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Money News Issue #192

Stock gain, US treasury yields rise as banking fear eases

HONG KONG, March 28 (Reuters) - Global stocks and U.S. bond yields rose on Tuesday, as a U.S. regulator-backed deal by First Citizens BancShares to buy failed Silicon Valley Bank soothed wider worries about problems in the sector.MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up 0.3% by early morning Hong Kong time. U.S. stock futures, the S&P 500 e-minis, were up 0.21%.

Australian shares jumped more than 1%, as lithium and commodity stocks rallied sharply after battery metals explorer Liontown Resources (LTR.AX) rejected a $3.7 billion buyout bid from Albemarle Corp.

Top U.S. banking regulators said on Monday that they planned to tell Congress that the overall financial system remains on solid footing after recent bank failures, but will comprehensively review their policies in a bid to prevent future collapses.

The concerns, however, haven't completely gone away as Federal Reserve Governor Philip Jefferson said on Monday that stress among small banks could hit small businesses hardest.

The dollar slid to 130.76 yen from the late New York high of 131.75 and 131.54 early Asia. "This round of uncertainty that we're seeing, it will likely continue for some more time," said Manishi Raych

China’s debt-heavy local governments look for new ways to raise cash

BEIJING — Debt-heavy local governments in China need new ways to raise money under a central regime that’s made clear its priority is to reduce financial risks.

Local governments’ direct debt exceeded 120% of revenue in 2022, S&P Global Ratings analysts said, noting that’s more than what Beijing has unofficially said was an acceptable debt level.

“The country’s provinces and municipalities have relied heavily on expanded bond issuance to carry them through a COVID-triggered economic slowdown and collapsed land-sale revenues,” the S&P analysts said in a report last month.

International Monetary Fund data show China’s explicit local government debt nearly doubled over five years to the equivalent of $5.14 trillion — or 35.34 trillion yuan — last year. That doesn’t include several other categories of related, rapidly growing debt such as that of “local government financing vehicles” (LGFV) — which allowed regional authorities to tap bank loans for infrastructure projects.

China’s central government is paying attention.

In China’s annual government work report released this month, an entire section was dedicated to preventing and defusing major risks — primarily in real estate and local government debt. “We should ... prevent a build-up of new debts while working to reduce existing ones,” the report said regarding local governments’ situation.

The topic didn’t get such prominence in last year’s report, pointed out Ting Lu, chief China economist at Nomura.

“Coupled with the conservative growth target [of around 5%], this may signal a potential shift in focus.

FTSE 100 close: Deutsche Bank surges while Barclays and HSBC yank London index higher

London’s FTSE 100 kicked off the week in upbeat style, yanked higher by UK banking giants Barclays and Lloyds racking up gains.

The capital’s premier index jumped 0.9 per cent to 7,471.78 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, climbed 0.19 per cent to 18,529.62 points.

The morning’s upward moves should help ease fears about the fragility of the global banking sector that resurfaced at the end of last week and saw German giant Deutsche Bank slump as much as 14 per

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