Wall Street Watch: Italy Scares Markets, GM Earnings

Italy’s (NYSE:EWI) increasingly grim situation has market watchers worrying as clearing house LCH.Clearnet increased the requisite margins to trade Italian government bonds. On Tuesday, Italian Prime Minister Silvio Berlusconi said he would resign once his country’s austerity measures are approved. Italy is facing increasing debts and its structure is having difficulty dealing with the growing problems.

Trending Now: Italian Borrowing Costs Surge to Dangerous New Record.

China (NYSE:FXI) reported October consumer prices increased 5.5 percent from the previous year but decreased 0.6 percentage points from September; this was its greatest drop since February 2009. Industrial output growth declined to 13.2 percent.

Inflation has slowed to its biggest level in almost three years and many economists think China’s government will either loosen fiscal or monetary policy without slashing interest rates as inflation remains above four percent year target, according to a Bloomberg News survey.

Investing Insights: Here’s What Germany and China Really Think About Gold.

Goldman Sachs Group Inc. (NYSE:GS) will sell up to $1.54 billion of its stake in China’s ICBC. This represents the firm’s third sale in the five-year-old investment and in the second quarter, Goldman saw a $1.05 billion paper loss on it.

General Motors Co. (NYSE:GM) reported its third quarter earnings dropped to $1.7 billion ($1.03 per share) from $2 billion ($1.20 per share) from the previous year. Revenue increased to $36.7 billion from $34.1 billion. Analysts estimates had $0.94 earnings per share on $35.9 billion in sales.

GM said its adjusted earnings before interest and taxes will show “solid improvement” from 2010 but it doesn’t expect to break even thanks to Europe’s economic challenges. Dig Deeper: General Motors Earnings Cheat Sheet: Net Income Drops.

Yahoo! Inc (NASDAQ:YHOO), Microsoft Corp (NYSE:MSF) and AOL Inc (NYSE:AOL) have formed an advertising alliance to challenge Google (NASDAQ:GOOG).  The three companies will sell each other’s display ads early next year. These types of ads appear on Web pages and attract marketers looking to brand either their product or services; they come with high rates.

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