RBA believes Europe still fragile, iiNet profit up: Midday Roundup

The Reserve Bank of Australia has said it still believes the financial situation in Europe is fragile, although the likelihood of another Greek bailout deal has increased.

According to the RBA’s minutes of its February meeting, where it kept interest rates on hold, the RBA said a mild improvement had rippled through financial markets.

“While the financial situation in Europe remained fragile, the likelihood of an extremely bad outcome seemed to have diminished somewhat over the previous couple of months, partly reflecting actions by the European policymakers,” it said.

The RBA said the inflation outlook also left some room for a cut in the cash rate, but only if conditions deteriorate further.

“Whereas the situation had been looking quite negative in early December, recent actions by the European Central Bank (ECB) and euro area governments had boosted confidence,” it said.

It also said the situation in the domestic economy is varied, with many sectors still adjusting to the dollar.

“Conditions in a number of other sectors remained subdued, with the high exchange rate, soft consumer demand for goods, the scaling back of public investment and weak building constructions still weighing on activity,” it said.

However, the RBA also said GDP forecasts suggest the country was growing on trend, and it took relief from the fact financial markets were more stable in early 2012.

iiNet posts 17% lift in net profit

Telecommunications provider iiNet has recorded a 17% lift in net profit for the half year, with subscriber numbers also growing to 860,000 during the first half of 2011-12.

The company announced net profit for the half year grew to $14.4 million, up from $12.3 million from the previous corresponding period, while revenue rose 11% to $365.3 million.

The company also said it had 16% of the broadband DSL market following the acquisitions of TransACT and Internode.

“The last six months have been a period of considerable expansion, with iiNet continuing to grow scale and cementing its position as the clear number two in DSL broadband,” iiNet chief executive Michael Malone said in a statement.

iiNet also referenced the recent decision by the Australian Competition and Consumer Commission to “declare” new and cheaper wholesale prices.

“These changes will allow iiNet to be more competitive, grow market share in the regions, and will provide certainty and benefits for both iiNet and its customers,” Malone said.

Shares flat after weak overseas leads

The Australian sharemarket has opened flat after a weak lead from overseas markets.

The benchmark S&P/ASX200 index was up 9.8 points or 4265.9 at 12.00 AEST, while the Australian dollar was trading at $US1.07c.

The American market was closed for the Presidents’ Day public holiday.

Greece approaching new bailout deal

Eurozone chiefs are close to a new bailout for Greece, with the country’s prime minister also preparing last-minute talks with banks.

Participants in the talks are confident that a new $282 billion loan will be given in exchange for stricter surveillance of the Government over the next several years.

Greek Finance Minister Evangelos Venizelos says he is “optimistic” of a deal, according to Reuters.

The bailout comes as Greece approaches its March 20 deadline, by which points it must pay 14.5 billion Euros.