Greek stock market falls (AP)

Athens – Athens Stock Exchange shares are plunging, with a decrease of 4.8 percent to levels not seen since the mid-1990s, the general price index.

The overall index stood at 1, 011.70, as global stock markets continued their recent slide after the breakdown of the debt of the United States Friday by Standard & Poors.

Debt-ridden Greece became the first EU country to seek a bailout International last year, when he saw his recruitment costs spiral out of control as investors doubted the country would repay debts.

The financial crisis has also affected other countries in the eurozone, Portugal and Ireland also receive bailouts.

Sunday, the European Central Bank said it will implement a program to buying bonds to calm investor worries that Italy and Spain will not be able to pay their debts.

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ECB gets pledge, Spain Italy rates down (AP)

Brussels – the European Central Bank's decision to buy billions of dollars worth of bonds in Spanish and Italian, pushed down borrowing costs, the two countries Monday, but analysts warned that the move transfers significant risks on the budgets of an institution long reluctant to go beyond its traditional role to control inflation.

The radical expansion of bond purchase programme of ECB cements the role of the Bank as an institution with primary responsibility for Europe to solve the financial crisis 21 months.

The ECB has been reluctant to become directly involved in averting the crisis instead of push politicians to get the finances of their countries under control and build their own crisis management system.

But a recent spike in investors ' concern for Italy and Spain's high debt levels and lackluster economic growth captured the 17 countries of the eurozone just as parliaments broke for summer recess, delaying the implementation of crucial changes to the bottom of the bailout of Monetary Union.

These changes, once implemented, would allow the European mechanism of financial stability to buy government bonds on the open markets, just as did the ECB.

The French Parliament will not be able to approve the expansion of European rescue first of September, said the Finance Minister of France.

French legislators are scheduled to hold a special session from 6 September to vote on an amendment allowing budget funding for the new aid plan approved by EU leaders on 21 July. Asked if he could be summoned Parliament immediately instead, Francois Baroin said on Europe-1 radio that: "for a democratic process with such heavy stakes, we can go any faster."

With similar votes pending throughout the EU, the ECB decided late Sunday decided to "implement actively" his bond purchase programme, one of its main tools that crisis was not yet used for Italy and Spain.

The Central Bank now plans to buy an average of 2.5 billion euros worth of Spanish and Italian bonds each day, equivalent to 600 billion dollars annually, analysts at the Royal Bank of Scotland wrote in a note.

Bond purchase supports their prices, taking off pressure from broadcasters during an investor sell-off. In early trading Monday, yields, or the interest rate on bonds of Italy fell 0.55 percentage point to 5.45% while the equivalent rate in Spain has fallen 0.71 percentage point to 5.34%.

The ECB could quickly push down the interest rate spread between bonds the two countries and those of Germany — seen as sovereign safer eurozone — 1-1 .5 percentage points, RBS said.

Loans of Italy and Spain Costa rose above 6 percent last week — rates that are deemed unsustainable in the long term for the economies of the third and fourth largest in the eurozone.

But the program will probably have its toll on the interest rate paid by rich nations such as Germany, when they borrow in markets. The ECB's move will not only slow down a recent flight to safety that has kept very low German interest rates, but also transfers credit risk of the Italian and Spanish Governments to the Central Bank and eurozone taxpayers.

Until now, the ECB had invested just under euro80 billion (113 billion dollars) in Greek, Irish and Portuguese bonds.

That appeared to cushion the consequences of Standard & Poors decision Friday feared of downgrading the long-term debt of the United States.

In contrast with the purchase of bonds programs of U.S. Federal Reserve and the Bank of England, the ECB "Sterilize" bond purchases to withdraw funds from the financial system, so that the total amount of money in circulation stays the same and not shoot up inflation.

The ECB's decision to take a more active role came after both in Italy and Spain announced new measures to cut spending and stimulate growth. Italian Premier Silvio Berlusconi said Friday night that his country would work to balance the budget by 2013, one year ahead of schedule.

Spanish Finance Minister Elena Salgado on Sunday announced new reforms to bring in an additional Euro 5 billion to help achieve the goal of cutting its deficit to 6 percent of GDP this year.

He said that half the money will come from changing a system of staggered payment of assessment, so that large companies have to pay at the beginning in the year, although the actual tax rates will not go.

The other half will euro5 billion come from savings in government expenditure by hospital purchases of generic drugs, Salgado told the news agency Efe in an interview. These changes will be approved at a meeting of Cabinet or August 19 or 26.

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Pan Pylas London, Greg Keller, in Paris, Daniel Woolls in Madrid, David McHugh in Frankfurt, Germany, contributed to this article.

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In Abu Dhabi, lingerie reflects pull retail UAE (AP)

ABU DHABI, United Arab Emirates – It could have picked London or Hong Kong. Instead, the lingerie retailer that styles itself "the original sex symbol" chose the buttoned down sheikdom of Abu Dhabi for the launch of its first international store.

Frederick's of Hollywood, famed for its curve-cinching corsets and provocative push-up bras, opened up to little fanfare in the Saudi capital last weekend. Another outpost offering the chain's racy lingerie is soon set to open up the road in the more freewheeling Dubai.

The choice of venue is revealing — not only about demand for risque unmentionables on the Arabian Peninsula, but also for what it says about the United Arab Emirates ' retail pull. In only a few short years, this South Carolina-sized desert country has emerged as an unlikely first port of call for retailers looking to test their brands overseas.

"Despite the outward conservative cultures ... this is a very fashion-conscious market," Frederick's Chairman and CEO Thomas Lynch said in a recent interview. "They're no less interested in what we have to offer."

Other retailers seem to agree. Crate and Barrel, American Eagle Outfitters, Aeropostale, Pottery Barn and Bloomingdale's each have launched their first stores outside North America in the UAE in the past couple of years.

Smaller companies are making the leap too. When Manhattan favorites Shake Shack and Magnolia Bakery decided to take their burgers and red velvet cupcakes overseas, the first city they turned to Dubai was.

Retailers and restaurant chains that once protective shied away from overseas markets are being seduced by the region's deep-pocketed citizens and the growing track records of their Arab franchise partners, who take on many of the costs and much of the legwork that goes into transferring the brand abroad.

Frederick's deal is a good example.

While financial details are private, Lynch said paying for the Gulf expansion is mainly up to the company's Abu Dhabi-based partners, Safeer Establishment. Frederick's is primarily providing brand support "for an arrangement that envisions 10 stores across the region in the next three years, he said.

The u.a.e. has other advantages too. It boasts plenty of high-quality retail space and few of the deeply entrenched local brands that retailers can put off expanding into mature markets like Europe. The country's booming airlines have turned the Emirates into a global crossroads, funneling armies of guest workers — including Westerners — and millions of tourists into the country's shopping malls each year.

That was part of the appeal for Bloomingdale 's, which opened its first international store in Dubai's biggest shopping mall early last year.

"With all the tourists passing through there, it's a great billboard for Bloomingdale 's," Chairman and CEO Michael Gould told The Associated Press.

Gould said it is tricky for many American retailers to translate their brands to Europe, as it is for European chains looking to enter the U.S. To market such as the Emirates, however, offers a "much more fertile environment. People have an opportunity to build something there, "he said.

A recent surge of new retailers, particularly from the U.S., Dubai has pushed into the No. 1 spot alongside London in terms of market penetration for major retail brands, according to a recent report by real estate firm CB Richard Ellis. On the national level, the UAE is in second place globally, just behind Britain and ahead of the United States.

As the Gulf's most liberal and internationally-connected city, Dubai has traditionally been the first stop for chains looking to expand in the region. But as it becomes more saturated, CBRE expects international retailers will increasingly target nearby Abu Dhabi and other Gulf markets such as Kuwait City and Doha, Qatar.

Michael Leighton, a retail consultant at CBRE, said many American retailers have long resisted setting up franchises, which is effectively a requirement for doing business in the Gulf. The economic downturn helped changed that.

"As consumer spending has reduced in the U.S., they've been forced to adjust their business model," he said. Setting up a franchise in the Gulf is "a very easy way of generating extra revenue. ... People have to generate profits and balance the books, and in the U.S. it's very very hard at the moment, "he added.

The strategy is not without risks. Dubai's economy was being pummeled by the global economic downturn, which sent property prices or plunging and exposed large levels of debt. Many retailers planned their regional expansions during the boom years late last decade and had to contend with leaner times when they eventually opened.

"When we made the deal, we made it right at the peak. ... When we opened, it was certainly at a much more difficult time, "Bloomingdale's Gould said. He said the Dubai store nonetheless beat the company's first-year projections in 2010, and he insists this year is looking "just terrific." He declined to give specifics.

The U.S. retail invasion shows few signs of slowing down.

Chicago-based Potbelly Sandwich Shop this year opened two stores in Dubai — with pork-free menus to suit Islamic rules.

The Cheesecake Factory plans to open its first international restaurants in Dubai and Kuwait next year. It, like Potbelly and Shake Shack, is expanding through an agreement with Kuwait's M.H. Alshaya co., which has several Mideast partnership deals with American companies, including Starbucks and frozen yogurt chains Pinkberry.

"There is great demand for high-quality American brands there," said Jill Peters, vice president for investor relations at the cheesecake chain.

Frederick's expects its Gulf customers won't be that different from those in the U.S. — young, fashion-conscious women who keep a close watch on what's happening on the red carpets of Hollywood, said Lynch, the CEO.

While the Abu Dhabi store offers saucy staples such as the "Exxtreme\r Cleavage" bra and even a pair of rhinestone-covered handcuffs, Lynch is eager to point out the company has lots more to offer, including swimwear and shoes.

Scantily dressed mannequins in the windows of its flagship Emirates store hints at the risque offerings inside, though the storefront is designed so passers-by by can't easily peer into. Inside, lingerie is grouped by color, with a relatively more modest bridal collection showcased in a lushly carpeted centerpiece section.

The set-up differs from U.S. layouts and is designed to appeal to Gulf tastes, said Usama Rashad, retail manager for franchisee Safeer's parent company.

He expects local women, who generally appear in public covered in full-length black cloaks and headscarves, and other Arabs will account for as much as two-thirds of sales.

"They know what they want," he said. "They travel a lot. They know these brands. And they like to spend their money. "

Still, as savvy as the region's shoppers may be, there are limits to what Frederick's is willing to offer in its Arabian stores. Out for now, for example, are kinky dress-up costumes that are popular at Halloween.

"It's an area that's more conservative than Southern California. There's no question, "Lynch said. "We're not naive. ... There are things that we traditionally carry on our website that we wouldn't even think of carrying over there. "

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Mitsubishi Heavy says merger talks with Toshiba: report (Reuters)

TOKYO Mitsubishi Heavy Industries (7011) President said his company does not intend to initiate merger talks with Hitachi (6501), the Mainichi Daily reported Monday, in the first public denial from his Manager.

"There is no truth that we are entering the talks at this time," Mitsubishi Heavy President Hideaki Omiya told the newspaper in an interview, referring to negotiations for a merger with Hitachi.

Leaders Mitsubishi Heavy, the leading manufacturer of heavy machinery of Japan, had remained silent since media reports on Thursday that the company and Hitachi have begun talks on what could lead to the merger of Japan's largest domestic.

A clear rift between the two surfaced almost immediately after the first news reports.

Hitachi Chief Executive Hiroaki Nakanishi told reporters early Thursday that his company would make an announcement later that day regarding relations on their merger talks. But Hitachi, later issued a statement denying the reported merger talks, and the announcement did not take place.

In a separate statement the same day, Mitsubishi Heavy said it had no intention of accepting a merger as reported by the media.

Sources told Reuters that Mitsubishi Heavy had taken into account a partial integration of their social infrastructure, including power generation systems, while Hitachi is looking at a full merger.

For Mitsubishi Heavy, there are strong doubts of a merger, because it would probably be the one that is swallowed their difference in size given.

"Hitachi has an annual turnover of 9 billion yen and Mitsubishi has 3 trillion ... Mitsubishi Heavy people proud to be a leader of the Group Mitsubishi and we don't want to be resumed, "said a Mitsubishi Heavy, who declined to be named.

In the interview with the Mainichi newspaper, Mitsubishi Heavy President Omiya said his company had "several meetings" with Hitachi, confirming that he had taken into account the integration of some of its operations, including social infrastructure systems.

But he has denied the possibility of an all-out merger of the two, saying that his company had no plan to establish a Preparatory Committee of the merger, as has been reported by some media, the paper said.

"We should not try to do everything by ourselves, when we venture into foreign markets such as internal market shrinks," was quoted as saying.

"If credit is available for both sides, we would like to bond with not only Hitachi but with foreign companies," he told the newspaper.

(Reporting by Taiga Uranaka; Editing by Chris Gallagher)

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CEO confirms 2 000 job losses "Ballpark".

Reuters reports that Royal Bank of Scotland CEO Stephen Hester confirmed last week that additional 2,000 investment bank jobs would go in the 12 to 18 months.

Hester, has said that the 2,000 figure "would be in the right stage".

Meanwhile, dow jones newswires reported that Knight Capital Group is cut about 6% of its workforce of work (thought to represent approximately 90 positions), as it restructures its operations in the wake of the current conditions of market.

Reuters also reports that, according to Credit Switzerland, a review of the income of a cross section of 7 large investment banks reveals that on average, revenues from fixed-income sales and trading have fallen by 36% in the second quarter from the first quarter of 2011. The jury is still decided that this fall is totally focused on the market, or is part of a structural change caused by settlement increased and more capital ratios.

Finally, reports The Financial Times that, according to the Research Hedge Fund, hedge fund average started last week, approximately 1.6% through 2011, but this quickly evaporated that the markets are directed towards the South towards the end of the week.

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Bankers "Bad smell" said of the difficulty in obtaining jobs in the sector

Telegraph reports that, for some of its sources of headhunting, "where the companies of the private sector in a range of industries would have once jumped at the opportunity of hiring of the ex-banquiers, now much will not touch with a barge pole."

Here is the city, however, is not so sure that all of this.

"There are many talented bankers out there who are, or may soon will be, the search for a new job", says our roving reporter Rhiann Hughes, "while not all companies believe that bankers have transferable skills to the right to go to work for them, but companies outside of the industry who have traditionally recruited bankers will continue to do so." And if they do not, it will be more to do with where we are in the economic cycle, as any general stigma attached to the bankers. This discussion of collective guilt is exaggerated way '.

Another area where bankers can find a source Ready-made of employment opportunities are firms of Grand Council, which many had big plans to gear up to this year and are happy to fish in the pool of banker. Even organizations such as the M16 have been known to recruit with ex-banquiers in the past and it is doubtful whether rest if the actions of a few hundred bankers senior difference to employers looking to pick up some decent talent relatively inexpensive.

"Bankers may not be particularly popular", a recruiter said here is the city, ' but that they can bring to the party. Many have transferable skills, a strong work ethic and the ability to think for themselves. "Any company to outside financial markets which is prepared to strike out a candidate simply because he / she has worked in the sector banking industry itself is drawn in the foot."

 

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Stock-Index Futures tumble on downgrades S & P (Reuters)

NEW YORK Stock index futures tracked to sharp drop in global equity markets on Monday after rating agency Standard Poor's cut & the top-tier AAA credit rating of the United States, rattling jittery investors.

The agency's move came late Friday after a wild week for stocks--its worst in more than two years--as lingering concerns about sluggish economic growth and heavy public debt loads in developed economies hit sentiment.

The impact of S&P's rating cut was felt in Asia and Europe. Japan's Nikkei stock average (.INDU) slid 2.2 percent at the close on Monday, while the FTSEurofirst 300 index (.FTEU3) of top European shares fell 1.8 percent in early trading after a bounce following the European Central Bank's move to buy Spanish and Italian bonds.

Peter Cardillo, chief market economist at Rockwell Global Capital in New York, said he expected an intraday reversal after sharp falls at the open, similar to Friday's action.

Hedge funds are selling out at levels that they are somewhat compelled to, so it feeds on itself "said," he said. "The market is grossly oversold, valuations are attractive, and I think at this point the market has already discounted a growth slowdown."

S&P 500 futures fell 24.8 points and were below fair value, a formula that re-evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 213 points, and Nasdaq 100 futures shed 49.25 points.

Last week's steep selloff in equities wiped about $ 2.5 trillion off global market valuations.

Safe-haven assets were in demand. Gold hit another record high of $ 715.01 an ounce and was set for its second largest daily gain this year.

Resource-related stocks will be under pressure as crude oil prices fell 3.3 percent to $ 84 a barrel on concerns over the economic outlook. Copper fell to a five-week low.

Sentiment worsened after the S&P cut the U.S. long-term credit rating by a notch to AA-plus late Friday on concerns about the debt situation in the world's largest economy. The downgrade could eventually raise borrowing costs for the U.S. government, companies as well as consumers.

Moody's on Monday repeated a warning it could downgrade the U.S. rating before 2013 if the fiscal or economic outlook weakens significantly, but said it saw potential for a new debt agreement in Washington to cut the budget deficit before then.

Analysts said the S&P 500 index could test Friday's intraday low of 1, 168.09. Some traders look for a pullback to the 32.8 percent retracement of the rally from the index's bear market low on March 2009. That level is around 1.100.

(Editing by Jeffrey Benkoe)

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In case you have missed-Top Stories last week

In case you missed the, here are stories of last week.

1. Top Firm to eliminate 30,000 jobs

2 7 Best companies currently undertaking cost reduction programs

3 Burdensome 3 comments possibly on the merger of the Bank of worse in history

4 11 Of the worst decisions made by the banks

5 4 Pieces more than difficult News that highlights just how it is there

6 Goldman Sachs and the "CV bonus"

7 'No Go Go' firm not said "No layoff here"

8 UBS said in London 'Threat'

9 If you thought that the last batch of photos have been incredible...

10 Farm credit, Goldman, HSBC, Lazard, Nomura

11 Other firm will shed 3,000 jobs in 2011

12 Exile on Wall Street

13 Barclays, HSBC, Goldman, JPMorgan, SocGen, Standard Chartered, UBS, Wells Fargo

14 Bank of America CEO "Desperate" ploy?

15 Summertime Blues

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Sales of BMW vehicles 7.6 per cent in July in the United States, China (Reuters)

Frankfurt (Reuters)-the German manufacturer BMW (BMWG award.DE) said unit sales rose 7.6 percent in July, driven by growth in demand from the United States and China.

July sales of its brands BMW, Mini and Rolls-Royce climbed to 129.094 vehicles, it said on Monday.

"We just reported July sales of the most successful ever and we are on the way to reaching our goal recently announced more than 1.6 million vehicles in 2011, the best result ever for the BMW Group sales," the head of BMW's sales Ian Robertson said in a statement.

In the United States, the company has delivered 21.409 vehicles during the month of July, 11.7 percent over a year earlier. Growth in China was 36.1% with 18.858 cars sold.

(Reporting by Ludwig Burger)

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The wild ride in financial markets, by the numbers (AP)

Global financial markets have been on a wild ride in the last two weeks. Political impasse in Washington has led in the United States close to defaulting on its debt; European leaders scrambled to prevent a debt crisis from spreading in Italy and Spain; and news on the economy of the United States has shown that growth has slowed. Here's how the markets reacted.

U.S. MARKETS:

U.S. Stock indexes entered a correction, which means a decrease of at least 10 percent from a peak recently. Corrections are common during bull markets and do not mean necessarily that stocks are starting a long decline. However, a decline of 20 percent or more generally marks the beginning of a bear market, or a long period of losses on the stock exchange.

• Dow Jones industrial average fell 1,280 points, or 10 percent, from July 21, when it closed at 12.724. 699 points is down this week, the largest weekly point decline since October 2008. The drop week of 5.8 per cent was the worst since March 2009.

• Standard & poor's 500 index, the market's most widely used by professional investors and mutual funds, is 10.8 percent below where it was on 22 July, when its decline began recently. The decline of 7.2% this week was the worst week since November 2008.

• Nasdaq composite index, which includes many technology companies, is down 11.4 percent since July 22. This week, its worst week since November 2008 lost 8.1 per cent.

• Russell 2000 index of small companies in the u.s. is down 15 percent since July 22. Decline of 10.3% this week was the worst since November 2008.

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WORLD MARKETS:

Overseas stock markets also took a beating this week, especially in Europe. Indexes in Italy and Spain have dropped more than 10 percent, as did Germany's DAX and CAC 40-in France. Asian markets didn't rate as pretty bad.

Europe:

• Germany DAX fell 12.9% this week, its worst loss since October 2008.

FTSE 100 • England fell to 9.8 percent, the worst loss since November 2008.

FT-IF MIB of Italy • decreased 13.1 percent, the worst loss since March 2009.

Spain's IBEX 35 fell • 10 percent, its worst loss since May 2010.

Asia:

Japan's Nikkei 225 • fell 5.4 percent, its worst loss since March.

• Hong Kong's Hang Seng fell 6.7 percent, the worst loss since March 2009.

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GOVERNMENT SECURITIES IN THE UNITED STATES

Investors rushed to buy Senate seeking safer investments. The price of two-year Treasury Note rose so high that its yield, which moves in the opposite direction of its price, fell to a record low. The 10-year Treasury yield serves as the benchmark for many types of loans. When it falls, are often on mortgages rates and other consumer loans.

• The note of the two-year Treasury yield fell 0.26 percent lower on Thursday, a record low before Friday that rises to 0.29 per cent. It was at 0.36% a week earlier.

• The yield on the 10-year note fell Treasury of 2.56% from 2.80 percent a week earlier. On Thursday, it fell to 2.39%, the lowest level since October.

• The yield on 30-year Treasury bond fell to 3.85 percent from 4.12 percent a week earlier.

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GAINERS AND LOSERS ON WALL STREET

All three major U.S. stock indexes lost more than 5% during the week. The steepest losses were by companies whose profits are more dependent on a growing economy. These include oil companies, producers of raw materials and banks.

• Bank of America Corp. fell 15.9% during the week, the largest loss among the 30 stocks in the Dow Jones industrial average.

• Alcoa Inc. fell 13.2 percent on concerns that a global economic slowdown will mean weaker demand for aluminum.

• Kraft Foods Inc., was the only Dow stock between 30 to rise during the week, gaining 1.4 percent. It is divided into two companies, with one focusing on snacks and the other on groceries.

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RAW MATERIALS:

Concerns about the weakening of the economies of the world, has led investors to sell oil and natural gas. I am concerned about the lower energy demand. But the nervousness also led to the gold price, which is considered a safer investment.

• Crude oil fell by 8.8% during the week.

• Natural Gas fell 7.7 percent.

• Gold ended the week at $ 651.80 per ounce. Earlier in the week, rose as high as $1,668. Adjusted for inflation, is still below its peak of 1980.

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Broadcasters brace for impact from debt downgrade (Reuters)

NEW YORK  – A downgrade of United States ' top-tier credit rating has Wall Street scrambling to figure out the knock on effects for the financial system, from mortgages to banks to markets that rely on U.S. Treasuries for collateral.

The immediate effects of the & Standard Poor's downgrade of the country's AAA credit rating late on Friday are likely to be modest, largely because it was expected and already discounted at least partly, experts said.

Many downplayed the likelihood of the sort of financial contagion experienced when Lehman Brothers went under in September 2008. Few had expected it to have to file for bankruptcy, and few were prepared for the fallout. Money market funds froze, some major commercial banks collapsed, and many major dealers and finance houses teetered on the edge of failure.

But even if that type of scenario is unlikely this time, bankers, lawyers and investors wonder if there could be longer-term consequences of S&P's downgrade, given that U.S. sovereign credit is bedrock to the world financial system.

The analysis is complicated because so many of the potential stress points for the financial system are relatively opaque areas like over-the-counter derivatives markets.

Adding to the difficulties is the concern that the downgrade is only one of the many issues roiling global markets. The European debt crisis is spreading, with Italy and Spain coming under the gun after Greece, and data in recent weeks point to a weaker U.S. economy than many investors had thought and have led to fears of another recession.

"I actually think it is going to end up having more of an impact than some of the news stories are suggesting," said Thomas Stoddard, senior managing director at Blackstone Group who focuses on financial services investment banking.

"Not having the U.S. as triple-A is just going to pop up in more places and have more frictional costs than people might suspect," Stoddard added.

A number of entities that are key players in the U.S. financial system--including mortgage finance companies Fannie Mae and Freddie Mac, and securities clearinghouses like the Options Clearing Corp Depository Trust Co.--are likely to be downgraded by Standard & Poor's on Monday.

For Fannie Mae and Freddie Mac, losing their triple-A rating could lift borrowing costs, potentially making mortgages more expensive for consumers and adding to stress in the already unstable U.S. housing market.

Last month, S&P said it may also cut ratings for companies like the Depository Trust Co., which facilitates payment transfers among major banks, and several Federal Home Loan Banks and Farm Credit System Banks.

On Friday evening, when S&P cut the United States ' sovereign rating by one notch to "AA-plus," it said it would offer more detail about the ratings for these companies on Monday.

DERIVATIVES MARKETS

Another source of potential stress is derivatives markets, where investors and banks often collateralize their positions using U.S. Treasuries.

If banks start demanding more Treasuries to collateralize the same exposure, investors could be forced to sell assets to come up with extra collateral, causing broader market declines. As long As Treasury yields are at all time lows, that risk seems relatively low, said a hedge fund trader who spoke on condition of anonymity.

Some derivatives transactions may have ratings triggers built into them that unwind the deals if the U.S. is downgraded, the trader said, but he said it is difficult to know how many such transactions are out there.

OCC, the world's largest equity derivatives clearing organization, said on Sunday it has no current plans to adjust its current valuations or haircuts on Treasuries used as collateral.

There are some factors working in markets ' favor, analysts noted.

For one thing, major U.S. banks are better organized as credit losses have slowed. The U.S. banking system had $ 1.51 trillion of equity capital at the end of the first quarter, compared with $ 1.29 trillion in the fourth quarter of 2008. That roughly 17 percent of extra capital is supporting about 3 percent fewer assets than it used to.

If stresses become strong in areas like the repo market, a massive market that banks use to fund securities short-term, dealers are fairly sure the Federal Reserve can jump in to offer support, as it did during the credit crunch, the trader said.

Any impact in the derivatives market will be less than what the pessimists fear, said Michael Holland, founder of asset manager Holland & co. "I don't expect major disruptions in the markets just from the downgrade."

BORROWING COSTS

Borrowing costs for companies with top ratings like Microsoft Corp. and Exxon Mobil Corp. could drop, because triple-A rated debt may be even more attractive to some investors now, analysts said. Some companies have at times had more available cash on their balance sheets than the U.S. government in recent weeks.

In general, corporate borrowing costs may not rise following the last downgrade. Last week, when many in the market were expecting the U.S. to be downgraded, six U.S. companies issued 30-year bonds, which is unusually long-dated for the corporate market.

Even highly-rated corporate bonds have seen their risk premiums rise in recent sessions, signaling that portfolio managers are still concerned about credit risk. As turmoil in Europe, those ratchets higher risk premiums may rise more. But investors ' willingness to buy long-term corporate debt signals some confidence in the sector.

"To a certain extent, corporate debt may look even more attractive, especially cash-rich balance sheet companies with lots of liquidity," said Chip MacDonald, a financial services partner at law firm Jones Day.

STATE FINANCES

States that rely heavily on federal government spending--such as Virginia and Maryland, which are home to many federal employees and defense contractors--could suffer if Congress and President Barack Obama slice the federal budget more deeply.

A downgrade of Fannie Mae and Freddie Mac would affect billions of dollars of debt issued by public housing authorities secured by federally guaranteed mortgages.

Hospital credits could be weakened if the federal government slashes programs such as Medicaid--the health plan for the elderly, poor and disabled that accounts for as much as 30 percent of state spending. Stocks in the health care sector sold off last week, amid fears of declining government support for spending in the sector.

"The degree of dependence on the federal government now becomes a state credit issue," said Philip Fischer to managing principal at eBooleant Consulting, in a recent report.

S&P is also expected to immediately downgrade pre-refunded bonds. When municipal bonds are refunded, investors are typically repaid from Treasuries held in escrow.

Debt issued by AAA-rated universities and colleges with global reputations might rise in price, said Evan Rourke, a portfolio manager with Eaton Vance, citing as examples the Harvard and Princeton.

Indeed, the immediate impact of the downgrade might be muted by the tax-free market's traditional strengths.

"I don't see a tremendous flight out of municipals. You might see credit spreads widening for lower-rated issues but we also think a lot will hold their ratings, "Rourke said.

(Reporting by Paritosh Bansal and Dan Wilchins, additional reporting by Joan Gralla, Ben Berkowitz and Ann Saphir; Editing by Marguerita Choy)

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In summary: Berkshire Hathaway's 2Q earnings (AP)

Berkshire Hathaway says it's generated a net profit of $ 3.4 billion during the second quarter. Here's a breakdown of the firm's profits top contributors:

INVESTMENTS and derivatives: Added 713 million dollars of net income, loss of 1.1 billion dollars last year.

RAIL: Towed net profit of 690 million dollars to 603 million dollars last year.

PRODUCTION, service and RETAIL: added 789 million, up from 671 million dollars last year.

UTILITIES: Added 215 million dollars, down from 233 million.

SUBSCRIBE to insurance: Recorded a loss of 7 million dollars this year, down from net income of $462 million last year.

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5 Candidates in the run Deutsche corporate & Investment Bank

With Anshu Jain offshore to become co - CEO of Deutsche Bank, Paris are on who will replace him at the head of the Bank corporate and investment banking unit.

Here are the 5 most widely tipped candidates of the estate:

Alan cloete - head of Global Finance & FX

Colin Fan - head of commercial credit and emerging markets

Michele faissola - head of global rates & Commodities

rich Herman - head of institutional Clients

Stephan leithner - co-coordinator of investment banking coverage & Advisory

All five are members of the company and the Executive Committee of investment bank.

Sources - Bloomberg, The Wall Street Journal

 

 

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G7 says committed to ensuring liquidity, support markets (Reuters)

Paris the Group of seven Nations agree to take coordinated action to secure liquidity and supporting the functioning of financial markets, financial stability and economic growth, G7 Finance Ministers and Central Bank Governors, said in a statement.

"These actions, along with continued efforts of fiscal discipline will enable long-term sustainability of Public Finances," said the statement issued early on Monday.

"No change in the fundamentals of financial guarantees the recent tensions faced by Spain and Italy. We welcome additional policy measures announced by Italy and Spain to strengthen fiscal discipline and support the upswing in economic activity and job creation, "he added.

Senior officials conferred by phone before the opening of the Asian financial markets such as financial crises on both sides of the Atlantic has threatened to escalate.

In separate efforts to prevent panic, the European Central Bank has reported would begin to buy Italian and Spanish debt, while the United States Treasury Secretary Timothy Geithner said Treasury securities are just as strong as they were before a potentially damaging debt downgrade from Standard Poors & on Friday.

G7 officials said in their statement that would closely consult on action on currency markets and would be appropriate on a foreign currency.

"Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability," they said.

(Reporting by Geert De Clercq; Editing by Michael Roddy and Chizu Nomiyama)

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BlackRock seem to buy debt mortgage Agency of the United States more (Reuters)

SINGAPORE (Reuters)-BlackRock, Fund Manager in the world, is looking for opportunities to buy the debt of the United States mortgage agency in the wake of the Standard Poor's downgrading of sovereign & rating U.S., said Rick Rieder, company chief investment officer for fixed income portfolios.

Financial markets in Asia slumped Monday after the unprecedented decision of S & P cut the U.S. debt rating to AA-Friday plus from AAA, a move that could lead to chain credit rating cuts mortgage finance companies Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB).

Rieder, who oversees about $ 612.5 billion in assets as of June to BlackRock, is focused on the quality of the so-called debt GSE among other credits.

"The GSEs are still an instrument of high quality, and in the context of improving the liquidity of our portfolio, we have been a buyer of mortgage Agency," Rieder told Reuters by phone.

"With greater volatility of Agency mortgage market may experience some weakness, and if there's a weakness I will add to the portfolio once again," he added.

For Fannie Mae and Freddie Mac, losing their AAA rating may raise borrowing costs, making it potentially mortgages more expensive for consumers and the added stress in the United States already unstable property market.

For the past few months by the bond-buying 600 billion of the Federal Reserve, BlackRock is protecting wound his credit portfolios against risks arising from the debt crisis of the euro area and the impasse over the U.S. debt ceiling by increasing exposure to high-quality bonds.

Rieder said the action S & P was well-flagged so it will require little or no changes to their portfolios.

He did not expect that the role of the United States Treasury collateral repo market has changed after the S & P downgrade.

"The Treasury market is a market of 13 billion dollars and a lot of reason that is used as a form of guarantee is not only the rating AAA or what was a AAA rating but the incredible liquidity and because it has become accepted as a form of payment and guarantee. A one-notch downgrade by one of the three agencies will not change that dynamic in any significant form. "

With regard to economic prospects, Rieder believes the u.s. economy will grow under the trend for a long time, and the Federal Reserve does not necessarily add more liquidity through a new program of quantitative easing. Rather it can keep the size of its budget for a longer period and extend the duration of some of its fixed-income assets, he said.

"A recession is unlikely, but we cannot exclude."

(Edited by Kim Coghill)

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ECB backs Italy, Spain, as politicians pledge action (Reuters)

SYDNEY/Paris The European Central Bank stepped in bond markets Monday, a commitment to support the Spain and Italy with the aim of avoiding the financial meltdown in the euro area, while the G7 and G20 offered soothing words to investors shaken by a historical debt rating downgrade of U.S. backing.

Spanish and Italian bond yields fell as dealers said the Bank was expanding its bond-buying program for debt issued by economies third-and fourth-largest block, in the latest effort to stop the sovereign debt crisis in Europe.

"They're doing clip of 20-25 million (USD) and are spread around the market," said a dealer. "We expect to make billions today."

Equity markets that had been in headlong retreat Asia turned positive in Europe as G20 Finance Chiefs and central bankers pledged to take all necessary measures to support the liquidity, growth and financial stability.

"It seems that policymakers globally are swinging into action," said Shane Oliver, head of investment strategy at AMP capital investors, one of the largest managers of Australia.

"A move to begin now to buy Italian bond could be very positive in helping to calm fears of a further escalation of European debt problems," said Oliver, speaking before the ECB has made its move in the markets.

"Speculators will now think twice before selling or cortocircuite Italian and Spanish bond, knowing the ECB will act against them."

Spread of Italian and Spanish bonds for debt sharply reduced German, credit default swaps fell and stocks of Spanish and Italian jumped more than 3 percent. The euro has also extended gains.

Marked a reversal in mood from the fear that had gripped the Asian markets earlier in the day, when similar engages in a G7 statement had failed to calm investors who drove the safe haven of gold to a record $ 1,715 atop an ounce, while the share markets were again coloured red.

Investors also turned their attention to what the Federal Reserve might say at its policy meeting Tuesday, fueling speculations, soon you may need to consider a third round of quantitative easing to resurrect the richest economy in the world.

COUNTING ON THE FED, ECB

After a conference call Sunday night, the ECB welcomed announcements from Italy and Spain of new deficit-cutting measures and economic reforms, as well as a Franco-German Rescue Fund pledge that the eurozone will take responsibility for the purchase of bonds once it is operational, probably in October.

"The Euro to intervene in a very significant markets and respond in a meaningful way and cohesive", a monetary source said.

The Central Bank had been reluctant to step up its purchase of distressed debt, fearing that it would be seen as a blank cheque to Governments spendthrift.

Since the program began in May last year bought just 80 billion of bonds, while Italy and Spain alone question about 600 billion annually. Dealers said that it would take a pledge to buy several hundred billion euros of debt go ahead of fears of contagion.

At the same time the G7-United States, Britain, Canada, France, Germany, Italy and Japan--said it would take joint action in currency markets if needed because "disordered movements ... adversely affect economic and financial stability."

The G20 Communique followed shortly after the opening of European markets.

The Japanese intervened to keep their currency last week, while the National Bank of Switzerland surprised with a new easing cycle as they battled a fast-growing Franco.

Pressure is growing on the Fed now to look for further easing from the market-QE3 voiced – although few expect anything dramatic from policy meeting Tuesday.

"We are probably a bit closer. But I don't think we yet, "said Nomura's global chief economist Paul Sheard. "I believe that the Fed would have to get a little more worried that financial markets were spinning out of control before accepting with QE3".

CHINA NOT HAPPY

None of which was enough to reassure the single largest creditor of Washington, China.

"It must be understood that if the United States, Europe and other advanced economies does not take responsibility and continue their ceaseless joke about selfish interests, this will seriously hinder stable development of the global economy," said a comment the people's daily, the mouthpiece of the Communist Party of China.

China has over one trillion dollars of U.S. Government paper and was not so happy when the debt rating of AA-plus United States to cut & Poor Standard from AAA-a move that infuriated the Treasury Secretary Timothy Geithner.

In an interview to NBC and CNBC television, Geithner said the rating agency "showed really terrible judgment" and claimed the downgrade means nothing and does not affect the faith of investors in debt of the United States.

Japanese Finance Minister Yoshihiko Noda put a face on it on Monday, saying that the market confidence in the dollar and the treasure of the United States has not wavered and indicated for the internationalization of Tokyo to maintain its massive holdings of United States Government.

(Additional reporting by Laura McInnis, David Lawder Washington and Mark Felsenthal, Sarah Marsh in Berlin, Astrid Wendlandt, Yeonhee Kim and Yoo Choonsik in Seoul, Praveen Menon and Shaheen Pasha in Dubai and Reuters offices worldwide; Written by Wayne Cole and Alex Richardson; Editing by Ed Davies and Dean Yates)

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IRS will not pursue a tax on air tickets (ContributorNetwork)

The confusion surrounding the partial closure of the Federal Aviation Administration was relieved by the time of Congress and President Barack Obama to accept , and the signing of a Bill to fund the Agency until mid-September. However, during the two weeks of deadlock that taxes were not collected by the airlines have raised a number of questions. Fortunately, the IRS is entered and issued a statement to help clarify the issue.

What is the position of the IRS tax ticket paid prior to the arrest?

Previously, the IRS had suggested passengers contact the airlines for a refund taxes paid before the arrest, but he traveled during the arrest. The Agency has reversed their position, because of language in the new Bill and won't be issuing refunds to anyone who fits these criteria.

Are taxes due on tickets purchased during the partial closure?

While the law allows to apply retroactively the tax, the IRS will not prosecute customers who have purchased tickets during shutdown to collect taxes. Since the airline raised fares by the difference of the application fee is collected, many travelers would have to slightly more taxes on their tickets that would under normal circumstances.

The decision is not a bit unfair?

Unfortunately, the decision to raise taxes might be a bit unfair to whichever side of the fence customers sit. Those who bought tickets before 23 July, the date of closing, paid taxes on their business cards and saw no benefit, but those who have purchased tickets, after stopping to pay no taxes. However, because of the discount rate hike was invisible to potential customers. Airlines have benefited pocketing money that were directed to cover these fees.

When taxes begin again collected?

Airlines are need to start collecting taxes again shortly after midnight Monday. Therefore, the whole situation will be resolved shortly.

This will happen again in September?

Because the Bill only restores funding for FAA until 16 September, the possibility of another partial shutdown is possible. However, almost 30 million dollars per day in tax revenue, not to mention tens of thousands of jobs at stake, should be enough to entice the Congress to get a deal on the spot.

Jason Gallagher is a former professional trips and long time resident of Pennsylvania. These experiences give him a firsthand look at situation in the State and all included in the travel industry technology development trends.

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Goldman Sachs upgrades India to market peso (Reuters)

MUMBAI Goldman Sachs upgraded India Monday to "market weight" from "underweight", given a probable turn in loop macro, reduction of oil prices, lower assessment and policy reform.

"The latest move by RBI to raise the repo rate by 50 basis points was a clear sign we believe that the Central Bank is monitoring to reduce inflation expectations," Goldman said in a statement.

Despite the short-term weakness, tightening of policy was a necessary step to reign in inflation expectations and will serve at the end as a net positive for the stock market to support Indian on a longer term horizon, he added.

The Reserve Bank of India (RBI), which raised rates 11 times since mid-March 2010, should be nearing the end of its cycle of tightening.

(Reporting by Divya Chowdhury and Neha Singh; Editing by Ranjit Gangadharan)

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Moody says U.S. needs to find the most deficit cuts (Reuters)

NEW YORK)--Moody's rating agency repeated a warning Monday that could downgrade the United States before 2013 if fiscal or economic Outlook weakens significantly, but said that he saw the potential for a new debt agreement in Washington to cut the budget deficit before then.

With the markets of the United States yet to open after rival Standard & Poor stripped of its AAA rating late on Friday, United States, Moody said in a statement its decision to assert that the AAA rating on 2 August was on condition that further cuts.

"For the Aaa rating to remain in place, would look for further measures that would bring the ratio of federal debt to GDP, for example, reaching not far above the projected 2012 by almost 75% by the middle of the Decade and then falling in the long run," Moody's analyst Steven Hess wrote in a report.

"The agreement last week implies that come to an agreement that would meet this criterion by 2013 first will be challenging, given the political polarization, but not necessarily impossible."

Questions about whether U.S. lawmakers will be able to agree on further budget savings next year are located in the Centre of a disagreement between two rating agencies.

While S & P downgraded in the United States to AA-plus debt after deal fell last week short of his expectations, Moody is willing to give the Government more time to tackle its debt problems.

Moody's said that the United States "continues to exhibit characteristics consistent with an Aaa rating" despite further deterioration expected in government debt metrics in the coming years.

"Over time, this status could be threatened if further measures are not taken to address the long-term fiscal situation, but it is too early to conclude that those measures will not be forthcoming," said Hess.

(Edited by Patrick Graham)

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AIG to sue BofA on mortgage bonds: report (Reuters)

(Reuters)-U.S. insurance giant American International Group (AIG.N) is planning to sue Bank of America (BAC.N) to recover more than 10 billion dollars in losses over 28 billion dollars in investments in mortgage-backed securities, the New York Times said, citing three people with knowledge of the complaint.

AIG's move adds the soaring investors seeking compensation for troubled loans that led to the financial crisis, the Times said.

The complaint alleges that Bank of America, together with his unit, Merrill Lynch and Countrywide Financial misrepresented the quality of mortgages into securities and sold to investors, the newspaper reported.

Bank of America is likely to dispute claims in suit, that AIG should be presented on Monday in New York State Supreme Court, the paper said.

Bank of America spokesman Lawrence Di Rita said NY Times that the revelations of mortgage securities were quite strong for sophisticated investors. Many of the lost value because loans fell said.

"Now you have a lot of investors and lawyers who are trying to recover losses from an economic crisis," Rita told the paper. The Bank hasn't seen dressed in AIG, NY Times said.

An AIG spokesman declined to comment on the paper. Bank of America and AIG could not immediately be reached for comment by Reuters.

(Reporting by doing nothing Prasad in Bangalore; Editing by Hans-Juergen Peters)

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HSBC branches in warehouses U.S. Pact 1 billion first Niagara (Reuters)

NEW YORK (Reuters)-HSBC Holdings Plc said Sunday it will shed nearly half its branch network, selling underperforming U.S. 195 branches to first Niagara Financial Group Inc. for approximately $ 1 billion and closing the other 13.

Sale of cash at first Niagara covers more than 40 percent of about 470 branches in the U.S., including 183 HSBC in New York, six on the outskirts of the city of New York and Connecticut. It also includes 15 billion dollars in deposits, 2.8 billion dollars in loans and $ 4.3 billion of assets under management.

Following the transaction, Buffalo, New York-based Niagara before expects to be significantly larger, with branches to about 450, 38 billion dollars in assets and $ 30 billion of deposits. Expects to cede some branches to satisfy antitrust concerns. Closing is expected early 2012, pending approvals.

Stuart Gulliver HSBC Chief Executive can set plans for Europe's largest bank to cut 3.5 billion spending cuts in retail banking and sell its U.S. credit card unit, which has more than 30 billion dollars of assets.

The Bank has been criticized for the same spread too widely, with approximately 95 million customers and 300,000 employees in 87 markets without sufficient regard for profitability.

Forty-two percent of companies are returning HSBC unless its cost by 11 per cent of the capital, and the Bank said it will be released in Russia and Poland.

Results first half-year report is expected on Monday and HSBC. Analysts on average expect a pre-tax profit of $ 10.9 billion, compared with 11.1 billion, a year earlier.

"RECORD OF DEVELOPED"

In may, HSBC said its Us unit banking HSBC Bank USA had a "record of poor", and that it would focus its operations on U.S. business clients with international and non-u.s. customers with business in the United States.

"HSBC is committed to the United States and our international network and skill set, which are our competitive advantages", Niall Booker, CEO of HSBC North America, said in a statement Sunday.

The 13 branches that HSBC plans to close are in Connecticut and New Jersey and are near other HSBC branches. HSBC has around 370 branches in New York.

The Bank did not immediately return calls on Sunday for further comment.

Other bidders for the branches include KeyCorp and M & T Bank Corp, while the bidders for the credit card unit have included Capital One Financial Corp. and Wells Fargo & Co, people familiar with the matter said before July.

"HORRIBLE" TIME TO MAKE ACQUISITIONS, OR NOT?

First Niagara Chief Koelmel Executive John said in an interview that his Bank expects to sell 20 to 25 percent of HSBC branches to satisfy regulators 195 and reduce duplication.

"We pointed out a footprint running from Buffalo to Boston to Philly and back to Pittsburgh," he said. "It's all a matter of having significant presence in the markets we choose to serve".

Koelmel also said it was "sensitive" assessments, especially given that the transaction is all cash, in a time of uncertainty for the environment, economy and market.

"It can be argued that this is a horrible time for doing anything: Washington can't do anything, and the markets are in a State of high alert," said. "Is somewhere between a mess and an embarrassing train wreck. I'm always one who believes that in the private sector, we must have the courage to bring in spite of that. We cannot be unduly deterred by what the markets generally are doing. "

Niagara before expects the transaction to Boost operating earnings, after the costs of the merger, from 10 to 11 percent in 2012. It plans to issue 750 million to 800 million dollars worth of stock and $ 350 million to 400 million dollars of debt before closing.

Most of the 1,900 workers at 195 HSBC branches are expected to keep their jobs, including at subsidiaries that are sold, said the first Niagara.

Niagara before he said he was advised by Goldman Sachs & Co, Sandler O'Neill & Partners LP & the law firm of Pepper Hamilton, while HSBC was advised by its investment bankers, JPMorgan and the law firm Cromwell & Sullivan.

Shares of Niagara before closed Friday on the Nasdaq at $ 12.25.

(Reporting by Jonathan Stempel; editing by Maureen Bavdek, Bernard Orr)

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Markets rally if the debt agreement, downgrade dagli occhi (Reuters)

NEW YORK (Reuters)-if the debate in Washington over raising the debt ceiling Us finally ends with a deal on Sunday, the last-minute truce could spark a rally relief when open global markets.

U.S. lawmakers were close to a deal last-gasp 3 billion dollars to raise the debt limit and avoid default is potentially catastrophic. Markets have been protracted discussions during the tumultuous, with Wall Street, ending its worst week in a year on Friday.

"An affair of 2.8 billion looks like the result and the mechanism is in place and, with no default. This is enough to rally the markets, "said David Kotok, chief investment officer of Cumberland advisors in Sarasota Florida.

But the White House stressed that no deal had been reached yet. Communications Director Dan Pfeiffer sounded a note of caution, saying in a tweet on Sunday that "a lot of bad information is floating out there."

Wayne Kaufman, Chief market analyst at John Thomas financial, New York, said that after five days of Wall Street, the stock market was primed for a bounce. But he warned that options traders, they have been a deal will be struck, bets may remain trapped.

"There is a possibility that this could go on for another couple of weeks," he said. "Probably it would be devastating for the markets, but there is a possibility".

Even if an agreement is struck soon, the markets remain nervous, and a prominent pop in action can be short-lasting. This year, Wall Street was quick to move from crisis to crisis. And those seem to be almost infinite supply.

The United States still faces a possible downgrade in its credit rating AAA gold in the near future and that is likely to affect markets if it happens at the end.

"The initial shock of downgrade will rattle the markets," said Peter Cardillo, Chief market Economist at Avalon Partners, New York. "The possibility of a downgrade are certainly now more than a month ago."

Trading activity in recent weeks suggests U.S. equities have been restrained by paralysis in Washington.

Fears that a Government could be hamstrung a deadweight on growth rose on Friday after a report showed that the American economy grew far more slowly than thought in the first half of the year.

A number of major investors have indicated they are in possession of larger cash positions than usual, and yields on some debt of the United States in the short term, maturing in August climbed.

Meanwhile the dollar safe haven in the world during the financial crisis of 2008, hit a record low against the Swiss franc and a trough four months against the Japanese yen on Friday. Both are now seen as a more secure location to store the money of the United States.

The lack of a budget agreement would also ratchet U.S. to exert pressure on the dollar against the yen so much that raises the prospect that Japan might intervene to stop its currency from strengthening.

The dollar is on Friday to its lowest since coordinated actions to weaken the Japanese currency in mid-March. Is now in the distance of its record low of 76,250 yen, which it struck shortly before authorities intervened then.

Short-term money markets were involved, making it more expensive for banks and companies. If that persists, consumers and small businesses can also find more difficult to access credit. Who can get loans will probably pay more for them.

Companies, meanwhile, are hardly likely to ramp up hiring if funding costs are rising. It has become even more of a concern after data showed the US economy grew at a plodding pace 1.3 percent in the second quarter and produced nearly flat growth in the first quarter.

"This is exactly what the market does not need as economic conditions are shaky," Jim Caron, head of global interest rate to Morgan Stanley, said in a research note.

Ironically, he gathered more dated Treasury debt, partly in reaction to weaker than expected, but also reflecting a "flight to safety" as investors move out of the way of default can have consequences that global markets.

(Additional reporting by Angela Moon and David Gaffen; Editing by Chris Sanders and Dale Hudson)

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Control deficiency with sanctions, says Germany (AFP)

Berlin (AFP)-European Union States which do not respect the rules agreed on their deficits should have their frozen EU subsidies, Finance Minister of Germany said in an interview to be published Sunday.

"We would quickly filter out the rate of European funds" to countries whose deficits exceeded the amount allowed, Wolfgang Schaeuble told the newspaper Frankfurter Allgemeine Sonntagszeitung.

The European Union's 1997 Stability and Growth Pact requires members of the block to maintain fiscal discipline, in particular by holding the annual public deficit under 3.0% of total production and to work towards securing surpluses in times of strong growth.

Euro-zone countries are struggling with a debt crisis partly caused by the failure of some Member States to respect the limits set by the Pact.

Schaeuble argued that the EU does not have to wait in the future for the situation to get out of hand.

But at the same time he rejected the idea that Greece would have to leave the euro zone.

"The eurozone would suffer an irreparable loss of confidence if only one of it members left the Monetary Union," he warned.

"I don't even want to try to imagine what it would be if the markets realized that they can expel a country from the euro area," he added.

The EU is currently looking to strengthen its sanctioning methods that States demonstrate budgetary discipline enough.

Several euro area countries have called for tougher sanctions in exchange for support of rescue packages for Greece, Ireland and Portugal to avoid default.

The European Parliament has also considered fine countries running large deficits.

Euro-zone countries in March on the broad outlines of a plan to control the deficit, but the Member States, has tried to limit the scope of any automatic sanctions, hoping to retain some political flexibility.

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HSBC appoints a General Manager group

HSBC Holdings plc has appointed Sean O'Sullivan, 55, a Director-General of group and the Group Chief Operating Officer, with effect from August 1, 2011.

O'Sullivan will continue directly to Stuart Gulliver, Steering Group Executive and joined the Board of management of the group.

It is the responsible Executive of improving organizational effectiveness through HSBC. He was head of the Group technology and Services agent (CTSO) since January 11, 2011. It will continue to lead the HSBC technology and Services (HRT), which provides services to the sectors of HSBC.

O'Sullivan is a graduate of the Ivey School of Business at the University of Western Ontario, Canada. He joined HSBC in 1980, spending 22 years of his career in the commercial bank, branch management and executive management positions in Toronto and Vancouver. He served as a Vice Executive Chairman of HSBC USA Inc. in New York, before moving on to the bank HSBC Canada as COO, and in 2007, in London as CTSO for HSBC in the United Kingdom.

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Former official NY admits guilt in Hamptons fraud (AP)

RIVERHEAD, NY – a former member of New York, convicted of insurance fraud this year declared guilty in a separate mortgage fraud scheme of several million dollars.

George Guldi (GOOL '-dee) admitted to grand larceny and other charges Friday in a Court of Suffolk County.

In the previous case, prosecutors say he pocketed $853,000 in insurance money after fire 2008 at his home in Westhampton Beach. He was sentenced to 4-12 years in prison.

The last indictment charged him with the creation of fake documents to obtain loans which involves approximately 60 properties, primarily in the Hamptons.

He was promised a sentence of one to three years to run concurrently with his other term of imprisonment. He should be sentenced on 31 August.

Prosecutors say that sought a sentence of up to 25 years.

Guldi served as a County legislator from 1994 until 2003.

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U.s. offshore oil producer by restarting ops post-Don (Reuters)

HOUSTON (Reuters)-U.S. offshore oil and natural gas producers are restarting production operations along with Don tropical storm over, data from the energy regulators of the Gulf of Mexico showed on Sunday.

U.S. Bureau of Ocean Energy Management said the 6 percent, or 84.072 barrels per day oil production remained in line, down 4.9 percent from Saturday.

BOEM also said the 3.5 percent of daily production of natural gas, or down 186 million cubic meters of natgas, remained closed, 3.1 percentage points from Saturday.

Among those who had restarted closed all production was Anadarko Petroleum Corp., which was closed and completely evacuated six platforms in the Gulf.

"Everything is back up and running," said spokesman Anadarko John Christiansen.

BOEM statistics were based on reports from 17 companies Sunday, the Agency said.

Some manufacturers, including Shell Oil Co., has yet to report publicly whether they had restarted the production.

Chevron Corp. said Sunday it had restarted oil and gas production closed for storm and Gulf operations was reshuffles. The company has never disclosed what exit was closed or how many workers were evacuated.

Exxon Mobil Corp. said it was returning workers evacuated for operations in the Gulf, but about 8,000 barrels per day of oil and 50 million cubic meters per day of natural gas production has remained closed.

Don was the first threat to energy infrastructure in the Gulf hurricane season 2011, but the path of the storm came nowhere close to higher concentrations of platforms for oil and natural gas.

A system of movement westward-weather about 575 miles east of the Leeward Islands had a "close to 100 percent" chance of becoming a tropical cyclone over the next two days, the National Hurricane Center said Sunday. This system will be named Emily strengthens its position in a storm or a hurricane.

Daily production in the Gulf is about 1.4 million barrels of oil and to 5.2 billion cubic feet of natgas, according to figures BOEM.

Don hit shore late on Friday, 40 miles south of Corpus Christi and quickly dissipated.

The three major refiners with plants in Corpus Christi-Valero Energy Corp, Flint Hills resources and Citgo Petroleum Corp.-Don breaks not reported.

Overall, the Gulf represents 30 percent of u.s. oil production and 12% of natural gas, according to BOEM. The Gulf Coast is also home to 40 per cent of United States refining capacity and 30 percent of the capacity of the treatment plant to natural gas.

(Edited by Dale Hudson)

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Commercial metals corrode after Icahn Buys rights plan (Reuters)

NEW YORK (Reuters)-commercial metals Co (CMC.N) said on Sunday adopted a shareholder rights plan, making it harder for an activist investor Carl Icahn to take a larger stake in steel maker.

The plan has a trigger of 10 percent, the same percentage stake that Icahn first reported on Thursday.

In a US Securities and Exchange Commission, Icahn said he may have discussions with the management of the maker of steel and metal recycler regarding strategic alternatives "and" believing that the actions were "underrated".

Board of commercial metals in a statement said it has adopted the "sudden and rapid increase in Property of Icahn" and later by a representative of his "intention to continue to stockpile CMC." Icahn

The company said it plans to meet with Icahn in September to better understand the interest.

Shareholders rights plans are commonly referred to as "poison pills" and can dilute the power of shareholder activists.

Second floor commercial metals, if the rights become exercisable, shareholders can buy a fraction of a part of commercial metals that will have economic and voting terms similar to those of a share of common stock.

Commercial metals shares closed 21 cents Friday to $ 14.51.

(By Jonathan Stempel and Megan Davies; edited by Bernard Orr)

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Default cloud hangs over the labour market of the United States (Reuters)

WASHINGTON (Reuters)-the terrifying prospect of a Us debt default has left a cloud over businesses already shaken by the lukewarm performance of the economy and probably left them reluctant to ramp up hiring in July.

A heated political battle over how to increase the nation's debt ceiling has helped to make the prospect of once remote a downgrade of the credit rating of AAA United States a strong possibility. Worse still, investors are grappling with the unthinkable: a outright default on the debt of the Government of the United States.

The fight over the debt, which started with a refusal by some Republicans to raise the debt limit largely procedural without sharp cuts in public spending, it comes with the American economy already struggling to stay above water.

Data on gross domestic product in the second quarter released Friday, showed the largest economy in the world, expanded into just an annual rate of 1.3 per cent in April-June period. More worryingly, revisions to the first quarter to an annualized GDP dropped 0.4 percent pace-dangerously close to a contraction.

The figures prompted some analysts to wonder whether the market forecasts for a gain of unspectacular 90,000 jobs in the month of July may be too optimistic, following readings really sad for may and June. The jobs report is due on Friday.

"Certainly, my outlook tempera resets expectations," said Jason Ware, senior research analyst at Albion Financial Group in Salt Lake City. "If we're going to have any type of material uptick in private sector employment, we're going to be growing faster than 1.5 percent."

The furor over the debt crisis of the United States has temporarily diverted attention from the problems of Europe, which continue to simmer though. Moody's Investors Service's said on Friday that he had placed Spain's credit rating on review for a possible downgrade, citing financial pressure and a precedent set by the eurozone's debt for Greece.

That deal was supposed to rescue to calm fears of contagion, but does not appear to have done the trick. Borrowing for Italy, for example, soared in the latest bond auction.

Austerity measures seem to be taking a toll on many of the economies that were due to help, and a report on the euro-zone unemployment should show a steady unemployment rate of 9.9% for Monetary Union.

DAY AND THE R-WORD

Still, investors will continue to focus their attention on the most immediate risk and potentially catastrophic-a non-resolution of the U.S. debt debacle which leads to a crippling Government shutdown or even a debt default.

Most investors say that the latter scenario is highly unlikely, given that the Government should have enough revenue to continue to make bond payments for some time, particularly if it gives priority to bondholders as expected.

But this does not mean they are not increasing the risk of recession.

"We still think that the Federal Government will be able to avoid a default, but probably still will lose its AAA credit rating," said Julian Jessop, Economist at capital Economics. "Default could be averted even at the cost of a shutdown of non-essential government services that could tip the US economy into recession."

A tense calm over the stalemate of the debt has permeated the Treasury bond market of the United States, which have continued to rally in the last week, pushing yields 2.80% at 10 years, their lowest level since November.

Before the American occupation Friday, economists will eye two other key indicators: the Institute for Supply Management survey of factory employment report and the ADP, which is used as a rough guide to the Government's broadest gauge.

The ISM index is seen easing slightly, from 55.3 to 54.9, according to a survey by Reuters. About ADP, economists are looking for a gain of approximately 100,000 new private sector jobs-in tune with their predictions of total payrolls.

Officials at the Federal Reserve of the United States have continued to indicate a reluctance to take any new high program for monetary easing. But if the labour market into another rut, the pressure for renewed action could assemble. The Fed next meets to set the policy on 9 August.

(Reporting by Pedro Nicolaci da Costa; Editing by Dan Grebler)

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Earnings preview: Pfizer to report on the 2° quarter (AP)

TRENTON, N.J. – Pfizer Inc., which reports second quarter results before the stock market opens Tuesday, will discuss some recent drug approvals, new data on some experimental drugs and intends to divest some of its non-core assets.

What to Watch for: drugmaker Pfizer, the world's largest by revenue, it needs some new great salesmen to compensate for intensifying competition. The cholesterol fighter 11 billion dollars annually, Lipitor, loses patent protection the U.S. 30 November — the largest ever drug patent expiration.

The creator of impotence pill Viagra and treat pain Lyrica also had some recent setbacks in drug development, and analysts can ask about those.

CEO Ian Read, who took over in December, will discuss his ongoing review of the business of New York-based Pfizer, including plans to spin off or sell its divisions of animal health and nutrition. The company also is selling their business, manufacture of medicine capsule for 2.4 billion dollars, in a deal set to close soon.

Reading will probably give an update on the integration of King Pharmaceuticals Inc., a manufacturer of pain medications and other products that Pfizer bought for $ 3.6 billion in March. He probably will discuss progress of Pfizer in increase sales in emerging markets, plus the ongoing cost cuts.

By buying Wyeth for $ 68 billion in October 2009, the company has worked to reduce annual costs by $ 4 billion to 5 billion. Plans to cut spending by about 20 percent next year, to about $8,25 billion.

Managers can see recent approvals of drugs, including a new use of cancer drug, Sutent for treating advanced pancreatic cancer. Tampering with amazing Painkiller Oxecta, an immediate-release drug containing Oxycodone, the active ingredient in OxyContin, was approved in the United States in June.

And blood clots that eliquis thinner has been approved in the European Union in May to prevent the blood in patients who have undergone surgery for hip replacement or knee. Pfizer and partner Bristol-Myers Squibb plan to seek U.S. approval this year. The companies also will seek approvals for much larger groups of patients at risk of fatal blood clots. That gives the blockbuster drug potential.

Pfizer also has recently applied for approval of lung cancer treatment crizotinib and axitinib, for treatment of most common type of kidney cancer and is revise the research data on them.

Down, the Food and Drug Administration on Friday said it would delay for 90 days a decision on the approval of sales of the pneumococcal vaccine Prevnar 13 children for adults aged 50 and over. The FDA called Pfizer presented new data from two studies of a major change to the application.

Prevnar 13, which protects against 13 common pneumococcal strains of bacteria and the original version, seven-strain, had combined sales of about 3.7 billion dollars last year, most of the sales generated by a vaccine. The delay could mean a loss of hundreds of millions of dollars.

Why it matters: Pfizer had four big-selling drugs get generic competition since last July, including Blockbuster Effexor for depression, Protonix for severe heartburn and Aricept for Alzheimer's disease symptoms. Sales were falling fast, and the same thing will happen to Lipitor from five months.

Despite an annual budget approaching search 10 billion, Pfizer has repeatedly had promising drugs fail in testing human in recent years. That problem and delayed price Pfizer stock, led the Council last December to oust predecessor Read, Jeffrey Kindler, who had temporarily shored up the company with the acquisition of Wyeth and intense cost cutting ever since. Reading must prove that a better strategy, one for the long term.

What is expected: analysts surveyed by FactSet expect, on average, earnings of 59 cents and 17.02 billion.

The year-ago quarter: Pfizer posted earnings of 31 cents, or 62 cents, excluding charges, on 17.33 billion.

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World warns of disaster if no deal made debt (Reuters)

London/TOKYO, July (Reuters)-Governments and politicians around the world warned of the risk of financial disaster if Washington fails to lift the U.S. debt ceiling.

Congress haggled over a deal to avert the risk of an unprecedented breach of U.S., British and Japanese officials on Sunday said bankruptcy could hurt families around the world.

"The world is watching the United States with trepidation, anxiety, with concern, but also with hope," International Monetary Fund Managing Director Christine Lagarde told CNN.

"Instability is never a good idea, never a good idea. And this level of uncertainty, trepidation arising from 2 August, is taking on a lot of instability, "he added.

United States Democrats and Republicans face a Tuesday deadline to reach an agreement. Treasury of the United States said that it will run out of borrowing room on that day, although analysts say they may have enough money to keep maintenance of its debt and paying bills through the middle of this month.

The German Central Bank expressed confidence in the United States could avert a debt default.

The key role of the dollar in global banking and financial markets trading means addressing the risk of major instability without an agreement 11 hours.

Senate Leader Harry Reid said that he hoped to hold a vote of the Senate later Sunday on an emerging deal to raise the debt ceiling, raising the hope that the deadlock could be broken.

As financial markets open for the week in Asia, investors took some relief from the signs of progress and the US dollar strengthened against the Japanese yen, falling to four-month low on Friday.

"If they get this one wrong and there is a default--we don't expect that we think you will sort this out-but if that happens, has consequences for every household and every company in this country and around the world," said Danny Alexander, Chief Secretary to the Treasury.

"I think eventually that politicians on Capitol Hill can be seen looking on the precipice is one they're going to step back from," he told BBC television.

In Tokyo, said sources familiar with international and Monetary Affairs of Japan, speaking earlier on Sunday, which were increasingly worried that the markets might be too confident about the prospects for a lasting solution to the crisis.

Japanese officials still hope Washington can strike a bargain and if that proves impossible, we will give priority to the interest payments to holders of u.s. Treasury debt to limit the immediate impact of the market, the sources said.

But Tokyo's concern is that if the crisis drags without a clear solution and long-term markets may be thrown into turmoil in the same way that suffered when U.S. Investment Bank Lehman Brothers collapsed in September 2008.

"If there is a default value, the impact on global markets will be enormous," said one of the sources, who declined to be named because of the sensitivity of the issue.

Another Japanese source, said, "no one thought that Washington would leave Lehman collapse. But look what happened. "

The German Central Bank said it was monitoring the situation. "Should really not be a solution, it begs the question: what happens then," said a spokesman for the German Central Bank. "But I expect there will be a solution in the United States today or in the coming days ".

CHINA

China, which has more than 1,000 billion dollars in Treasury bonds of the United States, has expressed alarm. On Saturday, the official people's daily, the mouthpiece of the Communist Party of China, castigated the U.S. debt crisis management as "irresponsible" and "immoral".

He said that the American democratic system was to blame for the "farce", saying that "not a single representative has given the world, and even national interests of the United States are being banished from the mind.

On Friday, a senior economic policymaker in the euro area, who declined to be named, expressed surprise and anger that u.s. politicians were "playing chicken" with an issue of such importance for the global economy.

Euro-zone leaders are struggling to control the sovereign debt crisis in many countries in their region, an operation complicated by U.S. debt problem that has added to the upward pressure on yields of government bonds in weak States.

It is expected that the world's central banks are ready to provide emergency supplies of money to commercial banks, in case banks become too nervous to lend to each other.

Before Japan's defence will be to ensure that Japanese financial institutions have a sufficient supply of dollars, said the sources in Tokyo.

The Bank of Japan considers Japanese commercial banks have enough pillows dollar but will use its dollar exchange agreements with other central banks to prevent a collapse of the dollar in case of market turmoil.

In June, the US Federal Reserve extended liquidity exchange agreement with other major central banks until August 1, 2012.

The Bank of Japan is also ready to flood the markets with yen through open market operations in case of inter-bank borrowing costs spike, say officials BOJ.

In Europe, there have been minor signs of strain in the money markets last week with some banks becoming unable to enter into long-term loans in dollars, but the effect was small, since banks still predicted that Washington would reach an agreement.

The European Central Bank already offers unlimited euro loan to banks in some of its money market operations as part of its response to the crisis in the past, and that the policy could use to cope with problems of the market this week.

A spokesman for Switzerland's Central Bank, said, "the National Bank Switzerland is ready to react appropriately at any time to market disruptions."

(Additional reporting by Lesley Wroughton in Washington; Written by Andrew Torchia; Editing by David Cowell)

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