New Zealand GDP Disappoints

Daily Forex Fundamentals | Written by AC-Markets | Dec 23 09 09:49 GMT |

Markets have shifted into holiday mode, as ranges have become compressed and thin liquidity is dominating price behavior. USD was basically unchanged in the Asian session, with Japan on holiday. Higher Treasury yield in recent weeks have created just another reason for traders to liquidate JPY positions. The USDJPY started the Asian session around 91.80, after the JPY fell the hardest in the earlier USD rally due to better than expected US housing data. The Tokyo holiday made certain that trading stayed light, with a narrow 91.56 to 91.85 range, with rumors of Japanese exports offers around 92.00 capping the upside. EURUSD has found a comfortable intraday range trading between 1.4220 and 1.4280. Greece continues to weigh no risk appetite as Greek 10-year govt yields hit 6% for the first time since March, as Moody's downgraded the their sovereign debt ratings by one notch (the third agency to downgrade). In New Zealand, the Q3 GDP disappointed markets, printing at +0.2% q/q vs+0.4% exp. The y/y figure was -1.3% vs. -1.2% exp. Despite the deviation, the GDP figure highlights that New Zealand is completely out of recession and clearly on the road to recovery. The NZDUSD fell to 0.6972 on the weaker figure but was able to rally back on USD selling. Overall, the growth trend is positive and should support our view that the RBNZ begins tightening in early 2010. Today’s BoE December MPC minutes were originally anticipated to be a non-event. However, after yesterday's weak Q3 GDP was revised up to -0.2% q/q from -0.3% q/q, but below expectations, might now attract some attention. AC Markets http://www.ac-markets.com 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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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | Dec 23 09 07:37 GMT |

GBP/JPY The GBP/JPY pair is still moving below 76.4 % Fibonacci level, signaling that the flat correction of our detected Elliott count is still in progress. Therefore, we keep our intraday outlook to the downside over intraday basis as this correction is to be seen as the completion of the second wave over short term basis. Thus, the downside [IM] wave-the third- is under preparation. Stochastic supports this overview. Trading range for today is among key support at 141.50 and key resistance at 151.60. The general trend is to the downside as far as 167.40 remains intact with target at 116.00. Support 145.50 145.00 144.15 143.60 142.70 Resistance 146.65 147.00 147.40 148.00 148.60 Recommendation Based on the charts and explanations above our opinion is, selling the pair from 146.45 targeting 144.15 and stop loss above 148.20 might be appropriate EUR/JPY On the secondary four-hour chart; the EUR/JPY is trapped within a very narrow range but succeeded to form a bearish candlestick structure. Thereby, the bigger daily picture of our suggested CD leg for the AB=CD pattern might continue to the downside on the intraday basis. A break of 130.05- value of SMA 50- will be able to accelerate this highly anticipated bearishness. Trading range for today is among key support at 127.90 and key resistance now at 133.60. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support 130.05 129.40 128.90 128.40 127.90 Resistance 131.05 131.60 132.00 132.50 133.15 Recommendation Based on the charts and explanations above our opinion is, selling the pair from 130.60 targeting 128.90 and stop loss above 131.80 might be appropriate. EUR/GBP The royal pair is still moving steadily above the pivotal support arrears of 0.8905; forming a bullish candlestick formation on the four-hour chart. Thus, the positive effect obtained from our previous explained ideal [BAT] pattern is still in progress. Therefore, we keep our overview to the upside on the intraday basis. Presently, the path is clear towards the second technical objective areas at 0.9005, followed by 0.9030. The trading range is among the key support at 0.8690 and key resistance now at 0.9115. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support 0.8905 0.8865 0.8820 0.8790 0.8760 Resistance 0.8960 0.9005 0.9030 0.9070 0.9115 Recommendation Based on the charts and explanations above our opinion is, buying the pair from 0.8925 targeting 0.9030 and stop loss below 0.8840 might be appropriate. 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 23 09 08:26 GMT |

CHF The estimated test of key supports for implementation of the pre-planned long positions has not accurately been confirmed, and the result of the previous trading day through fall in activity of both parties gives grounds for petty correction in planning trading operations for today. Namely, we can assume probability of another test of channel line 2 at 1,0460/70 levels, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term buying positions on condition of the formation of topping signals the targets will be 1,0500/10 and (or) further break-out variant up to 1,0560/80, 1,0620/40, 1,0680/1,0700. The alternative for sales will be below 1,0380 with the targets of 1,0320/40, 1,0240/60. GBP The pre-planned short positions from key resistance range levels have been implemented with attainment of basic anticipated targets. OsMA trend indicator, having marked preservation of fall in both party activity, as earlier, suggests petty correction in planning trading operations for today. Namely, we can assume probability of rate return to close 1,5980/1,6000 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 1,5920/40, 1,5880/1,5900 and (or) further break-out variant up to 1,5820/40, 1,5700/40. The alternative for buyers will be above 1,6040 with the targets of 1,6080/1,6100, 1,6140/60, 1,6200/20. JPY The pre-planned break-out variant for buyers has been implemented, but with loss in attainment of minimal anticipated target. OsMA trend indicator, having marked strengthening of rate overbought, has revealed inessential strengthening of bearish counteraction, which at this point gives grounds for supposition of further rate range movement, however with preservation of bullish direction choice in planning trading operations for today. Therefore, we can assume probability of rate return to close 91,20/40 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 91,80/92,00, 92,40/60 and (or) further break-out variant up to 93,00/20, 93,60/80. The alternative for sales will be below 90,80 with the targets of 90,20/40, 89,60/80. EUR The pre-planned short positions from key resistance range levels have been implemented with attainment of basic anticipated targets. OsMA trend indicator, having marked preservation of fall in both party activity, as earlier, suggests petty correction in planning trading operations for today. Therefore, we can assume probability of another rate return to channel line 1 at 1,4270/90 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 1,4200/20 and (or) further break-out variant up to 1,4140/60, 1,4080/1,4100. The alternative for buyers will be above 1,4420 with the targets of 1,4460/80, 1,4520/40, 1,4580/1,4620. FOREX Ltd www.forexltd.co.uk

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Loans at 0.57% to Family Members Could Save Millions on Taxes

By Alexis Leondis and Margaret Collins

Dec. 23 (Bloomberg) -- Estate planner Richard Behrendt helped his client make $5 million loans to each of his children this year, avoiding gift taxes of 45 percent and saving the kids as much as $837,000 apiece in interest.

Rates for so-called intra-family loans have declined as much as 53 percent since 2008. “The timing of it was clearly tied to the rock bottom of these rates,” said Behrendt, who works for Robert W. Baird & Co., based in Milwaukee, Wisconsin.

The loans may be the perfect holiday gift to help relatives this year, according to Carol Kroch, head of wealth and financial planning at Wilmington, Delaware-based Wilmington Trust. For wealthy taxpayers, they can be used for estate planning purposes, since gains earned will be free of estate and gift taxes.

That’s because low interest rates and depressed asset values mean there’s a greater possibility that investments purchased with an intra-family loan, such as stock, will appreciate more than the loan’s cost, Kroch said.

The rate for an intra-family loan made in January 2010 for less than three years is 0.57 percent. The rate is 2.45 percent for a loan of three years to nine years and 4.11 percent for a loan of nine years or more, according to the Internal Revenue Service, which sets the rates monthly. That compares with an average rate of 10.55 percent for a personal bank loan in the New York metro area and 12.51 percent for a credit-union loan, based on data from Bankrate.com.

“The chances are they are going to go up, the only question is how fast or how soon,” said Bill Fleming, managing director of New York-based PricewaterhouseCoopers’s Private Company Services Group, referring to rates for intra-family loans.

Tax Savings

Behrendt’s client, who has a net worth of $100 million, loaned each of his three children $5 million for nine years. The children invested the money in a balanced portfolio seeking at least a 5 percent return, said Behrendt, a former estate tax attorney for the IRS.

Any amount above the 1.65 interest rate, which was the February rate, should pass to the client’s children free of estate and gift taxes, he said. The Standard & Poor’s 500 Index has increased 36 percent since February as of yesterday.

The borrowers also saved on interest costs because of the low rates. Each will owe $82,500 in interest annually, compared with $175,500 if the loan had been made in February 2008 when the rate was 3.51 percent.

Current federal law taxes estates exceeding $3.5 million for an individual or $7 million for a married couple at as much as 45 percent. Any gift to an individual of more than $13,000 annually may also be taxed as much as 45 percent with a $1 million lifetime exclusion per donor, according to the IRS.

Estate Tax

The estate tax is scheduled to expire for a year on Jan. 1 under the provisions of a tax-cut bill enacted in 2001. It comes back in 2011, taxing estates valued at more than $1 million as much as 55 percent. Senate Finance Committee Chairman Max Baucus, Democrat of Montana, has vowed to extend the estate tax in 2010 retroactively.

Lenders who are subject to the estate tax can use the loans to reduce the value of their estates because the appreciation of any investment made with the loan above the IRS rate accrues outside of the lender’s estate, said Larry Richman, chair of private wealth services at Neal, Gerber & Eisenberg LLP in Chicago.

Taxpayers with family businesses may also want to consider intra-family loans to help with the sale of the business to family members, according to David Kron, a partner in the Fort Lauderdale office of law firm Ruden McClosky.

Parents can loan their children money to buy the business and the children can repay using profits from the firm. The future appreciation and any income of the business beyond the loan amount are then considered part of the children’s, not the parents’, estate, Kron said.

‘Low-Tech’ Tool

Intra-family loans are a “low-tech” way to give money to family members because they’re easy to set up and are appropriate for anyone regardless of net worth, said Deborah L. Jacobs, author of “Estate Planning Smarts: A Practical, User- Friendly, Action-Oriented Guide,” which was published this month.

Family members should be aware the loans must be repaid in full with interest at the rate specified by the IRS. If the borrower doesn’t repay, it may be considered a gift subject to the gift tax, said Jacobs, who is based in New York.

Lenders should also consider the income tax they’ll owe on the interest received with repayment of the loan, said Kron.

‘Thanksgiving Firecracker’

Loaning money to family members may create relationship issues, said Dan Deighan of Melbourne, Florida-based Deighan Financial Advisors Inc.

“It’s like throwing a firecracker on the Thanksgiving dinner table when you bring money issues into the family dynamic,” Deighan said.

Borrowers can get “sloppy with repayments,” which is why setting up an automatic bank transfer for payments is recommended, said Fleming of PricewaterhouseCoopers.

Don Albritton, a 61-year-old executive in Longwood, Florida, gave his son $260,000 to buy a house through a 30-year intra-family loan four years ago. Albritton ended up taking the house back after his son was unable to sell it without taking a loss. Home prices have declined 17 percent since January 2005, according to the S&P/Case-Shiller index for 20 metropolitan areas.

“I’m not discouraged,” Albritton said. “I’m getting ready to make him another loan now.”

To contact the reporters on this story: Margaret Collins in New York at mcollins45@bloomberg.net. Alexis Leondis in New York 5773 or aleondis@bloomberg.net.

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Consumer Spending, New-Home Sales in U.S. Probably Increased

By Timothy R. Homan

Dec. 23 (Bloomberg) -- Consumer spending in the U.S. probably rose in November for the sixth time in seven months as households took advantage of holiday discounting.

Purchases increased 0.7 percent for a second consecutive month, according to the median estimate of 72 economists surveyed by Bloomberg News. The report may also show incomes grew by the most in six months. Confidence and new-home sales probably also climbed, other reports may show.

Retailers such as Best Buy Co. are cutting prices on some items to help Americans overcome the worst employment slump in the post-World War II era and mounting foreclosures. Growing sales indicate consumers will contribute to, rather than hold back, the economic expansion in coming months.

“The U.S. consumer is mounting a comeback.,” said Chris Low, chief economist at FTN Financial in New York. “Despite a 10 percent unemployment rate, credit restrictions and political uncertainty, spending is growing again.”

The Commerce Department’s report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey ranged from gains of 0.4 percent to 0.9 percent.

The report may also show incomes rose 0.5 percent last month, the biggest gain since May, according to the survey median. Estimates ranged from increases of 0.2 percent to 0.8 percent.

Auto dealers are among retailers seeing demand improve long after the government’s so called cash-for-clunkers plan expired. Cars and light trucks sold at a 10.9 million unit annual pace last month, up from a 10.5 million pace in October. Sales slumped in September, the month after the trade-in incentive ended.

More Discounting

Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts.

The labor market remains a hurdle. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression.

Consumer Confidence

Stock-market gains are boosting optimism among Americans. The Reuters/University of Michigan final reading on consumer sentiment for December, due about 10 a.m., is projected to climb to 73.8, its highest level since January 2008.

The Standard & Poor’s 500 Index yesterday closed at the highest level in almost 15 months after existing home sales in November topped forecasts. The National Association of Realtors said sales of previously owned houses rose 7.4 percent from the prior month to an annual pace of 6.54 million, the highest level in almost three years.

Another report from the Commerce Department today, due at 10 a.m., is forecast to show purchases of new homes rose 1.9 percent to a 438,000 annual pace last month, the highest level since August 2008, according to the survey median.

Lower interest rates, cheaper homes and a homebuyer tax credit are bolstering a housing market that contributed to the worst economic slump since the 1930s.

                    Bloomberg Survey

===============================================================
                             Pers     Pers  U of Mich New Home
                              Inc    Spend    Conf.    Sales
                             MOM%     MOM%    Index   ,000’s
===============================================================
Date of Release              12/23    12/23    12/23    12/23
Observation Period            Nov.     Nov.   Dec. F     Nov.
---------------------------------------------------------------
Median                        0.5%     0.7%     73.8      438
Average                       0.5%     0.7%     73.9      435
High Forecast                 0.8%     0.9%     76.4      460
Low Forecast                  0.2%     0.4%     72.0      400
Number of Participants          68       72       59       72
Previous                      0.2%     0.7%     73.4      430
---------------------------------------------------------------
4CAST Ltd.                    0.5%     0.6%     75.5      425
Action Economics              0.5%     0.5%     73.4      435
Aletti Gestielle SGR          0.5%     0.7%     73.6      443
Ameriprise Financial Inc      0.2%     0.7%     74.0      435
Banesto                       0.6%     0.5%     73.7      425
Bank of Tokyo- Mitsubishi     0.4%     0.7%     73.4      430
Bantleon Bank AG              0.4%     0.7%     73.0      430
Barclays Capital              0.4%     0.7%     73.5      420
Bayerische Landesbank         ---      0.8%     74.2     ---
BBVA                          0.5%     0.5%     73.8      434
BMO Capital Markets           0.3%     0.6%     74.0      440
BNP Paribas                   0.5%     0.7%     73.0      440
BofA Merrill Lynch Resear     0.5%     0.6%     74.5      445
Briefing.com                  0.6%     0.8%     74.5      420
C I T I C Securities          ---      ---      75.0      435
Calyon                        0.4%     0.6%     73.4      437
Capital Economics             0.4%     0.8%     73.4      450
CIBC World Markets            0.6%     0.9%     ---       443
Citi                          0.3%     0.6%     73.5      440
ClearView Economics           0.4%     0.7%     72.0      460
Commerzbank AG                0.7%     0.6%     73.4      430
Credit Suisse                 0.6%     0.6%     74.0      440
Daiwa Securities America      0.5%     0.5%     ---       440
Danske Bank                   0.6%     0.6%     76.4      435
DekaBank                      0.5%     0.7%     74.0      440
Desjardins Group              0.4%     0.5%     73.5      435
Deutsche Bank Securities      0.8%     0.7%     74.0      450
Deutsche Postbank AG          ---      ---      74.0     ---
DZ Bank                       0.5%     0.8%     74.0      435
Exane                         ---      0.6%     ---       430
First Trust Advisors          0.4%     0.9%     73.5      444
Fortis                        ---      0.9%     ---       450
Goldman, Sachs & Co.          0.3%     0.5%     ---       422
Helaba                        0.5%     0.7%     ---       440
Herrmann Forecasting          0.5%     0.8%     73.7      438
High Frequency Economics      0.5%     0.8%     73.4      450
HSBC Markets                  0.7%     0.8%     73.5      420
IDEAglobal                    0.5%     0.6%     74.0      445
IHS Global Insight            0.4%     0.5%     74.0      442
Informa Global Markets        0.4%     0.9%     73.0      415
ING Financial Markets         0.4%     0.8%     75.0      440
Insight Economics             0.7%     0.5%     73.5      425
Intesa-SanPaulo               0.5%     0.7%     73.5      440
J.P. Morgan Chase             0.5%     0.4%     74.0      420
Janney Montgomery Scott L     0.5%     0.8%     ---       440
Landesbank Berlin             0.5%     0.8%     73.4      440
Landesbank BW                 0.6%     0.8%     73.8      445
Maria Fiorini Ramirez Inc     0.5%     0.6%     ---       425
MF Global                     0.4%     0.7%     72.5      400
MFC Global Investment Man     0.3%     0.7%     74.5      450
Mizuho Securities             0.2%     0.5%     73.0      430
Morgan Keegan & Co.           0.5%     0.7%     ---       435
National Bank Financial       ---      ---      ---       440
Natixis                       0.4%     0.5%     ---       439
Nomura Securities Intl.       0.3%     0.5%     ---       422
Nord/LB                       0.3%     0.7%     74.0     ---
PineBridge Investments        0.3%     0.6%     76.0      426
PNC Bank                      0.3%     0.6%     ---       415
Raiffeisen Zentralbank        0.2%     0.6%     73.5      460
Raymond James                 0.6%     0.7%     74.0      440
RBC Capital Markets           0.4%     0.6%     74.0      438
Ried, Thunberg & Co.          ---      0.4%     75.0      420
Schneider Foreign Exchang     0.3%     0.6%     74.0      427
Scotia Capital                0.3%     0.6%     ---       450
Societe Generale              0.3%     0.6%     73.7      435
Standard Chartered            0.5%     0.6%     ---       440
Stone & McCarthy Research     0.5%     0.8%     74.0      445
TD Securities                 0.6%     0.6%     73.5      445
Thomson Reuters/IFR           0.5%     0.7%     74.5      450
UBS                           0.5%     0.7%     74.0      415
University of Maryland        0.5%     0.5%     73.4      440
Wells Fargo & Co.             0.4%     0.6%     ---       415
Westpac Banking Co.           0.4%     0.9%     73.5      434
Woodley Park Research         0.7%     0.7%     73.6      421
Wrightson Associates          0.3%     0.5%     75.0      420
===============================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Bernanke’s Confirmation Support Runs 3-1 in Favor in Senate

By Scott Lanman

Dec. 23 (Bloomberg) -- U.S. senators are backing Federal Reserve Chairman Ben S. Bernanke for a second term by a 3-to-1 margin, based on a count of 77 lawmakers by Bloomberg News.

Bloomberg yesterday interviewed 53 senators who aren’t on the Banking Committee, which voted 16-7 on Dec. 17 to recommend Bernanke’s nomination to the full Senate. Twenty-one lawmakers said they are inclined to vote for Bernanke, while four said they would oppose the central bank chief, giving him 37-12 support so far for a four-year term starting Feb. 1. Another 28 said they’re undecided or declined to comment.

California Democrat Dianne Feinstein and South Carolina Republican Lindsey Graham were among senators saying they’ll support Bernanke, citing his response to the financial crisis. Senators from both major parties said they expect him to be confirmed, even with at least four lawmakers trying to block or delay the nomination.

“We were on the verge of a Great Depression, and I think he and others came up with some monetary policies that prevented us from going into a depression,” said Graham, who also backs a broad audit of the central bank. “He is worthy of renomination.”

Of the 77 senators who have voted, spoken with Bloomberg or publicly commented on their views, 43 are Democrats, 33 are Republicans and one is an independent. Democrats support Bernanke by a 26-1 margin, while Republicans are split 11-10 in the Fed chief’s favor. The chamber has 58 Democrats, 40 Republicans and two independents.

Bernard Sanders, a Vermont independent who isn’t on the banking panel, previously announced his opposition to Bernanke, saying he would try to block the nomination.

After Jan. 19

A vote will occur sometime after Jan. 19, Christopher Dodd, a Democrat from Connecticut and chairman of the Senate Banking Committee, said last week.

During a Dec. 3 hearing by Dodd’s panel, Bernanke, 56, faced criticism of the Fed’s bank oversight while gaining support for a second term. Dodd credited Bernanke with preventing a financial meltdown, while saying the Fed’s oversight of banks before the crisis was an “abysmal failure.”

Four Republicans -- John McCain and Jon Kyl of Arizona, Jeff Sessions of Alabama and Roger Wicker of Mississippi -- said they were inclined to oppose Bernanke.

“He hasn’t been effective enough in pointing out the reckless spending and financial policies of our Congress and our government,” Sessions said. “I don’t have anything against him personally, but there needs to be some accountability around here.”

Jeff Merkley of Oregon remains the only Democrat to announce his opposition to the Fed chief.

Majority Vote

While the nomination requires a majority vote for approval, the Senate would need 60 votes to break the procedural holds. The Senate has 100 members, two from each U.S. state.

Orrin Hatch, a Republican from Utah, said Bernanke has “done as good a job as he could. And I would be a little bit concerned by who would replace him.”

“He’s done an impressive job under extremely difficult circumstances,” said Jeff Bingaman, a Democrat from New Mexico.

Extrapolating the current vote count for the entire Senate would yield about 25 “no” votes, a total that probably wouldn’t trigger declines in stock or bond markets or cause investors to question the Fed’s political support, said Michael Feroli, an economist at JPMorgan Chase & Co. in New York.

“The market could deal with that,” said Feroli, a former Fed researcher. “If you got closer to 35 or 40, I think that’s worrisome.”

Decide to Oppose

Once a majority materializes for Bernanke, senators, especially those who are up for re-election next year, may decide to oppose the Fed chief, said Tom Gallagher, head of policy research at International Strategy and Investment Group Inc. in Washington.

“It’s fair to say that the safe vote on Bernanke is to vote ‘no’ on the losing side,” said Gallagher, a former congressional aide.

Bernanke was named “Person of the Year” last week by Time magazine after leading the biggest expansion of the central bank’s powers in its 96-year history to respond to the crisis. The Fed is phasing out many of its emergency programs by Feb. 1.

Feinstein said Bernanke shouldn’t be blamed for the troubles in the economy. “This thing was a long time coming, and to put it all on Bernanke is a mistake,” she said. “It’s a combination of a lack of regulation over a substantial period of time.”

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.

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China Central Bank May Strengthen Financial System Oversight

By Bloomberg News

Dec. 23 (Bloomberg) -- China’s central bank plans to study how to strengthen oversight of risks across the financial system, an effort that echoes measures under way in the U.S. and Europe in the aftermath of the crisis.

The People’s Bank of China “will study establishing a macroprudential management system,” the bank said in a quarterly monetary statement in Beijing today. The aim would be to prevent risks and ensure the safety of the financial system, it said.

Today’s statement follows calls by U.S. Federal Reserve Chairman Ben S. Bernanke for regulators to examine risks that can develop across financial firms and threaten the entire industry. Economists have warned of dangers of asset bubbles in China after a record credit boom, and the PBOC reiterated it will strictly control lending to areas with excess capacity.

While China’s banks mostly side-stepped the mortgage-linked assets that threatened the U.S. financial system, unprecedented lending in the Asian nation this year has brought its own risks. Chinese banks’ capital strength is probably more “strained” than it appears as lenders use off-balance sheet transactions to make room for lending growth, Fitch Ratings said Dec. 17.

The central bank said today that it would “manage money and loan growth, guide financial institutions to lend in a balanced manner and avoid excessive volatilities.”

Bernanke said Dec. 7 that all “systemically important financial institutions, not only banks, should be subject to strong and comprehensive supervision on a consolidated, or firm- wide, basis.”

The European Commission in September proposed a systemic- risk board as part of an overhaul of regulation following the worst financial crisis since the Great Depression. Part of that proposal includes creating regulatory bodies for the banking, securities and insurance industries. EU finance ministers this month approved forming the three regulators, overcoming objections from the U.K.

European Central Bank Vice President Lucas Papademos said Dec. 12 that greater regulation and oversight of banks can help rather than hamper economies, aiding long-term growth.

--Li Yanping. Editors: Paul Panckhurst, Chris Anstey.

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

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Dollar Trades Near Three-Month High on Signs of U.S. Recovery

By Bo Nielsen and Yoshiaki Nohara

Dec. 23 (Bloomberg) -- The dollar traded within half a cent of the highest level in more than three months against the euro before a report that may show new home sales rose in the U.S., adding to signs of recovery in the world’s largest economy.

The dollar was also near an eight-week high against the yen as the yield on 10-year Treasuries rose, boosting the advantage of holding U.S. over other government debt. The pound fell for a third day versus the dollar before the release of minutes of the Bank of England’s most recent meeting, when policy makers stuck to a plan to buy as much as 200 billion pounds ($326 billion) in bonds to revive the economy.

“People are taking the opportunity from the good U.S. data to buy some dollars before year end,” said Simon Derrick, the London-based chief currency strategist at BNY Mellon, the world’s biggest custodian of assets. “But the big picture hasn’t changed and the Fed has been pretty clear about its intentions to keep rates low, so we expect the dollar to come under pressure again in the new year.”

The dollar traded at $1.4258 per euro as of 8:21 a.m. in London from $1.4249 in New York yesterday, when it climbed to $1.4218, the highest level since Sept. 4. The dollar was at 91.75 yen, from 91.83 yen. It reached 91.87 yen earlier, the strongest since Oct. 27.

U.S. bond yields have climbed since the end of November as reports showed the nation’s jobless rate unexpectedly fell, retail sales beat forecasts and purchases of existing homes rose to the highest level in almost three years.

Yield Differentials

Two-year German notes yielded 30 basis points more than similar-maturity U.S. securities today, down from 59 points on Nov. 30. Japanese 10-year notes yielded 250 basis points less than Treasuries yesterday, the most since October 2008.

Sales of new homes in the U.S. probably rose to a 438,000 annual pace in November from 430,000 in October, according to the median estimate of economists in a Bloomberg News survey. The Commerce Department will release the data at 10 a.m. in Washington today.

Purchases of U.S. existing homes increased 7.4 percent in November to a 6.54 million annual rate, the highest since February 2007, the National Association of Realtors said yesterday. The median estimate of 69 economists in a Bloomberg survey was for a 2.5 percent advance.

‘Chugging Along’

“The U.S. economy is chugging along in its recovery mode, punching out some decent figures,” said Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Sydney. “Markets are re-rating some of the major currencies, particularly the euro and yen. The dollar has more to offer from these levels than those currencies do, considering the problems surrounding the periphery in Europe.”

Greece’s government debt rating was cut yesterday one step to A2 from A1 by Moody’s Investors Service. Moody’s kept a negative outlook on the rating.

The pound fell 0.1 percent to $1.5945 before the publication of the Bank of England’s Dec. 10 Monetary Policy Committee meeting, which may reveal details of the discussion on whether to prolong the central bank’s asset-purchase program. Policy makers signaled last month that the most “natural” time to reassess the program will be in February, when they will have more evidence of the economic recovery.

The yen erased losses against the dollar today amid speculation investors are removing some bets on U.S. currency gains before the Christmas holiday.

BoJ Rates

“All we hear is some intra-day profit taking” on dollar- yen, said Phil Burke, chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. “Liquidity is not there, so you are actually getting a lot more moves than you normally should get.”

Bank of Japan Governor Masaaki Shirakawa said in an interview with TV Tokyo on Dec. 21 that the central bank will “persistently” keep interest rates at “virtually zero” to fight deflation. The Japanese currency is headed for a 3 percent drop against the dollar this month, the most since February.

“The yen gains at times as exporters take advantage of higher levels of the dollar-yen to bring home profits,” said Takashi Yamamoto, chief trader in Singapore at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s biggest bank. “Shirakawa’s reiteration to keep rates low seems to be helping the yen weaken, as solid U.S. data boost demand for the dollar.”

Technical Indicators

Shirakawa is scheduled to speak at an annual meeting of Keidanren, Japan’s biggest business lobby, tomorrow in Tokyo. A government report on Dec. 25 may show consumer prices fell for a ninth month in November, according to a Bloomberg survey of economists.

Gains in the dollar were limited as the 14-day relative strength index, or RSI, for the currency against the euro remained below 30 for a fifth day, a sign the U.S. currency is likely to fall. The index was at 25.21 today.

“Technical indicators show the dollar’s rise has been rapid, as investors unwind numerous dollar-short positions before Christmas,” said Norifumi Yoshida, vice president of the trading section at Mizuho Corporate Bank Ltd. in Singapore. “I’m guessing the market will switch back to a dollar-weakening trend early next year.”

To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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French Consumer Spending Drops on Unemployment Woes

By Mark Deen

Dec. 23 (Bloomberg) -- French consumer spending unexpectedly fell in November as concern about unemployment outweighed the impact of government incentives to buy new cars.

Spending on manufactured goods declined 0.1 percent from October, national statistics office Insee said in a statement today. Economists expected a 0.5 percent gain, the median of 10 estimates in a Bloomberg survey showed. November spending rose 3.2 percent from a year earlier

By Mark Deen

Dec. 23 (Bloomberg) -- French consumer spending unexpectedly fell in November as concern about unemployment outweighed the impact of government incentives to buy new cars.

Spending on manufactured goods declined 0.1 percent from October, national statistics office Insee said in a statement today. Economists expected a 0.5 percent gain, the median of 10 estimates in a Bloomberg survey showed. November spending rose 3.2 percent from a year earlier and October’s month-on-month increase was revised down to 1 percent from 1.1 percent.

French households are grappling with joblessness at a three-year high in the wake of the deepest recession in more than half a century. While subsidies have spurred car sales, consumers are cutting back in other areas, causing spending to drop in six of the first 11 months of 2009.

“When people spend on cars they tend to cut back in other areas,” said Dominique Barbet, an economist at BNP Paribas in Paris. “Unemployment is unlikely to peak before next spring.”

France’s jobless rate climbed to 9.5 percent in the third quarter, the highest since the first quarter of 2006, as Air France-KLM Group shrank its workforce. The number of unemployed actively looking for a job in October rose by 52,400. The labor and finance ministries report their latest figures tomorrow.

Auto Incentives

Meanwhile, car sales are surging. Motorists and automobile manufacturers benefited as the government offers 1,000 euros ($1,500) to buyers who trade in old cars to purchase new ones. That subsidy will be cut in half on Jan. 1.

French car sales jumped 48 percent in November, the seventh consecutive monthly increase, to 216,452 vehicles, the national automakers association said on Dec. 1.

Total spending on cars rose 4.2 percent in the month, lifting demand for durable goods by 2 percent, Insee said today. By contrast, spending on textiles and leather goods fell 1.8 percent, while industries including home improvement and jewelry also posted declines.

“The impact of unfavorable labor market conditions will increasingly come to the fore, leaving spending lackluster going forward,” said Joost Beaumont, an economist at Fortis Bank in Amsterdam.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net and October’s month-on-month increase was revised down to 1 percent from 1.1 percent.

French households are grappling with joblessness at a three-year high in the wake of the deepest recession in more than half a century. While subsidies have spurred car sales, consumers are cutting back in other areas, causing spending to drop in six of the first 11 months of 2009.

“When people spend on cars they tend to cut back in other areas,” said Dominique Barbet, an economist at BNP Paribas in Paris. “Unemployment is unlikely to peak before next spring.”

France’s jobless rate climbed to 9.5 percent in the third quarter, the highest since the first quarter of 2006, as Air France-KLM Group shrank its workforce. The number of unemployed actively looking for a job in October rose by 52,400. The labor and finance ministries report their latest figures tomorrow.

Auto Incentives

Meanwhile, car sales are surging. Motorists and automobile manufacturers benefited as the government offers 1,000 euros ($1,500) to buyers who trade in old cars to purchase new ones. That subsidy will be cut in half on Jan. 1.

French car sales jumped 48 percent in November, the seventh consecutive monthly increase, to 216,452 vehicles, the national automakers association said on Dec. 1.

Total spending on cars rose 4.2 percent in the month, lifting demand for durable goods by 2 percent, Insee said today. By contrast, spending on textiles and leather goods fell 1.8 percent, while industries including home improvement and jewelry also posted declines.

“The impact of unfavorable labor market conditions will increasingly come to the fore, leaving spending lackluster going forward,” said Joost Beaumont, an economist at Fortis Bank in Amsterdam.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

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Oil Rises for a Second Day on Signs of U.S. Economic Recovery

By James Paton and Yee Kai Pin

Dec. 23 (Bloomberg) -- Crude oil rose for a second day in New York as positive housing and fuel-inventory data signaled a recovery in the U.S., the world’s largest energy user.

Oil climbed above $74 a barrel yesterday after the National Association of Realtors reported November sales of existing homes increased at the highest annual rate since February 2007, indicating the industry at the center of the recession has stabilized. Separately, the American Petroleum Institute said the country’s crude oil and refined-product stockpiles declined.

“The psychology has changed significantly,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are increasing signs of recovery in the key market, the U.S.”

Crude oil for February delivery rose as much as 38 cents, or 0.5 percent, to $74.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.75 at 4:06 p.m. Singapore time. Futures closed yesterday at $74.40, the highest settlement since Dec. 4. There will be no trading Dec. 25 for Christmas and on Jan. 1 for New Year’s Day.

Oil, which lost 54 percent in 2008, has gained 68 percent this year on speculation global demand for fuels will increase with the economic rebound.

Yesterday’s existing-homes sales figure rate exceeded the highest estimate from economists surveyed by Bloomberg News. The Commerce Department is expected to report today November sales of new homes also increased.

Stockpiles Fall

Commercially held crude oil inventories in the U.S. fell 3.71 million barrels last week to 328.8 million, said the industry-funded American Petroleum Institute. Gasoline stockpiles declined 1.1 million barrels to 215.9 million, the biggest drop in 10 weeks. Distillate fuel supplies, which include heating oil and diesel, slipped 745,000 barrels to 165.1 million, the API said.

An Energy Department report today is expected to show crude oil stockpiles fell 1.6 million barrels in the week ended Dec. 18, according to the median of estimates from 16 analysts polled by Bloomberg News. Distillate inventories probably dropped 2 million barrels, the survey showed. The report will be released at 10:30 a.m. in Washington.

U.S. gasoline demand rose the most in three weeks as drivers in the northeast filled up before a snowstorm, according to MasterCard Inc., the second-biggest credit card company.

Motorists bought an average 9.57 million barrels a day of gasoline in the week to Dec. 18, MasterCard said yesterday in its SpendingPulse report. Consumption increased 2.9 percent from the previous week and 1.7 percent from a year earlier.

OPEC Quotas

The Organization of Petroleum Exporting Countries agreed at a meeting yesterday in Luanda, Angola, to hold production quotas at 24.845 million barrels a day. The 12-member group, which pumps about 40 percent of the world’s oil, has gathered four times this year without revising official output targets.

Rising oil prices have encouraged some OPEC members to renege on their pledge in 2008 to reduce supply by 4.2 million barrels a day. Secretary-General Abdalla el-Badri said he wants quota compliance to improve to between 75 percent and 80 percent from the current level of about 60 percent.

“No change in quotas was largely expected by the market,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, a hedge fund that specializes in emerging markets. “More important is compliance, which has deteriorated meaningfully. That puts pressure on prices.”

Brent crude oil for February settlement rose as much as 46 cents, or 0.6 percent, to $73.92 a barrel on the London-based ICE Futures Europe exchange. The contract was at $73.90 at 4:07 p.m. Singapore time. Yesterday, it advanced 47 cents, or 0.6 percent, to settle at $73.46 a barrel.

To contact the reporters on this story: James Paton in Sydney jpaton4@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net

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National Aluminium to Triple Capacity in Six Years

By Abhishek Shanker

Dec. 23 (Bloomberg) -- National Aluminium Co., India’s second-biggest producer, plans to almost triple production capacity in the next six years as demand rises in Asia, Europe and North America.

Output of the lightweight metal may reach 1.25 million metric tons from 460,000 tons, Director of Production A.K. Sharma said in an interview. The company, which added 115,000 tons of capacity on Dec. 20, aims to put on another 180,000 tons in the next phase at its Angul plant in eastern Orissa state, he said, without specifying a timeframe.

Aluminum, used to make cars, aircraft and beverage cans, has climbed 45 percent this year in London as China, the world’s biggest producer and consumer, became a net importer and demand began to recover in the U.S., Japan and Europe.

“With higher prices and expanded capacity, National Aluminium will make good money,” said Giriraj Daga, an analyst in Khandwala Securities Ltd. in Mumbai. “Going forward, prices may rise further due to better demand.”

National Aluminium shares rose as much as 2.5 percent to 384.45 rupees and traded at 382.65 rupees as of 11:46 p.m. in Mumbai. The key Sensitive Index of the Bombay Stock Exchange gained 1.7 percent.

Global Production

China’s imports of refined aluminum swelled 1,245 percent to 1.45 million tons in the first 11 months of this year, while exports slumped 71 percent to 18,609 tons, according to government data.

Aluminum production in North America fell 17.9 percent this year, according to data from the International Aluminum Institute. Output fell 19.5 percent in West Europe and 11.6 percent in East/Central Europe, while production in Asia, including India, rose 11.8 percent.

“Declining capacities in North America and Europe because of rising input costs and expectations of an increase in per capita consumption of metals in China and India will help us,” Sharma said yesterday by telephone from Bhubaneshwar, where National Aluminium is based.

National Aluminium said yesterday it raised prices by 2.9 percent, the third increase this month, after the metal rose in London trading.

The company has sought 250 acres of land from the state government to expand its Angul facility, which will include a 240 megawatt power plant, Sharma said. Following the 180,000 ton capacity addition, it plans to add a further 107,000 tons, Sharma said.

Work on a 160 billion rupee ($3.4 billion), 500,000 ton smelter at Jharsuguda is expected to commence in June 2010 after a setback of more than a year because of delayed state government approvals, he said. The company may have to tap the market to fund the project that will include a 1,250 megawatt power plant, he said, without giving details.

“The state government may complete the environment impact study of the project in about five months after which we can expect an approval,” Sharma said.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

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Gold Fluctuates After Falling Past Two Days on Dollar Outlook

By Kim Kyoungwha

Dec. 23 (Bloomberg) -- Gold fluctuated in Asia after falling for the past two days as a strengthening dollar reduced demand for the precious metal and volumes waned as investors prepared for yearend holidays.

The Dollar Index, a six-currency gauge of the currency’s value, is trading near its highest level in more than three months, on signs of a recovery in the world’s largest economy. Sales of existing U.S. homes reached their highest level last month in almost three years, a report showed yesterday.

“Commodities including gold will probably remain weak as long as the dollar continues its rise,” said Park Jong Beom, a senior trader with Tongyang Futures Co. in Seoul. “With major market players closing their yearend books, volume is thin.”

Gold for immediate delivery climbed a much as 0.4 percent to $1,088.28 an ounce, having earlier dipped 0.1 percent. The metal was at $1,085.03 at 1:54 p.m. in Singapore. Gold for February delivery in New York was little changed at $1,085.60 an ounce.

Gold has fallen 9.3 percent this month as signs of economic expansion spurred a 5.2 percent advance in the dollar against the basket of six currencies. The greenback is headed for its first monthly increase since June.

Gold, up 23 percent this year, is still headed for its ninth annual gain. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, were unchanged at 1,132.71 metric tons yesterday, according to the fund’s Web site. They reached a record 1,134 tons on June 1.

Among other precious metals, silver fell 0.1 percent to $16.97 an ounce, platinum dropped 0.1 percent at $1,397.25 an ounce and palladium slid 1.3 percent to $353.97 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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Stocks, Dollar Rise on Signs Economies Worldwide Are Improving

By Shani Raja and Nicolas Johnson

Dec. 23 (Bloomberg) -- European and Asian stocks rose and the dollar traded near a three-month high against the euro and oil climbed above $74 a barrel on signs economies around the world are improving.

The Dow Jones Stoxx 600 Index added 0.6 percent as of 8:58 a.m. in London and the MSCI Asia Pacific excluding Japan Index climbed 0.9 percent. The dollar was unchanged at $1.4249 versus the euro from yesterday’s close in New York. Japanese markets were closed for a holiday.

A measure of risk in emerging-market bonds narrowed to the lowest level in 16 months as confidence in a global recovery increased. Consumer spending in the U.S. probably rose in November for the sixth time in seven months as households took advantage of holiday discounting, while China’s biggest brokerage said the nation’s growth may surge to as much as 12 percent next year.

“The recent data indicate the global economy is recovering faster than originally expected,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “It’s too early to say whether the recovery is self- sustaining, but we should know towards the end of first quarter 2010.”

Crude oil for February delivery climbed to $74.64 in electronic trading on the New York Mercantile Exchange. Prices closed at $74.40 yesterday, the highest settlement since Dec. 4.

Gold gained as much as 0.4 percent to $1,088.72 per ounce, after falling the past two days as a rebounding dollar reduced demand for the precious metal.

U.S. Futures Climb

Futures on the Standard & Poor’s 500 Index added 0.2 percent. The benchmark U.S. stock index climbed 0.4 percent yesterday to its highest close since October 2008, after the report on November home sales and as a profit forecast by Jabil Circuit Inc. triggered gains in technology shares.

U.S. 10-year government bond yields traded near the highest level in four months. U.S. debt yesterday completed the steepest back-to-back decline since July following the housing report.

“The more stable data trend is supporting a turnaround in the dollar; increasing the odds that the Fed will be thinking about edging policy rates out of their emergency setting at some stage next year,” Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a note to clients.

South Korea’s won led declines among Asia-Pacific emerging- market currencies, approaching a seven-week low. The Thai baht fell to its low for the month and Malaysia’s ringgit traded near its weakest level since October. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed to a three-month high.

‘Downward Pressure’

“Asian currencies continue to be under some downward pressure because of the strength of the dollar in global markets,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong.

All major stock markets in the Asia-Pacific Region climbed, led by increases of 2.7 percent in India, 1.1 percent in Hong Kong, 1 percent in New Zealand and 0.8 percent in Australia.

Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal used by steelmakers, climbed 5.6 percent in Sydney after Macquarie Group Ltd. said Hong Kong’s Noble Group Ltd. may be planning a bid. Gloucester Coal Ltd. jumped 28 percent after receiving a takeover offer from Macarthur and Noble advanced 4.7 percent, leading gains in Singapore’s benchmark stock index.

European Stocks

The MSCI Asia Pacific ex-Japan index has risen 62 percent this year, on course for its steepest annual increase since 1993, as central banks worldwide reduced borrowing costs and governments boosted spending to shore up their economies.

Europe’s Dow Jones Stoxx 600 rose to a 14-month high, ahead of the U.S. consumer spending report. DSG International Plc, the U.K.’s biggest consumer-electronics retailer, added 1.2 percent after UBS AG added the stock to its list of “most preferred” shares. Maurel & Prom jumped 4.4 percent after saying a well in Gabon was successful. Antofagasta Plc advanced 1.2 percent as metals prices gained.

Bond risk fell in Australia and in Asia outside Japan, as measured by credit-default swaps. The Markit iTraxx Asia ex- Japan investment grade index fell 1 basis point to 96 in Hong Kong, according to BNP Paribas SA prices.

“We’re seeing a fairly broad-based improvement in most economic measures,” said Cameron Peacock, an analyst at IG Markets in Melbourne. “Heading into next year, most people are fairly optimistic we’ll see a continued recovery across the global economy.”

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Nicolas Johnson in Tokyo at nicojohnson@bloomberg.net.

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U.K. Stocks Rise, Extending Steepest Yearly Rally Since 1997

By Adam Haigh

Dec. 23 (Bloomberg) -- U.K. stocks advanced, extending the biggest annual rally since 1997, before reports that may show U.S. consumer spending and new-home sales rose.

Antofagasta Plc and Fresnillo Plc both climbed more than 1 percent as metals prices advanced. Consumer spending probably rose in the world’s largest economy, some economists said before a report due at 8:30 a.m. in Washington.

The benchmark FTSE 100 Index gained 26.34 or 0.5 percent, to 5,355.00 as of 8:16 a.m. in London, extending this year’s 21 percent rally. The benchmark gauge has rebounded 52 percent since March as central banks cut interest rates to record lows and governments worldwide committed about $12 trillion to revive the economy. The FTSE All-Share Index rose 0.5 percent today and Ireland’s ISEQ Index fell 0.1 percent.

This year has “demonstrated beyond any reasonable doubt the fire power of public policy, especially when coordinated globally,” said Bill O’Neill, a portfolio strategist at Merrill Lynch Wealth Management in London. “Economies are ending the year on a firm footing based on the latest readings of business confidence.”

Consumer spending in the U.S. probably rose in November for the sixth time in seven months as households took advantage of holiday discounting. Purchases gained 0.7 percent for a second consecutive month, according to the median estimate of 72 economists surveyed by Bloomberg News. The report may also show incomes grew by the most in six months. Other data will probably show confidence and new-home sales also climbed.

Antofagasta rose 1.1 percent to 918 pence and Fresnillo gained 1.3 percent to 761.5 pence. Copper, nickel and tin advanced on the London Metal Exchange.

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

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European Stocks, U.S. Futures Rise Before Economic Reports

By Adria Cimino

Dec. 23 (Bloomberg) -- European stocks rose, sending the the Dow Jones Stoxx 600 Index to a 14-month high, before reports that may show U.S. consumer spending and new-home sales increased. U.S. futures and Asian shares also advanced.

DSG International Plc, the U.K.’s biggest consumer- electronics retailer, added 1.8 percent after UBS AG added the stock to its list of “most preferred” shares. Maurel & Prom jumped 4.5 percent after saying a well in Gabon was successful. Antofagasta Plc advanced 1.2 percent as metals prices gained.

The Stoxx 600 rose 0.3 percent to 252 at 8:13 a.m. in London, the highest level since October 2008. Today is the last full day of trading in Europe before the Christmas holiday.

The gauge is heading for a 27 percent increase this year, its steepest annual advance in a decade. Equities have been buoyed by record-low interest rates in the U.S. and Europe and by governments worldwide that have committed about $12 trillion to revive the economy.

“We’re quite positive on equities,” Thomas Romig, a fund manager at Union Investment in Frankfurt, which has $229 billion in assets under management, said in a Bloomberg Television interview. “We see more surprises on economic growth. It will broaden in 2010. The market will be driven higher.”

Consumer spending in the U.S. probably rose in November for the sixth time in seven months as households took advantage of holiday discounting. Purchases gained 0.7 percent for a second consecutive month, according to the median estimate of 72 economists surveyed by Bloomberg News.

U.S., Asia

The report, set for 8:30 a.m. in Washington, may also show incomes grew by the most in six months. Other data will probably show confidence and new-home sales also climbed.

U.S. stocks rose yesterday, sending the Standard & Poor’s 500 Index above its highest close in almost 15 months. Futures on the S&P 500 added 0.3 percent today, while the MSCI Asia Pacific Index advanced 0.6 percent.

DSG gained 1.8 percent to 36.7 pence after UBS recommended the shares, saying in a report the company’s “interim results showed stronger momentum across the business.”

Maurel & Prom jumped 4.5 percent to 12.59 euros. The French company whose units explore for oil and operate cable-laying ships said its OMGW-1 exploration well in Gabon was successful.

Miners Advance

Antofagasta, the copper producer controlled by Chile’s Luksic family, added 1.2 percent to 919 pence. BHP Billiton Plc, the world’s biggest mining company, gained 0.7 percent to 1,917.5 pence. Rio Tinto Group, the third-largest, advanced 0.9 percent to 3,244. Copper, nickel and tin were among metals rising on the London Metal Exchange.

Allied Irish Banks Plc climbed 5.8 percent to 1.30 euros. Irish Finance Minister Brian Lenihan said restructuring plans submitted by Bank of Ireland Plc and Allied Irish Banks to the European Commission have received a “positive response,” the Irish Times reported.

The lenders will be able to determine their capital needs in the first quarter of 2010 after they transfer their biggest loans to the country’s so-called bad bank, the Dublin-based newspaper said.Bank of Ireland shares slipped 0.3 percent to 1.35 euros.

Inditex SA gained 0.9 percent to 43.61 euros. The world’s biggest clothing retailer was removed from the “least preferred” list at UBS as “there no longer seems any immediate threat of Spanish retail sales deteriorating further.”

Bank Sarasin & Cie AG advanced 1.8 percent to 37.75 Swiss francs. The bank will beat its new money growth target of 7 billion Swiss francs ($6.67 billion) in the full year and is “confident” to reach last year’s profit level, Finanz und Wirtschaft said, citing an interview with Chief Executive Officer Joachim Straehle.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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