By Heather Burke and Zahra Burton
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Aug. 6 (Bloomberg) -- Retailers in the U.S. may be dreading the approach of the school year almost as much as kids, given a forecast for the worst back-to-school season in seven years.
Even with projections for almost no growth, stores need to raise prices, says Burt Flickinger, managing director of Strategic Resource Group, a New York retail consulting firm. Otherwise, higher costs for everything from cotton, to shipping, to labor in China will eat away at already narrow profit margins, he said.
``It's an absolute balancing act,'' said Patricia Edwards, a portfolio manager with Seattle-based investment firm Wentworth Hauser and Violich. ``This is retail high-wire at its finest.''
Sellers and buyers are up against similar economic realities. Retailers such as J.C. Penney Co. in Plano, Texas, San Francisco-based Gymboree Corp. and Cincinnati-based Macy's Inc. must cope with higher costs and a U.S. dollar worth 9 percent less than a year ago. Their customers are confronting $4-a-gallon gasoline and food price increases amid a housing market decline, falling asset values and job losses.
Shoppers ``don't have any more money in their pocket,'' said Joseph Gromek, chief executive officer at New York-based Warnaco Group Inc., with brands that include Calvin Klein and Speedo. ``So to think that they're going to pay more for the same is not going to happen. The consumer is not willing and candidly today not able to spend more on discretionary items.''
Kathi Nunziato has noticed the price creep. As she shopped at a J.C. Penney's in Paramus, New Jersey, the mother of a school-age boy and girl said clothes she bought in June were more expensive by the time she returned to the store in July.
``I would say $5 per item'' more expensive, she said. ``They've gone up, just in that short time.''
Reluctant Parents
Back-to-school purchases from July through September, retailing's second biggest season after Christmas, this year may climb 1 percent to $38.5 billion, according to the International Council of Shopping Centers in New York. That would be the slowest growth since 2001, the group said.
Almost 30 percent of U.S. parents plan to spend less money this year on back-to-school purchases, according to a survey of 1,000 adults by America's Research Group conducted July 8 through 10. Last year, that figure was 16 percent, said Britt Beemer, chairman of the Charleston, South Carolina-based firm. This year, 45 percent of those who planned to cut back said they had less money.
Even with the threat to volume, some retailers are trying to increase prices 8 to 9 percent on certain items, said Flickinger. For instance, Warnaco said it has raised prices on its Calvin Klein jeans because it is a premium brand.
A Matter of Survival
Stores are hoping that new merchandise, already priced higher, and well-promoted discounts will mask the inflated costs, Flickinger said.
``It's a risky strategy, because people who are already buying less at full-price will have even more sticker shock and be less inclined,'' Flickinger said in a telephone interview. ``This is simply a matter of survival.''
One of the biggest contributors is inflation in China, where a quarter of all the clothes sold in the U.S. are made. China's producer price index, a measure of inflation, climbed 8.8 percent in June, the biggest increase since Bloomberg data began in 1999. In May China's PPI rose 8.2 percent.
That in turn helped push U.S. costs on goods from China up 4.8 percent in June, the biggest year-over-year gain since the Labor Department started tracking the data in 2003.
China's Inflation
Footwear, one of the purchases parents can't easily avoid each year, has felt the squeeze. Eighty-four percent of shoes sold in the U.S. are made in China.
``We'll continue to look at sourcing some of our products from other countries such as Indonesia and Vietnam,'' said Ron Fromm, the chief executive officer of Brown Shoe Co., the St. Louis-based maker of Buster Brown and Dr. Scholl's footwear. ``But they could never build to the volume to offset the main production capability in China.''
Companies that have announced price increases include Collective Brands Inc., the Topeka, Kansas-based owner of the Payless ShoeSource chain; Los Angeles-based Rebels Footwear, which supplies Macy's with juniors' shoes; and Brown Shoe.
For discounters like Wal-Mart Stores Inc. and Target Corp., the trend isn't all bad news. Both order larger quantities than department stores, said Flickinger, which means they can negotiate better prices from suppliers. This may allow them to ``selectively'' raise prices 3 percent to 7 percent in the next month, he said.
Discounters Benefit
Bentonville, Arkansas-based Wal-Mart, the world's largest retailer, and Target in Minneapolis said they're working with suppliers to absorb costs rather than pass on increases. Target will be ``price competitive'' for back-to-school with Wal-Mart, spokeswoman Lena Michaud wrote in an e-mail.
They may also benefit from increased traffic, according to a survey by Brand Keys, a New York-based market-research firm. The survey showed 85 percent of parents said they would shop for back-to-school at discounters including Wal-Mart, up from 75 percent from 2007.
Some retailers are saying they will tough out the higher costs -- at least until next year when the economy may bounce back. J.C. Penney, Children's Place Retail Stores Inc. in Secaucus, New Jersey, and American Eagle Outfitters Inc. in Pittsburgh said they weren't raising prices for back-to-school.
``You can't totally sacrifice sales, but you can't sacrifice margins either,'' said Wentworth Hauser's Edwards. ``Show me the margin, show me the earnings.''
To contact the reporters on this story: Heather Burke in New York at hburke2@bloomberg.net; Zahra Burton in New York at zburton1@bloomberg.net
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Wednesday, August 6, 2008
Spain's Industrial Production Shrinks Most Since 1993
By Ben Sills and Emma Ross-Thomas
Aug. 6 (Bloomberg) -- Spain's industrial production contracted the most in 15 years in June, led by declines in output of office equipment and housing-related goods.
Production at factories, farms and mines, which accounts for a seventh of the Spanish economy, fell 9 percent from a year earlier after adjusting for the number of days worked, the Madrid-based National Statistics Institute said on its Web site today. That was the biggest drop since April 1993 and followed a revised 5.8 percent decline in May.
``The contraction was stronger than expected,'' said Susana Garcia-Cervero, senior economist at Deutsche Bank in London. ``It means we all have to revise our growth forecasts to the downside.'' She currently forecasts 1.6 percent economic growth this year, less than half 2007's pace of expansion.
Spain's once-booming economy has been hit by the global credit crunch and a slowdown in the domestic housing market, just as increased energy prices are pushing up production costs and the euro's gains are damping exports. A Bloomberg News survey of economists last month showed the nation faces a 50 percent chance of falling into a recession by the end of 2009.
Production of office equipment and computers slumped 31 percent in June from a year earlier, not adjusted for the number of days worked, while output in the wood and cork industry fell 26 percent, according to today's report. Overall consumer durables declined 21 percent.
`Very Weak'
``This suggests that second- and third-quarter consumption is going to be very weak,'' Garcia-Cervero said. Dominic White, global economist at ABN Amro in London, said Spain's ``industrial output could well continue to contract for another few months or a year even.''
Spanish Finance Minister Pedro Solbes last month cut his economic-growth forecasts to 1.6 percent for this year and 1 percent for 2009, down from 2.3 percent predicted for each year in April. The 2008 outlook would be down from expansion of 3.8 percent last year. Second-quarter data on gross domestic product are due next week.
The euro's 12 percent advance against the dollar in the past year makes it harder for European exporters to compete. The currency shared by Spain and 14 other nations reached a record $1.6038 on July 15.
At the same time, the weakness in Spain's housing market has prompted construction-industry layoffs and swelled Spain's unemployment ranks. The number of people claiming jobless benefits rose 1.5 percent in July, the fourth straight increase, with claims among construction workers jumping 5.4 percent.
Seventh Month
Manufacturing is contracting across the euro region, with industrial orders declining 3.5 percent in May from the previous month. German factory orders unexpectedly fell for a seventh month in June, the Economy Ministry in Berlin said today, increasing the likelihood that Europe's largest economy contracted in the second quarter.
European Central Bank President Jean-Claude Trichet said last month there will be a ``trough'' in euro-area economic growth through the third quarter before the expansion gathers strength toward the end of the year.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net.
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Aug. 6 (Bloomberg) -- Spain's industrial production contracted the most in 15 years in June, led by declines in output of office equipment and housing-related goods.
Production at factories, farms and mines, which accounts for a seventh of the Spanish economy, fell 9 percent from a year earlier after adjusting for the number of days worked, the Madrid-based National Statistics Institute said on its Web site today. That was the biggest drop since April 1993 and followed a revised 5.8 percent decline in May.
``The contraction was stronger than expected,'' said Susana Garcia-Cervero, senior economist at Deutsche Bank in London. ``It means we all have to revise our growth forecasts to the downside.'' She currently forecasts 1.6 percent economic growth this year, less than half 2007's pace of expansion.
Spain's once-booming economy has been hit by the global credit crunch and a slowdown in the domestic housing market, just as increased energy prices are pushing up production costs and the euro's gains are damping exports. A Bloomberg News survey of economists last month showed the nation faces a 50 percent chance of falling into a recession by the end of 2009.
Production of office equipment and computers slumped 31 percent in June from a year earlier, not adjusted for the number of days worked, while output in the wood and cork industry fell 26 percent, according to today's report. Overall consumer durables declined 21 percent.
`Very Weak'
``This suggests that second- and third-quarter consumption is going to be very weak,'' Garcia-Cervero said. Dominic White, global economist at ABN Amro in London, said Spain's ``industrial output could well continue to contract for another few months or a year even.''
Spanish Finance Minister Pedro Solbes last month cut his economic-growth forecasts to 1.6 percent for this year and 1 percent for 2009, down from 2.3 percent predicted for each year in April. The 2008 outlook would be down from expansion of 3.8 percent last year. Second-quarter data on gross domestic product are due next week.
The euro's 12 percent advance against the dollar in the past year makes it harder for European exporters to compete. The currency shared by Spain and 14 other nations reached a record $1.6038 on July 15.
At the same time, the weakness in Spain's housing market has prompted construction-industry layoffs and swelled Spain's unemployment ranks. The number of people claiming jobless benefits rose 1.5 percent in July, the fourth straight increase, with claims among construction workers jumping 5.4 percent.
Seventh Month
Manufacturing is contracting across the euro region, with industrial orders declining 3.5 percent in May from the previous month. German factory orders unexpectedly fell for a seventh month in June, the Economy Ministry in Berlin said today, increasing the likelihood that Europe's largest economy contracted in the second quarter.
European Central Bank President Jean-Claude Trichet said last month there will be a ``trough'' in euro-area economic growth through the third quarter before the expansion gathers strength toward the end of the year.
To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net.
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Philippines May Lure Funds as Rate Gap Widens, Guinigundo Says
By Karl Lester M. Yap
Aug. 6 (Bloomberg) -- A widening gap between U.S. and Philippine benchmark interest rates will help the Asian nation attract portfolio investments, central bank Deputy Governor Diwa Guinigundo said.
``Risk aversion seems to be keeping foreign capital in so- called safe havens like the U.S. market,'' Guinigundo said in a mobile-phone text message today. ``We expect good fundamentals plus this rate gap to start bringing in foreign capital.''
The Philippine Stock Exchange Index has slumped 26 percent this year and the peso has declined 5.8 percent as investors sold Asian assets on concern accelerating inflation in the region will weigh on economic growth. The gap between U.S. and Philippine interest rates has widened after the Southeast Asian nation raised its benchmark twice in the last two months.
``More foreign funds coming in will help strengthen the peso,'' said Tynee Tan, who helps manage about $1 billion in assets at Rizal Commercial Banking Corp. in Manila. ``A wide rate differential will help keep the attractiveness of Philippine assets.''
The peso jumped 0.7 percent today to the highest in three months.
The Philippine central bank may raise borrowing costs a third time, and that would further widen the gap between U.S. and Philippine benchmark interest rates from the current 3.75 percentage points, Tan said.
The Federal Reserve kept its benchmark interest rate at 2 percent yesterday, and had lowered the measure from 5.25 percent in August 2007 to the current level in April.
Bangko Sentral ng Pilipinas, which next meets to decide on monetary policy on Aug. 28, raised the overnight borrowing rate by half a percentage point to 5.75 percent on July 17 to fight inflation running at the fastest in more than 16 years.
To contact the reporters on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net;
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Aug. 6 (Bloomberg) -- A widening gap between U.S. and Philippine benchmark interest rates will help the Asian nation attract portfolio investments, central bank Deputy Governor Diwa Guinigundo said.
``Risk aversion seems to be keeping foreign capital in so- called safe havens like the U.S. market,'' Guinigundo said in a mobile-phone text message today. ``We expect good fundamentals plus this rate gap to start bringing in foreign capital.''
The Philippine Stock Exchange Index has slumped 26 percent this year and the peso has declined 5.8 percent as investors sold Asian assets on concern accelerating inflation in the region will weigh on economic growth. The gap between U.S. and Philippine interest rates has widened after the Southeast Asian nation raised its benchmark twice in the last two months.
``More foreign funds coming in will help strengthen the peso,'' said Tynee Tan, who helps manage about $1 billion in assets at Rizal Commercial Banking Corp. in Manila. ``A wide rate differential will help keep the attractiveness of Philippine assets.''
The peso jumped 0.7 percent today to the highest in three months.
The Philippine central bank may raise borrowing costs a third time, and that would further widen the gap between U.S. and Philippine benchmark interest rates from the current 3.75 percentage points, Tan said.
The Federal Reserve kept its benchmark interest rate at 2 percent yesterday, and had lowered the measure from 5.25 percent in August 2007 to the current level in April.
Bangko Sentral ng Pilipinas, which next meets to decide on monetary policy on Aug. 28, raised the overnight borrowing rate by half a percentage point to 5.75 percent on July 17 to fight inflation running at the fastest in more than 16 years.
To contact the reporters on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net;
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Ireland Doesn't Plan Tax Increase as Economy Slows, Harney Says
By Louisa Nesbitt
Aug. 6 (Bloomberg) -- Ireland doesn't plan to raise taxes even as economic growth slows and the country's budget deficit increases, according to Health Minister Mary Harney.
``Clearly the last thing we need is a knee-jerk reaction,'' Harney said in an interview on Ireland's RTE radio today. ``The last thing we need in this economy is to increase taxes and to go on what I call a spending, borrowing and taxing spree.''
A housing slump and slower economic growth contributed to Ireland's budget deficit widening to 6.7 billion euros ($10.4 billion) in the first seven months of the year, more than five times the year-earlier deficit of 1.3 billion euros, the Finance Ministry said yesterday. The country may enter a recession in 2008 for the first time in more than two decades, according to the Economic and Social Research Institute.
Ireland's deficit will expand to 2.75 percent of gross domestic product this year, close to the European Union limit of 3 percent of GDP, the government forecast last month. Goodbody Stockbrokers economist Dermot O'Leary said in a research note today that the nation is likely to breach the EU limit.
The government wants most agencies under its control to reduce their wage bill by 3 percent as part of a plan to save 1.4 billion euros by the end of 2009, Finance Minister Brian Lenihan said last month.
To contact the reporter on this story: Louisa Nesbitt in Dublin at lnesbitt@bloomberg.net
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Aug. 6 (Bloomberg) -- Ireland doesn't plan to raise taxes even as economic growth slows and the country's budget deficit increases, according to Health Minister Mary Harney.
``Clearly the last thing we need is a knee-jerk reaction,'' Harney said in an interview on Ireland's RTE radio today. ``The last thing we need in this economy is to increase taxes and to go on what I call a spending, borrowing and taxing spree.''
A housing slump and slower economic growth contributed to Ireland's budget deficit widening to 6.7 billion euros ($10.4 billion) in the first seven months of the year, more than five times the year-earlier deficit of 1.3 billion euros, the Finance Ministry said yesterday. The country may enter a recession in 2008 for the first time in more than two decades, according to the Economic and Social Research Institute.
Ireland's deficit will expand to 2.75 percent of gross domestic product this year, close to the European Union limit of 3 percent of GDP, the government forecast last month. Goodbody Stockbrokers economist Dermot O'Leary said in a research note today that the nation is likely to breach the EU limit.
The government wants most agencies under its control to reduce their wage bill by 3 percent as part of a plan to save 1.4 billion euros by the end of 2009, Finance Minister Brian Lenihan said last month.
To contact the reporter on this story: Louisa Nesbitt in Dublin at lnesbitt@bloomberg.net
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German June Orders Unexpectedly Fall a Seventh Month
By Gabi Thesing
Aug. 6 (Bloomberg) -- German factory orders unexpectedly fell for a seventh month in June, increasing the likelihood Europe's largest economy contracted in the second quarter.
Orders, adjusted for seasonal swings and inflation, declined 2.9 percent from May, the Economy Ministry in Berlin said today. That's the biggest drop since July 2007. Economists expected a gain of 0.4 percent, the median of 39 forecasts in a Bloomberg News survey showed. Orders fell 6.1 percent from a year earlier.
Manufacturing in Germany and Europe is faltering as higher energy and food prices push up production costs for companies and damp household spending power just as slower global growth and a stronger euro weigh on demand for exports.
``This series of declines is unprecedented,'' said Alexander Koch, an economist at Unicredit Markets & Investment Banking in Munich. ``It's the final nail in the coffin for second quarter growth and certainly increases the likelihood of a recession. Any inventory backlog that we have thought could carry German industry into the second half of the year is well and truly gone.''
The euro dropped to as low as $1.5464 euros from $1.5485 before the report. It's the fifth month in a row that orders defied economists' expectations of an increase.
Euro-Area Drop
Foreign sales dropped 5.1 percent, while domestic orders fell 0.6 percent in June. Orders from the euro area declined 7.7 percent and demand from outside the region fell 3.1 percent.
Heidelberger Druckmaschinen AG, the world's largest printing- press maker, yesterday posted its first quarterly loss in three years as higher raw-material costs squeezed margins and customers in the U.S. delayed purchases. The company said full-year profit will decline ``significantly'' as a stronger euro hurts revenue in the U.S. and Asia.
Bayerische Motoren Werke AG Chief Executive Officer Norbert Reithofer said on Aug. 1 that 2009 would be ``another difficult year'' for the world's largest maker of luxury cars as falling U.S. sales, the stronger euro and rising costs for plastics, steel and oil hurt profit. Car sales in the U.S., BMW's biggest market, have fallen 10 percent this year as soaring gasoline prices and slower economic growth hurt consumer spending.
Double Trouble
``Manufacturers are squeezed at both ends,'' said Matthias Rubisch, an economist at Commerzbank AG in Frankfurt. ``No one's buying at home and growth in the main export markets is falling off rapidly.''
The euro has gained 12 percent against the dollar and 17 percent against sterling over the past year. The price of oil surged to a record $147.27 a barrel last month and is up 65 percent from a year earlier.
Inflation in the 15-nation euro area accelerated to a 16-year high of 4.1 percent last month. In Germany, which accounts for about a third of the region's economy, annual price gains held at 3.4 percent, the most since records began. The ECB aims to keep inflation just below 2 percent.
Germany's economy may shrink in the second quarter after it expanded at the fastest pace in 12 years in the first three months, Deputy Economy Minister Walther Otremba said June 24.
The euro area, which takes just over 40 percent of Germany's exports, probably contracted 0.5 percent in the second quarter, economists from French bank Societe Generale estimate. The U.K. economy, which ranks third as a destination for German exports, expanded 0.2 percent in the second quarter, matching the slowest pace since 2001.
China Orders
Not all German companies are suffering, though. Siemens AG, Europe's largest engineering company, reported third-quarter earnings that beat analyst estimates on increased orders for power plants and generator updates in Russia and China.
Siemens said yesterday it will get 10 billion euros ($15.5 billion) of annual orders from China by 2010 as the country boosts spending on utilities and transport networks.
Other companies profit from the oil price boom. BASF SE, the world's biggest chemical maker, last week reported profit that beat analyst estimates for a sixth straight quarter as record crude prices bolstered its oil and gas unit and demand for pesticides surged.
Adding to company and household concerns, the European Central Bank raised borrowing costs to a seven-year high last month to combat the threat of an inflation spiral. Policy makers are concerned companies will raise prices and workers demand higher wages to compensate for the increase in energy prices.
The bank raised the benchmark lending rate by a quarter point to 4.25 percent and is expected to leave the rate unchanged tomorrow, a Bloomberg survey of economists shows.
``With these kind of interest rates you can forget about an economic upswing,'' Rubisch said.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net
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Aug. 6 (Bloomberg) -- German factory orders unexpectedly fell for a seventh month in June, increasing the likelihood Europe's largest economy contracted in the second quarter.
Orders, adjusted for seasonal swings and inflation, declined 2.9 percent from May, the Economy Ministry in Berlin said today. That's the biggest drop since July 2007. Economists expected a gain of 0.4 percent, the median of 39 forecasts in a Bloomberg News survey showed. Orders fell 6.1 percent from a year earlier.
Manufacturing in Germany and Europe is faltering as higher energy and food prices push up production costs for companies and damp household spending power just as slower global growth and a stronger euro weigh on demand for exports.
``This series of declines is unprecedented,'' said Alexander Koch, an economist at Unicredit Markets & Investment Banking in Munich. ``It's the final nail in the coffin for second quarter growth and certainly increases the likelihood of a recession. Any inventory backlog that we have thought could carry German industry into the second half of the year is well and truly gone.''
The euro dropped to as low as $1.5464 euros from $1.5485 before the report. It's the fifth month in a row that orders defied economists' expectations of an increase.
Euro-Area Drop
Foreign sales dropped 5.1 percent, while domestic orders fell 0.6 percent in June. Orders from the euro area declined 7.7 percent and demand from outside the region fell 3.1 percent.
Heidelberger Druckmaschinen AG, the world's largest printing- press maker, yesterday posted its first quarterly loss in three years as higher raw-material costs squeezed margins and customers in the U.S. delayed purchases. The company said full-year profit will decline ``significantly'' as a stronger euro hurts revenue in the U.S. and Asia.
Bayerische Motoren Werke AG Chief Executive Officer Norbert Reithofer said on Aug. 1 that 2009 would be ``another difficult year'' for the world's largest maker of luxury cars as falling U.S. sales, the stronger euro and rising costs for plastics, steel and oil hurt profit. Car sales in the U.S., BMW's biggest market, have fallen 10 percent this year as soaring gasoline prices and slower economic growth hurt consumer spending.
Double Trouble
``Manufacturers are squeezed at both ends,'' said Matthias Rubisch, an economist at Commerzbank AG in Frankfurt. ``No one's buying at home and growth in the main export markets is falling off rapidly.''
The euro has gained 12 percent against the dollar and 17 percent against sterling over the past year. The price of oil surged to a record $147.27 a barrel last month and is up 65 percent from a year earlier.
Inflation in the 15-nation euro area accelerated to a 16-year high of 4.1 percent last month. In Germany, which accounts for about a third of the region's economy, annual price gains held at 3.4 percent, the most since records began. The ECB aims to keep inflation just below 2 percent.
Germany's economy may shrink in the second quarter after it expanded at the fastest pace in 12 years in the first three months, Deputy Economy Minister Walther Otremba said June 24.
The euro area, which takes just over 40 percent of Germany's exports, probably contracted 0.5 percent in the second quarter, economists from French bank Societe Generale estimate. The U.K. economy, which ranks third as a destination for German exports, expanded 0.2 percent in the second quarter, matching the slowest pace since 2001.
China Orders
Not all German companies are suffering, though. Siemens AG, Europe's largest engineering company, reported third-quarter earnings that beat analyst estimates on increased orders for power plants and generator updates in Russia and China.
Siemens said yesterday it will get 10 billion euros ($15.5 billion) of annual orders from China by 2010 as the country boosts spending on utilities and transport networks.
Other companies profit from the oil price boom. BASF SE, the world's biggest chemical maker, last week reported profit that beat analyst estimates for a sixth straight quarter as record crude prices bolstered its oil and gas unit and demand for pesticides surged.
Adding to company and household concerns, the European Central Bank raised borrowing costs to a seven-year high last month to combat the threat of an inflation spiral. Policy makers are concerned companies will raise prices and workers demand higher wages to compensate for the increase in energy prices.
The bank raised the benchmark lending rate by a quarter point to 4.25 percent and is expected to leave the rate unchanged tomorrow, a Bloomberg survey of economists shows.
``With these kind of interest rates you can forget about an economic upswing,'' Rubisch said.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net
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China Yuan Forwards Underestimate Gains, Goldman Says
By Kim Kyoungwha and Judy Chen
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Aug. 6 (Bloomberg) -- China's yuan is likely to appreciate against the dollar ``almost three times as fast'' as traders predict because money flowing into the country is still increasing, according to Goldman Sachs Group Inc.
The rate of yuan gains has slowed over the past month and non-deliverable forwards show traders have pared expectations for the speed of the advance on speculation China is reducing the pace to protect exporters as economic growth cools. China last month set up an electronic network to monitor export income to stop currency speculators using bogus contracts to bypass investment rules.
China's record trade surplus and so-called ``hot money'' inflows betting on yuan appreciation have pushed the nation's foreign-currency reserves to $1.8 trillion, driving inflation to a 12-year high in February.
``We remain confident that it would be the wrong decision to close long yuan exposure at these levels,'' Thomas Stolper, a London-based strategist at the world's biggest securities firm by market value, wrote in a research note yesterday. ``The pace of reserve accumulation remains a serious issue.''
Cash inflows from the trade surplus and foreign direct investment suggests reserve accumulation runs at about $30 billion per month before additional speculative capital, according to the report, Goldman said.
`Little Choice'
``The central bank has little choice but to allow yuan appreciation as excessive liquidity in a pre-dominantly cash based economy could still lead to further inflationary pressures,'' wrote Claudio Piron and Yen Ping Ho, currency strategists at JPMorgan Chase & Co. in Singapore in a report today.
The yuan climbed 0.1 percent to 6.8482 per dollar as of 5:30 p.m. in Shanghai, from 6.8556 yesterday, according to China Foreign Exchange Trade System. The currency is more than 20 percent stronger than the 8.3 level it was pegged at until July 2005.
Non-deliverable forwards show an implied rate for the yuan of 6.6045 in the next 12 months, a gain of 3.7 percent from today's spot rate and compared with bets for a level of 6.4650 at the start of July. Forwards are agreements in which assets are bought and sold at current prices for future delivery.
The Politburo, the Communist Party's top decision-making body, dropped mention of ``tight'' monetary policy in a report on July 25 and said growth and inflation were both top priorities.
Speculative Capital
China's crackdown on ``hot money'' seems to be curbing inflows of speculative capital, enabling policy makers to slow the pace of yuan appreciation, Yu Yongding, a former adviser to the central bank, said in an interview last week.
More rigorous checks by the State Administration of Foreign Exchange, China's currency regulator, have started to control ``unwanted money'' flows, reducing the need for rapid yuan gains to quell inflation, Yu said.
Any slowdown in the yuan would be ``a rather unfortunate development as it would create incentives to worsen the imbalances'' in the economy, sacrificing domestic demand to further boost exports when the exact opposite is needed, Stolper said.
Guiding the Rate
The market's perception that growth without exports is difficult to achieve in China is unfounded, Stolper said.
The People's Bank of China guides the exchange rate against a basket of currencies including the yen and the euro. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of a daily reference rate. The central bank set the rate weaker for a sixth day today at 6.8525.
On Goldman Sach's trade-weighted index the yuan ``is clearly still appreciating,'' Stolper said, strengthening 1 percent of a two-week period.
China's decision to raise tax rebates for textile exporters last week is seen as a measure to ``offset the worst side effects of an otherwise unchanged foreign-exchange stance,'' he said.
``By giving in to some pressures from the industries hardest hit, the overall currency policy of gradual yuan appreciation may actually be maintained more easily,'' Stolper wrote.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net;
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Enlarge Image/Details
Aug. 6 (Bloomberg) -- China's yuan is likely to appreciate against the dollar ``almost three times as fast'' as traders predict because money flowing into the country is still increasing, according to Goldman Sachs Group Inc.
The rate of yuan gains has slowed over the past month and non-deliverable forwards show traders have pared expectations for the speed of the advance on speculation China is reducing the pace to protect exporters as economic growth cools. China last month set up an electronic network to monitor export income to stop currency speculators using bogus contracts to bypass investment rules.
China's record trade surplus and so-called ``hot money'' inflows betting on yuan appreciation have pushed the nation's foreign-currency reserves to $1.8 trillion, driving inflation to a 12-year high in February.
``We remain confident that it would be the wrong decision to close long yuan exposure at these levels,'' Thomas Stolper, a London-based strategist at the world's biggest securities firm by market value, wrote in a research note yesterday. ``The pace of reserve accumulation remains a serious issue.''
Cash inflows from the trade surplus and foreign direct investment suggests reserve accumulation runs at about $30 billion per month before additional speculative capital, according to the report, Goldman said.
`Little Choice'
``The central bank has little choice but to allow yuan appreciation as excessive liquidity in a pre-dominantly cash based economy could still lead to further inflationary pressures,'' wrote Claudio Piron and Yen Ping Ho, currency strategists at JPMorgan Chase & Co. in Singapore in a report today.
The yuan climbed 0.1 percent to 6.8482 per dollar as of 5:30 p.m. in Shanghai, from 6.8556 yesterday, according to China Foreign Exchange Trade System. The currency is more than 20 percent stronger than the 8.3 level it was pegged at until July 2005.
Non-deliverable forwards show an implied rate for the yuan of 6.6045 in the next 12 months, a gain of 3.7 percent from today's spot rate and compared with bets for a level of 6.4650 at the start of July. Forwards are agreements in which assets are bought and sold at current prices for future delivery.
The Politburo, the Communist Party's top decision-making body, dropped mention of ``tight'' monetary policy in a report on July 25 and said growth and inflation were both top priorities.
Speculative Capital
China's crackdown on ``hot money'' seems to be curbing inflows of speculative capital, enabling policy makers to slow the pace of yuan appreciation, Yu Yongding, a former adviser to the central bank, said in an interview last week.
More rigorous checks by the State Administration of Foreign Exchange, China's currency regulator, have started to control ``unwanted money'' flows, reducing the need for rapid yuan gains to quell inflation, Yu said.
Any slowdown in the yuan would be ``a rather unfortunate development as it would create incentives to worsen the imbalances'' in the economy, sacrificing domestic demand to further boost exports when the exact opposite is needed, Stolper said.
Guiding the Rate
The market's perception that growth without exports is difficult to achieve in China is unfounded, Stolper said.
The People's Bank of China guides the exchange rate against a basket of currencies including the yen and the euro. The yuan is allowed to trade by up to 0.5 percent against the dollar either side of a daily reference rate. The central bank set the rate weaker for a sixth day today at 6.8525.
On Goldman Sach's trade-weighted index the yuan ``is clearly still appreciating,'' Stolper said, strengthening 1 percent of a two-week period.
China's decision to raise tax rebates for textile exporters last week is seen as a measure to ``offset the worst side effects of an otherwise unchanged foreign-exchange stance,'' he said.
``By giving in to some pressures from the industries hardest hit, the overall currency policy of gradual yuan appreciation may actually be maintained more easily,'' Stolper wrote.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net;
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Shekel May Fall 7 Percent by Year-End, Citigroup Says
By Tal Barak
Aug. 6 (Bloomberg) -- The shekel may fall 7 percent against the dollar by year-end as Israel's economic growth slows, according to Citigroup Capital Markets Ltd.
The currency will slide to 3.80 per dollar, from about 3.55 today, Ali Al-Eyd, an economist in London at Citigroup, the world's third-largest currency trader, wrote in an e-mailed report today. Citigroup's year-end prediction was 3.60 per dollar as recently as July 10. The median of 12 analyst and strategist forecasts compiled by Bloomberg is for the shekel to end the year at 3.43 per dollar.
The shekel lost 6.3 percent against the dollar since the Bank of Israel said July 10 it will buy $100 million a day to limit currency gains that are hurting exports. The economy will grow 4.2 percent this year, the slowest pace since 2003, according to the central bank. The bank's state-of-the economy index fell in June for the first time in more than three years.
``The combination of weaker growth as well as recommitment to the foreign currency-repurchase program should help to maintain a weaker shekel going forward,'' Al-Eyd said in a telephone interview.
The shekel traded at 3.5380 per dollar as of 4:05 p.m. in Tel Aviv today, from 3.5475 yesterday. The currency was the worst performer against the dollar in July among 11 emerging- market counterparts, losing 4 percent.
Currency Purchases
The Bank of Israel plans to increase foreign-currency holdings to between $35 billion and $40 billion in the next two years, from $28 billion. Policy makers will decide whether to buy more dollars when the bank completes the purchase of $10 billion in two months, Haaretz newspaper cited Deputy Governor Zvi Eckstein as saying yesterday.
``Eckstein's comments point to a renewal of the foreign exchange-purchase program as a means to maintain the currency around current levels to the U.S. dollar,'' Al-Eyd wrote.
The Bank of Israel, led by Governor Stanley Fischer, raised its benchmark interest rate by a quarter-point to 4 percent on July 28, the third increase since May. Inflation has exceeded the government's 3 percent ceiling for seven months.
To contact the reporter on this story: Tal Barak in Tel Aviv at tbarak@bloomberg.net
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Aug. 6 (Bloomberg) -- The shekel may fall 7 percent against the dollar by year-end as Israel's economic growth slows, according to Citigroup Capital Markets Ltd.
The currency will slide to 3.80 per dollar, from about 3.55 today, Ali Al-Eyd, an economist in London at Citigroup, the world's third-largest currency trader, wrote in an e-mailed report today. Citigroup's year-end prediction was 3.60 per dollar as recently as July 10. The median of 12 analyst and strategist forecasts compiled by Bloomberg is for the shekel to end the year at 3.43 per dollar.
The shekel lost 6.3 percent against the dollar since the Bank of Israel said July 10 it will buy $100 million a day to limit currency gains that are hurting exports. The economy will grow 4.2 percent this year, the slowest pace since 2003, according to the central bank. The bank's state-of-the economy index fell in June for the first time in more than three years.
``The combination of weaker growth as well as recommitment to the foreign currency-repurchase program should help to maintain a weaker shekel going forward,'' Al-Eyd said in a telephone interview.
The shekel traded at 3.5380 per dollar as of 4:05 p.m. in Tel Aviv today, from 3.5475 yesterday. The currency was the worst performer against the dollar in July among 11 emerging- market counterparts, losing 4 percent.
Currency Purchases
The Bank of Israel plans to increase foreign-currency holdings to between $35 billion and $40 billion in the next two years, from $28 billion. Policy makers will decide whether to buy more dollars when the bank completes the purchase of $10 billion in two months, Haaretz newspaper cited Deputy Governor Zvi Eckstein as saying yesterday.
``Eckstein's comments point to a renewal of the foreign exchange-purchase program as a means to maintain the currency around current levels to the U.S. dollar,'' Al-Eyd wrote.
The Bank of Israel, led by Governor Stanley Fischer, raised its benchmark interest rate by a quarter-point to 4 percent on July 28, the third increase since May. Inflation has exceeded the government's 3 percent ceiling for seven months.
To contact the reporter on this story: Tal Barak in Tel Aviv at tbarak@bloomberg.net
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Asian Currencies: Philippine Peso Gains; Taiwan Dollar Weakens
By Aaron Pan and Karl Lester M. Yap
Aug. 6 (Bloomberg) -- The Philippine peso led gains in Asian currencies on speculation the central bank will raise borrowing costs and widen the interest-rate advantage over the U.S., making local assets more attractive.
The peso climbed to the highest in two months against the dollar after the Federal Reserve yesterday kept interest rates on hold and signaled it may delay increasing them until inflation slows. Taiwan's dollar fell for a seventh day, the longest losing streak in a year, on speculation economic growth will slow.
``Higher Philippine rates will lure funds looking for high- yield assets,'' said Catherine Tan, head of regional foreign exchange at IFR Markets in Singapore. ``The inflows will help boost the peso.''
The Philippine currency rose 0.7 percent to 43.82 per dollar as of the 4 p.m. close of trading in Manila, according to the Bankers Association of the Philippines. The currency touched 43.80, the strongest since June 4.
The Fed maintained its target rate for overnight loans between banks at 2 percent yesterday and said weak labor markets and tight credit conditions will likely weigh on economic growth.
The Philippine central bank raised the overnight borrowing rate by half a percentage point to 5.75 percent on July 17, increasing the advantage over the U.S. benchmark to 3.75 percent from 1 percent at the end of last year. Policy makers next meet to review rates on Aug. 28.
South Korea's won rose, snapping a three-day decline, on optimism demand for the nation's assets will increase as local stocks gain.
Two-Week Low
The won also climbed from a two-week low on speculation the authorities will buy the currency to cool inflation stoked by rising import prices. The benchmark Kospi index of local shares climbed 2.8 percent today, the biggest gain since July 21.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. ``The gains were supported by caution against intervention as well.''
The won rose 0.2 percent to 1,015.90 per dollar, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performer of the 10 most-active regional currencies outside of Japan.
Taiwan's dollar fell on speculation the island's economic growth will slow, deterring the central bank from raising interest rates.
Export Growth
The currency earlier declined the most in two months before a report tomorrow that may show export growth slowed in July. Overseas shipments are equivalent to about half of Taiwan's gross domestic product.
``People are focusing on weaker Asian growth,'' said Callum Henderson, head of currency strategy at Standard Chartered Plc in Singapore. ``The market got ahead of itself and I'd expect dollar-Taiwan to gradually grind higher from here.''
Taiwan's dollar fell 0.1 percent to NT$30.738 against the U.S. currency, after losing 1 percent in the previous six trading days, according to Taipei Forex Inc. It earlier lost as much as 0.4 percent.
Elsewhere, Malaysia's ringgit fell 0.2 percent to 3.2770 per dollar, Singapore's dollar was little changed at S$1.3783, Indonesia's rupiah gained 0.1 percent to 9,090, and the Thai baht added 0.1 percent to 33.59. Vietnam's dong advanced 0.5 percent to 16,600.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
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Aug. 6 (Bloomberg) -- The Philippine peso led gains in Asian currencies on speculation the central bank will raise borrowing costs and widen the interest-rate advantage over the U.S., making local assets more attractive.
The peso climbed to the highest in two months against the dollar after the Federal Reserve yesterday kept interest rates on hold and signaled it may delay increasing them until inflation slows. Taiwan's dollar fell for a seventh day, the longest losing streak in a year, on speculation economic growth will slow.
``Higher Philippine rates will lure funds looking for high- yield assets,'' said Catherine Tan, head of regional foreign exchange at IFR Markets in Singapore. ``The inflows will help boost the peso.''
The Philippine currency rose 0.7 percent to 43.82 per dollar as of the 4 p.m. close of trading in Manila, according to the Bankers Association of the Philippines. The currency touched 43.80, the strongest since June 4.
The Fed maintained its target rate for overnight loans between banks at 2 percent yesterday and said weak labor markets and tight credit conditions will likely weigh on economic growth.
The Philippine central bank raised the overnight borrowing rate by half a percentage point to 5.75 percent on July 17, increasing the advantage over the U.S. benchmark to 3.75 percent from 1 percent at the end of last year. Policy makers next meet to review rates on Aug. 28.
South Korea's won rose, snapping a three-day decline, on optimism demand for the nation's assets will increase as local stocks gain.
Two-Week Low
The won also climbed from a two-week low on speculation the authorities will buy the currency to cool inflation stoked by rising import prices. The benchmark Kospi index of local shares climbed 2.8 percent today, the biggest gain since July 21.
``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. ``The gains were supported by caution against intervention as well.''
The won rose 0.2 percent to 1,015.90 per dollar, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performer of the 10 most-active regional currencies outside of Japan.
Taiwan's dollar fell on speculation the island's economic growth will slow, deterring the central bank from raising interest rates.
Export Growth
The currency earlier declined the most in two months before a report tomorrow that may show export growth slowed in July. Overseas shipments are equivalent to about half of Taiwan's gross domestic product.
``People are focusing on weaker Asian growth,'' said Callum Henderson, head of currency strategy at Standard Chartered Plc in Singapore. ``The market got ahead of itself and I'd expect dollar-Taiwan to gradually grind higher from here.''
Taiwan's dollar fell 0.1 percent to NT$30.738 against the U.S. currency, after losing 1 percent in the previous six trading days, according to Taipei Forex Inc. It earlier lost as much as 0.4 percent.
Elsewhere, Malaysia's ringgit fell 0.2 percent to 3.2770 per dollar, Singapore's dollar was little changed at S$1.3783, Indonesia's rupiah gained 0.1 percent to 9,090, and the Thai baht added 0.1 percent to 33.59. Vietnam's dong advanced 0.5 percent to 16,600.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
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South African Rand Declines for Third Day as Strike Shuts Mines
By Garth Theunissen
Aug. 6 (Bloomberg) -- South Africa's rand fell for a third day against the dollar as the country's biggest labor federation began a nationwide strike to protest at higher power prices.
The drop pushed the rand to the lowest level in a week as the one-day action shut mines and factories in the country, reducing output from the world's biggest producer of precious metals. South Africa's currency also fell on speculation the country's importers are taking advantage of its advance to a six- month high on Aug. 4 to buy dollars.
``Almost two million workers are expected to strike and that has negative implications for domestic output,'' said Michael Keenan, a currency strategist in Johannesburg at Standard Bank Group Ltd. the continent's largest lender. ``Disruptions to production aren't good for the rand, especially given its weakness in the last few days.'' It may fall to 7.55 by next week, he predicted.
The rand dropped as much as 1 percent to 7.4558 per dollar and was at 7.4126 by 2:25 p.m. in Johannesburg, from 7.3808 yesterday. It also fell versus all its 16 major counterparts monitored by Bloomberg, losing 1 percent to 11.5158 per euro.
The Congress of South African Trade Unions, known as Cosatu, called a strike after the energy regulator allowed state-owned Eskom Holdings Ltd. to raise electricity prices 27.5 percent to fund a $44 billion expansion. The utility, which supplies 95 percent of South Africa's power, cut energy to mines and smelters for five days in January because of a lack of capacity.
Mines, Factories Shut
The strike shut operations at AngloGold Ashanti Ltd., the world's third-largest gold producer while Anglo American Plc, the biggest investor in South African mining, said 55 percent of workers stayed away from its nine coal mines.
Vehicle assembly and manufacturing plants run by Ford Motor Co., Volkswagen AG and Mercedes-Benz South Africa, a unit of Daimler AG, were also closed.
Cosatu says higher energy costs and power shortages will cut jobs in a nation where 23 percent of the workforce is unemployed.
The rand dropped 3 percent in the past three days, its longest losing run since June 12. That follows a seven-week rally that sent it almost 9 percent higher as the central bank raised the benchmark interest rate by a half-point in June to a five- year high of 12 percent.
``The rand hit a wall at about 7.20 per dollar and importers have been climbing in to buy foreign currency ever since,'' said Chris du Bois, chief dealer in Cape Town at Master Currency, which runs a chain of money changers. ``The rand has had a great run so guys tend to start taking profits at stronger levels.''
Government bonds declined, with the yield on the benchmark 13.5 percent security due September 2015 climbing 3 basis points to 9.31 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Aug. 6 (Bloomberg) -- South Africa's rand fell for a third day against the dollar as the country's biggest labor federation began a nationwide strike to protest at higher power prices.
The drop pushed the rand to the lowest level in a week as the one-day action shut mines and factories in the country, reducing output from the world's biggest producer of precious metals. South Africa's currency also fell on speculation the country's importers are taking advantage of its advance to a six- month high on Aug. 4 to buy dollars.
``Almost two million workers are expected to strike and that has negative implications for domestic output,'' said Michael Keenan, a currency strategist in Johannesburg at Standard Bank Group Ltd. the continent's largest lender. ``Disruptions to production aren't good for the rand, especially given its weakness in the last few days.'' It may fall to 7.55 by next week, he predicted.
The rand dropped as much as 1 percent to 7.4558 per dollar and was at 7.4126 by 2:25 p.m. in Johannesburg, from 7.3808 yesterday. It also fell versus all its 16 major counterparts monitored by Bloomberg, losing 1 percent to 11.5158 per euro.
The Congress of South African Trade Unions, known as Cosatu, called a strike after the energy regulator allowed state-owned Eskom Holdings Ltd. to raise electricity prices 27.5 percent to fund a $44 billion expansion. The utility, which supplies 95 percent of South Africa's power, cut energy to mines and smelters for five days in January because of a lack of capacity.
Mines, Factories Shut
The strike shut operations at AngloGold Ashanti Ltd., the world's third-largest gold producer while Anglo American Plc, the biggest investor in South African mining, said 55 percent of workers stayed away from its nine coal mines.
Vehicle assembly and manufacturing plants run by Ford Motor Co., Volkswagen AG and Mercedes-Benz South Africa, a unit of Daimler AG, were also closed.
Cosatu says higher energy costs and power shortages will cut jobs in a nation where 23 percent of the workforce is unemployed.
The rand dropped 3 percent in the past three days, its longest losing run since June 12. That follows a seven-week rally that sent it almost 9 percent higher as the central bank raised the benchmark interest rate by a half-point in June to a five- year high of 12 percent.
``The rand hit a wall at about 7.20 per dollar and importers have been climbing in to buy foreign currency ever since,'' said Chris du Bois, chief dealer in Cape Town at Master Currency, which runs a chain of money changers. ``The rand has had a great run so guys tend to start taking profits at stronger levels.''
Government bonds declined, with the yield on the benchmark 13.5 percent security due September 2015 climbing 3 basis points to 9.31 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Pound Drops, Gilts Advance as U.K. Consumer Confidence Tumbles
By Andrew MacAskill and Kim-Mai Cutler
Aug. 6 (Bloomberg) -- The pound fell against the euro and dollar after an industry survey showed U.K. consumer confidence dropped in July by the most in at least four years amid slumping house prices and accelerating inflation. Government bonds rose.
The currency slid for the fourth day in five versus the euro. An index of sentiment sank 11 points to 51, the biggest decline since the survey began in May 2004, mortgage-lender Nationwide Building Society said today. The Bank of England will keep its benchmark interest rate at 5 percent tomorrow, according to all 60 economists surveyed by Bloomberg News.
``You have the most exposed and overstretched consumer in the world,'' said John Hardy, the head of foreign-exchange strategy in London at Saxo Bank A/S, a Copenhagen-based bank specializing in currencies, stocks, bonds and derivatives. ``This is setting the U.K. up for a very hard landing.'' The pound is set for ``a big fall through to around $1.93,'' he said.
The British currency weakened to 79.24 pence as of 9:52 a.m. in London, from 79.06 pence yesterday. It traded at $1.9534, from $1.9547. The pound fell yesterday to $1.9521, the lowest level since June 18.
A separate report showed that the economy grew at the slowest pace in three years in the quarter through July, the National Institute of Economic & Social Research said. Policy makers have cut interest rate three times since November as growth sputtered.
The yield on the two-year government note dropped 5 basis points to 4.70 percent. The price of the 4.75 percent security due June 2010 rose 0.08, or 80 pence per 1,000-pound ($1,953) face amount, to 100.08. The 10-year yield fell 3 basis points to 4.73 percent. Yields move inversely to bond prices.
The pound has slipped 1.6 percent versus the dollar this year and 7.3 percent against the euro.
Britain's faltering economy will weaken the currency 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 4.87 percent, according to a separate survey.
To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net.
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Aug. 6 (Bloomberg) -- The pound fell against the euro and dollar after an industry survey showed U.K. consumer confidence dropped in July by the most in at least four years amid slumping house prices and accelerating inflation. Government bonds rose.
The currency slid for the fourth day in five versus the euro. An index of sentiment sank 11 points to 51, the biggest decline since the survey began in May 2004, mortgage-lender Nationwide Building Society said today. The Bank of England will keep its benchmark interest rate at 5 percent tomorrow, according to all 60 economists surveyed by Bloomberg News.
``You have the most exposed and overstretched consumer in the world,'' said John Hardy, the head of foreign-exchange strategy in London at Saxo Bank A/S, a Copenhagen-based bank specializing in currencies, stocks, bonds and derivatives. ``This is setting the U.K. up for a very hard landing.'' The pound is set for ``a big fall through to around $1.93,'' he said.
The British currency weakened to 79.24 pence as of 9:52 a.m. in London, from 79.06 pence yesterday. It traded at $1.9534, from $1.9547. The pound fell yesterday to $1.9521, the lowest level since June 18.
A separate report showed that the economy grew at the slowest pace in three years in the quarter through July, the National Institute of Economic & Social Research said. Policy makers have cut interest rate three times since November as growth sputtered.
The yield on the two-year government note dropped 5 basis points to 4.70 percent. The price of the 4.75 percent security due June 2010 rose 0.08, or 80 pence per 1,000-pound ($1,953) face amount, to 100.08. The 10-year yield fell 3 basis points to 4.73 percent. Yields move inversely to bond prices.
The pound has slipped 1.6 percent versus the dollar this year and 7.3 percent against the euro.
Britain's faltering economy will weaken the currency 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 4.87 percent, according to a separate survey.
To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net.
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Xstrata Says Supply Disruptions Support Nickel, Copper Prices
By Chanyaporn Chanjaroen
Aug. 6 (Bloomberg) -- Xstrata Plc, the world's fourth- largest copper and nickel producer, said supply disruptions will support prices for both metals this year by partly compensating for any weakening in demand.
Labor strikes, energy shortages and maintenance cut nickel supply by about 70,000 metric tons in the first half, Zug, Switzerland-based Xstrata said today in its earnings statement. That's more than all the nickel stockpiled in warehouses monitored by the London Metal Exchange.
Nickel has slumped 33 percent this year, the most of all the main industrial metals traded on the bourse. The metal accounted for 18 percent of Xstrata's sales last year. Demand from China, the world's largest consumer, will probably improve toward the end of this year, the company said.
There is a risk output may be suspended by some producers of nickel pig iron, used as an alternative to refined nickel in China, because of higher energy, raw material and transport costs, Xstrata said.
Demand for nickel among stainless-steel mills, the biggest users, is still weak in the U.S. and Europe, the company said. Usage in jet engines and wind turbines is ``robust,'' it said.
Supply of copper from mines is ``tight,'' obliging smelters to reduce processing fees as they compete for supply, Xstrata said. Copper has climbed 15 percent this year, reaching a record $8,940 a ton on July 2. The metal accounted for 45 percent of the Xstrata's sales last year.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net.
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Aug. 6 (Bloomberg) -- Xstrata Plc, the world's fourth- largest copper and nickel producer, said supply disruptions will support prices for both metals this year by partly compensating for any weakening in demand.
Labor strikes, energy shortages and maintenance cut nickel supply by about 70,000 metric tons in the first half, Zug, Switzerland-based Xstrata said today in its earnings statement. That's more than all the nickel stockpiled in warehouses monitored by the London Metal Exchange.
Nickel has slumped 33 percent this year, the most of all the main industrial metals traded on the bourse. The metal accounted for 18 percent of Xstrata's sales last year. Demand from China, the world's largest consumer, will probably improve toward the end of this year, the company said.
There is a risk output may be suspended by some producers of nickel pig iron, used as an alternative to refined nickel in China, because of higher energy, raw material and transport costs, Xstrata said.
Demand for nickel among stainless-steel mills, the biggest users, is still weak in the U.S. and Europe, the company said. Usage in jet engines and wind turbines is ``robust,'' it said.
Supply of copper from mines is ``tight,'' obliging smelters to reduce processing fees as they compete for supply, Xstrata said. Copper has climbed 15 percent this year, reaching a record $8,940 a ton on July 2. The metal accounted for 45 percent of the Xstrata's sales last year.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net.
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Coffee Falls in London on Brazilian Supply; Cocoa, Sugar Gain
By Rachel Graham
Aug. 6 (Bloomberg) -- Robusta coffee fell in London on speculation that exports from Brazil, the world's biggest grower, will accelerate. Cocoa and white sugar advanced.
Brazil will produce 51.1 million bags this year, 36 percent more than last year, because trees are in the higher-yielding part of a two-year cycle, the U.S. Department of Agriculture estimates. A bag of beans weighs 60 kilograms (132 pounds).
``Brazil is going to offer the most leverage in the next couple of weeks,'' Abah Ofon, an analyst with Standard Chartered Plc, said by phone from Dubai. ``There's quite a bit of supply in the market right now, we are looking for coffee prices to move moderately down.''
Robusta for September delivery fell $43, or 1.8 percent, to $2,381 a ton on the Liffe exchange in London. Prices have advanced 25 percent this year, extending four consecutive years of higher prices.
Global coffee production may rise 15 percent to a record 139.7 million bags in the year that begins Oct. 1 because of increased Brazilian and Vietnamese supply, German researcher F.O. Licht said July 8.
White, or refined, sugar for October delivery added $3.50, or 0.9 percent, to $390.50 a ton in London. Sugar has risen 24 percent this year, partly on speculation rising crude-oil prices will spur demand for cane-based ethanol.
``We remain bullish on sugar,'' Ofon said. ``We expect more cane to be used in ethanol.''
Brazil's sugar and ethanol industry association, or Unica, said last week it may spend more than $1 million to challenge a U.S. tax on imported ethanol at the World Trade Organization.
Cocoa for September delivery gained 21 pounds, or 1.4 percent, to 1,491 pounds ($2,913) a ton.
Crop diseases may cost Indonesian cocoa farmers an estimated 3.5 trillion rupiah ($388 million) this year in production losses. As much as 300,000 hectares (741,000 acres) of cocoa farms on Sulawesi island, which accounts for four-fifths of the country's production, are affected, said Bayu Krisnamurthi, a deputy to the Coordinating Ministry for Economic Affairs.
To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.
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Aug. 6 (Bloomberg) -- Robusta coffee fell in London on speculation that exports from Brazil, the world's biggest grower, will accelerate. Cocoa and white sugar advanced.
Brazil will produce 51.1 million bags this year, 36 percent more than last year, because trees are in the higher-yielding part of a two-year cycle, the U.S. Department of Agriculture estimates. A bag of beans weighs 60 kilograms (132 pounds).
``Brazil is going to offer the most leverage in the next couple of weeks,'' Abah Ofon, an analyst with Standard Chartered Plc, said by phone from Dubai. ``There's quite a bit of supply in the market right now, we are looking for coffee prices to move moderately down.''
Robusta for September delivery fell $43, or 1.8 percent, to $2,381 a ton on the Liffe exchange in London. Prices have advanced 25 percent this year, extending four consecutive years of higher prices.
Global coffee production may rise 15 percent to a record 139.7 million bags in the year that begins Oct. 1 because of increased Brazilian and Vietnamese supply, German researcher F.O. Licht said July 8.
White, or refined, sugar for October delivery added $3.50, or 0.9 percent, to $390.50 a ton in London. Sugar has risen 24 percent this year, partly on speculation rising crude-oil prices will spur demand for cane-based ethanol.
``We remain bullish on sugar,'' Ofon said. ``We expect more cane to be used in ethanol.''
Brazil's sugar and ethanol industry association, or Unica, said last week it may spend more than $1 million to challenge a U.S. tax on imported ethanol at the World Trade Organization.
Cocoa for September delivery gained 21 pounds, or 1.4 percent, to 1,491 pounds ($2,913) a ton.
Crop diseases may cost Indonesian cocoa farmers an estimated 3.5 trillion rupiah ($388 million) this year in production losses. As much as 300,000 hectares (741,000 acres) of cocoa farms on Sulawesi island, which accounts for four-fifths of the country's production, are affected, said Bayu Krisnamurthi, a deputy to the Coordinating Ministry for Economic Affairs.
To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.
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Gold, Platinum Advance in London After Xstrata's Bid for Lonmin
By Claudia Carpenter
Aug. 6 (Bloomberg) -- Gold and platinum advanced in London on speculation the $9.8 billion takeover offer of Lonmin Plc will spur consolidation of South African mines and limit supplies. Palladium rose the most in three months.
Xstrata Plc, the world's fourth-largest copper producer, bid for Lonmin to add mines in South Africa and diversify its metals output to include more platinum. South Africa is the world's second-biggest gold producer after China and largest miner of platinum used in jewelry and car parts.
``The supply story is an important issue for gold,'' said Eugen Weinberg, a commodity strategist at Commerzbank AG in Frankfurt. ``The market expects consolidation to continue in precious metals which is a positive factor for prices.''
Gold for immediate delivery advanced $10.25, or 1.2 percent, to $884.70 an ounce as of 11:34 a.m. in London, the first gain this month. The rally is probably more to do with the Lonmin bid than the drop in the dollar, Weinberg said. Gold has climbed 6.1 percent this year as declines in the dollar spurred investor demand for an alternative to the U.S. currency.
The metal has performed ``better than anything in our portfolio,'' Graham Birch, manager of the $13 billion BGF-World Mining Fund, said in an interview in London yesterday. ``Gold does what it always does, which is serve as a store of value.''
AngloGold Ashanti Ltd., South Africa's biggest gold producer, climbed 1.3 percent in Johannesburg trading and Gold Fields Ltd., the country's second-biggest, gained 1.7 percent. Johannesburg-based Anglo Platinum Ltd., the world's largest platinum producer, jumped 8.9 percent.
Gold Trust
Assets in the SPDR Gold Trust, the world's largest gold- backed fund, declined to 21.2 million ounces yesterday from 21.69 million the day before, according to the SPDR Web site. Gold prices yesterday dropped to the lowest since June 16.
South Africa was displaced last year as the world's biggest gold producer for the first time since 1904 as output fell 8.7 percent, London-based research company GFMS Ltd. said. Output in the country won't likely rise this year, Weinberg said.
Johannesburg-based AngloGold was among companies that shut South African plants as tens of thousands of workers went on strike over rising energy bills. ``All our shafts are unlikely to be operating today in South Africa,'' Alan Fine, spokesman for AngloGold, said today.
Average attendance at Gold Fields' Driefontein mine was 40 percent, spokesman Daniel Thole said.
``Wage increases and higher energy costs have brought the market price of aluminum and nickel close to their mining cost, a reason why many smelters are being closed,'' Shailendra Kumar, an analyst at Commodity Research Group in Mumbai, wrote in an e- mail. ``Gold may see the same sequence.''
Central Banks
European central banks are unlikely to increase gold sales this year after the Bundesbank held back on dumping the metal, London research company VM Group said in a report yesterday.
Platinum climbed $61.75, or 3.9 percent, to $1,635.75 an ounce, gaining for a second day.
Supplies of the metal will fall short of consumption by about 500,000 ounces this year because of increased demand from makers of auto catalysts, Xstrata said in the statement.
Catalytic converters used to control noxious fumes from vehicle exhausts accounted for 60 percent of total platinum demand last year, according to London-based catalytic converter manufacturer Johnson Matthey Plc.
The deficit last year was 480,000 ounces, the largest since 2002, Johnson Matthey said in May.
Silver climbed 22.01 cents to $16.68 an ounce and palladium jumped $16.50, or 4.6 percent, to $373.25 an ounce, the biggest advance since March 25.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Aug. 6 (Bloomberg) -- Gold and platinum advanced in London on speculation the $9.8 billion takeover offer of Lonmin Plc will spur consolidation of South African mines and limit supplies. Palladium rose the most in three months.
Xstrata Plc, the world's fourth-largest copper producer, bid for Lonmin to add mines in South Africa and diversify its metals output to include more platinum. South Africa is the world's second-biggest gold producer after China and largest miner of platinum used in jewelry and car parts.
``The supply story is an important issue for gold,'' said Eugen Weinberg, a commodity strategist at Commerzbank AG in Frankfurt. ``The market expects consolidation to continue in precious metals which is a positive factor for prices.''
Gold for immediate delivery advanced $10.25, or 1.2 percent, to $884.70 an ounce as of 11:34 a.m. in London, the first gain this month. The rally is probably more to do with the Lonmin bid than the drop in the dollar, Weinberg said. Gold has climbed 6.1 percent this year as declines in the dollar spurred investor demand for an alternative to the U.S. currency.
The metal has performed ``better than anything in our portfolio,'' Graham Birch, manager of the $13 billion BGF-World Mining Fund, said in an interview in London yesterday. ``Gold does what it always does, which is serve as a store of value.''
AngloGold Ashanti Ltd., South Africa's biggest gold producer, climbed 1.3 percent in Johannesburg trading and Gold Fields Ltd., the country's second-biggest, gained 1.7 percent. Johannesburg-based Anglo Platinum Ltd., the world's largest platinum producer, jumped 8.9 percent.
Gold Trust
Assets in the SPDR Gold Trust, the world's largest gold- backed fund, declined to 21.2 million ounces yesterday from 21.69 million the day before, according to the SPDR Web site. Gold prices yesterday dropped to the lowest since June 16.
South Africa was displaced last year as the world's biggest gold producer for the first time since 1904 as output fell 8.7 percent, London-based research company GFMS Ltd. said. Output in the country won't likely rise this year, Weinberg said.
Johannesburg-based AngloGold was among companies that shut South African plants as tens of thousands of workers went on strike over rising energy bills. ``All our shafts are unlikely to be operating today in South Africa,'' Alan Fine, spokesman for AngloGold, said today.
Average attendance at Gold Fields' Driefontein mine was 40 percent, spokesman Daniel Thole said.
``Wage increases and higher energy costs have brought the market price of aluminum and nickel close to their mining cost, a reason why many smelters are being closed,'' Shailendra Kumar, an analyst at Commodity Research Group in Mumbai, wrote in an e- mail. ``Gold may see the same sequence.''
Central Banks
European central banks are unlikely to increase gold sales this year after the Bundesbank held back on dumping the metal, London research company VM Group said in a report yesterday.
Platinum climbed $61.75, or 3.9 percent, to $1,635.75 an ounce, gaining for a second day.
Supplies of the metal will fall short of consumption by about 500,000 ounces this year because of increased demand from makers of auto catalysts, Xstrata said in the statement.
Catalytic converters used to control noxious fumes from vehicle exhausts accounted for 60 percent of total platinum demand last year, according to London-based catalytic converter manufacturer Johnson Matthey Plc.
The deficit last year was 480,000 ounces, the largest since 2002, Johnson Matthey said in May.
Silver climbed 22.01 cents to $16.68 an ounce and palladium jumped $16.50, or 4.6 percent, to $373.25 an ounce, the biggest advance since March 25.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Lead Advances in London Trading on Sign Stockpiles Will Shrink
By Chanyaporn Chanjaroen
Aug. 6 (Bloomberg) -- Lead rose the most in more than a week in London after the amount of stockpiled metal earmarked to leave warehouses jumped to a 22-month high, indicating a possible supply shortfall. Aluminum and copper also advanced.
So-called canceled lead warrants gained 2.7 percent to 10,525 metric tons at warehouses registered with the London Metal Exchange, the highest since Sept. 28, 2006. The market is shifting from a surplus into a deficit of 67,000 tons this quarter, according to Barclays Capital. That's equal to about 72 percent of existing LME-tracked stockpiles.
``A big jump in canceled warrants suggested we're going to see stockpiles declining,'' Gayle Berry, an analyst at Barclays Capital in London, said today by phone. Lower-than-expected output in China, the world's largest producer of the metal, will curb supply of the metal, she said.
Lead for delivery in three months added $75, or 3.7 percent, to $2,090 a ton as of 12:39 p.m. in London. The contract rose 1 percent yesterday, while the LME index tracking all industrial metals gained less than 0.1 percent.
Lead has declined 18 percent this year, the second-worst loser on the LME after nickel. Chinese prices are about $600 to $700 a ton more expensive than international prices, an incentive for increased imports of the metal into the world's largest consumers of the commodity, Berry said.
Open interest, or outstanding contracts, in lead futures has jumped 29 percent since the end of June, to 95,683 contracts, the highest since records began in 2005. Expanding open interest as prices gain suggests investors and traders are taking a net long position, or a bet prices will rise further.
Supply Disruptions
Xstrata Plc, the world's fourth-largest copper and nickel producer, said supply disruptions will support prices for both metals this year by partly compensating for any weakening in demand.
Labor strikes, energy shortages and maintenance cut nickel supply by about 70,000 tons in the first half, Zug, Switzerland- based Xstrata said today in its earnings statement. That's more than all the nickel held in warehouses monitored by the LME.
Copper rose $55, or 0.7 percent, to $7,680 a ton. LME stockpiles gained 1.1 percent to 150,325 tons. Including those tracked by exchanges in New York and Shanghai, they totaled 192,698 tons, or 3.8 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Nickel lost $100 to $17,500 a ton.
Aluminum rose $23, or 0.8 percent, to $2,923 a ton. China's biggest aluminum smelters have cut more than 10 percent of capacity because of a power shortage and weak export demand, said Wen Xianjun, deputy chairman of the China Nonferrous Metal Industry Association.
Among other LME-traded metals, tin increased $325 to $20,425 a ton. Zinc added $6 to $1,752.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Lead rose the most in more than a week in London after the amount of stockpiled metal earmarked to leave warehouses jumped to a 22-month high, indicating a possible supply shortfall. Aluminum and copper also advanced.
So-called canceled lead warrants gained 2.7 percent to 10,525 metric tons at warehouses registered with the London Metal Exchange, the highest since Sept. 28, 2006. The market is shifting from a surplus into a deficit of 67,000 tons this quarter, according to Barclays Capital. That's equal to about 72 percent of existing LME-tracked stockpiles.
``A big jump in canceled warrants suggested we're going to see stockpiles declining,'' Gayle Berry, an analyst at Barclays Capital in London, said today by phone. Lower-than-expected output in China, the world's largest producer of the metal, will curb supply of the metal, she said.
Lead for delivery in three months added $75, or 3.7 percent, to $2,090 a ton as of 12:39 p.m. in London. The contract rose 1 percent yesterday, while the LME index tracking all industrial metals gained less than 0.1 percent.
Lead has declined 18 percent this year, the second-worst loser on the LME after nickel. Chinese prices are about $600 to $700 a ton more expensive than international prices, an incentive for increased imports of the metal into the world's largest consumers of the commodity, Berry said.
Open interest, or outstanding contracts, in lead futures has jumped 29 percent since the end of June, to 95,683 contracts, the highest since records began in 2005. Expanding open interest as prices gain suggests investors and traders are taking a net long position, or a bet prices will rise further.
Supply Disruptions
Xstrata Plc, the world's fourth-largest copper and nickel producer, said supply disruptions will support prices for both metals this year by partly compensating for any weakening in demand.
Labor strikes, energy shortages and maintenance cut nickel supply by about 70,000 tons in the first half, Zug, Switzerland- based Xstrata said today in its earnings statement. That's more than all the nickel held in warehouses monitored by the LME.
Copper rose $55, or 0.7 percent, to $7,680 a ton. LME stockpiles gained 1.1 percent to 150,325 tons. Including those tracked by exchanges in New York and Shanghai, they totaled 192,698 tons, or 3.8 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Nickel lost $100 to $17,500 a ton.
Aluminum rose $23, or 0.8 percent, to $2,923 a ton. China's biggest aluminum smelters have cut more than 10 percent of capacity because of a power shortage and weak export demand, said Wen Xianjun, deputy chairman of the China Nonferrous Metal Industry Association.
Among other LME-traded metals, tin increased $325 to $20,425 a ton. Zinc added $6 to $1,752.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Philippine Stocks Climb Most in a Year; Globe, PLDT Advance
By Ian C. Sayson
Aug. 6 (Bloomberg) -- Philippine stocks rose, sending the main index to its biggest gain in a year after Globe Telecom Inc. increased dividend payments and Philippine Long Distance Telephone Co. reported higher income.
SM Investments Corp., the nation's second-biggest company by value, and Bank of the Philippine Islands, the largest local bank by value, also climbed, gaining after central bank Deputy Governor Diwa Guinigundo said a widening gap between U.S. and Philippine benchmark interest rates may attract portfolio investments into the Southeast Asian nation.
``Globe and PLDT show the attraction and resiliency of some Philippine companies amidst a tough inflation environment,'' said Patrick Manaloto, who helps oversee $6.7 billion at BPI Asset Management Inc. in Manila. ``Some expect funds will flow into markets or assets that can provide better returns.''
Globe Telecom climbed the most in a year after the nation's second-biggest mobile-phone services company said it will pay a special dividend. Philippine Long Distance, also known as PLDT, rose to a two-month high after reporting a 13 percent growth in six-month profit and that it will buy 2 million more of its own shares.
The Philippine Stock Exchange Index increased 94.83, or 3.6 percent, to 2,697.21 at the close in Manila, with more than five gainers for each stock that fell on the exchange. It is the sharpest advance since Aug. 21, 2007, for the benchmark, which slumped 25 percent this year on concern record oil prices and a U.S. recession will erode profit and weaken consumer spending.
Globe Telecom climbed 7.9 percent to 1,225 pesos, its biggest gain since Aug. 21, after the company said it will pay 11.6 billion pesos ($265 million) in regular and special dividends next month. PLDT rose 1.8 percent to 2,570 pesos, its highest close since June 3.
SM Investments
SM Investments, which has holdings in banks, shopping malls and property development, added 7.1 percent to 300 pesos, its biggest gain since Aug. 21. Bank of the Philippine Islands, the biggest contributor to the Financials Index's rise, added 6 percent to 44 pesos, its sharpest advance since July 30.
Guinigundo said foreign capital may flow into the Philippines after the U.S. Federal Reserve kept its benchmark interest rate at 2 percent yesterday. The Philippine central bank has raised interest rates twice since June.
``The market's biggest companies and stocks that are most liquid stand to benefit from a stronger inflow of investment funds,'' Manaloto said.
The following stocks rose in the stock market today. Stocks symbols are in brackets after company names.
Builders: Ayala Land Inc. (ALI PM), the largest local builder, added 50 centavos, or 4.9 percent, to 10.75 pesos, its sharpest advance since May 14 on speculation inflation will cool and ease pressure for the central bank to raise interest rates after oil fell to a three-month low.
Shang Properties Inc. (SHNG PM), which has investments in real estate including the Shangri-La Hotel and Plaza Mall in Manila, jumped 40 centavos, or 29 percent, to 1.76 pesos, the second-biggest gainer by percentage in the stock market today. SM Prime Holdings Inc. (SMPH PM), the nation's largest shopping mall builder, climbed 60 centavos, or 8.2 percent, to 7.90 pesos, the most since October 2007.
Ayala Corp. (AC PM), which owns 30.5 percent of Globe Telecom, gained 17.50 pesos, or 5.9 percent, to 315 pesos, a two- month high on expectation that dividend payments from its mobile phone unit will boost earnings. Ayala will get a 3.53 billion peso dividend from Globe next month.
First Gen Corp. (FGEN PM), the nation's biggest non-state power producer, added 2 pesos, or 7.1 percent, to 30 pesos, its highest close since June 18, on speculation a stronger peso will make it easier to pay its overseas debt. The peso rose to a two- month high earlier today.
Philex Mining Corp. (PX PM), the nation's largest metal producer by value, gained 20 centavos, or 2.9 percent, to 7 pesos, its first advance in seven days. The company said it has been authorized by its board to buy back another 10 percent of its own shares. The number of Philex shares that traded today were more than twice the six-month daily average.
To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- Philippine stocks rose, sending the main index to its biggest gain in a year after Globe Telecom Inc. increased dividend payments and Philippine Long Distance Telephone Co. reported higher income.
SM Investments Corp., the nation's second-biggest company by value, and Bank of the Philippine Islands, the largest local bank by value, also climbed, gaining after central bank Deputy Governor Diwa Guinigundo said a widening gap between U.S. and Philippine benchmark interest rates may attract portfolio investments into the Southeast Asian nation.
``Globe and PLDT show the attraction and resiliency of some Philippine companies amidst a tough inflation environment,'' said Patrick Manaloto, who helps oversee $6.7 billion at BPI Asset Management Inc. in Manila. ``Some expect funds will flow into markets or assets that can provide better returns.''
Globe Telecom climbed the most in a year after the nation's second-biggest mobile-phone services company said it will pay a special dividend. Philippine Long Distance, also known as PLDT, rose to a two-month high after reporting a 13 percent growth in six-month profit and that it will buy 2 million more of its own shares.
The Philippine Stock Exchange Index increased 94.83, or 3.6 percent, to 2,697.21 at the close in Manila, with more than five gainers for each stock that fell on the exchange. It is the sharpest advance since Aug. 21, 2007, for the benchmark, which slumped 25 percent this year on concern record oil prices and a U.S. recession will erode profit and weaken consumer spending.
Globe Telecom climbed 7.9 percent to 1,225 pesos, its biggest gain since Aug. 21, after the company said it will pay 11.6 billion pesos ($265 million) in regular and special dividends next month. PLDT rose 1.8 percent to 2,570 pesos, its highest close since June 3.
SM Investments
SM Investments, which has holdings in banks, shopping malls and property development, added 7.1 percent to 300 pesos, its biggest gain since Aug. 21. Bank of the Philippine Islands, the biggest contributor to the Financials Index's rise, added 6 percent to 44 pesos, its sharpest advance since July 30.
Guinigundo said foreign capital may flow into the Philippines after the U.S. Federal Reserve kept its benchmark interest rate at 2 percent yesterday. The Philippine central bank has raised interest rates twice since June.
``The market's biggest companies and stocks that are most liquid stand to benefit from a stronger inflow of investment funds,'' Manaloto said.
The following stocks rose in the stock market today. Stocks symbols are in brackets after company names.
Builders: Ayala Land Inc. (ALI PM), the largest local builder, added 50 centavos, or 4.9 percent, to 10.75 pesos, its sharpest advance since May 14 on speculation inflation will cool and ease pressure for the central bank to raise interest rates after oil fell to a three-month low.
Shang Properties Inc. (SHNG PM), which has investments in real estate including the Shangri-La Hotel and Plaza Mall in Manila, jumped 40 centavos, or 29 percent, to 1.76 pesos, the second-biggest gainer by percentage in the stock market today. SM Prime Holdings Inc. (SMPH PM), the nation's largest shopping mall builder, climbed 60 centavos, or 8.2 percent, to 7.90 pesos, the most since October 2007.
Ayala Corp. (AC PM), which owns 30.5 percent of Globe Telecom, gained 17.50 pesos, or 5.9 percent, to 315 pesos, a two- month high on expectation that dividend payments from its mobile phone unit will boost earnings. Ayala will get a 3.53 billion peso dividend from Globe next month.
First Gen Corp. (FGEN PM), the nation's biggest non-state power producer, added 2 pesos, or 7.1 percent, to 30 pesos, its highest close since June 18, on speculation a stronger peso will make it easier to pay its overseas debt. The peso rose to a two- month high earlier today.
Philex Mining Corp. (PX PM), the nation's largest metal producer by value, gained 20 centavos, or 2.9 percent, to 7 pesos, its first advance in seven days. The company said it has been authorized by its board to buy back another 10 percent of its own shares. The number of Philex shares that traded today were more than twice the six-month daily average.
To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net.
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Asian Stocks Gain Most Since April; Toyota, Samsung Advance
By Chua Kong Ho and Shani Raja
Enlarge Image/Details
Aug. 6 (Bloomberg) -- Asian stocks rallied the most in more than three months, led by automakers and electronics manufacturers, on speculation lower oil will slow inflation and spur consumer spending.
Toyota Motor Corp., Japan's largest automaker, and Samsung Electronics Co. gained after crude fell for a third day and the Federal Reserve left U.S. interest rates unchanged, saying price gains will ease. Sony Corp. advanced the most in two weeks after saying it will buy Bertelsmann AG's share of their music venture. Commonwealth Bank of Australia led financial companies higher. Hong Kong's market is shut because of a typhoon.
``Stocks should react favorably to the increasingly dovish monetary policy stances by central bankers around the world,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Oil prices are in retreat and the risk of inflation is dissipating.''
The MSCI Asia-Pacific Index added 1.9 percent to 129.63 as of 7:07 p.m. in Tokyo, the biggest increase since April 21. About six stocks rose for each that fell, and all but one of the index's 10 industry groups advanced. The Philippine Stock Exchange Index climbed 3.6 percent, the region's biggest gain.
Japan's Nikkei 225 Stock Average added 2.6 percent to 13,254.89. Sanyo Electric Co., Japan's third-largest solar-cell maker, surged the most in four months after forecasting it will double its global market share by 2020. All markets in Asia open for trading rallied, apart from Pakistan.
U.S. Stocks
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the central bank forecast that inflation will ease through next year. S&P 500 index futures fell less than 0.1 percent today.
Toyota, which counts North America as its largest market, added 3.1 percent to 4,640 yen. Samsung Electronics, the world's biggest computer-memory maker, climbed 3.5 percent to 587,000 won, while Taiwan Semiconductor Manufacturing Co., the largest custom- chip maker, advanced 6.1 percent to NT$58.80.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, jumped the most since March 2006 after the Reserve Bank of Australia yesterday signaled it may begin to cut borrowing costs. The stock gained 6.9 percent to A$3.43.
David Jones Ltd., Australia's second-largest department store chain, gained 7.5 percent to A$3.75.
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
`Big Relief'
Commonwealth Bank, Australia's biggest mortgage lender, advanced 6.3 percent to A$43.85, the most since March 25. Westpac Banking Corp., the nation's third-largest bank by market value, added 5.3 percent to A$22.99, the highest since May 30.
Oil dropped for a third day, by 41 cents to $119.58 a barrel at 4:58 p.m. Tokyo time. Yesterday, futures fell $2.81 a barrel on speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 on July 11.
Korean Air Lines Co., South Korea's largest carrier, climbed 7.8 percent to 46,100 won, on speculation fuel costs will drop. Air China Ltd., Beijing's biggest airline, rose 1.6 percent to 9.92 yuan.
Surging fuel costs triggered Cathay Pacific Airways Ltd.'s first half-year loss in five years, the company said today. Asia's third-biggest carrier by market came up short by HK$663 million ($85 million), compared with analysts' estimates for a profit. The shares didn't trade today because of the typhoon in Hong Kong.
``A halt in crude price gains is a big relief for investors,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
Philippine Stocks Rise
Sony rose 5.7 percent to 4,290 yen, the most since May 15, after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Sanyo Electric jumped 10 percent to 228 yen, the most since April 2, after forecasting its share of the solar-battery market will climb to 10 percent by 2020, from 4 percent in the year ended March 31.
Tomy Co. added 4.9 percent to 707 yen, the biggest advance since Feb. 14, after the Japanese toymaker yesterday almost tripled its net income outlook for the six months ending Sept. 30. The popularity of Transformers, made into a movie by Steven Spielberg's DreamWorks SKG last year, boosted sales of character goods and royalty income, a company spokeswoman said.
Globe Telecom
Globe Telecom Inc., the second-largest mobile-phone operator in the Philippines, jumped 7.9 percent to 1,225 pesos, the most since Aug. 21, after the company said it will increase dividend payments. Philippine Long Distance Telephone Co., the nation's biggest stock by market value, gained 1.8 percent to 2,570 pesos, the highest since June 3.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, fell 1.2 percent to 904 yen, heading for the lowest since April 1. First-quarter profit dropped 66 percent to 51.2 billion yen ($473 million), the company said. That trailed the average estimate of 127.8 billion yen in a Bloomberg News survey of analysts.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
Read more...
Enlarge Image/Details
Aug. 6 (Bloomberg) -- Asian stocks rallied the most in more than three months, led by automakers and electronics manufacturers, on speculation lower oil will slow inflation and spur consumer spending.
Toyota Motor Corp., Japan's largest automaker, and Samsung Electronics Co. gained after crude fell for a third day and the Federal Reserve left U.S. interest rates unchanged, saying price gains will ease. Sony Corp. advanced the most in two weeks after saying it will buy Bertelsmann AG's share of their music venture. Commonwealth Bank of Australia led financial companies higher. Hong Kong's market is shut because of a typhoon.
``Stocks should react favorably to the increasingly dovish monetary policy stances by central bankers around the world,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Oil prices are in retreat and the risk of inflation is dissipating.''
The MSCI Asia-Pacific Index added 1.9 percent to 129.63 as of 7:07 p.m. in Tokyo, the biggest increase since April 21. About six stocks rose for each that fell, and all but one of the index's 10 industry groups advanced. The Philippine Stock Exchange Index climbed 3.6 percent, the region's biggest gain.
Japan's Nikkei 225 Stock Average added 2.6 percent to 13,254.89. Sanyo Electric Co., Japan's third-largest solar-cell maker, surged the most in four months after forecasting it will double its global market share by 2020. All markets in Asia open for trading rallied, apart from Pakistan.
U.S. Stocks
U.S. stocks rallied the most since April, sending the Standard & Poor's 500 Index to a 2.9 percent gain, as oil fell and the central bank forecast that inflation will ease through next year. S&P 500 index futures fell less than 0.1 percent today.
Toyota, which counts North America as its largest market, added 3.1 percent to 4,640 yen. Samsung Electronics, the world's biggest computer-memory maker, climbed 3.5 percent to 587,000 won, while Taiwan Semiconductor Manufacturing Co., the largest custom- chip maker, advanced 6.1 percent to NT$58.80.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, jumped the most since March 2006 after the Reserve Bank of Australia yesterday signaled it may begin to cut borrowing costs. The stock gained 6.9 percent to A$3.43.
David Jones Ltd., Australia's second-largest department store chain, gained 7.5 percent to A$3.75.
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on interest rates.
`Big Relief'
Commonwealth Bank, Australia's biggest mortgage lender, advanced 6.3 percent to A$43.85, the most since March 25. Westpac Banking Corp., the nation's third-largest bank by market value, added 5.3 percent to A$22.99, the highest since May 30.
Oil dropped for a third day, by 41 cents to $119.58 a barrel at 4:58 p.m. Tokyo time. Yesterday, futures fell $2.81 a barrel on speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 on July 11.
Korean Air Lines Co., South Korea's largest carrier, climbed 7.8 percent to 46,100 won, on speculation fuel costs will drop. Air China Ltd., Beijing's biggest airline, rose 1.6 percent to 9.92 yuan.
Surging fuel costs triggered Cathay Pacific Airways Ltd.'s first half-year loss in five years, the company said today. Asia's third-biggest carrier by market came up short by HK$663 million ($85 million), compared with analysts' estimates for a profit. The shares didn't trade today because of the typhoon in Hong Kong.
``A halt in crude price gains is a big relief for investors,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
Philippine Stocks Rise
Sony rose 5.7 percent to 4,290 yen, the most since May 15, after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Sanyo Electric jumped 10 percent to 228 yen, the most since April 2, after forecasting its share of the solar-battery market will climb to 10 percent by 2020, from 4 percent in the year ended March 31.
Tomy Co. added 4.9 percent to 707 yen, the biggest advance since Feb. 14, after the Japanese toymaker yesterday almost tripled its net income outlook for the six months ending Sept. 30. The popularity of Transformers, made into a movie by Steven Spielberg's DreamWorks SKG last year, boosted sales of character goods and royalty income, a company spokeswoman said.
Globe Telecom
Globe Telecom Inc., the second-largest mobile-phone operator in the Philippines, jumped 7.9 percent to 1,225 pesos, the most since Aug. 21, after the company said it will increase dividend payments. Philippine Long Distance Telephone Co., the nation's biggest stock by market value, gained 1.8 percent to 2,570 pesos, the highest since June 3.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, fell 1.2 percent to 904 yen, heading for the lowest since April 1. First-quarter profit dropped 66 percent to 51.2 billion yen ($473 million), the company said. That trailed the average estimate of 127.8 billion yen in a Bloomberg News survey of analysts.
To contact the reporter for this story: Chua Kong Ho at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net
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India Stocks Rise to Seven-Week High as Inflation Concern Eases
By Pooja Thakur
Aug. 6 (Bloomberg) -- Indian stocks rose to the highest in seven weeks, led by banks and automakers, as falling oil prices spurred optimism that inflation will ease and boost consumer spending.
ICICI Bank Ltd., the country's second-largest lender by assets, climbed to a two-week high, while HDFC Bank Ltd., the third-biggest, jumped to its highest since June 2. Maruti Suzuki India Ltd., the nation's largest carmaker, rose to its highest in more than a month.
``Investors are betting rates may have peaked in India on optimism inflation will decline after the fall in commodity prices,'' said Ajay Argal, who helps manage about $9.2 billion in assets at Birla Sun Life Asset Management Co. in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 314.71, or 2.1 percent, to 15,275.78 as of 12:25 p.m. local time, headed for its highest close since June 18. The S&P CNX Nifty Index on the National Stock Exchange climbed 71.15, or 1.6 percent, to 4,574.
The Sensitive index has fallen 25 percent this year as interest rates at a seven-year high slowed economic growth and inflation at a 13-year high eroded spending by consumers and companies.
Oil dropped for a third day, falling as much as 0.9 percent to $118.10, amid speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11. The U.S. Federal Reserve yesterday forecast inflation to ease through next year as it left its benchmark interest rate unchanged.
``The Fed move to hold interest rates and a drop in oil and commodity prices have acted as a positive trigger for markets globally including India,'' Birla Sun Life's Argal said.
ICICI, Maruti
ICICI added 5.6 percent to 732.75 rupees. A close at that level would be the highest since July 23. HDFC Bank Ltd., India's third-biggest lender, surged 7.2 percent to 1,269.90 rupees, the highest since June 2.
Maruti rose 7.1 percent to 657.5 rupees, set to close at its highest since June 26. Tata Motors Ltd., India's largest truck and bus maker, climbed 5 percent to 429.25 rupees.
Overseas investors sold a net 3.42 billion rupees ($81 million) of Indian equities on Aug. 1, boosting their net outflow this year from stocks to $6.7 billion, according to the nation's stock market regulator.
To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net;
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Aug. 6 (Bloomberg) -- Indian stocks rose to the highest in seven weeks, led by banks and automakers, as falling oil prices spurred optimism that inflation will ease and boost consumer spending.
ICICI Bank Ltd., the country's second-largest lender by assets, climbed to a two-week high, while HDFC Bank Ltd., the third-biggest, jumped to its highest since June 2. Maruti Suzuki India Ltd., the nation's largest carmaker, rose to its highest in more than a month.
``Investors are betting rates may have peaked in India on optimism inflation will decline after the fall in commodity prices,'' said Ajay Argal, who helps manage about $9.2 billion in assets at Birla Sun Life Asset Management Co. in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 314.71, or 2.1 percent, to 15,275.78 as of 12:25 p.m. local time, headed for its highest close since June 18. The S&P CNX Nifty Index on the National Stock Exchange climbed 71.15, or 1.6 percent, to 4,574.
The Sensitive index has fallen 25 percent this year as interest rates at a seven-year high slowed economic growth and inflation at a 13-year high eroded spending by consumers and companies.
Oil dropped for a third day, falling as much as 0.9 percent to $118.10, amid speculation demand will be reduced by economic slowdowns in the U.S. and Europe. Oil has lost more than $28 since touching a record $147.27 a barrel on July 11. The U.S. Federal Reserve yesterday forecast inflation to ease through next year as it left its benchmark interest rate unchanged.
``The Fed move to hold interest rates and a drop in oil and commodity prices have acted as a positive trigger for markets globally including India,'' Birla Sun Life's Argal said.
ICICI, Maruti
ICICI added 5.6 percent to 732.75 rupees. A close at that level would be the highest since July 23. HDFC Bank Ltd., India's third-biggest lender, surged 7.2 percent to 1,269.90 rupees, the highest since June 2.
Maruti rose 7.1 percent to 657.5 rupees, set to close at its highest since June 26. Tata Motors Ltd., India's largest truck and bus maker, climbed 5 percent to 429.25 rupees.
Overseas investors sold a net 3.42 billion rupees ($81 million) of Indian equities on Aug. 1, boosting their net outflow this year from stocks to $6.7 billion, according to the nation's stock market regulator.
To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net;
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Japan Stocks Rise as Inflation Concerns Ease; Mazda, Canon Gain
By Masaki Kondo
Aug. 6 (Bloomberg) -- Japan's stocks rose the most in two weeks as falling oil prices lifted expectations production costs will ease and spending will rebound.
Mazda Motor Corp., a third owned by Ford Motor Co., led carmakers to their biggest jump in two weeks, while Bridgestone Corp., the world's biggest tiremaker, soared the most in four months after oil sank for a third day. Canon Inc., the world's biggest maker of digital cameras, jumped on speculation lower energy costs will boost consumer spending power.
``Investors were caught by fear crude would keep rising endlessly,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which manages about $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
The Nikkei 225 Stock Average climbed 340.23, or 2.6 percent, to close at 13,254.89 in Tokyo, breaking a three-day slide. The broader Topix index added 29.56, or 2.4 percent, to 1,277.27. Both gauges rose the most since July 22.
Crude prices, which have risen 64 percent in the past 12 months and spurred the fastest inflation in a decade in Japan, lost 1.8 percent to $119.17 a barrel yesterday, the lowest since May 5. Rising costs and weakening demand have dented corporate profits and caused production, household spending and exports to fall in June.
Yesterday, the Federal Reserve said it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. The Fed's comments sent U.S. stocks to their biggest rally since April.
Mazda, Japan's fourth-largest automaker, surged 7.2 percent to 594 yen, the biggest jump since June 4, while Fuji Heavy Industries Ltd. soared 6.9 percent to 572 yen, breaking a four- day skid. Automakers as a group rose the most since July 24.
Tires, Games
Bridgestone surged a second day, rising 6.8 percent to 1,832 yen, the sharpest gain since April 2. Rival Sumitomo Rubber Industries Inc. jumped 6.3 percent to 873 yen.
The drop in oil gave a gauge of tiremakers its biggest jump since Jan. 25, making it the biggest winner among 33 Topix groups. About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association.
Canon rose 5 percent to 5,090 yen. Sony Corp., maker of the PlayStation 3 game machine, added 5.7 percent to 4,290 yen, the biggest gain since May 15. Sony also rose after saying it will buy out Bertelsmann AG's stake in Sony BMG Music Entertainment to get full control of the recording company. Electronics makers contributed the most to the Topix's advance.
Freed From Fuel
``There are increasing expectations the decline in crude will free up consumers to spend more on other products rather than fuel,'' said Masaru Hamasaki, a senior strategist in Tokyo at Toyota Asset Management Co., which manages the equivalent of $3.3 billion.
Sanyo Electric Co., Japan's third-biggest solar-cell maker, jumped 10 percent to 228 yen, after having lost 16 percent in the previous four days. The company yesterday forecast its global market share in solar batteries will more than double by 2020.
NGK Insulators Ltd. which makes parts used in wind power, soared 8.3 percent to 1,540 yen, while GS Yuasa Corp., a maker of batteries for electric cars, gained 8.9 percent to 516 yen. NGK and GS Yuasa had fallen 20 percent and 14 percent respectively in the five days through yesterday.
Nikkei futures expiring in September added 2.4 percent to 13,230 in Osaka and gained 2.5 percent to 13,250 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Read more...
Aug. 6 (Bloomberg) -- Japan's stocks rose the most in two weeks as falling oil prices lifted expectations production costs will ease and spending will rebound.
Mazda Motor Corp., a third owned by Ford Motor Co., led carmakers to their biggest jump in two weeks, while Bridgestone Corp., the world's biggest tiremaker, soared the most in four months after oil sank for a third day. Canon Inc., the world's biggest maker of digital cameras, jumped on speculation lower energy costs will boost consumer spending power.
``Investors were caught by fear crude would keep rising endlessly,'' said Kenji Sekiguchi, general manager of strategic research and investment at Mitsubishi UFJ Asset Management Co., which manages about $61 billion. ``If oil stays at current levels, it will no longer be among the uncertainties we are facing.''
The Nikkei 225 Stock Average climbed 340.23, or 2.6 percent, to close at 13,254.89 in Tokyo, breaking a three-day slide. The broader Topix index added 29.56, or 2.4 percent, to 1,277.27. Both gauges rose the most since July 22.
Crude prices, which have risen 64 percent in the past 12 months and spurred the fastest inflation in a decade in Japan, lost 1.8 percent to $119.17 a barrel yesterday, the lowest since May 5. Rising costs and weakening demand have dented corporate profits and caused production, household spending and exports to fall in June.
Yesterday, the Federal Reserve said it ``expects inflation to moderate'' from later this year and left the benchmark interest rate unchanged. The Fed's comments sent U.S. stocks to their biggest rally since April.
Mazda, Japan's fourth-largest automaker, surged 7.2 percent to 594 yen, the biggest jump since June 4, while Fuji Heavy Industries Ltd. soared 6.9 percent to 572 yen, breaking a four- day skid. Automakers as a group rose the most since July 24.
Tires, Games
Bridgestone surged a second day, rising 6.8 percent to 1,832 yen, the sharpest gain since April 2. Rival Sumitomo Rubber Industries Inc. jumped 6.3 percent to 873 yen.
The drop in oil gave a gauge of tiremakers its biggest jump since Jan. 25, making it the biggest winner among 33 Topix groups. About seven gallons of oil are needed to make a standard car tire, according to the Rubber Manufacturers Association.
Canon rose 5 percent to 5,090 yen. Sony Corp., maker of the PlayStation 3 game machine, added 5.7 percent to 4,290 yen, the biggest gain since May 15. Sony also rose after saying it will buy out Bertelsmann AG's stake in Sony BMG Music Entertainment to get full control of the recording company. Electronics makers contributed the most to the Topix's advance.
Freed From Fuel
``There are increasing expectations the decline in crude will free up consumers to spend more on other products rather than fuel,'' said Masaru Hamasaki, a senior strategist in Tokyo at Toyota Asset Management Co., which manages the equivalent of $3.3 billion.
Sanyo Electric Co., Japan's third-biggest solar-cell maker, jumped 10 percent to 228 yen, after having lost 16 percent in the previous four days. The company yesterday forecast its global market share in solar batteries will more than double by 2020.
NGK Insulators Ltd. which makes parts used in wind power, soared 8.3 percent to 1,540 yen, while GS Yuasa Corp., a maker of batteries for electric cars, gained 8.9 percent to 516 yen. NGK and GS Yuasa had fallen 20 percent and 14 percent respectively in the five days through yesterday.
Nikkei futures expiring in September added 2.4 percent to 13,230 in Osaka and gained 2.5 percent to 13,250 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Crude Oil Trades Above $119 After Fire Shuts BP Turkey Pipeline
By Grant Smith
Aug. 6 (Bloomberg) -- Crude oil futures traded little changed above $119 a barrel after a Turkish section of a BP Plc- led pipeline for Azeri crude was shut by an explosion.
The cause of the blast and the timing of the resumption of flows were unclear, a spokesman at the Ankara-based Energy Ministry said. BP and its partners shipped almost 1 million barrels a day through the Azerbaijan-Turkey link in May.
``It's a huge pipeline and European consumers' dependency on it is increasing,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. ``After dropping $30 in four weeks it's easily possible for things like this to increase prices.''
Crude oil for September delivery traded down 3 cents at $119.13 a barrel in electronic trading on the New York Mercantile Exchange. Earlier, the contract rose as much as 83 cents, or 0.7 percent, to $120 a barrel.
Yesterday, the contract settled at $119.17 a barrel in New York after dropping to $118, the lowest level since May 5.
The Baku-Tblisi-Ceyhan pipeline may reopen next week after repairs, which will take ``a few days,'' are completed, said Mehmet Akif Sam, spokesman for the Energy Ministry.
BP spokesman Robert Wine in London said there is no impact on exports from Ceyhan and that the company is starting up another pipeline from Baku as an alternative export route.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday.
China Economy
The U.S. Energy Department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
The Organization of Petroleum Exporting Countries boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
Read more...
Aug. 6 (Bloomberg) -- Crude oil futures traded little changed above $119 a barrel after a Turkish section of a BP Plc- led pipeline for Azeri crude was shut by an explosion.
The cause of the blast and the timing of the resumption of flows were unclear, a spokesman at the Ankara-based Energy Ministry said. BP and its partners shipped almost 1 million barrels a day through the Azerbaijan-Turkey link in May.
``It's a huge pipeline and European consumers' dependency on it is increasing,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. ``After dropping $30 in four weeks it's easily possible for things like this to increase prices.''
Crude oil for September delivery traded down 3 cents at $119.13 a barrel in electronic trading on the New York Mercantile Exchange. Earlier, the contract rose as much as 83 cents, or 0.7 percent, to $120 a barrel.
Yesterday, the contract settled at $119.17 a barrel in New York after dropping to $118, the lowest level since May 5.
The Baku-Tblisi-Ceyhan pipeline may reopen next week after repairs, which will take ``a few days,'' are completed, said Mehmet Akif Sam, spokesman for the Energy Ministry.
BP spokesman Robert Wine in London said there is no impact on exports from Ceyhan and that the company is starting up another pipeline from Baku as an alternative export route.
Oil has lost more than $28 since touching a record $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending. U.S. gasoline demand fell for a 15th consecutive week, as motorists cope with high fuel prices by driving less, according to a MasterCard Inc. report yesterday.
China Economy
The U.S. Energy Department may say in its weekly report today that gasoline supplies fell 1.5 million barrels last week, a Bloomberg survey predicted.
The economy in China, the world's second-largest energy user, grew at the slowest pace since 2005 in the second quarter while manufacturing in July contracted for the first time since a survey began in 2005.
Tropical storm Edouard was downgraded to a depression after it made landfall on the Texas coast and missed oil-production areas in the Gulf of Mexico.
The Organization of Petroleum Exporting Countries boosted output by 0.7 percent in July to 32.825 million barrels a day, a Bloomberg News survey showed yesterday. The gains were led by Nigeria, which had its highest production figure since March, and Saudi Arabia. The kingdom's output reached a three-year high.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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DAX Index Falls on Orders Report; Commerzbank, Volkswagen Drop
By Henrietta Rumberger
Aug. 6 (Bloomberg) -- Germany's benchmark DAX Index declined as German factory orders unexpectedly fell for a seventh month in June, increasing the likelihood Europe's largest economy contracted in the second quarter.
Volkswagen AG, Europe's largest carmaker, dropped for a second day this week and MAN AG posted its biggest loss in four days. Commerzbank AG fell the most in more than a week on concern Germany's second-largest bank may face further charges. Deutsche Boerse AG led rising shares after analysts advised investors to buy shares in the company.
The benchmark DAX Index decreased 20.16, or 0.3 percent, to 6,498.54 as of 1:26 p.m. in Frankfurt. DAX futures expiring in September sank 15, or 0.2 percent, to 6,536.5. The HDAX Index of the country's 110 biggest companies fell 0.2 percent to 3,297.35.
``The latest data made the speed of the global economic slowdown more visible,'' said Folker Hellmeyer, chief analyst at Bremer Landesbank Kreditanstalt. ``The global picture starts to get under pressure.''
Factory orders, adjusted for seasonal swings and inflation, declined 2.9 percent from May, the Economy Ministry in Berlin said today, the biggest drop since July 2007. Economists expected a gain of 0.4 percent, the median of 39 forecasts in a Bloomberg News survey.
Volkswagen slipped 4.01 euros, or 2 percent, to 194.29. MAN, Europe's third-largest truckmaker, dropped 76 cents, or 1.2 percent, to 64.49 euros.
Commerzbank, Deutsche Boerse
Commerzbank fell 84 cents, or 3.8 percent, to 21.11 euros after rising as much as 2.5 percent earlier. The bank said today profit in the second quarter rose 6.4 percent as a tax gain and higher revenue from lending offset debt-related writedowns.
``There's concern the bank may face further charges from its large commercial-real estate exposure,'' said Ronny Rehn, a London-based analyst at Morgan Stanley. Commerzbank has a commercial real-state book of 83 billion euros.
Deutsche Boerse rallied 2.23 euros, or 3.2 percent, to 72.54, the biggest jump in almost three weeks. Goldman Sachs Group Inc. rated the operator of the Frankfurt exchange ``buy'' in new coverage.
``The group's superior diversification and relatively high exposure to derivative products leaves it well placed for growth in a more moderate volume environment,'' Goldman analyst Chris M. Turner in London wrote in a note to investors today. ``Deutsche Boerse's relatively low exposure to cash equities means the group should be best placed to withstand the threats of liquidity fragmentation and sustained pricing pressure.''
E.ON, RWE
E.ON AG, Germany's biggest utility, fell 88 cents, or 2.2 percent, to 39.62 euros. RWE AG, the second-largest utility, slipped 1.71 euros, or 2.2 percent, to 74.57 euros.
German electricity for tomorrow fell to the lowest weekday price for 10 weeks as wind capacity may be above average and nuclear capacity was boosted by the return of two plants at the weekend. Day-ahead power in Europe's biggest electricity market fell 1.6 euros, or 2.3 percent, to 62.50 euros a megawatt- hour as of 1:49 p.m. in Frankfurt, according to broker ICAP Plc.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Air Berlin Plc (AB1 GY) climbed 19 cents, or 5.1 percent, to 3.91 euros, the fourth straight gain. Europe's third-biggest discount airline said the load factor, or proportion of seats filled, declined 0.3 percentage point to 83.3 percent as the airline scaled back capacity by 1.1 percent. Passenger numbers fell 1.4 percent in July as the company scaled back flights.
Colonia Real Estate AG (KBU GR) increased for a second day, adding 27 cents, or 3.6 percent, to 7.77 euros. HSBC Holdings Plc initiated coverage of shares of the property company with an ``overweight'' recommendation and a price estimate of 8.50 euros.
Deutsche Post AG (DPW GY) climbed 21.5 cents, or 1.4 percent, to 15.62 euros. Citigroup Inc. raised its recommendation on shares of Europe's biggest postal service to ``buy'' from ``hold.''
Freenet AG (FNT GY) advanced 14 cents, or 1.3 percent, to 11.11 euros, the second gain this week. Vodafone Group Plc is considered the favorite to buy the digital-subscriber-line business of the mobile-phone and Internet company, Platow Brief reported, without citing anyone.
Fuchs Petrolub AG (FPE GY) fell for a second day, dropping 2.29 euros, or 4 percent, to 55.17. Germany's largest maker of lubricants said second-quarter profit gained 5.5 percent to 32.8 million euros on rising demand from Asia and Europe. Analysts surveyed by Bloomberg had predicted quarterly net income of 33 million.
Henkel AG & Co. KGaA (HEN3 GY) rose 97 cents, or 3.7 percent, to 27.16 euros, the highest since June 19. The German maker of Persil detergent, said second-quarter operating profit in the quarter fell to 113 million euros from 339 million euros. Adjusted for one-time costs, earnings on that basis rose 7.8 percent, according to the statement.
``Adjusted operating profit is above expectations, that's why the shares rise,'' Martina Noss, an analyst at Norddeutsche Landesbank in Hanover, Germany, said in an interview. She has a ``hold'' rating on the stock.
Loewe AG (LOE GY) gained for a seventh straight day, adding 76 cents, or 6.3 percent, to 12.75 euros. The television maker partly owned by Sharp Corp. said second-quarter profit more than tripled to 5.4 million euros on higher demand during the European soccer championship.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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Aug. 6 (Bloomberg) -- Germany's benchmark DAX Index declined as German factory orders unexpectedly fell for a seventh month in June, increasing the likelihood Europe's largest economy contracted in the second quarter.
Volkswagen AG, Europe's largest carmaker, dropped for a second day this week and MAN AG posted its biggest loss in four days. Commerzbank AG fell the most in more than a week on concern Germany's second-largest bank may face further charges. Deutsche Boerse AG led rising shares after analysts advised investors to buy shares in the company.
The benchmark DAX Index decreased 20.16, or 0.3 percent, to 6,498.54 as of 1:26 p.m. in Frankfurt. DAX futures expiring in September sank 15, or 0.2 percent, to 6,536.5. The HDAX Index of the country's 110 biggest companies fell 0.2 percent to 3,297.35.
``The latest data made the speed of the global economic slowdown more visible,'' said Folker Hellmeyer, chief analyst at Bremer Landesbank Kreditanstalt. ``The global picture starts to get under pressure.''
Factory orders, adjusted for seasonal swings and inflation, declined 2.9 percent from May, the Economy Ministry in Berlin said today, the biggest drop since July 2007. Economists expected a gain of 0.4 percent, the median of 39 forecasts in a Bloomberg News survey.
Volkswagen slipped 4.01 euros, or 2 percent, to 194.29. MAN, Europe's third-largest truckmaker, dropped 76 cents, or 1.2 percent, to 64.49 euros.
Commerzbank, Deutsche Boerse
Commerzbank fell 84 cents, or 3.8 percent, to 21.11 euros after rising as much as 2.5 percent earlier. The bank said today profit in the second quarter rose 6.4 percent as a tax gain and higher revenue from lending offset debt-related writedowns.
``There's concern the bank may face further charges from its large commercial-real estate exposure,'' said Ronny Rehn, a London-based analyst at Morgan Stanley. Commerzbank has a commercial real-state book of 83 billion euros.
Deutsche Boerse rallied 2.23 euros, or 3.2 percent, to 72.54, the biggest jump in almost three weeks. Goldman Sachs Group Inc. rated the operator of the Frankfurt exchange ``buy'' in new coverage.
``The group's superior diversification and relatively high exposure to derivative products leaves it well placed for growth in a more moderate volume environment,'' Goldman analyst Chris M. Turner in London wrote in a note to investors today. ``Deutsche Boerse's relatively low exposure to cash equities means the group should be best placed to withstand the threats of liquidity fragmentation and sustained pricing pressure.''
E.ON, RWE
E.ON AG, Germany's biggest utility, fell 88 cents, or 2.2 percent, to 39.62 euros. RWE AG, the second-largest utility, slipped 1.71 euros, or 2.2 percent, to 74.57 euros.
German electricity for tomorrow fell to the lowest weekday price for 10 weeks as wind capacity may be above average and nuclear capacity was boosted by the return of two plants at the weekend. Day-ahead power in Europe's biggest electricity market fell 1.6 euros, or 2.3 percent, to 62.50 euros a megawatt- hour as of 1:49 p.m. in Frankfurt, according to broker ICAP Plc.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Air Berlin Plc (AB1 GY) climbed 19 cents, or 5.1 percent, to 3.91 euros, the fourth straight gain. Europe's third-biggest discount airline said the load factor, or proportion of seats filled, declined 0.3 percentage point to 83.3 percent as the airline scaled back capacity by 1.1 percent. Passenger numbers fell 1.4 percent in July as the company scaled back flights.
Colonia Real Estate AG (KBU GR) increased for a second day, adding 27 cents, or 3.6 percent, to 7.77 euros. HSBC Holdings Plc initiated coverage of shares of the property company with an ``overweight'' recommendation and a price estimate of 8.50 euros.
Deutsche Post AG (DPW GY) climbed 21.5 cents, or 1.4 percent, to 15.62 euros. Citigroup Inc. raised its recommendation on shares of Europe's biggest postal service to ``buy'' from ``hold.''
Freenet AG (FNT GY) advanced 14 cents, or 1.3 percent, to 11.11 euros, the second gain this week. Vodafone Group Plc is considered the favorite to buy the digital-subscriber-line business of the mobile-phone and Internet company, Platow Brief reported, without citing anyone.
Fuchs Petrolub AG (FPE GY) fell for a second day, dropping 2.29 euros, or 4 percent, to 55.17. Germany's largest maker of lubricants said second-quarter profit gained 5.5 percent to 32.8 million euros on rising demand from Asia and Europe. Analysts surveyed by Bloomberg had predicted quarterly net income of 33 million.
Henkel AG & Co. KGaA (HEN3 GY) rose 97 cents, or 3.7 percent, to 27.16 euros, the highest since June 19. The German maker of Persil detergent, said second-quarter operating profit in the quarter fell to 113 million euros from 339 million euros. Adjusted for one-time costs, earnings on that basis rose 7.8 percent, according to the statement.
``Adjusted operating profit is above expectations, that's why the shares rise,'' Martina Noss, an analyst at Norddeutsche Landesbank in Hanover, Germany, said in an interview. She has a ``hold'' rating on the stock.
Loewe AG (LOE GY) gained for a seventh straight day, adding 76 cents, or 6.3 percent, to 12.75 euros. The television maker partly owned by Sharp Corp. said second-quarter profit more than tripled to 5.4 million euros on higher demand during the European soccer championship.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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RenCap Recommends RTS Call Options, Says Russian Index to Gain
By William Mauldin
Aug. 6 (Bloomberg) -- Investors should buy call options on Russia's RTS Index to benefit from a possible ``bounce'' in the equity benchmark, which may increase as much as almost 20 percent within two months, Renaissance Capital said.
The brokerage recommended buying calls expiring in a month with a strike price 5 percent more than the RTS's current level. The gauge traded at 1,809.47 as of 2:41 p.m. in Moscow. Investors will make money, after the costs of buying the contract, if the RTS rises to above 1,965 in the next month, Renaissance Capital strategist David Aserkoff wrote in a note to investors today.
Renaissance expects the RTS Index to trade between 1,800 and 2,150 in the remainder of the third quarter, as much as 19 percent above yesterday's closing price. Yesterday, the Russian benchmark had its worst daily performance compared with Europe's Dow Jones Stoxx 600 Index and the Standard & Poor's 500 Index in more than two years, RenCap said.
``It seems like we could bounce a little here,'' Aserkoff wrote. The RTS dropped 4.4 percent to 1,812 yesterday, led by oil producer OAO Rosneft after declines in crude prices.
Calls give investors the right to buy a security for a certain amount, the strike price, up to a given date. Puts convey the right to sell a security under similar conditions. Investors use options to guard against fluctuations in the price of securities or indexes they already own and also to make leveraged bets or wager that volatility, or stock-price swings, will increase or decrease.
To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.
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Aug. 6 (Bloomberg) -- Investors should buy call options on Russia's RTS Index to benefit from a possible ``bounce'' in the equity benchmark, which may increase as much as almost 20 percent within two months, Renaissance Capital said.
The brokerage recommended buying calls expiring in a month with a strike price 5 percent more than the RTS's current level. The gauge traded at 1,809.47 as of 2:41 p.m. in Moscow. Investors will make money, after the costs of buying the contract, if the RTS rises to above 1,965 in the next month, Renaissance Capital strategist David Aserkoff wrote in a note to investors today.
Renaissance expects the RTS Index to trade between 1,800 and 2,150 in the remainder of the third quarter, as much as 19 percent above yesterday's closing price. Yesterday, the Russian benchmark had its worst daily performance compared with Europe's Dow Jones Stoxx 600 Index and the Standard & Poor's 500 Index in more than two years, RenCap said.
``It seems like we could bounce a little here,'' Aserkoff wrote. The RTS dropped 4.4 percent to 1,812 yesterday, led by oil producer OAO Rosneft after declines in crude prices.
Calls give investors the right to buy a security for a certain amount, the strike price, up to a given date. Puts convey the right to sell a security under similar conditions. Investors use options to guard against fluctuations in the price of securities or indexes they already own and also to make leveraged bets or wager that volatility, or stock-price swings, will increase or decrease.
To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.
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Stocks in Europe, Asia Advance; U.S. Index Futures Decline
By Adria Cimino
Aug. 6 (Bloomberg) -- Stocks rose in Europe and Asia after BNP Paribas SA's earnings beat analysts' estimates, Xstrata Plc made a hostile bid for Lonmin Plc and the Federal Reserve indicated interest rates are on hold. U.S. index futures fell.
BNP jumped the most in three weeks after pretax profit at its investment bank eased concern France's biggest bank will have to raise capital. Lonmin surged 47 percent as Xstrata offered $9.8 billion for the platinum producer. Cisco Systems Inc. jumped in Germany after its forecast reassured investors. Air France-KLM Group gained in Paris and Toyota Motor Corp. climbed in Tokyo as oil traded near a three-month low.
``Earnings are far from disappointing,'' said Salah Seddik, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``We have a status quo from the Fed, oil has fallen below the $120 barrier and banks' earnings are pushing the risk of a systemic crisis farther away.''
The MSCI World Index added 0.3 percent to 1,365.39 at 1:31 p.m. in London. The index trimmed its 2008 decline to 14 percent as Fed policy makers left the benchmark rate at 2 percent and signaled they won't lift borrowing costs until the credit crisis and inflation ease.
Stocks pared gains and U.S. futures fell after Freddie Mac, the second-largest U.S. mortgage-finance company, posted its fourth straight quarterly loss and said it will cut the common- stock dividend.
Bear Markets
All 23 countries in the MSCI World except Canada have entered bear markets since September after oil rose to a record in July and credit losses topped $490 billion worldwide, prompting analysts to cut earnings estimates.
Mining stocks had the biggest gains today among the 10 industries in the MSCI World as Anglo American Plc and Vedanta Resources Plc also rose. The MSCI World/Materials Index, the worst performer in the past month after the gauge for oil shares, climbed 1.5 percent today, snapping a four-day decline.
Futures on the Standard & Poor's 500 Index fell 0.3 percent. Europe's Dow Jones Stoxx 600 Index rose 0.2 percent as Freddie Mac's results sent financial firms lower. Nokian Renkaat Oyj tumbled after the tiremaker's earnings missed estimates.
The MSCI Asia Pacific Index increased 1.9 percent, with Commonwealth Bank of Australia and Sony Corp. increasing.
BNP Paribas climbed 5.3 percent to 65.15 euros. Pretax earnings at its securities division, the only one among the largest French banks to remain profitable in each quarter since the start of last year, fell to 523 million euros ($809 million) from 1.22 billion euros a year earlier.
Fewer Writedowns
``Earnings from French banks are better than expected,'' said Alexis Charveriat, a fund manager at Ecofi Investissements, a unit of GIE USCC in Paris, which oversees $14 billion. ``The market is reassured.''
Profit surpassed the 285 million-euro estimate of analysts surveyed by Bloomberg. The unit had 457 million euros of writedowns, less than the 475 million euros projected by analysts.
``We won't see a capital increase,'' said Richelieu's Seddik. ``Writedowns are less than expected. The bank isn't exposed to the most toxic products linked to subprime.''
Profits at Stoxx 600 companies may drop 2.5 percent on average in 2008, according to projections tracked by Bloomberg. That's down from a forecast for 11 percent growth in January.
Commonwealth Bank of Australia, the nation's biggest mortgage lender, advanced 6.3 percent to A$43.85. Westpac Banking Corp., the country's third-largest bank by market value, added 5.3 percent to A$22.99.
Rates Unchanged
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on rates.
Lonmin, the world's third-largest platinum producer, surged 1,089 pence to 3,408 after Xstrata made an unsolicited 5 billion-pound ($9.8 billion) bid to add mines in South Africa and diversify its metals output.
Xstrata will offer 3,300 pence in cash for each Lonmin share.
Anglo American, the world's fourth-biggest diversified mining company, gained 2.9 percent to 2,772 pence. Vedanta, controlled by India billionaire Anil Agarwal, jumped 4.1 percent to 1,847 pence.
Air France, Europe's biggest airline, added 2.2 percent to 18.17 euros. Toyota, Japan's largest automaker, added 3.1 percent to 4,640 yen.
Crude for September delivery was little changed, after falling as much as 0.9 percent, in electronic trading on the New York Mercantile Exchange. It last traded up 15 cents to $119.32.
Fuel Costs
Oil has lost more than $28 since touching a record $147.27 in New York on July 11 as unprecedented fuel costs curbed consumer spending.
``The price of oil keeps falling and equity prices are continuing to rally,'' Paul Webb, chief dealer at CMC Markets in London, wrote.
Cisco, the world's largest maker of network equipment, climbed 5 percent to $23.86 in Germany. Chief Executive Officer John Chambers's forecast for the next six months eased investor concern that business is deteriorating.
Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections.
Freddie Mac lost 13 percent to $7 in pre-market trading. The finance company hobbled by record foreclosures will slash its dividend at least 80 percent.
The second-quarter net loss of $1.63 a share, compares with the 54-cent a share average estimate of nine analysts in a Bloomberg survey.
Earnings Outlook
S&P 500 companies are poised for a fourth straight quarter of shrinking profits, the longest stretch of declines since 2002. Earnings at the 385 companies that released results so far were down 18 percent from the year-earlier quarter, according to data compiled by Bloomberg.
Sony rose 5.7 percent to 4,290 yen after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Nokian Renkaat sank 10 percent to 25.73 euros. The Nordic region's biggest tiremaker said second-quarter profit rose a less-than-expected 29 percent as increases in raw-material costs held back growth propelled by Russia's growing car market.
Carlsberg A/S added 3.2 percent to 453.5 kroner. The Nordic region's largest brewer had its recommendation lifted to ``buy'' from ``hold'' at ING Groep NV on the outlook for earnings.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Aug. 6 (Bloomberg) -- Stocks rose in Europe and Asia after BNP Paribas SA's earnings beat analysts' estimates, Xstrata Plc made a hostile bid for Lonmin Plc and the Federal Reserve indicated interest rates are on hold. U.S. index futures fell.
BNP jumped the most in three weeks after pretax profit at its investment bank eased concern France's biggest bank will have to raise capital. Lonmin surged 47 percent as Xstrata offered $9.8 billion for the platinum producer. Cisco Systems Inc. jumped in Germany after its forecast reassured investors. Air France-KLM Group gained in Paris and Toyota Motor Corp. climbed in Tokyo as oil traded near a three-month low.
``Earnings are far from disappointing,'' said Salah Seddik, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``We have a status quo from the Fed, oil has fallen below the $120 barrier and banks' earnings are pushing the risk of a systemic crisis farther away.''
The MSCI World Index added 0.3 percent to 1,365.39 at 1:31 p.m. in London. The index trimmed its 2008 decline to 14 percent as Fed policy makers left the benchmark rate at 2 percent and signaled they won't lift borrowing costs until the credit crisis and inflation ease.
Stocks pared gains and U.S. futures fell after Freddie Mac, the second-largest U.S. mortgage-finance company, posted its fourth straight quarterly loss and said it will cut the common- stock dividend.
Bear Markets
All 23 countries in the MSCI World except Canada have entered bear markets since September after oil rose to a record in July and credit losses topped $490 billion worldwide, prompting analysts to cut earnings estimates.
Mining stocks had the biggest gains today among the 10 industries in the MSCI World as Anglo American Plc and Vedanta Resources Plc also rose. The MSCI World/Materials Index, the worst performer in the past month after the gauge for oil shares, climbed 1.5 percent today, snapping a four-day decline.
Futures on the Standard & Poor's 500 Index fell 0.3 percent. Europe's Dow Jones Stoxx 600 Index rose 0.2 percent as Freddie Mac's results sent financial firms lower. Nokian Renkaat Oyj tumbled after the tiremaker's earnings missed estimates.
The MSCI Asia Pacific Index increased 1.9 percent, with Commonwealth Bank of Australia and Sony Corp. increasing.
BNP Paribas climbed 5.3 percent to 65.15 euros. Pretax earnings at its securities division, the only one among the largest French banks to remain profitable in each quarter since the start of last year, fell to 523 million euros ($809 million) from 1.22 billion euros a year earlier.
Fewer Writedowns
``Earnings from French banks are better than expected,'' said Alexis Charveriat, a fund manager at Ecofi Investissements, a unit of GIE USCC in Paris, which oversees $14 billion. ``The market is reassured.''
Profit surpassed the 285 million-euro estimate of analysts surveyed by Bloomberg. The unit had 457 million euros of writedowns, less than the 475 million euros projected by analysts.
``We won't see a capital increase,'' said Richelieu's Seddik. ``Writedowns are less than expected. The bank isn't exposed to the most toxic products linked to subprime.''
Profits at Stoxx 600 companies may drop 2.5 percent on average in 2008, according to projections tracked by Bloomberg. That's down from a forecast for 11 percent growth in January.
Commonwealth Bank of Australia, the nation's biggest mortgage lender, advanced 6.3 percent to A$43.85. Westpac Banking Corp., the country's third-largest bank by market value, added 5.3 percent to A$22.99.
Rates Unchanged
Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on rates.
Lonmin, the world's third-largest platinum producer, surged 1,089 pence to 3,408 after Xstrata made an unsolicited 5 billion-pound ($9.8 billion) bid to add mines in South Africa and diversify its metals output.
Xstrata will offer 3,300 pence in cash for each Lonmin share.
Anglo American, the world's fourth-biggest diversified mining company, gained 2.9 percent to 2,772 pence. Vedanta, controlled by India billionaire Anil Agarwal, jumped 4.1 percent to 1,847 pence.
Air France, Europe's biggest airline, added 2.2 percent to 18.17 euros. Toyota, Japan's largest automaker, added 3.1 percent to 4,640 yen.
Crude for September delivery was little changed, after falling as much as 0.9 percent, in electronic trading on the New York Mercantile Exchange. It last traded up 15 cents to $119.32.
Fuel Costs
Oil has lost more than $28 since touching a record $147.27 in New York on July 11 as unprecedented fuel costs curbed consumer spending.
``The price of oil keeps falling and equity prices are continuing to rally,'' Paul Webb, chief dealer at CMC Markets in London, wrote.
Cisco, the world's largest maker of network equipment, climbed 5 percent to $23.86 in Germany. Chief Executive Officer John Chambers's forecast for the next six months eased investor concern that business is deteriorating.
Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections.
Freddie Mac lost 13 percent to $7 in pre-market trading. The finance company hobbled by record foreclosures will slash its dividend at least 80 percent.
The second-quarter net loss of $1.63 a share, compares with the 54-cent a share average estimate of nine analysts in a Bloomberg survey.
Earnings Outlook
S&P 500 companies are poised for a fourth straight quarter of shrinking profits, the longest stretch of declines since 2002. Earnings at the 385 companies that released results so far were down 18 percent from the year-earlier quarter, according to data compiled by Bloomberg.
Sony rose 5.7 percent to 4,290 yen after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.
Nokian Renkaat sank 10 percent to 25.73 euros. The Nordic region's biggest tiremaker said second-quarter profit rose a less-than-expected 29 percent as increases in raw-material costs held back growth propelled by Russia's growing car market.
Carlsberg A/S added 3.2 percent to 453.5 kroner. The Nordic region's largest brewer had its recommendation lifted to ``buy'' from ``hold'' at ING Groep NV on the outlook for earnings.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Stocks Will Rise `Much Higher' This Year, JPMorgan's Lee Says
By Michael Patterson and Carol Massar
Aug. 6 (Bloomberg) -- U.S. stocks will climb ``much higher'' by the end of 2008 as falling commodity prices ease inflation concerns and investors buy shares that dropped the most during the market's sell-off, JPMorgan Chase & Co.'s Thomas Lee said.
``I'm still very confident that we're going to see much higher levels by year-end,'' the chief U.S. equity strategist said in a Bloomberg Television interview. ``We're starting to see these contrarian, out-of-favor sectors come back.''
The New York-based strategist advised clients on June 6 to buy U.S. stocks, saying a surge in the May unemployment rate that sent the S&P 500 down 3.1 percent that day was an ``aberration.'' The index fell another 11 percent over the next five weeks, and the jobless rate climbed to the highest in more than four years in July. Lee, 39, said July 28 that stocks will probably ``bottom'' in the next month and he reiterated his year-end S&P 500 estimate of 1,450, a 13 percent gain from yesterday's close.
Lee's forecast is in line with the 1,454 average projection of nine Wall Street strategists who provide year-end estimates to Bloomberg News.
Crude oil prices dropped almost 20 percent from a record $147.27 a barrel last month.
To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Carol Massar in New York at cmassar@bloomberg.net
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Aug. 6 (Bloomberg) -- U.S. stocks will climb ``much higher'' by the end of 2008 as falling commodity prices ease inflation concerns and investors buy shares that dropped the most during the market's sell-off, JPMorgan Chase & Co.'s Thomas Lee said.
``I'm still very confident that we're going to see much higher levels by year-end,'' the chief U.S. equity strategist said in a Bloomberg Television interview. ``We're starting to see these contrarian, out-of-favor sectors come back.''
The New York-based strategist advised clients on June 6 to buy U.S. stocks, saying a surge in the May unemployment rate that sent the S&P 500 down 3.1 percent that day was an ``aberration.'' The index fell another 11 percent over the next five weeks, and the jobless rate climbed to the highest in more than four years in July. Lee, 39, said July 28 that stocks will probably ``bottom'' in the next month and he reiterated his year-end S&P 500 estimate of 1,450, a 13 percent gain from yesterday's close.
Lee's forecast is in line with the 1,454 average projection of nine Wall Street strategists who provide year-end estimates to Bloomberg News.
Crude oil prices dropped almost 20 percent from a record $147.27 a barrel last month.
To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Carol Massar in New York at cmassar@bloomberg.net
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U.S. Stock-Index Futures Fall; Freddie Mac, Whole Foods Drop
By Adam Haigh and Elizabeth Stanton
Aug. 6 (Bloomberg) -- U.S. stock-index futures declined as Freddie Mac's dividend cut and disappointing forecasts from Whole Foods Market Inc. and Priceline.com Inc. overshadowed better-than-estimated earnings at Cisco Systems Inc.
Freddie Mac dropped after the second-largest U.S. mortgage- finance company posted its fourth straight quarterly loss and said it will reduce its payout by at least 80 percent. Whole Foods, the largest U.S. natural-foods grocer, slumped on an annual earnings forecast that trailed projections. Cisco spurred gains in Nasdaq-100 Index futures as its forecast eased concern that demand for computer networking equipment is deteriorating.
Futures on the Standard & Poor's 500 Index expiring in September lost 2.7, or 0.2 percent, to 1,280.2 at 8:05 a.m. in New York, indicating the benchmark index for U.S. equities may retreat following its biggest gain in four months. Dow Jones Industrial Average futures lost 31 to 11,554. Nasdaq-100 futures climbed 5.5 to 1,874.5.
More than three-quarters of the S&P 500 companies that have reported second-quarter earnings exceeded or matched analysts' estimates, according to data compiled by Bloomberg. Still, profits at the 409 companies that released results through yesterday were down 19 percent from a year earlier.
U.S. stocks yesterday jumped the most since April as crude oil fell to a three-month low and the Federal Reserve indicated it won't lift interest rates until next year. The central bank left borrowing costs unchanged at 2 percent and predicted inflation will ease. Shares in Europe and Asia climbed today.
Freddie Mac
Freddie Mac tumbled 13 percent to $7 in pre-market trading. The company's second-quarter net loss of $821 million, or $1.63 a share, compares with the 54-cent-a-share average loss estimate of nine analysts in a Bloomberg survey. Freddie Mac said its dividend will be reduced to 5 cents from 25 cents.
Freddie Mac has plunged 76 percent this year on concern the company may not have enough capital to overcome loan delinquencies on the $2.2 trillion of mortgages it owns and guarantees. The concerns prompted U.S. Treasury Secretary Henry Paulson to shore up Freddie Mac and the larger Fannie Mae. Freddie Mac Chief Executive Officer Richard Syron, 64, committed to raise $5.5 billion in equity, though failed to complete the sale as the stock slumped.
Whole Foods
Whole Foods retreated 16 percent to $19.19. Net income dropped 31 percent to $33.9 million, or 24 cents a share, on costs from last year's purchase of Wild Oats Markets Inc. The grocer said it's reducing the number of planned store openings for the year ending in September 2009 to 15, from the 25 to 30 announced in May.
Priceline.com slumped 21 percent to $96.38 in Germany. Gross travel bookings will rise no more than 54 percent in the third quarter, less than the 71 percent increase in the second quarter, the company said.
Cisco climbed 4.6 percent to $23.70 in trading before U.S. exchanges opened. Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, the company said.
Amkor Technology Inc. may advance. The world's second- largest computer-chip packager said second-quarter profit climbed for the seventh consecutive period on gains from the sale of real estate and foreign currency fluctuations. The stock didn't trade in Europe.
American International Group Inc., the world's biggest insurer and one of the 30 companies in the Dow Jones Industrial Average, is scheduled to report earnings after the market closes today.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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Aug. 6 (Bloomberg) -- U.S. stock-index futures declined as Freddie Mac's dividend cut and disappointing forecasts from Whole Foods Market Inc. and Priceline.com Inc. overshadowed better-than-estimated earnings at Cisco Systems Inc.
Freddie Mac dropped after the second-largest U.S. mortgage- finance company posted its fourth straight quarterly loss and said it will reduce its payout by at least 80 percent. Whole Foods, the largest U.S. natural-foods grocer, slumped on an annual earnings forecast that trailed projections. Cisco spurred gains in Nasdaq-100 Index futures as its forecast eased concern that demand for computer networking equipment is deteriorating.
Futures on the Standard & Poor's 500 Index expiring in September lost 2.7, or 0.2 percent, to 1,280.2 at 8:05 a.m. in New York, indicating the benchmark index for U.S. equities may retreat following its biggest gain in four months. Dow Jones Industrial Average futures lost 31 to 11,554. Nasdaq-100 futures climbed 5.5 to 1,874.5.
More than three-quarters of the S&P 500 companies that have reported second-quarter earnings exceeded or matched analysts' estimates, according to data compiled by Bloomberg. Still, profits at the 409 companies that released results through yesterday were down 19 percent from a year earlier.
U.S. stocks yesterday jumped the most since April as crude oil fell to a three-month low and the Federal Reserve indicated it won't lift interest rates until next year. The central bank left borrowing costs unchanged at 2 percent and predicted inflation will ease. Shares in Europe and Asia climbed today.
Freddie Mac
Freddie Mac tumbled 13 percent to $7 in pre-market trading. The company's second-quarter net loss of $821 million, or $1.63 a share, compares with the 54-cent-a-share average loss estimate of nine analysts in a Bloomberg survey. Freddie Mac said its dividend will be reduced to 5 cents from 25 cents.
Freddie Mac has plunged 76 percent this year on concern the company may not have enough capital to overcome loan delinquencies on the $2.2 trillion of mortgages it owns and guarantees. The concerns prompted U.S. Treasury Secretary Henry Paulson to shore up Freddie Mac and the larger Fannie Mae. Freddie Mac Chief Executive Officer Richard Syron, 64, committed to raise $5.5 billion in equity, though failed to complete the sale as the stock slumped.
Whole Foods
Whole Foods retreated 16 percent to $19.19. Net income dropped 31 percent to $33.9 million, or 24 cents a share, on costs from last year's purchase of Wild Oats Markets Inc. The grocer said it's reducing the number of planned store openings for the year ending in September 2009 to 15, from the 25 to 30 announced in May.
Priceline.com slumped 21 percent to $96.38 in Germany. Gross travel bookings will rise no more than 54 percent in the third quarter, less than the 71 percent increase in the second quarter, the company said.
Cisco climbed 4.6 percent to $23.70 in trading before U.S. exchanges opened. Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections, the company said.
Amkor Technology Inc. may advance. The world's second- largest computer-chip packager said second-quarter profit climbed for the seventh consecutive period on gains from the sale of real estate and foreign currency fluctuations. The stock didn't trade in Europe.
American International Group Inc., the world's biggest insurer and one of the 30 companies in the Dow Jones Industrial Average, is scheduled to report earnings after the market closes today.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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Most U.K. Stocks Fall, Led by ITV, Liberty; Lonmin Shares Soar
By Sarah Jones
Aug. 6 (Bloomberg) -- Most U.K. stocks fell, led by ITV Plc, the U.K.'s biggest commercial broadcaster, and Liberty International Plc after the companies posted a first-half loss.
Old Mutual Plc tumbled after the insurer said hedging failures reduced reserves in the American unit. Mining companies limited the retreat after Xstrata Plc made an unsolicited 5 billion-pound ($9.8 billion) bid for Lonmin Plc.
The FTSE 100 Index fell 6.6, or 0.1 percent, to 5,447.9 at 11:47 a.m. in London as two stocks declined for every one that rose. Eight companies from Royal Dutch Shell Plc to AstraZeneca Plc traded without the right to their latest dividends, dragging down the index.
The FTSE All-Share Index slipped 0.1 percent while Ireland's ISEQ Index fell 1.2 percent.
ITV lost 9.3 percent to 42 pence, the biggest decline on the FTSE 100. The broadcaster reported a first-half loss of 1.54 billion pounds ($3 billion) after writing down the value of its broadcasting operations as clients cut advertising spending.
The ``results highlight the challenges facing ITV,'' said London-based analyst Justin Diddams at Royal Bank of Scotland Group Plc in a note to investors. ``The numbers were in line with expectations but the outlook is deteriorating.''
ITV forecast ad sales will drop 10 percent in the third quarter and also cut its interim dividend by half.
Liberty International lost 5.6 percent to 916 pence after the U.K.'s largest shopping-center owner reported a loss in the first half of 426 million pounds after its malls depreciated by 639 million pounds.
Old Mutual
Old Mutual fell 7.5 percent, to 98.4 pence, the steepest decline since January. The U.K. insurer said it will take a 257 million-pound charge because its Bermuda-based annuities unit guaranteed clients' investment returns without properly hedging its risks. The unit may take at least 15 million pounds in additional charges unless stock markets recover, Old Mutual said.
Lonmin paced advancing shares, soaring a record 47 percent to 3,410 pence after Xstrata made a bid of 3,300 pence in cash for each share, 42 percent more than Lonmin's closing price yesterday.
``Despite the recent fall in the platinum price, we believe that the market will see this transaction positively and expect to see other platinum producers trade higher on the back of this,'' London-based analyst Jason Fairclough at Merrill Lynch & Co. wrote in a note to investors.
Anglo American Plc, the world's fourth-biggest diversified mining company, increased 3.5 percent to 2,789 pence. Aquarius Platinum Ltd., a producer of the precious metal in South Africa and Zimbabwe, surged 19 percent to 456.5 pence.
Xstrata added 1.6 percent to 3,250 pence. The company also posted first-half profit that beat analysts' estimates.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Eurasian Natural Resources Corp. (ENRC LN) advanced 39.5 pence, or 4.2 percent, to 989.5 after the Kazakhstan metals producer said first-quarter ferroalloy output rose 2.5 percent to 374,000 metric tons. Ferrochrome output advanced 3.5 percent to 293,000 tons.
F&C Asset Management Plc (FCAM LN) slipped 1.5 pence, or 1.4 percent, to 102.5 after the company, which oversees the oldest U.K. investment fund, posted a 58 percent drop in first-half profit as declining financial markets prompted investors to pull money.
Hunting Plc (HTG LN) rallied 77.5 pence, or 9.8 percent, to 870 after the oil-services provider announced the sale of its Gibson Energy unit to private-equity firms Riverstone Holdings LLC and Carlyle Group for C$1.27 billion ($1.22 billion).
Morgan Crucible Co. (MGCR LN) rose 5.75 pence, or 2.9 percent, to 205.25 after the company, whose ceramics and coatings are used by Ford Motor Co., reported a 5.1 percent rise in first- half profit to 28.8 million pounds, boosted by acquisitions.
Irish companies:
Elan Corp. (ELN ID) fell 30 cents, or 3.9 percent, to 7.32 euros in Dublin. Standard & Poor's Ratings Service changed its outlook on Ireland's largest drugmaker to stable from positive.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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Aug. 6 (Bloomberg) -- Most U.K. stocks fell, led by ITV Plc, the U.K.'s biggest commercial broadcaster, and Liberty International Plc after the companies posted a first-half loss.
Old Mutual Plc tumbled after the insurer said hedging failures reduced reserves in the American unit. Mining companies limited the retreat after Xstrata Plc made an unsolicited 5 billion-pound ($9.8 billion) bid for Lonmin Plc.
The FTSE 100 Index fell 6.6, or 0.1 percent, to 5,447.9 at 11:47 a.m. in London as two stocks declined for every one that rose. Eight companies from Royal Dutch Shell Plc to AstraZeneca Plc traded without the right to their latest dividends, dragging down the index.
The FTSE All-Share Index slipped 0.1 percent while Ireland's ISEQ Index fell 1.2 percent.
ITV lost 9.3 percent to 42 pence, the biggest decline on the FTSE 100. The broadcaster reported a first-half loss of 1.54 billion pounds ($3 billion) after writing down the value of its broadcasting operations as clients cut advertising spending.
The ``results highlight the challenges facing ITV,'' said London-based analyst Justin Diddams at Royal Bank of Scotland Group Plc in a note to investors. ``The numbers were in line with expectations but the outlook is deteriorating.''
ITV forecast ad sales will drop 10 percent in the third quarter and also cut its interim dividend by half.
Liberty International lost 5.6 percent to 916 pence after the U.K.'s largest shopping-center owner reported a loss in the first half of 426 million pounds after its malls depreciated by 639 million pounds.
Old Mutual
Old Mutual fell 7.5 percent, to 98.4 pence, the steepest decline since January. The U.K. insurer said it will take a 257 million-pound charge because its Bermuda-based annuities unit guaranteed clients' investment returns without properly hedging its risks. The unit may take at least 15 million pounds in additional charges unless stock markets recover, Old Mutual said.
Lonmin paced advancing shares, soaring a record 47 percent to 3,410 pence after Xstrata made a bid of 3,300 pence in cash for each share, 42 percent more than Lonmin's closing price yesterday.
``Despite the recent fall in the platinum price, we believe that the market will see this transaction positively and expect to see other platinum producers trade higher on the back of this,'' London-based analyst Jason Fairclough at Merrill Lynch & Co. wrote in a note to investors.
Anglo American Plc, the world's fourth-biggest diversified mining company, increased 3.5 percent to 2,789 pence. Aquarius Platinum Ltd., a producer of the precious metal in South Africa and Zimbabwe, surged 19 percent to 456.5 pence.
Xstrata added 1.6 percent to 3,250 pence. The company also posted first-half profit that beat analysts' estimates.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Eurasian Natural Resources Corp. (ENRC LN) advanced 39.5 pence, or 4.2 percent, to 989.5 after the Kazakhstan metals producer said first-quarter ferroalloy output rose 2.5 percent to 374,000 metric tons. Ferrochrome output advanced 3.5 percent to 293,000 tons.
F&C Asset Management Plc (FCAM LN) slipped 1.5 pence, or 1.4 percent, to 102.5 after the company, which oversees the oldest U.K. investment fund, posted a 58 percent drop in first-half profit as declining financial markets prompted investors to pull money.
Hunting Plc (HTG LN) rallied 77.5 pence, or 9.8 percent, to 870 after the oil-services provider announced the sale of its Gibson Energy unit to private-equity firms Riverstone Holdings LLC and Carlyle Group for C$1.27 billion ($1.22 billion).
Morgan Crucible Co. (MGCR LN) rose 5.75 pence, or 2.9 percent, to 205.25 after the company, whose ceramics and coatings are used by Ford Motor Co., reported a 5.1 percent rise in first- half profit to 28.8 million pounds, boosted by acquisitions.
Irish companies:
Elan Corp. (ELN ID) fell 30 cents, or 3.9 percent, to 7.32 euros in Dublin. Standard & Poor's Ratings Service changed its outlook on Ireland's largest drugmaker to stable from positive.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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Agrium, Cott, Genivar, Silver Wheaton: Canadian Equity Preview
By John Kipphoff
Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are from yesterday's close in Toronto.
The Standard & Poor's/TSX Composite Index fell 1.9 percent to 13,242.20.
Agrium Inc. (AGU CN): North America's third-largest fertilizer producer said second-quarter profit almost tripled to $636 million (C$664 million), or $4 a share, as record grain prices spurred demand. Agrium's per-share profit exceeded the average of analyst estimates for profit before one-time items by 28 percent, according to Bloomberg data. Agrium fell 7.8 percent to C$82.78.
Bell Aliant Regional Communications Income Fund (BA-U CN): The Halifax, Nova Scotia-based telecommunications company forecast fiscal 2008 revenue of C$3.24 billion to C$3.31 billion. Three analysts have an average estimate of C$3.35 billion, according to Bloomberg data. The shares rose 1.3 percent to C$26.90.
Cott Corp. (BCB CN): The biggest maker of private-label soft drinks was cut to ``sell'' from ``buy'' by UBS AG analyst Kaumil Gajrawala in New York, in a note to clients that cited the possibility of a decline in sales volume. The shares fell 5.4 percent to C$3.31.
Challenger Energy Corp. (CHQ CN): The company exploring for offshore oil and gas in Nova Scotia and Trinidad & Tobago was rated ``overweight'' in new coverage by analyst David Dudlyke at Thomas Weisel Partners in London. The shares fell 0.6 percent to C$5.17.
FNX Mining Co. (FNX CN): The nickel and copper mining company said John Lill resigned as chief executive officer and will be replaced by Executive Chairman Terry MacGibbon. The shares declined 8.5 percent to C$16.28.
Genivar Income Fund (GNV-U CN): The owner of an engineering and construction services company increased its annual dividend by 50 percent to C$1.50 a share yesterday.
Separately, Genivar was raised today to ``strong buy'' from ``outperform'' at Raymond James & Associates. The shares gained 0.8 percent to C$24.10.
Silver Wheaton Corp. (SLW CN): The re-seller of silver from other mines was raised to ``outperform'' from ``market perform'' at Raymond James. The shares dropped 16 percent to C$11 yesterday as silver prices slumped.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Aug. 6 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are from yesterday's close in Toronto.
The Standard & Poor's/TSX Composite Index fell 1.9 percent to 13,242.20.
Agrium Inc. (AGU CN): North America's third-largest fertilizer producer said second-quarter profit almost tripled to $636 million (C$664 million), or $4 a share, as record grain prices spurred demand. Agrium's per-share profit exceeded the average of analyst estimates for profit before one-time items by 28 percent, according to Bloomberg data. Agrium fell 7.8 percent to C$82.78.
Bell Aliant Regional Communications Income Fund (BA-U CN): The Halifax, Nova Scotia-based telecommunications company forecast fiscal 2008 revenue of C$3.24 billion to C$3.31 billion. Three analysts have an average estimate of C$3.35 billion, according to Bloomberg data. The shares rose 1.3 percent to C$26.90.
Cott Corp. (BCB CN): The biggest maker of private-label soft drinks was cut to ``sell'' from ``buy'' by UBS AG analyst Kaumil Gajrawala in New York, in a note to clients that cited the possibility of a decline in sales volume. The shares fell 5.4 percent to C$3.31.
Challenger Energy Corp. (CHQ CN): The company exploring for offshore oil and gas in Nova Scotia and Trinidad & Tobago was rated ``overweight'' in new coverage by analyst David Dudlyke at Thomas Weisel Partners in London. The shares fell 0.6 percent to C$5.17.
FNX Mining Co. (FNX CN): The nickel and copper mining company said John Lill resigned as chief executive officer and will be replaced by Executive Chairman Terry MacGibbon. The shares declined 8.5 percent to C$16.28.
Genivar Income Fund (GNV-U CN): The owner of an engineering and construction services company increased its annual dividend by 50 percent to C$1.50 a share yesterday.
Separately, Genivar was raised today to ``strong buy'' from ``outperform'' at Raymond James & Associates. The shares gained 0.8 percent to C$24.10.
Silver Wheaton Corp. (SLW CN): The re-seller of silver from other mines was raised to ``outperform'' from ``market perform'' at Raymond James. The shares dropped 16 percent to C$11 yesterday as silver prices slumped.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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German Manufacturing, Foreign Sales Signal Recession; Freddie Mac Posts 2Q Loss
Daily Forex Fundamentals | Written by DailyFX | Aug 06 08 11:33 GMT |
Fundamental Headlines
GBPUSD - U.K. consumer confidence posted its largest decline in four years, dropping 11 points to 51. Confidence continues to decline amid the housing slump, unemployment on the rise, higher living costs, and inflated prices. The British economy continued to expand last quarter, showing 0.1 percent growth, its slowest growth in three years. Despite talks of a recession, inflationary pressures all but guarantee the Bank of England will leave its rates at 5.00 percent, for the fourth consecutive month.
EURUSD - German factory orders fell for the seventh month in June, creating speculation that the economy contracted in the second quarter. Manufacturing faltered 2.9 percent in May, amid high food and energy costs pushing up the cost of production. Orders are down 6.1 percent from a year earlier. As a result, inflated prices are draining consumer purchasing power and a highly appreciated euro is weighing on exports, with foreign sales dropping 5.1 percent.
USDJPY - The coincident index, a measure of production and job applicants, fell to 101.7 in June from 103.3 in May. The leading index, a signal for the direction of the economy, fell to 91.2 in June from 92.9 from the previous month, showing the economy is showing downside growth potential. As growth slows and prices continue to rise, the Japanese government has acknowledged that stagflation is beginning to set in, ending Japan’s post war expansion. However, economists believe the slowdown will moderate as companies have dismissed additional workers and exports are boosted to emerging markets, removing the risk of recession.
DailyFX
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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Fundamental Headlines
GBPUSD - U.K. consumer confidence posted its largest decline in four years, dropping 11 points to 51. Confidence continues to decline amid the housing slump, unemployment on the rise, higher living costs, and inflated prices. The British economy continued to expand last quarter, showing 0.1 percent growth, its slowest growth in three years. Despite talks of a recession, inflationary pressures all but guarantee the Bank of England will leave its rates at 5.00 percent, for the fourth consecutive month.
EURUSD - German factory orders fell for the seventh month in June, creating speculation that the economy contracted in the second quarter. Manufacturing faltered 2.9 percent in May, amid high food and energy costs pushing up the cost of production. Orders are down 6.1 percent from a year earlier. As a result, inflated prices are draining consumer purchasing power and a highly appreciated euro is weighing on exports, with foreign sales dropping 5.1 percent.
USDJPY - The coincident index, a measure of production and job applicants, fell to 101.7 in June from 103.3 in May. The leading index, a signal for the direction of the economy, fell to 91.2 in June from 92.9 from the previous month, showing the economy is showing downside growth potential. As growth slows and prices continue to rise, the Japanese government has acknowledged that stagflation is beginning to set in, ending Japan’s post war expansion. However, economists believe the slowdown will moderate as companies have dismissed additional workers and exports are boosted to emerging markets, removing the risk of recession.
DailyFX
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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London Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 06 08 12:02 GMT |
The buck was modestly bid in London trading on the back of some more disappointing economic data across the pond. UK consumer confidence plunged to 51 in July from a previous 62 print in June, marking the sharpest decline in the series history. Meanwhile, the Euro-zone did not offer any better results as Germany factory orders plummeted -2.9% in June after a downwardly revised -1.4% in May. This took the annual rate to a dreadful -6.1% from -2.5% the prior month, the weakest run-rate since November 2001.
The dollar strengthened on the weaker data with EURUSD dipping to a close near 1.5470 after opening around the 1.5500 mark. Sterling (GBPUSD) lost some ground as well as it fell to a session close near 1.9540 after opening near the 1.9575 area. Oil prices remained contained below $120/bbl and this helped USDCAD hold on to gains, opening near 1.0425 and closing around the 1.0440 level. Oil inventory data today at 1435GMT will be closely watched and higher than expected results should give the oil price another hit, below yesterday's $118/bbl low.
USDJPY also gained, catching up a bit to the other currency moves from yesterday. The pair opened near 108.35 and was sitting near 108.65 at the close of London trading. It rose as high as 108.70, which seems to be the next key resistance level and trigger for more upside. US stock markets are currently pointing to a weak open, but another pullback in oil prices could propel them into the green and thus help extend USDJPY gains.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/6/2008 14:00 CA Ivey Purchasing Managers Index JUL 69.6 62.5
* 8/6/2008 14:35 DOE U.S. Crude Oil Inventories AUG 1 -200K -81K
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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The buck was modestly bid in London trading on the back of some more disappointing economic data across the pond. UK consumer confidence plunged to 51 in July from a previous 62 print in June, marking the sharpest decline in the series history. Meanwhile, the Euro-zone did not offer any better results as Germany factory orders plummeted -2.9% in June after a downwardly revised -1.4% in May. This took the annual rate to a dreadful -6.1% from -2.5% the prior month, the weakest run-rate since November 2001.
The dollar strengthened on the weaker data with EURUSD dipping to a close near 1.5470 after opening around the 1.5500 mark. Sterling (GBPUSD) lost some ground as well as it fell to a session close near 1.9540 after opening near the 1.9575 area. Oil prices remained contained below $120/bbl and this helped USDCAD hold on to gains, opening near 1.0425 and closing around the 1.0440 level. Oil inventory data today at 1435GMT will be closely watched and higher than expected results should give the oil price another hit, below yesterday's $118/bbl low.
USDJPY also gained, catching up a bit to the other currency moves from yesterday. The pair opened near 108.35 and was sitting near 108.65 at the close of London trading. It rose as high as 108.70, which seems to be the next key resistance level and trigger for more upside. US stock markets are currently pointing to a weak open, but another pullback in oil prices could propel them into the green and thus help extend USDJPY gains.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/6/2008 14:00 CA Ivey Purchasing Managers Index JUL 69.6 62.5
* 8/6/2008 14:35 DOE U.S. Crude Oil Inventories AUG 1 -200K -81K
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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Structural Dollar Support
Daily Forex Fundamentals | Written by Investica | Aug 06 08 10:47 GMT |
Structural support will continue to underpin the dollar, but it will be difficult to secure strong near-term gains from current levels
The dollar strengthened in European trading on Tuesday and sustained the advance with a peak close to 1.5460 ahead of the US open as commodity prices were subjected to further selling pressure while there were reports of strong dollar buying from US accounts.
The US ISM index for the services sector increased to 49.5 in July from 48.2 previously which was slightly above market expectations. The data breakdown was mixed and failed to provide clear direction. The employment component improved, but there was a rise in inventories which will lessen the potential for a sustained recovery in the economy.
As expected, the Federal Reserve held interest rates at 2.00% following the latest FOMC meeting. There was a 10-1 vote with Fisher again dissenting and calling for a hike. The statement was not changed radically from the previous meeting with the Fed uneasy over both growth and inflation aspects. The inflation situation was described as highly uncertain with considerable concern while the labour market had softened further. Markets will remain sceptical that the Fed will tighten policy this year with some disappointment over the Fed stance which will curb dollar buying support as yields will remain low.
Investica
http://www.investica.co.uk
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.
Read more...
Structural support will continue to underpin the dollar, but it will be difficult to secure strong near-term gains from current levels
The dollar strengthened in European trading on Tuesday and sustained the advance with a peak close to 1.5460 ahead of the US open as commodity prices were subjected to further selling pressure while there were reports of strong dollar buying from US accounts.
The US ISM index for the services sector increased to 49.5 in July from 48.2 previously which was slightly above market expectations. The data breakdown was mixed and failed to provide clear direction. The employment component improved, but there was a rise in inventories which will lessen the potential for a sustained recovery in the economy.
As expected, the Federal Reserve held interest rates at 2.00% following the latest FOMC meeting. There was a 10-1 vote with Fisher again dissenting and calling for a hike. The statement was not changed radically from the previous meeting with the Fed uneasy over both growth and inflation aspects. The inflation situation was described as highly uncertain with considerable concern while the labour market had softened further. Markets will remain sceptical that the Fed will tighten policy this year with some disappointment over the Fed stance which will curb dollar buying support as yields will remain low.
Investica
http://www.investica.co.uk
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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