Morning MoneyBeat Europe: Eurozone Inflation Ahead; ECB QE Still Needed

        By Peter Nurse
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        Good Morning Europe
        Some good news on the eurozone inflation front emerged Monday.
        Germany, the region's largest economy, came out from a period of falling prices by registering growth in consumer prices of 0.1% in March from the same month last year. This follows two months in which prices had fallen.
        Now the European Central Bank has explained that its decision to launch an aggressive bond-buying program--buying EUR60 billion a month of predominately sovereign debt--would last until September 2016, and could extend further if it doesn't meet its inflation target of just below 2%.
        Inflation figures for the eurozone as a whole will be released later Tuesday. While they are expected to record a fourth month of falling prices, the rate of decline is expected by economists to be the smallest since the current sequence began in December.
        So does this mean the ECB has committed to its quantitative easing for too long a period and the recent price declines will prove just a temporary phenomenon?
        Not so, according to Capital Economics.
        Core inflation, or price rises excluding energy and food inflation, still remain very low, even in Germany, the strongest economy in the eurozone. Inflation looks set to remain well below the ECB's target for the region as a whole of close to 2%. "While the recovery has recently resumed, there is still spare capacity in the economy. And despite promising trade union deals, overall German wage growth remains subdued so far," said Jennifer McKeown, Senior European Economist at Capital Economics.
        And there is clearly a greater risk that this develops into a deflationary spiral in the weaker parts of the euro-zone.
        "Accordingly, the ECB's quantitative easing program is still very sorely needed," Ms. McKeown added.
        Market Snapshot: U.S. markets (Monday close) DJIA up 1.49%, Nasdaq up 1.15%, S&P 500 up 1.22%. Nikkei (Tuesday close) down 1.1%. Brent crude down 40 cents at $55.89. Gold down $2.40 at $1182.90. EUR/USD at $1.0789, USD/JPY at Yen120.04. 10 year Treasury yield 1.94%, Bund 0.17%, Gilt 1.60%.
        Watch For: Eurozone February unemployment, March flash CPI.
        What You May Have Missed on MoneyBeat:
        No Hibernation For Euro Bears: Who says bets against the euro have been flushed out? The currency has had a handy rally against the dollar over the past two weeks, but data from the U.S. Commodity Futures Trading Commission released Friday suggest that the downdraft is not over.
        Greece Can No Longer Kick the Can Down the Road -- Economists: Greece is facing a deadline to submit its latest reform proposals Monday after a weekend of tough talks with the European Commission, the European Central Bank and the International Monetary Fund.
        Stocks Revisit Last Spring's Selloff -- With a Difference: The latest pullback in technology and biotechnology stocks echoes a temporary selloff last spring. But this time around, some investors are warning that the broader market's problems could run deeper.
        Swiss Investor Calls for Big Cut in Hedge Fund Fees: One of Europe's biggest hedge fund investors, Unigestion, is pushing hedge funds to scrap management fees in place of a bigger slice of profits as investors attempt to crack down on high charges.
        London Cutting Back on Banking Habit: London may be one of the world's financial capitals, but, nowadays, Peru, Thailand and Indonesia are getting more out of their banking industries than the U.K.
        Why Private Equity Is Moving Into Ethiopia -- At A Glance: In Ethiopia, a land devastated by famine 30 years ago, western private equity firms are starting to invest in roses, wine and power plants, as the African nation opens to trade with the world. The private-equity firms are part of a historic shift: Global foreign direct investment has overtaken Western aid on the world's poorest continent. Here's more to know.
        From The Wall Street Journal:
        Iran's Supreme Leader Holds Key to Nuclear Deal: With a key deadline just hours away, U.S. and European officials said nuclear negotiations were imperiled by deep uncertainty over whether Iranian Supreme Leader Ayatollah Ali Khamenei would sign off on the necessary concessions for a deal.
        Lubitz Was in Treatment for Suicide Risk : The Germanwings co-pilot suspected of deliberately crashing an airliner into a mountainside last week had undergone psychotherapy because of suicidal tendencies over an extended period, the German prosecutor in charge of the case said Monday.
        Buhari Leads Vote in Nigerian Election: Former military dictator Muhammadu Buhari built a wide lead in Nigeria's elections on Monday, raising the prospect of a 1980s-era strongman being elected to lead the emerging but troubled country.
        U.S. Stocks Rally : U.S. stocks rose sharply, rebounding from last week's losses, buoyed by a spate of deal announcements in the health-care sector.
        UnitedHealth to Buy Catamaran for $12.8 Billion : UnitedHealth Group Inc. plans to acquire Catamaran Corp. for about $12.8 billion in cash, bulking up its pharmacy-benefit business as spending on cutting-edge drugs is a growing concern for employers and insurers.
        Philips Sells Lighting Business to Consortium: GO Scale Capital, an investment fund sponsored by GSR Ventures and Oak Investment Partners, said it would buy an 80.1% stake in Royal Philips NV's combined LED components and automotive lighting business in a deal that values the business at about $3.3 billion.
        AIG Chairman Steve Miller to Step Down in July: Robert S. "Steve" Miller intends to step down in July as chairman of American International Group Inc. after five years in the role, a person familiar with the matter said Monday.
        Former Federal Agents Charged With Stealing Bitcoins During Probe : Two former federal agents were charged with stealing hundreds of thousands of dollars of virtual currency during an undercover investigation into an online drug market, bringing an age-old law enforcement problem into the Internet age.
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        (END) Dow Jones Newswires

        March 31, 2015 02:30 ET (06:30 GMT)

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