Closing Market Recap: North American Currencies Surge Ahead
27 Agustus 2008 4:13
(CEP News) - The Canadian and U.S. dollars navigated a flurry of economic news and data but held on to strong gains against overseas currencies. The economic news also failed to inspire market participants in Treasury and equity markets as both ended the day virtually flat.
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Tuesday, August 26, 2008
French Unsold New Homes Reach a Record as Economy Contracts
By Sandrine Rastello
Aug. 26 (Bloomberg) -- France's stock of new, unsold homes reached a record in the second quarter, when the euro region's second-largest economy shrank.
The difference between the number of new homes put on the market and those purchased reached 110,500 in the three months through June, the Environment Ministry said in an e-mailed statement sent late yesterday. Sales dropped 34 percent in the quarter from a year earlier, it said.
Higher interest rates in the euro region and banks' reluctance to lend in the wake of the U.S. subprime mortgage market collapse have driven up the cost of credit, just when the fastest inflation in more than 12 years erodes consumer spending power. The French economy shrank 0.3 percent in the second quarter, the first contraction since the end of 2002.
``We're in a situation where there's no reasons to see these factors reverse,'' said Laurence Boone, an economist at Barclays Capital in Paris. ``The real estate market's strength of the past three years has seriously eroded.''
Other figures released today add to signs that the slowdown is deepening. Housing starts dropped 12 percent in the three months through July from a year earlier and home permits fell 17 percent in the period, the ministry said today.
The real-estate slump is affecting the rest of Europe as well. Sagging construction contributed to the German economy's 0.5 percent contraction in the three months through June. Over the same period in Spain, where the housing industry accounts for about 10 percent of the economy, the expansion was the slowest in 15 years.
Jobs, Prices
The slowdown is reflected in French employment figures, too. The number of jobs in the construction sector grew 0.6 percent in the second quarter, the smallest increase since the first three months of 2005, Insee reported this month. Jobs in temporary employment services, which home builders often tap, dropped 6.8 percent.
French Finance Minister Christine Lagarde said in an interview last week that the government is going to revise down next month its growth forecast for the year as she expects the third quarter ``won't be good.''
The lower demand has also started to show in prices of existing homes, which fell 0.8 percent in the first quarter from the previous three months, according to Insee.
In the Paris region, prices of such apartments fell up to 1.4 percent in some suburbs for the three months ended in May from the same period last year, the Paris Chamber of Notaries said yesterday in a statement. Overall, prices rose 4.8 percent in May from a year earlier, the smallest gain in nine years.
In Paris itself, apartment prices rose 1.5 percent, according to the chamber.
To contact the reporters on this story: Sandrine Rastello in Paris srastello@bloomberg.net;
Read more...
Aug. 26 (Bloomberg) -- France's stock of new, unsold homes reached a record in the second quarter, when the euro region's second-largest economy shrank.
The difference between the number of new homes put on the market and those purchased reached 110,500 in the three months through June, the Environment Ministry said in an e-mailed statement sent late yesterday. Sales dropped 34 percent in the quarter from a year earlier, it said.
Higher interest rates in the euro region and banks' reluctance to lend in the wake of the U.S. subprime mortgage market collapse have driven up the cost of credit, just when the fastest inflation in more than 12 years erodes consumer spending power. The French economy shrank 0.3 percent in the second quarter, the first contraction since the end of 2002.
``We're in a situation where there's no reasons to see these factors reverse,'' said Laurence Boone, an economist at Barclays Capital in Paris. ``The real estate market's strength of the past three years has seriously eroded.''
Other figures released today add to signs that the slowdown is deepening. Housing starts dropped 12 percent in the three months through July from a year earlier and home permits fell 17 percent in the period, the ministry said today.
The real-estate slump is affecting the rest of Europe as well. Sagging construction contributed to the German economy's 0.5 percent contraction in the three months through June. Over the same period in Spain, where the housing industry accounts for about 10 percent of the economy, the expansion was the slowest in 15 years.
Jobs, Prices
The slowdown is reflected in French employment figures, too. The number of jobs in the construction sector grew 0.6 percent in the second quarter, the smallest increase since the first three months of 2005, Insee reported this month. Jobs in temporary employment services, which home builders often tap, dropped 6.8 percent.
French Finance Minister Christine Lagarde said in an interview last week that the government is going to revise down next month its growth forecast for the year as she expects the third quarter ``won't be good.''
The lower demand has also started to show in prices of existing homes, which fell 0.8 percent in the first quarter from the previous three months, according to Insee.
In the Paris region, prices of such apartments fell up to 1.4 percent in some suburbs for the three months ended in May from the same period last year, the Paris Chamber of Notaries said yesterday in a statement. Overall, prices rose 4.8 percent in May from a year earlier, the smallest gain in nine years.
In Paris itself, apartment prices rose 1.5 percent, according to the chamber.
To contact the reporters on this story: Sandrine Rastello in Paris srastello@bloomberg.net;
Read more...
U.S. June S&P/Case-Shiller Home Price Index: Summary (Table)
By Alex Tanzi
Aug. 26 (Bloomberg) -- The following table shows the change in the U.S. composite home price index from S&P/Case-Shiller.
==========================================================================
June May April March Feb. Jan. Dec.
2008 2008 2008 2008 2008 2008 2007
==========================================================================
-------------- US Composite-20 City Index -------------
Monthly % -0.50% -0.85% -1.28% -2.15% -2.63% -2.32% -2.08%
3-Mth Annualized -10.05% -15.87% -21.73% -24.98% -24.76% -23.07% -20.07%
Yearly % -15.92% -15.78% -15.23% -14.34% -12.70% -10.67% -9.01%
[bn:WBTKR=SPCS20:IND] Index Level [] 167.69 168.54 169.99 172.19 175.98 180.73 185.02
-------------- US Composite-10 City Index -------------
Monthly % -0.61% -1.03% -1.47% -2.37% -2.81% -2.30% -2.21%
3-Mth Annualized -11.74% -17.84% -23.59% -26.13% -25.63% -23.57% -20.68%
Yearly % -17.02% -16.88% -16.25% -15.28% -13.54% -11.38% -9.74%
Index Level 180.38 181.48 183.37 186.10 190.62 196.13 200.74
==========================================================================
==============================================================
Current Previous 3-Mth YoY% Index
MoM% MoM% Annual% Change Level
==============================================================
US Composite-20 -0.50% -0.85% -10.05% -15.92% 167.69
--------------------------------------------------------------
Denver 1.48% 0.96% 13.88% -4.67% 131.64
Boston 1.23% 1.04% 9.91% -5.24% 162.32
Minneapolis 0.98% 0.56% -2.12% -13.87% 141.50
Cleveland 0.73% -0.61% 12.79% -7.32% 109.67
Dallas 0.66% 1.01% 11.82% -3.24% 122.38
Atlanta 0.60% 0.51% 1.71% -8.10% 125.08
Charlotte 0.36% 1.02% 6.61% -1.04% 133.64
Chicago 0.20% -0.32% -0.21% -9.46% 150.25
New York 0.16% -0.42% -4.50% -7.29% 194.22
Detroit -0.09% -1.07% -11.56% -16.29% 92.68
Seattle -0.22% -0.50% -0.02% -7.11% 178.28
Portland -0.28% 0.38% 1.48% -5.78% 175.03
Washington DC -0.93% -1.01% -11.20% -15.65% 197.39
Tampa -1.15% -0.76% -14.79% -20.14% 175.11
Los Angeles -1.44% -1.94% -20.22% -25.32% 195.74
==============================================================
Current Previous 3-Mth YoY% Index
NOTE: The S&P/Case-Shiller(R) Home Price Indices are constructed from
nonseasonally adjusted data on sales of individual properties. With this
method, changes in the index are derived only from actual changes in
selling prices of individual properties. Jan. 2000 = 100.
The S&P/Case-Shiller (R) index includes homes of all prices, while
the sample for the OFHEO index is based only on conforming mortgages
which leaves out much of the upper end of the housing market.
The composition of the U.S. metropolitan area captured by each of the
S&P/Case-Shiller(R) Home Price Indices (SPCSIs) is largely based upon the
most recent definitions established by the Office of Management and Budget
in 2003. With the exceptions of Chicago (as composed for the S&P/Case-Shiller
Home Price Index, akin to the OMB Chicago "Metropolitan Division") and New
York (as composed for the S&P/Case-Shiller New York Home Price Index, a
variant of the OMB New York "Combined Statistical Area"), these markets are
consistent with what OMB refers to as the "Metropolitan Statistical Area"
(MSA) of each city listed. For more information on geographic composition
of the SPCSIs, please see
http://www.macromarkets.com/csi_housing/market_definitions.shtml
Composite Weights:
Atlanta 3.9%
Boston 5.3%
Charlotte 1.3%
Chicago 6.3%
Cleveland 1.7%
Dallas 4.0%
Denver 2.6%
Detroit 4.8%
Las Vegas 1.1%
Los Angeles 15.1%
Miami 3.6%
Minneapolis 2.8%
New York 19.4%
Phoenix 2.9%
Portland 1.9%
San Diego 3.9%
San Francisco 8.4%
Seattle 3.9%
Tampa 1.5%
Washington DC 5.6%
To contact the reporter on this story:
[bn:PRSN=1] Alex Tanzi [] in Washington at atanzi@bloomberg.net
Read more...
U.S. Consumer Confidence Index Rises More Than Forecast to 56.9
By Timothy R. Homan
Aug. 26 (Bloomberg) -- Consumer confidence in August increased more than forecast in August as cheaper gasoline improved Americans' moods, a private report showed.
The Conference Board's confidence index rose to 56.9 from 51.9 in July. A separate report showed home prices dropped at a slower pace in the second quarter.
A weakening labor market, falling home prices and higher inflation may curb consumer spending for the remainder of the year even as gasoline prices have fallen during the last six weeks. The confidence report does little to ease concern that economic expansion will slow after the effects of the federal tax rebates fade.
``If gasoline prices come down somewhat further, it'll be nice, but I don't think it'll be able to offset further job- market concerns in the eyes of consumers,'' Russell Price, a senior economist at H&R Block Financial Advisors Inc. in Detroit, said before the report.
The New York-based Conference Board's confidence index was forecast to climb to 53, from a previously reported 51.9 for July, according to the median estimate of 70 economists surveyed by Bloomberg News. Projections ranged from 50 to 56.1. June's reading of 51 was the lowest since February 1992.
Home-Price Index
The S&P/Case-Shiller home-price index showed home values declined 2.3 percent in the three months through June from the previous three months, compared with a 6.8 percent drop in the first quarter.
The Reuters/University of Michigan preliminary index of consumer sentiment for August increased less than forecast to 61.7 from 61.2, according to a report earlier this month. The measure averaged 85.6 last year.
Labor markets have a greater weight in the Conference Board's report than they do in the University of Michigan's, economists said.
The share of people telling the Conference Board that jobs are hard to get increased to 32 percent, the highest since October 2003, from 30.2 percent in July. Those saying jobs were plentiful declined to 13.1 percent this month from 13.6 percent.
The share of respondents expecting fewer jobs in six months decreased to 30.6 percent from 37.3 percent.
The outlook for incomes was little changed. The proportion of people who expect their incomes to rise over the next six months increased to 14.7 percent from 14.3 percent last month, according to today's report. The gauge fell to a record-low 13.1 percent in June. Records began in 1967.
Payroll Report
Economists forecast the Labor Department will report on Sept. 5 that the U.S. lost jobs in August for an eighth straight month.
The Conference Board's measure of present conditions decreased to 63.2 in August from 65.8 in July. A gauge of expectations for the next six months rose to 52.8 from 42.7 the prior month, the report showed.
Buying plans over the next six months increased for automobiles and major appliances. More Americans said they would consider buying a home than in July.
The average cost of a gallon of regular gasoline peaked at $4.11 on July 16, according to AAA. Prices yesterday were $3.67 a gallon.
Consumer spending probably will slow as the effects of the rebate checks diminish. Economists surveyed by Bloomberg earlier this month projected spending, which has grown every quarter since 1992, will stall in the last three months of the year.
Commerce Department figures released this month show retail sales in July fell for the first time in five months, signaling the boost from the tax rebates may already be fading.
Some companies are feeling the combined effects of the worst housing slump in a quarter century and a drop-off in consumer spending. Home Depot Inc., the world's largest home- improvement retailer, last week forecast a 24 percent earnings decline for the year.
Chief Executive Officer Frank Blake said in a statement that the Atlanta-based company sees ``pressure on our market and the consumer.'' Second-quarter sales fell 5.4 percent, the seventh decline in the past eight quarters.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
Read more...
Aug. 26 (Bloomberg) -- Consumer confidence in August increased more than forecast in August as cheaper gasoline improved Americans' moods, a private report showed.
The Conference Board's confidence index rose to 56.9 from 51.9 in July. A separate report showed home prices dropped at a slower pace in the second quarter.
A weakening labor market, falling home prices and higher inflation may curb consumer spending for the remainder of the year even as gasoline prices have fallen during the last six weeks. The confidence report does little to ease concern that economic expansion will slow after the effects of the federal tax rebates fade.
``If gasoline prices come down somewhat further, it'll be nice, but I don't think it'll be able to offset further job- market concerns in the eyes of consumers,'' Russell Price, a senior economist at H&R Block Financial Advisors Inc. in Detroit, said before the report.
The New York-based Conference Board's confidence index was forecast to climb to 53, from a previously reported 51.9 for July, according to the median estimate of 70 economists surveyed by Bloomberg News. Projections ranged from 50 to 56.1. June's reading of 51 was the lowest since February 1992.
Home-Price Index
The S&P/Case-Shiller home-price index showed home values declined 2.3 percent in the three months through June from the previous three months, compared with a 6.8 percent drop in the first quarter.
The Reuters/University of Michigan preliminary index of consumer sentiment for August increased less than forecast to 61.7 from 61.2, according to a report earlier this month. The measure averaged 85.6 last year.
Labor markets have a greater weight in the Conference Board's report than they do in the University of Michigan's, economists said.
The share of people telling the Conference Board that jobs are hard to get increased to 32 percent, the highest since October 2003, from 30.2 percent in July. Those saying jobs were plentiful declined to 13.1 percent this month from 13.6 percent.
The share of respondents expecting fewer jobs in six months decreased to 30.6 percent from 37.3 percent.
The outlook for incomes was little changed. The proportion of people who expect their incomes to rise over the next six months increased to 14.7 percent from 14.3 percent last month, according to today's report. The gauge fell to a record-low 13.1 percent in June. Records began in 1967.
Payroll Report
Economists forecast the Labor Department will report on Sept. 5 that the U.S. lost jobs in August for an eighth straight month.
The Conference Board's measure of present conditions decreased to 63.2 in August from 65.8 in July. A gauge of expectations for the next six months rose to 52.8 from 42.7 the prior month, the report showed.
Buying plans over the next six months increased for automobiles and major appliances. More Americans said they would consider buying a home than in July.
The average cost of a gallon of regular gasoline peaked at $4.11 on July 16, according to AAA. Prices yesterday were $3.67 a gallon.
Consumer spending probably will slow as the effects of the rebate checks diminish. Economists surveyed by Bloomberg earlier this month projected spending, which has grown every quarter since 1992, will stall in the last three months of the year.
Commerce Department figures released this month show retail sales in July fell for the first time in five months, signaling the boost from the tax rebates may already be fading.
Some companies are feeling the combined effects of the worst housing slump in a quarter century and a drop-off in consumer spending. Home Depot Inc., the world's largest home- improvement retailer, last week forecast a 24 percent earnings decline for the year.
Chief Executive Officer Frank Blake said in a statement that the Atlanta-based company sees ``pressure on our market and the consumer.'' Second-quarter sales fell 5.4 percent, the seventh decline in the past eight quarters.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
Read more...
U.S. House-Price Slide Eases, S&P/Case-Shiller Shows
By Courtney Schlisserman
(Corrects second paragraph to show 15.9 percent drop was from a year before.)
Aug. 26 (Bloomberg) -- U.S. house prices declined at a slower pace for the fourth straight month in June, signaling that the worst housing slump in more than 25 years may be starting to stabilize.
Home prices in 20 U.S. metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May, the S&P/Case-Shiller index showed. Prices were down 15.9 percent from the previous year, less than economists had forecast.
The figures add evidence that the drag on the economy from the housing slump is lessening, while officials and analysts predict that a rebound remains at least a year away. A private report yesterday showed that sales of existing homes in the past three months averaged the same rate as the previous period.
``We're seeing a slowing in the pace of home-price depreciation,'' said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. ``The middle of next year is when we would expect to see some improvement.''
Treasuries, which had fallen earlier in the day, stayed lower after the report, pushing benchmark 10-year note yields up to 3.80 percent at 9:38 a.m. in New York, from 3.79 percent late yesterday.
Quarterly Drop
S&P/Case Shiller also released quarterly figures for nationwide home prices. That measure showed a 2.3 percent drop in the three months through June from the previous three months, compared with a 6.8 percent decline in the first quarter.
Economists forecast the 20-city index would fall 16.2 percent from a year earlier, according to the median of 26 forecasts in a Bloomberg News survey. Estimates ranged from declines of 17.3 percent to 15.9 percent.
Compared with a year earlier, all 20 areas showed a decrease in prices in June, led by a 29 percent drop in Las Vegas and a 28 percent decline in Miami.
``While there is no national turnaround in residential real estate prices, it is possible that we are a seeing some regions struggling to come back, which has resulted in some moderation of price declines at the national level,'' David Blitzer, chairman of the index committee at S&P, said in a statement.
Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
Other reports show price declines continue. The National Association of Realtors said yesterday that the median price of an existing home fell 7.1 percent in July from a year earlier, compared with a 6.1 percent drop in June.
Resales Rise
The Realtors group also said that resales increased from a 10-year low and the supply of unsold homes rose. There was a record 4.67 million unsold houses and condos on the market in July, representing 11.2 months' supply at the current sales pace, matching the highest rate ever.
The Commerce Department is scheduled to release its report on July new home sales later today. The figures will include information on prices and inventory.
The price gauges from Commerce and the Realtors group can be influenced by changes in the regional composition or types of homes sold. Purchases in areas with more expensive homes relative to cheaper properties will bias the figures up.
In contrast, the S&P/Case-Shiller index, and another by the Office of Federal Housing Enterprise Oversight, track the same houses over time and more accurately reflect price trends, economists said. The Ofheo figures are due at 10:00 a.m.
Bargain Hunting
Some companies are already seeing a pickup in interest because of lower prices.
``Buyers are coming back into the market,'' Tom McCormick, president of Astoria Homes, said in a Bloomberg Television interview last week. ``Remarkably low'' prices do ``seem to be bringing people in off the sidelines.''
Even so, tight credit conditions and ongoing declines in residential construction will weigh on economic growth in coming months, Federal Reserve policy makers said at their Aug. 5 meeting. The Fed's quarterly survey of bank loan officers showed 75 percent had made it tougher for prime borrowers to get a mortgage, more than in the April survey.
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
Read more...
(Corrects second paragraph to show 15.9 percent drop was from a year before.)
Aug. 26 (Bloomberg) -- U.S. house prices declined at a slower pace for the fourth straight month in June, signaling that the worst housing slump in more than 25 years may be starting to stabilize.
Home prices in 20 U.S. metropolitan areas fell 0.5 percent from the previous month, with nine areas reporting a gain compared with seven in May, the S&P/Case-Shiller index showed. Prices were down 15.9 percent from the previous year, less than economists had forecast.
The figures add evidence that the drag on the economy from the housing slump is lessening, while officials and analysts predict that a rebound remains at least a year away. A private report yesterday showed that sales of existing homes in the past three months averaged the same rate as the previous period.
``We're seeing a slowing in the pace of home-price depreciation,'' said Guy Lebas, chief economist at Janney Montgomery Scott LLC in Philadelphia. ``The middle of next year is when we would expect to see some improvement.''
Treasuries, which had fallen earlier in the day, stayed lower after the report, pushing benchmark 10-year note yields up to 3.80 percent at 9:38 a.m. in New York, from 3.79 percent late yesterday.
Quarterly Drop
S&P/Case Shiller also released quarterly figures for nationwide home prices. That measure showed a 2.3 percent drop in the three months through June from the previous three months, compared with a 6.8 percent decline in the first quarter.
Economists forecast the 20-city index would fall 16.2 percent from a year earlier, according to the median of 26 forecasts in a Bloomberg News survey. Estimates ranged from declines of 17.3 percent to 15.9 percent.
Compared with a year earlier, all 20 areas showed a decrease in prices in June, led by a 29 percent drop in Las Vegas and a 28 percent decline in Miami.
``While there is no national turnaround in residential real estate prices, it is possible that we are a seeing some regions struggling to come back, which has resulted in some moderation of price declines at the national level,'' David Blitzer, chairman of the index committee at S&P, said in a statement.
Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University, and Karl Case, an economics professor at Wellesley College, created the home-price index based on research from the 1980s.
Other reports show price declines continue. The National Association of Realtors said yesterday that the median price of an existing home fell 7.1 percent in July from a year earlier, compared with a 6.1 percent drop in June.
Resales Rise
The Realtors group also said that resales increased from a 10-year low and the supply of unsold homes rose. There was a record 4.67 million unsold houses and condos on the market in July, representing 11.2 months' supply at the current sales pace, matching the highest rate ever.
The Commerce Department is scheduled to release its report on July new home sales later today. The figures will include information on prices and inventory.
The price gauges from Commerce and the Realtors group can be influenced by changes in the regional composition or types of homes sold. Purchases in areas with more expensive homes relative to cheaper properties will bias the figures up.
In contrast, the S&P/Case-Shiller index, and another by the Office of Federal Housing Enterprise Oversight, track the same houses over time and more accurately reflect price trends, economists said. The Ofheo figures are due at 10:00 a.m.
Bargain Hunting
Some companies are already seeing a pickup in interest because of lower prices.
``Buyers are coming back into the market,'' Tom McCormick, president of Astoria Homes, said in a Bloomberg Television interview last week. ``Remarkably low'' prices do ``seem to be bringing people in off the sidelines.''
Even so, tight credit conditions and ongoing declines in residential construction will weigh on economic growth in coming months, Federal Reserve policy makers said at their Aug. 5 meeting. The Fed's quarterly survey of bank loan officers showed 75 percent had made it tougher for prime borrowers to get a mortgage, more than in the April survey.
To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net
Read more...
Norway Oil Minister Says Crude Prices Are Still `Quite High'
By Alexander Kwiatkowski
Aug. 26 (Bloomberg) -- Norway's Oil Minister Terje Riis- Johansen said crude prices are still ``quite high'' and that there's no need to slacken world output.
Norway doesn't see ``any reason'' for the Organization of Petroleum Exporting Countries to cut production, the minister told reporters today at a conference in Stavanger, Norway. The Nordic country is the world's fifth-largest oil exporter and isn't a member of OPEC.
Iran's Oil Ministry yesterday said it may urge OPEC to cut production when it next meets on Sept. 9 after the price slipped more than $30 a barrel since last month.
Separately, Riis-Johansen said that the conflict between Russia and Georgia won't affect Norway's involvement in the development of the Shtokman gas field in the Arctic. StatoilHydro ASA, Norway's largest oil and gas company, holds 24 percent of the project's operating company.
``It's important for Norway to have cooperation with Russia,'' the minister said.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net;
Read more...
Aug. 26 (Bloomberg) -- Norway's Oil Minister Terje Riis- Johansen said crude prices are still ``quite high'' and that there's no need to slacken world output.
Norway doesn't see ``any reason'' for the Organization of Petroleum Exporting Countries to cut production, the minister told reporters today at a conference in Stavanger, Norway. The Nordic country is the world's fifth-largest oil exporter and isn't a member of OPEC.
Iran's Oil Ministry yesterday said it may urge OPEC to cut production when it next meets on Sept. 9 after the price slipped more than $30 a barrel since last month.
Separately, Riis-Johansen said that the conflict between Russia and Georgia won't affect Norway's involvement in the development of the Shtokman gas field in the Arctic. StatoilHydro ASA, Norway's largest oil and gas company, holds 24 percent of the project's operating company.
``It's important for Norway to have cooperation with Russia,'' the minister said.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net;
Read more...
German Recession Looms as Business Confidence Slumps
By Simone Meier
Aug. 26 (Bloomberg) -- German business and consumer confidence fell more than economists forecast, heightening concern that Europe's largest economy may be slipping into a recession.
The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, dropped to a three-year low of 94.8 from 97.5 in July. Consumer sentiment slumped to the lowest level in five years, according to Nuremberg-based market research company GfK AG.
The euro and bond yields fell. Germany's economy contracted in the second quarter and may fail to grow in the third. While oil prices have receded from a record $147.27 a barrel, they're still up 60 percent over the past year, crimping companies' spending power just as the euro's appreciation and the U.S. housing slump weigh on exports.
``With today's data, the risk of a recession has increased,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. ``Germany is no longer in a position to resist the downward spiral. I can't even see the end of it.''
Ifo's gauge of business expectations dropped to 87, the lowest since February 1993, when Germany was experiencing the worst recession of the past two decades. A measure of current conditions eased to 103.2 from 105.7.
The economy contracted 0.5 percent in the three months through June as construction slumped and companies and households reduced spending, the Federal Statistics Office confirmed today. Exports also fell.
ECB Rates
The euro dropped more than a cent after the Ifo report to $1.4597 and yields on 10-year German bonds fell 5 basis points.
``A serious German downturn would not bode well for the euro zone as a whole, to put it mildly,'' said Holger Schmieding, chief European economist at Bank of America Corp. in London.
The chances of the European Central Bank cutting interest rates are growing, Ifo economist Gernot Nerb said. The ECB last month raised its key rate by 25 basis points to 4.25 percent to fight inflation.
The rate increase ``was certainly not helpful,'' Nerb said in an interview with Bloomberg Television. ``In the current environment, it would be better if they'' lowered borrowing costs. ``It's difficult to say whether the worst is behind us.''
Investors raised bets that the ECB's next move will be a rate reduction, Eonia forward contracts show. The yield on the March contract fell to 4.13 percent today from 4.61 percent on July 21.
`Gradual Weakening'
While the German government has maintained its forecast for growth of 1.7 percent this year after 2.5 percent in 2007, the Berlin-based BDB banking association said on Aug. 20 the economy may barely expand in the second half of the year.
Arcandor AG, Germany's largest department-store operator, on Aug. 13 reported a loss for the quarter through June and reduced its 2009 earnings forecast. Daimler AG, the world's second-largest luxury carmaker, said Aug. 6 it plans to cut production by 45,000 vehicles by the end of the year.
In the economy of the 15 euro nations, manufacturing and service industries contracted for a third straight month in August and confidence in the economic outlook last month dropped the most since the Sept. 11 terrorist attacks in 2001.
``I see a gradual weakening of the German economy but not a collapse,'' said Peter Loescher, chief executive officer of Siemens AG, Europe's largest engineering company.
The price of crude has dropped 9 percent over the past month to around $114 a barrel and the euro has retreated from an all- time high of $1.6038 on July 15. Some companies are also benefiting from demand in faster-growing economies in Asia and eastern Europe.
Hochtief AG, Germany's largest builder, on Aug. 14 raised its full-year earnings forecasts on increasing demand for construction and mining work. SAP AG, the world's largest maker of business- management software, last month raised its full-year earnings forecast on increasing orders.
Still, ``the airbag effect of lower oil prices and a weaker exchange rate hasn't kicked in,'' said Andreas Rees, chief German economist at UniCredit Markets & Investment Banking in Munich. ``We see a recession risk of 70 percent this year.''
To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net
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European Workers Per Retiree Projected to Drop by Half by 2060
By Fergal O'Brien
Aug. 26 (Bloomberg) -- The number of working Europeans per retiree will drop by half over the next 50 years, according to European Union projections, putting additional pressure on governments' public finances as pension spending increases.
The number of people of working age for every person aged 65 or more will fall to two by 2060, compared with four today, the EU statistics office in Luxembourg said in population projections published today. The population of the 27-member EU may rise to 521 million in 2035 from 495 million now before declining to 506 million by 2060, today's report shows.
Aging populations will increase fiscal pressure on Europe's governments as lower birth rates mean a smaller number of people supporting a growing proportion of retired people. The share of the overall population aged 65 years and over will almost double to 30 percent by 2060 due in part to ``persistently low fertility,'' according to the report.
``This is one of the major challenges that Europe must face, together with climate change and globalization,'' Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, told journalists in Brussels today. The EU will use the population projections to study ``the burden which the aging process has on the economy and the budget.''
Starting in 2015, annual deaths will outnumber births, while from 2035, positive net migration will no longer be strong enough to ``counterbalance the negative natural change, and the population is projected to begin to fall,'' the statistics office said.
U.K., France
The report also projects that the U.K. and France will overtake Germany as Europe's largest countries by population. The number of people living in the U.K. will jump 25 percent to 76.7 million by 2060, while the French population is projected to rise 16 percent to 71.8 million. Over the same period, Germany's population will drop 14 percent to 70.8 million.
Cyprus and Ireland will probably record the biggest population increases over the next 50 years, of 66 percent and 53 percent, respectively, according to the report. Bulgaria and Latvia are projected to record declines of more than 25 percent over the period.
To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.
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Aug. 26 (Bloomberg) -- The number of working Europeans per retiree will drop by half over the next 50 years, according to European Union projections, putting additional pressure on governments' public finances as pension spending increases.
The number of people of working age for every person aged 65 or more will fall to two by 2060, compared with four today, the EU statistics office in Luxembourg said in population projections published today. The population of the 27-member EU may rise to 521 million in 2035 from 495 million now before declining to 506 million by 2060, today's report shows.
Aging populations will increase fiscal pressure on Europe's governments as lower birth rates mean a smaller number of people supporting a growing proportion of retired people. The share of the overall population aged 65 years and over will almost double to 30 percent by 2060 due in part to ``persistently low fertility,'' according to the report.
``This is one of the major challenges that Europe must face, together with climate change and globalization,'' Amelia Torres, spokeswoman for EU Economic and Monetary Affairs Commissioner Joaquin Almunia, told journalists in Brussels today. The EU will use the population projections to study ``the burden which the aging process has on the economy and the budget.''
Starting in 2015, annual deaths will outnumber births, while from 2035, positive net migration will no longer be strong enough to ``counterbalance the negative natural change, and the population is projected to begin to fall,'' the statistics office said.
U.K., France
The report also projects that the U.K. and France will overtake Germany as Europe's largest countries by population. The number of people living in the U.K. will jump 25 percent to 76.7 million by 2060, while the French population is projected to rise 16 percent to 71.8 million. Over the same period, Germany's population will drop 14 percent to 70.8 million.
Cyprus and Ireland will probably record the biggest population increases over the next 50 years, of 66 percent and 53 percent, respectively, according to the report. Bulgaria and Latvia are projected to record declines of more than 25 percent over the period.
To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.
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Hurricane Gustav Strengthens, Heads for Haiti, Gulf
By Brian K. Sullivan and Alex Morales
Aug. 26 (Bloomberg) -- Hurricane Gustav is forecast to make landfall later today in Haiti and may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds strengthened to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory just before 8 a.m. Miami time. The system, located 75 miles south-southeast of the Haitian capital, Port-au-Prince, was heading northwest at 9 mph.
``This time next week it will be somewhere in the Gulf,'' said Eric Wilhelm, senior meteorologist at private forecaster AccuWeather Inc. in State College, Pennsylvania. ``All the states lining the Gulf Coast of the U.S. will be on the lookout.''
Gustav will probably intensify into a Category 2 hurricane later today with winds of at least 96 mph and may develop into a Category 3 or 4 by the end of the week, Wilhelm said. Hurricanes are rated on the 5-step Saffir-Simpson scale, with Categories 3 or higher deemed ``major'' storms, with winds of 111 mph and higher.
Crude oil for October delivery pared an earlier loss, falling 0.7 percent to $114.32 a barrel on the New York Mercantile Exchange.
Oil Production
``It may disrupt the production of oil next week,'' said Paul Walker, a meteorologist at AccuWeather Inc.
Forecasts from the Hurricane Center show Gustav striking Haiti later today and then following a track between Jamaica in the south and Cuba to the north. Wilhelm said that path will give the hurricane access to the warm waters of the Caribbean and let it gather strength.
Sometime between Aug. 30 and 31, the hurricane will likely be between Cuba and the Yucatan Peninsula in Mexico heading for the Gulf.
Gustav follows the remnants of Tropical Storm Fay, which last week left a trail of death and flooding in the Caribbean and Florida, where it made an unprecedented four landfalls.
Haiti in recent years has proved vulnerable to flooding and mudslides caused by storms because deforestation has left the nation short of vegetation to hold rainwater and soil.
A hurricane warning was in effect for parts of the Dominican Republic and Haiti.
The storm may bring 15 inches (38 centimeters) of rain to parts of the Dominican Republic, Haiti and Jamaica, the U.S. center said.
``Preparations to protect life and property should be rushed to completion,'' the center said. ``Interests in central and western Cuba and the Cayman Islands should closely monitor the progress of Gustav.''
Gustav formed yesterday as a depression and then a tropical storm, before reaching the 74 mph threshold for a hurricane early today. Gustav is the seventh named storm of the Atlantic hurricane season, which runs from June 1 through Nov. 30. The National Oceanic and Atmospheric Administration's forecasters predict 14 to 18 named storms will develop this year.
To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net
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Aug. 26 (Bloomberg) -- Hurricane Gustav is forecast to make landfall later today in Haiti and may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds strengthened to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory just before 8 a.m. Miami time. The system, located 75 miles south-southeast of the Haitian capital, Port-au-Prince, was heading northwest at 9 mph.
``This time next week it will be somewhere in the Gulf,'' said Eric Wilhelm, senior meteorologist at private forecaster AccuWeather Inc. in State College, Pennsylvania. ``All the states lining the Gulf Coast of the U.S. will be on the lookout.''
Gustav will probably intensify into a Category 2 hurricane later today with winds of at least 96 mph and may develop into a Category 3 or 4 by the end of the week, Wilhelm said. Hurricanes are rated on the 5-step Saffir-Simpson scale, with Categories 3 or higher deemed ``major'' storms, with winds of 111 mph and higher.
Crude oil for October delivery pared an earlier loss, falling 0.7 percent to $114.32 a barrel on the New York Mercantile Exchange.
Oil Production
``It may disrupt the production of oil next week,'' said Paul Walker, a meteorologist at AccuWeather Inc.
Forecasts from the Hurricane Center show Gustav striking Haiti later today and then following a track between Jamaica in the south and Cuba to the north. Wilhelm said that path will give the hurricane access to the warm waters of the Caribbean and let it gather strength.
Sometime between Aug. 30 and 31, the hurricane will likely be between Cuba and the Yucatan Peninsula in Mexico heading for the Gulf.
Gustav follows the remnants of Tropical Storm Fay, which last week left a trail of death and flooding in the Caribbean and Florida, where it made an unprecedented four landfalls.
Haiti in recent years has proved vulnerable to flooding and mudslides caused by storms because deforestation has left the nation short of vegetation to hold rainwater and soil.
A hurricane warning was in effect for parts of the Dominican Republic and Haiti.
The storm may bring 15 inches (38 centimeters) of rain to parts of the Dominican Republic, Haiti and Jamaica, the U.S. center said.
``Preparations to protect life and property should be rushed to completion,'' the center said. ``Interests in central and western Cuba and the Cayman Islands should closely monitor the progress of Gustav.''
Gustav formed yesterday as a depression and then a tropical storm, before reaching the 74 mph threshold for a hurricane early today. Gustav is the seventh named storm of the Atlantic hurricane season, which runs from June 1 through Nov. 30. The National Oceanic and Atmospheric Administration's forecasters predict 14 to 18 named storms will develop this year.
To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net
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Oil Rises More Than $2 as Hurricane Threatens Gulf of Mexico
By Mark Shenk
Aug. 26 (Bloomberg) -- Crude oil rose more than $2 a barrel on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds rose to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory at 8 a.m. Miami time. Russia, the world's second-biggest oil producer, recognized the independence of two breakaway regions in Georgia today, risking a deepening rift with the West.
``Prices surged because Gustav appears to be strengthening as it moves toward the Gulf,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``The news from Georgia is also helping send prices higher. Tension is ratcheting up instead of cooling down.''
Crude oil for October delivery rose $2.27, or 2 percent, to $117.38 a barrel at 9:45 a.m. on the New York Mercantile Exchange. Prices are up 63 percent from a year ago.
Brent crude oil for October settlement rose $2.02, or 1.8 percent, to $116.05 a barrel on London's ICE Futures Europe exchange.
The hurricane, located 75 miles south-southeast of the Haitian capital, Port-au-Prince, was heading northwest at 9 mph. Forecasts from the Hurricane Center show Gustav striking Haiti later today. By Aug. 31 the hurricane will probably be between Cuba and the Yucatan Peninsula in Mexico, heading for the Gulf.
``We are going to pay close attention to every change in the storm's forecast,'' said Tom Bentz, a broker at BNP Paribas in New York.
Strengthening Hurricane
Gustav will probably intensify into a Category 2 hurricane later today with winds of at least 96 mph and may develop into a Category 3 or 4 storm by the end of the week, said Eric Wilhelm, senior meteorologist at private forecaster AccuWeather Inc. in State College, Pennsylvania. Hurricanes are rated on the 5-step Saffir-Simpson scale.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
German Chancellor Angela Merkel said that Russia's decision to recognize two breakaway Georgian regions of South Ossetia and Abkhazia breaches international law and will not be accepted by European Union members meeting to discuss the fallout from the war in Georgia.
``It's a very serious situation for Russia,'' said Alexander Rahr, a Russia and Eurasia expert at the German Council on Foreign Relations in Berlin. ``Russia now risks getting itself into complete international isolation.''
Euro Weakens
Oil fell earlier as the dollar strengthened to a six-month high against the euro, limiting the appeal of commodities as a hedge, and shipments of Caspian Sea crude oil resumed after a pipeline fire.
The euro tumbled against the dollar after a report showed German business confidence dropped in August by more than economists forecast. The European currency declined 0.7 percent to $1.465 in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14.
``It's a battle between the dollar and the weather for dominance in this market,'' Bentz said. ``The German economic numbers put crude under pressure because it raises concern about lower European demand and sent the dollar to a six-month high. The dollar has been the primary driving force of the oil market for more than six months.''
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Read more...
Aug. 26 (Bloomberg) -- Crude oil rose more than $2 a barrel on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds rose to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory at 8 a.m. Miami time. Russia, the world's second-biggest oil producer, recognized the independence of two breakaway regions in Georgia today, risking a deepening rift with the West.
``Prices surged because Gustav appears to be strengthening as it moves toward the Gulf,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``The news from Georgia is also helping send prices higher. Tension is ratcheting up instead of cooling down.''
Crude oil for October delivery rose $2.27, or 2 percent, to $117.38 a barrel at 9:45 a.m. on the New York Mercantile Exchange. Prices are up 63 percent from a year ago.
Brent crude oil for October settlement rose $2.02, or 1.8 percent, to $116.05 a barrel on London's ICE Futures Europe exchange.
The hurricane, located 75 miles south-southeast of the Haitian capital, Port-au-Prince, was heading northwest at 9 mph. Forecasts from the Hurricane Center show Gustav striking Haiti later today. By Aug. 31 the hurricane will probably be between Cuba and the Yucatan Peninsula in Mexico, heading for the Gulf.
``We are going to pay close attention to every change in the storm's forecast,'' said Tom Bentz, a broker at BNP Paribas in New York.
Strengthening Hurricane
Gustav will probably intensify into a Category 2 hurricane later today with winds of at least 96 mph and may develop into a Category 3 or 4 storm by the end of the week, said Eric Wilhelm, senior meteorologist at private forecaster AccuWeather Inc. in State College, Pennsylvania. Hurricanes are rated on the 5-step Saffir-Simpson scale.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
German Chancellor Angela Merkel said that Russia's decision to recognize two breakaway Georgian regions of South Ossetia and Abkhazia breaches international law and will not be accepted by European Union members meeting to discuss the fallout from the war in Georgia.
``It's a very serious situation for Russia,'' said Alexander Rahr, a Russia and Eurasia expert at the German Council on Foreign Relations in Berlin. ``Russia now risks getting itself into complete international isolation.''
Euro Weakens
Oil fell earlier as the dollar strengthened to a six-month high against the euro, limiting the appeal of commodities as a hedge, and shipments of Caspian Sea crude oil resumed after a pipeline fire.
The euro tumbled against the dollar after a report showed German business confidence dropped in August by more than economists forecast. The European currency declined 0.7 percent to $1.465 in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14.
``It's a battle between the dollar and the weather for dominance in this market,'' Bentz said. ``The German economic numbers put crude under pressure because it raises concern about lower European demand and sent the dollar to a six-month high. The dollar has been the primary driving force of the oil market for more than six months.''
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Read more...
Sinopec Says 2008 Is Company's Most `Difficult' Year
By Wang Ying
Aug. 26 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, is facing its most ``difficult'' year as government subsidies and higher state-set fuel prices are not enough to offset record crude costs.
Sinopec, as the company is known, will cut its 2008 capital expenditure by 8.2 billion yuan ($1.2 billion) due to ``severe operating pressures'' and ``cash-flow constraints,'' Chairman Su Shulin told a press conference in Hong Kong today. The third and fourth quarters will be the most challenging, Su said.
The shares of the Hong Kong-listed company have slumped 33 percent this year as the government prevented the refiner from passing on higher crude costs to customers. China raised the prices of gasoline, diesel and jet fuel by at least 17 percent in June while oil prices almost doubled from a year earlier.
``With the refining business a money loser, insufficient cash flow is a real challenge for Sinopec,'' Grace Liu, an analyst with Guotai Junan Securities Hong Kong Co., said by telephone from the southern city of Shenzhen. ``Sinopec may improve in 2009 on potentially higher domestic fuel prices.''
Sinopec will continue to get subsidies in the third quarter for crude oil imports, Su said. The size of the subsidies, in the form of tax rebates, will be ``appropriate,'' Su said.
``Sinopec is facing unprecedented difficulties, which we believe is also temporary, and that hasn't changed the fundamentals of the company,'' Chief Financial Officer Dai Houliang told reporters. ``We are confident about the future.''
Postponing Projects
First-half profit slumped 77 percent from a year earlier to 8.26 billion yuan, while refining losses reached 46 billion yuan in the first six months, Sinopec said in a statement to the Shanghai Stock Exchange on Aug. 24.
The Beijing-based refiner plans to cut expenditure on exploration and development by 1.9 billion yuan, reduce its spending on refineries by 1.7 billion yuan and lower investment in chemical plants by 4.6 billion yuan, Su said.
``If the situation doesn't improve in the third and fourth quarters, there will be more projects to be adjusted or delayed,'' Su told reporters today.
Sinopec will postpone the operational startup of its Puguang gas field in Sichuan by up to a year because of the plan to cut spending, company spokesman Huang Wensheng said after the press conference. The startup is also affected by the 7.9- magnitude quake that hit the southwestern province on May 12, Huang said.
The company has reduced its 2008 natural gas production target by 8 percent to 8.28 billion cubic meters, according to data from Sinopec's 2007 annual report and numbers provided by the company during a presentation today.
Fuel Imports
Sinopec should cut fuel imports because of falling consumption, Su said today. China, the world's second-largest energy consumer after the U.S., boosted diesel and gasoline imports to a record last month to ensure supplies during the Beijing Olympics, which ended on Aug. 24. Diesel imports reached 970,000 metric tons and gasoline purchases 606,000 tons in July.
``Domestic demand for fuels is currently declining because of the recent oil-product price increases, the Olympics-related transportation restrictions, and because the seasonal peak in diesel demand from farmers has ended,'' he said.
China raised the prices of gasoline, diesel and jet fuel on June 20, the first increase since November last year. It is ``unclear'' if the government will increase fuel prices in the third quarter, Sinopec's Deputy Chief Financial Officer Liu Yun said today.
Tax Rebates
The crude import subsidy Sinopec is getting in the third quarter will be less than that for the previous three months, Dai said. Crude prices have fallen and domestic fuel prices have gained, hence the smaller subsidy, he said. Benchmark crude oil in New York has retreated 21 percent from its all-time high of $147.27 a barrel on July 11.
``The way in which the government will subsidize imports of refined fuels in the third quarter will be the same as it did in the second quarter,'' Dai said.
The government paid Sinopec and PetroChina Co. rebates of 75 percent on the 17 percent tax levied on crude imports in the second quarter. Sinopec received 22.93 billion yuan in the quarter, the company said in the Aug. 24 statement.
PetroChina and Sinopec will get back about 40 percent of the tax in the third quarter, the South China Morning Post reported today, citing people it didn't identify.
Sinopec was losing about 3,000 yuan on each ton of refined products because of the high crude costs, the company's spokesman Chen Ge said in May.
Windfall Tax
The refiner has not received any word from the government on a possible adjustment in the `trigger level' of the windfall tax, Dai said.
Chinese oil producers pay a windfall tax on revenue from crude sold for more than $40 a barrel under a levy introduced in March 2006, based on a global crude price of about $60.
The wider the gap between the `trigger level' and actual selling prices, the more tax companies have to pay. Crude prices on the New York Mercantile Exchange were at $113.51 a barrel at 7:54 p.m. Hong Kong time, up 58 percent from a year earlier.
China Petrochemical Corp., the parent of Hong Kong-listed Sinopec, is making ``preliminary'' preparations with China National Petroleum Corp. for a joint bid for Petro-Tech Peruana in Peru, Su said.
Sinopec Group, as China Petrochemical is known, is also doing the same with China National Petroleum Corp. for an Angolan oil and gas asset, Su said, without elaborating.
``Our listed unit Sinopec will participate in some overseas exploration projects in the long term, but will not directly get involved in the near future,'' Su said.
To contact the reporter on this story: Wang Ying in Hong Kong at wang30@bloomberg.net;
Read more...
Aug. 26 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, is facing its most ``difficult'' year as government subsidies and higher state-set fuel prices are not enough to offset record crude costs.
Sinopec, as the company is known, will cut its 2008 capital expenditure by 8.2 billion yuan ($1.2 billion) due to ``severe operating pressures'' and ``cash-flow constraints,'' Chairman Su Shulin told a press conference in Hong Kong today. The third and fourth quarters will be the most challenging, Su said.
The shares of the Hong Kong-listed company have slumped 33 percent this year as the government prevented the refiner from passing on higher crude costs to customers. China raised the prices of gasoline, diesel and jet fuel by at least 17 percent in June while oil prices almost doubled from a year earlier.
``With the refining business a money loser, insufficient cash flow is a real challenge for Sinopec,'' Grace Liu, an analyst with Guotai Junan Securities Hong Kong Co., said by telephone from the southern city of Shenzhen. ``Sinopec may improve in 2009 on potentially higher domestic fuel prices.''
Sinopec will continue to get subsidies in the third quarter for crude oil imports, Su said. The size of the subsidies, in the form of tax rebates, will be ``appropriate,'' Su said.
``Sinopec is facing unprecedented difficulties, which we believe is also temporary, and that hasn't changed the fundamentals of the company,'' Chief Financial Officer Dai Houliang told reporters. ``We are confident about the future.''
Postponing Projects
First-half profit slumped 77 percent from a year earlier to 8.26 billion yuan, while refining losses reached 46 billion yuan in the first six months, Sinopec said in a statement to the Shanghai Stock Exchange on Aug. 24.
The Beijing-based refiner plans to cut expenditure on exploration and development by 1.9 billion yuan, reduce its spending on refineries by 1.7 billion yuan and lower investment in chemical plants by 4.6 billion yuan, Su said.
``If the situation doesn't improve in the third and fourth quarters, there will be more projects to be adjusted or delayed,'' Su told reporters today.
Sinopec will postpone the operational startup of its Puguang gas field in Sichuan by up to a year because of the plan to cut spending, company spokesman Huang Wensheng said after the press conference. The startup is also affected by the 7.9- magnitude quake that hit the southwestern province on May 12, Huang said.
The company has reduced its 2008 natural gas production target by 8 percent to 8.28 billion cubic meters, according to data from Sinopec's 2007 annual report and numbers provided by the company during a presentation today.
Fuel Imports
Sinopec should cut fuel imports because of falling consumption, Su said today. China, the world's second-largest energy consumer after the U.S., boosted diesel and gasoline imports to a record last month to ensure supplies during the Beijing Olympics, which ended on Aug. 24. Diesel imports reached 970,000 metric tons and gasoline purchases 606,000 tons in July.
``Domestic demand for fuels is currently declining because of the recent oil-product price increases, the Olympics-related transportation restrictions, and because the seasonal peak in diesel demand from farmers has ended,'' he said.
China raised the prices of gasoline, diesel and jet fuel on June 20, the first increase since November last year. It is ``unclear'' if the government will increase fuel prices in the third quarter, Sinopec's Deputy Chief Financial Officer Liu Yun said today.
Tax Rebates
The crude import subsidy Sinopec is getting in the third quarter will be less than that for the previous three months, Dai said. Crude prices have fallen and domestic fuel prices have gained, hence the smaller subsidy, he said. Benchmark crude oil in New York has retreated 21 percent from its all-time high of $147.27 a barrel on July 11.
``The way in which the government will subsidize imports of refined fuels in the third quarter will be the same as it did in the second quarter,'' Dai said.
The government paid Sinopec and PetroChina Co. rebates of 75 percent on the 17 percent tax levied on crude imports in the second quarter. Sinopec received 22.93 billion yuan in the quarter, the company said in the Aug. 24 statement.
PetroChina and Sinopec will get back about 40 percent of the tax in the third quarter, the South China Morning Post reported today, citing people it didn't identify.
Sinopec was losing about 3,000 yuan on each ton of refined products because of the high crude costs, the company's spokesman Chen Ge said in May.
Windfall Tax
The refiner has not received any word from the government on a possible adjustment in the `trigger level' of the windfall tax, Dai said.
Chinese oil producers pay a windfall tax on revenue from crude sold for more than $40 a barrel under a levy introduced in March 2006, based on a global crude price of about $60.
The wider the gap between the `trigger level' and actual selling prices, the more tax companies have to pay. Crude prices on the New York Mercantile Exchange were at $113.51 a barrel at 7:54 p.m. Hong Kong time, up 58 percent from a year earlier.
China Petrochemical Corp., the parent of Hong Kong-listed Sinopec, is making ``preliminary'' preparations with China National Petroleum Corp. for a joint bid for Petro-Tech Peruana in Peru, Su said.
Sinopec Group, as China Petrochemical is known, is also doing the same with China National Petroleum Corp. for an Angolan oil and gas asset, Su said, without elaborating.
``Our listed unit Sinopec will participate in some overseas exploration projects in the long term, but will not directly get involved in the near future,'' Su said.
To contact the reporter on this story: Wang Ying in Hong Kong at wang30@bloomberg.net;
Read more...
East European Currencies: Zloty Drops as Risk Appetite Falls
By Ewa Krukowska
Aug. 26 (Bloomberg) -- Poland's zloty fell against the euro as a deterioration in German business confidence this month dented investors' sentiment toward higher-yielding emerging- market currencies. The Hungarian forint dropped.
The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, fell to a three-year low of 94.8 in August, from 97.5 in July. Economists expected a drop to 97.2, the median of 35 forecasts in a Bloomberg News survey shows. The euro declined to the weakest level against the dollar since mid-February after the report.
``The Ifo data showed weak economic growth prospects for Europe,'' said Maja Goetting, Warsaw-based senior economist at Bank BPH, part of General Electric Co. ``This prompted some investors to sell the zloty and other regional currencies.''
The zloty dropped as much as 0.4 percent to 3.3137 per euro, and was at 3.3105 by 11:31 a.m. in Warsaw, from 3.2997 yesterday.
The zloty is the best-performing currency in Europe in the past 12 months, having gained 16 percent versus the euro as the central bank raised interest rates to a more than three-year high of 6 percent to curb inflation.
Policy makers will probably leave borrowing costs unchanged at their two-day policy meeting that started today, a Bloomberg survey of economists showed. The decision is due to be announced tomorrow after 11:30 a.m.
Poland's retail sales rose an annual 14.3 percent in July, compared with 14.2 percent a month earlier, the statistics office said today. That was more than the 14 percent median estimate of economists in a Bloomberg survey.
Forint Weakens
In other trading, the Hungarian forint declined 0.2 percent to 234.72 per euro, dropping for a third day.
The Magyar Nemzeti Bank in Budapest yesterday kept the two- week deposit rate at 8.5 percent, the second-highest in the European Union after Romania. The bank also lowered its forecasts for core inflation and economic growth, reinforcing speculation it may begin cutting rates in coming months.
The Romanian leu dropped 0.7 percent to 3.5452 against the euro and the Turkish lira lost 0.2 percent to 1.1904 per dollar.
The Czech koruna declined 0.1 percent to 24.479 versus the euro, while the Slovak koruna was little changed at 30.297 against Europe's common currency after policy makers kept the country's main rate at 4.25 percent today. Slovakia will join the euro area at the start of next year.
To contact the reporter on this story: Ewa Krukowska at ekrukowska@bloomberg.net
Read more...
Aug. 26 (Bloomberg) -- Poland's zloty fell against the euro as a deterioration in German business confidence this month dented investors' sentiment toward higher-yielding emerging- market currencies. The Hungarian forint dropped.
The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, fell to a three-year low of 94.8 in August, from 97.5 in July. Economists expected a drop to 97.2, the median of 35 forecasts in a Bloomberg News survey shows. The euro declined to the weakest level against the dollar since mid-February after the report.
``The Ifo data showed weak economic growth prospects for Europe,'' said Maja Goetting, Warsaw-based senior economist at Bank BPH, part of General Electric Co. ``This prompted some investors to sell the zloty and other regional currencies.''
The zloty dropped as much as 0.4 percent to 3.3137 per euro, and was at 3.3105 by 11:31 a.m. in Warsaw, from 3.2997 yesterday.
The zloty is the best-performing currency in Europe in the past 12 months, having gained 16 percent versus the euro as the central bank raised interest rates to a more than three-year high of 6 percent to curb inflation.
Policy makers will probably leave borrowing costs unchanged at their two-day policy meeting that started today, a Bloomberg survey of economists showed. The decision is due to be announced tomorrow after 11:30 a.m.
Poland's retail sales rose an annual 14.3 percent in July, compared with 14.2 percent a month earlier, the statistics office said today. That was more than the 14 percent median estimate of economists in a Bloomberg survey.
Forint Weakens
In other trading, the Hungarian forint declined 0.2 percent to 234.72 per euro, dropping for a third day.
The Magyar Nemzeti Bank in Budapest yesterday kept the two- week deposit rate at 8.5 percent, the second-highest in the European Union after Romania. The bank also lowered its forecasts for core inflation and economic growth, reinforcing speculation it may begin cutting rates in coming months.
The Romanian leu dropped 0.7 percent to 3.5452 against the euro and the Turkish lira lost 0.2 percent to 1.1904 per dollar.
The Czech koruna declined 0.1 percent to 24.479 versus the euro, while the Slovak koruna was little changed at 30.297 against Europe's common currency after policy makers kept the country's main rate at 4.25 percent today. Slovakia will join the euro area at the start of next year.
To contact the reporter on this story: Ewa Krukowska at ekrukowska@bloomberg.net
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ONGC Agrees to Buy Imperial Energy for $2.58 Billion
By Archana Chaudhary and Stephen Bierman
More Photos/Details
Aug. 26 (Bloomberg) -- Oil & Natural Gas Corp., India's biggest exploration company, agreed to buy Imperial Energy Plc for 1.4 billion pounds ($2.58 billion) to tap Siberian deposits and make up for dwindling output at home.
The cash offer of 1,250 pence a share is 61.9 percent more than Imperial Energy's share price on July 11, the day before the London-based company said it received a bid, according to a statement distributed by Regulatory News Service. China Petroleum & Chemical Corp. indicated today it may bid for Imperial Energy.
India's explorers have been outbid by Chinese rivals as the two most populous nations compete for energy assets globally. The South Asian nation is looking to invest in oil projects in Russia, Kazakhstan, Iran and Africa as the government expects economic growth to accelerate to as much as 10 percent by 2012, fueling demand for vehicles and electricity. India imports more than three-quarters of its oil requirements.
``The offer for Imperial seems fairly priced, especially considering the volatility in energy prices,'' said Ballabh Modani, Mumbai-based analyst at Enam Securities Pvt. ``It's not an aggressive bid, but it seems a fair one.''
Imperial would be biggest overseas acquisition for ONGC, which has as much as 6.8 billion barrels of oil equivalent in reserves. The explorer paid $1.7 billion to buy a stake in Exxon Mobil Corp.'s Sakhalin-I field in Russia and $785 million for a stake in the Greater Nile project in Sudan, both in 2003. State- run ONGC owns 20 percent of Sakhalin-1, which began pumping oil in 2005 and produced 250,000 barrels a day in February 2007.
Sinopec, Korea National
Su Shulin, the chairman of China Petroleum, known as Sinopec, said in Hong Kong today that the parent company is doing preliminary work on a bid for Imperial Energy. No formal offer from any other company has been received, Evgeniy Chuikov, a spokesman for Imperial Energy, said.
Korea National Oil Corp. has no interest in bidding for Imperial Energy, a KNOC official said today, declining to be named. Reuters reported on Aug. 13 that KNOC may be interested in acquiring the company. KNOC press spokesman Bae Ho Jun said today he had no comment.
ONGC shares gained 1.35 rupees, or 0.1 percent, to 1,015.9 rupees at the close in Mumbai trading. Imperial Energy declined 1.2 percent to 1,225 pence in London after reaching a seven-month high last week.
Proven Reserves
Imperial Energy has 450 million barrels of Russian registered reserves, according to a July company statement. The company is seeking to bring these figures closer in line with its estimates based on Society of Petroleum Engineers standards after the country's government raised questions about differences between the two.
The company, which operates primarily in the Siberian region of Tomsk, had 920 million barrels of oil equivalent of proven and probable reserves as of December 2007, according to an audit by DeGolyer and MacNaughton cited on Imperial Energy's Web site.
Drilling successes at the Kiev Eganskoye field on the east side of the Ob River came after the yearly DeGolyer and MacNaughton audit and will likely increase valuations when they are included in the next report, Artem Konchin, an oil and gas analyst at UniCredit Aton in Moscow, said Aug. 21.
Imperial Energy said in April it pumped 7,000 barrels a day in the first quarter. The company plans to produce 25,000 barrels of oil a day by the end of the year and expects to start output at the Kiev Eganskoye field in September.
ONGC reported a drop in output in the year through March, India's Oil Minister Murli Deora told lawmakers April 15. India estimates demand for oil will rise 62 percent over the next five years to 241 million tons a year, or 4.8 million barrels a day.
Key Supplier
``As India's energy consumption catches up with China, Russia wants to be at the forefront of securing access to the market,'' said Konchin. ``Whether it is for crude or for products, the more common projects there are, the more guarantees there are for Russia to be a key supplier to India.''
One state-controlled Russian energy company, either OAO Gazprom or OAO Rosneft, is likely to be involved in any transaction involving Imperial Energy, the Financial Times reported Aug. 22.
``Large Russian oil companies are looking to diversify downstream internationally,'' Renaissance Capital chief strategist David Aserkoff said today. ``They may be able to strike a deal where they could partner with a company like ONGC.''
Imperial Energy is far from being a strategic asset, Konchin said in response to concerns that the Russian state may insist on controlling the company.
Profile Booster
``It is a collection of small fields. It's nice because it is young and it may give your production profile a yearly boost instead of a decline,'' he said.
ONGC plans to invest a total 240 billion rupees ($6 billion) to boost output from its domestic and overseas fields, Chairman R.S. Sharma said in April. The company expects output of 8.5 million tons of oil and gas from overseas fields and production of 9 million tons in the year ending March 2009.
The explorer plans to produce about 20 million metric tons a year of oil equivalent by 2020 from its overseas fields from 8.76 million last year, Sharma said in June. The company has increased its overseas assets to 38 from a single one seven years ago, he said.
ONGC is bidding for Imperial Energy through its unit ONGC Videsh Ltd. The proposed transaction is subject to shareholder and regulatory approval.
To contact the reporters on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net; Stephen Bierman in Moscow at sbierman1@bloomberg.net.
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More Photos/Details
Aug. 26 (Bloomberg) -- Oil & Natural Gas Corp., India's biggest exploration company, agreed to buy Imperial Energy Plc for 1.4 billion pounds ($2.58 billion) to tap Siberian deposits and make up for dwindling output at home.
The cash offer of 1,250 pence a share is 61.9 percent more than Imperial Energy's share price on July 11, the day before the London-based company said it received a bid, according to a statement distributed by Regulatory News Service. China Petroleum & Chemical Corp. indicated today it may bid for Imperial Energy.
India's explorers have been outbid by Chinese rivals as the two most populous nations compete for energy assets globally. The South Asian nation is looking to invest in oil projects in Russia, Kazakhstan, Iran and Africa as the government expects economic growth to accelerate to as much as 10 percent by 2012, fueling demand for vehicles and electricity. India imports more than three-quarters of its oil requirements.
``The offer for Imperial seems fairly priced, especially considering the volatility in energy prices,'' said Ballabh Modani, Mumbai-based analyst at Enam Securities Pvt. ``It's not an aggressive bid, but it seems a fair one.''
Imperial would be biggest overseas acquisition for ONGC, which has as much as 6.8 billion barrels of oil equivalent in reserves. The explorer paid $1.7 billion to buy a stake in Exxon Mobil Corp.'s Sakhalin-I field in Russia and $785 million for a stake in the Greater Nile project in Sudan, both in 2003. State- run ONGC owns 20 percent of Sakhalin-1, which began pumping oil in 2005 and produced 250,000 barrels a day in February 2007.
Sinopec, Korea National
Su Shulin, the chairman of China Petroleum, known as Sinopec, said in Hong Kong today that the parent company is doing preliminary work on a bid for Imperial Energy. No formal offer from any other company has been received, Evgeniy Chuikov, a spokesman for Imperial Energy, said.
Korea National Oil Corp. has no interest in bidding for Imperial Energy, a KNOC official said today, declining to be named. Reuters reported on Aug. 13 that KNOC may be interested in acquiring the company. KNOC press spokesman Bae Ho Jun said today he had no comment.
ONGC shares gained 1.35 rupees, or 0.1 percent, to 1,015.9 rupees at the close in Mumbai trading. Imperial Energy declined 1.2 percent to 1,225 pence in London after reaching a seven-month high last week.
Proven Reserves
Imperial Energy has 450 million barrels of Russian registered reserves, according to a July company statement. The company is seeking to bring these figures closer in line with its estimates based on Society of Petroleum Engineers standards after the country's government raised questions about differences between the two.
The company, which operates primarily in the Siberian region of Tomsk, had 920 million barrels of oil equivalent of proven and probable reserves as of December 2007, according to an audit by DeGolyer and MacNaughton cited on Imperial Energy's Web site.
Drilling successes at the Kiev Eganskoye field on the east side of the Ob River came after the yearly DeGolyer and MacNaughton audit and will likely increase valuations when they are included in the next report, Artem Konchin, an oil and gas analyst at UniCredit Aton in Moscow, said Aug. 21.
Imperial Energy said in April it pumped 7,000 barrels a day in the first quarter. The company plans to produce 25,000 barrels of oil a day by the end of the year and expects to start output at the Kiev Eganskoye field in September.
ONGC reported a drop in output in the year through March, India's Oil Minister Murli Deora told lawmakers April 15. India estimates demand for oil will rise 62 percent over the next five years to 241 million tons a year, or 4.8 million barrels a day.
Key Supplier
``As India's energy consumption catches up with China, Russia wants to be at the forefront of securing access to the market,'' said Konchin. ``Whether it is for crude or for products, the more common projects there are, the more guarantees there are for Russia to be a key supplier to India.''
One state-controlled Russian energy company, either OAO Gazprom or OAO Rosneft, is likely to be involved in any transaction involving Imperial Energy, the Financial Times reported Aug. 22.
``Large Russian oil companies are looking to diversify downstream internationally,'' Renaissance Capital chief strategist David Aserkoff said today. ``They may be able to strike a deal where they could partner with a company like ONGC.''
Imperial Energy is far from being a strategic asset, Konchin said in response to concerns that the Russian state may insist on controlling the company.
Profile Booster
``It is a collection of small fields. It's nice because it is young and it may give your production profile a yearly boost instead of a decline,'' he said.
ONGC plans to invest a total 240 billion rupees ($6 billion) to boost output from its domestic and overseas fields, Chairman R.S. Sharma said in April. The company expects output of 8.5 million tons of oil and gas from overseas fields and production of 9 million tons in the year ending March 2009.
The explorer plans to produce about 20 million metric tons a year of oil equivalent by 2020 from its overseas fields from 8.76 million last year, Sharma said in June. The company has increased its overseas assets to 38 from a single one seven years ago, he said.
ONGC is bidding for Imperial Energy through its unit ONGC Videsh Ltd. The proposed transaction is subject to shareholder and regulatory approval.
To contact the reporters on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net; Stephen Bierman in Moscow at sbierman1@bloomberg.net.
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South Africa Rand Falls to One-Week Low Before Inflation Report
By Garth Theunissen
Aug. 26 (Bloomberg) -- South Africa's rand fell for a third day against the dollar before a government report that may show inflation in the continent's biggest economy exceeded the central bank's ceiling for a 15th month.
The rand slipped to its weakest level in a week before Statistics South Africa releases its consumer-price data tomorrow. CPIX inflation, which excludes mortgage costs, quickened to 12.9 percent in July, from 11.6 percent a month earlier, according to the median estimate of 20 economists surveyed by Bloomberg News. That would be the fastest rate of price growth since CPIX records began in 1998.
``In a stronger dollar environment the rand is trading weaker against the U.S. currency, particularly ahead of the inflation data tomorrow,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Traders are waiting to see if there's a big move in inflation before taking a clear position in the currency.''
The rand dropped as much as 0.9 percent to 7.8330 per dollar, its lowest level since Aug. 19, and was at 7.8292 by 12:10 p.m. in Johannesburg, from 7.7635 yesterday.
``Inflation is expected to have catapulted to fresh record highs last month,'' Michael Keenan, a currency strategist at Standard Bank Group Ltd. in Johannesburg, wrote in a client note today. There is a ``risk of another surprise figure,'' he said.
South Africa's currency rose against the euro, adding 0.1 percent to 11.4389. It also strengthened versus half of the 16 most-actively traded currencies monitored by Bloomberg, rising most against the New Zealand and Australian dollars.
Inflation Risk
``The risk of a really high inflation number tomorrow increases concerns of further interest-rate hikes,'' said Muller. ``That could help the rand in the short term, but fundamental weakness in the South African economy suggests there will be a tendency for the rand to weaken in the long term.''
Rand Merchant Bank predicts the rand will fall to 8.50 per dollar by year-end, more bearish than all but two of the 20 currency forecasts in a Bloomberg survey.
The South African Reserve Bank has raised its key interest rate 10 times since June 2006 in a bid to quell inflation, which has exceeded its 6 percent ceiling since April 2007. The bank's monetary policy committee kept interest rates on hold at its meeting Aug. 14.
The country's 12 percent main rate, the highest in more than five years, makes the rand a favorite in so-called carry trades. In such transactions, investors borrow a currency at a low interest rate and invest the proceeds in markets where returns on assets are higher. Investors earn the spread between the cost of borrowing and the returns on their investment, taking the risk currency moves will erase their profit.
South Africa's main interest rate is 1,150 basis points above Japan's and 925 basis points higher than Switzerland's.
Government bonds fell, with the yield on the 13 percent note maturing in August 2010, which is more sensitive to interest-rate expectations, climbing 4 basis points to 9.92 percent. The yield on the 13.5 percent security due September 2015 gained 2 basis points to 9.28 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net.
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Aug. 26 (Bloomberg) -- South Africa's rand fell for a third day against the dollar before a government report that may show inflation in the continent's biggest economy exceeded the central bank's ceiling for a 15th month.
The rand slipped to its weakest level in a week before Statistics South Africa releases its consumer-price data tomorrow. CPIX inflation, which excludes mortgage costs, quickened to 12.9 percent in July, from 11.6 percent a month earlier, according to the median estimate of 20 economists surveyed by Bloomberg News. That would be the fastest rate of price growth since CPIX records began in 1998.
``In a stronger dollar environment the rand is trading weaker against the U.S. currency, particularly ahead of the inflation data tomorrow,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Traders are waiting to see if there's a big move in inflation before taking a clear position in the currency.''
The rand dropped as much as 0.9 percent to 7.8330 per dollar, its lowest level since Aug. 19, and was at 7.8292 by 12:10 p.m. in Johannesburg, from 7.7635 yesterday.
``Inflation is expected to have catapulted to fresh record highs last month,'' Michael Keenan, a currency strategist at Standard Bank Group Ltd. in Johannesburg, wrote in a client note today. There is a ``risk of another surprise figure,'' he said.
South Africa's currency rose against the euro, adding 0.1 percent to 11.4389. It also strengthened versus half of the 16 most-actively traded currencies monitored by Bloomberg, rising most against the New Zealand and Australian dollars.
Inflation Risk
``The risk of a really high inflation number tomorrow increases concerns of further interest-rate hikes,'' said Muller. ``That could help the rand in the short term, but fundamental weakness in the South African economy suggests there will be a tendency for the rand to weaken in the long term.''
Rand Merchant Bank predicts the rand will fall to 8.50 per dollar by year-end, more bearish than all but two of the 20 currency forecasts in a Bloomberg survey.
The South African Reserve Bank has raised its key interest rate 10 times since June 2006 in a bid to quell inflation, which has exceeded its 6 percent ceiling since April 2007. The bank's monetary policy committee kept interest rates on hold at its meeting Aug. 14.
The country's 12 percent main rate, the highest in more than five years, makes the rand a favorite in so-called carry trades. In such transactions, investors borrow a currency at a low interest rate and invest the proceeds in markets where returns on assets are higher. Investors earn the spread between the cost of borrowing and the returns on their investment, taking the risk currency moves will erase their profit.
South Africa's main interest rate is 1,150 basis points above Japan's and 925 basis points higher than Switzerland's.
Government bonds fell, with the yield on the 13 percent note maturing in August 2010, which is more sensitive to interest-rate expectations, climbing 4 basis points to 9.92 percent. The yield on the 13.5 percent security due September 2015 gained 2 basis points to 9.28 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net.
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Nordic Currencies: Sweden's Krona Falls After German Ifo Drops
By Bo Nielsen
Aug. 26 (Bloomberg) -- Sweden's krona fell to the lowest level since February against the dollar after a report showed business confidence in Germany, its biggest export market, dropped to a three-year low.
The krona weakened for a third day after the Ifo institute's German investor sentiment index slipped to 94.8 in August, the lowest level since August 2005, compared with 97.5 the previous month and the 97.2 estimate in a Bloomberg survey. A Swedish government report showed producer prices rose an annual 3.3 percent in July, up from 3 percent in the prior period.
``The slowdown in Europe will feed through fairly quickly to the Swedish economy,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, France's biggest bank. ``That leaves the krona vulnerable.''
The Swedish krona slipped to 6.4290 per dollar by 1 p.m. in Stockholm, the lowest level since February, from 6.3501 yesterday. It was little changed at 9.3730 per euro.
A separate government report showed the economy of Germany, Sweden's main trading partner, contracted in the second quarter for the first time in almost four years as companies cut investments and consumers reduced spending.
In other trading, Norway's krone rose versus the euro before a report tomorrow forecast by economists to show the June unemployment rate held near the lowest level in two decades.
The Norwegian krone climbed to 7.9023 per euro, from 7.9239. It fell 1 percent to 5.4218 per dollar as the price of crude oil, the country's biggest source of exports, slipped to as low as $112.36 a barrel, from $115.11 yesterday.
Iceland's krona dropped for a second day versus the dollar, dropping to 83.44, the weakest level since June 23, from 82.53.
Nordic government bonds gained, with the yield on Sweden's 5.25 percent note due March 2011 falling 7 basis points, or 0.07 percentage point, to 4.28 percent. The yield on Norway's 6 percent government note maturing May 2011 slipped 1 basis point to 5.01 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. 26 (Bloomberg) -- Sweden's krona fell to the lowest level since February against the dollar after a report showed business confidence in Germany, its biggest export market, dropped to a three-year low.
The krona weakened for a third day after the Ifo institute's German investor sentiment index slipped to 94.8 in August, the lowest level since August 2005, compared with 97.5 the previous month and the 97.2 estimate in a Bloomberg survey. A Swedish government report showed producer prices rose an annual 3.3 percent in July, up from 3 percent in the prior period.
``The slowdown in Europe will feed through fairly quickly to the Swedish economy,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, France's biggest bank. ``That leaves the krona vulnerable.''
The Swedish krona slipped to 6.4290 per dollar by 1 p.m. in Stockholm, the lowest level since February, from 6.3501 yesterday. It was little changed at 9.3730 per euro.
A separate government report showed the economy of Germany, Sweden's main trading partner, contracted in the second quarter for the first time in almost four years as companies cut investments and consumers reduced spending.
In other trading, Norway's krone rose versus the euro before a report tomorrow forecast by economists to show the June unemployment rate held near the lowest level in two decades.
The Norwegian krone climbed to 7.9023 per euro, from 7.9239. It fell 1 percent to 5.4218 per dollar as the price of crude oil, the country's biggest source of exports, slipped to as low as $112.36 a barrel, from $115.11 yesterday.
Iceland's krona dropped for a second day versus the dollar, dropping to 83.44, the weakest level since June 23, from 82.53.
Nordic government bonds gained, with the yield on Sweden's 5.25 percent note due March 2011 falling 7 basis points, or 0.07 percentage point, to 4.28 percent. The yield on Norway's 6 percent government note maturing May 2011 slipped 1 basis point to 5.01 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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Canadian Dollar Strengthens as Price of Crude Oil Rebounds
By Chris Fournier
Aug. 26 (Bloomberg) -- Canada's currency climbed for the first time in three days as the price of crude oil erased an earlier loss and increased.
The Canadian dollar strengthened versus the 16 most- actively traded currencies. Commodities account for more than half of the nation's export revenue. The U.S. is Canada's largest trading partner.
``Oil prices dipped overnight but have recovered,'' said Shane Enright, currency strategist at CIBC World Markets Inc. in Toronto.
The Canadian dollar appreciated 0.3 percent to C$1.0481 per U.S. dollar at 9:21 a.m. in Toronto, from C$1.0513 yesterday. One Canadian dollar buys 95.43 U.S. cents.
Crude oil rose 0.6 percent to $115.83 a barrel, after earlier dropping as much as 2.4 percent.
The currency will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Aug. 26 (Bloomberg) -- Canada's currency climbed for the first time in three days as the price of crude oil erased an earlier loss and increased.
The Canadian dollar strengthened versus the 16 most- actively traded currencies. Commodities account for more than half of the nation's export revenue. The U.S. is Canada's largest trading partner.
``Oil prices dipped overnight but have recovered,'' said Shane Enright, currency strategist at CIBC World Markets Inc. in Toronto.
The Canadian dollar appreciated 0.3 percent to C$1.0481 per U.S. dollar at 9:21 a.m. in Toronto, from C$1.0513 yesterday. One Canadian dollar buys 95.43 U.S. cents.
Crude oil rose 0.6 percent to $115.83 a barrel, after earlier dropping as much as 2.4 percent.
The currency will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Euro Falls to Six-Month Low as German Business Sentiment Drops
By Ye Xie and Gavin Finch
Aug. 26 (Bloomberg) -- The euro fell to a six-month low against the dollar after a report showed German business confidence dropped in August more than economists forecast.
Sterling declined to the weakest level versus the dollar in two years as an industry report showed mortgage approvals held last month near a decade low. Economic weakness in Europe helped push an index measuring the dollar against the currencies of six U.S. trading partners to the highest level since December.
``The euro is hit hard today,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``The market is coming around to the view that the extremely high level in the euro-dollar is not justified.''
The 15-nation euro dropped 0.8 percent to $1.4633 at 9:21 a.m. in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14. The currency fell 0.6 percent to 160.35 yen, from 161.26 yesterday, after reaching 159.99, the lowest level since May 12. The dollar increased 0.3 percent to 109.58 yen, from 109.30.
The greenback has risen against all of the other major currencies this month on evidence the economic slowdown that began in the U.S. is spreading to the rest of the world. The U.S. currency's gains range from a 10.4 percent advance against the Australian dollar to a 1.4 percent increase versus the Mexican peso.
The ICE futures exchange's Dollar Index, which compares the greenback against six other major currencies, rose to 77.619, its highest level since Dec. 26.
Weaker Pound
The pound dropped 1 percent to $1.8350 after touching $1.8331, the lowest level since July 2006. Banks granted 22,448 loans for house purchases in July, down 65 percent from a year earlier, the British Bankers' Association said. The reading is up from 22,369 in June, the lowest since 1996.
The euro has lost more than 8 percent versus the dollar since touching an all-time high of $1.6038 on July 15. It decreased as the European economy contracted in the second quarter and crude oil dropped more than 20 percent from a record $147.27 a barrel set last month.
The Ifo institute's German business confidence index declined this month to 94.8, the lowest level in three years, from 97.5 in July. The median forecast of 35 economists surveyed by Bloomberg News was for a decrease to 97.2.
``The combination of incremental weakness in the European economy and moderating oil prices should keep the pressure on the euro,'' said Manuel Oliveri, a currency strategist in Zurich at UBS AG, the world's second-biggest currency trader.
ECB Rate Outlook
The euro dropped for a second day versus the yen and declined 0.4 percent to 2.3987 Brazilian reais as traders added to bets that the European Central Bank will cut interest rates next year. The implied yield on Euribor futures contract expiring in September 2009 fell 9 basis points, or 0.09 percentage point, to 4.29 percent. The yield averaged 18 basis points above the ECB's benchmark, currently 4.25 percent, from 1999 to August 2007.
The yen declined against the dollar on speculation Japanese pension funds and institutional investors sold the currency to increase their holdings of Treasuries.
The Treasury Department is scheduled to auction a record $32 billion of two-year notes tomorrow and $22 billion of five- year debt, the most since February 2003, the following day. Japan is the largest foreign holder of Treasuries, according to U.S. government data.
`Supply of Treasuries'
``There's a new supply of Treasuries coming on line, and that may lure some Japanese investors,'' said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust & Banking Co. Ltd., a unit of Japan's largest brokerage. ``Pension funds have been aggressive buyers of Treasuries.''
U.S. new home sales declined to an annual rate of 525,000 in July from 530,000 in the previous month, according to the median forecast of 76 economists surveyed by Bloomberg News. New home sales fell to a 17-year low of 513,000 in March. The Commerce Department is scheduled to release the data at 10 a.m. in Washington.
``There's not going to be any improvement in the data out of the U.S., and the hope is that it doesn't get any worse than it already is,'' said Mitul Kotecha, global head of currency strategy at Calyon in Hong Kong. ``We could see the dollar being restrained in the short term.''
To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net
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China Stocks Decline for Fourth Day; Haitong, Air China Retreat
By Zhang Shidong
Aug. 26 (Bloomberg) -- China's stocks fell for a fourth day, led by brokerages, after daily trading value yesterday dropped to the lowest since November 2006.
Haitong Securities Co., the country's largest listed brokerage by market value, dropped 7.8 percent on concern lower turnover will slash income. Air China Ltd. retreated to the lowest in 20 months on speculation the cost of paying overseas debt will rise as the yuan weakened the most in four weeks. Baoshan Iron & Steel Co. led steelmakers lower after a newspaper said it will cut product prices in the fourth quarter.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, sank 69.02, or 2.9 percent, to 2,331.53 at the close. China Life Insurance Co., the nation's biggest insurer, dropped 0.9 percent after first-half profit slumped 32 percent.
``You'll see worse corporate earnings in the third quarter than in the previous two quarters,'' said Zheng Tuo, who manages $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai. ``The possibility cannot be ruled out that the market will seek a bottom at a lower level.''
China's benchmark index has slumped 56 percent this year, the most among 89 major benchmark indexes tracked by Bloomberg. That has prompted a government plan to let investors sell bonds that can be swapped for shares to deter equity sales and support the market, according a Beijing-based official of the regulator, who declined to be identified before a proposal is made public.
Yuan Slides
The China Securities Regulatory Commission is studying exchangeable bonds as part of a package of measures to restrict sales of state-owned shares, the official said. China has become the world's worst-performing market this year because of concern measures to cool inflation will damp growth in the economy and corporate earnings.
China's yuan fell 0.22 percent to 6.8481 a dollar yesterday on speculation the government is seeking a stable currency to prevent the economy from slowing after the Olympic Games.
Haitong Securities dropped to 15.50 yuan. Citic Securities Co., the brokerage unit of China's biggest investment company, retreated 4.3 percent to 17.93 yuan. Sinolink Securities Co. plunged 8.6 percent to 30.28 yuan. Hong Yuan Securities Co., China's first publicly traded brokerage, fell 5 percent to 12.54 yuan.
Shares worth 39.7 billion yuan ($5.8 billion) were traded on the Shanghai and Shenzhen stock markets yesterday, the lowest since Nov. 14, 2006, according to data compiled by Bloomberg. That compared with an average daily trading value of 101 billion yuan in July.
Air China Slumps
Air China, the nation's largest international carrier, slumped 7.9 percent to 5.63 yuan, the lowest close since Dec. 29, 2006. China Southern Airlines Co., the nation's biggest carrier by fleet size, sank 7.2 percent to 5.17 yuan. China Eastern Airlines Corp., the nation's third-largest carrier by fleet size, lost 8.8 percent to 4.90 yuan.
China Eastern's passenger numbers dropped 11 percent in July, a fourth monthly decline, while Air China's fell 6.8 percent, according to data released this month by the two carriers, as restrictions put in place for the Beijing Olympics disrupted travel.
A weakening yuan boosts the value of airlines' dollar- denominated debts when converted into the local currency. China Southern made a full-year currency gain of 2.83 billion yuan in 2007. That was more than its 1.87 billion yuan net income. Air China earned 2.03 billion yuan from the appreciation of the yuan last year.
Cold-Rolled Steel
Baoshan Steel, China's biggest steelmaker, dropped 5.8 percent to 6.30 yuan. Wuhan Iron & Steel Co., China's third- biggest steelmaker by value, fell 7.5 percent to 7.06 yuan. Maanshan Iron & Steel Co., one of China's biggest producers of construction steel, lost 6.1 percent to 4 yuan.
Baoshan Steel lowered its fourth-quarter price for cold- rolled steel by 300 yuan, the China Securities Journal reported, without saying where it got the information. The reduction in cold-rolled products is the company's first price cut this year.
PetroChina Co., the nation's biggest oil company, fell 1.8 percent to 13.37 yuan. It agreed to buy parent China National Petroleum Corp.'s 50 percent stake in an oil and gas exploration company for $11.8 billion, the Wall Street Journal reported, citing a person familiar with the matter. The company may sell new shares in Shanghai to fund the acquisition, it said.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, slid 2.6 percent to 2,350.08. The Shenzhen Composite Index fell 4 percent to 646.47.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Aug. 26 (Bloomberg) -- China's stocks fell for a fourth day, led by brokerages, after daily trading value yesterday dropped to the lowest since November 2006.
Haitong Securities Co., the country's largest listed brokerage by market value, dropped 7.8 percent on concern lower turnover will slash income. Air China Ltd. retreated to the lowest in 20 months on speculation the cost of paying overseas debt will rise as the yuan weakened the most in four weeks. Baoshan Iron & Steel Co. led steelmakers lower after a newspaper said it will cut product prices in the fourth quarter.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, sank 69.02, or 2.9 percent, to 2,331.53 at the close. China Life Insurance Co., the nation's biggest insurer, dropped 0.9 percent after first-half profit slumped 32 percent.
``You'll see worse corporate earnings in the third quarter than in the previous two quarters,'' said Zheng Tuo, who manages $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai. ``The possibility cannot be ruled out that the market will seek a bottom at a lower level.''
China's benchmark index has slumped 56 percent this year, the most among 89 major benchmark indexes tracked by Bloomberg. That has prompted a government plan to let investors sell bonds that can be swapped for shares to deter equity sales and support the market, according a Beijing-based official of the regulator, who declined to be identified before a proposal is made public.
Yuan Slides
The China Securities Regulatory Commission is studying exchangeable bonds as part of a package of measures to restrict sales of state-owned shares, the official said. China has become the world's worst-performing market this year because of concern measures to cool inflation will damp growth in the economy and corporate earnings.
China's yuan fell 0.22 percent to 6.8481 a dollar yesterday on speculation the government is seeking a stable currency to prevent the economy from slowing after the Olympic Games.
Haitong Securities dropped to 15.50 yuan. Citic Securities Co., the brokerage unit of China's biggest investment company, retreated 4.3 percent to 17.93 yuan. Sinolink Securities Co. plunged 8.6 percent to 30.28 yuan. Hong Yuan Securities Co., China's first publicly traded brokerage, fell 5 percent to 12.54 yuan.
Shares worth 39.7 billion yuan ($5.8 billion) were traded on the Shanghai and Shenzhen stock markets yesterday, the lowest since Nov. 14, 2006, according to data compiled by Bloomberg. That compared with an average daily trading value of 101 billion yuan in July.
Air China Slumps
Air China, the nation's largest international carrier, slumped 7.9 percent to 5.63 yuan, the lowest close since Dec. 29, 2006. China Southern Airlines Co., the nation's biggest carrier by fleet size, sank 7.2 percent to 5.17 yuan. China Eastern Airlines Corp., the nation's third-largest carrier by fleet size, lost 8.8 percent to 4.90 yuan.
China Eastern's passenger numbers dropped 11 percent in July, a fourth monthly decline, while Air China's fell 6.8 percent, according to data released this month by the two carriers, as restrictions put in place for the Beijing Olympics disrupted travel.
A weakening yuan boosts the value of airlines' dollar- denominated debts when converted into the local currency. China Southern made a full-year currency gain of 2.83 billion yuan in 2007. That was more than its 1.87 billion yuan net income. Air China earned 2.03 billion yuan from the appreciation of the yuan last year.
Cold-Rolled Steel
Baoshan Steel, China's biggest steelmaker, dropped 5.8 percent to 6.30 yuan. Wuhan Iron & Steel Co., China's third- biggest steelmaker by value, fell 7.5 percent to 7.06 yuan. Maanshan Iron & Steel Co., one of China's biggest producers of construction steel, lost 6.1 percent to 4 yuan.
Baoshan Steel lowered its fourth-quarter price for cold- rolled steel by 300 yuan, the China Securities Journal reported, without saying where it got the information. The reduction in cold-rolled products is the company's first price cut this year.
PetroChina Co., the nation's biggest oil company, fell 1.8 percent to 13.37 yuan. It agreed to buy parent China National Petroleum Corp.'s 50 percent stake in an oil and gas exploration company for $11.8 billion, the Wall Street Journal reported, citing a person familiar with the matter. The company may sell new shares in Shanghai to fund the acquisition, it said.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, slid 2.6 percent to 2,350.08. The Shenzhen Composite Index fell 4 percent to 646.47.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Oil Rises on Forecasts That Hurricane May Enter Gulf of Mexico
By Mark Shenk
Aug. 26 (Bloomberg) -- Crude oil rose on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds rose to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory at 8 a.m. Miami time. Oil fell earlier as the dollar strengthened to a six-month high against the euro, limiting the appeal of commodities as a hedge, and shipments of Caspian Sea crude oil resumed after a pipeline fire.
``We are going to pay close attention to every change in the storm's forecast,'' said Tom Bentz, a broker at BNP Paribas in New York. ``It's a battle between the dollar and the weather for dominance in this market.''
Crude oil for October delivery rose 89 cents, or 0.8 percent, to $116 a barrel at 9:03 a.m. on the New York Mercantile Exchange. Prices are up 63 percent from a year ago.
Brent crude oil for October settlement rose 52 cents, or 0.5 percent, to $114.55 a barrel on London's ICE Futures Europe exchange.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
The euro tumbled against the dollar after a report showed German business confidence dropped in August by more than economists forecast. The European currency declined 0.8 percent to $1.4628 in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14.
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Aug. 26 (Bloomberg) -- Crude oil rose on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav's sustained winds rose to 90 miles (145 kilometers) per hour, the U.S. National Hurricane Center said in an advisory at 8 a.m. Miami time. Oil fell earlier as the dollar strengthened to a six-month high against the euro, limiting the appeal of commodities as a hedge, and shipments of Caspian Sea crude oil resumed after a pipeline fire.
``We are going to pay close attention to every change in the storm's forecast,'' said Tom Bentz, a broker at BNP Paribas in New York. ``It's a battle between the dollar and the weather for dominance in this market.''
Crude oil for October delivery rose 89 cents, or 0.8 percent, to $116 a barrel at 9:03 a.m. on the New York Mercantile Exchange. Prices are up 63 percent from a year ago.
Brent crude oil for October settlement rose 52 cents, or 0.5 percent, to $114.55 a barrel on London's ICE Futures Europe exchange.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
The euro tumbled against the dollar after a report showed German business confidence dropped in August by more than economists forecast. The European currency declined 0.8 percent to $1.4628 in New York, from $1.4754 yesterday. It touched $1.4571, the lowest level since Feb. 14.
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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Cocoa Advances in London on Concern Supply Shortfall Will Widen
By Rachel Graham
Aug. 26 (Bloomberg) -- Cocoa rose for a sixth session in London on concern that a supply shortfall this year will be wider than expected. White sugar advanced to its highest since November 2006.
Cocoa demand will outpace supply by 88,000 metric tons in the year to September, double the previous forecast, the International Cocoa Organization said Aug. 21. That would be a second consecutive annual deficit.
``The reason why cocoa prices have recovered is the ICCO's revision of its deficit,'' Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital, said by phone from London.
Cocoa futures for September delivery rose 51 pounds, or 3.3 percent, to 1,608 pounds ($2,958) a ton as of 2:46 p.m. on the Liffe exchange in London. The contract traded as high as 1,616 pounds, the highest intraday price since Aug. 4.
Cocoa for December gained $7, or 0.2 percent, to $2,875 a metric ton in electronic trading on ICE Futures U.S., the former New York Board of Trade. The contract rose 2 percent yesterday, while Liffe was closed for a public holiday in the U.K.
White, or refined, sugar for October climbed as much as $9.90, or 2.4 percent, to $414.90 a ton on Liffe, the highest compared with intraday prices since Nov. 15, 2006.
Robusta coffee for November rose $9, or 0.4 percent, to $2,307 a ton.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Aug. 26 (Bloomberg) -- Cocoa rose for a sixth session in London on concern that a supply shortfall this year will be wider than expected. White sugar advanced to its highest since November 2006.
Cocoa demand will outpace supply by 88,000 metric tons in the year to September, double the previous forecast, the International Cocoa Organization said Aug. 21. That would be a second consecutive annual deficit.
``The reason why cocoa prices have recovered is the ICCO's revision of its deficit,'' Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital, said by phone from London.
Cocoa futures for September delivery rose 51 pounds, or 3.3 percent, to 1,608 pounds ($2,958) a ton as of 2:46 p.m. on the Liffe exchange in London. The contract traded as high as 1,616 pounds, the highest intraday price since Aug. 4.
Cocoa for December gained $7, or 0.2 percent, to $2,875 a metric ton in electronic trading on ICE Futures U.S., the former New York Board of Trade. The contract rose 2 percent yesterday, while Liffe was closed for a public holiday in the U.K.
White, or refined, sugar for October climbed as much as $9.90, or 2.4 percent, to $414.90 a ton on Liffe, the highest compared with intraday prices since Nov. 15, 2006.
Robusta coffee for November rose $9, or 0.4 percent, to $2,307 a ton.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Gold Declines as Dollar Strengthens Against Euro; Silver Rises
By Pham-Duy Nguyen
Aug. 26 (Bloomberg) -- Gold fell as the dollar strengthened against the euro, eroding the appeal of the precious metal as an alternative investment. Silver rose.
The euro fell as much as 1.2 percent against the dollar after rising 0.7 percent last week. Gold generally moves in tandem with the euro as an alternative to the U.S. currency. The metal reached a record in March as the euro headed to an all-time high against the dollar.
``Gold's movement is focused on the dollar,'' said Stephen Platt, commodity analyst at Archer Financial Services Inc. in Chicago. ``As long as the dollar remains strong, gold is going to have trouble attracting substantial investment buying.''
Gold futures for December delivery fell $5.50, or 0.7 percent, to $820.20 an ounce at 9:19 a.m. on the Comex division of the New York Mercantile Exchange. The metal fell 0.9 percent yesterday after rallying 5.2 percent last week.
Silver futures for December delivery rose 5.6 cents, or 0.4 percent, to $13.535 an ounce on the Comex. Before today, silver dropped 9.7 percent this year while gold fell 1.5 percent.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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Aug. 26 (Bloomberg) -- Gold fell as the dollar strengthened against the euro, eroding the appeal of the precious metal as an alternative investment. Silver rose.
The euro fell as much as 1.2 percent against the dollar after rising 0.7 percent last week. Gold generally moves in tandem with the euro as an alternative to the U.S. currency. The metal reached a record in March as the euro headed to an all-time high against the dollar.
``Gold's movement is focused on the dollar,'' said Stephen Platt, commodity analyst at Archer Financial Services Inc. in Chicago. ``As long as the dollar remains strong, gold is going to have trouble attracting substantial investment buying.''
Gold futures for December delivery fell $5.50, or 0.7 percent, to $820.20 an ounce at 9:19 a.m. on the Comex division of the New York Mercantile Exchange. The metal fell 0.9 percent yesterday after rallying 5.2 percent last week.
Silver futures for December delivery rose 5.6 cents, or 0.4 percent, to $13.535 an ounce on the Comex. Before today, silver dropped 9.7 percent this year while gold fell 1.5 percent.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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Russian Stocks, Ruble Tumble as Medvedev Recognizes Regions
By William Mauldin and Emma O'Brien
Aug. 26 (Bloomberg) -- Russia's RTS Index fell to the lowest level since 2006, the ruble extended its drop and the cost of protecting the country's bonds rose as the government recognized the independence of Georgia's breakaway regions.
The RTS index of 48 companies posted the biggest decline among 89 global equity measures tracked by Bloomberg, while Russia's currency slid to the lowest level in almost seven months against the dollar. Credit-default swaps on Russian debt climbed 7 basis points, according to CMA Datavision prices in London, as President Dmitry Medvedev risked a deepening rift with the West by recognizing South Ossetia and Abkhazia.
Investors have pushed the RTS to this quarter's steepest retreat among the world's stock markets as Russia invaded Georgia and tumbling oil prices sent energy producers lower. Medvedev's statement followed a unanimous call by Russia's parliament to back the enclaves' aspirations for statehood in the aftermath of a five-day war that began on Aug. 8.
``The sentiment here remains pretty bad because of the events in Georgia,'' said Jean-Louis Tauvy, who manages $300 million at Atria Advisors Ltd. in Moscow.
The dollar-denominated RTS Index fell 5.3 percent to 1,560.14 at 4:19 p.m. in Moscow, extending its third-quarter drop to 32 percent. The ruble-denominated Micex Index slumped 3.3 percent to 1,276.47, the lowest level since September 2006.
VTB Group, Russian's second-biggest bank, plunged 6.3 percent to 6.42 kopeks, the lowest level since its initial public offering last year.
`Follow its Example'
``I signed decrees on the recognition by the Russian Federation of the independence of South Ossetia and Abkhazia,'' Medvedev said on television from Sochi today. ``Russia calls on other states to follow its example.''
OAO Gazprom, the country's biggest publicly traded company, sank for a third day, losing 2.7 percent to 226.50 rubles. Crude oil for October delivery fell as much as $2.75, or 2.4 percent, to $112.36 a barrel on the New York Mercantile Exchange.
Russia's ruble declined as much as 1.3 percent to 24.7676 to the dollar, the lowest since Feb. 7.
`Prolonged Period'
``This adds to the uncertainty of doing business in Russia and so people are reducing their positions,'' said Lars Rasmussen, an emerging-markets analyst at Danske Bank A/S in Copenhagen. ``It now seems like this conflict could go on for a prolonged period.''
Credit-default swaps on Russian government debt rose 7 basis points from Aug. 22 to 135, according to CMA Datavision prices at 12 p.m. in London. Contracts on Gazprom rose 11 basis points to 267, CMA prices show.
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates a deterioration in the perception of credit quality; a decline signals the opposite.
A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net; Emma O'Brien in Moscow at eobrien6@bloomberg.net.
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Bank of Montreal May Decline; Barrick Gold, Potash May Retreat
By John Kipphoff
Aug. 26 (Bloomberg) -- Bank of Montreal may fall, based on bids on the Toronto Stock Exchange, after posting third-quarter profit that missed analysts' estimates, because of higher-than- expected loan losses.
Bank of Montreal, the first Canadian bank to report earnings for the period ended in July, was downgraded to ``sell'' by Dundee Securities Corp. analyst John Aiken in Toronto, who called the results ``disappointing.''
Barrick Gold Corp. and Potash Corp. of Saskatchewan Inc. may slide, bids indicated, as metals and grain prices decline.
Standard & Poor's/TSX Composite Index fell 1.2 percent to 13,288.96 yesterday in Toronto. Canada's equity benchmark, which derives three-quarters of its value from financial, materials and energy stocks, has slid 12 percent from its June 18 peak after commodity prices slumped on concern lenders' credit losses will slow global growth and demand for resources.
Bank of Montreal may fall 31 cents to C$43.75, according bids already submitted in Toronto. Canada's fourth-largest lender by assets said third-quarter profit fell 21 percent to C$521 million ($494.5 million), or 98 cents a share, from C$660 million. Excluding one-time items, profit was C$1 a share, Bank of Montreal said. That missed the median estimate of C$1.20 a share from 12 analysts in a Bloomberg survey.
Bank of Montreal set aside C$484 million for bad loans, five times more than a year ago, including C$247 million for two corporate loans linked to the U.S. housing market. Canada's six biggest banks will probably report the worst earnings drop in more than five years on rising costs to cover bad loans and a slowdown in investment-banking revenue, Andre-Philippe Hardy at RBC Capital Markets said in a report last week.
Biggest Bank
Royal Bank of Canada may decline 39 cents to C$44.75, bids suggested. The nation's biggest bank is scheduled to report results on Aug. 28.
Bank of Nova Scotia, which reports later today, was indicating 13 cents higher at C$47.64. Canada's third-biggest bank may report third-quarter profit of C$1.03 a share before one-time items, the average estimate of five analysts polled by Bloomberg.
Barrick Gold, the largest bullion mining company, may fall 58 cents to C$35.50, based on bids. Potash Corp., the biggest maker of crop nutrients by market value, may slip C$1.10 to C$185.
Gold declined in London for a third day as the U.S. dollar strengthened, diminishing demand for the precious metal and other commodities as an alternative investment. Copper and wheat prices retreated also.
U.S. stock-index futures declined, led by mining companies, as a retreat in metal prices overshadowed a private report that signaled the housing slump may be starting to stabilize.
To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.
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Aug. 26 (Bloomberg) -- Bank of Montreal may fall, based on bids on the Toronto Stock Exchange, after posting third-quarter profit that missed analysts' estimates, because of higher-than- expected loan losses.
Bank of Montreal, the first Canadian bank to report earnings for the period ended in July, was downgraded to ``sell'' by Dundee Securities Corp. analyst John Aiken in Toronto, who called the results ``disappointing.''
Barrick Gold Corp. and Potash Corp. of Saskatchewan Inc. may slide, bids indicated, as metals and grain prices decline.
Standard & Poor's/TSX Composite Index fell 1.2 percent to 13,288.96 yesterday in Toronto. Canada's equity benchmark, which derives three-quarters of its value from financial, materials and energy stocks, has slid 12 percent from its June 18 peak after commodity prices slumped on concern lenders' credit losses will slow global growth and demand for resources.
Bank of Montreal may fall 31 cents to C$43.75, according bids already submitted in Toronto. Canada's fourth-largest lender by assets said third-quarter profit fell 21 percent to C$521 million ($494.5 million), or 98 cents a share, from C$660 million. Excluding one-time items, profit was C$1 a share, Bank of Montreal said. That missed the median estimate of C$1.20 a share from 12 analysts in a Bloomberg survey.
Bank of Montreal set aside C$484 million for bad loans, five times more than a year ago, including C$247 million for two corporate loans linked to the U.S. housing market. Canada's six biggest banks will probably report the worst earnings drop in more than five years on rising costs to cover bad loans and a slowdown in investment-banking revenue, Andre-Philippe Hardy at RBC Capital Markets said in a report last week.
Biggest Bank
Royal Bank of Canada may decline 39 cents to C$44.75, bids suggested. The nation's biggest bank is scheduled to report results on Aug. 28.
Bank of Nova Scotia, which reports later today, was indicating 13 cents higher at C$47.64. Canada's third-biggest bank may report third-quarter profit of C$1.03 a share before one-time items, the average estimate of five analysts polled by Bloomberg.
Barrick Gold, the largest bullion mining company, may fall 58 cents to C$35.50, based on bids. Potash Corp., the biggest maker of crop nutrients by market value, may slip C$1.10 to C$185.
Gold declined in London for a third day as the U.S. dollar strengthened, diminishing demand for the precious metal and other commodities as an alternative investment. Copper and wheat prices retreated also.
U.S. stock-index futures declined, led by mining companies, as a retreat in metal prices overshadowed a private report that signaled the housing slump may be starting to stabilize.
To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.
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U.S. Stock-Index Futures Rise After Housing Data; Pulte Gains
By Elizabeth Stanton
Enlarge Image/Details
Aug. 26 (Bloomberg) -- U.S. stock-index futures rose, erasing an earlier retreat, after a private report signaled the housing slump may be starting to stabilize.
Pulte Homes Inc. climbed 1.8 percent and Citigroup Inc. advanced 0.5 percent after the S&P/Case-Shiller index decreased less than economists forecast. Barrick Gold Corp. lost 1.8 percent and Freeport-McMoRan Copper & Gold Inc. retreated almost 1 percent as gold declined for a third day and copper fell in London.
Standard & Poor's 500 Index futures expiring in September added 0.1 point to 1,266.5 as of 9:24 a.m. in New York. Dow Jones Industrial Average futures increased 6 to 11,390 and Nasdaq-100 Index futures lost 1.75 to 1,893.25.
The S&P 500 Index is down 14 percent this year on concern more than $500 billion in losses and writedowns related to the collapse of the subprime-mortgage market and accelerating inflation will slow economic expansion and curb profit growth.
Purchases of new houses in the U.S. probably dropped 0.9 percent to a 525,000 annual pace, according to the median forecast in a Bloomberg News survey. Sales reached a 17-year low rate of 513,000 in March. The report from the Commerce Department is due at 10 a.m. in Washington today.
At 10 a.m., a report from the New York-based Conference Board may show confidence this month was little-changed from a 16-year low reached in June, according to the survey.
Barrick
Barrick, the world's largest gold producer, retreated 61 cents to $33.80. Freeport, the biggest publicly traded copper producer, fell 81 cents to $87.
Gold for immediate delivery lost $13.95, or 1.7 percent, to $808 an ounce in London as the dollar strengthened, diminishing demand for the metal as an alternative investment. Copper slid $125 to $7,535 a ton as inventories monitored by the London Metal Exchange jumped 17 percent this month.
American Eagle Outfitters retreated 4.3 percent to $13.15. The U.S. retailer of clothing for 15- to 25-year-olds said third- quarter profit will be as low as 31 cents a share, or 23 percent lower than the average analyst estimate in a Bloomberg survey.
Analysts forecast earnings among companies in the S&P 500 will decline 1.2 percent on average in 2008, according to weekly Bloomberg data. That compares with 15 percent growth forecast at the beginning of the year.
U.S. stocks dropped the most in a month yesterday as a Kansas bank's failure and speculation American International Group Inc. will post a loss heightened concern that credit writedowns will keep rattling the financial system.
Fannie Mae
Fannie Mae added 23 cents to $5.42 and Freddie Mac rose 20 cents to $3.49 in trading before the open of U.S. exchanges. U.S. Treasury Secretary Henry Paulson said providing government aid for the two largest U.S. mortgage-finance companies would be a last resort, the New York Times reported, citing an interview. A credit facility would be used as a last resort to protect the taxpayer, according to the newspaper, which said it interviewed Paulson on Aug. 18.
The S&P 500 is poised to retreat for a third straight month even after rebounding more than 4 percent from its low of the year on July 15. All 10 of the main industry groups in the index have declined this year, led by a 32 percent tumble in financial shares.
Morgan Stanley cut its year-end forecast for the S&P 500 by 7.1 percent to 1,300 yesterday on concern banks will report more credit-related writedowns and the global economic slowdown will curb profits at technology and industrial companies.
The average estimate of nine other Wall Street strategists who provide year-end forecasts to Bloomberg News is 1,446, implying a 14 percent rally from yesterday's close.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
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Enlarge Image/Details
Aug. 26 (Bloomberg) -- U.S. stock-index futures rose, erasing an earlier retreat, after a private report signaled the housing slump may be starting to stabilize.
Pulte Homes Inc. climbed 1.8 percent and Citigroup Inc. advanced 0.5 percent after the S&P/Case-Shiller index decreased less than economists forecast. Barrick Gold Corp. lost 1.8 percent and Freeport-McMoRan Copper & Gold Inc. retreated almost 1 percent as gold declined for a third day and copper fell in London.
Standard & Poor's 500 Index futures expiring in September added 0.1 point to 1,266.5 as of 9:24 a.m. in New York. Dow Jones Industrial Average futures increased 6 to 11,390 and Nasdaq-100 Index futures lost 1.75 to 1,893.25.
The S&P 500 Index is down 14 percent this year on concern more than $500 billion in losses and writedowns related to the collapse of the subprime-mortgage market and accelerating inflation will slow economic expansion and curb profit growth.
Purchases of new houses in the U.S. probably dropped 0.9 percent to a 525,000 annual pace, according to the median forecast in a Bloomberg News survey. Sales reached a 17-year low rate of 513,000 in March. The report from the Commerce Department is due at 10 a.m. in Washington today.
At 10 a.m., a report from the New York-based Conference Board may show confidence this month was little-changed from a 16-year low reached in June, according to the survey.
Barrick
Barrick, the world's largest gold producer, retreated 61 cents to $33.80. Freeport, the biggest publicly traded copper producer, fell 81 cents to $87.
Gold for immediate delivery lost $13.95, or 1.7 percent, to $808 an ounce in London as the dollar strengthened, diminishing demand for the metal as an alternative investment. Copper slid $125 to $7,535 a ton as inventories monitored by the London Metal Exchange jumped 17 percent this month.
American Eagle Outfitters retreated 4.3 percent to $13.15. The U.S. retailer of clothing for 15- to 25-year-olds said third- quarter profit will be as low as 31 cents a share, or 23 percent lower than the average analyst estimate in a Bloomberg survey.
Analysts forecast earnings among companies in the S&P 500 will decline 1.2 percent on average in 2008, according to weekly Bloomberg data. That compares with 15 percent growth forecast at the beginning of the year.
U.S. stocks dropped the most in a month yesterday as a Kansas bank's failure and speculation American International Group Inc. will post a loss heightened concern that credit writedowns will keep rattling the financial system.
Fannie Mae
Fannie Mae added 23 cents to $5.42 and Freddie Mac rose 20 cents to $3.49 in trading before the open of U.S. exchanges. U.S. Treasury Secretary Henry Paulson said providing government aid for the two largest U.S. mortgage-finance companies would be a last resort, the New York Times reported, citing an interview. A credit facility would be used as a last resort to protect the taxpayer, according to the newspaper, which said it interviewed Paulson on Aug. 18.
The S&P 500 is poised to retreat for a third straight month even after rebounding more than 4 percent from its low of the year on July 15. All 10 of the main industry groups in the index have declined this year, led by a 32 percent tumble in financial shares.
Morgan Stanley cut its year-end forecast for the S&P 500 by 7.1 percent to 1,300 yesterday on concern banks will report more credit-related writedowns and the global economic slowdown will curb profits at technology and industrial companies.
The average estimate of nine other Wall Street strategists who provide year-end forecasts to Bloomberg News is 1,446, implying a 14 percent rally from yesterday's close.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.
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Milpo, Petrobras, Quickfood and Usiminas: Latin Equity Preview
By Alexander Ragir and [bn:PRSN=1] William Freebairn []
Aug. 26 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 2.9 percent yesterday to 3,909.83.
Argentina
Quickfood SA (PATY AF): Argentina's biggest meatpacker said it is unaware of reasons for the stock's steepest drop in more than a year. ``There is nothing new,'' company spokesman Miguel Gorelik said by phone yesterday from Buenos Aires. Quickfood fell 8.6 percent to 21.20 pesos.
Brazil
Petroleo Brasileiro SA (PETR4 BS): The decline in shares of Petroleo Brasileiro SA shares has been ``overdone'' and investors should focus on the company's exploration potential instead, Deutsche Bank AG said in a note to clients today. Petrobras fell 4.2 percent to 33.81 reais.
Usinas Siderurgicas de Minas Gerais (USIM5 BS) and Cia. Siderurgica Nacional SA (CSNA3 BS): Brazil's second- and third- largest steelmakers, respectively, were upgraded to ``buy'' at UBS AG after a three-month slump in the shares. Carlos Vasques and Edmo Chagas, analysts at UBS, upgraded both companies from ``neutral'' in a report today. Usiminas fell 1.8 percent to 55 reais. CSN fell 3.8 percent to 53.41 reais.
Colombia
Bancolombia SA (BCOLO CB): The country's largest bank said directors agreed to allow vice president Luis Santiago Perez Moreno sell a Bancolombia stake worth $126,064, according to a statement sent yesterday via PR Newswire. Bancolombia fell 1.6 percent to 14,800 pesos.
Mexico
Cia. Minera Autlan (AUTLANB MM): The Mexican manganese miner will pay a dividend of 29 centavos a share on Sept. 3, according to a filing with the Mexican stock exchange yesterday. Autlan fell 1.2 percent to 72.54 pesos.
Telefonos de Mexico SAB (TELMEXL MM): Mexico's biggest fixed-line phone company lost 8,000 customers since the July 12 start of a system letting users change phone carriers while keeping the same number, El Universal reported yesterday, citing a cable industry group. Telmex, as the company is known, gained 750 customers from other companies under the so-called number portability rules, the Mexico City-based newspaper reported, quoting cable industry group head Alejandro Puente. Telmex fell 2.5 percent to 12.74 pesos.
Peru
Cia. Minera Milpo SA (MILPOC1 PE): Votorantim Metais Ltda., Latin America's biggest zinc producer, increased its stake in Milpo, Peru's fourth-largest zinc producer. Votorantim bought 8.3 percent of shares from Aug. 15 to Aug. 20, Milpo said in a filing yesterday with Peruvian regulators. Milpo rose 1.4 percent to 7.50 soles.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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Aug. 26 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 2.9 percent yesterday to 3,909.83.
Argentina
Quickfood SA (PATY AF): Argentina's biggest meatpacker said it is unaware of reasons for the stock's steepest drop in more than a year. ``There is nothing new,'' company spokesman Miguel Gorelik said by phone yesterday from Buenos Aires. Quickfood fell 8.6 percent to 21.20 pesos.
Brazil
Petroleo Brasileiro SA (PETR4 BS): The decline in shares of Petroleo Brasileiro SA shares has been ``overdone'' and investors should focus on the company's exploration potential instead, Deutsche Bank AG said in a note to clients today. Petrobras fell 4.2 percent to 33.81 reais.
Usinas Siderurgicas de Minas Gerais (USIM5 BS) and Cia. Siderurgica Nacional SA (CSNA3 BS): Brazil's second- and third- largest steelmakers, respectively, were upgraded to ``buy'' at UBS AG after a three-month slump in the shares. Carlos Vasques and Edmo Chagas, analysts at UBS, upgraded both companies from ``neutral'' in a report today. Usiminas fell 1.8 percent to 55 reais. CSN fell 3.8 percent to 53.41 reais.
Colombia
Bancolombia SA (BCOLO CB): The country's largest bank said directors agreed to allow vice president Luis Santiago Perez Moreno sell a Bancolombia stake worth $126,064, according to a statement sent yesterday via PR Newswire. Bancolombia fell 1.6 percent to 14,800 pesos.
Mexico
Cia. Minera Autlan (AUTLANB MM): The Mexican manganese miner will pay a dividend of 29 centavos a share on Sept. 3, according to a filing with the Mexican stock exchange yesterday. Autlan fell 1.2 percent to 72.54 pesos.
Telefonos de Mexico SAB (TELMEXL MM): Mexico's biggest fixed-line phone company lost 8,000 customers since the July 12 start of a system letting users change phone carriers while keeping the same number, El Universal reported yesterday, citing a cable industry group. Telmex, as the company is known, gained 750 customers from other companies under the so-called number portability rules, the Mexico City-based newspaper reported, quoting cable industry group head Alejandro Puente. Telmex fell 2.5 percent to 12.74 pesos.
Peru
Cia. Minera Milpo SA (MILPOC1 PE): Votorantim Metais Ltda., Latin America's biggest zinc producer, increased its stake in Milpo, Peru's fourth-largest zinc producer. Votorantim bought 8.3 percent of shares from Aug. 15 to Aug. 20, Milpo said in a filing yesterday with Peruvian regulators. Milpo rose 1.4 percent to 7.50 soles.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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American Eagle, Biogen, Marvell Technology: U.S. Equity Preview
By Nick Baker
Aug. 26 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:10 a.m. unless stated otherwise.
American Eagle Outfitters Inc. (AEO US) retreated 4.3 percent to $13.15. The U.S. retailer of clothing for 15- to 25- year-olds said third-quarter profit will be as low as 31 cents a share, or 23 percent lower than the average analyst estimate in a Bloomberg survey.
BankUnited Financial Corp. (BKUNA US): Florida's largest bank may lose its ``well-capitalized'' status under federal rules for financial strength unless it attracts at least $400 million of new capital. BankUnited lost 1.2 percent to $1.59 yesterday.
Biogen Idec Inc. (BIIB US): The company and Elan Corp. (ELN US) are working on revisions to prescribing information for the multiple sclerosis drug Tysabri to show that a rare brain infection may occur in patients taking the medicine as a sole therapy. Biogen climbed 2.1 percent to $53.48 yesterday, while Elan added 4.9 percent to $14.25.
Lorillard Inc. (LO US): The cigarette maker spun off in June by Loews Corp. (L US) is the ``best-positioned'' company in the industry, Goldman Sachs Group Inc. analyst Judy Hong wrote in a report. The shares slipped 0.2 percent to $72 yesterday.
Marvell Technology Group Ltd. (MRVL US) declined 4.3 percent to $15. The maker of chips for the BlackBerry and iPhone was cut to ``hold'' from ``buy'' by Jefferies Group Inc. analyst Adam Benjamin.
Take-Two Interactive Software Inc. (TTWO US): Electronic Arts Inc. (ERTS US), the second-largest video-game publisher, signed a confidentiality agreement with Take-Two, opening the way for talks about a possible acquisition. Take-Two slipped less than 0.1 percent to $24.46 yesterday, while Electronic Arts declined 2 percent to $46.82.
To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net.
Read more...
Aug. 26 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:10 a.m. unless stated otherwise.
American Eagle Outfitters Inc. (AEO US) retreated 4.3 percent to $13.15. The U.S. retailer of clothing for 15- to 25- year-olds said third-quarter profit will be as low as 31 cents a share, or 23 percent lower than the average analyst estimate in a Bloomberg survey.
BankUnited Financial Corp. (BKUNA US): Florida's largest bank may lose its ``well-capitalized'' status under federal rules for financial strength unless it attracts at least $400 million of new capital. BankUnited lost 1.2 percent to $1.59 yesterday.
Biogen Idec Inc. (BIIB US): The company and Elan Corp. (ELN US) are working on revisions to prescribing information for the multiple sclerosis drug Tysabri to show that a rare brain infection may occur in patients taking the medicine as a sole therapy. Biogen climbed 2.1 percent to $53.48 yesterday, while Elan added 4.9 percent to $14.25.
Lorillard Inc. (LO US): The cigarette maker spun off in June by Loews Corp. (L US) is the ``best-positioned'' company in the industry, Goldman Sachs Group Inc. analyst Judy Hong wrote in a report. The shares slipped 0.2 percent to $72 yesterday.
Marvell Technology Group Ltd. (MRVL US) declined 4.3 percent to $15. The maker of chips for the BlackBerry and iPhone was cut to ``hold'' from ``buy'' by Jefferies Group Inc. analyst Adam Benjamin.
Take-Two Interactive Software Inc. (TTWO US): Electronic Arts Inc. (ERTS US), the second-largest video-game publisher, signed a confidentiality agreement with Take-Two, opening the way for talks about a possible acquisition. Take-Two slipped less than 0.1 percent to $24.46 yesterday, while Electronic Arts declined 2 percent to $46.82.
To contact the reporter on this story: Nick Baker in New York at nbaker7@bloomberg.net.
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Morning Market Recap: North American Currencies Pull Ahead
Morning Market Recap: North American Currencies Pull Ahead
26 Agustus 2008 20:31
(CEP News) - North American currencies rallied in tandem on Tuesday after soft overseas data spurred demand for Canadian and U.S. dollars.
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26 Agustus 2008 20:31
(CEP News) - North American currencies rallied in tandem on Tuesday after soft overseas data spurred demand for Canadian and U.S. dollars.
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Grains, soy fall on wet outlook, strong dollar
By Naveen Thukral and Nigel Hunt
SINGAPORE/LONDON (Reuters) - Wheat, corn and soybean prices all fell on Tuesday, weighed down by forecasts for much-needed rains in the U.S. Midwest and a broad-based decline in commodity markets linked to a strengthening dollar.
"The affirmative weather for crops and the strength in U.S. dollar are putting pressure on the investors not to be in the agriculture markets," said Nicholas Chung, senior manager of the commodities team at Korea Development Bank in Seoul.
September soybean futures on the Chicago Board of Trade SU8 were down 33-3/4 cents at $13.05-1/2 a bushel at 1045 GMT. Prices had risen sharply during the last couple of weeks, buoyed by a surge in oil prices, a weak dollar and concerns that dry weather in the U.S. Midwest may diminish crop prospects.
The U.S. currency surged on Tuesday, however, hitting a six-month high against the euro, oil prices fell sharply and rain was forecast for the Midwest.
"Commodities across the board are all a touch softer and ags are pretty much following that trend as well," said Barclays Capital analyst Sudakshina Unnikrishnan.
Global Forecast System (GFS) computer model on Monday turned wetter for late next week, projecting heavy rains of one to three inches for parts of the Midwest.
August is critical to the development of the U.S. soybean crop, while July weather influences the corn yield.
Topsoil moisture has evaporated due to limited rains since late July, especially east of the Mississippi River.
"Weather conditions are a key driver. If we see rain in the Midwest we will see that impacting corn and soybeans negatively," Unnikrishnan said.
She added, however, that she did not anticipate there would be a steep downside correction in prices, with markets underpinned by robust demand from key importers such as China.
CBOT corn prices also fell with September CU8 off 10 cents at $5.70-1/4 a bushel.
So far, the U.S. Agriculture Department is estimating that American farmers will harvest their second-largest corn crop in history, 12.3 billion bushels. USDA projects soy output at 2.97 billion bushels, which would be the fourth-largest on record.
Wheat prices also weakened but remained comfortably above levels traded a couple of weeks ago.
"I think the downside is limited as (wheat) stocks are still fairly low. We may see a bit of a build (in stocks) but we've seen pretty strong demand with a raft of recent import tenders," Barclays Capital's Unnikrishnan said.
(Editing by Christopher Johnson)
Read more...
SINGAPORE/LONDON (Reuters) - Wheat, corn and soybean prices all fell on Tuesday, weighed down by forecasts for much-needed rains in the U.S. Midwest and a broad-based decline in commodity markets linked to a strengthening dollar.
"The affirmative weather for crops and the strength in U.S. dollar are putting pressure on the investors not to be in the agriculture markets," said Nicholas Chung, senior manager of the commodities team at Korea Development Bank in Seoul.
September soybean futures on the Chicago Board of Trade SU8 were down 33-3/4 cents at $13.05-1/2 a bushel at 1045 GMT. Prices had risen sharply during the last couple of weeks, buoyed by a surge in oil prices, a weak dollar and concerns that dry weather in the U.S. Midwest may diminish crop prospects.
The U.S. currency surged on Tuesday, however, hitting a six-month high against the euro, oil prices fell sharply and rain was forecast for the Midwest.
"Commodities across the board are all a touch softer and ags are pretty much following that trend as well," said Barclays Capital analyst Sudakshina Unnikrishnan.
Global Forecast System (GFS) computer model on Monday turned wetter for late next week, projecting heavy rains of one to three inches for parts of the Midwest.
August is critical to the development of the U.S. soybean crop, while July weather influences the corn yield.
Topsoil moisture has evaporated due to limited rains since late July, especially east of the Mississippi River.
"Weather conditions are a key driver. If we see rain in the Midwest we will see that impacting corn and soybeans negatively," Unnikrishnan said.
She added, however, that she did not anticipate there would be a steep downside correction in prices, with markets underpinned by robust demand from key importers such as China.
CBOT corn prices also fell with September CU8 off 10 cents at $5.70-1/4 a bushel.
So far, the U.S. Agriculture Department is estimating that American farmers will harvest their second-largest corn crop in history, 12.3 billion bushels. USDA projects soy output at 2.97 billion bushels, which would be the fourth-largest on record.
Wheat prices also weakened but remained comfortably above levels traded a couple of weeks ago.
"I think the downside is limited as (wheat) stocks are still fairly low. We may see a bit of a build (in stocks) but we've seen pretty strong demand with a raft of recent import tenders," Barclays Capital's Unnikrishnan said.
(Editing by Christopher Johnson)
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