U.K. Manufacturing Index Rises, Adding to Optimism

By Brian Swint

May 1 (Bloomberg) -- U.K. manufacturing contracted at the slowest pace in eight months in April, adding to evidence that the country’s deepest recession in a generation will ease later this year.

A gauge based on a survey of factories climbed to 42.9 from a revised 39.5 the previous month, the Chartered Institute of Purchasing and Supply and Markit Economics said. Economists predicted 40, according to the median of 29 forecasts in a Bloomberg News survey. A separate Bank of England report showed mortgage approvals rose less than forecast in March.

The British economy is showing some signs of pulling out of its downward spiral after contracting at the fastest pace since 1979 in the first quarter. Consumer confidence rose to the highest in a year in April and the pace of house-price declines is slowing. At the same time, another report today showed that insolvencies jumped in the first three months of the year.

“The data has again provided some positive surprises,” said James Knightley, an economist at ING Financial Markets in London. “There are still tough questions regarding how sustainable this turn in the data is.”

Knightley says the manufacturing data is consistent with the annual rate of economic contraction slowing to 1 percent from 4.1 percent at present. A PMI reading of below 50 signals contraction.

Mortgage Approvals

The Bank of England said mortgage approvals rose to 39,230 in March from 37,716 the previous month. While that’s the highest in 10 months, it’s below the median forecast of 40,000 in a Bloomberg survey.

Personal insolvencies in England and Wales climbed 1.6 percent in the first quarter from the fourth and company liquidations rose 7.1 percent, the government’s Insolvency Service said today. The recession is forcing more Britons to seek protection from creditors after consumer debt rose to a record 1.5 trillion pounds ($2.2 trillion).

Overall net lending to consumers rose by 885 million pounds in March, the least since records began in 1993, the U.K. central bank said today.

House prices still declined last month by 0.4 percent, less than the 1.2 percent drop forecast by economists, after a surprise increase in March, a report by Nationwide showed yesterday. Consumer confidence is improving, climbing to the highest in a year in April, GfK NOP says.

BOE Decision

The Bank of England, which makes its next interest-rate decision on May 7, in March cut the benchmark interest rate to a record low of 0.5 percent and started buying assets with newly created money to stimulate the economy. The government and the central bank say the U.K. may return to growth around the end of this year.

“Because the effects of quantitative easing are uncertain, they’ll want to look at the effects before committing to extending the scale of purchases,” said Philip Shaw, chief economist at Investec Securities in London. “We’re looking squarely at no change in the interest rate next week, but it’s good to be talking about some relatively good news for a change.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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European Market Update

Daily Forex Fundamentals | Written by Trade The News | May 01 09 09:58 GMT |

UK PMI Manufacturing at best level since Aug ECONOMIC DATA (ID) Indonesia Mar Total Trade Balance: $2.01B v 1.27B prior (ID) Indonesia Apr Inflation M/M: -0.3% v 0.0%e, Y/Y: 7.3% v 7.6%e (IN) India Mar Trade Balance: -$4.0B v -$6.3B y/y; Exports Y/Y: -33.3% v -21.7% prior; Imports Y/Y: -34% v -23.3% prior (IR) Irish Apr PMI Manufacturing 36.1 v 35.1 prior (DE) Denmark Mar Retail Sales M/M: 0.1% v 0.9% prior, Y/Y: -3.7% v -8.9% prior (UK) Mar Net Consumer Credit: £0.1B v £0.1Be; Net Lending: £0.8B v £1.6Be (UK) Mar Mortgage approvals: 39K v 40Ke; highest reading since May 2008 (UK) March Final M4 Money Supply M/M: 0.2% v 0.0% prior; Y/Y: 17.8% v 17.6% prior (UK) Apr PMI Manufacturing: 42.9 v 40.0e; highest reading since Aug 2008 (UK) Q1 Liquidations in England & Wales at 4.9K, +56% y/y and +7.1% q/q; Personal insolvencies at 29.8K, +19% y/y and +6% q/q (DE) Danish Apr PMI Survey: 33.8 v 29.6 prior SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities: May day celebrations bring a holiday to Deutsche Bourse and NYSE Euronext. In the absence of continental trading the London Stock Exchange trades alone on little fresh earnings news. US futures rallied back to the unchanged mark just prior to the London open, but the FTSE100 Still opened to the downside, snapping a two day pos open streak. Financial names led the downside, specifically insurance names including Old Mutual (OML.UK) and Prudential (PRU.UK) on the back of poor US insurance Q1 reports in the New York post market yesterday afternoon (MET). Utilities and energy names held on to gains in early trading at oil in electronic trading, while in negative territory, remains above the $50/bbl handle. Just after the abbreviated European open, Citi announced the finalization of their Nikko Cordial Japanese Brokerage to Sumitomo for $7.9B. In light trading (approx 42% below its 30 day average), the FTSE100 turned positive by 4:00EST and then again negative just past 5:00EST. UK Data including PMI, mortgage approvals and Q1 individual and corporate liquidations had little net effect on equity trading patterns as the majority of European firms enjoyed the continental European holiday. In Specific equity news: UK FASB reportedly close to new regulation regarding 'off balance sheet' assets for UK banks. Chairman Herz has noted the Financial Acounting Standards Board is close to new decision that could add up to billions of new assets to books that are currently not listed. ||Vodafone [VOD.UK] Threatens legal action against Telecom NZ regarding 3G network launch. NZ Telecom has stated that it is in full compliance with its terms of Spectrum License. Vodafone states that NZ telecom's network is causing interference on its on platform. || Pearson [PSON.UK] Provides interim statement: Reports Q1 Rev £1B v £800M y/y; sees trading in line with expectations. || Siemens [SIE.GE] Reportedly awarded INR13.8B order form Adani Power, to install 2.5K MW high voltage direct current transmission system. || UBS [UBSN.SZ] Tells Miami judge that it would violate Swiss criminal law to comply with the demands of the US tax authority on disclosing its clients. Spokesperson: 'The summons is incompatible with the tax treaty between the United States and Switzerland, which provides specific standards for government-to-government exchanges of information relating to tax matters.' || Citi [C] Sumitomo Mitsui agrees to purchase Citi's Nikko Cordial Securities for total cash value of ¥774.5B ($7.9B). Cash consideration of transaction put at ¥545B ($5.4B). Citi states that deal will generate up to $2.5B in tangible common equity. Deal to include payments of $28.5B in equity securities, $201B in cash. Citi expected to recognize an after-tax loss of approximately $200M. || In Currencies: The session began with another bout of risk appetite as both the USD and JPY currencies maintained soft tones. Initially, the China Apr PMI data was cited as the catalyst. China's PMI Manufacturing registered its second consecutive month of expansion and provides further evidence of recent government and central banker rhetoric of 'green shoots'. The rotation out of bonds and into equities are also suggesting a growing optimism that the worst of the global recession has past. The UK data also suggested some improvement as UK PMI manufacturing and mortgage approval hit levels since last summer. The GBP was firmer against its major pairs with GBP/USD back above the 1.48 level and GBP/JPY inching towards 148. The CAD continued its firm tone and was again probing its 200-day mvg avg of 1.1855 In Fixed Income: US Treasury's hover close to unchanged in holiday-thinned electronic trading Friday. Dealers noted that activity was extremely light with major European markets closed for the May Day holiday, while the UK and Japan participants were preparing to be closed Monday. Credit Crisis: Sweden's Fin Min Borg comments on US banking bailout efforts. Borg expressed doubts that it could work. Believes that U.S. officials should confront the financial industry's political power and seize temporary ownership of troubled banks. Otherwise, error-prone bankers will be bailed out at taxpayer expense. Article noted that during a crisis in the early 1990s, Sweden successfully rehabilitated its banking system via temporary nationalization. The government divided the industry into healthy banks and troubled institutions. It pumped capital into the healthy ones, while punishing their shareholders, and held onto the troubled assets until their values recovered. Borg stated that their approach better protected taxpayers than the current U.S. strategy. NOTES Risk appetite continues to receive booster shots. China Official Apr PMI Manufacturing came in at 53.5 compared to its prior reading of 52.4. This was its highest level since Apr 2008 and the second consecutive month of expansion. The European PMI in Ireland, UK and Denmark also were better that prior releases. Sumitomo Mitsui agrees to purchase Citi's Nikko Cordial Securities for ¥545B (about $5.52B) Stress tests release delayed by a few days as banking executives debate preliminary findings with Federal examiners Obama might get an early pick for the US Supreme Court as Souter seeks to retire. Looking ahead: 10:00 (US) April Final U. of Michigan Confidence: 61.9 expected versus prior 61.9 10:00 (US) April ISM Manufacturing: 38.4 versus prior 36.3; Prices Paid: 34.0 expected versus 31.0 10:00 (US) March Factory Orders: -0.6% versus prior -1.8% No set time (US) Apr Total vehicle sales expected at 9.7M versus 9.9M prior; Domestic sales expected 7.1M versus 7.1M 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. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | May 01 09 09:15 GMT |

Good morning from wonderful Hamburg. Since yesterday evening, we knew that even the U.S. government failed to protect Chrysler from the insolvency. It remains to be seen what will happen with General Motor's. The stock markets react amazingly cool-headed. However, we wish you prosperous trading day and a nice weekend. Markets review The JPY strengthened to a two-week low versus the EUR and weaken against USD. Japan's consumer confidence declined in March for the first time since one year and increased the probability that the Bank of Japan will keep the interest rate at 0.1 percent. Economist expects that today a U.S. report will show that the manufacturing rose for the fourth months, from 36.3 in March to 38.4 in April. 'Optimism that the worst of the global recession is over, is re-emerging thanks to an improvement in macroeconomic data', said Akitsugu Bandou, senior economist in Tokyo at Okasan Securities Co. Yesterday the USD/JPY rose 0.99 percent and the EUR/JPY 0.70 percent. Today in the early Tokyo trading session, the AUD and NZD rose against the USD as the global stock market spurred optimism that the world's recession is easing. The AUD/USD headed for its 9th weekly gain, the longest winning phase since December 2003. Also the CAD profits from the optimism and an increased investors demand for commodity-linked currencies. In order of this, the USD/CAD fell to its highest level since January Technical analysis NZD/USD Since the middle of April the NZD/USD traded close to a bearish trend-line and recovered last week. After crossing this line the currency pair has been trading in a zigzag course and failed to climb sustained over its resistance at 0.5739. Now it seems that the market reversals again and shrank near to a new downward trend-line. It remains to be seen if the support at 0.5529 could stop the bears again. CAD/JPY The currency pair lost last week its support at 80.46 and fell near to its 78.00 level. After touching a multi-week low the CAD/JPY recovered close to an upward trend-line. This bullish movement boosted the currency pair over its resistance lines at 80.45 and apparently the 82.47 was sustainable crossed as well. This may support further bullish movements. On the other side the RSI shows a strong overbought market 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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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | May 01 09 06:29 GMT |

GBP/JPY The British pound versus Japanese yen is still battling the areas of 61.8% Fibonacci of CD leg -target of the bullish harmonic pattern- which we speculate that it will be able to force the pair to show correctional declining movements affected also by facing the upper line of the Bollinger bands while the overall candlestick structure is bearish as shown on the above chart. The overbought signs appear on (William%R, Stochastic and CCI-RVI combination) can be activated strongly with a breakout occurs below 145.50 zone. Therefore we will keep our overview to the downside on the intraday basis. Trading range for today is among key support at 142.50 and key resistance at 150.00. The general trend is to the downside as far as 156.20.remains intact with target at 116.00. Support: 145.50, 144.60, 143.85, 143.30, 142.75 Resistance: 146.30, 146.90, 147.70, 148.35, 149.00 Recommendation: According to our analysis, sell the pair at 146.10 with targets at 143.35 and stop loss at 148.25. EUR/JPY The European currency versus the Japanese yen is facing a pivotal resistance zone around 131.25 while the Stochastic, William and CCI indicators show that the pair is moving inside an overbought area and as we discussed in our previous reports that we are ahead of seeing a correctional movement as a normal technical effect from forming a continuous long upper shadow for the previous 5 candles claiming that it doesn't have enough momentum to continue up trending. This anticipated bearishness is protected by 61.8% Fibonacci of the last drop started at 137.45 zones at 132.50. Trading range for today is among key support at 127.40 and key resistance now at 134.20. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 130.75, 130.00, 129.40, 128.65, 128.00 Resistance: 131.80, 132.50, 133.20, 133.80, 134.40 Recommendation: According to our analysis, sell the pair at 131.20 with targets at 129.00 and stop loss at 133.00. EUR/GBP After the expected bearishness that appeared on the royal pair yesterday, it succeeded to find a strong support around 0.8920 that pushed the pair forming a long white candlestick that turned yesterday's downward movements into an upward direction on the intraday basis supported by the obvious oversold signs appear on the CCI and AC indicator. A clear breakout occurs above 61.8% Fibonacci Arc at 0.8985 will accelerate today's anticipated upside actions. Trading range is among the key support 0.8760 and key resistance now at 0.9180. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.8950, 0.8905, 0.8860, 0.8815, 0.8760 Resistance: 0.9000, 0.9030, 0.9070, 0.9130, 0.9180 Recommendation: According to our analysis, buy the pair at 0.8965 with targets at 0.9050 and stop loss at 0.8895. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | May 01 09 06:40 GMT |

EURUSD Comment: Trapped at the 26-day moving average, between the top of the 'cloud' and the top of the 'flag'. Hopefully we will get a weekly close above 1.3400 to add to upside pressure. Note similar patterns can be seen in a series of major currencies. Strategy: Buy at 1.3365, adding to 1.3200; stop well below 1.3090. Add to longs on a sustained break above 1.3350 for 1.3400 short term and 1.3600 further out Direction of Trade: →↗ Chart Levels: Support Resistance 1.3219 " 1.3275 1.319 1.33 1.312 1.3342 1.3090* 1.3385/1.3400* 1.2964 1.352 GBPUSD Comment: Holding above the 9 and 26-day moving averages but struggling ahead of the psychological 1.5000 area. We remind that only a weekly close above 1.5000 will give Cable a fighting chance for a decent rally. Strategy: Buy at 1.4780; stop well below 1.4500. Short term target 1.4945, eventually 1.5050 Direction of Trade: →↗ Chart Levels: Support Resistance 1.4748 " 1.4822 1.462 1.495 1.458 1.496 1.4500* 1.504 1.444 1.5069* USDJPY Comment: Bouncing beyond what we had allowed for but appears to be stalling against the 99.00 area as it did in February and March. Moving averages suggest a short so conflicting messages and we may end up trading between 96.00 and 99.00 for longer than we had originally thought. Strategy: Attempt shorts at 98.80; stop above 99.85. Short term target 97.15. Direction of Trade: → Chart Levels: Support Resistance 98.52 " 99.17 97.9 99.69* 97.15 99.77 96.00* 100 95.63* 100.74 EURJPY Comment: Mixed Technical picture and likely to continue difficult with random moves within the big band established since October last year. Allow for more random moves roughly between 126.00 and 133.00 for another week or two. Strategy: Possibly attempt tiny longs at 131.25; stop/reverse below 130.00 for 128.00. Cover longs at 132.55/133.00 and watch for signs of topping. Direction of Trade: → Chart Levels: Support Resistance 130.30 " 131.52 129.35 132.03 128.9 132.55 126.65 134 126 134.33 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | May 01 09 01:39 GMT |

News And Views US equities rose on the opening bell, but then faltered, as Chrysler's bankruptcy filing weighed on investors who were otherwise reassured by better-than-expected corporate earnings (Dow Chemical the notable result last night) and slightly improved economic data (jobless claims, regional industrial production). Chrysler filed for bankruptcy after restructuring talks with lenders broke down, and focus may now turn to the General Motors outcome. The S&P500 is unchanged from yesterday's close at time of writing. Swine flu news accelerated yesterday, the WHO saying they are in the process of moving from phase 5 to 6, and the US Homeland Security secretary saying they have been preparing for a fullfledged pandemic. The USD currency was under pressure during early Europe due to month-end fixing dynamics. There was talk of country reserves managers selling USD across currencies. EUR rose from around 1.3300 to 1.3385, before the falling S&P500 dragged it back to the 1.3200 area. USD/JPY ran counter to other major pairs, rallying from 97.30 to 99.00. AUD strengthened to 0.7385 on fixings, followed by choppy European and US sessions, eventually returning to the 0.7270 area where it traded during yesterday's domestic session. Rory Robertson (Macquarie economist) wrote the next RBA meeting would result in a pause, but that ultimately, the policy rate would be cut to 2.00%; there was no market impact from the story. NZD closed the domestic session lower at 0.5660 after the dovish RBNZ package, spiking to 0.5750 in response to AUD and EUR strength, but then gyrating back to 0.5660. AUD/ NZD peaked at 1.2940 at the US opening, settling back at 1.2850. US initial jobless claims down 14k to 631k. Although initial jobless claims seem to have settled in a new range a little below their recent peak rate of 674k per week in late March, continuing claims soar ever upwards. The message is simple: layoffs are still happening at a rapid but not accelerating rate, but once unemployed, finding another job is increasingly difficult. These numbers point to payrolls continuing to decline at a 600-700k pace per month, and a sharply higher jobless rate. US employment costs grew 0.3% in Q1, their slowest pace on record (i.e. since 1996), and at half the pace of Q4 last year. Slower growth in wages and salaries was the main driver although benefits have been drifting lower too, consistent with the soft jobs market. US Chicago PMI up 8.7 pts to 40.1 in April, matching the message of the four regional Fed surveys released earlier this month: the headline index, orders and production were all much less negative in April, consistent with a slower pace of decline in activity, but the jobs measure only marginally improved. US personal income and spending data for March were consistent with the quarterly totals published in yesterday's GDP report. One point to note is that the 2.2% quarterly growth rate in Q1 consumer spending was mainly due to a spike in January though growth since then has been subdued. Recent tax cuts will boost incomes in Q2 but the weaker labour market will clearly be an offsetting constraint. Japanese industrial production up 1.6%. Continuing the theme, Japan's industrial sector also produced a better than expected March result, production rising 1.6% in the month, 'double' the 0.8% rise consensus was looking for. The Euroland flash estimate of the annual CPI was steady at 0.6%yr in April, but should resume its decline towards 0% yr later in Q2. Germany's labour market downturn continued this month, with another 58k unemployed. Unemployment continued to rise steadily to 8.3%, from its 7.6% low point in late 2008, and last month, Euroland unemployment continued its upswing, reaching 8.9% from its low of 7.2% in early 2008. UK consumer confidence posted a further gain in April, though being surveyed between 3-19 April, the slump in Q1 GDP growth, the huge budget deficits announced in the Budget, and swine flu would all be factors that the occurred too late to impact on respondents' moods. House prices only partially reversed their March gain in April, falling 0.4%. Outlook The residual effects of yesterday's very dovish RBNZ package should maintain downward pressure on the NZD today. For technicians, an hourly head-and-shoulders has developed during the past 24 hours, and a break of the 0.5640 neckline is imminent, pointing to 0.5550. Events Today Country Release Last Forecast Aus Apr AiG PMI 33.4 – US Apr UoM Consumer Sentiment (F) 61.9a 61.9 Apr ISM Manufacturing 36.3 38.5 Mar Factory Orders 1.80% flat Apr Auto Sales, mn 9.9 9.5 Jpn Mar Jobless Rate 4.40% 4.50% Mar Household Spending %yr –3.5% –2.7% Apr Tokyo CPI Ex-Fresh Food 0.40% 0.20% Mar National CPI %yr –0.1% –0.3% Apr Vehicle Sales %yr –31.5% – UK Apr House Prices %yr –17.5% Mar Net Consumer Credit £bn –0.2 0.1 Mar Net Mortgage Lending £bn 1.5 1.6 Apr PMI Factory 39.1 40 Westpac Institutional Bank http://www.wib.westpac.co.nz/ Disclaimer All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

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Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | May 01 09 04:21 GMT |

EUR/USD Today's support: - 1.3208(main), where correction is possible. Break would give 1.3177, where correction also may be. Then follows 1.3144. Break of the latter would result in 1.1312. If a strong impulse, we would see 1.3078. Continuation will give 1.3046 and 1.3018. Today's resistance: - 1.3320, 1.3368 and 1.3403(main). Break would give 1.3440, where a correction is possible. Then goes 1.3467. Break of the latter would result in 1.3500. If a strong impulse, we'd see 1.3532. Continuation will give 1.3570 and 1.3596. USD/JPY Today's support: - 98.42, 98.07 and 97.43(main). Break would bring 97.18, where correction is possible. Then 96.76, where a correction may also happen. Break of the latter will give 96.43. If a strong impulse, we would see 96.21. Continuation would give 95.88. Today's resistance: - 99.48(main), where a correction may happen. Break would bring 99.70, where also a correction may be. Then 99.90. If a strong impulse, we would see 100.07. Continuation will give 100.32. DOW JONES INDEX Today's support: - 8088.80, 8046.37, 8010.50 and 7987.50(main), where a delay and correction may happen. Break of the latter will give 7959.37, where correction also can be. Then follows 7922.80. Be there a strong impulse, we would see 7900.20. Continuation will bring 7871.40. Today's resistance: - 8280.00(main), where a delay and correction may happen. Break would bring 8303.90, where a correction may happen. Then follows 8336.20, where a delay and correction could also be. Be there a strong impulse, we'd see 8370.00. Continuation would bring 8398.62. FXtechtrade http://www.fxtechtrade.com Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.

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Japan’s Jobless Rate Soars, Prices Fall as Recession Spreads

By Toru Fujioka and Mayumi Otsuma

May 1 (Bloomberg) -- Japan’s unemployment rate surged to a four-year high in March and consumer prices fell for the first time in 18 months, indicating any recovery in the world’s second-largest economy is likely to be weak.

The jobless rate rose to 4.8 percent from 4.4 percent in February, the biggest jump since 1967, the government statistics bureau said in Tokyo today. Prices excluding fresh food slid 0.1 percent from a year earlier.

Household spending fell for a record 13th month as exporters from Pioneer Corp. to Toyota Motor Corp. cut jobs and wages to offset plunging profit. Japan’s economy may resume growing this quarter as production and exports stabilize following unprecedented declines, though the prospect of a return to deflation risks thwarting a sustained expansion.

“The economic environment for households is very harsh, with surging unemployment and decreasing income,” said Tatsushi Shikano, a senior economist at Mitsubishi UFJ Securities Co. in Tokyo. “That means consumer spending won’t propel the economy for a while and it’s unlikely that Japan’s recovery will be strong.”

The yen traded at 98.90 per dollar at 12:37 p.m. in Tokyo from 98.71 before the reports. The Nikkei 225 Stock Average rose 0.6 percent.

The economy may expand at an annual 1.2 percent pace in the second quarter, according to the median estimate of 10 economists surveyed by Bloomberg after a report yesterday showed factory output rose for the first time in six months in March and companies planned further increases in April and May.

‘Moderate’ Recovery

The Bank of Japan said yesterday that the economy will expand 1.2 percent in the year starting April 2010 after shrinking 3.1 percent in the current year. The global economy is “leveling out” and Japan will “recover at a moderate pace” from the latter half of this fiscal year, the policy board said.

Job prospects are getting worse and wage declines are accelerating, damping consumption, reports showed today.

The ratio of positions available to each applicant dropped to 0.52 from 0.59, the lowest in seven years, the Labor Ministry said. Wages plunged 3.7 percent, the fastest drop in more than six years, as companies slashed overtime pay at a record pace to cope with the collapse in exports.

Spending by households slid 0.4 percent, capping off the worst losing streak since comparable data were first made available in 1964.

Pioneer, Teijin

Pioneer, a car audio and navigation systems maker, will eliminate 9,800 jobs and Teijin Ltd., a carbon fiber producer, will cut 2,500 jobs over three years, the companies said this week. Toyota, expecting a loss for the first time in almost six decades, has cut temporary jobs and also plans to reduce its fixed costs, including salaries, by 10 percent.

The number of cases of employees who lost their jobs because they were fired or a project ended totaled 5.5 million since September, the statistics bureau said.

“With employment and wages worsening, there are no short- term remedies to avert deflation,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo.

During Japan’s last bout with sustained price declines that began a decade ago, bankruptcies surged and the jobless rate advanced to a record 5.4 percent. Consumers delayed purchases, prompting companies to lower prices further, eroding profits and forcing them to cut wages.

Japanese policy makers are relatively sanguine about the likelihood of a return to deflation.

‘Too Early’

“It’s too early to judge from the CPI data that Japan is lurching toward deflation,” Finance Minister Kaoru Yosano said today. Bank of Japan Governor Masaaki Shirakawa said yesterday that there’s little risk of a deflationary spiral, even after his board forecast that consumer prices will drop 1.5 percent this fiscal year and 1 percent in the year starting April 2010.

The central bank cut the key interest rate to 0.1 percent in December, and has since bought corporate debt and expanded government bond purchases to channel funds to companies.

“Unfortunately, the Bank of Japan’s policy is currently focused on stabilizing financial markets and helping corporate borrowing, and there seems to be little chance that the central bank will take action to counter deflation,” said Adachi at Deutsche Securities.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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South Korea’s Exports Decline Less-Than-Expected 19%

By Seonjin Cha

May 1 (Bloomberg) -- South Korea’s exports fell less than economists expected in April, adding to evidence that the economy’s slump may be past its worst.

Overseas shipments decreased 19 percent to $30.67 billion from a year earlier, after March’s 22 percent slide, the Ministry of Knowledge Economy said in Gwacheon today. The median estimate was for a 23.2 percent drop, according to a Bloomberg News survey of eight analysts. The country posted a record trade surplus of $6.02 billion last month as imports slumped.

Export declines may ease as demand from China begins to recover and as the won’s 22 percent drop against the dollar in the past year helps companies including Samsung Electronics Co. and Kia Motors Corp. weather a contraction in global trade. Manufacturers’ confidence rose to a seven-month high and March industrial production posted the longest run of gains in more than a year, reports yesterday showed.

“South Korea’s exports are being assisted by a weaker currency,” said Kwon Young Sun, senior economist at Nomura International Ltd. in Hong Kong. “Still, it’ll be difficult to avoid a drop in exports for some time until global demand starts to comes back.”

South Korea is one of the first Asian countries to report overseas trade figures for April. Exports rose 9.3 percent last month from March, the first consecutive gain, according to Bloomberg calculations based on the value of monthly shipments.

China’s manufacturing expanded for a second month in April, according to Chinese government data released today.

Shares Gain

South Korea’s stock market is closed today for the Labor Day holiday. The Kospi index rose 14 percent in April, the biggest monthly gain since November 2001, on optimism the global recession is easing.

Asia’s fourth-biggest economy grew 0.1 percent in the first quarter, rebounding from a 5.1 percent contraction in the previous quarter of 2008 as record interest-rate cuts and government spending underpinned domestic demand.

Overseas shipments make up about 60 percent of South Korea’s gross domestic product.

The South Korean and Chinese numbers show “global demand is no longer in freefall,” said David Cohen, an economist with Action Economics in Singapore. “Maybe the global downturn is bottoming out.”

Export Earnings

Hyundai Heavy Industries Co., the world’s largest shipbuilder, said yesterday first-quarter profit rose 13 percent as the weaker won boosted the value of overseas earnings. Kia Motors, South Korea’s second-biggest automaker, posted the highest profit in three years after it boosted domestic sales and overseas earnings were helped by the won’s decline.

South Korean imports slid 35.6 percent in April from a year earlier to $24.65 billion, today’s report showed.

“A down trend in exports will likely be inevitable for the time being because of high comparison base from a year earlier,” the ministry said in a statement. “Still, we expect the two-digit trade surplus trend to continue if the local currency and oil prices remain weak.”

Exports to the Oceania region, including Australia and New Zealand, gained 110.3 percent in the first 20 days of April from a year earlier. Exports to the European Union slid 1 percent.

Shipments to China, the nation’s largest overseas market, declined 20.5 percent during the first 20 days of last month, less than the 22.2 percent decrease in March. Exports to Japan dropped 34.1 percent and shipments to the U.S. fell 19.2 percent in the first 20 days of April.

Exports of vessels jumped 83.3 percent in the first 20 days of April from a year earlier and shipments of liquid-display equipment, such as computer panels and screens, rose 14.7 percent. Exports of automobiles slid 50.6 percent.

The ministry said today that the recent outbreak of swine flu posed a potential threat to global trade. “ The government will establish measures after closely monitoring export markets,” the statement noted.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

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U.S. Bank Stress Test Results Delayed as Conclusions Debated

By Craig Torres and Robert Schmidt

May 1 (Bloomberg) -- The Federal Reserve is postponing the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials.

The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as today, they said.

Regulators and bank executives are concerned about how the disclosure is handled because weaker institutions could suffer a collapse in their stock prices.

“Everybody understands they’ve got a tiger by the tail here,” said Mark Tenhundfeld, a senior vice president at the American Bankers’ Association in Washington. “If they don’t let him go gently, there will be a lot of mauling going on.”

The 19 firms include Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions Financial Corp. The banks in the test hold two-thirds of the assets and more than half of the loans in the U.S. banking system, according to a Fed study released April 24.

Regulators are pushing higher minimum capital levels for the banks to determine whether they can survive a worsening recession.

Officials favor tangible common equity equal of about 4 percent of a bank’s assets and Tier 1 capital worth about 6 percent, according to people familiar with the tests of the largest 19 banks. Financial institutions received preliminary results and are being judged on whether they need more capital to ensure they stay above those levels. Earlier in the process, regulators discussed a TCE target of 3 percent, said two people with knowledge of the deliberations.

‘Dominant’ Element

The Fed, which oversaw the stress tests, wants common equity to be the “dominant” element in a bank’s primary capital, according to a central bank report on the test methodology released a week ago. TCE is a measure of a bank’s financial health that excludes intangible assets such as brand names that can’t readily be used as payments.

Investors and analysts have focused on the TCE ratio as a more accurate benchmark of a bank’s ability to absorb losses. Tier 1 capital is a broader measure of bank health that is commonly used by regulators. Regulators typically look at risk- weighted assets when assessing banks’ financial strength.

Stocks Rally

The Standard & Poor’s 500 Financials Index, which comprises 80 companies, is up 30 percent in the past month as officials played down the prospect of nationalization and the economy showed signs of stability. Shares of Goldman Sachs are up 28 percent over the same period and JPMorgan Chase & Co. has rallied 33 percent.

“One thing the stress tests will do is herald a fundamental shift in approach toward the financial system,” said Stephen Stanley, chief economist at RBS Securities Inc. in Greenwich, Connecticut.

Initially, Stanley said, the Treasury’s Troubled Asset Relief Program treated all banks equally. “Now, finally, there is going to be differentiation. Some banks will get a clean bill of health and others will not,” he said.

The Fed led the stress tests, using as many as 140 staff members working in consultation with 60 people from other bank oversight agencies.

Goldman Sachs Signal

While the banks were ordered not to release the results of the stress assessments prematurely, Goldman Sachs yesterday may have provided a hint with its decision to sell bonds and shares, issuing $2 billion in five-year notes without a government guarantee and making a $750 million stock offering. A spokesman for Goldman Sachs declined to comment.

“You can read between the lines on it that nothing adverse will be coming out next week” about Goldman Sachs, said Ralph Cole, a money manager at Portland, Oregon-based Ferguson Wellman Capital Management Inc., which oversees $2.2 billion.

At least six of the 19 largest U.S. banks require additional capital, according to preliminary results of government stress tests, people briefed on the matter said this week. While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.

By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts. The risk is that, along with diluting existing shareholders, the government action won’t seem strong enough.

Geithner TARP Reassurance

Treasury Secretary Timothy Geithner told U.S. lawmakers yesterday that there is no need for new bank bailout money as of now, said Senate Budget Committee Chairman Kent Conrad.

“He said ‘no, not in the foreseeable future and they’re hoping not at all’,” Conrad, a North Dakota Democrat, said in an interview after Democrats held a closed meeting with Geithner in Washington.

Geithner has said that banks can add capital by a variety of ways, including converting government-held preferred shares dating from capital injections made last year, raising private funds or getting more taxpayer cash. With regulators putting an emphasis on common equity in their stress tests, converting privately held preferred shares is another option.

To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.

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Japan’s Economy May Return to Growth as Output Climbs

By Toru Fujioka and Shizuka Muragishi

May 1 (Bloomberg) -- Japan’s economy may return to growth as soon as this quarter as companies increase production in response to inventory cuts and consumer demand shows signs of picking up in some markets.

The economy may expand at an annual 1.2 percent pace in the second quarter, according to the median estimate of 10 economists surveyed by Bloomberg News after a report yesterday showed industrial production rose for the first time in six months and companies predicted increases in April and May.

Growth would allow Prime Minister Taro Aso, who has announced three stimulus packages since becoming the nation’s leader in September, to claim credit just as he prepares for elections that must be called by September. The Bank of Japan said the world’s second-largest economy will resume expanding in 2010 after shrinking 3.1 percent this fiscal year.

“An early return to positive growth quarter-on-quarter would point to a much better 2010,” said Julian Jessop, an economist at Capital Economics Ltd. in London. “The recovery seems to have plenty of positive momentum,” he said, citing corporate predictions that production will increase 4.3 percent in April and 6.1 percent in May.

The Nikkei 225 Stock Average climbed 0.3 percent at the morning break today, taking its gain to 25 percent since reaching a 26-year low on March 10. Stocks were also buoyed after consumer spending in the U.S., Japan’s biggest overseas customer, jumped the most in two years in the first quarter, according to gross domestic product figures released April 29.

Fujitsu Soars

Shares of Fujitsu Ltd., Japan’s biggest computer-services provider, rose 19 percent in Tokyo trading after the company forecast it will return to profit this fiscal year on narrowing losses in its chip business.

Former Federal Reserve Chairman Paul Volcker said this week the U.S. economy is “leveling off at a low level” and doesn’t need a second stimulus package. Volcker is the head of Obama’s Economic Recovery Advisory Board. In the U.K., consumer confidence climbed to the highest level in a year this month.

In its twice-annual outlook yesterday, the Bank of Japan predicted a “moderate” recovery from the second half of the current fiscal year.

“Economic conditions are likely to continue deteriorating in coming months but gradually level out thereafter, and the growth rate is expected, from the latter half of fiscal 2009, to recover at a moderate pace,” the central bank said. Gross domestic product will rise 1.2 percent in the year starting April 2010, it said.

Shrinking Economy

Japan’s economy shrank 12.1 percent in the fourth quarter of last year and a report on May 20 will show a contraction of 10.9 percent in the first three months of 2009, according to the median estimate of economists surveyed by Bloomberg News.

The unemployment rate surged to a four-year high of 4.8 percent in March and consumer prices fell for the first time in 18 months, indicating any recovery is likely to be weak. Wages dropped 3.7 percent, and household spending fell for a 13th month, capping off the worst losing streak since the data were first compiled in 1964.

“The panic is over, but that doesn’t mean we are not in the middle of a deep recession,” said Robert Feldman, head of research at Morgan Stanley in Tokyo. “Wages have only just begun to fall. Corporate profits are terrible.”

Even with the increase in output, only about half the nation’s productive capacity is being used, hurting profits and exerting pressure on companies to keep cutting costs and wages.

“We are at levels of production that would suggest that low capacity utilization will keep capital expenditure very, very low for a long time,” said Feldman.

Mitsubishi Electric

Mitsubishi Electric Corp. yesterday forecast its first loss in seven years because of record losses at its 45 percent owned Renesas Technology Corp., a computer chip maker.

Cost reductions have “cut into demand for corporate services and the wages of workers,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “The environment surrounding non-manufacturers and households has become increasingly severe.”

Barclays predicts the economy will grow at an annual 3.7 percent pace in the second quarter.

Any decline in wages may be partially offset as Prime Minister Aso’s third stimulus package is implemented later this year. The 15.4 trillion yen ($158 billion) spending plan includes measures to bolster the job market, encourage investment in energy-efficient technology and provide credit to companies. Aso leads the ruling Liberal Democratic Party.

Aso’s Cabinet approval rating rose 5.9 percentage points to 29.6 percent, helped by a political funding scandal in the country’s main opposition party, Kyodo News said yesterday.

“Aso has implemented stimulus packages and he will of course take credit for the recovery,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. “The election, which everybody once thought the LDP would lose for sure, is becoming difficult to call.”

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Shizuka Muragishi in Tokyo at smuragishi@bloomberg.net

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Yen Falls to Two-Week Low Against Euro on Higher-Yield Demand

By Yasuhiko Seki

May 1 (Bloomberg) -- The yen slid to a two-week low against the euro and weakened against the dollar on speculation a report today will show U.S. manufacturing contracted at a slower pace, encouraging investors to buy higher-yielding assets.

Japan’s yen also halted a three-week rally versus both currencies after the nation’s consumer prices fell for the first time in more than a year in March, backing the case for the central bank to keep interest rates at 0.1 percent. The dollar advanced after President Barack Obama said the U.S. and Canada will commit more money to Chrysler LLC, which filed for bankruptcy, as it forms an alliance with Fiat SpA.

“The market is more optimistic about Chrysler’s bankruptcy and is looking toward the re-engineering of the company,” said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. “Data this morning signaled that Japanese consumer spending will remain weak for some time” and caused the yen to fall.

The yen slid to 131.08 per euro at 12:20 p.m. in Tokyo, from 130.52 in New York yesterday. It earlier fell to 131.51, the weakest since April 16. The yen was at 98.93 against the dollar from 98.63, after dropping to 99.16, the lowest since April 20. The dollar was at $1.3251 per euro from $1.3230.

Australia’s dollar rose to 72.60 U.S. cents from 72.56 cents, heading for its ninth weekly advance versus the greenback, after Asian stocks last month posted their biggest rally since at least 1999.

U.S. Manufacturing

The Institute for Supply Management’s manufacturing index in the U.S. rose for a fourth straight month to 38.4 in April, from 36.3 in the previous month, according to the median forecast of 66 economists surveyed by Bloomberg. A reading above 50 indicates expansion. The report is due at 10 a.m. in New York.

“Optimism that the worst of the global recession is over is re-emerging thanks to an improvement in macroeconomic data,” said Akitsugu Bandou, senior economist in Tokyo at Okasan Securities Co. “This view will weaken the yen and buoy demand for higher-yielding currencies.”

The Dollar Index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, rose 0.1 percent to 84.735.

Demand for the yen weakened after the government said Japan’s prices excluding fresh food fell 0.1 percent in March from a year earlier after being unchanged in February. The jobless rate rose to 4.8 percent from 4.4 percent in February, the statistics bureau said today in Tokyo.

Aussie Versus Yen

The Bank of Japan said yesterday the economy will shrink 3.1 percent this fiscal year and prices will tumble as the recession takes a toll on spending. The BOJ kept its benchmark interest rate unchanged yesterday in a unanimous decision.

Japan’s currency gained 0.5 percent in April against the euro and 0.4 percent versus the dollar. The greenback increased 0.2 percent against the euro last month.

Australia’s dollar headed for its first weekly gain against the yen in three weeks on speculation Japanese investors will pour funds into higher-yielding currencies.

“When there is optimism, one bet which may work is to buy the Australian dollar as the bottoming-out of global demand may buoy exports of resources and commodity products from Australia,” said Takeshi Makita, an economist in Tokyo at Japan Research Institute Ltd., a unit of Sumitomo Mitsui Financial Group Inc., Japan’s third-largest banking group. “But when there is no clarity about the sustainability of such an improvement, such operations may result in a short-term move.”

Swine Flu

Higher interest rates in New Zealand and Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the nations’ assets. Australia’s central bank probably will maintain benchmark borrowing costs at a 49-year low of 3 percent when policy makers meet May 5, according to the median forecast of a Bloomberg News survey.

In carry trades, investors get funds in a country with low borrowing costs and invest in another with higher rates. The risk is that market moves can erase those profits.

The yen fell against all of the 16 most-active currencies after Japan’s Health Minister Yoichi Masuzoe said a 17-year-old boy may be the country’s first swine-flu case.

The teenager, a high-school student from Yokohama, near Tokyo, visited the western Canadian province of British Columbia from April 10 to 25, according to public broadcaster NHK, which televised the news conference by Masuzoe this morning.

“I’m a bit worried about the spread of the flu to Japan,” said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “This may weaken the allure of the yen.”

Golden Week

Bridgestone Corp., the world’s largest tiremaker, will shut four factories in Mexico until May 5 in response to the outbreak, said Mari Tainaka, a company spokeswoman. Mexico’s government had ordered the company to shut the factories, she said.

The yen’s losses were tempered by speculation investors will cut “short” positions on the currency before Japan enters the so-called Golden Week holidays, said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust and Banking Co., a unit of Japan’s seventh-largest publicly traded bank. A short trade is a bet that an asset’s value will decline.

Japan’s financial markets will be closed from May 4 to May 6.

To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

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China Non-Ferrous Metal Buys Majority Stake in Lynas

By Jason Scott

May 1 (Bloomberg) -- China Non-Ferrous Metal Mining Co. agreed to pay A$252 million ($184 million) in cash for a majority stake in Lynas Corp., an Australian miner of minerals used in iPod music players and liquid crystal displays.

The state-owned company will buy 700 million new shares at 36 cents each, the Sydney-based company said today in a statement. That’s 22 percent more that the last closing price.

Shares of Lynas rose 41 percent as the deal will secure the company a total of A$522 million in cash and loans to complete construction of plants in Australia and Malaysia to supply customers in North America, Japan and Europe. China may spend more than $500 billion on overseas resources investments over the next eight years, according to Deloitte Touche Tohmatsu.

“A lot of the Australian projects that have struggled to secure financing under normal means have had the Chinese come and help them,” Hunter Hillcoat, a Sydney-based analyst at Austock Securities Ltd., said today by phone. “The project itself is fundamentally sound. With the company securing that financing, the key concern is removed.”

Lynas rose 12 cents to 41.5 cents at 10:38 a.m. Sydney time on the Australian stock exchange.

The share sale needs approval from Australian and Chinese regulators, Lynas said. A backlash against Chinese firms buying Australian mines has prompted the Senate to begin an inquiry into foreign investment rules.

China Non-Ferrous Metal will have a 51.6 percent of Lynas should the transaction be approved. The Chinese company will have four directors appointed to the board of Lynas, which suspended worth on its Rare Earths project in February due to lack of funding.

“This shall enable the company to lift the suspension of the project and complete construction and commissioning,” the statement said.

Rare earths are also used in compact fluorescent light bulbs, hybrid cars and wind turbines.

To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.net

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OZ Minerals’ Lenders Agree to Extend Debt Repayment

By Jesse Riseborough and Madelene Pearson

May 1 (Bloomberg) -- OZ Minerals Ltd., the world’s second- biggest zinc producer, won a two-month extension on A$1.1 billion ($802 million) of debt, giving it time to complete the sale of most of its assets to China Minmetals Group.

Lenders agreed to extend the deadline on loans that were due for repayment yesterday until June 30, subject to a number of conditions, Melbourne-based OZ said today in a statement to the Australian stock exchange. The company is seeking to complete the sale to Minmetals by mid-June following a shareholder vote, it said this week.

OZ Minerals, formed last year through the merger of Oxiana Ltd. and Zinifex Ltd., was forced to sell assets to repay debt after metals prices plummeted. Asset sales will boost the company’s cash reserves to about A$750 million, according to an April 29 report by Royal Bank of Scotland Group Plc analysts.

The company’s total cash balance was $109.5 million as at April 30, OZ Minerals said today. It has drawn A$107 million of a A$140 million short-term bridging loan, it said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net;

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