint for the development of the domestic industry in the next three to five years, a regulatory spokesman told a weekly news conference in Beijing on Friday. By the end of May, China's 91 mutual fund companies with 680 funds managed a total assets of 7.25 trillion yuan ($1.2 trillion), making the domestic fund industry the 10th biggest in the world, official data shows. Still, stock holdings by professional institutional investors, dominated by mutual funds and brokerages, only accounted for 10.87 percent of China's total stock market capitalisation by the end of last year. The fledging market is dominated by much less sophisticated retail investors, a result that has led to rampant speculation in loss-makin

The European Union's banking watchdog will toughen up its guidelines on bankers' pay after a study uncovered wide variations in how lenders apply the rules across the 28-country bloc and how banks are avoiding the bonus cap. The European Banking Authority (EBA) did not say how it will toughen the rules but this is likely to include tighter supervision and more detail in how the rules should be applied. After the 2007-09 financial crisis sparked public anger over bonuses at banks that taxpayers had to rescue, the EU introduced curbs on the pay of top bankers earning a million euros or more. The current rules mean that 40-60 percent of a bonus must be deferred over 3-5 years, with the possibility to claw back the cash if problems like misconduct are later discovered. The curbs were toughened so that bonuses handed out from early next year can be no higher than fixed salary, or twice that amount with shareholder approval. Staff earning more than 500,000 euros will be affected

Europe's top share index headed for a weekly drop after gaining for eight straight weeks, with escalating conflict in Iraq hitting travel stocks and the prospect of an early rate hike in the United Kingdom hurting property shares on Friday. The pan-European FTSEurofirst 300 slipped to a one-week low, moving further away from this week's 6-1/2-year high. It was down 0.7 percent at 1,382.78 points by 1051 GMT after falling to a low of 1,381.86, the lowest since early June. Travel and leisure stocks led the market lower, with the European sector index falling 2.3 percent after growing tensions in Iraq hit sentiment and boosted oil prices. "The market was looking for an excuse to take profits after a rally to new highs and tensions in Iraq gave investors an opportunity to trim their positions," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels. "America may send a few fighter planes to help Iraq, but it doesn't look like the

Cyprus is preparing to sell bonds to yield-starved investors in the next few weeks, making a return to markets that looked very distant just a year ago when it was bailing-in bank depositors and imposing capital controls. Still mired in recession, and with its credit ratings deep in junk territory following a debt exchange last year that ratings agencies classed as a default, the island hired five banks this week to oversee a planned bond sale. That would mark the fastest comeback to markets of any of the euro zone countries that were forced to seek international aid as a debt crisis engulfed the currency bloc. It would also take place while capital controls are still in force, although Nicosia says it aims to lift them by the end of the year. With interest rates in developed countries at historic lows and investors grabbing anything that offers even a tiny pick-up in yield, the sale is expected to be a success. "Now is the best time for Cyprus to establish itself in markets

French bank BNP Paribas was warned in 2006 by a high-ranking U.S. Treasury official and in three reports by legal experts that it risked being penalised for breaking U.S. sanctions, according to Le Monde newspaper. _0"> Since France's biggest bank flagged the risk of a big fine in February this year, sources close to the affair have said it ignored early warnings of the risks it faced. They pointed out that the alleged offending transactions being investigated by U.S. authorities continued until 2009. The French newspaper's report, written as talks accelerate towards a possible $10 billion fine and other penalties, said Stuart Levey, then the U.S. Treasury Under Secretary for Terrorism and Financial Intelligence, made a visit to Paris in September 2006. The paper, drawing on the findings of its own investigation, said Levey met the bank's top officials, including Baudoin Prot, who has since become chairman, in its boardroom. Levey was there not to talk about

The Sri Lankan rupee edged down from a near a one-year high on Friday as importer dollar demand outpaced greenback sales by banks and exporters while state banks bought dollars to prevent volatility, dealers said. _0"> The rupee ended at 130.25/28 per dollar, little changed from Wednesday's close of 130.25/27, which was its highest since June 28, 2013. Both the forex and stock markets were closed on Thursday for a public holiday. "There was late importer dollar demand," said a currency dealer asking not to be named. The two state banks, through which the central bank intervenes to direct the market, bought dollars at 130.25 rupees, as the central bank is allowing a gradual appreciation in the local currency to prevent shocks, dealers said. Dealers said exporter dollar sales picked up on expectations that the rupee would strengthen further. The central bank bought dollars at 130.35 rupees on May 30 and started lowering its buying rate since then, allowing a

British payday lender Wonga said its co-founder Errol Damelin had quit as a director of the company, just seven months after stepping down as chief executive. _0"> Wonga is one of the biggest short-term lenders in Britain and has come under fire, along with the industry as a whole, for the high level of interest rates it charges. Its rates can equate to as much as 5,853 percent a year, though its loans are only supposed to be held for a short period of time, often to provide funds for someone until they are paid. Britain's financial regulator is planning to impose tougher rules on the industry. Wonga said on Friday Damelin, who co-founded the company in 2006, had indicated in November he wanted to begin an orderly exit from the firm so he could start working on new business ventures. He stepped aside as chief executive at that time and became chairman. "He is now happy that the migration to a senior team suited to running a large and regulated financial services

In the struggle to explain this year's collapse in volatility and volume in financial trading, one newly-nominated culprit is central banks' intent to use every tactic available short of raising interest rates too soon. It sounded like a deeply contrarian view on Friday after comments by Bank of England Governor Mark Carney, but a study by analysts from market heavyweights HSBC this week argued that the use of macroprudential steps will make central bank interest rates in general less volatile in future. Implicitly that may mean markets see less marked swings. The global economy is right at the point, as the economic fates of Japan, Europe and the United States diverge, when an upturn in trading action could be expected due to the growing chances for arbitrage between future interest rates. Yet volatility, which traders depend upon for profits, is at rock bottom. Trading in currencies on the biggest platforms has fallen by a third to half in the past year; options contract

British construction output grew faster than previously thought in the first quarter, new figures showed on Friday, but could slow in the next three months, particularly after the government took steps to cool the housing market. Finance minister George Osborne said on Thursday that he would give the Bank of England stronger powers to curb mortgage lending, while BoE Governor Mark Carney said interest rates could rise sooner than financial markets expect. The comments sent sterling and short-dated British government bond yields soaring and caused shares to plunge, with housebuilders particularly hard hit. Some 1.7 billion pounds ($2.85 billion) has been wiped off the value of the six housebuilders and two property groups. Economists say Osborne's announcement means the Bank may adopt a more direct approach when trying to curb mortgage lending. It is expected to announce more controls after its Financial Policy Committee meeting next week. The moves should help take some heat o

The leader of South Africa's AMCU union said on Friday a wage deal with the top three platinum producers was imminent, signalling a possible end to a crippling five-month strike that has disrupted global output of the metal. Workers from the Association of Mineworkers and Construction Union (AMCU) begged leader Joseph Mathunjwa on Thursday to end the country's longest mining strike and sign the latest offer - an increase of about 20 percent, or 1,000 rand ($93) a month. Mathunjwa told Johannesburg radio he would take the offer to more AMCU members at mines on Friday, before meeting with management at Lonmin , Anglo American Platinum and Impala Platinum later or over the weekend to relay the response of his miners to their offer. "At least there is light at the end of the tunnel, which is not the light of a goods train," he told Talk Radio 702. The main outstanding sticking point was whether the wage deal should stretch over three or five years, he said. "W

Investors braced on Friday for a UK interest rate hike later this year, pushing sterling to five-year highs and hurting property stocks, after the head of the Bank of England said rates may rise sooner than markets predict. Governor Mark Carney's surprisingly stark warning late on Thursday prompted investors to bring forward expectations for a first BoE rate hike by nearly four months, to December from the first quarter of 2015. Sterling's trade-weighted index posted its biggest one-day rise in four months, hitting 5 1/2-year highs. Short-dated UK government bond yields were on track for their biggest daily gain in more than three years. A rate hike by the end of 2014 is likely to come at least six months before the U.S. Federal Reserve tightens policy. It would contrast sharply with the European Central Bank, which cut rates last week and is likely to ease policy in the coming months. "The BoE seems to be slightly ahead of the Fed as far as rate hikes are concerned,&

Britain could become the first major economy to tighten monetary policy since the 2008 financial crisis, Bank of England Governor Mark Carney has signalled, sending sterling shooting towards a five-year high against the dollar on Friday. British government bond yields soared, construction stocks tumbled and interest rate futures priced in a first hike by December after Carney said rates could rise sooner than markets had thought - his most hawkish comment to date. "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said in a speech late on Thursday alongside British finance minister George Osborne. "It could happen sooner than markets currently expect." Few economists had expected rates to increase until the second quarter of next year given the central bank's previous guidance that there was plenty of scope for Britain's economy to expand further without causing infla

Bartender Yoshiro Tsuneoka smiled with satisfaction between popping open bottles of champagne. It was midweek, 8 pm, and business was good at the tiny bar in downtown Tokyo. Watching a bevy of young professionals quaffing sparkling wine, there was little sign that an increase in Japan's sales tax in April caused anything more than a hiccup in the economy. "Sales have been doing well for a while now and we've noticed no change after the tax increase," Tsuneoka said above the sound of clinking glasses. "We get a broad range of customers, and their spending hasn't changed." Japan needs people spending with confidence if a radical strategy adopted by Prime Minister Shinzo Abe is to succeed in breaking the economy free of two decades of deflation and sub-par growth. Government data covering the period after the tax was increased to 8 percent from 5 percent at the start of April has begun to trickle in. Household spending and retail sales in April dropp

The U.S. Federal Reserve should suspend payments to the Treasury to avoid a potential cash crunch when the time comes to raise interest rates, according to former Richmond Fed policy adviser Marvin Goodfriend. Such a reversal in policy is critical to protecting the Fed's inflation-fighting credibility, Goodfriend said in an interview Thursday, because otherwise the central bank will find itself needing to print money to pay for its obligations as it raises interest rates, an untenable situation in his view. "It's not good idea for a central bank to ever put itself in the position of having to create money to stabilize the value of money against inflation," said Goodfriend, now an economics professor at Carnegie-Mellon University. "You are throwing fuel on the fire." The U.S. central bank has sent about $320 billion to the Treasury since 2010. The money comes from interest earned on the Fed's massive portfolio of bonds acquired in its ongoing effort

The U.S. Federal Reserve on Thursday proposed tougher conditions for banks to pay dividends or buy back shares as part of a number of changes to its annual stress tests to measure banks' ability to withstand financial shocks. _0"> Banks need to ask the Fed for approval for shareholder payouts each year, part of a set of new rules to make banking safer after the financial crisis. Banks must submit capital plans that disclose whether they intend to pay dividends or buyback shares, as well as any planned increases in capital through raising new debt or shares. The new rule would prevent banks from increasing dividends or buying back shares if they did not meet the capital increases that they had pledged to the Fed. "Some large bank holding companies included issuances of capital instruments in their capital plans, but did not execute these planned issuances," the Fed said. For instance, if a bank had planned a $50 million stock issuance, and combined dividends

Bartender Yoshiro Tsuneoka smiled with satisfaction between popping open bottles of champagne. It was midweek, 8 pm, and business was good at the tiny bar in downtown Tokyo. Watching a bevy of young professionals quaffing sparkling wine, there was little sign that an increase in Japan's sales tax in April caused anything more than a hiccup in the economy. "Sales have been doing well for a while now and we've noticed no change after the tax increase," Tsuneoka said above the sound of clinking glasses. "We get a broad range of customers, and their spending hasn't changed." Japan needs people spending with confidence if a radical strategy adopted by Prime Minister Shinzo Abe is to succeed in breaking the economy free of two decades of deflation and sub-par growth. Government data covering the period after the tax was increased to 8 percent from 5 percent at the start of April has begun to trickle in. Household spending and retail sales in April dropp

Six years after mind-blowingly complex securitized debt brought the global financial system to its knees, the bankers behind the market are wary of official efforts to rehabilitate it in Europe. In the years leading up to 2008, when loans were transformed into bonds, many were repackaged again and again, acquiring triple A ratings despite links to U.S. sub-prime mortgages, and earning the nickname "toxic sludge". Yet the European Central Bank (ECB) and Bank of England (BoE) say they want to revive more straightforward asset backed securities (ABS) in the hope of ramping-up lending to credit-starved businesses and rebooting the regional economy. Attendees at the industry's annual meeting in Barcelona say it will take more than positive words to overcome their pariah status in Europe and worry that official efforts to exclude the riskier parts of the market will make it unworkable. "Don't confuse words with action," James Hewer, a partner at PwC's st

Rising bond yields, mounting inflation and a weakening currency have taken the shine off Ghana, a country until recently hailed as a model for African growth. An oil boom helped fuel five years of GDP growth above 8 percent making Ghana an emerging market star, a stable democracy whose population of 25 million was moving steadily into middle income status. It is now, however, paying a steep price for not coming through with a new tranche of fiscal reforms. Political consensus is stymied, the public is dismayed by rising costs and the dream of new wealth is on hold. Analysts put the immediate difficulty down to a delay in announcing reforms, saying it makes it harder for the government to meet its 2014 economic targets and has increased the chance it will eventually need a bailout from the International Monetary Fund (IMF). It has also created a perception of policy drift at a time of economic trouble rather than decisive action to shore up gains made during the boom years in whic

Four months ago, Jean-Claude Juncker would have struggled to have his name recognized in much of Europe. Now he could be forgiven for wishing people would shut up about him. As the top candidate of Europe's largest center-right political group, which won the European elections last month, the former prime minister of Luxembourg is in pole position to become the next president of the European Commission. While Britain's David Cameron is adamantly opposed and The Sun tabloid has described him as "The Most Dangerous Man in Europe", Juncker remains on track to secure the powerful post, which has influence over policy from telecommunications to banking and trade affecting 500 million Europeans. Cameron's opposition is based on a belief that Juncker, 59, is an "old-school federalist" wedded to the concept of "ever closer union", not a modernizer who will shake up and refocus Brussels institutions regarded in London as bloated and opaque. After

German Chancellor Angela Merkel has not altered her view that Luxembourg's Jean-Claude Juncker should become president of the European Commission, a government spokesman said on Friday. _0"> "The German chancellor has very clearly said, including in her recent speech to parliament, that she is in favor of Jean-Claude Juncker becoming the next European Commission president and that she will work towards him getting a majority," Steffen Seibert said, adding that "nothing has changed" in this regard.   true       (Reporting by Stephen Brown and Michelle Martin)

class="mandelbrot_refrag"> Banks will return 3.712 billion euros ($5.05 billion) in long-term crisis loans to the European Central Bank next week, ECB data showed, after the ECB started to charge banks for holding their excess cash overnight and promised more long-term loans. _0"> The amount that class="mandelbrot_refrag"> banks will repay on June 18 is below this week's repayments of 10.588 billion euros, and misses the 7.5 billion forecast in a Reuters poll. The ECB cut interest rates to record lows - the deposit rate is now below zero - and launched a series of measures to pump money into the sluggish class="mandelbrot_refrag"> euro zone class="mandelbrot_refrag"> economy , pledging to do more if needed to fight off the risk of Japan-like deflation.   true       The measures also include a new 400 billion euro four-year loan scheme to give banks an incentive to increase lending to businesses in the class=&q

The European Union's banking watchdog will toughen up its guidelines on bankers' pay after a study uncovered wide variations in how lenders apply the rules across the 28-country bloc and how class="mandelbrot_refrag"> banks are avoiding the bonus cap. The European Banking Authority (EBA) did not say how it will toughen the rules but this is likely to include tighter supervision and more detail in how the rules should be applied. After the 2007-09 financial crisis sparked public anger over bonuses at class="mandelbrot_refrag"> banks that taxpayers had to rescue, the EU introduced curbs on the pay of top bankers earning a million euros or more. The current rules mean that 40-60 percent of a bonus must be deferred over 3-5 years, with the possibility to claw back the cash if problems like misconduct are later discovered. The curbs were toughened so that bonuses handed out from early next year can be no higher than fixed salary, or twice tha

Japan's exports likely fell for the first time in 15 months in May due to stagnant demand overseas, and with imports expected to rise the trade balance will probably remain in deficit, where it has been for nearly two years, a Reuters poll showed. In addition to weak demand from emerging nations, the benefit of a weak yen for exports appeared to have run its course. The Reuters poll of 28 economists forecast exports to show a 1.2 percent fall in the year to May, which would be the first decline since a 2.9 percent fall in February last year.   true       In April, Japan's exports rose 5.1 percent from a year earlier. The poll forecast a 1.7 percent increase in imports in May, largely led by higher demand for liquid class="mandelbrot_refrag"> natural gas . The trade deficit was forecast at 1.17 trillion yen. It would be 23rd straight monthly deficit. "Shipments to Europe are expected to stay solid, but those to Asia will probably continue to be stagn