Finance topics

Prime Minister Mario Monti

Swiss (SNBN) National Bank President Philipp Hildebrand will today answer lawmaker questions in Bern as he seeks to end a discussion over controversial currency purchases by his wife.

Consumer confidence in the U.S. rose last week to the highest level in more than five months and the pace of firings declined, showing an improving job market is bolstering the biggest part of the economy.

The Bloomberg Consumer Comfort Index (COMFCOMF) climbed to minus 44.8 in the period ended Dec. 31, the best reading since mid-July, from minus 47.5 the prior week. Applications for jobless benefits (INJCJC) decreased by 15,000 during the same time to 372,000, according to Labor Department figures.

A pickup in hiring will further lift Americans

Construction spending surged to a near 1-1/2 year high in November as investment in public and private projects rose solidly, cementing expectations of

strong economic growth in the fourth quarter.

Construction spending increased 1.2 percent to an annual rate of $807.1 billion, the highest level since June 2010, the Commerce Department said on Tuesday.

Spending in October was revised to a 0.2 percent fall, after initially reported as a 0.8 percent rise.

Economists polled by Reuters had expected construction spending to rise 0.5 percent in November.

Overall construction spending was up 0.5 percent compared to November 2010.

Private construction spending rose 1.0 percent, advancing for a fourth straight month. Spending on residential projects increased 2.0 percent, with solid gains in both multifamily and single family homes.

The housing market is showing some signs of recovery, with builders breaking more ground on new projects to meet growing demand for rental apartments. It is becoming less of a drag on the economy and is expected to significantly add to growth in 2012.

Private nonresidential construction was flat in November after declining 0.6 percent the prior month.

Spending on public sector construction rebounded 1.7 percent in November as outlays on federal projects jumped 5.3 percent after dropping 7.5 percent in October.

State and local government spending rose 1.3 percent after falling 1.2 percent the prior month.

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Singapore

Asian stocks markets were mostly lower Wednesday, with trading thinned by year-end holidays and mixed economic news out of the U.S.

Hong Kong’s Hang Seng index fell 0.4 percent to 18,556.53. South Korea’s Kospi lost 0.9 percent to 1,825.94 and Australia’s S&P ASX 200 lost 0.9 percent to 4,103.90. Benchmarks in mainland China and the Philippines were also lower.

Bucking the trend was Japan’s Nikkei 225 index, which rose 0.1 percent to 8,449.54. While Japan’s industrial output dropped last month, government forecasters expect manufacturing and production to rebound this month and next.

Industrial output dropped a seasonally adjusted 2.6 percent in November, the government said. It was the first decline in two months paydayloan.

Trading, falling between the Christmas holiday and New Year’s, was generally light.

On Wall Street on Tuesday, the Dow Jones lost less than 0.1 percent to close at 12,291.35. The S&P 500 was up marginally to 1,265.43. The Nasdaq composite rose 0.3 percent to 2,625.20.

Consumer confidence surged to an eight-month high, but home prices fell in 19 of the 20 cities tracked by the Standard & Poor’s/Case-Shiller index. That report dampened investors’ enthusiasm about a jump in consumer confidence to the highest level since April.

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British tour operator Thomas Cook said Wednesday it will close 200 stores after tourism to Tunisia and Egypt dried up in the wake of the protests earlier this year.

Europe’s second largest tour operator said it will cut 661 jobs and close 115 of its stores immediately, with the remainder going over the next two years.

The group also reported its final year results Wednesday, after postponing their release as it sought new agreements with its creditors. It said its operating profit fell 16 percent to 303.6 million pounds ($471 million).

The company said it has already begun selling off 200 million pounds worth of assets and will suspend dividend payments until the balance sheet improves.

Thomas Cook said it had been hit by several external shocks in the last few years. It suffered badly when the volcanic ash cloud from Iceland shut off European airspace in April 2010.

It also said that the Arab Spring had resulted in a dramatic fall in travel to Middle East and North African destinations and that its operations in Britain and France had underperformed as its traditional customer base of families with young children who holiday in its all-inclusive beach resorts decided to stay home instead.

Thomas Cook shares were down 7 percent to 13.75 pence in morning trading.

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ST. LOUIS COUNTY

Australia’s central bank cut its benchmark interest rate by a quarter percentage point on Tuesday, the second such move in as many months as concern mounts over the fragile global economy.

The Reserve Bank of Australia said its decision to lower the rate to 4.25 percent comes amid uncertainty over the European debt crisis, and concern that global economic conditions could worsen.

“Financial markets have experienced considerable turbulence, and financing conditions have become much more difficult, especially in Europe,” Reserve Bank Governor Glenn Stevens said in a statement. “This, together with precautionary behavior by firms and households, means that the likelihood of a further material slowing in global growth has increased.”

Economists were split on what the bank would do, after it cut the cash rate by a quarter percentage point in November. Tuesday’s decision marked the first time the bank has cut rates in consecutive months since Dec. 2008, the height of the global financial crisis.

The move will provide a savings of an extra 50 Australian dollars ($51) a month on a AU$300,000 mortgage, Treasurer Wayne Swan said.

“Christmas is a time when family budgets are stretched, so I’m certain it will be welcome,” Swan told reporters.

The treasurer said the country’s economy remained strong, but said there are “serious risks” arising from Europe’s debt woes. European Union leaders will hold a summit later this week to discuss a plan to resolve the crisis.

“There is a lot riding on what is happening in Europe as we go through the rest of this week,” Swan said. “All of us hope and pray that the Europeans get their act together.”

Australia’s economy remained strong throughout the global financial crisis thanks to a mining boom largely fueled by China’s demand for iron ore, coal and natural gas.

Craig James, chief economist with the Commonwealth Bank of Australia, said the Reserve Bank will probably cut the rate by another quarter percentage point when it meets again in February. Should the European crisis worsen dramatically, he said, the bank may issue an even steeper cut of half a percentage point.

“In the global financial crisis, they were quite aggressive with cutting interest rates,” James said. “This time around, they’re not taking any chances.”

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India is opening its $400 billion retail industry to global chains such as Wal-Mart in a move that could improve decrepit infrastructure that causes massive food waste in a country plagued by malnutrition and high inflation.

Top retailers have lobbied for years for a chance to build stores in the nation of 1.2 billion people and political deadlock on long-promised reforms in retail and other areas has helped cool foreign investor interest in India. Foreign retailers have Indian partners in wholesale operations, but no retail stores.

“Multibrand” stores such as supermarkets could be built with up to 51 percent foreign ownership under the change the Cabinet approved Thursday. The Cabinet also allowed 100 percent foreign ownership of single-brand retail operations, up from 51 percent.

Advocates see the move as a way to strengthen India’s creaking food distribution system.

The country suffers chronically high malnutrition and soaring inflation, but it’s not for lack of food. It is the world’s second largest grower of fresh produce, yet loses an estimated 40 percent of its fruit and vegetables to rot because of a lack of refrigerated trucking and warehouses, poor roads, inclement weather and corruption. That translates into lower incomes for farmers and higher prices for consumers.

If companies such as Wal-Mart and Tesco can open shops of their own, they may invest billions in improving farming techniques and getting produce into stores more efficiently, bringing down food inflation _ which has averaged 10.5 percent over the last year _ and possibly improving rural incomes.

Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision.

“This legal evolution should contribute to modernize the Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in a statement. It said the decision would help India’s farmers and the nation’s general economic development.

Opposition parties and some allies of the government resisted the move. The country has struggled to find consensus because of concerns that competition from the foreign retail giants could hurt millions of small shopkeepers, as well as the poor best payday advance.

Speaking on the NDTV news channel, ruling Congress party spokesman Abhishek Manu Singhvi called the decision “centrist and reasonable.”

The main opposition, the right-wing Bharatiya Janata Party, decried the move.

“The government has clearly bowed to international pressure,” spokesman Chandan Mitra told the same TV channel.

India’s $400 billion retail sector is the nation’s second-largest employer, after agriculture, according to consulting firm Deloitte.

The Ministry of Commerce says it will cost 76.9 billion rupees ($1.7 billion US) to build the additional 35 million metric tons of food storage India needs. In a July paper, it suggested that loosening restrictions on foreign investment in India’s retail sector could be the best way to get more storage space built.

Ashish Sanyal, managing director of retailing consultancy AMP Retail Services, said small businesses had nothing to fear from the big chains.

“At the end of the day this is like the high tide. All boats will rise. We will learn from the big retailers.”

Long delays in economic reforms in India have made investors increasingly wary of plowing money into the country.

India’s policymakers are now under acute pressure to find ways to attract foreign currency to help strengthen the rupee, which hit an all-time low against the dollar this week.

Traders say the central bank has been buying rupees in recent days but those measures are unlikely to reverse the currency’s plunge absent more farsighted policy reform.

The discussions on opening up India’s retail sector have been going on for 10 years.

“There is a limit to how much time we can spend on a decision,” said Singhvi, the Congress spokesman.

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