Nikkei slips from 6-wk high, shaken by euro zone doubts
* Investors also mull U.S., Japanese earnings* China data weighs on exporter sharesBy Lisa Twaronite and Hideyuki SanoTOKYO, Oct 18 (Reuters) - Japan’s Nikkei share average fell
more than 1 percent on Tuesday from a six-week high hit the
previous day on concerns that Europe’s plan to contain its debt
crisis might not be as fast and comprehensive as some investors
had expected.Olympus Corp continued to drop in volatile trading
after the camera and endoscope maker abruptly dismissed its CEO
last week.Shares of exporters, which had benefited from optimism on
the euro zone’s debt plan, underperformed the overall market and
were also pressured by news that China’s economic expansion
slowed in the third quarter to its weakest pace since early
2009.Germany deflated hopes for a quick end to Europe’s debt
woes, when its finance minister said on Monday that a summit of
EU leaders next Sunday would not produce a “definitive solution”
to the region’s sovereign debt crisis.But some strategists said that expectations for Europe’s
plan could rise again as quickly as they fell.”Stocks rallied in recent sessions on positive news from
Europe and expectations of more to come, and then they
corrected, but the weekend meeting could reassure investors and
prompt them to buy back shares,” said Yutaka Miura, senior
technical analyst at Mizuho SecuritiesThe Nikkei average fell 1.5 percent to 8,749.21,
while the broader Topix index lost 1.3 percent to
752.09.Support for the Nikkei is seen around 8,689, a 38.2 percent
retracement of its rally to Monday’s six-week closing high from
its Oct. 5 low, and then at its 25-day moving average, now
around 8,650.”As long as the Nikkei stays above its 25-day moving
average, I think the market’s uptrend will continue,” said
Toshiyuki Kanayama, an analyst at Monex Securities, adding that
he thinks the market is in a rising trend after forming a double
bottom in late September to early October.UNDER PRESSUREOlympus continued to trade heavily, ending the morning
session 1 percent higher, only to give back the gains in the
afternoon, hitting a fresh 2-1/2 year low of 1,366 yen.The stock has lost 44 percent since the firm fired its CEO
on Friday. It has come under pressure to disclose details of
payments to advisers in the buyout of a UK-based medical
equipment firm.Ousted Chief Executive Michael Woodford has accused the
board of firing him for probing allegations of improper payments
related to acquisitions, according to media reports.The company told investors on Monday that it may take legal
action against Woodford, accusing him of disclosing confidential
information in media interviews.Investors are also focused on this week’s U.S. corporate
earnings, including those from Apple Inc , Intel
Goldman Sachs and Bank of America .Japanese companies will also release earnings beginning in
the final week of October. Analysts are generally upbeat on the
past quarter as companies are recovering from the damage from
the earthquake and nuclear accident in March.Still, the yen’s strength and signs of slowdown in the
global economy are hurting some companies, especially exporters.Yaskawa Electric , which cut its operating profit
outlook for the year to March to 14 billion yen from 20 billion
yen on the strong yen and slow sales of motors used in
chipmaking equipment, dropped 2.4 percent to 612 yen.KDDI Corp fell 4.3 percent to 558,000 yen, while
rival Softbank shed 3.9 percent to 2,451 yen after
Japanese business daily Fuji Sankei Business i reported that the
nation’s biggest phone operator NTT DoCoMo is
considering a cut of about 20 percent in its fees for
smartphones.Docomo shares fell 2.2 percent to 136,600 yen.
In Michigan, Obama defends auto bailout and touts trade
Visiting a General Motors assembly plant in Michigan, Obama said the trade deal signed this week would support at least 70,000 jobs and bolster the U.S. economy.South Korean President Lee Myung-bak, sporting a Detroit Tigers baseball cap, got a standing ovation from auto workers when he offered a “promise” that the accord that some labor leaders have been wary of would not harm U.S. employment.”Rather, it will create more jobs for you and your families and it is going to protect your jobs. And this is the pledge that I give you today,” he said through a translator.Before addressing the crowd on the factory floor, Obama and Lee toured the plant, which was at risk of closing before the White House’s auto industry bailout.They sat in the front seats of a new red Chevrolet Sonic, a sub-compact car made with some parts shipped to the United States from South Korea, which Obama said showed the benefits of close ties with the Asian economy as well as the U.S. car sector’s comeback from its financial crisis.In an apparent jab at Mitt Romney, a leading contender for the 2012 Republican presidential nomination, Obama credited the industry’s current strength to his own intervention.”There were a lot of politicians who said it wasn’t worth the time and it wasn’t worth the money. In fact, there are some politicians who still say that. Well, they should come and tell that to the workers here,” the Democratic president said.U.S. taxpayers extended $50 billion to GM and more than $12 billion to Chrysler in bailout and bankruptcy financing in 2009.’THE INVESTMENT PAID OFF‘“Today I can stand here and say that the investment paid off. The hundreds of thousands of jobs that have been saved made it worth it. An American auto industry that is more profitable and competitive than it has been in years made it worth it,” Obama said. “The taxpayers are being repaid.”The entire bailout included loans and working capital for manufacturers, suppliers and financing businesses that underwrite consumer auto purchases.The Treasury Department long ago conceded it would likely write off a portion of the bailout. Its latest estimates show the government will recover more than 80 percent of the money.Romney, a former Massachusetts governor who grew up in Detroit, has said that GM and Chrysler could have been saved without the injection of government funds, drawing criticism from the United Auto Workers union and others.His 2008 op-ed in the New York Times titled “Let Detroit Go Bankrupt” has haunted him on the campaign trail but reflects a sentiment among many Republicans that Obama spent money too readily when he took office, driving up U.S. deficits and swelling the national debt.Michigan is likely to be a closely contested state in the November 2012 presidential election.
GLOBAL MARKETS-Stocks, euro rise on crisis hopes, US data
* Brent rises toward $113 on optimism over debt crisis* Euro extends gains against dollar after U.S. sales data* Bonds succumb to rising equity markets, retail salesBy Herbert LashNEW YORK, Oct 14 (Reuters) - Global stocks gained and the
euro strengthened on Friday on growing optimism that Europe is
on track to resolve its festering sovereign debt crisis and
after data showed a surprising surge in U.S. retail sales.Group of 20 finance ministers and central bank chiefs began
two days of talks in Paris on Friday which investors hope will
provide a basis for a draft plan in time for a European Union
summit on Oct. 23.The benchmark S&P 500 was on track for back-to-back weekly
gains for the first time since early July and gold headed
toward its strongest weekly rise in over a month.The euro rose 0.7 percent to $1.3866.”Right now we are trading on hopes of a decisive policy
response,” said Jens Nordvig, head of G10 FX strategy at Nomura
Securities in New York.To be sure, investors do not expect a comprehensive
strategy to Europe’s debt crisis to come out of the meetings.
But a report early in the session that said U.S. retail sales
grew by 1.1 percent in September, the fastest pace in seven
months, boosted investor sentiment on the economy’s prospects.The data, coupled with earnings from Google late
Thursday that trounced analysts’ expectations, led investors to
shrug off a rating downgrade on Spain by Standard & Poor’s and
an unexpected slump in U.S. consumer confidence in October.The data also was expected to help lift forecasts for
growth in gross domestic product even though investors said a
resolution to Europe’s debt crisis was more important.”The data hasn’t mattered for a couple of months. It
matters here and there, but most of what today is, is Europe,”
said John Canally, investment strategist for LPL Financial in
Boston.”Just getting the details of this plan out there and making
the details work is the most important thing,” Canally said.Stocks on Wall Street pared some early gains but shares in
Europe rose almost 1 percent.The Dow Jones industrial average was up 110.92
points, or 0.97 percent, at 11,589.05. The Standard & Poor’s
500 Index was up 13.76 points, or 1.14 percent, at
1,217.42. The Nasdaq Composite Index was up 32.18
points, or 1.23 percent, at 2,652.42.Google shares jumped 5.8 percent to $591.43 after the
Internet search giant said robust growth at its mobile business
and a strong emerging market lifted its third quarter, allaying
worries that a slowing Europe was hurting business.In Europe, the FTSEurofirst 300 index of top
regional shares closed up 0.95 percent at 975.52 points, while
MSCI’s all-country world equity index gained
1.1 percent.The increased appetite for risk also lifted the price of
crude oil more than 3.0 percent and pushed down the U.S. dollar
and government debt, usually beneficiaries of bearish news.”The outlook is good and getting better by the day. Risk
is back on,” said Chris Rupkey, chief financial economist at
Bank of Tokyo-Mitsubishi UFJ in New York.Brent crude rose above $114 a barrel, propelled by
hopes that European leaders would soon agree on how to curtail
the long festering euro zone debt crisis.Early hints that China may loosen credit as inflation cools
also boosted gains while investors mostly ignored a preliminary
reading of U.S. consumer sentiment that sagged to 57.5 from
59.4 in September, a Thomson Michigan
survey showed.November Brent crude rose $3.56 to $114.67 a barrel
on the day of its expiry, while U.S. crude was up $2.47
at $86.70 a barrel.U.S. Treasury debt prices fell.The benchmark 10-year U.S. Treasury note was
down 13/32 in price to yield 2.23 percent.Spot gold prices rose $16.24 to $1,682.40 an ounce.
Budget battle hobbles Clinton as clock ticks down
After surprising the world in 2009 when she signed up as secretary of state for her Democratic rival President Barack Obama, Clinton has repeatedly said she will stand aside after Obama’s term ends in January 2013, leaving her just 15 months to cement her legacy as America’s top diplomat.But as the clock winds down, Clinton also faces one of the biggest domestic battles of her life: ensuring that U.S. spending on diplomacy and foreign aid survives the whirlwind of budget cuts swirling through Congress.”We are engaged in a very challenging budget discussion with the Congress which will to some extent determine where our priorities are and what we do,” Clinton told Reuters in an interview on Tuesday.”There are so many emerging actors who can influence events in ways that either advantage or disadvantage us nationally, or promote or undermine the values that we stand for. So we really have to have a broad comprehensive global presence at the very time when we’re having the money cut,” she said.The sweeping view from Clinton’s suite of meeting rooms atop the gray-walled State Department complex includes enduring symbols of American power and prestige anchored by the spire of the Washington Monument.But like that monument — closed to visitors after a rare earthquake in August — American power in the latter half of Clinton’s State Department tenure is looking shaky.Budget hawks in Congress, empowered both by Republican electoral gains and grim news about the U.S. deficit, cut some $8 billion off Obama’s request for the State Department and U.S. foreign aid for last year and propose to whack another $8.6 billion from their combined budget in fiscal 2012.Lawmakers are looking for another $1.2-$1.5 trillion in deficit reduction measures across the government over the next decade and State and aid budgets, which got about $49 billion for the current fiscal year.The crunch comes as Clinton’s State Department grapples with a fast-expanding docket of problems ranging from the U.S.-led war in Afghanistan and managing relations with Pakistan and China to the flagging Middle East peace process and fallout from Arab uprisings across the Middle East and North Africa.For Clinton, who came into office vowing to promote U.S. “smart power” by ramping up both U.S. aid and civilian engagement around the world, the threatened downscaling of U.S. involvement is both dangerous and disappointing.”I do believe that our leadership is critical to our economic revival and to our security and safety in the world,” Clinton said. “So it’s something that I’m going to try to explain and connect to what people are going through right now.“‘COBBLING TOGETHER’But there is only so much a cash-starved secretary of state can do — even if polls repeatedly show her as one of the most popular political figures in the country.Clinton has used a series of speeches to advocate for international spending even at a time of rising domestic economic fears.”As we debate the choices ahead, we must resist the temptation to turn inward and undercut our leadership by slashing investments in diplomacy and development, which account for only 1 percent of the federal budget,” Clinton said in one such address on Wednesday at a Washington think-tank.But the results of the U.S. pullback are already coming into focus.In Tunisia, which the Obama administration frequently cites as an Arab country on the right track after a popular revolt toppled its longtime president in January, the United States has been able to contribute only around $40 million in aid.”We’re cobbling together what we can to help them … and you multiply that many times over (for) Libya, Egypt, Jordan, Yemen, the other Gulf countries. We have to be a lot more creative with the dollars that we have in order to get the impact that we’re seeking,” she said.Clinton’s colorful political history and undeniable star-power have helped to raise the profile of the State Department, aided by an unflagging work ethic which has seen her log more than 600,000 miles in air travel — more than twice the distance from the Earth to the Moon.But while she is certain to draw headlines, Clinton says her remaining time at the State Department will also be devoted to studying “trendlines” — the long, slow changes taking place around the world that promise to rewrite the U.S. strategic calculus over time.These, Clinton said, include issues close to her heart such as women’s empowerment as well as U.S. energy security and nuclear non-proliferation, and stepping up engagement with increasingly powerful regional actors such as Nigeria, India and Brazil.Clinton said she aggressively promotes the Obama administration’s vision of global U.S. engagement, underscoring that the United States must take the lead in managing global problems to secure both economic prosperity and national security at home.”Leadership has to be earned. It has to be earned over and over again,” Clinton said.”I hope that people will understand that, while we have to fix our problems at home, we cannot abdicate our leadership without it eventually boomeranging on us.”
