Europe stocks lower; Senate talks watched; LVMH falls 6%
Senate Democratic leader Harry Reid said he had a “substantive” and “productive conversation” with Senate Republican leader Mitch McConnell. The U.S. government needs to raise the debt ceiling before Thursday, October 17 if it is to avoid a sovereign default. As global concerns grow, the head of the International Monetary Fund, Christine Lagarde, said the situation was “very, very concerning” and warned that “creative accounting” was not the solution. Senator. Bob Corker, R-Tenn., told CNBC that a debt deal was still “very possible” following the talk between Reid and McConnell. “I’ve had some good conversations early this morning. It is between Mitch and Harry. And I think people want to see that come to fruition,” said Corker, who is a member of the Senate Banking Committee. President Barack Obama and Vice President Joe Biden are scheduled to meet Congressional leaders at 8 p.m. London time. In European news, the Eurogroup of finance ministers from the euro zone countries met on Monday to discuss, among other topics, Greece and banking supervision. In Ireland, the government is preparing to soften its line on austerity for Tuesday’s 2014 budget proposals, despite warnings that it would be better to stick to its targets.
European stocks followed the trend set by Asia, where equity markets were in a holding pattern on Wednesday as investors awaited a possible fiscal deal from U.S. Senate lawmakers. U.S. Senate leaders adjourned negotiations on legislation to avert a government default and will continue talks at noon Wednesday ET. The decision for Senate lawmakers to resume talks comes after a failed attempt in the House of Representatives to hold a vote on a short-term funding bill. The Senate deal will reportedly extend the government’s borrowing authority until February 7 and re-open federal agencies that have been shut since October 1. It would also fund the government through January 15. The back-and-forth news comes one day before the Treasury Department says it will be unable to borrow and will have to rely on a cash cushion to pay the country’s bills. Meanwhile, Fitch credit agency placed the U.S.’ AAA-rating under review for a downgrade as the impasse over the debt limit and government funding continued. “So, it’s going to the wire,” Chris Scicluna, an economist at Daiwa Capital said in a morning note. “Just a day before the Treasury’s new borrowing authority is set to expire, and, after yesterday’s House effort predictably came to nought, the ball is now back in the court of the Senate to craft a compromise.” Italy announces budget In European news, the U.K’s jobless rate a key factor influencing the Bank of England’s interest rate policy held steady in the three months to August, but the number of people claiming unemployment benefits fell much more than expected last month. (Read More: UK unemployment steady but claimant count plummets ) Inflationary pressures in the euro zone continued to ease, data showed on Wednesday. Consumer price inflation for the 17 countries that use the single currency fell to 1.1 percent (year-on-year) in September, its lowest since February 2010, according to Eurostat.
Dark pool stock trading picks up as Europe debates new curbs
They worry that transactions capable of destabilising markets could go undetected unless limits are introduced. They also fear users are draining liquidity from public exchanges, making it harder for other investors to value stocks accurately. Anyone can use these pools if they have membership and fees are typically lower than trading stocks using traditional stockbrokers. The biggest users of these networks are large fund managers and banks who regularly trade large volumes of stocks. Supporters of off-exchange trading say removing the option of buying and selling shares privately will make large portfolios more costly to manage and potentially hurt performance of investment funds and pensions. “This will hurt liquidity but more specifically, it will hurt European citizens. When the price for one security is set, you are removing the capacity for an asset manager to negotiate something lower,” Dessard added. Thomson Reuters aggregates all trade data on ‘dark’ Multilateral Trading Facilities (MTFs) and platforms provided by BATS-Chi X, London Stock Exchange-operated Turquoise (LSE.L) and Liquidnet. MTFs match buyers and sellers anonymously and publish the trade on data feeds available to all market users after the market has closed. The Markit data, meanwhile, only gives a snapshot of aggregate trade at six of the large Broker Crossing Systems, where bank traders match up clients privately but only report the trades in a job lot at the close, without breaking down the stocks concerned. Without more comprehensive data, critics say it is tough to establish whether dark pools help or hinder the broader market, or make public exchanges less efficient in discovering price. This could render new rules challenging to enforce.