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Heavyweights investing heavily in China
Giant soft-drink producer Coca-Cola (NYSE: KO) told The Wall Street Journal it would invest $4 billion in China over the next three years. According to CEO Muhtar Kent, the money will be used to add new bottling factories, expand facilities, and fund the distribution, marketing, and development of new drinks. Kent also said the company isn't looking at any acquisitions and instead saw the opportunity to grow in a more organic way. Coke and its rival PepsiCo (NYSE: PEP) have been seeing double-digit growth in China, helping offset slowing sales in the United States.

McDonald's (NYSE: MCD) plans to increase its number of Chinese locations to 3,000 by 2013, up from 1,300, while Nestle bid $1.7 billion for Chinese candy maker Hsu Fu Chi International. But the hurdles have been apparent for large companies. Coke was blocked from acquiring Huiyuan Juice Group on anticompetitive terms by China's Ministry of Commerce. Read more at The Wall Street Journal. 

Morgan Stanley cutting down
Investment bank Morgan Stanley (NYSE: MS) slashed its global growth forecast for 2011-2012, saying the U.S. and the eurozone are inching closer to a recession. The bank cut its global gross domestic product growth to 3.9% from 4.2% for 2011 and to 3.8% from 4.5% for 2012. The bank criticized policymaker's indecision and lack of speed to react to the sovereign debt crisis and the debt ceiling. The bank said it saw no particular large growth in developing economies that could add to the overall outcome. As for China, the bank believes it is not in a good position to hold the economy up if another recession hits. Read more at Reuters.

Bank of America could face more losses
Bank of America (NYSE: BAC), the country's largest bank, could face billions of dollars more in liabilities for faulty mortgages. This could happen is if a judge agrees with insurer MBIA (NYSE: MBI) that lenders must buy back loans even if there was no error by the lender when a default happened. Such a ruling could add about $9 billion to what the bank owes to insurers, according to hedge fund Branch-Hill Capital. Since 2010, Bank of America's cushion to pay off loans that never lived up to their expectations has grown from $4 billion to $17.8 billion after it made payments to Fannie Mae and Freddie Mac. Bank of America said its situation is being overstated, considering that it had set aside $14 billion last quarter, including the $8.5 billion settlement with Countrywide. The ruling could set a precedent for similar cases, putting at risk lenders like UBS AG (NYSE: UBS) and Credit Suisse. Read more at Bloomberg.

One more plunge in stocks
Following the trends in Asia and Europe, U.S. stocks fell sharply during midday trading. The drop comes amid concerns of the deepening eurozone debt crisis and its effect on the wobbling U.S. economy. The market opened at a lower level and dropped continuously. The S&P 500 dropped about 4% within the first hour of trading. The Dow was down by 3.8% and the Nasdaq Composite lost 4.6%. The heaviest selling came in the heavy industrials sector, with losses around 5% in various stocks, followed by technology and the financial sector. Read more at The New York Times and The Wall Street Journal.

So there you have it -- the top financial stories for this afternoon. If you're interested in getting all the news and commentary on these stocks, sign up for My Watchlist -- its free!