By Steven Bodzin
Aug. 20 (Bloomberg) -- Venezuela approved the ``forced acquisition'' of the shares and property of Cemex SAB's local unit, a day after the national guard, oil workers and Energy and Oil Minister Rafael Ramirez seized the facilities.
Petroleos de Venezuela SA, the state oil company, will take over the cement unit under a decree signed by President Hugo Chavez and published today in the official gazette, the formal record of government actions.
The decree formalizes state ownership of Cemex Venezuela SACA as part of Chavez's move to boost state ownership of the country's most productive industries. Negotiations continue on the takeover of the country's biggest steel mill and third- biggest bank.
Holcim Ltd. this week accepted $552 million and Lafarge SA received $267 million for majority stakes in their units. Mexico's Cemex and the Venezuelan government still disagree over a fair price. Finance Minister Ali Rodriguez said yesterday that shares of the local unit, which trade on the Caracas stock exchange, are worth only $400 million, while the company is demanding $1.2 billion.
Cemex's Venezuelan unit would be worth $1 billion if the government valued it the same as it did Holcim's operations, about $224 per ton of annual production capacity, Nicolai Sebrell, an analyst with Morgan Stanley, wrote in a report yesterday. The Mexican government yesterday called for negotiations between Venezuela and Cemex to continue with ``non- discriminatory treatment.''
Cemex's Venezuela shares were halted at 71 centimos yesterday, giving the unit a market value of 987.2 million bolivars ($459.7 million).
Cemex's American depositary receipts rose 21 cents, or 1 percent, to $20.86 at 11:13 a.m. in New York Stock Exchange composite trading. The shares have fallen 18 percent since Chavez announced the takeover on April 4.
To contact the reporter on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net
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Wednesday, August 20, 2008
Petrobras Will `Need a Miracle' to Hit Output Target, Itau Says
By Paulo Winterstein
Aug. 20 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, will ``need a miracle'' to meet its forecast for production this year, Itau Corretora said, citing July results that ``continue to disappoint.''
Petrobras, as the Rio de Janeiro-based company is known, produced 1.87 million barrels of crude oil and natural-gas liquids per day in Brazil in July, almost unchanged from June, according to data posted on the company's Web site yesterday.
``As the year goes on, the closer we are to seeing another year of production performance lagging behind expectations,'' analyst Paula Kovarsky wrote in a note to investors. ``We probably need a miracle here to meet our target or Petrobras's new guidance figures'' of 1.95 million barrels per day, she wrote.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, will ``need a miracle'' to meet its forecast for production this year, Itau Corretora said, citing July results that ``continue to disappoint.''
Petrobras, as the Rio de Janeiro-based company is known, produced 1.87 million barrels of crude oil and natural-gas liquids per day in Brazil in July, almost unchanged from June, according to data posted on the company's Web site yesterday.
``As the year goes on, the closer we are to seeing another year of production performance lagging behind expectations,'' analyst Paula Kovarsky wrote in a note to investors. ``We probably need a miracle here to meet our target or Petrobras's new guidance figures'' of 1.95 million barrels per day, she wrote.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
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Peru Hydroelectric Plants Guarantee Power Supply, Valdivia Says
By [bn:PRSN=1] Alex Emery []
Aug. 20 (Bloomberg) -- Peru, which had blackouts earlier this month, has enough hydroelectric generating capacity to cover energy demand over the next two years, Energy and Mines Minister Juan Valdivia said.
Peru won't have to ration electricity as reservoirs have enough water to power plants operated by Spain's Endesa SA, the largest generator in the Andean country, Valdivia said in an e- mailed statement.
Endesa's Etevensa power plant was shut for four hours Aug. 7, leaving at least 250,000 Lima homes in the dark. President Alan Garcia met with industry owners last week to push for energy savings after surging economic growth spurred a 12 percent increase in electricity demand in the first half.
Hydroelectric plants operated by Endesa, Duke Energy Corp. and GDF Suez SA generated 67 percent of Peru's electricity through the first half, according to a report on the Ministry's Web site. Electricity output rose 10.3 percent to 2,529 gigawatt-hours in June, the Ministry said.
To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.
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Aug. 20 (Bloomberg) -- Peru, which had blackouts earlier this month, has enough hydroelectric generating capacity to cover energy demand over the next two years, Energy and Mines Minister Juan Valdivia said.
Peru won't have to ration electricity as reservoirs have enough water to power plants operated by Spain's Endesa SA, the largest generator in the Andean country, Valdivia said in an e- mailed statement.
Endesa's Etevensa power plant was shut for four hours Aug. 7, leaving at least 250,000 Lima homes in the dark. President Alan Garcia met with industry owners last week to push for energy savings after surging economic growth spurred a 12 percent increase in electricity demand in the first half.
Hydroelectric plants operated by Endesa, Duke Energy Corp. and GDF Suez SA generated 67 percent of Peru's electricity through the first half, according to a report on the Ministry's Web site. Electricity output rose 10.3 percent to 2,529 gigawatt-hours in June, the Ministry said.
To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net.
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Georgian Ports Run Out of Oil as Troops Block Rails
By Eduard Gismatullin
Aug. 20 (Bloomberg) -- Georgian Black Sea ports are running out of crude and oil-product supplies as Russian troops block railways near the city of Khashuri, a shipping agent said.
Rail transportation will probably resume in three to four days, Vako Kavzharadze, an agent at TeRo Co. Ltd. in the Georgian port of Batumi, said today in an e-mailed statement.
BP Plc, Azerbaijan's national oil company and other exporters halted crude and product exports by rail through Georgia to the Black Sea after a bridge was blown up near the village of Grakali on Aug. 16.
An ``alternative bridge is fixed, however Russian troops blocked the railways near the city of Khashuri,'' about 100 kilometers (60 miles) from Tbilisi, Kavzharadze said.
Anatoly Nogovitsyn, deputy chief of Russia's General Staff, denied the military's involvement in blocking railways and attacking the bridge.
``Why would we block a railway? We haven't done that,'' Nogovitsyn told reporters today in Moscow.
The Baku-Supsa pipeline, which pumps crude from the Azeri capital of Baku to the Georgian port of Supsa, has also been shut on security concerns because of the fighting in Georgia. Russia started withdrawing its troops from Georgia after President Dmitry Medvedev announced the pullout Aug. 17.
The BP-led Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week. The 1 million barrel-a-day link is undergoing tests after it was damaged by a blast and fire on Aug. 5, BTC Co., which operates the line, said today.
Shippers declared force majeure on exports from the Supsa and Ceyhan ports, a legal clause that exempts them from meeting contracts because of circumstances beyond their control.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
Read more...
Aug. 20 (Bloomberg) -- Georgian Black Sea ports are running out of crude and oil-product supplies as Russian troops block railways near the city of Khashuri, a shipping agent said.
Rail transportation will probably resume in three to four days, Vako Kavzharadze, an agent at TeRo Co. Ltd. in the Georgian port of Batumi, said today in an e-mailed statement.
BP Plc, Azerbaijan's national oil company and other exporters halted crude and product exports by rail through Georgia to the Black Sea after a bridge was blown up near the village of Grakali on Aug. 16.
An ``alternative bridge is fixed, however Russian troops blocked the railways near the city of Khashuri,'' about 100 kilometers (60 miles) from Tbilisi, Kavzharadze said.
Anatoly Nogovitsyn, deputy chief of Russia's General Staff, denied the military's involvement in blocking railways and attacking the bridge.
``Why would we block a railway? We haven't done that,'' Nogovitsyn told reporters today in Moscow.
The Baku-Supsa pipeline, which pumps crude from the Azeri capital of Baku to the Georgian port of Supsa, has also been shut on security concerns because of the fighting in Georgia. Russia started withdrawing its troops from Georgia after President Dmitry Medvedev announced the pullout Aug. 17.
The BP-led Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week. The 1 million barrel-a-day link is undergoing tests after it was damaged by a blast and fire on Aug. 5, BTC Co., which operates the line, said today.
Shippers declared force majeure on exports from the Supsa and Ceyhan ports, a legal clause that exempts them from meeting contracts because of circumstances beyond their control.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Goldman Sachs Maintains View That Oil Will Top Record This Year
By Juan Pablo Spinetto and Grant Smith
Aug. 20 (Bloomberg) -- Goldman Sachs Group Inc. repeated its forecast that crude oil prices will rebound to $149 a barrel by the end of the year as supply growth struggles to keep pace with demand from emerging markets.
Goldman maintained its forecast even after oil futures slid $30 from their July 11 record of $147.27 a barrel. Fundamentals of supply and demand are still more important in setting oil prices than investor flows linked to movements in the U.S. dollar, Goldman added.
``We expect declining trend oil supply growth and supportive emerging markets oil demand growth to continue to offset demand weakness'' in developed economies, London-based Goldman analyst Jeffrey Currie said in a report.
Prices will be supported by a combination of disappointments in production outside the Organization of Petroleum Exporting Countries, this month's supply disruption in the Caspian Sea and the absence of any increase in consumers' oil stockpiles during the second quarter, when inventories normally rise, Goldman said.
To contact the reporter on this story: Juan Pablo Spinetto in London at jspinetto@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net
Read more...
Aug. 20 (Bloomberg) -- Goldman Sachs Group Inc. repeated its forecast that crude oil prices will rebound to $149 a barrel by the end of the year as supply growth struggles to keep pace with demand from emerging markets.
Goldman maintained its forecast even after oil futures slid $30 from their July 11 record of $147.27 a barrel. Fundamentals of supply and demand are still more important in setting oil prices than investor flows linked to movements in the U.S. dollar, Goldman added.
``We expect declining trend oil supply growth and supportive emerging markets oil demand growth to continue to offset demand weakness'' in developed economies, London-based Goldman analyst Jeffrey Currie said in a report.
Prices will be supported by a combination of disappointments in production outside the Organization of Petroleum Exporting Countries, this month's supply disruption in the Caspian Sea and the absence of any increase in consumers' oil stockpiles during the second quarter, when inventories normally rise, Goldman said.
To contact the reporter on this story: Juan Pablo Spinetto in London at jspinetto@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net
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Chevron Completes Agreements on Offshore Canada Field
By Joe Carroll
Aug. 20 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, signed agreements to develop an offshore Canadian oil field that was stalled more than two years by an ownership dispute with the provincial government.
Production at the Hebron field, located 340 kilometers (211 miles) off Canada's east coast, is expected to begin in 2016 or 2018 and peak two years later at the equivalent of 150,000 barrels of oil a day, Newfoundland and Labrador Premier Danny Williams said today in a statement.
Chevron is counting on Hebron, which the company called ``key'' to its Canada growth strategy, to help stem declines in production and reserves. The field holds an estimated 400 million to 700 million barrels of recoverable oil, Chevron said in a separate statement, enough to supply every refinery on the U.S. East Coast for up to 16 months.
San Ramon, California-based Chevron plans to use a cement column to attach Hebron's production platform to the sea floor, similar to the design used by Exxon Mobil Corp. for the offshore Hibernia project northwest of Hebron, company spokesman Leif Sollid said today in a telephone interview from St. John's, Newfoundland. The company hasn't updated its C$5 billion ($4.7 billion) cost estimate for Hebron since late 2006, and Sollid said it's too early to give a new projection.
The province of Newfoundland and Labrador estimates development costs at C$4 billion to C$6 billion. Chevron has only five projects worldwide that are expected to cost that much or more, according to a presentation that the company's exploration chief, George Kirkland, gave to analysts in March.
Shares Rise
Chevron is project operator and owns a 26.63 percent stake. Partners include: Exxon Mobil, the largest U.S. oil company, with a 36.04 percent interest; Petro-Canada, whose stake is 22.73 percent; Norway's StatoilHydro ASA, 9.7 percent; and the province's Oil & Gas Corp., 4.9 percent.
Chevron rose 37 cents to $85.08 at 11:58 a.m. in New York Stock Exchange composite trading. Exxon Mobil rose 6 cents to $78.01, and Petro-Canada climbed 68 cents to C$45.85.
Negotiations to develop Hebron, discovered in 1981, collapsed in April 2006 because of disagreements between provincial authorities and the oil companies over ownership stakes. In August 2007, the companies agreed to sell the province a 4.9 percent stake for C$110 million and to pay a 6.5 percent royalty when oil sells for more than $50 a barrel.
Today's signing ceremony in St. John's formalized those arrangements. At current oil prices, Hebron may generate as much as C$28 billion in revenue for the province and C$8 billion for the federal government over the 25-year life of the project, Premier Williams said in the statement.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, signed agreements to develop an offshore Canadian oil field that was stalled more than two years by an ownership dispute with the provincial government.
Production at the Hebron field, located 340 kilometers (211 miles) off Canada's east coast, is expected to begin in 2016 or 2018 and peak two years later at the equivalent of 150,000 barrels of oil a day, Newfoundland and Labrador Premier Danny Williams said today in a statement.
Chevron is counting on Hebron, which the company called ``key'' to its Canada growth strategy, to help stem declines in production and reserves. The field holds an estimated 400 million to 700 million barrels of recoverable oil, Chevron said in a separate statement, enough to supply every refinery on the U.S. East Coast for up to 16 months.
San Ramon, California-based Chevron plans to use a cement column to attach Hebron's production platform to the sea floor, similar to the design used by Exxon Mobil Corp. for the offshore Hibernia project northwest of Hebron, company spokesman Leif Sollid said today in a telephone interview from St. John's, Newfoundland. The company hasn't updated its C$5 billion ($4.7 billion) cost estimate for Hebron since late 2006, and Sollid said it's too early to give a new projection.
The province of Newfoundland and Labrador estimates development costs at C$4 billion to C$6 billion. Chevron has only five projects worldwide that are expected to cost that much or more, according to a presentation that the company's exploration chief, George Kirkland, gave to analysts in March.
Shares Rise
Chevron is project operator and owns a 26.63 percent stake. Partners include: Exxon Mobil, the largest U.S. oil company, with a 36.04 percent interest; Petro-Canada, whose stake is 22.73 percent; Norway's StatoilHydro ASA, 9.7 percent; and the province's Oil & Gas Corp., 4.9 percent.
Chevron rose 37 cents to $85.08 at 11:58 a.m. in New York Stock Exchange composite trading. Exxon Mobil rose 6 cents to $78.01, and Petro-Canada climbed 68 cents to C$45.85.
Negotiations to develop Hebron, discovered in 1981, collapsed in April 2006 because of disagreements between provincial authorities and the oil companies over ownership stakes. In August 2007, the companies agreed to sell the province a 4.9 percent stake for C$110 million and to pay a 6.5 percent royalty when oil sells for more than $50 a barrel.
Today's signing ceremony in St. John's formalized those arrangements. At current oil prices, Hebron may generate as much as C$28 billion in revenue for the province and C$8 billion for the federal government over the 25-year life of the project, Premier Williams said in the statement.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
Read more...
BP-Led Oil Pipeline to Resume Shipments Next Week
By Eduard Gismatullin and Ayla Jean Yackley
Aug. 20 (Bloomberg) -- The BP Plc-led Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will resume tanker loadings next week following fire damage earlier this month.
BP, Europe's second-largest oil company, and other exporters of Azeri oil have been unable to use the 1,768- kilometer (1,100-mile) link since Aug. 5 when a blaze engulfed the pipeline in Erzincan province in northeastern Turkey.
BP, StatoilHydro ASA and partners had to reduce production at oil fields in the Azeri part of the Caspian Sea after flows halted through the pipeline, which has a capacity of 1 million barrels a day, about 1 percent of the world's supply. The military conflict in Georgia also highlighted risks for crude oil and natural gas transportation across the Caucasus.
BTC Co., which operates the link, will start ``testing of the line today before a move to full operation,'' the Turkey- based company said in an e-mailed statement. ``This will involve some limited and intermittent flow of oil through the pipeline.''
Inspection of damage at BTC shows no sign the fire was caused by a bomb, Energy Minister Hilmi Guler said Aug. 18. He denied claims by the Kurdistan Workers' Party, a Kurdish separatist movement in Turkey, that it attacked the link as part of its campaign for autonomy in southeast Turkey.
Shipping Schedule
A statement was sent to transporters so that ``the shipping schedule can be updated today for loadings to begin next week,'' Murat Lecompte, external affairs director for BTC, said in a telephone interview. Repairs are completed and exporters will be putting oil into the pipeline, while the testing will take a few days to complete, he said.
Another pipeline, which pumps 100,000 barrels of crude a day from the Azeri capital of Baku to the Georgian port of Supsa, has been shut on security concerns because of the fighting in Georgia. Shippers declared force majeure on exports from the Supsa and Ceyhan ports, a legal clause that exempts them from meeting contracts because of circumstances beyond their control.
BP and partners also suspended for two days last week natural gas exports from Azerbaijan to Georgia and Turkey through the South Caucasus pipeline. Gas exports from the Shah- Deniz field in the Azeri sector of the Caspian Sea resumed on Aug. 14.
Russian Troops
Russia has started withdrawing its troops from Georgia after President Dmitry Medvedev announced the pullout Aug. 17. Fighting between Georgian and the Russian troops disrupted supplies of about 1.6 million barrels of oil equivalent a day from the Caspian Sea region to world markets, the Moscow-based brokerage Troika Dialog said this month.
BP isn't aware of any damage to any of its pipelines in Georgia because of fighting, Toby Odone, a London-based spokesman at the company, said today by phone.
Georgian Black Sea ports are running out of crude and oil- product supplies also because Russian military troops have blocked rail lines near the city of Khashuri, Vako Kavzharadze, a shipping agent at TeRo Co. Ltd. in the Georgian port of Batumi, said today in an e-mailed statement. Rail transportation will probably resume in three to four days.
BP, State Oil Company of Azerbaijan, or Socar, and other exporters halted crude and product exports by rail through Georgia to the Black Sea after a bridge was blown up near the village of Grakali on Aug. 16.
Rail Links
An ``alternative bridge is fixed, however Russian troops blocked the railways near the city of Khashuri,'' about 100 kilometers (60 miles) from Tbilisi, Kavzharadze said.
Anatoly Nogovitsyn, deputy chief of Russia's General Staff, denied his military was involved in the bridge attack or was blocking railways.
Azerbaijan will also export oil via Iran after routes through Turkey and the Caucasus were disrupted.
Socar awarded a tender for 300,000 tons, or about 2.1 million barrels, of Azeri Light crude for shipping to Iran by early October, an official with the Baku-based company, who declined to be identified, said by phone today.
To contact the reporter on this story: Eduard Gismatullin in London and Ayla Jean Yackley in Istanbul at egismatullin@bloomberg.net
Last Updated: August 20, 2008 08:32 EDT
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Aug. 20 (Bloomberg) -- The BP Plc-led Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will resume tanker loadings next week following fire damage earlier this month.
BP, Europe's second-largest oil company, and other exporters of Azeri oil have been unable to use the 1,768- kilometer (1,100-mile) link since Aug. 5 when a blaze engulfed the pipeline in Erzincan province in northeastern Turkey.
BP, StatoilHydro ASA and partners had to reduce production at oil fields in the Azeri part of the Caspian Sea after flows halted through the pipeline, which has a capacity of 1 million barrels a day, about 1 percent of the world's supply. The military conflict in Georgia also highlighted risks for crude oil and natural gas transportation across the Caucasus.
BTC Co., which operates the link, will start ``testing of the line today before a move to full operation,'' the Turkey- based company said in an e-mailed statement. ``This will involve some limited and intermittent flow of oil through the pipeline.''
Inspection of damage at BTC shows no sign the fire was caused by a bomb, Energy Minister Hilmi Guler said Aug. 18. He denied claims by the Kurdistan Workers' Party, a Kurdish separatist movement in Turkey, that it attacked the link as part of its campaign for autonomy in southeast Turkey.
Shipping Schedule
A statement was sent to transporters so that ``the shipping schedule can be updated today for loadings to begin next week,'' Murat Lecompte, external affairs director for BTC, said in a telephone interview. Repairs are completed and exporters will be putting oil into the pipeline, while the testing will take a few days to complete, he said.
Another pipeline, which pumps 100,000 barrels of crude a day from the Azeri capital of Baku to the Georgian port of Supsa, has been shut on security concerns because of the fighting in Georgia. Shippers declared force majeure on exports from the Supsa and Ceyhan ports, a legal clause that exempts them from meeting contracts because of circumstances beyond their control.
BP and partners also suspended for two days last week natural gas exports from Azerbaijan to Georgia and Turkey through the South Caucasus pipeline. Gas exports from the Shah- Deniz field in the Azeri sector of the Caspian Sea resumed on Aug. 14.
Russian Troops
Russia has started withdrawing its troops from Georgia after President Dmitry Medvedev announced the pullout Aug. 17. Fighting between Georgian and the Russian troops disrupted supplies of about 1.6 million barrels of oil equivalent a day from the Caspian Sea region to world markets, the Moscow-based brokerage Troika Dialog said this month.
BP isn't aware of any damage to any of its pipelines in Georgia because of fighting, Toby Odone, a London-based spokesman at the company, said today by phone.
Georgian Black Sea ports are running out of crude and oil- product supplies also because Russian military troops have blocked rail lines near the city of Khashuri, Vako Kavzharadze, a shipping agent at TeRo Co. Ltd. in the Georgian port of Batumi, said today in an e-mailed statement. Rail transportation will probably resume in three to four days.
BP, State Oil Company of Azerbaijan, or Socar, and other exporters halted crude and product exports by rail through Georgia to the Black Sea after a bridge was blown up near the village of Grakali on Aug. 16.
Rail Links
An ``alternative bridge is fixed, however Russian troops blocked the railways near the city of Khashuri,'' about 100 kilometers (60 miles) from Tbilisi, Kavzharadze said.
Anatoly Nogovitsyn, deputy chief of Russia's General Staff, denied his military was involved in the bridge attack or was blocking railways.
Azerbaijan will also export oil via Iran after routes through Turkey and the Caucasus were disrupted.
Socar awarded a tender for 300,000 tons, or about 2.1 million barrels, of Azeri Light crude for shipping to Iran by early October, an official with the Baku-based company, who declined to be identified, said by phone today.
To contact the reporter on this story: Eduard Gismatullin in London and Ayla Jean Yackley in Istanbul at egismatullin@bloomberg.net
Last Updated: August 20, 2008 08:32 EDT
Read more...
Chevron Completes Agreements on Offshore Canada Field
By Joe Carroll
Aug. 20 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, signed agreements to develop an offshore Canadian oil field that was stalled more than two years by an ownership dispute with the provincial government.
Production at the Hebron field, located 340 kilometers (211 miles) off Canada's east coast, is expected to begin in 2016 or 2018 and peak two years later at the equivalent of 150,000 barrels of oil a day, Newfoundland and Labrador Premier Danny Williams said today in a statement.
Chevron is counting on Hebron, which the company called ``key'' to its Canada growth strategy, to help stem declines in production and reserves. The field holds an estimated 400 million to 700 million barrels of recoverable oil, Chevron said in a separate statement, enough to supply every refinery on the U.S. East Coast for up to 16 months.
San Ramon, California-based Chevron plans to use a cement column to attach Hebron's production platform to the sea floor, similar to the design used by Exxon Mobil Corp. for the offshore Hibernia project northwest of Hebron, company spokesman Leif Sollid said today in a telephone interview from St. John's, Newfoundland. The company hasn't updated its C$5 billion ($4.7 billion) cost estimate for Hebron since late 2006, and Sollid said it's too early to give a new projection.
The province of Newfoundland and Labrador estimates development costs at C$4 billion to C$6 billion. Chevron has only five projects worldwide that are expected to cost that much or more, according to a presentation that the company's exploration chief, George Kirkland, gave to analysts in March.
Shares Rise
Chevron is project operator and owns a 26.63 percent stake. Partners include: Exxon Mobil, the largest U.S. oil company, with a 36.04 percent interest; Petro-Canada, whose stake is 22.73 percent; Norway's StatoilHydro ASA, 9.7 percent; and the province's Oil & Gas Corp., 4.9 percent.
Chevron rose 37 cents to $85.08 at 11:58 a.m. in New York Stock Exchange composite trading. Exxon Mobil rose 6 cents to $78.01, and Petro-Canada climbed 68 cents to C$45.85.
Negotiations to develop Hebron, discovered in 1981, collapsed in April 2006 because of disagreements between provincial authorities and the oil companies over ownership stakes. In August 2007, the companies agreed to sell the province a 4.9 percent stake for C$110 million and to pay a 6.5 percent royalty when oil sells for more than $50 a barrel.
Today's signing ceremony in St. John's formalized those arrangements. At current oil prices, Hebron may generate as much as C$28 billion in revenue for the province and C$8 billion for the federal government over the 25-year life of the project, Premier Williams said in the statement.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, signed agreements to develop an offshore Canadian oil field that was stalled more than two years by an ownership dispute with the provincial government.
Production at the Hebron field, located 340 kilometers (211 miles) off Canada's east coast, is expected to begin in 2016 or 2018 and peak two years later at the equivalent of 150,000 barrels of oil a day, Newfoundland and Labrador Premier Danny Williams said today in a statement.
Chevron is counting on Hebron, which the company called ``key'' to its Canada growth strategy, to help stem declines in production and reserves. The field holds an estimated 400 million to 700 million barrels of recoverable oil, Chevron said in a separate statement, enough to supply every refinery on the U.S. East Coast for up to 16 months.
San Ramon, California-based Chevron plans to use a cement column to attach Hebron's production platform to the sea floor, similar to the design used by Exxon Mobil Corp. for the offshore Hibernia project northwest of Hebron, company spokesman Leif Sollid said today in a telephone interview from St. John's, Newfoundland. The company hasn't updated its C$5 billion ($4.7 billion) cost estimate for Hebron since late 2006, and Sollid said it's too early to give a new projection.
The province of Newfoundland and Labrador estimates development costs at C$4 billion to C$6 billion. Chevron has only five projects worldwide that are expected to cost that much or more, according to a presentation that the company's exploration chief, George Kirkland, gave to analysts in March.
Shares Rise
Chevron is project operator and owns a 26.63 percent stake. Partners include: Exxon Mobil, the largest U.S. oil company, with a 36.04 percent interest; Petro-Canada, whose stake is 22.73 percent; Norway's StatoilHydro ASA, 9.7 percent; and the province's Oil & Gas Corp., 4.9 percent.
Chevron rose 37 cents to $85.08 at 11:58 a.m. in New York Stock Exchange composite trading. Exxon Mobil rose 6 cents to $78.01, and Petro-Canada climbed 68 cents to C$45.85.
Negotiations to develop Hebron, discovered in 1981, collapsed in April 2006 because of disagreements between provincial authorities and the oil companies over ownership stakes. In August 2007, the companies agreed to sell the province a 4.9 percent stake for C$110 million and to pay a 6.5 percent royalty when oil sells for more than $50 a barrel.
Today's signing ceremony in St. John's formalized those arrangements. At current oil prices, Hebron may generate as much as C$28 billion in revenue for the province and C$8 billion for the federal government over the 25-year life of the project, Premier Williams said in the statement.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
Read more...
Copper Gains for Second Day in N.Y. on Chinese Demand Outlook
By Millie Munshi
Aug. 20 (Bloomberg) -- Copper rose for a second day on speculation demand may gain in China, the world's biggest metals buyer.
China's manufacturers, the world's largest copper consumers, may increase imports by about 60 percent, a trader at Bayin Resources Co. said today from Shanghai. The price of the metal has quadrupled since 2003 as miners struggled to keep up with rising demand from the Asian country.
``Watch out for a sharp pick-up in demand'' from China, Alex Heath, the head of base metals trading at RBC Capital Markets in London, said today in a report. ``If we are right, then the fourth quarter could very well see continued recoveries in price for the likes of copper.''
Copper futures for December delivery rose 1 cent, or 0.3 percent, to $3.437 a pound at 9:11 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would leave the metal up 3.9 percent in the past two sessions, the biggest two-day advance since July 2.
Chinese imports of refined copper may jump to between 100,000 metric tons and 120,000 tons a month, said Frank Zhou, deputy manager of Bayin's copper division. Imports were 75,707 tons in June.
Copper's gains through 2010 will be ``aggressive'' as supplies are limited and demand remains strong in China, Citigroup Inc. analyst John H. Hill said in a report this week.
Still, a stronger dollar may reduce demand for commodities as a hedge against inflation and limit today's gains for copper, Heath of RBC said.
The U.S. currency gained as much as 0.6 percent against the euro today. The dollar has climbed more than 8 percent versus the euro in the past month, spurring a 6.7 percent drop in the copper price.
On the London Metal Exchange, copper for delivery in three months gained $54, or 0.7 percent, to $7,630 a metric ton ($3.46 a pound). Before today, the price rose 7.9 percent in the past 12 months.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net
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Aug. 20 (Bloomberg) -- Copper rose for a second day on speculation demand may gain in China, the world's biggest metals buyer.
China's manufacturers, the world's largest copper consumers, may increase imports by about 60 percent, a trader at Bayin Resources Co. said today from Shanghai. The price of the metal has quadrupled since 2003 as miners struggled to keep up with rising demand from the Asian country.
``Watch out for a sharp pick-up in demand'' from China, Alex Heath, the head of base metals trading at RBC Capital Markets in London, said today in a report. ``If we are right, then the fourth quarter could very well see continued recoveries in price for the likes of copper.''
Copper futures for December delivery rose 1 cent, or 0.3 percent, to $3.437 a pound at 9:11 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would leave the metal up 3.9 percent in the past two sessions, the biggest two-day advance since July 2.
Chinese imports of refined copper may jump to between 100,000 metric tons and 120,000 tons a month, said Frank Zhou, deputy manager of Bayin's copper division. Imports were 75,707 tons in June.
Copper's gains through 2010 will be ``aggressive'' as supplies are limited and demand remains strong in China, Citigroup Inc. analyst John H. Hill said in a report this week.
Still, a stronger dollar may reduce demand for commodities as a hedge against inflation and limit today's gains for copper, Heath of RBC said.
The U.S. currency gained as much as 0.6 percent against the euro today. The dollar has climbed more than 8 percent versus the euro in the past month, spurring a 6.7 percent drop in the copper price.
On the London Metal Exchange, copper for delivery in three months gained $54, or 0.7 percent, to $7,630 a metric ton ($3.46 a pound). Before today, the price rose 7.9 percent in the past 12 months.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net
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Norway's Krone Little Changed After OECD Says Rates Should Rise
By Bo Nielsen
Aug. 20 (Bloomberg) -- The Norwegian krone was little changed against the euro after the Organisation for Economic Cooperation and Development said the country's central bank should consider raising interest rates to slow inflation.
The Paris-based OECD forecast the mainland economy will grow 3.25 percent this year, from 6.2 percent in 2007. A government report tomorrow will show the Norwegian economy expanded a seasonally adjusted 0.4 percent in the second quarter, up from 0.2 percent in the previous three months, according to a Bloomberg survey of economists.
``The continuing strength of the economy in early 2008 is certainly a reminder that the danger of overheating will not recede immediately and interest rates may need to go higher,'' the OECD said in an e-mailed report released today.
Norway's currency traded at 7.9554 per euro at 4:19 p.m. in Oslo from 7.9528 yesterday. It fell 0.3 percent to 5.3965 versus the dollar from 5.3824.
Royal Bank of Scotland Group Plc, the fifth-biggest currency trader, recommended investors should buy the krone against the Swedish krona and the British pound in a note sent to investors today.
``Interest-rate cuts in Norway are off the agenda until well into 2009,'' wrote Paul Robson, a currency strategist at RBS in London.
Norway's central bank raised the key rate to 5.75 percent in June and indicated it may lift it to 6 percent to prevent inflation from accelerating. Underlying consumer-price increases rose to a 7 1/2-year high of 2.9 percent in July.
The Swedish krona traded at 6.3774 per dollar, from 6.3654 yesterday, and was at 9.4011 per euro from 9.4062. Iceland's krona fell 0.6 percent to 83.13 per dollar.
Nordic government bonds were mixed. The yield on Sweden's 5.25 percent note due March 2011 rose 2 basis points, or 0.02 percentage point, to 4.26 percent. Norway's 6 percent government note maturing in May 2011 slid 5 basis points to 4.83 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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Aug. 20 (Bloomberg) -- The Norwegian krone was little changed against the euro after the Organisation for Economic Cooperation and Development said the country's central bank should consider raising interest rates to slow inflation.
The Paris-based OECD forecast the mainland economy will grow 3.25 percent this year, from 6.2 percent in 2007. A government report tomorrow will show the Norwegian economy expanded a seasonally adjusted 0.4 percent in the second quarter, up from 0.2 percent in the previous three months, according to a Bloomberg survey of economists.
``The continuing strength of the economy in early 2008 is certainly a reminder that the danger of overheating will not recede immediately and interest rates may need to go higher,'' the OECD said in an e-mailed report released today.
Norway's currency traded at 7.9554 per euro at 4:19 p.m. in Oslo from 7.9528 yesterday. It fell 0.3 percent to 5.3965 versus the dollar from 5.3824.
Royal Bank of Scotland Group Plc, the fifth-biggest currency trader, recommended investors should buy the krone against the Swedish krona and the British pound in a note sent to investors today.
``Interest-rate cuts in Norway are off the agenda until well into 2009,'' wrote Paul Robson, a currency strategist at RBS in London.
Norway's central bank raised the key rate to 5.75 percent in June and indicated it may lift it to 6 percent to prevent inflation from accelerating. Underlying consumer-price increases rose to a 7 1/2-year high of 2.9 percent in July.
The Swedish krona traded at 6.3774 per dollar, from 6.3654 yesterday, and was at 9.4011 per euro from 9.4062. Iceland's krona fell 0.6 percent to 83.13 per dollar.
Nordic government bonds were mixed. The yield on Sweden's 5.25 percent note due March 2011 rose 2 basis points, or 0.02 percentage point, to 4.26 percent. Norway's 6 percent government note maturing in May 2011 slid 5 basis points to 4.83 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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U.K. Pound Declines Against Dollar and Euro After BOE Minutes
By Lukanyo Mnyanda and Andrew MacAskill
Aug. 20 (Bloomberg) -- The U.K. pound fell against the dollar, trading near a two-year low, as the minutes of the Bank of England's last policy meeting showed policy makers judged inflation risks ``probably eased a little'' in the past month.
The currency also dropped for a third day versus the euro as the minutes of the Monetary Policy Committee showed seven policy makers, including Governor Mervyn King, voted to keep borrowing costs unchanged on Aug. 7. Timothy Besley backed an increase, while David Blanchflower favored a reduction. An industry report showed factory orders fell to the lowest level in five months.
``This will keep sterling on the defensive,'' said Daragh Maher, deputy head of global currency strategy at Calyon, the investment-banking unit of Credit Agricole SA. ``They were trying to send a dovish signal to the market and the indications are this is likely to continue in the months to come.''
The pound fell 0.5 percent to $1.8579 by 4:22 p.m. in London, from $1.8670 yesterday. It slipped to $1.8512 Aug. 15, the lowest since July 2006, and may drop to $1.83 in a month, Maher said. The pound was at 79.15 pence per euro, from 79.14.
The U.K. currency declined yesterday after policy maker Besley wrote in the Sun newspaper that increases in food and energy prices will slow, allowing inflation to ease toward the central bank's 2 percent ceiling by the end of 2009.
``The outlook for activity growth had continued to worsen,'' the minutes of the meeting published today showed. Policy makers also said ``some measures of inflation expectations had fallen back in July.'' King said last week there was ``a feeling of chill in the economic air.''
Deteriorating Data
Policy makers' comments continue ``to tell the story that the data outlook is deteriorating,'' said Jeremy Stretch, a senior strategist in London at Rabobank International, the third- largest Dutch bank. ``The prospect for rate cuts are still there.'' The pound may hold at current levels and trade at $1.86 in a month, Stretch predicted.
The Confederation of British Industry said its measure of factory orders was minus 13 in August, compared with minus 8 in July, matching the lowest level since October 2006 and adding to evidence the economy may be headed for recession. A gauge of output-growth expectations fell to minus 13, the lowest since December 2001, from minus 7, the survey showed.
The CBI, the nation's biggest business lobby, polled 603 manufacturers between July 25 and Aug. 13.
Falling House Prices
The pound lost 3 percent against the dollar last week, its biggest five-day drop since the period through July 1, 2005, as traders bet falling house prices will exacerbate the economic slowdown. The central bank kept its benchmark rate at 5 percent this month.
Gilts rose, with the yield on the 10-year bond dropping 3 basis points to 4.56 percent. The 5 percent security due March 2018 gained 0.23, or 2.3 pounds per 1,000-pound face amount, to 103.37. The yield on the two-year gilt, which is more sensitive to the outlook for interest rates, dropped 1 basis point to 4.55 percent. Bond yields move inversely to prices.
The spread between U.K. government bonds and their German counterparts has narrowed as traders bet the end of a decade-long rally in the nation's housing market will persuade policy makers to cut interest rates. The 10-year gilt yielded 43 basis points more than the German bund, down from 69 basis points on Feb. 25, the widest this year.
U.K. bonds have outperformed their European counterparts in the past three months as evidence the economic slowdown is deepening prompted investors to remove wagers on rate increases. The implied yield on the March short-sterling futures contract was at 5.16 percent, from 5.44 percent at the end of July.
The nation's bonds have returned 2.4 percent in the past three months, compared with 1.2 percent from their European counterparts, according to Merrill Lynch & Co.'s EMU Direct Government and U.K. Gilts Master indexes.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
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Aug. 20 (Bloomberg) -- The U.K. pound fell against the dollar, trading near a two-year low, as the minutes of the Bank of England's last policy meeting showed policy makers judged inflation risks ``probably eased a little'' in the past month.
The currency also dropped for a third day versus the euro as the minutes of the Monetary Policy Committee showed seven policy makers, including Governor Mervyn King, voted to keep borrowing costs unchanged on Aug. 7. Timothy Besley backed an increase, while David Blanchflower favored a reduction. An industry report showed factory orders fell to the lowest level in five months.
``This will keep sterling on the defensive,'' said Daragh Maher, deputy head of global currency strategy at Calyon, the investment-banking unit of Credit Agricole SA. ``They were trying to send a dovish signal to the market and the indications are this is likely to continue in the months to come.''
The pound fell 0.5 percent to $1.8579 by 4:22 p.m. in London, from $1.8670 yesterday. It slipped to $1.8512 Aug. 15, the lowest since July 2006, and may drop to $1.83 in a month, Maher said. The pound was at 79.15 pence per euro, from 79.14.
The U.K. currency declined yesterday after policy maker Besley wrote in the Sun newspaper that increases in food and energy prices will slow, allowing inflation to ease toward the central bank's 2 percent ceiling by the end of 2009.
``The outlook for activity growth had continued to worsen,'' the minutes of the meeting published today showed. Policy makers also said ``some measures of inflation expectations had fallen back in July.'' King said last week there was ``a feeling of chill in the economic air.''
Deteriorating Data
Policy makers' comments continue ``to tell the story that the data outlook is deteriorating,'' said Jeremy Stretch, a senior strategist in London at Rabobank International, the third- largest Dutch bank. ``The prospect for rate cuts are still there.'' The pound may hold at current levels and trade at $1.86 in a month, Stretch predicted.
The Confederation of British Industry said its measure of factory orders was minus 13 in August, compared with minus 8 in July, matching the lowest level since October 2006 and adding to evidence the economy may be headed for recession. A gauge of output-growth expectations fell to minus 13, the lowest since December 2001, from minus 7, the survey showed.
The CBI, the nation's biggest business lobby, polled 603 manufacturers between July 25 and Aug. 13.
Falling House Prices
The pound lost 3 percent against the dollar last week, its biggest five-day drop since the period through July 1, 2005, as traders bet falling house prices will exacerbate the economic slowdown. The central bank kept its benchmark rate at 5 percent this month.
Gilts rose, with the yield on the 10-year bond dropping 3 basis points to 4.56 percent. The 5 percent security due March 2018 gained 0.23, or 2.3 pounds per 1,000-pound face amount, to 103.37. The yield on the two-year gilt, which is more sensitive to the outlook for interest rates, dropped 1 basis point to 4.55 percent. Bond yields move inversely to prices.
The spread between U.K. government bonds and their German counterparts has narrowed as traders bet the end of a decade-long rally in the nation's housing market will persuade policy makers to cut interest rates. The 10-year gilt yielded 43 basis points more than the German bund, down from 69 basis points on Feb. 25, the widest this year.
U.K. bonds have outperformed their European counterparts in the past three months as evidence the economic slowdown is deepening prompted investors to remove wagers on rate increases. The implied yield on the March short-sterling futures contract was at 5.16 percent, from 5.44 percent at the end of July.
The nation's bonds have returned 2.4 percent in the past three months, compared with 1.2 percent from their European counterparts, according to Merrill Lynch & Co.'s EMU Direct Government and U.K. Gilts Master indexes.
To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
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Latin America Currencies: Chile Peso Declines as Copper Sinks
By Drew Benson
Aug. 20 (Bloomberg) -- Chile's peso declined as a slide in copper, the country's biggest export, threatened to curb dollar inflows.
The peso fell for a third day, weakening 0.3 percent to 522.67 per dollar at 12:20 p.m. New York time, from 521.21 yesterday. The peso is down 5 percent in the past month.
Copper futures for December delivery dropped 1 percent today on the Comex division of the New York Mercantile Exchange. An advance in the dollar against most major currencies spilled over into Latin American markets, said Dustin Reid, senior currency strategist with ABN Amro Bank NV in Chicago.
``People are buying dollars across the board, and pretty aggressively,'' Reid said. ``The dollar is up significantly against most of the G-10 and Latin American currency reaction is mostly carryover from that.''
The yield on a basket of five-year Chilean peso bonds in inflation-linked currency units slid 6 basis points to 2.95 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net
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Aug. 20 (Bloomberg) -- Chile's peso declined as a slide in copper, the country's biggest export, threatened to curb dollar inflows.
The peso fell for a third day, weakening 0.3 percent to 522.67 per dollar at 12:20 p.m. New York time, from 521.21 yesterday. The peso is down 5 percent in the past month.
Copper futures for December delivery dropped 1 percent today on the Comex division of the New York Mercantile Exchange. An advance in the dollar against most major currencies spilled over into Latin American markets, said Dustin Reid, senior currency strategist with ABN Amro Bank NV in Chicago.
``People are buying dollars across the board, and pretty aggressively,'' Reid said. ``The dollar is up significantly against most of the G-10 and Latin American currency reaction is mostly carryover from that.''
The yield on a basket of five-year Chilean peso bonds in inflation-linked currency units slid 6 basis points to 2.95 percent, according to Bloomberg composite prices.
To contact the reporter on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net
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Euro Falls to Near Six-Month Low on German Outlook, Drop in Oil
By Ye Xie and Cordell Eddings
Enlarge Image/Details
Aug. 20 (Bloomberg) -- The euro fell to near the lowest level against the dollar in six months as Germany's economic outlook deteriorated and crude oil prices declined.
The pound approached a two-year low versus the dollar as minutes of the Bank of England's August meeting indicated British inflation risks may have ``eased a little'' while the outlook for the economy worsened. The dollar has risen 8 percent versus the euro from the record low set in July.
``The market was waiting for a big correction after such a massive dollar rally, but they never got it,'' said Steve Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. ``People are pessimistic about European growth. They are coming back to buy the dollar on a dip.''
Against the dollar, the euro decreased 0.6 percent to $1.4695 at 12:02 p.m. in New York, from $1.4776 yesterday, when it touched $1.4631, the lowest level since Feb. 20. It reached the record high of $1.6038 on July 15. The currency fell 0.3 percent to 161.66 yen, from 162.13 yesterday, when it touched 160.87, the weakest level in three months. The dollar increased 0.2 percent to 109.98 yen, from 109.72.
The British pound dropped 0.4 percent to $1.8601 on the Bank of England's economic outlook, after touching $1.8512 on Aug. 15, the lowest level since July 2006.
BOE policy makers split three ways when they kept the target lending rate unchanged earlier this month, minutes of the Aug. 7 meeting showed today. Governor Mervyn King and six other members of the Monetary Policy Committee held the benchmark at 5 percent, while one official voted for a rate increase and another called for a cut to help sustain growth.
Freddie Mac
Crude oil fell 0.5 percent to $113.95 a barrel, reversing an earlier gain, after an U.S. Energy Department report showed a bigger-than-forecast increase in U.S. inventories. 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.
The dollar has traded in a range of $1.46 to $1.48 per euro this week after advancing for five consecutive weeks, the longest stretch of gains since February 2006.
``We are in a consolidation period,'' said Tyson Wright, a senior currency trader in Victoria, British Columbia, at Custom House, a currency brokerage with 50,000 corporate accounts. ``The sentiment is still for a stronger U.S. dollar.''
The dollar briefly erased its gain versus the yen after the Wall Street Journal reported that executives of mortgage-finance company Freddie Mac are scheduled to meet with U.S. Treasury Department officials today.
`Unsettling News'
``To the extent that you get further unsettling news on the financial side, that will cause a turnaround and lead to more softening for the U.S. dollar,'' said Michael Gregory, a senior economist at the Bank of Montreal in Toronto.
Futures on the Chicago Board of Trade show a 21 percent chance the U.S. central bank will raise the 2 percent target rate for overnight lending between banks by at least a quarter- point by its Dec. 16 meeting, down from 35 percent odds a week earlier. Policy makers next meet Sept. 16.
The euro fell 0.6 percent to 2.3855 Brazilian reais and 0.5 percent to 14.8998 Mexican pesos as Germany's Economy Ministry said in its monthly report that growth will remain moderate.
The country's BDB banking association said it no longer expects the economy to expand between 2.25 percent and 2.50 percent this year, and will lower its growth forecast on Sept. 18. German gross domestic product shrank 0.5 percent in the second quarter, the first contraction in four years.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Cordell Eddings in New York at ceddings@bloomberg.net;
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Enlarge Image/Details
Aug. 20 (Bloomberg) -- The euro fell to near the lowest level against the dollar in six months as Germany's economic outlook deteriorated and crude oil prices declined.
The pound approached a two-year low versus the dollar as minutes of the Bank of England's August meeting indicated British inflation risks may have ``eased a little'' while the outlook for the economy worsened. The dollar has risen 8 percent versus the euro from the record low set in July.
``The market was waiting for a big correction after such a massive dollar rally, but they never got it,'' said Steve Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. ``People are pessimistic about European growth. They are coming back to buy the dollar on a dip.''
Against the dollar, the euro decreased 0.6 percent to $1.4695 at 12:02 p.m. in New York, from $1.4776 yesterday, when it touched $1.4631, the lowest level since Feb. 20. It reached the record high of $1.6038 on July 15. The currency fell 0.3 percent to 161.66 yen, from 162.13 yesterday, when it touched 160.87, the weakest level in three months. The dollar increased 0.2 percent to 109.98 yen, from 109.72.
The British pound dropped 0.4 percent to $1.8601 on the Bank of England's economic outlook, after touching $1.8512 on Aug. 15, the lowest level since July 2006.
BOE policy makers split three ways when they kept the target lending rate unchanged earlier this month, minutes of the Aug. 7 meeting showed today. Governor Mervyn King and six other members of the Monetary Policy Committee held the benchmark at 5 percent, while one official voted for a rate increase and another called for a cut to help sustain growth.
Freddie Mac
Crude oil fell 0.5 percent to $113.95 a barrel, reversing an earlier gain, after an U.S. Energy Department report showed a bigger-than-forecast increase in U.S. inventories. 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.
The dollar has traded in a range of $1.46 to $1.48 per euro this week after advancing for five consecutive weeks, the longest stretch of gains since February 2006.
``We are in a consolidation period,'' said Tyson Wright, a senior currency trader in Victoria, British Columbia, at Custom House, a currency brokerage with 50,000 corporate accounts. ``The sentiment is still for a stronger U.S. dollar.''
The dollar briefly erased its gain versus the yen after the Wall Street Journal reported that executives of mortgage-finance company Freddie Mac are scheduled to meet with U.S. Treasury Department officials today.
`Unsettling News'
``To the extent that you get further unsettling news on the financial side, that will cause a turnaround and lead to more softening for the U.S. dollar,'' said Michael Gregory, a senior economist at the Bank of Montreal in Toronto.
Futures on the Chicago Board of Trade show a 21 percent chance the U.S. central bank will raise the 2 percent target rate for overnight lending between banks by at least a quarter- point by its Dec. 16 meeting, down from 35 percent odds a week earlier. Policy makers next meet Sept. 16.
The euro fell 0.6 percent to 2.3855 Brazilian reais and 0.5 percent to 14.8998 Mexican pesos as Germany's Economy Ministry said in its monthly report that growth will remain moderate.
The country's BDB banking association said it no longer expects the economy to expand between 2.25 percent and 2.50 percent this year, and will lower its growth forecast on Sept. 18. German gross domestic product shrank 0.5 percent in the second quarter, the first contraction in four years.
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Cordell Eddings in New York at ceddings@bloomberg.net;
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Mexico's Peso Trades Near Highest in More Than Week on Rates
By Valerie Rota
Aug. 20 (Bloomberg) -- Mexico's peso traded near the strongest in more than a week on speculation the biggest gap in three years between Mexican and U.S. benchmark lending rates will hold through year-end.
The peso traded at 10.1290 per dollar at 10:46 a.m. New York time, compared with 10.1325 yesterday. It touched 10.1128, the strongest since Aug. 8.
The currency has risen 7.6 percent this year as three interest-rate increases by Banco de Mexico have swelled the yield differential between the Mexican and U.S. benchmark rates to 6.25 percentage points, the widest since 2005, luring investment to the nation's securities.
Interest-rate futures show traders see a 77 percent chance the Federal Reserve will keep the 2 percent target rate for overnight lending between banks unchanged through December, compared with 21 percent odds a month ago.
Banco de Mexico will maintain borrowing costs at 8.25 percent through the end of the year, according to the median forecast of 21 analysts in a survey published by Citigroup Inc.'s Banamex unit this week.
Yields on Mexico's 10 percent bond due in December 2024 fell less than 1 basis point, or 0.01 percentage point, to 8.63 percent. The bond's price rose 0.04 centavo to 111.92 centavos per peso, according to Banco Santander SA.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net
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Aug. 20 (Bloomberg) -- Mexico's peso traded near the strongest in more than a week on speculation the biggest gap in three years between Mexican and U.S. benchmark lending rates will hold through year-end.
The peso traded at 10.1290 per dollar at 10:46 a.m. New York time, compared with 10.1325 yesterday. It touched 10.1128, the strongest since Aug. 8.
The currency has risen 7.6 percent this year as three interest-rate increases by Banco de Mexico have swelled the yield differential between the Mexican and U.S. benchmark rates to 6.25 percentage points, the widest since 2005, luring investment to the nation's securities.
Interest-rate futures show traders see a 77 percent chance the Federal Reserve will keep the 2 percent target rate for overnight lending between banks unchanged through December, compared with 21 percent odds a month ago.
Banco de Mexico will maintain borrowing costs at 8.25 percent through the end of the year, according to the median forecast of 21 analysts in a survey published by Citigroup Inc.'s Banamex unit this week.
Yields on Mexico's 10 percent bond due in December 2024 fell less than 1 basis point, or 0.01 percentage point, to 8.63 percent. The bond's price rose 0.04 centavo to 111.92 centavos per peso, according to Banco Santander SA.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net
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Cocoa Falls in New York, Halts 2-Day Rally, as Dollar Rebounds
By Shruti Date Singh
Aug. 20 (Bloomberg) -- Cocoa fell in New York, halting a two-day rally, as the dollar's rally made the commodity more expensive for buyers holding other currencies.
An index measuring the dollar against six currencies rose as much as 0.5 percent today, rebounding from a 0.4 percent drop the previous two days that helped send cocoa up 3.3 percent. The British pound, used to trade cocoa in London, has dropped 6.1 percent against the U.S. currency this month.
``Cocoa is driving itself on the changes in the U.S. dollar,'' said Hector Galvan, a senior market strategist for RJO Futures in Chicago.
Cocoa futures for December delivery fell $11, or 0.4 percent, to $2,660 a metric ton at 10:12 a.m. on ICE Futures U.S., the former New York Board of Trade. Cocoa earlier today rose as much as 1.1 percent while the dollar was down as much 0.2 percent.
Through yesterday, cocoa dropped 16 percent since the end of June as the dollar index rose 6 percent.
To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.
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Aug. 20 (Bloomberg) -- Cocoa fell in New York, halting a two-day rally, as the dollar's rally made the commodity more expensive for buyers holding other currencies.
An index measuring the dollar against six currencies rose as much as 0.5 percent today, rebounding from a 0.4 percent drop the previous two days that helped send cocoa up 3.3 percent. The British pound, used to trade cocoa in London, has dropped 6.1 percent against the U.S. currency this month.
``Cocoa is driving itself on the changes in the U.S. dollar,'' said Hector Galvan, a senior market strategist for RJO Futures in Chicago.
Cocoa futures for December delivery fell $11, or 0.4 percent, to $2,660 a metric ton at 10:12 a.m. on ICE Futures U.S., the former New York Board of Trade. Cocoa earlier today rose as much as 1.1 percent while the dollar was down as much 0.2 percent.
Through yesterday, cocoa dropped 16 percent since the end of June as the dollar index rose 6 percent.
To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.
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East European Currencies: Hungarian Forint Rises on Stock Gains
By Emma O'Brien and Ewa Krukowska
Aug. 20 (Bloomberg) -- Hungary's forint advanced as rising stocks in Europe and Asia gave investors confidence to buy higher-yielding emerging-market assets. The Polish zloty rose.
The NTX Index of the 30 largest publicly traded companies in central and Eastern Europe rose 0.5 percent today, the biggest gain in three weeks. An interest rate of 8.5 percent in Hungary and 6 percent in Poland make the currencies a target for the carry trade, where investors borrow funds in countries with lower rates of interest and invest them where returns are higher.
``Equities are seen as a bellwether for risk appetite and when they are up riskier assets in emerging markets do better,'' said Lucy Bethell, an emerging-markets currency strategist in London at Royal Bank of Scotland Group Plc, the world's fourth- largest currency trader. ``The whole region is doing better today and that fits with the bounce in global sentiment.''
The forint rose as much as 0.9 percent to a two-week high of 233.35 against the euro and traded at 233.5 by 5:12 p.m. in Budapest.
Hungary and Poland have been raising interest rates to more than three-year highs to curb inflation. Hungarian rates have increased one percentage point this year. Poland's benchmark has been lifted eight times since April 2007.
Zloty Gains
The zloty advanced to 3.3135 per euro, from 3.3197. It is the best-performing European emerging-market currency against the euro over the past year, gaining 15.7 percent.
Poland's industrial output increased an annual 5.6 percent, compared with 7.3 percent in June and 7.5 percent expected by analysts, a report by the statistical office showed today. Producer prices gained an annual 2.3 percent in July.
Slower output growth might have been caused by the strength of the zloty, which harmed exports, and an economic slowdown in the European Union, Deputy Finance Minister Katarzyna Zajdel- Kurowska said in an e-mailed statement.
``The slowdown in industrial production and in producer prices are further arguments for keeping interest rates on hold at next week's Monetary Policy Council meeting,'' Lars Christensen, chief analyst at Danske Bank in Copenhagen, wrote in a client note today. ``The monetary tightening cycle in Poland has come to an end.''
Elsewhere, the Czech koruna declined 0.1 percent to 24.405 per euro, while Slovakia's koruna held steady at 30.316. The Romanian leu slipped 0.1 percent to 3.5245 per euro.
Turkey's lira dropped 0.2 percent to 1.1932 against the dollar, its fourth straight decline. A decision by the country's top administrative court yesterday to halt government plans to sell the rights to operate highways and bridges is potentially negative for the currency, RBS's Bethell said.
``The roads decision is a bit disappointing,'' she said. ``The lira is struggling more than it has done. Turkey's currency has lost almost 2 percent to the dollar so far this year.
To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.netEwa Krukowska in Warsaw at ekrukowska@bloomberg.net;
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Aug. 20 (Bloomberg) -- Hungary's forint advanced as rising stocks in Europe and Asia gave investors confidence to buy higher-yielding emerging-market assets. The Polish zloty rose.
The NTX Index of the 30 largest publicly traded companies in central and Eastern Europe rose 0.5 percent today, the biggest gain in three weeks. An interest rate of 8.5 percent in Hungary and 6 percent in Poland make the currencies a target for the carry trade, where investors borrow funds in countries with lower rates of interest and invest them where returns are higher.
``Equities are seen as a bellwether for risk appetite and when they are up riskier assets in emerging markets do better,'' said Lucy Bethell, an emerging-markets currency strategist in London at Royal Bank of Scotland Group Plc, the world's fourth- largest currency trader. ``The whole region is doing better today and that fits with the bounce in global sentiment.''
The forint rose as much as 0.9 percent to a two-week high of 233.35 against the euro and traded at 233.5 by 5:12 p.m. in Budapest.
Hungary and Poland have been raising interest rates to more than three-year highs to curb inflation. Hungarian rates have increased one percentage point this year. Poland's benchmark has been lifted eight times since April 2007.
Zloty Gains
The zloty advanced to 3.3135 per euro, from 3.3197. It is the best-performing European emerging-market currency against the euro over the past year, gaining 15.7 percent.
Poland's industrial output increased an annual 5.6 percent, compared with 7.3 percent in June and 7.5 percent expected by analysts, a report by the statistical office showed today. Producer prices gained an annual 2.3 percent in July.
Slower output growth might have been caused by the strength of the zloty, which harmed exports, and an economic slowdown in the European Union, Deputy Finance Minister Katarzyna Zajdel- Kurowska said in an e-mailed statement.
``The slowdown in industrial production and in producer prices are further arguments for keeping interest rates on hold at next week's Monetary Policy Council meeting,'' Lars Christensen, chief analyst at Danske Bank in Copenhagen, wrote in a client note today. ``The monetary tightening cycle in Poland has come to an end.''
Elsewhere, the Czech koruna declined 0.1 percent to 24.405 per euro, while Slovakia's koruna held steady at 30.316. The Romanian leu slipped 0.1 percent to 3.5245 per euro.
Turkey's lira dropped 0.2 percent to 1.1932 against the dollar, its fourth straight decline. A decision by the country's top administrative court yesterday to halt government plans to sell the rights to operate highways and bridges is potentially negative for the currency, RBS's Bethell said.
``The roads decision is a bit disappointing,'' she said. ``The lira is struggling more than it has done. Turkey's currency has lost almost 2 percent to the dollar so far this year.
To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.netEwa Krukowska in Warsaw at ekrukowska@bloomberg.net;
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Brazil Real Rises as Stock Gains Boost Appeal of Higher Yields
By Adriana Brasileiro
Aug. 20 (Bloomberg) -- Brazil's real strengthened for a second day as gains in local stocks attracted investors to higher-yielding emerging-market assets.
``There's a more positive sentiment in stock markets today, so investors are less apprehensive about buying riskier assets,'' said Sergio Machado, a partner at Vetorial Asset Management in Sao Paulo.
The real rose 0.3 percent to 1.6180 per dollar at 9:48 a.m. New York time, from 1.6234 yesterday. The real has declined 3.2 percent this month, paring its advance this year to 10 percent.
Brazil's Bovespa stock index jumped 1.8 percent, led by financial shares and Cia. Vale do Rio Doce, the world's biggest producer of iron ore.
The yield on Brazil's zero-coupon bonds due in January 2010 rose 2 basis points, or 0.02 percentage point, to 14.70 percent, according to Banco Votorantim. The yield on the overnight interest futures contract for January delivery increased 2 basis points to 13.81 percent.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net
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Aug. 20 (Bloomberg) -- Brazil's real strengthened for a second day as gains in local stocks attracted investors to higher-yielding emerging-market assets.
``There's a more positive sentiment in stock markets today, so investors are less apprehensive about buying riskier assets,'' said Sergio Machado, a partner at Vetorial Asset Management in Sao Paulo.
The real rose 0.3 percent to 1.6180 per dollar at 9:48 a.m. New York time, from 1.6234 yesterday. The real has declined 3.2 percent this month, paring its advance this year to 10 percent.
Brazil's Bovespa stock index jumped 1.8 percent, led by financial shares and Cia. Vale do Rio Doce, the world's biggest producer of iron ore.
The yield on Brazil's zero-coupon bonds due in January 2010 rose 2 basis points, or 0.02 percentage point, to 14.70 percent, according to Banco Votorantim. The yield on the overnight interest futures contract for January delivery increased 2 basis points to 13.81 percent.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net
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Orange Juice Gains on Speculation Storm-Driven Slump Overdone
By Yi Tian
Aug. 20 (Bloomberg) -- Orange juice rose on speculation yesterday's slump went too far, amid predictions of a major crop decline in Florida, the world's largest grower of the citrus fruit after Brazil.
Orange-juice futures fell the most in three weeks yesterday after Tropical Storm Fay failed to reach hurricane strength over Florida's citrus groves. Crop forecaster Elizabeth Steger last week projected a 150 million-box harvest in the new season, a 12 percent drop from the previous year.
``There was so much disappointment yesterday and the market sold off too low,'' said James Cordier, a portfolio manager at OptionSellers.com in Tampa, Florida. Fay weakened as it moved north along Florida's eastern coast today, forecasters said.
Orange-juice futures for November delivery rose 3.1 cents, or 3 percent, to $1.0765 a pound at 10:57 a.m. on ICE Futures U.S., the former New York Board of Trade. Yesterday, most-active futures fell 3.8 percent, the biggest drop since July 24.
``The market was overdone on the downside -- we're recouping some of that today,'' Cordier said. He said prices may stay ``slightly higher'' tomorrow.
Florida's production fell to a 17-year low of 129 million boxes in the marketing year through June 2007 after high winds and heavy rain battered citrus trees and spread diseases in 2004 and 2005, according to the U.S. Department of Agriculture. The orange crop rebounded to almost 170 million boxes this season, the USDA estimates. A box weighs 90 pounds (41 kilograms).
Steger, the founder of Citrus Consulting International Inc. in Kissimmee, Florida, cited a lower tree count and a decrease in yields for her forecast for the season that starts in October. Louis Dreyfus Citrus Inc. of Winter Garden, Florida, said the crop may fall 8.2 percent to 156 million boxes.
``We're going to have a large decrease in production,'' Cordier said, which should support higher futures prices.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Orange juice rose on speculation yesterday's slump went too far, amid predictions of a major crop decline in Florida, the world's largest grower of the citrus fruit after Brazil.
Orange-juice futures fell the most in three weeks yesterday after Tropical Storm Fay failed to reach hurricane strength over Florida's citrus groves. Crop forecaster Elizabeth Steger last week projected a 150 million-box harvest in the new season, a 12 percent drop from the previous year.
``There was so much disappointment yesterday and the market sold off too low,'' said James Cordier, a portfolio manager at OptionSellers.com in Tampa, Florida. Fay weakened as it moved north along Florida's eastern coast today, forecasters said.
Orange-juice futures for November delivery rose 3.1 cents, or 3 percent, to $1.0765 a pound at 10:57 a.m. on ICE Futures U.S., the former New York Board of Trade. Yesterday, most-active futures fell 3.8 percent, the biggest drop since July 24.
``The market was overdone on the downside -- we're recouping some of that today,'' Cordier said. He said prices may stay ``slightly higher'' tomorrow.
Florida's production fell to a 17-year low of 129 million boxes in the marketing year through June 2007 after high winds and heavy rain battered citrus trees and spread diseases in 2004 and 2005, according to the U.S. Department of Agriculture. The orange crop rebounded to almost 170 million boxes this season, the USDA estimates. A box weighs 90 pounds (41 kilograms).
Steger, the founder of Citrus Consulting International Inc. in Kissimmee, Florida, cited a lower tree count and a decrease in yields for her forecast for the season that starts in October. Louis Dreyfus Citrus Inc. of Winter Garden, Florida, said the crop may fall 8.2 percent to 156 million boxes.
``We're going to have a large decrease in production,'' Cordier said, which should support higher futures prices.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.
Read more...
Canadian: June Retail Sales a Gas, Gas, Gas
Daily Forex Fundamentals | Written by TD Bank Financial Group | Aug 20 08 15:43 GMT |
* Soaring gasoline prices send nominal retail sales up 0.5% in June
* Holding prices constant, retail sales fell by 0.4%.
As expected, nominal retail sales rose by 0.5% in June. However, it wasn't that Canadians were buying a lot more things in the month; instead we were paying more for what we bought - especially to fill up our vehicles. Excluding the impact of rising prices, retail sales fell in June by 0.4%.
Rising gas prices pushed up sales at gas stations a whopping 4.2%. Sales at food and beverage stores were also up 1.3%, but this was also thanks to rising prices. For the last several months, there have been two opposite forces operating in the Canadian auto sector. The more Canadians have to spend to fill up their cars, the less they are spending on new ones. Sales at new car dealerships continued to plummet in June, falling by 3.1%. To some extent the drop in receipts from new car dealers is also a price story as dealerships continued to lower sticker prices to draw in customers. Taking out food and autos (including gas and new and used car dealers), retail sales were up 0.6%, led by a rebound in sales at clothing and accessories stores, which rose 2.5% after a slight decline in May.
Retail sales increased in all provinces across the country in June. Saskatchewan continues to lead the provinces in year-over-year growth - up 13.5% and in sharp contrast with its neighbour to the west, Alberta, which is up only 0.2%. After strong spending growth in 2007, the western-most provinces of Alberta and British Columbia are set to underperform the rest of Canada in 2008, while Saskatchewan is expected to maintain its lead through the remainder of this year.
Going into the second half of this year, the gasoline price story that so characterized the rise in retail sales for much of the first half, is unlikely to continue. Instead, expect to see a gradual moderation in both the nominal retail sales and a continuation of the moderation in real spending levels. While spending on home furnishings and other household durables was resilient in June, the housing market is now showing clear signs of slowing and this will feed through to spending on household items. Moreover, the fall in employment in July gives little reason to expect a rebound in retail sales in the months ahead. All told, slower income and employment growth should be expected to lead to a slower pace of retail sales and real consumer spending over the remainder of 2008.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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* Soaring gasoline prices send nominal retail sales up 0.5% in June
* Holding prices constant, retail sales fell by 0.4%.
As expected, nominal retail sales rose by 0.5% in June. However, it wasn't that Canadians were buying a lot more things in the month; instead we were paying more for what we bought - especially to fill up our vehicles. Excluding the impact of rising prices, retail sales fell in June by 0.4%.
Rising gas prices pushed up sales at gas stations a whopping 4.2%. Sales at food and beverage stores were also up 1.3%, but this was also thanks to rising prices. For the last several months, there have been two opposite forces operating in the Canadian auto sector. The more Canadians have to spend to fill up their cars, the less they are spending on new ones. Sales at new car dealerships continued to plummet in June, falling by 3.1%. To some extent the drop in receipts from new car dealers is also a price story as dealerships continued to lower sticker prices to draw in customers. Taking out food and autos (including gas and new and used car dealers), retail sales were up 0.6%, led by a rebound in sales at clothing and accessories stores, which rose 2.5% after a slight decline in May.
Retail sales increased in all provinces across the country in June. Saskatchewan continues to lead the provinces in year-over-year growth - up 13.5% and in sharp contrast with its neighbour to the west, Alberta, which is up only 0.2%. After strong spending growth in 2007, the western-most provinces of Alberta and British Columbia are set to underperform the rest of Canada in 2008, while Saskatchewan is expected to maintain its lead through the remainder of this year.
Going into the second half of this year, the gasoline price story that so characterized the rise in retail sales for much of the first half, is unlikely to continue. Instead, expect to see a gradual moderation in both the nominal retail sales and a continuation of the moderation in real spending levels. While spending on home furnishings and other household durables was resilient in June, the housing market is now showing clear signs of slowing and this will feed through to spending on household items. Moreover, the fall in employment in July gives little reason to expect a rebound in retail sales in the months ahead. All told, slower income and employment growth should be expected to lead to a slower pace of retail sales and real consumer spending over the remainder of 2008.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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U.S. Market Update
Daily Forex Fundamentals | Written by Trade The News | Aug 20 08 15:46 GMT |
Dow +70 S&P +7 NASDAQ +17.5
The GSEs have taken equity markets for a wild ride this morning. Indices quickly fell into negative territory on headlines indicating that FRE was seeking an immediate meeting with the US Treasury, sparking speculation that the long-heralded government bailout was at hand. FNM's CEO responded in a radio interview saying that the firm has yet to ask the Treasury for any assistance, asserting that it has more capital than ever before, helping stocks and more specifically financials recover sharply by mid-morning. Front-month crude rose more than $2 ahead of the weekly inventory reading that showed crude inventories added a whopping 9M barrels in the latest week. That news is overshadowing a much larger than expected drawdown in gasoline inventories, sending energy futures into the red across the board. Financials have been under pressure from weakness in the GSE's that sent both FNM and FRE below July lows early in the session. LEH approached its 52-week low just after the open, before spiking up +4%, despite the fact that both Goldman and Bernstein have lowered widened their FY08 EPS loss estimates for the firm, to -$9.65 from -$2.10 and to -$4.65 from -$2.24, respectively (consensus estimate is -$3.17). MER, JPM and GS retraced earlier losses, moving into positive territory, while MS-2%. FRE and FNM fell 20% each on the morning's news before regaining some ground. More retail earnings reports came out before the open. Both ROST-1.0% and BJ-9% reported and guided for upcoming quarters mostly in-line with estimates, while BJ increased its share buyback by $200M (8.2% of market cap) and increased its guidance for the year. In other retail news, Goldman cut M and KSS to neutral from buy. Computer giant HPQ+5% came in ahead of estimates and offered in-line guidance, while the CEO said the firm still sees continuing growth in emerging markets but overall calls the sales outlook a "mixed bag." The CFO noted that if the USD stays at current levels, HP may expect some downward pressure in reported revenues. Merrill made positive comments on HPQ, maintaining its buy and raising its FY08 EPS estimate from $3.59 to $3.61, and maintaining their FY09 and FY10 EPS estimates slightly. STP+12% on decent earnings and increases in guidance for the coming quarter and the year, while the CEO said the firm is looking to do a deal with a major utility company in the next six months. Airlines are under pressure after the chief of the International Air Transportation Association said overnight that airlines could have losses of as much as $6.1B in 2008 and that he is bracing for further airline collapses: UAUA-8%, NWA-7%, DAL-5%, CAL-4% and AMR-3%. In other news, PAY+24% after boosting guidance. NVTL-25% after getting slammed with downgrades at Piper Jaffray, Morgan Joseph and Craig-Hallum.
Treasury prices moved higher once again receiving risk aversion bids early in the session. The 10-year yield tested its lowest levels of the summer before rebounding with the bounce in stocks. The 10-year yield remains pinned at 3.8% while the 2-year remains below 2.3%. The USD has rebounded back near its overnight high against the Euro as commodity prices have come off heard led by oil. EUR/USD has slipped back towards the 1.47 figure while Cable remains below 1.86. The greenback has also advanced against the Aussie and Canadian Dollar late in the NY morning, helped again by falling commodity prices.
Trade The News Staff
Trade The News, Inc.
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.
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Dow +70 S&P +7 NASDAQ +17.5
The GSEs have taken equity markets for a wild ride this morning. Indices quickly fell into negative territory on headlines indicating that FRE was seeking an immediate meeting with the US Treasury, sparking speculation that the long-heralded government bailout was at hand. FNM's CEO responded in a radio interview saying that the firm has yet to ask the Treasury for any assistance, asserting that it has more capital than ever before, helping stocks and more specifically financials recover sharply by mid-morning. Front-month crude rose more than $2 ahead of the weekly inventory reading that showed crude inventories added a whopping 9M barrels in the latest week. That news is overshadowing a much larger than expected drawdown in gasoline inventories, sending energy futures into the red across the board. Financials have been under pressure from weakness in the GSE's that sent both FNM and FRE below July lows early in the session. LEH approached its 52-week low just after the open, before spiking up +4%, despite the fact that both Goldman and Bernstein have lowered widened their FY08 EPS loss estimates for the firm, to -$9.65 from -$2.10 and to -$4.65 from -$2.24, respectively (consensus estimate is -$3.17). MER, JPM and GS retraced earlier losses, moving into positive territory, while MS-2%. FRE and FNM fell 20% each on the morning's news before regaining some ground. More retail earnings reports came out before the open. Both ROST-1.0% and BJ-9% reported and guided for upcoming quarters mostly in-line with estimates, while BJ increased its share buyback by $200M (8.2% of market cap) and increased its guidance for the year. In other retail news, Goldman cut M and KSS to neutral from buy. Computer giant HPQ+5% came in ahead of estimates and offered in-line guidance, while the CEO said the firm still sees continuing growth in emerging markets but overall calls the sales outlook a "mixed bag." The CFO noted that if the USD stays at current levels, HP may expect some downward pressure in reported revenues. Merrill made positive comments on HPQ, maintaining its buy and raising its FY08 EPS estimate from $3.59 to $3.61, and maintaining their FY09 and FY10 EPS estimates slightly. STP+12% on decent earnings and increases in guidance for the coming quarter and the year, while the CEO said the firm is looking to do a deal with a major utility company in the next six months. Airlines are under pressure after the chief of the International Air Transportation Association said overnight that airlines could have losses of as much as $6.1B in 2008 and that he is bracing for further airline collapses: UAUA-8%, NWA-7%, DAL-5%, CAL-4% and AMR-3%. In other news, PAY+24% after boosting guidance. NVTL-25% after getting slammed with downgrades at Piper Jaffray, Morgan Joseph and Craig-Hallum.
Treasury prices moved higher once again receiving risk aversion bids early in the session. The 10-year yield tested its lowest levels of the summer before rebounding with the bounce in stocks. The 10-year yield remains pinned at 3.8% while the 2-year remains below 2.3%. The USD has rebounded back near its overnight high against the Euro as commodity prices have come off heard led by oil. EUR/USD has slipped back towards the 1.47 figure while Cable remains below 1.86. The greenback has also advanced against the Aussie and Canadian Dollar late in the NY morning, helped again by falling commodity prices.
Trade The News Staff
Trade The News, Inc.
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.
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Oil Falls After Biggest U.S. Supply Gain in More Than 7 Years
By Mark Shenk
Aug. 20 (Bloomberg) -- Crude oil fell more than $1 a barrel after a government report showed the biggest U.S. inventory gain in more than seven years.
Stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain in since March 2001, the Energy Department said. Supplies fell the previous week as Tropical Storm Edouard hit Texas. Inventories were forecast to increase 1 million barrels, according to a Bloomberg News analyst survey.
``Deliveries are bouncing back from Edouard,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Imports are also up because there is plentiful crude available.''
Crude oil for September delivery fell $1.64, or 1.4 percent, to $112.89 barrel at 11:33 a.m. on the New York Mercantile Exchange. Futures touched a 15-week low of $111.34 a barrel on Aug. 15. Prices are up 59 percent from a year ago.
By Mark Shenk
Aug. 20 (Bloomberg) -- Crude oil fell more than $1 a barrel after a government report showed the biggest U.S. inventory gain in more than seven years.
Stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain in since March 2001, the Energy Department said. Supplies fell the previous week as Tropical Storm Edouard hit Texas. Inventories were forecast to increase 1 million barrels, according to a Bloomberg News analyst survey.
``Deliveries are bouncing back from Edouard,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Imports are also up because there is plentiful crude available.''
Crude oil for September delivery fell $1.64, or 1.4 percent, to $112.89 barrel at 11:33 a.m. on the New York Mercantile Exchange. Futures touched a 15-week low of $111.34 a barrel on Aug. 15. Prices are up 59 percent from a year ago.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 3 percent from a year earlier, the department said. Gasoline consumption averaged 9.46 million barrels a day over the period, down 1.6 percent.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
Gasoline Stockpiles
Gasoline supplies dropped 6.2 million barrels, more than double the 3 million-barrel decline analysts predicted. Stockpiles have dropped 9.5 percent in the past four weeks.
Gasoline for September delivery fell 2.74 cents, or 1 percent, to $2.8365 a gallon in New York. Futures reached a record $3.631 a gallon on July 11.
Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.3 cents to $3.717 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.
The BP-led Baku-Tblisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week, the pipe's operating company said today. Exporters of Azeri oil have been unable to use the 1,100-mile link through Georgia and Turkey since Aug. 5, when a fire engulfed the pipeline in northeastern Turkey.
Georgian Black Sea ports are running out of crude and oil- product supplies as Russian military troops block railways near the city of Khashuri, local shipping agent TeRo Co. Ltd. said.
Brent crude oil for October settlement fell $1.02, or 0.9 percent, to $112.23 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 3 percent from a year earlier, the department said. Gasoline consumption averaged 9.46 million barrels a day over the period, down 1.6 percent.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
Gasoline Stockpiles
Gasoline supplies dropped 6.2 million barrels, more than double the 3 million-barrel decline analysts predicted. Stockpiles have dropped 9.5 percent in the past four weeks.
Gasoline for September delivery fell 2.74 cents, or 1 percent, to $2.8365 a gallon in New York. Futures reached a record $3.631 a gallon on July 11.
Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.3 cents to $3.717 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.
The BP-led Baku-Tblisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week, the pipe's operating company said today. Exporters of Azeri oil have been unable to use the 1,100-mile link through Georgia and Turkey since Aug. 5, when a fire engulfed the pipeline in northeastern Turkey.
Georgian Black Sea ports are running out of crude and oil- product supplies as Russian military troops block railways near the city of Khashuri, local shipping agent TeRo Co. Ltd. said.
Brent crude oil for October settlement fell $1.02, or 0.9 percent, to $112.23 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Crude oil fell more than $1 a barrel after a government report showed the biggest U.S. inventory gain in more than seven years.
Stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain in since March 2001, the Energy Department said. Supplies fell the previous week as Tropical Storm Edouard hit Texas. Inventories were forecast to increase 1 million barrels, according to a Bloomberg News analyst survey.
``Deliveries are bouncing back from Edouard,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Imports are also up because there is plentiful crude available.''
Crude oil for September delivery fell $1.64, or 1.4 percent, to $112.89 barrel at 11:33 a.m. on the New York Mercantile Exchange. Futures touched a 15-week low of $111.34 a barrel on Aug. 15. Prices are up 59 percent from a year ago.
By Mark Shenk
Aug. 20 (Bloomberg) -- Crude oil fell more than $1 a barrel after a government report showed the biggest U.S. inventory gain in more than seven years.
Stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain in since March 2001, the Energy Department said. Supplies fell the previous week as Tropical Storm Edouard hit Texas. Inventories were forecast to increase 1 million barrels, according to a Bloomberg News analyst survey.
``Deliveries are bouncing back from Edouard,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Imports are also up because there is plentiful crude available.''
Crude oil for September delivery fell $1.64, or 1.4 percent, to $112.89 barrel at 11:33 a.m. on the New York Mercantile Exchange. Futures touched a 15-week low of $111.34 a barrel on Aug. 15. Prices are up 59 percent from a year ago.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 3 percent from a year earlier, the department said. Gasoline consumption averaged 9.46 million barrels a day over the period, down 1.6 percent.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
Gasoline Stockpiles
Gasoline supplies dropped 6.2 million barrels, more than double the 3 million-barrel decline analysts predicted. Stockpiles have dropped 9.5 percent in the past four weeks.
Gasoline for September delivery fell 2.74 cents, or 1 percent, to $2.8365 a gallon in New York. Futures reached a record $3.631 a gallon on July 11.
Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.3 cents to $3.717 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.
The BP-led Baku-Tblisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week, the pipe's operating company said today. Exporters of Azeri oil have been unable to use the 1,100-mile link through Georgia and Turkey since Aug. 5, when a fire engulfed the pipeline in northeastern Turkey.
Georgian Black Sea ports are running out of crude and oil- product supplies as Russian military troops block railways near the city of Khashuri, local shipping agent TeRo Co. Ltd. said.
Brent crude oil for October settlement fell $1.02, or 0.9 percent, to $112.23 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
U.S. fuel demand averaged 20.2 million barrels a day during the past four weeks, down 3 percent from a year earlier, the department said. Gasoline consumption averaged 9.46 million barrels a day over the period, down 1.6 percent.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
Gasoline Stockpiles
Gasoline supplies dropped 6.2 million barrels, more than double the 3 million-barrel decline analysts predicted. Stockpiles have dropped 9.5 percent in the past four weeks.
Gasoline for September delivery fell 2.74 cents, or 1 percent, to $2.8365 a gallon in New York. Futures reached a record $3.631 a gallon on July 11.
Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.3 cents to $3.717 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.
The BP-led Baku-Tblisi-Ceyhan pipeline, which transports oil from Azerbaijan to the Mediterranean, plans to resume tanker loadings next week, the pipe's operating company said today. Exporters of Azeri oil have been unable to use the 1,100-mile link through Georgia and Turkey since Aug. 5, when a fire engulfed the pipeline in northeastern Turkey.
Georgian Black Sea ports are running out of crude and oil- product supplies as Russian military troops block railways near the city of Khashuri, local shipping agent TeRo Co. Ltd. said.
Brent crude oil for October settlement fell $1.02, or 0.9 percent, to $112.23 a barrel on London's ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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European Stocks Advance, Led by BHP, Infineon; Yara Climbs
By Sarah Thompson
Aug. 20 (Bloomberg) -- European stocks rose for the first time in three days as mining shares near their cheapest in seven months lured investors and Hewlett-Packard Co.'s earnings spurred gains by chipmakers.
BHP Billiton Ltd., the world's biggest mining company, and Rio Tinto Group climbed at least 7 percent. Infineon Technologies AG, Germany's largest semiconductor maker, rose 2.1 percent after Hewlett-Packard reported profit that topped analysts' estimates. Yara International ASA led chemical makers higher, adding 3.9 percent, following Israel Chemicals Ltd.'s more than fivefold surge in profit.
Europe's Dow Jones Stoxx 600 Index advanced 0.4 percent to 280.95 as of 4:30 p.m. in London. The measure for mining shares, the world's worst-performing equities in the past month following declines in commodity prices, climbed the most in three weeks today.
``For the long-term, you clearly have to play raw-material stocks,'' Franz Wenzel, who helps oversee about $830 billion as deputy director for investment strategy at Axa Investment Managers in Paris, said in a Bloomberg Television interview. ``Growth in emerging markets will support them. You have to search for an entry point.''
National benchmark indexes advanced in 11 of the 18 western European markets. Germany's DAX added 0.7 percent. The U.K. FTSE 100 gained 1.1 percent, and France's CAC 40 rose 0.8 percent.
BHP, Rio Tinto
BHP Billiton, which reported record earnings this week, rallied 7.3 percent to 1,631 pence. Rio Tinto, the world's third-largest mining company, gained 7.4 percent to 4,985 pence.
Copper for delivery in three months climbed $221, or 3 percent, to $7,563 a ton yesterday in London amid speculation that prices had fallen too far, given limited supplies of the metal. It traded down $46 today.
The Stoxx 600 Basic Resource Index has dropped as much as 30 percent from this year's peak in May, leaving shares in the measure yesterday trading at the cheapest since January relative to earnings, according to data compiled by Bloomberg.
Commodity producers ``are still generating very good profitability,'' said Jane Coffey, head of equities at Royal London Asset Management, which oversees about $63 billion. ``The demand side is weakening but the supply side is constrained, so there is a limit to how far these could come back.''
Infineon, Yara
Infineon climbed 2.1 percent to 5.68 euros. STMicroelectronics NV, Europe's biggest chipmaker, rose 2.6 percent to 8.315 euros.
Hewlett-Packard, the world's largest personal-computer maker, said demand for notebooks and orders in Europe and Asia spurred a 14 percent jump in third-quarter profit and a 10 percent gain in sales.
Hewlett-Packard's earnings forecast for the current period also topped projections.
Yara, the world's largest fertilizer maker, climbed 3.9 percent to 320 Norwegian kroner, while K+S AG, Europe's largest producer of potash used in fertilizers, jumped 7 percent to 78.78 euros.
Israel Chemicals, which harvests minerals from the Dead Sea to make fertilizers and chemicals, said second-quarter profit rose more than fivefold on soaring potash prices.
Tullow Oil Plc rallied 6.8 percent to 741.5 pence. The U.K. explorer with the most exploration licenses in Africa was upgraded to ``buy'' from ``neutral'' at UBS AG because of future drilling potential and the possibility of takeover bids.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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Aug. 20 (Bloomberg) -- European stocks rose for the first time in three days as mining shares near their cheapest in seven months lured investors and Hewlett-Packard Co.'s earnings spurred gains by chipmakers.
BHP Billiton Ltd., the world's biggest mining company, and Rio Tinto Group climbed at least 7 percent. Infineon Technologies AG, Germany's largest semiconductor maker, rose 2.1 percent after Hewlett-Packard reported profit that topped analysts' estimates. Yara International ASA led chemical makers higher, adding 3.9 percent, following Israel Chemicals Ltd.'s more than fivefold surge in profit.
Europe's Dow Jones Stoxx 600 Index advanced 0.4 percent to 280.95 as of 4:30 p.m. in London. The measure for mining shares, the world's worst-performing equities in the past month following declines in commodity prices, climbed the most in three weeks today.
``For the long-term, you clearly have to play raw-material stocks,'' Franz Wenzel, who helps oversee about $830 billion as deputy director for investment strategy at Axa Investment Managers in Paris, said in a Bloomberg Television interview. ``Growth in emerging markets will support them. You have to search for an entry point.''
National benchmark indexes advanced in 11 of the 18 western European markets. Germany's DAX added 0.7 percent. The U.K. FTSE 100 gained 1.1 percent, and France's CAC 40 rose 0.8 percent.
BHP, Rio Tinto
BHP Billiton, which reported record earnings this week, rallied 7.3 percent to 1,631 pence. Rio Tinto, the world's third-largest mining company, gained 7.4 percent to 4,985 pence.
Copper for delivery in three months climbed $221, or 3 percent, to $7,563 a ton yesterday in London amid speculation that prices had fallen too far, given limited supplies of the metal. It traded down $46 today.
The Stoxx 600 Basic Resource Index has dropped as much as 30 percent from this year's peak in May, leaving shares in the measure yesterday trading at the cheapest since January relative to earnings, according to data compiled by Bloomberg.
Commodity producers ``are still generating very good profitability,'' said Jane Coffey, head of equities at Royal London Asset Management, which oversees about $63 billion. ``The demand side is weakening but the supply side is constrained, so there is a limit to how far these could come back.''
Infineon, Yara
Infineon climbed 2.1 percent to 5.68 euros. STMicroelectronics NV, Europe's biggest chipmaker, rose 2.6 percent to 8.315 euros.
Hewlett-Packard, the world's largest personal-computer maker, said demand for notebooks and orders in Europe and Asia spurred a 14 percent jump in third-quarter profit and a 10 percent gain in sales.
Hewlett-Packard's earnings forecast for the current period also topped projections.
Yara, the world's largest fertilizer maker, climbed 3.9 percent to 320 Norwegian kroner, while K+S AG, Europe's largest producer of potash used in fertilizers, jumped 7 percent to 78.78 euros.
Israel Chemicals, which harvests minerals from the Dead Sea to make fertilizers and chemicals, said second-quarter profit rose more than fivefold on soaring potash prices.
Tullow Oil Plc rallied 6.8 percent to 741.5 pence. The U.K. explorer with the most exploration licenses in Africa was upgraded to ``buy'' from ``neutral'' at UBS AG because of future drilling potential and the possibility of takeover bids.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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French Stocks: Arcelor, STMicroelectronics, Theolia, Total
By Adria Cimino
Aug. 20 (Bloomberg) -- France's CAC 40 Index added 18.30, or 0.4 percent, to 4,351.09 at 12:41 p.m. in Paris, advancing for the first day this week. The SBF 120 Index increased 0.4 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
ArcelorMittal (MTP FP) gained 1.80 euros, or 3.6 percent, to 52.05, rising the most in three weeks. The world's biggest steelmaker agreed to buy London Mining Plc's Brazilian iron-ore unit for about $810 million to increase its self sufficiency in the steelmaking ingredient.
``This allows the company to have its hands on supply,'' said Matthieu Bordeaux-Groult, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``It's a strategy that's paying off.''
STMicroelectronics NV (STM FP) advanced 12 cents, or 1.6 percent, to 8.23 euros, gaining for the first time this week. Ericsson AB, the world's largest maker of wireless networks, and STMicroelectronics, Europe's largest chipmaker, agreed to set up a joint venture for wireless applications that will employ almost 8,000 people.
Theolia SA (TEO FP) slid 82 cents, or 5.3 percent, to 14.61 euros, falling for a second day. The wind-power company plans a partial withdrawal from building wind power construction plants for sale to third parties, and will instead sell the electricity itself, Les Echos said, citing the chief executive.
Vallourec SA (VK FP), the world's second-largest supplier of seamless pipes for energy extraction, jumped 6.82 euros, or 3.9 percent, to 183.15, the biggest gain in two weeks. Total SA (FP FP), Europe's biggest oil refiner, climbed 1.09 euros, or 2.3 percent, to 48.91, rising for a second time this week.
Crude oil rose for a second day as a weakening dollar prompted investors to buy commodities as an inflation hedge. The contract for September delivery gained as much as 0.7 percent to $115.36 on the New York Mercantile Exchange.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Aug. 20 (Bloomberg) -- France's CAC 40 Index added 18.30, or 0.4 percent, to 4,351.09 at 12:41 p.m. in Paris, advancing for the first day this week. The SBF 120 Index increased 0.4 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
ArcelorMittal (MTP FP) gained 1.80 euros, or 3.6 percent, to 52.05, rising the most in three weeks. The world's biggest steelmaker agreed to buy London Mining Plc's Brazilian iron-ore unit for about $810 million to increase its self sufficiency in the steelmaking ingredient.
``This allows the company to have its hands on supply,'' said Matthieu Bordeaux-Groult, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``It's a strategy that's paying off.''
STMicroelectronics NV (STM FP) advanced 12 cents, or 1.6 percent, to 8.23 euros, gaining for the first time this week. Ericsson AB, the world's largest maker of wireless networks, and STMicroelectronics, Europe's largest chipmaker, agreed to set up a joint venture for wireless applications that will employ almost 8,000 people.
Theolia SA (TEO FP) slid 82 cents, or 5.3 percent, to 14.61 euros, falling for a second day. The wind-power company plans a partial withdrawal from building wind power construction plants for sale to third parties, and will instead sell the electricity itself, Les Echos said, citing the chief executive.
Vallourec SA (VK FP), the world's second-largest supplier of seamless pipes for energy extraction, jumped 6.82 euros, or 3.9 percent, to 183.15, the biggest gain in two weeks. Total SA (FP FP), Europe's biggest oil refiner, climbed 1.09 euros, or 2.3 percent, to 48.91, rising for a second time this week.
Crude oil rose for a second day as a weakening dollar prompted investors to buy commodities as an inflation hedge. The contract for September delivery gained as much as 0.7 percent to $115.36 on the New York Mercantile Exchange.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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U.K. Stocks Rise, Led by Commodity Producers; Tullow Oil Gains
By Sarah Jones
Aug. 20 (Bloomberg) -- U.K. stocks rose for the first time in four days, led by commodity producers as UBS AG recommended shares of Tullow Oil Plc and crude oil climbed. BHP Billiton Ltd. and Rio Tinto Group led a rally in mining companies.
Tullow Oil, the U.K. explorer with the most exploration licenses in Africa, rose the most since May. BHP, the world's biggest mining company, advanced 6.1 percent, and Rio Tinto, the third-largest, had its steepest gain in six months.
The FTSE 100 Index gained 34.5, or 0.7 percent, to 5,354.9 at 1:41 p.m. in London. The FTSE All-Share Index added 0.5 percent, while Ireland's ISEQ Index declined 1.5 percent.
Tullow Oil rallied 6.7 percent to 740.5 pence after UBS upgraded the U.K. explorer to ``buy'' from ``neutral,'' citing future drilling potential and the possibility of a takeover bid.
``Further exploration success could possibly make Tullow a mergers & acquisition target next year,'' Adrian Wood, a London- based analyst, wrote in a note. ``The company plans to drill 14 wells over the balance of the year.''
BP Plc, Europe's second-largest oil company, advanced 1.5 percent to 514.75 pence, as crude oil climbed for a second today. Royal Dutch Shell Plc, Europe's biggest, added 2 percent to 1,831 pence.
BHP jumped 93 pence to 1,613. Rio Tinto gained 6.8 percent to 4,957 pence. Anglo American Plc, the world's second-largest mining company, gained 2.7 percent to 2,758 pence. Gold and silver rose for the third day in Asia, while base metals including tin and nickel advanced on the London Metal Exchange.
Whitbread, MAN Group
Whitbread Plc advanced for the first time this week as Credit Suisse Group rated the shares ``outperform'' in new coverage. Man Group Plc gained after its flagship fund rose for the first week in five.
Whitbread increased 0.5 percent to 1,125 pence. Credit Suisse said the company's Premier Inn budget hotels chain was well positioned to consolidate the U.K market and increase market share.
Man Group increased 4.7 percent to 531 pence after the largest publicly traded hedge-fund manager said its flagship fund rose for the first week in five, snapping its longest losing stretch in a year.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Capital & Regional Plc (CAL LN) jumped 7.5 pence, or 4.6 percent, to 169.5 after Apollo Real Estate Advisors LLC agreed to pay 65.6 million euros ($97 million) for a 50 percent stake in the company's German retail properties.
J Sainsbury Plc (SBRY LN) slid 10 pence, or 3.1 percent, to 316.75 after JPMorgan Chase & Co. downgraded the U.K.'s third biggest supermarket chain to ``neutral'' from ``overweight'' on concern that sales will worsen as customers switch to cheaper retailers.
Woolworths Group Plc (WLW LN) increased 0.1 pence, or 1.5 percent, to 6.86 after the Financial Times reported the retailer is still open to negotiations with the group led by Baugur Group Hf after Woolworth's board rejected the group's proposed 50 million-pound bid on Aug. 17. The newspaper cited Chairman Richard North.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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Aug. 20 (Bloomberg) -- U.K. stocks rose for the first time in four days, led by commodity producers as UBS AG recommended shares of Tullow Oil Plc and crude oil climbed. BHP Billiton Ltd. and Rio Tinto Group led a rally in mining companies.
Tullow Oil, the U.K. explorer with the most exploration licenses in Africa, rose the most since May. BHP, the world's biggest mining company, advanced 6.1 percent, and Rio Tinto, the third-largest, had its steepest gain in six months.
The FTSE 100 Index gained 34.5, or 0.7 percent, to 5,354.9 at 1:41 p.m. in London. The FTSE All-Share Index added 0.5 percent, while Ireland's ISEQ Index declined 1.5 percent.
Tullow Oil rallied 6.7 percent to 740.5 pence after UBS upgraded the U.K. explorer to ``buy'' from ``neutral,'' citing future drilling potential and the possibility of a takeover bid.
``Further exploration success could possibly make Tullow a mergers & acquisition target next year,'' Adrian Wood, a London- based analyst, wrote in a note. ``The company plans to drill 14 wells over the balance of the year.''
BP Plc, Europe's second-largest oil company, advanced 1.5 percent to 514.75 pence, as crude oil climbed for a second today. Royal Dutch Shell Plc, Europe's biggest, added 2 percent to 1,831 pence.
BHP jumped 93 pence to 1,613. Rio Tinto gained 6.8 percent to 4,957 pence. Anglo American Plc, the world's second-largest mining company, gained 2.7 percent to 2,758 pence. Gold and silver rose for the third day in Asia, while base metals including tin and nickel advanced on the London Metal Exchange.
Whitbread, MAN Group
Whitbread Plc advanced for the first time this week as Credit Suisse Group rated the shares ``outperform'' in new coverage. Man Group Plc gained after its flagship fund rose for the first week in five.
Whitbread increased 0.5 percent to 1,125 pence. Credit Suisse said the company's Premier Inn budget hotels chain was well positioned to consolidate the U.K market and increase market share.
Man Group increased 4.7 percent to 531 pence after the largest publicly traded hedge-fund manager said its flagship fund rose for the first week in five, snapping its longest losing stretch in a year.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Capital & Regional Plc (CAL LN) jumped 7.5 pence, or 4.6 percent, to 169.5 after Apollo Real Estate Advisors LLC agreed to pay 65.6 million euros ($97 million) for a 50 percent stake in the company's German retail properties.
J Sainsbury Plc (SBRY LN) slid 10 pence, or 3.1 percent, to 316.75 after JPMorgan Chase & Co. downgraded the U.K.'s third biggest supermarket chain to ``neutral'' from ``overweight'' on concern that sales will worsen as customers switch to cheaper retailers.
Woolworths Group Plc (WLW LN) increased 0.1 pence, or 1.5 percent, to 6.86 after the Financial Times reported the retailer is still open to negotiations with the group led by Baugur Group Hf after Woolworth's board rejected the group's proposed 50 million-pound bid on Aug. 17. The newspaper cited Chairman Richard North.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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Goldcorp, Maple Leaf Foods, Thompson Creek: Canada Stock Movers
By John Kipphoff
Aug. 20 (Bloomberg) -- The following companies were having unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are as of 10:16 a.m. in Toronto.
The Standard & Poor's/TSX Composite Index gained 1.2 percent to 13,226.42.
Goldcorp Inc. (G CN) gained the most in a week, rising 4.3 percent to C$35.09. The world's second-largest bullion mining company by market value was raised to ``top pick'' from ``sector perform'' by Michael Curran at RBC Capital Markets.
Goldcorp has solid growth prospects, based on an expected increase in production during 2009 at its Penasquito mine and ``seasonal strength in gold prices later this year,'' the Toronto based analyst wrote in a note to clients.
Maple Leaf Foods Inc. (MFI CN) had its biggest decline in almost a month, falling 3.2 percent to C$10.36. Canada's largest food processor recalled 23 delicatessen meat products, citing concern they may be contaminated with listeria bacteria, and temporarily closed a Toronto plant.
Parkland Income Fund (PKI-U CN) rose to a seven-week high, adding 3.9 percent to C$10.45. The owner of an oil refiner and fuel seller was rated ``outperform'' in new coverage by at RBC Capital Markets analyst Steve Toth in Calgary.
Thompson Creek Metals Co. (TCM CN) climbed to the highest since Aug. 8, gaining 4.2 percent to C$14.75. The fifth-largest molybdenum producer agreed to acquire an option for as much as 75 percent of U.S. Energy Corp.'s Lucky Jack molybdenum property in Colorado. Thompson Creek may spend as much as $400 million to get control of the deposit, the Toronto-based company said.
Yamana Gold Inc. (YRI CN) advanced the most in a week, adding 3.2 percent to C$11.39. The bullion producer with mines in Argentina, Brazil and the U.S. was raised to ``outperform'' from ``sector perform'' by RBC Capital's Curran, who said, in a report, that gold prices probably hit a low for the northern hemisphere summer last week.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Aug. 20 (Bloomberg) -- The following companies were having unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are as of 10:16 a.m. in Toronto.
The Standard & Poor's/TSX Composite Index gained 1.2 percent to 13,226.42.
Goldcorp Inc. (G CN) gained the most in a week, rising 4.3 percent to C$35.09. The world's second-largest bullion mining company by market value was raised to ``top pick'' from ``sector perform'' by Michael Curran at RBC Capital Markets.
Goldcorp has solid growth prospects, based on an expected increase in production during 2009 at its Penasquito mine and ``seasonal strength in gold prices later this year,'' the Toronto based analyst wrote in a note to clients.
Maple Leaf Foods Inc. (MFI CN) had its biggest decline in almost a month, falling 3.2 percent to C$10.36. Canada's largest food processor recalled 23 delicatessen meat products, citing concern they may be contaminated with listeria bacteria, and temporarily closed a Toronto plant.
Parkland Income Fund (PKI-U CN) rose to a seven-week high, adding 3.9 percent to C$10.45. The owner of an oil refiner and fuel seller was rated ``outperform'' in new coverage by at RBC Capital Markets analyst Steve Toth in Calgary.
Thompson Creek Metals Co. (TCM CN) climbed to the highest since Aug. 8, gaining 4.2 percent to C$14.75. The fifth-largest molybdenum producer agreed to acquire an option for as much as 75 percent of U.S. Energy Corp.'s Lucky Jack molybdenum property in Colorado. Thompson Creek may spend as much as $400 million to get control of the deposit, the Toronto-based company said.
Yamana Gold Inc. (YRI CN) advanced the most in a week, adding 3.2 percent to C$11.39. The bullion producer with mines in Argentina, Brazil and the U.S. was raised to ``outperform'' from ``sector perform'' by RBC Capital's Curran, who said, in a report, that gold prices probably hit a low for the northern hemisphere summer last week.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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German Stocks Rise, Led by Steelmakers; Lufthansa, TUI Decline
By Stefanie Haxel and Daniela Silberstein
Aug. 20 (Bloomberg) -- German stocks gained as higher nickel prices lifted steel companies and better-than-estimated earnings from Hewlett-Packard Co. boosted technology shares.
ThyssenKrupp AG and Salzgitter AG, the country's two largest steelmakers, increased more than 3 percent. Kloeckner & Co., a trader of the metal, rallied the most in three weeks. Infineon Technologies AG, Europe's second-largest chipmaker, and Aixtron AG also advanced. Deutsche Lufthansa AG, Europe's second-largest airline, led falling shares as crude oil gained.
The benchmark DAX Index added 20.95, or 0.3 percent, to 6,303.38 as of 3:22 p.m. in Frankfurt. DAX futures expiring in September climbed 0.4 percent. The HDAX Index of the country's 110 biggest companies increased 0.4 percent.
``Investors were worried in the last few weeks that the falling nickel price might hurt Kloeckner's earnings,'' said Marc Gabriel, an analyst with Bankhaus Lampe KG. ``Now nickel prices look like they will rise, which means the problem doesn't look so big.'' He has a ``buy'' recommendation for shares of Kloeckner and Salzgitter.
Nickel, used to make stainless steel, rose for a second day in London after Xstrata Plc, the world's fourth-largest producer of the metal, suspended production in the Dominican Republic to bolster prices.
ThyssenKrupp, Germany's biggest steelmaker, advanced 1.25 euros, or 3.8 percent, to 34.17 euros. Salzgitter, the second- largest, climbed 3.02 euros, or 3 percent, to 103.87. Kloeckner surged 1.32 euros, or 5 percent, to 27.99.
Hewlett-Packard
Infineon added 5.5 cents, or 1 percent, to 5.615 euros. Aixtron, a maker of machines to coat semiconductors, climbed 17 cents, or 2.5 percent, to 7.09 euros.
Hewlett-Packard, the world's biggest personal-computer maker, said orders in Europe and Asia helped fuel a 14 percent jump in profit. The company's fourth-quarter earnings forecast also beat analysts' projections.
Deutsche Boerse AG, operator of the Frankfurt exchange, rose for the first time in four days, adding 1.46 euros, or 2.4 percent, to 62.05 euros.
Commodity regulators granted permission for the sale of Eurex Deutschland futures contracts based on Swiss and European markets in the U.S. Eurex is a derivates market jointly owned by Deutsche Boerse and Swiss Financial Market Services AG.
Deutsche Postbank AG, the country's largest consumer bank by clients, advanced 61 cents, or 1.5 percent, to 40.62 euros.
Decision on Sale
Parent Deutsche Post AG plans to decide by the beginning of October at the latest whether to sell its banking unit, Financial Times Deutschland reported, without saying how it got the information. Post shares added 26 cents, or 1.7 percent, to 15.27 euros.
Lufthansa dropped 19 cents, or 1.3 percent, to 14.27 euros. Crude oil gained for a second day before a weekly U.S. government report on stockpiles that may show gasoline supplies shrank for a fourth week in the world's largest energy user.
TUI AG declined 21 cents, or 1.5 percent, to 13.59 euros. Dresdner Kleinwort cut its share-price estimate for Europe's largest travel company by 6.9 percent to 12.10 euros.
The following stocks also rose or fell in German market Symbols are in parentheses.
Bertrandt AG (BDT GY) dropped 1.05 euros, or 4 percent, to 25.43, the biggest decline in two months. Bankhaus Lampe cut its share-price estimate for the company specializing in car design by 5.9 percent to 32 euros.
IKB Deutsche Industriebank AG (IKB GY) gained for a fourth time in five days, surging 17 cents, or 6.8 percent, to 2.68 euros. The lender bailed out after U.S. subprime investments will receive an additional 800 million euros in government aid to facilitate the sale of the bank, Frankfurter Allgemeine Zeitung said.
K+S GY (SDF GY), Europe's largest producer of potash used in fertilizers, rallied 4.18 euros, or 5.7 percent, to 77.83, the highest this month. Competitor Israel Chemicals Ltd., which harvests minerals from the Dead Sea to make fertilizers and chemicals, said second-quarter profit rose more than fivefold on soaring potash prices.
Muehlhan AG (M4N GY) sank for a second day, falling 6 cents, or 2 percent, to 3 euros. WestLB AG lowered its share-price estimate for the company that provided rust protection to the Queen Mary 2 by 8.8 percent to 3.10 euros.
Rohwedder AG (RWD GY) plunged 1.14 euros, or 22 percent, to 3.95, the steepest decline since its initial public offering in March 2000. The maker of robots and testing equipment founded in 1956 predicted a full-year loss this year.
Solon AG fuer Solartechnik (SOO1 GY) fell 59 cents, or 1.4 percent, to 42 euros, the lowest in two weeks. Lehman Brothers Holdings Inc. cut its share-price estimate for the solar company by 2.5 percent to 39 euros.
Wirecard AG (WDI GY) rallied 76 cents, or 11 percent, to 7.59 euros, the highest in seven weeks. The maker of online payment software raised its full-year forecast for profit growth in 2008.
To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net; Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
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Aug. 20 (Bloomberg) -- German stocks gained as higher nickel prices lifted steel companies and better-than-estimated earnings from Hewlett-Packard Co. boosted technology shares.
ThyssenKrupp AG and Salzgitter AG, the country's two largest steelmakers, increased more than 3 percent. Kloeckner & Co., a trader of the metal, rallied the most in three weeks. Infineon Technologies AG, Europe's second-largest chipmaker, and Aixtron AG also advanced. Deutsche Lufthansa AG, Europe's second-largest airline, led falling shares as crude oil gained.
The benchmark DAX Index added 20.95, or 0.3 percent, to 6,303.38 as of 3:22 p.m. in Frankfurt. DAX futures expiring in September climbed 0.4 percent. The HDAX Index of the country's 110 biggest companies increased 0.4 percent.
``Investors were worried in the last few weeks that the falling nickel price might hurt Kloeckner's earnings,'' said Marc Gabriel, an analyst with Bankhaus Lampe KG. ``Now nickel prices look like they will rise, which means the problem doesn't look so big.'' He has a ``buy'' recommendation for shares of Kloeckner and Salzgitter.
Nickel, used to make stainless steel, rose for a second day in London after Xstrata Plc, the world's fourth-largest producer of the metal, suspended production in the Dominican Republic to bolster prices.
ThyssenKrupp, Germany's biggest steelmaker, advanced 1.25 euros, or 3.8 percent, to 34.17 euros. Salzgitter, the second- largest, climbed 3.02 euros, or 3 percent, to 103.87. Kloeckner surged 1.32 euros, or 5 percent, to 27.99.
Hewlett-Packard
Infineon added 5.5 cents, or 1 percent, to 5.615 euros. Aixtron, a maker of machines to coat semiconductors, climbed 17 cents, or 2.5 percent, to 7.09 euros.
Hewlett-Packard, the world's biggest personal-computer maker, said orders in Europe and Asia helped fuel a 14 percent jump in profit. The company's fourth-quarter earnings forecast also beat analysts' projections.
Deutsche Boerse AG, operator of the Frankfurt exchange, rose for the first time in four days, adding 1.46 euros, or 2.4 percent, to 62.05 euros.
Commodity regulators granted permission for the sale of Eurex Deutschland futures contracts based on Swiss and European markets in the U.S. Eurex is a derivates market jointly owned by Deutsche Boerse and Swiss Financial Market Services AG.
Deutsche Postbank AG, the country's largest consumer bank by clients, advanced 61 cents, or 1.5 percent, to 40.62 euros.
Decision on Sale
Parent Deutsche Post AG plans to decide by the beginning of October at the latest whether to sell its banking unit, Financial Times Deutschland reported, without saying how it got the information. Post shares added 26 cents, or 1.7 percent, to 15.27 euros.
Lufthansa dropped 19 cents, or 1.3 percent, to 14.27 euros. Crude oil gained for a second day before a weekly U.S. government report on stockpiles that may show gasoline supplies shrank for a fourth week in the world's largest energy user.
TUI AG declined 21 cents, or 1.5 percent, to 13.59 euros. Dresdner Kleinwort cut its share-price estimate for Europe's largest travel company by 6.9 percent to 12.10 euros.
The following stocks also rose or fell in German market Symbols are in parentheses.
Bertrandt AG (BDT GY) dropped 1.05 euros, or 4 percent, to 25.43, the biggest decline in two months. Bankhaus Lampe cut its share-price estimate for the company specializing in car design by 5.9 percent to 32 euros.
IKB Deutsche Industriebank AG (IKB GY) gained for a fourth time in five days, surging 17 cents, or 6.8 percent, to 2.68 euros. The lender bailed out after U.S. subprime investments will receive an additional 800 million euros in government aid to facilitate the sale of the bank, Frankfurter Allgemeine Zeitung said.
K+S GY (SDF GY), Europe's largest producer of potash used in fertilizers, rallied 4.18 euros, or 5.7 percent, to 77.83, the highest this month. Competitor Israel Chemicals Ltd., which harvests minerals from the Dead Sea to make fertilizers and chemicals, said second-quarter profit rose more than fivefold on soaring potash prices.
Muehlhan AG (M4N GY) sank for a second day, falling 6 cents, or 2 percent, to 3 euros. WestLB AG lowered its share-price estimate for the company that provided rust protection to the Queen Mary 2 by 8.8 percent to 3.10 euros.
Rohwedder AG (RWD GY) plunged 1.14 euros, or 22 percent, to 3.95, the steepest decline since its initial public offering in March 2000. The maker of robots and testing equipment founded in 1956 predicted a full-year loss this year.
Solon AG fuer Solartechnik (SOO1 GY) fell 59 cents, or 1.4 percent, to 42 euros, the lowest in two weeks. Lehman Brothers Holdings Inc. cut its share-price estimate for the solar company by 2.5 percent to 39 euros.
Wirecard AG (WDI GY) rallied 76 cents, or 11 percent, to 7.59 euros, the highest in seven weeks. The maker of online payment software raised its full-year forecast for profit growth in 2008.
To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net; Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
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By Eric Martin Enlarge Image/Details Aug. 20 (Bloomberg) -- U.S. stocks climbed after better- than-estimated earnings from Hewlett-Packard Co. spurre
By Eric Martin
Enlarge Image/Details
Aug. 20 (Bloomberg) -- U.S. stocks climbed after better- than-estimated earnings from Hewlett-Packard Co. spurred a technology company rally and Fannie Mae's chief executive officer said the mortgage financier is getting record new business.
Hewlett-Packard, the largest personal-computer maker, rose 5.3 percent for the biggest gain in the Dow Jones Industrial Average after demand for notebooks and orders in Europe and Asia spurred profit and sales. Lehman Brothers Holdings Inc., Bank of America Corp. and American International Group Inc. gained 4 percent on speculation mortgage losses will abate. Fannie Mae halved a 21 percent decline after CEO Daniel Mudd said the company hasn't asked for a government bailout.
The Standard & Poor's 500 Index increased 6.85 points, or 0.5 percent, to 1,273.54 at 11:28 a.m. in New York. The Dow average added 66.03, or 0.6 percent, to 11,414.58, and the Nasdaq Composite Index climbed 17.80, or 0.8 percent, to 2,402.16. Two stocks rose for each that fell on the New York Stock Exchange.
``There's not a lot of news to grasp onto in these last two weeks of August, so what news does come out and is positive, investors are flocking to that,'' Leo Grohowski, who helps oversee $162 billion as chief investment officer at Bank of New York Mellon Wealth Management, told Bloomberg Television. ``Investors will have rolling opportunities to get into the financials.''
Profit Reports
About 70 percent of technology companies in the S&P 500 including EMC Corp. and Intel Corp. reported better-than- estimated earnings for the previous quarter. Industry earnings are forecast to climb 17 percent this year, compared with the analyst estimate of a 0.2 percent profit decline for all S&P 500 companies, data compiled by Bloomberg show.
The S&P 500, the U.S. stocks benchmark that's down 14 percent in 2008, has clawed back 4.6 percent from its July 15 low as crude oil's retreat from a record and the Federal Reserve's decision to keep interest rates on hold eased inflation concerns.
Hewlett-Packard added $2.31 to $46. Excluding acquisition costs, third-quarter profit was 86 cents a share, exceeding the 84 cents anticipated by analysts on average in a Bloomberg survey. Its earnings forecast for this quarter topped estimates.
Dell Inc., the second-largest personal-computer maker, advanced 27 cents to $24.71. International Business Machines Corp., the No. 2 software company, rose 62 cents to $123.18. Apple Inc., the seller of iPhones and Macintosh computers, gained 79 cents to $174.32.
Lehman Rallies
The S&P 500 Financials Index advanced 1.4 percent, the first gain in three days and the biggest increase among 10 industries. Lehman added 5.1 percent, the most since Aug. 8, to $13.74. Bank of America rose $1.05, or 3.7 percent, to $29.13. AIG had the second-biggest rally in the Dow average, rising 84 cents, or 4.1 percent, to $21.16.
Fannie Mae hasn't asked the U.S. Treasury for help in funding the mortgage-finance company and the government hasn't offered, Mudd told National Public Radio. Fannie Mae is generating a record amount of new business as the private mortgage market is ``gone,'' Mudd said in the interview. He said he expects the company to recover from its recent losses.
Fannie Mae retreated 66 cents to $5.35. Freddie Mac slumped 49 cents to $3.68.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
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Enlarge Image/Details
Aug. 20 (Bloomberg) -- U.S. stocks climbed after better- than-estimated earnings from Hewlett-Packard Co. spurred a technology company rally and Fannie Mae's chief executive officer said the mortgage financier is getting record new business.
Hewlett-Packard, the largest personal-computer maker, rose 5.3 percent for the biggest gain in the Dow Jones Industrial Average after demand for notebooks and orders in Europe and Asia spurred profit and sales. Lehman Brothers Holdings Inc., Bank of America Corp. and American International Group Inc. gained 4 percent on speculation mortgage losses will abate. Fannie Mae halved a 21 percent decline after CEO Daniel Mudd said the company hasn't asked for a government bailout.
The Standard & Poor's 500 Index increased 6.85 points, or 0.5 percent, to 1,273.54 at 11:28 a.m. in New York. The Dow average added 66.03, or 0.6 percent, to 11,414.58, and the Nasdaq Composite Index climbed 17.80, or 0.8 percent, to 2,402.16. Two stocks rose for each that fell on the New York Stock Exchange.
``There's not a lot of news to grasp onto in these last two weeks of August, so what news does come out and is positive, investors are flocking to that,'' Leo Grohowski, who helps oversee $162 billion as chief investment officer at Bank of New York Mellon Wealth Management, told Bloomberg Television. ``Investors will have rolling opportunities to get into the financials.''
Profit Reports
About 70 percent of technology companies in the S&P 500 including EMC Corp. and Intel Corp. reported better-than- estimated earnings for the previous quarter. Industry earnings are forecast to climb 17 percent this year, compared with the analyst estimate of a 0.2 percent profit decline for all S&P 500 companies, data compiled by Bloomberg show.
The S&P 500, the U.S. stocks benchmark that's down 14 percent in 2008, has clawed back 4.6 percent from its July 15 low as crude oil's retreat from a record and the Federal Reserve's decision to keep interest rates on hold eased inflation concerns.
Hewlett-Packard added $2.31 to $46. Excluding acquisition costs, third-quarter profit was 86 cents a share, exceeding the 84 cents anticipated by analysts on average in a Bloomberg survey. Its earnings forecast for this quarter topped estimates.
Dell Inc., the second-largest personal-computer maker, advanced 27 cents to $24.71. International Business Machines Corp., the No. 2 software company, rose 62 cents to $123.18. Apple Inc., the seller of iPhones and Macintosh computers, gained 79 cents to $174.32.
Lehman Rallies
The S&P 500 Financials Index advanced 1.4 percent, the first gain in three days and the biggest increase among 10 industries. Lehman added 5.1 percent, the most since Aug. 8, to $13.74. Bank of America rose $1.05, or 3.7 percent, to $29.13. AIG had the second-biggest rally in the Dow average, rising 84 cents, or 4.1 percent, to $21.16.
Fannie Mae hasn't asked the U.S. Treasury for help in funding the mortgage-finance company and the government hasn't offered, Mudd told National Public Radio. Fannie Mae is generating a record amount of new business as the private mortgage market is ``gone,'' Mudd said in the interview. He said he expects the company to recover from its recent losses.
Fannie Mae retreated 66 cents to $5.35. Freddie Mac slumped 49 cents to $3.68.
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
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Brazil's Bovespa Gains on Metals Price Outlook, Bank Upgrades
By Paulo Winterstein
Aug. 20 (Bloomberg) -- Brazilian stocks gained the most this month, led by metals producers and banks, after commodity prices rose and Citigroup Inc. said investors should buy financial shares as inflation concerns ease.
Cia. Siderurgica Nacional SA led gains in steelmakers after Deutsche Bank said CSN will benefit from rising metal prices in Brazil. Brazilian billionaire Eike Batista's MMX Mineracao & Metalicos SA surged on speculation it may be an acquisition target. Banco do Brasil SA and Uniao de Bancos Brasileiros SA advanced after Citigroup said inflation is peaking and valuations for the two bank stocks are ``compelling.''
``We're seeing that commodities are having decent gains, yet not enough to jeopardize the inflation outlook, and that's good for markets the world over,'' said Fabio Spinola Vianna, who helps manage $1.4 billion at Quest Investimentos in Sao Paulo. ``There were concerns about growth slowing, but this new round of Chinese investment is cheering up the market.''
The Bovespa index gained 2 percent to 54,695.53 at 10:35 a.m. New York time, the largest advance since July 30. Mexico's Bolsa rose 0.7 percent. The MSCI Latin America index jumped 3.1 percent. MSCI Colombia gained 1.4 percent on speculation the government may be preparing to ease capital controls.
CSN, the third-biggest Brazilian steelmaker, gained 3.3 percent to 52.72 reais.
``CSN remains one of the lowest cost and, in our opinion, best positioned steel companies globally,'' analysts David Martin and Jorge Beristain wrote in a note to clients today. ``Prior concerns about rising input costs have eased and CSN now appears poised to benefit from rising steel prices in Brazil.''
Usinas Siderurgicas de Minas Gerais SA, Brazil's second- biggest steelmaker, added 3.4 percent while Gerdau SA, Latin America's biggest maker of the metal, rose 3.5 percent.
Commodities Gain
The Reuters Jefferies Commodities Index rose for a third day, advancing 0.7 percent.
China's government is considering spending as much as 400 billion yuan ($58 billion), or 1.5 percent of the country's gross domestic product, to stimulate the economy and may ease monetary policy this year, said Frank Gong, head of China research at JPMorgan Chase & Co., in a research note yesterday.
Banco do Brasil, Latin America's biggest bank by assets, rose 2.3 percent to 22.70 reais. Unibanco, as Brazil's third- biggest non-government bank is known, advanced 2.3 percent to 19.29 reais. The lenders were both upgraded to ``buy'' from ``hold'' by Citigroup analyst Daniel Abut.
``As far as large-cap Brazilian bank stocks are concerned, we believe it is time to jump into the pool again'' after losses in the shares in the past 2 1/2 months, according to the note. Inflation expectations have peaked, ``allowing us to feel more confident forecasting the likely depth and length of the ongoing tightening cycle,'' the analyst wrote.
Banks Rally
Banco Bradesco SA, the country's biggest non-state bank, rose 1.9 percent to 29.72 reais, while second-biggest Banco Itau Holding Financeira SA added 2.2 percent.
Inflation may be easing, according to recent data. Consumer prices climbed 0.38 percent through the first ten days of August, down from a 2 percent increase in the previous month, the IGP-10 inflation index from Getulio Vargas Foundation showed on Aug. 18.
An index of material stocks in the MSCI Brazil index jumped 5 percent for the biggest advance among the 10 industries.
MMX, the mining company controlled by Batista, rose the most in its two years as a public company after Credit Suisse Group said it is ``likely'' to receive buyout offers.
``MMX is likely to be approached (if it wasn't already) by major players,'' analyst Roger Downey wrote in a note to investors. These ``major players'' may make an offer for MMX to increase their ore production or to guarantee supplies of iron, he wrote, without specifying likely purchasers.
Cia. Vale do Rio Doce, the world's biggest iron-ore producer, gained the most this month after Goldman Sachs Group Inc. raised its profit estimates for 2008 and 2009 on ``stronger than estimated'' second-quarter earnings.
Vale Profit Outlook
Vale will likely report profit of $3.24 per American depositary receipt this year, or 5.2 percent more than previously estimated, analyst Marcelo Aguiar wrote in a note. Profit will likely reach $4.44 per ADR next year, an increase of 3.7 percent from his previous estimate.
The MSCI Colombia index rose the most this month. Colombia is moving towards lifting capital controls on foreign equity trading after the peso's 14 percent depreciation from a mid-June high, Citigroup Inc. wrote today.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- Brazilian stocks gained the most this month, led by metals producers and banks, after commodity prices rose and Citigroup Inc. said investors should buy financial shares as inflation concerns ease.
Cia. Siderurgica Nacional SA led gains in steelmakers after Deutsche Bank said CSN will benefit from rising metal prices in Brazil. Brazilian billionaire Eike Batista's MMX Mineracao & Metalicos SA surged on speculation it may be an acquisition target. Banco do Brasil SA and Uniao de Bancos Brasileiros SA advanced after Citigroup said inflation is peaking and valuations for the two bank stocks are ``compelling.''
``We're seeing that commodities are having decent gains, yet not enough to jeopardize the inflation outlook, and that's good for markets the world over,'' said Fabio Spinola Vianna, who helps manage $1.4 billion at Quest Investimentos in Sao Paulo. ``There were concerns about growth slowing, but this new round of Chinese investment is cheering up the market.''
The Bovespa index gained 2 percent to 54,695.53 at 10:35 a.m. New York time, the largest advance since July 30. Mexico's Bolsa rose 0.7 percent. The MSCI Latin America index jumped 3.1 percent. MSCI Colombia gained 1.4 percent on speculation the government may be preparing to ease capital controls.
CSN, the third-biggest Brazilian steelmaker, gained 3.3 percent to 52.72 reais.
``CSN remains one of the lowest cost and, in our opinion, best positioned steel companies globally,'' analysts David Martin and Jorge Beristain wrote in a note to clients today. ``Prior concerns about rising input costs have eased and CSN now appears poised to benefit from rising steel prices in Brazil.''
Usinas Siderurgicas de Minas Gerais SA, Brazil's second- biggest steelmaker, added 3.4 percent while Gerdau SA, Latin America's biggest maker of the metal, rose 3.5 percent.
Commodities Gain
The Reuters Jefferies Commodities Index rose for a third day, advancing 0.7 percent.
China's government is considering spending as much as 400 billion yuan ($58 billion), or 1.5 percent of the country's gross domestic product, to stimulate the economy and may ease monetary policy this year, said Frank Gong, head of China research at JPMorgan Chase & Co., in a research note yesterday.
Banco do Brasil, Latin America's biggest bank by assets, rose 2.3 percent to 22.70 reais. Unibanco, as Brazil's third- biggest non-government bank is known, advanced 2.3 percent to 19.29 reais. The lenders were both upgraded to ``buy'' from ``hold'' by Citigroup analyst Daniel Abut.
``As far as large-cap Brazilian bank stocks are concerned, we believe it is time to jump into the pool again'' after losses in the shares in the past 2 1/2 months, according to the note. Inflation expectations have peaked, ``allowing us to feel more confident forecasting the likely depth and length of the ongoing tightening cycle,'' the analyst wrote.
Banks Rally
Banco Bradesco SA, the country's biggest non-state bank, rose 1.9 percent to 29.72 reais, while second-biggest Banco Itau Holding Financeira SA added 2.2 percent.
Inflation may be easing, according to recent data. Consumer prices climbed 0.38 percent through the first ten days of August, down from a 2 percent increase in the previous month, the IGP-10 inflation index from Getulio Vargas Foundation showed on Aug. 18.
An index of material stocks in the MSCI Brazil index jumped 5 percent for the biggest advance among the 10 industries.
MMX, the mining company controlled by Batista, rose the most in its two years as a public company after Credit Suisse Group said it is ``likely'' to receive buyout offers.
``MMX is likely to be approached (if it wasn't already) by major players,'' analyst Roger Downey wrote in a note to investors. These ``major players'' may make an offer for MMX to increase their ore production or to guarantee supplies of iron, he wrote, without specifying likely purchasers.
Cia. Vale do Rio Doce, the world's biggest iron-ore producer, gained the most this month after Goldman Sachs Group Inc. raised its profit estimates for 2008 and 2009 on ``stronger than estimated'' second-quarter earnings.
Vale Profit Outlook
Vale will likely report profit of $3.24 per American depositary receipt this year, or 5.2 percent more than previously estimated, analyst Marcelo Aguiar wrote in a note. Profit will likely reach $4.44 per ADR next year, an increase of 3.7 percent from his previous estimate.
The MSCI Colombia index rose the most this month. Colombia is moving towards lifting capital controls on foreign equity trading after the peso's 14 percent depreciation from a mid-June high, Citigroup Inc. wrote today.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
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Eagle Materials, Fannie Mae, OfficeMax: U.S. Equity Movers
By Lynn Thomasson
Aug. 20 (Bloomberg) -- The following companies are having unusual price changes in U.S. markets. Stock symbols are in parentheses, and prices are as of 11:15 a.m. in New York.
Aluminum Corp. of China (ACH US) rose the most in a month, gaining 6.1 percent to $21.25. China's largest aluminum producer plans to invest 2 billion yuan ($292 million) to build its largest copper-processing plant in the southwestern Yunnan province, according to a statement on its Web site.
Analog Devices Inc. (ADI US) lost 5.8 percent, the most since May 2007, to $30.29. The maker of semiconductors for companies including Cisco Systems Inc. (CSCO US) reported third- quarter profit and sales that fell short of analysts' estimates.
Eagle Materials Inc. (EXP US) gained 13 percent to $27.31 for the steepest advance since 2006. Ash Grove Cement Co. said it bought a 5 percent stake in the maker of gypsum wallboard, calling it an ``attractive investment opportunity.'' Ash Grove paid $53.4 million for 2.19 million shares, according to a government filing.
Fannie Mae (FNM US) dropped for a fourth day, losing 11 percent to $5.38. Freddie Mac (FRE US) tumbled 11 percent to $3.71. Freddie Mac executives are scheduled to meet with U.S. Treasury Department officials today, the Wall Street Journal reported. The two sides may explore whether the Treasury could clarify its intentions in a way that would reassure investors, the paper said.
Fannie Mae hasn't asked the U.S. Treasury for help in funding the mortgage-finance company and the government hasn't offered, Chief Executive Officer Daniel Mudd told National Public Radio.
Freeport-McMoRan Copper & Gold Inc. (FCX US) rose the most in a week, adding 3.9 percent to $87.96. Morgan Stanley advised investors to buy the world's largest publicly traded copper producer, citing the stock's valuation following a 28 percent drop from the beginning of July through yesterday. There is not a ``significant'' surplus in the copper market, Morgan Stanley analysts wrote.
Hewlett-Packard Co. (HPQ US) climbed the most in the Dow Jones Industrial Average, adding 5.1 percent to $45.90. The world's largest personal-computer maker reported quarterly profit that exceeded analysts' estimates as new designs attracted notebook buyers.
ITT Educational Services Inc. (ESI US) rose the most since June 19, adding 7 percent to $89.15. The for-profit college was raised to ``buy'' from ``neutral'' by Bank of America Corp. analysts.
Mentor Graphics Corp. (MENT US) rose 7.8 percent, the most in two months, to $11.25. The world's largest maker of programs for creating computer chips reported a second-quarter loss of 1 cent a share before one-time items, smaller than analysts' average estimate of 11 cents.
Novatel Wireless Inc. (NVTL US) plunged the most since 2002, sliding 24 percent to $6.35. The maker of wireless data-access cards for personal computers reported second-quarter profit of 9 cents a share, excluding one-time items. Analysts expected 14 cents, the average of eight estimates in a Bloomberg survey.
OfficeMax Inc. (OMX US) lost 11 percent, the most since July 8, to $12.23. Chief Financial Officer Don Civgin resigned from the third-largest U.S. office supplies retailer to become Allstate Corp.'s (ALL US) new finance chief.
Suntech Power Holdings Co. (STP US) added 12 percent to $41.44, the highest since June 24. The world's third-largest maker of solar-power cells said second-quarter profit rose 58 percent, beating estimates, as the average selling price for its renewable energy equipment climbed.
VeriFone Holdings Inc. (PAY US) climbed 24 percent, the most since going public in April 2005, to $18.31. The biggest maker of electronic-payment equipment restated results and gave an annual forecast that beat analysts' estimates.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
Read more...
Aug. 20 (Bloomberg) -- The following companies are having unusual price changes in U.S. markets. Stock symbols are in parentheses, and prices are as of 11:15 a.m. in New York.
Aluminum Corp. of China (ACH US) rose the most in a month, gaining 6.1 percent to $21.25. China's largest aluminum producer plans to invest 2 billion yuan ($292 million) to build its largest copper-processing plant in the southwestern Yunnan province, according to a statement on its Web site.
Analog Devices Inc. (ADI US) lost 5.8 percent, the most since May 2007, to $30.29. The maker of semiconductors for companies including Cisco Systems Inc. (CSCO US) reported third- quarter profit and sales that fell short of analysts' estimates.
Eagle Materials Inc. (EXP US) gained 13 percent to $27.31 for the steepest advance since 2006. Ash Grove Cement Co. said it bought a 5 percent stake in the maker of gypsum wallboard, calling it an ``attractive investment opportunity.'' Ash Grove paid $53.4 million for 2.19 million shares, according to a government filing.
Fannie Mae (FNM US) dropped for a fourth day, losing 11 percent to $5.38. Freddie Mac (FRE US) tumbled 11 percent to $3.71. Freddie Mac executives are scheduled to meet with U.S. Treasury Department officials today, the Wall Street Journal reported. The two sides may explore whether the Treasury could clarify its intentions in a way that would reassure investors, the paper said.
Fannie Mae hasn't asked the U.S. Treasury for help in funding the mortgage-finance company and the government hasn't offered, Chief Executive Officer Daniel Mudd told National Public Radio.
Freeport-McMoRan Copper & Gold Inc. (FCX US) rose the most in a week, adding 3.9 percent to $87.96. Morgan Stanley advised investors to buy the world's largest publicly traded copper producer, citing the stock's valuation following a 28 percent drop from the beginning of July through yesterday. There is not a ``significant'' surplus in the copper market, Morgan Stanley analysts wrote.
Hewlett-Packard Co. (HPQ US) climbed the most in the Dow Jones Industrial Average, adding 5.1 percent to $45.90. The world's largest personal-computer maker reported quarterly profit that exceeded analysts' estimates as new designs attracted notebook buyers.
ITT Educational Services Inc. (ESI US) rose the most since June 19, adding 7 percent to $89.15. The for-profit college was raised to ``buy'' from ``neutral'' by Bank of America Corp. analysts.
Mentor Graphics Corp. (MENT US) rose 7.8 percent, the most in two months, to $11.25. The world's largest maker of programs for creating computer chips reported a second-quarter loss of 1 cent a share before one-time items, smaller than analysts' average estimate of 11 cents.
Novatel Wireless Inc. (NVTL US) plunged the most since 2002, sliding 24 percent to $6.35. The maker of wireless data-access cards for personal computers reported second-quarter profit of 9 cents a share, excluding one-time items. Analysts expected 14 cents, the average of eight estimates in a Bloomberg survey.
OfficeMax Inc. (OMX US) lost 11 percent, the most since July 8, to $12.23. Chief Financial Officer Don Civgin resigned from the third-largest U.S. office supplies retailer to become Allstate Corp.'s (ALL US) new finance chief.
Suntech Power Holdings Co. (STP US) added 12 percent to $41.44, the highest since June 24. The world's third-largest maker of solar-power cells said second-quarter profit rose 58 percent, beating estimates, as the average selling price for its renewable energy equipment climbed.
VeriFone Holdings Inc. (PAY US) climbed 24 percent, the most since going public in April 2005, to $18.31. The biggest maker of electronic-payment equipment restated results and gave an annual forecast that beat analysts' estimates.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
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Fannie, Freddie Bailouts May Hinge on Debt Rollover
By Dawn Kopecki
Aug. 20 (Bloomberg) -- Fannie Mae and Freddie Mac's success in repaying $223 billion of bonds due by the end of the quarter may determine whether they can avoid a federal bailout.
Fannie, based in Washington, has about $120 billion of debt maturing through Sept. 30, while McLean, Virginia-based Freddie has $103 billion, according to figures provided by the government-chartered companies and data compiled by Bloomberg.
Rising borrowing costs and evidence that demand for their debt was waning last month led Treasury Secretary Henry Paulson to seek the authority to pump unlimited amounts of capital in Fannie and Freddie in an emergency. Their interest costs are again increasing amid concern that credit losses are depleting the capital of the beleaguered mortgage-finance companies.
Rolling over the debt ``is the single most important factor to their ability to remain liquid,'' said Moshe Orenbuch, an analyst at Credit Suisse in New York. ``So far, they've been able to do that.''
Investors in Asia, the biggest foreign owner of Fannie's $3 trillion of bonds, are reducing their share of purchases, potentially increasing the need for Paulson to make good on his pledge to backstop the companies.
``This whole backstop mechanism was set up so the actual need for it could be avoided,'' said Mahesh Swaminathan, a mortgage strategist for Credit Suisse in New York. ``The market is testing the Treasury's resolve.''
New Capital
The companies, responsible for 42 percent of the U.S. home loan market, need as much as $15 billion each in fresh capital to reserve against losses on mortgages and related securities that they either own or guarantee, Paul Miller, an analyst with Friedman Billings Ramsey & Co. in Arlington, Virginia, said.
The Treasury will probably be forced to buy as much as $30 billion of preferred shares in both Fannie and Freddie by the end of next month, according to Bill Gross, who manages the world's biggest bond fund at Pacific Investment Management Co.
``Treasury is monitoring market developments vigilantly. We are focused on encouraging market stability, mortgage availability, and protecting the taxpayers' interests,'' Treasury spokeswoman Jennifer Zuccarelli said.
Freddie Mac ``continues to have strong access to the debt markets at attractive spreads,'' spokeswoman Sharon McHale said. Fannie spokesman Brian Faith declined to comment.
Losing Faith
Investors this week demanded an extra 104 basis points in yield to own Freddie's five-year debt rather than Treasuries of similar maturity, the most since reaching a 10-year high of 114 basis points in March. The gap narrowed to 74 basis points after Paulson's announcement. A basis point is 0.01 percentage point.
Fannie spreads approached a 10-year high of 104 basis points on Aug. 18, from 74 basis points on July 28. In the decade before 2008, the spread averaged 43 basis points.
``The fixed-income markets are starting to lose faith,'' Miller said.
JPMorgan Asset Management Japan is reducing its holdings of Fannie and Freddie debt, according to Shinji Kunibe, a senior money manager at the firm in Tokyo. And Yuuki Sakurai, the general manager of financial and investment planning in Tokyo at Fukoku Mutual Life Insurance Co., said his firm is also ``a little bit worried about the fate of'' Fannie and Freddie.
``The conditions don't seem to be turning into a good environment,'' Sakurai said.
Fannie fell 14 cents to a 19-year low of $6.01 yesterday in New York Stock Exchange trading. Freddie was at its lowest level since January 1991, dropping 22 cents yesterday to $4.17. Both have tumbled more than 90 percent in the past year. In European trading today, Fannie climbed 15 cents to $6.16 by 11 a.m. in Frankfurt, and Freddie added 13 cents to $4.30.
Highlighting Problems
Fannie's market value has shrunk to $6.47 billion and Freddie's declined to $2.7 billion, making it increasingly difficult for the companies to raise equity through public markets, Miller said. The companies have reported a combined $14.9 billion of net losses the past four quarters.
After receiving authority last month to inject unlimited capital into Fannie and Freddie, a Treasury spokeswoman this week said Paulson had no plans to use his new power.
Initial optimism that Paulson's proposal would bolster confidence in the companies has vanished on concern that the deteriorating housing market may force a bailout, a move that would likely wipe out common shareholders and potentially some preferred stockholders, Miller said.
``It hasn't restored any faith, it just highlighted their problems,'' Miller said. ``The market has come to accept the fact that the government has got to do something.''
Freddie's 5.57 percent perpetual preferred shares are trading at $9.37 to yield 15.3 percent, compared with $17.99 and a yield of 7.77 percent on June 30 before the crisis erupted. Fannie's 5.5 percent preferred shares yield 16.4 percent, up from 7.83 percent on June 30.
Roosevelt's Creation
Fannie was created as part of Franklin D. Roosevelt's New Deal in the 1930s and became a publicly owned company in 1968. Freddie was started in 1970 during the Vietnam War, primarily as competition for Fannie.
The companies, which own or guarantee about $5 trillion of the $12 trillion of outstanding U.S. home loans, help expand financing to homebuyers by purchasing home loans from lenders and packaging other loans into securities that they then guarantee.
The companies, which have a combined $1.7 trillion in outstanding unsecured debt, issue new debt to pay off outstanding obligations as they mature. The companies can also sell securities to raise cash.
`Aggressive'
``While the plan was extraordinarily aggressive, it seems that the market is looking for something even more explicit and more guidance about what form that will take,'' said Margaret Kerins, the managing director of agency debt strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut.
Freddie had $70 billion of cash and non-mortgage investments on June 30 and $470 billion of agency mortgage securities that it could pledge for secured borrowing, the company said Aug. 6.
Fannie paid a record high yield in a $3.5 billion sale of three-year benchmark notes last week that drew less demand from Asia. Investors in the region bought 22 percent of the offering, almost half the demand of three months ago and about two-thirds of Asia's usual purchases.
``The 22 percent of Asian participation is worrying,'' said Ajay Rajadhyaksha, the head of fixed-income strategy for Barclays Capital in New York.
Freddie's latest auction of short-term notes attracted less interest from investors for the second straight week.
Freddie this week said it sold $4 billion of short-term notes in a weekly auction, where investors bid for 2.19 times the amount of three-month securities available, down from 2.73 times last week. The bid-to-cover ratio on the company's six- month securities was 2.42 times, down from 2.92 times, while the ratio on 12-month debt sold was fell to 1.75 times, from 2.50.
To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net
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Bank of England Bank Rate Decision History: Summary (Table)
By Joel Rinneby
Aug. 20 (Bloomberg) -- The following table details the changes in the Bank of England's benchmark interest rate.
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Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
8/7/2008 5.00% None None 7-2 1 Cut, 1 Increase
7/10/2008 5.00% None None 7-2 1 Cut, 1 Increase
6/5/2008 5.00% None None 8-1 Cut
5/8/2008 5.00% None None 8-1 Cut
4/10/2008 5.00% Easing -0.25% 6-3 2 Hold, 1 Larger Cut
3/6/2008 5.25% None None 7-2 Cut
2/7/2008 5.25% Easing -0.25% 8-1 Larger Cut
1/10/2008 5.50% None None 8-1 Cut
-------------------------------------------------------------------------------
12/6/2007 5.50% Easing -0.25% 9-0 Unanimous
11/8/2007 5.75% None None 7-2 Cut
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
10/4/2007 5.75% None None 8-1 Cut
9/6/2007 5.75% None None 9-0 Unanimous
8/2/2007 5.75% None None 9-0 Unanimous
7/5/2007 5.75% Tightening 0.25% 6-3 Maintain
6/7/2007 5.50% None None 5-4 Increase
5/10/2007 5.50% Tightening 0.25% 9-0 Unanimous
4/5/2007 5.25% None None 7-2 Increase
3/8/2007 5.25% None None 8-1 Cut
2/8/2007 5.25% None None 7-2 Increase
1/11/2007 5.25% Tightening 0.25% 5-4 Maintain
-------------------------------------------------------------------------------
12/7/2006 5.00% None None 9-0 Unanimous
11/9/2006 5.00% Tightening 0.25% 7-2 Maintain
10/5/2006 4.75% None None 7-2 Increase
9/7/2006 4.75% None None 8-0 Unanimous
8/3/2006 4.75% Tightening 0.25% 6-1 Maintain
7/6/2006 4.50% None None 7-0 Unanimous
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
6/8/2006 4.50% None None 7-1 Increase
5/4/2006 4.50% None None 6-2 1 Cut, 1 Increase
4/6/2006 4.50% None None 7-1 Cut
3/9/2006 4.50% None None 8-1 Cut
2/9/2006 4.50% None None 8-1 Cut
1/12/2006 4.50% None None 8-1 Cut
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12/8/2005 4.50% None None 8-1 Cut
11/10/2005 4.50% None None 9-0 Unanimous
10/6/2005 4.50% None None 9-0 Unanimous
9/8/2005 4.50% None None 9-0 Unanimous
8/4/2005 4.50% Easing -0.25% 5-4 Maintain
7/7/2005 4.75% None None 5-4 Cut
6/9/2005 4.75% None None 7-2 Cut
5/9/2005 4.75% None None 8-1 Increase
4/7/2005 4.75% None None 7-2 Increase
3/10/2005 4.75% None None 7-2 Increase
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
2/10/2005 4.75% None None 8-1 Increase
1/13/2005 4.75% None None 9-0 Unanimous
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12/9/2004 4.75% None None 9-0 Unanimous
11/4/2004 4.75% None None 9-0 Unanimous
10/7/2004 4.75% None None 9-0 Unanimous
9/9/2004 4.75% None None 9-0 Unanimous
8/5/2004 4.75% Tightening 0.25% 9-0 Unanimous
7/8/2004 4.50% None None 9-0 Unanimous
6/10/2004 4.50% Tightening 0.25% 9-0 Unanimous
5/6/2004 4.25% Tightening 0.25% 9-0 Unanimous
4/8/2004 4.00% None None 8-1 Increase
3/4/2004 4.00% None None 9-0 Unanimous
2/5/2004 4.00% Tightening 0.25% 9-0 Unanimous
1/8/2004 3.75% None None 8-1 Increase
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12/4/2003 3.75% None None 8-1 Increase
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
11/6/2003 3.75% Tightening 0.25% 8-1 Maintain
10/9/2003 3.50% None None 5-4 Increase
9/4/2003 3.50% None None 9-0 Unanimous
8/7/2003 3.50% None None 9-0 Unanimous
7/10/2003 3.50% Easing -0.25% 8-1 Maintain
6/5/2003 3.75% None None 6-3 Cut
5/8/2003 3.75% None None 5-4 Cut
4/10/2003 3.75% None None 7-2 Cut
3/6/2003 3.75% None None 8-1 Cut
2/6/2003 3.75% Easing -0.25% 7-2 Maintain
1/9/2003 4.00% None None 7-2 Cut
-------------------------------------------------------------------------------
12/5/2002 4.00% None None 7-2 Cut
11/7/2002 4.00% None None 7-2 Cut
10/10/2002 4.00% None None 6-3 Cut
9/5/2002 4.00% None None 8-0 Unanimous
8/1/2002 4.00% None None 9-0 Unanimous
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
7/4/2002 4.00% None None 8-1 Increase
6/6/2002 4.00% None None 7-1 Increase
5/9/2002 4.00% None None 9-0 Unanimous
4/4/2002 4.00% None None 9-0 Unanimous
3/7/2002 4.00% None None 9-0 Unanimous
2/7/2002 4.00% None None 7-2 Cut
1/10/2002 4.00% None None 9-0 Unanimous
-------------------------------------------------------------------------------
12/5/2001 4.00% None None 7-2 Cut
11/7/2001 4.00% Easing -0.50% 8-1 Smaller Cut
10/4/2001 4.50% Easing -0.25% 8-1 Larger Cut
9/18/2001* 4.75% Easing -0.25% 7-2 Larger Cut
9/6/2001 5.00% None None 8-1 Cut
8/2/2001 5.00% Easing -0.25% 6-3 Maintain
7/5/2001 5.25% None None 8-1 Cut
6/6/2001 5.25% None None 8-1 Cut
5/10/2001 5.25% Easing -0.25% 8-1 Larger Cut
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
4/5/2001 5.50% Easing -0.25% 6-3 Larger Cut
3/8/2001 5.75% None None 7-2 Cut
2/8/2001 5.75% Easing -0.25% 9-0 Unanimous
1/11/2001 6.00% None None 5-4 Cut
-------------------------------------------------------------------------------
12/7/2000 6.00% None None 7-2 Cut
11/9/2000 6.00% None None 9-0 Unanimous
10/5/2000 6.00% None None 9-0 Unanimous
9/7/2000 6.00% None None 5-4 Increase
8/3/2000 6.00% None None 5-4 Increase
7/6/2000 6.00% None None 9-0 Unanimous
6/7/2000 6.00% None None 6-3 Increase
5/4/2000 6.00% None None 9-0 Unanimous
4/6/2000 6.00% None None 6-3 Increase
3/9/2000 6.00% None None 9-0 Unanimous
2/10/2000 6.00% Tightening 0.25% 8-1 Maintain
1/13/2000 5.75% Tightening 0.25% 8-1 Larger Increase
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
-------------------------------------------------------------------------------
12/9/1999 5.50% None None 6-3 Increase
11/4/1999 5.50% Tightening 0.25% 8-1 Maintain
10/7/1999 5.25% None None 9-0 Unanimous
9/8/1999 5.25% Tightening 0.25% 7-2 Maintain
8/5/1999 5.00% None None 9-0 Unanimous
7/8/1999 5.00% None None 9-0 Unanimous
6/10/1999 5.00% Easing -0.25% 8-1 Maintain
5/6/1999 5.25% None None 5-4 Cut
4/8/1999 5.25% Easing -0.25% 8-1 Larger Cut
3/3/1999 5.50% None None 8-1 Cut
2/4/1999 5.50% Easing -0.50% 8-1 Larger Cut
1/7/1999 6.00% Easing -0.25% 7-2 1 Hold, 1 Larger Cut
-------------------------------------------------------------------------------
12/10/1998 6.25% Easing -0.50% 8-1 Larger Cut
11/5/1998 6.75% Easing -0.50% 8-1 Larger Cut
10/8/1998 7.25% Easing -0.25% 7-2 Larger Cut
===============================================================================
Announcement Bank Direction Amount of Minutes Direction
Date Rate Change Vote of Dissent
===============================================================================
9/10/1998 7.50% None None 7-2 Cut
8/6/1998 7.50% None None 7-2 1 Increase, 1 Cut
7/9/1998 7.50% None None 9-0 Unanimous
6/4/1998 7.50% Tightening 0.25% 8-1 Cut
5/7/1998 7.25% None None 6-2 1 Increase, 1 Cut
4/9/1998 7.25% None None 5-3 Increase
3/5/1998 7.25% None None 4-4 Increase
2/5/1998 7.25% None None 4-4 Increase
1/8/1998 7.25% None None 5-3 Increase
-------------------------------------------------------------------------------
12/4/1997 7.25% None None 8-0 Unanimous
11/6/1997 7.25% Tightening 0.25% 7-0 Unanimous
10/9/1997 7.00% None None 7-0 Unanimous
9/11/1997 7.00% None None 7-0 Unanimous
8/7/1997 7.00% Tightening 0.25% 5-0 Unanimous
7/10/1997 6.75% Tightening 0.25% 6-0 Unanimous
6/6/1997 6.50% Tightening 0.25% 6-0 Unanimous
===============================================================================
NOTE: (*) denotes an inter-meeting change in interest rates.
When the vote was even, the Governor had the casting vote.
To contact the reporter on this story:
[bn:PRSN=1] Joel Rinneby [] in Stockholm at jrinneby@bloomberg.net
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