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Morning Market Roundup: Italian Crisis, Fender Nixes IPO, Venture Funding Down $7B


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

Italy: Italian Premier Mario Monti says the debt crisis has spread to Italy and that the country must try to avoid taking a bailout.

At a news conference Friday, Monti says the financial turmoil has weakened trust in the euro currency project.

He emphasized that Italy does not need further budget measures to raise revenue and shore up public finances.

Italy's borrowing costs have risen steadily in recent weeks due to fears that the government will not be able to handle its high debt load. On Friday, the 10-year bond yield was up 0.23 percentage points at 6.13 percent.

The Confindustria industrial lobby estimates Italy has burned up 0.9 percent of GDP during the crisis by paying higher interest rates when raising money in bond markets.

Fender: The guitar-maker Fender, finding itself playing before a hostile crowd, is reversing course on becoming a publicly traded company.

The company, whose guitars have been wielded by Bob Dylan and Bruce Springsteen and set afire by Jimi Hendrix, said late Thursday that economic strife, particularly in Europe, has created a poor environment for an initial public offering.

Fender had originally filed its plans to go public in March. The cancellation is a blow to an IPO market that has been moribund since Facebook Inc.'s bumpy offering in May.

Fender Musical Instruments Corp. was founded in 1946 by Leo Fender and the company created the Telecaster and Stratocaster guitars in the 1950s. It is based in Scottsdale, Ariz.

Venture Funding: Funding for startups fell 12 percent in the April-June period as venture capitalists poured less money into fewer deals than a year earlier. But the number of companies getting funded in the earliest stages of development reached the highest level in more than a decade - a hopeful sign for the broader economy and an indication that investors are willing to wait for returns.

A report due out Friday says that startup investments slipped to $7 billion in the second quarter, down from $8 billion in the same period a year earlier. The companies getting funded were mainly in the software, Internet, industrial, and energy sectors. There were 898 deals completed during the quarter, down 15 percent from 1,057 a year earlier.

The MoneyTree study was conducted by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. The study tracked four stages of venture capital funding. Depending on how far along companies are in development, they received either "seed", "early", "expansion" or "later-stage" funding.

Compared with the first quarter, both the amount of VC money and the number of overall deals increased. The April-June quarter saw most early-stage deals completed since the first quarter of 2001, with $2.1 billion going into 410 deals.

U.S. Futures: Stock futures slid Friday as the economic crisis in Europe overshadowed a surprisingly strong earnings performance by major U.S. corporations.

Dow Jones industrial average futures fell 65 points to 12,815. Standard & Poor's 500 futures gave up 9.2 points to 1,362.70 and Nasdaq futures fell 8.75 points to 2,643.50.

Both Britain and Spain are seeing the costs of borrowing rise over doubts about their ability to repay debt. Spain's borrowing rates are nearing unsustainable levels and tens of thousands of protesters have taken to the streets in 80 cities, including Madrid, where they have clashed with riot police.

The Associated Press contributed to this report.

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