Sunday newspaper round-up: Oil, Greece, Trading volumes

BP has reached a $7.8bn (£4.9bn) deal to settle claims by more than 100,000 fishermen who lost work, cleanup workers who got sick and other private claimants who were affected by the 2010 Gulf of Mexico oil spill, ahead of a lengthy and damaging court showdown over liability. The British oil giant said last night it had settled out of court with lawyers acting on behalf of some of the thousands of individuals and businesses affected by the Deepwater Horizon disaster. However the settlement does not affect what is anticipated to be tens of billions in fines and claims from the US government, federal agencies (including under the Clean Water Act and for Natural Resource Damages under the Oil Pollution Act) and the coastal states and local governments impacted by the spill, The Times says.European leaders are braced for the Eurozone's first ever sovereign default this week as Greece's efforts to secure a €206bn (£172bn) "voluntary" bond swap looks increasingly unlikely. Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short of the required amount. Credit rating agencies have warned they will declare Athens to be in default if the CACs are triggered, which would be a dramatic culmination to a three-year rollercoaster ride for Athens, the Eurozone and global markets. Raoul Ruparel of Open Europe, the London-based think-tank, said: "Greece is likely to struggle to reach the targets for a voluntary agreement so the credit rating agencies are almost certainly going to see this as a default. "What happens next is unknown territory," writes the Sunday Telegraph. HSBC´s chief executive officer, Stuart Gulliver, told The Sunday Telegraph that he was so concerned about the costs of the UK banking levy he had raised the issue with the Treasury. In what amounts to the most detailed description of the way in which over-regulation is hurting the UK banking sector, Mr Gulliver criticised both the way the levy is charged and what he described as the "plaque" issue. This refers to the Treasury's suggestion that banks should have enough capital to cope with losses equal to 20% of their entire balance sheet. "The plaque thing and the levy are the only two things that have got investors worked up," he said, estimating the levy will cost HSBC $700m in 2012 and the plaque issue approximately $2.1bn a year. "So there's about a $2.8bn cost to those two. Assume a PE of 10, to keep the maths easy, and you get $28bn permanently off the market cap of the firm.""The rally is impressive, but it lacks conviction. Trading volumes have been low, so there has been no great switching into cyclical stocks, and bond prices have stayed obdurately high. There has not (yet) been any great switch by asset allocators into equities. Money remains on the sidelines ready to come in; but this looks so far more like a rally within a rangebound market than a true new bull market. There is a potentially negative development; the 15% rise in the crude oil price. The US is less dependent on oil, and imported oil, than it once was. But a higher oil price could damage oil-importing emerging markets, and act as a further drag on the troubled economies of the European periphery. And by raising inflation, higher oil prices jeopardise the chance of looser monetary policies - and markets tumbled a bit this week after the US Federal Reserve chairman, Ben Bernanke, pointed out that oil creates inflationary pressure," writes John Authers, in this weekend´s Financial Times. Russians flocked to polling stations to vote in the presidential election today as Vladimir Putin sought to return to the Kremlin for an historic third term. Turnout was put at more than 30% by 1pm Moscow time (09.00 GMT), 4% higher than at the previous election in 2008, amid signs that the controversy over Mr Putin's bid to replace Dmitry Medvedev had spurred Russians to vote. One exit poll in Russia's Far East region, where voting has already finished, put Mr. Putin at 42% followed by Mikhail Prokhorov with 33%. The result would cause a sensation if repeated nationally and force Mr. Putin into a run-off against the billionaire businessman, who has endorsed opposition demands for democratic reform, The Times says. Oil prices being pushed up by tensions in the Middle East will bring uncertainty to this week's meeting of the Bank of England's Monetary Policy Committee. After last month's decision to boost the MPC's quantitative easing money creation program by £50bn, the March meeting would normally have proved fairly uneventful. But fears of possible military action directed against Iran's nuclear program have helped to reverse the decline in oil prices. This has complicated the Bank's calculations because most observers had previously believed that inflation was coming off the boil. Since February 1st, the price of a barrel of Brent crude has climbed from just under $112 (£70) to reach a level of more than $122. George Buckley, economist with Deutsche Bank, said: 'How will the MPC respond? Does it treat high oil prices as inflationary, or as a tax on consumers that will ultimately press down on inflation?', writes the Financial Mail on Sunday.Aggreko, which is expected to post a strong set of full-year results next Friday, is weeks away from announcing that its new £20m manufacturing facility is fully operational. The 16-acre Lomondgate, Dumbarton, site will bring production currently scattered across several locations under one roof. Analysts expecting the company, which supplies temporary power generators for major events including this year's Super Bowl, pictured, will post a 5% rise in pre-tax profits to £324m. Shares in Aggreko have hit record highs in recent weeks on the back of continued demand for power across the world. Analyst Caroline de La Soujeole of Seymour Pierce said that at some 22 times earnings the shares were "pretty pricey" but added she believed there will still "more room to run". Shares closed 22p lower at 2,219p, according to Scotland on Sunday.General Motors will suspend production of the Chevrolet Volt for five weeks this spring, a spokesman said on Friday. Disappointing sales of the award-winning plug-in hybrid electric car have left the car firm with too many Volts. Production of the US car and its European version, the Opel Ampera, will be on hold starting 19th of March and 1,300 workers will be temporarily laid off. They are expected to return to work on the 23rd of April. Edmunds.com senior analyst Michelle Krebs commented that, "the Chevrolet Volt has had a very rocky go of it, from the very beginning of the launch when confusion emerged about what it was - an EV or a hybrid - to the latest episode with Volts catching fire after NHTSA testing (...) this period of high gas prices should have given sales of the Volt and other hybrids and electric cars a lift. Instead, there's a wide selection of 30mpg and even 40mpg cars that don't carry the hefty premium of vehicles like the Volt so the Volt, Nissan Leaf and others are up against stiff competition," The Guardian reports.In this week´s "On London" column in the Financial Times Paul Murphy comments on the recent rise in oil prices and its implications. Mr. Murphy writes that, "next up is the question of how far oil prices might rise. In the event of major political upheaval in the Middle East, this quickly becomes a partially educated guessing-game based on assorted wars and oil shocks of the past 40 years. Here he cites HSBC´s chief economist Stephen King, who last Friday wrote, "Think $150 or even $200 a barrel," adding that more excitable forecasting types go higher still. In any case, and as Mr. King does, he believes that it is the longer term dynamics of demand and supply that one must concentrate upon. Here he again cites Mr.King, when he says that, "if current global demand trends continue, China alone will be attempting to consume the equivalent of all of today´s global oil output by 2035. That, alone, should be enough to underpin oil prices." The auction of Cove Energy is in disarray after the Mozambique Government said that it would levy a tax when the gas explorer was sold. Esperança Bias, the Mozambican Minerals Minister, said: "We are monitoring the negotiations and what we have said is that we are going to put in place a capital gains tax." The sale needs the approval of the Mozambique Government to go ahead. Shares in Cove fell 7% to 210p yesterday. The case with Cove is more complicated than some others because the whole company is up for sale, rather than just an asset, leaving the explorer's shareholders potentially on the hook for any tax levied by Mozambique. Canaccord analysts estimated that a 30% capital gains tax could be levied on Cove, equivalent to about 28p per share. Werner Riding, an analyst from stockbroker Peel Hunt, said: "The possibility of ... a tax on the transaction does not come as a huge surprise. But the difference in this case is that an entire company, rather than an asset, is being sold. Either way I expect the Mozambique Government to want to realise a return on their assets," The Times reports. AB