US-India hold talks as business climate worsens in Delhi - BBC News US-India hold talks as business climate worsens in Delhi - BBC News

Wednesday, June 13, 2012

US-India hold talks as business climate worsens in Delhi - BBC News

US-India hold talks as business climate worsens in Delhi - BBC News

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World stocks struggle as crisis fears weigh - The Guardian


AP Business Writer= HONG KONG (AP) — World stocks struggled to stay above water in choppy trading on Wednesday, as persistent worries over Europe's ability to contain a simmering debt crisis tempered optimism following talk of more stimulus for the U.S. economy.

Some markets zigzagged between gains and losses as investors weighed comments by a Federal Reserve official in support of more measures to stimulate the economy against the situation in Europe.

In early European trading, the FTSE 100 index of leading British companies rose 0.3 percent to 5,488.84 while Germany's DAX was nearly flat at 6,161.24. France's CAC 40 retreated 0.1 percent to 3,043.97 after briefly turning positive.

U.S. stocks were poised to fall. Dow futures lost 0.1 percent to 12,500.00 while broader S&P 500 futures dropped 0.2 percent to 1,317.70.

In Asia, Japan's Nikkei 225 index gained 0.6 percent to close at 8,587.84, after machinery orders rose 5.7 percent to the highest level in four years, Kyodo reported.

South Korea's Kospi swung temporarily into negative territory in early trading before closing 0.2 percent higher at 1,859.32. Hong Kong's Hang Seng also briefly dipped before rising 0.8 percent to 18,026.52.

Australia's S&P/ASX 200 fell 0.2 percent to 4,063.80. Benchmarks in New Zealand and Singapore fell but Taiwan's rose.

Mainland Chinese shares rose on hopes authorities would bring in more economy-boosting measures. The benchmark Shanghai Composite Index added 1.3 percent to 2,318.92 while the smaller Shenzhen Composite Index gained 1.8 percent to 959.11. Shares in biotechnology, insurance and power-related companies led the gains.

"There is some room for gains after the earlier losses, and investors are expecting more positive monetary policies in the short term, even if the outlook is not so good in the longer term," said Zhang Yang, an analyst at Sinolink Securities, based in Shanghai.

Speculation that regulators may ease limits on insurers' investments helped buoy China Life Insurance, China's biggest insurance company, which gained 7.2 percent.

Huaneng Power International, one of several big electricity generators, gained 5.7 percent on expectations that lower coal prices will boost utilities' profits, Zhang said.

Conditions in Europe continued to weigh.

In Spain, ratings agency Fitch downgraded 18 banks and the government's borrowing costs rose again Wednesday after peaking the day before at the highest level since adopting the euro currency. Investors are worried that a European bailout for Spain's banks won't solve the country's problems amid fears that the contagion could spread to Italy. In Greece, investors are nervously looking ahead to an election on Sunday to see if a party that has vowed to throw out the country's bailout agreement will win.

U.S. stocks, meanwhile, staged one of their strongest rallies of the year after Charles Evans, president of the Fed's Chicago bank, told Bloomberg News he supported action to produce faster job growth.

"Even though the U.S. market rose strongly overnight because of the anticipation of quantitative easing, the market still in Asia is not convinced of the recovery," said Francis Lun, managing director of investment firm Lyncean Holdings Ltd. "So investors are very timid and dare not buy in the market right now."

Esprit Holdings Ltd. plummeted 21 percent in Hong Kong trading before being suspended after the clothing chain said chief executive Ronald van der Vis resigned for personal and family reasons. It's another sign of trouble at Esprit, which has been struggling amid shrinking demand in its biggest market, Europe.

Benchmark oil for July delivery was up 19 cents to $83.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 62 cents to finish at $83.32 on Tuesday.

In currencies, the euro strengthened to $1.2519 from $1.2498 late Tuesday in New York. The dollar rose to 79.56 yen from 79.49 yen.


AP researcher Fu Ting in Shanghai contributed to this report.

Encouraged by the Fed's positive comments, stocks rise sharply - The Christian Science Monitor

Stocks staged one of their strongest rallies of the year Tuesday, erasing a big decline from the day before, after a Federal Reserve official said he supported more measures to stimulate the economy.

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The Dow Jones industrial average shot up 162 points, and every major category of stock in the U.S. market closed higher.

Charles Evans, president of the Fed's Chicago bank, told Bloomberg News that he supported action to produce faster job growth, including having the Fed commit to super-low interest rates until unemployment falls significantly.

Last week, Fed Chairman Ben Bernanke told a committee of Congress that he was ready to act if the economy needs it, but he laid out no immediate steps.

Investors have been worried about an escalating crisis in Europe over government debt and the health of banks, and job growth in the United States has been slower over the past three months than it was earlier in the year.

"If there's really bad news, it creates a heightened sense of anticipation that the Fed is going to ride to the rescue," said Jeff Lancaster, a prinicpal at the wealth advisory firm Bingham, Osborn & Scarborough in San Francisco.

"It's almost like you've crashed your car and you've got a $500 deductible, and you take the car to the body shop and you just have this perverse desire for the damage to be well over $500," he said.

Rob Lutts, president and chief investment officer of Cabot Money Management, said investors were looking for an excuse to buy.

"The question for Bernanke is should he add more medicine when he's already doped up the patient enough already," he said.

Materials companies, industrial companies and banks rose the most, but each of the 10 major categories of stock in the Standard & Poor's 500 climbed. Energy stocks also had an impressive day after the price of oil rose from an eight-month low.

Over the weekend, European countries committed to lend Spain up to $125 billion to save its failing banks. But on Monday, the Dow fell 142 points. Investors fretted that they did not know enough about the details.

The big rally in U.S. stocks on Tuesday came despite more discouraging signs from Europe. Spain's borrowing costs jumped for a second day, to the highest level since Spain adopted the euro currency.

The interest rate, or yield, on Spain's 10-year bond rose 0.20 percentage point to 6.67 percent. It rose as high as 6.81 percent earlier in the day. At 7 percent, economists say, countries generally can no longer finance their own debt.

The rescue loan will be funneled through the government of Spain, and investors are also worried about whether Spain will have to repay that loan before it pays its other debt.

That makes bondholders less willing to buy Spain's debt, and makes them demand a higher interest rate to compensate for the added risk that they will not be paid back first if Spain is unable to pay all its debt.

"The market needs some confidence and foreign buyers won't buy Spanish debt if they won't get paid first," said William O'Donnell, head of U.S. Treasury strategy at Royal Bank of Scotland.

Borrowing costs for Italy, which analysts fear will be the next European country to seek some kind of rescue, rose even more. They jumped 0.47 percentage point to 6.02 percent.

Investors are also nervous ahead of an election in Greece this weekend that may determine whether that country cuts itself free from the euro.

Stocks slipped early in Madrid, then turned positive and were up 0.1 percent after U.S. markets opened. France's CAC-40 rose 0.1 percent, and Germany's DAX gained 0.3 percent.

In the U.S., the Dow rose 162.57 points, or 1.3 percent, to close at 12,573.80. The Standard & Poor's 500 index gained 15.25 points to 1,324.18, and the Nasdaq composite rose 33.34 to 2,843.07. Trading was light for a second day.

Investors sold U.S. government debt, an indication that they were willing to move money into riskier assets. The yield on the benchmark 10-year U.S. Treasury note climbed 0.08 percentage point to 1.67 percent.

Michael Kors Holdings, a high-end clothing company, rose $2.06, or 5 percent, to $40.24 after reporting that its fourth-quarter profit more than tripled on strong demand grew for its luxury clothing and accessories.

The company also boosted its earnings forecast for the quarter and the year. Luxury spending has recovered from the recession faster than other consumer spending. Stocks of other upscale retailers, like Nordstrom, also rose.

Among other stocks making big moves:

VeriFone Systems, an electronic payments company, fell $2.02, or 6 percent, to $31.92. A jury ruled against it last week in a patent dispute, and VeriFone said late Monday that it was booking $18 million in expenses.

A123 Systems, which makes batteries for electric cars, jumped 54 cents, or 52 percent, to $1.58 after saying it had developed new lithium ion technology capable of operating in extreme heat or cold. Heat generated by powerful next-generation batteries is one of the biggest hurdles in developing cars that do not use fossil fuels.

Textron, which makes planes, rose 94 cents, or 4 percent, to $24.52, one of the biggest gains in the S&P 500. Business jet operator NetJets said it plans to spend up to $9.6 billion on planes from Textron's Cessna unit and from Bombardier.

— First Solar, the world's largest maker of a type of solar panel, rose $2.62, or 21.2 percent, to $14.95. It reported strong demand from Europe and will delay the closing of a German plant.

Morning business round-up: World Bank warning - BBC News

What made the business news in Asia and Europe this morning? Here's our daily business round-up:

Economic concerns continued to dominate headlines, with problems in the eurozone threatening to have an impact on economies outside the bloc.

Developing nations should brace themselves for weak growth and "tougher times", the World Bank has warned.

It said that there may be "a long period of volatility in the global economy" as the eurozone debt crisis escalates.

The bank forecast that developing economies would grow by 5.3% this year, down from 6.1% in 2011.

There was, however, some good news for the eurozone, with new data showing that inflation for the larger economies has eased.

And although the Spanish economy continues to suffer, not all the country's companies are struggling. Retailer Inditex, whose brands include Zara, posted a surge in profits and sales, sending the company's share price up 8%.

In Japan, there was a boost for machinery orders in April, a key indicator of capital expenditure.

In what was a positive sign for the economy, orders rose 5.7% from a month earlier. Most analysts had projected 1.5% growth.

Failed carmaker Saab has found a buyer, with the identity of the new owner due to be announced later on Wednesday. However, media in Sweden reported that the buyer was a Swedish-Chinese investment group.

Also being announced later is the result of a shareholder vote on remuneration at advertising group WPP. Chief executive Martin Sorrell is facing a backlash over his £6.8m package.

In the UK, the chief executive of the financial regulator has been speaking about one of the defining moments of the financial crisis.

Hector Sants disclosed to the BBC that the crisis that forced the nationalisation of Northern Rock bank might have been avoided if his advice had been heeded.

Also in the UK, one of the leading supermarkets, Sainsbury's, has seen a rise in sales due to the opening of smaller stores.

The figures come two days after the UK's largest supermarket group Tesco reported a fall in UK sales.

In the latest Business Daily podcast, the team examines how Europe is starting to think the unthinkable - what happens if the eurozone splits. The BBC's Chris Bowlby runs through some of the possible scenarios.

Stocks Fall as German Bunds Drop After Debt Sale - Bloomberg

European stocks fell from a two-week high while German bund yields stayed higher after a debt sale. The euro strengthened against the dollar and Italy’s 10-year bonds gained as the government met its target at an auction.

The Stoxx European 600 Index lost 0.5 percent at 10:37 a.m. in London. Standard & Poor’s 500 Index futures slid 0.3 percent. The yield on 10-year German bunds jumped 10 basis points to 1.52 percent. Italian debt rallied, sending the difference in yield between the nation’s 10-year security and benchmark bunds down 16 basis points. The euro appreciated 0.3 percent to $1.2547. The cost of insuring against default on European government debt dropped for the first time in four days. Brent crude rose 0.3 percent.

Italy sold 6.5 billion euros ($8.1 billion) of bills today, matching its maximum target, as borrowing costs rose. Germany sold 4.04 billion euros in the sale of 10-year bonds. Europe is in an intense and crucial phase, Italian Prime Minister Mario Monti said today in Rome. Retail sales in the U.S. probably fell in May for the first time in a year, economists said before a Commerce Department report today.

“The price action suggests that the safe haven bid may be starting to weaken,” Sercan Eraslan, a fixed-income strategist at WestLB AG in Dusseldorf, wrote today in an e-mailed report. “Eurozone markets will keep a close eye on the European government bond primary market.”

Lower Demand

More than two shares fell for every one that gained in the Stoxx 600. SKF AB slumped 6.9 percent as the world’s largest maker of ball bearings predicted lower demand for its products and services.

Inditex SA, the world’s largest clothing retailer, jumped 8 percent after reporting first-quarter profit that beat analysts’ estimates. Etablissements Maurel & Prom SA surged 19 percent, its biggest rally since 2003, after the U.K.’s Guardian newspaper reported that Royal Dutch Shell Plc may be interested in acquiring the company.

The decline in U.S. futures indicated the S&P 500 will pare yesterday’s 1.2 percent advance. Retail sales probably decreased 0.2 percent last month following a 0.1 percent gain in April that was the smallest this year, according to the median forecast of 78 economists surveyed by Bloomberg News. A separate report may show prices paid to producers fell for a second month.

German Auction

The increase in Germany’s 10-year yield extended a 12 basis point jump yesterday. The nation is also selling as much as 1 billion euros of April 2018 inflation-linked bonds. Italy’s 10- year bond yield declined eight basis points to 6.09 percent as the government also sells debt maturing in March 2015, February 2019 and March 2020 tomorrow. Spain’s 10-year yield dropped four basis points to 6.66 percent after rising to a euro-era record yesterday.

Denmark’s 30-year bond yield advanced 14 basis points to 2.10 percent as the government agreed to ease rules for the country’s pension firms to help reduce their liabilities as record-low bond yields inflate the value of their obligations. Pension companies and life insurers will be allowed to raise the discount rate they use to calculate their liabilities to better reflect long-term growth and inflation prospects, the Business and Growth Ministry in Copenhagen said in a statement yesterday.

The Markit iTraxx SovX Western Europe Index of credit- default swaps linked to 15 governments fell 5.5 basis points to 317.5, the lowest in almost a week.

OPEC Meeting

Brent climbed to $97.46 a barrel as OPEC ministers are meeting in Vienna before a formal session tomorrow to decide on output levels for the second half of the year. Divisions within the Organization of Petroleum Exporting Countries signal the group will probably keep its crude production ceiling unchanged tomorrow as falling prices limit Saudi Arabia’s ability to justify a higher quota.

Copper advanced 0.9 percent to $7,460.75 a metric ton.

The MSCI Emerging Markets Index (MXEF) rose 0.6 percent, poised for its highest close this month. Russia’s Micex Index jumped 1.3 percent as trading resumed following a two-day holiday, while Hong Kong’s Hang Seng China Enterprises Index (HSCEI) rose 0.8 percent.

To contact the reporters on this story: Stephen Kirkland in London at; Jason Clenfield in Tokyo at

To contact the editor responsible for this story: Stuart Wallace at

Enlarge image German Bunds Fall as Italian Debt Gains Before Sales

German Bunds Fall as Italian Debt Gains Before Sales

German Bunds Fall as Italian Debt Gains Before Sales

Alessia Pierdomenico/Bloomberg

Italy plans to auction as much as 6.5 billion euros of bills today.

Italy plans to auction as much as 6.5 billion euros of bills today. Photographer: Alessia Pierdomenico/Bloomberg

June 13 (Bloomberg) -- Craig Ferguson, a currency hedge fund manager at Antipodean Capital Management in Melbourne, talks about the European sovereign debt crisis and its implications for global currencies. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

June 13 (Bloomberg) -- Barclays Plc Chief Executive Officer Robert Diamond talks about his company's business strategy and Europe's debt crisis. Diamond said the euro region is likely to survive even as the sovereign debt crisis slows economic growth and weakens the currency. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "First Up." (Source: Bloomberg)

June 13 (Bloomberg) -- Mauro Guillen, a professor at the Wharton School of the University of Pennsylvania, talks Europe's sovereign debt crisis. He speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)

June 13 (Bloomberg) -- Scott Wren, senior equity strategist at Wells Fargo Advisors LLC, talks about U.S. stocks, the implications of Europe's debt crisis for markets and his investment strategy. Wren speaks with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)

June 13 (Bloomberg) -- Pranay Gupta, chief investment officer for Asia at Lombard Odier, talks about the outlook for global financial markets and economies. Gupta also discusses Felda Global Ventures Holdings Bhd.'s initial public offering. He speaks in Hong Kong with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)

Financial crisis erases two decades of accumulated prosperity of US families - Economic Times

This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period.

The new data come from the Fed's release Monday of its triennial Survey of Consumer Finance, one of the broadest and deepest sources of information about the financial health of U.S. families. The latest survey is based on data collected in 2010. Figures are reported in 2010 dollars.

Unsurprisingly, the report is full of grim news, and although it is news from 18 months ago, fresher sources of economic data make clear that most households have since seen only modest increases, at best, in wealth and income.

Despite these setbacks, consumers have continued to spend surprising amounts of money in recent years, helping to keep the economy growing at a modest pace. The survey underscores where the money is coming from: Americans are saving less for future needs and making little progress in repaying debts.

The share of families saving anything over the previous year fell to 52 percent in 2010 from 56.4 percent in 2007. Other government statistics show that total savings have increased since 2007, suggesting that a smaller group of families are saving more money, while a growing number manage to save nothing.

The survey also found a shift in the reasons that families set aside money, illustrating the lack of confidence that is weighing on the pace of economic growth. More families said they were saving as a precautionary measure, to make sure they had sufficient liquidity to meet short-term needs. Fewer said they were saving for retirement, education or for a down payment on a home.

And the report highlighted the fact that households have made limited progress in reducing the amount that they owe to lenders. The share of households reporting any debt declined by 2.1 percentage points over the past three years, but 74.9 percent of households still owe something and the median amount of the debt did not change.

The drop in reported incomes could have increased the weight of those debts, requiring families to devote a larger share of income to debt payments. But one of the rare benefits of the crisis, lower interest rates, has helped to offset that effect. Families also have been able to reduce debt payments by refinancing into mortgages with longer terms and deferring repayment of student loans.

The survey also confirmed that Americans are shifting the kinds of debts that they carry. The share of families with credit card debt declined by 6.7 percentage points to 39.4 percent, and the median balance of that debt fell 16.1 percent to $2,600.   Families also reduced the number of credit cards that they carried, and 32 percent of families said they now had no cards, up from 27 percent in 2007.

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