Pakistani stocks fall after rates kept on hold

Pakistani stocks fell in early trade on Monday as investors reacted bearishly to a decision by the central bank over the weekend to leave interest rates unchanged despite an alarming slowdown in the economy, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index .KSE was 0.70 percent, or 37.85 points, lower at 5,339.57 points on turnover of 14.3 million shares by 9:43 a.m.

"There were some hopes in the market that the central bank might cut the interest rates by 50 basis points," said Sajid Bhanji, a dealer at brokers' Arif Habib Ltd.

Dealers said investors were also booking profits as the KSE-index gained 9 percent last week.

Pakistan's central bank said on Saturday its key policy discount rate would be left unchanged at 15.0 percent, although economic growth was set to fall to 3.7 percent in the fiscal year, the slowest since 2000/01.

The central bank raised interest rates by 2 percentage points in November, the same month it signed a $7.6 billion loan with the International Monetary Fund to stave off a balance of payments crisis.

State Bank of Pakistan Governor Salim Raza said there would be another review in April, leaving open the possibility of a change in rates later.

Analysts had expected the central bank to keep interest rates on hold but say the need for rate cuts is becoming more urgent as the economy weakens.

The government's top economic official said last authorities might start cutting interest rates this year as inflation eases.

Sensex below 9100; DLF, JP Associates, HDFC plunge

MUMBAI: Selling in frontline stocks intensified Monday as traders squared positions following a weak opening of European markets. Poor results from real estate companies and rate sensitive banking stocks were the worst hit.

At 2:35 pm, Bombay Stock Exchange’s Sensex was at 9080.10, down 344.14 points or 3.65 per cent. The index touched an intra-day low of 9071.39 and high of 9363.58.

National Stock Exchange’s Nifty was at 2774.50, down 100.3 points or 3.49 per cent. The broader index touched a low of 2764.75 and high of 2873.45.

BSE Midcap Index was down 0.88 per cent and BSE Smallcap Index declined 0.78 per cent.

DLF (-12.27%), Jaiprakash Associates (-10.49%), Reliance Infrastructure (-7.61%), HDFC (-6.54%) and Hindalco (-5.91%) were the top Sensex losers.

Maruti Suzuki (0.53%) was the lone index gainer.

All sectoral indices were in red with realty being the worst hit on account of poor results. BSE Realty Index was down 8.89 per cent, BSE Metal Index fell 4.72 per cent, BSE Bankex declined 4.34 per cent and BSE Oil&gas index was down 2.78 per cent.

Maruti Suzuki announced highest ever domestic and total sales in January. During the month, the company sold 67,005 units in the domestic market, up 5.6 per cent over corresponding month last fiscal. The previous highest monthly domestic sales were 65,216 units in November 2007.

DLF 's net profit for quarter ended Dec was down 68.72 per cent to Rs 670.79 crore from Rs 2144.98 crore in the same quarter a year ago. Revenues fell 62.02 per cent to Rs 1366.67 crore from Rs 3598.42 crore. Other income was up 157.65 per c ent to Rs 136.12 crore from Rs 52.83 crore.

Unitech’s Q3 net profit was down 74.12 per cent to Rs 136.05 crore, sales was down 57.15 per cent to Rs 489.39 crore. The company is in talks with three private equity players to sell about 20-26 per cent of its equity for an estimated Rs 2,500 crore. The funds would go into diluting its debt load, which is currently at Rs 8,000 crore. The scrip was down 8.24 per cent.

Indiabulls Real Estate Q3 consolidated net profit was at Rs 11.33 crore versus Rs 25.84 crore. Net sales stood at Rs 38.95 crore from Rs 81.56 crore. The stock was down 9.63 per cent.

Sensex declines most in three weeks, loses 3.8%

The 30-share BSE index ended at 9,066.70, 357.54 points down and 50-share NSE Nifty lost 108.20 points to close at 2766.65
Mumbai: The Bombay Stock Exchange’s (BSE) benchmark index fell the most in three weeks on Monday. Auto makers and developers declined after Tata Motors Ltd posted a loss and Mahindra and Mahindra Ltd (M&M) and DLF Ltd reported earnings that lagged behind analysts’ estimates.

Tata Motors fell 3.9%, while M&M declined 3.5%. DLF dropped 14% to its lowest since it went public in 2007.

“Analysts have overestimated company earnings,” said Jayesh Shroff, who helps manage $2 billion (Rs 9,800 crore) in equities at SBI Asset Management Co. Ltd in Mumbai. “They haven’t estimated the extent of erosion in profits correctly.”

The Sensex fell 357.54 points, or 3.8%, to 9,066.70, the most since 7 January. The S&P CNX Nifty index on the National Stock Exchange (NSE) slid 108.15 points, or 3.8%, to 2,766.65.

DLF fell 14% to Rs153. The company reported a 69% drop in third quarter (Q3) net income to Rs671 crore on 31 January. That was lower than the Rs1,590 crore median estimate of analysts surveyed by Bloomberg. DLF had its rating cut to “reduce” by Kotak Institutional Equities Research after the earnings.

Unitech Ltd traded 8.9% lower at Rs29.30. Profit declined 74% to Rs136 crore, missing the Rs300 crore median estimate in a Bloomberg survey.

Tata Motors dropped 3.9% to Rs143.75 after reporting its first quarterly loss in seven years. The company had a net loss of Rs263 crore in the quarter ended 31 December. The median estimate in a Bloomberg survey was for net income of Rs14.20 crore. The loss doesn’t include financials of Jaguar and Land Rover.

M&M fell 3.5% to Rs291.75 after Q3 profit tumbled by 99%, more than expected, as currency losses mounted and sales fell. Net income in the three months ended 31 December dropped to Rs1.20 crore, lagging behind the Rs109 crore profit estimate of analysts surveyed.

Kingfisher Airlines Ltd dropped Rs2.35, or 6.7%, to Rs32.70 after the company said its Q3 loss widened to Rs413 crore, from Rs191 crore a year earlier.

SpiceJet Ltd declined Re0.74, or 5.3%, to Rs13.26 after the company reported a Rs17.96 crore net loss in the three months ended December, compared with a Rs9.34 crore profit a year earlier.

State Bank of India fell Rs55.20, or 4.8%, to Rs1,095.80 after the lender said it will keep interest rates on new home loans unchanged at 8% for a period of one year.

Stocks mostly lower after manufacturing report

NEW YORK (AP) -- Wall Street extended a monthlong slide Monday, largely shaking off a better-than-expected reading on manufacturing. Tech stocks outperformed the market, giving the Nasdaq composite index a slight gain.

The Institute for Supply Management said manufacturing activity rose during January from a record low, but still fell for the 12th straight month as the recession spread around the world. The trade group of purchasing executives said its widely-followed survey of manufacturing rose to 35.6 percent in January from 32.9 in December. That was well above the reading of 32.6 economists had expected.

"It's good that it came in better than expected, but it's not one of the key numbers," said Jim Herrick, director of equity trading at Baird & Co., referring to the manufacturing index.

The market was more concerned about a Commerce Department report that personal spending fell for the sixth straight month in December by 1 percent. Analysts had predicted a decline of 0.9 percent. Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous about the economy.

The department also said construction spending dropped by 1.4 percent in December, slightly worse than the 1.2 percent decline economists expected.

The major market indexes have fallen for four straight weeks on increasing pessimism about the economy, and the Dow Jones industrials and the Standard & Poor's 500 had their worst January ever.

The tech sector was the one bright spot on Monday. Gains in the sector helped to offset some of the losses in the broader market.

"Technology is one of the sectors that people, businesses are always going to need," said Keith Springer, president of Capital Financial Advisory Services. "There's a feeling that corporations are going to continue to invest in technology."

In late morning trading, the Dow fell 68.34, or 0.85 percent, to 7,932.52, after earlier falling as much as 121 points. The Standard & Poor's 500 index fell 3.09, or 0.37 percent, to 822.79, and the Nasdaq rose 8.00, or 0.54 percent, to 1,484.42.

The Russell 2000 index of smaller companies rose 0.36, or 0.08 percent, to 443.89.

Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 466.1 million shares.

As the economy deteriorates and consumers hunker down, investors are once again looking to Washington for help. But the market has been growing worried about government gridlock over a stimulus package for individuals and businesses.

The stimulus package that passed the House last week now goes to the Senate, where Republican leader Mitch McConnell said Sunday the bill backed by President Barack Obama and congressional Democrats could be defeated if it's not stripped of what Republicans deem unnecessary spending.

Investors are also concerned about the nation's ailing banks. So far, no "bad bank" plan has emerged from the White House. Such a plan would allow the government to take the riskiest assets off of banks' books and put them into a government-controlled entity.

Last week, the Dow closed down 0.90 percent, the S&P fell 0.70 percent, and the Nasdaq composite index lost 0.10 percent. Trading is likely to be fractious again this week as investors await the government's January jobs report, due Friday morning.

"The market doesn't like uncertainty," Herrick said. "Right now we're in a very uncertain time. Until we get some clarity on how deep this recession is, the market is going to be in a trading range."

Investors will also be looking to more corporate earnings reports for an indication of the economy's health. While there have been a few bright spots among the reports so far, the majority have been disappointing.

In earnings news Monday, toy maker Mattel Inc. said its fourth-quarter profit skidded 46 percent, well below analysts' estimates, as the recession curbed consumer spending.

Health insurer Humana Inc. reported that its fourth-quarter profit dropped 28 percent, driven by higher claim expenses from its stand-alone Medicare prescription drug plans and a plunge in its commercial business.

Mattel shares plunged $2.16, or 15.22 percent, to $12.03 Humana jumped $3.25, or 8.57 percent, to $41.18.

Among tech stocks, Microsoft Corp. rose 83 cents, or 4.9 percent, to $17.93, and Intel Corp. added 28 cents, or 2.2 percent, to $13.18.

Early Monday, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.78 percent from 2.85 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose slightly to 0.24 percent from 0.22 percent late Friday.

The dollar was mostly higher against other major currencies, while gold prices fell.

Light, sweet crude fell 76 cents to $40.92 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 1.50 percent. In afternoon trading, Britain's FTSE 100 fell 2.16 percent, Germany's DAX index fell 1.71 percent, and France's CAC-40 fell 1.93 percent.

Stocks slide after rise in unemployment rate

Stocks tumble on worries that rise in unemployment will further hurt spending; Dow falls 143

NEW YORK (AP) -- The first full week of 2009 didn't bring Wall Street any huge shocks, but it didn't bring much for investors be happy about, either.

A jump in unemployment sent stocks sharply lower Friday as investors feared that Americans won't soon deviate from their tightened budgets. The Dow Jones industrial average fell 143 points to end the week down nearly 5 percent, its worst week since November.

The Labor Department's much-anticipated report showed employers cut 524,000 jobs in December, a smaller decline than the loss of 550,000 jobs economists forecast. But the unemployment rate jumped to a 16-year high of 7.2 percent -- more than the 7 percent economists predicted -- from 6.8 percent in November.

Lost jobs were not a shock to Wall Street, but the news still stung.

"People say that they know how bad the economy is. But they don't know how it feels to have the reality hit home," said Stu Schweitzer, global markets strategist at J.P. Morgan's Private Bank. "It's not the facts -- it's how the facts feel. And it feels terrible to have so many Americans losing jobs, and so many more likely to follow in the coming months."

Rising unemployment tends to erode consumer spending, which accounts for more than two-thirds of U.S. economic activity. For all of 2008, the economy lost 2.6 million jobs -- the most since 1945. Retailers have been reporting dismal holiday sales figures, and Wall Street is concerned about how long the economy will be suffering a pullback in consumer spending.

President-elect Barack Obama on Friday called December's jobs loss "a stark reminder of how urgently action is needed" to revive the nation's staggering economy. Obama is planning on a stimulus package costing about $800 billion, consisting of tax cuts and other ways to try to help individuals and businesses.

But investors were nonetheless worried about the prospects for the economy. Warnings from industry leaders during the week about business conditions underscored the economy's troubles. Wal-Mart Stores Inc., chip maker Intel Corp., aluminum producer Alcoa Inc. and media company Time Warner Inc. all told Wall Street their results suffered in the fourth quarter.

The Dow Jones industrial average fell 143.28, or 1.64 percent, to 8,599.18. The blue chips' 4.8 percent decline for the week was the biggest point and percentage loss since the week ended Nov. 21.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 19.38, or 2.13 percent, to 890.35, and the Nasdaq composite index fell 45.42, or 2.81 percent, to 1,571.59.

For the week, the S&P 500 slid 4.5 percent and the Nasdaq lost 3.7 percent.

The Russell 2000 index of smaller companies dropped 20.71, or 4.13 percent, to 481.30.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to a light 4.13 billion shares compared with 4.34 billion shares traded Thursday.

Bond prices mostly rose Friday as investors sought safety from the grim economic data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.40 percent from 2.44 percent late Thursday. The yield on the three-month T-bill, considered one of the safest short-term investments, slipped to 0.07 percent from 0.08 percent compared with late Thursday.

The dollar mostly rose against other major currencies, while gold prices fell.

Light, sweet crude fell 87 cents to settle at $40.83 on the New York Mercantile Exchange after dipping as low as $39.38.

Investors also digested a Commerce Department report that businesses cut wholesale inventories for a third straight month in November as sales continued to plunge. Wholesale inventories dropped 0.6 percent, and sales were down a record 7.1 percent.

Energy companies were among the hardest hit stocks Friday after months of declining oil prices and a loss for the week of about $10 a barrel. Occidental Petroleum Corp. fell $2.70, or 4.6 percent, to $56.30. Schlumberger Ltd. fell $2.83, or 6.2 percent, to $43 after announcing plans to cut about 5 percent of its work force due to the drop in crude. Oil is down from more than $147 a barrel in July, hurting demand for exploration and production services.

Citigroup Inc. fell 41 cents, or 5.7 percent, to $6.75 after board member Robert Rubin, the former U.S. Treasury secretary, resigned as a senior adviser to the big financial services company. The company said he will remain a director until his term expires at the next annual meeting in the spring. Rubin has drawn criticism for his role in the bank's recent problems that drove it to seek federal assistance.

The rise in unemployment also hurt consumer discretionary stocks like retailers. Target Corp. fell $2.12, or 5.7 percent, to $35.40, while Macy's Inc. fell 63 cents, or 5.8 percent, to $10.30.

Wall Street is also girding for dismal fourth-quarter earnings reports from companies starting next week.

"Everyone is expecting bad results," said Jim Swanson, chief investment strategist at MFS Investment Management. But he said Wall Street has also set expectations so low that results would have to be far worse than expected to startle the market.

"Anything that's not catastrophic will probably be greeted mildly or even a little bit positively," he said.

Nick Kalivas, vice president of financial research at the brokerage MF Global, said he believes investors will start buying back into the market again, but slowly and cautiously. "There's nothing in the short term that's going to give people real satisfaction," he said.

Overseas, Japan's Nikkei stock average fell 0.45 percent. Britain's FTSE 100 fell 1.26 percent, Germany's DAX index fell 1.97 percent, and France's CAC-40 fell 0.75 percent.

The Dow Jones industrial average ended the week down 435.51, or 4.82 percent, at 8,599.18. The Standard & Poor's 500 index fell 41.45, or 4.45 percent, to 890.35. The Nasdaq composite index ended the week down 60.62, or 3.71 percent, at 1,571.59.

The Russell 2000 index finished the week down 24.54, or 4.85 percent, at 481.30.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 8,935.80, down 378.77 points, or 4.04 percent, for the week. A year ago, the index was at 14,120.81.

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SECP unveils road map for demutualisation of stock exchanges

ISLAMABAD: Securities and Exchange Commission of Pakistan here on Friday unveiled the structure and road map for demutualisation of stock exchanges under which foreign stock exchange; investment bank or Central Depository Company could acquire management of any stock exchange.

National Assembly Standing Committee on Finance and Revenues met in the parliament house under the chair of Fauzia wahab. Secretary Finance, Dr Waqar Masood Khan and SECP Chairman, Razi-ur-Rehman Khan were present on the occasion.

Chairman, SECP, briefed the committee on salient features of the proposal and said that demutualized stock exchange shall comprised of strategic investor with 40 percent shares, general public with 20 percent shares and existing brokers with the remaining 40 percent. Explaining the term of strategic investor, chairman SECP said that it can be stock exchange of foreign country having capital and latest technology, investment bank and central depository company. The strategic investor would be allowed to obtain 40 percent shares with total neutral management control.

Local institutions will be getting shares from the remaining after sale of shares to strategic investor and general public. However, strategic investor may acquire more shares from general public by not exceeding its holding from 51 percent of paid up capital(further acquisition not before 3 years of acquisition), Razi explained. Trading Rights Entitlement (TRE) certificate holder and their connected persons shall not hold majority on the board of any stock exchange. Chairman of the board of any stock exchange shall not be a director who represents TRE certificate holder.

The commission may direct divestment of shares by initial shareholders, a member of public or TRE certificate holder if the holding exceeding 1 percent shares of a stock exchange. The same is applicable for any financial institution whose holding period exceeds 5 percent. The shares of stock exchanges shall be listed on any stock exchange and within time, as may be prescribed by the SECP and consultation with board of directors of stock exchanges. Stock exchanges shall not issue any new TRE certificate to any person until June 30, 2010 unless two third of TRE certificate holders decide otherwise. Thereafter 15 TRE certificates shall be offered for issuance from July 1, 2010 to December 31, 2019.

The SECP would have powers to order for integration of two or more stock exchanges after their submission of scheme of integration and compliance with procedures.

Offence & Penalties: The Commission would have powers to suspend the privilege and or hold a stock exchange liable to a penalty of Rs 20 million, in case offence is committed by it under the act. The same is applicable for any director, shareholder, TE certificate holder, and committee member to the limit of Rs 1 million.

Stock exchanges shall not make any amendment in Memorandum and Articles of Association, commence any proceeding of winding up, or sell immoveable asset, without approval of the SECP.

Time Lines: Within 30 days of promulgation of the bill stock exchanges would be required to constitute demutualisation committees fully authorised to approve valuation of stock exchanges, enter into negotiations with strategic investor and determine offer price for offer of sale of shares to general public.

Within 45 days of promulgation of the bill every stock exchange shall submit its valuation, revaluation. Propose authorised paid up capital, name of the proposed members and director, proposed plan for segregation of commercial and regulatory functions, draft memorandum, article of association and five year development plan.

Within 30 days of the receipt of the aforementioned information, the SECP shall approve the aforementioned and nominate six directors for each stock exchange.

Within 30 days of receipt of the aforementioned approval, a stock exchange shall adopt memorandum and article of association, allot shares to initial members, and deposit 60 percent of shares in block account, issue certificate and TRE to share holders.

Within 7 days of adoption, a stock exchange shall submit copy of resolution, certificates from auditors and CDC for allotment and deposit, respectively, of shares to initial shareholders. And within 7 days of receipt of aforementioned information, the registrar shall issue a certificate of re-registration, first directors shall replace the previous directors from such date and stock exchange shall stand demutualised.

Forex reserves increase by $343 million

KARACHI: The country's liquid foreign exchange reserves rose by over $343 million during last week.

The State Bank of Pakistan's statistics show that overall foreign exchange reserves registered an increase of $343 millions during the week that ended on January 03, 2009.

With the current upsurge, the country's foreign exchange reserves have mounted to $10.004 billion on 03 January 2009 as compared to $9.661 billion a week earlier. The major increase has been witnessed in the reserves held by the central bank as it showed an increase of $232 million during last week. The central bank reserves reached $6.601 billion on 03 January as compared to $6.369 billion on December 27, 2008.

Reserves held by the banks (other than SBP) also showed an increase of $111 million to $3.403 billion during the last week from $3.292 billion a week earlier.

European stocks take a pause from New Year rally

European markets lower as investors take profits; India's Sensex tumbles on Satyam warning

LONDON (AP) -- European stock markets fell Wednesday after a mixed performance in Asia as investors took profits on solid New Year gains, though sentiment remains relatively upbeat as markets look through grim economic news to a possible economic recovery later this year.

The FTSE 100 index of leading British shares was down 59.77 points, or 1.3 percent, at 4,579.15, while Germany's DAX fell 38.01 points, or 0.8 percent, to 4,988.30. France's CAC-40 was 8.45 points, or 0.3 percent, lower at 3,387.77.

Earlier, Asian markets were mixed as Japan's key index rose for a seventh day but Indian shares tumbled after the chairman of major outsourcing company Satyam Computer admitted to falsely inflating profits for years.

Stock markets have started the New Year in sprightly mood on relief that 2008 has been left behind and amid hopes that the incoming Obama administration will unveil a near $800 million stimulus plan that may help limit the depth and breadth of the U.S. recession.

Despite the early losses in Europe, many stock market observers think the rally will likely continue at least in the short term.

"Markets are looking decidedly perky at the beginning of the year as concerns about credit markets and deteriorating economic conditions are pushed into the background and expectations of the success of the massive stimulus in the pipeline globally together with the host of macro and micro measures announced over recent months, are pushed into the foreground," said Mitul Kotecha, an analyst at Calyon Credit Agricole.

Nevertheless, investors remain fully aware that the economic gloom will hang around for a long time to come. A raft of economic news this week, most notably Friday's U.S. jobs report for December, will likely provide markets with their first hurdles of 2009.

Indian investors were fully aware about how quickly fortunes can change. The Sensex index plunged more than 7.3 percent to 9,586.88 after Satyam's chairman, B. Ramalinga Raju, said in a letter to the board released to the stock exchange that the company's balance sheet was loaded with "fictitious" assets and "non-existent cash."

Shares of Satyam Computer Services Ltd. crashed 78 percent to 40 rupees. The Securities and Exchange Board of India, the market regulator, said it was investigating the incident.

In Hong Kong, the benchmark Hang Seng sank 3.4 percent to 9,239.24 after Bank of America Corp. sold part of its stake in No. 2 lender China Construction Bank Ltd. for $2.8 billion, a move to raise cash amid the economic turmoil. Construction Bank shares dived 8.8 percent, dragging down most banking stocks.

Tokyo's Nikkei 225 stock average rose 158.40 points, or 1.7 percent, to 9,239.24, as a weaker yen led investors to buy exporters. Honda Motor Co., Japan's No. 2 carmaker, jumped 11 percent, Nikon Corp. soared 15 percent and Sony Corp. added 8.7 percent.

Elsewhere, South Korea's Kospi gained 2.8 percent to 1,228.17, while benchmarks in Australia, Taiwan and the Philippines were higher by about 1 percent or more.

Overnight in New York, Wall Street again brushed off more dismal readings about the U.S. economy. Pending home sales fell to the lowest level on record in November, while November factory orders dropped nearly twice as much as economists had expected.

The Dow Jones industrial average gained 62.21, or 0.7 percent, to 9,015.10. Broader stock indicators showed steeper advances to end at their highest levels since Nov. 5. The Standard & Poor's 500 index rose 7.25, or 0.8 percent, to 934.70.

U.S. futures eased modestly, pointing to a soft open on Wall Street. Dow futures were down 55 points, or 0.6 percent, at 8,895 and S&P 500 futures fell 5.5 points, or 0.6 percent, to 925.10.

Oil prices were lower, with light, sweet crude for February delivery down 50 cents at $48.08 a barrel. Overnight, the contract fell 23 cents to settle at $48.58 a barrel after prices at one point reached $50.47.

The dollar fell 0.5 percent to 93.21 yen, while the euro was 0.5 percent higher at $1.3696.

Bank of America sells shares in Chinese bank

Bank of America sells part of Chinese bank stake for $2.8 billion, raising cash amid turmoil

BEIJING (AP) -- Bank of America Corp. raised more money Wednesday to cope with U.S. economic turmoil by selling part of its stake in China Construction Bank Ltd., China's second-biggest commercial lender, for $2.8 billion.

Bank of America sold 5.62 billion Construction Bank shares in a move that reduced its stake from 19.1 percent to 16.6 percent, according to a sale sheet viewed by The Associated Press.

Bank of America is raising money to weather the worst downturn for U.S. banks since the 1930s and absorb Merrill Lynch & Co., acquired in December. The bank received a $15 billion infusion as part of the U.S. government's $700 billion industry bailout.

"Bank of America is reducing its China Construction Bank shares due to its consideration of its own financial conditions under the current severe turbulence of the international financial crisis," the Chinese bank said in a statement. "Construction Bank expresses its understanding."

Phone calls to Bank of America spokespeople at its Asian headquarters in Singapore and Hong Kong were not answered.

The price was HK$3.92 (50.5 U.S. cents) per share, or a total of HK$22 billion (US$2.8 billion), an 11.9 percent discount from Tuesday's closing price. The sale was arranged by Merrill Lynch and UBS Corp.

Construction Bank shares plunged 8.8 percent in Hong Kong trading to HK$4.06, dragging down Hong Kong's key Hang Seng market index by 3.4 percent. Shares in China's biggest state-owned lender, Industrial & Commercial Bank of China Ltd., also fell sharply.

Bank of America, based in Charlotte, North Carolina, bought 9 percent of the Chinese bank in 2005 for $3 billion and the two launched a strategic partnership amid a flurry of tie-ups between Chinese lenders and foreign partners.

China has encouraged such partnerships in an effort to modernize the country's banking industry.

Bank of America paid $1.9 billion last May to increase its Construction Bank stake to 11 percent and raised it to 19.1 percent in November.

Other U.S. and European institutions are reported to be considering selling some of their stakes in Chinese banks to raise money.

Construction Bank, based in Beijing, is China's second-largest commercial lender by assets after Industrial & Commercial Bank of China Ltd.

Bank of America and Construction Bank plan to continue their strategic cooperation, the Chinese bank said. The two banks have agreed to let their customers use each other's automatic teller machines and say they are considering other ventures.

TradingMarkets 7 Stocks You Need to Know for Tuesday

Overbought conditions from three days of rising markets finally caught up with stocks on Monday as the major averages sagged into the close.

The Dow closed lower by 81.80. The Nasdaq Composite slid 4.18. And the S&P 500 ended the day down 4.35.

Here are 7 Stocks You Need to Know for Tuesday.

Shares of Apple (NasdaqGS:AAPL - News) rallied in the premarket Monday morning as CEO Steve Jobs dispelled rumors that his health was worse than believed. Later in the day, Apple affirmed that the company in fact had a CEO succession plan in place. The Short Term PowerRating for AAPL is 3.

Goldman Sachs (NYSE:GS - News) upgraded electronics retail giant, Best Buy (NYSE:BBY - News) to "buy" on Tuesday. GS and BBY both has a Short Term PowerRating of 2.

Two telecommunications companies - Verizon Communications (NYSE:VZ - News) and AT&T (NYSE:T - News) - were downgraded by a Bernstein analyst who cited the stocks recent outperformance for his caution on the stocks in the near term. The Short Term PowerRatings for VZ and T is 4 and 4 respectively.

Unsurprisingly, both General Motors (NYSE:GM - News) and Ford Motor Company (NYSE:F - News) reported exceptionally weak auto sales numbers on Monday. The Short Term PowerRatings for GM and F is 4 and 2 respectively.

Investors collect profits after last week's rally

NEW YORK (AP) -- Caution returned to Wall Street Monday as investors gave back some gains from last week's rally even as they found encouragement from President-elect Barack Obama's calls for an economic stimulus package.

Some retreat was to be expected after investors sent the Dow Jones industrial average to a two-month high on Friday; investors are wary about pouring more money into the battered market with economic data still weak and fourth-quarter earnings reports coming later this month.

Monday was expected to be the first real test of Wall Street in 2009 after many traders were on vacation on Friday, leading to light volume that may have exaggerated the market's move upward. Investors are still contending with fears about everything from the state of corporate earnings to consumers' willingness to spend during a recession.

Prices fluctuated throughout the session, but some analysts found signs that the market's improving tone from December was carrying over to the new year.

"There is some optimism out there that there is going to be a massive stimulus package by Obama that is going to get passed and that will help the economy," said Greg Church, chief investment officer of Church Capital Management.

Church warned, however, that a recovery will be difficult.

"The economy is still very weak. Unemployment is still high and is likely to get worse," he said.

But some analysts cautioned against drawing big conclusions from Monday's trading.

"We're not reading too much into this market right now, especially after Friday's big gain," said Matt King, chief investment officer at Bell Investment Advisors. "There's just not a lot of conviction behind it."

"I do think there is an element of profit-taking from Friday," when the Dow rose 258 points, he said.

The Dow closed down 81.80, or 0.91 percent, to 8,952.89 after falling as much as 142.

Broader stock indicators showed more modest declines. The Standard & Poor's 500 index fell 4.35, or 0.47 percent, to 927.45, and the Nasdaq composite index fell 4.18, or 0.26 percent, to 1,628.03.

The Russell 2000 index of smaller companies fell 0.81, or 0.16 percent, to 505.03.

Despite the pullback in the major indexes, advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 4.76 billion shares, compared with a light 3.48 billion shares traded Friday.

The Dow registered its first close above 9,000 in two months on Friday. Last week, all the major indexes gained more than 6 percent, furthering a rally off multiyear lows that began Nov. 20.

Bond prices pulled back again Monday as investors prepared for the possibility that the government will issue more debt than the market has anticipated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.48 percent from 2.39 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.09 percent from 0.07 percent.

The dollar rose against the euro and the yen, while gold prices fell.

Light, sweet crude rose $2.47 to settle at $48.81 a barrel on the New York Mercantile Exchange.

Analysts expect Wall Street will remain on edge as companies release their quarterly results and, more important, their forecasts for the year. Economists are expecting terrible profit reports and cautious forecasts but anything worse than expected could rock the market.

Kim Caughey, equity research analyst at Fort Pitt Capital Group, said investors are already bracing for lackluster earnings, a stance that could help Wall Street more easily absorb bad news. Since late November, a pessimistic market has often been able to shrug off some bad economic readings as unsurprising. Wall Street's ability to look beyond poor readings of the moment is an important step in forming a bottom for stocks.

"I think it may put a limit on the downside because we're already expecting things to be terrible. It's not going to take a whole lot to meet or exceed terrible," she said.

Caughey warned, however, that modest expectations likely won't be enough to take the market higher.

"It's just going to limp along," she said of the economy.

Some stocks and sectors saw selling Monday as analysts issued downbeat forecasts. JPMorgan Chase & Co., which last year scooped up ailing banks Washington Mutual and Bear Stearns, fell after a Deutsche Bank analyst late Sunday reduced his 2009 profit forecast for the company. He predicts JPMorgan will see increases in bad loans. The stock fell $2.10, or 6.7 percent, to $29.25 and was the steepest decliner among the 30 companies that make up the Dow industrials.

Another downgrade weighed on the telecommunications sector. Verizon Communications fell $2.16, or 6.2 percent, to $32.48, while AT&T Inc. fell 99 cents, or 3.4 percent, to $28.43. Both stocks are Dow components, and their declines steepened the average's drop.

Some energy stocks advanced as oil moved higher. El Paso Corp. rose 50 cents, or 6 percent, to $8.81, while XTO Energy Inc. rose $2.12, or 5.6 percent, to $39.70.

Apple Inc. eased some investors' worries about the health of Steve Jobs, its chief executive. Wall Street closely associates his vision with the company's success. In a letter released Monday, Jobs acknowledged recent weight loss, and said his doctors believe he has a hormone imbalance. Jobs, a survivor of pancreatic cancer, will continue as CEO during his recovery. Apple rose $3.83, or 4.2 percent, to $94.58.

Overseas, Britain's FTSE 100 rose 0.39 percent, Germany's DAX index rose 0.22 percent, and France's CAC-40 added 0.31 percent.

ASIA MARKETS : Sensex gains on Icici Bank and resource stocks

HONG KONG (MarketWatch) -- Indian shares advanced Thursday on the first trading day of 2009, led by gains in Icici Bank after the lender cut its lending and deposit rates by at least half a percentage point, while resource stocks jumped after crude-oil prices surged overnight.

The benchmark Sensitive Index, or Sensex, rose 224.43 points, or 2.3% to 9,871.74 in afternoon trading, after losing more than 52% in 2008 and in the wake of an overnight advance on Wall Street.

Pakistan's KSE 100 Index fell 114.24 points to 5,761.10, taking losses into a 13th session since Dec. 15, as investors continued to dump shares after the country's markets regulator removed a floor under stock prices.

Most other Asian markets, including those in Japan, Hong Kong, China, Australia, South Korea, Taiwan, Singapore and Thailand, were closed for New Year's Day.

In Mumbai trading, shares of Icici Bank (IBN:19.25, 0.00 , 0.00 %) gained 3.5%

after the private-sector lender cut its lending rates by a half-point, following similar rate reduction moves by its state-owned peers. The bank also cut interest rates on retail deposits by between 0.5 and 0.75 percentage point.

Markets' fall in 2008 was worst in seven decades

Investors can't close the book on 2008 fast enough, and it will be some time before they can look back and laugh it off.

After delivering investors a brutal 38.5% loss, 2008 stands as the worst year for the Standard & Poor's 500 since 1937. The 33.8% drop in the Dow Jones industrials was the worst since 1931. That easily makes 2008 the nastiest annual decline ever experienced by most current investors.

"2008? Good riddance," says David Sowerby of Loomis Sayles. "It's been like a bad date. 'Don't ever call me again.' "

There is no shortage of ways to quantify the destruction. The carnage has been nothing short of breathtaking, in that it has been:

•Unrelenting in its persistence. The Nasdaq composite index fell 40.5%, making it the worst of the three major U.S. indexes, all of which were underwater from 2007 levels for all 253 trading days. It was the S&P's third worst year, the second worst for the Dow and the worst ever for the Nasdaq.

KSE opens New Year on a negative note, index sheds 112 pts

The Karachi stock market remained on a negative note on the first day of the New Year Thursday, as investor’s were cautious in the wake of continuation of selling activities by the distressed brokers and institutions, analysts said.

The Karachi Stock Exchange (KSE) 100-share index lost 111.83 points to close at 5,753.18 points as compared to 5,865.01 points traded in the previous session. The KSE 30 index shed 143.36 points and closed at 5,341.97 points as against 5,485.97 points of the previous session. The KMI 30 index also declined by 41.88 points to close at 6,661.58 points as compared with 6,703.46 points of the previous session.

The market turnover went up by 4.13 percent and traded 75.43 million shares as compared to previous session’s 78.68 million shares. The overall market capitalisation decreased by 1.66 percent to close at Rs 1.827 trillion as compared with Rs 1.858 trillion traded in the previous session. Out of 230 active companies, 106 closed in positive zone, 114 in negative while 10 remained unchanged.

Analysts said activity remained high on expectations that State Enterprise Fund of Rs 20 billion would bailout the market from the current lows in the days to come, while liquidity crunch and CFS non-availability remained major concerns for investors.

The negative economic and political developments that have occurred in 2008 have had a major impact on the market and it would take a lot of funding for the market to come back on track, analysts believed.

The KSE 100 index opened in the red zone with a loss of 78.03 points and at the end of the day closed at 5,753.18 with a loss of 111.83 points.

WorldCall was the volume leader in the share market with 6.71 million shares as it closed at Rs 3.10 and closed at Rs 2.97 making a financial gain of 13 paisas. Fauji Fertiliser traded 6.35 million shares as it closed at Rs 12.69 after opening at Rs 12.90 shedding 21 paisas. TRG Pakistan traded 4.93 million shares as it closed at Rs 2.05 after opening at Rs 1.78 shedding 27 paisas.