(RTTNews) - US stocks were looking for direction Tuesday morning in New York after the Bank of Australia shocked the markets by slashing their key interest rate by a full percentage point.

Meanwhile, European banks came under heavy pressure after a report from the BBC indicated that Royal Bank of Scotland, Lloyds TSB and Barclays asked the UK finance minister for public funds.

Barclays Chief Executive John Varley denied the report, saying that the company “has not requested capital from the government and has no reason to do so.”

As of 6:15 am ET, the Dow Futures were down 14 points, the S&P Futures were down 1 point, and the Nasdaq Futures were up 3 points.

Amid worries that the government’s $700 billion bailout plan won’t stop a global economic slowdown, stocks ended Monday’s session sharply lower. The Dow closed down more than 350 points, ending the day below the psychologically important 10,000 mark.

Bank of America Corp. (BAC) Monday reported a sharp decline in third-quarter profit as a 21% growth in revenue was offset by a significant increase in credit costs, reflecting the continuing deterioration in the mortgage market.

The company also slashed its quarterly dividend by 50% and plans a $10 billion stock-sale to raise capital to achieve an 8% Tier 1 capital ratio. Following the results, released two weeks earlier than scheduled, BAC shares lost about 10% in Monday’s extended trading session.

The takeover battle for Wachovia took another turn on Monday when Citigroup, Inc. (C), Wachovia Corp. (WB) and Wells Fargo & Co. (WFC) said that in consultation with the U.S. Federal Reserve, they have agreed to a standstill of all formal litigation activity effective immediately.

All eyes will be on the Federal Reserve when it releases the minutes from its last meeting. Investors will be looking over the minutes for any clues as to how the Fed may react at its next meeting.

Federal Reserve Chairman Ben Bernanke will also be speaking on Tuesday. Bernanke will speak at the National Association for Business Economics annual meeting in Washington. Minneapolis Federal Reserve Bank President Gary Stern will be in Chicago to speak about the repercussions from the financial shock at a Council of Institutional Investors conference.

The Reserve Bank of Australia (RBA) on Tuesday responded to a shrinking national economy and a freeze in global credit liquidity with a 100 basis point interest rate cut.

The move, announced in Sydney, brings the central bank’s Overnight Cash Rate to 6.00 percent. It was the first time the RBA slashed the rate by 50 or more basis points in more than 7 years.

Asian stocks were mostly weaker on Tuesday, with Tokyo’s Nikkei losing 317 points. Markets in Hong Kong were closed for a public holiday.

In European intraday dealing, the FTSE of the UK was down 5 points, the DAX of Germany was down 14 points, and the CAC of France was up 32 points.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Australia, Economy, Eurozone, Japan, Releases, UK, USA.

Subscribe by RSS Subscribe by Email