Japan and India sign free-trade deal after sales slide

 

India and Japan represent the fast-growing new and stagnating old guard of the global economy

Japan and India have signed a free-trade agreement that will see tariffs on 94% of goods scrapped within a decade. 

SEC to wean markets off credit ratings

(Reuters) - Securities regulators on Wednesday will move to scale back markets' reliance on credit rating agencies, after the financial crisis laid bare the industry's shortcomings.
The Securities and Exchange Commission is expected to propose that one of its key documents for securities offerings no longer include ratings references designed to give investors confidence in the company behind the securities offering.
The SEC's effort to extract rating references predates the financial crisis, but it lost steam when global financial markets started going into panic mode.
In 2009 the agency stripped some rating references from regulations, saying it was concerned about undue reliance on the ratings, but the removal of everything was not mandatory.
The Dodd-Frank financial law, however, changes that by requiring government agencies to go through their regulations and remove rating references.
On Wednesday, the SEC will resuscitate a similar plan it proposed in 2008, in its first move to remove ratings from its regulations since the Dodd-Frank law was enacted in July.
Credit-raters have often been blamed for helping fuel the crisis by giving overly positive ratings to loans backed by toxic subprime mortgages.
Dodd-Frank mandates some credit-rating reforms, such as mitigating conflicts of interest, holding credit-raters accountable for their ratings and reducing investor reliance on them.
But credit-raters such as Moody's Corp, McGraw-Hill Cos' Standard & Poor's, and Fimalac SA's Fitch Ratings are not facing the same sweeping overhaul as banks and mortgage lenders, largely because lawmakers could not come up with a good alternative to what they offer.
The lack of a good alternative has even caused some financial regulators to worry that Dodd-Frank goes too far, especially bank regulators who rely on ratings providers to assess the risk associated with a bank's capital.
MORE THORNY ISSUES AWAIT
The SEC's proposal on Wednesday specifically would strip rating references from a form known as an S-3, a simplified registration form designed to expedite the process for a primary offering of public securities.
A company can qualify to file an S-3 if it meets criteria that make the SEC comfortable with it's getting greater access to the public securities market.
Companies offering nonconvertible debt securities, for instance, can qualify for an S-3 filing as long as the debt is given an investment grade rating.
The SEC plans to propose stripping out that rating requirement and replacing it with an alternative.

Asia stocks mostly lower: banks lift Japan, Sydney

BANGKOK – Asian shares were mostly lower Tuesday, battling inertia following Lunar New Year holidays but with a strong showing by banks that hoisted markets in Australia and Japan.

Oil prices hovered above $87 a barrel as fears ease that protests in Egypt could disrupt Middle East crude supplies. In currencies, the dollar was little changed against the yen and lower against the euro.
Deal news out of the U.S. boosted financial stocks on Wall Street and also helped power banking shares in Japan.
The Nikkei 225 rose 0.5 percent to 10,642.81, a day after closing at a nine-month high. Financial giants led the way. Mitsubishi UFJ Financial Group added 1.6 percent, Mizuho Financial Group was up 1.8 percent and Sumitomo Mitsui Financial Group jumped 2.2 percent.
Australia's S&P/ASX 200 added 0.4 percent to 4,889.70. National Australia Bank Ltd. jumped 2.6 percent after reporting higher quarterly earnings and Commonwealth Bank of Australia was up 1 percent.
Hong Kong's Hang Seng index slipped 0.5 percent to 23,444.10 and Taiwan's benchmark fell 0.1 percent to 9,135.01. South Korea's Kospi was down 0.3 percent at 2,075.66, with some high-tech blue chips losing ground. Samsung Electronics Co. was off 0.7 percent.
Analysts said it was difficult to pinpoint the reason for the muted performance, given the strong session Monday on Wall Street that saw the Dow Jones industrial average rise for the sixth straight day — its longest winning streak since November. The index climbed 69.48 points, or 0.6 percent, to 12,161.63.
Several big acquisitions buoyed investor optimism as did a strong earnings report from Loews Corp. A bubbly Dow and intense efforts by leaders in Europe to contain the region's debt crisis are luring investors to developed markets from emerging ones where inflation is a persistent threat.
"We were on a down trend before the Chinese New Year," said Jackson Wong, vice president of Tanrich Securities in Hong Kong. "We are now retreating and pretty much on the down trend."
Expectations that China's central bank will either raise interest rates or hike reserve requirements have been pressuring stocks, he said.
"The investor view is that China's equity markets might not rise this year because of the rising rate environment," Wong said. "The main theme now seems to be that money is leaving emerging markets."
The broader Standard & Poor's 500 index rose 8.18, or 0.6 percent, to 1,319.05. Financial companies posted the largest gain of any of the 10 company groups that make up the S&P index.
The tech-heavy Nasdaq composite gained 14.69, or 0.5 percent, to 2,783.99.
In currencies, the dollar was nearly unchanged at 82.30 yen from 82.29 yen late Monday. The euro rose slightly to $1.3614 from $1.3591.
Benchmark crude for March delivery was down 15 cents at $87.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.55 to settle at $87.48 Monday as investors shifted their focus from unrest in Egypt to the U.S. economy.

Stocks advance on M&A with further gains seen

 

Traders work on the floor of the New York Stock Exchange 

NEW YORK (Reuters) – Merger activity drove the Dow and S&P to two-and-a-half-year highs on Monday in the latest in a series of mileposts that point to more gains ahead.
Buying accelerated after the S&P 500 broke through the 1,313 mark, taking the index further into levels that prevailed before the financial crisis. More than two stocks rose for every one that fell on both the New York Stock Exchange and Nasdaq, but the day's rise came on lighter-than-average volume.
Diversified industrial company Danaher Corp (DHR.N) agreed to buy medical diagnostics company Beckman Coulter Inc (BEC.N) for about $6.8 billion. Oil driller EnsCo Plc (ESV.N) said it would buy Pride International Inc (PDE.N) for about $7.3 billion.
"The size of these deals is an indication that the buyers feel comfortable putting that cash to work while the companies being bought are undervalued," said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $105 billion.
"The level of the broader market is reasonable, but there are these individual situations that deserve a higher premium than the market is getting over all."
Danaher Corp rose 2.2 percent to $49.03 while Beckman Coulter gained 10 percent to $82.65. EnsCo fell 4.2 percent to $52.13 while Pride International rose 15.7 percent to $39.80.
With the 1,313 level breached, stocks face little by way of technical resistance until the 1,400 level on the S&P.
The Dow Jones industrial average (.DJI) was up 69.40 points, or 0.57 percent, at 12,161.55. The Standard & Poor's 500 Index (.SPX) was up 8.18 points, or 0.62 percent, at 1,319.05. The Nasdaq Composite Index (.IXIC) was up 14.69 points, or 0.53 percent, at 2,783.99.
The S&P is up 4.9 percent so far in 2011, adding to the gains it notched mostly in the latter half of 2010. The size and swiftness of the advance has prompted many analysts to call for a correction, though none has materialized.
UBS raised its 2011 target for the S&P 500 index by 7.5 percent to 1,425 from 1,325, citing an improving outlook for the economy and earnings.
Loews Corp (L.N) reported a better-than-expected 16 percent jump in profit, sending shares of the conglomerate up 4.5 percent to $43.27.
About 72 percent of S&P 500 companies that have reported results so far posted stronger-than-expected earnings, according to Thomson Reuters data. Investors expect aggregate earnings rose 37 percent in the last quarter, the highest estimate for that period in more than 10 months.
Speaking to the U.S. Chamber of Commerce, President Barack Obama stepped up efforts to woo the business community, seeking their help to tackle "burdensome" corporate taxes, but offering no new initiatives.
"This was a pretty positive message that shows the President continuing to extend an olive branch to business," Dunigan said.
AOL Inc (AOL.N) has agreed to buy The Huffington Post for $315 million. The stock fell 3.4 percent to $21.19.
Volume was light, with about 6.89 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 8.47 billion.