Unemployment Rates Beat Expectations In The United Kingdom

Daily Forex Fundamentals | Written by ecPulse.com | Nov 11 09 10:01 GMT |

A major economic day in the United Kingdom as the highlight of today is on the labour market conditions and the November Inflationary Report, in which the report focuses on the economic health and inflation expectations in the medium and long term and will help the Bank of England determine upcoming decision for APF program. First on our calendars is the claimant count rate for October in which it came in at 5.1% which is inline with the expected reading and higher than the previous 5.0% while jobless claims change for the same time period fell to 12.9 thousand from the revised 20.6 from 20.8 thousand which is better than the projected 20.0 thousand. The lower Britons claiming for jobless benefits helped drag down unemployment rates to 7.8% better than both the forecasted 8.0% and inline with the revised prior reading of 7.8% from 7.9%. Also released was average earnings including bonus for the three months ending in September at 1.2% lower than the prior and expected readings of 1.6% and 1.4% respectively while excluding bonuses was inline with projections at 1.8% and worse than the previous reading of 1.9 percent. 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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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Nov 11 09 07:50 GMT |

CHF The pre-planned short positions from key resistance range levels have been implemented with achievement of minimal anticipated target. OsMA trend indicator, having marked tendency of fall in both party activity and considering a chosen strategy does not clarify the choice of planning priorities for today. Therefore, considering probability of further rate rage movement, as earlier we can assume rate return to close 1,0100/20 resistance levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term sales on condition of the formation of topping signals the targets will be 1,0040/60, 0,9980/1,0000 and (or) further break-out variant up to 0,9920/40, 0,9860/80, 0,9800/20. The alternative for buyers will be above 1,0240 with the targets of 1,0280/1,0300, 1,0340/60, 1,0400/20. GBP The estimated test of key resistance range levels has been confirmed with conditions for implementation of the pre-planned short positions. Therefore, as mentioned before the targets for opened short positions will be at 1,6620/40, 1,6540/60 levels and (or) further break-out variant up to 1,6480/1,6500, 1,6420/40, 1,6340/60. The alternative for buyers will be above 1,6760 with the targets of 1,6800/1,6820, 1,6880/1,6920. JPY The estimated test of key resistance range levels for implementation of the pre-planned short positions has not exactly been confirmed, however the result of the previous trading day marked by OsMA trend indicator gives grounds for preservation of earlier designed trading plans with slight adjustment. Namely, as earlier we can assume probability of rate return to channel line 2 at 90,00/20 levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for sales on condition of the formation of topping signals the targets will be 89,40/60, 89,00/20 and (or) further break-out variant up to 88,40/60, 87,80/88,00. The alternative for buyers will be above 90,80 with the targets of 91,20/40, 91,80/92,00. EUR The pre-planned long positions from key supports have been implemented with achievement of minimal anticipated target. OsMA trend indicator, having marked fall in both party activity does not clarify the choice of planning priorities for today. Therefore, considering supposition of probable rate range movement, as earlier we can assume probability of rate return to close 1,4920/40 support levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term buying positions on condition of the formation of topping signals the targets will be 1,4980/1,5000, 1,5040/60 and (or) further break-out variant up to 1,5100/20, 1,5160/80, 1,5220/40. The alternative for sales will be below 1,4880 with the targets of 1,4820/40, 1,4760/80. FOREX Ltd www.forexltd.co.uk

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Japan’s Capital Spending Trough May Entrench Recovery

By Jason Clenfield and Tatsuo Ito

Nov. 11 (Bloomberg) -- Japanese companies including equipment-maker Tokyo Electron Ltd. are reporting an increase in orders for factory machinery, a trend that may offer the clearest sign yet the economic recovery is gaining traction.

Machinery makers said they expect orders to rise 1 percent this quarter from the previous three months, the first increase since the January-March period in 2008, the Cabinet Office said today in Tokyo. The rebound follows a quarter in which bookings sank to the lowest level since records started in 1987.

Japanese companies managed to protect earnings during the recession by cutting jobs and slashing investment in plant and equipment, spending that accounted for more than a third of the economy’s growth during its previous expansion. Today’s report suggests the cuts to investment may be over.

“Up until now there have been two missing links in the Japanese economy. One is capital spending, the other is employment,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Capex is starting to come back.”

The Cabinet Office today raised its assessment of machinery orders, which tend to lead spending on capital equipment by three to six months, saying they are showing signs of bottoming. Orders climbed 10.5 percent in September from a month earlier, the second consecutive gain. The increase, more than twice the pace forecast by economists, was driven largely by bookings from service firms for computers and communications.

The yen climbed after the report, and later erased its gains. It traded at 89.78 per dollar at 4:09 p.m. in Tokyo from 89.76 before the report. The Nikkei 225 Stock Average edged 0.01 percent higher, and has advanced 40 percent from a 26-year low in March.

Tokyo Electron

Tokyo Electron, Japan’s biggest maker of equipment used to make semiconductors, last month reported a narrower-than- forecast loss for the first half of the fiscal year, citing improving demand for chip gear and cost reductions. The company said orders for machines that make chips and flat-panel displays climbed 94 percent in the three months ended Sept 30.

The rebound in capital spending would lend stability to a recovery that has so far depended on temporary factors including government stimulus and a rebound in production spurred by run-down inventories.

Japan’s economic growth accelerated last quarter to a 2.9 percent annualized pace, according to the median estimate of economists surveyed by Bloomberg ahead of gross domestic product figures due for release on Nov. 16. Capital spending likely added to an expansion that began in the second quarter, powered mainly by exports, consumer spending and government outlays, economists said.

Chinese Demand

Growth in China is spurring demand for Japanese products. Reports today showed the expansion in Japan’s biggest market may accelerate, with factory output rising the most in October since March 2008, retail sales climbing 16.2 percent and urban fixed-asset investment up 33.1 percent in the first 10 months.

To be sure, Japan’s business investment is rebounding from record low levels. The failure of consumer demand in the U.S. and Europe to return to pre-recession levels has left Japanese manufacturers burdened with equipment they no longer need. Even after seven months of increasing industrial production, about a third of the country’s factories are still sitting idle.

“Companies are saddled with massive excess capacity,” said Hiroshi Shiraishi, an economist at BNP Paribas in Tokyo. “You can paint this however you want, but basically our forecast is for capital spending to rebound at fairly moderate pace and for the level to be quite subdued for a long time.”

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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London Finance Job Openings Rise to One-Year High, Survey Shows

By Gavin Finch

Nov. 11 (Bloomberg) -- Job openings in London’s financial- services industry rose to the highest level in a year last month, according to a survey by recruitment firm Morgan McKinley.

The number of openings climbed 15 percent to 4,410, the most recorded in any one month since October 2008, the London-based company said today.

“The City jobs market has seen and continues to see a general trend of improvement,” Andrew Evans, managing director of Morgan McKinley’s financial-services unit, said in an e- mailed statement. “Progress has been slow and somewhat unsteady over the course of 2009, but hiring within London’s financial services sector is following an upward trend.”

Prime Minister Gordon Brown is trying to revive the recession-mired economy in time for an election that must be held by June. The Office for National Statistics will say later today that U.K. claims for jobless benefits rose in October by the least since May 2008, according to the median forecast of 28 economists in a Bloomberg survey.

The average salary registered by the Morgan McKinley survey fell 1.5 percent to 51,350 pounds ($85,639) in October, from 52,142 the previous month. That compares with 48,021 pounds a year earlier, Morgan McKinley said.

KPMG LLP and the Recruitment and Employment Federation said in a Nov. 4 report that strains in the labor market eased in October. A measure of permanent job placements rose to 54.6, the highest in two years, from 51.3 the previous month.

Lloyds Banking Group Plc, Britain’s biggest mortgage lender, said yesterday it plans to cut about 5,000 jobs in its administration, insurance and mortgage units. Lloyds, which already announced more than 8,000 jobs cuts since its January takeover of HBOS Plc, follows Royal Bank of Scotland Group Plc and HSBC Holdings Plc in cutting jobs. The two lenders said last week they would eliminate a combined 5,400 positions.

To contact the reporter for this story: Gavin Finch in London at gfinch@bloomberg.net

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U.K. Jobless Rises Less Than Forecast as Slump Eases

By Jennifer Ryan and Svenja O’Donnell

Nov. 11 (Bloomberg) -- U.K. unemployment rose at the slowest pace in 18 months in October, bolstering government claims that efforts to lift the economy out of recession are working.

Claims for jobless benefits increased by 12,900, the least since April 2008, the Office for National Statistics said in London today. The median forecast in a Bloomberg News survey of 20 economists was an increase of 20,000. The number of people seeking work in the three months through September rose 30,000, the smallest gain since the period through May 2008.

Prime Minister Gordon Brown is counting on an economic revival to narrow the Conservative lead over his Labour Party before a general election due by June 2010. Economists expect unemployment to keep rising long after the economy returns to growth, casting doubt over the strength of the recovery.

“I think we probably are out of the woods but I’m not convinced how sustainable it is,” said George Buckley, chief U.K. economist at Deutsche Bank AG. “We see a recovery that peters out next year.”

The economy unexpectedly shrank 0.4 percent in the third quarter, extending the slump to six quarters, the most since records began in 1955. Bank of England officials say the recovery may be muted as unemployment and the prospect of tax increases to curb the budget deficit weigh on spending.

Doubts

Doubts over the sustainability of the recovery prompted Bank of England policy makers to raise their bond-buying program by 25 billion pounds ($42 billion) last week to 200 billion pounds. The central bank will release new growth and inflation forecasts at 10:30 a.m. today.

Britain has lost more than 600,000 jobs since the recession began, taking the unemployment rate to 7.8 percent in the three months through September. That compares with 10.2 percent in the U.S. in October, 9.7 percent in the 16-nation euro region in September and 5.3 percent in Japan. A fifth of people age 16 to 24 are without work in the U.K.

Claimant unemployment has risen for 20 consecutive months and stood at 1.64 million in October, the highest level since 1997. In September, the number of claims rose 20,600 instead of the 20,800 previously reported.

Brown’s popularity dwindled as the financial crisis forced the government to bail out banks with billions of pounds of public money and plunged the economy into recession. David Cameron’s Conservative opposition led Labour by 10 percentage points in a Populus Ltd. poll for the Times newspaper finished on Nov. 8.

Job Losses

While services, manufacturing and house prices are showing signs of recovery, companies are still cutting staff to curb costs.

This month alone, Lloyds Banking Group Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc have announced plans to ax a combined 10,400 jobs. BAE Systems Plc’s Land Systems unit will cut 500 jobs in the U.K., the Unite union said on Oct 29.

Some companies have spared jobs by cutting or freezing pay and shortening working hours. Many economists expect unemployment to peak below 10 percent, compared with almost 12 percent reached in the aftermath of the early 1980s recession.

Average earnings excluding bonuses grew an annual 1.8 percent in the quarter through September, the least since records began in 2001, the statistics office said. Including bonuses, they increased by 1.2 percent.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

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Fed Faces Biggest Blow to Independence, Powers in Dodd Proposal

By Scott Lanman and Craig Torres

Nov. 11 (Bloomberg) -- The Federal Reserve faces the biggest blows to its authority and independence in five decades under legislation championed by its lead overseer in the U.S. Senate.

The financial-regulation overhaul proposed yesterday by Senator Christopher Dodd would strip the Fed of its role as a bank supervisor and give Congress a greater voice in naming the officials who set interest rates. The measure opens the door to interference from politicians who might disagree with any move by the Fed to raise rates from record lows, former central bank officials said.

“If you were worried that the Fed will be pressured to remove its accommodation while the unemployment rate is still very high, you’ve got to look for leverage,” Vincent Reinhart, a former director of the Fed’s Monetary Affairs Division, said in an interview. Dodd is aiming for “some political reach into all the voters” on the Fed’s Open Market Committee, which decides the benchmark U.S. interest rate, added Reinhart, now a resident scholar at the American Enterprise Institute.

U.S. stocks, bonds and the dollar would collapse if investors perceive Congress violating the independence of the policy-setting panel, former Fed Governor Laurence Meyer, now vice chairman of Macroeconomic Advisers LLC, said last month.

The Dodd measure would also curb the Fed’s ability to make emergency loans to individual companies. The Fed’s response to the financial crisis prompted increased scrutiny of the central bank, especially after it used its emergency powers to bail out Bear Stearns Cos. and American International Group Inc.

Confirmation Hearings

The proposal comes as Fed Chairman Ben S. Bernanke, 55, awaits confirmation to a second term. The hearings will be held some time after the Nov. 26 Thanksgiving holiday by Dodd, the Connecticut Democrat who chairs the banking committee.

Dodd said yesterday that Bernanke is “doing a terrific job,” and that his proposal is “not about individuals and personalities. It’s about putting together an architecture that makes sense.”

Under the 1,136-page proposal, the Fed would lose its bank- supervision role to a new Financial Institutions Regulatory Administration. Its consumer oversight duties would go to a new Consumer Financial Protection Agency. An Agency for Financial Stability would have broad powers to protect the economy from financial risks, with the Fed chairman holding one of nine seats.

Dodd would leave the Fed with monetary policy as it main responsibility. The White House and Congress would gain sway over the private-sector directors who choose regional Fed presidents, who vote on interest rates.

‘Abysmal Failure’

The Fed’s regulation of banks has been an “abysmal failure,” said Dodd, who has blamed it for not preventing the practices that contributed to the financial crisis and led to taxpayer bailouts of firms including Bank of America Corp. and Citigroup Inc.

Dodd, 65, faces re-election to a sixth term next year. A Quinnipiac University poll of Connecticut voters conducted Sept. 10-14 showed Dodd’s disapproval rating at 49 percent, down nine points from April. The poll had a margin of error of plus or minus 3.2 percentage points.

The bill is “not designed to basically punish the Federal Reserve at all, but rather to enhance their role, and their independence,” Dodd said at a press conference yesterday. “You start loading up the Fed with additional responsibilities, and that independence can be threatened.”

Fed Mandate

“It is hard to imagine monetary policy being conducted effectively in an environment where financial stability is lacking from the Fed’s mandate,” J. Alfred Broaddus Jr., a former president of the Richmond Fed, said in an interview.

A Fed official said the agency will review the Dodd plan guided by whether it maintains the Fed’s independence and its ability to set monetary policy as well as promote financial stability.

“The Fed should have a particularly important role in supervising institutions that create systemic risk,” Janet Yellen, president of the San Francisco Fed, told reporters yesterday after a speech in Phoenix.

Under the proposal, commercial banks would lose their power to appoint directors of the 12 regional Fed banks. Instead, directors would be chosen by the Fed’s Senate-confirmed governors, and each board chairman would be subject to Senate approval. Currently, two-thirds of directors are chosen by private-sector banks and one-third by the Washington-based governors.

Commercial banks’ power to appoint regional Fed directors dates to the 1913 law that created the central bank. In 1951, the Fed won the right to conduct monetary policy without Treasury Department approval. The Fed was charged with supervising bank holding companies in 1956.

Single Regulator

In creating a single U.S. bank regulator, Dodd would combine parts of the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The legislation also creates a mechanism for the FDIC to unwind failing “systemically significant” financial firms.

The bill must be approved by the Senate, reconciled with the House version and signed by President Barack Obama to become law. It goes beyond proposals from the Obama administration and House Financial Services Committee Chairman Barney Frank, who would expand the Fed’s bank-supervision role.

Frank, whose bill doesn’t address the central bank’s governance, said in a statement that “we are moving in the same direction.”

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

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China Production, Trade Surplus Climb, Boosting Yuan Calls

By Bloomberg News

Nov. 11 (Bloomberg) -- China’s industrial production and trade surplus climbed in October, indicating a strengthening recovery in the world’s third-largest economy that’s likely to amplify calls to let the yuan appreciate.

Today’s figures come days before leaders from the Asia- Pacific region gather in Singapore, and a visit by U.S. President Barack Obama to Beijing, where he plans to raise China’s currency policy. Premier Wen Jiabao has so far rebuffed pressure to loosen reins on the yuan, awaiting a bigger rebound in exports in an effort to secure social stability and job gains.

“For China, it is necessary and appropriate to allow the currency to be more flexible,” Asian Development Bank President Haruhiko Kuroda said in an interview with Bloomberg Television in Singapore today. “Crisis response by the Chinese authorities has been excellent,” and “they’ve brought about a very strong economic recovery,” he also said.

Production rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said in Beijing today. Retail sales gained an annual 16.2 percent in October, it said. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year.

Stocks rose in the region, with the MSCI Asia Pacific Index advancing 0.4 percent to 118.06 as of 12:04 p.m. Hong Kong time. The Shanghai Composite Index was down 0.6 percent at 3,158.19. Twelve-month non-deliverable yuan forwards rose 0.1 percent to 6.6285 per dollar, showing that traders predict about a 3 percent gain in the currency in the coming year.

Investment, Prices

In other figures today, urban fixed-asset investment climbed 33.1 percent in the first 10 months of this year, consumer-price declines eased and the supply of money climbed at a record pace. Faster gains in production and sales underscore forecasts for growth to exceed 10 percent this quarter, and for China’s economy to surpass Japan’s as No. 2 next year.

“The economy is strengthening, exports will be growing very soon and inflation is bottoming out -- in this environment the very loose policy has to change,” said Paul Cavey, an economist with Macquarie Securities in Hong Kong. “Interest rates and the currency may begin rising from around March.”

Failure to withdraw the government’s monetary and fiscal stimulus measures in time may fuel asset-price inflation, risking a boom-bust cycle that would destabilize the economy, some analysts warn.

Zoellick on Risks

Chinese policy makers are aware of risks that may stem from credit growth, World Bank President Robert Zoellick said in a Bloomberg Television interview today. Officials face pressure to let the currency rise, he said separately in Singapore, where the Asia-Pacific Economic Cooperation group, which includes the U.S., Japan and China, holds a summit Nov. 14-15.

China has maintained the currency’s value at around 6.83 against the dollar since July 2008, after allowing it to rise 21 percent in the previous three years.

Analysts including Peng Wensheng, head of China research at Barclays Capital in Hong Kong, argue that a stronger yuan would help deepen a structural shift in the economy toward domestic demand, rather than manufacturing and exports. The Group of 20 last week reiterated its goal of making the world less dependent on both U.S. spending and Chinese savings.

China’s expansion has led Asia and the global economic recovery. Its gross domestic product expanded 8.9 percent from a year earlier in the third quarter, while U.S. GDP rose at an annual rate of 3.5 percent from the previous three months.

Japan’s Recovery

Japan, which has lagged behind its Asian neighbors, offered some sign that its own recovery may last today. A government report showed machinery orders surged 10.5 percent in September, more than twice the median estimate in a survey of economists.

China’s officials have already indicated they intend to tighten lending terms, and a central bank report today showed that credit growth eased in October. Banks extended 253 billion yuan ($37 billion) of new local-currency loans, compared with 516.7 billion yuan in September and a median projection of 370 billion yuan in a Bloomberg News survey.

Overseas demand for China’s products may also be recovering, as the statistics bureau said the trade surplus widened to about $24 billion in October, the highest level since December, excluding seasonal distortions in January and February.

The increase in industrial output was more than economists’ median forecast for a 15.5 percent gain and retail-sales growth was also ahead of estimates.

‘Loose’ Policy

Ma Delun, a deputy governor at the central bank, told reporters in Mumbai yesterday that the nation will maintain its “loose” monetary policy for now, citing the challenges of weak external and domestic demand. Alibaba.com Ltd., most of whose revenue is derived from Chinese exporters, expects the recovery in trade will weaken next year because of “flat” overseas demand, Chief Executive Officer David Wei said in an interview yesterday.

Obama said in an interview with Reuters Nov. 9 that he will bring up currency issues when he meets with President Hu Jintao and Wen in Beijing next week. The U.S. Treasury Department last month criticized “the recent lack of flexibility” in the yuan.

European Central Bank President Jean-Claude Trichet said last week a stronger Chinese currency would help the global economy, and the International Monetary Fund has called the yuan “significantly undervalued.” Japanese Vice Finance Minister Yoshihiko Noda told reporters last week it is “desirable for the yuan to be flexible.”

Consumer Prices

China’s consumer prices fell by 0.5 percent in October from a year earlier, the smallest drop since declines began in February, and producer prices dropped 5.8 percent, according to the bureau.

The increase in retail sales last month was the biggest since December excluding seasonal distortions in January and February. SAIC Motor Corp., the biggest domestic automaker, sold 240,300 vehicles as the nation’s passenger-car sales surged.

Moody’s Investors Service on Nov. 9 raised China’s debt rating outlook to “positive” from “stable,” citing the government’s success in steering the nation through the global crisis and strong financial position, including $2.273 trillion of foreign-currency holdings.

The Chinese economy will expand 10.5 percent in the fourth quarter from a year earlier, according to the median forecast in a Bloomberg News survey of economists.

Besides building 270,000 low-rent homes, 200,000 kilometers (120,000 miles) of rural roads and nearly 1,500 kilometers of railway under a $586 billion stimulus plan, China’s government has pressed banks to lend, flooding the economy with cash. The World Bank cautioned last week that the nation may risk asset bubbles and a “misallocation of resources.”

Urban property prices jumped 3.9 percent in October, the biggest increase in 14 months, the statistics bureau said yesterday. The value of sales jumped 79.2 percent in the first 10 months of 2009 from a year earlier.

--Li Yanping, Kevin Hamlin, Sophie Leung, Zeb Eckert, Keiko Ujikane, Shamim Adam and Mark Lee. Editors: Chris Anstey, John McCluskey

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

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Canadians Hang on to Their Fridges, ‘Beaters,’ in Slow Recovery

By Greg Quinn and Andy Burt

Nov. 11 (Bloomberg) -- Customers in Ben Miller’s appliance shop are choosing to repair, not replace, their aging fridges and dishwashers, forcing the British Columbia salesman to ignore the wear on his own pickup truck.

Canada’s recovery from its first recession since 1992 has been hit by drops in output, employment and prices, surprising economists. Estimates for third-quarter growth were cut to 1.4 percent from 2 percent last month, according to the median of 16 estimates in a Bloomberg survey released today.

Slower-than-expected growth may prompt Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney to prolong some stimulus efforts, which include record budget deficits, targeted tax breaks and near-zero interest rates, until consumers resume spending.

Two days into last week, Miller said he had sold only two new appliances, while the shop’s repair technicians were constantly “booked” as clients chose to spend C$250 ($238) to fix a dishwasher that sells for C$550 new.

Canada’s currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, strengthened 0.6 percent to C$1.0495 per U.S. dollar yesterday.

Repair Work

“Most people are willing to repair rather than buy new because they don’t have the money,” Miller, 34, said at Moore Appliance Ltd. in Prince George, British Columbia, in front of a storeroom stocked with touch-up paint and valves. “My red beater truck I know needs C$2,000 of repairs,” he said, though slow sales prevent him from getting the work done.

Economists are trimming forecasts following reports that output shrank 0.1 percent in August after it was little changed in July, and data showing consumer prices have fallen for the longest stretch since 1953. Last week, Statistics Canada said employment dropped by 43,200 in October following two monthly gains, lifting the jobless rate to 8.6 percent, almost an 11- year high.

Flaherty didn’t wait for the jobs report to warn Canadians the labor market won’t return to normal for some time. “We need to have a clear entrenched economic recovery and then the job numbers will have to catch up with that as businesses start to reinvest,” he told reporters Nov. 5.

With consumers reluctant to spend, discretionary stocks have lagged behind a 27 percent rise in the country’s benchmark Standard & Poor’s/TSX Composite Index this year, gaining 7 percent. Consumer-staples stocks have fallen 0.2 percent, ahead of only the telecommunications services index drop of 3.1 percent.

Luring Shoppers

To lure consumers back into stores, Flaherty has introduced temporary tax credits for home renovations. Customers at Home Depot are more drawn to items that will get them a tax break, said Michael Rowe, chief financial officer of the building- product retailer’s Canadian unit.

“We do see a difference between those that are eligible and those that are not,” Rowe said in an interview in Ottawa. The Atlanta-based firm is opening three stores in Canada this year instead of the 10 they added last year.

While sales at furniture and electronics stores have stopped falling, they remain 9.3 percent below pre-recession levels, according to Statistics Canada.

Consumers are central to the Bank of Canada’s forecast for next year, with consumption pegged to account for more than half of a 3 percent expansion. To support that growth, Carney cut the bank’s benchmark interest rate to a record low 0.25 percent in April and has pledged to keep it there through June 2010 unless the inflation outlook shifts.

‘Softer’ Recovery

Carney said last weekend that third-quarter growth may come in “softer” than a prediction for a 2 percent annualized pace he made two weeks earlier, adding the “profile” for recovery remains intact.

Carney has also warned the recovery depends on a “difficult handoff from public- to private-led growth.”

“There is going to be a degree of turbulence with that handoff,” said Stewart Hall, an economist at HSBC Securities in Toronto. Hall says that Carney will keep the benchmark rate at 0.25 percent for at least three months after the bank’s conditional promise expires.

Flaherty has also forecast a record C$55.9 billion deficit this year, aiming to stimulate the economy with infrastructure spending and increased jobless benefits.

For Miller in British Columbia, the closing of local lumber mills has a bigger effect than even the province’s spending on infrastructure for the Olympic Games in Vancouver next year.

“Some people say the Olympics has an effect; not up here,” he said. “When the economy is strong, people buy new.”

To contact the reporters on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net; Andy Burt in Washington at aburt1@bloomberg.net.

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Pound Trades Near 3-Month High Against Dollar Before BOE Report

By Paul Dobson

Nov. 11 (Bloomberg) -- The pound traded near a three-month high against the dollar before the Bank of England gives its quarterly inflation update and a report that economists predict will show the pace of claims for jobless benefits slowed.

Sterling was little changed versus the yen. Policy makers may say inflation will be roughly at their target rate of 2 percent in two years’ time, according to UBS AG. The Office for National Statistics will say people claiming unemployment benefits rose by 20,000 in October, the slowest rate since May 2008, according to the median estimate of 28 economists in a Bloomberg survey.

“The Monetary Policy Committee will indicate early rate hikes are unlikely, and also leave the door open for more quantitative easing if necessary,” Gareth Berry, a strategist at the bank in Singapore, wrote today in a report. “With the Bank of England’s policy view having stabilized for now, we think downside for sterling based on policy differentials alone is limited.”

The pound was at $1.6758 as of 8:32 a.m. in London, from $1.6744 yesterday, and traded at 150.54 yen, from 150.38 yen. The U.K. currency weakened to 89.70 pence per euro, from 89.54 pence.

Bank of England Governor Mervyn King is unlikely to seek rate increases in the next year as the longest recession on record keeps inflation in check, former Chancellor of the Exchequer Kenneth Clarke said.

“The governor of the bank is going to face an absolutely crucial decision,” Clarke told reporters at a lunch in London yesterday. “I don’t think he’s likely to want to put up interest rates in the next 12 months.”

The yield on the 10-year U.K. government bond rose 2 basis points to 3.81 percent, and the two-year security’s yield also increased 2 basis points, to 0.79 percent.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

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Euro Gains as Chinese Production, Trade Fuel Growth Optimism

By Anna Rascouet

Nov. 11 (Bloomberg) -- The euro rose against the dollar and the yen as stocks advanced after Chinese industrial production increased and its trade surplus swelled, fueling optimism that the global economic recovery is gathering pace.

The 16-nation currency reached its highest level in more than two weeks against its U.S. counterpart after China’s statistics bureau said that production rose 16.1 percent from a year before, the most since March 2008. The MSCI World Index of shares gained 0.5 percent. The yen gave up gains after Japanese machine orders rose more than forecast.

“The euro is gaining support from the continued positive investor sentiment globally,” said Ian Stannard, a senior currency strategist at BNP Paribas SA in London. “Euro-dollar is testing the top end of the range, attempting to break higher.”

The euro traded at $1.5036 as of 8:33 a.m. in London, from $1.4993 in New York yesterday, after reaching $1.5044 earlier, the highest level since Oct. 26. It strengthened to 135.10 yen, from 134.65 yen. The dollar was little changed at 89.83 yen.

The Norwegian krone climbed against 15 of the 16 most- traded currencies tracked by Bloomberg and reached 5.5546 per dollar, also its strongest level since Oct. 26.

To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net

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Copper Advances on Signs of Chinese, Japanese Demand: Overview

By Anna Stablum

Nov. 11 (Bloomberg) -- Copper rose in London after industrial production advanced in China, the world’s largest user of the metal, and on better-than-forecast machinery orders in Japan, the fourth-biggest consumer.

Market News:

Metals News:

Metals Prices:

-- Copper rose 1.1 percent to $6,600 a metric ton on the London
Metal Exchange at 8:27 a.m. Relative Strength Index 57.
-- Aluminum gained 0.5 percent to $1,968.75 a ton. RSI 57.
-- Zinc advanced 0.9 percent to $2,180 a ton. RSI 54.
-- Lead rose 1.2 percent to $2,314.50 a ton. RSI 53.
-- Nickel climbed 0.9 percent to $16,975 a ton. RSI 39.
-- Tin gained 0.3 percent to $14,875 a ton. RSI 52.

Other markets:      Last           % Change  % YTD
Dollar Index        74.791         -0.3        -8
Crude oil           $79.23          0.2        78
Gold                $1,115.40       0.9        26
MSCI World Index    1,162.22        0.5        26

Economic Events:
                               Forecast       Prior     Time
                                                      (London)
UK Jobless Claims                20.0K         20.8K     09:30
Bank of England Inflation Report                         10:30
Bloomberg Global Confidence                    61.7      12:00

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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Thai Rice Exports May Climb to Record, Group Says

By Supunnabul Suwannakij and Zeb Eckert

Nov. 11 (Bloomberg) -- Rice exports from Thailand, the world’s largest shipper, may increase to a record of more than 10 million metric tons next year, according to the Thai Rice Exporters Association.

“Demand from India will be a key factor driving an increase,” Chookiat Ophaswongse, president of the association, said in a Bloomberg Television interview today. “In terms of volume, 2010 will be a prosperous year for Thai rice.”

Thai production in the crop year that began Oct. 1 may increase to 35 million tons, from an estimated 32 million tons in the 2008-2009 year, Chookiat said. Exports reached a record 10.14 million tons in 2004.

Global output may decline after drought in India cut the monsoon crop and storms in the Philippines destroyed at least 1 million tons. Rice, wheat and palm oil jumped to records last year, sparking concern among policy makers that there may be a food crisis as protests about prices broke out across the globe.

The price of Thai 100 percent grade-B white rice, the regional benchmark, “may increase to as high as $700 a ton in the next 12 months if India imports as much as 3 million tons,” Chookiat said in a separate interview today.

“Even though next year seems to be a golden year for exporting countries, I don’t think prices will go back to the 2008 high, when price went above $1,000 a ton,” said Chookiat. The price reached a record $1,038 a ton in May 2008.

Gains in Thai prices may be limited because government stockpiles stand at 5 million to 6 million tons, compared with 2 million tons in 2008, Chookiat said.

The export price increased by 3 percent last week to $541 a metric ton, up from this year’s low of $525 a ton in October. The Rice Exporters Association sets the price every Wednesday.

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net; Zeb Eckert in Hong Kong at zeckert1@bloomberg.net

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Oil Trades Near $79 as U.S. Stocks Build Outweighs China Gains

By Christian Schmollinger

Nov. 11 (Bloomberg) -- Oil traded near $79 a barrel after an industry report showed U.S. crude and fuel stockpiles rose, outweighing signs of economic expansion in China.

The American Petroleum Institute said late yesterday crude inventories climbed 1.22 million barrels last week to 337.5 million and gasoline supplies rose by 1.4 million barrels. China, the second-largest user after the U.S., said October net oil imports were 18.98 million tons, or 4.47 million barrels a day, the second-highest on record.

“The crude build was expected, but typically gasoline should draw this time of year so it’s a bearish number because of the gasoline build,” said Clarence Chu, a trader with options traders Hudson Capital Energy in Singapore. “People are expecting the Chinese demand to grow so the industrial output numbers are supportive for this.”

Crude oil for December delivery traded at $79.09 a barrel, up 4 cents, in electronic trading on the New York Mercantile Exchange at 4:04 p.m. Singapore time. Yesterday, the contract fell 38 cents to settle at $79.05. Prices have gained 77 percent this year.

Crude declined as Tropical Depression Ida weakened after coming ashore yesterday, allowing workers to return to production platforms in the Gulf of Mexico. Energy producers idled about 43 percent of oil and 28 percent of natural-gas output in the Gulf because of Ida, the Minerals Management Service said.

Chevron Corp. said its Mississippi refinery was unaffected and Murphy Oil Corp. plans to resume output at its offshore Thunder Hawk platform today.

China Imports Rise

China’s crude imports rose as industrial production spurred fuel demand. Net purchases in October were 13 percent higher than in September. The country’s industrial output for the month rose 16.1 percent. Power generation grew at the fastest pace in 19 months.

Import of oil products, such as gasoline and diesel, dropped to 2.38 million tons from 2.8 million tons in September. Exports were 2.09 million tons from 2.08 million tons in September.

The Energy Department will report that U.S. inventories of crude oil rose 1 million barrels last week, according to the median of 15 estimates by analysts surveyed by Bloomberg News.

Gasoline stockpiles probably dropped 400,000 barrels from 208.3 million the week before, the survey showed. Supplies of distillate fuel, a category that includes heating oil and diesel, declined 800,000 barrels from 167.4 million the prior week, according to the survey.

The department is scheduled to release its weekly report tomorrow at 11 a.m. in Washington, a day later than usual because of the Veterans’ Day holiday today.

Gasoline, IEA

The Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline consumption in the U.S. fell 2.3 percent last week to the lowest in four weeks, MasterCard Inc. said in a report.

Motorists bought an average 9.1 million barrels of gasoline a day in the week ended Nov. 6, MasterCard, the second-biggest credit-card company, said in its SpendingPulse report yesterday. The decline from the prior week is the biggest since Oct. 9.

The International Energy Agency cut its long-term forecast for global oil demand yesterday as the economic crisis reduces consumption in developed economies and environmental policies encourage alternative energy use.

Global oil demand is expected to advance 1 percent a year to 105 million barrels a day by 2030 from 85 million in 2008, the adviser to 28 nations said in its annual World Energy Outlook. The figure is below last year’s 2030 estimate of 106 million barrels a day.

Brent crude for December settlement was at $77.55 a barrel, up 6 cents on the London-based ICE Futures Europe exchange at 4:04 p.m. Singapore time. Yesterday, the contract fell 27 cents, or 0.3 percent, to end the session at $77.50.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

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Most Japanese Stocks Fall as Dollar Slips; Sony, Nintendo Drop

By Akiko Ikeda and Kotaro Tsunetomi

Nov. 11 (Bloomberg) -- Most Japanese stocks fell as the dollar weakened against the yen to the lowest level in more than a week and companies reported lower earnings or forecasts.

Nintendo Co., the maker of video-game consoles that gets almost 90 percent of sales overseas, dropped 1.3 percent. Sony Corp., an electronics maker that generates 25 percent of sales in the U.S., fell 1 percent. Dowa Holdings Co., a smelter, and Pacific Metals Co., a maker of stainless steel, both sank more than 5 percent after their profits plunged. Aeon Co., lost 5 percent after saying it will sell bonds convertible into stock.

“If the yen strengthens further, the market will face a severe situation and investors will react strongly,” said Kiyoshi Noda, a senior fund manager at Tokyo-based MU Investment Co., which oversees the equivalent of $13 billion.

More than two shares declined for each that advanced in the Topix index, which fell 0.15 point, or less than 0.1 percent, to close at 872.29 in Tokyo. The Nikkei 225 Stock Average rose 0.95 point, also less than 0.1 percent, to 9,871.68.

The dollar weakened to as low as 89.29 yen, the least since Nov. 2. That reduces the value of sales generated overseas by Japanese companies when converted into their home currency.

Nintendo, the world’s biggest maker of video-game consoles, dropped 1.3 percent to 23,150 yen and was the biggest single drag on the Topix. Sony lost 1 percent to 2,590 yen. Tokyo Electron Ltd., a maker of semiconductor equipment that generates almost 60 percent of sales outside Japan, slumped 2 percent to 4,880 yen and Advantest Corp., which makes chip-testing equipment, fell 1.7 percent to 1,975.

Fast Retailing Record

Fast Retailing Co., operator of the Uniqlo casual clothing chain, added 1.4 percent to a record close of 16,920. The company was the largest contributor to the Nikkei’s gain and overtook Seven & I Holdings Co. as Japan’s largest retailer by market value.

Stocks advanced in the morning after a report from the Cabinet Office showed machinery orders, an indicator of business investment in three to six months, climbed 10.5 percent in September from a month earlier. That’s more than twice the 4.1 percent average estimate by 25 economists surveyed by Bloomberg.

The Topix Machinery Index of 124 companies rose to the highest level this month, led by tractor maker Kubota Corp., which climbed 4.1 percent to 790 yen. Sumitomo Heavy Industries Ltd., Japan’s largest maker of plastic injection-molding gear, advanced 3.6 percent to 431 yen.

“The data on machinery orders weren’t strong enough to boost investors’ sentiment,” said Seiichiro Iwamoto, who manages the equivalent of $977 million at Mizuho Asset Management Co. “The full-fledged recovery is not yet underway.”

Topix Lags Behind

The Topix has risen 1.5 percent this year, the least among the world’s 20 largest equity markets, as the global recession sapped demand for companies’ products and the stronger yen hurt exporters. The Standard & Poor’s 500 Index in the U.S. has climbed 21 percent this year, and the Dow Jones Stoxx 600 Index in Europe has added 24 percent.

Stocks in the Topix are valued at 36 times estimated earnings, versus 17 times for the S&P and 15 times for the Stoxx.

Aeon tumbled 5 percent to 736 yen, the lowest in seven months. The retailer said it will sell 100 billion yen ($1.1 billion) of convertible bonds in two maturities to retire commercial paper and repay debt. Aeon’s rating was reduced to “underweight” from “neutral” at JPMorgan Chase & Co.

Japan Wind Development Co. plummeted 9 percent to 297,500 yen, a level not seen since May 22, as the company said it will raise as much as 7.5 billion yen in a sale of new shares and use the funds for capital spending and investment in subsidiaries.

Dowa Holdings Co. tumbled 6 percent to 503 yen, the sharpest decline in the Nikkei. The metal-products smelter said first-half net income plunged 65 percent as sales fell by 40 percent. Pacific Metals Co. slumped 5.5 percent to 641 yen after the maker of stainless steel said profit sank 72 percent.

Japan Airport Terminal Co., an operator of buildings at Tokyo’s Haneda Airport, retreated 2.3 percent to 1,188 yen, the lowest since Oct. 9. The company posted a 45 percent drop in first-half profit and cut its full-year forecast by 27 percent.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kotaro Tsunetomi at ktsunetomi@bloomberg.net.

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U.K.’s FTSE 100 Index Climbs; Rio Tinto, BHP Advance on Metals

By Adam Haigh

Nov. 11 (Bloomberg) -- U.K. stocks advanced as raw-material producers were boosted by reports showing China’s industrial production and trade surplus climbed and earnings at J Sainsbury Plc topped estimates.

Rio Tinto Group and BHP Billiton Ltd. rose more than 2.5 percent as metals prices advanced in London. Sainsbury added 2.4 percent after pretax profit at the U.K.’s second biggest supermarket owner beat estimates.

The benchmark FTSE 100 Index gained 42.88, or 0.8 percent, to 5,273.43 as of 8:27 a.m. in London. The gauge has surged 49 percent from the lowest level this year on March 3 amid signs that government stimulus policies and record-low interest rates are helping to drag the global economy out of recession. The FTSE All-Share Index added 0.8 percent today and Ireland’s ISEQ Index advanced 0.2 percent.

BHP Billiton, the world’s largest mining company, gained 2.5 percent to 1,814 pence. Rio Tinto Group, the third biggest, increased 2.9 percent to 3,132.5 pence. Copper, lead, nickel, and tin prices rose on the London Metal Exchange.

Gold climbed to a record in London and New York as the dollar fell for a third day, spurring demand for the metal as a hedge against further weakness.

Production in China, the world’s third-largest economy, rose 16.1 percent from a year earlier, the most since March 2008. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year, the statistics bureau said in Beijing today.

Sainsbury added 2.4 percent to 335.3 pence. Pretax profit before one-time items rose 18.5 percent to 307 million pounds, beating the 302 million-pound median estimate of 11 analysts surveyed by Bloomberg.

International Power Plc jumped 4.2 percent to 268 pence after saying free cash flow in 2009 will be “significantly ahead” of last year.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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European, Asian Stocks Gain on Economy; U.S. Futures Advance

By Sarah Jones

Nov. 11 (Bloomberg) -- European and Asian stocks advanced and U.S. index futures rose after Credit Agricole SA and Holcim Ltd. posted earnings that beat analysts’ estimates and reports showed China’s industrial production and trade surplus climbed.

Credit Agricole, France’s third-largest bank by market value, and Holcim, the world’s second-biggest cement maker, gained more than 3 percent. BHP Billiton Ltd. and Rio Tinto Group added at least 2.6 percent as orders for Japanese machinery also increased. ING Groep NV rallied 5.2 percent after the largest Dutch financial-services company reported a third- quarter profit as improved markets limited writedowns.

Europe’s Dow Jones Stoxx 600 Index advanced 0.7 percent to 246.99 at 8:26 a.m. in London. The measure has rebounded 56 percent since this year’s low on March 9 amid speculation government stimulus measures and record-low interest rates are helping to drag the economy out of recession.

The MSCI Asia Pacific Index gained 0.7 percent as production in China, the world’s third-largest economy, rose 16.1 percent from a year earlier, the most since March 2008. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year, the statistics bureau said in Beijing today.

Japanese machinery orders, an indicator of business investment in three to six months, climbed 10.5 percent from a month earlier, according to the Cabinet Office in Tokyo. The median estimate of 25 economists surveyed by Bloomberg was for a 4.1 percent increase.

U.S. Futures

In the U.S., most stocks declined yesterday following six- straight gains for the Standard & Poor’s 500 Index. Futures on the S&P 500 expiring in December added 0.5 percent today.

Credit Agricole climbed 3.7 percent to 15.04 euros. Third- quarter net income fell to 289 million euros ($435 million) from 365 million euros a year earlier, topping the 128 million-euro median estimate of seven analysts surveyed by Bloomberg. The bank said Chief Executive Officer Georges Pauget will step down next year, to be replaced by Jean-Paul Chifflet, secretary general of its largest shareholder.

Holcim surged 4 percent to 72.45 Swiss francs. The cement maker reported third-quarter profit of 673 million Swiss francs ($668 million), after plant closures and job cuts helped boost margins. The mean estimate of five analysts surveyed by Bloomberg was a profit of 464.6 million francs.

BHP, Rio Tinto

BHP Billiton, the world’s biggest mining company, increased 2.6 percent to 1,816 pence and Rio Tinto, the third-largest, gained 3 percent to 3,135 pence. Copper, lead and nickel advanced on the London Metal Exchange.

ING soared 5.2 percent to 10.05 euros after its third- quarter net income was 499 million euros, compared with a net loss of 478 million euros a year earlier. That was in line with the 500 million-euro profit it forecast last month.

E.ON AG advanced 2.4 percent to 27.57 euros. Germany’s largest utility said nine-month adjusted profit held steady and raised its full-year earnings forecast.

J Sainsbury Plc rose 2.5 percent to 335.8 pence. The U.K.’s third-biggest supermarket owner said first-half net income climbed 48 percent as the chain increased food promotions. Pretax profit before one-time items rose 18.5 percent to 307 million pounds, beating the 302 million-pound median estimate of 11 analysts surveyed by Bloomberg.

DSG International Plc, the U.K.’s largest consumer- electronics retailer, jumped 6.5 percent to 36.03 pence after Citigroup Inc. upgraded the shares to “buy” from “hold.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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Asian Stocks, Currencies Rise on Japan, China Data; Gold Gains

By Patrick Rial

Nov. 11 (Bloomberg) -- Asian stocks and the currencies rose as Japan’s machinery orders surged, China’s industrial production accelerated and South Korea’s unemployment fell. Gold futures reached a record high.

The MSCI Asia Pacific Index advanced 0.4 percent to 118.57 as of 4:27 p.m. in Tokyo, extending its four-day increase to 3.4 percent. The Japanese yen climbed on confidence exports will pick up as Asian growth accelerates. China’s Shanghai Composite Index reversed gains as lending growth slowed in October.

HSBC Holdings Plc led the advance in Hong Kong after saying third-quarter profit was “surprisingly ahead” of its projections. Nippon Telegraph & Telephone Corp., Japan’s former telephone monopoly, rose after Goldman Sachs Group Inc. recommended buying the shares.

“Asian economies are set to recover ahead of other regions,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $38 billion. “That’s the reason why exports and industrial production are improving so quickly. Next year’s growth will be led by Asian economies.”

U.S. Treasuries weren’t traded today as the market closed for the Veteran’s Day holiday. Federal Reserve Bank of Dallas President Richard Fisher said yesterday the most likely outcome for the U.S. “is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to remain subdued.”

Gold

Treasury Secretary Timothy Geithner said a strong dollar is in the nation’s interest and the government recognizes the importance it plays in the global financial system.

Gold futures in New York increased for an eighth-straight session today in after-hours trading, rising to a record $1,111.40 an ounce. Newcrest Mining Ltd., Australia’s largest gold producer, gained 0.5 percent.

Oil traded near $79 a barrel after American Petroleum Institute said late yesterday U.S. crude and fuel stockpiles rose, outweighing signs of economic expansion. Crude oil for December delivery traded at $78.85 a barrel, down 20 cents, in electronic trading on the New York Mercantile Exchange.

Orders for Japanese machinery, an indicator of business investment intentions, climbed 10.5 percent in September, while economists had forecast a 4.1 percent increase. Omron Corp., a maker of factory automation systems, advanced 1.4 percent to 1,486 yen.

“The bottom is probably behind us for capital spending,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo. “The retrenchment phase is over and the corporate sector as a whole should gradually pick up in a self-sustained way.”

South Korea

South Korea’s unemployment rate fell to the lowest level in nine months as transport and telecommunications companies and banks hired more workers, a further sign the nation’s economy is recovering. The Kospi index rose 0.8 percent, while the won approached a 13-month high.

China’s Shanghai Composite retreated 0.1 percent to 3,175.19, dropping for the first time in nine days as a slowdown in the nation’s lending growth sent banks and developers lower. New loans declined to 253 billion yuan ($37 billion) last month from 516.7 billion yuan in September, the People’s Bank of China reported today, less than 370 billion yuan predicted by economists in a Bloomberg News survey.

The Shanghai gauge increased as much as 0.3 percent earlier after the China’s industrial production rose 16.1 percent from a year earlier in October, the most since March 2008. Retail sales gained an annual 16.2 percent last month.

‘Monetary Tightening’

“It’s probably the start of the monetary tightening,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co. in Shanghai. “Optimism about the economy is already priced in.”

Japan and China’s economic data also drove Asian currencies higher, raising optimism the region’s growth will spur demand for higher-yielding assets. The dollar traded near a 15-month low against the currencies of six major U.S. trading counterparts.

The Japanese yen strengthened for a second day against the dollar as the nation’s machine orders added to evidence the economic recovery is gathering momentum.

“The data were a surprise,” said Koji Fukaya, a senior currency strategist in Tokyo at Deutsche Bank AG. “Improving risk appetite may weigh down on the dollar.”

The yen rose to as high as 89.29 per dollar in Tokyo, the strongest since Nov. 2. The won climbed 0.4 percent to 1,157.95, according to Seoul Money Brokerage Services, while the Philippine peso advanced as much as 0.4 percent to 46.712 and last traded at 46.870.

HSBC

Daikin Industries Ltd., the world’s No. 2 air conditioner maker, jumped 2.5 percent after lifting its annual profit forecast due to an improved outlook for sales in China.

HSBC, Europe’s biggest bank, rallied 5.6 percent to HK$93.65, after it said third-quarter pretax profit was “significantly” higher than a year earlier.

“Most of the markets have done better than what we expected,” Asia-Pacific Chief Executive Officer Sandy Flockhart said in an interview with Bloomberg Television in Hong Kong today. “Our businesses in Asia, Middle East and Latin America have performed well while the impairment situation in the U.S. is getting better.”

NTT rallied 4.5 percent to 3,750 yen after the stock was added to Goldman Sachs Group Inc.’s “conviction buy” list as the company is likely to buy back shares from the government amid improving profitability. Yakult Honsha Co., a health drink maker, surged 5.8 percent to 2,555 yen after Nomura Holdings Inc. boosted the shares to “neutral” from “reduce,” citing growth in the Chinese market.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

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