Japan Stocks Advance on Resources; Shippers Jump on Ratings

By Masaki Kondo

June 10 (Bloomberg) -- Japanese stocks rose, led by resource producers as oil and metal prices jumped, outweighing a bigger-than-expected drop in the nation’s machinery orders.

Mitsubishi Corp., which gets more than half its profit from commodities, increased 4.5 percent as crude rose a second day and copper gained the most in a week. Japan Petroleum Exploration Co., the nation’s No. 2 oil explorer, jumped 5 percent. Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd. climbed at least 3.7 percent after analysts boosted their ratings.

“Capital spending is still low and the job market is harsh, but investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees about $7.7 billion. “The recovery in the commodity market and ample liquidity with low interest rates are spurring investor appetite for risk.”

The Nikkei 225 Stock Average added 141.51, or 1.5 percent, to 9,928.33 as of 12:38 p.m. in Tokyo, rebounding from yesterday’s 0.8 percent decline. The broader Topix index rose 14.93, or 1.6 percent, to 933.17, with more than four stocks advancing for each that slumped.

Companies on the Topix trade at 43.3 times their estimated net income for this fiscal year, the highest level among benchmark indexes in the world’s five biggest stock markets, according to Bloomberg data. The gauge has risen 6.9 percent this year through yesterday as central banks in Japan, the U.S. and Europe cut key interest rates and pumped money into the economy to curb the global credit crisis.

Machinery Orders

Japan’s machinery orders, which indicate capital investment in the next three to six months, fell 5.4 percent in April from the previous month, a government report released this morning showed. Economists had estimated a 0.6 percent drop from March.

Mitsubishi, the nation’s biggest trading company by value, surged 4.5 percent to 1,961 yen. Japan Petroleum leapt 5 percent to 5,640 yen, while metal producer Sumitomo Metal Mining Co. added 6.3 percent.

Dowa Holdings Co., Japan’s No. 2 zinc smelter, soared 7.1 percent, breaking a four-day losing streak. The Nikkei newspaper said its metal business may post a profit in the year to March 2010 as the company cuts costs, though Dowa is projecting a loss.

Crude rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement in seven months, and extended its gain today. A gauge of six metals jumped 3.8 percent in London. Copper surging 5 percent in New York, the most since June 1.

Shippers Advance

A gauge of maritime transport companies rebounded from a four-day retreat after Credit Suisse Group AG raised Japan’s three-biggest shippers to “outperform” from “neutral” on expectations earnings will bottom this year. Deutsche Bank AG also boosted ratings on Nippon Yusen and Mitsui O.S.K.

Nippon Yusen, Japan’s top shipping line by sales, rose 3.7 percent to 453 yen, while closest rival Mitsui O.S.K. added 5 percent to 688 yen. Kawasaki Kisen Kaisha Ltd., the No. 3, jumped 5.9 percent to 447 yen, also benefiting from comments by President Hiroyuki Maekawa that the company may cut more costs.

Nikkei futures expiring in June added 1.6 percent to 9,940 in Osaka and gained 1.5 percent to 9,930 in Singapore.

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

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NYSE Comments May End Six Months of Deutsche Boerse Speculation

By Edgar Ortega

June 10 (Bloomberg) -- NYSE Euronext Chief Executive Officer Duncan Niederauer squashed six months of speculation that he was considering a merger with Deutsche Boerse AG.

The world’s largest owner of stock exchanges isn’t in negotiations with the Frankfurt-based Deutsche Boerse and has no plans to enter them, Reuters reported, citing remarks yesterday by Niederauer at the Japan Society in New York. Richard Adamonis, a spokesman for the exchange, declined to comment.

NYSE Euronext, owner of the New York Stock Exchange and four bourses in Europe, held preliminary talks with Deutsche Boerse last year, people familiar with the matter said at the time. NYSE Euronext shares rallied 14 percent April 23 and jumped 23 percent on Dec. 8 after reports in German magazines raised the prospect of a deal.

Niederauer told investors last week that he is focused on squeezing more profit from NYSE Group Inc.’s $12.4 billion purchase of Paris-based Euronext NV by overhauling trading systems on both sides of the Atlantic to reduce costs. Niederauer said earlier this year that consolidation among exchanges may slow as companies integrate operations from a wave of deals since 2006 valued at about $54 billion, according to data compiled by Bloomberg.

Deutsche Boerse, the second-largest exchange operator, is also seeking to cut costs to sustain growth after the Dow Jones Stoxx 600 Index lost 46 percent in 2008, posting its steepest yearly drop in more than three decades. CEO Reto Francioni told shareholders last month that expanding without an acquisition “remains the highest priority,” and declined to comment on “rumors” about merger talks with NYSE Euronext.

Yesterday, NYSE Euronext shares rose $1.21 to $30.68 in New York trading, while Deutsche Boerse declined 1.80 euros to 59 euros in Frankfurt. NYSE Euronext has a market value of $7.98 billion, less than half Deutsche Boerse’s $16.2 billion, according to Bloomberg data.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

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Barnes, LaSalle, Oxford, Shuffle Master: U.S. Equity Preview

By Lu Wang

June 10 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Barnes Group Inc. (B US): The maker of components for automobiles and aircraft withdrew its full-year earnings forecast, citing “increased uncertainty in the transportation sector.”

ITT Corp. (ITT US): The maker of “jammers” that prevent remotely triggered roadside bombs from detonating won a U.S. Army contract valued at $363.1 million for radio systems.

LaSalle Hotel Properties (LHO US): The real estate investment trust focused on luxury and upscale full-service hotels said it plans to sell 6.5 million common shares.

Oxford Industries Inc. (OXM US): The maker of Tommy Bahama clothing reported earnings of 42 cents a share in the first quarter, beating the average analyst estimate by 71 percent.

Shuffle Master Inc. (SHFL US): The maker of casino-chip sorters and card shufflers reported second-quarter profit excluding some items of 10 cents a share, more than double the average analyst estimate.

Stone Energy Corp. (SGY US): The independent oil and gas company said it’s offering 6 million shares, raising money to pay back debt.

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

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Asian Stocks Climb on Commodity Prices, Australian Confidence

By Patrick Rial and Masaki Kondo

June 10 (Bloomberg) -- Asian stocks rose for the first time in three days, as higher metal and oil prices boosted commodity companies and the biggest gain in Australian consumer confidence in 22 years added to evidence the global recession is easing.

Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, jumped 9.7 percent, while Mitsubishi Corp., a trading company that gets more than half its profit from commodities, climbed 5.2 percent in Tokyo. David Jones Ltd., Australia’s No. 2 department store chain, surged 5.4 percent as a consumer sentiment index showed the country’s optimists outnumbered pessimists for the first time since January 2008.

“Investors are focusing more on the possibility that the economy is emerging from its worst period,” said Yoshihiro Ito, senior strategist at Tokyo-based Okasan Asset Management Co., which oversees the equivalent of $7.7 billion. “Improved sentiment is resulting in this resilient market.”

The MSCI Asia Pacific Index gained 2.1 percent to 104.25 as of 1:48 p.m. in Tokyo, following a two-day, 1.2 percent drop. The gauge has surged 48 percent from a five-year low on March 9 as equities from Mumbai to Shanghai rallied on rising confidence the worst of the global recession is over.

Japan’s Nikkei 225 Stock Average rose 1.8 percent as Mitsui O.S.K. Lines Ltd., Japan’s second-biggest bulk shipper, surged 5.3 percent after brokerages recommended buying the shares. Taiwan Semiconductor Manufacturing Co. climbed 2.7 percent after saying the worst is over for the global chip industry.

South Korea’s retailers rallied after Shinsegae Co. reported higher sales. Stocks climbed in all Asian markets except Vietnam. China’s CSI 300 Index rose 0.5 percent to the highest since Aug. 1 as a report showed consumer prices fell for a fourth month, making it easier for the government to keep interest rates low.

Higher Valuations

Futures on the Standard & Poor’s 500 Index rose 0.4 percent. Most U.S. stocks rose yesterday, lifting the S&P 500 up by 0.4 percent as a better-than-estimated forecast at Texas Instruments Inc. spurred gains in technology companies.

The three-month stock rally has driven the average valuations of companies on the MSCI Asia Pacific Index to 1.5 times the book value of assets, the highest since Sept. 26. Analyst profit forecasts have been increasing since the end of March, according to data compiled by Bloomberg. Nomura Holdings Inc. yesterday narrowed its estimate for how much profit at Japan’s non-financial companies will decline in fiscal 2009.

Fortescue soared 9.7 percent to A$3.41 in Sydney. Mitsubishi Corp. added 5.2 percent to 1,974 yen. BHP Billiton Ltd., the world’s largest mining company and Australia’s top oil producer, jumped 3.3 percent to A$37.70.

Best Performers

Crude oil rose 2.8 percent to $70.01 a barrel yesterday in New York, the highest settlement since Nov. 4. A gauge of six metals jumped 3.8 percent in London, the most since June 1. Copper surged 5 percent in New York.

Measures of energy and material stocks have been the top performers among the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation demand for commodities will increase as global growth picks up.

Signs of a global recovery have increased in recent weeks, fueling the stock rally since March. Australia unexpectedly reported growth in its economy last week, while Japan’s government two weeks ago raised its view of the economy for the first time in three years.

The International Monetary Fund said in April it expects Asia’s developing markets to grow 4.8 percent in 2009, compared with a global contraction of 1.3 percent.

Optimists Increase

An Australian consumer sentiment index compiled by Westpac Banking Corp. and the Melbourne Institute that was released today showed an increase of 12.7 percent in June from the previous month to 100.1 points. It’s the first time since January 2008 that the index was above 100, indicating optimists outnumber pessimists.

David Jones climbed 5.4 percent to A$4.11. Commonwealth Bank of Australia, the nation’s second-biggest lender, added 2 percent to A$37.73. Harvey Norman Holdings Ltd., Australia’s biggest electronics retailer, climbed 2 percent to A$3.09.

Mitsui O.S.K. rallied 5.3 percent to 690 after Osuke Itazaki, an analyst at Credit Suisse Group AG and Deutsche Bank AG’s Seigo Ando recommended investors buy the shares.

“Any short-term reduction in share prices is an investment opportunity,” Itazaki wrote in a report. “If the March 2010 fiscal year marks the bottom for earnings, then there is a strong possibility of an upturn in the basic share price trend.”

Shippers Gain

Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, jumped 5.9 percent to 447 yen, while Nippon Yusen K.K., the largest, rose 4.1 percent to 455 yen, after Itazaki gave “outperform” ratings to both.

In Taipei, Taiwan Semiconductor, the world’s largest custom-chip maker, climbed 2.9 percent to NT$57.70 as comments made by Chairman Morris Chang at the company’s annual shareholder meeting fueled optimism industry demand will pick up.

United Microelectronics Corp., the world’s second-biggest maker of custom semiconductors, gained 3.6 percent to NT$12.85. Samsung Electronics Co., the world’s largest computer memory chipmaker, jumped 3.5 percent to 585,000 won.

Shinsegae, which runs South Korea’s biggest discount-store chain, climbed 6.9 percent to 472,500 won after saying sales in May rose 20 percent. Lotte Shopping Co., South Korea’s biggest department-store chain, added 6.4 percent to 251,000 won.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Currency Trading Summary

Daily Forex Fundamentals | Written by Easy Forex | Jun 10 09 01:35 GMT |

U.S. Dollar Trading (USD) resumed weakening after a brief period of strengthening as speculation of future rate hikes in the US were dampened. In a survey of the major US bond traders all 16/16 thought the US would not raise rates this year. USD/JPY was lower even as stocks rallied on banking and mining stocks. Oil broke and closed above $70 a barrel. Crude Oil closed up $1.92 to finish the day at $70.01. In US share markets, the Nasdaq was up 17 points or 0.96% and the Dow Jones was down 1 points or -0.02%. Looking ahead, April Trade Balance forecast at -29BN vs. -28Bn previously. The Euro (EUR) regained above 1.4000 after Goldman Sachs put out a buy recommendation and the USD weakened after traders pared back bets of the US Fed raising rates this year. German Industrial Production was down -1.9% in April vs. 0.0% forecast. Overall the EUR/USD traded with a low of 1.4004 and a high of 1.3804 before closing at 1.3910. Looking ahead, May German CPI is forecast at -0.1%. The Japanese Yen (JPY) strengthened against the USD as Yields dropped on the above news. Support at 98 gave weigh but crosses continued to provide support on dips so the downside may be limited while risk appetite is strong. Core Machinery Orders fell -5.4% vs. 0.1% forecast. Overall the USDJPY traded with a low of 97.24 and a high of 98.57 before closing the day around 97.40 in the New York session. The Sterling (GBP) continued the rally that began yesterday on route back above 1.6300 towards year highs above 1.66. Better than expected RICS house price balance helped propel the pair with gains above 1% for the day. Overall the GBP/USD traded with a low of 1.5985 and a high of 1.6365 before closing the day at 1.6330 in the New York session. Industrial Output is forecast at -0.1% vs. 0.0%. Also released, April Trade balance is forecast at -6.4Bn vs. -6.59Bn. The Australian Dollar (AUD) regained 0.8000 as USD weakened and commodities surged. The major topside target at year highs of 0.8260 could come under threat as June consumer confidence increased the most on record up 12%. Overall the AUD/USD traded with a low of 0.7851 and a high of 0.8046 before closing the US session at 0.8015. Looking ahead, Australian June Unemployment is forecast at -30k vs. +27.2K previously. Gold (XAU) couldn’t rally on the USD weakness with improving risk sentiment and inflation pressures yet to materialize. Overall trading with a low of USD$942 and high of USD$960 before ending the New York session at USD$953 an ounce. Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

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Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | Jun 10 09 01:43 GMT |

News And Views Dollar slips. The S&P500 hovered around its flat open, closing up 0.4%. The US Treasury said 10 big banks will repay about $68 billion to the government, but the market was undecided whether that was positive (banks in good shape) or negative (banks have less to lend) for the economy. The US dollar index lost around 1.3%, which then helped metals - copper gaining 4.6% and nickel 6.2%. Treasury bond supply concerns were absent at a 3yr auction, foreign (e.g. central bank) bidders more noticeable. Of course the real test will be the 10yr and 30yr auctions this week. The 2yr yield rallied by 10bp while 10yrs did 2bp, in a partreversal of the rate-hike-expectations prevailing during the past few days. EUR bounced from 1.3855 to 1.4100, a US investment bank's long-EUR trade recommendation coinciding with a moderately positive tone in risk sentiment last night. GBP rallied from around 1.6000 to 1.6360 in the standout performance of the evening, helped by talk of inflows related to the Barclay Global sale, improving housing data, and receding political volatility. USD was weaker against even the yen, falling from 98.50 to 97.25. AUD went for the ride with the other majors, rallying from 0.7900 (noon London) to 0.8045 (late NY), opening in NZ at 0.8020. NZD copied the action, gaining a cent to the current 0.6270. AUD/NZD marched higher, from 1.2700 to 1.2800. US wholesale inventories down 1.4% in April. Another sharp rundown in stocks at the start of Q2, following a downward revision to March from -1.6% to -1.8%. No evidence at this early stage of a positive contribution to Q2 GDP growth from inventory accumulation. US IBD-TIPP economic optimism up from 48.6 to 50.8 in June. This first read on consumer confidence this month shows a further modest gain, driven by all three of the economic outlook, personal finances and federal policies. Japan April leading composite index rose 1.0, extending the 2.1 March rebound from prolonged sharp drop that saw it decline 9 of the 10 previous month. The coincident composite index rose 1.0 in April, the first increase in 11 month. The April indices reflect recent hints of a bottoming out in the sharp contraction in the manufacturing sector. German industrial production down 1.9% in April. This weak monthly outcome pulled annual growth down from -20.2% yr to -21.6% yr. UK house prices update. The May RICS (surveyor) index rose to an 18 month high, with just 44.1% of respondents reporting lower house prices. The DCLG (government) house price index improved from -13.6% yr to -13.0% yr. Both add to the body of evidence suggesting the UK housing market may be stabilising. UK BRC retail sales monitor very soft. May same store sales growth dropped from 4.6% yr to -0.8% yr, confirming that April's strength was mostly Easter and hot weather driven. Outlook We have a negative NZD bias for a 2-month outlook, having expressed that yesterday via the purchase of a NZD put (USD call) option. The motivation for using an option was to remove the daily noise from a medium-term structural trade. We have a target of around 0.55 in mind, but expect the path will be choppy. Today, the 0.6300 level should cap the action, and a move to 0.6150 is our preferred scenario. Watch the terms of trade report this morning - we think it could be much worse than the -3.8% q/q consensus. Events Today Country Release Last Forecast NZ Q1 Terms of Trade -0.9% -6.6% May Electronic Card Transactions 0.70% - Aus Jun Westpac-MI Consumer Sentiment 88.8 - Apr Housing Finance 4.90% -1.0% US Apr Trade Balance $bn -27.6 -29.0 May Federal Budget Balance $bn -166 -181 Fed Beige Book Apr Current Account €bn Fedspeak: Governor Duke Jpn Apr Machinery Orders -1.3% -0.7% May Corp. Goods Prices %yr -0.4% -0.3% UK Apr Visible Trade Balance £bn -6.6 -6.4 Apr Industrial Production -0.6% 0.20% Can Apr Trade Balance C$bn 1.1 1.1 Apr New House Prices -0.5% -0.5% 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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Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Jun 10 09 03:31 GMT |

EUR/USD closed sharply higher on Tuesday due to short covering as it consolidated some of its decline off last week's low. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices is possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews this spring's rally, the 87% retracement level of the December-March decline crossing is the next upside target. USD/JPY closed higher due to short covering on Tuesday as it consolidated some of the decline off May's high. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, the reaction low crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted. GBP/USD closed sharply higher due to short covering on Tuesday as it consolidates some of last week's decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. If it renews the rally off April's low, the 50% retracement level of the 2008-2009 decline crossing is the next upside target. USD/CHF closed higher due to short covering on Tuesday as it consolidated some of the decline off last week's high. The high-range close sets the stage for a steady to higher opening on Wednesday. Despite today's rebound, stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends the decline off last week's high, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the near-term bearish outlook in the market. HY Markets http://www.hymarkets.com

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Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Jun 10 09 03:26 GMT |

EUR/USD Today's support: - 1.4025, 1.3990 and 1.3953(main), where correction is possible. Break would give 1.3922, where correction also may be. Then follows 1.3904. Break of the latter would result in 1.3891. If a strong impulse, we would see 1.3872. Continuation will give 1.3858. Today's resistance: - 1.4123(main). Break would give 1.4176, where a correction is possible. Then goes 1.4220. Break of the latter would result in 1.4247. If a strong impulse, we'd see 1.4266. Continuation will give 1.4290. USD/JPY Today's support: - 96.90(main). Break would bring 96.77, where correction is possible. Then 96.53, where a correction may also happen. Break of the latter will give 96.40. If a strong impulse, we would see 96.17. Continuation would give 95.86. Today's resistance: - 97.88 and 98.21(main), where a correction may happen. Break would bring 98.58, where also a correction may be. Then 98.78. If a strong impulse, we would see 99.26 Continuation will give 99.47. DOW JONES INDEX Today's support: -8724.32, 8673.70, 8634.17 and 8561.40(main), where a delay and correction may happen. Break of the latter will give 8495.80, where correction also can be. Then follows 8463.00. Be there a strong impulse, we would see 8426.22. Continuation will bring 8392.44. Today's resistance: - 8808.80 and 8842.72(main), where a delay and correction may happen. Break would bring 8858.37, where a correction may happen. Then follows 8887.46, where a delay and correction could also be. Be there a strong impulse, we'd see 8910.00. Continuation would bring 8927.28. 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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