Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Sep 30 09 07:13 GMT |

EUR/USD closed lower on Tuesday due to short covering. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends this week's decline, the 38% retracement level of this year's rally crossing is the next downside target. Closes above the 20-day moving average crossing would temper the near-term bearish outlook in the market. USD/JPY closed lower on Tuesday due to short covering. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends this week's decline, the 38% retracement level of this year's rally crossing is the next downside target. Closes above the 20-day moving average crossing would temper the near-term bearish outlook in the market. GBP/USD closed higher on Tuesday as it consolidated yesterday's decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signalling that sideways to higher prices are possible near-term. If it extends this month's rally, the 38% retracement level of this year's decline crossing is the next upside target. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. USD/CHF closed lower on Tuesday as the dollar's decline slowed. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends this week's decline, the 38% retracement level of this year's rally crossing is the next downside target. Closes above the 20-day moving average crossing would temper the near-term bearish outlook in the market. HY Markets http://www.hymarkets.com

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London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 30 09 09:58 GMT |

Following an initial move lower EUR/USD has pushed higher during the European session in tune with the better tone of stock markets. A later boost for the EUR came from the results of the ECB's 1yr tender. News that the IMF has cut is estimates for global write downs on loans and investments by 15% on the back of the economic recovery has been seen as an endorsement of the better economic outlook. Another +1.8% m/m rise in Japanese industrial production in August also supports the better outlook as does the overnight release of better than expected UK consumer confidence data. The UK GfK confidence survey registered -16 compared with -25 in August. The improvement is consistent with the relative strength noted in the Sep CBI distributive trade survey released earlier this week. These data support the notion that there is a chance that the UK economy may return to growth during the final quarter. However, insofar as there has simultaneously been a rise in the UK savings rate, there is the danger that the better tone in consumption will falter once fiscal support measures are reigned in. Sterling pushed higher from the open supported by the better UK economic data but also on talk that a EUR3.5 bln UK farming subsidy will impact the market at the 11 am fix. Yesterday's meeting between some MPC members and various city economists has left the market with the impression that it may be too awkward to adjust the BoE's framework to allow for a cut in commercial banks reserves with the BoE in time for the Oct MPC meeting. Cable is holding above the 1.600 level but remains shy of 1.6100. The ECB has announced that it will lend EUR72.2 bln in its second 12 mth auction. This represents far lower demand than had been expected and the results have consequently boosted the EUR vs the USD and many other currencies. The ECB has not embarked on QE this year but instead has resorted to 'exceptional measures' based around extending funds via the money market. Lower than expected demand at today's auction may reflect a more healthy position of European banks. Today's ECB auction coincides with a move lower in EUR/CHF. The gains for the CHF follow the fact that the SNB has not intervened today. Intervention by the SNB had been coincident with the ECB's previous 12 mth auction. EUR/CHF is currently pushing below the 1.5090 level. French President Sarkozy is promising to kick start the French economy with another round of fiscal measures. Present measures are due to fade into next year in contrast to the measures in place in Germany. The plan, however, has sparked concerns as to the impact of the French budget deficit and debt. Market commentary this morning has included warnings that the French government could be in danger of losing its AAA rating in the coming years which would put it in the same boat as the UK. The EUR has been able to shrug off early loses. Germany's labour data caused little impact. The NOK has rallied strongly this morning on the indication from Norges Bank chief that it may be appropriate to raise rates earlier than had been projected in June. Also supporting the NOK has been talk that there will be no oil fund related NOK sales during Oct. The US ADP jobs data are due today. Revised US Q2 GDP data, the Chicago PMI and Canadian Jul GDP are also due. 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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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Sep 30 09 08:56 GMT |

EUR/USD Current level-1.4604 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4134 and 1.3523. With the recent low at 1.4524 the pair lost its negative momentum and although there is a possibility for one more intraday slide to 1.4564, a test of 1.4720 resistance seems inevitable at the moment. On the 4 h. chart the bias remains neutral in the 1.4444-4842 range Resistance Support intraday intraweek intraday intraweek 1.4644 1.50+ 1.4564 1.4444 1.4719 1.6040 1.4512 1.3746 USD/JPY Current level - 89.76 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84. Yesterday's test at 90.40 marked a reversal on the lower frames and the bias is negative for 89.10 with nearest support around 90.02 Resistance Support intraday intraweek intraday intraweek 90.34 93.40 89.12 87.12 91.62 101.45 88.42 83.53 GBP/USD Current level- 1.6060 The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. The break above 1.6030 confirmed, that the rebound from 1.5766 comes from a larger degree and is heading towards 1.6110-30 major resistance. We still favor the idea, that current test will fail and the direction will be reversed for 1.5766, en route to 1.5352. Intraday bias is positive with a support at 1.6030, followed by the crucial 1.5920. Expect a reversal below 1.6130 to target directly the dynamic support around 1.5876. Resistance Support intraday intraweek intraday intraweek 1.6130 1.6468 1.6030 1.5352 --- 1.7042 1.5876 1.50+ DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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German Unemployment Rises; ‘No Turnaround’ in Sight

By Rainer Buergin and Christian Vits

Sept. 30 (Bloomberg) -- German unemployment rose in September, posing a challenge for Chancellor Angela Merkel’s incoming coalition even as signs mount that the worst of the economic crisis is over.

The number of people out of work rose 10,000 on a seasonally adjusted basis, before statistical changes are taken into account, the Nuremberg-based Federal Labor Agency said today. Including the changes, unemployment declined by 12,000 to 3.46 million. The agency said there is “no turnaround” in the labor market and the economic crisis continues to affect joblessness.

Merkel, whose government introduced stimulus measures including subsidies to sustain employment, plans to form a coalition of her Christian Democrats and Free Democratic Party after the Sept. 27 elections. While consumer and business confidence is rising as Germany climbs out of its deepest recession since World War II, job-cutting by companies from Jenoptik AG to BASF SE is marring the economic outlook.

“The labor market is now entering a crucial phase,” Carsten Brzeski, an economist at ING Group in Brussels, said in a note. “The first wave of short-term work arrangements is approaching their sell-by dates.”

Economists had forecast that unemployment would increase by 20,000 in September, according to the median of 27 estimates in a Bloomberg News survey. The jobless rate declined to 8.2 percent from 8.3 percent the previous month, today’s report showed.

Confidence

Recent data indicate that the economy, Europe’s largest, may be strengthening after the economy grew in the second quarter for the first time in more than a year. Business confidence rose to a 12-month high of 91.3 this month from 90.5 in August, the Ifo institute in Munich said on Sept. 24. Consumer sentiment has improved to the highest in 16 months.

“Although encouraging signs of recovery are emerging, the crisis is not yet over and it will take years to come back to previous levels of output,” Bundesbank Vice President Franz- Christoph Zeitler said on Sept. 24.

Services expanded at a slower pace in September than in August and manufacturing continued to contract, surveys last week showed.

Incentives

Merkel’s 85 billion euros ($124 billion) of stimulus measures included subsidizing social insurance payments to persuade companies to keep workers on shortened shifts when orders are slack.

“It was clear” that the incentives “were preventing the sharp increases seen in other euro-zone economies,” said Jennifer McKeown, an economist at Capital Economics in London. “But given that productivity is still plummeting, we think that there is a further correction in the labor market to come.”

Germany will lose 20,000 engineering jobs a month as long as the economic crisis lasts, according to Martin Kannegiesser, head of the Gesamtmetall employers’ association, the Frankfurter Allgemeine Zeitung newspaper reported yesterday. Companies that are using short-time work programs to hold on to staff will be forced to cut jobs eventually, he said.

German plant and machinery orders declined 43 percent in August from a year earlier, the Frankfurt-based VDMA machine makers association said today. Export orders slumped 41 percent and domestic orders dropped 45 percent.

According to the latest comparable figures published by the Organization for Economic Cooperation and Development, Germany’s jobless rate rose to 7.7 percent in July from a 2008 average of 7.3 percent. The unemployment rate was 9.2 percent in France and 9.4 percent in the U.S.

In western Germany, the number of people out of work fell by a seasonally adjusted 5,000 in September, while the number in eastern Germany declined by 7,000, today’s report showed.

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net; Christian Vits in Frankfurt cvits@bloomberg.net

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European Prices Fell More Than Economists Forecast in September

By Emma Ross-Thomas

Sept. 30 (Bloomberg) -- European consumer prices fell more than economists forecast in September as rising unemployment curbed demand and oil prices dropped.

Prices in the 16-nation euro region declined 0.3 percent from a year earlier after falling 0.2 percent in August, the European Union statistics office in Luxembourg said today. The September drop was the fourth straight decrease and exceeded the 0.2 percent fall projected by economists, according to the median of 29 estimates in a Bloomberg News survey.

Crude-oil prices have declined 33 percent in the past year during the deepest global recession since the Great Depression, dragging down inflation rates around the world. Even as evidence mounts that the worst of the crisis is over with the euro area’s two largest economies returning to growth, European households expect prices to decline further, a report from the European Commission showed yesterday.

“Inflation is probably going to go back into positive territory by the end of the year, but there are signs that the core rate is starting to ease and that trend is only going to become stronger,” Jennifer McKeown, an economist at Capital Economics in London, said before the report. “There’s a much greater risk of a damaging period of deflation than there is of a renewed sharp pick-up in inflation,” she said.

The European Central Bank expects inflation to average 0.4 percent this year and 1.2 percent in 2010, up from 0.3 percent and 1 percent forecast in June. ECB President Jean-Claude Trichet said on Sept. 3 that inflation would turn positive again “within the coming months.”

Covered Bonds

The ECB, which aims to keep inflation just under 2 percent, has cut its benchmark rate to a record low of 1 percent and started buying covered bonds to stimulate lending.

As an increase in euro-area unemployment to a decade-high of 9.5 percent curbs consumer spending, European businesses are cutting prices. Carrefour SA, Europe’s largest retailer, said on Aug. 28 that it will invest 600 million euros ($877 million) in discounts to revive its sales performance.

Puma AG, Europe’s second-largest sporting-goods maker, on Aug. 7 reported a 16 percent drop in second-quarter profit because of increased discounting. Spanish supermarket chain Mercadona SA plans to reduce prices by an average 17 percent this year.

Yesterday’s report by the European Commission showed that an index of consumers’ price expectations over the next 12 months held near a record low. The gauge rose to minus 14 in September from minus 16 in August, which was the lowest since the data started in 1990. The same survey showed executive and consumer sentiment in the euro region increased to the highest in 12 months in September in the sixth straight monthly gain.

Biggest Economies

The euro-area economy may expand 0.2 percent in the current quarter and 0.1 percent in the three months through December, the commission said on Sept. 14. In the second quarter, the economy contracted just 0.1 percent as Germany and France, the region’s two biggest economies, returned to growth.

The inflation report released today is an estimate. The statistics office will publish a detailed breakdown of the consumer-price data, including core inflation, on Oct. 15.

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

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IMF Cuts Forecast for Global Losses to $3.4 Trillion

By Timothy R. Homan and Sandrine Rastello

Sept. 30 (Bloomberg) -- The International Monetary Fund cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion, citing improvements in credit markets and initial signs of economic growth.

The tally, released in a semiannual report today, was based on a new methodology after criticism of an April estimate of about $4 trillion. Banks’ losses on bad assets are projected to increase from July 2009 through next year by $470 billion in the euro area, $420 billion in the U.S. and $140 billion in the U.K., the report said.

As firms from Bank of America Corp. to BNP Paribas SA repair their balance sheets, the report said banks that already have written down $1.3 trillion may have another $1.5 trillion in toxic debt on their books. The result will be impaired credit markets that may stifle the recovery through next year and require sustained attention from policy makers to avoid reigniting the crisis, the IMF said.

“Systemic risks have been substantially reduced following unprecedented policy actions and nascent signs of improvement in the real economy,” the IMF said in its Global Financial Stability Report. “Even so, credit channels are still impaired and the economic recovery is likely to be slow.”

For the period from 2007 through 2010, banks’ writedowns on nonperforming assets will be $2.8 trillion worldwide, with $1 trillion originating in the U.S., $814 billion in the euro area and $604 billion in the U.K.

Losses

The IMF said U.S. banks have recognized about 60 percent of their expected losses, compared with 40 percent in both the euro area and in the U.K. Bank earnings will not be enough to offset future losses, the IMF said in the report. It added that the euro area needs to raise more capital than the U.S. or U.K. and “further reforms may be needed to strengthen banks before central banks can fully exit from extensive liquidity support.”

While raising capital should be a priority, preserving funds on hand is equally important, said Jose Vinals, director of the IMF’s monetary and capital markets department. “Capital conservation is something that is very important at this stage,” Vinals said today at a news conference in Istanbul.

In a category called “other mature Europe” that includes Denmark, Iceland, Norway, Sweden and Switzerland, bank writedowns may increase by $120 billion by the end of 2010, the report said.

Banks have already written down $610 billion in the U.S., $350 billion in the euro area and $260 billion in the U.K., the report said.

IMF Estimates

The overall loss projection, which includes pension funds and insurance companies’ potential losses, was lower than an initially projected $4.1 trillion announced in April, attributed to improved economic and financial conditions, the IMF said.

After some European officials complained five months ago about IMF estimates for the region’s banks, the fund’s report today said a different approach was used to estimate future loan and securities losses. The new measure links regional economic forecasts and credit developments to project writedowns. The previous method did not take into account geographic differences.

In the U.S., consumer loans “remain the worst performing segment,” and residential and commercial mortgage charge-off rates are expected to increase in the second half of 2010, the report said. In the euro zone and U.K., “muted economic activity and rising unemployment are expected to push up loan losses,” it said.

Market Collapse

The financial crisis stemming from the collapse of the subprime mortgage market in the U.S. wiped 44 percent off the MSCI World Index, erasing about $24 trillion from the value of global equities in the 12 months to the end of March. Financial companies worldwide have recorded $1.6 trillion in writedowns and losses, according to Bloomberg News data.

“There’s still a lot of impaired assets on the balance sheets of the banks,” IMF Managing Director Dominique Strauss- Kahn said in a Sept. 21 interview. “A lot has been done, but there’s still a lot to do.”

The MSCI World Index has rallied about 64 percent from this year’s low in March.

While signs of improvement in the economy and “reassuring” bank stress-test results have relieved some of the immediate pressure to deal with toxic assets, addressing them remains a “a policy priority and a challenge,” the IMF said in the report.

Hurdles

In the U.S., the Public-Private Investment Program “has faced significant hurdles,” and authorities could adjust it to encourage banks to participate more in the initiative, according to the report.

In Europe, programs to establish “bad banks” to hold impaired assets are still in the early stages and “show promise,” the IMF’s report said.

The Swiss government last year invested 6 billion Swiss francs ($5.8 billion) in mandatory convertible notes to help Zurich-based UBS AG split off toxic assets.

BNP Paribas, France’s largest bank, earlier this month said 2009 provisions for bad loans will be between 7 billion euros ($10.2 billion) and 8 billion euros, lower than analysts’ estimates.

Still, the report mentioned “a concern” about Germany’s plan, which instead of demanding upfront recognition of losses, allows banks to spread them over 20 years.

A leverage ratio for banks, which would manage holdings relative to total assets, will be added to the existing Basel II capital rules, which all members of the Group of 20 advanced and emerging economies will adopt by 2011.

Capital

The U.S. has pumped capital into banks with a $700 billion Troubled Asset Relief Program in the past year. Citigroup Inc., Bank of America and American International Group Inc. were among the top recipients.

The IMF estimates that credit constraints, while easing in most regions, still pose a threat to the recovery. That’s because overall demand will not slow as fast as supply because governments need cash to finance their stimulus plans and their growing deficits, the IMF said.

“Our scenarios envisage the supply of bank credit falling for the remainder of 2009 and into 2010 both in the United States and Europe,” according to the report. “Western European banks appear able to absorb deteriorating credit conditions in emerging Europe, but may lack sufficient capital to support a recovery in the region.”

At the same time, the IMF said, “sovereign issuance will effectively compete with -- and possibly crowd out -- private- sector credit needs.”

The IMF dismissed the notion that a temporary rise in sovereign debt issuance by advanced economies can hurt emerging market debt. Such a scenario would occur only, the IMF said, if widening deficits in industrial nations were sustained.

Governments need to commit to medium-term plans to ensure fiscal sustainability and avoid an increase in long-term interest rates, the lender said. The IMF predicted that financing an increase in budget gaps of 5 percent to 6 percent of gross domestic product may raise long-term borrowing cost by 150 to 200 basis points.

To contact the reporters on this story: Timothy R. Homan in Istanbul at thoman1@bloomberg.netSandrine Rastello in Istanbul at srastello@bloomberg.net

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BOJ Said to Consider Ending Corporate Debt Purchases

By Masahiro Hidaka and Mayumi Otsuma

Sept. 30 (Bloomberg) -- The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with direct knowledge of the discussions said.

Officials are concerned that maintaining their purchases of corporate bonds and commercial paper beyond the scheduled end in December would distort capital markets, according to the people, who spoke on condition of anonymity because the deliberations are private.

The decision would echo steps by central banks around the world to pare back unprecedented measures to unfreeze credit as the financial industry stabilizes. At the same time, because Japan’s economic recovery is threatened by rising unemployment and deflation, policy makers are likely to keep the benchmark interest rate target near zero into next year, analysts said.

“There is no doubt that the central bank is heading toward unwinding the credit-easing steps,” said Eiji Hirano, who worked at the central bank for 33 years until 2006 and served as an executive director. “BOJ policy makers are now signaling their intention to end them and they seem to be having a sort of dialogue with markets to test their reaction,” said Hirano, who is now a Tokyo-based director at Toyota Financial Services Corp.

Fed, ECB

The Federal Reserve this month said it would shrink programs that auction loans to banks and Treasuries to bond dealers, citing “continued improvements” in markets. The European Central Bank said Sept. 24 it will stop its longer- dated dollar liquidity operations because of limited demand.

Bank of Japan Deputy Governor Hirohide Yamaguchi said on Sept. 18 that the central bank needs to “be mindful that keeping the temporary measures for a long time may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” Earlier in the month, Miyako Suda, a Bank of Japan board member, said the need for the measures is “diminishing.”

The yen rose to 89.76 per dollar at 3:18 p.m. in Tokyo from 90.09 late yesterday in New York. The yield on benchmark 10-year government bonds rose one basis point to 1.29 percent after a Trade Ministry report showed industrial production climbed for a sixth month in August.

Waning Usage

Japan’s central bank found no lenders offering to sell it commercial paper on Sept. 18; as of the end of August, it had 100 billion yen ($1.1 billion) of the securities on its balance sheet, about 3 percent of the 3 trillion yen the bank allowed itself to hold. The Bank of Japan held 200 billion yen of corporate bonds, only one-fifth of the limit set by officials.

Borrowing costs have tumbled in the market for commercial paper, the short-term securities that companies typically use to pay for day-to-day items such as payrolls and rent. The yield on three-month paper issued by top-rated companies was as low as 0.12 percent today -- lower than before Lehman Brothers Holdings Inc. collapsed in September 2008 -- from a high of 1.25 percent in October.

A rally in Japanese corporate bonds left them with their best back-to-back quarterly performance since 2001, returning 3.6 percent to investors including reinvested interest, index data compiled by Merrill Lynch & Co. show.

While it will be “appropriate” to consider halting the debt buying, the central bank should consider ways to help smaller companies, which are still struggling to get funds, said Susumu Kato, chief economist in Tokyo at Calyon Securities.

Unlimited Lending

Policy makers may keep their third extraordinary credit program beyond December, while changing its size or the loan repayment period, one of the people familiar with the matter said. That measure offers banks unlimited loans backed by collateral, and has been tapped by lenders more than the corporate debt plans. The central bank had lent 7.3 trillion yen under the facility as of Aug. 31.

Bank of Japan board member Atsushi Mizuno said in August that the bank-loan program had helped keep yields on short-term securities low. Ending it prematurely “may increase the volatility of financial markets,” he said.

The strategy is to withdraw the facilities “in stages,” Hirano, the 59-year-old former central banker, said. Markets “still face fragility, but on the other hand the bank can’t allow speculation that the programs will stay in place for one or two more years,” added Hirano.

Tankan Survey

The Bank of Japan’s quarterly Tankan report tomorrow will give Governor Masaaki Shirakawa an update on business sentiment and firms’ ability to raise cash. Economists estimate the survey will show that pessimism among large manufacturers diminished for a second straight quarter.

The bank will hold two meetings next month -- on Oct. 13- 14 and Oct. 30. Officials will publish their twice-yearly forecasts for the economy and inflation at the second gathering.

The Bank of Japan said this month that it saw “signs of improvement” in company financing and removed funding concerns from its list of risks for the economy.

After lowering the key rate to 0.1 percent in December, the Bank of Japan started buying commercial paper and corporate bonds from lenders and offering them unlimited loans backed by collateral to channel funds to companies. The policy board extended all three plans until Dec. 31 when it met in July.

Some 14 of 16 analysts surveyed by Bloomberg this month anticipated a 0.1 percent rate target through the end of 2010.

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

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Chile and Colombia: Latin America Bond and Currency Preview

By Catarina Saraiva

Sept. 30 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous day’s session.

Chile: Unemployment rose in August, climbing to 10.9 percent from 10.8 percent in July, according to the median estimate of 12 economists in a Bloomberg survey. The report will be released at 9 a.m. New York time.

The peso dropped 0.8 percent to 548.05 per dollar.

The yield for a basket of Chile’s 10-year peso bonds in inflation-linked currency units, called unidades de fomento, rose one basis point, or 0.01 percentage point, to 2.81 percent, according to Bloomberg composite prices.

Colombia: Unemployment fell to 12.5 percent in August from 12.8 percent in July, according to the median forecast of seven economists in a Bloomberg survey.

The peso declined 0.7 percent to 1,931.60 per dollar.

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell five basis points to 8.98 percent, according to Colombia’s stock exchange.

Other prices in Latin American markets:

Argentina: The peso rose 0.2 percent to 3.8365 per dollar.

The yield on the country’s inflation-linked peso bonds due in December 2033 rose nine basis points to 11.77 percent, according to Citigroup Inc.’s local unit.

Brazil: The real fell 0.3 percent to 1.7922 per dollar.

The yield on the zero-coupon, real-denominated bond due in January 2010 rose three basis points to 8.72 percent, according to Bloomberg prices.

Mexico: The peso rose 0.1 percent to 13.5373 per dollar.

The yield on Mexico’s 10 percent bond due December 2024 was unchanged at 8.22 percent, according to Banco Santander SA.

Peru: The sol dropped 0.2 percent to 2.8890 per dollar.

The yield on Peru’s 8.6 percent bond maturing August 2017 fell one basis point to 4.93 percent, according to Citigroup Inc.’s unit in Lima.

To contact the reporter on this story: Catarina Saraiva in New York at Asaraiva5@bloomberg.net.

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Darling Says Banker ‘Stupidity’ Left Lenders Close to Collapse

By Gonzalo Vina

Sept. 30 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling blamed the “stupidity” of bankers for bringing Britain’s financial system to within hours of collapse last year.

Excessive risk-taking by bankers chasing unjustified bonuses almost forced banks to “close their doors,” Darling said, adding that tougher rules on bonuses would help prevent a repeat of the crisis.

“I am bothered about the bonus culture because it played a part in the downfall of the banks,” Darling told Labour Party activists at a meeting on the fringes of the party’s annual conference in Brighton, England late yesterday. “We have to make sure we don’t get into more problems because of the stupidity of a number of people.”

Darling told the audience that the decisions to bail out Royal Bank of Scotland Group Plc and HBOS Plc were the most difficult during his time as chancellor. Prime Minister Gordon Brown’s government pledged to support banks on Oct. 8, 2008, to prevent a meltdown in the aftermath of Lehman Brothers Holdings Inc.’s bankruptcy.

“Banks were hours away from having to close their doors,” Darling said. “We reached a point last October when banks were finding it difficult to lend to each other overnight.”

The comments came a day after the finance minister told the conference he’d speak to the heads of compensation committees this week to make sure they hold back bonuses this year ahead of legislation that is due to be introduced next year.

Labour is seeking to tap into popular anger against bankers who are rewarding themselves even as taxpayers underwrite a bailout with total potential liabilities worth 1.4 trillion pounds, equivalent to the nation’s economic output in a year.

Darling rejected calls from Labour Party activists in the audience who suggested the government establish a High Pay Commission to regulate pay. He said such proposals would be “unenforceable.”

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

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* STORY * PHOTO * VIDEO * U.K. Consumer Confidence Jumps the Most in 14 Years

By Svenja O’Donnell

Sept. 30 (Bloomberg) -- U.K. consumer confidence jumped in September by the most since 1995 as optimism about the economy’s prospects rebounded, GfK NOP said.

An index of sentiment rose to minus 16, the highest since January 2008, from minus 25 the previous month, the market researcher said in an e-mailed statement today in London. A gauge of confidence in the economy for the next year increased 13 points to 4, the highest in more than a decade.

“Psychologically important is the fact that confidence in people’s own personal finances for the next 12 months and confidence in the general economy over the next 12 months both moved into positive territory, after being in the red for well over a year,” Nick Moon, Social Research managing director at GfK, said in the statement.

Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, today reported the smallest drop in same-store sales for two years and said confidence among customers “has reached the bottom.” Chancellor of the Exchequer Alistair Darling predicted this week that an economic recovery may be under way by the end of the year.

The pound rose for a second day against the dollar after the GfK report. The U.K. currency traded at $1.6058 as of 8:49 a.m. in London.

The index of personal finances in the next year rose 5 points to 5, the report showed. The index measuring the climate for major purchases rose 11 points to minus 15. GfK surveyed 1,999 people from Sept. 4 to Sept. 13.

M&S Sales

Retailers saying sales increased this month from a year earlier outnumbered those reporting declines by 3 percentage points, compared with a reading of minus 16 points in August, the CBI said yesterday.

M&S said that sales at U.K. stores open at least a year fell 0.5 percent in the 13 weeks ended Sept. 26. That beat the average estimate of nine analysts surveyed by Bloomberg News for a 1.6 percent drop. The retailer raised its margin forecast.

Moss Bros Group Plc, the U.K.’s third-largest suit retailer, said yesterday it may restart opening new stores this year amid signs the decline in sales is slowing.

The U.K. economy shrank 0.6 percent in the second quarter, less than previously estimated, as the slump in manufacturing and construction started to ease, the Office for National Statistics said yesterday.

Today’s report still showed that consumers, who have 1.5 trillion pounds ($2.4 trillion) in debts, may be getting keener to save. GfK’s measure of whether now is a good time to save rose to minus 5 from minus 10. The household savings ratio, a measure of savings as a proportion of post-tax income, jumped to 5.6 percent in the second quarter, the most since 2003, the statistics office said yesterday.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.

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Bank of America, Major Banks’ FDIC Premiums May Top $10 Billion

By David Mildenberg

Sept. 30 (Bloomberg) -- The Federal Deposit Insurance Corp.’s plan to rebuild its reserves may cost Bank of America Corp. and three of the largest U.S. banks more than $10 billion.

Bank of America, the biggest U.S. lender by deposits, may owe $3.5 billion under an FDIC proposal that banks prepay three years of premiums, based on the lowest assessment rate multiplied by the bank’s $900 billion in June 30 U.S. deposits.

“This seems like a very hefty amount,” said Tim Yeager, a finance professor at the University of Arkansas and former economist at the Federal Reserve Bank of St. Louis. “The FDIC’s projections of future losses are pretty severe, and they are trying everything they can to avoid tapping the Treasury.”

U.S. bank premiums range from 12 cents per $100 in deposits for the safest lenders to 45 cents for banks the U.S. considers risky, said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America. The FDIC yesterday proposed asking banks to pay premiums for the fourth quarter and next three years on Dec. 30. The fees will raise $45 billion.

The FDIC is required by law to rebuild the fund when the reserve ratio, or the balance divided by insured deposits, falls below 1.15 percent. It was 0.22 percent on June 30 and sank to a deficit in the third quarter. The fund, drained by 95 bank failures this year, had $10.4 billion on the second quarter. The fund will erase its deficit by 2012, the FDIC said yesterday.

Based on the current assessment and each bank’s deposits, Wells Fargo & Co.’s fee may be $3.2 billion based on its $814 billion in deposits, JPMorgan Chase & Co. may pay $2.4 billion and Citigroup Inc. $1.2 billion. The estimates exclude the FDIC’s plan to boost the assessment rate by 3 cents per $100 in deposits in 2011 or the agency’s assumption that bank deposits will increase by 5 percent annually.

Deferred Expenses

Banks won’t record the premiums as an expense on Dec. 30, making the prepayments more palatable, Gary Townsend, chief executive officer of Hill-Townsend Capital LLC, said in a Bloomberg TV interview.

The expense for prepaying will be recorded during the next three years, lessening the impact on earnings, said Brad Milsaps, an analyst at Sandler O’Neill and Partners LLP in Atlanta. “I don’t think it’s going to be a problem overall, though for the stressed banks that need cash, it could be,” he said. Banks will record a cost when the payments would be due.

Bank of America reported $140 billion in cash as of June 30, while JPMorgan, Wells Fargo and Citigroup each had more than $20 billion, according to regulatory filings.

Spokesmen for the four banks declined to estimate their costs. “It’s obviously going to be big because we are a big bank,” JPMorgan spokesman Tom Kelly said.

Fund Deficit

Regulators shut 120 banks in the past two years and the FDIC said the insurance fund to run at a deficit until at least 2012. Banks failures through 2013 may cost $100 billion, an increase from $70 billion estimated in May, with half the expenses already incurred, the FDIC said.

The four banks paid a combined $2.28 billion in a special assessment for the FDIC earlier this year, according to regulatory filings. The agency raised $5.6 billion from that fee, which was based on assets rather than deposits, Cole said.

Bank of America cited the FDIC’s special assessment as a contributing to its 5.5 percent decline in net income during the second quarter.

The agency rejected options for a second special fee or borrowing from the Treasury Department.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

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Dollar May Weaken to $1.4780 per Euro on Data, Commerzbank Says

By Justin Carrigan

Sept. 30 (Bloomberg) -- The dollar may extend declines should government reports today signal the pace of the U.S. economic recovery is slowing, Commerzbank AG said.

“A breach of the support in the $1.4500-to-$1.4530 area in euro-dollar is difficult,” Frankfurt-based currency analysts Antje Praefcke and Lutz Karpowitz wrote in a report today. “If U.S. data disappoint –- U.S. consumer confidence surprised negatively yesterday and doesn’t bode well for Friday’s employment report -- euro-dollar should head back toward $1.4780.”

The dollar weakened 0.3 percent to $1.4625 as of 7:26 a.m. in London.

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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Dollar Falls as Signs on Global Recovery Boosts Demand for Risk

By Yoshiaki Nohara and Ron Harui

Sept. 30 (Bloomberg) -- The dollar fell, heading for a second quarterly loss against the euro, as signs the global economy is recovering boosted demand for higher-yielding assets funded in the U.S. currency.

The U.S. currency headed for a quarterly decline against 14 of 16 major counterparts before a report this week forecast to show American employers cut fewer jobs and as Japan’s industrial production rose in August for a sixth month. Australia’s dollar climbed to a 13-month high against the greenback as better-than- forecast retail sales bolstered speculation the nation’s central bank will raise rates as early as November.

“Investors are waiting for positive data to justify taking risk,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “Improving U.S. jobs figures would boost demand for higher-yielding assets and be negative for the dollar.”

The dollar dropped to 89.65 yen as of 7:08 a.m. in London from 90.09 yen in New York yesterday. It fell to as low as 88.24 yen on Sept. 28, the weakest level since Jan. 23. For the quarter ending today, the dollar has declined 7 percent against the yen.

The euro advanced to $1.4639 from $1.4587. Yesterday, it touched $1.4527, the lowest level since Sept. 14. The euro has risen 4.3 percent against the dollar this quarter.

Japan’s currency fetched 131.28 per euro from 131.40 in New York yesterday. The yen has gained 3 percent against the euro this quarter.

U.S Jobs Data

The U.S. Labor Department is forecast to report payrolls fell by 180,000 workers in September, the smallest drop since August 2008, according to the median estimate of economists in a Bloomberg News survey. The data is due on Oct. 2.

Japan’s factory output gained 1.8 percent in August after advancing 2.1 percent in July, the Trade Ministry reported today in Tokyo. That matched the median estimate of economists in a separate survey.

The dollar also fell on speculation a Federal Reserve official will reiterate today that record-low interest rates will be unchanged for an extended period.

“Fed policy makers will probably keep low borrowing costs unchanged until next summer, weighing on the dollar,” said Akira Hoshino, chief manager of the foreign-exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender.

Fed Vice Chairman Donald Kohn is set to speak on a panel in Washington about the central bank’s exit policies. Kohn earlier this month said a swift increase in U.S. interest rates is unlikely.

Fed’s Kohn

“With the global economy quite weak and inflation low, a large and rapid rise seems quite improbable,” Kohn said at the Brookings Institution in Washington on Sept. 10.

Futures contracts on the Chicago Board of Trade show a 23 percent chance the Fed will keep rates unchanged through April, up from 18 percent odds a month ago.

The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with direct knowledge of the discussions said.

The decision would echo steps by central banks to pare back unprecedented measures to unfreeze credit as the financial industry stabilizes. At the same time, because Japan’s economic recovery is threatened by rising unemployment and deflation, policy makers are likely to keep the benchmark interest rate target near zero into next year, analysts said.

Australia’s Dollar

The Australian currency rose against all of its 16 major counterparts as retail sales climbed 0.9 percent in August after dropping 0.9 percent in July, the Bureau of Statistics said today. The median forecast of economists surveyed by Bloomberg News was for a 0.5 percent gain.

“The market’s focus was on the retail sales number which had a very strong result,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney.

The Australian dollar rose 1.2 percent to 88.06 U.S. cents. It earlier touched 88.19, the highest since August 2008. Australia’s currency gained 9.1 percent against its U.S. counterpart this quarter.

The euro snapped two days of losses against the dollar on speculation European Central Bank officials will reiterate it is too early to withdraw economic stimulus measures.

ECB President Jean-Claude Trichet wrote in a newsletter yesterday that “at some point in time, exit strategies will have to be implemented,” suggesting the central bank is in no hurry to scale back its unconventional policies. The ECB yesterday offered banks as much cash as they want over 12 months for a second time in three months to support the economy.

ECB

“As long as officials like Trichet feel that now is not the time to start an exit strategy, the market’s appetite for risk should be underpinned,” said Philip Wee, a senior currency economist at DBS Group Holdings Ltd. in Singapore. “This coupled with ultra-low U.S. interest rates should continue to benefit the euro and to hold the dollar down.”

ECB policy makers including Trichet and Council Board members Christian Noyer and Axel Weber will speak at the Eurofi Financial Forum in Goeteborg, Sweden later today.

The benchmark interest rate is 1 percent in the 16-nation euro region, compared with as low as zero in the U.S. and 0.1 percent in Japan, attracting investors to European assets.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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Japan Stocks Rise on Profit Reports; Property Developers Fall

By Masaki Kondo

Sept. 30 (Bloomberg) -- Japanese stocks rose after NGK Insulators Ltd. and Foster Electric Co. said their first-half profits probably exceeded forecasts. Property developers fell after ratings cuts by UBS AG.

NGK, a maker of electronic components, surged 8.8 percent, and Foster, which makes headphones and speakers, climbed 15 percent. Mitsui Fudosan Co., Japan’s largest real-estate company, lost 2.2 percent, and smaller rival Sumitomo Realty & Development Co. slid 2.6 percent.

The Nikkei 225 Stock Average advanced 0.3 percent to close at 10,133.23 in Tokyo. The broader Topix index gained 0.7 percent to 909.84, with seven stocks rising for every four that declined. For September, the Nikkei 225 dropped 3.4 percent and the Topix lost 5.8 percent, their first decreases since February and the steepest declines among 88 benchmarks tracked by Bloomberg.

“Technologies will make a marked difference in competitiveness among companies in the same sector,” said Hisakazu Amano, who helps oversee the equivalent of $19 billion at T&D Asset Management Co. “It’s almost impossible to come up with a reason to think Japanese equities will fare well relative to their overseas counterparts in the coming months.”

The number of shares traded in Tokyo was the lowest since Sept. 15.

The Topix and the Nikkei 225 declined this month after the Liberal Democratic Party was defeated in national elections on Aug. 30, ending its half century of almost unbroken rule. Shares of consumer lenders and banks have been dragged down by comments by newly installed Financial Services Minister Shizuka Kamei that he favored a plan that would let businesses and individuals suspend payments on loans for about three years.

Japan’s factory output increased 1.8 percent in August from the preceding month, slower than a 2.1 percent gain in July, the Trade Ministry said before markets opened. That matched the median of economists’ estimates surveyed by Bloomberg.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Fortescue Misses $6 Billion China Funding Deadline

By Rebecca Keenan and Jesse Riseborough

Sept. 30 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, missed today’s deadline to raise as much as $6 billion from Chinese lenders to finance expansion of its mine, port and rail project.

“There is no change whatsoever to Fortescue’s plans to expand,” Cameron Morse, spokesman for Perth-based Fortescue, controlled by billionaire Andrew Forrest, said today by phone. He wouldn’t comment on whether the funding talks were continuing.

China, the world’s biggest buyer of the ore, has invested in more than $56 billion of projects globally to try to reduce dependence on Vale SA, Rio Tinto Group and BHP Billiton Ltd., the world’s three-biggest exporters. Fortescue plans to use the funds to more than double exports by 2012.

“Without securing extra funding, the expansion timeline has to come into question until if, when, a suitable funding package is secured,” Len Eldridge, an iron and steel analyst at Macquarie Group Ltd. said by phone from Perth. He has an “underperform” rating on the stock.

Fortescue dropped 2.1 percent to A$3.82, its lowest since July 14, at the 4:10 p.m. Sydney time on the Australian stock exchange. The stock has risen 98 percent this year and has a market value of A$12 billion ($11 billion).

Pricing Deal

Today’s funding deadline was part of the company’s ore pricing agreement last month with the China Iron & Steel Association and Baosteel Group Corp. Securing financing is a condition of the accord under which Fortescue agreed to supply Chinese mills with ore at a 35 percent reduction in price to last year’s pact.

The agreement condition for the completion of the funding by Sept. 30 will not be met, the company said today in a statement to the exchange. “Fortescue intends to continue working co-operatively with CISA, including the provision of attractive iron ore pricing if requested.”

The company had held talks with major Chinese financiers, Forrest said in an interview last month, without naming the potential lenders. Fortescue plans to expand capacity to 95 million metric tons by 2012, former Chief Financial Officer Michael Minosora said last month, from current capacity of about 45 million tons.

The loan may be provided by a Chinese syndicate including the Export-Import Bank of China, the Australian newspaper said today, without citing anyone.

Shan Shanghua, general secretary of the Chinese steel association, couldn’t be reached immediately for a comment.

Expand Capacity

China is Australia’s second-biggest trading partner, with two-way trade valued at A$68 billion in 2008, and is its largest source of foreign investment. China, which has a $200 billion sovereign fund, hasn’t been as affected by funding constraints and may boost spending on oil and mining acquisitions by at least half this year, according to data complied by Bloomberg.

Fortescue may need between $3 billion and $4 billion to proceed with plans to almost double output, Hunan Valin Iron & Steel Group, its second-largest shareholder, said in May.

The company in May 2008 started shipments to China from its A$2.8 billion project in Western Australia. It shipped 27 million tons of ore in fiscal 2009 for sales of $1.8 billion. Fortescue in 2007 flagged expansion plans with a target of as much as 200 million tons. The company said in April expansion plans had been put on hold because of a cash squeeze.

Fortescue had ratings on its debt cut by Standard & Poor’s Ratings Services and Moody’s Investors Service in the past month on delays to expanding production. The company is “tight on cash” and needs additional capital this half, Morgan Stanley analysts said in a Sept. 2 report. An expansion to 98 million tons may cost as much as $4 billion, the broker forecast.

Fortescue has liabilities of $554 million maturing this half and a further $178 million due next half, according to Morgan Stanley. It had cash of $655 million at June 30 and non- current liabilities of $2.8 billion, according to an Aug. 10 presentation. The liabilities include $2.25 billion of debt.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.netJesse Riseborough in Melbourne at jriseborough@bloomberg.net

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Norilsk Expects Return of Nickel Export Duty in 2010

By Maria Kolesnikova and Ilya Khrennikov

Sept. 30 (Bloomberg) -- OAO GMK Norilsk Nickel, Russia’s largest mining company, expects the government to resume a 5 percent duty on nickel exports from next year, Chief Executive Officer Vladimir Strzhalkovsky said.

“We expect the old duty to be reintroduced in 2010,” Strzhalkovsky said in an interview at a VTB Capital investment conference in Moscow today.

The government’s Commission for Protective Measures in Foreign Trade said yesterday on its Web site that Russia may impose a 5 percent nickel duty from Dec. 1.

Russia annulled the 5 percent duty and a 10 percent tariff on copper cathode, a finished form of the metal, in January after prices plunged. Metals have rebounded since then.

“Copper production costs are fairly high and the government shouldn’t rush to reintroduce the tax,” Strzhalkovsky said today.

To contact the reporter on this story: Maria Kolesnikova in Moscow at +7-495-771-7707 or mkolesnikova@bloomberg.net; Ilya Khrennikov in Moscow at +7-495-771-7747 or ikhrennikov@bloomberg.net

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Palm Oil Poised for 4th Monthly Drop This Year on Supply Gains

By Glenys Sim

Sept. 30 (Bloomberg) -- Palm oil was little changed, heading for its fourth monthly drop this year, amid falling exports and the prospect of a record crop of rival soybean.

The tropical oil has lost 11 percent this month as sales from Malaysia, the second-largest producer, fell 7.8 percent in the first 30 days of this month to 1.23 million tons compared with 1.33 million tons in the same period in August, Intertek, an independent surveyor, said today.

“The fundamentals aren’t looking great for palm oil at the moment,” Wang Aihua, an analyst at Orient Securities Futures in Shanghai, said. “We may see a lift if crude oil moves higher.”

Palm oil for December delivery traded unchanged at 2,102 ringgit ($605) a metric ton on the Malaysia Derivatives Exchange at 12:22 p.m. local time. Futures gained 0.8 percent earlier.

November-delivery soybean oil was little changed at 33.83 cents a pound in after-hours trading on the Chicago Board of Trade at the same time. The contract rose 0.7 percent yesterday.

An overnight freeze in parts of the U.S. Midwest caused little crop damage as farmers hasten the pace of harvesting before rains arrive later this week. An estimated 63 percent of the crop was beginning to drop leaves as of Sept. 27, a sign of maturity before the harvest, compared with 40 percent a week ago, the U.S. Department of Agriculture said yesterday. About 5 percent was harvested, compared with a five-year average of 18 percent, the agency said.

Output of soybeans in the U.S., the world’s largest grower and exporter, will reach a record 3.245 billion bushels this year, the U.S. Department of Agriculture estimated on Sept. 11.

Crude oil was up 0.9 percent at $67.33 a barrel at 12:23 p.m. in Malaysia. Palm oil and its substitute soybean oil often track crude oil as they are used as feedstock for biofuels.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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Asia Stocks Rise for Seventh Month on Economic Growth Optimism

By Shani Raja

Sept. 30 (Bloomberg) -- Asian stocks rose, lifting the MSCI Asia Pacific Index to its seventh monthly advance, after China’s central bank said it will retain a “moderately loose” monetary policy and NGK Insulators Ltd. increased its profit forecast.

Poly Real Estate Group Co. rose 3.8 percent after the People’s Bank of China said stimulus measures to boost domestic demand will continue. NGK Insulators surged 8.6 percent in Tokyo after citing growing demand for products related to cars and electronics for its higher forecast. Billabong International Ltd., Australia’s biggest surfwear maker, climbed 4 percent on a better-than-estimated retail sales report.

The MSCI Asia Pacific Index added 0.7 percent to 117.62 as of 3:32 p.m. in Tokyo. The gauge is set for its second-straight quarterly advance, having climbed 14 percent in the past three months as economies around the world emerged from recession.

“The recovery is moving from being supported by governments and central banks to being a bit more self- sustained,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $75 billion. “Across Asia we’re seeing strong private demand as well as a strong pick-up in actual measures of economic activity.”

The Shanghai Composite Index climbed 0.9 percent in China, where markets are closed from tomorrow for a week-long holiday. The country’s central bank said it will maintain its moderately loose monetary policy to sustain an economic recovery.

Taiwan’s Taiex Index rose 1.1 percent, while Japan’s Topix Index added 0.7 percent. The Bank of Japan may decide as soon as next month to let its emergency corporate-debt buying programs expire as businesses regain access to private funding, people with knowledge of the discussions said.

U.S. Home Prices

Hong Kong’s Hang Seng Index fell 0.7 percent. China South City Holdings Ltd., a developer and operator of logistics and trade centers, plunged 26 percent, becoming the fourth company in a week to decline on its first day of trading in the city.

In Seoul, Korea Gas Corp. tumbled 11 percent in Seoul on share-sale plans, while Hyundai Heavy Industries Co., the world’s largest shipyard, tumbled 9.6 percent on concern French shipping line CMA CGM SA may cancel orders.

Futures on the U.S. Standard & Poor’s 500 Index added 0.1 percent. The gauge fluctuated between gains and losses yesterday before finishing down 0.2 percent. The S&P/Case-Shiller home- price index climbed 1.2 percent in July from the previous month, the most since October 2005, according to an S&P report.

In Tokyo, NGK Insulators surged 8.6 percent to 2,075 yen after boosting its profit forecast for the year ending March 31, 2010, by 14 percent to 12.5 billion yen ($139 million).

Worst Performers

The MSCI Asia Pacific Index has added 3.5 percent in September, set for a seventh monthly advance, its longest stretch of gains since the 10 months ended July 2007. Japan’s Topix index and the Nikkei 225 are the worst performers this month among 88 global equity indexes tracked by Bloomberg, amid uncertainties over policies from the nation’s new government.

In Shanghai, Poly Real Estate gained 3.8 percent to 24.25 yuan. China Vanke Co., the nation’s biggest listed property developer, added 1 percent to 10.44 yuan.

The People’s Bank of China said yesterday after its quarterly monetary policy meeting it will guide reasonable loan growth, adding that the economic rebound isn’t solid. Chinese manufacturing expanded for a sixth month in September on stimulus spending and record bank lending, an index from HSBC Holdings Plc showed.

Holiday Buying

“Some investors are buying stocks ahead of the holidays and betting strong economic data will be released after that,” said Chen Shide, a Guangzhou-based fund manager at GF Fund Management Co., which oversees about $11.4 billion. “The September figures will be good and there’s a strong possibility of making positive returns from equities in the short term.”

The climb in equities in the past seven months has been fueled by better-than-estimated economic and earnings reports. Australian retail sales climbed 0.9 percent in August, the first gain in three months, the country’s statistics bureau reported today. The median forecast of economists surveyed by Bloomberg News was for a 0.5 percent gain.

Billabong climbed 4 percent to A$12 in Sydney, while David Jones Ltd., Australia’s second-biggest department store, rose 1.9 percent to A$5.84.

Goodman Group, a real-estate trust, surged 9 percent to 66.5 Australian cents, after the retail data spurred speculation that an economic recovery is underway and will bolster the property market. Mirvac Group advanced 6.3 percent to A$1.68.

Rising Valuations

The MSCI index’s gain in the past three months is lower than the second quarter’s 28 percent as concerns emerged the stock rally may have overvalued company earnings prospects. The average price of the gauge’s shares rose to 1.6 times book value on Sept. 17, up from 1 at the measure’s five-year low on March 9.

China South City sank 26 percent to HK$1.56 in its debut amid concern demand for share sales in Hong Kong may be waning. Peak Sport Products Co., China Lilang Ltd. and Metallurgical Corporation of China Ltd. also fell on their first day of trading in the past week.

Wilmar International Ltd., the world’s biggest palm-oil trader, is delaying the Hong Kong share sale of its China unit until stock markets stabilize, FinanceAsia said on its Web site. Wilmar, which said it hasn’t decided on the timing of the sale, lost 3.7 percent to S$6.27 in Singapore.

Korea Gas, the world’s largest buyer of liquefied natural gas, slumped 11 percent to 53,300 won in Seoul after announcing plans to double its capital by selling new shares.

Technology Stocks Rise

Hyundai Heavy Industries fell 9.6 percent to 180,000 won. CMA CGM, the world’s third-largest container line, yesterday announced talks with creditors as it battles to avoid collapse amid plunging demand and rising overcapacity. The company may also try to cancel new ships, the Financial Times said today.

Technology companies accounted for 20 percent of the MSCI Asia Pacific Index’s gain today after Micron Technology Inc. reported a narrower loss, boosting optimism a glut in the memory-chip industry is easing.

Hynix Semiconductor Inc. gained 1.3 percent to 19,800 won. Taiwan Semiconductor Manufacturing Co., the world’s largest maker of customized chips, gained 1.3 percent to NT$64.50.

Bankruptcies and factory shutdowns have helped the memory industry pare an oversupply of chips, pushing up prices closer to the cost of production. Micron makes dynamic random access memory, or DRAM, for personal computers, as well as Nand flash chips, which store information.

In Kuala Lumpur, Hai-O Enterprise Bhd., a Malaysian seller of Chinese wines, herbs and medicines, rose 4.9 percent to a record 5.97 ringgit after first-quarter profit climbed 36 percent. OSK Research Sdn. upgraded the stock to “buy” from “neutral.”

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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