Citigroup slashes jobs, Wall St gains overnight

Citigroup chief executive Michael Corbat has wasted little time in cost cutting since taking over the helm of America's third-largest bank from Vikram Pandit in October.

The New York-based firm has announced plans to eliminate 11,000 jobs worldwide, about 4 per cent of its workforce, and will take a US$1 billion charge in the fourth quarter. Investors cheered the news, sending the shares up 6.3 per cent on the New York Stock Exchange

More than half the cuts will come from Citigroup's global consumer-banking business in countries ranging from Pakistan to Uruguay.

The Dow Jones Industrial Average rallied almost 1 per cent, snapping a two-day slide, and the Standard & Poor's 500 Index gained 0.6 per cent. Investors said equity markets are still beholden to stalled fiscal cliff talks in Washington though with a drop of optimism both sides could be softening.

Plains Exploration & Production jumped 25 per cent and McMoRan Exploration soared about 83 per cent after Freeport-McMoRan Copper & Gold agreed to acquire them for about $9 billion. Freeport dropped 13.4 per cent as some analysts questioned the wisdom of merging a miner with an energy company.

Apple fell 4.2 per cent after reports that a clearing house, COR Clearing, had raised its margin requirements for Apple to 60 per cent from 30 per cent because of what it called "high concentration." Facebook slipped 0.3 per cent as Nasdaq OMX Group said the social media company will replace Infosys on the Nasdaq 100 Index on December 12.

Helping lift stocks, a gauge of services industries in the US rose faster than expected last month.

The Institute for Supply Management's non-manufacturing index rose to 54.7 from 54.2 in October, surprising economists who were projecting a decline. Still, the employment gauge fell to 50.3, the lowest since July, though still indicating expansion.

Another report showed the US companies added fewer workers in November though this can be put down to the disruption from Hurricane Sandy.

Employment rose by 118,000, less than the 125,000 estimate in a Bloomberg survey and down from 157,000 the previous month, according to the ADP Research Institute. Storm disruptions probably reduced payrolls by 86,000.

The data provides a clue to the private hiring component of the Labor Department's non-farm payrolls survey tomorrow, a key measure of employment growth. The jobless rate is expected to have held unchanged at 7.9 per cent.

The euro fell from a seven-week high after against the greenback after the indebted nation sold fewer bonds than it had targeted, stoking concern a further request for euro financial aid could come sooner rather than later.

Spain sold 4.3 billion euros of debt, missing the top end of the 3.5 billion to 4.5 billion euros it targeted.

The euro traded recently at $1.3082, having earlier reached a session high of $1.3126 according to Reuters data, the highest since Oct. 18.

Services and manufacturing output contracted for a 10th straight month in November, according to Markit Economics' composite index of purchasing managers, which edged up to a still-negative reading of 46.5 from 45.7 a month earlier.

Finland became the latest European nation to slide into recession, with its economy contracting 0.1 per cent in the third quarter, following a 1.1 per cent contraction three months earlier. Economists had expected growth in the third quarter.

Poland, which is hoping to avoid recession, cut its seven-day reference rate a quarter point to 4.25 per cent, the second reduction in as many months.

- BusinessDesk

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