Economic Calendar

Saturday, September 10, 2011

AOL Said to Discuss Deal With Yahoo Advisers

By Brett Pulley and Douglas MacMillan - Sep 10, 2011 3:47 AM GMT+0700

AOL Said to Discuss Deal With Yahoo Advisers After Bartz

AOL Inc. signage is displayed outside the company's headquarters building in New York. Photographer: Jin Lee/Bloomberg

Sept. 9 (Bloomberg) -- Paul Kedrosky, author of the Infectious Greed blog and a Bloomberg contributing editor, talks about the possibility of a merger between AOL Inc. and Yahoo! Inc. AOL Chief Executive Officer Tim Armstrong is talking with advisers to Yahoo to gauge its interest combining the companies, according to two people familiar with the matter. Kedrosky speaks with Emily Chang and Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Sept. 8 (Bloomberg) -- Jordan Rohan, an analyst at Stifel Nicolaus & Co., talks about the outlook for Yahoo! Inc. Rohan speaks with Betty Liu and Jon Erlichman on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Tim Armstrong, chief executive officer of AOL Inc. Photographer: Brendan Smialowski/Bloomberg

AOL Inc. (AOL) Chief Executive Officer Tim Armstrong is talking with advisers to Yahoo! Inc. to gauge its interest in combining the companies after the ouster of CEO Carol Bartz, according to two people familiar with the matter.

Armstrong is discussing options for a combination aimed at strengthening the two Internet companies, said the people, who wouldn’t be identified because the talks aren’t public. He has talked with private equity firms and investment bankers from Allen & Co. working with Yahoo, one person said.

Armstrong had been interested in a merger with Yahoo last year and was rebuffed while Bartz was at the helm, one person said. Her departure prompted him to reconsider the option, and, under one scenario now being considered, Yahoo would acquire AOL and Armstrong would become CEO of the combined company, the person said.

Yahoo is unlikely to be interested in a deal for AOL at this time given the company’s losses and declining revenue, according to one person familiar with the matter. AOL’s market value is about $1.6 billion, while Yahoo’s is about $18.2 billion.

Graham James, a spokesman for AOL, and Kim Rubey, spokeswoman for Yahoo, declined to comment.

AOL and Yahoo have been struggling to compete against Internet companies such as Google Inc. (GOOG) and Facebook Inc. AOL has lost almost $800 million since it was spun off from Time Warner Inc. (TWX) in 2009. The Internet pioneer has struggled to make money from online advertising as its profitable dial-up Internet access business declines. AOL is also using Allen & Co. to consider its strategic options.

Yahoo’s Decline

Yahoo, the most-visited U.S. Web portal, fired Bartz on Sept. 6, after less than three years as CEO. Once an $80 billion company, Yahoo has fallen more than 80 percent as it lost Internet users and advertising revenue to Google and Facebook. Bartz was hired after Yahoo rejected a $47.5 billion offer from Microsoft Corp. (MSFT) in 2008.

Yahoo has been working with Allen & Co. and UBS AG for some time, according to Charles Sipkins, a spokesman for Yahoo’s board.

AOL, based in New York, fell 82 cents, or 5.3 percent, to $14.72 at 4 p.m. on New York Stock Exchange. Sunnyvale, California-based Yahoo rose 4 cents to $14.48 on the Nasdaq Stock Market.

To contact the reporters on this story: Brett Pulley in New York at; Douglas MacMillan in San Francisco at

To contact the editors responsible for this story: Tom Giles at; Peter Elstrom at


Greece Dismisses Default ‘Rumors,’ Says Country Committed to Bailout Pact

By Marcus Bensasson - Sep 10, 2011 1:14 AM GMT+0700

Greece Committed to ‘Full Implementation’ of Bailout

The main headquarters of the Greek Finance Ministry sit in Athens. Photographer: Kostas Tsironis/Bloomberg

Sept. 9 (Bloomberg) -- Vincent Truglia, managing director at Granite Springs Asset Management, talks about the likelihood of a possible default on Greek sovereign debt. Finance Minister Evangelos Venizelos dismissed “rumors” of a Greek default, saying the nation is committed to “full implementation” of the terms of a July agreement for a second aid package. Truglia speaks with Lisa Murphy on Bloomberg Television's "Fast Forward." (Source: Bloomberg)

Sept. 9 (Bloomberg) -- Axel Merk, president and chief investment officer of Merk Investments LLC, talks about his decision to sell the euro. Merk also discusses Greece's sovereign debt crisis. He speaks with Matt Miller, Carol Massar and Peter Cook on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Sept. 9 (Bloomberg) -- German lawmaker Otto Fricke, the budget spokesman for Chancellor Angela Merkel's Free Democratic Party coalition partner, talks about political solutions to the Greek debt crisis. He speaks from Berlin with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)

Finance Minister Evangelos Venizelos dismissed “rumors” of a Greek default, saying the nation is committed to “full implementation” of the terms of a July agreement for a second aid package.

“This isn’t the first time that this organized wave of rumors over Greece’s default has appeared,” Venizelos said in an e-mailed statement today. “This is a game that’s in bad taste, organized speculation that is directed against the euro region and the euro as a whole.”

Stocks sank and the euro slid to a six-month low against the dollar today as three German officials said that Chancellor Angela Merkel’s government is preparing plans to shore up banks should Greece default. Investors are concerned that Greece isn’t implementing austerity moves fast enough to get a sixth payment from last year’s 110 billion-euro ($151 billion) bailout.

Greece committed is to the “full implementation” of the decisions of a July 21 summit for a second aid package worth 159 billion euros, as well as “its obligations arising from its agreements with its institutional partners,” Venizelos said.

Greece this week pledged to accelerate measures pledged in return for international financing, with EU and International Monetary Fund officials due to return to Athens next week to resume a suspended review of the country’s fiscal performance.

Responses from banks invited to participate in a 50 billion-euro debt swap program that forms part of the July 21 agreement have been “very positive,” Petros Christodoulou, head of the country’s debt management office, said in a telephone interview today. The government is looking for financial institutions holding 90 percent of Greek government debt expiring up to 2014 to take part in the program.

To contact the reporter on this story: Marcus Bensasson in Athens at

To contact the editor responsible for this story: Craig Stirling at


Copper Tumbles Most in a Month as Obama, Bernanke Fail to Boost Confidence

By Yi Tian and Agnieszka Troszkiewicz - Sep 10, 2011 1:04 AM GMT+0700

Copper tumbled the most in a month as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke failed to boost investor confidence in the economy.

Global equities dropped as Bernanke stopped short of detailing new plans to boost growth in the world’s largest economy in a speech yesterday, making no reference to further asset purchases by the central bank. Obama called on Congress to pass a plan that would inject $447 billion into the economy. The U.S. is the world’s biggest copper consumer after China.

“Obama’s plan is just not convincing enough,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Bernanke also disappointed investors. A lot of risk assets are lower. We will have more downside in the copper market.”

Copper futures for December delivery declined 14.1 cents, or 3.4 percent, to close at $4.0025 a pound at 1 p.m. on the Comex in New York, the biggest loss since Aug. 8. The metal slumped 3 percent for the week, the first decline in three weeks.

“There is residual disappointment in the market that QE3 has not been announced,” Stephen Briggs, an analyst at BNP Paribas SA in London, said by telephone today, referring to a third round of so-called quantitative easing. The “Obama job proposal was not earth-shattering, so perhaps slight disappointment there.”

On the London Metal Exchange, copper for delivery in three months dropped $294, or 3.2 percent, to $8,821 a metric ton ($4 a pound).

Aluminum, nickel, zinc, tin and lead also fell.

To contact the reporters on this story: Yi Tian in New York at; Agnieszka Troszkiewicz in London at

To contact the editor responsible for this story: Steve Stroth at


Gold Futures Rally as World Economy, Debt Concerns Spur Demand for a Haven

By Debarati Roy - Sep 10, 2011 1:55 AM GMT+0700

Gold futures rose for the second straight day in New York as renewed concern that the Greek debt crisis will worsen and signs of a slowing global economy spurred demand for the metal as a store of value.

The MSCI All-Country World Index fell as much as 3.1 percent, and the Standard & Poor’s 500 Index slipped 3.1 percent after German Chancellor Angela Merkel’s government said it is preparing plans to shore up banks in the event that Greece fails to meet the terms of its aid package and defaults. President Barack Obama yesterday proposed a $447 billion plan to create jobs and boost the U.S. economy.

“The Greece problem is huge, and people also are skeptical about how much of Obama’s plan will be translated into action,” Frank Lesh, a trader at FuturePath Trading, said in a telephone interview from Chicago. “Equities are tumbling, and the flight to safety has begun.”

Gold futures for December delivery gained $2, or 0.1 percent, to settle at $1,859.50 an ounce at 1:49 p.m. on the Comex in New York. This week, the price fell 0.9 percent after the metal surged to a record $1,923.70 on Sept. 6. After today’s close, the metal slid to $1,847.30 in electronic trading.

Budget-Cutting Plans

Obama, speaking before a joint session of Congress, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners. Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss the tools they may need to use to aid the recovery at their meeting this month.

Canadian Finance Minister Jim Flaherty said Greece may have to leave the euro if it fails to press ahead with its budget- cutting plans.

Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal has rallied 31 percent this year, outperforming global stocks, commodities and Treasuries.

Yesterday, CME Group Inc., the parent company of the Comex, raised the margin requirement for the Cleared OTC London Gold Forwards contract to $9,450 per contract, the same level as that for New York gold futures. The OCT contract had no trading volume or open interest, according to data on the CME website.

Silver futures for December delivery fell 90.6 cents, or 2.1 percent, to settle at $41.624 an ounce on the Comex. The price slid 3.4 percent this week, narrowing this year’s gain to 35 percent.

On the New York Mercantile Exchange, platinum futures for October delivery declined $16.60, or 0.9 percent, to $1,837.90 an ounce. Palladium futures for December delivery retreated $26.70, or 3.5 percent, to $738.60 an ounce.

To contact the reporter on this story: Debarati Roy in Mumbai at

To contact the editor responsible for this story: Steve Stroth at


Asian Currencies Decline on U.S. Economic Recovery, European Debt Concern

By Lilian Karunungan - Sep 10, 2011 5:36 AM GMT+0700

Asian currencies fell this week, led by slides in the Singapore dollar and India’s rupee, as a faltering U.S. recovery and Europe’s debt crisis prompted investors to favor safer bets than emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index had its biggest weekly loss this year after global funds pulled $2.3 billion from shares in South Korea and Taiwan in the first four days of the week. Central banks in Korea, Indonesia, the Philippines and Malaysia held off from raising interest rates at policy reviews on Sept. 8 after the U.S. reported zero jobs growth for August. The European Central Bank also left borrowing costs unchanged and cut its growth forecasts for the region.

“The ECB seems to be quite worried about the slowdown in economic activity in Europe and that is casting a pall on risk sentiment globally,” said Nick Verdi, a Singapore-based currency strategist at Barclays Capital. “The U.S. labor market is very weak. Market participants were trying to weigh up whether the Fed will enact further monetary stimulus.”

The Singapore dollar fell 1.7 percent this week to S$1.2244 against its U.S. counterpart, according to data compiled by Bloomberg. The rupee weakened 1.7 percent to 46.5650, South Korea’s won dropped 2 percent to 1,084.10 and Malaysia’s ringgit declined 1.5 percent to 3.0095.

The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, dropped 0.99 percent in the past five days, the most since the week ended Nov. 26.

U.S., Europe

Concern the U.S. economy will slip into a recession prompted President Barack Obama to unveil a $447 billion plan to Congress on Sept. 8 to create jobs through tax cuts and infrastructure spending. The ECB cut its 2011 growth forecast on Sept. 8 to 1.6 percent, from 1.9 percent, and its projection for 2012 to 1.3 percent from 1.7 percent.

Finance ministers from the Group of Seven nations, meeting yesterday in Marseille, France, said concerns about the future of a global economic recovery highlight the need for policy makers to support growth. They agreed to “take all necessary actions to ensure the resilience of banking systems and financial markets.”

The ECB, the Bank of Japan and the Federal Reserve may implement coordinated monetary-policy easing to tackle weak growth, Morgan Stanley economists wrote in a Sept. 7 note to investors. Fed Chairman Ben S. Bernanke refrained from signaling plans for further stimulus in a speech on Sept. 8 in Minneapolis.

“Speeches made by Bernanke and Obama were in line with expectations, and not enough to surprise the market,” said Kim Sung Soon, a Seoul-based senior currency trader at the Industrial Bank of Korea. “The lingering uncertainty in global financial markets is putting downward pressure on the won.”

‘External’ Risks

South Korean President Lee Myung Bak said Sept. 8 that inflation may exceed the 4 percent target this year, adding it’s hard to find ways to curb consumer-price gains. The Bank of Korea kept the benchmark interest rate unchanged at 3.25 percent for a third month on Sept. 8 and said it may not be able to increase borrowing costs until “external” factors such as Europe’s debt crisis are under control.

The ringgit had its biggest weekly loss in a month after government data showed that Malaysia’s export growth moderated to 7.1 percent in July from 9.6 percent the previous month.

“Prolonged uncertainties in the financial markets, weakness in the labor market and the prevailing fiscal conditions in the advanced economies have heightened the downside risks and fragility of the global economy,” Bank Negara said in its policy statement on Sept. 8. “In the domestic economy, recent indicators point to slower growth in external demand.”

Export Slump

Taiwan’s dollar completed its biggest weekly decline since February, sliding 0.9 percent to NT$29.265 versus the greenback. The island’s overseas sales rose 7.2 percent in August from a year earlier, the least since they last declined in October 2009, the Ministry of Finance reported this week. Economists expected a 15.5 percent increase, a Bloomberg survey showed.

Elsewhere, the Philippine peso declined 0.7 percent to 42.438 per dollar and Thailand’s baht fell 0.5 percent to 30.07. China’s yuan lost 0.09 percent to 6.3882, while Indonesia’s dropped 0.8 percent to 8,588 from Aug. 26. Financial markets in Southeast Asia’s biggest economy were shut for a holiday in the week ended Sept. 2.

To contact the reporter on this story: Lilian Karunungan in Singapore at

To contact the editor responsible for this story: Sandy Hendry at


European Stocks Drop for First Week in Three as Banks Sink on Debt Concern

By Alexis Xydias - Sep 10, 2011 6:00 AM GMT+0700

European stocks fell for the first week in three amid concern policy makers won’t be able to stop the region’s sovereign debt crisis from growing and damaging the economic recovery.

Societe Generale SA and Banco Comercial Portugues SA (BCP) led a measure of European bank shares to the lowest since March 2009. Royal Bank of Scotland Group Plc (RBS) and Barclays Plc (BARC) each sank 13 percent as 17 lenders were sued by the U.S. over the sale of mortgage-backed securities and interbank lending rates climbed.

The Stoxx Europe 600 Index dropped 3.7 percent to 224.59 this past week as 18 of 19 industry groups declined. The gauge has plunged 23 percent since this year’s peak on Feb. 17 as economic data from the U.S. and Europe trailed forecasts and Standard & Poor’s downgraded America’s AAA sovereign-debt rating, citing political failure to reduce record deficits. The index is trading at 9.4 times the estimated earnings of its constituent companies, near the lowest valuation since March 2009, according to data compiled by Bloomberg.

There has been “a whirlwind of sovereign downgrades, collapsing economic data and stumbling politics across developed markets” in recent weeks, said Tim Price, chief investment director at PFP Group LLP in London. “Unsurprisingly, markets have suffered. We have gone from a consensus of muted recovery to one of possible double dip.”

Swiss Stocks Gain

National benchmark indexes fell in all of the 18 western European markets except Switzerland, where the Swiss National Bank intervened to weaken the franc. France’s CAC 40 declined 5.5 percent, the U.K.’s FTSE 100 slid 1.5 percent and Germany’s DAX plunged 6.3 percent. The Swiss Market Index (SMI) gained 1.3 percent, a third straight weekly advance.

The VStoxx Index (V2X), which measures the cost of protecting against a decline in shares on the Euro Stoxx 50 Index, climbed 24 percent, the biggest gain in a month.

The Stoxx 600 tumbled 4.1 percent on Sept. 5 after German Chancellor Angela Merkel’s party suffered its fifth election loss this year as she faced criticism over the handling of the debt crisis.

European Central Bank President Jean-Claude Trichet on Sept. 8 said threats to the euro region have worsened and inflation risks have eased. Planned rescue loans to Greece have been put in doubt as countries including Finland demand the country provide collateral in exchange for the funds.

Default Insurance

The cost of insuring against default on European financial companies rose to a record this week as the ECB comments added to concern lenders are finding it harder to access funding markets. Credit-default swaps on Greek government debt surged to an all-time high, signaling a 91 percent chance the nation will fail to meet debt commitments, after its economy shrank more than previously reported.

The rate at which London-based banks say they can borrow for three months in dollars climbed to the highest level in more than a year yesterday. The London interbank offered rate, or Libor, for dollar loans rose to the highest since August 2010, according to the British Bankers’ Association.

The Stoxx 600 Banks Index dropped 8.4 percent. Societe Generale, France’s second-largest lender, and BCP, Portugal’s second-biggest publicly traded bank by market value, fell 21 percent and 17 percent, respectively.

RBS, Britain’s biggest government-owned lender, and Barclays each fell 13 percent. The banks were among European, Asian and American lenders sued by the U.S. Federal Housing Finance Agency on Sept. 2 to recoup $196 billion spent on mortgage-backed securities bought by Fannie Mae and Freddie Mac.

Porsche Plunges

Porsche SE plunged 15 percent in the week and posted the worst decline in more than two years yesterday after saying efforts to combine with Volkswagen AG by the end of 2011 had failed because of pending lawsuits. Preferred shares of Volkswagen, Europe’s largest automaker, slid 5 percent.

Verbund AG tumbled 16 percent, the most since 2008, after Austria’s biggest power company cut its guidance for 2011 and gave a “cautious” outlook for next year.

YIT Oyj, Finland’s biggest builder, slid 17 percent after saying excessive levels of ammonia were found in residential units it built in St. Petersburg, Russia.

Novartis AG, the drugmaker based in Basel, gained 7.9 percent while Cie. Financiere Richemont SA, the world’s second- biggest luxury-goods company, climbed 6 percent. Investors bought Swiss exporters after the country’s central bank set a ceiling for the franc’s value against the euro. The Swiss currency tumbled 7.3 percent to 1.21 per euro, the biggest weekly drop since the creation of the single currency.

Tullow Oil Plc (TLW) jumped 27 percent, the most since 2008. The U.K. explorer behind West Africa’s biggest offshore discovery in a decade said an offshore find in French Guiana opened up a new hydrocarbon basin on the other side of the Atlantic.

To contact the reporter on this story: Alexis Xydias in London at

To contact the editor responsible for this story: Andrew Rummer at


ECB Dealt a Blow as Executive Board Member Stark of Germany Steps Down

By Matthew Brockett and Jeff Black - Sep 9, 2011 10:47 PM GMT+0700

ECB's Juergen Stark Steps Down

Juergen Stark, an executive board member of the European Central Bank. Photographer: Michele Tantussi/Bloomberg

Sept. 9 (Bloomberg) -- Richard Lacaille, chief investment officer at State Street Global Advisors, talks about Juergen Stark's resignation from the European Central Bank’s Executive Board. Lacaille also discusses the euro-area debt crisis and investment strategies. He talks with Andrea Catherwood on Bloomberg Television's "Last Word." (Source: Bloomberg)

Juergen Stark resigned from the European Central Bank’s Executive Board after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting.

During the Sept. 4 call, Stark, 63, expressed his strong opposition to the program, which was expanded last month when the ECB started buying Italian and Spanish bonds, said the official, who spoke on condition of anonymity because the discussions are confidential. Stark was supported by the central banks of Austria and the Netherlands, the person said. The resignation of Stark, the ECB’s chief economist, is a blow to the bank, the official said, noting he is the second German ECB member after Axel Weber to leave over the bond program.

Stark’s resignation, less than two months before President Jean-Claude Trichet’s term ends, suggests policy makers are increasingly split over the best way to fight Europe’s debt crisis. The ECB’s bond purchases have also been opposed by Bundesbank President Jens Weidmann and his predecessor Weber, who earlier this year pulled out of the running to succeed Trichet.

“There is quite a severe row going on,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “It seems that it went too far.”

‘Personal Reasons’

The euro extended its decline after news of Stark’s possible resignation was first published. It traded at $1.3662 at 5:37 p.m. in Frankfurt, down 1.6 percent on the day.

Stark today informed Trichet that, “for personal reasons, he will resign from his position,” the Frankfurt-based ECB said in a statement. “Stark will stay on in his current position until a successor is appointed, which, according to the appointment procedure, will be by the end of this year.”

The German government will nominate Deputy Finance Minister Joerg Asmussen to replace Stark on the ECB’s six-member board, Germany’s N-TV reported, without saying where it got the information.

The ECB, which started its bond program in May last year when Greece’s fiscal crisis began to spread to other euro-area countries, has so far spent 129 billion euros ($176 billion) on the bonds of distressed governments in an attempt to lower their yields. While the ECB says it is trying to ensure the transmission of its interest rates, Stark told Bloomberg News on Aug. 18 that the purchases blur the line between monetary and fiscal policy.

No ‘Glowing Advocate’

“It’s generally known that I’m not a glowing advocate of these purchases,” Stark said. “I see the rationale. Our accommodative monetary policy isn’t being transmitted in certain regions. So it’s justifiable from a policy point of view. But there’s an important point -- we are also reducing interest rates for the sovereign. That’s where the problem is.”

Stark’s eight-year term was due to end on May 31, 2014. When he and Trichet depart, half of the ECB’s board will be new. Belgium’s Peter Praet joined in June. Bank of Italy Governor Mario Draghi will take the ECB’s helm on Nov. 1.

Trichet yesterday said the central bank has cut its growth forecasts for this year and next and reduced its assessment of inflation risks, opening the door for further stimulus measures. Stark is one of the ECB’s most ardent inflation fighters.

“Things do not look too good from outside, with a second German leaving the Governing Council to openly criticize the ECB after Weber,” said Laurent Bilke, a former ECB economist now working at Nomura International in London. “Good luck to Mario Draghi.”

To contact the reporters on this story: Matthew Brockett in Frankfurt at; Jeffrey Black in Frankfurt at

To contact the editor responsible for this story: Craig Stirling at


Crude Oil Drops Most in a Week as Euro Tumbles on European Debt Crisis

By Margot Habiby - Sep 10, 2011 3:10 AM GMT+0700

Oil dropped the most in a week in New York as the euro tumbled against the dollar on concern that Greece’s deteriorating debt crisis will lead to a default.

Oil fell 2 percent after Europe’s single currency declined to a six-month low and European bank and sovereign credit risk surged to all-time highs. A plan for jobs growth announced yesterday by President Barack Obama failed to boost confidence in the U.S., the world’s largest economy.

“The concerns out of Europe and the positive relationship between oil prices and the euro are the catalyst,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “The euro is getting crushed and putting pressure on all our markets right now.”

Crude for October delivery dropped $1.81 to settle at $87.24 a barrel on the New York Mercantile Exchange. Prices rose 0.9 percent this week, the third consecutive advance. Futures have fallen 4.5 percent this year.

Brent crude for October settlement declined $1.78, or 1.6 percent, to $112.77 a barrel on London’s ICE Futures Europe exchange. Brent’s premium to Nymex-traded West Texas Intermediate rose 3 cents to $25.53.

The euro fell 1.5 percent to $1.3669 at 3:23 p.m. in New York, the lowest level since February. A weaker euro and stronger dollar curb commodities’ appeal as an alternative to the U.S. currency. The euro has plummeted 3.8 percent this week.

German Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event Greece fails to meet the terms of its aid package and defaults, three coalition officials said.

Stark’s Resignation

Juergen Stark of Germany resigned from the European Central Bank’s Executive Board today after protesting the bank’s bond purchases on a conference call earlier in the week, said a euro area bank official familiar with the meeting. The purchase program was expanded last month when the ECB started buying Italian and Spanish bonds.

“When Stark stepped down, that signaled the possibility of more German opposition to bailing out Greece,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Oil is pricing the increasing odds of demand destruction on the European concerns and following the president’s speech last night.”

Obama challenged Congress to pass a $447 billion jobs plan “right away” to boost spending on infrastructure, stem teacher layoffs and halve payroll taxes paid by workers and small- business owners. He addressed a joint session of Congress yesterday and campaigned for the plan today in Virginia.

U.S. Economy

The president’s remarks came after Federal Reserve Chairman Ben S. Bernanke yesterday stopped short of outlining new plans to revive growth.

“Bernanke didn’t give any further insight into stimulus measures, and Obama’s speech has been received very tepidly, which continues to weigh on concerns about the U.S. economy,” said Matt Smith, a commodities analyst for Summit Energy Services Inc. in Louisville, Kentucky.

The Standard & Poor’s 500 Index fell 2.7 percent to 1,154.23 at 4:03 p.m. in New York. The Dow Jones Industrial Average dropped 2.7 percent to 10,992.13.

Oil also declined on signals that Libya may export a crude- oil cargo this month for the first time since March from the country’s west. The holder of Africa’s biggest oil reserves is rebuilding production which plunged 97 percent during an armed conflict to depose ruler Muammar Qaddafi, based on Bloomberg News output estimates.

Libyan Exports

“There are two critical factors dominating the outlook for the oil markets at this time, what global economic developments are doing to demand and the prospects for a pickup in Libyan oil exports,” according to a report published today by Deutsche Bank analysts including Adam Sieminski, the company’s Washington-based chief energy economist.

An 80,000-metric-ton cargo of crude is being offered for shipment from the port of Mellitah this month, three people with direct knowledge of the transaction said yesterday. The oil, equal to 600,000 barrels, will be loaded from Sept. 15 to 17, the people said, declining to be identified because the consignment has yet to be publicly announced.

Oil also declined as the National Hurricane Center forecast that Tropical Storm Nate will move toward the Mexican coast, missing the biggest U.S. oil-producing region in the Gulf or Mexico. Nate was 150 miles (240 kilometers) west of Campeche, Mexico, at about 2 p.m. New York time.

Fourteen of 28 analysts, or 50 percent of those in a Bloomberg News survey, forecast oil prices will decline next week amid heightened concern that global economic growth is slowing. Seven respondents, or 25 percent, predicted prices will increase and seven estimated there will be little change. Last week, 50 percent of surveyed analysts projected a drop.

Oil volume in electronic trading on the Nymex was 597,732 contracts as of 3:24 p.m. in New York. Volume totaled 790,112 contracts yesterday, 16 percent above the average of the past three months. Open interest was 1.5 million contracts.

To contact the reporter on this story: Margot Habiby in Dallas at

To contact the editor responsible for this story: Dan Stets at


Asia Stocks Slide on Concern U.S. Economy May Weaken, European Debt Crisis

By Shani Raja - Sep 10, 2011 6:34 AM GMT+0700

Asian stocks fell this week, snapping a fortnight of advance, as exporters dropped on speculation the world’s largest economy is headed toward recession and banks slid amid concern Europe may fail to contain its sovereign debt crisis.

Honda Motor Co., a carmaker with more than 40 percent of its revenue in North America, plunged 6.4 percent in Tokyo after a report showed the U.S. job market stalled in August. BHP Billiton Ltd. (BHP) sank 2.9 percent in Sydney. HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, slumped 3.3 percent in Hong Kong after the cost of insuring against default on European sovereign and financial debt surged to records. Fanuc Corp. (6954) tumbled 15 percent after an industry group said growth in machine-tool orders slowed.

“It’s clear the U.S. economy needed more stimulus as there’s a limit to what monetary policy can do,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s growing concern that the sovereign-debt crisis in the EU is now manifesting into a sharp slowdown in the economy and a banking crisis,”

The MSCI Asia Pacific Index fell 2.7 percent this week to 120.78, snapping a 3.9 percent two-week advance. The gauge tumbled 8.6 percent last month amid escalating concern over Europe’s debt crisis and after Standard & Poor’s downgraded the U.S.’s credit rating. Stocks in the Asian benchmark are valued at about 11.9 times estimated earnings on average, compared with 11.5 times for the S&P 500 and 9.3 times for the Stoxx 600.

Nikkei, Kospi

Japan’s Nikkei 225 (NKY) Stock Average dropped 2.4 percent in a week when the Cabinet Office also said Japan’s economy contracted more than an initial government estimate. Australia’s S&P/ASX 200 Index slipped 1.1 percent after a statistics bureau report showed the nation’s employers unexpectedly cut jobs for a second straight month in August.

South Korea’s Kospi Index (KOSPI) slid 2.9 percent and Hong Kong’s Hang Seng Index (HSI) retreated 1.7 percent. The Shanghai Composite Index slid 1.2 percent this week.

Honda, which counts North America as its biggest market for sales, plunged 6.4 percent to 2,347 yen in Tokyo. Canon Inc. (7751), which earns more than 80 percent of its sales overseas, declined 2.9 percent to 3,490 yen. James Hardie Industries SE (JHX), a building materials supplier that gets almost 70 percent of sales from the U.S., sank 4.2 percent to A$5.78 in Sydney.

A report Sept. 2 showed U.S. payrolls were unchanged in August, the weakest reading since September 2010. The median forecast in a Bloomberg News survey called for an increase of 68,000.

‘Scary Report’

“It was a scary report,” Dan North, chief U.S. economist at Euler Hermes ACI in Owings Mills, Maryland, said in an interview from Singapore with Susan Li on Bloomberg Television on Sept. 5. “When you get to negative job growth, which we’re very close to now, it means you’re already in a recession.”

Stocks fell even as U.S. President Barack Obama outlined a jobs plan that would inject $447 billion into the economy, and Federal Reserve Chairman Ben S. Bernanke said policymakers will discuss ways to boost growth at their next meeting.

Fed officials gather for a two-day meeting on Sept. 20 that was expanded from the one day originally scheduled to “allow a fuller discussion” of the economy and the central bank’s possible policy response.

BHP, Jiangxi

BHP Billiton, the world’s No. 1 mining company and Australia’s biggest oil producer, fell 2.9 percent to A$37.91 in Sydney. Rio Tinto Group, the second-largest miner by sales, slid 1.1 percent to A$71.25. In Hong Kong, Jiangxi Copper Co., China’s No. 1 producer of the metal, slumped 4.6 percent to HK$20.95, while Chinese oil explorer Cnooc Ltd. (883) tumbled 9.3 percent to HK$14.

Belle International Holdings Ltd. (1880), a Chinese retailer of women’s shoes, plunged 10 percent to HK$14.60 in Hong Kong and Tencent Holdings Ltd. (700), a Shenzhen-based Internet company, lost 1.5 percent to HK$184.50.

China’s inflation eased in August from a three-year high, the National Bureau of Statistics said in Beijing on Sept. 9. Still, consumer prices climbed 6.2 percent from a year earlier. A separate report showed industrial output growth in China trailed estimates.

Asian stocks also slipped this week after an election loss for German Chancellor Angela Merkel’s party and reports of a rift between Greece and the International Monetary Fund fueled concern that support for bailing out indebted European nations is waning. Later in the week, European Central Bank President Jean-Claude Trichet said “downside risks” for the region have risen, while resisting calls to lower interest rates.

Financial Stocks

HSBC fell 3.3 percent to HK$64.95 in Hong Kong. Korea Exchange Bank (004940) retreated 4.3 percent to 7,590 won in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, declined 2.9 percent to 332 yen in Tokyo after the cost of insuring against default on European sovereign and financial debt surged to records.

Investors drove yields higher on the bonds of Greece, Portugal, Spain and Italy early in the week on doubts Europe’s leaders will be able to stop the crisis spreading. The yield on the Greek two-year note rose above its price for the first time on Sept. 5, indicating mounting concern the nation will default on the debt.

Lasting Solution

“Volatility is likely to remain high until there’s clarity around Europe’s ability to work out a lasting solution,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. “Right now, it seems policy makers are going in the opposite direction. While the fundamentals in Asia are in better shape than elsewhere, shares here will get caught up in the crossfire.”

Fanuc, Japan’s No. 1 maker of controls used to run machine tools, fell 15 percent to 10,730 yen, after the Japan Machinery Tool Builders’ Association said growth in Japanese orders slowed in August, falling 12.7 percent from July. A separate Cabinet Office report this week said Japanese machinery orders fell 8.2 percent in July after rising 7.7 percent in June.

Komatsu Ltd. (6301), the world’s No. 2 maker of construction equipment and Japan’s largest construction machinery maker, sank 14 percent to 1,797 yen.

Technology Shares

Among stocks that advanced this week, Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer memory, jumped 4.2 percent to 19,900 won in Seoul, leading some technology stocks higher on speculation chip prices will recover. Samsung Electronics Co. gained 1.4 percent to 780,000 won.

The price of the benchmark DDR3 2-gigabit DRAM has fallen 3 percent this month after falling 14 percent in August, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.

“There’s some consensus that the chip market is near its bottom,” Ahn Seong Ho, an analyst at Hanwha Securities Co. who covers technology stocks, said in Seoul.

To contact the reporters on this story: Shani Raja in Sydney at

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