German Industrial Output Fell in July After June Gain

By Gabi Thesing

Sept. 8 (Bloomberg) -- German industrial output fell in July after rising in June, suggesting the recovery from recession may be gradual.

Production declined 0.9 percent from June, when it rose a revised 0.8 percent, the Economy Ministry in Berlin said today. It had initially reported a 0.1 percent decline in June output. Economists predicted an increase of 1.6 percent in July, the median of 39 forecasts in a Bloomberg survey showed. From a year earlier, production declined 17 percent when adjusted for the number of work days.

Germany unexpectedly pulled out of its worst recession since World War II in the second quarter and some data suggest the pace of expansion may accelerate. Exports and factory orders rose in July and business confidence increased for a fifth month in August. With unemployment rising and some government stimulus measures starting to expire, policy makers including European Central Bank President Jean-Claude Trichet have warned that the economic pickup may be uneven.

“The recovery is bumpy and strong order and confidence numbers don’t immediately translate into production,” said James Ashley, an economist at Barclays Capital in London. “Next month should be much better and we expect sound growth in the third and fourth quarters.”

July’s output decline was driven by a 3.2 percent drop in investment goods production and 3.9 percent slide in energy output, the ministry said. Construction fell 2.3 percent. Intermediate goods output gained 1.8 percent and production of durable goods such as household appliances rose 1.2 percent.

Exports, Orders

German exports gained 2.3 in July and factory orders advanced 3.5 percent. Given the increase in orders, “industrial production is likely to increase in the third quarter,” the ministry said.

K+S AG, Europe’s biggest potash producer, on Sept. 1 predicted a 50 percent jump in potash sales next year as global demand for the crop nutrient rebounds from this year’s slump.

Governments worldwide have announced about $2 trillion in economic stimulus programs to help rekindle economic growth.

Measures introduced by German Chancellor Angela Merkel’s government, which faces a national election on Sept. 27, include infrastructure spending and a 2,500-euro payment to people who trade in their old car and buy a new one. The “cash-for- clunkers” fund ran dry last week.

Rising Unemployment

While Bundesbank President Axel Weber last week predicted the third quarter “will again signal a strong pick-up,” boosted by the car-scrappage program, he said a stronger global recovery is needed for Germany to overcome all its economic weaknesses.

The Bundesbank expects unemployment to rise to 10.5 percent in 2010 from 8.3 percent today as companies cut costs to restore profit. That may damp consumer spending and undermine the recovery.

Still, “with gradually filling order books, chances are increasing that the future worsening of the labor market will be limited,” said Carsten Brzeski, an economist at ING Groep in Brussels.

Germany’s government has indicated its forecast for a 6 percent economic contraction this year may now be too pessimistic.

The Organization for Economic Cooperation and Development last week cut its estimate for the recession in the world’s leading industrialized economies, and a senior International Monetary Fund economist said the lender plans to adjust its global growth forecast for 2010 to “just below” 3 percent from a July prediction of 2.5 percent.

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net

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Spain Industrial Output Falls More Than Expected for 15th Month

By Emma Ross-Thomas

Sept. 8 (Bloomberg) -- Spain’s industrial production declined for a 15th month in July, adding to signs Spain will take longer than its European trading partners to emerge from the recession.

Output at factories, refineries and mines fell 17.4 percent from a year earlier, adjusting for the number of working days, after declining a revised 16 percent in June, the Madrid-based National Statistics Institute said today in an e-mailed statement. That compares with a median forecast for a 16 percent drop in a Bloomberg News survey of nine economists.

Spain’s economy contracted for a fifth quarter in the three months through June even as Germany and France returned to growth. After the collapse of the construction boom pushed Spanish unemployment to 18.5 percent, the highest in Europe, the nation’s gross domestic product may shrink 0.9 percent in 2010, the Organization for Economic Cooperation and Development said on June 24, making it the worst performer in the 30-nation OECD after Hungary and Ireland.

“In the third quarter, it will probably still be negative quarter-on-quarter, but by the end of this year or the beginning of next year the sector will begin to expand again,” said Dominic Bryant, economist at BNP Paribas in London, referring to Spanish industrial output.

Vehicle manufacturing declined 31 percent from a year earlier, in unadjusted terms, today’s report showed. New car registrations, a proxy for sales, stagnated from a year earlier in August, compared with annual declines of more than 40 percent in January and February, after government incentives for consumers started in May.

Ford Motor Co. said on July 31 that it plans to eliminate 600 jobs in Spain. Nicolas Correa SA, Spain’s largest milling- machines maker, has cut its workforce by 15 percent, and anticipates a total reduction of 20 percent by year end, the company said on Aug. 31. The number of unemployed industrial workers increased 47 percent from a year earlier in August, the Labor Ministry said last week.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

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Gold Rallies to 18-Month High on Dollar’s Weakness, Inflation

By Nicholas Larkin, Halia Pavliva and Kim Kyoungwha

Sept. 8 (Bloomberg) -- Gold rose to the highest price since March 2008, passing $1,000 an ounce, while silver climbed to a 13-month high as a weaker dollar and concern that inflation may accelerate boosted the appeal of precious metals.

Bullion for December delivery surged to $1,009.40 on the Comex division of the New York Mercantile Exchange, taking this year’s gain to 14 percent. Gold futures, which reached a record $1,033.90 in March 2008, are set for a ninth yearly gain. Crude- oil futures and all six industrial metals on the London Metal Exchange rallied as the Dollar Index lost as much as 1.1 percent to more than an 11-month low. Raw materials typically move inversely to the U.S. currency.

Governments have cut interest rates and boosted spending to fight the worst recession since World War II, spurring investors to buy bullion as a hedge against potential inflation and debasement of currencies. Gold, silver and palladium holdings in exchange-traded funds have advanced to records.

“We don’t see any immediate recovery in the dollar and gold is one of the better alternatives,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “From here, the next technical level is $1,040, and at the rate it’s going it might not be difficult. There’s a lot of new money coming into gold.”

Gold last traded at more than $1,000 on Feb. 20, the first time the metal had reached that price since March 2008. Futures then retreated as low as $865 on April 6. The metal added 0.9 percent to $1,005.70 at 8:35 a.m. in New York. Bullion for immediate delivery surged as high as $1,007.70 in London and was last at $1,005.45.

Producers Climb

“There’s not many good options for investors to hedge against a declining dollar and rising inflation,” Hwang Il Doo, head of trading with KEB Futures Co., said today from Seoul. He expects gold will rise to $1,100 an ounce by year’s end.

The metal’s advance boosted producers. Newcrest Mining Ltd., Australia’s largest gold-mining company, gained as much as 5 percent to A$34.18. Zijin Mining Group Co., China’s largest producer, rose as much as 10 percent in Hong Kong.

Lead, which has paced this year’s gains in metals, rose as much as 5.7 percent to $2,484 a metric ton, the highest level since May 2008. The metal’s 149 percent rally this year came after China, the world’s largest supplier of the metal, closed smelters and investigated lead-poisoning cases. Copper has more than doubled and traded at $6,505.75 a ton, the highest in more than a week. Goldman Sachs Group Inc. today raised its forecasts for industrial metals as a recovery in the world economy reduces spare capacity.

Haven Investment

Gold may be cementing its status as a haven investment as governments seek to flood the financial system with cash in an effort to haul the global economy out of a recession.

“The reasons to own gold as an investment make sense,” Sydney-based Greg Gibbs, a Royal Bank of Scotland Group Plc strategist, said in advance of the metal’s gain to $1,000 today. “It is a hedge against policy makers losing control of fiscal and quantitative monetary policies.”

The Dollar Index, a six-currency gauge of the dollar’s value, declined for a third day today. The measure has slipped 5 percent this year.

Other precious metals have outperformed gold this year. Silver for December delivery in New York gained as much as 3.5 percent to $16.86 an ounce today, the highest since August 2008, and was last at $16.725. It has climbed 48 percent this year.

Silver Ratio

An ounce of gold now buys about 60 ounces of silver in London, the least since August 2008, according to Bloomberg data. That’s down from a high of 84.4 on Oct. 10, which was the most since March 1995.

Palladium for December delivery in New York rose 1 percent to $299 an ounce, the highest price in a year. The best performing precious metal this year has gained 58 percent in 2009. Platinum for October delivery added 2 percent to $1,284.80 an ounce, increasing its gain this year to 37 percent.

U.S. President Barack Obama has increased U.S. marketable debt to an unprecedented $6.78 trillion as he borrows to spur the world’s largest economy. Goldman Sachs predicts that the U.S. will sell about $2.9 trillion of debt in the two years ending September 2010.

Crude-oil futures, used by some investors as an inflation- outlook guide, have soared 57 percent this year. Consumer prices will rise 0.9 percent in advanced economies next year compared with 0.1 percent in 2009, the International Monetary Fund forecast in July.

ETF Records

Gold at more than $1,000 may attract more investors seeking to take advantage of the longest advance in the metal’s price in 60 years. Assets in some of the industry’s largest exchange- traded funds have reached all-time highs the past few months.

The SPDR Gold Trust, the biggest ETF backed by the metal, reached a record 1,134.03 metric tons on June 1. The fund, which held 1,077.63 tons as of Sept. 4, has overtaken Switzerland as the world’s sixth-largest gold holding. Bullion held in ETF Securities Ltd.’s exchange-traded products added 6.640 ounces to a record 8 million ounces (248.8 tons) yesterday, its Web site showed.

The company’s silver holdings increased 0.9 percent to an all-time high 20.516 million ounces, while palladium assets rose 1 percent to a record 456,953 ounces.

Investors should avoid buying gold at $1,000 an ounce because investment demand is less compared with earlier this year, UBS AG analyst John Reade wrote in a note today. UBS maintained its one-month and three-month forecasts for the metal at $950 and $1,000 an ounce respectively.

“We are unconvinced that all the ingredients are in place for a sustained surge higher,” Reade said. “Only if we see much stronger and more broad-based buying in gold will we change our view that this is a profit-taking opportunity rather than a signal to buy gold.”

To contact the reporters on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net

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Japan Sees Economy ‘Picking Up’ Even as Jobs Lost

By Jason Clenfield

Sept. 8 (Bloomberg) -- Japan’s economy is recovering from its worst postwar recession, the government said, keeping its assessment unchanged for a second month even after the jobless rate climbed to a record.

“The economy is showing signs of picking up amid record unemployment and other difficult conditions,” the Cabinet Office said in Tokyo today, adding language about joblessness to phrasing it’s used since July. The report, the first since the Democratic Party of Japan won power on Aug. 30, cited overseas demand as the driver of the recovery.

Although growth resumed last quarter, the economy has only rebounded to its 2004 size and factory output is still almost a quarter below last year’s level. Saddled with idle equipment and unneeded workers, companies are cutting investment and jobs.

The unemployment rate climbed to 5.7 percent in July, the highest since records began in 1953. The increase was a reflection of low production levels, the government said.

The Cabinet Office downgraded its view of the job market, saying there’s a risk confidence may deteriorate among households, whose spending accounts for about 60 percent of the economy. A separate report today showed that sentiment among merchants fell in August for the first time in eight months.

The world’s second-largest economy grew an annualized 3.7 percent last quarter, following a record 11.7 percent contraction in the previous three months, economists expect revised gross domestic product figures to show on Sept. 11. Exports led the expansion as governments worldwide poured more than $2 trillion into their economies.

Global Recovery

Economic and Fiscal Policy Minister Yoshimasa Hayashi told reporters after the Cabinet Office release that economic conditions remain critical, with falling incomes and consumer spending risk factors.

The global recession is bottoming, the government said today, raising its assessment of the world economy for a third month. China’s 4 trillion yuan ($585 billion) in public spending is helping generate demand in an economy that this year passed the U.S. as Japan’s biggest export customer.

Hayashi said policies haven’t spurred consumer demand.

Job prospects have worsened and workers are enduring the biggest pay cuts on record.

Still, government incentives to encourage the purchase of fuel-efficient cars boosted domestic revenue for companies including Toyota Motor Corp., whose sales of its Prius hybrid almost quadrupled in July.

The automaker said today it will hire about 800 temporary workers to meet “possible” production increases as government subsidies at home and abroad revive sales. Toyota still plans to build about a third fewer cars this year than the 10 million vehicles it has the capacity to make.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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ECB’s Weber Sees Subdued Inflation During ‘Protracted’ Recovery

By Gabi Thesing

Sept. 8 (Bloomberg) -- European Central Bank council member Axel Weber said price pressures will remain subdued as the euro- region economy struggles to recover from recession.

There is little risk that the ECB’s policy of flooding banks with cash will stoke inflation and it will take some time before the economy is growing fast enough to push up prices, Weber said in a speech in Frankfurt today. “All in all, inflation fears, understandable as they may be, are unfounded.”

The ECB last week left its benchmark interest rate at a record low of 1 percent and said it will continue to lend banks as much money as they want at that rate for up to 12 months. The ECB remains wary of nipping the euro-region recovery in the bud by tightening policy too soon as rising unemployment and the expiry of government rescue packages threaten to damp expansion next year.

Weber, who heads Germany’s Bundesbank, said the economic recovery will be “protracted” and interest rates are “appropriate” for the inflation outlook. While “it’s too early” to withdraw the monetary stimulus, a “timely exit” is nevertheless vital, he said.

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net

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Tea Shortage to Widen 10% as India, Kenya Droughts Hurt Crops

By Thomas Kutty Abraham

Sept. 8 (Bloomberg) -- A global tea shortage may increase by 10 percent next year as droughts in Kenya, Sri Lanka and India, the top exporters, damage crops and propel prices to a record, the world’s biggest tea plantation company said.

The deficit may widen to 110 million kilograms (243 million pounds) by May to June next year, compared with 100 million kilograms this year, Aditya Khaitan, managing director, of McLeod Russel India Ltd., said in an interview. Record tea prices in Kenya and India may gain by another 15 percent in the next 12 months, he said.

Reduced supplies will increase costs for tea marketing companies including Tata Tea Ltd., owner of Tetley brands, and Unilever Plc, while boosting earnings at producers McLeod, Goodricke Group Ltd. and Jayshree Tea & Industries Ltd. African tea prices rose to a record at auctions on Aug. 29, while Indian prices have gained an average 25 percent this year.

“I don’t see any relief for tea consumers for the next one year,” said Harsh Gupta, an analyst at SMC Global Securities Ltd. “The global shortage isn’t likely to be overcome anytime soon as prices will firm up further.”

Stagnant prices for almost a decade since 1999 caused some tea estates to close and forced plantation companies to cut investment in replanting old bushes and adding new machines, McLeod Russel’s Khaitan said by phone from Kolkata yesterday.

“Tea is playing a catch-up with other agriculture commodities, which have shot up in the past couple of years,” he said. “The tea deficit is here to stay and the prices will continue to rise.”

Kenya, Sri Lanka

India, Kenya and Sri Lanka together account for more than 50 percent of global tea exports. India’s tea output this year may drop 20 million kilograms from last year’s 980.8 million kilograms, Khaitan said.

India’s tea production in the seven months to July dropped 3.3 percent to 461 million kilograms after the weakest monsoon in at least seven years caused a drought in 278 of India’s 626 districts this year. That may create a deficit of 50 million kilograms next year, Khaitan said.

“Drought is only one reason for prices to take off,” he said. “Years of neglect because of stagnant prices took a toll on production over the years.”

The record prices may help companies resume investment in developing plantations and raising output, Khaitan said.

The harvest in Sri Lanka, the world’s fourth-biggest producer, declined 32 percent in the six months to June to 130.5 million kilograms, according to Sri Lanka Tea Board data.

Kenyan Production

Kenya’s crop this year is about 161 million kilograms, 21 percent lower than a year earlier, Africa Tea Brokers Ltd. said in a report on Sept. 4. The Kenya Tea Development Agency, the country’s biggest grower and exporter, said on Aug. 14 that a “serious” drought will cut production “heavily.”

India, the world’s largest tea consumer, won’t boost exports to benefit from record global prices as local demand has increased 1 percent on average over the past few years, Khaitan said. Shipments in the January-July period totaled 94 million kilograms, 14 percent less than the 109.3 million kilograms a year earlier, according to the state-run Tea Board of India.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

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Copper, Metals Jump as Dollar’s Slump Spurs Inflation Concerns

By Millie Munshi and Anna Stablum

Sept. 8 (Bloomberg) -- Copper futures rose for the fourth straight session and lead climbed to the highest price since May 2008 as the slumping dollar boosted demand for metals as a hedge against inflation.

The dollar fell to an 11-month low against a basket of six major currencies. The greenback has tumbled 13 percent since March 1. Copper has more than doubled this year. Crude oil and gold also jumped today.

“The dollar is playing a huge part in the market,” said William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “Hard assets are king. People are buying based on inflation fears.”

Copper futures for December delivery rose 11 cents, or 3.8 percent, to $2.9765 a pound at 9:41 a.m. on the Comex division of the New York Mercantile Exchange. The market was closed yesterday for a public holiday. The price gained 1.7 percent in the previous three sessions.

“All the metals are very much following the dollar as people are going for tangible assets,” said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York.

Copper also jumped on signs of improving global growth. Goldman Sachs Group Inc. boosted its price forecast.

German exports increased 2.3 percent in July, the third advance in a row, Germany’s Federal Statistics Office said today. The country is the world’s third-largest copper user after China and the U.S. China’s auto sales in August surged a record 90 percent from a year earlier, the China Association of Automobile Manufacturers said.

Exports ‘Encouraging’

“The export data is very encouraging,” said David Thurtell, an analyst at Citigroup Inc. in London. “We need to start buying goods from each other again. Car sales jumped in China. It is all good.”

On the London Metal Exchange, copper for delivery in three months gained $196, or 3.1 percent, to $6,520 a metric ton ($2.96 a pound).

Copper will reach $7,650 a ton at the end of 2010, Goldman Sachs said, almost a third higher than a previous estimate of $5,800.

“Increasing evidence of a stronger-than-anticipated recovery in global industrial activity” will lift prices, the bank said.

On the LME, lead rose $165, or 7 percent, to $2,515 a ton, the highest level since May 7, 2008.

Lead, used mainly in batteries, has more than doubled this year as smelters in China closed because of environmental regulations.

‘Short of Lead’

“There are thousands of small smelters in China that have probably never been tested for any environmental impact,” Citigroup’s Thurtell said. “If we lose even just a small percentage, the world is going to be short of lead.”

At least 500,000 tons of lead capacity is under investigation, according to Standard Chartered Plc. China produces 4 million tons a year, almost half of total global supplies, the bank says.

Aluminum, nickel, tin and zinc also gained in London.

To contact the reporters on this story: Millie Munshi in New York at mmunshi@bloomberg.net; Anna Stablum in London at astablum@bloomberg.net

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U.S. Displaced by Switzerland as Most Competitive

By Simon Kennedy and Klaus Wille

Sept. 8 (Bloomberg) -- The U.S. was displaced by Switzerland as the world’s most-competitive economy after its financial markets were roiled by the worst crises since the Great Depression, the World Economic Forum said today.

The U.S. fell to second position for the first time since the Geneva-based organization began its current index in 2004 as it lost marks for the sophistication of its markets and rising budget deficits. Switzerland was credited for its stability and ability to innovate.

“A number of escalating weaknesses have taken their toll on the U.S. ranking this year,” the study of 133 countries ny the Geneva-based organization said. “Switzerland’s performance has remained relatively stable.”

The loss of efficiency by the world’s largest economy is another obstacle to a fast recovery even as it begins to show signs of emerging from its deepest recession since World War II.

Reduced confidence in its banking system after the collapse a year ago of Lehman Brothers Holdings Inc. meant the U.S. slid to ninth from 20th when ranked for the attributes of its markets. A measure of how easy access to finance is fell to 106th this year, close to Albania and Mali, from 40th last year, while a budget deficit now above $1 trillion pushed its grade for economic stability to 93rd from 66th.

U.S. Faces Obstacles

The U.S. economy still won marks for its flexible product and labor markets, research and development and technological advances. ‘These factors remain a driving force behind U.S. productivity and will support recovery from the current recession,” the forum said.

The U.S. economy may be slow to pull out of its slump as data suggest obstacles to expansion remain. While the economy lost the fewest jobs this year in August, unemployment climbed to a 26-year high, a U.S. Labor Department report showed Sept. 5.

Switzerland took the top spot after being ranked third in the world for business sophistication and second for its capacity to innovate. Its economy was ranked 17th for stability.

Recent indicators show the Swiss economy is emerging from its worst recession in three decades. Gross domestic product contracted 0.3 percent in the second quarter from the previous three months, less than economists expected. Exports rose in July after falling for two months and investor confidence jumped to a three-year high in August.

Returning to Growth

“Some months ago, uncertainty was much higher and I expected worse” said Ursina Kubli, an economist at Bank Sarasin in Zurich. “But given these latest data, it looks as if the economy is stabilizing on a solid level. I expect the economy to expand again in the third quarter.”

Singapore, Sweden and Denmark rounded out the top five, followed by Finland, Germany, Japan, Canada and the Netherlands. Among the other Group of Seven nations, the U.K. slipped one slot to 13th, France held at 16th and Italy rose a place to 48th, although remained below Barbados in 44th.

China climbed one place to 29th, while India and Brazil also gained to 49th and 56th respectively. Russia fell 12 places to 63th because of concern about the government’s growing role in its economy and the independence of its justice system. In Latin America, Chile was the highest placed ranking 30th and Qatar outpaced its Middle East counterparts coming in at 22nd.

Governments should be wary of not taking steps to fortify their economies even once the crisis passes, said Xavier Sala-i- Martin, an economics professor at Columbia University in New York, who helped write the report. The International Monetary Fund now expects the world economy to grow 2.9 percent next year rather than 2.5 percent it predicted in July.

“It is critical that policy makers not lose sight of long- term competitiveness fundamentals amid short-term urgencies,” said Sala-i-Martin. “A competitiveness-supporting economic environment can help national economies to weather business cycle downturns.”

To contact the reporters on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net

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Sugar Falls to One-Month Low on Speculation Gains Were Overdone

By M. Shankar

Sept. 8 (Bloomberg) -- White sugar fell to a one-month low in London on concern that prices no longer reflected the outlook for demand. Robusta coffee and cocoa advanced.

White, or refined, sugar for December delivery slid as much as $12.90, or 2.4 percent, to $532.70 a metric ton on the Liffe exchange, the lowest compared with intraday prices since Aug. 7. The contract was trading at $540 a ton at 1:06 p.m., paring its gain this year to 70 percent.

“The market is getting a bit more cautious,” Abah Ofon, an analyst with Standard Chartered Bank in Dubai, said at a sugar conference in Cape Town, South Africa, today. “There is going to be more volatility next year.”

The driest June in 83 years in India and excess rains in Brazil have crimped production in the two major producing countries. The price of raw sugar traded in New York has advanced 78 percent this year and traded 3.5 percent lower at 20.85 cents a pound today.

“Sugar will trend a bit lower once harvesting picks up in Brazil and assuming the weather is good,” Ofon said. “We are probably going to stabilize at around 21 cents per pound for raw sugar” for the remainder of the year, he said.

Sugar production in Brazil is forecast to climb 9.8 percent in 2009-10, the London-based International Sugar Organization said in its monthly report today.

A recent revival of the monsoon helped India’s drought- stricken sugarcane crop, the country’s agricultural commissioner said last week. Supplies are sufficient to meet higher demand during the festival season, junior Food Minister K.V. Thomas said Sept. 4.

Sugar Production

European Union sugar production will rise to 16 million tons in 2009-10 from 14.9 million tons a year earlier, F.O. Licht said in an e-mailed statement yesterday.

Among other agricultural commodities traded on Liffe, cocoa for December delivery advanced 1 percent to 1,879 pounds ($3,116) a ton.

Ghana, the world’s second-largest cocoa producer, will miss its target of producing 1 million tons a year by the 2010-11 season, according to Tony Fofie, chief executive officer of the Ghana Cocoa Board.

The state-run board, which oversees the industry, now expects the West African country to produce 1 million tons a year by the 2012-13 season, Fofie said in an interview at the Cocoa Producers Alliance conference in Lome, Togo, late yesterday.

Robusta coffee for November delivery gained 0.7 percent to $1,504 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net

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Asian Stocks Rise on Australian Confidence Report, Chip Prices

By Patrick Rial and Ian C. Sayson

Sept. 8 (Bloomberg) -- Asian stocks rose, lifting the MSCI Asia Pacific Index to the highest level in a year, as Australian business confidence jumped, computer-memory prices gained and gold rose above $1,000 an ounce.

National Australia Bank Ltd. climbed 3.8 percent in Sydney after the lender’s sentiment index jumped to a six-year high. Elpida Memory Inc., Japan’s largest maker of dynamic random access memory, gained 5.4 percent after the benchmark price for chips climbed to the highest level since August 2008. Newcrest Mining Ltd., Australia’s No. 1 gold producer, jumped 3.7 percent.

The MSCI Asia Pacific Index rose 1.5 percent to 115.91 as of 7:20 p.m. in Tokyo, the highest level since Sept. 24, 2008. The gauge has climbed 64 percent from a more than five-year low on March 9 on speculation stimulus measures worldwide will revive the global economy.

“The market hasn’t given up on the economic recovery story,” said Olan Caperina, who helps manage about $7.75 billion at BPI Asset Management Inc. in Manila. “There’s optimism that the market has bottomed out, but you need earnings and consistent economic data to push share prices higher.”

Japan’s Nikkei 225 Stock Average advanced 0.7 percent. JVC Kenwood Holdings Inc. surged 31 percent as the Nikkei newspaper said the company may beat profit forecasts. Limiting gains, Mitsubishi UFJ Financial Group Inc. sank 1.8 percent as central bank figures showed loan growth slowed.

Cabinet Reshuffle

Australia’s S&P/ASX 200 Index added 1.6 percent while Hong Kong’s Hang Seng Index gained 2.1 percent. Taiwan’s Taiex Index climbed 1.2 percent on speculation a cabinet reshuffle will resolve a political crisis. In Seoul, SK Energy Co. surged 15 percent on speculation third-quarter earnings will rebound.

Futures on the U.S. Standard & Poor’s 500 Index advanced 1 percent. Markets in the U.S. were shut yesterday for a public holiday.

National Australia Bank rose 3.8 percent to A$28.34 after its index of business confidence, based on a survey of more than 550 companies, climbed to the highest level since October 2003. Commonwealth Bank of Australia increased 2.1 percent to A$46.83.

National Australia today also scrapped an earlier forecast that the Australian economy would stagnate this year, saying gross domestic product will rise 0.6 percent in 2009 and 2.1 percent in 2010.

Governments globally have authorized more than $2 trillion in relief measures to bring an end to the worst slowdown since the Great Depression. Countries including Japan and Germany have already started to expand, while $485 billion of stimulus has helped China’s growth to reaccelerate.

Chip Prices

“There are still a lot of things to be worried about, but the economic cycle will take care of them naturally,” said Masaru Hamasaki, a senior strategist at　Toyota Asset Management Co., which oversees the equivalent of $14 billion. “Earnings and the economy will continue to improve.”

Technology companies on the MSCI Asia Pacific Index accounted for 13 percent of the gauge’s advance today as prices of the benchmark 1-gigabit computer-memory chip climbed to $1.71 yesterday, from as low as 58 cents in December, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for the chips.

Elpida rose 5.4 percent to 1,225 yen. Samsung Electronics Co., the world’s largest maker of computer-memory chips, added 1 percent to 781,000 won.

Advantest Corp., the world’s biggest maker of memory-chip testers, gained 1.5 percent to 2,360 yen. The company expects July-September orders for its chip-testing equipment to exceed levels for the preceding quarter, the Nikkei reported.

Rising Sales

AU Optronics Corp. added 3 percent to NT$34 after Taiwan’s largest maker of liquid-crystal displays sold 23 million shares of United Microelectronics Corp. for a profit of NT$70.7 million ($2.2 million). AU Optronics also said sales in August rose 15.9 percent from the prior month.

Investors including Daiwa SB Investment Ltd.’s Koichi Ogawa questioned whether stocks can extend the six-month rally given how expensive equities are. Stocks on the MSCI Asia Pacific Index are priced at an average 23.5 times estimated profit, up from 15.1 times at the low in March.

“We’re currently without a major catalyst,” said Ogawa, chief portfolio manager at Daiwa SB in Tokyo, which manages the equivalent of $37 billion. “This time of year is traditionally the weakest for stocks and on top of that valuations are no longer cheap.”

Gold Prices

Japan’s Nikkei has lost an average of 2.1 percent in September in the last two decades, compared with a 0.3 percent increase in other months, according to data compiled by Bloomberg.

In Sydney, Newcrest gained 3.7 percent to A$33.75 as gold futures rose above $1,000 an ounce for the first time since February. Zijin Mining Group Co., China’s largest gold producer, jumped 7.8 percent to HK$7.74 in Hong Kong.

BHP Billiton Ltd., the world’s No. 1 mining company, climbed 2.2 percent to A$37.58, while Rio Tinto Group, the world’s third-largest mining company, gained 2.2 percent to A$57.79. A gauge of six metals, including nickel and copper, climbed 0.7 percent in London yesterday to the highest close since Aug. 28.

Mitsubishi UFJ, Japan’s biggest publicly traded bank, retreated 1.8 percent to 543 yen, and Sumitomo Mitsui Financial Group Inc. sank 2.1 percent to 3,710 yen. Lending growth at Japanese banks slowed in August for an eighth-straight month, Bank of Japan figures showed today, as companies cut spending and unemployment climbed to a record.

Raising Capital?

Meanwhile, the Group of 20 finance ministers said over the weekend banks need to increase the amount and quality of so- called core capital. Japanese banks may be disadvantaged if preferred shares are not allowed to be counted toward capital, the Nikkei newspaper reported.

“Talk about banks raising capital levels is going to put pressure on Japanese lenders because of their small cushions,” said Daiwa’s Ogawa. “We could be looking at additional equity financing from some lenders.”

JVC Kenwood surged 31 percent to 64 yen. The company may have twice as much operating profit as forecast in the quarter to Sept. 30, the Nikkei reported. The company expanded its share of the U.S. market for car navigation systems and audio devices, the paper said.

SK Energy, South Korea’s largest oil refiner, soared 15 percent to 118,000 won. Third-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, may double from the previous quarter, HI Investment & Securities Co. wrote in a report today.

Farglory Land Development Co., Taiwan’s No. 1 construction company by value, surged by 6.9 percent to NT$73.20. Taiwan’s Premier Liu Chao-shiuan and his Cabinet will resign on Sept. 10 to take responsibility for the government’s poor response to a deadly typhoon last month.

“The replacements are far more competent,” Peter Kurz, head of Taiwan Research at Citigroup Inc., wrote in an e-mailed note. “This is positive for the market.”

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.

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Swiss Stock Exchange Considers Tariff Changes, CEO Katz Says

By Nandini Sukumar

Sept. 8 (Bloomberg) -- The SIX Swiss Exchange, home to Nestle SA and UBS AG, is considering cutting some trading fees and plans to introduce new services and woo new members as it seeks to claw back market share.

“We are going to work on the cost base to get further tariff flexibility,” Christian Katz, who took over as chief executive officer in May, said in an interview in Zurich yesterday. “We are looking at being more client- and product- specific in terms of tariff. We might cut tariffs over time in some segments, in others they may rise.”

Traditional bourses including London Stock Exchange Group Plc, Deutsche Boerse AG and NYSE Euronext are losing customers to so-called multilateral trading facilities, which focus mostly on trading in the largest stocks. The Swiss exchange has surrendered about 20 percent of market share for the benchmark Swiss Market Index to rivals including Chi-X Europe Ltd., Bats Europe and Turquoise, according to data from Bats.

“All equities are priced the same on our market, but do they need to be priced that way?” Katz said. “We charge the same way whether it’s to trade a bigcap stock or a smallcap stock. I’m not sure this is what the market needs.”

The increasing number of market participants has fragmented liquidity between competing trading systems. Last week, Budapest-based Quote MTF became the latest to start operations.

‘Swung Too far’

“There was a time when market share was liquidity-driven and you went where the liquidity was,” said Katz, previously head of equities in Zurich at Goldman Sachs Group Inc. “Now the pendulum has swung to price. The pendulum has swung too far and people are neglecting liquidity.”

The bourse, the largest of Europe’s traditional exchanges not to be publicly traded, moved trading of stocks in the SMI and the Swiss Leader Index to Zurich from London on May 4, after a seven-year push to get into pan-European trading.

“Stock exchanges provide a lot of the externalities for which they’re not adequately compensated,” Katz said. “They provide access to the markets for small- and medium-size firms and also supervise issuers. They are part of the financial structure and play a key role in the stability. We need to consider all these tasks when looking at tariffs and recognize that the exchange provides more than trading.”

SIX Group, which controls the Swiss bourse, is owned by 162 brokers and banks that are users and was formed in a three-way merger at the start of 2008. Swiss cantonal banks own about 13.6 percent of SIX Group with commercial banks and asset managers having about 15 percent. Foreign banks own about 22.7 percent and UBS and Credit Suisse Group AG, the two biggest Swiss banks, another 30 percent.

To contact the reporter on this story: Nandini Sukumar in Zurich at nsukumar@bloomberg.net.

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German Stocks Pare Gains as Fresenius Drops; Commerzbank Gains

By Christiane Lenzner

Sept. 8 (Bloomberg) -- German stocks pared earlier gains, leaving the DAX Index little changed at 5,468.53 as of 4:01 p.m. in Frankfurt. Commerzbank AG and Deutsche Lufthansa AG rose more than 3 percent, while Fresenius SE slid 2.2 percent.

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U.K. Stocks Pare Earlier Gains; Utility, Health-Care Shares Drop

By Andrew Rummer

Sept. 8 (Bloomberg) -- U.K. stocks pared their advance as utilities and health-care companies declined. The FTSE 100 Index was little changed at 4,933.11 as of 3:10 p.m. in London, having earlier risen as much as 0.8 percent.

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Most European Stocks Rise; BHP Billiton, Deutsche Telekom Gain

By Daniela Silberstein

Sept. 8 (Bloomberg) -- Most European stocks advanced as commodity producers rallied with metal prices and investors speculated that mergers will increase.

BHP Billiton Ltd., the world’s biggest mining company, and Randgold Resources Ltd. surged more than 2.5 percent as copper and gold rose. Deutsche Telekom AG and France Telecom SA climbed more than 1.5 percent after agreeing to merge their U.K. mobile- phone units.

The Dow Jones Stoxx 600 Index added 0.2 percent to 237.73 at 3:31 p.m. in London, as three stocks rose for every two that fell. The gauge has surged 51 percent since March 9 as companies from GlaxoSmithKline Plc to Johnson & Johnson reported results that topped estimates and the German and French economies unexpectedly expanded.

“I’m feeling pretty optimistic,” Jane Coffey, who helps oversee $12 billion at Royal London Asset Management, said in a Bloomberg Television interview. “Economic data will continue to look good, corporate earnings are looking pretty good. My concern was that we’re going to have a lot equity issuance and that will weigh on the market. If we get the counter of M&A taking the stock away that will equal things out.”

European stocks pared their advance after U.S. trading opened, as a measure of bank shares declined.

Credit Suisse Group AG strategists said investors should favor stocks over bonds and cash and forecast gains in equity indexes worldwide ranging from 12 percent for Europe and 23 percent for Japan through mid-2010 as the economy recovers.

‘Best Phase’

“This is the best phase of the economic cycle,” a team of strategists led by Andrew Garthwaite in London wrote today. “We do not exclude a period of near-term consolidation, given that some of our tactical indicators are sending a signal of caution. Yet, other indicators suggest it is too early to sell.”

International Monetary Fund Managing Director Dominique Strauss-Kahn told the Il Sole 24 Ore newspaper that the crisis phase that toppled Lehman Brothers Holdings Inc. in September 2008 “is almost certainly behind us.”

U.K. manufacturing increased three times as much as economists forecast in July in the biggest jump in 18 months, boosted by higher production of cars and pharmaceuticals. Output rose 0.9 percent from the previous month, the Office for National Statistics said today in London.

National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.2 percent and France’s CAC 40 advanced 0.1 percent. Germany’s DAX added 0.3 percent as TUI AG climbed.

Mining Companies

BHP Billiton rose 2.5 percent to 1,664 pence and Rio Tinto Group, the third-largest mining company, gained 3 percent to 2,539.5 pence. A gauge of basic-resource companies in the Stoxx 600 surged 1.9 percent, the second-steepest advance among 19 industry groups, as copper, nickel, zinc and tin advanced on the London Metal Exchange.

Goldman Sachs Group Inc. raised it forecasts for industrial metals prices, citing “increasing signs and confidence that the global economy is finally recovery.”

Randgold, an owner of gold mines in West Africa, increased 3.3 percent to 4,360 pence. Gold futures climbed to an 18-month high, passing $1,000 an ounce for the first time in more than six months as a weaker dollar and concern that inflation may accelerate boosted the precious metal’s appeal.

Phone Merger

Deutsche Telekom, Europe’s biggest telephone company, increased 1.5 percent to 9.60 euros and France Telecom gained 1.5 percent to 18.39 euros. The two companies agreed to merge their U.K. mobile-phone divisions to create the country’s largest cellular operator.

STMicroelectronics NV, Europe’s largest semiconductor maker, advanced 2.1 percent to 6.54 euros. Prices of the benchmark 1-gigabit computer-memory chip climbed to $1.71 yesterday, from as low as 58 cents in December, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for the chips.

Dassault Systemes SA rallied 4 percent to 37.08 euros. Deutsche Bank AG raised its recommendation on the company, whose design software is used by Toyota Motor Corp. and Boeing Co., to “buy” from “hold.”

A measure of travel and leisure companies on the Stoxx 600 added 2.5 percent, the biggest gain among 19 industry groups. Air France-KLM Group advanced 6 percent to 10.62 euros as Europe’s largest airline said it halted a decline in yields, or revenue per passenger, after cutting the number of seats to match supply with demand.

TUI, the biggest stakeholder in the Hapag-Lloyd shipping company, rose 6.3 percent to 6.63 euros after Hamburger Abendblatt said Hapag agreed with workers on cost cuts, making state aid more likely. Hapag will cut 120 of its 1,100 jobs in Germany by April 2010, the newspaper said.

InterContinental Hotels Group Plc climbed 6.4 percent to 817 pence. The owner of the Holiday Inn brand was raised to “outperform” from “neutral” at Credit Suisse.

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

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Mobius Spurns Brazil Share Offers as Gol Seeks Sale

By Telma Marotto and Francisco Marcelino

Sept. 8 (Bloomberg) -- Brazilian companies lining up to sell stock after this year’s 51 percent surge in the Bovespa index are offering “low quality,” overpriced shares, said Templeton Asset Management Ltd.’s Mark Mobius.

At least 12 companies filed to sell equity in Brazil since July 31, including Gol Linhas Aereas Inteligentes SA, the nation’s second-biggest airline, and Rossi Residencial SA, the sixth-largest homebuilder by assets. Only one company, the iron ore producer now known as Vale SA, sold stock in the second half of 2008 before an eight-month drought in offerings.

“The new share sales that are coming out in Brazil are of relatively low quality and priced far above fair value,” Mobius, who oversees about $25 billion as Templeton’s executive chairman, wrote Sept. 2 in an e-mail response to questions. “We are not planning to buy any of the pending offerings we have seen thus far but it all depends on the final pricing.”

Brazilian companies are returning to the market as stocks rally on prospects record-low interest rates and rising prices for the country’s commodity exports will fuel growth in Latin America’s largest economy. The national statistics agency, known as IBGE, will say on Sept. 11 that gross domestic product grew between April and June for the first time in three quarters, according to economists surveyed by Bloomberg.

Bovespa Valuations

The Bovespa’s gain sent the valuation for the benchmark index last month to 24 times the reported earnings of its companies, the highest in at least five years. The MSCI Emerging Markets Index fetches 19.3 times profit.

“I can’t see right now anything that makes me think valuations will go up more than this,” said Carlos Camacho, who helps manage about 3 billion reais ($1.6 billion) at GAP Asset Management in Rio de Janeiro.

The Bovespa increased 1.5 percent today to 57,498.19 as of 9:28 a.m. New York time.

Brookfield Incorporacoes SA, the Rio-based real-estate developer formerly known as Brascan Residential Properties SA, said today it plans to raise as much as 700 million reais in a primary stock offering.

Pending IPOs

Share sales pending in Sao Paulo include initial public offerings of Rio de Janeiro-based Cetip SA - Balcao Organizado de Ativos & Derivativos, Brazil’s biggest clearing house; Tivit Terceirizacao de Tecnologia e Servicos SA, a Sao Paulo-based computer-services company; and Direcional Engenharia SA, a homebuilder based in Belo Horizonte. They follow Cia. Brasileira de Meios de Pagamento, the processor of Visa Inc. payments known as VisaNet, which raised 8.4 billion reais in a June IPO that set a record in Brazil.

Cetip, Tivit and Direcional declined to comment on their sales because of the so-called quiet period before the offering, according to spokeswomen for the companies.

Barueri-based VisaNet’s initial share sale was the first in a year. There were only four new listings in 2008 as the global financial crisis deepened, compared with a record 64 in 2007. Almost 80 percent of the IPOs in Brazil since the beginning of 2006 trade below their offering price, according to data compiled by Bloomberg.

“In the past, the way to do well from deals in Brazil was to be very demanding in valuation and very skeptical and only participating in a few deals,” said Urban Larson, a Latin America portfolio manager at F&C Management Ltd. in London, who oversees about $450 million in shares. “There’s some very good companies that have gone public in Brazil in the last few years and it’s possible to do quite well, but it’s also a good idea to be cautious in looking at these deals.”

Economic Growth

Alberto Kiraly, a vice president for the National Investment Bank Association in Sao Paulo, said companies selling shares now will benefit from the country’s economic rebound.

“All these companies should appreciate as they are closely linked to local demand,” Kiraly said. “And the economic prospects suggest higher consumption and more credit available for purchases.”

Brazil’s GDP grew 1.7 percent in the second quarter from the previous period, according to the median estimate of 26 economists surveyed by Bloomberg. It will shrink 0.16 percent in 2009 before expanding 4 percent next year, a central bank survey of 100 economists published today showed. That’s more than economists’ 2010 growth forecasts for Chile, Mexico and Argentina, according to Bloomberg data.

‘Bullish’ Sentiment

“People selling those shares see an opportunity to obtain a high price at this time when sentiment is bullish,” Mobius, 73, wrote in the e-mail. The Singapore-based investor, voted among the “Top Ten Money Managers of the 20th Century” by the Carson Group, said in July that Brazil is his top pick among emerging-market countries after China. He declined to comment on specific companies offering shares.

Companies selling stock “offer good opportunities for investors who want to be exposed to Brazilian local economy,” said Guilherme Figueiredo, who helps oversee 1.7 billion reais as director at M Safra & Co. in Sao Paulo. “That said, I still think that the market is very sensitive and investors will look carefully into each company to assess valuation, earnings.”

Rossi, up 217 percent this year, is trading 52 percent below the 25 reais price at which it sold shares in February 2006. The Sao Paulo-based company said Sept. 1 it plans to sell up to 600 million reais of common stock. Three analysts rate Rossi a “buy,” six rate it “hold” and two recommend selling the shares, according to Bloomberg data.

Gol Offering

Gol, which said on Aug. 25 it is seeking to raise up to 650 million reais in a share sale, is down 32 percent since selling shares for 26.57 reais in a June 2004 initial offering. It has three analyst “buy” ratings, two “holds” and two “sells.”

Sao Paulo-based Gol and Rossi said in e-mailed statements that they can’t comment on the share sales, citing the quiet period.

“There’s been a housing boom, an airline boom, an everything boom in Brazil since 2006 and here they are raising money below what they raised in the past,” said Christopher Palmer, who oversees about $5 billion as Gartmore Investment Management Ltd.’s London-based head of global emerging markets. “How would you feel if you were one of those investors who invested in 2006?”

Markets

The Bovespa index fell 1.8 percent to 56,652.28 last week, led by Banco Nossa Caixa SA, which dropped 8.9 percent. MMX Mineracao e Metalicos SA gained the most in the measure, advancing 5.5 percent.

The yield on the local-currency zero-coupon bonds due January 2011 fell three basis points, or 0.03 percentage point, to 9.8 percent in the week. The real gained 2 percent to 1.8442 per U.S. dollar from 1.8812 on Aug. 28.

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

Event                                                  Date
FGV CPI IPC-S Inflation Index - Weekly                 Sep 8
Weekly Trade Balance                                   Sep 8
FIPE Consumer Price Index - Weekly                     Sep 9
FGV IGP-DI Inflation Index - August                    Sep 9
CNI Capacity Utilization - July                        Sep 9
Monetary Policy Meeting Minutes                        Sep 10
IBGE Inflation Index IPCA - August                     Sep 10
FGV Preview Inflation IGP-M - Sep. 10                  Sep 11
Gross Domestic Product - 2nd Quarter                   Sep 11

To contact the reporter on this story: Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net; Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

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Putnam’s Thakore Pins Voyager Rebound to Rally’s Ignored Stocks

By Charles Stein

Sept. 8 (Bloomberg) -- Nick Thakore, whose Putnam Voyager Fund has beaten 98 percent of rivals this year, is leaning more on stocks that investors ignored in the market’s rally since March to help him stay ahead of the pack.

“I have shifted my focus to more stable companies that were left in the dust,” Thakore said in an interview at his Boston office. Holdings he expects to drive gains include biotech firm Genzyme Corp. and video-game maker Nintendo Co., which fell this year as the Standard & Poor’s 500 Index rose 11 percent through Sept. 3.

The $3.3 billion Putnam Voyager surged 44 percent in 2009, landing it in the top 2 percent of large-capitalization growth funds, according to data compiled by Morningstar Inc. The fund is headed for its best year since 1999, when it returned 56 percent, including reinvested dividends.

Putnam Investments, based in Boston, is counting on improved performance to reclaim market share it lost as investors fled. Its ranking in fund assets slid to 26th in July from fourth at the end of 2001, according to Financial Research Corp., a Boston firm that tracks the data. Chief Executive Officer Robert Reynolds said in April he hoped to lift Putnam back into the list of the top five fund companies.

“Putnam is going to have to have several years of good performance before brokers that were once part of the fold come back,” said Geoff Bobroff, president of Bobroff Consulting Inc. in East Greenwich, Rhode Island. Putnam funds are sold through financial advisers, who typically look at multiyear records.

Fidelity Flavor

Putnam was bought in 2007 by Montreal-based Power Financial Corp. from New York-based insurance broker Marsh & McLennan Cos. Reynolds joined in 2008 after spending 23 years at Fidelity Investments, rising to vice chairman. Thakore is among a number of former Fidelity colleagues Reynolds recruited, including Walter Donovan as chief investment officer.

Thakore, 42, worked as an analyst and portfolio manager at Fidelity from 1993 to 2002, where he oversaw the Fidelity Fund. He was a fund manager at RiverSource Investments from 2002 until October, when he joined Putnam.

“It’s very important to perform here because this fund has struggled in the past,” Thakore said.

RiverSource Growth Fund, which Thakore managed before coming to Putnam, averaged returns of 4 percent annually in the six years ending Sept. 30, 2008, Bloomberg data show. That compared with 8.1 percent for the S&P 500.

Voyager, opened in 1969, swelled to $46.4 billion in assets at its peak in March 2000, data from Chicago-based Morningstar show. The fund lost 52 percent in the three years ended December 2002. Investors withdrew $19.7 billion from Voyager since the start of the decade, according to Morningstar.

Investors Attracted

The fund attracted net $25.8 million in July, Morningstar data show. That was its second monthly inflow since 2000.

Voyager benefited from owning stocks including computer maker Apple Inc. and insurer Aflac Inc. early in the year “when their prices were disconnected from their real value,” Thakore said.

Apple, based in Cupertino, California, almost doubled in 2009. The fund reduced its Apple holding by 42 percent from Jan. 31 to June 30, according to Bloomberg data and a regulatory filing by the fund in March. Apple was Voyager’s largest position at 3.8 percent of the portfolio as of the end of June, Bloomberg data show.

Aflac, based in Columbus, Georgia, more than tripled since the market’s 12-year low on March 9. Investors were too bearish about the company’s prospects during the financial crisis after Lehman Brothers Holdings Inc. collapsed last year and American International Group Inc. was bailed out, Thakore said. The stock, which closed at $38.86 on Sept. 3, could reach $60 if Aflac meets Wall Street earnings estimates for 2010, he said.

‘Fantastic Turnaround’

Jonathan Rahbar, a fund analyst at Morningstar, described Thakore’s 10-month tenure at Voyager as “a fantastic turnaround job so far.” Morningstar raised its rating on Voyager in September to four out of five stars.

Thakore, in the fund’s regulatory filing, said his goal was to own a portfolio of companies that will increase earnings and cash flow faster than the overall market. “But I don’t want to pay up for that growth,” he wrote.

Genzyme, the Cambridge, Massachusetts-based maker of treatments for rare diseases, fits the definition of a “growth company selling below fair value,” Thakore said in the interview.

The shares dropped the most in more than seven months on July 22 after the company cut its 2009 profit forecast because of a plant closure that restricted drug supplies. Genzyme said it needed to decontaminate a Boston factory after detecting a virus.

Company Setbacks

Thakore said it was “just a matter of time” before the company fixes the problem and returns to earnings growth. Genzyme fell 16 percent this year.

Nintendo, the Kyoto, Japan-based maker of the top-selling Wii video-game console, reported a 61 percent plunge in net income in its latest quarter as the product’s sales fell for the first time since it was introduced in 2006.

The company, said Thakore, suffers from both a weak global economy that has led to lower consumer spending, and a lack of new games. He predicted Nintendo would soon start to see improvement on both fronts.

“I may be the only person who likes this stock anymore,” Thakore said. Nintendo slumped 30 percent in 2009.

Thakore said the stock market could get a boost from what he expects to be a “strong cyclical recovery” over the next few quarters as the U.S. pulls out of the recession that began in late 2007. He declined to make a specific economic forecast.

Economists at New York-based Morgan Stanley in the past month raised their forecast for U.S. gross domestic product for the current quarter to 4.8 percent annualized from 3.5 percent.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net.

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Canada Stocks Rise as Dollar Weakness Lifts Gold; Barrick Gains

By Rita Nazareth

Sept. 8 (Bloomberg) -- Canadian stocks rose, led by commodity producers, as gold surpassed $1,000 an ounce and oil prices surged after the dollar dropped against the euro, boosting the appeal of precious metals and demand for crude.

Barrick Gold Corp., the world’s largest producer, gained 1.2 percent as the price of bullion rose to an 18-month high. Suncor Energy Inc., Canada’s largest energy company, added 2.4 percent as crude oil climbed above $70 a barrel. Bombardier Inc., the world’s third-biggest planemaker, climbed 2.9 percent after saying it expects to deliver 550 business jets in India and China.

The Standard & Poor’s/TSX Composite Index rose 84.38 points, or 0.8 percent, to 11,101.85 at 10:15 a.m. in Toronto, extending last week’s 0.4 percent increase.

Energy and raw-materials producers, which combined account for 45 percent of the S&P/TSX Index, rose 1.3 percent and 1.7 percent, respectively. Barrick gained 1.2 percent to C$44, while Suncor added 2.4 percent to C$34.81.

Bullion for December delivery surged to $1,009.40 on the Comex division of the New York Mercantile Exchange, extending this year’s gain to 14 percent. Gold futures, which reached a record $1,033.90 in March 2008, are set for a ninth yearly gain. Crude-oil futures and all six industrial metals on the London Metal Exchange rallied as the Dollar Index lost as much as 1.2 percent to the lowest in almost a year. Raw materials typically move inversely to the U.S. currency.

Crude oil for October delivery rose $2.63, or 3.9 percent, to $70.65 a barrel on the New York Mercantile Exchange. Futures climbed as much as $2.99, or 4.4 percent, the most since Aug. 19. Prices are up 58 percent this year.

Bombardier climbed 2.9 percent to C$4.60. The planemaker expects to deliver 550 business jets in India and China by 2018 as emerging markets help offset slumping demand in the U.S. and Europe. There are currently 86 Bombardier jets in China, with another 300 deliveries expected by 2018, according to Bombardier. India, which will receive 250 jets, has 106 nationwide at present.

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

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