European Market Update

Daily Forex Fundamentals | Written by Trade The News | Jun 02 09 10:13 GMT |

Euro-Zone Unemployment hits 10-hear high at 9.2% ECONOMIC DATA (NO) Norway Q2 Consumer Confidence: -3.7 v -5.0e (SZ) Swiss Q1 GDP Q/Q: -0.8% v -1.5%e; Y/Y: -2.4% v -1.7%e (FR) French April Producer Prices M/M: -0.9% v -0.2%e; Y/Y: -6.4% v -6.4%e (SP) Spain Net Unemployment M/M: -24.7K v 39.5K prior; First decline since Mar 2008 (DE) Danish Apr Retail Sales M/M: -0.6% v 0.1% prior, Y/Y: -6.8% v -3.7% prior (SZ) Swiss May SVME- Purchasing Managers Index: 39.8 v 36.5e (HU) Hungary May PMI: 45.3 v 40.4 prior (NO) Norway Apr Credit Indicator Growth Y/Y: 8.0% v 8.3%e (UK) Apr Net Consumer Credit: £0.3B v £0.1Be; Net Lending: £1.0B v £1.0Be (UK) Apr Mortgage Approvals: 43K v 41Ke (UK) M4 Money Supply M/M: 0.2% v 0.1%e; Y/Y: 17.4% v 17.4%e (UK) May PMI Construction: 45.9 v 39.5e (DE) Danish May PMI Survey: 40.9 v 33.8 prior (EU) Euro-zone Apr Unemployment Rate: 9.2% v 9.1%e; Highest reading since Sept 1999 SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities: -In equities: Coming off strong gains on Monday's sessions, European equity markets snapped a 2-day positive level opening streak by trending negative through the pre-market and opening for trade negative across the board. Geo-political concerns emerged out of Korea once again following comments that N Korea was readying itself to fire another missile, this time of the medium-range variety. Overall, financial names led the downward direction on the open with Barclays [BARC.UK] down -12% on the back of IPIC placing its 1.3B stake, HSBC [HSBA.UK] traded lower on rumor that a major investor may need to sell down £2B stake. German and French tier one banking names also traded lower in a sector wide movement. Other trends included the paring of recent gains, and some profit taking in major industrials, exporters and basic resources firms that have moved higher over the 10+ week rally seen in global equity markets. Steel names, including ArcelorMittal [MTA.NV] and ThyseenKrupp [TKA.GE] were leading downward movers in initial trades. Continental markets slowed show recovery from the opening. Stronger than expected Spanish Net unemployment (showing a positive figure) and second tier data out of Switzerland and Denmark continued this upward momentum. By 4:00EST, the CAC and DAX rallied to their session highs with the CAC trading nearly flat on the session and the DAX breaking into positive territory. Recovery in industrial and exporters led this equity lift. The FTSE, however, never gained positive traction being weighed down by two of its biggest banking names. Past 5:00ESt, the DAX trended back into negative territory joining the FTSE and CAC in the red. In individual equities: Barclays [BARC.UK] Abu Dhabi's IPIC to dispose of stake in the company equal to 1.3B shares (15.5% of shares outstanding). Also IPIC invited offers for its entire £1.5B holding of Barclays capital notes. Abu Dhabi's IPIC has no current intention to exercise or sell indirect interest in warrants of Barclays Bank. || HSBC [HSBA.UK] Fears continue that Saudi investor al-Sanea may need to sell down £2B stake -Guardian. Saudi central bank has reportedly frozen al-Sanea's accounts. al-Sanea is owner fo Saad investments that has broad global banking investors and significant land and property holdings in Middle East. S&P cut outlook on Saad property investments to negative from stable on the back of growing risks in the sector. || Ryanair[ RYA.UK] Reports FY09 net loss €169M v gain €62Me, Rev €2.94B v €2.95Be. Fuel costs rose to €1.26B +€466M y/y, Q1-3 are 90% fuel hedged, Group has €2.3B cash on hand, Guides FY2010 post tax profit €200-300M, Guides FY2010 traffic +15% y/y. || King Fisher[ KGF.UK] Reports Q1 Group SSS -1.7% y/y, Q1 Total Sales +2.4% y/y to £2.64B. Outdoor seasonal product sales boosted by more favorable weather in the UK and France and a later Easter compared to last year, whilst non-seasonal sales continued to decline. Group retail profit up 38.5%, primarily reflecting a doubling of B&Q's profit in the UK. French sales up 1.7%, retail profit up 3.5% benefiting from cost initiative. || Centrica [CNA.UK] To acquire 45% stake in gas development block for $145M. Co to acquire a 45% interest in gas development Block 5, located off the south east coast of Trinidad. || SocGen [GLE.FR] Co. traders continue to operate at limit of rules without being reprimanded - French press. La Tribune reports that for a study carried out by consultants Technologia at the request of the French bank and its workers committee recommends steps including a clearer division of tasks between traders and their back office, improving the job prospects and salary of the back office, and making bonus policy more transparent. || Deutsche Telecom [DTE.GE] Update: France Telecom has placed offer for T-Mobile UK -Guardian. Article notes that initial approaches by FTE were rejected by DTE. || Gazprom [GAZP.RU] Polish Econ Min: Signed short term gas delivery contract with company, PGNig signs $300M contracts with Gazprom, sees contract returning deliveries to full restoration. |||S&P commented that the GM bankruptcy had limited impact on Japanese automakers ||| Speakers: Treasury Sec Geithner commented that both China and US expected USD to be the main reserve currency for some time to come. Geithner noted that China's Vice Premier Wang did not express concerns regarding the countries US Treasury holdings. The Tsy Sec continued to welcome Chinese commitment towards a flexible Yuan currency over time. He noted that China was helping to stabilize the international financial system. ||| ECB's Draghi commented that States must seek to reduce debt levels and currency policies must be shaped accordingly |||Swedish Central Bank commented that its domestic banks could manage increased loan losses and that its main scenario assumes that the major Swedish banks loan losses in 2009 and 2010 to total SEK170B. The Riksbank noted that its domestic banks had sufficient capital to meet large losses and remained well capitalized on a global context. It saw 40% of loan losses from Baltic operations. Central Bank measures have contributed to a decline in the banks liquidity risk since November but risks posed by Baltic region economies to Swedish system have risen. The Riksbank noted that the situation could worsen in region |||Latvian Gov't Advisor Bengt Dennis: Country needs to devalue Lats currency at some point ||| German Chancellor Merkel commented that she did not believe Germany should diversify away from exports || Spain Industry Minister commented on the decline in Span'sMay unemployment data and noted that the jobless data could indicate a beginning of the end of the crisis || In Currencies: The USD managed to achieve some gains against its European counterparts in the session. The GBP/USD traded at 1.6330, off over 120 pips from the opening levels in Asia. Dealers were noting that a negative today for the GBP currency was news that Barclay's largest Middle Eastern investor, Abu Dhabi's IPIChas announced plans to offload its long term strategic stake, which could require the selling of GBP currency. The EUR/USD was lower by 50 pips at 1.4127 for most of the morning and largely ignored that highest level of unemployment within the Euro-Zone in a decade. The Euro did manage to retrace most of its session losses as short-covering ensued after the EU unemployment data. Commodity-related pairs followed the energy and metal price action and consolidated some of its recent trend moves. Some vague dealer chatter that the RBA was checking rates around .8100 level. In Fixed Income: Government bonds have experienced some relief from the aggressive selling of the past fortnight with Bunds, Gilts and Treasuries all in positive territory at the time of writing. UK and German yield curves continue to steepen with 2s10s in both markets right at their widest levels of the year. In an illustration of how conditions have improved over the past two months, the UK sold £2B of the 4.25% 2049 Long Gilts, the same issue which it had failed to sell in March, with auction generating a strong bid to cover of more than 2 and a yield tail of less than 1 basis point. Issuance on the covered bond market is picking up with benchmark offerings from DB and BNP both in the works. Three month Euribor improved by 1bps to 1.26% I n Energy: PPEC Research Director Qabazard commented that OPEC has an overhang of 200M+ barrels of oil in floating stock but expressed optimism that such an overhang would be consumed by the end of 2009. He reiterated the view that the recent oil price rise was not due to fundamental reasons ||Libyan Oil Min stated that oil could rise to $80/bbl in Q2 and that OPEC sought an average price pf $70/barrel for 2009 |||Russian Energy Ministry stated that Russian May Oil Production was 9.8M bpd, which was unchanged from Aprils's level and up 1% from year-ago levels. Gazprom's May gas output declined by 14% m/m, and down 34% y/y || Russian Foreign Min Lavrov stated that he expected 'constructive response' from Iran regarding its nuclear enrichment program || China end of April Crude oil inventories at 38.6M tons, up 1.0M tons y/y. In Commodities: China Steel Association Chairman Bingsheng commented that the Jan-April iron ore imports exceeded demand by 27M tons with iron Ore surplus seen at 200-300M tons due to excessive imports ||| India's JSW Steel Exec commented that May sales rose by 50% y/y and the company to consider increasing steel product prices by 2% in July || Credit Crisis: Reportedly Russian companies overdue loans at RUB500B, up 100% in four months of 2009 NOTES FT: Chinese official who sees no replacement for the USD US Treasury Geithner in China. Dealers did note that the Tsy Sec was very polite and saying all the right things to his hosts and biggest customers. However, not all is rosy. China's Yu tells US to be responsible and that there are alternatives to the USD (specifically mentioning the Euro and commodities). Reserve bank of Australia (RBA) leaves unchanged as expected and adds scope for further easing if necessary. Reportedly North Korea preparing up to 4 more medium-range missile tests Swedish Central Bank: Banks notes the potential losses of its exposure from the Baltics Looking Ahead: 10:00 (US) Pending Home Sales M/M: 0.5% expected v 3.2% prior, Pending Home Sales Index: No expectations v 3.2 prior 10:00 (EU) ECB's Constancio speaks in Portugal 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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Currency Technical Report

Daily Forex Technicals | Written by FX Greece | Jun 02 09 10:40 GMT |

EUR/USD Resistance: 1,4150-80 / 1,4230-50 / 1,4280-00 / 1,4330-50 Support: 1,4080-00 / 1,4030-50 / 1,3950-70 / 1,3860-80 Comment: Euro formed new tops in the beginning of the week, reaching the area of 1.4250. A retracement was formed from these levels in terms of the short term uptrend. As we mentioned in our analysis yesterday, after the break of 1.4050, the move is likely to be resumed to higher levels and most important resistance and targets emerge at 1.4340-00 area. This is the upper range regarding our longer term scenario. A clear break of 1.4400 and a consolidation above these levels, would change our scenario… First important support emerges at 1.4100, which was the last base before yesterday's tops. As long as price remains above these levels, a move to new tops is possible. A move below 1.4100, would bring the area of 1.4030-50 into focus, and should be tested as support. The rise will be considered complete if the area of 1.3970 is breached. STRATEGY : Buy orders could be tried at 1.4080-00 with stops below 1.4000 and target at 1.4240-50 or 1.4340 area. A possible reach of 1.4320-40 will be used for sell orders with stops above 1.4400 area... The above mentioned strategy refers to orders that we may follow for personal accounts, depending on the market analysis and the potential reach of resistance and support levels. We do not encourage buy or sell orders, as its effective use is based on correct risk management and the ability of position readjustment depending on current conditions FX Greece DISCLAIMER The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market. We assume no responsibility for any kind of losses ,profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action. We reserve the right to change the terms and the characteristics of the analysis. The contents of the analysis are solely intended for personal use. They may not be retransmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights.

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Jun 02 09 10:55 GMT |

EUR/USD Current level-1.4131 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.3064 and 1.3524. Yesterday's peak at 1.4246 provoked a brief consolidation, which is expected to be limited above 1.4050 before next leg upwards to 1.4367. Resistance Support intraday intraweek intraday intraweek 1.4256 1.4367 1.4050 1.4050 1.4367 1.4719 -- 1.3740 USD/JPY Current level - 96.50 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 98.13 and 97.75. We believe, that a larger corrective pattern is underway above 93.82, so expect one more slide towards 95.03 before final upswing towards 97.24-95. Intraday bias is negative for 95.03. Resistance Support intraday intraweek intraday intraweek 96.95 97.95 95.03 93.58 97.24 99.55 93.58 89.82 GBP/USD Current level- 1.6375 The pair is in an uptrend, after bottoming at 1.3506. Trading is situated above the 50- and 200-day SMA, currently projected at 1.4778 and 1.5510. With the recent top at 1.6496 the pair has entered a larger corrective phase, that is expected to be limited above 1.6291 before the final leg towards 1.6693. Resistance Support intraday intraweek intraday intraweek 1.6496 1.6693 1.6245 1.5916 1.6543 1.7000 1.6180 1.50+ DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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Most Asian Stocks Fall on North Korea Concern; PetroChina Drops

By Jonathan Burgos and Shani Raja

June 2 (Bloomberg) -- Most Asian stocks fell, led by banks and energy companies, as concerns North Korea will step up military tests outweighed signs the global recession is abating.

Shinhan Financial Group Co., which controls South Korea’s second-biggest bank, sank 2.3 percent, erasing a 2.1 percent gain, after Yonhap News said North Korea was preparing to launch a medium-range missile. PetroChina Co. lost 3.6 percent in Hong Kong after oil prices retreated. Honda Motor Co., which gets 48 percent of its profit in North America, climbed 2.2 percent in Tokyo, while Sony Corp., which makes Bravia televisions, jumped 4.3 percent on better-than-expected U.S. economic data.

“The equity market has had such massive gains that it’s ripe for any excuse to trigger a sell-off,” said Nader Naeimi, an investment strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Geopolitical worries could be one of them.”

Five stocks declined for every four that advanced on the MSCI Asia Pacific Index, which added 0.2 percent to 104.15 as of 7:15 p.m. in Tokyo. It earlier climbed as much as 1.2 percent and has gained 48 percent in a rally since March 9. The Kospi Index lost 0.2 percent in Seoul, erasing a 1.6 percent gain.

Japan’s Nikkei 225 Stock Average closed 0.3 percent higher, paring a climb of as much as 1.2 percent. Hong Kong’s Hang Seng Index slumped 2.6 percent, led by Industrial & Commercial Bank of China Ltd. after Goldman Sachs Group Inc. sold a stake in the Chinese lender at a discount.

Share Sale

Also in Hong Kong, Parkson Retail Group Ltd., a department- store operator, slumped 6.7 percent as its controlling shareholder sought to divest stock. Neptune Orient Lines Ltd., Southeast Asia’s No. 1 container carrier, surged 9.8 percent on plans to repay debt. EVA Airways Corp. surged 6.9 percent in Taipei after winning permission to raise ticket surcharges.

Futures of the Standard & Poor’s 500 Index added 0.3 percent. The gauge climbed 2.6 percent above its 200-day moving average in New York yesterday, a bullish indicator, as reports on personal income, manufacturing and construction beat economists’ forecasts.

The Institute for Supply Management’s factory index rose in May to 42.8, less than the 50 level that signals growth, but above the 42.3 reading that economists had estimated. The reports had buoyed investor sentiment today until speculation of North Korea’s missile launch surfaced.

The communist country is preparing the rocket in the region of Anbyon, northeast of Pyongyang, Yonhap reported. The latest exercise comes eight days after North Korea conducted its second nuclear test in three years. The Kospi Index fell 0.6 percent last week.

Leadership Change

The Dong-A Ilbo newspaper separately reported today that North Korean leader Kim Jong Il had named his third son as his successor.

Shinhan Financial sank 2.3 percent to 31,900 won. LG Electronics Inc., the world’s third-largest maker of mobile phones, fell 1.3 percent to 117,500 won, erasing a climb of as much as 4.2 percent.

“Until now, the market hasn’t reacted much to North Korea’s missile tests, but, together with the leadership change, this launch carries a different weight,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion. “If the leadership handoff gets complicated, there’s a risk the state itself could fall into chaos.”

PetroChina, China’s largest oil producer, slumped 3.6 percent to HK$9.05, while Cnooc Ltd. China’s largest offshore oil explorer, dropped 1.6 percent to HK$10.92. Crude-oil futures in New York, which yesterday settled at their highest since Nov. 4, sank as much as 1.4 percent in after-hours trading.

‘Extraordinary Stimulus’

Oil climbed yesterday as the U.S. data added to signs the global economy is recovering. A Chinese purchasing manager’s index yesterday showed the country’s manufacturing industry expanded for a third month. Japan’s government last week raised its assessment of the economy for the first time in three years.

Honda gained 2.2 percent to 2,820 yen. Kia Motors Corp. added 1.6 percent to 12,400 won in Seoul. Sony climbed 4.3 percent to 2,690 yen. BHP Billiton Ltd., the world’s largest mining company, rose 2.7 percent to A$36.70 on optimism metals demand will increase.

“The data continues to improve everywhere because of the extraordinary policy stimulus,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State, which holds about $104 billion. “I’m just worried that the demand to meet all that production may not materialize, and that you get a significant relapse in the economic data over the second half of 2009.”

Bankruptcy Protection

The Group of 20 nations had pledged $2.1 trillion of spending as of April 15 to support growth, data compiled by Bloomberg show, helping drive the stock rally since March. MSCI’s Asian gauge climbed 12 percent in May, its third monthly advance and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds.

The rally drove the average valuation of companies on MSCI’s Asian index to 1.4 times the book value of assets on May 29, an increase of 17 percent from the end of 2008. Developing- nation stock funds attracted $12 billion of assets in the four weeks through May 27, according to EPFR Global, which tracks investment flows worldwide.

Honda and Kia also advanced as General Motors Corp.’s bankruptcy raised optimism Asian automakers will gain market share. GM, the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. yesterday.

Share Sales

ICBC dropped 4.1 percent to HK$4.90 in Hong Kong. Goldman Sachs sold 3.03 billion shares, or a 0.9 percent stake in the Chinese lender at HK$4.88 apiece each, according to a document e-mailed to fund managers today.

Parkson Retail slumped 6.7 percent to HK$11.50. A shareholder had offered 55 million shares at HK$11.71 to HK$12.07 apiece, according to an e-mail sent to investors by UBS AG, the sale’s arranger. Parkson said the shares were being sold by its controlling shareholder PRG Corp.

Neptune Orient jumped 9.8 percent to S$1.68. The company plans to raise S$1.44 billion ($1 billion) selling new shares to repay debt.

In Taipei, EVA Airways surged 6.9 percent to NT$9.76, while China Airlines Ltd. climbed 1.8 percent to NT$8.86. The carriers, Taiwan’s two biggest, won government permission to raise ticket surcharges by as much as 25 percent to offset higher fuel prices.

To contact the reporters responsible for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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Japanese Stocks Rise on U.S. Manufacturing; Shipping Lines Drop

By Jason Clenfield

June 2 (Bloomberg) -- Japanese shares rose after U.S. manufacturing figures added to signs the global recession is abating. Stocks pared gains on media reports North Korea is preparing to launch a medium-range missile.

Sony Corp., maker of the PlayStation 3 game machine, climbed 4.3 percent. Honda Motor Corp., the nation’s No. 2 carmaker, jumped 2.2 percent on optimism General Motors Corp.’s bankruptcy will allow Japanese carmakers to expand market share. Nippon Yusen KK, Japan’s No. 1 shipping line, lost 1.7 percent as investors speculated the shares have risen too fast.

The Nikkei 225 Stock Average climbed for a fifth day, adding 26.56, or 0.3 percent, to close at 9,704.31 in Tokyo, the highest since Oct. 7. The broader Topix index inched up 1.04, or 0.1 percent, to 913.56, with almost three shares advancing for every two that retreated.

“Markets around the world have been rising steadily from the middle of last week, and investors have just about exhausted their appetite for buying,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. “There’s concern shares are overbought.”

In the U.S., The Institute for Supply Management’s factory index rose in May to 42.8 from 40.1 the previous month. The result was less than the 50 level that signals growth, while economists estimated the gauge would gain to 42.3. A measure of new orders, a leading indicator of Japanese exports, signaled an expansion for the first time since September 2007.

Sony, Canon

Sony climbed 4.3 percent to 2,690 yen. Sharp Corp., Japan’s biggest maker of liquid-crystal display televisions, rose 1.2 percent to 1,100 yen. Canon Inc., which makes three quarters of its sales overseas, added 1 percent to 3,180 yen. Makers of electronics and cars were the biggest gainers among the Topix’s 33 industry groups.

GM, the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. yesterday with a plan to create a viable company that can compete in world markets. The Detroit-based automaker plans to sell unprofitable brands and close at least 11 factories before emerging as a new, smaller company in 60 to 90 days.

Honda rose 2.2 percent to 2,820 yen. Toyota gained 0.8 percent to 3850 yen. Mazda Motor Corp., which exports about 80 percent of its production, increased 3.2 percent to 256 yen.

‘Huge Opportunity’

“For Japanese automakers, GM’s collapse presents a huge opportunity to take market share,” said Fumiyuki Nakanishi , a strategist at SMBC Friend Securities Co. in Tokyo. “All the bad news on GM is out, and that’s a relief to the market.”

Stocks lost momentum after Yonhap News said North Korea is preparing to test another missile following six launches last week and the nation’s second detonation of a nuclear device. Leader Kim Jong Il picked his third son to succeed him, the Dong-A Ilbo newspaper said.

“Until now, the market hasn’t reacted much to North Korea’s missile tests, but, together with the leadership change, this launch carries a different weight,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion. “If the leadership handoff gets complicated there’s a risk the state itself could fall into chaos.”

Nippon Yusen lost 1.7 percent to 471 yen. Rival Mitsui O.S.K Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, dropped 2.9 percent to 698 yen. Both companies broke a four-day winning streak and were cut to “underperform” from “neutral” by Merrill Lynch & Co., the brokerage bought last year by Bank of America Corp.

Relative Strength

The relative-strength index for a gauge of Japanese shipping stocks yesterday exceeded the 70 threshold some traders use as a sign to sell. The shipping index, which has surged 18 percent in May, was the second-biggest loser among Topix groups today.

“Shipping shares have really exploded recently, so there’s a feeling they’ve overheated,” said Mitsubishi UFJ’s Ishigane.

Nomura Real Estate Holdings Inc. sank 4.8 percent to 1,585 yen after the developer said it plans to raise as much as 64.1 billion yen ($665 million) from the sale of new shares. Sony Financial Holdings Inc. plummeted by a record 14 percent to 241,400 yen after the Sony Corp. subsidiary said the value of its life insurance business fell by more than half last fiscal year.

To contact the reporter responsible for this story: Jason Clenfield at in Tokyo or jclenfield@bloomberg.net.

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Barclays Abu Dhabi Holders to Sell $6.8 Billion Stake

By Ben Livesey and Malcolm Scott

June 2 (Bloomberg) -- Barclays Plc’s Abu Dhabi investors plan to sell 4.12 billion pounds ($6.8 billion) of shares in the bank, shedding a stake they bought last year as the U.K.’s third-biggest lender sought to avoid a government bailout.

PCP Gulf Invest 1 Ltd., owned by the Abu Dhabi-based International Petroleum Investment Co., hired Credit Suisse Group AG to sell mandatory convertible notes, it said in an e- mailed statement. The shares are likely to be priced at about 265 pence each, 16 percent less than yesterday’s closing price, according to people close to the situation.

Abu Dhabi became one of the bank’s biggest investors in October, when Barclays Chief Executive Officer John Varley tapped sovereign wealth funds in the Mideast as he tried to avoid giving a stake to the government. Barclays has gained 54 percent since then as the bank reported a 2008 profit, shunned the U.K.’s asset insurance program and agreed to sell assets.

“The guy has made a lot of money from the rise in the share price and is now cashing in,” said Simon Maughan at MF Global Securities Ltd, who has a “buy” rating on Barclays. “If you are selling about 12 percent of the capital base then you are going to have to take a discount on that and you would expect the share price to reflect that.”

Barclays fell 14 percent to 272 pence as of 11:32 a.m. in London trading, after dropping as low as 264.75 pence.

The notes IPIC is selling amount to 1.3 billion shares, Barclays said in a separate statement. The fund continues to hold warrants for 758.4 million Barclays shares that can be exercised at 197.775 pence a share.

Bypassing Shareholders

London-based Barclays bypassed existing shareholders last year when it raised money to comply with new capital requirements. It agreed Oct. 31 to sell 2.8 billion pounds of convertible stock and 3 billion pounds of preferred stock to Sheikh Mansour Bin Zayed Al Nahyan, a member of the Royal Family of Abu Dhabi, Qatar Holding LLC and Challenger Universal Ltd., an investment vehicle set up by Qatar.

Varley, 53, said at the time that the investment would help Barclays create a “strong alignment with regions which have growing economic power.”

“It’s a bit embarrassing as they were meant to be strategic anchor investors,” Leigh Goodwin, an analyst at Fox- Pitt Kelton Ltd. in London, said of today’s sale. Goodwin has an “outperform” rating on the stock. “Nothing fundamentally has changed, and it is a buying opportunity,” he added.

Shares Surge

Barclays shares have surged six-fold since dropping to a low of 51.2 pence on Jan. 23 as concern ebbed that the bank would need to raise more money. The five-member FTSE 350 Banks Index gained 53 percent in the same period.

“There is little chance of Barclays continuing their rally,” said Danny Clarke, a Liverpool-based analyst at Shore Capital Group Plc, who has a “hold” rating on Barclays. “The shares were trading toward the top end of any analysis in terms of what they were going to be making in profit in the medium term.”

The KBW Bank Index of 24 U.S. financial stocks has doubled since dropping to a March 6 low on signs of a possible recovery in the U.S. economy. JPMorgan Chase & Co. and American Express Co. are among the financial institutions taking advantage of the rally to sell shares and raise funds to pay back money received from the government’s Troubled Asset Relief Program.

Australia & New Zealand Banking Group Ltd. last week sold A$2.5 billion ($2 billion) of stock to fund a bid for Royal Bank of Scotland Group Plc’s Asian assets. Sumitomo Mitsui Financial Group Inc. may sell as much as 834 billion yen ($8.7 billion), Japan’s second-biggest bank said May 28.

‘Reshuffling’

IPIC said it was selling the Barclays stake as it focuses on its long-term strategy of investing in energy assets. That mirrors a shift away from financial stocks among sovereign wealth funds, including Temasek Holdings Pte, as commodity prices recover from last year’s rout.

Commodities prices are showing signs of a rebound, less than a year after the Reuters/Jefferies CRB Index of 19 raw materials began its plunge from a July 3 record, dropping as much as 58 percent by Feb. 24 as the global economy entered its first recession since the Great Depression. The index jumped 14 percent in May, the most since July 1974.

“They’re reshuffling a bit, putting money into areas where, if indeed this is the beginning of the end of the great recession, there could be a recovery in demand for resources,” said Song Seng Wun, an economist at CIMB-GK Securities Pte in Singapore.

‘Good Money’

Temasek, Singapore’s state-owned investment company, yesterday agreed to buy a stake in Olam International Ltd., its first foray into commodities since naming former head of BHP Billiton Ltd. Charles “Chip” Goodyear as chief executive officer-designate in February.

China Investment Corp. and Qatar Investment Authority said in March they would buy commodity assets after values dropped.

PCP Gulf Invest 2, another IPIC subsidiary, is considering selling its 14 percent step-up callable reserve capital instruments in Barclays, IPIC said.

“They have made good money on the holding in a short period of time so you can’t blame them for taking the profit,” said Simon Willis, an analyst at NCB Stockbrokers Ltd. in London who has a “reduce” rating on the stock.

To contact the reporters on this story: Malcolm Scott in Sydney at mscott23@bloomberg.netBen Livesey in London at blivesey@bloomberg.net

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Russian Rally to Power Through ‘Fear Factor,’ Jennings Says

By Denis Maternovsky and William Mauldin

June 2 (Bloomberg) -- Russia’s biggest stock rally in a decade will brush aside any temporary setbacks because valuations are still cheap relative to other emerging markets, Renaissance Group Chief Executive Officer Stephen Jennings said.

“We can see incredible short-term volatility, but I think in a year’s time for Russia it’s going to be like this crisis never happened,” Jennings said in an interview with Bloomberg Television in Moscow yesterday. “It is incredibly, incredibly uncertain, short term. One piece of bad data and the fear factor can go through the roof again.”

The 50-stock RTS Index has advanced 85 percent this year, making it the world’s best-performing large equity market, after a 72 percent decline in 2008, the most since the country defaulted in 1998. Even after the gains, the MSCI Russia Index is trading at six times earnings, less than half the ratio in the other so-called BRIC countries: Brazil, India and China.

Jennings, a New Zealand native who founded Moscow-based investment bank Renaissance Capital in 1995, said a prolonged economic slump in the U.S. and Europe will encourage investors to seek greater returns in Russia and the other BRICs.

“As the U.S. stabilizes and people realize how low growth is going to be in the U.S. and Europe, the strategic investor focus on the emerging markets will become really pronounced,” said Jennings, 48. “I think this process will unfold in the next six months.”

Prokhorov, VTB

Russia’s economy, led by oil and gas exports, will probably return to growth in the third quarter, after contracting in the first two quarters for the first time in more than a decade, UBS AG said in a research note yesterday. Gross domestic product may shrink as much as 8 percent this year, after a decade of average annual growth of 7 percent, Economy Minister Elvira Nabiullina said last month.

Jennings in September sold 50 percent minus one share of Renaissance Capital to Mikhail Prokhorov, now Russia’s richest man, for $500 million in cash as the credit squeeze deepened. That was less than a quarter of what state-run lender VTB Group offered for the bank in 2007, according to the Vedomosti newspaper. Renaissance Group also has units for consumer lending, asset management and merchant banking.

The dollar-denominated RTS yesterday jumped 7.3 percent to 1,167.42, the biggest daily gain in three months. The index is still 53 percent below its 2,487.92 high reached May 19, 2008.

Renaissance sees “fantastic organic growth opportunities” after it fired staff and cut costs 60 percent, not including bonuses, Jennings said.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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SocGen Says Earnings Weakness Means VIX Won’t Fall for a Year

By Gareth Gore

June 2 (Bloomberg) -- The cost of using options to protect against a decline in stock prices may take more than a year to revert to pre-crisis levels as earnings weakness and the economic recession continue, according to analysts at Societe Generale.

Recent declines in options prices may be more to do with a lack of interest in buying the contracts due to the exit of many hedge fund investors rather than a “strong selling pressure,” the analysts wrote in a note to clients, adding that options markets currently provide “poor context.”

“The final leg of the drop might need a bit more than one year to be completed,” they wrote in the report. “We are entering into a transition period where volatility may realize lower but the economic context and corporate figures are still far from being supportive.”

The VIX, as the Chicago Board Options Exchange Volatility Index is known, last month dropped to its lowest since Lehman Brothers Holdings Inc. filed for bankruptcy. The gauge, which measures the price paid for options on the Standard & Poor’s 500 Index, has fallen 63 percent since its November high.

Comparable bear markets indicate that realized volatility, which measures stock swings, tends to take an average of two years to revert to pre-crisis levels, the brokerage said. In addition, markets may remain “volatile” until 2010 as interest rate cuts take time to stimulate the economy, it added.

‘No Longer Active’

Declines in option prices may not signal that the cost of insurance will continue to fall since the exit of large investors from the equity derivatives markets and a “wait-and- see attitude” from asset managers may have distorted the real buying flow of options, accord to the French bank.

“Many hedge funds are no longer active in the equity derivatives market, either because they have been burnt, are underinvested or now focus on other asset classes like credit,” the Paris, New York and Hong Kong-based analysts said. “This poor context reduces liquidity on option markets.”

Put options give the buyer the right to sell shares at a pre-agreed price on or before a specific date. Calls convey the right to buy. By selling an option, the investor is taking a bet the contract won’t be exercised, allowing them to keep as profit the price paid for the call or put.

Options are derivatives, or securities that derive their value from an underlying asset, and can be used to protect against a decline or to speculate on the asset’s future value.

To contact the reporter on this story: Gareth Gore in Madrid ggore1@bloomberg.net.

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U.K. Stocks Retreat, Led by Barclays; Shell Drops on Oil Price

By Sarah Jones

June 2 (Bloomberg) -- U.K. stocks fell, with the FTSE 100 Index dropping from the highest level in almost five months, as Barclays Plc’s Abu Dhabi investors sell 4.12 billion pounds ($6.8 billion) of the lender’s shares.

Barclays, the U.K.’s third-largest bank, sank 14 percent. HSBC Holdings Plc dropped 2.2 percent as Saad Group, the company owned by Maan al-Sanea, the Saudi billionaire who holds a stake in Europe’s biggest bank, said it is restructuring debts because of tighter credit markets. Tullow Oil Plc and Royal Dutch Shell Plc led energy companies lower after crude oil fell from the highest in eight months.

The FTSE 100 lost 51.39, or 1.1 percent, to 4,454.80 at 10:02 a.m. in London, erasing some of yesterday’s 2 percent rally. The FTSE All-Share Index declined 1 percent. Ireland’s ISEQ Index gained 3.6 percent after the market was closed yesterday for a public holiday.

“There is really only one story in London this morning and that is the divestment of Barclays’ shares by Abu Dubai,” said Manus Cranny, senior market analyst at MF Global Spreads in London. “Today’s market action is a pause for thought. We have had a fantastic run and I think fundamentals are struggling to validate that run.”

U.K. stocks rallied yesterday after data showed Chinese manufacturing expanded for a third month, sending a gauge of mining shares to an eight-month high. The FTSE 100 has rebounded 27 percent from this year’s low on March 3 amid growing optimism the worst of the recession may be over.

U.K. mortgage approvals rose more than economists forecast in April to the highest level in a year, according to data released today from the Bank of England, underpinning demand for homes as the property-market slump shows signs of easing.

Stake

Barclays lost 14 percent to 272.75 pence. PCP Gulf Invest 1 Ltd., owned by the Abu Dhabi-based International Petroleum Investment Co., is sheding a stake in the lender that it bought last year.

Abu Dhabi hired Credit Suisse Group AG to sell mandatory convertible notes, which amount to about 1.3 billion shares. Credit Suisse is offering the shares for 260 to 270 pence each, according to a person familiar with the sale.

HSBC fell 2.2 percent to 540 pence. Saad Group said it is planning an “orderly restructuring” of its debt after it was affected by a “short-term liquidity squeeze.”

Saudi Arabia’s central bank ordered the country’s banks to freeze the accounts of Maan al-Sanea, people familiar with the instructions said on May 31.

Oil Retreats

Tullow Oil, the U.K. explorer in Africa, fell 1.9 percent to 1,025 pence. Crude oil retreated from a seven-month high in New York on signs OPEC’s output is climbing and as traders who bet on rising prices sold futures to lock in gains.

Royal Dutch Shell, Europe’s biggest oil company, declined 1.3 percent to 1,666 pence. BG Group Plc, the U.K.’s third- largest natural-gas producer, retreated 1.6 percent to 1,138 pence.

A measure of energy companies yesterday climbed to the highest since January as crude oil jumped 3.6 percent after the U.S. and China reported increases in manufacturing activity.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

Kingfisher Plc (KGF LN) increased 13.2 pence, or 7.2 percent, to 197. Europe’s largest home-improvement retailer said first-quarter profit rose more than expected after warmer weather and store refurbishments spurred sales at its U.K. B&Q chain.

Earnings before interest and tax climbed 39 percent to 128 million pounds, beating the 94 million-pound consensus estimate compiled by Kingfisher.

Ryanair Holdings Plc (RYA ID) dropped 23 cents, or 6.3 percent, to 3.40. Europe’s largest discount carrier reported its first annual loss as fuel bill soared and the airline further wrote down the value of a stake in Irish competitor Aer Lingus Plc.

The net loss was 169 million euros ($239 million), missing the 70 million-euro median estimate by seven analysts surveyed by Bloomberg.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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European Stocks Fluctuate; Barclays Declines, Volkswagen Gains

By Adam Haigh

June 2 (Bloomberg) -- European stocks fluctuated after rising to the highest level since November as gains by automakers offset concern a three-month rally has outpaced the expectations for earnings and economic growth.

Barclays Plc sank 14 percent after the bank’s Abu Dhabi investors said they will sell 4.12 billion pounds ($6.8 billion) of shares in the U.K. lender. Ryanair Holdings Plc, Europe’s largest discount carrier, slid 3.6 percent after reporting its first annual loss. Volkswagen AG led European carmakers higher after Porsche SE said its aim to integrate with the company is “the best industrial solution for all sides.”

The Dow Jones Stoxx 600 Index slipped 0.1 percent to 214.05 at 11:25 a.m. in London, having swung between gains and losses at least six times. The regional gauge yesterday climbed to 25.4 times the earnings of its companies, the highest since March 2004, amid optimism that the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.

“Markets are taking any bullish or less negative data and just extrapolating that,” said Gregor Smith, a London-based fund manager at Daiwa Asset Management, who helps oversee $1 billion. “The recovery could be long and slow.”

Europe’s unemployment rate rose to the highest in almost 10 years in April, the European Union statistics office in Luxembourg said today. Unemployment in the 16-member euro region increased to 9.2 percent from 8.9 percent in March, the highest since September 1999.

Asia Stocks

The MSCI Asia Pacific Index climbed 0.3 percent as U.S. reports on personal income, manufacturing and construction added to evidence the worst of the economic contraction is over.

Standard & Poor’s 500 Index futures fluctuated between gains and losses after the benchmark index for U.S. equities closed at a seven-month high yesterday.

Barclays slumped 14 percent to 271 pence. PCP Gulf Invest 1 Ltd., owned by the Abu Dhabi-based International Petroleum Investment Company, said it hired Credit Suisse Group AG to sell mandatory convertible notes. The notes amount to 1.3 billion shares, Barclays said.

Piraeus Bank SA, Greece’s fourth-biggest lender, lost 4.9 percent to 8.08 euros after selling a 3.95 percent stake to investors for 102 million euros ($144 million). Piraeus sold about 13.3 million treasury shares at 7.7 euros each.

JPMorgan, American Express

JPMorgan Chase & Co. and American Express Co., told by regulators last month they don’t need fresh capital, will raise $5.5 billion after the Federal Reserve said any firm seeking to repay the U.S. rescue funds must first tap equity markets. JPMorgan and American Express were little changed in Germany.

Ryanair decreased 3.6 percent to 3.50 euros after reporting a net loss of 169 million euros in the year ended March 31. That was wider than the 70 million-euro median estimate by seven analysts surveyed by Bloomberg.

Volkswagen surged 10 percent to 253.13 euros, leading a gauge of automakers on the Stoxx 600 3.7 percent higher.

Porsche, which holds a majority stake in Volkswagen, said it knows its obligations toward Europe’s largest carmaker and will fulfill them. Porsche said it has secured 10 billion euros of a 12.5 billion-euro credit line that it’s seeking from banks.

Kingfisher Plc climbed 5.3 percent to 193.6 pence. Europe’s largest home-improvement retailer reported first-quarter profit that beat analysts’ estimates after warmer weather and store refurbishments spurred sales at its U.K. B&Q chain.

The number of Americans signing contracts to purchase previously owned homes may have risen in April for the fourth time in five months as lower prices attracted buyers, economists said before a report from the National Association of Realtors at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from a 2 percent drop to a 4 percent gain.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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JPMorgan, American Express Will Tap Stock Markets to Repay TARP

By Elizabeth Hester

June 2 (Bloomberg) -- JPMorgan Chase & Co. and American Express Co., told by regulators last month they don’t need fresh capital, will raise $5.5 billion after the Federal Reserve said any firm seeking to repay the U.S. rescue funds must first tap equity markets.

JPMorgan, the second-largest U.S. bank by deposits, will sell $5 billion of common stock, and American Express, the biggest U.S. credit-card company by purchases, plans to raise $500 million, the companies said yesterday in separate statements after the Fed issued its rule.

The companies, which got aid from the Troubled Asset Relief Program, were among nine of 19 financial firms subjected to U.S. stress tests that were deemed to have no need for additional capital. JPMorgan said the amount was set by regulators as a way to show equity markets were open to them.

“They’re the government; they can change the rules,” said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia. “That’s the beauty of being the government.”

JPMorgan, which like AmEx is based in New York, hasn’t yet won approval to repay the $25 billion in U.S. rescue funds. Chief Executive Officer Jamie Dimon said on a conference call yesterday he would be “very surprised” if they weren’t able to refund the government in full by the end of this month.

JPMorgan expects to price its stock sale before the market opens today. Unlike rivals Morgan Stanley and Goldman Sachs Group Inc., JPMorgan hasn’t sold shares to the public this year.

Dimon, 53, who called the TARP money “a scarlet letter” and “the TARP baby” in April, made it clear that he was ready to get out from underneath government control.

‘Dear Timmy’

“Dear Timmy, we are happy to be able to pay back the $25 billion you lent us,” Dimon read yesterday from a mock letter to U.S. Treasury Secretary Timothy Geithner at the 31st Annual NYU International Hospitality Industry Investment Conference. “We hope you enjoyed the experience as much as we did.”

Dimon said on the call that repaying the U.S. should lift the bank from under government restrictions. He didn’t know how the firm would resolve the warrants sold to Treasury, and said he hoped to settle them “sooner rather than later.” The U.S. should cancel 50 percent “out of fairness,” Dimon said.

The government received warrants -- the right to buy shares at a set amount -- with almost all capital injection made from TARP. The total value of the government’s warrants is about $5 billion, according to Treasury calculations.

JPMorgan, Goldman Sachs and Morgan Stanley have applied to refund a combined $45 billion of government investments, a step that would mark the biggest reimbursement to taxpayers since the $700 billion bank bailout program began in October.

AmEx Partial Refund

AmEx will use money raised in the stock sale to partially repurchase $3.4 billion of preferred shares from the government. The company issued the shares to the Treasury’s Capital Purchase Program, which is part of the TARP rescue plan. The sale may be increased by $75 million if demand is strong.

“We’ve always viewed the Capital Purchase Program as a temporary program,” said Chief Executive Officer Kenneth I.Chenault in the statement.

An announcement on the “initial set” of redemption approvals will come during the week of June 8, the central bank said.

JPMorgan stock, up 15 percent this year through yesterday, dropped 2.1 percent to $36.11 in New York Stock Exchange composite trading. AmEx shares, up 40 percent on the year, rose 4.6 percent to $25.99. Both the company statements and the Fed’s statement were released after the close of normal trading.

The KBW Bank Index has doubled since the March 6 low on signs of possible recovery in the U.S. economy. Still, Fed officials forecast that unemployment will linger at high rates of just above 9 percent through the end of next year, showing little improvement from the April rate of 8.9 percent.

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

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Bankruptcy Pays 18% Stock Return in Week-Long Trade as GM Files

By Eric Martin and Lynn Thomasson

June 2 (Bloomberg) -- General Motors Corp., the largest U.S. automaker, may prove a profitable bet for stock traders who sell their shares within a week of the company’s bankruptcy filing, if history is any guide.

Stocks of the 20 largest U.S. companies that declared bankruptcy since 1980 rose an average 18 percent one week after filing for court protection from creditors, according to data compiled by Bloomberg and BankruptcyData.com, a Boston-based research firm. The increase diminished to 3.1 percent over a month and turned into a 15 percent loss within three months as the shares began to be removed from exchanges, the data show.

The gains have little to do with expectations for a recovery. Instead, the shares rally as investors who had wagered on a decline buy the stock back to complete their trades, said John Carey, a fund manager at Pioneer Investment Management. Advances also reflect speculation a company will return money after paying creditors.

“Companies spiraling downward toward bankruptcy are often sold short as people realize the dire straits they are in,” said Carey, who helps oversee $200 billion in Boston. “The likelihood is the stock will become worthless and people want to cover their shorts.”

In a short sale, investors borrow shares with the intention of buying the stock back at a lower price and returning it to the lender. About 117 million GM shares were sold short as of May 15, according to New York Stock Exchange data compiled by Bloomberg.

GM’s Drop

GM, which has tumbled 77 percent in 2009, will be removed from the Dow Jones Industrial Average on June 8 and is being suspended on the NYSE. The Detroit-based automaker filed the fourth-largest bankruptcy in U.S. history after Lehman Brothers Holdings Inc. and Seattle-based Washington Mutual Inc. in September and WorldCom Inc. in 2002.

The U.S. plans to convert much of $50 billion in loans to the 100-year-old automaker into a 60 percent stake in a new entity. A worker health-care fund will get 17.5 percent, the Canadian government will receive 11.7 percent and bondholders and other unsecured creditors would be eligible for 10 percent plus warrants to buy another 15 percent.

A record 342 million GM shares changed hands yesterday, more than half the number available for trading. The stock, which rose as high as $93.63 in April 2000, closed at 75 cents yesterday, unchanged.

General Growth

General Growth Properties Inc., the Chicago-based mall owner that filed the biggest real-estate bankruptcy in U.S. history, has quadrupled since seeking protection from creditors on April 16. William Ackman of Pershing Square Capital Management LP, the New York-based hedge fund that holds about 25 percent, said the stock will rebound. General Growth’s business is “doing just fine” and the stock has “huge potential reward and generally limited risk,” Ackman said in a May 27 presentation in New York.

Lehman gained 2.4 percent in the four days after the New York-based securities firm filed the largest bankruptcy ever, with debt of $613 billion. The company sold its North American business to London-based Barclays Plc and its operations in Asia, the Middle East and Europe to Nomura Holdings Inc. in Tokyo.

WorldCom, once the second-largest U.S. long-distance phone provider, soared 75 percent in the week after its filing on July 21, 2002, on speculation the company would emerge stronger from its reorganization. WorldCom changed its name to MCI Inc. and moved from Clinton, Mississippi, to Ashburn, Virginia. New York- based Verizon Communications Inc. acquired MCI for $8.44 billion in January 2006.

Removed From Exchanges

Shares of bankrupt companies are usually removed from exchanges and canceled after the court proceedings are completed, according to Jerome Dodson, who oversees $2.2 billion at Parnassus Investments in San Francisco. Enron Corp. sank below $1 four days before entering Chapter 11 in December 2001, and kept trading for three more years, according to data compiled by Bloomberg. Stock of the Houston-based energy company eventually went to zero.

“I’m not saying you can’t make money, but it’s not investing,” said Dan Greenhaus, an equity analyst at Miller Tabak & Co. in New York. “It’s the hope of short-term gains. Nobody is buying this and holding.”

To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.

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Data Domain, EMC, JPMorgan, MasTec, Pfizer: U.S. Equity Preview

By Lu Wang

June 2 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Data Domain Inc. (DDUP US): EMC Corp. (EMC US), the world’s biggest maker of storage computers, made an unsolicited offer of $30 a share for Data Domain, setting up a potential bidding war with NetApp Inc., which agreed to buy the company for $25 a share two weeks ago.

DeVry Inc. (DV US): The provider of technical and college degrees will replace General Motors Corp. (GM US) in the Standard & Poor’s 500 Index, S&P said in a statement.

JPMorgan Chase & Co. (JPM US): The second-largest U.S. bank by deposits said it will sell $5 billion of stock to comply with a government requirement to repay its $25 billion capital infusion from taxpayers.

MasTec Inc. (MTZ US): The installer of DirecTV Group Inc. (DTV US) systems and other networks said it’s selling $100 million of convertible notes and Jon Wanzek, one of the company’s biggest shareholders is offering 4 million MasTec shares.

Pfizer Inc. (PFE US): The world’s largest drugmaker said it discontinued a phase 3 study evaluating Suntent plus paclitaxel for first-line treatment of advanced breast cancer, after the primary endpoint was not met.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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