By Kristy Scheuble
August 14 (Bloomberg) -- Following is a summary of the July consumer price report from the Labor Department.
===============================================================================
July June May April March 3-mo. July
Weight 2008 2008 2008 2008 2008 Annual YOY%
===============================================================================
All items 100.0% 0.8% 1.1% 0.6% 0.2% 0.3% 10.6% 5.6%
(3 decimals) 100.0% 0.818% 1.056% 0.650% 0.207% 0.343% n/a n/a
ex-food/energy 76.5% 0.3% 0.3% 0.2% 0.1% 0.2% 3.5% 2.5%
(3 decimals) 76.5% 0.327% 0.323% 0.202% 0.104% 0.152% n/a n/a
ex-food 86.2% 0.8% 1.1% 0.7% 0.1% 0.4% 10.9% 5.5%
ex-energy 90.3% 0.4% 0.4% 0.2% 0.2% 0.2% 4.2% 3.0%
Energy 9.7% 4.0% 6.6% 4.4% 0.0% 1.9% 79.4% 29.3%
Services 58.7% 0.5% 0.5% 0.5% 0.3% 0.4% 6.2% 4.1%
ex-energy 54.9% 0.3% 0.4% 0.3% 0.1% 0.2% 4.1% 3.3%
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Housing 42.4% 0.6% 0.5% 0.5% 0.3% 0.4% 6.5% 3.9%
Owners eq. rent 23.9% 0.1% 0.3% 0.1% 0.2% 0.2% 1.8% 2.6%
===============================================================================
July June May April March 3-mo. July
Weight 2008 2008 2008 2008 2008 Annual YOY%
===============================================================================
Fuels & util. 5.1% 3.3% 1.8% 2.4% 2.2% 2.0% 34.4% 16.0%
Food/beverages 14.9% 0.9% 0.7% 0.3% 0.9% 0.2% 8.0% 5.8%
Food 13.8% 0.9% 0.8% 0.3% 0.9% 0.2% 8.4% 6.0%
Apparel 3.7% 1.2% 0.1% -0.3% 0.5% -1.3% 4.2% 0.8%
Transportation 17.7% 1.7% 3.8% 2.0% -0.7% 0.7% 34.3% 13.4%
Vehicles 7.2% 0.2% 0.1% -0.1% -0.2% -0.1% 0.8% -0.3%
Gasoline 5.2% 4.1% 10.1% 5.7% -2.0% 1.3% 115.4% 37.9%
Medical care 6.2% 0.1% 0.2% 0.2% 0.2% 0.1% 1.8% 3.5%
Recreation 5.6% 0.4% 0.1% 0.1% -0.1% 0.3% 2.4% 1.7%
Education, comm. 6.1% 0.5% 0.5% 0.4% 0.4% 0.3% 5.5% 3.7%
Pers. computers 0.2% -1.0% -1.4% -1.8% -1.5% -0.2% -15.7% -11.8%
Other good, serv 3.3% 0.4% 0.4% 0.4% 0.5% 0.4% 4.6% 4.0%
Tobacco 0.7% 1.2% 1.5% 0.8% 0.3% -0.1% 14.9% 7.7%
Commodities 41.3% 1.2% 1.9% 0.9% 0.1% 0.3% 17.0% 7.8%
ex-food/bev. 26.4% 1.3% 2.5% 1.2% -0.4% 0.4% 22.3% 9.0%
ex-food/energy 21.6% 0.5% 0.1% -0.1% 0.0% -0.1% 1.7% 0.6%
-------------------------------------------------------------------------------
===============================================================================
July June May April March Feb. Jan.
Weight 2008 2008 2008 2008 2008 2008 2008
===============================================================================
-------------------- YOY% Change --------------------
All items 100.0% 5.6% 5.0% 4.2% 3.9% 4.0% 4.0% 4.3%
(3 decimals) 100.0% 5.600% 5.022% 4.176% 3.937% 3.981% 4.027% 4.280%
ex-food/energy 76.5% 2.5% 2.4% 2.3% 2.3% 2.4% 2.3% 2.5%
(3 decimals) 76.5% 2.510% 2.413% 2.313% 2.258% 2.355% 2.273% 2.466%
-------------- Contribution to Change ---------------
All items 100.0% 0.82% 1.06% 0.65% 0.21% 0.34% 0.03% 0.39%
Housing 42.4% 0.26% 0.20% 0.20% 0.13% 0.18% 0.08% 0.10%
Transportation 17.7% 0.30% 0.66% 0.36% -0.12% 0.13% -0.12% 0.10%
Food & beverages 14.9% 0.13% 0.11% 0.05% 0.14% 0.03% 0.05% 0.10%
Medical care 6.2% 0.00% 0.01% 0.01% 0.01% 0.01% 0.01% 0.03%
Education, comm. 6.1% 0.03% 0.03% 0.02% 0.02% 0.02% 0.01% 0.02%
Recreation 5.6% 0.02% 0.01% 0.00% 0.00% 0.01% 0.01% 0.01%
Apparel 3.7% 0.05% 0.00% -0.01% 0.02% -0.05% -0.01% 0.02%
Other good, ser. 3.3% 0.01% 0.01% 0.01% 0.02% 0.01% 0.01% 0.01%
===============================================================================
NOTE: All percentage changes are monthly, unless otherwise noted.
Monthly and three month annual changes are seasonally adjusted,
yearly changes are unadjusted.
To contact the reporter on this story: Kristy Scheuble in Washington kmckeaney@bloomberg.net
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Thursday, August 14, 2008
ECB Will Miss Goal for 11th Year, Forecasters Predict
By Gabi Thesing
Aug. 14 (Bloomberg) -- The European Central Bank will fail to achieve its goal of keeping inflation below 2 percent for an 11th consecutive year in 2010, according to a quarterly survey of forecasters published by the ECB today.
The forecasters predict inflation will average 3.6 percent this year, 2.6 percent in 2009 and 2.1 percent in 2010, raising their expectations from May, the Frankfurt-based central bank said. The expectation for inflation in the longer term, defined as through 2013, rose to 2.03 percent, the highest since the survey started in 1999 and up from 1.95 percent three months ago.
``The survey is an unwelcome challenge to the ECB's credibility,'' said Julian Callow, chief European economist at Barclay's Capital in London. It tallies ``with a whole range of other surveys all pointing in the same direction. They signal a lack of confidence in the ECB's ability to meet its own definition of price stability.''
The ECB aims to keep annual price gains ``close to but below'' 2 percent, a goal it has missed every year since 1999. Inflation in the 15-nation euro region is currently running at 4 percent, the fastest pace in 16 years. The bank raised its benchmark rate to a seven-year high of 4.25 percent last month, citing its desire to keep inflation expectations in check to prevent a wage-price spiral.
Rising inflation expectations ``reflect the elevated levels of oil, commodity and food prices as well as, to a lesser extent, concerns about higher wages,'' the ECB said today.
Record Oil Price
The price of oil has gained 61 percent over the past year, reaching a record $147.27 on July 11. Negotiated wages in Germany, Europe's largest economy, jumped 3.5 percent in the year through April, the biggest gain in 12 years.
``There is a risk that inflation will simply not come down to the levels we were used to in the past,'' said Kenneth Broux, an economist at Lloyds TSB Group Plc in London. ``There is a stronger chance that the ECB will raise rates next year than cut them.''
Investors increased bets that the ECB's next move will be a rate reduction after Trichet said on Aug. 7 growth will be ``particularly weak'' through the third quarter. The yield on the March Eonia forward contract was at 4.11 percent today, down from 4.38 percent on Aug. 6.
The euro-region economy shrank 0.2 percent in the second quarter, its first contraction since the launch of the euro almost a decade ago, as surging energy and food costs damped consumer spending.
Slower economic expansion will not be enough to bring inflation back into the ECB's comfort zone over the next two years, the survey of forecasters suggests.
They predict inflation will remain above 2 percent even after cutting their 2009 growth prediction to 1.3 percent from 1.6 percent. Growth will pick up to 1.8 percent in 2010, they predict. Last year, the economy expanded 2.7 percent.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- The European Central Bank will fail to achieve its goal of keeping inflation below 2 percent for an 11th consecutive year in 2010, according to a quarterly survey of forecasters published by the ECB today.
The forecasters predict inflation will average 3.6 percent this year, 2.6 percent in 2009 and 2.1 percent in 2010, raising their expectations from May, the Frankfurt-based central bank said. The expectation for inflation in the longer term, defined as through 2013, rose to 2.03 percent, the highest since the survey started in 1999 and up from 1.95 percent three months ago.
``The survey is an unwelcome challenge to the ECB's credibility,'' said Julian Callow, chief European economist at Barclay's Capital in London. It tallies ``with a whole range of other surveys all pointing in the same direction. They signal a lack of confidence in the ECB's ability to meet its own definition of price stability.''
The ECB aims to keep annual price gains ``close to but below'' 2 percent, a goal it has missed every year since 1999. Inflation in the 15-nation euro region is currently running at 4 percent, the fastest pace in 16 years. The bank raised its benchmark rate to a seven-year high of 4.25 percent last month, citing its desire to keep inflation expectations in check to prevent a wage-price spiral.
Rising inflation expectations ``reflect the elevated levels of oil, commodity and food prices as well as, to a lesser extent, concerns about higher wages,'' the ECB said today.
Record Oil Price
The price of oil has gained 61 percent over the past year, reaching a record $147.27 on July 11. Negotiated wages in Germany, Europe's largest economy, jumped 3.5 percent in the year through April, the biggest gain in 12 years.
``There is a risk that inflation will simply not come down to the levels we were used to in the past,'' said Kenneth Broux, an economist at Lloyds TSB Group Plc in London. ``There is a stronger chance that the ECB will raise rates next year than cut them.''
Investors increased bets that the ECB's next move will be a rate reduction after Trichet said on Aug. 7 growth will be ``particularly weak'' through the third quarter. The yield on the March Eonia forward contract was at 4.11 percent today, down from 4.38 percent on Aug. 6.
The euro-region economy shrank 0.2 percent in the second quarter, its first contraction since the launch of the euro almost a decade ago, as surging energy and food costs damped consumer spending.
Slower economic expansion will not be enough to bring inflation back into the ECB's comfort zone over the next two years, the survey of forecasters suggests.
They predict inflation will remain above 2 percent even after cutting their 2009 growth prediction to 1.3 percent from 1.6 percent. Growth will pick up to 1.8 percent in 2010, they predict. Last year, the economy expanded 2.7 percent.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
Read more...
Spain Adopts New Measures to Reverse Economic Slump
By Emma Ross-Thomas and Sharon Smyth
Aug. 14 (Bloomberg) -- Spain eliminated its wealth tax and approved 20 billion euros ($29 billion) of financing for businesses and consumers in a bid to revive an economy growing at the slowest pace since a 1993 recession.
The measures, which follows an 18 billion-euro ($27 billion) stimulus package approved in April, aims to ease bureaucracy, increase competition and speed up public works projects. The plan seeks to return economic growth to a 3 percent rate by 2010, from the 1.8 percent annual pace announced for the second quarter today.
Prime Minister Jose Luis Rodriguez Zapatero, who called his ministers back early from their summer vacation to approve the measures, said the country's economy risked stagnating. ``We are going to work hard so as not to fall into negative growth, which others, including the most important countries of the euro zone, have done,'' he said at a press conference in Madrid.
Spain's economy has expanded faster than the euro-region average for more than a decade, driven by a building boom that has now collapsed because of rising interest rates and increasing joblessness. The economy grew 0.1 percent in the second quarter from the previous three months, when it expanded 0.3 percent, the national statistics agency said today.
Wealth Tax
``The measures will help in some way, but they will not change the situation,'' said Diego Fernandez, economist at Fortis Bank in Madrid, before Zapatero announced all the details of the package. ``The correction in the real estate sector will continue, as will the correction in the rest of the economy.''
As part of the plan, the government will make an additional 20 billion euros in financing available in 2009-2010 for small businesses and families trying to buy public housing, Zapatero said.
To help sustain the construction industry and speed up public works projects, the government will set a six-month limit on environmental impact studies. There are 3,000 pending public works projects and environmental impact studies are averaging more than 2 years, he said.
Zapatero also announced the government had approved a law making good on a previous pledge to eliminate the country's wealth tax and speed reimbursement to companies of value-added taxes. Those measures would inject 10 billion euros into the economy, he said. They must still be approved by parliament.
European Contraction
Even with economic growth decelerating from 4 percent as recently as the second quarter of last year, Spain continues to fare better than the larger euro-region economies. The euro zone contracted 0.2 percent in the second quarter with the German, French and Italian economies all shrinking.
Zapatero said that the recent decline in oil prices may help reduce Spain's inflation rate as soon as August. Consumer prices rose an annual 5.3 percent in July, the most in a decade.
Oil prices have fallen more than 20 percent since reaching a record $147.27 on July 11. That decline might also allow the European Central Bank to lower its benchmark interest rate, Zapatero said.
``If oil prices perform favorably, that should in a reasonable period of time also affect interest rates in the euro zone. It should affect them, and more so when we have just seen that there is a sharp slowdown in the whole of Europe and particularly in the euro zone''
The ECB last month raised the rate to a seven-year high of 4.25 percent to try to tame oil-driven inflation even as economic growth slowed.
To contact the reporter on this story: Emma Ross-Thomas in Madrid erossthomas@bloomberg.net
Read more...
Aug. 14 (Bloomberg) -- Spain eliminated its wealth tax and approved 20 billion euros ($29 billion) of financing for businesses and consumers in a bid to revive an economy growing at the slowest pace since a 1993 recession.
The measures, which follows an 18 billion-euro ($27 billion) stimulus package approved in April, aims to ease bureaucracy, increase competition and speed up public works projects. The plan seeks to return economic growth to a 3 percent rate by 2010, from the 1.8 percent annual pace announced for the second quarter today.
Prime Minister Jose Luis Rodriguez Zapatero, who called his ministers back early from their summer vacation to approve the measures, said the country's economy risked stagnating. ``We are going to work hard so as not to fall into negative growth, which others, including the most important countries of the euro zone, have done,'' he said at a press conference in Madrid.
Spain's economy has expanded faster than the euro-region average for more than a decade, driven by a building boom that has now collapsed because of rising interest rates and increasing joblessness. The economy grew 0.1 percent in the second quarter from the previous three months, when it expanded 0.3 percent, the national statistics agency said today.
Wealth Tax
``The measures will help in some way, but they will not change the situation,'' said Diego Fernandez, economist at Fortis Bank in Madrid, before Zapatero announced all the details of the package. ``The correction in the real estate sector will continue, as will the correction in the rest of the economy.''
As part of the plan, the government will make an additional 20 billion euros in financing available in 2009-2010 for small businesses and families trying to buy public housing, Zapatero said.
To help sustain the construction industry and speed up public works projects, the government will set a six-month limit on environmental impact studies. There are 3,000 pending public works projects and environmental impact studies are averaging more than 2 years, he said.
Zapatero also announced the government had approved a law making good on a previous pledge to eliminate the country's wealth tax and speed reimbursement to companies of value-added taxes. Those measures would inject 10 billion euros into the economy, he said. They must still be approved by parliament.
European Contraction
Even with economic growth decelerating from 4 percent as recently as the second quarter of last year, Spain continues to fare better than the larger euro-region economies. The euro zone contracted 0.2 percent in the second quarter with the German, French and Italian economies all shrinking.
Zapatero said that the recent decline in oil prices may help reduce Spain's inflation rate as soon as August. Consumer prices rose an annual 5.3 percent in July, the most in a decade.
Oil prices have fallen more than 20 percent since reaching a record $147.27 on July 11. That decline might also allow the European Central Bank to lower its benchmark interest rate, Zapatero said.
``If oil prices perform favorably, that should in a reasonable period of time also affect interest rates in the euro zone. It should affect them, and more so when we have just seen that there is a sharp slowdown in the whole of Europe and particularly in the euro zone''
The ECB last month raised the rate to a seven-year high of 4.25 percent to try to tame oil-driven inflation even as economic growth slowed.
To contact the reporter on this story: Emma Ross-Thomas in Madrid erossthomas@bloomberg.net
Read more...
Europe Economy Shrinks as Spending, Investment Falter
By Fergal O'Brien and Christian Vits
Aug. 14 (Bloomberg) -- Europe's economy contracted for the first time since the introduction of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.
Gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today. The year-on-year growth rate slowed for a third straight quarter, to 1.5 percent. Separate figures showed inflation held at 4 percent in July, less than initially estimated.
The stronger euro and slower global growth have damped Europe's exports just as the fastest inflation in 16 years erodes domestic purchasing power. European Central Bank President Jean- Claude Trichet last week said growth will be ``particularly weak'' through the third quarter, and economists at UBS Ltd. and Unicredit MIB say the risk of a recession has increased.
``The buffer that separates the economy from outright recession has been largely exhausted,'' said Aurelio Maccario, chief euro-area economist at Unicredit in Milan. ``So a natural question is whether we have seen the worst, or if leading indicators have further to fall.''
For Sunil Kapadia, an economist at UBS in London, the probability of a recession, defined as two consecutive quarters of contraction, has risen ``probably to over 50 percent now'' from below 40 percent previously, he said today.
`A Bit Exaggerated'
``The signs are not really very good for the future,'' Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, told journalists in Brussels today, though she deflected talk about a possible recession. ``It's a bit exaggerated to use that word.''
Even with the weaker growth, the central bank last month raised its key rate to 4.25 percent, a seven-year high, to curb price growth. While today's inflation reading was less than the 4.1 percent estimated earlier, it still is twice the ECB's 2 percent limit. Food-price increases accelerated to 6.7 percent in July, while energy-price inflation soared to 17.1 percent.
The slowdown isn't confined to the euro area. In the U.S., the world's largest economy, growth may average an annual 0.7 percent from July through December, half the pace of the first half. The Bank of England this week cut its forecast for U.K. expansion, Japan's economy is on the brink of a recession, and China today said industrial-output growth is at a 17-month low.
German GDP
In Europe, national data today showed German GDP fell a seasonally adjusted 0.5 percent from the first quarter, when it rose a revised 1.3 percent. The French and Italian economies also contracted in the April-June period, the Dutch economy stalled and Spain grew at the slowest pace since a 1993 recession as the nation's once-booming construction industry slumped.
Netherlands-based CSM NV, the world's largest supplier of ingredients to bakeries, yesterday said price increases will hurt U.S. sales and delayed a profitability goal. Ryanair Holdings Plc, Europe's biggest discount airline, may post the first full-year loss since going public in 1997.
``This is a cyclical downturn, which tends to be a long haul'' issue, said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. Nonetheless, the ECB ``needs more economic pain'' before it will lower interest rates, he said.
European two-year note yields rose 2 basis points to 4.03 percent after the GDP data. The yield on the German 10-year bund, Europe's benchmark government security, increased 1 basis point to 4.22 percent. The euro, which it has gained 10 percent in the last 12 months, was little changed at $1.4907 today.
Emerging Asia
Some companies are trying to offset falling western European and U.S. orders by expanding in eastern Europe, oil- exporting countries and emerging Asia. Hochtief AG, Germany's largest builder, today reported a jump in second-quarter profit and increased its full-year forecasts on rising demand for construction and mining work in Australia and Asia.
Hochtief rose 2.9 percent in Frankfurt trading. Europe's Dow Jones Stoxx 600 added 0.8 percent to 286.60 points.
Still, an index measuring the economic climate in the euro region dropped to a 15-year low, the Munich-based Ifo institute said yesterday, with measures of both current conditions and expectations declining. German factory orders have dropped for the past seven months.
While oil prices have retreated 20 percent from a record $147.27 a barrel reached on July 11, they are still 60 percent higher than a year ago.
``The real slowdown is only starting now,'' said David Kohl, deputy chief economist at Julius Baer Holding AG in Frankfurt. ``The worst is still ahead.''
To contact the reporters on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net; Christian Vits in Frankfurt at cvits@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- Europe's economy contracted for the first time since the introduction of the euro almost a decade ago as faltering sales undermined investment by companies and soaring costs eroded consumer spending power.
Gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today. The year-on-year growth rate slowed for a third straight quarter, to 1.5 percent. Separate figures showed inflation held at 4 percent in July, less than initially estimated.
The stronger euro and slower global growth have damped Europe's exports just as the fastest inflation in 16 years erodes domestic purchasing power. European Central Bank President Jean- Claude Trichet last week said growth will be ``particularly weak'' through the third quarter, and economists at UBS Ltd. and Unicredit MIB say the risk of a recession has increased.
``The buffer that separates the economy from outright recession has been largely exhausted,'' said Aurelio Maccario, chief euro-area economist at Unicredit in Milan. ``So a natural question is whether we have seen the worst, or if leading indicators have further to fall.''
For Sunil Kapadia, an economist at UBS in London, the probability of a recession, defined as two consecutive quarters of contraction, has risen ``probably to over 50 percent now'' from below 40 percent previously, he said today.
`A Bit Exaggerated'
``The signs are not really very good for the future,'' Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, told journalists in Brussels today, though she deflected talk about a possible recession. ``It's a bit exaggerated to use that word.''
Even with the weaker growth, the central bank last month raised its key rate to 4.25 percent, a seven-year high, to curb price growth. While today's inflation reading was less than the 4.1 percent estimated earlier, it still is twice the ECB's 2 percent limit. Food-price increases accelerated to 6.7 percent in July, while energy-price inflation soared to 17.1 percent.
The slowdown isn't confined to the euro area. In the U.S., the world's largest economy, growth may average an annual 0.7 percent from July through December, half the pace of the first half. The Bank of England this week cut its forecast for U.K. expansion, Japan's economy is on the brink of a recession, and China today said industrial-output growth is at a 17-month low.
German GDP
In Europe, national data today showed German GDP fell a seasonally adjusted 0.5 percent from the first quarter, when it rose a revised 1.3 percent. The French and Italian economies also contracted in the April-June period, the Dutch economy stalled and Spain grew at the slowest pace since a 1993 recession as the nation's once-booming construction industry slumped.
Netherlands-based CSM NV, the world's largest supplier of ingredients to bakeries, yesterday said price increases will hurt U.S. sales and delayed a profitability goal. Ryanair Holdings Plc, Europe's biggest discount airline, may post the first full-year loss since going public in 1997.
``This is a cyclical downturn, which tends to be a long haul'' issue, said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. Nonetheless, the ECB ``needs more economic pain'' before it will lower interest rates, he said.
European two-year note yields rose 2 basis points to 4.03 percent after the GDP data. The yield on the German 10-year bund, Europe's benchmark government security, increased 1 basis point to 4.22 percent. The euro, which it has gained 10 percent in the last 12 months, was little changed at $1.4907 today.
Emerging Asia
Some companies are trying to offset falling western European and U.S. orders by expanding in eastern Europe, oil- exporting countries and emerging Asia. Hochtief AG, Germany's largest builder, today reported a jump in second-quarter profit and increased its full-year forecasts on rising demand for construction and mining work in Australia and Asia.
Hochtief rose 2.9 percent in Frankfurt trading. Europe's Dow Jones Stoxx 600 added 0.8 percent to 286.60 points.
Still, an index measuring the economic climate in the euro region dropped to a 15-year low, the Munich-based Ifo institute said yesterday, with measures of both current conditions and expectations declining. German factory orders have dropped for the past seven months.
While oil prices have retreated 20 percent from a record $147.27 a barrel reached on July 11, they are still 60 percent higher than a year ago.
``The real slowdown is only starting now,'' said David Kohl, deputy chief economist at Julius Baer Holding AG in Frankfurt. ``The worst is still ahead.''
To contact the reporters on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net; Christian Vits in Frankfurt at cvits@bloomberg.net.
Read more...
India Inflation Accelerates to 16-Year High of 12.44%
By Kartik Goyal
Aug. 14 (Bloomberg) -- India's inflation soared to a 16- year high and may accelerate further after the government approved wage increases for civil servants.
Wholesale prices rose 12.44 percent in the week to Aug. 2, after increasing 12.01 percent in the previous week, the commerce ministry said in New Delhi today. Economists were expecting a 12.2 percent gain.
Prime Minister Manmohan Singh's cabinet today approved an average 21 percent salary increase for about 5 million government employees. That may give the central bank little choice other than to raise interest rates again after three increases since June, economists said.
``We expect inflation to remain elevated and reach 13.5 percent by December,'' said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai. ``We are looking at a 50 basis point increase for both the repurchase rate and the cash- reserve ratio by year-end.''
India's 10-year bonds fell for a third day, their worst run in almost a month, on accelerating inflation. The yield on the benchmark 8.24 percent note due April 2018 climbed 5 basis points to 9.14 percent as of the 5:30 p.m. close in Mumbai, according to the central bank's trading system.
The Reserve Bank of India last month raised its benchmark rate by a half point to a seven-year high of 9 percent. The reserve requirement for commercial lenders was also lifted to 9 percent from 8.75 percent. Governor Yaga Venugopal Reddy is targeting inflation of 7 percent in the year to March.
`Tight' Policy
Prime Minister Singh's economic advisory council yesterday said the central bank needs to keep monetary policy ``tight'' amid rising prices. Faster inflation, coupled with a global slowdown, may weaken growth in India's $912 billion economy to the slowest in four years, the panel said.
Finance Minister Palaniappan Chidambaram today said the impact of increased salaries on inflation was taken into account when the cabinet approved the proposal. The higher wages will cost the government 338.6 billion rupees ($8 billion) this year.
Soaring energy and commodity prices are fanning inflation across Asia. Pakistan's inflation accelerated to a 30-year high of 24.33 percent in July. Consumer prices in Indonesia jumped 11.9 percent last month, the biggest gain in almost two years.
Inflation in India in the week to August 2 accelerated because of a rise in the cost of pulses, fruits, spices and aviation turbine fuel. Fuel-price inflation rose to 17.99 percent, compared with 17.12 percent in the previous week, today's report showed.
Fuel Prices
Fuel costs increased after Indian Oil Corp., the nation's largest refiner, raised the price of jet fuel by 2.9 percent on Aug. 1 to 2,043.03 rupees a kiloliter.
Faster inflation is squeezing consumer spending and hurting factory output. India's industrial production grew 5.2 percent in the quarter ended June 30, almost half the 10.3 percent pace in the same period a year earlier.
Mahindra & Mahindra Ltd., the biggest maker of sport- utility vehicles in India, this week said it is cutting production at its largest factory after sales dropped 4 percent in July, the first decline in local sales this year. India's passenger-car sales fell last month for the first time in more than 2 1/2 years.
The government may revise today's preliminary wholesale- price estimate in two months after receiving additional data. The commerce ministry today raised its inflation estimate for the week ended June 7 to 11.66 percent from 11.05 percent.
To contact the reporter on this story: Kartik Goyal in New Delhi at yal@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- India's inflation soared to a 16- year high and may accelerate further after the government approved wage increases for civil servants.
Wholesale prices rose 12.44 percent in the week to Aug. 2, after increasing 12.01 percent in the previous week, the commerce ministry said in New Delhi today. Economists were expecting a 12.2 percent gain.
Prime Minister Manmohan Singh's cabinet today approved an average 21 percent salary increase for about 5 million government employees. That may give the central bank little choice other than to raise interest rates again after three increases since June, economists said.
``We expect inflation to remain elevated and reach 13.5 percent by December,'' said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai. ``We are looking at a 50 basis point increase for both the repurchase rate and the cash- reserve ratio by year-end.''
India's 10-year bonds fell for a third day, their worst run in almost a month, on accelerating inflation. The yield on the benchmark 8.24 percent note due April 2018 climbed 5 basis points to 9.14 percent as of the 5:30 p.m. close in Mumbai, according to the central bank's trading system.
The Reserve Bank of India last month raised its benchmark rate by a half point to a seven-year high of 9 percent. The reserve requirement for commercial lenders was also lifted to 9 percent from 8.75 percent. Governor Yaga Venugopal Reddy is targeting inflation of 7 percent in the year to March.
`Tight' Policy
Prime Minister Singh's economic advisory council yesterday said the central bank needs to keep monetary policy ``tight'' amid rising prices. Faster inflation, coupled with a global slowdown, may weaken growth in India's $912 billion economy to the slowest in four years, the panel said.
Finance Minister Palaniappan Chidambaram today said the impact of increased salaries on inflation was taken into account when the cabinet approved the proposal. The higher wages will cost the government 338.6 billion rupees ($8 billion) this year.
Soaring energy and commodity prices are fanning inflation across Asia. Pakistan's inflation accelerated to a 30-year high of 24.33 percent in July. Consumer prices in Indonesia jumped 11.9 percent last month, the biggest gain in almost two years.
Inflation in India in the week to August 2 accelerated because of a rise in the cost of pulses, fruits, spices and aviation turbine fuel. Fuel-price inflation rose to 17.99 percent, compared with 17.12 percent in the previous week, today's report showed.
Fuel Prices
Fuel costs increased after Indian Oil Corp., the nation's largest refiner, raised the price of jet fuel by 2.9 percent on Aug. 1 to 2,043.03 rupees a kiloliter.
Faster inflation is squeezing consumer spending and hurting factory output. India's industrial production grew 5.2 percent in the quarter ended June 30, almost half the 10.3 percent pace in the same period a year earlier.
Mahindra & Mahindra Ltd., the biggest maker of sport- utility vehicles in India, this week said it is cutting production at its largest factory after sales dropped 4 percent in July, the first decline in local sales this year. India's passenger-car sales fell last month for the first time in more than 2 1/2 years.
The government may revise today's preliminary wholesale- price estimate in two months after receiving additional data. The commerce ministry today raised its inflation estimate for the week ended June 7 to 11.66 percent from 11.05 percent.
To contact the reporter on this story: Kartik Goyal in New Delhi at yal@bloomberg.net.
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U.S. Consumer Prices Rose More Than Forecast in July
By Shobhana Chandra
Aug. 14 (Bloomberg) -- U.S. consumer prices jumped to a 17- year high in July, reducing the ability of the Federal Reserve to lower interest rates should the economic slowdown deepen.
The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest surge since January 1991. So-called core prices, which exclude food and energy, also rose more than projected.
The report may intensify the debate between those Fed policy makers that forecast inflation will slow and those concerned that price pressures will accelerate. Increases beyond food and fuel, including gains in clothing, airline fares and education, make it less likely that central bankers will be able to keep interest rates unchanged for long.
There is ``a tremendous amount of cost pressure here that is affecting many, many industries,'' William Poole, the former St. Louis Fed president, said in an interview with Bloomberg Television. Today's report ``raises the general trajectory'' of interest rates, reducing the chance of cuts and bringing forward the likelihood of increases, he said.
Still, commodity costs have retreated since mid-July, indicating the rise in total consumer prices may slow. Crude oil futures dropped as low as $112 a barrel this week after topping $147 last month. Regular gasoline, which reached a record $4.11 a gallon on July 17, has fallen about 8 percent, according to AAA.
Treasuries, Stocks
Treasuries rose, with benchmark 10-year note yields falling to 3.90 percent at 9:39 a.m. in New York, from 3.94 percent late yesterday. The Standard & Poor's 500 Stock Index dropped 0.6 percent to 1,278.64.
Consumer prices were forecast to rise 0.4 percent, according to the median forecast of 78 economists in a Bloomberg News survey. Estimates ranged from gains of 0.1 percent to 0.7 percent.
Costs excluding food and energy increased 0.3 percent for a second month, exceeding the 0.2 percent median forecast of economists surveyed.
The core rate increased 2.5 percent from July 2007, the most since January, after a 2.4 percent year-over-year increase the prior month.
Separately, Labor reported that more Americans than anticipated filed first-time claims for jobless benefits last week.
Energy expenses jumped 4 percent, after a 6.6 percent gain in the prior month, today's report said. Gasoline prices increased 4.1 percent.
Cost Pressures
Procter & Gamble Co. was among businesses that responded to the surge in oil earlier this year. The world's largest consumer- products company charged more for Cascade dishwashing detergent, Iams pet food and Gillette razors to offset some of the jump in packaging costs. McDonald's Corp., the world's largest restaurant company, raised prices as ingredient expenses surged.
``Beef and cheese are up, but we've been able to mitigate that cost,'' Chief Executive Officer James Skinner said in an interview in Beijing last week.
The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.
Food prices, which account for about a fifth of the CPI, gained 0.9 percent after a 0.8 percent increase in June.
Clothing Costs
The increases went beyond food and fuel. Clothing expenses jumped 1.2 percent, the most since 1998. The cost of an airline ticket rose 1.3 percent and education expenses climbed 0.5 percent for a second month.
Rents which, make up almost 40 percent of the core CPI, cooled. A category designed to track rental prices rose 0.1 percent, compared with a 0.3 percent gain in June.
Policy makers at the Fed's Aug. 5 meeting signaled they're unlikely to change rates as they wait for slowing growth to cool inflation.
``Although downside risks to growth remain, the upside risks to inflation are also of significant concern,'' the Fed statement said. Still, ``the Committee expects inflation to moderate later this year and next year.''
Today's figures also showed wages decreased 0.8 percent after adjusting for inflation following a 0.9 percent drop in June. They were down 3.1 percent over the last 12 months, the biggest year-over-year decline since 1990. The drop in buying power is one reason economists forecast consumer spending will slow.
Car Sales
Higher gasoline bills and tighter credit reduced automobile purchases in July, causing retail sales to drop for the first time in five months, government figures showed yesterday.
Economists John Ryding and Conrad DeQuadros at RDQ Economics LLC in New York are among those not convinced inflation will continue to ebb. The recent decline is just ``temporary relief,'' they said.
``It would be a mistake to view this as a rolling over of the inflation problem and an endorsement of the Fed's policy to keep rates on hold,'' they wrote Aug. 11. By keeping rates low, policy makers will contribute to a pickup in prices later this year and next, they said.
A jump in the cost of imported goods may also give American companies leeway to charge more, economists said. Prices of products made overseas soared 22 percent in the year ended in July, the most since at least 1982, the Labor Department reported yesterday.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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ECB Vows to Fight Inflation Even as Economy Contracts
By Gabi Thesing
Aug. 14 (Bloomberg) -- The European Central Bank said it will continue to fight inflation even after the economy contracted for the first time since the launch of the euro a decade ago.
``Growth figures for mid-2008 will be substantially weaker than for the first quarter of the year,'' the Frankfurt-based ECB said in its monthly bulletin today. Still, ``against this background and in full accordance with our mandate, the Governing Council emphasizes that maintaining price stability in the medium term is the ECB's primary objective and that it is its strong determination'' to keep inflation expectations anchored.
The ECB raised its key rate to a seven-year high last month to discourage unions from lifting wage demands and companies from increasing prices after inflation accelerated at the fastest pace in 16 years. The economy of the 15 nations sharing the euro contracted in the second quarter from the first, the European Statistics Office said today, as a U.S.-led global slowdown curbed demand for exports and higher oil prices constrained spending.
Gross domestic product fell 0.2 percent from the first quarter, when it rose 0.7 percent. Record oil and food prices kept euro-area inflation to 4 percent in July, twice the ECB's limit.
While oil has retreated 20 percent from a record $147.27 a barrel reached on July 11, inflation risks are ``clearly on the upside and have increased in recent months,'' the ECB said today.
`Pipeline Effect'
The report echoes President Jean-Claude Trichet's comments on Aug. 7 after the bank kept its benchmark rate at 4.25 percent.
``The current monetary policy stance will contribute to achieving the ECB's objective'' of price stability, the report said. Even so, inflation is ``likely to remain well above'' the bank's 2 percent ceiling ``for a protracted period.''
Trichet said last week that ``a pipeline effect'' from commodity-price increases ``is something which is ongoing and undoubtedly creates more risks.'' There is an ``absolute necessity to avoid the materialization of such risks.''
Professional forecasters surveyed quarterly by the ECB have raised their inflation expectations for the next two years and the longer term, the bank said. Inflation will average 3.6 percent this year and 2.6 percent in 2009, the survey showed, up from May forecasts of 3 percent and 2.2 percent respectively.
For 2010, the forecasters estimate an average inflation rate of 2.1 percent. Their longer term inflation estimates have increased to 2 percent from 1.9 percent, according to the report.
Slower Growth
The forecasters predict growth will slow to 1.3 percent next year from 1.6 percent in 2008. They previously expected the economy would expand 1.6 percent in 2009. Growth will pick up to 1.8 percent in 2010, the survey shows.
ECB policy makers remain concerned that faster inflation will prompt companies to pass on their costs and encourage trade unions to demand bigger wage increases to compensate for higher prices.
German negotiated wages jumped 3.5 percent in the year through April, the biggest gain in 12 years, as companies such as BASF AG and ThyssenKrupp AG bowed to union demands.
This year's wage rounds culminate next month, when IG Metall, Germany's biggest union, starts talks for 3.2 million employees in the electronics, metal and car industries whose collective contracts expire Oct. 31. The union won a 5.2 percent raise for about 85,000 steelworkers in February.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
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Aug. 14 (Bloomberg) -- The European Central Bank said it will continue to fight inflation even after the economy contracted for the first time since the launch of the euro a decade ago.
``Growth figures for mid-2008 will be substantially weaker than for the first quarter of the year,'' the Frankfurt-based ECB said in its monthly bulletin today. Still, ``against this background and in full accordance with our mandate, the Governing Council emphasizes that maintaining price stability in the medium term is the ECB's primary objective and that it is its strong determination'' to keep inflation expectations anchored.
The ECB raised its key rate to a seven-year high last month to discourage unions from lifting wage demands and companies from increasing prices after inflation accelerated at the fastest pace in 16 years. The economy of the 15 nations sharing the euro contracted in the second quarter from the first, the European Statistics Office said today, as a U.S.-led global slowdown curbed demand for exports and higher oil prices constrained spending.
Gross domestic product fell 0.2 percent from the first quarter, when it rose 0.7 percent. Record oil and food prices kept euro-area inflation to 4 percent in July, twice the ECB's limit.
While oil has retreated 20 percent from a record $147.27 a barrel reached on July 11, inflation risks are ``clearly on the upside and have increased in recent months,'' the ECB said today.
`Pipeline Effect'
The report echoes President Jean-Claude Trichet's comments on Aug. 7 after the bank kept its benchmark rate at 4.25 percent.
``The current monetary policy stance will contribute to achieving the ECB's objective'' of price stability, the report said. Even so, inflation is ``likely to remain well above'' the bank's 2 percent ceiling ``for a protracted period.''
Trichet said last week that ``a pipeline effect'' from commodity-price increases ``is something which is ongoing and undoubtedly creates more risks.'' There is an ``absolute necessity to avoid the materialization of such risks.''
Professional forecasters surveyed quarterly by the ECB have raised their inflation expectations for the next two years and the longer term, the bank said. Inflation will average 3.6 percent this year and 2.6 percent in 2009, the survey showed, up from May forecasts of 3 percent and 2.2 percent respectively.
For 2010, the forecasters estimate an average inflation rate of 2.1 percent. Their longer term inflation estimates have increased to 2 percent from 1.9 percent, according to the report.
Slower Growth
The forecasters predict growth will slow to 1.3 percent next year from 1.6 percent in 2008. They previously expected the economy would expand 1.6 percent in 2009. Growth will pick up to 1.8 percent in 2010, the survey shows.
ECB policy makers remain concerned that faster inflation will prompt companies to pass on their costs and encourage trade unions to demand bigger wage increases to compensate for higher prices.
German negotiated wages jumped 3.5 percent in the year through April, the biggest gain in 12 years, as companies such as BASF AG and ThyssenKrupp AG bowed to union demands.
This year's wage rounds culminate next month, when IG Metall, Germany's biggest union, starts talks for 3.2 million employees in the electronics, metal and car industries whose collective contracts expire Oct. 31. The union won a 5.2 percent raise for about 85,000 steelworkers in February.
To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net.
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U.S. Jobless Claims Fell Less Than Forecast Last Week
By Courtney Schlisserman and Shobhana Chandra
Aug. 14 (Bloomberg) -- More Americans than anticipated filed initial claims for jobless benefits last week, signaling further weakness in the labor market.
The number of first-time applications decreased by 10,000 to 450,000 in the week ended Aug. 9, from a revised 460,000 the prior week that was higher than previously estimated. The total number of people receiving benefits climbed to an almost five- year high.
Rising unemployment and smaller wage gains are among the reasons economists project consumer spending will keep slowing following a drop in retail sales last month. Fewer purchases raise the risk that the economy will stall later this year.
``The job market is still weakening,'' said Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina. ``We're going to see continuing claims numbers continue to rise and that's certainly disconcerting.''
Economists forecast claims would fall to 435,000 from a previously reported 455,000 for the prior week, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 400,000 to 465,000.
A separate report today showed consumer prices climbed 0.8 percent in July, more than forecast, reflecting increases in the cost of food, energy, clothing and airline fares. Excluding food and fuel, so-called core prices rose 0.3 percent for a second month, also more than anticipated.
Market Reaction
After the reports, Treasuries were little changed, with the 10-year note's yield at 3.92 percent at 9:02 a.m. in New York, according to BGCantor Market Data. Futures on the Standard & Poor's 500 Stock Index dropped 0.5 percent to 1,277.90.
Claims in the last few weeks have been pushed up by several factors, according to a Labor spokesman. Publicity over the extension of benefits as well as an increase in firings have contributed to the jump, he said.
The government hasn't been able to quantify the impact on claims from the new legislation, according to the spokesman.
The four-week moving average of first-time claims, a less volatile measure, increased to 440,500, the highest since April 2002, today's report showed.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 2.6 percent from 2.5 percent. Thirty-five states and territories reported an increase in claims, while 18 had a decrease. These data are reported with a one-week lag.
Job Prospects
So far this year, weekly claims have averaged 372,300, compared with 321,000 for all of 2007.
The government program extending benefits is also boosting the level of continuing claims, which jumped in the week ended Aug. 2 to 3.417 million, the most since November 2003.
Rising prices and dimming job and wage prospects may hurt consumer spending the rest of this year. Sales at U.S. retailers dropped 0.1 percent in July, the Commerce Department said yesterday. Excluding automobiles, purchases increased a less- than-forecast 0.4 percent.
Ford Motor Co., the second-largest U.S. automaker, is laying off 300 workers at a Michigan engine factory to address dwindling demand for vehicles equipped with V-8 engines. The furloughs will extend indefinitely, spokeswoman Angie Kozleski said in an e-mail Aug. 11.
Some companies are seeking different solutions to make up for their rising costs and slower sales. Chrysler LLC plans to run a dozen U.S. plants four days a week instead of five, spokesman Ed Saenz said in an interview on Aug. 11. The shift is being discussed in the company's talks with the United Auto Workers union and the company doesn't expect the changes ``to be temporary,'' he said.
The automaker also plans to close its St. Louis-area minivan factory by the end of October and scale back to one shift of production at a nearby Dodge Ram plant by Sept. 2. These moves will cut about 2,400 jobs.
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.netShobhana Chandra in Washington at schandra1@bloomberg.net
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Aug. 14 (Bloomberg) -- More Americans than anticipated filed initial claims for jobless benefits last week, signaling further weakness in the labor market.
The number of first-time applications decreased by 10,000 to 450,000 in the week ended Aug. 9, from a revised 460,000 the prior week that was higher than previously estimated. The total number of people receiving benefits climbed to an almost five- year high.
Rising unemployment and smaller wage gains are among the reasons economists project consumer spending will keep slowing following a drop in retail sales last month. Fewer purchases raise the risk that the economy will stall later this year.
``The job market is still weakening,'' said Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina. ``We're going to see continuing claims numbers continue to rise and that's certainly disconcerting.''
Economists forecast claims would fall to 435,000 from a previously reported 455,000 for the prior week, according to the median of 41 projections in a Bloomberg News survey. Estimates ranged from 400,000 to 465,000.
A separate report today showed consumer prices climbed 0.8 percent in July, more than forecast, reflecting increases in the cost of food, energy, clothing and airline fares. Excluding food and fuel, so-called core prices rose 0.3 percent for a second month, also more than anticipated.
Market Reaction
After the reports, Treasuries were little changed, with the 10-year note's yield at 3.92 percent at 9:02 a.m. in New York, according to BGCantor Market Data. Futures on the Standard & Poor's 500 Stock Index dropped 0.5 percent to 1,277.90.
Claims in the last few weeks have been pushed up by several factors, according to a Labor spokesman. Publicity over the extension of benefits as well as an increase in firings have contributed to the jump, he said.
The government hasn't been able to quantify the impact on claims from the new legislation, according to the spokesman.
The four-week moving average of first-time claims, a less volatile measure, increased to 440,500, the highest since April 2002, today's report showed.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 2.6 percent from 2.5 percent. Thirty-five states and territories reported an increase in claims, while 18 had a decrease. These data are reported with a one-week lag.
Job Prospects
So far this year, weekly claims have averaged 372,300, compared with 321,000 for all of 2007.
The government program extending benefits is also boosting the level of continuing claims, which jumped in the week ended Aug. 2 to 3.417 million, the most since November 2003.
Rising prices and dimming job and wage prospects may hurt consumer spending the rest of this year. Sales at U.S. retailers dropped 0.1 percent in July, the Commerce Department said yesterday. Excluding automobiles, purchases increased a less- than-forecast 0.4 percent.
Ford Motor Co., the second-largest U.S. automaker, is laying off 300 workers at a Michigan engine factory to address dwindling demand for vehicles equipped with V-8 engines. The furloughs will extend indefinitely, spokeswoman Angie Kozleski said in an e-mail Aug. 11.
Some companies are seeking different solutions to make up for their rising costs and slower sales. Chrysler LLC plans to run a dozen U.S. plants four days a week instead of five, spokesman Ed Saenz said in an interview on Aug. 11. The shift is being discussed in the company's talks with the United Auto Workers union and the company doesn't expect the changes ``to be temporary,'' he said.
The automaker also plans to close its St. Louis-area minivan factory by the end of October and scale back to one shift of production at a nearby Dodge Ram plant by Sept. 2. These moves will cut about 2,400 jobs.
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.netShobhana Chandra in Washington at schandra1@bloomberg.net
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Frontline, Boskalis Shares Advance on MSCI Inclusion
By Alexis Xydias
Aug. 14 (Bloomberg) -- Frontline Ltd., the world's largest supertanker owner, and Royal Boskalis Westminster NV, owner of the biggest dredging fleet, jumped after the stocks were added to MSCI Barra's global indexes.
Frontline climbed 4.5 percent to 313 Norwegian kroner at 3:12 p.m. in Oslo, and Boskalis rose 5.6 percent to 35.50 euros in Amsterdam trading. The stocks were added to developed-market measures including the MSCI World Index as well as respective national benchmarks, MSCI Barra said in an e-mail today.
Jeronimo Martins SGPS SA, Portugal's biggest retailer, climbed 3 percent to 5.86 euros in Lisbon. Drax Group Plc, operator of western Europe's biggest coal-fired power station, gained as much as 3.8 percent before falling 1.6 percent after Merrill Lynch & Co. sold 5 million Drax shares. Both stocks were also added to the indexes, according to the e-mail.
As part of its quarterly reviews, MSCI Barra yesterday announced the changes to equity indexes that are benchmark to about $3 trillion, the index compiler said on its Web site. Joining and leaving an index can boost or hurt share prices as funds that track the measures must adjust their holdings to reflect the new compositions.
Duvernay Oil Corp., a Canadian oil explorer; Petrohawk Energy Corp., a Houston-based natural-gas producer; and Alpha Natural Resources Inc., the coking-coal producer that agreed in July to be taken over, will also join the indexes. All changes will take place as of the close of trading on Aug. 29.
Deletions
Smurfit Kappa Group Plc, Europe's largest maker of cardboard boxes, led declines among stocks that will leave the index. The shares tumbled 13 percent to 3.97 euros in Dublin.
Taylor Wimpey Plc, the U.K.'s largest homebuilder; Punch Taverns Plc, the biggest pub owner in Britain; Oshkosh Corp., the Wisconsin-based maker of aerial work platforms; and AutoNation Inc., the largest publicly traded U.S. car dealer, will also be removed from the indexes.
In emerging markets, four stocks were added to the MSCI index universe, according to the e-mail, with no deletions.
Yurun Food Group Ltd., China's biggest hog processor; S1 Corp., a provider of security services in South Korea; Russia's OAO RusHydro, the world's biggest publicly traded hydropower producer; and PT Indah Kiat Pulp & Paper, an Indonesian pulp and paper company, will join the indexes.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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Aug. 14 (Bloomberg) -- Frontline Ltd., the world's largest supertanker owner, and Royal Boskalis Westminster NV, owner of the biggest dredging fleet, jumped after the stocks were added to MSCI Barra's global indexes.
Frontline climbed 4.5 percent to 313 Norwegian kroner at 3:12 p.m. in Oslo, and Boskalis rose 5.6 percent to 35.50 euros in Amsterdam trading. The stocks were added to developed-market measures including the MSCI World Index as well as respective national benchmarks, MSCI Barra said in an e-mail today.
Jeronimo Martins SGPS SA, Portugal's biggest retailer, climbed 3 percent to 5.86 euros in Lisbon. Drax Group Plc, operator of western Europe's biggest coal-fired power station, gained as much as 3.8 percent before falling 1.6 percent after Merrill Lynch & Co. sold 5 million Drax shares. Both stocks were also added to the indexes, according to the e-mail.
As part of its quarterly reviews, MSCI Barra yesterday announced the changes to equity indexes that are benchmark to about $3 trillion, the index compiler said on its Web site. Joining and leaving an index can boost or hurt share prices as funds that track the measures must adjust their holdings to reflect the new compositions.
Duvernay Oil Corp., a Canadian oil explorer; Petrohawk Energy Corp., a Houston-based natural-gas producer; and Alpha Natural Resources Inc., the coking-coal producer that agreed in July to be taken over, will also join the indexes. All changes will take place as of the close of trading on Aug. 29.
Deletions
Smurfit Kappa Group Plc, Europe's largest maker of cardboard boxes, led declines among stocks that will leave the index. The shares tumbled 13 percent to 3.97 euros in Dublin.
Taylor Wimpey Plc, the U.K.'s largest homebuilder; Punch Taverns Plc, the biggest pub owner in Britain; Oshkosh Corp., the Wisconsin-based maker of aerial work platforms; and AutoNation Inc., the largest publicly traded U.S. car dealer, will also be removed from the indexes.
In emerging markets, four stocks were added to the MSCI index universe, according to the e-mail, with no deletions.
Yurun Food Group Ltd., China's biggest hog processor; S1 Corp., a provider of security services in South Korea; Russia's OAO RusHydro, the world's biggest publicly traded hydropower producer; and PT Indah Kiat Pulp & Paper, an Indonesian pulp and paper company, will join the indexes.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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Forties Crude Rises After Phibro Buys a Cargo, Chevron Bids
By Alexander Kwiatkowski
Aug. 14 (Bloomberg) -- Forties North Sea crude rose to a one-week high relative to Dated Brent after Phibro Ltd. bought a cargo and Chevron Corp. bid without attracting a seller.
Forties was at a discount of 67 cents to Dated Brent compared with a discount of $1.19 yesterday, according to data compiled by Bloomberg. That's the smallest gap since Aug. 5.
The price rose after companies including Chevron and Phibro bid for cargoes. Phibro bid for a shipment loading between Sept. 1 and Sept. 3 before buying a cargo from Royal Dutch Shell Plc loading Aug. 27 to Aug. 29, according to the companies.
Chevron also bid for a cargo and failed to attract a seller. The U.S. refiner bid for a shipment loading Aug. 23-28 at a discount of 60 cents to Dated Brent, it said.
Demand for Forties has risen amid rising prices for alternative crude types such as Russia's Urals blend. European refiners may switch consumption between Forties and Urals when the spread between the two grades narrows. Forties typically trades at a premium to Urals because of differences in the value of the products they yield.
The spread between the cost of Forties and Urals, relative to Dated Brent, narrowed to 41 cents yesterday, the smallest since May 2006. The spread has averaged $3.38 this year. Urals prices rose to the highest in six months yesterday.
Dated Brent for delivery in 10 to 21 days rose to $111.35 a barrel from $110.16, according to Bloomberg data.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
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Aug. 14 (Bloomberg) -- Forties North Sea crude rose to a one-week high relative to Dated Brent after Phibro Ltd. bought a cargo and Chevron Corp. bid without attracting a seller.
Forties was at a discount of 67 cents to Dated Brent compared with a discount of $1.19 yesterday, according to data compiled by Bloomberg. That's the smallest gap since Aug. 5.
The price rose after companies including Chevron and Phibro bid for cargoes. Phibro bid for a shipment loading between Sept. 1 and Sept. 3 before buying a cargo from Royal Dutch Shell Plc loading Aug. 27 to Aug. 29, according to the companies.
Chevron also bid for a cargo and failed to attract a seller. The U.S. refiner bid for a shipment loading Aug. 23-28 at a discount of 60 cents to Dated Brent, it said.
Demand for Forties has risen amid rising prices for alternative crude types such as Russia's Urals blend. European refiners may switch consumption between Forties and Urals when the spread between the two grades narrows. Forties typically trades at a premium to Urals because of differences in the value of the products they yield.
The spread between the cost of Forties and Urals, relative to Dated Brent, narrowed to 41 cents yesterday, the smallest since May 2006. The spread has averaged $3.38 this year. Urals prices rose to the highest in six months yesterday.
Dated Brent for delivery in 10 to 21 days rose to $111.35 a barrel from $110.16, according to Bloomberg data.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
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Natural Gas Falls on Outlook for Above-Average Inventory Gain
By Reg Curren
Aug. 14 (Bloomberg) -- Natural gas in New York declined amid speculation a government report today will show an above-average expansion of supplies.
Inventories rose 52 billion cubic feet in the week ended Aug. 8, according to the median of 21 analyst estimates compiled by Bloomberg News. The average change for this time of year over the past five is an increase of 50 billion.
``There's really not a lot of excitement in the market right now,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. A stockpile gain will not support higher prices, Flynn said.
Natural gas for September delivery fell 4.5 cents, or 0.5 percent, to $8.411 per million British thermal units at 9:33 a.m. on the New York Mercantile Exchange. Futures have fallen 38 percent since closing at $13.577 on July 3, a 30-month high.
Gas is selling below its 200-day moving average of $9.599 and its 300-day moving average of $8.60 per million Btu. Gas is 21 percent higher than a year ago and on this day in 2007 closed at $6.94 per million Btu.
``It seems traders have returned to economic worries'' as a reason to sell energy holdings, said Peter Beutel, president of New Canaan, Connecticut-based Cameron Hanover Inc.
Consumer prices rose 0.8 percent, twice as much as expected, the Labor Department said today. Interest rates may have to rise to combat inflation, William Poole, the former St. Louis Fed president, said in an interview with Bloomberg Television.
The Federal Reserve would lose the ability to lower interest rates should the economic slowdown deepen.
Domestic Production
Onshore production in the U.S. is expected to increase 8 percent this year, spurred by the price run-up earlier this year, the Energy Department said in its monthly Short-Term Energy Outlook released Aug. 12. Higher output may prompt lower prices later in the year.
Stockpiles may end the injection season in October near last year's record of 3.545 trillion cubic feet, George Hopley, an analyst at Barclays Capital Inc. in New York, said in a report this week. The average over the past five years is 3.327 trillion cubic feet, according to the Energy Department, which is scheduled to release its inventory report at 10:35 a.m. in Washington.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Aug. 14 (Bloomberg) -- Natural gas in New York declined amid speculation a government report today will show an above-average expansion of supplies.
Inventories rose 52 billion cubic feet in the week ended Aug. 8, according to the median of 21 analyst estimates compiled by Bloomberg News. The average change for this time of year over the past five is an increase of 50 billion.
``There's really not a lot of excitement in the market right now,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. A stockpile gain will not support higher prices, Flynn said.
Natural gas for September delivery fell 4.5 cents, or 0.5 percent, to $8.411 per million British thermal units at 9:33 a.m. on the New York Mercantile Exchange. Futures have fallen 38 percent since closing at $13.577 on July 3, a 30-month high.
Gas is selling below its 200-day moving average of $9.599 and its 300-day moving average of $8.60 per million Btu. Gas is 21 percent higher than a year ago and on this day in 2007 closed at $6.94 per million Btu.
``It seems traders have returned to economic worries'' as a reason to sell energy holdings, said Peter Beutel, president of New Canaan, Connecticut-based Cameron Hanover Inc.
Consumer prices rose 0.8 percent, twice as much as expected, the Labor Department said today. Interest rates may have to rise to combat inflation, William Poole, the former St. Louis Fed president, said in an interview with Bloomberg Television.
The Federal Reserve would lose the ability to lower interest rates should the economic slowdown deepen.
Domestic Production
Onshore production in the U.S. is expected to increase 8 percent this year, spurred by the price run-up earlier this year, the Energy Department said in its monthly Short-Term Energy Outlook released Aug. 12. Higher output may prompt lower prices later in the year.
Stockpiles may end the injection season in October near last year's record of 3.545 trillion cubic feet, George Hopley, an analyst at Barclays Capital Inc. in New York, said in a report this week. The average over the past five years is 3.327 trillion cubic feet, according to the Energy Department, which is scheduled to release its inventory report at 10:35 a.m. in Washington.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Oil Falls on Speculation U.S. Consumption Decline Will Spread
By Mark Shenk
Aug. 14 (Bloomberg) -- Crude oil fell on speculation that fuel-consumption declines in the U.S. will spread to other countries as their economies slow.
U.S. gasoline demand was down 2.1 percent through July as record prices and slower economic growth cut consumer spending, an American Petroleum Institute report showed yesterday. Europe's economy contracted for the first time since the introduction of the euro almost a decade ago, a report showed today.
``The market is much more focused on demand destruction than on supply concerns,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``The concern now is that the demand destruction in the U.S. will spread like a virus to other countries.''
Crude oil for September delivery fell 52 cents, or 0.5 percent, to $115.48 a barrel at 9:14 a.m. on the New York Mercantile Exchange. Prices are up 60 percent from a year ago.
Futures climbed $2.99 a barrel yesterday after an Energy Department report showed that U.S. gasoline supplies dropped 6.39 million barrels to 202.8 million barrels last week, the biggest decline since October 2002. Petroleum-product imports fell to the lowest since April 2005 and refinery operating rates were 1.1 percentage points lower, the report showed.
European gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today.
Georgian officials said a Russian withdrawal stalled today as forces returned to the Black Sea port of Poti a day after U.S. President George W. Bush ordered a military-led humanitarian aid effort.
``People are trying to parse what's happening in Georgia,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``There are major pipelines running through the region, but it doesn't appear that they have been damaged during the conflict yet.''
Brent crude oil for September settlement rose 1 cent to $113.48 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Aug. 14 (Bloomberg) -- Crude oil fell on speculation that fuel-consumption declines in the U.S. will spread to other countries as their economies slow.
U.S. gasoline demand was down 2.1 percent through July as record prices and slower economic growth cut consumer spending, an American Petroleum Institute report showed yesterday. Europe's economy contracted for the first time since the introduction of the euro almost a decade ago, a report showed today.
``The market is much more focused on demand destruction than on supply concerns,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``The concern now is that the demand destruction in the U.S. will spread like a virus to other countries.''
Crude oil for September delivery fell 52 cents, or 0.5 percent, to $115.48 a barrel at 9:14 a.m. on the New York Mercantile Exchange. Prices are up 60 percent from a year ago.
Futures climbed $2.99 a barrel yesterday after an Energy Department report showed that U.S. gasoline supplies dropped 6.39 million barrels to 202.8 million barrels last week, the biggest decline since October 2002. Petroleum-product imports fell to the lowest since April 2005 and refinery operating rates were 1.1 percentage points lower, the report showed.
European gross domestic product fell 0.2 percent in the second quarter from the first, when it increased 0.7 percent, the European Union statistics office in Luxembourg said today.
Georgian officials said a Russian withdrawal stalled today as forces returned to the Black Sea port of Poti a day after U.S. President George W. Bush ordered a military-led humanitarian aid effort.
``People are trying to parse what's happening in Georgia,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``There are major pipelines running through the region, but it doesn't appear that they have been damaged during the conflict yet.''
Brent crude oil for September settlement rose 1 cent to $113.48 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Russian Army in Poti, Withdrawal Stalls, Georgia Says
By Helena Bedwell and Henry Meyer
Aug. 14 (Bloomberg) -- Georgian officials said a Russian withdrawal stalled today as forces returned to the Black Sea port of Poti a day after U.S. President George W. Bush ordered a military-led humanitarian aid effort.
``The Russian troops have returned to Poti,'' Georgian Foreign Ministry spokeswoman Khatuna Iosava said by telephone. Anatoly Nogovitsyn, deputy chief of Russia's General Staff, said Russia has no troops in Poti.
Russia informed Georgia's Interior Ministry that its troops will remain deployed around the city of Gori, near South Ossetia, for up to three days, ministry spokesman Shota Utiashvili said. Nogovitsyn said Russian troops are transporting seized Georgian military equipment in Gori.
The troop movements came two days after Georgia and Russia accepted a European Union-brokered peace plan for ending five days of fighting over the breakaway Georgian region of South Ossetia that began Aug. 8. The war, Russia's first major foreign offensive since the collapse of the Soviet Union in 1991, has strained relations with the U.S., which considers Georgia one of its closest allies in the region.
President Dmitry Medvedev said in televised comments that Russia will support the decisions of South Ossetia and another breakaway Georgian region, Abkhazia, about the legal status of their self-proclaimed republics.
Kosovo Precedent
Medvedev met in Moscow with South Ossetian President Eduard Kokoity and Sergei Bagapsh, the leader of Abkhazia. Both regions seek international recognition of their independence, citing Kosovo as a precedent. No country, including Russia, has recognized either region. Kokoity and Bagapsh signed the EU peace plan.
Turkish Prime Minister Recep Tayyip Erdogan said in Tbilisi after talks with Saakashvili that Georgia's territorial integrity ``must be preserved.'' Russia's Foreign Minister Sergei Lavrov said that ``de facto'' the former Soviet republic's territorial integrity ``is limited by the conflict in South Ossetia,'' the Interfax news service reported.
Bush said yesterday that the U.S. expects Russia ``to ensure that all lines of communication and transport, including sea ports, airports, roads and airspace remain open for the delivery of humanitarian assistance and for civilian transit.''
U.S. Aid
``The Russians aren't leaving Gori,'' Temur Iakobashvili, Georgia's minister for reintegration issues, said by phone. ``They're planting bombs in buildings and blowing up infrastructure.''
Kakha Lomaia, Georgia's national security chief, said earlier that as many as 800 Georgian police officers were entering Gori, located 70 kilometers (about 45 miles) from Tbilisi, and were meeting no resistance from the Russians.
A first U.S. military plane carrying humanitarian aid landed in Tbilisi yesterday. Secretary of State Condoleezza Rice arrives in France today to discuss the peace plan with President Nicolas Sarkozy before making a visit to Georgia tomorrow. France holds the EU presidency.
U.S. military aircraft and navy ships will deliver aid to Georgia, Bush told reporters in Washington yesterday.
Russia is committed to the terms of the truce, Medvedev told Sarkozy in a phone conversation, the Kremlin said late yesterday.
Peace Plan
Nogovitsyn said Russian forces in Georgia have been observing a cease-fire since 3 p.m. on Aug. 12 after Medvedev called a halt to military operations. He said the Russian peacekeeping mission includes weakening Georgia's military so that it ``can't even think about repeating its attempts to attack this or that territory.''
Lavrov said Russia is observing the peace plan, when he spoke with Rice by telephone yesterday. During the conversation, Lavrov rejected ``insinuations'' that Russia had broken clauses of the six-point European Union plan, the Foreign Ministry said in a statement on its Web site today.
The EU peace plan calls for the withdrawal of Georgian and Russian troops, renunciation of the use of force, an end to all military operations and a commitment to making humanitarian aid freely available in the conflict zone.
Medvedev ordered a halt two days ago to the military campaign, which was sparked by fighting between Georgia and South Ossetia. Both Georgia and Russia accuse the other of planning an invasion well in advance.
100,000 Displaced
Russia won't speak directly with Saakashvili after he committed acts of ``genocide and ethnic cleansing,'' Russian Deputy Prime Minister Sergei Ivanov said in comments to the British Broadcasting Corp.
``We offer him peace, but not friendship,'' Ivanov said.
The UN estimates that about 100,000 people have been displaced by the conflict, according to a statement published on the Web site of the UN children's fund Unicef.
South Ossetia and Abkhazia broke away from Georgian control in wars in the early 1990s and Russian forces have been stationed as peacekeepers in the regions under a Commonwealth of Independent States mandate. Most people living in the regions have Russian passports. Saakashvili said on Aug. 12 that Georgia is quitting the CIS.
The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets, bypassing Russia. Bush backs Georgia's bid to join the North Atlantic Treaty Organization, which Russia views as a security threat.
To contact the reporters on this story: Helena Bedwell in Tbilisi hbedwell@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net
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Aug. 14 (Bloomberg) -- Georgian officials said a Russian withdrawal stalled today as forces returned to the Black Sea port of Poti a day after U.S. President George W. Bush ordered a military-led humanitarian aid effort.
``The Russian troops have returned to Poti,'' Georgian Foreign Ministry spokeswoman Khatuna Iosava said by telephone. Anatoly Nogovitsyn, deputy chief of Russia's General Staff, said Russia has no troops in Poti.
Russia informed Georgia's Interior Ministry that its troops will remain deployed around the city of Gori, near South Ossetia, for up to three days, ministry spokesman Shota Utiashvili said. Nogovitsyn said Russian troops are transporting seized Georgian military equipment in Gori.
The troop movements came two days after Georgia and Russia accepted a European Union-brokered peace plan for ending five days of fighting over the breakaway Georgian region of South Ossetia that began Aug. 8. The war, Russia's first major foreign offensive since the collapse of the Soviet Union in 1991, has strained relations with the U.S., which considers Georgia one of its closest allies in the region.
President Dmitry Medvedev said in televised comments that Russia will support the decisions of South Ossetia and another breakaway Georgian region, Abkhazia, about the legal status of their self-proclaimed republics.
Kosovo Precedent
Medvedev met in Moscow with South Ossetian President Eduard Kokoity and Sergei Bagapsh, the leader of Abkhazia. Both regions seek international recognition of their independence, citing Kosovo as a precedent. No country, including Russia, has recognized either region. Kokoity and Bagapsh signed the EU peace plan.
Turkish Prime Minister Recep Tayyip Erdogan said in Tbilisi after talks with Saakashvili that Georgia's territorial integrity ``must be preserved.'' Russia's Foreign Minister Sergei Lavrov said that ``de facto'' the former Soviet republic's territorial integrity ``is limited by the conflict in South Ossetia,'' the Interfax news service reported.
Bush said yesterday that the U.S. expects Russia ``to ensure that all lines of communication and transport, including sea ports, airports, roads and airspace remain open for the delivery of humanitarian assistance and for civilian transit.''
U.S. Aid
``The Russians aren't leaving Gori,'' Temur Iakobashvili, Georgia's minister for reintegration issues, said by phone. ``They're planting bombs in buildings and blowing up infrastructure.''
Kakha Lomaia, Georgia's national security chief, said earlier that as many as 800 Georgian police officers were entering Gori, located 70 kilometers (about 45 miles) from Tbilisi, and were meeting no resistance from the Russians.
A first U.S. military plane carrying humanitarian aid landed in Tbilisi yesterday. Secretary of State Condoleezza Rice arrives in France today to discuss the peace plan with President Nicolas Sarkozy before making a visit to Georgia tomorrow. France holds the EU presidency.
U.S. military aircraft and navy ships will deliver aid to Georgia, Bush told reporters in Washington yesterday.
Russia is committed to the terms of the truce, Medvedev told Sarkozy in a phone conversation, the Kremlin said late yesterday.
Peace Plan
Nogovitsyn said Russian forces in Georgia have been observing a cease-fire since 3 p.m. on Aug. 12 after Medvedev called a halt to military operations. He said the Russian peacekeeping mission includes weakening Georgia's military so that it ``can't even think about repeating its attempts to attack this or that territory.''
Lavrov said Russia is observing the peace plan, when he spoke with Rice by telephone yesterday. During the conversation, Lavrov rejected ``insinuations'' that Russia had broken clauses of the six-point European Union plan, the Foreign Ministry said in a statement on its Web site today.
The EU peace plan calls for the withdrawal of Georgian and Russian troops, renunciation of the use of force, an end to all military operations and a commitment to making humanitarian aid freely available in the conflict zone.
Medvedev ordered a halt two days ago to the military campaign, which was sparked by fighting between Georgia and South Ossetia. Both Georgia and Russia accuse the other of planning an invasion well in advance.
100,000 Displaced
Russia won't speak directly with Saakashvili after he committed acts of ``genocide and ethnic cleansing,'' Russian Deputy Prime Minister Sergei Ivanov said in comments to the British Broadcasting Corp.
``We offer him peace, but not friendship,'' Ivanov said.
The UN estimates that about 100,000 people have been displaced by the conflict, according to a statement published on the Web site of the UN children's fund Unicef.
South Ossetia and Abkhazia broke away from Georgian control in wars in the early 1990s and Russian forces have been stationed as peacekeepers in the regions under a Commonwealth of Independent States mandate. Most people living in the regions have Russian passports. Saakashvili said on Aug. 12 that Georgia is quitting the CIS.
The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets, bypassing Russia. Bush backs Georgia's bid to join the North Atlantic Treaty Organization, which Russia views as a security threat.
To contact the reporters on this story: Helena Bedwell in Tbilisi hbedwell@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net
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CEZ Increases Quarterly Profit 68%, Raises Full-Year Outlook
By Andrea Dudikova and Marketa Fiserova
Aug. 14 (Bloomberg) -- CEZ AS, the Czech Republic's biggest power company, increased second-quarter profit 68 percent on cost cuts and higher electricity prices.
Net income advanced to 13.1 billion koruna ($803 million) from 7.8 billion koruna a year earlier, the Prague-based utility said today in a statement. That beat the 10.4 billion-koruna median estimate of 10 analysts surveyed by Bloomberg News. CEZ climbed in Prague trading after raising its earnings forecast.
CEZ, which is seeking to build more nuclear reactors in the Czech Republic, has boosted profit as economic growth has driven up power demand and prices. Higher output from Czech atomic plants has also helped the company raise 2008 earnings guidance to 48.6 billion koruna from 46.6 billion koruna, it said.
The revised forecast remains ``very conservative and the company should not have a problem to even exceed this level in 2008,'' Marek Hatlapatka, an analyst at Cyrrus AS, said today in a note, calling CEZ ``the king of margins.''
The utility also increased its forecast for earnings before interest, tax, depreciation and amortization to 87 billion koruna, and its outlook for earnings before interest and tax to 65 billion koruna.
CEZ rose as much as 59.5 koruna, or 4.8 percent, to 1,290 koruna in Prague, the biggest one-day gain in six months, and traded at 1,245 koruna as of 2:09 p.m. local time.
The ``brilliant earnings'' can be attributed in part to cost cuts in areas such as maintenance, according to CEZ Chief Executive Officer Martin Roman.
Nuclear, Hydro
``There are a couple of positive factors behind our guidance increase,'' Roman told reporters at a press briefing in Prague. ``One of them definitely is rising output from nuclear and hydro resources, which are the most rentable as they consume no CO2 credits.''
Power producers need carbon dioxide permits to release greenhouse gases, blamed by scientists for climate change. More utilities are switching to renewable sources of energy from fossil-fuel-burning generators to cut costs and emissions.
Sales advanced 7 percent in the period as the utility shifted more production to cheaper nuclear plants from coal- burning stations. Earnings were also boosted by gains from selling derivatives on the Prague power exchange, CEZ said.
CEZ will stick to its dividend policy of paying out 50 percent to 60 percent of annual net income, Chief Financial Officer Martin Novak said at the press conference. The size of a planned share buyback program will be determined by acquisition opportunities and the share price, he said.
Buyback
The buyback won't be ``as automatic'' as before, Novak said. A general meeting in May allowed management to purchase as much as 10 percent of shares. Before it can start the buyback, CEZ needs to cancel stock bought under a previous repurchasing program, he said.
Power demand in the Czech Republic, the utility's biggest market, rose 4.2 percent in the first half from a year earlier, or 3 percent after adjustment for ``weather variations,'' CEZ said. Electricity prices ``strengthened significantly,'' the utility said, adding that ``the entire second quarter was characterized by continuous growth in prices of most commodities, to new record levels.''
The company plans to build its future energy mix mainly on nuclear, gas and renewable sources and will begin trading in gas ``soon,'' it said.
To contact the reporters on the story: Andrea Dudikova in Prague at adudikova@bloomberg.net; Marketa Fiserova in Prague mfiserova@bloomberg.net
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Aug. 14 (Bloomberg) -- CEZ AS, the Czech Republic's biggest power company, increased second-quarter profit 68 percent on cost cuts and higher electricity prices.
Net income advanced to 13.1 billion koruna ($803 million) from 7.8 billion koruna a year earlier, the Prague-based utility said today in a statement. That beat the 10.4 billion-koruna median estimate of 10 analysts surveyed by Bloomberg News. CEZ climbed in Prague trading after raising its earnings forecast.
CEZ, which is seeking to build more nuclear reactors in the Czech Republic, has boosted profit as economic growth has driven up power demand and prices. Higher output from Czech atomic plants has also helped the company raise 2008 earnings guidance to 48.6 billion koruna from 46.6 billion koruna, it said.
The revised forecast remains ``very conservative and the company should not have a problem to even exceed this level in 2008,'' Marek Hatlapatka, an analyst at Cyrrus AS, said today in a note, calling CEZ ``the king of margins.''
The utility also increased its forecast for earnings before interest, tax, depreciation and amortization to 87 billion koruna, and its outlook for earnings before interest and tax to 65 billion koruna.
CEZ rose as much as 59.5 koruna, or 4.8 percent, to 1,290 koruna in Prague, the biggest one-day gain in six months, and traded at 1,245 koruna as of 2:09 p.m. local time.
The ``brilliant earnings'' can be attributed in part to cost cuts in areas such as maintenance, according to CEZ Chief Executive Officer Martin Roman.
Nuclear, Hydro
``There are a couple of positive factors behind our guidance increase,'' Roman told reporters at a press briefing in Prague. ``One of them definitely is rising output from nuclear and hydro resources, which are the most rentable as they consume no CO2 credits.''
Power producers need carbon dioxide permits to release greenhouse gases, blamed by scientists for climate change. More utilities are switching to renewable sources of energy from fossil-fuel-burning generators to cut costs and emissions.
Sales advanced 7 percent in the period as the utility shifted more production to cheaper nuclear plants from coal- burning stations. Earnings were also boosted by gains from selling derivatives on the Prague power exchange, CEZ said.
CEZ will stick to its dividend policy of paying out 50 percent to 60 percent of annual net income, Chief Financial Officer Martin Novak said at the press conference. The size of a planned share buyback program will be determined by acquisition opportunities and the share price, he said.
Buyback
The buyback won't be ``as automatic'' as before, Novak said. A general meeting in May allowed management to purchase as much as 10 percent of shares. Before it can start the buyback, CEZ needs to cancel stock bought under a previous repurchasing program, he said.
Power demand in the Czech Republic, the utility's biggest market, rose 4.2 percent in the first half from a year earlier, or 3 percent after adjustment for ``weather variations,'' CEZ said. Electricity prices ``strengthened significantly,'' the utility said, adding that ``the entire second quarter was characterized by continuous growth in prices of most commodities, to new record levels.''
The company plans to build its future energy mix mainly on nuclear, gas and renewable sources and will begin trading in gas ``soon,'' it said.
To contact the reporters on the story: Andrea Dudikova in Prague at adudikova@bloomberg.net; Marketa Fiserova in Prague mfiserova@bloomberg.net
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GDF Suez to Pay $549 Million for Turkish Gas Grid
By Mark Bentley
Aug. 14 (Bloomberg) -- GDF Suez SA, the world's second- biggest utility, will pay $549 million for a natural-gas distribution network in Turkey's northwestern city of Izmit.
The Paris-based utility beat out four rivals for rights to operate Izmit Gaz Dagitim AS with a bid of $232 million. It will also pay $317 million of debts owed by the grid to the treasury and state-run pipeline company Botas, according to the result of a televised auction in Izmit today.
GDF Suez, created through the merger of Suez SA and Gaz de France SA last month, plans to invest about 10 billion euros ($14.9 billion) a year through 2010 and targets profit of 17 billion euros in two years' time.
Izmit Gaz Dagitim, known as Izgaz, sold 1.1 billion cubic meters of gas last year to more than 200,000 subscribers, according to the company's Web site. Revenue totaled 298 million liras ($252 million), Turkey's CNBC-e television station reported.
Turkey is divesting energy assets in an International Monetary Fund-backed effort to encourage investment and meet demand for energy that's rising 8 percent annually. A gas grid in the capital Ankara, which last year sold 1.7 billion cubic meters of gas, was bought for $1.6 billion in April.
Turkey's antitrust regulator must approve GDF Suez's bid before the company can complete the transaction.
To contact the report for this story: Mark Bentley in Ankara at mbentley3@bloomberg.net
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Aug. 14 (Bloomberg) -- GDF Suez SA, the world's second- biggest utility, will pay $549 million for a natural-gas distribution network in Turkey's northwestern city of Izmit.
The Paris-based utility beat out four rivals for rights to operate Izmit Gaz Dagitim AS with a bid of $232 million. It will also pay $317 million of debts owed by the grid to the treasury and state-run pipeline company Botas, according to the result of a televised auction in Izmit today.
GDF Suez, created through the merger of Suez SA and Gaz de France SA last month, plans to invest about 10 billion euros ($14.9 billion) a year through 2010 and targets profit of 17 billion euros in two years' time.
Izmit Gaz Dagitim, known as Izgaz, sold 1.1 billion cubic meters of gas last year to more than 200,000 subscribers, according to the company's Web site. Revenue totaled 298 million liras ($252 million), Turkey's CNBC-e television station reported.
Turkey is divesting energy assets in an International Monetary Fund-backed effort to encourage investment and meet demand for energy that's rising 8 percent annually. A gas grid in the capital Ankara, which last year sold 1.7 billion cubic meters of gas, was bought for $1.6 billion in April.
Turkey's antitrust regulator must approve GDF Suez's bid before the company can complete the transaction.
To contact the report for this story: Mark Bentley in Ankara at mbentley3@bloomberg.net
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Ultrapar to Buy Chevron Fuels-Marketing Business in Brazil
By Kim Jordan
Aug. 14 (Bloomberg) -- Ultrapar Participacoes SA agreed to buy Chevron Corp.'s fuels-marketing business in Brazil for about $730 million.
Chevron said in a Business Wire statement today that Ultrapar will get 2,000 service stations operating under the Texaco brand.
To contact the reporter on this story: Kim Jordan in Houston at kjordan2@bloomberg.net.
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Aug. 14 (Bloomberg) -- Ultrapar Participacoes SA agreed to buy Chevron Corp.'s fuels-marketing business in Brazil for about $730 million.
Chevron said in a Business Wire statement today that Ultrapar will get 2,000 service stations operating under the Texaco brand.
To contact the reporter on this story: Kim Jordan in Houston at kjordan2@bloomberg.net.
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RWE Profit Falls 67% on Derivatives and CO2 Emissions
By Nicholas Comfort
Aug. 14 (Bloomberg) -- RWE AG, Germany's second-biggest utility, reported a 67 percent drop in second-quarter profit because of derivatives losses, rising costs to emit carbon dioxide and lower grid fees.
Net income fell to 347 million euros ($516 million) from 1.06 billion euros a year earlier. The figure was calculated by subtracting first-quarter profit from half-year earnings released by the Essen-based utility today. That missed the 742.5 million-euro median estimate of eight analysts surveyed by Bloomberg.
Earnings were lower at RWE's trading unit as higher gas prices cut the value of derivatives and gains from power contracts were postponed to the second half. A German regulator reduced the fees RWE can charge for use of its power grid while the cost of carbon permits rose. The company said operating profit will match last year's results as it cuts costs.
``It's a disappointment,'' said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg who has a ``hold'' on the stock. ``The trust in them has been damaged, but their prospects don't look bad.''
RWE fell 67 cents, or 0.9 percent, to 72.70 euros as of 1:21 p.m. in Frankfurt, extending its drop for the year to 24 percent. That compares with an 18 percent decline for larger German rival E.ON AG, which yesterday raised its full-year profit outlook.
Revalued Contracts
Operating profit at RWE's trading unit slumped ninefold to 68 million euros as the company revalued gas storage derivatives contracts after fuel prices doubled. Accounting rules mean power sales agreed on in the first half can only be booked on delivery in the second, RWE spokesman Harald Fletcher said by telephone.
The company should be able to reach a full-year earnings target of 300 million euros for the unit, Jeggle said by phone from Stuttgart.
Carbon dioxide allowance prices jumped 61-fold in the second quarter to an average 25.61 euros a metric ton, compared with 42 cents a year earlier, when the European Commission allowed nations to hand out too many permits. The allocation in 2008 was slashed by 9.4 percent.
RWE had to buy 276 million euros worth of permits in the period compared with 11 million euros a year earlier. Conditions for buying the certificates are now ``much less favorable for power producers,'' and prices ``will continue to be high,'' the utility said in a statement.
Lower Fees
Lower grid fees cut operating profit by 120 million euros. The utility's grid fees are based on what reimbursement Germany's Federal Network Agency judges appropriate given RWE's level of investment in the infrastructure. Operating profit is calculated by adding pretax results from its holdings in other companies to adjusted earnings before interest and tax.
The authority, known as the Bundesnetzagentur, invalidated 28 percent of the costs the company claimed in March, Renate Hichert, a Bonn-based agency spokeswoman, said by telephone on Aug. 12. The investments determining 2008 grid fees are based on spending from 2006, she said.
The European Commission, the regulatory arm of the European Union, proposed measures to split utilities from their power grids in September to increase competition in the bloc's power market.
Keep Grid
``We still plan on keeping our power grid,'' Chief Executive Officer Juergen Grossmann said on a conference call with reporters.
Paying for the right to burn fuels which emit carbon dioxide and lower fees for use of RWE's transmission grid will cut earnings by about 1.5 billion euros this year, RWE said.
Still, 2008 operating profit is expected to gain as two nuclear reactors that were offline a year earlier continue to boost output at record prices, Grossmann said.
A cost-cutting plan, which includes transferring jobs to reduce any duplication of labor, will save 100 million euros this year and an estimated 1.2 billion euros by 2012. The savings will come mainly from the company's power and gas grid units.
Power generation gained 11 percent in the first half, led by nuclear and gas while energy from plants that burn coal or lignite fell. The utility registered a 9.1 percent drop in the amount of electricity it purchased from others to 55.6 billion kilowatt-hours in the first half.
German electricity for delivery the next day sold for an average of 71.63 euros a megawatt-hour in the second quarter, compared with 35.39 euros a year earlier, according to broker GFI Group Inc.
Sold Power
RWE said it has sold over 90 percent of its 2008 electricity and more than two thirds of the power it will generate in Germany next year.
The company confirmed its outlook for 2008 net income to fall ``marginally'' from last year as it books a charge on the initial public offering of its American Water Works Co. unit.
Sales should rise by 5 to 10 percent this year based on a pound exchange rate of 79.28 pence against the euro. The gain in revenue is down to steeper power prices in Germany as well as higher wholesaling revenue at RWE's upstream gas unit.
Recurrent net income, used to calculate the company's dividend, should rise by more than 10 percent. RWE defines this measure of profit as net income before one-time expenses and discontinued operations.
The company may raise its targets through 2012 next February based on higher power prices, Chief Financial Officer Rolf Pohlig said today.
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
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Aug. 14 (Bloomberg) -- RWE AG, Germany's second-biggest utility, reported a 67 percent drop in second-quarter profit because of derivatives losses, rising costs to emit carbon dioxide and lower grid fees.
Net income fell to 347 million euros ($516 million) from 1.06 billion euros a year earlier. The figure was calculated by subtracting first-quarter profit from half-year earnings released by the Essen-based utility today. That missed the 742.5 million-euro median estimate of eight analysts surveyed by Bloomberg.
Earnings were lower at RWE's trading unit as higher gas prices cut the value of derivatives and gains from power contracts were postponed to the second half. A German regulator reduced the fees RWE can charge for use of its power grid while the cost of carbon permits rose. The company said operating profit will match last year's results as it cuts costs.
``It's a disappointment,'' said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg who has a ``hold'' on the stock. ``The trust in them has been damaged, but their prospects don't look bad.''
RWE fell 67 cents, or 0.9 percent, to 72.70 euros as of 1:21 p.m. in Frankfurt, extending its drop for the year to 24 percent. That compares with an 18 percent decline for larger German rival E.ON AG, which yesterday raised its full-year profit outlook.
Revalued Contracts
Operating profit at RWE's trading unit slumped ninefold to 68 million euros as the company revalued gas storage derivatives contracts after fuel prices doubled. Accounting rules mean power sales agreed on in the first half can only be booked on delivery in the second, RWE spokesman Harald Fletcher said by telephone.
The company should be able to reach a full-year earnings target of 300 million euros for the unit, Jeggle said by phone from Stuttgart.
Carbon dioxide allowance prices jumped 61-fold in the second quarter to an average 25.61 euros a metric ton, compared with 42 cents a year earlier, when the European Commission allowed nations to hand out too many permits. The allocation in 2008 was slashed by 9.4 percent.
RWE had to buy 276 million euros worth of permits in the period compared with 11 million euros a year earlier. Conditions for buying the certificates are now ``much less favorable for power producers,'' and prices ``will continue to be high,'' the utility said in a statement.
Lower Fees
Lower grid fees cut operating profit by 120 million euros. The utility's grid fees are based on what reimbursement Germany's Federal Network Agency judges appropriate given RWE's level of investment in the infrastructure. Operating profit is calculated by adding pretax results from its holdings in other companies to adjusted earnings before interest and tax.
The authority, known as the Bundesnetzagentur, invalidated 28 percent of the costs the company claimed in March, Renate Hichert, a Bonn-based agency spokeswoman, said by telephone on Aug. 12. The investments determining 2008 grid fees are based on spending from 2006, she said.
The European Commission, the regulatory arm of the European Union, proposed measures to split utilities from their power grids in September to increase competition in the bloc's power market.
Keep Grid
``We still plan on keeping our power grid,'' Chief Executive Officer Juergen Grossmann said on a conference call with reporters.
Paying for the right to burn fuels which emit carbon dioxide and lower fees for use of RWE's transmission grid will cut earnings by about 1.5 billion euros this year, RWE said.
Still, 2008 operating profit is expected to gain as two nuclear reactors that were offline a year earlier continue to boost output at record prices, Grossmann said.
A cost-cutting plan, which includes transferring jobs to reduce any duplication of labor, will save 100 million euros this year and an estimated 1.2 billion euros by 2012. The savings will come mainly from the company's power and gas grid units.
Power generation gained 11 percent in the first half, led by nuclear and gas while energy from plants that burn coal or lignite fell. The utility registered a 9.1 percent drop in the amount of electricity it purchased from others to 55.6 billion kilowatt-hours in the first half.
German electricity for delivery the next day sold for an average of 71.63 euros a megawatt-hour in the second quarter, compared with 35.39 euros a year earlier, according to broker GFI Group Inc.
Sold Power
RWE said it has sold over 90 percent of its 2008 electricity and more than two thirds of the power it will generate in Germany next year.
The company confirmed its outlook for 2008 net income to fall ``marginally'' from last year as it books a charge on the initial public offering of its American Water Works Co. unit.
Sales should rise by 5 to 10 percent this year based on a pound exchange rate of 79.28 pence against the euro. The gain in revenue is down to steeper power prices in Germany as well as higher wholesaling revenue at RWE's upstream gas unit.
Recurrent net income, used to calculate the company's dividend, should rise by more than 10 percent. RWE defines this measure of profit as net income before one-time expenses and discontinued operations.
The company may raise its targets through 2012 next February based on higher power prices, Chief Financial Officer Rolf Pohlig said today.
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
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Georgia Says Russian Missiles Struck BP Pipeline
By Steve Bryant and Lucian Kim
Aug. 14 (Bloomberg) -- A BP Plc-operated oil pipeline that passes through Georgia to the Black Sea port of Supsa was struck by Russian missiles yesterday, the Georgian government said.
A second link that carries oil from Azerbaijan to the Mediterranean port of Ceyhan, known as the Baku-Tbilisi-Ceyhan or BTC pipeline, will reopen in a week after a fire earlier this month, according to Turkey's Energy Ministry.
Two Russian Iskander missiles hit the Baku-Supsa pipeline southeast of the Georgian capital of Tbilisi yesterday, Economy Minister Eka Sharashidze said by phone. BP, which runs the 100,000 barrel-a-day pipeline, stopped shipments after pressure fell, she said. Russia denied bombing the pipeline.
``All transit oil shipments have been stopped via Georgia,'' Sharashidze said. ``Russia is trying to annihilate alternative sources of energy. It couldn't have happened by chance.''
Russian President Dmitry Medvedev Aug. 12 ordered a halt to Russia's offensive in Georgia after six days of fighting. The military conflict in the Caucasus disrupted oil and gas flows in the region, and called into question Georgia's reliability as an energy transit hub.
Rail shipments across Georgia to Black Sea oil terminals were halted after Russian forces seized the central Georgian transport city of Gori, Sharashidze said.
The targeted section of the Baku-Supsa pipeline is located near the town of Rustavi near the Azeri border, according to the Economy Minister. Rustavi is about 150 kilometers (93 miles) from the South Ossetian capital of Tskhinvali.
Russian Denial
Anatoly Nogovitsyn, the deputy head of Russia's General Staff, denied bombing or targeting pipelines in Georgia. ``They are not a target,'' he told a press briefing in Moscow today.
Tamam Bayatly, a spokeswoman for BP in Baku, Azerbaijan, said pipeline flows were halted as a ``precautionary measure'' and that all the company's assets in Georgia are safe.
Inspections of fire damage at the second pipeline, the 1 million barrel-a-day BTC link, show no sign the Aug. 5 fire was caused by a bomb, Turkish Energy Ministry spokesman Akif Sam said in a phone interview.
`Malfunction'
In Turkey, engineers are inspecting the fire damage to the Turkish section of the BTC oil pipeline and will ``be able to give guidance in a few days as to how long repairs may take,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview.
The Kurdistan Workers' Party, or PKK, had claimed responsibility for the pipeline explosion. Turkish security officials had examined the damaged section and ``we think it was probably a malfunction,'' Sam said.
BP Plc and StatoilHydro ASA today raised production at their offshore natural gas field in Azerbaijan after resuming fuel exports through the South Caucasus pipeline to Georgia and Turkey.
Natural gas exports were halted from Azerbaijan's Shah Deniz field through the South Caucasus pipeline because of security concerns in Georgia on Aug. 12. The gas pipeline runs parallel to the BTC oil link.
``We are now exporting through'' the pipeline, BP spokesman Robert Wine said by phone today from London. ``The pumping into the pipeline was suspended for about two days.''
Turkey increased imports of gas from Iran and from Russia to compensate for the shortfall from the South Caucasus pipeline, the Turkish Energy Minister spokesman said.
To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- A BP Plc-operated oil pipeline that passes through Georgia to the Black Sea port of Supsa was struck by Russian missiles yesterday, the Georgian government said.
A second link that carries oil from Azerbaijan to the Mediterranean port of Ceyhan, known as the Baku-Tbilisi-Ceyhan or BTC pipeline, will reopen in a week after a fire earlier this month, according to Turkey's Energy Ministry.
Two Russian Iskander missiles hit the Baku-Supsa pipeline southeast of the Georgian capital of Tbilisi yesterday, Economy Minister Eka Sharashidze said by phone. BP, which runs the 100,000 barrel-a-day pipeline, stopped shipments after pressure fell, she said. Russia denied bombing the pipeline.
``All transit oil shipments have been stopped via Georgia,'' Sharashidze said. ``Russia is trying to annihilate alternative sources of energy. It couldn't have happened by chance.''
Russian President Dmitry Medvedev Aug. 12 ordered a halt to Russia's offensive in Georgia after six days of fighting. The military conflict in the Caucasus disrupted oil and gas flows in the region, and called into question Georgia's reliability as an energy transit hub.
Rail shipments across Georgia to Black Sea oil terminals were halted after Russian forces seized the central Georgian transport city of Gori, Sharashidze said.
The targeted section of the Baku-Supsa pipeline is located near the town of Rustavi near the Azeri border, according to the Economy Minister. Rustavi is about 150 kilometers (93 miles) from the South Ossetian capital of Tskhinvali.
Russian Denial
Anatoly Nogovitsyn, the deputy head of Russia's General Staff, denied bombing or targeting pipelines in Georgia. ``They are not a target,'' he told a press briefing in Moscow today.
Tamam Bayatly, a spokeswoman for BP in Baku, Azerbaijan, said pipeline flows were halted as a ``precautionary measure'' and that all the company's assets in Georgia are safe.
Inspections of fire damage at the second pipeline, the 1 million barrel-a-day BTC link, show no sign the Aug. 5 fire was caused by a bomb, Turkish Energy Ministry spokesman Akif Sam said in a phone interview.
`Malfunction'
In Turkey, engineers are inspecting the fire damage to the Turkish section of the BTC oil pipeline and will ``be able to give guidance in a few days as to how long repairs may take,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview.
The Kurdistan Workers' Party, or PKK, had claimed responsibility for the pipeline explosion. Turkish security officials had examined the damaged section and ``we think it was probably a malfunction,'' Sam said.
BP Plc and StatoilHydro ASA today raised production at their offshore natural gas field in Azerbaijan after resuming fuel exports through the South Caucasus pipeline to Georgia and Turkey.
Natural gas exports were halted from Azerbaijan's Shah Deniz field through the South Caucasus pipeline because of security concerns in Georgia on Aug. 12. The gas pipeline runs parallel to the BTC oil link.
``We are now exporting through'' the pipeline, BP spokesman Robert Wine said by phone today from London. ``The pumping into the pipeline was suspended for about two days.''
Turkey increased imports of gas from Iran and from Russia to compensate for the shortfall from the South Caucasus pipeline, the Turkish Energy Minister spokesman said.
To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.
Read more...
BTC Pipeline to Open in One Week, Turkish Energy Ministry Says
By Steve Bryant
Aug. 14 (Bloomberg) -- Turkey expects a pipeline carrying oil from Azerbaijan to the Mediterranean port of Ceyhan to reopen in a week after a blaze earlier this month, a spokesman for the Energy Ministry said.
Inspections of the Baku-Tbilisi-Ceyhan pipeline, run by BP Plc and partners, revealed no evidence of a bomb on the section in eastern Turkey that was engulfed in fire after a blast, spokesman Akif Sam said in a telephone interview. ``We think it was probably a malfunction,'' he said.
The Kurdistan Workers' Party, or PKK, had claimed responsibility for the pipeline explosion.
To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.
Read more...
Aug. 14 (Bloomberg) -- Turkey expects a pipeline carrying oil from Azerbaijan to the Mediterranean port of Ceyhan to reopen in a week after a blaze earlier this month, a spokesman for the Energy Ministry said.
Inspections of the Baku-Tbilisi-Ceyhan pipeline, run by BP Plc and partners, revealed no evidence of a bomb on the section in eastern Turkey that was engulfed in fire after a blast, spokesman Akif Sam said in a telephone interview. ``We think it was probably a malfunction,'' he said.
The Kurdistan Workers' Party, or PKK, had claimed responsibility for the pipeline explosion.
To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.
Read more...
Yuan Forecast Cut at RBS as China Exports, Inflation May Cool
By Kim Kyoungwha and Judy Chen
Aug. 14 (Bloomberg) -- Royal Bank of Scotland Group Plc. lowered its forecast for China's yuan, saying weakening overseas demand and slowing inflation are prompting the central bank to rein in yuan appreciation.
The Chinese currency will advance to 6.6 per dollar by the end of 2008, weaker than a previous forecast of 6.4, as the dollar climb against major currencies, strategist Ben Simpfendorfer in Hong Kong wrote in a report today. The yuan, which closed today at 6.86 in Shanghai, has retreated 0.1 percent versus the U.S. currency since June 30, after climbing 4.2 percent in the first quarter and 2.3 percent in the second.
``A stronger dollar is an important driver of the forecast change,'' Simpfendorfer said. ``However, the People's Bank of China is also partly responding to a weaker global economy and lower inflation.''
A government report today showed China's industrial production grew 14.7 percent from a year earlier in July, the slowest pace since February 2007. Consumer prices rose 6.3 percent, the smallest increase in 10 months, according to a separate report released this week.
The gross domestic product of the 15 nations sharing the euro dropped in the second quarter for the first time since the currency was introduced almost a decade ago and Japan's economy also contracted, according to figures published yesterday and today. The U.S. economy, China's biggest export market, shrank in the fourth quarter of 2007.
Medium-Term Appreciation
Simpfendorfer stressed it would be ``wrong to exaggerate'' the risks to China's economy of a global economic slowdown and said the country needs to press ahead with restructuring its export industries. The yuan will reach 6.2 per dollar by the end of 2009, he predicts.
``The arguments for medium-term appreciation are intact,'' Simpfendorfer said. ``A stronger currency helps the government replace an ageing export-led growth model with a consumer-driven version.''
The yuan will end this year at 6.64 against the dollar and strengthen to 6.25 by the end of 2009, according to the median estimate in a survey of 22 analysts by Bloomberg News. The currency declined in the past three weeks after government officials said on July 25 that supporting growth is as important as fighting inflation.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net. Judy Chen in Shanghai at xchen45@bloomberg.net;
Read more...
Aug. 14 (Bloomberg) -- Royal Bank of Scotland Group Plc. lowered its forecast for China's yuan, saying weakening overseas demand and slowing inflation are prompting the central bank to rein in yuan appreciation.
The Chinese currency will advance to 6.6 per dollar by the end of 2008, weaker than a previous forecast of 6.4, as the dollar climb against major currencies, strategist Ben Simpfendorfer in Hong Kong wrote in a report today. The yuan, which closed today at 6.86 in Shanghai, has retreated 0.1 percent versus the U.S. currency since June 30, after climbing 4.2 percent in the first quarter and 2.3 percent in the second.
``A stronger dollar is an important driver of the forecast change,'' Simpfendorfer said. ``However, the People's Bank of China is also partly responding to a weaker global economy and lower inflation.''
A government report today showed China's industrial production grew 14.7 percent from a year earlier in July, the slowest pace since February 2007. Consumer prices rose 6.3 percent, the smallest increase in 10 months, according to a separate report released this week.
The gross domestic product of the 15 nations sharing the euro dropped in the second quarter for the first time since the currency was introduced almost a decade ago and Japan's economy also contracted, according to figures published yesterday and today. The U.S. economy, China's biggest export market, shrank in the fourth quarter of 2007.
Medium-Term Appreciation
Simpfendorfer stressed it would be ``wrong to exaggerate'' the risks to China's economy of a global economic slowdown and said the country needs to press ahead with restructuring its export industries. The yuan will reach 6.2 per dollar by the end of 2009, he predicts.
``The arguments for medium-term appreciation are intact,'' Simpfendorfer said. ``A stronger currency helps the government replace an ageing export-led growth model with a consumer-driven version.''
The yuan will end this year at 6.64 against the dollar and strengthen to 6.25 by the end of 2009, according to the median estimate in a survey of 22 analysts by Bloomberg News. The currency declined in the past three weeks after government officials said on July 25 that supporting growth is as important as fighting inflation.
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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Pound Traders Most Bearish Since January, Risk Reversals Show
By Kim-Mai Cutler
Aug. 14 (Bloomberg) -- Options traders are the most bearish in seven months on the pound versus the dollar after the Bank of England yesterday cut its growth forecast and unemployment rose the most in almost 16 years, risk reversals showed.
The premium traders are paying for six-month pound put options, which provide the right to sell the currency, relative to calls is the highest since January, according to data compiled by Bloomberg. The risk-reversal rate reached as much as a 1.2 percentage-point premium for puts. Calls grant the right to buy a currency.
The British currency traded at $1.8728 at 11:18 a.m. in London, close to a 22-month low, from $1.8704 yesterday. It was as high as $2.0157 four weeks ago. The pound was at 79.68 pence per euro, from 79.76 pence.
The pound had its biggest loss against the dollar in nine months yesterday after Bank of England Governor Mervyn King said he sees a ``chill in the economic air.'' The central bank cut its growth forecast to 0.1 percent on a year-on-year basis for the first quarter of 2009 and said inflation may slow to below its 2 percent ceiling in two years if policy makers leave interest rates unchanged.
To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net
Read more...
Aug. 14 (Bloomberg) -- Options traders are the most bearish in seven months on the pound versus the dollar after the Bank of England yesterday cut its growth forecast and unemployment rose the most in almost 16 years, risk reversals showed.
The premium traders are paying for six-month pound put options, which provide the right to sell the currency, relative to calls is the highest since January, according to data compiled by Bloomberg. The risk-reversal rate reached as much as a 1.2 percentage-point premium for puts. Calls grant the right to buy a currency.
The British currency traded at $1.8728 at 11:18 a.m. in London, close to a 22-month low, from $1.8704 yesterday. It was as high as $2.0157 four weeks ago. The pound was at 79.68 pence per euro, from 79.76 pence.
The pound had its biggest loss against the dollar in nine months yesterday after Bank of England Governor Mervyn King said he sees a ``chill in the economic air.'' The central bank cut its growth forecast to 0.1 percent on a year-on-year basis for the first quarter of 2009 and said inflation may slow to below its 2 percent ceiling in two years if policy makers leave interest rates unchanged.
To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net
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Pound Near 22-Month Low on Growing Case for Interest-Rate Cut
By Andrew MacAskill and Kim-Mai Cutler
Aug. 14 (Bloomberg) -- The U.K. pound traded near its lowest level in 22 months against the dollar after the Bank of England cut its economic-growth forecast yesterday, signaling it may reduce interest rates.
Bank of England Governor Mervyn King said yesterday he saw a ``chill in the economic air'' after unemployment climbed in July by the most in almost 16 years. The pound has lost 5.4 percent against the dollar in the past 10 days, more than any other major currency except the South African rand and Australian dollar.
``The central bank has effectively opened the door for an interest-rate cut, possibly as soon as next month,'' Lee Ferridge, a foreign-exchange strategist in London at State Street Global Markets, a unit of the world's largest money manager for institutions, wrote in an e-mailed note to clients today. ``Sterling has obviously reacted significantly to this.''
The British currency was at $1.8750 by 12:18 p.m. in London, from $1.8704 yesterday. It fell earlier to $1.8619, its lowest level since October 2006. The pound rose to 79.57 pence per euro, from 79.76 pence.
The depreciating currency highlights concern a slumping housing market is pushing Europe's second-biggest economy toward a recession. A drop in house prices in July brought the property market to a ``virtual standstill,'' the Royal Institution of Chartered Surveyors said two days ago. The economy will grow about 0.1 percent on a year-on-year basis in the first quarter of 2009, compared with a previous prediction of 1 percent, according to bank forecasts published yesterday.
More Bearish
The pound is down 5.8 percent versus the dollar this year, after being little changed against the U.S. currency as recently as July 31. It fell 7.8 percent against the euro.
Options traders are the most bearish in seven months on the pound versus the dollar, risk reversal rates showed. The premium traders are paying for six-month pound put options, which provide the right to sell the currency, relative to calls rose to 1.2 percentage points, the highest since January, according to data compiled by Bloomberg. Calls grant the right to buy a currency.
Technical indicators suggested the pound is due for a recovery. The 14-day relative strength index was at 20.24 today. A number below 30 signals a change in price direction.
`Extremely Oversold'
``From a technical perspective, cable is extremely oversold,'' wrote Lee Hardman, a currency strategist in London for the Bank of Tokyo-Mitsubishi. ``However, any bounce for the pound is likely to be limited.'' The pound is likely to breach the $1.80 level and 190.00 against the Japanese yen over the next six to 12 months, Hardman forecast.
Government bonds declined, with the yield on the two-year gilt rebounding from the lowest level in three months. The yield climbed 6 basis points to 4.55 percent. The price of the 4.75 percent security due March 2010 fell 0.11, or 1.1 pound per 1,000-pound ($1,872) face amount, to 100.34.
The 10-year yield rose 3 basis points to 4.63 percent. Bond yields move inversely to prices.
``The market is generally consolidating yields near these lower levels,'' said John Wraith, head of U.K. rates-product development at Royal Bank of Canada in London. ``Bonds will be more sensitive to oil and commodity prices as well, as the bank doesn't have control over these external factors.''
Bond Auction
Crude oil rose for a second day, to $117.25 a barrel. Longer-dated U.K. bonds may underperform as inflation erodes returns and the government issues more debt to finance budget deficits during the economic slowdown, driving prices lower, according to Wraith.
The U.K. today sold 925 million pounds of inflation-linked bonds due 2037. The average yield was 0.519 percent and the bid- to-cover ratio, a gauge of demand, was 1.52.
``It's not great, but slightly better than the last two auctions,'' Wraith said. `` This is not a great time of year to be selling debt and there's a fairly nervous market. There is so much more supply coming and investors are spoiled for choice. It's been a struggler to get the paper away.''
Britain's sputtering economy has already pushed the pound below the level at which it's forecast to end 2008. The currency will be worth $1.91 and 80 pence per euro by year-end, according to the median forecast of analysts and strategists surveyed by Bloomberg.
To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
Read more...
Aug. 14 (Bloomberg) -- The U.K. pound traded near its lowest level in 22 months against the dollar after the Bank of England cut its economic-growth forecast yesterday, signaling it may reduce interest rates.
Bank of England Governor Mervyn King said yesterday he saw a ``chill in the economic air'' after unemployment climbed in July by the most in almost 16 years. The pound has lost 5.4 percent against the dollar in the past 10 days, more than any other major currency except the South African rand and Australian dollar.
``The central bank has effectively opened the door for an interest-rate cut, possibly as soon as next month,'' Lee Ferridge, a foreign-exchange strategist in London at State Street Global Markets, a unit of the world's largest money manager for institutions, wrote in an e-mailed note to clients today. ``Sterling has obviously reacted significantly to this.''
The British currency was at $1.8750 by 12:18 p.m. in London, from $1.8704 yesterday. It fell earlier to $1.8619, its lowest level since October 2006. The pound rose to 79.57 pence per euro, from 79.76 pence.
The depreciating currency highlights concern a slumping housing market is pushing Europe's second-biggest economy toward a recession. A drop in house prices in July brought the property market to a ``virtual standstill,'' the Royal Institution of Chartered Surveyors said two days ago. The economy will grow about 0.1 percent on a year-on-year basis in the first quarter of 2009, compared with a previous prediction of 1 percent, according to bank forecasts published yesterday.
More Bearish
The pound is down 5.8 percent versus the dollar this year, after being little changed against the U.S. currency as recently as July 31. It fell 7.8 percent against the euro.
Options traders are the most bearish in seven months on the pound versus the dollar, risk reversal rates showed. The premium traders are paying for six-month pound put options, which provide the right to sell the currency, relative to calls rose to 1.2 percentage points, the highest since January, according to data compiled by Bloomberg. Calls grant the right to buy a currency.
Technical indicators suggested the pound is due for a recovery. The 14-day relative strength index was at 20.24 today. A number below 30 signals a change in price direction.
`Extremely Oversold'
``From a technical perspective, cable is extremely oversold,'' wrote Lee Hardman, a currency strategist in London for the Bank of Tokyo-Mitsubishi. ``However, any bounce for the pound is likely to be limited.'' The pound is likely to breach the $1.80 level and 190.00 against the Japanese yen over the next six to 12 months, Hardman forecast.
Government bonds declined, with the yield on the two-year gilt rebounding from the lowest level in three months. The yield climbed 6 basis points to 4.55 percent. The price of the 4.75 percent security due March 2010 fell 0.11, or 1.1 pound per 1,000-pound ($1,872) face amount, to 100.34.
The 10-year yield rose 3 basis points to 4.63 percent. Bond yields move inversely to prices.
``The market is generally consolidating yields near these lower levels,'' said John Wraith, head of U.K. rates-product development at Royal Bank of Canada in London. ``Bonds will be more sensitive to oil and commodity prices as well, as the bank doesn't have control over these external factors.''
Bond Auction
Crude oil rose for a second day, to $117.25 a barrel. Longer-dated U.K. bonds may underperform as inflation erodes returns and the government issues more debt to finance budget deficits during the economic slowdown, driving prices lower, according to Wraith.
The U.K. today sold 925 million pounds of inflation-linked bonds due 2037. The average yield was 0.519 percent and the bid- to-cover ratio, a gauge of demand, was 1.52.
``It's not great, but slightly better than the last two auctions,'' Wraith said. `` This is not a great time of year to be selling debt and there's a fairly nervous market. There is so much more supply coming and investors are spoiled for choice. It's been a struggler to get the paper away.''
Britain's sputtering economy has already pushed the pound below the level at which it's forecast to end 2008. The currency will be worth $1.91 and 80 pence per euro by year-end, according to the median forecast of analysts and strategists surveyed by Bloomberg.
To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net
Read more...
Brazil and Chile: Latin America Bond and Currency Preview
By Jamie McGee
Aug. 14 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Retail sales rose 9.8 percent in the year through June, compared with a 10.5 percent increase in May, according to the median forecast of 30 economists in a Bloomberg survey.
The Instituto Brasileiro de Geografia e Estatistica (IBGE) is scheduled to release the data at 8 a.m. New York time.
The real rose 0.7 percent to 1.6115 per dollar.
The yield on the country's zero-coupon bonds due in January 2010 rose 1 basis point, or 0.01 percentage point, to 14.82 percent, according to Banco Votorantim SA.
Chile: The central bank will likely raise its overnight lending rate to 7.75 percent from 7.25 percent, according to the median forecast of 30 economists surveyed by Bloomberg News.
The central bank is scheduled to announce the rate at 6 p.m. New York time.
The peso strengthened 0.7 percent to 515.75 per dollar.
The yield for a basket of five-year peso bonds in inflation-linked currency units fell 6 basis points to 3.01 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
Read more...
Aug. 14 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
Brazil: Retail sales rose 9.8 percent in the year through June, compared with a 10.5 percent increase in May, according to the median forecast of 30 economists in a Bloomberg survey.
The Instituto Brasileiro de Geografia e Estatistica (IBGE) is scheduled to release the data at 8 a.m. New York time.
The real rose 0.7 percent to 1.6115 per dollar.
The yield on the country's zero-coupon bonds due in January 2010 rose 1 basis point, or 0.01 percentage point, to 14.82 percent, according to Banco Votorantim SA.
Chile: The central bank will likely raise its overnight lending rate to 7.75 percent from 7.25 percent, according to the median forecast of 30 economists surveyed by Bloomberg News.
The central bank is scheduled to announce the rate at 6 p.m. New York time.
The peso strengthened 0.7 percent to 515.75 per dollar.
The yield for a basket of five-year peso bonds in inflation-linked currency units fell 6 basis points to 3.01 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Jamie McGee in New York at jmcgee8@bloomberg.net
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Euro Near 5 1/2-Month Low Against Dollar as Economy Shrinks
By Anchalee Worrachate and Stanley White
Aug. 14 (Bloomberg) -- The euro traded near a 5 1/2-month low against the dollar after a report showed Europe's economy contracted for the first time since the single currency was introduced almost a decade ago.
The European currency also declined against the British pound on concern the second-quarter data will prompt traders to cut bets on higher interest rates in the 15 countries that share the euro. The 14-day relative strength index of the euro versus the dollar still signaled its losses may be exaggerated.
``The euro might find some support in the near term because the recent moves were overdone, but longer term we expect the currency to weaken against the dollar,'' said Lee Hardman, a currency strategist at Bank of Tokyo-Mistubishi Ltd. in London. ``There's more bad news to come in the euro area.'' The euro will fall to $1.40 in the next 12 months, said Hardman.
The euro traded at $1.4932 at 8:35 a.m. in New York, compared with $1.4919 yesterday. It fell to $1.4816 two days ago, the weakest level since Feb. 26. The euro was at 163.55 yen, compared with 163.43 yesterday, when it reached a three- month low of 161.40. The dollar traded at 109.64 yen, compared with 109.53.
Europe's economy shrank 0.2 percent in the second quarter, after growing 0.7 percent in the first, the European Union's statistics office said from Luxembourg.
`Outright Recession'
The contraction was in line with the median forecast of analysts in a Bloomberg News survey. The German economy, Europe's largest, contracted for the first time in almost four years in the second quarter, the Federal Statistics Office said today from Wiesbaden.
``We expect the euro zone to move into an outright recession,'' said Ian Stannard, a London-based currency strategist for BNP Paribas SA. ``We see a multi-year euro downtrend now developing. And data we are getting is consistent with that view.''
Traders have reduced bets the European Central Bank will raise interest rates a second time this year. The implied yield on the December Euribor futures contract was at 4.95 percent today, compared with 5.04 percent at the end of July.
Further euro declines against the dollar may be limited on concern the financial turmoil and the housing slump in the U.S. may deepen. Bank repossessions in the U.S. almost tripled in July, and foreclosure filings increased 55 percent from a year earlier as falling prices cut homeowner equity, said RealtyTrac Inc., California-based seller of foreclosure data.
Relative Strength
The euro's 14-day relative strength index was at 20.8 today. A reading below 30 typically signals a change in price direction is imminent.
The dollar surged 4.6 percent against Europe's common currency this month, enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the housing slump and credit market losses keep the Federal Reserve from raising interest rates this year.
The yen may rise against the dollar on speculation Japanese investors will repatriate some of their earnings on investments in U.S. Treasuries. The U.S. will pay $38.8 billion in principal and coupons on government debt tomorrow. Japan is the largest foreign owner of Treasuries, according to U.S. government data.
Japanese investors sold 461.3 billion yen ($4.2 billion) more overseas bonds and notes than they bought last week, the second week of sales and the most since the period ended April 18, the Finance Ministry said today in Tokyo.
`Great Chance'
``There's a great chance that the yen will appreciate,'' said Akira Takei, general manager in Tokyo for international bonds at Mizuho Asset Management Co., which oversees the equivalent of $37.3 billion. ``People want to avoid risks. Repatriation will play some part in yen strength as there is some comfort in holding funds in your own currency.''
Any gains in the dollar may be limited by speculation a rebound in oil prices will damp consumer spending in the nation, the world's largest user of the fuel. The dollar has risen 6.7 percent against the euro in the past month as the price of oil slumped more than 20 percent from a record.
Crude oil for September delivery rose 86 U.S. cents to $116.86 a barrel after a U.S. Energy Department report showed a bigger-than-forecast decline in inventories of gasoline.
``The resurgence of oil prices is causing the market to second-guess if the rebound of the U.S. dollar is temporary in nature,'' said Firas Askari, head currency trader at BMO Capital Markets in Toronto.
U.S. Inflation
U.S. consumer prices rose more than forecast in July, indicating Federal Reserve policy makers have reason to be concerned over a pickup in inflation.
The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years. So-called core prices, which exclude food and energy, also rose more than projected.
The British pound may extend its decline to 192.48 yen after the currency dropped below so-called support at around 211.25 yen, technical analysts at Citigroup Global Markets Inc. said in a research note yesterday. The pound traded at 205.38 yen, from 204.87 yen late yesterday.
Support around the 211.25 yen level is the 55-day moving average and represents an ascending trend line that connects the lows in March, May, July and on Aug. 8, based on Citigroup's chart. Support is where buy orders may be clustered.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
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Aug. 14 (Bloomberg) -- The euro traded near a 5 1/2-month low against the dollar after a report showed Europe's economy contracted for the first time since the single currency was introduced almost a decade ago.
The European currency also declined against the British pound on concern the second-quarter data will prompt traders to cut bets on higher interest rates in the 15 countries that share the euro. The 14-day relative strength index of the euro versus the dollar still signaled its losses may be exaggerated.
``The euro might find some support in the near term because the recent moves were overdone, but longer term we expect the currency to weaken against the dollar,'' said Lee Hardman, a currency strategist at Bank of Tokyo-Mistubishi Ltd. in London. ``There's more bad news to come in the euro area.'' The euro will fall to $1.40 in the next 12 months, said Hardman.
The euro traded at $1.4932 at 8:35 a.m. in New York, compared with $1.4919 yesterday. It fell to $1.4816 two days ago, the weakest level since Feb. 26. The euro was at 163.55 yen, compared with 163.43 yesterday, when it reached a three- month low of 161.40. The dollar traded at 109.64 yen, compared with 109.53.
Europe's economy shrank 0.2 percent in the second quarter, after growing 0.7 percent in the first, the European Union's statistics office said from Luxembourg.
`Outright Recession'
The contraction was in line with the median forecast of analysts in a Bloomberg News survey. The German economy, Europe's largest, contracted for the first time in almost four years in the second quarter, the Federal Statistics Office said today from Wiesbaden.
``We expect the euro zone to move into an outright recession,'' said Ian Stannard, a London-based currency strategist for BNP Paribas SA. ``We see a multi-year euro downtrend now developing. And data we are getting is consistent with that view.''
Traders have reduced bets the European Central Bank will raise interest rates a second time this year. The implied yield on the December Euribor futures contract was at 4.95 percent today, compared with 5.04 percent at the end of July.
Further euro declines against the dollar may be limited on concern the financial turmoil and the housing slump in the U.S. may deepen. Bank repossessions in the U.S. almost tripled in July, and foreclosure filings increased 55 percent from a year earlier as falling prices cut homeowner equity, said RealtyTrac Inc., California-based seller of foreclosure data.
Relative Strength
The euro's 14-day relative strength index was at 20.8 today. A reading below 30 typically signals a change in price direction is imminent.
The dollar surged 4.6 percent against Europe's common currency this month, enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the housing slump and credit market losses keep the Federal Reserve from raising interest rates this year.
The yen may rise against the dollar on speculation Japanese investors will repatriate some of their earnings on investments in U.S. Treasuries. The U.S. will pay $38.8 billion in principal and coupons on government debt tomorrow. Japan is the largest foreign owner of Treasuries, according to U.S. government data.
Japanese investors sold 461.3 billion yen ($4.2 billion) more overseas bonds and notes than they bought last week, the second week of sales and the most since the period ended April 18, the Finance Ministry said today in Tokyo.
`Great Chance'
``There's a great chance that the yen will appreciate,'' said Akira Takei, general manager in Tokyo for international bonds at Mizuho Asset Management Co., which oversees the equivalent of $37.3 billion. ``People want to avoid risks. Repatriation will play some part in yen strength as there is some comfort in holding funds in your own currency.''
Any gains in the dollar may be limited by speculation a rebound in oil prices will damp consumer spending in the nation, the world's largest user of the fuel. The dollar has risen 6.7 percent against the euro in the past month as the price of oil slumped more than 20 percent from a record.
Crude oil for September delivery rose 86 U.S. cents to $116.86 a barrel after a U.S. Energy Department report showed a bigger-than-forecast decline in inventories of gasoline.
``The resurgence of oil prices is causing the market to second-guess if the rebound of the U.S. dollar is temporary in nature,'' said Firas Askari, head currency trader at BMO Capital Markets in Toronto.
U.S. Inflation
U.S. consumer prices rose more than forecast in July, indicating Federal Reserve policy makers have reason to be concerned over a pickup in inflation.
The consumer price index climbed 0.8 percent, twice as much as anticipated, the Labor Department said today in Washington. The cost of living was up 5.6 percent in the year ended in July, the biggest jump in 17 years. So-called core prices, which exclude food and energy, also rose more than projected.
The British pound may extend its decline to 192.48 yen after the currency dropped below so-called support at around 211.25 yen, technical analysts at Citigroup Global Markets Inc. said in a research note yesterday. The pound traded at 205.38 yen, from 204.87 yen late yesterday.
Support around the 211.25 yen level is the 55-day moving average and represents an ascending trend line that connects the lows in March, May, July and on Aug. 8, based on Citigroup's chart. Support is where buy orders may be clustered.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
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Nordic Currencies: Sweden's Krona Trades Near Two-Month High
By Bo Nielsen
Aug. 14 (Bloomberg) -- Sweden's krona traded near a two- month high versus the euro after a government report showed industrial production unexpectedly increased in June. Iceland's krona advanced the most this month versus the dollar.
Output gained 0.6 percent from May, when it fell a revised 0.8 percent, Statistics Sweden today said. The median estimate of eight economists surveyed by Bloomberg News was for a contraction of 0.3 percent. Europe's gross domestic product fell 0.2 percent from the first quarter, the first contraction since the launch of the euro almost a decade ago, the European Union statistics office in Luxembourg said today.
``We still believe in a stronger krona versus the euro,'' said Camilla Viland, a currency strategist in Oslo for DnB NOR ASA, Norway's biggest bank. ``It doesn't look too good in the Swedish economy but it's even worse in the rest of Europe.''
The Swedish krona traded at 9.3839 per euro by 2:15 p.m. in Stockholm, from 9.3743 yesterday, taking its appreciation since Aug. 1 to 1 percent. It was at 6.2922 per dollar, from 6.2838. Iceland's krona rose 1.3 percent to 80.88 per dollar from 81.95, the biggest gain since July 31.
The Stockholm-based Riksbank raised its benchmark interest rate to 4.5 percent last month, the second increase this year, to curb inflation. Swedish policy makers should be prepared to raise rates further, the Washington-based International Monetary Fund said this week.
The yield on Sweden's 5.25 percent government note due March 2011 rose 3 basis points, or 0.03 percentage points, to 4.29 percent. Bond yields move inversely to prices.
Icelandic Krona
Iceland's krona gained after a report from the country's regulator showed its four biggest banks have enough capital to withstand heavy losses, boosting optimism the central bank will be more able to act as lender of last resort to a financial industry that is almost nine times the size of the economy.
Kaupthing Bank hf, Landsbanki Islands hf, Glitnir Bank hf and Straumur-Burdaras hf would all continue to have capital ratios above the minimum requirement of 8 percent if they suffered simultaneous and significant losses, the Reykjavik-based FME said in a statement today.
The yield on the Norwegian 6 percent government note due May 2011 tumbled 19 basis points to 4.81 percent, the lowest level since May 16, after the Norges Bank, led by Governor Svein Gjedrem, held rates steady yesterday and said ``growth in the world economy is slowing markedly.''
The Norwegian krone was at 8.0160 per euro, from 8.0310 yesterday, and at 5.3765 per dollar, from 5.3835.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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Aug. 14 (Bloomberg) -- Sweden's krona traded near a two- month high versus the euro after a government report showed industrial production unexpectedly increased in June. Iceland's krona advanced the most this month versus the dollar.
Output gained 0.6 percent from May, when it fell a revised 0.8 percent, Statistics Sweden today said. The median estimate of eight economists surveyed by Bloomberg News was for a contraction of 0.3 percent. Europe's gross domestic product fell 0.2 percent from the first quarter, the first contraction since the launch of the euro almost a decade ago, the European Union statistics office in Luxembourg said today.
``We still believe in a stronger krona versus the euro,'' said Camilla Viland, a currency strategist in Oslo for DnB NOR ASA, Norway's biggest bank. ``It doesn't look too good in the Swedish economy but it's even worse in the rest of Europe.''
The Swedish krona traded at 9.3839 per euro by 2:15 p.m. in Stockholm, from 9.3743 yesterday, taking its appreciation since Aug. 1 to 1 percent. It was at 6.2922 per dollar, from 6.2838. Iceland's krona rose 1.3 percent to 80.88 per dollar from 81.95, the biggest gain since July 31.
The Stockholm-based Riksbank raised its benchmark interest rate to 4.5 percent last month, the second increase this year, to curb inflation. Swedish policy makers should be prepared to raise rates further, the Washington-based International Monetary Fund said this week.
The yield on Sweden's 5.25 percent government note due March 2011 rose 3 basis points, or 0.03 percentage points, to 4.29 percent. Bond yields move inversely to prices.
Icelandic Krona
Iceland's krona gained after a report from the country's regulator showed its four biggest banks have enough capital to withstand heavy losses, boosting optimism the central bank will be more able to act as lender of last resort to a financial industry that is almost nine times the size of the economy.
Kaupthing Bank hf, Landsbanki Islands hf, Glitnir Bank hf and Straumur-Burdaras hf would all continue to have capital ratios above the minimum requirement of 8 percent if they suffered simultaneous and significant losses, the Reykjavik-based FME said in a statement today.
The yield on the Norwegian 6 percent government note due May 2011 tumbled 19 basis points to 4.81 percent, the lowest level since May 16, after the Norges Bank, led by Governor Svein Gjedrem, held rates steady yesterday and said ``growth in the world economy is slowing markedly.''
The Norwegian krone was at 8.0160 per euro, from 8.0310 yesterday, and at 5.3765 per dollar, from 5.3835.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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U.S. Soybean Use Falls After End of Argentine Crisis
By Jeff Wilson
Aug. 14 (Bloomberg) -- Soybean demand from U.S. processors fell 6.7 percent last month after Argentina rescinded an export tax increase, ending a four-month dispute with farmers and reducing demand for U.S. vegetable oils and animal feed.
Users including Bunge Ltd. and Archer Daniels Midland Co. crushed 133 million bushels of soybeans last month, down from 142.5 million in July 2007, the National Oilseed Processors Association said today in a report. The average estimate of five analysts surveyed by Bloomberg News was for 140.3 million. About 133.5 million bushels were processed in June.
The Argentine farm crisis ended July 18, when President Cristina Fernandez de Kirchner rescinded her decree raising levies on exports of grains and oilseeds. The country is the world's biggest exporter of soybean oil and meal. Farmers fought the March increase for four months, blocking roads and withholding produce, boosting demand for U.S. supplies.
``Crushing slowed after the Argentina settlement,'' said Anne Frick, a senior oilseed analyst for Prudential Financial in New York. ``A few more plants were taking down time for regular maintenance.''
Soybean futures for November delivery rose the 70-cent limit allowed by the Chicago Board of Trade to close at $12.84 a bushel yesterday. The 5.8 percent gain was the biggest since January 2007. Most-active futures, which jumped 49 percent in the past year before today, reached a record $16.3675 on July 3.
Projected Use
U.S. processors will use 1.83 billion bushels of soybeans to make animal feed and cooking oil in the marketing year that ends Aug. 31, up from 1.808 billion last year, the U.S. Department of Agriculture said Aug. 12. Use may fall to 1.815 billion bushels next year, the department said.
Advance export orders of soybean-oil since Oct. 1 are 85 percent above year-ago levels on increased demand from China, the world's biggest buyer, USDA data show. Since Oct. 1, shipments of soybean meal, an animal feed, are up 7.9 percent from the same period a year earlier, the USDA data showed on July 31.
Slower demand helped reduce profit for oilseed processors at the end of July to 84 cents a bushel from $1.11 at the start of the month in the U.S., the world's largest soybean grower and exporter, Bloomberg data show.
Inventories Fall
Inventories of soybean oil at the end of June at NOPA- member processing plants fell 17 percent to 2.367 billion pounds from 2.835 billion pounds a year earlier, the association said. Analysts surveyed by Bloomberg expected 2.388 billion, on average. Stockpiles at the end of June were 2.449 billion pounds.
Soybean-oil futures for December delivery rose 2.5 cents, or 4.9 percent, to 53.28 cents a pound yesterday in Chicago. The price gained 45 percent in the past year before today, reaching a record 72.69 cents on March 4 on rising demand for biofuels and cooking oil.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.
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Aug. 14 (Bloomberg) -- Soybean demand from U.S. processors fell 6.7 percent last month after Argentina rescinded an export tax increase, ending a four-month dispute with farmers and reducing demand for U.S. vegetable oils and animal feed.
Users including Bunge Ltd. and Archer Daniels Midland Co. crushed 133 million bushels of soybeans last month, down from 142.5 million in July 2007, the National Oilseed Processors Association said today in a report. The average estimate of five analysts surveyed by Bloomberg News was for 140.3 million. About 133.5 million bushels were processed in June.
The Argentine farm crisis ended July 18, when President Cristina Fernandez de Kirchner rescinded her decree raising levies on exports of grains and oilseeds. The country is the world's biggest exporter of soybean oil and meal. Farmers fought the March increase for four months, blocking roads and withholding produce, boosting demand for U.S. supplies.
``Crushing slowed after the Argentina settlement,'' said Anne Frick, a senior oilseed analyst for Prudential Financial in New York. ``A few more plants were taking down time for regular maintenance.''
Soybean futures for November delivery rose the 70-cent limit allowed by the Chicago Board of Trade to close at $12.84 a bushel yesterday. The 5.8 percent gain was the biggest since January 2007. Most-active futures, which jumped 49 percent in the past year before today, reached a record $16.3675 on July 3.
Projected Use
U.S. processors will use 1.83 billion bushels of soybeans to make animal feed and cooking oil in the marketing year that ends Aug. 31, up from 1.808 billion last year, the U.S. Department of Agriculture said Aug. 12. Use may fall to 1.815 billion bushels next year, the department said.
Advance export orders of soybean-oil since Oct. 1 are 85 percent above year-ago levels on increased demand from China, the world's biggest buyer, USDA data show. Since Oct. 1, shipments of soybean meal, an animal feed, are up 7.9 percent from the same period a year earlier, the USDA data showed on July 31.
Slower demand helped reduce profit for oilseed processors at the end of July to 84 cents a bushel from $1.11 at the start of the month in the U.S., the world's largest soybean grower and exporter, Bloomberg data show.
Inventories Fall
Inventories of soybean oil at the end of June at NOPA- member processing plants fell 17 percent to 2.367 billion pounds from 2.835 billion pounds a year earlier, the association said. Analysts surveyed by Bloomberg expected 2.388 billion, on average. Stockpiles at the end of June were 2.449 billion pounds.
Soybean-oil futures for December delivery rose 2.5 cents, or 4.9 percent, to 53.28 cents a pound yesterday in Chicago. The price gained 45 percent in the past year before today, reaching a record 72.69 cents on March 4 on rising demand for biofuels and cooking oil.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.
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Corn Gains for Third Day as Recent Price Decline Spurs Buying
By Jae Hur
Aug. 14 (Bloomberg) -- Corn rose a third day on speculation importers, including Japan and South Korea, are seeking the grain after prices fell to a six-month low this week.
South Korea, the world's third-biggest buyer of corn, plans to buy as much as 110,000 metric tons of corn at a tender today. The nation's Major Feedmill Group and members of the Korea Feed Association in Busan purchased 45,000 tons and 55,000 tons each yesterday, said two officials with knowledge of the trade.
``Corn prices close to $5 a bushel were enough to stoke interest among buyers who saw the price over $7 a month earlier,'' said Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd. Japan, the world's top corn importer, is also seeking to buy the grain, he said.
Corn for December delivery, the most active contract, rose as much as 2.8 percent to $5.74 a bushel in after-hours electronic trading on the Chicago Board of Trade. It traded at $5.68 as of 3:37 p.m. in Singapore.
The contract gained the 30-cent daily limit yesterday after rising 2.2 percent the day before. Prices declined to $5.045, the lowest since Feb. 14, on Aug. 12. Futures have dropped 29 percent from the record $7.9925 reached on June 27.
In Japan, importers may have bought as much as 600,000 tons for feed production this week after purchasing about 150,000 tons last week, Chino said. Japan imports 12 million tons of corn for animal feed each year and about 4 million tons for food, he said.
Soybeans for November delivery advanced 23 cents, or 1.8 percent, to $13.07 a bushel and last traded at $12.97, gaining for a fourth day. The contract jumped the 70-cent daily limit yesterday. Futures are down 21 percent from the July 3 record of $16.3675 and touched $11.68 on Aug. 11, the lowest since April 1.
U.S. Farmers
``On the futures basis, prices fell by about $100 a ton for corn and $180 for soybeans within about a month,'' Chino said. ``However, U.S. farmers are reluctant to sell those because the prices fell too much.''
Soybeans and corn, which is also used to make ethanol, got additional support from a rally in crude oil, he said. Oil jumped 2.6 percent to $116 a barrel yesterday, the biggest one-day gain since July 30, and last traded at $117.01 today.
Wheat for December delivery advanced 14.75 cents, or 1.7 percent, to $8.90 a bushel after gaining the 60-cent daily limit yesterday. The most-active futures have dropped 34 percent since reaching a record $13.495 on Feb. 27.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Aug. 14 (Bloomberg) -- Corn rose a third day on speculation importers, including Japan and South Korea, are seeking the grain after prices fell to a six-month low this week.
South Korea, the world's third-biggest buyer of corn, plans to buy as much as 110,000 metric tons of corn at a tender today. The nation's Major Feedmill Group and members of the Korea Feed Association in Busan purchased 45,000 tons and 55,000 tons each yesterday, said two officials with knowledge of the trade.
``Corn prices close to $5 a bushel were enough to stoke interest among buyers who saw the price over $7 a month earlier,'' said Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd. Japan, the world's top corn importer, is also seeking to buy the grain, he said.
Corn for December delivery, the most active contract, rose as much as 2.8 percent to $5.74 a bushel in after-hours electronic trading on the Chicago Board of Trade. It traded at $5.68 as of 3:37 p.m. in Singapore.
The contract gained the 30-cent daily limit yesterday after rising 2.2 percent the day before. Prices declined to $5.045, the lowest since Feb. 14, on Aug. 12. Futures have dropped 29 percent from the record $7.9925 reached on June 27.
In Japan, importers may have bought as much as 600,000 tons for feed production this week after purchasing about 150,000 tons last week, Chino said. Japan imports 12 million tons of corn for animal feed each year and about 4 million tons for food, he said.
Soybeans for November delivery advanced 23 cents, or 1.8 percent, to $13.07 a bushel and last traded at $12.97, gaining for a fourth day. The contract jumped the 70-cent daily limit yesterday. Futures are down 21 percent from the July 3 record of $16.3675 and touched $11.68 on Aug. 11, the lowest since April 1.
U.S. Farmers
``On the futures basis, prices fell by about $100 a ton for corn and $180 for soybeans within about a month,'' Chino said. ``However, U.S. farmers are reluctant to sell those because the prices fell too much.''
Soybeans and corn, which is also used to make ethanol, got additional support from a rally in crude oil, he said. Oil jumped 2.6 percent to $116 a barrel yesterday, the biggest one-day gain since July 30, and last traded at $117.01 today.
Wheat for December delivery advanced 14.75 cents, or 1.7 percent, to $8.90 a bushel after gaining the 60-cent daily limit yesterday. The most-active futures have dropped 34 percent since reaching a record $13.495 on Feb. 27.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Tin Rises Most in 4 Months in London on Indonesia; Copper Jumps
By Claudia Carpenter
Aug. 14 (Bloomberg) -- Tin advanced the most in almost four months in London as reduced Indonesian exports exacerbate a world supply shortfall. Copper and aluminum also gained.
Indonesia's PT Timah, the world's second-biggest tin miner, may cut sales to 55,000 to 56,000 metric tons this year, Bisnis Indonesia reported, citing President Director Wachid Usman. The company in May forecast sales of 58,000 tons. The government of tin-producing province Bangka Belitung meets next week to discuss environmental damage from tin mining.
``It's possible with the meeting occurring, there may be stricter-than-normal steps being taken to contain illegal mining,'' said Peter Kettle, research manager for tin industry trade group ITRI Ltd. in St. Albans, England. ``The fundamentals supporting tin prices still is that Indonesia's production is falling.''
Tin for delivery in three months gained as much as 5.9 percent to $18,850 a ton on the London Metal Exchange, the steepest advance compared with intraday prices since April 23. The contract traded up $850, or 4.8 percent, at $18,650 as of 1:34 p.m. in London. Prices have fallen 16 percent this month.
``The fact that this international conference is coming up, plus the big drop in prices over the last week or so, it wouldn't be surprising to see some sort of story along the lines Indonesia is doing something to hold back supply,'' Kettle said.
China, the largest tin supplier, produced 8,400 tons in July, down 34 percent from the prior month, according to the National Bureau of Statistics.
Copper Advances
Global supply will probably fall short of demand by 16,000 tons this year compared with a deficit of 2,000 tons last year, said Dan Smith, a metals analyst at Standard Chartered Plc in London. Tin will average $21,216 a ton this year, the bank forecasts. So far, it's averaged $20,493 a ton.
Copper rose $120 to $7,550 a ton and aluminum gained $5 to $2,815 a ton. Jiangxi Copper Co., China's second-biggest smelter of the metal, will cut production of copper rods and wires by 30 percent from this month after the local government restricted power supply. Jiangxi joins aluminum and zinc smelters in China that are curbing output because of electricity shortages.
``The Jiangxi provincial government asked us to reduce power consumption,'' said Wang Chiwei, executive director and vice president.
Copper is probably being supported by ``short-covering,'' or purchases of the metal previously sold by traders who were betting on lower prices, Smith said. Power cuts are negative because they signal reduced demand, he said.
Lead gained $60.50 to $1,740.50 a ton and zinc was unchanged at $1,650 a ton. Nickel fell $398 to $19,102.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Aug. 14 (Bloomberg) -- Tin advanced the most in almost four months in London as reduced Indonesian exports exacerbate a world supply shortfall. Copper and aluminum also gained.
Indonesia's PT Timah, the world's second-biggest tin miner, may cut sales to 55,000 to 56,000 metric tons this year, Bisnis Indonesia reported, citing President Director Wachid Usman. The company in May forecast sales of 58,000 tons. The government of tin-producing province Bangka Belitung meets next week to discuss environmental damage from tin mining.
``It's possible with the meeting occurring, there may be stricter-than-normal steps being taken to contain illegal mining,'' said Peter Kettle, research manager for tin industry trade group ITRI Ltd. in St. Albans, England. ``The fundamentals supporting tin prices still is that Indonesia's production is falling.''
Tin for delivery in three months gained as much as 5.9 percent to $18,850 a ton on the London Metal Exchange, the steepest advance compared with intraday prices since April 23. The contract traded up $850, or 4.8 percent, at $18,650 as of 1:34 p.m. in London. Prices have fallen 16 percent this month.
``The fact that this international conference is coming up, plus the big drop in prices over the last week or so, it wouldn't be surprising to see some sort of story along the lines Indonesia is doing something to hold back supply,'' Kettle said.
China, the largest tin supplier, produced 8,400 tons in July, down 34 percent from the prior month, according to the National Bureau of Statistics.
Copper Advances
Global supply will probably fall short of demand by 16,000 tons this year compared with a deficit of 2,000 tons last year, said Dan Smith, a metals analyst at Standard Chartered Plc in London. Tin will average $21,216 a ton this year, the bank forecasts. So far, it's averaged $20,493 a ton.
Copper rose $120 to $7,550 a ton and aluminum gained $5 to $2,815 a ton. Jiangxi Copper Co., China's second-biggest smelter of the metal, will cut production of copper rods and wires by 30 percent from this month after the local government restricted power supply. Jiangxi joins aluminum and zinc smelters in China that are curbing output because of electricity shortages.
``The Jiangxi provincial government asked us to reduce power consumption,'' said Wang Chiwei, executive director and vice president.
Copper is probably being supported by ``short-covering,'' or purchases of the metal previously sold by traders who were betting on lower prices, Smith said. Power cuts are negative because they signal reduced demand, he said.
Lead gained $60.50 to $1,740.50 a ton and zinc was unchanged at $1,650 a ton. Nickel fell $398 to $19,102.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net
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Crude Oil Trades Little Changed After U.S. Inventory Report
By Grant Smith
Aug. 14 (Bloomberg) -- Crude oil traded little changed after rallying yesterday on a decline in U.S. gasoline stockpiles caused by reduced imports and refinery processing.
Gasoline supplies dropped 6.39 million barrels to 202.8 million barrels last week, the biggest decline since October 2002, the Energy Department said yesterday. Petroleum product imports fell to the lowest since April 2005 and refinery rates were 1.1 percentage points lower as oil companies prepared for Edouard, a tropical storm in the Gulf of Mexico that lost strength as it moved inland.
``Yesterday's numbers were less bullish than the headline would suggest, as a lot of the product draws were more a result of lost output on the Gulf Coast due to precautionary closures ahead of Tropical Storm Edouard,'' said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London.
Crude oil for September delivery was at $115.84 a barrel, 16 cents or 0.1 percent higher at 12:41 p.m. London time on the New York Mercantile Exchange. It earlier rose as much as $1.42 or 1.2 percent to $117.42.
Yesterday, futures increased $2.99, or 2.6 percent, to settle at $116 a barrel, the biggest one-day gain since July 30.
Refineries in the U.S. operated at 85.9 percent of capacity, down 1.1 percentage points from the week before, the Energy Department report showed. Petroleum-product imports fell 17 percent to 2.6 million barrels a day, the lowest since the week ended April 1, 2005, it showed.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 2.8 percent from a year earlier, the department said. Gasoline consumption averaged 9.4 million barrels a day over the period, down 1.9 percent from a year ago.
Brent crude oil for September settlement fell 18 cents to $113.29 a barrel on London's ICE Futures Europe exchange at 12:43 p.m. London time. The contract expires today.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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Aug. 14 (Bloomberg) -- Crude oil traded little changed after rallying yesterday on a decline in U.S. gasoline stockpiles caused by reduced imports and refinery processing.
Gasoline supplies dropped 6.39 million barrels to 202.8 million barrels last week, the biggest decline since October 2002, the Energy Department said yesterday. Petroleum product imports fell to the lowest since April 2005 and refinery rates were 1.1 percentage points lower as oil companies prepared for Edouard, a tropical storm in the Gulf of Mexico that lost strength as it moved inland.
``Yesterday's numbers were less bullish than the headline would suggest, as a lot of the product draws were more a result of lost output on the Gulf Coast due to precautionary closures ahead of Tropical Storm Edouard,'' said Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London.
Crude oil for September delivery was at $115.84 a barrel, 16 cents or 0.1 percent higher at 12:41 p.m. London time on the New York Mercantile Exchange. It earlier rose as much as $1.42 or 1.2 percent to $117.42.
Yesterday, futures increased $2.99, or 2.6 percent, to settle at $116 a barrel, the biggest one-day gain since July 30.
Refineries in the U.S. operated at 85.9 percent of capacity, down 1.1 percentage points from the week before, the Energy Department report showed. Petroleum-product imports fell 17 percent to 2.6 million barrels a day, the lowest since the week ended April 1, 2005, it showed.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 2.8 percent from a year earlier, the department said. Gasoline consumption averaged 9.4 million barrels a day over the period, down 1.9 percent from a year ago.
Brent crude oil for September settlement fell 18 cents to $113.29 a barrel on London's ICE Futures Europe exchange at 12:43 p.m. London time. The contract expires today.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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Gold Rises for 2nd Day in London on Jewelry, Industrial Demand
By Chanyaporn Chanjaroen
Aug. 14 (Bloomberg) -- Gold rose for a second consecutive day in London, buoyed by demand from jewelers and industrial consumers. Platinum also advanced.
Gold is still trading below its 10-, 20- and 100-day moving averages after slumping to a seven-month low earlier this week. The drop in prices has spurred demand, said Wolfgang Wrzesniok- Rossbach, head of marketing and sales at refiner Heraeus Holding GmbH in Hanau, Germany.
``We have reports from our Asian colleagues that showed extremely good demand for jewelry and electronics,'' Wrzesniok- Rossbach said today by phone.
Gold for immediate delivery added $6.22, or 0.7 percent, to $832.95 an ounce as of 11:46 a.m. in London, after trading as high as $836.85. Prices are 19 percent below the record $1,032.70 reached March 17.
A two-day rally in oil prices has also buoyed gold, seen by some investors as a hedge against accelerating inflation, Wrzesniok-Rossbach said. Inflation in the euro region reached 4.1 percent in July, more than twice the limit of the European Central Bank.
The economy in the euro zone contracted in the second quarter for the first time since the introduction of the currency. Gross domestic product fell 0.2 percent from the first three months, the European Union statistics office in Luxembourg said today.
``The market might intensify speculation that the European Central Bank would cut rates soon,'' Peter Fertig, a consultant at Dresdner Kleinwort wrote today in a report. ``A shrinking interest rate spread over U.S. interest rates is negative for gold,'' he said.
U.S. Inflation
The U.S. inflation report due at 1:30 p.m. London time may move the dollar and gold, Emanuel Georgouras, a trader at Marex Financial Ltd. in London said by phone. Consumer price index probably climbed 0.4 percent in July, according to the median forecast of 78 economists in a Bloomberg News survey, after jumping 1.1 percent in June.
Dow Jones & Co. adjusted the weightings of 19 futures in the Dow Jones-AIG Commodity Index for 2009 and will increase gold's share to 7.86 percent, from 7.4 percent this year.
Silver for immediate delivery rose 3.0 cents to $14.940 an ounce. Platinum advanced $11, or 0.7 percent, to $1,525 an ounce and palladium fell $5.75, or 1.8 percent, to $319 an ounce.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Aug. 14 (Bloomberg) -- Gold rose for a second consecutive day in London, buoyed by demand from jewelers and industrial consumers. Platinum also advanced.
Gold is still trading below its 10-, 20- and 100-day moving averages after slumping to a seven-month low earlier this week. The drop in prices has spurred demand, said Wolfgang Wrzesniok- Rossbach, head of marketing and sales at refiner Heraeus Holding GmbH in Hanau, Germany.
``We have reports from our Asian colleagues that showed extremely good demand for jewelry and electronics,'' Wrzesniok- Rossbach said today by phone.
Gold for immediate delivery added $6.22, or 0.7 percent, to $832.95 an ounce as of 11:46 a.m. in London, after trading as high as $836.85. Prices are 19 percent below the record $1,032.70 reached March 17.
A two-day rally in oil prices has also buoyed gold, seen by some investors as a hedge against accelerating inflation, Wrzesniok-Rossbach said. Inflation in the euro region reached 4.1 percent in July, more than twice the limit of the European Central Bank.
The economy in the euro zone contracted in the second quarter for the first time since the introduction of the currency. Gross domestic product fell 0.2 percent from the first three months, the European Union statistics office in Luxembourg said today.
``The market might intensify speculation that the European Central Bank would cut rates soon,'' Peter Fertig, a consultant at Dresdner Kleinwort wrote today in a report. ``A shrinking interest rate spread over U.S. interest rates is negative for gold,'' he said.
U.S. Inflation
The U.S. inflation report due at 1:30 p.m. London time may move the dollar and gold, Emanuel Georgouras, a trader at Marex Financial Ltd. in London said by phone. Consumer price index probably climbed 0.4 percent in July, according to the median forecast of 78 economists in a Bloomberg News survey, after jumping 1.1 percent in June.
Dow Jones & Co. adjusted the weightings of 19 futures in the Dow Jones-AIG Commodity Index for 2009 and will increase gold's share to 7.86 percent, from 7.4 percent this year.
Silver for immediate delivery rose 3.0 cents to $14.940 an ounce. Platinum advanced $11, or 0.7 percent, to $1,525 an ounce and palladium fell $5.75, or 1.8 percent, to $319 an ounce.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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