Cheaper fuels drive German inflation to three-year low

The cost of living in Germany rose by 1.2 percent in October, compared with the same month in 2012, which was the lowest monthly inflation rate in Europe's biggest economy since August 2010, the Federal Statistics Office, Destatis, announced Tuesday.

The slowdown followed a rate of 1.4 percent in September, and was primarily caused by significantly lower costs for fuels. In a year-on-year comparison, Germans in October had to spend about 10 percent less on heating oil and almost 6 percent less for car fuels than in the same months last year.

Rising prices in October were reported for food with butter prices leading the increase with 28 percent, followed by milk which was 20 percent more expensive.

Measured with the help of the European Union's Harmonized Index of Consumer Prices (HICP), German inflation also came in at a rate of 1.2 percent - well below the rate of 2 percent which the European Central Bank (ECB) has set for maintaining price stability.

The drop in inflation in Germany might add to ECB worries of deflationary pressures mounting in the crisis-hit eurozone. Across the 17-nation currency area, consumer prices rose by only 0.7 percent in October in a sign that demand was weak and the recovery fragile.

Deflation, which is marked by stagnant or falling prices, is bad for any economy. It causes consumers to withhold spending on the prospect of lower prices, thus reducing demand and the incentive for businesses to invest in jobs and production.

The downward trend prompted the ECB last week cut its main interest rate to a new historic low of 0.25 percent.

China’s elite opts for ‘more market’ but gives little detail

China's Communist Party ended a closely watched meeting of its 376-member Central Committee on Tuesday, saying it had approved 'comprehensive deepening reforms.'

Market economics, which had a 'basic role' over the past two decades, would be elevated to a 'decisive role,' Xinhua said.

State ownership would remain a pillar of China's economy, but private businesses were 'important components,' the communiqué said, adding that people's livelihoods and social stability had to be ensured.

Resource allocations via market

'The core is to handle the relationship between government and market, and let the market play the decisive role in allocating resources, and to better play the government role,' it said.

The message gave no indication on whether party leaders had agreed to reformists' calls to curb the status of state companies. They control vast swaths of China's economy, including banking, energy and telecommunications.

'Improve public security'

The communiqué issued via Xinhua also said China needed to 'effectively prevent and end social disputes and improve public security.'

That comes two weeks after a fiery vehicle crash in front of the iconic Tiananmen Square that killed two tourists and wounded dozens.

The government belatedly described the incident as 'terrorism' and blamed separatists from Xinjiang, the far-western region that is home to China's mostly-Muslim Uighur minority.

A state security committee would be set up to 'improve systems and strategies to ensure national security,' Xinhua said, but without giving details.

Growth rate slows

The Central Committee meeting, known as the Third Plenum, was widely seen as setting China's course over the next decade. In 1978, a similar meeting ushered in a switch from a Communist-style command economy to one driven by exports and investment.

In 2012 China's growth rate was 7.7 percent - seemingly high but the lowest rate in 13 years.

German corporate insolvencies down despite sluggish recovery

Germany's National Statistics Office (Destatis) reported Tuesday it had recorded 2,212 cases of corporate insolvencies in the country for August, marking a 7.4-percent drop compared to the level reached in the same month last year.

Among the firms having to file for bankruptcy, those in the retail and vehicle maintenance sectors appeared hardest hit, but hundreds of insolvencies were also logged in the building industry.

Estimated active debt in terms of claims from creditors was put at 1.6 billion euros ($2.14 billion) for August, an average of 732,000 euros per insolvency.

Optimistic outlook

Destatis said the number of jobs threatened by the corporate bankruptcies in question totaled about 13,800 across the nation.

The statistics office also reported a 12.8-percent decline in private household insolvencies year-on-year.

The Federal Collection Agency Association said it expected corporate insolvencies to ease throughout 2013. Cyclical developments usually take at least half a year to be reflected in insolvency statistics.

Towards the end of last year, the German economy contracted by 0.5 percent to stagnate in early 2013. But recovery has been picking up since the second quarter.

Dollar mixed in Asia after US jobs data

TOKYO: The dollar was mixed in Asia Monday after the unit surged on the back of upbeat US jobs data which stoked speculation of an early pullback on the Fed's monetary easing.

The greenback bought 99.01 yen in Tokyo morning trade, from 99.04 yen on Friday in New York where it had surged from 98.02 the previous day.

A European Central Bank rate cut last week pressured the euro which weakened to $1.3355 in Tokyo from $1.3368 in US trade and 132.22 yen against 132.40 yen.

Investor sentiment got a boost Friday as the US Labor Department said the economy added 204,000 jobs in October, double what analysts forecast.

The upbeat jobs growth, despite a 16-day partial federal government shutdown, suggested the world's largest economy could be in better shape than previously believed.

That hiked speculation the Federal Reserve would start cutting back on its $85 billion-a-month bond buying plan by year's end, a move that would tend to boost the dollar.

The Fed has said any draw down hinged on signs of a firm recovery.

However, Tachibana Securities market advisor Kenichi Hirano called the dollar's jump on the yen "speculative more than anything else", with the dollar also facing pressure from selling by Japanese exporters.

"The real yen-weakening story will resume once reliable data come in showing an unmistakeable US economic recovery," Hirano told Dow Jones Newswires.

Strong Chinese industrial production and export data has helped lift market sentiment, but the euro remained under pressure as looming deflation fears in the eurozone saw the ECB cut rates to a record low 0.25 percent last week.

A downgrade of France's credit rating also heaped pressure on the unit while an expected tepid result for eurozone GDP this week "will add more weight to the argument for further policy actions", Credit Agricole said. (AFP)

Oil rises after Iran nuclear talks stall

SINGAPORE: Oil prices rose in Asian trade Monday after gruelling meetings in Geneva aimed at convincing Iran to halt its disputed nuclear programme failed to result in an agreement, analysts said.

New York's main contract West Texas Intermediate (WTI) for December delivery was up seven cents to $94.67 in mid-morning trade, while Brent North Sea crude for December rose 38 cents to $105.50.

"We see no breakthrough in the nuclear talks held between Iran and the six powers in Geneva last week," Teoh Say Hwa, head of investment at Phillip Futures in Singapore, told AFP.

"This has deferred concerns over the influx of Iranian oil into global markets, hence supporting crude oil prices," she said.

Diplomats on Sunday insisted they were closing in on agreement to curb Iran's nuclear programme despite the failure to clinch a long-sought deal in marathon negotiations in Geneva.

The Islamic republic has been crippled by a series of UN and US sanctions aimed at bringing an end to its nuclear drive, which the West claims is being used to develop atomic weapons. Iran denies the assertion.

The so-called P5+1 group of major powers -- Britain, France, the United States, Russia, China plus Germany -- plan to meet again with Iranian delegates on November 20 with the hope of securing a short-term deal that would freeze the country's nuclear activities while both sides work on a comprehensive agreement.

Meanwhile, oil prices were also supported by strong US job and economic growth figures that topped forecasts and signalled a possible recovery in the world's biggest economy following months of languid growth, Teoh Said.

The US Labor Department's highly anticipated October jobs report released Friday showed the world's largest economy added a surprising 204,000 jobs, more than double the average analyst estimate, despite a 16-day partial federal government shutdown.

The Commerce Department's third-quarter GDP advanced estimates came in at an annual rate of 2.8 percent, well above the 1.9 percent projected by analysts. (AFP)

BMW in record race gets boost from October sales

In October, BMW group delivered 165,851 cars to customers around the globe, an increase by 5.2 percent compared with October 2012, the German top-of-the-range carmaker announced on Monday.

The Munich-based car group, which includes BMW cars as well as the Mini city car and Britain's Rolls Royce, was able to boost sales in all of its divisions and in all world regions.

'In the month of October, as well as in the first ten month of 2013, we continued driving in the fast lane and posted record sales despite strong headwinds in European markets,' said BMW's Sales and Marketing Chief Ian Robertson in a statement.

The rise in October propelled group sales in 2013 to about 1.6 million, which manifested BMW's pole position in the global luxury car segment ahead of its German rivals Audi and Mercedes. Audi sold 1.31 million cars while Mercedes delivered 1.2 million vehicles to customers in the period.

Between January and October, sales were significantly higher in Asia, up 17.7 percent, with the biggest demand for BMW cars coming from China with a rise in sales by about 20 percent to 469,434 vehicles.

In the Americas, the Munich carmaker sold 366,661 vehicles, out of which the US market took in about 295,000 cars alone. Demand for BMW's on the whole continent grew by more than 11 percent.

The significant gains overseas helped BMW compensate stagnant sales in its main market Europe, where about 711,900 customers bought a car from the company, up 0.1 percent compared with the same ten-month period of 2012.

Noting that BMW was hoping for further positive developments in the remaining months of 2013, sales chief Robertson said the carmaker was laying particular emphasis on profitable growth.

Against the background of sales in the first ten months, BMW appears well on track of breaking its record of 1.85 million sold cars set in 2012.

NSA spying scandal clouds second round of EU-US free trade talks

Originally, the second round of talks on the so-called Transatlantic Trade and Investment Partnership(TTIP) between the European Union and the United States was scheduled to be held in October. However, the US government shutdown postponed negotiations.

Moreover, allegations that the US intelligence agency NSAspied on EU leaders, including German Chancellor Angela Merkel, sparked bitter recriminations and calls in Europe to halt TTIP talks.

Issues of trust had been raised, an EU official close to negotiations told the German DPA news agency on Friday, adding that the matter would not be a subject on the agenda of the talks.

Nevertheless, the EU's personal data protection standards would not be compromised in the discussions as the transfer of data in general was a key component of a modern economy, the official said.

The current round of talks, which began Monday, covers services, investment, energy, raw materials and focuses on regulatory issues. Negotiations were still in an exploratory phase, the EU official said, adding that it would take a further round to identify more clearly where the talks might need a political impulse.

Tariffs between the EU and the United States are already rather low, meaning that the free trade talks need to focus on reducing regulations and bureaucratic hurdles. Controversial sectors are said to be agriculture, including food safety, as well as the auto industry. Harmonizing regulatory standards in the car industry, for example, might cut costs by 20 percent, the EU estimated.

On balance, a transatlantic free trade deal would bring annual benefits of 119 billion euros ($159 billion) for the EU and only slightly less for the US, the bloc calculated.

A third round of talks is scheduled for December 16 in Washington as both sides aim for a final accord by late 2014.