Wakeup Call: Possible Retracements In Risk

Daily Forex Fundamentals | Written by Saxo Bank | Nov 12 09 08:35 GMT |

Fake-break above 1101 in S&P500 and Break-Even Inflation Rates are down 3 bps. after a big rally in the past two weeks. EURUSD struggling to close above 1.50. We could see retracement today. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment EC 10:00 Industrial Production MoM (SEP) 0.5% 0.9% US 13:30 Initial Jobless Claims (Nov) 510K 512K US 13:30 Continuing Claims (OCT) 5700K 5749K What's going on? Fake-break above 1101 in S&P500 and Break-Even Inflation Rates are down 3 bps. after a big rally in the past two weeks. EURUSD struggling to close above 1.50. Stock market futures and Asian markets are down. We believe that a retracement of risk is in the cards today. Sell on rallies. Also in commodities Only important data today is the E-Z Industrial Production and a Treasury auction of $16B 30-year bonds. FX FX Daily stance Comment EURUSD 0/- May struggle past 1.5020, capped max at 1.5060 for retracement lower to 1.4960 USDJPY 0/- Looks capped at 89.90-00 area. Sell for a re-test of 89.65 suppt, stop abv 90.25 EURJPY 0/- Prefer to sell rallies to 135.15-25 for a retracement back to 134.0, stop abv 135.50 GBPUSD - Expect rally to be contained at 1.6615 lvl for next leg down. Tgt 1.6490, stop abv 1.6675 AUDUSD 0/+ Buy dips to 0.9315-30 for a rebound back through 0.9370 towards 0.94, stop below 0.9270 Equities Equities Daily stance Comment DAX 0/- Sell on rallies towards 5640 targeting 5588. S/L above 5665. FTSE 0/- Sell on rallies towards 5235 targeting 5190. S/L above 5256. S&P500 0/- Sell on rallies towards 1096 targeting 1087. S/L above 1101. Nasdaq100 0/- DJIA 0/- Futures Commodities Daily Stance Comment Gold 0/- Sell at the break of 1115 and target 1100. Stop above 1120. Silver 0/- Sell at the break of 17.60 and target 17.50. Stop above 17.70. Oil (CLZ9) 0/- Sell on rallies towards 80 and target 78. Stop above 80.65 FX Options FX-Options Comment EURUSD Frontend vols mainly offered yesterday. Talk abt large 1.50 strike expiring tomorrow and latest price action point to the strike having a good hold in EURUSD AUDUSD Vols were offered from the start of the Asia session, market makers searching for bids. No clear direction on interest, look for spot to stay in range. Saxo Bank Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

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Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | Nov 12 09 08:03 GMT |

EUR/USD closed lower on Tuesday as it consolidated some of last week's rally. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, October's high crossing is the next upside target. Closes below Tuesday's low crossing are needed to confirm that a top has been posted. USD/JPY closed higher on Tuesday due to short covering. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish signalling that additional gains are possible. If it extends this week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing are needed to confirm that a short-term top has been posted. GBP/USD closed lower on Tuesday as it consolidated some of last week's rally. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, October's high crossing is the next upside target. Closes below Tuesday's low crossing are needed to confirm that a top has been posted. USD/CHF closed higher on Tuesday due to short covering. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are bullish signalling that additional gains are possible. If it extends this week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing are needed to confirm that a short-term top has been posted. HY Markets http://www.hymarkets.com

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Nov 12 09 07:37 GMT |

EURUSD Comment: Consolidating neatly just under this year's high at 1.5064 and short term indicators are neutral. Though the Euro is not overbought we shall continue to allow for consolidation around 1.5000 for another week or two. Strategy: Attempt small longs at 1.4990; stop below 1.4900. Short term target this year's high at 1.5064, then more medium term. Direction of Trade: → Chart Levels: Support Resistance 1.4978 " 1.5021 1.4938 1.5049 1.49 1.5064** 1.485 1.5085 1.4822/1.4811* 1.5115 GBPUSD Comment: Sterling sold across the board as the Bank of England governor again suggests a weak pound will help economic recovery. Nevertheless Cable is holding above immediate trendline support and the 9-day moving average. Expect it to try and hold above here today and move back toward 1.6750 again. Strategy: Attempt small longs at 1.6575; stop below 1.6500. First target 1.6700/1.6750 Direction of Trade: → Chart Levels: Support Resistance 1.6556 " 1.6627/1.6638 1.6536 1.67 1.65 1.675 1.6465 1.68 1.6400* 1.6844 USDJPY Comment: A small 'spike low' yesterday might make things a bit more difficult today. However, as bearish momentum has increased and moving averages set to cross to bearish any moment now, eventually we ought to break down. Today and tomorrow continue to allow for very slow work, cautiously probing the downside. Strategy: Sell at 89.85; stop above 90.40. Short term target 89.35, eventually 88.25. Direction of Trade: → Chart Levels: Support Resistance 89.60 " 89.99/90.04 89.29 90.19/90.38* 89.18/89.00* 90.86 88.85 91.34* 88.25* 91.65** EURJPY Comment: The 'triangle' of the last seven days or so may look neat and pretty but it gives no indication of the next direction and how far it might go. In fact it is a waste of space. At the moment while very frustrating, there is no reason to question our slightly bearish outlook. Strategy: Attempt shorts at 134.65/135.00; stop above 135.75. Short term target 133.00, then 132.00. Direction of Trade: → Chart Levels: Support Resistance 134.00 " 135.02 133.8 135.15 133.2 135.40/135.76* 132.5 136 131.00* 137 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Japan Broadens Financial Scrutiny, Targets Art, Racehorse Funds

By Takahiko Hyuga

Nov. 12 (Bloomberg) -- Japan’s financial surveillance agency said it is investigating funds that bet on art and racehorses as regulators broaden their scope to protect individual as well as institutional investors.

The Securities and Exchange Surveillance Commission is probing the activities of nine funds and brokers that sell so- called low-liquidity products to individuals, according to its Web site. It didn’t look at any last fiscal year, SESC data shows.

“We are expanding our coverage to protect individual investors,” Shuichi Sonoda, the director of the inspection division at SESC, said yesterday in an interview. “We will make an effort to check the activities of new targets.”

Sonoda said regulators began to take a wider view of their role after the government started enforcing the Financial Instruments and Exchange Law in September 2007, seeking to bolster protection for investors and unlock the 796 trillion yen ($8.9 trillion) held in cash and bank deposits in Japan.

The SESC began a probe of Epsom Aiba-Kai, a fund that invests in race horses, with an inspection of its offices in Tokyo’s Setagaya district last month. Commission staff are also investigating Art Investment Bank Ltd.

Epsom Aiba-Kai collects money from individuals to invest in racehorses and pays a dividend when the horse wins. Art Investment collects funds from individuals to purchase contemporary art, providing them with a capital gain when it sells the pieces.

‘Vulnerable Position’

Sonoda declined to provide details on the investigations and would not say whether or not they were routine.

An official at Epsom Aiba-Kai, who declined to be identified, said she had no comment. Art Investment President Kazuo Tanaka also declined to comment.

The number of Japanese brokerages inspected by the SESC dropped to 89 in the 12 months through June 30, from 107 five years earlier, according to its annual report. The number of foreign banks that came under scrutiny fell 59 percent to 7 from during the same period.

“Individual investors are in a vulnerable position and could get hurt if the government doesn’t step up scrutiny,” said Takao Saga, a director at Japan Securities Research Institute.

Saga, who also teaches securities regulation at Waseda University in Tokyo, said small funds are proliferating in Japan, presenting individuals with the chance to make or lose money on everything from wine and noodle shops to bikini models.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

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Taiwan Billionaires Send Cash Home as Currency Climbs

By Yu-huay Sun and Lilian Karunungan

Nov. 12 (Bloomberg) -- The biggest inflow of capital to Taiwan in four years is prompting investors to bet that the central bank will give up efforts to keep the world’s second- worst performing major currency from strengthening.

Pictet Asset Management, which oversees $3.9 billion of emerging-market debt, added to holdings of Taiwan’s dollar last month even as the central bank stepped up sales, limiting gains in 2009 to 1.7 percent. A Nov. 10 ban on foreigners’ opening of time deposits won’t hurt investment in the island’s markets, HSBC Holdings Plc said. The bank predicts the currency will rise 11 percent against the U.S. dollar by the end of 2010.

Billionaires from Tsai Eng-meng, who earned $3.6 billion selling rice crackers made at China-based factories, to Wei Ing- chou, whose Chinese noodle business earned him $3.2 billion, are sending money home after President Ma Ying-jeou reversed his predecessor’s stance that such investment made Taiwan too dependent on the mainland. Overseas investors also bought $11.8 billion more Taiwan shares than they sold this year through yesterday, helping lift the Taiex stock index 67 percent.

“We expect funds to come back into Taiwan,” said Wee-Ming Ting, the head of Asian fixed income at Pictet Asset, the investment unit of Pictet & Cie, Switzerland’s largest closely held private bank. “At some point, the central bank has to step away.”

Capital Inflows

Taiwan’s central bank has sought to prevent inflows from pushing up the currency and making Taiwan’s exports uncompetitive amid a global recession. Funds from China are increasing as Ma’s government pushes for an agreement that would allow mainland investors to buy the island’s stocks, acquire stakes in companies and build ports and airports. China says Taiwan is part of its territory, though the two sides have been ruled separately since a civil war in 1949.

Taiwan’s financial account surplus, which gauges investment flows, in the July to September period probably matched the $4.65 billion of the second quarter, which was the highest since 2005, Singapore-based Action Economics estimated before a Nov. 20 report. That compares with an average deficit of $1.5 billion in the past decade, central bank data show.

The Central Bank of the Republic of China (Taiwan) has intervened in markets by arranging purchases of U.S. dollars. Foreign-exchange reserves rose by $63 billion in the past year to $341.2 billion, according to a Nov. 5 central bank report. October’s increase of $9 billion was the biggest this year.

Holding Pattern

The Taiwan dollar traded within a range of NT$33.2 per dollar and NT$32 for the past six months, and was at NT$32.266 today. Its gain for 2009 compares with a 36 percent increase for the Brazilian real and a 35 percent climb for the Australian dollar. Only the yen rose less with a 0.5 percent advance.

The 12-month non-deliverable forward contract for the currency has risen 10 percent in the past eight months to NT$31.09, pricing in a 4 percent appreciation. Forwards are agreements to buy and sell assets for delivery at a specified time. Non-deliverable contracts are settled in dollars.

Gains in the currency may be gradual, making Taiwan bonds a better way of investing than NDFs, said Warren Hyland, a money manager in London at Schroder Investment Management Ltd., which oversees $200 billion in assets. Hyland forecasts the currency will be as strong as NT$27 per dollar in two years’ time.

“The Taiwanese central bank is very determined not to appreciate the currency and seems to set a limit of NT$32,” he said. “It has been very difficult for me to make money.”

‘Sitting Idle’

Central bank Deputy Governor George Chou said on Nov. 10 the ban on opening time deposits will “make sure” foreign investors return to placing their money in capital markets. Governor Perng Fai-nan said Oct. 14 that overseas investors have NT$500 billion ($15 billion) of funds “sitting idle,” which may be used for speculation.

Pictet’s Ting said the central bank will scale back intervention to avoid flooding the market with its own currency as growth returns. Taiwan’s economy may expand in the October- to-December period after contracting for five straight quarters, the statistics bureau said in August.

Overseas sales dropped 4.7 percent from a year earlier in October, the smallest decline since September 2008, the Finance Ministry said on Nov. 9. Shipments to China, Taiwan’s biggest market, rose 9.8 percent from a year earlier.

“The balance the central bank has to play is to attract capital inflows without stalling exports,” said Robert Reilly, the co-head of fixed-income at Societe Generale SA in Hong Kong. SocGen recommends buying the currency against the Swiss franc.

‘Driving Force’

HSBC’s forecast of NT$29 by the end of 2010 is the most bullish in a Bloomberg survey of 13 strategists. The median is for the Taiwan dollar to appreciate 6 percent.

“So far foreigners have played a role in pushing the currency higher,” said Perry Kojodjojo, a strategist at HSBC, Europe’s largest bank. “In 2010, the driving force will be the wealthy Taiwanese who have kept their money offshore.”

Wei Ing-chou’s Ting Hsin International Group recently increased its stake in Taipei 101, East Asia’s tallest building, to 37 percent from 32 percent, according to Michael Liu, spokesman for the skyscraper’s owner. Frank Lin, chief financial officer at Wei’s noodle maker Tingyi Holding Corp., said direct flights had made it easier to shuttle between Taiwan and China, while declining to discuss the Wei’s investments.

Belief in Future

Tsai Eng-meng, chairman of rice-cracker maker Want Want China Holdings Ltd., bought the island’s second biggest business daily last year. Tsai didn’t respond to e-mails and telephone calls seeking comment. Tsai is the third-richest man in Taiwan and Wei is the fifth, according to Forbes Asia magazine.

“Nobody used to believe in the future of the country and when entrepreneurs made money they would just take it out,” said Neo Teng Hwee, Singapore-based head of portfolio management for Asia at Bank Julius Baer, which oversees about $141 billion in assets. “This year we are seeing more of the offshore money coming back.”

Julius Baer bought property and bank stocks in May.

Mainland-based Taiwanese companies invested NT$35 billion on the island in the first nine months, 88 percent more than in 2008, the economic ministry said in an e-mailed response to questions. The government in Taipei estimates that Taiwanese investments in the mainland exceed $150 billion.

As recently as July 2008, Taiwan companies were barred from investing more than 40 percent of their net worth in China. During the era of martial law between 1949 and 1987, Taiwanese businessmen could be tried for treason by their government for investing in China.

“It’s a trend for relatively successful China-based Taiwanese businesses to come home with glory,” said C.Y. Huang, head of investment banking for the greater China market at Polaris Finance Group, which controls Taiwan’s biggest investment trust company. “There’s a peace dividend.”

To contact the reporters on this story: Yu-huay Sun in Taipei at ysun7@bloomberg.net; Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.

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South Korea’s Central Bank Maintains Key Rate at 2%

By Seyoon Kim

Nov. 12 (Bloomberg) -- South Korea’s central bank kept its benchmark interest rate at a record low for a ninth month, seeking to strengthen the economy’s recovery before increasing borrowing costs.

Governor Lee Seong Tae left the seven-day repurchase rate at 2 percent in Seoul, and the Bank of Korea said it “will maintain an accommodative policy stance for the time being with an emphasis on sustaining the recovery of economic activity.”

South Korea is projected to be one of the first in Asia to boost rates as it helps lead the region out of a financial crisis-induced slowdown. Economic growth accelerated to 2.9 percent in the third quarter from three months earlier, the fastest pace in seven years, as companies including Samsung Electronics Co. and Hyundai Motor Co. reported surging profits.

“The sense is that the recovery is proceeding and the central bank will be looking to begin raising rates as we move into next year, probably sometime in the first quarter,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

Governor Lee and Finance Minister Yoon Jeung Hyun said last month gross domestic product may expand this year, reversing earlier predictions of a contraction. Lee said today economic growth is unlikely to be as strong in the three months through December as it was in the second and third quarters.

Currency Gains

The nation’s currency has climbed more than 8 percent this year. The won was little changed after the decision, trading at 1,157.80 against the dollar as of 1:23 p.m. in Seoul, according to data compiled by Bloomberg.

“Consumer price inflation has continued to be stable, influenced by the appreciation of the Korean won against the U.S. dollar,” the Bank of Korea said in a statement today. “The upward trend of real estate prices appears to have faltered.”

President Lee Myung Bak’s administration increased spending to support consumer purchases and cushion the economy from the worst global recession since World War II. The central bank cut the benchmark rate by 3.25 percentage points between October 2008 and February, the most aggressive easing since it began setting a policy rate a decade ago.

Low rates have spurred consumer borrowing, with bank lending to households rebounding in October, rising 1.4 trillion won ($1.2 billion) to 405.6 trillion won, according to the Bank of Korea. South Korea’s financial regulator tightened rules on non-banking finance companies’ mortgage lending for people buying homes in and around Seoul from Oct. 12 to slow an increase in borrowing.

Inflation Outlook

Governor Lee told reporters in Seoul today that the central bank needs to “normalize” interest rates while assessing developments in the economy.

“It’s evident the 2 percent level of interest rates is a historically low level and we’re weighing whether there are more benefits or losses to the economy,” he said. “It’s hard to be confident how strongly private demand and corporate investment will help support the economy. I can’t say whether a rate increase will be within the year, the first or second quarters of next year.”

Cohen of Action Economics said the inflation outlook gives the Bank of Korea flexibility to wait. Inflation remained below the central bank’s target of between 2.5 percent and 3.5 percent for a fifth month in October.

“Inflation is still contained, and I think that gives them a little bit of flexibility,” Cohen said. “Like central banks around the world, they’re able to be patient right now because inflation is still fairly subdued.”

Interest Rates

The Group of 20 nations said at the weekend interest rates should be kept low and record budget deficits maintained until recoveries take hold. That boosted stock markets including South Korea’s Kospi, which has gained about 42 percent this year.

Even so, Australia’s central bank Governor Glenn Stevens raised the benchmark interest rate by a quarter point for the second straight month on Nov. 3 to 3.5 percent as his nation’s economy rebounds, becoming the first policy maker to increase rates twice this year.

Finance Minister Yoon has said repeatedly that it’s too early to unwind policy steps taken to support the economy. While it’s “up to the central bank” to determine rates, South Korean policy makers “understand it’s premature” to implement an exit strategy from stimulus measures, he said on Oct. 26.

Industrial Production

Industrial production gained 5.4 percent in September from August. Other reports showed manufacturers’ confidence stayed near a two-year high and the unemployment rate fell to a nine- month low of 3.4 percent in October.

Samsung, Asia’s biggest maker of computer chips, flat screens and mobile phones, said Oct. 30 that third-quarter profit tripled to a record 3.72 trillion won as sales, including those of overseas affiliates, climbed 19 percent.

The company forecast a “solid” fourth quarter and said it plans to boost capital spending on semiconductors and displays next year to more than 8.5 trillion won.

Hyundai, South Korea’s largest automaker, more than tripled third-quarter profit to 979.2 billion won on surging sales in the U.S. and China.

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

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Wen Says World Faces Slow, Bumpy Economic Recovery

By Bloomberg News

Nov. 12 (Bloomberg) -- Chinese Premier Wen Jiabao said the world faces a gradual and uneven recovery from the worst financial crisis since the Great Depression.

“The worst is over,” Wen said in speech televised from a forum in Beijing. “The global economy is starting to recover but a total recovery will be a slow and bumpy process.”

Risks include trade protectionism, the sustainability of fiscal stimulus measures, and “price uncertainties,” China’s central bank said yesterday. Confidence in the world economy dipped in November as governments withdrew some emergency measures, sparking concern that a recovery may falter, a survey of Bloomberg users showed.

“It’s going to take a couple of years before we can settle back into steady growth of above 5 percent,” said Tim Condon, chief Asia economist at ING Groep NV in Singapore. While economies may see “very big bounces in 2010,” that will only be “because 2009 was so bad,” Condon added.

China will maintain a moderately loose monetary policy and a “proactive” fiscal stance and continue to fine-tune its 4 trillion yuan ($586 billion) stimulus plan, Wen said. He also reiterated that policy makers need to manage inflation expectations.

He didn’t comment on China’s currency, which has been held at close to 6.83 per dollar since July last year to help exporters as demand slumped. The central bank yesterday triggered speculation that the currency could rise, by dropping a pledge to keep the yuan “basically stable” from its third- quarter monetary-policy report.

Shouldering Its Load

China will “continue opening up, cooperating and shouldering its responsibilities” to help restore stable global growth, Wen said today.

The nation’s industrial production and trade surplus climbed in October, according to data released yesterday. The world’s third-largest economy can maintain stable and relatively fast growth, the central bank said in its report.

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.

The Bloomberg Professional Global Confidence Index fell to 60.3 from 61.7 in October, the highest level in the series that began two years ago. The index exceeded 50 for a fourth month, which means there were more optimists than pessimists.

For Related News and Information: Most-read stories on China: MNI CHINA 1W Most-read China economy stories: TNI CHECO MOSTREAD BN For top economic news: TOP ECO For top China news: TOP CHINA Credit crunch page: WCC Government relief programs: GGRP

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Spanish GDP Shrinks for Sixth Quarter, Slowing European Rebound

By Emma Ross-Thomas

Nov. 12 (Bloomberg) -- Spain’s economy contracted for a sixth quarter, with a housing-market collapse and rising unemployment keeping the country in a recession even as the euro region returned to growth.

Gross domestic product fell 0.3 percent in the third quarter from the previous three months, when it dropped 1.1 percent, the Madrid-based National Statistics Institute said today. That was stronger than the median forecast of a 0.4 percent contraction in a Bloomberg survey of 18 economists. The economy shrank 4 percent from a year earlier.

The euro-region economy probably expanded last quarter, leaving Spain trailing the economies of Germany, France and Italy, which all grew in the period, the European Commission forecasts. The International Monetary Fund expects the Spanish recession to push the unemployment rate to 20 percent next year. Madrid-based Banco Santander SA, Europe’s second-biggest bank by market value, said on Oct. 28 that its home market posed the greatest “threat” to earnings.

The euro region probably grew 0.5 percent in the third quarter, according to the median forecast from a Bloomberg News survey of 34 economists. GDP data for Germany, France, Italy and the European Union is published tomorrow.

Diageo Plc, the London-based maker of Smirnoff vodka, has cited Spain as a weak market and said on Aug. 27 that it had cut marketing spending in the country to reflect lower consumer demand. Telefonica SA, Europe’s second-largest phone company, doesn’t expect the Spanish market to recover until 2011, Guillermo Ansaldo Lutz, chairman of Telefonica’s domestic business, said on Oct. 9.

Rising Joblessness

Spain has the highest unemployment rate in the euro region at 19.3 percent, according to the EU’s statistics office, and more than four in 10 young people are out of work. The government has injected funds worth 2.3 percent of GDP into the economy this year, creating around 400,000 jobs and swelling its budget deficit to one of the highest in Europe. Next year, the government plans to raise value-added tax and levies on income from capital to rein in the shortfall.

The recession, prompted by the collapse of the housing market as well as the global financial crisis, has eroded the popularity of Prime Minister Jose Luis Rodriguez Zapatero. The opposition People’s Party would win 41 percent of the vote if elections were held now, compared with 37.7 percent for the ruling Socialist Party, according to a poll published Nov. 2 by the government’s Center for Sociological Research. Spaniards consider unemployment to be the biggest problem, the opinion poll for October showed.

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

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Australian Employment Surges 24,500; Currency Rises

By Jacob Greber

Nov. 12 (Bloomberg) -- Australian employers unexpectedly added workers in October, pushing the nation’s currency to its highest level this year on speculation the central bank will raise interest rates for a record third straight month.

The number of people employed rose 24,500 from September, the statistics bureau said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 10,000. The jobless rate rose to 5.8 percent from 5.7 percent.

Australia’s economy is expanding with “less spare capacity than earlier thought likely,” the central bank said last week, as China’s demand for resources spurs companies such as Chevron Corp. to hire workers. Reserve Bank Governor Glenn Stevens will raise the benchmark interest rate by a quarter percentage point on Dec. 1 to 3.75 percent, economists surveyed by Bloomberg say.

“Quarter-point increases are on for every meeting until they get to 5 percent,” said John Honan, chief economist at Ausbil Dexia Ltd. in Sydney, who forecast today’s gain in employment.

“The retail sector is employing, as is the services sector and labor-intensive areas of housing activity, plus the obvious resources-based investment,” Honan added.

The Australian dollar, the best performing major currency of the last 12 months, surged to 93.45 U.S. cents at 1:28 p.m. in Sydney from 93.10 cents just before the report was released. The two-year government bond yield climbed to 4.72 percent from 4.68 percent.

Rate Bets

Investors are betting there is an 84 percent chance of a quarter-point boost in December, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 1:14 p.m. Prior to today’s report, they saw a 70 percent chance of an increase. It would be the first time the central bank has raised rates at three successive meetings.

Some 14 of 17 economists surveyed by Bloomberg expect Stevens to raise the benchmark interest rate on Dec. 1 by a quarter percentage point to 3.75 percent.

Australia in October became the first Group of 20 economy to raise borrowing costs since the height of the global recession. By contrast, G-20 nations said at the weekend that interest rates should be kept low and record budget deficits maintained until recoveries take hold.

The number of full-time jobs gained 2,900 in October and part-time employment increased 21,500, today’s report showed.

Cash Handouts

Australia’s economy is growing faster and generating more jobs than the government and central bank forecast earlier this year, helped by Stevens’s decision to slash borrowing costs by a record 4.25 percentage points between September 2008 and April to a half-century low of 3 percent.

Growth was also boosted in the first half of this year by more than A$20 billion ($19 billion) in cash handouts to households from Prime Minister Kevin Rudd’s government. Another A$22 billion is being spent on roads, ports and schools.

“It looks like all sectors of the economy have started to pick up,” said Annette Beacher, an economist at TD Securities Ltd. in Singapore. Employment will increase by between 10,000 and 15,000 in coming months, she added.

David Jones Ltd., the nation’s largest department store, has employed 1,700 permanent part-time staff in the lead-up to Christmas. Michael Luscombe, chief executive officer of Australia’s largest retailer, Woolworths Ltd. told Bloomberg in an Oct. 20 telephone interview the company has 6,000 job vacancies.

Global Contrast

By contrast, the unemployment rate in the U.S. jumped to 10.2 percent last month, the highest level since 1983 and the European Union’s rate climbed to 9.7 percent in September, the worst result since January 1999.

Signs of a rebound in Australian employment were among reasons Stevens raised the overnight cash rate target by a quarter point in October and this month to 3.5 percent, and signaled further “gradual” increases.

“The Australian economy is operating with less spare capacity than earlier thought likely, and the outlook for the next few years has improved,” the central bank said in its quarterly monetary policy statement last week.

While employment growth is expected “to be subdued” over the next couple of quarters, before accelerating in 2010, the outlook for the labor market has “improved” since the bank’s August policy statement, it said on Nov. 6. It didn’t provide specific forecasts for the jobless rate.

Gross domestic product growth will accelerate from 1.75 percent this year to 3.25 percent in 2010, the bank said. In August, it forecast gains of 0.5 percent and 2.25 percent respectively. The economy expanded 1 percent in the first half of this year.

West Booms

The economy is forecast to continue its expansion in 2011 and 2012 as companies boost investment in resources, including Western Australia’s A$43 billion Gorgon liquefied natural gas project owned by Chevron, Exxon Mobil Corp. and Royal Dutch Shell Plc.

Projects such as Gorgon, which is expected to generate 10,000 jobs, were among reasons the government this month scrapped a May prediction that the jobless rate would rise to 8.25 percent in the second quarter of next year.

More than A$100 billion of resources projects expected to generate some 40,000 construction jobs are in progress or planned in resource-rich Western Australia “during the next few years,” according to a state government report on Nov. 4. Those developments may lead to 12,500 permanent jobs, it estimated.

Western Australia’s unemployment rate fell 0.7 percentage point to 5 percent in October, the lowest level in five months. In Queensland, another major mining state, the jobless rate declined to 6 percent from 6.3 percent. By contrast, Australia’s most populous state, New South Wales, home to Sydney, jumped to 6.1 percent from 5.5 percent.

Jobless Peak

Treasurer Wayne Swan said on Nov. 2 that unemployment will peak at 6.75 percent by the June quarter of 2010 before decreasing to 6.5 percent the following year. Swan told reporters in Singapore today, where he is attending the Asia- Pacific Economic Co-operation forum, that Australia still faces a “substantial challenge” on unemployment and the government will maintain its economic stimulus.

“About 670,000 Australians unemployed is a very substantial number and we also know many more people are working reduced hours as a consequence of this global recession, so the government is absolutely focused on supporting employment in the Australian economy,” he said.

Recent reports showed business confidence rose in October to near its highest level in almost six years, home-loan approvals gained in September by the most in six months and house prices jumped 8.4 percent in the six months through Sept. 30.

The participation rate, which measures the labor force as a percentage of the population aged over 15, held at 65.2 percent in October, today’s report showed.

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

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Crude Oil Trades Above $79 on China’s Imports, Weaker Dollar

By Ben Sharples and Christian Schmollinger

Nov. 12 (Bloomberg) -- Crude oil traded above $79 a barrel in New York as China’s rising oil imports and a weaker dollar spurred investors to buy commodities.

Oil gained as much as 0.5 percent as the dollar approached a two-week low against the euro, weakening against 13 of 16 major counterparts. Gold reached a record. Net crude imports to China, the largest oil user after the U.S., climbed in October to the second-highest level ever.

“It’s a market that is just really waiting to move higher,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said in a Bloomberg Television interview. If oil can break through $80 “then there are enough positive fundamentals that could see it trade upwards and onwards through to $85,” he said.

Crude oil for December delivery traded at $79.25, down 3 cents, in electronic trading on the New York Mercantile Exchange at 3:51 p.m. Singapore time. Yesterday, the contract climbed 23 cents to settle at $79.28 a barrel. Prices have gained 78 percent this year.

Oil rose as much as 1.3 percent yesterday as China’s industrial output expanded last month, signaling a strengthening recovery. Net oil imports were 18.98 million tons, or 4.5 million barrels a day, the Beijing-based customs office said.

The dollar was at $1.4975 per euro at 4:52 p.m. in Tokyo from $1.4987 yesterday, when it touched $1.5048, the lowest level since Oct. 26. A weaker dollar increases the appeal of commodities as an alternative investment.

“If the U.S. dollar continues to weaken that’ll certainly help commodities, in particular oil,” Barratt said.

China Buying

China’s net imports in October were the highest since July’s record 19.2 million barrels. China and the U.S. are responsible for 33 percent of global oil consumption, according to BP Plc.

Crude-oil processing volume in China climbed to a record 33.3 million metric tons, or 7.8 million barrels a day, in October, according to China Mainland Marketing Research Co., which compiles data for the government. That was 10 percent higher than a year ago.

The U.S. Energy Department will publish its weekly inventory report today. Crude-oil stockpiles probably rose 1 million barrels last week as imports increased, according to the median of 16 responses from analysts surveyed by Bloomberg News.

A Nov. 10 report from the American Petroleum Institute showed crude oil supplies rose 1.22 million barrels last week to 337.5 million.

The Energy Department report will probably show that gasoline supplies declined 350,000 barrels, according to the survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, may have fallen 700,000 barrels.

The Standard & Poor’s 500 Index increased 0.5 percent to 1,098.51 in New York yesterday, its highest close since Oct. 3, 2008. The Dow Jones Industrial Average added 0.4 percent to 10,291.26.

Brent crude for December settlement was at $77.99 a barrel, up 4 cents, on the London-based ICE Futures Europe exchange at 3:51 p.m. Singapore time. The contract advanced 45 cents, or 0.6 percent, to end the session at $77.95 a barrel yesterday.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net

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U.K. Pound Drops Against Euro to Trade 0.2% Lower at 90.65 Pence

By Matthew Brown

Nov. 12 (Bloomberg) -- The pound fell against the euro to trade 0.2 percent lower at 90.65 pence as of 7:14 a.m. in London.

To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

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Wen Says World Faces Slow, Bumpy Economic Recovery

By Bloomberg News

Nov. 12 (Bloomberg) -- Chinese Premier Wen Jiabao said the world faces a gradual and uneven recovery from the worst financial crisis since the Great Depression.

“The worst is over,” Wen said in speech televised from a forum in Beijing. “The global economy is starting to recover but a total recovery will be a slow and bumpy process.”

Risks include trade protectionism, the sustainability of fiscal stimulus measures, and “price uncertainties,” China’s central bank said yesterday. Confidence in the world economy dipped in November as governments withdrew some emergency measures, sparking concern that a recovery may falter, a survey of Bloomberg users showed.

“It’s going to take a couple of years before we can settle back into steady growth of above 5 percent,” said Tim Condon, chief Asia economist at ING Groep NV in Singapore. While economies may see “very big bounces in 2010,” that will only be “because 2009 was so bad,” Condon added.

China will maintain a moderately loose monetary policy and a “proactive” fiscal stance and continue to fine-tune its 4 trillion yuan ($586 billion) stimulus plan, Wen said. He also reiterated that policy makers need to manage inflation expectations.

He didn’t comment on China’s currency, which has been held at close to 6.83 per dollar since July last year to help exporters as demand slumped. The central bank yesterday triggered speculation that the currency could rise, by dropping a pledge to keep the yuan “basically stable” from its third- quarter monetary-policy report.

Shouldering Its Load

China will “continue opening up, cooperating and shouldering its responsibilities” to help restore stable global growth, Wen said today.

The nation’s industrial production and trade surplus climbed in October, according to data released yesterday. The world’s third-largest economy can maintain stable and relatively fast growth, the central bank said in its report.

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.

The Bloomberg Professional Global Confidence Index fell to 60.3 from 61.7 in October, the highest level in the series that began two years ago. The index exceeded 50 for a fourth month, which means there were more optimists than pessimists.

For Related News and Information: Most-read stories on China: MNI CHINA 1W Most-read China economy stories: TNI CHECO MOSTREAD BN For top economic news: TOP ECO For top China news: TOP CHINA Credit crunch page: WCC Government relief programs: GGRP

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Japanese Yen Strengthens Against the U.S. Dollar and the Euro

By Daniel Tilles

Nov. 12 (Bloomberg) -- The yen rose against the dollar and the euro.

The Japanese currency strengthened 0.2 percent to 89.68 per dollar as of 7:52 a.m. in London, and appreciated 0.3 percent to 134.28 against the euro.

To contact the reporter on this story: Daniel Tilles in London at dtilles@bloomberg.net

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IMF Economists Urge Diminished World Role for Dollar, FT Reports

By Alan Purkiss

Nov. 12 (Bloomberg) -- World demand for dollar reserves should be reduced and alternative reserve assets should be explored, according to a group of economists at the International Monetary Fund, the Financial Times said.

A report published by the economists in their individual capacities says the global financial and economic crisis has underlined long-standing concern about the dollar’s role, given that the crisis had its origin in the U.S. financial system, the newspaper said.

Alternatives to the dollar as the main reserve asset might include a move toward sharing the leading role with a few other currencies such as the euro and perhaps China’s renminbi, the FT cited the economists as saying.

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Rubber Advances to 13-Month High as Gold’s Rally Boosts Demand

By Aya Takada

Nov. 12 (Bloomberg) -- Rubber climbed to the highest level in 13 months after gold rallied to a record for a second day, boosting speculation investor demand for commodities will grow.

Futures in Tokyo gained as much as 3.5 percent to the highest level since Oct. 3, 2008. Gold for immediate delivery reached $1,123.38 an ounce as the dollar weakened on speculation U.S. interest rates will remain low, spurring demand for the precious metal as a currency alternative.

“Rubber chased a rally in gold,” Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. “Investors will likely increase purchases of commodities as an inflation hedge on signs that central banks will keep interest rates at very low levels.”

April-delivery rubber rose as much as 8.1 yen to 238.7 yen a kilogram ($2,657 a metric ton) on the Tokyo Commodity Exchange before settling at 237.3 yen. Prices gained 74 percent this year.

Rubber on the Shanghai Futures Exchange surged as much as 4.8 percent to 20,685 yuan ($3,030) a ton, the highest level for the most-active contract since September 23, 2008. The March- delivery contract settled at 20,365 yuan.

The market extended gains after data yesterday indicated that China’s economic expansion accelerated, boosting speculation demand will increase in the world’s largest consumer of natural rubber, Saito said.

Industrial Production

China’s industrial production rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said in Beijing yesterday. Retail sales gained an annual 16.2 percent in October, and urban fixed-asset investment climbed 33.1 percent in the first 10 months of this year, it said.

Gold for immediate delivery traded at $1,122.28 as of 4:01 p.m. Tokyo time. The metal has risen 27 percent this year, heading for a ninth annual gain, the longest winning run since at least 1948, as the Dollar Index, a gauge of the greenback’s value against six major currencies, tumbled 7.8 percent.

Federal Reserve Bank of Dallas President Richard Fisher said Nov. 10 that economic growth and inflation may persist below ideal levels into 2011, making the central bank’s current interest-rate stance “appropriate.”

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

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Australia Says China Extends Rio’s Hu Probe 2 Months

By Jesse Riseborough and Madelene Pearson

Nov. 12 (Bloomberg) -- China, the world’s biggest buyer of iron ore, extended its investigation of Rio Tinto Group employee Stern Hu by two months, Australia’s Department of Foreign Affairs and Trade said.

“We were informed during the Nov. 9 consular visit to Mr. Hu that the Chinese authorities have extended the investigation by another two months,” the department said today in an e- mailed statement. “This extension is in addition to the earlier one-month extension of the investigation approved by Chinese authorities.”

Australian Stern Hu, head of Rio’s iron ore business in China, and three Chinese colleagues have been detained since July and were formally arrested in August, straining ties between the two countries. China is Australia’s biggest trading partner with two-way trade valued at A$83 billion ($77 billion) in the 12 months ended June 30.

China’s investigation was earlier extended in October according to the department, which said details of the charges won’t be known before the trial. Hu was in “good spirits,” Australia’s Trade Minister Simon Crean said Oct. 1.

“We are visiting him regularly to ensure that his health and welfare are appropriately safeguarded in the detention centre,” the department said today. “Consular visits are taking place at least monthly, as provided for in the bilateral consular agreement.”

Melbourne-based Rio spokesman Tony Shaffer declined to comment. The stock rose 1.9 percent to A$69.90 at 2:33 p.m. Sydney time on the Australian stock exchange.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net; Madelene Pearson in Melbourne on mpearson1@bloomberg.net

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Most Asian Stocks Fall, Led by Drugmakers; Mining Shares Gain

By Jonathan Burgos and Kotaro Tsunetomi

Nov. 12 (Bloomberg) -- Most Asian stocks fell as declines by Japanese drugmakers countered advances among mining companies and automakers.

Hisamitsu Pharmaceutical Co. and Tsumura & Co. sank more than 7 percent in Tokyo after the Yomiuri newspaper said a government committee advised cutting drug costs to trim medical expenses. Rio Tinto Group, the world’s No. 3 mining company, climbed 1.8 percent in Sydney as metal prices advanced. Honda Motor Co., Japan’s second-biggest carmaker, jumped 1.4 percent after Goldman Sachs Group Inc. recommended buying the stock.

Two stocks fell for each one that rose on the MSCI Asia Pacific Index, which dropped 0.3 percent to 118.48 as of 2:22 p.m. in Tokyo. The gauge has lost 2.2 percent from a 13-month high on Oct. 20 amid concern the withdrawal of government stimulus measures will cause the global recovery to falter.

“Concerns about whether the recovery is sustainable or not are weighing on shares,” said Hiroshi Morikawa, a senior strategist in Tokyo at MU Investments Co., which manages the equivalent of $14 billion.

Japan’s Nikkei 225 Stock Average fell 0.1 percent to 9,861.89 in Tokyo. Australia’s S&P/ASX 200 Index lost 0.1 percent even as the government reported an unexpected increase in jobs last month. The Kospi Index dropped 0.2 percent in South Korea, where the nation’s central bank left its benchmark interest rate at a record low.

Changes to MSCI Inc.’s global indexes moved some stocks. Yangzijiang Shipbuilding Holdings Ltd. surged 7.1 percent in Singapore and Greentown China Holdings Ltd. gained 5.7 percent in Hong Kong after they were added. Guangshen Railway Co., which was removed, fell 2.3 percent in Hong Kong.

Low Borrowing Costs?

Futures on the Standard & Poor’s 500 Index slipped 0.4 percent. The measure advanced 0.5 percent to a 13-month high in New York yesterday, as China’s industrial production surged and as Federal Reserve policy makers signaled interest rates will remain at a record low.

San Francisco Fed Bank President Janet Yellen raised the prospect of a “jobless recovery” in a speech in Phoenix, while Dennis Lockhart, who heads the Atlanta Fed, predicted a “relatively subdued pace of growth” this quarter and beyond.

A gauge of healthcare stocks on the MSCI Asia Pacific Index lost 1.3 percent, the most of 10 industry groups. Hisamitsu Pharmaceutical, which makes anti-inflammatory plasters, sank 7.6 percent to 2,855 yen. Tsumura slumped 8.8 percent to 2,800 yen. Takeda Pharmaceutical Co., Asia’s largest drugmaker, lost 1.7 percent to 3,510 yen.

Cutting Waste

The Government Revitalization Unit, tasked with cutting waste from the national budget, will review Japan’s medical- service fees and drug prices and promote the use of cheaper generic medicines over branded drugs, the Yomiuri newspaper said.

The MSCI Asia Pacific Index’s rally since March has driven the average price of stocks in the gauge to 22 times estimated profit, compared with 17 times for the S&P 500 and 15 times for the Dow Jones Stoxx 600 Index.

The gauge has surged 68 percent from a more than five-year low on March 9 on signs stimulus policies introduced around the world were starting to revive the global economy. The gauge fell 1.3 percent last month, the first monthly decline since February, as Australia’s central bank raised interest rates, while India’s shifted policy focus toward stemming inflation.

The Bank of Korea today maintained its seven-day repurchase rate at a record low of 2 percent as it sought to strengthen the economy before increasing borrowing costs.

Australia’s unemployment rate rose to 5.8 percent last month from 5.7 percent in September, government data released today showed. Employers added 24,500 workers in October, compared with economists’ expectations for a decline of 10,000.

Record Gold Prices

In Sydney, Rio Tinto rose 1.8 percent to A$69.84. BHP Billiton Ltd., the world’s biggest mining company, advanced 1.2 percent to A$39.55. Mitsui & Co., which gets 30 percent of sales from commodities, climbed 1.2 percent to 1,193 yen in Tokyo.

Gold added 0.5 percent in New York to $1,120.60 an ounce today, after earlier reaching a record $1,120.90. It was the ninth day of gains for the precious metal’s futures. The London Metals Index, a measure of six metals including copper and zinc, added 0.2 percent yesterday.

Honda Motor climbed 1.4 percent to 2,895 yen as Goldman added the stock to its “conviction buy” list. The company said yesterday it is developing a small car for India, which prefers compact cars.

FamilyMart Co., a Japanese convenience-store operator, rose 1.4 percent to 2,520 yen. The Nikkei newspaper said the company and its top shareholder, Itochu Corp., plan to purchase Am/pm Japan Co., a competitor, for about 10 billion yen ($111 million).

MSCI Changes

In Singapore, Yangzijiang Shipbuilding, a China-based shipbuilder, surged 7.1 percent to S$1.06 after the company was included in MSCI’s indexes. Greentown China, a real-estate developer, gained 5.7 percent to HK$12.26 in Hong Kong. Guangshen Railway lost 2.3 percent to HK$3.39.

MSCI is raising the number of Chinese and Brazilian stocks in its global standard indexes following a semi-annual review, reflecting a rally in the world’s two largest developing markets.

“Emerging markets’ contribution to global GDP has been increasing substantially in recent years but from an indexes point of view, they still have a very small weighting overall,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Markets, which holds $75 billion in assets. “That’s a trend that we’re likely to see over the coming years.”

Adjustments in the MSCI indexes may cause shares chosen for inclusion to advance and those slated for deletion to drop as funds mirroring the benchmarks buy and sell stocks in accordance with those changes. The company estimates more than $3 trillion in funds are benchmarked against its indexes globally.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Kotaro Tsunetomi at ktsunetomi@bloomberg.net.

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European, U.S. Stock-Index Futures Decline; Asian Shares Slide

By Sarah Jones

Nov. 12 (Bloomberg) -- European stock-index futures fell, indicating the Dow Jones Stoxx 600 Index may retreat from a three-week high. U.S. futures and Asian shares also declined.

Utility companies may retreat after Electricite de France SA, Europe’s biggest power producer, cut its 2009 earnings target and Germany’s RWE AG reported a drop in nine-month earnings. Anheuser-Busch InBev NV might move after the world’s largest brewer reported profit that beat analysts’ estimates.

Futures on the Euro Stoxx 50, a benchmark gauge for the euro region, slipped 0.2 percent at 7:17 a.m. in London. The U.K.’s FTSE 100 Index may fall 9, according to CMC Markets.

European stocks rallied to a three-week high yesterday after China’s industrial production surged and Credit Agricole SA and Holcim Ltd. posted earnings that beat analyst estimates. In the U.S., the Standard & Poor’s 500 Index climbed to a 13- month high as Federal Reserve policy makers signaled interest rates will remain at a record low. Futures on the S&P 500 expiring in December lost 0.3 percent today.

The MSCI Asia Pacific Index fell 0.3 percent as declines by Japanese drugmakers countered advances among mining companies and automakers. Hisamitsu Pharmaceutical Co. and Tsumura & Co. sank more than 7 percent in Tokyo after the Yomiuri newspaper said a government committee advised cutting drug costs to trim medical expenses.

‘Slow and Bumpy’

Chinese Premier Wen Jiabao said the world faces a gradual and uneven recovery from the worst financial crisis since the Great Depression.

“The worst is over,” Wen said in speech televised from a forum in Beijing. “The global economy is starting to recover but a total recovery will be a slow and bumpy process.”

EDF, the world’s biggest operator of nuclear reactors, cut its full-year target for earnings before interest, taxes, depreciation and amortization on lower nuclear output. Sales in the nine months through Sept. 30 increased 6.7 percent.

RWE might decline after Germany’s second-largest utility said nine-month earnings fell 7 percent as the global economic slump cut demand and prices. Recurrent net income, which excludes writedowns and swings in fuel prices, fell to 2.87 billion euros ($4.3 billion).

AB InBev reported third-quarter net income of $1.55 billion, beating the $1.39 billion average of eight estimates compiled by Bloomberg. The company didn’t provide a net income figure for the previous year’s period, when it was being formed by a $52 billion merger.

Telefonica, BT

Telefonica SA might decline after Europe’s second-largest phone company posted a 0.6 percent drop in third-quarter profit to 1.99 billion euros amid the worst Spanish recession in six decades. Sales fell 5.7 percent to 14.13 billion euros.

Analysts had predicted profit of 2.01 billion euros on sales of 14.23 billion euros, the average estimates compiled by Bloomberg.

BT Group Plc, the U.K.’s largest fixed-line phone company, said fiscal second-quarter profit dropped on lower sales and costs to revamp the business. Ebitda slid to 1.31 billion pounds ($2.17 billion) from 1.33 billion pounds a year earlier, the London-based company said. Revenue before some items declined 3.4 percent to 5.12 billion pounds.

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

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