20110822 1028 Global Market Related News.

GLOBAL MARKETS-Stocks routed, gold soars
LONDON, Aug 19 (Reuters) - An ugly sell-off in global stocks gathered pace, on mounting concerns the U.S. economy is heading into another recession and as some European lenders faced a short-term funding crunch, highlighting the risk of a banking crisis.
"The heavy selling is on the back of fears over the state of global economic growth and the ability of European banks to withstand another freezing-over of credit markets," said Ben Potter, strategist at IG Markets.

Asian Stocks Pare Losses on Stimulus Speculation (Source: Bloomberg)
Asian stocks pared a third day of losses as speculation the U.S. Federal Reserve will announce further measures to stimulate the economy tempered concern that German chancellor Angela Merkel’s resistance to common euro-area bonds will prolong the region’s debt crisis. Toyota Motor Corp. (7203), the carmaker that gets 28 percent of sales from North America, sank 1.9 percent in Tokyo after the yen touched a post-World War II record, harming the outlook for the country’s exporters. Inpex Corp., Japan’s No. 1 energy explorer, fell 0.7 percent as crude oil dropped. Newcrest Mining Ltd., Australia’s biggest gold producer, gained 2.6 percent after the price of the precious metal rose to a record. The MSCI Asia Pacific Index fell 0.3 percent to 119.2 as of 10:17 a.m. in Tokyo, heading for its lowest close since September 2010. About the same number of stocks rose as fell on the measure.

Asian Stocks Decline a Fourth Week as Growth Concern Deepens (Source: Bloomberg)
Asian stocks fell, with the regional index declining for a fourth straight week, as the global stock rout continued amid signs the world economy is slowing and Europe’s debt crisis will damage the banking system. Honda Motor Co., the Japanese carmaker that gets about 83 percent of sales overseas, slipped 5.3 percent in Tokyo. Hynix Semiconductor Inc. (000660), the world’s second-largest computer-memory chipmaker, tumbled 21 percent in Seoul after Dell Inc. lowered its sales forecast for this year. HSBC Holdings Plc (HSBA), Europe’s biggest lender by market value, dropped 2.9 percent on concern the worsening debt crisis in Europe could freeze interbank markets and cut off funding. An index of Japan’s 30 biggest companies hit a record low.
“Everything that’s going on is just eating away at investor confidence,” said Matt Riordan, who helps manage almost $6.6 billion in Sydney at Paradice Investment Management Pty. “Business confidence is tailing off and global growth slowing, and Europe’s debt situation appears to be getting worse and worse without any coordinated policy response. The worst case is that you go back to a 2008-type financial crisis.”

Treasuries Price in QE3 as Barclays Says Traders Anticipate $500 Billion (Source: Bloomberg)
Record-low yields on U.S. Treasuries show traders expect Federal Reserve Chairman Ben S. Bernanke to signal as soon as this week that the central bank will begin a third round of asset purchases to boost the economy, a scenario the world’s biggest bond dealers said is unlikely. Barclays Plc said 10-year yields indicate traders have priced in $500 billion to $600 billion of Treasury purchases by the Fed. Citigroup Inc. said current rates can only be justified by more central bank bond buying or assuming the economy will shrink by 2 percent. “The market is pricing in another round of large-scale asset purchases, looking for confirmation possibly as early as the Jackson Hole symposium” in Wyoming this week, Anshul Pradhan, a fixed-income research analyst at Barclays in New York, said in an interview last week. “The probability of that is low. If the Chairman does disappoint, then there should be a reversal in the outperformance of 10-year notes.”

Obama Strategist Axelrod Says ‘Politics’ Endangers U.S. Economic Progress (Source: Bloomberg)
“Pure politics” threatens to block proposals to strengthen the economy and reduce the national debt going into the 2012 election, according to David Axelrod, campaign strategist for President Barack Obama. “The only thing that keeps us from acting on many of these things is pure politics,” Axelrod said in an interview aired today on CNN’s “State of the Union.” “The fact that we can’t agree to extend a payroll tax cut for working Americans is bewildering to me, and the only explanation is politics.” Robert Gibbs, the former White House press secretary now serving as Obama’s campaign manager, promised “a very robust campaign.” This is “the most challenging economy that we’ve ever lived through,” Gibbs said today on NBC’s “Meet the Press” program. “The president can’t do all of this alone.”

Business Equipment Demand Probably Fell: U.S. Economy Preview (Source: Bloomberg)
Companies probably ordered less equipment in July as concern grew that the U.S. recovery was coming to a halt, economists said before reports this week. Bookings for durable goods excluding transportation fell 0.5 percent after rising 0.4 percent in June, according to the median forecast of 38 economists surveyed by Bloomberg News ahead of Commerce Department figures Aug. 24. Two days later, data from the same agency may show the economy grew even less in the second quarter than previously estimated. A 16 percent plunge in stocks since July 22 reflects a loss of confidence that may prompt companies and consumers to cut back even more. Attention will shift to Ben S. Bernanke on Aug. 26 to see whether the Federal Reserve chief lays out tools the central bank is likely to use should the economy need another dose of stimulus to avert a recession.

Treasury Rally Pushes Yields to Record Lows (Source: Bloomberg)
Treasuries surged, pushing yields on five-, seven- and 10-year notes to historic lows, as investors sought a refuge on concern U.S. growth is slowing and Europe’s sovereign-debt crisis is getting worse. Yields on 30-year bonds dropped this week the most since 2008 after the Federal Reserve said earlier in August it would keep borrowing costs unchanged until at least mid-2013 and Standard & Poor’s lowered the top U.S. credit rating. The rally in bonds indicates Fed Chairman Ben S. Bernanke may signal at a conference on Aug. 26 in Jackson Hole, Wyoming, that additional measures to lift the economy are needed. “Clearly growth continues to be extremely weak,” said Larry Milstein, managing director of government and agency debt trading in New York at R.W. Pressprich & Co., a fixed-income broker and dealer for institutional investors. “There’s still concern for what’s going on in Europe. Despite the downgrade by S&P, investors are looking for safety, and that’s clearly in the Treasury market.”

Payrolls Climb in 31 States, Led by New York, Texas; Nevada Is at Bottom (Source: Bloomberg)
Payrolls climbed in 31 U.S. states in July, led by New York and Texas, while the jobless rate increased in 28, painting a mixed employment picture the month before global stock markets slumped. Employers in New York boosted staff by 29,400 workers, while those in Texas added 29,300, figures from the Labor Department showed today in Washington. Joblessness increased by 0.4 percentage point in Illinois, Michigan, Minnesota and South Carolina. Nevada continued to lead the nation in unemployment with a rate of 12.9 percent. Widespread job growth is needed to shore up incomes after spending among consumers ground to a halt in the second quarter, raising concern the world’s largest economy was stalling. A Labor Department report on Aug. 5 showed employers added 117,000 workers to payrolls last month and the jobless rate fell to 9.1 percent.

Fed’s Dudley Says U.S. Economic Performance ‘Mixed,’ Banks in Better Shape (Source: Bloomberg)
Federal Reserve Bank of New York President William C. Dudley said U.S. economic performance is “at worst, mixed,” with negative news offset by loosening credit, firmer retail sales and stronger bank balance sheets. Banks are “in much better shape” than a year ago, with “huge liquidity buffers compared to where they were in 2008,” Dudley said today in response to an audience question after a speech in Lyndhurst, New Jersey. Real-estate financing is “a little more available today than” 12 months ago. The policy-setting Federal Open Market Committee on Aug. 9 pledged to keep its benchmark interest rate near zero until at least mid-2013 to revive an economic recovery that’s “considerably slower” than anticipated. Fed officials also “discussed the range of policy tools” available to boost growth and are “prepared to employ those tools as appropriate,” the FOMC said.

U.S. Stocks Post Biggest Retreat Since 2009 on Economic Concern (Source: Bloomberg)
U.S. stocks tumbled, sending the Standard & Poor’s 500 Index to its biggest four-week loss since March 2009, as concern the global economy is stalling overshadowed the cheapest valuations in 2 1/2 years. Hewlett-Packard Co. (HPQ) plunged 27 percent this week, the most since the October 1987 market crash, after a strategy shift undermined confidence in its managers. Technology, industrial and raw-material companies in the S&P 500 dropped at least 6.9 percent, the most among 10 groups. Caterpillar Inc. (CAT) and Alcoa Inc. (AA) retreated more than 8.4 percent after some of the world’s biggest banks -- Morgan Stanley, JPMorgan Chase & Co. and Citigroup Inc. -- slashed economic growth forecasts.
The S&P 500 lost 4.7 percent to 1,123.53. It has sunk 16 percent since July 22 as about $3 trillion was erased from the value of U.S. equities, according to data compiled by Bloomberg. The Dow Jones Industrial Average fell 451.37 points, or 4 percent, to 10,817.65 this week, extending its four-week decline to 1,863.51 points.

Japanese Stocks Swing Between Gains, Losses After Noda’s Comments on Yen (Source: Bloomberg)
Japanese stocks swung between gains and losses after Finance Minister Yoshihiko Noda said he’s prepared to take decisive steps to curb the yen’s appreciation, boosting the earnings prospects for the country’s exporters. Canon Inc., the world’s largest camera maker, climbed 0.9 percent, reversing earlier declines. Toyota Motor Corp., the biggest global automaker, declined 1.8 percent. Hino Motors Ltd. slumped 2 percent after Deutsche Bank AG. cut its investment rating on the truckmaker. The Nikkei 225 (NKY) Stock Average fell 0.01 percent to 8,718.24 as of 10:23 a.m. in Tokyo after rising as much as 0.4 percent. The broader Topix index slid 0.4 percent to 749.00. Noda said today he has become “more concerned” about the yen’s appreciation after the currency rose to a postwar high of 75.95 per dollar on Aug. 19 in New York. The yen has risen 6.6 percent against the greenback in the past three months.

Merkel Says She’ll Resist Pressure for Euro Bonds (Source: Bloomberg)
German Chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying that she won’t let financial markets dictate policy. Joint euro bonds would require European Union treaty changes that would “take years” and might run afoul of Germany’s constitution, Merkel said. While common borrowing might arrive at some point in the “distant future,” bringing in euro bonds at this time would further undermine economic stability and so they “are not the answer right now.” “At this time -- we’re in a dramatic crisis -- euro bonds are precisely the wrong answer,” Merkel said in an interview with ZDF television in Berlin yesterday. “They lead us into a debt union, not a stability union. Each country has to take its own steps to reduce its debt.”
Merkel has stepped up her opposition to euro bonds since returning from her summer vacation last week, making resistance to common European borrowing a campaign theme of Sept. 4 elections in her home state of Mecklenburg-Western Pomerania. Investor calls for euro bonds intensified last week as concerns about the debt crisis and a stuttering global economy drove European stocks to their lowest in more than two years.

European Stocks Drop for Fourth Week; Carlsberg Tumbles as Autonomy Soars (Source: Bloomberg)
European stocks declined for a fourth week, led by banks and carmakers, as concern escalated that the global economy is slowing and as the leaders of the euro area failed to restore investor confidence. Carlsberg A/S, the Nordic region’s largest brewer, sank 25 percent after reducing its full-year outlook. Royal Bank of Scotland Plc dropped 22 percent as a gauge of European banks slid to its lowest level since 2009. Autonomy Corp., the U.K.’s second-largest software company, surged 53 percent after it agreed to be bought by Hewlett-Packard Co. for $10.3 billion. The benchmark Stoxx Europe 600 Index dropped 6.1 percent to 223.13 this past week to its lowest level since July 2009. The gauge has declined 23 percent from its peak in February as concern mounted that Europe’s sovereign-debt crisis will spread to the larger economies of Italy and Spain and that the U.S. recovery will stall.

Aussie Dollar Trades Near One-Week Low on Signs of Slowdown, Stock Losses (Source: Bloomberg)
Australia’s dollar was 0.9 percent from a one-week low versus the U.S. currency on signs the global economy is slowing, reducing demand for higher-yielding assets. The so-called Aussie pared last week’s gain versus the greenback before reports in the next two days forecast to show companies ordered less equipment in the U.S. last month and that European consumer confidence dropped in August. New Zealand’s dollar, nicknamed the kiwi, held a two-day drop against the U.S. currency as Asian shares extended a global rout in stocks. “Global risk sentiment will be weak overall,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. Over the next few weeks, the Aussie will fall below $1 and the kiwi will drop to at least 78 U.S. cents, Speizer forecast.

FOREX-Euro struggles on weak stocks, economy view
LONDON, Aug 19 (Reuters) - The euro slipped against the dollar on Friday on the back of steep losses in European shares, remaining at risk of more selling if the global economic outlook deteriorates further and the financial funding picture worsens.
The Swiss franc edged up, benefiting from demand for currencies perceived to offer a safe haven, although its gains were capped by ongoing speculation Swiss authorities will again step in to rein the currency in.