China considers same tax rate for domestic, overseas firms (AFP)
AFP - Chinese lawmakers have mulled a draft law that would impose a 25 percent income tax on both domestic and foreign firms, eliminating the preferential rate for overseas companies, according to state media.
Credit fear stalks global shares (Reuters)
2008.08.20By Veronica Brown Tue Aug 19, 4:42 AM ET
LONDON (Reuters) - European stocks slid in tandem with their Asian counterparts on Tuesday, haunted by renewed concern surrounding the top U.S. mortgage finance companies, while falling oil helped send the dollar to fresh peaks.
Europe's shares were rattled, falling 1.6 percent in early trade, after Asian stocks hit a 2-year low overnight as an end to the worst U.S. housing crisis since the Great Depression looked as far away as ever.
Demand worries sparked by a weak global economic outlook took oil below $112 a barrel, but reignited the dollar's rally to its highest this year against a basket of major currencies as investors to bulked up their holdings.
Jitters over U.S. financial sector stability bubbled to the surface again after an article in Barron's said a government bailout could wipe out existing holders of Fannie Mae and Freddie Mac common stock with other asset holders also suffering losses.
"Overall the environment for equity markets remains very difficult as it has now become clearer that we are witnessing a more severe economic slowdown," said Tammo Greetfeld, a strategist for UniCredit in Munich.
By 0824 GMT, the FTSEurofirst 300 Index had fallen 1.7 percent to 1169.13 points. Japan's Nikkei share average tumbled 2.3 percent to a one-month low, while the MSCI pan-Asia equities index fell 1.7 percent to its lowest since July 2006, down 22 percent this year.
The drop in oil prices was felt far and wide, with other commodities including gold and copper relinquishing tentative rallies in the previous session.
Recent slides in commodity prices have now left the Reuters-Jefferies CRB Index down 18.6 percent from levels seen in early July.
Crude was down 71 cents at 112.16 a barrel, having earlier fallen as low as $111.64 on expectations that Tropical Storm Fay would bypass key assets in the Gulf of Mexico.
SECOND WIND FOR DOLLAR
While falling crude prices weighed on energy shares, they saved the dollar from credit market malaise with a growing view that the United States will not be the only economy to suffer weak growth and fragile asset markets.
The U.S. dollar index, a basket of six major currencies traded on the ICE Futures exchange, rose to 77.413, its highest since December 2007.
Meanwhile a beleaguered euro, dogged by a contracting euro zone economy, fell to a six month low of $1.4631, according to Reuters data.
"The strength in the dollar index has little to do with dollar strength but more the weakness of the other currencies," said Michael Klawitter, senior currency strategist at Dresdner Kleinwort in Frankfurt.
"The market's focus is just very one-sided. At the moment the market has decided to focus on the weakness of the euro zone and hasn't taken a balanced view of risks in the U.S.," he said.
Further indications on euro area sentiment are expected with the release of Germany's ZEW investor index at 0900 GMT.
A Reuters poll forecast a slight improvement in the index covering sentiment in the euro area's largest economy to -62.0 for August, its first gain since March, from July record low of -63.9.
(Additional reporting by Amanda Cooper and Jamie McGeever in London, editing by Mike Peacock)
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