US & EUROPE NEWS----BAD!

Stocks tumbled Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations. Stocks had fallen through the morning as lingering worries about China's lending practices hit commodities and the broader market. Reports showing a rise in jobless
claims and a drop in manufacturing activity added to the pressure, overshadowing Goldman Sachs' better-than-expected profit report. But declines accelerated as investors geared up for and then dissected the White House's afternoon announcement. The Dow Jones industrial average lost 2.0% (-213.3 pts, close 10,389.9). The Nasdaq lost 1.1% (-25.6 pts, close 2,265.7) and the S&P 500 lost 1.9% (-21.6 pts, close 1,116.5). U.S. light crude oil for February delivery fell US$1.66 to settle at US$76.08 a barrel on the New York Mercantile Exchange. (CNNmoney)
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More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays. Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labour Department figures showed yesterday in Washington. The jump was due to an “administrative” accumulation from late December and early Januaryholidays, and did not reflect “economic” reasons, a Labour Department spokesman said. Initial jobless claims were forecast to decline to 440,000 from 444,000 the week before, according to the median estimate of 40 economists surveyed by Bloomberg. Estimates ranged from 430,000 to 457,000. Continuing claims fell by 18,000 to 4.6m in the week ended Jan. 9. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. (Bloomberg)
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Bundesbank President Axel Weber said it’s unlikely that the German economy, Europe’s largest, stagnated in 4Q09, striking a more optimistic tone than the country’s statistics office. “It’s not likely that economic growth in Germany was flat in the fourth quarter,” he told reporters in Berlin yesterday. At the same time, “I can’t rule out flat growth in Germany in the first
quarter.” The German economy was probably unchanged in terms of growth in 4Q09, the Federal Statistics Office said on Jan. 13, capping the worst year for the country since World War II. Gross domestic product fell 5% in 2009, a sharper decline than economists had estimated, after expanding 1.3% in 2008. The Bundesbank said last month that the outlook has “brightened
perceptibly,” predicting 1.6% German growth this year and 1.2% in 2011. Still, unemployment is set to rise and the strong euro may hurt Germany’s export industry. (Bloomberg)
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Expansion in Europe’s service and manufacturing industries unexpectedly slowed in January, adding to signs the pace of the economy’s recovery may weaken. A composite index based on a survey of purchasing managers in both industries in the 16-nation euro region fell to 53.6 from 54.2 in December, London-based Markit Economics said yesterday in an initial estimate. Economists expected an increase to 54.4, according to the median of 15 estimates in a Bloomberg survey. A reading above 50 indicates expansion. The euro-region economy may lose momentum as the effect of government stimulus measures tapers off and rising unemployment erodes consumers’ willingness to spend. An index of services dropped to 52.3 in January from 53.6 in the previous month, Markit said. A gauge of manufacturing increased to 52 from 51.6 in December. (Bloomberg)
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