French Business Confidence Gains as Household Demand Improves

By Mark Deen

July 23 (Bloomberg) -- French business confidence climbed for a fourth month as demand for clothes and household goods picked up, helping counter the country’s worst recession since World War II.

An index of sentiment among 4,000 manufacturers rose to 78, from a revised 76 in June, Paris-based statistics office Insee said today. That compares with a median forecast of 77 in a survey of 22 economists by Bloomberg News.

The climb from a record-low of 69 in March highlights the impact of President Nicolas Sarkozy’s efforts to support businesses and consumers with tax cuts, loans and investment. While consumer spending rose 1.4 percent in June, growing unemployment may restrain demand later this year

“The good spending figures should be helping business for now,” said Amelie de Montchalin, an economist at Exane BNP Paribas in Paris. “Yet much of this relates to temporary support and the stabilization we’re seeing now in the economy may not last.”

Sarkozy has promised about 30 billion euros ($42.7 billion) in fiscal stimulus, including incentives to buy new cars.

French manufacturers’ overall production held at minus 40 for a second month, Insee said. Their view on pending orders was also virtually unchanged, with that measure climbing to minus 68 from minus 69 a month before.

To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net

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Obama’s Fed Risk Regulator Plan Fades as Lawmakers Back Council

By Alison Vekshin

July 23 (Bloomberg) -- The Obama administration’s plan to expand the Federal Reserve’s powers to oversee financial firms is failing to win supporters in Congress as some lawmakers back a proposal to give the responsibility to several regulators.

“It’s going to be shared authority,” House Financial Services Committee Chairman Barney Frank, whose panel will write the measure, told reporters July 21, without providing details.

Frank and lawmakers leading discussion on regulatory reform fault the central bank for slow action on lending abuses and want the Fed to focus on monetary policy. Support is emerging for a council of the Fed, Treasury Department, Federal Deposit Insurance Corp. and other regulators. The Senate Banking Committee will consider the systemic-risk plan today.

“The more eyes on the problem the more likelihood that someone will raise an alarm,” Representative Spencer Bachus, top Republican on the House panel, said in a July 21 interview.

Obama, as part of the overhaul of U.S. financial rules, released a proposal last month giving the Fed power to supervise all large firms “whose failure could threaten the stability of the system” regardless of whether they own a bank.

The administration said the proposal is aimed at avoiding failures similar to insurer American International Group Inc., which has required a U.S. rescue package valued at more than $182 billion, and investment banks Lehman Brothers Holdings Inc., which is being liquidated, and Bear Stearns Cos., bought by JPMorgan Chase & Co. with U.S. backing.

Fed Chairman Ben S. Bernanke downplayed the extent of the new powers while testifying yesterday to the Senate Banking Committee. The Fed supervises almost all firms that would likely fall under its review, he said.

‘Specific Role’

“We’d have a very specific role, which is to supervise and look at the systemic implications of a specific set of companies,” Bernanke said.

Lawmakers fault the Fed for taking more than a decade to use authority Congress gave the central bank to write rules aimed at protecting consumers.

Senate Banking Committee Chairman Christopher Dodd and Richard Shelby, the panel’s top Republican, are concerned about giving the Fed additional power.

“Monetary policy is the primary function,” Dodd, a Connecticut Democrat, said yesterday in an interview. “The Fed’s job is to be somewhat of a cheerleader on the economy, whereas a systemic-risk regulator is the cop.”

White House National Economic Council Director Lawrence Summers said it was too early to dismiss the Fed idea.

‘Best Way’

“I think it’s way premature to be talking about anything like that,” Summers said in a July 20 interview with Bloomberg News. “We’re very focused on what we think is the best way to contain these risks.”

Senator Charles Schumer, a New York Democrat and a member of the banking panel, said he supported the Obama plan.

“The Fed has one major advantage that the opponents would have to answer, which is they have knowledge,” Schumer said in a July 22 interview.

Shelby, of Alabama, said the Fed has “utterly failed” at regulation.

“We’d better look at the role of the Fed,” Shelby said yesterday. “You load the Fed up with too many responsibilities and I think it weakens the Fed.”

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

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European Stocks Will Gain 11% in Second Half, Strategists Say

By Alexis Xydias and Adria Cimino

July 23 (Bloomberg) -- Improving company profits will spur the biggest year-end rally for European stocks since 2006, according to a survey of strategists.

Benchmark indexes in the region may climb 11 percent between June 30 and the end of 2009, according to the average prediction of 11 European market analysts surveyed this week by Bloomberg. That compares with an 8.4 percent advance for the Standard & Poor’s 500 Index estimated by 10 U.S. strategists.

Rising earnings will justify the highest valuations since December 2003 and lure investors after the Dow Jones Stoxx 600 Index dropped 46 percent last year, the most on record, according to the strategists. The predicted increase would be the biggest for the final six months of a year since the gauge rose 14 percent in 2006, data compiled by Bloomberg show.

Gains “will be linked to the earnings reports, and so far they’ve been reassuring,” said Kilian de Kertanguy, a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees about $2.3 billion. “There is a lot of capital waiting to be re-injected into the market. If there is a real sign of improvement from companies, the capital will go to stocks.”

The Stoxx 600 index added 6.8 percent last week, the most since November, reviving a rally that’s driven the gauge up 37 percent in four months. Speculation the first global recession since World War II is ending has pushed the measure up 8.7 percent this year, erasing a loss that reached 20 percent on March 9. It added 0.3 percent yesterday to 215.65.

Positive Surprises

Of the 43 Stoxx 600 companies that reported second-quarter results since July 8, 26 beat estimates while 15 trailed them. Two reported results that matched projections, the data show.

Nokia Oyj, the world’s biggest maker of mobile phones, reported net income last week of 380 million euros ($540 million), surpassing analysts’ predictions. Competition from Cupertino, California-based Apple Inc.’s iPhone and the BlackBerry, made by Research In Motion Ltd. of Waterloo, Ontario, forced the Espoo, Finland-based company to reduce forecasts for market share and profitability.

Royal Philips Electronics NV, Europe’s biggest consumer- electronics maker, reported a quarterly profit on July 13, defying analysts’ expectations of a loss, and said second-half sales may increase from the first six months of 2009.

Results such as those may help halt a year-long decline in analysts’ profit forecasts for next year. Since Jan. 4, 2008, the current-year consensus estimate of Stoxx 600 earnings has slipped every week except for the one ended June 12.

‘Squeezed Higher’

“Any surprise in second-quarter earnings could see stocks squeezed higher,” said Gary Baker, co-head of international investment strategy at Bank of America Corp.’s Merrill Lynch & Co. unit in London. He didn’t participate in the survey.

Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, said the economy may limit equities. German investor confidence unexpectedly fell in July, according to the ZEW Center for European Economic Research in Mannheim. European unemployment rose to the highest in a decade in May.

“I’m not convinced that the market will take off,” said Chaloin, whose company oversees $3.5 billion. “I’m not optimistic.”

Morgan Stanley’s Teun Draaisma, who forecast losses for European stocks in 2008, and Matthias Joerss of Sal. Oppenheim Jr. & Cie. were the only two surveyed to predict declines. Nomura Holdings Inc.’s Ian Scott forecasts a 6.2 percent advance this year in a FTSE European index that excludes the U.K.

Jean-Francois Robin, a strategist at Natixis in Paris, says the worst of the economic slump is over and investors will return to markets because they hold “a lot of cash.” He predicted the biggest increases among the strategists polled.

“The Armageddon scenario is out of the picture,” said Robin, whose forecast implies 20 percent gains. “The worst seems to have passed. The economy isn’t as dark, and growth and company outlooks are improving.”

     The following table lists forecasts for European benchmark
indexes at the end of 2009 from 11 strategists surveyed by
Bloomberg News. Percentage changes are based on the June 30
market close.

Brokerage            Benchmark              Target   Gain/Loss
===============================================================
Morgan Stanley       MSCI Europe Local       850       -6.4%
SocGen Cross Asset   DJ Stoxx 600            230       12.0%
Goldman Sachs        DJ Stoxx 600            235       14.0%
JPMorgan Chase       MSCI Europe Local     1,080       19.0%
Nomura               FTSE Europe (ex-UK)     280        6.2%
UBS                  FTSEurofirst 300      1,000       18.0%
ING Groep            DJ Stoxx 600            210        2.0%
ABN Amro             DJ Stoxx 600            230       12.0%
Exane                DJ Stoxx 600            220        6.9%
Natixis              DJ Euro Stoxx 50      2,877       20.0%
Sal. Oppenheim Jr.   DJ Euro Stoxx 50      2,250 to    -6.3% to
                                          2,400       -0.1%
Credit Suisse        DJ Euro Stoxx           250       12.0%

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Adria Cimino in Paris at acimino1@bloomberg.net.

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European Stocks Erase Gains; Stoxx 600 Index Is Little Changed

By Andrew Rummer

July 23 (Bloomberg) -- European stocks erased their advance as declines by travel and leisure stocks and automakers offset a rally by basic-resource companies.

The Dow Jones Stoxx 600 Index was little changed at 215.53 as of 11:38 a.m. in London, having earlier climbed as much as 0.5 percent.




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Aluminum Recovery Delayed by Stocks, Chinalco Says

By Bloomberg News

July 23 (Bloomberg) -- Aluminum Corp. of China, the nation’s largest producer of the metal, said a price recovery for the lightweight metal will lag behind other base metals because of high inventories.

A demand revival from the auto and building industries hasn’t had “an obvious” impact on aluminum yet, Chairman Xiong Weiping said today in an interview in Beijing while attending a conference.

“The aluminum recovery has not been as rapid as copper because aluminum inventories are still high,” Xiong said. “Demand from the building and auto industries would only have an effect later.”

Aluminum inventories monitored by the London Metal Exchange quadrupled in the past year to a record 4.6 million metric tons, forcing Chinalco and rivals including Aloca Inc. to cut output. Aluminum futures in Shanghai have gained 20 percent this year, lagging behind an 83 percent gain for copper.

Copper futures gained 1.6 percent in Shanghai to 43,670 yuan a metric ton at 11:24 a.m. Aluminum rose 1 percent to 13,965 yuan. Aluminum Corp. of China Ltd., the listed unit of Chinalco, rose 2 percent to HK$8.28 in Hong Kong trading.

Anglo American

Chinalco is “closely watching” how a proposed merger between Xstrata Plc and London-based Anglo American Plc unfolds, Xiong also said. The proposal is a “very important transaction” in the world of resources, he said.

Xiong, who was responding to reporters’ questions, didn’t say whether Chinalco would be interested in bidding for either of the companies.

Anglo American last month rejected a proposed “merger of equals” from Xstrata, which would have created a mining company with sales of more than $54 billion. Anglo American may start talks with Chinalco about investing in Anglo’s Brazilian iron ore business, the Sunday Telegraph reported June 28.

Separately, Xiong also said Chinalco is continuing to push for an agreement to buy power directly from utilities under a government proposal. He didn’t elaborate.

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

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Corn Futures Jump in Chicago on Concern USDA to Cut Estimates

By Luzi Ann Javier

July 23 (Bloomberg) -- Corn futures jumped in Chicago on concern the U.S. may lower its production estimate and after output in Argentina, the world’s second-biggest exporter last year, slumped 40 percent in the 2008-2009 season.

The U.S. Department of Agriculture said yesterday it will survey farmers to measure the impact of cold, wet weather that delayed planting. The USDA estimated on June 30 that corn was planted on about 87 million acres, up 1.2 percent, based on a survey done before some of the adverse weather hindered sowing.

“That announcement has probably got the market expecting their ending stocks for 2009-2010 will be lower than their last estimate,” Toby Hassall, a research analyst at Commodity Warrants Asia Pty. in Sydney said by phone today. The USDA “has a history” of overestimating stockpiles initially, he said.

Corn for December delivery jumped as much as 3.9 percent to $3.3175 a bushel on the Chicago Board of Trade, the biggest intraday gain for the most-active contract since June 5. Futures touched $3.1475 a bushel yesterday, the lowest since Dec. 8. The contract traded at $3.2725 a bushel, up 2.5 percent, at 3:07 p.m. Singapore time.

Corn has dropped 30 percent from an eight-month high of $4.7175 on June 10 as favorable weather improved yield prospects in the biggest growing region in the U.S., the world’s largest producer and exporter.

Futures also surged today on concern global supplies may be lower than earlier estimates, after Argentina said its production of the grain plunged to the lowest since 1995.

Argentina Production

Argentina’s output fell to 12.5 million tons in 2008-2009 from the previous season, the Buenos Aires Cereals Exchange said yesterday. Drought and higher fertilizer costs reduced production amid conflicts between farmers and the government over export taxes.

“If estimates of South American production are reduced, then I guess it tightens the global balance sheet,” Hassall said. “That might be providing some support,” he said.

Argentina will have rainfall and colder weather, raising the risk of frost at many of the nation’s farms, the cereals exchange said yesterday in its weather forecast for July 22-28.

The USDA estimated July 10 that U.S. inventory before the 2010 harvest will rise to 44.97 million tons, up 9 percent from 41.26 million tons a year earlier. Production was forecast to rise 1.6 percent to 312.2 million tons in the harvest that begins September.

USDA Estimates

USDA estimates to be released Aug. 12, will include the results of the survey of U.S. farmers and the latest outlook for global grain production, consumption, trade and inventory.

Wheat and soybean futures also rose as the Dollar Index, which tracks the value of the greenback against six major currencies, traded near the lowest in seven weeks. The gauge was at 78.689 at 3:03 p.m. Singapore time.

Wheat for September delivery added as much as 1.5 percent to $5.30 a bushel in Chicago, after closing 2.4 percent lower yesterday. The most-active contract traded at $5.2575 a bushel, up 0.7 percent at 3:05 p.m. Singapore time.

Soybeans for November delivery gained 0.8 percent to $9.155 a bushel, advancing for a second day.

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

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Jul 23 09 09:57 GMT |

EUR/USD Current level-1.4231 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.3064 and 1.3524. Obviously a larger corrective phase is underway below 1.4274, so we still favor the negative outlook for 1.4160, en route to 1.4050. Resistance Support intraday intraweek intraday intraweek 1.4274 1.4338 1.4160 1.3746 1.4338 1.4720 1.4055 1.35+ USD/JPY Current level - 94.31 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 98.13 and 97.75. With yesterday's break above 93.75, the bearish momentum was lost and 94.88 resistance is to be tested again. Intraday bias is positive with a risk limit below 94.15. Resistance Support intraday intraweek intraday intraweek 94.88 96.52 94.15 89.60 -- 101.45 93.07 87.12 GBP/USD Current level- 1.6515 The pair is in an downtrend, after peaking at 1.6746. Trading is situated above the 50- and 200-day SMA, currently projected at 1.4778 and 1.5510. Yesterday's advance beyond 1.6382 and especially the break above 1.6416 did confirm a bottom at 1.6307 and the bias is positive for 1.6557. Intraday support comes at 1.6502 and a reversal around 1.6557 is to be expected, that should send the pair towards 1.63+ once again Resistance Support intraday intraweek intraday intraweek 1.6557 1.6746 1.6502 1.5778 1.663 1.7440 1.6430 1.5352 DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Jul 23 09 11:51 GMT |

USD-CHF @ 1.0695/0699...Seeking Direction R: 1.0720-26 / 1.077-89 S: 1.0647 / 1.0624-20 / 1.0594 Swiss has risen sharply in the Asia session after a pull pack yesterday. It is currently standing at the Resistance formed by 89 period moving average of the Highs in the 4-hourly. It is expected to take support at 1.0681, the much talked about long term support obtained by joining the Lows of 2nd June (1.0590) and 24th June (1.0631) which is also the 38.2% level of today’s rally. Support at 1.0681 may propel the pair to greater highs of 1.0726 in the coming US session. If however the Support gives in to the bears, the low of 2nd June at 1.0590 can be tested. Limit Buy Order: Buy USD 10K at 1.0660, SL 1.0590, TP 1.0740 Cable GBP-USD @ 1.6510/14...Resistance at 1.6550 R: 1.6550-60 / 1.6600 / 1.6670 S: 1.6460 / 1.6375 / 1.6320 Cable saw a break above 1.6500 during the day. After trading above 1.6500 and recording a high of 1.6544, the pair once again fell below 1.6500 and is now trading just above 1.6500. On the upside 1.6550 is a significant level to watch for now. A break above this level may see the pair testing 1.6600, the upper end of the range (1.6200-6600) in which it has been trading for some time. On the downside the 21-MA on the 4-hr (1.6461) is a significant level to watch for. The pair has not seen a strong break below this Support level during the day. A strong break below this Support at 1.6461 might pull the pair down towards 1.6375-6350 in the coming sessions. Holding: GBP 10K Short at 1.6460, SL 1.6550, TP 1.6320 Aussie AUD-USD @ 0.8176/79...Bearish outlook R: 0.8206 / 0.8257 S: 0.8131-24 / 0.8088-76 / 0.8043 Aussie tried to break the top of the range and rose till 0.8206 (the first resistance mentioned before). However similar to what happened yesterday it has entered back into the range (0.8108-0.8180) in which it has been trading for 3 weeks now. As for the US session, we expect the pair to touch the Support of 0.8131 if the bearishness continues. A sharp fall and break below 0.8131 can catalyze downward momentum, which can lead the pair to 0.8108 (which is the bottom of the range) and 0.8043 (which is a major horizontal Support – joining recent tops in the 4-hourly). On the upside, the trend is losing its momentum yet a movement above the current levels should be stalled at 0.8206 or 0.8257 (which is a major Resistance) Kshitij Consultancy Service http://www.fxthoughts.com Legal disclaimer and risk disclosure 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 responsibly 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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European Market Update

Daily Forex Fundamentals | Written by Trade The News | Jul 23 09 10:07 GMT |

UK retail sales beat expectations; USD and JPY maintain soft tone on continued rise in risk appetite ECONOMIC DATA (FR) French Jul Business Confidence Indicator: 78 v 77e; Own-Company Production Outlook: -14 v -12e; Production Outlook Indicator: -40 v -38e (SP) Spain Jun Producer Prices M/M: 0.5% v 0.8%e; Y/Y: -5.0% v -4.7%e (SW) Swedish Jun Unemployment Rate: 9.8% v 10.2%e (DE) Danish Jul Consumer Confidence Indicator: -3.2 v -5.5 prior (NV) Netherlands May Consumer Spending Y/Y: -3.6% v -3.5% prior (IT) Italian May Retail Sales M/M: 0.0% v 0.2%e; Y/Y: -2.9% v -2.0%e (EU) ECB Euro-Zone May Current Account SA: -€1.2B v -€5.9B prior; Current Account nsa : -€13.0B v -9.2B prior (PD) Polish Jun Retail Sales M/M: 2.2% v 1.5%e; Y/Y: 0.9% v 0.5%e (PD) Polish Jun Unemployment Rate 10.7% v 10.8%e (TT) Taiwan Jun Industrial Production Y/Y: -11.4% v -16.0%e (RU) Russian weekly Gold & Forex Reserves: $398.1B v $400.9B prior (UK) Retail Sales M/M: 1.2% v 0.3%e; Y/Y: 2.9% v 2.1%e (UK) BBA Loans for House Purchase: 35.2K v 31.9K prior (IT) Italian Trade Balance Non EU: €155M v €555.0M prior SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities news overnight: Having pulled off 8 straight days of rally in Wednesday's session, European bourses opened slightly positive before slipping into the red in mixed sentiment. Negative sentiment, however, would not last and as we have seen over the past week and half, and equities once again pushed through the unchanged mark to print positive before once again spilling negative. Choppy trading defined the first 60 min of European trading as markets searched for a definitive direction. Sentiment looked to be driven by Q2 and H1 earnings, but with a markedly mixed performance, overall direction remained scarce. Primary European earnings for the session came from peripheral markets including Roche [ROG.SZ], ABB [ABBN.SZ] and Credit Suisse [CSGN.SZ] out of Switzerland, Skanska [SKAB.SW] out of Sweden and Stora Enso [STERV.FH] out of Finland. Ahead of retail sales figures from Italy, Poland and the UK, retailers faired mixed to broadly lower. In other sector news, comments from the UK Water Regulator targeting 2015 improvements and capital projects sent that sector to the bottom of the FTSE led by United Utilities [UU.UK]. Solid Credit Suisse figures rallied the broader financial sector and it, along with basic resources were marked outperformers amongst European equities. Markets took a brief lift past 4:30EST following better than expected UK retail figures for June, but through 4:00EST and into 5:00EST both the CAC and FTSE remained in negative territory, with the DAX only marginally positive. Volumes on trading remain muted outside of some earnings based performance in specific names. As we have seen through this week, European markets look set to take their next cues from the NY pre-market as another wave of corporate earnings is seen ahead of the NY morning. In individual equities: Credit Suisse [CSGN.SZ] Reported Q2 Net CHF1.6B touch better than the CHF1.4Bexpected, Revenues came in at CHF8.61B and also slightly above estimates of CHF8.5B. Q2 ROE 17.5% v 22.6% q/q. Q2 Tier 1 Ratio 15.5 % v 14.1% q/q. Q2 Provision for credit losses CHF 310M v CHF183M q/q. ||Roche [ROG.SZ] Reported H1 Net CHF4.05B below CHF5.1B estimates. However, revenues were CHF24.0B just above the CHF23.6B consensus.. Full-year 2009 sales in both divisions expected to grow well ahead of market. Double-digit Core EPS growth expected in 2009 and 2010 (at constant exchange rates). Group will use strong operating free cash flow to repay net debt; expects to repay 25% of debt by end of 2010 and to return to a positive net cash position by 2015. Continuation of dividend guidance. Pharma sales grow 11% in local currencies. || ABB [ABBN.SZ] Reported Q2 Net income $675M above $611M estimates, while revenues were in line at $7.9B. Q2 orders $7.31B v $11.3B y/y. Confirmed previously announced targets for the period FY07-11. Saw growth opportunities despite difficult market. || Telnor [TEL.NO] Reported Q2 Net NOK1.38B versus NOK2.2B estimates, but revenues were NOK24.5B and roughly in line with the NOK24.8B consensus. Q2 impairment charge NOK1.97B. Guided 2009 Rev in line with 2008, 'however on the negative side.' Expected revenues to remain under pressure for the rest of 2009. Reaffirmed 2009 EBITDA margin target of 34%. Lowers 2009 CAPEX est to 13-15% of sales from 15-17% prior. || Skanska [SKAB.SW] Reported Q2 Net SEK1.17B better than the SEK726.3M estimate, Rev SEK35.7B in line with SEK35.5Be. Construction order booking of SEK37.6B was better than the SEK35.1B estimate. Backlog SEK114B v SEK145B y/y. During 2010 expected continued revenue declines, especially in the Nordic countries and the Czech Republic. Have seen revenue levels decline in a number of markets. Orders in H2 2010 may show signs of recover on the back of US construction orders. || Deutsche Post World [DPW.GE] Reported Q2 Net profit €66M (after minorities) compared to an expected loss of €32M. , Rev €11.1B worse than the €11.8B expected. Guideed FY09 EBIT €1.2B compared to the 1.04Bestimate. Outlook: Business development in the second quarter confirms our view, expressed after the first quarter, that in percentage terms volume declines may have seen the bottom. Still, the Group doesn't expect a substantial recovery in world trade in coming months. || Carphone Warehouse [CPW.UK] Provided trading statement: Re-iterates financial guidance for full year. Is trading in line with expectations. Q1 Like-for-Like retail revenue growth 5.4%. Q1 TalkTalk Group revenues were stable quarter-on-quarter and down 2% y/y to £340M. Q1 Residential revenues were flat quarter-on-quarter and down 3% year-on-year at £264M. Q1Total Best Buy Europe revenues were up 6% year on year to £773M. Talk Talk Group: Broadband net adds of 47,000, Acquisition of Tiscali UK completed on 3 July 2009. Best buy Europe: Like-for-Like retail revenue growth 5.4%. || National Express [NEX.UK] The second suitor for the company could be Stagecoach - London Times, the article cites transport industry sources. || AstraZeneca [AZN.UK] To collaborate with Alcon on eye care products. Entered into a five-year collaborative research agreement with AstraZeneca for the exclusive ophthalmic discovery and potential development rights to AstraZenecas compound library. || Land Securities [LAND.UK] Raised £360M through secured bond offer. Notes held maturity date of 2027. || Unibail [UL.FR] Reported 1H Net loss €1.32B v loss €704.7Me, Net rental Income €634M v €712.1Me. || Technip [TEC.FR] Reported Q2 Net profit €116M v €92.6Me, Rev €1.73B v €1.6Be. Guides FY09 Rev €6.4B v €6.3Be. Order intake €873M v 1.15B q/q. Backlog €6.06B v €8.05B y/y. Confirmed y/y improvement in combined operating margin. || Publicis [PUB.FR] Reported H1 Net €167M v €148Me, Rev €2.2B v €2.2Be, maintains 2009 targets. Expects to outperform market in 2009 despite negative sales growth. || Mobistar [MOBB.BE] Reports Q2 Net €68.4M v €66.2Me, H1 Rev €761.6M v €752.7Me. States that results remain in line with FY09 forecasts. H1 service rev €761.6M v €745.5M y/y. Will pay extraordinary dividend of €1.65/share. || KPN [KPN.NV] Reports Q2 Net €340M v €339Me, Rev €3.41B v €3.48Be. Reaffirms FY10 EBITDA €5.5B. Lower FY10 Rev guidance to €13.6-13.8B v 14.0Be. Sees free cash flow €2.4B through 2H 2009. Maintaining dividend guidance for FY2009/10 at €0.80/share. || ING [INGA.NV] Seeking bids for European and Asian private-banking operations, process is in early stages - WSJ. The operations under consideration for sale could be worth more than $1.0B. || Logitech [LOGN.SZ] Reports Q1 -$0.20 v -$0.19e, R$327.9M v $318.4Me. Guides Q2 Rev $465-485M v $507.5Me, GM 27-29%. || Speakers: German Fin Min Stienbrueck stated that USD to remain dominant reserve currency, but added that the important of USD would decline against both the EUR and CNY currencies. He noted that once the economy recovers there will be the threat of rising inflation || China's Premier Wen commented that it would continue to firmly implement expansionary fiscal policy and reiterated that the PBoC would continue its 'appropriately loose' monetary policy. He noted that that fiscal position remained very grim. The Chinese economy was showing more positive signs but reiterated the view that its economic recovery was at a critical point || German Bank Assoc: stated that the German Q2 GDP contraction would be less than 0.5%. The association warned against excessive optimism on economy and noted that German annual CPI to be negative for the next few months || Japan DPJ opposition party official commented that intervention in currency markets must be avoided and added that a gradual rise in Yen's value would be beneficial (elections on Aug 30th) ||Moody's raised Philippines' foreign and local currency gov't ratings to Ba3 from B1; outlook stable || China-Africa Development Fund Vice Gov: End 2Q assets at CNY4 Trillion; Outstanding forex loans total $79.1B || MOF's Vice Fin Min Tango Japanese Trade surplus in June does show an export pickup || Australian RBA Assistant Gov commented that the local economy has held up fairly well || Japanese DPJ Official (opposition party) noted that intervention in currency markets must be avoided, gradual rise in Yen would be beneficial || Italian Banking Association (ABI) forecasted 2009 GDP contraction of 5%. It saw +0.4% growth in 2010 and +1.0% in 2011. The ABI forecasted 2009 and 2010 deficit to GDP ratio at 5.2% and 2011 at 4.8% || || Italy's ISAE forecasted Italian 2009 GDP down by5.3%, with mild growth next year at +0.2% In Currencies: The USD and JPY started the European session on a soft note and remained that way throughout the morning into NY. Continued expectations of a global economic recovery continued to increase appetite for yield. There was vague chatter that the Japanese MOF might have told some large Japanese accounts that it is 'safe' to buy USD/JPY from around the 93 area. The GBP was former following the U.K retail sales data, which beat expectations and also aided by the BBA mortgage approvals also improved to 35.2k in June. Dealers noting that further equity market strength and upbeat U.S. In Energy/commodities: Japan weekly oil product inventories 12.5M kiloliters vs 12.4M at July 11 .Gasoline inventories 2.24M kiloliters vs 2.27M prior || FT article noting that spot iron ore prices are fast approaching $100/. The article noted that the level is well above the levels at which miners and steelmakers in Japan, South Korea and Europe have agreed to supply deals. In Fixed Income Supply: After a brief interval supply rears its ugly head again today with the Treasury's 2-5 and 7 Note announcements due later in the New York morning. Ahead of the announcements 10y Note futures sit right at the unchanged mark, with prices and yields in the cash market pretty much unmoved from yesterdays close. Across the Atlantic it's a different story with UK and German fixed income both in negative terrotory despite weakness in the equity space. Better than expected retail sales data saw 10y Gilts hit an intraday high yield of 3.895%, its highest level in over a month. Bunds managed to hold up comparatively better than Gilts , with 10y yields gapping higher but steadily moving lower, with the Bund testing the 3.40% level at the time of writing. NOTES Asia Development Bank Semi-annual Economic Review: China's GDP may grow more than 7% forecast in 2009, China is 'major bright spot' in emerging east Asia Looking Ahead Weekly Jobless a key focus today and a plethora of corporate earnings with BMY, CIT, CME, EMC, F, HSY, MCD, MMM, NEM, NOC, NUE, PM, PNC, POT, RAI, RS, RTN, SWY, T, UPS, WYE, XRX all expected to report before the NY equity open. 7:00 (BR) Brazil July FGV Consumer Confidence: No expectations v 106.4 prior 8:00 (BR) Brazil Unemployment Rate 8.90% e v 8.80% prior 8:30 (US) Initial Jobless Claims w/e Jul 18th: 557Ke v 522K prior 8:30 (US) Continuing Claims w/e Jul 11th: 63.9Me v 6.27M prior 9:00 (US) RPX Composite 28dy Y/Y: No expectations v -19.69% prior 9:00 (US) RPX Composite 28dy Index - - No expectations v 188.52 prior 9:00 (BE) Belgian Business Confidence Level sa: -22e v -23.6 prior 9:30 (US) Fed's Tarullo testifies before Senate Banking Committee 10:00 (US) Existing Home Sales 4.84M No expectations v 4.77M prior 10:00 (US)Existing Home Sales M/M: 1.50% e v 2.40% prior Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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United Kingdom Retail Sales Surpass Market Expectations!

Daily Forex Fundamentals | Written by ecPulse.com | Jul 23 09 11:33 GMT |

Today we saw in the UK that retail sales beat market expectations and this flood the economy with optimism as higher sales usually indicate more confidence that consumers have for their nation while also the discounted merchandise attracted customers which helped boost retail sales. The Office for National Statistics (ONS) released retail sales for the month of June coming in at 1.2% which is higher than both the projected reading of 0.3% and the revised May's reading of -0.9% from -0.6% while on the year the indicator also climbed to 2.9% which is better than the revised previous reading of -2.0% from -1.6%, this also beat the forecasted reading of 2.1 percent. The rise in the data surprised markets as everyone assumed the surging unemployment rates would pare spending in the nation because with more jobless Britons, this meant that there were more pocket squeezed consumers trying to survive at a time of economical recession. Next to the mounting of job losses, there was crippled consumer confidence and with lack confidence, comes lower spending levels because consumers usually tend to save when they are not sure about the economic outlook of their nation, but today the story differs as despite the soft labor market, consumers were looking forward to actions that were taken by officials to stimulate economic growth. The central bank is buying gilts using newly printed money worth 125 billion pounds to recover the nation while easing the pace of contraction, from our data today; we see that the measures have supported retail sales as consumers are spending and helping the economic flow of money, which is what the nation needs now to find recover. As retail sales are improving therefore this is helping economic growth while already we are seeing that GDP second quarter reading is easing its contraction in which expectations show us tomorrow this reading will improve to -0.3% from the prior first quarter contraction of -2.4%, which marked the worst quarter since 1958. Also released today, was the British Bankers Association releasing their loans for home purchases showing that 35,235 were approved for loans which is higher than the revised prior reading of 31,919 from 31,162. This reading marked the highest since March 2008. The upbeat data is also supporting the fact that the housing sector is finding its bottom as lending is slightly improving, which again hints that the government interventions and BoE measures are supporting major sectors in the nation step out of misery as they undergo the worst financial crisis since the Great Depression. Since lately we have been seeing that conditions in the UK are improving as a result of the APF program, from my point of view, the central bank should continue to buy gilts and then pull out the money from the markets when the nation recovers by hiking rates to attract savings which will avoid inflation rates from rising. The upbeat continues to chime with other data that the worst of this recession in the UK is over, but a full economic recovery will be delayed until the banking systems stabilize. Turing to the UK stocks, we see that they are slightly declining as the British water regulator suggested reducing water bills, and this caused investors to sell water utility companies which weighed on the FTSE-100. The index as of 11:17 GMT shed 16.25 points or 0.36% to 4,477.48 points. 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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BHP, Japanese Smelters Set Lower Mid-Year Copper Fees

By Jae Hur and Yasumasa Song

July 23 (Bloomberg) -- Japanese copper smelters and BHP Billiton Ltd., the world’s biggest mining company, settled mid- year processing fees at a 33 percent discount compared with contracts started six months earlier, an industry group said.

The smelters agreed to fees of $50 a metric ton for smelting and 5 cents a pound for refining for the year that began July 1, Masanori Okada, chairman of the Japan Mining Industry Association, told reporters today in Tokyo. That compares with $75 a ton and 7.5 cents for calendar 2009 fees.

Processing fees for immediate delivery have slumped this year because lower ore grades and declining mine output cut raw material supplies. The so-called treatment and refining charges, or TC/RCs, usually drop when there is a shortage of raw material and smelters have to compete for deliveries.

“The fees were concluded below the level needed to make profits” because of lower production at BHP’s Escondida project and Teck Resources Ltd.’s Highland Valley mine, said Okada, also president of Nippon Mining & Metals Co.

Miners and smelters set annual processing fees twice a year, with the July contracts covering about 10 percent to 20 percent of the total volumes processed in Japan.

Year Earlier

Last year’s mid-year deals were at $42.50 a ton and 4.25 cents, according to data compiled by the industry association. Copper smelters buy concentrate, a semi-processed form of ore used as a feedstock, at a price based on the London Metal Exchange benchmark minus processing fees.

Pan Pacific Copper Co., Japan’s largest smelter of the metal, is 66 percent owned by Nippon Mining & Metals Co., a unit of Nippon Mining Holdings Inc.Mitsui Mining & Smelting Co. holds the remaining share. Sumitomo Metal Mining Co. is Japan’s second-biggest smelter, ahead of Mitsubishi Materials Corp.

Teck Resources, Canada’s largest diversified mining company, cut its 2010 copper production forecast 13 percent because of “geotechnical issues” at its Highland Valley mine.

Total copper output may be 755 million pounds next year, down from a previous forecast of 870 million pounds, Vancouver- based Teck said June 24. It cut its 2009 production forecast for the Highland Valley mine in Canada by 12 percent to 258 million pounds and its 2010 estimate by 38 percent to 187 million pounds.

Production at Escondida, the world’s largest copper mine, will be 30 percent lower this year because of repairs to a mill, Diego Hernandez, president of BHP Billiton’s base metals division, said June 8. Escondida will shut a faulty mill for 45 days during July and August, Hernandez said.

To contact the reporters on this story: Jae Hur in Singapore at jhur1@bloomberg.net; Yasumasa Song in Tokyo at ysong9@bloomberg.ne

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Asian Stocks Rise on Yen, U.S. Housing Prices; Funai Advances

By Masaki Kondo and Shani Raja

July 23 (Bloomberg) -- Asian stocks rose for an eighth day, led by automakers and technology companies, as a weaker yen boosted the prospects for Japanese export earnings and U.S. housing prices unexpectedly gained.

Japan’s Funai Electric Co., which gets 71 percent of its revenue in North America, climbed 3.9 percent. Bank of East Asia Ltd. rose 3.3 percent in Hong Kong as JPMorgan Chase & Co. said an offer of compensation from the city’s banks for notes linked to failed Lehman Brothers Holdings Inc. removed a drag on shares. Sun Hung Kai Properties Ltd. rallied 4 percent on a newspaper report that the company had rented most of the shops at a Singapore mall.

The MSCI Asia Pacific Index added 0.4 percent to 107.12 as of 8:04 p.m. in Tokyo, with five stocks advancing for every three that declined. The gauge has gained 9.2 percent in the past eight days, the longest winning streak since January.

“The sentiment is one of cautious optimism,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State, which holds about $110 billion. “The economy and markets are not likely to continue to recover in a straight line. There are going to be ebbs and flows.”

Hong Kong’s Hang Seng Index climbed 3 percent, led by financial shares. China’s Shanghai Composite Index gained 1 percent, while South Korea’s Kospi Index added 0.2 percent.

Japan’s Nikkei 225 Stock Average rose 0.7 percent, extending its advance to a seventh day, as the yen weakened against the dollar, raised earnings outlooks for car and electronics makers. Disco Corp., which makes precision machinery, jumped 5 percent after reporting a surge in sales.

U.S. Housing

Australia’s S&P/ASX 200 Index dipped 0.1 percent. National Australia Bank Ltd., the nation’s top lender by assets, slumped 5.2 percent after pricing a share sale at a discount. Woolworths Ltd., the country’s biggest retailer, sank 3.7 percent as rising valuations pushed a brokerage to cut its rating.

Futures on the U.S. Standard & Poor’s 500 Index gained 0.2 percent. The gauge was little changed yesterday.

Average U.S. home prices rose 0.9 percent in May from April, the Federal Housing Finance Agency said yesterday. Prices were estimated to drop 0.2 percent, according to an economist survey.

Funai climbed 3.9 percent to 4,010 yen in Osaka trading. James Hardie Industries NV, the biggest seller of home siding in the U.S., rose 1.5 percent to A$4.82 in Sydney.

Toyota Motor Corp., which gets more than a half its profit from North America, rose 1.7 percent to 3,660 yen in Tokyo. Sony Corp., maker of the PlayStation 3 game machine, added 1.5 percent to 2,330 yen. The yen depreciated to as much as 94.38 from 93.58 at the 9 a.m. opening of Tokyo stock trading.

Light Trading

“Housing is no longer the drag on the market that kept pulling everything down,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co. in Tokyo. “Volumes remain light though, so shares are likely to remain range-bound until we can get some new sense of direction.”

Shares traded today on the Tokyo Stock Exchange’s first section were 3 percent below the three-month average, according to data compiled by Bloomberg. Trading volumes of stocks on Hong Kong’s Hang Seng Index were 12 percent below average.

The MSCI Asia Pacific Index’s eight-day rally has come amid better-than-expected earnings from U.S. companies including Apple Inc. and International Business Machines Corp. Shares in the gauge are valued at 24 times estimated net income, near the highest in almost four months.

“The market has really run ahead of itself in the last week or so,” Arjuna Mahendran, Singapore-based chief investment strategist for Asia at HSBC Private Bank, which oversees $494 billion in assets, said on Bloomberg Television. “We have reasonable optimism that the spate of above-expectation earnings that have been coming out will continue.”

Economic Recovery

The International Monetary Fund saw signs of stabilization in the global economy, Deputy Managing Director Takatoshi Kato said last month in a speech made public today. Japan’s Finance Ministry said today the nation’s exports decreased in June at the slowest pace of decline since December.

Disco rallied 5 percent to 4,390 yen. First-quarter revenue jumped 42 percent from the previous three months as demand recovered, the company said yesterday in a preliminary report.

In Hong Kong, Bank of East Asia gained 3.3 percent to HK$25.10. HSBC Holdings Plc, the biggest bank in Hong Kong by branches, added 2.7 percent HK$72.10. BOC Hong Kong (Holdings) Ltd. advanced 2.5 percent to HK$15.54.

Hong Kong banks offered to pay at least 60 cents on the dollar to investors in notes linked to Lehman. The repurchase of the notes “should remove a major overhang” for the sector, JPMorgan analysts wrote in a note to clients today.

Share Sales

Sun Hung Kai Properties, Hong Kong’s biggest developer, jumped 4 percent to HK$111.10. The company expects annual rental income of HK$815 million ($105 million) from its newly opened ION Orchard mall in Singapore, the Standard said.

National Australia Bank slumped 5.2 percent to A$22.35. The bank said it will sell shares at A$21.50 ($18) each, a discount of 8.8 percent from the previous closing price. Rival Suncorp- Metway Ltd. lost 1.7 percent to A$6.78 and Bank of Queensland Ltd. slid 2.7 percent to A$10.22.

Chunghwa Picture Tubes Co., Taiwan’s No. 3 maker of liquid- crystal displays, lost 3.4 percent to NT$4.83. The company is selling as many as 100 million new global depositary receipts at a discount of up to 20 percent, a document from the sale arrangers showed.

Woolworths slumped 3.7 percent to A$26.55. Royal Bank of Scotland Group Plc slashed the rating on the stock to “hold” from “buy,” citing valuations.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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U.S. Stock-Index Futures Advance; EBay, Citigroup, Alcoa Climb

By Daniela Silberstein

July 23 (Bloomberg) -- U.S. stock futures rose, indicating the Standard & Poor’s 500 Index will resume its rally, as EBay Inc. reported profit and sales that beat analysts’ estimates and investors speculated a report may show home resales increased.

EBay, owner of the most visited U.S. e-commerce Web site, advanced 3.9 percent in pre-market trading New York after its forecast also topped projections. Citigroup Inc. added 1.1 percent before the National Association of Realtors report. Alcoa Inc., the largest U.S. aluminum producer, climbed with metal prices.

Futures on the S&P 500 expiring in September rose 0.3 percent to 952.60 at 11:18 a.m. in London. Dow Jones Industrial Average futures gained 0.3 percent to 8,860. Nasdaq-100 Index futures increased 0.3 percent to 1,561.75.

Stocks declined yesterday, with the S&P 500 slipping from an eight-month high, as energy producers dropped on lower oil prices and banks slid following an increase in bad loans at Wells Fargo & Co. The benchmark index for U.S. equities has still rallied 8.5 percent since July 10 as companies from Goldman Sachs Group Inc. to Intel Corp. reported earnings that beat analysts’ estimates.

“So far we’ve had a fly in the ointment here and there but the overall trend in earnings is encouraging,” said Thomas Schudel, a fund manager at Clariden Leu in Zurich, which oversees about $88 billion. “Today’s housing data will be watched. If house prices stabilize, that will be positive for retail and consumer banking. Leading indicators are pointing to a recovery.”

Earnings Analysis

Per-share earnings beat analysts’ projections by an average of 11 percent for the 114 companies in the S&P 500 that reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to Bloomberg data.

More than 60 companies, or about 12 percent of the S&P 500, are scheduled to report earnings today.

EBay climbed 5.6 percent to $20.54 in New York as the company forecast revenue in the next three months will be $2.05 billion to $2.15 billion. Analysts had estimated $2 billion.

Citigroup, grappling with consumer-loan delinquencies that contributed to a $2.4 billion operating loss last quarter, added 1.1 percent to $2.83.

Home resales in the U.S. probably rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices, economists said before a report by the National Association of Realtors due at 10 a.m. in Washington.

Alcoa, Freeport

At 8:30 a.m., figures from the Labor Department may show first-time applications for jobless benefits rose by 33,000 to 555,000 in the week ended July 18, economists forecast. The number of workers filing claims dropped by 95,000 over the previous two weeks, reflecting changes in the timing of mid-year auto shutdowns to retool for the new model year.

Alcoa gained 1.1 percent to $10.31 in Europe. Industrial metals climbed on speculation that China is leading a global economic recovery. Aluminum advanced for an eighth day, the longest winning streak in four months.

Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly traded copper producer, increased 1.2 percent to $59.50 in early New York trading. Copper in Shanghai climbed to the highest in more than nine months.

Barrick Gold Corp. advanced 1.4 percent to 35.43 as gold rallied to a six-week high in London.

Qualcomm Forecast

Qualcomm Inc. sank 5.8 percent to $45.66 in German trading as the company forecast fourth-quarter sales that fell short of some analysts’ estimates, raising concern that handset demand is still slowing. Separately, South Korea’s antitrust regulator said it plans to fine the world’s biggest maker of mobile-phone chips a record 260 billion won ($208 million) for anti- competitive practices.

CIT Group Inc. slipped 2.3 percent to 85 cents. Advisers to bondholders that rescued CIT with a $3 billion loan said creditors should push the company into Chapter 11 bankruptcy after a debt swap next month, according to a person familiar with the matter.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

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European Stocks Erase Gains; Stoxx 600 Index Is Little Changed

By Andrew Rummer

July 23 (Bloomberg) -- European stocks erased their advance as declines by travel and leisure stocks and automakers offset a rally by basic-resource companies.

The Dow Jones Stoxx 600 Index was little changed at 215.53 as of 11:38 a.m. in London, having earlier climbed as much as 0.5 percent.




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Russian Stocks May Rally 23% More This Year: Technical Analysis

By William Mauldin

July 23 (Bloomberg) -- Russia’s RTS Index, the world’s best share index in the past six months, may rally another 23 percent this year, based on technical analysis of moving averages by New York-based Auerbach Grayson & Co.

The 50-day moving average of RTS prices climbed above the 200-day exponential average this month, representing a “bullish cross,” according to Auerbach Grayson. The index’s rally from 836, representing a 50 percent retracement from this year’s high in June and January low, signals “bullish momentum” has returned, the brokerage said.

“A resumption of the uptrend in earnest has begun,” said Richard Ross, a technical analyst at Auerbach Grayson, which specializes in emerging and frontier markets and has research affiliates in 120 countries.

The RTS is likely “retest” the 1,180 level “by the late fall,” Ross said. The RTS fell 2.5 percent yesterday to 963.06, snapping seven-day rally. The RTS is close to “resistance” levels at about 979 and 994, based and the 200-day and 50-day moving averages, respectively, according to Bloomberg data and Auerbach Grayson.

“Once we consolidate prices in here and move back above these moving averages, that’s going to provide the catalyst for greater upside,” Ross said.

The 50-stock RTS has climbed 15 percent after closing at two-month low of 835.23 on July 10 as speculation the global recession is easing spurred a rally in oil prices. Russia is the world’s largest energy supplier. The RTS has risen 93 percent in the past six months as oil has almost doubled from this year’s lowest close in February.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net



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European Stocks Will Gain 11% in Second Half, Strategists Say

By Alexis Xydias and Adria Cimino

July 23 (Bloomberg) -- Improving company profits will spur the biggest year-end rally for European stocks since 2006, according to a survey of strategists.

Benchmark indexes in the region may climb 11 percent between June 30 and the end of 2009, according to the average prediction of 11 European market analysts surveyed this week by Bloomberg. That compares with an 8.4 percent advance for the Standard & Poor’s 500 Index estimated by 10 U.S. strategists.

Rising earnings will justify the highest valuations since December 2003 and lure investors after the Dow Jones Stoxx 600 Index dropped 46 percent last year, the most on record, according to the strategists. The predicted increase would be the biggest for the final six months of a year since the gauge rose 14 percent in 2006, data compiled by Bloomberg show.

Gains “will be linked to the earnings reports, and so far they’ve been reassuring,” said Kilian de Kertanguy, a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees about $2.3 billion. “There is a lot of capital waiting to be re-injected into the market. If there is a real sign of improvement from companies, the capital will go to stocks.”

The Stoxx 600 index added 6.8 percent last week, the most since November, reviving a rally that’s driven the gauge up 37 percent in four months. Speculation the first global recession since World War II is ending has pushed the measure up 8.7 percent this year, erasing a loss that reached 20 percent on March 9. It added 0.3 percent yesterday to 215.65.

Positive Surprises

Of the 43 Stoxx 600 companies that reported second-quarter results since July 8, 26 beat estimates while 15 trailed them. Two reported results that matched projections, the data show.

Nokia Oyj, the world’s biggest maker of mobile phones, reported net income last week of 380 million euros ($540 million), surpassing analysts’ predictions. Competition from Cupertino, California-based Apple Inc.’s iPhone and the BlackBerry, made by Research In Motion Ltd. of Waterloo, Ontario, forced the Espoo, Finland-based company to reduce forecasts for market share and profitability.

Royal Philips Electronics NV, Europe’s biggest consumer- electronics maker, reported a quarterly profit on July 13, defying analysts’ expectations of a loss, and said second-half sales may increase from the first six months of 2009.

Results such as those may help halt a year-long decline in analysts’ profit forecasts for next year. Since Jan. 4, 2008, the current-year consensus estimate of Stoxx 600 earnings has slipped every week except for the one ended June 12.

‘Squeezed Higher’

“Any surprise in second-quarter earnings could see stocks squeezed higher,” said Gary Baker, co-head of international investment strategy at Bank of America Corp.’s Merrill Lynch & Co. unit in London. He didn’t participate in the survey.

Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, said the economy may limit equities. German investor confidence unexpectedly fell in July, according to the ZEW Center for European Economic Research in Mannheim. European unemployment rose to the highest in a decade in May.

“I’m not convinced that the market will take off,” said Chaloin, whose company oversees $3.5 billion. “I’m not optimistic.”

Morgan Stanley’s Teun Draaisma, who forecast losses for European stocks in 2008, and Matthias Joerss of Sal. Oppenheim Jr. & Cie. were the only two surveyed to predict declines. Nomura Holdings Inc.’s Ian Scott forecasts a 6.2 percent advance this year in a FTSE European index that excludes the U.K.

Jean-Francois Robin, a strategist at Natixis in Paris, says the worst of the economic slump is over and investors will return to markets because they hold “a lot of cash.” He predicted the biggest increases among the strategists polled.

“The Armageddon scenario is out of the picture,” said Robin, whose forecast implies 20 percent gains. “The worst seems to have passed. The economy isn’t as dark, and growth and company outlooks are improving.”

     The following table lists forecasts for European benchmark
indexes at the end of 2009 from 11 strategists surveyed by
Bloomberg News. Percentage changes are based on the June 30
market close.

Brokerage            Benchmark              Target   Gain/Loss
===============================================================
Morgan Stanley       MSCI Europe Local       850       -6.4%
SocGen Cross Asset   DJ Stoxx 600            230       12.0%
Goldman Sachs        DJ Stoxx 600            235       14.0%
JPMorgan Chase       MSCI Europe Local     1,080       19.0%
Nomura               FTSE Europe (ex-UK)     280        6.2%
UBS                  FTSEurofirst 300      1,000       18.0%
ING Groep            DJ Stoxx 600            210        2.0%
ABN Amro             DJ Stoxx 600            230       12.0%
Exane                DJ Stoxx 600            220        6.9%
Natixis              DJ Euro Stoxx 50      2,877       20.0%
Sal. Oppenheim Jr.   DJ Euro Stoxx 50      2,250 to    -6.3% to
                                          2,400       -0.1%
Credit Suisse        DJ Euro Stoxx           250       12.0%

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Adria Cimino in Paris at acimino1@bloomberg.net.

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