Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Jul 14 09 08:25 GMT |

Previous session overview Monday night saw the Dollar close low, EURUSD stood at 1.40, GBPUSD was seen at 1.6290. It was sold after the Dow rallied nearly 200 points to close at a 14-day high. Early Asian traders picked up cheap Dollars, but they were unable to drive EURUSD through support at 1.3965, positions were squared and the pair returned to 1.40. GBPUSD outperformed Euro this morning, extending the top to 1.6305 a short while ago. USDJPY traded through 92.60 in late Europe and never looked back. Up to 93.10 at the end of the New York session, the pair held on to form a base at 92.80 and extend the top to 93.30 in Tokyo. We are now trading close to key resistance at 93.60. Both JPY-crosses rose strongly, EURJPY reached a high of 130.65 while GBPJPY peaked at 152. Their moves were amplified by the weak Dollar. So far they remain underneath of their key resistance levels of 131.30-ish EURJPY and 152.50 GBPJPY. Market expectation Lots of market data this morning in Europe, starting with the German and European ZEW economic sentiment index for July. At 12.30 GMT US June Retail Sales and PPI will be released. Currency markets are likely to remain volatile. With Euro and Cable threatening to lift the July top on one side and a growing sentiment that the GBP rise may be very overdone on the other. There should be lots of trading interests and volatility. For now EURUSD 1.3850 / 1.4050 range persists, GBPUSD next strong resistance lies above 1.6360, support far lower at 1.61. USDJPY range 92.80 / 93.40 initially, a test of 93.60 seems imminent. A fall lower would confirm a medium-term outlook for a stronger YEN. EURJPY and GBPJPY are close to their resistance levels, a daily close above may scare the bears. On the other hand, the last days rally seem like an invitation to establish fresh short positions. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Jul 14 09 07:18 GMT |

CHF The estimated test of key supports has been implemented with conditions for implementation of pre-planned long positions. OsMA trend indicator, having marked formation of reversal bullish signals considering prevailing of bullish party, gives grounds for preservation of opened long positions with pre-planned target levels practically unchanged. Therefore, as for open buying positions the targets will be 1,0860/80, 1,0920/40, 1,0980/1,1020 and (or) further break-out variant up to 1,1060/80, 1,1120/40, 1,1180/1,1220. The alternative for sales will be below 1,0790 with the targets of 1,0720/40, 1,0640/60, 1,0580/1,0600. GBP The estimated test of key resistance range levels has been confirmed, but relatively high level of bullish activity marked by OsMA trend indicator has not suggested immediate implementation of pre-planned long positions. At this point considering developing situation merely favoring parity of both parties, as earlier, we can assume probability of rate range movement with no clear choice of planning priorities for today. Hence and considering downside indicator trend, we assume probability of rate return to close 1,6160/80 support range levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term sales on condition of the formation of topping signals the targets will be 1,6220/40, 1,6280/1,6320 and (or) further break-out variant up to 1,6360/80, 1,6420/40, 1,6480/1,6500. The alternative for sales will be below 1,6100 with the targets of 1,6020/40, 1,5960/80, 1,5900/20. JPY The estimated test of key resistance range levels has been confirmed with conditions for implementation of pre-planned short positions. OsMA trend indicator, having marked assumed test of Ichimoku cloud border by formation of reversal bearish sign gives grounds for preservation of earlier opened short positions considering earlier marked high level of buying activity and incompleteness of bullish development cycle, there are risks of further rate rise contained in Ichimoku cloud. Nevertheless, as earlier, as for open sales the targets will be 92,60/80, 92,00/20, 91,60/80 and (or) further break-out variant up to 91,00/20, 90,40/60, 89,80/90,00. The alternative for buyers will be above 94,40 with the targets of 94,80/95,00, 95,60/80. EUR Earlier opened and preserved short positions did not result in achievement of anticipated targets within previous trading day. OsMA trend indicator, having marked weakness of bullish party activity level, gives grounds for preservation of earlier opened short positions with target levels practically unchanged. Therefore, as for open sales, the targets will be 1,3900/20, 1,3820/40, 1,3740/60 and (or) further break-out variant up to 1,3680/1,3700, 1,3620/40, 1,3560/80. The alternative for buyers will be above 1,4040 with the targets of 1,4080/1,4100, 1,4140/60, 1,4200/20. FOREX Ltd www.forexltd.co.uk

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Forex and Dow Jones Recommended Levels

Daily Forex Technicals | Written by FXtechtrade | Jul 14 09 06:51 GMT |

EUR/USD Today's support: - 1.3943, 1.3898 and 1.3860(main), where correction is possible. Break would give 1.3823, where correction also may be. Then follows 1.3790. Break of the latter would result in 1.3767. If a strong impulse, we would see 1.3740. Continuation will give 1.3726 and 1.3684. Today's resistance: - 1.4027 and 1.4050(main). Break would give 1.4077, where a correction is possible. Then goes 1.4096. Break of the latter would result in 1.4136. If a strong impulse, we'd see 1.4153. Continuation will give 1.4176. USD/JPY Today's support: - 92.64, 92.26 and 91.80(main). Break would bring 91.62, where correction is possible. Then 91.36, where a correction may also happen. Break of the latter will give 91.14. If a strong impulse, we would see 90.86. Continuation would give 90.47 and 90.21. Today's resistance: - 93.67, 94.12 and 94.50(main), where a correction may happen. Break would bring 95.00, where also a correction may be. Then 95.36. If a strong impulse, we would see 95.78. Continuation will give 96.43. DOW JONES INDEX Today's support: - 8250.00, 8212.46 and 8184.37(main), where a delay and correction may happen. Break of the latter will give 8156.20, where correction also can be. Then follows 8130.00. Be there a strong impulse, we would see 8119.50. Continuation will bring 8100.00. Today's resistance: - 8352.12 and 8376.18(main), where a delay and correction may happen. Break would bring 8413.20, where a correction may happen. Then follows 8436.50, where a delay and correction could also be. Be there a strong impulse, we'd see 8457.40. Continuation would bring 8494.70. FXtechtrade http://www.fxtechtrade.com Disclaimer: Any information presented by Nikolajs Serikovs at this very website should be in no way understood as an offer, promise or guarantee for receiving a profit or avoiding the losses. Stated here levels of support and resistance must not be construed as an investment advice or endorsement for any financial instrument. There exists no guarantee that the market would behave in accordance with the information stated here Prepared in Republic of Latvia for the worldwide distribution.

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Business Sentiment Rises In Australia For The First Time Since 2007

Daily Forex Fundamentals | Written by ecPulse.com | Jul 14 09 07:54 GMT |

Australia released today some data from the business sector, where the business conditions have improved to -2 in June from the previous reading -14, while the business confidence rose into the positive area reaching to 4 during the month of June from the previous -2. Confidence entered the positive area for the first time since December 2007, after Australia’s central bank lowered rate to the lowest in 49 years at 3.00% in order to support domestic consumption, while the stimulus plans have managed to slightly compensate for the decline in exports. Even if the economy sees higher unemployment which reached to 5.8% in June, the confidence is still improving since the economy managed to avoid falling into recession during the first quarter of the year after growing unexpectedly by 0.4%, being of the few economies around the world to stand in face of this worldwide recession. The improvement in consumer spending and the support seen in demand on exports since China started recovering while some other major countries are seeing some stability into their economies, are factors that helped Australia avoid recession and determined the central bank to hold rates steady in order to monitor closely the latest developments before taking any more actions. The decisions taken by the Australian government are certainly improving the future outlook of the business conditions, which might improve if worldwide trade will start picking up, raising companies’ revenues and profits, which will determine them to stop reducing jobs, then definitely consumers, will feel more confident to spend more. Moving to Singapore, which today improved its economic forecasts for this year, as the gross domestic product is expected by the government to shrink by 4.0% to 6.0% in 2009 from the previous estimation of -9.0%; the economy is obviously on the right track and might start recovering form the worst recession since 1965. Even if the growth might come slowly, however the improvement in some Asian economies, the rising in optimism, the government stimulus plans and the tax cuts were all factors that support the future outlook of Singapore which relies heavily on exports, especially in the second quarter. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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China Needs to Keep Reining in Loans, Researcher Says

By Bloomberg News

July 14 (Bloomberg) -- China’s central bank can keep inflation in check without harming the economy by making clear it plans to rein in lending, said Xia Bin, head of financial research at the State Council Development Research Center.

“The People’s Bank of China needs to manage inflation expectations by giving signals of a more stable money-supply growth,” said Xia, who attended a meeting hosted by Premier Wen Jiabao last week. “The government’s appropriately loose monetary policy shouldn’t be without limits.”

Policy makers pledged this week to do more to guide loan expansion as record growth in credit adds to the risks of asset bubbles and bad debts. New loans rose almost fivefold in June as the credit boom revived the world’s third-biggest economy, helping the Shanghai Composite Index surge 71 percent this year.

Two government debt sales failed last week to draw enough bids as investor concerns grew that the threat of inflation would prompt policy makers to further restrict funds. The People’s Bank sold bills through 28- and 91-day repurchase agreements today at higher yields for a third consecutive week.

“The central bank will guide the rates higher through open-market operations,” said Dong Dezhi, an analyst at Bank of China Trading Center in Shanghai. The yield on the central bank’s three-month bills may rise to 1.4 percent, from 1.22 percent yesterday, before stabilizing, he forecast.

Current money-supply growth is sufficient to achieve the government’s economic growth target of 8 percent, said Xia, whose center is affiliated with the Cabinet. He estimates a 14 percent increase in money supply would be enough to back gross domestic product growth of 10 percent. M2, the broadest measure of money supply, rose 25.7 percent in May from a year earlier.

Open-Market Operations

The People’s Bank sold bills through 28-day repurchase agreements at 1.05 percent today, compared with 0.9 percent in the year through June 16.

China will mainly use such sales and so-called “window guidance” to curb lending, said Liu Yuhui, director of the Center for Chinese Economic Evaluation in Beijing at the Chinese Academy of Social Sciences. “The way of quietly changing the policy, which has special Chinese characteristics, will help avoid any great impact on the market and the economy.”

China’s GDP increased 6.1 percent in the first quarter from a year earlier, the least in almost a decade. The consumer price index declined for a fourth month in May, falling 1.4 percent.

Rate Outlook

Banks made new loans totaling 7.4 trillion yuan ($1.1 trillion) in the first half, more than triple the amount a year earlier. That helped drive up stocks and property values. A government report last week showed home prices in major cities climbed in June for the first time in seven months.

Zhu Baoliang, chief economist in Beijing at the State Information Center, said it’s unlikely China will raise interest rates or require banks to set aside more cash as reserves “in the short term.”

The central bank has kept borrowing costs unchanged this year, after reducing the benchmark one-year deposit rate five times in the last four months of 2008 to 5.31 percent as the government sought to bolster economic growth amid the global recession.

“We haven’t seen a sustainable recovery in China’s economy yet,” Zhu said. “If we cut stimulus efforts, the economy may head towards a second bottom.”

--Belinda Cao, Judy Chen. Editors: James Regan, Sandy Hendry

To contact the Bloomberg news staff on this story: Belinda Cao in Beijing at lcao4@bloomberg.netJudy Chen in Shanghai at Xchen45@bloomberg.net.

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Taiwan Premier Sees No Delay in China Economic Accord

By Chinmei Sung and Yu-huay Sun

July 14 (Bloomberg) -- Taiwan will continue to push for an economic cooperation accord with China, Premier Liu Chao-shiuan said today, adding “there’s no delay” in the process.

The two sides expect to finish a joint study on the planned economic agreement before the end of September and complete negotiations this year, Minister of Economic Affairs Yiin Chii- ming said at a business breakfast in Taipei. The island is also working on signing a separate financial deal with the mainland, Liu said at the same event.

The Taiex stock index rose as much as 1.2 percent after plunging the most in a month yesterday on concern accords with China to ease restrictions on trade and finance could be delayed. Taiwan is seeking closer ties with the mainland to support an economy that it forecasts may contract at a record pace this year amid declining exports and business investment.

“Negotiations will take time as an economic agreement involves many facets,” said David Dong, who helps oversee the equivalent of $1.5 billion of assets at President Investment Trust Corp. in Taipei. “The market overreacted yesterday as it is inevitable talks with China will have twists and turns.”

President Ma Ying-jeou’s government wants to sign agreements with China that would waive tariffs and give preferential market access for the island’s banks, brokerages and insurers.

Stock Market

Negotiations for an economic cooperation framework between China and Taiwan should begin this year, with the signing of a deal in 2010, Lai Shin-yuan, chairwoman of the island’s Mainland Affairs Council, said July 12. The comments helped spark a 3.5 percent slump in the share index yesterday.

The Taiex index rose 0.9 percent to 6,592.43 at 10:14 a.m. in Taipei. Shares in Cathay Financial Holding Co., the island’s largest publicly traded financial-services company, increased 0.8 percent and those in Fubon Financial Holding Co. gained 0.7 percent. Taiwan Semiconductor Manufacturing Co. rose 1.3 percent.

The Taiwan dollar advanced 0.1 percent after falling yesterday to the lowest since May 6 against the U.S. currency.

Ties between China and Taiwan have improved since Ma took office in May last year, abandoning his predecessor’s pro- independence stance. The two sides started direct flights, shipping and postal services across the Taiwan Strait on Dec. 15, ending a six-decade ban.

Unemployment Forecast

The jobless rate may climb to 6 percent in June and July, Premier Liu also said today. That would surpass the record 5.84 percent rate reached in May.

Taiwan’s economy shrank an unprecedented 10.24 percent in the first quarter from a year earlier, the statistics bureau said May 21. Gross domestic product may contract 4.25 percent this year, it forecast.

The government plans NT$858.5 billion ($25.9 billion) of spending over four years, equal to about 6 percent of GDP, on infrastructure, consumer grants and tax cuts to revive growth.

Taiwan has earmarked NT$313 billion for economic stimulus next year, the Council for Economic Planning and Development said yesterday.

China and Taiwan split in 1949 after a civil war brought the communists to power in the mainland, forcing the Nationalist Kuomintang to flee to the island. China regards Taiwan as one of its provinces and has threatened to invade if it declares formal independence.

To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.netYu-huay Sun in Taipei ysun7@bloomberg.net

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China’s Economic Growth May Accelerate to 7.8% on Credit Boom

By Bloomberg News

July 14 (Bloomberg) -- China’s economy may have expanded 7.8 percent in the second quarter as record lending and surging investment drove a rebound from the weakest growth in almost a decade, a survey shows.

The median forecast of 20 economists in a Bloomberg News survey compares with a 6.1 percent expansion in the previous three months from a year earlier. The government will announce gross domestic product in Beijing on July 16.

China’s 4 trillion yuan ($585 billion) stimulus package and the scrapping of lending restrictions for banks powered a revival in the world’s third-largest economy, countering a collapse in exports. Investment in factories, property and roads surged 34 percent in the first six months of 2009 from a year earlier, the fastest pace in five years, the survey showed.

“China will be the first among major economies to confirm an economic recovery,” said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. Policy makers will use bill sales, instructions to banks, and loan regulations to “fine- tune” monetary policy, Tao said.

A rebound in GDP would snap a two-year run of progressively slower growth. The Shanghai Composite Index has climbed 80 percent from last year’s low, with PetroChina Co. and Industrial & Commercial Bank of China Ltd. contributing the biggest shares of the gain, as money floods the economy.

China’s slowdown deepened after government efforts from 2007 to cool the economy and the property market by raising interest rates and adding loan restrictions were exacerbated by the global financial crisis.

Maintaining Stability

Premier Wen Jiabao wants faster growth to create jobs and maintain social stability ahead of the 60th anniversary of Communist Party rule in October. Ethnic riots in Urumqi in the northwestern Xinjiang province on July 5 left at least 184 people dead, highlighting the potential for disorder.

“The outlook for exports and the job market remains grim, so Beijing won’t step on the brake until they’re assured of social stability,” Tao said.

Wen cautioned this month that a recovery is not yet on solid ground, citing falling profits and fiscal revenue, unemployment and weak global demand.

The central bank has kept interest rates and reserve requirements for lenders unchanged this year after cuts in 2008. It has stalled the yuan’s gains against the dollar for a year to help exporters.

‘Fragile’ Recovery

“China’s economic rebound is still fragile, so any drastic change to macroeconomic policies would be a spring frost that freezes the green shoots,” said Fan Jianping, head of the economic forecast department of the State Information Center, an affiliate of the nation’s top economic planning agency.

Record lending may inflate bubbles in stocks and property and add to bad-debt risks. The central bank pledged yesterday to do more to “guide” loan growth after previously urging more lending to small and medium-sized businesses.

Two government bill sales failed last week on speculation that the credit boom will spark inflation. That risk is not immediate. Consumer prices may have fallen 1.3 percent in June from a year earlier, the fifth monthly decline, with producer prices dropping a record 7.4 percent, the survey showed.

Industrial-output growth may have quickened to 9.5 percent in June, the fastest pace in nine months after eliminating seasonal distortions in January and February, the survey showed. Retail sales rose 15.3 percent from a year earlier, according to the economists’ forecasts.

New loans tripled to 7.37 trillion yuan in the six months through June from a year earlier, overshooting the central bank’s minimum target for the whole year by 47 percent.

--Li Yanping. Editors: Paul Panckhurst, Margo Towie.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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U.K. Housing Market Improves as London Survey Shows Increase

By Brian Swint

July 14 (Bloomberg) -- The U.K. housing market improved last month as more London real-estate agents and surveyors said home values increased rather than fell for the first time in 20 months, the Royal Institution of Chartered Surveyors said.

Across Britain, the number of respondents saying prices dropped exceeded those reporting gains by 18.1 percentage points, the highest reading since September 2007, RICS said in its monthly survey released today in London. The balance for the capital became positive for the first time since October 2007.

The two-year long collapse in prices may be starting to end as the U.K. starts to emerge from its deepest recession in a generation. The Bank of England last week declined to extend its emergency bond-buying program, waiting until next month to reexamine its forecasts for economic growth and inflation.

“There’s a lot more optimism,” Simon Rubinsohn, chief economist at RICS, said in a Bloomberg Television interview. “There has been a wholesale shift in sentiment.”

A majority of surveyors now expect property prices to increase for the first time since May 2007, RICS said today. The indexes for new sales and buyer interest rose to the highest since 1999, according to the report.

While U.K. gross domestic product fell 2.4 percent in the first quarter, the most since 1958, the economy may now be stagnating, the National Institute of Economic and Social Research said last week. Warmer weather helped push up same- store retail sales in June by 1.4 percent from a year earlier, the British Retail Consortium said in a separate report today.

Long Haul

The economy has probably hit bottom and will pick up over time, Bank of England Deputy Governor Charles Bean said in an interview on BBC Radio Leeds yesterday. The recovery may be “a long haul,” he said.

Lloyds Banking Group Plc’s Halifax division last week said that house prices fell 0.5 percent in June and 12.5 percent from a year earlier. Stephen Nickell, chair of the National Housing Planning and Advice Unit, said that the market won’t recover until banks become more willing to provide loans.

House prices are likely to fall further into next year before stagnating in 2011, PricewaterhouseCoopers LLP predicted in a report today.

“The recovery looks like it’s still going to be very patchy,” RICS’s Rubinsohn said. “Finance is still in short supply and unemployment is likely to keep rising.”

Parliament’s Communities and Local Government Committee said today that the government must do more to assist mortgage financing and encourage more homebuilding. The cost of two-year fixed mortgages rose to the highest this year in June, Bank of England data showed last week.

Homes Shortage

The outlook for house prices may be brighter because of a shortage of homes on the market. The average number of properties on agents’ books fell to 56.9 from 58.5 last month, a drop of 32 percent from a year earlier, RICS said.

The RICS index for prices was positive this month for London, the southwest and the southeast of England. The lowest index reading was for the West Midlands, where it was minus 48.

The Bank of England on July 9 kept the benchmark interest rate at 0.5 percent and refrained from expanding its 125 billion pound ($201 billion) asset-purchase plan. Policy makers will make their next interest-rate decision on Aug. 6.

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

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Singapore Raises GDP Forecast as Recession Recedes

By Shamim Adam

July 14 (Bloomberg) -- Singapore’s government raised its economic forecast for 2009 as gains in construction and pharmaceutical output lifted the nation from its deepest recession since independence in 1965.

Gross domestic product will shrink 4 percent to 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said in a statement today. The economy expanded an annualized 20.4 percent last quarter from the previous three months, the first growth in a year.

“The Singapore economy is back, and back with a vengeance,” said Robert Prior-Wandesforde, a senior economist at HSBC Holdings Plc in Singapore. “We think other drivers of growth will come through as the year progresses, ensuring that, although bumpy, the recovery is likely to be sustained.”

Singapore stocks advanced after the report, led by the country’s biggest developer, Capitaland Ltd., on optimism a combination of tax cuts and record government spending will support the recovery. South Korea and Japan have said their economic outlook is improving and the International Monetary Fund raised its growth forecast for emerging Asia last week.

The Singapore dollar rose 0.4 percent to S$1.4605 against the U.S. currency as at 11:04 a.m. local time. The benchmark stock index climbed 1.3 percent.

“Across Asia, things are not going to be as bad as what everyone thought at the beginning of the year,” said Song Seng- Wun, regional economist at CIMB-GK Securities Pte in Singapore. “For export-oriented Asian economies, the drag from the manufacturing sector is going to be less than forecast.”

Stimulus Plans

Governments worldwide have pledged about $2 trillion in stimulus to counter the global recession, helping stabilize sales by Asian companies including Japan’s Nissan Motor Co. and Singapore’s Frasers Centrepoint Homes.

South Korea last month raised its GDP estimate for 2009 and 2010, saying fiscal stimulus and interest-rate cuts stoked consumer confidence. Goldman Sachs Group Inc., Morgan Stanley and the World Bank have raised forecasts for China in the past month. China will release GDP data on July 16.

The revised 2009 GDP prediction “reflects the less severe contraction in the first half of the year, while the underlying economic conditions remain weak,” Singapore’s trade ministry said. The expansion last quarter was better than the median estimate for a 13.4 percent gain in a Bloomberg survey.

Singapore’s $161 billion economy contracted 3.7 percent last quarter from a year earlier, better than the median estimate for a 5.4 percent decline in a Bloomberg survey.

Bouncing Back

Manufacturing, which accounts for a quarter of the economy, fell 1.5 percent from a year earlier, after sliding a revised 24.3 percent in the three months ended March.

“Asia is bouncing back in a V-shaped fashion,” said David Carbon, head of economic and currency research at DBS Group Holdings Ltd. in Singapore. “Industrial production is 65 percent back to pre-crisis levels and exports have recovered about one-third of their lost territory.”

India’s industrial production increased at the fastest pace in eight months in May, while Malaysia’s declined the least in six months.

The Japanese government said yesterday the economy is “picking up,” and upgraded its view of exports and consumer spending. Australia’s business sentiment turned positive in June for the first time since December 2007.

‘Peter Out’

The better growth forecast for emerging Asia “owes to improved prospects in China and India, in part reflecting substantial macroeconomic stimulus and a faster-than-expected turnaround in capital flows,” the IMF said July 8. “However, the recent acceleration in growth is likely to peter out unless there is a recovery in advanced economies.”

The “volatile” pharmaceutical industry and electronics inventory restocking led to the improvement in Singapore’s manufacturing output, the trade ministry said. That may not be sustained as rising unemployment and reduced household spending in the U.S. and Europe suggest there isn’t evidence yet of a “decisive improvement” in demand, it said.

Singapore’s services industry declined 5.1 percent last quarter, after shrinking by a similar pace in the first three months of the year. The construction industry gained 18.3 percent last quarter as Las Vegas Sands Corp. and other developers worked to complete hotels and office towers.

Declines in Singapore’s home prices have slowed and companies such as Frasers Centrepoint Homes plan to start selling homes from new developments in the next six months. The unit of Fraser & Neave Ltd. said it sold 90 percent of a 330- unit condominium project in central Singapore within three days of starting sales on June 20.

“Singapore’s recovery will be more pronounced than others in the region because pharmaceuticals swung the industrial production numbers a lot more than it did in other countries,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. “We’ll really be getting ahead of ourselves to say the recession is in the rear-view mirror.”

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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German Investor Confidence May Rise to Three-Year High in July

By Christian Vits

July 14 (Bloomberg) -- German investor confidence probably rose to a three-year high this month on signs the contraction in Europe’s largest economy is coming to an end, a survey of economists shows.

The ZEW Center for European Economic Research will say its index of investor and analyst expectations rose to 47.8 from 44.8 in June, according to the median of 36 forecasts in a Bloomberg News survey. That would be the highest since May 2006. ZEW releases the report, which aims to predict economic developments six months ahead, at 11 a.m. in Mannheim today.

Industrial output jumped 3.7 percent in May from April, the biggest gain in almost 16 years, and business confidence increased for a third month in June. The benchmark DAX share index has advanced 28 percent in the past four months. Even as the economy stabilizes from its first-half freefall, the government expects gross domestic product to plunge 6 percent this year, the most since World War II.

“The economic contraction is over,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “However, the recovery will be anemic and slow.”

ZEW’s gauge of the current economic situation probably rose to minus 87.8 from minus 89.7 in June, the economist survey shows.

Volkswagen AG’s luxury Audi division is forecasting “light” growth in auto sales next year following this year’s contraction, Peter Schwarzenbauer, the brand’s sales chief, said on July 8.

Stimulus Measures

HeidelbergCement AG, Germany’s biggest cement maker, said the same day it’s seeing initial signs of improvement in some markets, particularly Asia, as local stimulus packages start kicking in.

Chancellor Angela Merkel’s government has pledged to spend about 85 billion euros ($117 billion) in an effort to rekindle growth in Germany, including tax breaks and a 2,500-euro payment for consumers who scrap their old car and buy a new one.

The European Central Bank has cut its key interest rate to a record low of 1 percent, offered to lend banks as much cash as they want and started purchasing 60 billion euros of covered bonds to help revive lending.

“The prevailing mood has changed, thanks to the latest positive data but also due to the government stimulus package and lower interest rates,” said Matthias Huth, an economist at Landesbank Baden-Wurttemberg in Stuttgart. “Still, there’s a risk that the green shoots are exaggerated.”

The euro-area economy will probably shrink 4.8 percent this year and 0.3 percent in 2010, the International Monetary Fund said last week.

“The good news is that the forces pulling the economy down are decreasing in intensity,” IMF Chief Economist Olivier Blanchard told a July 8 press briefing. “The bad news is that the forces pulling the economy up are still weak.”

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

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Swiss Franc Trades Little Changed Against the Dollar, the Euro

By Daniel Tilles

July 14 (Bloomberg) -- The Swiss franc was little changed against the dollar and the euro.

The Swiss currency traded at 1.0837 per dollar as of 7:44 a.m. in Zurich, from 1.0830 yesterday. Against the euro, the franc was at 1.5149, from 1.5139.

To contact the reporter on this story: Daniel Tilles in London at dtilles@bloomberg.net

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U.K. Pound Rises Against U.S. Dollar for Second Consecutive Day

By Justin Carrigan

July 14 (Bloomberg) -- The pound rose against the dollar for a second day.

The British currency advanced to $1.6256 as of 7:10 a.m. in London, from $1.6227 yesterday. It was little changed at 86.08 pence per euro.

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

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Russia Faces Risk of More in Rate Cuts, Ruble Decline, ING Says

By Stephen Kirkland

July 14 (Bloomberg) -- Russia’s ruble may weaken further as the central bank tries to revive credit expansion by lowering key interest rates, according to ING Groep NV.

“Seeing the risk of a further 200-400 basis points rate cut, we do not rule out the ruble dropping to 41” versus the basket, the upper boundary of its current trading range, ING wrote in an e-mailed report today.

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Yen Weakens for Second Day Against Euro as Asian Stocks Advance

By Yasuhiko Seki and Ron Harui

July 14 (Bloomberg) -- The yen fell for a second day against the euro as Asian stocks rose amid speculation Goldman Sachs Group Inc. will report stronger earnings today, spurring investors to increase holdings of higher-yielding assets.

The yen declined against all of the 16 major currencies after New Zealand’s Reserve Bank Governor Alan Bollard said “early signs of a global recovery have emerged” and an Australian report showed business sentiment turned positive. South Korea’s won climbed the most in two months against the greenback after a rally in U.S. stocks bolstered demand for emerging-market investments. The Singapore dollar advanced after the government raised its economic forecast.

“If we look at the trend of the economy and profits, it is evident that we have already gone through the worst of the recession,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “When the underlying risk appetite is improving, there is little reason to buy the yen.”

The yen dropped to 130.54 per euro as of 7:34 a.m. in London from 129.95 yesterday in New York. It fell 0.7 percent to 73.36 per Australian dollar, and weakened 0.6 percent to 59.10 per New Zealand dollar. The yen traded at 93.23 per dollar from 92.97. The euro rose to $1.3997 from $1.3978.

The yen weakened as the Nikkei 225 Stock Average rose 2.3 percent and the MSCI Asia-Pacific Index of regional shares climbed 2.3 percent, the biggest gain in a month.

Goldman Sachs

Goldman Sachs will probably say it earned $2.2 billion in the three months through June when it reports second-quarter earnings today, according to the average estimate of analysts surveyed by Bloomberg. Goldman, JPMorgan Chase & Co. and International Business Machines Corp. are among more than 30 companies in the Standard & Poor’s 500 Index due to report results this week.

The S&P Index rose the most in six weeks yesterday after analyst Meredith Whitney gave Goldman Sachs the only “buy” recommendation among the eight companies she covers. She told CNBC the New York-based financial institution is going to “surprise big.”

The New Zealand dollar rose for a second day against the yen after the central bank governor said the nation’s economy is likely to start recovering earlier than many of its trading partners.

“We hope that in the next phase of recovery in financial- market sentiment and return to risk seeking, the markets will be more discriminating about New Zealand,” Bollard said in notes for a speech delivered today in Napier.

Sentiment Index

Australian business sentiment index rose 6 points to 4, after holding below zero for the previous 17 months, according to a National Australia Bank Ltd. survey released in Sydney today. A figure above zero shows optimists outnumber pessimists.

Benchmark interest rates are 2.5 percent in New Zealand and 3 percent in Australia, compared with as low as zero in the U.S. and 0.1 percent in Japan, attracting investors to the South Pacific nations’ assets. The risk in such trades is that currency moves can erase profits.

The won rebounded from a two-month low as the Kospi index climbed for the first time in a week. The South Korean government will report preliminary second-quarter gross domestic product figures on July 24.

“Most of the markets are a little higher today, after the rebound on Wall Street overnight,” said David Cohen, an economist with Action Economics in Singapore. “A lot of the GDP reports coming out over the next month will be positive. The mood is a little relieved.”

The won closed 1.8 percent higher at 1,293.25 versus the dollar, the biggest advance since April 30. The Kospi index advanced 0.5 percent.

Singapore Dollar

The Singapore dollar rose the most in two weeks after the government said gross domestic product rose an annualized 20.4 percent last quarter from the previous three months. Economists surveyed by Bloomberg forecast a 13.4 percent expansion.

“We treat this number as a positive,” said Chia Woon Khien, a strategist at Royal Bank of Scotland Group Plc in Singapore. “The central bank is very unlikely to weaken the Singapore dollar any further and the next move will be up, but that may not be till 2010.”

GDP will shrink 4 percent to 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said in a statement today.

Singapore’s dollar gained 0.4 percent versus the U.S. currency to S$1.4592 from late in Asia yesterday.

German Sentiment

The euro rose for a second day against the dollar before a German report that economists said will show investor confidence climbed to a three-year high.

Sentiment increased to 47.8 this month from 44.8 in June, according to a Bloomberg News survey of economists. The reading would be the highest since May 2006. The ZEW Center for European Economic Research releases its index of investor and analyst expectations today.

“Risk appetite is recovering,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “The bias is for the yen to be sold.”

To contact the reporter on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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Dollar’s Fall Versus Yen May Stall, Reverse: Technical Analysis

By Ron Harui

July 14 (Bloomberg) -- The dollar’s decline against the yen may stall before it reaches so-called support at 91.30, Standard Chartered Plc said, citing trading patterns.

The 91.30 yen support level is the dollar’s high set on Jan. 19, according to a chart compiled by Standard Chartered. The Jan. 19 high is a previous level of resistance, which has become support since it has been breached. Support is where buy orders may be clustered. Resistance is where there may be sell orders.

“The dollar-yen breakdown is expected to be short-lived ahead of 91.30 support,” Callum Henderson, global head of currency strategy at Standard Chartered in Singapore, wrote in a research note yesterday. “Clients should close short dollar-yen positions and look to buy into this dip ahead of 91.30.” A short position is a bet an asset will fall.

The dollar traded at 93.12 yen as of 7:55 a.m. in Tokyo after weakening to 91.74 yen yesterday, the lowest level since Feb. 17. The U.S. currency slumped 3.6 percent against the yen last week, the biggest drop since the five days ended Oct. 24.

“Look for a push back above 95 to follow,” Henderson wrote. Should the greenback rise beyond “congestive resistance” at 95 yen, the dollar may extend its rally to 99 and then to 101.45 or higher, he said.

The 95 yen level was last seen on July 7, 99 yen is near the June 5 high of 98.89 yen, and 101.45 yen represents the April 6 high, according to data compiled by Bloomberg.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.

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Soybeans Rise in Chicago After Plunge in Prices Lures Importers

By Luzi Ann Javier

July 14 (Bloomberg) -- Soybean futures in Chicago gained on speculation importers including China, the world’s biggest buyer, will increase purchases after the oilseed plunged to the lowest since March. Corn also advanced.

Soybeans dropped 21 percent on the Chicago Board of Trade in the two months through yesterday as the U.S. Department of Agriculture raised its output forecast for the world’s biggest grower and exporter.

Some importers, including China, “are appearing to buy cheaper U.S. soybeans,” Tetsu Emori, a commodity fund manager with Astmax Ltd. in Tokyo, said by phone today.

Soybeans for November delivery, after the U.S. harvest, gained as much as 0.8 percent to $9.19 a bushel in after-hours electronic trading. The contract was at $9.18 a bushel at 10:13 a.m. Singapore time.

The U.S. inspected 10.9 million bushels of soybeans slated for export in the week ending July 9, 15 percent higher than a year earlier, according to data from the Department of Agriculture released yesterday. That takes total shipments in the marketing year ending Aug. 31 to 1.16 million tons, 11 percent higher than last year, the USDA said.

Corn for December delivery added as much as 1 percent to $3.43 a bushel, and last traded at $3.42 a bushel. The most- active contract has fallen 21 percent in the two months through yesterday. “Corn has been oversold,” Emori said.

Corn’s 14-day relative strength index, a gauge of momentum, has been less than 30 since June 30, a signal some investors use to indicate prices may be about to rise.

The USDA reported that the volume of corn inspected for export for the week ending July 9 climbed to 38.8 million bushels, 36 percent higher than a year ago. “That’s one of the factors holding up prices at the moment,” Emori said.

Wheat for September delivery dropped 0.2 percent to $5.4150 a bushel after rebounding 4.6 percent yesterday on speculation U.S. farmers would withhold supplies after a 20 percent drop in prices since the start of June.

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

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BHP Unaware of Any Review of Ore Operations by China

By Rebecca Keenan

July 14 (Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, is unaware of any review of its iron ore operations by China after four Rio Tinto Group employees were detained there on July 5.

“We are unaware of any review and unaware of any reason for such a review,” spokeswoman Samantha Evans said by phone from Melbourne today. “We certainly have a strict code of conduct that guides how our employees behave regardless of which market they are operating in.”

Rio executive Stern Hu, an Australian national, and three Chinese colleagues were detained in Shanghai on suspicion of spying for foreign countries, China Foreign Ministry spokesman Qin Gang said last week. BHP is the world’s third-biggest iron ore producer behind Rio, the No. 2, and Vale SA.

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

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GrainCorp 2010 Earnings Forecast Raised on Crop Outlook by ABN

By Madelene Pearson

July 14 (Bloomberg) -- GrainCorp Ltd., eastern Australia’s largest grain handler, had its 2010 profit forecast raised by ABN Amro Morgans Ltd. due to improved seasonal crop conditions.

Net income may be A$69.1 million ($54.2 million) in the year ending Sept. 30, 2010, ABN analysts Belinda Moore and Sam Turner said in a note to clients dated yesterday. That’s 30 percent more than their previous forecast. The broker also raised its 2009 profit forecast by 6.4 percent.

Farmers in Australia, the world’s fourth-largest wheat exporter, harvest the current 2009-2010 winter crop from about November. That crop, now planted, will largely underpin 2010 earnings for Sydney-based GrainCorp, ABN Amro said.

“The east coast grain crop is off to a great start,” Moore and Turner wrote. “Good rainfall in June has boosted prospects for this year’s winter crop.”

The Australian Bureau of Agricultural and Resource Economics, the country’s commodity forecaster, is predicting an east coast grain crop of 17.6 million metric tons in 2009-2010, ABN Amro said. That implies grain deliveries of 10.6 million tons for GrainCorp in fiscal 2010, up from 9.4 million tons a year earlier, applying a 60 percent market share for the company, the broker said.

More rain is needed in August and September to underpin the forecast, the analysts wrote. There are indications the El Nino weather pattern, which can cause drought in Australia and parts of Asia, is developing across the Pacific Basin, the Australian Bureau of Meteorology said July 8.

“The key risk to our view is El Nino,” the analysts said. “However we note the bureau has been incorrect in the past and the current share price already reflects drought-affected lows.”

GrainCorp fell 0.7 percent to A$6.90 on the Australian stock exchange at 10:53 a.m. in Sydney.

The profit forecast was also raised because of expectations GrainCorp will have lower net interest expenses, ABN said.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

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Sinograin to Sell 61,820 Tons of Soybean Stockpile, Center Says

By Bloomberg News

July 14 (Bloomberg) -- The China Grain Reserves Corp., or Sinograin, will sell 61,820 metric tons of soybeans from its stockpiles, the state-backed China National Grain and Oils Information Center said.

Sinograin will sell 3,393 tons of domestic soybeans produced in 2005, 30,000 tons from 2006, 15,000 tons from 2005/06 and 13,427 tons produced in 2007, the center said in an e-mailed report today. The company will sell the soybeans at market prices in Heilongjiang, Inner Mongolia, Shandong, Jiangsu and Zhejiang, it added.

--Feiwen Rong. Editor: Wendy Pugh

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at +86-10-6649-7563 or frong2@bloomberg.net;

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Inco Indonesia May Lay Off 500 Workers to Cut Costs, Globe Says

By Arijit Ghosh

July 14 (Bloomberg) -- PT International Nickel Indonesia, the nation’s biggest producer of the metal, may lay off 500 workers to cut costs, the Jakarta Globe reported, citing an unidentified person.

The company has sought permission from the Manpower Ministry for the layoffs, the newspaper said.

Company spokesman Indra Ginting didn’t immediately respond to a text message sent to his mobile phone.

To contact the reporter on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net

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Energy Resources Uranium Output Rises 44% on Higher-Grade Ore

By Ben Sharples

July 14 (Bloomberg) -- Energy Resources of Australia Ltd., producer of about a 10th of the world’s mined uranium, said second-quarter output rose 44 percent because of higher grades of ore extracted and the processing of more material.

Uranium oxide production increased to 1,481 metric tons, or 3,266 million pounds, from 1,030 tons a year earlier, the Darwin-based company said in a statement filed to the Australian stock exchange today.

Energy Resources, controlled by Rio Tinto Group, is expanding its Ranger mine in the Northern Territory as global demand for uranium from power utilities rises. A proposal to build a plant to extract uranium oxide from stored low-grade ore will undergo environmental assessment, the company said May 19.

Energy Resources rose 2.8 percent to A$21.69 in Sydney trading at 10:07 a.m. as the benchmark S&P/ASX 200 Index advanced 1.4 percent.

Output was 22 percent higher than in the first quarter of this year because of better access to the open pit after the end of the wet season, Energy Resources said today.

Construction of the underground exploration project at an area known as Ranger 3 Deeps may start in the first half of next year, Energy Resources said April 15. The estimated 34,000 tons of uranium oxide resources at Ranger 3 Deeps helped more than double total resources at Ranger to 115,000 tons last year.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net.

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Japan Stocks Rise on Earnings Outlook; Komatsu, Kobe Steel Gain

By Masaki Kondo

July 14 (Bloomberg) -- Japanese stocks rose for the first time in 10 sessions amid expectations company earnings will recover and after financial shares rebounded in the U.S.

Mizuho Financial Group Inc., Japan’s second-biggest publicly traded bank, jumped 4.7 percent. Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, climbed 6.3 percent on a newspaper report the company likely had an operating profit in the April-June quarter. Kobe Steel Ltd. advanced 4.6 percent after South Korea-based rival Posco raised its 2009 production target.

The Nikkei 225 Stock Average climbed 201.05, or 2.2 percent, to 9,251.38 at the 11 a.m. break in Tokyo. The broader Topix index advanced 16.12, or 1.9 percent, to 868.54, with five stocks rising for every two that retreated.

“Japanese financial companies have completed the disposal of bad loans and bolstered their capital, which works as a safety net,” said Yoshihiro Ito, senior strategist at Okasan Asset Management Co., which oversees the equivalent of $7.7 billion in Tokyo. “Stimulus measures will soon start to take effect in emerging countries such as China and India.”

The Nikkei and Topix had fallen for nine straight days through yesterday as weaker-than-expected machinery orders, a stronger yen and Prime Minister Taro Aso’s plan to dissolve parliament weakened investor sentiment. Nikkei-listed companies traded at 38 times their estimated net income for this year, the lowest level since Feb. 6, according to Nikkei Inc.

U.S. Banks

In New York, the Standard & Poor’s 500 Index rebounded 2.5 percent after posting a fourth weekly decline on July 10. Meredith Whitney, the analyst who correctly predicted Citigroup Inc.’s dividend reduction and founded her own research company, said the American bank shares she covers will likely rise 15 percent and gave a “buy” rating on Goldman Sachs Group Inc.

Mizuho climbed 4.7 percent to 202 yen, while its brokerage arm Mizuho Securities Co. jumped 7.4 percent to 260 yen. Market leader Mitsubishi UFJ Financial Group Inc. added 3.4 percent, and No. 3 Sumitomo Mitsui Financial Group Inc. rose 6 percent.

“Regardless of which analyst calculates earnings estimates, Japanese banks will most likely record a V-shaped recovery this year,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. “With an oligopoly in the market, the foundations of the country’s largest banks are unshakeable.”

Komatsu rose 6.3 percent to 1,377 yen. The company will likely report about 5 billion yen ($54 million) in operating profit for the three months to June, recovering from a loss in the previous quarter, the Nikkei newspaper reported. Demand in emerging markets, including China, and cost cuts contributed to earnings, the newspaper said.

China’s Demand

Isuzu Motors Ltd., a truckmaker that gets a quarter of its revenue from Asia, surged 9.6 percent. Asahi Glass Co., which makes a third of its sales in Asia, climbed 6.4 percent.

Kobe Steel jumped 4.6 percent to 160 yen, and Nippon Steel Corp., the world’s No. 2 maker of the alloy, leapt 3.2 percent to 324 yen. Posco, South Korea’s top steelmaker, yesterday lifted its 2009 steel production estimate by 6.4 percent from its previous target.

Separately, Shanghai-based Mysteel Research Institute said Baoshan Iron & Steel Co., China’s largest steelmaker, raised prices by as much as 14 percent for August delivery as demand from automakers and builders improved. Baoshan’s price change confirmed the continuing favorable market conditions, Yuji Matsumoto, an analyst for Tokyo-based Nomura Holdings Inc., wrote in a report today.

Weakening Yen

Sony Corp., maker of the PlayStation 3 game machine, rose 5.8 percent to 2,290 yen, and Canon Inc., a camera maker that gets a third of its sales from the Americas, added 3.4 percent to 3,020 yen. Toyota Motor Corp. advanced 3 percent to 3,480 yen. Makers of electronics and cars contributed the most to the Topix’s gain, followed by banks.

The yen depreciated against the dollar to as much as 93.16 from 92.24 at the close of Tokyo stock trading yesterday. Japanese large manufacturers expect the local currency to trade at an average of 94.85 this year, according to the Bank of Japan’s quarterly Tankan survey released earlier this month.

Nikkei futures expiring in September added 2.3 percent to 9,250 in Osaka and added 2.4 percent to 9,260 in Singapore.

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

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Asian Stocks Climb on Earnings Optimism; Posco, Komatsu Advance

By Jonathan Burgos

July 14 (Bloomberg) -- Asian stocks rose, lifting the MSCI Asia Pacific Index from an eight-week low, as Posco raised its production target and Singapore upgraded its forecast for economic growth.

Posco, South Korea’s largest steelmaker, climbed 3.5 percent in Seoul after saying 2009 output may be 6.4 percent higher than forecast. Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, surged 6.3 percent after the Nikkei English News said the company likely posted an operating profit in the April-June quarter. DBS Group Holdings Ltd., Southeast Asia’s biggest bank, gained 2.5 percent in Singapore.

The MSCI Asia Pacific Index rose 1.9 percent to 99.90 as of 12:12 p.m. in Tokyo after yesterday closing at its lowest level since May 18. The index had rallied 42 percent from a more than five-year low on March 9 on optimism stimulus policies around the world will revive the global economy.

“The recovery is gaining traction,” said Nader Naeimi, a strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Even if we don’t see spectacular growth, a stabilization should be enough to support a market rally.”

Japan’s Nikkei 225 Stock Average rose 2.6 percent, with NEC Electronics Corp. surging 10 percent after the Nikkei said the company will boost production. Kirin Holdings Co. gained 1.9 percent after confirming it’s in merger talks with Suntory Holdings Ltd.

Coal Shipments

Singapore’s Straits Times Index gained 2.2 percent. The S&P/ASX 200 Index in Australia climbed 2.6 percent, led by mining company BHP Billiton, which jumped 3.9 percent as coal shipments from the country’s Newcastle port climbed.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge rallied 2.5 percent yesterday, led by finance shares after analyst Meredith Whitney said U.S. bank stocks will likely rise 15 percent. She recommended investors buy Goldman Sachs Group Inc.

Raw material producers accounted for 15 percent of the MSCI Asia Pacific Index’s advance today. Posco climbed 3.5 percent to 445,000 won. The company announced its new production target after the market closed yesterday as it reported second-quarter profit that beat analyst estimates.

Komatsu rose 6.3 percent to 1,377 yen. The company will likely report about 5 billion yen ($54 million) in operating profit for the three months to June, recovering from a loss in the previous quarter, the Nikkei newspaper reported. Demand in emerging markets, including China, and cost cuts contributed to earnings, the newspaper said.

World’s Best Investments

“Stimulus measures will soon start to take effect in emerging countries such as China and India, and people are snapping up companies that will benefit from their revival,” said Yoshihiro Ito, senior strategist at Okasan Asset Management Co., which oversees about $7.7 billion.

Chinese stocks are among the world’s best investments because the nation’s economic growth is poised to exceed forecasts, according to Barton Biggs, who runs New York-based hedge fund Traxis Partners LP. The Shanghai Composite Index added 1.4 percent today.

NEC Electronics, Japan’s fourth-largest chipmaker, surged 10 percent to 818 yen after the Nikkei reported the company will bolster use of its plant in Kumamoto prefecture, southwestern Japan, to about 70 percent.

Kirin, Japan’s largest drinks maker, added 1.9 percent to 1,419 yen. The stock extended yesterday’s 7.8 percent surge after the Nikkei newspaper reported Kirin and closely held Suntory were discussing a merger.

The companies are in the “early stage” of discussions and no decision has been made, Kirin said in a statement to Tokyo’s Stock Exchange today.

Economic Growth

In Singapore, DBS gained 2.5 percent to S$11.70. CapitaLand Ltd., the city’s biggest developer, rose 2.4 percent to S$3.39.

Singapore’s gross domestic product will shrink between 4 percent and 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said today. The economy grew an annualized 20.4 percent last quarter from the previous three months, after declining a revised 12.7 percent between January and March, it said.

“Early signs of a global recovery have now emerged,” Alan Bollard, governor of the New Zealand central bank said today. Australian business sentiment turned positive in June for the first time since December 2007, a National Australia Bank Ltd. index released today showed.

The stock rally since March has lifted the average valuation of companies on the MSCI Asia Pacific Index to 41 times reported profit, more than double the 15 times stocks were trading at during the market’s trough that month.

‘Getting More Cautious’

“Today’s gains might still be a bit short-lived,” said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian Ltd. “People have been getting more cautious as valuations aren’t as attractive as a couple of months ago. Most of my institutional clients have a very high level of cash in hand.”

Melbourne-based BHP jumped 3.9 percent to A$33.47, while Rio Tinto Group added 3.2 percent to A$48.11. The companies are among those that ship coal through Newcastle, the world’s biggest export harbor for the fuel.

Coal shipments from the port gained 11 percent last week while the number of vessels waiting to load decreased, Newcastle Port Corp. said on its Web site.

Mitsubishi Corp., which operates an alliance with BHP that is the world’s biggest exporter of coking coal, climbed 4.4 percent to 1,631 yen in Tokyo.

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

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