Financial life in a big town

Investors kept pressure on Portugal and Spain Thursday, as fears that they could be the European debt crisis’ next victims pushed borrowing costs near record levels.

Yields on Portugal’s 10-year bonds hovered about 7 percent, just shy of the highs first reached earlier this month, when jitters about Ireland’s need for a bailout raised pressure on other heavily indebted countries.

The yield on equivalent bonds in Spain _ seen as vulnerable if Portugal needs a bailout _ rose to 5.2 percent Thursday, near euro-era records last touched in 2002, from about 5.1 percent Wednesday.

By contrast, the yield on Germany’s 10-year bonds, a benchmark of global lending safety, stood at only 2.7 percent.

The high borrowing rates reflect market uncertainty about the countries’ ability to pay off debts amid an economic downturn and as the bailouts for Greece and Ireland failed to quell fears that other countries will need help. Markets demand a higher return on bonds issued by countries seen as a risky investment.

The rise in yields also threatened to cause trading losses at foreign banks and pension funds that hold Portuguese and Spanish debt, because the value of bond holdings falls as the yields rise.

French banks were the most exposed to Portugal’s public debt as of the end of the first quarter, holding $20.4 billion (euro15.3 billion), according to a report by the Bank for International Settlements, based in Basel, Switzerland.

Spanish banks held $10.6 billion and Germany’s $9.9 billion, from a total of $62.9 billion.

French banks were also most exposed to Spain’s public debt, holding $46.9 billion, while German banks held $30 billion out of a total $128 billion, according to the BIS figures.

Shares in BNP Paribas, France’s largest commercial and investment bank, were down 1.8 percent on Thursday, reflecting worries of its exposure. However, analysts say that Europe’s main banks have enough capital buffers to withstand a drop in the value of their bond holdings, as they did when Greece’s debt markets plummeted earlier this year.

Government default or restructuring of the public debt, which did not happen in either the Greek or Irish rescues, has been ruled out by European officials, who set up a euro750 billion ($1 trillion) backstop to plug holes in public finances. Germany is pushing for investors to start taking losses in bailouts from 2013.

Portugal’s government insists it won’t need international financial assistance to dig itself out of debt. Its austerity measures for 2011 are due to be passed by Parliament on Friday, clearing the way for tax hikes, public sector pay cuts and lower welfare benefits from Jan. 1.

Spain, meanwhile, is struggling to emerge from nearly two years of recession and has the highest unemployment rate in the eurozone, at 19.8 percent. It has also pushed through painful austerity measures to bring down its deficit.

Lisbon’s benchmark share index fell 0.5 percent in morning trading, continuing its downward trend of recent days despite a slight recovery on Wednesday.

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German business confidence probably eased from a three-and-a-half-year high in November after economic growth slowed from a record pace and Europe’s sovereign debt crisis clouded the outlook.

The Ifo institute will say its business climate index, based on a survey of 7,000 executives, fell to 107.5 from 107.6 in October, which was the highest since May 2007, according to the median of 42 forecasts in Bloomberg News survey. Ifo releases the report at 10 a.m. in Munich today.

German growth slowed to 0.7 percent in the third quarter from a record 2.3 percent in the second as the global recovery stuttered and debt-strapped euro-area nations cut spending, slackening demand for German exports. At the same time, falling unemployment is boosting private consumption in Europe’s largest economy, which the government’s council of economic advisors expects to expand 3.7 percent this year.

“Economic growth is very well balanced at the moment, driven not only by foreign trade but also domestic demand,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “However, we’ll see weaker growth around year-end as exports slow down.”

Ifo’s measure of executives’ expectations will decline to 104.7 from 105.1, the survey of economists shows. The gauge of the current situation will probably rise to 110.4 from 110.2. That would be the highest since March 2008.

Stocks Rally

Germany’s benchmark DAX stock index has gained 13 percent this year, compared with a decline of 6 percent in the Euro Stoxx 50 gauge of euro-area equities. German investor confidence rose for the first time in seven months in November as the economy powered ahead of its euro-area neighbors.

Unemployment fell below the three-million mark in October to the lowest in 18 years as companies stepped up hiring to meet foreign demand for goods including cars and machinery, supporting private consumption.

Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz, the world’s two largest makers of luxury autos, will shorten Christmas breaks at their factories because of surging demand for new models. “Production capacity is the limiting factor at the moment,” Michael Rebstock, a spokesman for BMW, said in a phone interview this week.

Euro-area governments’ efforts to rein in ballooning budget deficits may still damp German growth. Ireland this week became the second euro nation after Greece to seek a bailout from the European Union and International Monetary Fund, and investors are speculating Portugal could be next.

German factory orders unexpectedly dropped in September, led by a slump in euro-area demand for investment goods, and industrial production also fell.

“Looking forward, we won’t go ahead with the same pace as we had in the second quarter, which was exceptional,” said Juergen Michels, chief euro-area economist at Citigroup Inc. in London. “But it is likely to be decent growth by German standards.”

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A council of U.S. regulators charged with preventing another financial crisis is starting to consider which clearinghouses and exchanges are systemically important and require additional oversight.

The Financial Stability Oversight Council voted at a meeting in Washington today to request public comment on how it should designate such firms for Federal Reserve supervision. The council, which is led by Treasury Secretary Timothy F. Geithner and includes Fed Chairman Ben S. Bernanke, is also analyzing which non-bank financial companies could pose a potential risk to economic stability. It will propose a rule in January guiding that process, Geithner said.

Imposing “higher, more consistent standards” on clearing activities is crucial for “a more resilient, more robust financial system,” Geithner said during the meeting at the Treasury Department easy payday loans.

The Dodd-Frank financial overhaul law, which created the council, aims to stem systemic risk by requiring that most interest-rate, credit-default and other swaps be processed by clearinghouses after being traded on exchanges or swap-execution facilities. Clearinghouses are privately owned third parties that guarantee transactions and keep track of collateral and margin.

Regulators are revamping oversight of the $583 trillion over-the-counter derivatives market after largely unregulated trading emerged as a central reason for the 2008 financial crisis.

The group won’t begin designating specific companies until after the first quarter of 2011, according to the council’s web page.

Gary Gensler, chairman of the Commodity Futures Trading Commission and a member of the council, told Congress in September that “some small handful” of clearinghouses would likely be considered systemically important by the council.

Atlanta-based Intercontinental Exchange Inc.’s ICE Trust is the world’s largest credit-default swap clearinghouse. LCH.Clearnet Group Ltd., based in London, is the biggest interest-rate swap clearinghouse. Chicago-based CME Group Inc., the world’s largest futures exchange, guarantees credit default and interest-rate swaps with its clearinghouse.

“Certainly clearinghouses are systemically important,” Craig Pirrong, a University of Houston finance professor who studies derivatives-trading, said in an interview yesterday instant payday loan no faxing. “If a swaps or futures clearinghouse failed, it would be in many respects equivalent to a large bank failing. It can be a channel of contagion.”

U.S. bank holding companies with more than $50 billion in assets — about 35 in all, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Goldman Sachs — will automatically be designated systemically important.

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The pace of the U.S. economic recovery will remain steady but slow in the face of persistently high unemployment and heavy debt burdens, according to a new survey.

The National Association for Business Economics survey, set to be released Monday, found economists now expect growth of 2.7 percent this year, up slightly from the previous forecast of 2.6 percent.

For 2011, the group still expects an economic expansion of 2.6 percent.

The likelihood of either stagflation or relapse into recession was seen as low. But high unemployment, debt and severe loss of wealth are expected to hamper a more robust rebound, according to the survey

“Confidence in the expansion’s durability is intact, but panelists remain concerned about high levels of federal debt, a continuing high level of unemployment, increased business regulation, and rising commodity prices,” said Richard Wobbekind, president of NABE and an associate dean of the Leeds School of Business at the University of Colorado. “

The 51 members surveyed by the group said they also expect consumer spending to remain modest, with this year’s holiday retail sales expected to rise just 2.5 percent from last year.

Meanwhile, the number of jobs employers add to their payrolls is forecast to average less than 150,000 a month before picking up in the latter half of next year. The unemployment rate is expected to remain elevated at 9.5 percent or higher through early next year. It’s expected to ease only slightly to 9.2 percent by the end of 2011.

That would mark the weakest post-recession job recovery on record, the group said.

The outlook on housing also remained tepid, with the group scaling back its expectations for housing starts this year to 720,000, from its forecast of 750,000 last month.

The bright spot in the survey was business spending, with sustained, double-digit growth projected through the end of next year. Spending on structures is now expected to grow 1.8 percent in 2011. That’s still weak, but better than the previous forecast of 0.2 percent contraction.

NABE panelists also said they expect the federal funds rate to remain near zero until late next year. The 10-year Treasury note is now expected to yield 3.25 percent by the end of 2011, compared with the 3.75 percent forecast last month.

The survey was taken between Oc.t 21 and Nov. 4.

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Former Toronto stock broker George Georgiou was sentenced to 25 years in prison by a Philadelphia judge on Friday for his role in an international, multi-million dollar stock scam.

Georgiou, 40, was also ordered to pay $55-million in restitution for the fraud, which involved Canada, the U.S. and the Caribbean.

The money mover, who was banned from trading stocks in Canada between 1995 and 2005, had faced a maximum sentence of 165 years after being convicted in February of conspiracy, securities fraud and wire fraud.

His trial heard that he’s connected through business deals to Fercan Developments of Toronto.

Fercan owns the former Molson Brewery on Highway 400 in Barrie, which was the site of a massive marijuana grow-operation.

In Philadelphia, Georgiou was held in custody pending sentencing after he unsuccessfully argued that he should be allowed to live with a Philadelphia priest and be subject to GPS monitoring, at his own expense.

Prosecutors argued that Georgiou is connected to organized crime figures – including some in the GTA - and represents a danger to society payday loans.

Prosecutors cited threats that Georgiou made to one of their witnesses, former stock scammer Kevin Waltzer. Those threats included a statement that Waltzer should "sleep with one eye open" and that it would be easier to "get someone’s legs broken" in New York than it would be in Canada.

Court heard that, at one point, Georgiou suggested a business meeting in a hot tub, so that his comments couldn’t be secretly recorded. The hot tub meeting never took places and his comments were secretly recorded by police.

The prosecution argued that he illegally manipulated the stock values of four companies: Neutron Enterprises Inc., Avicena Group Inc., Northern Ethanol Inc. and Hydrogen Hybrid Technologies Inc.

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Irish officials and experts from the European Union and International Monetary Fund are working through the weekend in Dublin, racing to finish an aid agreement amid pressure to act before markets tumble.

Allied Irish Banks Plc, Ireland’s second-biggest bank, emphasized the fragility of the financial system yesterday, reporting a 17 percent decline in deposits this year. IMF Managing Director Dominique Strauss-Kahn said Europe is moving “too slowly” to resolve the sovereign debt crisis that began in Greece.

The deposit outflow at Allied Irish “looks grim,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “It underscores the urgency in the situation and need to reach a resolution. A big package is needed to reassure the markets.”

The aid talks began two days ago after a meeting of EU finance ministers urged Ireland to agree to a package within days. The plan, which will focus on a banking sector reeling from the 2008 property crash, may total as much as 100 billion euros ($136 billion), according to Barclays Capital.

Investors dumped Irish bonds this month on concern about the nation’s ability to keep its financial system afloat, forcing Prime Minister Brian Cowen to abandon a refusal to seek assistance. Finance Minister Brian Lenihan said on Nov. 18 that it was clear the country would need aid as the banks had become “unmanageable.”

The premium that investors demand to hold Irish 10-year bonds over the benchmark German bonds rose 3 basis points yesterday to 544 basis points. The spread, a measure of the risk of investing in Irish debt, declined from a record 646 basis points on Nov. 11 as investors anticipated a rescue.

Cowen Campaigns

As talks proceed, Cowen will campaign in Donegal in northwest Ireland before a Nov. 25 election to fill a vacant parliamentary seat. The vote threatens to erode Cowen’s majority. He has the support of 82 lawmakers, including independents, compared with 79 for the combined opposition.

Lenihan said this week he would welcome the creation of “substantial contingency capital funding” for Irish banks as Irish officials said they’d resist any demand by the EU to raise revenue by increasing a 12.5 percent corporate tax rate.

A 2011 budget, due for release on Dec. 7, may placate investors concerned over a budget deficit that will be about 12 percent of gross domestic product this year, or 32 percent when the costs of the banking rescue are included.

Irish lenders have become more reliant on European Central Bank funding after being frozen out of wholesale markets. The amount of ECB loans to the country’s banks rose 7.3 percent to 130 billion euros in October from the previous month.

Relying on ECB

Allied Irish has tripled its reliance on funding from central banks since the end of June as deposits fled. The bank’s dependence on “monetary authorities” rose to 27 billion euros from a “high single-digit” billion-euro amount on June 30, Alan Kelly, general manager of group corporate services at Allied Irish, said in a telephone interview yesterday.

Irish banks’ failure to wean themselves off the ECB lifeline prompted EU officials to step in, in an effort to halt the crisis before it spreads across the euro region.

“The current view seems to be if Ireland accepts bailout funds, at least for the banking sector, that might help fend off any move by the bond vigilantes to move onto Portugal,” said James Shugg, a London-based economist at Westpac Banking Corp.

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A resolution of the Irish debt crisis may shift the burden of speculation to Portugal.

While officials such as European Central Bank Vice President Vitor Constancio predict a bailout of Ireland will reduce financial pressures in the euro region, analysts from Citigroup Inc. and Nomura International Plc say any relief would be short-lived as investors turn their focus to the next-weakest peripheral nation.

The markets indicate that country is Portugal with 10-year bond yields of 6.89 percent, compared with 8.25 percent in Ireland and 11.67 percent in Greece, which received rescue funds in May from the European Union and International Monetary Fund. Portuguese Finance Minister Fernando Teixeira dos Santos said Nov. 15 that while “there is a risk of contagion,” that doesn’t mean the country will seek financial aid.

“Portugal isn’t in the situation that it is now because of Ireland,” said Steven Mansell, director of interest-rate strategy at Citigroup Global Markets Ltd. in London. “If Ireland reaches an agreement to tap the European Financial Stability Facility or some other mechanism to support its banking sector, I don’t think that will alleviate the pressure on Portugal.”

The government has forecast that economic growth in Portugal will slow to 0.2 percent in 2011 from an estimated 1.3 percent this year. Portugal has made less progress at taming its deficit than some of the other peripheral nations. In the first nine months, the central government’s deficit rose 2.3 percent from a year earlier. That compared with a decline of more than 40 percent in Spain and more than 30 percent in Greece.

Record Yields

While Portugal has no plans to sell more bonds this year, so-called market vigilantes drove up yields on its debt during the past month amid doubts about the country’s efforts to reduce the budget deficit. The 10-year yield reached a euro-era record of 7.25 percent on Nov. 11, 484 basis points higher than benchmark German bunds of similar maturity.

Portuguese 10-year yields are little changed this week, while Irish yields fell 12 basis points. The spread between the 10-year Portuguese bonds and German bunds rose 4 basis points today to 408.

Investors who push up yields to alter government policy are known as vigilantes, a term coined in 1984 by economist Edward Yardeni, president of Yardeni Investments Inc. in New York. They were credited with forcing Bill Clinton to cut the U.S. deficit after he came into office in 1993, helping drive 10-year Treasury yields down to about 4 percent by November 1998 from above 8 percent in 1994.

While Irish and Portuguese bonds probably would rise with a bailout agreement for Ireland, any gains wouldn’t change the underlying problems for peripheral Europe, according to Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank.

Greece Than Ireland

“Wait a few weeks and the markets will just go for someone else, with Portugal at the front of the queue,” London-based Diebel said. “The vigilantes pushed Ireland into the same situation Greece is in. Why would you conclude they won’t do the same to Portugal?”

Ireland’s debt crisis was triggered by the rising cost of bailing out the nation’s banks, including Anglo Irish Bank Corp. and Allied Irish Banks Plc. While Portugal doesn’t face a crisis in its financial industry, it has a larger debt burden and the country has almost 10 billion euros of debt that comes due during the first half of 2011, data compiled by Bloomberg show.

Teixeira dos Santos, the finance minister, said in parliament two days ago that Portugal wants to continue financing itself in the markets.

‘Significantly at Risk’

“Portugal needs more cash than Ireland does because they go to the market on a regular basis,” said Nick Firoozye, head of interest-rate strategy at Nomura in London. “The market may move onto Portugal at some point because it’s significantly at risk.”

While Ireland started to reduce spending in 2008, Portugal has been slower to address its fiscal deficit, the fourth- largest in the euro region, and the government failed to reach an agreement with its biggest opposition party on the 2011 budget plan until the end of last month.

Portugal has proposed to lower its total wage bill for public workers by 5 percent, freeze hiring and raise the so- called value-added tax by 2 percentage points to 23 percent.

The government is counting on exports such as paper and wood products to support expansion. Portugal’s economy unexpectedly grew 0.4 percent in the third quarter from the previous three months, beating economists’ estimates for a contraction, as exports rose and imports grew at a slower pace.

Still, the Organization for Economic Cooperation and Development yesterday forecast the economy will swing to a contraction of 0.2 percent next year.

“Their view on fiscal consolidation is still premised on an excessively-optimistic growth projection,” Citigroup’s Mansell said. “Portugal is hugely reliant on the fortunes of its neighbors and it takes a huge stretch of the imagination to see growth remaining buoyant.”

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The federal government has opened criminal investigations into approximately 50 executives and directors of U.S. banks that have collapsed during the financial crisis.

Deputy Inspector General Fred Gibson says the inspector general’s office at the Federal Deposit Insurance Corp. has been probing the role of the executives in bank failures around the country.

The criminal investigations are separate from civil lawsuits against some 80 bank executives, employees and directors. The lawsuits are seeking to recover about $2 billion and were authorized by the FDIC’s board.

The FDIC has shut down or seized 311 banks since January 2008 at a cost of around $77 billion. The criminal probes were reported earlier by The Wall Street Journal.

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Ireland was prodded by European Central Bank council member Miguel Angel Fernandez Ordonez to make a “final decision” on its fiscal crisis to calm markets as finance ministers prepare to discuss an aid plan.

“The situation in the markets in recent weeks has been very negative due in some way to the lack of a final decision by Ireland,” Ordonez told reporters today in Madrid. “It’s not me who should take a decision about Ireland, it’s Ireland that should take the right decision at the right moment.”

The comments by Spain’s central bank governor underscore pressure on Ireland to accept a bailout and help reverse a bond sell-off among the euro-region’s deficit-laden nations. Germany has pressed for Ireland to take aid before tomorrow’s ministers’ meeting in Brussels, according to a German government official.

Allaying investor concerns about Irish finances would help advance Chancellor Angela Merkel’s plan to require investors to help pay for future rescues, a German government official said. European leaders remain divided on Merkel’s proposal, the timing of a bailout for Ireland and whether the ECB should keep buying bonds of debt-laden countries.

“As long as European governments go back and forth, the markets won’t settle down,” said Marco Annunziata, chief economist at UniCredit Group in London. “We’re likely to see markets getting more nervous and worried about what is going on in Europe.”

The yield on Ireland’s 10-year notes fell 10 basis points to 8.263 percent at 10:30 a.m. in London. It has jumped more than 200 points in the past month. The euro weakened 0.4 percent to $1.3637.

Irish Banks

While Ireland says it doesn’t need to raise money until mid-2011, its banks, weakened by a property-market collapse, have grown increasingly reliant on the ECB as the country’s borrowing costs rise. Borrowing from the ECB by lenders in Ireland rose 7.3 percent to 130 billion euros as of Oct. 29, about 80 percent of gross domestic product.

A request for aid may total about 80 billion euros ($110 billion) between 2011 and 2013, according to Barclays Capital. French Finance Minister Christine Lagarde said today on France Info radio no aid request has been made.

Ireland’s Finance Minister Brian Lenihan may ask European counterparts in Brussels to consider allowing the nation’s banks tap the EU’s emergency fund, the Irish Independent said today , without citing anyone. The government is also considering bringing forward the announcement of next year’s budget, scheduled to be unveiled Dec. 7, by a week, the Dublin-based newspaper said.

Deposit Outflows

Allied Irish Banks Plc, the second-largest bank, is due to release a trading statement this week, where it may give details on its funding situation. Dublin-based Bank of Ireland Plc said last week its loan-to-deposit ratio rose to about 160 percent from 145 percent on June 30 after outflows from its capital- markets unit.

The premium that investors demand to hold Irish 10-year bonds over the benchmark German bonds was 556 basis points, compared to 563 points on Nov. 12 and a record 646 Nov. 11.

Irish officials had said as recently as yesterday lunchtime that a bailout wasn’t being considered. Seeking aid hasn’t been discussed by Irish Prime Minister Brian Cowen’s Cabinet, Enterprise Minister Batt O’Keeffe told broadcaster RTE, denying that there is a “crisis.”

Ireland is not going to give up its “hard-won” sovereignty, O’Keeffe said on RTE. The ruling Fianna Fail party grew out of the armed movement that opposed the treaty with Britain dividing Ireland in the 1920s.

Bond Slump

Bonds in Ireland, Portugal and Greece have plummeted since EU leaders agreed on Oct. 29 to draft a permanent crisis mechanism to replace the euro-rescue fund set up in May once its mandate expires in 2013 cash advance no fax. That prompted European finance chiefs to issue a statement at a Group of 20 summit in Seoul last week saying the plan being debated to have investors cover future bailout costs would have “no impact” on existing debt.

Ordonez said in the speech that “it should be hoped that an appropriate reaction on the part of the Irish authorities,” along with the statement from the G-20, will “help to calm the markets.”

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro finance ministers, said Nov. 12 there was “no immediate reason” to think Ireland will seek cash and that officials wouldn’t meet before the monthly talks in Brussels.

Jumping Yields

Yields on bonds of Spain and Portugal also jumped amid concern that fallout from Ireland would spread. The extra yield that investors demand to hold Portuguese 10-year bonds instead of German bunds climbed to a record 484 basis points on Nov. 11. Foreign Minister Luis Amado told Expresso magazine day earlier that the country’s membership of the euro could be at stake if the country fails to grapple with its deficit.

Greece’s spread was little changed at 887 basis points today. Revised figures from the EU’s statistics office today showed that Greece had the euro region’s largest budget deficit last year. It was changed to 15.4 percent of GDP from 13.6 percent. That surpassed Ireland’s 14.4 percent shortfall.

An Irish decision to seek financial help “is a purely political decision on the back of an assessment of the broader risk of the spread levels to economic and financial stability,” said Erik Nielsen, chief European economist at Goldman Sachs Group Inc. in London.

Bailout Cost

Bailing out Ireland’s financial system could cost as much as 50 billion euros under a “stress case” scenario compiled by the Finance Ministry and central bank. The country’s gross funding need for 2011 will be 23.5 billion euros, falling to 18.6 billion euros in 2014, the nation’s debt agency says.

“While the sovereign is fully funded through the first half of next year, consideration also has to be given to the banking situation,” Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin, said in an interview.

The International Monetary Fund stands ready to help Ireland if needed, Managing Director Dominique Strauss-Kahn said Nov. 13 in Yokohama, Japan.

“So far I haven’t received any kind of request,” he said. “If at one point in time, tomorrow, in two months or two years, the Irish want support from the IMF, we will be ready.”

In a Nov. 12 conference call of ECB officials, Ireland was pressed to seek outside help within days, a person briefed on the discussions said on condition of anonymity. Bundesbank President Axel Weber has called for ending the ECB’s emergency bond-buying program, which has benefited deficit-laden countries such as Ireland, Portugal and Greece.

Balance Sheet Damage

The risk for the ECB is that buying those bonds could eventually hurt the central bank’s balance sheet, damaging its independence.

Irish officials have indicated they hope the 2011 budget will placate markets as they try to cut a budget deficit which will be about 12 percent of gross domestic product this year, or 32 percent when the costs of the banking rescue are included. Lenihan’s plan includes 6 billion euros of spending cuts and tax increases next year.

“The ecofin meeting is crucial to resolving this,” O’Leary said. “There is every reason to be a standoff. It’s a big decision for Ireland to seek aid, with big consequences. On the other hand, Europe wants to nip the situation in the bud.”

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China’s four biggest state banks will not issue any new loans to property developers for the remainder of the year, the state-run China Real Estate Business reported, citing unidentified executives at the banks.

Industrial & Commercial Bank of China Ltd., China Construction Bank Corp, Bank of China Ltd. and Agricultural Bank of China Ltd., had met their allotted loan targets for the year, according to a copy of a report e-mailed to Bloomberg News by the newspaper today. Approvals of new loans had ceased since the end of October, the paper said.

Calls to each of the four banks were not answered. Bi Jianling, spokeswoman for the Ministry of Housing and Urban- rural Development, which operates the paper, said she could not confirm the story.

China’s new local-currency lending was 587.7 billion yuan ($89 billion) last month, a report from the central bank showed Nov. 11, more than the median 450 billion yuan forecast in a Bloomberg News survey of 25 economists. M2, the broadest measure of money supply, rose 19.3 percent from a year earlier, the central bank said.

China’s property prices rose at the slowest pace in 10 months in October after the government raised interest rates and expanded measures to limit the risk of asset bubbles in the world’s fastest-growing major economy. Measures to ease gains in prices included suspending mortgages for third-home purchases and a pledge to speed up trials of property taxes instant payday loan.

The central bank raised interest rates last month for the first time in three years and this month raised lenders’ reserve requirements as cash from October’s larger-than-forecast $27.1 billion trade surplus threatened to add to the risk of asset bubbles and accelerating inflation.

Inflation Gains

Consumer prices rose to the fastest pace in two years in October, building the case for the central bank to add to last month’s interest-rate increase. Consumer prices rose 4.4 percent from a year earlier, boosted by food costs, a statistics bureau report showed Nov. 10.

Policy makers may introduce more measures in the fourth quarter amid signs of a price recovery, according to Nomura Securities Co. The likely policies include a property tax and the enforcement of the so-called land added-value levy in the “overheated cities,” the brokerage said in a Nov. 4 report.

The introduction of a property tax may cause housing prices to drop between 15 percent and 20 percent, Citic Securities Co. said Nov. 3. The tax may affect economic growth by 0.48 to 0.64 percentage points by slowing real-estate investment, the brokerage said.

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