U.S. economic news for the week ended December 9, 2011

Amid mounting pressure from financial markets and policymakers to come up with a workable plan to contain the eurozone debt crisis, the European Union's all-night effort to save the eurozone from debt contagion met with mixed reviews. Throughout the week investors bid stocks higher and lower as efforts to shore up the region's financial woes were met with news of ratings agency downgrades of eurozone countries and many if its banks. By Friday, investors were left to scrutinize the EU agreement that calls for a tightening of fiscal coordination and to examine the details of an intergovernmental treaty that is still in the works.

U.S. and global economic news

EU leaders seal blueprint for closer fiscal union
After a marathon meeting this week, European leaders agreed to cap the European Stability Mechanism at 500 billion and that EU nations would provide up to 200 billion in loans to the International Monetary Fund to increase its funding ability. In spite of opposition from the United Kingdom, the 17 countries of the eurozone also agreed to run only minimal budget deficits in the future and allow the European Court of Justice the right to strike down national laws that do not properly enforce such discipline.

S&P puts 15 eurozone nations on negative credit watch
Standard & Poor's Ratings Service put the long-term debt ratings of 15 eurozone nations on negative watch. That warning includes Germany and five AAA members and comes as turmoil deepens in the currency bloc. The warning typically means that there is a 50% chance of a downgrade within 90 days. S&P also said it placed the long-term credit rating of the European Financial Stability Facility on credit watch negative. The move puts the bailout fund's rating on review for a possible downgrade. In another follow-up to its warning on Monday, S&P said some of the eurozone's largest banks, such as BNP Paribas and Deutsche Bank, could have their ratings cut, following a potential downgrade of eurozone countries.

Central banks weigh rate cuts
Central bankers around the world continue to weigh faltering growth prospects against weaker currencies as the sovereign debt crisis threatens to spill over from Greece. The European Central Bank cut interest rates for the second month in a row, lowering the benchmark interest rate by a quarter of a percentage point to 1% to match a record low. Meanwhile, the Bank of England kept the size of its asset-purchase program unchanged at 275 billion and left its key interest rate at 0.5%. The Reserve Bank of Australia cut its rate for the second month in a row as Europe's fiscal crisis threatened to slow its commodity exports, which would in turn send its currency lower. The bank lowered the rate by a quarter of a basis point to 4.25%. Serbia's central bank unexpectedly lowered its rate for the sixth time since June on concerns the European debt crisis will damp exports demand and slow growth. South Korea, New Zealand, and Indonesia left rates unchanged.

German industrial production rises; Italy and United Kingdom see declines
Germany's economy showed signs of life in October as industrial production rose more than expected after falling for the previous two months. Industrial production numbers from Italy showed a decline at the fastest rate in two years. U.K. factories decreased their output in October to the weakest annual rate since January 2010.

U.S. trade deficit narrows
In October, the U.S. trade deficit narrowed to its lowest level for the year. The gap shrank 1.6% as imports declined to a level not seen since April. That drop resulted almost entirely from a decrease in demand for oil. Imports of capital goods rose an indication that consumer spending is still keeping the economy afloat. Exports to China and South and Central America reached records, a sign that U.S. companies are benefiting from rising demand for their products in developing nations.

Japan's machinery orders fall
Japan's machinery orders unexpectedly fell for a second month in October, a signal that a strong yen and global slowing are prompting companies to postpone investment. Orders, an indicator of capital spending, fell 6.9% from a month earlier.

U.S. and global corporate news

Moody's cuts ratings of big French banks
Moody's Investors Service cut the credit ratings of BNP Paribas, Socit Gnrale, and Crdit Agricole amid funding constraints and deteriorating economic conditions. Moody's cut the long-term ratings for BNP and Crdit Agricole by one level to Aa3, the fourth-highest investment grade. Socit Gnrale's rating was cut to A1, the fifth highest. Moody's also cut the standalone assessments of financial strength of the three banks.

European banks face 114.7 billion shortfall
The European Banking Authority said European banks have a capital shortfall of 114.7 billion. The new figure is 8 billion more than the EBA estimated in October and published in the EBA's bank recapitalization plans that are among measures agreed to by the European Council in October in response to the European debt crisis.

Citigroup to cut 4,500 jobs
Citigroup announced that it will cut about 4,500 jobs over the next few quarters as volatile financial markets and new regulations hit profits. The company will take a $400 million charge in the fourth quarter to cover severance and other expenses.

Ford Motor declares first dividend since 2006
Ford Motor declared a $0.05 quarterly dividend, its first payout to shareholders since September 2006. The announcement came as part of Ford's news that it earned $1.65 billion in the three months ended in September. This marked the company's tenth-consecutive profitable quarter.