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Futures Fall After China Tightens; Cisco Rises

CNBC.com
Friday, 19 Nov 2010 | 9:17 AM ET

U.S. stock index futures fell ahead of the open Friday after China announced a second measure to tighten monetary conditions in two weeks. China's decision was released at the same time Federal Reserve Chief Ben Bernanke was speaking in defense the Federal Reserve's policy to stimulate the economy.

China's central bank said it would raise banks' reserve requirements by 50 basis points starting with November 29. It stopped short of raising base interest rates, but the move did represent a tightening to the country's economic policy.

Bernanke said during a conference at the European Central Bank in Frankfurt that the best way to support the global economic recovery is to boost growth in the United States with liquidity measures. The comments were already available before the actual speech.

The Fed's bond buying program has come under fire from the countries such as China for its dollar-weakening impact.

Meanwhile, Ireland was still unclearhow much its banks would require, a day after the head of the nation's central bank said the company would need a loan of tens of billions of euros.

Cisco shares rose in pre-market trading after news Thursday night that the company would buy back an additional $10 billion shares. The network equipment maker had previously authorized up to $72 billion in stock repurchases. The plan is a part of a "continued commitment" to return cash to shareholders, Cisco CFO Frank Calderoni said in a statement. The company's shares had fallen about 14 percent in November, since it delivered a disappointing earnings report.

Harrah's Entertainment pulled an initial public offering Friday that was expected to raise about $470 million, citing market conditions. The casino operator, which had planned to rebrand itself at Caesar's Entertainment, had received lukewarm interest from institutional investors.

Google is reportedly in preliminary talks to buy Groupon, an online company that offers localized deals to consumers, according to a report on a Wall Street Journal website. Yahoo had offered $2 billion to $3 billion for the company earlier this year.

Meanwhile, Google is seeking to fill more than 2,000 positionsas it continues to expand globally.

On the earnings front, Dell beat expectations with its third-quarter earnings and profit margins, but missed its revenue view.

Gap and Autodesk both reported earnings in line with Wall Street estimates, with revenue beating forecasts.

In other news, KKRis reportedly in talks to buyDel Monte Foods . Sources said KKR has offered $18.50 per share for the food make, which would value the company at about $3.6 billion.

European shares were dragged lower by mining stocks again, while Asian markets ended mixed before China's announcement.

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