Economic Calendar

Tuesday, July 7, 2009

A Smart U-Turn In The NY Session Yesterday Halts The Dollar's Rise, Back In The Ranges?

Daily Forex Fundamentals | Written by Saxo Bank | Jul 07 09 06:49 GMT |

RBA keeps rates unchanged but sees more scope for cuts in a benign inflation environment

HEADLINES - PREVIOUS SESSION

  • EU Jul Sentix Investor Confidence out at -31.3 vs. -25.0 expected and -27.0 prior
  • US Jun ISM Non-manufacturing out at 47.0 vs. 46.0 expected and 44.0 prior
  • NZ Q2 NZIER Business Opinion out at -25 vs. -65 prior
  • AU Jun AiG Performance of Construction Index out at 42.6 vs. 46.9 prior
  • AU RBA leaves rates unchanged at 3.0%

THEMES TO WATCH - UPCOMING SESSION

  • Swiss Budget Balance (0730)
  • EU ECB's Ordonez speaks (0730)
  • NO Manufacturing Production (0800)
  • UK Industrial Production (0830)
  • GE Factory Orders (1000)
  • CA Building Permits (1230)
  • CA Ivey PMI (1400)
  • US ABC Consumer Confidence (2100)

Market Comments

All change!

What started off as a risk aversion, buy the dollar and yen day finished the complete opposite as US equity markets clawed back early weakness to finish the day mixed, but mostly in positive territory. The catalyst for the reversal included a better-than-forecast ISM non-manufacturing number (47.0 vs. 46.0 expected) and comments from Moody's that it was placing Brazil on review for a potential ratings upgrade (but note that Fitch downgraded California's credit rating to BBB, 2 notches above junk after it was forced to pay some bills with IOUs). The attack on the 200-day MA on the S&P500 survived for another day with a pleasant rebound off 886.60 to finish at 898.72.

One surprising point from the breakdown of the ISM data was that the employment sub-index rose 4.4 points to 43.4, a surprise considering the dismal non-farm payroll number we witnessed last Thursday. Other sub-indices that produced improvements included business activity (+7.4 to 49.8), new orders (+4.2 to 48.6) and export orders up 7.5 points to 54.5 (the first reading above 50 since September) while production and new orders were stable and price-related indices mixed.

Positive developments in US bond markets also helped turn sentiment. The Fed bought another $7 bln of Treasuries today while the $8 bln TIPS auction was well received, paving the way for better sentiment going into the planned auction towards the end of this week.

As the preference towards risk aversion trades waned, so the USD gave back some of its gains, in some cases reverting back to the same levels where Asia had left them, notably in EUR and AUD. GBP was still on the soft side though, pressured by bad weekend press and poor sentiment. Despite the u-turn in appetite, note that the commodity sector remained weak. Oil prices were stuck at 6-week lows and gold hovered around the 925 mark.

Meanwhile, early dissection of the prepared draft G8 memo (thought the meeting hadn't even started yet!) appears to focus on world trade/ anti-protectionism with the recent debate on the USD as a reserve currency, and its negative influence on the greenback, conspicuous by its absence.

The highlight of the Asian session was the RBA rate meeting with the headlines noting that the RBA left rates unchanged but the improving inflation environment leaving scope for further rate cuts down the line. However, additional comments indicated that the RBA viewed China as strengthening 'considerably' and that economic conditions in Australia were not as weak as expected a few months earlier and the downside risks to the outlook have diminished. The RBA acknowledged that mortgage rates had seen a slight uptick of late, noting that they were still at 'very low levels by historical standards'. AUD had a quick knee-jerk reaction lower (albeit 20 ticks) but held the lower 0.79 levels and could extend gains towards 0.80 unless the risk aversion story re-emerges as the session progresses.

CHF has received much focus in recent days following the SNB intervention on June 24. Any subsequent sharp CHF shift lower has been met with the usual rumour/talk of further central bank activity. However, crosses have shifted gradually lower and the EURCHF is sitting at the 61.8% Fibonacci retracement level of the 1.5010-1.5380 sharp up-move. Will this level trigger another response (at least verbal) from the SNB? Keep the ears open and eyes peeled……

The data slate continues to be relatively thin with only UK industrial production and German factory orders to tickle Europe. From North America there is nothing scheduled for the US while Canada releases building permits and Ivey PMI data. Looks like Wall St direction will again be the catalyst for FX moves today.

Saxobank

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Forex Technical Update

Daily Forex Technicals | Written by India Forex | Jul 07 09 06:20 GMT |

Rupee: Rupee stayed weak as expected post budget and crossed our target of 48.35. We maintain bearishness and a break of 48.53 again would push rupee weaker. Bearish.(USD/INR : 48.38)

Euro: Euro is still holding below the short term trendline . We can look at accumulating shorts close to 1.3980 to 1.40 for a target of 150 pips. Bearish (Eur/Usd:1.3978)

Sterling : Gbp had a bearish momentum yesterday but got a good support from 1.6100 levels. Bearishness in the pair still holds . Stay short around 1.6280 levels for 150-180 pips move.(Gbp/Usd: 1.6270) Bearish.

Yen: Yen is short term bullish could head towards 92 level provided dollar maintains strength across board followed by risk aversion.(USD/JPY : 95.33) Bullish

AUD: Remains bearish overall below 0.8050. 2 closings above 0.8100 would negate the view. Corrections in commodity prices is still expected across. Bearish (Aud/Usd: 0.7970).

Gold: Gold was unable to hold above $930 . Still holding bearishness targeting $900 (Gold- $924.18). Rangebound to Bearish.

Dollar Index: Dollar index extends the rebound from 79.56 and is set to take on 80.94. We're anticipating a break of 80.94 resistance to signal resumption of rise from 78.33, to be confirmed by break of 81.36/47 resistance zone. Further rally should be seen to next key resistance at 82.62 (38.2% retracement of 89.62 to 78.93 at 82.64). in such case. (DI- 80.70) Bullish

India Forex
http://www.indiaforex.in

DISCLAIMER

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.


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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jul 07 09 06:28 GMT |

EURUSD

Comment: A small 'hammer' candle yesterday ahead of a rising and increasingly large Ichimoku 'cloud' demonstrate the underlying bullish tone. Until we get a weekly close above 1.4200 we shall have to allow for yet more random consolidation within the recent range.

Strategy: Attempt longs at 1.3955; stop below 1.3800. Short term target 1.4100, then 1.4200.

Direction of Trade: →

Chart Levels:

Support Resistance
1.3950 " 1.4
1.3927 1.4045
1.3876 1.41
1.3825 1.4178/1.4202*
1.3800* 1.423

GBPUSD

Comment: Yesterday's 'hammer' candle whose low was at the middle of the recent trading range underlines the long term bullish trend to this currency pair. Moving averages are still bullish, supported by an increasingly large, upward-sloping Ichimoku 'cloud'. A weekly close clearly above 1.6500 should add to current strong bullish momentum, hopefully with a whole host of currencies pulling in the same direction.

Strategy: Attempt small longs at 1.6225; stop below 1.6075. First target 1.6500, then 1.6600.

Direction of Trade: →

Chart Levels:

Support Resistance
1.6216 " 1.63
1.6187 1.635
1.6125 1.6435
1.6095* 1.66
1.5985 1.6745*

USDJPY

Comment: Pity it didn't close below 95.00 yesterday as this would have seen bearish pressure increase. Expect more consolidation neatly below the lower edge of the Ichimoku 'cloud' and the moving averages today, above trendline support. Hopefully some time this week we will see a re-test of the increasingly important 94.00 area.

Strategy: Attempt shorts at 95.35, adding to 96.00; stop well above 96.25. First target 94.66/94.44, then lower still.

Direction of Trade: →

Chart Levels:

Support Resistance
95.11 " 95.46
95 95.8
94.88 96.25*
94.66 96.6
94.44 94.00 97.25*

EURJPY

Comment: Testing trendline support and a thin Ichimoku 'cloud', below moving averages which suggest a short position. We expect a re-test of the 132.00 area where a weekly close below here would add considerably to downside pressure, potentially setting off a very sharp move lower over the next two weeks.

Strategy: Sell at 133.05, adding to 134.00; stop above 135.55. Short term target 132.00/131.80, then 130.00.

Direction of Trade: →

Chart Levels:

Support Resistance
133.00 " 133.46
132.5 134.05
132 135
131.73 135.4
131.41* 136

Mizuho Corporate Bank

Disclaimer

The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.


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Corn Rebounds From Lowest Since February; Soybeans, Wheat Rise

By Luzi Ann Javier

July 7 (Bloomberg) -- Corn futures in Chicago rebounded from the lowest in more than four months and wheat and soybeans rose as investors judged declines as excessive.

Corn yesterday plunged as much as 3.9 percent to $3.435 a bushel, the lowest since Feb. 20, increasing the loss in the past month to 22 percent. Soybean futures slumped 21 percent since June 5 through yesterday, while wheat futures lost 17 percent.

“We’ll probably see a little bit of a correction today,” Peter McGuire, managing director at Commodity Warrants Australia Pty in Sydney, said by phone today. “It all just collapsed in the past month.”

Corn for December delivery rose as much as 1.1 percent to $3.48 a bushel in after-hours electronic trading on the Chicago Board of Trade and advanced 0.3 percent to $3.4525 a bushel at 11:09 a.m. Singapore time.

Wheat for September delivery added as much as 1 percent to $5.2425 a bushel, and last traded at $5.2275 a bushel. The most- active contract lost as much as 2.2 percent yesterday.

Soybeans for November delivery, after the U.S. harvest, gained as much as 1.2 percent to $9.7475 a bushel, before trading at $9.695.

The volume of corn inspected for export from ports in the U.S., the world’s biggest grower and supplier, rose 5.9 percent to 31.1 million bushels in the week ended July 2, according to a Department of Agriculture report yesterday. Wheat inspected for export rose 7.3 percent to 12.1 million bushels from a week earlier, it said.

Commodity Warrants’s McGuire said a recovery in the U.S. dollar may damp demand for U.S. exports, as supplies become more expensive in other currencies.

The Dollar Index, which tracks the value of the greenback against six major currencies, was little changed at 80.433 at 11:03 a.m. Singapore time. Before today, the gauge gained 2.6 percent since June 2, when it dropped to 78.404, the lowest since Sept. 29.

To contact the reporter on this story: Luzi Ann Javier in Singapore at javier@bloomberg.net





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Shandong Gold Says Government Rejects Its Plan to Buy Miner

By Bloomberg News

July 7 (Bloomberg) -- Shandong Gold Mining Co., China’s third-largest bullion producer by market value, said it scrapped a plan to buy a controlling stake in a gold mining company after the local government rejected the proposal.

Shandong Gold had planned to pay 516 million yuan ($76 million) for a 70 percent stake in Guilaizhuang Mining Co., based in Pingyi county, Shandong province, according to a statement today to the Shanghai Stock Exchange. The local state- assets supervision and administration commission rejected the proposal, the statement said, without giving a reason.

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





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Gold, Little Changed, May Rise in Asia as Dollar, Oil Steady

By Glenys Sim

July 7 (Bloomberg) -- Gold, little changed in Asia, may gain from a two-week low as crude oil stemmed a decline and the dollar rally halted.

Bullion fell to $920.75 an ounce yesterday, the lowest since June 23, as oil led a drop in commodities on concern the global economic recovery will falter, damping demand for the precious metal as an inflation hedge.

“In the near term, gold will trade in a wide $880 to $980 range as concerns swing between inflation and deflation,” Lin Haoxiang, analyst at Guotai Junan Securities, said from Shanghai today. “Gold’s day-to-day moves will still be broadly influenced by the U.S. dollar.”

Gold for immediate delivery traded at $925.98 an ounce at 8:43 a.m. in Singapore. Gold for August delivery on the Comex division of the New York Mercantile Exchange was at $925.90.

Oil, which has dropped 10 percent in the past week, traded near a five-week low on concern a protracted economic slump will curb fuel consumption. The dollar was little changed for a second day after gaining 0.6 percent against a basket of six currencies last week. A rising U.S. currency cuts the attraction of raw materials priced in dollars.

“A broad-based retreat in commodity prices augurs negatively for gold prices,” HSBC Securities analyst James Steel said in a note. “If the pace of global activity remains slow and deflationary fears are rekindled, then gold prices may remain under pressure.”

Among other precious metals for immediate delivery, silver gained 0.5 percent to $13.33 an ounce, platinum rose 0.7 percent to $1,156.75 an ounce and palladium added 0.2 percent to $242.50 an ounce as of 8:47 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net





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Breeding Breakthrough Helps Sushi Baron Create Sustainable Tuna

By Stuart Biggs and Madelene Pearson

July 7 (Bloomberg) -- Hagen Stehr was at home in Adelaide, Australia, on March 12 when his company’s chief scientist called with news that their bet of about $48 million on the breeding of southern bluefin tuna in captivity -- a feat never accomplished before -- might finally pay off.

“Big fella, you better come back,” scientist Morten Deichmann said to the 6-foot-1-inch Stehr.

Stehr, chairman of Port Lincoln, Australia-based Clean Seas Tuna Ltd., rushed more than 500 kilometers (311 miles) to his company’s fish hatchery outside Arno Bay in southern Australia. With tears in his eyes, he pushed his Toyota Land Cruiser to its top speed of 180 kilometers an hour as he raced to see the fertilized eggs for himself. As the owner of a fishing fleet during the past four decades, Stehr had helped empty the seas of the bluefin tuna used in sushi restaurants from New York to Tokyo. Now, at age 67, he believed he was on the verge of saving the tuna -- and the industry that made him rich -- from the threat of extinction.

“Everyone thought I was a bloody lunatic,” says the suntanned Stehr, in jeans and a checked shirt from the iconic line of boots and outdoor clothing named for R.M. Williams, an Australian bushman. “Nobody in the world had ever done this. We’ve created a sustainable fishing industry for years ahead.”

The majestic bluefin, a metallic-blue-and-silver fish, is prized by sushi lovers in Japan, the U.S. and Europe for the rich taste and creamy texture of its meat. In their zeal to feed those palates, fishermen have almost wiped out the two species of bluefin -- northern and southern -- while also threatening the yellowfin and bigeye tuna.

Nothing Left to Fish

The eastern Atlantic bluefin, a northern variety found in the Mediterranean Sea, will probably vanish within 10 years, says a study by marine scientist Brian MacKenzie at the National Institute of Aquatic Resources in Charlottenlund, Denmark.

“In a few years, there’ll be nothing left for us to fish,” says Atsushi Sasaki, a Japanese fisherman who’s caught bluefin for 20 years. “The collapse of bluefin is just around the corner.”

The Japanese -- the biggest consumers of bluefin -- devour 80 percent of the world’s catch. The fish has been served at restaurants such as Nobu, a chain of at least 18 high-end Japanese eateries. The menu at Nobu London, however, warns that bluefin is a threatened species and asks patrons to order an alternative dish.

Failed Quotas

This is more than another fish story. The saga of the bluefin, a creature that can swim 45,000 miles in 17 months to spawn and feed, shows the difficulties in managing resources across borders -- a sign of the challenges ahead as countries confront the more intractable problems of environmental degradation and global warming. At the same time, Stehr’s indoor-breeding breakthrough points to the role technology may play in addressing these broader resource issues.

Since the early 1980s, countries working through the United Nations have tried -- and failed -- to set catch quotas tough enough to protect bluefin and other tuna from overfishing.

“Where you have politicians arguing for a share of a quota, that quota will inevitably be inflated,” says Callum Roberts, a marine conservation biologist at the University of York in England. “That kind of decision making guarantees the collapse of a population.”

Stehr and his scientists now must find a way to grow fertilized hatchery eggs into adult tuna. One challenge: The bluefin, a predator, eats its young.

$20,000 Tuna

“If Hagen Stehr can solve the issues surrounding breeding predacious fish, he’ll have a sustainable product that will last forever,” says Barbara Block, a professor of marine science at Stanford University in California. “The future lies somewhere in what they’re doing.”

Clean Seas, which has raised about $58 million since its initial public offering in December 2005, plans to build more indoor tanks to protect and grow young fingerlings before they’re put into the ocean. Stehr aims to produce at least 250,000 bluefin by 2015 -- a number that would almost equal the total bluefin catch of Australia’s fishermen in a single year.

As prices soar for bluefin, which sell for as much as $20,000 a fish at Tsukiji, the world’s largest fish market in Tokyo, Stehr stands to add to his fortune. He’s worth about $135 million, according to the 2009 annual Australian rich list by BRW magazine, a business publication owned by Sydney-based Fairfax Media Ltd. “It’s about more than making money,” Stehr says. “I would like to leave a legacy to the world with bluefin.”

Sky Diver

Stehr, who’s invested millions of his own money in the breeding of southern bluefin, has always been a risk taker. The former owner of a sky-diving school, he once jumped out of an airplane attached to a parachute packed into a shoe box that he held tucked under his arm.

“It’s more gung-ho-like,” says Stehr, who has a dragon figure tattooed on his forearm. “You make an exit out of the airplane door; you throw the shoe box in the air and pray to God that the chute comes out.”

Since the 1970s, Stehr has helped build a tuna industry that was worth about $7.2 billion globally in 2006. The fishermen have thrived on the high seas, particularly in the Mediterranean, where they have exceeded quotas established by regulators.

Greenpeace Protest

The International Commission for the Conservation of Atlantic Tunas, the UN body that controls the Mediterranean region, set the limit for eastern Atlantic bluefin between 32,000 metric tons and 29,500 metric tons from 1999 to 2007. During that period, even as ICCAT’s own scientists pushed unsuccessfully for lower quotas, fishermen blew past the limits. They netted twice as much bluefin tuna as permitted, or up to 60,000 tons a year, according to ICCAT data.

In November 2008, ICCAT, composed of agricultural officials from 46 nations, including France, Spain, Italy and Japan, held a meeting in Morocco to set stricter quotas. As the meeting began, activists from the environmental group Greenpeace International dumped 5 tons of bluefin tuna heads in front of France’s Agriculture Ministry building in Paris under a banner reading “Bluefin Tuna Massacre.” The pile of gray-blue heads, each about the size of a basketball, spilled off the sidewalk into the street.

Greenpeace activists and several scientists were calling for ICCAT to temporarily ban bluefin fishing.

“If the situation doesn’t improve, ICCAT will take the blame for managing the collapse of one of the most important and profitable fisheries of our time,” says Sebastian Losada, oceans campaigner for Greenpeace in Spain.

Merchant Marine

Regulators did lower annual quotas to 18,500 tons of bluefin by 2010 and for the first time required that an ICCAT observer be onboard the larger vessels that use purse seines -- crane-operated nets that can capture as much as 100 tons of fish in a day.

“If people play by the rules, we’ll still have a fishing season next year,” says Nathalie Charbonneau, a spokeswoman for the European Commission, whose ICCAT members account for 66 percent of the bluefin quota.

Stehr began fishing for tuna in 1961 after he arrived in Australia with little money and no work. A native of Germany, he left home at the age of 12 to become a cadet with the merchant marines and later served as a seaman on cargo ships, bouncing from job to job. When his freighter docked at Port Lincoln, Stehr got off the vessel and never returned.

Crazy Days

After a decade of catching tuna for other operators, he used money he earned diving for abalone to start his own fishing outfit. By the 1980s, the entrepreneur owned several companies that he brought together under the Stehr Group. Today, it boasts a fleet of 21 vessels that range from 30 feet to 100 feet long.

Stehr compares the heyday of bluefin fishing in the Great Australian Bight off the country’s southern coast to the Battle of Britain during World War II, when waves of German Luftwaffe bombers attacked England. Rival fishing companies flew as many as 12 planes at a time from Port Lincoln to spot schools of fish.

“Those days were crazy,” says Stehr. “It was catch as much as you can, kill as many fish in the shortest possible period of time, make a lot of money, then have the rest of the year off. We raped the industry quite badly.”

While Stehr was on his way to catching tens of thousands of tons of southern bluefin in his fishing career, Australia, Japan and New Zealand moved to slow the destruction. The governments began lowering their quotas for the fish in 1984, dropping them to a total of about 14,000 tons per year a decade later.

Fish Farming

The Australian government stood out for cracking down on quota violators, and in 2006 it accused Japan of exceeding its bluefin limit by a total of about 178,000 tons from 1985 to 2005. Japan acknowledged that some overfishing took place.

“You can’t even catch three too many or you end up a criminal,” Stehr says. “We all had our backs against the wall. Most of us were virtually bankrupt.”

To keep his business afloat in the early 1990s, Stehr helped start ocean-based fish farming -- now a booming industry that has exacerbated the reduction of bluefin. Before quotas, fishermen chased the largest tuna because those earned the most profit at market. As restrictions cut into Stehr’s catch, he kept more of the younger tuna, which weighed less, and transferred them to cages at sea.

“We towed large cages in from 300, 400 miles out in the Great Australian Bight all the way to Port Lincoln,” Stehr says.

After feeding tuna in 20 cages for up to 8 months -- enlarging them to weights that surpass his annual 400-ton catch limit -- Stehr sells them to Japan, Europe and the U.S.

Mediterranean Boom

About 70 such farms dot the coasts of Spain, Italy, Croatia and Turkey -- turning the Mediterranean region into a tuna pantry for Japan. The farms have a total capacity of 57,582 tons, or about three times the total ICCAT quota for the area this year.

They hold fish caught in the spring, which is the prime fishing season in the Mediterranean, until the winter, when demand peaks in Japan.

“In the beginning, ranching was a sustainable business that made sense; it really controlled the trade flux in bluefin,” says Roberto Mielgo Bregazzi, a Spaniard who developed the first farms in the Mediterranean. “Then the business matured and resulted in a mushrooming of tuna ranches. In 15 years, we have almost wiped out the entire stock, and I’m very pessimistic we can save it.”

Breeding Tuna

He quit the industry in 2003 and started ATRT Tuna-Ranching Intelligence Unit to expose abuses in the trade.

As wild tuna became scarcer, Stehr started Clean Seas in 2000 with the idea of breeding the fish. The hatchery is set on 700 hectares (1,730 acres) surrounded by sheep ranches and grain farms just outside Arno Bay. The concrete breeding tank -- about 25 meters in diameter and 7 meters deep -- is housed in a plain, white shed that’s monitored with security cameras.

“We are quite strict who we let into our hatchery,” Stehr says.

To get the bluefin to breed, scientists at Clean Seas designed the tank to simulate conditions in the ocean. Using overhead lights to suggest the sun and moon, saltwater piped in from the ocean, artificial currents and temperature controls, the scientists have tried to re-create the experience of a spawning journey for the fish.

Helicopter Airlift

Stehr hired a former Vietnam War helicopter pilot to airlift 400-pound (180-kilogram) adult tuna one by one from the sea to the tank. The fish were pacified, suspended beneath the helicopter, flown over the top of the shed, which has a removable roof, and lowered into the tank. Scientists were concerned that the effects of stress on the tuna from what Stehr called a “military-style operation” might prevent them from spawning.

“It’s like playing cricket with hand grenades,” Stehr says. “If something goes wrong, it costs you mega­dollars.”

Miles Wise, one of about 20 scientists who live at the hatchery for months at a time, watches over the feeding and health of the tuna via a flat-screen monitor. Once a week, he dons a wet suit and enters the tank to get a closer look at the tuna, a fish that will die if it stops swimming.

“They are a difficult species to work with, so it’s been very trying over the last couple of years,” Wise says.

The fish entered the tank in 2006, and for three years the females didn’t produce eggs although the males were making sperm. Stehr’s scientists changed almost every variable, including water temperature and the age of the males.

Hormone Injections

Hormone injections, given to females using spearguns, were a key in finally getting the tuna to spawn, says Abigail Elizur, a professor at the University of Sunshine Coast in Queensland, Australia, who works with Clean Seas. In March, the females began to lay eggs, setting off a mating ritual that lasted for more than one month. On some days, the tuna generated as many as 2 million fertilized eggs.

“Every time you crack a new species, it’s always very exciting,” says Deichmann, the chief scientist who also helped Stehr breed kingfish, a type of amberjack popular for making sushi in Japan. “To everybody that is working in marine hatchery, tuna is the crown. It is probably the most significant thing I have done.”

In 2002, Kinki University’s fisheries laboratory in southern Japan first bred northern bluefin in the ocean under the stewardship of marine scientist Yoshifumi Sawada. The problem with ocean breeding is that the tuna don’t consistently produce fertilized eggs, and only 2 percent of them survive to become juveniles due to cannibalism and dietary issues. Sawada says his project is a long way from achieving large-scale commercial production.

Preventing Cannibalism

The university sold 5,000 fingerlings last year to commercial farms, equal to only 2.5 percent of the 200,000 young tuna caught by Japanese fishing companies for farming annually.

“It’s not enough,” Sawada says.

Stehr may have more success in mass-producing tuna. At Clean Seas, the use of hormones may spur females to spawn more consistently, says Elizur. And scientists can prevent cannibalism by removing the eggs, which float to the surface of the water, from the tanks.

“We have over 50 million fertilized eggs and larvae,” Stehr says. “We have so many we can hold the equivalent of 28 years of quotas for wild southern bluefin in the palm of one hand.”

Stehr still must overcome other obstacles to growing tuna into adults. The fish used to feed captive tuna -- primarily mackerel and sardines -- are also in short supply in many parts of the world. In attempting to save tuna, breeders have to find a way to avoid wiping out the feeder fish. Clean Seas is developing wheat-based pellets to feed its tuna.

General Patton

“Within five years, they’ll be breeding thousands of young tuna,” says Stanford’s Block, who’s served as an unpaid adviser to Clean Seas. “We still have to solve the feed issue, and that’s the huge worry out there.”

In looking for inspiration during the tough years when he couldn’t get his tuna to spawn, Stehr would open a history book about his hero, George Patton, the four-star U.S. general who helped repel the German offensive at the Battle of the Bulge during World War II.

“When I feel kind of low, I read General Patton,” says Stehr, who has the warrior’s picture on his office wall.

If Stehr’s breeding experiment bears fruit, it will change his place in history -- from one of the fishermen who endangered the bluefin to the entrepreneur who helped save it.

To contact the reporters on this story: Stuart Biggs in Tokyo at sbiggs3@bloomberg.net; Madelene Pearson in Melbourne at mpearson1@bloomberg.net.





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Stanford Asks Judge for Access to Funds to Defend Himself

By Andrew M. Harris and Laurel Brubaker Calkins

July 7 (Bloomberg) -- R. Allen Stanford, who the U.S. accuses of leading a $7 billion securities fraud, told a federal judge the criminal case against him should be thrown out if he doesn’t get access to money to pay his lawyers.

Stanford, in papers filed yesterday with U.S. District Judge David Hittner in Houston, said a court-ordered freeze on his assets prevents him from mounting a defense to a lawsuit filed by the U.S. Securities and Exchange Commission as well as in the criminal case filed last month. The SEC sued Stanford in a different federal court in February.

“Throughout the duration of this case, the government has repeatedly sought to deprive Mr. Stanford of his ability to obtain any funds to defend himself,” attorneys for the financier said in the 18-page submission.

The asset freeze was imposed by U.S. District Judge David Godbey in Dallas at the request of the SEC when the agency sued Stanford, two associates and three of businesses, accusing them of being part of a “massive” fraud centered on the sale of certificates of deposit through Antigua-based Stanford International Bank Ltd.

Stanford was indicted for fraud on June 18 together with Stanford Group Co. Chief Investment Officer Laura Pendergest- Holt. The company’s chief financial officer, James M. Davis, was charged separately that day with conspiring to aid the others.

Pendergest-Holt and Stanford have pleaded not guilty to the criminal charges. Davis is to be arraigned on July 13. His lawyer, David Finn, has said Davis is cooperating with the civil and criminal investigations and will plead guilty at a later date.

Bail Fight

Stanford, held at a jail in Conroe, Texas, has been fighting in court to be released on bail.

The issue of paying Stanford’s lawyers came to a head at a June 29 hearing in Hittner’s court on whether the financier should be held without bail until trial.

“I haven’t been paid a penny,” Stanford’s criminal- defense lawyer, Dick DeGuerin, told Hittner. ‘For expenses, legal fees, accounting fees, anything, zip.”

Hittner offered to “help get the attention of the powers that be, at least to get resolution on that point, because you’ve got to start cranking up a defense.”

In April, Stanford had asked Godbey for permission to pay attorneys from funds frozen by that judge’s February court order. Davis and Pendergest-Holt also have filed papers arguing that the court-imposed freeze was impairing their ability to defend themselves.

The SEC and Ralph Janvey, the receiver appointed by Godbey, opposed the release of frozen assets.

Request Denied

Godbey, in a July 1 ruling, denied Stanford’s request for access to his funds to pay lawyers’ fees, saying the financier hadn’t complied with an earlier order to provide an accounting of his personal assets.

In refusing to produce the financial statement, Stanford invoked his U.S. constitutional right not to incriminate himself.

His lawyers argue that he is now being asked to waive that right or his right to counsel.

Janvey, who is charged with marshalling assets to repay investors, also has laid claim to directors’ and officers’ insurance proceeds according to separate filings with Godbey by Pendergest-Holt and Stanford. The defendants each said they need those policy proceeds to help finance their defense.

Former SEC lawyer Jacob Frenkel said it’s unusual for a defendant to ask a federal judge to intervene in actions taken by another federal judge. It’s equally uncommon for a receiver to claim the proceeds from a defendant’s legal insurance policy in an effort to keep someone from defending himself, he said.

‘New Ground’

“This case is treading new ground in a lot of areas,” Frenkel, now in practice with Shulman Rogers in Maryland, said in a phone interview. “I don’t think we can rule out some of these issues potentially being resolved by the U.S. Supreme Court.”

Nancy Sims, a spokeswoman for the receiver, declined to comment on Stanford’s court filing. Kevin Callahan, an SEC spokesman, also declined to comment.

The criminal case is U.S. v. Stanford, H-09-342, U.S. District Court, Southern District of Texas (Houston). The civil case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas).

To contact the reporters on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.





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Discover, Hansen Medical, McMoRan, Vimicro: U.S. Equity Preview

By Lu Wang

July 7 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Discover Financial Services (DFS US): The credit-card company said it’s offering $500 million of shares and may use the money to buy some of the U.S.’s stake from the Treasury.

Hansen Medical Inc. (HNSN US): The medical company said preliminary results showed second-quarter sales were $3.30 million at most. That’s short of the average analyst estimate of $8.72 million in a Bloomberg survey.

McMoRan Exploration Co. (MMR US): The holder of the world record for deepest oil well said it plans to deepen a well in Louisiana after drilling results were “positive.”

Tellabs Inc. (TLAB US): The maker of networking Equipment said it’s cutting about 150 jobs and expects to incur pretax costs of as much as $6 million through the first quarter of 2010.

Vimicro International Corp. (VIMC US): The maker of audio and video signal processing chips said second-quarter revenue was at least $18 million, almost double that in the previous three months.

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





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Macquarie, ING Top Alternative Asset Managers for Pension Funds

By Malcolm Scott

July 7 (Bloomberg) -- Macquarie Group Ltd., ING Real Estate Investment Management and Morgan Stanley are the three biggest managers of alternative assets for pension funds, according to a survey published by Watson Wyatt Worldwide Inc.

Globally, the 100 largest firms managed $817 billion of so- called alternative assets, including real estate, hedge funds and private equity money, at the end of last year, down about 1 percent from a year earlier, according to the survey.

The asset class weathered the global financial crisis better than equities, which slumped 42 percent last year, as managers prevented significant withdrawals and it attracted interest from investors seeking to diversify their portfolios, the researcher said.

Real estate had the highest number or managers in the top 100, with 37 managers accounting for 58 percent of funds managed. Private-equity fund of funds accounted for 20 percent of the assets, ahead of fund of hedge funds with 13 percent. Infrastructure funds and commodities funds made up the balance.

The U.S. accounts for 53 percent of the pension fund assets invested in alternatives, followed by Europe with 33 percent and Asia with 11 percent, according to the report.

HarbourVest Partners LLC was the biggest private equity fund of funds, while Blackstone Alternative Asset Management LP was the biggest fund of hedge funds, Watson Wyatt said.

Grosvenor, Mesirow

Grosvenor Capital Management LP, Mesirow Financial Holdings Inc., Financial Risk Management Ltd. and BlackRock Inc. round out the top five fund of hedge fund managers.

Assets managed by the top 50 fund of hedge funds shrank by 16 percent in 2008, the survey showed, with the average fund managing about $2 billion in assets as of Dec. 31.

Sydney-based Macquarie topped the overall list with $44.4 billion worth of infrastructure assets managed on behalf of pension funds, Watson Wyatt said.

Alternative assets managed on behalf of pension funds had increased 40 percent in 2007.

To contact the reporter on this story: Malcolm Scott at Mscott23@bloomberg.net





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Casino, Rheinmetall, Telecom Italia: European Equity Preview

By Rita Nazareth

July 7 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.

The Dow Jones Stoxx 600 fell 1.2 percent to 201.70. The Dow Jones Stoxx 50 Index declined 1.1 percent to 2,055.57. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, retreated 1.4 percent to 2,343.88.

Casino Guichard-Perrachon SA (CO FP): A French tribunal threw out a lawsuit brought by the Baud family against the biggest supermarket owner in Paris over its purchase of stakes in the Franprix and Leader Price store chains. Casino acted “in a legitimate manner” when it removed Baud family members from management positions at the two companies, the tribunal said. The shares lost 49 cents, or 1 percent, to 46.51 euros.

Parmalat SpA (PLT IM): The dairy company that became insolvent in 2003 reached a settlement with Banca Popolare dell’Etruria e del Lazio Scrl (PEL IM). Popolare Etruria will pay Parmalat 4.2 million euros to settle the case. Parmalat retreated 2.8 cents, or 1.6 percent, to 1.70 euros. Popolare Etruria retreated 14 cents, or 3 percent, to 4.48 euros.

Rheinmetall AG (RHM GY): The maker of weapons for the U.S. Army’s Abrams tank will sell shares representing about 10 percent of current stock to finance debt reduction and its defense division’s expansion. Rheinmetall also expects other countries to buy its Puma tank after winning an order from the German army, the Handelsblatt newspaper reported. The shares fell 1.30 euros, or 4.1 percent, to 30.31 euros.

Telecom Italia SpA (TIT IM): Italy’s largest phone company said it hired Credit Suisse Group AG to analyze options including the sale of Telecom Argentina SA after tighter regulations harmed its ability to control the unit. The shares retreated 1.25 cents, or 1.3 percent, to 99.05 cents.

Vinci SA (DG FP): The world’s biggest construction company won a contract worth more than 100 million euros from France’s Defense Ministry to build a new campus for the Polytechnique school. The shares dropped 36 cents, or 1.1 percent, to 31.10 euros.

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





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3i, Barclays, Cape, Hays, Persimmon: U.K., Irish Equity Preview

By Charlie Duxbury

July 7 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.

The benchmark FTSE 100 Index was down 41.37 or 1 percent to 4,194.91. The FTSE All-Share Index fell 1 percent and Ireland’s ISEQ Index declined 3.5 percent.

3i Group Plc (III LN): Europe’s biggest publicly traded private equity firm releases trading. The company’s shares fell 3.25 pence, or 1.4 percent, to 226 pence.

Barclays Plc (BARC LN): The U.K.’s third-largest bank said Qatar Investment Authority has a 7.38 percent stake while Challenger Universal Ltd., an investment vehicle set up by Qatar, holds 2.84 percent, making the Gulf state the bank’s biggest shareholder. The shares fell 4.25 pence, or 1.4 percent, to 292.75 pence

Big Yellow Group Plc (BYG LN): The self-storage company releases trading. Its shares fell 0.3 pence, or 0.1 percent, to 338.75 pence.

Cape Plc (CIU LN): The supplier of industrial scaffolding and insulation releases trading. The shares fell 7.75 pence, or 4 percent, to 188 pence

CRH Plc (CRH LN): The manufacturer of cement and other building materials releases trading. The shares dropped 0.66 cents, or 4.2 percent, to 15.26 euros.

Hays Plc (HAS LN): The recruitment agency’s Chief Executive Officer Alistair Cox said “the mood and tone of voice” of the company’s trading statement, July 9, is “unlikely to be any different” from recent trading updates in which the company has said business will remain tough for some time, the Financial Times reported, citing comments by Cox. Its shares fell 1.5 pence, or 1.8 percent, to 81.75 pence.

Michael Page International Plc (MPI LN): The U.K.’s second- largest recruitment company releases trading. The shares declined 4.5 pence, or 2 percent, to 225.5 pence.

N Brown Group Plc (BWNG LN): The U.K. owner of mail-order catalogs Fashion World and Simply Be, releases trading. Its shares rose 8.5 pence, or 4 percent, to 220 pence.

Persimmon Plc (PSN LN): The U.K.’s largest homebuilder by market value releases trading. Its shares gained 4.75 pence, or 1.3 percent, to 363.25 pence.





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Commerzbank, Deutsche Bank, Rheinmetall: German Equity Preview

By Patrick Donahue

July 7 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.

The X-DAX Index rose 0.2 percent to 4,675.23. The measure, derived from trading in DAX Index futures, provides an estimate of Germany’s benchmark index. The DAX fell 1.2 percent to 4,651.82.

Air Berlin Plc (AB1 GY): The airline releases passenger- traffic data for June. In May, the company said the number of passengers fell 7.7 percent from a year earlier to 2.51 million travelers. The shares fell 5 cents, or 1.5 percent, to 3.29 euros.

Commerzbank AG (CBK GY), Deutsche Bank AG (DBK GY) and Deutsche Postbank AG (DPB GY) stand to profit from a government proposal to change the way assets are revaluated under current accounting rules, Financial Times Deutschland said. Commerzbank shares fell 27 cents, or 5.2 percent, to 4.79 euros.

Deutsche Bank shares dropped 1.39 euros, or 3.2 percent, to 41.31 euros.

Postbank shares slid 41 cents, or 2.2 percent, to 18.10 euros.

Rheinmetall AG (RHM GY): The maker of weapons for the U.S. Army’s Abrams tank will sell shares representing about 10 percent of current stock to finance debt reduction and its defense division’s expansion. Rheinmetall also expects other countries to buy its Puma tank after winning an order from the German army, the Handelsblatt newspaper reported. The shares fell 1.30 euros, or 4.1 percent, to 30.31 euros.

To contact the reporter on this story: Patrick Donahue in Berlin at at pdonahue1@bloomberg.net.





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Asian Commodity Stocks Fall on Oil, Metals; Utilities Advance

By Jonathan Burgos

July 7 (Bloomberg) -- Asian commodity stocks declined after oil and metal prices slumped, countering gains in the region by utilities and technology companies.

Rio Tinto Group Ltd., the world’s No. 3 mining company, and Japan’s Mitsui & Co., which gets more than half its profit from commodities, both sank more than 2 percent. Tokyo Electric Power Co., Asia’s largest utility, rose 1.2 percent to a two-week high on optimism energy costs will fall. Samsung Electronics Co., the world’s largest memory-chip maker, gained 2.4 percent after BNP Paribas SA recommended investors buy the stock.

“Investors are still cautious,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “They are looking for further evidence that earnings and economic data are improving before putting fresh money into the market.”

The MSCI Asia Pacific Index lost 0.2 percent to 101.90 at 2:44 p.m. in Tokyo, with volatility levels on the gauge slipping to a six-month low. The index has slipped 3.2 percent since climbing to an eight-month high on June 12 as disappointing economic data damped demand for equities. The measure has gained 44 percent from a more than five-year low on March 9.

Japan’s Nikkei 225 Stock Average dropped 0.5 percent to 9,634.92. Mitsui O.S.K. Lines Ltd., the world’s largest operator of iron-ore vessels, lost 2.5 percent after shipping rates fell for a fourth day. Australia’s S&P/ASX 200 Index fell 0.3 percent as the central bank kept interest rates unchanged at the lowest levels in about 50 years.

LG, China Development

Indonesia’s Jakarta Composite Index gained 1.5 percent a day before presidential elections. South Korea’s Kospi Index added 0.4 percent, led by LG Electronics Co., which climbed 4.1 percent on plans to boost revenue from its Mexican factories. China Development Financial Holding Corp. jumped 5.7 percent in Taipei after selling a stake in a building.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The measure gained 0.3 percent yesterday as Moody’s Investors Service said it may lift Brazil’s debt rating.

Rio Tinto declined 2.2 percent to A$47.44. BHP Billiton Ltd., the world’s largest mining company, lost 0.6 percent to A$32.42. Mitsui & Co. dipped 2 percent to 1,061 yen. Copper futures in New York fell 0.5 percent in after-hours trading, taking declines in the past three days to 3.5 percent.

PetroChina Co., China’s largest oil producer, lost 1.1 percent to HK$8.25 in Hong Kong. Woodside Petroleum Ltd., Australia’s second-largest oil producer, declined 1.3 percent to A$40.32. Crude oil slid 4 percent to $64.05 a barrel yesterday in New York, the lowest settlement since May 27.

Lower Volatility

“Volumes are light and commodities are tumbling, which is encouraging investors to stay on the sidelines until they can get a fix on the direction of the economy,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.

Ten-day implied volatility on the MSCI Asia Pacific Index has dropped to the lowest level since January, data compiled by Bloomberg show. The average valuation of companies on the index climbed last week to 1.5 times the net value of assets, close to the highest level since September.

“We’ve hit our peak for now, and there will be a correction, although likely not a large one,” said Hisakazu Amano, who helps oversee some $16 billion at T&D Asset Management Co. in Tokyo. “There were expectations that the market and economy would stage a quick rebound, but we are seeing that the recovery will take time.”

The Bank of Japan maintained a cautious stance on the economy in its quarterly report yesterday even as it became more optimistic on all regions of the country for the first time since January 2006.

Baltic Dry Index

Glenn Stevens, governor of the Reserve Bank of Australia, said today that there was “still scope” to reduce interest rates if necessary. Stevens, who cut interest rates six times between September and April, left the bank’s overnight cash target rate at 3 percent today.

Mitsui O.S.K. sank 2.5 percent to 553 yen. STX Pan Ocean Co., South Korea’s biggest bulk-commodity shipping line, fell 3.1 percent to 11,100 won. The Baltic Dry Index, a measure of shipping costs for commodities, retreated 4.1 percent yesterday, taking losses since June 3 to 21 percent.

Tokyo Electric gained 1.2 percent to 2,480 yen on optimism lower oil prices will cut its fuel bill. The company slashed its use of crude oil and fuel oil to generate power after it restarted a nuclear reactor on May 19. Chubu Electric Power Co. climbed 2.4 percent to 2,305 yen.

Samsung, Sumco

Samsung Electronics gained 2.4 percent to 649,000 won. The company had its rating upgraded to “buy” from “hold” at BNP Paribas, which said the company’s second-quarter earnings guidance was “significantly” higher than analysts’ expectations. The brokerage lifted its share-price estimate to 740,000 won from 630,000 won in a report today. Sumco Corp., the world’s second-largest maker of silicon wafers, jumped 5.9 percent to 1,465 yen. The stock was lifted to “overweight” from “underweight” at Morgan Stanley, which said wafer prices are unlikely to fall further.

In Seoul, LG Electronics, the world’s third-largest maker of liquid-crystal display televisions, climbed 4.1 percent to 128,000 won. The company plans to boost revenue from its Mexican factories by 54 percent to $4 billion as it expands production.

China Development, the owner of Taiwan’s largest venture- capital company, rose 5.7 percent to NT$8.30 after selling its 19.55 percent stake in the Taipei 101 building to a company controlled by the Ting Hsin International Group.

Daihatsu Motor Co. advanced 7.3 percent to 997 yen. Japan’s largest minicar maker was rated “buy” in new coverage at Deutsche Bank AG and was raised to “buy” from “underperform” at Bank of America Corp.’s Merrill Lynch unit.

To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.





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Hong Kong Stocks Rebound; Cathay, Mengniu Dairy Lead Advance

By Hanny Wan

July 7 (Bloomberg) -- Hong Kong stocks rose, with the benchmark index rebounding from a one-week low. Cathay Pacific Airways Ltd. and China Resources Enterprise Ltd. climbed after their shares were upgraded by brokerages.

Cathay Pacific, Hong Kong’s largest airline, jumped 5.9 percent, after JPMorgan Chase & Co. lifted its rating on the stock to “overweight.” China Resources Enterprise Ltd., a retailer, rose 2.9 percent. China Mengniu Dairy Co., the nation’s biggest maker of liquid milk, rallied as much as 12 percent after Cofco (Hong Kong) Ltd. and Hopu Investment Management Co. agreed to buy a 20 percent stake in the company.

“Airlines may see demand coming back as it’s widely expected the global economy will start to recover by the end of this year,” said Castor Pang, a strategist at Sun Hung Kai Securities in Hong Kong. “Chinese consumption plays will be safer bets as the economy sees steady growth.”

The Hang Seng Index added 0.7 percent to 18,097.08 at the 12:30 p.m. break, having closed yesterday at its lowest level since June 24. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, advanced 0.5 percent to 10,877.22.

Cathay Pacific surged 5.9 percent to HK$10.86, the sharpest gain on the benchmark index. JPMorgan lifted its recommendation on the stock to “overweight” from “underweight” on capacity cuts and expected fuel-hedging gains.

Mengniu Purchase

China Resources added 2.9 percent to HK$15.48. CLSA resumed coverage on the stock with a “buy” rating, saying the company’s retail business will benefit from an increase in China’s consumption in 2010, the brokerage said.

Mengniu added 2.4 percent to HK$19.56, after gaining HK$6.12 billion ($790 million) of capital from Cofco and Hopu. The stock rallied as much as 12 percent today as trading resumed after a one-day suspension. Cofco, part of China’s biggest grain trader, and Hopu will acquire a 20 percent stake from the dairy company and shareholders, Mengniu said yesterday.

Credit Suisse Group lifted its rating on the stock to “neutral” from “underperform.”

Tencent Holdings Ltd., operator of China’s biggest online chat service, climbed 3.4 percent to HK$90.50. BNP Paribas SA lifted its share-price estimate for the stock to HK$100 from HK$82.

Almost three stocks rose on the 42-member Hang Seng Index for each that dropped. July futures added 0.8 percent to 18,072.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net





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