Asian Stocks Drop as ECB Damps Bond Hope (Source: Bloomberg)
Asian stocks (MXAPJ) fell for a second day after the European Central Bank damped speculation it would step up debt purchases and ahead of economic reports today that are expected to show China’s economy slowing. Nissan Motor Co., which depends on Europe for 15 percent of its sales, fell 1 percent in Tokyo. Fanuc Corp. (6954), a maker of industrial robots that gets about 70 percent of its revenue outside Japan, sank 3.1 percent. BHP Billiton Ltd. (BHP), the largest global mining company, retreated 2.8 percent in Sydney after commodity prices declined. The MSCI Asia Pacific Index (MXAP) slid 1.1 percent to 116.08 as of 9:37 a.m. in Tokyo. All 10 industry groups on the measure dropped, with almost seven stocks falling for each that rose.
U.S. Stocks Decline as ECB Damps Speculation (Source: Bloomberg)
U.S. stocks fell, snapping a three- day gain, as the European Central Bank damped speculation it would boost debt purchases and amid a report Germany rejected some proposals to fight the crisis at a summit of leaders. Banks tumbled as Morgan Stanley (MS), Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) retreated at least 5.2 percent. Alcoa Inc., Intel Corp. and General Electric Co. dropped more than 2.5 percent, pacing declines among the biggest American companies. Hartford (HIG) Financial Services Group Inc. decreased 8.2 percent after the insurer said it is targeting additional cost cuts as it copes with a “fragile economic recovery.” The Standard & Poor’s 500 Index retreated 2.1 percent to 1,234.35 at 4 p.m. New York time as 487 out of 500 stocks declined. The Dow Jones Industrial Average lost 198.67 points, or 1.6 percent, to 11,997.70. The Russell 2000 Index of small companies tumbled 3.1 percent to 722.68.
Stocks in Europe Drop Most in Two Weeks on ECB Outlook, Bank Stress Tests (Source: Bloomberg)
European stocks dropped the most in two weeks as the European Central Bank damped speculation it would step up purchases of government bonds and regulators said lenders need to raise more capital than previously forecast. Commerzbank AG (CBK) and Intesa Sanpaolo SpA retreated more than 8 percent after the European Banking Authority said Europe’s lenders will need to boost capital by 114.7 billion euros ($153 billion). PSA Peugeot Citroen and Fiat SpA (F) led a decline in auto shares. BioMerieux (BIM) SA tumbled 11 percent as the maker of medical tests said it may not meet its sales-growth target.
The Stoxx Europe 600 Index slid 1.5 percent to 237.71 at the close of trading. The gauge earlier climbed as much as 1 percent after the ECB cut its benchmark interest rate by a quarter percentage point, offered banks as much money as they need for three years and loosened collateral rules for refinancing operations to ease strains in credit markets. The measure has dropped 14 percent this year amid concern the euro- area debt crisis will derail the region’s economic recovery.
China reported slowest inflation (Consumer Price Index)for Nov 2011 at 4.2% (Source: Bloomberg)
Drop in Jobless Claims a Sign Market is Mending (Source: Bloomberg)
Fewer Americans than forecast filed applications for unemployment benefits last week, reflecting a drop in firings that may signal the job market is on the mend. Jobless claims fell by 23,000 to 381,000 in the week ended Dec. 3, the fewest since February, Labor Department figures showed today in Washington. Other data showed consumer sentiment has stabilized around levels usually associated with recessions, and wholesalers boosted inventories heading into the holidays. A decrease in firings may foreshadow bigger gains in hiring that will help Americans gain enough confidence in the economic recovery to sustain the pickup in holiday spending into 2012. Nonetheless, the specter of a slump in Europe brought on by the debt crisis and government haggling over the U.S. budget loom as obstacles to bigger increases in employment.
IMF Says Hong Kong Needs Immediate Stimulus Should Crisis Cause Recession (Source: Bloomberg)
Hong Kong must be ready to provide “significant and immediate” fiscal stimulus should a worsening European debt crisis threaten to drive the city into recession, according to the International Monetary Fund. The Chinese city could cut taxes, provide subsidies to the poor or roll back some property-cooling measures, the Washington-based fund said in a report released today. Policy makers must be ready to react, even though a deepening crisis is a “low probability tail event,” it said. Global stocks fell as the European Central Bank damped speculation that it would increase debt purchases to fight the region’s crisis. Recession is “possible” for Hong Kong on deteriorating exports and the government will ease property curbs in the event home prices slump, Financial Secretary John Tsang said this week.
Japan GDP Rebound Last Quarter Less Than Initial Estimate (Source: Bloomberg)
Japan’s economy grew less than the government’s initial estimate last quarter as companies reduced investment on concern overseas demand was stalling. Gross domestic product increased at an annualized 5.6 percent in the three months ended Sept. 30, the Cabinet Office said in Tokyo today, compared with a preliminary figure of 6 percent. The median forecast of 19 economists surveyed by Bloomberg News was for an increase of 5.2 percent. Japan’s economic recovery after two straight quarters of contraction and a record earthquake in March is threatened by a global slowdown and a yen rate staying near post-World War II highs against the dollar. Prime Minister Yoshihiko Noda ordered a fourth extra budget last week to shore up demand in the world’s third-largest economy.
South Korean Economy to Forecast Grow 3.7% in 2012, Bank of Korea Says (Source: Bloomberg)
South Korea’s growth is set to slow and inflation may ease next year, the Bank of Korea said a day after leaving borrowing costs unchanged on concern Europe’s debt crisis poses risks to Asia’s fourth-biggest economy. Gross domestic product is likely to expand 3.7 percent in 2012 and 4.2 percent in 2013, compared with 3.8 percent this year, the central bank forecast in a statement released in Seoul today. Consumer prices may increase 3.3 percent next year after a 4 percent gain in 2011, it said. Governor Kim Choong Soo left the seven-day repurchase rate at 3.25 percent for a sixth month yesterday, the longest pause since tightening began in July 2010. Downside risks to growth are “high” because of the European turmoil, possible slumps in major economies and unrest in international financial markets, the central bank said in its statement yesterday.
EU Battles for ‘Fiscal Compact’ to Lure ECB Into Euro Fight (Source: Bloomberg)
European leaders battled into the night to halt two years of debt-driven turmoil in financial markets and dispel concerns that the 17-nation euro currency is on the brink of unraveling. Leaders worked on a “fiscal compact” at a Brussels summit to restore bondholders’ confidence and make it possible for the European Central Bank and International Monetary Fund to step up contributions to the rescue effort. No agreement has yet been reached, said two government officials familiar with the talks.Chancellor Angela Merkel of Germany, Europe’s dominant economy, damped expectations, saying the euro’s credibility has suffered and calling the 15th summit in 23 months part of a “step-by-step” solution to the crisis that has cast doubt on the currency’s survival. Italian and Spanish bonds tumbled and the U.S. Standard & Poor’s Index fell the most in two weeks as some investors reined in optimism about the summit’s outcome.
EU Loans to IMF May Open Door to Brazil, China Help (Source: Bloomberg)
An agreement by European Union leaders to boost the International Monetary Fund’s resources may open the door to similar loans by nations from South Korea to Brazil in a global effort to stem the European debt crisis. European leaders meeting in Brussels may agree to make bilateral loans to the IMF of as much as 200 billion euros ($267 billion), an EU diplomat said yesterday. Such a move may draw aid from the Group of 20 nations, which held back last month because they said Europe wasn’t doing enough to help itself. A deal in Brussels “should pave the way, make it more comfortable for countries that want to contribute to do so,” said Uri Dadush, director of international economics at the Carnegie Endowment for International Peace in Washington. “The Brazilians, the Chinese will be pushing for increased participation.”
Draghi Acts to Expand Credit to Banks, Doesn’t Signal More ECB Bond Buying (Source: Bloomberg)
European Central Bank President Mario Draghi cut interest rates and offered banks unlimited cash for three years while damping speculation the ECB will buy more government bonds to stem the region’s debt crisis. Policy makers meeting in Frankfurt today reduced the benchmark rate by a quarter percentage point to 1 percent, matching a record low. They also loosened collateral rules so that banks can borrow more from the ECB and announced two unlimited three-year loans. The measures “should ensure enhanced access of the banking sector to liquidity,” Draghi said at a press conference. Hours before European leaders meet in Brussels, Draghi kept the onus on them to solve the two-year debt crisis by repeating his call for a “fiscal compact” and denying he had hinted the ECB would automatically support such an initiative with more bond purchases.
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