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21.10.2011 08:00

Stocks: Weekly’s review

Asian stocks declined for a third- straight week, with the regional benchmark index within a percent of erasing October’s gains, amid concern about China’s property sector and evidence that Europe’s debt crisis is infecting major economies.

Stocks declined this week as Fitch Ratings said the creditworthiness of U.S. banks will deteriorate if Europe’s debt crisis spreads beyond the Europe’s five most-troubled nations. In the U.S., Republicans and Democrats on a congressional committee are struggling to find a compromise before a Nov. 23 deadline to produce a U.S. deficit-cutting plan.

The sovereign-debt crisis has stirred political turmoil across Europe, with Italy and Greece replacing their leaders this month. Spain may speed up the timetable for forming a new government after the election on Nov. 20 so the first Cabinet meeting can be held on Dec. 23, ABC reported, citing officials in the People’s Party it didn’t name.

Hong Kong’s Hang Seng Index declined 3.4 percent this week, while China’s Shanghai Composite Index fell 2.6 percent. Japan’s Nikkei 225 (NKY) Stock Average fell 1.6 percent. Australia’s S&P/ASX 200 dropped 2.8 percent.

HSBC, Europe’s largest bank, fell 4 percent to HK$59.25 in Hong Kong. Commonwealth Bank, Australia’s No. 1 lender, retreated 3.8 percent to A$47.73 in Sydney and was the biggest drag on a measure of financial companies in the Asia-Pacific index. Standard Chartered Plc, a London-based bank that makes most of its revenue in emerging markets, declined 7.5 percent to HK$159.40.

Exporters to Europe also dropped after the Bank of England said on Nov. 16 Britain’s economy faces a “markedly weaker” outlook and Spain cut its economic forecast.

Esprit Holdings Ltd., the clothier that counts Europe as its biggest market, tumbled 8.5 percent to HK$9.10 in Hong Kong. Canon Inc., the camera maker that gets about 32 percent of sales from Europe, dropped 2.5 percent to 3,350 yen in Tokyo. Mazda Motor Corp., the Japanese carmaker most dependent on Europe, declined 2.8 percent to 137 yen.

Chinese property developers and lenders fell as a government report showed home prices fell in 33 of 70 cities monitored by the government in October. The China Banking Regulatory Commission told lenders last week to step up debt restructuring for struggling local government financing vehicles and cut “high-risk” loans to developers, a person with knowledge of the matter said.

China Overseas Land sank 6.9 percent to HK$12.38. China Resources Land Ltd., a state-owned developer, slumped 5.3 percent to HK$10.70. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, dropped 8.3 percent to HK$4.44.

Gauges of raw material and energy producers led declines among the 10 industry groups in the MSCI Asia Pacific as copper futures decreased for a second week and a six-week rally in crude oil fizzled out.

BHP Billiton fell 4.4 percent to A$36.13 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, slid 3.4 percent to A$67.05. Cnooc Ltd., China’s largest offshore oil producer, dropped 3.8 percent to HK$14.82 in Hong Kong.

European stocks declined for a second day as a spat between Germany and France over the role of the region’s central bank in ending the debt crisis outweighed better-than-forecast U.S. economic data. German Chancellor Angela Merkel yesterday rejected French calls to deploy the ECB as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. Merkel listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work.

Europe is running out of options to fix its debt crisis and it is now up to Italy and Greece to convince markets they can deliver the necessary austerity measures, Finnish Prime Minister Jyrki Katainen said. Greek Prime Minister Lucas Papademos won approval for the final 2012 budget designed to regain the confidence of creditors and secure resumption of international financing. The budget forecasts Greece’s debt as a proportion of gross domestic product will fall to 145.5 percent in 2012 from 161.7 percent this year.

In Italy, Prime Minister Mario Monti won a final parliamentary confidence vote, granting full power to his new government after pledging to attack the euro-region’s second- biggest debt and spur growth.

National benchmark indexes fell in 15 of the 18 western- European markets today, with Italy, Portugal and Spain the only gainers. U.K.’s FTSE 100 Index slid 1.1 percent, while France’s CAC 40 Index fell 0.4 percent. Germany’s DAX Index lost 0.9 percent.

Kemira Oyj, the Finnish maker of water-treatment chemicals, sank 14 percent after cutting its forecasts. Annual revenue will probably reach the same level as last year and operating profit excluding one-time items will be at or slightly below the level in 2010, the Helsinki- based company said.

Chemring Group Plc, the U.K. maker of missile-avoidance gear, slumped the most in 14 years as profit missed estimates. The company said full-year revenue was 745 million pounds ($1.18 billion), 5 percent less than management expectations, leaving operating profit below analyst estimates.

ARM Holdings Plc fell 3.9 percent to 498 pence. The maker of processor chips for Apple Inc.’s iPhone expects slower growth in research spending in 2012, the Wall Street Journal reported, citing an interview with President Tudor Brown.

SGL Carbon rose 1.2 percent to 43.68 euros after BMW, the world’s largest maker of luxury cars, bought a 15 percent stake in the maker of carbon products. BMW said it’s “satisfied” with its current holding, though can’t rule out additional share purchases in the future.

Deutsche Boerse AG, the operator of the Frankfurt exchange, added 2.8 percent to 42.52 euros. Deutsche Boerse and NYSE Euronext offered to sell overlapping single-equity derivatives businesses and give access to clearing services to soothe European regulators’ concerns over their proposed merger.

Holcim Ltd., the world’s second-biggest cement maker, jumped 2.2 percent to 51.30 francs after Paul Roger, an analyst at Exane BNP Paribas SA, raised the stock to “outperform” from “underperform.”

U.S. stocks fell, with the Standard & Poor’s 500 Index completing its biggest weekly drop in two months, as a decline in technology and energy companies overshadowed optimism that the economy is accelerating. Stocks swung between gains and losses as investors watched developments in Europe. The Conference Board’s index of U.S. leading indicators rose more than forecast, signaling the largest economy will keep growing in 2012. The U.S. economy may end 2011 expanding at its fastest pace in 18 months as analysts increase their forecasts for the fourth quarter.

Technology and energy shares had the biggest declines in the S&P 500 among 10 industries, falling at least 0.4 percent. Chevron decreased 2.2 percent to $97.88. Halliburton lost 2.9 percent to $35.96.

Chevron Corp. (CVX) and Halliburton Co. slumped at least 2.2 percent as oil fell for a second day. Inc., the largest maker of online customer-management software, lost 10 percent as billings missed some estimates. Billings rose 29 percent in the fiscal third quarter from a year earlier, said Pat Walravens, an analyst at JMP Securities LLC, who has an “outperform” rating on the shares. That missed his 33 percent growth estimate. The figure is seen as a benchmark of momentum at the company, whose shares had climbed more than 10 percent in the past six weeks before today.

Clearwire Corp. plunged 21 percent to $1.47 after the Wall Street Journal reported the unprofitable wholesale wireless carrier is evaluating whether to make a Dec. 1 debt payment, citing its chief executive officer. Susan Johnston, a Clearwire spokeswoman, declined to comment on the interest payment or the Wall Street Journal’s story.

H.J. Heinz Co. fell 3.3 percent to $51.07. The biggest ketchup maker affirmed its forecast for current fiscal year earnings of no more than $3.32 a share. Analysts on average estimated $3.34 a share, according to a Bloomberg survey.

Hewlett-Packard Co. (HPQ) rallied 2.6 percent after adding Relational Investors LLC’s Ralph Whitworth to its board.

Boeing Co. (BA) advanced 2.1 percent after winning a provisional order for 230 planes from Lion Air. The order from Indonesian budget carrier Lion Air would be worth $21.7 billion at list prices, making it a record transaction for Boeing.

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