[NYTr] Asian Central Banks Eye US Crisis; Aussie Dollar Falls

[All the News That Doesn't Fit]

Prensa Latina, Havana
http://www.plenglish.com

Asian Central Banks Eye US Crisis

Tokyo, Aug 16 (Prensa Latina) Asian central banks were keeping a
weather eye on the US high risk mortgage sector crisis Thursday, afraid
of its worsening.

Asia shows a solid economic situation, but bankers and finance
ministers of the region would not predict the ultimate outcome of the
US crisis.

US Treasury Secretary Henry Paulson admitted to The Wall Street Journal
that the US economy would pay the cost, but he was optimistic the US
would not fall into a recession.

However, William Poole, president of the US Federal Reserve, said the
turbulence of the financial markets have not weakened the US economy,
and a reduction of interest rates is not so urgent.

The crisis began when the US banks started to resell high risk loans
and other financial instruments to other banks all over the entire
world, which could get rid of them later, and had to report them as
losses from their shares.

This provoked panic and adjustments in the world credit markets,
including big injections of capital into central banks to try to stop
the crisis.

hr/ccs/tac/jmg

                            ***

sent by Dave Muller (southnews)

AAP (australia) - Aug 16, 2007

[Aussie] Dollar tumbles alongside market falls

THE Australian dollar has tumbled early in the afternoon session to be 
down two-and-a-quarter US cents as stocks fell sharply on continued 
credit market fears.

At 2.05pm (AEST), the Australian dollar was trading at $US0.8032/36, 
down from yesterday's close of of $US0.8257/61

It reached as low as $US0.8008 in early afternoon trade.

Westpac currency strategist Jonathan Cavenagh said the market was 
reacting to the sharp fall in the Australian stock market, which was 
down five per cent at 1.45pm - its biggest loss in seven years.

RAMS Home Loans Group said today it was unable to rollover its maturing 
commercial paper in the US overnight due to significant volatility in 
the US extendible commercial paper (XCP) market.

The lender has lost about 75 per cent of its share value.

"We've broken down through some key technical levels as well," Mr 
Cavenagh said.

He said once the Australian dollar had fallen through the technical 
level of $US0.8120, which was the 200-day moving average, the currency 
fell sharply.

"The market is really skittish at the moment," he said.

He said international investors would be taking their money out of 
Australia.

He said there was a definite risk the Australian dollar would fall below 
80 US cents.

                       ***

Newscom.au - Aug 16, 2007

Share market plunges over 5pc

By staff writers and wires

THE Australian share market nosedived more than 5 per cent, its biggest 
one-day fall in more than seven years.

The benchmark S&P/ASX200 has lost 5.21 per cent or 301.4 points to 5486.6.

The All Ordinares index has lost 5.29 per cent to 306.7 points to 5494.8.

It is the biggest one-day fall in the market since April 2000.

The share market lost 3 per cent yesterday.

Japanese stocks also plunged in early afternoon trade today, diving 3.7 
per cent to below the key 16,000 points level for the first time since 
November as a wave of selling hit Asian markets.

Hong Kong blue chips fell 3.6 per cent and China plays dived 4.9 per 
cent in mid-morning trade as investors sold across the board, with 
bourse operator Hong Kong Exchanges and Clearing sinking in heavy trade.

-With AAP and AFP

                         ***

AFP - Aug 16, 2007

World stocks stumble amid credit market anxiety

NEW YORK (AFP) - - Credit market anxiety gripped investors again 
Wednesday, pulling global stock markets lower, as even a new Federal 
Reserve cash injection into the financial system failed to buoy US shares.

With no sense of just how big the problems initially related to a crisis 
in the US subprime mortgage sector have become, investors' fear of the 
unknown overcame any positive signs of economic health.

The Dow Jones Industrial Average shed a heavy 167.45 points (1.29 
percent) to end at 12,859.19. It was the fifth straight closing loss for 
the blue-chip index and the first time since late April it closed below 
13,000.

The Dow has lost more than 1,000 points since topping 14,000 points for 
the first time almost a month ago, on July 19.

The tech-heavy Nasdaq composite fell 40.29 points (1.61 percent) to 
2,458.83, while the broad-market Standard Poor's 500 index lost 19.84 
points (1.39 percent) at 1,406.70.

The Federal Reserve pumped an additional seven billion dollars into the 
US financial system to loosen credit. The central bank has now 
interjected 69 billion dollars into the markets since last Thursday and 
said it "stands ready" to take further action as needed.

"Anything even remotely bearish is creating an oversized reaction given 
the nervous underlying tone in the market," said Dick Green, an analyst 
at Briefing.com.

European markets closed mixed, with losses in London and Paris.

Asian stocks plunged, with Tokyo and Hong Kong both down 2.0 percent and 
the Indonesian market off 6.5 percent.

Analysts said swings in sentiment were due to nervousness as investors 
attempt to weigh the impact of a downturn in the US housing market and 
the exposure of banks to bad loans.

"Market volatility is going to continue until the extent of the problem 
is properly known," said Richard Hunter, head of equities at Hargreaves 
Lansdown stockbrokers in London.

Traders remain highly sensitive to evidence that losses from US subprime 
home loans -- high-risk loans to people with poor credit histories -- 
are affecting banks or investment funds around the world.

"There are suspicions surrounding all the banks," said one Paris-based 
dealer, commenting on broad losses for most banking stocks in Europe.

In Europe, the London FTSE 100 index closed down 0.56 percent and in 
Paris the CAC 40 fell 0.66 percent. In Frankfurt the DAX index rose 0.28 
percent.

"Investors are still having a real battle trying to understand who's got 
the (subprime) exposure and what their liabilities are," said Barclays 
Capital analyst Henk Potts.

"Until we get a better picture on how the problems we've been seeing in 
the credits markets will affect long-term business, there's going to be 
this uncertainty."

In Asia, Tokyo's Nikkei-225 index slumped 2.19 percent to an eight-month 
low, Jakarta was punished most with a 6.4 percent tumble, Hong Kong was 
down 2.87 percent and Singapore lost 3.45 percent.

South American markets also were buffeted. In Argentina, the Merval 
index in Buenos Aires plunged 5.17 percent, while in Brazil, the 
region's largest economy, the Ibovespa index in Sao Paulo fell 3.19 percent.

The latest wave of selling in Asia came as the Bank of Japan decided 
Wednesday to siphon off a further 2.0 trillion yen (17.0 billion 
dollars) in excess funds from the banking system, believing that fears 
of a domestic credit squeeze have faded.

It came a day after the central bank had drained 1.6 trillion yen from 
the money market, the amount it had injected since Friday, as part of 
efforts by central banks to ease tightening credit.