Economic Calendar

Monday, January 30, 2012

Australian, New Zealand Dollars Decline Versus Peers Before Europe Summit

By Kristine Aquino - Jan 30, 2012 7:50 AM GMT+0700

The Australian and New Zealand dollars weakened before European Union leaders meet to discuss the region’s debt crisis at a summit in Brussels today.

The so-called Aussie slid versus all of its 16 major counterparts amid concern Italy’s funding costs will surge at an auction today after Fitch Ratings cut the nation’s credit grade last week. New Zealand’s currency, nicknamed the kiwi, halted its longest advance in 10 months as Asian stocks fell, extending a global slump in shares.

“We’re still quite a long way from solving the issues in Europe and market cynicism can certainly raise its ugly head again,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company. “Before the Aussie and kiwi get some support again, you’re going to need to see a bit of a dip.”

Australia’s dollar declined 0.4 percent to $1.0613 as of 11:40 a.m. in Sydney, and slipped 0.3 percent to 81.47 yen. New Zealand’s currency fell 0.3 percent to 82.26 U.S. cents, ending a six-day advance, the longest since March. It slid 0.2 percent to 63.16 yen.

The MSCI Asia Pacific Index lost 0.4 percent. The Standard & Poor’s 500 Index dropped 0.2 percent on Jan. 27 and the Stoxx Europe 600 Index retreated 1 percent.

Australian bonds rose, pushing the yield on benchmark 10- year securities down two basis points, or 0.02 percentage point, to 3.79 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell 2 1/2 basis points to 2.775 percent.

EU heads of government will meet in the Belgian capital today to put the finishing touches on a German-led deficit- control treaty and endorse the statutes of a 500 billion-euro ($660 billion) rescue fund to be set up this year.

Italy is scheduled to sell debt maturing in 2016, 2017, 2021 and 2022 today. Fitch reduced the nation’s credit score two levels to A- from A+. Spain was lowered two notches to A from AA-. Ratings on Belgium, Slovenia and Cyprus were also cut, while Ireland’s was maintained.

To contact the reporter on this story: Kristine Aquino in Singapore at

To contact the editor responsible for this story: Rocky Swift at


Japanese Stocks Decline Third Day as U.S. Economic Growth Misses Forecast

By Norie Kuboyama and Masaaki Iwamoto - Jan 30, 2012 8:43 AM GMT+0700

Japanese stocks fell for a third day after the U.S. economy expanded less than forecast in the fourth quarter, dimming the earnings outlook for Asia’s exporters.

Sony Corp. (6758), which depends on the U.S. for a fifth of its sales, fell 0.9 percent. Nippon Electric Glass Co. tumbled 9.3 percent after saying profit may fall by more than half. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. slid after a report the shipping lines may post losses amid falling cargo rates. Mitsubishi Electric Corp., which last week said it overcharged the government on contracts, dropped the most on the Nikkei 225 Stock Average.

“The U.S. growth number was below forecast and that’s a negative,” said Toshiyuki Kanayama, a market analyst at Tokyo- based Monex Group Inc. “The market looks overheated, so investors are likely to use the report as an excuse to sell.”

The Nikkei 225 fell 0.3 percent to 8,817.21 as of 10:17 a.m. in Tokyo, headed for a one-week low. The broader Topix (TPX) lost 0.1 percent to 760.44. The 25-day Toraku (TORAKU) index, an indicator of market momentum, exceeded 120 for a third consecutive day, a level that suggests the market may be poised to fall.

The Topix (TPX) has advanced 4.4 percent this year, rebounding from last year’s 19 percent drop, amid signs the U.S. economy is improving. Shares on the index trade for an average of 0.9 times book value, compared with 2.2 times for the Standard & Poor’s 500 Index. A number less than one means that companies can be bought for less than value of their assets


Futures on the S&P 500 Index slipped 0.5 percent today. The gauge lost 0.2 percent in New York on Jan. 27 after a report showed U.S. gross domestic product, the value of all goods and services produced, expanded less than analysts forecast.

Sony lost 0.9 percent to 1,402 yen. Kyocera Corp. (6971), an electronic components maker that derives more than half of its sales outside Japan, slipped 1.5 percent to 6,400 yen.

The world’s biggest economy grew at a 2.8 percent annualized rate in the three months through December, compared with a forecast for a 3 percent increase. Growth accelerated from 1.8 percent in the previous quarter.

European Union leaders gather today in Brussels for their first summit of 2012 where they will put the finishing touches on a German-led deficit-control treaty and endorse a 500 billion-euro ($661 billion) rescue fund to be set up this year.

Greek Debt Deal

Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.

Glass makers declined the most among the Topix’s 33 industry groups. Nippon Electric Glass tumbled 9.3 percent to 675 yen after forecasting profit may fall by at least 54 percent to 31.5 billion yen ($410 million) for this fiscal year on slumping glass demand.

Shipping companies also declined after the Nikkei newspaper reported Japan’s three largest lines may post pretax losses for the year ending March as sluggish demand in Europe and Asia pushes down cargo fees. Nippon Yusen, the country’s biggest shipper, slipped 1.5 percent to 192 yen. Mitsui O.S.K. lost 2.1 percent to 285 yen and Kawasaki Kisen Kaisha Ltd. fell 1.4 percent to 142 yen.

Mitsubishi Electric dropped the most on the Nikkei 225 (NKY) after Japan barred it from bidding on projects until it refunds the government for overcharges. The company, which makes satellites equipment and electronics, last week said it billed the government too much on aerospace and defense contracts. The stock fell 12 percent to 670 yen.

To contact the reporters on this story: Norie Kuboyama in Tokyo at; Masaaki Iwamoto in Tokyo at

To contact the editor responsible for this story: Nick Gentle at


QE3 ‘Very Good’ for Emerging Stocks: Mobius

By Jennifer Tan and Weiyi Lim - Jan 30, 2012 6:57 AM GMT+0700

Emerging market stocks would benefit from the cash injection created by a third round of U.S. asset purchases, with China, Russia and Taiwan looking “attractive,” Templeton Asset Management’s Mark Mobius said.

Federal Reserve Chairman Ben S. Bernanke laid the groundwork last week for a third round of so-called quantitative easing, or QE3, saying that the Fed is prepared for further “accommodation.” The central bank, which bought $2.3 trillion of debt as part of QE1 and QE2, also reiterated a commitment to keep rates low until at least 2014.

“QE3 is very, very good for emerging markets because it means there’s lots of cash in the system,” Mobius, who oversees about $40 billion as executive chairman of Templeton’s emerging markets group, said in a phone interview from Bangkok on Jan. 27. “I would expect more institutional flows into stocks, generally, and of course, emerging markets as well.”

Chinese stocks will “probably see a rally” this week after being closed last week for the Lunar New Year holiday, said Mobius, 75. “There’s no question” China will continue to loosen monetary policy and he recommends consumer, energy and commodity stocks in the country, he said.

The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong rose 2.7 percent on Jan. 26 and Jan. 27, after closing for the first three days of the week. The benchmark Shanghai Composite Index (SHCOMP) has climbed 5.4 percent this year on speculation slowing Chinese growth will prompt the central bank to further relax monetary policy and that the government will take measures to support stocks.

Predicted Gains

The People’s Bank of China lowered lenders’ reserve- requirement ratios in December for the first time since 2008 as inflation slowed to a 15-month low. China’s economy grew 8.9 percent last quarter, below 9 percent for the first time since the middle of 2009, official data show.

Mobius predicted gains in emerging markets in March 2009, when he told Bloomberg Television that developing-nation equities are building the base for the next “bull-market” rally. The MSCI Emerging Markets Index (MXEF) more than doubled from its lows that month to its peak in May 2011.

The measure has risen 11 percent in 2012, after tumbling 20 percent last year. Shares on the emerging-market index trade at 10.1 times estimated earnings, less than the 12 daily average over the past four years.

‘Rallies Should Continue’

Valuations in developing nation stocks are “attractive, almost globally,” Mobius said. He said “rallies should continue” as markets have “already anticipated” a global economic slowdown.

The International Monetary Fund cut its forecast for global economic growth this year on Jan. 24 to 3.3 percent from a September estimate of 4 percent, citing a European recession and slowing expansion in China and India. Growth in 2013 will be 3.9 percent, less than the previous projection of 4.5 percent, the IMF said.

Mobius joined Templeton in 1987 to help oversee emerging- market investments, according to a biography posted on the company’s website.

In addition to China, Mobius said equity markets in Taiwan and Russia are “attractive.” Templeton also likes Indonesia and smaller countries including Vietnam, including Cambodia, Laos, Nigeria and Kazakhstan, according to Mobius.

“Emerging markets, even this year, are growing at four times that of developed countries,” he said.

To contact the reporters on this story: Jennifer Tan in Singapore at; Weiyi Lim in Singapore at

To contact the editors responsible for this story: Grant Clark at; Darren Boey at


Asian Stocks Swing Between Gains, Losses on Europe Summit, Japan Earnings

By Jonathan Burgos - Jan 30, 2012 8:32 AM GMT+0700
Enlarge image Asian Stocks Fall Ahead of Europe Summit

The MSCI Asia Pacific Index decreased 0.2 percent to 122.74 as of 9:47 a.m. in Tokyo, heading for its first drop in four days. Photographer: Kiyoshi Ota/Bloomberg

Jan. 30 (Bloomberg) -- Vasu Menon, vice-president of wealth management at Oversea-Chinese Banking Corp., talks about U.S. and Asian stocks. Menon also discusses Europe's sovereign debt crisis, the U.S. economy, and People's Bank of China monetary policy. He speaks from Singapore with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks swung between gains and losses ahead of a European summit on the region’s debt crisis and after the U.S. economy expanded less than forecast in the fourth quarter.

James Hardie Industries SE (JHX), a building materials supplier that counts the U.S. as its biggest market, fell 1.5 percent in Sydney. Mitsubishi Electric Corp., a maker of industrial machinery and home appliances, slumped 12 percent in Tokyo after admitting it overcharged the government for some defense and aerospace contracts. Advantest Corp., a maker of memory-chip testers, jumped 9.8 percent after doubling its second-half dividend payout.

The MSCI Asia Pacific Index (MXAP) slipped 0.1 percent to 122.95 as of 10:31 a.m. in Tokyo, having swung between gains and losses at least three times. The measure has risen the past six weeks, the longest streak since a seven-week stretch that ended Oct. 15, 2010, amid bets China will ease lending curbs and signs the U.S. economy is improving and Europe is containing the region’s debts crisis.

“I don’t expect the rally to be sustainable,” said Pauline Dan, who helps oversee $480 million as chief investment officer at Samsung Asset Management in Hong Kong. “There will still be volatility. I don’t think we’ve seen the worst of the European situation.”

European Union leaders gather today for their first summit of 2012 as a deteriorating economy and struggle to complete a Greek debt writeoff risk sidetracking efforts to stamp out the financial crisis.

To contact the reporter on this story: Jonathan Burgos in Singapore at

To contact the editor responsible for this story: Nick Gentle at


ABB Nears Deal for Thomas & Betts for About $4B

By Zachary R. Mider - Jan 30, 2012 7:00 AM GMT+0700

ABB Ltd. (ABBN), the world’s largest provider of power-transmission gear, is nearing an agreement to buy Thomas & Betts Corp., a maker of electrical connectors, for about $4 billion in cash, a person with knowledge of the plan said.

ABB, based in Zurich, may announce a deal as soon as today, said the person, who spoke on condition of anonymity because the negotiations are private. The talks for Thomas & Betts, whose market value was $3.02 billion based on its Jan. 27 closing price of $57.95 a share, may still break down.

Thomas & Betts, based in Memphis, Tennessee, would be the second large acquisition for ABB under Chief Executive Officer Joe Hogan, who joined in 2008 from General Electric Co. (GE) He bolstered ABB in the U.S. with the January 2011 purchase of Baldor Electric Co. for about $3.1 billion. That deal added industrial motors and drives and gave ABB heft in automation, where it competes with Siemens AG. (SIE)

Spokespeople for ABB in Zurich didn’t respond to messages seeking comment yesterday. A phone message at the office of Tricia Bergeron, an investor relations representative for Thomas & Betts, wasn’t answered. The Wall Street Journal reported the talks yesterday, citing unidentified people familiar with the situation.

Thomas & Betts was founded in 1898 as a sales agency for electrical wires and raceways, and its products are used in the telecommunications, construction and power utility industries. Now it makes cable ties, connectors and steel boxes that house electrical wiring, generating 2010 sales of $2 billion.


The shares of Thomas & Betts have climbed by more than half since August. They haven’t returned to the record closing high of $64 set in 1998.

At the Jan. 27 price of $57.95, Thomas & Betts traded at about 15 times analysts’ estimates for 2012 profit, data compiled by Bloomberg show, up from as little as 10 times in September. Electrical equipment makers Hubbell Inc. and Amphenol Corp. fetch multiples of about 15 times and 16 times forward earnings respectively, the data show.

Thomas & Betts is scheduled to release its fourth-quarter earnings report today. For 2010, the company said industrial and construction customers accounted for about 76 percent of its sales, with utilities making up the rest. The U.S. and Canada generated about 81 percent of its sales.

ABB was created in 1988 from the combination of Asea AB of Sweden and Switzerland’s BBC Brown Boveri. Investor AB, the Swedish Wallenberg family’s holding company, remains ABB’s largest shareholder, with a stake of about 7.2 percent, data compiled by Bloomberg show.

Hogan Builds ABB

ABB and Munich-based Siemens compete in areas such as factory automation gear and power-transmission equipment. ABB, which posts fourth-quarter earnings Feb. 16, had revenue of about $32 billion in 2010, with power products making up about 27 percent of sales.

Hogan has vowed to pursue “disciplined” acquisition opportunities across all business areas and geographies, and he has proven that he is willing to abandon a deal. In 2010, he walked away from a planned purchase of Chloride Group Ltd. after being outbid for the U.K. company by Emerson Electric Co. (EMR)

Hogan has made the Americas one of his main regions in which to pursue growth in power systems, discrete automation and low-voltage products. By 2015, ABB wants to generate as much as 30 percent of revenue from the region, compared with 19 percent in 2010. The company has said that it will continue to focus on power and automation and doesn’t intend to divest assets.

ABB has said purchases may boost annual sales growth by as much as 4 percent until 2015.

A purchase of Thomas & Betts would mark the second major deal announced by a Swiss company in less than a week. Roche Holding AG offered $5.7 billion on Jan. 25 in a hostile bid for Illumina Inc. to bolster sales of gene-mapping equipment.

To contact the reporter on this story: Zachary R. Mider in New York at

To contact the editor responsible for this story: Benedikt Kammel at


Strong Florida Finish Needed: Gingrich

By Michael C. Bender - Jan 30, 2012 2:07 AM GMT+0700

Republican presidential candidate Newt Gingrich said only a strong finish in Florida’s primary election will save his “totally unique” campaign.

With his campaign down to about $600,000 after his South Carolina primary victory, Gingrich said he trailed Mitt Romney among Florida voters who cast ballots early and he needs a large vote on election day to win the Jan. 31 primary.

“As fast as we’ve raised it, we’re spending it,” Gingrich said in an interview. Later on ABC’s “This Week” program, he predicted the contest for the Republican presidential nomination would continue until the party’s national convention in August, saying that conservatives will decide they don’t want a “Massachusetts liberal” to be the nominee.

Romney, a former Massachusetts governor who has estimated his personal fortune at between $150 million and $200 million, has “unending amounts of money,” Gingrich said, while questioning the enthusiasm voters have shown for his rival.

“He always relied on just sheer machinery,” Gingrich said of Romney. “He has no message. There is no reason for a Romney presidency.”

Romney Poll Lead

Romney led Gingrich, a former U.S. House speaker, by 42 percent to 27 percent among likely Republican primary voters, according to an NBC News-Marist poll released today. The survey of 682 likely Republican voters was conducted Jan. 25-27 and had a margin of error of 3.8 percent.

Gingrich’s 12 percentage point victory in South Carolina Jan. 21 initially translated into large audiences for the candidate in Florida. Those audiences have dwindled, including a group of about 70 at an Orlando town hall that was planned in a theater with triple the capacity.

Gingrich said he needs to carry about 52 percent of the vote on election day to compensate for Romney’s edge in early voting and absentee ballots.

“We’re like Apple as compared to Microsoft,” Gingrich said of his and Romney’s campaign. “We’re very agile, we’re very organic, we’re very innovative,” Gingrich said. “And every once in a while we fray at the edges.”

Romney told voters in Naples today that Gingrich’s sinking fortunes in Florida stemmed from the fact that he worked for Freddie Mac, the federally tied home mortgage company, unpopular in a state that has been the site of one-quarter of the nation’s foreclosures.

Florida Housing Market

“The people of Florida have had enough of Freddie Mac and Fannie Mae and government interference” in the housing market, Romney said at a rally at a square in the city’s upscale downtown, surrounded by boutiques, restaurants and palm trees.

“Mr. Speaker, your problem in Florida is not that the audience is too quiet or too loud,” Romney said in a reference to lackluster debate performances by Gingrich last week, which the former speaker later attributed in part to the responses of attendees. “Your problem in Florida is you worked for Freddie Mac at a time that Freddie Mac was not doing the right thing for the American people.”

Santorum’s Daughter

As Gingrich and Romney fanned out across the state, former U.S. Senator Rick Santorum, who is running third in recent polls, was at home in Pennsylvania, where his daughter Isabella’s admission to a hospital in Philadelphia forced the cancellation of his Sunday morning events. Santorum’s campaign said in a statement he would “resume the campaign schedule as soon as possible.”

U.S. Representative Ron Paul of Texas isn’t campaigning in Florida, instead focusing on Maine, which will caucus in late February. Paul said today on CNN’s “State of the Union” program the state is “a real good place for us to break through” and that the ups and downs of the nominating contest so far show the race remains up for grabs.

“The rough road is competing with, you know, establishment money, the big money,” Paul said. “It’s a money game. And I think that’s one of the things that frustrates a lot of people.”

Asked to name the best-run national campaigns he’d seen or been a part of, Gingrich first named President Barack Obama’s primary campaign in 2008. He added Richard Nixon’s in 1972, with the exception of the Watergate scandal, Ronald Reagan’s in 1984 and George H.W. Bush’s in 1988.

Gingrich refused to compare his campaign with those.

‘Unique’ Campaign

“I’m totally unique,” Gingrich said. “My campaign resembles nothing that has ever been run. It’s a very idea- oriented, Internet-based, constantly-evolving,” he said. “It’s organic.”

“Every week we absorb new energy, new people and we figure out five new things,” he said. “It’s the most exciting thing I’ve ever done.”

Gingrich offered an explanation for his performance in two nationally televised debates during the week leading to Florida’s primary vote.

“I went into those two debates with one big goal: I didn’t want to get mad enough to lose my poise,” Gingrich said. “I felt that the Romney people had a very deliberate strategy. They’d all been talking about my temperament and they were looking for an excuse.”

Gingrich’s Discipline

“So I just wanted to be very calm no matter what,” he said. “I spent a lot of my energy just staying disciplined.”

If he appeared tired, he said, he was simply “staring in amazement” at Romney in debate.

“I’m standing there thinking to myself, ‘You think you can lie your way to the presidency? You think it’s possible in America today, even to be this dishonest?’” Gingrich said.

Gingrich said he held a conference call with his campaign team at 11:15 p.m. after the second debate on Jan. 26.

“By the next morning we had an ad up that begins to demonstrate and you’re going to see more stuff like this,” Gingrich said. “We’re going to demonstrate again and again this is not a man who can be honest, because if he is honest his campaign is over.”

To contact the reporter on this story: Michael Bender in Tampa, Florida, at

To contact the editor responsible for this story: Mark Silva at


Sarkozy: Euro Crisis Stabilizing After Response

By Helene Fouquet and Mark Deen - Jan 30, 2012 2:50 AM GMT+0700

French President Nicolas Sarkozy said the euro-region’s financial crisis is stabilizing thanks to measures taken by European leaders.

“We can say -- with caution -- that we see elements of financial stability in France, in Europe and in the world,” Sarkozy said in a nationally televised interview in Paris today. “Europe is no longer at the edge of the cliff.”

The comments came on the eve of a European Union summit in Brussels where where leaders are set to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year.

Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in debt holdings.

Efforts to hold the 17-member euro area together come against a deteriorating economic outlook, with the euro economy set to contract by 0.5 percent this year, according to the median of 19 economist forecasts compiled by Bloomberg.

To contact the reporters on this story: Helene Fouquet in Paris at; Mark Deen in Paris at

To contact the editor responsible for this story: James Hertling at


Greek Debt Talks Risk Derailing EU Summit Plan

By Patrick Donahue - Jan 30, 2012 6:01 AM GMT+0700

European Union leaders gather for their first summit of 2012 as a deteriorating economy and struggle to complete a Greek debt writeoff risk sidetracking efforts to stamp out the financial crisis.

EU chiefs arrive in Brussels about 2 p.m. today to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year. Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.

Efforts to hold the 17-member euro area together with bolstered fiscal rules and a stronger firewall are colliding with stalled progress in Greece, where the crisis began in 2009. To prevent a financial collapse, Greek bondholders have been pushed to cede more ground after agreeing in October to take a 50 percent cut in the face value of more than 200 billion euros ($263 billion) of debt.

“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” U.K. Chancellor of the Exchequer George Osborne said at the World Economic Forum in Davos, Switzerland.

The summit follows warnings at the gathering that ended yesterday in Davos that it’s time to end the region’s debt crisis and that measures aimed at simply containing the turmoil are no longer enough. The euro economy is set to contract by 0.5 percent this year, according to the median of 19 economist forecasts compiled by Bloomberg.

ECB Loans

The European Central Bank’s unlimited three-year loans to banks have helped buoy sentiment among investors in the euro area. Italian 10-year bonds gained for a third week, while Spanish two-year yields dropped to the lowest since November 2010. The euro gained against the U.S. dollar every day last week, climbing 2.2 percent to $1.322.

“We can say -- with caution -- that we see elements of financial stability in France, in Europe and in the world,” French President Nicolas Sarkozy said in a nationally televised interview in Paris yesterday. “Europe is no longer at the edge of the cliff.”

Attention before the Brussels summit turned to negotiations between the interim government of Greek Prime Minister Lucas Papademos and creditors. The two sides were “close” to an agreement outlined by Luxembourg Prime Minister Jean-Claude Juncker, the Institute of International Finance, negotiating on behalf of private creditors, said in a Jan. 28 statement after three days of talks in Athens.

Debt Swap

Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet. As recently as Jan. 23, creditors wanted an average coupon of about 4.25 percent, two people familiar with the talks said then. That offer equated to a loss of about 69 percent on the net-present value of Greek debt.

The initial debt-swap agreement with creditors three months ago sought to scale back Greece’s debt to 120 percent of gross domestic product by 2020. The anticipated agreement on private sector involvement, or PSI, will open the way to a 130 billion- euro second bailout from Greece’s European partners and the International Monetary Fund for the country, which faces a 14.5 billion-euro bond payment March 20.

‘Last Minute’

“A deal on PSI will be reached at the last minute,” Niall Ferguson, a professor of economic history at Harvard University, said in a Davos interview. “The trouble for Europe is the crisis won’t be over as the Greek position remains unsustainable. Any PSI deal will bring only temporary respite.”

Greece now requires 145 billion euros for the second bailout, 15 billion euros more than was agreed in October, Der Spiegel reported Jan. 28, citing an unidentified official from the troika in Greece.

As a possible condition of the bailout, European policy makers are discussing plans to directly intervene in Greek budget decisions as the country struggles to cut its deficit, according to two euro-region government officials.

Patience with Greece “is really coming close to the limit,” Philipp Roesler, chief of Germany’s Free Democratic Party, the junior coalition partner. “Time is running out. There can only be additional help if the Greek government carries out the necessary reforms.”

U.K. Refusal

Another objective at the summit will be to complete a fiscal compact, which was negotiated in December in talks that exposed a rift in the EU after the U.K. refused to participate. The rules aim to provide stricter sanctions and closer cooperation on national budgets.

A call by Poland, the biggest country with aspirations to joint the single currency, to take part in euro-area decision- making looms as the main obstacle to the deal, two officials said. Poland’s plea to take part in euro summits is opposed by a group led by France, which aims to turn the 17-nation monetary union into an exclusive policymaking club.

“We’re willing to put our signature to the pact, but on the understanding that we’re taking part in it only if we have a voice in deciding about future action, including of the euro group,” Polish Prime Minister Donald Tusk said on Jan. 27.

Over the weekend, senior officials worked to clear away lesser snags to the treaty, including the role of national parliaments and the ratification threshold. A draft last week foresaw the treaty taking effect after ratification by 12 of the 17 euro countries.

EU leaders plan to endorse the statutes of the permanent bailout fund, the European Stability Mechanism, to be signed in early February and sent to national parliaments to ratify. The ESM is scheduled to go into operation this year.

Leaders are unlikely to address mounting pressure to raise the ceiling on rescue lending from 500 billion euros once the permanent goes online, the officials said.

To contact the reporter on this story: Patrick Donahue in Berlin at

To contact the editor responsible for this story: James Hertling at