Sensex settles above 17,000 for the first time in over 3 weeks

Key benchmark indices surged to their highest levels in more than 3 weeks as firm European shares, higher US index futures and data showing sustained buying by foreign funds recently boosted sentiment. The barometer index BSE Sensex regained the psychological 17,000 mark. The BSE Sensex jumped 198.77 points or 1.18%, off close to 20 points from the day's high and up close to 255 points from the day's low. The market breadth was positive.

The Sensex has risen 620.93 points or 3.82% in this month so far. The index has slumped 3,426.40 points or 16.7% in calendar 2011. From a 52-week high of 21,108.64 on 5 November 2010, the Sensex has lost 4,025.95 points or 19.07%. From a 52-week low of 15,745.43 on 4 October 2011, the Sensex has risen 1,337.26 points or 8.49%.



Coming back to today's trade, IT stocks extended their recent gains triggered by good Q2 results from IT bellwether Infosys, which also raised its full year earnings guidance on Wednesday, 12 October 2011. Index heavyweight Reliance Industries (RIL) gained ahead of its Q2 results tomorrow, 15 October 2011. Metal stocks were mixed as the latest data showed inflation remains at uncomfortably high levels in China, the world's largest consumer of aluminum and copper. Interest rate sensitive realty stocks edged lower on reports the slowdown in the economy has hit the realty sector in Mumbai. Consumer durables stocks rose on hopes of buoyant sales in Diwali, the festival of lights. Interest rate sensitive banking stocks edged higher in volatile trade.

Data showing sustained buying by foreign funds recently underpinned sentiment. Foreign institutional investors (FIIs) bought shares worth Rs 670.08 crore on Thursday, 13 October 2011, as per provisional figures on stock exchanges. FII inflow totaled Rs 2082.50 crore in five trading sessions from 7 October 2011 to 13 October 2011, as per data from stock exchanges. The recent inflow came after heavy outflow early this month. FIIs had dumped shares worth a net Rs 2806.19 crore in the first three trading sessions from 3 October to 5 October 2011.

The market moved into positive terrain after a weak opening triggered by lower Asian shares. A bout of volatility was witnessed as the market regained positive zone after slipping into the red for a brief period after hitting fresh intraday high in morning trade. The market extended gains to hit fresh intraday high in mid-morning trade. The market strengthened further to hit fresh intraday high in early afternoon trade. A bout of volatility was witnessed in afternoon trade as key benchmark indices recovered after coming off highs as European stocks rose in early trade. The market surged in mid-afternoon trade, with the Sensex regaining the psychological 17,000 level. The market extended gains in late trade.

The BSE Sensex jumped 198.77 points or 1.18% to settle at 17,082.69, its highest closing level since 20 September 2011. The index surged 220.53 points at the day's high of 17,112.45 in late trade. The index fell 55.47 points at the day's low of 16,828.45 in early trade, its lowest level since 12 October 2011.

The S&P CNX Nifty surged 54.45 points or 1.07% to settle at 5,132.30, its highest closing level since 21 September 2011. The Nifty hit a high of 5,141.40 in intraday trade. The Nifty hit a low of 5,056.60 in intraday trade, its lowest level since 12 October 2011.

The BSE Mid-Cap index rose 0.55% and the BSE Small-Cap index gained 0.31%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 1989 crore, lower than Rs 2523.74 crore on Thursday, 13 October 2011.

The market breadth was positive. On BSE, 1,434 shares rose and 1,337 fell. A total of 127 shares were unchanged. The breadth swung alternately between positive and negative zone in intraday trade.

From the 30-share Sensex pack, 19 rose and the rest fell.

Index heavyweight Reliance Industries (RIL) rose 2.36% to Rs 866.80 on expectations of good Q2 results. The stock gyrated between Rs 841.60 and Rs 870. RIL's advance tax payment rose 37.6% to Rs 1800 crore in Q2 September 2011 over Q2 September 2010, hinting at good Q2 results from the diversified firm. RIL unveils Q2 results on Saturday, 15 October 2011.

BP PLC recently said it expects its partnership with RIL to boost natural gas output at the D6 block in the Krishna Godavari basin, off India's east coast. BP Chief Executive Robert Dudley and RIL Chairman Mukesh Ambani met trade minister Anand Sharma in New Delhi on 28 September 2011. RIL is fighting a decline in gas output at the D6 block. BP and RIL on 28 September 2011, pitched for permission from the government to develop satellite fields adjacent to the D6 block.

RIL, last month, closed a deal with UK-based BP to sell a 30% stake in its 21 oil and gas exploration blocks in India. RIL recently denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL made the clarification after CAG said in its final report submitted to the parliament on 8 September 2011 that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at $2.4 billion, which it later revised to $8.8 billion.

Interest rate sensitive banking stocks edged higher in volatile trade. India's second largest private sector bank by net profit HDFC Bank rose 0.79%, extending five-day gains. India's largest private sector bank by net profit ICICI Bank rose 1.3%, with the stock gaining for the third straight day.

India's largest bank by branch network State Bank of India (SBI) fell 0.24% on profit taking. The stock had jumped 10% in the preceding 5 trading sessions on hopes of capital infusion from the Government of India, its majority shareholder. Financial Services Secretary D.K. Mittal on Tuesday, 11 October 2011, said that the government will inject Rs 3000 crore to Rs 4500 crore in SBI this fiscal year to help improve its capital base. "The capital infusion in SBI may happen by December-end, but definitely before March 31," Mittal said. His comments come after Moody's Investors Service last week cut its rating on SBI's financial strength to D+ from C- and lowered its hybrid debt rating on the bank to Ba3 (hyb) from Ba2 (hyb), flagging concerns over capital and deteriorating loan quality.

Mittal said that the rating downgrade was "shocking" and "unfair", and that some banks in developed countries were rated higher despite their asset quality being inferior to SBI's, He also said that the capital infusion may not be through a rights issue or a public share sale as market conditions weren't right for that, but through other methods. He didn't elaborate.

The government on Thursday, 13 October 2011, approved amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and debt recovery acts to enable banks to effectively deal with the menace of bad loans and also encourage them to disburse credit freely to home and corporate loan seekers. The Cabinet approved the introduction of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, in the next Winter Session of Parliament.

Information and Broadcasting Minister Ambika Soni said that suggested amendments will strengthen the ability of banks to recover debts due from the borrowers, enhance the ability of banks to extend credit to both corporate and retail borrowers, reduce the cost of funds for banks and their customers and reduce the level of non-performing assets.

FMCG stocks rose on expectations of higher rural sales after good rains this year. Dabur India, ITC, Hindustan Unilever, and Marico gained by between 0.15% to 3.73%.

IT bellwether Infosys rose 1.83%, extending two-day 7.41% surge triggered by good Q2 results and upward revision in full year earnings guidance. Infosys announced before market hours on Wednesday, 12 October 2011, that its consolidated net profit as per International Financial Reporting Standards (IFRS) rose 10.68% to Rs 1906 crore on 8.2% growth in revenue to Rs 8099 crore in Q2 September 2011 over Q1 June 2011.

Infosys has forecast 9.72% to 11.11% growth in non-annualized earnings per American Depositary Share at $0.79 to $0.80 in Q3 December 2011 over Q2 September 2011. It has forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011.

The company has for the second quarter in a row revised upwards its dollar earnings guidance for the year ending March 2012 (FY 2012). The company expects 15.3% to 16.8% growth in earnings per American Depositary Share at $3.02 to $3.06 in FY 2012 over the year ending March 2011 (FY 2011). However, the company has revised downwards dollar revenue growth guidance for FY 2012. The company expects 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion in FY 2012 over FY 2011.

Infosys has forecast 15.4% to 1.7.5% growth in non-annualised earnings per share (EPS) at Rs 38.51 to Rs 39.20 in Q3 December 2011 over Q2 September 2011. The company has forecast 8.97% to 11.2% growth in revenue at Rs 8826 crore to Rs 9012 crore in Q3 December 2011 over Q2 September 2011.

Thanks to a recent steep fall in rupee against the dollar, Infosys has sharply revised upwards EPS guidance for FY 2012. The company has projected 19.7% to 21.6% growth in EPS at Rs 143.02 to Rs 145.26 in FY 2012 over FY 2011. The company has also revised FY 2012 revenue guidance upwards. Infosys has projected 21.8% to 24% growth in revenue at Rs 33501 crore to Rs 34088 crore in FY 2012 over FY 2011.

India's largest software services exporter TCS surged 4.01% ahead of its Q2 results on Monday, 17 October 2011. India's third largest software services exporter Wipro rose 3.98% ahead of its Q2 results on 31 October 2011.

Metal stocks were mixed as the latest data showed inflation remains at uncomfortably high levels in China, the world's largest consumer of aluminum and copper. Sesa Goa, JSW Steel, Sterlite Industries, Nalco, Hindalco Industries dropped by between 0.16% to 3.65%. Hindustan Zinc, NMDC, Bhushan Steel, Jindal Saw, and Sail rose by between 0.09% to 2.78%. LMEX, a gauge of six metals traded on the London Metal Exchange shed 2.39% on Thursday, 13 October 2011.

Jindal Steel & Power jumped 5.01% and was the top gainer from the Sensex pack.

Tata Steel fell 2.84%. Tata Steel Europe's chief executive said on Wednesday, 12 October 2011 that Tata Steel Europe is prepared to cut its output further if its order book weakens over the next couple of months. Tata Steel Europe is the European arm of Tata Steel. Tata Steel Europe has already shut down one blast furnace at its Scunthorpe, UK steel works and is operating at 80% to 85% of full production capacity, in line with other steelmakers in Europe. "We don't exactly know where this is going to go in the next couple of months. If it is a temporary thing we will find temporary solutions," Karl-Ulrich Koehler said at a press briefing at the annual World Steel Association on Wednesday. "If the order book is not supporting production, we will certainly reduce further," he added.

Interest rate sensitive realty stocks edged lower on reports the slowdown in the economy has hit the realty sector in Mumbai. DLF, HDIL, Unitech and Indiabulls Real Estate shed by between 0.15% to 2.68%.

Cement stocks were mixed after a government statement said Indian railways will raise development surcharge on all goods traffic from Saturday, 15 October 2011, to 5% from 2%. It will also raise tariffs for the "busy season", which runs from runs from October to June, to 10% from 7%, the statement showed. UltraTech Cement, Jaiprakash Associates and ACC fell by between 0.07% to 0.71%. India Cements and Ambuja Cements rose by between 0.26% to 1.36%.

Media firms jumped for the second straight day after the Union Cabinet cleared ordinance for cable network digitization. Wire & Wireless India (up 11.19%), Hathway Cable & Datacom (up 20%), and Den Networks (up 9.36%) surged.

India's largest coal miner by capacity Coal India lost 2.91% on reports the company's workers are likely to go on strike for three days, demanding an increase of as much as 57% in bonus payments.

Capital goods stocks edged lower. L&T, Bhel, Thermax and Crompton Greaves fell by between 0.15% to 3.12%.

Interest rate sensitive automobile stocks rose on hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. Automobile purchases, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. India's largest truck maker by sales Tata Motors gained 2.36%. The stock has surged recently due to easing of euro-zone debt worries. UK unit, Jaguar Land Rover, generated 57% of Tata Motors' revenue during the year ended 31 March 2011, up from 53% a year earlier.

Tata Motors last week introduced its Manza sedan and Prima range of trucks in South Africa at the Johannesburg International Motor Show. "We see Africa as a region of tremendous potential for the group," Noel Tata, managing director of Tata International, the trading arm of Tata Group, said in a statement. "In South Africa, the auto industry is making giant strides and we are happy to contribute to this growth." Tata Motors sells its passenger vehicles and light trucks in South Africa through a local joint venture between group company Tata Africa Holding and South Africa's Associate Motor Holdings. Other trucks and buses are sold through a wholly owned subsidiary of Tata Africa, Tata Automobile Corporation South Africa (Pty).

Tata Motors' total sales rose 22% to 78,786 units in September 2011 over September 2010. The homegrown firm's total passenger vehicles sales in the domestic market stood at 26,319 units in September, up 10.22% from 23,877 units in the same month last year. The company's total exports grew by 23% to 6,220 units in September 2011 over September 2010.

India's largest tractor and sports utility vehicles maker Mahindra & Mahindra (M&M) rose 0.84%. M&M plans to raise monthly production of its new sport-utility vehicle--XUV500--by half to 3,000 units in January and more than double it to 5,000 units in June to meet robust local demand. The company currently produces 2,000 units of XUV500 a month. M&M recently said it has received more than 8,000 bookings for the vehicle in the first 10 days of the launch, forcing it to halt taking fresh orders.

M&M's total auto sales rose 25% to a record 44,137 units in September 2011 over September 2010. The company's domestic sales stood at 41,136 units during September 2011, as against 33,866 units during September 2010, an increase of 21%. M&M's Passenger Vehicles segment (which includes the Utility vehicles and Verito) registered a growth of 11%, having sold 19,447 units in September 2011, as against 17,537 units during September 2010. The 4-wheeler commercial segment which includes the passenger and load categories registered a phenomenal growth of 45%.

India's largest bike maker by sales Hero MotoCorp gained 0.6%. The company's total sales jumped 26.75% to 5.49 lakh units in September 2011 over September 2010. Hero MotoCorp's total sales increased 20.10% to 15.44 lakh units in Q2 September 2011 over Q2 September 2010. The company expects sales growth to continue into the festive season.

India's second largest bike maker by sales Bajaj Auto rose 2.85%. The company's total sales rose 18% to a record 4,17,686 units in September 2011 over September 2010. Motorcycle sales rose 18% to a record 3,71,208 units. Commercial vehicle sales rose 21% to 46,478 units in September 2011 over September 2010. The company said it achieved record three-wheeler sales in September 2011. Exports rose 39% to 1,41,913 units in September 2011 over September 2010.

Maruti Suzuki India fell 2.65% to Rs 1028.45 after the company said police has started efforts to evict about 1,500 striking workers at its Manesar plant following directions from Punjab and Haryana High Court. The stock hit a 52-week low of Rs 1,022.10 today, 14 October 2011. The workers at the Manesar plant have struck work and have been protesting inside the factory premises since Oct. 7. The workers are demanding reinstatement of 44 of their suspended colleagues who weren't taken back by Maruti after a 33-day long labor unrest ended Oct. 1.

Tijaria Polypipes clocked highest volume of 4.74 crore share on BSE. G-Tech Info Training (1.86 crore shares), Resurgence Mines (1.01 crore shares), Cals Refineries (65.21 lakh shares) and Wire & Wireless (64.81 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 97.84 crore on BSE. Tijaria Polypipes (Rs 85.92 crore), RIL (Rs 85 crore), Infosys (Rs 74.38 crore) and Coal India (Rs 57.22 crore) were the other turnover toppers in that order.

The Q2 results season has started on a positive note, with good results from IT bellwether Infosys. The company also revised upwards its full year earnings guidance in both dollar and rupee terms. Stock-specific activity may dominate trade in the near-term as earnings trickle in. Investors will closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook. Reliance Industries unveils Q2 results on 15 October 2011. IT major TCS, housing finance major HDFC and media major Zee Entertainment Enterprises unveil Q2 results on 17 October 2011. Jindal Steel & Power, Hero MotoCorp and HCL Technologies unveil quarterly results on 18 October 2011. HDFC Bank unveils Q2 results on 19 October 2011.

Bajaj Auto, Cairn India, Biocon, UltraTech Cement, Exide Industries and Thermax unveil quarterly results on 20 October 2011. Engineering & construction major L&T, Idea Cellular, paints major Asian Paints, JSW Steel and Godrej Consumer Products reveal Q2 results on 21 October 2011. Axis Bank, Power Grid Corporation and Grasim unveil Q2 results on 22 October 2011. Cigarette major ITC, Sterlite Industries and Titan Industries unveil Q2 results on 24 October 2011.

NTPC, Kotak Mahindra Bank and Dr. Reddy's Lab unveil Q2 results on 25 October 2011. Maruti Suzuki reports Q2 results on 29 October 2011. ICICI Bank, Wipro, Dabur India, Colgate Palmolive (India) and BPCL unveil Q2 results on 31 October 2011. Cement majors ACC and Ambuja Cements and Aditya Birla Nuvo unveil quarterly results on 1 November 2011. ABB unveils results on 8 November 2011. Ranbaxy Laboratories unveils quarter results on 9 November 2011. Jet Airways (India) unveils Q2 results on 11 November 2011. Mahindra & Mahindra and India Cements unveil Q2 results on 14 November 2011.

Lower global commodity prices may ease pressure on corporate profit margins arising from higher raw material prices and at the macro level it could help ease inflation pressure. However, a weak rupee will offset the benefit of the recent steep fall in global commodity prices triggered by global growth worries. Most commodities imported by India, particularly oil, are denominated in dollars making these expensive for India. The rupee had declined from its 2011 high of 43.855 reached in late July 2011. The Standard & Poor's GSCI Index of 24 commodities, hit a 10-month low last week. Commodity prices have since recovered along with global equities.

The market regulator Securities and Exchange Board of India recently set a minimum net worth of Rs 100 crore for companies that wish to issue structured products or market-linked debentures to raise funds. Sebi also set the minimum size for such issues at Rs 10 lakh. Market-linked debentures are hybrid products which have the features of usual debt securities, but offer market-linked returns like an exchange-traded derivative. The issuer company will have to appoint a third party, a credit-rating company registered with the regulator, which will provide the value of the security at least once a week, Sebi said in a circular.

The government last month raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan.

Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on 12 September 2011, further relaxed the norms on FII investment in such bonds. Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.

Industrial output in the month of August 2011 rose a slower-than expected 4.1% from a year earlier, data released by the government on Wednesday, 12 October 2011, showed. Industrial output growth for July was revised upwards to 3.84% from a provisional reading of 3.28%. Manufacturing output, which constitutes about 76% of the industrial production rose an annual 4.5% in August versus 2.3% in July. The government also revised upwards the industrial production growth for May 2011 to 6.15% from 5.91% reported earlier.

The government recently raised its borrowing target for the current fiscal year by Rs 52800 crore, surprising the market and fueling worries that it may even overshoot the new estimate because of muted revenue growth amid a slowing economy and swelling subsidies. The government will borrow Rs 2.2 lakh crore during October 2011-March 2012 period, or the second half of the fiscal year, compared with the target of Rs 1.67 lakh crore announced in budget in February 2011. C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, on 29 September 2011 said it is going to be difficult to achieve fiscal deficit target of 4.6% of GDP for the year ending March 2012.

The government's new borrowing programme may crowd out private borrowers who come into the market in the second half of the year. Credit growth normally picks up after October every year when the busy season starts.

Atsi Sheth, a New York-based vice president and senior analyst at Moody's Investors Service said in a media interview recently that Moody's is unlikely to change its rating outlook on India for now, though the extent of the increase in the government's borrowing target is a surprise. The possibility of fiscal slippage is, however, already factored into the sovereign rating, Sheth said.

Standard & Poor's Ratings Services on 3 October 2011 said it is maintaining its view that India will struggle to meet its fiscal deficit target. Takahira Ogawa, director of Sovereign and International Public Finance Ratings at S&P said India must prove its intent to continue with the process of fiscal consolidation in the medium term.

The latest data showed that inflation in India remains uncomfortably high. Inflation, as measured by the wholesale price index (WPI), rose 9.72% in September 2011, compared with a 9.78% rise in August 2011, data released by the government today, 14 October 2011, showed. WPI inflation for July 2011 was revised upwards to 9.36% from the provisional reading of 9.22%. Five out of nine economists polled by Capital Market before the latest WPI data expect a 25 basis points hike in repo rate from the Reserve Bank of India at its half-yearly review of the monetary policy on 25 October 2011. The rest four expect a status quo on rates.

Rangarajan today, 14 October 2011, said that monetary policy has a role to play in containing demand pressures as long as inflation remains above 9%.

While its tolerance of inflation has gone up with rising income levels, the Reserve Bank of India (RBI) will raise rates further if high inflation persists, central bank deputy governor Subir Gokarn said Wednesday, 12 October 2011. The RBI will discuss domestic growth and inflation at its board meeting on Thursday, 13 October 2011, central bank governor D Subbarao added at a joint panel discussion, as he reiterated that controlling inflation is the main focus of monetary policy. Rangarajan on Wednesday, 12 October 2011, said the September inflation data will be key in shaping the RBI's next rate move.

RBI said at a monetary policy review on 16 September 2011 that it is imperative to persist with the current anti-inflationary stance because a premature change in the policy stance could harden inflationary expectations, thereby diluting the impact of past policy actions. The RBI raised repo rate by 25 basis points on 16 September 2011.

Going forward, the stance of the monetary will be influenced by signs of downward movement in the inflation trajectory, to which the moderation in demand is expected to contribute, and the implications of global developments, RBI said in its 16 September 2011 policy statement. The overall tone of the RBI's September policy was softer than the previous policy announcement which was extremely hawkish.

RBI said on 16 September 2011 that corporate margins moderated across several sectors in Q1 June 2011 compared to levels in Q4 March 2011. However, barring a few sectors, significant pass-through of rising input costs is still visible, RBI said.

India's services sector contracted for the first time in more than two years as new business dried up and expectations weakened amid concern over a flagging world economy, a survey showed on 5 October 2011. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, plunged in September to 49.8 -- its lowest reading since April 2009 -- and below the 50 mark which separates growth from contraction.

The slowdown in growth has continued to broaden with the service sector seeing a further slowdown in economic momentum, HSBC economist Leif Eskesen said. The new business sub-index sank to a 28-month low of 51.6 in September, down from 54.9 in August. The weak expansion in new business -- the main cause of the stagnation in activity -- meant employment levels fell for a third consecutive month. Despite harsh conditions firms were able to pass on rising input costs to customers, albeit at a slightly lower pace than in August.

The growth in manufacturing sector nearly stalled in September 2011, hitting its weakest spot since March 2009 on slowing output and orders growth following a series of interest rate hikes, data showed on 3 October 2011. The HSBC Markit India Manufacturing PMI fell more than two points to 50.4 in September 2011 from 52.6 in August 2011, very close to the 50 mark which divides growth and contraction. The output index plunged by its biggest amount in one month since November 2008, to 51.1 from 56.

European stocks edged higher on Friday, 14 October 2011, as gains for miners and technology stocks offset losses for banks triggered by series of downgrades and warnings from brokers and credit-rating agencies. Key benchmark indices in UK, Germany and France were up by between 0.75% to 0.96%.

Fitch Ratings downgraded UBS AG on Thursday and placed seven other US and European banks on credit watch negative, citing challenges in the economy and financial markets, as well as the impact of new regulations. The ratings agency lowered UBS's long-term issuer default rating to A from A+. Fitch is also reviewing ratings for Barclays Bank Plc, BNP Paribas, Credit Suisse Group AG, Deutsche Bank AG, Societe Generale, Bank of America Corp, Morgan Stanley and Goldman Sachs Group Inc for further possible downgrades.

Ratings agency Standard and Poor's downgraded the long-term credit rating of Spain by one notch on Thursday. S&P cited Spain's high unemployment, tightening credit and high level of private-sector debt among the reasons for the downgrade of the nation's creditworthiness to AA- from AA. S&P and Fitch now rate Spain as AA- and both also have signalled further possible downgrades.

Slovakia finally ratified new powers for the euro zone's rescue fund on Thursday, the last country to do so, clearing the way for a bolder effort to arrest Europe's sovereign debt crisis, which threatens global financial stability. The vote came 10 days before a European Union summit called to approve a "comprehensive strategy" to fight the crisis, expected to include action to reduce Greece's debt burden, a plan to strengthen European banks and measures to stop contagion spreading to larger euro zone economies.

Asian markets declined on Friday, 14 October 2011, with auto makers and resource firms weak, as data showed Chinese inflation eased slightly in September but remains at uncomfortably high levels. Key benchmark indices in China, Japan, Hong Kong, Indonesia, and Taiwan fell by between 0.3% to 1.36%. South Korea's Seoul Composite rose 0.67% and Singapore's Straits Times gained 0.37%.

China's consumer price index rose 6.1% in September from a year earlier, according to reports, a weaker-than-forecast increase that may bode well for future price trends in the world's second-largest economy. The latest CPI reading for China marked a slowdown from August, when prices rose 6.2% annually. Still, inflation remains uncomfortably high in China, far above the central bank's target range and the People's Bank of China currently has little scope to loosen policy.

China's trade surplus narrowed for a second straight month in September as both imports and exports were lower than expected, pointing to cooling domestic and global economic demand, data on Thursday, 13 October 2011, showed.

Trading in US index futures indicated that the Dow could gain 96 points at the opening bell on Friday, 14 October 2011. US stocks slipped on Thursday after softer-than-expected results from J.P. Morgan Chase & Co and China's soft trade data revived worries about the impact of slower growth on profits. In US economic data, new claims for jobless benefits were little changed last week and the trade deficit narrowed marginally in August, indicating a modest improvement in the economy.

Finance ministers and central bankers from the Group of 20 leading industrialized and developing economies meet in Paris on Friday and Saturday, with the euro zone's sovereign debt crisis firmly in the spotlight, as worries grow over possible contagion to bigger nations such as Italy and Spain