Grim world data stacks up against hopeful Obama

NEW YORK,  (Reuters) – News of plunging exports hit  Japan and Germany, while home sales fell in the United States,  painting a grim economic picture yesterday, the day after  President Barack Obama offered assurances the United States  would emerge strengthened from the financial crisis.

U.S. stocks fell on disappointment that Obama’s speech, his  first major address to Congress, lacked details of his plan to  rebuild the U.S. economy.

Obama’s budget proposal, scheduled for today,  should provide a fuller picture, including insight on his  pledge to cut subsidies to big farm businesses. This will  reopen a long-simmering fight about whether — and if so, how  — the United States should reform its traditional farm  supports.

Federal Reserve Chairman Ben Bernanke, in a second day of  testimony to Congress, eased concerns that U.S. banks would be  nationalized but reiterated a warning the U.S. recession could  drag into next year without government intervention.

The U.S. central bank chief’s suggestion to lawmakers that  big banks would survive the downturn without being nationalized  helped to snap a six-day losing streak in U.S. stocks on  Tuesday.

“There was a little bit of an overshoot to the upside  yesterday and we’re just giving some of that back early as  President Obama didn’t have anything substantive to say last  night,” said Michael James, senior trader at regional  investment bank Wedbush Morgan in Los Angeles.

Egged on by U.S. data showing sales of existing homes last  month dropped to the slowest pace since July 1997, investors  pushed down U.S. stocks. This helped to send share prices in  Europe lower as well.

A late U.S. market rally fizzled as Washington launched  tests to gauge banks’ abilities to withstand a long and deep  recession, raising the specter of greater regulation.

The Standard & Poor’s 500 stock index <.SPX> ended 1  percent weaker after briefly reaching into positive territory. Adding evidence of the deepening global recession, Standard  & Poor’s downgraded hard-hit Ukraine and warned there  would likely be more sovereign downgrades than upgrades this  year versus 2008.

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