September 17, 2019

Rally Fades on Bank Profits

Stocks on Wall Street advanced Tuesday but pared gains after Citigroup’s steep drop in profit gave investors a reason to unload bank shares.

The late-day sell-off reflected a reversal in prevailing sentiment, when earlier optimism about the economy and China’s growth prospects drove the major stock indexes up about 1 percent.

The Dow Jones industrial average closed up 0.5 percent to 12,482.07, while the Standard Poor’s 500-stock index was up 0.4 percent, to 1,293.67 The Nasdaq composite index was up 0.6 percent to 2,728.08.

Across the Atlantic, the FTSE 100 in London added 0.7 percent.

The financial sector took a hit from investors’ disappointment with Citigroup’s earnings. Citigroup’s stock slid 8 percent to a session low at $28.16 after the bank reported weaker-than-expected earnings. The KBW Banks Index lost 1.4 percent.

Citigroup’s results followed similarly disappointing earnings on Friday from JPMorgan Chase.

“It was expected that some of the big banks would continue struggling, especially those heavily involved in investment banking, because that part of the financial system has clearly slowed down,” said Bryant Evans, investment adviser and portfolio manager at Cozad Asset Management in Champaign, Ill.

Earlier in the day, stocks rallied about 1 percent after data showed China’s economy expanded at the weakest pace in two and a half years, suggesting that officials may try to increase growth in the near term by tweaking monetary policy.

The news followed the widely expected announcement late Friday by Standard Poor’s that it was downgrading the credit ratings of nine euro zone countries.

Also Tuesday, Wells Fargo posted a 20 percent jump in quarterly profit. Wells Fargo’s stock, which earlier had risen to a session high at $30.69, pulled back sharply and was up just 0.7 percent at the close.

The Treasury’s 10-year note rose 4/32, to 101 9/32. The yield fell to 1.86 percent, from 1.87 percent late Friday.

Article source: http://feeds.nytimes.com/click.phdo?i=021b6dccdc47593b65badd6eb577e8d7

World Stocks Down as Euro Debt Woes Multiply

LONDON (AP) — European stocks rose on Friday as investors set aside concerns about the euro‘s debt crisis to focus on the impending release of monthly U.S. jobs data, which many hope will confirm a mild recovery in the world’s largest economy.

Asian market indexes closed lower as they reacted to poor economic and financial indicators out of Europe the previous day. That stream of poor European data continued on Friday, with new information showing a drop in retail sales and economic sentiment among consumers and businesses. Unemployment in the 17-nation eurozone, meanwhile, remained at a worrying 10.3 percent.

Traders expect 2012 to be a tough one for Europe, as it slides back toward recession, and appeared relieved to have more upbeat U.S. economic indicators to focus on Friday.

Analysts are projecting hiring gains of about 150,000 when the U.S. Labor Department issues the December jobs report. That would mark a six-month stretch in which the economy generated 100,000 jobs or more in each month. Expectations of the data rose on Thursday, when the private payrolls agency ADP said its own calculations for hiring gains were much stronger than forecast.

An improvement in the U.S. labor market is crucial for global markets because American consumer spending accounts for a fifth of the world’s economic activity. A recovery in the U.S. would also mitigate the impact of the sharp slowdown in Europe.

Britain’s FTSE 100 rose 0.4 percent to 5,644.55, while Germany’s DAX rose 0.6 percent to 6,131.25. France’s CAC-40 rose 0.8 percent to 3,170.85. Ahead of the opening bell on Wall Street, Dow Jones futures rose almost 0.1 percent to 12,334 and SP 500 futures gained 0.1 percent to 1,274.50.

Although upbeat U.S. data could push stocks higher, gains were likely to be limited by the lingering fears about Europe’s debt crisis. Italy’s benchmark 10-year bond yield edged further above 7 percent, a borrowing rate that is considered unsustainable over the longer term.

Italy, along with many other European governments, has to roll over huge amounts of debt in coming months. It is trying to restore investor confidence in its public finances to get those bond yields down and pay lower rates when it auctions its bonds to raise cash from capital markets.

Traders will watch comments from Italian Premier Mario Monti, who will hold talks in Paris with French President Nicolas Sarkozy on Friday.

Banks, meanwhile, are hurting due to fears that they will take big losses on their holdings of government debt and will struggle to raise new cash to plug those holes.

Trading in UniCredit, Italy’s largest bank, was halted on Thursday after the stock lost a quarter of its value in two days. The bank said Wednesday it would need to offer huge discounts to investors to raise money in a new share sale. The stock was down another 11 percent on Friday.

Longer-term concerns about the euro and the region’s financial system pushed the common currency to 15-month lows on Thursday. It recovered slightly on Friday, rising 0.1 percent to $1.2808.

Outside the eurozone, Hungary was sliding deeper into its own financial crisis. It had to pay a staggeringly high interest rate of 10 percent on its 12-month debt. That is far above the 7 percent level that forced Greece and Portugal to seek emergency bailouts to prevent them from defaulting on their debts.

Investor confidence in the country has deteriorated to the point that the country is considering asking the International Monetary Fund for a standby rescue loan.

Asian indexes ended mostly lower as they reacted to the previous day’s European market jitters. Japan’s Nikkei 225 Index closed 1.2 percent lower at 8,390.35. Hong Kong’s Hang Seng index fell 1.2 percent at 18,593.06 and South Korea’s Kospi fell 1.1 percent to 1,843.14. Benchmarks in Taiwan and Indonesia also fell. India and Singapore rose.

In mainland China, the benchmark Shanghai Composite Index gained 0.7 percent to 2,163.39, while the smaller Shenzhen Composite Index gained 0.5 percent to 817.78.

Japanese stocks are hurt by the yen‘s rise against the dollar, which makes exports less competitive internationally. On Friday, the dollar dropped another 0.1 percent to 77.07 yen.

Benchmark oil for February delivery rose 60 cents to $102.41 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $1.41 to end Thursday at $101.81 in New York.

___

Pamela Sampson in Bangkok contributed to this report.

Article source: http://www.nytimes.com/aponline/2012/01/05/business/AP-World-Markets.html?partner=rss&emc=rss

Asian Markets Rise on Eurozone Factory Data

BANGKOK (AP) — World stock markets rose Tuesday, as market confidence grew after the release of manufacturing data that showed improvement in Europe.

Benchmark oil rose above $100 per barrel while the dollar fell against the euro and the yen.

Britain’s FTSE 100 opened after a three-day holiday, gaining 1 percent at 5,625.17.

Germany’s DAX rose 0.8 percent to 6,125.05 while France’s CAC-40 fell 0.7 percent to 3,199.95. Wall Street appeared headed for a mixed day of trading, with Dow Jones industrial futures up less than 0.1 percent to 12,158 and SP 500 futures flat at 1,252.50.

Asian stocks rose as post-holiday trade began to acquire momentum. Hong Kong’s Hang Seng Index, on its first trading session of 2012, jumped 2.4 percent to close at 18,877.41. South Korea’s Kospi index rose 2.7 percent to 1,875.41 and Australia’s SP ASX 200 gained 1.1 percent at 4,101.20. Benchmarks in India, Singapore, Taiwan, Malaysia and Indonesia also rose.

Benchmarks in Japan, mainland China and Thailand remained closed for the extended New Year’s holiday.

Steadily improving economic news in the U.S. and continued growth in China are providing traders with reasons for optimism in 2012, despite a debt crisis in Europe that shows few signs of abating.

“Nobody expects much from Europe, but you can expect better things from the U.S. and China. So, I think the market will rise in 2012 mainly because we started in a very low base,” said Francis Lun, managing director at Lyncean Holdings in Hong Kong.

Oil-related stocks posted solid gains as the price of crude hovered above $100 per barrel. Hong Kong-listed PetroChina Co., China’s largest oil and gas producer, jumped 4.5 percent. China Petroleum Chemical Co., Asia’s biggest oil refiner, gained 5.5 percent.

Other commodity shares headed upward. Australia’s Fortescue Metals Group added 3.3 percent. Newcrest Mining rose 3.7 percent and BHP Billiton, the world’s largest mining company, rose 1.1 percent. Rival Rio Tinto added 1.8 percent.

Korean industrial shares posted solid gains. Hyundai Heavy Industries, the country’s leading shipbuilder, jumped 5.8 percent. Steel giant POSCO rose 3.1 percent. Hyundai Motor soared 4.2 percent.

On Monday, German and French stocks rose in light volumes as a reading of manufacturing activity in Europe improved in December from November.

But the purchasing managers index levels still show a fifth straight month of contraction — an indication of recession in the eurozone, analysts said.

“It seems unlikely that equity gains will be sustained over the rest of this week, with risk aversion set to remain elevated against the background of ongoing Eurozone debt and global growth concerns,” Credit Agricole CIB said in a research note.

Many of the world’s leading indexes are starting 2012 after a down year. Britain’s FTSE was off 5.6 percent by year end, Japan’s Nikkei fell 17 percent to its lowest close since 1982, and the Standard Poor’s 500 showed zero gain.

Data releases later in the week such as eurozone inflation on Wednesday and German factory orders and U.S. non-farm payrolls on Friday will give traders more grist.

Benchmark crude for February delivery rose $1.76 to $100.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 82 cents to settle at $98.83 in New York on Friday.

In currencies, the euro rose to $1.2994 from $1.2946 late Friday in New York. The dollar fell to 76.80 yen from 77.78 yen.

Article source: http://www.nytimes.com/aponline/2012/01/02/business/AP-World-Markets.html?partner=rss&emc=rss

World Stocks Down on Mixed US, Japan Economic News

BANGKOK (AP) — World stocks markets fell Wednesday, with trading thinned by year-end holidays and mixed economic news out of the U.S. and Japan.

Benchmark oil hovered above $101 per barrel while the dollar fell against the euro and the yen.

European stocks dropped in early trading. Britain’s FTSE 100 fell 0.2 percent to 5,501.25. Germany’s DAX was 0.9 percent lower at 5,839.98 and France’s CAC-40 lost 0.4 percent to 3,092.01. Wall Street also appeared headed for a lower opening. Dow Jones industrial futures rose 0.2 percent to 12,199 while SP 500 futures dipped 0.3 percent to 1,256.60.

Earlier in Asia, trading was subdued, as it typically is between the Christmas holiday and New Year’s.

Japan’s Nikkei 225 index fell 0.2 percent to close at 8,423.62. Hong Kong’s Hang Seng Index fell 0.6 percent to 18,518.67, while South Korea’s Kospi lost 0.9 percent to 1,825.12. Australia’s SP ASX 200 lost 1.3 percent to 4,088.80. Benchmarks in Singapore, Taiwan and Indonesia were also lower.

Japan’s industrial output dropped a seasonally adjusted 2.6 percent last month — the first decline in two months. But the negative news was mitigated by expectations of rebounding manufacturing and production this month and next, which helped to mute stock market losses.

The Shanghai Composite Index reversed course after early losses, rising 0.2 percent to 2,170.01. But the smaller Shenzhen Composite Index sank 0.5 percent at 849.76.

Some investors were “dumping shares” because Beijing has failed to take steps they expected to stimulate slowing economic growth, said Peter Lai, investment manager for DBS Vickers in Hong Kong.

“Some investors believed there would be a reduction in interest rates or the bank reserve ratio. But this hasn’t happened,” Lai said.

Tokyo Electric Power plunged 11.8 percent, a day after Japanese Industry Minister Yukio Edano suggested that the embattled utility be put under temporary state control and warned the company against resorting to electricity bill hikes.

TEPCO operates the Fukushima Dai-ichi nuclear power plant, which was heavily damaged in the March earthquake and tsunami, and owes massive compensation payments to people and companies harmed by a nuclear disaster at the plant.

Hong Kong-listed property shares also slumped. China Overseas Land Investment slid 3 percent. China Resources Land lost 2.7 percent.

China Mengniu Dairy, the country’s biggest dairy company, plummeted 24 percent in Hong Kong after acknowledging that a cancer-causing toxin had been found in milk produced by the company. Mengniu apologized and said no tainted milk had made it to the market. The government blamed the problem on bad feed given to cows.

Retail shares also slid on growing anxiety over the global economy in 2012. Hong Kong-listed jewelry retailer Chow Sang Sang shed 4 percent. Australian department store chain David Jones fell 2.1 percent and Woolworth’s lost 0.9 percent.

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

U.S. 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.

Benchmark crude oil rose 2 cents to $101.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.66 to finish at $101.34 per barrel on the Nymex on Tuesday.

In currency trading, the euro fell to $1.3075 from $1.3069 late Tuesday in New York. The euro has been weak because of worries about Europe’s government debt crisis. It is still trading just above an 11-month low of $1.2943 reached on Dec. 14.

The dollar fell to 77.73 yen from 77.85 yen.

___

AP Business Writer Joe McDonald contributed from Beijing.

Article source: http://www.nytimes.com/aponline/2011/12/27/business/AP-World-Markets.html?partner=rss&emc=rss

World Stocks Up on Hopes for Europe Debt Fix

BANGKOK (AP) — World stocks rose Wednesday amid growing optimism that European leaders will approve aggressive plans by the end of the week to rescue the region from a debt crisis that has roiled financial markets for months.

Benchmark oil rose above $101 per barrel, while the dollar fell against the euro and the yen.

European stocks tracked earlier gains in Asia. Britain’s FTSE 100 rose 0.9 percent to 5,617.16. Germany’s DAX added 1.4 percent to 6,110.91 and France’s CAC-40 climbed 1.5 percent to 3,227.68. Wall Street also appeared set for advances, with Dow Jones industrial futures rising 0.8 percent to 12,210 and SP 500 futures gaining 0.8 percent to 1,265.40.

In Asia, Japan’s Nikkei 225 jumped 1.7 percent to end at 8,722.17 — its highest close in a month. South Korea’s Kospi added 0.9 percent to 1,919.42 and Hong Kong’s Hang Seng gained 1.6 percent to 19,240.58.

Mainland Chinese shares edged higher, with the benchmark Shanghai Composite Index climbing 0.3 percent to 2,332.73, ending a five-session losing streak.

Sentiment was boosted by a report that European leaders might create a second bailout fund to supplement the one they have already agreed to. The second fund would nearly double the capacity of Europe’s financial rescue programs, the Financial Times reported.

The plan involves allowing the existing 440 billion euros bailout fund to continue running when a new 500 billion euros facility comes into force in mid-2012, almost doubling the rescue system’s firepower, Stan Shamu of IG Markets wrote in a report. “This latest move might just be the ‘bazooka’ Europe needs to appease markets.”

Shares of camera and medical equipment maker Olympus fell 5.2 percent in Tokyo, a day after an independent panel determined that the company had falsified accounting records to cover up huge investment losses from the 1990s. The company risks being removed from the Tokyo Stock Exchange.

But other Japanese exporters posted solid gains. Sony Corp. jumped 5.9 percent and Ricoh Co. climbed 3.4 percent.

Japanese shipper Mitsui O.S.K. Lines surged 11.2 percent after an agreement with four other tanker owners to jointly operate very large crude carriers known as VLCCs starting early next year, Kyodo News Agency reported.

In Australia, markets were helped by data showing the economy grew by 1 percent in the September quarter. An interest rate cut by the Reserve Bank of Australia on Tuesday, which raised hopes of more consumer spending, helped retail shares. Woolworths rose 1.9 percent and surfwear maker Billabong International gained 3.1 percent.

Trading volume was light in Hong Kong, where a slew of IPOs devoured much of the available investment funds and sentiment leaned toward caution as the end of the year approaches.

“I think a lot of people, a lot of funds, have effectively closed their books for the year and are trying to protect the gains that they made, and also a lot of retail money is tied up in IPOs, so it makes for thin trading,” said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong.

In mainland China, shares in information technology, financial, environmental protection and biotechnology companies advanced while shares in steel related companies weakened. Ping An Insurance gained 3 percent while Shanxi Securities Co. gained 1.7 percent.

China is due to release economic data for November, including inflation, on Friday. Peng Yunliang, an analyst based in Shanghai, said the inflation rate should’ve eased to below 5 percent. That would give Beijing more leeway to ease credit controls as risks to growth from Europe’s debt crisis mount.

Hopes that Europe was finally serious about taming its debt crisis boosted U.S. stocks Tuesday. The Dow Jones industrial average closed up 0.4 percent at 12,150.13. The Standard Poor’s 500 index closed up 0.1 percent to 1,258.47. The Nasdaq composite average closed down 0.2 percent at 2,649.56.

Benchmark crude for January delivery was up 51 cents to $101.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to settle at $101.28 on Tuesday.

In currency trading, the euro rose to $1.3445 from $1.3414 late Tuesday in New York. The dollar fell to 77.66 yen from 77.70 yen.

___

AP researcher Fu Ting contributed from Shanghai.

___

Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

Article source: http://www.nytimes.com/aponline/2011/12/06/business/AP-World-Markets.html?partner=rss&emc=rss

Italy Rejects S.&.P. Downgrade

Late Monday, S.P. cut the rating by one notch to A from A+, citing the country’s weakening economic growth prospects and higher-than-expected levels of government debt.

The agency said Italy’s fragile governing coalition and policy differences in Parliament would continue to limit the government’s ability to respond decisively to economic head winds. It also cast doubt on whether the government’s projected €60 billion, or $82 billion, in fiscal savings would be realized because growth prospects are weakening, the budgetary savings rely on revenue increases, and market interest rates are anticipated to rise.

Prime Minister Silvio Berlusconi’s office issued a statement early Tuesday noting that his government had a solid majority in Parliament. It said the government was preparing steps to lift growth and recently passed measures to control public finances through tax increases and spending cuts.

“The evaluations of Standard Poor’s seem dictated more by behind the scenes reports in newspapers than reality and seems influenced by political considerations,” the statement said.

The yield on Italian 10-year bonds was up slightly by midday Tuesday, but at more than 5.6 percent Italy’s borrowing costs are more than three times what Germany, the euro-zone anchor, pays. Stock markets in Europe also brushed off the downgrade, as investors reacted to positive signals on discussions about aiding Greece, and Spain sold another offering of Treasury bills.

Analysts said the mood was also helped by speculation that the United States Federal Reserve would approve a new program for monetary easing Wednesday to try to stimulate economic growth.

The Euro Stoxx 50 index of euro zone blue chips was up almost 2 percent at midday. The FTSE 100 in London up about 1.5 percent, as was the main index in Milan. Futures contracts on the Standard Poor’s 500 index suggested a firmer opening on Wall Street.

S.P.’s A rating for Italy is still five steps above junk status, but it is three below that given by another agency Moody’s Investors Service, which is currently assessing Italy.

“Moody’s announcement to extend its review of Italy’s rating by another month last Friday probably gave the market a false sense of relief, especially after persistent speculation of a Moody’s downgrade last week,” said Colin Tan, an analyst at Deutsche Bank.

He added that although Italy had covered 77 percent of its 2011 debt funding needs, but there was still another €100 billion more to be raised before the end of the year.

Italy is the euro zone’s third-largest economy behind Germany and France and is considered to be too big to save should it run into the same kind of trouble that beset Greece, Portugal and Ireland. Although its budget deficit is relatively low, the big concern among investors is that Italy, whose debts stand at 120 percent of its gross domestic product, will find it increasingly costly to borrow.

As a result, the European Central Bank has been helping, buying around €5 billion to €10 billion in the riskier euro-area bonds over the last five weeks. But even that has failed to stop Italian bond yields from rising.

“The E.C.B. will probably need to do more from here,” Mr. Tan said, referring to its bond buying program.

Commerzbank said in a research note that the lengthy process of ratifying changes to the European Union’s main bailout vehicle was starting to impair the effectiveness of the central bank’s bond buying program.

In Athens, meanwhile, talks between Greece and international lenders that began on Monday were due to resume Tuesday night, according to the Greek Finance Ministry.

Greek officials described talks so far with the so-called troika — the International Monetary Fund, the E.C.B. and the European Commission — as productive, and they said that a deal may be close.

If there is an accord, the troika would then release the latest tranche of loans — which the country needs by mid-October to avoid running out of cash to pay its bills.

The Greek press published a list of 15 austerity measures that the troika was said to be demanding of the Socialist government. They included laying off another 20,000 state workers, cutting or freezing state salaries and pensions, increasing heating oil tax, shutting down loss-making state organizations, cutting health spending and speeding up privatizations.

Governments across Spain also are struggling to rein in spending. Teachers in Madrid began a three-day strike Tuesday to protest against staff cuts and longer classroom hours, news agencies reported.

Reflecting the country’s strained finances, Spain sold just under €4.5 billion in Treasury bills on Tuesday, but at a higher cost. The average yield on the 12-month bill rose to 3.591 percent, compared with 3.335 percent the last time, the securities were sold on Aug. 16, while the 18-month debt yielded 3.807 percent, compared with 3.592 percent last month.

Amid the wreckage of a collapsed housing bubble and weak economy, the latest data from the Bank of Spain showed that the ratio of non-performing loans continued to rise in July, reaching 6.9 percent of all loans. Analysts noted that the level was comparable to that of the previous banking crisis in the early to mid-1990s.

In an interview published Tuesday in the Spanish newspaper Expansion, the E.C.B. president Jean-Claude Trichet said that while Spain’s financial situation has improved considerably, policymakers must remain alert, Reuters reported.

He also said the outlook for the economy had deteriorated and that there were downside risks to growth.

“We conclude from these comments that Mr. Trichet is still envisaging that there could be a rate cut in the future, but for now he is keeping his powder dry,” said Julian Callow, chief European economist at Barclays Capital.

Elisabetta Povoledo contributed reporting from Rome.

Article source: http://feeds.nytimes.com/click.phdo?i=980029af8421a61ea990853636cbdb65

France Expresses Confidence in Banks After Downgrades

The latest attempt at reassurance about the health of French banks came as the leaders of France and Germany prepared to speak with their Greek counterpart amid worries that Athens may default on its heavy debt load.

European stocks and the euro got a lift after the head of the European Commission said he would present options soon for the introduction of euro area bonds — the latest effort by European leaders to show they are trying to strengthen the foundations of their monetary union.

Moody’s Investors Service downgraded two of France’s biggest banks Wednesday, Société Générale, Crédit Agricole, citing their exposure to the Greek economy and the fragile state of bank financing markets. It kept a third, BNP Paribas, under review.

The cuts had been widely anticipated by investors but nevertheless sparked knee-jerk drops in the euro and Asian stock markets, both of which had already been on the back foot earlier in the Asian trading day.

But the downgrades were less severe than many analysts had anticipated, and by midday in Europe, the Euro Stoxx 50 index of euro zone blue chips was up around 2 percent and the FTSE 100 in London was up around 1.5 percent.

In Japan, the Nikkei 225 index closed down 1.1 percent, but the Hang Seng in Hong Kong closed up 0.1 percent.

The euro, which had been hovering at around the mid-$1.36 level before news of the downgrades, slipped half a cent initially but then rallied to above $1.37.

The Bank of France governor, Christian Noyer, called the ratings cuts “good news” because they were less than expected. In a radio interview, he also said it would make “no sense” to nationalize any French bank, calling such talk “surreal.”

Société Générale, BNP Paribas and Crédit Agricole are considered integral actors in the French economy, lending billions of euros to businesses and individuals, and the government has said it will never let them any of them fail.

In its report, Moody’s expressed concern over the French banks’ reliance on wholesale funding markets given the “potentially persistent fragility in the bank financing markets.” Moody’s also highlighted “structural challenges to banks’ funding and liquidity profiles,” as nervousness about the exposure of European banks to a potential Greek default make it harder for banks to obtain funding.

A day after BNP Paribas was forced to deny a report that U.S. banks are pulling back on lending to it, Moody’s left its rating at Aa2, saying it had “an adequate cushion to support its Greek, Portuguese and Irish exposure.” But it said the bank would remain on review for a possible downgrade.

“I can only imagine that the bank is fighting very hard with the agency to avoid a downgrade,” Gary Jenkins, a the head of fixed income analysis at Evolution Securities, said in a note. Moody’s already rates the bank at the same level as Standard and Poor’s, he noted, “so any cut would result in a new low rating.”

BNP Paribas said on its website that it planned to cut its risk-weighted assets by about €70 billion, or $95.7 billion, and improve its Tier 1 capital ratio — a common measure of banks’ strength — to 9 percent by the start of 2013.

Analysts say one possible solution to Europe’s crisis is the creation of euro bonds, a bond that would be jointly backed by countries in the euro union. Such an instrument would make it harder for investors to attack the individual bonds of countries with tattered finances, like Greece or Italy.

Germany, whose bonds are considered rock-solid now, has been opposed to such a move because it would likely would face higher borrowing costs itself. Countries also would have to agree to relinquish a degree of sovereignty, and the whole process would face enormous political hurdles if changes to the treaty that established the euro are required.

In a speech to the European Parliament on Wednesday, the European Commission president José Manuel Barroso suggested, however, that he would suggest ways under which such bonds could be issued without changing the treaty, although other options would mean treaty change.

“But we must be honest,” he added. “This will not bring an immediate solution for all the problems we face.”

The biggest immediate problem is Greece, which has struggled to meet the terms of an agreement struck in July for new emergency funding, as economic growth slows after nearly two years of harsh austerity.

President Nicolas Sarkozy of France and the German Chancellor Angela Merkel were scheduled to hold a video conference call Wednesday evening with the embattled Greek prime minister, George Papandreou. The announcement could portend yet another restructuring of Greek debt to stave off a default.

The prospect of a Greek default, which would shake the euro zone to its core, was also sure to be discussed at a meeting Friday of finance ministers from all 27 European Union nations. The U.S. Treasury Secretary Timothy Geithner also planned to attend the meeting, underscoring concerns about the impact of Europe’s debt crisis on the United States.

In Beijing, the Chinese Prime Minister Wen Jiabao expressed his support for Europe at a World Economic Forum event Wednesday.

“What we have to take note of now is to prevent the sovereign debt crises from spreading and expanding further,” he said, according to Reuters. “We’ve said countless times that China is willing to give a helping hand and we’ll continue to invest there.”

Stephen Castle contributed reporting from Brussels.

Article source: http://feeds.nytimes.com/click.phdo?i=837b98f6535db3f9cc0c6399433d7e99