World shares slide despite G7, ECB hopes boost euro

Shares tumbled on Monday despite efforts by global policymakers to stem a collapse in investor confidence after S&P downgraded the U.S. credit rating, but the euro jumped on hopes the ECB will act to stop Europe's debt crisis from engulfingItaly and Spain.

Major Asian equity markets fell by 2-4 percent, with South Korea slumping more than 7 percent at one point.

S&P 500 futures shed 2.6 percent, indicating no respite for Wall Street, and financial bookmakers predicted the main European markets would open down 1-2 percent. .N .EU

Fears that the world's largest economy may be sliding back into recession, worries about a downgrade of the U.S. AAA rating and Europe's woes combined to pummel financial markets last week in one of the worst routs since the dark days following the collapse of Lehman Brothers in 2008.

Investors sought shelter in assets traditionally viewed as safe havens in times of financial turmoil, driving the Swiss franc to a record against the dollar and pushing gold to a new high above $1,701 an ounce.

"There are few places you can obviously hide ... and the ones that you can hide in are doing very well. Gold is the beneficiary because there is no central bank to sell it," said Greg Gibbs, strategist at RBS in Sydney.

Finance chiefs from the G7 group of major industrial powers pledged to take whatever action was needed to stabilize markets that have been losing faith in political leaders' ability to tackle the twin debt crises in Europe and the United States.

In a statement issued after an emergency conference call, G7 countries said they were "ready to take action to ensure stability and liquidity in financial markets", adding that senior officials would remain in close contact.

"The G7 has effectively drawn a line in the sand on contagion," said Christian Cooper head of U.S. dollar derivatives rating at Jefferies & Co in New York.

Ratings agency Standard & Poor's cut the U.S. long-term rating by one notch from AAA on Friday, capping a week that saw $2.5 trillion wiped off companies' values amid worries the U.S. economy was stalling.

STOCK MARKETS FALL

Equity markets continued to slide on Monday, following on from last week when the MSCI All-Country World Index .MIWD00000PUS saw its biggest weekly price fall since early October 2008, according to Thomson Reuters Datastream.

Tokyo's Nikkei .N225 fell 2.2 percent and MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS lost 3.8 percent.

Indexes in Hong Kong and Singapore lost 4 percent while South Korea's KOSPI .KS11 tumbled as much as 7.3 percent, prompting the stock exchange operator to briefly suspend program trading.

Traders said attention was turning to the Federal Reserve's next policy-setting meeting on Tuesday, which may signal renewed efforts to support the beleaguered U.S. economy.

"Selling is not done yet," said Toshio Sumitani, a senior strategist at Tokai Tokyo. "Investors are focusing on whether the Fed may hint at easing such as quantitative easing. If it doesn't, investors may signal disappointment by selling stocks."

The dollar remained under pressure on Monday, touching a record low versus the Swiss franc below 0.7500 before pulling back to around 0.7600. Against a basket of major currencies .DXY, the dollar was down 0.3 percent.

EURO ZONE CRISIS

While the loss of the prized AAA credit rating the United States has held with S&P since 1941 was a huge symbolic blow, the crisis in the euro zone has presented an even bigger immediate concern for investors.

Yields on Italian and Spanish debt soared to 14-year highs last week on political wrangling and doubts over the vigor of budget cuts, raising fears that the euro zone's bailout fund for struggling members could be overwhelmed.

"Clearly, the S&P downgrade is a very symbolic and historic event," Nomura Chief Global Economist Paul Sheard told Reuters Insider TV.

"But really, the epicenter of this crisis, unlike 2008, is very much in the euro zone. So I think the markets will be focusing very much on what the euro area policymakers will do over the coming weeks."

Following a rare Sunday conference call by the ECB's governing council, a euro zone monetary source said the central bank would intervene "significantly" to protect Italy and Spain from the debt crisis, indicating it would buy government bonds of the euro zone's third and fourth biggest economies.

A statement from the ECB said it would "actively implement" its bond-buying programs.

The euro briefly climbed as high as $1.4432 on the news, up more than a cent from late New York levels on Friday and a long way from last week's lows around $1.4055, and was later trading around $1.4315.

Gold, which has risen more than 18 percent this year, notching up a succession of records along the way, hit another all-time high of $1,701.39 an ounce.

But commodities tied to economic growth fell, with Shanghai copper down about 1.3 percent and U.S. crude oil futures falling 3.7 percent to $83.64 a barrel .

"I think troubles in Europe are also undermining markets. Progress in dealing with Europe sovereign debt issues is painfully slow," said Natalie Robertson, a commodities strategist at ANZ.

(Additional reporting by Ian Chua in Sydney, Adrian Bathgate in Wellington, Ayai Tomisawa in Tokyo, Umesh Desai in Hong Kong, Lewa Pardomuan in Singapore and Reuters Insider Television)

FCC proposes wireless by Arne Ruhnau

U.S. telecommunications regulators proposed freeing up more airwaves for wireless services to meet the expanding use of handheld devices.

The Federal Communications Commission voted unanimously on Tuesday to seek public comment on proposals that include the use of some broadcast television airwaves for wireless devices.

"The explosive growth of mobile communications threatens to outpace the infrastructure on which it relies," FCC Chairman Julius Genachowski told an FCC open meeting.

The FCC is looking to entice broadcasters to give up some of their airwaves so that consumers can better download data on smart phones like Research in Motion Ltd's BlackBerry and Apple Inc's iPhone and other wireless devices.

There was still no word late Tuesday on whether the FCC plans to act on contentious Internet traffic rules this year, another key part of shaping future broadband access.

The agenda for the agency's December 21 meeting had been widely expected on Tuesday, but could slip until later in the week.

The issue of so-called net neutrality has sent the agency back to the drawing board after a U.S. appeals court ruled that the FCC lacked the authority to stop cable television company Comcast Corp from blocking bandwidth-hogging applications.

The airwave changes proposed at Tuesday's FCC meeting have been less contentious, but they still rely on broadcasters like CBS Corp and owners of affiliates, like Sinclair Broadcast Group Inc and LIN TV Corp, to voluntarily give up spectrum. Lawmakers would also have to give the FCC the authority to conduct airwave auctions in which a portion of the proceeds would be shared with broadcasters.

The FCC's proposed rule changes would help in its plan to repurpose 120 megahertz of spectrum from television stations for mobile broadband use.

The Obama administration has endorsed making 500 megahertz of spectrum available for mobile broadband use.

"Our goal is to be ready to move quickly in the event that Congress authorizes incentive auctions," Genachowski said.

The National Association of Broadcasters said it did not oppose "truly voluntary" incentive auctions, but has taken issue with spectrum fees outlined in the FCC's national broadband plan that it believes could force broadcasters to surrender their licenses and could threaten the transmission of free, local television.

One analyst said some broadcasters' apparent reluctance to turn over underutilized spectrum may simply be a negotiating tactic.

"They're going to hold out and try for the best deal on what they would be compensated," Jeffrey Silva, an analyst with Medley Global Advisors, said in an interview.

He also said some lawmakers may be reluctant to authorize the auctions if they are perceived to apply undue pressure to broadcasters in their districts.