World equities continued to fall this afternoon amid continued speculation that Europe's leaders will struggle to gather financial support for their plan to tackle the Eurozone debt crisis.
Meanwhile the OECD have cut global growth forecasts and warned that the Eurozone is heading towards a sharp economic downturn.
By 4pm (London time) the FTSE 100 had dropped 1.68% to 5606.53, while the FTSE 250 plummeted 2.26% to 10,529.72. Wall Street was also down, with the S&P 500 1.35% lower at 1267.71 and the Dow 1.23% down to 12,080.16.
OECD cuts growth forecast
The Organisation for Economic Cooperation and Development (OECD) announced today that the Eurozone is set for a sharp economic slowdown in 2012, with some countries are set for negative growth.
The report warned that a failure to restore confidence could prompt a major contraction in developed countries, and slashed its 2012 growth forecast for the Eurozone and the US. Eurozone growth rates were reduced to 0.3%, well below the 2% forecast five months ago, whilst US growth estimates were revised to 1.8% from 3.1%.
However the organisation expects growth will pick up in 2013 with a 2.5% expansion, but warns there are major downside risks to the global outlook if leaders fail in their bid to stem the sovereign debt crisis.
The OECD further reiterated that advanced economies are looking at two years of weak growth and high unemployment. The statement comes after EU unemployment figures, released this morning, showed that unemployment in Europe increased to 10.2% in September from an upwardly revised 10.1% in August.
On a positive note, they announced that if policy measures announced on 26 October at the EU leaders' summit were implemented effectively, growth could prove better than expected.
Panasonic forecasts largest annual net loss in a decade
Japanese electronics maker Panasonic, forecast an annual net loss of 420 billion yen ($5.5 billion), its biggest in a decade, as restructuring costs soared, and the strengthening yen and weak demand in the US and Europe eroded income.
The quarterly loss, which will be its second biggest ever, compares with the company's previous forecast for a net profit of 30 billion yen in the year to March 2012 and last year's net profit of 74 billion yen. The soaring yen, with the USD/JPY spreads reaching a record high of 75.59 today, is making it harder for Panasonic to compete with Korean firm Samsung.
Panasonic reported this morning that its third-quarter operating profit was 42 billion yen, beating its own forecast of 4.4 billion yen, and compared to an operating profit of 85.2 billion yen a year earlier. Shares of the company closed 2.1% lower before the results, after already falling 31% this year so far.
MF Global files for bankruptcy
Also in online spread betting news, MF Global, the futures broker run by former Goldman Sachs chief Jon Corzine, has filed for bankruptcy after a tentative deal with a buyer fell through. The bankruptcy filing listed MF Global with $100 million to $500 million in assets and $10 million to $50 million in estimated liabilities.
Earlier this month the company reported third-quarter net earnings of $202.5 million on net revenues of $385.6 million, up from net profit of $148.8 million a year earlier.
The threat of bankruptcy heightened last week when a slew of credit rating downgrades (to junk territory) threatened the company's viability and left it racing to find a buyer. Jon Corzine, former chief executive of Goldman Sachs and the former New Jersey governor, had hoped to expand the business from its roots as a futures broker into a full-service investment bank.
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'Online Spread Betting: Futures Broker MF Global Files for Banrukptcy', Article by IG Index, last update: 31-Oct-11
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