Asian stock markets fell Tuesday as new concerns emerged about the viability of a much-heralded plan to contain Europe’s debt crisis.
Benchmark oil fell to near $92 a barrel. The dollar rose slightly against the yen, a day after jumping about 5 percent following Japan’s move to buy dollars and sell the strong yen to protect its exporters.
Japan’s Nikkei 225 index dropped 1.4 percent to 8,859.21. Hong Kong’s Hang Seng lost 1.4 percent to 19,584.69, and Australia’s S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India and Indonesia were also down.
South Korea’s Kospi gained 0.1 percent to 1,911.39. Key indexes in Taiwan, Malaysia and Thailand also rose.
Wall Street tumbled Monday, with confidence shaken by the collapse of the brokerage house MF Global. The securities firm filed for bankruptcy protection after it was downgraded by ratings agencies for holding too much European debt.
The company’s collapse startled investors already nervous that the United States _ with an economy growing at the slowest pace since the end of the Great Recession _ is in danger of falling back into recession.
The Dow Jones industrial average spiraled down 2.3 percent to close at 11,955.01. The S&P 500 fell 2.5 percent to 1,253.30, and the Nasdaq composite fell 1.9 percent to 2,684.41.
European leaders reached an agreement Thursday aimed at shoring up the region’s banks and preventing a severe debt crunch in Greece from bringing down Europe’s financial system.
But the European debt crisis is still far from fixed. One troubling sign is that borrowing costs for Italy and Spain have increased, a signal that traders remain worried about those countries’ ability to pay their debts.
Complicating the picture further was the announcement by Greek Prime Minister George Papandreou on Monday that his debt-strapped country will hold a referendum on whether to accept the European debt deal faxless cash advances.
“That puts everything in question. No longer do you have Greece backing it,” said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. “It is putting another level of uncertainty into it, and the markets don’t like uncertainty.”
Meanwhile, surveys showing China’s manufacturing remained sluggish in October also weighed on investor sentiment. Hong Kong-listed GOME Electrical Appliance Holdings, China’s largest appliances retailer, fell 5.8 percent. Anhui Conch Cement Co. fell 3.6 percent. China’s biggest steel company, Baoshan Iron & Steel Ltd., lost 0.4 percent.
But Qantas Airways rose 1.6 percent as the world’s 10-largest airline took to the skies again after a debilitating series of strikes and subsequent staff lockout were halted by an Australian court.
Negative earnings also weighed on shares.
Japanese consumer electronics giant Panasonic Corp. tumbled 4.5 percent, a day after reporting a quarterly loss and projecting a huge annual loss due to slumping TV sales and a strong yen.
Australian retailer Harvey Norman fell 3.7 percent after the company reported a drop of almost 20 percent in pre-tax earnings in the three months to September.
In energy trading, benchmark crude for December delivery was down 82 cents at $92.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract slipped 13 cents to settle at $93.19 in New York on Monday.
The euro fell to $1.3804 from $1.3924 late Monday in New York. The dollar rose slightly to 78.07 yen from 78.05 yen.
Regulators on Friday closed two banks in Georgia and one each in Florida and Colorado, raising to 84 the number of U.S. banks that have failed this year.
The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 139 banks.
The Federal Deposit Insurance Corp. seized the four banks. The largest by far was Community Banks of Colorado, based in Greenwood, Colo., with $1.38 billion in assets and $1.33 billion in deposits. Also shuttered were Community Capital Bank, Jonesboro, Ga., with $181.2 million in assets and $166.2 million in deposits; Decatur First Bank, Decatur, Ga., with $191.5 million in assets and $179.2 million in deposits; and Old Harbor Bank, Clearwater, Fla., with $215.9 million in assets and $217.8 million in deposits.
Community Banks of Colorado was a state-chartered institution and under the supervision of the Federal Reserve. The Fed appointed the FDIC receiver of the bank after determining that it had been “critically undercapitalized” since July 29.
The Fed said in a statement that it also consulted with Colorado’s banking commissioner.
Bank Midwest, based in Kansas City, Mo., agreed to assume the assets and deposits of Community Banks of Colorado. In addition, the FDIC and Bank Midwest agreed to share losses on $714.2 of Community Banks of Colorado’s loans and other assets.
The bank’s failure is expected to cost the deposit insurance fund $224.9 million.
State Bank and Trust Co., based in Macon, Ga., agreed to assume the assets and deposits of Community Capital Bank. Atlanta-based Fidelity Bank agreed to acquire the assets and deposits of Decatur First Bank, while 1st United Bank, based in Boca Raton, Fla., is assuming the assets and deposits of Old Harbor Bank.
In addition, the FDIC and State Bank and Trust agreed to share losses on $141 short term personal loan.3 million of Community Capital Bank’s assets. The agency and Fidelity Bank are sharing losses on $111.5 million of Decatur First Bank’s assets. The FDIC and 1st United Bank are sharing losses on $155.6 million of Old Harbor Bank’s assets.
The failure of Community Capital Bank is expected to cost the deposit insurance fund $62 million. The failure of Decatur First Bank is expected to cost $32.6 million; that of Old Harbor Bank, $39.3 million.
Georgia and Florida have been among the hardest-hit states for bank failures. Regulators closed 16 banks in Georgia and 29 in Florida last year. The failures of Community Capital Bank and Decatur First Bank brought to 22 the number of Georgia lenders shut down this year. Old Harbor Bank was the 12th bank shuttered in Florida.
California and Illinois also have seen large numbers of bank failures.
In all of 2010, regulators seized 157 banks, the most in any year since the savings and loan crisis two decades ago. Those failures cost around $23 billion. The FDIC has said 2010 likely was the high-water mark for bank failures from the Great Recession.
In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
From 2008 through 2010, bank failures cost the fund $76.8 billion. The FDIC expects failures from 2011 through 2015 to cost $19 billion.
The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC’s fund balance turned positive in the second quarter of this year; it stood at $3.9 billion as of June 30.
St. Louis-based CPI Corp. said today that it received notice last week from the New York Stock Exchange that it is out of compliance with its listing standards because the company’s average market capitalization fell below $50 million over a consecutive 30-day trading period.
The portrait studio operator of about 3,000 locations, mostly inside Walmart, Sears and Toys R Us stores, said it plans to submit a plan within the required 45 days from the original notice — October 12 — about how it plans to restore compliance within 18 months no fax payday loan.
The company noted that its shares will continue to be listed during this period.
CPI reported a loss of $6.2 million, or 89 cents a share, in its second quarter earlier this year. Overall net sales in the quarter were $70.9 million, down 7 percent from $76.4 million a year earlier.
The Libyan capital saw its first major gunbattle since Moammar Gadhafi fled Tripoli more than two months ago, as his supporters traded fire with revolutionary forces Friday after a crowd raised the ousted regime’s green flag.
Fearing more attacks, revolutionary forces set up checkpoints manned by young, armed men across the metropolis of some 2 million people, snarling traffic. They also rounded up several suspected African mercenaries, pulling them from cars and houses.
The violence in Tripoli and fierce resistance on two other fronts set back the new rulers’ stated goals of declaring total victory and establishing democracy as Gadhafi, the ruler for nearly 42 years, remains on the run.
The capital has been relatively calm since then-rebels swept into the city in late August. But Gadhafi’s loyalists have control of parts of his hometown of Sirte and the desert enclave of Bani Walid and have battled off NATO-backed revolutionary forces besieging them for weeks, perhaps encouraged by several audio recordings issued by Gadhafi from hiding.
The firefight in Tripoli began after Friday prayers. Witnesses said dozens of loyalists carrying the green flag appeared on a square in the Abu Salim neighborhood, which has long been a pro-Gadhafi stronghold and houses a notorious prison of the same name.
“I looked out of my window and I saw men and women in a group of 50 to 80 people, carrying the green flag,” said Abadi Omar, a resident in one of the buildings in the area. “They put one of these flags at the end of our street. This is when the revolutionary forces came out and these people disappeared.”
Revolutionary forces started searching every building in the area and found weapons on some of the rooftops, many hidden under water tanks, Omar said. Then pro-Gadhafi snipers opened fire, and the gunbattle began as anti-Gadhafi fighters chased loyalists around the closely packed buildings.
In amateur video shown to The Associated Press, gunfire can be seen coming from the upper floors of apartment buildings surrounding the square, prompting revolutionary forces to scramble and begin shooting from the street below.
Shouting “God is Great,” hundreds of revolutionary fighters converged on the area in pickups mounted with weapons. They set up checkpoints as heavy gunfire echoed through the streets.
Ameena Sami, a 39-year-old resident, said her brother was shot in his waist.
“My brother was standing at the front door of our house, and we heard shooting in the streets. We don’t know where it came from, and the revolutionaries came speeding onto our street and surrounded one of the buildings across the street,” she said. “The shooting just got more intense, and we looked outside and found my brother shot.”
Tripoli military officials said 12 suspected Gadhafi supporters were detained but played down the shooting, saying no clashes occurred and that the gunfire was primarily from revolutionary forces themselves. The local military council issued a statement saying 30 people were injured in friendly fire.
U.S. State Department spokeswoman Victoria Nuland also downplayed the seriousness of the fighting, calling it an “isolated, relatively small incident, by the sound of it.”
Ahmad al-Warfly, a fighter from the revolutionary forces’ Zintan brigade, said several Gadhafi supporters apparently planned a protest but drew fire because they were armed. They then fled and were pursued by revolutionary forces, prompting fierce street battles.
Al-Warfly said one man carrying a gun was captured and identified as a suspect wanted for the killings of protesters in the nearby city of Zawiya.
“It seems like it was organized,” he said. “They were planning to have a big demonstration, then the fight started.”
Witnesses also reported fighting elsewhere in the capital, but the shooting was most intense in Abu Salim.
Interim leader Mustafa Abdul-Jalil, the head of the governing National Transitional Council, has said that he hoped to declare liberation this week after the imminent fall of the holdout city of Sirte, 250 miles (400 kilometers) southeast of Tripoli on the Mediterranean coast. That could allow the council to name a new interim government and set a timeline for holding elections within eight months.
The revolutionary forces control much of Sirte after launching a major push a week ago.
On Friday, they pounded loyalists holed up in two neighborhoods with rocket and machine-gun fire but also suffered heavy casualties themselves. Wounded men streamed into front-line medical units, then were evacuated to field hospitals on the city’s outskirts.
Tanks and weapons-mounted vehicles from the revolutionary forces have kept up a steady barrage of fire into the small enclave known as District 2, where commanders believe several hundred remaining loyalists, possibly including high-ranking figures from the former regime, are hiding.
AP Television footage on Friday showed smoke rising from a building in one part of the city, and a burning car presumably in another. Pickup trucks with mounted machine guns are seen driving through a flooded street, and elsewhere an injured revolutionary soldier is carried on a stretcher into an ambulance.
Thousands of civilians have fled the city to escape the violence.
One resident returned Friday to collect personal items from his home, which had been used as a firing position for pro-Gadhafi forces. Their uniforms and mattresses littered the front courtyard.
The owner, who would not give his name because of fear of reprisals, left carrying just a blanket, saying, “the pictures speak for themselves.” He then left the city with several of his relatives.
NATO has called the continued resistance by Gadhafi forces in Sirte “surprising,” as they appear to be losing the battle since revolutionary forces have the area surrounded.
In Geneva, meanwhile, a senior U.N. human rights official, Mona Rishmawi, expressed concern about a risk of serious abuses against suspected loyalists after Gadhafi’s last strongholds fall to revolutionary forces.
Rishmawi, who recently visited Libya as part of a U.N. delegation, said the transitional government is trying to ensure that the rights of captured Gadhafi fighters are protected but “the system that is currently in place is not adequate.”
She said “there is a lot of room for abuse” of the estimated 7,000 people detained in sometimes makeshift prisons throughout Libya.
Buses, metro trains, trams and taxis were not running in the Greek capital Friday, snarling traffic as public transport workers striked for a second day in an unrelenting barrage of protests against government austerity measures.
Finance Minister Evangelos Venizelos criticized the repeated strikes and protests, which have included the take-over of government buildings and risk slowing reforms the country needs to qualify for bailout loans.
“This is a challenge at the heart of democracy,” the minister said in Parliament, adding that “the image there has been in the last few weeks is one of lawlessness,” and that blackmail was different from fighting for people’s rights.
Venizelos said the government was prepared to assume the political cost of pushing through unpopular but necessary austerity measures.
Taxi drivers on Friday joined the second day of a 48-hour public transport strike, leaving private cars and motorcycles as the only form of transport in the Greek capital, while lawyers walked off the job until Oct. 19 and customs officers for 10 days. On Thursday, power company unionists occupied the electricity company’s billing facility in an effort to prevent the issuing of electricity bills which include a new property tax.
A wave of strikes is expected next week, with seamen leaving ferries tied up at ports for two days from Monday and hospital doctors and teachers also walking off the job. The labor action is to culminate in a two-day nationwide general strike on Oct. 19-20. The second day will coincide with a vote in Parliament on new budget cuts, which includes reforms to the labor law.
The government has been imposing repeated rounds of austerity measures as it struggles to meet the requirements to qualify for funds from a euro110 billion ($151 billion) international bailout loan that is preventing it from defaulting on its debts. Its international debt inspectors have said the country will likely receive the next euro8 billion installment of the loans in early November.
Athens has said it only has enough money to pay salaries and pensions until mid-November.
Public servants are the main targets of the latest reforms that include across-the-board salary cuts and the suspension of 30,000 workers on the state payroll with reduced salaries. Pensioners will also see more cuts and salary earners will pay higher taxes, while parliament has already approved an emergency property tax to be charged starting this month through household and business electricity bills.
The new measures have led to widespread criticism not only from labor unions and opposition parties, but also from within the governing Socialist party, with some deputies implying they will not vote in favor of the bill on Thursday unless changes are made.
Venizelos said the country found itself in an “economic war.”
“We must defend ourselves,” he said. “Yes, unfortunately we must cut salaries and pensions, … yes, unfortunately we must impose greater taxes.”
Markets and analysts believe that a default by Greece is inevitable eventually, and some have raised the prospects of the country leaving the European Union’s joint currency, the euro. Both Greek and European officials have repeatedly insisted this is not on the cards.
Venizelos said such a prospect would be disastrous.
“An exit from the euro leads to poverty and the jungle,” he said in Parliament, and called on the opposition parties to support the government’s efforts to pull the country out of its crisis.
“We have an obligation to tell the people the truth about how dangerous, fluid, unclear the situation is,” he said. “We must be united when there is danger in order to be secure and sovereign.”
Venizelos criticized the repeated strikes and protests, which have included takeovers of government buildings, saying that “the image there has been in the last few weeks is one of lawlessness,” and that blackmail was a different thing from fighting for people’s rights.
The finance minister said the government was prepared to assume the political cost of pushing through unpopular but necessary austerity measures, and repeated that authorities were cracking down on tax evasion.
International Monetary Fund officials urged the Cyprus government to move fast with its austerity program to get a grip on its debts, after projecting that the island’s economy will contract next year.
IMF officials Wes McGrew and J. Erik Jan de Vrijer said Wednesday that the Cypriot economy will stagnate this year but shrink by one percent next year, while the fiscal deficit will grow to 7 percent of national income in 2011 before moderating to 4 percent in 2012.
Cypriot Finance Minister Kikis Kazamias disputed the IMF figures, telling told state TV late Wednesday that his ministry’s revised projections put growth next year at just above zero percent and the deficit at around 2.9 percent.
Kazamias last month forecast 1 to 1.5 percent growth next year and a deficit of around 6 to 6.5 percent in 2011 and 2.3 percent in 2012.
“A doom scenario is a lot worse than what you see here, and one of the things that we’re saying is the time to take action is now in order to avoid getting into a doom scenario,” Jan de Vrijer told a news conference at the end of a weeklong review of the island’s economy.
Buffeted by the ongoing eurozone crisis, Cyprus is finding it more expensive to borrow from international markets because of a string of credit rating agency downgrades due to the exposure of the country’s large banking sector to Greece.
That has stoked fears that the small island with a population of around 1 million and a euro17 billion ($23 billion) economy may be forced to seek a bailout from its partners in the eurozone, as Greece, Ireland and Portugal already have.
“We think that the situation at the moment is very serious. The fact that the government cannot access the capital markets is very, very serious and the risks to the banking sector compound that very much,” Jan de Vrijer said Online payday loans.
To finance its debt and stimulate growth, the Cypriot government is looking to finalize a 4 1/2 year, euro2.5 billion ($3.4 billion) loan agreement with Russia at a 4.5 percent annual interest rate. That’s much lower than markets are currently offering.
McGrew said it’s crucial that any such loan deal doesn’t weaken the resolve of the government to roll back spending and push through fiscal reforms.
Cyprus’ 2012 draft budget that Kazamias will submit to parliament late this week incorporates a euro840 million ($1.14 billion) package of spending cuts and tax increases, aimed at reducing the deficit.
Measures include slashing 1,100 public sector positions, rolling back social handouts by euro220 million ($299 million) and raising the sales tax from 15 to 17 percent for at least three years _ a move that is meeting resistance from opposition parties.
Jan de Vrijer said there is no wriggle room to discount the measures which need to be implemented fully.
“The first priority is for Cyprus to do all it can to avoid that these problems get out of hand,” he said.
“I think there is time and there is opportunity for the government to take really decisive and large action to avert the possibility of these problems getting worse and worse.”
Kazamias said there would be no hesitation to take additional austerity measures if necessary.
On Tuesday, the finance minister told lawmakers that the government is looking into opening tightly-regulated casinos to tap their revenue-generating potential, reversing it’s long-held opposition to any such move.
JEFFERSON CITY
Toyota is selling its first “minicar” in Japan as demand increases for the tiny vehicles which are popular for short commutes.
Toyota Motor Corp., Japan’s top automaker, launched the tiny Pixis Space minivehicle manufactured by group company Daihatsu Motor Co., on Monday.
Minivehicles, or “kei,” are defined under Japanese regulations as having maximum length of 3.4 meters (11.15 feet), width of 1.48 meters (4.86 feet), height of 2 meters (6.56 feet) and engine displacement of less than 660 cc.
Taxes are lower for minicars, which now make up about a third of Japan’s annual vehicle sales.
Toyota is planning two more minicar models for the Japanese market, although it has not said when those will go on sale. Toyota is targeting annual minicar sales of 60,000 in Japan for all three models in total.
The Pixis Space starts at 1.12 million yen ($14,700).
Minicars are popular not only for the tax savings but also with people who use cars for short commutes or grocery shopping, as well as with those who don’t see cars as status symbols as did the older generation.
Forecasters say Hurricane Hilary is now a Category 3 storm in the Pacific south of Mexico.
Hilary’s maximum sustained winds were near 115 mph (185 kph) Thursday. The hurricane is not forecast to make landfall, though officials say it is expected to rake the coast with wind, rain and heavy surf.
The U.S. National Hurricane Center says Hilary reached major hurricane status with winds of at least 111 mph (179 kph).
A tropical storm warning is in effect for Mexico’s coast from Lagunas de Chacahua to Punta San Telmo. A tropical storm watch is in effect for west of Punta San Telmo to Manzanillo.
Hilary is centered about 75 miles (121 kilometers) south of Acapulco, Mexico, and is moving west-northwest.
In the Atlantic, Tropical Storm Ophelia is expected to weaken.
Greece will have to take fresh austerity measures, the debt-ridden country’s finance minister said Wednesday, a day after Athens moved a step closer to getting the vital bailout funds it needs to avoid a disastrous default next month.
The prospect of more tax increases and spending cuts are likely to be met with mounting concern in a country mired in a deep recession and the number of unemployed rising to around one in seven.
“Do we have to take additional measures? Yes we have to take supplementary measures … because of the recession, because of the difficult task, and the weakness of the central administration have not produced the required results,” Evangelos Venizelos said in Parliament ahead of a Cabinet meeting.
He did not specify what the measures might be.
Greece has been under pressure from its international lenders to meet fiscal targets and slash the size of its bloated public sector, which has more than 750,000 staff in the country of 11 million people.
It has already pledged to suspend up to 20,000 civil servants on reduced pay as part of a plan to shed 150,000 public jobs through 2015. It also recently announced a new property tax, to be paid through electricity bills to make it easier and faster for the state to collect.
State electricity company unionists have threatened not to collect the tax and not to cut off the electricity supply to those who refuse to pay.
A public reeling from repeated rounds of spending cuts and tax hikes is showing waning patience with measures that appear not to have the necessary effect on the state budget. Many warn that with the country facing a fourth year of recession in 2012 and unemployment at more than 16 percent, yet more austerity could sink the economy.
Yannis Varoufakis, an economics professor at Athens University, said the government’s actions appear increasingly desperate and likened its strategy to “the last stages” of the Vietnam war.
“The more obvious it was that the war was lost, the more desperate the attempts of the United States army and air force to bomb Vietnamese villages in order to save them,” Varoufakis said.
Venizelos though is pressing ahead with the strategy and argues that Greece will emerge a stronger economy once it’s got a grip on its public finances and rebalanced the economy more towards the private sector.
He said that without the supervision of debt inspectors from the European Central Bank, the International Monetary Fund and the European Commission, collectively known as the troika, Greece would have “slipped off the fiscal track instant personal loans guaranteed.”
The troika has been pressing the Greek government hard to adhere to the reforms it agreed to in return for bailout money. In particular, the inspectors want it to move faster in reducing the size of the public sector.
Their quarterly reviews of the country’s progress is essential to the country’s international creditors releasing funds from a euro110 billion ($151 billion) bailout loan that has been keeping Greece afloat since last year.
Measures taken so far include pension and salary cuts in the public sector, and a series of tax hikes on everything from food and fuel to property and income.
The troika suspended its current review in early September amid talk of missed targets and delays, and Venizelos held two critical conference calls with them on Monday and Tuesday.
Brussels and Athens said progress had been made in the calls, and the troika heads are due back in the Greek capital next week _ a clear hint that the next batch of bailout cash amounting to euro8 billion ($11 billion) is likely to be released.
Venizelos conceded that it was a “humiliation” for Greece to ask for loans and to be under international supervision, but that the country had to if it was to avoid a more a calamitous outcome.
“If we did not have the supervision of the troika … we would have again unfortunately slipped off the fiscal track,” he said. “Just as the country derailed in an unprecedented away between 2004 and 2009. It’s not a question of intent. It’s a matter of mentality, lack of ability, management structure, methods, habits, and inertia.”
Greece has been struggling to persuade its creditors that it deserves to receive the next installment of its bailout. Without it, the country only has enough funds to see it through mid-October.
“The choices we are making are, unfortunately, absolutely necessary,” Venizelos insisted.
“When you are borrowing money, you are obliged to consider the opinion of the lender,” he said. “There is a negotiation. And of course the strong party is the one who pays out, not the one who receives. That is of great importance.”
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Theodora Tongas in Athens contributed.
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