Carnage on the Street

The bailout plan passed Friday sure doesn’t seem to have reassured investors. As the financial crisis worsened in Europe (see items below), stocks got hammered around the world. Japanese equities fell 4.25%, and Hong Kong nearly 5%. Europe was even worse, with London off 6.88%, Paris 8.25%, and Frankfurt 6.87%. A gigantic wave of selling hit Wall Street as soon as the market opened, with the Dow down nearly 700 points, or 6.4%, around 3 p.m.

The selling hit all sectors of the market, with more than 30 issues on the Big Board falling for every one rising. Bonds rose as the Fed pumped liquidity into the financial system, and oil dropped below $90 a barrel. The dollar surged in speculation that the European and British central banks would soon cut rates.

Source: BusinessWeek

Shedding Staff at eBay

The online giant said it will lay off 10% of its global workforce, about 1,000 employees and several hundred temps, as the company tries to offset the impact of slower growth of the auction business. It also lowered its revenue forecast for the third quarter and announced it’s acquiring two companies, online payment outfit Bill Me Later for $945 million, and two Danish sites for $390 million.

Source: MarketWatch.com

The Battle for Wachovia

The fight for control of Wachovia Corp. took a new twist on Sunday night as Citigroup and Well Fargo began talks in New York aimed at splitting the Charlotte-based bank and its 3,300 branches nationwide. According to people close to the situation, the New York Federal Reserve is involved in the talks, which don’t include Wachovia itself. The negotiations come as the legal war heats up, leading to worries that a prolonged battle would further harm Wachovia. In a victory for Wells Fargo, an appeals-court judge on Sunday overruled a lower court’s ruling from Saturday that would have given Citi more time to complete a deal. Meanwhile, Wachovia filed a motion in a separate court to declare invalid a restriction prohibiting it from considering other bids, and Citi filed suit against Wachovia and Wells Fargo on Monday, asking for $60 billion in damages. The judge has scheduled a hearing for tomorrow.

Source: Financial Times, Associated Press, Bloomberg

BNP Paribas Buys Fortis for $19.7 Billion

The largest French bank, BNP Paribas, on Monday agreed to pay $19.7 billion in cash and shares to take control of Fortis, the troubled bank that the Benelux nations rescued last week. The deal will make BNP Paribas the largest European bank as measured by deposits. The government of Belgium will become the French bank’s largest shareholder, holding an 11.7% stake in BNP Paribas.

Source: Times of London

German, Italian Financial Sectors Hit by Crisis

In a bid to support faltering banks, the German government yesterday guaranteed all consumer bank deposits. German officials also bailed out Hypo Real Estate Holding, a lender that nearly collapsed last week after the failure of a $48.2 billion aid plan. Still, German Chancellor Angela Merkel expressed confidence in the health of the overall banking system. “We won’t allow the distress of one financial institution to become the distress of the whole system,” she said. Also on Sunday, Italy’s UniCredit announced an emergency $4.1 billion capital increase after its stock took a beating last week from worried investors.

Source: Wall Street Journal

Stocks Slide in Asia, Europe and U.S. Futures Fall

Asian and European stocks fell sharply on Monday following the bailouts of Hypo Real Estate and Fortis. Financial stocks took the biggest hit, with UBS down 8.6% and Mitsubishi UFJ down 9.9%. Benchmark indices fell 5% in Japan, 4.8% in China and 4.4% in South Korea. Worries of a worsening global downturn put pressure on commodities prices, with London-traded BHP Billiton, the world’s largest mining company, down 9.9%.

Source: Bloomberg

ImClone to Accept $6.1 Billion Eli Lilly Takeover

The boards of both ImClone Systems and Eli Lilly and Co. have approved a $6.1 billion bid for ImClone, according to sources familiar with the situation. By valuing ImClone at $70 a share, Eli Lilly tops a rival bid from Bristol-Myers Squibb that had valued the maker of cancer drug Erbitux at $62 a share.

Source: Reuters

Countrywide Agrees to $8.4 Billion Plan to Modify Home Loans

To settle lawsuits brought by states alleging it engaged in predatory pricing, Countrywide Financial has agreed to $8.4 billion in direct loan relief for an estimated 400,000 homeowners. Countrywide, now owned by Bank of America, has also agreed to set aside certain fees and help people facing foreclosure in the largest-ever program to modify home loans.

Source: New York Times

Conversation of the Day: Green Energy

Reader Bill in Colorado writes: “XCEL Energy in Colorado issued a mailer touting the importance of conservation. Since when should users pay more so that the utility can waste big bucks on more PR?”

Tell Us: Are You Leery of Green Marketing?

Hot Topic on the Business Exchange: Bailout

Henry Blodget and others are sharing their insights on the government bailout of the U.S. banking sector.