Greece Bailout Rumors Continue To Swirl

Daily Forex Fundamentals | Written by AC-Markets | Feb 10 10 11:14 GMT |

Market Brief Stocks rallied, with emerging-market equities recovering from the worst three-day slide in a year, and the EUR and commodities gained as European officials said they were considering financial assistance for Greece (but since has been heavily refuted). The S&P 500 Index rose 1.3% while the MSCI Emerging Markets Index increased 1.9% after falling 6.1% in the past three sessions. The EUR strengthened the most in more than five months against the USD, snapping four days of declines, and ended a three-day drop against the JPY. Oil, copper and aluminum surged at least 2.2% to help lead gains in commodities. The S&P 500 erased yesterday's 0.9% drop and the DJIA rallied above 10,000, increased 150.25 points, or 1.5%, to 10,058.64 for its biggest gain since Nov. 9. The EUR climbed as much as 1.4% against the USD, its biggest gain since Sept. 8. The EUR appreciated 1.4% versus the JPY and 0.2% compared with the GBP. US wholesalers unexpectedly fell in December after the biggest increase in more than five years, indicating distributors had trouble keeping up with demand. The 0.8% decrease in stockpiles followed a revised 1.6% gain in November that was the largest since July 2004. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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Forex Technical Analysis

Daily Forex Technicals | Written by DeltaStock Inc. | Feb 10 10 09:56 GMT |

EUR/USD Current level-1.3766 EUR/USD is in a downtrend, after peaking at 1.5146 (Nov.25,2009). Technical indicators are neutral, and trading is situated below the 50- and 200-Day SMA, currently projected at 1.4793 and 1.4169. Yesterday's break above 1.3740 intraday resistance cleared the road for a precise test of 1.3850. Current bias is neutral, but we expect a break below 1.3690 to initiate a downtrend for 1.3585, en route to 1.3413. Resistance Support intraday intraweek intraday intraweek 1.3850 1.4260 1.3692 1.3413 1.3850 1.5146 1.3585 1.30+ USD/JPY Current level - 89.63 The overall downtrend has been renewed with the recent break below 87.12. Trading is situated below the 50- and 200-day SMA, currently projected at 89.50 and 93.54. Still in the consolidation pattern above 88.54 and while 90.06 limits the upside, the overall bias will continue to be negative for 87.36. Important on the downside is 89.14. Resistance Support intraday intraweek intraday intraweek 90.08 93.40 89.14 87.36 91.30 95.60 88.54 79.60 GBP/USD Current level- 1.5667 The pair is in a downtrend after peaking at 1.7042. Trading is situated between the 50- and 200-day SMA, currently projected at 1.6454 and 1.5258. Current bias is positive with an initial support around 1.5647. We favor a break below that zone, that will target 1.5532, en route to 1.5352. On the upside major resistance is 1.5835 Resistance Support intraday intraweek intraday intraweek 1.5747 1.6459 1.5647 1.5352 1.5835 1.7042 1.5535 1.50+ DeltaStock Inc. - Online Forex & Securities Broker www.deltastock.com RISK DISCLAIMER: These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from generally accessible data sources. The forecasts made are based on technical analysis. However, Delta Stock’s Analyst Dept. also takes into consideration a number of fundamental and macroeconomic factors, which we believe impact the price moves of the observed instruments. Delta Stock Inc. assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon the information on this page. Delta Stock Inc. shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses or unrealized gains that may result. Any information is subject to change without notice.

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Sterling Volatility To Spike Again

Daily Forex Fundamentals | Written by Investica | Feb 10 10 10:56 GMT |

Sterling will continue to be vulnerable to the debt concerns, especially with political uncertainties adding to fears that the government deficit situation will not be addressed. Indeed, it is certainly possible that confidence will deteriorate further in the short term. Volatility levels are liable to remain sharply higher in the short term, especially after the Bank of England inflation report. The report could lift Sterling briefly, but rallies to above 1.5750 against the dollar will soon attract selling pressure. From a medium-term perspective, losses to the 1.52 region remain realistic. Sterling came under renewed selling pressure during Tuesday with a further test of support near 1.5550 against the US dollar. The UK trade deficit was wider than expected with an 11-month high shortfall of GBP7.3bn for December which will tend to increase fears over the economic outlook. There was also a warning from ratings agency Fitch that the UK was the most vulnerable of the AAA-rated economies to a credit-rating downgrade. Sterling recovered to around 1.57 against the dollar later in the US session, primarily due to the impact of general dollar weakness. The Bank of England inflation report will be extremely important for Sterling later in the day and is liable to trigger further Sterling volatility. The currency could gain some support on higher than expected inflation forecasts or a more upbeat survey of the economy from Bank Governor King, although he may be more cautious over the economic outlook which would tend to erode currency support. Investica http://www.investica.co.uk Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.

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Paulson, Once a Top Earner, Tells Buffett Bankers Make Too Much

By Andrew Frye

Feb. 10 (Bloomberg) -- Henry Paulson, who was paid an $18.7 million cash bonus for his final six months of work on Wall Street in 2006, said bank bailouts he later orchestrated as Treasury secretary should encourage firms to rein in pay.

“Today restraint is very much in order by the top people,” Paulson, 63, said yesterday in an interview conducted by billionaire Warren Buffett in Omaha, Nebraska. “If you have losses you are supposed to bear responsibility.”

Bank executives, who tapped taxpayers amid losses in 2008, are under pressure from lawmakers to keep compensation in check as profits return. Lloyd Blankfein, the chief executive officer of Paulson’s old firm, Goldman Sachs Group Inc., turned in record profit in 2009 and walked away with a $9 million all- stock bonus, about one-seventh the size of his 2007 award.

“During benign periods, I think compensation levels on Wall Street are out of whack,” Paulson said to an audience of more than 2,400 people at a lunch meeting organized by the Omaha chamber of commerce. “I would have these conversations with Wendy all the time,” Paulson said, referring to his wife.

Paulson led Goldman Sachs for seven years before joining George W. Bush’s cabinet. In the first half of 2006, he turned in what was then the biggest profit in Wall Street history. Paulson stepped down, after a career at the firm, with stock and restricted shares worth more than $500 million.

Buffett, 79, a Goldman Sachs investor through his Berkshire Hathaway Inc. and a friend of Paulson’s, has criticized compensation at firms that perform poorly. Last month he told Fox Business Network that the CEO of a failing company should be “destroyed himself financially.” With Paulson, Buffett asked questions and offered few opinions.

‘Obscene’ and ‘Reckless’

President Barack Obama called bank bonuses “obscene” at least twice this year, and Democratic Representative Andre Carson said the industry’s practices are “reckless” during a House Financial Services Committee hearing on compensation.

Paulson is promoting a memoir about the financial crisis, “On the Brink,” which was published this month. In the book, he said he would sometimes chide Goldman Sachs colleagues about “the dangers of the ostentatious lifestyles” he saw with some bankers.

“No one likes investment bankers,” Paulson recalls saying. “You make your life more difficult when you build a 15,000- square-foot house.”

Goldman Sachs this year cut the percentage of revenue earmarked for pay to the lowest in a decade as a public company. The New York-based firm aimed to allay anger about bank profits as the U.S. jobless rate remains about 10 percent.

In the fourth quarter, Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation. The three Wall Street firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

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Soros Is ‘Confident’ Greece Will Stay in Euro Region

By Achmad Sukarsono

Feb. 10 (Bloomberg) -- Billionaire investor George Soros, who made $1 billion in 1992 correctly betting against the British pound, said he expects Greece will be able to remain in the euro region.

“I’m actually confident Greece will do whatever is necessary to meet conditions to remain a member of the euro to qualify for financing by the ECB for Greek government bonds,” Soros told reporters in Jakarta today. The European Central Bank has limits for the ratings of bonds it accepts as collateral.

World stock markets rallied since yesterday as prospects for a bailout of Greece eased concern that deteriorating government finances will derail the global economic recovery. The European Union is scheduled to hold a summit in Brussels tomorrow as the Greek government braces for a wave of strikes protesting plans to reduce the region’s largest budget deficit.

German Finance Minister Wolfgang Schaeuble will brief lawmakers today on steps he may take to support the Greek government as European leaders dropped their resistance to rescuing the nation in an effort to protect the rest of the euro region from market turmoil.

“Providing Greece meets its target, I hope the European Union, the European Central Bank, the euro zone will find a way to finance the government in a way that’s not too expensive for Greece to provide some relief,” said Soros, 79, who was in Indonesia meeting Vice President Boediono.

‘Strict Conditions’

Any support would come “under strict conditions and if the Greek government undertakes far-reaching state reforms,” Michael Meister, financial-affairs spokesman for German Chancellor Angela Merkel’s Christian Democratic Union, said in an interview yesterday. Options include bilateral aid or a package put together by a group of countries using the euro, Meister said.

Greek Prime Minister George Papandreou’s government yesterday floated new steps to reduce the deficit, including cuts of as much as 5.5 percent in government workers’ wages and a waiver on taxes for Greeks who repatriate funds held abroad.

Fitch Ratings analyst Brian Coulton said yesterday that any country leaving the euro area would likely face a “banking crisis.”

Credit Default Swaps

The cost to protect investors from default on Greek government bonds fell a record 50 basis points today, CMA DataVision prices show. Credit default swaps for Portugal and Spain also declined.

The MSCI World Index of developed-market stocks climbed 0.1 percent at 2:53 p.m. in Tokyo, a second straight gain, paring the year’s losses to 5.7 percent. The index has slumped for four straight weeks on concern that deficits and sovereign debt in Europe will slow the global recovery.

“I think the markets are generally concerned on sovereign debt and Greece is at the forefront of that issue,” Soros said.

Soros gained fame in 1992 when he reportedly made $1 billion betting that Britain would fail to keep its currency in a European exchange-rate system that pre-dated the euro. He also wagered that Germany’s mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year.

To contact the reporter on this story: Achmad Sukarsono in Jakarta at asukarsono@bloomberg.net

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Indonesia’s Economy Expands at Fastest Pace in a Year

By Aloysius Unditu and Novrida Manurung

Feb. 10 (Bloomberg) -- Indonesia’s economy grew at the fastest pace in a year last quarter as lower interest rates and government stimulus measures spurred consumer spending.

Southeast Asia’s largest economy expanded 5.4 percent in the three months to Dec. 31 from a year earlier after gaining 4.2 percent in the third quarter, the statistics office said in Jakarta today. The median forecast in a Bloomberg News survey of 18 economists was for a 5 percent increase.

Asian economies from China to Vietnam are picking up speed after policy makers boosted spending and slashed borrowing costs to counter the global recession. Credit Suisse Group AG said Indonesia and other countries in the region are less vulnerable to sovereign risks than some European nations as Asian debt levels are lower and more sustainable.

“Indonesia’s financing situation compares favorably to many of its regional and rating peers, not to mention the weak links in the European Union,” Cem Karacadag, an economist at Credit Suisse in Singapore, said before the report. “The government’s financing situation is manageable and Indonesia’s creditworthiness is gradually but steadily improving.”

The Indonesian government’s financing requirements will be about 4 percent of gross domestic product this year, less than half of those of India and the Philippines, and less than a quarter of those of Greece, Portugal, Spain, and Turkey, according to Credit Suisse estimates.

Greek Tragedy

European officials, who are meeting at a summit in Brussels tomorrow, are considering assistance for Greece after the country’s deficit threatened financial-market stability. The euro’s slide to a nine-month low and surging bond yields prompted leaders to drop their resistance to rescuing Greece and protect the rest of the euro region from market turmoil.

Asia is “relatively risk free” from contagion from Europe as the region’s governments mainly use domestic markets to fund their deficits and debt levels are within sustainable limits, CIMB Investment Bank Bhd. said in a Feb. 8 report.

Indonesia’s economy expanded 4.5 percent in 2009, according to today’s report. GDP shrank 2.4 percent in the fourth quarter from the previous three months.

Indonesia has fared better than its neighbors during the global slump as it relies less on exports and consumer confidence has been buoyed by the most stable political climate since the ouster of former dictator Suharto in 1998.

“For Indonesia, the risks have nothing to do with politics,” Nikhil Srinivasan, who helps manage about $30 billion as Singapore-based chief investment officer for Asia and the Middle East at Allianz Investment Management, said in an interview in Jakarta before the report. “The only worry is making sure they push infrastructure so that growth can be more than 5 percent.”

Consumer Confidence

The Jakarta benchmark stock index increased 87 percent last year and the rupiah gained 16 percent, the best performance from an Asian currency outside Japan, as foreign funds sought to take advantage of Indonesia’s strengthening economy.

Growth in Indonesia’s $514 billion economy has been supported by rising consumer confidence, which according to a central bank index rose in January to near the five-year high recorded in July 2009 when President Susilo Bambang Yudhoyono was elected to a second term.

Yudhoyono, 60, has pledged to double spending on roads, seaports and airports to $140 billion over the next five years, part of his push to deliver economic growth of at least 6.6 percent by the end of 2014.

Car Sales

Consumer spending is also benefitting from low inflation, said economists including Alexander Eric Sugandi from Standard Chartered Plc. in Jakarta. Inflation slowed to a decade low of 2.78 percent last year.

Indonesian car sales rose to 148,598 units in the fourth quarter from 140,585 a year earlier, according to data from Indonesia’s Car Association. Sales may increase to between 550,000 and 600,000 this year from 486,061 in 2009, according to Joko Trisanyoto, PT Toyota Astra Motor’s marketing director.

PT Krakatau Steel, Indonesia’s largest producer of the metal, expects sales to increase by 20 percent to 19 trillion rupiah ($2 billion) this year due to possible demand from government infrastructure projects, Irvan K. Hakim, marketing director of the company, said on Feb. 8.

Indonesia’s central bank cut its benchmark interest rate by 3 percentage points between December 2008 and August last year to shield the nation from the global recession. The policy rate has since been maintained at 6.5 percent.

The Philippine economy expanded 1.8 percent in the fourth quarter of 2009 from a year earlier and China’s GDP increased 10.7 percent.

Indonesia’s “economic upswing remains on track, with domestic demand leading the way,” said Ashira Perera, an economist at Capital Economics Ltd. in London.

To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@blomberg.net

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U.K. Lawmakers Urge Government to Reject EU Hedge Fund Rules

By Ben Moshinsky

Feb. 10 (Bloomberg) -- U.K. lawmakers advised the government to challenge a proposed European Union law regulating hedge funds and private equity because it could make it harder for EU funds to compete.

The government “should not agree” to the rules unless they are “compatible with equivalent legislation with regulatory regimes in third countries and in particular in the United States,” the House of Lords European Union Committee said in a report today. Fund managers risk losing “competitiveness at a global level” according to the report.

“It will mean Cayman Island funds run by European managers will be more expensive than Cayman funds managed from the U.S., and that is dangerous,” Andrew Shrimpton, a former U.K. regulator who now advises hedge funds at Kinetic Partners LLP, said in a telephone interview. “The asset management industry is an Anglo-American industry.”

Hedge-fund managers have come under fire from politicians and regulators since the collapse of the U.S. subprime mortgage market triggered a global crisis. The European Commission proposed the Alternative Investment Fund Managers directive to tighten supervision of hedge funds last year. Finance ministers from the 27-member EU bloc are scheduled to vote on the rules later this year.

Equivalence Requirements

Investors from Europe won’t be able to access 40 percent of hedge funds and 35 percent of private equity firms under the proposals because of so-called equivalence requirements, Dan Waters, the Financial Services Authority’s asset-management sector leader, said in a speech in London last month.

The U.K. government “should continue to negotiate a solution that does not penalize the marketing of non-EU funds” because of the “negative repercussions on the U.K. and European financial markets,” the committee said in its report.

European lawmakers made hundreds of changes to the commission draft rules last week. Two members of the European Parliament proposed an amendment that would force hedge-fund and private-equity managers to return more than 20 percent of their bonuses to their funds if they don’t properly account for risk levels.

“The U.K. government should do everything it can to ensure that the final proposals that emerge in the AIFM Directive do not damage the EU and U.K. economies to which the City of London makes an important contribution,” Kenneth Woolmer, a member of the House of Lords Sub-Committee on Economic and Financial Affairs, said in an e-mailed statement.

To contact the reporters on this story: Ben Moshinsky in Brussels at bmoshinsky@bloomberg.net

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Germany Weighs Greek Support in Pre-Summit Switch

By Brian Parkin and Jonathan Stearns

Feb. 10 (Bloomberg) -- German officials are considering assistance for Greece after the country’s fiscal woes threatened the stability of the euro and financial markets, two lawmakers from Chancellor Angela Merkel’s governing coalition said.

German 10-year government bonds dropped by the most in three months today and their Greek counterparts soared as prospects of a rescue firmed. Finance Minister Wolfgang Schaeuble, who met lawmakers in Berlin today, told reporters he “no intention to participate in speculation.”

The German initiative came on the eve of a European Union summit and followed a slump in bond prices amid speculation that Greece would fail to tackle the EU’s largest budget deficit. The euro’s slide to a nine-month low and a slump in bond prices prompted leaders to drop their resistance to rescuing Greece and protect the rest of the euro region from market turmoil.

Schaeuble will give a speech on tax policy and financial markets in Berlin at 5:40 p.m. local time. Merkel is not scheduled to make any public comments today.

“We are considering support,” Michael Meister, financial- affairs spokesman for Chancellor Angela Merkel’s Christian Democratic Union, said yesterday.

“We are talking about support in the broad sense,” Olli Rehn, the EU’s economic affairs commissioner, said yesterday. Meister said aid would come “under strict conditions and if the Greek government undertakes far-reaching state reforms.”

EU leaders arrive in Brussels tomorrow morning for the summit, which will be hosted by EU President Herman Van Rompuy. While Greece isn’t officially on the agenda, he will discuss the current “economic situation” over lunch, a session traditionally devoted to the most-sensitive subjects.

Paris Meeting

Greek Prime Minister George Papandreou, who is scheduled to meet French President Nicolas Sarkozy in Paris today, has failed to convince investors that his plan to cut the EU’s biggest deficit will work. His challenge will be highlighted today when unions shut schools, hospitals and flights to fight his proposals.

For weeks, European officials have insisted that no bailout was planned and that Greece’s effort to reduce its deficit, estimated at 12.7 percent of gross domestic product, should be given a chance to work. EU policy makers have no “plan B” to help Greece, former Monetary Affairs Commissioner Joaquin Almunia said in a Jan. 29 interview.

Signs of a rescue helped ease investors concerns that Greece’s worsening finances would derail the global recovery. The risk premium investors demand to buy Greek debt over comparable German bonds tumbled for a second day to 2.69 percentage points, the lowest since Jan. 19. It reached as high as 3.96 percentage points on Jan. 28.

Timing

The euro slid 0.2 percent to $1.3766 at 10:02 a.m. in Frankfurt after rallying more than 1 percent yesterday. The yield on the German bund earlier jumped 9 basis points to 3.24 percent.

“I’m not surprised it happened, just by the timing of it,” said Julian Callow, chief European economist at Barclays Capital in London. “They would have to structure it in a way that it’s sufficiently penal so as not to create a moral hazard issue and encourage other countries like Portugal, Spain and Ireland to keep on track in terms of getting their own houses in order.”

German government spokesman Ulrich Wilhelm said in a statement yesterday that reports that a decision to offer Greek assistance had “virtually been taken” were “unfounded.”

Germany and other EU nations were considering offering Greece and other debt-ridden euro-area members loan guarantees, the Wall Street Journal reported yesterday, citing people familiar with the matter.

Legal Issues

In the interview in Strasbourg, Rehn, pointed to tomorrow’s summit and a meeting of European finance ministers next week and indicated that Greece will be held to strict conditions in exchange for any backing.

“Solidarity goes both ways,” Rehn said. “I am sure that in the next couple of days we will see discussion and decisions to this effect.”

EU law bars the European Central Bank or national central banks from bailing out EU countries through buying their debt or offering loans, according to a report by the German parliament’s research unit published today.

Options for Greece include bilateral aid or a package put together by a group of countries using the euro, Meister said.

Nobel laureate Joseph Stiglitz said Greece’s budget-deficit reduction plan will prevent a default, and he reiterated his call for the European Union to aid the nation against “speculative attacks” in financial markets.

“I’ve been very impressed with the comprehensive approach they’ve had,” Stiglitz said in an interview on Bloomberg Television in London yesterday. “There’s clearly no risk of default. I’m very confident about it.”

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net

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Dollar Rises Before Bernanke’s Testimony on Fed’s Exit Strategy

By Ron Harui and Paul Dobson

Feb. 10 (Bloomberg) -- The dollar rose before the release of Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress about withdrawing stimulus funds and on speculation U.S. reports will show the deficit shrank and retail sales rose.

The Australian and New Zealand dollars weakened after a Chinese report showed exports and imports fell in January from the previous month, damping demand for higher-yielding assets. The pound was near a three-week low against the euro on speculation the Bank of England will cut its economic-growth forecast in its quarterly report today.

“Some of the dollar recovery is linked to Bernanke’s text about the Fed’s thinking on policy exiting,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “The Chinese data was much weaker than expected and markets are taking that as a warning signal.”

The dollar advanced to $1.3754 per euro as of 8:15 a.m. in London from $1.3797 in New York yesterday. The U.S. currency traded at 89.68 yen from 89.69 yen. The yen rose to 123.40 per euro from 123.75, after earlier falling to 124.27, the lowest level since Feb. 4.

Bernanke’s testimony on the Fed’s exit strategy will be released at 10 a.m. in Washington. He was originally scheduled to speak before the House Financial Services Committee on “Unwinding Emergency Federal Liquidity Programs and Implications for Economic Recovery.” The hearing was postponed due to snow and hasn’t been rescheduled.

Trade Deficit

The U.S. trade deficit shrank to $35.8 billion in December from $36.4 billion the prior month, according to a Bloomberg News survey of economists. Retail sales rose 0.3 percent in January, after a 0.3 percent decline in December, a separate Bloomberg survey showed. The Commerce Department will release the trade report today. The department tentatively postponed the release of the retail sales report until Feb. 12.

The yen strengthened after China’s customs bureau reported exports declined a seasonally adjusted 5.5 percent last month from December, while imports dropped 0.9 percent.

“Both exports and imports fell, which could be perceived as a bad sign for China’s economic growth,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole CIB in Tokyo. “This may cause risk aversion and buying of the yen and the dollar.”

The yen gained 0.4 percent to 78.49 per Australian dollar, and advanced 0.5 percent to 62.14 against New Zealand’s dollar. Australia’s dollar fell 0.4 percent to 87.51 U.S. cents, and New Zealand’s currency lost 0.5 percent to 69.30 cents. The Dollar Index, which tracks the U.S.’s currency against those of six major trading partners, rose 0.1 percent to 79.920.

Interest Rates

Benchmark interest rates of 3.75 percent in Australia and 2.5 percent in New Zealand compare with as low as zero in the U.S. and 0.1 percent in Japan, making the South Pacific nations’ assets attractive to investors seeking higher returns. The risk in such trades is that currency market moves will erase profits.

The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders. The dollar benefits as the world’s main reserve currency.

The pound weakened against the dollar on speculation the Bank of England will lower its forecast of economic growth while raising its prediction for inflation.

U.K. Outlook

Gross domestic product in the U.K. rose 0.1 percent in the fourth quarter, the Office for National Statistics said last month. Consumer prices climbed 2.9 percent in December from a year earlier, the most since records began in 1997, according to government data.

“The BOE is likely to express a dovish view on the economic outlook even though it may upgrade its inflation forecast,” said Akane Vallery Uchida, a currency strategist at Royal Bank of Scotland Group Plc in Tokyo. “This report is unlikely to alter the recent downward trend for the pound.”

The U.K. currency declined to $1.5667 from $1.5719. The pound was 87.86 pence per euro from 87.77 pence yesterday, when it fell to 88.18 pence, the weakest level since Jan. 18.

The euro earlier rose against the yen on prospects the European Union will help Greece stem its budget crisis. German Finance Minister Wolfgang Schaeuble plans to brief lawmakers today on steps he may take to support the Greek government before the European Union holds a summit tomorrow.

“There was a suggestion from Germany in particular that they will come up with something to support Greece, and you’ve got a decent bounce in the euro,” said Phil Burke, chief dealer for global foreign exchange and rates at JPMorgan Chase & Co. in Sydney. “In Asia, currencies and equities will be supported on dips.”

To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net



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Sugar-Cane Crop Area in India to Rise Marginally, Official Says

By Pratik Parija

Feb. 10 (Bloomberg) -- Farmers in India, the biggest sugar consumer, may only increase planting of cane “marginally” as some growers choose grains, Farm Secretary T. Nanda Kumar said.

“It’s increasing but not significantly because everybody won’t like to go back to sugar cane,” Nanda Kumar said in an interview yesterday in New Delhi. “There’s also the wheat and rice combination that many farmers are happy with.”

A less-than-expected increase in cane area may force the nation to import for a third year, supporting prices that rose to the highest in three decades in New York this month. Output may rebound to as much as 23 million to 24 million metric tons in the year starting Oct. 1, the Indian Sugar Mills Association said this week. The country may still have a “small deficit,” Rahil Shaikh, India head for ED&F Man said in Dubai Feb. 8.

Sugar had its biggest annual advance since 1974 last year as heavy rains and drought pared harvests in Brazil and India, the largest growers, and forced buyers from Egypt to Mexico to seek supplies from overseas. Futures reached 30.4 cents on Feb. 1, the highest since January 1981.

Indian millers have contracted to import 4.5 million tons, including 400,000 tons of white sugar, since the start of the 2009-2010 season on Oct. 1, according to the association. Last year, imports were 2.5 million tons. Purchases may be 3 million tons next year, broker Kingsman SA said at the same conference.

Raw-sugar futures for March delivery gained 1.8 percent to 27.07 cents a pound on ICE Futures U.S. in New York yesterday, the biggest gain for a most-active contract since Jan. 29.

To contact the reporter on this story: Thomas Kutty Abraham in Dubai at tabraham4@bloomberg.net

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Soybeans, Corn, Wheat Advance on Rising Investor Confidence

By Luzi Ann Javier

Feb. 10 (Bloomberg) -- Corn gained for a third day, and soybeans and wheat advanced, as concerns eased that Greece’s budget deficit may slow Europe’s economic recovery.

Corn for March delivery gained as much as 0.3 percent to $3.595 a bushel in after-hours electronic trading on the Chicago Board of Trade before trading at $3.5875 at 3:20 p.m. Singapore time. Soybeans for delivery in the same month added 0.2 percent to $9.265.

Olli Rehn, who is taking over as European Union economic affairs commissioner, said in an interview yesterday that support for Greece will be discussed within days. Lawmakers in Germany are considering financial assistance to Greece, Michael Meister, a legislator from Chancellor Angela Merkel’s Christian Democratic Union, said yesterday.

“We’re getting confidence back into the market,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by phone today. “The general good feel is translating to higher prices of commodities across the board.”

Prices also climbed after the U.S. Department of Agriculture lowered its estimates for global corn and soybean stockpiles this year, and boosted its outlook for demand, Barratt said.

The USDA cut its world corn inventory estimate before the next northern hemisphere harvest to 134 million metric tons, from 136.2 million in January. That compares with stockpiles of 146 million tons the previous year.

Draining Supplies

Global corn consumption will outpace production for the first time in three years, as rising use of the grain in ethanol production in the U.S., the world’s biggest consumer, grower and exporter, helps drain supplies, the USDA said.

The department raised its corn consumption estimate for the year that began Oct. 1 to a record 809.7 million tons, according to USDA data. The previous forecast in January was 806.2 million tons and last year’s figure was 775.2 million tons.

The output estimate was raised to a record 797.8 million tons, from 796.5 million in January, on increased production in Argentina, the USDA said.

Global stockpiles of soybeans on Oct. 1 will be 59.7 million tons, down from 59.8 million tons forecast in January, as the USDA increased its U.S. exports outlook. The average estimate of 13 analysts surveyed was 60.3 million tons. Stockpiles were at 41.6 million tons a year earlier, the department said.

China, the world’s biggest soybean buyer, may import 42 million tons of the oilseed in the year through September, the China National Grain & Oils Information Center said today. That’s 2 million tons more than the center’s January forecast and 16 percent higher than purchases a year earlier.

Boosting Imports

The Asian nation boosted soybean imports by 34.5 percent to 4.08 million metric tons in January from the previous year, the Beijing-based customs office said on its Web site today.

Wheat for March delivery climbed as much as 0.8 percent to $4.8625 a bushel and last traded at $4.84.

Two South Korean groups issued a joint tender to buy 165,000 metric tons of wheat for feed production for delivery between July and August.

The groups will hold the bidding at 5 p.m. in Seoul today, according to a copy of invitation to the auction e-mailed to Bloomberg News.

Wheat planting in Australia may decline because of low prices, Rabobank Groep NV said in a report e-mailed today. Australia is world’s fourth-largest exporter of the grain, according to the USDA.

A weakening Australian dollar was spurring export interest, particularly from Asian buyers, Rabobank said.

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

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Sweden’s $14 Billion AP7 Fund to Triple Clean-Tech Investment

By Adam Ewing and Niklas Magnusson

Feb. 10 (Bloomberg) -- AP7, a Swedish state pension fund that manages about 100 billion kronor ($14 billion), plans to triple its investment in renewable energy as more people switch to cleaner technologies.

The investment in renewable-energy companies is expected to swell to about 3 billion kronor over the next two years from 1 billion kronor today, AP7 Chief Executive Officer Peter Norman said in an interview at the fund’s headquarters in Stockholm.

“It’s not because we have Mother Teresa economists, but because we think it’s going to be good value,” Norman said. “We think the world will change its resistance to using renewable energy and if you’re in at an early stage, in a lot of companies in the sector, you’ll have a nice performance over time.”

Nearly 1 billion kronor has already been invested in about 50 clean-technology companies such as Vestas Wind Systems A/S, the world’s biggest maker of wind turbines, Spanish rival Gamesa Corporacion Tecnologica SA, and Norway’s Renewable Energy Corp. ASA, a maker of solar-energy components, according to Norman.

Norman said he expects the fund’s returns to surpass gains in the broader equity market by about 5 percent, without specifying which markets he was referring to. The FTSE ET50 Index, a measure of the largest 50 companies globally that focus on environmental technologies, has risen 19 percent in the past 12 months, compared with a 23 percent advance for Europe’s Dow Jones Stoxx 600 Index.

Norman has been the CEO of AP7 since 2000. In November 2008, he was appointed chairman of D. Carnegie & Co. AB after the Swedish investment bank was taken over by the country’s government following the revocation of its banking license by the financial regulator. The Swedish National Debt Office, which took over ownership of the bank, and Norman shrank Carnegie’s balance sheet and sold the company after three months.

To contact the reporters on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net; Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net.

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U.K. Stocks Climb; Financials Rebound as Greece Concern Abates

By Sarah Jones

Feb. 10 (Bloomberg) -- U.K. stocks advanced for a third day, led by banks and insurers after Germany signaled it may help Greece tackle is sovereign debt.

Aviva Plc, Lloyds Banking Group Plc and Legal & General Group Plc all rallied more than 2 percent in London. Reckitt Benckiser Group Plc added 2.5 percent after earnings beat analysts’ estimates. ICAP Plc gained 3.4 percent as Goldman Sachs Group Inc. became the latest broker to recommend the shares.

The FTSE 100 Index climbed 17.04, or 0.3 percent, to 5,128.88 at 8:53 a.m. in London. The FTSE All-Share Index rose 0.3 percent today, while Ireland’s ISEQ Index added 1.1 percent.

U.K. stock have retreated for four-straight weeks, the longest losing streak since July, amid mounting concern that Greece, Spain and Portugal will struggle to reduce their budget deficits.

German Finance Minister Wolfgang Schaeuble will brief lawmakers today on steps he may take to support the Greek government as it braces for a wave of strikes protesting deficit-reduction plans.

Yesterday, the European Union’s new economic affairs commissioner, Olli Rehn, said support for Greece will be discussed in the coming days. Michael Meister, a German legislator from Chancellor Angela Merkel’s Christian Democrats, said lawmakers are considering financial assistance.

Insurers

Aviva led a rebound in insurance stocks, climbing 3.1 percent to 355 pence, while Legal & General added 2.3 percent to 71.75 pence. Insurers were sold off amid concern holdings of corporate and government debt may threaten their capital as state finances worsen.

Lloyds Banking Group increased 3.6 percent to 49.92 pence, while Barclays Plc added 2.4 percent to 275.85 pence.

Shares of ICAP increased 3.4 percent to 315 pence as Goldman Sachs raised its recommendation for the broker to “buy” from “neutral,” following a 21 percent plunge in the shares last week.

BofA-Merrill Lynch yesterday added ICAP to its “Europe 1” list while analysts at Credit Suisse Group AG upgraded the shares to “outperform” on Feb. 8.

Reckitt Benckiser rallied 2.5 percent to 3,213 pence after the world’s largest maker of household cleaners reported growth in fourth-quarter profit that beat analysts’ estimates, driven by sales of Nurofen painkillers and its heroin-dependency drug. Net income rose to 448 million pounds ($702 million), beating the 435.6 million- pound average analyst estimate in a Bloomberg survey.

-- Editors: Jason Carey.

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

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Baidu, Lions Gate, Netgear, Walt Disney: U.S. Equity Preview

By Lu Wang

Feb. 10 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Baidu Inc. (BIDU US): The operator of China’s biggest Internet search engine forecast first-quarter sales that topped analysts’ estimates after rival Google Inc. (GOOG US) said it may exit the country.

Finisar Corp. (FNSR US): The maker of fiber-optic transmission gear said in a preliminary statement that sales in the fiscal third quarter were at least $166 million, higher than its forecast.

Lions Gate Entertainment Corp. (LGF US): The independent film studio reported a third-quarter loss excluding some items of 54 cents a share, wider than the 17-cent loss estimated on average by analysts in a Bloomberg survey.

Netgear Inc. (NTGR US): The maker of networking equipment for homes and small businesses said it expects sales of at least $195 million in the first quarter, beating the average analyst estimate in a Bloomberg survey of $178.6 million.

Walt Disney Co. (DIS US): The world’s biggest media company reported fiscal first-quarter profit that beat analysts’ estimates as TV revenue rose and theme-park results stabilized.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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European, Asian Shares Advance; Greek Banks, Fortis Increase

By Daniela Silberstein

Feb. 10 (Bloomberg) -- European and Asian shares rose after Germany signaled it may help support Greece’s finances, easing concern a sovereign default could hamper the economic recovery. U.S. stock-index futures retreated.

National Bank of Greece SA led the nation’s shares higher. Fortis surged 5.2 percent as Royal Bank of Scotland Group Plc recommended buying the shares. Banco Comercial Portugues SA jumped 3.9 percent after profit at the lender’s Polish unit beat estimates.

Europe’s Dow Jones Stoxx 600 Index rose 0.8 percent to 241.09 at 9:27 a.m. in London. The measure has tumbled 7.4 percent since this year’s high on Jan. 19 amid concern that Greece, Spain and Portugal will struggle to curb their deficit.

German Finance Minister Wolfgang Schaeuble will brief lawmakers today on steps he may take to support the Greek government as it braces for a wave of strikes protesting deficit-reduction plans.

“Reassurance has arrived,” said Philipp Musil, a fund manager at Constantia Privatbank AG in Vienna, who helps oversee about $13 billion. “A comment from a decision maker has long been awaited to show that Greece will not be left alone. It’s a beginning but further steps will have to follow because Greece is not the only problem in Europe.”

Olli Rehn, the European Union’s new economic affairs commissioner, said yesterday support for Greece will be discussed in the coming days. Michael Meister, a German legislator from Chancellor Angela Merkel’s Christian Democrats, said lawmakers in that country are considering financial assistance.

Soros ‘Confident’

Billionaire investor George Soros, who made $1 billion in 1992 correctly betting against the British pound, said he is “confident” Greece will be able to remain in the euro region.

U.S. stocks yesterday rallied, sending the Dow Jones Industrial Average back above 10,000. Futures on the benchmark Standard & Poor’s 500 Index lost 0.2 percent today. The MSCI Asia Pacific Index added 0.3 percent as a government report showed Japan’s machinery orders climbed.

Greece’s ASE Index surged as much as 4.7 percent today. National Bank of Greece, the country’s biggest lender, jumped 7 percent to 14.76 euros. EFG Eurobank Ergasias SA, the second- largest, rallied 7.3 percent to 6.01 euros.

Fortis, the insurer that held a combined 18.2 billion euros of Greek, Spanish, Portugese and Italian government bonds on June 30, rallied 5.2 percent to 2.54 euros. The stock was upgraded to “buy” from “hold” at Royal Bank of Scotland, which said more European Union support for Greece could “trigger a relief rally” in the shares.

ICAP Jumps

Banco Comercial Portugues surged 3.9 percent to 77.3 cents. Bank Millennium SA, the Polish unit of the Portuguese lender, said fourth-quarter profit rose as it increased fee income and reduced employment.

ICAP Plc jumped 4 percent to 317 pence. The world’s biggest broker of transactions between banks was raised to “buy” from “neutral” at Goldman Sachs Group Inc. after the shares plunged 21 percent last week.

Vestas Wind Systems A/S rose 1.7 percent to 295.70 kroner. The world’s biggest maker of wind turbines recorded fourth- quarter net income of 315 million euros ($433.7 million), compared with a 280 million-euro median estimate of 13 analysts surveyed by Bloomberg.

Marine Harvest ASA added 2.8 percent to 5.31 kroner. The world’s largest salmon farmer expects the first quarter to be “good,” Chief Executive Officer Aase Aulie Michelet said. The company posted a fourth-quarter profit of 520 million kroner ($88 million). Analysts had estimated a profit of 266 million kroner.

ArcelorMittal Declines

ArcelorMittal slid 6 percent to 26.87 euros. The world’s largest steelmaker said earnings before interest, taxes, depreciation and amortization fell 24 percent to $2.13 billion, compared with an average analyst estimate of $2.18 billion.

Renewable Energy Corp. ASA tumbled 19 percent to 28.10 kroner, a record low. The Norwegian maker of solar-energy components expects lower earnings in the first quarter than a year earlier after posting an unexpected loss at the end of last year.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

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Asian Stocks Rise as Greece Concern Eases; Rio, Nissan Advance

By Shani Raja and Toshiro Hasegawa

Feb. 10 (Bloomberg) -- Asian stocks rose for a second day after European officials said they may help Greece grapple with its budget deficit, easing concern a sovereign default will cripple a global economic recovery.

Rio Tinto Group gained 1.4 percent, leading gains among mining companies, after rival BHP Billiton Ltd.’s profit beat analyst estimates. Japan Tobacco Inc. jumped after raising its profit forecast by 13 percent. Nissan Motor Co. climbed 1.6 percent after predicting a return to profit. Komatsu Ltd. rose 3.2 percent in Tokyo after a government report showed Japan’s machinery orders climbed. Stocks pared gains as Chinese export and trade surplus reports missed economist estimates.

“Markets are hopeful that there’ll be some sort of positive resolution of the Greece situation,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State Global Asset Management, which holds about $135 billion. “Earnings across the region reinforce the view that the recovery is gaining momentum and that the attention on reducing costs is bearing some fruit.”

The MSCI Asia Pacific Index added 0.2 percent to 114.95 as of 3:27 p.m. in Tokyo, with five stocks rising for each three that dropped. The gauge has lost 9.3 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.

The Nikkei 225 Stock Average advanced 0.3 percent in Tokyo. China’s Shanghai Composite Index gained 0.8 percent, as the customs bureau said January exports rose 21 percent from a year earlier and imports climbed 85.5 percent. Taiwan’s Taiex Index added 1.1 percent.

Deficit Concerns

Geely Automobile Holdings Ltd. surged 6.2 percent after saying January sales climbed to a record. Cosco Pacific Ltd. added 1.9 percent in Hong Kong after BNP Paribas recommended investors buy the stock. Karoon Gas Australia Ltd. jumped 12 percent in Sydney after a shareholder increased its stake.

Futures on the U.S. Standard & Poor’s 500 Index lost 0.2 percent. The gauge climbed 1.3 percent yesterday on growing prospects for a bailout of Greece.

Olli Rehn, who is taking over as European Union economic affairs commissioner, said in an interview that support for Greece will be discussed within days. Michael Meister, a German legislator from Chancellor Angela Merkel’s Christian Democrats, said lawmakers in that country are considering financial assistance.

“Whether Greece will fail to repay its debt is the crux of this issue,” said Masaru Hamasaki, chief strategist at Tokyo- based Toyota Asset Management Co., which oversees the equivalent of $14 billion.

Best Performers

Material producers were the biggest contributor to the MSCI Asia Pacific Index’s gain today after oil and copper futures in New York jumped at least 2.5 percent. Materials companies are the second-best performing of the MSCI Asia Pacific’s 10 industry groups in the past year.

BHP, the world’s biggest mining company, climbed as much as 3.5 percent before closing 0.1 percent higher at A$39.88. BHP today said net income more than doubled in the six months ended Dec. 31, as a one-time charge for mine closures deflated earnings a year earlier.

“In the long term we continue to expect strong growth in demand for our commodities,” the company said in a statement.

In Tokyo, Mitsubishi Corp., whose BHP Billiton Mitsubishi Alliance is the world’s largest steelmaking coal exporter, climbed 0.9 percent to 2,155 yen. Rio Tinto, the world’s third- largest mining company, gained 1.4 percent to A$67.94. OZ Minerals Ltd. jumped 3.1 percent to A$1.015.

Net Income

Nissan rose 1.6 percent to 743 yen. Nissan, which is Japan’s No. 3 carmaker, scrapped its loss projection yesterday to forecast net income for the year to March 31. The company benefitted from tax cuts and government subsidies in China and Japan.

Japan Tobacco, the world’s third-largest publicly traded cigarette maker, rose 5.6 percent to 328,000 yen after raising its profit forecast 13 percent on higher overseas demand. Japan Tobacco is boosting international sales as a declining smoking rate and higher taxes in its home market stifle demand.

Japan’s industrial manufacturers advanced after the Cabinet Office reported a 20.1 percent month-on-month surge in the nation’s machinery orders in December, more than twice as much as economists had estimated. Orders are perceived as an indicator of business investment in the next three to six months.

Komatsu, the world’s second-biggest maker of earthmoving equipment, jumped 3.2 percent to 1,784 yen. Fanuc Ltd., Japan’s largest maker of industrial robots, advanced 0.7 percent to 8,850 yen.

Robust Demand

“With robust foreign demand, companies, especially manufacturers, will likely beat their own earnings forecasts,” said Toyota Asset’s Hamasaki.

In Taipei, Acer Inc., the world’s No. 2 computer vendor, gained 1.6 percent to NT$87.40 after saying fourth-quarter net income climbed 25 percent to its biggest quarterly profit in almost three years. HTC Corp. gained 3.5 percent to NT$307.5 after the company said the board approved plans to buy back as many as 15 million shares. Compal Communications Inc., which makes mobile phones, jumped 6.9 percent to NT$34.30 after it said January sales gained 34 percent from a year earlier.

The MSCI Asia Pacific Index completed its third weekly decline last week as an unexpected increase in U.S. jobless claims 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.

Fragile Situation

The cost of protecting Australian corporate and sovereign bonds from default dropped as speculation that Greece may receive European Union aid saw markets rally worldwide. The Markit iTraxx Australia Index dropped 7 basis points to 103.5 basis points, the biggest decline since Nov. 30, according to Deutsche Bank AG and CMA DataVision.

“The recovery continues, but it’s not all plain sailing,” said Colonial’s Halmarick. “The situation in Europe reminds us that the situation is fairly fragile and that we’ve still got a long way to go.”

Geely Automobile jumped 6.5 percent to HK$3.29. January sales increased 137 percent from a year earlier to 43,877 vehicles, the manufacturer said in a statement to the Hong Kong stock exchange yesterday.

Separately, the China Association of Automobile Manufacturers said total vehicle sales more than doubled to a record 1.66 million units from a year earlier. SAIC Motor Corp., China’s largest carmaker, climbed 2.6 percent to 20.51 yuan in Shanghai.

Broker Recommendations

Karoon Gas Australia Ltd. jumped 12 percent to A$6.39 after shareholder Wellington Management boosted its stake to 11.9 percent from 10.7 percent, an exchange filing showed. Cosco Pacific added 4 percent to HK$11. BNP Paribas raised the company’s stock rating to “buy” from “hold,” citing an improving outlook and attractive valuation.

LG Telecom Ltd. slumped 4.5 percent to 7,820 won in Seoul, leading declines among phone stocks after being downgraded to “market perform” from “buy” at Hyundai Securities, and to “hold” from “buy” at Eugene Investment & Securities.

In Tokyo, Comsys Holdings Corp., which provides telecommunications engineering services, dropped 8.5 percent to 833 yen after Nomura Holdings Inc. cut its rating to “neutral” from “buy.”

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

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