Markets hit by new fears of Greek default
NEW YORK, Sept. 12 (UPI) -- Worries of a Greek default rocked markets in Asia, Europe and the United States Monday, as the Greek economy was pegged to shrink 5.3 percent this year.
Government officials said during the weekend $185 billion in spending cuts would be needed quickly, the most likely savings to come from layoffs of as many as 120,000 government workers.
Bank stocks in Europe were hit afresh with losses with major stock boards down 4 percent in Hong Kong, 3.7 percent in Australia and 2 percent in India. The London FTSE was off 2.35 percent, the German DAX dropped 2.27 percent and the French CAC dropped 4.03 percent.
In afternoon trading in Europe, stocks ranged from 2 percent to 3.2 percent lower in Britain, Germany and France.
In afternoon trading on Wall Street, the Dow Jones industrial average lost 127.03 points or 1.16 percent to 10,865.10. The Standard & Poor's 500 index fell 12.31 points or 1.07 percent to 1,141.92. The Nasdaq composite index shed 17.95 points or 0.73 percent to 2,450.04.
The benchmark 10-year treasury note fell 1/32 to yield 1.91 percent.
The euro fell to $1.3576 from Friday's $1.3657. Against the yen, the dollar fell to 77.2805 yen from Friday's 77.6 yen.
In Tokyo, the Nikkei 225 index shed 2.31 percent, 201.99, to 8,535.67.
Austerity plan sends Greek stocks downward
ATHENS, Greece, Sept. 12 (UPI) -- Greek stocks slid into the red Monday after the government announced another round of austerity measures.
The General Index lost 2.75 percent at 862.37 units in morning trading, Capital.gr reported.
The downward trend was fueled in part by German media reports about a so-called Plan B to support German banks in case Greece goes bankrupt, and discussions about a possible downgrade of French banks by Moody's because of their exposure to Greek debt.
Banks showed losses of 5.3 percent at 515.31 units
The Greek government announced another round of austerity measures, of roughly $2.7 billion, Sunday as pressure built for the country to deliver on its pledge to reduce its debt.
Finance minister Evangelos Venizelos called the measures, which involve a new two-year real estate tax and holding back a month's pay from all elected officials, a new "national effort," EUobserver.com reported.
"We know that these measures are unbearable," Venizelos said Sunday. "But once more, we all have to rally together in a national effort. Our immediate priority is the full respect of the budget targets for 2011."
The European Commission welcomed the announcement, saying officials from the EU, the International Monetary Fund and the European Central Bank would return to Greece "in the coming days" to review the country's deficit-slashing effort.
"I welcome the expressed commitment by the Greek government to fully meet the agreed fiscal targets this year and next, and to take the necessary consolidation measures to achieve these objectives," Olli Rhen, the bloc's economy commissioner, said.
The turmoil in the European markets left investors preparing for another global stock market downturn this week, The New York Times said.
When announcing the new round of measures, Venizelos warned the Greek economy was expected to shrink more sharply this year than previously expected. A revision indicated a contraction of 5.3 percent in 2011 was predicted, instead of 3.8 percent as forecast in May.
Slower growth could make it harder for Greece to pay its debts, even with the austerity measures.
China's Aug. trade surplus dips to $17.8B
BEIJING, Sept. 12 (UPI) -- China's trade surplus in August shrank to $17.75 billion from July's $31.5 billion, largely because of higher imports, the government said.
The July surplus, however, was the highest in 2 1/2 years despite the global economic doldrums, China Daily reported.
The government said while slowing global demand is pinching China's export growth, demand remains strong. China is the world's second-largest economy after the United States.
"Acceleration of import continues exceeding export's rise in the future," the newspaper quoted Wang Tao, head of China Economic Research at UBS Securities, as saying.
China's August exports were up 24.5 percent from the same month of last year to $173.31 billion, the General Administration of Customs said.
August imports rose 30.2 percent to $155.56 billion, yielding a trade surplus of $17.75 billion for the month.
China's exports in August to the United States were up 12.55 percent and up 29.8 percent to Japan.
China's policymakers, concerned by rising inflation, want to drive up domestic demand to make the country less dependent on exports.
McGraw-Hill to split itself in two
NEW YORK, Sept. 12 (UPI) -- New York publishing giant McGraw-Hill said Monday it would split into two independent companies -- one focused on markets and the other on education.
McGraw-Hill, which divested itself of broadcasting assets this summer, said one company would operate Standard & Poor's -- both the index and the credit rating services -- plus two research firms, J.D. Power and Associates and Platts, which researches the energy industry.
The other company will operate McGraw-Hill's educational business, including textbook publishing, The New York Times reported Monday.
"After thorough analysis, the board determined that the creation of these two independent companies is the best and most reliable way to generate superior shareholder value," Chairman and Chief Executive Officer Harold McGraw III said in a statement Monday.
"Because both companies will be sharply defined, they will create two pure-play investment opportunities and present a more transparent capital markets profile, enabling investors to better assess their value, performance and potential," he said.
The Times said the market-oriented business is expected to have $4 billion revenue in 2011.
McGraw-Hill Education is expected to generate revenue of $2.4 billion for 2011.
