By John Brinsley and Rebecca Christie
Aug. 15 (Bloomberg) -- International buying of U.S. financial assets fell in June, posting the smallest gain in nine months, as investors sold stocks and demand weakened for corporate bonds.
Total net purchases of long-term equities, notes and bonds dropped to $53.4 billion, from a revised $83.2 billion the previous month, the Treasury Department said today in Washington. Including short-term securities such as Treasury bills and non-market trades such as stock swaps, foreigners bought a net $51.1 billion, up from net buying of $12.3 billion a month earlier that was revised from $2.5 billion in sales.
Stocks fell in June by the most in more than five years on concern that the U.S. housing market collapse and credit crunch would deepen. Federal Reserve policy makers cautioned that month about ``downside risks'' to growth and rising inflation threats while keeping its benchmark interest rate at 2 percent.
``The data is a bit of a disappointment and signals that the global financial environment is responding to continued uncertainty in the U.S. financial and economic situation,'' said Joseph Brusuelas, chief economist at Merk Investments LLC in Palo Alto, California. ``There may be a bit of a bounce back in the next couple of months.''
Economists had predicted international investors would buy a net $60 billion of long-term securities in June, based on the median of 11 estimates in a Bloomberg News survey, down from a previously reported gain of $67.0 billion in May.
Notes, Bonds
The report also showed that foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac strengthened from a month earlier on more buying by private investors. Buying of long-term agency debt rose a net $31.4 billion, the most since February.
Net purchases of Treasury notes and bonds increased $28.3 billion, compared with $5.7 billion a month earlier. Net foreign official buying rose of Treasury bonds and notes totaled a net $1.1 billion, after net sales of $3.7 billion the previous month.
Net purchases of all U.S. financial assets by foreign governments totaled $14.9 billion after a $16.4 billion net gain in May, the report showed.
The Treasury's reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy mortgages.
The dollar rose 1 percent in June, the third straight monthly advance, based on a trade-weighted index of major currencies. The Standard & Poor's 500 stock index fell 8.6 percent in June, the biggest monthly drop since September 2002.
Stock Selloff
International sales of U.S. stocks totaled a net $1.8 billion, compared with net purchases of $16 billion in May. Foreigners bought a net $4.7 billion of corporate bonds, compared with net purchase of $59.8 billion a month earlier.
U.S. investors bought a net $9.2 billion of overseas assets in June.
Japan, the largest foreign owner of U.S. Treasury securities, expanded its holdings by $5.1 billion to $583.8 billion. China, the second-largest holder, reduced its holdings by $3 billion to $503.8 billion, the Treasury said.
The U.K., which through London acts as a transit point for international investors, especially those in the Middle East, bought an additional $7.9 billion, bringing holdings to $280.4 billion.
To contact the reporter on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.netJohn Brinsley in Washington at jbrinsley@bloomberg.net
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Friday, August 15, 2008
Sri Lanka Exports Fall in June on Slowing U.S. Demand
By [bn:PRSN=1] Anusha Ondaatjie []
Aug. 15 (Bloomberg) -- Sri Lanka's exports declined in June for the first time in seven months as a slowdown in the U.S. weakened demand for the island's textiles and garments.
Overseas sales fell 1.9 percent to $654.6 million from $667.3 million a year earlier, after growing 17 percent in May, the Central Bank of Sri Lanka said on its Web site today.
Asian exporters face declining shipments to the U.S., where retail sales dropped in July for the first time in five months. Sri Lanka, the world's fourth-biggest tea producer, is relying on rising demand for commodities from emerging economies to weather faltering U.S. orders.
``Agricultural exports are expected to continue to perform better, in terms of volumes as well as prices,'' the central bank said in a statement.
Sri Lanka's economic growth slowed for the first time in a year in the first quarter as inflation running above 25 percent and escalating violence in the South Asian island's civil war damped spending.
Gross domestic product expanded 6.2 percent in the three months ended March 31 from a year earlier, compared with 7.6 percent in the fourth quarter, the Department of Census & Statistics said in June.
The government on Jan. 16 formally ended its 2002 cease- fire with the Liberation Tigers of Tamil Eelam, saying the rebels had used the accord to rearm and prepare for further attacks. Consumer prices in the capital Colombo rose 26.6 percent from a year earlier in July.
Clothing, Rubber
Slowing shipments of Gap Inc. and Liz Claiborne Inc. clothing to the U.S., Sri Lanka's largest export market, may further weigh on growth.
The value of industrial exports such as clothing, jewelry and rubber-based products declined 9.3 percent to $485.3 million in June, the central bank said. Agricultural shipments gained 34.6 percent to $161.3 million.
Sri Lanka's trade deficit in June widened to $504.5 million, from $164.4 million a year earlier, today's report showed. Imports gained 39.4 percent to $1.16 billion on costlier oil.
The overall balance of payments posted a surplus of $390 million as private remittances climbed. The country's foreign currency reserves were $3.43 billion at the end of June, the bank said.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.
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Aug. 15 (Bloomberg) -- Sri Lanka's exports declined in June for the first time in seven months as a slowdown in the U.S. weakened demand for the island's textiles and garments.
Overseas sales fell 1.9 percent to $654.6 million from $667.3 million a year earlier, after growing 17 percent in May, the Central Bank of Sri Lanka said on its Web site today.
Asian exporters face declining shipments to the U.S., where retail sales dropped in July for the first time in five months. Sri Lanka, the world's fourth-biggest tea producer, is relying on rising demand for commodities from emerging economies to weather faltering U.S. orders.
``Agricultural exports are expected to continue to perform better, in terms of volumes as well as prices,'' the central bank said in a statement.
Sri Lanka's economic growth slowed for the first time in a year in the first quarter as inflation running above 25 percent and escalating violence in the South Asian island's civil war damped spending.
Gross domestic product expanded 6.2 percent in the three months ended March 31 from a year earlier, compared with 7.6 percent in the fourth quarter, the Department of Census & Statistics said in June.
The government on Jan. 16 formally ended its 2002 cease- fire with the Liberation Tigers of Tamil Eelam, saying the rebels had used the accord to rearm and prepare for further attacks. Consumer prices in the capital Colombo rose 26.6 percent from a year earlier in July.
Clothing, Rubber
Slowing shipments of Gap Inc. and Liz Claiborne Inc. clothing to the U.S., Sri Lanka's largest export market, may further weigh on growth.
The value of industrial exports such as clothing, jewelry and rubber-based products declined 9.3 percent to $485.3 million in June, the central bank said. Agricultural shipments gained 34.6 percent to $161.3 million.
Sri Lanka's trade deficit in June widened to $504.5 million, from $164.4 million a year earlier, today's report showed. Imports gained 39.4 percent to $1.16 billion on costlier oil.
The overall balance of payments posted a surplus of $390 million as private remittances climbed. The country's foreign currency reserves were $3.43 billion at the end of June, the bank said.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.
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Mexico Bank Lifts Key Rate for Third Straight Month
By Jens Erik Gould
Aug. 15 (Bloomberg) -- Mexico's central bank increased its benchmark interest rate for the third straight month and signaled easing commodity prices and slower economic growth may reduce the need for further tightening.
The bank's five-member board, led by Governor Guillermo Ortiz, raised the key lending rate a quarter of a percentage point to 8.25 percent today, the highest since December 2005.
Policy makers said the risks of an economic slowdown had increased, and that food and energy prices, after spurring the fastest inflation in almost four years, may ease soon. The ``dovish'' comments indicate the bank is less likely to raise rates again this year, said Benito Berber, a strategist at RBS Greenwich Capital Markets in Greenwich, Connecticut.
``Banxico will most likely not hike anymore,'' Berber said, referring to the central bank. ``Those statements are very clear and characterize a very dovish view.''
Mexico's peso slid 0.2 percent to 10.1902 per dollar at 10:06 New York time, from 10.1684 yesterday, on the reduced likelihood of further rate increases this year.
On July 30, the bank surprised analysts by raising its inflation forecasts by an average of 0.89 percentage point over the next two years. It said annual inflation will rise as high as 6 percent in the fourth quarter, up from a previous forecast of no more than 4.75 percent.
Consumer prices climbed 5.39 percent in July from a year earlier, driven by higher costs for food and gasoline. It was the sixth straight month inflation accelerated.
Anchoring Expectations
Today's rate increase aims to anchor inflation expectations and will help reduce annual inflation to the bank's target of 3 percent by 2010, policy makers said. Inflationary pressures are originating in the supply side rather than from demand, the bank said in a statement accompanying its decision.
Yields on Mexico's 10 percent bond due December 2024, the country's most-traded security, fell 6 basis points today, or 0.06 percentage point, to 8.75 percent. The price rose 0.52 centavo to 110.79 centavos per peso, according to Banco Santander SA.
The bank said last month that inflation will probably remain above its target until 2010, after previously expecting to reach its objective in 2009.
Mexico's peso has gained 7.1 percent this year as interest- rate increases by Banco de Mexico swelled the gap between Mexican and U.S. benchmark lending rates.
Price Accord
Mexican President Felipe Calderon in June announced an accord with industry groups to freeze the price of canned tuna, coffee, beans and about 150 other items in a bid to hold down prices. Wheat, corn and rice reached records on global markets this year, before retreating because of improved crop forecasts and a strengthening dollar.
Calderon has also tried to fight higher food prices by lifting import tariffs on corn, wheat, rice and beans in May. He eliminated import taxes on nitrogen-based fertilizer, and cut in half the tax on imported powdered milk.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net
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Industrial Production in U.S. Increased 0.2% in July
By Bob Willis
Aug. 15 (Bloomberg) -- Industrial production in the U.S. unexpectedly rose in July, helped by gains in automobiles, metals and machinery.
Output at factories, mines and utilities rose 0.2 percent last month after a 0.4 percent gain in June, the Federal Reserve reported today in Washington. Capacity utilization, which measures the proportion of plants in use, increased to 79.9 percent from 79.8 percent.
Demand for autos increased for a third month, reflecting a continued rebound from a strike at an auto-parts supplier. Gains elsewhere signal demand from overseas continued to boost orders even as U.S. consumer and business spending weaken.
``While export growth looks set to remain solid at least over the near term, an increasingly constrained consumer, deepening woes for the housing sector, and a desire to pare inventories will all weigh on manufacturing output,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Gains in auto output were ``due to rebounds after the end of a strike'' and did ``not reflect fundamental strength,'' he said.
Output was forecast to be unchanged according to the median estimate of 79 economists surveyed by Bloomberg News after a previously reported gain of 0.5 percent in June. Projections ranged from a decline of 0.5 percent to a gain of 0.4 percent.
Capacity utilization was forecast to fall to 79.8 percent from a previously reported 79.9 percent for the prior month, according to the survey median.
Risk of Bottlenecks
Economists track plant operating rates to gauge factories' ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher. The utilization rate has averaged 81 percent over the past 30 years.
Another report earlier today showed manufacturing in the New York region unexpectedly expanded in August for the first time in four months. The Fed Bank of New York's general economic index rose to 2.8 from minus 4.9 in the prior month.
Manufacturing, which accounts for about four-fifths of the industrial production report, rose 0.4 percent last month after a 0.1 percent increase in June. Excluding autos, factory output climbed 0.2 percent after falling 0.2 percent.
Production of motor vehicles and parts increased 3.6 percent after rising 4.8 percent in June.
The resolution of a three-month strike at American Axle & Manufacturing Holdings Inc., General Motors Corp.'s largest axle supplier, may explain the rise in output even as sales slump. The walkout, which ended May 26, had halted production of about 330,000 units at GM plants.
Falling Demand
GM, faced with falling demand for SUVs and pickup trucks, is expanding early retirement programs and cutting output and staff to lower costs. ``We're in a very difficult economic environment,'' GM Chief Executive Officer Rick Wagoner said in an interview Aug. 1 in Detroit.
Sales of cars and light trucks in July slid to a 12.5 million annual rate, the lowest level since 1993, according to industry figures.
Output of machinery increased 0.7 percent last month and production of primary metals rose 0.8 percent.
Production of consumer goods increased 0.3 percent, led by the rebound in autos.
The production figures countered other reports that have indicated manufacturing stagnated. The Institute for Supply Management's factory index fell to 50 in July, the dividing line between expansion and contraction.
One reason manufacturing hasn't suffered even more is that exports have been growing. Now, even that support is in question.
Economy Contracted
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, the European Union announced this week. Japan's economy also contracted last quarter as consumers spent less and exports fell, the government said on Aug. 13.
The U.S. economy, the world's largest, will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of economists surveyed by Bloomberg this month.
Mining production increased 0.9 percent in July, after rising 0.9 percent in June. Utilities output decreased 1.9 percent after rising 2.3 percent.
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
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Aug. 15 (Bloomberg) -- Industrial production in the U.S. unexpectedly rose in July, helped by gains in automobiles, metals and machinery.
Output at factories, mines and utilities rose 0.2 percent last month after a 0.4 percent gain in June, the Federal Reserve reported today in Washington. Capacity utilization, which measures the proportion of plants in use, increased to 79.9 percent from 79.8 percent.
Demand for autos increased for a third month, reflecting a continued rebound from a strike at an auto-parts supplier. Gains elsewhere signal demand from overseas continued to boost orders even as U.S. consumer and business spending weaken.
``While export growth looks set to remain solid at least over the near term, an increasingly constrained consumer, deepening woes for the housing sector, and a desire to pare inventories will all weigh on manufacturing output,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Gains in auto output were ``due to rebounds after the end of a strike'' and did ``not reflect fundamental strength,'' he said.
Output was forecast to be unchanged according to the median estimate of 79 economists surveyed by Bloomberg News after a previously reported gain of 0.5 percent in June. Projections ranged from a decline of 0.5 percent to a gain of 0.4 percent.
Capacity utilization was forecast to fall to 79.8 percent from a previously reported 79.9 percent for the prior month, according to the survey median.
Risk of Bottlenecks
Economists track plant operating rates to gauge factories' ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher. The utilization rate has averaged 81 percent over the past 30 years.
Another report earlier today showed manufacturing in the New York region unexpectedly expanded in August for the first time in four months. The Fed Bank of New York's general economic index rose to 2.8 from minus 4.9 in the prior month.
Manufacturing, which accounts for about four-fifths of the industrial production report, rose 0.4 percent last month after a 0.1 percent increase in June. Excluding autos, factory output climbed 0.2 percent after falling 0.2 percent.
Production of motor vehicles and parts increased 3.6 percent after rising 4.8 percent in June.
The resolution of a three-month strike at American Axle & Manufacturing Holdings Inc., General Motors Corp.'s largest axle supplier, may explain the rise in output even as sales slump. The walkout, which ended May 26, had halted production of about 330,000 units at GM plants.
Falling Demand
GM, faced with falling demand for SUVs and pickup trucks, is expanding early retirement programs and cutting output and staff to lower costs. ``We're in a very difficult economic environment,'' GM Chief Executive Officer Rick Wagoner said in an interview Aug. 1 in Detroit.
Sales of cars and light trucks in July slid to a 12.5 million annual rate, the lowest level since 1993, according to industry figures.
Output of machinery increased 0.7 percent last month and production of primary metals rose 0.8 percent.
Production of consumer goods increased 0.3 percent, led by the rebound in autos.
The production figures countered other reports that have indicated manufacturing stagnated. The Institute for Supply Management's factory index fell to 50 in July, the dividing line between expansion and contraction.
One reason manufacturing hasn't suffered even more is that exports have been growing. Now, even that support is in question.
Economy Contracted
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, the European Union announced this week. Japan's economy also contracted last quarter as consumers spent less and exports fell, the government said on Aug. 13.
The U.S. economy, the world's largest, will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of economists surveyed by Bloomberg this month.
Mining production increased 0.9 percent in July, after rising 0.9 percent in June. Utilities output decreased 1.9 percent after rising 2.3 percent.
To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
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LNG Price May Gain 80% on Plant Delays, Export Cuts
By Dinakar Sethuraman and Angela Macdonald-Smith
Enlarge Image/Details
Aug. 15 (Bloomberg) -- Liquefied natural gas prices in Asia may climb about 80 percent this year as new projects get delayed and countries from Indonesia to Egypt curb exports.
Cargoes of LNG, which is gas chilled into liquid for transportation by tankers, may rise to as much as $25 per million British thermal units in the Northern Hemisphere winter, said John Harris, a director at Cambridge Energy Research Associates Inc. in Beijing. Japan, the world's biggest buyer, paid an average $14.10 in June in the spot market for immediate delivery, according to the finance ministry, while China paid a record $14.35, customs figures show.
Production at plants in Russia, Yemen and Indonesia, with a combined capacity of about 24 million metric tons, will be delayed until next year instead of starting in the second half. Supplies will be limited just as South Korea increases imports 3.5 percent and Japan boosts purchases after an earthquake shut down its largest nuclear plant.
``This winter can be very tight,'' said Andy Flower, a London-based industry consultant and former executive at BP Plc's LNG business. ``There's not going to be much supply available.''
Cambridge Energy and Edinburgh-based Wood Mackenzie Consultants Ltd. say natural gas will reach parity with oil this year. Oil is forecast to average $124 a barrel in the fourth quarter, according to the median estimate of 31 analysts in a Bloomberg survey. That equates to a gas price of around $21 per million Btu.
Oil Alternative
U.K. gas futures for winter are trading at about $18 per million Btu, according to data compiled by Bloomberg. A British thermal unit is equivalent to the heat generated by a lighted match.
Supplies of the fuel, which pollutes less than oil-based alternatives, could be constrained because plants in Egypt, Nigeria and Norway operated at about 60 percent of capacity in the first half of 2008 after equipment failures and inadequate pipeline capacity, according to estimates compiled by Flower.
The StatoilHydro ASA-led Snohvit project shut twice this year because of mechanical difficulties, and is now operating at 70 percent of its capacity, company spokesman Sverre Kojedal said by telephone on Aug. 14.
The BP Plc-led Tangguh venture in Indonesia, the OAO Gazprom-led Sakhalin-2 project in eastern Russia and a Total SA- led development in Yemen may start in 2009 instead of this year, said Frank Harris, global head of LNG at Wood Mackenzie.
Indonesia, Egypt, Qatar
Indonesia will divert fuel to fertilizer makers. The Bontang plant in the Kalimantan region will produce about 320 cargoes this year, lagging behind its contracted volume of 350, Daniel Purba, head of LNG market development at PT Pertamina, said in May. The plant can produce about 400 a year, he said. A cargo is typically 50,000 to 60,000 tons.
Pertamina, Indonesia's state oil company, will cut supplies to a group in Japan by 75 percent after its contract expires in 2010, Vice President Iin Arifin Takhyan said in October.
Egypt produced about 5.2 million tons in the first six months of 2008, compared with a potential 6.1 million, to meet domestic demand, Flower estimates. Nigeria supplied about 8 million, or about 72 percent of its first half capacity.
Qatargas Operating Co.'s fourth LNG unit and a fifth unit at the North West Shelf venture in Australia will probably be the only new production coming onto the market this half, Wood Mackenzie's Harris said. Most of the supply added in the first half of 2009 is designated for long-term agreements, or is being marketed under shorter contracts, rather than left for spot sales, he said.
Double Purchases
Global LNG trade rose 7.3 percent to the equivalent to 165.3 million metric tons last year, according to the BP Plc Statistical Review of World Energy June 2008. Consumption will increase 10 percent a year through 2015, more than five times as fast as crude oil, Citigroup Inc. analysts led by James Neale said in an April report.
China, the world's second-biggest energy user after the U.S., may double spot-market purchases this year, Cambridge Energy's Harris said. China may import as many as 15 cargoes from producers including Egypt, Nigeria, Algeria and Trinidad, he said.
Korea Gas Corp., which imports about 95 percent of South Korea's needs, plans to increase purchases to 26.4 million tons this year, Kim Sang Gil, an investor relations official, said in an Aug. 12 interview. The country relies on LNG for its gas requirements.
Japan's imports rose 6.2 percent to 34.67 million tons in the first six months, according to data compiled by the Finance Ministry. The country, which imports almost all its gas, bought 66.8 million tons of LNG in 2007.
Tokyo Electric Power Co., Asia's largest utility, increased consumption by about 18 percent to 19.9 million tons in the year ended March 31 after an earthquake last July shut its Kashiwazaki Kariwa nuclear plant, the world's biggest. LNG use in July grew 7.4 percent to 1.75 million tons from a year earlier, the company said Aug. 12.
``Japan and South Korea will pay whatever it takes to get the fuel,'' Cambridge Energy's Harris said. ``They do not have access to pipeline gas and the alternative is oil-based fuel.''
To contact the reporters on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net; Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Enlarge Image/Details
Aug. 15 (Bloomberg) -- Liquefied natural gas prices in Asia may climb about 80 percent this year as new projects get delayed and countries from Indonesia to Egypt curb exports.
Cargoes of LNG, which is gas chilled into liquid for transportation by tankers, may rise to as much as $25 per million British thermal units in the Northern Hemisphere winter, said John Harris, a director at Cambridge Energy Research Associates Inc. in Beijing. Japan, the world's biggest buyer, paid an average $14.10 in June in the spot market for immediate delivery, according to the finance ministry, while China paid a record $14.35, customs figures show.
Production at plants in Russia, Yemen and Indonesia, with a combined capacity of about 24 million metric tons, will be delayed until next year instead of starting in the second half. Supplies will be limited just as South Korea increases imports 3.5 percent and Japan boosts purchases after an earthquake shut down its largest nuclear plant.
``This winter can be very tight,'' said Andy Flower, a London-based industry consultant and former executive at BP Plc's LNG business. ``There's not going to be much supply available.''
Cambridge Energy and Edinburgh-based Wood Mackenzie Consultants Ltd. say natural gas will reach parity with oil this year. Oil is forecast to average $124 a barrel in the fourth quarter, according to the median estimate of 31 analysts in a Bloomberg survey. That equates to a gas price of around $21 per million Btu.
Oil Alternative
U.K. gas futures for winter are trading at about $18 per million Btu, according to data compiled by Bloomberg. A British thermal unit is equivalent to the heat generated by a lighted match.
Supplies of the fuel, which pollutes less than oil-based alternatives, could be constrained because plants in Egypt, Nigeria and Norway operated at about 60 percent of capacity in the first half of 2008 after equipment failures and inadequate pipeline capacity, according to estimates compiled by Flower.
The StatoilHydro ASA-led Snohvit project shut twice this year because of mechanical difficulties, and is now operating at 70 percent of its capacity, company spokesman Sverre Kojedal said by telephone on Aug. 14.
The BP Plc-led Tangguh venture in Indonesia, the OAO Gazprom-led Sakhalin-2 project in eastern Russia and a Total SA- led development in Yemen may start in 2009 instead of this year, said Frank Harris, global head of LNG at Wood Mackenzie.
Indonesia, Egypt, Qatar
Indonesia will divert fuel to fertilizer makers. The Bontang plant in the Kalimantan region will produce about 320 cargoes this year, lagging behind its contracted volume of 350, Daniel Purba, head of LNG market development at PT Pertamina, said in May. The plant can produce about 400 a year, he said. A cargo is typically 50,000 to 60,000 tons.
Pertamina, Indonesia's state oil company, will cut supplies to a group in Japan by 75 percent after its contract expires in 2010, Vice President Iin Arifin Takhyan said in October.
Egypt produced about 5.2 million tons in the first six months of 2008, compared with a potential 6.1 million, to meet domestic demand, Flower estimates. Nigeria supplied about 8 million, or about 72 percent of its first half capacity.
Qatargas Operating Co.'s fourth LNG unit and a fifth unit at the North West Shelf venture in Australia will probably be the only new production coming onto the market this half, Wood Mackenzie's Harris said. Most of the supply added in the first half of 2009 is designated for long-term agreements, or is being marketed under shorter contracts, rather than left for spot sales, he said.
Double Purchases
Global LNG trade rose 7.3 percent to the equivalent to 165.3 million metric tons last year, according to the BP Plc Statistical Review of World Energy June 2008. Consumption will increase 10 percent a year through 2015, more than five times as fast as crude oil, Citigroup Inc. analysts led by James Neale said in an April report.
China, the world's second-biggest energy user after the U.S., may double spot-market purchases this year, Cambridge Energy's Harris said. China may import as many as 15 cargoes from producers including Egypt, Nigeria, Algeria and Trinidad, he said.
Korea Gas Corp., which imports about 95 percent of South Korea's needs, plans to increase purchases to 26.4 million tons this year, Kim Sang Gil, an investor relations official, said in an Aug. 12 interview. The country relies on LNG for its gas requirements.
Japan's imports rose 6.2 percent to 34.67 million tons in the first six months, according to data compiled by the Finance Ministry. The country, which imports almost all its gas, bought 66.8 million tons of LNG in 2007.
Tokyo Electric Power Co., Asia's largest utility, increased consumption by about 18 percent to 19.9 million tons in the year ended March 31 after an earthquake last July shut its Kashiwazaki Kariwa nuclear plant, the world's biggest. LNG use in July grew 7.4 percent to 1.75 million tons from a year earlier, the company said Aug. 12.
``Japan and South Korea will pay whatever it takes to get the fuel,'' Cambridge Energy's Harris said. ``They do not have access to pipeline gas and the alternative is oil-based fuel.''
To contact the reporters on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net; Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Midday News Recap: Empire State Mfg in Growth, U.S. Consumer Sentiment Rises
Midday News Recap: Empire State Mfg in Growth, U.S. Consumer Sentiment Rises
15 Agustus 2008 22:35
(CEP News) - The U.S. market received some upbeat reports Friday morning, as U.S. consumer sentiment improved and manufacturing in New York State rebounded into growth mode in August. However, rising unemployment was seen in a Bureau of Labor Statistics report released today. In Canada, an upbeat manufacturing report was released.
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15 Agustus 2008 22:35
(CEP News) - The U.S. market received some upbeat reports Friday morning, as U.S. consumer sentiment improved and manufacturing in New York State rebounded into growth mode in August. However, rising unemployment was seen in a Bureau of Labor Statistics report released today. In Canada, an upbeat manufacturing report was released.
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U.S. Economy: Consumer Sentiment, New York Manufacturing Gain
By Timothy R. Homan and Courtney Schlisserman
Aug. 15 (Bloomberg) -- Confidence among American consumers gained in August and manufacturing in New York grew the most since January as a slide in gasoline, oil, metals and grain prices eased cost pressures on households and companies.
The Reuters/University of Michigan preliminary index of consumer sentiment rose to 61.7, from 61.2 in July. The Federal Reserve Bank of New York's general economic index climbed to 2.8, from minus 4.9 a month earlier. A separate Fed report showed industrial production increased in July, boosted by the end of a strike at an auto-parts supplier.
Gasoline has retreated 6 percent since the start of last month, copper is down 14 percent and corn prices have slumped 26 percent, diminishing some of the threat to the economy of elevated commodity costs. At the same time, rising unemployment and falling property values mean consumers are unlikely to pick up spending, which economists project will stagnate next quarter for the first time since 1991.
``We're a little less pessimistic than we were a month ago,'' Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut, said in a Bloomberg Radio interview. ``But we still think consumer spending in real terms could be negative in the second half.''
Stocks erased their advance in the minutes after the release of the consumer sentiment index, which was lower than economists had forecast, before recouping gains. The Standard & Poor's 500 Stock Index rose 0.5 percent to 1,299.34 at 10:56 a.m. in New York.
Commodities Drop
The Reuters/Jefferies CRB Index of 19 commodities has dropped 17 percent since the start of last month, a period when crude oil dropped 19 percent.
Consumers' expectations for inflation receded this month, the Reuters/University of Michigan survey showed. They expect consumer prices to rise an average of 4.8 percent over the next 12 months, down from a 5.1 percent forecast in the July survey.
Economists had forecast the confidence index would rise to 62, according to the median of 64 projections in a Bloomberg News survey. Estimates ranged from 56 to 69.
A gauge of current conditions, which reflects Americans' perceptions of their financial situation and whether it is a good time to buy cars and other big-ticket items, decreased to 69.3 from 73.1 the prior month.
Retail Sales
Sales at U.S. retailers dropped in July for the first time in five months, the Commerce Department said this week. Wal-Mart Stores Inc., the world's largest retailer, this week said that sales at stores open at least a year might not rise more than 1 percent in the third quarter as the boost from the federal tax rebates fades.
Output at factories, mines and utilities rose 0.2 percent last month after a 0.4 percent gain in June, the Fed reported today in Washington. Capacity utilization, which measures the proportion of plants in use, increased to 79.9 percent from 79.8 percent.
Demand for autos increased for a third month, reflecting a continued rebound from a strike at an auto-parts supplier. Gains elsewhere signal demand from overseas continued to boost orders even as U.S. consumer and business spending weaken.
``While export growth looks set to remain solid at least over the near term, an increasingly constrained consumer, deepening woes for the housing sector, and a desire to pare inventories will all weigh on manufacturing output,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Strike Impact
Gains in auto output were ``due to rebounds after the end of a strike'' and did ``not reflect fundamental strength,'' he said.
Output was forecast to be unchanged, according to the median estimate of 79 economists.
Production of motor vehicles and parts increased 3.6 percent after rising 4.8 percent in June.
The resolution of a three-month strike at American Axle & Manufacturing Holdings Inc., General Motors Corp.'s largest axle supplier, may explain the rise in output even as sales slump. The walkout, which ended May 26, had halted production of about 330,000 units at GM plants.
Factories in New York were more optimistic about their prospects, according to the state's Fed Bank report. The index measuring the outlook for six months from now jumped 34.6, the highest level this year, from 15.6 in July. Readings of zero are the dividing line between growth and contraction.
The so-called Empire State index's measure of prices paid dropped by the most in more than two years.
Economists forecast the index would be little changed, rising to minus 4 this month, according to the median of 50 projections in a Bloomberg News survey. Estimates ranged from minus 11 to zero. The New York Fed started the gauge in 2001.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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Aug. 15 (Bloomberg) -- Confidence among American consumers gained in August and manufacturing in New York grew the most since January as a slide in gasoline, oil, metals and grain prices eased cost pressures on households and companies.
The Reuters/University of Michigan preliminary index of consumer sentiment rose to 61.7, from 61.2 in July. The Federal Reserve Bank of New York's general economic index climbed to 2.8, from minus 4.9 a month earlier. A separate Fed report showed industrial production increased in July, boosted by the end of a strike at an auto-parts supplier.
Gasoline has retreated 6 percent since the start of last month, copper is down 14 percent and corn prices have slumped 26 percent, diminishing some of the threat to the economy of elevated commodity costs. At the same time, rising unemployment and falling property values mean consumers are unlikely to pick up spending, which economists project will stagnate next quarter for the first time since 1991.
``We're a little less pessimistic than we were a month ago,'' Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut, said in a Bloomberg Radio interview. ``But we still think consumer spending in real terms could be negative in the second half.''
Stocks erased their advance in the minutes after the release of the consumer sentiment index, which was lower than economists had forecast, before recouping gains. The Standard & Poor's 500 Stock Index rose 0.5 percent to 1,299.34 at 10:56 a.m. in New York.
Commodities Drop
The Reuters/Jefferies CRB Index of 19 commodities has dropped 17 percent since the start of last month, a period when crude oil dropped 19 percent.
Consumers' expectations for inflation receded this month, the Reuters/University of Michigan survey showed. They expect consumer prices to rise an average of 4.8 percent over the next 12 months, down from a 5.1 percent forecast in the July survey.
Economists had forecast the confidence index would rise to 62, according to the median of 64 projections in a Bloomberg News survey. Estimates ranged from 56 to 69.
A gauge of current conditions, which reflects Americans' perceptions of their financial situation and whether it is a good time to buy cars and other big-ticket items, decreased to 69.3 from 73.1 the prior month.
Retail Sales
Sales at U.S. retailers dropped in July for the first time in five months, the Commerce Department said this week. Wal-Mart Stores Inc., the world's largest retailer, this week said that sales at stores open at least a year might not rise more than 1 percent in the third quarter as the boost from the federal tax rebates fades.
Output at factories, mines and utilities rose 0.2 percent last month after a 0.4 percent gain in June, the Fed reported today in Washington. Capacity utilization, which measures the proportion of plants in use, increased to 79.9 percent from 79.8 percent.
Demand for autos increased for a third month, reflecting a continued rebound from a strike at an auto-parts supplier. Gains elsewhere signal demand from overseas continued to boost orders even as U.S. consumer and business spending weaken.
``While export growth looks set to remain solid at least over the near term, an increasingly constrained consumer, deepening woes for the housing sector, and a desire to pare inventories will all weigh on manufacturing output,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.
Strike Impact
Gains in auto output were ``due to rebounds after the end of a strike'' and did ``not reflect fundamental strength,'' he said.
Output was forecast to be unchanged, according to the median estimate of 79 economists.
Production of motor vehicles and parts increased 3.6 percent after rising 4.8 percent in June.
The resolution of a three-month strike at American Axle & Manufacturing Holdings Inc., General Motors Corp.'s largest axle supplier, may explain the rise in output even as sales slump. The walkout, which ended May 26, had halted production of about 330,000 units at GM plants.
Factories in New York were more optimistic about their prospects, according to the state's Fed Bank report. The index measuring the outlook for six months from now jumped 34.6, the highest level this year, from 15.6 in July. Readings of zero are the dividing line between growth and contraction.
The so-called Empire State index's measure of prices paid dropped by the most in more than two years.
Economists forecast the index would be little changed, rising to minus 4 this month, according to the median of 50 projections in a Bloomberg News survey. Estimates ranged from minus 11 to zero. The New York Fed started the gauge in 2001.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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SunPower Soars After Winning Contract for 250-Megawatt Plant
By Todd Zeranski
Aug. 15 (Bloomberg) -- SunPower Corp. rose as much as 13 percent after the solar-module marker won a contract to build a 250-megawatt power plant for PG&E Corp., owner of California's largest utility.
SunPower rose as much as $10.43 to $89 in early morning Nasdaq composite trading.
The company, based in San Jose, California, will design and build the array of solar power panels, the largest in the U.S., which would begin producing power in 2010 and ramp up to full capacity by 2012.
Merrill Lynch & Co. upgraded the stock to ``buy'' from ``neutral,'' saying SunPower is making inroads into the U.S. utility market.
To contact the reporter on this story: Todd Zeranski in New York at tzeranski@bloomberg.net
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Aug. 15 (Bloomberg) -- SunPower Corp. rose as much as 13 percent after the solar-module marker won a contract to build a 250-megawatt power plant for PG&E Corp., owner of California's largest utility.
SunPower rose as much as $10.43 to $89 in early morning Nasdaq composite trading.
The company, based in San Jose, California, will design and build the array of solar power panels, the largest in the U.S., which would begin producing power in 2010 and ramp up to full capacity by 2012.
Merrill Lynch & Co. upgraded the stock to ``buy'' from ``neutral,'' saying SunPower is making inroads into the U.S. utility market.
To contact the reporter on this story: Todd Zeranski in New York at tzeranski@bloomberg.net
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Lower Crude Prices May `Improve Refining Economics,' OPEC Says
By Nidaa Bakhsh
Aug. 15 (Bloomberg) -- Refining margins may improve with lower crude oil prices, which have fallen from an all-time high last month, according to the Organization of Petroleum Exporting Countries.
``The recent sharp fall in crude oil prices may help improve refining economics and cap discretionary cuts by refiners,'' OPEC said in a monthly report today. Lower input costs make it cheaper to produce fuels such as gasoline and diesel.
High crude prices, which hit a record of $147.27 a barrel on July 1 on the New York Mercantile Exchange, led to run cuts at refineries in Europe and the U.S. as fuel prices lagged behind oil. In Europe, Brent crude on London's ICE Futures Europe exchange rose 41 percent from the start of the year until mid-July. Gasoline increased 32 percent during the same period, according to data compiled by Bloomberg.
ConocoPhillips reduced operating rates at its Wilhelmshaven plant in Germany in the second quarter because of weak margins. The lower rates were expected to continue into the third quarter, the Houston-based company said during its second- quarter earnings conference call on July 23.
Refining margins, or the profit of turning a barrel of oil into fuels, fell to $3.23 a barrel in July from $5.69 a barrel in June for facilities using West Texas Intermediate oil along the U.S. Gulf Coast, OPEC said in the report. European margins slid to $1.39 a barrel from $1.56 a barrel in June.
To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net
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Aug. 15 (Bloomberg) -- Refining margins may improve with lower crude oil prices, which have fallen from an all-time high last month, according to the Organization of Petroleum Exporting Countries.
``The recent sharp fall in crude oil prices may help improve refining economics and cap discretionary cuts by refiners,'' OPEC said in a monthly report today. Lower input costs make it cheaper to produce fuels such as gasoline and diesel.
High crude prices, which hit a record of $147.27 a barrel on July 1 on the New York Mercantile Exchange, led to run cuts at refineries in Europe and the U.S. as fuel prices lagged behind oil. In Europe, Brent crude on London's ICE Futures Europe exchange rose 41 percent from the start of the year until mid-July. Gasoline increased 32 percent during the same period, according to data compiled by Bloomberg.
ConocoPhillips reduced operating rates at its Wilhelmshaven plant in Germany in the second quarter because of weak margins. The lower rates were expected to continue into the third quarter, the Houston-based company said during its second- quarter earnings conference call on July 23.
Refining margins, or the profit of turning a barrel of oil into fuels, fell to $3.23 a barrel in July from $5.69 a barrel in June for facilities using West Texas Intermediate oil along the U.S. Gulf Coast, OPEC said in the report. European margins slid to $1.39 a barrel from $1.56 a barrel in June.
To contact the reporter on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net
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Natural Gas Declines Amid Ample Supplies, Stronger U.S. Dollar
By Reg Curren
Aug. 15 (Bloomberg) -- Natural gas in New York declined amid speculation supplies are ample for winter heating needs and as stronger dollar diminished the appeal of commodities.
Gas stockpiles are near the five-year average for this time of year and increased domestic production is expected to bolster inventory. The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years.
``It's pretty clear there's been a major change in the last couple of weeks with the reemergence of the dollar,'' said Tom Orr, director of research at Weeden & Co. in Greenwich, Connecticut. ``The money that has been pouring into commodities in the past 18 months is coming out and repositioning.''
Natural gas for September delivery fell 9.9 cents, or 1.2 percent, to $8.037 per million British thermal units at 10:57 a.m. on the New York Mercantile Exchange. It earlier fell to $7.96 per million Btu, the lowest intraday price since $7.916 on Feb. 6.
Futures have declined 41 percent since closing at $13.577 on July 3, a 30-month high, and are selling below their 200-day moving average of $9.597.
``The sentiment in gas is bearish,'' said Orr. ``Prices may dip down to the low $7s if crude goes to $105 a barrel.''
Crude oil for September delivery fell $3.63, or 3.2 percent, to $111.38 a barrel in New York. Futures earlier touched $111.34 and reached a record $147.27 on July 11.
Oil's 200-day moving average is $110.16a barrel, a price it last touched in early April.
The dollar traded at $1.4688 at 10:58 a.m. in New York from $1.4826 yesterday.
Commodities Crumble
As investors shed commodity holdings ``gas is going along for the ride'', said George Hopley, an analyst at Barclays Capital Inc. in New York.
Commodities, measured by the Standard & Poor's GSCI index, have tumbled 21 percent from their record July 3, descending into a bear market. Gold plunged below $800 an ounce, platinum posted the biggest drop in almost seven years and corn and copper slumped as the dollar rebounded.
``Once gold tripped up that allowed the dollar to trade a little stronger, so commodities are getting clipped,'' said Gordy Elliott, a director at FC Stone LLC in St. Louis Park, Minnesota. ``Gas is following.''
If crude oil closes below $110 a barrel, `` the whole energy complex is going to fall off a cliff,'' said Elliott.
A storm-free ``Gulf of Mexico means there is no threat to production,'' said Hopley. Cyclones can enter the Gulf and curb output from oil and natural gas platforms and rigs. The hurricane season began June 1 and runs through November.
Quiet Gulf
Hurricane Katrina formed over the Bahamas on Aug. 23, 2005, making landfall in southeast Louisiana on August 29. Hurricane Rita, the most intense tropical cyclone ever observed in the Gulf, made landfall Sept. 24, 2005, at Sabine Pass near the borders of Texas and Louisiana.
The storms crimped Gulf gas flow, prompting the fuel to touch $15.78 per million Btu on Dec. 13, 2005, the highest since gas began Nymex trading.
Pushing natural gas much lower than $8 per million Btu is not probably because the lower price would attract buyers, said Elliott, who is buying contracts today for the needs of industrial customers later this year.
A low-pressure system over Puerto Rico may develop into a tropical depression within the next day, the National Hurricane Center in Miami said in an outlook today. Some forecasters have it tracking on the east side of Florida, should it develop, Hopley said.
Ample Supplies
``It may go along the East Coast and cover the area with clouds and rain, shielding the region from heat,'' Hopley said. ``That would keep a damper on demand,'' reducing the need for electricity from gas-fired power plants.
Gas inventory of 2.567 trillion cubic feet is 6 billion, or 0.2 percent, below the average for this time of year for the past five, the Energy Department said in its weekly update yesterday. Inventories rose to a record 3.545 trillion cubic feet in Nov. 2007, helping keep prices within a range of $7 to $9.366 per million Btu through the end of March.
Domestic gas output is expected to increase by 8 percent this year on higher production from fields in Texas, Louisiana and Wyoming, the department said in its monthly Short-Term Energy Outlook earlier this week.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Aug. 15 (Bloomberg) -- Natural gas in New York declined amid speculation supplies are ample for winter heating needs and as stronger dollar diminished the appeal of commodities.
Gas stockpiles are near the five-year average for this time of year and increased domestic production is expected to bolster inventory. The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years.
``It's pretty clear there's been a major change in the last couple of weeks with the reemergence of the dollar,'' said Tom Orr, director of research at Weeden & Co. in Greenwich, Connecticut. ``The money that has been pouring into commodities in the past 18 months is coming out and repositioning.''
Natural gas for September delivery fell 9.9 cents, or 1.2 percent, to $8.037 per million British thermal units at 10:57 a.m. on the New York Mercantile Exchange. It earlier fell to $7.96 per million Btu, the lowest intraday price since $7.916 on Feb. 6.
Futures have declined 41 percent since closing at $13.577 on July 3, a 30-month high, and are selling below their 200-day moving average of $9.597.
``The sentiment in gas is bearish,'' said Orr. ``Prices may dip down to the low $7s if crude goes to $105 a barrel.''
Crude oil for September delivery fell $3.63, or 3.2 percent, to $111.38 a barrel in New York. Futures earlier touched $111.34 and reached a record $147.27 on July 11.
Oil's 200-day moving average is $110.16a barrel, a price it last touched in early April.
The dollar traded at $1.4688 at 10:58 a.m. in New York from $1.4826 yesterday.
Commodities Crumble
As investors shed commodity holdings ``gas is going along for the ride'', said George Hopley, an analyst at Barclays Capital Inc. in New York.
Commodities, measured by the Standard & Poor's GSCI index, have tumbled 21 percent from their record July 3, descending into a bear market. Gold plunged below $800 an ounce, platinum posted the biggest drop in almost seven years and corn and copper slumped as the dollar rebounded.
``Once gold tripped up that allowed the dollar to trade a little stronger, so commodities are getting clipped,'' said Gordy Elliott, a director at FC Stone LLC in St. Louis Park, Minnesota. ``Gas is following.''
If crude oil closes below $110 a barrel, `` the whole energy complex is going to fall off a cliff,'' said Elliott.
A storm-free ``Gulf of Mexico means there is no threat to production,'' said Hopley. Cyclones can enter the Gulf and curb output from oil and natural gas platforms and rigs. The hurricane season began June 1 and runs through November.
Quiet Gulf
Hurricane Katrina formed over the Bahamas on Aug. 23, 2005, making landfall in southeast Louisiana on August 29. Hurricane Rita, the most intense tropical cyclone ever observed in the Gulf, made landfall Sept. 24, 2005, at Sabine Pass near the borders of Texas and Louisiana.
The storms crimped Gulf gas flow, prompting the fuel to touch $15.78 per million Btu on Dec. 13, 2005, the highest since gas began Nymex trading.
Pushing natural gas much lower than $8 per million Btu is not probably because the lower price would attract buyers, said Elliott, who is buying contracts today for the needs of industrial customers later this year.
A low-pressure system over Puerto Rico may develop into a tropical depression within the next day, the National Hurricane Center in Miami said in an outlook today. Some forecasters have it tracking on the east side of Florida, should it develop, Hopley said.
Ample Supplies
``It may go along the East Coast and cover the area with clouds and rain, shielding the region from heat,'' Hopley said. ``That would keep a damper on demand,'' reducing the need for electricity from gas-fired power plants.
Gas inventory of 2.567 trillion cubic feet is 6 billion, or 0.2 percent, below the average for this time of year for the past five, the Energy Department said in its weekly update yesterday. Inventories rose to a record 3.545 trillion cubic feet in Nov. 2007, helping keep prices within a range of $7 to $9.366 per million Btu through the end of March.
Domestic gas output is expected to increase by 8 percent this year on higher production from fields in Texas, Louisiana and Wyoming, the department said in its monthly Short-Term Energy Outlook earlier this week.
To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.
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Touradji Triples Petrohawk Stake, Adds EXCO, Sells Sandridge
By Chanyaporn Chanjaroen
Aug. 15 (Bloomberg) -- Touradji Capital Management LP, the $3.5 billion hedge fund firm founded by former Tiger Management LLC trader Paul Touradji, tripled its stake in oil and natural- gas company Petrohawk Energy Group in the second quarter.
Touradji Capital held 3.24 million shares of Houston-based Petrohawk worth $149.87 million as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. The stock accounted for 20 percent of the firm's portfolio in the second quarter.
Petrohawk, which operates a test well in northwestern Louisiana, soared 130 percent in the quarter. Touradji Capital also bought 1.59 million shares worth $58.67 million of EXCO Resources Inc., a Dallas-based oil and natural-gas producer. The stock doubled in the second quarter.
Touradji, 36, started Touradji Capital in New York in 2005 and has since returned an annualized 31.4 percent. The firm trades commodities including oil, copper and coffee as well as shares of natural-resource companies. Its main fund gained 6.5 percent in July, cutting its loss to 5 percent in 2008.
Energy stocks accounted for 92 percent of the holdings filed by Touradji Capital to the SEC. Other additions in the quarter included a $56.4 million stake in Denver-based Colorado- based energy company St. Mary Land & Exploration and shares of Helmerich & Payne Inc., a provider of contract drilling of oil and gas wells in the Gulf of Mexico and South America.
Touradji Capital cut its stake in Cabot Oil & Gas Corp, a Houston-based producer of natural gas, selling 12,923 shares. Cabot rose 33 percent in the quarter.
The firm also cut its stake in Sandridge Energy Inc., an Oklahoma-based oil and gas company. Touradji Capital sold 796,444 shares. Sandridge rose 65 percent in the quarter.
Hedge funds are private pools of capital that allow managers to participate substantially in the gains of the money invested.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Aug. 15 (Bloomberg) -- Touradji Capital Management LP, the $3.5 billion hedge fund firm founded by former Tiger Management LLC trader Paul Touradji, tripled its stake in oil and natural- gas company Petrohawk Energy Group in the second quarter.
Touradji Capital held 3.24 million shares of Houston-based Petrohawk worth $149.87 million as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. The stock accounted for 20 percent of the firm's portfolio in the second quarter.
Petrohawk, which operates a test well in northwestern Louisiana, soared 130 percent in the quarter. Touradji Capital also bought 1.59 million shares worth $58.67 million of EXCO Resources Inc., a Dallas-based oil and natural-gas producer. The stock doubled in the second quarter.
Touradji, 36, started Touradji Capital in New York in 2005 and has since returned an annualized 31.4 percent. The firm trades commodities including oil, copper and coffee as well as shares of natural-resource companies. Its main fund gained 6.5 percent in July, cutting its loss to 5 percent in 2008.
Energy stocks accounted for 92 percent of the holdings filed by Touradji Capital to the SEC. Other additions in the quarter included a $56.4 million stake in Denver-based Colorado- based energy company St. Mary Land & Exploration and shares of Helmerich & Payne Inc., a provider of contract drilling of oil and gas wells in the Gulf of Mexico and South America.
Touradji Capital cut its stake in Cabot Oil & Gas Corp, a Houston-based producer of natural gas, selling 12,923 shares. Cabot rose 33 percent in the quarter.
The firm also cut its stake in Sandridge Energy Inc., an Oklahoma-based oil and gas company. Touradji Capital sold 796,444 shares. Sandridge rose 65 percent in the quarter.
Hedge funds are private pools of capital that allow managers to participate substantially in the gains of the money invested.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Buffett's Berkshire Discloses Stake in NRG Energy
By Josh P. Hamilton and Erik Holm
Enlarge Image/Details
Aug. 15 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. took a stake in NRG Energy Inc., the second-biggest power producer in Texas, where electricity prices surged 24 percent from a year earlier.
Berkshire had 3.24 million NRG shares as of June 30, the Omaha, Nebraska-based company said yesterday in a regulatory filing disclosing equity investments at the end of the second quarter. Buffett slashed by 61 percent its holding of Anheuser- Busch Cos. before the brewer agreed to be purchased by InBev NV.
Ranked the world's richest man by Forbes magazine, Buffett built Berkshire by investing in out-of-favor securities and buying businesses whose prospects and management he deemed superior. NRG is an unregulated power company, able to charge whatever the market will bear as environmental concerns keep new plants from being built and demand continues to grow.
``It would be logical for him to increase his utility and energy holdings and NRG would fit in nicely,'' said Frank Betz, a partner at Warren, New Jersey-based Carret Zane Capital Management, which oversees $800 million, including Berkshire shares. ``There's exponentially increasing demand for energy.''
Buffett, 77, also added to stakes in refrigeration-equipment maker Ingersoll-Rand Co. and Sanofi-Aventis SA, France's largest drugmaker.
The purchases disclosed yesterday may have cost Buffett about $260 million all told if he bought the shares at their highest second-quarter prices. Berkshire said last week that it spent $3.98 billion on equities in the period, leaving more than $3.5 billion unaccounted for in yesterday's filing.
Confidential Treatment
Outsiders lack full details on the portfolio because Buffett often receives U.S. Securities and Exchange Commission approval to delay disclosure to avert copycat investing. The filing says some information was submitted confidentially, including details on a stake in ConocoPhillips, the No. 2 U.S. refiner. Yesterday's document only lists equities traded on U.S. exchanges.
``I wouldn't be at all surprised if he's gone international, given his trip to Europe in May,'' said Gerald Martin, a finance professor at American University in Washington who has studied Buffett's investing history.
Buffett made a four-day trip to Germany, Switzerland, Spain and Italy to drum up potential buyouts.
``He's not only looking for 100 percent acquisitions, he's also looking at 5, 20, 30 percent,'' said Uto Baader, chairman of brokerge Baader Wertpapierhandelsbank AG, after attending an invitation-only meeting with Buffett in Frankfurt.
France, Korea
Buffett disclosed in March of last year that Berkshire held a 4 percent stake in South Korea's Posco, Asia's third-largest steelmaker. He also has bought French shares of Sanofi and a stake in Britain's Tesco Plc.
Mimicking Buffett's stock trades when publicly revealed would have delivered annual returns of about 25 percent for more than three decades, double the return of the S&P 500, according to a study co-written by Martin in 2007. ``He's probably earned the title of greatest investor of all-time,'' Martin said. ``I would expect he went confidential to get out of Conoco.''
Berkshire had 17.5 million shares of ConocoPhillips as of March 31. The Houston-based company's stock peaked near the end of the second quarter, and dropped 17 percent since then, as oil fell about 23 percent from a record of more than $145 a barrel. Becky Johnson, spokeswoman for ConocoPhillips, didn't return a call.
Berkshire reported record earnings last year as Buffett booked a $3.5 billion profit cashing out of a $500 million investment in oil producer PetroChina Co.
NRG Gains
NRG, based in Princeton, New Jersey, declined 19 percent this year through yesterday. The stock gained $1.64, or 4.7 percent, to $36.86 at 9:33 a.m. in New York Stock Exchange composite trading.
``I would suspect he's looking at this move that we've seen in energy and he's thinking assets are worth a whole lot more than what the market is currently valuing them at,'' said Gordon Howald, an analyst with Calyon Securities in New York who has a ``buy'' rating on NRG shares. NRG spokesman David Knox declined to comment.
Berkshire, previously the No. 2 investor in St. Louis-based Anheuser-Busch, reduced its stake to 13.8 million shares before the maker of Budweiser beer agreed on July 14 to be bought for $52 billion. The brewer rejected an earlier offer in June. Anheuser-Busch shares rose 31 percent in the second quarter, and 9.5 percent more from June 30 through yesterday.
Stock Slump
Berkshire increased its holding of American depositary receipts in Sanofi-Aventis by 8.8 percent to 3.9 million. The ADRs gained 40 cents, or 1.1 percent, to $36.42. Ingersoll-Rand advanced 66 cents, or 1.7 percent, to $40.06.
Berkshire shares had their worst first half since 1990 and are down 18 percent this year through yesterday. Berkshire has posted three consecutive profit declines on slumping returns from insurance, the company's biggest business. The company rose $1,400, or 1.2 percent, to $117,600.
Berkshire invested $5.51 billion on stocks in the first six months of the year compared with purchases of $11.5 billion a year earlier, according to a regulatory filing. The slower pace of purchases may signal that Buffett expects further market declines after saying in June he believes the U.S. is experiencing ``stagflation,'' a slowing economy with rising inflation.
Berkshire's U.S. stocks listed on the filing were worth $57.9 billion on June 30. The largest holdings are Coca-Cola Co., the world's biggest soft-drink maker, and Wells Fargo & Co., the No. 1 bank on the U.S. West Coast.
To contact the reporterson this story: Josh P. Hamilton in New York at jphamilton@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.
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Enlarge Image/Details
Aug. 15 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. took a stake in NRG Energy Inc., the second-biggest power producer in Texas, where electricity prices surged 24 percent from a year earlier.
Berkshire had 3.24 million NRG shares as of June 30, the Omaha, Nebraska-based company said yesterday in a regulatory filing disclosing equity investments at the end of the second quarter. Buffett slashed by 61 percent its holding of Anheuser- Busch Cos. before the brewer agreed to be purchased by InBev NV.
Ranked the world's richest man by Forbes magazine, Buffett built Berkshire by investing in out-of-favor securities and buying businesses whose prospects and management he deemed superior. NRG is an unregulated power company, able to charge whatever the market will bear as environmental concerns keep new plants from being built and demand continues to grow.
``It would be logical for him to increase his utility and energy holdings and NRG would fit in nicely,'' said Frank Betz, a partner at Warren, New Jersey-based Carret Zane Capital Management, which oversees $800 million, including Berkshire shares. ``There's exponentially increasing demand for energy.''
Buffett, 77, also added to stakes in refrigeration-equipment maker Ingersoll-Rand Co. and Sanofi-Aventis SA, France's largest drugmaker.
The purchases disclosed yesterday may have cost Buffett about $260 million all told if he bought the shares at their highest second-quarter prices. Berkshire said last week that it spent $3.98 billion on equities in the period, leaving more than $3.5 billion unaccounted for in yesterday's filing.
Confidential Treatment
Outsiders lack full details on the portfolio because Buffett often receives U.S. Securities and Exchange Commission approval to delay disclosure to avert copycat investing. The filing says some information was submitted confidentially, including details on a stake in ConocoPhillips, the No. 2 U.S. refiner. Yesterday's document only lists equities traded on U.S. exchanges.
``I wouldn't be at all surprised if he's gone international, given his trip to Europe in May,'' said Gerald Martin, a finance professor at American University in Washington who has studied Buffett's investing history.
Buffett made a four-day trip to Germany, Switzerland, Spain and Italy to drum up potential buyouts.
``He's not only looking for 100 percent acquisitions, he's also looking at 5, 20, 30 percent,'' said Uto Baader, chairman of brokerge Baader Wertpapierhandelsbank AG, after attending an invitation-only meeting with Buffett in Frankfurt.
France, Korea
Buffett disclosed in March of last year that Berkshire held a 4 percent stake in South Korea's Posco, Asia's third-largest steelmaker. He also has bought French shares of Sanofi and a stake in Britain's Tesco Plc.
Mimicking Buffett's stock trades when publicly revealed would have delivered annual returns of about 25 percent for more than three decades, double the return of the S&P 500, according to a study co-written by Martin in 2007. ``He's probably earned the title of greatest investor of all-time,'' Martin said. ``I would expect he went confidential to get out of Conoco.''
Berkshire had 17.5 million shares of ConocoPhillips as of March 31. The Houston-based company's stock peaked near the end of the second quarter, and dropped 17 percent since then, as oil fell about 23 percent from a record of more than $145 a barrel. Becky Johnson, spokeswoman for ConocoPhillips, didn't return a call.
Berkshire reported record earnings last year as Buffett booked a $3.5 billion profit cashing out of a $500 million investment in oil producer PetroChina Co.
NRG Gains
NRG, based in Princeton, New Jersey, declined 19 percent this year through yesterday. The stock gained $1.64, or 4.7 percent, to $36.86 at 9:33 a.m. in New York Stock Exchange composite trading.
``I would suspect he's looking at this move that we've seen in energy and he's thinking assets are worth a whole lot more than what the market is currently valuing them at,'' said Gordon Howald, an analyst with Calyon Securities in New York who has a ``buy'' rating on NRG shares. NRG spokesman David Knox declined to comment.
Berkshire, previously the No. 2 investor in St. Louis-based Anheuser-Busch, reduced its stake to 13.8 million shares before the maker of Budweiser beer agreed on July 14 to be bought for $52 billion. The brewer rejected an earlier offer in June. Anheuser-Busch shares rose 31 percent in the second quarter, and 9.5 percent more from June 30 through yesterday.
Stock Slump
Berkshire increased its holding of American depositary receipts in Sanofi-Aventis by 8.8 percent to 3.9 million. The ADRs gained 40 cents, or 1.1 percent, to $36.42. Ingersoll-Rand advanced 66 cents, or 1.7 percent, to $40.06.
Berkshire shares had their worst first half since 1990 and are down 18 percent this year through yesterday. Berkshire has posted three consecutive profit declines on slumping returns from insurance, the company's biggest business. The company rose $1,400, or 1.2 percent, to $117,600.
Berkshire invested $5.51 billion on stocks in the first six months of the year compared with purchases of $11.5 billion a year earlier, according to a regulatory filing. The slower pace of purchases may signal that Buffett expects further market declines after saying in June he believes the U.S. is experiencing ``stagflation,'' a slowing economy with rising inflation.
Berkshire's U.S. stocks listed on the filing were worth $57.9 billion on June 30. The largest holdings are Coca-Cola Co., the world's biggest soft-drink maker, and Wells Fargo & Co., the No. 1 bank on the U.S. West Coast.
To contact the reporterson this story: Josh P. Hamilton in New York at jphamilton@bloomberg.net; Erik Holm in New York at eholm2@bloomberg.net.
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OPEC Leaves 2009 Oil Demand Growth at Lowest Rate in 7 Years
By Grant Smith
Aug. 15 (Bloomberg) -- The Organization of Petroleum Exporting Countries, the supplier of more than 40 percent of the world's oil, left its forecast for 2009 oil demand growth unchanged at the lowest rate in seven years and warned that consumption may fall further.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today. Oil prices have declined more than 20 percent from last month's record because of a ``softening of oil market fundamentals,'' it added.
``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''
Global oil consumption will average 86.9 million barrels a day this year and 87.8 million barrels a day in 2009. The increase for 2008 ends a run of downward revisions in six previous OPEC reports.
The slower rate of demand growth in 2009 is due to ``a major slowdown in transport and industrial fuel consumption not only North America'' but also Europe and parts of Asia, it said.
Earlier this week, the International Energy Agency, an adviser to 27 nations, raised its 2009 forecast for global oil demand by 70,000 barrels to 87.8 million barrels a day.
OPEC Call
The call on OPEC's crude next year will average 31.33 million barrels a day, an increase of 90,000 from its previous estimate, as world consumption is revised up while non-OPEC output projections are little changed.
The group will discuss output at OPEC's next scheduled ministerial meeting in Vienna on Sept. 9.
Total OPEC crude production averaged 32.643 million barrels a day in July, an increase of 235,800 barrels from June, because of additional flows from Saudi Arabia, Iraq, Nigeria, Kuwait and the United Arab Emirates.
Saudi output increased by 162,200 barrels a day in July to 9.513 million barrels a day. Saudi Arabia, responding to calls from consuming nations including the U.S., said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July.
OPEC may consider cutting production at its September meeting to reduce an excess in the market, Iranian OPEC governor Mohammad Ali Khatibi said Aug. 12.
`Too High'
Kuwait's oil minister has said any quota decrease is unlikely, and Ecuador said it would be unnecessary. Last month, OPEC President and Algerian Oil Minister Chakib Khelil said there was no need to lower output because prices are ``too high.''
Other members of the group including Saudi Arabia, its largest and most dominant, have yet to express a view on next month's decision.
OPEC made a ``slight downward revision'' of 10,000 barrels a day to its assessment for 2008 oil supply from outside the 13- member group, bringing it to 50,000 barrels a day. Non-OPEC output will increase to an average of 51 million barrels a day next year, it said.
The OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
Indonesia said three months ago that it will pull out of the group as declining production forces it to boost oil imports.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
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Aug. 15 (Bloomberg) -- The Organization of Petroleum Exporting Countries, the supplier of more than 40 percent of the world's oil, left its forecast for 2009 oil demand growth unchanged at the lowest rate in seven years and warned that consumption may fall further.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today. Oil prices have declined more than 20 percent from last month's record because of a ``softening of oil market fundamentals,'' it added.
``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''
Global oil consumption will average 86.9 million barrels a day this year and 87.8 million barrels a day in 2009. The increase for 2008 ends a run of downward revisions in six previous OPEC reports.
The slower rate of demand growth in 2009 is due to ``a major slowdown in transport and industrial fuel consumption not only North America'' but also Europe and parts of Asia, it said.
Earlier this week, the International Energy Agency, an adviser to 27 nations, raised its 2009 forecast for global oil demand by 70,000 barrels to 87.8 million barrels a day.
OPEC Call
The call on OPEC's crude next year will average 31.33 million barrels a day, an increase of 90,000 from its previous estimate, as world consumption is revised up while non-OPEC output projections are little changed.
The group will discuss output at OPEC's next scheduled ministerial meeting in Vienna on Sept. 9.
Total OPEC crude production averaged 32.643 million barrels a day in July, an increase of 235,800 barrels from June, because of additional flows from Saudi Arabia, Iraq, Nigeria, Kuwait and the United Arab Emirates.
Saudi output increased by 162,200 barrels a day in July to 9.513 million barrels a day. Saudi Arabia, responding to calls from consuming nations including the U.S., said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July.
OPEC may consider cutting production at its September meeting to reduce an excess in the market, Iranian OPEC governor Mohammad Ali Khatibi said Aug. 12.
`Too High'
Kuwait's oil minister has said any quota decrease is unlikely, and Ecuador said it would be unnecessary. Last month, OPEC President and Algerian Oil Minister Chakib Khelil said there was no need to lower output because prices are ``too high.''
Other members of the group including Saudi Arabia, its largest and most dominant, have yet to express a view on next month's decision.
OPEC made a ``slight downward revision'' of 10,000 barrels a day to its assessment for 2008 oil supply from outside the 13- member group, bringing it to 50,000 barrels a day. Non-OPEC output will increase to an average of 51 million barrels a day next year, it said.
The OPEC members are Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
Indonesia said three months ago that it will pull out of the group as declining production forces it to boost oil imports.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
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Soros Hedge Fund Bought Petrobras Stake Worth $811 Million
By Jeb Blount and Miles Weiss
Enlarge Image/Details
Aug. 15 (Bloomberg) -- Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund's largest holding.
As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission. Petrobras has since slumped 28 percent.
Soros has increased his mining and commodities holdings, a move that accelerated in the first quarter with purchases of such companies as Cia. Vale do Rio Doce, the world's largest iron-ore producer, and Talisman Energy Inc., a Canadian oil and gas company. In November, Petrobras announced the discovery of Tupi, a field with as much as 8 billion barrels of reserves, making it the largest find in the Americas since 1976.
``Petrobras has something that other oil companies don't have: oil -- lots of it and they're going to find more,'' said Ricardo Kobayashi, equity fund manager with UBS Pactual SA in Rio de Janeiro, which manages about $5 billion of stocks, including shares in Petrobras. ``If you can buy now and hang on, if you have the staying power, it's great.''
Tupi is part of a new deepwater offshore region known as the pre-salt that may contain as much as 50 billion barrels, according to Peter Wells, oil analyst with the U.K.'s Neftex Petroleum Consultants Ltd.
Share Slump
The drop in Petrobras' U.S.-traded common shares since June 30 would have reduced the value of Soros's disclosed stake by $235 million.
Soros Fund Management didn't report holding any Petrobras shares at the end of the first quarter. It did disclose much smaller stakes in the Brazilian oil company during 2007, including 150,000 depositary shares, with a market value of about $17.3 million, at Dec. 31. The hedge fund company also had calls on another 35,000 shares at Dec. 31.
Petrobras shares traded at an average closing price of $64.83 each during the second quarter, when Soros bought the stake. The shares today dropped 91 centavos, or 1.8 percent, to $50.68 in New York, valuing Petrobras at $204.8 billion, the world's 11th-biggest company by market capitalization.
Soros funds also bought almost 9.5 million shares of Lehman Brothers Holdings Inc. during the second quarter, according to today's filing. Soros funds held 10,000 Lehman shares at March 31, just before the second quarter began.
Lehman shares closed at $19.81 each on June 30, giving Soros's stake in the New York-based brokerage a market value of about $187.7 million when the quarter ended. Lehman shares have since declined 18 percent, reducing the stake's value to $153.5 million.
Michael Vachon, a Soros spokesman, didn't immediately return a telephone call seeking comment.
To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net.
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Enlarge Image/Details
Aug. 15 (Bloomberg) -- Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund's largest holding.
As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission. Petrobras has since slumped 28 percent.
Soros has increased his mining and commodities holdings, a move that accelerated in the first quarter with purchases of such companies as Cia. Vale do Rio Doce, the world's largest iron-ore producer, and Talisman Energy Inc., a Canadian oil and gas company. In November, Petrobras announced the discovery of Tupi, a field with as much as 8 billion barrels of reserves, making it the largest find in the Americas since 1976.
``Petrobras has something that other oil companies don't have: oil -- lots of it and they're going to find more,'' said Ricardo Kobayashi, equity fund manager with UBS Pactual SA in Rio de Janeiro, which manages about $5 billion of stocks, including shares in Petrobras. ``If you can buy now and hang on, if you have the staying power, it's great.''
Tupi is part of a new deepwater offshore region known as the pre-salt that may contain as much as 50 billion barrels, according to Peter Wells, oil analyst with the U.K.'s Neftex Petroleum Consultants Ltd.
Share Slump
The drop in Petrobras' U.S.-traded common shares since June 30 would have reduced the value of Soros's disclosed stake by $235 million.
Soros Fund Management didn't report holding any Petrobras shares at the end of the first quarter. It did disclose much smaller stakes in the Brazilian oil company during 2007, including 150,000 depositary shares, with a market value of about $17.3 million, at Dec. 31. The hedge fund company also had calls on another 35,000 shares at Dec. 31.
Petrobras shares traded at an average closing price of $64.83 each during the second quarter, when Soros bought the stake. The shares today dropped 91 centavos, or 1.8 percent, to $50.68 in New York, valuing Petrobras at $204.8 billion, the world's 11th-biggest company by market capitalization.
Soros funds also bought almost 9.5 million shares of Lehman Brothers Holdings Inc. during the second quarter, according to today's filing. Soros funds held 10,000 Lehman shares at March 31, just before the second quarter began.
Lehman shares closed at $19.81 each on June 30, giving Soros's stake in the New York-based brokerage a market value of about $187.7 million when the quarter ended. Lehman shares have since declined 18 percent, reducing the stake's value to $153.5 million.
Michael Vachon, a Soros spokesman, didn't immediately return a telephone call seeking comment.
To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net.
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Oil Declines as Stronger Dollar Erodes Hedging Appeal of Crude
By Margot Habiby
Aug. 15 (Bloomberg) -- Oil fell more than $3 a barrel in New York to a three-month low as the stronger dollar curbed the appeal of commodities as an inflation hedge.
Oil has tumbled 24 percent from the record $147.27 a barrel reached on July 11. The U.S. Dollar Index in New York, which tracks the currency against six others, rose to its highest since January on speculation U.S. consumer spending will keep the world's biggest economy out of a recession.
``We're taking our cue from the dollar today,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``People were buying commodities against risk in the dollar, war and the economy. The play has been coming off at the same time we're seeing dramatic signs of demand destruction across the globe.''
Crude oil for September delivery fell $3.03, or 2.6 percent, to $111.98 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Oil touched $111.39 a barrel, the lowest since May 1, and has declined 2.9 percent this week.
The dollar index, traded on ICE Futures in New York, was up 0.6 percent to 77.133, its 11th consecutive daily advance.
Gasoline demand was down 2.1 percent in the first seven months of the year as record prices and slower economic growth cut consumer spending, the American Petroleum Institute said Aug. 13. Consumers spent more on gasoline than vehicles and parts for the first time in 26 years in May and June, as U.S. pump prices headed for a record.
Gasoline for September delivery lost 7.8 cents, or 2.7 percent, to $2.8340 a gallon. They're down 1.8 percent this week.
Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.771 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
Global Economy
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, a report showed.
``It's not just a U.S. problem, it's a global problem and it's taking its toll on commodities,'' said Peter Luxton, an energy analyst at Informa Global Markets.
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 yesterday.
``After the Olympics are over, the question is whether demand in the Far East is going to drop off,'' said Gene McGillian, a Tradition Energy analyst in Stamford, Connecticut. ``The market might be reaching the conclusion that some of the measures by the Chinese government to showcase their event are going to be over, and it might start to put a bottom on the market.''
OPEC Report
The global economic outlook led the Organization of Petroleum Exporting Countries to leave its forecast for 2009 oil demand growth unchanged today at the lowest rate in seven years.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today.
``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''
The dollar headed for a fifth weekly gain against the euro, its longest stretch of increases in more than two years. It traded at $1.4701 as of 10:40 a.m. in New York, compared with $1.4826 yesterday. The U.S. currency has risen 2 percent this week.
Dollar Gains
The oil price and the dollar have shown a long-term correlation whereby increases in one coincide with a drop in the other, said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland.
``Oil is still overvalued on the basis of the long-term correlation,'' he said.
Brent crude for October settlement fell $1.60, or 1.4 percent, to $111.04 a barrel on London's ICE Futures Europe exchange.
Crude oil prices may rise next week as U.S. gasoline inventories fall because refineries are cutting output in response to low profit margins.
Nineteen of 30 analysts surveyed by Bloomberg News, or 63 percent, said prices will rise through Aug. 22. It was the most bullish response since December 2006. Seven of the respondents, or 23 percent, said oil will be little changed and four said there would be a drop in prices. Last week 37 percent expected a decline and 34 percent predicted an increase.
September crude oil options expire at the close of trading on the Nymex today. September $110 and $111 puts, which represent the right to sell oil at those prices, were the most actively traded contracts. The $111 put option more than doubled to 20 cents, or $200 a contract, from 8 cents yesterday. One contract is for 1,000 barrels of oil.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
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East European Currencies: Czech Koruna Posts Fourth Weekly Drop
By Yon Pulkrabek
Aug. 15 (Bloomberg) -- The Czech koruna posted a fourth weekly decline against the euro on concern economic growth is faltering, prompting the central bank to reduce interest rates.
The currency had its biggest drop in more than three weeks yesterday after a government report showed the economy expanded 4.5 percent in the second quarter, the slowest pace in four years and less than economists estimated. Growth will slow ``more markedly than we had anticipated,'' central bank Governor Zdenek Tuma said Aug. 7 after policy makers cut the main rate to 3.5 percent, the lowest rate in the European Union.
``It seems the GDP data reinforced what the central bank has been saying,'' said Nicholas Kennedy, an emerging-markets currency strategist in London at 4Cast Ltd., a research company that counts central banks among its subscribers. ``That reinforces speculation that they will cut rates.''
The koruna dropped 0.2 percent to 24.494 per euro at 3:06 p.m. in Prague, from 24.455 yesterday. It lost 0.5 percent in the week. Against the dollar, the koruna depreciated 2.4 percent on the week.
The currency may weaken in the third quarter before strengthening again, the central bank said today. The bank also increased its estimate for this year's budget shortfall to 1.1 percent of gross domestic product, from 1 percent previously.
In other markets, Turkey's lira fell against the dollar after policy makers yesterday held the overnight borrowing rate at 16.75 percent, halting three months of increases, as slower economic growth and falling oil prices ease inflation. The decision was forecast by 14 of 21 economists surveyed by Bloomberg. Seven predicted a quarter-point increase.
Tightening Over
``The Turkish central bank's tightening cycle is now over,'' analysts led by Nick Chamie at RBC Capital Markets in Toronto wrote in a client note. ``We expect 200 basis points in rate cuts in 2009.''
The lira dropped 0.1 percent to 1.1837 per dollar, and was at 1.1836, from 1.1831 yesterday, paring the currency's gain in the week to 0.5 percent.
The Hungarian forint dropped 0.2 percent to 239.28 per euro, from 238.75. The currency is 1.2 percent lower since Aug. 8, posting a fourth weekly drop.
The Polish zloty fell 0.4 percent to 3.3323 for a 1.7 percent weekly decline, its third in a row. Romania's leu lost 0.3 percent to 3.5502, from 3.5394 yesterday and 3.5326 at the end of last week.
The Slovak koruna was little changed at 30.318 per euro, rising 0.2 percent on the week.
To contact the reporter on this story: Yon Pulkrabek in Prague at ypulkrabek@bloomberg.net
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Aug. 15 (Bloomberg) -- The Czech koruna posted a fourth weekly decline against the euro on concern economic growth is faltering, prompting the central bank to reduce interest rates.
The currency had its biggest drop in more than three weeks yesterday after a government report showed the economy expanded 4.5 percent in the second quarter, the slowest pace in four years and less than economists estimated. Growth will slow ``more markedly than we had anticipated,'' central bank Governor Zdenek Tuma said Aug. 7 after policy makers cut the main rate to 3.5 percent, the lowest rate in the European Union.
``It seems the GDP data reinforced what the central bank has been saying,'' said Nicholas Kennedy, an emerging-markets currency strategist in London at 4Cast Ltd., a research company that counts central banks among its subscribers. ``That reinforces speculation that they will cut rates.''
The koruna dropped 0.2 percent to 24.494 per euro at 3:06 p.m. in Prague, from 24.455 yesterday. It lost 0.5 percent in the week. Against the dollar, the koruna depreciated 2.4 percent on the week.
The currency may weaken in the third quarter before strengthening again, the central bank said today. The bank also increased its estimate for this year's budget shortfall to 1.1 percent of gross domestic product, from 1 percent previously.
In other markets, Turkey's lira fell against the dollar after policy makers yesterday held the overnight borrowing rate at 16.75 percent, halting three months of increases, as slower economic growth and falling oil prices ease inflation. The decision was forecast by 14 of 21 economists surveyed by Bloomberg. Seven predicted a quarter-point increase.
Tightening Over
``The Turkish central bank's tightening cycle is now over,'' analysts led by Nick Chamie at RBC Capital Markets in Toronto wrote in a client note. ``We expect 200 basis points in rate cuts in 2009.''
The lira dropped 0.1 percent to 1.1837 per dollar, and was at 1.1836, from 1.1831 yesterday, paring the currency's gain in the week to 0.5 percent.
The Hungarian forint dropped 0.2 percent to 239.28 per euro, from 238.75. The currency is 1.2 percent lower since Aug. 8, posting a fourth weekly drop.
The Polish zloty fell 0.4 percent to 3.3323 for a 1.7 percent weekly decline, its third in a row. Romania's leu lost 0.3 percent to 3.5502, from 3.5394 yesterday and 3.5326 at the end of last week.
The Slovak koruna was little changed at 30.318 per euro, rising 0.2 percent on the week.
To contact the reporter on this story: Yon Pulkrabek in Prague at ypulkrabek@bloomberg.net
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Rand Posts Second Weekly Decline as Commodity Slump Persists
By Garth Theunissen
Aug. 15 (Bloomberg) -- South Africa's rand posted a second weekly decline against the dollar as a slump in platinum and gold prices persisted, eroding earnings prospects for the world's biggest exporter of precious metals.
The rand fell to the lowest level in more than seven weeks as platinum headed for a 12 percent slide since Aug. 8, its fifth weekly drop, and gold plunged below $800 an ounce for the first time in eight months. Silver and palladium also sank. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold and the rand typically moves in tandem with their prices.
``Commodity prices have collapsed, souring sentiment towards the rand,'' said George Glynos, managing director in Johannesburg at Econometrix Treasury Management, which advises clients on bond and foreign-exchange transactions. ``Commodities are facing demand destruction in the wake of a global economic slowdown. Along with a stronger dollar, that's hurting commodity-backed currencies.''
The rand fell as much as 2 percent to 8.0047 per dollar, the weakest level since June 25, and was at 7.8781 as of 4:22 p.m. in Johannesburg, from 7.8445 yesterday. The drop extended the rand's decline since Aug. 8 to 1.8 percent. It also fell versus all but four of the 16 most-actively traded currencies monitored by Bloomberg in the week. Against the euro, it dropped 0.2 percent to 11.5929.
``The fall in commodities has increased the appetite for dollars,'' said Shahin Vallee, an emerging-markets currency strategist in London at BNP Paribas SA, France's largest bank. ``The result is a sell-off in currencies like the rand.''
Sinking Metals
Gold fell as much as 4.2 percent to $772.98 an ounce today, the lowest level since Oct. 26. The precious metal is poised for its fifth weekly drop. Platinum has declined no less than 5.2 percent during each week of its five-week slide. Silver is down 14 percent this week, with palladium 13 percent lower.
Commodities, measured by the Standard & Poor's GSCI index, have tumbled 22 percent from their record July 3, descending into a bear market, on concern a spreading global economic slowdown would reduce demand for raw materials.
The rand also fell after the South African Reserve Bank left interest rates at 12 percent yesterday and Governor Tito Mboweni said inflation will drop ``significantly'' in the first quarter of 2009, reducing prospects for further increases in the key lending rate. The decision followed six gains since June last year and matched a forecast from economists surveyed by Bloomberg News.
`Disappointment'
The rand posted a seven-week rally after the last monetary policy committee meeting on June 12 when the central bank lifted interest rates by a half point, increasing the currency's allure for so-called carry trades.
``There was a bit of disappointment from people who were hoping for another interest-rate hike,'' said Vallee. ``Prospects for higher interest rates have been the only reason to buy rand so the decision undermines its carry-trade appeal.''
Carry-trade investors borrow money in countries with low interest rates to invest in markets that offer higher returns, earning the spread between the two. They take the risk currency moves will erase their profit.
South Africa's main interest rate is 1,150 basis points above Japan's and 925 basis points higher than Switzerland's.
The rand had its biggest weekly drop versus the dollar in more than two years last week as weaker precious metals prices hurt the outlook for export revenue. It has lost 13 percent in 2008, making it the worst-performing major currency monitored by Bloomberg.
Government bonds gained in the week, with the yield on the benchmark 13.5 percent security due September 2015 dropping 37 basis points to 9.13 percent. The yield on the 13 percent note due August 2010 fell 35 basis points from its Aug. 8 level to 9.79 percent. Yields move inversely to bond prices.
To contact the reporters on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Aug. 15 (Bloomberg) -- South Africa's rand posted a second weekly decline against the dollar as a slump in platinum and gold prices persisted, eroding earnings prospects for the world's biggest exporter of precious metals.
The rand fell to the lowest level in more than seven weeks as platinum headed for a 12 percent slide since Aug. 8, its fifth weekly drop, and gold plunged below $800 an ounce for the first time in eight months. Silver and palladium also sank. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold and the rand typically moves in tandem with their prices.
``Commodity prices have collapsed, souring sentiment towards the rand,'' said George Glynos, managing director in Johannesburg at Econometrix Treasury Management, which advises clients on bond and foreign-exchange transactions. ``Commodities are facing demand destruction in the wake of a global economic slowdown. Along with a stronger dollar, that's hurting commodity-backed currencies.''
The rand fell as much as 2 percent to 8.0047 per dollar, the weakest level since June 25, and was at 7.8781 as of 4:22 p.m. in Johannesburg, from 7.8445 yesterday. The drop extended the rand's decline since Aug. 8 to 1.8 percent. It also fell versus all but four of the 16 most-actively traded currencies monitored by Bloomberg in the week. Against the euro, it dropped 0.2 percent to 11.5929.
``The fall in commodities has increased the appetite for dollars,'' said Shahin Vallee, an emerging-markets currency strategist in London at BNP Paribas SA, France's largest bank. ``The result is a sell-off in currencies like the rand.''
Sinking Metals
Gold fell as much as 4.2 percent to $772.98 an ounce today, the lowest level since Oct. 26. The precious metal is poised for its fifth weekly drop. Platinum has declined no less than 5.2 percent during each week of its five-week slide. Silver is down 14 percent this week, with palladium 13 percent lower.
Commodities, measured by the Standard & Poor's GSCI index, have tumbled 22 percent from their record July 3, descending into a bear market, on concern a spreading global economic slowdown would reduce demand for raw materials.
The rand also fell after the South African Reserve Bank left interest rates at 12 percent yesterday and Governor Tito Mboweni said inflation will drop ``significantly'' in the first quarter of 2009, reducing prospects for further increases in the key lending rate. The decision followed six gains since June last year and matched a forecast from economists surveyed by Bloomberg News.
`Disappointment'
The rand posted a seven-week rally after the last monetary policy committee meeting on June 12 when the central bank lifted interest rates by a half point, increasing the currency's allure for so-called carry trades.
``There was a bit of disappointment from people who were hoping for another interest-rate hike,'' said Vallee. ``Prospects for higher interest rates have been the only reason to buy rand so the decision undermines its carry-trade appeal.''
Carry-trade investors borrow money in countries with low interest rates to invest in markets that offer higher returns, earning the spread between the two. They take the risk currency moves will erase their profit.
South Africa's main interest rate is 1,150 basis points above Japan's and 925 basis points higher than Switzerland's.
The rand had its biggest weekly drop versus the dollar in more than two years last week as weaker precious metals prices hurt the outlook for export revenue. It has lost 13 percent in 2008, making it the worst-performing major currency monitored by Bloomberg.
Government bonds gained in the week, with the yield on the benchmark 13.5 percent security due September 2015 dropping 37 basis points to 9.13 percent. The yield on the 13 percent note due August 2010 fell 35 basis points from its Aug. 8 level to 9.79 percent. Yields move inversely to bond prices.
To contact the reporters on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Yuan Completes 4th Weekly Loss as Pace Slows to Support Growth
By Judy Chen and Kim Kyoungwha
Aug. 15 (Bloomberg) -- The yuan completed a fourth weekly loss, the longest stretch since a peg to the dollar was scrapped in 2005, on speculation China is curbing gains to bolster exports and the economy. Bonds rose.
The currency dropped 0.16 percent for the week, taking the decline since July 18 to 0.77 percent. China will ``maintain the momentum of stable and relatively rapid growth'' in the second half of this year, according to a second-quarter monetary policy report posted on the central bank's Web site today .
``More and more data suggest increasing risks of an economic slowdown,'' said Liu Dongliang, a Shenzhen-based foreign-exchange analyst at China Merchants Bank Co., the country's sixth-largest lender. ``The pace of appreciation in the first half won't return. There will be more two-way fluctuations.''
The yuan fell 0.15 percent to 6.8700 per dollar as of 5:30 p.m. in Shanghai, the biggest loss in more than a week, according to the China Foreign Exchange Trade System.
Liu forecast the yuan won't rise beyond 6.7 per dollar during the second half of this year. The median estimate in a Bloomberg News survey of 25 analysts is for an exchange rate of 6.63 by year-end.
The People's Bank of China has set a weaker reference rate for yuan trading every day in August except one. The rate was fixed at 6.8649, compared with 6.8630 yesterday. The currency is allowed to trade by up to 0.5 percent on either side of the daily rate.
Slowing Growth
China's industrial-production climbed 14.7 percent in July from a year earlier, the slowest pace since February 2007, the statistics bureau said yesterday, compared with 16 percent in June.
The Dollar Index traded on ICE futures in New York, which tracks the U.S. currency against those of six trading partners, gained for an 11th day, extending its advance since July 31 to 5.1 percent.
``The dollar is so strong that onshore traders have trimmed yuan positions,'' said Li Tao, a foreign-exchange trader at Shenzhen Development Bank Co. in the southern city of Shenzhen. ``But the appreciation trend is still there if you look at the yuan's big gains against other currencies in the basket.''
The Chinese currency has climbed 6.8 percent and 2.9 percent versus the euro and the yen since July 18. China has managed the exchange rate against a basket of currencies, including the euro, the yen and British pound since the dollar peg was scrapped in 2005.
Bonds Advance
Government bonds rose after a debt auction today drew more bids than a previous sale.
The finance ministry received bids for 2.15 times the 24 billion yuan ($3.5 billion) of seven-year debt on offer, it said in a statement posted on the Chinabond Web site. The so-called bid-cover ratio was 1.38 at the ministry's last seven-year debt sale in May.
``The result shows demand for bonds is strong and yields will keep going down,'' said Qu Qing, a fixed-income analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai.
The yield on the 4.01 percent note due May 2015 fell 4 basis points to 4.22 percent, the lowest level since July 7, according to the China Interbank Bond Market. The price rose 0.23 per 100 yuan face amount to 98.77. A basis point is 0.01 percentage point.
The finance ministry sold 2.6 billion yuan more debt than planned, according to the statement.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Aug. 15 (Bloomberg) -- The yuan completed a fourth weekly loss, the longest stretch since a peg to the dollar was scrapped in 2005, on speculation China is curbing gains to bolster exports and the economy. Bonds rose.
The currency dropped 0.16 percent for the week, taking the decline since July 18 to 0.77 percent. China will ``maintain the momentum of stable and relatively rapid growth'' in the second half of this year, according to a second-quarter monetary policy report posted on the central bank's Web site today .
``More and more data suggest increasing risks of an economic slowdown,'' said Liu Dongliang, a Shenzhen-based foreign-exchange analyst at China Merchants Bank Co., the country's sixth-largest lender. ``The pace of appreciation in the first half won't return. There will be more two-way fluctuations.''
The yuan fell 0.15 percent to 6.8700 per dollar as of 5:30 p.m. in Shanghai, the biggest loss in more than a week, according to the China Foreign Exchange Trade System.
Liu forecast the yuan won't rise beyond 6.7 per dollar during the second half of this year. The median estimate in a Bloomberg News survey of 25 analysts is for an exchange rate of 6.63 by year-end.
The People's Bank of China has set a weaker reference rate for yuan trading every day in August except one. The rate was fixed at 6.8649, compared with 6.8630 yesterday. The currency is allowed to trade by up to 0.5 percent on either side of the daily rate.
Slowing Growth
China's industrial-production climbed 14.7 percent in July from a year earlier, the slowest pace since February 2007, the statistics bureau said yesterday, compared with 16 percent in June.
The Dollar Index traded on ICE futures in New York, which tracks the U.S. currency against those of six trading partners, gained for an 11th day, extending its advance since July 31 to 5.1 percent.
``The dollar is so strong that onshore traders have trimmed yuan positions,'' said Li Tao, a foreign-exchange trader at Shenzhen Development Bank Co. in the southern city of Shenzhen. ``But the appreciation trend is still there if you look at the yuan's big gains against other currencies in the basket.''
The Chinese currency has climbed 6.8 percent and 2.9 percent versus the euro and the yen since July 18. China has managed the exchange rate against a basket of currencies, including the euro, the yen and British pound since the dollar peg was scrapped in 2005.
Bonds Advance
Government bonds rose after a debt auction today drew more bids than a previous sale.
The finance ministry received bids for 2.15 times the 24 billion yuan ($3.5 billion) of seven-year debt on offer, it said in a statement posted on the Chinabond Web site. The so-called bid-cover ratio was 1.38 at the ministry's last seven-year debt sale in May.
``The result shows demand for bonds is strong and yields will keep going down,'' said Qu Qing, a fixed-income analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai.
The yield on the 4.01 percent note due May 2015 fell 4 basis points to 4.22 percent, the lowest level since July 7, according to the China Interbank Bond Market. The price rose 0.23 per 100 yuan face amount to 98.77. A basis point is 0.01 percentage point.
The finance ministry sold 2.6 billion yuan more debt than planned, according to the statement.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Brazil's Real Heads for Weekly Loss on Declining Commodities
By Adriana Brasileiro
Aug. 15 (Bloomberg) -- Brazil's real declined for a second day and headed for a weekly loss as falling commodity prices raised speculation that the trade surplus will narrow, reducing foreign currency flows.
The real dropped 0.4 percent to 1.6302 per dollar at 9:11 a.m. New York time, from 1.6236 yesterday. Earlier the currency touched 1.634, the weakest since June 13. It has declined 1.3 percent this week after tumbling 3.1 percent last week.
``It will be very hard for commodity prices to stay at the high levels we've seen in the past,'' said Jose Carlos de Faria, chief economist at Deutsche Bank AG in Sao Paulo. ``Adjustments are happening, and that will impact trade flows.''
The Brazilian currency has lost 4 percent since Aug. 1, as commodity prices fall and concern grows that the U.S. credit crisis is spreading through global markets. The Reuters/Jefferies CRB Index of commodity prices has declined 22 percent since reaching a high on July 3.
The yield on Brazil's zero-coupon bonds due in January 2010 fell 3 basis points, or 0.03 percentage point, to 14.78 percent, according to Banco Votorantim.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net
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Aug. 15 (Bloomberg) -- Brazil's real declined for a second day and headed for a weekly loss as falling commodity prices raised speculation that the trade surplus will narrow, reducing foreign currency flows.
The real dropped 0.4 percent to 1.6302 per dollar at 9:11 a.m. New York time, from 1.6236 yesterday. Earlier the currency touched 1.634, the weakest since June 13. It has declined 1.3 percent this week after tumbling 3.1 percent last week.
``It will be very hard for commodity prices to stay at the high levels we've seen in the past,'' said Jose Carlos de Faria, chief economist at Deutsche Bank AG in Sao Paulo. ``Adjustments are happening, and that will impact trade flows.''
The Brazilian currency has lost 4 percent since Aug. 1, as commodity prices fall and concern grows that the U.S. credit crisis is spreading through global markets. The Reuters/Jefferies CRB Index of commodity prices has declined 22 percent since reaching a high on July 3.
The yield on Brazil's zero-coupon bonds due in January 2010 fell 3 basis points, or 0.03 percentage point, to 14.78 percent, according to Banco Votorantim.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net
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Canada's Dollar Gains After Report Shows Manufacturing Increase
By Chris Fournier
Aug. 15 (Bloomberg) -- Canada's dollar rose after a government report showed manufacturing shipments in the world's eighth-largest economy advanced more than forecast.
The Canadian dollar is poised for its biggest weekly gain in more than a month. It has strengthened 0.6 percent versus its U.S. counterpart since Aug. 8. Canada's dollar appreciated today versus the 16 most-actively traded currencies.
``It's an economic data story today,'' said Eric Lascelles, chief economist at TD Securities Inc. in Toronto. ``It was a broadly-based gain, and I think it is eliminating some of the pessimism that surrounds Canada, and is perhaps helping the Canadian dollar recoup some of its recent losses.''
The currency increased 0.3 percent to C$1.0607 per U.S. dollar at 9:22 a.m. in Toronto, from C$1.0636 yesterday. It fell to as low as C$1.0728 on Aug. 12, the weakest since Aug. 17, 2007. One Canadian dollar buys 94.28 U.S. cents.
Factory shipments increased 2.1 percent in June, after a revised 2.2 percent gain during the previous month that was less than originally reported, Statistics Canada said in Ottawa. Economists surveyed by Bloomberg predicted a 1 percent gain, the median of 21 forecasts.
Lascelles predicts the Canadian dollar will trade at C$1.10 by year-end.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Aug. 15 (Bloomberg) -- Canada's dollar rose after a government report showed manufacturing shipments in the world's eighth-largest economy advanced more than forecast.
The Canadian dollar is poised for its biggest weekly gain in more than a month. It has strengthened 0.6 percent versus its U.S. counterpart since Aug. 8. Canada's dollar appreciated today versus the 16 most-actively traded currencies.
``It's an economic data story today,'' said Eric Lascelles, chief economist at TD Securities Inc. in Toronto. ``It was a broadly-based gain, and I think it is eliminating some of the pessimism that surrounds Canada, and is perhaps helping the Canadian dollar recoup some of its recent losses.''
The currency increased 0.3 percent to C$1.0607 per U.S. dollar at 9:22 a.m. in Toronto, from C$1.0636 yesterday. It fell to as low as C$1.0728 on Aug. 12, the weakest since Aug. 17, 2007. One Canadian dollar buys 94.28 U.S. cents.
Factory shipments increased 2.1 percent in June, after a revised 2.2 percent gain during the previous month that was less than originally reported, Statistics Canada said in Ottawa. Economists surveyed by Bloomberg predicted a 1 percent gain, the median of 21 forecasts.
Lascelles predicts the Canadian dollar will trade at C$1.10 by year-end.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Lead Rises, Narrowing Weekly Drop, on Ivernia; Copper Declines
By Claudia Carpenter
Aug. 15 (Bloomberg) -- Lead rose, narrowing its biggest weekly decline in three months, on signs Ivernia Inc. won't restart exports from its Magellan mine until next year, crimping supplies. Copper and other industrial metals fell.
Lead, used to make batteries, rose to a record in October last year after Ivernia was banned from exporting 3 percent of the world's mined lead from its pit in Australia. Managing Director Patrick Scott said in March the company was preparing a shipment pending final government approval.
``Some people are getting very bullish about lead's prospects,'' said John Kemp, an analyst at RBS Sempra Metals Ltd. in London. Ivernia's statement yesterday ``is slightly bullish in terms of sentiment.''
Lead for delivery in three months gained $25, or 1.5 percent, to $1,685 a metric ton as of 12:10 p.m. on the London Metal Exchange. Prices have still dropped almost 15 percent this week, the most since the week ended May 9, and are down 57 percent from the record $3,890.15 on Oct. 1.
Government approval to resume shipments probably won't occur before a September election, and then it will take at least four months to resume operations, Ivernia said yesterday.
``There's a lot of two-way interest in the lead market,'' Kemp said.
Copper fell $130 to $7,255 a ton and aluminum dropped $19.50 to $2,756.50 a ton as gains in the dollar and lower oil prices spurred selling, Kemp said. Crude oil futures dropped 1.5 percent to $113.26 a barrel.
``Oil is the bellwether for the commodity sector as a whole, and at least some people are asking whether the bull market is over,'' he said.
The UBS Bloomberg CMCI Index of 26 commodities dropped 18.96, or 1.3 percent, to 1,416.503, bringing its drop to 18 percent from a record on July 3.
Zinc fell $10 to $1,640 a ton, nickel declined $500 to $18,600 and tin decreased $200 to $18,500 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net
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Aug. 15 (Bloomberg) -- Lead rose, narrowing its biggest weekly decline in three months, on signs Ivernia Inc. won't restart exports from its Magellan mine until next year, crimping supplies. Copper and other industrial metals fell.
Lead, used to make batteries, rose to a record in October last year after Ivernia was banned from exporting 3 percent of the world's mined lead from its pit in Australia. Managing Director Patrick Scott said in March the company was preparing a shipment pending final government approval.
``Some people are getting very bullish about lead's prospects,'' said John Kemp, an analyst at RBS Sempra Metals Ltd. in London. Ivernia's statement yesterday ``is slightly bullish in terms of sentiment.''
Lead for delivery in three months gained $25, or 1.5 percent, to $1,685 a metric ton as of 12:10 p.m. on the London Metal Exchange. Prices have still dropped almost 15 percent this week, the most since the week ended May 9, and are down 57 percent from the record $3,890.15 on Oct. 1.
Government approval to resume shipments probably won't occur before a September election, and then it will take at least four months to resume operations, Ivernia said yesterday.
``There's a lot of two-way interest in the lead market,'' Kemp said.
Copper fell $130 to $7,255 a ton and aluminum dropped $19.50 to $2,756.50 a ton as gains in the dollar and lower oil prices spurred selling, Kemp said. Crude oil futures dropped 1.5 percent to $113.26 a barrel.
``Oil is the bellwether for the commodity sector as a whole, and at least some people are asking whether the bull market is over,'' he said.
The UBS Bloomberg CMCI Index of 26 commodities dropped 18.96, or 1.3 percent, to 1,416.503, bringing its drop to 18 percent from a record on July 3.
Zinc fell $10 to $1,640 a ton, nickel declined $500 to $18,600 and tin decreased $200 to $18,500 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net
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Gold Heads for Biggest Weekly Drop Since March on Dollar Rally
By Pham-Duy Nguyen
Aug. 15 (Bloomberg) -- Gold fell, heading for the biggest weekly slide since March, as the dollar surged against the euro, reducing the appeal of the precious metal as an alternative investment. Silver dropped as much as 14 percent.
The dollar is up for the fifth straight week against the euro as economies in Europe slow. Gold generally moves in tandem with the euro as an alternative to the dollar. The metal plunged into a bear market this week, declining as much as 25 percent from the record $1,033.90 an ounce reached on March 17.
``There's just a lot of long liquidation,'' said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``Commodities are priced in U.S. dollars. There's no getting around that.''
Gold futures for December delivery fell $14.70, or 1.8 percent, $799.80 an ounce at 9:15 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark a 7.5 percent drop for the week, the most since March 21.
Earlier, the price touched $777.70, the lowest for a most- active contract since Nov. 20. Gold has fallen every day this month except for a 2.1 percent rally on Aug. 13.
Silver futures for December delivery fell $1.05, or 7.3 percent, to $13.31 an ounce on the Comex, after earlier dropping to $12.305. Before today, silver had declined 3.8 percent this year while gold dropped 2.8 percent.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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Aug. 15 (Bloomberg) -- Gold fell, heading for the biggest weekly slide since March, as the dollar surged against the euro, reducing the appeal of the precious metal as an alternative investment. Silver dropped as much as 14 percent.
The dollar is up for the fifth straight week against the euro as economies in Europe slow. Gold generally moves in tandem with the euro as an alternative to the dollar. The metal plunged into a bear market this week, declining as much as 25 percent from the record $1,033.90 an ounce reached on March 17.
``There's just a lot of long liquidation,'' said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``Commodities are priced in U.S. dollars. There's no getting around that.''
Gold futures for December delivery fell $14.70, or 1.8 percent, $799.80 an ounce at 9:15 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark a 7.5 percent drop for the week, the most since March 21.
Earlier, the price touched $777.70, the lowest for a most- active contract since Nov. 20. Gold has fallen every day this month except for a 2.1 percent rally on Aug. 13.
Silver futures for December delivery fell $1.05, or 7.3 percent, to $13.31 an ounce on the Comex, after earlier dropping to $12.305. Before today, silver had declined 3.8 percent this year while gold dropped 2.8 percent.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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Dollar Heads for Fifth Weekly Gain on Oil Drop, Global Slowdown
By Ye Xie and Anchalee Worrachate
Enlarge Image/Details
Aug. 15 (Bloomberg) -- The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years, as crude oil prices declined and economies from Germany to Japan contracted.
The U.S. currency rose to the strongest level in almost six months against the euro and a seven-month high versus the yen. The pound dropped for an 11th day against the dollar, the longest run of declines in at least 37 years, on speculation a recession will force the Bank of England to cut interest rates.
``The world is finding the dollar is very, very cheap,'' said Steven Englander, a currency strategist at Lehman Brothers Holdings Inc. in New York. ``There's significant revision of growth outlook and monetary policies outside the U.S. Changing global sentiment is bringing down commodity prices, which is helping the dollar.''
Against the euro, the dollar rose 0.8 percent to $1.4713 at 10:31 a.m. in New York, from $1.4826 yesterday. It earlier touched $1.4678, the strongest level since Feb. 20. The U.S. currency increased 0.5 percent to 110.32 yen, from 109.74. It earlier rose to 110.66, the strongest since Jan. 2. The euro fell 0.2 percent to 162.29 yen, from 162.68.
The dollar has risen 1.8 percent against the euro this week in its longest stretch of weekly gains since February 2006. The U.S. currency has increased 8.3 percent after reaching the record low of $1.6038 on July 15. The dollar is headed for a 0.3 percent advance versus the yen, its second straight weekly increase. The euro is poised for a fourth weekly decline against the yen, dropping 1.6 percent.
The dollar's 5.9 percent rally against the euro this month has led banks to raise their forecasts for the U.S. currency.
Lehman More Bullish
Lehman turned more bullish on the greenback yesterday, predicting it will advance to $1.43 by year-end and $1.40 by the end of March 2009. Goldman Sachs Group Inc. said yesterday the dollar has ``bottomed'' against the euro, predicting it will strengthen to $1.45 per euro in three months.
The median forecast of 38 analysts compiled by Bloomberg News was for the dollar to trade at $1.50 per euro by year-end and $1.40 by the close of 2009.
Sterling fell 0.6 percent to $1.8581 today after touching $1.8512, the lowest level since July 2006. The stretch of daily declines is the longest since at least January 1971. The pound has fallen 2.9 percent this week in the biggest weekly drop since July 2005. The Bank of England cut its forecast for economic growth this week, signaling it may reduce the 5 percent target lending rate.
The euro may also be undermined by Europe's proximity to the conflict between Russia and Georgia, said Firas Askari, head currency trader at BMO Capital Markets in Toronto.
`Boris the Bear'
``Boris the bear may be stretching his claws,'' he said. ``That would be more negative to Europe than the U.S.''
The Dollar Index traded on the ICE futures market, tracking the greenback against the currencies of six U.S. trading partners, reached 77.252 today, the highest since Jan. 22.
Industrial production in the U.S. rose 0.2 percent last month, following a 0.4 percent gain in June, the Federal Reserve reported. The median forecast of 79 economists surveyed by Bloomberg News was for no change.
Europe's gross domestic product fell 0.2 percent in the second quarter, the first contraction since the 15-nation common currency was introduced in 1999, the European Union's statistics office said yesterday. Japan's economy shrank an annualized 2.4 percent in the second quarter, after expanding 3.2 percent in the previous three months, the Cabinet Office said this week.
UBS on ECB
UBS AG said today it no longer expects the European Central Bank to raise the main refinancing rate from 4.25 percent in September as economic growth slowed ``more rapidly than initially expected.'' The Federal Reserve cut its lending target to 2 percent in April.
Crude oil for September delivery declined $1.80 to $113.21 a barrel today, extending its decline to 23 percent since reaching a record $147.27 on July 11. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they move in lockstep.
Two-year U.S. Treasury notes yielded 1.62 percentage points less than comparable-maturity German bunds. When the yield spread was at this level on June 23, the dollar traded at $1.5568 per euro, 9 cents weaker than now.
``The price action does not reflect the interest-rate differential,'' said Lehman's Englander. ``People are cutting their short-dollar positions. Investors hedged their foreign portfolio by shorting the dollar, and we are seeing a lot of these positions unwinding.'' A short is a bet that a currency will decline.
International buying of U.S. financial assets rose in June at the weakest pace since September, as investors sold stocks and demand weakened for corporate bonds. Total net purchases of long-term equities, notes and bonds dropped to $53.4 billion, from a revised $83.2 billion the previous month, the Treasury Department said today in Washington.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
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Enlarge Image/Details
Aug. 15 (Bloomberg) -- The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years, as crude oil prices declined and economies from Germany to Japan contracted.
The U.S. currency rose to the strongest level in almost six months against the euro and a seven-month high versus the yen. The pound dropped for an 11th day against the dollar, the longest run of declines in at least 37 years, on speculation a recession will force the Bank of England to cut interest rates.
``The world is finding the dollar is very, very cheap,'' said Steven Englander, a currency strategist at Lehman Brothers Holdings Inc. in New York. ``There's significant revision of growth outlook and monetary policies outside the U.S. Changing global sentiment is bringing down commodity prices, which is helping the dollar.''
Against the euro, the dollar rose 0.8 percent to $1.4713 at 10:31 a.m. in New York, from $1.4826 yesterday. It earlier touched $1.4678, the strongest level since Feb. 20. The U.S. currency increased 0.5 percent to 110.32 yen, from 109.74. It earlier rose to 110.66, the strongest since Jan. 2. The euro fell 0.2 percent to 162.29 yen, from 162.68.
The dollar has risen 1.8 percent against the euro this week in its longest stretch of weekly gains since February 2006. The U.S. currency has increased 8.3 percent after reaching the record low of $1.6038 on July 15. The dollar is headed for a 0.3 percent advance versus the yen, its second straight weekly increase. The euro is poised for a fourth weekly decline against the yen, dropping 1.6 percent.
The dollar's 5.9 percent rally against the euro this month has led banks to raise their forecasts for the U.S. currency.
Lehman More Bullish
Lehman turned more bullish on the greenback yesterday, predicting it will advance to $1.43 by year-end and $1.40 by the end of March 2009. Goldman Sachs Group Inc. said yesterday the dollar has ``bottomed'' against the euro, predicting it will strengthen to $1.45 per euro in three months.
The median forecast of 38 analysts compiled by Bloomberg News was for the dollar to trade at $1.50 per euro by year-end and $1.40 by the close of 2009.
Sterling fell 0.6 percent to $1.8581 today after touching $1.8512, the lowest level since July 2006. The stretch of daily declines is the longest since at least January 1971. The pound has fallen 2.9 percent this week in the biggest weekly drop since July 2005. The Bank of England cut its forecast for economic growth this week, signaling it may reduce the 5 percent target lending rate.
The euro may also be undermined by Europe's proximity to the conflict between Russia and Georgia, said Firas Askari, head currency trader at BMO Capital Markets in Toronto.
`Boris the Bear'
``Boris the bear may be stretching his claws,'' he said. ``That would be more negative to Europe than the U.S.''
The Dollar Index traded on the ICE futures market, tracking the greenback against the currencies of six U.S. trading partners, reached 77.252 today, the highest since Jan. 22.
Industrial production in the U.S. rose 0.2 percent last month, following a 0.4 percent gain in June, the Federal Reserve reported. The median forecast of 79 economists surveyed by Bloomberg News was for no change.
Europe's gross domestic product fell 0.2 percent in the second quarter, the first contraction since the 15-nation common currency was introduced in 1999, the European Union's statistics office said yesterday. Japan's economy shrank an annualized 2.4 percent in the second quarter, after expanding 3.2 percent in the previous three months, the Cabinet Office said this week.
UBS on ECB
UBS AG said today it no longer expects the European Central Bank to raise the main refinancing rate from 4.25 percent in September as economic growth slowed ``more rapidly than initially expected.'' The Federal Reserve cut its lending target to 2 percent in April.
Crude oil for September delivery declined $1.80 to $113.21 a barrel today, extending its decline to 23 percent since reaching a record $147.27 on July 11. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they move in lockstep.
Two-year U.S. Treasury notes yielded 1.62 percentage points less than comparable-maturity German bunds. When the yield spread was at this level on June 23, the dollar traded at $1.5568 per euro, 9 cents weaker than now.
``The price action does not reflect the interest-rate differential,'' said Lehman's Englander. ``People are cutting their short-dollar positions. Investors hedged their foreign portfolio by shorting the dollar, and we are seeing a lot of these positions unwinding.'' A short is a bet that a currency will decline.
International buying of U.S. financial assets rose in June at the weakest pace since September, as investors sold stocks and demand weakened for corporate bonds. Total net purchases of long-term equities, notes and bonds dropped to $53.4 billion, from a revised $83.2 billion the previous month, the Treasury Department said today in Washington.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net
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Oil Declines as Stronger Dollar Erodes Hedging Appeal of Crude
By Margot Habiby
Aug. 15 (Bloomberg) -- Oil fell more than $3 a barrel in New York to a three-month low as the stronger dollar curbed the appeal of commodities as an inflation hedge.
Oil has tumbled 24 percent from the record $147.27 a barrel reached on July 11. The U.S. Dollar Index in New York, which tracks the currency against six others, rose to its highest since January on speculation U.S. consumer spending will keep the world's biggest economy out of a recession.
``We're taking our cue from the dollar today,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``People were buying commodities against risk in the dollar, war and the economy. The play has been coming off at the same time we're seeing dramatic signs of demand destruction across the globe.''
Crude oil for September delivery fell $3.03, or 2.6 percent, to $111.98 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Oil touched $111.39 a barrel, the lowest since May 1, and has declined 2.9 percent this week.
The dollar index, traded on ICE Futures in New York, was up 0.6 percent to 77.133, its 11th consecutive daily advance.
Gasoline demand was down 2.1 percent in the first seven months of the year as record prices and slower economic growth cut consumer spending, the American Petroleum Institute said Aug. 13. Consumers spent more on gasoline than vehicles and parts for the first time in 26 years in May and June, as U.S. pump prices headed for a record.
Gasoline for September delivery lost 7.8 cents, or 2.7 percent, to $2.8340 a gallon. They're down 1.8 percent this week.
Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.771 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
Global Economy
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, a report showed.
``It's not just a U.S. problem, it's a global problem and it's taking its toll on commodities,'' said Peter Luxton, an energy analyst at Informa Global Markets.
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 yesterday.
``After the Olympics are over, the question is whether demand in the Far East is going to drop off,'' said Gene McGillian, a Tradition Energy analyst in Stamford, Connecticut. ``The market might be reaching the conclusion that some of the measures by the Chinese government to showcase their event are going to be over, and it might start to put a bottom on the market.''
OPEC Report
The global economic outlook led the Organization of Petroleum Exporting Countries to leave its forecast for 2009 oil demand growth unchanged today at the lowest rate in seven years.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today.
``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''
The dollar headed for a fifth weekly gain against the euro, its longest stretch of increases in more than two years. It traded at $1.4701 as of 10:40 a.m. in New York, compared with $1.4826 yesterday. The U.S. currency has risen 2 percent this week.
Dollar Gains
The oil price and the dollar have shown a long-term correlation whereby increases in one coincide with a drop in the other, said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland.
``Oil is still overvalued on the basis of the long-term correlation,'' he said.
Brent crude for October settlement fell $1.60, or 1.4 percent, to $111.04 a barrel on London's ICE Futures Europe exchange.
Crude oil prices may rise next week as U.S. gasoline inventories fall because refineries are cutting output in response to low profit margins.
Nineteen of 30 analysts surveyed by Bloomberg News, or 63 percent, said prices will rise through Aug. 22. It was the most bullish response since December 2006. Seven of the respondents, or 23 percent, said oil will be little changed and four said there would be a drop in prices. Last week 37 percent expected a decline and 34 percent predicted an increase.
September crude oil options expire at the close of trading on the Nymex today. September $110 and $111 puts, which represent the right to sell oil at those prices, were the most actively traded contracts. The $111 put option more than doubled to 20 cents, or $200 a contract, from 8 cents yesterday. One contract is for 1,000 barrels of oil.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
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Aug. 15 (Bloomberg) -- Oil fell more than $3 a barrel in New York to a three-month low as the stronger dollar curbed the appeal of commodities as an inflation hedge.
Oil has tumbled 24 percent from the record $147.27 a barrel reached on July 11. The U.S. Dollar Index in New York, which tracks the currency against six others, rose to its highest since January on speculation U.S. consumer spending will keep the world's biggest economy out of a recession.
``We're taking our cue from the dollar today,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``People were buying commodities against risk in the dollar, war and the economy. The play has been coming off at the same time we're seeing dramatic signs of demand destruction across the globe.''
Crude oil for September delivery fell $3.03, or 2.6 percent, to $111.98 a barrel at 11:07 a.m. on the New York Mercantile Exchange. Oil touched $111.39 a barrel, the lowest since May 1, and has declined 2.9 percent this week.
The dollar index, traded on ICE Futures in New York, was up 0.6 percent to 77.133, its 11th consecutive daily advance.
Gasoline demand was down 2.1 percent in the first seven months of the year as record prices and slower economic growth cut consumer spending, the American Petroleum Institute said Aug. 13. Consumers spent more on gasoline than vehicles and parts for the first time in 26 years in May and June, as U.S. pump prices headed for a record.
Gasoline for September delivery lost 7.8 cents, or 2.7 percent, to $2.8340 a gallon. They're down 1.8 percent this week.
Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.771 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices reached a record $4.114 a gallon on July 17.
Global Economy
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, a report showed.
``It's not just a U.S. problem, it's a global problem and it's taking its toll on commodities,'' said Peter Luxton, an energy analyst at Informa Global Markets.
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 yesterday.
``After the Olympics are over, the question is whether demand in the Far East is going to drop off,'' said Gene McGillian, a Tradition Energy analyst in Stamford, Connecticut. ``The market might be reaching the conclusion that some of the measures by the Chinese government to showcase their event are going to be over, and it might start to put a bottom on the market.''
OPEC Report
The global economic outlook led the Organization of Petroleum Exporting Countries to leave its forecast for 2009 oil demand growth unchanged today at the lowest rate in seven years.
The 13-member group left the rate at 1.03 percent, the narrowest since 2002, even after raising its estimates of daily demand in 2008 and 2009 by 90,000 barrels, according to a monthly oil market report today.
``Risks to the outlook for the world oil market appear to be on the downside,'' OPEC said in the report. ``The outlook for the world economy has deteriorated further as more evidence of a global slowdown emerged.''
The dollar headed for a fifth weekly gain against the euro, its longest stretch of increases in more than two years. It traded at $1.4701 as of 10:40 a.m. in New York, compared with $1.4826 yesterday. The U.S. currency has risen 2 percent this week.
Dollar Gains
The oil price and the dollar have shown a long-term correlation whereby increases in one coincide with a drop in the other, said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland.
``Oil is still overvalued on the basis of the long-term correlation,'' he said.
Brent crude for October settlement fell $1.60, or 1.4 percent, to $111.04 a barrel on London's ICE Futures Europe exchange.
Crude oil prices may rise next week as U.S. gasoline inventories fall because refineries are cutting output in response to low profit margins.
Nineteen of 30 analysts surveyed by Bloomberg News, or 63 percent, said prices will rise through Aug. 22. It was the most bullish response since December 2006. Seven of the respondents, or 23 percent, said oil will be little changed and four said there would be a drop in prices. Last week 37 percent expected a decline and 34 percent predicted an increase.
September crude oil options expire at the close of trading on the Nymex today. September $110 and $111 puts, which represent the right to sell oil at those prices, were the most actively traded contracts. The $111 put option more than doubled to 20 cents, or $200 a contract, from 8 cents yesterday. One contract is for 1,000 barrels of oil.
To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.
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Cotton Falls as Dollar Gain, Slowing Economy May Reduce Demand
By Shruti Date Singh
Aug. 15 (Bloomberg) -- Cotton fell, heading for a third straight weekly drop, on speculation that a weaker economy will slow demand for textiles and clothing as a stronger dollar makes the commodity more expensive for buyers using other currencies.
U.S. retail sales fell in July for the first time in five months, the Commerce Department said this week. The U.S. Dollar Index, a six-currency gauge that includes the euro and yen, rose for the 11th session to the highest level since January. The Reuters/Jefferies CRB Index fell as much as 0.9 percent.
``The dollar rising is generally not good for commodities,'' said Andy Ryan, a risk-management consultant at F.C. Stone LLC in Nashville, Tennessee. ``It's across-the-board selling. It's larger concerns about the economy in general.''
Cotton futures for December delivery fell 0.58 cent, or 0.8 percent, to 68.9 cents a pound at 9:59 a.m. on ICE Futures U.S., the former New York Board of Trade. A close at that price would mark a 0.4 percent drop for the week and leave cotton down 12 percent since the end of June.
To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.
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Aug. 15 (Bloomberg) -- Cotton fell, heading for a third straight weekly drop, on speculation that a weaker economy will slow demand for textiles and clothing as a stronger dollar makes the commodity more expensive for buyers using other currencies.
U.S. retail sales fell in July for the first time in five months, the Commerce Department said this week. The U.S. Dollar Index, a six-currency gauge that includes the euro and yen, rose for the 11th session to the highest level since January. The Reuters/Jefferies CRB Index fell as much as 0.9 percent.
``The dollar rising is generally not good for commodities,'' said Andy Ryan, a risk-management consultant at F.C. Stone LLC in Nashville, Tennessee. ``It's across-the-board selling. It's larger concerns about the economy in general.''
Cotton futures for December delivery fell 0.58 cent, or 0.8 percent, to 68.9 cents a pound at 9:59 a.m. on ICE Futures U.S., the former New York Board of Trade. A close at that price would mark a 0.4 percent drop for the week and leave cotton down 12 percent since the end of June.
To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.
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Coffee Falls as Stronger Dollar May Erode Appeal of Commodities
By Yi Tian
Aug. 15 (Bloomberg) -- Coffee futures fell for the third straight day on speculation the strengthening dollar will reduce the appeal of contracts traded in New York for buyers holding other currencies.
The U.S. Dollar Index, a gauge that includes the euro and yen among six currencies, rose for the 11th straight session, the longest advance since September 1975. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 0.9 percent. Coffee has dropped 2.2 percent this month, while the Dollar Index gained 5.1 percent during the same period.
There is ``an implicit negative relationship'' between the greenback and commodities, Dan Vaught, an analyst with Wachovia Securities LLC, wrote in a report today. It is ``no coincidence'' coffee fell as the dollar strengthened.
Coffee futures for December delivery fell 2.8 cents, or 2 percent, to $1.3625 a pound at 9:28 a.m. on ICE Futures U.S., the former New York Board of Trade. The most-active contract has gained 0.3 percent this week, after losing 3.1 percent last week.
Index funds have reduced stakes in coffee and other futures on the dollar's strength as well as efforts in the U.S. Congress to pass limits on speculation in crude-oil futures.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.
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Aug. 15 (Bloomberg) -- Coffee futures fell for the third straight day on speculation the strengthening dollar will reduce the appeal of contracts traded in New York for buyers holding other currencies.
The U.S. Dollar Index, a gauge that includes the euro and yen among six currencies, rose for the 11th straight session, the longest advance since September 1975. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 0.9 percent. Coffee has dropped 2.2 percent this month, while the Dollar Index gained 5.1 percent during the same period.
There is ``an implicit negative relationship'' between the greenback and commodities, Dan Vaught, an analyst with Wachovia Securities LLC, wrote in a report today. It is ``no coincidence'' coffee fell as the dollar strengthened.
Coffee futures for December delivery fell 2.8 cents, or 2 percent, to $1.3625 a pound at 9:28 a.m. on ICE Futures U.S., the former New York Board of Trade. The most-active contract has gained 0.3 percent this week, after losing 3.1 percent last week.
Index funds have reduced stakes in coffee and other futures on the dollar's strength as well as efforts in the U.S. Congress to pass limits on speculation in crude-oil futures.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.
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Russian Stocks Should Be Bought, Morgan Stanley Says
By Adam Haigh and William Mauldin
Aug. 15 (Bloomberg) -- Investors should add to holdings of Russian stocks as they trade at a significant ``discount,'' and buy Israeli shares because of an ``improved'' earnings outlook, Morgan Stanley said.
Clients should increase their holdings of Russian equities even as the country risks U.S. sanctions and falling commodity prices, Morgan Stanley's head of global emerging markets strategy Jonathan Garner wrote in a note to investors.
Israel was upgraded to ``overweight'' from ``equal-weight'' on higher expectations for earnings growth and ``improved'' political risk after Prime Minister Ehud Olmert last month said he will resign, according to the note dated yesterday. Investors should also add to holdings of Taiwanese stocks.
``The earnings outlook in Russia remains very positive,'' Garner wrote. ``The primary risk at the moment in our opinion lies with possible economic and financial sanctions by the U.S. should Russian troops deploy further in Georgia.''
The brokerage said it was increasing its ``overweight'' on Russia, a position which means it advises investors hold a higher proportion of the stocks than are represented in benchmarks.
The MSCI Russia Index currently trades at a 33 percent discount to the MSCI Emerging Markets Index based on the price of its constituent stocks compared with their estimated earnings, Garner wrote. It's the highest discount Russian stocks have had since the Kremlin's tax claims against OAO Yukos Oil Co. in 2004.
Cathay Financial
U.S. Secretary of State Condoleezza Rice today travels to Tbilisi to lend support to U.S. ally Georgia after a military conflict with Russia began a week ago.
Yukos Oil was declared bankrupt Aug. 1, 2006 after the government had claimed more than $30 billion in back taxes. The company's founder, Mikhail Khodorkovsky, is serving eight years in a Siberian labor camp, while some of his company's oil assets were transferred to state-controlled OAO Rosneft.
In Taiwan, which Morgan Stanley maintains as an ``overweight,'' Garner recommended Cathay Financial Holding Co., the territory's biggest financial-services company by market value, as investment and travel restrictions with mainland China are being ``eased rapidly.''
Morgan Stanley, the second biggest U.S. securities firm, also downgraded Turkish and Indian stocks to ``underweight'' from ``equal-weight'' after a one-month rally.
India, Turkey
``India and Turkey's downgrades follow more than 24 percent outperformance since last month,'' Garner wrote. ``This has led to a reversal of their technically oversold position and a deterioration in valuation rankings.''
Hungarian and Egyptian equities were raised to ``equal- weight'' from ``underweight.'' Garner said valuations in Egypt were ``more appealing'' and Hungarian stocks were ``cheap'' due to recent underperformance. Hungary's benchmark BUX Index trades at 8.01 times earnings, compared with price-to-earnings ratio of 15.7 on the MSCI World Index.
Korean stocks were cut to ``equal-weight'' from ``overweight,'' citing a ``major deterioration'' in earnings outlook.
For related news:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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Aug. 15 (Bloomberg) -- Investors should add to holdings of Russian stocks as they trade at a significant ``discount,'' and buy Israeli shares because of an ``improved'' earnings outlook, Morgan Stanley said.
Clients should increase their holdings of Russian equities even as the country risks U.S. sanctions and falling commodity prices, Morgan Stanley's head of global emerging markets strategy Jonathan Garner wrote in a note to investors.
Israel was upgraded to ``overweight'' from ``equal-weight'' on higher expectations for earnings growth and ``improved'' political risk after Prime Minister Ehud Olmert last month said he will resign, according to the note dated yesterday. Investors should also add to holdings of Taiwanese stocks.
``The earnings outlook in Russia remains very positive,'' Garner wrote. ``The primary risk at the moment in our opinion lies with possible economic and financial sanctions by the U.S. should Russian troops deploy further in Georgia.''
The brokerage said it was increasing its ``overweight'' on Russia, a position which means it advises investors hold a higher proportion of the stocks than are represented in benchmarks.
The MSCI Russia Index currently trades at a 33 percent discount to the MSCI Emerging Markets Index based on the price of its constituent stocks compared with their estimated earnings, Garner wrote. It's the highest discount Russian stocks have had since the Kremlin's tax claims against OAO Yukos Oil Co. in 2004.
Cathay Financial
U.S. Secretary of State Condoleezza Rice today travels to Tbilisi to lend support to U.S. ally Georgia after a military conflict with Russia began a week ago.
Yukos Oil was declared bankrupt Aug. 1, 2006 after the government had claimed more than $30 billion in back taxes. The company's founder, Mikhail Khodorkovsky, is serving eight years in a Siberian labor camp, while some of his company's oil assets were transferred to state-controlled OAO Rosneft.
In Taiwan, which Morgan Stanley maintains as an ``overweight,'' Garner recommended Cathay Financial Holding Co., the territory's biggest financial-services company by market value, as investment and travel restrictions with mainland China are being ``eased rapidly.''
Morgan Stanley, the second biggest U.S. securities firm, also downgraded Turkish and Indian stocks to ``underweight'' from ``equal-weight'' after a one-month rally.
India, Turkey
``India and Turkey's downgrades follow more than 24 percent outperformance since last month,'' Garner wrote. ``This has led to a reversal of their technically oversold position and a deterioration in valuation rankings.''
Hungarian and Egyptian equities were raised to ``equal- weight'' from ``underweight.'' Garner said valuations in Egypt were ``more appealing'' and Hungarian stocks were ``cheap'' due to recent underperformance. Hungary's benchmark BUX Index trades at 8.01 times earnings, compared with price-to-earnings ratio of 15.7 on the MSCI World Index.
Korean stocks were cut to ``equal-weight'' from ``overweight,'' citing a ``major deterioration'' in earnings outlook.
For related news:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
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U.K. Stocks Drop; Anglo American, BHP Billiton Lead Declines
By Adam Haigh and Daniela Silberstein
Aug. 15 (Bloomberg) -- U.K. stocks fell as a drop in copper prices pushed mining shares lower. Anglo American Plc and BHP Billiton Ltd. led the retreat.
British Airways Plc climbed the most in a week as crude headed for its second consecutive weekly decline, boosting the earning outlook for travel and leisure companies.
The FTSE 100 lost 44.5, or 0.8 percent, to 5,452.9 at 12:36 p.m. in London, bringing its drop this week to 0.7 percent. The FTSE All-Share Index fell 0.7 percent today. Ireland's ISEQ Index climbed 0.9 percent.
Anglo American, the world's fourth-largest diversified mining company, slid 4.9 percent to 2,779 pence, while BHP Billiton, the biggest mining company, declined 3.8 percent to 1,522 pence. Copper retreated 1.8 percent to $7,250 a metric ton in London. Nickel, tin and zinc prices also slid.
British Airways, Europe's third-largest airline, rose for the first time in four days, adding 1.5 percent to 257.5 pence.
``If oil prices continue to soften, then further gains may be within reach,'' said Paul Webb, chief dealer at CMC Markets in London.
Oil fell today after the dollar strengthened and Europe's economy contracted. The stronger dollar diminishes the appeal of commodities as a hedge.
Crude for September delivery dropped as much as 1.6 percent to $113.20 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.netDaniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
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Aug. 15 (Bloomberg) -- U.K. stocks fell as a drop in copper prices pushed mining shares lower. Anglo American Plc and BHP Billiton Ltd. led the retreat.
British Airways Plc climbed the most in a week as crude headed for its second consecutive weekly decline, boosting the earning outlook for travel and leisure companies.
The FTSE 100 lost 44.5, or 0.8 percent, to 5,452.9 at 12:36 p.m. in London, bringing its drop this week to 0.7 percent. The FTSE All-Share Index fell 0.7 percent today. Ireland's ISEQ Index climbed 0.9 percent.
Anglo American, the world's fourth-largest diversified mining company, slid 4.9 percent to 2,779 pence, while BHP Billiton, the biggest mining company, declined 3.8 percent to 1,522 pence. Copper retreated 1.8 percent to $7,250 a metric ton in London. Nickel, tin and zinc prices also slid.
British Airways, Europe's third-largest airline, rose for the first time in four days, adding 1.5 percent to 257.5 pence.
``If oil prices continue to soften, then further gains may be within reach,'' said Paul Webb, chief dealer at CMC Markets in London.
Oil fell today after the dollar strengthened and Europe's economy contracted. The stronger dollar diminishes the appeal of commodities as a hedge.
Crude for September delivery dropped as much as 1.6 percent to $113.20 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.netDaniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
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Most European Stocks Rise as Inflation Concern Eases; RBS Gains
By Michael Patterson
Aug. 15 (Bloomberg) -- Most European stocks rose, led by retailers and airlines, as falling commodity prices eased concern that inflation will force central banks to lift interest rates.
Carrefour SA, Ryanair Holdings Plc and Royal Bank of Scotland Group Plc climbed after prices for oil, gold and copper declined. European Aeronautic Defence & Space Co. rallied 5.8 percent as the euro slipped to the lowest since February against the dollar, boosting the value of its overseas sales. The gains were limited as mining companies and oil producers including BHP Billiton Ltd., Rio Tinto Group and BP Plc dropped.
The retreat in commodities ``is good for consumer-related sectors,'' said Matthias Fankhauser, a Zurich-based fund manager at Clariden Leu, which oversees about $120 billion. ``It helps the outlook for inflation. It's also going to help if we have a higher dollar.''
Europe's Dow Jones Stoxx 600 Index was little changed, adding less than 0.1 percent to 285.93 at 3:07 p.m. in London, leaving the gauge down 1.1 percent for the week. More than six stocks advanced for every five that fell today.
The Stoxx 600 lost 21 percent in 2008 after surging commodity prices spurred speculation the European Central Bank would increase its benchmark interest rate for a second time this year even as $500 billion of credit-market losses threaten to prolong the economy's slump.
Stocks trimmed gains after a report showed confidence among U.S. consumers rose less than forecast in August. The Reuters/University of Michigan preliminary index of consumer sentiment increased to 61.7 from 61.2 in July. Economists had forecast a reading of 62, according to a Bloomberg survey.
National Markets
National benchmark indexes climbed in all 14 western European markets that were open except the U.K., where commodity producers led declines. France's CAC 40 added 0.8 percent and Germany's DAX increased 0.1 percent. The U.K.'s FTSE 100 lost 0.5 percent.
Hennes & Mauritz AB jumped after Europe's second-largest clothes retailer reported same-store sales increased more than analysts estimated. Stada Arzneimittel AG rallied 11 percent on a report Teva Pharmaceutical Industries Ltd. is in talks to buy the drugmaker, while Vestas Wind Systems A/S, the world's biggest wind-turbine maker, climbed on higher profit.
The Stoxx 600 earlier rebounded from a brief decline of as much as 0.1 percent after a report showed manufacturing in New York unexpectedly grew in August as the cost of raw materials cooled, making companies more optimistic about the future. The Federal Reserve Bank of New York's general economic index rose to 2.8, the highest level since January, from minus 4.9 a month earlier, the bank said today. A reading of zero is the dividing line between growth and contraction.
Carrefour
Carrefour, Europe's biggest retailer, added 2.2 percent to 36.49 euros. Ryanair, the region's largest discount airline, increased 4.9 percent to 2.76 euros. Royal Bank, the U.K.'s second-largest lender, climbed 1 percent to 232.5 pence.
Crude oil fell 1.8 percent, gold dropped 2.3 percent, silver plunged 7.8 percent and corn dropped 3.4 percent as a rising U.S. currency diminished the appeal of commodities as alternative investments.
Oil has tumbled 23 percent from a record $147.27 a barrel on July 11, helping to send the Reuters/Jefferies CRB Commodity Index to its biggest monthly decline since 1980 in July.
The drop in oil is ``a relief for equities,'' Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co., said in a Bloomberg Television interview. Commodities are ``much lower than the highs, so we will see some easing in the pressure there.''
Rio Tinto
Rio Tinto, the world's third-biggest mining company, dropped 2.4 percent to 4,683 pence. BHP Billiton, the largest, fell 3.3 percent to 1,530 pence. Both stocks have declined more than 25 percent during the past three months in London trading as copper and gold prices tumbled.
BP, Europe's second biggest oil company, fell 1.5 percent to 519.25 pence.
More than $12 trillion has been erased from global equity markets this year as all of the 23 developed nations in the MSCI World Index except for Canada experienced bear-market plunges of 20 percent or more since September.
EADS, which controls planemaker Airbus SAS, gained 5.8 percent to 15.72 euros as the euro dropped to the lowest since Feb. 20 against the dollar.
The U.S. currency is headed for a fifth weekly gain against the euro, its longest winning streak in more than two years.
H&M rallied 2.2 percent to 320.5 kronor. Same-store sales rose 3 percent in July after consumers bought low-priced summer garments including cardigans and polo shirts. That beat the 2.1 percent average estimate of analysts surveyed by SME Direkt.
Stada Arzneimittel
Stada Arzneimittel climbed 11 percent to 35.70 euros after Israel's Globes newspaper said Teva is in talks to acquire Germany's third-largest maker of generic drugs. Stada spokesman Axel Mueller wasn't immediately available for comment. Teva spokeswoman Ayala Miller didn't immediately return a telephone call requesting comment.
Vestas Wind added 5.5 percent to 618 kroner. Second-quarter profit rose 27 percent as surging demand for alternative energy sources raised prices.
Michael Page International Plc slumped 6.2 percent to 314.25 pence. The U.K.'s second-largest recruitment company said it rejected a proposed takeover bid from Adecco SA because it ``materially undervalued the company and its prospects.''
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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Aug. 15 (Bloomberg) -- Most European stocks rose, led by retailers and airlines, as falling commodity prices eased concern that inflation will force central banks to lift interest rates.
Carrefour SA, Ryanair Holdings Plc and Royal Bank of Scotland Group Plc climbed after prices for oil, gold and copper declined. European Aeronautic Defence & Space Co. rallied 5.8 percent as the euro slipped to the lowest since February against the dollar, boosting the value of its overseas sales. The gains were limited as mining companies and oil producers including BHP Billiton Ltd., Rio Tinto Group and BP Plc dropped.
The retreat in commodities ``is good for consumer-related sectors,'' said Matthias Fankhauser, a Zurich-based fund manager at Clariden Leu, which oversees about $120 billion. ``It helps the outlook for inflation. It's also going to help if we have a higher dollar.''
Europe's Dow Jones Stoxx 600 Index was little changed, adding less than 0.1 percent to 285.93 at 3:07 p.m. in London, leaving the gauge down 1.1 percent for the week. More than six stocks advanced for every five that fell today.
The Stoxx 600 lost 21 percent in 2008 after surging commodity prices spurred speculation the European Central Bank would increase its benchmark interest rate for a second time this year even as $500 billion of credit-market losses threaten to prolong the economy's slump.
Stocks trimmed gains after a report showed confidence among U.S. consumers rose less than forecast in August. The Reuters/University of Michigan preliminary index of consumer sentiment increased to 61.7 from 61.2 in July. Economists had forecast a reading of 62, according to a Bloomberg survey.
National Markets
National benchmark indexes climbed in all 14 western European markets that were open except the U.K., where commodity producers led declines. France's CAC 40 added 0.8 percent and Germany's DAX increased 0.1 percent. The U.K.'s FTSE 100 lost 0.5 percent.
Hennes & Mauritz AB jumped after Europe's second-largest clothes retailer reported same-store sales increased more than analysts estimated. Stada Arzneimittel AG rallied 11 percent on a report Teva Pharmaceutical Industries Ltd. is in talks to buy the drugmaker, while Vestas Wind Systems A/S, the world's biggest wind-turbine maker, climbed on higher profit.
The Stoxx 600 earlier rebounded from a brief decline of as much as 0.1 percent after a report showed manufacturing in New York unexpectedly grew in August as the cost of raw materials cooled, making companies more optimistic about the future. The Federal Reserve Bank of New York's general economic index rose to 2.8, the highest level since January, from minus 4.9 a month earlier, the bank said today. A reading of zero is the dividing line between growth and contraction.
Carrefour
Carrefour, Europe's biggest retailer, added 2.2 percent to 36.49 euros. Ryanair, the region's largest discount airline, increased 4.9 percent to 2.76 euros. Royal Bank, the U.K.'s second-largest lender, climbed 1 percent to 232.5 pence.
Crude oil fell 1.8 percent, gold dropped 2.3 percent, silver plunged 7.8 percent and corn dropped 3.4 percent as a rising U.S. currency diminished the appeal of commodities as alternative investments.
Oil has tumbled 23 percent from a record $147.27 a barrel on July 11, helping to send the Reuters/Jefferies CRB Commodity Index to its biggest monthly decline since 1980 in July.
The drop in oil is ``a relief for equities,'' Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co., said in a Bloomberg Television interview. Commodities are ``much lower than the highs, so we will see some easing in the pressure there.''
Rio Tinto
Rio Tinto, the world's third-biggest mining company, dropped 2.4 percent to 4,683 pence. BHP Billiton, the largest, fell 3.3 percent to 1,530 pence. Both stocks have declined more than 25 percent during the past three months in London trading as copper and gold prices tumbled.
BP, Europe's second biggest oil company, fell 1.5 percent to 519.25 pence.
More than $12 trillion has been erased from global equity markets this year as all of the 23 developed nations in the MSCI World Index except for Canada experienced bear-market plunges of 20 percent or more since September.
EADS, which controls planemaker Airbus SAS, gained 5.8 percent to 15.72 euros as the euro dropped to the lowest since Feb. 20 against the dollar.
The U.S. currency is headed for a fifth weekly gain against the euro, its longest winning streak in more than two years.
H&M rallied 2.2 percent to 320.5 kronor. Same-store sales rose 3 percent in July after consumers bought low-priced summer garments including cardigans and polo shirts. That beat the 2.1 percent average estimate of analysts surveyed by SME Direkt.
Stada Arzneimittel
Stada Arzneimittel climbed 11 percent to 35.70 euros after Israel's Globes newspaper said Teva is in talks to acquire Germany's third-largest maker of generic drugs. Stada spokesman Axel Mueller wasn't immediately available for comment. Teva spokeswoman Ayala Miller didn't immediately return a telephone call requesting comment.
Vestas Wind added 5.5 percent to 618 kroner. Second-quarter profit rose 27 percent as surging demand for alternative energy sources raised prices.
Michael Page International Plc slumped 6.2 percent to 314.25 pence. The U.K.'s second-largest recruitment company said it rejected a proposed takeover bid from Adecco SA because it ``materially undervalued the company and its prospects.''
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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