China’s stocks fell, driving the benchmark index into a so-called bear market — or more than 20% below this year’s high — on concern the nation’s economic recovery will falter as the government reins in lending. The Shanghai Composite Index fell 4.7%to 2,774.77 in mid-afternoon trading, increasing its loss since the 14-month high on Aug. 4 to 20.2%. The gauge later clawed back slightly but remained 59% below its record level on Oct. 16, 2007.

Prime Minister Wen Jiabao’s $585 billion stimulus package, coupled with record bank lending in the first six months, helped the Shanghai index more than double from the low on Nov. 4. The rally faltered as new loans in July declined to less than a quarter of June’s level, the regulator allowed initial share sales after a nine-month moratorium and companies including Yunnan Copper Industry reported losses. China follows Russia among the so-called BRIC bloc of major emerging economies to have entered bear markets.

Source: Bloomberg

Poor HP Earnings Dim Hopes for Tech

Investors looking for evidence that the tech sector has turned a corner were disappointed by results released Aug. 18 by Hewlett-Packard. The world’s largest maker of computers said profit tumbled 19% and that while the recession was easing and business conditions are becoming more stable, pricing battles are likely to erode profits. HP, one of the first tech companies to offer a glimpse into July demand, said fiscal third-quarter sales slid 2.1%, to $27.5 billion, amid slumping demand for computers and printers.

Source: BusinessWeek

Home Starts Rise Keeps Recovery Hope Alive

Ground-breaking for new U.S. single-family homes rose for a fifth straight month in July and producer prices tumbled, keeping hopes for an economic recovery alive. The Commerce Department said work began on single-family dwellings at an annual rate of 490,000 units last month, up 1.7% from June. But a 13.3% drop in new multifamily home projects pushed overall housing starts down 1% last month to an annual rate of 581,000 units after two months of gains.

Source: Reuters

GM Raises Production, Adds Workers and Shifts

General Motors said it would add shifts and run some plants on overtime so it can increase production by 60,000 vehicles by year’s end in response to the demand created largely by the “cash for clunkers” program. The move mirrors one made last week by Ford, which also plans to increase production to meet demand that was heightened by the clunkers program.

Source: New York Times

Detroit Automakers Score Big in Pleasing Customers

A quarterly study by the University of Michigan’s American Customer Satisfaction Index shows that Detroit automakers are doing a much better job pleasing customers, with their biggest gains in years putting them on a par with the Asian automakers. Ford rose the most among U.S. brands, jumping 3.8% to 83. Volkswagen rose most overall: 6% to 86. Cadillac and Lexus tied at the top with scores of 89. Buick, Lincoln/Mercury and Honda followed at 88. Toyota was 86.

Source: USA Today

Over 150 U.S. Clients of UBS Probed

More than 150 American clients of Swiss Bank UBS are under criminal investigation as part of a broader crackdown on tax evasion by the U.S. administration, according to a court document. The public confirmation of the initial number of cases under way comes as the U.S. and Swiss governments prepare to reveal the details of an out-of-court settlement over access by the U.S. tax authority to names of up to 52,000 Americans with secret accounts with UBS.

Source: Financial Times

Ford Eyes Vehicles Interacting with Power Grids

Ford Motor says its future electric cars will “talk” to power grids across the U.S. As part of an effort to drive interest in alternative energy vehicles, America’s second-largest automaker released details of a two-year collaboration with about a dozen utility companies as well as the Department of Energy on the design of a system that allows car owners to control when they charge vehicles and for how long.

Source: Associated Press

China-Australia Ties Warm with $41 Billion Gas Deal

China and Australia have signed an energy deal worth more than $40 billion — the largest trade deal ever between the two nations. The deal comes after tensions rose between the Asia-Pacific powerhouses over recent Chinese bids for Australian commodities companies and the arrest of an Australian Rio Tinto executive in Shanghai. Under the deal, China will receive liquefied natural gas from the Gorgon Gas Field off Australia’s west coast. Exxon Mobil, which has a 25% stake in the field, will provide gas to PetroChina for the next 20 years.

Source: CNN

Buffett Warns of Threats from Federal Debt

The U.S. must address the massive amounts of “monetary medicine” that now pose threats to the world’s largest economy and its currency, although the “gusher of federal money” has rescued the financial system, billionaire Warren Buffett said. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.” He warned that threats from enormous dosages of monetary medicine might be as ominous as that posed by the financial crisis itself.

Source: Bloomberg