Economic Calendar

Friday, April 1, 2011

Sunrise Market Commentary

  • US Equities ended slightly lower on Thursday due to a late session pull-back. This morning, most Asian shares trade slightly up, while Japanese stocks ended the session a little lower.
  • As the results of stress tests on the Irish banks were revealed, the government announced a radical shake-up of the industry aimed at restoring investor's confidence in Ireland's banking sector, which remains dependant on the ECB. Ireland's banking sector will require €24 billion in additional capital.
  • Portugal revealed yesterday that its missed the 2010 budget goal as the gap reached 8.6% of GDP in 2010, above the 7.3% target. Lisbon added that the upward revision was due to a simple accounting change demanded by Europe's statistics agency rather than any attempt to deceive.
  • The Federal Reserve could raise rates by the end of this year, sooner than expected by financial markets, according to comments made by Fed's Kocherlakota. The Minneapoliss Fed president signalled the Fed could raise benchmark rates by three-quarters of a percentage point by the end of the year.
  • Rebels cheered the defection of a Libyan minister as a sign that Gaddafi's rule was crumbling, but US officials warned he was far from beaten and made clear they feared entanglement in another painful war.
  • China's central bank may have to raise both interest rates and reserve requirements in April to combat a possible jump in consumer inflation to a nearly three-year high, a government researcher said.
  • Japanese manufacturers' business sentiment improved slightly in the three months to March, the Bank of Japan's closely watched tankan survey showed, but a downturn in confidence is expected for this quarter as 72% of replies for the survey came in before the earthquake.
  • Chinese factories raised production a touch in March while cost inflation slowed, early signs that China was scoring some success in taming prices with its gradual monetary tightening.
  • Today, the eco calendar is well-filled with the US payrolls and manufacturing ISM, the euro zone (final) and UK manufacturing PMI and euro zone unemployment rate.


Global markets had an overall quiet trading session ahead of the US payrolls release today and despite a high number of interesting eco and headline news. Yesterday's session cannot be simply described as a 'risk on' or 'risk off' day. Commodities, including oil, made substantial gains, equities closed narrowly mixed in the US and modestly (Germany) to substantially lower (Spain/Italy) in Europe. In the FX market, movements weren't too important, but the euro was well supported versus the US dollar and sterling, while the dollar made gains versus the yen. Global bonds remained under some modest downward pressure with German yields up between 3.3 bps and 0.8 bps, flattening the curve. Also in the US, the curve flattened bearishly, which resulted in yields up by 4 to 7 bps at the 2-to-5-year and somewhat lower further out of the curve. The peripherals traded generally uneventful ahead of the publication of the Irish stress tests (see below) with the Portuguese debt making the exception and the country now very close to throwing in the towel and asking for EFSF support (see below). Global core bonds were 'hit' by the higherthan- expected EMU inflation data that played right in the card of hawkish ECB and by another set of strong German labour market data. The latter contrasts with the situation in the peripherals and might become a problem inside EMU. In this respect, remarks of ECB's Wellink are worth citing: 'the strong economic pick-up in Germany makes clear that a recovering economy comes with higher inflation and therefore a higher benchmark interest rate'. If the ECB would not deliver this, he added, its credibility in Germany may suffer.

Intra-day, global core bonds started the day on the same footing as they ended yesterday. They traded quietly with an upward bias until the publication of the March CPI data for the euro zone. Inflation rose unexpectedly from 2.4% to 2.6%, which pushed the Bund down and German yields higher, especially on the short end of the curve, up. The drop of the Bund was however short-lived and gradually struggled higher again to about opening levels. However, there was some renewed weakening in midmorning US session, this time in sympathy with the US Treasuries. The US eco data were mixed with factory orders a tad weaker, but with a solid and above consensus Chicago PMI. The market barely reacted, but somewhat later, talk about positioninginduced selling took global bonds lower.

Review eco releases

Yesterday, the first estimate of euro zone CPI inflation for the month of March came out significantly higher than expected. CPI rose from 2.4% Y/Y to 2.6% Y/Y, while an unchanged reading was expected. Earlier released national data show that upward surprises were mainly based in Spain and Italy, which was probably due to the changed methodology. Nevertheless, these data provide further evidence that CPI inflation is running further away from the ECB's target, which supports the ECB's view that action on rates is needed. In the US, economic data came out mixed, with the claims and factory orders somewhat weaker, while the Chicago PMI came out slightly stronger than expected.

Peripheral news and markets

The INE statistics agency announced that it has upwardly revised the Portuguese budget deficits and debt-to-GDP ratios for the last two years. Portugal's budget deficit reached 8.6% of GDP in 2010, above the previously commented 7.3% target with Brussels. The 2009 deficit was revised from 9.3% to 10%. The debt to GDP ratios for 2010 and 2011 are now seen at respectively 92.4% (up from 82.8%) and 97.3% (up from 88.8%). The changes in last year's deficit came after a visit by Eurostat and the inclusion of capital injections at nationalised bank BPN and the accounts of three pubic transport companies. The worse debt/deficit data, which were mostly due to accounting issues and not skeletons falling out of the cupboard, is the latest in a series of events recently (collapse of government, several downgrades, yields reaching euro lifetime highs) that extends Portugal's walk of shame and takes away the (now caretaker) government's last bit of credibility. The optics of the moves do not look good and are reminiscent on what occurred in Greece. Portugal announced after the closure that it will hold today a special 1-year Note auction for an amount of €1.5B. It apparently has specific demand for such a Note and it is rumoured that Brazil will be the buyer. It is however still unlikely that will be enough to avoid a bail-out. The Portuguese yields increased further and the 2-year yield exceeded the 10- year, with the yield spread of the latter breaching the 500bps. The National Bank of Belgium on the contrary had better news and announced that the country's debt load increased less than initially estimated, as its 2010 budget deficit narrowed more than the caretaker government had previously expected. The 2010 budget deficit decreased to 4.1% of GDP from 5.9% in 2009 and compares to a previous estimate of 4.6%. The debt to GDP ratio was downwardly revised from 97.5% to 96.8%. Similarly the French deficit and debt levels were reported lower than hitherto assumed.

Irish stress tests

The Irish stress tests revealed that Irish banks need an additional €24B of capital injection, which was close to expectations and falls within the amount of capital the bail-out package had reserved (€35B). The total bill for the clean up of the banking sector mess is now about €70B, approaching 50% of GDP. The Irish government will restructure the sector and merge the main four banks into two centred on Allied Irish and Bank of Ireland. All may end up nationalized. There had been speculation that the ECB would put a medium term funding facility into place for the Irish banks, but apparently, there was resistance in the Council and earlier remarks of ECB's Stark indeed pointed to resistance. However, the ECB declared officially that it would continue to accept Irish sovereign debt as collateral regardless its credit rating and promised banks continued access to liquidity. The Irish government promised to deleverage and downside the balance sheets of the banks. According to the press, the Irish government would drop its threat to impose losses on senior unsecured bonds in both remaining banks. The Irish central banker suggested that a lower rate on the bail-out package was a possibility over time and added that its ability to meet its deficit and debt targets would depend on a return to growth. We need to examine more closely the arrangement and have more still missing information to judge whether it might put Ireland on the road to recovery. We think that the market will be cautious in its attitude and do expect the spread to remain (unsustainable) high for the time being. It might be that the financing of the Irish banks might again entirely go through the ECB repo-operation (instead of partly via the ELA). This might pose problems if the ECB would decide to go back to the variable rate procedure (in QE-3?) or does it mean that the ECB will be obliged to continue its Full Allotment procedure for longer.

Fed comments

Interesting comments from Fed policymakers yesterday: it seems the hawks have started a campaign to make their point that policy cannot stay as accommodative for much longer than it is now. Richmond Fed Lacker suggested the Fed should trim its QE-2 programme by $100B, a suggestion already ventilated by governor Bullard before and for which also Hoenig and Fisher would vote. However, these members (maybe partially with the exception of Bullard) are the hard core hawk wing from which nothing else can be expected. However, there seem to get other governors on board too. Minneapolis Fed Kocherlakota (late yesterday), quite influential with well-known moderate hawkish tendencies but who fully supported the QE policy, surprised by suggesting that if core inflation would move to 1.3% Y/Y by the end of the year, the Taylor rule would call for a raise in the target rate by more than 50 bps. While the majority of the FOMC still wants to complete the QE-2 unaltered (confirmed by governor Pianalto, who spoke yesterday and even didn't exclude more QE if needed) the debate on the exit of the monetary very accommodative policy is open. In this respect, the speech of NY Fed Dudley, a key FOMC member with outspoken dovish profile, this afternoon might be worth giving all attention. Eco data preview and Markets today

Today, the eco calendar contains not only the eye-catching US payrolls report, but also the US manufacturing ISM, euro zone (final) and UK manufacturing PMI and euro zone unemployment rate. Fed's Plosser, Dudley and ECB's Bini Smaghi are scheduled to speak. Portugal holds a surprise 1-year Note auction

After three consecutive months of very disappointing payrolls data, last month's February report finally met expectations, partially due to a weather-related rebound after the weak January report. In February, non-farm payrolls rose by 192 000, the biggest monthly increase since May 2010, when payrolls were boosted by the Census. For the March report, the question is whether this decent February figure can be confirmed. The consensus is looking for an increase at almost the same pace (190 000), while the weather related boost will have faded, which indicates a significant underlying improvement in jobs growth. Although we expect to see some improvement in the payrolls data, we believe that the consensus might be a bit too optimistic. Manufacturing payrolls were probably strong, but construction payrolls will be significantly weaker than in February. Besides that, also the late Easter holiday poses a risk for the payrolls in the retail, hotel and food sectors. The unemployment rate is forecasted to stay unchanged at 8.9%. In the US, the manufacturing ISM reached a multi-year high in February. For March however, the consensus is looking for a slight decline (from 61.4 to 61.0). We believe that the risks might be on the upside of expectations as all regional business confidence indicators surprised on the upside too, despite the Richmond Fed index. In the euro zone, the final reading of March Manufacturing PMI is expected to confirm that sentiment weakened slightly. According to the first estimate, euro zone manufacturing PMI fell from 59.0 to 57.7. We have no reasons to distance ourselves from the consensus. Finally also in the UK, manufacturing PMI is forecasted to come off its record high reading from the previous two months. A slight drop from 61.5 to 60.9 is forecasted, but we don't exclude a downward surprise. Regarding markets today, while we put ourselves slightly on the downside of consensus expectations, the major risk, market-wise, might be a real big payrolls number at the time the debate on monetary policy flares up. The market though seems already positioned for a somewhat stronger number. Also the technical pictures for both bonds and currencies merit a heightened alert. For US bonds, the 2-year is close to 0.85% and a strong report would suggest that the consensus economist expectations that the Fed would act before mid 2012 are too conservative.

The picture of the June Note future is bearish, but no key levels are nearby. That is different for the German Bund and yields. A strong payrolls report, combined with the recent upped hawkish ECB talk and the upcoming ECB meeting (where rates will be raised) might push the 2-year yield above the high highs (1.84%), while the Bund is approaching the key 120.92 level. A break would paint a bearish double top on the charts with first target at 119.11. Similarly the 10-year yield might test the 3.50% level.

The technical picture of the main currency crosses is very interesting too. A strong payrolls report might prevent EUR/USD from breaking through major 1.4282 resistance level. Weak payrolls may however be threatening for that resistance level, which if broken paint a double bottom on the charts with theoretical targets at 1.5706 and 1.6690. USD/JPY might profit from a strong report to threaten the 84.51 resistance, which if broken would point to a much stronger pair. Also for EUR/GBP the technical picture is highly interesting. While we don't dare anticipating on sustained breaks of these levels, traders and investors might set up strategies around these levels.

About the Author

Disclaimer: This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.


Today's Market Outlook


Maintains near-term positive tone after reversal from 1.4247 high found support at 1.4020. Yesterday’s breach of 1.4218, previous high, has so far reached 1.4232, just ahead of 1.4247, 22 Mar lower top, clearance of which is required for fresh attempt at 1.4280, Nov 2010 peak and major trendline resistance. Current correction is consolidating above 1.4150, with further easing not ruled out, and higher low above 1.41 seen to maintain bulls. Loss of 1.41, however, will delay and re-expose 1.4050/20 for test.

Res: 1.4176, 1.4200, 1.4232, 1.4247
Sup: 1.4152, 1.4115, 1.4090, 1.4050


Upside failure to sustain gains above strong resistance at 1.6140 has triggered sharp reversal under 1.61 to reach 1.6015, just above 1.6010 higher low. Recovery attempt is seen capped by 1.61 zone, with break here and key near-term barrier at 1.6150 to signal recovery under-way. Otherwise, fresh weakness through 1.6015/10 will re-focus 1.5942/35.

Res: 1.6083, 1.6095, 1.6127, 1.6149
Sup: 1.6015, 1.6010, 1.5978, 1.5942


Reversal from 83.20, yesterday’s high, was contained at 82.55, where fresh strength has emerged. Clearance of 83.20/29 barriers and important 200 day MA at 83.62, has so far reached 83.73, just ahead of 83.96, 16 Feb high, break of which is needed to open 84.49, key short-term resistance. Positive near-term studies see scope for further gains, with 82.75/55 expected to contain corrective dips on overbought conditions, to keep immediate bulls in play

Res: 83.20, 83.29, 83.52, 83.96
Sup: 82.55, 82.35, 82.00, 81.50


Correction from 0.9273 spike high exceeded 0.9138/30, 29 Mar higher low/38.2% Fibonacci retracement of 0.8900/1.9273 ascend, to find temporary support at 0.9125. Break above 0.92 barrier keeps positive near-term tone for further gains, with regain of 0.9273 required to resume short-term recovery from 0.8900, towards key short-term barrier at 0.9367. On the downside, loss of 0.9125/00 weakens the tone.

Res: 0.9215, 0.9232, 0.9273, 0.9310
Sup: 0.9185, 0.9125, 0.9089, 0.9073

About the Author

Windsor Brokers Ltd

The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.


Yen Declines For Seventh Day Against Dollar Before U.S. Payrolls Report

Yen Declines Before Reports U.S. Jobs, French Manufacturin

The yen weakened against all its major counterparts before reports that economists said will show U.S. employers added jobs and a gauge of French manufacturing held at the highest level in nine months. Photographer: Tomohiro Ohsumi/Bloomberg

The yen headed for its longest losing streak against the dollar since July 2005 after a gauge of Chinese manufacturing accelerated and before a report that economists said will show U.S. employers added jobs last month.

Japan’s currency dropped to a 10-month low against the euro on speculation the Bank of Japan will keep interest rates on hold as it deals with the impact of the nation’s March 11 earthquake while the European Central Bank begins a round of increases. South Korea’s won headed for its biggest weekly gain this year.

“In general world economic growth is quite strong,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. “The negative impacts on Japan’s debt levels from the earthquake are beginning to hit the yen.”

The yen depreciated 0.7 percent, a seventh straight decline, to 83.67 per dollar as of 9:02 a.m. in London, after reaching 83.74, the weakest since Feb. 17. Japan’s currency slid 0.6 percent versus the euro, to 118.44, after touching 118.67, the least since May 13. The euro traded at $1.4154 from $1.4158.

The yen weakened against all 16 of its major counterparts tracked by Bloomberg. It extended its drop against the dollar into a second quarter after losing 2.4 percent in the three months through yesterday, the sharpest quarterly slide since the end of 2009.

Fed Outlook

U.S. employment rose for a sixth month, increasing by 190,000 in March, according to a Bloomberg News survey of economists before the Labor Department report today. China’s Purchasing Managers’ Index increased to 53.4 in March from 52.2 in February, rising for the first time in four months.

Large Japanese manufacturers forecast on average that the yen will trade at 84.20 per dollar in the year through March 2012, according to the Bank of Japan’s Tankan survey released today. Almost three quarters of the responses to the survey came by March 11, the day the magnitude-9.0 earthquake and ensuing tsunami struck the country.

Nomura Holdings Inc., Japan’s biggest brokerage, raised its forecast for the yen, saying domestic investors will sell overseas assets and bring back proceeds for reconstruction. The yen will be at 82.5 per dollar at the end of June, compared with 87.5 projected in January, Nomura analysts led by Taisuke Tanaka wrote in a report today.

‘Significant Possibility’

Federal Reserve Bank of Richmond President Jeffrey Lacker said yesterday the central bank should review whether to reduce its planned purchase of $600 billion in Treasuries, a program known as quantitative easing, because of improving economic data. New York Fed President William Dudley, Philadelphia Fed President Charles Plosser and Dallas Fed President Richard Fisher are scheduled to speak today.

“There’s a significant possibility that the Fed will move closer to exiting from quantitative easing,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “U.S. data have been getting better. The dollar is likely to strengthen.”

The Dollar Index increased for the first time in three days, adding 0.1 percent to 76.073.

The euro was set for a third weekly advance against the Japanese currency on speculation the European Central Bank will raise interest rates to contain inflation.

Euro, Won

The central bank will increase its main refinancing rate by 25 basis points to 1.25 percent on April 7, a Bloomberg survey of economists shows. ECB President Jean-Claude Trichet signaled on March 3 that he may raise rates this month.

“We are broadly constructive on the euro this year, especially as Trichet has now primed the markets for imminent interest-rate hikes,” Morgan Stanley analysts Tim Davis and Calvin Tse wrote in a research note yesterday. “Rate differentials should increasingly play in the euro’s favor.”

The euro has risen 3.3 percent against the yen in the past five days, after adding 8.5 percent in the quarter that ended yesterday.

The South Korean won appreciated against all of its 16 major counterparts as the improved outlook for the global economy boosted confidence in the country’s assets.

Foreign investors increased their holdings of Korean stocks for a 12th day, the longest run of net purchases this year, as the Kospi Index of the nation’s shares climbed 3.4 percent during the period.

“Global stocks, including South Korea’s, have been performing well on expectations for an economic improvement,” said Ha Jun Woo, a currency dealer at Daegu Bank in Seoul. “Stock inflows and the trade surplus are supporting the won.”

The won rose to 1,091.20 per dollar from 1,096.93, set for a 2.1 percent gain for this week.

To contact the reporters on this story: Emma Charlton in London at; Masaki Kondo in Tokyo at;

To contact the editor responsible for this story: Daniel Tilles at


Increases in U.S. Payrolls, Manufacturing Probably Were Sustained in March

March 31 (Bloomberg) -- David Cote, chief executive officer of Honeywell International Inc., talks with Judy Woodruff about the outlook for the U.S. economy and the crude oil market. (This is an excerpt from "Conversations With Judy Woodruff," which airs weekends on Bloomberg Television. Source: Bloomberg)

March 31 (Bloomberg) -- Anthony Dwyer, chief equity strategist at Collins Stewart, talks about the outlook for Federal Reserve monetary policy. Dwyer also discusses tomorrow's U.S. jobs report for March, the U.S. economy and stocks. He speaks with Matt Miller, Adam Johnson, Julie Hyman and Sheila Dharmarajan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

March 31 (Bloomberg) -- Anthony Crescenzi of Pacific Investment Management Co. talks about the outlook for the financial industry, demand for U.S. Treasuries and the state of the labor market. He speaks with Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg)

The pickup in U.S. employment was probably sustained in March, and factory assembly lines kept humming, showing that a jump in fuel costs has yet to choke the expansion, economists said before reports today.

Payrolls increased by 190,000 workers last month after a 192,000 advance in February that was the biggest in nine months, according to the median forecast of 83 economists surveyed by Bloomberg News. Manufacturing may have expanded at about the same pace as in February, the strongest month in almost seven years.

Record exports and gains in business and consumer spending are prompting companies like Chrysler Group LLC and Kohl’s Corp. (KSS) to boost staff, helping the U.S. weather the highest energy prices in more than two years. The improving economy encouraged Federal Reserve policy makers last month to signal they were unlikely to extend bond purchases beyond June.

“The improving trend in employment is a bright spot,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The private sector is picking up its hiring. The economy is on a firmer footing, but not yet on a firm footing.”

The Labor Department’s jobs numbers are due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from payroll increases of 150,000 to 295,000.

Private payrolls are forecast to rise by 208,000 in March after a 222,000 gain, according to the survey median, the biggest back-to-back increase since 2006. Manufacturing payrolls are forecast to rise by 30,000.

Jobless Outlook

Unemployment probably held at 8.9 percent, the lowest level in almost two years, according to the survey median. The rate dropped by 0.9 percentage point over the prior three months, the biggest decline in such a time span since 1983.

The March jobs reading will likely be the first of the year that wasn’t skewed by weather. Winter storms constrained payrolls in January, prompting a February rebound when temperatures were closer to normal for the month.

A report from the Tempe, Arizona-based Institute for Supply Management at 10 a.m. will show the purchasers’ factory index fell to 61 last month from 61.4 in February, its highest level since May 2004. The gauge climbed over 50, signaling growth, in August 2009, two months after the recession ended.

The manufacturing industries that account for 11 percent of the economy are likely to remain at the forefront of the recovery as businesses replenish inventories, the auto industry rebounds and China and other emerging markets boost imports of U.S.-made goods.

Auto Demand

Auto sales, after climbing for six consecutive months, reached the highest level in more than a year in February. Demand at General Motors Co. (GM), Chrysler and Toyota Motor Corp. (TOYOF) exceeded analysts’ estimates.

Chrysler, aiming for its first net profit since emerging from bankruptcy in 2009, plans to hire 1,000 engineers and high- tech workers for its small and midsized vehicles. The Auburn Hills, Michigan-based company is also urging its dealers to hire more salesmen and service workers to help boost sales 32 percent this year.

“Hiring additional personnel in preparation for the spring market is essential for success in 2011,” Peter Grady, vice president of Chrysler’s network development and fleet, said in a memo to dealers last month.

Kohl’s said this week that it plans to open a new e- commerce distribution center in Edgewood, Maryland, in July and hire 1,200 workers over the next three years.

Fuel Costs

Oil prices that closed at $106.72 yesterday, the highest since September 2008, may keep climbing should Middle East political turmoil continue unabated, raising the risk that consumer spending will slow in coming months.

U.S. companies are also still trying to gauge the effects of the March 11 earthquake in Japan and the subsequent nuclear crisis on international supply chains. Toyota expects assembly interruptions that may affect North America plants.

The Fed, after its latest policy meeting March 15, pledged to continue its program of purchasing $600 billion of bonds by June, in order to “promote a stronger pace of economic recovery.” Policy makers also said the economy was on “firmer footing” and acknowledged a rise in commodity prices, signaling deflation risk had diminished and they were unlikely to expand the bond purchase plan.

The housing industry that led the economy into recession in December 2007 remains a weak link in the recovery. Construction spending, due at 10 a.m., fell 0.2 percent in February after a 0.7 percent decline the prior month, economists forecast the Commerce Department will report.

                         Bloomberg Survey  ==============================================================                            Nonfarm  Private Unemploy      ISM                           Payrolls Payrolls     Rate     Manu                             ,000’s   ,000’s        %    Index ==============================================================  Date of Release              04/01    04/01    04/01    04/01 Observation Period           March    March    March    March -------------------------------------------------------------- Median                         190      208     8.9%     61.0 Average                        196      214     8.9%     61.0 High Forecast                  295      315     9.1%     64.0 Low Forecast                   150      165     8.7%     59.0 Number of Participants          83       42       80       79 Previous                       192      222     8.9%     61.4 -------------------------------------------------------------- 4CAST Ltd.                     215      240     8.9%     60.8 ABN Amro Inc.                  210      230     8.9%     61.0 Action Economics               185     ---      8.9%     60.0 Aletti Gestielle               190      205     8.9%     61.5 Ameriprise Financial           210      235     8.9%     59.8 Banesto                        220     ---      ---      61.1 Bank of Tokyo- Mitsubishi      170      187     8.8%     61.9 Bantleon Bank AG               180     ---      9.0%     61.3 Barclays Capital               175      190     8.9%     62.0 Bayerische Landesbank          180     ---      8.9%     61.2 BBVA                           195      220     8.9%     62.5 BMO Capital Markets            230     ---      8.9%     61.5 BNP Paribas                    180     ---      9.0%     61.0 BofA Merrill Lynch             160      185     9.0%     59.5                   175      200     9.0%     59.0 Capital Economics              175     ---      8.9%     60.0 CIBC World Markets             230     ---      8.9%     59.5 Citi                           250      265     9.0%     59.0 ClearView Economics            200      230     9.0%     60.0 Commerzbank AG                 200     ---      8.9%     61.0 Credit Agricole CIB            180     ---      8.9%     62.0 Credit Suisse                  200     ---      8.9%     61.4 DekaBank                       180     ---      9.0%     61.5 Desjardins Group               155     ---      9.0%     62.0 Deutsche Bank Securities       200     ---      8.9%     60.0 Deutsche Postbank AG           190     ---      8.9%     60.5 Exane                          230     ---      9.0%     61.0 Fact & Opinion Economics       235     ---      8.9%     61.5 First Trust Advisors           165      185     8.8%     61.2 FTN Financial                  200      225     8.9%     61.0 Goldman, Sachs & Co.           175     ---      8.9%     60.0 Helaba                         200     ---      8.9%     60.0 High Frequency Economics       175      200     ---      --- HSBC Markets                   175      190     8.9%     60.0 Hugh Johnson Advisors          180     ---      9.0%     62.0 IDEAglobal                     250      265     8.8%     63.0 IHS Global Insight             160      175     8.9%     61.6 Informa Global Markets         175     ---      8.9%     61.7 ING Financial Markets          170      185     8.9%     61.6 Intesa-SanPaulo                200     ---      8.9%     61.5 ITG Investment Research        185      200     ---      --- J.P. Morgan Chase              185      200     8.9%     61.0 Janney Montgomery Scott        201      222     8.9%     59.8 Jefferies & Co.                240      260     8.8%     62.0 Landesbank Berlin              250     ---      9.0%     62.0 Landesbank BW                  280     ---      8.8%     62.0 Maria Fiorini Ramirez          225      240     8.9%     60.0 MET Capital Advisors           200     ---      8.9%     62.0 MF Global                      175      195     9.0%     61.5 Mizuho Securities              175     ---      8.9%     60.0 Moody’s Analytics              190      200     9.0%     60.7 Morgan Keegan & Co.            162     ---      8.9%     --- Morgan Stanley & Co.           180     ---      9.0%     61.0 National Bank Financial        150     ---      9.0%     61.0 Natixis                        180     ---      8.9%     60.5 Newedge                        200      230     8.9%     61.6 Nomura Securities              225     ---      8.9%     61.6 Nord/LB                        180      210     8.9%     59.0 OSK Group/DMG                  190     ---      9.0%     60.6 Paragon Research               220     ---      9.0%     --- Parthenon Group                246     ---      8.9%     60.5 Pierpont Securities            210      225     8.9%     61.8 PineBridge Investments         235     ---      8.9%     61.5 PNC Bank                       220      222     9.1%     62.5 Prestige Economics             165      180     8.9%     61.0 Raiffeisenbank International   185      210     8.9%     61.4 Raymond James                  165      190     8.9%     62.2 RBC Capital Markets            168      180     8.8%     62.7 RBS Securities Inc.            180      200     9.0%     61.0 Scotia Capital                 170     ---      8.9%     60.5 Societe Generale               295      315     8.7%     62.0 Standard Chartered             195      230     8.9%     64.0 State Street Global Markets    192      206     8.9%     60.4 Stone & McCarthy Research      150      165     8.8%     62.0 TD Securities                  200      210     9.0%     62.0 UBS                            205      225     8.8%     62.0 UniCredit Research             160     ---      9.1%     60.0 Union Investment               201     ---      8.8%     61.0 University of Maryland         163      183     8.9%     60.2 Wells Fargo & Co.              220     ---      8.8%     60.0 WestLB AG                      195     ---      8.9%     60.0 Westpac Banking Co.            160     ---      9.1%     59.0 Wrightson ICAP                 275      290     8.8%     60.5 ============================================================== 

To contact the reporter on this story: Bob Willis in Washington at

To contact the editor responsible for this story: Christopher Wellisz at


Oil Leads Quarterly Gains on Middle East Unrest as Earthquake Saps Stocks

An Oil Pumpjack

Oil’s biggest advance in two years led commodities to a third straight quarterly gain as political turmoil erupted in the Middle East and north Africa, while stocks were curbed by Japan’s strongest earthquake on record. Photographer: Noah Friedman-Rudovsky/Bloomberg

Oil’s biggest advance in two years led commodities to a third straight quarterly gain as political turmoil erupted in the Middle East and north Africa, while stocks were curbed by Japan’s strongest earthquake on record.

Brent jumped 5 percent in March for a three-month gain of 24 percent, helping to drive the Standard & Poor’s GSCI Total Return Index 12 percent higher. The MSCI World Index of stocks fell 1.2 percent last month, paring its quarterly advance to 4.3 percent. Bonds were little changed and the Dollar Index, a gauge of the currency against those of six major U.S. trading partners, lost 3.8 percent.

Rising food prices sparked protests in Tunisia and Egypt and fighting erupted in Libya as unrest swept across a region that produces about 35 percent of the world’s oil. Central banks from China to Brazil raised interest rates, while Japan grappled with the worst nuclear crisis since the 1986 Chernobyl disaster following the March 11 quake that left more than 27,000 people dead or missing. Government bonds may fall through the rest of the year, while stocks and oil extend gains, according to data compiled by Bloomberg.

“The two largest themes have been Middle East-North Africa unrest and the Japan quake,” said Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York. “These two things will have important implications for markets over the next quarters and years. We’ve lost a lot of oil supply. The potential for unrest doesn’t stop in Libya.”

Dwindling Returns

The quarterly gain in the MSCI World (MXWO) Index was the third straight, as investors bet radiation leaks from the Fukushima Dai-Ichi nuclear plant following the magnitude-9 quake and tsunami would hamper industrial production and sap growth. The Nikkei 225 (NKY) Stock Average slid 8.2 percent in March, ending a four-month rally and producing a quarterly drop of 4.6 percent. Tokyo Electric Power Co., which runs the plant, lost 78 percent.

The Standard & Poor’s 500 Index climbed 5.4 percent, following gains exceed 10 percent in the previous two quarters. The Stoxx Europe 600 Index was little changed in the quarter, as was the U.K.’s FTSE 100 Index. The MSCI Asia Pacific Index ended the quarter down 1.4 percent, its first loss since dropping 9.8 percent in the three months ended June 30, 2010.

The S&P 500 will climb a further 7.5 percent by the end of the year, according to the median of 13 strategists’ estimates compiled by Bloomberg.

‘Supporting Markets’

“It is remarkable to me how well stocks have done, given all the headlines,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “I suspect it’s the largesse of central banks and federal governments that they’ve been pretty much supporting their markets for years now. So far this year, we think negative in bonds, positive in stocks and commodities.”

Global sovereign, corporate, asset-backed and mortgage bonds lost 0.07 percent this quarter through March 30, after tumbling 1.64 percent in the final three months of 2010, the worst performance since losing 1.67 percent in the three months ended June 30, 2008, according to Bank of America Merrill Lynch’s Global Broad Market Index.

U.S. government bonds fell 0.14 percent, extending a 2.7 percent drop in the final three months of 2010, Bank of America Merrill Lynch’s Treasury Master Index shows. German bunds slipped 2.23 percent, following a loss of 2.64 percent in the prior quarter. Portugal’s debt tumbled 8.26 percent as speculation the nation would be the third nation in the euro region to seek a bailout sent yields to all-time highs.

Central Bank Stimulus

Government bonds are falling amid speculation that the world’s major central banks may soon end unprecedented monetary stimulus. European Central Bank President Jean-Claude Trichet said in March that interest rates in the region may rise as soon as this month. Federal Reserve Bank of St. Louis President James Bullard said policy makers should consider curtailing purchases of Treasuries earlier than planned as the economy strengthens.

“If the economy is as strong as I think and hope it will be in 2011, I think it will be time for us to start to reverse our ultra-aggressive and ultra-easy monetary policy,” Bullard told reporters at a financial conference in Prague this week. “We could pull up a little bit shy of our total” of $600 billion in purchases through June, he said.

The yield on the benchmark 10-year Treasury note may rise 42 basis points to 3.89 percent by year-end, from 3.47 percent on March 31, according to the median of 63 strategists’ forecasts compiled by Bloomberg.

America’s Economy

America’s economy, the world’s largest, may expand 3.1 percent this year, up from 2.9 percent in 2010 and the most since 2005, according to the median estimate of 68 analysts surveyed by Bloomberg. Goldman Sachs Group Inc. forecasts a global economic expansion of 4.8 percent this year, while JPMorgan Chase & Co. predicts 4.4 percent. The average over the past two decades is 3.4 percent.

The People’s Bank of China raised interest rates last month for the third time since mid-October. Policy makers in Brazil lifted the nation’s benchmark rate a second consecutive time in March. Central banks in India, Russia, Sweden, Poland, South Korea, Peru, Chile, the Philippines, Thailand and Israel also increased borrowing costs.

IntercontinentalExchange Inc.’s Dollar Index, fell to 75.996, from 79.028 at the end of 2010. The measure dropped to 75.249 on March 22, the lowest level since December 2009.

Sweden, Japan

The Swedish krona rose the most against the dollar among the 16 most-widely traded currencies, appreciating 6.13 percent, followed by the euro’s 5.78 percent gain. The Dollar Index is likely to slip a further 0.3 percent by year-end, a Bloomberg survey showed.

Japan’s yen fell the most, weakening 2.42 percent, while New Zealand’s dollar depreciated 2.4 percent as that nation dealt with the aftermath of its own earthquake.

The yen depreciated tumbled as Group of Seven nations sold the currency on March 18 after it reached its strongest level since World War II. The yen surged in the days following the earthquake on speculation investors would repatriate funds to help the reconstruction effort. It tumbled the most in more than two years against the dollar on the day of the sales.

The euro strengthened against 15 of the 16 major currencies as the prospect of higher interest rates overshadowed concern that the sovereign-debt crisis will worsen. It may weaken to $1.35 by year-end, from $1.4158 yesterday, according to the median of 39 analysts’ forecasts compiled by Bloomberg.

Crude, Cotton

Crude and refined products posted three of the four biggest gains among the 24 materials on the GSCI Index, as anti- government protests in Libya, home to Africa’s largest oil reserves, turned into an armed conflict. Gasoil climbed about 28 percent and gasoline about 24 percent. Brent may decline to $100 a barrel by year-end, from $117.36 in London yesterday, according to forecasts compiled by Bloomberg.

Cotton, which has a 1.1 percent weighting in the gauge, had the biggest increase, rising 39 percent, on surging export demand for U.S. supplies amid crop damage in China and India, the biggest producers. Cotton may still drop about 50 percent to $1 a pound by Dec. 31, according to the median forecast in a Bloomberg survey of 14 analysts and traders.

“The amplitude of the cotton price increase was a real surprise,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It’s been a very divided quarter for commodity markets. It started on a very positive note on recovery hopes. On agriculture in general, the sentiment in the first weeks of this year was extremely optimistic. Then the turmoil in North Africa, and under pressure from what’s going on in Japan, the whole tenor of the market reversed.”

Production ‘Trickle’

Oil production in Libya fell to a “trickle” as fighting between rebels and soldiers loyal to Muammar Qaddafi forced companies to suspend operations, the Paris-based International Energy Agency said. The country pumped 1.6 million barrels a day in January, about 1.8 percent of global production.

Silver jumped about 20 percent during the quarter, trading at the highest level since 1980. Lean hogs gained on speculation of increased demand for U.S. pork supplies from Japan after elevated levels of radioactivity were discovered in milk and vegetables in parts of the country.

Raw sugar futures, wheat and rice all declined. Copper slid on the London Metal Exchange, and gold for immediate delivery advanced 0.8 percent to $1,432.30 an ounce, after reaching a record $1,447.82 March 24.

Emerging Markets

In emerging markets, Hungarian stocks were the best performers, with the BUX Index gaining 8 percent. The forint appreciated 9.8 percent against the dollar as the government promised to reduce spending and delay tax cuts.

Russia’s Micex Index jumped 7.4 percent as investors bet the world’s biggest energy exporter would benefit from gains in oil. Holders of ruble-denominated bonds earned 10.4 percent in the quarter, the strongest performance since the second quarter of 2009 and topping the 1.8 percent average for emerging markets, according to the JPMorgan Chase & Co. GBI-EM Unhedged Index. The MSCI Emerging Markets Index advanced 1.7 percent.

The first quarter “could be split down the middle with roughly the first 45 days representing an attempt to get exposure across that board and the final 45 days being a period of correction and consolidation,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “There have been some dramatic headlines accompanying this latter period, but for the majority of the U.S. equity market they strike us as fairly irrelevant.”

To contact the reporters on this story: Grant Smith in London at

To contact the editor responsible for this story: Stephen Voss on


Corn Extends Advance on Concern Higher U.S. Acreage Won't Boost Stockpiles

Corn futures jumped to the highest in almost a month, after surging the most allowed by the exchange yesterday, on concern an expansion in plantings in the U.S. won’t be enough to rebuild global stockpiles.

May-delivery corn advanced as much as 5.9 percent to $7.34 a bushel, the highest price for the most-active contract on the Chicago Board of Trade since March 4. The contract traded at $7.31 a bushel at 2:52 p.m. in Singapore, set for a 6.1 percent advance this week.

U.S. stockpiles at the beginning of March dropped to 6.52 billion bushels, the lowest for the date since 2007, the country’s Department of Agriculture said yesterday. Farmers will sow corn on about 92.178 million acres (37.3 million hectares), the second-largest since 1944, as profits rise while increasing demand for food and biofuel cuts world stockpiles, the USDA said.

“While the increase in area could be seen as bearish, the figure was overshadowed by the shock in the grain stocks report,” Rabobank Agri Commodity Markets Research said in a report e-mailed today. “The new crops are not expected to replenish inventories to any meaningful extent, keeping prices in the new season high.”

Global food costs climbed to a record in February, a United Nations index showed. High food prices and corruption have spurred unrest in northern Africa and the Middle East this year, triggering the ouster of leaders in Tunisia and Egypt. The U.S. is the biggest exporter of corn, soybeans and wheat.

Dwindling Stockpiles

Even with the expansion in acreage, which may take the U.S. corn harvest to a record, the nation’s stocks-to-use ratio in the 2011-2012 season will still be the second-lowest since the 1995-1996 season, according to Rabobank.

The U.S. is estimated to account for 39 percent of the global corn harvest in the 2010-2011 season, according to a USDA estimate on March 10.

Soybeans for May delivery were little changed at $14.0875 a bushel, after advancing 2.8 percent yesterday, the biggest closing gain since March 17. The contract is set for a 3.7 percent advance this week.

U.S. farmers will cut soybean acres by 1 percent to 76.609 million, the USDA said, close to analysts’ expectations. The nation is estimated to represent 35 percent of the global harvest of the oilseed in the current season, USDA data last month showed. Inventories as of March 1 dropped 1.7 percent from a year earlier to 1.249 billion bushels, the USDA said.

Wheat for May delivery declined 0.5 percent to $7.5925 a bushel in Chicago, after surging 5 percent yesterday. It is set for a 3.6 percent gain this week.

Total wheat acres in the U.S. may expand 8.2 percent from last year to 58.021 million compared with analysts’ expectations of 57.239 million. About 14.427 million acres will be planted with spring wheat, up 5.3 percent from last year, the USDA said.

To contact the reporter on this story: Luzi Ann Javier in Singapore at

To contact the editor responsible for this story: James Poole at


U.S. Stocks Fall as S&P 500 Trims Biggest First-Quarter Advance Since 1998

Former Midamerican Energy Chairman David Sokol

David Sokol, former Midamerican Energy Chairman David Sokol. Photographer: Daniel Acker/Bloomberg

March 31 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks fell, trimming the biggest first-quarter rally for the Standard & Poor’s 500 Index since 1998, as a Federal Reserve official said interest rates may need to rise and concern about Europe’s debt crisis grew. Bloomberg's Julie Hyman also speaks. (Source: Bloomberg)

March 31 (Bloomberg) -- Anthony Dwyer, chief equity strategist at Collins Stewart, talks about the outlook for Federal Reserve monetary policy. Dwyer also discusses tomorrow's U.S. jobs report for March, the U.S. economy and stocks. He speaks with Matt Miller, Adam Johnson, Julie Hyman and Sheila Dharmarajan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

U.S. stocks fell, trimming the biggest first-quarter rally for the Standard & Poor’s 500 Index since 1998, as a Federal Reserve official said interest rates may need to rise and concern about Europe’s debt crisis grew.

Berkshire Hathaway Inc. (BRK/A) lost 2.1 percent as David Sokol, once a candidate to succeed Warren Buffett as the head of the investment firm, resigned. CarMax Inc. (KMX) slumped 7.2 percent after the largest U.S. seller of used cars said margins shrunk. Home Depot Inc. (HD), Intel Corp. and American Express Co. (AXP) fell more than 1.3 percent to lead losses in the Dow Jones Industrial Average.

The S&P 500 fell 0.2 percent to 1,325.83 at 4 p.m. in New York and advanced 5.4 percent during the January-March period. The Dow average dropped 30.88 points, or 0.3 percent, to 12,319.73 today. Stocks extended losses late in the session as Fed Bank of Minneapolis President Narayana Kocherlakota told the Wall Street Journal that policy makers may have to lift rates to fight inflation.

“That kind of brought the market back to reality,” Michael Nasto, senior trader at U.S. Global Investors Inc., which manages $3 billion in San Antonio, Texas, said of Kocherlakota’s comments. “We had a negative tone set. It’s another example of people being a little bit timid about going to the market simply because of what they’re hearing.”

Equities fell earlier after Irish regulators instructed four banks to raise 24 billion euros ($34 billion) in additional capital following a stress test on the nation’s lenders. Portugal reported a budget deficit of 8.6 percent of gross domestic product last year, higher than a government target of about 7 percent. In the U.S., jobless claims topped economist estimates a day before the Labor Department’s monthly labor data.

First-Quarter Gains

The S&P 500 usually climbs further following first-quarter gains similar to this year’s, according to Birinyi Associates Inc. The index has risen about 7.1 percent in the final three quarters of years following January-March gains of 5 percent to 7 percent, Birinyi data dating back to 1928 show.

The benchmark gauge of U.S. stocks is trading for about 13.7 times its companies’ estimated operating earnings, compared with an average multiple of 18.1 times reported profits over the last decade, data compiled by Bloomberg show.

Jobless claims fell by 6,000 to 388,000 in the week ended March 26, the Labor Department said. The median forecast of economists in a Bloomberg survey was for a decline to 380,000 claims. The report comes before tomorrow’s monthly government report on non-farm payrolls, expected to show that the economy added 190,000 jobs in March.

Economy Watch

Other reports showed U.S. factory orders unexpectedly fell 0.1 percent after a 3.3 percent gain in January, the Commerce Department said today. The Institute for Supply Management- Chicago Inc.’s business barometer fell in March. The Bloomberg Consumer Comfort Index rose for the first time in five weeks to minus 46.9 in the period ended March 27 from a seven-month low of minus 48.9 the prior week.

Berkshire Hathaway Class B shares fell 2.1 percent to $83.63. Sokol bought about 96,000 Lubrizol Corp. shares in January before recommending the company as a takeover target, according to a statement late yesterday from Buffett, Berkshire’s chairman and chief executive officer. Sokol had initiated confidential talks with Lubrizol the month before. Berkshire agreed to buy the firm for $9 billion on March 14.

CarMax slumped 7.2 percent to $32.10, its biggest decline of the year. The largest U.S. seller of used cars said gross margin for the fourth-quarter fell to 14.2 percent from 14.5 percent in the year-ago period.

Dow Movers

Home Depot, the largest U.S. home-improvement retailer, fell 1.4 percent to $37.06. American Express, the biggest credit-card issuer by purchases, slid 1.6 percent to $45.20.

Intel Corp. (INTC), the world’s largest chipmaker, fell 1.4 percent to $20.18 after FBR Capital Markets said in a note to clients the world’s largest chipmaker faces slower-than-expected growth in the personal-computer market during the second quarter and its Sandy Bridge products are not stimulating as much demand as anticipated.

American International Group Inc. (AIG) fell 2.5 percent to $35.14 after the Federal Reserve Bank of New York said it has declined the insurer’s $15.7 billion offer to purchase the residential-mortgage backed securities owned by the central bank’s Maiden Lane II LLC rescue fund.

U.S. Steel, Rowan

U.S. Steel Corp. declined 4.2 percent to $53.94 after the Pittsburgh-based company was added to Deutsche Bank AG’s short- term sell list.

Rowan Cos. advanced 3 percent to $44.18 after Moody’s changed the offshore driller’s outlook to “stable” from “negative.”

CF Industries Holdings Inc. (CF), the world’s second-largest maker of nitrogen fertilizer, rallied 3.2 percent to $136.79. The U.S. Department of Agriculture reported corn acreage this year will be the second largest since 1944 as increasing demand for food and fuel cuts stockpiles worldwide.

XL Group Plc (XL) added 4 percent to $24.60 after Egan-Jones Ratings Co. said the insurer stands good chance of a takeover by Berkshire Hathaway or other stronger peers.

The rebound in the S&P 500 isn’t over, according to Bay Crest Partners LLC. When the S&P 500 slipped to 1,249.05 on March 16, the weekly survey from the American Association of Individual Investors showed the next day that the ratio of bulls to bears fell to 0.71, the lowest since Aug. 26, Bloomberg data show. Christian Bendixen, director of technical research at Bay Crest, said the increase in pessimism may reverse and help the S&P 500 climb to 1,425, or 7.3 percent above yesterday’s close.

“We have some good reasons to want to own stocks,” said Perry Piazza, director of investment strategy at Contango Capital Advisors in San Francisco, who helps oversee about $3.3 billion of assets. “We know the energy and materials sectors are doing really well, we know the dollar is weak, we know that individual investors are interested again in coming back to the stock market. I don’t think it’s time to take your chips off the table yet.”

To contact the reporter on this story: Cecile Vannucci in New York at

To contact the editor responsible for this story: Nick Baker at


Brown & Brown, Global Payments, Krispy Kreme, Xyratex: U.S. Equity Preview

Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Alexander & Baldwin Inc. (ALEX) : Bill Ackman’s Pershing Square Capital LP reported a stake of about 9.9 percent in the parent of ocean-transport company Matson Navigation and plans to start talks with the company, according to a regulatory filing.

Brown & Brown Inc. (BRO) : The family-run insurance broker agreed to buy First Horizon National Corp. (FHN US). The deal is likely to close in late April, according to a statement.

Cascade Corp. (CASC) : The maker of equipment for forklifts posted fourth-quarter earnings that fell short of the average analyst estimate, Bloomberg data show.

Christopher & Banks Corp. (CBK) : The Minnesota-based women’s clothing retailer said its fourth-quarter loss will be at least 41 cents a share, wider than the average analyst projection for a loss of 31 cents, according to a Bloomberg survey.

Exfo Inc. (EXFO) : The maker of equipment for the telecommunications industry said third-quarter revenue will be no more than $72 million. Analysts project $73.2 million on average, Bloomberg data show.

GameStop Corp. (GME) : The world’s largest video-game retailer said it is buying Spawn Labs, a streaming technology company, and has an agreement to buy Impulse Inc., a digital distribution business.

Global Payments Inc. (GPN) : The provider of card- processing services increased the bottom range of its annual revenue forecast to $1.8 billion to match the average forecast of analysts surveyed by Bloomberg. Earnings may be as low as $2.70 a share, compared with the average projection of $2.75 a share.

Krispy Kreme Doughnuts Inc. (KKD) : The doughnut chain posted fourth-quarter sales that fell short of the average of analyst estimates, Bloomberg data show. The company also reiterated its 2012 forecast for operating income.

Resources Connection Inc. (RECN) : The provider of legal and accounting services said third-quarter net income was 2 cents a share, falling short of the average analyst estimate of 6 cents, according to Bloomberg data. Revenue also missed projections.

Xyratex Ltd. (XRTX) : The provider of data storage and network technology said it will earn 6 cents a share at most in the second quarter. Analysts projected a profit of 27 cents a share, Bloomberg data show.

To contact the reporter on this story: Whitney Kisling in New York at

To contact the editor responsible for this story: Nick Baker at


Asian Stocks Decline as Exporters Drop; Woodside Leads Oil Stocks' Advance

Asian stocks declined, dragging the regional benchmark index lower for the first time in three days, as exporters dropped after a Federal Reserve official said interest rates made need to rise to curb inflation.

Nintendo Co., the maker of Wii game consoles that counts America as its biggest market, and Honda Motor Co., which gets about 44 percent of sales from North America, lost at least 1.4 percent. U.S. payroll reports will be released later today. Tokyo Electric Power Co., operator of a nuclear plant crippled after an earthquake and tsunami on March 11, slipped 3.7 percent as speculation grew the company will be nationalized. China Railway Group Ltd. (601390), the country’s No. 2 heavy construction firm, declined 5.6 percent after JPMorgan Chase & Co. cut its rating.

“Investors are sitting on the sidelines, waiting for the U.S. jobs data due out tonight,” said Manpreet Gill, Singapore- based Asian strategist at Barclays Wealth. “It’s premature to raise interest rates in the U.S. as the labor market is recovering very slowly.”

The MSCI Asia Pacific Index lost 0.1 percent to 135.61 as of 3:40 p.m. in Tokyo, paring losses of as much as 0.4 percent earlier. About the same number of stocks rose as fell in the index, which is set for a 1 percent advance this week. The gauge last week had its biggest weekly gain since November as Japan moved to stabilize nuclear reactors damaged by the earthquake, and as companies from Cnooc Ltd. (883) to Bank of China Ltd. reported earnings that surpassed estimates.

China, South Korea Data

Japan’s Nikkei 225 (NKY) Stock Average dropped 0.5 percent. Hong Kong’s Hang Seng Index gained 0.4 percent. China’s Shanghai Composite Index both advanced 1.1 percent as the nation’s manufacturing growth accelerated for the first time in four months, easing concern that monetary tightening may lead to a slowdown in the world’s second-biggest economy.

South Korea’s Kospi Index gained 0.7 percent to a record close as the country’s inflation climbed to the highest level in 29 months and exports reached a record in March, adding pressure for another interest-rate increase. Australia’s S&P/ASX 200 Index both climbed 0.5 percent. New Zealand’s NZX 50 Index increased 0.4 percent.

Futures on the Standard & Poor’s 500 Index were little changed today. The index fell 0.2 percent yesterday after Fed Bank of Minneapolis President Narayana Kocherlakota told the Wall Street Journal that policy makers may have to lift rates to fight inflation.

A Labor Department report today may show total U.S. non- farm payrolls rose 190,000 in March and the unemployment rate held at 8.9 percent, economists predict. The jobless rate fell below 9 percent in February for the first time in 22 months.

Exporters Drop

Nintendo dropped 1.4 percent to 22,160 yen in Tokyo. Honda Motor Co., Japan’s second-biggest carmaker, declined 2.4 percent to 3,050 yen. Li & Fung Ltd. (494), the largest supplier to Wal-Mart Stores Inc., declined 0.1 percent to HK$39.80 in Hong Kong.

Tokyo Electric Power Co., operator of the crippled Fukushima Dai-Ichi nuclear power plant, slipped 3.7 percent to 449 yen. Japan’s government hasn’t ruled out the possibility of investing in Tokyo Electric, Chief Cabinet Secretary Yukio Edano said.

The company faces claims of as much as 11 trillion yen ($131.5 billion), if the crisis lasts two years, that could lead to nationalization, a Bank of America Merrill Lynch report said this week.

China Railway Group dropped 5.6 percent to HK$4.74, the worst performer on the MSCI Asia Pacific Index. JPMorgan lowered its rating to “underweight” from “overweight.” China Railway Construction Corp., the country’s third-largest heavy construction company by market capitalization, dropped 4.5 percent to HK$7.72, its lowest level since October 2008, after also being downgraded to ‘underweight’ by JPMorgan.

Acer Inc. (2353), the world’s second-largest maker of personal computers, tumbled 4.8 percent to NT$57.1. The company said yesterday said Chief Executive Officer Gianfranco Lanci resigned after clashing with board members over the company’s strategy.

Energy Stocks Rally

Among stocks that advanced, Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, increased 1.3 percent to A$47.40 in Sydney. Royal Dutch Shell Plc might be holding talks with BHP Billiton Ltd., Mitsui & Co. Ltd. and Mitsubishi Corp. for a sale of its 24 percent stake in Woodside, the Australian Financial Review reported in its Street Talk column, without citing anyone.

Cnooc Ltd., China’s biggest offshore oil producer gained 2.6 percent to HK$20.10 in Hong Kong. Inpex Corp. (1605), Japan’s No.1 energy explorer jumped 4.3 percent to 658,000 yen.

Crude oil for May delivery climbed 2.4 percent to $106.72 a barrel yesterday, the highest settlement since Sept. 26, 2008, in New York amid concern the Libyan conflict will prolong production cuts.

Ping An Insurance (Group) Co., China’s second-largest insurer, jumped 4.1 percent to HK$82.10. Daiwa Securities Group Inc. raised its share-price forecast to HK$124.47 from HK$109.14 and maintained its “buy” rating.

To contact the reporters on this story: Jonathan Burgos in Singapore at

To contact the editor responsible for this story: Nick Gentle at