Asian shares down as US faces shutdown

Asian markets have slumped as the US government edged towards a shutdown over a budget battle.

The face-off in Washington also sent the US dollar lower, while the euro suffered selling pressure from a crisis in Italy that has left the country's five-month-old government on the brink of collapse.

Tokyo on Monday fell 2.06 per cent, or 304.27 points, to 14,455.80, Sydney shed 1.66 per cent, or 88.2 points, to end at 5,218.9 and Seoul eased 0.74 per cent, or 14.84 points, to 1,996.96. Hong Kong shed 1.50 per cent, or 347.18 points, to close at 22,859.86.

But Shanghai rose 0.68 per cent, or 14.64 points, to close at 2,174.67 after a survey by banking giant HSBC showed Chinese manufacturing expanded further in September.

Traders have been spooked by the latest row on Capitol Hill, with the US government on the brink of shutting down after the House of Representatives approved a Republican bill seeking to delay President Barack Obama's health care law.

Legislators now have until midnight on Monday to reach an agreement to keep the government open, but analysts say the chances of a breakthrough are slim.

Obama has threatened to veto any bill that undercuts his sweeping health overhaul, while Democratic Senate Majority Leader Harry Reid says his chamber will reject the bill.

Adding to the crisis is a deadline to raise the country's borrowing limit, which comes up in mid-October. With Republicans determined not to raise the debt ceiling unless Obama gives way on the health bill, there are fears that Washington will run out of cash and default on its repayments.

'Things are far from the 'panic stage', but they don't have to be for investors to be spooked by the apparent intractability of the US political deadlock,' said Tachibana Securities market analyst Kenichi Hirano.

The impasse weighed on the US dollar on Monday, with the unit weakening to Y97.87 from Y98.24 in New York on Friday.

The euro fell to $US1.3500 and Y132.16 compared with $US1.3519 and Y132.88.

The single currency suffered selling pressure after Italian Prime Minister Enrico Letta called a vote of confidence in his left-right government, as former premier Silvio Berlusconi pulled his party's ministers out of the coalition.

President Giorgio Napolitano will have to mediate to find a way out of the latest political impasse, and has said he would dissolve parliament, triggering new elections, only 'if there are no other solutions'.

On oil markets New York's main contract, West Texas Intermediate for delivery in November, fell $US1.35 to $US101.52 in afternoon trade. Brent North Sea crude for November was down 95 US cents to $US107.68.

Gold cost $US1,340.86 at 1805 AEST, compared with $US1,324.60 on Friday.

In other markets:

- Taipei fell 0.69 per cent, or 56.81 points, to 8,173.87.

Taiwan Semiconductor Manufacturing Co shed 2.43 per cent to $Tw100.5 while Hon Hai Precision was 0.52 per cent lower at $Tw75.9.

- Wellington eased 0.97 per cent, or 46.29 points, to 4,736.39.

Telecom fell 1.9 per cent to $NZ2.33 and Warehouse Group was off 2.92 per cent at $NZ3.66, while Air New Zealand rose 0.33 per cent to $NZ1.52.

- Manila slipped 2.95 per cent, or 188.01 points, to 6,191.80.

Alliance Global Group fell six per cent to 23.50 pesos while SM Investments dropped 4.41 per cent to 7.80 pesos.

source: bigpondnews.com

Spain public debt hits record high

Spain's accumulated public debt soared to a record high at the end of June, the Bank of Spain says, shattering government targets despite a relentless austerity squeeze.

Spain, which boasts the eurozone's fourth largest economy, had racked up an unprecedented public debt of 942.8 billion euros ($A1.36 trillion) by mid year, the bank said on Friday.

The figure was equal to 92.2 per cent of the nation's total annual economic output - up 14.7 percentage points from the same period last year.

With just half of the year gone, Spain had already missed its target of limiting the public debt to 91.4 per cent of gross domestic product in 2013, the figures showed.

Prime Minister Mariano Rajoy's conservative government is battling to rein in the soaring public debt by curbing spending.

The ensuing budget cuts have sparked angry street protests as Spaniards endure a two-year recession which pushed the unemployment rate to 26.26 per cent in the second quarter of this year.

High unemployment leads to lower tax income and bigger social security bills for the state, making it even harder to plug the hole in Spain's public accounts.

Rajoy's Popular Party government says it is determined to pursue austerity measures to help the country save 150 billion euros between 2012 and 2014.

It aims to curb the annual public deficit from 7.0 per cent of economic output last year to 6.5 per cent in 2013, on the way to finally bringing it below the European Union-agreed ceiling of 3.0 per cent by 2016.

The Bank of Spain also revised up the first-quarter figures to show the public debt amounted to 90.1 per cent of gross domestic product rather than 88.2 per cent, in line with recent downward revisions of Spain's economic growth.

source: bigpondnews.com

Profits embarrass Aust banks- Shepherd

Australian banks are 'almost embarrassed' to report huge profits, the Business Council of Australia (BCA) president says in the wake of the Commonwealth Bank of Australia's (CBA) record profit.

The CBA on Wednesday posted a $7.09 billion full year profit, the largest ever made by an Australian bank, but chief executive Ian Narev struck a cautious tone as he delivered the news on Wednesday.

'This is a good result given the uncertain environment,' Mr Narev said.

BCA president Tony Shepherd said Mr Narev's modest response to the profit was a distinctly 'Australian thing'.

'Companies are almost embarrassed (to report a major profit) ... particularly the banks,' Mr Shepherd told an Australian British Chamber of Commerce lunch in Melbourne.

'Companies aren't embarrassed in the (United) States about reporting a record profit, in fact the country will celebrate them.

'But we have this problem here with companies making a profit.

'The fact that our banks are profitable is one of the things that got us through the GFC (global financial crisis).

'Ian is quite correctly saying, I'm not sure how long this is going to last, our cost of funds is rising, business confidence and consumer confidence is low, and so we need to continue to work really hard to maintain our profitability.'

'But if he'd come out and said,We just shot the lights out with the profit,' everyone would be all over him.'

source: skynews.com.au

Standard Chartered CEO takes charge of Iran probe talks

(REUTERS) - Standard Chartered's chief executive Peter Sands has flown to New York to take personal control of the bank's attempts to reach a settlement with United States (US) regulators over allegations it hid transactions involving Iran.

Mr Sands is also ready to attend a hearing set for Wednesday at which the London-based bank has been told by the New York banking regulator that it must demonstrate why its state banking license should not be revoked over the transactions.

A Standard Chartered spokesman said the bank was waiting to hear from the Department of Financial Services (DFS) what form the hearing will take.

"Peter is happy to go if that's appropriate," a Standard Chartered spokesman said on Tuesday.

source: straitstimes.com

Philippine bank in $1 billion rights issue

MANILA, Philippines -- BDO Unibank, the Philippines' largest lender, launched a record $1 billion rights offer Tuesday, as it looks to boost its capital base to comply with new global banking rules due to come into effect.

The bank, controlled by the Philippines' richest man Henry Sy, said in a statement it will sell 895.2 million common shares to existing shareholders at 48.60 pesos ($1.12) per share.

The offer will run from June 18 to 27 but will only be available to those who hold BDO stock as of June 7, said its chairwoman, the shopping mall tycoon's daughter Teresita Sy.

"This capital raising is intended to support the growth and expansion of the bank amidst the positive sentiment on the economy," Teresita Sy said in the statement.

"At the same time (it will) strengthen the bank's capital position in anticipation of new Basel III requirements," she said.

Existing shareholders will be entitled to buy one share for every three they already own.

BDO Unibank closed 0.15 percent higher on Tuesday at 65.05 pesos.

The additional shares have been given a tentative listing date of July 4.

The move comes as the so-called Basel III rules mandating banks increase their capital-to-assets ratios, which are designed to avert another crisis like that seen in 2008, are set to be rolled out from next year.

The new rules will require banks to raise their high-quality core capital to 7.0 percent of total assets from the current 2.0 percent.

source: interaksyon.com