U.K.'s Contraction Eased In The Third Quarter

Daily Forex Fundamentals | Written by ecPulse.com | Nov 25 09 10:16 GMT |

U.K. suffered the blues of the economic recession more than other major economies due to the financial and economic problems that were triggered after the burst of the bubble. However, the economy, following contraction of 2.4% in the first quarter, it managed to ease the pace of contraction in the second and third quarter and show progress after the strong monetary interventions by the BoE. PMI manufacturing for the month of October came in at 53.7, higher than the revised 49.9 from 49.5, surpassing the expected reading of 50.0. PMI services for October spiked to 56.9, the highest level since August 2007, higher than both the prior and expected readings of 55.3 and 55.5 respectively, while retail sales on an annual basis climbed to a 17-month high. The amelioration started to take place from the second quarter as the BoE cut the interest rate to an historical low of 0.5% and launched 200 billion pounds stimulus to bolster spending, growth, and reduce deflation risks. In response, the economy shrank 0.6% in the second quarter then the contraction mitigated to 0.4% in the three months ending September. The United Kingdom released today its preliminary GDP reading for the third quarter showing that the contraction moderated to 0.3%, in line with expectations, while on the year the contraction also eased to 5.1% from 5.2%. Looking into details, private consumption rose to 0.0% from -0.6%; government spending slipped to 0.2% from 0.6%; gross fixed capital formation increased to -0.3% from -5.2%; exports inclined to 0.5% from -1.4%; imports soared to 1.3% from -2.2%. It is clear from details that private consumption and exports lifted growth in the third quarter to the upside. Global demand on goods and services returned again with improvement in global economies, while consumers became more confident in the economy than before after the progress witnessed recently. The Bank of England anticipates the economy Britain will return to growth in the last quarter. The economy is expected to expand 2.2% next year and 4.1% in 2011, according to policy makers' projections announced in November. In November's inflation report, the bank mentioned that the growth may be revise upwards which matches the banks' anticipations. The bank of England in November kept the borrowing cost unchanged at 0.5% and raised the Asset Purchase Facility (APF) program by 25 billion pounds to 200 billion pounds to revive growth and spur lending and spending. Governor of the BoE, Mervyn King, stated recently that he has an 'open mind' about adding more to the current 200 billion pounds, while Prime Minister Gordon Brown this week asked for leaving stimulus to stay to prevent any drawback in recovery. These announcements may give a clue that despite the improvement the economic conditions are still stressed; while at the same time arouses fears of inflation on the long run. The British economy is still suffering from serious economic problems such as the high jobless rate and low inflation. Unemployment is currently at 7.8% or 2.46 million people where Claims for jobless benefits surged by 12,900, while the number of job seekers in the three months through September soared 30,000, reflecting the there some companies that are still shedding jobs to cut expenses despite the slowdown in the rate in August and September. On the other hand, consumer price index for the month of October is at 0.2%, while on the year it reached 1.5%. It is projected that inflation will reach nearly 1.6% before surpassing the target by mid-2012. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Risk Sentiment And Gold Come Roaring Back

Daily Forex Fundamentals | Written by AC-Markets | Nov 25 09 08:28 GMT |

Market Brief Risk appetite came back in a big way during the Asian session, as events in the US session were supportive of long risk positions. The FOMC minutes really contained no surprises, but stayed dovish despite going divergence among members. The minutes also addressed the USD decline, which said that so far the deprecation had been orderly, which the market quickly read into as permission to continue to sell the USD. The economic data yesterday were mixed, with German IFO and US consumer confidence data surprising to the upside while GDP data basically printing inline with expectations. The rally in risk correlated trades saw Spot Gold rise to $1180.00, while EURUSD is now trading slightly above the 1.5000 handle. The GBPUSD jumped nearly a figure in late Asian trading to 1.6668 from 1.6580. Yet, GBPJPY gains were compressed, as JPY fueled carry trade felt the brunt of JPY buying. In Japan, exports grew in October for the third straight month thanks to robust shipments to Asia, illustrating that a sturdy recovery in the region will prop up Japans export-driven economy for the rest of this year. AUDUSD climbed to 0.9267, as construction work done data released this morning surprised the market to the upside rising by 2.2% q/q in Q3 (consensus 0.0%). This economic release helped confirm the RBA's bullish outlook for the economy, which was reiterated by RBA Deputy Governor Battellino this morning and supports our view that the central bank will raise the cash rate by 25bp in December. For this light calendar, pre-Thanksgiving Day markets will be watching economic data from the US . Today in the US, October's personal income and spending figures are expected to offer further clues that the pace at which real consumption grew in Q3 is not sustainable. And finally, the latest data core durable goods suggest that the growth rate of orders has already peaked and will falter in the near term. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Nov 25 09 08:02 GMT |

CHF The pre-planned short positions from key resistance range levels have been implemented with attainment of minimal anticipated target. OsMA trend indicator, having marked preservation of bearish party activity in the bigger picture, gives grounds favoring choice of sales in planning trading operations for today. At this point, considering signs of rate oversold, we can assume probability of rate return to close 1,0100/20 resistance levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term sales on condition of the formation of topping signals the targets will be 1,0040/60, 1,0000/20 and (or) further break-out variant up to 0,9940/60, 0,9860/80, 0,9800/20. The alternative for buyers will be above 1,0200 with the targets of 1,0240/60, 1,0300/40. GBP The estimated test of key resistance range levels for implementation of the pre-planned short positions has not been confirmed, and fall in both party activity, as a result of previous trading day, does not clarify the choice of planning priorities for today. Therefore, considering current indicator chart cycle, we can assume probability of reaching Senkou Span B of Ichimoku indicator at 1,6640/60, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term sales on condition of the formation of topping signals the targets will be 1,6560/80, 1,6500/20, 1,6440/60 and (or) further break-out variant up to 1,6380/1,6400, 1,6320/40, 1,6240/60. The alternative for buyers will be above 1,6740 with the targets of 1,6780/1,6800, 1,6860/80. JPY Earlier opened and preserved short positions have had a positive result in attainment of minimal anticipated target. OsMA trend indicator, having marked preservation of parity in both party activity, in the bigger picture, gives grounds not favoring probably rate range movement, but favoring preservation of bearish case of rate fall contained in descending trading channel. Hence, we can assume probability of rate return to close 88,60/80 levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term sales on condition of the formation of topping signals the targets will be 88,00/20 and (or) further break-out variant up to 87,40/60, 86,80/87,00, 86,20/40. The alternative for buyers will be above 89,40 with the targets of 89,80/90,00, 90,40/60. EUR The pre-planned long positions from key supports have been implemented with overlap of minimal anticipated target. OsMA trend indicator, having marked preservation of bullish party activity in the bigger picture, gives grounds favoring choice of buying in planning trading operations for today. At this point, considering sign of rate oversold, we can assume probability of rate return to close 1,4940/60 supports, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term buying positions on condition of the formation of topping signals the targets will be 1,5000/20, 1,5060/80 and (or) further break-out variant up to 1,520/40, 1,5180/1,5200. The alternative for sales will be below 1,4800 with the targets of 1,4740/90, 1,4680/1,4700, 1,4600/20.

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Nov 25 09 10:04 GMT |

EUR/USD Current level-1.5012 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. The minor consolidation pattern below 1.4999 ended at 1.4920 and the bias is positive for 1.5063, en route to 1.5130. Intraday support comes at 1.4999, followed by the crucial 1.4954. Resistance Support intraday intraweek intraday intraweek 1.5063 1.5290 1.4954 1.4623 1.5130 1.6040 1.4801 1.4444 USD/JPY Current level - 88.25 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. Our target at 88.21 has been met and while the pair stays above 88.01 we will continue to expect a reversal for 91+. Intraday bias is negative with a resistance at 88.75 and crucial level at 89.19. An eventual break below 88.01 will set the focus directly on 87.12 major support. Resistance Support intraday intraweek intraday intraweek 88.75 92.40 88.01 87.12 89.19 97.79 --- 83.53 GBP/USD Current level- 1.6703 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. As expected, the pair reversed its direction at 1.6495 and filled our target at 1.6712. We will keep our view, that current uptrend is the last leg of the consolidation pattern above 1.6460 and precedes a deeper drowning towards 1.6130. Intraday bias is positive, well supported at 1.6649 and with a crucial level at 1.6601. Resistance Support intraday intraweek intraday intraweek 1.6733 1.7042 1.6649 1.6130 1.6840 1.7442 1.6495 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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S. African Inflation in Target Range for First Time Since 2007

By Nasreen Seria

Nov. 25 (Bloomberg) -- South Africa’s inflation rate fell into the central bank’s 3 percent to 6 percent target band for the first time in more than two years, giving Governor Gill Marcus room to keep the key interest rate unchanged for longer.

Headline inflation eased to 5.9 percent in October from 6.1 percent in the previous month, the Pretoria-based statistics office said on its Web site today, in line with the median estimate of 23 economists surveyed by Bloomberg. Prices were unchanged in the month.

The Reserve Bank left its repurchase rate unchanged at 7 percent for a third consecutive meeting on Nov. 17, concerned that rising electricity costs will boost inflation, just as six rate cuts since December helped to pull the economy out of recession. Inflation eased last month after the government cut gasoline costs by 5 percent on Oct. 7 as the rand’s 41 percent surge against the dollar since March slashed import costs.

“A move to within the target band will create excitement on the markets in regards to prospects for monetary policy,” Gina Schoeman, an economist at Macquarie First South Securities in Johannesburg, said in a note to clients before today’s data. “However, we caution that sticky cost-push pressures are likely to keep CPI at the top-end of the target band for quite some time.”

The Reserve Bank said on Oct. 18 that the benchmark interest rate of 7 percent is “adequate” to curb inflation and support economic growth. The bank expects the inflation rate to stay inside the target until the fourth quarter of 2011, when it is expected to average 5.5 percent.

Recession Ends

That forecast is based on a 25 percent annual increase in electricity prices over the next two years. Eskom Holdings Ltd., the state-owned power utility, has applied to South Africa’s energy regulator to increase electricity tariffs by 45 percent a year over the next three years.

The central bank cut its key interest rate by 5 percentage points between December and August to help boost the economy, which the government expects will contract 1.9 percent in 2009. The economy expanded an annualized 0.9 percent in the third quarter from the previous three months, ending the first recession in 17 years, the statistics office said yesterday.

To contact the reporter responsible for this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net.

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Japan Exports Fall Least in a Year on Global Stimulus

By Keiko Ujikane and Kyoko Shimodoi

Nov. 25 (Bloomberg) -- Japan’s exports fell at the slowest pace in a year in October as worldwide government spending boosted demand, sustaining the economic recovery.

Shipments abroad slid 23.2 percent from a year earlier, compared with a 30.6 percent decline in September, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for a 26.8 percent drop.

The figures suggest Japan’s rebound from its deepest postwar recession will extend into this quarter as Asian demand spurs sales for manufacturers from Honda Motor Co. to Hitachi Construction Machinery Co. Exports helped the economy expand at the fastest pace in more than two years in the third quarter, even as prices of goods declined and the yen gained.

“Exports to Asia have been very strong,” said Seiji Shiraishi, chief economist at HSBC Securities Japan Ltd. in Tokyo. “By January to March next year, we should start to see a slowdown” as the effect of global stimulus fades, he said.

The yen rose to 88.25 per dollar at 11:02 a.m. in Tokyo from 88.61 before the report was published. Japan’s currency has climbed more than 6 percent in the past three months, eroding exporters’ profits and driving import costs lower.

Bigger Surplus

Imports slid 35.6 percent from a year earlier, the ministry said. The improvement in exports helped the trade surplus climb to 807.1 billion yen ($9.1 billion), the biggest since March 2008 and larger than the 465.5 billion yen median estimate of analysts. From a month earlier, exports rose 2.5 percent, the fastest pace since April.

Asian economies are benefiting from a global trade rebound that’s being driven by interest-rate cuts and more than $2 trillion in government spending worldwide. Taiwan’s export orders climbed in October for the first time in 13 months. Chinese exports fell at the slowest pace in 10 months.

Honda Motor, Japan’s second-largest carmaker, almost tripled its full-year profit forecast as government stimulus measures boosted demand for fuel-efficient vehicles. Hitachi Construction Machinery, Asia’s second-largest excavator maker, returned to profit last quarter as cost cuts countered a sales slide triggered by the global recession.

“Looking ahead, Japan’s economy may sustain a gradual recovery driven by an increase in exports, although personal consumption and public works spending are expected to decline,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo.

Asian Demand

Shipments to Asia fell 15 percent from a year earlier, easing from a 22.2 percent drop in September, the ministry said. An index measuring the volume of exports to Asia rose to the highest in a year. Exports to China, Japan’s biggest overseas customer, slipped 14.3 percent, compared with a 13.8 percent decline the previous month.

Sales to the U.S. fell 27.6 percent, moderating from September’s 33.9 percent decrease as retail sales in Japan’s second-largest market picked up. Exports to Europe slid 29 percent after slumping 38.6 percent.

While exports are leading Japan’s recovery, weakness in the domestic economy persists. Anabuki Construction Inc. filed for bankruptcy yesterday with 140 billion yen in debt, the country’s fifth-largest business failure this year.

Falling prices in Japan threaten to squeeze profits and wages, smothering demand in an economy that analysts say may slow in coming months once global stimulus effects wane. The government last week declared the economy is in deflation for the first time in three years and pressed the Bank of Japan to be more aggressive about tackling price declines.

“Japan’s economy is in chronic deflation,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. “Deflation is strengthening little by little” because weak demand and a higher yen are exerting downward pressure on prices, he said.

To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net

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Dubai Oil to Sell at 5-Cent Discount to Oman Crude

By Anthony DiPaola

Nov. 25 (Bloomberg) -- Dubai oil, a Persian Gulf benchmark for Asia, will sell at a narrower discount to Oman crude for a second month in February after other Middle Eastern states increased prices.

The official selling price for Dubai crude loading in February will be set at a discount of 5 cents to the Oman futures contract traded on the Dubai Mercantile Exchange for that month, the emirate’s Department of Petroleum Affairs said in an e-mail provided by the exchange today.

The differential to Oman crude narrowed from 15 cents for January and from 45 cents for December after October and November cargoes were unchanged at a 30-cent discount. The final price for February crude will be set on the last day of trading for that month’s contract, when the Oman level is calculated.

Saudi Aramco, the state oil company, said Nov. 1 it was raising prices of its Arab Light, Medium and Heavy crude grades for customers in the U.S. in December. Abu Dhabi said a day later it was raising official selling prices for October.

Dubai’s Department of Petroleum Affairs generally issues the differential on the last Thursday of every month to apply to the closing three months ahead. The differential came out a day early this month since tomorrow is a national holiday in the United Arab Emirates. The Dubai Exchange’s futures contract is used to set the official selling price for Oman’s 728,000 barrels a day of supplies.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.

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China to Double Environmental Budget to $454 Billion

By Bloomberg News

Nov. 25 (Bloomberg) -- China, the world’s largest emitter of greenhouse gases, plans to more than double its spending on environmental protection in the five years through 2015, the Shanghai Securities News reported.

The Asian nation may invest 3.1 trillion yuan ($454 billion) during the period, compared with 1.4 trillion yuan allocated for the five years between 2006 and 2010, the Chinese-language newspaper said today, citing an unidentified official from the Ministry of Environmental Protection.

China, pressed by the U.S. to set emission targets for the Copenhagen global-warming summit next month, said in September it will lower emissions per unit of economic growth through 2020. Greenhouse gases increased to record concentrations last year, the United Nations said yesterday.

“The doubling of the budget is beyond our expectations,” Yan Biao, an analyst with Century Securities Co. said by phone from the southern city of Shenzhen. “The increase in spending will benefit equipment manufacturers in water treatment, air pollution control, and also developers in the renewable energy sector.”

Tao Detian, Beijing-based spokesman at the Ministry of Environmental Protection, didn’t pick up calls made to his office today.

Solar Plants

The so-called output value of the environmental-protection industry may have an annual increase of between 15 percent and 20 percent, the Shanghai Securities said. The government is studying tax incentives for the sector, according to the report.

Beijing plans to build a 70 megawatt solar-power plant as part of the city’s focus on expanding the use of alternative energy, the capital’s Development and Reform Commission said Nov. 20. The government will also develop wind, nuclear and geothermal power, according to the commission.

China National Offshore Oil Corp., the nation’s third largest oil producer, may build a network of battery-charging stations for electric cars in China, the world’s second-biggest automobile market, Shan Lianwen, director of corporate strategy at China National Offshore said on Nov. 3.

The Asian nation has supported automakers’ investments in alternative-energy vehicles to curb oil imports, cut pollution and to help carmakers challenge General Motors Co. and Toyota Motor Corp. overseas.

Chery Automobile Co., China’s largest maker of own-brand cars, will start selling its first plug-in electric model around June next year.

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

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Ambani’s Lyondell Bid Mimics Valero, Tosco Expansion

By Jessica Resnick-Ault

Nov. 25 (Bloomberg) -- Reliance Industries Ltd.’s bid for bankrupt LyondellBasell Industries AF would give India’s biggest company a low-priced U.S. refinery, mimicking successful strategies by Valero Energy Corp. and the former Tosco Corp.

The Mumbai-based refiner and energy explorer led by billionaire Mukesh Ambani offered about $12 billion on Nov. 21 to buy a controlling stake in the Rotterdam-based chemicals and fuels maker, said two people familiar with the matter. The purchase would include LyondellBasell’s Houston refinery.

Refinery values tumbled after the worst global recession since the Great Depression cut gasoline and diesel demand in the world’s largest fuel market, creating circumstances similar to the late 1980s and early 1990s when Tom O’Malley built Tosco by buying lower-priced plants. Bill Greehey also made opportunistic acquisitions, helping Valero become the biggest U.S. refiner.

“It’s a buyer’s market, and that’s the same market O’Malley and Greehey used when they created Tosco and Valero,” said Ann Kohler, an analyst at Caris & Co. in New York.

San Antonio-based Valero, Sunoco Inc. of Philadelphia and Western Refining Inc. are closing unprofitable plants to stem losses. Holly Corp. agreed last month to buy Sinclair Oil Corp.’s Tulsa, Oklahoma, refinery for $128.5 million, less than half the total Sinclair spent to upgrade the plant.

Greehey, now chairman of San Antonio-based asphalt maker NuStar LP, continued to acquire refineries at Valero even after slumping demand led to a 1998 loss. He found willing sellers among the oil majors, such as Exxon Mobil Corp.

‘Big Shakeup’

“Majors are selling again, and I think we’re going to get new entrants,” said John Paisie, a partner at consulting firm PFC Energy Inc. in Washington. “I think we’re going to have a big shakeup in the downstream with consolidation, assets being spun off, trying to be sold.”

China Petroleum & Chemical Corp., the nation’s biggest refiner, and buyout firm TPG have weighed a bid that could challenge Reliance’s offer for LyondellBasell, according to the two people familiar with the matter.

Reliance has surged 78 percent in Mumbai trading this year, matching the gain in the benchmark Sensitive Index. The stock rise 0.9 percent 2,197.20 rupees at 2:54 p.m. local time.

LyondellBasell’s 270,000 barrels-a-day Houston plant would cost at least $5 billion to build today, according to John Parry, Vice President at Norwich, Connecticut-based consulting firm IHS Herold Inc. He assumes a cost of $20,000 per barrel of crude oil processing capacity.

‘Bargain-Basement Price’

Lyondell Chemical Co., which was later sold to Basell Holdings NV, bought Petroleos de Venezuela SA’s 41 percent stake in the plant in 2006. The $2.1 billion price valued the stake at $19,000 per barrel of processing capacity, a U.S. record.

“Costs remain very high,” said Victor Shum, a senior principal at energy consultants Purvin & Gertz Inc. in Singapore. Reliance’s offer “would just be a bargain-basement price,” he said today. “The $12 billion is very attractive. It’s impossible to build a new refinery in the U.S.”

Regulatory hurdles such as environmental permits have discouraged building of new refineries in the U.S. The last “significant” plant built in the country was Marathon Oil Co.’s Garyville, Louisiana, refinery that was finished in 1976 and began operating in 1977 with a processing capacity of 256,000 barrels a day, according to the Department of Energy.

“It’s probably a good time to be buying refineries, if you’ve got the stomach for it,” said David Hackett, president of consulting firm Stillwater Associates in Irvine, California.

Ambani, Greehey, O’Malley

Like O’Malley and Greehey, Reliance’s Ambani, 52, is comfortable with counter-cyclical moves, said Mike Leger, president of consulting firm Turner, Mason & Co. in Dallas. “Those are the kind of guys that look good when things turn around,” Leger said.

Ambani created the world’s largest refinery with a $6.1 billion project that doubled capacity at Reliance’s flagship plant in India. With a net worth estimated at $32 billion, he’s the richest of India’s 52 billionaires, according to a ranking by Forbes magazine.

Valero’s network of plants spanned from California to New Jersey by the time Greehey retired as chief executive officer at the end of 2005. He remained chairman until January 2007. The company netted more than $14 billion combined from 2005 through 2007 after Greehey built the largest U.S. capacity to process cheap, heavy grades of crude.

O’Malley sold Tosco to the former Phillips Petroleum Co. for $8.37 billion in 2001 and Premcor Inc. to Valero for $6.9 billion in 2005. He’s chairman of Switzerland’s Petroplus Holdings AG, the largest independent refiner in Europe.

Overseas Push

Thakur Sharma, president of Reliance’s U.S. operations, declined to comment on the company’s strategy with the proposed LyondellBasell deal. The company didn’t disclose how much it offered to pay for the controlling interest.

Reliance, which has $4.2 billion in cash, said this month overseas acquisitions are key to increasing revenue.

The company, which has 97 percent of its assets in India, has said it wants to diversify it risks by expanding overseas. In India, Reliance is also battling a lawsuit over gas supplies with a company owned by Ambani’s estranged brother, Anil Ambani.

With the LyondellBasell acquisition, Reliance could sell fuels refined in Houston, Rotterdam or India, or purchased through the company’s network of trading offices.

“That would give them quite a bit of leverage in marketing into the U.S. and into Europe,” said Kohler of Caris & Co.

To contact the reporter on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net.

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Oil to Extend Drop, Test Channel Below $74: Technical Analysis

By Yee Kai Pin

Nov. 25 (Bloomberg) -- Crude oil, declining since touching a one-year high of $82 a barrel Oct. 21, is poised to test the bottom of a downtrend channel below $74, according to an analysis of price charts by Societe Generale SA.

Oil, trading lower today for the fourth day in five, could extend its drop as traders pull out in the absence of profit opportunities, according to Stephanie Aymes, a London-based commodity technical analyst at France’s second-largest bank by market value.

“We are in a range, a descending channel,” Aymes said in an e-mail. “It looks like the one in August, but that was deeper. This range is very long and the daily indicators are breaking supports.”

Crude oil has pared its gains for this year from as high as 84 percent to 70 percent amid concern weaker growth in the U.S., the world’s largest energy consumer, may slow the recovery in demand. Futures for January delivery on the New York Mercantile Exchange was at $76.01 a barrel in electronic trading, down 1 cent, at 11:57 a.m. Singapore time.

Prices, which fell yesterday after the Commerce Department said the U.S. economy expanded less than estimated in the third quarter, are approaching a technical support area and may soon test its resilience, Aymes said.

The current “consolidation” phase will proceed to the bottom of the channel near $74 a barrel, or as low as $72.50 to $73, she said in a separate note to clients. The top of the channel is around $80.10 to $80.60 a barrel.

Further, oil’s 14-day Relative Strength Index mirrors the price downtrend, she noted. Today’s reading about 45 is close to neither the buy or sell markers at 30 and 70, suggesting the market probably isn’t due for a change in direction.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

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U.K. Economy Shrank Less Than Previous Estimate

By Svenja O’Donnell

Nov. 25 (Bloomberg) -- The U.K. economy shrank less than previously estimated in the third quarter as consumer spending stopped falling and the service industries slump eased, bringing the longest recession on record closer to an end.

Gross domestic product fell 0.3 percent from the previous three months, compared with a prior measurement of a 0.4 percent drop, the Office for National Statistics said today in London. The result matched the median prediction of 28 economists in a Bloomberg News survey.

Prime Minister Gordon Brown this week called for stimulus to stay in place to avoid “choking off recovery” as an election looms within six months. The Bank of England has expanded its bond purchase plan three times since March to ensure Britain’s escape from recession and Governor Mervyn King said yesterday the pickup isn’t “particularly strong.”

“We’re still confident the fourth quarter number will show positive growth,” Philip Shaw, chief economist at Investec Securities in London, said before the report. “It’s likely to be a slow, steady grind through 2010.”

The pound erased gains against the dollar and was trading at $1.6682 as of 9:35 a.m. in London. U.K. government bonds extended gains, pushing yields lower. The yield on the 2-year gilt fell 4 basis points to 1.19 percent.

The U.K.’s recovery has lagged behind that of the U.S. and the euro area, which have both returned to growth. Data yesterday showed Germany’s economic growth accelerated in the third quarter, while the U.S. economy expanded at a 2.8 percent annual rate, less than the government reported last month.

Election Fight

Brown is trying to revive the U.K. economy in time to defeat Conservative Leader David Cameron at the election, due by June. An Ipsos Mori poll in the Observer on Nov. 22 showed the Conservatives with a six-point lead, the least since December.

Consumer spending was unchanged in the third quarter, the first time it hasn’t dropped in a 1 1/2 years. Government spending rose 0.2 percent, while fixed investment fell 0.3 percent, the statistics office said.

Officials revised up the GDP data because the decline in services output was smaller than previously estimated, at 0.1 percent instead of 0.2 percent. Manufacturing dropped 0.1 percent, up from the prior measurement of 0.2 percent.

The Bank of England forecasts Britain will exit the recession in the fourth quarter. The economy will expand 2.2 percent in 2010 and 4.1 percent in 2011, according to policy makers’ projections published on Nov. 11.

Policy makers have cut the benchmark interest rate to a record low of 0.5 percent and pledged to buy 200 billion pounds in bonds to aid the economy. While policy maker Adam Posen told lawmakers that “one hopes that we are coming to the end” of the purchase program, King said he “can’t rule out” buying more assets.

Data ‘Surprise’

Policy maker Andrew Sentance said in a speech on Nov. 16 that the “surprise” gross domestic product estimate may be revised later, and told Bloomberg Television that “the broad balance of evidence is that the U.K. economy has started to grow in the second half of this year.”

Unemployment rose at the slowest pace in 18 months in October, retail sales rose for a second month and the inflation rate increased more than expected, to 1.5 percent. The bank aims to keep inflation at 2 percent.

Banks are still working to shore up their finances after government-led bailouts of Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc during the 2008 financial crisis. Lloyds said yesterday it plans to raise a record 13.4 billion pounds in the country’s biggest rights offering.

None of the economists surveyed predict a downward revision in today’s data. Six of them forecast the estimate will remain unchanged, 19 said it will change to a 0.3 percent drop and three said that it will be 0.2 percent.

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

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U.K. Banks Look to Supreme Court to Overturn Overdraft Ruling

By James Lumley

Nov. 25 (Bloomberg) -- Royal Bank of Scotland Group Plc, HSBC Holdings Plc and six other lenders are counting on Britain’s highest court to overturn a ruling that may allow a regulator to oversee fees charged on bounced checks.

The U.K. Supreme Court in London is scheduled to rule today on whether the Office of Fair Trading can proceed with a trial challenging the amounts banks charge when customers exceed limits on checking accounts.

Banks’ profit margins are under pressure as they face increased competition for customer accounts to fund lending, after wholesale credit markets seized last year. The U.K. Treasury said Nov. 3 that RBS, Britain’s biggest government- controlled bank, and Lloyds Banking Group Plc will ensure consumer account fees are “transparent and fair” in return for taxpayer support.

“If the OFT wins this week, it will then decide whether individual current account terms are in fact unfair,” Ed Crosse, a finance litigation partner at U.K. law firm Osborne Clarke said. “If the banks still have the appetite to challenge those decisions, they will need to do so in court and the matter could go all the way to the Supreme Court again.”

Lesley McLeod, a spokeswoman for the British Bankers’ Association, said her members hope the ruling will give them “legal clarity” about the fees.

Fees, Interest

British banks charge as much as 30 pounds ($50) and up to 30 percent interest to customers who bounce checks or spend more than they have in their account, according to data company Moneyfacts Group Plc.

The banks being sued are RBS, HSBC, Abbey National Plc, Barclays Plc, HBOS Plc, Clydesdale Bank Plc, Lloyds TSB Bank and Nationwide Building Society. The lenders and the OFT agreed to take the issue to court to clarify the law.

Tens of thousands of bank customers have written to lenders asking for the charges to be refunded. Thousands of them have lodged cases in the U.K.’s county courts, which hear smaller claims than the High Court. Those cases have been put on hold pending a definitive ruling.

Judges at both the High Court and the Court of Appeal have ruled overdraft fees are subject to laws regulating unfair terms in consumer contracts, allowing the OFT to continue its legal challenge.

To contact the reporter on this story: James Lumley in London at jlumley1@bloomberg.net.

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U.K. Pound Climbs on Speculation Economic Contraction Slowed

By Beth Mellor and Lukanyo Mnyanda

Nov. 25 (Bloomberg) -- The pound rose against the dollar before a report economists predict will show the U.K. economy contracted less than initially estimated in the third quarter.

Sterling also rebounded from the weakest level in almost two weeks against the euro. The British economy shrank by 0.3 percent in the third quarter, less than a previous estimate of a 0.4 percent contraction, the Office for National Statistics will say today, according to the median forecast of 28 economists surveyed by Bloomberg. The FTSE 100 Index of stocks rose 0.4 percent amid speculation the global recovery is gathering pace.

“There’s certainly an expectation that we’ll see something of an upward revision in the data and markets are biased toward the idea that the U.K. is not in as deep a trough as people expected,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International. “Risk appetite is looking more healthy and that’s also helping” the pound rise, he said.

The U.K. currency advanced 0.8 percent to $1.6712 as of 8:47 a.m. in London, and climbed 0.5 percent to 147.48 yen. Sterling appreciated 0.5 percent to 89.83 pence per euro. The pound weakened to 90.57 pence per euro yesterday, the lowest level since Nov. 12.

The economic slump may be easing after the government boosted spending and policy makers cut their main interest rate to a record low and started to buy 200 billion pounds ($334 billion) of bonds to lower borrowing costs. The Bank of England is encouraged by signs a recovery is emerging even if it isn’t “particularly strong,” Governor Mervyn King said yesterday.

The yield on the two-year note fell 2 basis points to 1.21 percent. The 10-year gilt yield was little changed at 3.65 percent.

To contact the reporters on this story: Beth Mellor in London at bmellor@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Fed Officials Watch Asset Prices for Signs of ‘Excessive Risk’

By Craig Torres

Nov. 25 (Bloomberg) -- Federal Reserve policy makers said for the first time that their decision to cut interest rates to zero may be fueling undue financial-market speculation even as they called the dollar’s decline “orderly.”

The Federal Open Market Committee said its policy of keeping rates low might cause “excessive risk-taking” or an “unanchoring of inflation expectations,” according to minutes of its Nov. 3-4 meeting released yesterday. Central bankers also said further dollar depreciation that might “put significant upward pressure on inflation would bear close watching.”

The dollar weakened as investors wagered the central bank will tolerate further declines in a currency that has slid more than 6 percent against the yen in three months. Policy makers are wary of fueling a third asset-price bubble in about a decade as they hold the benchmark interest rate near a record low to revive growth, economists said.

“Financial markets have been doing much better than people might have expected,” said Marvin Goodfriend, a former policy adviser at the Richmond Fed who is now a professor at Carnegie Mellon University in Pittsburgh. “The Fed is saying to markets, ‘Don’t overdo it.’”

Fed Chairman Ben S. Bernanke, 55, will face lawmakers’ scrutiny when he appears on Dec. 3 before the Senate Banking Committee for a hearing on his nomination to a second term.

Senator Christopher Dodd, the committee’s chairman and a Connecticut Democrat, has blamed the Fed for lax supervision that led to a credit-fueled housing bubble. The bust in home prices, along with borrower defaults, led to the worst recession since the Great Depression.

Fuel Speculation

Last week, policy makers in China and Japan said low U.S. interest rates are fueling surging prices of commodities as well as financial assets in emerging markets.

The decline of the dollar and decisions in the U.S. not to raise interest rates have caused “huge” speculation in foreign exchange trading and global asset prices, Liu Mingkang, chairman of the China Banking Regulatory Commission, said Nov. 15.

Gold prices touched an all-time high of $1,174 an ounce in New York on Nov. 23 as a slumping dollar boosted the appeal of alternative assets. The Standard & Poor’s 500 index has jumped 63 percent since its 2009 low on March 9, and the MSCI AC World stock index is up 72 percent.

The dollar weakened to the lowest level versus the yen in a month after the minutes were released yesterday. The dollar fell 0.5 percent in New York to 88.55 yen at 4:33 p.m. in New York from 88.97 on Nov. 23, after touching 88.36, the lowest level since Oct. 9.

Excessive Risk Taking

Fed policy makers at their meeting this month repeated their commitment to keep the benchmark interest rate “exceptionally low” for an “extended period.” In their discussion of asset prices, they said the likelihood of excessive risk-taking was “relatively low.”

Even so, officials “introduced topics that they traditionally avoid,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. Asset values “can be considered some of the additional factors that would influence their outlook for inflation and growth.”

The U.S. economy grew less than initially estimated last quarter as consumer spending trailed forecasts, according to a Commerce Department report released yesterday. The economy expanded at a 2.8 percent annual rate, less than the initial estimate of a 3.5 percent pace of expansion.

‘Balanced’ Risks

“Most participants now viewed the risks to their growth forecasts as being roughly balanced rather than tilted to the downside, but uncertainty surrounding these forecasts was still viewed as quite elevated,” the minutes said. Among the risks policy makers considered was a jobless recovery.

“Most members projected that over the next couple of years, the unemployment rate would remain quite elevated and the level of inflation would remain below rates consistent over the longer run with the Federal Reserve’s objectives,” the minutes said.

Fed officials trimmed their forecasts for the U.S. jobless rate in 2010 and 2011, the minutes showed. Fed governors and regional bank presidents predicted the rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, down from their June projection of 9.5 percent to 9.8 percent.

The U.S. economy has lost 7.3 million jobs since the recession began in December 2007. The unemployment rate rose last month to a 26-year high of 10.2 percent. U.S. payrolls shrank by 190,000 jobs last month, and the average workweek held at a record low.

AOL, the Internet unit being spun off from Time Warner Inc., plans to cut as much as 2,300 staff, or about one third of its workforce, over the next several months. Aetna Inc., the third-largest U.S. health insurer, said Nov. 18 it’s cutting about 625 positions and plans to eliminate a similar amount next year to cope with the recession and the potential effects of the U.S. health overhaul.

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

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IMF Gets $600 Billion Credit Line to Help in Financial Crises

By Sandrine Rastello

Nov. 25 (Bloomberg) -- The International Monetary Fund said it will have access to a credit line of up to $600 billion to make loans during financial crises after contributing countries agreed to fold commitments into one pool.

The agreement, yet to be approved by the IMF board, adds as many as 13 members from the current 26 to the so-called New Arrangements to Borrow, including emerging nations China, Russia, Brazil and India, the IMF said in an e-mailed statement.

The decision “marks an important moment for multilateralism and the fund, which will help the IMF’s effectiveness in its response to crises,” Managing Director Dominique Strauss-Kahn said in yesterday’s statement.

The deal goes beyond a pledge by leaders of the Group of 20 nations to contribute up to $500 billion to a credit arrangement that’s currently worth $54 billion, the IMF said. The worst financial crisis since the Great Depression prompted more nations to seek aid from the fund, created after World War II to help ensure the stability of the global monetary system.

The agreement, which merges existing commitments into one facility, makes it easier for the IMF to tap into its supplemental resources. The credit line will be “an effective tool of crisis management as a backstop for the international monetary system,” the IMF statement said.

While a general agreement on the NAB was reached at the G- 20 meeting in Pittsburgh in September, talks on the specifics stalled over divisions between some emerging and developed nations over voting rights relating to the credit facility.

Borrowed From Members

The IMF has estimated that its current credit line was insufficient when the financial crisis boosted demand for loans. It then started to borrow from individual members, such as Japan, to continue lending to countries in difficulty.

To ensure the institution would continue shoring up economies around the world, G-20 leaders in April pledged to add $500 billion to the IMF’s resources.

Some of these contributions were bilateral loans, while China agreed to participate by buying the first IMF notes. Some countries, like the U.S., made theirs directly to the NAB.

When the new credit-line agreement is activated, all the bilateral loans will fall into it, Andrew Tweedie, who heads the IMF Finance Department, said in a Nov. 20 interview. It won’t come into effect before next year, he said.

To contact the reporter on this story: Sandrine Rastello in Paris at srastello@bloomberg.net

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Vietnam Weakens Dong, Raises Rate to Combat Inflation

By Van Nguyen

Nov. 25 (Bloomberg) -- Vietnam’s central bank devalued its currency and raised interest rates to rein in accelerating inflation and a widening trade deficit that is eroding confidence in the dong.

The State Bank of Vietnam lowered the reference rate 5.2 percent to 17,961 against the dollar, after the gap between spot and black-market rates widened to the most in a decade. Policy makers narrowed the dong’s daily trading band to 3 percent, from 5 percent, effective tomorrow. The unofficial rate offered at gold shops in Ho Chi Minh City is 9 percent weaker than today’s spot rate.

Vietnam raised the benchmark rate one percentage point to 8 percent, after inflation accelerated this month, the first nation in Asia to raise borrowing costs. The benchmark stock index had the biggest drop in more than seven months on concern higher lending rates will lower company earnings.

“The rate hike is targeted towards giving the Vietnamese dong more support and the devaluation is to help exports,” said Tai Hui, Singapore-based head of Southeast Asian research at Standard Chartered Plc. “The dynamics in Vietnam are completely different from other Asian economies.”

The dong fell 0.04 percent to 17,881 against the dollar as of 3:15 p.m. in Hanoi, about 5 percent weaker than today’s reference rate of 17,034. The benchmark VN Index dropped 4.5 percent, the most in more than seven months, to close at a three-month low of 503.41.

Inflation Expectations

The Southeast Asian nation is trying to sustain economic growth in 2010 and curb inflation, the statement said. The rate increase is to lower credit growth and meet economic targets, the central bank said.

Consumer prices gained 4.35 percent in November from a year earlier, the biggest increase since May, according to figures released by the General Statistics Office in Hanoi today. The trade deficit widened to $1.9 billion in October, the most since May 2008, from $1.8 billion in September.

Concern about a widening deficit and quickening inflation has prompted Vietnamese investors to buy gold and foreign currency. The gold price in Vietnam rose as high as 28.85 million dong ($1,613) per tael today, from 18.4 million dong at the start of the year. One tael is about 1.2 ounces of gold.

“They want to make sure that inflation expectations are anchored,” said Jaseem Ahmed, the Manila-based director of the Asian Development Bank’s financial sector, public management and trade division for Southeast Asia. “They are also probably trying to give a sense that people don’t need to worry about substantial movements in the exchange rate.”

‘Odd One Out’

Government bonds rose on speculation higher interest rates may slow inflation. The yield on the benchmark five-year note declined 14 basis points to 11.13 percent, the biggest drop since Sept. 3. A basis point is 0.01 percentage point.

Vietnam’s dong has fallen 2.3 percent this year, heading for a second annual decline. Amongst 10 Asian currencies tracked by Bloomberg, all except the Chinese yuan and the Hong Kong dollar have gained.

Policy makers around the region are leaving borrowing costs unchanged amid concern higher interest rates will encourage capital inflows that may boost their currencies and undermine financial stability.

“Most Asian governments and central banks are fighting and resisting currency appreciation and are talking about currency controls,” Standard Chartered’s Hui said. “Vietnam is the odd one out in Asia.”

Vietnam will also lift the refinancing rate to 8 percent from 7 percent, and the discount rate to 6 percent from 5 percent, according to the statement. The rate increases, the first since January, are effective from Dec. 1.

Black Market Rates

The dong traded at between 19,600 and 19,800 in the so- called black market in Ho Chi Minh City, according to a state- run telephone information service. The gap between unofficial rates and the spot rate has widened from about 5 percent at the start of the month.

The central bank kept the key rate at 7 percent since January to help the government meet its 5 percent economic growth target. The economy expanded 6.2 percent last year, the slowest pace in nine years. Inflation may accelerate to 6 percent by the end of the year, Deputy Prime Minister Nguyen Sinh Hung said last week. Credit growth in the 10 months through October reached 33 percent, exceeding the government’s 30 percent full-year target. “There are risks of inflation picking up,” Hung said in a Nov. 18 interview in Hanoi. “Since we wanted to boost economic growth, we injected a large volume of funds to businesses.”

To contact the reporter on this story: Van Nguyen in Hanoi at vnguyen23@bloomberg.net

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Rice Prices May Return to Record Without Investment, IRRI Says

By Luzi Ann Javier

Nov. 25 (Bloomberg) -- Rice prices may return to last year’s record levels and the world will see repeated food shortages without investment to boost production, the International Rice Research Institute said.

“Rice prices are again approaching last year’s historic highs that caused social upheaval in some nations,” the Laguna, Philippines-based institute said in a statement today. “Once we get our productivity going, it will keep pace with demand,” IRRI Director General Robert Zeigler told reporters today.

Rice production has lagged behind demand in four of the past eight years and rising consumption is expected to erode global ending stockpiles by 41 percent to 85.9 million tons in the 2009-2010 marketing year, from a record 146.7 million tons in 2000-2001, according to the U.S. Department of Agriculture.

Rice futures have gained 37 percent from this year’s low of $11.195 per 100 pounds in Chicago on concern that crop losses from drought in India, the second-largest grower and consumer, and storms in the Philippines, the biggest importer, will cut global supplies.

Rough rice for January delivery gained for a third day, adding 0.3 percent to $15.315 per 100 pounds on the Chicago Board of Trade at 4:13 p.m. Singapore time.

Thai 100 percent grade-B white rice, Asia’s benchmark export price, was raised 5.3 percent to $590 a ton by the Thai Rice Exporters Association today. The price has gained 12 percent from this year’s low of $525 in October.

Without investments in agriculture “you will find increasing examples of 2008 repeating and extending,” Zeigler said in Singapore today. “You’ll find yourselves with global food shortages, you’ll find the world completely incapable of addressing the impact of climate change.”

Output Drop

Global output was forecast to drop 3 percent from a year earlier to 432 million tons in the 2009-2010 marketing year, resulting in a shortfall of 4.75 million tons, according to estimates by the USDA on Nov. 10.

Farmers are struggling to squeeze more crops from each acre while demand increases with a growing population. Limited growth in yields is “a major reason for the imbalance between long- term demand and supply,” according to the IRRI. Average annual yield growth slowed to 1.4 percent from 1990 to 2005, from 2.14 percent during the previous two decades, it said.

IRRI aims to raise $300 million in research funding over a five-year period to help develop higher-yielding rice varieties that will accelerate production growth and keep pace with the expansion in demand, Zeigler said.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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Indonesian Exporters Threatened by Rupiah at 9,000

By Lilian Karunungan

Nov. 25 (Bloomberg) -- Indonesia’s coal and palm oil exporters’ profit margins may narrow should the rupiah rise 5 percent to 9,000 per dollar and costs of fuel and rice keep climbing, industry groups said.

Seven of 16 analysts in a Bloomberg News survey predict a gain in the currency, Asia’s best performer this year, to 9,000 or stronger against the dollar by the end of 2010. The median estimate is 9,150, compared with 9,413 today. Indonesia is the world’s biggest producer of palm oil and the largest exporter of power-station coal.

The currency rising to 9,000 “is a critical level,” Bob Kamandanu, chairman of the Indonesian Coal Mining Association, said in an interview in Jakarta on Nov. 20. “It’s too strong.”

Indonesia’s exports, which account for 24 percent of gross domestic product, fell 19.9 percent in September from a year earlier after dropping 15.4 percent the previous month, statistics bureau data showed on Nov. 2. The rupiah has risen 16 percent this year, nearly double the pace of the South Korean won. It reached 9,280 on Oct. 15, the strongest level since September 2008, and last traded at 9,000 in July 2007.

Overseas investors plowed funds into Indonesian stocks and bonds this year to benefit from the fastest growth in Southeast Asia, driven by domestic consumption. The Jakarta Composite index of shares soared 82 percent as funds based abroad purchased $951 million more local shares than they sold, according to stock exchange data.

Danger Level

A rate of “9,000 would be dangerous for our exporters,” Fadhil Hasan, executive director of the Indonesian Palm Oil Association, said in an interview in Jakarta. “It’s going to hurt them.”

The rupiah may weaken next year as investors pare holdings of riskier assets on concern about the speed of the global economic recovery, said Tetsuo Yoshikoshi, a senior economist in Singapore at Sumitomo Mitsui Banking Corp.

“I don’t expect the rupiah to appreciate toward 9,000,” Yoshikoshi said. “It’s still a risky asset even if many economists are bullish on the economy. We’re going to see a slowdown in the recovery pace of the global economy. That will be a trigger for some kind of risk aversion.”

Oil, Food Costs

Coal producers’ earnings are also being hit by increased fuel prices, which account for 30 percent of costs, Kamandanu said. Oil on the New York Mercantile Stock Exchange has risen 71 percent this year and traded at $76.37 per barrel in after-hours trading.

If the price goes above $80, “that would kill our operations,” said Kamandanu.

The palm oil association’s 378 growers and producers also have to grapple with rising prices of food to feed their workers, said Steaven Halim, second secretary at the association.

The wholesale price of rice in Indonesia was at 5,550 rupiah per kilo of rice today, up from 5,400 a year ago, according to PT Food Station Tjipinang Jaya, Indonesia’s biggest market for the grain. Rice production may be affected by dry weather caused by El Nino, the weather pattern that creates a warming of the Pacific Ocean, can prolong the dry season in parts of Asia, damaging agricultural output.

If the rupiah rises to 9,000, “that may be a problem at the farms,” Halim said. “In nominal terms, the farmers will have decreasing income, while they are paying more for the staple food.”

To contact the reporter on this story: Lilian Karunungan in Jakarta at lkarunungan@bloomberg.net.

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German Stocks Rise for Second Day This Week, ThyssenKrupp Gains

By Julie Cruz

Nov. 25 (Bloomberg) -- German stocks climbed for a second day this week, led by steelmakers, as Federal Reserve officials increased their forecast for U.S. economic growth.

The benchmark DAX Index added 0.6 percent to 5,804.84 as of 9:39 a.m. in Frankfurt, erasing yesterday’s drop. The measure has rallied 50 percent since March 6 as companies posted better-than-estimated earnings and investors speculated the global recession is easing. The broader HDAX Index also gained 0.6 percent today.

In the U.S., Fed policy makers raised their forecast for 2010 economic growth, to a range of 2.5 percent to 3.5 percent from 2.1 percent to 3.3 percent. Fed governors and regional- bank presidents cut their prediction for unemployment to a rate of 9.3 percent to 9.7 percent in next year’s fourth quarter, from the June projection of 9.5 percent to 9.8 percent, according to minutes of the Federal Open Market Committee’s Nov. 3-4 meeting released yesterday.

ThyssenKrupp AG and Salzgitter AG, the country’s largest steelmakers, advanced 1 percent to 25.15 euros and 1.5 percent to 66.15 euros, respectively. European basic-resource shares rose as much as 2.1 percent today, the best performance among 19 industry groups in Europe’s Dow Jones Stoxx 600 Index.

Commerzbank AG, the country’s second-biggest bank, gained 0.8 percent to 6.49 euros. Commerzbank reaffirmed its revenue and earnings targets under “Roadmap 2012.” The lender said it sees 2012 gross revenue at “just below” 14 billion euros, and loan loss provisions at about 2 billion euros.

Daimler, Siemens

Daimler AG, the world’s second-largest maker of luxury cars, increased 1.8 percent to 36.08 euros. Rainer Schmueckle, chief operating officer of Daimler’s Mercedes-Benz division, will stay with the company as General Motors Co. failed to recruit him as head of its Opel unit, Handelsblatt reported.

Separately, Aabar Investments PJSC, the biggest shareholder in German luxury carmaker Daimler, borrowed $1.63 billion from a group of local and foreign banks.

Siemens AG, Europe’s largest engineering company, added 1 percent to 66.70 euros. Areva SA’s planned sale of its power- grid equipment division drew opposition from the unit’s senior managers, who said the disposal would end up benefiting rivals Siemens and ABB Ltd.

3U Holding AG rose 2.9 percent to 70 cents as the company said nine-month earnings before interest, taxes, depreciation and amortization rose 26 percent to 10.7 million euros. Sales fell, the company said.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

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U.K. Stocks Advance; Compass, Britvic, Anglo American Climb

By Adam Haigh

Nov. 25 (Bloomberg) -- U.K. stocks rose after the U.S. Federal Reserve increased forecasts for economic growth in the world’s biggest economy and rising metals prices boosted raw- material producers.

Compass Group Plc, the world’s largest catering company, gained 4 percent and Britvic Plc, the maker of Tango soda and Robinson’s fruit drinks, advanced 3.1 percent after saying profit increased. Anglo American Plc led mining shares higher, and Randgold Resources Ltd. increased as gold reached a record.

The benchmark FTSE 100 Index gained 28.23, or 0.5 percent, to 5,352.19 at 8:51 a.m. in London. The gauge has climbed 52 percent since March 3 as governments worldwide enacted spending programs and cut borrowing costs to revive economic growth. The FTSE All-Share Index added 0.5 percent today and Ireland’s ISEQ Index advanced 0.5 percent.

Reports today may show a rebound in U.S. consumer spending last month, while the number of jobs being shed continues to rise. In the U.K., the Office for National Statistics will provide details on gross domestic product in the third quarter.

“Today is going to be about recovering yesterday’s losses and there is a slew of macro data today to look forward to,” Tim Hughes, the London-based head of sales trading at IG Index told Bloomberg Television. “Strength really is informed by the miners today.”

In the U.S., Fed policy makers raised their forecast for 2010 economic growth, to a range of 2.5 percent to 3.5 percent from 2.1 percent to 3.3 percent. Fed governors and regional-bank presidents predicted the unemployment rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, down from the June projection of 9.5 percent to 9.8 percent, according to minutes of the Federal Open Market Committee’s Nov. 3-4 meeting released yesterday.

Economy Watch

The U.K. economy shrank less than previously estimated in the third quarter as the longest recession on record eased, a survey of economists shows. Gross domestic product probably fell 0.3 percent from the second quarter, less than the 0.4 percent drop reported on Oct. 23, according to the median of 28 economists’ forecasts in a Bloomberg News survey. The ONS will release its second estimate at 9:30 a.m. today in London.

Compass Group Plc added 4 percent to 418 pence after saying full-year profit rose 32 percent as cost cuts offset a decline in U.K. sales.

Britvic gained 3.1 percent to 384 pence. The company said full-year operating profit rose to 110.1 million pounds from 96.7 million pounds a year earlier.

Anglo American added 2.8 percent to 2,690 pence. BHP Billiton Ltd, the world’s largest mining company, advanced 2.3 percent to 1,901 pence. Copper, lead, nickel and tin rose on the London Metal Exchange. Randgold Resources added 2.9 percent to 5,185 pence as gold climbed to a record.

Old Mutual Plc advanced 1.7 percent to 121.2 pence as the biggest insurer in Africa was rated “buy” in new coverage at Goldman Sachs Group Inc., which said the company offers “upside potential through disposals and cost cuts yet to be announced.”

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

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