Sugar Climbs to Two-Decade High as India May Increase Purchases

By M. Shankar

Jan. 20 (Bloomberg) -- White sugar surged to the highest price in at least two decades in London on speculation that India and other importers will purchase more of the sweetener as a supply deficit looms.

India, the world’s largest consumer, may import 2 million metric tons in the year ending Sept. 30, up from 225,000 tons in the previous 12 months, said R.L. Tamak, business head for sugar at the Indian unit of Olam International Ltd. White, or refined, sugar prices have more than doubled in the past year.

“Right now, few factories” have refining facilities during the off-season, Tamak said in a telephone interview. “White sugar has to be imported to meet the demand.”

White sugar for March delivery climbed as much as $11.10, or 1.5 percent, to $755 a ton on the Liffe exchange, the highest price since at least January 1989. The contract was at $752.10 a ton at 9:43 a.m. local time.

On ICE Futures U.S. in New York, raw sugar for March delivery gained 0.1 percent to 29.02 cents a pound and earlier rose to 29.15 cents, the highest for a most-active contract since January 1981.

Egypt, Indonesia, Pakistan and Philippines have also said they intend to import sugar to cool domestic prices, crimping supplies.

Excess rains in Brazil and a weak monsoon in India hurt sugar-cane output from the world’s two biggest growers. Global demand for sugar will outpace supply by 13.5 million tons in the 2009-10 season, according to broker Czarnikow Group Ltd.

Among other agricultural commodities traded on Liffe, cocoa for March delivery advanced 0.1 percent to 2,320 pounds ($3,784) a ton. Robusta coffee for March delivery declined 0.8 percent to $1,362 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net.

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Sugar Climbs to Two-Decade High as India May Increase Purchases

By M. Shankar

Jan. 20 (Bloomberg) -- White sugar surged to the highest price in at least two decades in London on speculation that India and other importers will purchase more of the sweetener as a supply deficit looms.

India, the world’s largest consumer, may import 2 million metric tons in the year ending Sept. 30, up from 225,000 tons in the previous 12 months, said R.L. Tamak, business head for sugar at the Indian unit of Olam International Ltd. White, or refined, sugar prices have more than doubled in the past year.

“Right now, few factories” have refining facilities during the off-season, Tamak said in a telephone interview. “White sugar has to be imported to meet the demand.”

White sugar for March delivery climbed as much as $11.10, or 1.5 percent, to $755 a ton on the Liffe exchange, the highest price since at least January 1989. The contract was at $752.10 a ton at 9:43 a.m. local time.

On ICE Futures U.S. in New York, raw sugar for March delivery gained 0.1 percent to 29.02 cents a pound and earlier rose to 29.15 cents, the highest for a most-active contract since January 1981.

Egypt, Indonesia, Pakistan and Philippines have also said they intend to import sugar to cool domestic prices, crimping supplies.

Excess rains in Brazil and a weak monsoon in India hurt sugar-cane output from the world’s two biggest growers. Global demand for sugar will outpace supply by 13.5 million tons in the 2009-10 season, according to broker Czarnikow Group Ltd.

Among other agricultural commodities traded on Liffe, cocoa for March delivery advanced 0.1 percent to 2,320 pounds ($3,784) a ton. Robusta coffee for March delivery declined 0.8 percent to $1,362 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net.

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Wheat Drops to Two-Month Low in Chicago as U.S. Exports Slide

Wheat Drops to Two-Month Low in Chicago as U.S. Exports Slide

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By Rudy Ruitenberg

Jan. 20 (Bloomberg) -- Wheat futures fell for a fourth day and to a two-month low after the weekly quantity of U.S. grain inspected for export fell to the lowest since June.

Wheat for March delivery fell as much as 1.4 percent to $4.9325 a bushel in electronic trading on the Chicago Board of Trade, and was at $4.9375 as of 11:22 a.m. Paris time. That’s the lowest price since Nov. 2.

U.S. Department of Agriculture officials inspected 9.4 million bushels of wheat for export in the week ended Jan. 14, down 24 percent from a week earlier and the lowest level since the year that started June 1.

“The weekly inspection number turned out to be at a low level, 260,000 tons, below expectations,” French farm adviser Offre et Demande Agricole said in a report today.

Milling wheat for March delivery traded on Liffe in Paris slipped 0.2 percent to 125.50 euros ($177.97) a metric ton.

Corn for March delivery traded in Chicago slipped less than 0.1 percent to $3.69 a bushel while soybean futures gained 0.3 percent to $9.6625 a bushel.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

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Rice Output Growth in Indonesia to Slow on El Nino, Bulog Says

By Luzi Ann Javier

Jan. 20 (Bloomberg) -- Rice-production growth in Indonesia, the world’s third-largest grower, may slow this year as an El Nino weather phenomenon parches crops, according to Bulog, the state-owned food company that manages the nation’s supplies.

Output of milled rice may expand 3 percent in 2010 after rising 5 percent to 40 million tons in 2009, according to Mohammad Ismet, an expert who helps set Bulog’s policies. That forecast assumes the government has some success in neutralizing El Nino’s impact, he said in an interview today.

El Ninos curb or delay rains across Asia and can parch crops, potentially crimping harvests of rice, sugar and palm oil while boosting prices. Thailand and the Philippines, the world’s top rice shipper and importer respectively, warned earlier this month that the weather pattern may cut their harvests.

Without government intervention, including use of drought- resistant seeds, production growth “may not be as much as 3 percent,” Ismet said in Singapore, where he’s attending a conference. Still, the Southeast Asian nation will have enough supply of the staple to meet domestic needs, he said.

Thai rice-export prices, used as an Asian benchmark, were set at $609 a metric ton on Jan. 13 compared with $607 the week before and last year’s low of $525, according to data from the Thai Rice Exporters Association. Futures in Chicago traded at $13.98 per 100 pounds today, down by 6.1 percent this year.

‘Significant Influence’

An El Nino -- caused by a warming of the equatorial Pacific Ocean -- was forecast to cause drier-than-average conditions in Indonesia in the January-to-March period, the U.S. Climate Prediction Center said on Jan. 7. The pattern, forecast to last till June, “is expected to exert significant influence on the global weather and climate in the coming months,” it said.

The last time that Indonesia had a moderate El Nino similar to conditions the country is now experiencing was in 2006, when rice output grew 0.5 percent, Ismet said. That compares with growth of about 5 percent a year from 2007 to 2009, he said.

The price of rice in the domestic market has risen 6 percent this month compared with October as supply tightened after the El Nino delayed planting from November to December, he said. “Price is the best indicator for the market, whether the supply is enough or not for the consumption,” he said.

Bulog is forecast to buy 3.5 million tons of rice from farmers to sell to the poor at subsidized rates, helping to cool prices, Ismet said. The nation of about 232 million people has per capita consumption of 139.42 kilograms, he said.

Thailand may see a drop in rice output of as much as 15 percent to 27 million tons, Apichart Jongskul, secretary general of the nation’s Office of Agricultural Economics, said on Jan. 13. The Philippines may lose 400,000 tons from this year’s first rice harvest on El Nino, Joel Rudinas, acting agriculture undersecretary for operations, said on Jan. 18.

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

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Asian Stocks Fall on China Growth Concern; Astellas Advances

By Anna Kitanaka and Shani Raja

Jan. 20 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index down for the third straight day, after regulators told some of China’s banks to limit lending. Finance and energy companies led the decline.

China Construction Bank Corp. sank 3.1 percent and PetroChina Co. dropped 1.7 percent in Hong Kong. The chief Chinese banking regulator, Liu Mingkang, said some banks were asked to curb lending after failing to meet capital requirements. Nomura Holdings Inc. fell 3.8 percent after Credit Suisse Group AG downgraded Japan’s brokerages. Astellas Pharma Inc. climbed 2.7 percent, leading drugmakers higher on speculation President Barack Obama’s healthcare reform plan will be derailed.

The MSCI Asia Pacific Index lost 0.7 percent to 124.45 at 7:35 p.m. in Tokyo, extending a two-day, 1.2 percent drop. The measure has jumped 50 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II. Stocks on the gauge are priced at 1.63 times book value, near the highest level since September 2008.

“China is a critical factor in the recovery process,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “China’s tightening policy is telling us that growth is quite strong. If they can get more balance in their growth, that’s a positive thing.”

China’s Shanghai Composite Index slumped 2.9 percent, while Hong Kong’s Hang Seng Index lost 1.8 percent as Chinese Premier Wen Jiabao yesterday said the country will manage the pace of credit growth. Japan’s Nikkei 225 Stock Average lost 0.3 percent.

Toyota Tsusho, KT

Among stocks that rose today, Toyota Tsusho Corp., an affiliate of Toyota Motor Corp., surged 6 percent in Tokyo after agreeing on a venture with Australian mineral explorer Orocobre Ltd. KT Corp., South Korea’s largest phone and Internet company, jumped 6.8 percent after Shinhan Investment Corp. raised its share-price forecast.

Futures on the U.S. Standard & Poor’s 500 Index lost 0.3 percent. The gauge added 1.3 percent yesterday, led by health and technology companies.

China Construction Bank, the nation’s second-largest lender, sank 3.1 percent to HK$6.22 in Hong Kong and was the biggest drag on the MSCI Asia Pacific Index. Bank of China Ltd. lost 3.4 percent to HK$3.95.

Wen’s speech yesterday excluded references to a proactive fiscal policy and relatively loose monetary policy, marking the “official” end of the nation’s emergency measures to boost the economy, Lu Ting, a Hong Kong-based economist at Bank of America-Merrill Lynch wrote in a note.

‘Desired Effect’

“With the prospect of inflation starting to rear its ugly head, central bankers are now trying to tighten policy,” Arjuna Mahendran, chief investment strategist for Asia at HSBC Private Bank, said in a Bloomberg Television interview from Tokyo. “Monetary tightening is having the desired effect, which is to see that the stock market doesn’t get too exuberant.”

Hong Kong stocks also fell after Shanghai’s government said a Caijing magazine report that the city may allow individuals to invest abroad is “pure fabrication.” The report drove the Hang Seng Index up by 1 percent yesterday.

Insurers declined after the China Insurance Regulatory Commission said the companies should improve their assessment of profitability of sales made through banks and avoid price wars. The regulator may limit or revoke licenses of insurers found to have engaged in such practices to boost sales.

Ping An Insurance Group Co., China’s second-biggest insurer, slipped 2.3 percent to HK$66.05 in Hong Kong. China Life Insurance Co. lost 1.5 percent to HK$36.50.

Japanese Brokerages

Nomura Holdings, Japan’s biggest investment bank, fell 3.8 percent to 711 yen. Daiwa Securities Group Inc. dipped 2.4 percent to 482 yen and Matsui Securities Co. sank 3.7 percent to 654 yen. Credit Suisse lowered its rating on the Japanese brokerage sector to “market weight” from “overweight.”

“We favor shifting from the brokerage sector to the bank sector, for which the risk of further capital increases is gradually receding,” Azuma Ohno, a Tokyo-based Credit Suisse analyst, wrote in a report yesterday.

A gauge of energy stocks on the MSCI Asia Pacific Index lost 1.5 percent, the most of 10 industry groups, as oil futures in New York dropped 1.3 percent to $78.00 in after-hours trading.

PetroChina, China’s No. 1 oil producer, retreated 1.7 percent to HK$9.40 in Hong Kong, while Cnooc Ltd., the country’s largest offshore oil company, declined 1.2 percent to HK$12.08.

A measure of health-care companies on the MSCI Asia Pacific climbed 1.4 percent, after Scott Brown won a U.S. Senate seat in Massachusetts. The victory gives Republicans enough members to block votes on an overhaul of the U.S. health-care system, President Barack Obama’s top legislative goal.

Sweeping Revamp

If passed, the health-care legislation would be the most sweeping revamp of the medical system in 45 years and is aimed at extending health coverage to millions of uninsured Americans by expanding the Medicaid program for the poor and setting up online insurance-purchasing exchanges.

The proposed bill “basically limits the price of drugs,” said Takeru Ogihara, who helps oversee $27 billion as chief strategist at Mizuho Trust & Banking Co. in Tokyo. “If the health-care bill is put aside, it’ll help the U.S. health stocks and the big Japanese health companies that are doing business there too.”

Astellas, which derives 27 percent of its revenue from North America, climbed 2.7 percent to 3,565 yen. Takeda Pharmaceutical Co., Asia’s biggest drugmaker, added 1.7 percent to 4,000 yen. The company gets 41 percent of sales in North America.

Toyota Tsusho surged 6 percent to 1,489 yen in Tokyo. The trading company will establish a joint venture with Orocobre to develop a lithium and potash mine in Argentina. Orocobre, based in Australia, surged 32 percent to A$1.85 in Sydney.

In Seoul, KT Corp. jumped 6.8 percent to 48,700 won, the highest close since April 17, 2008. Shinhan Investment raised its share-price estimate by 18 percent to 57,000 won and maintained its “buy” rating, according to a report today.

To contact the reporters for this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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Euro Stoxx 50 to Fall After Sell Signals: Technical Analysis

By Francesca Cinelli

Jan. 20 (Bloomberg) -- Europe’s Dow Jones Euro Stoxx 50 may undergo “a stronger setback into February” because of sell signals in weekly and daily indicators, according to technical analysts at UBS AG.

While “a bounce early this week is likely” as intraday Europe is oversold, “the technical background is deteriorating strongly,” analysts Michael Riesner and Marc Mueller wrote in a report dated yesterday.

The benchmark index for euro-zone equities, which set a 15- month high at 3,017.85 on Jan. 8, added 0.9 percent to 2,984.82 yesterday.

“Selling pressure increased over the course of last week” and “the Jan. 11 reaction high at 3,044 now represents a crucial trading resistance,” the analysts wrote.

Both weekly charts and daily indicators point to further weakness in the Dow Jones Euro Stoxx 50.

“A classic bearish engulfing pattern on a weekly chart basis is in place, which usually occurs at or near important tops,” Riesner and Mueller wrote. A classic bearish engulfing pattern is a three-bar formation and is seen at the top end of an extended advance in prices. A tall white candle is followed by a second bar displaying tight disparity between the opening price and the closing price and located above the first bar. A third bar is a tall black candle, and the whole chart pattern is considered as bearish by technical analysts.

MACD

A daily momentum indicator called the moving average convergence/divergence, or MACD, is also showing sell signals for the gauge, UBS said. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods. The MACD is calculated by subtracting the 26-day exponential moving average, or EMA, from the 12-day EMA. A nine- day EMA of the MACD, called the “signal line,” is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

“The late December/early January index-high has not been confirmed by the MACD, which suggests that the March 2009 recovery is maturing,” the analysts wrote.

To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net.

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German Stocks Drop as Daimler, Volkswagen Fall; Merck Gains

By Cornelius Rahn

Jan. 20 (Bloomberg) -- German stocks fell, with the DAX Index retreating for the first time in three days, as China, the driver of the global recovery, signaled that it may rein in stimulus measures.

Daimler AG and Volkswagen AG lost at least 1 percent as European automakers declined. Solar companies retreated as a German parliamentarian said subsidies for the industry may be reduced more drastically than previously forecast. Merck KGaA surged 3.3 percent as the Republicans in the U.S. won the Senate seat for Massachusetts, imperiling health-care legislation in Congress.

The benchmark DAX Index slipped 0.2 percent to 5,964.81 as of 12:04 p.m. in Frankfurt. The measure has climbed 63 percent from last year’s low on March 6 as companies reported better- than-estimated earnings and the Europe’s largest economy exited recession. The broader HDAX Index also lost 0.2 percent today.

China’s Premier Wen Jiabao yesterday said China will manage the pace of credit growth and the nation’s chief banking regulator, Liu Mingkang, said in an interview that some banks were asked to reduce lending after a record 9.59 trillion yuan ($1.4 trillion) in new loans were made last year. U.S. housing starts were probably little changed in December as rising foreclosures and inclement weather kept builders at bay, economists said before a report today.

Daimler, VW

Daimler, the world’s second-biggest maker of luxury cars, slumped for a second day, losing 1.8 percent to 36.06 euros. Turkey’s car market won’t improve in 2010, according to Wolf Dieter Kurz, chairman of the Mercedes-Benz Turk AS, the unit of Daimler AG in Turkey. Volkswagen and Bayerische Motoren Werke AG retreated 1.2 percent to 60 euros and 0.9 percent to 32.13 euros, respectively.

Phoenix Solar AG, a company which builds and operates solar plants, declined 4.9 percent to 34.62 euros, heading for its lowest close in two months. Phoenix was removed from Goldman Sachs Group Inc.’s “conviction buy” list, with analysts citing a “less compelling” relationship between risk and reward compared with competitor SMA Solar Technology AG. SMA Solar shares slipped 4.4 percent to 86.64 euros.

Solar Shares

Q-Cells SE fell 2 percent to 10.72 euros and and Solarworld AG slipped 1.9 percent to 14.55 euros. Chancellor Angela Merkel’s Christian Democratic Union may press for deeper cuts in solar subsidies than previously estimated by the government, the party’s energy spokesman in parliament, Joachim Pfeiffer, said.

Merck KGaA, the European maker of the Erbitux cancer drug, rose 3.3 percent to 68.47 euros for its biggest advance in two months. Republican Scott Brown beat once-favored Democratic state Attorney General Martha Coakley for a Senate seat held by the late Edward M. Kennedy for nearly half a century. His victory increases Republican Senate numbers to 41, enough to block votes on an overhaul of the U.S. health-care system, President Barack Obama’s top legislative goal.

Fresenius Medical Care AG, the world’s biggest provider of kidney dialysis, and parent Fresenius SE added 1.3 percent to 38.27 and 1 percent to 51.51 euros, respectively. Health care companies were among the best performers in Europe’s Dow Jones Stoxx 600 index today.

The following shares rose or fell in German markets. Stock symbols are in parentheses.

Manz Automation AG (M5Z GY), a solar-cell machine maker, surged 5.8 percent to 63.40 euros, its first gain in six days. Manz had its share-price estimate raised to 95 euros from 79 euros at Goldman Sachs.

MorphoSys AG (MOR GY), a drugmaker, climbed 4.2 percent to 17.74 euros, its biggest rise since November. The company and chemical producer Wacker Chemie AG will expand their existing cooperation in the use of Wacker’s Esetec technology for the production of antigen material. Wacker (WCH GY) shares gained 2.4 percent to 116.45 euros.

Pfleiderer AG (PFD4 GY), a German laminate-flooring maker, jumped 5 percent to 7.35 euros. The company said it concluded a sale of 2.6 million of its own shares at a value of 18.5 million euros ($26.3 million).

Praktiger AG (PRA GY), Germany’s second-biggest home- improvement retailer, dropped 1.8 percent to 6.58 euros. The shares were removed from CA Cheuvreux’s “selected list” and reduced to “outperform.”

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

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U.K. Stocks Fall; Mining Companies Retreat on China Concerns

By Sarah Jones

Jan. 20 (Bloomberg) -- U.K. stocks declined for the first time in three days, as mining companies tumbled by the most in almost two months amid speculation China may rein in stimulus measures.

Xstrata Plc, the world’s fourth-largest copper producer, Antofagasta Plc and Rio Tinto Group all dropped more than 2 percent as copper fell in London. Johnson Matthey Plc lost 2.3 percent as Credit Suisse Group AG downgraded the shares, citing valuations.

The benchmark FTSE 100 Index retreated 17.38, or 0.3 percent, to 5,495.76 at 11:08 a.m. in London, trimming this year’s advance to 1.6 percent. The FTSE All-Share Index slid 0.3 percent today, as did Ireland’s ISEQ Index.

Stocks fell with commodity prices after the Chinese Chief banking regulator, Liu Mingkang, said in an interview today that some banks have been asked to limit lending after they failed to meet certain requirements.

“The move could lead to more widespread tightening by the Chinese central bank as they try and cool off an overheating economy,” said London-based Nick Serff, a market analyst at City Index.

Premier Wen Jiabao yesterday said China will manage the pace of credit growth. Last year, the third-largest economy expanded an estimated 8.5 percent, helping to drag the world from the worst recession since World War II.

A measure of mining shares dropped 3 percent, the steepest decline since Nov. 26 as copper retreated on concern about demand in China, the largest user of the metal. Lead, nickel, tin and zinc also retreated on the London Metal Exchange.

Miners Fall

Shares of Xstrata dropped 3.5 percent to 1,175 pence, while Antofagasta, owner of copper mines in Chile, declined 3.8 percent to 1,000 pence. Rio Tinto, the world’s third-biggest mining company, lost 2.8 percent to 3,521 pence.

Johnson Matthey slid 2.3 percent to 1,599 pence after Credit Suisse downgraded the producer of autocatalysts to “underperform” from “neutral.

London-based analyst Rhian Tucker said the shares “remained expensive” and the company would “benefit the least from an economic bounce back.”

The following stocks also rose or fell in the U.K. market. Symbols are in parentheses.

Kesa Electricals Plc (KESA LN) retreated 5.5 pence, or 3.8 percent, to 140.2. Europe’s third-largest electronics retailer said revenue at stores open at least a year fell as its Comet stores failed to repeat last year’s Christmas performance. Overall sales in the 10 weeks to Jan. 8 at stores open at least a year before currency gains slipped 0.3 percent.

Soco International Plc (SIA LN) dropped 46 pence, or 3.1 percent, to 1,421 after the company announced plans to sell up to 7.2 million new shares to fund a development program in Vietnam in the next year.

William Hill Plc (WMH LN) rallied 12.1 pence, or 6.5 percent, to 197.7 after the U.K.’s second-largest bookmaker reported a 6 percent rise in fourth-quarter revenue. The company also said Chairman, Charles Scott, will stand down by the end of 2010.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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U.S. Stock-Index Futures Fall; Morgan Stanley, BofA Shares Drop

By Alexis Xydias

Jan. 20 (Bloomberg) -- U.S. stock-index futures retreated before earnings reports from Morgan Stanley and Bank of America Corp. and amid concern China, the engine of the global recovery, may move to cool its economy.

Morgan Stanley slid 2.3 percent in European trading while Bank of America, the largest U.S. lender, retreated 1 percent. International Business Machines Corp. dropped 1.8 percent after reporting fourth-quarter results after the close of trading yesterday. Humana Inc. climbed 0.8 percent after the Republican party won a Senate seat in Massachusetts, imperiling health-care legislation in Congress.

Futures on the Standard & Poor’s 500 Index expiring in March slipped 0.5 percent to 1,140.5 as of 6:32 a.m. in New York. Dow Jones Industrial Average futures dropped 0.4 percent to 10,625 and Nasdaq-100 Index futures slid 0.5 percent to 1,880.5.

The earnings season in the U.S. gathers pace this week, with more than 60 companies in the S&P 500 scheduled to report quarterly results. The benchmark index is valued at 25 times its companies’ profits, the highest level since 2002, following a 70 percent jump since March. Stocks fell in Asia and Europe today after Chinese regulators told some of the nation’s banks to limit lending.

“Expect earnings to grab the headlines today, but the focus is also on what China is doing,” said Angus Campbell, head of sales at Capital Spreads in London. “It looks like the Chinese are starting to place some constraints on liquidity, which may put a cap on their expanding economy but also have a larger effect on global growth.”

China Lending

China will restrict overall credit growth in the nation to 7.5 trillion yuan ($1.1 trillion) this year, banking regulator Liu Mingkang said. Some lenders were asked to rein in credit because they failed to meet regulatory requirements including those for capital, Liu, chairman of the China Banking Regulatory Commission, said in an interview today in Hong Kong. New loans in the first 10 days of this year were “relatively high,” he told the Asian Financial Forum.

Reports on construction and producer prices today will provide the latest indications of the state of the U.S. economy. Housing starts were probably little changed in December as rising foreclosures and inclement weather kept builders at bay, economists said before a report today, economists said before a Commerce Department release due at 8:30 a.m. in Washington.

Ground may have been broken on 572,000 houses at an annual rate compared with 574,000 in November, according to the median estimate of 70 economists surveyed by Bloomberg News. Permits, a sign of future construction, may also have dropped.

Inflation Report

A separate report from the Labor Department, also scheduled for 8:30 a.m., may confirm inflation slowed in December. Wholesale costs were unchanged last month after jumping 1.8 percent in November, according to the survey median. Excluding food and energy, the producer-price index may have climbed 0.1 percent following a 0.5 percent November increase.

Morgan Stanley fell 2.3 percent to $30.46 in Frankfurt. The bank headed by John Mack is expected to say before U.S. markets open today that it earned $621 million, or 42 cents a share, from a loss a year earlier, according to the average of 10 analysts’ estimates.

Bank of America dropped 1 percent to $16.16. The bank may report its third loss in the past five quarters as its new chief executive officer tallies costs from consumer loan defaults and repaying bailout funds. Analysts’ estimates of a potential loss for the quarter range as high as $4.9 billion by Sanford C. Bernstein’s John MacDonald.

‘Disappointing’

The bank’s largest rival, JPMorgan Chase & Co., last week called its own fourth quarter “a little disappointing.” Wells Fargo & Co., one of the two biggest U.S. home lenders in 2009, may report its fourth straight quarter of improved results as the economy expanded and pressure to build reserves abated, according to another survey of analysts. The shares were little changed at $28.23 in Europe.

The bank probably swung to a fourth-quarter profit of $1.62 billion, from a loss of $2.55 billion a year earlier, according to the average estimate of analysts surveyed by Bloomberg.

IBM declined 1.8 percent to $131.76, also in Germany. The world’s largest computer-services company reported after U.S. trading ended yesterday that fourth-quarter business-consulting revenue declined while saying 2010 profit will top its earlier target.

Sales of business services, which include consulting, fell 2.8 percent to $4.58 billion, the company said. Profit in 2010 will be at least $11 a share. IBM set a goal in May 2007 for earnings of $10 to $11 this year.

Kraft Foods Inc. fell 0.8 percent to $29.18. The company had its credit rating cut at Fitch Ratings Ltd. after it yesterday agreed to buy Cadbury Plc for 11.9 billion pounds ($19.5 billion).

Republican Victory

U.S. stocks rose yesterday as health companies rallied on speculation Republicans may block an industry overhaul and technology companies gained on earnings optimism. Republican Scott Brown’s victory in the race for the U.S. Senate seat in Massachusetts was confirmed after U.S. markets closed yesterday.

The result increases the Republican party’s Senate numbers to 41, enough members to block votes on an overhaul of the U.S. health-care system, President Barack Obama’s top legislative goal.

Humana, the managed health-care company whose 7.1 percent gain yesterday was the biggest advance in the S&P 500 Health Care Index, climbed 0.8 percent to $52.35 in Frankfurt.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

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