NEW YORK (Reuters) - Anxiety over a global flu crisis and the health of some U.S. banks rattled hopes on Tuesday that the financial system was stabilizing, but U.S. and other data suggested confidence was returning to consumers.
U.S. regulators were talking to Citigroup Inc (C.N) about its capital levels after stress testing the bank, while the Wall Street Journal reported Bank of America Corp (BAC.N) may need billions of dollars in new capital.
"The flu story and the story on Citi and Bank of America have spooked the whole market," said CMC Markets analyst James Hughes in London.
The report on banks compounded worries of the economic fallout from the spread of cases of a new kind of flu and the specter of a pandemic began to hit the travel industry.
The virus, known as H1N1, has killed some 150 people in Mexico. Milder symptoms have appeared in countries including the United States, Canada, Spain, Britain, Israel and New Zealand.
"As long as it's contained, it will be a short-term blip," said Jonathan Basile, economist at Credit Suisse in New York.
Others saw the potential for more damage to an already weak global economy.
"The timing couldn't be worse. It may also end up serving as a barrier to global trade," said Mark Zandi, chief economist with Moody's Economy.com.
In the short term, the travel and oil industries are vulnerable to fallout from the flu outbreak, while drug companies could benefit from it, analysts said.
The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and cause a 5 percent drop in world gross domestic product.
BANK WORRIES OFFSET DATA
Wall Street stocks fell slightly on worries over U.S. banks, offsetting data on a bigger-than-expected improvement in U.S. consumer confidence in April.
A separate report suggested the sharp decline in U.S. home prices, the epicenter of the global downturn, may be slowing.
"Those are the green shoots that everybody's been talking about but you still have a lack of clarity on the timing and parameters of the recovery," said Jim Awad, managing director at Zephyr Management in New York.
The U.S. Treasury reached a tentative deal with some of the banks holding Chrysler LLC's CBS.UL debt, according to people familiar with the talks. The agreement of lenders is needed before the automaker can cement a deal with Italy's Fiat SpA (FIA.MI) that could keep it out of bankruptcy. Continued...
U.S. regulators were talking to Citigroup Inc (C.N) about its capital levels after stress testing the bank, while the Wall Street Journal reported Bank of America Corp (BAC.N) may need billions of dollars in new capital.
"The flu story and the story on Citi and Bank of America have spooked the whole market," said CMC Markets analyst James Hughes in London.
The report on banks compounded worries of the economic fallout from the spread of cases of a new kind of flu and the specter of a pandemic began to hit the travel industry.
The virus, known as H1N1, has killed some 150 people in Mexico. Milder symptoms have appeared in countries including the United States, Canada, Spain, Britain, Israel and New Zealand.
"As long as it's contained, it will be a short-term blip," said Jonathan Basile, economist at Credit Suisse in New York.
Others saw the potential for more damage to an already weak global economy.
"The timing couldn't be worse. It may also end up serving as a barrier to global trade," said Mark Zandi, chief economist with Moody's Economy.com.
In the short term, the travel and oil industries are vulnerable to fallout from the flu outbreak, while drug companies could benefit from it, analysts said.
The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and cause a 5 percent drop in world gross domestic product.
BANK WORRIES OFFSET DATA
Wall Street stocks fell slightly on worries over U.S. banks, offsetting data on a bigger-than-expected improvement in U.S. consumer confidence in April.
A separate report suggested the sharp decline in U.S. home prices, the epicenter of the global downturn, may be slowing.
"Those are the green shoots that everybody's been talking about but you still have a lack of clarity on the timing and parameters of the recovery," said Jim Awad, managing director at Zephyr Management in New York.
The U.S. Treasury reached a tentative deal with some of the banks holding Chrysler LLC's CBS.UL debt, according to people familiar with the talks. The agreement of lenders is needed before the automaker can cement a deal with Italy's Fiat SpA (FIA.MI) that could keep it out of bankruptcy. Continued...
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