Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Dec 11 09 08:46 GMT |

Previous session overview The dollar and euro rose against the yen in Asia Friday as strong Chinese economic data fueled optimism about the global economic recovery, to the detriment of the safe-haven, low-yielding Japanese currency. The dollar and euro climbed to intraday highs of JPY88.79 and JPY130.73 respectively, after data showed Chinese industrial production rose 19.2% from a year earlier in November. Other Chinese data showed the country's consumer price index increasing by 0.6% in November, the first rise in ten months. Players interpreted that as a positive offshoot of the surging economy, instead of as a reason for concern that monetary tightening could be imminent, dealers said. Also hurting the yen was apparent discord within the Japanese government over plans for government bond issuance for the fiscal year starting in April, traders said. Seemingly conflicting statements about the government's previously stated goal to cap new debt sales at JPY44 trillion in fiscal 2010 highlighted political risk negative for the yen. At 0450 GMT, the dollar stood at JPY88.72 compared with JPY88.21 late Thursday in New York. The euro traded hands at JPY130.66 compared with JPY129.97. Meanwhile the euro stood at USD1.4727 at 0450 GMT compared to USD1.4729 late Thursday in New York. The Dollar Index, which measures the currency's value against six major units including the euro, was at 76.061 compared to 76.011. Sterling stayed steady against the dollar after the Bank of England kept its asset-buying program unchanged at GBP 200 billion and left interest rates at 0.5%. The Australian dollar edged higher in Asia Friday on a better tone in stock markets but in quiet trade as dealers look ahead to important economic and policy releases next week. Market expectation If U.S. economic indicators later in the global day also come in strong, the dollar and euro could rise further against the yen, dealers said. While Japan will benefit from the China boost, deflation is likely to force the Bank of Japan to keep interest rates at rock-bottom levels, dealers said. That encouraged short-term players to sell the yen on the positive Chinese news, they said. For EURUSD bids seen placed to USD1.4700, more toward USD1.4690 with stops said to remain in place on a break of USD1.4680. Stronger demand seen placed on the approach to USD1.4650. Resistance seen placed toward the Asian high at USD1.4740, more at USD1.4760 (NY high) ahead of USD1.4775/85. For Pound support seen in place toward USD1.6260, with stops placed on a break of USD1.6250. If stops triggered to open a deeper pullback toward the recent area of pullback may lows between USD1.6225/15. Resistance seen placed at USD1.6300/05, USD1.6320 ahead of USD1.6334. European stocks are expected to open with modest gains overall Friday, following broadly positive sessions in Asia and the U.S. However, the advance is likely to remain muted until the release of U.S. retail sales data at 1330 GMT. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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UK's PPI Continues Its Rise In November

Daily Forex Fundamentals | Written by ecPulse.com | Dec 11 09 10:05 GMT |

Today, the U.K. released its Producer Price Index (PPI) for the month of November showing incline, reflecting the improvement witnessed in the economy recently. The British economy in third quarter contracted 0.3%, lower than 0.6% and 2.4% contractions signaled in the second and first quarters respectively, boosted by the monetary and fiscal interventions by the BoE and government. Mervyn King and other MPC members chose to reduce the interest rate to a historical low of 0.5% in addition to pumping 200 billion pounds of new printed money to bolster the economy and boost inflation. Yesterday, the bank preferred to stick to the current benchmark and APF quantity which they considered appropriate till they analyze the impact of the program on markets. Currently, the BoE already spent more than 187 billion and they mentioned that they will re-assess the effect of measures in February, when they have new projections and conditions become more vivid. The BoE expects the announced program to take another two months to end, while the scale of the program will remain under review. Although the economy showed progress starting from the second quarter, yet prices faced downward pressure impacted by the decline in demand and high unemployment rate. However, as seen recently, prices started to accelerate after falling to 1.1% in September it rebounded in October to 1.5%, above estimates. Today's data is giving additional clue that the price rise will continue in the fourth quarter as annual PPI output for November rose to 2.9% from the revised 1.9%. On the month, the reading slipped to 2.0% from 2.2%. PPI input spiked to 4.0% from 0.4% on the year and slumped to 0.1% from 2.9% on the month. Looking into details, annual PPI output was spurred by the incline petroleum products which soared from -3.1% to 8.3%, while manufactured products inched down to 0.2% from 0.3% on the month. On the other hand, annual PPI input was led by material purchased which rose to 6.9% from 1.8%, while on the month fuel purchased retreated to 0.3% from 6.9%. Energy prices after reaching its bottom in February below $34 a barrel, it surged to one-year high in October above $81 a barrel and it also recorded a high above $81 a barrel in November. On the other hand, the recovery in global demand enhanced sales overseas of British products, boosted by the depreciation in the value especially against the euro since their main trade partners are located in Europe. The bank expects inflation in the near term to climb above 2%, where it predicted previously to reach 0.4% this year and 1.5% next year. Moreover, in the coming period, inflation may incline as darling promised to increase spending especially on health and education although budget deficit is widening, while King said that he has an "open mind" about adding more to the current 200 billion pounds. In addition, the government is continuing its support to banks; for instance, Royal Bank of Scotland and Lloyds Banking Group received 76 billion pounds as a bailout from the government. Darling estimates the economy to contract by 4.75%, higher than March projections of a contraction between 3.75% and 3.25%, whereas next year the economy will grow between 1% and 1.5% and about 3.5% in 2011 and 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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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Dec 11 09 08:29 GMT |

CHF The pre-planned buying positions from key supports have been implemented with attainment of minimal anticipated target. OsMA trend indicator, having marked low activity of both parties does not give grounds for any amendments to earlier designed trading plans. Therefore, we can assume probability of rate return to 1,0220/40 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 1,0280/1,0300, 1,0340/60 and (or) further break-out variant up to 1,0400/20, 1,0460/1,0500. The alternative for sales will be below 1,0160 with the targets of 1,0100/20, 1,0040/60. GBP The pre-planned short positions from key resistance range levels have been implemented with attainment of minimal anticipated target. OsMA trend indicator, having marked decline in both party activity gives grounds for preservation of earlier designed trading plans for today. Namely, we can assume probability of rate return to channel line 1 at 1,6300/40 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 1,6200/40, 1,6140/60 and (or) further break-out variant up to 1,6060/80, 1,5980/1,6020. The alternative for buyers will be above 1,6440 with the targets of 1,6480/1,6500, 1,6540/60, 1,6620/60. JPY The estimated test of key resistance range levels has been confirmed, but preservation of bullish party priority, marked by OsMA trend indicator has not favored implementation of the pre-planned short positions. Therefore, at this point, with no clear choice of priorities for planning trading operations, we can assume probability of rate rise to close 89,20/40 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 88,60/80, 88,00/20 and (or) further break-out variant up to 87,40/60, 86,80/87,00. The alternative for buyers will be above 89,80 with the targets of 90,20/40, 90,80/91,00. EUR The estimated test of key resistance range levels for implementation of the pre-planned short positions has not been confirmed, but fall in both party activity as a result of the previous trading day, does not give grounds for any amendments to earlier designed trading plans. Therefore, as earlier, we can assume probability of rate return to 1,4760/80 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 1,4700/20, 1,4640/60 1,4580/1,4600 and (or) further break-out variant up to 1,4520/40, 1,4460/80. The alternative for buyers will be above 1,4860 with the targets of 1,4900/20, 1,4960/80. FOREX Ltd www.forexltd.co.uk

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Dec 11 09 07:37 GMT |

EUR/USD Current level-1.4728 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 prolonged consolidation above 1.4623 is still on the run and while 1.4801 limits the upside, the bias will remain negative for 1.4450 support. Intraday allow one more upswing for a test of 1.4780 resistance Resistance Support intraday intraweek intraday intraweek 1.4801 1.5146 1.4678 1.4450 1.4865 1.5290 1.4623 1.3740 USD/JPY Current level - 88.69 The overall downtrend has been renewed with the recent break below 87.12. Trading is situated below the 50- and 200-day SMA, currently projected at 94.86 and 94.84. The intraday bias is positive, well supported at 88.45 and a break above 88.75 will target 89.35-54 area. Crucial on the downside is 88.16. Resistance Support intraday intraweek intraday intraweek 89.54 90.77 88.45 84.79 90.77 95.60 87.53 79.60 GBP/USD Current level- 1.6309 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 Still in the consolidation pattern above 1.6130 and current intraday bias is positive, well supported at 1.6291 and is targeting 1.6460 resistance. A break above 1.6347 will confirm the positive outlook. On the bigger frames, a break below 1.6220 will set an end of the corrective phase and will aim at 1.59+ support area. Resistance Support intraday intraweek intraday intraweek 1.6347 1.6850 1.6290 1.6130 1.6460 1.7042 1.6130 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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Japan Consumer Sentiment Falls First Time This Year

By Aki Ito

Dec. 11 (Bloomberg) -- Japan’s household sentiment fell in November for the first time this year, a sign pay cuts threaten consumer spending in the world’s second-largest economy.

The confidence index dropped to 39.5 from 40.5 in October, the Cabinet Office said today in Tokyo. The government lowered its assessment of sentiment for a second month, describing it as “weakening.”

Today’s report shows that the boosts of the former government’s emergency spending, which had lifted sentiment to a 23-month high in September, are waning as consumers become increasingly concerned about their shrinking paychecks. Prime Minister Yukio Hatoyama’s 7.2 trillion yen ($81 billion) stimulus package will do little to reverse that trend of falling wages, analysts say.

“There’s a lot of uncertainty among consumers right now, and the stimulus won’t do much to eliminate that sense of uncertainty,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “For the near term, we expect confidence to stagnate at a low level.”

Japan expanded an annual 1.3 percent in the third quarter, following growth of 2.7 percent in April through June, revised figures from the Cabinet Office showed this week. Consumer spending boosted the economy in both quarters as households took advantage of incentives to purchase energy-efficient goods.

The 7.2 trillion yen emergency package announced this week will extend incentives to purchase cars through September and household appliances through December next year.

Durable Goods

Willingness to buy durable goods, one of the four components that comprise today’s sentiment index, dropped the most since October 2008. Respondents’ sentiment toward their incomes declined for the first time since February.

Analysts say much of the uncertainty last month came from volatility in the markets. The yen strengthened against the dollar to 84.83 on Nov. 27, the highest level since 1995.

The Nikkei 225 Stock Average tumbled 6.9 percent in November, the steepest drop in 10 months, on concern a stronger yen will erode exporters’ profits and reduce the competitiveness of their products abroad.

Hatoyama today indicated he may abandon a pledge of capping bond sales at 44 trillion yen next year to “protect the lives of citizens.”

Losing Steam

In another sign that the recovery is losing steam, merchant sentiment last month dropped to the lowest level since March, when the economy was still in a recession, and industrial production gained at the slowest pace in eight months in October.

Wages slid for a 17th month. Employers will cut winter bonuses by 14.8 percent to a 20-year low, the steepest drop since the survey began in 1978, a Nikkei newspaper survey showed today. Firms typically pay the bonus, which is often equivalent to several months of pay, this month.

Companies are lowering prices to lure consumers, exacerbating deflation. Aeon Co., the nation’s largest supermarket retailer, will hold a five-day sale through Dec. 14 at its 23,000 outlets. The company will lower prices by 10 to 20 percent to match the amount this year’s bonuses are likely to drop, it said on its Web site.

Shuichi Obata, senior economist at Nomura Securities Co. in Tokyo, says companies will keep slashing labor costs until the middle of next year, an indication paychecks won’t grow.

Even so, the jobless rate unexpectedly fell to 5.1 percent. The third monthly decline represents a “genuine” turnaround in the labor market, according to Julian Jessop, chief international economist at Capital Economics Ltd. in London.

To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

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Euro May Decline to 3-Month Low of $1.4446: Technical Analysis

By Yasuhiko Seki and Kazumi Miura

Dec. 11 (Bloomberg) -- The euro is poised to decline to a three-month low of $1.4446, Gaitame.com Research Institute Ltd. said, citing trading patterns.

The 16-nation currency, which climbed to a one-year high of $1.5144 last month, has entered a near-term downtrend as the spot price has fallen below its 60-day moving average, said Tsuyoshi Okada, managing director at the research unit of Japan’s largest foreign-exchange margin dealer in Tokyo.

“The charts are now showing signs of change for the euro, and herald an end of its rising trend,” Okada said. “Should the decline of the euro gain traction, the immediate target will be mid-$1.46 and the next target will be the $1.4446 level.”

The euro traded at $1.4732 as of 9:34 a.m. in Tokyo from $1.4732 yesterday in New York. The currency has declined 2.7 percent since reaching a 15-month high on Nov. 25.

The single currency last traded below $1.4446 on Sept. 8. “This level has served as a key resistance level for the euro’s rising trend that began early this year and lasted until August,” Okada said. A resistance level is where sell orders may be clustered.

The euro’s 60-day moving average was $1.4844 yesterday, according to data compiled by Bloomberg. The currency remained above the average from Aug. 19 until Dec. 4.

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

To contact the reporters on this story: Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net; Kazumi Miura in Tokyo at kmiura@bloomberg.net.

Last Updated: December 10, 2009 19:49 EST



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U.K. Producer Prices Increase 2.9% From Year Earlier

By Scott Hamilton

Dec. 11 (Bloomberg) -- U.K. producer prices rose at the fastest annual pace in nine months in November after raw- material costs increased, a sign inflation pressures are building as the recession eases.

The prices of goods at factory gates climbed 2.9 percent from a year earlier, the Office for National Statistics said today in London. The result matched the median forecast of 16 economists in a Bloomberg News survey. From October, prices increased 0.2 percent, in the ninth consecutive monthly gain.

The report suggests factories are finding scope to charge their customers more as the economic slump abates. Bank of England policy makers yesterday kept up their plan to buy 200 billion pounds ($326 billion) in the fight to prevent deflation taking hold in the economy.

“This raises the risks on inflation being more sticky than the BOE expects,” Ross Walker, an economist at Royal Bank of Scotland Group Plc in London, said in a telephone interview. “We’re all expecting a spike in inflation early next year, but then the BOE expects inflation to fall back sharply. I think that’s too optimistic.”

The pound was little changed after the report. The U.K. currency rose 0.5 percent today against the dollar and traded at $1.6317 as of 9:54 a.m. in London. Two-year gilts were up 2 basis points at 1.18 percent.

All 10 categories of producer prices increased from a year earlier, led by petroleum products, and tobacco and alcohol, the statistics office said.

Core Prices

Excluding food, beverages, tobacco and petroleum products, prices rose 2 percent from a year earlier. They fell 0.1 percent from October, the statistics office said.

Manufacturers face pressure to raise prices to protect margins as commodity costs fluctuate.

DS Smith Plc, the owner of the Spicers office products brand, said yesterday that it was raising the selling price of its cardboard box packaging at its U.K. operations to recover high waste-paper costs and rising energy expenses.

Robert Wiseman Dairies Plc, Scotland’s largest provider of fresh milk, said on Nov. 16 that the increasing oil price was going to make it “difficult” to maintain the level of its earnings.

Raw-material costs increased 4 percent from a year earlier, the biggest gain since November 2008, the statistics office said. Crude-oil costs, which have increased by about half in the past year, led the gain.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net.

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Spain Says Adios to Xmas as 19% Jobless Hits Spending

By Emma Ross-Thomas

Dec. 11 (Bloomberg) -- For the first time in their lives, Consuelo Serrano’s kids won’t get a visit from Santa Claus.

The Spanish mother will give presents only on the Jan. 6 Epiphany holiday, a Christian feast that marks when three wise men visited Jesus. As Spain grew faster than the region over the last decade, Serrano and millions like her handed out gifts at Christmas too. Now, she’s the sole breadwinner as the nation’s jobless rate soared to the euro area’s highest.

“The children used to ask for PlayStations and computers but they know that won’t happen this year,” said Serrano, 43, who earns 1,100 euros ($1,620) a month at a bakery in Madrid and has three children aged from 11 to 14.

Spanish holiday spending will drop 9.1 percent this season, according to Deloitte, more than the 6.3 percent decline forecast for western Europe. El Corte Ingles SA, the nation’s biggest department store operator, is advertising 70 percent discounts to lure shoppers.

The credit crunch exacerbated the collapse of Spain’s housing boom last year, leaving people struggling to pay household debt that is among the highest in the euro region. The protracted crisis means more than half the jobless, including Serrano’s husband, have been out of work too long to get full benefits. Spain’s unemployment rate is 19 percent.

The outlook for next year doesn’t give consumers much reason for holiday cheer. The economy is forecast to contract 0.8 percent in 2010, lagging behind the European Commission’s estimate for European expansion of 0.7 percent. Spanish unemployment is expected to rise to 20 percent.

No Presents

“There won’t be any presents,” said Luis Alberto Llumipanta, 36. The father of three, an Ecuadorian who’s lived in Spain for 12 years, lost his job as a carpenter and has had to refinance his mortgage.

Shoppers may be skipping Christmas gifts and are likely to delay spending on any presents as long as possible, hoping for bigger discounts, said Miguel Angel Fraile, head of the Spanish Retailers Association. Spanish consumer prices fell from March to October, the first decline for 50 years. Even after prices rose in November, inflation remains below the euro-region average.

“People are going to buy more at the last minute, thinking that there will be better offers,” Fraile said. He estimates prices for some gifts are as much as 15 percent cheaper than a year ago.

Fur Coats

El Corte Ingles slashed the price of a Fisher Price activity center by 40 percent to 50 euros and offered 50 percent off of fur coats last week. The department store is making a “very significant effort” on discounts this year to stimulate demand, said a spokeswoman.

Foreign retailers like Carrefour SA are also having trouble. In Spain, the Paris-based retailer’s second-biggest market, it cut prices as much as 25 percent on 10,000 products per store this year, a spokesman said. This week, it offered 20 percent off toys. Carrefour’s same-store sales in Spain dropped twice as much in the third quarter as they did globally.

“Spain is the worst of all,” for sales, said Enric Casi, general director of Barcelona-based clothing chain Mango, which makes a fifth of its revenue in Spain. The company plans to open 200 stores next year. None are planned in Spain, Casi said.

Credit Agricole Cheuvreux cut Zara fashion-chain owner Inditex SA to “underperform” today, saying sales were weaker than forecast and there wasn’t enough evidence to raise its earnings estimates. Inditex posted a 4.3 percent increase in third-quarter net income yesterday, helped by business in Asia.

No More Benefits

Fewer than half of Spain’s 3.8 million unemployed are still receiving their contributions-based jobless pay, which lasts a maximum of two years, according to Labor Ministry data. Another 1.2 million receive smaller subsidies, such as a 420 euro-a- month benefit introduced in August.

Unemployment among people younger than 25, who account for 10 percent of the labor force, is more than 40 percent, posing a further risk to companies that focus on young fashion such as Hennes & Mauritz AB, or Inditex’s Bershka brand, said Francisco Ruiz, an analyst at Fortis Bank SA in Madrid.

Debt built up during a decade-long real estate boom is also crimping households’ ability to spend. Mortgages, consumer credit and other loans account for 77 percent of Spanish GDP, compared with 51 percent in the euro region and 55 percent in Germany, according to European Central Bank data.

Monthly mortgage payments that exceed her income are keeping 42-year-old Nidia Vargas away from the shops after her husband lost his job as a builder.

Delayed Recovery

“We’ll try to do something for the children, but minimal, something from the corner store,” said Vargas, a Peruvian who’s lived in Madrid for three years and works in a home for disabled people.

Compared with last year, when household consumption fell an annual 3.4 percent in the fourth quarter, this year may not look as bad, said Gregorio Izquierdo, head of research at the Institute of Economic Research in Madrid. A year ago, higher interest rates also cut into spending power in a country where home ownership runs at about 80 percent.

“I think this Christmas season will be better than last year, not because it’ll be particularly good, but because last year was especially tough,” said Izquierdo.

Still, retailers may not see a real recovery until jobs are created, which won’t happen on a net basis until the end of next year, Deputy Finance Minister Jose Manuel Campa said last month.

That’s bad news for Serrano’s husband, a technician for a telephone company, who’s been out of work for two years and is searching for any job he can find.

“We have to get out of this somehow, I just don’t know how,” Serrano said.

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

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Russia’s Economy Contracted 8.9% in Third Quarter

By Alex Nicholson

Dec. 11 (Bloomberg) -- Russia’s economic decline abated in the third quarter as companies began restocking inventories depleted during a record slump in the first half of the year.

Gross domestic product fell 8.9 percent from a year earlier, in line with the government’s estimate, after a 10.9 percent contraction in the second quarter, the State Statistics Service said on its Web site today. On the quarter, output grew a non-seasonally adjusted 13.8 percent.

“The model of economic development has rapidly changed,” said Anton Struchenevsky, an economist at Troika Dialog in Moscow. “Investors are much more sensitive to risk. The euphoric component has gone and this is impeding lending. There is a slight improvement, but it would be a great illusion to think we will return to the pace of growth we had before the crisis.”

Almost 9 percentage points of the 10.4 percent plunge in output in the first half was because of “a massive inventory adjustment,” says Martin Gilman, former head of the Moscow office of the International Monetary Fund, and OAO Gazprom, the world’s No. 1 gas producer, accounted for most of the slump. European consumers tapped stored gas as the delayed effect of dearer oil drove up gas prices earlier this year.

Worst Performance

Russia’s economy is the worst performer among the so-called BRIC group of emerging markets that include Brazil, China and India.

The ruble strengthened 1.3 percent to 30.0150 against the dollar at 1:01 p.m. in Moscow. The currency gained 1.2 percent versus the euro to 44.2867. Russian stocks pared gains after the report, up 0.3 percent to 1308.97 at 1.02 p.m., after earlier rising as much as 0.9 percent.

Gazprom said last month that sales volumes to Europe and other export markets fell 24 percent in the first half from a year earlier as the economic slowdown eroded demand. Since July, Gazprom’s exports were higher than in the same periods of 2007 and 2008, the company said.

“A major driver of Russia’s sharp contraction was the inventory correction and we are seeing the end of that,” said Vladimir Osakovsky, an economist at UniCredit Bank in Moscow, before the data was released. “Any improvement in Russia’s overall economic performance is linked to this process.”

The price of Urals crude oil has rebounded 70 percent this year as global demand for commodities recovered. Energy, including oil and gas, accounts for about 70 percent of Russia’s export earnings.

Slow Recovery

The recovery may be slow. Nine interest rate cuts since April failed to spur bank lending and rekindle growth in industry and a slump in manufacturing deepened last month after export demand sagged.

VTB Capital’s Purchasing Managers’ Index fell to 49.1 from 49.6 in October. The index, which is based on a survey of 300 purchasing executives, in September rose above 50, signaling the industry’s first expansion in 14 months.

A contraction in industrial output accelerated in October to 11.2 percent from 9.5 in the previous month, the statistics service said last month.

“Industry hasn’t returned to stable growth,” Finance Minister Alexei Kudrin said this week. “There are still problems.”

Lenders’ corporate loan books fell 0.5 percent in October, after declining 0.7 percent in September, according to data published on the central bank’s Web site Dec. 3. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline.

Government Help

The contraction this year may have been as much as 3 percentage points deeper without anti-crisis spending, Deputy Economy Minister Andrei Klepach said on Dec. 10. The economy will probably shrink between 8.5 percent and 8.7 percent this year, he said.

As of Nov. 1, the government had spent 784 billion rubles ($26 billion) of 1.14 trillion rubles earmarked for stimulus measures, Deputy Finance Minister Tatiana Nesterenko said the same day.

Next year “there will be growth, but it will be growth after a big fall,” Kudrin said. The recovery will be complicated as governments retract stimulus programs and raise interest rates. “In the next two to three years this will be a factor that increases the cost of money and slows growth.”

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

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Oil Rises After Report Shows Record Runs at Chinese Refineries

By Rachel Graham

Dec. 11 (Bloomberg) -- Oil rose for the first time in eight days after China’s government said the country’s refineries processed a record amount of crude last month.

Refining volume in China, the world’s second-largest energy consumer, climbed 21 percent from a year earlier to 33.4 million metric tons, or 8.1 million barrels a day, according to government statistics. China’s industrial production grew more than estimated in November.

“This is the fastest growth in Chinese oil demand since 2004,” Amrita Sen, a London-based oil analyst at Barclays Capital, said by phone. “China has really surprised to the upside this year.”

Crude oil for January delivery rose as much as 55 cents, or 0.8 percent, to $71.09 a barrel in electronic trading on the New York Mercantile Exchange. It was at $71.05 a barrel at 9:32 a.m. London time.

Oil prices have fallen 8 percent since the beginning of this month and fell 3 percent on Dec. 9, when a U.S. government report showed U.S. gasoline inventories rose to the highest level since April. Futures are up 59 percent this year.

China imported 17.1 million metric tons of crude oil in November, 28 percent more than a year earlier, government data showed. Imports of crude oil in the first 11 months gained 11 percent to 182.5 million tons, according to preliminary data from the Beijing-based General Administration of Customs today.

The International Energy Agency cut its forecast for oil supplies from outside the Organization of Petroleum Exporting Countries next year because of delays to North American projects.

Global Demand

Non-OPEC producers, accounting for about 60 percent of the global total, will provide 51.6 million barrels a day in 2010, or 265,000 barrels a day less than previously anticipated, the adviser to 28 nations said in its monthly report today.

The IEA raised its forecast for 2010 global oil demand for a fifth month, and boosted its medium-term consumption outlook through to 2014, on expectations of economic recovery. Worldwide demand is likely to average 86.3 million barrels a day in 2010, 130,000 a day more than previously estimated, the adviser said.

Output from OPEC, due to meet in Angola on Dec. 22 for a review of quotas, climbed to its highest in a year during November, averaging 29.1 million barrels a day, the IEA said. A lull in militant attacks on oil facilities in Nigeria was behind the increase.

The compliance rate among the 11 OPEC members subject to production quotas slipped to 58 percent last month from 60 percent in October, with Iran and Angola violating their limits most, according to the agency.

Brent crude oil for January settlement rose as much as 74 cents, or 1 percent, to $72.60 on the London-based ICE Futures Europe exchange. It was at $72.44 a barrel at 9:33 a.m. local time.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net

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Goldman Sachs Stock Bonus Plan to Defer Compensation Expense

By Michael J. Moore and Christine Harper

Dec. 11 (Bloomberg) -- Goldman Sachs Group Inc.’s plan to pay top executives in restricted stock will let the firm defer compensation expenses, reducing what it must report this year after being pilloried for setting aside more than $16 billion for employees.

The awards will consist of so-called shares-at-risk that start vesting next year and can’t be sold for five years, the New York-based firm said yesterday. Because the expense isn’t recorded until they vest, the firm avoids incurring an immediate cost, said Robert Willens, founder of Robert Willens LLC, which advises investors on accounting and tax rules.

“That’s just what they needed to make this year look better,” said Willens, a former managing director at Lehman Brothers Holdings Inc. “The first charge won’t be until 2010, so this will definitely reduce their compensation expense. These 30 people make a disproportionate amount of the compensation.”

Goldman Sachs, which has repaid with interest the $10 billion it received from the Treasury Department last year, was derided for allocating a near-record $16.7 billion to pay employees in the first nine months of 2009 after benefiting from government support. Senator Bernard Sanders, an Independent from Vermont, called the bank’s compensation plans “obscene.”

The new policy, announced yesterday, will apply to the 30 members of Goldman Sachs’s management committee, including Chairman and Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and the leaders of the firm’s global and regional divisions.

Record for Pay

Goldman Sachs had 31,700 employees as of September and set a Wall Street pay record in 2007, when it set aside $20.2 billion for compensation, including $16.9 billion in the first nine months. Some analysts have estimated that the firm would break its 2007 record this year.

Switching to restricted stock awards won’t camouflage how much the firm is paying its five named executive officers, whose pay will be disclosed in the annual proxy statement and in Form 4 filings with the Securities and Exchange Commission, said Graef Crystal, a compensation specialist and consultant to Bloomberg News.

“The game’s up the minute the proxy comes out,” Crystal said. “In fact, the minute they award it, it will show up in the Form 4.”

U.S. Treasury Secretary Timothy Geithner, in an interview with Bloomberg Television last week, urged an end to “an era of irresponsibly high bonuses” and called for “fundamental constraints on how senior executives are paid” at big banks.

Shares-At-Risk

The new shares-at-risk will be treated like restricted stock and will vest in equal portions over three years, although employees won’t be allowed to sell them for five years, Lucas van Praag, a spokesman for Goldman Sachs, said yesterday.

Goldman Sachs reduced its 2008 fourth-quarter compensation expense by an estimated $1 billion as workers were for the first time required to stay at the company at least one year to lock in part of their stock and option grants.

Goldman Sachs’s plan will affect only the employees who can best afford a one-year hiatus on cash awards, while enabling the bank to continue bestowing grants on most of the staff, said John Benson, founder and chief executive officer of U.K.-based recruiting Web site eFinancialCareers.com, which is owned by Dice Holdings Inc.

“You’re talking about 30 people out of a total workforce of more than 31,000 and those 30 people have been very well compensated in the past and have a lot of stock already,” Benson said. “You’re still going to have a very large overall number for the pay at Goldman and the detail on whether that is in cash or stock is going be lost on most people.”

Employee Count

Earlier this year, Goldman Sachs changed how it reports the number of employees at the firm to include consultants and temporary staff instead of just full-time employees. That caused a jump in the number of employees to 31,700 at the end of September from 27,898 six months earlier and helped reduce the average compensation-per-employee figure at the firm, which came to $527,192 for the first nine months of the year.

While eliminating cash bonuses will align executives better with shareholders, Crystal said the strategy still seems designed to allow Goldman Sachs employees to take a bigger portion of revenue than they deserve.

“Why don’t they just give it to shareholders?” he said. “They will not settle for the fact that they ought to be paid a heck of a lot less.”

In yesterday’s statement, Blankfein said, “We believe our compensation policies are the strongest in our industry and ensure that compensation accurately reflects the firm’s performance and incentivizes behavior that is in the public’s and our shareholders’ best interests.”

Last year, Goldman Sachs reported its first quarterly loss as a public company and accepted $10 billion in taxpayer funds from the Treasury, which it repaid with dividends in June. Blankfein and six of his top deputies agreed to forgo bonuses last year, accepting only their $600,000 cash salaries.

To contact the reporters on this story: Michael J. Moore in New York at mmoore55@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.

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Rubber Climbs as Weak Yen Boosts Appeal, China’s Output Gains

By Aya Takada

Dec. 11 (Bloomberg) -- Rubber climbed for the first time this week as a drop in Japan’s currency raised the appeal of yen-denominated contracts and growth in China’s industrial output boosted speculation raw material demand will increase.

Futures in Tokyo gained as much as 1.5 percent, reversing yesterday’s 3.6 percent slump. The yen fell as signs the global economy is improving spurred demand for higher-yielding assets. Asian stocks advanced after Chinese industrial production rose more than economists forecast and U.S. jobless claims fell to a one-year low.

“Rubber futures drew support from the currency market,” said Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo. “A recovery in equities markets also increased the risk appetite of investors, leading to purchases of commodities.”

Rubber for May delivery gained as much as 3.7 yen to 247.5 yen per kilogram ($2,783 a metric ton) before settling at 247.0 yen on the Tokyo Commodity Exchange.

The Japanese currency dropped against all of its 16 major counterparts before reports today forecast to show U.S. retail sales advanced for a second month and confidence among American consumers rebounded.

China’s factory output surged 19.2 percent last month from a year earlier, exceeding the 18.2 percent median estimate in a Bloomberg News survey of 25 economists. The data came a day after a Labor Department report showed the four-week average number of Americans filing for joblessness benefits declined to a one-year low, adding to optimism the first global recession since World War II is receding.

Thai Output

Rubber futures lost 5.9 percent this week, the worst performance since the week ended Aug. 21, as output increased in top producer Thailand after rain subsided.

“In producing areas in Thailand it did not rain this week as much as before,” Shigemoto said. “Production is picking up and supply will increase.”

Thai shippers offered so-called RSS-3 grade rubber for January shipment at $2.7 a kilogram today, down from $2.8 a week earlier, he added.

Rubber climbed to a 14-month high of 264.7 yen on Dec. 7 on speculation that heavy rain would slash Thai output, leading to a shortage in the global market as China, the largest consumer, leads a recovery in demand. Flooding hit four provinces in southern Thailand in late November. The situation is back to normal, according to the Royal Irrigation Department.

Rubber plantations in the four Thai provinces affected by flooding account for about 20 percent of the country’s total plantation area of about 2.7 million hectares (6.7 million acres), according to the Rubber Research Institute of Thailand.

Rubber for March delivery on the Shanghai Futures Exchange added 0.9 percent to 21,700 yuan ($3,178) a ton at 2:47 p.m. local time.

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

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Iron Ore Imports by China Rise 12% as Mills Expand

By Bloomberg News

Dec. 11 (Bloomberg) -- Iron ore imports by China, the world’s largest buyer, rose 12 percent last month as steelmakers increased production to meet demand from makers of cars and appliances.

Imports of the steelmaking ingredient were 51.1 million metric tons, the customs office said on its Web site today. That compares with 45.5 million tons in October and a record 64.6 million tons in September, according to Bloomberg data.

Steelmakers and traders are increasing shipments on expectations that prices will gain next year because of the global economic recovery. Baosteel Group Corp., China’s largest steelmaker, yesterday announced the first price gains for its products in four months as demand rebounds.

“We anticipate a sustained steel price recovery in 2010 as we see positive factors on both the demand and supply side,” Deutsche Bank AG analysts Julian Zhu and Steven Tao wrote in a report before the data was released.

China may import 70 percent of its iron ore needs this year, up from 50 percent last year, Baosteel’s Chairman Xu Lejiang said Dec. 3. Contract prices for iron ore may rise 15 percent to 20 percent next year to the second-highest on record, China International Capital Corp. said Nov. 17.

Rising Prices

Cash prices for Australian iron ore delivered to China have surged 41 percent this year amid rising demand and higher freight costs. The price of 62 percent content ore delivered to Tianjin port was $100.90 a ton yesterday.

Rio Tinto Group, the world’s No. 2 iron ore exporter, rose 0.5 percent to close at A$70.18 in Sydney trading. BHP Billiton Ltd., the third-biggest supplier, gained 1.4 percent to A$40.50.

Chinese steel products output rose to a record last month, while crude steel production dropped from October, indicating mills are depleting crude steel inventories to make products for exports, said Mysteel Research Institute analyst Xu Xiangchun.

Exports of steel products rose to 2.85 million tons last month from 2.7 million tons in October, customs data showed. Exports in the first eleven months are down 62 percent from a year earlier.

--Xiao Yu, with assistance from Hanny Wan in Hong Kong. Editors: Tan Hwee Ann, Keith Gosman.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net

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Yen Falls a Second Day as Risk Sentiment Increases Yield Demand

By Anna Rascouet and Yasuhiko Seki

Dec. 11 (Bloomberg) -- The yen weakened for a second day against the euro as signs the global economy is improving boosted demand for higher-yielding assets.

Japan’s currency dropped against all 16 most-traded currencies before U.S. reports today that may show retail sales rose for a second month and consumer confidence rebounded. Australia’s dollar headed for a second weekly gain after data showed China’s exports fell the least in 14 months. The pound strengthened after Moody’s Investors Service said it had no plans to revise the U.K.’s top credit rating.

“The Chinese numbers weren’t bad and stocks worldwide are performing well” said David Deddouche, a currency strategist at Societe Generale SA in Paris. “After a bit of stress at the beginning of this week, things are calming down, so the yen tends to weaken as a consequence.”

The yen depreciated to 130.92 per euro as of 8:39 a.m. in London, from 129.94 yesterday in New York, paring its weekly gain to 2.8 percent. The currency weakened to 88.83 per dollar from 88.20. The dollar was at $1.4740 per euro, from $1.4732.

U.S. retail sales gained 0.6 percent in November after climbing 1.4 percent the prior month, according to a Bloomberg News survey before today’s Commerce Department report. The Reuters/University of Michigan preliminary index of consumer sentiment rose to 68.8 for December, from 67.4 a month earlier, according to a separate Bloomberg survey before today’s report.

Interest Rates

The yen dropped 2.7 percent against the dollar this month and 0.6 percent versus the euro as signs of a global economic recovery encouraged investors to seek higher-yielding currencies. Japan’s key interest rate is 0.1 percent, compared with rates of 3.75 percent in Australia and 2.5 percent in New Zealand.

Chinese industrial production grew 19.2 percent in November from a year earlier, the statistics bureau said in Beijing. That compared with a 16.1 percent increase in October. Exports fell 1.2 percent in November and imports surged 26.7 percent.

Australia’s currency strengthened for a second day versus the yen after the Chinese reports spurred speculation the country will benefit as demand for its commodities grows. Australia is China’s main trading partner.

The Aussie was at 91.56 U.S. cents, from 91.66 cents yesterday, for a 0.1 percent gain this week. It advanced 0.6 percent to 81.31 yen.

The Nikkei 225 Stock Average gained 2.5 percent and the MSCI World Index of shares advanced 0.4 percent today as the Chinese data added to evidence of a global economic recovery. Standard & Poor’s 500 Index futures added 0.6 percent.

The pound rose the most in a week against the yen and the dollar after Moody’s Investors Service said it has no current plans to lower its top debt ratings on the U.K. and the U.S.

‘Stable’ Outlook

“The outlook is stable” for the two countries, Moody’s Senior Vice President Tom Byrne said in an interview in Singapore today. Byrne was citing comments by Steven Hess, vice president and senior credit officer of the sovereign ratings group for the company, made in a teleconference today.

The pound gained to 145.05 yen, from 143.59 yesterday, and rose traded at $1.6326, from $1.6279. The U.K. currency dropped 2.2 percent against the yen on Dec. 8 after Moody’s said its ratings on the U.S. and the U.K. may “test the Aaa boundaries.”

“A rating warning from Moody’s drove the pound lower earlier this week and soothing comments from the same company triggered a knee-jerk buy-back of the currency today,” said Kazumasa Yamaoka, a senior analyst in Tokyo at GCI Capital Co., a foreign-exchange margin-service company.

Euro Decline

The euro headed for a second weekly decline against the dollar, the longest stretch in two months, on speculation the credit ratings of more European nations will be lowered.

Spain had the outlook on its AA+ debt rating cut to “negative” from “stable” by Standard & Poor’s this week. Greece’s credit was reduced one step to BBB+ by Fitch Ratings. Portugal’s outlook was also revised to “negative” from “stable” by S&P.

“There are lingering concerns about the health of the eurozone,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “These worries are taking the shine off the euro.”

To contact the reporters on this story: Anna Rascouet in London at arascouet@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

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Soybean Cash Premiums Widen as Price Slump Slows Farmer Sales

By Jeff Wilson

Dec. 11 (Bloomberg) -- Cash premiums for soybeans delivered to export terminals near New Orleans widened against Chicago futures yesterday after a three-day drop in prices slowed sales by growers, tightening available supplies.

The so-called spot-basis bid, or premium, for soybeans delivered this month was 44 cents to 50 cents a bushel above January futures on the Chicago Board of Trade, compared with 40 cents to 50 cents on Dec. 9, government data show. The basis a year earlier was 65 cents to 82 cents over January futures.

“The bean basis is pretty weak right now, but it will begin to firm by the end of December and in early January” to get farmers to sell, said Scott Stoller, a grain merchandiser for Michlig Agricenter Inc. in Manlius, Illinois. A combination of lower prices and the snowstorm that’s blanketing the Midwest has halted grower selling, he said.

Soybean futures for January delivery declined 1.5 cents, or 0.1 percent, to $10.27 a bushel on the CBOT yesterday, bringing the three-day drop to 2.5 percent. Prices have slipped 3.2 percent this month.

Increased overseas purchases of U.S. soybeans and animal feed produced from the oilseed may also start to firm prices, Stoller said.

Increased Export Sales

U.S. exporters sold 927,700 metric tons of soybeans during the week ended Dec. 3, up 41 percent from a week earlier, the Department of Agriculture said yesterday.

Cumulative sales for the marketing year that began Sept. 1 are up 56 percent from a year ago at 28.6 million tons. That’s about 78 percent of the USDA’s forecast for the entire year of 36.5 million tons. The average figure for the previous five years has been 56 percent.

Export shipments of soybean meal, an animal feed, were 297,200 tons last week, up 30 percent from the prior four-week average, USDA data show. Sales since the marketing year began on Oct. 1 totaled 5.101 million tons, up 79 percent from the same period a year earlier.

U.S. soybean and animal-feed exports have surged after drought cut output earlier this year in Brazil and Argentina, the two biggest growers and exporters of the oilseed after the U.S.

Soybean production in the two countries next year will jump 30 percent to a record 116 million metric tons, according to the USDA.

Lower Cash Prices

The average U.S. cash soybean price fell to $9.7667 a bushel yesterday, from $10.0464 at the end of November, the highest since the harvest began in early September, data from the Minneapolis Grain Exchange show.

“Processors and exporters bought a lot beans two weeks ago and will need to get more inventory by late this month,” Michlig’s Stoller said. “We have not taken in any soybeans stored in farmers’ bins for two weeks.”

Falling barge freight costs may begin to boost cash bids for soybeans by the end of December and in January, as buyers can pay more for the oilseed, Stoller said.

The cost to move grain and soybeans by barge from Chicago to New Orleans on Dec. 9 was $22.54 for 2,000 pounds, down 2.5 percent from $23.12 week earlier and down from a one-year high of $37.57 on Nov. 11, USDA data show.

Long Barge Season

The last towing barges to ply the northern section of the Mississippi River in 2009 left Minneapolis on Dec. 2, bringing an end to the longest towing season on the waterway in five years, according to the Minnesota Department of Transportation. A late harvest helped prolong the navigation season, the USDA said yesterday in a report. Barges leave the northern portion of the river to avoid being trapped in ice.

The average cost for shipping soybeans from Minneapolis through Gulf ports to Japan increased 9.6 percent to $88.99 per metric ton in the third quarter, from $81.16 in the second quarter, the USDA said in a report. Ocean rates increased about 18 percent, accounting for 64 percent of total transportation costs. Shipping costs were down 45 percent from $160.67 a year earlier.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

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Copper Rallies in Asia, Paring First Weekly Loss Since October

By Glenys Sim

Dec. 11 (Bloomberg) -- Copper rose for the first time in seven days in Asia, paring its first weekly loss in six, after China’s industrial production grew more-than-estimated and the country’s imports of the metal unexpectedly increased.

Factory output in November climbed 19.2 percent from a year earlier, the statistics bureau said today, more than the 18.2 percent median estimate by economists in a Bloomberg News survey. Imports of copper and products by the world’s largest user jumped 10 percent in November compared with the previous month.

“Imports were widely expected to decline, or at least remain at similar levels to the previous month, so an increase made some investors question if demand is stronger than previously thought,” Li Huazheng, a trader at Shanghai Securities Co.. “At the same time, the economic data today also points to a continued recovery in China.”

Copper for delivery in three months on the London Metal Exchange gained as much as 0.9 percent to $6,871 a metric ton, before trading at $6,865 at 3:44 p.m. Singapore time, rebounding from its longest losing streak in a year. The metal was down 2.5 percent for the week, headed for its largest weekly drop since Oct. 30. March-delivery copper on the Shanghai Futures Exchange ended the day up 0.3 percent at 54,270 yuan ($7,949) a ton.

“Inventory levels will keep the rally in check,” said Li. “The spot market in China is not reflecting strong demand at the moment.”

Copper for immediate delivery in Changjiang, Shanghai’s biggest cash market, has fallen every day since reaching a 14- month high on Dec. 3. Stockpiles of the metal in Shanghai warehouses stood at 104,710 tons last week, more than six times the level at the start of the year, while those at LME warehouses expanded for a 28th day yesterday to 461,625 tons.

Among other LME-traded metals, aluminum was down 0.4 percent at $2,194 a ton, zinc rose 1.1 percent to $2,295 a ton, and lead gained 0.7 percent to $2,290.50 a ton. Nickel added 1.5 percent to $16,525 a ton, while tin was little changed at $15,275 a ton by 3:57 p.m. in Singapore.

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

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Asian Stocks Advance on China Industrial Production, U.S. Jobs

By Masaki Kondo and Saeromi Shin

Dec. 11 (Bloomberg) -- Asianstocks rose the most in six days as a larger-than-expected increase in China’s industrial output and a drop in U.S. jobless claims to a one-year low boosted confidence that a recovery is gathering pace.

Fanuc Ltd., a maker of industrial robots that counts Asia as its biggest market, climbed 3.4 percent in Tokyo after Mitsubishi UFJ Securities Co. said demand in China drove up growth. Maanshan Iron & Steel Co. advanced 10 percent in Hong Kong after China’s steel products output surged to a record and as Baosteel Group Corp. raised prices. Nissan Motor Co., which gets 35 percent of sales in North America, climbed 3.9 percent after U.S. reports on jobs and the trade deficit.

The MSCI Asia Pacific Index rose 0.9 percent to 120.18 as of 5:21 p.m. in Tokyo, with three times as many stocks gaining as falling. The gauge is poised to advance less than 0.1 percent this week.

“I continue to believe that Asia will post stronger growth than any other region,” said Christian Jin, a fund manager at HI Asset Management Co. in Seoul, which manages the equivalent of $7.7 billion in assets. “Exports of Asian countries will recover in tandem with a recovery in developed nations, while there’s much to expect from China’s consumption as well.”

The Kospi Index rose 0.3 percent in Seoul after the central bank said South Korea’s gross domestic product will grow next year at a faster pace than previously forecast.

The Shanghai Composite Index dipped 0.2 percent, while the Hang Seng Index added 1 percent in Hong Kong, its first gain since Dec. 3.

Most Since 2003

Japan’s Nikkei 225 Stock Average added 2.5 percent. Mitsubishi Corp., whose alliance with BHP Billiton Ltd. is the world’s biggest coking-coal exporter, surged 5.3 percent.

The MSCI Asia Pacific Index has climbed 34 percent this year, set for its biggest annual gain since 2003, on signs government spending and lower interest rates bolstered economies. Yesterday, a government report showed Australian companies added six times more jobs in November than economists had estimated.

Stocks in the benchmark are valued at 22 times estimated earnings, compared with 18 times for the Standard and Poor’s 500 Index in the U.S. and 15 times for the Dow Jones Stoxx 600 Index in Europe.

China’s industrial production rose 19 percent in November from a year earlier, exceeding the 18 percent estimated by economists. New lending grew month-on-month, the central bank said today, while economists had forecast a decline.

Fanuc, Japan’s biggest maker of industrial robots, climbed 3.4 percent to 8,130 yen, the highest close since Oct. 26, after Mitsubishi UFJ Securities said orders from China remained resilient.

Steel Output

“Emerging markets will continue to lead growth in the world economy next year, and companies that can make money in those markets will remain in the spotlight,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees the equivalent of $96 billion.

Maanshan Iron, China’s No. 4 listed steelmaker, gained 10 percent to HK$5.96 in Hong Kong. Xinjiang Ba Yi Iron & Steel Co. advanced 2.6 percent to 14.75 yuan in Shanghai. Mitsubishi, Japan’s biggest trading house, surged 5.3 percent to 2,270 yen.

China’s November steel products output climbed 46 percent from a year ago, the statistics bureau said today. Baosteel, the country’s largest steelmaker, raised benchmark product prices by 8 percent for January delivery, the first increase since September, according to researcher Umetal, citing a notification Baosteel sent to traders.

Stronger Dollar

Futures on the S&P 500 added 0.4 percent. The gauge rose 0.6 percent yesterday in New York after a Labor Department report showed the four-week average number of Americans filing for jobless benefits declined to a one-year low. A separate report showed the trade deficit shrank 7.6 percent in October, while economists had estimated the gap would widen, as a weaker dollar boosted exports in the period.

The dollar strengthened to 88.94 yen today, compared with 87.79 at the 3 p.m. close of stock trading in Tokyo yesterday. A stronger greenback boosts U.S. income at Japanese companies when converted into their home currency.

Nissan, Japan’s No. 3 automaker, jumped 3.9 percent to 728 yen. Sony Corp., an electronics manufacturer that gets 23 percent of its sales from the U.S., added 3.4 percent to 2,575 yen. Bridgestone Corp., the world’s biggest tiremaker, added 3.7 percent to 1,537 yen.

Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, fell 1.5 percent to 455 yen and was the heaviest drag on the MSCI Asia Pacific Index. The company is preparing to sell as much as 1 trillion yen ($11 billion) in shares to bolster equity and will set the price from Dec. 14.

The world’s largest financial companies have reported $1.7 trillion in losses and writedowns since the U.S. subprime- mortgage market collapsed in 2007 and Lehman Brothers Holdings Inc. filed for bankruptcy in September 2008, according to data compiled by Bloomberg.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.

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