Asian Stocks Decline on Bank Earnings Concern; Caltex Tumbles

By Shani Raja

Feb. 20 (Bloomberg) -- Asia stocks fell, led by banks and technology companies, on concern rising bad-loan costs will hurt bank earnings and as orders for semiconductor equipment slumped.

National Australia Bank Ltd., the nation’s biggest lender by assets, dropped 2.6 percent after Goldman Sachs Group Inc. cut its recommendation on the stock. Samsung Electronics Co. declined 1.3 percent as North American semiconductor-equipment orders fell to their lowest level since 1991. Caltex Australia Ltd., the nation’s largest oil refiner, tumbled 9.4 percent after saying full-year profit plunged 95 percent.

“We’ll see more write-offs and bad debts as the recession deepens,” said Jason Teh, who helps manage $3.5 billion at Investors Mutual Ltd. in Sydney. “It’s still so uncertain when the cycle will turn.”

The MSCI Asia Pacific Index dropped 0.6 percent to 77.23 as of 10:15 a.m. in Tokyo, with two stocks falling for each one that rose. The measure has slumped 14 percent this year, extending 2008’s record 43 percent tumble, as the credit crisis sent the world’s biggest economies into recession.

The Nikkei 225 Stock Average fell 0.7 percent to 7,504.61. Australia’s S&P/ASX 200 Index lost 1.2 percent. In New York, the Dow Jones Industrial Average dropped 1.2 percent to the lowest close since October 2002, while the Standard and Poor’s 500 Financials Index slipped to the lowest level since January 1995.

Rising Defaults

Credit-card defaults may peak at 11 percent of loans by the end of the year, Goldman Sachs analyst Brian Foran said in an e- mail, cutting his 2009 earnings estimate for card issuer American Express Co. by almost 40 percent. Earlier this month, Fitch Ratings said loan failures climbed to 7.5 percent, the highest level since 2005.

Amid rising bankruptcies, the Bank of Japan yesterday said it will buy corporate bonds for the first time to stem a shortage of credit. The announcement came as Tokyo-based Aomi Construction Co. said it filed for bankruptcy protection because of the failure of a customer.

National Australia Bank slid 2.6 percent to A$17.93 after it was reduced to “hold” from “buy” at Goldman, which cited the prospect of rising bad debts. Separately, National Australia said today that Ahmed Fahour, who headed the company’s Australian and Asian banking units, will leave the lender.

In Tokyo, Mizuho Financial Group Inc., Japan’s second- largest bank, lost 2 percent to 192 yen. Bigger rival Mitsubishi UFJ Financial Group Inc. dropped 1.4 percent to 433 yen.

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

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Natural Gas Futures Decline After U.S. Inventory Report

By Bill Banker

Feb. 19 (Bloomberg) -- Natural gas futures fell in New York after the Energy Department reported a smaller-than-forecast decline in U.S. stockpiles.

Natural gas for March delivery fell 18.6 cents, or 4.4 percent, to $4.028 per million British thermal units at 10:31 a.m. on the New York Mercantile Exchange. Gas was trading at $4.168 before the report was released at 10:29 a.m.

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Centrica, U.K. Utilities Resist Calls to Slash Prices

By Paul Dobson

Feb. 19 (Bloomberg) -- Centrica Plc will kick off a round of price cuts by U.K. utilities today with a reduction in natural- gas bills. It’s keeping power rates unchanged to maintain profits as politicians press for greater discounts.

Centrica, Britain’s largest supplier, will lower gas prices by 10 percent for more than 7.5 million customers, the largest reduction announced this year. Recession-hit consumers need more, members of parliament say, because suppliers raised retail rates for power and gas an average 42 percent last year and wholesale prices are now at their lowest in 16 months.

“Prices are beginning to come down, but they’re not coming down quickly enough or big enough,” said Paddy Tipping, an MP in the ruling Labour party who sits on a committee that scrutinizes energy policy. Affordability has “come to the top of the political agenda.”

Utilities including Scottish & Southern Energy Plc and Iberdrola SA’s Scottish Power say they need sufficient margins to finance 100 billion pounds ($142 billion) of investment in power stations. The ability to maintain profits may help them outperform the wider stock market.

Windsor, England-based Centrica fell as much as 1.8 percent and was down 0.8 percent, or 2.3 pence, at 268 pence as of 10:29 a.m. in London trading. Still, it’s one of only 25 companies in London’s 102-member benchmark index to have advanced this year.

‘Balance the Needs’

“There’s a balance between the political pressure to lower tariffs for customers that are struggling in the economic slowdown and the political objective of security of supply,” said Tina Cook, an analyst at brokerage Charles Stanley in London. The companies “need to balance the needs of the consumer with the needs of the business.”

Three of the five-biggest competitors of Centrica’s British Gas retail unit will reduce prices at the end of next month, seeking to retain customers that are free to choose a supplier.

Perth, Scotland-based Scottish & Southern, the second- biggest retailer in customer numbers, will cut power rates by 9 percent and gas prices by 4 percent. The U.K. unit of E.ON AG, Germany’s biggest utility, and Electricite de France SA will each reduce power charges by about 9 percent.

Scottish Power will discuss price cuts at a board meeting this week. RWE AG’s Npower said yesterday it “will continue to review” its prices.

Regulatory Probe

The average household bill for a customer buying gas and power from British Gas will drop to 1,240 pounds a year from 1,328 pounds, according to E.W. Scripps Co.’s Uswitch, a Web site that makes money when consumers use it to change energy supplier. It was 912 pounds on Jan. 1, 2008.

Each supplier raised prices on two occasions last year, prompting probes by the regulator, known as the Office of Gas & Electricity Markets, and a parliamentary committee.

The regulator’s investigation, which found no evidence of a cartel, proposed ending “unfair” differences in charges to some groups of customers based on location and payment method. The utilities have until the end of this week to respond to its suggested remedies.

The probe showed how the utilities buy energy in the forward market, creating a lag behind between wholesale market movements and household prices.

Rolling one-year-ahead wholesale gas prices show costs at about 44 pence a therm on Feb. 16, the lowest since October 2007. Prices peaked at 99 pence a therm on July 3. A therm is 100,000 million British thermal units.

Struggling to Profit

The retailers say they struggle to profit from energy supplies. E.ON said Jan. 29 it will cut 450 jobs, 2.5 percent of its U.K. workforce, to reduce costs after making a loss from supplying power and gas in the past two years.

Lower wholesale prices are eroding profits from gas and electricity production. That makes it more important to ensure supply activities make money, analysts say.

“The important issue for investors is that the industry continues to demonstrate considerable pricing discipline despite the political pressure,” Citigroup Inc. analyst Peter Atherton said in an investor note Feb. 13. “It is crucial that supply businesses return to profit in 2009.”

The utilities face pressure to replace older plants and meet government targets for emissions reductions. The country’s Association of Electricity Producers puts the cost of new capacity at 100 billion pounds.

Ministers must step in to ensure they build required energy infrastructure, the parliamentary Business and Enterprise Committee said in a report Dec. 12. The utilities should also cut prices as soon as possible, it said.

Demonized and Chastised

Last year, “we were being demonized for raising prices and we were being chastised for underinvesting,” Ian Marchant, the chief executive officer of Scottish & Southern, told a panel of lawmakers including Tipping last week.

The utilities agreed in 2008 to a government-brokered deal to subsidize energy prices for the poorest households.

More than 5 million homes are in so-called fuel poverty, where more than 10 percent of income is spent on home heating, watchdog Consumer Focus estimates. Meanwhile unemployment is rising as the country endures a recession.

The government detailed plans Feb. 12 for 350 million pounds to be paid by energy producers and suppliers to improve energy efficiency and cut bills in homes.

“I query whether the burden is too great on our industry,” Marchant said.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

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EDF Wins First Approval for Constellation Nuclear Buy

By Tina Seeley

Feb. 19 (Bloomberg) -- Electricite de France SA won initial U.S. approval for its $4.5 billion purchase of half of Constellation Energy Group Inc.’s nuclear-power business, in a bid to enter the U.S. electricity market.

The Federal Energy Regulatory Commission voted unanimously today in favor of the purchase, which still needs approval from the U.S. Nuclear Regulatory Commission. Nuclear regulations prohibit foreign-owned companies from “owning, controlling or dominating” companies that have licenses to operate U.S. reactors.

Also, the Maryland Public Service Commission has set a hearing March 27 to consider whether it has authority to review the transaction, as requested by the state’s attorney general.

Constellation rose 50 cents, or 2.2 percent, to $22.80 at 10:42 a.m. in New York Stock Exchange composite trading after falling 77 percent in the year before today.

Baltimore-based Constellation chose the cash offer from EDF of Paris over a competing bid for the entire company from Warren Buffett’s MidAmerican Energy Holdings Co., which valued Constellation at $4.7 billion.

The commission also approved an agreement that gives Constellation the option to sell interest in non-nuclear power plants to EDF.

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.

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Canada’s Dollar Gains as Weak Greenback Spurs Commodity Demand

By Molly Seltzer

Feb. 19 (Bloomberg) -- Canada’s currency gained for a second day on speculation a weaker U.S. dollar will drive investor demand for commodities such copper and oil as a hedge against potential inflation.

“The story now is more about U.S. dollar weakness,” said Eric Lascelles, chief economics strategist at TD Securities Inc. in Toronto. “Commodities aren’t jumping like they did for a while, but they’re still lending a bit of support, and the weak U.S. dollar helps the loonie in that respect.”

The Canadian dollar strengthened 1.1 percent to C$1.2471 per U.S. dollar at 7:58 a.m. in Toronto, from C$1.2609 yesterday. One Canadian dollar buys 80.18 U.S. cents.

Copper futures have gained 8.5 percent this year. Oil rose today for the first time in three days. Commodities such as crude oil, copper and aluminum account for about half of Canada’s export revenue.

The U.S. dollar may be nearing its peak against the loonie as investors begin to focus on Canada’s long-term growth prospects, according to Barclays Capital strategists Steven Englander and Mathieu Zaradzki.

“We see near-term risk that global risk aversion will persist and take the U.S. dollar-Canadian dollar to C$1.30, but we do not see any breaches of this level as being sustained,” the strategists wrote in a note to clients yesterday. “We see the Canadian dollar emerging with a cyclical growth profile that is as good as or better than that of the U.S. dollar, with far fewer structural and policy negatives.”

The greenback has risen 19 percent against Canada’s dollar in the past six months. Investors should buy options to sell the U.S. dollar in nine months at C$1.18, said the strategists.

The yield on the two-year government bond rose 3 basis points, or 0.03 percentage point, to 1.29 percent. The price of the 2.75 percent security due in December 2010 fell 7 cents to C$102.54.

To contact the reporter on this story: Molly Seltzer in New York at mseltzer4@bloomberg.net

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Dollar May Be Near Peak Versus Canada’s Currency, Barclays Says

By Candice Zachariahs

Feb. 19 (Bloomberg) -- The U.S. dollar may be nearing its peak against Canada’s currency as investors begin to focus on the smaller nation’s better long-term growth prospects, according to Barclays Capital.

The greenback, which has risen 19 percent against Canada’s so-called loonie in the past six months, traded at C$1.2585 as of 11:56 a.m. in Tokyo, compared with Barclays’ peak forecast for C$1.30. Investors should buy options to sell the U.S. dollar in nine months at C$1.18, the London-based bank said.

“We see near-term risk that global risk aversion will persist and take the U.S. dollar-Canadian dollar to C$1.30, but we do not see any breaches of this level as being sustained,” Barclay’s strategists Steven Englander and Mathieu Zaradzki wrote in a note to clients yesterday. “We see the Canadian dollar emerging with a cyclical growth profile that is as good as or better than that of the U.S. dollar, with far fewer structural and policy negatives.”

Bank of Canada Governor Mark Carney cut interest rates to 1 percent last month, the lowest level since the bank was founded in 1934. The nation’s economy will expand 3.8 percent next year, he told the House of Commons Finance Committee on Feb. 10.

Interest rates are as low as zero in the U.S. and the Federal Reserve signaled in January that it was prepared to buy Treasury securities to spur lending.

The U.S. economy is contracting at a “disturbing pace” and gross domestic product will fall “markedly” through June, Fed Bank of Chicago President Charles Evans said yesterday. The U.S. will grow 1.9 percent in 2010 according to the median forecast of economists surveyed by Bloomberg News this month.

The Bank of Canada is likely to begin raising borrowing costs before the Fed and its government’s fiscal spending is likely to be “less expansive” than the U.S. and entail lower sovereign debt sales, New York-based Englander and London-based Zaradzki wrote.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net.

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Euro Rises From Near Three-Month Low on Outlook for German Aid

By Ye Xie and Anchalee Worrachate

Feb. 19 (Bloomberg) -- The euro rose from near the lowest level against the dollar in three months on speculation German Chancellor Angela Merkel will signal Europe’s largest economy plans to help ease financial turmoil in the region.

The 16-nation currency gained for the first time in four days on the outlook for a European rescue, and Goldman Sachs Group Inc. said the euro will rebound to $1.35. The dollar and yen tumbled against most of their major counterparts on reduced demand for the U.S. and Japanese currencies as havens.

“The euro suffered in the last few days as the market was concerned about western Europe’s exposure to eastern European countries,” said Meg Browne, a currency strategist at Brown Brothers Harriman & Co. in New York. “Now the Europeans are working on a solution. Euro-positive sentiment can carry on.”

Europe’s currency rose as much as 1.8 percent to $1.2760, its biggest intraday gain since Dec. 30, before trading at $1.2707 at 10:21 a.m. in New York. It touched $1.2513 yesterday, the lowest level since Nov. 21. The euro increased 1.8 percent to 119.59 yen from 117.50, after touching 120.34, the highest level since Jan. 19.

The dollar rose above 94 yen for the first time since Jan. 7, gaining momentum after breaking the 100-day moving average. It traded at 94.13 yen, compared with 93.79 yesterday.

Poland’s zloty strengthened 2.6 percent to 4.6558 per euro and Czech’s koruna advanced 1.2 percent to 28.60 on speculation Germany will provide aid. The koruna touched 29.68 on Feb. 17, the weakest level since October 2005, and the zloty declined as Moody’s Investors Service said it may cut the ratings of several banks with units in eastern Europe.

Euro’s Tumble

The euro tumbled 1.7 percent against the dollar two days ago as the Moody’s report raised concern financial turmoil in eastern Europe may slow growth in the countries that use the common currency.

German Finance Minister Peer Steinbrueck told reporters yesterday in Berlin that “we would show our ability to act” should countries in the euro region face problems and added that bets on a breakup of the currency “is absolutely absurd.”

Merkel’s cabinet approved draft legislation yesterday allowing the state to take over lender Hypo Real Estate Holding AG, paving the way for the first German bank nationalization since the 1930s. Merkel will hold a joint press conference with European Commission President Jose Barroso today in Berlin.

The German government also plans changes to insolvency rules that would improve chances of rescuing troubled banks and non-financial companies, the Financial Times Deutschland reported, citing government officials it didn’t name.

‘Waking Up’

“Germany is finally waking up to the reality that if they want to preserve that project which is the euro, then they’ll have to open up their own purse strings and help their neighbors,” said Geoffrey Yu, a strategist in London at UBS AG, the world’s second-biggest foreign-exchange trader. “That helped to lift the euro after its recent underperformance.”

The dollar fell 3.2 percent to 6.8387 Norwegian kroner and 1.9 percent to 64.91 U.S. cents versus the Australian dollar on speculation government efforts to revive growth will reduce demand for the world’s reserve currency as a haven.

The ICE’s Dollar Index, which tracks the U.S. currency versus the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, fell 1 percent to 87.161 today after touching 88.254 yesterday, the highest level since Nov. 21.

Weaker Yen

The yen weakened 3.6 percent to 13.78 versus the Norwegian krone and 2.3 percent to 61.16 against the Aussie today on bets Japanese investors will increase the purchase of overseas assets. Total net purchases of overseas securities reached 1,544.4 billion yen ($16.4 billion) during the week ended Feb. 14, according to figures based on reports from designated major investors released by the Ministry of Finance in Tokyo.

Investors should buy the euro because the EU may bail out member states in financial difficulties, reducing the chance of countries leaving the single currency, according to Goldman Sachs. There’s “reduced Economic and Monetary Union breakup probability,” analysts led by Thomas Stolper in London wrote in a note today.

Premiums on euro put options rose yesterday to the highest in almost a month as the European currency traded near the lowest since November. One-month 25-delta risk reversals, which measure demand for calls and puts, show the cost on euro put options climbed yesterday to 0.61 percent higher than the cost for euro calls, the biggest difference since Jan. 26. It was 0.30 percent today.

A put option gives a holder the right without obligation to sell an underlying asset, while a call option gives the holder the right to buy an asset. Risk reversals show the prices of a call option relative to a put option on the same currency.

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

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Platinum, Palladium Fall on Dimming Outlook for U.S. Auto Sales

By Halia Pavliva

Feb. 19 (Bloomberg) -- Platinum and palladium futures fell in New York on concerns that demand for the metals used mostly in pollution-control devices in cars and trucks will decline as automobile sales plunge.

General Motors Corp. and Chrysler LLC yesterday forecast an auto-industry slump this year. Detroit-based GM, the world’s largest carmaker, said sales will drop as low as 9.5 million vehicles from 13.2 million last year and an average of 16.1 million during the previous decade. In 2008, platinum tumbled 38 percent and palladium plunged 50 percent.

“Uncertainty over the world’s auto industry may mean a decline in platinum price in the next few weeks,” Sergey Grudev, the head of the precious metals department at Standard Bank Russia in Moscow, said today in an e-mailed note.

Platinum futures for April delivery fell $21.40, or 2 percent, to $1,077.50 at 9:46 a.m. on the New York Mercantile Exchange. A close at that price would be the biggest decline since Jan. 21. Before today, the metal gained 17 percent this year. The price still is down 53 percent from a record $2,308.80 on March 4.

Palladium futures for March delivery fell $3.10, or 1.4 percent, to $216 an ounce. The metal reached $222 yesterday, the highest for a most-active contract since Nov. 17. Before today, the price was up 16 percent this year.

In Russia, the world’s biggest palladium producer, the RTS exchange plans to start trading platinum and palladium futures at the end of March, Sergei Danov, head of commodity derivatives business development, said by telephone today. He declined to give a specific date.

The start of trading in the contracts, denominated in dollars and settled in rubles, has been delayed. The exchange said in October it planned to begin Feb. 1. The RTS already trades gold and silver contracts.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

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Cotton Falls on Concern Recession May Erode Demand From China

By Yi Tian

Feb. 19 (Bloomberg) -- Cotton prices fell for the sixth time in seven sessions on concern that China, the world’s largest fiber consumer, may import less as a deepening global slump erodes demand for the country’s textile products.

Chinese imports may drop 29 percent to 1.5 million metric tons this year from 2.11 million in 2008, said Mao Shuchun, a cotton economist at the Chinese Academy of Agricultural Sciences. Last year, China’s cotton imports fell 14 percent from 2007, according to preliminary customs data.

“When the U.S., Europe and Japan buy less from China, buying a lot of foreign supplies is out of the question,” Mao said yesterday by telephone from Anyang, in Henan, China.

Cotton futures for May delivery slipped 0.1 cent, or 0.2 percent, to 45 cents a pound at 9:32 a.m. on ICE Futures U.S. in New York. The price rose 0.9 percent yesterday after dropping 11 percent in the previous five sessions.

Imports fell last year as the textile industry “struggled” to cope with weak demand, the China Cotton Association said on Feb. 11. Exports of apparel and textile products increased 8.2 percent last year compared with a 19 percent gain in 2007, the association reported last week.

China’s textile exports may continue to slow if the global economy deteriorates and governments curtail imports to protect domestic jobs, said the association, the country’s biggest cotton-industry organization.

Before today, the most-active cotton futures fell 36 percent in New York in the past year. China is the biggest buyer of U.S. fiber supplies.

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.

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Oil Rises for the First Time in Three Days as U.S. Dollar Drops

By Mark Shenk

Feb. 19 (Bloomberg) -- Crude oil rose for the first time in three days as the U.S. dollar weakened against the euro, bolstering the appeal of commodities as an inflation hedge.

Oil climbed as much as 5.8 percent as the euro strengthened against the U.S. currency on speculation that Europe will take steps to address the financial crisis. Investors purchased commodities as a store of value. A U.S. Energy Department report today is forecast to show that crude-oil stockpiles gained last week as refiners shut units and fuel supplies declined.

“The weaker dollar tends to send people looking for an inflation hedge and at least theoretically will kick up demand overseas because oil will be cheaper for them,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois, energy consultant. “A major reason prices were knocked down into the $30s was the strength of the dollar.”

Crude oil for March delivery rose $1.76, or 5.1 percent, to $36.38 a barrel at 9:33 a.m. on the New York Mercantile Exchange. Prices are down 18 percent this year.

Europe’s currency rose as much as 1.8 percent to $1.2754, its biggest intraday gain in almost two weeks. It touched $1.2513 yesterday, the lowest level since Nov. 21.

The Energy Department report may show that U.S. stockpiles increased 3.2 million barrels last week, according to the median of 15 analyst responses in a Bloomberg News survey. That would be the 19th time in 21 weeks that inventories climbed.

The industry-funded American Petroleum Institute said yesterday that U.S. inventories rose 1.6 million barrels last week to 345.8 million barrels.

Brent crude oil for April settlement increased $1.17, or 3 percent, to $40.72 a barrel on London’s ICE Futures Europe exchange. Futures touched $39.35 yesterday, the lowest since Dec. 31.

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

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Copper Gains in N.Y. as Dollar Falls, Oil Rises, Helping Demand

By Halia Pavliva

Feb. 19 (Bloomberg) -- Copper futures rose in New York for the third time in four sessions after the dollar fell and oil gained, boosting demand for the metal as an alternative investment.

The euro snapped three days of losses against the dollar, rising from near a three-month low. Crude oil advanced for the first time in three days. Copper is used in pipes and wires for cars, trucks and buildings. Some investors buy the metal to preserve value when the dollar falls and oil gains, fueling inflation concerns.

“The weaker dollar is helping the upbeat tone in metals,” Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report. “Crude oil markets are also up.”

Copper futures for May delivery rose 4.9 cents, or 3.4 percent, to $1.5035 a pound at 9:14 a.m. on the Comex division of the New York Mercantile Exchange. The metal gained 3.2 percent this year before today.

Copper’s gains may be curbed by rising supplies. Inventories of the metal monitored by the London Metal Exchange rose 2,950 metric tons, or 0.6 percent, to 528,250 tons, the highest in more than five years. Supplies have tripled from a year ago, contributing to copper’s 60 percent slide in the past year.

“Most markets, including metals, are higher today in what seems to be a bounce from oversold conditions,” Meir said in the report.

On the LME, the world’s biggest metals market, copper for delivery in three months rose $107, or 3.3 percent, to $3,342 a ton ($1.52 a pound). The price set a record of $8,940 on July 2.

Crude oil for March delivery rose as much as $1.49, or 4.3 percent, to $36.11 on the New York Mercantile Exchange. The price is still down 20 percent this year.

Europe’s single currency climbed to $1.2741 as of 9:24 a.m. in New York from $1.253 yesterday, when it touched $1.2513, the lowest since Nov. 21.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

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Agnico, Cameco, Kinross, MI, Suncor: Canadian Equity Movers

By John Kipphoff

Feb. 19 (Bloomberg) -- Shares of the following companies are having unusual moves in Canadian trading. Stock symbols are in parentheses, and prices are as of 9:40 a.m. in Toronto.

Agnico-Eagle Mines Ltd. (AEM CN) dropped 3.2 percent to C$65.16. The gold producer planning to increase output fivefold said fourth-quarter profit dropped 66 percent after zinc and copper prices declined.

Cameco Corp. (CCO CN) fell 5.8 percent to C$18.01. The world’s largest uranium producer said it will sell about 23.2 million shares, which may dilute the value of existing stock.

Kinross Gold Corp. (K CN) declined 4.2 percent to C$23.40. Canada’s third-largest gold producer reported fourth-quarter profit of 9 cents a share, missing the average analyst estimate by 14 percent.

MI Developments Inc. (MIM/A CN) fell 5 percent to C$8.43. The real-estate company that owns land used by auto-parts maker Magna International Inc. (MG/A CN) abandoned its reorganization, saying the global recession, financial-market turmoil and the deteriorating car business made it unlikely that it would receive debt financing.

Suncor Energy Inc. (SU CN) added 6.5 percent to C$23.64. The company has the clearest growth prospects among Canadian oil- sands producers, according to Barclays Plc, which raised the stock to “overweight” from “equal weight.”

Talisman Energy Inc. (TLM CN) gained 2.9 percent to C$11.31. The oil and gas producer with reserves in North America and the North Sea was raised to “outperform” from “market perform” at Sanford C. Bernstein & Co.

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

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Argentina to Be Cut to ‘Frontier’ Market at MSCI

By James Attwood

Feb. 19 (Bloomberg) -- Argentina will be downgraded to “frontier” from “emerging market” status by MSCI Barra on the Latin American country’s restrictions on capital flows.

MSCI will reclassify Argentina to the MSCI Frontier Markets Index from the MSCI Emerging Markets Index at the end of May, the company said in an e-mailed statement distributed today. Only American depositary receipts will be eligible for inclusion, the statement said.

“Argentina has been on the back burner for quite a while,” said Roberto Lampl, who helps manage $12 billion in emerging- market assets at ING Investment Management in The Hague. “We’ve seen government policies that haven’t benefited minority investors and haven’t seen much that has improved traction for foreign direct investment.”

MSCI said in June it would consider demoting Argentina and Colombia unless they cut capital flow restrictions. Since 2005, Argentina has required that foreigners deposit 30 percent of their stock investments with the central bank for a year to limit speculative inflows. Colombia removed restrictions on foreign investments in the local equity market last year.

Merval’s Decline

Argentina’s benchmark Merval Index has lost about half its value in the last year as the global financial crisis and President Cristina Fernandez de Kirchner’s seizure of $24 billion of private pension funds undermined investor confidence.

Tenaris SA, which accounted for about 70 percent of the MSCI Argentina country index, switched to the MSCI Italian index in November as trading volume rose in Milan and fell in Buenos Aires. In the same month, Citigroup Inc. equity strategist Geoffrey Dennis cut his recommendation for Argentina to “zero” from “underweight.”

Tenaris and the depositary receipts of Brazil’s Petroleo Brasileiro SA account for half of the Merval index of 14 Argentina stocks. Listed stocks in Buenos Aires had dropped to 82 as of November from a record 669 four decades ago.

Argentina’s private pension funds held about a quarter of shares available for public trading in Argentina, data compiled by the companies show.

Argentina’s six-year-old economic expansion is slowing as the global recession curbs demand for the country’s commodity exports. South America’s second-biggest economy grew 4.9 percent in the fourth quarter, the weakest pace since 2002, when the economy contracted 3.4 percent in the aftermath of the government’s $95 billion bond default.

The MSCI International Equity Indexes are estimated to have over $3 trillion benchmarked to them, according to the company.

MSCI also said it will begin consultations on a proposal to include Pakistan in its Frontier index.

To contact the reporters on this story: James Attwood in Santiago at jattwood3@bloomberg.net

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Biomarin, GameStop, Priceline.com, Sprint: U.S. Equity Movers

By Rita Nazareth

Feb. 19 (Bloomberg) -- Shares of the following companies are having unusual moves in U.S. trading. Stock symbols are in parentheses, and prices are as of 9:40 a.m. in New York.

Advance Auto Parts Inc. (AAP US) gained 13 percent to $37. The cars-parts retailer reported fourth-quarter profit of 51 cents a share, beating the average estimate by 38 percent.

Biomarin Pharmaceutical Inc. (BMRN US) dropped 27 percent to $12.93 for the biggest loss in the Russell 1000 Index. The maker of treatments for rare disorders said fourth-quarter profit was 27 cents a share, missing the average analyst estimate by 2.9 percent, according to a Bloomberg survey.

CBS Corp. (CBS US) had the second-biggest gain in the Standard & Poor’s 500 Index, adding 14 percent to $5.83. The broadcaster said it will have enough cash to repay as much as $3 billion in debt maturing over the next three years and reported 25 percent more fourth-quarter profit than analysts estimated on average.

Dress Barn Inc. (DBRN US) added 11 percent to $10.32. The women’s clothing retailer said profit for the fiscal year ending in July will be as much as 85 cents a share, or 12 percent more than the average analyst estimate.

GameStop Corp. (GME US) rose 13 percent to $28.04. The world’s largest video-game retailer forecast profit for the fiscal year ending in January of as much as $2.93 a share, or 6.3 percent more than the average analyst estimate.

Hewlett-Packard Co. (HPQ US) declined the most in the Dow Jones Industrial Average, losing 6.4 percent to $31.91. The world’s largest personal-computer maker reported sales that missed analysts’ estimates, cut its earnings forecast for 2009 and reduced salaries.

LDK Solar Co. (LDK US) slipped 11 percent to $7.99. The Chinese maker of silicon wafers used in solar cells said fourth- quarter revenue was $425 million at most, trailing the average analyst estimate by 12 percent.

Priceline.com Inc. (PCLN US) had the second-biggest gain in the Russell 1000 Index, jumping 18 percent to $80.76. The Internet travel agency said first-quarter profit will be as much as 95 cents a share, or 19 percent more than the average analyst estimate.

Sprint Nextel Corp. (S US) gained 13 percent to $3.07. The third-largest mobile-phone carrier in the U.S. reported a smaller fourth-quarter loss than analysts estimated after cutting jobs and operating costs.

Whole Foods Market Inc. (WFMI US) rallied the most in the S&P 500, climbing 30 percent to $2.101. The largest U.S. natural- foods grocer said fiscal first-quarter was 25 cents a share, beating the average analyst estimate by 37 percent.

To contact the reporter on this story: Rita Nazareth in New York at nazareth@bloomberg.net.

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U.S. Stocks Gain, S&P 500 Index Rebounds From Three-Month Low

By Elizabeth Stanton

Feb. 19 (Bloomberg) -- U.S. stocks rose, with the Standard & Poor’s 500 Index halting a three-day slide, after CVS Caremark Corp., Sprint Nextel Corp. and Whole Foods Market Inc. reported results that topped analyst estimates.

CVS Caremark, the largest U.S. drugstore chain, jumped as much as 9.7 percent. Sprint Nextel, the third-largest U.S. mobile-phone carrier, rallied 20 percent and Whole Foods Market, the nation’s biggest natural-goods grocer, climbed 35 percent. The S&P 500 rebounded from a three-month low after this week’s losses dragged the benchmark index for American equities to near its cheapest price-to-earnings valuation since 1985.

The S&P 500 advanced 1 percent to 796.1 at 10:04 a.m. in New York. The Dow Jones Industrial Average rose 43.97 points, or 0.6 percent, to 7,599.6. The Russell 2000 Index added 1.1 percent.

“A lot of companies are in great shape but are being tarred and feathered like everybody else,” said Erick Maronak, who manages $1 billion, including CVS shares, as chief investment officer at Victory Capital Management Inc. in New York. “The negatives are overstated when you look at general market activity. This is an opportunity to upgrade your portfolio as long as you’re not looking for results overnight.”

Today’s gains also came after Priceline.con Inc, the Internet travel agency, and GameStop Corp., the world’s largest video-game retailer, posted higher-than-estimated profits. The S&P 500 traded for 10.71 times the earnings of its companies at the open, approaching the 23-year low of 10.46 reached in November, after the measure slumped 13 percent this year.

Three-Day Slide

The S&P 500 yesterday fell for a third day as the Federal Reserve cut its forecast for the U.S. economy this year, while government reports showed industrial production shrank more than forecast and housing starts slid to a record low last month.

Reports today showed that the Conference Board’s index of leading economic indicators climbed more than forecast, while a Federal Reserve gauge of manufacturing in the Philadelphia region slumped more than estimated.

Stocks in Asia advanced today as a weaker yen boosted the earnings prospects of Japanese automakers. The MSCI Asia Pacific Index increased 0.6 percent, while Europe’s Dow Jones Stoxx 600 Index added 0.8 percent.

Governments across the world are stepping up measures to stem the worst global recession since World War II. China’s government will seek to boost domestic demand, increase financial input for the electronics and information-technology industry and maintain the level of export tax rebates for electronic products, the State Council, or cabinet, said. The Bank of Japan said it will buy 1 trillion yen ($10.7 billion) in corporate bonds from financial institutions and extend lending programs to prevent a shortage of credit.

Whole Foods Rallied

Whole Foods surged 35 percent to $12.50. The largest U.S. natural-foods grocer reported fiscal first-quarter earnings excluding certain items of 25 cent a share, beating the average analyst estimate by 46 percent.

Goldman Sachs Group Inc. rose 2.9 percent to $87.40. The investment bank, which reported its first quarterly loss since going public in 1999, has returned to profit after boosting fees it charges customers for trades, according to Bank of America Corp.

Goldman Sachs will probably report first-quarter earnings of $1.58 a share, Bank of America analyst Guy Moszkowski wrote in a report after meeting with Chief Executive Officer Lloyd Blankfein and Chief Financial Officer David Viniar. That would beat the $1.12 average analyst estimate in a Bloomberg survey.

Hewlett-Packard Co. fell 7.5 percent to $31.54. The world’s largest personal-computer maker reduced its profit forecast for the year as PC demand waned.

Earnings Slump

Profits dropped 33 percent on average at the 394 companies in the S&P 500 that have reported fourth-quarter earnings since Jan. 12, according to data compiled by Bloomberg. The period is poised to be the sixth straight quarter of decreasing profits, the longest streak on record.

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

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Technical Analysis Daily: USD/JPY

Daily Forex Technicals | Written by iFOREX.bg | Feb 19 09 11:10 GMT |

USD/JPY 93.60 USD/JPY Open 93.62 High 93.87 Low 92.10 Close 93.76 Dollar/Yen did not make significant movement yesterday, having tried to do correct upwards after the second test of 93.20, but expectations are for a break of the resistance level 94.00, and reaching 94.50, after which the couple may return to the 91.15 level, if the currency couple fails to hold above 94.00. Today BOJ decided to keep the main interest rate unchanged at 0.10 percent, as expected. Later today will be announced BOJ's monthly economic report. Technical resistance levels: 994.00 95.05 94.50 Technical support levels: 92.10 91.15 90.30 Trading range: 93.50 - 94.10 Trend: Upward Buy at 93.60 SL 93.30 TP 94.00 iFOREX.bg Forecasts and Trading Signals http://www.zifx.com

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Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Feb 19 09 10:47 GMT |

Good morning and welcome to our Daily FX Report. Today the market expects new bad results of the Euro-Zone banks. Anyway, we hope you'll investigate good trading opportunities Markets review The EUR recovered from a near three-month low against the USD on speculation that German Chancellor Angela Merkel will support Germany's economy, which is the largest in Europe. She plans to take action to help avert the financial crisis in Europe. Finance Minister Peer Steinbrück said yesterday 'Germany would show its ability to act' while some of the 16 European countries are getting difficulties. Today, Angela Merkel is going to hold a press meeting with European Commission President Jose Barroso in Berlin. The EUR climbed to 1.2589 from 1.2530 against the USD and touched a low of 1.2513, which was the lowest level since November 21st 2008. The EUR/JPY climbed to 117.94 from 117.50. Gains in EUR may be tempered by concerns that European companies could report a deeperthan- expected loss because of the global financial turmoil. According to a survey, Axa SA, which is Europe's second-biggest insurer, could probably show a net loss of 1.76 billion EUR today. The BNP Paribas SA, the largest bank by market value of France, could post a loss of 1.36 billion EUR. The USD weakened against the JPY on expectations the biggest U.S. automakers could fail unless they get increased aid from the government. The USD/JPY fell to 93.46 from 93.76 after touching a day-low at 93.28. Technical analysis CAD/JPY Since the middle of November, the CAD/JPY has been moving under two resistance levels of 80.00 and 75.00. After it broke the long-term bearish trend line, the pair crossed the 75.00 level, touched the 80.00 resistance and came back below the 75.00 line. Now the market seems to try to break through the 75.00 resistance again. If this will happen, it could approach a second time towards the 80.00 resistance line. GBP/CAD The GBP/CAD has been trading inside a bearish trend channel since the middle of August. After touching the lower line of the channel for the 4th time, the market pulled back and touched the upper line. Now the pair has been stopped in the near of the middle Bollinger band. In the next days we have to pay attention if the pair crosses the upper line of the trend channel. This might be a long signal and the beginning of a trend reversal. Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.

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Currency Pair Daily Forecasts

Daily Forex Technicals | Written by Finotec Group | Feb 19 09 10:04 GMT |

EUR/USD Daily Technical Reports EUR/USD-market strategy can be a buy from the level 1.2640$ Technical oscillators supporting the bullish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines in a bullish direction and crossing below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. USD/JPY Daily Technical Reports USD/JPY-market strategy can be a sell form the level 93.50 Technical oscillators supporting the bearish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD in a bearish direction above the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line. GBP/USD Daily Technical Reports GBP/USD-market strategy can be a buy from the level 1.4360$ Technical oscillators supporting the bullish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines are in a bullish direction. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. USD/CHF Daily Technical Reports USD/CHF-market strategy can be a sell from the level 1.1760 Technical oscillators supporting the bearish trend for the currency pair To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines in a bearish direction above the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line. Finotec Group Inc. http://www.finotec.com/ Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.

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Technical Analysis Daily: GBP/USD

Daily Forex Technicals | Written by iFOREX.bg | Feb 19 09 09:12 GMT |

GBP/USD 1.4359 GBP/USD Open 1.4245 High 1.4389 Low 1.4100 Close 1.4208 Pound/Dollar also attempted to descend yesterday. The currency couple reached the short term target 1.4125, made a bottom at 1.4100, than sharply ascended and closed the day at 1.4208. On the 4 hour chart the formed rectangle is about to be broken upwards, indicating upwards momentum, which started this morning. Break out of the rectangle will give us a clearer movement direction. Expectations are for a break up with a test of the key resistance level at 1.4400. Short term signals are ascending. Immediate support is represented by yesterday's bottom 1.4100. Break below this level could lead to further decreasing momentum towards 1.3990. Next resistance is represented by the 1.4525 level. The CCI indicator is crossing up the 100 line on the 1 and 4 hour charts, suggesting ascending pressure. Technical resistance levels: 1.4400 1.4525 1.4640 Technical support levels: 1.4100 1.3990 1.3850 Trading range: 1.4345 - 1.4420 Trend: Upward Buy at 1.4359 SL 1.4345 TP 1.4409 iFOREX.bg Forecasts and Trading Signals http://www.zifx.com

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Feb 19 09 08:42 GMT |

EUR/USD Current level-1.2597 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are rising, and trading is situated below the 50- and 200-Day SMA, currently projected at 1.3292 and 1.4721. Yesterday's bottom at 1.2511 was a final of the slide from 1.2924 (Feb 13), so a larger consolidation is on the run towards 1.2671 and 1.2705. Nevertheless, the downtrend from 1.3090 is still intact and one more, final downswing should be expected, aiming at 1.2421-83, before a major reversal takes place and an uptrend towards 1.31+ emerges on the 4 h. chart. Resistance Support intraday intraweek intraday intraweek 1.2671 1.2799 1.2511 1.2421 1.2705 1.3090 1.2421 1.2330 USD/JPY Current level - 93.53 The pair has finalized its consolidation above 90.95 at 97.48 and the general downtrend has been renewed, targeting 79.86. Trading is situated below the 50- and 200-day SMA, currently projected at 107.61 and 105.76 Yesterday's break above 92.74 resistance cleared the way for 93.67 and 94.64. A minor consolidation is unfolding below the recent peak at 93.92 and we expect it to be limited above 92.75, before the final upswing to 94.23. Keep in mind, that the zone around 94.64 is expected to provoke a sharp sell towards 87.12. Crucial for the uptrend from 89.83 is 92.11. Resistance Support intraday intraweek intraday intraweek 93.92 94.64 92.74 86.31 94.64 97.48 89.83 83.02 GBP/USD Current level- 1.4341 The pair is in a larger corrective phase towards 1.60+, after bottoming at 1.3506. Trading is situated below the 50- and 200-day SMA, currently projected at 1.5505 and 1.8341. Yesterday's final sell-off bottomed at 1.4098, failing to reach precisely the support zone around 1.4050, but reversed sharply as expected and now breaks above the important resistance at 1.4321. We hold on to our view, that current break above 1.4321 will target directly 1.4590. Crucial for the uptrend from 1.4098 is 1.4236. Resistance Support intraday intraweek intraday intraweek 1.4421 1.5722 1.4236 1.4020-50 1.4590 1.63+ 1.4098 1.3768 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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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Feb 19 09 08:38 GMT |

CHF The assumed rate return to key supports for the realization of the pre-planned buying positions was not confirmed but the expected rate rise displayed preservation of relatively high buying activity level for supporting buying priorities priority of corresponding trading operations for today. At the moment considering assumptions about rate correction incompleteness we assume the possibility of attainment close supports at 1.1700/20 levels range, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.1760/80, 1.1820/40 and/or further breakout variant up to 1.1880/1.1900, 1.1940/60, 1.2000/20. An alternative for sells will be below 1.1640 with targets 1.1580/1.1600, 1.1510/30, 1.1440/60. GBP The assumed test of key resistance range for the realization of the pre-planned short-positions was not confirmed and preservation of generally low activity of both parties continues be the factor of indefiniteness in the choice of planning priorities for today. Hence and considering assumptions about further range rate movement we assume the possibility of close boundary of Ichimoku cloud test at 1.4290/1.4320 levels, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.4200/20, 1.4120/40, 1.4060/80 and/or further breakout variant up to 1.4000/20, 1.3900/40, 1.3780/1.3820. An alternative for buyers will be above 1.4400 with targets 1.4460/80, 1.4540/60, 1.4600/20. JPY The pre-planned breakout variant for buyers was realized with attainment of minimal assumed target. OsMA trend indicator, having marked activity advantage of bullish party gives reasons for supporting buying planning priorities for today as well. Hence and considering the current bearish activity cycle we assume the possibility of attainment close 93.00/20 supports, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 93.60/80, 94.00/20 and/or further breakout variant up to 94.60/80, 95.20/40. An alternative for sells will be below 92.60 with targets 92.00/20, 91.40/60. EUR The pre-planned short positions from key resistance range were realized with overlap of minimal assumed target. OsMA trend indicator, having marked current situation of minimal bullish party advantage with preservation of sells planning priority gives reasons for assumptions about further rate correction period with key resistance range at 1.2610/30, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.2540/60, 1.2480/1.2500 and/or further breakout variant up to 1.2420/40, 1.2340/60, 1.2280/1.2300. An alternative for buyers will be above 1.2680 with targets 1.2720/40, 1.2780/1.2800, and 1.2880/1.2920. FOREX Ltd www.forexltd.co.uk

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Forex Market Issues and Risks

Daily Forex Fundamentals | Written by AC-Markets | Feb 19 09 11:06 GMT |

U.S economic outlook remains bleak despite Obama's ambitious housing program News and Events: The dollar traded a mixed day yesterday as a flurry of economic data and a new program aimed at curbing the freefall of the housing market was announced by President Obama. The dollar rose against the Euro, Swissy and Yen on news that a $75Bn housing program would be set in motion in a bid to secure the very sector that spawned our current global slowdown in 2006. The dollar posted strong gains against the European currency during the day as the pair's price action converged to form an intraday wedge which materialized a rebound which has been confirmed by breaking the 1.2620 resistance. The Japanese Yen has captured all of our attention lately as it seems glimpses of renewed risk appetite have seen the pair steadily weaken against the dollar - a relationship that was inverse dollar strength biased until now (in comparison with the dollar's price action against other currencies) - the question is if this can be sustained. Questioning the global haven status of the Nippon currency would be premature but the continued dismal economic data coming out of the world's second economy has now dwarfed the repatriation and risk averse drivers of the currency as of late. Economists are forecasting an annualized contraction of the Japanese economy of -11.6%, this comes as a stark contrast and largely dwarfs the contraction of other large economies; -1.2% for the Eurozone, -1.8% in the UK and -3.8% in the U.S. USDJPY failed to break the 88.70 trend line support on the 12th and never looked back, however the same happened after the 87.15 low in December but lost momentum passed 93.00 and the bullish move faltered at 94.64. Further pressure on the Yen will see the pair rise for now but discounting renewed risk aversion would be foolish at this point. Focus today is on the dollar which could be seen to give back some of its gains as more data momentarily stunts the greenbacks advance - EURUSD moves have seen some consolidation - while the general sentiment remains bearish a momentary relapse of dollar weakness is expected. This said the U.S remains the only large economy to be ahead of the curve on an economic recovery plan. Not much in terms of news today - Philly Fed is expected to come out at -25.0 vs. -24.3, PPI expected to be better than expected at 0.2% vs. -1.9%. Today Key Issues: 10:00 CHF Swiss Zew Survey (FEB) prev. -66.7 13:30 CAD Leading indicators -0.7% vs. -0.6% 13:30 USD Producer Price Index (MoM) 0.2% vs. -1.9% 13:30 USD Producer Price Index (YoY) -2.6% vs. -0.9% 15:00 USD Philadelphia Fed. (Feb) -25.0 vs. -24.3% The Risk Today: EurUsd Rebound from 1.2514 is confirmed by breaking 1.2624. Upwards momentum passed 1.2707 (former support) would open the way for 1.2802. However renewed dollar strength below 1.2624 (38.20% retracement on 1.2802 - 1.2514 move) leaves 1.2514 exposed - before 1.2389. GbpUsd Bearish sentiment prevails, initial support at 1.4342 then sees 1.4295 as a target (23.60% and 38.20% respectively) - strong support at 1.4238 - persistent tone under 1.4610 has eyes riveted on 1.4095 low of Feb 18th. On the upside mid-term view stands at 1.4610 Feb 13th high, which leaves 1.5000 open. UsdJpy current intraday wedge formation shows the pair is consolidating in preparation for a breakout. Short term support stands at 92.99 (23.60% retracement on 89.80 - 93.97 move) while intraday support stands at 92.11 which leaves the doors open for 91.57. On the upside strong support at 94.66 in the mid-term, via 93.97. UsdChf Rise above 1.1789 targets 1.1828 (Feb 18th high). Near-term constructive above 1.1560/1.1511 support range with lower support of range strong - which gives way for 1.1403. EURUSD GBPUSD USDJPY USDCHF 1.2802 K 1.5000 S 95.00 M 1.1890 S 1.2707 S 1.4610 S 94.66 T 1.1843 M 1.2678 M 1.4420 M 93.97 S 1.1782 M 1.2677 1.4358 93.67 T 1.1779 1.2624 M 1.4342 M 92.99 M 1.1653 M 1.2562 S 1.4295 M 92.11 K 1.1511 S 1.2389 P 1.4000 S 91.57 M 1.1403 S S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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European Market Update

Daily Forex Fundamentals | Written by Trade The News | Feb 19 09 11:02 GMT |

Poland's recent move to convert EU funds helps to ease Eastern European concerns; Norway GDP better than expectations; Japanese Gov't downgrades its economic assessment (again) ECONOMIC DATA (JP) BOJ leaves its target interest rate at 0.10%, as expected; Plans to start purchasing up to ¥1T in corporate bonds outright as early as March (RU) Russian Jan Retail Sales M/M: -27.0% v 16.7% prior; Y/Y: 2.4% v 0.8%e (RU) Russia Jan Unemployment rate: 8.1% v 8.2%e Russian Gold & Forex Reserves w/e Feb 13th: $386.6B v $383.5B prior (SZ) Swiss Jan Trade Balance: CHF2.03B v CHF 0.0B prior. Exports: 6.7% v -13.3% prior; Imports: 0.8% v -5.0% prior (DE) Danish Feb Consumer Confidence Indicator: -11.3 v -10.5e (NE) Dutch Jan Unemployment Rate: 3.9% v 4.0%e (NE) Dutch Feb Consumer Confidence Indicator: -30 v -30e (SW) Swedish Jan CPI Level: 297.88 v 297.34e (SW) Swedish Jan CPI Headline Rate M/M: -0.4% v-0.7%e; Y/Y: 1.3% v1.0%e (SW) Swedish Jan Underlying Inflation M/M: -0.5% v -0.6%e; Y/Y: 1.7% v 1.6%e (SW) Swedish Jan Unemployment Rate: 7.3% v 7.4%e (IT) Italian Dec Total Trade Balance: -€0.4B v -€1.01Be; Trade Balance EU: -€345M v €111M prior (NO) Norwegian Q4 GDP Q/Q: +1.3% v -0.3%e; Mainland GDP Q/Q: -0.2% v -0.6%e (UK) Jan Public Finances (PSNCR): -£-25.1B v-£7.7Be; Net Borrowing: -£-3.3B v -£7.0Be (UK) Jan Prelim M4 Money Supply M/M: 2.5% v 1.2%e; Y/Y: 17.5% v 15.7%e (SZ) Swiss Feb ZEW Survey (Expectations): -57.7 v -66.7 prior SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM Equities: BNP Paribas [BNP.FR] Reported Q4 Net loss of €1.37B v loss €838M expected. The firm cuts its dividend to €1/shr from €3.35/shr in 2007. Its 2008 Tier 1 ratio came in at 7.8% compared to 7.6% y/y. It forecasted its Tier 1 ratio to rise to 8.4% after receipt of capital injection from French state. (v 7.6% y/y) || Nestle [NESN.SZ] Reported FY08 Net profit of CHF18B below the CHF20.2B consensus. It revenues were CHF109.9B slightly below the CHF110.6B estimates. It saw 2009 Organic Growth at least approaching 5% and improvement In EBIT margin at constant currencies. It planned to invest around CHF4B in repurchasing shares|| || Continental [CON.GE] Reported Q4 EBIT €267.7M versus €261.0M consensus. Revenues were €5.09Be below the €5.4B forecasts. The firm noted it would not pay dividend. It Expected markets to decline in a range of 10%-25% in 2009 and has initiated further cost cutting and expects substantial restructuring. Talks continue with Schaffler and noted it was expected to meet loan obligations || Reed Elsevier [REL.UK] Reported Preliminary 2008 revenues of £5.33B compared to consensus £5.17B. It noted that its term debt maturities well spaced and that adjusted earnings growth at constant currencies expected to be positive. It did note a challenging economic environment with its Business-To-Business markets more impacted || || Tecnip [TEC.FR] Reported Q4 Net profit of €134M better than the €99.4M estimates. Revenues were €1.91B above consensus of €1.79B. The firm noted that it had seen significant delays in non-conventional oil projects coupled with significant delays in US refining and petrochemical projects || BAE Systems [BA.UK] Reported FY08 Net profit of £1.75B above estimates of £1.32B. Its revenues were £18.5B also above expectations of £17.9B. It noted that weakness in Sterling FX rates continue benefit the company. Current order book stood at £46.5B compared to year-ago levels of £38.6B and saw further growth in 2009 with strong order book persisting into 2009 || Swiss Re [RUKN.SZ] Reported FY08 net loss CHF864M better than the net loss CHF1.02B expected. It cuts its dividend to CHF0.10/share. Its FY08 premiums earned CHF25.5B compared to CHF31.6B y/y. it noted that demand for reinsurance products has risen in market || Deutsche post bank [DPB.GE] Reported FY08 Net loss €821M slightly better than the loss €845M expected. Net Interest Rev €2.50B above the €2.33B forecast. It reported Q4 Trading loss €406M compared to a profit €24M y/y, Net interest income €738M v €602M y/y || Schneider Electric [SU.FR] Reported FY08 Net profit €1.68B slightly below €1.71B estimates with EBITA at €2.75B below the €3.16B forecasts. Its revenues came in at €18.31B compared to consensus of €18.28B. It proposed raising dividend 5% to €3.45/share. Guidance for the near term was difficult as visibility remained low. The company reaffirmed FY09 EBITA margin view of at least 12% || Man AG [MAN.GE] Reported FY08 Net profit of €1.25B in line with €1.28B estimates. Its operating profit of €1.73B in line with forecasts of €1.72B. Annual revenue was €14.90B versus €14.85B estimates. It saw big decline in 2009 commercial vehicle revenues and return noting that the 2009 Outlook was subject to major uncertainties || Impala Platinum [IMP.SA] Reported H1 net ZAR5.3B v ZAR4.7B y/y, Sales ZAR16.24B vs. ZAR16.32B y/y - H1 gross platinum production 878K oz (-14.8% y/y), gross refined PGM production -13% q/q- Does not expect any major recovery in automotive demand, expects the market to register a small surplus for 2009 Speakers: BoJ's Shirakawa commented that economic conditions to remain severe this quarter. Ther was no dissent at today's BOJ decision to leave interest rates unchanged at 0.10% and that ZERO rates were not discussed. He commented that lowering overnight rates does not always translate to lower long-term rates. The BOJ expects CPI to fall in spring as demand weakens. The BOJ's Corporate bond purchase program could improve market functionality and would continue to take extraordinary steps as needed. The recent -12.7% Q4 GDP reading could be revised upwards.|| Japan's government cut its economic assessment for the fifth straight month. It noted that the Japanese economy was 'Worsening Rapidly' and in a 'Severe Situation'. The Gov't also downgraded its views on consumption, exports and the global economy || German Chambers of Commerce (DIHK) revised lower its German 2009 GDP to -3.0% from its November forecast of -0.5% growth. It saw 2009 German exports contracting by 9.5% y/y, and imports down 5.0% y/y. it did note that the EUR/USD exchange rate was developing more positively for Euro-Zone exporters || Thai Central Bank stated that it could lower its 2009 GDP outlook from current 0% to2% level. It expected the Bah currency to weaken further in 2009 due to USD strength || German Chemical Association VCI to cut 2009 production outlook to -3.5% from -1.0% prior forecast . It saw Q4 Production declined by more than 10% q/q, which was the fastest decline in over 30 years. Current capacity utilization at 75% compared to 82-86% in past years. Lastly it forecasted industry wide job cuts in 2009 || IMF's Strauss-Kahn reiterated that the outlook for global economy was 'gloomier' than recent forecasts || In Currencies: The USD was maintaining a softer tone in the session as dealers note the market was extremely bearish the Euro due to Eastern European factors. The move by Poland yesterday to convert EU funds was essentially intervention but not from its reserves. The EUR/USD was moving towards the 1.27 area on position squaring. Dealer chatter that a large macro funds closed short Hungarian Forint trades and Goldman Sachs offseting its CE4 basket trade. Overall, the pressures in Eastern Europe in particular, and the associated vulnerabilities of Western European banks, viewed to limit EUR/USD's upside at the 1.2730 area|| The catalyst for the firmer GBP sentiment in the early part of the European session attributed to a “veiled attack from ECB's Bini-Smaghi in which EU countries should not allow their currencies to slide in order to gain an economic advantage|| JPY mixed as dealers note the recent currency weakness corresponding to the Japan net foreign bond investment up ¥1435Bin week ended Feb 14. Japan's government cut its economic assessment for the fifth straight month || CHF was softer as some concerns over the Swiss bank secrecy reputation was again tarnished. WSJ reported that UBS would name about 250 account holders as a result of $780M settlement with IRS || Fixed income: A combination of risk appetite and supply has seen fixed income exhibit a softer tone in Europe this morning, with short end underperformance leading to flatter yield curves in both the Eurozone and UK.|| Spain sold €3.3B in 7 and 20y Bono's with reasonable results in light of the recent pressure on Euro-zone perhiperal debt. France sold €7.4B in 2,4 and 5y BTAN's and the UK sold £3.25B in 3y Gilts with strong results, the latter pushing Gilt futures towards their best levels of the morning. In Energy: Reportedly most OPEC members are against productions cuts at coming March meeting but could decide on further 1.6M bpd cut in Q2 of 2009 || South Korea's Knowledge Minister: Expects Korea's refiners to export $18.6B over FY09 v $36.8B y/y || Petroleum Geo-Services [PGS.NO] Reported Q4 Op loss $27M v loss $15M consensus. Revenues were $462M versus $505M estimate. it reaffirmed FY09 EBITDA seen at $800-925M compared to $801.9Me || NOTES BOJ left its target interest rate at 0.10%, as expected and planned to start purchasing up to ¥1T in corporate bonds outright as early as March Demand for USD and gold has abated in the session as some pressures recently exhibited in the Eastern European block has eased a bit. There is speculation that the EU will devise a plan to assist Eastern European countries to stave off the fallout from the global economic crisis. The better Norwegian GDP data and increase in Russian reserves also provided a rational for position unwinding. China Central Bank talked down possibility of further rate cuts. Looking Ahead: 8:00 (PD) Polish Jan Producer Prices M?M: 1.0% expected v -0.5% prior; Y?Y: 2.3% expected v 2.6% prior 8:30 (CA) Canadian Leading Indicators M/M: -0.7% expected v -0.6% prior 8:30 (US) Producer Price Index M/M: 0.3% expected v -1.9% prior; Y/Y: -2.4% expected v -0.9% prior. PPI Ex- Food & Energy M/M: 0.1% expected v 0.2% prior; Y?Y: 3.8% expected v 4.3% prior 8:30 (US) Initial Jobless Claims w/e Feb 14th: 620k expected v 623k prior; Continuing Claims: 4.83M v 4.81M prior 10:00 (US) Jan Leading Indicators: 0.0% expected v 0.3% prior 10 :00 (SU) Feb Philadelphia Fed: -25.0 expected v -24.3 prior (RU) Russian Gold & Forex Reserves w/e Feb 13: No expectations v $383.5B prior (GR) Greek Dec Current Account: No expectations v -€3.46B prior 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. 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