If only Brown would have lost…

Collateral damage from President Barack Obama’s battle with the banks was strewn across the global financial theatre on Friday, as traders feared that similar proposals could be adopted in other trading centres and investors worried about the impact the move could have on fragile market sentiment.

“What the Obama administration is proposing may sound like a good idea to regulators trying to cut down ‘too big to fail’ financial institutions and remove the risk from the banking sector that is the financial life-blood of the economy,” said strategists at Royal Bank of Scotland.

“However, it is potentially a major overhaul of the whole financial sector, creating enormous uncertainty.”

The mood was not helped by a further exchange of verbal fire between Washington and Beijing over internet censorship and cyber attacks, a dispute that some fear could develop into a trade war.

And those bulls hoping for succour from the US fourth-quarter earnings season will have been disappointed, again, by the reaction to Google’s numbers overnight. The company that is a verb smashed analysts’ forecasts but saw its shares fall 5 per cent in out-of-hours trading.

Source/Full Story: FT.com

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