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11.11.2011 08:00

Stocks: Thursday’s review


Asian stocks plunged, with the regional index headed for its biggest drop in seven weeks, after Japan’s machinery orders dropped and China’s export growth slowed and Europe’s debt crisis has infected Italy.

Global stocks dropped this week as Europe’s sovereign-debt crisis stirred political turmoil across the region, with Italian Prime Minister Silvio Berlusconi and Greek Prime Minister George Papandreou both offering to step down. Italian 10-year bond yields have breached the 7 percent level at which Greece, Portugal and Ireland sought bailouts.

Japan’s Nikkei 225 (NKY) Stock Average slipped 2.9 percent, the most since Aug. 5. Australia’s S&P/ASX 200 dropped 2.4 percent. China’s Shanghai Composite Index fell 1.8 percent as the nation’s exports rose at the slowest pace in almost two years. India’s markets were closed today.

Hong Kong’s Hang Seng Index tumbled 5.3 percent, the most since Aug. 9.

Financial stocks were the main drag for the MSCI Asia Pacific Index amid concern political wrangling in Europe will hinder efforts to contain the debt crisis. Papandreou’s drive to put together a unity government in Greece descended into disarray as rival parties squabbled over his replacement.

HSBC Holdings Plc, the U.K.’s largest lender by market value, sank 9.1 percent in Hong Kong after profit at its investment bank declined amid political and economic uncertainty in Europe. Industrial & Commercial Bank of China Ltd. sank 8.7 percent to HK$4.74 after Goldman Sachs Group Inc. raised $1.1 billion selling shares of ICBC, as the world’s biggest lender is known, at a discount.

Japanese industrial companies dropped after a report showed the nation’s machinery orders fell more than economists forecast in September, indicating companies may hold off capital outlays as Europe’s crisis threatens the global economic recovery.

Fanuc Corp., a maker of industrial robots slipped 4.1 percent to 12,280 yen in Tokyo. Komatsu Ltd., Asia’s biggest maker of construction equipment, dropped 5.1 percent to 1,898 yen.

Chipmakers tumbled after the price of computer-storage chips dropped to their cheapest levels on record. Elpida dropped 10 percent to 377 yen. Toshiba Corp., which receives 18 percent of sales from semiconductors, retreated 6.7 percent to 323 yen. Inotera Memories Inc., a Taiwanese DRAM-chip maker, dropped 7 percent to NT$4.12.

Raw-material producers declined after copper dropped to a two-week low, crude oil fell for a second day and rubber plunged to the lowest price in 18 months.

BHP Billiton Ltd., the world’s biggest mining company and the Australia’s No. 1 oil producer, slipped 2.2 percent to A$37.48. Glencore International Plc, the world’s largest commodities trader, sank 3.9 percent to HK$53.60 in Hong Kong.


European stocks dropped, erasing earlier gains, as a surge in French borrowing costs added to concern the region’s debt crisis is spreading.

Stocks tumbled yesterday after Italian borrowing costs surged to euro-era records. Italy’s 10-year bond yield yesterday closed at 7.25 percent, near levels that prompted Greece, Ireland and Portugal to seek bailouts.

French 10-year bonds extended their declines today, sending the yield 20 basis points higher to 3.40 percent. The difference in yield with similar-maturity benchmark German bunds increased 18 basis points to 166 basis points, the most since the euro was introduced in 1999.

National benchmark indexes declined in 15 of the 18 western European markets today. France’s CAC 40 and the U.K.’s FTSE 100 both slid 0.3 percent, while Germany’s DAX rose 0.7 percent.

Credit Agricole SA slid 2.3 percent after France’s third- largest bank reported a drop in profit. The bank reported a 65 percent drop in third-quarter profit to 258 million euros as writedowns on Greek debt crimped earnings.

Vedanta Resources Plc led a retreat in mining companies, falling 9.5 percent after the largest copper producer in India reported a 92 percent drop in first-half profit to $27.8 million on foreign-exchange losses. The shares also fell as copper tumbled in London.

Air France-KLM lost 5 percent to 4.62 euros after Europe’s biggest airline reported a 31 percent drop in quarterly profit and said it expects to post a full-year loss as fuel costs surge and a sluggish economy weighs on ticket prices.

European Aeronautic Defence and Space Co. paced advancing shares, climbing 5 percent to 20.97 euros after third-quarter profit surged to 312 million euros from 13 million euros and the German government agreed to buy a 7.5 percent stake in the company from Daimler AG. The maker of Mercedes-Benz cars lost 1.2 percent to 33.16 euros.


U.S. stocks advanced, rebounding from yesterday’s tumble, as jobless claims declined while a retreat in Italian bond yields and the selection of a new Greek premier tempered concern about Europe’s debt crisis. Stocks tumbled yesterday as Italian bond yields surged to a record after Prime Minister Silvio Berlusconi said he won’t resign until austerity measures are passed. Concern about Greece’s leadership also contributed to the selloff as rival parties squabbled over the name of the next premier.

Today, the appointment of Lucas Papademos, the former vice president of the European Central Bank, to lead a unity government in Greece sent stocks higher. Italian government bonds rose after the ECB was said to purchase the securities and the nation sold the maximum amount of one-year bills on offer at an auction. A statement from S&P affirming France’s rating and saying that a “technical error” was to blame for a earlier message suggesting a downgrade also lifted equities.

The report showed the number of Americans filing applications for unemployment benefits fell to the lowest level in seven months, a sign the recovery may be encouraging companies to limit cuts in headcount. Federal Reserve Chairman Ben S. Bernanke said the central bank is concentrating “intently” on reducing unemployment and projects inflation to stay under control for the “foreseeable future.”

Dow 11,893.86 +112.92 +0.96%, Nasdaq 2,625.15 +3.50 +0.13%, S&P 500 1,239.70 +10.60 +0.86%

Cisco Systems Inc., the largest maker of networking equipment, climbed 5.7 percent, the most in the Dow, as profit and sales beat estimates. Chief Executive Officer John Chambers is eliminating jobs, scaling back operating expenses and revamping a management structure that slowed decision making. The company also is refocusing on its main products: switches and routers, which ferry data across networks.

The second-biggest U.S. drugmaker Merck & Co. jumped 3.5 percent after raising its dividend for the first time since 2004 and emphasized drug discovery in a meeting with analysts today.

Apple Inc. slumped 2.6 percent amid concern that the company may ship fewer units of its iPad tablet this year due to supply constraints.


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