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Morning Market Roundup: EU Leaders Meet for Crisis Talk, Moody's & 'Outsized Losses,' Asian Stock Dive


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

EU Leaders:  The leaders of Germany, France, Italy, and Spain gathered in Rome on Friday to seek agreement on ways to pull Europe out of its crippling debt crisis.

Germany's Angela Merkel, Francois Hollande of France, Spanish Prime Minister Mariano Rajoy, and host Mario Monti of Italy will get together to push for consensus to give momentum to a crucial summit of European Union leaders in Brussels on June 28 and 29.

Italy’s Prime Minister Mario Monti speaks at a press conference during the G20 summit in Los Cabos, Mexico, Tuesday, June 19, 2012. (AP Photo/Eduardo Verdugo)

Monti has warned of severe consequences for the 17 countries that use the euro and the world economy if next week's summit fails, as reported earlier on The Blaze.

"A large part of Europe would find itself having to continue to put up with very high interest rates, that would then impact on the states, and also indirectly on firms. This is the direct opposite of what is needed for economic growth," Monti said in an interview with five European newspapers published Friday.

Without a successful outcome at the summit "there will be progressively greater speculative attacks on individual countries, with harassment of the weaker countries."

Among the items on the agenda are a proposal by Monti to use Europe's emergency bailout fund to buy up countries' debt on the open market. This would bring down borrowing costs for countries like Spain and Italy. Other items to be discussed include plans to develop cross-border banking supervision and a possible tax on financial transactions, a government source said on condition of anonymity, because the issues are in flux.

Moody’s: As reported yesterday on The Blaze, Moody's Investors Service has lowered the credit ratings on some of the world's biggest banks, including Bank of America, JPMorgan Chase and Goldman Sachs, reflecting concern over their exposure to the violent swings in global financial markets.

The downgrades late Thursday ultimately are a measure of Moody's view on the ability of the banks to repay their debts. The ratings agency also cut its ratings on Barclays, Deutsche Bank and HSBC, some of the largest banks in Europe, a region fighting to contain a government debt crisis.

(AP Photo/Mark Lennihan, File)

The banks "have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's global banking managing director Greg Bauer said in a statement outlining the rational for the downgrades.

EU Financial Tax: The European Union, struggling to hold together under financial and political pressures, may soon fracture a bit further over the issue of whether to tax financial transactions to make banks pay for their own bailouts.

As EU finance ministers trooped into a meeting in Luxembourg on Friday morning to attempt to forge a unified response to Europe's financial crisis, unanimity on the tax issue was nowhere in sight. With countries including the Netherlands and Britain unalterably opposed to the proposal, finance ministers from other countries said they would likely break away to institute the tax in a smaller group.

"I will not allow this project to die," Austrian Finance Minister Maria Fekter said on her way into the meeting. "I expect that there will be nine countries, amongst them non-euro countries," that will decide to implement the tax.

German Finance Minister Wolfgang Schaeuble said there would be a vigorous effort to move forward on the proposal with all 27 EU member countries. "We emphatically want to move ahead," he said. But prospects for Europe-wide success seemed slim.

Some countries said they shared the goal of the current proposal but not the means put forward for achieving it.

Asian Stocks: European and Asian stocks fell Friday after economic reports suggested growth will weaken in the world's major economies. China's growth has been a pillar of the global economy in recent years, so its slowdown has been of particular concern to investors.

A man walks by the electronic stock board of a securities firm in Tokyo indicating the Nikkei index which fell 47.09 points to 8776.98 yen in the morning session Friday, June 22, 2012. (AP Photo/Itsuo Inouye)

In Asian trading, Japan's Nikkei 225 index fell 0.2 percent to 8,802.54 and South Korea's Kospi slid 2.1 percent to 1,848.57. Hong Kong's Hang Seng Index lost 1 percent to 19,067.51 and Australia's S&P/ASX 200 was down 1 percent at 4,046.70. Benchmarks in Singapore, Taiwan, Thailand and Indonesia fell while the Philippines rose. Markets in mainland China were closed for a public holiday.

The Associated Press contributed to this report.

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