Economic Calendar

Tuesday, February 9, 2010

London Session Recap

Daily Forex Fundamentals | Written by | Feb 09 10 11:15 GMT |

The news that ECB President Trichet was returning from Australia a day early to attend a scheduled meeting of EU leaders injected hope that a bail-out plan for Greece may become more probable. A bail-out at this point would contradict the rhetoric from ECB officials to date. That said Eurozone officials will be aware that an increase in contagion from the Greece situation would increase the chances of a EUR crisis. While Greece may yet be forced to go cap in hand to the IMF, a development of a system of incentives and rewards from wealthier EMU member countries for countries in crisis cannot be ruled out. EUR/USD rose back to the 1.3740 area on the news of Trichet's return, the yen is softer and stock markets have edged higher; the Athens Composite posing a 3.2% gains so far this morning. Risk appetite, however, is being reined in the approach to the US open.

Having rallied through the Asian session sterling turned its back on the market's improved sentiment. European traders had awoken to the news from the BRC of a very dismal UK retail performance in January. Total sales rose a disappointing 1.2% y/y. Bad weather and the January 1 hike in VAT likely contributed to the sour mood of consumers but with this suggesting that the pace of the UK's economic recovery could remain sluggish into Q1, it provided a reason for sterling to push lower at the start of the European session. The release of the worse than expected UK December trade deficit brought more back news. The visible deficit expanded to –GBP7.3 bln. Although the government's car scrappage scheme encouraged a temporary boost to imports, there is yet a lack of evidence that the weakened pound is provided support to the export sector. Cable fell back to a morning low of USD1.5572 before the better than expected result of the UK's GBP2000 mln 2034 gilts auction provided some relief. The bid/cover was a respectable 2.08 which will stave off concerns that bond investors have become disillusioned with the government's budget position. The debt issues have not gone away, however, and with the general election nearing sterling is very vulnerable. Technically the GBP/USD1.5500/40 area is key for the pound; having already broken below the Oct low of GBP/USD1.5700 a break below this swing target could prompt a leg lower for sterling. The push higher in EUR/GBP this morning supports the weaker bias in the pound.

The AUD rallied overnight following warnings from RBA Stevens about keeping rates too low for too long. The AUD suffered setbacks last week on the surprise announcement from the RBA of steady rates this month and then from poor retail sales data. Last year's rate hikes have lifted RBA policy from its previous emergency position and the pace of tightening going forward is likely to be moderate. That said it remains likely that the RBA will hike again this year before the Fed is off the starting blocks and this will likely offer the AUD some protection on the downside, though it remain vulnerable to fears of slower growth in Asia.

This afternoon US ABC consumer confidence data are due

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.


European Market Update

Daily Forex Fundamentals | Written by Trade The News | Feb 09 10 10:57 GMT |

Risk appetite firms on potential policy measures by the ECB to limit contagion from the Greek crisis


(GE) Germany Trade Balance: €13.5B v €15.0Be; Current Account: €20.6B v €19.1Be; Exports M/M: 3.0% v -0.1%e; Imports M/M: 4.5% v 3.0%e
(GE) Germany Jan Final CPI M/M: -0.6% v -0.6%e; Y/Y: 0.8% v 0.8%e
(GE) Germany Jan Final CPI EU Harmonized M/M: -0.6% v -0.7%e; Y/Y: 0.8% v 0.7%e

(FI) Finland Dec Preliminary Trade Balance: -€50M v €250Me

(HU) Hungary Dec Preliminary Trade Balance: €375M v €271Me

(CZ) Czech Jan CPI M/M: 1.2% v 1.5%e; Y/Y: 0.7% v 1.0%e

(UK) Dec Visible Trade Balance: -£7.3B v -£6.7Be; Total Trade Balance: -£3.3B v -£2.8Be; Trade Balance Non-EU: -£3.6B v -£3.1Be

(SA) South Africa Q4 Unemployment: 24.3% v 24.5% prior

(GR) Greece Jan Consumer Price Index Y/Y: 2.4% v 2.7%e

(GR) Greece Dec Industrial Production Y/Y: -7.6% v -6.1% prior

(RU) Russia Jan Budget Level YTD (RUB): 66.1B v -2.3T prior


In equities: European markets rotated off their strong gains on Monday's session (which snapped a 3-consecutive negative trend) on an initially soft footing. Declines in the US, with the DOW closing below 10,000 and a mixed session in Asia, that saw heavy trading in financials, set the macro background. Premarket corporate reports were dominated by UBS [UBSN.SZ] which broke a trend of 4-conecutive net losses with a positive Q1 net figure that beat expectations. Headline figures quickly gave way to focus on continued bleeding in the banks Wealth Management house that saw further sizeable q/q declines in both North America and Europe. UBS opened sharply lower but served as a broad indicator of market sentiment as shares led a gradual recovery in financials that rallied markets. UBS nearly broke the unchanged mark at 4:30EST, but fell off its best levels in a trend that was mirrored by equity markets. Disappointed UK trade data served as an immediate catalyst to this pare-back. Into 5:30ESt, European equity markets are off their best levels on in-line trading volumes.

In individual equities: UBS [UBSN.SZ]: Reports Q4 Net adj CHF1.4B v CHF653Me, Rev CHF6.09B v CHF6.9Be.|| BskyB [BSY.UK]: Confirms placing of 404k ITV shares at 48.5p/shr for aggregate proceeds of £196M. || Heidelberger [HDD.GE]: Reports Q3 EBIT loss €13M v loss €41Me, Rev €578M v €538Me. ||

Speakers: Greece Labor Minister commented that the Gov't is considering raising average real retirement age to 63 from 61 by 2015. He added that the pension system would face funding problems by 2015 if no measures taken Poland Finance Ministry issued its new convergence plan to reduce deficit to under 3% by 2012. The plan noted that Public debt would not exceed 55% of GDP between 2010-2012 period under Polish accounting rules. The 2011 Debt-to-GDP would hit 56.3% under EU rules. The plan decided against setting a new target for adopting the euro. The government originally wanted to replace the zloty with the European Union's single currency in 2012 Ireland Honohan stated that current Irish budgetary adjustments seemed to be at correct levels EU's Barroso commented that there was further action required by Greece and the EU had the ability to monitor the situation. He noted that all EU states were aware of the challenge and the need to reinforce economic coordination within the EMU. The Maastrict Stability Pact needs to be properly implemented. The Greek situation would be tougher without the Euro currency but the media treatment of the situation amplifies the difficulties. Goldman Sachs Chief Economist O'Neill: Sees China's PBoC raising interest rate between one to three times in 2010 with the first hike coming at any time now.

Currencies: The USD and JPY currencies were softer in the European session amid speculation that the ECB would hold an emergency meeting to discuss measures to head off contagion in the Greek debt crisis. Speculation mounted after ECB's Trichet left a meeting with the RBA a day early, which helped market sentiment. UK press taking note of recent CFTC Commitment of Traders report to surmise that traders and hedge funds have amassed the largest ever short positions against the Euro on the ssuspicions that the Greek crisis could give way to a full-blown attack on the euro. Nonetheless the EUR/USD remains to overtake the 1.3740 level, which was a prior upside acceleration point in May 2009 and the recent hourly high in the aftermath of the US Nonfarm payroll report last Friday. Some dealers note that the problem for Europe is that if Greece received special treatment then what precedent this would be for other peripherals and their adherence to the Maastrict growth and stability pact .

Fixed Income: The Trichet story and implications for a bailout have led to a decline in both cash yield spreads against the core and outright CDS protection for Europe's more fiscally challenged nations. The Greek 10y has shed 10bps to trade at Bunds +350bps while 5yr CDS has fallen by about the same amount to trade at +412bps. Portugal is the next best performer with 10 year yields at Bunds +151bps and 5 year CDS at 235bps, both lower by about 9bps. The DMO sold £2B in 24 year Gilts with robust results (bid-to-cover above 2x, yield tail 0.3bps), especially in light of the significant duration drop and the recent exit of the BoE from the market.

Geo/political: Iran has wasted no time in carrying out plans to accelerate its higher enrichment level program. The operation, which Iran claims is for exclusive use in its medical reactor program is a fresh rebuff of increasingly wide spread, and consensus calls, for tighter sanctions. Iranian state media has reported that the enrichment process began early on Tuesday at its Natranz facility. Iran stands ready to celebrate the 31st anniversary of the Islamic revolution on Feb 11. The date is now seen as a broad showdown behind the hard-line gov and any domestic opposition. Clear labeling of the opposition as foreign agents, in addition to the recent execution of several demonstrators, has eliminated any room for negotiation on the issue. US Defense Secretary Gates has express concern on an official level to French officials regarding the planned sale of multiple amphibious assault ships of the Mistral class to Russia. The vessels, capable of landing armored vehicles and launching helicopters are valued at $750M/unit. NATO members in the Baltic's have posed significant questions regarding the sale due to their relationship and proximity to Russia proper and Kaliningrad. As expected, current Ukrainian PM Tymoshenko will seek to contest last Sunday second round Presidential results. Supporters will seek recounts of some stations and contest the results of others. So far, all actions that have been called for have been in the political/legal realm, not major demonstrations or street protests. Reminder: On Sunday Feb 7, with 84% of Ukraine's election votes counted by Central Election Commission, Yanukovich leads Tymoshenko 48.5% to 45.9%

In the papers: Article in German press (Der Spiegal ) entitled "How Goldman Sachs Helped Greece to Mask its True Debt. Article stated that Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit. Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date. Article pointed out that Such transactions are part of normal government refinancing. But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks. At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years.


UBS reports first quarterly profit in over a year; clients have removed a net CHF228.1B over the 21 months through December

ECB's Trichet left a meeting with the RBA a day early, which helped fuel that the EU will find a solution to the peripheral debt situation and aiding overall market sentiment

Greece Fin Min: "The worst possible signal which we could send out is one calling for outside help "

Greece labor Min: Seeks to raise retirement age from 61 to 63 by 2015

Fed's Bullard comments deemed fairly hawkish comments. Sees discount rate rising soon and rates rising in steps.

Looking Ahead:

7:30 (US) Jan NFIB Small Business Optimism: No est v 88.0 prior

7:45 (US) ICSC Chain Store Sales: No est v 0.1% prior

8:55 (US) Redbook Retail Sales: No est v 0.8% prior

10:00 (US) Dec Wholesale Inventories: 0.5%e v 1.5% prior

10:00 (US) Feb IBD/TIPP Economic Optimism: No est v 48.8 prior

10:00 (MX) Mexico Consumer Prices M/M: 1.0%e v 0.4% prior; Y/Y: 4.4%e v 3.6% prior; CPI Core M/M: 0.6%e v 0.5% prior

12:30 (UA) Ukraine to sell 2-year and 3-year bonds

12:30 (MX) Mexico to sell MXN2.5B in 5-year FRN and MXN2.5B in 30-year bonds

13:00 (US) To sell $40B in 3-year notes

16:30 (US) API Crude Oil/Gasoline/Distillate Inventories

Trade The News Staff
Trade The News, Inc.

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FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Feb 09 10 12:29 GMT |

USD-CHF @ 1.0698/0702...Might test the Support region 1.0630-00 before a bounce back

R: 1.0775 / 1.0820 / 1.0880
S: 1.0650 / 1.0630-00 / 1.0550

Swiss broke below the Support at 1.07 as expected and is now trading in a very narrow range of 1.0675-1.07 for some time. As mentioned in the morning we might see a downmove towards the Support in 1.0630-00 region initially in the coming sessions and then see a bounce back once again towards 1.08 or even higher in the coming days.

Note, 1.0880 (21-Month-MA) and 1.0940 [the 50% retracement level of the fall from 1.1965 (09-Mar-09) to 0.9916 (23-Nov-09)] are the significant levels to watch for on the upside above 1.08.

Limit Buy Order:

Buy USD 10K at 1.0620, SL 1.0530. TP 1.0880

Cable GBP-USD @ 1.5580/85...May consolidate between 1.55-57

R: 1.5597-5605 / 1.5667 / 1.5717
S: 1.5550-5500 / 1.5271

The Cable rose towards 1.5646 during the day and has come off since there after the UK Trade Balance numbers were not able to meet street expectations. A further fall may be contained near 1.5550-5500. If it does, there could be chances of some pull back towards 1.5700-30 over the next couple of days. Hence, there's greater likelihood of the pair consolidating in the 1.55-1.57 region for the next couple of days.

The pair is overall bearish but has a crucial Support at 1.5500. This will have to be watched closely. Importantly, this Support coincides with crucial Resistances and Supports in other currency pairs which makes us doubt the break of this Support immediately unless there is some news flow impacting the global markets.

Aussie AUD-USD @ 0.8710/13...Holding Short

R: 0.8750-70 / 0.8830-45 / 0.8880
S: 0.8670 / 0.8590 / 0.8550-30

Aussie broke above 0.8700 during the day. However, much momentum is not seen in its upmove and it has come off from the day's high of 0.8737. If it continues to trade above 0.87 we might see a rise towards 0.8750 in the US session today. We might see a pull back once again towards the 200-DMA Support (currently at 0.8590) in the coming sessions. As mentioned earlier we mght expect a break below the 200-DMA and see a downmove towards 0.8470-50 over the next few days.


AUD 10K Short at 0.8720, SL 0.8810, TP 0.8480.

As soon as the market trades 0.8660 bring the SL down to 0.8760 and as soon as the market trades 0.8620 thereafter trial SL to 0.8710.

Kshitij Consultancy Service

Legal disclaimer and risk disclosure

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.


Euro to Fall on ‘Dead Cross’ Against Dollar: Technical Analysis

By Ron Harui

Feb. 9 (Bloomberg) -- The euro may fall toward a 15-month low against the dollar after forming a so-called dead cross, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo.

The European currency’s 50-day moving average, currently at $1.4324, dropped below its 200-day moving average of $1.4351 today, creating a dead-cross pattern. The euro slid 11.9 percent in less than two months after the last such cross occurred, dropping from $1.3998 on Sept. 10, 2008, to $1.2330 on Oct. 28, 2008.

“The dead cross is significant for the euro as it’s a rare development, signaling a long-term bearish trend,” said Soma in a Bloomberg News interview. “The target would likely be the October 2008 low.”

The euro traded at $1.3662 as of 9:28 a.m. in Tokyo from $1.3649 in New York yesterday. It touched $1.3586 on Feb. 5, the lowest level since May 20. The currency has weakened 4.6 percent against the greenback so far this year.

When a shorter-dated moving average drops through a longer-dated one, it may signal further declines. A moving average is a technical indicator that displays the average value of a security over a period of time.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, while resistance is where there may be sell orders.

To contact the reporter on this story: Ron Harui in Singapore at


Yen, Dollar Retreat on Speculation Europe Will Assist Greece

By Paul Dobson and Yoshiaki Nohara

Feb. 9 (Bloomberg) -- The yen and dollar fell on speculation European officials meeting this week will agree to assist Greece in tackling its budget deficit, reducing demand for the currencies as a refuge.

The yen slid the most against the euro since Jan. 6 after a European Central Bank spokeswoman said President Jean-Claude Trichet will leave a meeting in Sydney early for a European Union leaders’ summit. Australia’s dollar gained versus its U.S. counterpart after central bank Governor Glenn Stevens warned that keeping interest rates too low for too long may hamper efforts by policy makers to halt future asset bubbles forming.

“There’s increased speculation that support measures will be announced for Greece this week and that’s triggering a relief rally,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “It’s put on a degree of support for risk assets because it would ease near-term sovereign-default fears.”

The euro rose to $1.3701 as of 6:25 a.m. in New York from $1.3649 yesterday. It advanced to 122.71 yen from 121.81 yen. Japan’s currency declined to 89.55 per dollar from 89.26.

Europe’s single currency fell to $1.3586 on Feb. 5, the lowest level since May 20, as investors bet sovereign risk crises in nations such as Greece will force policy makers to keep interest rates at record lows for longer. Credit-default swaps on the debt of Greece, Spain and Portugal rose to all-time highs last week.

Overshadow Summit

Trichet will today depart a symposium marking the Reserve Bank of Australia’s 50th anniversary to attend this week’s gathering of EU leaders, ECB spokeswoman Regina Schueller said.

EU President Herman Van Rompuy said yesterday in a letter sent to nations’ leaders that the summit will discuss “some aspects of the present economic situation,” without making a direct reference to Greece’s financial crisis. The focus of the meeting will be long-term economic strategy, he said.

Greek Finance Minister George Papaconstantinou said yesterday in a Bloomberg Television interview in Athens that calling for outside aid would be “the worst possible signal which we could send out.”

The euro may drop below 120 yen for the first time in a year as labor unrest in Greece stifles government efforts to tackle the widening budget deficit, said Hideki Hayashi, a global economist in Tokyo at Mizuho Securities Co.

The currency looks like “the sickest dog in the litter,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in an investor note.

‘Necessary Framework’

Investors would be wrong to bet on a failure of the single currency because the EU has the commitment to manage the challenges of sovereign debt, European Commission President Jose Barroso told the European Parliament today in Strasbourg, France.

“The euro will continue to constitute a major tool for our development,” Barroso said. “Those who think it can be put into question must realize we will stick to our course. The European Union has the necessary framework to address all challenges that can appear.”

Australia’s dollar rose against the greenback and yen after Stevens signaled he may increase borrowing costs, and as gains in Asian stocks revived demand for higher-yielding assets.

“If the root problem is simply that interest rates are too low, experience suggests that efforts to handle the problem by regulation aimed at constraining balance-sheet growth won’t work for long,” Stevens said in paper delivered at the Sydney meeting of central bankers.

The MSCI Asia Pacific Index and the Dow Jones Stoxx 600 Index of European shares added as much as 0.4 percent.

China Stocks

“Asian stock markets, especially Chinese indexes, may act as a stabilizer, which is positive for the Aussie dollar,” said Hideo Shimomura, who helps oversee the equivalent of $56 billion as chief fund investor in Tokyo at Mitsubishi UFJ Asset Management Co. “In the long run, the Aussie is OK because Australia should hike rates a couple of times.”

Australia’s currency rose 0.6 percent to 86.96 U.S. cents, and 9 percent to 77.89 yen.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at; Paul Dobson in London at


Euro May Fall Below 120 Yen on Greek Labor Concern, Mizuho Says

By Hiroko Komiya

Feb. 9 (Bloomberg) -- The euro may weaken below 120 yen for the first time in a year as labor unrest in Greece stifles government efforts to tackle the widening budget deficit, according to Mizuho Securities Co.

Greek teachers, hospital workers and tax collectors plan to strike for 24 hours tomorrow as 600,000 public workers oppose Prime Minister George Papandreou’s plan to freeze wages and reduce benefits. Private-sector employees will follow Feb. 24.

“Europe’s fiscal woes, led by Greece, are producing global uncertainty and the strikes will be a key in deciding whether things get any worse,” said Hideki Hayashi, a global economist at Mizuho Securities, a unit of Japan’s second-largest banking group. If these concerns spill over to countries such as Portugal and Spain, we may see “a weaker euro or a stronger yen,” he said.

Speculation Greece and other European nations will struggle to contain their deficits has pushed the euro down almost 10 percent from its January high versus the yen. The 16-nation currency dropped to an 11-month low of 120.71 yen on Feb. 5, before trading at 122.49 yen as of 3:01 p.m. in Tokyo.

“There are concerns the impact of strikes will expand as public workers join a private-sector walkout,” Tokyo-based Hayashi said. “We need to watch how the February 10 strike will end and how the government will respond before forecasting the outcome of a large-scale strike on February 24.”

The first target for the euro will be its recent low of 120.71 yen, Hayashi said. Should the currency weaken below 120 yen, it may drop to as low as 115 yen, he said.

To contact the reporter on this story: Hiroko Komiya in Tokyo at


Gold Gains Most in a Week as Halt in Dollar Rally Spurs Demand

By Nicholas Larkin and Kim Kyoungwha

Feb. 8 (Bloomberg) -- Gold gained the most in a week as a halt in the dollar’s rally may increase demand for the metal as an alternative investment.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.4 percent after last week climbing to the highest level in almost seven months. Gold futures, which usually move inversely to the dollar, slid 5.8 percent in three sessions to a three-month low on Feb. 5.

“The dollar is down,” said Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. The metal’s sudden drop last week is also “a good indicator that prices may rise,” he said.

Gold futures for April delivery rose $13.40, or 1.3 percent, to $1,066.20 an ounce on the New York Mercantile Exchange’s Comex unit. That marks the biggest gain since Feb. 1. Futures declined 2.9 percent last week, a fourth straight drop.

In London, gold for immediate delivery fell 48 cents to $1,065.82 at 7:46 p.m. local time.

Gold futures’ relative strength index, a gauge of whether a commodity or security is overbought or oversold, plunged to 40.32 from 50.08 on Feb. 3. “From a technical perspective, gold was heavily oversold,” Fertig said.

Lunar New Year

Physical buying may also support prices before China’s weeklong Lunar New Year holidays start on Feb. 14, London-based broker ODL Securities Ltd. said today in a report.

The dollar index had a third consecutive weekly gain last week as the euro fell on concern that nations such as Greece may struggle to close budget deficits. European finance ministers said at the weekend they will help ensure that Greece tackles its deficit.

“While gold’s longer-term investment credentials remain sound, the metal is temporarily caught up in the slipstream of uncertainty currently being generated,” said Gavin Wendt, a senior resource analyst with Mine Life Pty Ltd. in Sydney.

Eight of 16 traders, investors and analysts surveyed by Bloomberg said bullion would fall this week. Six forecast higher prices and two were neutral.

The metal should trade at $1,000 to $1,200 an ounce this year and may advance as high as $1,500 after that, Mark Bristow, chief executive officer of Randgold Resources Ltd., said today in a television interview. Fourth-quarter profit more than tripled on surging gold prices, the company said.

SPDR Holdings

Bullion held by SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, increased 1.83 metric tons to 1,106.38 tons as of Feb. 5.

Also in New York, silver futures for March delivery rose 25.5 cents, or 1.7 percent, to $15.085 an ounce. Platinum for April delivery gained $5.90, or 0.4 percent, to $1,481 an ounce. March palladium jumped $9.40, or 2.4 percent, to $407.65 an ounce.

Palladium may average about $400 this year as fundamentals for the market improve, Sandy Wood, the executive head of Anglo Platinum Ltd.’s commercial unit, said today on a conference call. The metal, used in automotive pollution-control parts, averaged about $267 last year.

To contact the reporters on this story: Kyoungwha Kim in Singapore at; Nicholas Larkin in London at


Corn, Soybeans Jump Most This Year as Dollar Drops; Wheat Gains

By Steve Stroth

Feb. 8 (Bloomberg) -- Corn and soybean prices rose the most this year and wheat gained as a drop in the dollar boosted the appeal of commodities as an alternative investment.

Corn futures for March delivery rose 7.75 cents, or 2.2 percent, to $3.5925 a bushel at 9:44 a.m. on the Chicago Board of Trade. A close at that price would be the biggest gain since Dec. 11. Soybean futures for March delivery gained 20.25 cents, or 2.2 percent, to $9.3375 a bushel, which would be the biggest gain since Dec. 28. Wheat futures for March delivery rallied 13.25 cents, or 2.8 percent, to $4.865 a bushel.


Sugar Output in Brazil’s Center-South May Be 35 Million Tons

By Thomas Kutty Abraham

Feb. 8 (Bloomberg) -- Sugar cane output in Brazil’s Center South, the world’s largest producing region, may be 35 million metric tons in the 2010-11 season, according to Cosan SA Industria & Comercio, the world’s biggest cane processor.

The region may harvest 590 million tons of cane next year, and crush 45 percent of the crop to make sugar, compared with 43 percent last year, Carlos Murilo de Mello, commercial director at Cosan, said in an interview today at a conference in Dubai.

Raw-sugar prices may trade at 26 cents to 30 cents a pound until the country’s new crop arrives, de Mello said. Futures for March delivery lost 5.3 percent to 26.17 cents in New York on Feb. 5, the most since Oct. 9, as the dollar rallied and stocks retreated last week as concern mounted that Greece, Spain and Portugal will struggle to curb their budget deficits.

“The market should remain strong in the next two-three months,” de Mello said. “The market is still constructive despite an increase in risk aversion emanating from the EU situation.”

Brazil’s sugar production may total 35.3 million tons in the 2010-11 season, up 4.4 million tons, as farmers increase planting to gain from record prices, Plinio Nastari, president of the research company Datagro, said at the same conference.

To contact the reporter on this story: Thomas Kutty Abraham in Dubai at


German Stocks Advance for Second Day; MAN, Deutsche Bank Gain

By Julie Cruz

Feb. 9 (Bloomberg) -- German stocks advanced for a second day as an unexpected increase in exports in Europe’s largest economy countered a fourth day of losses in SAP AG.

MAN SE, Europe’s third-biggest truckmaker, advanced 1.3 percent as UBS AG recommended the shares. Deutsche Bank AG and Commerzbank AG followed financial stocks higher. SAP tumbled 1.6 percent, the worst performance in the DAX Index.

The DAX Index increased 0.5 percent to 5,511.59 as of 10:35 a.m. in Frankfurt, having lost as much as 0.4 percent earlier. The gauge fell 5.9 percent in January, the first monthly drop since October, amid concern governments and central banks will withdraw stimulus measures and speculation Greece will struggle to tame its deficit. The broader HDAX Index added 0.5 percent today.

Exports unexpectedly jumped in December, notching their fourth successive monthly gain, as the global recovery bolstered demand for goods. Sales abroad, adjusted for working days and seasonal changes, increased 3 percent from November, when they gained 1.1 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast a 0.1 percent decline, the median of 10 estimates in a Bloomberg News survey showed.

Separately, the inflation rate in Germany held steady in January as clothes prices fell and rising joblessness damped demand.

MAN added 1.3 percent to 50.38 euros. The company was added to UBS’s “European key calls” list.

Deutsche Bank Gains

Deutsche Bank, Germany’s largest bank, rose 2 percent to 43.95 euros, snapping four days of losses. Commerzbank climbed 3.3 percent to 5.703 euros. The Dow Jones Stoxx 600 Banks Index increased as much as 1.2 percent today, the best performance among 19 industry groups in Europe’s Dow Jones Stoxx 600 Index.

Fresenius Medical Care AG, the world’s biggest provider of kidney analysis, added 1 percent to 36.73 euros. The shares were rated “buy” in new coverage at Jefferies Group Inc.

Aurubis AG advanced 2.3 percent to 30.61 euros. Europe’s largest copper refiner was raised to “buy” from “sell” at DZ Bank AG. “We anticipate good quarterly figures, we even consider a positive earnings surprise to be possible, and expect that on presentation of the report Aurubis business prospects will look more optimistic,” the report read.

Douglas Holding AG jumped 3.4 percent to 33.19 euros. The company said the outlook for 2010 sales and earnings is unchanged as revenue is expected to grow as much as 2 percent and pretax profit is forecast to come in at 120 million euros to 130 million euros.

Centrotherm Photovoltaics AG surged 4.8 percent to 38 euros, the first advance this month. The German maker of equipment to produce solar silicon and modules had its share rating raised to “buy” from “hold” at Citigroup Inc.

SAP, the world’s largest maker of business-management software, declined 1.6 percent to 32.05 euros. Chief Executive Officer Leo Apotheker, who resigned unexpectedly this week after the board decided not to renew his contract, told employees that he did what was best for the company during a “brutal economic crisis.”

To contact the reporter on this story: Julie Cruz in Frankfurt at;


U.K. Stocks Advance, Led by Lloyds, Xstrata; Tullow Oil Drops

By Daniela Silberstein

Feb. 9 (Bloomberg) -- U.K. stocks rose for a second day, led by banks and basic resources shares.

Lloyds Banking Group Plc and Royal Bank of Scotland Plc both gained more than 2 percent. Xstrata Plc led commodity producers higher as metals prices climbed. Tullow Oil Plc slid 1 percent after a Ugandan government minister said he expects a proposal from the explorer this week.

The FTSE 100 Index added 21.79, or 0.4 percent, to 5,114.12 at 9:11 a.m. in London. The FTSE All-Share Index rose 0.4 percent while Ireland’s ISEQ Index fell 0.3 percent.

The benchmark FTSE 100 has retreated for four-consecutive weeks amid mounting concern that Greece, Spain and Portugal will struggle to reduce their budget deficits.

Lloyds gained 2.4 percent to 48.32 pence. RBS advanced 2.5 percent to 32.96 pence. British taxpayers may be able to sell their stakes in Lloyds and RBS in five years, with RBS exiting the government’s asset-insurance program in “two to three years,” a panel of lawmakers reported, citing testimony by Treasury officials.

Xstrata advanced 2.5 percent to 1,008 pence. The fourth- largest copper producer was raised to “outperform” from “market perform” at BMO Capital Markets. Copper advanced as the dollar declined on expectations that European central bankers will help Greece with its fiscal deficit, with the metal extending a rebound from its lowest level in more than three months.

Fresnillo Plc, the world’s biggest primary silver producer, rallied 1.2 percent to 713.5 pence.

Tullow Oil

Tullow Oil dropped 1 percent to 1,147 pence. Uganda expects the U.K. explorer to submit a proposal for a possible partnership to develop oilfields in the nation’s Lake Albert area this week, according to Minister of State for Mineral Development Peter Lokeris.

AstraZeneca Plc gained 1.5 percent to 2,821 pence. The U.K.’s second-largest drugmaker’s widely used cholesterol- lowering drug Crestor was approved by U.S. regulators to prevent heart attacks and strokes.

ICAP Plc rose 1.6 percent to 308.5 pence. The world’s largest broker of transactions between banks was added to Bank of America Merrill Lynch Global Research “Europe 1” list.

Beazley Group Plc gained 1.4 percent to 103.7 pence. The Lloyd’s of London insurer said 2009 profit rose 37 percent to 88.4 million pounds ($138 million) as higher rates boosted revenue while recession-related and catastrophe claims were lower than expected.

British Land Co. Plc rose 1.8 percent to 446 pence. The U.K.’s second-largest real-estate investment trust said it made a profit of 623 million pounds in the fiscal third quarter as the value of its real estate assets rose.

Rightmove Plc added 3.2 percent to 542 pence. The owner of the U.K.’s largest residential property Web site said full year trading is expected to be in line with current market expectations and 2010 profit will be above estimates.

To contact the reporter on this story: Daniela Silberstein in Zurich at


NYSE Posts Profit After Last Year’s Europe Writedown

By Whitney Kisling and Nandini Sukumar

Feb. 9 (Bloomberg) -- NYSE Euronext, the world’s largest owner of stock exchanges, posted profit of $172 million for the fourth quarter as derivatives trading buoyed revenue and the company cut expenses after a $1.59 billion writedown last year.

Net income was 66 cents a share, compared with a loss of $1.34 billion, or $5.06 a share, a year earlier, the New York- based company said today in a statement. Excluding some items, profit rose to 58 cents from 52 cents in the fourth quarter of 2008 and compared with the 48-cent average of 16 analyst estimates in a Bloomberg survey.

NYSE is lowering expenses and expanding beyond U.S. stocks after losing market share in equity trading to alternative platforms such as Direct Edge Holdings LLC and Bats Global Markets. The company plans to keep cutting jobs through this quarter and now depends on derivatives trading for a third of revenue. NYSE in 2007 purchased Paris-based Euronext NV, Europe’s second-largest stock exchange and the owner of the London-based Liffe derivatives market.

“What the numbers show is that NYSE is no longer just a stock exchange and no longer just New York-based,” said Ruben Lee, chief executive officer of the Oxford Finance Group and author of a report on market structure governance. “Most of the revenue comes from derivatives trading and Liffe, based in London, and Euronext are significant drivers.”

Derivatives Trading

The exchange made 28 percent of its revenue from derivatives trading in the quarter, 17 percent from listings and 15 percent from market data. Equity-related trading in Europe accounted for 13 percent of sales and the U.S. business contributed 9 percent.

For the full-year, fixed operating expenses fell three percent to $1.68 billion. NYSE Euronext said the number of employees fell to 3,231 as of Dec. 31, down 14 percent from a year ago.

Global derivatives trading revenue, which includes the European and U.S. businesses, rose to $182 million from $150 million in the fourth quarter of 2008. Revenue from European derivatives climbed 23 percent to $146 million and U.S. derivatives increased by $5 million to $36 million.

Options Trading

NYSE overtook the Chicago Board Options Exchange last month with the largest share of trading in U.S. options on stocks and exchange-traded funds.

Revenue from global cash markets fell 38 percent to $139 million. European cash equities trading revenue fell to $80 million. U.S. cash equities revenue slipped to $59 million in the fourth quarter and rose from the third quarter of 2009.

“The decrease in net revenue for all periods was driven primarily by declines in global cash equities trading volumes from the record levels achieved in 2008 and net pricing reductions,” the exchange said today.

In the fourth quarter, NYSE claimed about 28 percent of the U.S. equity market, down from about 34 percent for the same period in 2008. The exchange reported yesterday that its share slid to 26.5 percent in January, making it the only one of the four main stock markets to post a decline.

Segment Reporting

NYSE today said it will change the segment reporting in the first quarter of 2010 to reflect the way the business is now managed. The exchange has three global business units including Derivatives, Cash Equities & Listings and Technology & Information Solutions.

“As we move into 2010, our new initiatives are gaining traction, we are aggressively moving forward with the NYFIX integration and we expect to realize the full-year benefit from cost reduction programs launched in 2009,” Chief Financial Officer Michael Geltzeiler said in the statement.

Shares of NYSE Euronext fell 2.3 percent to $22.50 at 4 p.m. in New York yesterday. Before today, the stock has slipped 11 percent this year, compared with a 13 percent jump in the FTSE/Mondo Visione Exchanges Index that tracks 18 bourses.

Nasdaq OMX Group Inc., operator of the second-largest U.S. stock exchange, reported profit excluding some items yesterday that beat forecasts. The shares slid 4 percent after the company forecast operating expenses for 2010 that exceeded estimates from analysts including Atlanta-based Mike Vinciquerra of BMO Capital Markets.

To contact the reporters on this story: Whitney Kisling in New York at; Nandini Sukumar in London at


U.S. Stock-Index Futures Advance; Freeport, Exxon Shares Rise

By Sarah Jones

Feb. 9 (Bloomberg) -- U.S. stock-index futures climbed, after the Dow Jones Industrial Average closed below 10,000 for the first time since November, as commodity prices rallied.

Freeport-McMoRan Copper & Gold Inc. and Exxon Mobil Corp. rose in German trading as metals rose in London and crude oil rebounded above $72 a barrel. Electronic Arts Inc. plunged 7 percent after the world’s second-largest video-game publisher forecast earnings that trailed some analysts’ estimates.

Futures on the Standard & Poor’s 500 Index expiring in March added 0.8 percent to 1,064.10 at 10:43 a.m. in London. Dow average futures increased 0.6 percent to 9,950, while Nasdaq-100 Index futures also rose 0.8 percent to 1,748.

U.S. stocks retreated yesterday, sending the S&P 500 down 0.9 percent amid concern that deteriorating European government finances will derail the economic recovery. U.S. equities have fallen for four straight weeks, the longest losing streak since July.

More than 300 companies in the S&P 500 have reported fourth-quarter earnings since Jan. 11, and about 77 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. Coca-Cola Co. and Walt Disney Co. are among companies announcing results today.

Freeport, Exxon

Freeport, the world’s largest publicly traded copper producer, added 1.2 percent to $70 in Germany as the price of the metal rose for a second day in London on speculation that demand may swell on increased imports of metal into China, the world’s largest user.

Exxon, the largest U.S. company, gained 0.5 percent to $64.70 in German trading as crude oil traded around $72 a barrel in New York before a report due tomorrow that may show U.S. inventories of diesel and heating oil contracted last week. ConocoPhillips shares added 0.5 percent to $47.59.

Electronic Arts plunged 7 percent to $16.26 in Germany. Fiscal 2011 profit, excluding some items, will be 50 cents a share to 70 cents a share, the Redwood City, California-based company said in a statement after the close of trading yesterday. That’s less than the $1 a share projection of Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles.

To contact the reporters on this story: Sarah Jones at


Asian Stocks Rise Amid Greece Speculation; Drugmakers Decline

By Shani Raja and Saeromi Shin

Feb. 9 (Bloomberg) -- Asian stocks rose for the first time in four days as speculation European officials will help Greece tackle its budget deficit prompted investors to take on more risk through technology and energy shares. Drugmakers declined.

AU Optronics Corp. and Quanta Computer Inc. gained more than 3 percent in Taipei after boosting sales last month. Cnooc Ltd., China’s biggest offshore oil explorer, rose 3.2 percent as a partner made a discovery in the South China Sea. Sumitomo Mitsui Financial Group Inc. increased 2.1 percent in Tokyo after profit beat analyst estimates. Japan’s Takeda Pharmaceutical Co. and Manila Electric Co. slumped at least 2.6 percent, leading declines among so-called defensive shares.

The MSCI Asia Pacific Index added 0.3 percent to 114.49 as of 7:12 p.m. in Tokyo, with five stocks rising for every four that fell. The measure lost 3.7 percent in the past three days. The gauge has fallen 9.7 percent from a 17-month high on Jan. 15 on speculation central banks will tighten monetary policy, and that Greece, Spain and Portugal will struggle to curb deficits.

“Some confidence is building up that Greece would avert the worst-case scenario,” said Chu Moon Sung, a fund manager at Shinhan BNP Paribas Asset Management Co. in Seoul, which manages the equivalent to $26 billion in assets. “Investors seem to be looking for stocks that turned cheaper after they panicked on the Greece issue.”

Taiwan’s Taiex Index climbed 2 percent, the most in the region. Hong Kong’s Hang Seng Index gained 1.2 percent and China’s Shanghai Composite Index added 0.5 percent. Japan’s Nikkei 225 Stock Average lost 0.2 percent, while Australia’s S&P/ASX 200 Index declined 0.4 percent.

Disappointing Forecast

China Zhongwang Holdings Ltd., a Liaoning-based aluminum producer, plunged 27 percent in Hong Kong as it resumed trading, after denying newspaper reports challenging the accuracy of its accounts. Macquarie Group Ltd., Australia’s largest investment bank, slipped 6.1 percent after the company’s profit forecast disappointed some investors.

Futures on the U.S. Standard & Poor’s 500 Index rose 0.8 percent. Europe concerns dragged the gauge down by 0.9 percent yesterday. Credit-default swaps, or the cost of insuring against losses on sovereign debt, on Spain and Portugal jumped to a record, according to CMA DataVision. Those for Greece also hovered near an all-time high.

“Markets are climbing the wall of worry and are yet to be fully convinced that a workable solution is in the offing regarding highly indebted European countries such as Greece and Spain,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne.

Budget Deficit

European Central Bank President Jean-Claude Trichet leaves a central bankers’ meeting in Sydney today to attend a gathering of European Union leaders. His departure, a day earlier than planned, sparked speculation policy makers will help Greece address its budget deficit, dragging the yen and dollar lower.

The MSCI Asia Pacific Index completed its third weekly decline last week as an unexpected increase in U.S. jobless claims losses and concerns over debt in Europe dented investor confidence. That cut the average price of stocks in the gauge to 18 times estimated earnings, the lowest level since February 2009, according to data compiled by Bloomberg.

AU Optronics, the world’s third-largest flat-panel maker, added 3.7 percent to NT$36.20 after the company said January sales jumped 175 percent from a year earlier. Quanta Computer, the world’s second-largest maker of laptops, advanced 3.3 percent to NT$63.20, after its January sales climbed 83 percent.

In Hong Kong, Cnooc climbed 3.5 percent to HK$11.80. The Liuhua 29-1 find by Husky Energy Inc. coincides with a push to develop oil and gas reserves off China’s coast while Cnooc seeks overseas resources to meet domestic demand.

Defensive Stocks

Utilities and drugmakers were the heaviest drags on the index today. The companies had been the best and second-best performing groups in the MSCI Asia Pacific Index from Jan. 15 to yesterday on expectations their earnings will be sheltered from any faltering in the pace of the global recovery.

Takeda Pharmaceutical fell 2.6 percent to 3,895 yen. Dainippon Sumitomo Pharma Co. lost 2.6 percent to 890 yen. Manila Electric slumped 3.7 percent to 157 pesos. Korea Gas Corp., the world’s biggest buyer of liquefied natural gas, retreated 1.7 percent to 51,400 won.

“Shares have been sold to the level where there is little room for further drop,” said Masanori Ikunaga, who helps manage the equivalent of $112 billion at Tokyo-based Sumitomo Mitsui Asset Management Co. “Investors are expecting the market will soon rebound and replaced defensive shares with stocks that are more sensitive to a move in the broader market.”

Sumitomo Mitsui, Japan’s second-largest bank by market value, gained 2.1 percent to 2,831 yen. The lender posted third- quarter profit that beat analysts’ estimates as losses on shareholdings and bad-loan charges declined.

Global Recession

Rinnai Corp., a Japanese maker of gas appliances, jumped 7.2 percent to 4,530 yen after raising its full-year profit forecast. Cochlear Ltd., maker of the world’s best-selling hearing implant, climbed 3.5 percent to A$63.55 after first-half profit rose 8 percent on new product sales.

The MSCI gauge rose 34 percent last year as growth in China helped the global economy emerge from the worst recession since World War II. The S&P 500 Index gained 23 percent in 2009, while Europe’s Dow Jones Stoxx 600 Index added 28 percent.

Among stocks that fell today, China Zhongwang plunged 27 percent to HK$5.87. The stock was suspended on Jan. 7. The company released a statement late yesterday restating that a review of Zhongwang’s accounts by Ernst & Young LLP found “no deficiencies” with accounts included in its May 8 initial public offering prospectus.

Verification Procedures

Zhongwang said that while its audit committee had approved its accounts, Ernst & Young said it found some “external limitations in its verification procedures which require certain information of independent third parties.” Macquarie slipped 6.1 percent to A$47.29. The company said net income in the six months to March 31 may climb 10 percent from the first half. That indicates second-half profit of A$526.9 million ($457 million), below the A$586 million average estimate of three analysts surveyed by Bloomberg.

Macquarie’s forecast is “slightly below the more bullish analysts,” said Angus Gluskie, who oversees $300 million at White Funds Management Pty in Sydney. “Some investors were looking for a greater upgrade, so on a short-term basis are happy to close out positions given the softness in the market.”

Westpac Banking Corp., Australia’s second-largest lender by market value, lost 1.6 percent to A$22.88 as the cost of protecting Australian government bonds from default jumped to almost a nine-month high today, according to Deutsche Bank AG.

Koito Industries Ltd., which makes seats for trains and airplanes, plunged 33 percent to 159 yen. The company will fix about 150,000 passenger seats in some 1,000 commercial airliners after saying that it falsified test results and made unauthorized design changes.

To contact the reporters for this story: Shani Raja in Sydney at; Saeromi Shin in Seoul at


European Stocks Erase Advance; Stoxx 600 Index Is Little Changed

By Andrew Rummer

Feb. 9 (Bloomberg) -- European stocks erased their gains as utilities and telecommunication shares declined. The Dow Jones Stoxx 600 Index was little changed at 239.07 as of 10:51 a.m. in London, having earlier risen as much as 0.4 percent.