London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Nov 18 09 10:58 GMT |

Gains in EUR/USD accelerated in European hours before EUR buyers emerged at 1.4960. Softer stocks in Japan kept the lid on the risk trade in Asian hours but a better tone in European equities indices has coincided with a softer USD against the EUR, AUD and the NZD. Sterling has been subjected to a choppy morning. The pound initially plunged on the back of the release of the Nov MPC minutes. However, the unit has subsequently recovered. The softer USD has spurred gold to a high of USD1148.10 /troy ounce this morning. The minutes of the Nov BoE meeting showed that further easing is not quite off the agenda yet. The Bank discussed potentially lowering the bank deposit rate and stated that this may be useful in future. On the topic of QE, seven of the members voted in favour of the GBP 25 bln extension. One member voted for no change and one for a larger extension of GBP 40 bln. While the voting pattern in itself is no indication of any commitment towards increasing QE further, the tone of the minutes was in keeping with the dovish tone of Governor King last week. The minutes suggested that the committee was concerned over a number of factors which could restrain demand; not least 'a large fiscal consolidation'. Cable dropped from USD1.6824 ahead of the data to an intraday low of USD1.6758 before bouncing. It is presently little changed from the London open. The bounce in EUR/GBP following the data failed at GBP0.8910. EUR/GBP is still higher on the day but has settled below 0.8890. The ability of the pound to bounce from its lows can be linked with yesterday's stronger than expected CPI data. In all likelihood the CPI index will rise to 3.0% y/y early next year. Expectations of higher inflation have led to speculation that the BoE may be forced into hiking sooner than previously expected. This is unlikely. The expected rise in CPI can be attributed to base effects linked with the higher petrol and the unwinding of the temporary VAT tax cut on Jan1. Higher VAT and petrol prices will take money out of consumers' pockets and will not cause the BoE to hike rates early particularly given the Bank's view that excess capacity will suppress inflation medium-term. On balance, the bias in BoE policy at present it is still tilted towards easing. AUD/USD has recovered back to the 0.9330 area this morning on the back of the improved appetite for risk. Australian Q3 wage growth data was in line with expectations but at 3.6% y/y, the rate eased back from 3.8% in Q2 suggesting that the RBA may have scope to hold back from hiking rates again until February. President Obama has concluded his trip to China during which President Hu made no mention of the effective CNY peg to the USD. US CPI data this afternoon should highlight a lack of inflationary pressures. US housing starts are expected to show an improvement. Canadian CPI is also due. Forex.com http://www.forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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Technical Analysis Daily: GBP/USD

Daily Forex Technicals | Written by iFOREX.bg | Nov 18 09 09:05 GMT |

GBP/USD 1.6789 GBP/USD Open 1.6813 High 1.6868 Low 1.6757 Close 1.6810 On Tuesday Pound/Dollar traded hesitantly, reaching a top at 1.6868, than dropping down to the 1.6757, closing the day at 1.6810. Our expectations remain bullish in the short term with objectives towards 1.7000, followed by attempts towards 1.7140. However, the CCI indicator is in the overbought zone and downward of the 3 hour chart, so be careful for potential downward pressure with potential test of the 1.6755 support. Break bellow this level might trigger subsequent descending momentum. The CCI indicator is about to cross up the 100 line on the 1 hour chart, suggesting bullish pressure. Technical resistance levels: 1.6870 1.7000 1.7140 Technical support levels: 1.6755 1.6630 1.6480 Trading range: 1.6875 - 1.6850 Trend: Upward Buy at 1.6789 SL 1.6759 TP 1.6839 iFOREX.bg Forecasts and Trading Signals http://www.zifx.com

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Nov 18 09 10:06 GMT |

EUR/USD Current level-1.4901 EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4793 and 1.3523. Yesterday's slide bottomed at 1.4809 and current bias is positive for 1.4987 dynamic resistance. A break above 1.5015 will confirm, that the prolonged consolidation below 1.5050 is already over and the focus will be set on 1.5130 and 1.5280. Intraday crucial level is 1.4869. Resistance Support intraday intraweek intraday intraweek 1.4987 1.5290 1.4869 1.4623 1.5060 1.6040 1.4793 1.4444 USD/JPY Current level - 89.12 A short-term bottom has been set at 87.12 and a large consolidation is unfolding since. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84. With yesterday's high at 89.56, the bias has turned into negative again and is currently focusing on 88.73, en route to 88.21. Intraday resistance comes at 89.21. Resistance Support intraday intraweek intraday intraweek 89.21 92.40 88.73 88.01 90.75 97.79 88.21 83.53 GBP/USD Current level- 1.6801 The pair is in a downtrend after peaking at 1.7042. Trading is situated above the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. A minor top is set at 1.6877 and current corrective slide is testing 1.6752 support before next leg upwards, to 1.6957. The GBP is well supported at 0.8913 in EUR/GBP. Resistance Support intraday intraweek intraday intraweek 1.6877 1.7042 1.6752 1.6515 1.6932 1.7442 1.6702 1.5706 DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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Obama, Hu Vow Cooperation Amid Divisions Over Trade

By Julianna Goldman and Edwin Chen

Nov. 18 (Bloomberg) -- President Barack Obama and Chinese President Hu Jintao concluded their formal meetings in Beijing yesterday with promises of increased cooperation amid lingering friction over currency, trade and human rights.

Obama said the world’s most populous nation played a vital role in helping end a global recession and will be a key partner in dealing with challenges from curbing the nuclear ambitions of Iran and North Korea to combating climate change.

“The relationship between the United States and China has never been more important to our collective future,” Obama said in an appearance with Hu at the Great Hall of the People.

Hu, speaking first, said that the U.S. and China “share extensive common interests” on issues that affect “mankind’s peace and stability and development.”

The U.S. president wrapped up his first trip to China today by meeting with Chinese Premier Wen Jiabao in Beijing and touring a section of the Great Wall north of the city before leaving for South Korea. The most substantive talks took place yesterday, during which Obama and Hu pledged to continue a strategic and economic dialogue and left their biggest differences unresolved.

Obama called on the Chinese leader to make good on a commitment to allow the yuan to appreciate to help prevent trade imbalances that exacerbated the global economic crisis.

“I was pleased to note the Chinese commitment, made in past statements, to move toward a more market-oriented exchange rate over time,” Obama said. “Doing so based on economic fundamentals would make an essential contribution to the global rebalancing effort.”

Yuan Peg

Hu, in his remarks, made no mention of the yuan peg to a weakening dollar, which has forced central banks across Asia to sell their currencies to limit appreciation and maintain export competitiveness with China. The Indonesian rupiah gained 10 percent against the yuan in the past six months, and the Korean won rose 9.2 percent.

The yuan has been pegged at about 6.83 to a dollar since July 2008. Maintaining the peg has also helped make China the biggest foreign holder of U.S. government debt, with $797.1 billion in August, up 10 percent from Jan. 1, Treasury data show.

In a briefing, China’s vice foreign minister, He Yafei, told reporters that the stability of the exchange rate has helped settle financial markets.

‘Trade Frictions’

Hu said both parties will work on easing “trade frictions.” He also stressed that the two countries “need to oppose and reject protectionism in all its manifestations.”

America’s trade deficit with China widened to a 10-month high in September, raising concern that the combination of a recovering U.S. economy and a fixed yuan exchange rate against the dollar will worsen global imbalances.

It also has fueled calls for action against China from lawmakers, unions and some manufacturers. Obama’s administration responded by imposing duties of 35 percent on $1.8 billion worth of automobile tires imported from China, and duties of as much as 99 percent on Chinese steel pipes, in a case brought by U.S. Steel Corp. and other companies.

While Obama stresses cooperation, he faces skepticism at home. Seven in 10 people polled for CNN Nov. 13-15 said they consider China an economic threat to the U.S. China also represents unfair competition for U.S. companies, according to 67 percent of the 1,014 Americans surveyed, while 27 percent viewed China as a potential market.

Wider Relationship

The U.S.-China relationship “goes far beyond any single issue,” Obama said. Obama invited Hu to visit the U.S. next year, an offer Hu accepted, according to the administration.

In Beijing today, Wen told Obama that he hopes the U.S. and China will be able to take the relationship to “a new level.” In a statement before a working lunch with Wen, Obama said the ties between the two countries are moving beyond trade and economics to “a whole host of issues on which U.S.-China cooperation is critical.”

Among those areas Obama has cited on his trip are climate change and energy. The U.S. and China are the two largest consumers of energy. With expectations for a global treaty on emissions coming out of a summit in Copenhagen next month now gone, Obama and Hu agreed to move forward on a new two-stage plan that may aim to have an agreement next year.

On North Korea, Obama said he thanked Hu for China’s efforts to bring North Korea back into negotiations aimed at dismantling its nuclear weapons that also include Japan, South Korea and Russia.

“North Korea has a choice,” Obama said, between further isolation and provocation or becoming a full part of the international community, “which can give a better life to its people.”

Iran Concerns

On Iran, Obama said he and Hu agreed that the government in Tehran must provide solid and verifiable assurances that its nuclear program is peaceful.”

If Iran “fails to take this opportunity,” Obama said, “there will be consequences.”

China has balked at further sanctions against Iran. Hu reiterated that China seeks to resolve the dispute through negotiations.

Obama also addressed human rights, repeating language he used Nov. 16 when addressing students in Shanghai. Freedom of religion and political speech are fundamental, he said, and not limited to any particular country or culture.

On Tibet, Obama said that while Tibet is part of China, the U.S. “supports the early resumption on dialogue between the Chinese government and representatives of the Dalai Lama to resolve any concerns and differences.”

Obama travels this evening to Seoul, the last stop on his eight-day Asia trip.

To contact the reporters on this story: Julianna Goldman in Beijing at jgoldman6@bloomberg.net; Edwin Chen in Beijing at echen32@bloomberg.net

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Philippines’ 10-Month Budget Deficit Climbs to Record

By Karl Lester M. Yap and Max Estayo

Nov. 18 (Bloomberg) -- The Philippines’ budget deficit climbed to a record in the ten months through October as the government increased spending and revenue faltered, pushing the shortfall beyond the official full-year target.

A monthly shortfall of 28.5 billion pesos ($610 million) in October widened the 10-month deficit to 266.1 billion pesos, the government said in Manila today, exceeding the 250 billion-peso full-year estimate. Spending increased 12.3 percent in October from a year earlier and revenue dropped 7.6 percent.

Faltering tax revenue amid the global slowdown has prompted President Gloria Arroyo to sell dollar-denominated bonds overseas three times this year. The Philippines is looking at a worst-case deficit of 300 billion pesos for 2009, Finance Secretary Gary Teves said today, adding that the “likely” budget shortfall is 280 billion pesos.

“A widening deficit will keep positive markets in check,” said Rico Gomez, who helps manage $1 billion at Rizal Commercial Banking Corp. in Manila. “A 280 billion-peso deficit will still be acceptable; 300 billion pesos will be hard for the market.”

The yield on the 6.25 percent January 2014 bond rose earlier today before falling two basis points to 6.055 percent at 4:21 p.m., according to Tradition Financial Services Inc.

Dave Estacio, a fixed-income trader at First Metro Investment Corp., said investors “have started to price in” a 300 billion-peso deficit since Teves first raised it as a “worst-case scenario” on Oct. 14.

Asset Sales

The Philippines won’t need to borrow to fund the wider- than-expected shortfall this year, Treasurer Roberto Tan said today. The government is trying to sell its 50 billion-peso stake in San Miguel Corp., the nation’s largest food-and-drinks company, to prevent a 300 billion-peso shortfall, Teves said.

Teves said the government has yet to decide whether to privatize PNOC Exploration Corp. The plan to sell a 13 billion- peso Food Terminal Inc. property and a piece of government-owned land in Japan remains, Finance Undersecretary Crisanta Legaspi said today.

The Bureau of Internal Revenue, responsible for more than 60 percent of state profit, collected 54.9 billion pesos in October, 3.6 percent lower than a year earlier, according to the budget report today.

The bureau is likely to miss its revenue goals this month and next, agency head Joel Tan-Torres said late yesterday. Last month’s drop was due to “revenue erosion” from tax exemptions to individuals, lower corporate taxes and slower economic activity that may have worsened after recent storms, he said.

‘Shot in the Dark’

The agency is almost sure it will fail in delivering the 2009 goal and hitting it is “a shot in the dark,” Tan-Torres said. “What we’re doing now is directed towards preparing the framework of coming up with an enhanced tax collection effort that will hopefully bear fruit in 2010.”

Collection at the Bureau of Customs, responsible for a fifth of state revenue, fell 25.8 percent in October.

The Philippines’ $167 billion economy grew 1.5 percent in the second quarter from a year earlier, accelerating from a decade-low 0.6 percent in the previous three months.

To contact the reporters on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net; Max Estayo in Manila at mestayo@bloomberg.net

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Builders Probably Broke Ground on Most U.S. Houses in 11 Months

By Shobhana Chandra

Nov. 18 (Bloomberg) -- Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

Government tax credits and lower prices and borrowing costs may spur residential sales and construction in coming months, indicating housing will help the economy recover. A lack of inflation has made it possible for policy makers to pledge to hold interest rates down for an “extended period” in a bid to sustain the expansion and bring down joblessness.

“Housing is starting to turn,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “One problem is the still-soft job market, which may hold back the recovery. We’re not going to return to the peak for quite some time to come.”

The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from 570,000 to 630,000, after 590,000 in September.

Also at 8:30 a.m., the Labor Department will release the consumer price gauge. Compared with the same time last year, prices were probably down for the eighth consecutive month.

Excluding Food, Fuel

Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in September, according to the Bloomberg survey median. The gauge was probably up 1.6 percent in the 12 months to October, according to the survey median.

Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.7 percent to 2 percent. It was up 1.3 percent in the 12 months to September.

The housing report may also show building permits, a sign of future construction, increased 0.9 percent to a 580,000 annual pace, according to the survey.

Construction may further improve after President Barack Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Tax Credit

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo’s confidence index held at 17 in November for a second month, the group said yesterday.

Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder, last week said orders surged 42 percent in the quarter ended Oct. 31. The Horsham, Pennsylvania-based company also said cancellations slowed and revenue beat analysts’ estimates.

Gains in consumer confidence, more stable home prices and fewer unsold houses “suggest that the new home market should be improving,” Chief Executive Officer Robert Toll said in a statement. “We sense that it is, though slowly and through choppy waters.”

The Standard & Poor’s Homebuilder supercomposite index is up 72 percent since March 9, outpacing gains in the broader S&P 500 gauge that’s increased 64 percent from the 12-year low reached that day.

A sustained rebound still requires an improvement in the job market. The median estimate of economists surveyed this month anticipated unemployment, which reached a 26-year high of 10.2 percent last month, will top 10 percent through the first half of 2010.

Foreclosure filings exceeded 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay their bills, RealtyTrac Inc. said last week.

                        Bloomberg Survey

===============================================================
                              CPI     Core  Housing Building
                                       CPI   Starts  Permits
                             MOM%     MOM%   ,000’s   ,000’s
===============================================================
Date of Release              11/18    11/18    11/18    11/18
Observation Period            Oct.     Oct.     Oct.     Oct.
---------------------------------------------------------------
Median                        0.2%     0.1%      600      580
Average                       0.2%     0.1%      598      581
High Forecast                 0.5%     0.2%      630      620
Low Forecast                 -0.2%    -0.2%      570      552
Number of Participants          78       77       77       50
Previous                      0.2%     0.2%      590      575
---------------------------------------------------------------
4CAST Ltd.                    0.2%     0.1%      570      560
Action Economics              0.3%     0.1%      600      585
Aletti Gestielle SGR          0.2%     0.1%      600      590
Ameriprise Financial Inc      0.2%     0.1%      595      580
Banesto                       ---      ---       590      580
Bank of Tokyo- Mitsubishi     0.3%     0.2%      592      552
Barclays Capital              0.2%     0.1%      605     ---
Bayerische Landesbank         0.2%     0.1%     ---      ---
BBVA                          0.2%     0.1%      598      581
BMO Capital Markets           0.1%     0.1%      600     ---
BNP Paribas                   0.2%     0.1%      600     ---
BofA Merrill Lynch Resear     0.3%     0.1%      625      620
Briefing.com                  0.2%     0.0%      585      585
C I T I C Securities          0.2%     0.2%     ---      ---
Calyon                        0.2%     0.1%      603      586
Capital Economics             0.0%     0.1%      600     ---
CIBC World Markets            0.3%     0.1%      620     ---
Citi                          0.3%     0.1%      600      590
ClearView Economics           0.3%     0.1%      620      590
Commerzbank AG                0.3%     0.1%      600      580
Credit Suisse                 0.1%     0.1%      580     ---
Daiwa Securities America      0.3%     0.1%      600     ---
Danske Bank                   0.5%     0.1%     ---      ---
DekaBank                      0.2%     0.1%      580      570
Desjardins Group              0.2%     0.0%      605      610
Deutsche Bank Securities      0.2%     0.2%      590      580
Deutsche Postbank AG          0.2%     0.1%      600     ---
DZ Bank                       0.2%     0.1%      580      565
Exane                         0.1%     0.0%      600     ---
First Trust Advisors          0.2%     0.1%      630     ---
Fortis                        0.1%     0.2%      590     ---
FTN Financial                 0.2%     0.1%      600     ---
Goldman, Sachs & Co.          0.2%     0.1%      602     ---
Helaba                        0.2%     0.1%      610      570
Herrmann Forecasting          0.2%     0.1%      595      562
High Frequency Economics      0.3%     0.1%      600      575
HSBC Markets                  0.2%     0.1%      610      590
IDEAglobal                    0.2%     0.1%      600      580
IHS Global Insight            0.2%     0.1%      584      576
Informa Global Markets        0.2%     0.1%      585      580
ING Financial Markets         0.2%     0.1%      590      575
Insight Economics             0.2%     0.1%      600     ---
Intesa-SanPaulo               0.2%     0.1%      590      580
J.P. Morgan Chase             0.2%     0.1%      605      575
Janney Montgomery Scott L     0.2%     0.1%      601      580
Jefferies & Co.               ---      ---       592      575
Johnson Illington Advisor     0.3%     0.2%      615     ---
Landesbank Berlin            -0.2%    -0.1%      585      580
Landesbank BW                 0.2%     0.1%      600      580
Maria Fiorini Ramirez Inc     0.3%     0.1%      595     ---
MF Global                     0.3%     0.1%      590      580
MFC Global Investment Man     0.2%     0.1%      595      590
Mizuho Securities             0.2%     0.1%      587     ---
Moody’s Economy.com           0.1%     0.1%      605      585
Morgan Keegan & Co.           0.4%     0.2%      601      578
Morgan Stanley & Co.          0.2%     0.1%      620     ---
National Bank Financial       0.2%     0.1%      590     ---
Natixis                       0.2%     0.1%      595     ---
Nomura Securities Intl.       0.2%     0.1%      615      590
PineBridge Investments        0.2%     0.1%      615     ---
PNC Bank                      0.2%     0.1%      600     ---
Raymond James                 0.2%     0.1%      600      580
RBC Capital Markets           0.2%     0.1%      596     ---
RBS Securities Inc.           0.2%     0.1%      590     ---
Ried, Thunberg & Co.          0.3%     0.1%      580      570
Schneider Foreign Exchang     0.2%     0.1%      577      587
Scotia Capital                0.3%     0.1%      600      590
Societe Generale              0.1%     0.0%      615     ---
Stone & McCarthy Research     0.2%     0.1%      595      585
TD Securities                 0.3%    -0.2%      620      610
Thomson Reuters/IFR           0.3%     0.1%      590      565
UBS                           0.3%     0.1%      575     ---
UniCredit Research            0.2%     0.0%      595      575
Union Investment              0.2%     ---       598      570
University of Maryland        0.3%     0.2%      600      590
Wells Fargo & Co.             0.0%     0.1%      610     ---
WestLB AG                     0.3%     0.1%      600      585
Westpac Banking Co.           0.3%     0.1%      605      580
Woodley Park Research         0.4%     0.2%      608      584
Wrightson Associates          0.3%     0.1%      580      570
===============================================================

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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BOE Policy Makers Split Three Ways on Bond Program

By Brian Swint

Nov. 18 (Bloomberg) -- Bank of England policy makers split three ways in a vote to extend the bond-purchase program to 200 billion pounds ($336 billion), and discussed lowering the deposit rate on bank reserves to encourage lending.

While the majority of the nine-member Monetary Policy Committee wanted a 25 billion-pound increase, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion-pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent.

“A reduction in the rate of remuneration relative to bank rate on a proportion of commercial bank reserves would bear down on short-term market rates and could ease monetary conditions further,” the minutes said. The committee “agreed that it might be a useful policy tool in some circumstances, and therefore should be available in future.”

The decision is the first three-way split since August 2008, before the collapse of Lehman Brothers Holdings Inc. exacerbated the financial crisis. A change in the deposit rate would expand the toolkit available to policy makers as they try to pull the U.K. out of its longest recession on record.

“It’s very much a case of keeping their options open,” said Alan Clarke, an economist at BNP Paribas SA in London. “These minutes are saying there’s arguments in both directions, and it’s going to be very data-dependent in the next three months.”

The pound rose 0.3 percent against the dollar today, trading at $1.6837 as of 10:02 a.m. in London. The yield on the 2-year U.K. government bond fell 2 basis points to 1.25 percent.

‘Costly to Rectify’

Dale said that an increase in the bond plan posed a risk to inflation, and “might result in unwarranted increases in some asset prices that could prove costly to rectify.”

Miles’s argument for expansion was that it would “provide greater insurance against the downside risks to growth and inflation arising from constrained credit supply.”

While policy makers increased their forecasts for inflation and economic growth this month, Bank of England Governor Mervyn King said last week that he has an “open mind” about expanding the purchases further. The bank’s projections for the next two years show inflation approaching the 2 percent target even if the bank starts to increase interest rates next year and the total asset purchases stay at 200 billion pounds.

“Some members thought that that downside risks to activity in the near term were somewhat greater than implied by the inflation report projections,” the minutes said. “A number of committee members noted that one consequence of additional asset purchases would be to bring forward the point at which the extraordinary degree of stimulus could begin to be withdrawn.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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Rand Gains as Gold Surges to Record; Retail Sales Slump Eases

By Garth Theunissen

Nov. 18 (Bloomberg) -- The rand strengthened as the price of gold surged to a record and a government report showed the contraction in retail sales slowed as South Africa’s first recession in 17 years eased.

The currency of Africa’s biggest economy gained as much as 0.7 percent to 7.4201 per dollar and traded 0.5 percent stronger at 7.4392 by 11:53 a.m. in Johannesburg, from a close of 7.4738 yesterday.

Gold, which rivals platinum as South Africa’s biggest export, rallied for a fourth straight day, rising as much as 0.9 percent to an all-time high of $1,147.72 an ounce. A report showed retail sales shrank an annual 5.1 percent in September, compared with a revised 6.5 percent contraction the previous month, the Pretoria-based statistics office said.

“Gold and commodity prices in general are benefiting from a weaker dollar and that’s positive for the rand, which is still seen as a major commodity play,” said Natheem Alexander, a bond and currency trader in Cape Town at Peregrine Quant. “The fact that the slowing trend in retail sales is easing up a bit is definitely a positive signal.”

Bullion, which along with platinum accounts for about 22 percent of South Africa’s export earnings, has surged more than 30 percent this year as central banks, pension funds and individual buyers seek to protect their wealth against a weaker dollar and inflation. The Dollar Index, which tracks the U.S. currency against six major counterparts, has lost 7.5 percent this year, boosting commodities that are priced in dollars.

Government bonds fell in South Africa, with the price of the benchmark 13.5 percent security due September 2015 losing 6 cents to 123.20 rand. The drop pushed up the yield by less than half a basis point to 8.37 percent.

South Africa’s currency also strengthened versus half of its 16 most actively traded counterparts, appreciating most against the Taiwanese dollar. Against the euro it lost 0.2 percent to 11.1138, from yesterday’s close of 11.0956.

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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HSBC Brazil Fund Outperforms Rivals on Economic Outlook, Real

By Makiko Asai and Anna Kitanaka

Nov. 18 (Bloomberg) -- HSBC Global Asset Management’s Japan-based mutual fund investing in Brazilian stocks has beaten its biggest peers this year in the Asia-Pacific region as the stronger real boosted returns from bets on JBS SA and Duratex SA.

The 224.36 billion-yen ($2.5 billion) HSBC Brazil Open (Japan) fund has risen 170 percent in 2009, the steepest gain among 2,361 funds tracked by Bloomberg and based in the Asia- Pacific region with assets of at least $100 million.

Brazil’s Bovespa stock index has surged 80 percent this year, buoyed by the outlook for economic growth and by winning bids to host the 2014 World Cup soccer matches and 2016 Olympics. Further boosting returns at HSBC’s yen-denominated fund is the real’s 33 percent appreciation against the Japanese currency. Adjusted into yen, the Bovespa has soared 139 percent this year, the most of 89 benchmarks worldwide tracked by Bloomberg.

“Brazil’s economy is showing a strong recovery, led by domestic demand,” Pedro A B Bastos, chief executive officer of HSBC Global Asset Management in Brazil, said by e-mail. “With the 2014 World Cup and 2016 Olympic Games in Rio de Janeiro, interest in investment into Brazil has grown significantly.”

The country’s economy will expand 3.5 percent next year after a 0.7 percent contraction this year, according to forecasts published Oct. 1 by the International Monetary Fund. The real has strengthened against most currencies this year on the prospects for growth, increased commodity prices, rising stocks and an improved credit outlook.

Brazilian Stock Market

The Bovespa’s percentage gain in yen terms this year compares with increases of 25 percent for the MSCI World Index, 83 percent for the Sensitive Index in India, 78 percent for the Shanghai Composite Index in China and 130 percent for Russia’s dollar-denominated RTS Index.

JBS SA, the world’s largest beef producer and the HSBC fund’s largest holding, has climbed 95 percent this year.

“As emerging economies grow, diets change and more people eat meat, so demand is growing outside of Brazil too,” said Kenji Yamamoto, corporate director at HSBC Global Asset in Tokyo.

Duratex SA, a maker of bathroom fittings and wood panels that has gained 273 percent this year, and BR Malls Participacoes SA, Brazil’s biggest owner of shopping malls, with a 154 percent increase this year, are also among the HSBC fund’s top holdings, Bastos said.

To contact the reporter on this story: Makiko Asai in Tokyo masai@bloomberg.net; Anna Kitanaka at akitanaka@bloomberg.net.

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Builders Probably Broke Ground on Most U.S. Houses in 11 Months

By Shobhana Chandra

Nov. 18 (Bloomberg) -- Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

Government tax credits and lower prices and borrowing costs may spur residential sales and construction in coming months, indicating housing will help the economy recover. A lack of inflation has made it possible for policy makers to pledge to hold interest rates down for an “extended period” in a bid to sustain the expansion and bring down joblessness.

“Housing is starting to turn,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “One problem is the still-soft job market, which may hold back the recovery. We’re not going to return to the peak for quite some time to come.”

The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from 570,000 to 630,000, after 590,000 in September.

Also at 8:30 a.m., the Labor Department will release the consumer price gauge. Compared with the same time last year, prices were probably down for the eighth consecutive month.

Excluding Food, Fuel

Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in September, according to the Bloomberg survey median. The gauge was probably up 1.6 percent in the 12 months to October, according to the survey median.

Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.7 percent to 2 percent. It was up 1.3 percent in the 12 months to September.

The housing report may also show building permits, a sign of future construction, increased 0.9 percent to a 580,000 annual pace, according to the survey.

Construction may further improve after President Barack Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Tax Credit

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo’s confidence index held at 17 in November for a second month, the group said yesterday.

Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder, last week said orders surged 42 percent in the quarter ended Oct. 31. The Horsham, Pennsylvania-based company also said cancellations slowed and revenue beat analysts’ estimates.

Gains in consumer confidence, more stable home prices and fewer unsold houses “suggest that the new home market should be improving,” Chief Executive Officer Robert Toll said in a statement. “We sense that it is, though slowly and through choppy waters.”

The Standard & Poor’s Homebuilder supercomposite index is up 72 percent since March 9, outpacing gains in the broader S&P 500 gauge that’s increased 64 percent from the 12-year low reached that day.

A sustained rebound still requires an improvement in the job market. The median estimate of economists surveyed this month anticipated unemployment, which reached a 26-year high of 10.2 percent last month, will top 10 percent through the first half of 2010.

Foreclosure filings exceeded 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay their bills, RealtyTrac Inc. said last week.

                        Bloomberg Survey

===============================================================
                              CPI     Core  Housing Building
                                       CPI   Starts  Permits
                             MOM%     MOM%   ,000’s   ,000’s
===============================================================
Date of Release              11/18    11/18    11/18    11/18
Observation Period            Oct.     Oct.     Oct.     Oct.
---------------------------------------------------------------
Median                        0.2%     0.1%      600      580
Average                       0.2%     0.1%      598      581
High Forecast                 0.5%     0.2%      630      620
Low Forecast                 -0.2%    -0.2%      570      552
Number of Participants          78       77       77       50
Previous                      0.2%     0.2%      590      575
---------------------------------------------------------------
4CAST Ltd.                    0.2%     0.1%      570      560
Action Economics              0.3%     0.1%      600      585
Aletti Gestielle SGR          0.2%     0.1%      600      590
Ameriprise Financial Inc      0.2%     0.1%      595      580
Banesto                       ---      ---       590      580
Bank of Tokyo- Mitsubishi     0.3%     0.2%      592      552
Barclays Capital              0.2%     0.1%      605     ---
Bayerische Landesbank         0.2%     0.1%     ---      ---
BBVA                          0.2%     0.1%      598      581
BMO Capital Markets           0.1%     0.1%      600     ---
BNP Paribas                   0.2%     0.1%      600     ---
BofA Merrill Lynch Resear     0.3%     0.1%      625      620
Briefing.com                  0.2%     0.0%      585      585
C I T I C Securities          0.2%     0.2%     ---      ---
Calyon                        0.2%     0.1%      603      586
Capital Economics             0.0%     0.1%      600     ---
CIBC World Markets            0.3%     0.1%      620     ---
Citi                          0.3%     0.1%      600      590
ClearView Economics           0.3%     0.1%      620      590
Commerzbank AG                0.3%     0.1%      600      580
Credit Suisse                 0.1%     0.1%      580     ---
Daiwa Securities America      0.3%     0.1%      600     ---
Danske Bank                   0.5%     0.1%     ---      ---
DekaBank                      0.2%     0.1%      580      570
Desjardins Group              0.2%     0.0%      605      610
Deutsche Bank Securities      0.2%     0.2%      590      580
Deutsche Postbank AG          0.2%     0.1%      600     ---
DZ Bank                       0.2%     0.1%      580      565
Exane                         0.1%     0.0%      600     ---
First Trust Advisors          0.2%     0.1%      630     ---
Fortis                        0.1%     0.2%      590     ---
FTN Financial                 0.2%     0.1%      600     ---
Goldman, Sachs & Co.          0.2%     0.1%      602     ---
Helaba                        0.2%     0.1%      610      570
Herrmann Forecasting          0.2%     0.1%      595      562
High Frequency Economics      0.3%     0.1%      600      575
HSBC Markets                  0.2%     0.1%      610      590
IDEAglobal                    0.2%     0.1%      600      580
IHS Global Insight            0.2%     0.1%      584      576
Informa Global Markets        0.2%     0.1%      585      580
ING Financial Markets         0.2%     0.1%      590      575
Insight Economics             0.2%     0.1%      600     ---
Intesa-SanPaulo               0.2%     0.1%      590      580
J.P. Morgan Chase             0.2%     0.1%      605      575
Janney Montgomery Scott L     0.2%     0.1%      601      580
Jefferies & Co.               ---      ---       592      575
Johnson Illington Advisor     0.3%     0.2%      615     ---
Landesbank Berlin            -0.2%    -0.1%      585      580
Landesbank BW                 0.2%     0.1%      600      580
Maria Fiorini Ramirez Inc     0.3%     0.1%      595     ---
MF Global                     0.3%     0.1%      590      580
MFC Global Investment Man     0.2%     0.1%      595      590
Mizuho Securities             0.2%     0.1%      587     ---
Moody’s Economy.com           0.1%     0.1%      605      585
Morgan Keegan & Co.           0.4%     0.2%      601      578
Morgan Stanley & Co.          0.2%     0.1%      620     ---
National Bank Financial       0.2%     0.1%      590     ---
Natixis                       0.2%     0.1%      595     ---
Nomura Securities Intl.       0.2%     0.1%      615      590
PineBridge Investments        0.2%     0.1%      615     ---
PNC Bank                      0.2%     0.1%      600     ---
Raymond James                 0.2%     0.1%      600      580
RBC Capital Markets           0.2%     0.1%      596     ---
RBS Securities Inc.           0.2%     0.1%      590     ---
Ried, Thunberg & Co.          0.3%     0.1%      580      570
Schneider Foreign Exchang     0.2%     0.1%      577      587
Scotia Capital                0.3%     0.1%      600      590
Societe Generale              0.1%     0.0%      615     ---
Stone & McCarthy Research     0.2%     0.1%      595      585
TD Securities                 0.3%    -0.2%      620      610
Thomson Reuters/IFR           0.3%     0.1%      590      565
UBS                           0.3%     0.1%      575     ---
UniCredit Research            0.2%     0.0%      595      575
Union Investment              0.2%     ---       598      570
University of Maryland        0.3%     0.2%      600      590
Wells Fargo & Co.             0.0%     0.1%      610     ---
WestLB AG                     0.3%     0.1%      600      585
Westpac Banking Co.           0.3%     0.1%      605      580
Woodley Park Research         0.4%     0.2%      608      584
Wrightson Associates          0.3%     0.1%      580      570
===============================================================

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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Pound Falls Versus Euro as Bank of England Minutes Show Split

By Paul Dobson

Nov. 18 (Bloomberg) -- The pound fell against the euro after minutes from this month’s Bank of England meeting showed policy makers split three ways on whether to extend their debt- buying plan and discussed cutting the deposit rate on reserves.

Sterling snapped a four-day gain versus the 16-nation currency and was little changed versus the dollar. A majority of policy makers voted on Nov. 5 to boost the asset-purchase plan by a less-than-forecast 25 billion pounds ($42 billion), minutes published today showed. One member of the Monetary Policy Committee favored no change and one voted for an expansion.

“It’s very inconclusive,” said Peter Frank, a currency strategist in London at Societe Generale SA. “The two camps don’t seem to be agreeing. We’re coming to the end of the quantitative-easing process and people are worrying over how the inflation risk plays out ahead.”

The pound fell 0.4 percent to 88.87 pence per euro as of 10:30 a.m. in London, and traded at $1.6810, from $1.6812 yesterday.

U.K. government bonds were little changed, with the yield on the 10-year gilt rising 2 basis points to 3.69 percent. The two-year note yield slipped 1 basis point to 1.27 percent.

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

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Dollar, Yen Fall Against Euro as Stocks Rise, Before House Data

By Bo Nielsen

Nov. 18 (Bloomberg) -- The dollar and the yen fell against the euro as stock markets in Europe climbed and before a report that may show U.S. housing starts in October surged to the highest in almost a year.

The U.S. currency also declined against the Australian and New Zealand dollars. The Dow Jones Stoxx 600 Index climbed 0.3 percent and oil rose for a third day. The pound fell against the euro and the dollar after minutes of this month’s Bank of England policy-maker meeting showed the committee split three ways in a vote to extend its bond-buying program.

“It’s a relatively good day for oil and stocks are up,” said John Hydeskov, a senior analyst in Copenhagen at Danske Bank A/S, Denmark’s biggest lender. “When equities are up, the euro-dollar tends to tick upwards. That’s a favorable environment.”

The dollar fell 0.4 percent to $1.4936 per euro, 0.2 percent to 93.28 U.S. cents per Australian dollar and 0.4 percent to 74.8 U.S. cents per New Zealand dollar as of 9:32 a.m. in London. The yen also slid 0.4 percent, to 133.12 per euro. The pound dropped 0.2 percent to $1.6782 and 0.6 percent to 89.02 pence per euro.

A U.S. report today will show housing starts rose 1.7 percent in October from September to an 11-month high, according to a Bloomberg survey.

To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

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Sugar Rises to Four-Week High as Rains May Disrupt Brazil Crop

By Claudia Carpenter

Nov. 18 (Bloomberg) -- Sugar rose to a four-week high in London on speculation more rain in Brazil’s Center South, the world’s largest producing region for sugar cane, will disrupt harvesting.

The Center South will have wetter-than-normal weather in the next 10 to 15 days, AccuWeather.com said yesterday. The International Sugar Organization last week reduced its crop estimate for Brazil by 3.3 percent after rains in September.

“Fundamentals are still very constructive,” said Nick Hungate, a trader at Rabobank Ltd. in London.

White, or refined, sugar futures for March delivery climbed as much as $11.20, or 1.8 percent, to $622.50 a metric ton, the highest since Oct. 19 and were at $621.30 a ton at 10:17 a.m. on the Liffe exchange. Raw sugar futures for March delivery jumped 2.1 percent to 23.59 cents a pound on ICE Futures U.S. in New York. Prices for raw sugar climbed to a 28-year high of 25.43 cents a pound on Sept. 30.

Among other agriculture markets on Liffe, robusta coffee for January delivery climbed 1.1 percent to $1,342 a ton and cocoa for December delivery gained 0.5 percent to 2,023 pounds ($3,407) a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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Oil Rises a Third Day as Industry Report Shows Stockpile Drop

By Christian Schmollinger and Ayesha Daya

Nov. 18 (Bloomberg) -- Oil advanced for a third day in New York, rising above $80 a barrel after an industry report showed crude stockpiles declined in the U.S., the largest energy consumer.

The American Petroleum Institute said yesterday crude inventories fell by 4.37 million barrels last week to 333.1 million barrels. The U.S. Energy Department releases its weekly supply report today in Washington. Analysts expect it to say overall fuel supplies fell. Imports and output were disrupted last week as Hurricane Ida passed through the Gulf of Mexico.

“Oil prices are moving on surprisingly bullish data showing a higher-than-expected draw on crude stocks, indicating that demand is improving,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “It’s probably explained by Ida, which caused refineries and transportation to be shut down.”

Crude oil for December delivery rose as much as 89 cents, or 1.1 percent, to $80.03 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.97 at 10:11 a.m. London time. Yesterday, the contract rose 24 cents to settle at $79.14. Futures have gained 79 percent this year.

Prices have gained this week after a more-than-forecast jump in U.S. retail sales increased optimism that prospects for the global economy were improving. U.S. stock markets gained for a third day yesterday. Asian equity climbed as well.

“We’re seeing the rally in crude, the rally in equities and the rally in gold all highly correlated over the past six months,” said Alan Plaugmann, head of futures at Saxo Bank in a Bloomberg Television interview.

Ida’s Impact

Energy producers in the U.S. idled about 43 percent of oil output in the Gulf of Mexico on Nov. 10 as Ida made landfall, the Interior Department’s Minerals Management Service said.

The Louisiana Offshore Oil Port, used by tankers too large to dock at U.S. harbors, was closed for 3 1/2 days because of rough seas and high winds, Barb Hestermann, a spokeswoman for the oil terminal said yesterday.

The Energy Department report will probably show stockpiles of crude oil climbed 300,000 barrels, according to the 17 analysts who provided crude estimates. Those looking for an inventory decline focused on disruptions caused by Ida.

Supplies of distillates, a category that includes heating oil and diesel, fell 850,000 barrels from 167.4 million the prior week, according to the survey.

Gasoline consumption in the U.S. rose for the first time in three weeks, increasing by 1.4 percent, according to a report by MasterCard Inc. Motorists bought an average 9.22 million barrels a day in the week ended Nov. 13, MasterCard, the second-biggest credit-card company, said in its SpendingPulse report yesterday. It was the first gain since Oct. 23.

OPEC Meeting

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

“We should be careful not to give the data too much importance,” Saltvedt at Nordea Bank said. “OPEC members have said the group won’t officially boost output at the next meeting because demand is still too weak.”

The Organization of Petroleum Exporting Countries will keep production levels “as is” when it meets next month in Luanda, Angola, Kuwaiti Oil Minister Sheikh Ahmed Al-Sabah said yesterday. The group is unlikely to “tamper too much” with the oil market, Nigerian Minister Rilwanu Lukman said. There is “some oversupply” in the market, according to OPEC President Jose Maria Botelho de Vasconcelos.

Brent crude oil for January settlement rose as much as 97 cents, or 1.2 percent, to $79.94 a barrel on the London-based ICE Futures Europe exchange. It was at $79.90 a barrel at 10:11 a.m. local time. The contract climbed 21 cents, or 0.3 percent, to $78.97 a barrel yesterday.

To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Ayesha Daya at adaya1@bloomberg.net

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Vietnam Rice Exports May Top Record by 20% This Year

By Jason Folkmanis and Van Nguyen

Nov. 18 (Bloomberg) -- Rice exports from Vietnam, the world’s second-biggest shipper, may exceed the previous record by 20 percent this year, even as the total value of exports is forecast to drop.

Shipments are expected to be 6 million to 6.2 million metric tons, Minister of Industry and Trade Vu Huy Hoang told the National Assembly in Hanoi today. That compares with the previous record of 5.17 million tons in 2005, according to figures from the U.S. Foreign Agricultural Service, which last month forecast total exports of 5.7 million tons.

By Jason Folkmanis and Van Nguyen

Nov. 18 (Bloomberg) -- Rice exports from Vietnam, the world’s second-biggest shipper, may exceed the previous record by 20 percent this year, even as the total value of exports is forecast to drop.

Shipments are expected to be 6 million to 6.2 million metric tons, Minister of Industry and Trade Vu Huy Hoang told the National Assembly in Hanoi today. That compares with the previous record of 5.17 million tons in 2005, according to figures from the U.S. Foreign Agricultural Service, which last month forecast total exports of 5.7 million tons.

Global demand for imports is expected to grow this year after storms destroyed 1.3 million tons of rice in the Philippines, the world’s biggest buyer, and drought slashed India’s crop by as much as 18 percent, according to the country’s Farm Ministry.

“This will be a record year for our rice exports, but because the price has fluctuated so much, we expect the total value of shipments to fall compared with 2008,” Hoang said.

Rice futures in Chicago have jumped 36 percent since slumping to a low of $11.195 per 100 pounds in March, and traded at $15.205 at 12:39 p.m. in Singapore. The price reached a record $25.07 in April 2008 as concerns over shortages prompted countries like Vietnam and India to curb exports.

The Philippines will hold two record tenders of 600,000 tons each on Dec. 1 and Dec. 8, as the country advances imports for 2010 to secure supplies amid rising prices. The Southeast Asian nation bought 260,000 tons in September, including 15,000 tons from Vietnam Southern Food Corp.

‘Huge Supplies’

India is in talks with Thailand and Vietnam to buy rice under government-to-government contracts, the country’s Trade Minister Anand Sharma said yesterday. Thailand is the world’s biggest rice exporter.

Vietnam has “huge exportable supplies,” the Foreign Agricultural Service said in a monthly report on global grain markets in October.

“Vietnam’s price quotes are around $60 per ton below Thailand’s price quotes, down from an almost $100 difference in early October, but still enough of a difference to make Vietnam a very competitive seller,” the U.S. Agriculture Department said in a report last week.

Stronger-than-expected rice shipments may boost Vietnam’s overall export receipts and help ease a widening trade deficit that has damaged confidence in the Vietnamese dong.

The value of Vietnamese rice exports declined 8 percent in the 10 months through October to $2.38 billion, even as shipments increased 33 percent by volume to 5.34 million tons, according to preliminary estimates from the General Statistics Office in Hanoi.

Rice was Vietnam’s sixth-biggest export by value in the first 10 months of the year.

To contact the reporters on this story: Jason Folkmanis in Hanoi at folkmanis@bloomberg.net; Van Nguyen in Hanoi at vnguyen23@bloomberg.net

Global demand for imports is expected to grow this year after storms destroyed 1.3 million tons of rice in the Philippines, the world’s biggest buyer, and drought slashed India’s crop by as much as 18 percent, according to the country’s Farm Ministry.

“This will be a record year for our rice exports, but because the price has fluctuated so much, we expect the total value of shipments to fall compared with 2008,” Hoang said.

Rice futures in Chicago have jumped 36 percent since slumping to a low of $11.195 per 100 pounds in March, and traded at $15.205 at 12:39 p.m. in Singapore. The price reached a record $25.07 in April 2008 as concerns over shortages prompted countries like Vietnam and India to curb exports.

The Philippines will hold two record tenders of 600,000 tons each on Dec. 1 and Dec. 8, as the country advances imports for 2010 to secure supplies amid rising prices. The Southeast Asian nation bought 260,000 tons in September, including 15,000 tons from Vietnam Southern Food Corp.

‘Huge Supplies’

India is in talks with Thailand and Vietnam to buy rice under government-to-government contracts, the country’s Trade Minister Anand Sharma said yesterday. Thailand is the world’s biggest rice exporter.

Vietnam has “huge exportable supplies,” the Foreign Agricultural Service said in a monthly report on global grain markets in October.

“Vietnam’s price quotes are around $60 per ton below Thailand’s price quotes, down from an almost $100 difference in early October, but still enough of a difference to make Vietnam a very competitive seller,” the U.S. Agriculture Department said in a report last week.

Stronger-than-expected rice shipments may boost Vietnam’s overall export receipts and help ease a widening trade deficit that has damaged confidence in the Vietnamese dong.

The value of Vietnamese rice exports declined 8 percent in the 10 months through October to $2.38 billion, even as shipments increased 33 percent by volume to 5.34 million tons, according to preliminary estimates from the General Statistics Office in Hanoi.

Rice was Vietnam’s sixth-biggest export by value in the first 10 months of the year.

To contact the reporters on this story: Jason Folkmanis in Hanoi at folkmanis@bloomberg.net; Van Nguyen in Hanoi at vnguyen23@bloomberg.net

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U.K. Stocks Advance; BP, Xstrata, Diageo Shares Lead the Gains

By Adam Haigh

Nov. 18 (Bloomberg) -- U.K. stocks advanced as a three-day rally in crude oil and rising metals prices buoyed commodities producers and Societe Generale recommended buying Diageo Plc.

BP Plc and Royal Dutch Shell Plc, Europe’s largest energy producers, climbed as oil advanced to $79.85 a barrel. Xstrata Plc led a rally in mining companies. Diageo, the world’s biggest liquor maker, added 1.7 percent after Societe Generale raised its recommendation to “buy” on a rebound in volumes in the U.S. market.

The benchmark FTSE 100 Index gained 10.98, or 0.2 percent, to 5,356.91 as of 10:02 a.m. in London. The gauge has rebounded 53 percent from this year’s low on March 3 amid signs government stimulus policies and record-low interest rates are helping to drag the global economy out of recession. The FTSE All-Share Index added 0.2 percent today and Ireland’s ISEQ Index lost 0.1 percent.

“The rally seems to be holding up though clients are getting a little wary at the moment as we approach 5,400 on the FTSE 100,” said Paul Chesterton, a senior sales trader at CMC Markets Plc in London. “Clients are sticking with positions but are a bit reluctant to keep buying at ever higher levels.”

Bank of England policy makers were split three ways in a vote to extend the bond-purchase program to 200 billion pounds ($336 billion), and discussed lowering the deposit rate on bank reserves to encourage lending.

While the majority of the nine-member Monetary Policy Committee wanted a 25 billion-pound increase, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion-pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent.

Oil Advances

BP gained 0.7 percent to 591.6 pence. Shell added 0.7 percent to 1,884.5 pence. The companies account for about 16 percent of the benchmark index by market weighting.

Oil advanced for a third day in New York after an industry report showed a decline in crude stockpiles in the U.S., the largest energy consumer.

Xstrata, the world’s largest exporter of coal used by power stations, climbed 3 percent to 1,107 pence. BHP Billiton Ltd., the biggest mining company, rose 2 percent to 1,885 pence. Copper, lead, nickel and tin climbed on the London Metal Exchange.

Diageo added 1.7 percent to 1,050 pence. Societe Generale raised its recommendation to “buy” from “hold.”

Cadbury Plc increased 1.2 percent to 797.5 pence. Hershey Co. has been in talks with Ferrero SpA for weeks about making a joint bid for Cadbury, the Wall Street Journal reported yesterday, citing unidentified people familiar with the discussions.

Ladbrokes Advances

Ferrero may be divided about making a bid for Cadbury or a tie-up with the U.K. confectioner, the London-based Times reported, without attribution.

Ladbrokes Plc rose 3.3 percent to 131.2 pence. The owner of more than 2,300 U.K. and Irish betting shops was upgraded to “buy” from “underperform” at BofA Merrill Lynch Global Research, with a new price estimate of 160 pence.

Wolseley Plc dropped 2.3 percent to 1,341 pence. The world’s largest supplier of heating and plumbing gear said profit before exceptional items slumped 45 percent and sales from continued operations fell 13 percent in the three months ended Oct. 31.

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

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Most Asian Stocks Fall on Share-Sale Concern; Banks Decline

By Shani Raja

Nov. 18 (Bloomberg) -- Most Asian stocks fell as capital and share-sale concerns dragged banks and property companies lower, overshadowing advances among telecommunications companies.

HSBC Holdings Plc lost 0.9 percent, the biggest drag on Hong Kong’s Hang Seng Index, after its chairman said new capital rules may reduce credit in the economy. Developer Tokyo Tatemono Co. sank 17 percent in Tokyo on plans to sell 45.6 billion yen in shares. China Mobile Ltd. added 2.5 percent after saying its high-speed wireless service will have 3 million subscribers by the end of the year.

Five stocks declined for every four that advanced on the MSCI Asia Pacific Index, which was little changed at 118.65 as of 6:08 p.m. in Tokyo. The gauge has climbed 68 percent from a more than five-year low on March 9 as stimulus measures around the world helped revive the global economy.

“The economic data is saying we’re past the worst,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State, which holds about $135 billion. “But the recovery process is still going to be painful and grinding.”

Japan’s Topix Index lost 0.8 percent, while the Nikkei 225 Stock Average fell 0.6 percent. Japan Airlines Corp., which is seeking a state bailout, fell 3.9 percent after Reuters reported the country’s transport minister as saying he wouldn’t rule out a bankruptcy of the airline.

Hong Kong’s Hang Seng Index declined 0.3 percent, as Hang Lung Properties Ltd., which gets 40 percent of its revenue in China, sank 3 percent after a Chinese central bank adviser said Shenzhen city will introduce a property tax.

Takeover Speculation

Australia’s S&P/ASX 200 Index rose 0.2 percent. Insurance Australia Group Ltd. added 2.3 percent amid takeover speculation. South Korea’s Kospi Index climbed 1.1 percent.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.1 percent yesterday, buoyed by commodity companies as oil and copper prices advanced.

The MSCI Asia Pacific Index has climbed 33 percent this year, on course for its steepest annual increase since 2003. It has outpaced gains of 23 percent by the S&P 500 and 26 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the Asian index are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx 600.

In Hong Kong, HSBC, Europe’s largest lender, lost 0.9 percent to HK$96.50 as Chairman Stephen Green warned of the “unintended effects” from new rules to increase banks’ capital.

Capital Ratios

“Cumulative enhancement of capital ratios at the wrong stage of the economic cycle could easily withdraw credit from the economy and cause a new credit crunch,” Green said at a conference in London yesterday.

Governments around the world are seeking to strengthen lenders following the worst financial crisis since the Great Depression. Writedowns and losses from the credit crisis have risen to almost $1.7 trillion, according to data compiled by Bloomberg.

Mitsubishi UFJ Financial Group Inc., which reports earnings today, sank 0.6 percent to 484 yen in Tokyo after the Wall Street Journal reported that the bank is considering raising up to 1 trillion yen ($11.2 billion) from selling stock to bolster capital ratios. The paper cited a person familiar with the situation.

Tokyo Tatemono tumbled 17 percent to 323 yen, the biggest drop on the MSCI Asia Pacific Index today. The developer is planning to sell new shares to fund investments in rental property and to repay debt. Tokyu Land Corp. declined 11 percent to 292 yen.

“Concerns about capital increases spread through the real- estate industry after Tokyo Tatemono’s plan to raise capital,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd.

Property Tax

Hang Lung Properties lost 3 percent to HK$30.95, while China Overseas Land & Investment Ltd. fell 2.1 percent to HK$17.10. Sun Hung Kai Properties Ltd., the world’s largest developer by market value, slid 0.8 percent to HK$116.80.

The southern Chinese city of Shenzhen will introduce a property tax, central bank adviser Fan Gang said, adding that the move represented a “very important step” in balancing investment and consumption demand.

Japan Airlines slumped 3.9 percent to 98 yen after Reuters reported the comments from Transport Minister Seiji Maehara. Japan Air is seeking loans of 125 billion yen to maintain operations after posting a net loss of 131.2 billion yen for the six months ended Sept. 30.

In Sydney, Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal, slumped 4.7 percent to A$9.70 after forecasting first-half profit may drop as much as 72 percent.

China Mobile

Insurance Australia gained 2.3 percent to A$4.01 after the Australian Financial Review reported QBE Insurance Group Ltd. is considering a takeover offer. QBE rose 2.5 percent to A$23.01 as spokeswomen for both companies declined to comment.

China Mobile, the world’s biggest phone company by market value, added 2.5 percent to HK$76.15. Chairman Wang Jianzhou said in Hong Kong today that its third-generation service will have 3 million subscribers by the end of the year. The company had 1.66 million users at the end of September.

STX Pan Ocean Co. climbed 1.9 percent to S$14.72 in Singapore after the Baltic Dry Index, a measure of shipping rates for commodities, advanced for a 14th day to the highest since September 2008.

Pacific Basin Shipping Ltd., Hong Kong’s largest operator of dry-bulk vessels, climbed 5.4 percent to HK$6.61. China Shipping Development Co., the dry-bulk arm of the nation’s second-biggest shipping group, advanced 5.6 percent to HK$12.40.

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

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