ECONOMY

In Brief

Japan joins China in chipping in to help Europe TOKYO (AFP) – Japan said yesterday it would buy bonds from a eurozone rescue fund to help finance Ireland’s bailout and support the debt-hit bloc, following similar overtures from China amid fears of a spreading crisis. Finance Minister Yoshihiko Noda said Japan should help boost confidence in the bonds issued by the European Financial Stability Facility (EFSF), as concerns grow for nations such as Portugal. In pledging such purchases Japan is joining China, which has already expressed readiness to assist European economies seen as most exposed to a debt crisis by pledging to buy bonds directly from Spain, Greece and Portugal. «It is appropriate for Japan, as a major economy, to buy some of the EFSF bonds» to help boost confidence in Europe’s efforts, Noda said. «We’re thinking about buying more than 20 percent of the amount» of EFSF securities to be issued in the initial round, he said. The euro soared following Noda’s comments before quickly paring back gains. The unit bought $1.2990 but fell back to $1.2944 in Tokyo trade. The unit had in the past few days plunged to $1.2830, its weakest level since mid-September. Market players «went for euro buying out of surprise» over the Noda comments, said Credit Agricole forex director Yuji Saito. But the rally was short-lived, with investors realizing Japan would use euros in its foreign reserves to buy the bonds, indicating there will not be large fresh buying of the single currency, Saito said. ‘Deja vu’ seen as Portugal repeats no bailout needed LISBON (AFP) – Portugal insisted yesterday it would not need a bailout on the eve of its first issue of long-term debt since Ireland’s rescue even as its central bank forecast the economy would plunge into recession. Portugal has been beset by speculation that its eurozone peers want it to accept a bailout so as to avert a wider crisis that could drag down others, including neighbor Spain, after Greece and Ireland sought help in 2010. The pressure has mounted, through official denials and repeated rumors that a rescue was imminent, as Lisbon goes to the markets today in what could be a crunch test of its ability to continue raising fresh funds. Analysts described «a deep sense of deja vu» over the rumors and denials of an impending rescue deal, saying the government was simply trying to «delay the inevitable» – as Greece and Ireland did earlier. The beleaguered country suffered a fresh blow yesterday when the central bank said it would suffer a 1.3 percent recession this year, downgrading a previous outlook of zero growth. It said the contraction would result from the austerity measures the government has introduced, in effect making the task of restoring the strained public finances all the more difficult. «All the rumors on the International Monetary Fund and on external assistance are speculation that does not help and which harms the interests of the country and aggravates market conditions,» Prime Minister Jose Socrates said. Socrates said Portugal’s public deficit for 2010 was «clearly less than the forecast» of 7.3 percent of output and might even be down by an extra 0.5 percentage points. Finance Minister Fernando Teixeira dos Santos said earlier that Portugal did not intend to seek external help and «would do everything to avert such an eventuality.» EU energy The European Union will move closer this week to securing natural gas from Azerbaijan and diversifying its energy supplies to lessen dependence on imports from Russia. European Commission President Jose Manuel Barroso and Ilham Aliyev, the president of Azerbaijan, will sign tomorrow a joint declaration on the establishment of the so-called Southern Corridor, or projects that would enable the tapping of Caspian gas resources and supplement existing routes from Russia, Norway and North Africa. «I am sure that together we will create the necessary conditions for this strategic initiative to take place,» Barroso said in a statement yesterday in Brussels. To diversify its supply sources, the 27-nation EU has agreed to help fund the 7.9-billion-euro ($10.2 billion) Nabucco pipeline, planned to send Caspian-region gas via Turkey to Austria. (Bloomberg)