Zapatero seeks to dispel fears over economy

(FT)  - Spain's Socialist prime minister on Wednesday accused his conservative opponents of "unpatriotically" sowing alarm about the economy as he sought to dispel fears that the country was succumbing to the international credit squeeze ahead of a general election in early March.

José Luis Rodríguez Zapatero said he was confident Spain would grow by "at least" 3 per cent in 2008, compared with 3.7 per cent in 2007 and that, with the end of the construction boom, growth would be "more balanced, more productive and more sustainable".

 

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Bank of England holds rates, cut seen in Feb

(Reuters) - The Bank of England left interest rates unchanged on Thursday, following a week of intense speculation over whether it would cut them for a second month running to shore up economic growth.

The Bank held the main rate at 5.5 percent, having lowered it a quarter percentage point in December.

Still, the pause is likely to be short-lived and the Bank is widely tipped to cut rates again in February, when it publishes new growth and inflation forecasts.

The pound rose after the decision while Britain's index of leading shares .FTSE turned negative with retail stocks taking a sharp knock.

Most economists had predicted a no-change verdict but money markets, spooked by signs of a consumer retrenchment, were pricing in a 60 percent chance of a cut.

"We suspect that the deteriorating growth outlook, particularly for the household sector, was balanced by worries on inflation," said James Knightley at ING Bank.

 

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Bear and T.Rowe vie for China fund firm stake

(Reuters) - Wall Street investment bank Bear Stearns (BSC.N: Quote, Profile, Research) is in talks to buy around 10 percent of China's biggest fund house, looking to tap the country's red-hot mutual fund market, two sources with knowledge of the situation told Reuters on Thursday.

China Asset Management Co, wholly-owned by China's top broker CITIC Securities (600030.SS: Quote, Profile, Research), has been talking to several potential foreign investors including Bear Stearns and U.S. fund manager T. Rowe Price Group ( TROW.O: Quote, Profile, Research), said the sources, who have been briefed on the talks.

The talks between China Asset Management and Bear Stearns follow an announcement in October that the U.S. bank, battered by a mortgage market slump, and Beijing-based CITIC Securities would take investment stakes in each other and form a broad strategic alliance.

However, that announcement didn't include the plan to allow Bear Stearns to invest in CITIC Securities' fund arm.

T. Rowe Price approached China Asset Management earlier than Bear Stearns, but the partnership with CITIC Securities would help Bear Stearns secure its tie-up with China Asset Management, though no agreement has been reached, said the two sources.

 

Read more at Reuters