Market News: Eurozone Inflation, Morgan Stanley’s CDS, DOJ Into Chinese Books, Bofa Card Cost, Mortgage Rates, IBM Passes Microsoft

Eurozone inflation picks up. The EU’s statistics office estimates the eurozone’s inflation rate has risen to 3% in September – up from 2.5% in August, ahead of economist expectations for a 2.5% rate, and representing the largest increase in consumer prices since October 2008. The data makes it even less likely the ECB will cut interest rates at its October 6 meeting, given its mandate of keeping inflation below 2%.

Morgan Stanley’s CDS spread soars. The cost of acquiring credit-default swaps to insure Morgan Stanley’s (MS) debt has soared to 456bp, higher than the cost of buying swaps for some major French and Italian banks. Morgan Stanley’s CDS spread is still well below a post-Lehman peak of 1300bp, but nonetheless at its highest level since March 2009, as fears of French bank exposure heighten investor caution.

S&P and DJIA under one roof? Standard & Poor’s owner McGraw-Hill (MHP) and CME Group (CME), owner of Dow Jones Indexes, are in advanced talks to combine their index businesses for the first time, in a joint venture of which MHP would own 75%. McGraw-Hill is in the process of breaking into two, and one institutional investor had recommended that S&P indexes be further split into a separate business.

Justice looks into Chinese books. The Justice Department is investigating accounting irregularities at Chinese companies listed on U.S. exchanges, enforcement director Robert Khuzami confirms. The department’s involvement adds firepower to the SEC and the FBI, which have been probing Chinese companies for more than a year.

… And more China gloom. Adding to bad news from the Middle Kingdom was a Bloomberg survey that indicated more than half of investor respondents expected growth in China to slow to less than 5% a year by 2016. Shares of U.S.-based retail firms with exposure to China, such as Tiffany (TIF) and Coach (COH), took a pounding.

BofA’s new card cost. In a move likely to be followed by other banks, Bank of America (BAC) will soon charge most of its customers a new $5 fee for any month in which they use a BofA debit card to make a purchase. The bank, like others, is considering new ways to recover debit card revenue that is going away because of Dodd-Frank regulations.

Apotheker’s H-P takeaway. Hewlett-Packard (HPQ) agreed to pay ousted CEO Leo Apotheker $7.2 million in severance over the next 18 months, and millions more in bonuses and stock – the culmination of a stormy 11-month tenure during which the company lost $38 billion in market value. New CEO Meg Whitman will take a $1 salary, but with options on nearly 1.9 million shares and a target 2012 bonus of $2.4 million.

Ford talks U.S. jobs. Depending on estimates, Ford Motor (F) plans to add between 7,000 and 10,000 jobs in the U.S., part of talks with the United Auto Workers. CEO Alan Mulally is in Thailand, where the company is investing heavily, but some 4,000 U.S. jobs could come from shifting Fusion production to the U.S. from Mexico.

Micron posts a loss. Micron Technology (MU) fell more than 3% after hours Thursday after posting a surprise loss of $135 million (or $0.14 a share), a swing from the prior year’s profit of $0.32 a share. Falling DRAM prices – the result of oversupply and a tech spending slowdown – were largely the cause, along with a drop in NAND chip prices.

CEO views darken. Chief executives’ outlooks on the economy are growing worse, as the Business Roundtable’s latest quarterly survey found 24% expecting to cut jobs during the next six months, up from Q2’s 11%. The number expecting company sales to rise fell to 65% from 87%, and the number forecasting higher capital spending slipped to 32% from 61%.

New record lows for mortgages. Freddie Mac reported 30-year fixed mortgage rates are at record lows, falling to 4.01% in the weekly survey from a previous mark of 4.09%. Lenders in the Western part of the U.S. reported the lowest average of the five regions polled, checking in at 3.95%. Fifteen-year fixed rates averaged 3.28%.

IBM Passes Microsoft. IBM‘s market cap has surpassed Microsoft’s (MSFT) for the first time since 1996. While Big Blue’s profits have steadily increased as the company abandoned low-margin hardware businesses, and focused its attention on higher-margin services and software operations, Microsoft has been weighed down by slowing PC industry growth and massive losses at its online division.