By Lily Nonomiya and Jason Clenfield
Aug. 1 (Bloomberg) -- Bunmei Ibuki was named Japan's finance minister as Prime Minister Yasuo Fukuda turns to a former finance ministry official to help stave off a recession and reduce the world's biggest public debt.
Ibuki, 70, replaces Fukushiro Nukaga amid concern that he failed to rein in spending enough to balance the budget by 2011. Kaoru Yosano, 69, was chosen as economic and fiscal policy minister, replacing Hiroko Ota and returning to the post he held under Junichiro Koizumi from 2005 to 2006.
Fukuda probably chose Ibuki, the Liberal Democratic Party's No. 2 official, as a way to shore up support from within the party. Yosano's appointment, meanwhile, may signal that he's serious about cutting the debt and nurturing a recovery in the world's second-largest economy, said economist Masamichi Adachi.
``The message behind Yosano's appointment is that Fukuda is not giving up on fiscal consolidation,'' said Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. ``Ibuki isn't a big- picture guy, he's just a powerful politician.''
Hosting last month's Group of Eight summit failed to revive Fukuda's support in the polls, prompting the Cabinet reshuffle. His public approval rating has fallen by half since he took office in September, punctured by a feisty opposition that controls the less-powerful upper house of parliament, and criticism within his own party that he lacks a vision for Japan.
Ibuki was education minister under previous Prime Minister Shinzo Abe, and until today served as the LDP's secretary general. He worked in the Finance Ministry's budget bureau after graduating with a degree in economics from Kyoto University.
First Since Miyazawa
He's the first former Finance Ministry official to serve as finance minister since Kiichi Miyazawa ended his last stint in the job in 2001. The father of two also worked at the Japanese embassy in London for four years.
Yosano is head of the LDP's fiscal policy panel, charged with finding ways to cut debt that the Organization for Economic Cooperation and Development estimates at 182 percent of gross domestic product. He favors raising taxes and cutting spending to balance the budget.
Doubling the 5 percent consumption tax by 2015 would help Japan care for one of the world's most rapidly aging societies, Yosano said in a May interview. ``We may not be able to continue our good welfare system after a couple of years,'' he said.
Decisions on taxes may become more pressing as slowing growth causes revenue to decline. Still, even with Yosano in the Cabinet, Fukuda's declining popularity and the prospect of a general election within the next 12 months means any debate on the sales tax may be delayed.
Not Realistic
``I don't think it's realistic to expect the government to seriously discuss raising taxes right before the election,'' said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. ``That's not the message Fukuda wants to send.''
The last prime minister to raise the sales tax, Ryutaro Hashimoto, had to resign after the 1997 increase led the LDP to an election defeat.
The government will probably miss its goal of balancing the books by the year ending March 2012, according to a Cabinet Office report last month. The Finance Ministry this week increased its cap on general spending for next fiscal year by 1.1 percent to 47.8 trillion yen ($444 billion).
Yosano and Ibuki will inherit an economy that may already be in a recession. Exports, production, household spending and wages all declined in June. Morgan Stanley yesterday cut Japan's 2009 growth estimate to 0.2 percent and said a ``deepening recession'' was possible.
The new ministers probably won't try to influence decisions by the Bank of Japan, economists said. Though the central bank is independent, some officials in the past have urged the policy board to keep interest rates low to spur growth.
``The Bank of Japan doesn't have to worry about political pressure with this Cabinet reshuffle,'' said Shiraishi at HSBC.
The bank has ``normalized'' rates without hurting financial markets and should keep doing so without interference from politicians, Yosano said in an interview in October. He said last month that raising the benchmark rate from the current 0.5 percent would reward Japan's savers.
To contact the reporters on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net.
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Friday, August 1, 2008
U.S. July Employment Situation: Statistical Summary (Table)
By Kristy Scheuble
Aug. 1 (Bloomberg) -- Following is a summary of the July employment situation from the Labor Department.
==============================================================================
July June May April March Feb. 3-month
2008 2008 2008 2008 2008 2008 Average
==============================================================================
Unemployment rate 5.7% 5.5% 5.5% 5.0% 5.1% 4.8% 5.6%
Rate (3 decimals) 5.682% 5.505% 5.492% 4.953% 5.082% 4.812% 5.560%
Avg. hourly earnings 0.3% 0.3% 0.3% 0.1% 0.3% 0.3% 0.3%
Avg. weekly hours 33.6 33.7 33.7 33.8 33.8 33.7 33.7
------------------------------------------------------------------------------
Nonfarm employment -51 -51 -47 -67 -88 -83 -50
Previous estimate n/a -62 -62 -67 -88 -83 n/a
Net Revision 26
Manufacturing -35 -35 -21 -52 -46 -47 -30
Previous estimate n/a -33 -22 -52 -46 -47 n/a
Household employment -72 -155 -285 362 -24 -255 -171
------------------------------------------------------------------------------
==============================================================================
July June May April March Feb. 3-month
2008 2008 2008 2008 2008 2008 Average
==============================================================================
------------Monthly Change in Employment------------
Nonfarm employment -51 -51 -47 -67 -88 -83 -50
Total private -76 -94 -99 -91 -103 -109 -90
Goods-producing -46 -77 -51 -109 -79 -91 -58
Construction -22 -49 -38 -59 -39 -44 -36
Manufacturing -35 -35 -21 -52 -46 -47 -30
Service providing -5 26 4 42 -9 8 8
Trade, transport -39 -15 -45 -56 -27 -52 -33
Retail trade -17 -6 -24 -46 -27 -43 -16
Information -13 -6 -5 -6 -3 2 -8
Financial 0 -13 -3 -2 0 -13 -5
Business services -24 -39 -49 17 -59 -28 -37
Temporary help -29 -33 -36 -19 -31 -38 -33
Education, health 39 55 63 48 44 48 52
Leisure, hospitality 1 7 -11 14 16 16 -1
Government 25 43 52 24 15 26 40
------------------------------------------------------------------------------
==============================================================================
July June May April March Feb. 3-month
2008 2008 2008 2008 2008 2008 Average
==============================================================================
----------------------Earnings-----------------------
Avg. hourly earnings $18.06 $18.00 $17.95 $17.89 $17.87 $17.81 $18.00
MOM% change 0.3% 0.3% 0.3% 0.1% 0.3% 0.3% 0.3%
YOY% change 3.4% 3.4% 3.5% 3.5% 3.7% 3.7% 3.4%
Avg. weekly earnings $606.82 $606.60 $604.92 $604.68 $604.01 $600.20 $606.11
MOM% change 0.0% 0.3% 0.0% 0.1% 0.6% 0.3% 0.1%
YOY% change 2.8% 2.8% 3.2% 3.5% 3.3% 3.7% 2.9%
--------------------Hours of Work--------------------
Total private 33.6 33.7 33.7 33.8 33.8 33.7 33.7
MOM% change -0.3% 0.0% -0.3% 0.0% 0.3% 0.0% -0.2%
Manufacturing 41.0 41.0 41.0 41.0 41.2 41.1 41.0
MOM% change 0.0% 0.0% 0.0% -0.5% 0.2% 0.0% 0.0%
Overtime 3.8 3.8 3.9 4.0 4.0 4.0 3.8
--------------------Aggregate Hours--------------------
Aggregate hours index 106.6 107.0 107.1 107.5 107.6 107.3 106.9
3-month annualized -2.1% -0.9% -0.4% -0.6% -1.1% -0.6% n/a
MOM% change -0.4% -0.1% -0.4% -0.1% 0.3% -0.1% -0.3%
==============================================================================
July June May April March Feb. 3-month
2008 2008 2008 2008 2008 2008 Average
==============================================================================
-----------Labor Force Status (thousands)-------------
Pool available labor 13,781 13,387 13,253 12,381 12,545 12,153 13,474
Level change 394 134 872 -164 392 -280 467
Augmented Unemp. Rate 8.6% 8.4% 8.3% 7.8% 7.9% 7.7% 8.5%
Civilian labor force 154,603 154,390 154,534 153,957 153,784 153,374 154,509
Level change 213 -144 577 173 410 -450 215
Participation rate 66.1% 66.1% 66.2% 66.0% 66.0% 65.9% 66.1%
Employment 145,819 145,891 146,046 146,331 145,969 145,993 145,919
Level change -72 -155 -285 362 -24 -255 -171
Employment ratio 62.4% 62.4% 62.6% 62.7% 62.6% 62.7% 62.5%
Unemployment 8,784 8,499 8,487 7,626 7,815 7,381 8,590
Level change 285 12 861 -189 434 -195 386
Avg. duration (wks) 17.1 17.5 16.6 16.9 16.2 16.8 17.1
Median duration 9.7 10.0 8.3 9.3 8.1 8.4 9.3
Not in labor force 79,261 79,237 78,871 79,241 79,211 79,436 79,123
Level change 24 366 -370 30 -225 644 7
Job leavers 9.8% 9.9% 10.3% 11.2% 10.1% 10.4% 10.0%
==============================================================================
July June May April March Feb. 3-month
2008 2008 2008 2008 2008 2008 Average
==============================================================================
--------------------Diffusion Index--------------------
Private nonfarm 41.2 42.2 46.4 45.6 47.4 41.4 43.3
3-mo. average 43.3 44.7 46.5 44.8 44.7 45.1 n/a
Manufacturing 27.4 32.7 44.6 35.1 38.1 28.6 34.9
3-mo. average 34.9 37.5 39.3 33.9 35.7 35.1 n/a
==============================================================================
NOTE: All figures seasonally adjusted. Employment figures in thousands.
The augmented unemployment rate is the number of job wanters plus the number
unemployed divided by the labor force plus the number of job wanters.
To contact the reporter on this story: Kristy Scheuble in Washington at kmckeaney@bloomberg.net
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Swedish Economy Grows at Slowest Pace Since 2001
By Johan Carlstrom
Aug. 1 (Bloomberg) -- Sweden's economy grew at its slowest pace in almost seven years in the second quarter as unemployment reached a two-year high, inflation accelerated and interest rates rose.
Gross domestic product expanded an annual 0.7 percent, compared with a revised 2.1 percent in the previous three months, Statistics Sweden said today. The median forecast of 13 economists surveyed by Bloomberg was for 2 percent growth. GDP was unchanged from the first quarter.
Today's report may deter the central bank, or Riksbank, from going through with its forecast that interest rates will rise twice more this year to stem an inflation rate that reached a 15- year high in June. The bank had forecast economic growth of 2.1 percent for the second quarter.
``There's no room for the Riksbank to raise the interest rate,'' said Robert Bergqvist, chief economist at SEB AB, Sweden's second-largest bank by assets.
The yield on the 5.25 percent government note fell 10 basis points to 4.39 percent by 11:50 a.m. in Stockholm. The krona strengthened to 9.4377 per euro from 9.4413.
``The extremely weak Q2 GDP report, together with other very weak, more forward looking, economic indicators that we have received the past few days have reduced the probability of rate hikes during the autumn substantially,'' said Anna Raaman, economist at Handelbanken AB in a client note.
Slowing Down
The consumer confidence index fell to a 13-year low of minus 18.2 in July from minus 10.2 the month before, the National Institute of Economic Research said yesterday. Manufacturing industry contracted for the first time in five years in the same month, a Swedbank survey of purchasing managers showed today.
The Riksbank lifted its benchmark lending rate to 4.5 percent last month to limit inflation which accelerated to an annual 4.3 percent in June on the back of rising food and oil prices.
Net trade cut 0.4 percentage point from annual growth in the second quarter, Statistics Sweden said. Household consumption added 1 point, fiscal spending contributed 0.1 point and investment added 1.9 percentage points. The spending figures were not adjusted for calendar effects, unlike the overall GDP number.
Productivity declined an annual 1.3 percent in the second quarter, the largest fall since Statistics Sweden started to publish the figure in 1993, said Olle Holmgren, an economist at SEB. That will add to pressure on companies to raise prices.
``This highlights that inflation still is a Riksbank headache,'' Holmgren said in a client note. ``Still the risk for another rate hike in September has been reduced significantly.''
The central bank, which has an inflation target of 2 percent, predicts growth will slow to 2.1 percent this year and 1.2 percent in 2009 from 2.8 percent last year. Inflation will probably ease to 2.3 percent in 2010, it forecasts.
Several companies, including Ericsson AB, the world largest maker of wireless networks, and Sandvik AB, the world's biggest maker of metal-cutting tools, have said they will cut staff in Sweden as the economy slows. Unemployment rose to 8.1 percent in June from 5.9 percent in May.
To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.
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Aug. 1 (Bloomberg) -- Sweden's economy grew at its slowest pace in almost seven years in the second quarter as unemployment reached a two-year high, inflation accelerated and interest rates rose.
Gross domestic product expanded an annual 0.7 percent, compared with a revised 2.1 percent in the previous three months, Statistics Sweden said today. The median forecast of 13 economists surveyed by Bloomberg was for 2 percent growth. GDP was unchanged from the first quarter.
Today's report may deter the central bank, or Riksbank, from going through with its forecast that interest rates will rise twice more this year to stem an inflation rate that reached a 15- year high in June. The bank had forecast economic growth of 2.1 percent for the second quarter.
``There's no room for the Riksbank to raise the interest rate,'' said Robert Bergqvist, chief economist at SEB AB, Sweden's second-largest bank by assets.
The yield on the 5.25 percent government note fell 10 basis points to 4.39 percent by 11:50 a.m. in Stockholm. The krona strengthened to 9.4377 per euro from 9.4413.
``The extremely weak Q2 GDP report, together with other very weak, more forward looking, economic indicators that we have received the past few days have reduced the probability of rate hikes during the autumn substantially,'' said Anna Raaman, economist at Handelbanken AB in a client note.
Slowing Down
The consumer confidence index fell to a 13-year low of minus 18.2 in July from minus 10.2 the month before, the National Institute of Economic Research said yesterday. Manufacturing industry contracted for the first time in five years in the same month, a Swedbank survey of purchasing managers showed today.
The Riksbank lifted its benchmark lending rate to 4.5 percent last month to limit inflation which accelerated to an annual 4.3 percent in June on the back of rising food and oil prices.
Net trade cut 0.4 percentage point from annual growth in the second quarter, Statistics Sweden said. Household consumption added 1 point, fiscal spending contributed 0.1 point and investment added 1.9 percentage points. The spending figures were not adjusted for calendar effects, unlike the overall GDP number.
Productivity declined an annual 1.3 percent in the second quarter, the largest fall since Statistics Sweden started to publish the figure in 1993, said Olle Holmgren, an economist at SEB. That will add to pressure on companies to raise prices.
``This highlights that inflation still is a Riksbank headache,'' Holmgren said in a client note. ``Still the risk for another rate hike in September has been reduced significantly.''
The central bank, which has an inflation target of 2 percent, predicts growth will slow to 2.1 percent this year and 1.2 percent in 2009 from 2.8 percent last year. Inflation will probably ease to 2.3 percent in 2010, it forecasts.
Several companies, including Ericsson AB, the world largest maker of wireless networks, and Sandvik AB, the world's biggest maker of metal-cutting tools, have said they will cut staff in Sweden as the economy slows. Unemployment rose to 8.1 percent in June from 5.9 percent in May.
To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.
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China Manufacturing Shrinks for First Time on Record
By Li Yanping and Nipa Piboontanasawat
Aug. 1 (Bloomberg) -- Manufacturing in China contracted for the first time since a survey began in 2005 as export demand faltered and factories closed to clear the air before the Olympic Games.
The Purchasing Managers' Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today in an e-mailed statement.
The expansion of the world's fourth-biggest economy slowed for the fourth straight quarter in the three months through June on weaker U.S. demand. China raised tax rebates for shipments of textiles and garments today and the commerce ministry is pressing for slower yuan gains to protect exporters after the currency's 6.8 percent advance against the dollar this year.
``Companies are less willing to invest as export growth slumps, credit gets tighter and the economic outlook worsens,'' said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. ``Factory closures ahead of the Olympic Games may also have played a role.''
The yuan fell 0.1 percent to 6.8409 against the dollar as of 11:13 a.m. in Shanghai.
The government has closed construction sites and shuttered factories in and around Beijing to clear smog before the games start next week. Shougang Corp., a Beijing-based steelmaker, will keep only one of four blast furnaces open during the games.
Not Enough Electricity
China also faces power shortages. The government has asked coal producers to increase deliveries to power stations to help ease a sixth year of electricity shortages and ensure supplies for the games, according to a July 30 report by the state-run Xinhua News Agency.
Six of 11 sub-indexes in the PMI fell to record lows, including output, new orders and export orders.
``The size of the slowdown is unexpected,'' said Xing Ziqiang, a Beijing-based economist at China International Capital Corp., the nation's biggest investment bank. ``The government may use a more active fiscal policy, slow gains by the yuan, and encourage lending to small companies.''
The Communist Party's Politburo said July 25 that maintaining growth and fighting inflation are the two biggest priorities for the rest of the year. Inflation this year is the fastest since 1996. Consumer prices rose 7.1 percent in June.
China is raising tax rebates on exports of textiles and garments to 13 percent from 11 percent today, according to the State Administration of Taxation. The Ministry of Commerce had urged China's cabinet to rein in currency gains and raise some rebates, a ministry official said July 14, speaking on condition of anonymity.
Yuan's Advance
The yuan's advance against the dollar in 2008 has been at more than double the pace of a year earlier.
The economy expanded 10.1 percent in the second quarter as the trade surplus narrowed 12 percent from a year earlier to $58.14 billion.
Today's survey ``may indicate the economy will continue to weaken,'' Zhang Liqun, a senior research fellow at the State Council's Development Research Center, said in the statement. Companies ``are facing increasing difficulties and this could curb economic growth and reduce employment and incomes.''
The PMI is based on a survey that started in January 2005 of more than 700 companies in 20 industries, including energy, metallurgy, textile, automobile and electronics. A reading above 50 reflects an expansion, below 50 a contraction.
The output index fell to 47.4 in July from 54.2 in June, while the index of new orders dropped to 46.2 from 52.6. The index of export orders declined to 46.7 from 50.2.
Conflicting Survey
The CFLP jointly releases the figures with the National Bureau of Statistics.
A second PMI, released today by CLSA Asia-Pacific Markets, showed Chinese manufacturing continuing to expand last month. The surveys conflict because they have different methodologies. The CLSA index was a seasonally adjusted 53.3.
Output and orders are slowing gradually and from high levels, suggesting that the central bank ``has no room to ease monetary policy,'' Eric Fishwick, head of economic research at CLSA in Singapore, said in an e-mailed statement.
To contact the reporter on this story: Li Yanping in Beijing at yli16@bloomberg.net
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U.K. Manufacturing Shrinks Most in a Decade in July
By Svenja O'Donnell
Aug. 1 (Bloomberg) -- U.K. manufacturing contracted by the most in a decade in July and prices charged by factories rose at the fastest pace since at least 1999, worsening the Bank of England's dilemma as it tries to avert a recession.
The Chartered Institute of Purchasing and Supply's index of manufacturing dropped to 44.3, the lowest since December 1998, from 45.9 in June. Economists expected 45.5, the median of 27 forecasts in a Bloomberg News survey showed. Readings below 50 signal contraction.
The slump in manufacturing is deepening after reports this week showed that U.K. house prices dropped the most since 1991 in July and consumer confidence declined to a record low. At the same time, some central bank policy makers argue it may be necessary to raise interest rates to combat faster inflation.
``Recession, here we come,'' said Alan Clarke, an economist at BNP Paribas SA in London. ``The Bank of England's dilemma isn't changing but the extremes are fanning out and getting much worse.''
A subindex measuring prices for goods charged by factories rose to 63.1 from 62.6, the highest since that series started in November 1999. A gauge of input prices increased to 82.4, the most since records started in 1992, from 82.1. The CIPS report is based on a survey of more than 600 manufacturers.
The pound was little changed after the figures and traded at $1.9783 against the dollar at 12:25 p.m. in London. A separate report today showed corporate insolvencies increased 11.6 percent in the second quarter from the previous three months.
Earnings
Slower growth in the U.K. and around the world is starting to hurt companies' earnings. Tomkins Plc, the U.K. maker of auto parts and building materials founded in 1925, said yesterday first-half profit slumped. CSR Plc, the U.K. maker of microchips used in Nokia Oyj mobile phones, said July 29 that fewer sales of headsets and non-cellular products is eroding profit.
While manufacturing accounts for 15 percent of the economy, business services and finance make up 28 percent of gross domestic product.
Weaker growth is eroding support for Prime Minister Gordon Brown. A YouGov Plc poll published by the Daily Telegraph newspaper today showed only 15 percent of Britons say he is up to the job. He may also be losing the support of some lawmakers amid speculation that Foreign Secretary David Miliband is plotting to oust him.
The manufacturing slump is hurting the economy just as faster inflation prevents the Bank of England from cutting rates.
Consumer-price inflation reached 3.8 percent in June, the fastest pace in at least 11 years, and the central bank kept its benchmark rate at 5 percent this month. Policy makers will meet again next week and will probably keep the rate unchanged for a fourth month, according to all 30 economists in a Bloomberg News survey.
Some policy makers may still vote for a rate increase. Timothy Besley, one of the Bank of England's nine rate setters, said in an interview with the Daily Telegraph this week that ``more activism in policy now means one can afford to be less active later.''
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
Read more...
Aug. 1 (Bloomberg) -- U.K. manufacturing contracted by the most in a decade in July and prices charged by factories rose at the fastest pace since at least 1999, worsening the Bank of England's dilemma as it tries to avert a recession.
The Chartered Institute of Purchasing and Supply's index of manufacturing dropped to 44.3, the lowest since December 1998, from 45.9 in June. Economists expected 45.5, the median of 27 forecasts in a Bloomberg News survey showed. Readings below 50 signal contraction.
The slump in manufacturing is deepening after reports this week showed that U.K. house prices dropped the most since 1991 in July and consumer confidence declined to a record low. At the same time, some central bank policy makers argue it may be necessary to raise interest rates to combat faster inflation.
``Recession, here we come,'' said Alan Clarke, an economist at BNP Paribas SA in London. ``The Bank of England's dilemma isn't changing but the extremes are fanning out and getting much worse.''
A subindex measuring prices for goods charged by factories rose to 63.1 from 62.6, the highest since that series started in November 1999. A gauge of input prices increased to 82.4, the most since records started in 1992, from 82.1. The CIPS report is based on a survey of more than 600 manufacturers.
The pound was little changed after the figures and traded at $1.9783 against the dollar at 12:25 p.m. in London. A separate report today showed corporate insolvencies increased 11.6 percent in the second quarter from the previous three months.
Earnings
Slower growth in the U.K. and around the world is starting to hurt companies' earnings. Tomkins Plc, the U.K. maker of auto parts and building materials founded in 1925, said yesterday first-half profit slumped. CSR Plc, the U.K. maker of microchips used in Nokia Oyj mobile phones, said July 29 that fewer sales of headsets and non-cellular products is eroding profit.
While manufacturing accounts for 15 percent of the economy, business services and finance make up 28 percent of gross domestic product.
Weaker growth is eroding support for Prime Minister Gordon Brown. A YouGov Plc poll published by the Daily Telegraph newspaper today showed only 15 percent of Britons say he is up to the job. He may also be losing the support of some lawmakers amid speculation that Foreign Secretary David Miliband is plotting to oust him.
The manufacturing slump is hurting the economy just as faster inflation prevents the Bank of England from cutting rates.
Consumer-price inflation reached 3.8 percent in June, the fastest pace in at least 11 years, and the central bank kept its benchmark rate at 5 percent this month. Policy makers will meet again next week and will probably keep the rate unchanged for a fourth month, according to all 30 economists in a Bloomberg News survey.
Some policy makers may still vote for a rate increase. Timothy Besley, one of the Bank of England's nine rate setters, said in an interview with the Daily Telegraph this week that ``more activism in policy now means one can afford to be less active later.''
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
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Pound Headed for Weekly Drop as Manufacturing Index Declines
By Agnes Lovasz
Aug. 1 (Bloomberg) -- The pound headed for its biggest weekly drop against the dollar since mid June as U.K. manufacturing shrank by the most in a decade, adding to evidence a recession is looming.
An index based on a survey of more than 600 manufacturers by the Chartered Institute of Purchasing and Supply dropped to 44.3 in July, the lowest since December 1998, from 45.9 the previous month. The U.K. currency extended its drop after British Energy Group Plc, the nation's biggest nuclear-power producer, rejected a takeover approach from Electricite de France SA, according to people with knowledge of the talks.
``The news you're getting about the British economy goes only in one direction,'' said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG, Germany's second-biggest lender. ``The economy is very weak and we don't see signs of a recovery. The pound is going to get weaker against the euro and the dollar.''
The pound slipped to $1.9781 by 12:42 p.m. in London, from $1.9841 yesterday, bringing it weekly drop to 0.8 percent. The British currency was at 78.72 pence per euro, from 78.64, gaining 0.2 percent in the week.
The U.K. currency will slide to 82 pence per euro and $1.96 by the end of the March, before recovering, Karpowitz said.
Retail visits fell 2.6 percent from a year earlier, Experian Group Ltd. said today in an e-mailed report. The company forecasts sales volumes in the next 12 months will be ``the slowest period since the early 1990s,'' according to the report.
Gilts Decline
U.K. government bonds were little changed. The yield on the 10-year gilt was 4.81 percent. The 5 percent security due March 2018 dropped 0.03, or 30 pence per 1,000-pound ($1,978) face amount, to 101.47. The yield on the two-year gilt climbed 2 basis points to 4.81 percent. Bond yields move inversely to prices.
Bank of England policy makers left the nation's key interest rate unchanged at the past three meetings even as inflation accelerated to the fastest pace in 11 years. Prices rose 3.8 percent in June from a year earlier, almost double the central bank's 2 percent target. The bank next meets Aug. 7.
The pound has fallen 6.7 percent against the euro this year as tumbling house prices and accelerating inflation slowed the pace of growth.
The prospect of higher interest rates receded in the past month, with the implied yield on the December short-sterling futures contract at 5.76 percent today, from 6.21 percent a month ago. The contract rose 5 basis points today.
Gloomy Outlook
Britain's economic outlook has deteriorated in the past month after ``bad news'' on retail sales, Bank of England policy maker David Blanchflower, the only official to vote for a rate cut this month, said two days ago. U.K. house prices fell the most in nearly two decades in July and consumer confidence dropped to a record, reports showed yesterday.
Other reports this week showed mortgage approvals fell to the lowest since at least 1999 and an index of U.K. retail sales dropped to a 25-year low, house prices declined the most in almost two decades and consumer confidence slumped to a record.
The faltering economy will weaken the pound to $1.90 and to 80 pence per euro by year-end, according to the median forecast of analysts and strategists surveyed by Bloomberg. The yield on the 10-year note will end the year at 4.89 percent, according to a separate survey.
To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net
Read more...
Aug. 1 (Bloomberg) -- The pound headed for its biggest weekly drop against the dollar since mid June as U.K. manufacturing shrank by the most in a decade, adding to evidence a recession is looming.
An index based on a survey of more than 600 manufacturers by the Chartered Institute of Purchasing and Supply dropped to 44.3 in July, the lowest since December 1998, from 45.9 the previous month. The U.K. currency extended its drop after British Energy Group Plc, the nation's biggest nuclear-power producer, rejected a takeover approach from Electricite de France SA, according to people with knowledge of the talks.
``The news you're getting about the British economy goes only in one direction,'' said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG, Germany's second-biggest lender. ``The economy is very weak and we don't see signs of a recovery. The pound is going to get weaker against the euro and the dollar.''
The pound slipped to $1.9781 by 12:42 p.m. in London, from $1.9841 yesterday, bringing it weekly drop to 0.8 percent. The British currency was at 78.72 pence per euro, from 78.64, gaining 0.2 percent in the week.
The U.K. currency will slide to 82 pence per euro and $1.96 by the end of the March, before recovering, Karpowitz said.
Retail visits fell 2.6 percent from a year earlier, Experian Group Ltd. said today in an e-mailed report. The company forecasts sales volumes in the next 12 months will be ``the slowest period since the early 1990s,'' according to the report.
Gilts Decline
U.K. government bonds were little changed. The yield on the 10-year gilt was 4.81 percent. The 5 percent security due March 2018 dropped 0.03, or 30 pence per 1,000-pound ($1,978) face amount, to 101.47. The yield on the two-year gilt climbed 2 basis points to 4.81 percent. Bond yields move inversely to prices.
Bank of England policy makers left the nation's key interest rate unchanged at the past three meetings even as inflation accelerated to the fastest pace in 11 years. Prices rose 3.8 percent in June from a year earlier, almost double the central bank's 2 percent target. The bank next meets Aug. 7.
The pound has fallen 6.7 percent against the euro this year as tumbling house prices and accelerating inflation slowed the pace of growth.
The prospect of higher interest rates receded in the past month, with the implied yield on the December short-sterling futures contract at 5.76 percent today, from 6.21 percent a month ago. The contract rose 5 basis points today.
Gloomy Outlook
Britain's economic outlook has deteriorated in the past month after ``bad news'' on retail sales, Bank of England policy maker David Blanchflower, the only official to vote for a rate cut this month, said two days ago. U.K. house prices fell the most in nearly two decades in July and consumer confidence dropped to a record, reports showed yesterday.
Other reports this week showed mortgage approvals fell to the lowest since at least 1999 and an index of U.K. retail sales dropped to a 25-year low, house prices declined the most in almost two decades and consumer confidence slumped to a record.
The faltering economy will weaken the pound to $1.90 and to 80 pence per euro by year-end, according to the median forecast of analysts and strategists surveyed by Bloomberg. The yield on the 10-year note will end the year at 4.89 percent, according to a separate survey.
To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net
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Crude Oil Falls a Second Day as Slowing Economy Damps Demand
By Grant Smith
Aug. 1 (Bloomberg) -- Oil fell for a second day, after posting its biggest monthly drop since 2004 in July, on concern global consumption is falling amid slowing economic growth.
Demand is faltering in the U.S., the world's largest energy user, where the unemployment rate rose to its highest in four years, government data showed today. Manufacturing in China, the world's second-biggest energy consumer, contracted for the first time since a survey of purchasing managers began in 2005.
``The growing prospect of demand destruction in the U.S., and potentially other parts of the world, combined with technical indicators that suggest it's time to sell, is keeping prices under pressure,'' said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.
Crude oil for September delivery declined as much as $1.98 cents, or 1.6 percent, to $122.10 a barrel on the New York Mercantile Exchange. The contract traded at $122.92 a barrel at 1:41 p.m. London time.
Futures dropped 11 percent in July, the biggest one-month drop since December 2004. Yesterday, the September contract fell $2.69, or 2.1 percent, to settle at $124.08 a barrel.
Oil prices have slipped more than $23 a barrel, or 16 percent, from the $147.27 record on July 11 on signs of declining demand in the U.S., which consumed about 24 percent of the world's crude in 2007.
U.S. payrolls fell by 51,000, less than forecast, after a decline of 51,000 in June that was smaller than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.7 percent, the highest since March 2004, from 5.5 percent the prior month.
Economy Shrank
The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter. Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington yesterday, compared with the median projection of 2.3 percent in a Bloomberg News survey.
``U.S. economic indicators are weighing heavily on sentiment,'' said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. ``Negative refining margins are discouraging refiners from making gasoline.''
China's Purchasing Managers' Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today in an e-mailed statement.
Brent crude oil for September settlement fell as much as $2.04, or 1.7 percent, to $121.94 a barrel, and traded at $122.30 a barrel at 1:37 p.m. London time on London's ICE Futures Europe exchange. Yesterday, the contract declined $3.12, or 2.5 percent, yesterday to close at $123.98 a barrel.
Crude prices may fall next week on slowing demand. Thirteen of 29 analysts surveyed by Bloomberg News, or 45 percent, said prices will drop through August 8. Seven of the respondents, or 24 percent, said oil will rise and nine forecast little change. Last week 46 percent expected a decline.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.
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Aug. 1 (Bloomberg) -- Oil fell for a second day, after posting its biggest monthly drop since 2004 in July, on concern global consumption is falling amid slowing economic growth.
Demand is faltering in the U.S., the world's largest energy user, where the unemployment rate rose to its highest in four years, government data showed today. Manufacturing in China, the world's second-biggest energy consumer, contracted for the first time since a survey of purchasing managers began in 2005.
``The growing prospect of demand destruction in the U.S., and potentially other parts of the world, combined with technical indicators that suggest it's time to sell, is keeping prices under pressure,'' said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.
Crude oil for September delivery declined as much as $1.98 cents, or 1.6 percent, to $122.10 a barrel on the New York Mercantile Exchange. The contract traded at $122.92 a barrel at 1:41 p.m. London time.
Futures dropped 11 percent in July, the biggest one-month drop since December 2004. Yesterday, the September contract fell $2.69, or 2.1 percent, to settle at $124.08 a barrel.
Oil prices have slipped more than $23 a barrel, or 16 percent, from the $147.27 record on July 11 on signs of declining demand in the U.S., which consumed about 24 percent of the world's crude in 2007.
U.S. payrolls fell by 51,000, less than forecast, after a decline of 51,000 in June that was smaller than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.7 percent, the highest since March 2004, from 5.5 percent the prior month.
Economy Shrank
The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter. Gross domestic product increased at a 1.9 percent annualized rate, the Commerce Department said in Washington yesterday, compared with the median projection of 2.3 percent in a Bloomberg News survey.
``U.S. economic indicators are weighing heavily on sentiment,'' said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. ``Negative refining margins are discouraging refiners from making gasoline.''
China's Purchasing Managers' Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today in an e-mailed statement.
Brent crude oil for September settlement fell as much as $2.04, or 1.7 percent, to $121.94 a barrel, and traded at $122.30 a barrel at 1:37 p.m. London time on London's ICE Futures Europe exchange. Yesterday, the contract declined $3.12, or 2.5 percent, yesterday to close at $123.98 a barrel.
Crude prices may fall next week on slowing demand. Thirteen of 29 analysts surveyed by Bloomberg News, or 45 percent, said prices will drop through August 8. Seven of the respondents, or 24 percent, said oil will rise and nine forecast little change. Last week 46 percent expected a decline.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.
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U.S. Payrolls Drop 51,000 Jobs; Jobless Rate Rises
By Shobhana Chandra
Aug. 1 (Bloomberg) -- The U.S. lost jobs in July for a seventh straight month and the unemployment rate rose, increasing the risk that the economic slowdown will worsen.
Payrolls fell by 51,000, less than forecast, after a decline of 51,000 in June that was smaller than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.7 percent, the highest since March 2004, from 5.5 percent the prior month.
Fewer jobs, combined with decreasing property values, stricter lending rules and near-record energy prices, threaten to cut household spending. Cutbacks at UAL Corp. and Starbucks Corp. signal firings are spreading beyond builders and manufacturers as the cost of raw materials soars.
``There's not a whole lot of optimism among employers,'' Peter Kretzmer, a senior economist at Bank of America Corp. in New York, said before the report. ``The economy will get worse, and that can certainly generate more weakness in the labor market.''
Treasuries were little changed and stock-index futures advanced. Yields on benchmark 10-year notes were at 3.94 percent at 8:41 a.m. in New York, from 3.95 percent late yesterday. Futures on the Standard & Poor's 500 Stock Index gained 0.3 percent to 1,271.10.
Revisions added 26,000 to payroll figures previously reported for May and June.
Economists' Forecasts
Economists had projected payrolls would drop by 75,000 after a 62,000 decline the prior month, according to the median of 80 forecasts in a Bloomberg News survey. Estimates ranged from decreases of 150,000 to no change. The jobless rate was forecast to rise to 5.6 percent.
The employment figures may reinforce concern that the economy was in a recession. The July cuts bring the total drop in payrolls so far this year to 463,000.
The National Bureau of Economic Research, the official arbiter of U.S. contractions, tracks payrolls, sales, incomes, production and gross domestic product in making the recession call. The group defines downturns as a ``significant'' decrease in activity over a sustained period of time, and usually takes six to 18 months to make a determination.
The economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, figures from the Commerce Department showed yesterday. Some economists said this indicated the U.S. slipped into a recession late last year. Investors pared bets the Federal Reserve will raise interest rates in 2008.
`Remain Weak'
``The labor market is likely to remain weak, if not deteriorate a bit further,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, said before the report. ``This should keep the Fed uncomfortably on hold as policymakers are forced to grapple with the coexistence of recessionary and inflationary forces.''
More Americans filed initial claims for unemployment benefits last week than at any time in over five years, Labor reported yesterday. Consumer confidence surveys have indicated that Americans, growing more pessimistic about job prospects, may trim spending.
``There's a very high level of uncertainty'' about the economy, Conrad DeQuadros, economist and co-founder of RDQ Economics in New York, said in a Bloomberg Radio interview yesterday. ``The job numbers will provide a much more up-to-date picture.''
Starbucks, the world's largest chain of coffee shops, this week said it'll cut another 1,000 jobs as sales slump. The Seattle-based company on July 1 announced plans to eliminate as many as 12,000 positions worldwide.
Factory Jobs
Factory payrolls fell 35,000 after declining by the same amount in June. Economists had forecast a drop of 40,000. The decrease included a drop of 3,000 jobs in auto manufacturing and parts industries.
General Motors Corp. may cut about 5,000 U.S. jobs by year- end, people familiar with the plan said this week. July announcements at airlines included 7,000 cuts at UAL's United Airlines, and 6,840 at American Airlines parent AMR Corp.
The protracted housing slump and resulting credit crisis were also reflected in today's report. Construction payrolls declined 22,000, the smallest drop since October, after decreasing 49,000. Payrolls at financial firms were unchanged after declining 13,000 the prior month.
Services Payrolls
Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 5,000 workers, the first decline since March. Retail payrolls decreased by 16,500 after a drop of 6,300.
Government jobs increased by 25,000, the 12th month of gains in public payrolls, after an increase of 43,000.
The average work week shrank to 33.6 hours from 33.7 hours. Average weekly hours worked by production workers were unchanged at 41, and overtime was also unchanged at 3.8 hours. That brought the average weekly earnings up by 22 cents to $606.82 in July.
Workers' average hourly wages rose 6 cents, or 0.3 percent, to $18.06, matching economists' forecasts.
Sealed Air Corp., the maker of Bubble Wrap packaging, said this week it plans to eliminate 900 to 1,000 jobs globally after second-quarter profit fell because of rising costs to make plastics.
``We certainly are facing a challenging environment in 2008,'' Chief Financial Officer David Kelsey said in a July 30 telephone interview.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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Aug. 1 (Bloomberg) -- The U.S. lost jobs in July for a seventh straight month and the unemployment rate rose, increasing the risk that the economic slowdown will worsen.
Payrolls fell by 51,000, less than forecast, after a decline of 51,000 in June that was smaller than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.7 percent, the highest since March 2004, from 5.5 percent the prior month.
Fewer jobs, combined with decreasing property values, stricter lending rules and near-record energy prices, threaten to cut household spending. Cutbacks at UAL Corp. and Starbucks Corp. signal firings are spreading beyond builders and manufacturers as the cost of raw materials soars.
``There's not a whole lot of optimism among employers,'' Peter Kretzmer, a senior economist at Bank of America Corp. in New York, said before the report. ``The economy will get worse, and that can certainly generate more weakness in the labor market.''
Treasuries were little changed and stock-index futures advanced. Yields on benchmark 10-year notes were at 3.94 percent at 8:41 a.m. in New York, from 3.95 percent late yesterday. Futures on the Standard & Poor's 500 Stock Index gained 0.3 percent to 1,271.10.
Revisions added 26,000 to payroll figures previously reported for May and June.
Economists' Forecasts
Economists had projected payrolls would drop by 75,000 after a 62,000 decline the prior month, according to the median of 80 forecasts in a Bloomberg News survey. Estimates ranged from decreases of 150,000 to no change. The jobless rate was forecast to rise to 5.6 percent.
The employment figures may reinforce concern that the economy was in a recession. The July cuts bring the total drop in payrolls so far this year to 463,000.
The National Bureau of Economic Research, the official arbiter of U.S. contractions, tracks payrolls, sales, incomes, production and gross domestic product in making the recession call. The group defines downturns as a ``significant'' decrease in activity over a sustained period of time, and usually takes six to 18 months to make a determination.
The economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, figures from the Commerce Department showed yesterday. Some economists said this indicated the U.S. slipped into a recession late last year. Investors pared bets the Federal Reserve will raise interest rates in 2008.
`Remain Weak'
``The labor market is likely to remain weak, if not deteriorate a bit further,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, said before the report. ``This should keep the Fed uncomfortably on hold as policymakers are forced to grapple with the coexistence of recessionary and inflationary forces.''
More Americans filed initial claims for unemployment benefits last week than at any time in over five years, Labor reported yesterday. Consumer confidence surveys have indicated that Americans, growing more pessimistic about job prospects, may trim spending.
``There's a very high level of uncertainty'' about the economy, Conrad DeQuadros, economist and co-founder of RDQ Economics in New York, said in a Bloomberg Radio interview yesterday. ``The job numbers will provide a much more up-to-date picture.''
Starbucks, the world's largest chain of coffee shops, this week said it'll cut another 1,000 jobs as sales slump. The Seattle-based company on July 1 announced plans to eliminate as many as 12,000 positions worldwide.
Factory Jobs
Factory payrolls fell 35,000 after declining by the same amount in June. Economists had forecast a drop of 40,000. The decrease included a drop of 3,000 jobs in auto manufacturing and parts industries.
General Motors Corp. may cut about 5,000 U.S. jobs by year- end, people familiar with the plan said this week. July announcements at airlines included 7,000 cuts at UAL's United Airlines, and 6,840 at American Airlines parent AMR Corp.
The protracted housing slump and resulting credit crisis were also reflected in today's report. Construction payrolls declined 22,000, the smallest drop since October, after decreasing 49,000. Payrolls at financial firms were unchanged after declining 13,000 the prior month.
Services Payrolls
Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 5,000 workers, the first decline since March. Retail payrolls decreased by 16,500 after a drop of 6,300.
Government jobs increased by 25,000, the 12th month of gains in public payrolls, after an increase of 43,000.
The average work week shrank to 33.6 hours from 33.7 hours. Average weekly hours worked by production workers were unchanged at 41, and overtime was also unchanged at 3.8 hours. That brought the average weekly earnings up by 22 cents to $606.82 in July.
Workers' average hourly wages rose 6 cents, or 0.3 percent, to $18.06, matching economists' forecasts.
Sealed Air Corp., the maker of Bubble Wrap packaging, said this week it plans to eliminate 900 to 1,000 jobs globally after second-quarter profit fell because of rising costs to make plastics.
``We certainly are facing a challenging environment in 2008,'' Chief Financial Officer David Kelsey said in a July 30 telephone interview.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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Gold Heads for Third Weekly Drop as Dollar Rises, Crude Falls
By Rachel Graham
Aug. 1 (Bloomberg) -- Gold headed for a third consecutive weekly drop as crude fell and the dollar strengthened against the euro, reducing the appeal of the metal as a hedge against inflation and as an alternative investment.
Oil has fallen 16 percent since reaching a record $147.27 a barrel on July 11, easing concern that inflation will quicken. The dollar has gained 2.3 percent against the euro.
``We've seen the dollar strengthening, which is negative for gold,'' Rodion Rahnayev, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London. ``The sharp drop in oil'' also pushed gold lower, he said.
Gold for immediate delivery fell $3.58, or 0.4 percent, to $910.49 an ounce as of 12:19 p.m. in London. A close at that price would be a 2.1 percent weekly drop.
Futures for December fell $3.30, or 0.4 percent, to $919.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Traders are awaiting a U.S. government report on employment, scheduled for 1:30 p.m. London time, which may show that the U.S. lost jobs in July for a seventh consecutive month.
``If the data is positive, or if the dollar remains firm despite weak data as was the case yesterday, then gold could trade down towards the 200-day moving average, now at $890 an ounce,'' John Reade, the head of UBS AG metals strategy, wrote in a report today.
Gold Fields Ltd., Africa's second-biggest producer of the metal, said output will fall this quarter as it improves safety at mines following an accident that killed nine people in May.
Production Outlook
Output in the quarter through Sept. 30 will drop 5 percent from the preceding one, the Johannesburg-based company said. That will cause one or two months' delay in the company's target to increase annual production to 4 million ounces by December.
Gold fell to $909.50 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $918 at the previous afternoon fixing.
Among other metals for immediate delivery, silver dropped 18 cents, or 1 percent, to $17.57 an ounce. Platinum slid $45.50, or 2.6 percent, to $1,715 an ounce and palladium fell $7.50, or 2 percent, to $374.50 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
Read more...
Aug. 1 (Bloomberg) -- Gold headed for a third consecutive weekly drop as crude fell and the dollar strengthened against the euro, reducing the appeal of the metal as a hedge against inflation and as an alternative investment.
Oil has fallen 16 percent since reaching a record $147.27 a barrel on July 11, easing concern that inflation will quicken. The dollar has gained 2.3 percent against the euro.
``We've seen the dollar strengthening, which is negative for gold,'' Rodion Rahnayev, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London. ``The sharp drop in oil'' also pushed gold lower, he said.
Gold for immediate delivery fell $3.58, or 0.4 percent, to $910.49 an ounce as of 12:19 p.m. in London. A close at that price would be a 2.1 percent weekly drop.
Futures for December fell $3.30, or 0.4 percent, to $919.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Traders are awaiting a U.S. government report on employment, scheduled for 1:30 p.m. London time, which may show that the U.S. lost jobs in July for a seventh consecutive month.
``If the data is positive, or if the dollar remains firm despite weak data as was the case yesterday, then gold could trade down towards the 200-day moving average, now at $890 an ounce,'' John Reade, the head of UBS AG metals strategy, wrote in a report today.
Gold Fields Ltd., Africa's second-biggest producer of the metal, said output will fall this quarter as it improves safety at mines following an accident that killed nine people in May.
Production Outlook
Output in the quarter through Sept. 30 will drop 5 percent from the preceding one, the Johannesburg-based company said. That will cause one or two months' delay in the company's target to increase annual production to 4 million ounces by December.
Gold fell to $909.50 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $918 at the previous afternoon fixing.
Among other metals for immediate delivery, silver dropped 18 cents, or 1 percent, to $17.57 an ounce. Platinum slid $45.50, or 2.6 percent, to $1,715 an ounce and palladium fell $7.50, or 2 percent, to $374.50 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Copper, Aluminum Fall on Indications China's Growth May Slow
By Chanyaporn Chanjaroen
Aug. 1 (Bloomberg) -- Copper and aluminum fell in London on indications demand growth in China, the world's largest consumer of all industrial metals, may slow as manufacturing contracted for the first time since a survey began in 2005.
The Purchasing Mangers' Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today. China accounted for about a third of world aluminum usage last year, and about a quarter in copper.
``For years the Chinese have tried to slow down the economic growth to avoid a bubble and that's probably taking effect now,'' said Andrew Silver, a trader at Natixis Commodity Markets in London. ``Once the slowdown takes hold, we will see impacts on consumption,'' he said today by phone from London.
Copper for delivery in three months fell $83, or 1 percent, to $7,972 a metric ton as of 10:56 a.m. on the London Metal Exchange. Aluminum declined $34, or 1.1 percent, to $2,945 a ton.
The LME index tracking the six main metals traded on the bourse dropped 4.8 percent in July, led by declines in copper and aluminum, the most-traded contracts on the exchange. Industrial- metals demand tracks global manufacturing activity.
The euro's 1 percent drop against the dollar last month also contributed to the decline, curbing the appeal of dollar- denominated commodities as an alternative investment and making them more expensive to holders of other currencies.
Copper inventories expanded 2,250 tons, or 1.6 percent, to 144,650 tons, the highest since Feb. 28, according to the exchange's daily data. Including those monitored by exchanges in Shanghai and New York, they total 187,225 tons, or 3.6 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Limited Supply
Limited supply growth will limit declines in copper and aluminum, according to a Deutsche Bank AG report dated yesterday. ``Global copper inventories are also at critically low levels, leaving the market vulnerable to supply shocks,'' the bank said in the report.
``The global aluminum market is vulnerable to energy crises'' in China and South Africa, which are major production areas, the report said.
Among other LME-traded metals, nickel rose $22 to $18,372 and lead lost $75, or 3.4 percent, to $2,135 a ton. Tin lost $550, or 2.5 percent, to $21,650 a ton and zinc fell $25, or 1.4 percent, to $1,876 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
Read more...
Aug. 1 (Bloomberg) -- Copper and aluminum fell in London on indications demand growth in China, the world's largest consumer of all industrial metals, may slow as manufacturing contracted for the first time since a survey began in 2005.
The Purchasing Mangers' Index fell to a seasonally adjusted 48.4 in July from 52 in June, the China Federation of Logistics and Purchasing said today. China accounted for about a third of world aluminum usage last year, and about a quarter in copper.
``For years the Chinese have tried to slow down the economic growth to avoid a bubble and that's probably taking effect now,'' said Andrew Silver, a trader at Natixis Commodity Markets in London. ``Once the slowdown takes hold, we will see impacts on consumption,'' he said today by phone from London.
Copper for delivery in three months fell $83, or 1 percent, to $7,972 a metric ton as of 10:56 a.m. on the London Metal Exchange. Aluminum declined $34, or 1.1 percent, to $2,945 a ton.
The LME index tracking the six main metals traded on the bourse dropped 4.8 percent in July, led by declines in copper and aluminum, the most-traded contracts on the exchange. Industrial- metals demand tracks global manufacturing activity.
The euro's 1 percent drop against the dollar last month also contributed to the decline, curbing the appeal of dollar- denominated commodities as an alternative investment and making them more expensive to holders of other currencies.
Copper inventories expanded 2,250 tons, or 1.6 percent, to 144,650 tons, the highest since Feb. 28, according to the exchange's daily data. Including those monitored by exchanges in Shanghai and New York, they total 187,225 tons, or 3.6 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Limited Supply
Limited supply growth will limit declines in copper and aluminum, according to a Deutsche Bank AG report dated yesterday. ``Global copper inventories are also at critically low levels, leaving the market vulnerable to supply shocks,'' the bank said in the report.
``The global aluminum market is vulnerable to energy crises'' in China and South Africa, which are major production areas, the report said.
Among other LME-traded metals, nickel rose $22 to $18,372 and lead lost $75, or 3.4 percent, to $2,135 a ton. Tin lost $550, or 2.5 percent, to $21,650 a ton and zinc fell $25, or 1.4 percent, to $1,876 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Cocoa Climbs as Chart Signals Investors Should Buy; Sugar Rises
By Claudia Carpenter
Aug. 1 (Bloomberg) -- Cocoa rose in London as a technical chart used some investors signaled they should buy. Sugar erased an earlier decline.
Cocoa stayed above the 20-day moving average today for the first time since July 3. The last time it went over the indicator, prices climbed to the highest since at least 1989. Cocoa may rise through 2009 as supply falls short of demand, a fourth straight deficit, Macquarie Bank Ltd. said.
``The market opened above the 20-day moving average,'' said Jonathan Parkman, head of agriculture commodities at Fortis in London. ``We're in a small deficit at the moment.''
Cocoa for September delivery rose 34 pounds, or 2.2 percent, to 1,552 pounds ($3,067) a metric ton as of 11:44 a.m. on the Liffe exchange, trading above the 20-day moving average of about 1,511 pounds. The contract has gained 3.3 percent this week.
Cocoa has risen 48 percent this year on speculation that tree disease in producing nations including the Ivory Coast and Indonesia may curb supply.
Cocoa will average $2,790 a ton this year and $2,865 a ton in 2009, Macquarie said in a report e-mailed today by the bank's London-based commodity strategist Kona Haque.
Global production will lag behind demand by 13,000 tons in the year starting October 2009, on top of a deficit of 44,000 tons, according to the report. Supplies have lagged behind demand since the 2006/2007 crop year, Macquarie said.
White, or refined, sugar for delivery in October rose $2.80, or 0.7 percent, to $389 a ton.
Before today, sugar rose 7.4 percent this week after German researcher F.O. Licht said global production may drop for the first time in four years starting in October. Brazil, the world's largest producer, Argentina, Thailand and India sold when prices were this high last month, a Liffe report shows.
``Brazil has loads of it'' to sell, said David Sadler, manager of the sugar desk at brokerage Sucden (U.K.) Ltd. in London. ``The higher the price goes in sugar, the more sugar you'll get.''
Robusta coffee for September delivery gained $10 to $2,418 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Aug. 1 (Bloomberg) -- Cocoa rose in London as a technical chart used some investors signaled they should buy. Sugar erased an earlier decline.
Cocoa stayed above the 20-day moving average today for the first time since July 3. The last time it went over the indicator, prices climbed to the highest since at least 1989. Cocoa may rise through 2009 as supply falls short of demand, a fourth straight deficit, Macquarie Bank Ltd. said.
``The market opened above the 20-day moving average,'' said Jonathan Parkman, head of agriculture commodities at Fortis in London. ``We're in a small deficit at the moment.''
Cocoa for September delivery rose 34 pounds, or 2.2 percent, to 1,552 pounds ($3,067) a metric ton as of 11:44 a.m. on the Liffe exchange, trading above the 20-day moving average of about 1,511 pounds. The contract has gained 3.3 percent this week.
Cocoa has risen 48 percent this year on speculation that tree disease in producing nations including the Ivory Coast and Indonesia may curb supply.
Cocoa will average $2,790 a ton this year and $2,865 a ton in 2009, Macquarie said in a report e-mailed today by the bank's London-based commodity strategist Kona Haque.
Global production will lag behind demand by 13,000 tons in the year starting October 2009, on top of a deficit of 44,000 tons, according to the report. Supplies have lagged behind demand since the 2006/2007 crop year, Macquarie said.
White, or refined, sugar for delivery in October rose $2.80, or 0.7 percent, to $389 a ton.
Before today, sugar rose 7.4 percent this week after German researcher F.O. Licht said global production may drop for the first time in four years starting in October. Brazil, the world's largest producer, Argentina, Thailand and India sold when prices were this high last month, a Liffe report shows.
``Brazil has loads of it'' to sell, said David Sadler, manager of the sugar desk at brokerage Sucden (U.K.) Ltd. in London. ``The higher the price goes in sugar, the more sugar you'll get.''
Robusta coffee for September delivery gained $10 to $2,418 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Asia Stocks Fall on Lower Earnings; Sumitomo, Suncorp, NEC Drop
By Chua Kong Ho and Patrick Rial
Aug. 1 (Bloomberg) -- Asian stocks fell, led by financial and raw-materials companies, after bank profits slumped and oil and metals prices declined. U.S. and European futures dropped.
Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by value, tumbled the most since January while Suncorp- Metway Ltd., Australia's No. 6 bank, posted its biggest decline since 1989. Mitsui & Co. and Santos Ltd. retreated after oil last month fell the most since December 2004 and U.S. growth trailed forecasts. NEC Corp., Japan's biggest personal-computer maker, plunged the most in two decades after profit slumped.
``Any bad news is getting punished, while any small piece of good news is being ignored, which is typical of a bear market,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Inc., which oversees more than $1.4 trillion.
The MSCI Asia Pacific Index lost 1.3 percent to 130.68 at 7:17 p.m. in Tokyo, taking its weekly decline to 1.7 percent. Seven of 10 industry groups fell as financial and industrial stocks posted the biggest drop. The Asian benchmark index slipped 3.2 percent in July, taking its plunge from its Nov. 1 high to 25 percent.
Japan's Nikkei 225 Stock Average lost 2.1 percent to 13,094.59. Sharp Corp., Japan's largest liquid-crystal display maker, fell to its lowest since June 2003 after first-quarter operating profit trailed analysts' estimates. Mazda Motor Corp. and Suzuki Motor Corp. retreated after first-quarter profit fell on a stronger yen and higher raw-material costs.
Growth Concerns
Most other Asian markets declined. China's CSI 300 Index erased earlier losses after President Hu Jintao said the country needs to maintain ``steady and fast'' growth. Powerchip Semiconductor Corp. tumbled by the daily limit in Taipei after prosecutors indicted its chairman for insider trading and breach of trust.
In the U.S., the Standard & Poor's 500 Index yesterday lost 1.3 percent, capping a second monthly drop, after economic growth trailed forecasts, jobless claims rose to a five-year high and Exxon Mobil Corp.'s profit missed analysts' estimates. Shares extended declines after former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating. S&P 500 futures slid 0.1 percent.
Sumitomo Mitsui, Japan's second-largest bank, sank 7.7 percent to 783,000 yen, the most since Jan. 22 after first- quarter income declined 51 percent to 58.1 billion yen ($539 million) on lower fee income and increased bad-loan provisions.
Banks Decline
Mitsubishi UFJ Financial Group Inc., the largest Japanese bank, fell 4.3 percent to 929 yen. Mizuho Financial Group Inc., the third-largest bank by market value, slid 3.6 percent after reporting a 9.1 percent decline in revenue.
A measure of financial stocks on the MSCI Asian gauge dropped 1.9 percent today, extending a 21 percent loss this year.
Earnings declined by half or more at four of Japan's largest banks, including Aozora Bank Ltd., Shinsei Bank Ltd. and Sumitomo Trust & Banking Co., as lending costs rose and fee income dropped.
Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 30, 1989. Full-year profit was between A$525 million ($494 million) and A$550 million, compared with a profit of A$1.1 billion a year earlier, the company said yesterday.
``Wealth managers are having a bad time with equity markets as volatile as they are,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``When the market rallies, companies like this outperform a lot more than the market does. The reverse is what they're suffering now.''
Commodities Slump
Mitsui, Japan's second-biggest trading company, dropped 4.3 percent to 2,140 yen. Rio Tinto Group, the world's third-largest mining company, fell 3 percent to A$121.60. Aluminum Corp. of China Ltd. sank 5.5 percent to HK$7.58, after cutting alumina prices by 8.6 percent.
The Reuters/Jefferies CRB Commodity Index, a measure of 19 commodities including natural gas, nickel and corn, fell 10 percent in July, the biggest monthly decline since March 1980 when the U.S. economy was in a recession.
Inpex Holdings Inc., Japan's largest oil explorer, dropped 7 percent to 1.02 million yen. Santos, Australia's third-biggest oil producer, lost 3.7 percent to A$17.45.
Crude oil dropped 11 percent in July, the largest monthly retreat since December 2004, as a slowing U.S. economy weakened fuel consumption.
NEC tumbled 17 percent to 495 yen, the biggest retreat since Oct. 20, 1987. UBS AG and Deutsche Bank AG cut their ratings on NEC after the personal-computer manufacturer said first-quarter operating profit fell 64 percent on lower orders for network equipment.
Sharp, Mazda
Sharp lost 5.1 percent to 1,430 yen after operating profit for the three months ended June dropped 14 percent, missing all six analyst estimates in a Bloomberg survey.
Mazda, a third owned by Ford Motor Co., declined 3.4 percent to 605 yen after first-quarter operating profit fell 12 percent to 28.3 billion yen ($262.5 million). Suzuki, the second-largest Japanese maker of minicars, dropped 5.9 percent to 2,230 yen, as operating profit for the three months ended June declined 17 percent to 33.8 billion yen.
Among Topix-listed companies announcing quarterly earnings in the month through yesterday, 436 posted declining net income with 296 reporting gains, according to Bloomberg data.
``Economic indicators, whether foreign or domestic, are showing signs of deterioration, while corporate earnings have hit a rough patch,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television. ``The market is bound to fall in this kind of environment.''
Powerchip, Minebea
Powerchip plunged 7 percent to NT$6.68, the lowest level since May 29, 2003. Taiwan prosecutors are seeking a jail term and a NT$60 million ($2 million) fine for Powerchip Chairman Frank Huang for insider trading and breach of trust, the Hsinchu District Prosecutors Office said on its Web site. Powerchip denied the allegation in an e-mailed statement yesterday.
Minebea Co., a Japanese ball-bearing maker, tumbled 17 percent to 477 yen, the biggest percentage loss on MSCI's Asian gauge, after first-quarter income fell 16 percent and Goldman Sachs Group Inc. cut its rating to ``neutral'' from ``buy.''
CapitaLand Ltd., Southeast Asia's largest real-estate developer, sank 4 percent to S$5.47, the most since July 15. Second-quarter profit dropped 44 percent as home sales fell in China and Singapore and one-time gains weren't repeated.
Reliance Communications Ltd., India's second-largest mobile- phone operator, slumped 12 percent to 440 rupees after the company reported the slowest profit growth in nine quarters.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net
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Aug. 1 (Bloomberg) -- Asian stocks fell, led by financial and raw-materials companies, after bank profits slumped and oil and metals prices declined. U.S. and European futures dropped.
Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by value, tumbled the most since January while Suncorp- Metway Ltd., Australia's No. 6 bank, posted its biggest decline since 1989. Mitsui & Co. and Santos Ltd. retreated after oil last month fell the most since December 2004 and U.S. growth trailed forecasts. NEC Corp., Japan's biggest personal-computer maker, plunged the most in two decades after profit slumped.
``Any bad news is getting punished, while any small piece of good news is being ignored, which is typical of a bear market,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Inc., which oversees more than $1.4 trillion.
The MSCI Asia Pacific Index lost 1.3 percent to 130.68 at 7:17 p.m. in Tokyo, taking its weekly decline to 1.7 percent. Seven of 10 industry groups fell as financial and industrial stocks posted the biggest drop. The Asian benchmark index slipped 3.2 percent in July, taking its plunge from its Nov. 1 high to 25 percent.
Japan's Nikkei 225 Stock Average lost 2.1 percent to 13,094.59. Sharp Corp., Japan's largest liquid-crystal display maker, fell to its lowest since June 2003 after first-quarter operating profit trailed analysts' estimates. Mazda Motor Corp. and Suzuki Motor Corp. retreated after first-quarter profit fell on a stronger yen and higher raw-material costs.
Growth Concerns
Most other Asian markets declined. China's CSI 300 Index erased earlier losses after President Hu Jintao said the country needs to maintain ``steady and fast'' growth. Powerchip Semiconductor Corp. tumbled by the daily limit in Taipei after prosecutors indicted its chairman for insider trading and breach of trust.
In the U.S., the Standard & Poor's 500 Index yesterday lost 1.3 percent, capping a second monthly drop, after economic growth trailed forecasts, jobless claims rose to a five-year high and Exxon Mobil Corp.'s profit missed analysts' estimates. Shares extended declines after former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating. S&P 500 futures slid 0.1 percent.
Sumitomo Mitsui, Japan's second-largest bank, sank 7.7 percent to 783,000 yen, the most since Jan. 22 after first- quarter income declined 51 percent to 58.1 billion yen ($539 million) on lower fee income and increased bad-loan provisions.
Banks Decline
Mitsubishi UFJ Financial Group Inc., the largest Japanese bank, fell 4.3 percent to 929 yen. Mizuho Financial Group Inc., the third-largest bank by market value, slid 3.6 percent after reporting a 9.1 percent decline in revenue.
A measure of financial stocks on the MSCI Asian gauge dropped 1.9 percent today, extending a 21 percent loss this year.
Earnings declined by half or more at four of Japan's largest banks, including Aozora Bank Ltd., Shinsei Bank Ltd. and Sumitomo Trust & Banking Co., as lending costs rose and fee income dropped.
Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 30, 1989. Full-year profit was between A$525 million ($494 million) and A$550 million, compared with a profit of A$1.1 billion a year earlier, the company said yesterday.
``Wealth managers are having a bad time with equity markets as volatile as they are,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``When the market rallies, companies like this outperform a lot more than the market does. The reverse is what they're suffering now.''
Commodities Slump
Mitsui, Japan's second-biggest trading company, dropped 4.3 percent to 2,140 yen. Rio Tinto Group, the world's third-largest mining company, fell 3 percent to A$121.60. Aluminum Corp. of China Ltd. sank 5.5 percent to HK$7.58, after cutting alumina prices by 8.6 percent.
The Reuters/Jefferies CRB Commodity Index, a measure of 19 commodities including natural gas, nickel and corn, fell 10 percent in July, the biggest monthly decline since March 1980 when the U.S. economy was in a recession.
Inpex Holdings Inc., Japan's largest oil explorer, dropped 7 percent to 1.02 million yen. Santos, Australia's third-biggest oil producer, lost 3.7 percent to A$17.45.
Crude oil dropped 11 percent in July, the largest monthly retreat since December 2004, as a slowing U.S. economy weakened fuel consumption.
NEC tumbled 17 percent to 495 yen, the biggest retreat since Oct. 20, 1987. UBS AG and Deutsche Bank AG cut their ratings on NEC after the personal-computer manufacturer said first-quarter operating profit fell 64 percent on lower orders for network equipment.
Sharp, Mazda
Sharp lost 5.1 percent to 1,430 yen after operating profit for the three months ended June dropped 14 percent, missing all six analyst estimates in a Bloomberg survey.
Mazda, a third owned by Ford Motor Co., declined 3.4 percent to 605 yen after first-quarter operating profit fell 12 percent to 28.3 billion yen ($262.5 million). Suzuki, the second-largest Japanese maker of minicars, dropped 5.9 percent to 2,230 yen, as operating profit for the three months ended June declined 17 percent to 33.8 billion yen.
Among Topix-listed companies announcing quarterly earnings in the month through yesterday, 436 posted declining net income with 296 reporting gains, according to Bloomberg data.
``Economic indicators, whether foreign or domestic, are showing signs of deterioration, while corporate earnings have hit a rough patch,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television. ``The market is bound to fall in this kind of environment.''
Powerchip, Minebea
Powerchip plunged 7 percent to NT$6.68, the lowest level since May 29, 2003. Taiwan prosecutors are seeking a jail term and a NT$60 million ($2 million) fine for Powerchip Chairman Frank Huang for insider trading and breach of trust, the Hsinchu District Prosecutors Office said on its Web site. Powerchip denied the allegation in an e-mailed statement yesterday.
Minebea Co., a Japanese ball-bearing maker, tumbled 17 percent to 477 yen, the biggest percentage loss on MSCI's Asian gauge, after first-quarter income fell 16 percent and Goldman Sachs Group Inc. cut its rating to ``neutral'' from ``buy.''
CapitaLand Ltd., Southeast Asia's largest real-estate developer, sank 4 percent to S$5.47, the most since July 15. Second-quarter profit dropped 44 percent as home sales fell in China and Singapore and one-time gains weren't repeated.
Reliance Communications Ltd., India's second-largest mobile- phone operator, slumped 12 percent to 440 rupees after the company reported the slowest profit growth in nine quarters.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net
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Irish Stocks Tumble Most Since 1987; Elan Shares Lead Slide
By Adam Haigh
Aug. 1 (Bloomberg) -- Ireland's ISEQ Index tumbled the most in two decades, led by Elan Corp., the country's biggest drugmaker, after confirmation of two new cases of a deadly brain infection in patients taking the multiple sclerosis drug Tysabri.
``It's pulled down the whole ISEQ,'' Goodbody Stockbrokers analyst Killian Murphy said in an interview. ``Sentiment's gone a bit negative.''
Ireland's ISEQ Index decreased as much as 9.5 percent, to 3,958.59, the biggest drop since October 1987 and the first time since April 2003 that the measure slid below 4,000. The index traded at 4,063.78, a decline of 7.1 percent, at 10:43 a.m. in Dublin, the biggest retreat in almost 11 years and the steepest drop today among stock indexes tracked by Bloomberg.
Ireland's ISEQ index, Europe's third worst performing benchmark this year after Ukraine and Bulgaria, is heading for a second consecutive annual decline in 2008.
After a more than decade-long boom spurred by exports, consumer spending and homebuilding, Ireland's economy may be heading for its weakest performance in almost a quarter century, according to government forecasts.
Elan, which accounts for 5.7 percent of the ISEQ index's weighting, plunged 7.70 euros, or 63 percent, to 5.80 euros in Dublin. The two Tysabri cases, from the European Union, were the first since the drug was reintroduced in the U.S. in 2006. The cases of the disease, progressive multifocal leukoencephalopathy, were confirmed this week, Biogen Idec Inc. reported yesterday in a regulatory filing.
Earlier this week Elan shares slumped after its experimental treatment for Alzheimer's disease, bapineuzumab, was linked in a study to a brain-swelling side effect. The stock is down 73 percent so far this week.
``You are potentially on the edge of a precipice here'' for the company, Canaccord Adams analyst Karl Keegan said in a telephone interview. ``Last night's news also hits future growth opportunities for Elan.''
Anglo Irish Bank Plc fell 11.1 cents, or 2.2 percent, to 5.009 euros, bringing its decline this year to 54 percent.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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Aug. 1 (Bloomberg) -- Ireland's ISEQ Index tumbled the most in two decades, led by Elan Corp., the country's biggest drugmaker, after confirmation of two new cases of a deadly brain infection in patients taking the multiple sclerosis drug Tysabri.
``It's pulled down the whole ISEQ,'' Goodbody Stockbrokers analyst Killian Murphy said in an interview. ``Sentiment's gone a bit negative.''
Ireland's ISEQ Index decreased as much as 9.5 percent, to 3,958.59, the biggest drop since October 1987 and the first time since April 2003 that the measure slid below 4,000. The index traded at 4,063.78, a decline of 7.1 percent, at 10:43 a.m. in Dublin, the biggest retreat in almost 11 years and the steepest drop today among stock indexes tracked by Bloomberg.
Ireland's ISEQ index, Europe's third worst performing benchmark this year after Ukraine and Bulgaria, is heading for a second consecutive annual decline in 2008.
After a more than decade-long boom spurred by exports, consumer spending and homebuilding, Ireland's economy may be heading for its weakest performance in almost a quarter century, according to government forecasts.
Elan, which accounts for 5.7 percent of the ISEQ index's weighting, plunged 7.70 euros, or 63 percent, to 5.80 euros in Dublin. The two Tysabri cases, from the European Union, were the first since the drug was reintroduced in the U.S. in 2006. The cases of the disease, progressive multifocal leukoencephalopathy, were confirmed this week, Biogen Idec Inc. reported yesterday in a regulatory filing.
Earlier this week Elan shares slumped after its experimental treatment for Alzheimer's disease, bapineuzumab, was linked in a study to a brain-swelling side effect. The stock is down 73 percent so far this week.
``You are potentially on the edge of a precipice here'' for the company, Canaccord Adams analyst Karl Keegan said in a telephone interview. ``Last night's news also hits future growth opportunities for Elan.''
Anglo Irish Bank Plc fell 11.1 cents, or 2.2 percent, to 5.009 euros, bringing its decline this year to 54 percent.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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U.K., Irish Stocks Fall; Rio Tinto, BHP Billiton, Elan Retreat
By Adam Haigh
Aug. 1 (Bloomberg) -- U.K. stocks fell, extending the FTSE 100 Index's three-month slump, as lower metal prices dimmed the profit outlook for raw-material producers. Ireland's ISEQ Index tumbled the most in a decade as Elan Corp. plummeted 46 percent.
Rio Tinto Group and BHP Billiton Ltd., which account for more than 6 percent of the FTSE 100's value, led the slide as copper fell in London. British Energy Group Plc retreated the most since January after failing to agree on a takeover by Electricite de France SA, the world's largest owner of nuclear power stations.
``There is some profit-taking in the miners as people rebalance their portfolios,'' said David Fineberg, a trader at CMC Markets in London. `` The sentiment is definitely that there is more downside to come.''
The FTSE 100 fell 23.2, or 0.4 percent, to 5,388.7 at 12:20 a.m. in London, trimming this week's gain to 0.7 percent. The FTSE All-Share Index lost 0.3 percent and Ireland's ISEQ Index decreased 6.6 percent, the biggest decline since October 1997 and the steepest drop today among 88 indexes tracked by Bloomberg.
Stocks extended declines after General Motors Corp., the biggest U.S. carmaker, posted a second-quarter loss of $15.5 billion.
Rio Tinto, the world's third largest mining company, slipped 3.8 percent to 5,138 pence. BHP Billiton, the biggest, lost 4.3 percent to 1,620 pence, falling for the first time in six days. Copper retreated 1.4 percent to $7,940 per metric ton.
British Energy, Elan
British Energy tumbled 4 percent to 700 pence. The company wouldn't back yesterday's offer of 765 pence a share from the Paris-based company because some of its largest investors would reject the approach at that price, said two people with knowledge of the takeover, who declined to be identified because the negotiations are private.
Elan slumped 6.27 euros to 7.23 euros in Dublin. Biogen Idec Inc. and Elan reported two confirmed cases of a deadly brain infection in patients taking the multiple sclerosis drug Tysabri.
Kingfisher Plc added 7 percent to 126.7 pence. Europe's largest home-improvement retailer agreed to sell its Castorama Italy unit to Groupe Adeo SA for 560 million euros ($872 million) in cash.
Trinity Mirror Plc, the publisher of the Daily Mirror newspaper, rallied 16 percent to 100.25 pence as Morgan Stanley upgraded the shares to ``overweight'' from ``equal-weight,'' citing ``more clarity on the schedule of pension costs and management's commitment to further cost reduction measures.''
Separately, Merrill Lynch & Co. lifted its recommendation for Trinity Mirror to ``neutral'' from ``underperform,'' saying ``much of the bad news on advertising is now known'' in a report.
Tullett Prebon Plc, the second-biggest broker of transactions between banks, added 1.1 percent to 471 pence after saying it's in talks to merge with GFI Group Inc. to expand its derivatives-broking business in the U.S.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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Aug. 1 (Bloomberg) -- U.K. stocks fell, extending the FTSE 100 Index's three-month slump, as lower metal prices dimmed the profit outlook for raw-material producers. Ireland's ISEQ Index tumbled the most in a decade as Elan Corp. plummeted 46 percent.
Rio Tinto Group and BHP Billiton Ltd., which account for more than 6 percent of the FTSE 100's value, led the slide as copper fell in London. British Energy Group Plc retreated the most since January after failing to agree on a takeover by Electricite de France SA, the world's largest owner of nuclear power stations.
``There is some profit-taking in the miners as people rebalance their portfolios,'' said David Fineberg, a trader at CMC Markets in London. `` The sentiment is definitely that there is more downside to come.''
The FTSE 100 fell 23.2, or 0.4 percent, to 5,388.7 at 12:20 a.m. in London, trimming this week's gain to 0.7 percent. The FTSE All-Share Index lost 0.3 percent and Ireland's ISEQ Index decreased 6.6 percent, the biggest decline since October 1997 and the steepest drop today among 88 indexes tracked by Bloomberg.
Stocks extended declines after General Motors Corp., the biggest U.S. carmaker, posted a second-quarter loss of $15.5 billion.
Rio Tinto, the world's third largest mining company, slipped 3.8 percent to 5,138 pence. BHP Billiton, the biggest, lost 4.3 percent to 1,620 pence, falling for the first time in six days. Copper retreated 1.4 percent to $7,940 per metric ton.
British Energy, Elan
British Energy tumbled 4 percent to 700 pence. The company wouldn't back yesterday's offer of 765 pence a share from the Paris-based company because some of its largest investors would reject the approach at that price, said two people with knowledge of the takeover, who declined to be identified because the negotiations are private.
Elan slumped 6.27 euros to 7.23 euros in Dublin. Biogen Idec Inc. and Elan reported two confirmed cases of a deadly brain infection in patients taking the multiple sclerosis drug Tysabri.
Kingfisher Plc added 7 percent to 126.7 pence. Europe's largest home-improvement retailer agreed to sell its Castorama Italy unit to Groupe Adeo SA for 560 million euros ($872 million) in cash.
Trinity Mirror Plc, the publisher of the Daily Mirror newspaper, rallied 16 percent to 100.25 pence as Morgan Stanley upgraded the shares to ``overweight'' from ``equal-weight,'' citing ``more clarity on the schedule of pension costs and management's commitment to further cost reduction measures.''
Separately, Merrill Lynch & Co. lifted its recommendation for Trinity Mirror to ``neutral'' from ``underperform,'' saying ``much of the bad news on advertising is now known'' in a report.
Tullett Prebon Plc, the second-biggest broker of transactions between banks, added 1.1 percent to 471 pence after saying it's in talks to merge with GFI Group Inc. to expand its derivatives-broking business in the U.S.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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Stocks in Europe and Asia, U.S. Futures Drop on Profit Concern
By Michael Patterson
Aug. 1 (Bloomberg) -- Stocks in Europe and Asia fell as Bayerische Motoren Werke AG abandoned its profit forecast and investors speculated credit losses will erode banks' earnings. U.S. index futures retreated on General Motors Corp.'s worse- than-expected loss.
BMW, the world's largest maker of luxury vehicles, tumbled the most since March 2003 after saying ``conditions for the automobile industry have deteriorated sharply.'' GM, the biggest U.S. carmaker, dropped after reporting a second-quarter loss of $15.5 billion. Sumitomo Mitsui Financial Group Inc. of Japan had its steepest slide in six months on lower profit.
The MSCI World Index lost 0.6 percent to 1,359.11 at 12:30 p.m. in London. The benchmark for global equities has tumbled 14 percent this year as slowing economic growth and more than $480 million of credit losses and asset writedowns at banks prompted analysts to reduce their earnings projections.
``Many companies are going to suffer big setbacks in sales,'' Roger Nightingale, global strategist at Pointon York Ltd. in London, which manages about $1.5 billion, said in an interview on Bloomberg Television. ``Companies like BMW that depend on high volumes of sales are very vulnerable.''
Europe's Dow Jones Stoxx 600 Index declined 0.7 percent, paring its weekly advance, as lower metals prices dragged down commodity producers including BHP Billiton Plc and Elan Corp. tumbled 48 percent. The MSCI Asia Pacific Index sank 1.2 percent after Suncorp-Metway Ltd. and Mitsui & Co. fell.
Jobs Report
Futures on the Standard & Poor's 500 Index dropped 0.1 percent before a Labor Department report today that may show payrolls sank by 75,000 in July as the unemployment rate climbed to 5.6 percent, according to the median estimate of economists surveyed by Bloomberg News.
U.S. stocks fell yesterday, sending the S&P 500 to a 1.3 percent drop, after the Commerce Department said the economy grew at a 1.9 percent rate last quarter and contracted at the end of 2007. The S&P 500 extended its retreat as former Federal Reserve Chairman Alan Greenspan told CNBC that financial market turmoil isn't showing signs of ending.
BMW tumbled 7.9 percent to 26.63 euros today after saying rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult.'' The company reported second-quarter earnings that trailed analysts' estimates and said sales declined.
GM lost 5.9 percent to $10.42 in New York. Excluding costs considered by GM to be one-time expenses, the loss was $11.21 a share. On that basis, the company was forecast to lose $2.40 a share, the average of 12 analysts surveyed by Bloomberg.
`Dismal Earnings'
Daimler AG, the world's second-largest maker of luxury cars, lost 2.8 percent to 57.69 euros. Volkswagen AG, Europe's biggest automaker, fell 3.9 percent to 196.71 euros.
``BMW's dismal earnings have investors wincing,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne.
A measure of financial stocks in the MSCI Asia Index fell 1.8 percent, extending its loss this year to 21 percent, the biggest decline among 10 industry groups.
Sumitomo Mitsui, Japan's second-largest bank by market value, plunged 7.7 percent after saying profit fell by half on lower fee income and swelling bad-loan costs.
Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 1989. Australia's third-largest general insurer said profit dropped about 50 percent and its bad-debt charge tripled.
Lafarge SA retreated the most since June 2006, leading European construction companies lower, after the world's biggest cement producer said delays in Algeria, Iraq and the United Arab Emirates will affect 2.5 million tons of production and should take several months to resolve. The shares sank 7.3 percent to 81.37 euros.
Earnings Estimates
Profits at Stoxx 600 companies may drop 2.6 percent on average in 2008, according to estimates tracked by Bloomberg. That's down from a forecast for 11 percent growth at the start of the year.
Earnings at oil and gas companies in the Stoxx 600 may rise by 6.3 percent on average this year and raw-materials producers may post 16 percent earnings growth, according to analysts' estimates. Both industries fell today as prices for crude, gold and copper retreated.
BHP Billiton, the world's largest mining company, lost 4.1 percent to 1,623 pence. Royal Dutch Shell Plc, Europe's biggest oil company by market value, slipped 0.7 percent to 22.74 euros. Eni SpA, Italy's largest oil producer, decreased 1.9 percent to 21.32 euros.
Retailers, Airlines
StatoilHydro ASA retreated 5.9 percent to 158.8 kroner. Norway's largest oil and gas company said output rose to an average 1.710 million barrels of oil equivalent a day from 1.671 million barrels a day a year earlier. That missed the average 1.72 million-barrel estimate of 16 analysts polled by SME Direkt for TDN Finans.
A rally in airlines and retailers on lower oil prices limited the decline in the Stoxx 600.
Iberia Lineas Aereas de Espana SA climbed 4.2 percent to 2.01 euros and Air France-KLM added 1.7 percent to 16.34 euros. Crude oil fell for a second day in New York, extending the biggest monthly decline since 2004, on concern global consumption is falling amid slowing economic growth.
Next Plc, the U.K.'s second-largest clothes retailer, increased 1.8 percent to 971.5 pence, while J Sainsbury Plc, the country's third-biggest supermarket chain, added 0.9 percent to 318.25 pence.
Ahold Gains
Royal Ahold NV jumped 6 percent to 7.77 euros. The Dutch owner of U.S. Stop & Shop supermarkets said sales fell to 5.78 billion euros ($9 billion) from a restated 5.83 billion euros a year earlier. That exceeded the 5.63 billion-euro median estimate of 12 analysts surveyed by Bloomberg News.
ArcelorMittal dropped 2.9 percent to 55.59 euros. The world's largest steelmaker is considering making an offer for Alpha Natural Resources Inc. to trump Cleveland-Cliffs Inc.'s $8.8 billion bid, the Financial Times reported, citing unidentified people close to the companies.
Calls to ArcelorMittal's London-based spokesman Haroon Hassan and Alpha Natural's head office in Abingdon, Virginia, outside normal business hours weren't immediately returned.
Elan had the biggest drop in the Stoxx 600 after the drugmaker and Biogen Idec Inc. said two new cases of a deadly brain infection have been confirmed in patients taking their multiple sclerosis drug Tysabri. The shares lost 48 percent to 6.98 euros.
The Stoxx 600 is on course for a 0.1 percent weekly gain, the third straight advance, while the S&P 500 has risen 0.8 percent. The MSCI Asia Pacific Index dropped 1.7 percent.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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Aug. 1 (Bloomberg) -- Stocks in Europe and Asia fell as Bayerische Motoren Werke AG abandoned its profit forecast and investors speculated credit losses will erode banks' earnings. U.S. index futures retreated on General Motors Corp.'s worse- than-expected loss.
BMW, the world's largest maker of luxury vehicles, tumbled the most since March 2003 after saying ``conditions for the automobile industry have deteriorated sharply.'' GM, the biggest U.S. carmaker, dropped after reporting a second-quarter loss of $15.5 billion. Sumitomo Mitsui Financial Group Inc. of Japan had its steepest slide in six months on lower profit.
The MSCI World Index lost 0.6 percent to 1,359.11 at 12:30 p.m. in London. The benchmark for global equities has tumbled 14 percent this year as slowing economic growth and more than $480 million of credit losses and asset writedowns at banks prompted analysts to reduce their earnings projections.
``Many companies are going to suffer big setbacks in sales,'' Roger Nightingale, global strategist at Pointon York Ltd. in London, which manages about $1.5 billion, said in an interview on Bloomberg Television. ``Companies like BMW that depend on high volumes of sales are very vulnerable.''
Europe's Dow Jones Stoxx 600 Index declined 0.7 percent, paring its weekly advance, as lower metals prices dragged down commodity producers including BHP Billiton Plc and Elan Corp. tumbled 48 percent. The MSCI Asia Pacific Index sank 1.2 percent after Suncorp-Metway Ltd. and Mitsui & Co. fell.
Jobs Report
Futures on the Standard & Poor's 500 Index dropped 0.1 percent before a Labor Department report today that may show payrolls sank by 75,000 in July as the unemployment rate climbed to 5.6 percent, according to the median estimate of economists surveyed by Bloomberg News.
U.S. stocks fell yesterday, sending the S&P 500 to a 1.3 percent drop, after the Commerce Department said the economy grew at a 1.9 percent rate last quarter and contracted at the end of 2007. The S&P 500 extended its retreat as former Federal Reserve Chairman Alan Greenspan told CNBC that financial market turmoil isn't showing signs of ending.
BMW tumbled 7.9 percent to 26.63 euros today after saying rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult.'' The company reported second-quarter earnings that trailed analysts' estimates and said sales declined.
GM lost 5.9 percent to $10.42 in New York. Excluding costs considered by GM to be one-time expenses, the loss was $11.21 a share. On that basis, the company was forecast to lose $2.40 a share, the average of 12 analysts surveyed by Bloomberg.
`Dismal Earnings'
Daimler AG, the world's second-largest maker of luxury cars, lost 2.8 percent to 57.69 euros. Volkswagen AG, Europe's biggest automaker, fell 3.9 percent to 196.71 euros.
``BMW's dismal earnings have investors wincing,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne.
A measure of financial stocks in the MSCI Asia Index fell 1.8 percent, extending its loss this year to 21 percent, the biggest decline among 10 industry groups.
Sumitomo Mitsui, Japan's second-largest bank by market value, plunged 7.7 percent after saying profit fell by half on lower fee income and swelling bad-loan costs.
Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 1989. Australia's third-largest general insurer said profit dropped about 50 percent and its bad-debt charge tripled.
Lafarge SA retreated the most since June 2006, leading European construction companies lower, after the world's biggest cement producer said delays in Algeria, Iraq and the United Arab Emirates will affect 2.5 million tons of production and should take several months to resolve. The shares sank 7.3 percent to 81.37 euros.
Earnings Estimates
Profits at Stoxx 600 companies may drop 2.6 percent on average in 2008, according to estimates tracked by Bloomberg. That's down from a forecast for 11 percent growth at the start of the year.
Earnings at oil and gas companies in the Stoxx 600 may rise by 6.3 percent on average this year and raw-materials producers may post 16 percent earnings growth, according to analysts' estimates. Both industries fell today as prices for crude, gold and copper retreated.
BHP Billiton, the world's largest mining company, lost 4.1 percent to 1,623 pence. Royal Dutch Shell Plc, Europe's biggest oil company by market value, slipped 0.7 percent to 22.74 euros. Eni SpA, Italy's largest oil producer, decreased 1.9 percent to 21.32 euros.
Retailers, Airlines
StatoilHydro ASA retreated 5.9 percent to 158.8 kroner. Norway's largest oil and gas company said output rose to an average 1.710 million barrels of oil equivalent a day from 1.671 million barrels a day a year earlier. That missed the average 1.72 million-barrel estimate of 16 analysts polled by SME Direkt for TDN Finans.
A rally in airlines and retailers on lower oil prices limited the decline in the Stoxx 600.
Iberia Lineas Aereas de Espana SA climbed 4.2 percent to 2.01 euros and Air France-KLM added 1.7 percent to 16.34 euros. Crude oil fell for a second day in New York, extending the biggest monthly decline since 2004, on concern global consumption is falling amid slowing economic growth.
Next Plc, the U.K.'s second-largest clothes retailer, increased 1.8 percent to 971.5 pence, while J Sainsbury Plc, the country's third-biggest supermarket chain, added 0.9 percent to 318.25 pence.
Ahold Gains
Royal Ahold NV jumped 6 percent to 7.77 euros. The Dutch owner of U.S. Stop & Shop supermarkets said sales fell to 5.78 billion euros ($9 billion) from a restated 5.83 billion euros a year earlier. That exceeded the 5.63 billion-euro median estimate of 12 analysts surveyed by Bloomberg News.
ArcelorMittal dropped 2.9 percent to 55.59 euros. The world's largest steelmaker is considering making an offer for Alpha Natural Resources Inc. to trump Cleveland-Cliffs Inc.'s $8.8 billion bid, the Financial Times reported, citing unidentified people close to the companies.
Calls to ArcelorMittal's London-based spokesman Haroon Hassan and Alpha Natural's head office in Abingdon, Virginia, outside normal business hours weren't immediately returned.
Elan had the biggest drop in the Stoxx 600 after the drugmaker and Biogen Idec Inc. said two new cases of a deadly brain infection have been confirmed in patients taking their multiple sclerosis drug Tysabri. The shares lost 48 percent to 6.98 euros.
The Stoxx 600 is on course for a 0.1 percent weekly gain, the third straight advance, while the S&P 500 has risen 0.8 percent. The MSCI Asia Pacific Index dropped 1.7 percent.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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U.S. Stock Futures Decline After GM Reports $15.5 Billion Loss
By Henrietta Rumberger
Aug. 1 (Bloomberg) -- U.S. stock-index futures declined as General Motors Corp. posted a $15.5 billion loss and investors speculated reports on employment and manufacturing will show the economy is slipping into a recession.
Standard & Poor's 500 Index futures erased an earlier gain of as much as 0.4 percent after GM's results. Bayerische Motoren Werke AG, the world's largest maker of luxury cars, also said business conditions ``deteriorated sharply over the past weeks.''
``GM's earnings confirmed what we saw this morning with BMW,'' said Alexander Tavernaro, a Frankfurt-based money manager at Invesco Asset Management, which oversees about $481 billion. ``The whole sector is having difficulties.''
The S&P 500 has added 0.8 percent this week as the majority of its companies announcing second-quarter earnings beat analysts' estimates and oil capped its biggest monthly decline since 2004. Today's economic reports will come after data yesterday showed second-quarter growth trailed forecasts and jobless claims rose to a five-year high.
Futures on the S&P 500 expiring in September fell 3.1, or 0.2 percent, to 1,264 as of 12:27 p.m. in London. Dow Jones Industrial Average futures lost 20 to 11,339 and Nasdaq-100 Index futures slid 4 to 1,849.75.
The S&P 500 yesterday trimmed its rebound from an almost three-year low on July 15 to 4.3 percent. The 448,000 increase in jobless claims weighed on stocks as investors await today's report from the Labor Department at 8:30 a.m. in Washington.
Jobs Report
Payrolls fell by 75,000 after a 62,000 decline in June, according to the median estimate of economists surveyed by Bloomberg News. The jobless rate probably rose to 5.6 percent, the highest level in four years, according to the survey median.
A private report at 10 a.m. may show manufacturing shrank in July for the sixth time in eight months. The Institute for Supply Management's factory index fell to 49 from 50.2 in June, according to the Bloomberg survey median. A reading of 50 divides growth from contraction.
GM declined 73 cents to $10.34. The largest U.S. automaker reported a second-quarter loss because of strains from truck leases, costs from labor disputes and plunging U.S. sales.
The deficit of $27.33 a share marks GM's fourth straight quarterly loss and compares with a profit of $891 million, or $1.56, a year earlier. Sales fell 18 percent to $38.2 billion, the Detroit-based automaker said in a statement today.
BMW, the world's largest maker of luxury vehicles, said rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult'' and abandoned its profit forecast.
The Munich-based automaker also reported second-quarter earnings that trailed analysts' estimates.
Profit Results
Even though the majority of its companies have beaten estimates, S&P 500 profit growth in the second quarter has slumped 17 percent on average from a year earlier, according to data compiled by Bloomberg.
Biogen lost $14.25 to $55.51 in Germany. The world's largest maker of multiple sclerosis drugs and Elan Corp. said two cases of a deadly brain infection have been confirmed in patients taking the multiple sclerosis drug Tysabri, the first since the drug was reintroduced in the U.S. in 2006.
NYSE Euronext rose 42 cents to $47.66 in Germany. The world's largest owner of stock exchanges said second-quarter profit rose 21 percent, helped by record trading at its European markets.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net
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Aug. 1 (Bloomberg) -- U.S. stock-index futures declined as General Motors Corp. posted a $15.5 billion loss and investors speculated reports on employment and manufacturing will show the economy is slipping into a recession.
Standard & Poor's 500 Index futures erased an earlier gain of as much as 0.4 percent after GM's results. Bayerische Motoren Werke AG, the world's largest maker of luxury cars, also said business conditions ``deteriorated sharply over the past weeks.''
``GM's earnings confirmed what we saw this morning with BMW,'' said Alexander Tavernaro, a Frankfurt-based money manager at Invesco Asset Management, which oversees about $481 billion. ``The whole sector is having difficulties.''
The S&P 500 has added 0.8 percent this week as the majority of its companies announcing second-quarter earnings beat analysts' estimates and oil capped its biggest monthly decline since 2004. Today's economic reports will come after data yesterday showed second-quarter growth trailed forecasts and jobless claims rose to a five-year high.
Futures on the S&P 500 expiring in September fell 3.1, or 0.2 percent, to 1,264 as of 12:27 p.m. in London. Dow Jones Industrial Average futures lost 20 to 11,339 and Nasdaq-100 Index futures slid 4 to 1,849.75.
The S&P 500 yesterday trimmed its rebound from an almost three-year low on July 15 to 4.3 percent. The 448,000 increase in jobless claims weighed on stocks as investors await today's report from the Labor Department at 8:30 a.m. in Washington.
Jobs Report
Payrolls fell by 75,000 after a 62,000 decline in June, according to the median estimate of economists surveyed by Bloomberg News. The jobless rate probably rose to 5.6 percent, the highest level in four years, according to the survey median.
A private report at 10 a.m. may show manufacturing shrank in July for the sixth time in eight months. The Institute for Supply Management's factory index fell to 49 from 50.2 in June, according to the Bloomberg survey median. A reading of 50 divides growth from contraction.
GM declined 73 cents to $10.34. The largest U.S. automaker reported a second-quarter loss because of strains from truck leases, costs from labor disputes and plunging U.S. sales.
The deficit of $27.33 a share marks GM's fourth straight quarterly loss and compares with a profit of $891 million, or $1.56, a year earlier. Sales fell 18 percent to $38.2 billion, the Detroit-based automaker said in a statement today.
BMW, the world's largest maker of luxury vehicles, said rising commodity prices, a weak dollar and the slowing U.S. economy ``have made business conditions significantly more difficult'' and abandoned its profit forecast.
The Munich-based automaker also reported second-quarter earnings that trailed analysts' estimates.
Profit Results
Even though the majority of its companies have beaten estimates, S&P 500 profit growth in the second quarter has slumped 17 percent on average from a year earlier, according to data compiled by Bloomberg.
Biogen lost $14.25 to $55.51 in Germany. The world's largest maker of multiple sclerosis drugs and Elan Corp. said two cases of a deadly brain infection have been confirmed in patients taking the multiple sclerosis drug Tysabri, the first since the drug was reintroduced in the U.S. in 2006.
NYSE Euronext rose 42 cents to $47.66 in Germany. The world's largest owner of stock exchanges said second-quarter profit rose 21 percent, helped by record trading at its European markets.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net
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Dollar Looks To Survive Payroll Test
| Daily Forex Fundamentals | Written by Investica | Aug 01 08 10:30 GMT | | |
| The dollar should prove resilient on Friday unless there is a decline in employment much beyond the 100,000 level The dollar was unable to make a fresh attack on the 1.5550 level on Thursday and weakened sharply following weaker than expected US data releases. Second-quarter GDP growth was provisionally estimated at an annualised 1.9% from 0.9% the previous quarter which was below expectations while the fourth quarter of 2007 was revised to show a contraction. Business investment and the housing sectors were weak while exports provided important support. There was a sharp decline in business inventories, but this should lessen pressure for a further substantial drawdown in stocks this quarter. Elsewhere, jobless claims rose sharply to a 5-year high of 448,000 in the latest week from 404,000 while continuing claims rose sharply. Although the data may have been distorted by technical changes, there will be reduced confidence over the Friday employment report. Following the weaker than expected data, the dollar dipped to lows of 1.57 against the Euro. In contrast, the Chicago PMI index rose to 50.8 for July from 49.6 the previous month, the first reading above 50.0 for six months as orders strengthened which eased fears over the national survey. The dollar recovered to 1.5560 on Friday ahead of the key monthly payroll release Investica Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors. | |
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Pound See-Saws Despite Weak Manufacturing Data- Euro Consolidates As All Eyes On NFP
| Daily Forex Fundamentals | Written by DailyFX | Aug 01 08 10:25 GMT | | |
| Talking Points
US Dollar: NFP's on tap The Pound fell over 100 points during the assian session weighed by the lingering effects of the decline in Nationwide house prices, an expected dour manufacturing report due for release and touted short GBPCHF interest from a major Swiss Bank. However, the Sterling found support at 1.9740 despite the manufacturing indicator printing at a decade low of 44.3 in July. It was the third straight month the sector contracted as factories battle rising raw material costs and slowing global and domestic demand. After closer inspection of the breakdown, we see that new orders fell to 40.5 from 43.7 signaling that further weakness in the sector is forthcoming. The employment component also slipped to 43.3 from 46.2 which will further weigh on a U.K. labor market that saw jobless claims rise by 15,500 in June. The BoE will be hard pressed to raise rates at their upcoming policy meeting giving the contracting economy, despite the efforts of hawk Tim Besley to convince his fellow committee members that price stability should be their focus. Yet, prices charged by factories rose to 63.1 from 62.6 - the highest since the series started in 1999, adding upward pressure to inflation which is threatening to rise above 4%. The Euro spent the overnight session on hold ahead of the upcoming U.S. job report, despite German retail sales falling twice as much as expected. Consumer consumption continues to weaken in Europe's largest economy falling 1.4% in June and 3.9% year-over-year. It was the third time in four month that shoppers reduced their purchases as they battle rising inflation and a weakening labor market-which lost 20,000 jobs in July. The ECB recent rate hike has accelerated the contraction in the European economy, which may forced the MPC to abandon their tightening bias and consider a rate cut before the end of the year. Yesterday's GDP numbers showed that the U.S. economy did indeed contract in the fourth quarter of 2007 after the original 0.6% reading was revised lower to a -0.2%. The realization that the economy had reached recessionary levels and the weaker than expected 1.9% print for the 2Q of 2008 saw the dollar freefall. However, the greenback has fought back to erase those losses and more against the Euro and Pound. The upcoming Non-farm payroll report will test the dollar's resiliency as the economy is expected to have lost another 75,000 jobs, which would be the seventh straight month of declines. A drop of 100,000 or more could send the dollar falling sharply as the long-term effects of the credit crisis may only be beginning. However, giving the recent bullish momentum and optimism that the end of the subprime woes is in sight, an inline print or lower could push the dollar higher.
Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
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The U.S Economy Probably Lost Jobs Data Will Show
| Daily Forex Fundamentals | Written by Finotec Group | Aug 01 08 10:16 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The U.S. probably lost jobs in July for a seventh consecutive month and the unemployment rate rose, increasing the risk the economic slowdown will worsen, economists said before a government report today. Fewer jobs, combined with decreasing property values, stricter lending rules and near-record energy prices, would further undermine the ability of Americans to spend. Cutbacks at UAL Corp and Starbucks signal firings are spreading beyond builders and manufacturers as the cost of raw materials soars. 'We'll see accelerated declines in payrolls,' said Lindsey Piegza, an economic analyst at FTN Financial in New York. 'That will really compound the pressure on the consumer.' EUR/USD is currently trading at $1.5562 as of 9:24 am, GMT. The pound fell near to a three-week low against the dollar and weakened versus the euro after U.K. manufacturing shrank in July by the most in a decade, adding to evidence of a looming recession. An index based on a survey of more than 600 manufacturers by the Chartered Institute of Purchasing and Supply dropped to 44.3, the lowest since December 1998, from 45.9 in June, Reuters said today. The U.K. currency extended its drop after British Energy Group Plc, Britain's biggest nuclear-power producer, rejected a takeover approach from Electricite de France SA, according to people with knowledge of the talks. 'The news you're getting about the British economy goes only in one direction,' said Lutz Karpowitz, a Frankfurt-based currency strategist at Commerzbank AG, Germany's second-biggest lender. 'The economy is very weak and we don't see signs of a recovery. The pound is going to get weaker against the euro and the dollar.' The GBP/USD is currently trading at 1.9783 as 9:27 am, GMT. Economic Calendar
Finotec Group Inc. Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Forex Technical Analytics
| Daily Forex Technicals | Written by FOREX Ltd | Aug 01 08 10:52 GMT | | |
CHFThe pre-planned sells have been realized with overlap of minimal targets because of pair return to the center of descending channel. Taking into account diminishing bullish strength pair return to the center of the channel is also possible where it is recommended to evaluate further development of counteraction between bulls and bears according to the charts of shorter time interval. For sells the targets will be 1.0410/30. Short-term alternative for buyers will be 1.0520/40.
GBPThe pre-planned buys have been realized with overlap of maximal targets because of false break of upper boundary of the channel with further return to the channel. At this moment OsMA trend indicator marks the rise of bearish strength that means further pair movement within the channel and the test of bottom boundary of the channel on condition of formation of confirmative signals on the charts of shorter time period. For short positions the targets will be 1.9765/75, 1.9690/1.9710.
JPYThe pre-planned sells have been realized with attainment of minimal targets. At this moment pair has broken Ishimoku moving in descending direction. OsMA trend indicator indicates the rise of bearish strength but on the charts of shorter time interval this strength is falling. So it is recommended not to do hasty conclusions. We assume pair return to the cloud with a test of its boundaries where it is necessary to evaluate further development according to the charts of shorter time interval and OsMA signs. The breakout variant for long positions will be 107.80/108.00. An alternative in case of rebound will be 106.80/107.00, 106.30/50.
EURThe assumed test of bottom boundary of the channel was completed with false break with further rebound. In this situation short-term long and short positions have been realized. In this case pair has formed new channel but we should remember the old one. OsMA trend indicator has marked the fall of bearish strength that can bring to retest of resistance range (bottom boundary of the old channel). For long positions the targets will be 1.5600/10 with further breakout variant 1.5690/1.5710. An alternative for sells will be 1.5530/40, 1.5480/1.5500.
FOREX Ltd | |
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Daily Technical Strategist
| Daily Forex Technicals | Written by FXTechstrategy | Aug 01 08 10:49 GMT | | |||||||||||||||||||||||||||||||||||||
| Today's Focus: EURUSD & GBPUSD
EURUSDEUR saw its effort at heading higher halted on Thursday by a confluence of resistance levels coming in at the 1.5694/96 zone, representing its daily 50 ema/broken channel base. Consolidation remains a factor and with yesterday's marginal gains wiped out in early morning trading today, risk has now turned lower exposing its July 24'08/July 30'08 lows at 1.5527/21 at first and then the 1.5459/67 zone, its .786 Ret/Jun 23'08 lows. Decisively penetrating and holding below there will put further downside pressure on its May/June'08 lows at 1.5302/1.5283.Weekly studies which have turned lower remain suggestive of this view playing out though oversold condition on the daily timeframe may cause consolidation to recovery. Upside targets are located at its July 28'08 high at 1.5766 ahead of the 1.5842 level, its Jun 09'08 high with the next two upside objective residing at the 1.5945 level, its July 22'08 high and the 1.6018/37 zone, its April 22'08/YTD highs. On the whole, although GBP's medium and longer term bullish structure remain in place, its potential third week of downside closes now shaping up keeps risk to the downside in the short term.
GBPUSDAlthough gains were seen and a positive close was registered on Thursday, attempts at breaking and holding back within its daily eroded rising channel failed causing the pair to remain below the said key resistance levels. The pair was seen trading below its .50 Ret(1.9407-2.0155 rally) at 1.9782 in early morning trading today suggesting that a hold on to those gains should see GBP targeting further downside losses towards its .618 Ret at 1.9697 ahead of the 1.9643 level, its July 07'08 low and then its June 13'08 at 1.9407.Daily RSI remains supportive of this view. On the other hand, resistance runs through the 1.9800/1.9790 zone, its Jun 09 & 20'08 highs and the 1.9850/42,its May 23'08 high/Daily 200 ema with a break through the latter triggering upside gains towards the 2.0075 level, its July 22'08 high followed by the 2.0155 high, its July 15'08 high with scope for extension towards the 2.0191 level, its Mar 27'08 high. All in all, while the pair continues to trade and hold below the mentioned key resistance levels, risk of lower prices can not be ruled out.
Mohammed Isah Market Analyst This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report | |||||||||||||||||||||||||||||||||||||
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U.K. PMI Manufacturing Contracts For Third Month
| Daily Forex Fundamentals | Written by DailyFX | Aug 01 08 09:38 GMT | | |
| The U.K.PMI Manufacturing gauge fell to 44.3 in July from 45.9, which was the lowest in a decade. It was the third consecutive month the measurement fell below the 50 boom/bust level and provides further evidence the British economy is heading for a recession. After closer inspection of the breakdown, we see that new orders fell to 40.5 from 43.7 signaling that further weakness in the sector is forthcoming. The sector also showed employment slipping to 43.3 from 46.2 which will further weigh on the U.K. labor market which saw jobless claims rise by 15,500 in June. The BoE will be hard pressed to raise rates at their upcoming policy meeting, despite the efforts of hawk Tim Besley to convince his fellow committee members that price stability should be their focus. Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
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Forex Technical Analysis
| Daily Forex Technicals | Written by DeltaStock Inc. | Aug 01 08 09:46 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||
EUR/USDCurrent level-1.5572 EUR/USD is in an uptrend from recent bottom at 1.5301, that was the final of the prolonged consolidation since 1.5909 (17 March 2008). Technical indicators are slowly rising and trading is situated between the 50- and 200-Day SMA, currently projected at 1.5677 and 1.5181. Yesterday's corrective rise peaked few pips above our target at 1.5689 and sell-off followed to recent low at 1.5547. We hold on to our view, that a minor uptrend unfolds from 1.5519, targeting 1.5891. Crucial is 1.5519. Today's strategy: Buy current levels with a stop below 1.5519.
USD/JPYCurrent level - 107.46 The pair has finalized its corrective uptrend from 95.75 mid-term bottom with the recent top at 108.59. Trading is situated below the 50- and 200-day SMA, currently projected at 105.81 and 107.25. Obviously 108.44 is a tough resistance level and we rather prefer the idea, that the pair is entering a larger corrective phase below 108.44 and above 106.06. Yesterday's spike-high has reached precisely our target at 108.37, thus setting a local top at that level, finalizing the rise from 106.59 (25 July). Now a minor downtrend is on the run, targeting 106.61 with an intraday resistance, projected at 107.87 Today's strategy: Sell rallies to 107.80, stop above 108.17, target seen at 106.61.
GBP/USDCurrent level- 1.9761 The pair is in a broad consolidation above 1.9338 and below 2.0397. Technical indicators are flat on the higher time-frames and trading is situated above the 50- and 200-day SMA, currently projected at 1.9685 and 1.9982. The sell-off from recent peak at 1.9968 has managed to slide below 1.9817, thus confirming, that the broad corrective pattern since 2.0153 is still on the run. We expect the pair to aim at 1.9691, where a reversal should take place for finalizing the whole slide from 2.0153. Yesterday's rise was a little bit stronger than expected, reaching intraday high at 1.9929 where a sell-off emerged for 1.9693. Intraday resistance is projected at 1.9786, but only above 1.9841 it will be clear, that the corrective slide from 2.0153 is already over. Today's strategy : Sell 1.9785 for 1.9711, stop/Reverse above 1.9841. On the senior frames, buy on a break above 1.9929 for 2.0274.
DeltaStock Inc. - Online Forex & Securities Broker RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice. | |||||||||||||||||||||||||||||||||||||||||||||||||
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