European Market Update

Daily Forex Fundamentals | Written by Trade The News | Sep 10 09 10:03 GMT |

Chinese Premier Wen notes that Impact of stimulus policies is fading ECONOMIC DATA (IN) India Aug exports at $14.3B, down 19.7% y/y - Trade Sec (FI) Finland Jul Industrial Production M/M: -3.1% v 1.4%e, Y/Y: -24.0% v -19.9%e (FR) French Q2 Final Non-Farm Payrolls Q/Q: -0.7% v -0.5%e (FR) French Jul Industrial Production M/M: 0.1% v 0.4%e; Y/Y: -13.0% v -13.0%e (FR) French July Manufacturing Production M/M: 0.6% v 0.5%e; Y/Y: -13.8% v -14.4%e (FR) French Jul Trade Balance: -€1.3B v -€4.0Be (TU) Turkish Aug Capacity Utilization: 69.7% v 72.3%e (TU) Turkish Q2 GDP Y/Y: -7.0% v -8.0%e (RU) Russian Gold & Forex Reserves w/e Sep 4th: $404.9B v $404.9B prior (SW) Swedish Aug CPI Headline Rate M/M: 0.2% v 0.1%e; Y/Y: -0.8% v -1.0%e (SW) Swedish Aug CPI Underlying Inflation M/M: % v 0.2%e; Y/Y: % v 0.2%e; CPI Level: 299.42v 299.48e (DE) Danish Aug CPI M/M: 0.3% v 0.2%e;Y/Y: 1.1% v 1.1%e (DE) Danish Aug CPI - Underlying Inflation: 0.3% v 0.2%e; Y/Y: 0.7% v 0.7%e (EU) ECB Monthly Report: Significant economic contraction has ended and risks are more balanced (mirrors ECB press conference from Sept 3rd) (IT) Italian Jul Trade Balance non EU: €1.7B v €147M prior (NO) Norway CPI M/M: -0.2% v 0.1%e; Y/Y: 1.9% v 2.2%e (NO) Norway CPI Underlying M/M: -0.3% v 0.0%e; Y/Y: 2.3% v 2.6%e (NO) Norway Producer prices M/M: 4.9% v -5.7% prior; Y/Y: -1.2% v -7.1%e (UK) Aug Halifax House Prices M/M: 0.8% v 1.0%e; Y/Y: -10.1% v -10.1%e (IT) Italian Q2 Final GDP Q/Q: -0.5% v -0.5%e; Y/Y: -6.0% v -6.0%e SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities news overnight : European equity markets opened to a light note following a similarly positive trading session in Asia. Moving higher after the open, all of Europe's main bourses, including the CAC, DAX and FTSE100 proceeded to print new 2009 calendar year highs. For the FTSE100, yesterday's close above the 5000 handle represented a level not seen since early Oct 2008. Early equity strength was driven by tech and industrial sectors following a positive guidance revision out of chip-maker ASML [ASML.UK] and an upgrade in ThyssenKrupp [TKA.GE] out of RBS. Shares of TUI Travel [TT.UK] have continued their out performance that began yesterday as reports that Arcandor's [ARO.GE] 49% stake is being eagerly acquired. After the strong open, equities sold off their best level following a disappointing export figure out of India (-19.7% y/y). This figure had downside effects for a range of commodities, miners and industrial names. This slide was halted by economic data between 3:30EST and 4:00EST including the UK Aug Halifax, Italian trade balance and the second consecutive IEA 2009 oil demand upward revision on the back of 'stronger global recovery.' IEA comments led to a rally in equities that carried into 5:00EST but looked ready to quickly pare gains. By 5:30EST equities have regained their downward momentum and are testing the unchanged lines on solid volume. In individual equities: ASML [ASML.NV] Raises Q3 and Q4 targets; Guides Q3/Q4 Rev at above €500M v €450M prior (€446Me). Sees business levels and bookings rising from previous guidance into Q3. DRAM and Logic units seeing demand boosts. ||Home Retail [HOME.UK] Reports Q2 Argos Sales £951M (LFL -1.4%), Homebase Sales £401M( LFL +1.6%). || William Morrison [MRW.UK] Reports H1 Pretax £449M v £357Me, Rev £7.5B v £7.3Be, Declares interim dividend 1.80p/shr. || Thomas Cook [TCG.UK] Follow up: Group stake formerly held by Arcandor is being sold -Bayerische Landesbank. || National Express [NEX.UK] Group is read to agree to £765M bid from CVC and Cosmen family -Daily Telegraph. || Galliford Try [GFRD.UK] Reports FY09 Net loss £18M v loss £17Me, Rev £1.5B v £1.5Be; To sell shares to raise £125.6M (47% of market cap). || Alcatel Lucent [ALU.FR] Reportedly, Huawei denied that it was in talks regarding an alliance. || SberBank [SBER.RU] Reports Q2 Net RUB5.4B v RUB4.2Be. Net Interest Income RUB245B (+45% y/y). NPL's at 6.4% of portfolio. Provisions for loan losses at 388.1B (7.1% of loan book). Total Assets -2.3% to RUB6.6B. || Speakers: ECB Liikanen reiterated the central bank's view that global economy was seen recovering slowly. He continued to believe that major currencies should be market determined. He stated that global imbalances including US debt and Chinese surplus must be analyzed. Clear that Gov't cannot fund their actions with debt and must start to repay debt taken on over the last few years || Chinese Premier Wen commented that there were signs of strength in global economy but again cautioned that recovery was viewed as being slow and uneven || China's NDRC's Zhang: Hopeful of achieving 8% growth target || The ECB monthly report largely reflected the Spt 3rd press conference. The ECB noted that the significant economic contraction had come to an end and risks are more balanced. It did reiterated that the Euro-Zone recovery wouldbe gradual and uneven with activity to remain weak in near term. Economic slack possible widened substantially. The ECB would unwind emergency measures when economy improved and that Interest rates were appropriate for current circumstances. The ECB warned that one should not neglect the risk of protectionism resurgence || ECB's Mersch reiterated the recent theme that the economic recovery to be gradual and volatile. He also reiterated that expected Euro-zone inflation to turn positive by the end of 2009. Mersch added that it was too soon to withdraw ECB and government support for economy but must discuss the end of stimulus in coming months. The ECB member stressed that he was strongly vigilant for liquidity impact on inflation ||(PD) Polish Central Banker Noga commented that 2010 GDP growth could approach 2% In Currencies: The USD consolidated from its recent losses against the majors and commodity-related currency pairs. The current price action seen as more technical profit-taking oriented following the recent test of 1.4600 in EUR/USD. Overall dealer continue to point that the recent USD trend suggests that USD is now viewed as a carry trade funding currency. Short-term USD funding costs are cheap and the currency is seen as weak. Dealer do point out that the recent 'official' names seen buying euros might be the IMF and chatter that the purchases are related to the China deal worth $50B which is to be translated into SDRs. As the NY morning approaches, EUR/USD at 1.4540 area. The BoE meeting will focus later today. Market expects that the BOE would hold its asset purchase target steady at £175B at today's meeting. There is some chatter that the central bank might cut its deposit rate (in the manner Sweden did, back in July) but such a move is unlikely. GBP/USD at 1.6520 and lower by 20 pips from its asian open. In Fixed Income Supply: Bunds, Gilts and Treasuries have swung in and out of positive territory this morning, moving inversely to and at the whim of, gyrations in stocks. The UK yield curve continues to test its steepest levels ahead of the BoE rate decision, with 2s10s sitting right near all time highs of 280bps throughout the session. Bunds have maintained a 3bps range this morning and are yielding 3.35% at the time of writing, just above their 50 day moving average. The 10y Note has held onto a similar range with the yield at 3.46% in current trade. A healthy flow of corporate issuance continues to be announced, with a huge offering from Italian utility Enel the major talking point In Energy/commodities: : IEA raised its 2009 oil demand forecast by 500K bpd, raised 2010 demand by 400K bpd on the back of stronger global recovery in US and China. IEA now sees 2009 oil demand at 84.4M bpd (still down 2.2% y/y) and 2010 demand at 85.7M bpd. It noted that 2010 global oil consumption was forecasted to rise by 1.3%. 2009 and 2010 non-opec oil supply remains flat at 51M bpd and 51.5M bpd. IEA forecasted that current OPEC compliance would decline to 66% from previous of 69% as OPEC added extra 55K bpd last month. Current OPEC Aug supply 26.3M bpd and current OECD oil supply seen at 61.8 days, +4.6% y/y. Floating storage at 50-55M bbl v 65M bbl m/m || OPEC Gen Sec El-Badri commented that Non-Opec countries might be invited to attend meetings on a yearly basis. He noted that every non-opec nation ex Mexico have been raising production. It had seen any material results from its discussions with Russia and Russian decision to increase output was not viewed as Credit Crisis: Moody's issued its annual report on Ireland and noted that the country 'AA1' sovereign rating faces 'severe test'. Moody's notes that size and lack of diversification of the Irish economy exposes it to unique risks In The Papers: Washington Post noted that banks were being forced to forgive credit card debt or modify it in favor of the cardholders. Yesterday's NY Times noted that debit card overdraft fees are a boon for banks. That article noted that banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances - for a price. NOTES Fed's Beige Book seemed to indicate that US interest rate policy to remain steady for a long time (IN) India Aug exports at $14.3B, down 19.7% y/y - Trade Sec Realtytrac revises up forecasts for 09 and extends outlook for peak into late '10 Bank of China [3988.HK] Exec Zhu: Ample liquidity has caused 'bubbles' in stocks, commodities and real estate and not only in China Chinese Premier Wen: Seeing signs of strength in global economy; but Recovery seen as slow and non-linear; Impact of stimulus policies is fading IEA raises 2009 and 2010 demand forecast on stronger than expected recovery RealtyTrac: US Aug foreclosures: 1 in 357 homes with loans got filed. Looking Ahead 7:00 (UK) BoE Rate Decision: No change expected current Bank Rate is 0.50%, current APF Target is £175B (LV) Latvian Rate Decision: No estimates, current Rate is 4.00% 8:00 (BR) Brazil Aug IBGE Inflation M/M: 0.2%e v 0.2% prior, Y/Y:4.4%e v 4.5% prior 8:15 (EU) ECB's Weber 8:30 (US) July Trade Balance: -$27.3Be v -$27.0B prior 8:30 (US) Initial Jobless Claims w/e Sep 5th: 560Ke v 570K prior, Continuing Claims: 6.2Me v 6.234M prior 9:00 (CA) Bank of Canada Rate Decision: No change expected v 0.25% prior 11:30 (EU) ECB's Nowotny 12:30 (US) Fed's Lockhart 13:00 (US) Treasury to reopen $12B in 30y bonds - 13:00 (US) Treasury's Geither testifies before TARP oversight pane (TU) Turkish Current Account (TRY): -0.2B v -1.9B 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.

Read more...

Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Sep 10 09 09:50 GMT |

EUR/USD Current level-1.4542 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 1.4134 and 1.3523. The pair is in a brief consolidation below 1.4601. The overall bias remains positive for 1.4653 with a risk limit below 1.4470. Resistance Support intraday intraweek intraday intraweek 1.4601 1.4720 1.4530 1.4006 1.4653 1.50+ 1.4470 1.3746 USD/JPY Current level - 92.10 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 94.86 and 94.84. Yesterday's corrective phase peaked at 92.60 and the pair broke below 92.04, reaching temporary low at 91.61. Current rebound is corrective in nature, preceding next slide towards 90.35. Crucial on the upside is 92.60 Resistance Support intraday intraweek intraday intraweek 92.60 95.50 91.60 90.35 93.40 101.45 90.35 87.12 GBP/USD Current level- 1.6523 The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. Still in the corrective pattern below 1.6589 and we think, that the support area around 1.6440 will initiate a rise towards 1.6752 major target. Crucial remains 1.6325. Resistance Support intraday intraweek intraday intraweek 1.6562 1.6663 1.6444 1.6111 1.6663 1.7440 1.6326 1.5350 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.

Read more...

Philippine Exports Extend Longest Slump Since 2002

By Karl Lester M. Yap and Max Estayo

Sept. 10 (Bloomberg) -- Philippine exports fell for a tenth month, extending the longest slump in seven years and suggesting a nascent recovery in the global economy has yet to revive demand for Asian-made electronics and other goods.

Shipments abroad dropped 25.4 percent from a year earlier to $3.31 billion in July after declining 24.8 percent the previous month, the National Statistics Office said in Manila today. That compares with the median forecast for a 20.8 percent plunge in a Bloomberg News survey of eight economists.

The government has trimmed its 2009 economic forecast three times this year as the global slump crimped orders for Philippine-produced Texas Instruments Inc. semiconductors and Gap Inc. clothes. The central bank kept its benchmark interest rate at a record-low of 4 percent last month after economic growth accelerated to 1.5 percent in the second quarter.

“The recovery in exports will not be a sustained one,” said Carlos Ylagan, a treasurer at BPI Investment Management Inc. in Manila. “We will have some corrections along the way. We may see a W-shaped recovery.”

Worldwide semiconductor sales fell 18 percent in July from a year earlier, according to the San Jose, California-based Semiconductor Industry Association.

Electronics sales, which make up more than half of Philippine exports, fell 25.2 percent to $1.92 billion in July from a year earlier, today’s report showed.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net.

Read more...

N.Z. Leaves Key Rate at 2.5% Amid ‘Patchy’ Recovery

By Tracy Withers

Sept. 10 (Bloomberg) -- New Zealand’s central bank kept its benchmark interest rate unchanged and said further cuts remain possible amid a “patchy recovery” from the worst recession in three decades.

“We continue to expect to keep the cash rate at or below the current level for some time,” Reserve Bank Governor Alan Bollard said in a statement in Wellington today after leaving the official cash rate at a record-low of 2.5 percent.

Bollard said the economy requires further stimulus from low interest rates to combat rising unemployment even as the nation emerges from recession in the second half of this year. A report today showed New Zealand export prices tumbled by the most in 58 years, underscoring Bollard’s concern that a surging currency will curb shipments abroad.

“There is still sufficient risk and uncertainty around the recovery path that the Reserve Bank sees a need to keep policy stimulatory for now,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The soft easing bias remains, though we doubt they will act on it.”

Bollard today omitted the comment that the cash rate “could still move modestly lower” that was in his June and July statements.

Traders are ignoring the prospect of further cuts and expect the rate to rise by 96 basis points within a year, according to a Credit Suisse index of swaps prices at 11:50 a.m. in Wellington. A basis point is 0.01 percentage points.

Economic Growth

New Zealand’s dollar rose to 69.78 U.S. cents from 69.59 cents immediately before the decision.

Twelve of 13 economists surveyed last week by Bloomberg News forecast today’s move. One expected a quarter-point cut. Seven predict a rate increase by June 30.

The economy, which began contracting in the first quarter of last year, will start to grow in the third quarter, the central bank said today in its quarterly monetary policy statement. Previously, it expected growth would be delayed until the final three months of the year.

The economy will expand 1.3 percent in the first quarter of 2010 from a year earlier, it forecast today. That’s better than the 0.8 pace predicted in June. Annual growth will accelerate to 3.6 percent by the first quarter of 2011, the bank said.

The Treasury Department said this week it also expects the economy will grow in the three months ending Sept. 30.

‘Patchy Recovery’

“There is more evidence that the decline in economic activity is coming to an end and that a patchy recovery is under way,” Bollard said. “Retail spending appears to have stopped falling following a rise in net immigration and a pickup in the housing market.”

Buoying growth, consumer confidence is at an 18-month high, Roy Morgan Research said last week. House prices rose for a fourth month in August, according to Quotable Value New Zealand, a government agency.

Forty-one percent of companies surveyed by ANZ National Bank Ltd. last month expect sales will improve, the highest reading since March 2005.

The central bank said the risks to the economic outlook are a rising jobless rate, slowing exports and excessive borrowing to pay for consumption and houses. The jobless rate will jump to 7 percent by mid-2010 from 6 percent in the second quarter, it said. Exports will fall 11 percent in the year ending March 31.

Currency Pressure

New Zealand’s currency has gained 39 percent against the U.S. dollar in the past six months, the best performer of 16 major currencies measured by Bloomberg. The gains cloud the outlook for exports and tourism, which together make up 40 percent of the economy.

A government report released in Wellington today showed export prices tumbled 11.6 percent in the second quarter from the previous three months as the currency surged by the most in 23 years.

“Business profits are under pressure because of the low level of activity and the elevated New Zealand dollar,” Bollard said. “If the exchange rate were to continue its recent appreciation, then the sustainability of the present recovery will be brought into question.”

Auction prices for milk powder rose 25 percent from July, Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said last week. Still, the ability of the Auckland- based company to pass on higher prices to farmers is limited by the strength of the New Zealand dollar, the company has said.

Finance Minister Bill English said this week the currency is “out of line with fundamentals” and may hamper his desire for the nation’s recovery to be based around exports and investment rather than consumption led by borrowing.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

Read more...

South Korean Central Bank Holds Benchmark Rate at 2%

By Seyoon Kim

Sept. 10 (Bloomberg) -- South Korea’s central bank kept its benchmark interest rate unchanged at a record low for a seventh month as it gauges signs of recovery in the nation’s economy.

Governor Lee Seong Tae left the seven-day repurchase rate at 2 percent in Seoul today, as forecast by all 16 economists in a Bloomberg News survey. The Bank of Korea cut borrowing costs by 3.25 percentage points between October and February, the most aggressive easing since it began setting a rate a decade ago.

“South Korea’s economy has been picking up relatively faster than other economies around the world,” said Lim Jiwon, an economist at JPMorgan Chase & Co. in Seoul. “Still, that’s not to say the recovery is strong enough to justify an interest- rate increase yet.”

South Korea’s $929 billion economy expanded at the fastest pace in almost six years in the second quarter, leading a regional rebound with China and Singapore. Even so, the Finance Ministry warned this week the economy risks sliding into a “double-dip” recession if government stimulus measures are withdrawn too soon.

“In the coming months, the Korean economy is likely to maintain its positive growth on a quarter-on-quarter basis, helped by the improvement in the world economic environment and the rebuilding of inventories,” the Bank of Korea said in a statement in Seoul. It added that “a number of uncertainties surround the actual pace” of growth.

Stocks Rise

The Kospi stock index has surged 45 percent this year as investors bet the economy is past the worst. Fitch Ratings last week raised South Korea’s credit-rating outlook to “stable” from “negative,” citing the resilience of the nation’s economy and banks.

The Kospi gained 1.2 percent to 1,627.00 at 11:23 a.m. in Seoul, while the won was little changed.

Industrial production rose for a seventh consecutive month in July, climbing 2 percent from June, while manufacturers’ confidence rose to a 22-month high, earlier reports showed. Consumer sentiment climbed to the highest level in almost seven years in August.

Nomura International Ltd. last week raised its gross domestic product forecast to zero, from a 1 percent contraction, while Credit Suisse Group AG said the economy may grow 0.2 percent this year, avoiding a previously forecast contraction.

Borrowing Costs

Some economists say the central bank may have to raise rates soon to prevent inflation accelerating.

“The economic conditions have been better than expected and the central bank needs to stem inflationary expectations,” said Kwon Young Sun, an economist at Nomura in Hong Kong. Kwon said he expects a rate increase as early as November.

Low borrowing costs have fueled consumer credit, with South Korea’s bank lending to households expanding for a seventh straight month in August on demand for mortgages and as confidence rose. Loans to households climbed 3 trillion won ($2.4 billion) to 405.1 trillion won, the Bank of Korea said yesterday.

Aggregated household debt is at a record high relative to disposable income and the highest in Asia -- comparable to the proportions in the U.S. and Australia, according to Nomura.

The central bank said today it “will maintain an accommodative policy stance for the time being and do what is needed to bring about the continuation of the recent improving pattern of economic movements and financial market stabilization.”

The government also says it wants to maintain policies to support the economy until it’s confident the recovery is being led by business and consumers.

“A premature shift in the policy trend will pose the danger of putting the economy into a double dip by interrupting an economic recovery, while an excessive delay in the policy shift will spur a bubble in inflation and asset prices,” the Finance Ministry said in a Sept. 8 report. “There’s a need to maintain the expansionary macroeconomic policy trend until an economic recovery is more visible,” the ministry said.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

Read more...

China House Prices Climb as Sales, Investment Surge

By Bloomberg News

Sept. 10 (Bloomberg) -- China’s house prices in the nation’s 70 biggest cities rose at the fastest pace in 11 months on record lending and climbing confidence.

House prices increased 2 percent in August from a year earlier, double the gain in July, according to a National Bureau of Statistics report on its Web site today. Sales and investment in property development accelerated in the first eight months of the year from the seven months through July, the bureau said.

Shenzhen and Jinhua, cities in eastern coastal provinces, led the gains as a rebound in investment and sales helps to cement a recovery in the world’s third-biggest economy. At the same time, surging prices may reinforce concern that asset bubbles may be inflating in the wake of $1.1 trillion of lending in the first seven months of the year.

“The continued rise in asset prices reflects the recovery in investor confidence,” said Sherman Chan, an economist at Moody’s Economy.com in Sydney. “Policy makers certainly need to keep a close eye on asset prices in the near term and act fast in preventing bubbles, which could derail the economy.”

Shanghai’s property index was the only sub-index on the city’s stock exchange to rise today, climbing 1.1 percent as of the 11:30 a.m. local time break in trading, led by Poly Real Estate Group Co.

House sales jumped 69.9 percent in the first eight months of 2009 from a year earlier to 2.35 trillion yuan ($344 billion), the bureau said. That was up from a 60 percent gain in the first seven months. By floor area, sales climbed 42.9 percent, up from 37 percent.

Property Investment Accelerates

Investment in property development grew 14.7 percent during the period, the bureau said today. That was an increase from 11.6 percent.

“Property investment will grow by 20 percent this year, and it will continue to be a driving force for China’s growth this and next year,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing.

Central bank adviser Fan Gang said last week that property- investment growth may rebound to about 30 percent next year.

The government’s 4 trillion yuan stimulus package and the credit boom helped the economy to accelerate in the second quarter from the weakest pace in almost a decade. August economic data is due to be released tomorrow.

In Jinhua, house prices rose 6.9 percent in August from a year earlier. In Shenzhen, the gain was 6.5 percent. Year-on- year, 15 of 70 cities posted declines. Month-on-month, none fell.

Sliding Stocks

A slide by the Shanghai Composite Index has reduced concerns about a bubble in stocks. The benchmark fell 0.9 percent as of the trading break, extending its decline from this year’s Aug. 4 peak to 16 percent. The measure is still up 60 percent for the year.

Risks of property bubbles may show up in individual cities, rather than across the nation as a whole, according to economist Chan.

“Going by recent government policy direction, which aims to promote balanced development, the central and western regions should show the sharpest improvement in investment,” said Chan. “However, the latest breakdown suggests that the already- saturated eastern region also recorded a sharp increase, which could well be driven by a return of speculative investment.”

China’s gross domestic product may increase 9.5 percent in 2010 after an 8.3 percent gain in 2009, the smallest in eight years, according to a Bloomberg survey of 22 economists conducted the week ending Aug. 28.

--Li Yanping. Editors: Paul Panckhurst, John McCluskey.

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

Read more...

Australia Cuts Jobs as Stimulus Wanes, Easing Pressure on Rates

By Jacob Greber

Sept. 10 (Bloomberg) -- Australian employment fell in August by almost twice as much as economists estimated, driving down the nation’s currency on expectations the central bank won’t raise interest rates anytime soon.

The number of people employed dropped 27,100 from July, when it rose a revised 33,700, the statistics bureau said in Sydney today. The median estimate of 21 economists surveyed by Bloomberg was for a decline of 15,000. The jobless rate held at 5.8 percent.

Falling employment adds to signs the economy may slow in coming months after reports yesterday showed retail sales unexpectedly fell in July and home-loan approvals ended a record nine-month run of gains as the effect of government stimulus spending wanes. Traders today pared bets on when central bank Governor Glenn Stevens will raise borrowing costs from a half- century low of 3 percent.

“There now is no way in the world that the Reserve Bank is going to hike in October,” said Rory Robertson, an economist at Macquarie Group Ltd. in Sydney. “A pre-Christmas tightening will require more good news on the jobs front.”

The Australian dollar fell to 85.91 U.S. cents at 12:47 p.m. in Sydney from 86.21 cents just before the report was released. The two-year government bond yield dropped 13 basis points to 4.25 percent. A basis point is 0.01 percentage point.

Investors also cut bets on the size of future interest-rate increases, according to a Credit Suisse Group AG index based on swaps trading. Stevens will raise the benchmark rate by 162 basis points over the next 12 months, the index showed at 12:47 p.m. in Sydney, down from 178 basis points before the report.

Full-Time Jobs

Full-time jobs dropped 30,800 in August as companies including BHP Billiton Ltd. cut workers amid the global recession that has eroded demand for exports of iron ore and coal. Part-time work increased 3,800.

Today’s report supports the government’s view that it is too early for it to wind back A$22 billion ($19 billion) in spending on new roads, railways, ports and schools.

Opposition Liberal Party leader Malcolm Turnbull, who has criticized the amount of government stimulus, will promise to cut spending by A$14 billion a year in his bid to become prime minister at an election due next year, the Australian newspaper reported today.

“We need to continue economic stimulus to support jobs during these difficult days,” countered Deputy Prime Minister Julia Gillard in Canberra today. “The full impact on employment of the global recession will take some time” to emerge. “Unemployment will continue to rise.”

Japanese Demand

In a further sign that global stimulus measures may be losing their impact, a released today in Tokyo showed Japanese machinery orders fell in July by more than economists forecast, sliding 9.3 percent from June. Japan was Australia’s largest trading partner last year.

The drop in employment may also erode consumer spending that helped Australia’s economy expand in the second quarter at the fastest pace in more than a year. Gross domestic product gained 0.6 percent in the second quarter from the previous three months, when it grew 0.4 percent.

Retail sales fell 1 percent in July from June, when they slid 1.4 percent, the bureau of statistics said yesterday. Economists forecast a gain of 0.5 percent. Home-Loan approvals dropped 2 percent.

Retail sales and home-loan approvals had been climbing since late last year, driven by A$20 billion in government cash handouts to consumers and increased grants to first-time home buyers of as much as A$21,000.

‘No Justification’

“There is absolutely no justification for expectations of near-term tightening by the Reserve Bank,” said Annette Beacher, an economist at TD Securities Ltd. in Singapore. Falling retail sales, home loans and employment “cannot be glossed over.”

Domestic demand has been stoked by central bank Governor Glenn Stevens’ decision to slash the overnight cash rate target by 4.25 percentage points between September 2008 and April this year.

Stevens left the benchmark unchanged last week for a fifth month and signaled his next move will be to increase borrowing costs from their “emergency” setting.

Companies shedding staff include BHP Billiton. The world’s largest mining company said on Aug. 25 it will cut 70 jobs at its Mt Keith nickel project in Western Australia. Huntsman Corp., a U.S.-based chemical maker, said this week it will close a plant in Melbourne, shedding 325 jobs.

The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.1 percent in August from 65.3 percent, today’s report showed.

Without the fall in the participation rate, the jobless rate would have risen to 6.2 percent, TD Securities’ Beacher said.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

Read more...

Speculative-Grade Defaults to Peak at 15% in Europe, S&P Says

By John Glover

Sept. 10 (Bloomberg) -- Defaults among speculative-grade companies and issuers of so-called leveraged loans will peak at about 15 percent this year in Europe, Standard & Poor’s said in a report.

A total of 48 companies failed to meet their commitments in the six months to June 30, compared with six in the same period last year, S&P said in a report today on the leveraged loan market. That has pushed the trailing 12-month default rate to 11 percent, S&P said.

“Companies with highly leveraged capital structures are having a difficult time of late coping with the dislocation in credit markets that began in mid-2007 and the severe downturn in the global banking sector that followed in September 2008,” S&P analysts led by Paul Watters in London wrote in the report.

Companies purchased in 2006 have the highest failure rate, S&P said. A total of 17 firms acquired that year, with average debt of 5.4 times cashflow, have defaulted compared with nine transactions with debt at six times cashflow from 2007, S&P said.

“However, we expect that a significant proportion of transactions that will be restructured in 2010 are likely to be those completed in 2007,” the analysts wrote. “Many of those companies are likely to face covenant breaches or liquidity issues on the back of amortization payments.”

In a separate report on the performance of 90 companies that went through a leveraged buyout, S&P said 45 percent were more than 10 percent behind their forecasts for earnings before interest, tax, depreciation and amortization. That compares with 31 percent as of the end of 2007, S&P said.

In a leveraged buyout, companies borrow in the name of the company they’re acquiring. Speculative, or non-investment grade, debt is rated below BBB- by S&P and Baa3 by Moody’s Investors Service.

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

Read more...

BOE May Keep 175 Billion-Pound Bond Plan as U.K. Lags

By Jennifer Ryan

Sept. 10 (Bloomberg) -- Bank of England policy makers will probably keep pursuing their 175 billion-pound ($289 billion) emergency stimulus program today as the British economy shows signs of lagging behind the global recovery.

The central bank, led by Governor Mervyn King, will reiterate the size of its plan to buy bonds with newly created money, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, all 60 economists in a separate survey said.

Prime Minister Gordon Brown wants to avoid complacency and keep up stimulus measures as the economy shows “encouraging” signs, his spokesman said yesterday. The Organization for Economic Cooperation and Development last week predicted a “modest” recovery for the world’s industrialized economies, though the U.K.’s slump will be worse than previously forecast.

“The bank is waiting to see how things pan out,” said Jonathan Loynes, an economist at Capital Economics Ltd., a London-based research group founded by former U.K. Treasury adviser Roger Bootle. “It’s the outlook for the economy that matters, and that’s not showing signs of picking up.”

The Paris-based OECD, which seeks to coordinate policy across its 30 member nations, said Sept. 3 that the U.K. economy will contract 4.7 percent this year, more than the 4.3 percent slump it forecast in June. The organization predicted economic contraction of 3.7 percent for the Group of Seven, compared with the 4.1 percent it projected previously.

‘Encouraging Signs’

Brown sees “interesting and encouraging signs” on the economy, his spokesman Simon Lewis said yesterday, though he “feels strongly about the need to keep recovery going by maintaining the appropriate level of expenditure.”

U.K. services expanded in August at the fastest pace since September 2007, according to a survey by Markit Economics, and Nationwide Building Society’s consumer confidence index rose to the highest in more than a year. Markit’s survey of manufacturers still showed contraction after growth in July.

House prices rose for a second month in August as low borrowing costs lured homebuyers, a report by Halifax today showed. Values in the U.K. climbed 0.8 percent to an average of 160,973 pounds, the division of Lloyds Banking Group Plc said in a statement. Prices were 7.6 percent lower than a year earlier.

The pound dropped against the dollar and the euro today. It fell 0.2 percent to $1.6515 as of 9:56 a.m. in London, after earlier rising to as high as $1.6566. Sterling eased to 88.14 pence per euro.

Minority Vote

King has shown caution on the recovery. He sought 200 billion pounds in asset purchases last month in a minority vote backed by David Miles and Timothy Besley, who left the panel on Aug. 31. In June 2007, when King last dissented from the majority because he wanted an interest-rate increase, the panel supported it at the next month’s decision.

King has remained concerned about the dearth of bank lending, and said last month there is still “a very long way to go” before banks will have rebuilt enough capital. Royal Bank of Scotland Group Plc and Barclays Plc, two of Britain’s biggest banks, have cut lending even after promising the government to make more credit available.

“The Bank of England is trying to hurry the process along a bit, but what the debate comes down to is whether the monetary intervention measures which the bank and others have put in place are actually working,” said Peter Dixon, an economist at Commerzbank AG in London. “In normal circumstances they probably would, but these aren’t normal circumstances.”

Gilt Yields

Deputy Governor Charles Bean said on Aug. 25 that the results of the bank’s purchases so far have been “moderately encouraging” and that gilt yields are as much as 75 basis points lower than they would otherwise be. He said that it is still “very early to draw conclusions” on the plan’s efficacy.

The yield on the 10-year gilt closed at 3.76 percent yesterday, up from 3.02 percent at the start of the year. The yield fell as low as 2.933 percent on March 13, two days after the central bank said it would start its asset purchase program.

Investors speculated this week that the Bank of England would cut the interest rate it pays on reserves it holds, in a new move to encourage financial institutions to lend more instead of hoarding money at the central bank.

“Markets are contemplating a change to the remuneration rate on reserves at the bank,” said Philip Shaw, chief economist at Investec Securities in London. “It is incorrect to look at the raw reserves data and conclude that banks are simply parking their funds there. What’s more likely is that the Bank of England keeps everything on hold for now.”

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

Read more...

Rising Wedge Suggests Euro May Reach $1.50: Technical Analysis

By Liz Capo McCormick

Sept. 10 (Bloomberg) -- Trading patterns suggest the euro may strengthen to $1.50 for the first time in more than a year within six weeks, according Calyon, the investment banking unit of Credit Agricole SA.

The 16-nation currency’s move this week above resistance formed by an upper trend line from a so-called rising wedge formation at $1.4524 signaled the euro’s gains are poised to continue, wrote Simon Smollett, senior foreign-exchange options strategist in London at Calyon, in a note yesterday. He advised clients to use an options trade to capitalize on the move.

“The upper trend line has now broken at $1.4524, which seems encouraging,” wrote Smollett. “This kind of pattern is worth following as it is not especially prone to false breakouts.”

The euro appreciated 0.5 percent yesterday against the greenback to $1.4557, after touching $1.4601, its strongest level since Dec. 18, as record low U.S. borrowing costs encouraged investors to sell the dollar and buy higher-yielding assets. The currency last topped $1.50 on Aug. 11, 2008.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance is an area where sell orders may be clustered, making further price increases more difficult. Support is an area where buy orders may be clustered.

Seagull Options Spread

Smollett recommended that investors purchase a so-called seagull options spread to bet on euro gains. The strategy involves buying a euro call spread, which is the simultaneous purchase and sale of call options with different strike prices, and also the sale of a put. Call options grant the right, but not the obligation, to buy the currency at a pre-set price, while puts allow for sales.

The call spread portion of the trade involves the purchase of a six-week euro call option at a strike price of $1.45 and the sale of a similar maturity call with a strike price of $1.50. The final leg of the seagull spread is a sale of a put at a strike price of $1.40.

The trade would break even, netting no profit or loss, if the euro appreciates just to $1.4637 and would yield gains upon a move above that. Potential losses are unlimited on the put option sold if the euro depreciates below the strike price of $1.40.

To contact the reporter on this story: Liz Capo McCormick in New York at Emccormick7@bloomberg.net

Read more...

Russia Won’t Need to Devalue Currency, Nomura Says

By Paul Abelsky

Sept. 10 (Bloomberg) -- Russia won’t need to resort to a second ruble devaluation in as many years as the beginnings of economic recovery in the world’s largest energy exporter support the currency’s trading band, according to Nomura Holdings Inc.

The ruble’s current level against the basket is “consistent with macroeconomic fundamentals,” said Ivan Tchakarov, a London-based economist for Nomura, Japan’s largest investment bank. “If we see disappointing data going forward, there could be a case of letting the ruble depreciate but definitely not beyond 41,” which is the weaker limit of the band.

The ruble has traded close to the lower limit of its band against a basket of euros and dollars since the beginning of this year, with the rate averaging almost 38. The ruble gained 0.7 percent against the dollar to 30.8370 at 12:17 p.m. in Moscow and strengthened 0.6 percent to 37.1630 against the basket.

Russia’s economic plight, culminating in a record 10.9 percent output slump last quarter, has led to devaluation calls from members of the business community, who favor a weaker ruble to support their exports. The country’s commodity-reliant export sector is struggling to recover from a slump in raw material prices as the global economy contracts this year.

‘Sharp, One-Time’

The Russian Association of Regional Banks, whose 450 members include the Russian units of Barclays Plc and Citigroup Inc., has called for a devaluation of as much as 30 percent, while billionaire Vladimir Potaninsaid this week that the “interests of the economy” will lead the currency to depreciate in the “mid term,” allowing exporters to cut costs and modernize production.

Moscow-based brokerage KIT Finance said in an Aug. 26 report that there’s a 60 percent chance of a “sharp, one- time” devaluation of between 20 percent and 25 percent in the next few months.

If higher commodities prices and budget spending don’t unlock lending and spur growth, “then only devaluation could give the authorities the additional freedom in fiscal policy and prevent prolonging economic recovery or even stagnation,” KIT analysts including Maria Kalvarskaia wrote in the report.

The central bank, Moscow-based Bank Rossii, is unlikely to give in to the calls, according to Tchakarov. After managing a 35 percent depreciation in the second half of last year, the bank in January expanded its trading range to a band of 26 to 41 against the dollar-euro basket.

‘Emotional Barrier’

“It is definitely an emotional barrier for the Russian central bank, so they would not like to breach it for fear of losing credibility,” he said. “They supported that level, they showed to the market that they are committed to that level.”

The central bank has “considerably” lessened the scope and frequency of its interventions after the ruble’s rate stabilized and inflation slowed, Chairman Sergey Ignatiev said yesterday. The regulator is “gradually” moving toward inflation targeting and allowing the ruble to float freely, he said. The bank has said it targets a free floating ruble by 2011.

Even so, Bank Rossii sold more dollars and euros than it bought in August for the second consecutive month. It sold a net $1.42 billion, including $1.16 billion and 177.8 million euros ($259 million), Bank Rossii said this week.

The central bank will allow for more volatility in the ruble’s rate and let the market decide the currency’s direction after foreign-currency risks in the economy eased compared with last fall, said Aleksandra Evtifyeva, a senior economist at VTB Capital in Moscow.

‘More Volatility’

“The regulator now can allow more volatility in the ruble and more weakness if oil prices unexpectedly decline as foreign exchange risks in the economy are way lower than in autumn last year,” she said. “Last year’s gradual depreciation and the fact that households or corporates did not lose any money in banks increased the credibility of the central bank and the banking system.”

The Economy Ministry yesterday raised its forecast for economic expansion in 2010 to 1.6 percent from 1 percent. The ministry predicts a GDP contraction of 8.5 percent in 2009.

Economy Minister Elvira Nabiullina said yesterday output may grow 3.9 percent to 4.5 percent in the second half of this year compared with the first six months.

Expansion

The Services industry expanded for the first time in 11 months in August, according to a purchasing managers’ index compiled by VTB Capital and published on Sept. 3. The manufacturing PMI reached an 11-month high, and signaled the industry is teetering on the brink of expansion.

The ruble came under pressure last year after the global economic crisis pushed down the price of oil, with Urals crude dropping to about $70 a barrel last month from a peak of $142.5 in July 2008. The government estimates that oil prices will average $58 a barrel next year, while the ruble will weaken and reach an average rate of 33.9 per dollar. The currency averaged 32.7051 against the dollar in the first eight months, according to Bloomberg.

Energy, including oil and natural gas, accounted for 69.1 percent of exports to countries outside the former Soviet Union and the Baltic states in the first seven months of the year, the Federal Customs Service said on Sept. 8.

President Dmitry Medvedev said yesterday it’s too early to halt economic stabilization measures, even though signs of recovery have begun to appear. Russia isn’t yet in a “stable, positive dynamic,” he said.

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net.

Read more...

China Opposes U.S. Duties on Steel Pipes Used in Oil Industry

By Mark Drajem

Sept. 10 (Bloomberg) -- China “strongly opposes” a ruling by the U.S. Commerce Department to impose duties of as much as 31 percent on steel pipes, a Chinese government spokesman said.

“The Ministry of Commerce is very concerned about the ruling and strongly opposes it,” said a spokesman from the Chinese ministry, who declined to be named. He said an official statement will be released later, without elaborating.

The average duties on $2.8 billion in annual imports of the pipe, used in oil and gas wells, will be 21.3 percent, the Commerce Department said in an e-mailed statement yesterday announcing the preliminary decision. The ruling agreed with American producers led by U.S. Steel Corp. that the imports were supported by unfair subsidies.

The tariffs may help U.S. Steel and other domestic producers weather a drop in pipe demand following last year’s collapse in oil prices. It also may be a precursor for a number of trade complaints against China. President Barack Obama must decide a separate case on imported Chinese tires by Sept. 17.

“These are the dynamic duo of trade complaints,” said Joanne Thornton, a senior vice president at Concept Capital, an investors research group focused on Washington policy. “They take on a symbolic significance at a time when countries are concerned about trade restraints” amid the global recession, she said in an interview.

The pipe case, the largest so-called countervailing duty complaint filed against Chinese-made products, was brought by the United Steelworkers union; U.S. Steel, the largest U.S.- based steelmaker; U.S. operations of Evraz Group SA, Russia’s second-largest mill; and Pennsylvania-based Wheatland Tube Co.

Depositing Duties

After the ruling is published in the Federal Register, importers of the product -- known as oil country tubular goods -- will have to deposit duties of the assigned amount, pending a final ruling later this year by the Commerce Department and a separate decision by the U.S. International Trade Commission.

Chinese officials have spent the past months trying to head off tariffs for the steel pipes and the separate case brought by the United Steelworkers union against Chinese auto tires.

“If there is really such a decision, China’s Commerce Ministry will have a formal response,” Wang Baodong, a spokesman for the embassy in Washington, said in a telephone interview. “On these anti-dumping charges, the Chinese government has been very clear.”

‘Damage Done’

“This finding once again confirms what we have known for many years -- the Chinese steel industry benefits from substantial subsidies,” Dan DiMicco, the chief executive officer of Nucor Corp., the second largest U.S. steelmaker, said in an e-mail. “Unfortunately the damage has already been done and inventories are still at near record levels,” he said.

U.S. Steel spokeswoman Erin DiPietro declined to comment. U.S. Steel rose 2.4 percent to $44.30 in New York Stock Exchange composite trading and has gained 19 percent this year.

In the steel-pipe case, U.S. manufacturers saw their gross profits almost triple to $2.42 billion in 2008 from the previous year, according to the International Trade Commission. Record oil prices drove demand for the product. While imports from China surged, U.S. production and employment increased too.

“The fact that China is subsidizing is very clear,” Michelle Applebaum, who runs a research firm in Highland Park, Illinois, that advises investors on the steel industry, said in an interview. Chinese pipe imports came in “like locust” last year, and a duty of as much as 31 percent could block most or all new imports, she added.

‘Dumping’ Stopped

After the ITC issued a preliminary ruling May 22 in support of tariffs, imports from China ground to a halt as companies anticipated additional duties, Mark Parr, an analyst at Keybanc Capital Markets in Cleveland, said in an interview. Many Chinese companies “were forced to stop supplying this market,” he said. “All of the dumping that has gone on has really stopped now.”

China has already filed a complaint to the World Trade Organization arguing that the U.S. punishes China twice for the same subsidies. The U.S. categorizes China as a subsidized economy, allowing higher anti-dumping duties, and then imposes tariffs for the alleged subsidies too, according to its WTO complaint.

Obama has sent a number of messages about trade with China. When campaigning for president in Pennsylvania on April 14, 2008, he told union members that he supported “going after China.”

As president, Obama joined other leaders at a meeting of the Group of Eight in Italy in July to pledge to refrain from “taking decisions to increase tariffs above today’s levels.”

In June he warned, in an interview with the New York Times, about “sending any protectionist signals out there.”

The Commerce Department said in its decision that steel pipe from Jiangsu Changbao Steel Tube Co. would face duties of 24 percent; Tianjin Pipe Group Corp., 11 percent; Wuxi Seamless Pipe Co., 25 percent; and Zhejiang Jianli Enterprise Co., 31 percent. All other producers must pay the trade-weighted average of those figures, or 21 percent.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net.

Read more...

U.S. Trade Gap Probably Little Changed as Imports, Exports Grew

By Bob Willis

Sept. 10 (Bloomberg) -- The U.S. trade deficit was probably little changed in July as imports and exports both grew, signaling a revival of commerce as the global recession eased, economists said before a report today.

The gap between imports and exports increased 1.1 percent to $27.3 billion, according to the median of 74 estimates in a Bloomberg News survey. The deficit has widened since reaching $26 billion in May, the lowest level since November 1999.

Rising demand for U.S.-made goods from trading partners such as China, Mexico and the European Union is combining with domestic stimulus measures to help pull the world’s biggest economy out of its worst slump since the Great Depression. Finance chiefs from the Group of 20 nations meeting in London last week vowed to sustain efforts to boost growth worldwide.

“The global economy has clearly stabilized and global trade will certainly come back,” said Jay Bryson, chief global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Most areas are starting to see positive growth rates again.”

The Commerce Department’s report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from deficits of $25 billion to $30.3 billion.

The U.S. trade gap may have widened again last month as the “cash-for-clunkers” program sparked a surge in purchases of vehicles made overseas. Rising oil prices probably also added to the cost of imports. With economists predicting the U.S. economy will grow at an average 2.1 percent rate in the second half of this year, imports will probably climb further.

Oil Effect

A drop in oil prices during July may have limited import gains, according to analysts including Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado.

Crude oil on the New York Mercantile Exchange averaged $64.29 a barrel in July, down from an average $69.70 in June. Oil rose again in August, averaging $71.14 a barrel, which likely raised last month’s import bill further.

Alcoa Inc., the largest U.S. aluminum producer, is among companies profiting from rising demand for commodities. Alcoa last week raised its 2009 forecast for global aluminum consumption because of demand triggered by China’s 4 trillion yuan ($586 billion) in stimulus spending.

Chief Executive Officer Klaus Kleinfeld said he expects China’s consumption of the metal to rise 4 percent this year, compared with an earlier prediction of zero growth.

China ‘Back’

“China is back,” Kleinfeld said in an interview. “They had a lot of shovel-ready projects” planned for 2011 that are being started now in response to the global economic slowdown. “Also, the perceived deficiencies in the social network have been improved with the stimulus program, and that directly leads to people looking to upgrade from motorcycles to cars.”

The Paris-based Organization for Economic Cooperation and Development cut its estimate for contraction this year in the world’s leading industrial countries to 3.7 percent from 4.1 percent, while predicting a “modest” return to growth.

U.K. Prime Minister Gordon Brown on Sept. 5 warned against a premature end of emergency spending and rescue programs aimed at pulling the global economy out of its worst slump since the Great Depression.

“It would be an error of historic proportions if we were to repeat the errors of the 1930s,” Brown told Group of 20 finance ministers at the opening of their meeting in London. “The risks still very much remain. To start now reversing the extraordinary measures would be a serious mistake.”

‘Pronounced Recovery’

The U.S. economy will start to recover by year end, helped by “remarkable growth” in productivity, former Federal Reserve Chairman Alan Greenspan said yesterday in a speech in New York. Greenspan predicted “a fairly pronounced recovery not only in the U.S.,” but globally. “Surprises are on the upside,” he said.

Separately, the Labor Department at 8:30 a.m. will probably report that fewer Americans filed first-time jobless claims last week. The total number of people collecting benefits in the prior week was little changed from 6.23 million, the survey showed. Applications for benefits probably fell to 560,000, the lowest level in five weeks, from 570,000.

U.S. stocks have surged since March on signs the recession is easing. The Standard and Poor’s 500 Index has gained 53 percent from a 12-year low reached on March 9, and the Dow Jones Industrial Average has gained 46 percent. The S&P 500 closed at 1,033.37 yesterday in New York; the Dow closed at 9,547.22.

                      Bloomberg Survey

=======================================================
                            Trade  Initial    Cont.
                          Balance   Claims   Claims
                           $ Blns   ,000’s   ,000’s
=======================================================

Date of Release              09/10    09/10    09/10
Observation Period            July    5-Sep   29-Aug
-------------------------------------------------------
Median                       -27.3      560     6200
Average                      -27.4      560     6198
High Forecast                -25.0      570     6300
Low Forecast                 -30.3      535     6050
Number of Participants          74       44       15
Previous                     -27.0      570     6234
-------------------------------------------------------
4CAST Ltd.                   -27.5      565     ---
Action Economics             -27.0      560     6240
AIG Investments              -25.0     ---      ---
Aletti Gestielle SGR         -27.0      555     ---
Ameriprise Financial Inc     -28.0      545     6050
Argus Research Corp.         -29.5     ---      ---
Banesto                       ---       565     ---
Bank of Tokyo- Mitsubishi    -28.1     ---      ---
Barclays Capital             -27.5      565     ---
BBVA                         -27.1      560     6200
BMO Capital Markets          -28.0      550     ---
BNP Paribas                  -26.5      560     ---
Briefing.com                 -25.5      565     6150
Calyon                       -26.5     ---      ---
Capital Economics            -29.0     ---      ---
CIBC World Markets           -29.0     ---      ---
Citi                         -27.0      535     6130
ClearView Economics          -28.0     ---      ---
Commerzbank AG               -28.0      565     ---
Credit Suisse                -29.0      555     ---
Daiwa Securities America     -28.0     ---      ---
DekaBank                     -28.0     ---      ---
Desjardins Group             -26.2      560     ---
Deutsche Bank Securities     -27.5     ---      ---
Deutsche Postbank AG         -26.0     ---      ---
DZ Bank                      -28.0     ---      ---
First Trust Advisors         -27.4      566     ---
Fortis                       -26.6     ---      ---
Goldman, Sachs & Co.         -28.0     ---      ---
Helaba                       -28.5      570     ---
Herrmann Forecasting         -28.6      554     6221
High Frequency Economics     -28.0      570     ---
HSBC Markets                 -27.0      560     6200
IDEAglobal                   -27.5      565     ---
IHS Global Insight           -30.3     ---      ---
Informa Global Markets       -27.0      565     6210
ING Financial Markets        -30.0     ---      ---
Insight Economics            -26.0      570     6300
Intesa-SanPaulo              -27.5     ---      ---
J.P. Morgan Chase            -26.5      560     ---
Janney Montgomery Scott L    -26.5     ---      ---
Johnson Illington Advisor    -27.0     ---      ---
Landesbank Berlin            -25.5      560     ---
Landesbank BW                -30.0     ---      ---
Maria Fiorini Ramirez Inc    -26.5      560     ---
Merrill Lynch/BAS            -29.0      540     ---
MFC Global Investment Man    -28.0      550     6250
Mizuho Securities            -29.0      570     ---
Moody’s Economy.com          -26.5      565     6200
Morgan Keegan & Co.          -25.0     ---      ---
Morgan Stanley & Co.         -29.0      565     ---
National Bank Financial      -26.5     ---      ---
Natixis                      -28.4     ---      ---
Nomura Securities Intl.      -26.3     ---      ---
Nord/LB                      -28.0      570     ---
PNC Bank                     -28.5     ---      ---
Raymond James                -26.4      535     ---
RBC Capital Markets          -26.5      552     ---
RBS Securities Inc.          -28.7      560     ---
Ried, Thunberg & Co.         -26.0      565     ---
Schneider Foreign Exchang    -26.2      560     6215
Scotia Capital               -26.5      570     6250
Societe Generale             -28.0     ---      ---
Standard Chartered           -26.0     ---      ---
Stone & McCarthy Research    -26.3      550     ---
TD Securities                -26.5      560     6200
Thomson Reuters/IFR          -26.0      560     ---
Tullett Prebon               -27.0      556     ---
UBS                          -27.0      560     ---
University of Maryland       -28.8     ---      ---
Wells Fargo & Co.            -29.2     ---      ---
WestLB AG                    -26.8     ---      ---
Westpac Banking Co.          -28.5      560     ---
Woodley Park Research        -26.3     ---      ---
Wrightson Associates         -26.0      565     6150
=======================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

Read more...