Monday, December 10, 2007

Big UBS write down

Swiss banking giant UBS AG said Monday it will write off a further $10 billion on losses in the U.S. subprime lending market and will raise capital by selling substantial stakes to Singapore and an unnamed investor in the Middle East.

Societe Generale SA, France's second-biggest bank by market value, will bail out its $4.3 billion structured investment vehicle after losses related to the collapse of the U.S. subprime-mortgage market. Societe Generale will take on assets including $387 million of bonds backed by subprime mortgages.

Scale of shutdown in debt markets revealed. The BIS's quarterly survey of financial markets said the value of bonds issued by businesses in the international debt markets halved between the second and third quarters of the year. The $396bn (£195bn) issued was 4pc lower than the same period last year - the first fall in two years - as banks led the charge of businesses out of the credit markets. In Germany, whose banks have been some of the biggest victims of the sub-prime mortgage crisis in the US, some $20bn more was paid back than borrowed.

JPMorgan Chase & Co , the third-largest U.S. bank, avoided most of the losses suffered by other investment banks and its growth could now "really accelerate," weekly financial publication Barron's reported on Sunday..... the risk-conscious CEO Jamie Dimon had sold most of his subprime loans originated in 2006 and early 2007, which are regarded as the most problematic.

Bankers at Goldman Sachs will share a record bonus pool this week, despite continued fall-out from the credit crisis. The investment bank is expected to reveal total compensation of around $18bn (£8.8bn), ahead of last year's $16.5bn.

In 2005, the Securities and Exchange Commission and New York state's attorney general's office launched separate investigations into whether Wall Street securities firm Bear Stearns Cos. harmed investors by improperly valuing complex mortgage securities.

Profit slump deepens recession worries. Profits, measured by the operating earnings per share of companies in the Standard & Poor's 500-stock index, fell 8.4% in the third quarter from a year earlier, according to David Rosenberg, chief U.S. economist at Merrill Lynch.

Lafarge SA agreed to buy the cement unit of Orascom Construction Industries for 8.8 billion euros ($12.9 billion), becoming the biggest producer in the Middle East.

Argentine investor Enrique Eskenazi is seeking a $2 billion loan to buy a stake in YPF SA, the Buenos Aires-based oil company owned by Spain's Repsol YPF SA, two people with direct knowledge of the deal said.

The Bush administration, which has long rejected mandatory limits on global warming pollution, opposes a United Nations draft proposal calling on developed countries to make binding emissions cuts of 25-40 percent by 2020.

McDonald's Corp., the world's largest restaurant company, said November sales increased 8.2 percent on $1 double cheeseburgers and cappuccinos in the U.S. and breakfast and chicken in Europe and Asia.

Iran has stopped selling its oil for U.S. dollars, the Iranian ISNA news agency said on Saturday, citing the country's oil minister.

China announced yesterday a long- awaited plan to expand the amount that foreign investors could invest in the domestic market. The amount of capital qualified foreign institutional investors can invest is now capped at US$30 billion.

China Petrochemical Corp. signed a $2 billion agreement to develop Iran's Yadavaran oil field, advancing prospects for a contract on the sale of liquefied natural gas to the world's fastest-growing major economy.

The German trade surplus unexpectedly widened in October to 18.7 billion euros as export demand has shown few signs of wavering amidst growth in orders from the rest of Europe and emerging markets like China.

Machine orders in Japan rocketed 12.7 percent higher during the month of October, suggesting that business investment may have improved from Q3. On the other hand, the Eco Watchers survey reflected dismal consumer sentiment as the index fell further below the 50 boom/bust level to 38.8 from 41.5.

UK producer prices rose more than expected in November, as input costs surged 10.2 percent from a year ago while output prices jumped 4.5 percent - the sharpest gain since 1991.

Asian stocks fell for the first time in four days after writedowns by UBS AG raised concern losses from U.S. subprime investments will widen. More than two stocks declined for each that gained on the MSCI Asia Pacific Index, which fell 0.6 percent to 163.59 as of 19:07 p.m. in Tokyo after a three-day, 1.4 percent rally. Japan's Nikkei 225 Stock Average retreated 0.2 percent to 15,924.39.
European stocks rose, led by construction companies and banks, after Lafarge SA shares climbed the most in at least 17 years on an acquisition in the Middle East and UBS AG said it will shore up capital by selling stakes. National benchmarks increased in 12 of the 18 western European markets. France's CAC 40 advanced 0.3 percent, and Germany's DAX rose 0.4 percent. The U.K.'s FTSE 100 was little changed. The Stoxx 50 gained 0.4 percent, while the Euro Stoxx 50, a measure for the euro region, added 0.3 percent.

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