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Stories Report on Business is following today:
Markets, euro sink again
U.S. markets sank at today's open, following down both European stocks and the euro as fears over Europe's outlook continue. Both the Dow Jones industrial average and the S&P 500 dipped. Canadian markets are closed.
The euro sank on continuing fears over Europe's debt crisis, particularly given the nationalization of a Spanish bank on the weekend. The Bank of Spain took over CajaSur, a regional financial institutions, after its merger talks collapsed.
"Concerns about prospects for future growth in the euro zone due to the implementation of austerity measures by the most indebted economies has seen a significant dilution in risk appetite over the last week or so," CMC Markets analyst Michael Hewson said this morning.
"Investor sentiment has been further eroded by the implementation of the unilateral short selling ban by Germany, which seems to have been motivated more by political considerations than by any concerns about irresponsible speculative behaviour, has added to the overall uncertainty. If any reminder were needed of the problems facing the Euro zone then it was provided by Spain at the weekend when the Bank of Spain stepped into rescue one of its biggest regional banks (Cajasur) as a good portion of its property loan book went bad.
"This move followed last week's action by the Bank of Italy to suspend mark to market requirements on Italian bank exposure to euro government bonds, has fuelled market concerns that an Italian bank may have significant bad sovereign debt exposure. These actions raise concerns about what other nasty surprises may be in store over the coming weeks."
Britain's new government begins to cut
Britain's Chancellor of the Exchequer today unveiled more than £6-billion, or almost $9-billion U.S., in cuts as the new government moves quickly to make good on a pledge to slash its deficit. George Osborne said £2-billion would come from cutting in areas including information technology, suppliers and property, £700-million from not adding workers to the government payroll and £500-million from other spending, according to The Associated Press.
"This is the first time this government has announced difficult decisions on spending," he told reporters. "It will not be the last." Read the story
Greece hunts for tax cheats
Desperate to get its hands on every euro it can find given its debt crisis and notorious tax system, Greece is scouring for tax cheats among the ranks of its highly paid pro soccer players, artists and lawyers. Yannis Kapeleris, secretary general of a special audit office in the government's finance minister, said in a radio interview yesterday that authorities are "looking into the cases of artists, footballers, lawyers and nightclub owners for tax offences," Agence France Presse reported.
According to his comments carried by the news agency, Mr. Kapeleris said auditors are comparing tax returns whose lower incomes don't appear to match lifestyles.
The Ethnos newspaper said at least three soccer stars, three singers and four lawyers are being audited.
Related: Brian Milner on why Greek-style medicine may be worse than the disease
Gulf states to study euro crisis
The troubles in the euro zone have prompted four Gulf states to study the implications for their own push for a currency union. Kuwait's Foreign Minister Sheikh Mohammad al-Sabah said yesterday that the Gulf Co-operation Council, made up of Kuwait, Saudi Arabia, Bahrain, and Qatar, is taking time to look at the developments among the 16 countries that share the euro, though he said that does not necessarily mean a delay. "We want to do it at the right time and the right format," he said
China repeats yuan pledge
China today repeated its pledge to eventually allow its currency to appreciate, but said it will march to its own drummer, not that of the United States. As U.S. and Chinese officials met in Beijing to launch two days of talks, President Hu Jintao, speaking onstage with U.S. Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton nearby, said his government would continue to "steadily advance" currency reform but would do so "under the principle of independent decision-making, controllability and gradual progress." The U.S. and other countries have pushed Beijing to allow the yuan to rise, citing uneven trade flows. Read the story
BP: 'Everyone is frustrated'
The man in charge of efforts by BP PLC to contain the oil spill in the Gulf of Mexico appeared on three U.S. TV morning shows today to stress that the energy giant is doing all it can as the company said its costs have now mounted to about $760-million (U.S.). Amid mounting U.S. criticism of the company's failure to stop the oil link after the explosion on the Horizon Deepwater rig, chief operating officer Doug Suttles said that "everyone is frustrated. I think the people of the region are frustrated. I know we are, I know the government is. The fact that it's taken this long is painful to everybody."
Related: U.S. turns up heat on BP over spill
IBM to buy AT&T unit
AT&T Inc. is selling to IBM Corp. a "business to business" software unit it acquired a decade ago. AT&T, then called SBC Communications, is selling the Sterling Commerce business to IBM for $1.4-billion (U.S.), having acquired the operation in 2000 for almost $4-billion. Read the story
Economists more upbeat on U.S.
Economists are becoming more upbeat on the outlook for the United States. An outlook being released today by The National Association for Business Economics shows forecasters more optimistic than when they were last polled in February. The panel has boosted its projection for economic growth this year to 3.2 per cent and expects the economy to expand at a similar pace next year.
"Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," NABE president Lynn Reaser said, according to The Associated Press, although she gave a nod to the mounting troubles in Europe as the group also warned of the growing deficits in the United States.
U.S. home sales jump
Sales of existing homes in the United States jumped today by a larger-than-expected 7.6 per cent in April as buyers rushed to get in on a government tax credit before it expired. The National Association of Realtors today released data showing sales at their highest since last November. That was when the credit was originally set to expire, though it was extended. There are, of course, fears that with the end of the tax credit, home sales could slump again.
"So now what?" said BMO Nesbitt Burns senior economist Jennifer Lee. "See what happens in the next few months as housing forges on without widespread government assistance."
From today's Report on Business
How RBC is making waves in New York
At The Top: Ken Rowe's feet firmly on ground at IMP
Tim Cestnick on taxes: Selling the keys to the family cottage