Markets Live: Stocks lose $30b on Italy fears

Australian shares sink after investors grow fearful that Italy's debt may be unsustainable. Losses top $37 billion.

5.01pm: That's all for today. We'll be back tomorrow morning, shortly before the local sharemarket opens at 10am with the latest from the euro-zone's debt saga.

For a wrap of today's session, click here.

4.41pm: Wall Street futures have turned into the black, with both Dow and S&P500 futures up about 0.2 per cent, indicating a flat or slightly higher start of trade.

But European markets are bracing for another sell-off at the start of trade today.

Financial spreadbetters expect Britain's FTSE 100 to open around 81 points lower, or down 1.5 per cent, Germany's DAX to open 96 points lower, or down 1.7 per cent, and France's CAC-40 to open down 52 points, or 1.7 per cent lower.

4.35pm: A late contribution from our Small Business team: Time to play the Asia card, writes Mike Baker.

"Many Australian retailers have been eyeing emerging markets in the past couple of years like a domestic cat eyes the leftovers from a family roast."

4.23pm: Top banks - which have warned of higher funding costs - all fell. Westpac dropped 3.3 per cent to $20.86, its lowest in a month.

The miners were buoyed a bit by trade data from China showing a surge in imports. But both BHP and Rio still lost more than 2 per cent.

4.16pm: All sectors closed in the red, with financials slumping 3.3 per cent, materials down 2.6 per cent and energy stocks losing 2.4 per cent.

Today's losses shaved about $30 billion off the value of the market, the biggest drop in nearly two months.

4.11pm: And that's it for the local market. The S&P/ASX200 trimmed some of its losses but still closed down 102 points, or 2.3 per cent, at 4244.1, while the broader All Ords lost 98.9 points, or 2.2 per cent, to 4307.3.

4.02pm: Back to some local woes. Qantas remains hopeful of reaching an agreement with unions within a 21-day negotiation period brought in after it briefly grounded its fleet over the dispute with unions over pay, conditions and job security.

Qantas says has attended four conciliation sessions with the Australian and International Pilots Association (AIPA), two sessions with the Transport Workers' Union and one session with the Australian Licensed Aircraft Engineers Association (ALAEA). More meetings are scheduled for today and over the next week.

Meanwhile, AIPA has launched court proceedings challenging an order to end industrial action at Qantas.

But the federal government says it will take on airline workers in court if transport unions decide to appeal the Qantas dispute decision by the industrial umpire.

3.57pm: It is likely to take the combined forces of the European Central Bank, the IMF and the euro zone bailout fund to break Italy's financial fall, and it's far from clear that Europe's leaders are ready to take on that rescue mission, Reuters writes.

"There is plenty of money available from the IMF and EFSF for the next three to four months so, in a best case scenario Italy has about that long to sort itself out or it will have to leave the euro zone," says Riccardo Barbieri of Mizuho International.

3.37pm: "This is the way the euro ends. Not with a bang but with bunga-bunga," writes Paul Krugman writes in his New York Times blog.

"I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object - and watch the explosion."

3.31pm: Here's another scathing item on executive pay by BusinessDay's Michael West: Lance and his magic umbrella.

"Shareholders had thought they had seen it all this week as company boards adroitly shifted the goalposts at Commonwealth Bank and Wesfarmers’ to pay their fat cats millions of dollars more," West writes.

"Today, however, came the piece de resistance: the big train company QR National tweaked its chief executive’s pay to strip out Cyclone Yasi."

3.16pm: Asian stocks are trading sharply lower, with the regional index headed for its biggest drop in two months, amid worries over Itay's debt, Japan’s machinery orders dropped and China’s export growth slowed.

The MSCI Asia Pacific Index has fallen 3.3 per cent to 115.99, Japan's Nikkei 225 has dropped 2.8 per cent,  China’s Shanghai Composite Index fell 1.1 per cent, Hong Kong’s Hang Seng has tumbled 4.5 per cent, while South Korea’s Kospi Index slumped 3.7 per cent. Volatility indexes for the Hong Kong and South Korean benchmark gauges jumped more than 16 per cent.

‘‘The big concern is that Italy will need to get its funding from other sources than the market, but because of its size, people are very worried,’’ said Stephen Halmarick, head of investment markets research at Colonial First State Global Asset Management. ‘‘The outcome of all this is the European economy will go into recession. That’s a big negative.’’

3.14pm: A key gauge of Japan's corporate capital spending fell more than expected in September and manufacturers expect a further drop this quarter as business confidence sags in the face of the strong yen and slowing global growth.

The data herald a rough patch in the economy's recovery from a devastating earthquake and tsunami in March, with some economists warning it may shrink again this final quarter, given the added impact of floods in Thailand, Asia's major production base.

Core machinery orders, a leading indicator of capital spending six to nine months ahead, fell 8.2 percent from the previous month, bigger than a median market forecast for a 7.5 percent fall, government data showed on Thursday.

3.06pm: Here's ANZ's assessment of China's trade figures, which showed a slowing of growth as the global outlook worsens:China’s export growth is likely to slow to single-digits in the near term as the euro zone slips into a recession.While the net exports contribution to GDP growth has been considerably small compared with domestic demand, a decelerating export growth, together with slowing activity indicators, will certainly raise concerns that China’s growth may have been shifting from a soft landing to a more decelerating growth path.Without an easing of monetary policy, it is likely that growth will fall sharply in H1 2012. Therefore, it is time for the central bank to ease and hedge against a further deceleration of economic growth.

2.56pm: Here's a pretty gloomy, but not necessarily surprising assessment of Italy's debt situation: Italy is ‘‘ultimately’’ likely to need support and will ‘‘probably default’’, says Jonathan Loynes, an economist for Capital Economics.

Italy poses the ‘‘single biggest threat to the future of the euro’’, Loynes said at a briefing in Hong Kong today.

2.52pm: Oil is posting some losses too. Brent crude has fallen another 11 cents a barrel to $US112.20, after settling down $US2.69 on Wednesday, its first fall in five sessions. WTI crude traded 27 cents lower at $US95.47 a barrel.

Chinese trade data showed resilient domestic demand and higher crude oil imports last month lifted sentiment, with the world's second biggest oil consumer importing 20.80 million tonnes of crude in October, up 1.7 percent from September.

"The Chinese data is giving support to a market that is pulling away from risk because of what is happening in Europe," says Ric Spooner, chief market analyst at CMC Markets. "We've moved from a low-growth scenario to one where there is a real threat of recession in the euro zone, and that's weighing on oil markets."

2.50pm: Spot gold has dropped 0.5 per cent to $US1760, after the sharp falls in equities and commodities forced some investors to sell their profitable gold positions to cover losses elsewhere.

But gold's allure as a safe haven is likely to cushion the price fall, analysts say, with investors seeking to store their value in assets such as bullion and the US dollar during times of economic and political turmoil.

"The relatively modest reduction in gold compared to other commodities is encouraging," says Nick Trevethan, senior commodities strategist at ANZ. ‘‘Given the concerns about Europe, we may see people going back to gold. I don't necessarily think we'll see record highs in the next few weeks, but we could see some cautious gains."

2.38pm:  Italian politicians are scrambling to find a replacement for departing prime minister Silvio Berlusconi and head off the risk that the country could become the next and biggest euro zone casualty.

Frontrunner to lead a cabinet of technocrats is former European Commissioner Mario Monti, who was yesterday appointed a senator for life by Italy's President, Giorgio Napolitano.

The secretary of Mr Berlusconi's People of Freedom party, Angelino Alfano, said on television late last night that Mr Berlusconi would resign "between Saturday and Monday".

But it may already be too late to turn the markets around as the borrowing costs of the euro zone's third biggest economy have risen for days to run past levels which forced Ireland and Greece to seek bailouts.

"What matters most to investors is not who replaces Berlusconi or the next government's commitment to reforms, but whether euro zone policy-makers will finally put in place a credible and durable backstop to Italian debt," said Nicholas Spriro, head of debt consultancy Spiro Sovereign Strategy.

2.18pm: The value of China’s exports and imports fell in October from the previous month, as domestic tightening measures and turbulence in Europe and the United States hit demand.China’s exports rose 15.9 per cent year-on-year to $US157.49 billion ($155.6 billion) in October, but slipped  from $US169.7 billion in September. Imports expanded 28.7 per cent to $US140.46 billion in October, lower than the $US155.2 billion recorded a month earlier.China’s politically sensitive trade surplus - a constant bugbear for major trade partners such as the United States and Europe - widened to $US17 billion in October from $US14.51 billion in September.Beijing, anxious about surging inflation, has been pulling on a variety of levers to curb consumer and property prices in the past year, including restricting the amount of money banks can lend and hiking interest rates.

2.13pm: Treasurer Wayne Swan is urging Asia-Pacific regional leaders to speak with a united voice and urge Europe to quickly address its financial crisis.

‘‘This is a challenge for Europe. But we’ve all got a stake in the outcome,’’ he told reporters in Honolulu where he is attending the APEC finance ministers meeting today.

‘‘Every single economy represented at APEC has been impacted by 18 months of failure by European leaders to deal with their sovereign debt crisis,’’ Mr Swan said.

1.57pm: The chart above shows that there hasn't been too much movement in the market since the big drop this morning. The S&P/ASX200 is now down 122.7 points, or 2.8 per cent, to 4223.4 and the All Ordinaries is down 117.6 points, or 2.7 per cent, to 4288.6.

1.49pm: The latest chapter in the Olympus scandal:

Reuters reports that Japanese police have launched an investigation into the financial scandal engulfing Olympus as a major investor joined increasing calls for a wholesale clean-out of the board.Tokyo Metropolitan Police are investigating the firm's concealment of investment losses for possible violation of financial laws, the Yomiuri newspaper says.Police have asked Olympus for internal accounting documents and will also question Olympus executives and related officials.Olympus shares, meanwhile, remain untraded today.

1.39pm: BHP Billiton says it has agreed with the Western Australian government to raise royalty rates it pays on iron fines from 5.625 per cent to 6.5 per cent from July 2012 and 7.5 per cent from July 2013."The changes to the state agreements will give the company greater certainty in planning and executing our growth projects, particularly the proposed outer harbour development," Ian Ashby, the president for BHP's iron ore operations says.The mining giant's shares are down 95 cents, or 2.5 per cent, to $37.38 - broadly in line with the ASX200's fall.

1.27pm: Ratings agency Standard & Poor's says there is no immediate impact on its rated portfolio of Australian companies following the recent vote in the Senate ratifying the Australian government's carbon tax legislation, Reuters reports.''We consider, however, that the direct implications and challenges to manage the transition will vary greatly across sectors.'' S&P says the companies likely to be most affected by the tax are those operating in the electricity generation sector, as they will face a direct and quantifiable additional liability from the next financial year.

1.22pm: The big losses aren't confined to Australia this afternoon... Japan's Nikkei 225 is down 2.2 per cent and Hong Kong's Hang Seng is off about 4.3 per cent.

1.15pm: Brambles, the world's top pallet supplier says it is on track to deliver underlying profit in the 2012 financial year within its guidance range of $1.040 billion to $1.1 billion."This guidance remains subject to unforeseen circumstances and ongoing global economic uncertainty," says Brambles chairman Graham Kraehe.

1.10pm: The dollar is now at $US1.0130 after earlier going as low as $US1.0112, the lowest since October 13.CMC chief market strategist Michael McCarthy says the market is watching for any positive newsflow from Europe."It's quite clear that while the domestic factors are quite positive, it is the global macro considerations that are driving the Aussie at the moment," he says."At the moment we have no real newsflow until this evening's trading session, so we don't expect any moves until then. Given where we are at the bottom of the trading range, there's potential for some risk-on should we get any mildly positive news."

1pm: More on the housing front. Some interesting numbers out today from RPData, who say stock levels are at close to record levels:Based on current rates of sale as well as total number of homes being advertised for sale, the results show that there is 7.4 months of effective housing supply available. Across all capital cities, the effective supply of properties is currently recorded at 5.8 months.As a comparison, 12 months ago there was 4.5 months supply across all capital cities, while nationally the rate was 5.6 months.Similarly, an estimate of sales volumes shows they are currently much the same as they were 12 months ago. Mr Kusher said that this result highlights that supply levels are now being driven higher due to the amount of stock available for sale more so than a significant decline in sales activity.

12.54pm: Meanwhile, BusinessDay's Michael West has been taking a look at Lynas:  Lynas in midst of Malawi crisis.

"When Lynas Corp disclosed, almost incidentally, this morning that the ownership of its red-hot rare earths asset in Malawi might be in dispute, it was being a touch euphemistic," West writes.

"In fact, the dispute threatens to turn into a full-blown political and constitutional crisis in the African republic as the Mines Ministry and Government are in contempt of the Malawi High Court."

12.45pm: More from the RBA's Philip Lowe. While saying Austalian producers were well placed to benefit from a change in food preferences as the Asian middle class grows, he also offered a couple of macroeconomic asides:

"In preparing the Reserve Bank's latest forecasts of the world economy, we have assumed that the European authorities do enough to avert a real disaster but are not able to avoid periodic bouts of considerable market volatility and uncertainty. There are, of course, a range of other scenarios, many of which, unfortunately, are on the downside. This inevitably means that there is likely to be considerable uncertainty about the global economy for some time."

"From Australia's perspective, global growth (in 2012) somewhere around average, or just a little below, would make for a relatively benign international backdrop. The difficulty for many other advanced economies is that average growth will not allow them to make inroads into their very high levels of unemployment and excess capacity, and this is likely to create both economic and social strains in these countries for some time."

Read the full speech here

12.40pm: Some of the comments on this blog have looked at the threat America poses to the global economy. One year out from the presidential elections, there's scope for uncertainty and impasse there too. For now, though, one of the major ratings agency seems to sitting put:America's political system remains sound enough to overcome the partisan gulf that has widened over how to fix the country's fiscal mess, a top analyst from Moody's Investors Service said.Steven Hess, Moody's lead analyst for the United States, said the battles in Washington over debt and deficits meant 2011 had not been "one of the better years."But the rating agency factors the long-term view of America's political and financial institutions into its top-notch AAA rating on the country's debt."We still believe the US has institutions that over time have proven themselves resilient," Hess told the Reuters Washington Summit.

12.36pm: More comment on the European political and economic woes:"Whatever they come up with, it doesn't avoid a European recession. The question now is just how deep it will be and whether this is going to bleed over into the banking system, because that is much more significant," said Su-Lin Ong, senior economist at RBC Capital Markets."Increasingly there is a risk that it spills into the banking system and becomes an issue of credit and the lifeline of economies freezes up again. That's where the real concern is," she said.

12.34pm: Worth noting there are some conflicting prices on bank stocks. ANZ shares are off 5.7 per cent, with part of that accounted for by the stock trading exclusive of its dividend. NAB shares are off 5.2 per cent, with the same issue applying to that stock.

12.30pm: One reason why miners aren't doing too well is that key commodity prices are tumbling, such as copper:Shanghai copper traded on the Shanghai Futures Exchange (SHFE) fell more than 5 per cent at the market open, weighed down by poor sentiment after international copper prices slumped to a two-week low on Italian debt worries.Selling momentum enveloped the wider industrials complex on the SHFE, dragging zinc down over 5 per cent, lead down over 3 per cent and aluminium down over 1 per cent.

12.25pm: Among the major sub-indexes, financials are off 3.5 per cent, materials 3 per cent and energy 3.1 per cent. Even gold miners are off 2.2 per cent, with spot gold hovering below $US1770 an ounce.

12.20pm: Among major stocks, here are the percentage falls: BHP 3.2, Rio 3.9, Fortescue 5.7, CBA 2.9, Westpac 3.6 and Macquarie Group 5.7 per cent. Telstra, off 1.1 per cent, is among the better performers.

12.14pm: Across the region: Seoul, Tokyo, Taipei are all joining the global retreat, dropping between 1.7 and 2.8 per cent or so.

12.10pm: Entering early afternoon trading and the two main share indexes are off about 2.8 to 3 per cent. That leaves the market off about $37 billion or so for the day...which we'll monitor and change the headline to this piece accordingly.

12.08pm: Interest rate futures aren't buying the jobs data lessens the chance of a rate cut next month. Obviously there's more to it than jobs figures from last month, with all that's going on in Europe and beyond. Still, the chance of a rate cut on December 6 has bumped up a 50-50 prospect of a 50 basis point cut next month.

12.00pm: Back to those jobs figures. Here's the view from Su-lin Ong, senior economist, RBC capital markets:   "The pace of job generation is more moderate, but it's not deteriorating at a particularly rapid rate. We think we're going to get a bit of a tick up in the unemployment rate over the next few months. We've got it heading towards 5.5 per cent by late Q1, early Q2 next year, but it's pretty fluid times.The key really is the global backdrop. The risks there have intensified of late and we're very mindful that the global headwinds are increasing and that has implications for both Australian growth and the labour market.This number is probably neutral in terms of a December cut but developments offshore, particularly last night, increase the risk of a December rate cut. We've got a cut in Q1 (forecast) but the developments offshore see a pretty decent chance of that being pulled forward to December."

11.55am: At the risk of overdosing in NZ news, there's also this just in from S&P which is of interest because NZ's banks are mostly subsidiaries of Australian ones:Standard & Poor’s has lowered its ranking of the New Zealand banking industry to the same level as Italy, Korea, Britain and the United States.The credit rating company said it has revised its Banking Industry Country Risk Assessment on New Zealand to group three from group two. It also revised the economic risk score to three from two, while an industry risk score of four was assigned.New Zealand’s high level of private sector debt, at 150 per cent of gross domestic product, and the concentration of lending to agriculture are cited as reasons for the downgrade.

11.52am: More on NZ, actually. There's an interesting feature from MacroBusiness running on BusinessDay looking at how the slide in New Zealand house prices might be a portent for Australia.

The writer has this summary:I consider the New Zealand "slow melt" to be the base case scenario for Australian housing, with worse outcomes likely should external conditions deteriorate significantly.

11.47am: From across the ditch, some news - even with a rugby connection:The New Zealand manufacturing sector contracted in October to its worst level since June 2009 as the Rugby World Cup distracted business and the construction sector ebbed.The BNZ-Business New Zealand performance of manufacturing index (PMI) fell 4 points to 46.5 in October from 50.5 in September. A figure below 50 indicates a contraction. The index was 50.9 in October 2010.

11.43am: The brfeakdown for the states is quite interesting. Basically, NSW did well, Qld did poorly:

Seasonally adjusted unemployment rate state by state:              Oct          Sept      Year agoNSW        5.3 pct     5.5 pct   5.5 pctVic        5.3 pct       5.3 pct     5.5 pctQld        5.7 pct      5.4 pct     5.5 pctSA         5.3 pct      5.6 pct     5.7 pctWA         4.2 pct     4.3 pct     4.5 pctTas        5.0 pct       4.7 pct     5.2 pct

11.40am: The jobs story is evolving, and you can follow it here: Jobless rate at 5.2% as companies hire more staff.

11.36am: All that translates into less chance that the RBA will need to cut rates in December - although European troubles may swamp local issues by then.  The Aussie dollar has picked up a bit on the jobs news, to trade at $US1.013 from $US1.015 or so just before the release.

11.34am: Actually, generally a good number for jobs. For one thing, the net jobs included 20,000 full-time positions added (and 9,900 part-time jobs lost.) Also, the September jobless rate was revised to 5.3 per cent, so October marks a drop in the jobless rate to 5.2 per cent.

11.32am: Unemployment rate for October is 5.2 per cent. More than 10,000 jobs created last month.

11.28am: The dollar has slipped a little more - now at $US1.0134 - lets see what happens in a few moments with the jobs figures.

11.18am: That MTR radio station has fared poorly against 3AW, owned by Fairfax Media, publisher of this website. Fairfax, meanwhile, has been holding its AGM today, and not so happy a tale either:Fairfax Media chief executive Greg Hywood says trading conditions have not improved since the company delivered its 2010/11 full-year results in August.Mr Hywood told shareholders the diversified media group was facing an advertising market hit by poor consumer sentiment.Moreover, he said events in Europe, as well as volatile equity markets and weak real estate prices had Australians concerned for their longer-term wealth.This had reduced their willingness to spend and therefore depressed the advertising market.‘‘During the first four months of this financial year, we have seen a continuation of the trading that we reported in August, with revenues a little more than 4 per cent below the previous corresponding period,’’ Mr Hywood said in prepared remarks.

11.15am: Meanwhile, there are reports on News Ltd. sites that the MTR radio station plans to close. One of the partners is fighting that decision in the Victorian Supreme Court today.

11.12am: Key numbers at bottom of the hours: Jobs. Economists tipping Australia added 10,000 jobs for last month, but the jobless rate will still creep up to 5.3 per cent. A weak result (ie lots of full-time jobs lost) may tilt RBA to another rate cut when it meets in December (and send the dollar lower). Stay tuned for that one.

11.08am: Around the region, other markets are opening, with Japan's Nikkei 225 down about 1.8 per cent in early trading.

11.06am: There's more here about Italian bonds: Italy bond attack breaches euro defenses.

11.00am: The VIX index of volatility was until recently the key market barometer of jitters. There's a new one, and that's the bond yield chart for Italian debt.

Here's the 10-year Italian debt chart from Bloomberg. Alarming jump over the 7 per cent mark overnight:

10.53am: A few wry comments around today, such as:

At least Australia has the world's greatest treasurer to guide us through GFCII.

Or:

We need Bono to cancel to cancel First World Debt.

10.46am:Whither Australia in all this? Here's the view from the RBA:The investment boost from Australia's resources sector still has a lot longer to run, although the country's terms of trade will decline a bit over the next few years, a top Australian central banker said.Reserve Bank of Australia (RBA) Assistant Governor Philip Lowe was speaking at an agricultural conference in Melbourne.

10.41am: Meanwhile, here's what's being discussed in Europe, apparently: Germany and France plot smaller euro zone.German and French officials have discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller euro zone, EU sources say."France and Germany have had intense consultations on this issue over the last months, at all levels," a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions."We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don't want to be part of the club and those who simply cannot be part," the official said.

10.38am: Stocks may have plumbed their lows for moment, off 3 per cent or so. On the corporate front, meanwhile:

Australia’s number two telco Optus says it’s posted a ‘‘resilient’’ first-half result where net profit came in flat and operating revenue rose slightly.

The telco, which is a wholly-owned unit of Singapore Telecommunications, says net profit for the six months to September 30, was $344 million, compared with $345 million in the prior corresponding period.Operating revenue at Optus rose 1.6 per cent to $4.65 billion.

10.32am: And of course it's not just equities tanking. The Aussie dollar has taken a bit of a bath overnight, losing 2 US cents overnight. Kathy Lien of GFT Forex explains what's going on:First, even with the recent interest rate cut by the Reserve Bank, the A$ is still the highest yielding G20 currency. For that reason, many investors kept their funds parked in the Aussie but when they become nervous, deleveraging starts to occur and the Australian dollar suffers the most because it is less liquid than some of other major currencies and has more one directional flow.Secondly, the RBA is only the central bank among the three commodity producing countries to have lowered rates in the past few months.  Although they did not provide much clue on the possibility of additional easing, their decision to pull the trigger earlier this month suggests that they could proactive and willing to lower rates in the future. Finally of the three countries, Australia also does the most trade with China and last night’s weaker Chinese economic reports has the most direct impact on Australia’s economy.

10.24am: All but Foster's (which is not really an independent stock anymore) are down among top 50, with IAG among the biggest falls. It's down more than 4 per cent after saying claims from the Thai floods will top $50 million.

10.15am: Financials down 3.7 per cent overall, with CBA off 2.9 per cent, ANZ 2.6 per cent, NAB 2.7 per cent and Westpac 2.8 per cent.

10.12am: Some of the big losses: Macquarie Group off 4.2 per cent, Fortescue 5.1 per cent, Rio 3.9 per cent and BHP 3.1 per cent. 195 out of 200 down, two up.

10.10am: That loss now about 3 per cent, or $40 billion in paper value wiped off.

10.08am: As the chart above shows, there's a sell-off heading to the 2 per cent range early on, but not all trading yet.

9.57am: BusinessDay's Ian Verrender notes in his commentary this morning - Italian debt fears just become reality - that the sheer size of Italy's debt woes is what's worrying investors. (Italy's debt exceeds that of Greece, Spain, Ireland and Portugal):Contagion became the catchcry as the realisation dawned on markets that Italy may be too big to bail out.As a major commodity exporter, Australian investors can expect heavy selling among our resource giants today while the banks also will follow Wall Street's lead.Longer term, it appears Europe will be unable to avoid recession which will adversely affect global trade. Europe is China's biggest trading partner and China is Australia's biggest trading partner.

9.51am: In a note this morning, ANZ explains why the planned resignation of Silvio Berlusconi has failed to soothe fears about Italy's debt problem:Significant political uncertainty remains with Berlusconi calling for elections rather than the formation of an interim government.  This is creating significant uncertainty about a timetable for fiscal and economic reforms. Indeed, concerns about the sustainability of Italian debt are a self-fulfilling prophesy - the more investors worry about the rising level of bond yields, the more selling pressure that develops, and the further that bond yields climb.

9.45am: Good morning! Clearly a big night on overseas markets, as you may have seen in our need2know wrap of the main action.

Here are the key details and links:The SPI was 119 points lower at 4218 The $A was trading lower at $US1.0150 In the US, the S&P500 lost 48.4pts, or 3.8%, to 1,227.45 In Europe, the FTSE100 lost 106.9pts, or 1.9%, to 5460.38 Gold rose 0.2% to $US1787.79 an ounce WTI crude oil rose 17 cents to $US96.97CRB commodities index fell 1.28%

This blog is not intended to serve as investment advice

BusinessDay with agencies

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