Mid-Day Report: Markets Further Stabilized by Government Interventions

Market Overview | Written by ActionForex.com | Oct 13 08 14:12 GMT |

The global financial markets continue to show positive reactions to the Eurozone's rescue plan and UK's bailout plan as well as dollar injection from major central banks. Some further actions are announced from Germany, Austria and France following the agreement made yesterday by Eurozone leaders. Dow soars over 400 points in early US session following broad based rally in the European stock markets. Dollar index dropped further and is now pressing 81 level while crude oil rebounds to above $80 level.

Germany Chancellor Merkel said the cabinet has passed the bank rescue package which includes up to 400b euros in bank guarantees, 5% provision of losses and recapitalization funds up to 80b euros. French Preside Sarkozy said an entity will be created to assist banks and guarantee limit will be up to 320b euros. Austrian Chancellor Gusenbauer also said that Austria will implement a 100b euros rescue plan which provide support to the banking system mainly via guarantees while the government is also allowed to buy shares in Austrian banks.

The Eurozone rescue plan includes state guarantees on bank debts until the end of 2009 with maturities up to five years. The governments are allowed to recapitalize financial institutions by buying bank stakes with preference shares or other instruments. ECB also pledged to look at enlarging access to the system of guarantees to include commercial paper even though it doesn't have the legal power to do so yet.

UK Government also said earlier today that it will invest 37B pounds in banks, including RBS, HBOS and Lloyds TSB, to boost their so called Tier One capital ratio to more than 9%. Australian government said it will guarantee all deposit with financial institutions for the next three years and all "term wholesale funding" by Australian banks operating in international credit markets. New Zealand government said it will guarantee retail deposits in New Zealand-registered banks, building societies, credit unions and deposit taking finance companies.

Fed said that ECB, BoE and SNB will conduct dollar auctions at maturities of 7, 28, 84 days at a fixed interest rate to offer financial institutions unlimited funds in response to demand on dollar loans.

Technically speaking, GBP/USD's break of 1.7398 minor resistance serves as an early indication that markets are further stabilizing. Though, further rally in Dow as well as retreat in dollar and yen are needed to confirm.

On the data front, New Zealand retail sales rose 0.4% mom in Aug. Swiss combined PPI dropped more than expected by -0.5% mom in Sep, yoy rate moderated to 3.7% versus expectation of 3.9%. UK PPI input slowed to 24.5% yoy versus expectation of 19.8%. PPI output slowed to 8.5% yoy comparing to expectation of 8.8%. Core PPI slowed to 5.4% yoy versus consensus of 6.0%.
GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6831; (P) 1.7005; (R1) 1.7221; More

GBP/USD's break of 1.7398 resistance indicates that a short term bottom is in place. Intraday bias is now on the upside as long as 1.7108 minor support holds. Further rise could now be seen to test next resistance of 1.7843. On the downside, below 1.7108 will firstly flip intraday bias back to the downside for retesting 1.6786 low. Secondly it will argue that decline from 1.8668 is still in progress for 61.8% retracement of 1.3680 to 2.1161 at 1.6538.

In the bigger picture, a long term top is in place at 2.1161 and down trend from there is still in progress. Next medium term target is 61.8% retracement of 1.3680 to 2.1161 at 1.6538. The impulsive nature and the scale of the fall from 2.1161 also provides strong evidence to the case of the start of a long term down trend. Sustained break of 1.6538 will target 1.3680 (01 low).

On the upside, however, above 1.7398 resistance will also be the first signal that fall from 1.8668 has completed. Further break of 1.7843 will add more credence to this case. Also, this will argue that the five wave decline from 2.1161 has completed too. In such case, medium term outlook in GBP/USD will be turned neutral and expect some consolidation between 1.6786 and 1.8668 before resuming the long term down trend. Nevertheless, upside of the consolidation should be limited by 1.8668 resistance.

Economic Indicators Update
GMT  Ccy  Events  Actual  Consensus  Previous  Revised
21:45  NZD  New Zealand Retail sales M/M Aug  0.40%  N/A  -0.80%  -0.70%
7:15  CHF  Swiss Combined PPI M/M Sep  -0.50%  -0.30%  -0.50%  
7:15  CHF  Swiss Combined PPI Y/Y Sep  3.70%  3.90%  4.00%  
8:30  GBP  U.K. PPI core M/M Sep  -0.10%  0.10%  -0.10%  
8:30  GBP  U.K. PPI core Y/Y Sep  5.40%  6.00%  6.30%  
8:30  GBP  U.K. PPI input M/M Sep  -1.20%  -1.50%  -2.00%  
8:30  GBP  U.K. PPI input Y/Y Sep  24.50%  19.80%  26.20%  28.80%
8:30  GBP  U.K. PPI output M/M Sep  -0.30%  -0.40%  -0.60%  -0.70%
8:30  GBP  U.K. PPI output Y/Y Sep  8.50%  8.80%  9.70%  9.10%
  U.S.; Canada; Japan Market holiday  

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Bush Says U.S., Other Governments Working to Stabilize Markets

By Roger Runningen

Oct. 13 (Bloomberg) -- President George W. Bush said the U.S. and other governments will continue to take ``decisive action'' to restore stability to the world's financial systems.

``In these times of economic turmoil, we're working with other governments to resolve the troubles of the financial markets,'' Bush said during welcoming ceremonies at the White House for Italian Prime Minister Silvio Berlusconi.

``All of us will continue taking responsible, decisive action to restore credit and stability and return to vigorous growth,'' Bush said.

Berlusconi noted that he and other European leaders took steps yesterday in Paris to stem the crisis and avert a market meltdown.

``I'm 100 percent sure and confident that we have the means and ways to prevent this from happening,'' Berlusconi said.

To contact the reporter on this story: Roger Runningen in Chantilly, Virginia, at rrunningen@bloomberg.net



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BOE's Sentance Says U.K. May Already Be in Recession

By Jennifer Ryan and Brian Swint

Oct. 13 (Bloomberg) -- Bank of England policy maker Andrew Sentance said the U.K. economy may already be in a recession and inflation may slow below the central bank's 2 percent target, suggesting he may vote to cut the benchmark interest rate.

``It now seems to me more likely than not that we will see a fall in gross domestic product for the third and fourth quarters of this year,'' Sentance said in the text of a speech prepared for delivery today in London. Inflation ``could quite conceivably undershoot the target for a while.''

The Bank of England last week cut its benchmark rate by half a percentage point in tandem with other central banks around the world, a move that reflected a shift in prospects for U.K. inflation, he said. The central bank today said it would take part in a joint effort to flood markets with dollars to revive confidence in the banking system.

Inflation, which accelerated to 4.7 percent in August, may rise above 5 percent in coming months before receding, he said.

``We can now be much more confident than we were a few months ago that inflation will come back to the 2 percent target,'' said Sentance, who voted against a rate cut in April. There is now a higher risk of a ``prolonged and severe period of falling demand and output.''

Sentance voted in a minority to increase interest rates in five meetings since joining the Monetary Policy Committee in October 2006. He dissented to the April decision to lower the benchmark to 5 percent, favoring an unchanged rate.

Interest Rates

His label by media and commentators as a ``hawk'' who prefers higher interest rates was applied ``in a very different world to the one which we currently inhabit,'' he said. He said he agreed with a statement attributed to John Maynard Keynes, that ``When the facts change, I change my mind.''

Citigroup Inc. economist Michael Saunders last week said the central bank may make another emergency rate reduction before the next meeting on Nov. 6. Howard Archer, chief European economist at Global Insight Inc. in London, said today he saw scope for further coordinated central-bank rate cuts.

Last week's joint action, the first since the aftermath of the terrorist attacks in September 2001, showed ``our flexibility to act when the situation demands a response,'' Sentance said. ``The committee acted independently and under the terms of its legal mandate.'' Minutes of the Oct. 8 decision are due on Oct. 22.

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



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Natural Gas Rises as Central Banks Try to Stem Financial Crisis

By Mario Parker

Oct. 13 (Bloomberg) -- Natural gas in New York rebounded as governments in Europe, the U.S. and Asia took measures to support banks and restore confidence in economies across the world.

Natural gas, crude oil and other commodities advanced after the U.K. provided $64 billion of capital to its banks and the U.S. Federal Reserve said it will lend unlimited dollar funds to financial institutions.

``You're seeing rallies across the globe,'' said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. ``We're starting to see a more concentrated effort globally on the part of the banks.''

Natural gas for November delivery rose 17.4 cents, or 2.7 percent, to $6.709 per million British thermal units at 10:21 a.m. on the New York Mercantile Exchange. Futures have dropped 51 percent from a 30-month intraday high of $13.694 on July 2. The fuel plunged 11 percent last week.

``We were just really oversold last week and you're seeing a little bounce,'' said Larry Young, a senior trader at Infinity Futures Inc. in Chicago. ``We're up across the board in the entire complex.''


Crude oil for November delivery advanced $2.91, or 3.8 percent, to $80.61 a barrel in New York. Oil has fallen 45 percent since reaching a record $147.27 in July.

``We're getting some people that have been patiently waiting who are starting to get back into commodities,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``We may have seen the worst of the worst of this sell-off.''

Stocks Rally

Stocks rallied worldwide as the MSCI World Index rebounded from its worst week on record, and the euro rose the most in three weeks against the dollar after the banks worked to boost the financial system.

``The dollar's pretty weak,'' said Jarvis. ``The European situation looks better, so you're seeing the euro scream. Plus, you can throw into the mix that Morgan Stanley got a vote of confidence from the Japanese.''

Morgan Stanley climbed as much as 66 percent in New York trading after the firm sealed its $9 billion investment from Mitsubishi UFJ Financial Group Inc.

The Standard & Poor's 500 Index rose 4.4 percent to 938.35 as of 10:03 a.m. in New York. The index tumbled 18 percent last week and is down 36 percent this year.

As financial stocks rebound worldwide, commodities should follow, Jarvis said.

``Everyone's looking at equities as a beacon,'' he said.

Current natural gas prices are a bargain so close to the winter heating season, Neill said.

``Gas is cheap and a lot of end-users are interested at these levels,'' Neill said.

The cold-weather season runs from November to March when demand for natural gas outstrips production, requiring utilities and other large users to draw on supplies put into storage during the U.S. summer.

``If we get any type of winter supply could whittle,'' and prices could rise, Jarvis said.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net.


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Mexico Peso Gains Most in 13 Years, Brazil Real Most Since 2002

By Michael J. Moore

Oct. 13 (Bloomberg) -- Mexico's peso rose the most since 1995 and Brazil's real had its biggest gain in six years as an unprecedented push by central banks to flood the global financial system with dollars buoyed demand for higher-yielding assets.

The peso climbed 5.9 percent to 12.3647 per dollar at 9:43 a.m. New York time, stemming a three-week rout sparked by the worst global financial crisis since the Great Depression. Brazil's real gained 6.2 percent to 2.1785 per dollar after sinking 11.6 percent last week.

It's ``a repercussion of what's going on in the international markets,'' said Vanderlei Arruda, who manages the foreign-exchange trading desk at Sao Paulo-based Corretora Souza Barros. ``The joint interest rate cuts and the government packages in Europe, the U.S. and Asia give the market more confidence.''

The peso's gain was the biggest since March 10, 1995, a day after Mexico announced tax increases and spending cuts aimed at shoring up investor confidence in the aftermath of a devaluation three months earlier. The peso had an intraday decline on Oct. 8 of 13.8 percent, the biggest since that devaluation.

Banco de Mexico sold $8.9 billion last week, including $6.4 billion on Oct. 10 alone, in an effort to shore up the peso after it slid to a record low of 14.2927.

``It seems that Mexican authorities have deactivated the speculative bubble,'' said Alfredo Coutino, a Latin America economist at Moody's Economy.com in West Chester, Pennsylvania.

Brazil's central bank also sold dollars the last three days of last week, tapping into record foreign reserves of more than $200 billion to stem the real's tumble.

Borrowing Costs Fall

The real has plunged 29 percent from a nine-year high reached Aug. 1, more than any other currency tracked by Bloomberg, except for the Zimbabwean dollar. Mexico's peso has dropped 20 percent from a six-year high reached on Aug. 4.

Global stock markets also rallied today after the Federal Reserve said that the ECB, Bank of England and the Swiss central bank will auction unlimited dollar funds with maturities of seven days, 28 days and 84 days at a fixed interest rate. All of the previous dollar swap arrangements between the Fed and other central banks were capped.

The announcement drove down interbank loan rates in dollars for three months today to 4.75 percent from 4.82 percent, the highest this year. The rate for euros over the same timeframe declined to 5.32 percent from 5.38 percent.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net



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Euro Rises Most in 3 Weeks as European Leaders Guarantee Banks

By Ye Xie and Anchalee Worrachate

Oct. 13 (Bloomberg) -- The euro rose the most in three weeks against the dollar and yen after European leaders agreed to guarantee bank borrowing and prevent failures that would further batter the credit markets.

The U.S. currency fell versus the Mexican peso and Australian dollar as the Federal Reserve and three other central banks announced unlimited dollar auctions, reducing demand for the greenback for funding among financial firms. Brazil's real, South Korea's won and the peso led a rally in emerging-market currencies as the Group of Seven nations pledged over the weekend to take ``all necessary steps'' to stem the market turmoil.

``It helps restore market confidence and avert further financial meltdown,'' said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. ``It's positive for risky assets. If financial institutions stabilize, there's less of a flight toward the dollar.''

The euro rose as much as 2 percent, the most since Sept. 22, to $1.3682, before trading at $1.3609 at 10:44 a.m. in New York, from $1.3408 on Oct. 10. The euro advanced 1.6 percent to 137.12 yen, from 134.96. The dollar was little changed at 100.70 yen.

Foreign-exchange movements may be exaggerated because trading volumes are lower than normal due to public holidays in Japan, the U.S. and Canada, according to Takashi Yamamoto, chief trader at Mitsubishi UFJ Trust & Banking Corp. in Singapore.

Australian Dollar, Won

The Australian dollar rose 4.6 percent to 67.29 U.S. cents after the government guaranteed all bank deposits for three years.

South Korea's won climbed 5.4 percent to 1,240.42 per dollar, as efforts by global leaders to restore confidence in banks fueled demand for emerging-market assets. Mexico's peso gained 5.2 percent to 12.4478 and Brazil's real strengthened 6 percent to 2.1816.

The pound rose for the first time in four days, gaining 2.2 percent to $1.7423, as the U.K. government said it will invest in banks. Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group will get 37 billion pounds ($64.4 billion), the government said in a Regulatory News Service statement. The funding will allow the banks to boost their so-called Tier One capital ratio to more than 9 percent.

European policy makers meeting in Paris yesterday pledged to guarantee until the end of 2009 bank-debt issues with maturities up to five years. Plans to recapitalize banks in the region will cost 300 billion euros ($409.7 billion), according to Goldman Sachs Group Inc.

`Clarity of Plans'

``The rebound in the euro, and in sterling, is a direct response to the clarity of bailout plans in the euro zone and the U.K.,'' said Simon Derrick, head of currency strategy in London at Bank of New York Mellon Corp. ``In the medium-term, this means a surge in national debt which won't bode well for these currencies. In the near-term, the plans give investors confidence that there won't be further banking failures.''

Losses in the dollar accelerated after the Fed said today the European Central Bank, the Bank of England and the Swiss National Bank will offer financial institutions unlimited funds in the U.S. currency, providing easier access to dollars in response to demand for loans. The central banks will conduct dollar auctions at maturities of seven, 28 and 84 days at a fixed interest rate, the Fed said on its Web site.

Decreased Bets

Futures traders decreased bets that the euro will decline against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission showed on Oct. 10.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 18,662 on Oct. 7, compared with 28,932 a week earlier.

Treasury Secretary Henry Paulson said Oct. 10 that the government will buy equity ``as soon as we can'' in banks and other financial institutions to help them weather the worst credit crisis in seven decades. The Treasury Department said yesterday Paulson is studying Europe's debt-guarantee plan.

Finance ministers and central bankers from the Group of Seven countries said in a statement after a meeting in Washington on Oct. 11 they will take ``all necessary steps'' to repair credit markets.

``The G-7 and now the individual finance ministers and governments are really stepping up to try and recover some of this confidence which has been so punished to such low levels over the last few weeks,'' Patrick Bennett, a currency strategist at Societe Generale SA in Hong Kong, said in an interview with Bloomberg Television.

Japan's currency may rise to 95 per dollar should Japanese investment trusts, insurance companies and pension funds start selling foreign holdings, wrote Tohru Sasaki, chief strategist in Tokyo at JPMorgan and a former chief currency trader at the Bank of Japan, in a research note dated Oct. 10. Retail traders held $24 billion of bets the yen will decline on Oct. 9, down 50 percent from last month, the bank said in a report.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net.



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Markets Calm and Movements are Narrowed

Daily Forex Fundamentals | Written by Crown Forex | Oct 13 08 14:43 GMT |

Majors continue to find support from the different government plans to support banks as policy makers strive to restore confidence and stability in financial markets. The ECB, BoE and Swiss National Bank all pledged to provide unlimited amounts of dollars to ensure full liquidity in the market while US Treasury's Kashkari said he would support healthy institutions. With the US markets out for holiday, Dow Jones started the session advancing more than 400 points but trading for currencies are still consolidating within narrow ranges.

The 15 nation currency after advancing against the dollar remained trading within narrow levels as it is currently facing a resistance represented by the 23.6% correctional level for the downside channel at 1.3640 where at the same time we see the 14 and 20 day moving averages close to each other as they limit further losses seen by the EUR/USD pair at 1.3580-1.3610. We see direction indicators supporting the upside direction for the pair but contradiction in the momentum indicators shows that the pair is being overbought on the four hour charts but slightly oversold on the weekly. Yet overall, we see that there is still some potential to see the pair incline but not having enough momentum to successfully breach the mentioned resistance level before slightly falling to the support levels at the moving averages before reversing to the upside.


The GBP/USD pair inclined as well after the government said it would provide $73 billion for troubled banks but lacked enough momentum to breach the resistance level at 1.7440s which is supported by the 50 day moving average on the four hour charts. Trading is within the mentioned resistance level at the support level at 1.7342 but there is still chance for the pair to extend its gains further as we see technical indicators have yet showed signs for divergence to the downside.

After being the victim of carry trades, the greenback versus the yen was able to incline from the 99.50s early morning to currently remain consolidating at the 100.30-100.40 levels where it is finding difficulties in breaking the 100.50s resistance level which will open the way towards the 23.6% correction level for the descending channel at 100.80s. The 20 day moving average at the 100 level on the four hour charts is still providing a strong support for the pair.

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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Nordic Currencies: Norway's Krone Rallies on Bank-Rescue Plan

By Bo Nielsen

Oct. 13 (Bloomberg) -- The Swedish and Norwegian currencies rose against the euro and dollar after European leaders agreed to guarantee bank borrowing, prompting investors to return to buying higher-yielding assets in smaller countries.

Gains were led by Norway's krone as leaders of the 15-nation economy endorsed bailing out ``systemically'' critical banks in distress, fueling a rally in stock markets and pushing oil higher. Norwegian bonds slumped after the government said yesterday it would swap as much as $55.4 billion in notes for commercial banks' mortgage debt to boost market liquidity.

``Having stared into the abyss on Friday, the risk environment is marginally more positive this morning,'' David Simmonds, London-based head of currency research at Royal Bank of Scotland Group Plc, wrote in a client note today.

Norway's krone rose as much as 1 percent to 8.3855 per euro, and was at 8.4260 by 1 p.m. in Oslo. It added 2.8 percent to 6.1627 per dollar, the biggest gain since Sept. 22.

The Swedish krona climbed for a second day against the euro, gaining 0.3 percent to 9.6394. It advanced 1.6 percent to 7.0929 per dollar.


European leaders agreed to guarantee new bank debt and use taxpayer money to keep distressed lenders afloat to try to stave off a recession. The OMX Stockholm 30 index of equities surged 7 percent today while the OBX Stock Index in Oslo added 6.6 percent, after slumping 20 percent last week as investors sold higher-yielding assets.

When risk aversion is high investors tend to shun assets in the less liquid Norwegian and Swedish currencies on concern they won't able to sell them quickly if needed. The euro gained 0.9 percent against the Swedish krona and 3.1 percent versus the Norwegian krone in the last month as stock markets plummeted.

Rates Outlook

Gains in the Norwegian krone may be limited on speculation the central bank will lower borrowing costs this week, according to a note today by Commerzbank AG analysts led by Ulrich Leuchtmann in Frankfurt.

Norske Bank pushed forward its regular interest-rate meeting from Oct. 29 to Oct. 15. The bank kept borrowing costs on hold last week while Sweden's Riksbank cut its main rate a half point to 4.25 percent as part of a coordinated effort by central banks, including the European Central Bank, to revive interbank lending.

The two currencies may come under pressure as Sweden's Riksbank will reduce rates a further 1.25 percentage points by the end of June while Norwegian policy makers will cut rates to 4.25 percent by the end of next year, starting with a 0.5 percentage point reduction from 5.75 percent this week, according to a note by UBS AG analyst Ashley Davies in Singapore.

The price of crude oil, Norway's biggest source of exports, climbed $5 to $81.65 a barrel after dropping below $80 last week for the first time in a year.

`No Active Market'

Trading in Iceland's krona all but dried up by the end of last week as the country's banks collapsed, sending the currency's bid/ask spreads between foreign banks to 300/450 per euro on Oct. 10. ``There is no active market'' in the currency ``and it is unlikely there are any volumes going through,'' Antje Praefcke, a currency strategist in Frankfurt at Commerzbank said in an e-mailed note today.

JPMorgan Chase & Co. was reported to be in negotiations with Sedlabanki in Reykjavik to underwrite all krona trades in an attempt to unlock the currency markets, according TD Securities Ltd. in London.

The yield on Norway's 6 percent security maturing in May 2011 rose 40 basis points to 4.52 percent, according to Danske Bank A/S prices. The yield on Sweden's 5.25 percent note due March 2011 climbed 6 basis points to 3.35 percent. Yields move inversely to bond prices.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net


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Climate Talks Push Ahead in Poland Amid Credit Crunch

By Alex Morales and Jeremy van Loon

Oct. 13 (Bloomberg) -- Environment ministers from 40 nations met today in Warsaw to lay the groundwork for new climate-change regulations that may raise costs for polluting industries such as power generation and transportation.

Attempts to reach an agreement on limits for carbon-dioxide emissions at United Nations-sponsored talks in December face their biggest hurdle in the credit crisis that's pushing the world economy toward recession, said Astrid Klug, Germany's deputy environment minister.

``We have to make sure that the financial crisis does not hinder climate-change efforts,'' Klug said today in an interview in Berlin. ``This is critical because it's the major threat'' to the negotiations, she added.

Governments in Europe and the U.S. have stepped in to bail out banks, trying to protect the global economy from the biggest financial turmoil since the Great Depression. Stock indexes in the U.S. last week slid the most since 1914.

Environmental ministers meeting through tomorrow in Warsaw will discuss progress made since the UN conference in Bali last December and priorities for one in Poznan, Poland, this December. Aiming to curb CO2 output that add to global warming, the negotiators are seeking to conclude an accord between 192 nations by a December 2009 UN conference planned in Copenhagen.

Countries must ``keep the momentum'' to forge new rules to slow global warming and adopt cleaner technologies that may create millions of jobs, Danish Climate and Energy Minister Connie Hedegaard said.


`Lower Carbon World'

``The financial crisis is not working against this agenda,'' Hedegaard said in an Oct. 10 interview from Luxembourg. ``On the contrary, to take the climate and energy challenges seriously will be one of the ways we can make this shift into a lower carbon world and that will benefit our situation.''

The European Union's 27 members currently are hammering out a climate and energy package that includes a target of cutting emissions of global-warming gases by 20 percent by 2020. Hedegaard said she expected countries to work through objections to the draft law, including opposition by Poland to provisions on auctioning emissions credits, or permits that allow companies such as utilities to emit specific amounts of greenhouse gases.

``It would be difficult for governments to say right now `We're just going to forget about climate change because we have a big financial crisis,''' said Trevor Sikorski, a carbon analyst at Barclays Capital in London. ``One crisis doesn't stop climate change from creating yet another global crisis we'd have to deal with.''

German Target

Germany aims to help reach an accord on the European carbon- trading system after 2012, said Michael Schroeren, a spokesman for the environment ministry.

In that year emissions limits expire for Germany and most other developing countries under the 1997 Kyoto treaty, leaving a void for addressing man-made greenhouse gases.

A United Nations panel said last year it would cost as much as 3 percent of economic output to keep the concentration of greenhouse gases in the atmosphere at current levels in 2030. Tools include investing in renewable energy, making buildings and vehicles more energy efficient and developing technology that captures polluting gases from plants and pumps them underground.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.netJeremy van Loon in Berlin at jvanloon@bloomberg.net


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Copper Rises From 33-Month Low on Government Support for Banks

By Chanyaporn Chanjaroen

Oct. 13 (Bloomberg) -- Copper climbed from a 33-month low in London as stock markets rebounded after governments in Europe agreed to support banks. Aluminum also advanced.

The MSCI World Index of global stocks advanced 2.3 percent. The index and copper plunged 20 percent last week on concern about slowing global growth. European leaders yesterday agreed to guarantee new bank debt and use taxpayer money to keep distressed lenders afloat.

``The announcement by Europe helped lift the sentiment,'' Eliane Tanner, a commodity analyst at Credit Suisse Group, said by phone from Zurich. ``From the fundamental point of view, prices should be trading higher.''

Copper for delivery in three months rose $140, or 2.9 percent, to $4,930 a metric ton as of 1:02 p.m. on the London Metal Exchange. The contract has lost 45 percent from a record $8,940 on July 2.

The LME index tracking six metals has declined 38 percent since the start of the second half on concern that the financial crisis and slowing world economy will shrink demand.

The International Monetary Fund's World Economic Outlook last week said world economic expansion will slow to 3 percent in 2009, from 3.9 percent this year and 5 percent in 2007.

Goldman Sachs Group Inc. lowered its price forecasts for most commodities today, except gold.

``We have underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand,'' the bank said in a report.

Net-Short Positions

Hedge-fund managers and other large speculators increased their net-short position, or bets on price declines, by 16 percent to 18,799 contracts in New York copper futures in the week ended Oct. 7, according to U.S. Commodity Futures Trading Commission data. That's the largest net-short positions since March 2007.

BHP Billiton Ltd. declared force majeure allowing the company to miss copper concentrate deliveries from its Escondida mine in Chile, the world's largest, after an equipment failure curbed output. Concentrate is a semi-processed material that is smelted into metal.

Melbourne-based BHP on Oct. 10 said output of Escondida would fall 10 percent through next July because of the problems. Minera Escondida may require nine months to fix electrical failures at a mill, the company said. Production at Escondida has fallen this year because of lower-quality ore.

Tin Exports

Indonesia, the world's largest tin exporter, said it may produce less of the refined metal this year than previously forecast as the price declines.

``We expected 100,000 tons of output but it may only be 86,000 tons,'' Bambang Setiawan, director general of coal and mineral resources, told reporters in Jakarta today. ``We will see if we have to cut production to below 80,000 tons to maintain prices amid a global crisis.''

Tin fell $100, or 0.7 percent, to $14,000 a ton.

Lead consumption growth will slow to 4 percent next year to 8.99 million tons, from a growth of 5.7 percent expected this year, the Lisbon-based Lead and Zinc Study Group said today. Zinc demand will rise 3.8 percent in 2008, slowing to 3.3 percent at 11.78 million tons next year, it said.

Aluminum gained $40, or 1.8 percent, to $2,255 a ton and nickel rose $494, or 4.1 percent, to $12,669. Lead added $60, or 4.1 percent, to $1,535 and zinc gained $30, or 2.1 percent, to $1,480 a ton.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net



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U.K. Pound Has Biggest Advance Against U.S. Dollar in a Month

By Kim-Mai Cutler

Oct. 13 (Bloomberg) -- The U.K. pound rose the most in a month against the dollar as the government handed a $64 billion bailout to Royal Bank of Scotland Plc, HBOS Plc and Lloyds TSB Group Plc.

The pound snapped three days of losses against the U.S. dollar as the U.K. government invested the funds to forestall a banking collapse. Royal Bank of Scotland and HBOS will cede majority control to the government, give Prime Minister Gordon Brown seats on their boards, the right to halt dividends and the power to limit executives' bonuses.

``The Bank of England and the U.K. Treasury are really taking the lead internationally in developing a clear and vigorous plan to fix problems in the financial system,'' said Robert Minikin, a London-based currency strategist for Standard Chartered. ``The action has been viewed very positively here and overseas in the foreign-exchange market.''



The British currency strengthened almost 2 percent to $1.7378 as of 2:20 p.m. in London, the most since Sept. 17. The pound was little changed at 78.62 pence per euro.

RBS will get 20 billion pounds, while HBOS and Lloyds will raise 17 billion pounds between them, the companies said in statements today. Barclays Plc said it will try to raise more than 6.5 billion pounds without the government's help. The funding will allow banks to boost their so-called Tier One capital ratio to more than 9 percent, the government said.

U.K. government bonds fell after euro-area leaders at the weekend agreed to support their banks and the Debt Management Office said it would sell more debt to cover the cost bailout of the nation's lenders.

The Bank of England was part of an effort by central banks globally to flood the financial system with dollars, backing up government efforts to restore confidence and helping to drive down money-market rates.

The yield on the 10-year note rose 15 basis points to 4.61 percent. The 5 percent security maturing March 2018 declined 1.1, or 11.1 pounds per 1,000-pound face amount, to 102.96. The two-year note yielded 3.65 percent, an increase of 14 basis points.

To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net

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Oil Rises as U.S., European Governments Move to Support Banks

By Mark Shenk

Oct. 13 (Bloomberg) -- Crude oil rose, rebounding from last week's 17 percent plunge, as governments in the U.S. and Europe acted to stem the worst financial crisis since the 1930s.

Oil followed stock markets higher after the Federal Reserve led a push by central banks to flood the financial system with dollars to restore confidence. The International Energy Agency last week said global oil demand this year will grow at the slowest pace since 1993 as economies slide into a recession.

``We've moved from a complete lack of confidence to a modicum of confidence, which is allowing energy markets to rebound,'' said John Kilduff, senior vice president of risk management at MF Global Inc. in New York. ``The economic action of the weekend won't be enough to ease the recessionary outlook, helping to keep a lid on prices.''

Crude oil for November delivery rose $2.87, or 3.7 percent, to $80.57 a barrel at 10:23 a.m. on the New York Mercantile Exchange. Prices, which are down 3.6 percent from a year ago, have dropped 45 percent from the record $147.27 a barrel reached on July 11.

Stocks rallied worldwide as the MSCI World Index rebounded from its worst week on record, and the euro rose the most in three weeks against the dollar because of the efforts to support the financial system.

``The restoration of optimism in markets in general has spread to commodities,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Traders are thinking that demand will not be as stricken as they feared last week.''


Goldman Sachs Forecast

Goldman Sachs Group Inc. lowered its crude oil price forecasts for a second time this year. It reduced its estimate for the U.S. benchmark West Texas Intermediate crude for the fourth quarter to $75 a barrel from $110, and cut its year-end target to $70 a barrel from $115, research analysts led by Jeffrey Currie and Giovanni Serio said in a report today.

``We clearly underestimated the depth and duration of the global financial crisis and its implications on economic growth and commodity demand,'' the analysts wrote.

Raymond James & Associates Inc. also cut its forecast for crude oil prices for the fourth quarter and for 2009. Oil in New York will average $95 a barrel this quarter, down from a forecast of $120, Raymond James analysts, including Marshall Adkins in Houston, wrote in a note today. Oil will average $90 a barrel in 2009, down from the previous forecast of $130.

New York oil futures dropped 17 percent last week, the biggest one-week decline since the U.S.-led invasion of Iraq in March 2003. Copper, nickel and aluminum also declined as equity markets plunged and the International Monetary Fund warned the world was on the cusp of a recession.

Brent crude oil for November settlement rose $2.32, or 3.1 percent, to $76.41 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.


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Indonesia May Cut Palm Oil Export Tax, Minister Says

By Yoga Rusmana

Oct. 13 (Bloomberg) -- Indonesia, the biggest producer of palm oil, may cut its export tax as part of a revision of its duty system after prices plunged more than 50 percent in the past six months, Agriculture Minister Anton Apriyantono said.

``We're thinking of revising our regulations,'' he said in an interview today. The option is ``to reduce the export tax if the price stays below $500 a ton. If you adjust the tax, the price can be more competitive.''

Indonesia joins Malaysia in signaling measures that may boost exports of the vegetable oil to prop up domestic prices and reduce stockpiles. The two countries produce 80 percent of the world's supply of the oil used mainly for cooking. Prices have slumped to their lowest in almost two years on rising output and concern the credit freeze may cut raw-material demand.

``Any effort to boost exports is helpful'' short term as lower inventory bolsters prices, Ben Santoso, an analyst at DBSVickers Securities (Singapore), said by e-mail today. Still, ``the concern now is weakening global demand.''

The Indonesian government is seeking ways to help farmers cope with the plunge in commodity prices before parliamentary and presidential elections next year.

The move ``will make the country's palm oil more competitive,'' said Merlissa Paramitha Trisno, an analyst at PT Mandiri Sekuritas in Jakarta. ``It will definitely help producers cope with rising production costs.''

Biofuel Mix

The country will also make it mandatory to mix biofuel with gasoline and diesel starting in October, Energy Minister Purnomo Yusgiantoro said Sept. 26. Diesel used for transportation must have at least 1 percent biofuel content, while the minimum amount for industrial use is 2.5 percent.

Malaysia is taking measures to help growers. The country raised the limit on the amount of unprocessed palm oil that may be exported in a bid to cut rising stockpiles and boost prices, Plantation Industries and Commodities Minister Peter Chin Fah Kui said today. The government boosted the ceiling by 50 percent to 3 million tons.

Palm oil inventories in Malaysia gained 5.5 percent to 1.95 million tons in September, the third-highest on record.

``Palm oil stocks are building up,'' Chin told reporters outside Kuala Lumpur. ``That is our overall worry.''

The global credit freeze may make it harder for palm oil growers to obtain loans to expand their plantations, curbing growth of palm oil production in Indonesia in the next two to three years, Apriyantono said today.

Export Tax

Indonesia would probably produce 19.4 million tons of palm oil next year, he told reporters Aug. 11. That's up from 18.6 million tons this year, according to Derom Bangun, president of the country's palm oil association.

The government cut the crude palm oil export tax rate and the base price to calculate the levy for October, an official at the Ministry of Trade said Sept. 22.

The base price to calculate the tax fell to $736 a ton, while the tax rate was reduced to 7.5 percent, said Diah Maulida, director general for foreign trade at the ministry. The September base price was $902 and the tax rate 10 percent.

Palm oil for December delivery jumped 3.5 percent to 1,835 ringgit ($525) a ton on the Malaysia Derivatives Exchange today.

To contact the reporter on this story: Yoga Rusmanabio me in Jakarta at bbjakarta@bloomberg.net.



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Goldman Lowers S&P 500 Forecast 29 Percent, Sees Gain

By Adam Haigh and Elizabeth Stanton

Oct. 13 (Bloomberg) -- The Standard & Poor's 500 Index will rise 11 percent to end the year at 1,000, Goldman Sachs Group Inc. strategists predicted, a level 29 percent lower than their previous forecast for the benchmark gauge of U.S. equities.

``Potential exists for a strong year-end rally, although it would not be the start of a new bull market,'' Goldman Sachs equity strategists led by David Kostin wrote in a note to clients today. The team also lowered their earnings per share estimates for companies in the S&P 500 for 2008 to $72 from $76 and for 2009 to $75 from $87.

The S&P 500 will ``trough in late November'' after four ``milestones'' have been met. These include the return of functioning short-term credit markets, the completion of the third-quarter earnings season and the U.S. presidential election. They also said funds may choose to close at year-end after the Nov. 15 deadline for providing advance notification on redemptions.

Futures on the S&P 500 expiring in December added 4.1 percent to 927.6 at 8:08 a.m. in New York, indicating the gauge will rebound from its 18 percent slide last week. That was the worst weekly drop since 1933 as investors shrugged off an unprecedented coordinated effort by central banks led by the Federal Reserve to lower borrowing costs.

The S&P 500 peaked on Oct. 9, 2007 at 1,565.15 and Goldman's previous year-end forecast was 1,400. It's down 43 percent since then. Separately, other Goldman Sachs strategists today lowered their forecasts for crude oil, natural gas, and base metals including copper and aluminum.

For Related News:

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net



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German Stocks Rally on Rescue Plan; Banks, Steelmakers Advance

By Stefanie Haxel

Oct. 13 (Bloomberg) -- German stocks rebounded from the steepest weekly drop on record, led by banks, after governments in Europe agreed on measures to shore up financial markets.

Commerzbank AG, Germany's second-largest lender, rallied 16 percent and Hypo Real Estate Holding AG surged 37 percent. At a summit chaired by French President Nicolas Sarkozy, leaders of the 15 countries using the euro agreed to guarantee new bank debt and use taxpayer money to keep distressed lenders afloat. The German government said it will provide as much as 500 billion euros ($681 billion) to bolster the banking system. ThyssenKrupp AG and Salzgitter AG, the country's biggest steelmakers, both added more than 10 percent.

The DAX Index increased 301, or 6.6 percent, to 4,845.31 as of 2:07 p.m. in Frankfurt. A close at this level would mark the steepest one-day gain since March 2003. DAX futures expiring in December soared 8.5 percent to 4,880. The HDAX Index of the country's 110 biggest companies rose 6.9 percent to 2,438.72.

``There's relief everywhere,'' said Roger Peeters, an analyst at Close Brothers Seydler Research AG in Frankfurt. ``Positive news in terms of this rescue package is being rewarded again. When the U.S. package finally passed the House of Representatives, it had no lasting impact. Now, investors dare to buy stocks again,'' he said in a Bloomberg Television interview.

The DAX Index tumbled 22 percent last week on concern the deepening credit crisis will drag the global economy into recession, overshadowing interest-rate cuts by central banks in the U.S., Europe and Asia. The measure is down 40 percent this year as credit losses and asset writedowns at financial firms worldwide topped $600 billion.

`Restore Confidence'

Commerzbank surged 1.51 euros to 11.21. Hypo Real Estate, the commercial-property lender that had to be bailed out by the government, gained 1.52 euros to 5.65. Deutsche Bank AG, the country's largest bank by assets, advanced 2.81 euros, or 9 percent, to 34.04.


Chancellor Angela Merkel's government pledged 400 billion euros in loan guarantees, provided as much as 80 billion euros to recapitalize banks in distress and set aside another 20 billion euros in its budget to cover potential losses from loans.

Money-market rates in Europe declined after policy makers offered banks unlimited dollar funding and European governments pledged to take ``all necessary steps'' to shore up confidence among lenders.

``We see the rescue package positively as it should help to restore confidence among banks and to bolster weak banks' capital base,'' Equinet AG analyst Philipp Haessler in Frankfurt wrote in a note to clients today.

Steelmakers

ThyssenKrupp, Germany's largest steelmaker, gained 2.42 euros, or 16 percent, to 17.92. Salzgitter, the second-biggest, added 7 euros, or 14 percent, to 46.89. Steel trader Kloeckner & Co. SE climbed 2.42 euros, or 22 percent, to 13.57.

Metals and mining stocks were among the best performers in Europe today after government pledges of support for the banking system eased concern a global economic slump would curb demand for materials used in cars and buildings.

Infineon Technologies AG, Europe's second-largest chipmaker, advanced 40 cents, or 15 percent, to 3.15 euros. The company's memory-chip division Qimonda AG agreed to sell a 35.6 percent stake in Taiwan's Inotera Memories Inc. for $400 million in cash to U.S. competitor Micron Technology Inc.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Air Berlin Plc (AB1 GY) climbed for a second day, adding 11 cents, or 3.7 percent, to 3.06 euros after Europe's third-largest discount airline said it's in talks about a potential merger with German competitor TUIfly.

Bayerische Motoren Werke AG (BMW GY) rose 1.17 euros, or 6 percent, to 20.80, poised for the steepest gain in three weeks. The world's largest maker of luxury cars stuck to its forecast for record car sales and a profit margin of at least 4 percent, Frankfurter Allgemeine Sonntagszeitung reported, citing Chief Executive Officer Norbert Reithofer.

Fielmann AG (FIE GY) increased 2.86 euros, or 6.7 percent, to 45.58. Exane BNP Paribas rated Europe's largest chain of optical stores ``outperform'' in new coverage and set its share- price estimate at 56 euros.

Fresenius Medical Care AG (FME GY) climbed 2.25 euros, or 7.2 percent, to 33.67 as UBS AG raised its recommendation for the world's biggest provider of kidney dialysis to ``buy'' from ``neutral.''

ProSiebenSat.1 Media AG (PSM GY) rallied 79 cents, or 25 percent, to 4 euros, on course for the biggest gain since February 2002. Germany's largest private broadcaster purchased a 67.6 percent stake in online news company Webnews.de to expand its Internet business.

TUI AG (TUI1 GY) climbed 1.24 euros, or 14 percent, to 10.005, poised for the steepest advance in more than five years. The owner of Europe's largest travel company agreed to sell its Hapag-Lloyd shipping unit for more than some analysts had estimated.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.


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U.S. Stocks Rally on Bank Plan; Morgan Stanley, Ford Surge

By Elizabeth Stanton

Oct. 13 (Bloomberg) -- U.S. stocks rallied after the market's worst week in 75 years, boosted by the government's plan to buy stakes in banks and a Federal Reserve-led push to flood the global financial system with dollars.

Morgan Stanley soared as much as 66 percent after sealing a $9 billion investment from Japan's Misubishi UFJ Financial Group In. Bank of America Corp. and Citigroup Inc. jumped more than 7 percent, while General Motors Corp. and Ford Motor Co., the largest U.S. automakers, climbed more than 27 percent each. European and Asian stocks also jumped, helping the MSCI World Index rebound from its worst week on record.

The Standard & Poor's 500 Index added 49.88, or 5.6 percent, to 949.1 at 10:32 a.m. in New York. The Dow Jones Industrial Average rose 441.65, or 5.2 percent, to 8,892.84. The Nasdaq Composite Index advanced 91.01, or 4.5 percent, to 1,740.52. Nine stocks gained for each that fell on the New York Stock Exchange.

``The measures that they've said they're going to take are important,'' said Quincy Krosby, who helps manage about $380 billion as chief investment strategist at the Hartford in Hartford, Connecticut. ``When we say stabilize the financial system, we're talking about money flowing, banks lending. That's what the market is waiting for.''

The S&P 500 halted an eight-day losing streak, its longest since 1996. Last week's 18 percent declines pushed both the S&P 500 and Dow down more than 40 percent from their peaks last October. The S&P 500 ended last week's trading for 17 times reported earnings of its companies, the cheapest valuation in more than a year.

Global Plan

Neel Kashkari, the U.S. Treasury official overseeing the $700 billion rescue of the financial system, said government equity injections will be aimed at ``healthy'' firms, will be voluntary and have attractive terms to encourage participation. As part of the Fed-led plan, the European Central Bank, the Bank of England and the Swiss central bank will auction unlimited dollar funds. Previous dollar swap arrangements between the Fed and other central banks were capped.

Citigroup climbed 4.6 percent to $14.76, Bank of America added 6.4 percent to $22.21, Merrill Lynch & Co. added 7.1 percent to $16.86 and Goldman Sachs Group Inc. rallied 7.5 percent to $95.46.

Morgan Stanley

Morgan Stanley rose $4.35 to $14.03 and gained as much as $6.42. Morgan Stanley agreed to change the terms of its $9 billion investment from Mitsubishi UFJ Financial Group Inc., providing the Japanese bank with preferred stock that pays a 10 percent dividend instead of common stock.

Mitsubishi UFJ, Japan's biggest lender, will get 21 percent of the New York-based company as previously agreed, the two firms said today in a joint statement. The terms were renegotiated after the tumble in Morgan Stanley's shares last week.

The collapse of New York-based Lehman Brothers Holdings Inc. on Sept. 15 precipitated the latest chapter of the 14- month-old crisis, causing banks to stop lending to each other out of concern they may not get their money back.

The Treasury Department will take equity stakes in banks using authority it was granted under the $700 billion bank rescue plan enacted two weeks ago, Treasury Secretary Henry Paulson said over the weekend.

``We're talking about making investments in these banks in a way that doesn't necessarily punish existing shareholders,'' Charles Bobrinskoy, vice chairman of Ariel Investments, which manages $13 billion, said on Bloomberg Television. ``Most of the bank actions to date in the U.S. have been good for bondholders but terrible for common stockholders.''

Financials Gain

The S&P 500 Financials Index added 3 percent today. The gauge of banks, insurers and investment firms sank 22 percent last week. Morgan Stanley plunged 60 percent last week as Moody's Investors Service said it may reduce the U.S. bank's credit rating on concern the financial crisis threatens earnings and investor confidence. Goldman Sachs dropped 31 percent to $88.80 in the week.

Exxon Mobil Corp. climbed 2.7 percent to $64.04 after a 20 percent tumble last week. Oil gained as much as 6.2 percent to $83.52 a barrel today, rebounding from a 13-month low. General Motors gained 27 percent to $6.20 and Ford added 23 percent to $2.45.

Freeport-McMoRan Copper & Gold Inc. added 2.6 percent to $37.28 as copper on the London Metal Exchange rebounded from a 33-month low.

Apple Rebounds

Apple Inc. rose 5.9 percent to $102.55. Sanford C. Bernstein & Co. analyst Toni Sacconaghi upgraded the maker of Macintosh computers and the iPhone to ``outperform'' from ``market perform,'' saying the shares are ``overly discounted'' after plunging 46 percent in two months.

Abbott Laboratories rose 5.3 percent to $52.06. The maker of drug-coated heart stents said it will spend as much as $5 billion to buy back shares.

The benchmark index for U.S. stock options declined for the first time in six days. The VIX, as the Chicago Board Options Exchange Volatility Index is known, measures the cost of using options as insurance against declines in the S&P 500. It averaged 59.43 last week, almost triple the 22.39 average in its 18-year history.

Goldman Sachs Group Inc. cut its forecast for the S&P 500 by 29 percent to 1,000, while saying the benchmark index for U.S. equities is set for a potential ``strong'' year-end rally starting in late November, according to a note from equity strategists led by David Kostin.

Billionaire investor George Soros said the European agreement is a ``positive'' step that may help stabilize global financial markets.

``In the last 72 hours, I think the European governments got religion and realized that this is a serious problem,'' Soros said in Washington. ``People are looking for some leadership and finally they are getting it,'' suggesting there's ``a good chance'' the worst investor panic is over.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net



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European Stocks Climb on Bailout Plan; UBS, ING, Total Advance

By Adria Cimino

Oct. 13 (Bloomberg) -- European stocks rallied, with the Dow Jones Stoxx 600 Index rebounding from its worst week on record, as governments in Europe, the U.S. and Asia agreed to support banks.

UBS AG, Deutsche Bank AG and ING Groep NV jumped more than 10 percent after European leaders said they would guarantee new bank debt. Total SA gained 6.7 percent and BHP Billiton Ltd. rose 7.9 percent as oil climbed from a 13-month low and copper advanced from the lowest price in more than two years.

``There's a certain sense of relief,'' said Benoit de Broissia, an equity analyst at KBL Richelieu Gestion in Paris, which oversees $5.5 billion. ``The banking system is the lung of the economy, so it has to be supported.''

The Stoxx 600 advanced 6.7 percent to 218.8 at 3:04 p.m. in London. The index has dropped 40 percent this year as concern that frozen credit markets will trigger a recession erased about $28 trillion in value from global stock markets.

Financial firms have reported $635 billion in losses and writedowns from U.S. mortgage-related investments since the beginning of last year.

Stocks increased after the U.S. Federal Reserve said central banks will offer financial institutions unlimited dollar funds and Europe pledged to guarantee bank debt issues and permit governments to buy stakes and recapitalize some distressed financial companies.

National Markets

National benchmark indexes climbed more than 4 percent in 16 of the 17 western European markets that were open. The U.K.'s FTSE 100 jumped 4.8 percent. Germany's DAX advanced 7.7 percent. France's CAC 40 increased 6.8 percent as Total SA gained.

Iceland suspended stock trading for a third day after the government seized Kaupthing Bank hf, the country's biggest bank.

The cost of protecting bank bonds from default fell after the U.K. pledged 37 billion pounds ($64 billion) for Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc.

Germany will provide as much as 500 billion euros ($681 billion) in loan guarantees and capital to bolster the banking system, the Finance Ministry said.

``The most important signal that the European Union gave to us over the weekend is that it's finally speaking with one voice,'' said Michael Scholz, an equity strategist at WestLB AG in Dusseldorf. ``That's a positive signal for the market participants.''

The euro rose as much as 2 percent against the dollar, the most since Sept. 22. It advanced by as much as 2.1 percent against the yen.

Money-Market Rates Fall

Money-market rates declined after central banks offered unlimited dollar funds. The London interbank offered rate, or Libor, for three-month dollar loans fell to 4.75 percent from 4.82 percent, the British Bankers' Association said today.

The TED spread, the difference between what the U.S. government and banks pay for three-month dollars, narrowed 7 basis points to 457 basis points. The Libor-OIS spread, a gauge of cash scarcity among banks, narrowed 2 basis points to 362 basis points.

``We were on the brink of an implosion,'' said Jacques- Antoine Bretteil, who manages about $312 million at International Capital Gestion in Paris. ``We've avoided the worst, but that doesn't mean all of the problems are over.''

UBS, the European bank hardest hit by subprime-related losses, surged 12 percent to 19.04 francs. Deutsche Bank, Germany's biggest, rallied 10 percent to 34.435 euros. ING, the largest Dutch financial-services provider, gained 17 percent to 12.23 euros.

Banks Upgraded

Goldman Sachs Group Inc. raised its recommendation on European banks to ``neutral'' from ``underweight,'' citing the recent decline in valuations and central bank action to reduce risks for the industry.

Barclays Plc added 6 percent to 220 pence. The U.K.'s second-biggest bank plans to sell more than 6.5 billion pounds ($11 billion) of shares to private investors without turning to the government for help. Barclays won't pay a final dividend for 2008, the company said today.

Royal Bank of Scotland fell 9.8 percent to 64.7 pence, and HBOS dropped 22 percent to 96.5 pence. Lloyds TSB lost 9.7 percent to 171 pence.

In exchange for the bailout, Royal Bank of Scotland and HBOS will cede majority control to the government, give Prime Minister Gordon Brown seats on their boards, the right to fix dividends, and power to set executives' pay.

Societe Generale

Societe Generale SA sank 6 percent to 46.99 euros. The bank that suffered a record trading loss this year declined on concern the company may need to raise 10 billion euros ($13.6 billion) of capital.

Speculation about a ``capital increase is what's hurting the stock,'' said Frederic Boissel, an equity trader at Tradition Financial Services in London. ``We heard a rumor of a loss in structured products and then a rumor of a 10 billion- euro capital increase, which would dilute shares by about 35 percent.''

Societe Generale denied rumors of a need for a capital increase and significant losses in structured products.

The Stoxx 600 closed last week valued at 8.5 times profit of the companies in the index, the lowest level since at least 2002, according to data compiled by Bloomberg. The MSCI World Index traded at 11 times the earnings of its 1,730 companies. That was the cheapest since at least 1995. The S&P 500, the benchmark for American equities, was valued at 17.2 times earnings, the lowest in more than a year, after its steepest weekly retreat since 1933.

Banco Santander

Banco Santander SA added 7.5 percent to 9.75 euros. Spain's largest lender is in talks to buy Sovereign Bancorp Inc., the biggest remaining U.S. savings and loan, in what would be the third acquisition of a troubled lender in three months by the company.

Total, Europe's biggest oil refiner, gained 6.7 percent to 35.40 euros. Royal Dutch Shell Plc, the region's largest energy company, advanced 5.9 percent to 1,380 pence.

Crude for November delivery rose as much as 6.2 percent to $82.52 on the New York Mercantile Exchange.

BHP Billiton, the world's biggest mining company, jumped 7.9 percent to 1,030 pence, while Rio Tinto Group, the third- largest, climbed 9.6 percent to 2,657 pence. Copper on the London Metal Exchange rose from a 33-month low after governments around the world agreed to support their financial systems.

Philips, GDF Suez

Royal Philips Electronics NV lost 7.3 percent to 14.63 euros. Europe's biggest television maker said it will slow down its 5 billion-euro ($6.8 billion) share buyback after third- quarter sales fell short of analysts' estimates.

GDF Suez SA, the owner of Electrabel SA, Belgium's biggest power producer, surged 16 percent to 28.19 euros after Citigroup Inc. said the possibility of electricity-price regulation in the country receded.

``Comments made by the Belgian Prime Minister and members of the government lead us to believe regulation in the country is highly unlikely,'' Citigroup analyst Sofia Savvantidou wrote in a report.

ArcelorMittal gained 16 percent to 25.34 euros. The world's biggest steelmaker rebounded from its 13 percent decline on Oct. 10 as Societe Generale raised its recommendation on the shares to ``buy'' from ``sell.''

``ArcelorMittal's share price has clearly undershot,'' Paris-based Societe Generale analyst Alain William wrote in a research note to investors published today.

TUI AG soared 19 percent to 10.45 euros. The owner of Europe's largest travel company agreed to sell its Hapag-Lloyd shipping unit for more than some analysts had estimated.

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



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Brazilian Stocks Surge on Global Bank Bailout Plan; Vale Jumps

By Alexander Ragir

Oct. 13 (Bloomberg) -- Brazilian stocks rose for the first time in eight days after governments in Europe, the U.S. and Asia agreed to support banks, easing concern that credit seizures will curb demand for commodities.

Petroleo Brasileiro SA, Brazil's state-controlled oil company, gained 7.3 percent to 25.75 reais as oil rose from a 13- month low. Cia. Vale do Rio Doce rallied 8.6 percent to 26.38 reais as nickel, aluminum, zinc and lead jumped in London.

The U.S. Federal Reserve said central banks will offer financial institutions unlimited dollar funds and Europe pledged to guarantee bank debt issues and permit governments to buy stakes and recapitalize some distressed financial companies.

The Bovespa index sank 20 percent last week, the worst weekly decline since October 1997.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.



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Morgan Stanley, Qwest, Waste Management: U.S. Equity Movers

By Whitney Kisling and Elizabeth Campbell

Oct. 13 (Bloomberg) -- The following companies are having unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 9:40 a.m. in New York.

Financial stocks rallied after the Federal Reserve led an unprecedented effort by central banks worldwide to provide unlimited dollar funds to support government efforts to restore confidence to banks.

Bank of America Corp. (BAC US) climbed 9.4 percent to $22.84. National City Corp. (NCC US) gained 6 percent to $2.12. Keycorp (KEY US) rose 7.4 percent to $7.29. Citigroup Inc. (C US) increased 6.4 percent to $15.01. Merrill Lynch & Co. (MER US) rose 6.7 percent to $16.80.

Metal producers climbed as government pledges of support for the banking system eased fears a global economic slump would curb demand. ArcelorMittal (MT US) gained 19 percent to $34.74. AK Steel Holding Corp. (AKS US) rose 14 percent to $12.54. U.S. Steel Corp. (X US) advanced 5 percent to $46.82.

American International Group Inc. (AIG US) rose 13 percent to $2.63. The insurance company bailed out by the U.S. government may get a bid for its Philippine unit from SM Investments Corp. and its unit Banco de Oro Unibank. A foreign partner may join in on the bid, SM Investment Chief Financial Officer Jose Sio said in a statement.

Apple Inc. (AAPL US) rose 6.7 percent to $103.26 and earlier climbed to $106, the highest price in a week. The maker of iPods, iPhones and Macintosh computers was raised to ``outperform'' from ``market perform'' by Sanford C. Bernstein & Co.'s Toni Sacconaghi, the top-ranked computer analyst by Institutional Investor magazine. The risk-reward balance at Apple is ``compelling'' and the shares are ``overly discounted,'' Sacconaghi said.

Fastenal Co. (FAST US) gained 4.8 percent to $39 and earlier rose as much as 8.3 percent for the biggest intraday jump since Jan. 22. The largest U.S. retailer of nuts and bolts reported third-quarter earnings of 52 cents a share, excluding a charge for a legal settlement. Analysts surveyed by Bloomberg had an average estimate for earnings of 50 cents a share.

Ford Motor Co. (F US) climbed 18 percent to $2.34 and earlier surged as much as 50 percent for the biggest gain since at least 1980. The second-largest U.S. automaker is considering selling its controlling stake in Japan's Mazda Motor Corp., a person familiar with the matter said. Separately, Chief Financial Officer Don Leclair stepped down and will be replaced by the top executive in Ford's European division.

Infineon Technologies AG American depositary receipts (IFX US) rose 13 percent to $4.13. Qimonda AG (QI US) will receive $400 million in cash from Micron Technology Inc. (MU US), the largest U.S. memory-chip maker that has agreed to buy Qimonda's 35.6 percent stake in Inotera Memories Inc. Infineon is the majority owner of Qimonda.

Morgan Stanley (MS US) rose 45 percent to $14.08 and earlier surged 66 percent for its biggest intraday gain since at least 1993. The U.S. investment bank sealed its $9 billion investment from Mitsubishi UFJ Financial Group Inc. after renegotiating the terms.

New York & Co. (NWY US) slumped 34 percent to $4.77 for the biggest intraday loss since its initial public offering four years ago. The women's clothing retailer said it expects a loss of as much as 12 cents a share in the third quarter as sales declined. Analysts, on average, anticipated earnings of 11 cents a share, according to a Bloomberg survey.

Qwest Communications International Inc. (Q US) surged 22 percent to $2.67 and earlier rose as much as 28 percent for the steepest rise since August 2002. The third-largest U.S. local phone company and its largest union reached a tentative contract agreement 10 days after workers rejected a previous offer. Qwest said the agreement with the Communications Workers of America and the International Brotherhood of Electrical Workers boosts pay by about 12.6 percent over four years.

Royal Philips Electronics NV (PHG US) fell 8.9 percent to $19.67, the lowest intraday price since July 2003. The world's largest maker of patient-monitoring system said third-quarter earnings before interest, tax and amortization at its health-care division fell to 10.9 percent of sales, trailing the 12.8 percent margin analysts had anticipated. Analysts had expected 12.8 percent.

Waste Management Inc. (WMI US) jumped 13 percent to $29 and earlier rose as much as 16 percent, the biggest intraday gain since May 2000. The largest U.S. trash hauler withdrew a $6.73 billion hostile takeover offer for Republic Services Inc. (RSG US), saying market conditions would make the acquisition too risky.

To contact the reporters on this story: Whitney Kisling in New York at wkisling@bloomberg.net; Elizabeth Campbell in New York at ecampbell11@bloomberg.net



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FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Oct 13 08 13:02 GMT |

USD-CHF @ 1.1302/06... US closed today

R: 1.1360 / 1.1390-1400 / 1.1450 / 1500
S: 1.1300 / 1.1250 / 1.1200 / 1.1150

Facing Resistance near 1.14 the pair has slipped lower during the day. As long as the market is pressured below the Resistance a slip towards the Support region could be seen. For now, immediate Support is seen at 1.1300, 1.1250 and at 1.12 below it.

However, if the pair manages to rise beyond the Resistance at 1.14 it could then target 1.15-16, which happens to the next level of Resistance. Overall the pair is bullish and there is a good chance that the pair could break the Resistance at 1.15-16 to rise higher over the coming weeks to challenge the 200-week SMA at 1.2075.

The day ahead might see a calm trading session as the US is closed today.
GBP-USD @ 1.7361/65... Rise seen today

R: 1.7390 / 1.745-70 / 1.7500 / 1.7575
S: 1.7300 / 1.7275 / 1.7200 / 1.7150 / 1.7070

The pair has seen a sharp rise in the day to 1.7345. However, the pair could now face some Resistance near 1.7350-80 today. Also a dip towards 1.7200 could be seen before further upside becomes likely.

Overall the pair could slip lower once again towards 1.72 and 1.70 if the Resistance at 1.7350-7400 holds. However, the overall view remains that the pair could trade within a wide range, the boundaries not defined immediately, over the next couple of weeks.

As long as Cable trades below 1.7640, the pair could eventually slip towards the medium term target of 1.6550, the 61.8% retracement of the fall from 1.3682 ('01) to 2.1163 ('08). To see the chart click on:

http://www.kshitij.com/graphgallery/gbpcandle.shtml
AUD-USD @ 0.6700/04... Could slip lower

R: 0.6750-60 / 0.6800 / 0.6825-50 / 0.6900
S: 0.6660-50 / 0.6600 / 0.6550 / 0.6500 / 0.6450

The pair did rise during the day to face Resistance near 0.6800. However, dips towards 0.6660 seem to attract some buying and the pair has some immediate Support in the region.

However, the day ahead could see the pair slip towards 0.66 and eventually lower towards 0.65 on a break of Support at 0.6660. As long as Support at 0.6660 holds, there remains an outside chance that the pair rises past the Resistance at 0.6800-25

Overall, there is a strong chance that the market could see the pair trade within a wide range from 0.6330?0.7000 over the next couple of weeks.

Holding:

Short AUD 10K at 0.6750, SL 0.6825, TP 0.6500

Kshitij Consultancy Service
http://www.fxthoughts.com

Legal disclaimer and risk disclosure

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.



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London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Oct 13 08 12:29 GMT |

Further guarantees for bank borrowing by European leaders saw currencies across the pond strengthen against the buck. Euro-zone leaders made it clear that they would not allow systemically critical banks to fail while UK leaders took it one step further by saying that they will invest about $64 billion to buy stakes in banks.

An additional source of USD weakness also looks to be a new initiative by several central banks to flood the system with unlimited dollar funds. The ECB, the BOE and the Swiss central bank are expected to auction unlimited amounts of USD funds which had been previously capped. This fresh supply of USD into the market looks to be weighing on the buck some.

EUR/USD was about -40 pips weaker after opening the London session near the 1.3660 mark. GBP/USD however continued to rocket higher, adding more than 170 pips since the London open to currently sit near the 1.7350/55 area. We had noted in recent days that we felt the selloff in GBP/USD has been overdone. We continue to expect weakness into the 1.72/1.70 area to see relatively quick reversals higher.


JPY crosses gave back some gains after surging overnight from last week's lows. USD/JPY lost -50 bps into the 100.15 mark and the 100.00 area remains vulnerable while the volatility in US stocks continues. EUR/JPY meanwhile tumbled -85 pips and was sitting near 1.3655 as NY trading kicked off.

Nothing notable in terms of economic data today and the markets will be keenly awaiting developments in the seemingly never ending government plans to snap the credit market out of its current funk. As of this morning, credit spreads continue to suggest a very tight credit market environment. Not until these begin to contract in a very material way will we get the all-clear sign that things have really begun to improve.

Upcoming Economic Data Releases (NY Session) Prior Estimate

* 10/13 14:15 GMT GE German Economy Minister Glos Gives Statement

Forex.com
http://www.forex.com

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.


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FTSEjumps 4.3 pct as bank plan lifts confidence

* FTSE 100 gains 4.3 percent

* Energy, mining stocks rise on rising commodity prices

* Banks mixed as recapitalisation plans assessed

* HBOS, Lloyds TSB, Royal Bank of Scotland tumble

By Simon Falush

LONDON, Oct 13 (Reuters) - Britain's top share index was up 4.3 percent by midday on Monday, recouping some of last week's heavy losses as a government deal to pump billions of pounds into the troubled banking sector lifted market sentiment.

Oil and mining stocks rebounded strongly as commodity prices recovered and some banking stocks gained but HBOS , Lloyds TSB , and Royal Bank of Scotland tumbled again as investors fretted that moves by the government to take stakes in the firms would limit returns.

By 1106 GMT the FTSE 100 .FTSE had gained 168.9 points to trade at 4,100.9 after falling 8.9 percent on Friday and haemorrhaging 21 percent last week, its biggest fall since 1987.

The FTSE 350 banks index was up 3.7 percent after the British government said it would make capital investments worth 37 billion pounds ($64 billion) in RBS and a merged Lloyds TSB and HBOS .

"Market sentiment is a bit more positive, the government has grasped the nettle and committed to a rescue plan," said Keith Bowman, equity strategist at Hargreaves Lansdown.

"There's still a huge amount of nervousness and volatility around but we do seem to have taken a step in the right direction with some coordination from governments and some definite action."

HBOS dropped 26.2 percent and Lloyds TSB lost 9 percent after the latter said it had renegotiated its agreed takeover of HBOS, dropping its offer to 0.605 of a Lloyds share for every HBOS share, down from the 0.833 agreed on Sept. 18.

Royal Bank of Scotland tumbled 21 percent to 57.5 pence. RBS was trading at around 370 pence in January and peaked at over 600 pence in March last year.

Barclays gained 6.9 percent after it said it would boost its capital by more than 6.5 billion pounds but expected to do so without government help.

"I suspect that Barclays have shown the way by saying that they can go out to Asian, Middle Eastern investors and some of their own investors and saying we don't need to take this money from the government, so its quite a confidence statement," Paul Kavanagh, head of market strategy at stockbrokers Killik said.

Standard Chartered gained 10.3 percent after it said it meets UK capital requirements and was well capitalised and highly liquid.

FINANCIALS GAIN

Other financial stocks also climbed on the government measures, with insurers Prudential , and Standard Life up 5.2 and 6.8 percent, while interdealer broker ICAP was up 11.1 percent.

Energy stocks gained as oil CLc1 climbed more than $3 a barrel, recouping some of Friday's 10 percent dive, as nervousness on the future of the world economy eased somewhat.

BP , Royal Dutch Shell , BG Group and Cairn Energy advanced between 1.6 and 6.5 percent.

Heavily pressured mining stocks also rallied as metals surged, with copper gaining over 7 percent and gold up, also recovering ground after last week's heavy losses.

Anglo American , Kazakhmys , Eurasian Natural Resources , Rio Tinto and Lonmin strengthened between 5.8 and 11.5 percent.

Shares in TUI Travel jumped 18.1 percent after Frankfurt-listed TUI , which owns 51 percent of the company, said it would sell its Hapag-Lloyd unit to German investors, increasing the prospects of it buying out the British unit.

Retailers were supported on hopes that the bank recapitalisation moves would prevent a deep recession.

Kingfisher added 0.7 percent, Marks & Spencer put on 4.6 percent, and Next gained 3.6 percent. (Editing by Greg Mahlich)



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US STOCKS-Futures jump on bank rescues; Morgan higher

* Global efforts to pump cash into banks buoy markets

* Morgan Stanley jumps as news of Japanese deal eyed

* Credit markets show signs of loosening up

By Ellis Mnyandu

NEW YORK, Oct 13 (Reuters) - U.S. stock index futures soared on Monday as a push by governments around the world to pump money into the clogged banking system sparked relief among investors and credit markets showed signs of loosening up.

Stock markets leaped in Asia overnight, and in Europe, where the FTSEurofirst 300 , an index of leading European shares, shot up nearly 6 percent. Benchmark U.S. indexes were poised to open up about 5 percent or more after Wall Street capped its worst week ever on Friday.

Governments stepped up efforts to restore confidence in the tottering banking system by providing multibillion-dollar bank bailouts following weekend talks in Washington.

"The global markets are giving a nod of approval to what the governments, central banks and the U.S. Treasury are doing to boost confidence in the market place," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"What we could see is a market that begins to stabilize. Obviously there's some questions about the plans. Are we going too far? Are we all becoming socialist? But the bottom line: the market needed to get some concrete plan and I think finally we've gotten something that's going to restore confidence."


S&P 500 futures SPc1 rose 46.70 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 jumped 380 points and Nasdaq 100 NDc1 futures climbed 46.70 points.

U.S. trading was likely to be light, however, with the U.S. bond market closed for the Columbus Day holiday. Japanese markets were also closed for a holiday on Monday.

Britain said it would spend up to 37 billion pounds ($63.95 billion) buying into top UK banks and Germany and France took similar steps. In the United States, Treasury Secretary Henry Paulson said Washington was developing plans to buy equity in financial institutions to halt the prolonged market turmoil.

Before the bell, the Financial Select Sector SPDR XLF.A, an exchange-traded fund which tracks the performance of the Standard & Poor's 500 financials group, jumped 7.6 percent.

Shares of Morgan Stanley rose more than 30 percent to $12.75 before the bell amid news that Japan's Mitsubishi UFJ Financial Group is seeking more favorable terms for its $9 billion investment deal with the U.S. bank.

The Japanese lender will still buy a 21 percent stake from Morgan Stanley for $9 billion, but will amend the terms to include only convertible preferred shares and no common stock, a person briefed on the matter said.

Spain's Banco Santander is in advanced talks to buy full control of Sovereign Bancorp Inc in a deal valued at $2.5 billion, according to a source familiar with the matter. Before the bell, Sovereign Bancorp shares jumped more than 11 percent to $4.24.

In one sign that credit markets may be loosening up, the cost for banks to borrow from each other dollars, sterling and euros over three months fell. (Editing by James Dalgleish)


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European holidays to December 2008

exchanges closed.

Public holiday - Government offices, banks and ordinary businesses closed.

Double-click in brackets for Americas holidays diary [HOL1/DIARY], Asian holidays [HOL2/DIARY], Mideast/Africa holidays [HOL4/DIARY]

Alternatively click on HOLIDAY to retrieve dates by country.

REUTERS DIARY OF EUROPEAN HOLIDAYS

****************************************************

2008 MARKET/PUBLIC HOLIDAYS

****************************************************

** MORE COUNTRIES WILL BE ADDED AS AND WHEN THE DATES ARE CONFRIMED

OCTOBER

THURSDAY, OCT 23

HUNGARY - Public Holiday - Market Holiday

FRIDAY, OCT 24

HUNGARY - Public Holiday - Market Holiday

TUESDAY, OCT 28

CYPRUS - Greek National Anniversary - Market Holiday

CZECH REPUBLIC - Independent Czechoslovak State Day - Market Holiday

GREECE - National Holiday - Market Holiday

TURKEY - Republic Day - Half-day Market Holiday

WEDNESDAY, OCT 29

TURKEY - Republic Day - Market Holiday

FRIDAY, OCT 31

SLOVENIA - Reformation Day - Market Holiday

NOVEMBER

SATURDAY, NOV 1

CROATIA - All Saint's Day - Market Holiday

MONDAY, NOV 3

LITHUANIA - Market Holiday

RUSSIA - Public Holiday - Market Holiday

TUESDAY, NOV 4

RUSSIA - Public Holiday - Market Holiday

TUESDAY, NOV 11

POLAND - Independence Day - Market Holiday

MONDAY, NOV 17

CZECH REPUBLIC - Struggle for Freedom and Democracy Day - Market Holiday

SLOVAKIA - Struggle for Freedom and Democracy Day - Market Holiday

TUESDAY, NOV 18

LATVIA - Proclamation of Latvia - Market Holiday

DECEMBER

MONDAY, DEC 1

ROMANIA - National Day - Market Holiday

MONDAY, DEC 8

AUSTRIA - Immaculate Conceptio - Market Holiday

MALTA - Immaculate Conception - Market Holiday

TURKEY - Religious Kurban Holiday - Market Holiday

TUESDAY, DEC 9

TURKEY - Religious Kurban Holiday - Market Holiday

WEDNESDAY, DEC 10

TURKEY - Religious Kurban Holiday - Market Holiday

THURSDAY, DEC 11

TURKEY - Religious Kurban Holiday - Market Holiday

WEDNESDAY, DEC 24

AUSTRIA - Christmas Eve - Market Holiday

BULGARIA - Christmas Eve - Market Holiday

CROATIA - Trading till 13:00 local time

CYPRUS - Christmas Eve - Market Holiday

CZECH REPUBLIC - Christmas Eve - Market Holiday

DENMARK - Christmas Eve - Market Holiday

ESTONIA - Christmas Eve - Market Holiday

FINLAND - Christmas Eve - Market Holiday

GERMANY - Christmas Eve - Market Holiday

HUNGARY - Public holiday - Market Holiday

ICELAND - Christmas Eve - Market Holiday

ITALY - Christmas Eve - Market Holiday

LATVIA - Christmas Eve - Market Holiday

LITHUANIA - Christmas Eve - Market Holiday

NORWAY - Christmas Eve - Market Holiday

POLAND - Christmas Eve - Market Holiday

SLOVAKIA - Christmas Eve - Market Holiday

SPAIN - Market Holiday - Market Holiday

SWEDEN - Christmas Eve - Market Holiday

SWITZERLAND - Christmas Eve - NLIs will be available - SWX, SCOACH, STOXX, Berne Closed

THURSDAY, DEC 25

AUSTRIA - Christmas Day - Market Holiday

BELGIUM - Christmas Day - Market Holiday

BULGARIA - Christmas Day - Market Holiday

CROATIA - Christmas Day - Market Holiday

CYPRUS - Christmas Day - Market Holiday

CZECH REPUBLIC - Christmas Day - Market Holiday

DENMARK - Christmas Day - Market Holiday

ESTONIA - Christmas Day - Market Holiday

FINLAND - Christmas Day - Market Holiday

FRANCE - Christmas Day - Market Holiday

GERMANY - Christmas Day - Market Holiday

GREECE - Christmas Day - Market Holiday

HUNGARY - Christmas Day - Market Holiday

ICELAND - Christmas Day - Market Holiday

IRELAND - Christmas Day - Market Holiday

ITALY - Christmas Day - Market Holiday

LATVIA - Christmas Day - Market Holiday

LITHUANIA - Christmas Day - Market Holiday

LUXEMBOURG - Christmas - Market Holiday

NETHERLANDS - Christmas Day - Market Holiday

NORWAY - Christmas Day - Market Holiday

ROMANIA - Christmas - Market Holiday

SLOVENIA - Christmas - Market Holiday

SLOVAKIA - Christmas Day - Market Holiday

SRI LANKA - Christmas - Market Holiday

POLAND - Christmas - Market Holiday

PORTUGAL - Christmas Day - Market Holiday

SWEDEN - Christmas Day - Market Holiday

SWITZERLAND - Christmas Day - Market Holdiay

UNITED KINGDOM - Christmas Day - Market Holiday

FRIDAY, DEC 26

AUSTRIA - Boxing Day - Market Holiday

BELGIUM - Boxing Day - Market Holiday

BULGARIA - Second Christmas Day - Market Holiday

CROATIA - St. Stephen's Day - Market Holiday

CYPRUS - Boxing Day - Market Holiday

CZECH REPUBLIC - St. Stephen's Day - Market Holiday

DENMARK - Boxing Day - Market Holiday

ESTONIA - Boxing Day - Market Holiday

FINLAND - Boxing Day - Market Holiday

FRANCE - Boxing Day - Market Holiday

GERMANY - Market Holiday

GREECE - Market Holiday

HUNGARY - Market Holiday

ICELAND - Boxing Day - Market Holiday

IRELAND - St. Stephen's Day - Market Holiday

ITALY - St. Stephen's Day - Market Holiday

LATVIA - Boxing Day - Market Holiday

LITHUANIA - Boxing Day - Market Holiday

LUXEMBOURG - Boxing Day - Market Holiday

NETHERLANDS - Boxing Day - Market Holiday

NORWAY - Boxing Day - Market Holiday

PORTUGAL - Boxing Day - Market Holiday

POLAND - Boxing Day - Market Holiday

ROMANIA - Market Holiday

SLOVAKIA - St. Stephen's Day - Market Holiday

SLOVENIA - Independence Day - Market Holiday

SWEDEN - Boxing Day - Market Holiday

UNITED KINGDOM - Market Holiday

WEDNESDAY, DEC 31

AUSTRIA - Market Holiday

BULGARIA - New Year's Eve - Market Holiday

CROATIA - Trading till 13:00 local time - Market Holiday

CZECH REPUBLIC - Prague Stock Exchange non-working day

DENMARK - New Years Eve - Market Holiday

ESTONIA - New Year's Eve - Market Holiday

FINLAND - New Years Eve - Market Holiday

GERMANY - Market Holiday

ICELAND - New Years Eve - Market Holiday

IRELAND - New Year's Eve - Irish S.E closes half day

ITALY - New Year's Eve - Market Holiday

LATVIA - New Year's Eve - Market Holiday

LITHUANIA - Market Holiday

NORWAY - New Years Eve - Market Holiday

SWEDEN - New Years Eve - Market Holiday

SWITZERLAND - New Year's Eve - STOXX and NLI funds will received updates, SWX, SCOACH, Berne closed

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UK bank bail-out to take big stakes in top banks

* 3 major UK banks could take 37 bln pounds in govt capital

* Government could end up with direct majority holdings

* RBS Chief Executive Fred Goodwin resigns

* Lloyds revises terms of takeover of HBOS

* Similar measures to be echoed across Europe (Adds Brown on financial system reform, trader quote on RBS shares)

By Jodie Ginsberg and Steve Slater

LONDON, Oct 13 (Reuters) - Britain waded in with 37 billion pounds ($64 billion) of taxpayers' cash to bail out three major banks on Monday, in a move that could make it their main shareholder.

In return for the British government's money, the banks will be forced to curtail the bonuses that many believe encouraged a risk-taking culture that precipitated the global financial crisis. They will also have to scrap dividends.

Under the UK plan, Royal Bank of Scotland will boost its capital by 20 billion pounds, issuing 15 billion pounds' worth of shares underwritten by the state, and 5 billion pounds in preference shares directly taken by the government.

HBOS and Lloyds TSB will also participate in the scheme "upon successful merger".
Finance Minister Alistair Darling said extreme times called for extreme measures and that he was prepared to make even more money available if necessary.

"It's necessary because we are going through quite extraordinary circumstances the world over, and I'm determined to do everything we can to stabilise our banking system and make it stronger," he said.

"And in return for it, of course, there will be restrictions on what happens in boardroom pay, and we're also getting guarantees in relation to increased lending to businesses, as well as to mortgages."

EUROPE ACTS

The measures are being echoed across Europe as countries try to adopt a common approach to avoid a meltdown in the financial system and its knock-on effects on the global economy.

Prime Minister Gordon Brown said he believed Britain was taking the lead in dealing with the crisis.

"This is perhaps the first government to do what I believe a large number of governments are going to do over the next few days," he told a news conference.

In a speech later to City executives, Brown said the world's leaders needed to reform the financial system with the kind of courage and foresight their predecessors had shown when drawing up the post-war financial order in the 1940s.

"We must now reform the international financial system around agreed principles of transparency, integrity, responsibility, good housekeeping and co-operation across borders," he said at the London headquarters of Thomson Reuters.

The German Chancellor Angela Merkel is set to give further details at 1300 GMT of a draft bill seen by Reuters that earmarks 400 billion euros ($550 billion) in guarantees for banks and will also give them fresh capital.

In Paris, a report by Dow Jones Newswires said the French government would create a 40 billion euro fund to take stakes in banks, though there was no official comment. Italy is also expected to take measures to shore up their banks.

LLOYDS REVISES HBOS OFFER

In the UK, Lloyds, which agreed to buy HBOS as part of an earlier bank rescue plan, said it had revised down the price it was paying to 0.605 of a Lloyds share per HBOS share from 0.833 previously.
Barclays said in a statement it would boost its capital by more than 6.5 billion pounds but expected to do so without government help.

The British banks will try to sell shares to existing investors, but the government will buy any shares not taken up, meaning it could become the biggest shareholder, and even a majority investor, in RBS and a combined HBOS/Lloyds TSB.

RBS chief executive Fred Goodwin became the highest profile British bank executive to lose his job to the crisis. He will be replaced by Stephen Hester, chief executive of British Land and a former Abbey National banker.

RBS has been criticised for a highly acquisitive strategy that catapulted it from a domestic player to one of the world's biggest banking groups in less than a decade.

"Leverage is great in boom times, but it can be awfully dangerous when things get difficult, especially if they get difficult very quickly," said RBS chairman Tom McKillop, who will also be stepping down.

SHARES REACT

Shares in RBS were down 8 percent at 66 pence by 1052 GMT, and HBOS had fallen 23 percent to 95.4 pence. Lloyds TSB was down 8.6 percent.

"No dividend for five years, no growth in the business, not a great investment," a trader said.

Another added: "If Royal Bank of Scotland share prices continue to slide, it's going to be fully nationalised. (The government) cannot afford to let it go down like this.

Other banks rose, however. Barclays was up 6 percent, and HSBC was up 7.9 percent.

"It does solve the liquidity problem. This is the end of chapter 2 of the horror story, but unfortunately chapter 3 -- the recession -- is on the way," said James Hamilton, banks analyst at Numis Securities of the RBS share fall.

Bank-to-bank sterling lending rates for three months slipped slightly to between 5 and 6 percent from well over 6 percent on Friday but are still far in excess of the Bank of England's target rates.

Brown's handling of the financial crisis appears to be rebuilding his reputation with voters.

A YouGov poll published by the Sunday Times at the weekend showed Brown benefiting from the crisis politically. The opposition Conservative party's lead has halved from 19 percent to 10 percent over the last month. (Additional reporting by the UK bureau; Editing by Andrew Callus/Will Waterman)



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