Economy, Banks | featured news

Two of the nation's largest banks released third-quarter results that suggest the U.S. housing market, a key factor in the nation's economic performance, is bouncing back as mortgage rates hit record lows and home refinancings surge.

China's economy hasn't shown any signs of rebounding in the third quarter, and domestic investment is unlikely to expand dramatically in the short term, a central bank adviser said.

The Federal Reserve, hoping to give another shot in the arm to the pallid recovery, announced it would launch a new round of a controversial bond-buying stimulus program. The central bank also further extended its pledge to keep short-term interest rates near zero, now through the middle of 2015.

Jeffrey A. Michael, a finance professor in Stockton, Calif., took a hard look at his city’s bankruptcy this summer and thought he saw a smoking gun: a dubious bond deal that bankers had pushed on Stockton just as the local economy was starting to tank in the spring of 2007, he said.

The Spanish economy is falling deeper into recession and depositors are pulling their money out of the banks, figures published on Tuesday showed, while the country's most economically important region, Catalonia, said it needed a major rescue from Madrid.

A growing number of small and medium-sized banks are merging as shrinking profit margins, tepid loan demand and low interest rates place pressure on their operations. Conditions are unlikely to improve as the Federal Reserve contemplates another round of stimulus that could push rates even lower.

Stocks edged slightly higher on Thursday, up for a fifth session, on better-than-expected jobless claims and trade data in the United States and hopes of further stimulus action from China's central bank.

The Bank of England left its monetary policy unchanged on Thursday, judging that its July decision to expand purchases of government bonds is enough stimulus for now despite the danger of a prolonged slump.

The nation's largest mortgage lender said revenue from mortgage banking jumped almost 80% and consumers borrowed more on their credit cards. But it called the economic recovery uneven.

China's second surprise rate cut and lending reform in the space of a month shows that Beijing wants borrowing to play a greater role in reviving an economy struggling with its weakest pace of growth since the global financial crisis.