REFILE-WRAPUP 7-G20 struggles as Irish crisis hits market

(Corrects spelling of Barroso in third paragraph)

* Negotiators wrangle over G20 communique wording

* Greenspan says U.S. pursuing weak dollar policy

* Deep divides remain on currencies

* Euro zone periphery led by Ireland hit hard

By Rachel Armstrong and Tomasz Janowski

SEOUL, Nov 11 (BestGrowthStock) – The Group of 20 meeting on Thursday
struggled to agree on meaningful action to rebuild the global
economy as a crisis erupted in Ireland, pushing its bond spreads
out to a record over Germany, and infecting Spain and Portugal.

Even as U.S. President Barack Obama voiced confidence that
the leaders would agree on steps for more balanced and
sustainable global growth, financial markets sold vulnerable
eurozone bonds and shares of British bank RBS.

At the summit, European Commission President Jose Manuel
Barroso said that the European Union had the tools to help
Ireland, but did not commit to a fresh course of action that
could reassure nervy investors. [ID:nN10208331]

“What is important to know is that we have all the essential
instruments in place in the European Union and euro zone to act
if necessary, but I am not going to make any speculation,” he
told reporters.

The G20 summit, billed as a forum where rich nations
struggling with the recent global financial crisis could ink a
new world order with emerging economic powerhouses like India and
China, appeared set to agree to little of substance, as
policymakers preferred to avoid damaging rows.

“The real issue is given that it is a problem, how do we
coordinate policy? I don’t think you should be too demanding …
because such policy coordination has never been attempted
before,” Indian chief G20 negotiator Montek Singh Ahluwalia told

Struggling to recapture the unity forged in the throes of the
global economic crisis two years ago, the G20 club of rich and
emerging economies had hoped to use the summit to soothe tensions
over foreign exchange rates generated by imbalances between
cash-rich exporting nations and debt-burdened importers.

But behind the scenes, negotiators squabbled over the
language in a closing statement to be issued at the summit’s
conclusion on Friday. The final version may not venture far
beyond agreements reached by G20 finance ministers last month,
yet it was still proving difficult to agree on the wording.


Insider TV: Trade commitment may be unattainable [nRTV160151]

G20 battle lines:

Basel III – reshaping the rules:

Capital flows to emerging world:

G20 economies comparison:

Full coverage: [nN09105095]

The regulatory agenda [nLDE6A40UR]

Live blog:

A major irritant in the run-up to the meeting was the U.S.
Federal Reserve’s $600 billion bond-buying spree to revive the
economy. Former Fed Chairman Alan Greenspan stirred that pot,
saying the United States was deliberately weakening the dollar.

“The U.S. will never do that,” U.S. Treasury Secretary
Timothy Geithner shot back a few hours later in an interview with
CNBC. “We will never seek to weaken our currency as a tool to
gain competitive advantage or to grow the economy.”

Geithner again criticised China’s currency policies saying
the world’s second largest economy risked stoking inflation
pressures. China earlier reported that consumer price inflation
had hit a 25-month high in October. [ID:nTOE6AA03C]

Nevertheless, Russia said it was “especially worried by
attempts by a number of countries to take unilateral decisions to
weaken their currencies” to stimulate growth.

“We believe that such steps lead to nervousness among market
players and volatility of main currencies, prompting fears of
global currency wars,” a source with Russian delegation said.

Obama, speaking after a meeting with South Korean President
Lee Myung-bak, said he was confident leaders would support a
program for promoting balanced growth, building on a agreement
reached at a G20 summit in Pittsburgh in 2009.

“I don’t think this is a controversial proposition,” he said.

Thursday’s agenda included dozens of bilateral meetings, but
the summit officially starts with a working dinner on Thursday.

On the sidelines, the United States and South Korea failed to
reach accord on a stalled free trade deal, an embarrassment to
both countries’ leaders. [ID:nTOE6AA06W]


Lee said a “little bit” of progress had been made since the
October finance ministers’ meeting in Gyeongju, South Korea, but
deep divisions remained over how best to reduce current account

A draft of the final communique obtained by Reuters showed
the leaders would back the idea of “indicative guidelines” for
the reduction of current account imbalances. However, they were
undecided on whether these would be based on “measurable”
indicators or more vaguely “quantitative and qualitative”.

An idea floated by Geithner earlier for numerical targets to
be set for for trade imbalances has now been taken off the table.

The draft showed G20 members would agree to “refrain from
competitive devaluation” of currencies, but were debating whether
to include the words “competitive under-valuation”, a reference
to the U.S. view on China’s currency policy.

China’s yuan, also known as the renminbi, rose 0.25 percent
on Thursday and has climbed almost 3 percent since Beijing
loosened its grip on the tightly managed currency in June.
Washington has welcomed the slow-but-steady appreciation,
although it has said more movement is needed.

By contrast, Ireland saw the spread over German bunds for its
10-year bonds (IE10YT=TWEB: )(DE10YT=TWEB: ) hit 685 basis points for
the first time as Ireland’s fragile government battled to prove
it does not need a Greek-style rescue to help it reduce the worst
budget deficit in Europe. [ID:nLDE6A90XI]

Elsewhere in Europe, austerity measures triggered new
protests, with students in Britain rioting amid rising tuition
costs, although in the South Korean capital there were only
sporadic anti-G20 demonstrations. [ID:nLDE6A9290]
(Additional reporting by Patricia Zengerle and Alister Bull;
Writing David Chance; Editing by Nick Macfie)

REFILE-WRAPUP 7-G20 struggles as Irish crisis hits market