Brief world markets headlines of the day.

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Cyprus joins club seeking bailout in eurozone

Effectively barred from capital markets for more than a year, Cyprus is now the fifth European country to formally request a bailout. As much as 10 billion euros may be required to cover exposure to Greek private-sector debt and to backstop the second-largest lender, Cyprus Popular Bank. The request comes after Fitch's decision to downgrade the country's sovereign status to junk. 

Spain reaches out to EU for aid to banks

With a Moody's downgrade probably hours away, Spain called on eurozone partners to come to the aid of its banks. Citing an audit that shows Spanish banks may need as much as 62 billion euros, Economy Minister Luis de Guindos said he now wished to take advantage of an EU aid offer of as much as 100 billion euros. 

Greek finance minister resigns ahead of European summit

Greece's new finance minister asked to step down four days after his appointment, citing ill health. Prime Minister Antonis Samaras accepted the resignation of Vassilios Rapanos, 65, whose sudden illness and hospitalization had precluded his attendance at a summit of European leaders later this week. 

EU summit to focus on tighter union

The pre-summit draft document prepared for European leaders meeting later this week outlines four "pillars" of economic and monetary union. Among the ideas to be discussed are a cross-border banking union, greater fiscal integration and a debt redemption fund. Banking regulation is also a high priority. 

Bleak figures in store for U.K. economy

Two pieces of bad economic news are on the calendar this week in the U.K. A statistical report on taxes and benefits is expected to shed light on a worsening situation for consumers. And a third revision of GDP figures for the first quarter is likely to confirm that the country is in a double-dip recession. 

Consumer pessimism grows in U.S., but housing improves

U.S. consumer pessimism deepened in the second quarter, weighed down by stubbornly high unemployment and persistently bad news out of the eurozone, according to a Nielsen survey. At the same time, the Commerce Department reported Monday that there is continued strength in the housing sector. 

Central banks ready to ease, but stimulus may be called for

Although central banks around the world from Japan to Europe are signaling more monetary easing, any actions along these lines may be muted as policymakers scale back predictions of economic recovery. The situation recalls the persisting malaise in Japan since the real estate meltdown of the 1990s. "Japan's experience shows central banks can mitigate the worst effects of the current environment, but it's going to be very hard for them to stimulate demand," said Peter Dixon, global equities economist at Commerzbank in London. 

Market Activities

Investors in the U.S. and Europe focused Monday on the European summit later this week, with shares taking a tumble on both sides of the Atlantic as the outlook for a resolution to the euro crisis dimmed. The U.S. S&P 500 Index ended the day 1.6% lower, and the Stoxx Europe 600 Index was off a nearly identical 1.5%. Here is a continuously updated list of global stock indices. 

Economic Trends & Outlook
China's state-owned companies are warned to shape up for hard times

China's state-owned enterprises are being formally warned to take steps in preparation for a period of markedly slower growth than the sustained double-digit gains they've become accustomed to over decades. "Against the current harsh economic situations both home and abroad, the SOEs must attach much importance to reducing costs ... and boosting efficiency," says Shao Ning, deputy director of the State-owned Assets Supervision and Administration Commission. 

Moody's maintains stable rating outlook for India

India got a break from Moody's, which on Monday confirmed the country's sovereign rating. Moody's notes that many of the country's current economic problems are only an extension of years-long ills that have long been part of the current rating. The stable outlook comes after a previous downgrade by Standard & Poor's to negative.

Trade between Taiwan, EU returns to pre-crisis level

Trade between Taiwan and the EU totaling $50.05 billion last year put the two partners back where they were before the 2008-09 downturn, according to an EU-Taiwan fact file from the European Economic and Trade Office. Meanwhile, the EU remained the largest foreign investor in Taiwan in 2011, providing $30.24 billion in foreign direct investment stock, accounting for more than a quarter of the FDI total in Taiwan.

Capital Markets & Financial Products
In South Korea, institutional investors shun corporate bonds

A book-building attempt last week by South Korea's CJ E&M, an AA-stable company, failed to attract any institutional investors. Investors, for their part, said the rates offered were unreasonably low. But this and similar recent failures indicate that corporate financing in South Korea may be in for a difficult period, with local businesses facing the prospect of a liquidity crunch. 

South Korea's Export-Import Bank plans foreign-currency unit

A new unit to handle foreign-currency assets is in store for the Export-Import Bank of Korea. The unit, which may become an asset management firm in the future, will diversify the bank's investment outlets, one source said. 

Indonesia sets ground rules for greater-than-40% stakes in banks

Local institutions in Indonesia and foreign institutions that meet several requirements will be able to buy stakes in Indonesian banks greater than the 40% generally allowed, Bank Indonesia Deputy Gov. Halim Alamsyah said. Among the requirements is a willingness to buy contingent-convertible bonds from the banks involved, hold on to the purchases assets for a minimum period and commit to help improve the Indonesian economy. 

Asian fund managers are sought in Australia

John Donovan, founder of Australia's AFM Investment Partners, predicts the country's pension funds soon "will be investing heavily into Asia." With that in mind, AFM is searching for Asian fund managers, Donovan says. The need is likely to be great, with bigger mandated pension contributions over the next few years and the funds' current overinvestment domestically.
Industry & Regulatory Update
Qatar requests clearance to invest $5 billion in China

Qatar will be able to claim leading status as a foreign investor in China's capital markets if it wins clearance for $5 billion in investments. The request on behalf of Qatar's sovereign wealth fund is five times China's current limit. 

India raises upper limit for FII in government securities

India's ceiling for foreign institutional investors in government securities has been boosted by $5 billion, to $20 billion. The action by the Reserve Bank of India is accompanied by a move to add to the categories of long-term investors that can invest up to the $20 billion limit in government bonds. 

Under new currency clearance, Taiwanese will be able to invest in China

Investors in Taiwan will soon be able to invest in Chinese stocks in a major relaxation of cross-strait financial exchanges. The investments will be enabled under a new currency clearance mechanism, with stock investments made possible through reconsignment with securities firms and issuance of renminbi-denominated mutual funds, insurance policies and structured notes.

People & Personalities
Liew plans exit as CEO at CapitaLand

Liew Mun Leong, co-founder and CEO of leading Southeast Asia developer CaptiLand, plans to step down next June. The decision comes as other management changes are afoot at the company and is not considered a surprise to the market. However, the "key question is who the successor is," said BNP Paribas analyst Chong Kang Ho.
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