Asia Stocks Snap Rally Amid Europe Concern (Source: Bloomberg)
Asian stocks (MXAP) dropped, snapping a two-day rally, as lenders sought more cash from the European Central Bank than economists had expected, reducing optimism that the region’s debt crisis will be contained. Mizuho Financial Group Inc. (8411), Japan’s third-biggest lender, fell 1 percent on speculation Europe’s worsening debt problems will hurt bank earnings. Tokio Marine Holdings Inc. slipped 2 percent on concern Japan’s No. 2 casualty insurer may be paying too much to buy Delphi Financial Group Inc. OneSteel Ltd., Australia’s second-largest producer of the metal, gained 5.9 percent after saying it’s not considering a debt or share sale. “The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative, but at least they are acting as a lender of last resort for banks,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “As we are heading closer to a holiday period, volumes decline.”
Japanese Stocks Snap 2-Day Rally as Europe’s Banks Devour Cash From ECB (Source: Bloomberg)
Dec. 22 (Bloomberg) -- Japanese stocks fell for the first time in three days, as lenders borrowed more cash from the European Central Bank than economists had expected, sparking concern the region’s debt crisis won’t be contained. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest bank by market value, fell 0.3 percent. Okuma Corp. (6103) and other makers of precision machinery dropped after Bank of America Merrill Lynch cut its rating on the sector to “bearish.” Tokio Marine Holdings Inc. (8766), Japan’s second-biggest casualty insurer, fell 2 percent after agreeing to buy U.S.-based Delphi Financial Group Inc. in its biggest acquisition in three years.
“The ECB doesn’t seem to have stepped up to the plate for bond buying, which I think is negative, but at least they are acting as a lender of last resort for banks,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “As we are heading closer to a holiday period, volumes decline.”
Stocks in U.S. Advance as Utilities, Banks Outweigh Technology-Led Decline (Source: Bloomberg)
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a second day, as gains in energy and consumer shares helped the market recover from an early drop led by disappointing results at Oracle Corp. (ORCL) Exxon Mobil Corp. (XOM) gained 1.4 percent after oil rose for a third day as U.S. inventories declined the most in a decade. Gauges of utility, consumer staples and health-care companies in the S&P 500 added at least 0.7 percent. Bank of America Corp. advanced 1.2 percent after agreeing to a record $335 million fair-lending settlement. (BAC) Oracle plunged 12 percent, the most since 2002, as sales and profit missed analysts’ projections.
The S&P 500 increased 0.2 percent to 1,243.72 at 4 p.m. New York time, after dropping as much as 1 percent earlier. The Dow Jones Industrial Average gained 4.16 points, or less than 0.1 percent, to 12,107.74 today. The Nasdaq Composite Index slumped 1 percent to 2,577.97. About 6.6 billion shares changed hands on U.S. exchanges, or 17 percent below the three-month average.
European Stocks Decline as ECB Funding Fails to Ease Debt-Crisis Concern (Source: Bloomberg)
European stocks fell for the first time in three days as lenders sought more funds from the European Central Bank than economists had predicted, reducing optimism that the debt crisis will be contained. SAP AG (SAP), the world’s largest maker of business-management software, tumbled the most in two years as U.S. rival Oracle Corp. reported sales and profit that missed analysts’ estimates. Italy’s UniCredit SpA (UCG) led a gauge of banks (SX7P) lower. Konecranes Oyj (KCR1V) slipped 3.6 percent in Helsinki after announcing a restructuring of its operations. The Stoxx Europe 600 Index declined 0.5 percent to 237.29 at the close of trading. The benchmark measure rallied as much as 1.4 percent after the ECB agreed to provide three-year loans to euro-area banks to keep credit flowing to the economy, before erasing its advance two hours later.
Sales of Existing U.S. Homes Rise From Slump (Source: Bloomberg)
Sales of existing homes in the U.S. rose in November to a 10-month high, showing demand may be starting to stabilize following a plunge over the past four years that was steeper than previously calculated. Purchases climbed 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said today in Washington. The group revised down figures going back to 2007 by an average 14 percent, putting them more in line with other measures of demand. “Perhaps signs of life are increasing for the housing market,” said Ellen Zentner, a senior U.S. economist at Nomura Securities International Inc. in New York, who forecast a sales rate of 4.4 million for last month. “Housing is finally not going to be a drag on economic growth in 2012. That’s not to say that risks don’t abound. We know that there’s a substantial shadow inventory of distressed properties that we’re still waiting to come onto the market.”
Bernanke Prods Savers to Become Consumers (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke finally may be catching a break: His easy-money policies are showing signs of speeding up the economic rebound three years after he cut interest rates to zero. Housing may be nearing a bottom as record-low mortgage rates tempt more buyers into the market and confidence among homebuilders climbs to the highest since May 2010. Autos, another part of the economy sensitive to interest rates, are reviving, with carmakers reporting in November their highest sales pace in more than two years. Banks also are starting to put more of their money to work, expanding commercial and industrial loans last quarter by the most since Lehman Brothers Holdings Inc. went bankrupt in September 2008. “When the Fed sprinkles happy dust on the economy, we always respond,” said Allen Sinai, co-founder and chief global economist and strategist at Decision Economics in New York. “The happy dust has been out there a long, long time, and I think it finally may be settling in some places.”
Treasuries Hold Two-Day Loss Before Consumer Confidence, Spending Reports (Source: Bloomberg)
Treasuries held onto two days of losses before data this week forecast to show confidence and spending among U.S. consumers rose, a sign of a recovery in the world’s largest economy. Thirty-year bond yields were two basis points from a one- week high as the Federal Reserve prepares to make its final 2011 purchase of long-term Treasuries today in its effort to lower borrowing costs. The extra yield investors demand to hold 30- year Treasuries instead of 10-year notes widened to 104 basis points, or 1.04 percentage points, the most in more than a week. Demand for U.S. debt was supported as investors continue to seek a refuge from the prolonged debt crisis in Europe. “We’ve been seeing good data coming out of the U.S. and that indicates the economy is better than we had thought,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest publicly traded bank. “The recovery is supportive of the yields and Treasuries are likely to be sold.”
Dollar Is Near 11-Month High Against Euro Before Confidence, Spending Data (Source: Bloomberg)
The dollar traded 0.7 percent from its highest level in 11 months versus the euro before reports this week forecast to show confidence and spending among U.S. consumers strengthened, spurring demand for the nation’s assets. Europe’s common currency held yesterday’s decline as Greece’s creditors resisted pressure from the International Monetary Fund to accept bigger losses on their holdings of government bonds, according to people with direct knowledge of the talks. Australia’s dollar dropped, halting a two-day advance, as Asian stocks declined, sapping demand for higher- yielding currencies. “The U.S. economy is on a recovery path,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “The U.S. recovery diminishes the chance of another round of quantitative easing, which is a buying catalyst for the dollar.”
European Banks Devour ECB Emergency Funds Amid Frozen Markets (Source: Bloomberg)
European banks borrowed enough cash from the European Central Bank at its first three-year offering to refinance almost two-thirds of the debt they have maturing next year amid concern that markets will remain frozen. The 523 euro-area lenders took a record 489 billion euros ($638 billion) from the Frankfurt-based central bank in 1,134- day loans today, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. That equals about 63 percent of the European bank debt maturing in 2012, according to Goldman Sachs Group Inc. analysts. “The perceived stigma attached to central bank borrowing has not prevented euro-zone banks from making extensive use of the ECB’s offer,” said Martin van Vliet, an economist at ING Group in Amsterdam. “The take-up of loans is massive.”
ECB to Lend Greater-Than-Forecast $645 Billion as Banks Line Up for Funds (Source: Bloomberg)
The European Central Bank will lend euro-area banks a record amount for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis. The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans today, the most ever in a single operation and more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate -- currently 1 percent -- over the period of the loans. They start tomorrow. “It was obviously an offer the banks could not refuse,” said Laurent Fransolet, head of fixed-income strategy at Barclays Capital in London. “It shows the ECB is not out of ammunition and it gives banks security on liquidity for a few years. On the other hand it means banks will rely on the ECB for longer.”
Budget Deficit Narrowed More Than Forecast in November on Higher Revenue (Source: Bloomberg)
Britain’s budget deficit narrowed more than economists forecast in November as tax revenue rose and the government’s fiscal squeeze restrained spending. Net borrowing excluding support for banks fell to 18.1 billion pounds ($28.5 billion) from 20.4 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 15 forecasts in a Bloomberg News survey was a reading of 19.7 billion pounds. Tax revenue expanded 7.1 percent, while spending increased 0.8 percent. The U.K.’s Office for Budget Responsibility cut its growth forecasts last month, prompting Chancellor of the Exchequer George Osborne to borrow more and extend spending cuts to trim the budget deficit. The economic recovery has lost traction as officials in Europe, Britain’s biggest trading partner, struggle to contain the sovereign debt crisis, and Moody’s Investors Service said yesterday the U.K. is not immune to the turmoil.
Putin Must Beat His Own Economic Record (Source: Bloomberg)
Vladimir Putin may be his own toughest competition in next year’s presidential race. Putin, now prime minister, is trying to persuade voters he can repeat the performance of his first two terms in the Kremlin, when the economy grew at an annual average of 7.1 percent from 2000 to 2008. Gross domestic product in Russia, the world’s biggest supplier of energy, may rise 4.5 percent this year, according to government forecasts, even after a boost from record oil prices. Russia’s main export blend of the fuel has averaged $109 a barrel in 2011, more than the $46 a barrel in 2000-2008.
N.Z. Growth Accelerated on Rugby Spending (Source: Bloomberg)
New Zealand’s economy grew faster than economists forecast in the third quarter, as Rugby World Cup spending gave a temporary lift to an economy struggling to recover from earthquakes. Gross domestic product rose 0.8 percent in the three months ended Sept. 30 from the previous quarter, when it increased 0.1 percent, Statistics New Zealand said in a report released today in Wellington. Growth was faster than the 0.6 percent median projection in a Bloomberg News survey of 14 economists. Investors are betting Reserve Bank Governor Alan Bollard will see the spending by rugby fans as a one-time boost and hold the official cash rate at a record-low 2.5 percent until late next year. The central bank forecasts a stronger recovery in 2012, assuming rebuilding of earthquake-devastated Christchurch accelerates in the second half of the year.
Australian, New Zealand Dollars Decline Amid European Debt Crisis Concern (Source: Bloomberg)
The Australian and New Zealand currencies dropped, snapping a two-day advance, amid concern the European Central Bank’s measures to boost liquidity may not stem the region’s debt crisis. Australia’s currency fell 0.3 percent to $1.0070 and slipped 0.3 percent to 78.63 yen as of 11:07 a.m. in Sydney. New Zealand’s dollar dropped 0.3 percent to 76.82 U.S. cents and 59.98 yen.
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