Leonida notes

* IBM falls after earnings fail to impress* Goldman posts quarterly loss* Indexes off: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.8 pctBy Edward KrudyNEW YORK, Oct 18 (Reuters) - Wall Street stocks fell on Tuesday after a Moody’s warning about France’s credit rating added to worries about Europe and mixed earnings from some big corporations.U.S. stocks suffered their worst loss in two weeks on Monday, with the S&P 500 falling 1.9 percent after comments from Germany’s finance minister kept the focus on Europe.International Business Machines Corp fell about 4 percent to $178.75 after Big Blue’s quarterly earnings beat failed to stem worries about a slowdown in technology spending.Moody’s cautioned it may slap a negative outlook on France’s Aaa credit rating in the next three months if costs from helping to bail out banks and other euro zone members stretch its budget too thin.China’s economic growth slowed in the third quarter to its weakest pace since early 2009. Gross domestic product rose 9.1 percent in the quarter from a year earlier, but was down from 9.5 percent in the previous period.”There is lot of confusion about how to interpret what’s going on,” said Nick Kalivas, an analyst at MF Global in Chicago. “People are trying to figure out what to do with earnings and China.”The Dow Jones industrial average dropped 82.87 points, or 0.73 percent, to 11,314.13. The Standard & Poor’s 500 Index dropped 6.65 points, or 0.55 percent, to 1,194.21. The Nasdaq Composite Index dropped 22.07 points, or 0.84 percent, to 2,592.85.Goldman Sachs Group Inc , the largest U.S. investment bank, lost $428 million in the quarter, only its second quarterly loss as a public company. on a sharp decline in the value of investment securities and customer trading assets. The shares rose 0.5 percent to $97.47.Bank of America Corp , the biggest U.S. bank by assets, reported a $5.9 billion profit after accounting gains and asset sales, though the bank’s main businesses showed signs of weakness. The shares rose 3 percent to $6.20.

By Jeffrey Goldfarb The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Wall Street just got a bill for its conflicts of interest problem — and Barclays is picking up the tab. The UK bank will surrender a big slug of the fees it earned in the $5.3 billion buyout of Del Monte as part of a legal settlement with the food company’s shareholders. M&A practitioners seem to have read the writing on the wall after a Delaware judge earlier condemned the practice of advising a seller while also financing the buyer. But when banks get spanked on the bottom line, the message resonates louder and clearer. The Del Monte case stunned the dealmaking world earlier this year. Barclays hadn’t even been named as an original defendant. That didn’t deter a Delaware court from dragging it into the case and saying the bank “secretly and selfishly manipulated” the Del Monte auction to line its own pockets with additional fees. The accusations got the attention of bankers everywhere, who until then hadn’t much seen the problem with so-called “staple financing,” or lending money to a private equity firm so it could acquire a company the advisers were simultaneously helping to sell. Banks won’t necessarily concede any change of heart. But the evidence so far speaks for itself. While the volume of leveraged buyouts has shrunk considerably, it’s nevertheless hard to find an example since February, when the judge first ruled, of any sizable deal where a bank has engaged in the practice. This week’s $3.9 billion buyout of Pharmaceutical Product Development PPDI.O, for example, included four financing banks for Carlyle and Hellman & Friedman, none of which was a named adviser on the deal. The now quantifiable cost of such conflicts of interest should help drive the point home. Barclays, though it isn’t admitting any wrongdoing, will kick in nearly $24 million to the $89 million deal with Del Monte shareholders. And the Wall Street Journal is reporting that Del Monte will withhold another $21 million of fees from Barclays to help cover its portion of the settlement. It isn’t easy to alter the methods of bankers. But removing the financial incentive works almost every time.