20111201 1029 Global Market Related News.

Dow Jumps Most Since 2009 as Central Banks Take Action on Crisis (Source: Bloomberg)
U.S. stocks advanced, driving the Dow Jones Industrial Average up the most since March 2009, after six central banks took action on Europe’s debt crisis by making it cheaper for lenders to borrow in dollars. Financial shares rallied 6.6 percent, the biggest gain in the Standard & Poor’s 500 Index among 10 groups. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) surged at least 7.3 percent. Caterpillar Inc. (CAT) increased 8.1 percent and U.S. Steel Corp. climbed 15 percent after China lowered banks’ reserve requirements, bolstering optimism about economic growth. The Dow Jones Transportation Average jumped 4.8 percent. The S&P 500 rose 4.3 percent to 1,246.96 at 4 p.m. New York time. The benchmark gauge rallied 7.6 percent in three days, the most since March 2009. The Dow added 490.05 points, or 4.2 percent, to 12,045.68. About 10 billion shares changed hands on U.S. exchanges, or 25 percent above the three-month average.

Japanese Stocks Gain Most in 2 Months as Central Banks Fight Europe Crisis (Source: Bloomberg)
Japanese stocks gained, sending the Nikkei 225 (NKY) Stock Average toward its biggest gain in more than two months, after six central banks cut the cost of emergency dollar funding for European banks in response to the continent’s debt crisis. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, gained 3.7 percent. Komatsu Ltd., a maker of construction machinery that counts China as its fastest-growing market, jumped 6 percent after China took action to boost growth by lowering lending curbs. Mitsui & Co., a trading house that gets about 40 percent of its sales from commodities, climbed 3.9 percent after oil and metals prices rose. The Nikkei 225 gained 2.3 percent to 8,629.02 as of 9:27 a.m. in Tokyo, set for the biggest gain since Sept. 27. The gauge dropped 6.2 percent last month amid concern that Europe’s crisis is spreading to the region’s larger economies. The broader Topix rose 2 percent to 743.05 today.

Europe’s Stoxx 600 Index Posts Biggest Four-Day Gain Since November 2008 (Source: Bloomberg)
European stocks jumped, posting their biggest four-day rally since November 2008, as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut its reserve ratio for banks. Barclays Plc (BARC) and Deutsche Bank AG (DBK) rallied. BHP Billiton Ltd. (BHP), the world’s biggest mining company, paced gains in commodity shares. BP Plc (BP/), Europe’s second-largest oil company, rose the most in two months. The Stoxx Europe 600 Index increased 3.6 percent to 240.08 at the close. The benchmark measure has increased 9.1 percent over the last four days. The Stoxx 600 fell as much as 1.1 percent earlier today, after Standard & Poor’s cut the credit ratings of global banks including HSBC Holdings Plc (HSBA) and UBS AG. (UBSN)

Central Banks Cut Cost of Borrowing Dollars (Source: Bloomberg)
Six central banks led by the Federal Reserve made it cheaper for banks to borrow dollars in emergencies in a global effort to ease Europe’s sovereign-debt crisis. Stocks rallied, driving the Dow Jones Industrial Average up the most since March 2009, commodities surged and yields on most European debt fell on the show of force from central banks aimed at easing strains in financial markets. The cost for European banks to borrow dollars dropped from the highest in three years, tempering concerns about the euro’s worsening crisis after leaders said they’d failed to boost the region’s bailout fund as much as planned. “It’s supportive but not necessarily a game changer,” said Michelle Girard, senior U.S. economist at RBS Securities Inc. in Stamford, Connecticut. “The impact is more psychological than anything else” as investors take heart from policy makers’ coordination, Girard said.

Central Banks Prepare to Distribute Foreign Currency at Home During Crises (Source: Bloomberg)
The Federal Reserve and five other central banks set up agreements to distribute each other’s currencies in the event of a global funding crisis. Central banks agreed to establish temporary bilateral currency swap arrangements “so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant,” the Fed said today in a press release, calling the agreement a “contingency measure.” The European Central Bank and the central banks of Canada, Japan, Switzerland and the U.K. agreed to the arrangements. The bilateral agreements were announced alongside coordinated action by the six central banks aimed at boosting dollar liquidity. Bilateral swaps would enable, for example, the Fed to provide euros, Swiss francs, or British pounds to U.S. banks if needed. The accord allows a broader distribution of liquidity and allows a bank to deal directly with its home central bank, said Dino Kos, a former New York Fed executive vice president in charge of open market operations.

Fed: ‘Slow to Moderate’ Growth in 11 Districts (Source: Bloomberg)
The Federal Reserve said the economy expanded at a “moderate” pace in 11 of 12 districts, led by gains in manufacturing and consumer spending. “Overall economic activity increased at a slow to moderate pace since the previous report across all Federal Reserve districts except St. Louis, which reported a decline in economic activity,” the Fed said in its Beige Book survey released today in Washington covering October and the first half of November. The report reinforces the central bank’s view that the economy, while strong enough to skirt a recession, remains too weak to bring down an unemployment rate stuck near 9 percent or higher for more than two years. At their last meeting Nov. 1-2, some Fed policy makers said the central bank should consider easing policy further, according to minutes of the meeting.

Fed Has Tools Beyond Swaps for Countering Europe’s Sovereign-Debt Crisis (Source: Bloomberg)
The Federal Reserve has tools available for easing Europe’s sovereign-debt crisis beyond its coordinated effort to reduce borrowing costs announced today, including cutting the U.S. discount lending rate. Six central banks led by the Fed lowered the cost of emergency dollar funding for financial companies, reducing the premium banks pay to borrow dollars overnight from central banks by half a percentage point to 50 basis points. The Fed may reduce what it charges on emergency loans to banks by a quarter point to 0.5 percent by early next week, said Michael Cloherty, head of U.S. interest rate strategy at RBC Capital Markets. It probably won’t resort to its other options, including reopening the Term Auction Facility to give U.S. banks more access to funding, without a worsening in Europe’s crisis, said Charles Lieberman, chief investment officer with Advisors Capital Management LLC in Hasbrouck Heights, New Jersey.

Fed Policy Makers Sharpen Differences Over Conditions for More Bond Buying (Source: Bloomberg)
Federal Reserve policy makers sharpened their differences over the signs of economic decline that would warrant more asset purchases by the Fed in speeches yesterday. Vice Chairman Janet Yellen said the Fed still has “scope for action” to fight unemployment she predicted would remain “painfully high” for years. Atlanta Fed President Dennis Lockhart said he doubted more bond buying would make a difference, while the Minneapolis Fed’s Narayana Kocherlakota said policy makers should begin tightening in 2012, assuming forecasts for lower unemployment and stable inflation prove accurate. The officials’ remarks underscore a divided Fed that’s struggling to bring down a jobless rate stuck near 9 percent or higher for more than two years. The central bank will probably choose to step up stimulus through a third round of asset purchases next quarter, 16 of the 21 primary dealers of U.S. government securities that trade with the Fed said in a Bloomberg News survey last week.

Employment, Businesses Expand More Than Forecast: Economy (Source: Bloomberg)
Companies boosted payrolls in November by the most this year and U.S. businesses expanded at the fastest pace in seven months, giving the economy a lift as 2011 draws to a close. Private employment, which excludes government jobs, climbed 206,000 this month, according to data today from Roseland, New Jersey-based ADP Employer Services. The Institute for Supply Management-Chicago Inc.’s business barometer increased to 62.6 in November from 58.4 the prior month as orders and production strengthened. “Things are shifting in the right direction for a faster pace of growth next year,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “New orders are rising, production is increasing and employment will likely improve.” In addition, “central banks are taking the right steps,” he said.

Pending Sales of Existing U.S. Homes Exceed Forecasts With 10.4% Increase (Source: Bloomberg)
The number of Americans signing contracts to buy previously owned homes rose more than forecast in October as buyers took advantage of falling prices and low borrowing costs. The index of pending home sales increased 10.4 percent, the biggest gain since November 2010, after falling 4.6 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 2.0 percent increase, according to the median estimate in a Bloomberg News survey. While mortgage rates near record lows are helping some buyers purchase housing that’s growing more affordable as prices drop, 9 percent joblessness and tight lending standards are keeping others out of the market. A new wave of foreclosures may augment the property oversupply, triggering further slides in value and delaying an industry recovery.

China PMI Falls for First Time Since 2009 (Source: Bloomberg)
China’s manufacturing contracted for the first time since February 2009 as the property market cooled and Europe’s crisis cut export demand, a survey showed. The Purchasing Managers’ Index fell to 49.0 in November from 50.4 in October, the China Federation of Logistics and Purchasing said in a statement today. The median estimate in a Bloomberg News survey of 18 economists was 49.8. A level above 50 indicates expansion. The central bank last night announced the first cut in banks’ reserve requirements since 2008, moving two hours before the U.S. Federal Reserve led a global effort to ease Europe’s sovereign-debt crisis. The move will add about 370 billion yuan ($58 billion) to the financial system and more reductions may follow as the government seeks to support growth, Citigroup Inc. said.

China Reserve-Ratio Cut May Signal Slowdown (Source: Bloomberg)
China’s reduction in reserve requirements for banks, the first since 2008, may signal government concern that a slowdown in the world’s second-biggest economy is deepening. Reserve ratios will decline by 50 basis points effective Dec. 5, the central bank said on its website yesterday. The move may add 350 billion yuan ($55 billion) to the financial system, according to UBS AG. A report due today may show that China’s manufacturing contracted for the first time since February 2009, and the nation’s stocks had their biggest decline in almost four months yesterday. Premier Wen Jiabao aims to sustain the economic expansion as Europe’s debt crisis saps exports, a credit squeeze hits small businesses and a crackdown on real-estate speculation sends home sales sliding.

Japanese Stocks Gain Most in 2 Months as Central Banks Fight Europe Crisis (Source: Bloomberg)
Japanese stocks gained, sending the Nikkei 225 (NKY) Stock Average toward its biggest gain in more than two months, after six central banks cut the cost of emergency dollar funding for European banks in response to the continent’s debt crisis. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by market value, gained 3.7 percent. Komatsu Ltd., a maker of construction machinery that counts China as its fastest-growing market, jumped 6 percent after China took action to boost growth by lowering lending curbs. Mitsui & Co., a trading house that gets about 40 percent of its sales from commodities, climbed 3.9 percent after oil and metals prices rose. The Nikkei 225 gained 2.3 percent to 8,629.02 as of 9:27 a.m. in Tokyo, set for the biggest gain since Sept. 27. The gauge dropped 6.2 percent last month amid concern that Europe’s crisis is spreading to the region’s larger economies. The broader Topix rose 2 percent to 743.05 today.

S. Korean Inflation Quickens to 3-Month High, Above Central Bank’s Target (Source: Bloomberg)
South Korea’s inflation accelerated to a three-month high and above the central bank’s target limit in November, posing a dilemma for policy makers as risks to growth increase. Consumer prices rose 4.2 percent from a year earlier, after a revised 3.6 percent gain in October, Statistics Korea said today in Gwacheon, south of Seoul. The reading used a new inflation gauge system after the government this week changed the base year for the index to 2010 from 2005. A separate report showed exports rose a more-than-forecast 13.8 percent. Elevated inflation may leave limited room for the Bank of Korea to cut interest rates as Europe’s debt crisis dims the outlook for exports. China’s central bank last night announced the first cut in lenders’ reserve requirements since 2008, as the U.S. Federal Reserve led a global effort to ease strains in financial markets.

Thailand Cuts Interest Rate as Floods Force First Policy Easing Since 2009 (Source: Bloomberg)
The Bank of Thailand cut interest rates for the first time in more than two years and lowered its 2011 economic growth forecast as the nation reels from the worst floods in almost 70 years. The central bank reduced its one-day bond repurchase rate by a quarter of a percentage point to 3.25 percent, it said in Bangkok today. Nine of 17 economists in a Bloomberg News survey predicted the decision, with the rest expecting a half-point cut. The central bank said gross domestic product will rise 1.8 percent in 2011, less than an earlier 2.6 percent estimate. The move to prop up the economy follows the worst slump in industrial output in October since at least 2000 and the lowest consumer confidence in a decade, after the floods killed more than 600 people and shut thousands of factories. Thailand joins Indonesia in cutting rates this month, as the threat from the debt crisis in Europe adds pressure on Asia to shield growth.

Canada Economic Rebound Beats Forecasts as Export Surge Tops Slow Spending (Source: Bloomberg)
Canada’s economy rebounded at a faster pace than economists forecast in the third quarter as the biggest jump in exports since 2004 more than offset slower domestic spending. Gross domestic product grew at a 3.5 percent annualized pace from July to September following a revised 0.5 percent contraction the prior three months, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg forecast 3 percent growth, based on the median of 23 responses. Companies such as telecommunications firm BCE Inc. and Montreal-based railway tie-maker Stella Jones Inc. expect sales growth next year even as the Bank of Canada and the Organization for Economic Cooperation and Development cut their forecasts. Exporters are being supported by the 3.7 percent decline in Canadian dollar versus its U.S. counterpart in the last six months.

Brazilian Central Bank Cuts Rate for Third Meeting to 11% as Economy Slows (Source: Bloomberg)
Brazil’s central bank cut borrowing costs by half a point for a third straight meeting as a global economic slowdown threatens to exacerbate a slump in domestic demand. The bank’s board, led by President Alexandre Tombini, today voted unanimously to reduce the benchmark Selic rate to 11 percent from 11.5 percent, as forecast by 64 of 65 analysts surveyed by Bloomberg. One analyst predicted a full-point cut. Policy makers said that “by timely mitigating the effects coming from a more restrictive global environment, a moderate adjustment in the level of the basic rate is consistent with the scenario of inflation converging to the target in 2012,” according to their statement posted on the central bank’s web site. The language in today’s statement was unchanged from the bank’s Oct. 19 decision.

Euro Ministers Seek Greater IMF Role as Bailout-Fund Expansion Falls Short (Source: Bloomberg)
European finance ministers said they would seek a greater role for the International Monetary Fund alongside their own bailout fund in their latest gamble at taming the euro zone’s sovereign debt crisis. Ministers turned to the IMF after conceding that higher interest rates and lower appetite for European bonds made it impossible for the European Financial Stability Facility to be leveraged up to its 1 trillion euro ($1.3 trillion) target. Meeting in Brussels, the ministers also suggested that any IMF help or increase in bond purchases by the EFSF, and possibly by the ECB, depends on a Dec. 9 summit of heads of government accepting German demands for governance changes that would tighten enforcement of budget rules.
“The feasibility of interventions by both bodies depends on making progress on institutional matters such as moving toward fiscal union,” new Italian Prime Minister Mario Monti said after the meeting. “The euro summit of next week will be fundamental because further progress has to achieved on the governance of the euro zone.”