While you were sleeping: Citigroup slashes jobs, Wall St gains

Citigroup chief executive Michael Corbat

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% of its workforce, and will take a $US1 billion charge in the fourth quarter. Investors cheered the news, sending the shares up 6.3% 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%, snapping a two-day slide, and the Standard & Poor's 500 Index gained 0.6%. 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% and McMoRan Exploration soared about 83% after Freeport-McMoRan Copper & Gold agreed to acquire them for about $9 billion. Freeport dropped 13.4% as some analysts questioned the wisdom of merging a miner with an energy company.

Apple fell 4.2% after reports that a clearing house, COR Clearing, had raised its margin requirements for Apple to 60% from 30% because of what it called "high concentration". Facebook slipped 0.3% 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%.

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 October 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%  in the third quarter, after a 1.1% 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%,  the second reduction in as many months.

(BusinessDesk)

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