US & World Daily Markets Financial Briefing 10-10-2008

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STOCKS NEWS US-Global rout, bank woes roil Wall Street

1035 ET 10Oct2008-Global rout, bank woes roil Wall Street
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U.S. stocks tumbled on Friday, sending the benchmark S&P 500 below 900 for the first time in five years, as ebbing appetite for risk fueled a global share sell-off on fears tighter credit would spawn world recession.

Investors liquidated risky bets, sending stock markets in Asia and Europe into a tailspin, a day after Wall Street sank for a seventh straight session.

Even so, feelings that the sell-off might be overdone helped the market pare steep losses as some investors waded back into beaten-down financials and technology shares.

The short-covering boost didn't last long however, and the market began gyrating widely between losses and gains.

1020 ET 10Oct08-White House to talk to US bankers - sources
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White House officials will hold a 2:30 p.m. EDT (1830 GMT) conference call with U.S. banking executives, two sources with direct knowledge of the event told Reuters.

0948 10Oct2008-Wall St slides on global rout, bank woes
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U.S. stocks slumped at the open on Friday, with the benchmark S&P 500 falling below the 900 mark, as fears that tighter credit may send the global economy into recession slashed the appetite for risk.

0938 ET 10Oct2008-Circuit breakers on the Dow Jones
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The following are the circuit breakers that would trigger a halt in trading on the Dow Jones industrial average:

If the Dow falls 1,100 points, or 10 percent, before 2 pm, there would be a one-hour halt in trading. Between 2 and 2:30 pm, trading would be halted for 30 minutes, and after 2:30 pm, there would be no halt.

If the Dow falls 2,200 points, or 20 percent, before 1 pm, there would be a two-hour halt in trading. Between 1 and 2 pm, there would be a one-hour halt, while if the index falls that much after 2 pm, the market would close.

In the event of a 3,350-point drop, the market would close for the day, regardless of the time.

0803 ET 10Oct2008-Financial ETF drops before the bell
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The exchange-traded fund that tracks the U.S. financial sector drops 2.1 percent before the market open.

0741 ET 10Oct2008-Futures signal more losses amid global rout
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U.S. stock index futures swooned on Friday, indicating that Wall Street would extend the global equity rout spurred by fears that tighter credit may send the global economy into recession as the appetite for risk ebbs.

Investors unloaded stocks around the world, sending stock markets in Asia and Europe into a tailspin, a day after Wall Street sank for a seventh straight session.

Shares of Morgan Stanley, a securities firm turned into a bank holding company, slid more than 6 percent to $11.64 after ratings agency Moody's warned it might cut the company's long-term debt ratings and those of rival Goldman Sachs.

Goldman Sachs shares were down nearly 4 percent at $97.50 before the bell.

0745 ET 10Oct2008-Economic diary for Oct 10
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Economic indicators on tap for Friday include import prices and international trade.

0743 ET 10Oct2008-Earnings diary for Oct. 10
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Earnings reports on Friday include third-quarter results from General Electric.

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U.S. dollar rises against yen as markets look to G7

The U.S. dollar rallied from 6-1/2 month lows against the yen on Friday amid hopes for a another coordinated response to tackle the global credit crisis from G7 monetary leaders currently in Washington for a meeting.

Persistently tight credit conditions despite a raft of measures by policy-makers worldwide to unlock lending have stoked investor fears and led to extremely volatile trading across financial markets.

That fueled gains earlier in the yen across the board, hitting its highest in more than six months against the dollar and a three-year peak versus the euro. The dollar and euro have since recovered, but the market's bias was still to buy the Japanese currency.

Investors are looking to the Group of Seven meeting of finance ministers and central bankers in Washington for remedies to revive the global banking system after recent bank bailouts, liquidity injections and coordinated interest rate cuts failed to get bank funds flowing again.

"There are hopes out there that the G7 meeting will end with some coordinated action from policymakers. It is still an extremely volatile, extremely nervous market," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York.

"But in our view, the events of the last week have shown policymakers are prepared to do whatever it takes to stabilize markets. There is a global understanding of the severity of the problem," he added.

In late morning trade in New York, the dollar last traded up 0.4 percent at 99.80 yen, after falling as low as 97.92 yen, the lowest since March, according to Reuters data.

The euro was down 0.2 percent at 134.96 yen, after hitting a three-year trough of 132.80 yen.

"Essentially we're flying blind. No-one has a clue what's going on," DZ Bank currency strategist Sonja Marten said. "The uncertainty is too great and volatility is incredible. It's a question of market confidence and somehow we're going to have to get it back."

The ICE Futures U.S. dollar index, which tracks the value of the greenback against a basket of six currencies, last traded up 0.5 percent at 81.808, after rising as high as 81.959, a fresh 14-month high.

The euro was down 0.7 percent against the dollar at $1.3510

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07:45GMT 10Oct2008-European shares plunge, banks hardest hit
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European stocks tumble, tracking plunges in Asian and U.S. equities as investors fear world governments' attempts to unlock credit markets will not suffice to ward off a global recession.

The pan-European FTSEurofirst 300 index is down 7.1 percent at 855.74 points, after hitting its lowest level since July 2003. The index has fallen about 22 percent so far this week, on track for its worst week on record.

Battered banks lead the decline, with Barclays off 14.3 percent, Santander down 8.7 percent and HSBC down 4.2 percent. Oil shares also tumble, with BP and Royal Dutch Shell down 8.1 and 6.9 percent respectively, as crude falls 4.6 percent.

07:35GMT 10Oct2008-Banks plunge as recession fears mount
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Europe's banks plunge more than 7 percent to their lowest level in five years, as Barclays, UniCredit, Santander and other banks are hammered by a broad market sell-off and fears a global recession is inevitable.

The DJ Stoxx European bank index is down 7.5 percent at 218.8 points, after falling as low as 216.75, its lowest level since March 2003. The index has crashed by a quarter this week.

Barclays shares fall 13 percent and HBOS tumbles 19 percent. Royal Bank of Scotland, Santander, UniCredit and Credit Suisse all fall 9 percent or more. The broader stock market tumbles after a late sell-off on Wall Street on Thursday, as fears mount that government intervention can do little to stem a banking crisis and the global economy will be tipped into recession.

"The market is catching up with the grim reality that this isn't going to be a mild downturn," said James Hamilton, bank analyst at Numis. "The mass leverage that people have built up over the past decade or more is catching up, and it's going to be a long and painful process."

06:40GMT 10Oct2008-Europe stock futures tumble in global sell-off
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European stock index futures tumble, tracking sharp losses on Wall Street and in Asia as recession fears mount and investors shrug off attempts by the world's governments to unlock credit markets.

At 0640 GMT, futures for the DJ Euro Stoxx 50, Germany's DAX and France's CAC fall 7.8-8.5 percent. Asian stocks plunged on Friday with Japan's Nikkei 225 down nearly 10 percent.

The U.S. government is weighing guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits, in a bid to unfreeze bank lending and staunch massive losses in equity markets, The Wall Street Journal reported on Friday.

As well as financial stocks, commodity stocks are set to remain in focus, with metals prices dropping sharply and crude prices falling five percent to $82 a barrel as fears that market turmoil will send demand for fuel slumping, outweighs news that OPEC will hold an emergency meeting in November.

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JAPAN
The benchmark Nikkei shed 9.6 percent to end at 8,276.43, its lowest close since May 2003 and its biggest one-day loss since the 1987 stock market crash on growing fears that the financial crisis will spark a global recession.

The benchmark average's drop of 24 percent for the week was more than double the weekly drop right after the 1987 market crash.

The market mood, which was bleak after a fall in New York shares and news that a Japanese real estate investment trust had failed, turned even darker after a bankruptcy filing by unlisted Yamato Life Insurance.

The broader Topix lost 7.1 percent to close at 840.86.

SOUTH KOREA
The Korea Composite Stock Price Index closed down four percent at 1,241.47, its lowest close since July 2006, but steadied after hitting a near-three-year intraday low of 1,178.51, after heads of South Korean brokerages met to propose market stabilisation funds, and as the won rebounded.

AUSTRALIA
The benchmark S&P/ASX 200 index ended unofficially down 8.3 percent at the day's low of 3,960.7, registering its biggest percentage and points fall since at least May 1992, on mounting fears of a global recession.

Sellers attacked stocks across the board, with heavyweight lenders and mining stocks all suffering heavily, in tune with a broad sell-off of markets across Asia.

CHINA
The Shanghai Composite Index ended lower for a sixth day, down 3.57 percent at 2,000.57, amid broad sell-offs in regional markets, with resource stocks hit hard on concerns that a global recession will slash demand for raw material.

Steel makers came under pressure after the government warned of a further slide in steel prices and property companies also slumped.

PetroChina, the biggest index component, closed slightly higher amid hopes that its parent company may buy back more shares.

Financials rebounded from their lows and analysts said that investors may have been anticipating purchases by government investment firm Huijin.

The Shanghai A-share Index fell 3.56 percent to 2,101.30, while the Shenzhen A-share Index shed 5.55 percent to close at 558.34.

The Shanghai B-share Index fell 6.51 percent to 110.70, while the Shenzhen B-share Index was down 5.36 percent at 265.28.

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