Nissan Motor Co Ltd is recalling about 841,000 vehicles worldwide as a result of a steering wheel glitch.

Japan’s No.2 automaker said the recall affects certain models of the Micra compact car produced in Britain and Japan between 2002 and 2006, as well as the Cube, produced in Japan around the same period.

It is pulling back vehicles in Japan, Europe, Asia, Oceania, Africa, Latin America and the Middle East.

Sam Hardy, a spokesman for Nissan in the UK, said: “There is a very, very small risk that there are any 2002-2006 Micra models that require attention, but safety is our upmost priority which is why we are recalling all vehicles potentially affected.” 

The bolt used in the steering wheel of these cars may not have been properly tightened and at worst the steering wheel may not function, Nissan said in a statement filed to the Japanese transport ministry.

No accidents, injuries or deaths have been reported, Nissan spokeswoman Noriko Yoneyama said.

Nissan will fix the glitch by either tightening the bolts or replacing the steering wheel with a new one, the statement said.

The repair will take about 40 minutes, Ms Yoneyama added. She declined to say how much the recall will cost Nissan.

In April, Nissan was forced to recall 1.73m vehicles  due to a defect in passenger-side airbags.

Last year in September, the manufacturer recalled 51,000 vehicles – 7,000 in the UK – due to a steering wheel fault.            

The decision was made after the steering wheel of a Qashqai+2 detached at slow speed in Finland.     

By Masayuki Kitano and Hideyuki Sano

SINGAPORE (Reuters) – Japanese government bonds plunged on Thursday, taking yields to their highest in a year and leading a selloff in bonds globally after Federal Reserve Chairman Ben Bernanke’s remarks sparked worries of a reduction in U.S. monetary stimulus.

Bernanke’s comments, suggesting the Fed’s massive bond purchases could be scaled back in the next few policy meetings if the economy improves further, triggered a reaction across a swathe of markets, lifting the dollar to a three-year high versus a basket of currencies and the U.S. 10-year Treasury yield to the highest in two months.

Asian shares fell and extended their losses after a survey showed that China’s factory activity shrank for the first time in seven months in May, adding to concerns that a recovery in the world’s second-largest economy is sputtering.

JGB prices dived as a surge in U.S. Treasury yields added to the woes of Japan’s bond market, which has suffered a steep selloff after the BOJ unleashed massive monetary stimulus last month to boost inflation.

“Bernanke seems to be leaning towards reducing bond purchases, which was a bit of surprise. In addition, the Bank of Japan didn’t offer any concrete steps to calm the JGBs,” said Tadashi Matsukawa, head of fixed-income at Pinebridge Investments in Tokyo.

In testimony to Congress on Wednesday, Bernanke said a decision to scale back the billion in bonds the Fed buys each month could be taken at one of the central bank’s “next few meetings” if the economy looked set to maintain momentum.

Bernanke’s comments came just after BOJ chief Haruhiko Kuroda disappointed JGB players by offering only lip service to the recent rises in JGB yields and reiterated they could naturally rise when the economy improves.

The 10-year JGB yield rose to 1.000 percent, its highest level since early April last year, and last stood at 0.955 percent up 7 basis points on the day.

The 10-year JGB yield has more than tripled from a record low of 0.315 percent hit on April 5, the day after the BOJ unveiled its unprecedented monetary expansion.

To appease nervous investors, the BOJ offered 2.0 trillion yen (.4 billion) cash in one-year contract, a type of market operation the BOJ has used a few times in recent weeks when it wanted to reduce volatility in JGBs market though with limited success.

The U.S. 10-year Treasury yield hit a two-month high of 2.069 percent earlier on Thursday and last stood at 2.044 percent.

In the stock market, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.5 percent.

MSCI’s index extended its losses after the flash HSBC Purchasing Managers’ Index (PMI) for May fell to 49.6, slipping under the 50-point level demarcating expansion from contraction for the first since October.

Japan’s benchmark Nikkei share average showed some very choppy moves. The Nikkei was last up 0.2 percent on the day after rising 2 percent earlier and hitting a 5-1/2 year high.

“The focus today is that the yen pushed to 103 last night on the back of comments out of the U.S.,” said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo.

The dollar held steady against the yen at 103.12 yen, having hit a high of 103.74 yen on Wednesday, the greenback’s strongest level versus the Japanese currency since October 2008.

Highlighting its broad strength in the wake of Bernanke’s comments, the dollar hit a near three-year high against a basket of currencies at 84.498 and touched an 11-month high versus the Australian dollar.

The weak HSBC flash PMI for China added to pressure on the Australian dollar, which fell to its lowest level since June 2012 at .9626.

“The Aussie fall was in reaction to Bernanke’s testimony and it will go on for a while longer,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney.

“I see a drop below .9600 but with good support at .9581. If the U.S. bond markets continue to sell off, then the Aussie could test 90 cents,” he added.

In commodities markets, Brent crude slid 0.6 percent to 2.02 a barrel, while gold eased 0.1 percent to ,367.81 an ounce.

(Additional reporting by Hideyuki Sano and Dominic Lau in Tokyo, Cecile Lefort in Sydney; Editing by Eric Meijer)

By Pedro da Costa and Alister Bull

WASHINGTON (Reuters) – The Federal Reserve’s monetary stimulus is helping the U.S. economy recover but the central bank needs to see further signs of traction before taking its foot off the gas pedal, Fed Chairman Ben Bernanke said on Wednesday.

A decision to scale back the billion (56 billion pounds) in bonds the Fed is buying each month could come at one of the central bank’s “next few meetings” if the economy looked set to maintain momentum, Bernanke told Congress.

But minutes from the Fed’s most recent meeting released on Wednesday showed the bar was still relatively high.

“Many participants indicated that continued (job market) progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases,” according to minutes from the April 30-May 1 meeting.

In testimony that showed little immediate desire to retreat from the Fed’s third and latest round of bond buying, Bernanke emphasized the high costs of both unemployment and inflation, which respectively continue to run above and below the Fed’s targets.

“Monetary policy is providing significant benefits,” he told the congressional Joint Economic Committee, citing strong consumer spending on autos and housing, as well as increases in household wealth.

“Monetary policy has also helped offset incipient deflationary pressures and kept inflation from falling even further below the (Fed’s) 2 percent longer-run objective.”

Still, financial markets focused on the possibility that Fed purchases will be scaled back later this year. The S&P 500 closed 0.8 percent lower, the dollar hit a near three-year peak against a broad basket of currencies, and the bond market sold off sharply. Yields on 10-year Treasury notes jumped back above 2 percent to their highest levels since mid-March.

The central bank is currently buying billion in Treasury bonds and billion in mortgage-backed debt each month to keep borrowing costs low and encourage investment, hiring and economic growth. It is the third round of asset purchases, or quantitative easing, since the Fed drove interest rates to near zero in late 2008.

“I believe the Fed, while feeling more confident in the economy bottoming, is not yet comfortable with ending QE and the U.S. economic crutch it offers,” said Douglas Borthwick, managing director of Chapdelaine Foreign Exchange in New York.

MISSING THE TARGET

Bernanke noted that the main inflation gauge the Fed monitors rose just 1 percent in the 12 months through March, just half the central bank’s 2 percent target.

Part of the reason, he said, was a decline in energy prices. But there were also indications of more broad-based disinflation, Bernanke said.

He said the Fed was prepared either to increase or reduce the pace of its bond buys depending on economic conditions, as the central bank stated on May 1 after its last policy meeting.

“If we see continued improvement and we have confidence that that’s going to be sustained then we could in the next few meetings … take a step down in our pace of purchases,” he said.

“If we do that it would not mean that we are automatically aiming toward a complete wind down. Rather, we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward.”

U.S. economic growth rose to a 2.5 percent annual rate in the first quarter following an anaemic end to 2012. The unemployment rate has fallen to 7.5 percent from a peak of 10 percent, but remains, as Bernanke put it, “well above its longer-run normal level.”

Recent economic data have been mixed. Job growth, retail sales and housing have all shown some vigour, but factory output has been contracting.

Bernanke said some headwinds facing the economy, including the debt crisis in Europe, have been dissipating. But he said a sharp tightening of the U.S. government’s budget had become too big of a drag on growth for the central bank to offset fully.

Bernanke told the committee the Fed was aware of the risk that keeping monetary policy too easy for too long could fuel asset price bubbles. However, he said the central bank believed major asset prices were justified by the economy’s fundamentals.

Further, he warned of the risks to pulling back on stimulus too early.

“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said.

He also suggested the Fed could refrain from selling off some of the mortgage-backed securities it has acquired when the time finally came to tighten monetary policy. “I personally believe that we could exit without selling any MBS,” he said.

TOO SOON TO TAPER

In separate remarks, New York Fed President William Dudley stressed that uncertain economic conditions meant it was too early to determine whether to taper the Fed’s bond purchases.

“I think three or four months from now you’ll have a much better sense of ‘Is the economy healthy enough to overcome the fiscal drag or not?’” Dudley said in a Bloomberg TV interview that took place on Tuesday but aired on Wednesday.

Dudley added that it would be possible to dial down the program by the fall “if the economy does better and if the labour market continues to improve.”

The minutes of the last Fed meeting said a number of officials expressed a willingness to taper bond purchases as early as the upcoming meeting on June 18-19 if there were signs of “sufficiently strong and sustained growth.” But views differed both on how to gauge progress and on how likely it was that that threshold would be met.

Asked whether the Fed would curtail the pace of its bond purchases by the September 2 Labor Day holiday, Bernanke said simply: “I don’t know.”

(Additional reporting by Jonathan Spicer and Steven C. Johnson in New York; Editing by Tim Ahmann, Neil Stempleman and Dan Grebler)

By Philip Pullella

VATICAN CITY (Reuters) – The Vatican’s new financial watchdog said on Wednesday it had detected six possible attempts to use the Holy See to launder money last year, citing this as proof of its commitment to transparency.

The head of the Vatican’s Financial Intelligence Authority (FIA), presenting its first annual report, also said it would soon have stronger supervisory powers over the Vatican’s scandal-plagued bank, the Institute for Works of Religion (IOR), dubbed the world’s most secretive bank by Forbes magazine.

The Vatican is trying to meet international standards to combat the financing of terrorism, money laundering and tax evasion, but the European anti-money laundering committee, Moneyval, said in July that the IOR still had some way to go. The FIA is due to report back in December.

Rene Bruelhart, the Swiss lawyer and anti-laundering expert who heads the FIA, said that of the six suspected cases of money laundering handled by his office in 2012, two were considered serious enough to be passed on to the Vatican’s prosecutor.

He gave no details of any of the cases but said it was possible that some of the other four could also be passed on for formal investigation.

The Vatican has been trying to shed its image as a murky financial centre since 1982, when Roberto Calvi, known as “God’s Banker”, was found hanging from London’s Blackfriars Bridge.

Calvi was head of Banco Ambrosiano, then Italy’s largest private bank, which was part-owned by the Vatican and collapsed in a fraudulent bankruptcy.

The IOR primarily handles funds for Vatican departments, Roman Catholic charities and orders of priests and nuns around the world, but has been abused by third parties in the past.

Bruelhart, formerly the top anti-money laundering expert in the tiny tax haven of Liechtenstein, held up the annual report and the press conference, both the first of their kind, as a sign that the Vatican was getting its house in order.

Conceding that “not everything is great and perfect”, he said the Vatican was committed to meeting Moneyval’s requirements, notably closer supervision, or “prudential vigilance”, over the IOR.

“Over the next weeks we will come up with a new law and that is going to be one of the key competences of the FIA,” he said.

He also said the FIA would put into place new procedures to screen account holders at the IOR.

In 2010, Rome magistrates froze 23 million euros ( million) held by the IOR in an Italian bank. The Vatican said its bank was merely transferring its own funds between its own accounts in Italy and Germany. The funds were released in 2011 but the money laundering investigation continues.

(Reporting By Philip Pullella; Editing by Kevin Liffey)

NICOSIA (Reuters) – Cyprus faces substantial risks to its economic outlook and a forecast recession could be deeper than forecast, its central bank governor said in a prepared speech on Wednesday.

The island state, which narrowly averted financial meltdown in March, faces “unusually high” macroeconomic and banking sector risks, according to the speech, which was delivered to a Nicosia conference by a senior manager of the central bank.

Central bank chief Panicos Demetriades warned about the potential impact of a resolution process for two large banks and losses forced on big depositors under the island’s bailout deal, which has also entailed the imposition of capital controls.

The “recession could be deeper than anticipated with negative feedback loops on public finances, including government debt,” he said in the text of the speech.

Cyprus secured a 10 billion euro EU/IMF bailout in March, the fifth euro zone country to require aid. Its 17.5 billion euro economy is expected to shrink by 8.7 percent his year.

Conditions of the rescue package include the closure of Cyprus’s second-largest bank, Popular, and imposing losses on uninsured savings in its No. 1 lender, Bank of Cyprus, to recapitalise both after huge losses on lending to Greece.

Capital controls will have to be eased gradually, Demetriades warned, as eliminating them abruptly could trigger rapid outflows from the banking sector and liquidity problems.

(Reporting By Michele Kambas; Editing by Catherine Evans)

TOKYO (Reuters) – The Bank of Japan on Wednesday decided to keep monetary policy on hold, but one board member tried unsuccessfully to loosen the central bank’s commitment to achieving its 2 percent inflation target within two years.

In a unanimous vote, the BOJ maintained its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen (5-2 billion).

BOJ board member Takahide Kiuchi proposed that the central bank make its 2 percent inflation target a medium- to long-term goal, and commit to intensive easing in the next two years. This would differ from the BOJ’s current commitment to hit its inflation target within two years.

Kiuchi’s proposal was rejected in an 8-1 vote.

On April 4, the BOJ eased policy by pledging to double the supply of money in two years by boosting purchases of government bonds and risky assets.

In doing so, it switched its policy target from the overnight call rate target to base money, a broad measurement of the amount of money the central bank pumps into the economy.

The BOJ also upgraded its assessment of the economy on Wednesday to say it has started picking up.

The BOJ’s statement did not mention recent increases in government bond yields.

BOJ Governor Haruhiko Kuroda will hold a news conference from 0630 GMT (7.30 a.m. British Time) with his comments expected to come out any time after 0715 GMT (8.15 a.m. British Time).

( = 102.5450 Japanese yen)

(Reporting by Stanley White; Editing by Chris Gallagher)

By Robert Evans

GENEVA (Reuters) – Senior officials from business and commercial aviation voiced cautious optimism that a long-sought worldwide framework to reduce aviation’s carbon emissions could be in place by 2020.

And a key negotiator for the European Union’s Executive Commission, focus of anger from many other countries over its emissions trading scheme (ETS), said she hoped a road map towards a pact would be agreed by this autumn.

The comments came on Tuesday at a discussion on prospects for a global deal eliminating the threat of regional or national rules, which aviation leaders say would be disastrous, at an annual European show for the international aviation business sector, EBACE.

“Eventually I think we’ll get there,” said Kurt Edwards of the International Business Aviation Council, IBAC, which groups plane and equipment makers and service providers for the multibillion dollar sector.

Guy Visele of the European Business Aviation Association, EBAA, agreed but argued that meanwhile his industry – which creates a tiny fraction of the emissions which contribute to global warming – should be treated less harshly by the EU.

Business aviation – in which a major role is played by big manufacturers like Boeing , Europe’s Airbus , Canada’s Bombardier and Brazil’s Embraer – has been seen by many politicians as a playground for the super-rich.

But its advocates say the industry, in the doldrums since the financial crisis of 2008/9 after a decade-long boom, plays a major role in world trade and that over 80 percent of its operations involve moving businesspeople rather than elite individuals.

The EU, committed to combat the climate change blamed on carbon emissions, created an international storm when it said it would impose its rules from January this year on all flights to and from its territory.

China and India, among others, ordered their carriers not to comply and the United States said it would consider retaliatory action.

EU MEASURES SUSPENDED

The EU suspended implementation of the scheme, which would have compelled commercial and business aviation carriers from anywhere in the world to purchase offset credits for the carbon they emit over a set baseline for any flight arriving or departing European airspace.

At Tuesday’s EBACE discussion, Elina Bardram of the European Commission’s climate action division said Brussels remained committed to dialogue as the best way to achieve global agreement by 2020 through the United Nations’ International Civil Aviation Organization.

It has already suspended enforcement of its own interim scheme pending the outcome of negotiations at ICAO’s triennial assembly from September 24 to October 4, but has not yet made clear what it will do if those end in deadlock.

“The path remains challenging but we can remain confident that a road map will be agreed at ICAO if political rhetoric can be dropped,” she said.

Officials from 17 countries are working with Montreal-based ICAO to shape an agreement acceptable to its 191 member countries to reduce aviation’s carbon footprint through market measures.

Paul Steele, environmental specialist for the commercial airlines’ International Air Transport Association, IATA, and head of the Geneva-based Air Transport Action Group, ATAG, said considerable progress had been made in the ICAO talks but quick agreement was unlikely.

“We’re not going to get there this year. With 191 countries in ICAO, you’re not going to get agreement easily,” he told the EBACE session. But to reach the 2020 deadline, agreement was vital at ICAO’s next assembly in 2016, he said.

(Reported by Robert Evans; Editing by Phil Berlowitz)

(Reuters) – The European Banking Authority (EBA) on Tuesday published draft rules on how national regulators in the European Union must decide which bankers will have their bonus capped from 2014.

The EBA launched a public consultation until August 21 on its rules for implementing an EU law that says bonuses must be no more than fixed salary. A bonus can be twice salary with shareholder approval.

The draft rules propose that a bonus must be capped if the employee meets just one or more of three conditions:

* The employee is a senior manager or has the authority to commit significantly to the bank’s credit risk exposures above thresholds that are a percentage of the bank’s core common equity capital buffer;

* If any of four riders is triggered:

– total remuneration exceeds 500,000 euros a year

– employee included in the 0.3 percent of most highly paid staff at the bank

– employee’s pay bracket is equal to or greater than lowest total remuneration of senior management and risk takers

– variable pay exceeds 75,000 and 75 percent of the fixed pay component of a banker’s overall remuneration

* Employee meets internal criteria developed by the bank

* Get out clause: Only an employee who comes under the scope of the rule because of their pay bracket or variable pay level can escape the cap, and only then if the employee has no material impact on the bank’s risk profile.

(Reporting by Huw Jones; Editing by David Cowell)

FRANKFURT (Reuters) – Germany, the euro zone’s largest economy, is on track for a solid recovery thanks to a pick-up in demand for its products from abroad, the Bundesbank said on Tuesday.

Germany skirted recession in the first quarter thanks to a rise in private consumption. Its central bank said in its monthly report that it expected a further strengthening in the second quarter not only due to a catch-up in construction.

“The noticeable increase in industrial orders after a weak start to the year gives hope that with exports and equipment investments, demand factors – on whose stimulus the German economy can generally rely the most – will recover,” the report said.

German industrial production rose in March, beating expectations, boosted by strong demand from the euro zone.

But the Bundesbank also said that economic risks remained high due to the weak economic situation in large parts of the euro zone and the problems arising from the debt crisis.

France slipped into recession in the first quarter, and due to its poor economic outlook Paris has been given two more years to cut its deficit to below 3 percent of gross domestic product.

The Bundesbank, whose President Jens Weidmann will travel to Paris at the end of the week, warned that too much flexibility in applying deficit-reduction rules could hurt credibility.

“The binding effect (of the rules) threatens to be damaged from the start if the impression arises that necessary deficit reduction could perpetually be pushed back as long as sufficient political pressure is applied,” the Bundesbank report said.

(Reporting by Eva Kuehnen; Editing by Hugh Lawson)