Wall Street is closing near its low for the day amid what has been cautious trading after reports of further divisions over eurozone rescue funds and geopolitical tension in the wake of Kim Jong-il’s death, the FT reports. The FTSE All-World equity index is off 1.2 per cent, while traditional bolt-holes, such as the US dollar, are firmer on reports that a conference call between European Union ministers failed to agree a deal on raising the joint ceiling for the European Stability Mechanism and the European Financial Stability Fund, the eurozone’s two bail-out funds. The S&P 500 fell a further 0.5 percentage points after Bank of America’s share price slipped below $5 for the first time this year, triggering heavy selling of financials and leaving the benchmark US index off 1.2 per cent for the day. Asian markets were already weak as dealers sold exporter and commodities shares amid growing concerns about global economic growth and Europe’s debt crisis. Losses were extended after the news from Pyongyang hit the wires, sending the South Korean won and Kospi stock index sharply lower, as investors fretted about instability on the Korean peninsula following the death of the North’s Kim Jong-il. A fall of 1.8 per cent for the currency was pared to 1.4 per cent, leaving the won at 1,175 per US dollar. The Kospi shed as much as 5 per cent but settled down 3.4 per cent. The Stoxx 600 in Europe opened down 0.7 per cent, partly reflecting Wall Street’s pullback on Friday, but closed flat. Read more

Dominique Strauss-Kahn, the former head of the International Monetary Fund, made a defiant return to public life on Monday, warning European leaders that they were in denial about the Continent’s economic crisis and have only weeks to come up with real solutions, reports the FT. As the keynote speaker at a conference in Beijing, it was Mr Strauss-Kahn’s first formal address since facing a charge, which was later dropped, of the attempted rape of a hotel chamber maid in May that led to his resignation as head of the IMF. Mr Strauss-Kahn made no comments about his personal ordeal. Instead, he spoke for nearly an hour about the problems plaguing the global economy. He sounded as on top of matters as when he was IMF chief, but dispensed with diplomatic niceties in diagnosing Europe’s woes. “It appears today as a debt crisis. More than that, it is a growth crisis. Behind the growth crisis is a leadership crisis,” he said. He singled out Germany and France, saying that the history of the European Union proved the two countries needed to co-operate closely if there was to be any progress, but that the current leaders were not on the same page. Read more

For the commute home,

- Calculated Risk’s ten economic questions for 2012. Read more

Asian markets dropped as investors sold exporter and commodities shares amid growing concern about global economic growth and Europe’s debt crisis, extending losses after North Korean state television reported that North Korean leader Kim Jong-il has died, says the FT global markets overview.

The MSCI Asia Pacific index fell 1 per cent, heading for a three-week low, in the wake of Friday’s warning from Fitch Ratings that it may downgrade France and six other eurozone countries, as a comprehensive solution to the region’s debt crisis was “technically and politically beyond reach.” Read more