Global stocks, bonds hit by Fed, China worries

Global stocks, bonds hit by Fed, China worries
(Reuters) - Global equity markets, bond prices and commodities tumbled
on Monday, entering another week of heavy selloff, on worries about
the U.S. central bank's plans to scale back its money printing,
combined with tighter financial conditions in China.

Prices of U.S. Treasuries also resumed their slide on Monday, and
benchmark yields climbed to a nearly two-year high. Wall Street opened
sharply lower, with the Dow Jones industrial average retreating more
than 200 points in early trading, joining a global selloff after
concerns about liquidity crunch in China sent Shanghai stocks down
more than 5 percent.

The broad selloff added to more than $1 trillion in losses in global
equity markets in the five days ended June 21, based on the market
value of MSCI World Index.

The U.S. stock market alone lost about $354.4 billion during the
five-day period, while the U.S. bond market erased about $390.8
billion, measured by the market value of the BofA/Merrill Lynch Broad
Market Index.

"There is no fund flow here. The money out of the bond market is not
going into equities or anywhere else. Prices are going down because
there is panic selling when buyers are very hesitant," said James
Dailey, senior portfolio manager at Team Asset Strategy Fund in
Harrisburg, Pennsylvania.

"The hardest hit is no doubt the bond market. The decline that we have
seen in the past four weeks in the bond market would be equivalent to
a 30-35 percent decline in the stock market considering bonds are
traditionally not volatile."

The declines stem from Federal Reserve's signal last week that the era
of cheap central bank money - which caused many assets to hit record
highs - was coming to an end. But they have been exacerbated by
China's battle to transition to a lower-growth economy.

Both events are unprecedented and have driven a sharp rise in risk
aversion by investors fearing a long period of volatility across
markets.

The shift out of assets that have benefited most from cheap money has
been sharpest in the U.S. debt market, where yields on 10-year
Treasury notes spiked to two-year highs of 2.6 percent on Monday.
<US/>

The yield on two-year U.S. Treasury notes rose to 0.433 percent, which
was its highest level since July 2011.

This rise, and the brighter outlook for the U.S. economy, which was
behind the Fed's decision, has favored the dollar against most major
currencies. The dollar index .DXY, was up 0.2 percent at 82.556 after
rising as high as 82.841, its highest since June 5. The gains built on
last week's 2.2 percent rally, its biggest weekly rise since November,
2011.

WALL STREET TUMBLES

U.S. stocks extended their losses, falling more than 1 percent after
the S&P 500 index's biggest weekly decline in two months as investors
repriced shares in the wake of the Federal Reserve's plans to withdraw
its stimulus.

Investor sentiment also was hurt by a cash crunch in China, which
could further slow Chinese growth. Markets in Shanghai and Hong Kong
posted their biggest daily loss in almost four years.

"We are starting to see that follow-through in Asia, which is all part
of the broader narrative - the focus on a lack of stimulus, a creeping
higher in rates and the potential impact for less liquidity globally,"
said Peter Kenny, chief market strategist at Knight Capital in Jersey
City, New Jersey.

The Dow Jones industrial average .DJI was down 186.54 points, or 1.26
percent, at 14,612.86. The Standard & Poor's 500 Index .SPX was down
23.78 points, or 1.49 percent, at 1,568.65. The Nasdaq Composite Index
.IXIC was down 45.46 points, or 1.35 percent, at 3,311.79.

As investors retreated into the dollar, share markets tumbled, with
the falls heaviest in many of the world's major emerging markets.

MSCI's benchmark index for stocks in the emerging world .MSCIEF fell
2.1 percent, extending losses for a fifth straight day to touch
one-year lows. <EMRG/FRX>

The rise in Treasury yields and better prospects for the U.S. economy
have undermined the attraction of emerging markets, as China's efforts
to clean up its banking system and switch to a slower growth
trajectory raises fears of greater instability.

"The China story is something that people are aware of and keeping an
eye on, but broadly people are still digesting the comments of the
Fed," RBS emerging markets analyst Mohammed Kazmi said.

MSCI's main world equity index .MIWD00000PUS, which tracks stocks in
45 countries, shed 1.8 percent to add to last week's 3.2 percent loss,
its worst weekly fall since May 2012.

CHINA CRUNCH

The concerns over China's economic health spread to mining stocks in
Europe, adding to worries about the impact of the Fed's tapering and
pushing the FTSEurofirst 300 .FTEU3 index of top companies down 1.3
percent by midday to 1,124.10 points.

The Euro STOXX 50 Volatility index .V2TX, known as the VSTOXX, jumped
to a nine-month high, signaling a sharp rise in risk aversion among
investors.

European equity markets weakened despite data showing German business
morale picking up for a second straight month in June, pointing to a
slow recovery for Europe's largest economy.

Commodity markets were faced with the additional pressure of the
stronger dollar, which makes them more expensive to investors outside
the United States.

Copper dropped to its lowest price in 21 months, while oil slipped
below $100 a barrel for the first time in three weeks. <O/R>

"Global money supply will be wound back and the level of investment in
commodities like oil will be pulled back," said Michael McCarthy,
chief market strategist at CMC Markets.

Gold fell more than 1 percent, extending last week's 7 percent
decline, with investors shunning gold's appeal as a safe-haven asset.

(Reporting by Angela Moon; Editing by Dan Grebler)
For More Info vist Here :http://www.reuters.com/

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Global stocks, bonds hit by Fed, China worries

Global stocks, bonds hit by Fed, China worries
(Reuters) - Global equity markets, bond prices and commodities tumbled
on Monday, entering another week of heavy selloff, on worries about
the U.S. central bank's plans to scale back its money printing,
combined with tighter financial conditions in China.

Prices of U.S. Treasuries also resumed their slide on Monday, and
benchmark yields climbed to a nearly two-year high. Wall Street opened
sharply lower, with the Dow Jones industrial average retreating more
than 200 points in early trading, joining a global selloff after
concerns about liquidity crunch in China sent Shanghai stocks down
more than 5 percent.

The broad selloff added to more than $1 trillion in losses in global
equity markets in the five days ended June 21, based on the market
value of MSCI World Index.

The U.S. stock market alone lost about $354.4 billion during the
five-day period, while the U.S. bond market erased about $390.8
billion, measured by the market value of the BofA/Merrill Lynch Broad
Market Index.

"There is no fund flow here. The money out of the bond market is not
going into equities or anywhere else. Prices are going down because
there is panic selling when buyers are very hesitant," said James
Dailey, senior portfolio manager at Team Asset Strategy Fund in
Harrisburg, Pennsylvania.

"The hardest hit is no doubt the bond market. The decline that we have
seen in the past four weeks in the bond market would be equivalent to
a 30-35 percent decline in the stock market considering bonds are
traditionally not volatile."

The declines stem from Federal Reserve's signal last week that the era
of cheap central bank money - which caused many assets to hit record
highs - was coming to an end. But they have been exacerbated by
China's battle to transition to a lower-growth economy.

Both events are unprecedented and have driven a sharp rise in risk
aversion by investors fearing a long period of volatility across
markets.

The shift out of assets that have benefited most from cheap money has
been sharpest in the U.S. debt market, where yields on 10-year
Treasury notes spiked to two-year highs of 2.6 percent on Monday.
<US/>

The yield on two-year U.S. Treasury notes rose to 0.433 percent, which
was its highest level since July 2011.

This rise, and the brighter outlook for the U.S. economy, which was
behind the Fed's decision, has favored the dollar against most major
currencies. The dollar index .DXY, was up 0.2 percent at 82.556 after
rising as high as 82.841, its highest since June 5. The gains built on
last week's 2.2 percent rally, its biggest weekly rise since November,
2011.

WALL STREET TUMBLES

U.S. stocks extended their losses, falling more than 1 percent after
the S&P 500 index's biggest weekly decline in two months as investors
repriced shares in the wake of the Federal Reserve's plans to withdraw
its stimulus.

Investor sentiment also was hurt by a cash crunch in China, which
could further slow Chinese growth. Markets in Shanghai and Hong Kong
posted their biggest daily loss in almost four years.

"We are starting to see that follow-through in Asia, which is all part
of the broader narrative - the focus on a lack of stimulus, a creeping
higher in rates and the potential impact for less liquidity globally,"
said Peter Kenny, chief market strategist at Knight Capital in Jersey
City, New Jersey.

The Dow Jones industrial average .DJI was down 186.54 points, or 1.26
percent, at 14,612.86. The Standard & Poor's 500 Index .SPX was down
23.78 points, or 1.49 percent, at 1,568.65. The Nasdaq Composite Index
.IXIC was down 45.46 points, or 1.35 percent, at 3,311.79.

As investors retreated into the dollar, share markets tumbled, with
the falls heaviest in many of the world's major emerging markets.

MSCI's benchmark index for stocks in the emerging world .MSCIEF fell
2.1 percent, extending losses for a fifth straight day to touch
one-year lows. <EMRG/FRX>

The rise in Treasury yields and better prospects for the U.S. economy
have undermined the attraction of emerging markets, as China's efforts
to clean up its banking system and switch to a slower growth
trajectory raises fears of greater instability.

"The China story is something that people are aware of and keeping an
eye on, but broadly people are still digesting the comments of the
Fed," RBS emerging markets analyst Mohammed Kazmi said.

MSCI's main world equity index .MIWD00000PUS, which tracks stocks in
45 countries, shed 1.8 percent to add to last week's 3.2 percent loss,
its worst weekly fall since May 2012.

CHINA CRUNCH

The concerns over China's economic health spread to mining stocks in
Europe, adding to worries about the impact of the Fed's tapering and
pushing the FTSEurofirst 300 .FTEU3 index of top companies down 1.3
percent by midday to 1,124.10 points.

The Euro STOXX 50 Volatility index .V2TX, known as the VSTOXX, jumped
to a nine-month high, signaling a sharp rise in risk aversion among
investors.

European equity markets weakened despite data showing German business
morale picking up for a second straight month in June, pointing to a
slow recovery for Europe's largest economy.

Commodity markets were faced with the additional pressure of the
stronger dollar, which makes them more expensive to investors outside
the United States.

Copper dropped to its lowest price in 21 months, while oil slipped
below $100 a barrel for the first time in three weeks. <O/R>

"Global money supply will be wound back and the level of investment in
commodities like oil will be pulled back," said Michael McCarthy,
chief market strategist at CMC Markets.

Gold fell more than 1 percent, extending last week's 7 percent
decline, with investors shunning gold's appeal as a safe-haven asset.

(Reporting by Angela Moon; Editing by Dan Grebler)
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Snowden receives refugee document of passage from Ecuador

Snowden receives refugee document of passage from Ecuador
(Reuters) - WikiLeaks founder Julian Assange said on Monday that
fugitive U.S. spy agency contractor Edward Snowden had received
refugee papers from the Ecuador government to secure him safe passage
as he fled Hong Kong over the weekend.

"In relation to Hong Kong, Mr Snowden was supplied with a refugee
document of passage by the Ecuadorean government," Assange told
reporters from inside the Ecuador embassy in London where he has been
himself hiding from arrest for more than a year.

Such papers did not necessarily mean that Snowden would be granted
asylum in Ecuador, Assange said.

(Reporting by Rosalba O'Brien and Costas Pitas Writing by Maria Golovnina)
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Supreme Court holds off on major affirmative action decision

Supreme Court holds off on major affirmative action decision
Avoiding any major ruling on the hotbutton issue of affirmative action
in school admissions, the Supreme Court on Monday sent the case Fisher
v. University of Texas at Austin back to the Fifth Circuit Court of
Appeals. The narrow ruling essentially tees up the issue for the court
to reconsider next year, when it will review another affirmative
action case.

In a seven to one opinion, the court argued the lower court used the
wrong standards to evaluate the Texas college's admissions policies.
Justice Anthony Kennedy wrote for the majority that the Fifth Circuit
should not have given UT Austin as much deference on the matter of
whether its limited approach to racial considerations met the standard
set by the Supreme Court in 2003. That year, in Grutter v. Bollinger,
the court rejected the use of racial quotas but said that schools
could consider race as part of a "holistic" review of a student's
application.

That precedent, Kennedy wrote, "does not permit a court to accept a
school's assertion that its admissions process uses race in a
permissible way without closely examining how the process works in
practice, yet that is what the District Court and Fifth Circuit did
here."

Justice Ruth Bader Ginsburg dissented, while Justice Elena Kagan
recused herself from the case.

Fisher v. University of Texas at Austin was brought to the court by
Abigail Fisher, a white woman who applied to UT Austin as a high
school senior in 2008. She filed suit against the school after she was
rejected, arguing the university's consideration of race didn't meet
standards previously set by the Supreme Court.

While the University of Texas defended its consideration of race, most
students are accepted into UT Austin through the "Top 10 percent" law
-- a program that doesn't consider race. The "Top 10" program grants
automatic admission to the top students in every Texas high school.
Fisher did not qualify for the program. In 2008, just 216 accepted
students accepted outside of the "Top 10" program were black or
Hispanic.

Fisher v. University of Texas at Austin, argued before the court in
October, was considered a major opportunity for the court to rule on
affirmative action. While Monday's ruling doesn't set any new
precedents, the court will take up another affirmative action case as
soon as next year.

The Supreme Court in its next term will consider whether the state of
Michigan violated the Equal Protection Clause by amending its state
Constitution to prohibit affirmative action. The case, referred to as
Schuette v. Coalition to Defend Affirmative Action, reviews a 2006
Michigan ballot initiative that bans the consideration of race or sex
in public education, government contracting and public employment.

The Sixth Circuit Court of Appeals ruled that the Michigan initiative
-- because it came in the form of a constitutional amendment --
"reordered the political process" in a way that put special burdens on
racial minorities.

"Rather than undoing an act of popularly elected officials by simply
repealing the policies they created, Michigan voters repealed the
admissions policies that university officials created and took the
additional step of permanently removing the officials' power to
reinstate them," the appeals court wrote. "Had those favoring
elimination of all race-conscious admissions policies successfully
lobbied the universities' admissions units, just as racial minorities
did to have these policies adopted in the first place, there would be
no equal protection concern."
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Paula Deen re-scheduled for 'Today' on Wednesday

Paula Deen re-scheduled for 'Today' on Wednesday
NEW YORK—Paula Deen will appear on NBC's "Today" show on Wednesday,
according to host Matt Lauer.
Lauer's announcement came Monday, three days after the celebrity cook
abruptly canceled on the morning show, where she was scheduled to
answer questions about her past use of racial slurs.
Lauer said Deen "told us she will be here this time."
While questioned last month in a discrimination lawsuit, the
66-year-old Food Network star admitted to using the N-word in the
past, but she insisted she and her family do not tolerate prejudice.
Deen issued videotaped apologies Friday afternoon seeking forgiveness
from fans and critics.
But hours later, the Food Network announced it wouldn't renew her
contract when it ends this month.
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Berlusconi Faces Verdict in Sex-for-Hire Trial

Berlusconi Faces Verdict in Sex-for-Hire Trial
A Milan court was considering Silvio Berlusconi's fate in his
sex-for-hire trial Monday, with the former Italian premier risking an
end to his two-decade political career and a prison term if found
guilty.

Berlusconi, 76, is charged with paying an underage Moroccan teen for
sex and then trying to cover it up with phone calls to Milan police
officials when she was picked up for alleged theft. Berlusconi and the
woman deny having had sex with each other.

Prosecutors are seeking a six-year jail term and a lifetime ban from
politics for Berlusconi. Even if he is convicted, there are two more
levels of appeal before the sentence would become final. The process
can take months.

Berlusconi holds no official post in the current Italian government,
but remains influential in the uneasy cross-party coalition that
emerged after inconclusive February elections.
The charges against the billionaire media mogul stem from his infamous
"bunga bunga" parties in 2010 at his mansion near Milan, where he
wined and dined beautiful young women while he was premier. He says
the dinner parties were elegant soirees; prosecutors say they were
sex-fueled parties that women were paid to attend.
Neither Berlusconi nor the woman at the center of the case, Karima
el-Mahroug, better known by her nickname Ruby, have testified in this
trial. El-Mahroug was called by the defense but failed to show on a
couple of occasions, delaying the trial. Berlusconi's team eventually
dropped her from the witness list.

El-Mahroug did testify in the separate trial of three Berlusconi aides
charged with procuring prostitutes for the parties. She told that
court that Berlusconi's disco featured aspiring showgirls dressed as
sexy nuns and nurses performing striptease acts, and that one woman
even dressed up as President Barack Obama.

Berlusconi was not in court on Monday as the three female judges began
deliberating his fate at 9:45 a.m. Outside the courthouse a few people
held signs supporting prosecutors, including one reading: "Justice,
Legality and Dignity." A pair of Berlusconi supporters was also there.

Asked if Berlusconi was optimistic, defense attorney Piero Longo said
outside the courthouse that he was a "realist." Longo turned sarcastic
when asked if the Milan courts were biased against his client: "No,
Berlusconi has always been treated with great kindness and care in
Milan. Having a trial in Milan for Berlusconi is a privilege."

Berlusconi frequently has railed against Milan prosecutors and judges,
accusing them of mounting politically motivated cases against him.

El-Mahroug, now 20, said in the other trial that she attended about a
half-dozen parties at Berlusconi's villa, and that after each,
Berlusconi handed her an envelope with up to 3,000 euros ($3,900). She
said she later received 30,000 euros cash from the then-premier paid
through an intermediary — money that she told Berlusconi she wanted to
use to open a beauty salon, despite having no formal training.

She was 17 at the time of the alleged encounters but passed herself
off as being 24. She also claimed she was related to then-Egyptian
President Hosni Mubarak. Berlusconi's lawyers argued that he —
thinking el-Mahroug was indeed Mubarak's niece — called police after
she was detained in a bid to avoid a diplomatic incident.
El-Mahroug denied that Berlusconi had ever given her 5 million euros
($6.43 million). She said she told acquaintances and even her father
that she was going to receive such a large sum "as a boast," but that
it was a lie to make her seem more important.

The verdict garnered intense international media attention with half a
dozen TV satellite trucks taking positions outside the courthouse. The
verdict comes on the heels of Berlusconi's tax-fraud conviction, which
along with a four-year prison sentence and five-year ban on public
office, have been upheld on a first appeal.
The tax-fraud case is heading to Italy's highest court for a final
appeal after Berlusconi's defense failed to derail it last week at the
constitutional court.

Berlusconi, who has been tried numerous times relating to his business
dealings, has been convicted in other cases at the trial level. But
those convictions have always either been overturned on appeal or the
statute of limitations ran out before Italy's high court could have
its say.

The sex-for-hire case is the first involving his personal conduct.
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Pervez Musharraf should be tried for treason, says Pakistan's prime minister

Pervez Musharraf should be tried for treason, says Pakistan's prime minister
The former military dictator Pervez Musharraf should be tried for high
treason, Pakistan's prime minister said, raising the prospect of a
serious clash between the country's civilian and military masters.

A treason trial would mark the first time in Pakistan's history that a
military ruler has been held accountable, and the decision was cheered
by many who believe the country's overweening army needs to accept the
primacy of elected politicians.

The announcement by Nawaz Sharif, Pakistan's recently elected prime
minister, ended months of speculation over whether the government
would dare take on a former president and army chief who could face
the death penalty if found guilty of overturning the country's
constitution.

Only the government is able to try someone for treason, for which a
special court would have to be established.

Although Musharraf is currently under house arrest and has negligible
support in the country, many observers have long claimed the still
powerful military elite would never allow a civilian court to try one
of its former chiefs.

"Musharraf is still more popular in the army than [his successor
General Ashfaq Parvez] Kayani," said a lawyer, Chaudry Faisal Fareed.

He said Sharif risked "opening a Pandora's Box" if the trial expanded
to drag in other high-ranking officers.

Musharraf's actions amounted to high treason, Sharif told parliament
on Monday , promising that the former dictator had to "answer for all
his deeds in court".

"The prime minister is under oath to protect, preserve and defend the
constitution and it is implicit in his oath that his government
ensures that persons guilty of acts under Article 6 are brought to
justice," he said.
In a statement, Musharraf's spokesman said the Sharif government was
"demonstrating recklessness in its intention to pursue unwarranted
treason charges".

The statement said: "The people of Pakistan will not tolerate this
circus, which is primarily meant to create a diversion. It is taking
focus away from addressing serious challenges faced by the nation and
can result in unnecessary tension amongst the various pillars of state
and possibly destabilise the country."

The development adds to the legal troubles Musharraf has attracted
since his ill-judged decision to return from self-imposed exile in
March in the hope of running for election.

Apparently deluded about his popularity in Pakistan, which he said he
judged from his number of Facebook friends, he did not receive the
mass welcome he had hoped for.

Election officials snuffed out any hope that he might make a political
comeback when he was banned from standing in last May's election.

Private prosecutions were brought against him for his alleged role in
the assassination of the former prime minister Benazir Bhutto in 2007,
the killing of a prominent tribal separatist leader in 2006 and the
detention of senior judges in 2007 during the tail end of his
presidency.

In the view of many lawyers, Musharraf is likely to be successful in
defending himself against those charges, but treason charges are "an
open and shut case", according to Fareed.

Talat Masood, a retired army officer, said a trial was inevitable
given that Musharraf had alienated two of the country's most powerful
men: Sharif, whom he toppled in a 1999 coup, and Iftikhar Muhammad
Chaudhry, the activist chief justice who was the object of the then
president's battle against senior judges in 2007.

"It's a gamble, no doubt about it," said Masood. "Sharif is taking a
certain element of risk because the fight against militancy is the
greatest challenge Pakistan faces right now and he needs the military
for that."
Some have already detected army meddling in the issue, including
Musharraf supporters' attack on lawyers outside a court hearing in
April.

In May, a senior lawyer involved in the investigations into Bhutto's
murder was shot dead as he drove to work in Islamabad.

Many assume that even if the trial does go ahead, a political deal
will be hatched to spare Musharraf's life, or even allow him to leave
the country to live out his days in exile.

One possible scenario might see the intervention of Saudi Arabia, one
of Pakistan's closest allies. Such an outcome would be rich in irony
given that Sharif was given exile in the kingdom after he Musharraf
deposed him.

Akhtar Hussain, a former vice-president of Pakistan's bar association,
said it was likely Musharraf would ultimately receive a presidential
pardon after a long legal process that is likely to stretch into 2014
and beyond.

Merely putting the former general on trial would mark an important
milestone for Pakistan, he said. "The key thing is the initiation of
the trial itself, which is very important for the standing of
democratic institutions in this country. The result, whether acquitted
or ultimately pardoned is a different matter."
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