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And then I go and spoil it all by ... banning naked shorts

The euro logo is seen in front of the European Central Bank


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Stories Report on Business is following today:

Euro, Canadian dollar, stocks tumble

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What began as a more upbeat day on global financial markets turned into another sour performance as a decision by Germany to temporarily ban certain naked short-selling heightened fears over Europe's debt crisis. The euro tumbled again, the Canadian dollar sank as oil pulled back, and North American stocks extended their losses.

"It makes it look as if the Germans are worried about something behind the scenes that the market's not aware of," one strategist told Bloomberg News. "It almost looked panicked, which further undermines confidence in the markets. They've done as poor a job as one can do in delivering a message."

Another analyst, Michael Malpede of Easy Forex in Chicago, agreed, telling Reuters in an interview that "it tends to suggest desperation on the part of the German officials who want to discourage what they consider speculative attacks on euro zone financial markets."

Germany's market regulator unveiled a ban on naked short-selling of major financial institutions and some credit default swaps, citing the severe volatility in debt of several euro zone countries.

"The news was not welcomed by [euro]bulls as the bears saw the move as another sign of the inability and desperation of European governments to address the underlying problem," said RBC Dominion Securities senior currency strategist Matthew Strauss. "The uncertainty regarding the new measures and the fact that Germany might be going alone on this, at least initially, assisted the [euro]bears in their cause."

Investors sell short when they sell borrowed securities in hopes of buying them back later at a lower cost. The more controversial naked selling involves selling the securities before ensuring they can be borrowed. Read the story

Related: Market Blog by David Berman - Uh, oh, another short-selling ban?

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Related: Dow, TSX rattled again


SEC proposes new curbs

U.S. stock exchanges would briefly halt trading of some stocks that have big prices swings under new trading rules aimed at avoiding market plunges and proposed by federal regulators. The rules would take effect in mid-June under a six-month pilot program agreed to by major exchanges and the Securities and Exchange Commission. The SEC announced them this afternoon and put them forward for public comment, in a response to the stunning plunge of May 6. Under the plan, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more would be halted for five minutes. These rules, known as "circuit breakers," would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. That's almost the entire trading day.

It's not over, Roubini warns

Nouriel Roubini, the New York University professor renowned for calling the financial meltdown, warned in a radio interview today that the troubles in Greece are simply the tip of the iceberg, and that the troubles of the euro zone represent the "second stage of a typical financial crisis." In an interview with the BBC, he pointed out that the $1-trillion rescue of the euro zone unveiled last week has not calmed the nerves of anxious investors, and has left markets wary of the outlook for some of its countries.

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Related: Boyd Erman on how the credit crunch seems so déjà vu

Related: Investor jitters over Europe heighten

Related: My big, fat Greek fiscal calamity


What Wal-Mart, Saks earnings show

The quarterly results of two retailers at either end of the U.S. consumer spectrum - Saks Inc. and Wal-Mart Stores Inc. - tell the tale of how some Americans are rebounding from the recession while others remain troubled.

Saks today posted a better-than-expected first-quarter profit of $18.8-million (U.S.) or 11 cents a share, a turnaround from the loss of $5.1-million or 4 cents a year earlier. Revenue rose 7 per cent to $667.4 million while same-store sales, a key retailing measure, rose more than 6 per cent. The upscale retailer benefited from less discounting and signs of a more confident consumer.

In turn, Wal-Mart also posted a hefty jump in first-quarter profit, a 10-per-cent rise to $3.32-billion or 88 cents a share from $3.02-billion or 77 cents a year earlier. Revenue rose about 6 per cent to $99.9-billion but same-store sales, those open at least a year, fell 1.1 per cent, the fourth decline in a row.

What the results show is that Wal-Mart's fortunes in its core U.S. markets remain sluggish, while other retailers are coming back. Wal-Mart sales surged during the recession, and the latest results suggest some shoppers have moved back to higher-end goods from low-priced offerings.

But at the same time, its core shoppers aren't rebounding quickly from the slump. "Our customers, particularly in the United States, are still concerned about their personal finances and unemployment, as well as higher fuel prices," chief executive officer Mike Duke said as the world's biggest retailer unveiled the quarterly results.

Canada could benefit from Australia mining tax

Canada could benefit from Australia's proposed new mining tax, UBS Ltd. said today in a research report. Australia has unveiled proposals to boost effective mining taxes to 55 per cent from 38 per cent to become one of the highest global tax brackets, UBS analysts said, adding its surveys show Brazil, Africa and Mongolia could follow suit.

UBS warned that major diversified miners such as BHP Billiton and Rio Tinto could lose 15 per cent to 18 per cent of their value if Australia implements the new taxes, but countries such as Canada, Russia and Kazakhstan could be winners as they "leverage their competitiveness against their traditional rival Australia."

"Several countries see an opportunity to win exploration and mine development market share from Australia, a well established international investment destination," the analysts said. "We see Canada, Kazakhstan and Russia as not likely to follow Australia's lead for this reason."

UBS added that Canada's Barrick Gold and Teck Resources, and Anglo American, "are the direct beneficiaries in terms of relative value with Australian companies exposed to a successful implementation of the tax."

Pfizer to shut plants

Pfizer Inc. is cutting back operations in the wake of last year's takeover of Wyeth. The pharmaceutical giant said today it would close eight plants over the next five years, while trimming operations at several others. The move is part of its previously announced plans to shed more than 19,000 jobs after its deal with Wyeth. Read the story

Google to acquire Global IP

Google Inc. has struck a $68.2-million (U.S.) cash deal to acquire Norway's Global IP Solutions Holding AB, which will allow the Internet search giant to enhance video and audio online.

"The Web is evolving quickly as a development platform, and real-time video and audio communication over the Internet are becoming important new tools for users," Google engineering director Rian Liebenberg said in a statement.

U.S. housing starts surge, but signs are soft

Home construction in the United States jumped 5.8 per cent last month, reaching the highest level since October of 2008, but a slowdown in building permits suggests the market will cool. The increase in housing starts to an annual rate of 672,000 indicates buyers were scurrying in April to get in on a tax credit of up to $8,000 (U.S.) before it expired.

"While housing starts came in above expectations, the drop in permits suggests that this is purely a temporary blip as a result of a rush to break ground and guarantee a sale before the expiration of the home buyer tax credit at the end of April," said Toronto Dominion Bank economist James Marple.

From today's Report on Business

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