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(generated from captions) Live. Good morning. Welcome to

'Business Today' for Australian 'Business Today' for

network. I'm Whitney

Fitzsimmons. Coming up program - relief rallies,

stocks in the US stocks in the US and Europe

climb, after Greece approves

harsh spending cuts. Crucial step - Greek

legislation to avoid a default.

And strike anger - public on the Government over pension changes. Those stories coming

up shortly. First let's take a

quick look at the markets. local session will quick look at the markets. The

day soon. More on that in a

moment. region trade was moment. Yesterday around the

added 18 points. The Hong Kong the board. Japan's Nikkei

Hang Seng put on just over 1.5% and Australia's ASX 200 jumped

by one and three percent. An Wall Street overnight, all major upbeat, with the Dow rising by 1.25%, in Europe a picture, 1.25%, in Europe a similar making the most of gains there.

For more on market action joined by Christine Ip

will start soon. Bell Direct. The local session

to today? We're certainly going to see positive sentiment on today's session.

strong lead from the US, we'll see a

is the start of

statistics, the ASX 200 is up 8.4% for the year.

sectors driven by higher metal prices. The worst was worth a mention for the year is

Bathurst Resources. Bathurst Resources. This stock

wins an award for the best stock in the top 200. That's

up 606% for the year. new start and a positive start

is expected. We have crucial

China PMI numbers out this

how we end the session afternoon. That will determine

today. You mentioned today. You mentioned PMI

numbers out of China. What

else is on the agenda around

the region? In Japan, a

massive list of economic data

is due out this morning. We jobless rates and CPI, also jobless rates and CPI,

manufacturing outlook. We're

not expecting much change in not expecting much change

period. Of course in those numbers from the previous

period. Of course in focus is

that Chinese PMI for June. The

current reading is at 52 and

analysts are expecting a slight

pullback to 51.5. That will be

the crucial one out this morning for regional markets,

due out at 11 eastern standard

time. Christine, let's move to

the US now, can you tell us

what sectors will lead in the

gains there Once again gains One of the best performers were triple-digit gains for the Dow.

the industrials and tech

stocks. Cat pillar and both gaining close to 2% and stocks. Cat pillar and 3 M

helping to push the Dow to positive territory for the

quarter. US markets are

gaining for the fourth day in a

row and S&P 500 is sitting

comfortably past the 50-day

moving average. Volumes are

still very low, invest ors hope

the rally will build momentum.

We need volumes to pick up

disappointed with the gains on first.

the market after a lack-luster

quarter, gains across the board

for US . Let's move to Europe

for the second session in a now. Trade there posted a rise

row. Is that just relief after

the Greece decision? There was

a bit of a relief rally. The

Greek decision has laid the

path for financial aid. We saw

sentiment turn positive in

European markets.

Interestingly, we saw gains

#1350i9 a raft of disappointing

economic data, a surprise fall

unemployment came in under

expectations. Also UK consumer

confidence also disappointed.

Despite all that, European

stocks were mostly higher.

There was also a rebound on the

Euro following Hawkish comments

sigh of relief from investors from the ECB President. Huge

following that parliamentary

resolution in Greece and

positive across the board for

European stocks. Just before we

go, oil and gold, how are they

performing? O-I will is up to

two-week highs. That's up 0.7 Euro. Gold is lower for of a% thanks to

Euro. Gold is lower for the

first time in three sessions.

We are seeing risk back on the

be tables. That means there will

be less demand for the haven metals. So gold trading now

now just a touch above that

1,500 US an ounce. Christine,

for the update. we'll leave it there. Thanks

Whitney. Christine Ipp from for the update. Thanks

Bell direct there. We'll at what's happening with Bell direct there. We'll look

currencies and commodities now: Greece's parliament has

passed a second vote on passed a second vote on its

austerity program which is

crucial to securing the country

further financial support from

approved putting into practice the EU and International

the tax hikes, pay cuts and privatisations and public

sector redundancies, which had

been approved in principle the

day before. Though it had been anticipated, the vote to

approve Greece's austerity and

privatisation package still

came as a relief to other EU

members, who'd feareded a rout

in European financial markets

if the bill had been rejected.

The EU and International

Monetary Fund demanded that measures be implemented before

they extend further loans to

Athens. 9 newly appointed

Finance Minister said the deep

cuts to the public service and

selloff of major state assets was critical for Greece to overcome the severe financial

crisis it was facing. Before

the vote, Mr Ven slos offered

concessions on tax, quun of the most contentious parts of the

package. TRANSLATION: course we want to end the recession, measures

for social cohesion. When you

have to negotiate very hard and

in a weaker position because

you are the borrower, the one

asking for the help and support

under stringent deadlines

imposed by the fund, then you

have to move within the narrow

boundaries of balances of

power, which unfortunately are

not only political, but also

Greece will now receive $17 financial. The vote means financial. The vote

billion, effectively preventing

it from defaulting in mid-July or August. EU officials will or

sign off on the funding

lifeline on Sunday. And another development that's lifeline on Sunday. And in

reassured investors, Germany's banks, which hold around $14.5 billion in Greek bonds, billion in Greek bonds, have agreed to participate in the

second three-year wider bailout

that could cost up to $160

billion. . TRANSLATION: The

banks are prepared within the

framework of a concept that has

yet to be worked out in to make available again for

financing some invested in bonds expiring International Monetary Fund

welcomed the vote. A spokes

woman said it will contribute to restoring to restoring fiscal sustainability and safeguarding

financial sector stability. The Greek Government has bought time with its austerity time with its austerity plans, mainly on the basis the

alternatives would be even

worse. But a large section of the Greek population are

prepared to withstand, and

that's even before any of the

new measures take of the world's of the world's top systemic risk experts has warned risk experts has warned the

Greek debt crisis could still

send a shock through global

markets. New York university

he's Noble laureate Professor

Robert Engle says sentiment

remains fragile. If the financial institutions are

vulnerable, then any kind of a shock can lead to a systemic

event. It's a little like

there's gasoline and then

there's a spark and this makes

the whole things the whole things blow out. So

Greece is not a big event, but

if the financial institutions

of Europe and the western

economy are in a weak position,

then a small shock like Greece could have big effects. That's

New York university's Robert

Engle speaking there. To look

at how the tourm oil in Europe

is impacting I spoke to senior currency strategist with Oz

Fourex. Welcome to business today. Thanks for having me. The

me. The situation in Europe,

how damaging, or in Greece, how

damaging is it to the Euro overall? Certainly heading

into the austerity vote, we saw

the Euro sell off quite aggressively aggressively towards the 1.4

level against the Greenback. Since then we've seen a relief

rally in the markets and seen

the Euro strengthen back to

For the time being, the market seems

seems somewhat content with a

short-term measure, the fact

they've been able to push that

time horizon out

can down the road the term

being used. There is a lot of volatility there, though, as

you mentioned. Is this

obsession at preserving the

Euro, though, doing more damage

long term than any good? Certainly in terms of the real

economy in Europe, this

obsession, as you put it, is doing

financial system in Europe is

somewhat fragile. We have got

this exposure to Greek

Government bonds that's Government bonds that's been spread not just spread not just throughout

Europe but the rest of world as well. At the moment

the banks are in quite a

fragile situation. I guess we

saw news overnight saw news overnight with German

banks agreeing to roll over

some of that debt. The question will remain some of the other banks the other banks throughout

Europe and the world, will they

do the same. If we get some

larger banks deciding not to

extend that debt, not being

funds back and if the market's

indication of 85% chance of Greece defaulting on their debts over the next five debts over the next five years is any is any indication, it's likely

we may get some banks follow

Germany, but also others go

against that and not allow

Greece to roll over their

debt. In your view, as a

currency expert, do you think

the single currency model is

fundamentally flawed? There

are some issues with it.

Obviously it didn't really account account for exiting the

Euro. They should have had a

plan, shouldn't they, when they

introduced this system? They

should have, although it's not

unlikely they would not be able to to develop a plan that would

allow for an order ly exit. It

probably would rely on the ECB

in particular taking on some Euros and converting them back into drachma, for example, for Greece

Greece and having an orderly

exit of the Euro, which still

remains to be questioned. That

brings me to my next point. Do

you think we will in fact Greece return to the drachma?

They'd be better off,

wouldn't they? Some wouldn't they? Some people

agree they would be better off. At some point the reality have to come we can't afford have to come we can't afford to

pay this off, what do we do? I

don't think the market realises

how close they got this week to

facing that decision now and at some point they'll have to some point they'll have to bite

the bullet and make that tough

call. I think what is likely

to happen over the longer term,

probably three to five years

and the Euro itself, we're

likely to see the number of countries in the Euro currency

reduce and possibly a group of

possibly seven countries possibly seven countries as

opposed to 12 in there now. It's other point you mentioned was an exit strategy. What sort of form would that take if they need to go down

that road? If they needed to

go down that road, I think the first

first issue facing them, a

pertinent one at the moment, is

what they do with the Greek bonds issued

probably the first one. What

we'd like to see probably is ECB, although at the ECB, although at the moment this is in this is in question, whether they'd accept those bonds and take them take them on I think some of the funding

that will come Greece's way this week will help to some

degree, but the bigger question

is if they were to take the

bonds on board, what would ECB do with them. Let's look at the

effect this is having on other

currencies. Of course this has strengthened the Australian dollar. It hit a 26-year high

against the pound in response to

surprise to you? It surprise to you? It is

somewhat. Obviously the Aussie

dollar's rally against the greenback greenback helped that

cross-road as well. The pound

itself has under itself has been one of the most under performing currencies over the last week,

particularly against the

Greenback and Euro as well, obviously. Part of the story

is the pound weakness. is the pound weakness. We've seen the Bank of England keep

rates on hold, despite elevated

inflation in the UK, concerns

about contagion from peripheral

Europe in into the The pound has remained stagnant. So is the pike short

term, then? We think on the

cross rate that that

pound/Aussie rate which hit 67

pens is likely to remain

relatively well supported,

probably around 65 pence level, not necessarily because of the

Aussie dollar's strength, in part yes but more so also because of pound weakness. Are

currencies like the Australian

dollar still being driven

largely by risk things like commodity Certainly that appears the case this

week. We saw signs of the

dekubling previous week. This week with risk being a focus for the markets, that is

the case. The Aussie dollar

tends to follow the Euro, tends to follow the Euro, with

urto going up, that dragged the

Aussie dollar as well.

Obviously that link to commodities is also playing a

role. Since we're in the role. Since we're in the middle

of the jeer, I need to put you

ob the spot here. What's your

forecast for the next six

months with the Australian dollar The has been range bound between has been range bound between 1.04 and 1.10 in the last four

months. We see it moving back

to the 102 level. We don't to the 102 level. We don't see it moving back be low parity

any time soon. What does that

mean, what time frame is that?

23. We think that the broader

issues of risk sentiment and

also what's happening in Europe will eventually weigh on the Aussie dollar, but Aussie dollar, but not necessarily to the extent of have strong terms of trade

thanks to our position in Asia,

still our banks here very good financial situation and our

interest rates are relatively high compared. It's still an attractive attractive investment destination for global

investors. Having said that,

it's linked to risk appetite is

likely to see the Aussie dollar

drift lower. One other thing

before we let you go, the Yuan,

what do you see happening

there? Will China continue to slowly loosen its policy? Well, we've seen over the last 24 over the last 24 hours announce an increase to the tax threshold which is threshold which is somewhat

inflationary, which comes somewhat as a contradiction to economic policy we've seen out of China of China lately, quite stringently tightening reserve

ratios for banks and interest

rates in China, which are aimed to curb inflation. to curb inflation. That hasn't really transpired yet to

headline inflation, although we're seeing we're seeing manufacturing data

out of China today expected to show a picture, Chinese Yuan has

appreciated around 5% in appreciated around 5% in the

last year. We think, given

inflation pressures China is

facing and measures they're taking, they will allow the

Yuan to strengthen more than in

the last 12 months. We

the last 12 months. We could

see it strengthen somewhere

between 5 to 10% over the next

six to 12 months. Thank you,

Jim Vrondas. Thank you. teachers and civil servants

have taken part in a have taken part in a general strike in Britain strike in Britain protesting over proposed changes to

pensions. The Government wants

to reduce entitlements and

increase the eligible age increase the eligible age as

part of wider spending cuts

designed to designed to slash government

debt and reduce the budget deficit. In the schools, the

airports, courts and many other government offices, it's down

tools and strike. It's not

about wages, but pensions. The

Government wants to slash

entitlements and raise the pension age. Teachers especially are incensed. I'm

54 years old. This proposed

changes to pensions is going to

extend my working life to 66.

It's going to halve the pension

that I get and it's going to mean that if I die, my husband

will only get half of what will only get half of what he's due now. Pretty angry today?

Very angry. Yes. You know, I

think it's important that the

future - it's for the future

generations that we're doing

this, not just for ourselves. We're doing it for everybody. 234 London and many

other cities demonstrations

have already begun, despite

calls from Ministers to cross

picket lines, it appears up to three-quarters of a million

employees are on strike.

People are living longer, we

know that. So it's reasonable for people to expect

to work a bit longer before

they start drawing the pension,

which will still be among the

very best. Especially hard hit

are schools, a regrettable

consequence of a Government

that's not listening, to one union. Well, I say

several things to parents. One

is I am sorry they'll be inconvenienced, but

inconvenienced, but the point

is that if we have a significant worsening of

teachers pensions, our survey

shows fewer people will want to

come into teaching, it will be less attractive. But less attractive. But business operations fear strikes like

this mean the nation is a less

attractive proposition for prospective

prospective investors. If the

UK is perceived as a country

where we have a lot of public sector strikes, then I think investor confidence, perhaps in putting putting new business into the

UK, could be hit. What has been

hit are airports, as border

protection staff join the dispute, creating delays and disruptions. It's too early to

tell if this pressure will have any measurable effect on negotiations with the

Government. Earlier vilent

protests by students protesting

against a hike in fees had

little effect on the outcome

there. The Government says all

of this is unavoidable, the pensions

part of rebalancing an economy

hooked on debt. There are no rocks or petrol bombs being

thrown, but there are to what is happening in Greece.

At the core of it all are

public finances under severe strain and cuts being made and this the pushback for the

people affected. As beef producers in Northern producers in Northern Australia struggle because of the live

export ban, in the Red export ban, in the Red Center thinks have rarely looked better. last year has resulted in fat

and healthy cattle, which and healthy cattle, which went

under the hammer this week.

Buyers came from across Australia for Australia for the only major

local sale of the year, and the sales pitch was on. Done,

done. 181 cents. Prices steady done. 181 cents. Prices were

steady on last year, but well up on the past up on the past decade. The previous years we were previous years we were in severe drought, so it's a severe drought, so it's a nice feeling to be able to produce some fat some fat cattle and with really good muscle shape in good muscle shape in them. Some top end cattle would have gone

to Indonesia. Instead, they ended up in Alice Springs. Some sold, Some sold, others passed in.

Most of them sold and they sold to probably about the rate

that we hope they might sell

to. That was to. That was very good. The industry's keen not to talk

itself down, but central Australian farmers are feeling for their northern

counterparts. We're all in the industry together. We're all

trying to sell a product that wefz' with the Government offer to increase compensation tenfold.

Some affected northern

producers weren't impressed.

Not even a bandaid really, is

it? We certainly need it? We certainly need a lot

more done than that. Since live exports were suspended, the

industry has known it industry has known it would have a flow-on effect on southern markets. Today's sales sales were the first time that

effect has been apparent. We

are certainly seeing

readjustment in prices, which

could be in anticipation or as

a result directly of changes northern cattle. The hot topic

was when and how live exports

will resume, but industry

leaders weren't able to offer

any answers. Sydney has come up

with an ambitious plan to drastically cut its carbon

footprint. With the help of

the nation's biggest property

owners, Sydney is striving to

cut its pollution by nearly 75%

by 2030. She's well known for

her campaign to green the city. Now clover Now clover Moore has 60% of the

CBD behind her latest plan. It

has happened in London and it

has happened in Toronto and it

has been very effective, but

it's a first for it's a first for Australia. 14 companies owning more than $100

billion worth of property have

signed up. In a precinct-wide

partnership which targets electricity use, water and

waste. It's really good for the business community too,

because it's about reducing

costs, it's about

costs, it's about reducing emissions and about providing

new opportunities. It starts with an inner city electricity

plant known astry generation.

Using natural gas, the

underground station cannot only

power the precinct, but provide

heating and cooling as well.

By bringing the power station

closer to buildings, we can

extract energy not only to turn

it into electricity, we can extract thermal energy that has

the potential to be used in buildings. On top of

buildings. On top of that, they're retrofitting the city.

Shade systems are being installed using natural light,

not power. Solar panels being put up and a network of

recycled water and waste will

one day be piped around the

city. On the waterfront, significant consumers in CBD

buildings are still toilet

flushing and using flushing and using cooling

towers. We don't need to towers. We don't need to use

drinking water in those

services. If Sydney can do it, the city's lord mayor says she's happy for other capitals

to follow her lead. This week we've been revisiting our panel

to change their forecasts which

were made at the start of the

year for key parts of the Australian economy. Some have

changed their tune on the share market, while others revised their exchange revised their exchange rate forecasts, and today we take a look at the employment market. We'll be sticking with that forecast, the unemployment

rate right now is currently

4.9%. Forward indicators such as National Australia Bank is a softening in the employment market under way

right now. We think we'll see the unemployment rate pretty

much flatline for the rest of

this year. I think the

Australian economy is in for

very strong growth over quite a period of time. It's obviously been set back from the start of

this year, but we're going to

see the momentum pick up.

There's a lot of investment in

the pipeline, not just in the pipeline, not just in the mining sector, mining sector, but predominantly there. We're also seeing quite a bit of

investment in infrastructure Queensland. We have low

migration figures. We already

have quite high participation rates. So that labour force

will have to come from the existing spare capacity in the

labour force. Although that's

very limited, it's got to come

from there at the moment. So

we're looking at heading

towards - certainly we'll have

reached 4.5% by the end of 9

year, perhaps as low as four

and a quarter. It's quite

clear the labour market clear the labour market is

starting to moderate in line with the leading the economy, but I do tend to

think that that's a temporary

lull. Overall, the economy will be strengthening will be strengthening towards the end of this year. We have

Queensland housing reconstruction, we're going to have the early stages of the

mining boom and I still mining boom and I still think

that employment growth is going

to be reasonably strong. The

economy will be strengthening

and that will have flow on on

effects to the labour market. Overall, I'm comfortable with

that forecast of 4.6.

unemployment rate to end this

year at 4.7%. The year at 4.7%. The labour market is tight and leading indicators

indicators of employment still are suggesting gains will see the unemployment

rate fall further as we rate fall further as we move

through this year. We do have the investment boom coming

through from mining, coming

through in a strong way, and I

expect that to reassert itself

on the economy in the second

half of the year and also as some of those first-half events fade and turn to fade and turn to positives, in

the case of Queensland. So I'm

expecting that the employment

numbers are going to be looking a lot a lot more positive in the

second half of the year, which will again see

will again see unemployment

heading sharply down, but I

suspect the four and a suspect the four and a quarter

is a bit op tim is particular

and we won't see that and we won't see that until some time in the new year.

China's new high-speed passengers between Beijing and Shanghai. Premier Wen Jiabao was on hand for the train's

maiden trip. It's expected the

journey between the capital and the country's financial centre will be cut in half, as it travels along

high-tech track built at a cost

of $33 billion. The Chinese

Government is hoping the train will ease some of the load will ease some of the load on

the existing transport system.

Now let's look at what's making

headlines around the region. Vodafone has warned it faces doubling of

Vodafone has warned it faces a

doubling of the $2.5 billion tax bill it's contesting India's Supreme Court, with authorities

penalties for non-payment. The 'Wall Street Journal' reports

on the prospects of on the prospects of Thailand's Prime Minister as leading

candidate for the candidate for the country's national election Sunday. That's all for this

edition of 'Business Today'.

If you'd like to look back over

any interviews, please visit our website at Australian today. We look forward I'm Whitney Fitzsimmons. Thanks for joining me. Enjoy your day. Closed Captions by CSI Live. This morning, the Australian Federal Police

arrest two men over alleged

currency contract bribes. Also

this morning - Greece this morning - Greece avoids economic disaster, as Parliament gives the final nod

to tough new austerity

measures. And China looks back

as its Communist Party celebrates 90 years of

existence. A morning. You're watching ABC

News 24. I'm Jane Hutcheon.

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