Archive for March, 2009

U.S. stock futures signal losses on automaker woes (Reuters)

Monday, March 30th, 2009 | Finance News

PARIS (Reuters) –
U.S. stock index futures pointed to losses on Monday on worries over the troubled auto sector after Washington's rejection of viability plans from General Motors (GM.N) and Chrysler.

At 0848 GMT, futures for the S&P 500 were down 2.7 percent, Dow Jones futures were down 2.2 percent and Nasdaq 100 futures were down 2.5 percent.

The Obama administration autos task force rejected the turnaround plans of General Motors Corp and Chrysler LLC, forcing out GM's CEO Rick Wagoner, and warned both could be put through bankruptcy to slash debts.

Shares in GM traded in Frankfurt (GM.F) were down 16 percent.

The news weighed on auto stocks around the world, with Nissan Motor (7201.T) and Toyota Motor (7203.T) losing 7.7 percent and 3.7 percent respectively in Tokyo.

In Europe, Daimler (DAIGn.DE), which has a stake in Chrysler, was down 7.2 percent, Fiat (FIA.MI) was down 6.4 percent and BMW (BMWG.DE) down 6.8 percent.

Japan's Nikkei stock average (.N225) fell 4.5 percent and the FTSEurofirst 300 (.FTEU3) index of top European shares was down 3 percent in early trade, also hit by renewed fears over the banking sector after Spain announced it would bail out embattled regional savings bank Caja Castilla la Mancha.

"The specter of the bankruptcy of either GM or Chrysler is enough to prompt investors to book profits after the sharp gains we've seen recently. But I don't think Washington will let the automakers fail," said Christian Jimenez, president of Imene Investment partners, in Paris.

"The bailout of a bank in Spain is also a strong reminder that there are still toxic assets in the pipeline and that the credit crisis is not over yet," he said.

On the positive side, U.S. President Barack Obama said in an interview published on Sunday that he saw "glimmers of stabilization" in some areas of the U.S. economy, including pockets of the domestic housing market.

U.S. shares lost ground on Friday, as investors pocketed recent gains and bank stocks fell after bank executives indicated March had been a tougher month for the industry than the previous two.

The Dow Jones industrial average (.DJI) fell 148.38 points, or 1.87 percent, to 7,776.18. The Standard & Poor's 500 Index (.SPX) shed 16.92 points, or 2.03 percent, to 815.94. The Nasdaq Composite Index (.IXIC) slid 41.80 points, or 2.63 percent, to 1,545.20.

The S&P 500 is down 9.7 percent in 2009, but has gained 22.4 percent since reaching a floor in early March.

(Editing by Jon Loades-Carter)

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AIG delays funds to some real-estate ventures: report (Reuters)

Sunday, March 29th, 2009 | Finance News

(Reuters) –
American International Group (AIG.N) has cut or delayed payments to some of its real-estate ventures, potentially leaving the developers and their bankers in the lurch, the Wall Street Journal reported.

The paper, citing people familiar with the matter, said the insurer had halted payments to Alabama shopping-center developer Alex Baker, putting some 15 banks at risk of exposure to soured loans.

AIG has offered a settlement but a person close to the banks said the lenders were unlikely to accept, the Journal said.

Affiliates of another developer, Mitchell L Morgan Management Inc, sued AIG in February for missed and delayed payments.

A spokeswoman for AIG told the Journal that AIG and Morgan have agreed to suspend litigation for 60 days to negotiate a possible settlement but believes Morgan's complaint is without merit.

AIG Global Real Estate, an arm of the insurance company, has interests totaling more than $23 billion across 53 million square feet of real estate, the Journal said.

Spending at AIG is being monitored closely by the Federal Reserve after the U.S. government committed $180 billion in bailout funds to what was once the world's largest insurer.

AIG, AIG Baker and Morgan were not immediately available for comment.

(Reporting by Vikram Subhedar in Bangalore; editing by John Stonestreet)

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Asian shares fall, Treasuries up on U.S. auto news (Reuters)

Sunday, March 29th, 2009 | Finance News

HONG KONG (Reuters) –
Asian shares slumped and were headed for their biggest daily fall in four weeks, while U.S. Treasuries gained after a U.S. task force rejected turnaround plans for automakers GM and Chrysler.

S&P stock futures dropped and European shares opened lower, with investors also spooked by news on Sunday that Spain would bail out regional savings bank Caja Castilla La Mancha, marking yet another official rescue of a firm hit by the global crisis.

Europe's FTSEurofirst 300 (.FTEU3) fell 1.2 percent in early dealings on Monday and Spanish bank shares fell up to 8 percent.

The U.S. announcement by the White House autos panel marked a stunning reversal for GM and Chrysler and raises the prospect of bankruptcies that could further debilitate the already ailing U.S. economy.

The news sparked a fresh wave of risk aversion among investors, boosting the yen and U.S. Treasuries and setting back a stocks rally that started in earlier March on optimism the global economy may be bottoming out and the United States may finally be getting to grips with toxic debt on banks' books.

News on the U.S. auto firms comes ahead of a busy week that will feature the G20 gathering in London, a policy meeting by the European Central Bank, and employment data in the United States.

"Anything that spells of rejection in terms of bailout these days is not treated very well. We've seen threats of this before on other things, and it tends to spook the market a bit," said David Spry, a research manager at F.W. Holst in Sydney.

The MSCI index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) extended its slide after the autos news. It was down 4 percent as of 0610 GMT.

The gauge was headed for its biggest daily percentage fall since a 4.3 percent decline on March 2, when fears about U.S. insurer AIG (AIG.N) had sent global stock markets stumbling.

Asian stocks went on to hit their 2009 low on March 4, before staging a spectacular recovery that as of last week had raised the Asia MSCI index outside Japan by 26 percent.

U.S. stock futures were also hit on Monday, sending the S&P 500 down 2.3 percent. In Japan, the Nikkei average (.N225) slumped 4.5 percent.

"We are still not out of the woods as far as the economic landscape goes. Job losses are mounting in the U.S. and I feel the developments of late represent the economy is just coming off the bottom," said Stephen Roberts, an economist for Nomura in Sydney.

The U.S. autos task force on Monday determined that the turnaround plans submitted by General Motors Corp (GM.N) and Chrysler LLC could not ensure their viability.

The fate of GM has been of particular concern. The U.S. administration pledged only to fund operations at the biggest U.S. auto maker for the next 60 days, instead of granting GM's request for up to $30 billion in loans.

Rick Wagoner, GM's chief executive since 2000, also resigned under pressure from the U.S. task force.

Asian stock indices accelerated losses on the news. Shares in South Korea (.KS11), Hong Kong (.HSI), Taiwan (.TWII), Singapore (.FTSTI), and India (.BSESN) were down more than 3 percent.

The news provides a bleak backdrop for leaders of the world's biggest economies, who gather for a G20 meeting this week in London.

The Financial Times, quoting a draft communique, said the leaders are aiming to restore global growth by the end of 2010.

The meeting comes as Washington has been pressing for more stimulus measures in response to the worst global economic crisis since the 1930s, but some European governments have instead favored more emphasis on regulatory reforms.

Countries have so far responded to the global downturn with a mixture of economic stimulus measures, deep interest rate cuts and in some cases quantitative easing measures that pump money into banking systems.

RISK AVERSION RETURNS

The dollar reversed early gains to drop 1 percent to 96.98 yen to fall further from this month's four-month high of 99.69 yen.

The euro fell 1.5 percent to 128.10, dipping briefly below 128.00, after a steep fall in the previous session.

The autos news also prompted investors to reduce risky bets for higher-yielding currencies that had rallied strongly last week alongside stock markets.

The Australian dollar fell more than 2 percent to 66.14 yen and the New Zealand dollar lost 2.2 percent to 54.45 yen.

U.S. Treasuries, which earlier in the session had already been supported by U.S. Federal Reserve plans to purchase long-dated U.S. government bonds later in the day, advanced.

The 10-year note climbed 12/32 in price to yield 2.716 percent, a fall of 5 basis points from late U.S. trade on Friday. The 30-year bond gained 21/32 in price to 3.580 percent, down 4 basis points.

Gold, another safe-haven asset class, edged higher to $924.20 per ounce from its New York's notional close of

$922.10.

By contrast, oil prices fell $1.19 to $51.19 a barrel, building on losses of around $2 on Friday.

Expectations of weak near-term energy demand and the stronger dollar have also encouraged investors to take profits on oil's recent rally which has put crude prices on course for their biggest monthly gains since October 2007.

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