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Italian lender backs 5 bn-euro capital increase

Italian bank Monte dei Paschi di Siena gave the go-ahead on Friday to a 5.0 billion euro equity raising that will boost its capital and allow it to repay a government bailout this year. The bank said in a statement the share sale would give it a strong enough "capital buffer" to withstand EU bank stress tests in the current climate of "high uncertainty and limited visibility". The increase will also allow the lender to speed up a restructuring plan, due to be completed by 2017, that includes 8,000 job cuts and the closure of 550 branches.

Housing correction would damage Canada's economy, says BMO report

OTTAWA - A sudden and sharp correction in the housing market could have a devastating impact on the Canadian economy overall, enough to trigger another recession, says a new Bank of Montreal report. The analysis by senior economist Sal Guatieri finds that even a 10 per cent correction — what many would call a soft landing — could sap as much as one percentage point from gross domestic product growth, or basically halve the current growth rate.

Fed's balance sheet logged $84 billion profit last year

NEW YORK (Reuters) - The Federal Reserve logged $84 billion in net profit last year on its massive portfolio of assets, and average income will probably remain higher than before the financial crisis for another decade to come, according to an annual report. The New York Fed's report on its open market operations, released on Thursday, painted an optimistic picture of what could be a thorny political issue for the U.S. central bank: whether all its bond-buying will eventually lead to losses that the government would absorb.

Fed bond buying twice as effective on growth as BoE's: research

By David Milliken LONDON (Reuters) - Bond purchases by the U.S. Federal Reserve have been twice as effective at boosting economic output as those by the Bank of England, research by a BoE policymaker showed on Thursday. The findings are likely to be of interest to the European Central Bank, which is weighing whether to start an asset purchase program in the euro zone to ward off the threat of deflation.

Did Europe misdiagnose debt crisis and make it worse?

By Luke Baker BRUSSELS (Reuters) - At the height of the euro zone debt crisis, with Portugal's economy nearing collapse, the European Commission told the government in Lisbon that it had to slash wages if it was ever going to boost competitiveness and grow again. Portuguese shoemakers - one of the economy's main export sectors - steadfastly ignored the advice and found a way to bounce back while actually increasing workers' pay.

Italy asks EU for more time to meet deficit target

Italy on Thursday asked the European Union to push back a deadline for cutting its public deficit to 2016, days after France reportedly tried and failed to get another extension. Finance Minister Pier Carlo Padoan said record unemployment and weak growth -- exasperated by measures to pay tens of billions of euros of overdue arrears to companies -- were making it difficult to cut Italy's towering debt. "Despite the positive signs, the economic recovery is still fragile and the situation in the job market is still difficult," he told parliament.

Painful 2013 leaves European banks' returns well below target

By Laura Noonan LONDON (Reuters) - Europe's largest banks are generating a poor return on their capital, well below their post-crisis targets, as muted credit growth slows their recovery and progress on costs is swallowed by unexpectedly high loan losses.

China first-quarter GDP at 18-month low, to cut reserve ratio for small banks

By Adam Rose and Xiaoyi Shao BEIJING (Reuters) - China's economy expanded 7.4 percent between January and March, its slowest pace in 18 months, prompting authorities to act for the second time in as many weeks to shore up growth. Hours after the National Bureau of Statistics released the data, Premier Li Keqiang was quoted by state media as saying that China would reduce the amount of cash that some village banks hold at the central bank to help the farm sector.

Japanese Internet firms offer something new: high returns

By Ayai Tomisawa TOKYO (Reuters) - Some Japanese Internet companies are getting a boost from foreign investors as Prime Minister Shinzo Abe pushes for an elusive strength his country's firms are not known for - high returns. Overseas long-term investors were already hunting for stocks with growth potential, good governance and higher returns on equity before Abe took office in December 2012. But it's been a hard slog for many as the world's third-biggest economy stumbled through 15 years of deflation and sporadic growth.

British unemployment hits five-year low, pay growth matches inflation

By William Schomberg and Ana Nicolaci da Costa LONDON (Reuters) - Britain's unemployment rate fell more than expected and pay growth caught up with inflation for the first time in nearly four years. Sterling jumped and government debt prices fell after official statistics showed the unemployment rate sank to a five-year low of 6.9 percent in the three months to February, down from 7.2 percent in the three months to January.
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