Italy’s stock market regulator yesterday rushed through new rules on short-selling after Friday’s wave of panic selling of bank shares unsettled markets and sparked fears of contagion. The sell-off followed news that Italy’s finance minister was caught up in a corruption scandal involving one of his closest advisers. Italy has one of the highest debt levels in the world, at about 120% of GDP.
REPORTS emerged last night that the EU stance on Greece was shifting, to include the possibility that Athens should default on some of its bonds as part of a new bailout plan. European leaders have until now been reluctant to authorise any form of default for fear it could contaminate bond sales across the Eurozone.
EUROPE’s leading power brokers meet in Brussels today to discuss a second rescue package for Greece and how to stop the debt crisis spreading to other Eurozone countries such as Italy.
THE REPUBLICANS yesterday pulled out of a bipartisan plan to cut $4tn from the government deficit over the coming decade. The House of Representatives speaker told the Democratic president, Barack Obama, he would only pursue a smaller, $2tn package, similar to that originally pursued by the vice president Joe Biden.
THE FTSE dropped on Friday, led by weaker banks and commodity stocks, as risk aversion returned after the latest US jobs data disappointed, raising fears about the health of the world’s largest economy.
ITALIAN stocks fell 3.5% on Friday as political infighting and concern about the health of the banking sector supported fears that Europe’s third-biggest economy could face the same fate as Greece and Portugal.
OVERNIGHT, the Nikkei fell back, hurt by lower-than-expected US jobs figures, and profit taking on gains made last week. Shares of banks fell, tracking losses made by their Italian and Wall Street peers on. Hong Kong shares also slipped, as inflation data from China raised concern that the government will take additional measures to curb prices, including possibly another increase in interest rates.
EUROPEAN shares are seen opening mixed, following sharp falls in the previous session, with markets set to eye an emergency meeting of top European officials amid fears grow the regional debt crisis could engulf Italy.
THE EURO fell to a two-week low against the dollar and yen on concern that Europe’s debt crisis may spread to Italy as policy makers remain divided on how to structure aid for Greece. The Dollar Index, which is used to track the currency against six trading partners, rose to its strongest since June 28th.
OIL declined for a second day in New York as investors bet that a slump in Chinese imports and rising unemployment in the US indicated that fuel demand may falter in the world’s biggest crude-consuming nations.
GOLD may climb for a sixth day, heading for its longest winning run in more than two months, as investors sought the metal as a haven against slowing economic growth and rising consumer prices. Copper gained after data showed China’s imports rebounded for the first time in three months and as heavy rains in northern Chile spurred concern that supplies from the world’s largest producer may be reduced. Aluminium and zinc also increased.