Ukrainian economy contracts 6.8 pct in 2014 - statistics service

KIEV, March 20 Fri Mar 20, 2015 6:29am EDT

KIEV, March 20 (Reuters) - Ukraine's economy contracted 6.8 percent in 2014 after zero growth in 2013, the state statistics service said on Friday, due to the financial toll of a separatist conflict in the industrial eastern regions.

The International Monetary Fund, which has approved a new $17.5 billion financing package for Ukraine, forecasts the economy contracting 5.5 percent this year and returning to growth in 2016, but has warned efforts to restore financial stability face "exceptionally high" risks from further fighting.

The statistics service revised its data for the fourth-quarter of 2014 to a contraction of 14.8 percent from 15.2 percent. (Reporting by Natalia Zinets; Writing by Alessandra Prentice; Editing by Richard Balmforth)

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Turkish Airlines raises $328 mln for Boeing 777s

ISTANBUL, March 20 Fri Mar 20, 2015 5:50am EDT

ISTANBUL, March 20 (Reuters) - Turkish Airlines has raised $328.3 million through dollar-denominated certificates to finance three Boeing 777-300ER aircraft, it said, the first time the carrier has raised funds through capital markets.

The airline said in a statement late on Thursday it had raised the money through a private offering of Enhanced Equipment Trust Certificates (EETC).

EETCs, a type of debt financing, ensure lenders have direct claim over an aircraft in the event that a carrier has financial trouble. They typically offer low interest rates than other types of aircraft financing.

Turkish Airlines did not give details of the financing. However, bankers told Reuters on Thursday the certificates would mature in March 2027 and that Citigroup and Goldman Sachs were the lead bookrunners.

The financing will be used to fund the purchase of the three new Boeing jets due for delivery this month and next month, Turkish Airlines said.

The carrier said last month that it and its subsidiaries planned $3.74 billion in investments this year, mostly on previously ordered aircraft that will expand its fleet of 261 planes. (Reporting by Nevzat Davranoglu; writing by David Dolan; Editing by Crispian Balmer)

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WRAPUP 2-Greek PM assures EU creditors reforms coming to unlock cash

Fri Mar 20, 2015 6:33am EDT

(Adds Greek government comments, Juncker, markets)

* Late-night crisis talks produce assurances of reforms, help

* But Tsipras, Merkel offer divergent views of what expected

* Greece running out cash and creditors frustrated by delays

* Concerns Athens could stumble from euro zone under new govt

By Renee Maltezou and Alastair Macdonald

BRUSSELS, March 20 (Reuters) - Greece said on Friday it was moving swiftly to meet creditors' demands for a detailed economic reform plan after Prime Minister Alexis Tsipras assured euro zone leaders his leftist-led coalition would speed up work to avert bankruptcy.

After two months of mounting frustration on both sides since Tsipras was elected with a mandate to end years of austerity, he held three hours of late night talks to try to break an impasse that risks sending Athens stumbling of the euro zone.

But while a joint statement by the EU institutions spoke of a "spirit of mutual trust" and Tsipras said he left feeling more optimistic, German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms that it has so far been reluctant to accept.

The risk of a continued standoff, exactly a month after Greece secured a last-gasp four-month extension of an EU/IMF bailout, was highlighted by different descriptions by Tsipras and Merkel about what reforms Athens would need to launch.

"It is clear that Greece is not obliged to implement recessionary measures," the 40-year-old leftist premier told reporters, referring to previously agreed reforms. "Greece will submit its own structural reforms, which it will implement."

But Merkel, facing mounting resistance in Europe's richest state to continued lending to keep an erratic partner in the common currency area, insisted that only the full completion of already approved measures would satisfy the creditors.

"The reference point is the agreement of Feb. 20," she said. "We have not changed one iota. You may have heard some of this before. But then not much has happened in the last few weeks."

Tsipras will make a much anticipated visit to Merkel in Berlin on Monday. EU officials said that if Greece did come up with a convincing plan to get its debts under control, euro zone finance ministers could meet soon to release at least some funds to help it meet pressing commitments in the coming weeks.

In Athens on Friday, government spokesman Gabriel Sakellaridis said: "Once the reforms are submitted, and in a detailed manner, to the Euro Group when that happens ... then the funding will be unlocked towards the Greek economy."

The Finance Ministry said it would respond in a "constructive spirit" to a list of requirements on reforms being drawn up by a team of technical experts from the creditors - a contrast to an atmosphere of mutual mistrust which marked encounters with EU officials in Athens this week.

Finance Minister Yanis Varoufakis, who has offended many of Greece's partners, especially in Germany, with incendiary comments and undiplomatic behaviour, joined the call for immediate implementation of the Feb. 20 agreement.

"First, we should work towards ending the toxic 'blame game' and the moralising finger-pointing which benefit only the enemies of Europe," he said in a blog post on Friday.

JOINT STATEMENT

The meeting involved Tsipras, Merkel, summit chairman Donald Tusk, European Commission President Jean-Claude Juncker, Jeroen Dijsselbloem, the chair of the Eurogroup of finance ministers, European Central Bank (ECB) President Mario Draghi and French President Francois Hollande.

Juncker, Tusk and Dijsselbloem issued a brief joint statement on the outcome, intended partly to reassure euro zone minnows upset at being left out of the talks..

"We fully adhere to the agreement of the Eurogroup of Feb. 20. In the spirit of mutual trust, we are all committed to speed up the work and conclude it as fast as possible," they said. "The Greek authorities will have the ownership of the reforms and will present a full list of specific reforms in the next days."

Juncker said on arrival for a second day of summit talks on Friday that he was rather more optimistic about resolving the crisis because "I hadn't observed any convergence of views over the past weeks but noticed it yesterday".

Merkel's centre-left coalition partner Sigmar Gabriel, the German economy minister, said he too was "a bit more hopeful".

Those were hardly euphoric sentiments and were reflected in only cautious gains for Greek financial assets on the markets.

Greece's main stocks index rose 3.2 percent. Two-year government bond yields fell 89 basis points to 23.85 percent, while 10-year yields were down 18 bps at 12.10 percent. But two-year yields were still much higher than before, having doubled in a month and risen over 3 percentage points on Thursday.

EU officials said the talks were conducted in a business-like manner - a contrast with some of the ructions over recent weeks that have seen increasingly bitter confrontation between Greek and German ministers. That has fuelled speculation that some creditor states might prefer to see Greece quit the euro.

Athens has been kept from bankruptcy by two bailouts since the global financial crisis, but now risks running out of money within weeks. On Thursday, Greek banks reported the largest deposit withdrawals in a month, a sign savers are worried about the outlook for the country's finances and institutions.

ECB WARY

A person familiar with ECB thinking said Draghi would make clear the bank would not lift its limit on Greek short-term debt issuance, which Greece's Marxist finance minister has said is "asphyxiating" his country. "It's up to Greece to meet its commitments in order to get money from its creditors," said the person. "The ECB doesn't do bridge finance."

Two EU/IMF bailouts totalling 240 billion euros have kept Greece from bankruptcy since 2010 but its economy has shrunk by 25 percent, partly due to austerity measures imposed by the lenders. It risks running out of cash without more aid or permission to issue more short-term debt.

A Greek official said Athens had enough cash to pay a final 350 million euro instalment of a loan repayment to the International Monetary Fund on Friday. EU officials said Greece had enough money to last until at least mid-April. (Additional reporting by Philip Blenkinsop, Robert-Jan Bartunekk Jan Strupczewski, Paul Taylor, Tom Koerkemeier, Andreas Rinke, Elizabeth Pineau, Adrian Croft, Francesco Guarascio, Foo Yun Chee and Robin Emmott in Brussels, Michele Martin and Gernot Heller in Berlin and Costas Pitas and Deepa Babington in Athens; Writing by Alastair Macdonald; Editing by Paul Taylor)

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SNB's Jordan says nobody demanded resignations after cap removal

ZURICH, March 19 Thu Mar 19, 2015 6:32am EDT

ZURICH, March 19 (Reuters) - The Swiss National Bank's governing board did not come under any pressure to step down after its removal of a cap on the franc roiled markets and sent the currency soaring in January, SNB Chairman Thomas Jordan said.

"There were never demands for resignation directed at the three of us (board members) or at me personally," Jordan told journalists at a news conference on Thursday.

The SNB earlier on Thursday kept a charge on some cash deposits steady at -0.75 percent, but said it would remain active in foreign exchange markets to weaken what it sees as a "significantly overvalued" franc. (Reporting by Alice Baghdjian and Maria Sheahan)

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Greek bank deposit outflows spike over new tensions with EU-sources

ATHENS, March 19 Thu Mar 19, 2015 6:41am EDT

ATHENS, March 19 (Reuters) - Greek banks saw deposit outflows of about 300 million euros on Wednesday, the highest level in a single day since a Feb. 20 accord with euro zone partners that staved off a banking collapse, two senior Greek bankers familiar with the matter said on Thursday.

"The uncertainty over the lack of progress in negotiations and the negative newsflow has affected sentiment," one banker told Reuters. "It's not a huge amount but the worry is whether this is the start of a trend that could get worse."

About 16 billion euros left the Greek banking system in December and January on fears of a political crisis as parliament failed to elect a president, triggering snap elections that brought the leftist Syriza government to power.

The outflows continued in February but reversed course after the Feb.20 deal extending Greece's bailout by four months. (Reporting by George Georgiopoulos, editing by Deepa Babington)

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Putin says cbank rate rather high, warranted by current conditions

MOSCOW, March 19 Thu Mar 19, 2015 6:41am EDT

MOSCOW, March 19 (Reuters) - Russia's President Vladimir Putin said on Thursday that the central bank's key rate remains rather high, but it is warranted by current conditions.

"Indeed, for now the key rate is high enough," Putin told a conference of Russian entrepreneurs. "For now, there are no fundamental basis for us to feel confident."

The central bank cut its key rate, the one-week repurchasing rate, last week to 14 percent. (Reporting by Darya Korunskaya and Oksana Kobzeva; Writing by Vladimir Soldatkin and Lidia Kelly)

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QE-inspired scarcity worry boosts demand at 10-year Bund sale

LONDON, March 18 Wed Mar 18, 2015 6:47am EDT

LONDON, March 18 (Reuters) - Investors snapped up 3.3 billion euros of 10-year German bonds at a sale on Wednesday that fed relentless demand for top-rated debt in a market fretting about a scarcity of such bonds as ECB asset purchases gain pace.

The sale drew bids worth 2.4 times the amount offered, almost twice the demand seen at last month's auction of the bonds. The bonds were auctioned at a yield of 0.25 percent, half the interest rate offered by the bond and down from 0.37 percent at the previous sale.

Yields on 10-year German bonds fell in the secondary market after the sale, dropping to 0.25 percent, down 3.4 basis points on the day, from 0.26 percent beforehand. (Reporting by Emelia Sithole-Matarise, editing by Nigel Stephenson)

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UPDATE 1-Protesters, police clash near new European bank HQ in Frankfurt

Wed Mar 18, 2015 6:49am EDT

* Violence erupts outside new ECB headquarters

* Nearly 90 police hurt by stones, liquids thrown at them

* Draghi says protesters missing the point (Updates with details on violence, Draghi comments)

By John O'Donnell and Frank Siebelt

FRANKFURT, March 18 (Reuters) - Anti-capitalist protesters clashed with riot police near the new headquarters of the European Central Bank (ECB) in Frankfurt on Wednesday and set fire to barricades and cars, casting a pall over the ceremonial opening of the billion-euro skyscraper.

Nearly 90 police were injured by stones and unidentified liquids hurled by a violent minority from within the thousands-strong protest, police said. Some protesters said they were injured when police used pepper spray.

Seven police cars were set on fire, streets were blocked by burning stacks of tyres and rubbish bins, and shops were damaged in the city centre. Dark smoke billowed in front of the ECB towers and across central Frankfurt.

Police used water cannon to try to make a path through the mass of black-clad protesters to the entrance of the building, blocked off from the street by police barricades. Five people were detained and others taken into custody for questioning.

ECB President Mario Draghi addressed the demonstrators in his speech at the opening ceremony but said they were missing the point by blaming the ECB.

"European unity is being strained," he said, according to an advance text. "People are going through very difficult times. There are some, like many of the protesters outside today, who believe the problem is that Europe is doing too little.

"But the euro area is not a political union of the sort where some countries permanently pay for others. It has always been understood that countries have to be able to stand on their own two feet - that each is responsible for its own policies. The fact that some had to go through a difficult period of adjustment was therefore not a choice that was imposed on them. It was a consequence of their past decisions."

The protest organisers, a group called Blockupy - named after the Occupy Wall Street movement in 2011 - estimated that about 10,000 demonstrators were at the rally. Thousands came into the German financial capital from other parts of Europe.

"Our protest is against the ECB, as a member of the troika, that, despite the fact that it is not democratically elected, hinders the work of the Greek government. We want the austerity politics to end," Ulrich Wilken, one of the organisers, said.

"We want a loud but peaceful protest," he told Reuters.

Blockupy says it represents grass-roots critics of supranational financial institutions including the "troika": the ECB, the European Commission and the International Monetary Fund, whose inspectors monitor countries such as Greece and Cyprus that have received international bailouts.

The ECB is also influential as a provider of finance to the banks of struggling countries and has in recent weeks sanctioned a drip feed of extra emergency finance to Greece's lenders.

Greek Finance Minister Yanis Varoufakis last week criticised ECB policy towards Athens as "asphyxiating", a criticism also made by the protest organisers. (Additional reporting by Paul Carrel; Editing by Erik Kirschbaum and Louise Ireland)

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Fitch:Oil Producers Diversification Key to Weathering Price Drop

Wed Mar 18, 2015 6:53am EDT

(The following statement was released by the rating agency) LONDON, March 18 (Fitch) Sharp differences in export diversification and foreign net asset positions help explain why some oil-producing countries are likely to weather sustained oil price pressure much better than others, according to Fitch Ratings. A Fitch study of sensitivity to an extended USD50/bbl West Texas Intermediate (WTI) crude oil price shock employed a simplified graphical approach to mapping relative vulnerability across a disparate set of issuers. Risks for a large sample of sovereign, corporate and US public finance issuers were measured with respect to two parameters: i) expected revenue and EBITDA declines and ii) leverage. In the case of sovereigns, relative vulnerability was captured by comparing potential declines in oil's contribution to external receipts and ratios of sovereign net foreign assets to GDP (net leverage). This stress is more severe than our latest oil price assumptions, contained in our Global Economic Outlook published on Tuesday, of USD65/bbl (Brent crude) for 2015 and USD75/bbl for 2016. Brent crude has recently traded at a premium of between USD5 and USD10/bbl to WTI. <a href="https://www.fitchratings.com/web_content/images/fw/fw-chart-20150317.htm "> The USD50/bbl crude price sensitivity scatter plot can be seen here. Among sovereign issuers represented in the cross-sector scatterplot, those in the lower left quadrant are likely to be most affected by sustained lower oil prices, given their relatively weaker net foreign asset positions and greater export revenue exposure in a USD50/bbl environment. Issuers in the upper right quadrant are better positioned than their peers, both in terms of net leverage profiles and prospective revenue impact. High-yield issuers are highlighted in the plot. Notably, almost all of the issuers located in the high-sensitivity portion of the chart (lower left) are rated below investment grade by Fitch. The impact of an extended USD50/bbl crude price scenario on external revenues depends on the diversification of a country's export base. Weak business environments and institutional frameworks can hinder diversification. This is reflected at either end of the sensitivity scale on the vertical axis, with Norway in the strongest position and Venezuela and Angola the weakest. High savings provide significant insulation to Kuwait and Saudi Arabia, both rated 'AA', even though they have relatively undiversified revenue bases. Oil price vulnerabilities are factored into sovereign ratings. Norway, rated 'AAA' and 'Abu Dhabi, rated 'AA', are in the low debt/low impact quadrant. All sovereigns in the high-debt/high-impact quadrant are below investment grade. Policy responses can mitigate oil price vulnerabilities. In addition, measures to diversify revenue, cut spending (particularly subsidy reform) and enhance the investment climate can strengthen sovereign credit profiles in a prolonged lower oil price environment. The full report, "Global Crude Fallout: Sensitivity to Prolonged Oil Price Pressure Across Multiple Sectors," can be found at www.fitchratings.com. Contact: Bill Warlick Senior Director Macro Credit Research +1-312-368-3141 Fitch Ratings, Inc. 70 W Madison Street Chicago, IL 60602 Paul Gamble Director Sovereigns +44 20 3530 1623 Mark Brown Senior Director Fitch Wire +44 20 3530 1588 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. Applicable Criteria and Related Research: Global Crude Fallout (Sensitivity to Prolonged Oil Price Pressure Across Multiple Sectors) here Global Economic Outlook - March 2015 here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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ZEW president says confidence boost from ECB's QE has peaked

MANNHEIM, Germany, March 17 Tue Mar 17, 2015 6:42am EDT

MANNHEIM, Germany, March 17 (Reuters) - The economic stimulus stemming from the European Central Bank's quantitative easing (QE) programme was felt mainly until early this year but concerns about a hangover it may cause rose in March, the president of German think tank ZEW said on Tuesday.

"My feeling is that the boost in confidence caused by QE came mostly, I would say, until January and February," ZEW president Clemens Fuest said.

"Currently a lot of people think about the downside, you know, one obviously being the bubble in bond markets. If you look at the return on euro zone government bonds, I mean it's really at a point where it cannot go much lower," he said.

"I think the ECB itself has probably underestimated the effect of the programme on the exchange rate and maybe even on returns," Fuest added.

He also said that the situation in Greece appeared to be worsening every day and there was too much focus on Greece leaving the euro zone. He said his Plan A regarding Greece would be to try to find a way to keep the country in the euro zone. (Reporting by Kirsti Knolle and Till Weber; writing by Erik Kirschbaum in Berlin; Editing by Michelle Martin)

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