Markets world rally, dollar slides on the federal stimulus plan Reseve

FTSE 100 index of London, which had greatly increased in the morning, closed up to 113 points – almost 2pc - and a maximum of 28 months of 5863 and US stocks opened sharply higher.

Dow Jones in stir-fry to a maximum of two fresh years, earning more than 170 points - or 1. 5pc - 11,386 - yesterday it 0. Pink 2pc after the Fed describes his plan binding purchase larger .the S & P 500 gained 1. 3pc and technology-rich Nasdaq was increased by 1. 2pc.

US retailers reported strong sales in October and has helped to lift shares with gap until early commercial 7pc 4pc Macy.Preuve U.S. shoppers were more spending on traders assisted clothes get rid of an increase in the number of new claims for unemployment higher than expected.

Actions around the world was supported by the decision of the Federal Reserve to introduce quantitative easing most of creating more money and to increase the supply of money in the economy - which will need to buy $grant to Treasury bonds a month until next June.

"We believe QE2 will be more efficient that investors realize", Andrew Garthwaite, London head of global strategy equity Credit Switzerland wrote in a report. "Remain us overweight actions.»

Positive feelings have lifted the other major awards European and Asian .the ' Germany DAX rose 1 77pc, CAC-40 France 9pc 1 and 2 2pc, despite pressures on exporters the dollar fell below the level of yen 81.Hong Kong Hang Seng added 1 6pc and Shanghai Composite Japan Nikkei China closed until 1 9pc to a maximum of seven months of 3,086.94.

Although the prospect of more money into the financial system has been a boon for stocks, dollar tombé.Le dollar is at its lowest level since December 2009 against a broad basket of currencies and secured against this index Thursday 1pc.

Finance Ministers in emerging as China and the Brazil criticized the Fed stimulus plan and said that additional supply of dollars of investment could lead to bubble in their country.

Sterling is increased to its highest in nine months against the dollar - briefly striking $1.63 - Thursday after the Bank of England held the interest rate and unlike conserved United States its programme for the purchase of goods organize according to the economic recovery signs United Kingdom is on the right track.

The pink 1pc of euro against the dollar as investors has increased tolerance to risk on inflation and growth forecasts in the euro area after the departure of the European Central Bank reference interest rates unchanged as expected.

In London, rising stock prices was assisted by a 6 1pc miner BHP jump, partly due to the decision of the Federal Reserve and the rest the outcome of the Canada block its $remained hostile to group potash fertilizer.

Other minor grew strongly and with the rise of Natural Resources, Xstrata, Kazakhmys and Rio Tinto between 5 1pc and 6 9pc.

Good new business has also helped the man mounted 14pc sentiments.Groupe upwards classification FTSE after that most large listed company hedge funds world beats its own first half profit forecasts and announces the resumption of the assets of the client.

The firm, which saw eight straight quarters of net, said customer assets rose to $40. 5bn at the end of September. against estimates of $39. 5bn in September.

Unilever, the consumer goods group increased by 5 3pc after an optimistic statement in its ability to raise prices and to reduce the cost of commodity prices higher that it corresponded forecasts with a counter rising sales of third quarter.

"Consensus beating results continue to be favourable to the market with the authorities in fact appear to be prepared ready and able to support the economic recovery, which is good news", Henk Potts, Barclays Wealth, equity strategist said.

The rise is tempered by a 4 6pc fall at Rolls Royce after Qantas Airways flights suspended its fleet of Airbus A380 after the failure which led to an emergency landing at Singapore Rolls-Royce Trent 900 engine.

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On world markets fall on global growth fears

In the United States, the Dow Jones industrial average fell 1. 1pc to 11,984, while the broader S & P 500 index fell 1. 2pc and the Nasdag slid 1. 2pc.

Chinese exports slow in may as world demand has hesitated. This came a drop on the part of British industrial production in April and recent reports from United States showing an anemic recovery.

The price of oil was also fell after Saudi Arabia began to offer more oil to Asian refiners, with Brent crude in London down a $1.25 to $118.32 in afternoon trading.

"The world economy embarked on a"soft patch"and this is particularly the case for developed countries, but no one knows what the magnitude and duration will be," said Herve Goulletquer, analyst at Credit Agricole.

The uncertainty caused stock market sentiment to turn sour. In Europe, the FTSE 100 closed down 1. 5pc to 5,765, while the Germany DAX fell 1. 2pc and the CAC 40 in France fell by 1. 9pc.

In the United States, the Dow Jones industrial average fell 1. 1pc to 11,984, while the broader S & P 500 index fell 1. 2pc and the Nasdag slid 1. 2pc.

In the currencies market, the euro continued its descent of recent summits of one month after the Germany have voted for a second package of assistance for the Greece, provided that the holders of bonds share the load. It is in disagreement with the opinion of the European Central Bank who fear that any change to the Greek debt could trigger a "credit event" which, to injure other fragile economies of the euro area.

"The escalation of tensions between the Germany and of the ECB - tensions who believes that markets had been resolved - has been a key factor in undermining confidence,"said Derek Halpenny, global European research head of currency at the Bank of Tokyo-Mitsubishi UFJ.""

"For financial markets to remain stable and sustained euro must be a resolution of the German-ECB conflict", he added.

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World Bank fears Europe's crisis could set off deeper global slump than Lehman collapse

"The global economy has entered a dangerous phase. The financial system of the largest economic bloc in the world is threatened by a fiscal and financial crisis that has so far eluded policy-makers’ efforts to contain it," said the bank in its Global Economic Perspectives.

"The possibility of further escalation of the crisis in Europe cannot be ruled out. Should this happen, the ensuing global downturn is likely to be deeper and longer-lasting than the recession of 2008/2009 because countries do not have the fiscal and monetary space to stimulate the global economy. Activity is unlikely to bounce back as quickly."

"An escalation of the crisis would spare no one," said Andrew Burns, the key author. "Developing countries should hope for the best and plan for the worst. If these downside risks materialised there is not much developing countries can do to prevent it. But they can prepare for it."

The report said rich countries had used up their fiscal and monetary shock absorbers after the Lehman crisis. While some poorer states still have the means to cushion the blow, many have already pushed fiscal deficits and credit growth to the limits of safety.

"Developing countries would have much less fiscal space than in 2008 with which to react to a global slowdown. As a result, if financial conditions deteriorate, many of these countries could be forced to cut spending pro-cyclically, thereby exacerbating the cycle."

The bank said there is a risk that turmoil in Europe could interact with the delayed effects of monetary tightening in Asia and Latin America, reinforcing each other in a "downward overshooting of activity".

The bank cut its global forecast from 3.4pc to 2.5pc for 2012, warning that the eurozone has already fallen into recession and is likely to contract by 0.3pc this year. "The possibility of much worse outcomes are real," it said. If Europe’s financial system to seizes up, this could lop a further 4pc off global GDP.

"While contained for the moment, the risk of a much broader freezing up of capital markets and a global crisis similar in magnitude to the Lehman crisis remains. The willingness of markets to finance the deficits and maturing debt of high-income countries cannot be assured. Should more countries find themselves denied such financing, a much wider financial crisis that could engulf private banks and other financial institutions on both sides of the Atlantic cannot be ruled out. The world could be thrown into recession as large or even larger than that of 2008-09."

The consequences would be dire for 30-odd countries with external finance needs above 10pc of GDP. The bank advised these states to "prefinance" their needs while the credit markets are still open, reducing the risk of a sudden crunch. Commodity exporters should brace for a fall in oil and metal prices of almost a quarter.

Emerging markets have already seen a rise in average bond spreads of 117 basis points since last July. Global trade volumes contracted at an 8pc annual rate in the three months to October. Capital flows to developing countries fell to $170bn in the second half of 2011 from $309bn a year earlier.

In a veiled attack on Europe’s austerity policies the bank said "it is not yet clear whether there is an end in sight to the vicious circle whereby budget cuts to restore debt sustainability reduce growth and revenues to the detriment of debt sustainability".

The bank’s "downside scenario" involves a credit freeze in two "larger Euro Area economies". Such an event would cause a further contraction of Euroland’s GDP by 6pc over the next two years. The bank stopped short of modelling what would happen if the eurozone breaks up altogether.

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World power swings back to America

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.

"The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players," said Mr Blanch.

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.

"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.

The gap in "productivity-adjusted wages" will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.

As Cleveland Fed chief Sandra Pianalto said last week, US manufacturing is "very competitive" at the current dollar exchange rate. Whether intended or not, the Fed's zero rates and $2.3 trillion printing blitz have brought matters to an abrupt head for China.

Fed actions confronted Beijing with a Morton's Fork of ugly choices: revalue the yuan, or hang onto the mercantilist dollar peg and import a US monetary policy that is far too loose for a red-hot economy at the top of the cycle. Either choice erodes China's wage advantage. The Communist Party chose inflation.

Foreign exchange effects are subtle. They take a long to time play out as old plant slowly runs down, and fresh investment goes elsewhere. Yet you can see the damage to Europe from an over-strong euro in foreign direct investment (FDI) data.

Flows into the EU collapsed by 63p from 2007 to 2010 (UNCTAD data), and fell by 77pc in Italy. Flows into the US rose by 5pc.

Volkswagen is investing $4bn in America, led by its Chattanooga Passat plant. Korea's Samsung has begun a $20bn US investment blitz. Meanwhile, Intel, GM, and Caterpillar and other US firms are opting to stay at home rather than invest abroad.

Europe has only itself to blame for the current “hollowing out” of its industrial base. It craved its own reserve currency, without understanding how costly this “exorbitant burden” might prove to be.

China and the rising reserve powers have rotated a large chunk of their $10 trillion stash into EMU bonds to reduce their dollar weighting. The result is a euro too strong for half of EMU.

The European Central Bank has since made matters worse (for Italy, Spain, Portugal, and France) by keeping rates above those of the US, UK, and Japan. That has been a deliberate policy choice. It let real M1 deposits in Italy contract at a 7pc annual rate over the summer. May it live with the consequences.

The trade-weighted dollar has been sliding for a decade, falling 37pc since 2001. This roughly replicates the post-Plaza slide in the late 1980s, which was followed - with a lag - by 3pc of GDP shrinkage in the current account deficit. The US had a surplus by 1991.

Charles Dumas and Diana Choyleva from Lombard Street Research argue that this may happen again in their new book "The American Phoenix".

The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.

Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.

It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.

Europe's EMU soap opera has shown why it matters that America is a genuine nation, forged by shared language and the ancestral chords of memory over two centuries, with institutions that ultimately work and a real central bank able to back-stop the system.

The 21st Century may be American after all, just like the last.

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Return of the Gold Standard as world order unravels

 Gold surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train. Photo: AP

On one side of the Atlantic, the eurozone debt crisis has spread to the countries that may be too big to save - Spain and Italy - though RBS thinks a €3.5 trillion rescue fund would ensure survival of Europe's currency union.

On the other side, the recovery has sputtered out and the printing presses are being oiled again. Brinkmanship between the Congress and the White House over the US debt ceiling has compelled Moody's to warn of a "very small but rising risk" that the world's paramount power may default within two weeks. "The unthinkable is now thinkable," said Ross Norman, director of thebulliondesk.com.

Fed chair Ben Bernanke confessed to Congress that growth has failed to gain traction. "Deflationary risks might re-emerge, implying a need for additional policy support," he said.

The bar to QE3 - yet more bond purchases - is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.

Fuelling the blaze, the emerging powers of Asia are almost all running uber-loose monetary policies. Most have negative real interest rates that push citizens out of bank accounts and into gold, or property. China is an arch-inflater. Prices are rising at 6.4pc, yet the one-year deposit rate is just 3.5pc. India's central bank is far behind the curve.

"It is very scary: the flight to gold is accelerating at a faster and faster speed," said Peter Hambro, chairman of Britain's biggest pure gold listing Petropavlovsk.

"One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money."

China, Russia, Brazil, India, the Mid-East petro-powers have diversified their $7 trillion reserves into euros over the last decade to limit dollar exposure. As Europe's monetary union itself faces an existential crisis, there is no other safe-haven currency able to absorb the flows. The Swiss franc, Canada's loonie, the Aussie, and Korea's won are too small.

"There is no depth of market in these other currencies, so gold is the obvious play," said Neil Mellor from BNY Mellon. Western central banks (though not the US, Germany, or Italy) sold much of their gold at the depths of the bear market a decade ago. The Bank of England wins the booby prize for selling into the bottom at €254 an ounce on Gordon Brown's orders in 1999. But Russia, China, India, the Gulf states, the Philippines, and Kazakhstan have been buying.

China is coy, revealing purchases with a long delay. It has admitted to doubling its gold reserves to 1,054 tonnes or $54bn. This is just a tiny sliver of its $3.2 trillion reserves. China's Chamber of Commerce said this should be raised eightfold to 8,000 tonnes.

Xia Bin, an adviser to China's central bank, said in June that the country's reserve strategy needs an "urgent" overhaul. Instead of buying paper IOU's from a prostrate West, China should invest in strategic assets and accumulate gold by "buying the dips".

Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to "consider employing gold as an international reference point." The Swiss parliament is to hold hearings on a parallel "Gold Franc". Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the 'Bancor' proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China's central bank chief Zhou Xiaochuan two years ago as a way of curbing the "credit-based" excess.

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.

Indeed.

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Stock exchange mergers: the struggle for world domination

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What, exactly, were their competitors up to? With NYSE Euronext’s shares having risen 6pc in early trading and those in Deutsche Börse following a similar pattern, rumours circulated that the two had been suspended on their own markets.

Within 30 minutes of the LSE/TMX conference call, a statement was issued that confirmed the two smaller exchanges’ worst fears: the Americans and Germans were in 'advanced’ talks about a combination of their own. Blowing the £4.2bn London-Toronto merger out of the water, the New York-Frankfurt tie-up would be valued at about £14.4bn and control 94pc of European futures and 28pc of European equities.

After four relatively quiet years, the silence surrounding exchange consolidation was shattered by the race for repositioning as the world’s largest bourses attempt to move into growth markets, cemented by the biggest day for deal announcements in the industry’s history.

For London, what began as a day full of potential and new growth ended in worries about competition, a lack of dominance, and the City’s place in the new world order.

Although the London and Toronto exchanges had been speaking in-depth for five months, senior staff at both exchanges had known one another for years, furthered by the signing of a strategic partnership two years ago to launch EDX London, a derivatives platform powered by TMX’s SOLA derivatives trading system.

“We all talk all the time,” says Gibson-Smith. “Gradually the volume rose, and all of a sudden we were in full-blooded merger talks.”

However, it is understood the merger was accelerated in part due to the strength of personal friendship between Kloet – who will take on the role of president in the merged structure – and Raffaele Jerusalmi, who runs Borsa Italiana and the LSE’s cash equities market from London.

The two men will work under Rolet, chief executive of the enlarged group; with Fox becoming chairman and Gibson-Smith and Borsa Italiana chief Paolo Scaroni becoming deputy chairmen.

The structure of the planned merger will essentially see LSE Group – the exchange’s holding company – take over TMX in the same way it took over the Italian exchange four years ago.

As a result, local regulators will be able to continue policing their own markets – of which there will be 20 under the combined entity – with the Financial Services Authority (FSA) supervising the parent company. In Canadian circles, this aspect of the deal – and the fact that the LSE will nominate eight of 15 board directors and its shareholders will control 55pc of the overall equity - has not been well received. Not quite the 'transatlantic merger of equals’ it was first billed to be.

“No deal on merger of TMX/LSE” read the headline in the Vancouver Sun. “Proposed TMX/LSE merger will never happen” read the Toronto Star.

In a country where regional politics are often as important as national ones, negative rumblings have already begun.

Dwight Duncan, the Ontario finance minister, is said to be angered that he was given only 24 hours’ notice of the deal – “Control will rest with the other side,” he said. His is one of two provinces – along with Quebec – which has a right to veto the deal, as does the Canadian government.

With this in mind, when Kloet unveiled the deal, he was keen to stress the benefits for his home country, not least the fact that Canadian cities will be the global hub for the combined group’s equity listings, derivatives and energy business, leaving London with international listings, technology and information services. Kloet says: “We looked carefully at the benefits it can bring to Canada’s capital markets.”

Conversely, aware of adverse comment, Gibson-Smith, the LSE chairman of the geographic division of responsibilities, is quick to point out that the UK capital is not losing its power. “We’ve taken the same principle as we did with Borsa Italiana and seen where the best people [are] or best capability is and said 'you’re in charge of this’,” he says. “London’s got the chief executive, board dominance; the whole company will be regulated by the FSA. I don’t think London has lost anything, but we’ve gained Canada.”

Even if the question of nationality and who gains and who loses can be ironed out with politicians and regulators, the question remains as to whether combining London, the tenth largest global exchange, with Toronto, the 11th, will really create the “global exchange powerhouse” Fox predicts.

Even combined, the pair fall short when compared with the likes of the CME, worth $20bn (£12.5m), or the Hong Kong exchange, worth almost $25bn.

Strategically, the deal is a stepping stone for both exchanges, allowing each to access dominance in the other’s market but not squaring the circle in growth terms that access to an Asian bourse would allow.

“The Asian exchanges are all in bubbles and seriously stupidly priced,” says Gibson-Smith, who admits in conversation with The Sunday Telegraph that “you do what’s available at the time”.

However, Elie Darwish, analyst at Exane BNP Paribas, thinks the deal makes sense for both exchanges. “For the LSE, because it helps it further diversify away from under-pressure UK equities, it gives it a critical size and helps build the derivatives franchise.”

She added that for Toronto, the merger of the Singapore and Australian exchanges will create a rival in the natural resource listings, which the London tie-up will bolster.

But the deal is somewhat tinged with a sense that the pair had to merge because of their valuations and what fitted. “It’s the best deal they could have done, as there’s no one else either could have done a deal with,” says a former LSE staffer. “They’ve been limited to marriages of convenience – those who are left at the end of the dance.”

A senior industry source does not agree, however: “It’s blindingly obvious that there is a lot of upside for the users – this cultural affinity based on resources and small and medium-sized companies. After all, they’re the only two exchanges with successful SME markets.”

During the strategic dance of the exchanges from 2004-07, London’s position was always that any bid should carry a premium. That was because of London’s strategic importance as part of the fabric of one of the world’s busiest capital markets and having next to no derivatives business and no clearing operations.

But in this combination there is no premium, which analyst Raul Sinha at Nomura thinks could be a mistake. Sinha said that due to the structure of the deal and the lack of significant valuation premiums, “the potential for a counter bid from another exchange cannot be ruled out”.

That said, there is no way either exchange can stand still given the number of consolidations in the sector. The rationale for this flurry of deals is best summarised by UBS analyst Arnaud Giblat, who lists scale and distribution, technology rationalisation, product development, and positioning for market structure changes as the common themes of the deals on the table.

On top of the merger of Singapore and Australia’s exchanges, and Hong Kong’s announcement that it would also like to be involved in consolidation, the question of cost savings is key. London and Toronto expect to produce £35m of revenue synergies, rising to £100m, equivalent to 8pc of the combined cost base. However, Giblat estimates that cross-border deals usually deliver 15-20pc cost savings. The New York-Deutsche deal, which could be confirmed in detail as early as this week, will create a global exchange powerhouse, with more than $15 trillion of listed companies on its books and the largest provider of futures and options trading. In spite of the pair’s size, however, the need for the deal is obvious. NYSE once controlled 80pc of the trading in stocks listed on its markets. Today that figure stands at 23pc due to competition from Nasdaq OMX but also from trading platforms such as BATS – which is in advanced talks to take over London’s Chi-X platform – and Direct Edge.

But the deal also remains fraught with regulatory and governance problems. Combining London’s Liffe futures exchange, owned by NYSE Euronext, and the Eurex derivatives platform, owned by Deutsche, would give the pair more than 90pc of the European derivatives market. However, this could be vetoed by European regulators, as it was in 2007, which could create possible potential for the LSE in derivatives.

Questions as to where control will lie could yet cause problems. Although it was proposed that Deutsche Börse chief executive Reto Francioni will be chairman – with Duncan Niederauer, NYSE chief executive, keeping the same role in the wider business – the tussle between Frankfurt and New York could be too much to handle. The added aspect of Paris, Euronext’s old headquarters, could cause issues. Regulators from Paris and the German state of Hesse have vocalised their determination to ensure Frankfurt and Paris sit at the heart of the new group.

But these issues pale in comparison to American pride. The fact the deal is structured as a German takeover of NYSE Euronext, with Deutsche shareholders ending up with 60pc of the enlarged entity, resulted in New York Post headlines of “Achtung! Germans taking over NYSE” on Thursday morning.

The deal will be subjected to approval from the Committee on Foreign Investment in the United States. This could be where the deal falls, just like DP World’s takeover of P&O, which forced the group to sell its US operations.

Whatever the outcome of the NYSE’s flirtations with Deutsche Börse, it is London’s position that remains at stake. Using different metrics, it is possible to argue that the Toronto deal is either a defensive merger with an also-ran partner –something LSE management has discounted – or a stepping stone on the path to true global dominance.

But only in the context of the sector as a whole can this be judged, and that is the one thing the LSE, no matter how hard it tries to, cannot control.

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Stock exchange mergers: the struggle for world domination

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What, exactly, were their competitors up to? With NYSE Euronext’s shares having risen 6pc in early trading and those in Deutsche Börse following a similar pattern, rumours circulated that the two had been suspended on their own markets.

Within 30 minutes of the LSE/TMX conference call, a statement was issued that confirmed the two smaller exchanges’ worst fears: the Americans and Germans were in 'advanced’ talks about a combination of their own. Blowing the £4.2bn London-Toronto merger out of the water, the New York-Frankfurt tie-up would be valued at about £14.4bn and control 94pc of European futures and 28pc of European equities.

After four relatively quiet years, the silence surrounding exchange consolidation was shattered by the race for repositioning as the world’s largest bourses attempt to move into growth markets, cemented by the biggest day for deal announcements in the industry’s history.

For London, what began as a day full of potential and new growth ended in worries about competition, a lack of dominance, and the City’s place in the new world order.

Although the London and Toronto exchanges had been speaking in-depth for five months, senior staff at both exchanges had known one another for years, furthered by the signing of a strategic partnership two years ago to launch EDX London, a derivatives platform powered by TMX’s SOLA derivatives trading system.

“We all talk all the time,” says Gibson-Smith. “Gradually the volume rose, and all of a sudden we were in full-blooded merger talks.”

However, it is understood the merger was accelerated in part due to the strength of personal friendship between Kloet – who will take on the role of president in the merged structure – and Raffaele Jerusalmi, who runs Borsa Italiana and the LSE’s cash equities market from London.

The two men will work under Rolet, chief executive of the enlarged group; with Fox becoming chairman and Gibson-Smith and Borsa Italiana chief Paolo Scaroni becoming deputy chairmen.

The structure of the planned merger will essentially see LSE Group – the exchange’s holding company – take over TMX in the same way it took over the Italian exchange four years ago.

As a result, local regulators will be able to continue policing their own markets – of which there will be 20 under the combined entity – with the Financial Services Authority (FSA) supervising the parent company. In Canadian circles, this aspect of the deal – and the fact that the LSE will nominate eight of 15 board directors and its shareholders will control 55pc of the overall equity - has not been well received. Not quite the 'transatlantic merger of equals’ it was first billed to be.

“No deal on merger of TMX/LSE” read the headline in the Vancouver Sun. “Proposed TMX/LSE merger will never happen” read the Toronto Star.

In a country where regional politics are often as important as national ones, negative rumblings have already begun.

Dwight Duncan, the Ontario finance minister, is said to be angered that he was given only 24 hours’ notice of the deal – “Control will rest with the other side,” he said. His is one of two provinces – along with Quebec – which has a right to veto the deal, as does the Canadian government.

With this in mind, when Kloet unveiled the deal, he was keen to stress the benefits for his home country, not least the fact that Canadian cities will be the global hub for the combined group’s equity listings, derivatives and energy business, leaving London with international listings, technology and information services. Kloet says: “We looked carefully at the benefits it can bring to Canada’s capital markets.”

Conversely, aware of adverse comment, Gibson-Smith, the LSE chairman of the geographic division of responsibilities, is quick to point out that the UK capital is not losing its power. “We’ve taken the same principle as we did with Borsa Italiana and seen where the best people [are] or best capability is and said 'you’re in charge of this’,” he says. “London’s got the chief executive, board dominance; the whole company will be regulated by the FSA. I don’t think London has lost anything, but we’ve gained Canada.”

Even if the question of nationality and who gains and who loses can be ironed out with politicians and regulators, the question remains as to whether combining London, the tenth largest global exchange, with Toronto, the 11th, will really create the “global exchange powerhouse” Fox predicts.

Even combined, the pair fall short when compared with the likes of the CME, worth $20bn (£12.5m), or the Hong Kong exchange, worth almost $25bn.

Strategically, the deal is a stepping stone for both exchanges, allowing each to access dominance in the other’s market but not squaring the circle in growth terms that access to an Asian bourse would allow.

“The Asian exchanges are all in bubbles and seriously stupidly priced,” says Gibson-Smith, who admits in conversation with The Sunday Telegraph that “you do what’s available at the time”.

However, Elie Darwish, analyst at Exane BNP Paribas, thinks the deal makes sense for both exchanges. “For the LSE, because it helps it further diversify away from under-pressure UK equities, it gives it a critical size and helps build the derivatives franchise.”

She added that for Toronto, the merger of the Singapore and Australian exchanges will create a rival in the natural resource listings, which the London tie-up will bolster.

But the deal is somewhat tinged with a sense that the pair had to merge because of their valuations and what fitted. “It’s the best deal they could have done, as there’s no one else either could have done a deal with,” says a former LSE staffer. “They’ve been limited to marriages of convenience – those who are left at the end of the dance.”

A senior industry source does not agree, however: “It’s blindingly obvious that there is a lot of upside for the users – this cultural affinity based on resources and small and medium-sized companies. After all, they’re the only two exchanges with successful SME markets.”

During the strategic dance of the exchanges from 2004-07, London’s position was always that any bid should carry a premium. That was because of London’s strategic importance as part of the fabric of one of the world’s busiest capital markets and having next to no derivatives business and no clearing operations.

But in this combination there is no premium, which analyst Raul Sinha at Nomura thinks could be a mistake. Sinha said that due to the structure of the deal and the lack of significant valuation premiums, “the potential for a counter bid from another exchange cannot be ruled out”.

That said, there is no way either exchange can stand still given the number of consolidations in the sector. The rationale for this flurry of deals is best summarised by UBS analyst Arnaud Giblat, who lists scale and distribution, technology rationalisation, product development, and positioning for market structure changes as the common themes of the deals on the table.

On top of the merger of Singapore and Australia’s exchanges, and Hong Kong’s announcement that it would also like to be involved in consolidation, the question of cost savings is key. London and Toronto expect to produce £35m of revenue synergies, rising to £100m, equivalent to 8pc of the combined cost base. However, Giblat estimates that cross-border deals usually deliver 15-20pc cost savings. The New York-Deutsche deal, which could be confirmed in detail as early as this week, will create a global exchange powerhouse, with more than $15 trillion of listed companies on its books and the largest provider of futures and options trading. In spite of the pair’s size, however, the need for the deal is obvious. NYSE once controlled 80pc of the trading in stocks listed on its markets. Today that figure stands at 23pc due to competition from Nasdaq OMX but also from trading platforms such as BATS – which is in advanced talks to take over London’s Chi-X platform – and Direct Edge.

But the deal also remains fraught with regulatory and governance problems. Combining London’s Liffe futures exchange, owned by NYSE Euronext, and the Eurex derivatives platform, owned by Deutsche, would give the pair more than 90pc of the European derivatives market. However, this could be vetoed by European regulators, as it was in 2007, which could create possible potential for the LSE in derivatives.

Questions as to where control will lie could yet cause problems. Although it was proposed that Deutsche Börse chief executive Reto Francioni will be chairman – with Duncan Niederauer, NYSE chief executive, keeping the same role in the wider business – the tussle between Frankfurt and New York could be too much to handle. The added aspect of Paris, Euronext’s old headquarters, could cause issues. Regulators from Paris and the German state of Hesse have vocalised their determination to ensure Frankfurt and Paris sit at the heart of the new group.

But these issues pale in comparison to American pride. The fact the deal is structured as a German takeover of NYSE Euronext, with Deutsche shareholders ending up with 60pc of the enlarged entity, resulted in New York Post headlines of “Achtung! Germans taking over NYSE” on Thursday morning.

The deal will be subjected to approval from the Committee on Foreign Investment in the United States. This could be where the deal falls, just like DP World’s takeover of P&O, which forced the group to sell its US operations.

Whatever the outcome of the NYSE’s flirtations with Deutsche Börse, it is London’s position that remains at stake. Using different metrics, it is possible to argue that the Toronto deal is either a defensive merger with an also-ran partner –something LSE management has discounted – or a stepping stone on the path to true global dominance.

But only in the context of the sector as a whole can this be judged, and that is the one thing the LSE, no matter how hard it tries to, cannot control.

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World markets fall on fears U.S. blockade of debt default

The collapse of negotiations between John Boehner and President Obama leaves the possibility of the first major default value by the United States. Photo: GETTY

Brinkmanship political Washington on the ceiling of the country's debt of $ 14.3 billion ($ 8.8 billion of £) pushed gold in a record of $1.616 an ounce and the Swiss franc higher against the dollar.

In New York, the Dow Jones opened 104 points - or 0 8pc - at 12,572.36, with the broader S & P 500 and the Nasdaq also sliding. FTSE 100 index in London, leading shares fell from 0 3pc in 5918.24, in Germany of DAX dragged 0 1pc and the France CAC 0 4pc.

A US Congress strongly divided pursued plans budget rival Monday that appears unlikely to win broad support, pushing the United States more about a failure to downgrade and debt ratings would send new shock waves world markets.

In Nikkei 225 of the Tokyo Asia 0. 8pc lost, Hang Seng Hong Kong slipped 0. FP7, Nestle in Seoul fell 1pc and fell ASX Australian 1. FP6. Shanghai Composite China slipped by 2 96pc and the Shenzhen Composite declined 3 75pc, with the railway accident of last Saturday, also have an impact.

"The only thing you can be sure in the next hours and days is the volatility as continuing political posturing in the United States, said Ben Potter, strategist, IG markets market, in a report."

Weeks of talks between Democrats and Republicans to raise the ceiling of the debt of $ 14.3 billion ($ 8.8 billion of £) of the country and prevent by default do not relate to this product, and the negotiations between President Obama and John Boehner, the top Republican in Congress, disintegrated Friday.

The President now faces a rush to get an agreement agreed and voted by the Congress prior to the date limit of 2 August, when the United States will never know her first by default. A plunge in markets in the world shows that there are concerns that this would not be possible, or anxiety as possible these increases or spending cuts.

Futures contracts indicated that Wall Street will also be slide, the Dow Jones, the broader S & P 500 and NASDAQ technology rich of forecasting open downwards on 1pc.

The US is facing increasing pressure to reach a resolution, as the impact of U.S. default would be felt around the world. Business Secretary Vince Cable said the BBC Andrew Marr Sunday that it could have repercussions for the United Kingdom.

"The irony of the situation at the moment, with opening tomorrow morning, markets, is that the greatest threat to the global financial system has been a few nutters right in the US Congress rather than the euro area," he said.

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Mounted world as China stock market slide raises rates Asia following United States, less Europe

Nikkei average of Japan more 2pc slipped and briefly touched a low interday a month on Wednesday as investors rushed to take profits. Photo: Reuters

Japan focused on exports was the hardest hit by the Nikkei index in Tokyo tumbling 1. 7pc tp 9371 points.Australie the ASX slipped 0. 7pc and Hong Kong Hang Seng 0. 6pc.

Oil prices rose above $ 80 per barrel, after attempting to China to control inflation and a property bubble prospective he dragged more than 4pc Tuesday.

The dollar edged more after that Treasury Secretary Timothy Geithner is pulled out of a strong dollar fell against the yen, the euro and the pound sterling.

Buck the trend, with ABN Korea Southern progress 1pc and Shanghai Composite 0 6pc increasingly China markets.

"China's announcement was a great surprise to the market.Attenuated sense throughout Asia as investors worried that an increase in interest rates could pressure on economic growth in China, "says Masatoshi Sato, market analyst, Mizuho investors securities in Tokyo."

Bank of China said that it will be Wednesday increase loan Yuan a year to 5 5 31pc 56pc and yuan year drops 2 5pc 2 25pc rates.

The increase in interest rates was the first to China since 2007.

Chinese economy has increased 10 3pc in the second quarter and its growth has propelled the resumption of the economy of a deep recession, while the United States and Europe struggle to return to economic works foot.

The US Federal Reserve should largely in an attempt to revive the flagging economy in November by launching a program to purchase more .the Treasury bonds ' objective would be to drive down interest rates on mortgages, loans and other debts and encourage Americans to spend.

Mervyn King, Governor of the Bank of England has also fed hopes to facilitate greater quantitative (ve) Tuesday when he says political currency continues to be a "powerful weapon" in support of recovery.

New York by the tumbling points 165.07, Dow Jones industrial average or 1. 5pc 10,978.62, fall below 11,000 for the first time in a little over a week .the ' broader S & P 500 index lost 18.81 points, or 1. 59pc 1,165.90 points.

Rich technology Nasdaq composite index shed 43.71 points, or 1 76pc 2,436.95 points, as Apple is 2 7pc on earnings as forecast estimate and IBM dropped 3 4pc due to a decline in new contracts.

In Europe, FTSE 100 has fallen from London, 0 6pc, DAX 0 the Germany 4pc France ACC 0 7pc.

FTSE 100 Great Britain has been opened 10 - 19 points lower on Wednesday, mirroring the weakness of global investors concerned about interest rates Chinese and cooled US mortgage bonds also viewed UK policy.

The minutes of the Bank of England is published at 9.30 a.m. and Chancellor announced review of expenditures at 1230.

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The Qatar shares hit high two-year win World Cup bid

Qataris celebrate winning the bid to host the 2022 World Cup.

Qatar Exchange index opens 7pc but fell back slightly more later to close 3 6pc - or 292 points - 8,477.32 points.

Real estate Barwa was 6 19pc and Al Khalij Holdings, which is involved in the manufacture of cement, Office 6 2pc as the gas-rich desert Emirate is committed to spend tens of billions of dollars in the construction of stadiums, hotels and infrastructure.

Qatar has promised to build a modern transportation including a Metro system and new facilities hosting with air-conditioned stages.

A producer of major and extremely rich in gas oil reserves, but with a population of only 1.7 m, Qatar has emerged in recent years as a large crowd international sport and cultural events.

It hosted the 2006 Asian Games and will be staged event top football top region, Asia, cutting in January.

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Spain's astonishing co-op takes on the world

The solidarity ethos has its allure given mounting research by the IMF and other bodies that the extreme gap between rich and poor was a key cause of the global asset bubble and financial crisis, as well as being highly corrosive for democracies. The GINI index of income inequality has reached levels not seen since the 1920s across the West.

Mondragon weathered the 2009 slump in machine tools, car components, and its other cyclical niches by putting 20pc of full staff leave for a year at 80pc pay, with names chosen by lottery. Some of its 256 co-ops froze pay, others took a 10pc cut.

The membership rule is that all new workers must put up €13,400 in share capital, which they can borrow from the group’s Caja Laboral, one of the few Spanish savings banks in robust health.

Profits are largely reinvested or sunk into research centres, though a chunk is spent on social projects. Worker dividends are paid into retirement accounts. The whole system is run by an elected Congress, known as "the supreme expression of sovereignty".

Such an egalitarian venture creates all kinds of problems. "We can’t offshore, so we have to keep climbing the technology ladder and improve core engineering here," said Mr Ugarte.

The group is stepping up investment in thermal insulation, and water purification, and grinding machines for the aerospace industry. Its machine tool arm Danobat has bought Newall in Peterborough.

If a co-op keeps losing money, it is given three years to come up a credible plan, but ultimately workers have to be retrained and found other work. Paid-up 'Co-operativitistas' cannot easily be fired. The wider headcount fell by 7,000 during the crisis, but they were outsiders in building.

So far none of Mondragon’s plants in China, India, Latin America or the rest of Europe have opted for co-op status. "We encourage them to be owners of their future, but they are afraid of the obligations that go with it," said Mr Ugarte.

Mondragon pays global staff the market wage, which creates an odd disparity with the Spanish mother company. Mr Ugarte said the net effect of overseas expansion has boosted jobs at home, still 84pc of the total.

America’s United Steelworkers has sought help from Mondragon in creating its co-ops, hoping to emancipate itself from a Wall Street that "hollows out companies by draining their cash and shuttering plants". Yet it is unclear whether the model can easily be exported.

Mondragon’s strength comes from the powerful clan ethos of the Basques, the oldest nation in Europe with a tightknit global diaspora (Nevada, Idaho, Argentina, Brazil) and a unique pre-historical language. Linguists doubt claims that Basque is linked to old Etruscan or Berber dialects.

Recent studies of DNA suggest that the Basque have a very close genetic profile to the Irish and Welsh, who also pre-dated the Celtic agrarian settlements of the 6th Century BC.

There is a dark side to Mondragon. The town is a cauldron of ETA terrorist sympathies. A socialist politician was gunned down in broad daylight two years ago, and the mayor has still declined to condemn the act. The Corporacion adamantly denies any links to ETA, insisting that it is "radically opposed to intolerance and any type of violence". There is now hope of a lasting peace settlement in any case.

"The Myth of Mondragon", based on fieldwork by anthropologist Sharryn Kasmir, argues that political tourists from all over the world have been willing to overlook the subtle forms of peer pressure and worker stress in the valley.

Yet the movement is still flourishing half a century after critics said it would never survive. It generates 3pc of Spain's industrial output of the Basque region and generates annual sales of €24bn. Almost 60pc of its heavy production is exported.

As chairman Jose Maria Aldecoa puts it, with a Churchillian twist: "the co-operative model is absolutely flawed, but it has shown itself the least flawed in a crisis of values and models".

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World energy crunch as nuclear and oil both go wrong

Libya's civil war has cut global crude supply by 1.1m barrels per day (bpd), eroding Opec's spare capacity to a wafer-thin margin of 2m bpd, if Goldman Sachs is correct.

Now events in the Gulf have turned dangerous after Saudi Arabia sent troops into Bahrain to help the Sunni monarchy crush largely Shi'ite dissent, risking a showdown with Iran.

Russia's finance minister Alexei Kudrin warned on Wednesday that the confluence of events in Japan and the Mid-East could push oil to $200 a barrel in a "short-lived" spike, which would snuff out global recovery.

While there has been no loss of oil output in the Gulf so far, the violent crackdown in Manama on Wednesday left four people dead and risks inflaming the volatile geopolitics of the region. The rout of protesters encamped at the Pearl roundabout had echoes of China's Tiananmen massacre.

The risk group Exclusive Analysis said such heavy-handed methods may provoke Iran to launch a proxy war by arming insurgents. This could rapidly cross the border, fuelling Shia irredentism in Saudi Arabia's Eastern Province. Any threat to Saudi control over the 5m bpd Ghawar oil field nearby would be a global "game-changer". "Much worse headlines can easily be imagined," said Raza Agha from RBS.

Oil prices have fallen over recent days but it may not be long before the deepening nuclear crisis in Japan and Germany's decision to shut down seven of its oldest reactors starts to spill over into oil and gas markets.

The shutdown of 11 reactors in Japan has cut 10 gigawatts (GW) of power, forcing the country to import other fuels to keep its economy going. "We think they will need an extra 200,000 bpd of fuel oil and light crude, as well liquefied natural gas," said Eduardo Lopez from the International Energy Agency.

The Fukushima reactors are write-offs. Japan's local authorities are unlikely to permit other reactors to reopen for a long time. The closure of seven German pre-1980 reactors will cut energy supply by a further 6.2 GW, according to Daniel Brebner at Deutsche Bank.

"Nuclear power has suddenly gone from being part of the solution for future green energy to a dangerous relic of the cold-war era," he said. Germany will have to cover the shortfall by importing more gas and thermal coal, playing havoc with CO2 greenhouse targets.

Even if the world navigates today's crisis without an energy shock, a more intractable long-term crisis is brewing. Several countries are already turning their backs on the "nuclear renaissance" and shelving plans for fresh reactors. This implies a need for substitutes that will further strain fossil fuel supplies and bring forward the long-feared energy crunch.

It is too early to tell how much of this week's anti-nuclear rhetoric is posturing by politicians. Germany has imposed moratorium on renewal of 17 reactors. Switzerland and Taiwan are reviewing policy. China said on Wednesday that it was suspending approval of 25 reactors under construction. "We must fully grasp the urgency and importance of nuclear safety," said the state council.

US Energy Secretary Steven Chu also asked Congress for $36bn in loan guarantees for a new generation of small modular reactors. He has the backing of Capitol Hill for now but support could evaporate if Japan's containment vessels rupture. The world has 442 reactors, with 65 under construction. They generate 372 GW, covering 13.8pc of global electricity. The share is higher in the rich world: France 75pc, Belgium 52pc, Ukraine 47pc, Korea 35pc, Japan 29pc, the US 20pc, and the UK 18pc. In China it is just 2pc.

Output is expected to double over the next 20 years as the rising powers play catch up. Nuclear reactors are a core part of the supply mix needed to meet explosive demand for power from the industrial revolutions of China and India. Any slippage tightens the energy screw elsewhere, forcing greater reliance on coal before carbon capture and storage is viable.

Much depends on whether shale gas fulfils its promise, or how soon we can achieve a quantum leap in solar technology, or exactly when the world hits "peak oil", and at what price. The UK industry taskforce on peak oil fears the crunch will hit at 95m bpd within a decade.

Dr Euan Mearns at the Oil Drum said Fukushima has shattered democracies' faith in the safety of nuclear power. If Japanese engineers had prevailed despite the worst that nature could muster, it would have vindicated the industry. "Alas, this is not the case. The future of the human global energy system has just changed course with potentially far reaching consequences for civilisation," he said.

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World markets steady on the truce of Libya, the G7 intervention

Mask wearing people watch a screen displaying shares in Tokyo, which rose after that the G7 intervened to sell the yen. Photo: REUTERS

The FTSE 100 has finished the day up 0. set to 5718.13, but dropped 1. 9pc during the week. Germany the DAX edged up to 0 1pc and France CAC rose 0 FP6 with the falling yen as central banks sold the Japanese currency in the co-ordinated G7 first since 2000.

In New York, the Dow Jones rose 0 9pc closed trade in Europe and the price of oil has a strong. Brent crude, which rose above $117 per barrel earlier in the day after the United Nations, supported military action in Libya, withdraw below $114 as the Government announced an immediate halt to military operations in the country.

The United Nations Security Council adopted a resolution late Thursday approving "all necessary measures" to impose a no-fly in Libya area, protect civilian areas and pressure leader Libyan, Colonel Gaddafi to accept a cease-fire. He said he was looking to verify compliance with the resolution.

The market is "dance with the geopolitical developments which, for the moment, is sounding better than what they have in the last week," said Patrick O'Hare to Briefing.com.

The Nikkei 225, which dropped to 10 2pc this week after tumbling 16pc, in the first two days taking the comfort of the coordinated action by the G7 to big 2 FP7 countries. The increase was mirrored across stock markets in Asia.

Yoshihiko Noda, Japanese Finance Minister, said that the country had agreed with the central banks of United States, Britain and the Canada and the European Central Bank to intervene jointly in the foreign exchange market.

The Japanese currency weakened against the dollar to about 81.20 yen, that extends from a rebound to a record low of 76.25 yen struck on Thursday.

The France and the Bank of England Bank confirmed that they had sold yen Friday. The Bundesbank said they would participate but did not say if they had acted.

Some traders remain skeptical about the impact of the intervention. Speculators, such as hedge funds were keen to test the authorities resolve by buying in the rise in the yen sell-off, with the market still anticipate repatriation flows to the Japan after week last earthquake and subsequent nuclear crisis in support of the Japanese currency.

Mr. Noda told reporters that the size of the intervention will be revealed in two months. Analysts estimated that intervention could be as high as 750bn yen. Market Tokyo estimates prior to the Bank of the intervention Japan to 2 billion yen (£ 16bn) in the day, similar to its end of a day of intervention in September.

"Intervention must be concerted and aggressive... and even then, I am skeptical, said one trader in London."

The intervention surprised - most financial markets had anticipated to the Japan to act alone - underlines the threat that nations see now of Japan, of the world's third largest economy.

"They felt the need to do something together," said Masafumi Yamamoto, an analyst with Barclays Capital in Tokyo currency. "The disaster itself clearly had a very negative impact on the economy, but the movement of the yen has do worse."

The strength of the yen since the earthquake struck a week ago seems counter-intuitive, but Mr. Yamamoto of Barclays said that the Japanese currency has historically served as a haven for investors during a crisiseven one of the country.

He added that some speculators have been buying yen in the hope that Japanese insurance companies would have to liquidate foreign investment in order to yen home to help pay for the repair of the country.

To calm investors, insurance companies and most important of Japan, which are the major owners of America's debt, published yesterday strong denials that they were preparing a predatory pricing of US Treasury obligations.

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Will 'Chindia' rule the world in 2050, or America after all?

Having rid themselves of calamitous nonsense – Maoism, the Hindu model, and other variants of central planning or autarky – and having at last achieved a “threshold level” of law and governance, nothing should stop them, or so goes the argument.

“Sustained growth prospects in per capita incomes across the world have not been as favourable as they are today for a long time, possibly in human history.” Global growth will quicken. GDP will quadruple again from $73 trillion to $378 trillion by 2050 (constant US dollars).

Dr Buiter’s team adds the usual caveats: “beware of compound growth rate delusions;” or “the bigger the booms, the more spectacular the bubbles, and the devastating the busts;” or indeed that “convergence is neither automatic, nor inevitable. In history, it has been more the exception than the rule.”

Argentina is a salutary lesson. Why did it diverge from its sister economy Australia, so similar in trading patterns in the late 19th Century? Why did it fall from the world’s fifth richest in per capita terms in 1900 to a third of Australia’s level a century later?

It is hard to pin-point where the rot began, though Peron clinched decline by bleeding farm wealth to fund his populist patronage, and by forcing the central bank to print the shortfall. Bad policies hurt.

Oddly, Britain will scrape through in Citigroup’s global reshuffle, just holding on as the world’s 10th biggest economy in 2050, the only EU state left in the top ten. It will even overtake the US in per capita terms.

Can this be so? Britain has slipped to 25th in reading, 28th in maths, and 16th in science in the Pisa rankings. Shanghai’s school district takes top prize across all three, ahead of Korea and Finland. While the UK faces a less disastrous ageing crisis than much of Europe, this is thanks to our unrivalled leadership in unwed teenage pregnancies.

HSBC’s report also sketches an era of unparalleled prosperity, yet the West does not sink into oblivion. China overtakes the US, but only just, and then loses momentum.

Chimerica, not Chindia, form the G2, towering over all others in global condominium. Americans prosper with a fertility rate of 2.1, high enough to shield them from the sort of demographic collapse closing in on Asia and Europe. Beijing and Shanghai are 1.0, Korea is 1.1, Singapore 1.2, Germany 1.3, Poland 1.3, Italy 1.4 and Russia 1.4.

Americans remain three times richer than the Chinese in 2050. The US economy still outstrips India by two-and-a-half times. This is an entirely different geo-strategic outcome.

My own view is closer to HSBC, perhaps because my anthropological side gives greater weight to the enduring hold of cultural habits, beliefs, and kinship structures, and because of an unwillingness to accept that top-down regimes make good decisions in the end.

Both studies rely on the theories of Harvard economist Robert Barro, but differ on how easy it is to handle population collapse. The great unknown is what rapid ageing does to creative zest, and how many decades it takes to turn the demographic super tanker.

China’s workforce peaks in absolute terms in four years. While the population keeps growing until the tipping point in the mid 2020s, it is ageing very fast. Hence warnings by Chinese demographers that there may soon be an epidemic of suicides, as the elderly step out on the ice to relieve the burden.

Zhuoyan Mao from Beijing’s Institute for Family Planning said China’s fertility rate had been below replacement level for almost twenty years. “Population momentum” turned negative over a decade ago in Beijing, Tianjin, Shanghai and Liaoning, but the countryside is catching up. “The decline speed in rural areas is faster,” he says.

It is bizarre that China should still cling to the one-child policy, though Shanghai’s local authorities have been encouraging couples to have a second child since 2009. The policy is losing its relevance at this stage, though gender picking (female infanticide, at the ultrasound stage) has left the legacy of a male/female ratio of 1.2 to 1, with all that implies for social stability.

China’s fertility rate is collapsing anyway for the same reasons as it has collapsed in Japan and Korea – affluence, women’s education, later pregnancies that stretch generations, in-law duties, and costly housing. You cannot reverse this with a wave of the wand. The lag times can be half a century.

George Magnus, UBS’s global guru, writes in his book “Uprising” that China faces a “triple whammy of ageing”. The number of children under 14 will fall by 53m by 2050; the work force will contract by 100m; and the over-60s will rise by 234m, from 12pc to 31pc of the total.

Mr Magnus is scathing about the “muddled thinking” of those who fall for BRICs hysteria, or who succumb to the facile conclusion that the global credit crisis finished the West and served as catalyst for a permanent hand-over to Asia.

The crisis also exposed the fragility of Asian mercantilism, even if this has been disguised for now by a stimulus blitz in China that has pushed credit to 200pc of GDP.

I might add that China is depleting the non-renewable aquifers of its northern plains at an alarming place, and faces a separate water crisis from receding Himalayan glaciers.

Cheng Siwei, the head of China’s green energy drive, told me a few months ago that eco-damage of 13.5pc of GDP each year outstrips China’s growth rate of 10pc. "We have an intangible environmental debt that we are leaving to our children," he said. That debt is already due.

Perhaps the 21st Century will be America’s after all, just like the last.

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World Promethean wipes off-target price as FTSE 100 rises

But analysts said: "as a whole, given the decline of the c.75pc in the course of actions of Promethean since the intellectual property offices (and c.30pc), last week, the day of the profit warning we believe future dark is updated for the company." We believe not proceed as U.S. budget eventually recover in 2012 and society began to grow once more. »

Despite cutting, Promethean 1½ pink p 57.75 as partners in Sturgis, Manager of funds, raised its participation in a little more 5MC.

Interactive whiteboards aside, the most excitement was among major FTSE J Sainsbury actors stole Tesco entertainment as whispers resurfaced - again - that State Qatar investors could snaffle supermarket chain.

Although Tesco was the one results optimistic, 15.3 - ball Sainsbury or 4 28pc - p vertical on reheated gossip Qatar whose investment authority has a 27 5pc its participation in the retailer could be an inclination of society. This time, the figure being brandished threat was 450 p apart.

Qatar could not buy three years Sainsbury's, but she has invested in a string of international companies it seeks to diversify. Qatar Holding - Division on investment Qatar Investment Authority - buy Harrods earlier this year for about £ 1. 5bn.

But the merchants urged caution on speculation. The prospect of a bid for Sainsbury Qatar made before tours - when rumours supply resumed cropped in October last year, shares stir-fry Sainsbury 10pc in a single day. In July of this year, shot Sainsbury until almost 5MC that speculation swept once more the market.

Traders noted that Sainsbury's ' increase could have as much to do with third-quarter results and news that the retailer was seeing a pick-up request he leads in Tesco period peak Christmas trade.

However, with Tesco amounting to a mere 10 to 430 Sainsbury of the Eclipse p its largest peer yesterday.

Rehash rumors about the Sainsbury's has helped market rally one day when the mood was also clarified by rising prices of raw materials. As metals hit new heights, minor lit up the rankings. Africa Barrick Gold claimed pole position, putting on 34½ 600 percent, then that Antofagasta gained 71% to £ 15.28.

With minor heavy weight on the rise, the FTSE 100 obtained 38.17 38.17 points to 5808.45, while the FTSE 250 points 11299.44 148.09. Wednesday, investors will be discover that is defined for the promotion and demotion of CPI.

A final decision will be based on Tuesday closing price Wednesday, but indicative positions suggest that IMI could enter the FTSE 100 leave Cobham. IMI has 34 948 p while than Cobham 195.9 p 1.4.

Betfair may be set to enter the FTSE 250, while the Yell Group could be on the path of. Betfair on 62% to £ file while Yell throw 0.02 at 12.10 p.

Making an appearance alongside Sainsbury's ranking was Unilever thanks to an optimistic note from Michael Steib, an analyst at Morgan Stanley receives consumer giant a double-upgrade - boosting its position on "overweight"underweight"Unilever and raise his price target to £ 23.00 from £ 19.00.

In a note entitled "The New 'Unilever Model'", he wrote that while challenges remain "formidable", broker has been "encouraged by how Unilever appears more reshape its growth strategy".

He added that many risks - as competition and fresh produce - are now well understood by investors and must be taken into account in the pricing actions. Unilever has increased 53% to £ compared.

With investors optimistic mood, defensive were on the decline - National Grid throw 5 547½p and AstraZeneca has fallen from £ 30.27½ 6½p.

Among liners of a second, a series of housebuilders were in first place after Bellway said he expected net profit before taxes for the first half of up 20pc.

Signs of a more promising prospect for the peer supported the Bellway housebuilders. Kaki, Taylor Wimpey and Barratt Developments put on 416.4 p, 33.7 1.77 to 29 percent and 7½ to 86.3. But Bellway claimed gold medal over in more 54½ 612½p.

Saint Modwen developer has also benefited from JP Morgan Cazenove boost "overweight" to "neutral" rating in an extensive review of the property sector. Analysts said St Modwen stock was lower by 22pc for three months. St Modwen increased hereditary 151 p.

Suffering from a carefree bearish note was supergroup. The retailer behind worship wear used by artists such as David Beckham, reduce back his losses at the beginning at the end of the 2 p to £ estimate. After having tripled its price starts from floating p 500 in March, brokers were optimistic about the prospects of the supergroup - last month, Goldman Sachs has begun to cover with a "conviction buy" rating and a price of £ 21.00 target.

But execution of noble broke ranks, start with a rating of "selling" and the fair value of £ 11.65 supergroup.

Analysts said the current assessment required "flawless execution" and raised concerns about the brand growth rates. Said broker supergroup naturally takes advantage of incentives offered by the owners, but questioned whether this would lead to brand expand too quickly and to early saturation.

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Singapore Fellowship and Australian merge to create award-fifth of the world

Joint statement said the agreement would create a platform extended for global opportunities in the Asia-Pacific region, the recovery of the world driver clients its worst recession since the 1930s.

Cash and shares offer should be completed in the second quarter of 2011 subject to regulatory approval, the values of the ASX A $48 per share, or a $ 8, a premium of nearly 40pc last price traded.

Magnus Bocker, Executive Director SGX to become Chief Executive of the combined group, said that "by 2020, in less than 10 years from now, more than half of global GDP be in Asia-Pacific region."

"This is an opportunity we can't let go," he said at a press conference.

In terms of total number of inscriptions, ASX - SGX will exceed Tokyo to become the largest second list in the Asia-Pacific region after Bombay, offering more than 2,700 undertakings with more than 20 countries, including 200 of greater China, said the joint statement.

Merged exchanges will provide also access to the institutional investor base outside United States with active combined under valued at 2.3 trillions of dollars, including money from sovereign wealth funds management.

"There is no doubt it's a combination of point of repère.Nous try acting ahead of the curve to be proactive in a rapidly changing world" said Mr. Bocker.

The Wall Street Journal said the merger could create an approximately 1.9 billion market.

"At the end of the day, this combination is not only on the synergies of coût.Il is really on strategically makes us an Exchange much stronger together and positioning we grow in Asia, said the Wai Kwong, Director financial SGX Seck.".

The agreement seems likely to address certain regulatory issues in Australia as Singapore Government is a major shareholder in SGX, but stock exchange officials expected to major obstacles.

"I think that we would have announced it if we do not believe that approval would be forthcoming,", said Robert Elstone, Managing Director and CEO of ASX.

Australian competition and Consumer Commission (ACCC), Graeme Samuel said "I think it's an issue between the Exchange and Singapore Australia Exchange and I do not see that raise competition issues for us," President according to the public broadcaster ABC.

The announcement comes as the ASX is on the verge of losing its monopoly long Australia after the Government gave the go-ahead for rival to implement part exchanges.

SGX President-elect Chew Choon Seng is likely to become the non-Executive Chairman of the entity merged while ASX President David Gonski should become Deputy Chairman.

The combined group will have 1,100 employees and an international jury with 15 directors of five countries.

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Mounted world as China stock market slide raises rates Asia following United States, less Europe

Nikkei average of Japan more 2pc slipped and briefly touched a low interday a month on Wednesday as investors rushed to take profits. Photo: Reuters

Japan focused on exports was the hardest hit by the Nikkei index in Tokyo tumbling 1. 7pc tp 9371 points.Australie the ASX slipped 0. 7pc and Hong Kong Hang Seng 0. 6pc.

Oil prices rose above $ 80 per barrel, after attempting to China to control inflation and a property bubble prospective he dragged more than 4pc Tuesday.

The dollar edged more after that Treasury Secretary Timothy Geithner is pulled out of a strong dollar fell against the yen, the euro and the pound sterling.

Buck the trend, with ABN Korea Southern progress 1pc and Shanghai Composite 0 6pc increasingly China markets.

"China's announcement was a great surprise to the market.Attenuated sense throughout Asia as investors worried that an increase in interest rates could pressure on economic growth in China, "says Masatoshi Sato, market analyst, Mizuho investors securities in Tokyo."

Bank of China said that it will be Wednesday increase loan Yuan a year to 5 5 31pc 56pc and yuan year drops 2 5pc 2 25pc rates.

The increase in interest rates was the first to China since 2007.

Chinese economy has increased 10 3pc in the second quarter and its growth has propelled the resumption of the economy of a deep recession, while the United States and Europe struggle to return to economic works foot.

The US Federal Reserve should largely in an attempt to revive the flagging economy in November by launching a program to purchase more .the Treasury bonds ' objective would be to drive down interest rates on mortgages, loans and other debts and encourage Americans to spend.

Mervyn King, Governor of the Bank of England has also fed hopes to facilitate greater quantitative (ve) Tuesday when he says political currency continues to be a "powerful weapon" in support of recovery.

New York by the tumbling points 165.07, Dow Jones industrial average or 1. 5pc 10,978.62, fall below 11,000 for the first time in a little over a week .the ' broader S & P 500 index lost 18.81 points, or 1. 59pc 1,165.90 points.

Rich technology Nasdaq composite index shed 43.71 points, or 1 76pc 2,436.95 points, as Apple is 2 7pc on earnings as forecast estimate and IBM dropped 3 4pc due to a decline in new contracts.

In Europe, FTSE 100 has fallen from London, 0 6pc, DAX 0 the Germany 4pc France ACC 0 7pc.

FTSE 100 Great Britain has been opened 10 - 19 points lower on Wednesday, mirroring the weakness of global investors concerned about interest rates Chinese and cooled US mortgage bonds also viewed UK policy.

The minutes of the Bank of England is published at 9.30 a.m. and Chancellor announced review of expenditures at 1230.

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Singapore Fellowship and Australian merge to create award-fifth of the world

Joint statement said the agreement would create a platform extended for global opportunities in the Asia-Pacific region, the recovery of the world driver clients its worst recession since the 1930s.

Cash and shares offer should be completed in the second quarter of 2011 subject to regulatory approval, the values of the ASX A $48 per share, or a $ 8, a premium of nearly 40pc last price traded.

Magnus Bocker, Executive Director SGX to become Chief Executive of the combined group, said that "by 2020, in less than 10 years from now, more than half of global GDP be in Asia-Pacific region."

"This is an opportunity we can't let go," he said at a press conference.

In terms of total number of inscriptions, ASX - SGX will exceed Tokyo to become the largest second list in the Asia-Pacific region after Bombay, offering more than 2,700 undertakings with more than 20 countries, including 200 of greater China, said the joint statement.

Merged exchanges will provide also access to the institutional investor base outside United States with active combined under valued at 2.3 trillions of dollars, including money from sovereign wealth funds management.

"There is no doubt it's a combination of point of repère.Nous try acting ahead of the curve to be proactive in a rapidly changing world" said Mr. Bocker.

The Wall Street Journal said the merger could create an approximately 1.9 billion market.

"At the end of the day, this combination is not only on the synergies of coût.Il is really on strategically makes us an Exchange much stronger together and positioning we grow in Asia, said the Wai Kwong, Director financial SGX Seck.".

The agreement seems likely to address certain regulatory issues in Australia as Singapore Government is a major shareholder in SGX, but stock exchange officials expected to major obstacles.

"I think that we would have announced it if we do not believe that approval would be forthcoming,", said Robert Elstone, Managing Director and CEO of ASX.

Australian competition and Consumer Commission (ACCC), Graeme Samuel said "I think it's an issue between the Exchange and Singapore Australia Exchange and I do not see that raise competition issues for us," President according to the public broadcaster ABC.

The announcement comes as the ASX is on the verge of losing its monopoly long Australia after the Government gave the go-ahead for rival to implement part exchanges.

SGX President-elect Chew Choon Seng is likely to become the non-Executive Chairman of the entity merged while ASX President David Gonski should become Deputy Chairman.

The combined group will have 1,100 employees and an international jury with 15 directors of five countries.

View the original article here