Trichet Says U.S. Must Rescue `Global Finance'

By Andreas Scholz and Gabi Thesing

Oct. 1 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said U.S. lawmakers must pass a $700 billion rescue package for banks to shore up confidence in the global financial system.

``It has to go, for the sake of the U.S. and for the sake of global finance,'' Trichet said in an interview in Frankfurt with Bloomberg Television late yesterday. ``I am confident, but of course it is the decision of the U.S. Congress.''

President George W. Bush and Senate leaders yesterday vowed to revive a plan aimed at buying distressed assets from banks that was rejected by Congress a day earlier. The vote roiled markets already struggling to cope with the collapse of Lehman Brothers Holdings Inc. European governments have helped rescue at least five banks since Sept. 28, with Trichet taking part in talks to save Belgium's Fortis over the weekend.

Trichet said a pan-European approach to the banking crisis was unlikely, saying ``we are not a fully-fledged federation with a federal budget.''

``Each country has to mobilize its own efforts,'' said Trichet. ``But of course there is a European spirit and that is the spirit of the single market.''

Trichet declined to answer questions about ECB monetary policy before tomorrow's interest-rate decision. All 58 economists surveyed by Bloomberg News expect the central bank to keep its benchmark rate at 4.25 percent.

Clear Message

U.S. stocks plunged after lawmakers rejected a proposal that would give the Treasury broad power to buy mortgage-backed securities saddling investors and financial institutions with losses. Banks have recorded $588 billion in writedowns since the start of last year.

``I think the message from the markets yesterday was clear,'' Senate Republican leader Mitch McConnell said on Sept. 30.

Stocks rebounded yesterday on optimism the bill will be passed later this week. The Standard & Poor's 500 Index rose 58.35 points to 1,164.74, recouping more than half of the previous day's 8.8 percent plunge.

European leaders are trying to better coordinate their response to the financial crisis. Luxembourg Finance Minister Jean-Claude Juncker said yesterday he expects to meet with Trichet and French President Nicolas Sarkozy on Oct. 4 to discuss ``a more systematic approach.''

Cash Injections

``What's needed is for us to continue to tell our fellow citizens that we will ensure price stability,'' Trichet said in an interview broadcast yesterday on the France 2 television channel.

Trichet's ECB has so far chosen not to follow the Federal Reserve in slashing interest rates since credit markets seized up 13 months ago, injecting cash into their markets instead, while keeping monetary policy focused on inflation.

The ECB today said it will offer to drain 200 billion euros ($282 billion) from money markets after being swamped with record deposits from banks.

Financial institutions yesterday deposited 102.8 billion euros with the central bank at 3.25 percent overnight. At the same time, banks borrowed 15.9 billion euros at the emergency marginal rate of 5.25 percent.

The ECB today also raised the amount of dollars it is offering banks overnight to $50 billion from yesterday's $30 billion. It allotted the full $50 billion after banks bid for a total of $70.9 billion.

Belgium, the Netherlands and Luxembourg on Sept. 28 agreed to inject 11.2 billion euros ($16 billion) into Fortis, the largest Belgian financial-services company.

Governments and other authorities have also taken steps to protect the U.K.'s Bradford & Bingley Plc, Brussels- and Paris- based Dexia SA, Iceland's Glitnir Bank hf and Germany's Hypo Real Estate Holding AG. Ireland yesterday guaranteed the deposits and borrowings of six lenders.

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.netAndreas Scholz in Frankfurt at agscholz@bloomberg.net;

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European September Manufacturing Contracts, Unemployment Rises

By Ben Sills and Fergal O'Brien

Oct. 1 (Bloomberg) -- European manufacturing contracted more than initially estimated and unemployment rose to the highest in a year as the deepening credit crisis slowed growth.

Markit Economics's manufacturing index dropped to 45 in September from 47.6 in August, lower than the 45.3 published on Sept. 23. Unemployment in the euro region rose to 7.5 percent in August, the highest since April 2007, from a revised 7.4 percent in July, according to a separate report.

The euro-region economy, which contracted in the second quarter for the first time since the introduction of the common currency almost a decade ago, saw confidence slide as the U.S. financial meltdown crossed the Atlantic. Akzo Nobel NV, the chemical company that paid $15.9 billion for Imperial Chemical Industries Plc in 2007, said this week it will cut 3,500 jobs as the global housing slump damps demand for paints.

The manufacturing survey will ``heighten fears that the euro zone is headed for recession,'' said Howard Archer, chief European economist at Global Insight Inc. in London. ``On top of this, employment in the sector contracted for a fourth month,'' adding to the ``increasingly worrying news on euro-zone jobs.''

The manufacturing index, based on a survey of purchasing managers by Markit Economics in London, has been below the 50 mark that indicates contraction for four months. The euro region's services industry is also contracting, while confidence among executives and consumers fell to the lowest since the aftermath of the Sept. 11 terrorist attacks seven years ago.

Cost Cutting

Volvo AB, the world's second-largest truckmaker, plans to eliminate 1,400 jobs at factories in Belgium and Sweden to cope with slowing orders. The Gothenburg, Sweden-based manufacturer yesterday said it will take other cost-cutting measures to cope with declining sales and increased raw-material costs.

The financial crisis that forced Lehman Brothers Holdings Inc. to seek bankruptcy-court protection reached Europe this week with the Belgian government joining rescue plans for Fortis and Dexia SA. Stock markets in Europe and the U.S. slumped this week after the House of Representatives rejected a $700 billion plan to rescue the financial system.

The European Central Bank has resisted calls to support economic growth by lowering interest rates, saying that it is more concerned about inflation. Consumer prices in the bloc rose an annual 3.6 percent in September, from a 3.8 percent pace in August.

The European Union statistics office, which published the unemployment report, also revised the jobless rate for May, June and July to 7.4 percent from 7.3 percent. The rate fell to 7.2 percent earlier this year, the lowest since the euro was introduced in 1999.

`Divergent Movements'

Unemployment in the euro area rose by 90,000 to 11.6 million in August, the statistics office said. It increased in France and Spain, and declined in Germany, Europe's largest economy. National data published yesterday showed the jobless total in Germany fell in September, keeping the rate at the lowest in 16 years.

There are ``divergent movements in the region's main economies,'' said Martin van Vliet, an economist at ING Group in Amsterdam. Still, ``employer hiring intentions have deteriorated sharply in recent months, also in Germany, suggesting that the overall eurozone unemployment rate will rise further in the months ahead.''

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net; Fergal O'Brien in Dublin at fobrien@bloomberg.net.



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U.K. Manufacturing Contracts, Services Growth Stalls

By Brian Swint and Jennifer Ryan

Oct. 1 (Bloomberg) -- U.K. manufacturing contracted at the fastest pace in 16 years and service industries stagnated for the first time since 2002, suggesting the economy may have entered a recession.

The Chartered Institute of Purchasing and Supply's index of manufacturing, based on a survey of factories, fell to 41 in September from 45.3 the previous month, the lowest since the report began in January 1992. Growth in services from hotels to transportation stalled in the three months through July, the Office for National Statistics said today in London.

The global financial crisis forced Prime Minister Gordon Brown's government to seize mortgage lender Bradford & Bingley Plc this week, and prompted the Bank of England to offer emergency funds to money markets today. Economists at BNP Paribas and Morgan Stanley predict the central bank will cut the main interest rate on Oct. 9 for the first time since April.

``The weaker pound has made us more competitive but the demand isn't there, and services are following manufacturing down,'' said Alan Clarke, an economist at BNP Paribas. ``It does seal the case for a rate cut.''

The pound was little changed after the reports, trading at $1.7788 as of 1 p.m. in London. Against the euro, it traded at 79.16 pence.

Emergency Funds

The central bank auctioned $30 billion of one-week emergency funds today and drained 10 billion pounds ($17.8 billion) in pounds to help restore confidence to money markets. The bank has kept the benchmark rate at 5 percent for five months.

Measures for factory output, new orders and employment fell to the lowest since 1992, while an index of new export orders was at the lowest since September 2001, the CIPS report showed. Manufacturing makes up about 14 percent of the economy, compared with three-quarters for services. A reading below 50 in the CIPS index signals contraction.

The government seized Bradford & Bingley and helped to rescue HBOS Plc after the credit crisis led to a loss of investor confidence in both banks.

Lehman Brothers Holdings Inc., the securities firm that filed for bankruptcy two weeks ago, will eliminate 750 jobs in its European fixed-income and personal investment management units after talks to find a buyer failed. Financial firms worldwide have cut 130,000 positions as global credit markets collapsed.

Recession Forecast

Britain entered a recession in July, forecasts by the European Commission and the Confederation of British Industry, the country's biggest business lobby, show. Bank of England Governor Mervyn King said in August that economic output will be ``broadly flat'' for a few quarters.

Policy makers may reduce the benchmark interest rate in November, the median forecast of 52 economists in a Bloomberg survey show.

The bank has refused to cut borrowing costs since April while policy makers battle to control consumer prices. Inflation reached 4.7 percent in August, more than twice the 2 percent target.

Today's CIPS report suggests price pressures at manufacturers may be easing. A measure of input prices fell to 73.7 from 78.1, the biggest decline since 2005, while an index of prices charged to customers declined 1.9 points to 62.6.

Oil prices have dropped by almost a third since reaching a record in July, while the pound has declined 10 percent against the dollar. The pound has fallen 8 percent against the euro, the currency of the 15 countries which make up Britain's biggest trading partner.

``With these data and the recent extraordinary financial market turmoil, it now seems highly likely that the MPC will cut rates at the October meeting next week,'' Michael Saunders, chief western European economist at Citigroup Inc. in London, said in a note today.

To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Jennifer Ryan in London at Jryan13@bloomberg.net



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ADP Says U.S. Companies Decreased Payrolls by 8,000

By Shobhana Chandra

Oct. 1 (Bloomberg) -- Companies in the U.S. cut an estimated 8,000 jobs in September, less than forecast, a private report based on payroll data showed today.

The drop followed a revised 37,000 decrease in August that was larger than previously estimated, ADP Employer Services said.

Growth in overseas orders is preventing large-scale firings at some firms while automakers and housing-related businesses are paring staff. A government report later this week may show the economy lost jobs in September for the ninth consecutive month, according to the median forecast in a Bloomberg News survey.

``There's no question labor-market conditions are tough, but the usual cyclical payroll meltdown has not yet happened,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. ``It will, though, sooner or later.''

The ADP report was forecast to show a decline of 50,000 jobs, after a drop of 33,000 in August, according to the median estimate of 27 economists in a Bloomberg News survey. Projections ranged from decreases of 20,000 to 135,000.

ADP includes only private employment and does not take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

The government's Oct. 3 report may show total payrolls fell by 105,000 last month, and the unemployment rate was unchanged at a five-year high of 6.1 percent, according to the Bloomberg survey median. The economy has lost 605,000 jobs in the first eight months this year.

First Eight Months

The ADP report estimated private payrolls increased by 29,000 in the first eight months of the year, compared with a 758,000 decline according to Labor Department figures.

ADP said today's estimate didn't include the strike by about 37,000 machinists at Boeing Co. and the job losses following Hurricanes Gustav and Ike.

Today's ADP report showed a decrease of 72,000 workers in goods-producing industries including manufacturers and construction companies.

Service providers added 64,000 workers. Employment in construction dropped by 29,000, reflecting the housing slump, and financial firms increased jobs by 4,000.

Companies employing more than 499 workers shrank their workforces by 6,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 30,000 jobs and small companies increased payrolls by 28,000.

The ADP report is based on data from 399,000 businesses with about 24 million workers on payrolls.

More Claims

Labor Department figures released so far for September show 466,000 Americans a week on average filed first-time claims for jobless benefits, up from 443,000 in August and 363,000 in the first six months of 2008. Rising unemployment threatens consumer spending, which accounts for more than two-thirds of the economy.

In September, Chrysler LLC said it would fire about 250 employees as part of a plan to eliminate 1,000 salaried positions by month-end, and UAL Corp.'s United Airlines said 1,550 flight attendants volunteered for leaves, eliminating the need for forced layoffs.

ADP began keeping records in January 2001 and started publishing its numbers in 2006. The company says there is a 90 percent correlation between its revised data and the government's monthly private jobs figures.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net



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Spanish Home Prices Decline for a Third Quarter

By Emma Ross-Thomas

Oct. 1 (Bloomberg) -- Spanish home prices fell for a third quarter the region including Barcelona showing some of the sharpest declines, as the end of a decade-long construction boom edged the economy toward a recession.

The price of used and new homes declined 0.3 percent in the second quarter after falling 0.4 percent in the first, the National Statistics Institute said in the first publication of the indicator. From a year earlier, home prices also slipped 0.3 percent in the quarter, following a 2.8 percent gain in the first three months of the year, the Madrid-based institute said.

Rising interest rates and tighter lending globally made mortgages less accessible and helped push Spanish builders and real-estate companies into bankruptcy. The slowdown is spreading to other parts of the economy and Spain is expected to follow Ireland into a recession this year, according to the European Commission.

The Spanish economy is particularly sensitive to the property market as some 80 percent of households' assets are tied up in real estate and 81 percent of households own their main home, according to Bank of Spain data. Second-hand housing prices fell 4.9 percent in the second quarter from a year earlier, while new-house prices rose 5.3 percent.

``We continue to expect falls of at least 25 percent over three years from peak to trough,'' said Ben May, an economist at Capital Economics in London. He said the increase in new-house prices was at odds with anecdotal evidence and over-supply in the sector and expected that figure to turn negative.

`Much Steeper'

``When those fall, we'll see much steeper quarterly declines,'' he said.

Mortgage lending in Spain, where the housing boom helped the economy outpace the euro region for more than a decade, has declined for 12 straight months, separate data showed on Sept. 26, falling 29 percent in July from a year earlier. Jobless rates, swelled by unemployed construction workers, have risen to the highest in the euro area and consumer confidence has fallen to the lowest since Spain's last recession 15 years ago.

Angel Mas, president of European mortgage insurance at Genworth Financial Inc., also forecast further declines in home prices in the next 12 to 18 months.

``We see a double-digit decline this year,'' he said in an interview with Bloomberg Television in London today.

In the Madrid region, home prices fell 4.8 percent in the second quarter from a year earlier. In Catalonia, the region that includes Barcelona, prices dropped 5.2 percent, INE said. Prices in Madrid rose 0.1 percent and in Catalonia they fell 1.2 percent in the second quarter from the previous three months.

The figures from the statistics institute, which are calculated using European-Union methodology and are based on registered transactions, compare with second-quarter data from the Housing Ministry that showed a 0.1 percent decline in prices in the quarter and a 2.4 percent increase from a year earlier.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net



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China Calls on Rich Nations to Slash Greenhouse Gases

By Mathew Carr

Oct. 1 (Bloomberg) -- China, the world's most populous nation, called on wealthier countries to slash production of greenhouse gases by mid-century and leave developing economies free from the burden of cutting air pollution.

By 2050 industrialized nations should reduce annual emissions 80 percent to 95 percent from 1990's level, the Chinese government urged in a statement on the Web site of a United Nations agency that oversees global climate treaties. In a preliminary step to tackle global-warming gases, the proposal seeks cuts of 25 percent to 40 percent by 2020.

China, whose economy expanded 11.9 percent in 2007 and is the fourth-largest, wants slower-growing rich nations such as the U.S., Britain and Japan to set targets because their industries and vehicles have caused most of the historic build- up of gases that warm the planet. Carbon dioxide, the main man- made greenhouse gas, lasts a century or more, scientists say.

``Only with such a mid-term target being clearly determined is it meaningful to talk about any long-term goals for emission reductions,'' China said in its submission to the UN Framework Convention on Climate Change, based in Bonn.

About 180 nations are locked in a series of eight negotiations to form a climate-protection agreement under supervision by the UN climate agency. They have set a deadline of the end of 2009 to devise a successor to the Kyoto climate- protection treaty, which is set to expire in 2012.

No `Twisting'

China warned rich nations not to ``twist'' the mission to suit their own needs and left the door open for further agreements. Any accord reached at the last negotiations, planned for Copenhagen at the end of next year, ``shall not be a final result,'' China said.

Europe, the U.S. and other industrialized countries should contribute 0.5 percent to 1 percent of their national output to help developing countries cope with global warming and reduce their output of greenhouse gases, China said, repeating a proposal presented at a UN-sponsored climate meeting in Accra, Ghana, in August.

World carbon-dioxide emissions from energy use rose 2.8 percent last year as coal consumption outpaced crude oil and clean-burning natural gas, BP Plc data shows.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net



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Europe G-8 Leaders to Meet Oct. 4 to Discuss Turmoil

By Stephanie Bodoni

Oct. 1 (Bloomberg) -- European representatives to the Group of Eight will meet this weekend in Paris to discuss the financial-market turmoil, Luxembourg Finance Minister Jean- Claude Juncker's office said.

Germany, the U.K., France and Italy will meet Oct. 4 in the French capital with European Central Bank President Jean-Claude Trichet and Juncker, who heads the group of euro-area finance chiefs, Juncker spokeswoman Carole Ensch told Bloomberg News in Luxembourg today.

A pan-European approach to the banking crisis is unlikely, Trichet told Bloomberg Television in an interview late yesterday. The goal is to develop ``a more systemic approach'' to handling the financial crisis, according to Juncker. The European Union today proposed a regulatory overhaul that will force banks to hold more capital for asset-backed bonds.

The measures advanced today by Charlie McCreevy, the EU's financial-services commissioner, would tighten the oversight of lenders and curb practices, such as selling questionable loans to investors, that led to a global credit crunch and record bank losses.

Europe's central banks so far have chosen not to follow the U.S. Federal Reserve in slashing interest rates since the credit squeeze began 13 months ago, injecting cash into their markets instead, while keeping monetary policy focused on inflation. Authorities in Europe took action to rescue four banks this week and Ireland yesterday said it would guarantee bank deposits and debt for two years.

Juncker, who also serve's as his country's prime minister, said yesterday that the outcome of the Oct. 4 meeting is ``difficult'' to predict. Still, the EU and the euro-area nations have ``to take a leading role,'' he said.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net



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Exxon Mobil, Total, Sasol Fined by EU for Wax Cartel

By Matthew Newman

Oct. 1 (Bloomberg) -- Exxon Mobil Corp.,Total SA, Eni SpA and six competitors were fined 676 million euros ($957 million) by European Union regulators over claims they participated in a cartel that fixed the price of paraffin wax used in candles, paper cups and plates.

Sasol Ltd., South Africa's biggest fuel supplier, was fined 318 million euros, the highest penalty levied on the nine wax producers by the European Commission in Brussels. Total, Europe's third-largest oil company, was fined 128 million euros.

``There is probably not a household or company in Europe that has not bought products affected by this `paraffin mafia' cartel,'' said EU Competition Commissioner Neelie Kroes in a statement. ``Such illegal cartel behavior cannot and will not be tolerated.''

Kroes has made fighting cartels one of her main priorities since her five-year term began in 2004. The penalties are the fifth this year and the fourth highest against a single cartel. The biggest price-fixing fine was 992.3 million euros in 2007 against five elevator makers.

Irving, Texas-based Exxon Mobil, the world's biggest oil company, was fined 83.6 million euros and Repsol YPF SA, Spain's largest oil company, received a 19.8 million-euro penalty.

Johannesburg-based Sasol said it would likely appeal the ruling and that it is liable with two units to pay 250 million euros.

Closed Total Unit

``Sasol is surprised by and does not understand the reasons for the magnitude of this fine and will be studying the reasons for the finding,'' the company said in a statement.

Total's fine was for acts allegedly committed between 1992 and 2005, the year the company closed down its paraffin wax operations, Total spokeswoman Elisabeth de Reals said. The company will wait to receive the reasons for the fine before deciding on an appeal.

Exxon Mobil said in a statement that it ``deeply regrets its involvement'' in the cartel and the conduct was limited to the participation of a few of the company's former employees.

Kroes said the fines are high because the conspiracy lasted 13 years and the market for paraffin wax, which is used in a wide variety of industries from car tires to chewing gum, is worth 500 million euros a year.

Shell Cooperation

Royal Dutch Shell Plc, Europe's largest oil company, avoided a 96 million-euro fine because it was the first company to cooperate with inspectors, Kroes said.

The cartel ran from 1992 to 2005. Conspirators first met at the Blauer Salon or Blue Saloon in Hamburg, Germany. Shell referred to the price-fixing as the ``paraffin mafia'' in internal documents, Kroes said.

Other meetings were held in ``top hotels'' in Milan, Vienna, Budapest, Paris, Munich and Strasbourg, France, she said.

Sasol's penalty was increased by 50 percent because it was the cartel's leader. The fine for ENI was increased by 60 percent to 29.1 million euros because it previously took part in cartels, according to the commission.

Sasol said that as a result of its ``cooperation and support'' of the EU cartel investigations, the commission reduced the base amount of the fine by 50 percent.

Sasol's wax unit generated 629 million rand ($76.2 million) of the company's 25.6 billion rand operating profit in the 2007 fiscal year, it said in its annual report.

The fine is a ``negative, these things are always horrible to deal with,'' Paul Theron, a fund manager at Vestact in Johannesburg, said in an interview today.

In addition, H&R Wasag AG and its Tudapetrol unit were fined a total of 36 million euros; Mol Nyrt., Hungary's largest oil producer, was fined 23.7 million euros and RWE AG, Germany's second-largest utility, was penalized 37.4 million euros.

Salzbergen-based H&R Wasag said in a statement said it will challenge the levy. An Eni official had no immediate comment.

To contact the reporter on this story: Matthew Newman in Brussels at Mnewman6@bloomberg.net.



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Sibir's Tchigirinski Plans Projects With Shell, Rules Out Sale

By Eduard Gismatullin and Torrey Clark

Oct. 1 (Bloomberg) -- Chalva Tchigirinski, the Russian oil and construction billionaire, said his exploration company Sibir Energy Plc may expand projects with Royal Dutch Shell Plc.

Tchigirinski denied a Financial Times report today that said Shell poised to buy a holding in Sibir this year. ``We aren't selling a stake,'' the businessman said by phone.

Sibir may offer Shell an expanded partnership in the exploration of the Koltogorsky fields in western Siberia or fuel retail network expansion, he said.

``We have various talks with various companies on various issues,'' Tchigirinski said by phone today, declining to name the companies.

Shell, Europe's largest oil company, and Sibir each hold 50 percent in the Salym Petroleum Development joint venture in western Siberia. Tchigirinski together with partner Igor Kesaev owns 47 percent of Sibir, which relies on Salym for most of its oil extraction.

``We talk to Shell all the time, they're our partner in Salym and we have offices in the same building,'' Stuard Detmer, a board member at Sibir, said today by phone. ``It's not the case that a deal is imminent.''

Kirsten Smart, Adam Newton and Olga Gorodilina, London- based spokespeople at Shell, weren't immediately available for a comment. Christie Tang, from Shell's The Hague office, declined to comment.

To contact the reporter on this story: Eduard Gismatullin in London and Torrey Clark in Moscow at +44- egismatullin@bloomberg.net



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GE Boosts Capacity to Construct More Wind Turbines

By Nicholas Comfort

Oct. 1 (Bloomberg) -- General Electric Co., the world's biggest maker of power generation equipment, is adding capacity to build wind turbines as demand for alternative energy rises even as the global economy weakens.

Wind energy is in a ``build-out phase'' as governments across the globe seek to cut carbon dioxide emissions, Victor Abate, who runs the renewable-power units of GE Energy, said by phone today. He spoke from Salzbergen, Germany, where the company has begun manufacturing a new, larger class of wind turbine.

European countries including Germany currently reward CO2- free electricity generation and charge power plants that emit the gas blamed for global warming. German Foreign Minister Frank-Walter Steinmeier said yesterday in Berlin that resolving turmoil on financial markets may take precedence over initiatives to curb carbon-dioxide emissions.

``Regardless of short-term swings in the economic climate, the need for climate-friendly energy is expanding,'' Abate said in an interview. ``Wind is becoming mainstream, a real piece of the mix,'' of energy generation sources.

The 2.5xl model turbines built at the Salzbergen plant are targeting the European market, as they make use of limited space by generating more power per unit than older models, Mete Maltepe, GE Energy's Global Wind Sales leader, said on the same call.

Turbine Orders

The company will spend over $100 million adding capacity at the German factory it took over when it bought its wind unit from Enron Corp. in 2002, Maltepe said. GE has received turbine orders totalling over 1 gigawatt of capacity for the model built in Salzbergen, he added.

That site will be the ``workhorse'' for the continent, supplying turbines to developers in countries stretching from Turkey to Belgium, Maltepe said. About 85 percent of projects planned for Europe will be able to buy the wind mills they need from GE, he added.

The company has won a contract to supply 12 of the 2.5xl model turbines it will now build in Germany to an Italian wind farm that is scheduled to begin operations by June next year, according to an e-mailed statement.

A manufacturing base closer to its European clients will help the Fairfield, Connecticut-based company save on transport costs, Abate said. About 20 percent of the cost of building a turbine is linked to where it's built, he said, declining to say how much GE stands to save.

Production levels at the German plant will be ``ramped up'' during the next two years, he said.

GE has a total of seven wind turbine factories across the globe, including countries such as Spain and China, Abate said.

To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net



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Vestas Climbs as Two Banks Raise Stock Recommendation

By Christian Wienberg

Oct. 1 (Bloomberg) -- Vestas Wind Systems A/S, the world's biggest wind-turbine maker, jumped the most in eight days in Copenhagen trading after two banks raised their recommendation on the shares.

Vestas rose as much as 11 percent, the biggest intraday gain since Sept. 19, and was up 36 kroner at 487 kroner as of 11:06 a.m. local time. The stock was the biggest gainer on Denmark's benchmark index today, and the advance valued the company at 90 billion kroner ($17 billion).

Piper Jaffray & Co. increased its recommendation on the stock to ``buy'' from ``neutral,'' while Societe Generale SA lifted its rating to ``hold'' from ``sell.''


``The price environment and market conditions for wind turbines have improved substantially,'' London-based Piper analyst Torben Sommer said in a note to investors today. The upgrade is ``due to the company's low valuation, strong balance sheet and excellent earnings visibility.''

Separately, Vestas said it will move its headquarters to Aarhus, Denmark's second-largest city, from Randers, to attract more skilled foreign workers.

Vestas also today said it won an order to deliver 51 turbines to Italy with a total production capacity of 102 megawatts.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net


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Canada's Dollar Rallies From One-Week Low on U.S. Weakness

By Chris Fournier

Oct. 1 (Bloomberg) -- Canada's currency strengthened for the first time in three days, rising from the lowest in more than a week, after the U.S. dollar fell against most major currencies.

The Canadian dollar climbed as much as 0.9 percent to C$1.0547 per U.S. dollar, from C$1.0644 yesterday. It traded at C$1.0591 at 8:10 a.m. in Toronto. Yesterday it touched C$1.0664, the weakest since Sept. 19. One Canadian dollar buys 94.41 U.S. cents.

Canada's currency is ``following the flow within the overall trend to sell U.S. dollars,'' said Jack Spitz, a managing director of foreign exchange at National Bank of Canada in Toronto.

The loonie, as Canada's currency is known because of the aquatic bird on the one-dollar coin, will slip to C$1.13 against the U.S. dollar by the end of 2009, according to the median forecast in a Bloomberg News survey of economists.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net



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Dollar Rises Against Euro on Demand for U.S. Currency Funding

By Ye Xie

Oct. 1 (Bloomberg) -- The dollar rose against the euro for a third day as demand for funding in the U.S. currency increased, reflecting banks' reluctance to lend to each other amid a global credit crunch.

``Markets need dollars,'' said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York. ``They need funding, and they buy dollars in the spot market.''

The dollar advanced 0.4 percent to $1.4035 per euro at 8:32 a.m. in New York, from $1.4092 yesterday. The dollar traded at 106.28 yen, compared with 106.11. The euro dropped 0.3 percent to 149.11 yen, from 149.56.

Foreign banks are paying near the highest premiums in at least a decade to borrow in dollars in the swaps market even after the Fed this week increased the amount of funds available to other central banks to $620 billion from $330 billion. The price on one-year cross-currency basis swaps between yen and dollars reached minus 70 basis points, the biggest effective premium for dollar funding since Bloomberg began tracking the data in 1997.

The London interbank offered rate, or Libor, that banks charge each other for overnight loans slid 308 basis points today to 3.79 percent, the British Bankers' Association said. It surged to 6.88 percent yesterday. The one-month euro rate climbed to an all-time high of 5.07 percent, and three-month dollar loans rose to the highest level since January. The Libor- OIS spread, a gauge of cash scarcity, held near a record.

To contact the report on this story: Ye Xie in New York at yxie6@bloomberg.net



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Australia May Harvest 14% Less Wheat Than Forecast

By Madelene Pearson

Oct. 1 (Bloomberg) -- Australia, the world's sixth-largest wheat exporter, may produce 14 percent less of the grain this harvest than previously forecast after dry weather in recent months, National Australia Bank Ltd. said.

Output may be 20.8 million metric tons, Frank Drum, the bank's agribusiness economist, said in an e-mailed report. That compares with National Australia's June forecast of 24.3 million tons and last year's 13 million ton crop.

``We really haven't received the spring rainfall a lot of the country required,'' Drum said by phone. ``Whilst it is a significant improvement on last year, some producers are looking at another year of well below-average wheat production.''

The cut comes after Rabobank Group, JPMorgan Chase & Co. and the Australian Bureau of Agricultural and Resource Economics trimmed production estimates because of below-average rain September. Output could still be lower, Drum said.

``Rainfall over the next couple of weeks is going to help crops in places like South Australia, Victoria, and New South Wales, but it's probably too late to have any significant upside effect on yields,'' Drum said from Melbourne. ``If we don't get the rainfall, there is that potential that it could be lower'' than his current forecast, he said.

Wheat for December delivery dropped 0.1 percent to $6.795 a bushel on the Chicago Board of Trade in after-hours electronic trading at 11:13 a.m. in Sydney. Prices have halved since reaching a record $13.495 a bushel in February.

Canola production may be 1.3 million tons, while output of barley may be 7.4 million tons, National Australia Bank said. Australia produced 1.1 million tons of canola and 5.9 million tons of barley last harvest.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net



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Copper Erases Gain Before U.S. Manufacturing Report; Lead Drops

By Claudia Carpenter

Oct. 1 (Bloomberg) -- Copper erased gains in London before the release of U.S. economic reports that may add to signs of slumping growth from manufacturers that use the metal in wires and pipes. Lead also dropped.

U.S. manufacturing probably shrank at a faster pace in September and construction spending in August probably declined, economists said before the reports today. U.K. manufacturing contracted at the fastest pace in 16 years and European manufacturing contracted more than initially estimated.

``The data is still confirming recession fears,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. ``In a normal situation, copper will do badly in a recession because it's an industrial metal.''

Copper for delivery in three months fell $25, or 0.4 percent, to $6,335 a ton as of 1:42 p.m. on the London Metal Exchange. Futures for delivery in December dropped 2.55 cents, or 0.9 percent, to $2.8535 a pound on the Comex division of the New York Mercantile Exchange.

Prices had gained on speculation a strike at Xstrata Plc, the world's fourth-largest producer, will curb output. The U.S. Senate also set a vote for tonight on a $700 billion financial rescue plan. According to Weinberg, ``everybody is asking will the U.S. financial package help the real economy?''

Markit Economics's European manufacturing index dropped to 45 in September from 47.6 in August. In the U.K., the Chartered Institute of Purchasing and Supply's index of manufacturing retreated to 41 in September from 45.3 the previous month.

Xstrata Strike

Ontario workers began a strike at Xstrata's Kidd Creek on issues, including benefits. The plant produced 163,130 metric tons of copper concentrate last year.

Kidd Creek ``is a reasonably significant operation,'' said Dan Smith, an analyst at Standard Chartered Plc in London. ``A lot of markets have been really hammered in the last month and the fundamentals have not deteriorated that much.''

Prices last month fell 15 percent, the most since June 1996.

``It's difficult to be bullish but nevertheless the worst might be over for the time being,'' said Smith. ``We're working with the assumption that the financial bailout in the U.S. goes through and therefore there will be more confidence.''

Aluminum rose $2 to $2,427 a ton, lead dropped $5 to $1,825 a ton, nickel jumped $500 to $16,350 a ton and zinc rose $14.75 to $1,694.75 a ton. Tin for delivery in three months advanced $475 to $17,675 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net



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Pound Pares Drop Against Euro, Declines Versus U.S. Dollar

By Agnes Lovasz

Oct. 1 (Bloomberg) -- The pound pared its drop against the euro and fell versus the dollar.

The U.K. currency was at 79.20 pence per euro as of 1:05 p.m. in London, from 79.13 pence yesterday, after dropping to as low as 79.53 pence. It was at $1.7781, from $1.7805 yesterday.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net



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Gold Gains in London as Weaker Dollar Spurs Demand for Safety

By Marianne Stigset

Oct. 1 (Bloomberg) -- Gold rose in London as a weakening dollar and speculation of a deepening global financial crisis increased the metal's allure as an alternative asset.

The dollar fell from close to a two-week high against the euro on speculation the U.S. economy will enter a recession regardless of whether Congress approves the Bush administration's $700 billion bank-bailout proposals. Gold has a correlation of 0.67 to the euro-dollar exchange rate this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep.

``You wouldn't want to give up gold if you had it,'' said Mario Innecco, a futures broker at MF Global Ltd. in London. ``Things are not well.''

Gold for immediate delivery climbed $5.55, or almost 0.6 percent, to $876.50 an ounce as of 12:28 p.m. in London. Futures for December gained 80 cents, or 0.1 percent, to $881.60 in electronic trading on the Comex division of the New York Mercantile Exchange.

``Gold is an indication of how things are going and central banks are trying to put some ice on the thermometer,'' keeping gold prices down, Innecco said. ``Eventually it will burst out and go up to $1,000 an ounce quite easily.''

Gold fell to $876 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $884.5 at the previous afternoon fixing.

Senate leaders vowed yesterday to revive a bill to buy distressed assets from banks. The legislation was rejected two days ago by the House of Representatives.

Global financial institutions have posted $590 billion of losses and writedowns since the start of last year following the collapse of the U.S. subprime-mortgage market. The losses led to a credit squeeze that caused banks including Lehman Brothers Holdings Inc. and Washington Mutual Inc. to fail last month.

Not Enough

Gold refineries can't make enough bars to keep up with demand from investors, the Financial Times reported today, citing Jeremy Charles, chairman of the London Bullion Market Association.

The situation is unprecedented in Charles's 33-year career, the newspaper reported him as saying. Some investors are paying $25 an ounce above the spot price to get bars, the FT cited an unidentified banker at an LBMA meeting in Japan as saying.

``To buy gold now you would have to pay a lot more than the price you see on your screen,'' Innecco said. ``More and more people are buying gold coins and bars.''

Interbank Rates

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, advanced almost 3.1 tons to a record 755.3 tons yesterday, according to figures on the company's Web site. That would rank the fund eighth worldwide when compared with central bank holdings, according to data from the World Gold Council.

``With interbank rates continuing to rise to new record levels, systemic risk remains elevated which will support gold,'' brokerage Gold and Silver Investments Ltd. in Dublin said in a report today.

Banks are being squeezed because of a surge in borrowing costs as lenders hoard cash on concern more financial institutions will fail. The euro interbank offered rate, or Euribor, for one-month loans rose to a record 5.09 percent today. The London interbank offered rate, or Libor, for overnight dollar loans climbed to an all-time high of 6.88 percent yesterday.

Platinum for immediate delivery gained $17, or 1.7 percent, to $1,028 an ounce in London, rebounding from yesterday's 2 1/2- year low.

``Platinum was hammered yesterday,'' Manqoba Madinane, a commodity analyst at Standard Bank Group Ltd. in Johannesburg, said in a report. ``With bargain hunters roaming, technical signals should dominate today and we expect some gains.''

Among other metals for immediate delivery, silver rose 30 cents, or 2.5 percent, to $12.33 an ounce and palladium climbed $5.5, or 2.8 percent, to $205 an ounce.

Platinum rose to $1,040 an ounce in the morning fixing in London from $1,004 at the previous afternoon fixing. Palladium gained to $207 an ounce, from $199.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net



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China Calls on Rich Nations to Slash Greenhouse Gases

By Mathew Carr

Oct. 1 (Bloomberg) -- China, the world's most populous nation, called on wealthier countries to slash production of greenhouse gases by mid-century and leave developing economies free from the burden of cutting air pollution.

By 2050 industrialized nations should reduce annual emissions 80 percent to 95 percent from 1990's level, the Chinese government urged in a statement on the Web site of a United Nations agency that oversees global climate treaties. In a preliminary step to tackle global-warming gases, the proposal seeks cuts of 25 percent to 40 percent by 2020.

China, whose economy expanded 11.9 percent in 2007 and is the fourth-largest, wants slower-growing rich nations such as the U.S., Britain and Japan to set targets because their industries and vehicles have caused most of the historic build- up of gases that warm the planet. Carbon dioxide, the main man- made greenhouse gas, lasts a century or more, scientists say.

``Only with such a mid-term target being clearly determined is it meaningful to talk about any long-term goals for emission reductions,'' China said in its submission to the UN Framework Convention on Climate Change, based in Bonn.

About 180 nations are locked in a series of eight negotiations to form a climate-protection agreement under supervision by the UN climate agency. They have set a deadline of the end of 2009 to devise a successor to the Kyoto climate- protection treaty, which is set to expire in 2012.

No `Twisting'

China warned rich nations not to ``twist'' the mission to suit their own needs and left the door open for further agreements. Any accord reached at the last negotiations, planned for Copenhagen at the end of next year, ``shall not be a final result,'' China said.

Europe, the U.S. and other industrialized countries should contribute 0.5 percent to 1 percent of their national output to help developing countries cope with global warming and reduce their output of greenhouse gases, China said, repeating a proposal presented at a UN-sponsored climate meeting in Accra, Ghana, in August.

World carbon-dioxide emissions from energy use rose 2.8 percent last year as coal consumption outpaced crude oil and clean-burning natural gas, BP Plc data shows.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net



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Rautaruukki Jumps Most in 16 Years on Profit Target

By James Ludden and Mark Herlihy

Oct. 1 (Bloomberg) -- Rautaruukki Oyj, Finland's biggest producer of carbon steel, jumped the most in 16 years in Helsinki trading after raising its profit margin target through increased sales and cost cuts.

The shares jumped as much as 2.48 euros, or 18 percent, to 16.40 euros ($23.16), and traded at 15.18 euros at 12:11 p.m. local time. That's the biggest intraday gain since Sept. 8, 1992.

Rautaruukki raised its goal for earnings before interest and tax as a proportion of revenue to 15 percent from 12 percent, the Helsinki-based company said in a statement to the country's stock exchange today. Annual cost savings of 130 million euros are expected by the end of 2008 through ``more efficient sourcing and production'' and selling non-core units.

The company, which said July 30 that second-quarter profit declined 5.4 percent to 123 million euros, is cutting costs and selling units in a bid to bolster profit as prices for commodities and power soar. Charges for raw materials such as iron ore and coking coal will add 200 million euros to production costs in 2008, the company said July 30.

``Continued growth'' is expected from the company's main market areas, in particular in Eastern Europe, Rautaruukki said in the statement. The effect of uncertainty in the global economy is ``likely to be less'' in the Nordic region and in Russia and Ukraine, the company said.

To contact the reporter for this story: James Ludden in London at jludden@bloomberg.netMark Herlihy in London at mherlihy1@bloomberg.net.



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Oil Falls Below $100 on Speculation Recession May Curb Demand

By Alexander Kwiatkowski

Oct. 1 (Bloomberg) -- Crude oil fell below $100 on speculation the U.S. economy will fall into recession, curbing fuel demand in the world's biggest gasoline consumer.

Crude fell on concern that credit-related bank failures in the U.S. and Europe will trigger a global recession. An Energy Department report later today will probably show U.S. crude inventories rose, the first increase in six weeks.

``With economic growth faltering in a number of countries, we have to assume that energy demand will be adversely impacted,'' said Edward Meir, analyst at MF Global Ltd. in Connecticut. ``Oil prices should be below last year's levels of $80 a barrel as the current picture looks far worse than it did at this time last year.''

Crude oil for November delivery dropped as much as $1.78, or 1.8 percent, to $98.86 on the New York Mercantile Exchange. It traded at $99.20 at 1:43 p.m. London time. It earlier gained as much as 2.2 percent to $102.84.

Futures fell 28 percent in the third quarter, the largest drop since 1991. Oil slumped $10.52, or 9.8 percent, to $96.37 a barrel, on Sept. 29, the most in percentage terms since Nov. 15, 2001, as the Standard & Poor's index of 500 stocks tumbled the most since the 1987 crash.

A week earlier, prices jumped a record 16 percent. Such swings have increased volatility to its highest since the first Gulf War in 1991.

Crude inventories are expected to rise 2.75 million barrels from 290.1 million barrels a week earlier, according to the median of 13 analyst estimates before an Energy Department report today.

Brent crude oil for November settlement fell as much as $1.84, or 1.8 percent, to $96.36 a barrel on London's ICE Futures Europe exchange. It was at $96.55 at 1:26 p.m. London time.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net



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Asian Stocks Snap Six-Day Loss on Bank Rescue Bill Speculation

By Patrick Rial and Shani Raja

Oct. 1 (Bloomberg) -- Asian stocks climbed, snapping a six- day losing streak, on speculation the U.S. Senate will approve a $700 billion bank-rescue plan to revive credit markets and support the global economy.

Westpac Banking Corp., Australia's third-largest bank, rallied 8.2 percent as lawmakers reconsidered opposition to the package that prompted the largest drop in U.S. shares for 21 years. Rio Tinto Group surged 12 percent after Australian regulators said they won't oppose BHP Billiton Ltd.'s takeover. Daikin Industries Ltd. dropped as Japan's manufacturers turned pessimistic on the economy for the first time in five years.

``The very expectation U.S. politicians might do something is proving positive for markets,'' said Troy Angus, who helps manage $3.1 billion at Paradise Investment Management in Sydney. ``The financial crisis might abate, but we still have the impact on the real economy to work its way through worldwide.''

The MSCI Asia Pacific Index climbed 1.8 percent to 108.91 as of 8:33 p.m. in Tokyo, with financial shares accounting for 38 percent of the advance. The gauge lost 8.6 percent in the previous six days as the failures of Washington Mutual Inc. and Bradford & Bingley Plc, record-high bank borrowing costs, and the rejection of the rescue plan rattled investor confidence.

Japan's Nikkei 225 Stock Average gained 1 percent to 11,368.26. Most markets in Asia rose. China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays.

Samsung Electronics Co. led a 0.6 percent drop in South Korea's Kospi index after Macquarie Group Ltd. said semiconductor profit margins will decline. Mitsui O.S.K. Lines Ltd. led shipping stocks lower as the Baltic Dry Index, a measure of costs to transport commodities, completed its worst month on record.

Bailout `Catalyst'

U.S. stocks jumped the most in six years yesterday on renewed confidence a bailout will be passed this week. The Standard & Poor's 500 Index surged 5.3 percent, a day after posting an 8.8 percent decline. Futures on the S&P 500 declined 0.9 percent today.

The Sept. 29 slump wiped off $1.2 trillion in market value from American equities and sent lawmakers scrambling to revive the rescue plan in order to prevent a meltdown in financial markets. Senate Democrats and Republicans agreed to vote on the bailout later today.

``The erosion of a trillion dollars of shareholder wealth may be the catalyst required to get voters to pressure their leaders to approve a financial rescue package,'' Patrick Mohr, an equity strategist at Nikko Citigroup Ltd. in Tokyo, wrote in a report. ``If the `pass the bill' chorus from voters becomes loud enough there should be no problem with passage.''

Westpac, Commonwealth

The deepening credit crisis helped drag the MSCI Asia Pacific down by 15 percent last month, the most since 1990 when Japan's asset bubble burst.

Westpac gained 8.2 percent to A$23.25. Nomura Holdings Inc., Japan's largest brokerage, jumped 6 percent to 1,405 yen. Commonwealth Bank of Australia, the nation's biggest lender, added 5.3 percent to A$44.86.

Rio Tinto, the world's third-largest mining company, surged 12 percent to A$95. BHP's hostile $101 billion bid for Rio isn't likely to ``substantially lessen competition,'' the Australian Competition and Consumer Commission said. BHP, Rio's largest rival, gained 5.7 percent to A$32.75.

Higher oil prices also helped boost BHP, Australia's No. 1 producer. Crude oil for November delivery rose 4.4 percent to $100.64 a barrel in New York, rebounding from its biggest drop in seven years. The contract recently traded at $100.48.

Mitsubishi Corp., Japan's largest trading company, and which generates more than half of its profit from commodities dealing, climbed 3.9 percent to 2,240 yen.

Baltic Dry

Daikin, the biggest Japanese maker of air conditioners, dropped 3.2 percent to 3,360 yen. Sumitomo Electric Industries Ltd., Japan's largest maker of wires and cables, slumped 2.6 percent to 1,104 yen.

The Bank of Japan's Tankan index of confidence among large manufacturers, the nation's most closely watched economic release, dropped below 0 for the first time since 2003, indicating pessimists outnumber optimists. Companies surveyed indicated they are scaling back capital spending plans as the global economy moves toward recession.

Samsung Electronics dropped 1.1 percent to 533,000 won. Semiconductor profit margins for Asia's biggest maker of computer chips will turn negative in the fourth quarter, according to Macquarie.

Mitsui O.S.K., Japan's second-biggest bulk shipper, slid 4.1 percent to 848 yen. Kawasaki Kisen Kaisha Ltd., the third largest, dropped 4.4 percent to 604 yen. Hyundai Heavy Industries Co., the world's biggest shipbuilder, slumped 3 percent to 261,000 won.

The Baltic Dry Index lost 8.2 percent yesterday, bringing its slide for September to a record 53 percent.

Sumitomo Chemical Co. slumped 6.8 percent to 424, the lowest close since February 2004. The Japanese producer of petrochemicals and pharmaceuticals slashed its full-year net income forecast yesterday by 73 percent due to higher costs.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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Stocks Gain in Europe, Asia, Led by ING; U.S. Futures Decline

By Adria Cimino

Oct. 1 (Bloomberg) -- Stocks in Europe and Asia rose as investors speculated lawmakers will push through a $700 billion plan to rescue American banks. U.S. stock-index futures fell.

ING Groep NV, the biggest Dutch financial-services firm, climbed 3.2 percent and Westpac Banking Corp. rallied 8.2 percent in Australia after the Senate set a vote for tonight on the bailout plan. Anglo American Plc gained 3.4 percent as copper advanced for the first time in four days in London.

The MSCI World Index added 0.6 percent to 1,189.43 at 1:20 p.m. in London. Europe's Dow Jones Stoxx 600 Index rose 0.7 percent, and the MSCI Asia Pacific Index increased 1.7 percent. Futures on the Standard & Poor's 500 Index lost 1 percent before a report that may show manufacturing contracted at a faster pace in September.

``It's certainly good if the package comes through,'' said Bernhard Maeder, who oversees the $793 million Credit Suisse Equity Fund at Credit Suisse Asset Management in Zurich. ``We have to instill trust. My scenario is policy will work, trust will come back and yes we do have upside.''

A decline by automakers limited gains in Europe. Porsche SE fell 8.7 percent after saying turbulence in global financial markets made it ``difficult'' to predict earnings for 2009. Daimler AG slipped 7 percent.

Stocks extended their advance after companies in the U.S. cut fewer jobs in September than economists predicted, a private report based on payroll data showed today.

The U.S. Senate tied a revived plan to an increase in bank- deposit-insurance limits and tax breaks to win support from Republicans.

Japanese and Australian money-market rates fell as central banks pumped $15 billion into the system and U.S. lawmakers worked on the plan.

Treasuries, Dollar

Treasuries advanced and the dollar fell from near a two- week high against the euro. The U.S. currency was little changed versus the yen.

China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays today.

National benchmark indexes gained in 15 of the 18 western European markets. The U.K.'s FTSE 100 added 1.7 percent as Barclays Plc and BHP Billiton Ltd. jumped. Germany's DAX fell 0.1 percent and France's CAC 40 advanced 0.6 percent.

U.S. stocks jumped the most in six years yesterday after President George W. Bush urged passage of the plan designed to rid financial institutions of bad loans. More than $1 trillion in market value was erased on Sept. 29 in the worst day for the Standard & Poor's 500 Index since the ``Black Monday'' crash of 1987 after the House of Representatives rejected the plan.

Domino Effect

Europe's Stoxx 600 fell 11 percent in September, the worst monthly slump since January, after 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.

``We're optimistic the government plan will be adopted by the end of the week,'' said Francois Savary, a strategist at Reyl & Cie in Geneva. ``We have to stop these successive bankruptcies. The plan will be able to stop this domino effect.''

ING gained 3.2 percent to 15.41 euros. Barclays, the third- biggest U.K. bank, jumped 5.6 percent to 344.75 pence.

Westpac, Australia's third-largest bank, gained 8.2 percent to A$23.25. Nomura Holdings Inc., Japan's largest brokerage, jumped 6 percent to 1,405 yen.

Anglo American, the world's fourth-largest diversified metal company, climbed 4.4 percent to 1,937 pence. Kazakhmys Plc, Kazakhstan's biggest copper producer, rallied 5.6 percent to 604 pence. Copper rebounded from more than a one-year low in London. Nickel, lead and tin also advanced.

Xstrata, Lonmin

Xstrata Plc gained 7.6 percent to 1,846 pence. The world's fourth-largest copper producer said it does not intend to make a takeover offer for Lonmin Plc because of ``extreme volatility and uncertainty in the financial markets.''

Lonmin plunged 17 percent to 1,889 pence.

BHP Billiton rose 3.1 percent 1,298 pence after Australia's competition regulator approved its hostile $101 billion bid for rival Rio Tinto, boosting speculation that the world's largest mining takeover may succeed. Rio gained 5.6 percent to 3,666 pence.

Porsche sank 8.7 percent to 69.19 euros. The maker of the 911 sports car said turbulence in global financial markets makes predicting earnings for 2009 ``difficult.'' The company reported revenue in the 12 months through July 31 of 7.46 billion euros, without giving a year-earlier figure.

Daimler lost 7 percent to 32.94 euros. The world's second- largest luxury car maker said markets have become more difficult since it lowered the earnings outlook in July.

Peugeot, Fortis

PSA Peugeot Citroen slid 3.1 percent to 25.56 euros. Europe's second-largest carmaker declined to reiterate its 5 percent growth target for full-year vehicle sales. Peugeot brand chief Jean-Philippe Collin refused to discuss the delivery- increase goal at an investor conference in Paris.

The Stoxx 600 Automobiles & Parts Index sank 5 percent, its biggest drop since February and the biggest drag on the broader, pan-European index.

Fortis, the bank rescued by Belgium, the Netherlands and Luxembourg, jumped 10 percent to 4.72 euros on speculation it will avoid booking a 900 million-euro loss on the sale of assets to Deutsche Bank AG.

The Dutch central bank won't approve the sale of ABN Amro Holding NV's Dutch commercial-banking units to Deutsche Bank ``until further notice,'' Fortis said in statement yesterday. The transaction had been needed to win clearance from the European Union for the bank's portion of the takeover of ABN Amro last year.

``The most positive news is that Fortis may not have to execute the remedies proposed by the EU against a big book loss,'' said Ton Gietman, an Amsterdam-based analyst for Petercam.

Swisscom AG gained 4.1 percent to 345 francs. Credit Suisse Group AG upgraded the largest Swiss phone company to ``outperform'' from ``neutral,'' saying second-quarter earnings have increased confidence the full-year forecast can be achieved.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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Ember, Goldcorp, Gold Wheaton, Royal Bank: Canada Stock Preview

By John Kipphoff

Oct. 1 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading today. Stock symbols are in parentheses, and share prices are from the previous close in Toronto.

The Standard & Poor's/TSX Composite Index rose 4.2 percent to 11,752.90.

Ember Resources Inc. (EBR CN): The company exploring for coalbed methane gas was rated ``sector perform'' in new coverage at RBC Capital Markets. The shares climbed 5.5 percent to C$1.35.

Goldcorp Inc. (G CN): The second-biggest gold producer by market value was raised to ``buy'' from ``hold'' by Barry Allan at Research Capital Corp. The Toronto-based analyst set a share- price target of C$44 ($41.40). The shares fell 2.7 percent to C$33.47.

Gold Wheaton Corp. (GLW CN): The precious metals mining company was rated ``sector perform'' in new coverage at RBC Capital Markets. The shares rose 3.5 percent to 88 cents.

Kingsway Financial Services Inc. (KFS CN): The insurance company said it completed the sale of its York Fire & Casualty Insurance Co. for C$95 million to La Capitale General Insurance Inc. The shares gained 2 percent to C$7.30.

Royal Bank of Canada (RY CN): Canada's biggest bank was sued by five Wisconsin school districts over $200 million in credit derivatives that have lost about three-quarters of their value, the National Post reported.

A Royal Bank spokesman declined to comment, the Post said. Spokeswoman Beja Rodeck also wouldn't comment today to Bloomberg News. The shares rose 6.3 percent to C$50.50

To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.



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U.S. Stock Futures Drop on Economy Concern; GE, Citigroup Fall

By Michael Patterson

Oct. 1 (Bloomberg) -- U.S. stock-index futures fell, signaling the Standard & Poor's 500 Index may extend the worst monthly drop in six years, as investors speculated a $700 billion bank-rescue plan won't stave off a recession.

General Electric Co. dropped 2.1 percent before an industry report that may show manufacturing contracted at a faster pace in September. Bank of America Corp. declined 2.1 percent as people familiar with the matter said regulators probably will resist calls to suspend the fair-value accounting rules that some members of Congress blame for worsening the credit crisis.

S&P 500 futures expiring in December lost 13.3, or 1.1 percent, to 1,155.7 at 8:19 a.m. in New York. Dow Jones Industrial Average futures slipped 0.9 percent to 10,762. Nasdaq-100 Index futures fell 1.2 percent to 1,586. Most European stocks and Asian shares advanced, while Treasuries climbed.

``More important than the bailout plan will be next year's economy,'' Marc Faber, managing director of Marc Faber Ltd. and publisher of the Gloom, Boom & Doom Report, said in a Bloomberg Television interview. ``I would rather sell on strength.''

The S&P 500 jumped the most in six years yesterday as expectations grew that lawmakers will salvage the rescue package to buy bad loans from banks. The U.S. equity benchmark closed at 1,166.36, near the same level just before the House of Representatives voted down the bill on Sept. 29. The Senate set a vote for tonight on legislation that includes an increase in bank-deposit-insurance limits and tax breaks.

``I am more than willing to go short the market again because ultimately we need to wrestle with the real issues of this crisis and I don't think that's being done with this package,'' Steen Jakobsen, chief investment officer at Saxo Bank AS in London, said in a Bloomberg Television interview.

Economy Watch

Even with yesterday's advance, the S&P 500 had its worst month since 2002 in September, declining 9.1 percent, and tumbled 8.9 percent for the third quarter.

GE, the second-biggest U.S. company by market value, lost 2.1 percent to $24.97 in trading before the open of U.S. exchanges. Caterpillar Inc., the largest producer of construction equipment, fell 0.6 percent to $59.24 in Germany.

The Institute for Supply Management's factory index dropped to 49.5 from 49.9 in August, according to the median estimate of economists in a Bloomberg News survey. A reading of 50 is the dividing line between expansion and contraction. The Tempe, Arizona-based ISM's report is due at 10 a.m. New York time.

Companies in the U.S. cut an estimated 8,000 jobs in September, less than forecast, a private report based on payroll data showed today. The drop followed a revised 37,000 decrease in August that was larger than previously estimated, ADP Employer Services said.

`Clarifications'

Bank of America, the second-largest U.S. bank by market value, lost 2.1 percent to $34.25. Citigroup Inc., the fourth- biggest, slipped 0.5 percent to $20.40.

The SEC and Financial Accounting Standards Board issued ``clarifications'' on how banks should interpret existing rules requiring them to review assets each quarter and report losses if values decline. A moratorium isn't being considered, said the people, who declined to be identified because the plan hasn't been completed.

SEC spokesman John Nester declined to comment. FASB spokesman Neal McGarity didn't return a phone call seeking comment.

The Senate agreed to vote on the banking legislation along with the measure temporarily raising the limit on federal deposit insurance to $250,000 from $100,000. Also linked to the legislation is a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade.

Trichet Endorses Bailout

European Central Bank President Jean-Claude Trichet said in a Bloomberg Television interview that U.S. lawmakers must pass a rescue package ``for the sake of global finance.'' He added that a pan-European approach to the banking crisis is unlikely, saying ``we are not a fully-fledged federation with a federal budget.''

Europe's Dow Jones Stoxx 600 Index gained 0.7 percent, while the MSCI Asia Pacific Index added 1.8 percent. The yield on the two-year Treasury note fell 4 basis points, or 0.04 percentage point, to 1.92 percent.

To contact the reporter for this story: Michael Patterson in London at mpatterson10@bloomberg.net.



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French Stocks: Alten, Arcelor, Neopost Gain as Michelin Drops

By Alexis Xydias

Oct. 1 (Bloomberg) -- France's CAC 40 Index gained 24.83, or 0.6 percent, to 4,056.93 as of 1:18 p.m. in Paris. The SBF 120 Index rose 0.6 percent.

The following shares rose or fell in the local market. Stock symbols are in parentheses.

Alten SA (ATE FP) added 1.91 euros, or 9.4 percent, to 22.22, leading gains in the SBF 120. France's second-largest contract-technology research company reported first-half net income of 29.8 million euros ($42 million), up from 17.5 million euros a year earlier.

ArcelorMittal (MTP FP), the world's biggest steelmaker, climbed 86 cents, or 2.5 percent, to 36.01, adding to yesterday's 3.4 percent gain. Rautaruukki Oyj, Finland's biggest producer of carbon steel, raised its profit margin target.

Beneteau SA (BEN FP), the world's largest maker of sailboats, fell 52 cents, or 5.1 percent, to 9.63 euros, leading declines in the SBF 120. The company yesterday reported an increase in sales for 2008 and said some clients are holding back orders for 2009 amid slowing economic growth and a global financial crisis.

Michelin & Cie. (ML FP) decreased 2.55 euros, or 5.6 percent, to 42.91, headed for its steepest decline since July 18. The world's second-largest tiremaker will give a presentation on its earnings outlook today. PSA Peugeot Citroen (UG FP), Europe's second-largest carmaker, fell 91 cents, or 3.5 percent, to 25.46 euros after Peugeot brand chief Jean- Philippe Collin declined to reiterate its 5 percent growth target for full-year vehicle sales.

Daimler AG, the world's second-largest luxury car maker, said markets have worsened since it lowered the earnings outlook in July. Porsche SE, maker of the 911 sports car, said it's ready to scale back production as financial-market turmoil makes earnings forecasts ``difficult.''

Neopost SA (NEO FP) rose 98 cents, or 1.5 percent, to 67.33 euros, a second gain. Europe's biggest maker of mailroom equipment said first-half profit fell 6.8 percent to 74.3 million euros on a weaker dollar and declining U.S. demand.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.



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Improved US Manufacturing Would Validate Bearish EURUSD Technical Scenario

Daily Forex Fundamentals | Written by DailyFX | Oct 01 08 11:09 GMT |

Fundamental Outlook The US ISM manufacturing report is expected to show a slight decline to 49.5 from 49.9 as the slowing global economy is expected to weigh on demand. A second month of the sector falling into contraction could lead to an extended downturn, as last month saw a decline in overall activity despite an increase in overseas demand. Europe and Asia heading toward recession and tight credit markets denying firms needed funds for projects. A weak manufacturing report could end the dollar’s momentum as it reminds investor’s that a potential rescue plan will leave an economy with weak fundamentals. However, a better than expected Chicago PMI reading could be a sign that overall activity is stronger than expected which would perpetuate current bullish sentiment. This would validate the technical outlook scenario of another leg lower for the EURUSD. There remain a number of possibilities. While not clearly an impulse, the decline from near 1.49 is deep and accelerating. Remaining below 1.4576 keeps the most bearish count on track (in which a small 3rd wave is down from there). The larger correction scenario is still possible (triangle or flat). Until a break of 1.3877, we can not eliminate bullish potential. 1.4170 may be resistance DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Markets Patient ahead of Senate Vote

Daily Forex Fundamentals | Written by Crown Forex | Oct 01 08 11:08 GMT |

The markets remain calm after the dollar rally seen yesterday as the trend for today is yet to be clear as all eyes now are on the Senate vote to help decide the future of the currencies. Hope has been somewhat restored in the markets, but as we all know, the markets could once again surprise us! The Euro was able to gain against the dollar as it is currently trading above the 76.4% Fibonacci correction for the medium term ascending channel at 1.4116 as it provide a good support for the pair. As we see on the stochastic indicator on the daily charts, the pair is in need of an upside correction which could provide the Euro with enough momentum to target the 1.4176 resistance before opening the way towards the 1.42 levels. However, a breach of the mentioned correction level could perhaps add more pressure on the pair to take it down towards the 1.40 psychological barrier. Data flowed in from the Zone showing that unemployment in August inched up to 7.5 percent from a revised previous reading of 7.4 percent while the ISM manufacturing reading was revised lower to 45.0 in September from an originally reported 45.3 reading. From the UK, the calendar lacks fundamentals with the exception of the ISM manufacturing reading that showed a slide to 41.0 in September from 45.9 in August. The Royal pound continues to decline but remains consolidating within narrow ranges now between the support level at 1.7786 and the resistance level at 1.7860. Momentum indicators on the daily and four hour charts show the pair is currently trading in an oversold area which suggests the need of an upside correction to help the pair retest the mentioned resistance level where if breached could open the way to 1.7940s yet with the lack of bullish momentum and low volume, the neutral trend will dominate the Sterling's movements. On the other hand, the breach of the support level will result in further declines to 1.7742. As for the USD/JPY pair it is currently trading between the support level at 105.70s and the resistance level at 106.30s as the 100 and 50 day moving averages on the four hour charts are providing good supports at 106.07 and 105.90 respectively. Well dear reader, the trend of the dollar won't be set unless the Senate's vote is out in the open. So lets just wait and see what they come up with after seeing market's reactions when they first refused it… Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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Positive Q4 start for stocks on bailout hopes

By Natsuko Waki

LONDON (Reuters) - World stocks began the final quarter of 2008 on an upbeat note on Wednesday as hopes grew that U.S. lawmakers could reach agreement to revive a $700 billion bailout, but money markets remained stressed.

The U.S. Senate will vote later on a new version of the bailout package to tackle the worst financial crisis since Great Depression after the House of Representatives shocked markets with a rejection earlier in the week.

Hopes for a breakthrough, along with Tuesday's moves by Ireland to pledge up to 400 billion euros to guarantee bank deposits and the bailout of another European bank, Dexia, helped stabilize investor morale, pushing stocks higher across the board.

However, other markets remained deeply stressed, especially in money markets where the beginning of a new financial quarter failed to relieve strains despite recent actions by central banks to pump billions of dollars.

"The market is all about confidence and investors need to just hang in there and not be swayed by different rumors. The worrying sign is that it is based on no more than a hopeful optimism without much basis to it at the moment," said Justin Urquhart Stewart, director at Seven Investment Management.

"This is the eye of the storm until we wait for the decision from the U.S. Senate and see how the restructuring takes place."

The FTSEurofirst 300 index rose 0.7 percent while MSCI main world equity index rose two thirds of a percent, having hit a 2-1/2 year low on Tuesday.

The index fell 17 percent in the previous three months, its worst quarterly performance since the final quarter of 2002.

The dollar fell 0.15 percent against a basket of major currencies while the low-yielding yen fell a quarter percent to 106.31 per dollar.

NEAR PARALYSIS

Money markets remained under pressure globally as banks hoarded cash and wholesale lending dried up.

Early in London on Tuesday, the interbank cost of borrowing dollars overnight was indicated between 3.0 and 5.5 percent, and was last posted at the bottom of that range.

Norway's main overnight interbank money market rate leapt to 7.65 percent, nearly 200 basis points above the central bank's benchmark rate of 5.75 percent.

The cost of borrowing dollars overnight has shot up as high as 6 percent before easing to 3 percent in Europe, still 100 basis points above the Federal Reserve's policy rate.

The December bund future rose 16 ticks, reflecting demand for safer government papers.

U.S. long-term yields, using 30-year Treasuries, fell 3 basis points to 4.2753 percent. According to Barclays Capital, that is nearly 100 basis points below the mean yield for the past 208 years.

"The nominal and return prospects for bonds in 2009 do not look all that auspicious in many jurisdictions," the bank said in a note.

"And unless the world economy's really in for a protracted slump through the end of 2009, then risky asset classes, like equities, will generate higher total returns."

Emerging stocks, measured by MSCI, rose 0.6 percent, having fallen 27 percent in the previous quarter -- their worst quarterly performance in its 20-year history.

Emerging sovereign spreads tightened 21 basis points to trade 393 bps above U.S. Treasuries.

Confidence remained fragile in risky emerging markets after Russia on Tuesday halted trading in exchanges yet again for two hours.

U.S. light crude rose 1.4 percent to $102.03 a barrel, while gold rose to $880.10 an ounce.

(Editing by Mike Peacock)

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Banks lead Europe stocks higher on US bailout hopes

LONDON, Oct 1 (Reuters) - European shares rose early on Wednesday, led by banks on hopes that the U.S. Senate will pass a new version of a $700 billion bailout package for the embattled financial sector later in the day.

By 0715 GMT, the FTSEurofirst 300 index of top European shares was up 0.7 percent at 1,070.94.

Banking stocks were the main gainers on the index. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), UniCredit (CRDI.MI: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) and HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) were 0.7-6.2 percent higher.

The U.S. Senate will vote on Wednesday night on a new version of the $700 billion bailout package for Wall Street, rekindling hopes that the credit crisis can be stemmed before claiming yet more banks and causing further damage to the global economy. [ID:nSP361078]

"The market is all about confidence and investors need to just hang in there and not be swayed by different rumours. The worrying sign is that it is based on no more than a hopeful optimism without much basis to it at the moment," said Justin Urquhart Stewart, director at Seven Investment Management.

"This is the eye of the storm until we wait for the decision from the U.S. Senate and see how the restructuring takes place."

The mining sector gained as copper rose 1.4 percent.

BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) was up 3 percent and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) was 7 percent higher after Australia's competition watchdog cleared BHP's proposed around $114 billion bid for Rio, saying it was unlikely to substantially lessen competition. [ID:nSYU005209]

Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) slumped 27.5 percent after Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) said it would not make a formal offer for the group. Xstrata was up 9.9 percent. (Reporting by Joanne Frearson)

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