Morning Market Roundup: Facebook’s IPO Disaster, UK Eyes Stimulus, China & Econ Recovery

Here’s what’s important in the business world this morning:

Facebook: Regulators are examining whether Morgan Stanley, the investment bank that shepherded Facebook through its highly publicized stock offering last week, selectively informed clients of an analyst’s negative report about the company before the stock started trading.

Rick Ketchum, the head of the Financial Industry Regulatory Authority, the self-policing body for the securities industry, said Tuesday that the question is “a matter of regulatory concern” for his organization and the Securities and Exchange Commission.

“Global economy-killer?” Market Watch’s Paul B. Farrell asks.

“Yes, Facebook has now been added to my list of global macroeconomic triggers (deadly unpredictable Black Swans like the dot-coms in 2000, subprimes in 2008) that the denial system driving the collective brain of American investors will simply tune out, till it’s too late. Till a crash takes the economy down again,” he adds.

“Yes folks, Facebook is that dangerous to our economy and to the global economy.”

The top securities regulator for Massachusetts, William Galvin, said he had subpoenaed Morgan Stanley. Galvin said his office is investigating whether Morgan Stanley divulged to only some clients that one of its analysts had cut his revenue estimates for Facebook before the stock hit the market on Friday.

Oh, it should probably be mentioned that Facebook founder Mark Zuckerburg already sold 30.2 million of his shares in the social network company.

U.K.: Retail sales fell sharply in Britain during the wettest April in a century, official data showed Wednesday, a piece of bad economic news which analysts say could help prod the Bank of England to approve more monetary stimulus.

The Office for National Statistics said the volume of sales in April dropped 2.3 percent from March and 1.1 percent from a year earlier. Comparisons with last year were skewed by warm weather in 2011 and the wedding of Prince William and Kate Middleton, which had combined to boost spending, the agency said.

Special factors aside, the April sales drop weighs down on hopes that Britain’s economy will break out of recession in the second quarter.

China: China‘s Cabinet promised Wednesday to step up efforts to reverse a steep slowdown in the world’s second-largest economy and said it would encourage private investment in energy and other state-dominated industries.

Chinese leaders have gradually eased controls imposed over the past two years to cool an overheated economy and inflation. But some analysts warn they need to move faster as global demand and Chinese consumer spending weaken.

Economic growth fell to a nearly three-year low of 8.1 percent in the first quarter and factory output in April grew at its slowest pace since the 2008 crisis, raising the threat of job losses and possible political tensions.

Bundesbank: Germany’s central bank says the 17-country eurozone would be able to cope with Greece failing to implement austerity and reform promises.

Greece is holding new elections next month after last month’s vote failed to produce a government. In the May 6 election, opponents of painful cuts creditors have demanded in exchange for rescue loans made big gains.

Germany’s Bundesbank wrote in its monthly report, published Wednesday, that the situation in Greece is “highly worrying” and pointed to a danger that the country might not implement its promises, meaning future aid would be at risk.

It says that “Greece would have to carry the consequences,” without specifying what they were.

Though conceding that the challenges would be “significant,“ it says they are ”manageable” under careful crisis management.

The Associated Press contributed to this report.