Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Jun 22 09 05:58 GMT |

Japan Industrial Sentiment Brightens; Premier Wen, George Soros Bullish on China, but World Bank Cuts its Global and Emerging Market Outlook Asian equity markets are predominantly in the green, opening the week by shrugging off the caution seen late on Friday with response to some better than expected economic data. With about 90 minutes to go in Tokyo trading, Nikkei225 is in rally-mode coming out of midday break, gaining about 1% to 9,880. Hang Seng and Taiwan are up 2.7% and 1.4% - outperforming on respective macro developments, while S&P/ASX and Kospi are up only 0.5%. Ahead of the US open, front-month S&Ps are lifted by 0.3% above $918, while benchmark yields remain contained below 3.80% ahead of the much-anticipated Fed decision this Wednesday. Economic docket saw a strong industrial sector update from Japan, housing figures from UK, and 2nd tier data from Australia and New Zealand. Japan's Q2 BSI All Industry index improved on a Q/Q basis to -22.4 V -51.3 prior, and large manufacturers saw its best data since Q3 of 2008 at -13.2 - a sharp gain from the prior -66.0 and testament to the overall industrial/manufacturing sector improvement noted by both the Bank of Japan and Japan's government. April Tertiary Industry Index suggested that recovery may be at least a couple of months in the works, coming in 2.2% - the highest level since January 2006. Housing data from the UK were a disappointment, with June HPI contracting for the first time since January at -0.4% vs +2.4% seen in May. In Australia, May New Vehicle Sales saw its best increase since January 2005 at 5.4% v 1.7% prior, but New Zealand's credit card spending declined 2.4% in May vs 1.6% drop in April - evidence of local currency strength weighing on the overall economy as implied by local Prime Minister and Finance Minister in recent days. Among notable speakers and other macro oriented developments, China's Premier Wen was positive on domestic economy, noting that it has been recovering firmly as a result of the accomodative monetary and massive stimulus measures applied. Investor George Soros was also positive on the country, suggesting that the impact of the credit crisis in the region has been minimal while also calling a bottom for the worst of the financial crisis. Asia Development Bank's Kuroda echoed the above sentiment, citing rebound in commodity prices as evidence of a bottom with clearer signs of recovery to emerge toward the end of the year. Earlier in the session, China's May oil demand was said to have risen by 6% - the fastest rate of growth since August, matching a May rebound in China's power consumption that has conspicuously been contracting through April. On the flip side, World Bank has become increasingly more cautious about the overall global conditions and some of the other emerging economies. Chief Economist Lin cut his outlook for the global economy to -2.9% from -1.7% in 2009 and to +2% from +2.3% in 2010. Specifically, Lin cut 2009 growth for US to -3%, Japan to -6.8% and Russia to -4.5%, attributing his forecast to continued "dismal" financing climate, also cutting prospects for the Asian region's darling South Korea to -2% in 2009 before a 2% growth in 2010. Elsewhere in the region, Hang Seng and Taiex markets outperformed on a pair of bullish press reports for the local economies. South China Morning Post speculated Hong Kong's economy may grow in Q2 if the export sector can stop contracting. Over in Taiwan, the local economic affairs ministry was rumored to be discussing a plan to open its banking and insurance sector to Chinese investors - the event that sparked a sharp rally in the Taiex several weeks ago before politically sensitive govt officials tempered bullish optimism by talking down the prospects for greater cooperation with China in the immediate term. In other politically-driven events, Australia's Treasurer Swan dodged opposition's calls for his resignation, calling alleging of improper appropriation of govt loans "absurd". PM Rudd has stood by his Treasurer, demanding that the opposition present more concrete evidence of alleged favoritism. In equity-specific developments, Honda was up about 4% early after press reports that the company may invest up to $1B in a US electric car plant along with NEC. National Australia Bank was halted ahead of the open after announcing it would buy Aviva's Australian unit for A$825M. That deal is expected to close in Q4, with EPS being accretive in Yr 1 of the tie-up. In other merger news, Anglo American confirmed a preliminary interest from Xstrata, with the bid estimated to be valued at up to $34.6B. In Japan, Toshiba said it would cut its LED light bulb prices in half to address rising competition and expand company market share. In currencies, the greenback remained bid against most of the commodity and European majors, although price action saw traders remaining sensitive to near-term technical levels. EUR/USD and AUD/USD retreated to Friday support levels at 1.3880 and 0.7990 respectively. Sterling was rangebound between 1.6440 and 1.6510, and USD/CAD traded up by about 40 pips from opening levels to just below 1.14 handle. Japanese Yen retained its bullish tone despite the moderate risk appetite in equities, testing 96.00 handle vs USD and falling over one big figure against EUR to 133.15. In terms of the situation in Iran, a recent report noted that more than 450 people have been arrested in Tehran in relation to election related protests. The report follows earlier reports form Iranian state media noting that 10 people have died and more than 100 were injured on Saturday when clashes started between security forces and protesters. An evening report on Sunday from the Washington Post, noted that Tehran was quieter on Sunday, although eyewitnesses reported gunshots and sirens in the central Tehran neighborhood of Abbas Abad. At the time of writing, crude oil prices are lower for the second consecutive session, but have held the $69/bbl level. Oil prices are tracking the stronger dollar, and have so far failed to react to the weekend's election related protests in Iran. Additionally, some market players are noting that the recent bigger than expected rise in the US gasoline inventories is weighing on oil prices. Last week, the US Department of Energy reported that weekly gasoline inventories rose by 3.4M barrels against market expectations for a rise of 750K. Spot Gold is lower on the session, as the metal continues to consolidate between $928-$929/oz and $944/oz ahead of this week's Federal Reserve policy meeting. The $928-$929/oz area has been seen as the 100-day moving average, and $944/oz corresponds with the neckline of a head and shoulders top. In other metals, London copper has moved to a more than 2 week low on the firmer dollar. Also, copper is being weighed down by concerns that China may reduce its stockpiling of the metal, after the country's May copper imports rose to a record level. Additionally, it was reported that weekly copper inventories at the Shanghai metals exchange rose last week to the highest level in more than 20 months. 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.

Read more...

Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Jun 22 09 05:57 GMT |

The trade week in Asia has started out amidst uncertainty, with traders concerned about the potential powder keg in Iran as well as the US FOMC meeting on Wednesday. With the above noted concerns the safe-haven currencies, the Yen and Dollar, were the prime benefactors of investors looking for safer assets. The Yen most notably made solid gains against the Euro, Aussie Dollar, and Kiwi Dollar. EUR/JPY dropped from 134.28 to lows just near 133.15 despite gains in the Asian equity markets, this drop representing a continuation of the slide from 135.15 highs that began early on Friday as things looked tenuous in Iran. AUD/JPY fell from 77.55 to just under 76.60 and the NZD/JPY also dropped a solid 75 pips to 61.11 as traders abandoned the higher yielding and riskier currencies from down under. Risk aversion was put back on the play field as traders react to the perceived uncertainty and rising death toll in Iran. USD/JPY showed Yen strength as well, as the pair dropped from a 96.30 high to a touch below 95.80 as the day in Japan progressed, the Yen bounced back to a level near 96.00. With one eye on Iran, the other eye was surely on the upcoming FOMC meeting on Wednesday, with traders looking to see what direction the Fed will take in its rhetoric. Many see the Fed as walking a tight rope between possibly dampening the recovery with early rate hikes, or possibly over committing to keeping rates too low. Nonetheless, the Dollar was bought in Asia, with EUR/USD dropping from an opening high near 1.3957, to levels in the 1.3890 ballpark. AUD/USD weakened almost 90 pips to a 76.60ish low, and NZD/USD was weaker by half a hundred pips for the day as the Dollar was bought. This week could be a big turning point for the dollar as the FOMC should help give the Greenback a push in either direction. Upcoming Economic Data Releases (London Session): 6/22/2009 7:00 SZ Money Supply M3 YoY MAY 3.80% - - 6/22/2009 8:00 GE IFO - Business Climate JUN 84.2 85 6/22/2009 8:00 GE IFO - Current Assessment JUN 82.5 83 6/22/2009 8:00 GE IFO - Expectations JUN 85.9 86.9 Forex.com http://www.forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Read more...

Technical Analysis Daily: EUR/USD

Daily Forex Technicals | Written by iFOREX.bg | Jun 22 09 05:55 GMT |

EUR/USD 1.3916 EUR/USD Open 1.3936 High 1.3998 Low 1.3882 Close 1.3938 Euro/Dollar had a moderate increasing momentum on Friday. The currency couple tried to drop, reaching a bottom at 1.3882, than ascended, reached a peak at 1.3998 and closed the week highrt at 1.3938. On the 1 hour chart there a still valid secondary ascending channel, but the rising scenario will be confirmed only when the trend line resistance is broken. Last week there wasn't clear and convincing directional movement, and perhaps it is better to await further developments on the market. Immediate support is 1.3880, followed by 1.3750. Break at that level may trigger further bearish impetus towards 1.3590. The nearest resistance is 1.4000, the break of which might lead to further upward movement towards 1.4100. The CCI indicator is in the negative zone on the 1 and 4 hour charts, suggesting potential downward pressure. Technical resistance levels: 1.4000 1.4100 1.4230 Technical support levels: 1.3880 1.3750 1.3590 Trading range: 1.3930 - 1.3865 Trend: Downward Sell at 1.3916 SL 1.3946 TP 1.3876 iFOREX.bg Forecasts and Trading Signals http://www.zifx.com

Read more...

Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Jun 22 09 04:33 GMT |

EUR/USD closed higher on Friday as it extends the short covering bounce off Tuesday's low. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices is possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short- term low has been posted. If it renews this week's decline, the reaction low crossing is the next downside target. USD/JPY closed lower on Friday as it consolidated some of Thursday's rally. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain 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 10-day moving average crossing would temper the near-term friendly outlook in the market. GBP/USD closed higher on Friday as it extends last week's trading range above the 20-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral hinting that sideways trading is possible near-term. If it renews the rally off April's low, the 62% retracement level of the 2008-2009 decline crossing is the next upside target. Closes below the reaction low crossing are needed to confirm that a short-term top has been posted. USD/CHF posted an inside day with a lower close on Friday. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are turning bearish signalling that sideways to lower prices are possible near-term. Closes below the reaction low crossing would confirm that a short-term high has been posted. Closes above the reaction high crossing are needed to confirm that a short-term bottom has been posted. HY Markets http://www.hymarkets.com

Read more...

Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Jun 22 09 02:15 GMT |

EUR/USD Today's support: - 1.3871, 1.3837 and 1.3792(main), where correction is possible. Break would give 1.3767, where correction also may be. Then follows 1.3719. Break of the latter would result in 1.3680. If a strong impulse, we would see 1.3663. Continuation will give 1.3635. Today's resistance: - 1.3997 and 1.4036(main). Break would give 1.4079, where a correction is possible. Then goes 1.4126. Break of the latter would result in 1.4153. If a strong impulse, we'd see 1.4176. Continuation will give 1.4220. USD/JPY Today's support: - 95.82, 95.41 and 95.28(main). Break would bring 95.17, where correction is possible. Then 94.94, where a correction may also happen. Break of the latter will give 94.61. If a strong impulse, we would see 94.39. Continuation would give 94.13. Today's resistance: - 96.78, 97.31 and 97.76(main), where a correction may happen. Break would bring 98.10, where also a correction may be. Then 98.33. If a strong impulse, we would see 98.58. Continuation will give 98.78 and 99.26. DOW JONES INDEX Today's support: - 8490.93(main), where a delay and correction may happen. Break of the latter will give 8479.68, 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: - 8562.30, 8606.26, 8628.74 and 8645.40(main), where a delay and correction may happen. Break would bring 8686.42 and 8732.80, where a correction may happen. Then follows 8775.00, where a delay and correction could also be. Be there a strong impulse, we'd see 8814.63. Continuation would bring 8834.25 and 8842.00. 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.

Read more...

Hammerson Chief Says U.K. Commercial Property Close to Bottom

By Simon Packard

June 22 (Bloomberg) -- The two-year slump in the U.K. commercial-property market may be close to its bottom for the best buildings, according to Hammerson Plc, owner of stakes in London’s Bishops Square complex and Birmingham’s Bull Ring mall.

Rents are falling more slowly, which is helping to halt the decline in property values, Chief Executive Officer John Richards said. Capitalization rates,-- or annual rental income as a proportion of a building’s value -- for new and recently refurbished offices, stores and warehouses in the best locations may peak in the next month, he said.

“We will see values stabilize,” Richards, 53, said in an interview at his office in the Mayfair district of central London. For prime properties, “the occasions of tenant default or delinquency are going to continue to be rare.”

Commercial-property values in the U.K. have plummeted 44 percent since the market’s peak in June 2007, Investment Property Databank Ltd. estimates, dragged lower by the economic recession, rising unemployment and borrowing restrictions. The monthly decline for May was 1.6 percent, the smallest in a year, the London-based research company said June 12.

Hammerson was the first of Britain’s four largest publicly traded property companies to announce a rights offering, raising 584 million pounds ($961 million) in March to avoid breaking the terms of bank loans as values fell. Hammerson’s assets depreciated by 1.05 billion pounds, or 14 percent, to 6.5 billion pounds in the 18 months through December.

Property Sales

Since May, sales of buildings in Berlin, London and Paris enabled Hammerson to reduce net debt to 2.1 billion pounds. That’s about 45 percent of the value of its properties, assuming a 15 percent drop in their value in the first half, said Mike Prew, a London-based analyst at Nomura International Plc.

The risks of an “additional capital increase aren’t that big any more,” said Kai Klose, an analyst at Macquarie Capital in London with a “neutral” rating on the stock.

Concerns that Hammerson might breach loan terms have weighed on the shares. The stock is down 14 percent since Jan. 1, making the company the fourth-worst performer in an index of the 16 largest U.K. real estate companies. Hammerson has a market capitalization of 2.19 billion pounds. The shares have dropped 49 percent in the year through June 19.

‘Hold’ Ratings

Two-thirds of 18 analysts that cover Hammerson have “hold” recommendations on the stock.

Nomura’s Prew estimates property values can fall another 25 percent from the end of the first half without causing Hammerson to break bank-loan terms.

On June 4, Hammerson announced the sale of a 75 percent stake in the Bishops Square office building in London, its most valuable asset. Since then, the yield for the company’s six-year notes has declined 1.78 percentage points to 8.61 percent. Hammerson shares have climbed 13 percent.

The asset sales and the proceeds from the rights offering have “given us some headroom,” said Richards, who became CEO in October 1999. “We are back to a business-as-normal approach, albeit in what is clearly continuing to be very tough economic times.”

Hammerson may sell some retail parks in France and the U.K. as well as buildings that are unlikely to increase in value or generate more rental income, Richards said.

Eastgate Quarters

For now, it “isn’t viable” for the company to proceed with development projects, he said.

“Over time we will resuscitate a development business,” such as the Eastgate Quarters project in the northern English city of Leeds, he said.

Richards ruled out disposals of the most recent projects, such as 60 Threadneedle Street and 125 Old Broad Street in London’s main financial district, the extended O’Parinor shopping center on the northern outskirts of Paris and three retail centers in Aberdeen, Bristol and Leicester.

The developments opened when property values and rents were falling, something that in hindsight was a mistake, Richards said. Hammerson’s “timing has been wrong,” he said.

“In running a business you have to look forward,” he said. “From where we are now, that kind of stuff is the best recovery stock available. Our strategy is not to sell.”

Rent-Free

As rent-free periods for tenants lapse, Richards expects the properties will produce an additional 40 million pounds in annual rental income by 2014. Leasing the remaining vacant space may bring in an extra 20 million pounds, he said.

The combined 60 million pounds in extra revenue is equivalent to about 20 percent of Hammerson’s net rental income in 2008.

Richards said that only 1.4 percent of Hammerson’s rental income isn’t being paid because of tenant insolvencies.

Two thirds of Hammerson’s properties are shopping malls and out-of-town retail parks, including a stake in the Brent Cross center in north London. In the U.K., these tenants have seen a drop in sales of 3 percent to 4 percent from a year ago. That compares with a 6 percent decline nationally, Richards said.

“Flawed retail formats have already in the main been found out,” he said.

As unemployment mounts in the economic recession, properties that aren’t in prime locations or condition will generate less rent, incur higher tenant default rates and will lose value, he said.

“Our portfolio is at the top end of quality asset performance,” he said.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

Read more...

Thailand Credit Ratings May Be Cut on Weaker Economy, S&P Says

By Shanthy Nambiar

June 22 (Bloomberg) -- Thailand’s BBB+ credit rating may be lowered if the Southeast Asian nation’s economy slows and government finances degenerate, Standard & Poor’s Ratings Services said.

“Recent events have damaged medium-term economic growth prospects,” S&P said in an emailed statement today. “Heightened political tensions continue to undermine support for the Thai sovereign ratings,” which may be cut if the “economic performance weakens sharply, causing government finance to deteriorate seriously or banks’ asset quality to worsen markedly,” the ratings company said.

S&P revised the rating outlook on Thailand to negative from stable in December as political protests aimed at ousting the previous government led to a week-long shutdown of Bangkok’s international airport. A Thai political party linked to former leader Thaksin Shinawatra won a by-election in the rural Northeast yesterday, signaling his support base remains strong in the first test since he helped lead violent protests in April.

Thailand’s economy shrank 7.1 percent in the first quarter after a collapse in exports. Prime Minister Abhisit Vejjajiva said on June 9 “the worst is behind us” and he expects gross domestic product will return to annual growth in 2010.

“We may revise the negative outlook to stable if political divisions in the country are resolved peacefully and in a sustained manner, which eases perceptions of country risks and allows a rebound in investment,” S&P said today.

S&P’s rating on the country’s long-term foreign currency debt is the eighth-best investment rating, while Moody’s Investors Service rates Thailand’s overseas debt Baa1, five levels higher than Indonesia.

The nation’s $2 billion euro commercial notes program was rated A2 by Standard & Poor’s, a similar level to its short-term foreign currency debt rating. Moody’s assigned a P-2 rating to the short-term program, which will be used to refinance debt and support development projects, it said in a separate statement.

To contact the reporter on this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net

Read more...

Argentines Boost Dollar Deposits Ahead of Election: Week Ahead

By Bill Faries

June 22 (Bloomberg) -- Argentines are shifting money into dollars ahead of this weekend’s election on concern the government may let the peso slide after the vote to bolster economic growth.

Private bank deposits in dollars rose by about 5 billion pesos ($1.3 billion) between March and May, double the amount of the previous three months, according to data compiled by Argentina’s central bank.

President Cristina Fernandez de Kirchner, who in March called on Congress to move up the election by four months, has been tempering the pace of the peso’s decline to ensure that support for her ruling coalition doesn’t deteriorate ahead of the June 28 congressional elections, said Federico Thomsen, who heads E.F. Thomsen, a political and economic research company in Buenos Aires. Polls show her coalition is likely to lose its majority in at least one of the legislative houses.

“There’s a lot of speculation that there could be a move in the currency after the election,” Rafael de la Fuente, senior Latin America economist at BNP Paribas in New York, said in an interview. “There’s a lot of capital flight by the private sector and very high inflation, so there’s a need to depreciate to maintain competitiveness.”

A weaker peso makes imported goods, such as computers and medical equipment, more expensive for Argentines.

Managed Currency

Central Bank President Martin Redrado said in a June 13 speech that the bank uses a “managed floating exchange rate” to help guide monetary policy. A bank spokesman declined to comment on the exchange rate to Bloomberg.

Fernandez’s husband and former President Nestor Kirchner, who is seeking a lower-house seat, said last week there’s “no chance of a devaluation” after the mid-term vote. The peso is down 8.5 percent against the dollar this year, the worst performer among Latin America’s major currencies, and may fall another 10 percent by year-end, the median forecast of analysts surveyed by Bloomberg shows.

“The government doesn’t want to create any waves before the election,” Thomsen said. “Kirchner doesn’t have a lot of support he can afford to throw away.”

Inflation

Argentina’s annual inflation rate fell to the lowest in five years in May to 5.5 percent, the National Statistics Institute said. Economists such as former Economy Minister Roberto Lavagna say inflation in Argentina has been under- reported since Kirchner shuffled personnel at the institute in January 2007.

The country’s foreign reserves dropped 8 percent from a record high of $50.5 billion in March 2008 as the central bank sold dollars in the foreign-exchange market to ease the peso’s losses. Private capital outflows rose to $5.7 billion in the first quarter, compared with $2.3 billion in the same period of 2008, according to the central bank. The peso fell 0.2 percent to 3.7735 per dollar on June 19.

“In situations of crisis or uncertainty, Argentines turn to dollars,” said Carlos Lizer, a currency trader at Buenos Aires-based brokerage Puente Hermanos. “There’s going to be more demand for dollars.”

Half the 257-seat lower house and a third of the 72-member Senate are up for grabs in the election. The new lawmakers will take their seats in December.

Since May 2003, when Kirchner took office, unemployment has dropped to 8.4 percent from 18 percent, and the economy has grown at least 6.8 percent a year. Fernandez succeeded her husband in December 2007.

Fernandez vowed at a May 15 press conference to keep the economy growing this year. Gross domestic product expanded 0.1 percent in the first quarter from the fourth quarter of last year, the national statistics institute said June 18.

Alberto Ramos, senior Latin American economist at Goldman Sachs Group Inc. in New York, said in a June 19 report that the official figures “paint a much rosier picture” of reality. The economy may shrink 1 percent this year, he said.

Markets Last Week

Last week, the yield on Argentina’s benchmark 8.28 percent dollar bonds due in 2033 rose 177 basis points, or 1.77 percentage points, to 17.65 percent, according to Bloomberg data. The bond’s price fell 6 cents to 45 cents on the dollar.

The Buenos Aires benchmark Merval stock index fell 5.8 percent to 1,559.46 points. Telecom Argentina SA (TECO2 AF), the country’s second-largest telephone company, rose 11 percent after reports that parent company Telecom Italia is looking for a buyer of its stake in the Argentine unit. Steel pipe maker Tenaris SA (TS AF) fell 9.3 percent.

The following is a list of events in Argentina this week:

Event                                   Date
Economic activity                       June 23
Industrial production                   June 24
Congressional election                  June 28

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net

Read more...

Wen Pledges to Add More Money to China’s Economy to Spur Growth

By Bloomberg News

June 22 (Bloomberg) -- Chinese Premier Wen Jiabao pledged to keep pumping money into the financial system to sustain growth in the face of recessions around the world.

The government will “fully realize” stimulus measures, Wen said during a June 19-20 trip to Hebei province, according to a statement on the government’s Web site yesterday. It will maintain a “moderately loose” monetary policy and “proactive” fiscal policy, he said.

The world’s third-biggest economy is in a “critical” phase as the government’s 4 trillion yuan ($585 billion) stimulus plan counters a collapse in trade, Wen reiterated. China’s target of 8 percent growth in 2009 contrasts with a World Bank forecast today that the global economy will shrink by 2.9 percent.

The premier “is trying to maintain optimism while acknowledging risks,” David Cohen, head of Asian forecasting at Action Economics in Singapore, said by telephone yesterday. “Global demand will start to pick up and that should provide some boost to Chinese manufacturing.”

The Shanghai Composite Index rose 0.9 percent as of the 11:30 a.m. break in trading, extending this year’s gain to 59.6 percent as investors bet the government can engineer a revival.

A surge in lending, triggered by the central bank scrapping lending quotas and cutting interest rates in the final four months of last year, has continued this month, according to a report in the Shanghai Securities News today.

More Lending

Banks are set to lend more in June than in May, the newspaper said, citing unidentified sources. Last month, new loans more than doubled from a year earlier.

Increased investment in fixed assets has also helped to counter a decline in exports. Spending on factories, property and roads jumped 32.9 percent in the five months through May from a year earlier.

The World Bank raised last week its forecast for China’s growth, citing the effects of government spending. The economy will expand 7.2 percent in 2009 from a year earlier, up from a 6.5 percent forecast in March, the Washington-based lender said.

Drags on growth include rising unemployment, falling company profits and record declines in exports. TCL Corp., China’s biggest maker of consumer electronics, posted a 97 percent plunge in first-quarter profit as exports of televisions and mobile phones fell.

Gross domestic product expanded 6.1 percent in the first quarter, the slowest pace in almost 10 years.

Wen is “very concerned” about the effect of the global financial crisis on China’s steel industry and the damage to the dairy industry from last year’s tainted-milk scandal, according to yesterday’s statement.

At least six children died in China and 300,000 others fell ill last year after drinking milk formula contaminated with the chemical melamine, used in the production of plastics.

Milk production has since recovered only to 80 percent of earlier levels, the statement said.

--Stephanie Wong in Shanghai. Editors: Paul Panckhurst, David Tweed.

To contact Bloomberg News staff for this story: Stephanie Wong in Shanghai at +86-21-6104-7029 or swong139@bloomberg.net

Read more...

German Business Sentiment Probably Rose for Third Month in June

By Christian Vits

June 22 (Bloomberg) -- German business confidence probably rose for a third month in June, providing further evidence that the recession in Europe’s largest economy is easing.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 85 from 84.2 in May, according to the median of 29 forecasts in a Bloomberg News survey. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

Germany’s worst economic slump since World War II may be bottoming out as a global recovery improves prospects for exports. Manufacturing orders held steady in April after increasing in March and investor confidence rose to a three-year high in June. The coalition government led by Chancellor Angela Merkel, who faces national elections in September, is spending about 85 billion euros ($118 billion) to stimulate growth. Still, the Bundesbank expects the economy to shrink 6.2 percent this year and stagnate in 2010.

“Optimism is the wrong word,” said Holger Schmieding, chief European economist at Bank of America-Merrill Lynch in London. “Pessimism is abating. There’s evidence that the global economy has seen the trough and while Germany won’t immediately benefit, it will profit disproportionately later due to its focus on investment goods.”

Economists predict executives’ assessment of the current situation as well as their expectations will improve.

Signs of Improvement

Siemens AG, Europe’s largest engineering group, this month reiterated sales and earnings targets for the current year and Praktiker AG, Germany’s second-biggest home-improvement retailer, said last month revenue has rebounded in its domestic market since the end of March.

“There are signs which show that we already reached the bottom of the recession and that it will go up again soon,” Chief Executive Officer Wolfgang Werner told Praktiker shareholders on May 27.

Germany’s manufacturing and service industries contracted more slowly in May and unemployment rose less than economists forecast.

“Inventories are almost empty in many countries, so even a slight increase in demand means production goes up,” said Andreas Rees, chief German economist at UniCredit MIB in Munich. “The positive trend is intact, exports will rebound in the course of the year.”

Some companies are less sanguine.

“With the exception of China, global passenger-car markets are not showing any signs of recovery” and may not have “hit rock bottom yet,” Volkswagen AG’s group sales chief Detlef Wittig said June 12.

The economy is currently in a “stabilization phase,” Bundesbank President Axel Weber said last week. “However, we’re far away from a significant pick-up.”

The European Central Bank has cut its benchmark interest rate to a record low of 1 percent. It will offer to lend banks as much money as they want for 12 months in a new auction this week to help get credit flowing again.

To contact the reporter on this story: Christian Vits in Frankfurt cvits@bloomberg.net

Read more...

Japan’s Business Confidence, Service Demand Rebound

By Jason Clenfield and Toru Fujioka

June 22 (Bloomberg) -- Japanese business confidence improved for the first time in three quarters and demand for services rose, adding to signs the country’s worst postwar recession is easing.

Sentiment among large manufacturers increased to minus 13.2 points compared with a record low of minus 66 three months ago, a government survey showed today. The tertiary index of money spent on services from phone calls to dining out climbed 2.2 percent in April from March, the Trade Ministry said.

A rebound in production as companies replace stockpiles will help the world’s second-largest economy expand for the first time in a year this quarter, economists say. Even so, Bank of Japan Governor Masaaki Shirakawa is concerned that demand may not pick up enough to sustain a recovery once $2.2 trillion in worldwide stimulus measures fades.

“It’s becoming clearer that the economy has already hit bottom,” said Junko Nishioka, chief Japan economist at RBS Securities Japan Ltd. in Tokyo. “But the rebound will probably be lackluster in the absence of a solid recovery in profits, capital spending and consumption.”

The yen traded at 95.96 per dollar as of 11:39 a.m. in Tokyo from 96.08 before the reports were published. The Nikkei 225 Stock Average rose 0.1 percent, and has advanced 39 percent since dropping to a 26-year low on March 10.

Biggest Gain

The gain in sentiment at large manufacturers was the biggest since the Cabinet Office and Finance Ministry began the survey in 2004. Confidence at all big companies improved to minus 22.4 from minus 51.3. A negative reading means pessimists outnumber optimists.

The report offers a hint of the results likely in the Bank of Japan’s Tankan survey due July 1. The nation’s most closely watched gauge of corporate confidence will show sentiment among large manufacturers improving to minus 43 points from March’s record low of minus 58, according to the median estimate of 18 economists surveyed by Bloomberg.

China’s 4 trillion yuan ($586 billion) in government spending is boosting demand for Japanese heavy equipment and cars. Nissan Motor Co.’s sales to China rose 37 percent in April from a year earlier, buoyed by a government subsidy that halves the consumption tax on vehicles with smaller engines.

Japan’s own stimulus measures -- 25 trillion yen ($260 billion) pledged since October -- have helped lift consumer confidence to a 14-month high. Sales of electronics are by up 18 percent since the government last month introduced a program to encourage consumers to buy eco-friendly products, according to Tokyo-based researcher Gfk Marketing Service Japan Ltd.

BOJ, Government

Industrial production rose at the fastest pace in 56 years in April as companies replenished stockpiles they managed to run down during the worst of the export collapse. The rebound prompted the Bank of Japan and the government to raise their assessments of the economy in each of the past two months.

Gross domestic product will grow an annualized 1.5 percent this quarter, according to the median estimate of 11 economists. GDP contracted a record 14.2 percent in the previous period.

Governor Shirakawa said last week that he’s “cautious” about the economic outlook because the pickup in demand may be temporary. Exports and production, while improving on a month- on-month basis, are about a third lower than last year’s levels.

That’s putting pressure on managers to cut jobs and slash investment, spending that would normally trickle down to the smaller businesses that make up 70 percent of the economy. Companies plan to cut capital spending by an unprecedented 15.9 percent this business year, according to a survey published this month by the Nikkei newspaper.

Worsening Job Market

“Consumer spending will probably stay relatively solid in coming months, supported by stimulus measures,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “But it’s highly likely to weaken as the wage and labor market deteriorate further.”

The unemployment rate rose to a five-year high of 5 percent in April and economists surveyed by Bloomberg expect it to climb to a record 5.8 percent next year. Jobs are scarce: about two work seekers are competing for a single spot, the most severe shortage on record.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

Read more...

World Bank Cuts Forecast for Global Economy, Developing Nations

By Timothy R. Homan

June 22 (Bloomberg) -- The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.

The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, the Washington-based lender said in a report released today. Global growth will return next year with a 2 percent expansion, the bank said, cutting its forecast from a 2.3 percent prediction about three months ago.

The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin later this year, impoverished economies will lag rich nations in seeing any benefits. The lender called for “bold” policy actions to hasten a rebound and said prospects for rounding up aid for the poorest countries was “bleak.”

“While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the report said. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”

The World Bank’s report raised concern about the shrinking amount of capital flowing into developing countries. After a peak of $1.2 trillion in 2007, capital flows this year are expected to fall to $363 billion, the report said.

“Investors’ flight from perceived danger contributed to the sharp drop in capital flows to the developing countries, a trend that is very likely to persist through the end of 2009,” the report said.

‘Grave’ Prospects

With less capital coming in, growth in the developing world will be 1.2 percent this year, the World Bank said, scaling its outlook back from a 2.1 percent prediction in March.

“Low-income countries face increasingly grave economic prospects if the dramatic deterioration in their capital inflows from exports, remittances, and foreign direct investment is not reversed in 2010,” the report said.

As a result, “developing countries will most likely face a dismal external financing climate in 2009,” the report said, adding that net private flows will “barely” be positive.

The bank downgraded its forecast for the U.S. this year, calling for a 3 percent drop in the world’s biggest economy, after predicting a 2.4 percent contraction in March.

Japan’s gross domestic product will shrink 6.8 percent this year, more than the bank’s prediction in March for a 5.3 percent decline, while the euro area will shrink 4.5 percent, almost twice as much as the previous 2.7 percent contraction forecast.

IMF Forecast

The bank’s global outlook is more pessimistic than the forecast by its sister organization, the International Monetary Fund. The fund’s forecast for this year calls for a global contraction of 1.3 percent, with growth returning to 2.4 percent in 2010.

Developing nations in eastern Europe and Central Asia will be some of the hardest hit, according to the World Bank’s revised forecasts. The region is likely to shrink 4.7 percent this year, down from the 2 percent decline projected in March.

The economies of low-income countries in Latin America and the Caribbean are likely to decline by 2.2 percent this year, while growth is expected to slow in East Asia and the Pacific, the Middle East and North Africa, South Asia and Sub-Saharan Africa, the bank said.

A shortage of aid from advanced economies will likely weigh on the finances of developing nations, the bank said.

Aid Outlook

“The amount of development assistance to low-income countries will not fully cover their external financing needs in 2009, while the outlook for donor countries to increase aid is significantly bleak, given the intense fiscal pressures they face because of the crisis,” the report said.

The bank said it will take time for wealthier nations to fix financial systems shaken by a credit crisis that’s led to almost $1.5 trillion in writedowns and losses, and wiped out about $26 trillion in stock-market value worldwide since 2007.

Justin Lin, the bank’s chief economist, said in a statement that this hurdle, “combined with emerging limits to expansionary policies in high-income countries,” will restrain a global rebound.

Still, the MSCI index of 22 developing nations is up 31 percent this year, after plunging 55 percent last year. The surge is more than seven times the 4.2 percent gain in the MSCI World Index of 23 developed countries. Leading world equity market gains is Peru’s Lima General Index, which has jumped 86 percent this year, and Sri Lanka’s Colombo All Share Index, which is up 65 percent.

‘Unused Capacity’

“In terms of financial markets, I think people have broken the fall,” Zoellick said in a Bloomberg Television interview on May 29. “But if you look at what the economists call the real economy and the manufacturing sector, I think that you still see a lot of unused capacity.”

Efforts to revive domestic economies through stimulus spending should be coordinated internationally, the bank said in its report, adding that acting independently may have drawbacks.

“Any country that acts alone -- even the United States -- may reasonably fear that increases in government debt will cause investors to lose confidence in its fiscal sustainability and so withdraw financing,” the report said.

The U.S. is implementing a two-year, $787 billion stimulus package, while China is spending $585 billion.

“To break the cycle and revive lending and growth, bold policy measures, along with substantial international coordination, are needed,” the report said.

Global Trade

The report also said global trade is likely to drop by 9.7 percent this year. In March the bank forecast a decline of 6.1 percent.

Some companies around the world, meanwhile, are starting to reap the benefits of government aid efforts.

Dongfeng Motor Group Co., China’s third-largest automaker, said it sold more vehicles in the first four months of the year as stimulus measures helped lure drivers into showrooms.

Shares of Brazil’s two biggest airlines, Tam SA and Gol Linhas Aereas Inteligentes SA, both have jumped in recent weeks on signs of improving demand.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

Read more...

U.K. House Asking Prices Drop for First Time in Five Months

By Brian Swint

June 22 (Bloomberg) -- U.K. home sellers lowered asking prices in June for the first time in five months as banks scaled back lending and required buyers to stump up bigger deposits, Rightmove Plc said.

The average cost of a home slipped 0.4 percent to 226,436 pounds ($372,000) from May, when it rose by 2.4 percent, the operator of the biggest U.K. residential property Web site said today. Separately, business service companies will lose more than 300,000 jobs within five years, the Centre for Economics and Business Research said in a report.

While the Bank of England says the housing market has shown signs of stabilizing, Governor Mervyn King cautioned last week that the squeeze on lending may slow the economy’s recovery from the worst recession in a generation. Unemployment, which rose to the highest since 1996 in the quarter through April, may also hamper a rebound in home values.

“We’re very much bumping along the bottom,” said Miles Shipside, commercial director at Rightmove, in an interview with Bloomberg Television. “Sellers are having to reduce prices to where they’re getting interest. With the pickup in sales activity, there’s a narrowing of the gap between asking prices and what’s actually being achieved.”

House prices fell 5.5 percent on the year, Rightmove said. Values dropped the most on the month in East Anglia, the North and the Southeast. Prices slipped 0.1 percent in London. They rose in the East Midlands, Wales and the Northwest.

Mortgage Costs

Mortgage lenders are raising the cost of fixed-rate loans and asking for bigger down payments. Nationwide Building Society and Lloyds Banking Group Plc this month both increased the cost of their fixed-rate home loans after a jump in U.K. swap rates, used by banks as a benchmark for mortgage costs.

The drop in housing prices follows reports last week showing retail sales unexpectedly fell and manufacturers’ export orders declined to the lowest level in a decade. King said that the economy’s recovery will probably be “protracted.”

Business services in Britain such as consulting, legal firms and accountants will lose 311,000 jobs between 2008 and 2013, the CEBR said today. Output in the industry will drop 5 percent this year, the report said.

Still, more than half of U.K. companies said the country has reached the bottom of the economic cycle and business confidence is at the highest since 2008, a survey by KPMG showed in a separate report today. A majority still said they face higher financing costs and tighter borrowing.

There are other signs of a pickup. Inflation slowed less than economists forecast in May, while surveys of manufacturing and services industries improved. Both Halifax and Nationwide Building Society reported that home values jumped last month.

U.K. homebuyers are clinching smaller discounts on property prices as the housing market stabilizes, the Royal Institution of Chartered Surveyors said June 15. Rightmove said today that asking prices are still 6 percent higher than in January.

“We’re through the worst, but it will take a long time to recover,” Shipside said.

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

Read more...

China’s Copper Imports Climb to Record on Stockpiling

By Bloomberg News

June 22 (Bloomberg) -- China, the world’s biggest copper consumer, increased imports to a record in May as buyers replenished stockpiles needed for the country’s 4 trillion yuan ($586 billion) stimulus program.

Inbound shipments of refined copper advanced 6 percent from the previous month to 337,230 metric tons and were more than triple the same month last year, final data from the Beijing- based customs office showed today. The imports were the highest ever, said Lai Qiwen, Guantong Futures Brokerage Co.

China’s urban fixed-asset investment surged 32.9 percent, more than estimated, in the first five months from a year earlier as the government pumped money into building railways, oil pipelines and low-cost housing. Copper, used in power grids and homes, has advanced 58 percent this year in London as China boosted purchases.

“May’s shipments were from orders early in the year and have been priced in,” Lai said from Beijing today. “Copper importing turned unprofitable about two months ago.”

China’s refined copper imports more than doubled to 1.4 million tons in the first five months compared with a year earlier. The country’s refined copper purchases may jump to a record 2 million tons this year as scrap metal supplies plunge and Chinese government spending sustains consumption, Simon Collins, general manager of Trafigura Trading Shanghai Co., said in February.

“We expect the import momentum will cool from June, yet traders will continue to ship in the metal for cash flows despite losses on their book,” Lai said.

Inbound shipments of primary aluminum, refined zinc and lead in May all retreated from record levels in March or April, customs data showed. Last month’s imports of nickel and alloys jumped 19 percent from a month earlier to 25,032 tons, the highest since as least 2004, according to Bloomberg data.

--Li Xiaowei. Editors: Richard Dobson, Jake Lloyd-Smith.

To contact the Bloomberg News staff on this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net

Read more...

Crude Oil Falls a Second Day on Concern Fuel Supply to Increase

By Christian Schmollinger

June 22 (Bloomberg) -- Crude oil fell for a second day in New York on concern that U.S. gasoline stockpiles will increase because of weak demand during the recession.

Oil extended a 2.6 percent loss on June 19 after gains in refinery output amid lower consumption pulled motor fuel futures down by 5.2 percent. Gasoline inventories in the U.S., the world’s biggest oil consumer, climbed a larger-than-expected 3.39 million barrels in the week ended June 12, the Energy Department said last week.

“The current sentiment is driven by the gasoline markets behind the weak inventory number from last week,” said Tetsu Emori, a commodity fund manager at Astmax Co. in Tokyo. “Gasoline demand has improved somewhat due to seasonal factors but I’m not sure how realistic that will be.”

Crude oil for July delivery declined as much as 50 cents, or 0.7 percent, to $69.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract was at $69.29 at 12:26 p.m. Singapore time. The contract, which expires today, closed at $69.55 on June 19, the lowest settlement since June 8.

Oil for August delivery, the more-actively traded contract, fell as much as 56 cents, or 0.8 percent, to $69.46 a barrel.

“If we should stay below $70 for the August contract that should be a bearish sign,” said Astmax’s Emori. “ The trading for today and tomorrow will be very important in setting the direction for the market.”

Stockpile Increase

Last week’s increase in U.S. gasoline inventories to 205 million barrels was the biggest jump since January. Motor fuel demand averaged 9.26 million barrels a day for the four weeks ended June 12, the Energy Department said. That’s down 0.3 percent from the previous year.

Total daily fuel demand in the four weeks ended June 12 was down 6 percent from a year earlier, the department said.

The so-called crack spread for gasoline, or the profit margin from producing the motor fuel, plunged 19 percent on June 19 and is at $11.66 a barrel today. That’s down from a peak of $16.84 a barrel reached on June 16.

Brent crude for August settlement fell as much as 34 cents, or 0.5 percent, to $68.85 a barrel on London’s ICE Futures Europe exchange. It was as $69.08 a barrel at 12:30 p.m. Singapore time.

Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended June 16, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 26,430 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 21,453 contracts, or 45 percent, from a week earlier.

Iranian Unrest

Unrest continued this weekend in Tehran over the results of elections in Iran, the Organization of Petroleum Exporting Countries’ second-largest producer.

Still, it is unlikely that either side in the political dispute would disrupt the country’s exports of 2.2 million barrels a day, Michael Wittner, head of oil research at Societe Generale, said in a June 19 note.

“Even if there is violent regime change in Iran, we would not at all jump to the conclusion that crude production and exports would be shut down,” the report said. “Any new government would know that the Iranian economy is highly dependent on revenue from crude exports.”

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

Read more...

China Metal Recycling Shares Jump in Hong Kong Debut

By Bloomberg News

June 22 (Bloomberg) -- China Metal Recycling (Holdings) Ltd., the country’s largest recycler of scrap metal by sales, jumped in Hong Kong trading as a revival in prices benefited producers.

The Guangzhou-based company rose 25 percent to HK$6.48 at 10:50 a.m. local time. The company sold 300 million new shares at HK$5.18 each to raise HK$1.55 billion ($200 million) in Hong Kong’s second-biggest initial public offering this year.

Steel and industrial metal prices have rallied this year as China spends 4 trillion yuan ($585 billion) to revive economic growth. Steel prices in the world’s biggest consumer have gained 31 percent since November as the country bolstered spending on houses, roads and railways.

“China Metal mainly focuses on steel recycling,” Heng Kun, an analyst at Essence Securities Co., said by phone today. “So long as prices stabilize, the industry will be in good shape because its profit margin is quite stable.”

The company produced 1.6 million metric tons of recycled products in 2008, and plans to almost double capacity by the end of this year by building new facilities in Tianjin, Zhejiang and Jiangsu. It had sales of HK$6.5 billion last year, according to its prospectus.

“Recyclers with large-scale capacity enjoy lower operating costs and with low-interest rates, they can easily get financing,” Heng said. “The industry also enjoys favorable tax policies, so they have good prospects.”

China Metal buys scrap steel, copper and other metals from overseas and domestic suppliers and produces recycled products used in buildings, autos, ships, home appliances and aircraft. UBS AG managed the share sale.

China Zhongwang Holdings Ltd. the country’s biggest producer of extruded aluminum products, was the largest initial public offering in Hong Kong earlier this year.

--Xiao Yu. Editors: Tan Hwee Ann, Andrew Hobbs.

To contact the Bloomberg News staff on this story: Xiao Yu in Beijing on yxiao@bloomberg.net

Read more...

Australian Regulator Says Will Monitor Xstrata-Anglo

By Rebecca Keenan

June 22 (Bloomberg) -- Australia’s competition regulator said it will monitor Xstrata Plc’s proposed merger with Anglo- American Plc.

The regulator will “see what develops and then make a decision as to where we go from there,” Lin Enright, spokeswoman for the Australian Competition and Consumer Commission, said by phone.

Xstrata Chief Executive Officer Mick Davis wants to combine with London-based Anglo to create a mining company with a market value of about 41 billion pounds ($68 billion). About 47 percent of Xstrata’s operating income comes from assets in Australasia, according to Bloomberg data.

The regulator can monitor transactions without the deal being under review, according to the commission’s Web site. An investigation does not mean a transaction raises competition concerns and the matter may require further consideration before the commission can reach a view, it said.

Talks are “at a very preliminary stage, and there is no certainty that any transaction will be forthcoming,” London- based Anglo American said yesterday. It didn’t identify terms of a possible deal.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

Read more...

Japan Utilities, Beer Makers Gain; Resource Shares Drop on Oil

By Masaki Kondo

June 22 (Bloomberg) -- Japanese power-generator shares gained as investors sought the safety of companies less affected by economic slowdown. Resource-related stocks declined as oil prices fell the most in two weeks.

Kansai Electric Power Co. advanced 2.6 percent, while Inpex Corp., Japan’s biggest oil driller, dropped 2.7 percent. Kawasaki Kisen Kaisha Ltd., the nation’s No. 3 shipping line, retreated 3.3 percent after commodity transport fees slid. Sapporo Holdings Ltd. surged 17 percent as Credit Suisse Group AG boosted its rating.

The Nikkei 225 Stock Average fluctuated between gains and losses and was up 28.84, or 0.3 percent, to 9,815.10 as of 12:41 p.m. in Tokyo. The broader Topix index rose 2.91, or 0.3 percent, to 921.88, with five stocks advancing for every two that dropped.

“The improvement in the economy is merely a rebound and the level of a recovery is still very low,” said Hiroshi Morikawa, a senior strategist at MU Investments, which manages about $13 billion. Defensive shares have become more attractive as investors “aren’t sure how long a recovery will last.”

Confidence among Japanese manufacturers improved this quarter, the Cabinet Office and Finance Ministry said today. A separate report from the Trade Ministry showed demand for services rebounded in April for the first time in three months.

The Topix has gained 7 percent this year through June 19 on optimism government stimulus measures and looser monetary policies will lift the global economy from recession. John Lipsky, the International Monetary Fund’s first deputy managing director, said on June 19 that the organization expects to raise its world growth forecasts “modestly upward.”

Oil Slump

Kansai Electric climbed 2.6 percent to 2,135 yen, while Tokyo Electric Power Co., Asia’s biggest utility, added 1.4 percent to 2,520 yen. The Topix Electric Power & Gas Index contributed the most to the broader measure’s advance.

Utilities also got a boost as lower oil prices reduced their fuel expenses. Crude oil for July delivery declined 2.6 percent on June 19, the most since June 3. Oil fell as much as 0.7 percent today.

Inpex dived 2.7 percent to 746,000 yen, while closest domestic rival Japan Petroleum Exploration Co. slipped 2.8 percent to 5,130 yen. The Topix Mining Index, which includes the two companies, was the biggest loser among 33 industry groups.

Kawasaki Kisen lost 3.3 percent to 413 yen, after the Baltic Dry Index, a measure of shipping costs for commodities, slid for the first time in seven sessions. Nippon Yusen K.K., Japan’s top shipping line, fell 2.1 percent to 418 yen.

Beer Sales

Sapporo soared 17 percent to 506 yen, making it the biggest winner on the MSCI World Index. Asahi Breweries Ltd. climbed 1.6 percent to 1,379 yen. Credit Suisse lifted its rating on Sapporo to “outperform” and Asahi Breweries to “neutral.” Both had been rated “underperform.”

Beer sales will likely be flat in the year ending in December rather than the decline previously expected, as demand for low-priced brands offsets a drop in restaurant sales, Credit Suisse analyst Yoshiyasu Okihira said in a report dated June 19. Okihira boosted his view on Japan’s beverage industry to “market weight” from “underweight.”

Furniture retailer Nitori Co. jumped 2.9 percent to 6,670 yen. The company increased its net income forecast for the year to Feb. 20 by more than a tenth, saying deeper discounts are attracting customers.

“The market has factored in a possible rebound in the global economy, and investors are reluctant to buy unless companies show resilient earnings like Nitori,” said Masayoshi Yano, a senior market analyst at Meiwa Securities Co. in Tokyo.

Nikkei futures expiring in September added 0.5 percent to 9,820 in Osaka and gained 0.4 percent to 9,815 in Singapore.

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

Read more...