Wakeup Call: It's All About Jobs Today

Daily Forex Fundamentals | Written by Saxo Bank | Jan 08 10 08:14 GMT |

We are bullish on the payroll number coming out later this afternoon, our estimate lands at 35K vs. consensus of 0K Calendar Economic Data Releases Country Time (GMT) Name Saxo Consensus Prior GE 11:00 Industrial Production MoM (NOV) 1.0% -1.8% US 13:30 Nonfarm Payrolls / Unemploy. Rate (DEC) 35K / 10.1% 0K / 10.0% -11K / 10.0% US 15:00 Wholesale Inventories MoM (NOV) -0.3% 0.3% What's going on? The Fed released a statement yesterday stressing the need for better risk management at depository institutions. This can basically be viewed as a warning to banks that rates will not be kept at low levels forever. Nonfarm Payrolls are out today and we expect a very strong number. However, this has a lot to do with seasonal adjustments. The Unemployment Rate is seen slightly higher, but the risk is mostly to the downside due to the participation rate and aforementioned adjustments due to seasonality. The consensus of expectations in US Wholesale Inventories suggests that inventories will not lead Q4 GDP to the extent touted in the media. Watch out for NO Industrial Production at 09:00, UK PPI at 09:30, EC GDP (we and the market expect no change in this final estimate) at 10:00, and CA Unemployment at 12:00. Early macro numbers today have the potential for disappointment so we buy on dips into the Payrolls report. FX FX Daily stance Comment EURUSD 0/+ Continues to look supported by 200 day MA, look to buy dips down to 1.4260. USDJPY 0 Reversal in bullish sentiment seeing USDJPY sold down, prefer to stay on sidelines until upward momentum is re-established. EURJPY 0 Similarly, looking for a bottom to establish around 133.00 again before looking to go long. GBPUSD 0/+ Tight range fluctuating around 1.5950 expected to persist. Look to go long break of 1.5970 on upside. AUDUSD 0/+ Slight risk aversion ahead of payrolls data pushing a low of 0.9120. Buy dips down to 0.9120 looking for upside to 0.9200. Equities Equities Daily stance Comment DAX 0/+ Buy on dips towards 6028 targeting 6048. S/L below 6018. FTSE 0/+ Buy on dips towards 5536 targeting 5551. S/L below 5530. S&P500 0/+ Buy on dips towards 1139 targeting 1143. S/L below 1137. NASDAQ100 0/+ DJIA 0/+ Futures Commodities Daily Stance Comment Gold 0/- Sell at around 1122 targeting 1118. S/L above 1124. Silver 0/+ Buy at the break of 18.16 targeting 18.22. S/L below 18.11 Oil (CLG0) 0/+ Buy at the break of 82.70 targeting 83.40. S/L below 82.40 FX Options FX-Options Comment EURUSD Market still seems long gamma and this will keep spot ranges intact until the nonfarm numbers. Vols should find support should spot take another dive. USDJPY Vols are largely unchanged in Asia. With spot above 9300 we are seeing new wave of interest in buying the risk reversals (Buy USD puts) as ATM vols remain soft. AUDUSD Vols steadily lower in Asia except for front end gamma which continues to see good bids for both upside and downside strikes. Saxo Bank Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

Read more...

Euro Zone GDP And Unemployment Rates

Daily Forex Fundamentals | Written by ecPulse.com | Jan 08 10 08:11 GMT |

Dear reader, the end of the first economic week in 2010 is here as the euro zone is releasing major economic data regarding economic growth and labor market conditions while the largest economy contributing to growth in the euro zone, Germany, released its current account. First on our calendars, Germany's current account for November was released at 18.1 billion a rise from both the revised previous reading of 11.1 from 11.0 billion and the expected 10.8 billion. Trade balance for November was also released at 17.4 billion higher than the revised prior surplus of 13.4 from 13.6 billion which is better than the projected 12.5 billion. Taking the data into details we see that imports fell to -5.9% from the revised previous reading of -2.9% from -2.4% which is worse than the predicted 1.3%, while exports slipped to 1.6% from the revised prior reading of 1.9% from 2.5% which is better than the forecasted 0.8%. As exports slipped will hurt euro zone economic growth because the euro zone is an export dominated economy as they depend heavily on exports for growth, yet as a result of the global recession and crippled demand, exports have been heavily pressured. The major highlight of the day, euro zone will release its GDP third quarter final reading showing that it will remain unrevised at 0.4% while on the year the nation will continue to contract by 4.1 percent. The euro zone expanded during the third quarter as a result of Germany boosting growth levels especially as they expanded in the second quarter by 0.4%, and this positively impacted the euro zone helping the contraction narrow the second quarter contraction to -2% from first quarter contraction of 2.5%, which was the worst reading since 1959. The key sectors that boost growth levels in the euro zone, have been recovering in the past year, and this is positively affecting economic growth of-course alongside the incentive plans applied by the European Central Bank, after they took interest rate down to historical low levels at 1.00% while they are using 60 billion euros to buy governmental bonds to provide liquidity to markets. One of the main factors that are undermining growth prospects in the euro zone is the high unemployment rates; today we see that the zone will release the rates showing that in December they rose to 9.9% from 9.8%, which was the highest in nearly 11 years. The weak labor market is one of the core problems in the euro zone, because even when the region does prosper accurately and is out of recession, it will take some time before we see lower unemployment rates as industries lately have been facing lower net income while others have shut down from the worst economic period since WWII. The European stock market once again ended the session mixed as we saw the DJ Euro Stoxx 50 declined 2.32 points or 0.08% to 3007.34, CAC 40 rose 7.13 points or 0.18% to 4024.80 points while the DAX dipped 14.97 points or 0.25% to 6019.36 points. 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

Read more...

Australia Facing Next Boom, Billionaire Harvey Says

By Jacob Greber and Heidi Couch

Jan. 8 (Bloomberg) -- Australia’s economy is heading for its “next big boom,” according to Gerry Harvey, billionaire chairman of the nation’s largest electronics seller, after a report showed retail sales surged by the most in eight months.

Households, buoyed by the biggest three-month surge in employment in three years, are spending more at department stores and on clothing even as central bank Governor Glenn Stevens leads the world in raising interest rates. Consumer spending, which accounts for more than half of an economy that has grown for 18 years, will strengthen, said Harvey, 70.

“I’ve been saying for months now that the economy is recovering quite strongly and my belief is that we’re on the way to the next big boom,” the chairman of Harvey Norman Holdings Ltd. said in an interview with Bloomberg television yesterday.

Retail sales jumped 1.4 percent in November from October, the Bureau of Statistics said in Sydney yesterday. The gain was almost five times the median forecast of 12 economists surveyed by Bloomberg News.

Sales at Harvey Norman stores rose in October and November, and “I can’t tell you what we got, but I’m pretty happy” about December turnover, Harvey said.

The nation’s currency jumped to a one-month high against the U.S. dollar after yesterday’s retail sales report as investors bet resurgent consumer spending will force Stevens to raise interest rates again as soon as next month. It traded at 91.70 cents at 10:01 a.m. in Sydney today.

Rate Outlook

Stevens and his board boosted the overnight cash rate target on Dec. 1 by a quarter percentage point for an unprecedented third month to 3.75 percent.

Investors are betting there is a 58 percent chance of a quarter-point increase in the benchmark rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 9:42 a.m. Chances of a quarter-point move in March are at 100 percent.

Spending on clothes rose 2.5 percent in November, the biggest jump since March 2009, when Prime Minister Kevin Rudd’s government was distributing more than A$20 billion ($18 billion) in cash to households to cushion the economy against the global recession.

Yesterday’s report also shows consumers spent 1.6 percent more on food, and an extra 1.1 percent at department stores such as David Jones Ltd. and in restaurants, cafes and fast-food chains.

‘Shopping Spree’

“Aussie consumers went on a shopping spree during November,” said Craig James, a senior economist at Commonwealth Bank of Australia. “Department stores and large retailers were the big winners.”

Shares of David Jones, Australia’s largest department-store chain, rose yesterday for the first day in four, advancing 0.8 percent. Harvey Norman stock surged 3.7 percent.

“The retail sector has been recovering very strongly since April last year, and most retailers will tell you that,” Harvey said. “The economy in Australia is recovering strongly.”

Coopers Brewery Ltd. said yesterday that sales of beer surged in the past six months and forecast it would sell more than 60 million liters in 2010 for the first time.

Boxing Day sales last month at JB Hi-Fi Ltd., the best performing retailer in Australia’s benchmark stock index in 2009, were “a lot better” than a year earlier, chief executive officer Richard Uechtritz told the Australian newspaper last week.

Auto Sales

Sales of new cars and trucks surged a record 15.9 percent in December from a year earlier, driven by government tax breaks on auto purchases, the Federal Chamber of Automotive Industries said this week.

Consumer confidence jumped in October to near its highest level in almost six years, before falling in November and last month after Governor Stevens and his board increased interest rates.

“Confidence had sharply rebounded to one of the highest levels on record,” said Kieran Davies, chief economist at RBS Group Australia Ltd. in Sydney, referring to the October figures.

“Although there are no further government giveaways to temporarily boost spending, the fundamentals have shown a significant improvement,” he said. “Unemployment looks like it has peaked at less than 6 percent.”

Australia’s economy, one of few in the world to skirt last year’s recession, is generating more jobs than the central bank and government forecast early in 2009.

Jobs Boom

Employers added 99,500 new jobs in the three months through November, boosted by companies such as Chevron Corp., which is expanding liquefied natural gas ventures in Western Australia to meet rising global demand for energy. The jobless rate fell to 5.7 percent in November from 5.8 percent in October.

The nation’s trade deficit narrowed in November to A$1.7 billion from A$2.8 billion in October, as iron ore and farm exports jumped, a separate report showed yesterday.

Iron ore shipments from Western Australia’s Port Hedland, the world’s largest bulk exporting port, will double in three years as BHP Billiton Ltd. expands its overseas sales of the steelmaking ingredient, Andre Bush, the city’s Port Authority chief executive officer, said in an interview on Jan. 6.

Yesterday’s reports are “consistent with interest rates heading higher,” said RBS’s Davies said.

To contact the reporters for this story: Jacob Greber in Sydney at jgreber@bloomberg.net; Heidi Couch in Sydney at hcouch@bloomberg.net

Read more...

FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jan 08 10 07:43 GMT |

EURUSD Comment: Totally boring as we mark time ahead of today's US employment figures while trying to form an interim base against Fibonacci retracement support and the 200-day moving average at 1.4250. Momentum is zero and futures positions are being re-built at a painfully slow pace. Strategy: Possibly attempt longs at 1.4315; stop below 1.4200. Short term target 1.4450 Direction of Trade: → Chart Levels: Support Resistance 1.4282 " 1.436 1.4218 1.44 1.4200* 1.4448 1.4177* 1.4485 1.4085 1.455 GBPUSD Comment: Trading close to last year's lower levels and going nowhere in a hurry. Strategy: Possibly attempt very small longs at 1.5935; stop below 1.5800. First target 1.6050 then 1.6240. Direction of Trade: → Chart Levels: Support Resistance 1.5915 " 1.6 1.5896 1.6065 1.5832 1.6125 1.58 1.6242 1.5700* 1.6277 USDJPY Comment: Baptism by fire for the new Japanese finance minister and his ill-conceived comments. These pushed the Yen to its weakest since late August. Against AUD, CAD, KRW and IDR it is at its weakest since October 2008. The Japanese currency is oversold, and the USD overbought here, so the move looks unsustainable especially as bullish momentum is half of what it was at the start of the week. Watch for signs of turning today, hopefully with an 'evening star' or even a 'bearish engulfing' candle on the daily or weekly charts. Strategy: Attempt small shorts at 93.40; stop above 94.00. Short term target 91.25/91.00, then 90.00. Direction of Trade: → Chart Levels: Support Resistance 93.13 " 93.5 92.5 93.78 92.11 94 91.9 94.55 91.25* 95.10* EURJPY Comment: Trading at a new recent high but in the middle of the very broad band that dominated most of last year. Note that other Yen crosses are trading higher, other Asian currencies and so-called 'commodity' ones, at levels not seen since October 2008. Bullish momentum is not that strong here so watch for signs of instability today. Strategy: Possibly attempt small shorts at 133.65; stop above 134.25. Short term target 133.00, then 131.50. Direction of Trade: → Chart Levels: Support Resistance 133.34 " 133.79 133 134.12 132.39 134.54* 131.5 135 130.90* 135.50* Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

Read more...

Spanish Industrial Output Falls Least in 16 Months

By Emma Ross-Thomas

Jan. 8 (Bloomberg) -- Spain’s industrial production fell the least in 16 months in November and less than economists forecast, as government stimulus measures increased demand for cars and the global recovery supported exports.

Output at factories, refineries and mines fell 5.7 percent from a year earlier, adjusted for the number of working days, the least since July 2008, after slipping 9.2 percent the previous month, the Madrid-based National Statistics Institute said today in an e-mailed statement. Economists had forecast a decline of 7.5 percent, according to a Bloomberg News survey.

Faced with the worst recession in six decades and the highest unemployment rate in the euro region, Spain created stimulus measures last year to encourage car purchases and fund public infrastructure projects. As the global economy emerges from recession, Madrid-based Acerinox SA, the world’s biggest stainless-steel maker, returned to profit last year and expects demand to climb as much as 10 percent in 2010.

“The government stimulus measures are fundamental to this data,” said Jose Luis Martinez, a strategist for Spain at Citigroup in Madrid. He said the economy may have returned to low quarterly growth in the last three months of 2009.

“Once the measures run out, we’ll have to see if this is maintained,” he said.

Car Incentives

New car registrations, a proxy for sales, rose 25 percent from a year earlier in December, according to the Madrid-based automobile group ANFAC. As part of the Socialist government’s stimulus program, the central government provides as much as 500 euros ($716) in incentives for car purchases which regional administrations can match. Automakers were asked to offer a 1,000-euro discount to top up those measures.

Vehicle production rose 17.5 percent in November from a year earlier in unadjusted terms, the report showed. Output of non-durable consumer goods rose 1.3 percent, adjusting for the number of days worked, the institute said.

Output from the metal industry, including iron and steel, increased 12.2 percent in unadjusted terms, today’s report showed. Acerinox said Oct. 28 that improved demand may allow for price increases this year.

Spain, which has been in recession since the second quarter of 2008, is lagging behind the recovery in Europe. The International Monetary Fund forecasts Spain will contract 0.7 percent this year, while the U.S., the U.K., and the euro area return to growth.

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

Read more...

German Exports Rise More Than Economists Forecast

By Frances Robinson

Jan. 8 (Bloomberg) -- German exports rose more than economists forecast in November as the recovery in global trade drove demand for goods from Europe’s largest economy.

Sales abroad, adjusted for working days and seasonal changes, increased 1.6 percent from October, when they gained 1.9 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast an increase of 0.8 percent, the median of eight estimates in a Bloomberg News survey showed. Exports still declined 3.1 percent from a year earlier.

The Bundesbank said last month that the outlook for the German economy has brightened in recent months after growth accelerated in the third quarter. Exports may rise as much as 10 percent in 2010 after an 18 percent slump in 2009, the BGA exporters’ association said on Dec. 30.

“Germany is benefiting from investment and spending in Asia, as well as infrastructure spending in the U.S.,” said Carsten Brzeski, an economist at ING Group in Brussels. “This is really an industry and export-driven recovery.”

The euro was little changed today at $1.4313 as of 8:05 a.m. in Frankfurt from $1.4308 yesterday.

‘Beyond Expectations’

Imports fell 5.9 percent in November from October, the statistics office said. The trade surplus widened to 17.4 billion euros ($25 billion) from a revised 13.4 billion euros in October.

The surplus in the current account, a measure of all trade including services, was 18.1 billion euros, up from a revised 11.1 billion euros the previous month.

Volkswagen AG said yesterday that sales in China rose 37 percent to a record 1.4 million vehicles in 2009 as government stimulus measures spurred demand. The country’s auto market “went beyond everybody’s expectations” last year, said Winfried Vahland, Volkswagen’s China president.

Still, the slump in exports last year meant that China overtook Germany as the world’s top exporter, data compiled by Columbia, South Carolina-based GTI showed. Exports from China exceeded German shipments every month since April, according to the Jan. 6 report.

The Bundesbank on Dec. 4 raised its German growth forecasts, projecting expansion of 1.6 percent this year. The country’s Ifo economic institute also increased its outlook last month, saying exports will rebound and government tax cuts will boost consumer spending. It sees the economy, Europe’s largest, expanding 1.7 percent this year and 1.2 percent in 2011.

To contact the reporter on this story: Frances Robinson in Frankfurt at frobinson6@bloomberg.net

Read more...

Commodities Drop in China on Tightening Speculation

By Bloomberg News

Jan. 8 (Bloomberg) -- Commodity futures fell in China, led by zinc and sugar, on speculation the government will begin tightening monetary policy to reduce inflationary risks after a record gain in lending, reducing raw material demand.

Sugar for September delivery in Zhengzhou dropped 3.4 percent to 5,597 yuan ($820) per metric ton and zinc for April delivery in Shanghai fell 2.4 percent to 21,210 yuan a ton. Copper shed 0.8 percent to 60,690 yuan and soybean oil lost 1.5 percent to 7,744 yuan.

China’s central bank yesterday sold three-month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and limiting price gains. Prices also declined on speculation regulators may investigate futures traders as the government takes steps to curb lending.

“There has been talk that there will be an investigation into futures companies in China on the origins of their funds and this is weighing on the market,” Liu Biyuan, an analyst at GF Futures Co., said from Guangzhou. An official at the China Securities Regulatory Commission declined to comment when reached by phone today.

Traders fret that government efforts to rein in speculation may lead to investigations of futures trading firms and their sources of funds.

China’s stocks also fell, set for the first weekly decline in three weeks, as raw-material suppliers slid on lower commodity prices and automakers dropped on government tightening concerns.

‘Matter of Time’

“It’s just a matter of time before the central bank raises interest rates or reserve ratios,” said Wang Zheng, a fund manager at Jingxi Investment Management Co.

Policy makers are seeking to sustain a rebound in its economic growth, driven by fiscal stimulus and looser credit that spurred a construction boom, without stoking prices of stocks and property.

China’s three commodity futures exchanges traded record volumes last year on sustained demand for raw materials from soybeans to copper and as new contracts, including one for steel, were introduced.

A total of 2.15 billion contracts were traded in 2009 on the Shanghai Futures Exchange, the Dalian Commodity Exchange and the Zhengzhou Commodity Exchange, 58 percent more than in 2008, according to the China Futures Association. The contracts’ value exceeded 130.5 trillion yuan, 82 percent more than 2008, the association said.

Lending Curbed

China’s January lending will be curbed as the central bank this month may start directing banks on how much they can lend, according to Bank of China Ltd.

New credit may fall to less than 2.6 trillion yuan in the first quarter from 4.58 trillion yuan in the same period a year earlier, Bank of China analyst Shi Lei wrote in a note today. Banks may offer 1.2 trillion yuan of new loans in January as the central bank introduces its so-called “window guidance” to lenders, he said.

China’s central bank said this week it will target “moderate” loan growth in 2010, adding to signs that policy makers won’t allow a repeat of last year’s record expansion in credit that raised concerns of asset bubbles.

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

Read more...

Copper May Advance on Chinese Demand Speculation, Survey Shows

By Anna Stablum

Jan. 8 (Bloomberg) -- Copper may rise in London on speculation demand from China, the world’s biggest consumer, will remain steady even as the country’s central bank moves to curb bank-lending growth, a survey showed.

Eight of 15 analysts, investors and traders surveyed by Bloomberg, or 53 percent, said copper would gain next week. Six predicted lower prices and one expected little change.

Prices dropped yesterday on the London Metal Exchange after China’s central bank sold three-month bills at a higher interest rate for the first time in 19 weeks. Record imports into the Asian nation in last year’s first half helped copper prices to more than double for 2009, the biggest annual gain in more than two decades.

“Copper is likely to rise next week on continued fund buying, spurred by optimism about the outlook for China,” said Dan Smith, an analyst at Standard Chartered Plc in London.

Copper for three-month delivery was up 2.4 percent for this week at $7,554 a metric ton at 5 p.m. yesterday on the LME.

The red bars on the attached chart are derived by subtracting the bearish forecasts from the bullish estimates, with readings below zero signaling the majority of respondents expecting a decline. The green line shows the copper price. The data shown are as of Jan. 1.

The weekly copper survey has forecast prices accurately in 33 of the past 71 weeks, or 46 percent of the time.

This week’s survey results: Bullish: 8 Bearish: 6 Neutral: 1

To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

Read more...

Gold Declines for Second Day as Dollar’s Advance Curbs Demand

By Kim Kyoungwha

Jan. 8 (Bloomberg) -- Gold fell for a second day as the dollar’s strength sapped demand for the precious metal as an alternative asset.

The greenback rose against a six-currency basket before an employment report today that economists said will show two years of job losses halted, a signal that the world’s largest economy is recovering from recession. Gold rose 24 percent in 2009 as the Federal Reserve kept interest rates near zero percent to spur growth. The dollar gained as much as 0.8 percent against a six-currency basket yesterday.

“People are a bit disappointed that gold couldn’t hold on to gains and some of them are willing to sell,” said K.C. Wong, a trader with Standard Merchant Bank Ltd. in Singapore. The market is on watch for “a further clue” on the course of the dollar as it awaits the release of U.S. employment data today, he said.

Gold for immediate delivery weakened 0.7 percent to $1,123.47 an ounce at 2:48 p.m. in Singapore. February-delivery futures fell 0.9 percent to $1,123.80 an ounce.

Bullion holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, dropped 0.4 percent to 1,123.50 metric tons yesterday. The Dollar Index rose as much as 0.2 percent to 78.091 today.

Still, gold is up 2.1 percent this week after five weeks of declines, the longest losing streak since August 2008, amid speculation that large investors will resume adding gold to their investment as an asset class as the new year began.

Inflation Hedge

“We believe gold and other precious metals will remain a substantial allocation for hedge funds as a hedge against longer-term inflation,” Hennessee Group LLC, a consultant and adviser to direct investors in hedge funds, wrote in a report yesterday.

Gold will average $1,290 an ounce this year as spending by governments spurs inflation, stoking demand for the metal as a hedge against eroding values of other assets, according to broker GoldCore Ltd.

Prices will climb from an average $1,290 an ounce in the current quarter to $1,390 in the year’s final three months, Executive Director Mark O’Byrne said in an e-mail yesterday. The metal for immediate delivery climbed to a record $1,226.56 in December as a drop in the dollar spurred demand for the metal.

Fourteen of 20 traders, investors and analysts surveyed by Bloomberg News, or 70 percent, said bullion would gain next week. Six forecast lower prices.

Among other precious metals, silver decreased 0.9 percent to $18.075 an ounce, platinum fell 0.8 percent to $1,543 an ounce and palladium was down 0.2 percent to $425.50 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

Read more...

Corn, Wheat Extend Losses on Declining U.S. Crop Export Sales

By Jae Hur

Jan. 8 (Bloomberg) -- Corn and wheat dropped for a second day, trimming their weekly advances after a government report showed tumbling overseas sales by the U.S., the world’s biggest exporter of the crops.

Weekly sales of U.S. corn fell 53 percent in the week ended Dec. 31 to 364,700 metric tons, the smallest amount in seven weeks, the Department of Agriculture said yesterday. Wheat export sales plunged 75 percent to 93,432 tons in the week, the smallest total since the start of the marketing year on June 1, the USDA reported.

“Yesterday’s U.S. export sales data continued putting pressure on the grains market,” said Tomokazu Amano, research team chief at Mitsubishi Corp. Futures Ltd. in Tokyo. Investors are now watching the monthly USDA supply and demand report on Jan. 12 for direction, he said.

Corn for March delivery lost 0.2 percent to $4.1675 a bushel on the Chicago Board of Trade at 2:55 p.m. Singapore time, trimming the weekly gain to 0.5 percent. The contract is set for its third straight weekly rise.

March-delivery wheat dropped as much as 2.2 percent to $5.4525 a bushel and last traded at $5.51. The contract yesterday touched $5.68 a bushel, the highest level since Dec. 4. The grain has risen 1.6 percent this week, advancing for the second consecutive week.

Through Dec. 31, overseas buyers committed to purchase 16.5 million tons of U.S. wheat in the marketing year that began June 1, down 25 percent from the same period a year earlier, government data show. Actual shipments were down 28 percent at 12.7 million tons.

Rising Inventories

Wheat inventories in the U.S., the world’s biggest exporter, may rise to 921 million bushels before this year’s harvest, from 657 million bushels last year, according to an average forecast of 20 analysts surveyed by Bloomberg News. That compares with an inventory estimate by U.S. Department of Agriculture estimate of 900 million bushels this year.

Soybeans for March delivery lost as much as 1 percent to $10.1625 a bushel, after falling 3.1 percent yesterday on signs that China, the world’s biggest importer of oilseeds, is taking steps to control growth and inflation. The most active contract fell 0.4 percent to $10.215 a bushel at 2:59 p.m. Singapore time, taking the weekly decline to 2.6 percent.

China sold three-month bills yesterday at a higher interest rate for the first time in 19 weeks, after saying it wants to contain a record expansion.

- With assistance from Luzi Ann Javier in Singapore and Jeff Wilson in Chicago. Editors: Richard Dobson, Ravil Shirodkar.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

Read more...

GM Meeting Whitacre Profit Goal Means Fixing ‘Critical’ Sedans

By Jeff Green and Keith Naughton

Jan. 8 (Bloomberg) -- General Motors Co. is cutting prices and reworking ads to revive sales of two sedans that executives consider vital to meeting Chairman Ed Whitacre’s goal for a 2010 profit.

The moves are aimed at shrinking dealer stockpiles of the Chevrolet Malibu and Cadillac CTS that ballooned to more than twice the industry average, North American President Mark Reuss said in an interview ahead of next week’s Detroit auto show.

“The CTS is going to be fixed, now,” said Reuss, 46. “We’re going to be right on the back of that working on Malibu. We’ve got to have Malibu selling a lot more than we do right now. We’re looking at what we should be doing with the car versus where we’re at.”

Whitacre’s prediction this week of “positive net income” in 2010 expanded on his challenges to management since becoming chief executive officer on Dec. 1 when the board ousted Fritz Henderson. He has begun early repayments on GM’s $6.7 billion in U.S. loans and replaced more than a dozen executives.

The former AT&T Inc. CEO and chairman is pushing his team to keep U.S. market share at about 20 percent, after 2009’s 19.9 percent, said three people familiar with the goal who asked not to be identified because the plans aren’t public. Whitacre told reporters this week he wasn’t commenting on his plans.

2010 Outlook

Holding onto that share may require boosting sales by about 200,000 units, from 2.07 million last year, based on GM’s forecast for industry volumes of as much as 11.5 million. That heightens the importance of the CTS, Cadillac’s 2009 U.S. top seller, and the Malibu, the No. 2 Chevrolet car after the Impala. GM unveiled the current CTS and Malibu designs in 2007.

“Those are the two critical vehicles in GM’s lineup,” said Michael Robinet, a CSM Worldwide analyst in Northville, Michigan. “They have to have success there as an anchor to their overall portfolio.”

President Barack Obama, whose administration oversaw Detroit-based GM’s government-backed bankruptcy last year, alluded to the Malibu in a March 30 speech as one of the models that is “now outperforming the best cars made abroad.”

Malibu and CTS inventory reached a five-month supply in late 2009, more than double the industry average of roughly two months, Reuss said. The CTS was priced too high against models such as Bayerische Motoren Werke AG’s 3-Series, he said.

GM slashed CTS prices this week by as much as $3,000, said Steve Shannon, executive director of marketing for Cadillac. One popular version was pared to $39,990 from $42,255, with monthly lease payments dropping to $369 from $417, he said. BMW’s U.S. Web site advertises 3-Series leases for as low as $379.

‘Didn’t Wait’

“Finally GM is willing to look at the price of the vehicle and adjust it to the market conditions,” said Dave Butler, general manager of Suburban Cadillac in Troy, Michigan, and Suburban Chevrolet-Cadillac in Ann Arbor, Michigan. “They didn’t wait until it got to a critical level.”

Butler said the no-interest financing offered by GM on 2009 Malibus isn’t being matched on the 2010 model, in effect boosting the price. “A lot of purchase intenders may be waiting for that kind of incentive,” he said.

Advertising decisions also played a role in the Malibu’s slowing sales, as GM “walked away” after the vehicle’s initial promotion to focus on other models, Reuss said.

“There’s going to be a whole bunch of things we’re going to do look at and do, and it’s not going to take me a year to do it, either,” Reuss said of the Malibu, declining to elaborate.

Sales Slide

Malibu’s 9 percent decline in 2009 U.S. sales trailed the industry’s 21 percent slide, and the 25 percent decrease for the full Chevrolet line, according to industry researcher Autodata Corp. in Woodcliff Lake, New Jersey. CTS sales fell 34 percent, compared with 32 percent for all Cadillacs.

The Malibu and CTS aren’t GM’s only efforts to woo car buyers after focusing on light trucks in the 1990s and much of the past decade. The Chevrolet Aveo RS show car, with hidden rear-door handles and exposed headlamps to emulate motorcycle styling, will debut next week in Detroit at the North American International Auto Show.

Chevrolet and Cadillac are now more pivotal to GM’s sales, as the automaker trims U.S. brands to four from eight to help end annual losses that began in 2005. Buick and GMC also are being retained, while Saab, Hummer, Saturn and Pontiac are being dropped.

Reuss said he will present his 2010 priorities to the board next week, which include promoting vehicle quality over incentives to create profitable North American sales growth. New models reaching showrooms this year include a two-door CTS, Chevrolet’s Cruze and plug-in Volt, and Buick Regal.

Reuss said he’s using a page on the Facebook social networking Web site to keep in contact with customers and buff GM’s image one buyer at a time, if necessary.

“I’ve been here two weeks and I’m right in the middle of it,” said Reuss, whom Whitacre named to the post on Dec. 4. As to the CEO’s 2010 challenge for net income, Reuss said, “We’re going to make that, I think. I want to get the place profitable, I’m tired of it.”

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net

Read more...

Bank of America Expects Record Bonuses for Some Top Performers

By David Mildenberg

Jan. 8 (Bloomberg) -- Bank of America Corp., the biggest U.S. lender, expects to pay record bonuses to some investment bankers while keeping the overall cost of incentive compensation below previous years, according to a company spokesman.

“Some people will be getting very good bonuses because they had a very good year,” spokesman Robert Stickler said. The overall pool “will not be a record,” he said.

Bank of America repaid $45 billion in U.S. bank-rescue assistance in December, freeing the Charlotte, North Carolina- based lender from federal pay restrictions. Bonuses paid to Merrill Lynch & Co. executives before Bank of America completed its takeover of the brokerage in January 2009 prompted federal and state probes and a shareholder revolt that stripped Chief Executive Officer Kenneth D. Lewis of the chairman’s title.

Lewis retired on Dec. 31 and was replaced by Brian T. Moynihan. Bank of America’s management is determining the total earmarked for incentive-based compensation, Stickler said. The sum must get approval by the company’s board around the end of January, he said.

The Wall Street Journal reported on Bank of America’s bonus plans in its online edition yesterday. Incentive pay is based on individual, business unit and overall company performance, Stickler said.

Fees from the company’s investment bank and capital markets businesses ranked second in 2009 among Wall Street firms, trailing only New York-based JPMorgan Chase & Co. Moynihan said Jan. 4 the fees reflected the success of the Merrill Lynch takeover.

“Clearly investment banking at Bank of America had a pretty good year, so you’d expect year-end incentives would reflect that,” Stickler said.

Quarterly Results

Later this month, Bank of America as a whole may report its third loss in the past five quarters, amounting to 52 cents a share, according to the average estimate of 17 analysts surveyed by Bloomberg. Defaults on home loans, commercial real estate and credit cards have prompted the bank to charge off more than $25 billion through Sept. 30. Repaying funds to the Troubled Asset Relief Program may have reduced income available to common shareholders by $4.1 billion, the bank said last month.

Merrill reported a $27.6 billion loss in 2008, its last year as an independent company.

Bank of America rose 54 cents, or 3.3 percent, to $16.93 yesterday in New York Stock Exchange composite trading.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Read more...

U.S. Payrolls May Have Stopped Falling as Economy Strengthened

By Bob Willis

Jan. 8 (Bloomberg) -- The economy in the U.S. probably stopped losing jobs in December for the first time in almost two years, a sign the recovery strengthened heading into 2010, economists said before a report today.

Payrolls were probably unchanged after falling every month starting in January 2008, according to the median of 76 economists surveyed by Bloomberg News. The unemployment rate may have held at 10 percent, near the 26-year high of 10.2 percent reached in October.

Rising global sales mean American companies including Caterpillar Inc. may start hiring again this year after carrying out the biggest job cuts in the post-World War II era. The Federal Reserve has pledged to keep interest rates low and the Obama administration has announced measures to boost employment at small businesses as the jobless rate is forecast to exceed 10 percent through the first half of the year.

“It does look like the labor market is turning a corner,” said Julia Coronado, a senior economist at BNP Paribas in New York. “We expect a very, very modest rise in hiring that won’t be enough to stop the unemployment rate from going higher.”

The Labor Department’s report is due at 8:30 a.m. in Washington. Economists’ payroll forecasts ranged from a decline of 100,000 to an 85,000 gain.

Record Jump

A 10 percent reading in December would put the average jobless rate last year at 9.3 percent. The increase from 5.8 percent in 2008 would mark the biggest annual surge in records going back to 1940.

The 7.2 million drop in payrolls over the past two years has been the biggest as a percentage of all jobs since World War II was ending in 1944-45.

Monthly payroll losses accelerated after the collapse of Lehman Brothers Holdings Inc. in September 2008 and peaked at 741,000 in January 2009. The economy lost 11,000 jobs in November.

President Barack Obama on Dec. 8 proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. In early 2009, the administration’s economic advisers forecast the $797 million stimulus plan would keep unemployment below 8 percent.

Census Jobs

In another government boost to hiring, the Census Bureau will hire 1.15 million temporary workers in the first half of the year to conduct the population count that takes place every 10 years. The boost to payrolls may peak at about 700,000 in May before workers begin getting dismissed, according to a forecast by economist Lori Helwing at BofA Merrill Lynch Global Research in New York.

“They’re going to hire an army of people,” said Coronado. “In some sense, this acts as a stimulus package and is a timely coincidence, coming so early in the recovery.”

The economy grew at a 2.2 percent annual rate in the third quarter, the first gain in more than a year. Economists at JPMorgan Chase & Co. and Credit Suisse are forecasting fourth- quarter growth of more than 4 percent.

Staffing at temporary employment agencies jumped the most in five years in November, which some economists and executives view as a sign total payroll growth is imminent.

Temporary Help

Increases in temporary hiring are “a classic part of the recovery,” Manpower Inc. Chief Executive Officer Jeffrey Joerres said in a Bloomberg Television interview Dec. 31. The firm is seeing “slow but steady increases in people who are out on assignment,” he said.

Manufacturing, which accounts for about 12 percent of the economy, has been a driver of the recovery and is projected to continue to expand. The strength has yet to translate into more factory jobs. Manufacturing payrolls may drop by 35,000 after a decline of 41,000 in November, according to economists surveyed by Bloomberg, as companies increase productivity to cut costs.

Colder and wetter weather than average during the Dec. 12 survey week probably restrained the payroll numbers last month, compared with the unseasonably mild early November, Raymond Stone, managing director of Stone & McCarthy Research Associates in Skillman, New Jersey, said in a note to clients. “Weather sensitive” industries such as construction and travel may see “weaker” payroll numbers, he said.

Five-Year Revisions

With today’s report, the Labor Department will also revise figures from its household survey used in calculating the unemployment rate going back five years. Benchmark revisions to the payroll data will be announced in February.

U.S. stocks rallied in the second half of 2009 as evidence of an economic recovery mounted. The Standard & Poor’s 500 Index climbed 65 percent since sinking to a 12-year low on March 9, ending 2009 at 1,115.1.

Among companies resuming hiring, Caterpillar, the world’s largest maker of bulldozers, aims to bring back some laid-off workers this year, Chief Executive Officer Jim Owens said last month.

“We’ll gradually begin to call people back and to rebuild our overall sales and ability to ship product,” Owens said in a Dec. 11 interview with Bloomberg Television. “It will gradually begin to pick up as 2010 unfolds.”

                      Bloomberg Survey

===============================================================
                          Nonfarm Unemploy     Manu   Hourly
                         Payrolls     Rate Payrolls Earnings
                           ,000’s        %   ,000’s     MOM%
===============================================================
Date of Release              01/08    01/08    01/08    01/08
Observation Period            Dec.     Dec.     Dec.     Dec.
---------------------------------------------------------------
Median                           0    10.0%      -35     0.2%
Average                         -4    10.0%      -32     0.2%
High Forecast                   85    10.2%        0     0.3%
Low Forecast                  -100     9.9%      -50     0.0%
Number of Participants          76       73       23       54
Previous                       -11    10.0%      -41     0.1%
---------------------------------------------------------------
4CAST Ltd.                     -35    10.1%     ---      0.2%
Action Economics                 0    10.1%      -40     0.2%
Aletti Gestielle SGR            20    10.0%      -40     ---
Ameriprise Financial Inc        10    10.0%      -30     0.2%
Bank of Tokyo- Mitsubishi      -10    10.0%     ---      0.2%
Barclays Capital                25    10.0%      -20     0.2%
BBVA                           -20    10.0%      -37     0.1%
BMO Capital Markets            -70    10.0%     ---      0.2%
BNP Paribas                     25    10.1%     ---      0.1%
BofA Merrill Lynch Resear        0    10.1%     ---      0.1%
Briefing.com                   -25    10.2%     ---      0.1%
C I T I C Securities           -70     ---      ---      ---
Capital Economics              -50    10.0%     ---      0.2%
CIBC World Markets             -25    10.1%     ---      0.2%
Citi                           -50    10.1%     ---      0.2%
ClearView Economics             40    10.1%      -25     0.2%
Commerzbank AG                 -40    10.1%     ---      0.2%
Credit Suisse                   10    10.2%     ---      0.2%
Daiwa Securities America       -40     ---      ---      ---
Danske Bank                     30     9.9%     ---      ---
DekaBank                       -30    10.0%     ---      0.3%
Desjardins Group               -25    10.1%     ---      0.1%
Deutsche Bank Securities        50     9.9%     ---      ---
Deutsche Postbank AG           -30    10.1%     ---      ---
DZ Bank                         25    10.0%     ---      ---
First Trust Advisors            30     9.9%      -35     0.2%
Fortis                           0    10.0%     ---      ---
Goldman, Sachs & Co.           -25    10.1%     ---      0.1%
Helaba                          50    10.0%     ---      0.2%
Herrmann Forecasting            71     9.9%      -31     0.3%
High Frequency Economics       -50    10.2%     ---      0.1%
HSBC Markets                   -50    10.0%     ---      0.1%
IDEAglobal                      50    10.0%      -30     0.2%
IHS Global Insight             -30    10.1%     ---      0.2%
Informa Global Markets         -25    10.1%      -40     0.1%
ING Financial Markets           59    10.1%        0     0.2%
Insight Economics              -25    10.2%     ---      0.2%
Intesa-SanPaulo                 -5    10.1%     ---      0.2%
J.P. Morgan Chase               40    10.0%      -35     0.1%
Janney Montgomery Scott L      -55    10.1%     ---      ---
Jefferies & Co.                 25    10.1%      -50     0.2%
Johnson Illington Advisor       -2    10.0%      -35     0.2%
Landesbank Berlin              -30    10.0%     ---      0.1%
Landesbank BW                   30     9.9%     ---      ---
Majestic Research               44     ---      ---      ---
Maria Fiorini Ramirez Inc      -20    10.1%     ---      0.2%
MF Global                     -100    10.2%      -40     0.2%
MFC Global Investment Man       15    10.1%      -20     0.1%
Mizuho Securities              -75    10.0%     ---      ---
Moody’s Economy.com            -25    10.2%      -35     0.1%
Morgan Keegan & Co.             21    10.0%     ---      ---
Morgan Stanley & Co.           -25     9.9%     ---      0.2%
National Bank Financial         85    10.0%     ---      ---
Natixis                         20    10.0%     ---      0.2%
Nomura Securities Intl.         20    10.1%      -30     0.1%
Nord/LB                         10     9.9%      -30     0.1%
PineBridge Investments           5    10.2%     ---      ---
PNC Bank                        25     9.9%      -30     0.2%
Prestige Economics             -45    10.1%     ---      ---
Raiffeisen Zentralbank         -60    10.1%     ---      0.1%
RBC Capital Markets             20    10.1%     ---      ---
RBS Securities Inc.             25    10.1%      -25     0.1%
Ried, Thunberg & Co.             0    10.1%     ---      ---
Schneider Foreign Exchang      -63    10.0%     ---      0.0%
Scotia Capital                  50     9.9%     ---      ---
Societe Generale                25    10.0%     ---      0.2%
Stone & McCarthy Research       20    10.0%      -40     0.1%
TD Securities                   25    10.0%     ---      ---
Thomson Reuters/IFR             30    10.0%     ---      0.2%
Tullett Prebon                  15    10.0%     ---      0.2%
UBS                            -35    10.2%     ---      0.2%
University of Maryland           0    10.1%      -35     0.2%
Wells Fargo & Co.              -24    10.1%     ---      ---
Westpac Banking Co.            -80    10.0%     ---      ---
Woodley Park Research           26     9.9%     ---      0.1%
Wrightson Associates             0     9.9%     ---      0.1%
===============================================================

To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net

Read more...

Dollar Heads for 4th Weekly Gain Versus Yen Before Jobs Report

By Yasuhiko Seki and Ron Harui

Jan. 8 (Bloomberg) -- The dollar headed for its fourth weekly gain versus the yen, its longest winning run in 10 months, before a U.S. employment report today that economists said will show two years of job losses ended.

The Dollar Index, which tracks the greenback against six major currencies, was set for a second weekly advance, as signs the U.S. recovery is gaining momentum added to speculation the Federal Reserve will end its policy of keeping interest rates near zero. The yen pared losses from a four-month low against the dollar after Japan’s Prime Minister Yukio Hatoyama said rapid moves in the currency market were “not good.”

“With the plethora of data confirming a pick-up of the economy, speculation about an early exit from stimulus in the U.S. is increasing,” said Shuzo Kakuta, a senior foreign- exchange adviser at Tokyo Tomin Bank Ltd. “This will give impetus to the dollar.”

The dollar traded at 93.39 yen as of 7:02 a.m. in London from 93.37 yesterday in New York after earlier rising to 93.77, the strongest since Aug. 28. The currency has gained 0.3 percent this week. The greenback was at $1.4315 per euro from $1.4313. The yen bought 133.68 per euro from 133.58.

U.S. payrolls were unchanged in December after falling 11,000 in the previous month, according to the median estimate of economists in a Bloomberg News survey of economists before today’s Labor Department report.

Fed Rates

The dollar was also bolstered after U.S. regulators including the Fed yesterday warned banks to guard against possible losses from an end to low interest rates.

“It is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates,” said the Federal Financial Institutions Examination Council, made up of agencies including the Fed and the Federal Deposit Insurance Corp.

The Fed will raise its benchmark federal funds rate from close to zero in the third quarter of this year, according to a Bloomberg survey of economists undertaken during the first week of December.

The Dollar Index,which IntercontinentalExchange Inc. uses to track the greenback against currencies such as the euro, yen and pound, gained 0.1 percent to 78.02, extending this week’s advance to 0.2 percent.

Japan’s currency pared weekly declines as Hatoyama and Chief Cabinet Secretary Hirofumi Hirano said the government should not comment on foreign-exchange levels. Newly appointed Finance Minister Naoto Kan said yesterday he would welcome a weaker yen.

Hatoyama’s Remarks

“Hatoyama’s remarks muted the impact of yesterday’s comments from Kan,” said Masahide Tanaka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “Kan’s statement yesterday was a New Year’s gift for Japanese exporters.”

Hatoyama told reporters that “as currency stability is desirable, rapid fluctuations are unwelcome.” The Prime Minister also said “the government, at least as far as I am concerned, basically has no need to comment on currencies.”

Cabinet Secretary Hirano said today “it is undesirable for the government to say things that affect markets.” National Strategy Minister Yoshito Sengoku said “it’s not good to say much about whether the exchange rate is high or low.”

Kan later told reporters that foreign-exchange rates should be determined by the markets while saying the government is able to take action on currencies in extreme cases.

‘Gaffes’

“The market is already full of tiffs and gaffes,” said Takashi Kudo, general manager of market information service in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “It is apparent that there is no shared or uniform opinion on the currency among the government.”

South Korea’s won rose for a seventh day after the central bank signaled interest rates would be raised to reflect a recovery in the economy.

“My thoughts remain unchanged that there’s a gap between the current rate at 2 percent and rates after normalization,” BOK Governor Lee Seong Tae told reporters following a policy meeting today.

Governor Lee on Dec. 10 said the central bank should not wait too long before gradually raising rates, provided the recovery sustains momentum.

Korea’s currency climbed 0.4 percent to 1,130.75 per dollar, posting a 2.9 percent gain this week.

To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

Read more...

Japan Stocks Rise, Led by Automakers as Yen Weakens; Aeon Gains

By Kana Nishizawa and Satoshi Kawano

Jan. 8 (Bloomberg) -- Japanese stocks rose on speculation overseas earnings will climb, as the yen weakened to its lowest level against the dollar since August following comments by Finance Minister Naoto Kan.

Toyota Motor Corp., the world’s biggest carmaker and which gets 31 percent of revenue in North America, gained 2.9 percent after Kan said yesterday on his first day in office that he would like the yen to weaken “a bit more.” Sony Corp., Japan’s biggest exporter of televisions, advanced 2.4 percent. Aeon Co., the country’s largest supermarket operator, jumped 6.5 percent after its net loss narrowed.

“A weaker yen has a huge positive impact on the market for an export-dependent country like Japan,” said Masatsugu Okeya, a fund manager at Chiba-Gin Asset Management Co. “Foreign investors are buying Japan’s major companies.”

The Nikkei 225 Stock Average added 1.1 percent to 10,798.32 in Tokyo, the highest close since October 2008. The broader Topix index rose 1 percent to 941.29, with more than twice as many stocks advancing as declining.

This marks the only time since 1994 that the broad gauge has increased on the first five business days of the year. It rose 3.7 percent this week, the most since the week of Nov. 30. The Nikkei added 2.4 percent, the most in two weeks.

The Topix had the lowest return last year among benchmark indexes in the world’s 40 largest markets, climbing 5.6 percent, on concern the government will be unable to revive economic growth and a stronger yen will hurt profits. Stocks in the index trade at an average of 37 times estimated earnings, compared with 15 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Dow Jones Stoxx 600 Index in Europe.

Yen Weakens

The yen weakened to as much as 93.77 against the dollar today, compared with 92.20 at yesterday’s close of stock trading in Tokyo. A weaker yen boosts the value of overseas sales at Japanese companies when converted into their home currency.

The currency climbed to a 14-year high in November and averaged 93.59 in 2009, the highest annual level since currencies began trading freely in 1971.

Toyota added 2.9 percent to 3,960 yen and was the largest contributor to the Topix’s advance. Isuzu Motors Ltd. and Mazda Motor Corp., Japan’s second-largest car exporter, had the steepest gains on the Nikkei 225, soaring 9.1 percent and 7.4 percent. Sony rose 2.4 percent to 2,809 yen.

“People are buying exporters,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $92 billion. “The yen was already falling, so it’s reactive to anything that triggers a further weakening.”

Aeon, Chip-makers Gain

In the U.S., retailers’ December comparable-store sales gained 3 percent, the biggest gain since April 2008, Retail Metrics Inc. said yesterday.

“Positive U.S. retail sales gave a sense of relief on the U.S. economy and markets,” Nagano said. “If U.S. retailers are strong, it will positively impact the Japanese economy and markets.”

Aeon surged 6.5 percent to 848 yen after its nine-month net loss narrowed 66 percent from a year earlier.

Toshiba Corp., the world’s No. 2 maker of flash memory, climbed 3.5 percent to 538 yen, and NEC Electronics Corp., Japan’s fourth-largest chipmaker, climbed 2.7 percent to 767 yen. Toshiba’s semiconductor business may break even this fiscal year from a loss of 280 billion yen ($3 billion) last year, as chipmakers’ earnings recover from rising demand for high- technology products, Nikkei news said.

JAL, Commodities Fall

Commodity producers were among the biggest losers of the 33 industry groups in the Topix after oil and metal prices fell. Inpex Corp., Japan’s No. 1 oil explorer, lost 2.2 percent to 717,000 yen. Sumitomo Metal Mining Co., the country’s second- largest copper smelter and top producer of gold, slipped 1.3 percent to 1,448 yen.

Crude oil for February delivery declined 0.6 percent in New York yesterday, as the dollar climbed against the euro, while copper futures for March delivery slid 1.9 percent. Gold for immediate delivery fell for a second day today, declining as much as 1 percent.

The London Metal Exchange Index, a gauge of six metals including aluminum and copper, fell 2.4 percent yesterday, the first decline in five days.

Japan Airlines Corp., Asia’s biggest carrier by sales, tumbled 12 percent to 67 yen, the sharpest plunge on the Nikkei 225, after Kan declined to rule out a court-led bankruptcy as an option for the carrier.

To contact the reporters for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net.

Read more...