White House sets economic Crisis pounds emerging markets, summit set Nov 15 - 500 Beiträge pro Seite

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NEW YORK (Reuters) - The White House set a date of November 15 for the first of a series of international crisis summits as the biggest financial disaster in 80 years wrought more havoc from Budapest to Buenos Aires on Wednesday.

Hungary hiked interest rates to defend the forint, Ukraine, Pakistan and Belarus sought IMF help, currencies tumbled against the dollar and yen, global stock markets fell and U.S. companies announced job cuts and weaker earnings.

The summit, 11 days after the U.S. presidential election, will bring together leaders of the G20, which includes the Group of Seven major industrial economies plus key emerging-market countries like China, India and Brazil.

Stung by more bad news from companies that are the backbone of the U.S. economy, major U.S. stock indexes dropped about 3 percent and oil hit a 16-month low below $68.

AT&T Inc and Boeing were among companies reporting weaker-than-expected earnings, and drugmaker Merck & Co said it would cut 7,200 jobs.

Battered U.S. bank Wachovia Corp, set to be taken over by Wells Fargo & Co, posted a $23.9 billion third-quarter loss, a record for any U.S. lender in the global credit crisis.

"We started the week off in good spirits about the credit market loosening up, and then the onslaught of earnings hit us," said Arthur Hogan, chief market analyst at Jefferies & Co.

Interbank borrowing costs mostly fell on Wednesday, with further steep falls in dollar rates and spreads indicating that the flood of liquidity pumped into the banking system in recent weeks is easing money market strains. Continued...

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INTENSE PRESSURE

Emerging market stocks, sovereign debt and currencies all came under intense pressure.

The dollar and the yen were gainers as investors moved out of riskier assets in other currencies.

Fears of a global recession overshadowed signs that efforts by authorities across the world to bolster the financial system were beginning to bear fruit.

Standard Bank G10 currency strategist Steve Barrow said in a note to clients that markets were seeing a massive unwinding of the speculative asset bubble of recent years.

"History shows that, when bubbles burst, no amount of glue, from slumping Libor rates or anywhere else, can stick them back together again. The law of 'what goes up must come down' has to work its way through and, right now, it is working its way through the currency market with a vengeance," Barrow said.

Hungary ratcheted up interest rates by three full points to defend its forint currency.

Argentina's bonds fell 7 percent and stocks lost 10 percent after President Cristina Fernandez sent a bill to Congress on Tuesday to nationalize the country's private pension system, sending markets into freefall.

Belarus' central bank said it had requested credit from the International Monetary Fund, and Ukrainian Prime Minister Yulia Tymoshenko said she expected Kiev to receive substantial financial aid from the IMF next week. Continued...

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Antwort auf Beitrag Nr.: 35.664.702 von lvb28 am 22.10.08 19:35:48

The IMF is also ready to help Pakistan, which needs funds to avoid a balance of payments crisis, and Iceland, driven close to bankruptcy as frozen credit markets caused its banks to fail.

RECESSION LOOMS

The overarching fear was recession, a topic that will be weighing on the minds of world leaders at the November 15 summit to be held in the Washington, D.C., area.

The White House said it would seek input for the summit from whoever wins the November 4 U.S. presidential election.

"The leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes, and, in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world's financial sectors," said White House spokeswoman Dana Perino.

Minutes from the Bank of England's last meeting, at which it joined a coordinated round of rate cuts, said the UK economy had deteriorated substantially and the bank's governor Mervyn King said on Tuesday it was probably entering its first recession in 16 years.

The Dow and S&P 500 fell more than 3 percent. European shares were down around 5 percent and Japan's Nikkei average ended down 6.8 percent.

In emerging markets, MSCI's sector index was at its lowest since June 2005, and sovereign debt spreads widened beyond 700 basis points over Treasury yields for the first time since early 2003.

Currencies other than Hungary's forint were also battered, with the Turkish lira falling to the lowest in more than two years and South Africa's rand at its lowest in more than 6 years against the dollar. Continued...

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Antwort auf Beitrag Nr.: 35.664.702 von lvb28 am 22.10.08 19:35:48

OPTIMISM?

The latest market turmoil came despite some optimistic words from various officials about the financial crisis, which has prompted billions of dollars in rescue and liquidity packages from governments around the world.

U.S. Treasury Undersecretary David McCormick, speaking in Hong Kong, said the U.S. economy was in for a challenging few quarters but could start to recover late next year.

Bank of England governor King said that the worst may have passed for the financial system.

"We are far from the end of the road back to stability," he said late on Tuesday. "But the plan to recapitalize our banking system, both here and abroad, will, I believe, come to be seen as the moment in the banking crisis of the past year when we turned the corner."

Emerging powerhouse Russia, whose markets have been battered, also signaled improvements in bank lending.

"The interbank (lending) has started working normally. The rates are high but coming down. Banks have started crediting sectors again. But we still need two or three weeks for the situation to start improving," the Financial Times quoted First Deputy Prime Minister Igor Shuvalov as saying.

(Editing by Steve Orlofsky and Brian Moss)