Greece gets first batch of new bailout loans, avoids default

Greece received the first 13 billion euros (USD14.5 billion) from its new bailout package yesterday, allowing it to pay a debt of 3.2 billion euros to the European Central Bank and avoid a messy default.
Greece could not have afforded yesterday’s debt repayment, which was confirmed by the debt management agency, without the rescue funds from 18 other European nations that share the euro currency. Missing the payment would have raised new questions about the country’s ability to remain in the euro.
European bailout fund supervisors approved the release of the first batch of loans on Wednesday evening. Twelve billion euros are earmarked for repaying debts and the remainder for settling arrears to public sector suppliers.
The new three-year bailout package — Greece’s third bailout in little more than five years — is worth a total of 86 billion euros ($96 billion), and the gradual disbursement of funds depends on the Greek government implementing a series of reforms, including steep tax hikes and spending cuts.
Accepting the conditions was a major reversal of policy for Prime Minister Alexis Tsipras and the coalition government between his radical left Syriza party and the small nationalist Independent Greeks. It has cost him a major rebellion within Syriza that threatens to split the party and could lead to an early election as soon as next month.
Tsipras has been contemplating his options after a parliament vote to approve the bailout conditions led to dozens of his own party lawmakers voting against him. Among the options being discussed are for him to call a vote of confidence in his government or to call an early election outright, potentially in September.
The government has said its main priority was to secure the bailout funding and to repay the ECB loan yesterday, after which it would announce any further action. Elena Becatoros, Athens, AP

Another Chinese sell-off prompts jitters across markets

A fresh sell-off of Chinese shares prompted renewed jitters across global markets yesterday.
Worries over China, the world’s number 2 economy, were once again the catalyst for yesterday’s declines. Chinese shares have had a wild ride this week that has raised uncertainty over regulators’ ability to limit losses through efforts to boost liquidity in the markets. The Shanghai Composite Index dropped 3.4 percent to 3,664.29 on heavy selling of energy and property companies. China Petroleum & Chemical Corp. fell 3.5 percent while China Shenhua Energy Co. dropped 4.1 percent.
“It used to be just Australia that would catch a cold when China sneezed, but the Chinese sell-off is far more infectious than initially thought,” said David Madden, market analyst at IG.
Worries over China overshadowed the minutes from the Federal Reserve’s July meeting, which failed to provide investors much steer as to whether a rate hike in September would take place. The Fed hasn’t raised interest rates in nearly a decade. “There is clearly a desire to raise rates at the Fed, I’m just not sure at this stage whether everyone is quite on board yet for a September hike to occur,” said Craig Erlam, senior market analyst at OANDA.
Following the minutes the dollar has drifted lower against the euro, which was trading 0.5 percent higher at USD1.1175. Against the Japanese yen, it was flat at 123.95 yen.
In other Asian trading, Japan’s Nikkei 225 stock index lost 0.9 percent to 20,033.52 while Hong Kong’s Hang Seng slipped 2.3 percent to 22,642.66. South Korea’s Kospi shed 1.3 percent to 1,914.55 and Australia’s S&P ASX/200 also dropped, losing 1.7 percent to 5,288.60. Shares also fell in Southeast Asia but rose in Taiwan. AP