World Markets Slide; Google to Pay $6 Billion for Groupon

Bikram Pandey
30 Nov, 2010
New York City

Stocks traded lower as investors focused on the rising sovereign debt yields in Europe. The dollar gained against the euro and gold closed higher. Google Inc is said to be nearing its largest deal to acquire online coupon marketer Groupon Inc for $6 billion.

[R]4:00 PM New York – Stocks traded lower as investors focused on the rising sovereign debt yields in Europe. The dollar gained against the euro and gold closed higher. Google Inc is said to be nearing a deal to acquire online coupon marketer Groupon Inc for $6 billion.[/R]

Stocks in New York traded lower as investors remained focused on debt worries in Europe. Investors are not convinced that recent agreement between European nations to bailout Ireland will prevent the widening debt contagion.

European Union unemployment rose to a 12-year high as inflation remained flat. Switzerland-based ABB agreed to buy Baldor Electric for $4.2 billion. European Union opens an investigation relating to antitrust practices of Google.

Barnes & Noble comparable sales increased 59%, driven by digital initiatives but losses Altera declined after the company guided lower than expected fourth quarter revenues. Google declined after EU opened investigation. Interactive Brokers Group rose after it declared a special dividend.

Google Inc is said to be nearing an agreement to acquire Groupon Inc for as much as $6 billion. Online collective deal marketer using social networking sites is expected to reach $500 million in sales in its second year in business and has more than 18 million online subscribers for its daily deal emails.

Groupon is expected to be the largest purchase by Google. Neither Google nor Amazon.com reached $500 million in revenues in its second year in business. The news was first reported by AllThingsDigital blog on the Wall Street Journal Web site.

The deal is not final and can still fall apart and is likely to be agreed on by the end of this week.

European market indexes declined and yields on sovereign bonds of Portugal, Spain and Ireland rose. The euro dropped to a 2-month low and fell 8% from the peak a month ago. German unemployment fell in November. French PPI rose in October. ABB agreed to acquire U.S.-based Baldor Electric for $4.2 billion.

The UK indexes slid after consumer confidence fell to 4-month low in November. Irish private sector credit growth slackened in October. Seagate rejected buyout offer. BASF formed a venture with Ineos Industries on styrenics businesses.

Stocks in Tokyo fell sharply tracking the losses in the European markets and a rise in the dollar. Housing starts rose in October and unemployment rose for the first time in four months. Regional assessment led to the downgrade of 9 of the 11 regions.

Stocks in Shanghai and Hong Kong faced heavy selling pressure ahead of widely anticipated tighter liquidity measures next week. Bank lending is ahead of national target and policy makers are worried of rising inflation. Banks and property developers led the decliners.

Stocks in Mumbai responded to faster than anticipated economic growth in the quarter to September. Finance Minister Mukherjee revised fiscal year economic growth outlook to 8.75%. India threatens to cancel telecom licenses of 85 companies that were either ineligible or are still not in operation.

Australian stocks closed lower tracking losses in resource stocks as the U.S. dollar advanced against all major currencies. Current account deficit widened in the third quarter to A$7.83 billion. Retailers closed lower after Metcash issued profit warning and net in the first half edged up 0.9%.

Commodities, Currencies and Yields

Dollar edged up against euro to $1.29 and fell against the Japanese yen to 83.67. One UK pound fetched $1.55.

Crude oil decreased $1.61 to $84.12 a barrel for a front month contract, natural gas edged lower 1.3 cents to $4.19 per mBtu and gasoline decreased 2.96 cents to 225.50 cents.

Gold increased $15.90 in New York trading to close at $1,383.40 per ounce, silver increased $0.81 to $28.00 per ounce and copper for the front month delivery increased 4.60 cents to $3.81 per pound.

Yield on 10-year U.S. bond increased to 2.82% and on 30-year U.S. bond yield decreased to 4.13%.