Brief world markets headlines for today

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China feels direct, wide effects of unresolved eurozone crisis

The prolonged eurozone crisis is having a powerful effect in China, contributing to high unemployment and pushing down consumer spending, analysts say. With the Chinese currency rising against the hard-hit euro, Chinese exports are less in demand worldwide. And China's stock markets haven't been immune, with shares easing in line with falling indexes around the world. 

Germany signals flexibility on European debt

Just ahead of the eurozone summit in Brussels, Germany signaled it may soon be willing to accept some form of shared liability for debt across the zone, provided there is assured progress toward establishing centralized European control over national fiscal policies. The move would require nations to surrender a large measure of sovereignty. But German Finance Minister Wolfgang Schaeuble said Berlin, in return, is "willing to go as far as we need to in order to get a sustainable agreement in Europe." 
U.S. high court upholds bulk of health care law

In a ruling that echoed across the U.S. medical and insurance industries as well as the landscape of the 2012 presidential campaign, the Supreme Court essentially upheld President Barack Obama's landmark health care legislation. At the heart of the ruling was the requirement that Americans buy health insurance or pay a penalty, a provision that the court upheld as legal under the federal government's taxing authority. 

Latest U.S. growth, jobs figures point to weak economy

The U.S. Commerce Department confirmed that the nation's economy grew at a sluggish 1.9% annual rate in the first quarter, a pace widely thought to have slackened in the current period. Meanwhile, the latest figure for unemployment applications came in at 386,000, down 6,000 from the previous week but high enough to indicate that the jobless rate is unlikely to ease much soon.

Markets take note of record fines against Barclays

A record $451 million in fines for Barclays over manipulation of interest rates sent shock waves through the markets. The penalty highlighted continued investigations by U.S. and U.K. authorities involving a number of banks. "It's going to put a great deal of pressure on the other banks to settle because somebody has set a precedent," said Jerry W. Markham, law professor at Florida International University and a former chief counsel in the enforcement division of the U.S. Commodity Futures Trading Commission. 

News Corp. confirms publishing/entertainment split

As expected, News Corp. will be splitting into two companies, one with publications and the other with highly profitable entertainment properties. "We determined that creating this new structure would simplify operations and greater align strategic priorities, enabling each company to better deliver on our commitments to consumers across the globe," Chairman Rupert Murdoch said of the board's unanimous decision. 

Report that trade loss may total $9 billion slams JPMorgan shares

A New York Times report that losses from JPMorgan's disastrous credit derivatives trade could be as much as $9 billion sent the bank's shares tumbling Thursday. Last month, Chief Executive Jamie Dimon pegged the loss at $2 billion but said it could grow by $1 billion or more. Dimon plans to provide more details July 13.

Market Activities

Worries over a possible cutback in U.S. consumer spending after the Supreme Court upheld a mandate to buy health insurance weighed on stocks Thursday. But late signs of a possible resolution in the eurozone crisis lifted shares in late trading, leaving the S&P 500 down 0.2% for the day. In Europe, shares were generally lower after a jump in Spanish borrowing costs and an unexpectedly large gain in German unemployment. Here is a list of continuously updated global stock indexes.

Economic Trends & Outlook
Indian central bank blames eurozone crisis for global doldrums

The Reserve Bank of India singles out the eurozone crisis as a key driver of global economic instability and a contributor to a range of difficulties burdening India's economy. "The Euro area sovereign debt problem is continuing to weigh on global recovery. Although slowing global growth has dampened commodity prices, heightened risk aversion and the resultant slowing of capital flows are likely to adversely impact emerging and developing economies," the central bank said in its Financial Stability Report. 

Europe's debt woes are seen thwarting South Korean recovery

A recovery in South Korea's economy is being delayed by a global economy restrained by the festering crisis in the eurozone, the nation's finance ministry said as it lowered its GDP growth estimate for the year to 3.3%. The forecast is down from an earlier 3.7%. Looking ahead, however, the ministry said "an improved job market during the second half of this year and slowing consumer price rises will drive a recovery on the back of domestic demand."

China's Finance Ministry still expects 7.5% growth for year

Although China's economic growth has slowed, the Finance Ministry says the country is still on track for 7.5% growth in 2012. "We should see stabilization [in economic activity] in the third quarter," said Jia Kang, director of the ministry's Research Institute for Fiscal Science. Jia noted that Beijing also retains the option of adjusting fiscal and monetary policy as needed.

Capital Markets & Financial Products
Analysts forecast strong gains for Japan's Nikkei

A 20% gain is likely this year for Japan's Nikkei average, according to a poll of analysts. Expectations of renewed foreign interest in Japanese stocks as well as a resolution to the eurozone debt crisis were cited. The year-end projection for the Nikkei is 10,125, up 14% from Thursday's close of 8,874.11. 

UBS sees strong rebound for South Korean shares

Factors weighing on the global economy have already been figured into the price of South Korean shares, making them attractive enough to pull in buying that will lift the market about 10% in the second half of the year, according to a UBS researcher. "Although the current market conditions are not good, valuations on Korean shares send a buy signal to investors. The benchmark Kospi will start rebounding after between three and six months," the researcher said.

China plans currency-convertibility experiment in Shenzhen

Shenzhen will be the site for a special currency zone as China experiments with convertibility. President Hu Jintao is to reveal details today.

Joint venture to open trading across 3 Chinese exchanges

Investors will have the chance to trade in shares on all three major Chinese exchanges for the first time under a planned HK$300 million joint venture. 

Bank of China extends lending for Taiwan companies in China

Taiwanese-invested enterprises in China will receive at least 200 billion yuan in development support from the Bank of China over the next three years, said bank President Li Lihui. Over the past three years, BOC has made 170 billion yuan in loans to more than 1,000 Taiwanese enterprises located in China. 

Indian central bank announces FII rules change

FIIs will now be able to invest as much as 23% in commodity exchanges without seeking clearance under new FDI rules announced by the Reserve Bank of India. The changes were approved by the Department of Industrial policy and Promotion in April.

Industry & Regulatory Update
U.S. pursues next WTO step in rare earths dispute with China

The World Trade Organization has been asked by the U.S. to set up a settlement panel in Washington's dispute with China over Beijing's quotas on exports of rare earths and other materials. China says the quotas are intended to reduce irresponsible mining that endangers human health and the environment. For its part, the U.S. maintains that "it is vital that U.S. workers and manufacturers obtain the fair and equal access to raw materials like rare earths that China specifically agreed to when it joined the WTO," said U.S. Trade Representative Ron Kirk.
Ethics & Standards
Executive pay cuts loom for Nomura insider trading involvement

CEO Kenichi Watanabe and other top executives at Nomura Holdings will be subject to pay cuts as part of the company's effort to resolve an insider trading scandal, sources say. Nomura is working to complete by the end of the month an investigation into the Japanese company's failure in compliance. 
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