Economic Calendar

Friday, October 9, 2009

Japanese Machinery Orders Rise 0.5% From Record Low

By Jason Clenfield and Tatsuo Ito

Oct. 9 (Bloomberg) -- Japanese machinery orders rose less than estimated in August, barely rebounding from a record low as depressed capital spending by companies inhibits the economy’s recovery from its worst postwar recession.

Orders, an indicator of business investment in three to six months, climbed 0.5 percent from July, when they fell 9.3 percent, the Cabinet Office said today in Tokyo. Bookings in July dropped to the lowest level since the government began the survey in 1987. Economists forecast a 2.1 percent gain.

While emergency spending by governments worldwide has revived demand for Japanese exports, manufacturers like Toshiba Corp. and Toyota Motor Corp. are still closing plants and slashing costs to return to profit. Firms surveyed last month by the Bank of Japan said they plan to cut investment at a record pace even amid signs demand from abroad is improving.

“These numbers are still weak; they don’t suggest that capital spending is starting to bottom out,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “Companies still have too much capacity, and the economic recovery is likely to be slow.”

The yen traded at 88.96 per dollar at 10:38 a.m. in Tokyo from 88.65 before the report. The currency climbed to an eight- month high of 88.01 this week, threatening to erode exporters’ repatriated profits. The Nikkei 225 Stock Average rose 1.1 percent, led by trading companies as commodity prices gained.

Machinery orders slid 26.5 percent from a year earlier, today’s report showed.

Tankan Survey

The central bank’s Tankan survey of business sentiment released last week showed large firms plan to cut capital spending by 10.8 percent this year. The reduction plan for September was the deepest pullback in at least 26 years and it was also worse than estimates made by companies three months ago as the nation was emerging from recession.

“Very simply, that shows that companies are not getting more optimistic,” said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. “Demand hasn’t come back on a broad basis and the inventory rebuild that’s driven exports until now has just about run its course.”

Toyota, which has benefited from government programs to encourage spending on energy-efficient cars, last month announced it will hire 1,600 temporary workers in Japan to meet increased demand for its Prius hybrid. Even after raising its production targets, Toyota estimates a third of its factory capacity will go unused this year. The company in August reiterated its plan to cut capital spending by 36 percent.

Growth Driver

Business investment accounted for about 15 percent of last year’s gross domestic product and capital spending was a key driver of growth during the nation’s longest postwar expansion in 2002-2007.

Nevertheless, there are also signs that the economy is improving. Factory output rose for a sixth month in August; overseas shipments increased 6.1 percent in volume terms; and sentiment among both businesses and consumers is improving.

“There’s no question that things are getting better,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “But with this kind of excess capacity, there’s little hope for a strong recovery.”

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Tatsuo Ito in Tokyo at tito@bloomberg.net.





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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | Oct 09 09 06:07 GMT |

GBP/JPY

The pair inclined aggressively, approaching the detected technical target of yesterday's analysis-check it here-. Thus; the previous discussed upside corrective rally towards the broken neckline of our captured daily double top around 147.00 zones has been activated. The daily candlestick formation in addition to the positive sign appearing on RSI 14 supports the intraday bullish outlook.

Trading range for today is among key support at 138.70 and key resistance at 147.00.

The general trend is to the downside as far as 167.40 remains intact with target at 116.00.

Support: 142.60, 141.90, 141.00, 140.60, 139.70
Resistance: 143.40, 144.00, 144.95, 145.50, 146.20

Recommendation: Based on the charts and explanations above our opinion is, buying the pair from 142.60 targeting 145.20 and stop loss below 140.60 might be appropriate

EUR/JPY

The sharp inclines have activated the minor inverted head and shoulders pattern that may be able to confirm the harmonic structure which still has targets to be reached around 132.50 and may extend further towards 134.15 areas. As we see on the provided four-hour chart that the pair is moving freely above SMA20 - currently valued at 130.70 [resistance turned into a solid support], confirming the intraday bullish scenario.

Trading range for today is among key support at 128.30 and key resistance now at 134.15.

The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels.

Support: 130.70, 130.05, 129.60, 129.00, 128.30
Resistance: 132.00, 132.50, 133.10, 133.60, 134.15

Recommendation: Based on the charts and explanations above our opinion is, buying the pair from 131.20 targeting 133.15 and stop loss below 129.70 might be appropriate

EUR/GBP

The strong resistance that the royal pair has found around 61.8% Fibonacci level has forced it to form a dark cloud candlestick formation as seen on the secondary image. This declining movement has assisted it to breach the minor uptrend line. Stochastic has overlapped negatively, supporting the bearish overview for today. A break of 0.9130 may accelerate the bearish action towards 0.9070 followed by 0.9030 zones.

Trading range is among the key support at 0.9000 and key resistance now at 0.9420.

The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels.

Support: 0.9130, 0.9070, 0.9030, 0.9000, 0.8960
Resistance: 0.9205, 0.9235, 0.9260, 0.9300, 0.9340

Recommendation: Based on the charts and explanations above our opinion is, selling the pair from 0.9205 targeting 0.9100 and stop loss above 0.9280 might be appropriate.

Ecpulse

disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk


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Australian Banks Fuel Hiring Surge as Crisis Eases

By Jacob Greber

Oct. 9 (Bloomberg) -- Australian banks, among companies that fired the most workers at the height of the global financial crisis, are leading a charge to rehire as the economy strengthens.

A government report yesterday showed the nation’s jobless rate fell for the first time in five months as employers added the largest number of workers in almost two years, mostly in the financial hubs of Sydney and Melbourne.

“The sectors that were downtrodden through the global financial crisis are now those coming back,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “That includes financial services, investment banking, retail services, human resources and clerical duties.”

Rising employment and signs the jobless rate has peaked are among reasons Glenn Stevens this week became the first Group of 20 central banker to raise interest rates. Stevens said economic growth in Australia, which skirted the global recession, will accelerate, driven by A$22 billion ($20 billion) in government spending and demand for commodities from China, the nation’s second-largest export market.

The number of people employed unexpectedly jumped 40,600 last month, pushing the jobless rate down to 5.7 percent from 5.8 percent. All 20 economists surveyed by Bloomberg forecast the rate would remain unchanged or climb.

“Banks are hiring again; we’ve seen over the last three months very strong demand for finance people,” Andrew Brushfield, director of recruitment firm Robert Half Australia in Sydney, said in an interview yesterday.

Biggest Winners

The biggest falls in unemployment were in New South Wales and Victoria, the nation’s largest states. The jobless rate in New South Wales tumbled to 5.6 percent, the lowest level in eight months, from 6.1 percent. Victoria’s rate slid to the same level from 6.2 percent.

By contrast, unemployment rose in the mineral-rich states of Queensland and Western Australia. Rio Tinto Group, the world’s third-biggest mining company with iron ore operations in Western Australia’s Pilbara region and coal mines in Queensland, in December announced plans to eliminate 14,000 jobs.

BHP Billiton Ltd., the world’s largest mining company, cut 1,800 jobs when it shuttered the Ravensthorpe nickel mine in Western Australia and sold its Yabulu refinery in Queensland.

More Vacancies

An index of advertisements for job vacancies published by recruitment agency Olivier Group this week showed financial services and banking vacancies grew 7 percent in September following a 2.8 percent increase in August. The index had been falling since January 2008.

“Financial services and banking were the hardest hit by the global downturn -- now they are booming,” Olivier Group Managing Director Robert Olivier said today in an interview.

Bank of America last month said it hired more than 35 people in the previous three months. Japan-based Nomura Holdings Inc. in August appointed three investment bankers. Citigroup Inc. also hired four bankers to expand its Sydney- based global markets business.

UBS AG this week said it plans to hire 40 wealth advisors in Australia after inflows at the local unit resumed this year.

“The business has seen a marked change from where it was six months ago,” Clark Morgan, chief executive officer of the Australian wealth-management business, said in an interview.

The hiring contrasts with a surge in sackings earlier this year and late 2008, when the finance-industry workforce shrank for the first time in 13 years.

“Now that we’ve come out the end of this downturn, employers are scrambling to rehire staff,” said Commonwealth’s Sebastian.

Shed Jobs

Financial institutions shed 9,185 jobs since the start of last year, according to the Finance Sector Union of Australia. By contrast, there now “certainly has been a severe reduction in the number of jobs being cut,” Leanne Shingles, a spokeswoman for the union in Melbourne, said in an interview yesterday.

In March, Commonwealth Bank, the nation’s second largest, cited the “sharply contracting economy” for its decision to fire about 400 people from its BankWest unit.

Now, the Sydney-based lender “remains fairly steady in terms of overall recruitment, but we have looked at building our institutional banking team,” said spokesman Steve Batten.

A quarterly survey of employers published yesterday by recruitment firm Hays Group Plc found “a general, or in some cases acute, level of skills shortages” for accountants, financial analysts, mortgage brokers, insurance underwriters and risk officers. Engineers, infrastructure project managers, human resources staff and retail workers are also in short supply.

Focusing on ‘Upturn’

“Over the year, pockets of demand certainly existed, but they were often centered upon managing the effects of the financial crisis,” said Hays Managing Director Nigel Heap. “Now, employers are focusing on the expected upturn in business activity.”

Australia’s economy has outperformed most other developed nations, expanding 1 percent in the first half of the year. Stevens, who raised the overnight cash rate target to 3.25 percent from 3 percent on Oct. 6, says growth will accelerate close to the “trend” rate of around 3 percent next year.

The International Monetary Fund predicts Australia’s gross domestic product will rise 2 percent in 2010. By contrast, the U.S. economy will expand 1.5 percent next year, Japan by 1.7 percent and the euro region by just 0.3 percent, the fund said last week.

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





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Bernanke Says Fed Ready to Tighten When Economy Improves Enough

By Craig Torres

Oct. 9 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank will be prepared to tighten monetary policy when the outlook for the economy “has improved sufficiently.”

“My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period,” Bernanke said at a Board of Governors conference yesterday in Washington, echoing language from last month’s meeting of the Federal Open Market Committee. “At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.”

The Fed chairman didn’t enter into the debate among his colleagues on the FOMC over the pace or timing of a change in monetary policy. Fed Governor Kevin Warsh said Sept. 25 interest rates may need to rise “with greater force” than usual, while New York Fed President William Dudley said Oct. 5 the recovery’s pace “is not likely to be robust” and inflation risks are “on the downside.”

The FOMC reiterated its pledge last month to keep the benchmark lending rate at around zero “for an extended period” to boost a weak recovery that has yet to create jobs. The unemployment rate rose to 9.8 percent last month, the highest level since 1983. Bernanke didn’t discuss the outlook for the economy in his prepared remarks, which outlined the Fed’s response to the financial crisis.

‘More Pointed’

“He could not have been more pointed when reminding his worldwide audience that the low-rates promise is conditional,” said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Money is free and easy right now, and the minute the job losses halt, you can bet the Fed will stop talking about exit strategies, including lifting the Fed funds rate, and start implementing them.”

The Fed chairman, responding to an audience question about the effect of the $787 billion fiscal stimulus package on monetary policy, said he is assessing the impact of the spending on growth.

“Looking at the amount of excess capacity in the economy, looking at the low rate of inflation, we believe that conditions will warrant policy accommodation for an extended period,” he said.

The U.S. currency strengthened to 89.11 yen as of 12:45 p.m. in Tokyo from 88.39 yen in New York yesterday, while it has dropped 0.8 percent this week. The dollar climbed to $1.4723 per euro from $1.4794, paring its decline on the week to 1 percent.

Stocks Gained

U.S. stocks gained as Alcoa Inc. started the earnings season with an unexpected profit and jobless claims decreased more than forecast. The Standard and Poor’s 500 Index rose 0.8 percent to 1,065.48. Yields on U.S. 10-year notes increased 8 basis points to 3.26 percent. A basis point is 0.01 percent.

The Fed staff is fine-tuning mechanisms designed to drain or neutralize excess cash in the banking system following a doubling of the central bank’s balance sheet. Those tools range from paying interest on bank reserves deposited at the Fed to reverse repurchase agreements, where the Fed pulls cash out of the financial system through a temporary sale of securities.

Bernanke said in the question-and-answer period the Fed could also conduct reverse repurchase agreements with Fannie Mae and Freddie Mac to soak up their excess cash balances.

Emergency Credit

U.S. central bankers boosted their balance sheet by $1.2 trillion after the collapse of Lehman Brothers Holdings Inc. in September 2008. The Fed has provided emergency credit to markets for commercial paper and asset-backed securities, expanded loans to banks and financed a $30 billion pool of high-risk securities to facilitate the merger of Bear Stearns Cos. with JPMorgan Chase & Co.

The Fed chairman said the bank reserves created through these operations haven’t created growth in broader measures of money. Still, he said Fed actions have improved liquidity and reduced lending spreads, two measures of success for a policy he calls “credit easing.”

“The unstinting provision of liquidity by the central bank is crucial for arresting a financial panic,” Bernanke said. “By backstopping these markets, the Federal Reserve has helped normalize credit flows for the benefit of the economy.”

To keep longer-term interest rates low, the Federal Open Market Committee is also conducting a $1.75 trillion purchase program of Treasury, housing agency and mortgage-backed securities.

Lower the Cost

“The principal goals of our recent security purchases are to lower the cost and improve the availability of credit for households and businesses,” Bernanke said. “The programs appear to be having their intended effect.”

The average rate on a 30-year fixed-rate mortgage fell to 4.87 percent, the lowest since May, Freddie Mac said yesterday. The Fed’s auctions of term loans to banks are also reducing pressures in the market for interbank loans.

The Fed won’t begin raising interest rates until the third quarter of 2010 as the recovery is likely to be too weak to lift employment and incomes, according to a September survey of 57 economists by Bloomberg News.

Richmond Fed President Jeffrey Lacker told reporters at a separate event in Washington yesterday that the risk the economy will slide back into recession “has diminished substantially” yet is “not entirely zero.”

Lacker also said Oct. 1 in a Bloomberg Radio interview that the growth and consumer spending outlook are “more fundamental” to the decision on when to tighten than “labor- market conditions.”

‘Extended Period’

Fed Governor Daniel Tarullo said yesterday in a speech in Phoenix that the strength of the U.S. recovery shouldn’t be exaggerated, while reiterating that rates are likely to remain low for “an extended period.”

“This turnaround is certainly welcome, but it should not be overstated,” Tarullo said. “Although we can expect positive growth to continue beyond the third quarter, economic activity remains relatively weak.”

The economy will expand at a 2.2 percent annual pace this quarter, the economists estimated. Housing markets have stabilized and manufacturing is picking up as companies re- stock lean inventories. Employers cut 263,000 jobs in September, pushing the unemployment rate up to 9.8 percent.

“The unemployment rate is much too high and it seems likely that the recovery will be less robust than desired,” New York Fed President William Dudley said Oct. 5. “This means that the economy has significant excess slack and implies that we face meaningful downside risks to inflation over the next year or two.”

Six Straight Months

Consumer prices have fallen for six straight months from year-earlier levels, the longest stretch of declines since a 12- month drop from September 1954 to August 1955, according to the Labor Department.

The core consumer-price index, which excludes food and energy, rose 1.4 percent in August from a year earlier, down from a 2.5 percent increase in September 2008.

“There is still downward pressure on core inflation and with the unemployment as weak as it is, there is a lot of room, as the Fed sees it, to maintain exceptionally low interest rates,” said Dan Greenhaus, chief economic strategist at Miller Tabak & Co. LLC.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Scott Lanman in Washington at slanman@bloomberg.net.





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Singapore Economy Probably Expanded a Second Quarter

By Shamim Adam

Oct. 9 (Bloomberg) -- Singapore’s economy probably expanded for a second consecutive quarter as the global recession eased, adding to evidence of a regional recovery that has prompted policy makers to consider ending stimulus measures.

Gross domestic product rose an annualized 14.5 percent last quarter from the previous three months, after climbing 20.7 percent between April and June, according to the median estimate of 15 economists surveyed by Bloomberg News. The trade ministry will release the data at 8 a.m. on Oct. 12.

Singapore’s benchmark stock index has surged 51 percent this year and property prices have climbed as the nation emerges from its worst recession since independence in 1965. The central bank is forecast by economists to delay any change in its currency policy until April, while the government is due to say next week if it will keep paying companies to retain workers.

“As the recovery in the economy and property market continues, the risk of sector-specific tightening measures or removal of accommodation is growing,” said Edward Teather, an economist at UBS AG in Singapore. “The debate on stimulus withdrawal is likely to hot up.”

Asia is leading the world’s recovery from its deepest recession since the Great Depression after policy makers slashed interest rates to unprecedented lows and governments announced more than $950 billion of stimulus measures. The International Monetary Fund predicts gross domestic product in developing Asia will expand at more than twice the pace of advanced economies next year.

Australia’s Move

Australia this week became the first among the Group of 20 nations to raise borrowing costs since the height of the global financial crisis. Bank of Korea Governor Lee Seong Tae said last month he may raise borrowing costs to stem rising property prices in an economy that expanded at the fastest pace in almost six years in the second quarter.

The Singapore government predicts the economy will shrink 4 percent to 6 percent in 2009. Economists at UBS, Goldman Sachs Group Inc. and DBS Group Holdings Ltd. are more optimistic, with estimates that exceed the government’s expectations. UBS forecasts a 1.5 percent decline this year, while Goldman Sachs expects a contraction of 1.8 percent.

Singapore’s $182 billion economy expanded 0.5 percent in the three months ended September from a year earlier, growing for the first time in a year, according to a Bloomberg survey of 16 economists.

Pharmaceuticals

Industrial output climbed in the first two months of last quarter, and the island’s exports fell the least in almost a year in August, helped by gains in pharmaceutical shipments. Manufacturing accounts for about a quarter of the Southeast Asian nation’s economy.

The island’s private residential property prices rose last quarter for the first time in more than a year. The government said last month it would introduce new measures to prevent excessive price swings in the property market following signs that speculative home buying may be on the rise.

The central bank isn’t likely to be in a hurry to change its currency stance in its twice-yearly policy review to be released Oct. 12, a Bloomberg survey of 12 economists showed.

The Monetary Authority of Singapore in April adjusted the trading range for the island’s dollar against an undisclosed trade-weighted basket of currencies, a move that economists say was a de facto devaluation of the currency. It may next shift the policy stance in April, analysts say.

“To curb the risks of asset-price inflation, the government has already introduced some property cooling measures, rather than necessitating a monetary policy response,” said Enoch Fung, an economist at Goldman Sachs in Hong Kong. “We believe the MAS can afford to wait until April 2010 in order to have better visibility on the global growth outlook.”

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





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Oil Pares Weekly Gain as Bernanke Says Fed May Tighten Policy

By Yee Kai Pin and Ben Sharples

Oct. 9 (Bloomberg) -- Crude oil fell in New York, paring its weekly gain, as the dollar climbed after Federal Reserve Chairman Ben S. Bernanke said monetary policy may be tightened once the economic outlook has “improved sufficiently.”

Oil traded near $71 a barrel as the U.S. currency rose against the yen and the euro, damping the investment appeal of commodities including gold. Prices rallied 3 percent yesterday, the most since Sept. 30, after the dollar declined and the number of Americans filing for unemployment benefits dropped.

Bernanke’s remarks have had “a small impact on the immediate market,” said Ken Hasegawa, a commodity derivatives sales manager at broker Newedge in Tokyo. “It shows policy is not decided yet. The trend of the dollar will continue” to give direction to oil prices, he said.

Crude oil for November delivery fell as much as 66 cents, or 0.9 percent, to $71.03 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $71.24 at 12:08 p.m. Singapore time. Yesterday, it rose $2.12 to settle at $71.69. Futures are poised to gain 2 percent this week.

The dollar strengthened to 89.11 yen as of 12:37 p.m. in Tokyo from 88.39 in New York. The U.S. currency rose to $1.4722 per euro from $1.4794 after Bernanke’s comments.

“The pullback this morning is pretty marginal,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. “Coming off the jump last night I wouldn’t read too much into that. At this point, the overall consumption picture in the U.S. remains subdued.”

Policy Change

The Fed chairman, in prepared remarks at a Board of Governors conference late yesterday in Washington, didn’t say when the central bank may tighten monetary policy.

The Federal Open Market Committee reiterated its pledge last month to keep the benchmark lending rate near zero “for an extended period” to boost a weak recovery that has yet to create jobs. U.S. unemployment rose to 9.8 percent last month, the worst since 1983.

Oil yesterday touched $72.55 a barrel, the highest in almost three weeks, after Labor Department data showed initial unemployment benefit applications fell to the lowest since January. This fanned optimism over the prospects for a recovery in energy consumption.

“Gradually improving demand conditions amid continued supply tightness should accelerate the erosion of the currently large inventory overhang, thereby starting to provide the momentum required to break to the upside of the current trading range,” analysts at Barclays Capital, led by Gayle Berry, said in a report. “We still expect prices to transition gradually to $70-$80 over the next month or so.”

Fuel Stockpiles

U.S. distillate fuel inventories rose 679,000 barrels to 171.8 million last week, an Energy Department report showed Oct. 7. Stockpiles, at their highest since January 1983, were estimated to have declined 400,000 barrels, based on a Bloomberg survey of analysts. Gasoline inventories climbed 2.94 million barrels to 214.4 million as refinery output increased.

“The factors driving the market will be decreasing stockpiles and also increasing demand with an economic recovery,” said Hasegawa at Newedge. Until then, oil prices “cannot escape from this narrow range.”

Brent crude oil for November settlement dropped as much as 71 cents, or 1 percent, to $69.06 a barrel on the London-based ICE Futures Europe exchange. The contract was at $69.23 at 12:03 p.m. in Singapore. Yesterday, it rose 3.8 percent to end the session at $69.77, the biggest gain since Sept. 30.

To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net





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Bumi Plans Purchases to Be Indonesian Mine ‘Champion’

By Naila Firdausi

Oct. 9 (Bloomberg) -- PT Bumi Resources, Indonesia’s biggest coal company, plans to acquire mines in the country and may include China Investment Corp. as a partner after borrowing $1.9 billion from the sovereign wealth fund last month.

“Anything less than $400 million to $500 million shouldn’t make sense to us unless it’s very strategic,” said Nalinkant Rathod, president director of PT Bakrie & Brothers, Bumi’s biggest shareholder and a member of the coal company’s board. Bumi and CIC “signed a strategic partnership agreement where in all our investments above $75 million we show to them first,” and potential targets will be discussed with the Chinese fund this month, he said in an interview in Singapore yesterday.

China’s $297.5 billion fund bought debt from the Jakarta- based coal producer and is increasing investments in resources companies to gain access to the raw materials it needs to fuel the country’s growth. Bumi’s shares rose for the first time in four days today, paring a decline since the Sept. 23 announcement prompted by concerns the deal, which gives CIC a 19 percent return, is too expensive.

The agreement “put Bumi at high leverage level,” said Winston Sual, who helps manage $233 million at PT Panin Asset Management in Jakarta, which doesn’t include Bumi in its mutual funds. “I don’t see the urgency in getting this debt.”

Refinancing Debt

Bumi has said $1.7 billion of the funds will be used to refinance debt and the rest as working capital.

Though higher interest costs will hurt Bumi’s earnings in the short term, the funding arrangement and partnership with CIC would fund acquisitions, said Rathod, 58, who is also a member of Bumi’s board of commissioners.

“Sometimes you sacrifice immediate profitability for liquidity and future growth,” he said. “We want to be the national mining champion for Indonesia.”

Bumi shares rose as much as 2.8 percent to 2,800 rupiah in Jakarta trading today, the first gain in four days. The stock was at 2,750 rupiah at 9:58 a.m. local time. Bumi has dropped 18 percent since the CIC agreement was announced.

“Investors expecting strong short-term earnings will likely be disappointed,” Daisy Suryo, Singapore-based analyst at Bank of America Corp’s Merrill Lynch unit, wrote in a note dated yesterday after meeting Bumi. “Interested investors will need to give Bumi the benefit of the doubt -- i.e., believe in its ability to achieve lucrative M&A deals.”

Zinc, Copper, Gold

The company is already a significant coal producer and plans to extract zinc, copper, lead and gold, Rathod said. Bumi is currently looking at “one or two” assets and BHP Billiton Ltd.’s Maruwai coal project in Indonesia is “interesting,” said Dileep Srivastava, the company’s head of investor relations, without elaborating on whether it expressed interest in bidding.

Bumi, which became Indonesia’s biggest coal producer following acquisitions of PT Arutmin Indonesia in 2001 and PT Kaltim Prima Coal in 2003, announced in January it would buy stakes in three companies for $565 million. Bumi said the acquisitions will help the company double its coal output by 2012.

The acquisitions prompted investigations by Indonesia’s capital market regulator on concern Bumi paid too much. Bumi renegotiated the price of PT Fajar Bumi Sakti, which has a coal concession. Stakes purchases in mining contractor PT Darma Henwa and PT Pendopo Energi Batubara, a non-producing miner, were fairly valued, the regulator said in June.

To contact the reporter on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net.





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Power-Station Coal May Rise to $100 a Ton in 2010, Bumi Says

By Dinakar Sethuraman

Oct. 9 (Bloomberg) -- Power-station coal prices may climb by more than 40 percent in 2010 from current levels as a global economic recovery boosts demand from power plants and steel producers, an official from PT Bumi Resources said.

Benchmark thermal coal grades, those burnt by Japanese utilities, may rise to about $100 a metric ton in the fourth quarter of 2010, led by economic growth in Asia and under- investment in coal capacity, said Dileep Srivastava, senior vice president for investor relations at Bumi. That compares with $69.85 a metric ton in the week ended Oct. 2 at Australia’s Newcastle port, globalCOAL NEWC Index shows.

“Demand for coal in China, India and Indonesia will be sustained at higher levels, while demand should normalize” in developed countries, Srivastava said in Singapore yesterday. China imported a record 48 million tons in the first six months, customs figures show.

Spot prices at Newcastle reached a record $194.79 a ton in July last year, before the global recession cut output and electricity demand. Coal for delivery to Rotterdam with settlement next year rose to $83.75 a ton yesterday, according to data compiled by Bloomberg, compared with this year’s low of $51.75 on March 12.

Bumi estimates average prices at $61 to $62 a ton, excluding freight and charges, for coal shipped from its mines this year, compared with $73.30 a ton in 2008, according to a company presentation. That compares with about $44 a ton in 2007, Srivatsava said, declining to give a forecast for next year.

Steel Demand Recovery

UBS AG has raised its 2010 forecast for benchmark coal to $90 a metric ton from $80 a ton in 2010 in a report on July 6. Market conditions are expected to tighten starting in the fourth quarter of this year, with prices peaking in 2011, UBS said.

A recovery in steel demand may crimp thermal coal supplies, boosting prices, Srivatsava said. Steel producers use metallurgical coal, a higher grade that yields better margins for suppliers. Australian producers who diverted some metallurgical coal capacity to the thermal coal market because the recession curbed steel output may start boosting shipments to steel mills, he said.

Hard coking coal may climb to $180 a ton, up from an earlier forecast of $155 a ton because global crude steel production will rise by 12 percent in 2010 to a record 1.4 billion tons, Goldman Sachs JBWere Pty said Oct. 6.

Investments in new coal mines slowed as the global financial crisis slashed project funding, Srivatsava said. Mining ventures take a while to “unlock capacity” as producers typically need seven years to start output from a new coal concession and at least three years to expand output at an existing mine, he said.

Bumi plans to boost sales to China and India by 2012 when Asia’s biggest thermal coal exporter increases production to 100 million tons from 53 million last year, Srivastava said. It may supply 20 percent of its output to each of the two countries.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.





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PetroChina Parent Wins Engineering Contracts in Sudan

By Bloomberg News

Oct. 9 (Bloomberg) -- China National Petroleum Corp. said it beat 13 bidders from countries including India to win seven engineering contracts in Sudan, holder of Africa’s fifth-largest crude oil reserves.

A unit of China National Petroleum was awarded $260 million of engineering and construction contracts for an area known as Block 6 in September, China’s largest oil and gas producer said on its Web site today.

China National Petroleum, the parent of Hong Kong-listed PetroChina Co., said last month it had received a $30 billion loan to fund overseas expansion as the world’s third-largest economy stepped up its hunt for energy resources overseas. China National Petroleum led the development of the first oilfield in Sudan where President Umar al-Bashir is accused by the International Criminal Court of committing war crimes in Darfur.

The contracts include the expansion of a power plant and construction of two crude oil tanks with a capacity of 50,000 cubic meters each, China National Petroleum said.

Sudan had 5 billion barrels of proven oil reserves as of January, the fifth-biggest in Africa, according to the U.S. Energy Information Administration. The majority of the reserves are located in the Muglad and Melut basins in the south. China is the country’s largest investor.

In western region of Darfur, clashes between pro-government forces and rebels, along with tribal fighting, banditry and disease, have killed about 300,000 people, according to United Nations estimates. The rebels took up arms against the government in 2003 accusing it of neglecting the area. The government puts the death toll at about 10,000.

China’s oil consumption doubled in the last decade to 8 million barrels a day in 2008, according to BP Plc’s Statistical Review. It imported about 3.6 million barrels of oil a day last year, meeting about 45 percent of its needs.

To contact the reporter on this story: Ying Wang in Beijing at ywang30@bloomberg.net





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Dollar Rises as Bernanke Says Fed Set to Tighten Upon Recovery

By Yoshiaki Nohara and Ron Harui

Oct. 9 (Bloomberg) -- The dollar rose the most in two months against the yen after Federal Reserve Chairman Ben S. Bernanke said the bank is ready to tighten monetary policy once the economy improves, increasing the appeal of U.S. assets.

The yen dropped against all 16 of its most-traded counterparts after Japan’s machinery orders gained less than forecast, adding to signs its recovery will trail that of other economies. The Australian dollar headed for its biggest weekly gain since May amid wagers the central bank will raise interest rates twice more this year after a surprise increase on Oct. 6.

“Bernanke is shifting to a hawkish tone in terms of the timing of exit strategy following moves by other central banks, especially the Reserve Bank of Australia,” said Takeshi Tokita, vice president of foreign exchange sales at Mizuho Corporate Bank Ltd. in Tokyo. “That’s benefiting the dollar.”

The U.S. currency climbed 0.9 percent, set for the steepest daily gain since Aug. 7, to 89.17 yen as of 6:01 a.m. in London from 88.39 yen in New York yesterday. That trimmed the dollar’s loss this week to 0.7 percent. The greenback rose to $1.4735 per euro from $1.4794, paring a 1.1 percent decline on the week. Japan’s currency dropped to 131.37 per euro from 130.76. It has weakened 0.4 percent on the week.

Australia’s dollar traded at 90.48 U.S. cents from 90.61 cents in New York yesterday, when it touched 90.90 cents, the strongest level since Aug. 7, 2008.

The U.S. dollar gained against 15 of its 16 major counterparts after Bernanke said in prepared remarks at a conference in Washington “when the economic outlook has improved sufficiently, we will be prepared to tighten.”

Bernanke’s comments echoed those by Kansas City Fed President Thomas Hoenig, who on Oct. 6 said raising interest rates wouldn’t derail the U.S. economic recovery.

‘Incremental Increases’

“Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy,” Hoenig said in Denver. “I would not support a tight monetary policy in the current environment, but my experience tells me that we will need to remove our very accommodative policy sooner rather than later.”

White House economic adviser Lawrence Summers repeated the administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

“He made it very clear that our commitment is to a strong dollar based on strong fundamentals,” Summers said at a forum in New York organized by Bloomberg LP, the parent of Bloomberg News.

The yen dropped as Japan’s machinery orders rose 0.5 percent in August after falling 9.3 percent in July, the Cabinet Office reported in Tokyo. The median estimate of 27 economists in a Bloomberg News survey called for a 2.1 percent gain.

‘Momentum Trading’

“The data adds to speculation Japan will be the last to recover,” said Toshiya Yamauchi, a Tokyo-based manager of the foreign-exchange margin trading department at Ueda Harlow Ltd. “As other nations lead the global economic recovery, the yen will likely be sold as a funding currency.”

Japan’s currency is likely to weaken over the next 12 months as “momentum” fades from a tax break on overseas earnings, according to Brown Brothers Harriman & Co. Since April 1, Japanese exporters have been able to bring back income earned outside the country without paying the combined 40 percent tax.

“It’s largely momentum trading right now and we’re pushing it because we haven’t reached a pain threshold of anything to stop us,” said Marc Chandler, global head of currency strategy at Brown Brothers in New York. “The reason the Japanese stock market underperforms despite having a strong yen is precisely because they have a strong yen. It’s eroding corporate profits.”

Australia’s Rates

Japan’s currency will probably fall to between 105 and 110 versus the dollar in the next 12 months, Chandler predicted.

Australia’s currency has gained 4.6 percent this week versus its U.S. counterpart, the most since the five days ended May 8. Investors are certain the Reserve Bank of Australia will raise the overnight cash rate target on Nov. 3 by a quarter percentage point, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange.

They’re wagering on a 96 percent chance he follows with another increase in December to end the year with a cash rate at 3.75 percent.

“The central bank will probably hike rates twice more this year as fundamentals such as employment seem to be improving,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “High- yielding currencies such as the Aussie dollar will likely be bought more. Risk-taking appetite is high.”

‘Appropriate’ Rates

The number of people employed increased 40,600 in September from August 2008, the statistics bureau said in Sydney yesterday. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 10,000. The unemployment rate fell to 5.7 percent from 5.8 percent.

The euro advanced against the yen after European Central Bank President Jean-Claude Trichet said yesterday the region’s economy is emerging from a period of “free fall,” damping demand for Japan’s currency as a refuge.

Trichet signaled the ECB will keep interest rates at a record low to spur growth.

“The current rates remain appropriate,” Trichet said at a press conference in Venice after policy makers left the main refinancing rate at 1 percent. “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” he said, reiterating the Group of Seven’s statement on currencies.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.





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Yen to Fall as Tax-Free Repatriation Boost Fades, Chandler Says

By Thomas R. Keene and Oliver Biggadike

Oct. 9 (Bloomberg) -- The yen will probably decline against the dollar over the next 12 months as “momentum” fades from a tax break that encourages repatriation of overseas profits to Japan, according to Brown Brothers Harriman & Co.

Japan’s currency traded today within 1.5 percent of its lowest this year versus the dollar as signs of a global economic recovery boosted the appeal of funding investments with the greenback instead of the yen. Since April 1, Japanese exporters have been able to bring back income earned outside the country without paying the combined 40 percent tax.

“It’s largely momentum trading right now and we’re pushing it because we haven’t reached a pain threshold of anything to stop us,” said Marc Chandler, global head of currency strategy at Brown Brothers in New York. “The reason the Japanese stock market underperforms despite having a strong yen is precisely because they have a strong yen. It’s eroding corporate profits.”

The yen rose 0.3 percent to 88.39 against the dollar in New York trading yesterday, its fourth straight day of gains and longest winning stretch since Sept. 11. Japan’s currency will probably fall to between 105 and 110 versus the dollar in the next 12 months, Chandler predicted.

“The most telling fact about Japan is that by the end of next year they’re going to have three million fewer workers than they did in 2005,” Chandler said, speaking in New York at a foreign-exchange conference sponsored by Bloomberg LP, the parent company of Bloomberg News. “That simple statistic tells you a lot about the challenges Japan has.”

The Nikkei 225 Stock Average rose 11 percent this year, lagging the 18 percent gain in the Standard & Poor’s 500 Index and the 49 percent advance in Hong Kong’s Hang Seng Index.

China’s Yuan

China could boost domestic demand in its economy by allowing the yuan to strengthen, said Gabriel de Kock, a senior strategist at JPMorgan Chase & Co. who spoke on the currency panel with Chandler and James McCormick, head of European fixed- income research at Nomura International Plc.

“The Chinese have a policy problem, which is to reallocate demand from foreign demand to domestic demand,” de Kock said. “One way to kill two birds with one stone is to allow the currency appreciate over time.”

To contact the reporters on this story: Thomas R. Keene in New York at tkeene@bloomberg.net; Oliver Biggadike in New York at obiggadike@bloomberg.net





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Euro May Fall to Three-Month Low Versus Yen: Technical Analysis

By Yoshiaki Nohara and Shigeki Nozawa

Oct. 9 (Bloomberg) -- The euro is poised to decline to a three-month low against the yen, said Bank of Tokyo Mitsubishi UFJ Ltd., citing trading patterns.

The European currency’s five- and 21-day moving averages are both heading down, signaling the euro is likely to keep weakening, said Masashi Hashimoto, a senior analyst in Tokyo at the unit of Japan’s biggest publicly traded bank. Daily momentum indicators such as moving average convergence/divergence also show sell signals, he said.

“The euro is shifting to a downtrend,” Hashimoto said in an interview yesterday. “If it falls through the 200-day moving average, that would be a big turning point in terms of trend.”

The euro traded at 130.74 yen as of 7:19 a.m. in Tokyo, down from a two-month high of 138.72 yen on Aug. 7.

The currency is set to weaken toward the 200-day moving average, currently at 129.73 yen, and if it fails to hold at that level it would then fall toward 127.02 yen, which represents its low of July 8, Hashimoto said. The euro has remained above the 200-day moving average since May.

A failure to remain above 127.02, would then open up the possibility of a decline to its April 28 level of 124.39, Hashimoto said.

MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods.

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

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Shigeki Nozawa in Tokyo at Snozawa1@bloomberg.net.





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Japan Seeks to Purchase 52,200 Tons of Food Wheat in SBS Tender

By Aya Takada

Oct. 9 (Bloomberg) -- Japan, Asia’s largest wheat importer, is seeking to buy 52,200 tons of food wheat and 31,700 tons of food barley on Oct. 29 through a tender system introduced to loosen government controls over grain imports.

Shipment must be made by Jan. 31, the Ministry of Agriculture, Forestry and Fisheries said.

The tender will be held under the so-called simultaneous buy and sell system, in which Japanese food makers and trading companies jointly bid for grains of any country and quality.

The ministry has bought a total of 174,911 tons of food wheat and 105,798 tons of food barley through SBS tenders this fiscal year. It purchased 258,754 tons of food wheat and 260,386 tons of food barley in SBS tenders in the year ended March 31.

To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net





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Russia’s Fibonacci ‘Breakout’ Signals Rally: Technical Analysis

By Michael Patterson

Oct. 9 (Bloomberg) -- Russia’s Micex Index surged yesterday above the halfway point between its all-time high and its bear- market bottom, a signal shares may climb another 27 percent, according to Auerbach Grayson & Co.

The Micex advanced 4.3 percent to 1,278.53, closing above the level midway between its December 2007 peak and its October 2008 low for the first time.

The midpoint is a key level for Fibonacci analysts, who use a system pioneered by 13th century mathematician Leonardo Pisano that discerns ratios from proportions found in nature. To adherents, the performance of an index when it approaches the 50 percent “retracement” level can be used to forecast whether it will keep climbing or retreat.

“The completion of the 50 percent retracement is very bullish,” Richard Ross, Auerbach’s New York-based global technical strategist, said in a phone interview. “It lends credence to the Micex’s breakout” above its previous 2009 high in June, he said.

The next “logical target” for the Micex is the 61.8 percent retracement level, a 10 percent advance from yesterday’s closing level, according to Ross. There’s a “good chance” the 30-company gauge may extend its rally to the 76.4 percent retracement level, a 27 percent gain from yesterday’s close, he said.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.





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Most Asian Stocks Gain as Chip Prices Rise; Utilities Decline

By Shani Raja

Oct. 9 (Bloomberg) -- Most Asian stocks rose, with the MSCI Asia Pacific Index set for its biggest weekly gain in a month, as investors favored companies linked to the global economic recovery over haven assets including utilities shares.

Samsung Electronics Co., the world’s No. 1 memory-chip maker, climbed 4 percent after chip prices rose to a 16-month high. Record gold prices drove Zijin Mining Gold Co. up by 10 percent in Shanghai, where markets traded after an eight-day holiday. Electric Power Development Co. sank 2.4 percent in Tokyo, leading declines by utilities. Treasuries fell after Federal Reserve Chairman Ben S. Bernanke said the bank is ready to tighten monetary policy once the economy improves.

The MSCI Asia Pacific Index rose 0.3 percent to 118.85 at 1:13 p.m. in Tokyo, having swung between gains and losses at least 16 times. Five stocks advanced for every three that declined. The index has climbed 3.5 percent this week as a report showed U.S. service industries expanded and signs of growth prompted Australia to raise interest rates.

“We’re all hoping the global recession is winding to a close,” said Rob Patterson, who helps manage $3.4 billion at Argo Investments Ltd. in Adelaide, Australia. “Certainly, the economic indicators are getting less worse. But I don’t imagine the U.S. will be raising rates any time soon.”

China’s Shanghai Composite Index climbed 3.8 percent, leading gains in Asia, while Taiwan’s Taiex Index added 0.67 percent. South Korea’s Kospi Index rose 1.7 percent.

Nintendo, Promise

Japan’s Nikkei 225 Stock Average added 1.5 percent, led by Nintendo Co., which gained 6.4 percent on a Citigroup Inc. upgrade. Promise Co., a Japanese consumer lender, surged 11 percent on speculation an executive’s promotion will strengthen ties with the company’s largest shareholder. Casino company Wynn Macau Ltd. climbed 9.1 percent in its Hong Kong debut.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The gauge increased 0.8 percent yesterday, its fourth-straight gain, as first-time jobless claims fell more than economists estimated last week and an industry report showed U.S. retail sales rose for the first time in 13 months.

A gauge of technology stocks in the MSCI Asia Pacific Index climbed 0.7 percent, the most of 10 industry groups. The price of the benchmark dynamic random access memory chip gained 2.4 percent yesterday to the highest since June 17, 2008, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for semiconductors.

Samsung added 4 percent to 749,000 won, while Hynix Semiconductor Inc., the world’s second-largest computer-memory maker, climbed 2.1 percent to 19,700 won.

Chinese Gold Producers

Zijin Mining, China’s largest gold producer, surged 10 percent to 9.34 yuan, while Shandong Gold Mining Co. climbed 10 percent to 64.90 yuan after gold futures in New York reached a record $1,062.70 an ounce yesterday. Bullion lost 0.8 percent in after-hours trading today.

Newcrest Mining Ltd., Australia’s largest gold producer, gained 1.3 percent to A$35.62. Mitsubishi Corp., which generates more than half of its profit from commodities dealing, rose 0.7 percent to 1,902 yen.

A measure of six metals traded on the London Metal Exchange, including copper and zinc, added 4.2 percent yesterday, the steepest gain since Aug. 3, and oil surged 3.1 percent to $71.69 a barrel in New York.

“I’m still bullish because we are in a market with excess liquidity,” said Hiromichi Tsuyukubo, a hedge-fund manager at Myojo Asset Management Japan Co. in Tokyo. “That money is going to continue flowing to the materials sector.”

‘Pretty Good Rally’

The MSCI Asia Pacific Index has climbed 68 percent from a five-year low on March 9 on speculation the global economy’s recovery from its worst slowdown since World War II will bolster corporate earnings. Shares on the gauge traded at 1.55 times book value, up from 1.03 times at the market’s low in March, according to data compiled by Bloomberg.

“We’ve had a pretty good rally and it’s got to stop somewhere,” said Argo’s Patterson. “Companies will shortly be giving some indication of how they’re traveling. Much will depend how bullish or otherwise they are.”

The yield on the benchmark 10-year Treasury note rose two basis points, or 0.02 percentage point, to 3.27 percent, according to data compiled by Bloomberg. The Fed will be ready to raise interest rates when the economic outlook “has improved sufficiently,” Bernanke said at a conference yesterday on monetary economics in Washington.

“The U.S. economy and corporate-earnings picture both continue to show improvement,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Risk appetite among investors is returning.”

Worst Performers

Utilities and telephone companies, whose earnings are typically regarded as being sheltered from swings in the economic cycle, are the MSCI Asia Pacific Index’s worst performers during the gauge’s seven-month rally.

Electric Power Development sank 2.4 percent to 2,700 yen and Chugoku Electric Power Co. dropped 2 percent to 1,881 yen.

Nintendo, which makes the Wii game console, jumped 6.4 percent to 23,730 yen. Soichiro Fukuda, an analyst at Citigroup in Tokyo, raised the stock’s rating to “buy” from “hold,” citing the company’s prospects for an earnings recovery.

Promise rose 11 percent to 677 yen after it named Vice President Ken Kubo as its next president to replace Hiroki Jinnai, who will become chairman. The Nikkei reported the move will help boost ties with Sumitomo Mitsui, which held 21 percent of Promise’s shares at the end of March.

Kubo joined Promise in May 2007 from Sumitomo Mitsui, where he oversaw banking services for individuals.

Wynn Macau, the casino company led by billionaire Stephen Wynn, jumped 9.1 percent to HK$11 on its debut in Hong Kong. The company sold shares at HK$10.08, raising $1.63 billion in the city’s second-largest initial public offering this year.

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.





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Wheat Heads for First Weekly Gain in Six After Dollar Slumps

By Jae Hur

Oct. 9 (Bloomberg) -- Wheat headed for the first weekly gain in six after advancing on speculation that the dollar’s slump will boost demand for supplies from the U.S., the world’s biggest exporter of the grain.

Futures in Chicago gained 7.4 percent in the previous four days as the dollar dropped to the lowest level in almost 14 months against a basket of six major currencies. Prices fell as much as 1.1 percent today before a U.S. Department of Agriculture report that is expected to forecast a record soybean harvest and the second-biggest corn output.

“It’s position squaring before the USDA’s announcement,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. “The market has support from the weaker dollar and pressure from forecasts for bumper U.S. harvests, especially for corn and soybeans.”

Wheat for December delivery fell 3.25 cents to $4.705 a bushel in electronic trading on the Chicago Board of Trade as of 12:58 p.m. Tokyo time. The contract yesterday touched $4.83, the highest level since Sept. 3.

The grain used to make bread, pasta and noodles has fallen 23 percent this year. Global production is expected to total 663.7 million metric tons, the largest behind last year’s record harvest, according to the U.S. Department of Agriculture.

The Dollar Index rallied as much as 0.5 percent after reaching 75.767 yesterday, the weakest since Aug. 11, 2008. A decline in the dollar increases demand from overseas importers holding other currencies.

Export Sales

Export sales in the week ended Oct. 1 totaled 767,300 tons for the marketing year ending May 31, up 43 percent from a week earlier, the USDA said yesterday in a report.

Corn for December delivery fell 0.8 percent to $3.6125 a bushel at 1:01 p.m. Tokyo time, snapping the previous four days’ advance. The grain has risen 8.3 percent this week, heading for the biggest such gain since Dec. 12.

November-delivery soybeans were down 0.6 percent at $9.3025 a bushel. The contract climbed 2.6 percent yesterday after reaching $9.42, the highest price since Sept. 18. The oilseed rose 5.5 percent this week heading, for the first weekly gain in three, after touching a six-month low of $8.7875 on Oct. 5.

The USDA is expected to forecast a soybean harvest of 3.295 billion bushels, up 1.5 percent from last month’s estimate of 3.245 billion and 2.959 billion bushels produced last year, according to analysts surveyed by Bloomberg News.

Corn production will rise to 13.006 billion bushels, up from 12.954 billion estimated last month, according to analysts surveyed. U.S. farmers harvested 12.101 billion bushels a year earlier.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net





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Gold Pares Biggest Weekly Gain Since April as Rally Spurs Sales

By Glenys Sim

Oct. 9 (Bloomberg) -- Gold dropped for the first time this week, paring its biggest weekly advance since April, after a climb to a record prompted some investors to sell the metal to lock in gains.

Bullion also fell as the dollar stemmed a decline after Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to “tighten” monetary policy. Still, gold is up 4.7 percent this week, headed for its biggest weekly gain since April 24, as the Dollar Index, which tracks the greenback against the currencies of six trading partners, fell 1.2 percent.

“The likelihood that long-term U.S. dollar weakness will support gold does not obviate the fact that the near-relentless increase in bullion prices recently has raised the possibility that gold is due for a pullback,” said HSBC Securities analyst James Steel. “A U.S. dollar rally, even if only temporary, could provide a reason for gold longs to take profits,” he wrote in a report e-mailed today.

Gold for immediate delivery fell as much as 0.6 percent to $1,049.11 an ounce, and traded at $1,049.26 at 9:28 a.m. in Singapore. Bullion touched an all-time high of $1,061.55 an ounce yesterday. December-delivery gold on the Comex division of the New York Mercantile Exchange declined 0.6 percent to $1,050.40 an ounce.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,109.31 metric tons yesterday, data on the company’s Web site showed. The trust’s holdings are 2.2 percent from the record 1,134.03 tons reached June 2.

Among other precious metals for immediate delivery, silver slid 0.6 percent to $17.68 an ounce, platinum lost 0.6 percent to $1,339.25 an ounce, and palladium dropped 0.9 percent to $317.75 an ounce as of 9:20 a.m. in Singapore.

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





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Minara Nickel Output Rises 14%; ‘Cautious’ on Demand

By Jason Scott

Oct. 9 (Bloomberg) -- >Minara Resources Ltd., Australia’s second-largest nickel producer, said third-quarter production rose 14 percent, putting it on track to meet its annual target.

Output from the Murrin Murrin mine at Leonora in Western Australia was 8,698 metric tons in the three months ended Sept. 30 from 7,656 tons a year earlier, the Perth-based company controlled by Glencore International AG said today in a statement. The company maintained its full-year production forecast of between 30,000 tons and 34,000 tons.

Prices of nickel, used to strengthen stainless steel, have soared 65 percent this year as China increased consumption. Nickel demand may rise to 1.35 million tons next year, falling short of 1.44 million tons of production, the International Nickel Study Group said yesterday. Demand this year is estimated at 1.21 million tons against production of 1.28 million tons, the Lisbon-based organization said.

“The signs of increased demand for stainless steel in China have continued,” Minara wrote in the statement. “The company remains cautious as official London Metal Exchange stocks have risen to approximately 120,000 tons in recent weeks and the stainless steel markets in Europe and the U.S. remain soft.”

Minara rose 5.8 percent to A$1.00 at 12:17 p.m. in Sydney. Nickel for delivery in three months dropped 1 percent to $19,300 a ton at the same time in Sydney on the LME.

Cobalt production surged 47 percent to a record 754 tons, the company said. Minara owns 60 percent of Murrin Murrin, with Glencore, the world’s largest commodities trader, holding the balance.

To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.net


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