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Futures Pare Losses on Drop in Claims

CNBC.com and Reuters
Thursday, 12 Jul 2012 | 8:35 AM ET

A better than expected drop in jobless claims and a sharp decline in import prices gave a little help to stock index futures, though the market is still likely to open considerably lower.

Investors who continued to fret about a slowdown in economic growth after the minutes of the June 20 meeting of the Federal Reserve’s interest rate setting committee showed no appetite among committee members for a resumption of quantitative easing.

Instead the minutes showed the Fed was keen to continue with Operation Twist, its policy of trading shorter term bonds for longer-dated treasurys as a way of injecting liquidity into the economy.

Asian and European shares all fell overnight in response to the lack of Fed policy action.

Meanwhile, Japan's Nikkei share average posted its biggest fall in over a month after the Bank of Japan only offered minor tweaks to its easing strategy.

Infosys made a deeper-than-expected cut to its sales forecast on Thursday as global economic uncertainty took a toll on tech spending, sending its shares down 10 percent and slamming hopes for a second-half recovery.

The prevailing dim global economic climate, competition for a bigger share of the outsourcing business and sharp currency fluctuations have slowed the pace of growth for Indian outsourcing companies and in recent quarters Infosys has been underperforming key rivals.

Infosys said it sees revenue in dollar terms rising 5 percent to $7.34 billion in the fiscal year to March 2013, down from its April estimate of 8-10 percent growth. The company also said pricing fell sharply. Most analysts were expecting Infosys to trim its sales growth outlook to 6-8 percent.

In corporate news Apple’s next-generation iPhone has not even been released yet, but sellers on China's largest e-commerce platform, Taobao, are already accepting pre-orders, complete with mock-up pictures and purported technical specifications.

U.S. insurer Cigna has signed a deal to buy a 51 percent stake in Finansbank's wholly owned insurance unit Finans Emeklilik for 85 million euros ($104 million), Finansbank said in a statement on Thursday.

Centrica, which owns British Gas, said it had agreed to buy two New York-based power providers from a U.S. subsidiary of Iberdrola for $110.2 million in cash to strengthen its position and increase its customer base in the U.S. Northeast. The British utility's North American subsidiary, Direct Energy Services, will buy Energetix and NYSEGSolutions, which operate out of Rochester and Binghamton, New York.

China's economy may have grown around 7.5 percent in the second quarter and nearly 8 percent in the first half, and will recover steadily in the second half as policy stimulus gains traction, a senior economist at the cabinet's think-tank said on Thursday.

The assessment comes a day before China reports its second quarter growth rate.

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