profit.com.pk

Page 02

Sunday, 03 June, 2012

KARACHI

STAFF REPORT

ExpEct major positives like in-corporation of the recently-promulgated FinanceAmendment Ordinance 2012into the Finance Bill 2012, the

new fiscal document is believed to havebrought no major surprises for the coun-try’s capital market.

the presidential ordinance, whichincludes the rules for computation of themuch-debated capital Gain tax (cGt)and is considered to be a turning pointfor the volume-starved equity market, isgoing to get a parliamentary nod with thepassage of the new budget.

“All in all the Budget FY13 has nomajor surprises for the capital markets,”said the analysts at topline Research.the budgetary measures, the observersview, would have an impact ranging fromneutral to positive on the listed sectorsincluding banks, cement, fertilizer, autoassemblers, insurance, textile, explo-ration and production, oil manufacturingcompanies and refineries, Independentpower producers, telecommunication,chemicals, pharmaceuticals and FastMoving consumer Goods.

Generally, the fresh budget for localbourses envisages that: No source of in-vestors’ income would be asked for thefunding made for at least 45 days tillJune 30 (2012) or for at least 120 days tillJune 30 (2014) provided statement of in-vestment is filed along with return andwealth statement.

turnover tax reduced from 1 percentto 0.5 percent. For investment in Initialpublic Offering (IpO), individuals wouldnow get tax credit up to 20 percent oftaxable income or Rs 1 million, whichever is less. previously, individuals wereentitled to get a tax credit of 15 percentor Rs0.5mn which ever is less. Also theholding period to get a tax rebate hasbeen reduced to 2 years from 3 years.

No reduction made in corporate tax

rate of 35 percent.As expected the government ignored

the demand of minimum dividend pay-ment by the listed firms. Similarly, thenew budget also maintains 10 percent taxon dividend setting aside the KarachiStock Exchange’s (KSE) proposal.

to curb speculation and holding realestate for trading purpose, the govern-ment would charge 10 percent and fivepercent tax on gain on property if soldwithin one year and two years of its ac-quisition, respectively. However, therewould be no cGt on sales after two years.this may divert some funds from prop-erty business towards shares trading.

the analysts maintain a positivestance on the bourse which is trading atFY13 estimated pE of 6.5x and dividendyield of 8 percent. In the short run, how-ever, the dwindling pak rupee and melt-down in global stocks may affect localmarket also, warned they. A sector-wisebreakup of budgetary measures and im-pact is as follows:

Banks MEASURES

- contrary to media reports tax on t-bill remain at 35 percent in line withstandard corporate tax unlike marketexpectation of 40 percent.

- Dividends received on investmentsin money market and income fundsare now charged at 25 percent in-stead of 10 percent in 2012. this taxwould progressively be increase to 35percent in 2013.

- Exemption limit of WHt on cashwithdrawals (currently charged at 0.2percent) increased from 25k to 50k.

- Reliance on bank and non bank bor-rowing would keep interest rate highwith no major growth expected inprivate sector credit

Impact NEUTRAL

Increase in tax on dividends on invest-ment in funds has no major impact on

banks as 2012 average earnings would berevised down by less than one percent.

However, few banks like ABL andUBL, which have higher exposure infunds their profits would be affected by 2to 4 percent, if they hold funds for shortperiod. On the other hand, the said meas-ure would be slightly negative for thoseAMcs which are subsidiaries of banks.Moreover, increase in cash withdrawallimit would slightly improve depositbase. “Banks would continue to benefitfrom higher interest rates and lower pro-visioning,” the analysts said.

cement MEASURES

- Increase in pSDp, which is also spenton infrastructure development, toRs873bn, up 20 percent from last year.

- FED on cement price reduced byRs100 per ton (Rs5 per bag) toRs400 per ton (Rs20 per bag).

- Reduction in turnover tax from 1 per-cent to 0.5 percent for cement firmshaving tax losses.

- custom duty on rubber scrap re-duced from 20 percent to 10 percent.

- Increase in gas cess by Rs87 per mmbtuon captive power plants which wouldincrease cost of power generation.

Impact NEUTRAL TO POSITIVE

the government higher allocation inan election year on developmentspending may generate local demandfor cement. this would boost domesticdemand for cement in FY13 which isalready up 9 percent during 10MFY12.Moreover, reduction in FED (if notpassed on to consumers), low customduty on rubber scrap and lesserturnover tax would imo 0.5 percent forcompanies with tax losses.- to encourage normal tax regime and

phasing out of presumptive taxRegime (ptR) in three years, lowertax rates are being offered to com-

mercial importers, exporters andsuppliers.

- Increase in gas cess by Rs87 perMMBtU on captive power plantswould increase cost of production

Impact NEUTRAL

Reduction in turnover tax and decrease inexport duties would improve textile manu-facturers’ earnings. On the flip side, increasein gas cess would be slightly negative.

e&p MEASURES

- the government announced custom-ary dividends estimates from stateowned E&p and royalty targets on oiland gas for FY13. the government isexpecting to receive dividend of Rs8and Rs10 per share from OGDc andppL, respectively.

- the government has announced atarget from privatization proceeds ofRs74bn, which implies the govern-ment’s intention of conducting ppL’ssecondary public offering in FY13.

Impact NEUTRAL

the budget remained a non-event for theexploration sector. Furthermore, we ex-pect OGDc and ppL to announce a divi-dend of Rs10 and Rs16 per share in FY13.

Omcs and RefIneRy MEASURES

- the government announced pL tar-get of Rs120bn as against FY12 col-lection estimate of Rs69bn.

- the government announced its totaldividend expectation from pSO forFY13, rendering into cash payout ofRs13 per share.

- the government announced a gas de-velopment surcharge of Rs300 andRs200 per MMBtU on cNG fornorth and south zone.

- Abolishment of FED on lubricatingand base oil. FED on base oil is cur-

rently stand at Rs7.15 per liter.

Impact NEUTRAL TO POSITIVE

Increase in taxes on cNG would reducepetrol/cNG price differential, hence bod-ing well for petrol sales. Abolishment ofFED on lube oil could provide traction tolocal lubricating sales going forward. Forrefineries, abolishment of Rs7.15 per literFED on base oil bodes well for NRL, theonly lube refinery of pakistan. We esti-mate an annualized earning impact ofRs10-12 per share on NRL, assuming theimpact is not passed on. However lubeprices and margins would continue to bea function of international oil prices.

Ipps MEASURES

- the government has announced totalelectricity subsidy target of Rs185bnagainst revised allocation of Rs464bnin the outgoing year. the amount in-cludes Rs120bn for inter-disco tariffdifferential against last year revisedallocation of Rs417bn.

Impact NEUTRAL

Given existing tariff differential of 20-25 percent in electricity tariff and costand political compulsion in the elec-tion year playing a road block to fur-ther reduce tariff-cost gap, weestimate the electricity subsidy toovershoot the initial allocation. Assuch the budget turned out to be anon-event for the Ipps. However, re-cent fall in crude and furnace oil pricecan be a blessing in disguise if thistrend of oil continues in FY13 also.

telecOm MEASURES

- 20 percent increase in Governmentemployee salaries.

- the Government also announced itstotal dividend expectation fromptcL for FY13, rendering into cashpayout of Rs2 per share

- the Government announced the rev-enue from 3G licenses of Rs79bn inFY13.

- No change in FED for telecom sector

Impact NEUTRAL TO NEGATIVE

Increase in salaries would negatively im-pact profitability of ptcL as salary ex-penses contribute around 17 percent oftotal cost. the increase could dilute ptcLearning by Rs0.3-0.35 per share but, wehave already partially priced in the effectin our financial models. Expected rev-enue of Rs79bn from 3G licenses seemsto be an arbitrary number and final rev-enue would be decided when consultantwould be hired.

Merkel rejects debtsharing as Obamaurges end to crisis cloud

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news02Sunday, 3 June, 2012

BLOOMBERG

GERMAN hardened her opposition to joint debtsharing in the euro region as president singledout ’s leaders for not doing enough to stop thefinancial crisis. With Europe’s debt crisis citedlast week for canceled IpOs, weaker-than-ex-

pected chinese manufacturing figures and a rise in the U.S.jobless rate, Merkel rejected joint debt issuance in the 17-na-tion euro area as a solution, saying “under no circumstances”would she agree to Germany-backed euro bonds.

Now, some “come along and ask for euro bonds, sayingall we need are equal interest rates and everything will turnout all right,” Merkel said in a speech to members of her inBerlin today. Instead, what’s needed is an economic overhaulto tackle the lack of competitiveness in Europe, she said.Merkel, the head of Europe’s biggest economy and the largestcontributor to bailouts for Greece, and Ireland, is the pivotalplayer in efforts to resolve the crisis now in its third year. AsSpain struggles to avoid becoming the next country to callfor a rescue and the euro slides near a three-year low againstthe dollar, Obama added to pressure from the , and Italy todo more to halt the spread of contagion.

euROpean ‘clOud’ Obama, speaking at a fundraiser yesterdayas he bids for re-election in November, saidthat a report showing the slowest month ofU.S. employment growth in a year was inlarge part “attributable to Europe and thecloud that’s coming over from the Atlantic.”the “whole world economy has been weak-ened by it,” he said. “Europe is having a sig-nificant crisis in part because theyhaven’t taken as many of the de-cisive steps as were neededto deal with the challenge,”he said at a separateevent in . the president’spoint person for the Eu-ropean crisis, , treasuryundersecretary for in-ternational affairs,ended a three-day tourof Europe’s crisis cap-itals yesterday aswork continued onerecting a financialfirewall to stem con-tagion. the EuropeanUnion is targetingJuly 9 as the startdate for its permanentrescue fund, the 500billion-euro ($620billion) European Sta-bility Mechanism, anEU official said.Span-ish Storm Brainardheld closed-door meet-ings with governmentofficials in , Madrid,paris, Frankfurt andBerlin in a week when in-vestors flocked to the per-ceived safety of Germanand U.S. bonds. the eurofell to almost a three-year lowagainst the dollar and an 11-yearlow against the yen as uncertaintyover the outcome of Greek electionson June 17 shifted to take in , whereprime Minister ’s government isstruggling to shore up banks amid arecession. “the storm hasn’t disap-peared but we aren’t going to sink,”Rajoy said in a speech today in Sitges,near Barcelona. “We are not on theedge of a precipice.” Rajoy called on an-alysts and investors to moderate “irra-tional” views of Spain’s financialsituation, saying that Spain “will emergefrom the storm under its own efforts andwith the support of our European part-ners.” Spanish 10-year yields ended theweek at 6.51 percent, approaching the 7percent level that triggered previous euro-area bailouts, though below a euro-erarecord of 6.78 percent on Nov. 17. ’s equiv-alent 10-year bund rate was at 1.17 percentafter reaching 1.127 percent, the lowestsince Bloomberg began collecting the datain 1989. German two-year yields slid belowzero for the first time.

stOcks declIne Irish backing for Europe’s fiscal pact yes-

terday failed to halt a decline in Euro-pean stocks for the fourth week in five,with the Index dropping 3.1 percent to235.09. the benchmark measure hasplunged 14 percent from this year’shigh on March 16. Merkel laudedRajoy’s efforts “for the first time to un-dertake sweeping labor market re-forms,” tackle the real- estate crisisand Spanish banks, where she saidthe situation is “fragile.” “that’s whyit’s important to create transparencyquickly over what that means for thebanks, what the situation is for re-capitalization,” she said. Germanyand Spain are in close contact overthose efforts “as we must tackle theproblems of the past and start thefuture with a clean slate.”

ItalIan cRItIcs the German chancellor, who wasbesieged over her crisis- fightingpolicy last week by Italian primeMinister and EcB president ,took aim at Italy as she cited a“missed opportunity” offered by

the euro’s introduction for Europeto overhaul uncompetitiveeconomies. the cheaper borrowing

that came with the euro meant“countries like Italy became virtually

on a par with Germany in terms of ,” shesaid. Now “what we have is a situation that we

didn’t want,” Merkel said. “the freedom createdby this situation wasn’t exploited to improve long-term competitiveness. Instead, the time was used

to spend too much money in consumption and toolittle time in tackling reforms.” Greece, where thecrisis first emerged in late 2009, came back into thespotlight as Moody’s Investors Service lowered thecountry’s highest possible credit rating yesterday,saying there was an increasing risk the country mayexit the euro region. Alexis tsipras, head ofGreece’s biggest anti-bailout party Syriza, appealedto voters to give him the power to start anew by can-

celing the terms of the country’s internationalbailout and restore pensions and wages. the domes-tic pressure facing Merkel on her crisis response wasunderscored by an editorial in Germany’s best-sellingBild newspaper today, saying that is reaching theendgame as soon as next week, regardless of the elec-tion outcome. Greece “is unravelling,” and ever-moreaid cannot deliver the new beginning that Greeceneeds, said Nikolaus Blome, Bild’s chief political

columnist. the Greek state “must be rebuilt, like in adeveloping nation,” he said. “Someone among the euro-

zone leaders must finally tell the Greeks the truth: thisfresh start can only be achieved with a radical first step.And that means leaving the euro.”

Merkel rejects debtsharing as Obamaurges end to crisis cloud

MADRID

REUTERS

Spain called on Saturday for a new fiscaleuro zone authority which wouldharmonize national budgets and managethe block’s debts. prime MinisterMariano Rajoy said the authority was theanswer to the European debt crisis andwould go a long way in alleviating Spain’swoes as it would send a clear signal toinvestors that the single currency is anirreversible project. It is not the first timea European leader has proposed creatingsuch an authority but the woes and thesize of Spain - a country deemed too bigto fail - may now accelerate talks ahead ofa EU summit on June 28-29. theprospect of a Greek euro exit and Spain’sparlous finances have prompted EUpolicymakers to hurriedly considermeasures such as a “banking union”.Germany, the paymaster of the euro zone,and others insist such a move can onlyhappen as part of a drive to much closerfiscal union and relinquishing of nationalsovereignty. Overspending in the regionsand troubles with a banking sector badlyhit by a property crash four years agohave sent Spain’s borrowing costs torecord highs and pushed the countrycloser to seeking an international bailout.

the risk premium investors demand tohold Spanish 10-year debt rather thanGerman bonds rose to its highest sincethe launch of the euro - 548 basis points -on Friday. the Spanish government,which has hiked taxes, slashed spending,cut social benefits and bailed out troubledbanks, argues that there is little else it cando and the European Union should nowact to ease the country’s liquidityconcerns. In private, senior Spanishofficials have said this could be done byusing European money to recapitalizedirectly ailing banks or though a directintervention of the European centralBank on the bond market. they have alsosaid the euro zone should quickly movetowards a fiscal union to complete its 13-year monetary union but Rajoy went astep further by making a formal offer.“the European Union needs to reinforceits architecture,” Rajoy said at an event inSitges, in the north-eastern province ofcatalonia. “this entails moving towardsmore integration, transferring moresovereignty, especially in the fiscal field.“And this means a compromise to createa new European fiscal authority whichwould guide the fiscal policy in the eurozone, harmonize the fiscal policy ofmember states and enable a centralizedcontrol of (public) finances,” he added.

Spain wants eurozone fiscal authority

LONDON

REUTERS

the intensifying euro zone crisis and un-certain global growth outlook have raisedhopes for a policy response from majorcentral banks but, while it could be a closecall, they are likely to resist pressure to actin the coming week.

the European central Bank, the Bankof England and the Reserve Bank of Aus-tralia are all due to meet as data emergeson the euro zone’s service sector, and themanufacturing and trade performances ofthe big German and U.S. economies. themain focus will be Wednesday’s EcB meet-ing, and whether dramatic selling of pe-ripheral European government debt byinvestors in May and a flight into safe-haven U.S. treasuries and German govern-ment bonds will prompt it to act. Onereason to doubt a major shift in policy isthat, even after U.S. treasury 10-year noteshit yields not seen in more than two cen-turies of record keeping, and investorsbegan paying the German government forthe right to hold its debt, the move acrossall markets may not warrant it. “thestresses appear not yet to be big enoughacross all asset classes for the policymakersto react,” said Richard Batty, global invest-ment strategist at Standard Life Invest-ments. “It all seems to be playing out ininvestor’s appetite for triple-A governmentbonds and for the dollar, but there doesn’tseem to be the volatility or sharp falls inequity markets or other stresses in the sys-tem, such as the funding market.”

In Europe, the spread between three-month Libor rates and overnight rates,seen as a measure of health of the bankingsystem, has been stable throughout May -mainly due to the more than one trillioneuros of cheap funds injected into the sys-tem by the EcB in December and February.And while May was a bad month for equitymarkets everywhere and Spain and Italy inparticular, the widely watched Dow Jones.DxY and S&p 500 .Spx indexes remain inpositive territory for the year to date.those gains were under threat on Friday,however, as disappointing May U.S. jobsdata sparked heavy selling, sending theMScI world equity index.MIWD00000pUS back to where it startedthe year. the VIx index .VIx, often re-ferred to as the market’s fear gauge stoodat 25 points, in line with its levels of lastDecember but well below the 48 pointsseen at the height of last year’s market tur-

moil in August and September.pOlItIcal mOVes A heavy calendar of events throughoutJune which could help determine how theeuro zone crisis unfolds may also encour-age Europe’s key monetary policymakers tohold fire. Greek elections are due on June17, following a first round of French parlia-mentary elections on June 10. the heads ofthe G20 group of nations will hold a sum-mit on June 18 and 19, while Europe’sleaders gather at the end of the month todecide their next response to the crisis.

But pressure is growing for action fromthe EcB to calm acute nervousness about apotential Greek exit from the currencybloc, and fears that the cost to Spain of sav-ing its fragile banks will mean the countryitself has to be rescued. “the EcB is cur-rently the only institution that can crediblycounter a collective loss of confidence onthe scale we’re now witnessing,” saidNicholas Spiro, Managing Director at debtconsultancy Spiro Sovereign Strategy.Spanish bond yields have surged in thepast week to near their highest level sincethe launch of the euro, raising questionsabout the country’s ability to fund itselfover the longer term without outside help.Spain will provide a big test of investorsentiment when it auctions more govern-ment bonds on thursday as its 10-yearbond yields hover around 6.5 percent -close to the 7 percent level at which otherindebted countries have been forced toseek aid. the latest Reuters poll of econo-mists found most still expected the EcB toresist pressure to cut interest rates beforethe end of next year, but that majority hasshrunk from previous polls as gloomy eco-nomic data rolls in. Just 11 of the 73 re-spondents expected the bank to cut rateson June 6. <EcB/INt> the Bank of Eng-land is also expected to esist calls to pumpmore money into the depressed UK econ-omy when it meets on June 7, according toa separate Reuters poll, although it foundthere was an even chance the central bankwould restart the printing presses at somepoint in future. pOLL3

A slim majority of economists expectAustralia’s central bank to keep interestrates unchanged on tuesday, but this is aneven closer call as a growing number ofbanks, including the nation’s top four, arecalling for a cut. AURAtE1 Meanwhile, theU.S. Federal Reserve Board’s mid-monthpolicy meeting and the end of its currenteasing policy, known as ‘Operation twist’,could also bring changes.

CENTRAL BANKS TOHOLD FIRE... FOR NOW

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news

Sunday, 3 June, 2012

03

Speculators add

copper shorts,

little changed for goldNEW YORK

REUTERS

their net short in copper increased by 3,949 to 6,757lots and while their net long in gold increased byseven to 77,325 contracts. On silver, speculatorstrimmed their net long position by 104 to 4,912contracts. last week, money managers switched to anet short copper position for the first time sinceJanuary, as market fretted about the impact of apossible exit by from the euro zone and the region’sdeepening debt crisis. “It reinforces the alreadynegative sentiment about increasing copperstockpile and production indexes around the worldwere very weak,” said frank mcGhee, head preciousmetals trader of Integrated Brokerage services llc.Gold prices lost 6 percent in may and copper priceswere heavily pressured as the european debt crisisand signs of slowing economic growth in the unitedstates and other parts of the world hurt metals andcommodities. On friday, gold surged 4 percent, itsbiggest one-day rise in more than three years, as asurprisingly weak u.s. payrolls report added to fearsabout a global economic slowdown and fueled talk offurther u.s. monetary easing. On next week’s cftcreport, mcGhee said that gold’s net long could post abig jump on expectations of imminent actions bycentral banks to boost economic growth.

‘Big Four’ to auditSpain’s banking sectorg Spain has picked the ‘Big Four’ accounting firmsKPMG KPMG.UL, PwC PWC.UL, Deloitte DLTE.UL andErnst & Young ERNY.UL to carry a full, individualaudit of its ailing banks

MADRID

REUTERS

the review, which should take a few months, willcomplement an ongoing exercise to stress testspain’s banking sector by consultors Oliver Wymanand Roland Berger, whose first results are expectedaround mid-June. “I can confirm (the names),” thesource said. spain’s prime minister mariano Rajoyon saturday said his government would have a clearview of how much money will be needed torecapitalize troubled lenders by the end of June. Healso said the government would make clear by thenhow it intends to inject the money. economy ministerluis de Guindos said earlier this week that spainwould likely go to the markets to find the 19 billioneuros ($23.5 billion) nationalized lender Bankia ()said it would need to be cleaned up but investors aredoubtful it can manage to prop up the entire sectorwithout outside help. senior eu officials have saidprivately that the country should instead seek a loanfrom the european bailout fund but that wouldnecessarily come with tough conditions and a highpolitical cost Rajoy is not willing to assume. theeuropean stability mechanism (esm), due to enterinto force on July 1st, has the capacity to lend moneyto banks but the request has to be made by the state,which receives the money and then transfers it to thelenders. German chancellor angela merkel has so faropposed calls from other european leaders,including from Rajoy or france’s president francoisHollande, to change the rules and allow directrecapitalizations of the banks.

FBR collects Rs 1,631b

up to May 31ISLAMABAD

APP

the federal Board of Revenue (fBR) has collectedRs 1,631 billion upto may 31 for the current financialyear, a senior fBR official said on saturday. “thefBR has collected Rs 1,631 billion upto may 31 thisyear against Rs 1,319 billion during the same periodlast fiscal year showing an increase of 25 percent”,shahid Hassan member Inland Revenue of fBR toldapp. He said the total revenue during the month ofmay this year was Rs.182 billion and hoped that thefBR would be able to collect Rs 321 billion duringthe current month as compared to Rs 248 billion inJune last year. He expressed the hope that the fBRwould meet the revenue target of Rs 1,952 billion bythe end of current financial year.

Microsoft to defer revenue

from Windows upgrade offerNEW YORK

REUTERS

from saturday, microsoft is offering customers who buy qualify-ing Windows 7 pcs the option to download an upgrade to Windows8 pro for about $14.99. the company, whose shares were down 1.3percent in early trading on friday, said it would recognize the rev-

enue from the offer when consumers actually upgrade or on feb-ruary 28, when the program expires. “from our perspective it’s

business as usual. this is the way they do these big launches,” saidcross Research analyst Richard Williams. Windows 8 is the new

version of microsoft’s flagship product that provides almost half ofits profit. It is the first version that runs on tablet computers as well

as pcs, putting microsoft in a stronger position to challenge apple Inc.Based on the timeline for the launch of Windows 7 three years ago, mi-

crosoft is on track for a full release of Windows 8 by October or novem-ber, when machines running it will be available in stores. microsoft shares

were down 37 cents at $28.82 in early trading on friday on the nasdaq.

NEW YORK

REUTERS

HE S&p 500 closed at its lowest since early January and endedbelow its 200-day moving average for the first time in 2012after the Labor Department said employers created just 69,000jobs last month, the weakest in a year. the bleak May jobsreport caps a week of soft economic data from china and

growing problems in Europe as Spain’s bank crisis deepened. theglobal flight to safety pushed U.S. and German government debt yieldsto record lows while the VIx .VIx, a gauge of U.S. stock marketanxiety, jumped more than 20 percent for the week. “the vast majorityof investors are choosing to panic,” said Brian Jacobsen, chief portfoliostrategist at Wells Fargo Funds Management in Menomonee Falls,Wisconsin. “It’s been pretty clear for the last year that Europe wasgoing to be a drag for the global economy.” though steep, Jacobsensaid he would view the pullback as a buying opportunity unless itpushed the S&p 500 below 1,250. the Dow Jones industrial average.DJI fell 274.88 points, or 2.22 percent, to 12,118.57 at the close. theS&p 500 Index .Spx dropped 32.29 points, or 2.46 percent, to 1,278.04.the Nasdaq composite .IxIc dropped 79.86 points, or 2.82 percent, to2,747.48. the benchmark S&p 500 ended below its 200-day movingaverage, which was 1,284.53 late Friday afternoon. Friday’s decline wasthe largest daily percentage drop for the S&p 500 since November 9,when a spike in Italian benchmark bond yields sent the broad U.S. stockindex down 3.7 percent. For the week, the Dow fell 2.7 percent, the S&p500 lost 3 percent and the Nasdaq dropped 3.2 percent. Financial sectorstocks were among the worst hit in Friday’s selloff, with the KBW bankindex .BKx down 4.9 percent, its largest daily drop since earlyNovember. “Most investors don’t think the problem in Europe is going toinfect the U.S. economy as much as it would the U.S. financial system,”Wells Fargo’s Jacobsen said. JpMorgan chase & co (JpM.N) fell 3.7percent to $31.93 and Bank of America corp (BAc.N) slid 4.5 percent to$7.02. More than six issues fell for every one that rose on the New YorkStock Exchange, while on the Nasdaq, more than five stocks fell for everyone that advanced. Homebuilders ranked among the weakest stocks. pulteGroup (pHM.N) plunged 11.8 percent to $8.26 while D.R. Horton(DHI.N) lost 8.4 percent to $15.21. the pHLx housing sector index .HGxfell 6.3 percent, but it was still up nearly 14 percent for the year. In one ofthe few positive moves of the day, Newmont Mining (NEM.N) surged 6.7percent to $50.30 and Barrick Gold (ABx.N) added 7.3 percent to $41.91as the price of gold scored its biggest one-day rise in slightly more thanthree years. More than 8.3 billion shares changed hands on the New YorkStock Exchange, the Nasdaq and Amex, about 21 percent higher than theyear-to-date daily average of 6.85 billion shares.

Wall Street sinks on jobsdata, Dow negative for 2012

Stocks fell morethan 2 percent onFriday, dragging

the Dow intonegative territory

for the year after adismal U.S. jobsreport added to

fears that Europe’sspiraling debt

crisis was draggingdown the world

economy

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