World stocks fell Friday after credit downgrades slapped on Spanish banks unnerved investors already worried about the stability of the 17-country euro currency union.
The fall in European shares followed a sharp downturn in Asia where markets were also rattled by weak U.S. manufacturing figures.
The nervousness about Spain’s banks comes as the European financial crisis intensifies.
Political turmoil in Greece has increased the likelihood that it could leave the 17-country monetary union, a move that could have ripple effects throughout Europe and the world’s financial markets.
Britain’s FTSE 100 fell 0.8 percent to 5,295.30 and Germany’s DAX was 0.5 percent lower at 6,279.36. France’s CAC-40 lost 0.7 percent to 2,991.85.
But Wall Street looked set for a higher opening on Friday when shares of social media giant Facebook will start trading. Buyer demand is expected to be very strong. Dow Jones industrial futures rose 0.2 percent to 12,439 and S&P 500 futures added 0.2 percent to 1,304.40.
Markets were jolted by Moody’s downgrade Thursday of 16 Spanish banks, said Jackson Wong, vice president at Tanrich Securities in Hong Kong.
Moody’s said it took the action because the banks face a rising tide of bad loans linked to Spain’s recession, a gloomy real estate market and high unemployment.
“It’s very hard to predict how the euro crisis will evolve. All the news is bad, so investors like to stay on the sidelines even though stocks are very attractive right now,” Wong said.
Japan’s Nikkei 225 tumbled 3 percent to close at 8,611.31, its lowest finish in four months as signs of weakness in the U.S., a critical export market for Japanese companies, battered some of the country’s behemoth manufacturers.
Hong Kong’s Hang Seng dropped 1.3 percent to 18,951.85 and Australia’s S&P/ASX 200 slid 2.7 percent to 4,046.50. South Korea’s Kospi tumbled 3.4 percent to 1,782.46. Benchmarks in Singapore, Taiwan and New Zealand also fell.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index losing 1.4 percent to 2,344.52. The Shenzhen Composite Index fell 1.5 percent to 940.91. Shares in ports and trading related companies led the gains, while shares in banks, shipping and defense industry companies weakened.
“The investors are pessimistic over China’s economic outlook, on top of the problems in Europe. It is more like a panic selling,” said Guo Yanhong, an analyst at Huachuang Securities, based in Beijing.
In the U.S., meanwhile, the Federal Reserve Bank of Philadelphia said Thursday that its index of factory activity fell to minus 5.8 from 8.5 in April. Any reading below zero indicates contraction. Measures of new orders and employment also fell in May, the bank said. That suggests manufacturers in the region are cutting jobs.
Among individual stocks, Japanese vehicle makers were hit hard. Yamaha Motor Co. tumbled 5 percent and Mitsubishi Motors Corp. was down 5.1 percent. Toyota Motor Corp. lost 3.7 percent.
Asiana Airlines Inc., South Korea’s second-largest carrier, plunged 5.1 percent after reporting that its earnings slid in the first quarter of 2012 from a year earlier, mainly due to soaring fuel prices, Yonhap News Agency said.
Gold miners were among the gainers. Australia’s Newcrest Mining rose 3.8 percent on rising prices for the precious metal. Hong Kong-listed Zijin Mining Group Co., China’s largest gold miner, rose 3.4 percent.
Benchmark oil for June delivery was down 1 cent to $92.55 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 25 cents to settle at $92.56 in New York on Thursday.
In currencies, the euro fell to $1.2686 from $1.2714 late Thursday in New York. The dollar rose slightly to 79.30 yen from 79.28 yen.
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Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.
The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
An improved labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains the economy
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Record Chinese oil imports are emptying the Atlantic Ocean of very large crude carriers and their 2 million-barrel cargoes, driving a rebound in rates for the smaller vessels left to supply the U.S. from West Africa.
Suezmaxes, each holding 1 million barrels, will earn an average of $18,750 a day this quarter, 45 percent more than now, according to the median of six analysts surveyed by Bloomberg. That
U.S. government programs designed to stem the financial crisis starting in 2008 will probably break even in the long term, Treasury Department officials said.
So-called financial stability programs include excess earnings from the Federal Reserve and don
Australia
Ben S. Bernanke warned last month that payroll gains might slow as companies adjust their labor needs for a period of moderate growth. Today
The U.S. Coast Guard and a mega-yacht owned by billionaire Paul Allen are searching the Pacific for an American pilot and two Republic of Palau police officers whose plane disappeared as they tried to track down a Chinese vessel that was allegedly fishing illegally.
The search follows a deadly confrontation between Palau officers and a smaller Chinese boat that was part of the same fishing operation. One fisherman was killed Saturday after police fired on the fishing vessel as it tried to ram the officers’ boat, Fermin Meriang, a spokesman for Palau’s president, told the Pacific Daily News ( http://bit.ly/HQTKOG).
Meriang said officers had aimed for the ship’s engines. “One of the bullets must have ricocheted off the engine and struck him in the thigh,” he said, adding the fisherman bled to death before he could be taken to a hospital.
The missing men had been aboard a Cessna that was dispatched to track a larger Chinese fishing boat.
The U.S. Coast Guard has been searching for the three since the pilot reported Sunday that they were running low on fuel and having navigational problems.
Joining in the search, which spans more than 6,500 square nautical miles, is the ‘Octopus,’ a 126-meter (414-foot) yacht owned by Allen. The Microsoft co-founder visited Guam, some 1,300 kilometers (800 miles) from Palau, about a week ago, and the Coast Guard asked for the yacht’s assistance because it was in the area.
“The captain of Octopus has been in constant contact with Coast Guard officials through days of searching,” said David Postman, spokesman for Allen’s investment company, Vulcan.
The boat the plane had been looking for was ultimately found. About 20 Chinese fishermen from that vessel, and five from the smaller ship where the shooting occurred, have been charged with illegal fishing and other counts, according to court records.
The plane was believed to have gone down near the republic’s southernmost island of Peleliu, said Lt. j.g. Richard Russell, enforcement officer for Sector Guam. But since the plane’s navigational equipment was failing, the pilot wasn’t able to give an accurate report.
“Right now we’re hoping we can find some kind of debris or clue about where this plane may have gone down,” Russell said. “We’re really digging into this as deeply as we can.”
Rescuers have been poring over transcripts of the pilot’s conversation with the airport and over weather reports to try and match his description of the cloud cover.
Palau is in the mid-Pacific Ocean, some 500 miles east of the Philippines.
Palau President Johnson Toribiong on his Facebook page identified the missing pilot as American Frank Ohlinger and the officers as Earl Decherong and Willy Mays Towai.
“I ask for your prayers for the captain and these two fine young police officers,” he wrote.
Former European Central Bank Executive Board member Lorenzo Bini Smaghi suggested Germany
Iraq has opened the taps at a new oil export terminal in the Persian Gulf in a vital step to bringing sorely needed cash for reconstruction after decades of war and international sanctions.
Oil Ministry spokesman Assem Jihad says oil exports through southern Iraq _ which currently stand at about 1.7 million barrels a day _ will be boosted by about 200,000 barrels per day beginning in March.
Jihad said the new single point mooring (SPM) was inaugurated Sunday by Prime Minister Nouri al-Maliki during a ceremony in the oil-rich province of Basra.
Iraq’s total daily oil exports averaged 2.145 million barrels in December. The government relies on oil exports for 95 percent of its revenue.
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