World Markets Edge Lower, AIG to Trim AIA Stake

Bikram Pandey
05 Mar, 2012
New York City

Financial markets around the world and commodities declined after China lowered its economic growth outlook in the current year. BP Plc agreed to pay $7.8 billion to settle more than 100,000 claims related to Gulf of Mexico oil spill.

[R]4:00 PM New York – Financial markets around the world and commodities declined after China lowered its economic growth outlook in the current year. BP Plc agreed to pay $7.8 billion to settle more than 100,000 claims related to Gulf of Mexico oil spill.[/R]

The U.S. indexes and commodities declined after China lowered its growth outlook to an eight-year low and banks in the euro zone parked most of the recent new cash with the central bank. Investors are also uncertain under what conditions credit default swaps on Greek bonds may trigger.

In corporate news, Advanced Micro Devices said it will sell its equity stake in GlobalFoundries Inc. and take a charge of $703 million and restructure its deal to purchase wafers from the company to make electronic chips.

AIG plans to sale 1.7 billion shares in AIA Group Limited for a price of at least HK$27 a share that will raise as much as $6 billion. After the sale, AIG will lower its stake in the Asian company to 19% from 33% that was worth approximately $14.9 billion as of Friday’s close in Hong Kong.

Across the Atlantic, European indexes fell as uncertainty reigned on the Greek debt swap deal and the credit default swap trigger. The euro area private sector contracted and German private sector growth eased in February. Salzgitter plunged 7% despite a rise in fiscal year 2011 sales and earnings.

Bank deposits at the European Central Bank surged to a record high. Euro area private sector contracted and the French and Italian service sector activity declined in February. Retail sales in the euro area rose unexpectedly in January.

The UK indexes declined after the government net reserves rose and service sector activity slowed in February. British industry group lowered the growth outlook for the current year. Tesco plans to add 20,000 new jobs in the UK over the next two years.

Stocks in Tokyo traded lower after elevated oil prices dragged resource stocks. However, China set the lowest economic growth target in eight years and increased defense spending by 11.2%. Sanyo Housing Dropped 6% on a public offering announcement.

Australian stocks eased and the private measures of inflation declined in February. Resource stocks and commodities prices were lower after China cut its economic outlook but estimated inflation at elevated level. Centro investors filed $200 million class action lawsuit.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond edged up to 1.99% and 30-year bond edged higher to 3.13%.

The U.S. dollar traded down 0.1% to $1.322 to one euro and edged down against the Japanese yen at 81.581.

Immediate delivery futures of Texas crude oil increased 18 cents to $106.88 a barrel and Brent crude rose 34 cents to $123.99.

Futures of natural gas fell 11 cents to $2.36 per mbtu and gasoline price decreased 0.9 cents to 326.32 cents a gallon in New York trading.

In metals trading, copper decreased 3.60 cents to $3.86 per pound, gold decreased $2.70 to $1,707.10 per ounce and silver decreased 50 cents to $33.99.