USD Edges Stronger As Obama Elected Next US President. How Much Longer Does The Risk Appetite Honeymoon Last?

Daily Forex Fundamentals | Written by Saxo Bank | Nov 05 08 07:13 GMT |

US ISM Non-manufacturing number could be first ugly economic data point to remind us of the current economic woes. LATEST HEADLINES US Weekly ABC Consumer Confidence rose to -48 vs. -50 expected and -49 the previous week Australia Oct. Performance of Service Industries fell to 42.1 from 44.9 in Sep. UK Oct. Nationwide Consumer Confidence rose to 55 vs. 47 expected and 51 in Sep. Australia Sep. Building Approvals -7.2% vs. -1.0% expected THEMES TO WATCH - UPCOMING SESSION Switzerland SNB's Hildebrand to Speak (0810) EuroZone Final Oct. PMI Services (0900) UK Sep. Industrial and Manufacturing Production (0930) UK Oct. PMI Services (0930) EuroZone Sep. Retail Sales (1000) UK Oct. BRC Shop Price Index (1030) US Oct. Challenger Job Cuts (1230) US Oct. ISM Non-manufacturing (1500) US Weekly Crude Oil and Product Inventories (1535) New Zealand Q3 Unemployment Rate (2145) Japan BoJ to Publish Meeting Minutes (2350) UK Oct. NIESR GDP Estimate (0001) Australia Oct. Unemployment Rate and Change (0030) Market Comments Barack Obama swept to victory by a margin that was widely expected and the Democrats also made solid gains in the House of Representatives. As election day got underway yesterday, there was a real sense that the market was going into 'risk reduction' mode, taking off its heaviest positions before the results started rolling in. The USD and JPY tanked, equities were up sharply, bonds were also up (some might consider this strange if the supposed theme was higher risk appetite, but the market is already very heavily positioned on the short side in fixed income, so yesterday's move was likely simply position-trimming). The USDJPY barometer was interesting to watch as it briefly shot higher in sympathy with equities and USDJPY was through the psychologically significant 100.00 level before diving for cover again - setting up yesterday's highs as a reasonable risk point for new attempts to short the pair. As the results began rolling in, the day's moves unwound further in FX, though equities remain close to their highest levels. We have two scenarios for this rally in risk appetite we see here is unlikely to have significant legs. One scenario is that we move into a rangebound environment, with rallies in risk appetite capped, but downside volatility unable to work up a significant head of steam again as it did previously. This scenario would allow volatility to fall somewhat. The other possibility is that we go straight back to risk aversion mode. The scenario we don't look for is a for any continued heady rally in equities and JPY crosses, for example, beyond the next few days. The very measured reaction to the news of the Obama victory suggests that this event risk was mostly priced in for the short term. In the bigger picture, of course, this event marks the starting point of a new era in market history and we will have plenty of time to think about the consequences of a new Democratic president with strong majorities in both house of Congress. This is a very different environment than the one under Clinton, for example, whose initiatives were hampered by Republican lawmakers for most of his presidency. With a population suffering and looking for change and one political party clearly in power, it is obvious that policy response will be a pivotal input in trading and investment opportunities for at least the next two years until the midterm elections of 2010. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. 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Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Nov 05 08 07:10 GMT |

Obama Elected as 44th US President in Landslide, Promise of change to lift America's spirits rallies US currency In a monumentally historic elections, United States voters have swept Jr Senator from Illinois, a virtual political unknown until the 2004 Democratic National Convention, into the nation's highest office, making him the first African American president in US history. Although hardly an underdog going into the tail end of the campaign, few could have predicted the apparent ease of the Obama camp path to victory on election night, with traditionally Republican strongholds in Pennsylvania, Ohio, Virginia, New Mexico, and Colorado falling into Democrat hands with relative ease. And although it took until closing time for polls in California at 11pm, the race was virtually decided when Ohio fell to Obama - a state that McCain had to have and without which Republicans had never won the presidency. After a gracious concession from Sen. McCain, President-Elect took the stage in his home state, praising voter turnout and support of the younger constituency while staking a claim to renewing the nation's promise at a time when the US faces the 'greatest challenge of a lifetime'. In testament to Obama's international popularity, French President Sarkozy extended his congratulations on America's choice for change that 'raises hope in France, Europe, and everywhere in the world'. Attention now shifts to the Congressional elections, with Democrats making inroads toward filibuster-proof majority of 60 in the Senate while also picking up significant ground in the House. Financial markets will also be undoubtedly sensitive to Obama's impending cabinet's choice of Treasury Secretary as new administration inherits sharply rising unemployment, a threat of a severe recession, and a record budget deficit. The expected lukewarm reception of perceivably 'socialist' President-elect in the financial industry was hardly on display in Tuesday's Wall Street session. Major indices defied historic trend of a poor election day market performance with an over 3% rally in Dow and Nasdaq and a 4% gain in S&P. Investor optimism carried over into the Asian markets as major bourses accelerated their US-tracking gains. Nikkei was last seen up over 4%, Hang Seng picked up over 5.5%, and Korea's Kospi and Aussie ASX were trading above 2% to the upside. Among the first-tier companies reporting in Tokyo markets were energy sector's Mitsui division and automotive Isuzu. The former reported a shortfall in H1 net profit of ¥240.55B v ¥251.92B y/y but surpassed prior revenue of ¥8.20T with ¥8.54T. Meanwhile, the latter saw a much worse top and bottom line results relative to last comparable quarter, reporting net profit ¥30B v ¥37B y/y and revenue ¥859.7B v ¥874.5B y/y. Isuzu also cut its FY outlook to ¥40B from ¥85B prior. Elsewhere, Sanyo was once again the subject of takeover speculation as Panasonic reportedly commited to launch a tender offer by as early as January. In US equity markets, HealthSouth, Pioneer Natural Resources and Kaiser Aluminum were among the few notable large-caps reporting earnings. HLS came up short on earnings but guided significantly higher due to debt reduction, sending its shares up by 10% after-hours. PXD missed significantly however, with Q3 EPS coming in well below estimates of $1.21 at $0.90 while sending shares 10% lower. KALU reported mixed, beating EPS estimates by 10c at $0.77 but coming well short of consensus in the top line results, paring its 3.9% gain with 1.2% slide after close. Wednesday morning will see earnings data from Agrium Inc (AGU), Duke Energy (DUK), Foster Wheeler (FWLT), Medco (MHS), Time Warner (TWX), and Luxembourg steel production giant Arcelor Mittal (adr: MT). Preliminary jobs data from ADP and Services ISM on tap for release ahead of Wednesday's US session will also likely determine equity market trading sentiment In currencies, the US dollar received a sharp boost following confirmation of an Obama victory. EUR/USD spiked lower by 170pips from 1.2960 to 1.2790, GBP/USD sold off two big figures to 1.5760, and AUD/USD shed over 100pips to test 0.6850. All those gains have since been reversed with dollar selling maintaining strong correlation to global equity market strength. Meanwhile, trading in risk-gauging Japanese yen based pairs has been relatively subdued as USD/JPY oscillated in a tight 60-pip trading range between 99.30 and 99.80 with European-based yen crosses guided by the performance of home currencies against the dollar. Japanese Yen was not impacted by dovish sentiment from BOJ Governor Shirakawa, who said that market turmoil in Japan is likely to persist for some time despite the absence of turmoil in Japan's commercial paper markets that proved to be so damaging in the US. Furthermore, he saw the likelihood of further strength in the yen and the possibility of USD/JPY going as low as 80 in coming months - a likely prospect if broad global market weakness resurfaces on further evidence of global recessionary trends. In turn, ECB's Stark echoed dovish sentiment of Shirakawa regarding prospects for the Eurozone, stating that low economic growth in Eurozone is expected to extent well into 2009. ECB is set to decide on interest rates on Thursday, with consensus estimates widely calling for a 50bp easing. Following the confirmation that Democrat Obama won the US Presidential election, both gold and oil prices moved to session lows as the USD firmed against the European majors and the commodity-related currencies. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Euro Open: Euro To Benefit From Improving Market Risk Perception

Daily Forex Fundamentals | Written by DailyFX | Nov 05 08 06:54 GMT |

The US Dollar jumped 125 pips higher against the Euro as Barack Obama won enough electoral votes to become the next President of the United States. However, EUR/USD is likely to rise as improving risk sentiment remains the driving force behind forex price action in the near term. Key Overnight Developments UK Consumer Confidence Unexpectedly Rises in October Australian Trade Surplus Widens as Exports Surge US Dollar Rises as Barack Obama Clinches Presidency Critical Levels The Euro sold off late into the overnight session, retracing about half of its gains in US hours to find support at 1.28. The British Pound followed suit, falling over 200 pips to find support near the 1.58 mark. Asia Session Highlights UK sentiment was unexpectedly upbeat in October as Nationwide Consumer Confidence printed at 55 versus forecasts of 47 and 51 in the previous month. The metric registered its first positive result since December 2007 as consumers responded to interest rate cuts and the passage of emergency measures to stabilize the banking sector. The Bank of England is expected to slash rates by another 50 basis points tomorrow to offer further stimulus as the economy inches towards recession after GDP shrank -0.5% in the second quarter. Australia's Trade Balance surprised sharply to the upside, showing the surplus widened to A$1460 million in September A$1364 million in the preceding month. Economists' forecasts had predicted a meager A$500 million result. Exports surged 7.5%, the most in 4 months, driven by shipments of coal (9.8%) and iron ore (14.31%). Slowing worldwide demand is being offset by a sharply weaker Australian Dollar, making Australia's goods comparatively cheaper and thereby attractive to foreign buyers. Indeed, the Aussie lost -6.6% against an average of 7 top global currencies. Still, exports could slow significantly over the coming months as the global economic slowdown deepens. The CEO of mining giant Rio Tinto recently pointed out that 'the slowdown in Chinese economic growth is quickening and demand…won't rebound until 2009' while RBA Governor Glenn Stevens warned of 'significant weakness in the major industrial economies and...further signs that China and other parts of the developing world are slowing.' This will continue to weigh on commodity prices, shrinking revenues from Australia's key exports. It remains to be seen whether this or continued Australian dollar weakness will prove to be the dominant force affecting trade figures, with the Aussie pressured lower by another 100-125 basis points in interest rate cuts priced in for the next 12 months. The US Dollar jumped 125 pips higher against the Euro as Democratic Party candidate Barack Obama won enough electoral votes to become the next President of the United States. The move likely owes to easing uncertainty over the election outcome. Euro Session: What to Expect The pace of decline is expected to remain unchanged for UK Industrial Production, with forecasts putting the metric at -2.3% in the year to September. Meanwhile, Manufacturing Production is seen showing slight improvement as the slide there slows to an annualized -1.6% in September from -1.9% in the preceding month. Both readings are likely to benefit from the cheaper British Pound. Indeed, the currency slid nearly 2% against the US dollar in September, making goods priced in Sterling cheaper and spurring overseas demand. The sharp drop in oil prices also helps, reducing firms' production costs. Matters are far less rosy in the Euro Zone, where September Retail Sales are seen falling -0.3% in September to bring the annualized rate of decline to -2.2%. Europeans have noticeably shied away from spending as economies of the 15-nation currency bloc barrel towards recession. Consumer confidence has fallen to the lowest levels in 18 years and GDP shrank -0.2% in the second quarter. The European Central Bank is expected to cut interest rates by 0.50% in an attempt to stabilize economic growth. On balance, improving risk sentiment is likely to be the driving force behind forex price action in European trading hours. We have recently noted an impressive inverse correlation between the US dollar and global stock performance (as captured by the MSCI Index) as improving financial market conditions embolden bargain hunters to push some capital back into risky assets. This correction of the oversold conditions forged at the height of the credit crunch should see the US Dollar move lower in the near term before the long-run bullish trend resumes. Indeed, today saw EURUSD surpass key resistance, opening the door for substantial upside in the days ahead. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by Crown Forex | Nov 05 08 07:40 GMT |

EURO The pair is trading with the tendency to the downside on an intraday basis, facing a major resistance at 1.2740 where the 1.2705 is also an obstacle for the pair. We see today that movements will be to the upside in an attempt to breach these mentioned levels once again after rebounding from the 76.4% correction at 1.2565. If the pair was able to maintain trading above this level, we could see it extend gains to the resistance levels yet at the same time, we shouldn't forget that the trend for today still holds downside potential. The trading range for today is among the key support at 1.2405 and the key resistance at 1.2910 The general trend is to the downside as far as 1.5080 remains intact with targets at 1.2480 and 1.2340 Support: 1.256, 1.2525, 1.2500, 1.2480, 1.2405 Resistance: 1.2705, 1.2740, 1.2815, 1.2870, 1.2910 Recommendation: Buy the pair above 1.2600 with targets at 1.2680 and stop loss below 1.2560 GBP Yesterday's fall was halted by the 76.4% correction at 1.5595 which also lies on a minor support. Despite the downside trend is clear, the pair is trading within an oversold area as seen on the momentum indicaors where we expect to witness an upside correction in the early trading session today. The trading range for today is among the key support at 1.5340 and the key resistance at 1.6000 The general trend is to the downside as far as 1.9400 remains intact with targets at 1.5450 and 1.5175 Support: 1.5475, 1.5540, 1.5585, 1.5595, 1.5630 Resistance: 1.5725, 1.560, 1.5800, 1.5965, 1.6000 Recommendation: Buy the pair above 1.5600 with targets at 1.5720 and stop loss below 1.5540 JPY Trading remains above the key resistance for the descending channel near the 100 day moving average on the four hour charts. As long as 98.60 remains intact, this will assure the upside movement, which so far hasn't differed much from yesterday's neutral trend, where the pair is currently attempting to gather more bullish momentum. The trading range for today is among the key support at 96.80 and the key resistance at 101.80. The general trend is to the downisde as far as 104.60 remains intact with targets at 91.95 and 89.30 Support: 98.60, 98.15, 97.75, 97.35, 96.80 Resistance: 99.55, 99.70, 100.10, 100.50, 101.10 Recommendation; Buy the pair above 98.90 with targets at 99.70 and 101.75 and stop loss below 98.15 CHF An unexpected rise was able to return the pair to the 1.17 levels where the pair is now suffering downside pressures as it has entered an overbought area which could limit gains at the 1.1875 - 1.1920 levels as they represent major resistances for the pair. The trading range for today is among the key support at 1.1390 and the key resistance at 1.2020. The general trend is to the upside as far as 1.0570 remains intact with targets at 1.1795 and 1.1850 Support: 1.1700, 1.1670, 1.1655, 1.1565, 1.1390 Resistance: 1.1830, 1.1875, 1.1920, 1.1935, 1.2020 Recommendation: Sell the pair below 1.1830 with targets at 1.1710 and stop loss above 1.1600 CAD We are near our initial target for the downside trend yesterday where the pair is not trading within an oversold area suggesting an upside correction before reversing back to the downside to target 1.1670 as far as trading remains below 1.1990 The trading range for today is among the key support at 1.1590 and the key resistance at 1.2240 The general trend is to the downside as far as 1.1780 remains intact with targets at 1.3305 and 1.3465 Support: 1.1815, 1.1770, 1.1690, 1.1670, 1.1590 Resistance: 1.1895, 1.1905, 1.1990, 1.2050, 1.2080 Recommendation: Sell the pair below 1.1870 with targets at 1.1775 and stop loss below 1.2050 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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Forex Technical Update

Daily Forex Technicals | Written by India Forex | Nov 05 08 07:13 GMT |

Euro: Euro witnessed a very volatile trading session yesterday as it surged more than 500 pips from the lows of 1.2526 and making a reversal bar pattern in the daily chart. Taking resistance at the 100 4-hourly EMA around 1.3040 levels in the overnight session, Euro is trading weaker at 1.2850 currently. The 4-hourly stochastic is overbought and showing a strong down-move supported by the disappointing Eurozone Retail Sales expected today. Shorts should be considered at higher levels. (Euro: 1.2840). Pound: Cable strengthened around 500 pips in the mid-US session yesterday moving up strongly to touch 1.61 levels. Currently cable has retraced and is trading around 1.59 levels with the hourly, 4-hourly and daily charts showing strong selling pressure with immediate support coming in around 1.5590 levels. Overall bias continues to remain on the downside with BOE also expected to cut interest rate tomorrow. Selling at every retracement should be considered. (Gbp/Usd: 1.5895). Yen: The USD/JPY pair gained almost 220 pips touching the high of 100.55 in yesterday's session surpassing the 21 Daily EMA at 99.61. The hourly and 4-hourly stochastic is showing a downside and if the pair is able to break the 99.60 levels then we may witness a further downside upto 98.30 levels (55 4-hourly EMA). (USD/JPY: 99.68). Rupee: Rally in the stock market with the expectation that the rally would continue allowed the local currency to post the biggest intraday rise on Tuesday since 1998. Rupee closed at 47.74 yesterday and touched intraday high of 46.70 this morning. It was observed that unwinding of long positions of USD by the banks and heavy dollar sales by the big corporate aided the rupee to rise. This brings some hope for Dollar inflow in the Indian market. Though the liquidity remained neutral, trend remains still unclear. (USD/Re: 47.20). Swiss Franc: The pair shed most of its previous day's gains melting down from the highs of 1.1800 to the day's lows of 1.1566 on Tuesday. The hourly & daily stochastic are overbought while the 4-hourly is indicating some buying pressure. Immediate resistance continues to remain at 1.1890 levels (200 Weekly EMA). On the downside support for the pair is seen at 1.1670 levels (21 hourly EMA) which if broken can push the pair down to 1.1550 levels. Initiate shorts at resistance levels for 100 pips (Usd/Chf: 1.1720). Australian Dollar: Aussie rose close to 415 pips yesterday touching the highs of 0.7015. The hourly stochastic is indicating some buying pressure while the 4hourly has just corrected in the overbought region. Support comes in at 0.6760 levels which should hold good. Resistance for the pair is seen at 0.7130 (200 4hourly EMA) to initiate intraday shorts for 80 pips (Aud/Usd-0.6886). (Aus/Usd: 0.6938). Gold: Gold gained $46 yesterday and took resistance of 100 4-Hourly to close the session at $762 levels. Hourly charts are approaching the oversold region and the 4-Hourly charts have corrected in the over-bought region. Initial support is coming in around $740 levels. On the upside $770 levels should hold. The bias for the yellow metal remains on the downside. (Gold: $755.60). Dollar index: Dollar index is extremely volatile and has bounced back to 85.80 levels with the stochastic at 63.14%. India Forex http://www.indiaforex.in DISCLAIMER 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 responsible 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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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Nov 05 08 07:06 GMT |

EURUSD Comment: Still in consolidation mode and the corrective move should continue for another week at the very least. For this morning expect a re-test of 1.3000 with a sustained break above here setting off a short-squeeze back up to 1.3300. Strategy: Attempt longs at 1.2900, adding to 1.2800; stop below 1.2495. First target 1.3000, then 1.3300. Direction of Trade: → Chart Levels: Support Resistance 1.2850 " 1.3 1.2795 1.3032* 1.27 1.31 1.2665 1.32 1.2527* 1.3300* GBPUSD Comment: Still rather precarious as we try to base, or at least take a breather. Expect a lot more correction and consolidation this month. Strategy: Attempt longs at 1.5880, adding to 1.5600; stop below 1.5400. First target 1.6000 then 1.6400 and probably 1.7000 later this month. Direction of Trade: → Chart Levels: Support Resistance 1.5755 " 1.6014 1.56 1.611 1.5400* 1.629 1.53 1.635 1.5260** 1.64 USDJPY Comment: Correcting half of the summer's decline in what we see as a bounce followed by consolidation that should take up much of November. We continue to favour another upside probe this week, to 102.00 and probably no higher than 103.00. This might also see implied volatility edge back up though not as high as October's record high of 43.50%. Strategy: Possibly attempt small shorts at 99.65; stop above 100.65. First target 98.35, then 97.00. Direction of Trade: → Chart Levels: Support Resistance 99.27 " 99.93 98.2 100.56* 97.4 100.75 96.35 101 96.08* 101.6 EURJPY Comment: Retracing 61% of the final leg lower and at the higher end of the recent consolidation range. If not today then later this month we shall allow for another upside push to 133.00 and probably 135.00. Then watch for signs of topping between here and the 140.00 area. Strategy: Attempt longs at 128.50; stop/reverse below 122.00 for 114.00. First target 131.00, then 133.00 Direction of Trade: → Chart Levels: Support Resistance 127.23 " 129.5 126 130.2 124 130.98/131.05* 123.43 132 122.00* 133 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Philippines October Inflation Slows for Second Month

By Karl Lester M. Yap

Nov. 5 (Bloomberg) -- Philippine inflation eased a second month to the slowest pace since May as prices of food and services fell.

Consumer prices climbed 11.2 percent from a year earlier, after rising a revised 11.8 percent in September, the National Statistics Office said in Manila today. That compares with the 11.4 percent median estimate in a Bloomberg News survey of 13 economists.

The Philippine central bank remains on guard against inflation, Managing Director Cyd Tuano-Amador said Nov. 3. Bangko Sentral ng Pilipinas kept its key interest rate unchanged last month after three increases and avoided joining policy makers in Asia, the U.S. and Europe in slashing borrowing costs as the credit crisis threatens to push the world into recession.

``The central bank would rather wait for further signs from the economy and may hold off until next year to make a cut,'' said Jonathan Ravelas, an economist at Banco de Oro Unibank Inc. in Manila.

The Philippines, which has cut its growth target four times this year, maintained its benchmark interest rate at 6 percent last month even as it predicted inflation would ease. The central bank next meets on Nov. 20 to decide on borrowing costs.

Oil prices, which have fallen about 50 percent since the central bank started raising interest rates on June 5, remain volatile and pose a risk, Tuano-Amador said. The Philippines imports nearly all its oil requirements.

Greater Latitude

Still, slowing inflation bodes well ``for cementing inflation expectations going forward, which in turn provides greater latitude for monetary policy,'' Governor Amando Tetangco said in a mobile-phone text message today after the inflation data. The central bank will continue to monitor risks to the inflation outlook, he said.

Food, beverage and tobacco costs rose 15 percent last month from a year earlier, slowing from a 16.1 percent gain in September, today's report showed. Food accounts for half of the consumer-price index.

Fuel, electricity and water inflation accelerated to 10.7 percent in October. Services costs climbed 10.2 percent, easing from a 12.1 percent gain previously.

A weaker peso may prevent the central bank from cutting interest rates, said Edward Teather, an economist at UBS AG in Singapore. The peso has fallen more than 14 percent this year and is headed for its worst annual loss in eight years.

``The central bank still has the weak currency to worry about,'' Teather said. ``Unless something dramatic happens to the strength of the currency, there won't be a rush to ease policy rates.''

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net.

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BOJ Focusing on `Downside Risks,' Shirakawa Says

By Mayumi Otsuma

Nov. 5 (Bloomberg) -- The Bank of Japan needs to focus on the possibility that the economy will deteriorate further because of lingering global financial turmoil, Governor Masaaki Shirakawa said.

``For the time being, it's important to pay attention to the economy's downside risks, including developments in the U.S. and European financial systems and the effect of global market movements,'' Shirakawa said at a business meeting today in Tokyo.

The central bank last week cut the key overnight lending rate to 0.3 percent from 0.5 percent, its first reduction in more than seven years. Shirakawa and his board may need to bring borrowing costs even closer to zero in coming months as the credit crisis drags the world economy to the brink of a recession.

``It's highly likely that the bank will pursue additional reductions depending on the economy and financial markets,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. ``There was a clear consensus among board members about a rate cut'' at last week's meeting, he said.

Seven of the bank's eight policy makers voted for lowering the key rate on Oct. 31, with the only difference being the margin of reduction: three preferred a cut to 0.25 percent.

Margin of Cut

Shirakawa said in parliament after the speech that the decision to cut to 0.3 percent rather than 0.25 percent ``was not intended to leave maneuvering room'' for further reductions. The 20-basis point decrease was designed to make monetary conditions accommodative without disrupting money markets, he said.

Central banks around the world are lowering interest rates to limit the damage from the crisis and prop up economic growth. The U.S., China, India, Australia, Taiwan, Norway and Saudi Arabia cut borrowing costs in the past week.

``Strains in global financial markets are likely to continue for some time, although we have observed some improvements'' since central banks added ``ample liquidity'' and governments announced such measures as injecting public money into banks, Shirakawa said.

The Nikkei 225 Stock Average has gained 11 percent in the past two days, after slumping 24 percent in October, the biggest monthly drop ever. The yen has weakened 5.1 percent against the dollar since climbing to a 13-year high on Oct. 24.

Bank of Japan board members last week predicted the world's second-largest economy will barely grow this fiscal year and the next and inflation will probably evaporate.

Shirakawa said today that inflationary pressure has eased, mainly because of a drop in global commodity prices. Japan's economic outlook is ``extremely uncertain'' and growth will remain ``sluggish for the time being,'' he said.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Malaysia's Export Growth Unexpectedly Accelerates

By Stephanie Phang and Manirajan Ramasamy

Nov. 5 (Bloomberg) -- Malaysia's export growth unexpectedly accelerated in September, as rising commodities shipments to Asian markets countered declining electronics sales to the U.S.

Overseas sales increased 15.1 percent from a year earlier to 62.3 billion ringgit ($17.7 billion) after gaining a revised 10.7 percent in August, the trade ministry said in a statement in Kuala Lumpur today. The median estimate in a Bloomberg News survey of 12 economists had been for a 6.6 percent gain.

``Companies exporting to the regional markets of Asia expect demand to remain buoyant as countries in the region continue to invest in the industrial sector,'' Trade Minister Muhyiddin Yassin told reporters in Kuala Lumpur today. Electronics sales to the U.S. and Europe are expected to soften in early 2009 after ``marginal'' export growth in the fourth quarter to meet year-end holiday demand, he said.

Malaysia's government announced measures yesterday to bolster domestic demand as it predicted faltering exports would drag growth to an eight-year low in 2009. The Southeast Asian nation joins countries from Germany to South Korea in trying to limit the impact of a deepening global economic slowdown that's already pushed neighboring Singapore into recession.

The pick up in exports was probably ``a temporary interruption to what should be a slowing trend during the next few quarters,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.

Demand Wanes

Manufacturing in the U.S., Malaysia's largest overseas market last year, contracted at the fastest pace in 26 years last month, according to the Institute for Supply Management's factory index. The European Commission said this week the region's economy probably entered a recession in the third quarter and will barely grow next year.

``Slowing growth in major trading partners has meant demand has waned,'' said Nikhilesh Bhattacharyya, an economist in Sydney at Moody's Economy.com. ``Sagging demand for manufactured goods and sharp declines in commodity prices'' hurt overseas sales in September.

Exports to the U.S. dropped 15.3 percent to 7.37 billion ringgit in September from a year earlier because of a decline in electrical and electronics shipments, the ministry said today. The U.S. has fallen behind Singapore in the first nine months of the year as Malaysia's largest overseas market.

Sales to Southeast Asia rose 15 percent to 15.8 billion ringgit, helped by higher exports of crude oil, refined petroleum products and electronics. Shipments to China, Japan and India were also lifted by commodities.

Profit Declines

Shipments of electrical and electronics goods, which made up 40 percent of total exports in September, gained 3 percent after declining the month before. Malaysian Pacific Industries Bhd. and Unisem Bhd., the country's two largest publicly traded semiconductor assemblers, both posted profit declines in the three months to June.

Crude oil exports jumped 57 percent and palm oil sales increased 32 percent in September even as prices eased after reaching records earlier this year. Malaysia is Southeast Asia's second-largest oil and gas producer and the world's No. 2 palm oil seller.

Malaysia's government yesterday cut the country's 2009 economic growth forecast to 3.5 percent from 5.4 percent, announced public projects worth about $2 billion and said it will allow workers to pay less of their monthly incomes into a national pension fund to spur spending. It predicted exports would drop 1.5 percent next year.

Imports climbed 11.9 percent in September to 47.8 billion ringgit, leaving a trade surplus of 14.5 billion ringgit. Exports grew 16.9 percent in the third quarter, while imports expanded 10.3 percent.

To contact the reporter on this story: Stephanie Phang Singapore at sphang@bloomberg.net; Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

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Australia's Trade Surplus Unexpectedly Widens on Coal

By Jacob Greber

Nov. 5 (Bloomberg) -- Australia's trade surplus unexpectedly widened in September as exports of coal and iron ore surged.

The surplus increased to A$1.46 billion ($1 billion) from a revised A$1.24 billion in August, the Bureau of Statistics said in Sydney today. The median estimate of 15 economists surveyed by Bloomberg News was for a A$500 million surplus.

Exports are offsetting a slump in consumer and business spending that threatens to tip Australia's economy into a recession. Central bank Governor Glenn Stevens cut the benchmark interest rate yesterday by three quarters of a percentage point to a 3 1/2-year low of 5.25 percent after reports showed house prices fell in the third quarter by the most since 1978.

The ``trade surplus is the one bright light for the economy,'' said David de Garis, a senior economist a National Australia Bank Ltd. in Sydney.

``With domestic demand soft and import demand wilting, it will likely stay that way with net exports likely to soften the blow from a weakening'' local economy, he said.

Australia's dollar has tumbled 30 percent since hitting a 25-year high of 98.49 U.S. cents on July 16, helping boost income from exports of raw materials.

The local currency traded at 69.04 U.S. cents at 12:46 p.m. in Sydney from 69.19 cents just before the trade report was released. The two-year government bond yield fell 1 basis points, or 0.01 percentage point, to 3.96 percent.

Coal, Iron Ore

Exports rose 8 percent to A$26.5 billion in September, today's report showed. Shipments of metal ores including iron surged 19 percent and coal gained 14 percent.

Imports climbed 7 percent to A$25 billion, led by a 7 percent increase in food shipments.

Households cut spending in the three months through June 30 for the first time since 1993 as economic growth slowed to 0.3 percent, the weakest pace in more than three years.

Reserve Bank Governor Stevens has slashed the overnight cash rate target since the start of September by 2 percentage points, from a 12-year high of 7.25 percent. It is the most aggressive round of rate reductions since the economy was last in a recession in 1991.

Weighing up international and domestic developments, the central bank ``board judged that a further significant reduction in the cash rate was warranted,'' Stevens said yesterday.

Commodity Prices

``It appears likely that spending and activity will be weaker than earlier expected,'' he added.

Stevens also signaled that he expects income from trade, which has helped stoke Australia's 17-year economic expansion, to slide in coming months.

While the central bank's recent rate reductions will assist growth in the period ahead, ``deteriorating international conditions and falling commodity prices will have a dampening influence,'' Stevens said.

``There have been further signs that China and other parts of the developing world are slowing as well,'' he added.

The Reuters/Jefferies CRB Index of 19 raw materials plunged 22 percent in October, the biggest monthly drop since at least 1956. Copper fell by a record 36 percent, and gold dropped by the most in 26 years.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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South Korea Ruling Party Head Resolved to `Resuscitate' Economy

By Kim Kyoungwha

Nov. 5 (Bloomberg) -- South Korea's government is determined to ``resuscitate'' the economy by frontloading stimulus spending in the first few months of 2009, said ruling Grand National Party Chairman Park Hee Tae.

Policy makers cut interest rates, guaranteed bank debt and made more cash available to small businesses as the credit crunch aggravates a shortage of funds in South Korea. The government this week unveiled a 14 trillion won ($11 billion) stimulus plan of spending and tax breaks for 2009 to prevent the economy from slipping into its first recession in a decade.

``Tsunami-like turmoil from the outside world is having a negative influence on our economy,'' Park, 70, said in an interview in Seoul yesterday. ``We are firmly determined to resuscitate the economy through aggressive fiscal spending.''

The government forecasts the 2009 fiscal deficit will be 21.8 trillion won, or 2.1 percent of gross domestic product, more than double its previous estimate of 10.4 trillion won.

``The government will frontload spending early next year and is ready to accept deficit,'' Park said.

The economy expanded 0.6 percent last quarter from the previous three months, the slowest rate in four years, as exports fell and consumer spending stagnated. Jobs growth slowed to the weakest pace since 2005 in September as manufacturers, builders and retailers cut workers.

``Officials are working on comprehensive economic- development schemes aiming at the revival of the real economy,'' Park said. The plans, including development of provincial regions, will be announced early next year, he said.

`Too Complacent'

Park cautioned against being ``too complacent'' about a recent improvement in South Korea's currency and equities.

``Stability in the international financial markets is needed to regain full confidence,'' he said.

The won has risen 13 percent against the dollar in the past week, rebounding from its lowest level in 10 years, as the Federal Reserve agreed to provide the Bank of Korea with $30 billion. The benchmark Kospi stock index last week posted its biggest gain in at least two decades.

Still, a trade report on Nov. 3 underlined the widening fallout from the global slowdown. Exports, the main engine of South Korea's growth, rose by the least in 13 months in October because shipments to China fell for the first time since 2002.

To contact the reporter on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

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Merkel's Cabinet to Decide on 50 Billion-Euro Stimulus Package

By Alan Crawford and Brian Parkin

Nov. 5 (Bloomberg) -- German Chancellor Angela Merkel's Cabinet meets in Berlin today to agree on a ``bold'' package of measures aimed at shoring up the economy amid a global slowdown.

The two-year, 50 billion-euro ($65 billion) program ranges from tax breaks for buyers of new cars to greater financial help for improving buildings' energy efficiency, according to a joint paper by the Finance Ministry and Economy Ministry obtained by Bloomberg News. Ministers will discuss the steps from 9:30 a.m.

The program is ``bold and targeted'' and will act as a ``bridge'' to revive economic growth in 2010, Merkel said in a speech to the BDA employers' federation yesterday. The measures are ``completely different from an artificial, state-sponsored program to stimulate demand that costs billions. We emphatically want to avoid this.''

The government stimulus program for the economy, Europe's biggest, comes two days after the European Commission forecast stagnation in Germany in 2009, an election year. The government last month slashed its own forecast for 2009 growth to 0.2 percent from 1.2 percent, citing weakening demand for exports as the financial crisis feeds into the global economy.

The main aim of the program, which also includes increased tax relief on household repairs, loans to small and medium-sized businesses and money for roads and railways, is to deliver ``incentives for investment spending,'' according to Stefan Bielmeier, an economist with Deutsche Bank AG in Frankfurt.

`Too Small'

The growth program ``is too small and is designed mainly for capital spending instead of consumer spending,'' Bielmeier said in a Nov. 3 note. ``We believe that the growth impulses will be smaller than expected by the government. But it could help to shorten the period of negative GDP growth in Germany.''

Germany follows the U.S. in attempting to prime the wider economy after the financial crisis triggered the collapse of Lehman Brothers Holdings Inc. in September, forcing government bank bailout programs. Germany rushed a 500 billion-euro bank- rescue plan through parliament Oct. 17.

President George W. Bush signed a $168 billion economic stimulus package into law in February that sent tax rebates of as much as $600 to individuals and $1,200 to couples. U.S. lawmakers are moving toward a second fiscal-stimulus bill after Federal Reserve Chairman Ben S. Bernanke endorsed the idea. Democratic President-elect Barack Obama has called for a measure worth $175 billion.

Double U.S. Program

The German steps, equivalent to about 2 percent of gross domestic product, are worth ``double the effect of the Bush program from this spring,'' Jens Ehrhardt, who oversees $12 billion at Munich-based Dr. Jens Ehrhardt Kapital AG, told yesterday's edition of Handelsblatt newspaper.

In her speech, Merkel said that the program won't be able to avert economic hardship in 2009. Merkel's Christian Democrats and her Social Democrat coalition partners will contest national elections in September next year.

``We'll have bad news in 2009 but we'll be taking steps to make it better again in 2010,'' Merkel said. ``There's no script for managing the crisis.''

The measures will ``obviously'' hurt attempts to balance the federal budget by 2011, Merkel said. That will remain a ``goal'' for the government in the next legislative period after the election, she said.

In a related development, a panel of fiscal experts meeting in Hildesheim, about 140 kilometers (90 miles) south of Hamburg, is scheduled to give new estimates today for tax revenue at federal, state and municipal level for this year and next.

``History shows that economic stimulus packages aren't a panacea,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. ``Taking into account what we know now, the measures will alleviate the looming recession but won't stop it.''

To contact the reporters on this story: Alan Crawford in Berlin at acrawford6@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.

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Obama May Spend on Highways, Bridges to Stimulate U.S. Economy

By Angela Greiling Keane

Nov. 5 (Bloomberg) -- President-elect Barack Obama may put spending on roads and bridges at the top of his agenda for stimulating U.S. economic growth.

``He's identified infrastructure as one of the ways to strengthen the American economy,'' Janet Kavinoky, transportation infrastructure director for the U.S. Chamber of Commerce, said in an interview. ``So we would expect it to be on his list of actions both for the stimulus and longer term.''

Obama was elected yesterday amid a global credit crisis and with the U.S. in or heading into a recession that may be the deepest in more than 20 years. He promised during his campaign he would use infrastructure spending to create jobs.

``We'll create 2 million jobs by rebuilding our crumbling roads, schools and bridges,'' Obama said in an Oct. 13 speech in Toledo, Ohio, where he outlined his plan for reviving the economy.

Obama, 47, has urged Congress to pass an economic stimulus bill immediately after the election. House Speaker Nancy Pelosi, a California Democrat, has said she wants spending on highways and other transportation infrastructure included in the next stimulus package.

``Transportation's always something that everyone takes for granted, and then it gets a lot of attention as a result of a tragedy like 9/11 or I-35W in Minnesota,'' former Transportation Secretary Norman Mineta said in an interview. An Interstate 35W highway bridge collapsed in downtown Minneapolis last year, bringing attention to decaying infrastructure.

Infrastructure Bank

Mineta, a Democrat, headed the Transportation Department at the beginning of the George W. Bush administration and said he discussed infrastructure needs with Obama during the campaign.

Bush increased highway and transit spending to a record $286.5 billion over six years in the highway bill he signed into law in 2005. That compared with $218 billion for the previous highway bill and was less than the $375 billion House leaders wanted to spend on the measure.

Obama, a U.S. senator from Illinois, in February proposed a so-called infrastructure bank to invest $60 billion in roads, bridges and other projects over 10 years.

The American Society of Civil Engineers says it would take $1.6 trillion over five years to bring U.S. infrastructure to ``good'' condition, excluding expansion costs.

``If you believe the country has a problem, or a crisis as I'd call it, in transportation infrastructure, you've got to continue to spend,'' James Young, chief executive officer of Union Pacific Corp., the biggest U.S. railroad company, said in an Oct. 23 interview.

Young said the Omaha, Nebraska-based carrier will consider cutting capital spending next year depending on the economy, though it doesn't want to cut too much given nationwide transportation infrastructure needs.

Roosevelt Model?

The economic slump may give Obama and lawmakers a reason to pursue infrastructure spending in the model of President Franklin Delano Roosevelt following the Great Depression, said Leslie Blakey, executive director of the Coalition for America's Gateways and Trade Corridors, which advocates for money for freight projects.

``We have serious infrastructure problems right now that we need to address immediately,'' Pete Ruane, chief executive officer of the American Road and Transportation Builders Association, said in an October speech at an American Trucking Association's conference in New Orleans. The Washington-based builders association includes Caterpillar Inc. and other transportation construction companies.

The state of the economy ``is incentive to do something, not incentive to sit here and do nothing,'' Ruane said. ``We're not discouraged by that. We can generate the jobs.''

Aside from any special infrastructure program, Obama and the new Congress next year will set spending levels for roads and transit when the highway bill comes up for reauthorization.

Rail Push

The bill sets funding for the highway trust fund, the target of an $8 billion federal bailout in September before it ran out of money. A national commission looking into how to pay for the trust fund is to issue its report in January.

Obama may shy away from public-private partnerships that infuse private capital into transportation infrastructure, said Bob Campbell, a Deloitte LLP vice chairman based in Austin, Texas.

``Inevitably, an Obama administration would have to come back around to that model,'' Campbell said in an interview. ``But I don't think it would be out front as far as part of the pronounced strategy.''

The Obama administration also will be pushed by passenger rail advocates and freight railroads to fund expansion. Union Pacific and other carriers will renew their push for a federal tax credit they say would allow them to add freight rail infrastructure, rail executives have said.

Vice President-Elect Joseph Biden is a commuter on Amtrak, the U.S. passenger railroad, and has pushed for more money for the Washington-based rail service during his Senate career.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

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IAEA to Make Third Visit to Quake-Damaged Atomic Plant in Japan

By Megumi Yamanaka

Nov. 5 (Bloomberg) -- International Atomic Energy Agency inspectors will conduct a third inspection of a Tokyo Electric Power Co. nuclear plant that was damaged by a quake last year.

A 10-member group will meet officials of the company and Japan's Nuclear Safety Agency and carry out a five-day follow up survey of the site starting Dec. 1, Japan's trade ministry said in a statement on its Web site.

The Kashiwazaki Kariwa plant, the world's biggest nuclear facility, awaits central and local government approval for a restart after being struck by the temblor on July 16 last year. The IAEA said it found ``no significant damage'' after a second inspection in January.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.

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Australia Slashes Forecasts for Budget Surplus, Economic Growth

By Madelene Pearson and Gemma Daley

Nov. 5 (Bloomberg) -- Australia's government slashed its forecast budget surplus by 75 percent, saying the slowest economic growth in eight years and fallout from the global financial crisis will erode tax revenue.

The cash surplus in the year to June 30, 2009, will be A$5.4 billion ($3.8 billion), compared with A$21.7 billion forecast in May, as revenue falls and the government gives cash handouts to families, pensioners and homebuyers, Treasurer Wayne Swan said in Canberra today. The economy will grow 2 percent compared with a May prediction of 2.75 percent.

The central bank has cut the benchmark interest rate by 2 percentage points since September, the most aggressive round of reductions since the economy was in recession in 1991. Recent reports show house prices fell by the most since 1978, building approvals had the biggest drop in two years, the services industry shrank for a seventh month and retail sales contracted as Australia's 17 years of economic growth comes to an end.

``The revisions are a little bit conservative given the magnitude of what we've seen happening in the markets,'' said David de Garis, senior markets economist at National Australia Bank Ltd. in Sydney. ``It looks to us that when it's all tallied, the government will be skating close to a deficit,'' its first since 2002.

Still, unlike in the U.S., Australia does not plan to borrow to finance a fiscal stimulus package it has introduced to protect the economy in the face of the global market turmoil. The U.S. had a record $455 billion budget deficit in the 12 months ended September.

Cash Handouts

Swan also been forced to slash his budget surplus after an Oct. 14 promise to give pensioners, home buyers and families A$10.4 billion in handouts to boost the economy. Bank deposits and ``wholesale term funding'' have also been guaranteed, with the government ready to do more should the need arise.

The cash handouts came on top of the biggest income-tax cuts in history, delivered in the May budget, which the government said will add A$5.1 billion to consumer spending in 2008-09. Household spending accounts for two-thirds of the A$1 trillion economy.

The global financial crisis is forecast to reduce revenue from taxes by around A$40 billion over the next four years, Swan said today.

Australia's benchmark S&P/ASX 200 Index of stocks has plunged 32 percent this year, and property prices fell in the third quarter by the most since 1978, reducing government revenue from capital gains tax.

Company Taxes

Falling company profits will also cut government tax receipts. Caltex Australia Ltd., the nation's biggest oil refiner, said this week foreign-currency losses arising from an ``unprecedented'' drop in the Australian dollar will reduce its 2008 profit by about A$200 million. The currency has tumbled 30 percent since hitting a 25-year-high 98.49 U.S. cents on July 16.

The unemployment rate, now at 4.3 percent, will rise to 5 percent by the June quarter of 2009 and 5.75 percent the following year, taking more out of government revenue, Swan said.

Companies such as Qantas Airways Ltd. and Ford Motor Co. are firing workers after economic growth slowed in the second quarter to 0.3 percent, its weakest pace in more than three years, as consumers cut spending and business confidence slumped.

``Global economic conditions have changed dramatically in recent months as the global financial crisis has entered a dangerous new phase,'' Swan, 54, told reporters.

China Demand

Demand has slowed for exports from the world's biggest shipper of coal and iron ore to China and Japan. Home-building approvals fell the most in two years in September, the Bureau of Statistics said in Sydney today.

The International Monetary Fund's World Economic Outlook in October forecast global economic growth will slow to 3 percent in 2009, a world recession under the fund's informal definition.

``While Australia is clearly not immune from the effects of the global financial crisis and the global downturn, we are better placed than most other countries to withstand the fallout,'' Swan said.

The Reserve Bank of Australia cut its benchmark interest rate by three quarters of a percentage point yesterday, following a 1 percentage point reduction in October and a quarter-point drop in September. The U.S., China, India, Japan and South Korea all lowered borrowing costs in the past week.

The government today forecast a A$3.6 billion surplus in 2009-2010, with economic growth of 2.25 percent and a A$2.6 billion surplus in 2010-2011.

Inflation will be 3.5 percent this fiscal year, above the central bank's annual target of between 2 percent and 3 percent. It will be 3 percent in 2009-2010, Swan said.

The consumer price index in the third quarter jumped 5 percent from a year earlier, the fastest pace since 2001.

Swan is due to release the national budget for 2009-10 and at 7.30 p.m. on May 12 in Canberra.

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

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Aboitiz Power Rises by Record After Profit Jumps 35%

By Ian C. Sayson

Nov. 5 (Bloomberg) -- Aboitiz Power Corp. advanced the most since it started trading in Manila after the Philippine power producer and distributor said nine-month profit jumped 35 percent.

Aboitiz Power jumped 11 percent to 3.95 pesos at the noon close local time, its biggest gain since it started trading in July 16, 2007. The stock, which rose as much as 14 percent earlier today, topped a 0.2 percent gain in the main Philippine Stock Exchange Index.

``The earnings result is giving the stock a bounce,'' said Rico Gomez, who helps manage $1 billion in assets at Rizal Commercial Banking Corp. ``The profit bodes well for the stock, which has been generally viewed as cheap.''

Net income climbed to 3.17 billion pesos ($66 million), the company said today, driven in part by its acquisitions of power plants. Excluding currency adjustments and provisions, recurring profit jumped 73 percent to 3.45 billion pesos, it said.

Aboitiz Power is trading at 7.1 times its estimated earnings in the next 12 months, compared with 10 times for the Philippine Stock Exchange Index.

Aboitiz Equity Ventures Inc., which owns Aboitiz Power, rose for the first time this week, climbing 3.6 percent to 5.70 pesos, its highest close in almost four weeks.

Earnings contribution from power generation grew 66 percent to 1.99 billion pesos after energy sales jumped 130 percent to 1,300 gigawatt-hours, Aboitiz Power said. Acquisitions helped increased the company's generating capacity 41 percent to 578 megawatts, it said.

Power distribution contributed 1.12 billion pesos in income, up 6 percent from a year ago after electricity sales increased 17 percent from a year ago, the utility said.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

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India May Cut Fuel Prices by as Much as 2 Rupees, Times Reports

By Saikat Chatterjee

Nov. 5 (Bloomberg) -- India's federal government may lower fuel prices before elections are held in some states later this month, Economic Times reported, citing unidentified government officials.

The government may reduce gasoline prices by as much as 2 rupees a liter and diesel prices by as much as 1 rupee, the newspaper said.

India will hold assembly polls in six states including Madhya Pradesh, Delhi, Jammu & Kashmir and Rajasthan in November and December.

To contact the reporters on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net.

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Sinopec Delays Restart of Tianjin Refinery Until Tomorrow

By Winnie Zhu

Nov. 5 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, will delay the restart of a plant in the northern city of Tianjin until tomorrow after more than a month of planned maintenance, a company official said.

Sinopec, as China Petroleum is known, delayed the plant's restart because of high fuel stockpiles and technical problems encountered during the maintenance, Liu Caixin, a spokeswoman at the Tianjin plant, said by telephone in the city today. She didn't give details.

The plant was scheduled to resume operations in the middle of October, she said. Sinopec shut the plant that can process 5 million metric tons a year, or 100,000 barrels a day, of crude oil on Sept. 5.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

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Babcock Infrastructure Scraps Multinet Sale on Bids

By Angela Macdonald-Smith

Nov. 5 (Bloomberg) -- Babcock & Brown Infrastructure Group, owner of ports and energy transmission lines in Australia, Europe and the U.S., scrapped plans to sell its stake in a gas distribution unit in Victoria state after ``inadequate'' offers.

Bidders for the Multinet Gas Network were few or were seeking higher returns than were available, Chief Executive Officer Jeff Kendrew said today in an address to shareholders in Sydney. Talks are continuing for the sale of stakes in the European ports business and the WestNet Rail unit in Western Australia, and an outcome is expected by Christmas, he said.

BBI, whose shares have slumped 80 percent in the past six months, yesterday announced the sale of half of its Powerco Ltd. unit and is in talks for further divestments to cut borrowing and provide funds for investment. The company earlier today said it will suspend dividend payments to preserve cash.

``We said in August and September that BBI would only agree to divest assets where security-holder value is delivered,'' Chairman David Hamill said in a separate address, which was also sent to the Australian stock exchange. ``We have not changed our view.''

Babcock Infrastructure, which is managed by Babcock & Brown Ltd., dropped as much as 25 percent to 19 cents in Sydney trading and was at 19.5 cents at 2:32 p.m. local time. The decline compared with a gain of as much as 2.5 percent in the exchange's benchmark index.

`Difficult' Sales

The company may need to sell stakes in other core assets where it hadn't previously considered taking on a partner, ``particularly if financial markets do not improve in the timeframe for where customers require that growth to be exercised,'' Kendrew said. BBI is continuing to study all forms of capital raising for growth projects, he said.

BBI's principal assets include the Dalrymple Bay coal terminal in Queensland state, Australia's second-biggest export harbor for the fuel.

``Selling assets in this market is extremely difficult - many would-be buyers are capital-constrained themselves, and the opportunists have a glut of options to choose between, which can result in downward pressure on prices,'' Kendrew said.

BBI said its outlook for revenue next year is ``solid'' and that its businesses are performing ``broadly in line'' with expectations. The economic slowdown provides ``some degree of uncertainty'' for the outlook of the transport businesses, and volume growth may slow at WestNet Rail and Euroports, Kendrew said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

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