Spain, growth worries pressure shares, euro

Updated 09 June 2012
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Spain, growth worries pressure shares, euro

NEW YORK: Global stocks, the euro and oil prices fell yesterday after hopes for more stimulus from central banks faded, with Spain expected to become the fourth and biggest country to seek assistance since the euro zone’s debt crisis began.
Four senior EU officials said finance ministers of the 17-nation single currency area would hold a conference call today to discuss Spain’s request for an aid package for its ailing banks, although no figure had been set.
Losses in world shares followed a three-day rally built on expectations of global coordinated efforts to bolster slackening economic growth. But investors were disappointed after neither the European Central Bank nor the US Federal Reserve signaled near-term action.
“Financial markets are bipolar,” said Ward McCarthy, chief financial economist and managing director, fixed income division at Jefferies & Co. in New York. “Periodic fits of irrational exuberance are followed by the acknowledgement of reality. That is why it was risk on earlier this week and risk off today.”
MSCI’s world equity index was down 0.5 percent at 299.74. The index is still up 2.6 percent on the week, on pace for its best week since January.
US stocks turned positive after a lower open. The Dow Jones industrial average was up 9.46 points, or 0.08 percent, at 12,470.42. The Standard & Poor’s 500 Index was up 0.86 points, or 0.07 percent, at 1,315.85. The Nasdaq Composite Index was up 11.58 points, or 0.41 percent, at 2,842.60.
Top European shares trimmed early losses to trade 0.3 percent lower.
US President Barack Obama said European leaders face an “urgent need to act” to resolve the region’s financial crisis as the threat of a renewed recession there spells dangers for an anemic US recovery five months before elections.
The euro fell 0.7 percent to $1.2487, retreating from a two-week high of $1.2625 hit on T hursday.
More losses would leave the euro vulnerable to a test of the 23-month low of $1.2286 hit on June 1, using Reuters data, after failing to break above chart resistance at $1.2623, the January low.
Rating agency Fitch slashed Spain’s credit rating on Thursday, leaving it just two notches short of junk status. It signaled further downgrades could come as the country tries to restructure its troubled banking system.

Adding to the bearish sentiment was data showing Italian industrial production fell far more than expected in April and German imports tumbled at their fastest rate in two years.
Brent crude for July was down $1.98 to $97.95 a barrel, after hitting a low of $97.19.
US crude prices fell $1.71 to $83.11 a barrel, having touched a low of $82.00. Both contracts are down for a second day.
Copper fell to its lowest since December as investors feared China’s surprise interest-rate cut was a sign of a sharp slowdown in the world’s biggest metals consumer.
The metal, seen as a barometer of global economic health, is on track to extend its losing streak to a sixth week, its longest such run in two years.
Spot gold was at $1,583.06 an ounce, down from $1,589.15 late in New York the previous day.
The benchmark 10-year US Treasury note was up 14/32, the yield at 1.5962 percent.

 


Abu Dhabi, Shanghai plan exchange focusing on China trade

Updated 24 April 2018
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Abu Dhabi, Shanghai plan exchange focusing on China trade

DUBAI: The emirate’s international financial center, has agreed in principle with the Shanghai Stock Exchange to cooperate in establishing an exchange focusing on China’s foreign trade and investment, ADGM said on Monday.
The partners signed a memorandum of understanding to develop the exchange in Abu Dhabi. It would cater to companies and investors involved in China’s Belt and Road initiative, a Beijing-backed drive to win trade and investment deals along routes linking China to Europe.
“At ADGM, we have the international platform to serve different kinds of enterprises and investors — global, regional and local — seeking exposure to the Middle East and North Africa and Belt and Road projects,” said Richard Teng, chief executive of ADGM’s Financial Services Regulatory Authority.
Teng said he could not give specifics of which instruments the new exchange would trade or when it might open, saying this would depend on demand among stakeholders in both ADGM and Shanghai.
Chinese financial institutions have approached ADGM to discuss the financial environment in Abu Dhabi and their development needs in the six-nation Gulf Cooperation Council (GCC), he added.
Trade and investment ties between China and the GCC have been growing rapidly. The region is a big oil supplier to China, and Sino-United Arab Emirates trade exceeded $46 billion in 2016, according to Beijing’s official Xinhua news agency.
Ultimately, the new exchange will support not only the Belt and Road initiative but also the internationalization of the Chinese yuan in the region, Teng said.
Abu Dhabi is trying to build up ADGM, which opened in October 2015 and is smaller than the international financial center in neighboring Dubai, as part of a drive to develop its economy beyond oil exports.