UBS in $1 Billion Libor Probe Settlement, World Markets Cautious

Bikram Pandey
13 Dec, 2012
New York City

Stocks on Wall Street turned lower after budget negotiations took a divisive turn and lawmakers struggled to find a compromise. UBS AG is said to face a fine of $1 billion in the Libor probe, the largest so far, as sixteen banks face investigations.

[R]4:00 PM, New York – Stocks on Wall Street turned lower after budget negotiations took a divisive turn and lawmakers struggled to find a compromise. UBS AG is said to face a fine of $1 billion in the Libor probe, the largest so far, as sixteen banks face investigations.[/R]

Stocks on Wall Street traded lower and market sentiment turned cautious after House Speaker John Boehner highlighted differences with the White House.

Indexes traded higher in the morning after jobless claims were the lowest in several months and retail sales were stronger than anticipated and wholesale prices declined more than forecasted. In addition, the Fed announced commitment to continue to purchase U.S. government bonds.

The U.S. indexes traded sideways after jobless claims declined 29,000 to 343,000, retail sales rose, and producer prices fell in November.

In corporate news, Sprint Nextel bids for Clearwire shares that it does not own for $2.1 billion.

UBS AG, the Swiss bank is said to face a fine of as much as $1 billion from regulatory agencies in the U.S. and UK.

In a jointly coordinated action between the Department of Justice and Commodities and Futures Trading Commission in the U.S. and the UK Financial Service Authority, the bank is facing fines for manipulating reference rate called Libor used for more than $300 trillion in financial products around the world.

The fine is expected to largest levied by regulatory authorities in the Libor probe so far and sixteen other banks are under investigation. Earlier Barclays Plc agreed to a settlement of $451 million and forced out its chief executive office.

On the earnings front, Argan second quarter net soared nearly three-fold and CVS Caremark reaffirmed fiscal 2013 outlook. Ciena fourth quarter net loss widened to $39 million. Pier 1 Imports third quarter net advanced 4%.

Euro zone ministers approved the long sought banking union in the region. The Eurogroup formally approved the second disbursement of €49.1 billion for Greece. The SNB left the minimum exchange rate unchanged. Greek jobless rate rose in the third quarter.

Renault sold remaining 6.5% stake in Volvo for SEK 12.78 billion. Aurubis quarterly net slumped 35%. Dexia agreed to sell its asset management business to GCS Capital for €380 million.

Stocks in Tokyo surged and the benchmark Nikkei soared 1.7% to a new 8-month high ahead of general election on Sunday. Defense stocks gained for the second day in row as tensions escalated in disputed territories with China.

Australian markets halted a four-day rally and resource stocks advanced. GrainCorp rejected sweetened takeover offer of $2.8 billion from Archer Daniels Midland. Tourism Australia and Virgin Australia extended their partnership to $12 million over three years.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond increased to 1.71% and on 30-year bond fell to 2.88%.

The U.S. dollar inched lower to $1.3071 to a euro and increased against the Japanese yen to 83.54 yen.

Immediate delivery futures of Texas crude oil increased 98 cents to $86.77 a barrel and Brent crude gained $1.59 to $109.60, futures of natural gas decreased 1 cent to $3.40 per mbtu and gasoline traded up 3.72 cents to 264.77 cents a gallon.

In metals trading, gold decreased $21.00 to $1,697.10 per ounce and silver declined $1.29 to $32.45 and copper closed down 5.70 cents to $3.65 a pound.