Markets rise on Greece bailout hopes, solid US data


TOKYO |
Thu Feb 16, 2012 7:28pm EST

TOKYO (Reuters) – Asian shares rebounded on Friday, as sentiment turned positive on firmer signs euro zone officials would soon approve a long-awaited bailout for Greece to reduce the risk of a disorderly default, while solid U.S. economic data also lent support.

MSCI’s broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent, after falling 1.5 percent on Thursday when euro zone officials were reported to be examining ways of delaying part or even all of the second bailout programme, raising fears about a Greek default.

Japan’s Nikkei .N225 opened up 1.4 percent, rising to a six-month high. .T

The euro clung to overnight gains on Friday at $1.3124, off a three-week trough of $1.2974 hit on Thursday. Against the yen, it eased to 103.45 yen from a two-month high of 103.82 yen hit on Thursday. FRX/

“Greece is less likely to deliver a scare to markets, which already seem to be pricing quite a negative scenario,” said Barclays Capital in a note, but added that it was difficult to envisage a quick resolution given rising implementation risks amid domestic political pressures building ahead of elections.

“(Markets) have become more optimistic about the U.S., so a ‘growth scare’ there could upset market sentiment,” it said.

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Bank funding strains: link.reuters.com/rer25s

Euro zone crisis in graphics: r.reuters.com/hyb65p

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Euro zone officials said on Thursday they are putting the finishing touches to a second bailout deal for Greece for approval on Monday, with the focus on how Greece can prioritize debt repayment and ways to ensure Athens commits to reforms. Sources also said euro zone central banks had agreed on a Greek bond swap.

A spokesman for the Greek government said on Thursday that Greece expects to begin a debt swap scheme with private bondholders.

That would substantially reduce the risk of Athens missing the March 20 deadline to pay a 14.5 billion euro bond redemption payment.

The Standard Poor’s 500 Index .SPX rose to 1,358.05 on Thursday, a nine-month high, boosted by solid U.S. data that underlined a recovery trend in the world’s largest economy.

U.S. jobless claims unexpectedly fell last week to a near four-year low, January housing starts came in better than forecast, and the pace of factory activity in the U.S. Mid-Atlantic region gained momentum in February.

U.S. crude steadied around $102.33 a barrel on Friday, after ending at a six-week closing high of $102.31 the day before. Brent settled on Thursday at $120.11 a barrel, the highest settlement since mid-June, on worries about supply from Iran and the North Sea, where output was expected to dip next month.

Asian credit markets firmed with rising risk appetite, narrowing the spreads on the iTraxx Asia ex-Japan investment grade index by 6 basis points early on Friday.

Receding investor fears, or risk aversion, was reflected in the CBOE Volatility index VIX .VIX, which measures expected volatility in the SP 500 index .SPX over the next 30 days. The index plunged about 9 percent on Thursday, its biggest drop since December 9, sharply reversing an 8 percent jump on Wednesday.

But signs of strains were not completely wiped out yet.

Given that there was still potential for a messy Greek default, tentative signs of stress in the European interbank lending market are emerging despite hefty amounts of cash floating around in the euro banking system.

The Markit iTraxx index of credit default spreads for European senior financials, measuring the cost of insuring against a bank defaulting on its debts, has risen by almost 50 basis points in the past 10 days to above 240 bps.

(Editing by Richard Pullin)


10 places you never thought you could afford

The Galapagos

The Galapagos is a land of fearless sea lions, game-changing scientific theories, and expensive vacation packages. The destination is best explored by boat or guided tour, and one of the easiest ways to plan a trip is by booking a one-price-covers-all vacation package—but these aren’t cheap. Published prices for Galapagos packages on Intrepid Travel, a small-group adventure-tour operator, start at $2,020 for five nights, no airfare included—and we won’t even get into what luxury packages cost. So consider the alternative: Plan your own journey. SmarterTravel editor Caroline Morse did just that and saved a bundle. Morse details her incredibly affordable Galapagos trip in this trip report, writing, “We ended up walking into one of the numerous tour operators that line the streets on the main island and booking ourselves onto a four-day, three-island tour with everything (meals, accommodations, tours, snorkeling, boat transfers, et cetera) included for just $200 per person.” Putting on your travel-agent hat and conducting a bit of research could really pay off when planning a Galapagos getaway.

Greece

What does Greece’s recent economic turmoil mean for travelers? As of publication, there are no warnings issued by the U.S. Department of State against travel to Greece, and this year could, in fact, be an excellent time to go, as Greece travel deals are popping up like olive trees. TripAdvisor reports that hotel rates in popular Greece destinations have fallen by as much as 20 percent in the past year. The influx of bargains is a win-win for both locals and visitors, as a healthy tourism industry could help Greece revive its economy. According to Catharine Hamm of the Los Angeles Times, “Greece needs tourist dollars now more than ever to find its way out from under lest it default on its loans. Tourism is one of its leading industries, and that means you are apt to find bargains.”

By Laura Bly, USA TODAY

A lone horse and carriage at the Pyramids in Giza is testimony to the dearth of visitors in Cairo and other Egyptian cities in March, 2011.

Egypt

Revolutions don’t make for an attractive vacation destination—but travel deals do. To counter a drop in demand due to Arab Spring unrest, providers are rolling out some incredible price reductions for Egypt travel. As of press time, we spotted offers like 50 percent off Egypt tours from luxury tour operator Abercrombie Kent; this deal also includes complimentary travel insurance with select trips. Furthermore, Hotels.com lists Cairo as one of 10 worldwide destinations where luxury hotels cost the least (the average nightly rate for a five-star Cairo hotel came to $203 in 2011). If you’re comfortable traveling to a destination where there may be some civil disorder (we recommend purchasing travel insurance), you can book a once-in-a-lifetime luxury getaway to Egypt for pennies on the dollar.

Jon Arnold Images

A traditional Japanese restaurant in Tokyo.

Japan

The tourism industry in Japan took a major hit after the catastrophic earthquake that struck almost a year ago, and it continues to lag. To bounce back, Japanese hotels and other travel providers have been offering deep savings on accommodations, attractions, and more in an attempt to lure international visitors. (Experts agree it’s now safe to travel to most of Japan, including the greater Tokyo area.) “Japan is still expensive, primarily because the yen is high against the dollar,” Chris Gray Faust, of Chris Around The World, told us in an email. “But hotels have been offering value-added specials to entice tourists back to the country. In Kyoto, for example, the Hyatt Regency Kyoto has been offering deals where if you buy one night, you get the second one for 50 percent, or a third night free with two nights paid,” she said. Moreover, spending money on a Japan vacation is a great way to support a nation that has endured a terrible tragedy and is still in the process of rebuilding.

Berlin

This year, Berlin turns 775 and will open a new major international airport. And while the city is one of Europe’s best for museums, galleries, fashion, and culture, it offers more bang for your euro compared to major Western European destinations such as London, Paris, or Rome. Average nightly hotel rates in Berlin are just €72—that’s well below average prices for the aforementioned cities. And did we mention the exchange rate? The euro has been falling against the dollar, and economic problems in the euro zone, while calamitous for those who live in E.U. countries, could lead to better exchange rates for U.S. travelers.

By John Moore, Getty Images

The Empire State Building towers over the Manhattan skyline as tourists gather on the observation deck of Rockefeller Center in New York City.

New York City

New York is the most expensive U.S. city to spend the night in, with average nightly hotel rates reaching $190.46 in 2011, according to data gathered from Hotels.com. But high hotel rates can couple with a wealth of free activities to strike an affordable balance for travelers to the Big Apple. City parks, music shows, galleries, breweries, famous stores, monuments, and museums that charge zilch abound in the city—you need only know where to look. We recommend browsing through the regularly updated listings on Time Out New York or reading this list of 40 free New York attractions from Lonely Planet. If you’re looking for even more savings, beat those notorious New York hotel rates by booking alternative accommodations on sites like Airbnb and Flipkey. We found one-bedroom apartment rentals in Manhattan listed on Airbnb for as little as $100 per night for high-season summer stays.

Hawaii

It’s shaping up to be a good year for Hawaii, as more and more travelers are heading to the lush locale. (Can you blame them?) The Wall Street Journal reports that Hawaii tourism rates are at their highest levels since 2007, thanks in part to large advertising campaigns put forth by the local tourism board. As a consequence, one might expect prices for travel to this already-expensive destination to rise. Yet there are ways to try big-wave surfing, explore underwater lava caves, or dance the hula on the cheap this year. One cost-cutting tactic is to buy your big-ticket Hawaii flight from a discount airline; very soon, you’ll be able to do this. Hawaiian Airlines and JetBlue recently entered into a partnership agreement that will open up new routes to the Aloha State (this will also bring about the only nonstop flight connecting New York to Hawaii). United’s adding a new nonstop from Washington, D.C., as well. New routes usually amount to greater competition, which could work to push down fares to Hawaii in the coming year.

By Beth J. Harpaz, AP

The Hubbard Glacier in Alaska as seen from the deck of Royal Caribbean’s Radiance of the Seas cruise ship.

Alaska

Alaska is enormous—it’s two times the size of Texas. And crossing hundreds or thousands of miles by plane, train, or automobile isn’t cheap. The solution? Set sail. Cruising is the most popular way to tour Alaska—and it may be the cheapest, too. The destination has been drawing more and more ships (Disney Cruise Line began its inaugural Alaska season in 2011) since the state’s government decreased head taxes on cruise-ship passengers. For an amazingly economical Alaska vacation, book a cruise during shoulder season. As of this publication, we spotted weeklong spring and fall Alaska cruises on our sister site Cruise Critic’s deals page on sale for as little as $569 per person.

Switzerland

As the euro falls in surrounding countries, the franc holds steady; this would, it seem, make for a very expensive Switzerland vacation. However, with many travelers choosing neighboring destinations that offer better exchange rates, the local tourism industry has suffered. The good news? Travel providers are taking pains to make it more affordable to see Switzerland. This season, ski resorts have been offering free night’s stays and free skiing in an effort to draw more guests, reports OnTheSnow. And, as of press time, the Zurich Tourism Board was offering 20 percent off winter stays at a variety of local hotels. Of course, if you’re an American or a European, you’ll have to deal with an unfavorable exchange rate when traveling to Switzerland. But take advantage of a good travel deal or two and your Swiss vacation could be a lot cheaper than you might expect.

Cayman Islands Department of Tourism via AP

A diver photographs coral off of Cayman Brac, Cayman Islands.

Cayman Islands

Discount carriers like JetBlue and AirTran don’t fly to the Cayman Islands, and the destination is generally considered one of the most expensive in the Caribbean. So to access the islands’ blue waters and breezy beaches at a fraction of the price, veer off the beaten path. Skip the high-rise hotels that line the coast on Grand Cayman and go for a guesthouse or a villa on one of the Caymans’ smaller islands: Cayman Brac or Little Cayman. (There are no campsites on the Cayman Islands, so guesthouse lodging is likely the cheapest option you’ll find.) We spotted oceanfront guesthouses listed on the Cayman Islands Department of Tourism website for as little as $1,000 per week in high season—a more-than-fair price for a one-bedroom house that sleeps four or five people.

SmarterTravel.com features expert travel advice and unbiased coverage of travel deals.


Greece turmoil fails to deter UK holidaymakers

Riots in Athens and economic turmoil have failed to dent holiday bookings to Greece, holiday and research companies are reporting.

The number of people planning to visit Greece has slightly increased from 8% in February 2011 to 9% in February 2012, according to independent market research company BDRC Continental.

Steve Mills, a director of the company, said this was “positive for Greece considering the turmoil, and in marked contrast to Egypt where the percentage considering a holiday has declined from 8% down to 6%.”

Travel website HomeAway said booking enquiries were up 32% in January 2012 compared to the same month in 2011. Spokeswoman Sarah Chambers said: “We experience growth in overall enquiries every year, but this is above the site average, so indicates Greece is doing fine.”

The travel group Tui, which includes the Thomson and First Choice brands, said its bookings were in line with expectations. “Our customer service teams have not noticed an increase in calls from concerned customers regarding their holidays to Greece. The protests are happening on the mainland, a considerable distance from the islands to which we operate,” a spokeswoman said.

“We believe consumer confidence has not been impacted by these protests in Athens, and we have no major concerns heading into the busy summer season. It is very much business as usual in our resorts and we will continue to closely monitor the situation.”

Greece is now widely expected to drop out of the euro, following the decision by eurozone ministers to cancel a meeting scheduled for 15 February to discuss the country’s €130bn bailout. Its departure could have a considerable impact on the cost of holidays: the new currency would be pegged against the euro for 48 hours but is likely to fall sharply in value after that, improving the exchange rate for tourists but forcing holiday companies to renegotiate contracts with Greek suppliers.

James Hickman, managing director of currency exchange firm Caxton FX, said: “Greece is perilously close to defaulting on their debts and, inevitably if default occurs, we will see them being ejected from the euro. Although the drachma will be reintroduced as the new currency over time, it will cause turmoil in Greece and we could be looking at a situation of ‘organised chaos’.

“If you’re a holidaymaker out in Greece when they are asked to leave the euro, there is no need to panic as you will still be able to spend your holiday cash in the short term.”

He added: “Looking to the summer holidays, as the drachma will be heavily devalued, going to Greece could be a cheaper alternative compared to the Italian Rivera or the Iberian coast.”

The Tui spokeswoman said: “As with any tour operator, we are in negotiations with hoteliers to ensure the best possible rates months in advance of holidays going on sale. These negotiations allow us to ensure the best rates are then passed on to our customers.

“If Greece were to drop out of the euro, this is something we would address if and when the time came. It is not something we can speculate on now.”

But Carl Caterall, a spokesman for Saga Holidays, said his company would pass on any drop in price to customers who have already booked and paid for holidays.

Hickman also said Greece dropping out of the euro could help some Britons who have mortgages on holiday homes in the country.

“It all depends on which denomination you make your payments in. If you have a sterling-based mortgage you will be able to pay more towards your mortgage as your pound will go that much further. Nonetheless, property prices would suffer a nosedive and you could lose out on what you originally put into your property if you were looking to make a sale.

“As for euro-based mortgages, you face the risk of it being transferred to drachma, which as mentioned before will be an exceptionally weak currency.”

The tourism industry is a major source of foreign exchange earnings and revenue for Greece, accounting for 15% of its total GDP in 2010, according to the CIA’s World Factbook, and it employs 16.5% of the total workforce, either directly or indirectly. But tourism receipts have been declining for the past four years from $17,416m in 2008 to $12,948m in 2011.

Despite the sustained bookings, prospective holidaymakers are expressing concern at the turmoil in Greece. One posting on travel website Tripadvisor said: “We are going to Corfu in July 2012. We have paid a large deposit already and the balance is due in April. We are very concerned about the Greek financial situation. Has anyone else got any second thoughts about their 2012 bookings to Greece?”

But those answering were in agreement that holidaymakers would not be adversely affected. One poster named HolidayBear73 said: “I live in Greece and the current situation, although poor for the Greek’s, should have no adverse effect on your holiday – if anything you’ll be even more welcome than ever.”

More are worried about travelling to Athens where riots took place on 11 and 12 February, but a poster called yojimbo7 said holidaymakers would probably have no problems, as long as they stay away from protest areas. “Generally, avoid Syntagma Square. That’s where the majority of protests seem to take place. If you’re at a bar and the chit chat gets political, either avoid talking or pick a different bar. Yes, Greeks are actually very willing to talk about politics in a passionate yet friendly manner, but it’s probably best to avoid any political discussions at the moment,” he said.

“Don’t panic if you seem to be near a protest or potential riot. Move away from the area, but not against the crowd to the point where you’re pushing and shoving head on; move laterally.”


10 places you never thought you could afford

The Galapagos

The Galapagos is a land of fearless sea lions, game-changing scientific theories, and expensive vacation packages. The destination is best explored by boat or guided tour, and one of the easiest ways to plan a trip is by booking a one-price-covers-all vacation package—but these aren’t cheap. Published prices for Galapagos packages on Intrepid Travel, a small-group adventure-tour operator, start at $2,020 for five nights, no airfare included—and we won’t even get into what luxury packages cost. So consider the alternative: Plan your own journey. SmarterTravel editor Caroline Morse did just that and saved a bundle. Morse details her incredibly affordable Galapagos trip in this trip report, writing, “We ended up walking into one of the numerous tour operators that line the streets on the main island and booking ourselves onto a four-day, three-island tour with everything (meals, accommodations, tours, snorkeling, boat transfers, et cetera) included for just $200 per person.” Putting on your travel-agent hat and conducting a bit of research could really pay off when planning a Galapagos getaway.

Greece

What does Greece’s recent economic turmoil mean for travelers? As of publication, there are no warnings issued by the U.S. Department of State against travel to Greece, and this year could, in fact, be an excellent time to go, as Greece travel deals are popping up like olive trees. TripAdvisor reports that hotel rates in popular Greece destinations have fallen by as much as 20 percent in the past year. The influx of bargains is a win-win for both locals and visitors, as a healthy tourism industry could help Greece revive its economy. According to Catharine Hamm of the Los Angeles Times, “Greece needs tourist dollars now more than ever to find its way out from under lest it default on its loans. Tourism is one of its leading industries, and that means you are apt to find bargains.”

By Laura Bly, USA TODAY

A lone horse and carriage at the Pyramids in Giza is testimony to the dearth of visitors in Cairo and other Egyptian cities in March, 2011.

Egypt

Revolutions don’t make for an attractive vacation destination—but travel deals do. To counter a drop in demand due to Arab Spring unrest, providers are rolling out some incredible price reductions for Egypt travel. As of press time, we spotted offers like 50 percent off Egypt tours from luxury tour operator Abercrombie Kent; this deal also includes complimentary travel insurance with select trips. Furthermore, Hotels.com lists Cairo as one of 10 worldwide destinations where luxury hotels cost the least (the average nightly rate for a five-star Cairo hotel came to $203 in 2011). If you’re comfortable traveling to a destination where there may be some civil disorder (we recommend purchasing travel insurance), you can book a once-in-a-lifetime luxury getaway to Egypt for pennies on the dollar.

Jon Arnold Images

A traditional Japanese restaurant in Tokyo.

Japan

The tourism industry in Japan took a major hit after the catastrophic earthquake that struck almost a year ago, and it continues to lag. To bounce back, Japanese hotels and other travel providers have been offering deep savings on accommodations, attractions, and more in an attempt to lure international visitors. (Experts agree it’s now safe to travel to most of Japan, including the greater Tokyo area.) “Japan is still expensive, primarily because the yen is high against the dollar,” Chris Gray Faust, of Chris Around The World, told us in an email. “But hotels have been offering value-added specials to entice tourists back to the country. In Kyoto, for example, the Hyatt Regency Kyoto has been offering deals where if you buy one night, you get the second one for 50 percent, or a third night free with two nights paid,” she said. Moreover, spending money on a Japan vacation is a great way to support a nation that has endured a terrible tragedy and is still in the process of rebuilding.

Berlin

This year, Berlin turns 775 and will open a new major international airport. And while the city is one of Europe’s best for museums, galleries, fashion, and culture, it offers more bang for your euro compared to major Western European destinations such as London, Paris, or Rome. Average nightly hotel rates in Berlin are just €72—that’s well below average prices for the aforementioned cities. And did we mention the exchange rate? The euro has been falling against the dollar, and economic problems in the euro zone, while calamitous for those who live in E.U. countries, could lead to better exchange rates for U.S. travelers.

By John Moore, Getty Images

The Empire State Building towers over the Manhattan skyline as tourists gather on the observation deck of Rockefeller Center in New York City.

New York City

New York is the most expensive U.S. city to spend the night in, with average nightly hotel rates reaching $190.46 in 2011, according to data gathered from Hotels.com. But high hotel rates can couple with a wealth of free activities to strike an affordable balance for travelers to the Big Apple. City parks, music shows, galleries, breweries, famous stores, monuments, and museums that charge zilch abound in the city—you need only know where to look. We recommend browsing through the regularly updated listings on Time Out New York or reading this list of 40 free New York attractions from Lonely Planet. If you’re looking for even more savings, beat those notorious New York hotel rates by booking alternative accommodations on sites like Airbnb and Flipkey. We found one-bedroom apartment rentals in Manhattan listed on Airbnb for as little as $100 per night for high-season summer stays.

Hawaii

It’s shaping up to be a good year for Hawaii, as more and more travelers are heading to the lush locale. (Can you blame them?) The Wall Street Journal reports that Hawaii tourism rates are at their highest levels since 2007, thanks in part to large advertising campaigns put forth by the local tourism board. As a consequence, one might expect prices for travel to this already-expensive destination to rise. Yet there are ways to try big-wave surfing, explore underwater lava caves, or dance the hula on the cheap this year. One cost-cutting tactic is to buy your big-ticket Hawaii flight from a discount airline; very soon, you’ll be able to do this. Hawaiian Airlines and JetBlue recently entered into a partnership agreement that will open up new routes to the Aloha State (this will also bring about the only nonstop flight connecting New York to Hawaii). United’s adding a new nonstop from Washington, D.C., as well. New routes usually amount to greater competition, which could work to push down fares to Hawaii in the coming year.

By Beth J. Harpaz, AP

The Hubbard Glacier in Alaska as seen from the deck of Royal Caribbean’s Radiance of the Seas cruise ship.

Alaska

Alaska is enormous—it’s two times the size of Texas. And crossing hundreds or thousands of miles by plane, train, or automobile isn’t cheap. The solution? Set sail. Cruising is the most popular way to tour Alaska—and it may be the cheapest, too. The destination has been drawing more and more ships (Disney Cruise Line began its inaugural Alaska season in 2011) since the state’s government decreased head taxes on cruise-ship passengers. For an amazingly economical Alaska vacation, book a cruise during shoulder season. As of this publication, we spotted weeklong spring and fall Alaska cruises on our sister site Cruise Critic’s deals page on sale for as little as $569 per person.

Switzerland

As the euro falls in surrounding countries, the franc holds steady; this would, it seem, make for a very expensive Switzerland vacation. However, with many travelers choosing neighboring destinations that offer better exchange rates, the local tourism industry has suffered. The good news? Travel providers are taking pains to make it more affordable to see Switzerland. This season, ski resorts have been offering free night’s stays and free skiing in an effort to draw more guests, reports OnTheSnow. And, as of press time, the Zurich Tourism Board was offering 20 percent off winter stays at a variety of local hotels. Of course, if you’re an American or a European, you’ll have to deal with an unfavorable exchange rate when traveling to Switzerland. But take advantage of a good travel deal or two and your Swiss vacation could be a lot cheaper than you might expect.

Cayman Islands Department of Tourism via AP

A diver photographs coral off of Cayman Brac, Cayman Islands.

Cayman Islands

Discount carriers like JetBlue and AirTran don’t fly to the Cayman Islands, and the destination is generally considered one of the most expensive in the Caribbean. So to access the islands’ blue waters and breezy beaches at a fraction of the price, veer off the beaten path. Skip the high-rise hotels that line the coast on Grand Cayman and go for a guesthouse or a villa on one of the Caymans’ smaller islands: Cayman Brac or Little Cayman. (There are no campsites on the Cayman Islands, so guesthouse lodging is likely the cheapest option you’ll find.) We spotted oceanfront guesthouses listed on the Cayman Islands Department of Tourism website for as little as $1,000 per week in high season—a more-than-fair price for a one-bedroom house that sleeps four or five people.

SmarterTravel.com features expert travel advice and unbiased coverage of travel deals.