Cyprus given deadline for bailout

The drama in Cyprus continues as its government is given a deadline to come up with a new plan to raise money. Bloomberg reports:

Cypriot lawmakers will begin debate today on legislation to unlock bailout funds and prevent a financial collapse with a European Central Bank deadline to cut off funding for its lenders in three days.

Euro-area finance ministers expect a proposal from Cyprus “as rapidly as possible” to raise the 5.8 billion euros ($7.5 billion) needed to trigger the emergency loans, they said in a statement late yesterday after meeting in a teleconference...

The ECB turned up the pressure on Anastasiades and euro- area finance chiefs to deliver a rescue package, saying it may cut off emergency funds to Cypriot banks after March 25 unless a plan is in place “that would ensure the solvency of the concerned banks.”

Economic data on Thursday were mixed.

In Japan, the all industry activity index fell 1.4 percent in January and exports fell 2.9 percent in February from a year ago, leaving the trade balance with a deficit of 777.5 billion yen.

There was better news from China. The HSBC manufacturing PMI rose to 51.7 in March from 50.4 in February, alleviating concerns that China's growth is slowing.

However, contraction in the euro area appears to have worsened in March after Markit's composite index fell to 46.5 from 47.9 in February. The services index fell to 46.5 from 47.9 while the manufacturing index fell to 46.6 from 47.9.

There were positive data though from the UK. Retail sales rose 2.1 percent in February, the biggest increase in almost a year, while the budget deficit excluding temporary support for banks was 2.76 billion pounds, the smallest February deficit in five years.

Another report from the UK showed that the Confederation of British Industry's total order book balance fell to -15 in March from -14 in February. However, the output expectations balance rose to +22 from +5.

The trend of positive data is more entrenched in the US though and that trend was maintained on Thursday. Existing home sales rose 0.8 percent in February while Markit's manufacturing PMI rose to 54.9 in March from 54.3 in February.

And US economic growth is likely to strengthen further as the Conference Board's index of leading indicators rose 0.5 percent in February.