By Garth Theunissen
Sept. 30 (Bloomberg) -- South Africa's rand rose against the dollar, reversing an earlier decline.
The rand advanced 0.3 percent to 8.3188 per dollar as of 9:37 a.m. in Johannesburg, from 8.3456 yesterday. Earlier it fell as much as 0.4 percent to 8.3750.
U.S. lawmakers rejected yesterday President George W. Bush's $700 billion plan to bail out financial institutions, sending U.S. stocks plunging.
The South African currency has dropped 8 percent this month and 6.5 percent in the third quarter versus the dollar.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net
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Tuesday, September 30, 2008
Ruble Set for Record Monthly Drop as Stock Trading Is Halted
By Emma O'Brien
Sept. 30 (Bloomberg) -- The ruble fell against the dollar and was headed for its biggest monthly drop on record versus the country's currency basket, as stock trading was halted after U.S. lawmakers rejected a $700 billion bank-bailout package.
The currency dropped as Russia's benchmark Micex stock index slid 1 percent before trading was stopped for two hours and oil, Russia's largest export earner, extended yesterday's 9.8 percent decline. The ruble, which the central bank manages against a dollar-euro basket, was also poised for its biggest quarterly drop versus the dollar since the final three months of 1999, when it weakened 9.2 percent.
``Investors everywhere are suffering an almost complete loss of confidence,'' Chris Weafer, chief strategist in Moscow at UralSib Financial Corp., said in an e-mailed note to clients today. Sentiment has been ``executed,'' he said.
The currency was at 25.3811 per dollar by 10:44 a.m. in Moscow, from 25.3059 yesterday, headed for a 3 percent decline in the month. It rose to 36.4723 per euro, from 36.5256, poised to lose 0.8 percent in September. The ruble was little changed at 30.3644 to the basket, from 30.3548 late yesterday, when it dropped 0.4 percent.
Bank Rossii, Russia's central bank, keeps the ruble within a trading range against the basket to minimize the impact of its fluctuations on the competitiveness of Russian exports. The basket rate is calculated by multiplying the ruble's rate to the dollar by 0.55, the euro rate by 0.45, then adding them together.
Quarterly Decline
The ruble has lost 8.2 percent versus the dollar this quarter and 2.9 percent against the basket, its first quarterly drop this year, as investor shunned higher-yielding, emerging- market assets amid the global financial turmoil. It's down 1.8 percent versus the basket in September, the most since the currency gauge was introduced in February 2005.
The Micex may resume trading at 12:30 p.m. in Moscow, spokesman Alexei Gerasyuk said. In anticipation of a slump in stocks, Russia's market regulator banned all unsecured short sales today for the second time this month. A short position is a bet an asset will fall.
Bank Rossii sold as much as $13 billion in September to prevent the ruble from falling beyond 30.40, the lower end of the basket's trading range, Evgeniy Nadorshin, a senior economist at Moscow-based Trust Investment Bank, said yesterday.
Oil fell 2.4 percent to $94.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange today.
To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net
Read more...
Sept. 30 (Bloomberg) -- The ruble fell against the dollar and was headed for its biggest monthly drop on record versus the country's currency basket, as stock trading was halted after U.S. lawmakers rejected a $700 billion bank-bailout package.
The currency dropped as Russia's benchmark Micex stock index slid 1 percent before trading was stopped for two hours and oil, Russia's largest export earner, extended yesterday's 9.8 percent decline. The ruble, which the central bank manages against a dollar-euro basket, was also poised for its biggest quarterly drop versus the dollar since the final three months of 1999, when it weakened 9.2 percent.
``Investors everywhere are suffering an almost complete loss of confidence,'' Chris Weafer, chief strategist in Moscow at UralSib Financial Corp., said in an e-mailed note to clients today. Sentiment has been ``executed,'' he said.
The currency was at 25.3811 per dollar by 10:44 a.m. in Moscow, from 25.3059 yesterday, headed for a 3 percent decline in the month. It rose to 36.4723 per euro, from 36.5256, poised to lose 0.8 percent in September. The ruble was little changed at 30.3644 to the basket, from 30.3548 late yesterday, when it dropped 0.4 percent.
Bank Rossii, Russia's central bank, keeps the ruble within a trading range against the basket to minimize the impact of its fluctuations on the competitiveness of Russian exports. The basket rate is calculated by multiplying the ruble's rate to the dollar by 0.55, the euro rate by 0.45, then adding them together.
Quarterly Decline
The ruble has lost 8.2 percent versus the dollar this quarter and 2.9 percent against the basket, its first quarterly drop this year, as investor shunned higher-yielding, emerging- market assets amid the global financial turmoil. It's down 1.8 percent versus the basket in September, the most since the currency gauge was introduced in February 2005.
The Micex may resume trading at 12:30 p.m. in Moscow, spokesman Alexei Gerasyuk said. In anticipation of a slump in stocks, Russia's market regulator banned all unsecured short sales today for the second time this month. A short position is a bet an asset will fall.
Bank Rossii sold as much as $13 billion in September to prevent the ruble from falling beyond 30.40, the lower end of the basket's trading range, Evgeniy Nadorshin, a senior economist at Moscow-based Trust Investment Bank, said yesterday.
Oil fell 2.4 percent to $94.08 a barrel in after-hours electronic trading on the New York Mercantile Exchange today.
To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net
Read more...
Pound Rises Versus Euro; Stocks Gain on Rescue-Plan Speculation
By Agnes Lovasz
Sept. 30 (Bloomberg) -- The pound gained against the euro as U.K. stocks advanced after U.S. lawmakers said they will seek to salvage the $700 billion bank-bailout package.
The British currency was little changed against the dollar after the biggest drop in more than 15 years yesterday as the U.K. government seized lender Bradford & Bingley Plc. The FTSE 100 Index and U.S. stock futures climbed as Judd Gregg, the Senate Banking Committee's ranking Republican, and Barack Obama, the Democratic presidential candidate, said the rescue plan, defeated in the House of Representatives yesterday, would eventually pass.
``There is a grinding improvement in equity market sentiment and that's driving the uptick in sterling,'' said Robert Minikin, a senior currency strategist at Standard Chartered. ``Yesterday we had a catastrophic day for the pound. Today we're getting a slightly better tone.''
The U.K. currency rose to 79.60 pence against the euro as of 11:27 a.m. in London, from 79.81 pence yesterday. It was also at $1.8021, from $1.8086 yesterday. It declined as much as 2.6 percent, to $1.7959 yesterday, the biggest slump since June 1993.
The FTSE 100 index rose 0.3 percent. Futures on the Standard & Poor's 500 index rallied 2.9 percent, and Dow Jones Industrial Average futures gained 2.2 percent.
The pound slid 9.6 percent against the dollar in the third quarter, poised for its biggest decline since the final three months of 1992, when the currency tumbled 15 percent. The pound is down 0.8 percent versus the euro in the period.
The pound fell against the U.S. currency after a report showed U.K. consumer confidence stayed near a record low this month. GfK's index of sentiment was at minus 32. The gauge reached minus 39 in July, the lowest level since the series began in 1974.
Bank Bailouts
Dexia SA, the world's biggest lender to local governments, received a 6.4 billion-euro ($9.2 billion) state-backed bailout, Belgian Prime Minister Yves Leterme said in a statement today.
Fortis became the largest European financial-services firm forced into a government rescue after Belgium, the Netherlands and Luxembourg said yesterday they would inject 11.2 billion euros by taking minority stakes in the bank's units in each country.
U.K. 10-year bonds fell and two-year gilts pared gains after U.S. senators said they will salvage the government's market-rescue plan. The yield on the 10-year gilt rose 3 basis points to 4.41 percent. The 4.75 percent security due March 2018 fell 0.22, or 2.2 pounds per 1,000-pound ($1,802) face amount, to 104.53.
The yield on the two-year note fell 3 basis points to 3.96 percent, after dropping to as low as 3.90 percent earlier. Bond yields move inversely to prices.
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net
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Sept. 30 (Bloomberg) -- The pound gained against the euro as U.K. stocks advanced after U.S. lawmakers said they will seek to salvage the $700 billion bank-bailout package.
The British currency was little changed against the dollar after the biggest drop in more than 15 years yesterday as the U.K. government seized lender Bradford & Bingley Plc. The FTSE 100 Index and U.S. stock futures climbed as Judd Gregg, the Senate Banking Committee's ranking Republican, and Barack Obama, the Democratic presidential candidate, said the rescue plan, defeated in the House of Representatives yesterday, would eventually pass.
``There is a grinding improvement in equity market sentiment and that's driving the uptick in sterling,'' said Robert Minikin, a senior currency strategist at Standard Chartered. ``Yesterday we had a catastrophic day for the pound. Today we're getting a slightly better tone.''
The U.K. currency rose to 79.60 pence against the euro as of 11:27 a.m. in London, from 79.81 pence yesterday. It was also at $1.8021, from $1.8086 yesterday. It declined as much as 2.6 percent, to $1.7959 yesterday, the biggest slump since June 1993.
The FTSE 100 index rose 0.3 percent. Futures on the Standard & Poor's 500 index rallied 2.9 percent, and Dow Jones Industrial Average futures gained 2.2 percent.
The pound slid 9.6 percent against the dollar in the third quarter, poised for its biggest decline since the final three months of 1992, when the currency tumbled 15 percent. The pound is down 0.8 percent versus the euro in the period.
The pound fell against the U.S. currency after a report showed U.K. consumer confidence stayed near a record low this month. GfK's index of sentiment was at minus 32. The gauge reached minus 39 in July, the lowest level since the series began in 1974.
Bank Bailouts
Dexia SA, the world's biggest lender to local governments, received a 6.4 billion-euro ($9.2 billion) state-backed bailout, Belgian Prime Minister Yves Leterme said in a statement today.
Fortis became the largest European financial-services firm forced into a government rescue after Belgium, the Netherlands and Luxembourg said yesterday they would inject 11.2 billion euros by taking minority stakes in the bank's units in each country.
U.K. 10-year bonds fell and two-year gilts pared gains after U.S. senators said they will salvage the government's market-rescue plan. The yield on the 10-year gilt rose 3 basis points to 4.41 percent. The 4.75 percent security due March 2018 fell 0.22, or 2.2 pounds per 1,000-pound ($1,802) face amount, to 104.53.
The yield on the two-year note fell 3 basis points to 3.96 percent, after dropping to as low as 3.90 percent earlier. Bond yields move inversely to prices.
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net
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Asian Currencies Fall, Led by Won, as Bank Rescue Plan Rejected
By Anil Varma and Bob Chen
Sept. 30 (Bloomberg) -- Asian currencies declined, with South Korea's won falling to its lowest in more than five years, after U.S. lawmakers rejected a $700 billion financial rescue plan to bail out the banking system.
The won completed its worst quarter since the Asian financial crisis in 1997, after Lehman Brothers Holdings Inc. collapsed, American International Group Inc. was nationalized and Merrill Lynch & Co. was acquired by Bank of America Corp. Korea's Kospi stock index slumped 13 percent in the three months, the most since March 2003, as the deepening credit crisis spurred investors to sell emerging-market assets.
``We'll see broad-based Asian currency weakness,'' said Mitul Kotecha, global head of foreign-exchange strategy at Calyon in Hong Kong. ``The weakness in equities results in further outflows from equity markets among foreign investors.''
The won fell as low as 1,230 versus the dollar, the weakest since April 2003, according to Seoul Money Brokerage Services Ltd. It was down 1.5 percent at 1,207 at the 3 p.m. close of trading in Seoul. The currency slumped 13 percent this quarter.
The rejection by U.S. lawmakers yesterday of the biggest government intervention in markets since the Great Depression may lead to more bank failures worldwide. The bill would have allowed the government to buy troubled assets from financial companies, which have reported losses and writedowns of $591 billion due to the collapse of the U.S. subprime mortgage market. Federal Reserve Chairman Ben S. Bernanke warned of ``grave threats'' to the financial system if Congress rejected the plan.
Taiwan Dollar
Taiwan's dollar had the worst quarter since 1997 on concern increasingly risk-averse investors are pulling out of emerging markets. Taiwan's Taiex stock index tumbled 3.6 percent to 5,719.28 today, capping a 24 percent drop for the quarter. Its close of 5,641.95 on Sept. 18 was the lowest since October 2005.
The local currency fell as much as 1 percent today to NT$32.368 against the U.S. dollar, the lowest level since Jan. 24, before trading down 0.3 percent at NT$32.13, according to Taipei Forex Inc. The currency lost 5.5 percent this quarter.
Taiwan's financial regulator said late yesterday that it placed temporary limits on short-selling of stocks ``to maintain market stability and boost investors' confidence'' after the Standard & Poor's 500 Index fell the most since the 1987 crash and the Dow Jones Industrial Average plunged the most ever.
Short sellers borrow stocks and sell them, betting the price will fall and they will be able to buy them back later, return them to the lender, and pocket the difference in price.
The Philippine peso fell for a fourth day as Asian stocks extended the worst global equities sell-off in 21 years. The MSCI Asia Pacific Index has slumped 32 percent this year as deteriorating confidence in global credit markets caused the world's financial institutions to report losses and asset writedowns of more than $590 billion.
`Risk Averse'
``The bailout hasn't happened and it's making people more risk averse,'' said Jonathan Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila. ``That, plus the month-end dollar requirement of companies, is pushing the exchange rate higher.''
The peso weakened 0.2 percent to 47.04 per dollar, according to Tullett Prebon Plc.
Malaysia's ringgit rounded off a second month of losses.
``Risk aversion and flight to safety will dominate, and that means almost everyone will be getting out of emerging markets for a while,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The ringgit is heading for weaker levels'' unless a U.S. bank bailout is approved, he said.
The ringgit fell 1.4 percent this month to 3.4407 versus the dollar, according to data compiled by Bloomberg. The currency touched 3.4595, the weakest level since Sept. 19.
Elsewhere, the Singapore dollar gained 0.6 percent to S$1.4260 against the U.S. currency and the Thai baht rose 0.5 percent to 33.86. Vietnam's dong was unchanged at 16,600.
To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net.
Read more...
Sept. 30 (Bloomberg) -- Asian currencies declined, with South Korea's won falling to its lowest in more than five years, after U.S. lawmakers rejected a $700 billion financial rescue plan to bail out the banking system.
The won completed its worst quarter since the Asian financial crisis in 1997, after Lehman Brothers Holdings Inc. collapsed, American International Group Inc. was nationalized and Merrill Lynch & Co. was acquired by Bank of America Corp. Korea's Kospi stock index slumped 13 percent in the three months, the most since March 2003, as the deepening credit crisis spurred investors to sell emerging-market assets.
``We'll see broad-based Asian currency weakness,'' said Mitul Kotecha, global head of foreign-exchange strategy at Calyon in Hong Kong. ``The weakness in equities results in further outflows from equity markets among foreign investors.''
The won fell as low as 1,230 versus the dollar, the weakest since April 2003, according to Seoul Money Brokerage Services Ltd. It was down 1.5 percent at 1,207 at the 3 p.m. close of trading in Seoul. The currency slumped 13 percent this quarter.
The rejection by U.S. lawmakers yesterday of the biggest government intervention in markets since the Great Depression may lead to more bank failures worldwide. The bill would have allowed the government to buy troubled assets from financial companies, which have reported losses and writedowns of $591 billion due to the collapse of the U.S. subprime mortgage market. Federal Reserve Chairman Ben S. Bernanke warned of ``grave threats'' to the financial system if Congress rejected the plan.
Taiwan Dollar
Taiwan's dollar had the worst quarter since 1997 on concern increasingly risk-averse investors are pulling out of emerging markets. Taiwan's Taiex stock index tumbled 3.6 percent to 5,719.28 today, capping a 24 percent drop for the quarter. Its close of 5,641.95 on Sept. 18 was the lowest since October 2005.
The local currency fell as much as 1 percent today to NT$32.368 against the U.S. dollar, the lowest level since Jan. 24, before trading down 0.3 percent at NT$32.13, according to Taipei Forex Inc. The currency lost 5.5 percent this quarter.
Taiwan's financial regulator said late yesterday that it placed temporary limits on short-selling of stocks ``to maintain market stability and boost investors' confidence'' after the Standard & Poor's 500 Index fell the most since the 1987 crash and the Dow Jones Industrial Average plunged the most ever.
Short sellers borrow stocks and sell them, betting the price will fall and they will be able to buy them back later, return them to the lender, and pocket the difference in price.
The Philippine peso fell for a fourth day as Asian stocks extended the worst global equities sell-off in 21 years. The MSCI Asia Pacific Index has slumped 32 percent this year as deteriorating confidence in global credit markets caused the world's financial institutions to report losses and asset writedowns of more than $590 billion.
`Risk Averse'
``The bailout hasn't happened and it's making people more risk averse,'' said Jonathan Ravelas, a strategist at Banco de Oro Unibank Inc. in Manila. ``That, plus the month-end dollar requirement of companies, is pushing the exchange rate higher.''
The peso weakened 0.2 percent to 47.04 per dollar, according to Tullett Prebon Plc.
Malaysia's ringgit rounded off a second month of losses.
``Risk aversion and flight to safety will dominate, and that means almost everyone will be getting out of emerging markets for a while,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The ringgit is heading for weaker levels'' unless a U.S. bank bailout is approved, he said.
The ringgit fell 1.4 percent this month to 3.4407 versus the dollar, according to data compiled by Bloomberg. The currency touched 3.4595, the weakest level since Sept. 19.
Elsewhere, the Singapore dollar gained 0.6 percent to S$1.4260 against the U.S. currency and the Thai baht rose 0.5 percent to 33.86. Vietnam's dong was unchanged at 16,600.
To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net.
Read more...
Consumer Confidence in U.S. Probably Fell, Home Values Dropped
By Shobhana Chandra
Sept. 30 (Bloomberg) -- U.S. consumers grew more pessimistic in September for the first time in three months as the credit crisis intensified, stocks plunged, firings accelerated and housing fell deeper into a recession, economists said before reports today.
The New York-based Conference Board's confidence index fell to 55 from 56.9 in August, according to the median forecast in a Bloomberg News survey. Another report may show a record drop in home prices over the 12 months ended in July.
Failing banks, evaporating wealth and paychecks that aren't keeping up with inflation raise the odds that spending, the biggest part of the economy, will keep faltering. The outlook dimmed even more yesterday when the government failed to approve a financial rescue plan.
``Recent developments in financial markets probably led to darker moods,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. ``Consumers are starting to spend much more cautiously.''
Forecasts for the confidence gauge ranged from 48 to 66 in the Bloomberg survey of 61 economists. The Conference Board's report is due at 10 a.m. New York time. The index reached a 16- year low of 51 in June and averaged 103.4 last year.
Home prices in 20 U.S. metropolitan areas slid 16 percent in the year ended in July, the most since records were first published in 2001, economists forecast a report from S&P/Case- Shiller at 9:00 a.m. will show. Values have been dropping on a year-over-year basis since January 2007.
Foreclosures
The number of properties on the market is swelling as banks try to unload foreclosed houses and limit losses, putting additional pressure on home values.
A third report may show business activity slowed this month. The National Association of Purchasing Management-Chicago's index probably fell to 53 from 57.9 in August, according to the survey median. Fifty is the dividing line between growth and contraction.
The cutoff data for this month's consumer confidence survey was Sept. 23, before Washington Mutual Inc. joined Lehman Brothers Holdings Inc. in bankruptcy, Citigroup Inc. acquired Wachovia Corp. to prevent the collapse of the sixth-biggest U.S. bank by assets, and stocks suffered their biggest drop since 1987.
The House of Representatives voted down a $700 billion plan intended to restore confidence in U.S. banks, sending the Standard & Poor's 500 Index tumbling almost 9 percent.
Job's Influence
Compared with other sentiment measures, the Conference Board's index tends to be more influenced by consumer attitudes about the labor market, economists said. So far this month, 466,000 Americans a week on average filed first-time claims for unemployment benefits, up from 443,000 in August and 363,000 in the first six months of the year.
A report last week showed the Reuters/University of Michigan final sentiment reading for this month declined from a preliminary figure issued in early September as the credit crisis deepened. The reading was still up from August, reflecting the decline in gasoline prices, economists said.
The economy probably lost another 105,000 jobs in September, the ninth consecutive monthly decline, according to the median estimate in a Bloomberg survey ahead of a Labor Department report due Oct. 3. Payrolls dropped by 605,000 workers in the first eight months of the year.
Job cuts may swell as the effects of the financial meltdown ripple through other industries. Fewer jobs and less-available credit indicate consumer spending, which accounts for more than two-thirds of the economy, will weaken further.
Auto Loans
Fewer Americans were able to obtain an auto loan this month, according to CNW Marketing Research in Bandon, Oregon, which analyzes auto-industry data.
Through Sept. 20, fewer of the lowest-risk, or prime, loans were approved compared with a year earlier, while approvals for so-called subprime loans, for buyers with the lowest credit scores, were only about a third as many as in 2007, CNW said.
``Given the relatively weak state of the economy, that's obviously impacting the consumer's ability or willingness to come out and buy a new car,'' General Motors Corp. Chief Executive Officer Rick Wagoner said in a Bloomberg Radio interview on Sept. 25 from Flint, Michigan.
Consumer spending this quarter will be unchanged, the weakest performance since 1991, according to the median estimate in a Bloomberg survey earlier this month.
Bloomberg Survey
================================================================
Case Shil Chicago Consumer
Monthly PM Conf
YOY% Index Index
================================================================
Date of Release 09/30 09/30 09/30
Observation Period July Sept. Sept.
----------------------------------------------------------------
Median -16.0% 53.0 55.0
Average -16.0% 52.8 56.2
High Forecast -14.5% 56.0 66.0
Low Forecast -16.5% 49.0 48.0
Number of Participants 23 58 61
Previous -15.9% 57.9 56.9
----------------------------------------------------------------
4CAST Ltd. -16.0% 54.0 66.0
Action Economics --- 52.0 65.0
Aletti Gestielle SGR --- 54.3 52.0
Analytical Synthesis -16.0% --- ---
Argus Research Corp. --- 55.0 55.0
Banc of America Securitie --- 52.5 57.0
Bank of Tokyo- Mitsubishi --- 51.8 58.7
Bantleon Bank AG --- 52.0 56.0
Barclays Capital --- 54.0 54.0
BBVA --- 55.0 54.0
BMO Capital Markets -16.1% 52.0 57.5
BNP Paribas --- 52.5 65.0
Calyon --- 55.0 54.0
Commerzbank AG --- 53.0 56.0
Credit Suisse --- 52.0 50.0
Daiwa Securities America --- --- 59.0
Danske Bank --- 54.7 57.0
DekaBank --- 52.0 54.0
Desjardins Group -15.8% 51.0 56.0
Deutsche Bank Securities --- 54.0 55.0
Dresdner Kleinwort -16.0% 52.0 52.0
DZ Bank -16.0% 55.0 53.0
First Trust Advisors --- 54.8 60.7
Fortis -16.2% 52.0 57.0
FTN Financial --- 52.0 ---
Goldman, Sachs & Co. --- 53.0 57.0
H&R Block Financial Advis --- 51.0 54.0
Helaba --- 50.0 52.0
High Frequency Economics -16.2% 55.0 58.0
HSBC Markets -16.2% 52.0 53.0
IDEAglobal -16.0% 53.0 59.0
Informa Global Markets --- 52.5 55.0
ING Financial Markets -16.5% 54.0 54.0
Insight Economics --- 54.5 53.5
Intesa-SanPaulo --- 54.0 55.0
J.P. Morgan Chase -16.2% 52.0 61.0
JPMorgan Private Client --- 51.0 ---
Landesbank Berlin --- 52.0 52.0
Landesbank BW -16.0% 52.0 56.0
Lehman Brothers -16.1% 54.2 58.0
Lloyds TSB -14.5% 56.0 56.0
Maria Fiorini Ramirez Inc --- 53.0 54.0
Merk Investments --- 54.0 55.0
Merrill Lynch -16.2% 50.0 54.0
Moody's Economy.com --- 53.5 55.5
National City Corporation --- --- 65.3
Natixis -15.7% --- 54.0
Newedge --- 53.0 52.0
Nomura Securities Intl. --- 49.0 ---
Okasan Securities -15.6% --- ---
RBS Greenwich Capital --- --- 60.0
Ried, Thunberg & Co. --- 53.0 58.0
Schneider Trading Associa -15.3% 52.6 48.0
Scotia Capital --- --- 50.0
Societe Generale --- 54.0 57.0
Stone & McCarthy Research --- 51.4 54.0
TD Securities -16.5% 50.0 ---
Thomson Financial/IFR --- 54.0 55.0
Tullett Prebon --- 53.0 54.5
UBS Securities LLC --- 50.0 59.0
Unicredit MIB -16.0% --- 60.0
University of Maryland --- 54.0 55.0
Wachovia Corp. --- --- 60.0
Wells Fargo & Co. --- 52.0 63.0
WestLB AG -16.5% 54.0 54.5
Westpac Banking Co. -16.0% 50.0 52.0
Wrightson Associates --- 53.0 58.0
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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U.S. Heading for Slump, With or Without Bailout
By Rich Miller
Sept. 30 (Bloomberg) -- The U.S. may face its longest recession in a quarter century no matter what action Congress takes on Treasury Secretary Henry Paulson's $700 billion plan to rescue the battered banking industry.
Economists including Joseph Lavorgna of Deutsche Bank Securities and David Greenlaw of Morgan Stanley said it now appears the economy shrank in the third quarter as credit- crimped consumers cut spending for the first time since 1991. A further contraction is likely in the next two quarters, some economists predicted, which would make the recession the longest since 1981-82.
``This has been a body blow to consumer and business confidence,'' said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania. ``The next six months are going to be very difficult.''
How bad it gets depends on whether Congress passes some form of assistance for the banks. The Standard & Poor's 500 index plunged 8.8 percent yesterday, its biggest fall since 1987, after the House of Representatives rejected the rescue package. The stock-market rout wiped out a record $1.3 trillion of wealth.
The defeat of the measure -- and the steep price decline that accompanied it -- set off a scramble among the plan's backers for additional support before another vote, which likely won't come until later in the week.
Long and Steep
If Congress ultimately fails to approve a bailout, what is shaping up to be a long and moderate recession might turn into a long and steep decline as credit freezes up and stock prices continue to nosedive, said Allen Sinai, chief economist at Decision Economics in New York.
``We're going through a period of holy terror,'' he said.
The grim outlook puts pressure on Federal Reserve Chairman Ben S. Bernanke and his colleagues to reduce interest rates, following yesterday's move to pump an extra $630 billion into the global financial system.
``They should and will cut rates,'' said John Lonski, chief economist at Moody's Investors Service in New York. Economists at Citigroup Inc. told clients today that they see a ``decent chance'' of European central banks following any reduction from the Fed with ``emergency'' rate cuts of their own.
So far, the economy has largely been able to weather the financial crisis, growing by 2.1 percent during the past year, thanks to well-timed tax relief and healthy corporate cash flow. Both now look to be losing their potency.
Flat Consumer Spending
Consumer spending was flat in August as the boost from $93 billion worth of rebates faded and households grappled with mounting job losses, declining home prices and a squeeze on credit.
Morgan Stanley reduced its forecast for third-quarter gross domestic product and now sees it contracting by an annualized rate of 0.6 percent instead remaining unchanged, Greenlaw said in a note to clients yesterday. The economy grew by 2.8 percent in the second quarter.
Deutsche Bank's Lavorgna also turned more pessimistic after the consumer-spending numbers were announced yesterday, saying the economy looks set to suffer a 0.5 percent decline in the third quarter. He had previously expected a 0.7 percent gain.
``The spending outlook is even worse going forward, given the dramatic tightening in financial conditions that has occurred in the last couple of weeks,'' he said in a note to clients. The outcome could end up looking like the credit- induced slowdown of 1980, when consumer outlays plunged at a 5 percent annual rate over two quarters, he wrote.
Trimming Purchases
Consumers are so pinched they're even trimming purchases of basic goods. Walgreen Co., the largest U.S. drugstore chain, reported on Monday that its profits rose less than analysts estimated after it posted its smallest sales increase in a decade.
Faced with stalling consumer spending and fading profits, companies are also starting to rein in their outlays and pare their payrolls.
Industrial production fell in August by the most in almost three years as slower car sales prompted automakers to cut back on output. Data coming out Oct. 3 are expected to show that jobs declined another 105,000 this month, after an 84,000 drop in August, according to economists polled by Bloomberg News.
Tighter credit is also beginning to take its toll on companies as earnings slow, making them more dependent on loans to expand their businesses.
Financing Gap
The so-called financing gap -- the amount of money companies pay for capital expenditures minus what they generate internally from profits -- rose to an annualized $327 billion in the second quarter from $163 billion in the same period a year earlier, Fed data show.
``Businesses are starting to be squeezed,'' Lonski said.
McDonald's Corp., the world's largest restaurant company, told some U.S. franchisees to seek other ways to finance store improvements after Bank of America Corp. declined to increase lending, according to a memo obtained by Bloomberg.
Even companies that are able to get credit must pay more for it. While Caterpillar Inc. raised $1.3 billion last week in its biggest bond offering ever, it had to offer the highest yields it has paid on such debt in nine years.
Zandi said the combination of strapped consumers and cautious companies may cause the economy to contract by as much as 1 percent in the fourth quarter of this year and again in the first quarter of next.
A bank-rescue package ``is not going to save us from recession,'' said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``It will only prevent it from getting a lot worse.''
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net
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Euro Falls Against Dollar as Dexia Gets $9.2 Billion Bailout
By Kim-Mai Cutler and Andrew Macaskill
Sept. 30 (Bloomberg) -- The euro fell a second day against the dollar as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments.
The 15-nation currency also weakened against the British pound after Belgian Prime Minister Yves Leterme said Dexia will receive about $9.2 billion to shore up its capital. The dollar rose against the yen on speculation the U.S. Senate will salvage a $700 billion bank-bailout plan as early as tomorrow after Congress rejected it yesterday. The yen dropped against 14 of the 16 most active currencies as European stocks rose, reviving purchases of higher-yielding currencies funded in Japan.
``This isn't just about Wall Street, there's very bad news in Europe that will need to be countered by new measures,'' said Stephen Jen, the global head of currency research at Morgan Stanley in London. ``What's notable is how well the dollar has held up against the euro and pound despite the bailout's rejection yesterday.''
The euro fell to $1.4315 at 7:52 a.m. in New York, from $1.4434 yesterday. The yen slid to 150.55 per euro from 150.38. It earlier reached 148.84, the strongest since Sept. 17. The yen also weakened to 105.17 per dollar from 104.18, after earlier reaching 103.54, the most since Sept. 16.
Dexia is being rescued after its shares had a record decline yesterday. The capital infusion comes two days after Belgium, the Netherlands and Luxembourg rescued Fortis, the largest Belgian financial-services company, Britain took control of Bradford & Bingley Plc, the country's biggest lender to landlords, and Germany bailed out Hypo Real Estate Holding AG.
`Coming Out a Winner'
European banks are being squeezed amid a surge in borrowing costs as lenders hoard cash on concern more financial institutions will fail. The euro interbank offered rate, or Euribor, that banks charge each other for one-month loans climbed to a record 5.05 percent today, the European Banking Federation said.
The U.S. Senate will try to revive a $700 billion financial-rescue package after yesterday's defeat in the House of Representatives. The bill would have allowed the government to buy troubled assets from banks. Institutions posted $590 billion of losses and writedowns since the start of last year follwing the collapse of the U.S. subprime-mortgage market.
``Although the U.S. is at the center of all the problems going on in the markets, rather counter-intuitively the dollar is coming out of it a winner,'' said Adam Cole, head of global currency strategy in London at RBC Capital Markets.
Carry Trades
Higher-yielding currencies recouped losses against the Japanese yen as Europe's benchmark Dow Jones Stoxx 600 Index gained 0.5 percent. The Australian dollar rose 1 percent to 84.65 yen after falling 4.9 percent yesterday. The New Zealand dollar gained 1.3 percent to 70.97 yen after dropping 3.7 percent yesterday.
``I would be very cautious in betting on further near-term dollar-yen losses,'' said Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt. ``Any positive news on the political front would have quite an impact.''
The yen typically declines when demand for high-yielding currencies rises, as traders put on so-called carry trades. In such transactions, investors get funds in countries with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 7.5 percent in New Zealand.
The yen rose the most of all 16 most-actively traded currencies yesterday after the Standard & Poor's 500 Index plunged the most since the 1987 crash.
The Japanese currency is up 10 percent against the euro this quarter. The dollar has fallen 1.4 percent against the yen, paring a 7 percent gain in the previous three months. The euro is down 9.6 percent against the dollar, its biggest quarterly decline since 1999.
Implied volatility on one-month euro-dollar options rose to 16.4725 percent, or the highest in almost eight years. On Sept. 18, it reached 15.55 percent, the same level that triggered the Group of Seven nations to buy euros in 2000 to halt the 27 percent slide from its 1999 debut.
To contact the reporters on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net
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Indian Rupee's `Unprecedented' Decline Not Over, Treasurers Say
By Sam Nagarajan and Anoop Agrawal
Sept. 30 (Bloomberg) -- India's rupee may extend yesterday's drop to a five-year low as the trade deficit swells and overseas investors dump local shares, said treasurers at Larsen & Toubro Ltd., Hero Honda Motors Ltd. and Essar Group.
Dwindling capital inflows, elevated oil prices and slowing economic growth will undermine the rupee, said Yeshwant M. Deosthalee, chief financial officer at Mumbai-based Larsen & Toubro, India's biggest engineering company. A weaker currency may also exacerbate an inflation rate near a 16-year high by increasing import costs, said Ravi Sud, chief financial officer at Hero Honda, the nation's largest motorcycle maker.
``The drop in the rupee is unprecedented and never have I seen such a move in my 28-year career, barring the devaluation in 1991,'' said N.S. Paramasivam, who trades an average $200 million a day as head of treasury in Mumbai at Essar, which has businesses in shipping, steel and oil. ``The downside risk to the rupee is mostly emanating from lack of dollar supply.''
The rupee has dropped 16 percent this year, heading for its worst annual performance since 1991, when India devalued the currency as a balance-of-payments crisis forced it to pawn gold from its reserves. Exporters and importers alike are struggling to cope with as the exchange rate has swung between a decade- high and a 26-month low within a year.
Price Swings
The rupee touched 47.115 a dollar yesterday, the lowest level since June 3, 2003, after reaching 39.185 on Nov. 7 last year, its strongest since February 1998. Essar's Paramasivam predicts the currency, which was at 46.955 late yesterday in Mumbai, will trade between 45 and 47.50 over the next six months.
India's current-account deficit may widen by $12 billion in the financial year ending March 31, 2009, after reaching a record $17.7 billion the previous year, he said. Imports exceeded exports by $10.8 billion in July, the most ever.
Implied volatility on one-month dollar-rupee options reached 17.25 percent on Sept. 19, the highest in at least nine years, after credit-market losses led to the collapse of Lehman Brothers Holdings Inc. and U.S. government takeovers of Fannie Mae, Freddie Mac and American International Group Inc.
``The magnitude and timing of the crisis has taken everyone by surprise,'' said Deosthalee. ``Such sharp depreciation is not desirable. It's been very challenging for us'' to manage risks related to the rupee's fluctuations.
Larsen's dollar borrowing costs may climb by as much as 1.5 percentage points this fiscal year as credit-market turmoil makes banks less willing to lend, he said. The company has $800 million of overseas debt and the increase would boost financing costs by $15,000 a year for every $1 million of new loans taken out.
Selling Shares
Overseas investors sold $9.2 billion more Indian shares than they bought this year, following a record $17.2 billion of net purchases in 2007, according to data provided by the Securities & Exchange Board of India.
The currency ``isn't likely to turn around at least for six months,'' said Prabal Banerji, Mumbai-based chief financial officer at Hinduja Group, which has businesses in banking, automobiles and entertainment. ``Inflation will stay elevated as oil will stay around $100 a barrel.''
India imports almost three-quarters of the oil it needs. The front-month crude futures contract was recently at $96.11 a barrel in New York, 6 percent higher than the seven-month low of $90.51 reached on Sept. 16. The price touched a record $147.27 on July 11.
The Reserve Bank of India will stem rupee losses and may halt the currency's slide at about 47 per dollar, according to Larsen's Deosthalee and Essar's Paramasivam. A steeper drop would draw speculators, possibly causing the rupee to spiral down into a ``bottomless pit,'' Paramasivam said.
A surge in commodity prices this year propelled India's wholesale-price inflation to 12.63 percent in August, the fastest since June 1992.
Central Bank Reserves
``A weaker rupee is the last thing the central bank wants at a time when inflation is in double digits,'' Sud said.
India's foreign-currency reserves were $282.8 billion as of Sept. 19, down from a record $316.2 billion four months earlier, central bank figures show. The drop indicates policy makers sold dollars to bolster the rupee.
The rupee may ``limp back'' to 43 a dollar in six months or more should global investors' risk appetite improve, Hinduja's Banerji said.
The risk of a recession in the U.S., Europe and Japan may slow growth in India, adding pressure on the rupee to weaken, according to Hinduja's Banerji, Larsen's Deosthalee and Hero Honda's Sud. The central bank predicts the $1.2 trillion economy will expand 8 percent in the 12 months through March 31, the slowest pace in six years.
Domestic Demand
Domestic demand in the world's second-most populous country will help temper the rupee's losses, said S.K. Joshi, Director of Finance at Bharat Petroleum Corp., the nation's second- biggest state-run refiner. Exports account for about 30 percent of India's gross domestic product.
``India still is a domestic-demand driven economy,'' he said. ``That will soothe sentiment sooner or later.''
To contact the reporters on this story: Sam Nagarajan in New Delhi at snagarajan@bloomberg.net; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.
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Natural Rubber Drops by Trading Limit on Global Growth Concerns
By Rattaphol Onsanit
Sept. 30 (Bloomberg) -- Natural rubber tumbled by the daily trading limit on concern global economic growth will slow after a U.S. financial rescue plan was rejected by lawmakers and as production in Thailand, the biggest exporter, is forecast to rise.
Rubber, the main raw material for vehicle tires, dropped by 6 percent and headed for its worst quarter in two years in Tokyo amid concerns that slower economic growth will reduce car sales. The U.S. is the world's biggest automobile market.
``Confidence on Main Street is weakening,'' Felix Yeo, a trader at Marubeni International Commodities, said by telephone in Singapore. ``Concerns on demand from major economies are affecting rubber.''
March-delivery rubber fell by 16 yen to 250.9 yen a kilogram ($2,406 a metric ton) on the Tokyo Commodity Exchange, the lowest in a year, at 4:11 p.m. local time. Futures have fallen 27 percent for the quarter and are down 30 percent from a 28-year high reached June 30.
The Reuters/Jefferies CRB Index of 19 raw materials fell the most in at least 50 years yesterday after U.S. congressmen voted 228 to 205 against a measure to authorize the biggest government intervention into markets since the Great Depression.
``Prices of agricultural commodities are likely to keep falling through the rest of the year,'' Phornsin Phacharintanakul, vice president of agricultural conglomerate Charoen Pokphand Group, told reporters today in Bangkok. ``Some new harvests will come as the world's economy is languishing.''
Thailand will probably raise rubber output by around 60,000 tons in 2010, Montri Congtrakultien, head of the crop unit at C.P. Group said.
Rubber inventories monitored by the Tokyo Commodity Exchange fell 14 percent to a record low of 1,700 tons on Sept. 20, the bourse said in a faxed statement today.
Lower prices on the exchange than in Thailand prompted shippers and trading houses to sell fewer contracts as a hedge for physical supplies, said Takaki Shigemoto, analyst at Tokyo- based commodity broker Okachi & Co.
To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net
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Sept. 30 (Bloomberg) -- Natural rubber tumbled by the daily trading limit on concern global economic growth will slow after a U.S. financial rescue plan was rejected by lawmakers and as production in Thailand, the biggest exporter, is forecast to rise.
Rubber, the main raw material for vehicle tires, dropped by 6 percent and headed for its worst quarter in two years in Tokyo amid concerns that slower economic growth will reduce car sales. The U.S. is the world's biggest automobile market.
``Confidence on Main Street is weakening,'' Felix Yeo, a trader at Marubeni International Commodities, said by telephone in Singapore. ``Concerns on demand from major economies are affecting rubber.''
March-delivery rubber fell by 16 yen to 250.9 yen a kilogram ($2,406 a metric ton) on the Tokyo Commodity Exchange, the lowest in a year, at 4:11 p.m. local time. Futures have fallen 27 percent for the quarter and are down 30 percent from a 28-year high reached June 30.
The Reuters/Jefferies CRB Index of 19 raw materials fell the most in at least 50 years yesterday after U.S. congressmen voted 228 to 205 against a measure to authorize the biggest government intervention into markets since the Great Depression.
``Prices of agricultural commodities are likely to keep falling through the rest of the year,'' Phornsin Phacharintanakul, vice president of agricultural conglomerate Charoen Pokphand Group, told reporters today in Bangkok. ``Some new harvests will come as the world's economy is languishing.''
Thailand will probably raise rubber output by around 60,000 tons in 2010, Montri Congtrakultien, head of the crop unit at C.P. Group said.
Rubber inventories monitored by the Tokyo Commodity Exchange fell 14 percent to a record low of 1,700 tons on Sept. 20, the bourse said in a faxed statement today.
Lower prices on the exchange than in Thailand prompted shippers and trading houses to sell fewer contracts as a hedge for physical supplies, said Takaki Shigemoto, analyst at Tokyo- based commodity broker Okachi & Co.
To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net
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Platinum Slumps for Sixth Day as Slowing Growth Reduces Demand
By Jae Hur
Sept. 30 (Bloomberg) -- Platinum fell for a sixth day and is heading for its worst quarterly slide since at least June 1987 after the rejection of a $700 billion U.S. financial rescue plan increased concern that slowing global growth will slash demand.
Before today, the metal, used in car exhaust systems and jewelry, had lost 47.3 percent since June 30. Oil slumped more than $10 a barrel yesterday and U.S. stocks plunged after the bailout plan intended to restore confidence in the U.S. financial system was defeated 228-205 in a congressional vote.
``There's no reason to buy in this market,'' Kazuhiko Saito, strategist at Interes Capital Management Co., said by phone today in Tokyo. ``The market is now waiting for tomorrow's car sales data from Japan and the U.S. The numbers might not be positive.''
Immediate-delivery platinum fell $7, or 0.6 percent, to $1,083 an ounce at 12:30 p.m. in Tokyo. It dropped 2.9 percent yesterday having traded as low as $1,067.35, the lowest since Sept. 17.
Palladium for immediate delivery was down 0.5 percent at $212.50 an ounce after losing 5.5 percent yesterday. It earlier fell to $210.25, the lowest since October 2005.
Platinum for August delivery fell as much as 296 yen, or 7.9 percent, to 3,461 yen a gram ($1,033 an ounce), the lowest since November 2005. It was at 3,463 yen at the 11 a.m. break on the Tokyo Commodity Exchange.
Platinum consumption by automakers accounts for more than 60 percent of global demand for the metal, according to Johnson Matthey Plc, which makes about a third of the world's automobile catalysts.
Tokyo platinum futures plunged the exchange-imposed daily limit on Sept. 10 after a report showed passenger car sales in China in August fell for the first time in three years.
Platinum will swing from a deficit to the largest surplus in 10 years as demand declines amid an economic slowdown, said Paul Walker, chief executive officer of London-based research company GFMS Ltd., said yesterday.
``We estimate it's going to be about 200,000 ounces of surplus this year, and possibly larger,'' Walker said in an interview in Kyoto. The metal is used in jewelry and catalytic converters that reduce noxious gases from auto exhausts.
To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Sept. 30 (Bloomberg) -- Platinum fell for a sixth day and is heading for its worst quarterly slide since at least June 1987 after the rejection of a $700 billion U.S. financial rescue plan increased concern that slowing global growth will slash demand.
Before today, the metal, used in car exhaust systems and jewelry, had lost 47.3 percent since June 30. Oil slumped more than $10 a barrel yesterday and U.S. stocks plunged after the bailout plan intended to restore confidence in the U.S. financial system was defeated 228-205 in a congressional vote.
``There's no reason to buy in this market,'' Kazuhiko Saito, strategist at Interes Capital Management Co., said by phone today in Tokyo. ``The market is now waiting for tomorrow's car sales data from Japan and the U.S. The numbers might not be positive.''
Immediate-delivery platinum fell $7, or 0.6 percent, to $1,083 an ounce at 12:30 p.m. in Tokyo. It dropped 2.9 percent yesterday having traded as low as $1,067.35, the lowest since Sept. 17.
Palladium for immediate delivery was down 0.5 percent at $212.50 an ounce after losing 5.5 percent yesterday. It earlier fell to $210.25, the lowest since October 2005.
Platinum for August delivery fell as much as 296 yen, or 7.9 percent, to 3,461 yen a gram ($1,033 an ounce), the lowest since November 2005. It was at 3,463 yen at the 11 a.m. break on the Tokyo Commodity Exchange.
Platinum consumption by automakers accounts for more than 60 percent of global demand for the metal, according to Johnson Matthey Plc, which makes about a third of the world's automobile catalysts.
Tokyo platinum futures plunged the exchange-imposed daily limit on Sept. 10 after a report showed passenger car sales in China in August fell for the first time in three years.
Platinum will swing from a deficit to the largest surplus in 10 years as demand declines amid an economic slowdown, said Paul Walker, chief executive officer of London-based research company GFMS Ltd., said yesterday.
``We estimate it's going to be about 200,000 ounces of surplus this year, and possibly larger,'' Walker said in an interview in Kyoto. The metal is used in jewelry and catalytic converters that reduce noxious gases from auto exhausts.
To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Copper Heads for Biggest Quarterly Loss in More Than 22 Years
By Glenys Sim
Sept. 30 (Bloomberg) -- Copper is headed for its biggest quarterly loss since at least 1986 on concern a spreading financial crisis may slash demand for raw materials.
Copper is the second-worst performer behind nickel among the London Metal Exchange's six industrial metals this quarter. The Reuters/Jefferies CRB Index of 19 commodities plunged by the most in more than five decades yesterday after U.S. lawmakers rejected a $700 billion bank rescue plan.
``The U.S. is moving into a recession, so is Europe and Japan,'' Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said today. ``Demand conditions have got a big question mark over them.''
Copper for delivery in three months on the London Metal Exchange fell as much as 1.7 percent to $6,330 a metric ton, the lowest since December 18. The contract traded at $6,355 a ton at 1:01 p.m. in Singapore, down 25 percent for the quarter.
December delivery copper on the Comex division of the New York Mercantile Exchange lost 1.7 percent to $2.856 a pound at the same time. Earlier the contract dropped to $2.8425 a pound, the lowest for a most-active since March 2007. China's markets are closed for a week-long holiday.
Low global stockpiles may help stem the metal's decline. Stockpiles monitored by London Metal Exchange warehouses dropped a sixth day to 198,925 tons yesterday, and reserves in Shanghai warehouses fell 5.5 percent to 16,130 tons last week.
``The global supply and demand balance will remain tight,'' Joel Crane, Deutsche Bank AG's New York-based analyst, said in a report. ``Given the dearth of new projects scheduled to come online over the next two to three years, any supply disruptions or upside risk to the demand scenario would certainly have positive implications on pricing.''
Nickel Tumbles
Nickel slumped to the lowest in two-and-a-half years on speculation a slowdown in global economic growth will further curb demand from the stainless steel industry, which accounts for two-thirds of total nickel use.
Stockpiles of the metal monitored by the London Metal Exchange jumped to 55,596 metric tons yesterday, the highest since June 1999.
Nickel for delivery in three months on the London Metal Exchange fell as much as 5 percent to $15,588 a ton, extending yesterday's 3.5 percent slide. This is the lowest intra-day price since April 3, 2006. The metal traded at $16,000 a ton at 12:49 p.m. in Singapore, taking the quarter's loss to 25 percent.
Among other LME-traded metals, aluminum fell 1 percent to $2,417, zinc slipped 1.3 percent to $1,670, lead declined 2.5 percent to $1,780, and tin had not traded as of 12:50 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Sept. 30 (Bloomberg) -- Copper is headed for its biggest quarterly loss since at least 1986 on concern a spreading financial crisis may slash demand for raw materials.
Copper is the second-worst performer behind nickel among the London Metal Exchange's six industrial metals this quarter. The Reuters/Jefferies CRB Index of 19 commodities plunged by the most in more than five decades yesterday after U.S. lawmakers rejected a $700 billion bank rescue plan.
``The U.S. is moving into a recession, so is Europe and Japan,'' Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said today. ``Demand conditions have got a big question mark over them.''
Copper for delivery in three months on the London Metal Exchange fell as much as 1.7 percent to $6,330 a metric ton, the lowest since December 18. The contract traded at $6,355 a ton at 1:01 p.m. in Singapore, down 25 percent for the quarter.
December delivery copper on the Comex division of the New York Mercantile Exchange lost 1.7 percent to $2.856 a pound at the same time. Earlier the contract dropped to $2.8425 a pound, the lowest for a most-active since March 2007. China's markets are closed for a week-long holiday.
Low global stockpiles may help stem the metal's decline. Stockpiles monitored by London Metal Exchange warehouses dropped a sixth day to 198,925 tons yesterday, and reserves in Shanghai warehouses fell 5.5 percent to 16,130 tons last week.
``The global supply and demand balance will remain tight,'' Joel Crane, Deutsche Bank AG's New York-based analyst, said in a report. ``Given the dearth of new projects scheduled to come online over the next two to three years, any supply disruptions or upside risk to the demand scenario would certainly have positive implications on pricing.''
Nickel Tumbles
Nickel slumped to the lowest in two-and-a-half years on speculation a slowdown in global economic growth will further curb demand from the stainless steel industry, which accounts for two-thirds of total nickel use.
Stockpiles of the metal monitored by the London Metal Exchange jumped to 55,596 metric tons yesterday, the highest since June 1999.
Nickel for delivery in three months on the London Metal Exchange fell as much as 5 percent to $15,588 a ton, extending yesterday's 3.5 percent slide. This is the lowest intra-day price since April 3, 2006. The metal traded at $16,000 a ton at 12:49 p.m. in Singapore, taking the quarter's loss to 25 percent.
Among other LME-traded metals, aluminum fell 1 percent to $2,417, zinc slipped 1.3 percent to $1,670, lead declined 2.5 percent to $1,780, and tin had not traded as of 12:50 p.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Gold Futures Trade Near Two-Month High on Demand as Haven Asset
By Feiwen Rong
Sept. 30 (Bloomberg) -- Gold futures traded near the highest in two months after the U.S. House of Representatives rejected a $700 billion bailout bill for the U.S. banking system, stoking concern of a worsening credit crisis.
Markets plunged as the House rejected the bill by a vote of 228 to 205 yesterday. The Dow Jones Industrial Average fell the most ever, and the MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years.
``Gold could go a lot higher as more safe-haven asset buying comes into the market,'' Charles Dowsett, head of structuring and trading of precious metals at ABN Amro Holding NV, said today by phone from Sydney.
December-delivery gold advanced 1.7 percent to $910 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 2:30 p.m. in Singapore. Gold for immediate delivery rallied to $925.10 an ounce yesterday, the highest since July 31, and traded at $905.05 an ounce. Silver for immediate delivery was little changed at $13.125 an ounce.
Newcrest Mining Ltd., Australia's largest gold miner, rose as much as 5.7 percent to A$29.64 in Sydney trading.
The dollar was little changed at 104.30 against the Japanese yen at 2:31 p.m. in Singapore, after dropping for past two days.
Euro-Dollar
The dollar climbed for the second day against the euro to $1.4394 at 2:32 p.m. in Singapore after Belgium and France governments pledged to inject 6.4 billion euros into Dexia SA, the world's largest lender to local governments.
Belgium, the Netherlands and Luxembourg also gave an 11.2 billion euro ($16.1 billion) lifeline yesterday to Fortis Bank, the largest Belgian financial-services company.
``We could have seen a much more explosive move in gold, had the U.S. dollar weakened combined with the sell-off in the equities market,'' Toby Hassall, analyst at Commodity Warrants Australia, said by phone from Sydney.
Gains in gold may be limited in the near term because ``there maybe a bit of profit-taking and liquidation of long positions just to cover the cash costs'' at the end of the quarter, said Dowsett. ``But overall we expect gold to test $950 an ounce.''
Exchange-traded funds held a record 1,039.68 metric tons of gold bullion, reflecting concern about the U.S. financial system, the Financial Times reported on Sept. 24. Investors' bullion assets have almost doubled in the two years to this month, the newspaper said, citing the World Gold Council.
Gold for August delivery jumped 1.6 percent to 3,023 yen a gram ($901) an ounce on the Tokyo Commodity Exchange at the 2:34 p.m. local time break.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Sept. 30 (Bloomberg) -- Gold futures traded near the highest in two months after the U.S. House of Representatives rejected a $700 billion bailout bill for the U.S. banking system, stoking concern of a worsening credit crisis.
Markets plunged as the House rejected the bill by a vote of 228 to 205 yesterday. The Dow Jones Industrial Average fell the most ever, and the MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years.
``Gold could go a lot higher as more safe-haven asset buying comes into the market,'' Charles Dowsett, head of structuring and trading of precious metals at ABN Amro Holding NV, said today by phone from Sydney.
December-delivery gold advanced 1.7 percent to $910 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 2:30 p.m. in Singapore. Gold for immediate delivery rallied to $925.10 an ounce yesterday, the highest since July 31, and traded at $905.05 an ounce. Silver for immediate delivery was little changed at $13.125 an ounce.
Newcrest Mining Ltd., Australia's largest gold miner, rose as much as 5.7 percent to A$29.64 in Sydney trading.
The dollar was little changed at 104.30 against the Japanese yen at 2:31 p.m. in Singapore, after dropping for past two days.
Euro-Dollar
The dollar climbed for the second day against the euro to $1.4394 at 2:32 p.m. in Singapore after Belgium and France governments pledged to inject 6.4 billion euros into Dexia SA, the world's largest lender to local governments.
Belgium, the Netherlands and Luxembourg also gave an 11.2 billion euro ($16.1 billion) lifeline yesterday to Fortis Bank, the largest Belgian financial-services company.
``We could have seen a much more explosive move in gold, had the U.S. dollar weakened combined with the sell-off in the equities market,'' Toby Hassall, analyst at Commodity Warrants Australia, said by phone from Sydney.
Gains in gold may be limited in the near term because ``there maybe a bit of profit-taking and liquidation of long positions just to cover the cash costs'' at the end of the quarter, said Dowsett. ``But overall we expect gold to test $950 an ounce.''
Exchange-traded funds held a record 1,039.68 metric tons of gold bullion, reflecting concern about the U.S. financial system, the Financial Times reported on Sept. 24. Investors' bullion assets have almost doubled in the two years to this month, the newspaper said, citing the World Gold Council.
Gold for August delivery jumped 1.6 percent to 3,023 yen a gram ($901) an ounce on the Tokyo Commodity Exchange at the 2:34 p.m. local time break.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Australia Stocks Tumble as Bailout Fails, Sparking Credit Fears
By Shani Raja
Sept. 30 (Bloomberg) -- Australian stocks and the local dollar tumbled on concern global credit markets will remain frozen after the U.S. House of Representatives rejected a $700 billion plan to rescue the financial system.
BHP Billiton Ltd., the world's largest mining company, dived 6.6 percent to its lowest price since January. Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 16 percent. National Australia Bank Ltd. fell 5.3 percent, the most in almost two weeks.
The S&P/ASX 200 Index plunged 3.8 percent to 4,624.60 at 11:45 a.m. in Sydney, the most in eight months, and the Australian currency fell 2.1 percent. The index has tumbled 32 percent from its November 2007 record as global credit markets seized up amid the U.S. subprime mortgage crisis.
``Volatility in the market has been notched up to a new high,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``This package is critical and it seems to be getting bogged down for political reasons. Credit markets are dysfunctional at the moment and if they aren't normalized quickly, we have a serious problem.''
The Standard & Poor's 500 Index tumbled the most since the 1987 crash yesterday and the Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in value was erased from American equities.
The Australian dollar fell 2.1 percent to 79.76 U.S. cents from 81.50 cents in late Asian trading yesterday. A measure of six metals traded on the London Metal Exchange dropped 4 percent. Zinc fell 4.4 percent, copper 4.9 percent and nickel 3.5 percent.
BHP fell A$2.25, or 6.6 percent, to A$31.99. Babcock & Brown dropped 37 cents, or 16 percent, to A$1.98. National Australia Bank declined A$1.35, or 5.3 percent, to A$24.34.
Crude Decline
Newcrest Mining Ltd., Australia's largest gold producer, was among the index's biggest gainers as investors sought a haven from financial market turmoil. Its shares rose 81 cents, or 2.9 percent, to A$28.85, the highest since Aug. 4.
Woodside Petroleum Ltd., operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, declined A$2.76, or 5.1 percent, to A$51.79, the most since Aug. 5. Santos Ltd., the nation's third-largest oil and gas producer, fell 54 cents, or 2.7 percent, to A$19.16.
Crude oil for November delivery fell $10.52, or 9.8 percent, to settle at $96.37 a barrel at 2:42 p.m. on the New York Mercantile Exchange. The drop was the biggest in percentage terms since Nov. 15, 2001.
Caltex Australia Ltd., the nation's biggest oil refiner, advanced 43 cents, or 3.5 percent, to A$12.62, after the decline in crude reduced its procurement costs.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Sept. 30 (Bloomberg) -- Australian stocks and the local dollar tumbled on concern global credit markets will remain frozen after the U.S. House of Representatives rejected a $700 billion plan to rescue the financial system.
BHP Billiton Ltd., the world's largest mining company, dived 6.6 percent to its lowest price since January. Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 16 percent. National Australia Bank Ltd. fell 5.3 percent, the most in almost two weeks.
The S&P/ASX 200 Index plunged 3.8 percent to 4,624.60 at 11:45 a.m. in Sydney, the most in eight months, and the Australian currency fell 2.1 percent. The index has tumbled 32 percent from its November 2007 record as global credit markets seized up amid the U.S. subprime mortgage crisis.
``Volatility in the market has been notched up to a new high,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``This package is critical and it seems to be getting bogged down for political reasons. Credit markets are dysfunctional at the moment and if they aren't normalized quickly, we have a serious problem.''
The Standard & Poor's 500 Index tumbled the most since the 1987 crash yesterday and the Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in value was erased from American equities.
The Australian dollar fell 2.1 percent to 79.76 U.S. cents from 81.50 cents in late Asian trading yesterday. A measure of six metals traded on the London Metal Exchange dropped 4 percent. Zinc fell 4.4 percent, copper 4.9 percent and nickel 3.5 percent.
BHP fell A$2.25, or 6.6 percent, to A$31.99. Babcock & Brown dropped 37 cents, or 16 percent, to A$1.98. National Australia Bank declined A$1.35, or 5.3 percent, to A$24.34.
Crude Decline
Newcrest Mining Ltd., Australia's largest gold producer, was among the index's biggest gainers as investors sought a haven from financial market turmoil. Its shares rose 81 cents, or 2.9 percent, to A$28.85, the highest since Aug. 4.
Woodside Petroleum Ltd., operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, declined A$2.76, or 5.1 percent, to A$51.79, the most since Aug. 5. Santos Ltd., the nation's third-largest oil and gas producer, fell 54 cents, or 2.7 percent, to A$19.16.
Crude oil for November delivery fell $10.52, or 9.8 percent, to settle at $96.37 a barrel at 2:42 p.m. on the New York Mercantile Exchange. The drop was the biggest in percentage terms since Nov. 15, 2001.
Caltex Australia Ltd., the nation's biggest oil refiner, advanced 43 cents, or 3.5 percent, to A$12.62, after the decline in crude reduced its procurement costs.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Oil Extends Biggest Drop in 7 Years on Rejection of Rescue Plan
By Christian Schmollinger
Sept. 30 (Bloomberg) -- Crude oil extended its decline in New York after falling the most in almost seven years yesterday as U.S. lawmakers rejected a $700 billion financial rescue plan, raising concern demand for commodities will drop.
Oil slumped more than $10 yesterday, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest tumble since at least 1956, as the House of Representatives voted down the plan and European governments bailed out three more banks. Corn, nickel and platinum also fell.
``This certainly raises heightened concern about global demand conditions, especially in the U.S.,'' said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The trend for prices is down and I don't think we've seen the bottom yet.''
Crude oil for November delivery fell as much as $3.01, or 3.1 percent, to $93.36 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93.37 a barrel at 8:23 a.m. London time.
Prices have declined 35 percent from the record $147.27 reached on July 11 and have fallen 32 percent this quarter, the first quarterly drop since the end of 2006. Oil has plunged 11 percent the past three days, the most since Dec. 3, 2004.
Yesterday, oil fell $10.52, or 9.8 percent, to $96.37 a barrel, the biggest slide in percentage terms since Nov. 15, 2001, and the largest dollar decline since Jan. 17, 1991, when U.S.-led forces expelled Iraq from Kuwait. Crude closed yesterday at the lowest since Sept. 16.
Stocks Plunge
``The main concern is that you have everything locking up in terms of credit,'' said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``Hedge funds and people who are leveraged are going to have a hard time trading on the market because of the margin requirements. With no credit, people have to hoard cash.''
The CRB Commodity Price Index dropped 21.35 to 343.22, slumping 28 percent from a record on July 3.
U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after House rejected the bailout package. The Dow Jones Industrial Average slid 778 points in its biggest point drop ever as $1.2 trillion in market value was erased from U.S. equities.
Gasoline for October delivery slipped as much as 2.1 percent to $2.3464 a gallon in New York after the biggest drop yesterday since the ethanol-based contract began trading in October 2005.
Heating oil was at $2.707 a gallon, down 0.53 cent, after dropping 7.8 percent to $2.7604 a gallon yesterday.
U.S. fuel demand averaged 19.5 million barrels a day in the four weeks ended Sept. 19, the lowest since October 2003, according to Energy Department data.
Dollar Strengthens
The euro and pound dropped against the dollar after a government-led bailouts this week of Brussels- and Amsterdam- based Fortis, U.K.-based Bradford & Bingley Plc and Germany's Hypo Real Estate Holding AG.
The dollar weakened to $1.4413 per euro at 8:26 a.m. London time. It gained 1.2 percent yesterday to $1.4434 per euro and the pound lost 1.8 percent to $1.8115.
``The dollar has reasserted itself and that will create additional drag for commodities, oil particularly,'' ANZ's Pervan said. ``The bottom line is this will make oil more expensive for Europe, Japan, even China, and that creates more drag on demand.''
Brent crude oil for November settlement tumbled as much as $2.88, or 3.1 percent, to $91.10 a barrel on London's ICE Futures Europe exchange at 8:26 a.m. London time. Futures yesterday dropped $9.56, or 9.2 percent, to $93.98 a barrel.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Sept. 30 (Bloomberg) -- Crude oil extended its decline in New York after falling the most in almost seven years yesterday as U.S. lawmakers rejected a $700 billion financial rescue plan, raising concern demand for commodities will drop.
Oil slumped more than $10 yesterday, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest tumble since at least 1956, as the House of Representatives voted down the plan and European governments bailed out three more banks. Corn, nickel and platinum also fell.
``This certainly raises heightened concern about global demand conditions, especially in the U.S.,'' said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``The trend for prices is down and I don't think we've seen the bottom yet.''
Crude oil for November delivery fell as much as $3.01, or 3.1 percent, to $93.36 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93.37 a barrel at 8:23 a.m. London time.
Prices have declined 35 percent from the record $147.27 reached on July 11 and have fallen 32 percent this quarter, the first quarterly drop since the end of 2006. Oil has plunged 11 percent the past three days, the most since Dec. 3, 2004.
Yesterday, oil fell $10.52, or 9.8 percent, to $96.37 a barrel, the biggest slide in percentage terms since Nov. 15, 2001, and the largest dollar decline since Jan. 17, 1991, when U.S.-led forces expelled Iraq from Kuwait. Crude closed yesterday at the lowest since Sept. 16.
Stocks Plunge
``The main concern is that you have everything locking up in terms of credit,'' said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``Hedge funds and people who are leveraged are going to have a hard time trading on the market because of the margin requirements. With no credit, people have to hoard cash.''
The CRB Commodity Price Index dropped 21.35 to 343.22, slumping 28 percent from a record on July 3.
U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since the 1987 crash after House rejected the bailout package. The Dow Jones Industrial Average slid 778 points in its biggest point drop ever as $1.2 trillion in market value was erased from U.S. equities.
Gasoline for October delivery slipped as much as 2.1 percent to $2.3464 a gallon in New York after the biggest drop yesterday since the ethanol-based contract began trading in October 2005.
Heating oil was at $2.707 a gallon, down 0.53 cent, after dropping 7.8 percent to $2.7604 a gallon yesterday.
U.S. fuel demand averaged 19.5 million barrels a day in the four weeks ended Sept. 19, the lowest since October 2003, according to Energy Department data.
Dollar Strengthens
The euro and pound dropped against the dollar after a government-led bailouts this week of Brussels- and Amsterdam- based Fortis, U.K.-based Bradford & Bingley Plc and Germany's Hypo Real Estate Holding AG.
The dollar weakened to $1.4413 per euro at 8:26 a.m. London time. It gained 1.2 percent yesterday to $1.4434 per euro and the pound lost 1.8 percent to $1.8115.
``The dollar has reasserted itself and that will create additional drag for commodities, oil particularly,'' ANZ's Pervan said. ``The bottom line is this will make oil more expensive for Europe, Japan, even China, and that creates more drag on demand.''
Brent crude oil for November settlement tumbled as much as $2.88, or 3.1 percent, to $91.10 a barrel on London's ICE Futures Europe exchange at 8:26 a.m. London time. Futures yesterday dropped $9.56, or 9.2 percent, to $93.98 a barrel.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Japan's Topix May Drop 16% to 950, Nomura, CLSA Say
By Patrick Rial and Toshiro Hasegawa
Sept. 30 (Bloomberg) -- Japan's Topix stock index may plunge 16 percent below yesterday's close, to the lowest since August 2003, after U.S. lawmakers rejected a $700 billion bank- rescue plan, Nomura Holdings Inc. and CLSA Ltd. said.
The gauge may drop below 950 points, Seiichiro Iwasawa, Nomura's chief strategist in Tokyo, wrote in a note to clients today. The measure closed at 1,127.87 yesterday. Jolyon Montague, chief equity strategist in Tokyo for CLSA, agreed with the target, a level that would bring shares in line with book value.
``You'll see a bit of extreme Armageddon in the next couple of days, but after that we'll be fine,'' Montague said in an interview today, advising clients to switch from ``defensive'' stocks to ``high-quality'' companies such as Canon Inc., the world's largest digital camera maker, after such a plunge.
The U.S. House of Representatives yesterday rejected the rescue plan, sending the Standard & Poor's 500 Index to its worst slide since the 1987 ``Black Monday'' market crash. Congress will reconvene on Thursday, Oct. 2 and attempt to reach a deal on a package, U.S. House Majority Leader Steny Hoyer said.
``The voting down of the relief package means that risks to the financial system have intensified,'' Nomura's Iwasawa said in his note. ``Financial markets are breaking into crisis mode. There were hopes that the government would move swiftly to deal with the problem, but it's not happening.''
Book Value
The Topix slumped 4.6 percent to 1,076.57 as of the 11 a.m. break in Tokyo, while the Nikkei 225 Stock Average lost 4.6 percent to 11,199.07. The Nikkei may slip under 10,000, 15 percent less than yesterday's close, Nomura's Iwasawa said.
The Topix currently trades at 1.25 times book value, or the net value of assets minus debt. The Topix fell to as low as 1.18 times book in March 2003, when the gauge marked the bottom of a 12-year downward slide.
``Around 950 or so implies the market is on one times book,'' CLSA's Montague said. ``I really don't see the Japanese equity market going significantly below that and any time spent down there will be really brief.''
Investors should take that opportunity to buy into beaten- down shares as the eventual approval of financial relief measures means those levels will be temporary, he said.
``If you're a Congressman you're going to reconsider your vote strongly when you meet to discuss the package on Thursday,'' Montague said.
Opportunities
The failure of U.S. lawmakers to pass a bank rescue plan would provide opportunities for Japan's financial companies to acquire U.S. lenders as they collapse, Montague said.
Mitsubishi UFJ Financial Group Inc. agreed to spend $9 billion for a 21 percent stake in Morgan Stanley yesterday. Meanwhile, Nomura snapped up the European, Asian and Middle Eastern operations of bankrupt Lehman Brothers Holdings Inc. last week, extending the global reach of Japan's largest brokerage.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net
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Sept. 30 (Bloomberg) -- Japan's Topix stock index may plunge 16 percent below yesterday's close, to the lowest since August 2003, after U.S. lawmakers rejected a $700 billion bank- rescue plan, Nomura Holdings Inc. and CLSA Ltd. said.
The gauge may drop below 950 points, Seiichiro Iwasawa, Nomura's chief strategist in Tokyo, wrote in a note to clients today. The measure closed at 1,127.87 yesterday. Jolyon Montague, chief equity strategist in Tokyo for CLSA, agreed with the target, a level that would bring shares in line with book value.
``You'll see a bit of extreme Armageddon in the next couple of days, but after that we'll be fine,'' Montague said in an interview today, advising clients to switch from ``defensive'' stocks to ``high-quality'' companies such as Canon Inc., the world's largest digital camera maker, after such a plunge.
The U.S. House of Representatives yesterday rejected the rescue plan, sending the Standard & Poor's 500 Index to its worst slide since the 1987 ``Black Monday'' market crash. Congress will reconvene on Thursday, Oct. 2 and attempt to reach a deal on a package, U.S. House Majority Leader Steny Hoyer said.
``The voting down of the relief package means that risks to the financial system have intensified,'' Nomura's Iwasawa said in his note. ``Financial markets are breaking into crisis mode. There were hopes that the government would move swiftly to deal with the problem, but it's not happening.''
Book Value
The Topix slumped 4.6 percent to 1,076.57 as of the 11 a.m. break in Tokyo, while the Nikkei 225 Stock Average lost 4.6 percent to 11,199.07. The Nikkei may slip under 10,000, 15 percent less than yesterday's close, Nomura's Iwasawa said.
The Topix currently trades at 1.25 times book value, or the net value of assets minus debt. The Topix fell to as low as 1.18 times book in March 2003, when the gauge marked the bottom of a 12-year downward slide.
``Around 950 or so implies the market is on one times book,'' CLSA's Montague said. ``I really don't see the Japanese equity market going significantly below that and any time spent down there will be really brief.''
Investors should take that opportunity to buy into beaten- down shares as the eventual approval of financial relief measures means those levels will be temporary, he said.
``If you're a Congressman you're going to reconsider your vote strongly when you meet to discuss the package on Thursday,'' Montague said.
Opportunities
The failure of U.S. lawmakers to pass a bank rescue plan would provide opportunities for Japan's financial companies to acquire U.S. lenders as they collapse, Montague said.
Mitsubishi UFJ Financial Group Inc. agreed to spend $9 billion for a 21 percent stake in Morgan Stanley yesterday. Meanwhile, Nomura snapped up the European, Asian and Middle Eastern operations of bankrupt Lehman Brothers Holdings Inc. last week, extending the global reach of Japan's largest brokerage.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net
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Areva, Dexia, Neopost, Unibail, Vinci: French Stocks Preview
By Fabio Benedetti-Valentini
Sept. 30 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index lost 209.9, or 5 percent, to 3,953.48, its steepest decline since Jan. 21 and its lowest close since May 2005. The measure has fallen 12 percent in September. The SBF 120 Index slipped 4.9 percent.
Altamir Amboise (LTA FP): The financial holding company raised 20.7 million euros ($29.8 million) selling equity warrants. A total 3.5 million new shares will trade from Oct. 1, the company said. The shares declined 75 cents, or 13 percent, to 5.20 euros.
Areva SA (CEI FP): The transmission and distribution unit of the world's largest nuclear reactor maker signed a strategic alliance with GE Consumer & Industrial India to provide electrical systems for power, mining, metals and minerals companies. The company's investment certificates fell 14.71 euros, or 2.6 percent, to 554.79.
Catering International & Services SA (CTRG FP): The remote catering company said first-half net income rose 22 percent to 4.08 million euros and forecast ``strong business growth'' for the full year. The shares dropped 1.10 euros, or 1.5 percent, to 70.90.
Dexia SA (DX FP): The world's biggest lender to local governments will get a 6.4 billion-euro state-backed rescue after worsening financial markets drove the shares to a record decline. The shares declined 2.87 euros, or 29 percent, to 7.20.
Electricite de France SA (EDF FP): The electricity producer's wholesale trading unit agreed to buy Eagle Energy Partners I LP from Lehman Brothers Holdings Inc. to expand its operations in North America. The shares fell 1.51 euros, or 2.9 percent, to 50.61 euros.
Neopost SA (NEO FP): Europe's biggest maker of mailroom equipment reports first-half earnings after the market close in Paris. Net income likely fell 11 percent to 71 million euros on a weaker dollar and declining U.S. demand, according to the average of five analyst estimates. The shares lost 4.86 euros, or 7 percent, to 65.05.
Schneider Electric SA (SU FP): The world's biggest maker of circuit breakers completed its $500 million Canadian-dollar purchase of Vancouver-based Xantrex Technology Inc. The shares declined 4.59 euros, or 7.4 percent, to 57.71.
SQLI SA (SQI FP): The Web design and computer-services company reported a 45 percent drop in first-half net income to 2.11 million euros. SQLI forecast full-year sales of more than 160 million euros and ``adjusted'' its operating profit target to 10 million euros. The shares lost 3 cents, or 2 percent, to 1.45 euros.
Unibail-Rodamco SA (UL FP): Europe's largest real-estate company will pay shareholders an interim dividend of 1.75 euros a share on Oct. 15. The shares dropped 8.93 euros, or 6.1 percent, to 138.54.
Vinci SA (DG FP): The world's biggest builder and Portugal's Mota-Engil SGPS SA agreed to buy Macquarie Infrastructure Group's 30.6 percent stake in Lusoponte SA, the operator of two toll bridges crossing the Tagus River in Lisbon for a total 112 million euros. The shares dropped 1.85 euros, or 5.5 percent, to 31.94.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.
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Sept. 30 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index lost 209.9, or 5 percent, to 3,953.48, its steepest decline since Jan. 21 and its lowest close since May 2005. The measure has fallen 12 percent in September. The SBF 120 Index slipped 4.9 percent.
Altamir Amboise (LTA FP): The financial holding company raised 20.7 million euros ($29.8 million) selling equity warrants. A total 3.5 million new shares will trade from Oct. 1, the company said. The shares declined 75 cents, or 13 percent, to 5.20 euros.
Areva SA (CEI FP): The transmission and distribution unit of the world's largest nuclear reactor maker signed a strategic alliance with GE Consumer & Industrial India to provide electrical systems for power, mining, metals and minerals companies. The company's investment certificates fell 14.71 euros, or 2.6 percent, to 554.79.
Catering International & Services SA (CTRG FP): The remote catering company said first-half net income rose 22 percent to 4.08 million euros and forecast ``strong business growth'' for the full year. The shares dropped 1.10 euros, or 1.5 percent, to 70.90.
Dexia SA (DX FP): The world's biggest lender to local governments will get a 6.4 billion-euro state-backed rescue after worsening financial markets drove the shares to a record decline. The shares declined 2.87 euros, or 29 percent, to 7.20.
Electricite de France SA (EDF FP): The electricity producer's wholesale trading unit agreed to buy Eagle Energy Partners I LP from Lehman Brothers Holdings Inc. to expand its operations in North America. The shares fell 1.51 euros, or 2.9 percent, to 50.61 euros.
Neopost SA (NEO FP): Europe's biggest maker of mailroom equipment reports first-half earnings after the market close in Paris. Net income likely fell 11 percent to 71 million euros on a weaker dollar and declining U.S. demand, according to the average of five analyst estimates. The shares lost 4.86 euros, or 7 percent, to 65.05.
Schneider Electric SA (SU FP): The world's biggest maker of circuit breakers completed its $500 million Canadian-dollar purchase of Vancouver-based Xantrex Technology Inc. The shares declined 4.59 euros, or 7.4 percent, to 57.71.
SQLI SA (SQI FP): The Web design and computer-services company reported a 45 percent drop in first-half net income to 2.11 million euros. SQLI forecast full-year sales of more than 160 million euros and ``adjusted'' its operating profit target to 10 million euros. The shares lost 3 cents, or 2 percent, to 1.45 euros.
Unibail-Rodamco SA (UL FP): Europe's largest real-estate company will pay shareholders an interim dividend of 1.75 euros a share on Oct. 15. The shares dropped 8.93 euros, or 6.1 percent, to 138.54.
Vinci SA (DG FP): The world's biggest builder and Portugal's Mota-Engil SGPS SA agreed to buy Macquarie Infrastructure Group's 30.6 percent stake in Lusoponte SA, the operator of two toll bridges crossing the Tagus River in Lisbon for a total 112 million euros. The shares dropped 1.85 euros, or 5.5 percent, to 31.94.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.
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Japan Stocks Drop to Near 4-Year Low as Bank Rescue Plan Fails
By Masaki Kondo
Sept. 30 (Bloomberg) -- Japan's stocks plunged the lowest in almost four years after a U.S. bank-rescue package failed, unemployment rose and production slumped, raising concern the financial crisis is spreading through the broader economy.
Sumitomo Mitsui Financial Group Inc., Japan's third-biggest listed bank, and Nomura Holdings Inc., the largest brokerage, sank more than 7 percent. Mitsubishi Corp., a trading company that gets more than half its profit from commodities, tumbled 7.1 percent after crude fell the most in seven years.
``The global financial market is nearing the brink of collapse, and the only real choice investors have right now is to sell stocks and hold cash,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo.
The Nikkei 225 Stock Average declined 483.75, or 4.1 percent, to close at 11,259.86 in Tokyo. The broader Topix index fell 40.46, or 3.6 percent, to 1,087.41, the lowest since December 2004. All 33 industry groups on the Topix slumped.
The U.S. House of Representatives voted yesterday to reject a $700 billion rescue package for the financial system, sparking the biggest drop in the Standard & Poor's 500 Index since the October 1987 crash. Treasury Secretary Henry Paulson said he'll work to salvage the plan that would give him the authority to buy bad loans from financial companies.
Japan's unemployment rate rose to the highest in two years in August while industrial production fell at the fastest pace in five years, the government said today, signaling the reach of the economic slowdown to households and manufacturers.
The Topix slumped 13 percent in September, its worst monthly decline since November 1993. The gauge is down 40 percent from a 15-year high reached in February 2007. The Nikkei fell 14 percent this month, its steepest slide in a decade.
Nikkei futures expiring in December retreated 4.2 percent to 11,290 in Osaka and slumped 4.4 percent to 11,290 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Sept. 30 (Bloomberg) -- Japan's stocks plunged the lowest in almost four years after a U.S. bank-rescue package failed, unemployment rose and production slumped, raising concern the financial crisis is spreading through the broader economy.
Sumitomo Mitsui Financial Group Inc., Japan's third-biggest listed bank, and Nomura Holdings Inc., the largest brokerage, sank more than 7 percent. Mitsubishi Corp., a trading company that gets more than half its profit from commodities, tumbled 7.1 percent after crude fell the most in seven years.
``The global financial market is nearing the brink of collapse, and the only real choice investors have right now is to sell stocks and hold cash,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo.
The Nikkei 225 Stock Average declined 483.75, or 4.1 percent, to close at 11,259.86 in Tokyo. The broader Topix index fell 40.46, or 3.6 percent, to 1,087.41, the lowest since December 2004. All 33 industry groups on the Topix slumped.
The U.S. House of Representatives voted yesterday to reject a $700 billion rescue package for the financial system, sparking the biggest drop in the Standard & Poor's 500 Index since the October 1987 crash. Treasury Secretary Henry Paulson said he'll work to salvage the plan that would give him the authority to buy bad loans from financial companies.
Japan's unemployment rate rose to the highest in two years in August while industrial production fell at the fastest pace in five years, the government said today, signaling the reach of the economic slowdown to households and manufacturers.
The Topix slumped 13 percent in September, its worst monthly decline since November 1993. The gauge is down 40 percent from a 15-year high reached in February 2007. The Nikkei fell 14 percent this month, its steepest slide in a decade.
Nikkei futures expiring in December retreated 4.2 percent to 11,290 in Osaka and slumped 4.4 percent to 11,290 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Areva, Dexia, Neopost, Unibail, Vinci: French Stocks Preview
By Fabio Benedetti-Valentini
Sept. 30 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index lost 209.9, or 5 percent, to 3,953.48, its steepest decline since Jan. 21 and its lowest close since May 2005. The measure has fallen 12 percent in September. The SBF 120 Index slipped 4.9 percent.
Altamir Amboise (LTA FP): The financial holding company raised 20.7 million euros ($29.8 million) selling equity warrants. A total 3.5 million new shares will trade from Oct. 1, the company said. The shares declined 75 cents, or 13 percent, to 5.20 euros.
Areva SA (CEI FP): The transmission and distribution unit of the world's largest nuclear reactor maker signed a strategic alliance with GE Consumer & Industrial India to provide electrical systems for power, mining, metals and minerals companies. The company's investment certificates fell 14.71 euros, or 2.6 percent, to 554.79.
Catering International & Services SA (CTRG FP): The remote catering company said first-half net income rose 22 percent to 4.08 million euros and forecast ``strong business growth'' for the full year. The shares dropped 1.10 euros, or 1.5 percent, to 70.90.
Dexia SA (DX FP): The world's biggest lender to local governments will get a 6.4 billion-euro state-backed rescue after worsening financial markets drove the shares to a record decline. The shares declined 2.87 euros, or 29 percent, to 7.20.
Electricite de France SA (EDF FP): The electricity producer's wholesale trading unit agreed to buy Eagle Energy Partners I LP from Lehman Brothers Holdings Inc. to expand its operations in North America. The shares fell 1.51 euros, or 2.9 percent, to 50.61 euros.
Neopost SA (NEO FP): Europe's biggest maker of mailroom equipment reports first-half earnings after the market close in Paris. Net income likely fell 11 percent to 71 million euros on a weaker dollar and declining U.S. demand, according to the average of five analyst estimates. The shares lost 4.86 euros, or 7 percent, to 65.05.
Schneider Electric SA (SU FP): The world's biggest maker of circuit breakers completed its $500 million Canadian-dollar purchase of Vancouver-based Xantrex Technology Inc. The shares declined 4.59 euros, or 7.4 percent, to 57.71.
SQLI SA (SQI FP): The Web design and computer-services company reported a 45 percent drop in first-half net income to 2.11 million euros. SQLI forecast full-year sales of more than 160 million euros and ``adjusted'' its operating profit target to 10 million euros. The shares lost 3 cents, or 2 percent, to 1.45 euros.
Unibail-Rodamco SA (UL FP): Europe's largest real-estate company will pay shareholders an interim dividend of 1.75 euros a share on Oct. 15. The shares dropped 8.93 euros, or 6.1 percent, to 138.54.
Vinci SA (DG FP): The world's biggest builder and Portugal's Mota-Engil SGPS SA agreed to buy Macquarie Infrastructure Group's 30.6 percent stake in Lusoponte SA, the operator of two toll bridges crossing the Tagus River in Lisbon for a total 112 million euros. The shares dropped 1.85 euros, or 5.5 percent, to 31.94.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.
Read more...
Sept. 30 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index lost 209.9, or 5 percent, to 3,953.48, its steepest decline since Jan. 21 and its lowest close since May 2005. The measure has fallen 12 percent in September. The SBF 120 Index slipped 4.9 percent.
Altamir Amboise (LTA FP): The financial holding company raised 20.7 million euros ($29.8 million) selling equity warrants. A total 3.5 million new shares will trade from Oct. 1, the company said. The shares declined 75 cents, or 13 percent, to 5.20 euros.
Areva SA (CEI FP): The transmission and distribution unit of the world's largest nuclear reactor maker signed a strategic alliance with GE Consumer & Industrial India to provide electrical systems for power, mining, metals and minerals companies. The company's investment certificates fell 14.71 euros, or 2.6 percent, to 554.79.
Catering International & Services SA (CTRG FP): The remote catering company said first-half net income rose 22 percent to 4.08 million euros and forecast ``strong business growth'' for the full year. The shares dropped 1.10 euros, or 1.5 percent, to 70.90.
Dexia SA (DX FP): The world's biggest lender to local governments will get a 6.4 billion-euro state-backed rescue after worsening financial markets drove the shares to a record decline. The shares declined 2.87 euros, or 29 percent, to 7.20.
Electricite de France SA (EDF FP): The electricity producer's wholesale trading unit agreed to buy Eagle Energy Partners I LP from Lehman Brothers Holdings Inc. to expand its operations in North America. The shares fell 1.51 euros, or 2.9 percent, to 50.61 euros.
Neopost SA (NEO FP): Europe's biggest maker of mailroom equipment reports first-half earnings after the market close in Paris. Net income likely fell 11 percent to 71 million euros on a weaker dollar and declining U.S. demand, according to the average of five analyst estimates. The shares lost 4.86 euros, or 7 percent, to 65.05.
Schneider Electric SA (SU FP): The world's biggest maker of circuit breakers completed its $500 million Canadian-dollar purchase of Vancouver-based Xantrex Technology Inc. The shares declined 4.59 euros, or 7.4 percent, to 57.71.
SQLI SA (SQI FP): The Web design and computer-services company reported a 45 percent drop in first-half net income to 2.11 million euros. SQLI forecast full-year sales of more than 160 million euros and ``adjusted'' its operating profit target to 10 million euros. The shares lost 3 cents, or 2 percent, to 1.45 euros.
Unibail-Rodamco SA (UL FP): Europe's largest real-estate company will pay shareholders an interim dividend of 1.75 euros a share on Oct. 15. The shares dropped 8.93 euros, or 6.1 percent, to 138.54.
Vinci SA (DG FP): The world's biggest builder and Portugal's Mota-Engil SGPS SA agreed to buy Macquarie Infrastructure Group's 30.6 percent stake in Lusoponte SA, the operator of two toll bridges crossing the Tagus River in Lisbon for a total 112 million euros. The shares dropped 1.85 euros, or 5.5 percent, to 31.94.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.
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Allianz, Freenet AG, Hornbach, Nordex AG: German Equity Preview
By Nadja Brandt and Zainab Fattah
Sept. 30 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses and share prices are from the previous close.
Futures on the DAX Index expiring in December lost 188, or 3.2 percent, to 5,686.5 as of 8:09 a.m. in Frankfurt. The DAX declined 4.2 percent to 5,807.08.
Allianz SE (ALV GY): Europe's biggest insurer said the sale of its Dresdner Bank unit to Commerzbank AG, the second-largest bank in Germany, is ``on track.'' Allianz decreased 7.57 euros, or 7.3 percent, to 95.77 euros.
Arcandor AG (ARO GY): Germany's biggest department-store owner was cut to ``neutral'' from ``overweight'' at JPMorgan Chase & Co. The shares lost 4 cents, or 2.1 percent, to 1.87 euros.
Bayer AG (BAY GY): Germany's biggest drugmaker is cooperating with the National University in Singapore on pre- clinical research in Asia. Bayer fell 1.4 euros, or 2.6 percent, to 52.23 euros.
Daimler AG (DAI GY): The world's second-largest maker of luxury cars wants to lower the price it agreed to pay for 42 percent of OAO KamAZ, Russia's biggest truckmaker, because of the stock-market rout, Vedomosti reported. Daimler shares dropped 1.65 euros, or 4.3 percent to 36.91 euros.
Deutsche Telekom AG (DTE GY): Europe's largest telephone company had its recommendation raised to ``buy'' from ``neutral'' at Goldman Sachs Group Inc. The shares dropped 45 cents, or 4.1 percent, to 10.30 euros.
Freenet AG (FNT GY): Debitel AG Chief Executive Officer Oliver Steil won't move onto the Freenet AG board, die Welt said.
Instead, Debitel finance chief Joachim Preisig will be the board member responsible for the integration of the two companies, die Welt said in the summary of an article to be published tomorrow, without saying where it got the information. Freenet Chief Financial Officer Axel Krieger will become deputy chief, the newspaper reported, without saying where it got the information. Freenet shares fell 74 cents, or 10 percent, to 6.35 euros.
Fresenius SE (FRE GR): The German health-care company buying APP Pharmaceuticals Inc. increased the syndicated credit facilities used to pay for the acquisition by $500 million because of demand from institutional investors. The shares declined 59 cents, or 1.1 percent to 51.91 euros.
Hornbach Holding AG (HBH3 GY): The operator of home- improvement stores in nine countries said second-quarter profit rose after the company sold more do-it-yourself products outside its home market. The shares decreased 9 cents, or 0.2 percent, to 52 euros.
Mobotix AG (MBQ GY): The German maker of security cameras proposed a full-year dividend of 50 cents. The company said full-year net income was 4.9 million euros ($7.1 million) as sales jumped 49 percent to 35.3 million euros. The shares rose 39 cents, or 1.4 percent, to 27.5 euros.
Nordex AG (NDX1 GY): Ventus Venture Fund GmbH & Co. Beteiligungs KG agreed to buy 280.7 million euros worth of Nordex shares. Nordex fell 2.33 euros, or 11 percent, to 19 euros.
ProSiebenSat.1 Media AG (PSM GR): Credit Suisse Group AG cut its price estimates on shares of the country's biggest private broadcaster 25 percent to 6.2 euros. ProSieben shares sank 37 cents, or 7.3 percent, to 4.70 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.netZainab Fattah in Dubai on zfattah@bloomberg.net.
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Sept. 30 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses and share prices are from the previous close.
Futures on the DAX Index expiring in December lost 188, or 3.2 percent, to 5,686.5 as of 8:09 a.m. in Frankfurt. The DAX declined 4.2 percent to 5,807.08.
Allianz SE (ALV GY): Europe's biggest insurer said the sale of its Dresdner Bank unit to Commerzbank AG, the second-largest bank in Germany, is ``on track.'' Allianz decreased 7.57 euros, or 7.3 percent, to 95.77 euros.
Arcandor AG (ARO GY): Germany's biggest department-store owner was cut to ``neutral'' from ``overweight'' at JPMorgan Chase & Co. The shares lost 4 cents, or 2.1 percent, to 1.87 euros.
Bayer AG (BAY GY): Germany's biggest drugmaker is cooperating with the National University in Singapore on pre- clinical research in Asia. Bayer fell 1.4 euros, or 2.6 percent, to 52.23 euros.
Daimler AG (DAI GY): The world's second-largest maker of luxury cars wants to lower the price it agreed to pay for 42 percent of OAO KamAZ, Russia's biggest truckmaker, because of the stock-market rout, Vedomosti reported. Daimler shares dropped 1.65 euros, or 4.3 percent to 36.91 euros.
Deutsche Telekom AG (DTE GY): Europe's largest telephone company had its recommendation raised to ``buy'' from ``neutral'' at Goldman Sachs Group Inc. The shares dropped 45 cents, or 4.1 percent, to 10.30 euros.
Freenet AG (FNT GY): Debitel AG Chief Executive Officer Oliver Steil won't move onto the Freenet AG board, die Welt said.
Instead, Debitel finance chief Joachim Preisig will be the board member responsible for the integration of the two companies, die Welt said in the summary of an article to be published tomorrow, without saying where it got the information. Freenet Chief Financial Officer Axel Krieger will become deputy chief, the newspaper reported, without saying where it got the information. Freenet shares fell 74 cents, or 10 percent, to 6.35 euros.
Fresenius SE (FRE GR): The German health-care company buying APP Pharmaceuticals Inc. increased the syndicated credit facilities used to pay for the acquisition by $500 million because of demand from institutional investors. The shares declined 59 cents, or 1.1 percent to 51.91 euros.
Hornbach Holding AG (HBH3 GY): The operator of home- improvement stores in nine countries said second-quarter profit rose after the company sold more do-it-yourself products outside its home market. The shares decreased 9 cents, or 0.2 percent, to 52 euros.
Mobotix AG (MBQ GY): The German maker of security cameras proposed a full-year dividend of 50 cents. The company said full-year net income was 4.9 million euros ($7.1 million) as sales jumped 49 percent to 35.3 million euros. The shares rose 39 cents, or 1.4 percent, to 27.5 euros.
Nordex AG (NDX1 GY): Ventus Venture Fund GmbH & Co. Beteiligungs KG agreed to buy 280.7 million euros worth of Nordex shares. Nordex fell 2.33 euros, or 11 percent, to 19 euros.
ProSiebenSat.1 Media AG (PSM GR): Credit Suisse Group AG cut its price estimates on shares of the country's biggest private broadcaster 25 percent to 6.2 euros. ProSieben shares sank 37 cents, or 7.3 percent, to 4.70 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.netZainab Fattah in Dubai on zfattah@bloomberg.net.
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European Stock-Index Futures Tumble; Societe Generale May Drop
By Adria Cimino
Sept. 30 (Bloomberg) -- European stock-index futures sank, extending the worst global sell-off in 21 years, after the House of Representatives rejected a $700 billion rescue plan for financial companies.
U.S.-traded shares of Societe Generale SA, France's third- largest bank by assets, and UBS AG, the European bank hardest hit by subprime-related losses, retreated more than 6 percent. Dexia SA was suspended from trading after the world's biggest lender to local governments received a 6.4 billion-euro ($9.2 billion) state-backed bailout. BHP Billiton Ltd. dropped the most in 21 years in Australia after commodities posted the steepest decline in five decades.
Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slid 82, or 2.7 percent, to 2,954 at 7:31 a.m. in London. The U.K.'s FTSE 100 Index may decrease 180, according to Cantor Index, a betting firm. The MSCI World Index of 23 developed markets sank 7 percent yesterday, the biggest loss in 21 years.
``I was disappointed and surprised,'' said Philippe Gijsels, Brussels-based senior equity strategist at Fortis Global Markets with $62 billion under management. ``Now it will take more time. I hope policy makers get their act together and get this resolved by the end of the week,'' he said in a Bloomberg Television interview.
Congressmen voted 228 to 205 against the measure to authorize the biggest government intervention into markets since the Great Depression, sending the Standard & Poor's 500 Index to the steepest drop since the 1987 crash.
Monthly Loss
Europe's Stoxx 600 is down 13 percent this month, on course for the worst slump since September 2002, as Lehman Brothers Holdings Inc. filed for bankruptcy, American International Group Inc. was taken over by the U.S. Treasury and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history. The measure, poised for a 13 percent drop this quarter, slid the most in eight months yesterday after bank bailouts in Europe accelerated.
American depositary receipts of Societe Generale lost 13 percent from the stock's close in France. ADRs of UBS retreated 6.2 percent from the close in Switzerland.
``The impact of that no vote on Capitol Hill last night will hit European markets hard at the open,'' Matthew Buckland, a dealer at CMC Markets in London, wrote in a note.
Belgium's federal and regional governments, France and the company's largest shareholders will supply the funds to Dexia, according to a statement from Belgian Prime Minister Yves Leterme today.
Mining Shares
BHP, the world's biggest mining company, slid 5.9 percent in Australia after earlier losing as much as 9.9 percent. Rio Tinto Group, the second-largest iron-ore exporter, fell 8.4 percent.
The Reuters/Jefferies CRB Index of 19 commodities yesterday plunged 5.9 percent, the biggest drop since 1956, on concern the spreading financial crisis may slash demand for raw materials.
U.S. notes fell, paring the biggest monthly rally since January. The yen rose to its highest in almost two weeks against the euro and advanced against the dollar.
U.K. consumer confidence stayed close to a record low in September as the financial crisis made shoppers more pessimistic about their personal finances, GfK NOP said.
Arcandor AG, Germany's biggest department-store owner, may slip after JPMorgan Chase & Co. cut its recommendation on the stock to ``neutral'' from ``overweight.''
Rentokil Initial Plc, the world's largest pest-control company, will probably drop. Goldman Sachs Group Inc. added the shares to its ``conviction sell'' list.
Deutsche Telekom AG, Europe's biggest phone company, may be active after Goldman upgraded the shares to ``buy'' from ``neutral'' and added them to its ``conviction buy'' list, citing a ``well covered dividend.''
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Sept. 30 (Bloomberg) -- European stock-index futures sank, extending the worst global sell-off in 21 years, after the House of Representatives rejected a $700 billion rescue plan for financial companies.
U.S.-traded shares of Societe Generale SA, France's third- largest bank by assets, and UBS AG, the European bank hardest hit by subprime-related losses, retreated more than 6 percent. Dexia SA was suspended from trading after the world's biggest lender to local governments received a 6.4 billion-euro ($9.2 billion) state-backed bailout. BHP Billiton Ltd. dropped the most in 21 years in Australia after commodities posted the steepest decline in five decades.
Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slid 82, or 2.7 percent, to 2,954 at 7:31 a.m. in London. The U.K.'s FTSE 100 Index may decrease 180, according to Cantor Index, a betting firm. The MSCI World Index of 23 developed markets sank 7 percent yesterday, the biggest loss in 21 years.
``I was disappointed and surprised,'' said Philippe Gijsels, Brussels-based senior equity strategist at Fortis Global Markets with $62 billion under management. ``Now it will take more time. I hope policy makers get their act together and get this resolved by the end of the week,'' he said in a Bloomberg Television interview.
Congressmen voted 228 to 205 against the measure to authorize the biggest government intervention into markets since the Great Depression, sending the Standard & Poor's 500 Index to the steepest drop since the 1987 crash.
Monthly Loss
Europe's Stoxx 600 is down 13 percent this month, on course for the worst slump since September 2002, as Lehman Brothers Holdings Inc. filed for bankruptcy, American International Group Inc. was taken over by the U.S. Treasury and Washington Mutual Inc. was seized by regulators in the biggest U.S. bank failure in history. The measure, poised for a 13 percent drop this quarter, slid the most in eight months yesterday after bank bailouts in Europe accelerated.
American depositary receipts of Societe Generale lost 13 percent from the stock's close in France. ADRs of UBS retreated 6.2 percent from the close in Switzerland.
``The impact of that no vote on Capitol Hill last night will hit European markets hard at the open,'' Matthew Buckland, a dealer at CMC Markets in London, wrote in a note.
Belgium's federal and regional governments, France and the company's largest shareholders will supply the funds to Dexia, according to a statement from Belgian Prime Minister Yves Leterme today.
Mining Shares
BHP, the world's biggest mining company, slid 5.9 percent in Australia after earlier losing as much as 9.9 percent. Rio Tinto Group, the second-largest iron-ore exporter, fell 8.4 percent.
The Reuters/Jefferies CRB Index of 19 commodities yesterday plunged 5.9 percent, the biggest drop since 1956, on concern the spreading financial crisis may slash demand for raw materials.
U.S. notes fell, paring the biggest monthly rally since January. The yen rose to its highest in almost two weeks against the euro and advanced against the dollar.
U.K. consumer confidence stayed close to a record low in September as the financial crisis made shoppers more pessimistic about their personal finances, GfK NOP said.
Arcandor AG, Germany's biggest department-store owner, may slip after JPMorgan Chase & Co. cut its recommendation on the stock to ``neutral'' from ``overweight.''
Rentokil Initial Plc, the world's largest pest-control company, will probably drop. Goldman Sachs Group Inc. added the shares to its ``conviction sell'' list.
Deutsche Telekom AG, Europe's biggest phone company, may be active after Goldman upgraded the shares to ``buy'' from ``neutral'' and added them to its ``conviction buy'' list, citing a ``well covered dividend.''
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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U.S. Stocks May Fall More on Transports' Drop, Dow Theory Says
By Elizabeth Stanton and Jeff Kearns
Enlarge Image/Details
Sept. 30 (Bloomberg) -- Transportation stocks are signaling the market is poised for more losses after the Dow Jones Industrial Average posted its biggest-ever point decline.
Dow Theory, created by Wall Street Journal co-founder Charles Dow in 1884, holds that the 30-stock industrial average takes cues from the Dow Jones Transportation Average. The gauge of companies such as FedEx Corp. and Ryder Systems Inc. slid to the lowest since March 17, suggesting the industrials' biggest point decline ever won't mark its bottom, some investors say.
``When the Dow transports are making new lows, that generally signals more trouble for the markets,'' said Frederic Dickson, who manages $17 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``The transports are really a signal of what Wall Street thinks of overall economic prospects.''
According to Dow Theory, weakness or strength in manufacturing will last only if matched in the shipping of products. Until today, when the transports joined the industrials in giving up gains since mid-July, that trend was bullish.
U.S. stocks tumbled after Congress rejected the Bush administration's plan to buy toxic mortgages from banks. The Dow industrials plunged 7 percent to 10,365.45, while the transportation index tumbled 5.2 percent to 4,503.89.
`Moving in Sync'
``Both indicators moving in sync to the downside is indicative of an economic issue that would translate into lower corporate earnings,'' said Chuck Carlson, a money manager at Horizon Investment Services LLC in Hammond, Indiana. Horizon oversees $170 million and uses Dow Theory to determine how much cash to hold as insurance against declines in stock prices.
Companies in the S&P 500 are forecast to report a 3 percent drop in profits this quarter, the fourth consecutive decline, according to estimates compiled by Bloomberg. The benchmark index for U.S. equities lost 8.8 percent yesterday, the most since the crash of 1987.
Another indicator may show stocks are poised to rally. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 34 percent to a record 46.72. The gauge, calculated from prices paid for options on the S&P 500, is considered the market's ``fear gauge'' because it tends to rise as stocks fall.
Stocks usually advance after the VIX peaks, according to a note to clients by Bespoke Investment Group LLC, a research and money-management company based in Harrison, New York. After the 10 biggest percentage increases for the 18-year-old VIX, the S&P 500 added an average of 0.36 percent the next day and 0.5 percent during the next week, Bespoke analysts wrote.
Three-Year Low
Every company in the industrial average dropped yesterday as the measure slid to the lowest since October 2005. Nine companies fell to 52-week lows, including 3M Co., Caterpillar Inc. and United Technologies Corp.
Dow Theory's last signal, on April 18, was bullish, as the industrial and transportation averages rebounded from declines in March. That changed yesterday as the transport gauge retreated for the fifth time in six days.
``People are anticipating that if the economy is slowing down people are going to be shipping less,'' said Blake Howells, who helps oversee $2 billion at Portland, Oregon-based Becker Capital Management. ``That would indicate that the market anticipates that the economy is going to slow.''
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
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Enlarge Image/Details
Sept. 30 (Bloomberg) -- Transportation stocks are signaling the market is poised for more losses after the Dow Jones Industrial Average posted its biggest-ever point decline.
Dow Theory, created by Wall Street Journal co-founder Charles Dow in 1884, holds that the 30-stock industrial average takes cues from the Dow Jones Transportation Average. The gauge of companies such as FedEx Corp. and Ryder Systems Inc. slid to the lowest since March 17, suggesting the industrials' biggest point decline ever won't mark its bottom, some investors say.
``When the Dow transports are making new lows, that generally signals more trouble for the markets,'' said Frederic Dickson, who manages $17 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``The transports are really a signal of what Wall Street thinks of overall economic prospects.''
According to Dow Theory, weakness or strength in manufacturing will last only if matched in the shipping of products. Until today, when the transports joined the industrials in giving up gains since mid-July, that trend was bullish.
U.S. stocks tumbled after Congress rejected the Bush administration's plan to buy toxic mortgages from banks. The Dow industrials plunged 7 percent to 10,365.45, while the transportation index tumbled 5.2 percent to 4,503.89.
`Moving in Sync'
``Both indicators moving in sync to the downside is indicative of an economic issue that would translate into lower corporate earnings,'' said Chuck Carlson, a money manager at Horizon Investment Services LLC in Hammond, Indiana. Horizon oversees $170 million and uses Dow Theory to determine how much cash to hold as insurance against declines in stock prices.
Companies in the S&P 500 are forecast to report a 3 percent drop in profits this quarter, the fourth consecutive decline, according to estimates compiled by Bloomberg. The benchmark index for U.S. equities lost 8.8 percent yesterday, the most since the crash of 1987.
Another indicator may show stocks are poised to rally. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 34 percent to a record 46.72. The gauge, calculated from prices paid for options on the S&P 500, is considered the market's ``fear gauge'' because it tends to rise as stocks fall.
Stocks usually advance after the VIX peaks, according to a note to clients by Bespoke Investment Group LLC, a research and money-management company based in Harrison, New York. After the 10 biggest percentage increases for the 18-year-old VIX, the S&P 500 added an average of 0.36 percent the next day and 0.5 percent during the next week, Bespoke analysts wrote.
Three-Year Low
Every company in the industrial average dropped yesterday as the measure slid to the lowest since October 2005. Nine companies fell to 52-week lows, including 3M Co., Caterpillar Inc. and United Technologies Corp.
Dow Theory's last signal, on April 18, was bullish, as the industrial and transportation averages rebounded from declines in March. That changed yesterday as the transport gauge retreated for the fifth time in six days.
``People are anticipating that if the economy is slowing down people are going to be shipping less,'' said Blake Howells, who helps oversee $2 billion at Portland, Oregon-based Becker Capital Management. ``That would indicate that the market anticipates that the economy is going to slow.''
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
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Bancolombia, Molinos, OHL Brasil, Urbi: Latin Equity Preview
By William Freebairn and James Attwood
Sept. 30 (Bloomberg) -- The following companies may have unusual price changes today 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 11 percent yesterday to 3,003.75.
Argentina
Molinos Rio de la Plata SA (MOLI AF): The Buenos Aires-based food producer bought 25 million of its own shares at 10 pesos apiece, or about 10 percent of shares outstanding, it said in a regulatory filing yesterday. Molinos rose 6.3 percent to 9.35 pesos.
Telecom Argentina SA (TECO2 AF): The country's second- biggest telephone company had its ``buy'' rating reiterated at Buenos Aires-based Grupo SBS. The stock probably will rise to 15.83 pesos, analyst Mariano Kruskevich wrote in a note yesterday, citing prospects for Internet business growth and price increases. Telecom fell 10 percent to 7.65 pesos.
Brazil
Obrascon Huarte Lain Brasil SA (OHLB3 BS): Brazil's second- biggest toll-road operator said yesterday in a regulatory filing that its debt is denominated in reais, and that it generates cash flow to supply its capital needs. The real yesterday fell 6.1 percent against the dollar, the biggest drop since January 1999. OHL Brasil, the Brazilian unit of Spanish builder Obrascon Huarte Lain SA, dropped 7.8 percent to 17.34 reais.
Rossi Residencial SA (RSID3 BS): Fator Corretora analyst Eduardo Silveira reiterated his ``outperform'' rating on Brazil's third-largest homebuilder, writing in a note yesterday that the sale of debentures will allow Rossi to meet its forecast for projects developed in 2008. Recent credit cost concerns have led to selling of more leveraged companies such as Rossi, even though the company's fundamentals have not changed, he wrote. Rossi tumbled 21 percent to 5.21 reais.
Colombia
Bancolombia SA (PFBCOLO CB): The American depositary receipts of Colombia's biggest lender (CIB US) dropped 7.3 percent after the U.S. House of Representatives rejected a $700 billion plan to rescue the financial system. In Bogota, preferred shares fell 1 percent to close at 15,440 pesos at 2 p.m. New York time.
Textiles Fabricato Tejicondor SA (FABRI CB): The U.S. House yesterday approved extending trade preferences for Colombia, Peru and more than 100 other developing nations, setting up a possible vote in the Senate this week. The bill, which would suspend $1 billion in tariffs, will continue for a year two separate measures that allow developing countries to ship their products duty-free to the U.S. Textile maker Fabricato, which gets about a fifth of its revenue from exports, fell 2.2 percent to 27.20 pesos.
Mexico
Cia. Minera Autlan SAB (AUTLANB MM): The Mexican manganese miner, whose stock more than tripled this year, may make acquisitions rather than seek a buyer, Chairman Jose Antonio Rivero said in an interview yesterday. Autlan hired Lehman Brothers Holdings Inc. earlier this year to analyze options including a possible sale. Autlan fell 6.5 percent to 70.65 pesos.
Urbi Desarrollos Urbanos SAB (URBI* MM): Fitch Ratings reiterated the BB issuer default rating of Mexico's third-largest homebuilder by sales, citing its land holdings and ``good financial position.'' Urbi's presence in eight states and in several market segments reduces risk, Fitch said in a note yesterday. Urbi fell 2.9 percent to 25.24 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net
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Sept. 30 (Bloomberg) -- The following companies may have unusual price changes today 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 11 percent yesterday to 3,003.75.
Argentina
Molinos Rio de la Plata SA (MOLI AF): The Buenos Aires-based food producer bought 25 million of its own shares at 10 pesos apiece, or about 10 percent of shares outstanding, it said in a regulatory filing yesterday. Molinos rose 6.3 percent to 9.35 pesos.
Telecom Argentina SA (TECO2 AF): The country's second- biggest telephone company had its ``buy'' rating reiterated at Buenos Aires-based Grupo SBS. The stock probably will rise to 15.83 pesos, analyst Mariano Kruskevich wrote in a note yesterday, citing prospects for Internet business growth and price increases. Telecom fell 10 percent to 7.65 pesos.
Brazil
Obrascon Huarte Lain Brasil SA (OHLB3 BS): Brazil's second- biggest toll-road operator said yesterday in a regulatory filing that its debt is denominated in reais, and that it generates cash flow to supply its capital needs. The real yesterday fell 6.1 percent against the dollar, the biggest drop since January 1999. OHL Brasil, the Brazilian unit of Spanish builder Obrascon Huarte Lain SA, dropped 7.8 percent to 17.34 reais.
Rossi Residencial SA (RSID3 BS): Fator Corretora analyst Eduardo Silveira reiterated his ``outperform'' rating on Brazil's third-largest homebuilder, writing in a note yesterday that the sale of debentures will allow Rossi to meet its forecast for projects developed in 2008. Recent credit cost concerns have led to selling of more leveraged companies such as Rossi, even though the company's fundamentals have not changed, he wrote. Rossi tumbled 21 percent to 5.21 reais.
Colombia
Bancolombia SA (PFBCOLO CB): The American depositary receipts of Colombia's biggest lender (CIB US) dropped 7.3 percent after the U.S. House of Representatives rejected a $700 billion plan to rescue the financial system. In Bogota, preferred shares fell 1 percent to close at 15,440 pesos at 2 p.m. New York time.
Textiles Fabricato Tejicondor SA (FABRI CB): The U.S. House yesterday approved extending trade preferences for Colombia, Peru and more than 100 other developing nations, setting up a possible vote in the Senate this week. The bill, which would suspend $1 billion in tariffs, will continue for a year two separate measures that allow developing countries to ship their products duty-free to the U.S. Textile maker Fabricato, which gets about a fifth of its revenue from exports, fell 2.2 percent to 27.20 pesos.
Mexico
Cia. Minera Autlan SAB (AUTLANB MM): The Mexican manganese miner, whose stock more than tripled this year, may make acquisitions rather than seek a buyer, Chairman Jose Antonio Rivero said in an interview yesterday. Autlan hired Lehman Brothers Holdings Inc. earlier this year to analyze options including a possible sale. Autlan fell 6.5 percent to 70.65 pesos.
Urbi Desarrollos Urbanos SAB (URBI* MM): Fitch Ratings reiterated the BB issuer default rating of Mexico's third-largest homebuilder by sales, citing its land holdings and ``good financial position.'' Urbi's presence in eight states and in several market segments reduces risk, Fitch said in a note yesterday. Urbi fell 2.9 percent to 25.24 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net
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Asian Stocks Decline, Yen Gains as U.S. Lawmakers Block Rescue
By Kyung Bok Cho and Haslinda Amin
Sept. 30 (Bloomberg) -- Asian stocks dropped, extending the worst global sell-off in 21 years, after the rejection of a $700 billion rescue plan by U.S. lawmakers deepened concern more economies will fall into recession. Japan bonds and the yen rose.
Mitsubishi UFJ Financial Group Inc. and DBS Group Holdings Ltd. led declines in financial shares as money-market rates and corporate bond risk rose. BHP Billiton Ltd. and SK Energy Co. dropped after oil fell more than $10 yesterday, the most in seven years. Regulators in South Korea and Taiwan tightened curbs on short selling to help stem market declines after U.S. stocks tumbled by the most since the 1987 crash.
``There is a massive crisis of confidence,'' said Khiem Do, who helps oversee $9 billion of Asian equities at Baring Asset Management (Asia) Ltd., in an interview with Bloomberg Television. ``There is definitely further downside.''
The MSCI Asia Pacific Index fell 3.4 percent to 107.57 as of 3:28 p.m. in Tokyo, adding to a five-day, 4.9 percent retreat. The measure is set to lose 14 percent this month, the biggest monthly loss since September 1990. Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slid 2.9 percent.
The yen rose against the euro as investors cut holdings of higher-yielding assets funded in the Japanese currency, trading at 150.06 per euro from 150.38.
The MSCI Asian index has slumped 32 percent this year as credit turmoil caused more than $590 billion in losses and writedowns and the failure of Lehman Brothers Holdings Inc. Citigroup Inc. yesterday agreed to buy the banking operations of Wachovia Corp., a North Carolina lender that collapsed under the weight of overdue mortgages.
Global Rout
Japan's Nikkei 225 Stock Average lost 4.1 percent to 11,259.86, its lowest since December 2004, as the unemployment rate rose to a two-year high in August while industrial production fell at the fastest pace in five years.
Vietnam's VN Index lost 4.7 percent, the most in the region. China's markets are closed this week for holidays.
The Standard & Poor's 500 Index tumbled 8.8 percent yesterday after the U.S. House of Representatives voted down the financial-rescue proposal. The MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years.
``That Congress is reining in the regulators themselves in return for the bailout gives us a glimpse of the post-apocalyptic finance system landscape: highly regulated and very restricted,'' said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur.
South Korea said it will temporarily ban short selling on all stocks, while Taiwan tightened limits on the practice for the remainder of the year. Hong Kong regulators said they will take ``more aggressive'' measures against short selling, in which investors try to profit by betting stock prices will fall.
Banks, Automakers
Mitsubishi UFJ, Japan's largest bank, retreated 4.7 percent to 893 yen. DBS, Southeast Asia's biggest, lost 2.4 percent to S$16.50 in Singapore. Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 17 percent to A$1.95 in Sydney, taking its decline this year to 93 percent, the worst performance on the MSCI Asian index.
Toyota Motor Corp., Japan's largest automaker, fell 4.6 percent to 4,380 yen. Output by the nation's automakers decreased 11 percent in August from a year earlier, the steepest drop since 1998, the Japan Automobile Manufacturers Association said today.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, declined 12 percent to A$3.09 after it said profit for the first two months of the year fell 18 percent.
``People are out there worrying,'' said billionaire Gerry Harvey, chairman of Harvey Norman. ``If the U.S. doesn't turn it around, we are in for a prolonged world recession.''
Default Risks Rise
The cost of protecting Japanese corporate bonds from default increased. The Markit iTraxx Japan Series 10 index rose 17 basis points to 175 basis points at 12:39 p.m. in Tokyo, Morgan Stanley prices show. Credit-default swaps, contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements.
Japan's overnight call loan rate rose 10 basis points, or 0.10 percentage point, to 0.5 percent as the Bank of Japan pumped 3 trillion yen ($28.8 billion) into the financial system.
BHP, the world's largest mining company, slipped 9.5 percent to A$31. SK Energy, South Korea's biggest oil refiner, fell 3.3 percent to 89,000 won. Fortescue Metals Group Ltd., an Australian iron-ore producer, slipped 17 percent to A$4.66, down 64 percent from its June 24 peak.
Crude oil slumped 9.8 percent yesterday to $96.37 a barrel in New York, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest drop since at least 1956. It recently slid further to $96.14 a barrel today.
Buying Opportunity?
``You're seeing a general flight from commodity players around the world,'' said Sean Fenton, who manages the equivalent of $540 million at Tribeca Investment Partners in Sydney. ``There's a lot of fear and uncertainty in the market.''
Australia's currency dropped as the stocks rout curbed investor appetite for buying the nation's higher-yielding assets. The Australian dollar fell 1.9 percent to 79.93 U.S. cents while New Zealand's dollar slid 0.9 percent to 66.98 cents.
Stock indexes pared earlier declines as S&P 500 futures added 1.3 percent in after-hours trading. South Korea's National Pension Service, the nation's biggest investor with the equivalent of $187 billion in assets, is ``steadily'' buying, said Hong Sung Gi, head of the fund's strategy division.
``It's a good time to pick up value stocks, those with steady cashflows, high dividend yields and good earnings visibility,'' said Masahiko Ejiri, who helps manage about $30 billion at Mizuho Asset Management Co. in Tokyo. ``I am sure the U.S. knows the gravity of the situation and a plan will be reached to save their financial institutions.''
Currency Movements
U.S. notes fell, paring the biggest monthly rally since January, after Treasury Secretary Henry Paulson said he will work to salvage the rescue plan. The yield on the two-year note rose 8 basis points to 1.74 percent as of 7:10 a.m. in London, according to BGCantor Market Data.
Japanese bonds rose, with 10-year yields reaching a two- week low after government reports today showed household spending fell for the sixth consecutive month and unemployment increased more than estimated in August. The yield on the 1.5 percent bond due September 2018 fell 2.5 basis points to 1.46 percent.
``Equities are a disaster, supporting government bond buying,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co.. ``Flight to quality to the bond market will continue.''
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Haslinda Amin in Singapore at hamin1@bloomberg.net.
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Sept. 30 (Bloomberg) -- Asian stocks dropped, extending the worst global sell-off in 21 years, after the rejection of a $700 billion rescue plan by U.S. lawmakers deepened concern more economies will fall into recession. Japan bonds and the yen rose.
Mitsubishi UFJ Financial Group Inc. and DBS Group Holdings Ltd. led declines in financial shares as money-market rates and corporate bond risk rose. BHP Billiton Ltd. and SK Energy Co. dropped after oil fell more than $10 yesterday, the most in seven years. Regulators in South Korea and Taiwan tightened curbs on short selling to help stem market declines after U.S. stocks tumbled by the most since the 1987 crash.
``There is a massive crisis of confidence,'' said Khiem Do, who helps oversee $9 billion of Asian equities at Baring Asset Management (Asia) Ltd., in an interview with Bloomberg Television. ``There is definitely further downside.''
The MSCI Asia Pacific Index fell 3.4 percent to 107.57 as of 3:28 p.m. in Tokyo, adding to a five-day, 4.9 percent retreat. The measure is set to lose 14 percent this month, the biggest monthly loss since September 1990. Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, slid 2.9 percent.
The yen rose against the euro as investors cut holdings of higher-yielding assets funded in the Japanese currency, trading at 150.06 per euro from 150.38.
The MSCI Asian index has slumped 32 percent this year as credit turmoil caused more than $590 billion in losses and writedowns and the failure of Lehman Brothers Holdings Inc. Citigroup Inc. yesterday agreed to buy the banking operations of Wachovia Corp., a North Carolina lender that collapsed under the weight of overdue mortgages.
Global Rout
Japan's Nikkei 225 Stock Average lost 4.1 percent to 11,259.86, its lowest since December 2004, as the unemployment rate rose to a two-year high in August while industrial production fell at the fastest pace in five years.
Vietnam's VN Index lost 4.7 percent, the most in the region. China's markets are closed this week for holidays.
The Standard & Poor's 500 Index tumbled 8.8 percent yesterday after the U.S. House of Representatives voted down the financial-rescue proposal. The MSCI World Index of 23 developed markets slid 6.9 percent, the biggest loss in 21 years.
``That Congress is reining in the regulators themselves in return for the bailout gives us a glimpse of the post-apocalyptic finance system landscape: highly regulated and very restricted,'' said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur.
South Korea said it will temporarily ban short selling on all stocks, while Taiwan tightened limits on the practice for the remainder of the year. Hong Kong regulators said they will take ``more aggressive'' measures against short selling, in which investors try to profit by betting stock prices will fall.
Banks, Automakers
Mitsubishi UFJ, Japan's largest bank, retreated 4.7 percent to 893 yen. DBS, Southeast Asia's biggest, lost 2.4 percent to S$16.50 in Singapore. Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 17 percent to A$1.95 in Sydney, taking its decline this year to 93 percent, the worst performance on the MSCI Asian index.
Toyota Motor Corp., Japan's largest automaker, fell 4.6 percent to 4,380 yen. Output by the nation's automakers decreased 11 percent in August from a year earlier, the steepest drop since 1998, the Japan Automobile Manufacturers Association said today.
Harvey Norman Holdings Ltd., Australia's biggest furniture and electronics retailer, declined 12 percent to A$3.09 after it said profit for the first two months of the year fell 18 percent.
``People are out there worrying,'' said billionaire Gerry Harvey, chairman of Harvey Norman. ``If the U.S. doesn't turn it around, we are in for a prolonged world recession.''
Default Risks Rise
The cost of protecting Japanese corporate bonds from default increased. The Markit iTraxx Japan Series 10 index rose 17 basis points to 175 basis points at 12:39 p.m. in Tokyo, Morgan Stanley prices show. Credit-default swaps, contracts to protect against or speculate on default, pay the buyer face value if a company fails to adhere to its debt agreements.
Japan's overnight call loan rate rose 10 basis points, or 0.10 percentage point, to 0.5 percent as the Bank of Japan pumped 3 trillion yen ($28.8 billion) into the financial system.
BHP, the world's largest mining company, slipped 9.5 percent to A$31. SK Energy, South Korea's biggest oil refiner, fell 3.3 percent to 89,000 won. Fortescue Metals Group Ltd., an Australian iron-ore producer, slipped 17 percent to A$4.66, down 64 percent from its June 24 peak.
Crude oil slumped 9.8 percent yesterday to $96.37 a barrel in New York, helping send the Reuters/Jefferies CRB Index of 19 commodities to the biggest drop since at least 1956. It recently slid further to $96.14 a barrel today.
Buying Opportunity?
``You're seeing a general flight from commodity players around the world,'' said Sean Fenton, who manages the equivalent of $540 million at Tribeca Investment Partners in Sydney. ``There's a lot of fear and uncertainty in the market.''
Australia's currency dropped as the stocks rout curbed investor appetite for buying the nation's higher-yielding assets. The Australian dollar fell 1.9 percent to 79.93 U.S. cents while New Zealand's dollar slid 0.9 percent to 66.98 cents.
Stock indexes pared earlier declines as S&P 500 futures added 1.3 percent in after-hours trading. South Korea's National Pension Service, the nation's biggest investor with the equivalent of $187 billion in assets, is ``steadily'' buying, said Hong Sung Gi, head of the fund's strategy division.
``It's a good time to pick up value stocks, those with steady cashflows, high dividend yields and good earnings visibility,'' said Masahiko Ejiri, who helps manage about $30 billion at Mizuho Asset Management Co. in Tokyo. ``I am sure the U.S. knows the gravity of the situation and a plan will be reached to save their financial institutions.''
Currency Movements
U.S. notes fell, paring the biggest monthly rally since January, after Treasury Secretary Henry Paulson said he will work to salvage the rescue plan. The yield on the two-year note rose 8 basis points to 1.74 percent as of 7:10 a.m. in London, according to BGCantor Market Data.
Japanese bonds rose, with 10-year yields reaching a two- week low after government reports today showed household spending fell for the sixth consecutive month and unemployment increased more than estimated in August. The yield on the 1.5 percent bond due September 2018 fell 2.5 basis points to 1.46 percent.
``Equities are a disaster, supporting government bond buying,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co.. ``Flight to quality to the bond market will continue.''
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Haslinda Amin in Singapore at hamin1@bloomberg.net.
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