By Cathy Chan
June 26 (Bloomberg) -- Citigroup Inc., the bank that's posted the biggest losses from the collapse of the U.S. mortgage market, may take an additional $8.9 billion in net writedowns in the second quarter, Goldman Sachs Group Inc. said.
Goldman also lowered its rating on U.S. brokerages to ``neutral'' from ``attractive,'' saying the pace of deterioration in the industry ``appears to be far worse than'' it originally anticipated, according to a June 25 note.
``The turnaround in business trends that we had been expecting in the second half of 2008 may not occur as quickly as we should have thought,'' Goldman said. ``We see multiple headwinds for Citigroup,'' such as risks of further writedowns, higher consumer provisions, and the potential need for additional capital raisings, dividend cuts or asset sales, Goldman said.
Goldman joined UBS AG and Merrill Lynch & Co. in predicting more writedowns for New York-based Citigroup, already reeling from $42.9 billion of credit-related losses. Citigroup Chief Executive Officer Vikram Pandit has announced 13,000 job cuts this year, and the bank this month forecast ``substantial'' additional writedowns and more losses on consumer loans.
Citigroup may write down $7.1 billion of collateralized debt obligations and associated hedges, and $1.2 billion for other asset classes, Goldman said. It may need to post a $600 million loss to reflect the mark-to-market value of its own structured note liabilities, New York-based Goldman said.
Payouts in Doubt
Goldman cut its six-month price target for Citigroup to $16 and put the New York-based investment bank on its ``conviction sell'' list. Citigroup closed at $18.85 in New York trading yesterday, having dropped 36 percent this year.
Citigroup probably won't be able to keep its current 7 percent dividend yield and may need to raise more capital, according to the report. Goldman estimated Citigroup could generate $3.5 billion in capital a year by cutting payouts in half.
``Given the firm's current level of earnings power, we do not believe the dividend is safe,'' it said. ``We believe any additional capital raises will be in the form of common equity, dividend cuts and or additional asset sales.''
Citigroup is more exposed to hedges on its leveraged loan and commercial mortgage-backed securities portfolios than Merrill and JPMorgan Chase & Co., indicating higher potential losses, Goldman said.
Merrill analyst Guy Moszkowski this week said Citigroup may post another $8 billion of writedowns this year. UBS analyst Glenn Schorr on June 20 said Citigroup probably will post a second-quarter loss of 40 cents a share after $8.7 billion of asset writedowns.
To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net
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Thursday, June 26, 2008
Arawak, BCE, Research In Motion, WestJet: Canada Equity Preview
By John Kipphoff
June 26 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading today. Stock symbols are in parentheses, and share prices are from the yesterday's close in Toronto.
The Standard & Poor's/TSX Composite Index gained 0.2 percent to 14,441.13.
Arawak Energy Corp. (ABG CN): The Canadian company exploring for oil and gas in Kazakhstan, Russia and Azerbaijan, said it plans to list its shares on the London Stock Exchange. Arawak will maintain its Toronto Stock Exchange listing, the Jersey, U.K.-based company said today in a statement distributed by the Regulatory News Service. The shares fell 3.9 percent to C$2.50.
BCE Inc. (BCE CN): BCE is being told by investors to skip its quarterly dividend payment, in the hope that retaining the C$294 million ($290.84 million) cash will persuade banks to keep to their loan commitment for the buyout of Canada's largest phone company, the Globe and Mail reported., without naming the investors.
BCE has agreed to a C$42.75-a-share takeover offer from a group led by the Ontario Teachers' Pension Plan. The deal depends on a C$32 billion ($31.7 billion) debt package being negotiated by banks including Citigroup Inc. and Toronto- Dominion Bank, the newspaper said. BCE's board is expected to make a decision on the 36.5 cent-a-share payout it by June 30. The shares rose 0.9 to C$37.55.
Compton Petroleum Corp. (CMT CN): The natural gas producer that's seeking a buyer said it agreed to sell four groups of assets for $218 million. Compton, based in Calgary, agreed to sell properties with production of the equivalent of 3,700 barrels of oil a day. The shares fell 2.3 percent to C$12.61.
Husky Energy Inc. (HSE CN): The oil and gas producer controlled by Hong Kong billionaire Li Ka-shing said it signed an accord with the China National Offshore Oil Corp. for an exploration block in China's South China Sea. Cnooc, as the Beijing-based company is known, is China's biggest offshore oil producer. Husky fell 0.4 percent to C$47.94.
Jean Coutu Group Inc. (PJC/A CN): Rite Aid Corp., the U.S. drugstore chain 30 percent owned by Jean Coutu, posted its fourth straight quarterly loss after integrating the 1,800 Brooks and Eckerd locations it bought last year. Rite Aid reported a net loss of $156.6 million, compared with profit of $27.6 million a year earlier. Sales rose to $6.61 billion from $4.43 billion. Jean Coutu fell 0.9 percent to C$8.63.
Magna International Inc. (MG/A CN): An Austrian unit of Magna, North America's biggest car-parts maker, will produce Porsche SE's Boxster and Cayman models, the German carmaker said. Magna will replace Metso Oyj's Valmet Automotive division from 2012, Porsche said. Magna gained 2.5 percent to C$65.99.
Research In Motion Ltd. (RIM CN): The maker of the BlackBerry e-mail phone missed analysts' profit estimates for the first time in five quarters and gave a disappointing forecast amid higher spending to take on Apple Inc.'s new iPhone.
Second-quarter profit will be as low as 84 cents a share, the Waterloo, Ontario-based company said yesterday. That missed the average prediction by analysts of 92 cents, according to a Bloomberg survey. The stock dropped 9.4 percent in early U.S. trading, and 0.6 percent to C$141 during regular trading in Toronto yesterday.
Talisman Energy Inc. (TLM CN): Talisman's Norwegian unit discovered a ``small oil column'' in a wildcat well near the Varg Field the North Sea, Norway's Petroleum Safety Authority said. The find is between 100,000 and 250,000 standard cubic meters of recoverable oil, which will be produced through Varg starting on July 5, the regulator said. Talisman fell 2.3 percent to C$22.31.
WestJet Airlines Ltd. (WJA CN): Canada's second-biggest airline was raised to ``buy'' from ``neutral'' by Fadi Chamoun at UBS. The Toronto-based analyst set a 12-month share-price target of C$19. WestJet added 1.1 percent to C$14.26.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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June 26 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading today. Stock symbols are in parentheses, and share prices are from the yesterday's close in Toronto.
The Standard & Poor's/TSX Composite Index gained 0.2 percent to 14,441.13.
Arawak Energy Corp. (ABG CN): The Canadian company exploring for oil and gas in Kazakhstan, Russia and Azerbaijan, said it plans to list its shares on the London Stock Exchange. Arawak will maintain its Toronto Stock Exchange listing, the Jersey, U.K.-based company said today in a statement distributed by the Regulatory News Service. The shares fell 3.9 percent to C$2.50.
BCE Inc. (BCE CN): BCE is being told by investors to skip its quarterly dividend payment, in the hope that retaining the C$294 million ($290.84 million) cash will persuade banks to keep to their loan commitment for the buyout of Canada's largest phone company, the Globe and Mail reported., without naming the investors.
BCE has agreed to a C$42.75-a-share takeover offer from a group led by the Ontario Teachers' Pension Plan. The deal depends on a C$32 billion ($31.7 billion) debt package being negotiated by banks including Citigroup Inc. and Toronto- Dominion Bank, the newspaper said. BCE's board is expected to make a decision on the 36.5 cent-a-share payout it by June 30. The shares rose 0.9 to C$37.55.
Compton Petroleum Corp. (CMT CN): The natural gas producer that's seeking a buyer said it agreed to sell four groups of assets for $218 million. Compton, based in Calgary, agreed to sell properties with production of the equivalent of 3,700 barrels of oil a day. The shares fell 2.3 percent to C$12.61.
Husky Energy Inc. (HSE CN): The oil and gas producer controlled by Hong Kong billionaire Li Ka-shing said it signed an accord with the China National Offshore Oil Corp. for an exploration block in China's South China Sea. Cnooc, as the Beijing-based company is known, is China's biggest offshore oil producer. Husky fell 0.4 percent to C$47.94.
Jean Coutu Group Inc. (PJC/A CN): Rite Aid Corp., the U.S. drugstore chain 30 percent owned by Jean Coutu, posted its fourth straight quarterly loss after integrating the 1,800 Brooks and Eckerd locations it bought last year. Rite Aid reported a net loss of $156.6 million, compared with profit of $27.6 million a year earlier. Sales rose to $6.61 billion from $4.43 billion. Jean Coutu fell 0.9 percent to C$8.63.
Magna International Inc. (MG/A CN): An Austrian unit of Magna, North America's biggest car-parts maker, will produce Porsche SE's Boxster and Cayman models, the German carmaker said. Magna will replace Metso Oyj's Valmet Automotive division from 2012, Porsche said. Magna gained 2.5 percent to C$65.99.
Research In Motion Ltd. (RIM CN): The maker of the BlackBerry e-mail phone missed analysts' profit estimates for the first time in five quarters and gave a disappointing forecast amid higher spending to take on Apple Inc.'s new iPhone.
Second-quarter profit will be as low as 84 cents a share, the Waterloo, Ontario-based company said yesterday. That missed the average prediction by analysts of 92 cents, according to a Bloomberg survey. The stock dropped 9.4 percent in early U.S. trading, and 0.6 percent to C$141 during regular trading in Toronto yesterday.
Talisman Energy Inc. (TLM CN): Talisman's Norwegian unit discovered a ``small oil column'' in a wildcat well near the Varg Field the North Sea, Norway's Petroleum Safety Authority said. The find is between 100,000 and 250,000 standard cubic meters of recoverable oil, which will be produced through Varg starting on July 5, the regulator said. Talisman fell 2.3 percent to C$22.31.
WestJet Airlines Ltd. (WJA CN): Canada's second-biggest airline was raised to ``buy'' from ``neutral'' by Fadi Chamoun at UBS. The Toronto-based analyst set a 12-month share-price target of C$19. WestJet added 1.1 percent to C$14.26.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Gol, Grupo Modelo, Marcopolo, Socotherm: Latin Equity Preview
By Paulo Winterstein and Alexander Ragir
June 26 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 2.3 percent to 4,784.55 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Socotherm Americas SA (STHE AR): The maker of steel pipe coatings won a $14.2 million contract to treat a gas pipeline between Tierra del Fuego and the South American mainland, it wrote in a regulatory filing yesterday. Socotherm rose 1.3 percent to 15.80 pesos in Buenos Aires trading.
Brazil
Cia. de Bebidas das Americas (AMBV4 BS): Anheuser-Busch Cos. is prepared to reject a $46.3 billion takeover offer by InBev NV, parent of AmBev, as Latin America's biggest brewer is known, the Wall Street Journal reported, citing people familiar with the matter. Anheuser-Busch believes the offer of $65 a share undervalues the company, the Journal said in a story on its Web site. AmBev added 0.4 percent to 104.80 reais.
Gol Linhas Aereas Inteligentes SA (GOLL4 BS): Brazil's second-biggest airline had its purchase of rival Varig authorized by the country's antitrust regulator, on the condition that Gol modify a contract with Varig's sellers. Gol, based in Sao Paulo, must remove a clause stipulating that the sellers of Varig wouldn't be able to operate their cargo transport business for three years after the purchase, Brazil's antitrust regulator said today in an e-mailed statement. Gol was unchanged at 19.96 reais.
JBS SA (JBSS3 BS): The world's biggest beef producer and two Brazilian rivals said shipments to Russia won't be halted by Brazil's suspension of exports from the state of Goias. The Agriculture Ministry today suspended beef exports to Russia from Goias after finding cattle with gall-bladder infections in the central state. Marfrig Frigorificos & Comercio de Alimentos SA (MRFG3 BS), the world's fourth-biggest beef producer, and Minerva SA (BEEF3 BS) also said in separate filings on Brazil's regulator Web site that they will continue to ship to Russia from plants in other Brazilian states. JBS was unchanged at 8.20 reais. Marfrig fell 1.4 percent to 21.50 reais. Minerva fell 4.1 percent to 9.40 reais.
Marcopolo SA (POMO4 BS): Latin America's biggest maker of bus parts and chassis will invest $50 million over the next three years in a newly formed joint venture with Egyptian bus maker GB Auto SAE and begin building vehicles in the African country by July 2009, Marcopolo said in a filing yesterday. GB Auto will control 51 percent of the new company and Marcopolo will own the remaining 49 percent. Marcopolo rose 0.3 percent to 6.71 reais.
SLC Agricola SA (SLCE3 BS): The Brazilian agricultural company and its stockholders are raising 369.2 million reais ($232 million) in an additional sale of shares in Brazil. The company is selling about 9.4 million shares for 27.50 reais each, while shareholders are selling more than 4 million shares at the same price, according to a statement posted yesterday on Brazil's securities regulator Web site. That includes a possible supplemental offering of as much as 15 percent. SLC fell 1 percent to 27.80 reais.
Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore producer was rated ``overweight'' in initial coverage by Lehman Brothers Holdings Inc. because of rising steel demand from emerging economies. The company may also revive its takeover offer for Xstrata Plc because it is the ``best fit,'' Lehman said. Vale rose 2.7 percent to 49.48 reais.
Colombia
Bolsa de Valores de Colombia (BVC CB): Colombia's main securities exchange was downgraded to ``hold'' from ``buy'' at Interbolsa SA. Analyst Andres Jimenez reduced BVC's year-end price estimate to 32.10 pesos from 41.21 pesos in a note to clients yesterday, citing lower fixed-income volumes. BVC fell 1.4 percent to 28.9 pesos.
Mexico
Grupo Modelo SAB (GMODELOC MM): Anheuser Busch, which owns a non-controlling 50 percent stake in Mexico's largest brewer, will present its own strategic plan to increase the company's share price after it rejects an unsolicited bid, the Wall Street Journal reported. Modelo rose 1.4 percent to 54.23 pesos.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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June 26 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 2.3 percent to 4,784.55 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Argentina
Socotherm Americas SA (STHE AR): The maker of steel pipe coatings won a $14.2 million contract to treat a gas pipeline between Tierra del Fuego and the South American mainland, it wrote in a regulatory filing yesterday. Socotherm rose 1.3 percent to 15.80 pesos in Buenos Aires trading.
Brazil
Cia. de Bebidas das Americas (AMBV4 BS): Anheuser-Busch Cos. is prepared to reject a $46.3 billion takeover offer by InBev NV, parent of AmBev, as Latin America's biggest brewer is known, the Wall Street Journal reported, citing people familiar with the matter. Anheuser-Busch believes the offer of $65 a share undervalues the company, the Journal said in a story on its Web site. AmBev added 0.4 percent to 104.80 reais.
Gol Linhas Aereas Inteligentes SA (GOLL4 BS): Brazil's second-biggest airline had its purchase of rival Varig authorized by the country's antitrust regulator, on the condition that Gol modify a contract with Varig's sellers. Gol, based in Sao Paulo, must remove a clause stipulating that the sellers of Varig wouldn't be able to operate their cargo transport business for three years after the purchase, Brazil's antitrust regulator said today in an e-mailed statement. Gol was unchanged at 19.96 reais.
JBS SA (JBSS3 BS): The world's biggest beef producer and two Brazilian rivals said shipments to Russia won't be halted by Brazil's suspension of exports from the state of Goias. The Agriculture Ministry today suspended beef exports to Russia from Goias after finding cattle with gall-bladder infections in the central state. Marfrig Frigorificos & Comercio de Alimentos SA (MRFG3 BS), the world's fourth-biggest beef producer, and Minerva SA (BEEF3 BS) also said in separate filings on Brazil's regulator Web site that they will continue to ship to Russia from plants in other Brazilian states. JBS was unchanged at 8.20 reais. Marfrig fell 1.4 percent to 21.50 reais. Minerva fell 4.1 percent to 9.40 reais.
Marcopolo SA (POMO4 BS): Latin America's biggest maker of bus parts and chassis will invest $50 million over the next three years in a newly formed joint venture with Egyptian bus maker GB Auto SAE and begin building vehicles in the African country by July 2009, Marcopolo said in a filing yesterday. GB Auto will control 51 percent of the new company and Marcopolo will own the remaining 49 percent. Marcopolo rose 0.3 percent to 6.71 reais.
SLC Agricola SA (SLCE3 BS): The Brazilian agricultural company and its stockholders are raising 369.2 million reais ($232 million) in an additional sale of shares in Brazil. The company is selling about 9.4 million shares for 27.50 reais each, while shareholders are selling more than 4 million shares at the same price, according to a statement posted yesterday on Brazil's securities regulator Web site. That includes a possible supplemental offering of as much as 15 percent. SLC fell 1 percent to 27.80 reais.
Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore producer was rated ``overweight'' in initial coverage by Lehman Brothers Holdings Inc. because of rising steel demand from emerging economies. The company may also revive its takeover offer for Xstrata Plc because it is the ``best fit,'' Lehman said. Vale rose 2.7 percent to 49.48 reais.
Colombia
Bolsa de Valores de Colombia (BVC CB): Colombia's main securities exchange was downgraded to ``hold'' from ``buy'' at Interbolsa SA. Analyst Andres Jimenez reduced BVC's year-end price estimate to 32.10 pesos from 41.21 pesos in a note to clients yesterday, citing lower fixed-income volumes. BVC fell 1.4 percent to 28.9 pesos.
Mexico
Grupo Modelo SAB (GMODELOC MM): Anheuser Busch, which owns a non-controlling 50 percent stake in Mexico's largest brewer, will present its own strategic plan to increase the company's share price after it rejects an unsolicited bid, the Wall Street Journal reported. Modelo rose 1.4 percent to 54.23 pesos.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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Anheuser-Busch, Citigroup, General Motors: U.S. Equity Preview
By Katherine Greene
June 26 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 7:44 a.m. in New York, unless stated otherwise.
Anheuser-Busch Cos. (BUD US) fell 0.8 percent to $61.25. The maker of Budweiser may reject InBev NV's $46.3 billion takeover bid and announce plans to lower costs and sell off divisions to increase its stock price, the Wall Street Journal reported yesterday, citing unidentified people familiar with the matter.
Autodesk Inc. (ADSK US) lost 4.5 percent to $34.71 in extended trading yesterday. The biggest maker of engineering- design software cut its second-quarter forecast for adjusted earnings per share to as low as 50 cents a share. Analysts had expected 53 cents, the average of 17 estimates in a Bloomberg survey, for the quarter ending July 31.
Bed Bath & Beyond Inc. (BBBY US) added 8 percent to $30.84 in extended trading yesterday. The largest U.S. home-furnishings retailer reported profit that fell less than analysts estimated on higher sales. First-quarter net income declined to 30 cents a share from 38 cents a year earlier, the company said in a statement. Analysts had forecast 27 cents, the average of 20 estimates in a Bloomberg survey.
Citigroup Inc. (C US) fell 4.5 percent to $18. The bank that's posted the biggest losses from the collapse of the U.S. mortgage market may take an additional $8.9 billion in net writedowns in the second quarter, Goldman Sachs Group Inc. said.
General Motors Corp. (GM US) dropped 5.5 percent to $12.10. The world's largest automaker was downgraded to ``sell'' from ``neutral'' at Goldman, Sachs & Co., which said the shares will continue to slide as the sales outlook worsens, citing soaring gas prices, falling consumer confidence and tighter credit conditions.
Ford Motor Co. (F US), GM's smaller rival, fell 3 percent to $5.08.
Merrill Lynch & Co. (MER US) slid 3.3 percent to $34.40. The third-biggest U.S. securities firm is likely to post losses in the second quarter and 2008 after writing down the value of mortgage-related assets, according to Sanford C. Bernstein & Co.'s Brad Hintz.
Oracle Corp. (ORCL US) lost 3.3 percent to $21.81. The second-largest software maker said it expects first-quarter profit before some items of 26 cents to 27 cents a share. Analysts had expected 27 cents, the average of 16 analyst estimates in a Bloomberg survey.
Research In Motion Ltd. (RIMM US) lost 9.6 percent to $128.62. The maker of the BlackBerry e-mail phone missed profit and sales estimates for the first time in five quarters and gave a disappointing forecast amid heightened competition with Apple Inc.'s iPhone. The company reported first-quarter profit of 84 cents a share. That trailed the 85 cents predicted by analysts in a Bloomberg survey.
-- With reporting by Jeff Kearns. Editor: Allen Wan
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
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June 26 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 7:44 a.m. in New York, unless stated otherwise.
Anheuser-Busch Cos. (BUD US) fell 0.8 percent to $61.25. The maker of Budweiser may reject InBev NV's $46.3 billion takeover bid and announce plans to lower costs and sell off divisions to increase its stock price, the Wall Street Journal reported yesterday, citing unidentified people familiar with the matter.
Autodesk Inc. (ADSK US) lost 4.5 percent to $34.71 in extended trading yesterday. The biggest maker of engineering- design software cut its second-quarter forecast for adjusted earnings per share to as low as 50 cents a share. Analysts had expected 53 cents, the average of 17 estimates in a Bloomberg survey, for the quarter ending July 31.
Bed Bath & Beyond Inc. (BBBY US) added 8 percent to $30.84 in extended trading yesterday. The largest U.S. home-furnishings retailer reported profit that fell less than analysts estimated on higher sales. First-quarter net income declined to 30 cents a share from 38 cents a year earlier, the company said in a statement. Analysts had forecast 27 cents, the average of 20 estimates in a Bloomberg survey.
Citigroup Inc. (C US) fell 4.5 percent to $18. The bank that's posted the biggest losses from the collapse of the U.S. mortgage market may take an additional $8.9 billion in net writedowns in the second quarter, Goldman Sachs Group Inc. said.
General Motors Corp. (GM US) dropped 5.5 percent to $12.10. The world's largest automaker was downgraded to ``sell'' from ``neutral'' at Goldman, Sachs & Co., which said the shares will continue to slide as the sales outlook worsens, citing soaring gas prices, falling consumer confidence and tighter credit conditions.
Ford Motor Co. (F US), GM's smaller rival, fell 3 percent to $5.08.
Merrill Lynch & Co. (MER US) slid 3.3 percent to $34.40. The third-biggest U.S. securities firm is likely to post losses in the second quarter and 2008 after writing down the value of mortgage-related assets, according to Sanford C. Bernstein & Co.'s Brad Hintz.
Oracle Corp. (ORCL US) lost 3.3 percent to $21.81. The second-largest software maker said it expects first-quarter profit before some items of 26 cents to 27 cents a share. Analysts had expected 27 cents, the average of 16 analyst estimates in a Bloomberg survey.
Research In Motion Ltd. (RIMM US) lost 9.6 percent to $128.62. The maker of the BlackBerry e-mail phone missed profit and sales estimates for the first time in five quarters and gave a disappointing forecast amid heightened competition with Apple Inc.'s iPhone. The company reported first-quarter profit of 84 cents a share. That trailed the 85 cents predicted by analysts in a Bloomberg survey.
-- With reporting by Jeff Kearns. Editor: Allen Wan
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
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U.S. Stocks Drop on Earnings Concern; Citigroup, RIM Retreat
By Michael Patterson
June 26 (Bloomberg) -- U.S. stocks tumbled, sending the Dow Jones Industrial Average to its lowest since October 2006, after analysts said Citigroup Inc. will post more writedowns and Research In Motion Ltd. forecast earnings that trailed estimates.
Citigroup led bank and brokerage stocks to a five-year low as Goldman analysts said the lender may report an $8.9 billion second-quarter charge and cut its dividend. Research In Motion, maker of the BlackBerry e-mail phone, posted its biggest drop since 2004 on concern competition with Apple Inc.'s iPhone is reducing earnings. Oracle Corp., the world's second-largest software maker, declined the most since April after predicting the slowest sales growth since 2006.
Standard & Poor's 500 Index lost 13.92, or 1.1 percent, to 1,308.05 at 9:35 a.m. in New York, extending its 2008 retreat to 11 percent. The Dow decreased 109.68, or 0.9 percent, to 11,702.15. The Nasdaq Composite Index sank 40.03 to 2,361.23. Six stocks fell for each that rose on the New York Stock Exchange.
``Most investors are going to sit on the sidelines until they're more certain the sharks have left the waters and it's safe to go back in,'' said Bruce McCain, the Cleveland-based head of investment strategy at Key Private Bank, which oversees about $30 billion. ``The writeoffs have been far worse than anyone would have imagined.''
Nine of 10 industry groups retreated as higher-than-forecast initial jobless claims also weighed on the market. The Commerce Department said the U.S. economy expanded at an annual rate of 1 percent in the first quarter, capping the weakest six months of growth in five years, as measures of inflation accelerated more than previously projected. Energy shares posted the only advance as oil climbed more than $3 a barrel.
European stocks fell after Belgium-based lender Fortis scrapped its dividend and said it will sell shares. Asian stocks advanced.
To contact the reporter on this story: Michael Patterson in New York at mpatterson10@bloomberg.net.
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June 26 (Bloomberg) -- U.S. stocks tumbled, sending the Dow Jones Industrial Average to its lowest since October 2006, after analysts said Citigroup Inc. will post more writedowns and Research In Motion Ltd. forecast earnings that trailed estimates.
Citigroup led bank and brokerage stocks to a five-year low as Goldman analysts said the lender may report an $8.9 billion second-quarter charge and cut its dividend. Research In Motion, maker of the BlackBerry e-mail phone, posted its biggest drop since 2004 on concern competition with Apple Inc.'s iPhone is reducing earnings. Oracle Corp., the world's second-largest software maker, declined the most since April after predicting the slowest sales growth since 2006.
Standard & Poor's 500 Index lost 13.92, or 1.1 percent, to 1,308.05 at 9:35 a.m. in New York, extending its 2008 retreat to 11 percent. The Dow decreased 109.68, or 0.9 percent, to 11,702.15. The Nasdaq Composite Index sank 40.03 to 2,361.23. Six stocks fell for each that rose on the New York Stock Exchange.
``Most investors are going to sit on the sidelines until they're more certain the sharks have left the waters and it's safe to go back in,'' said Bruce McCain, the Cleveland-based head of investment strategy at Key Private Bank, which oversees about $30 billion. ``The writeoffs have been far worse than anyone would have imagined.''
Nine of 10 industry groups retreated as higher-than-forecast initial jobless claims also weighed on the market. The Commerce Department said the U.S. economy expanded at an annual rate of 1 percent in the first quarter, capping the weakest six months of growth in five years, as measures of inflation accelerated more than previously projected. Energy shares posted the only advance as oil climbed more than $3 a barrel.
European stocks fell after Belgium-based lender Fortis scrapped its dividend and said it will sell shares. Asian stocks advanced.
To contact the reporter on this story: Michael Patterson in New York at mpatterson10@bloomberg.net.
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U.S. Preview: Existing Home Sales Expected to Bump Up to 4.95 Million in May (Repeat)
US Economy | Written by CEP News | Jun 26 08 13:09 GMT |
(CEP News) - Existing home sales for May, which will be released Thursday by the National Association of Realtors (NAR), are expected to see a 1.2% rise to an annual pace of 4.95 million units following April's 1.0% decline to 4.89 million. The pace has been below the 5 million mark for two months.
The previous report saw single-family unit sales come in at 4.34 million, decreasing from a rate of 4.36 million in the previous month, while the national median existing home price was $202,300, up from the previous month but marking an 8% decline from the same time a year ago.
Lehman Brothers economists expect a 2.5% increase to 5.00 million in May based on the unexpected gain in pending home sales in April, which suggests "an increase in closed contracts in May and June."
U.S. pending home sales have been declining in five of the past six months, yet in the most recent report they jumped 6.3% to reach their highest level in six months. The index tracks home sales that have been signed but not finalized, a process that takes another month or two, thereby offering a forecast for existing home sales.
In the longer-term, however, Lehman analysts said the expected gain in existing home sales will be "a fleeting gain" as sales should continue to decline through the rest of the summer, "bottoming in September."
By contrast, Dawn Desjardins, assistant chief economist at RBC Capital Markets, is looking for sales to stabilize, "albeit at a very low level." She said the housing market "remains in deep depression and, for the time being, the main concern is the glut of homes for sale."
Total housing inventories came in with an 11.2-month supply in April, up from the 10-month supply in March.
Desjardins said "persistent price concessions will likely bolster activity but we haven't seen any clear signs of improvement yet."
A third view comes from BBVA economists, who expect housing demand to keep weakening as deflation plagues the housing market. "In our view, the housing market will deteriorate - each time at a slower pace - throughout the rest of the year and will not start to recover until the beginning of 2009."
Other forecasters are looking for a gain of up to 5.3% in the month, which would put the annual pace at 5.15 million units, while the lowest forecasts expect a 2.9% decline to a pace of 4.75 million units.
Earlier in the week, the S&P Case-Shiller U.S. home price index continued to deteriorate in April as the 20-city composite index posted a record annual decline of 15.3%. Meanwhile, the Office of Federal Housing Enterprise Oversight (OFHEO) reported a 0.8% monthly decline in house prices in April.
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) - Existing home sales for May, which will be released Thursday by the National Association of Realtors (NAR), are expected to see a 1.2% rise to an annual pace of 4.95 million units following April's 1.0% decline to 4.89 million. The pace has been below the 5 million mark for two months.
The previous report saw single-family unit sales come in at 4.34 million, decreasing from a rate of 4.36 million in the previous month, while the national median existing home price was $202,300, up from the previous month but marking an 8% decline from the same time a year ago.
Lehman Brothers economists expect a 2.5% increase to 5.00 million in May based on the unexpected gain in pending home sales in April, which suggests "an increase in closed contracts in May and June."
U.S. pending home sales have been declining in five of the past six months, yet in the most recent report they jumped 6.3% to reach their highest level in six months. The index tracks home sales that have been signed but not finalized, a process that takes another month or two, thereby offering a forecast for existing home sales.
In the longer-term, however, Lehman analysts said the expected gain in existing home sales will be "a fleeting gain" as sales should continue to decline through the rest of the summer, "bottoming in September."
By contrast, Dawn Desjardins, assistant chief economist at RBC Capital Markets, is looking for sales to stabilize, "albeit at a very low level." She said the housing market "remains in deep depression and, for the time being, the main concern is the glut of homes for sale."
Total housing inventories came in with an 11.2-month supply in April, up from the 10-month supply in March.
Desjardins said "persistent price concessions will likely bolster activity but we haven't seen any clear signs of improvement yet."
A third view comes from BBVA economists, who expect housing demand to keep weakening as deflation plagues the housing market. "In our view, the housing market will deteriorate - each time at a slower pace - throughout the rest of the year and will not start to recover until the beginning of 2009."
Other forecasters are looking for a gain of up to 5.3% in the month, which would put the annual pace at 5.15 million units, while the lowest forecasts expect a 2.9% decline to a pace of 4.75 million units.
Earlier in the week, the S&P Case-Shiller U.S. home price index continued to deteriorate in April as the 20-city composite index posted a record annual decline of 15.3%. Meanwhile, the Office of Federal Housing Enterprise Oversight (OFHEO) reported a 0.8% monthly decline in house prices in April.
By Patrick McGee, pmcgee@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
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European Market Recap: German Bonds Move Higher, UK Bonds Lower
Market Updates | Written by CEP News | Jun 26 08 11:32 GMT |
(CEP News) - European equity markets are trading lower with the Eurostoxx losing 38.23 points on the day and the UK FTSE 100 down 66.90 points to 5599.199. In Germany, the bund was up 3.0 ticks to 110.48 with yields down 0.2 bps to 4.61% while the 10-year gilt was down 13.0 ticks to 104.29 with yields up 1.9 bps to 5.14%.
The five-year Bobl was up 4.0 ticks to 105.87, the two-year Schatz up 4.0 ticks to 102.39 and the June 2008 Euribor contract trading up 5.5 ticks to 94.94.
The spread between the 10-year Bund and 10-year U.S. Treasury notes widened 1.962 bps to -48.80.
Yields on the UK's 30-year bond were up 2.3 bps to 4.67%, the five-year bond up 0.8 bps to 5.19% and the two-year bond up 0.4 bps to 5.25%.
The September 2008 Short Sterling contract was up 6.0 ticks to 93.92.
Yields on U.S. 10-year Treasury notes are up 2.4 bps to 4.123%.
European stock markets are declining with the Eurostoxx down 38.23 points to 2920.04, the UK FTSE 100 down 66.90 points to 5599.199 and the German DAX down 88.75 points to 6529.09.
The Japanese Nikkei was trading down 7.60 points to 13822.32.
The Canadian dollar was down 0.02 cents to 0.9907 against the USD (1.0099 USD/CAD). Against the euro, the loonie was down 0.17 cents to 0.6305 (1.5859 CAD/EUR).
The U.S. dollar was down 0.07 to 107.75 and the euro was up 0.35 to 169.24, both against the yen.
The euro was up 0.38 cents to 1.5705 while the pound sterling was up 0.69 cents to 1.9820, both against the USD.
The euro was down 0.08 cents to 0.7924 pounds.
The Swiss franc was up 0.39 cents to 1.0311 against the USD and up 0.19 cents to 1.6196 against the euro.
All data taken at 7:30 a.m. EDT.
Generated by CEP Newswires, edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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(CEP News) - European equity markets are trading lower with the Eurostoxx losing 38.23 points on the day and the UK FTSE 100 down 66.90 points to 5599.199. In Germany, the bund was up 3.0 ticks to 110.48 with yields down 0.2 bps to 4.61% while the 10-year gilt was down 13.0 ticks to 104.29 with yields up 1.9 bps to 5.14%.
The five-year Bobl was up 4.0 ticks to 105.87, the two-year Schatz up 4.0 ticks to 102.39 and the June 2008 Euribor contract trading up 5.5 ticks to 94.94.
The spread between the 10-year Bund and 10-year U.S. Treasury notes widened 1.962 bps to -48.80.
Yields on the UK's 30-year bond were up 2.3 bps to 4.67%, the five-year bond up 0.8 bps to 5.19% and the two-year bond up 0.4 bps to 5.25%.
The September 2008 Short Sterling contract was up 6.0 ticks to 93.92.
Yields on U.S. 10-year Treasury notes are up 2.4 bps to 4.123%.
European stock markets are declining with the Eurostoxx down 38.23 points to 2920.04, the UK FTSE 100 down 66.90 points to 5599.199 and the German DAX down 88.75 points to 6529.09.
The Japanese Nikkei was trading down 7.60 points to 13822.32.
The Canadian dollar was down 0.02 cents to 0.9907 against the USD (1.0099 USD/CAD). Against the euro, the loonie was down 0.17 cents to 0.6305 (1.5859 CAD/EUR).
The U.S. dollar was down 0.07 to 107.75 and the euro was up 0.35 to 169.24, both against the yen.
The euro was up 0.38 cents to 1.5705 while the pound sterling was up 0.69 cents to 1.9820, both against the USD.
The euro was down 0.08 cents to 0.7924 pounds.
The Swiss franc was up 0.39 cents to 1.0311 against the USD and up 0.19 cents to 1.6196 against the euro.
All data taken at 7:30 a.m. EDT.
Generated by CEP Newswires, edited by Stephen Huebl, shuebl@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it
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The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
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German Import Prices Have Biggest Gain in 18 Years
By Simone Meier
June 26 (Bloomberg) -- German import prices rose the most in almost 18 years in May, adding to signs of increasing inflation pressure in Europe's largest economy.
Prices gained 2.4 percent from April, when they climbed 0.9 percent, the Federal Statistics Office in Wiesbaden said today. That's the biggest gain since September 1990. Economists expected an increase of 1.5 percent, according to the median of 16 forecasts in a Bloomberg News survey.
A surge in oil prices to a record $139.89 a barrel on June 16 has pushed up inflation and increased pressure on companies to pass on higher costs, even as a stronger euro makes imports more affordable. The European Central Bank has said it is ready to raise borrowing costs from a six-year high next month.
``Inflation pressures are much stronger than expected,'' said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. ``It's mainly due to developments on commodity markets. Prices will continue to rise.''
From a year earlier, import prices increased 7.9 percent after rising 5.7 percent in April, the statistics office said today. That's the strongest annual increase since November 2000. Energy costs increased 10.1 percent in the month and imported crude oil was 13.3 percent more expensive, today's report showed.
The price of oil has increased 43 percent this year, draining the purchasing power of companies and consumers. The euro has gained 6.6 percent against the dollar over the same period.
Faster Inflation
In Germany, inflation probably accelerated to 3.3 percent in June from 3 percent in the previous month, a Bloomberg survey of economists shows. That would be the fastest since harmonized records began in 1996. The statistics office will release the data tomorrow.
The ECB is concerned that faster inflation will feed into wage demands and prompt companies to pass on higher costs. ECB President Jean-Claude Trichet reiterated yesterday that the bank is in a state of ``heightened alertness'' and may raise the key rate from 4 percent in July.
Adding to signs of cost pressures, German producer-price inflation accelerated to the fastest pace in almost two years in May and wholesale prices jumped the most in 26 years. Export-price inflation accelerated to 2.3 percent in May from 2.2 percent in the previous month, today's report showed.
`Readiness to Act'
Lanxess AG, Germany's biggest publicly traded specialty- chemicals maker, said on May 29 it is passing on rising raw- material costs. Continental AG, Europe's second-largest tire maker, said last month it will raise car tire prices in the region by up to 4 percent to counter rising oil costs.
The ECB forecasts inflation in the economy of the 15 euro nations will average about 3.4 percent this year and around 2.4 percent in 2009. The Frankfurt-based bank aims to keep annual gains in consumer prices just below 2 percent.
``Financial markets should by now have understood our readiness to act,'' ECB council member Axel Weber, who is also head of Germany's Bundesbank, said yesterday. ``It is our strong determination to secure a firm anchoring of medium and long-term inflation expectations in line with price stability.''
Investors expect the ECB to raise its key rate twice this year, Eonia forwards show.
Still, with the economy losing momentum and households holding back spending, companies may find it more difficult to raise prices. In Germany, consumer confidence dropped to the lowest in more than two years, GfK AG's index for July showed.
German companies ``are able to pass on higher input prices to consumers,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. ``However, in view of the deterioration in consumer sentiment, this elbowroom can diminish rapidly.''
To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net
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June 26 (Bloomberg) -- German import prices rose the most in almost 18 years in May, adding to signs of increasing inflation pressure in Europe's largest economy.
Prices gained 2.4 percent from April, when they climbed 0.9 percent, the Federal Statistics Office in Wiesbaden said today. That's the biggest gain since September 1990. Economists expected an increase of 1.5 percent, according to the median of 16 forecasts in a Bloomberg News survey.
A surge in oil prices to a record $139.89 a barrel on June 16 has pushed up inflation and increased pressure on companies to pass on higher costs, even as a stronger euro makes imports more affordable. The European Central Bank has said it is ready to raise borrowing costs from a six-year high next month.
``Inflation pressures are much stronger than expected,'' said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. ``It's mainly due to developments on commodity markets. Prices will continue to rise.''
From a year earlier, import prices increased 7.9 percent after rising 5.7 percent in April, the statistics office said today. That's the strongest annual increase since November 2000. Energy costs increased 10.1 percent in the month and imported crude oil was 13.3 percent more expensive, today's report showed.
The price of oil has increased 43 percent this year, draining the purchasing power of companies and consumers. The euro has gained 6.6 percent against the dollar over the same period.
Faster Inflation
In Germany, inflation probably accelerated to 3.3 percent in June from 3 percent in the previous month, a Bloomberg survey of economists shows. That would be the fastest since harmonized records began in 1996. The statistics office will release the data tomorrow.
The ECB is concerned that faster inflation will feed into wage demands and prompt companies to pass on higher costs. ECB President Jean-Claude Trichet reiterated yesterday that the bank is in a state of ``heightened alertness'' and may raise the key rate from 4 percent in July.
Adding to signs of cost pressures, German producer-price inflation accelerated to the fastest pace in almost two years in May and wholesale prices jumped the most in 26 years. Export-price inflation accelerated to 2.3 percent in May from 2.2 percent in the previous month, today's report showed.
`Readiness to Act'
Lanxess AG, Germany's biggest publicly traded specialty- chemicals maker, said on May 29 it is passing on rising raw- material costs. Continental AG, Europe's second-largest tire maker, said last month it will raise car tire prices in the region by up to 4 percent to counter rising oil costs.
The ECB forecasts inflation in the economy of the 15 euro nations will average about 3.4 percent this year and around 2.4 percent in 2009. The Frankfurt-based bank aims to keep annual gains in consumer prices just below 2 percent.
``Financial markets should by now have understood our readiness to act,'' ECB council member Axel Weber, who is also head of Germany's Bundesbank, said yesterday. ``It is our strong determination to secure a firm anchoring of medium and long-term inflation expectations in line with price stability.''
Investors expect the ECB to raise its key rate twice this year, Eonia forwards show.
Still, with the economy losing momentum and households holding back spending, companies may find it more difficult to raise prices. In Germany, consumer confidence dropped to the lowest in more than two years, GfK AG's index for July showed.
German companies ``are able to pass on higher input prices to consumers,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. ``However, in view of the deterioration in consumer sentiment, this elbowroom can diminish rapidly.''
To contact the reporter on this story: Simone Meier in Frankfurt at smeier@bloomberg.net
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Sales of Existing Homes in the U.S. Probably Increased in May
By Courtney Schlisserman
June 26 (Bloomberg) -- Sales of U.S. previously owned houses probably rose in May from a record low as depressed prices lured some buyers into the market, economists said before a report today.
Resales rose 1.2 percent to a 4.95 million annual rate, according to the median forecast of 72 economists surveyed by Bloomberg News ahead of a report by the National Association of Realtors. April's sales pace of 4.89 million matched the lowest level since records began in 1999.
A drop in property values may have spurred demand in some of the most depressed areas, such as California and the Midwest. Even so, rising mortgage rates, a glut of unsold homes, and stricter borrowing rules indicate the real estate recession will persist for most of the year.
``We're not quite convinced we've reached a bottom yet,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts.
The Realtors group is scheduled to release the report at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from 4.75 million to 5.15 million.
Other reports today may show that firings eased last week and the economy grew in the first quarter at a faster pace than previously estimated.
Initial jobless claims fell to 375,000 last week, from 381,000 a week earlier, according to the Bloomberg survey median. While down, the level of applications still indicates the job market is soft.
Economic Growth
Gross domestic product rose at a 1 percent annual rate for the first three months of the year, compared with the 0.9 percent pace estimated last month, according to the survey median. Following the fourth quarter's 0.6 percent growth rate, the economic expansion for the six months ended in March was the weakest in five years.
Federal Reserve policy makers yesterday left the benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, and said growth risks had diminished while higher energy costs boosted the threat of inflation.
The ``ongoing housing contraction,'' stricter lending rules and the jump in fuel costs were among the factors the central bankers predicted would hurt economic growth for at least the rest of the year.
Declines in residential construction have been a drag on growth since the first quarter of 2006. In addition, demand for furniture and building materials has sagged and home prices and consumer confidence have fallen.
Prices Drop
The S&P/Case-Shiller index earlier this week showed prices in 20 U.S. metropolitan areas fell 15.3 percent in April from a year earlier, the steepest decline since records began in 2001.
Rising rates of defaults and foreclosures may bring more homes onto the market and put even more pressure on prices. Banks repossessed twice as many homes in May as they did a year ago and foreclosure filings rose 48 percent, according to RealtyTrac Inc., a real estate database in Irvine, California.
The California Association of Realtors yesterday said sales in that state rose 18 percent in May from the same month last year as median prices dropped 35 percent.
The increase was due to a high number of ``distressed sales,'' the group said.
Recent reports suggest the housing slump will continue. The Mortgage Bankers Association's index of loan applications to purchase homes fell last week to the lowest level in more than five years.
The Commerce Department said yesterday that sales of new homes fell to a 512,000 pace last month, the second-lowest reading since 1991. At that pace, it would take 10.9 months to sell all the houses currently on the market.
Timelier Gauge
While sales of previously owned homes account for about 85 percent of the market, new home sales are considered to be a timelier indicator because they are based on contract signings. Resales are tabulated once a transaction is closed, which typically occurs a month or two later.
``It feels to us as though we're pretty much on the bottom, but that doesn't make you feel too good,'' Robert Toll, chief executive officer of Toll Brothers Inc., the largest U.S. luxury-home builder, said in a Bloomberg Television interview June 24. ``We have noticed some good times coming back in some markets, but in other markets, there's no sign of recovery.''
On June 3, Horsham, Pennsylvania-based Toll reported a loss for the third straight quarter.
Bloomberg Survey
================================================================
GDP Initial Exist
Annual Claims Homes
QOQ% ,000's Mlns
================================================================
Date of Release 06/26 06/26 06/26
Observation Period 1Q F 22-Jun May
----------------------------------------------------------------
Median 1.0% 375 4.95
Average 1.0% 377 4.95
High Forecast 1.3% 388 5.15
Low Forecast 0.9% 370 4.75
Number of Participants 70 37 72
Previous 0.9% 381 4.89
----------------------------------------------------------------
4CAST Ltd. 1.0% --- 4.90
Action Economics 1.2% 375 4.90
Aletti Gestielle SGR 1.0% 378 4.95
Argus Research Corp. 0.9% --- 5.00
Banc of America Securitie 0.9% --- 4.96
Bank of Tokyo- Mitsubishi 1.1% --- 5.00
Bantleon Bank AG --- --- 4.85
Barclays Capital 1.2% 375 5.00
BBVA 1.0% --- 4.80
BMO Capital Markets 1.0% 388 4.94
BNP Paribas 1.0% 386 5.15
Briefing.com 1.0% --- 5.05
Calyon 1.1% --- 4.93
CFC Group 1.0% 373 5.01
CIBC World Markets 1.0% --- 4.95
Citi 1.2% 380 4.95
ClearView Economics 1.0% --- 4.75
Commerzbank AG 1.0% 370 5.00
Commonwealth Bank of Aust --- 370 ---
Credit Suisse 1.1% 380 5.00
Daiwa Securities America 1.0% --- 4.90
DekaBank 1.0% --- 5.00
Desjardins Group 0.9% 378 4.93
Deutsche Bank Securities 0.9% 375 4.75
Deutsche Postbank AG 1.0% --- ---
Dresdner Kleinwort 1.1% --- 4.94
DZ Bank 0.9% --- 4.95
First Trust Advisors 0.9% 376 4.96
Fortis 1.0% --- 5.00
FTN Financial --- --- 4.85
Global Insight Inc. 1.2% --- 4.99
Goldman, Sachs & Co. 1.0% --- 4.96
H&R Block Financial Advis 1.0% 380 4.90
Helaba 1.0% --- 4.90
High Frequency Economics 1.0% --- 5.00
Horizon Investments 1.0% --- 4.90
HSBC Markets 0.9% 375 5.05
IDEAglobal 1.0% 385 5.01
Informa Global Markets 1.2% 375 5.00
ING Financial Markets 1.0% 380 5.05
Insight Economics 1.0% 375 4.85
Intesa-SanPaulo 1.0% --- 4.90
J.P. Morgan Chase 1.3% --- 5.01
Janney Montgomery Scott L 0.9% --- 4.80
JPMorgan Private Client 1.1% 375 4.92
Landesbank Berlin 0.9% 375 4.95
Landesbank BW 1.0% --- 4.95
Lehman Brothers 1.0% 380 5.00
Maria Fiorini Ramirez Inc 1.0% 370 4.90
Merk Investments 1.0% 375 5.04
Merrill Lynch 1.1% --- 4.84
Moody's Economy.com 1.1% 385 5.00
Morgan Stanley & Co. 1.2% --- 4.95
National Bank Financial --- --- 4.85
National City Corporation 1.1% --- 4.93
Newedge 1.1% --- ---
Nomura Securities Intl. 0.9% --- 4.90
Nord/LB --- 370 ---
PNC Bank 1.0% --- 5.00
RBS Greenwich Capital 1.2% --- 4.95
Ried, Thunberg & Co. 1.2% 380 5.00
Schneider Trading Associa 0.9% 370 5.01
Scotia Capital 1.0% --- 4.98
Standard Chartered 0.9% --- 4.90
Stone & McCarthy Research 1.0% 375 5.08
TD Securities 1.0% 380 4.90
Thomson Financial/IFR 1.0% 385 4.88
Tullett Prebon 1.0% 375 4.95
UBS Securities LLC 1.1% 375 5.01
Unicredit MIB --- 370 4.80
University of Maryland 1.0% --- 5.06
Wachovia Corp. 1.1% --- 4.75
Wells Fargo & Co. 1.2% 375 4.90
WestLB AG 0.9% --- 4.93
Westpac Banking Co. 1.0% 385 5.01
Wrightson Associates 1.2% 380 5.00
================================================================
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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BOJ Is Concerned Rising Costs May Crimp Spending, Nakamura Says
By Lily Nonomiya
June 26 (Bloomberg) -- The Bank of Japan is concerned that rising energy and raw-materials costs may force the nation's companies and consumers to spend less, policy board member Seiji Nakamura said.
``Even though capital spending and personal consumption remain solid, we need to carefully watch whether weakening of the spending mechanism will hurt domestic demand,'' Nakamura, 66, said in a speech in Asahikawa, northern Japan.
Nakamura said the central bank is also watching whether rising inflationary pressures worldwide will spread to Japan. ``Rising uncertainty'' over the economic outlook makes it inappropriate to predetermine the policy direction, he added, reinforcing that the bank has no bias toward raising or lowering the benchmark interest rate from 0.5 percent.
``Nakamura's speech indicates that unlike in the U.S. and Europe, rising commodity prices are only intensifying the risk of Japan's economic deterioration,'' said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. ``There's no chance for the central bank to raise interest rates this year at least.''
The yield on Japan's five-year note fell 1.5 basis points to 1.24 percent, the lowest in three weeks. The odds that the Bank of Japan will lift borrowing costs by year-end slid to 36 percent from 50 percent at the start of the week, interest-rate swaps show, according to JPMorgan Chase & Co. calculations.
Faster Inflation
Higher prices of oil and food are spurring the fastest inflation in a decade, crimping profits and forcing companies in the world's second-largest economy to pare spending plans.
``Uncertainty concerning the outlook is rising because of trends in overseas economies, inflationary pressures resulting from surging energy and raw-materials prices, as well as volatility in global financial markets,'' Nakamura said. ``It's important to be flexible in implementing monetary policy in accordance with developments in the economy and prices.''
Only three of 34 economists surveyed by Bloomberg News this month said the bank will increase rates this year. The remaining 31 expect no change in the benchmark rate, the lowest in the industrialized world, which was last raised in February 2007.
Still, Nakamura said Japan's interest rates are lower than the inflation rate and may stimulate demand in the world's second-largest economy.
``Real short-term rates are negative and in relation to the potential growth rate, they are very low,'' Nakamura said. ``I think that this accommodative monetary environment amid such low interest-rate levels will support private demand.''
Consumer Prices
A report tomorrow will probably show that consumer prices excluding fresh food climbed 1.4 percent in May, the fastest pace in a decade. Wholesale inflation surged 4.7 percent last month, the quickest in 27 years, increasing pressure on companies to pass record commodities costs to households.
Given that food and energy costs are rising ``it is expected that gains will remain around the mid-1 percent range for some time,'' Nakamura said. ``There is a need to keep an eye on changes in consumers' inflationary expectations, companies' price-setting behavior as well as whether rising inflationary pressures overseas will spread to Japan.''
Sentiment at the nation's largest manufacturers fell at the fastest pace in four years this quarter, a government survey this week showed, and companies said they plan to cut capital outlays 0.9 percent in the year ending March 31. Data yesterday showed growth in exports slowed to 3.7 percent last month as sales to Europe fell for the first time in more than two years.
Nakamura headed MOL Ferry Co., a subsidiary of Mitsui O.S.K. Lines Ltd., before joining the policy board in April 2007.
To contact the reporter on this story: Lily Nonomiya in Asahikawa City lnonomiya@bloomberg.net
Read more...
June 26 (Bloomberg) -- The Bank of Japan is concerned that rising energy and raw-materials costs may force the nation's companies and consumers to spend less, policy board member Seiji Nakamura said.
``Even though capital spending and personal consumption remain solid, we need to carefully watch whether weakening of the spending mechanism will hurt domestic demand,'' Nakamura, 66, said in a speech in Asahikawa, northern Japan.
Nakamura said the central bank is also watching whether rising inflationary pressures worldwide will spread to Japan. ``Rising uncertainty'' over the economic outlook makes it inappropriate to predetermine the policy direction, he added, reinforcing that the bank has no bias toward raising or lowering the benchmark interest rate from 0.5 percent.
``Nakamura's speech indicates that unlike in the U.S. and Europe, rising commodity prices are only intensifying the risk of Japan's economic deterioration,'' said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. ``There's no chance for the central bank to raise interest rates this year at least.''
The yield on Japan's five-year note fell 1.5 basis points to 1.24 percent, the lowest in three weeks. The odds that the Bank of Japan will lift borrowing costs by year-end slid to 36 percent from 50 percent at the start of the week, interest-rate swaps show, according to JPMorgan Chase & Co. calculations.
Faster Inflation
Higher prices of oil and food are spurring the fastest inflation in a decade, crimping profits and forcing companies in the world's second-largest economy to pare spending plans.
``Uncertainty concerning the outlook is rising because of trends in overseas economies, inflationary pressures resulting from surging energy and raw-materials prices, as well as volatility in global financial markets,'' Nakamura said. ``It's important to be flexible in implementing monetary policy in accordance with developments in the economy and prices.''
Only three of 34 economists surveyed by Bloomberg News this month said the bank will increase rates this year. The remaining 31 expect no change in the benchmark rate, the lowest in the industrialized world, which was last raised in February 2007.
Still, Nakamura said Japan's interest rates are lower than the inflation rate and may stimulate demand in the world's second-largest economy.
``Real short-term rates are negative and in relation to the potential growth rate, they are very low,'' Nakamura said. ``I think that this accommodative monetary environment amid such low interest-rate levels will support private demand.''
Consumer Prices
A report tomorrow will probably show that consumer prices excluding fresh food climbed 1.4 percent in May, the fastest pace in a decade. Wholesale inflation surged 4.7 percent last month, the quickest in 27 years, increasing pressure on companies to pass record commodities costs to households.
Given that food and energy costs are rising ``it is expected that gains will remain around the mid-1 percent range for some time,'' Nakamura said. ``There is a need to keep an eye on changes in consumers' inflationary expectations, companies' price-setting behavior as well as whether rising inflationary pressures overseas will spread to Japan.''
Sentiment at the nation's largest manufacturers fell at the fastest pace in four years this quarter, a government survey this week showed, and companies said they plan to cut capital outlays 0.9 percent in the year ending March 31. Data yesterday showed growth in exports slowed to 3.7 percent last month as sales to Europe fell for the first time in more than two years.
Nakamura headed MOL Ferry Co., a subsidiary of Mitsui O.S.K. Lines Ltd., before joining the policy board in April 2007.
To contact the reporter on this story: Lily Nonomiya in Asahikawa City lnonomiya@bloomberg.net
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Fed Sounds Inflation Alarm, Moves Toward Rate Rise
By Scott Lanman
June 26 (Bloomberg) -- The Federal Reserve is sounding the alarm on inflation without committing to raise interest rates.
The Federal Open Market Committee left its benchmark rate at 2 percent yesterday and said ``upside risks'' to prices have picked up. The statement also said consumer spending is ``firming,'' while acknowledging that rising energy prices will curb growth into 2009.
The FOMC cited ``the elevated state'' of some measures of inflation expectations and dropped an April forecast of a ``leveling out'' in commodity prices. The officials want to keep their options open on rate changes in case the credit crisis worsens and the economy deteriorates after consumers spend their tax rebates, Fed watchers said.
``It is a baby step in the direction of raising rates,'' said Stephen Stanley, chief economist at RBS Greenwich Capital Markets in Greenwich, Connecticut. The central bankers signaled ``they are not expecting to tighten in the near term. That is as far as they are willing to go,'' he said.
Treasuries fell, with the yield on the benchmark 10-year note rising 3 basis points to 4.12 percent as of 7:27 a.m. in London.
The FOMC also said employment had weakened and financial markets remained under ``considerable stress,'' even as growth risks ``diminished somewhat.''
Chairman Ben S. Bernanke and his colleagues stopped short of specifying that inflation was a greater concern than growth. They reiterated language from their April meeting that the Fed will ``act as needed'' to promote both economic expansion and stable prices.
Rate Outlook
Traders trimmed bets on a rate increase in the next three months after the announcement. Odds that the Fed will keep its benchmark at 2 percent in September jumped to 66 percent from 10 percent a day earlier, according to futures contracts quoted on the Chicago Board of Trade.
``I don't think they are signaling a rate hike as a possibility at the next meeting,'' said Cary Leahey, senior economist at Decision Economics Inc. in New York. ``Before they would tighten credit, they would have a statement that would say `we do have a tightening bias' and they would say that as clearly as they can.''
Yesterday's statement reflected Fed officials' comments this month that the central bank must keep price expectations in check to avoid a spiraling in inflation. Bernanke said June 9 that officials would ``strongly resist'' a jump in those expectations.
The decision wasn't unanimous, with Dallas Fed President Richard Fisher dissenting for a fourth straight time, favoring the first rate increase in two years.
Inflation Climbs
Oil prices touched a record $139.89 June 16, extending a rally that helped push the consumer price index up 4.2 percent in the 12 months to May compared with an average of 2.7 percent over the past decade.
Dow Chemical Co. said two days ago that higher raw materials costs will cause the company to raise prices by as much as 25 percent in July, following an increase of as much as 20 percent. United Parcel Service Inc. cut its second-quarter profit forecast June 23 because of rising fuel costs and slowing U.S. growth.
American consumers foresee average annual inflation of 3.4 percent over the next five years, the highest expectation since 1995, according to the Reuters/University of Michigan survey.
Fed's `Duty'
``What they're saying is, we have a duty to price stability, and we want you to know that we are mindful of that duty, but we may not think it's appropriate to act on that duty in the short run,'' said Neal Soss, chief economist at Credit Suisse in New York, who used to work as an aide to former Fed chief Paul Volcker.
Credit markets have yet to normalize and bank losses are mounting as the economic slowdown adds to stresses from the subprime mortgage collapse. The gap between investors' expectations for the Fed's main rate and the rate that banks charge each other for funds increased this month, a sign of continued turmoil.
The difference between the three-month London Interbank Offered Rate and the overnight index swap rate widened to 0.73 percentage point yesterday from 0.68 point at the end of May. Former Fed chairman Alan Greenspan said this month the credit crisis will be over when the spread narrows past 0.25 point.
The worst housing recession in a quarter century is showing few signs of ending. Reports this week showed sales of new homes extended their decline in May, consumer confidence dropped to a 16-year low and orders for durable goods stagnated.
Growth Rate
Yesterday's statement contained no mention of the contraction in gross domestic product that many officials judged likely at their April meeting. The Commerce Department today will probably lift its estimate of GDP growth for the first quarter to a 1 percent annual pace, from a previous estimate of 0.9 percent, according to a Bloomberg News survey of economists.
``I hope we'll be in good enough shape by later in the year'' that the Fed could raise rates, House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said in an interview with Bloomberg Television. Frank added he was ``skeptical'' there will be sufficient improvement by then.
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
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London Bourse Extends Contracts Including Aluminum
By Jae Hur and Stuart Wallace
June 26 (Bloomberg) -- The London Metal Exchange, the world's largest marketplace for copper, lengthened the maturity of some futures contracts to as much as 10 years.
High-grade aluminum and copper contracts were extended to 123 months, from 63, and zinc and nickel to 63 months from 27, the bourse said in an e-mailed statement today. Lead was extended to 63 months, from 15. The changes take place Sept. 29.
``There has been some growing demand from investment banks and metal companies for longer prompt dates as a mine development project normally takes 4-5 years to complete and they need a benchmark forward price for financing and other purposes,'' said Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank in Seoul.
The exchange handled a record $9.5 trillion of futures and options in 2007, a third consecutive year of higher volumes. The LME is facing increased competition as other commodity bourses including the New York Mercantile Exchange plan to increase the number of metals they handle.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.netStuart Wallace at swallace6@bloombe
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June 26 (Bloomberg) -- The London Metal Exchange, the world's largest marketplace for copper, lengthened the maturity of some futures contracts to as much as 10 years.
High-grade aluminum and copper contracts were extended to 123 months, from 63, and zinc and nickel to 63 months from 27, the bourse said in an e-mailed statement today. Lead was extended to 63 months, from 15. The changes take place Sept. 29.
``There has been some growing demand from investment banks and metal companies for longer prompt dates as a mine development project normally takes 4-5 years to complete and they need a benchmark forward price for financing and other purposes,'' said Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank in Seoul.
The exchange handled a record $9.5 trillion of futures and options in 2007, a third consecutive year of higher volumes. The LME is facing increased competition as other commodity bourses including the New York Mercantile Exchange plan to increase the number of metals they handle.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.netStuart Wallace at swallace6@bloombe
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Gold Rises as Euro Holds Gains Versus Dollar After Fed Decision
By Feiwen Rong
June 26 (Bloomberg) -- Gold rose in Asia as the euro traded near the highest against the dollar in more than two weeks, boosting the appeal of the precious metal as an alternative asset.
The dollar fell yesterday after the Federal Reserve gave no indication it will start reversing the most aggressive series of interest-rate cuts in two decades. Gold has gained 6.5 percent this year while the dollar has fallen 6.9 percent versus the euro.
``Gold could firm on a stronger euro,'' Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a report yesterday.
Bullion for immediate delivery was up 0.2 percent to $887.74 an ounce at 10:32 a.m. in Singapore. Silver was little changed at $16.79 an ounce at the same time.
``A choppy to weak oil price will hold back stronger gains,'' Pervan said. Crude oil in New York was little changed at $134.47 a barrel at 10:21 a.m. in Singapore. It fell yesterday on unexpected rise in the U.S. inventories which gained for the first time in six weeks because record fuel prices cut demand.
The dollar traded at $1.5666 against the euro at 10:33 a.m. in Singapore, after falling to $1.5686 yesterday, the weakest since June 9.
European Central Bank President Jean-Claude Trichet told the European Parliament in Brussels yesterday that he's leaving open the option of raising interest rates again after July to contain accelerating inflation.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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June 26 (Bloomberg) -- Gold rose in Asia as the euro traded near the highest against the dollar in more than two weeks, boosting the appeal of the precious metal as an alternative asset.
The dollar fell yesterday after the Federal Reserve gave no indication it will start reversing the most aggressive series of interest-rate cuts in two decades. Gold has gained 6.5 percent this year while the dollar has fallen 6.9 percent versus the euro.
``Gold could firm on a stronger euro,'' Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a report yesterday.
Bullion for immediate delivery was up 0.2 percent to $887.74 an ounce at 10:32 a.m. in Singapore. Silver was little changed at $16.79 an ounce at the same time.
``A choppy to weak oil price will hold back stronger gains,'' Pervan said. Crude oil in New York was little changed at $134.47 a barrel at 10:21 a.m. in Singapore. It fell yesterday on unexpected rise in the U.S. inventories which gained for the first time in six weeks because record fuel prices cut demand.
The dollar traded at $1.5666 against the euro at 10:33 a.m. in Singapore, after falling to $1.5686 yesterday, the weakest since June 9.
European Central Bank President Jean-Claude Trichet told the European Parliament in Brussels yesterday that he's leaving open the option of raising interest rates again after July to contain accelerating inflation.
To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Copper Gains After Federal Reserve Gives No Rate-Rise Signal
By Glenys Sim
June 26 (Bloomberg) -- Copper rose for the first time in four days in Asia as the dollar fell after the Federal Reserve gave no indication that it will increase interest rates, raising the investment appeal of raw materials.
The Fed kept its benchmark rate at 2 percent yesterday and said risks to growth have diminished in the world's largest economy. Copper rallied 26 percent this year as cuts to borrowing costs drove a decline in the dollar and prompted investors to buy commodities.
``The rebound, which we're seeing across the whole metals complex, mainly has to do with the dollar's move after last night's Fed statement,'' Liang Lijuan, analyst at Yide Futures Brokerage Co., said today.
Copper for delivery in three months rose as much as $110, or 1.3 percent, to $8,425 a metric ton on the London Metal Exchange, erasing most of the 1.4 percent decline in the past three days. The contract traded at $8,420 at 10:40 a.m. Singapore time.
``The market already priced expectations of a rate hike at the next meeting but it's less certain now so we're seeing some short-covering taking place,'' said Liang.
Copper for September delivery on the Shanghai Futures Exchange added as much as 410 yuan, or 0.7 percent, to 62,690 yuan ($9,134) a ton, and stood at 62,630 yuan at 10:12 a.m. local time.
``Chinese investors are reluctant chasers of this rally,'' said Zeng Chao, chief metals analyst at Everbright Futures Co. ``Domestic stockpiles are declining and starting to get tight. However, this being the slow consumption season, it's not getting reflected in the prices.''
Among other LME-traded metals, aluminum was up 1 percent at $3,087 a ton, zinc added 2.3 percent to $1,915, lead gained 0.7 percent to $1,795, and tin rose 1.3 percent to $23,000. Nickel had not traded as of 10:40 a.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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June 26 (Bloomberg) -- Copper rose for the first time in four days in Asia as the dollar fell after the Federal Reserve gave no indication that it will increase interest rates, raising the investment appeal of raw materials.
The Fed kept its benchmark rate at 2 percent yesterday and said risks to growth have diminished in the world's largest economy. Copper rallied 26 percent this year as cuts to borrowing costs drove a decline in the dollar and prompted investors to buy commodities.
``The rebound, which we're seeing across the whole metals complex, mainly has to do with the dollar's move after last night's Fed statement,'' Liang Lijuan, analyst at Yide Futures Brokerage Co., said today.
Copper for delivery in three months rose as much as $110, or 1.3 percent, to $8,425 a metric ton on the London Metal Exchange, erasing most of the 1.4 percent decline in the past three days. The contract traded at $8,420 at 10:40 a.m. Singapore time.
``The market already priced expectations of a rate hike at the next meeting but it's less certain now so we're seeing some short-covering taking place,'' said Liang.
Copper for September delivery on the Shanghai Futures Exchange added as much as 410 yuan, or 0.7 percent, to 62,690 yuan ($9,134) a ton, and stood at 62,630 yuan at 10:12 a.m. local time.
``Chinese investors are reluctant chasers of this rally,'' said Zeng Chao, chief metals analyst at Everbright Futures Co. ``Domestic stockpiles are declining and starting to get tight. However, this being the slow consumption season, it's not getting reflected in the prices.''
Among other LME-traded metals, aluminum was up 1 percent at $3,087 a ton, zinc added 2.3 percent to $1,915, lead gained 0.7 percent to $1,795, and tin rose 1.3 percent to $23,000. Nickel had not traded as of 10:40 a.m. in Singapore.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Crude Oil Falls for a Second Day as U.S. Fuel Demand Falters
By Christian Schmollinger
June 26 (Bloomberg) -- Crude oil fell for a second day in New York after a report yesterday showed U.S. fuel demand dropped to the lowest level since January 2007 as record prices limited purchases.
The upward price trend of oil could ease in the years ahead as U.S. gasoline use may have peaked in 2007, Daniel Yergin, chairman of Cambridge Energy Research Associates, told a congressional panel yesterday. Consumption for the week to June 20 has slipped 5 percent this year from its peak of 21.3 million barrels a day on Jan. 4, data from the Energy Department shows.
``With demand noticeably down that's a bit more of a story,'' said Gerard Burg, the energy economist at National Australia Bank Ltd. in Melbourne. ``Overall demand is declining.''
Crude oil for August delivery fell as much as 81 cents, or 0.6 percent, to $133.74 a barrel in after-hours electronic trade on the New York Mercantile Exchange. It was at $133.81 a barrel at 2:43 p.m. Singapore time. Yesterday, futures dropped $2.45, or 1.8 percent, to settle at $134.55 a barrel. Oil touched a record $139.89 on June 16.
Brent crude oil for August settlement declined as much as 76 cents, or 0.6 percent, to $133.57 a barrel on London's ICE Futures Europe exchange. It was at $133.71 a barrel at 2:43 p.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
The average retail unleaded gasoline price in the U.S. has climbed 33 percent this year, reaching a record $4.08 a gallon on June 15.
Gasoline
Gasoline consumption has averaged 9.28 million barrels a day for the past four weeks, down 2.1 percent from last year, the department said yesterday. Motor-fuel purchases fell 2.7 percent last week in the ninth consecutive decline, MasterCard Inc. said in a June 25 report.
``The Energy Department numbers have been lagging some of the other indicators of fuel demand for the past few months such as the MasterCard announcements,'' said National Australia's Burg. ``So this potentially just brings them in line.''
Gasoline for July delivery rose 1.09 cents, or 0.3 percent, to $3.4050 a gallon in New York. Yesterday, it fell 6.94 cents, or 2 percent, to settle at $3.3941 a gallon. Futures reached a record $3.5762 a gallon on June 16.
Brent crude oil for August settlement was at $133.91 a barrel, down 42 cents, on London's ICE Futures Europe exchange at 12:19 p.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
Nigerian Strike
A strike by Nigerian white-collar oil workers against Chevron Corp.'s local unit entered a third day, a union official said. Production remained unaffected.
The union and management will hold talks with Petroleum Minister H. Odein Ajumogobia tomorrow and with Abubakar Yar'Adua, head of the state-owned oil company, on June 27.
The strike will continue through the talks ``as long as we are not getting what we want,'' Jonathan Omare, secretary of the Chevron branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by telephone.
``It's possible the strike may linger but it's more an accumulation of news in Nigeria,'' Burg said. ``With the number of other outages there, it's just one more concern.''
Crude oil also fell as U.S. crude oil inventories unexpectedly increased for the first time in six weeks.
Crude stockpiles gained 803,000 barrels to 301.8 million last week, the Energy Department said. A 1.1 million-barrel drop was forecast by analysts in a Bloomberg News survey.
Fuel Inventories
Gasoline stockpiles fell 153,000 barrels to 208.8 million barrels, the department said. Analysts surveyed before the report were split over whether supplies would rise or fall.
Distillate-fuel inventories rose 2.82 million barrels to 119.4 million barrels in the week ended June 20, the seventh- straight increase, the report showed. A 2 million-barrel gain was forecast. Stockpiles last week were 1.1 percent higher than the five-year average, the department said.
Demand for distillate fuel, a category that includes heating oil and diesel, averaged 4.06 million barrels a day, down by 1.1 percent from a year earlier.
Oil was unchanged earlier yesterday after the Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as record energy prices threaten to increase inflation.
Futures have almost doubled over the past year as investors looking to hedge against the dollar's drop have purchased commodities, helping push oil, gold and corn to records. Rising Asian fuel consumption and falling output in the North Sea, Russia and Mexico have contributed to the rally.
``This might have impacted more of the other commodities such as gold,'' said Burg. ``It was the most likely outcome and was probably factored into the market already.''
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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June 26 (Bloomberg) -- Crude oil fell for a second day in New York after a report yesterday showed U.S. fuel demand dropped to the lowest level since January 2007 as record prices limited purchases.
The upward price trend of oil could ease in the years ahead as U.S. gasoline use may have peaked in 2007, Daniel Yergin, chairman of Cambridge Energy Research Associates, told a congressional panel yesterday. Consumption for the week to June 20 has slipped 5 percent this year from its peak of 21.3 million barrels a day on Jan. 4, data from the Energy Department shows.
``With demand noticeably down that's a bit more of a story,'' said Gerard Burg, the energy economist at National Australia Bank Ltd. in Melbourne. ``Overall demand is declining.''
Crude oil for August delivery fell as much as 81 cents, or 0.6 percent, to $133.74 a barrel in after-hours electronic trade on the New York Mercantile Exchange. It was at $133.81 a barrel at 2:43 p.m. Singapore time. Yesterday, futures dropped $2.45, or 1.8 percent, to settle at $134.55 a barrel. Oil touched a record $139.89 on June 16.
Brent crude oil for August settlement declined as much as 76 cents, or 0.6 percent, to $133.57 a barrel on London's ICE Futures Europe exchange. It was at $133.71 a barrel at 2:43 p.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
The average retail unleaded gasoline price in the U.S. has climbed 33 percent this year, reaching a record $4.08 a gallon on June 15.
Gasoline
Gasoline consumption has averaged 9.28 million barrels a day for the past four weeks, down 2.1 percent from last year, the department said yesterday. Motor-fuel purchases fell 2.7 percent last week in the ninth consecutive decline, MasterCard Inc. said in a June 25 report.
``The Energy Department numbers have been lagging some of the other indicators of fuel demand for the past few months such as the MasterCard announcements,'' said National Australia's Burg. ``So this potentially just brings them in line.''
Gasoline for July delivery rose 1.09 cents, or 0.3 percent, to $3.4050 a gallon in New York. Yesterday, it fell 6.94 cents, or 2 percent, to settle at $3.3941 a gallon. Futures reached a record $3.5762 a gallon on June 16.
Brent crude oil for August settlement was at $133.91 a barrel, down 42 cents, on London's ICE Futures Europe exchange at 12:19 p.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
Nigerian Strike
A strike by Nigerian white-collar oil workers against Chevron Corp.'s local unit entered a third day, a union official said. Production remained unaffected.
The union and management will hold talks with Petroleum Minister H. Odein Ajumogobia tomorrow and with Abubakar Yar'Adua, head of the state-owned oil company, on June 27.
The strike will continue through the talks ``as long as we are not getting what we want,'' Jonathan Omare, secretary of the Chevron branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by telephone.
``It's possible the strike may linger but it's more an accumulation of news in Nigeria,'' Burg said. ``With the number of other outages there, it's just one more concern.''
Crude oil also fell as U.S. crude oil inventories unexpectedly increased for the first time in six weeks.
Crude stockpiles gained 803,000 barrels to 301.8 million last week, the Energy Department said. A 1.1 million-barrel drop was forecast by analysts in a Bloomberg News survey.
Fuel Inventories
Gasoline stockpiles fell 153,000 barrels to 208.8 million barrels, the department said. Analysts surveyed before the report were split over whether supplies would rise or fall.
Distillate-fuel inventories rose 2.82 million barrels to 119.4 million barrels in the week ended June 20, the seventh- straight increase, the report showed. A 2 million-barrel gain was forecast. Stockpiles last week were 1.1 percent higher than the five-year average, the department said.
Demand for distillate fuel, a category that includes heating oil and diesel, averaged 4.06 million barrels a day, down by 1.1 percent from a year earlier.
Oil was unchanged earlier yesterday after the Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as record energy prices threaten to increase inflation.
Futures have almost doubled over the past year as investors looking to hedge against the dollar's drop have purchased commodities, helping push oil, gold and corn to records. Rising Asian fuel consumption and falling output in the North Sea, Russia and Mexico have contributed to the rally.
``This might have impacted more of the other commodities such as gold,'' said Burg. ``It was the most likely outcome and was probably factored into the market already.''
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Asian Currencies Gain; Fed Growth Outlook May Spur Local Demand
By Aaron Pan and Clarissa Batino
June 26 (Bloomberg) -- Asian currencies gained, led by the Philippine peso, on speculation investors will buy the region's assets after the Federal Reserve said risks to growth in the world's biggest economy have diminished.
The peso, the region's worst performer this quarter, climbed after the main stock index advanced for a second day. Bangko Sentral ng Pilipinas Governor Amando Tetangco today said ``the Fed's emphasis on inflation could be positive for emerging-market economies.'' Eight of the 10 most-traded Asian currencies outside of Japan strengthened today.
The Fed is ``improving the sentiment of investors'' and buoying the peso, said Ricky Cebrero, a treasurer at East West Banking Corp. in Manila.
The currency appreciated to 44.455 a dollar as of 11:56 a.m. in Manila, according to Tullett Prebon Plc. It closed at 44.59 yesterday, according to Bankers Association of the Philippines. Today's gain is ``just a knee-jerk reaction'' and the peso may weaken to 45.85 next quarter, the East West treasurer said.
The Fed kept its benchmark rate at 2 percent yesterday. ``That gives the Philippine central bank the flexibility not to be aggressive in hiking interest rates,'' Cebrero said.
Elsewhere, the Singapore dollar gained 0.2 percent to S$1.3646, Malaysia's ringgit added 0.2 percent to 3.2561 and Thailand's baht rose 0.1 percent to 33.57.
Bank Indonesia
Indonesia's rupiah climbed to the strongest level in almost seven weeks on speculation overseas investors will buy the nation's bonds as the yield advantage over the U.S. widens.
The currency gained 1.8 percent this year as Bank Indonesia raised its benchmark interest rate to a one-year high this month after inflation accelerated to the fastest pace in 20 months in May. The central bank will next meet to decide interest rates on July 3.
``With the Fed holding the rate and if BI will raise the rate, that's good for rupiah assets,'' said Rio Lanasier, a currency trader at Bank DBS Indonesia in Jakarta. ``Mostly foreign banks sold dollars for the rupiah to get into bonds.''
The currency rose as high as 9,225, the highest level since May 9, before trading at 9,228 per dollar, compared with 9,263 late yesterday, according to data compiled by Bloomberg. The rupiah may strengthen to 9,220 between now and the end of next week, Lanasier forecast.
Rate Increase
The central bank may raise its reference rate for bill sales next week by 25 basis points to 8.75 percent, Lanasier said, pushing Indonesia's benchmark to 6.75 percentage points above the Fed's, the widest gap since 2006.
Indonesia's inflation may have quickened to 12.7 percent in June from a year earlier, compared with 10.4 percent in May, according to the median estimate of 12 economists in a Bloomberg News survey before a government report on July 1.
South Korea's won rallied on speculation the nation's foreign-exchange authorities will buy the currency to temper inflation at the fastest in seven years.
The won pared its fourth straight monthly decline after Choi Jong Ku, head of the finance ministry's international finance bureau, said this week the government will take ``continuous'' steps to stabilize the won. The local currency gained the most in three months on June 17 after Choi said the same day that the government will take ``solid'' measures to temper inflation.
`Cautious' Mood
``The mood is cautious that the authorities may step in to curb the won's loss as the dollar nears the pre-intervention level of 1,040,'' said Kim Hee, a currency dealer at state-run Korea Development Bank in Seoul. Still, ``the upward pressure for the dollar remains as importers buy dollars to pay bills.''
The won climbed 0.3 percent to 1,034.5 a dollar, according to Seoul Money Brokerage Services Ltd. The currency has fallen 4.2 percent this quarter taking its loss this year to 9.5 percent, the second-worst performance in the region.
The won also gained as overseas investors bought more local shares than they sold, ending 13 days of net sales. Fund managers outside the nation bought a net 29 billion won ($28 million) of shares today, according to Korea Exchange.
Central banks intervene in currency markets by buying or selling foreign exchange. A stronger currency helps limit inflation by reducing the cost of imports.
Taiwan's dollar was little changed at NT$30.378, while the Vietnamese dong held at 16,615.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Clarissa Batino in Manila at cbatino@bloomberg.net.
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June 26 (Bloomberg) -- Asian currencies gained, led by the Philippine peso, on speculation investors will buy the region's assets after the Federal Reserve said risks to growth in the world's biggest economy have diminished.
The peso, the region's worst performer this quarter, climbed after the main stock index advanced for a second day. Bangko Sentral ng Pilipinas Governor Amando Tetangco today said ``the Fed's emphasis on inflation could be positive for emerging-market economies.'' Eight of the 10 most-traded Asian currencies outside of Japan strengthened today.
The Fed is ``improving the sentiment of investors'' and buoying the peso, said Ricky Cebrero, a treasurer at East West Banking Corp. in Manila.
The currency appreciated to 44.455 a dollar as of 11:56 a.m. in Manila, according to Tullett Prebon Plc. It closed at 44.59 yesterday, according to Bankers Association of the Philippines. Today's gain is ``just a knee-jerk reaction'' and the peso may weaken to 45.85 next quarter, the East West treasurer said.
The Fed kept its benchmark rate at 2 percent yesterday. ``That gives the Philippine central bank the flexibility not to be aggressive in hiking interest rates,'' Cebrero said.
Elsewhere, the Singapore dollar gained 0.2 percent to S$1.3646, Malaysia's ringgit added 0.2 percent to 3.2561 and Thailand's baht rose 0.1 percent to 33.57.
Bank Indonesia
Indonesia's rupiah climbed to the strongest level in almost seven weeks on speculation overseas investors will buy the nation's bonds as the yield advantage over the U.S. widens.
The currency gained 1.8 percent this year as Bank Indonesia raised its benchmark interest rate to a one-year high this month after inflation accelerated to the fastest pace in 20 months in May. The central bank will next meet to decide interest rates on July 3.
``With the Fed holding the rate and if BI will raise the rate, that's good for rupiah assets,'' said Rio Lanasier, a currency trader at Bank DBS Indonesia in Jakarta. ``Mostly foreign banks sold dollars for the rupiah to get into bonds.''
The currency rose as high as 9,225, the highest level since May 9, before trading at 9,228 per dollar, compared with 9,263 late yesterday, according to data compiled by Bloomberg. The rupiah may strengthen to 9,220 between now and the end of next week, Lanasier forecast.
Rate Increase
The central bank may raise its reference rate for bill sales next week by 25 basis points to 8.75 percent, Lanasier said, pushing Indonesia's benchmark to 6.75 percentage points above the Fed's, the widest gap since 2006.
Indonesia's inflation may have quickened to 12.7 percent in June from a year earlier, compared with 10.4 percent in May, according to the median estimate of 12 economists in a Bloomberg News survey before a government report on July 1.
South Korea's won rallied on speculation the nation's foreign-exchange authorities will buy the currency to temper inflation at the fastest in seven years.
The won pared its fourth straight monthly decline after Choi Jong Ku, head of the finance ministry's international finance bureau, said this week the government will take ``continuous'' steps to stabilize the won. The local currency gained the most in three months on June 17 after Choi said the same day that the government will take ``solid'' measures to temper inflation.
`Cautious' Mood
``The mood is cautious that the authorities may step in to curb the won's loss as the dollar nears the pre-intervention level of 1,040,'' said Kim Hee, a currency dealer at state-run Korea Development Bank in Seoul. Still, ``the upward pressure for the dollar remains as importers buy dollars to pay bills.''
The won climbed 0.3 percent to 1,034.5 a dollar, according to Seoul Money Brokerage Services Ltd. The currency has fallen 4.2 percent this quarter taking its loss this year to 9.5 percent, the second-worst performance in the region.
The won also gained as overseas investors bought more local shares than they sold, ending 13 days of net sales. Fund managers outside the nation bought a net 29 billion won ($28 million) of shares today, according to Korea Exchange.
Central banks intervene in currency markets by buying or selling foreign exchange. A stronger currency helps limit inflation by reducing the cost of imports.
Taiwan's dollar was little changed at NT$30.378, while the Vietnamese dong held at 16,615.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Clarissa Batino in Manila at cbatino@bloomberg.net.
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S.Korea to pave way for Internet-based banks
SEOUL, June 26 (Reuters) - South Korea is considering allowing the introduction of Internet-based banks to encourage competition and product diversity in the banking industry, a regulator said on Thursday.
The Financial Services Commission (FSC) said in a statement that technology development and growing access to the Internet had raised interest in the establishment of Web-based banks for cost savings and service differentiation.
An online bank, which the FSC calls an Internet primary bank, has no or very few operating offices and handles most of its business via the Internet or electronic means such as automated teller machines.
"We are studying the adoption of small specialised banks, in particular Internet primary banks, for consumers' convenience," the statement said.
South Korea is the world's most wired country, with a majority of households having access to broadband Internet.
Conglomerates and small start-ups tried to jointly set up Web-based banks in South Korea between 2001 and 2002, but cancelled the plans because of a lack of legislation supporting the business model.
The regulatory agency said it would work on details such as defining the extent of Internet banking businesses, cutting the amount of initial capital needed to set up Internet banks and how to help them secure customers.
Possible amendments to the law to support the plan would be submitted within this year, it added.
The FSC also is trying to loosen rules on the consumer finance sector, excluding credit card sales, by lowering entry barriers and allowing firms to raise their portion of lending to above half of total operations, while tightening monitoring.
The deregulation steps were one of the key campaign pledges by President Lee Myung-bak, in office for four months, to boost the financial sector and promote the country as a regional financial centre.
Lee also has pledged to speed up the privatisation of state-run banks and institutions, including Korea Development Bank and Woori Finance Holdings (053000.KS: Quote, Profile, Research, Stock Buzz).
(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)
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The Financial Services Commission (FSC) said in a statement that technology development and growing access to the Internet had raised interest in the establishment of Web-based banks for cost savings and service differentiation.
An online bank, which the FSC calls an Internet primary bank, has no or very few operating offices and handles most of its business via the Internet or electronic means such as automated teller machines.
"We are studying the adoption of small specialised banks, in particular Internet primary banks, for consumers' convenience," the statement said.
South Korea is the world's most wired country, with a majority of households having access to broadband Internet.
Conglomerates and small start-ups tried to jointly set up Web-based banks in South Korea between 2001 and 2002, but cancelled the plans because of a lack of legislation supporting the business model.
The regulatory agency said it would work on details such as defining the extent of Internet banking businesses, cutting the amount of initial capital needed to set up Internet banks and how to help them secure customers.
Possible amendments to the law to support the plan would be submitted within this year, it added.
The FSC also is trying to loosen rules on the consumer finance sector, excluding credit card sales, by lowering entry barriers and allowing firms to raise their portion of lending to above half of total operations, while tightening monitoring.
The deregulation steps were one of the key campaign pledges by President Lee Myung-bak, in office for four months, to boost the financial sector and promote the country as a regional financial centre.
Lee also has pledged to speed up the privatisation of state-run banks and institutions, including Korea Development Bank and Woori Finance Holdings (053000.KS: Quote, Profile, Research, Stock Buzz).
(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)
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South Korean Won Gains as Authorities May Intervene; Bonds Rise
By Kim Kyoungwha
June 26 (Bloomberg) -- South Korea's won rose on speculation the nation's foreign-exchange authorities will buy the currency to temper inflation at the fastest in seven years. Government bonds gained.
The won pared its fourth straight monthly decline after Choi Jong Ku, head of the finance ministry's international finance bureau, said this week the government will take ``continuous'' steps to stabilize the won. The local currency gained the most in three months on June 17 after Choi said that day the nation's authorities will take ``solid'' measures to temper inflation.
``The mood is cautious that the authorities may step in to curb the won's loss as the dollar nears the pre-intervention level of 1,040,'' said Kim Hee, a currency dealer at state-run Korea Development Bank in Seoul. Still, ``the upward pressure for the dollar remains as importers buy dollars to pay bills.''
The won climbed 0.4 percent to 1,034.10 per dollar as of 10:55 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency has fallen 4.2 percent this quarter taking its loss this year to 9.5 percent, the second worst performer of the 10 most-active currencies in Asia outside Japan.
The won also gained as overseas investors bought more local shares than they sold, ending 13 days of net sales. Fund managers outside the nation bought a net 29 billion won ($28 million) of shares today, according to Korea Exchange.
Central banks intervene in currency markets by buying or selling foreign exchange. A stronger currency helps limit inflation by reducing the cost of imports.
Five-year government bonds rose for a second day on optimism yields near the highest since January will lure buyers.
The yield on the 5.25 percent note due March 2013 fell 4 basis points to 5.87 percent, according to Korea Exchange. The price rose 0.18, or 18 won per 10,000 won face amount, to 99.02. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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June 26 (Bloomberg) -- South Korea's won rose on speculation the nation's foreign-exchange authorities will buy the currency to temper inflation at the fastest in seven years. Government bonds gained.
The won pared its fourth straight monthly decline after Choi Jong Ku, head of the finance ministry's international finance bureau, said this week the government will take ``continuous'' steps to stabilize the won. The local currency gained the most in three months on June 17 after Choi said that day the nation's authorities will take ``solid'' measures to temper inflation.
``The mood is cautious that the authorities may step in to curb the won's loss as the dollar nears the pre-intervention level of 1,040,'' said Kim Hee, a currency dealer at state-run Korea Development Bank in Seoul. Still, ``the upward pressure for the dollar remains as importers buy dollars to pay bills.''
The won climbed 0.4 percent to 1,034.10 per dollar as of 10:55 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency has fallen 4.2 percent this quarter taking its loss this year to 9.5 percent, the second worst performer of the 10 most-active currencies in Asia outside Japan.
The won also gained as overseas investors bought more local shares than they sold, ending 13 days of net sales. Fund managers outside the nation bought a net 29 billion won ($28 million) of shares today, according to Korea Exchange.
Central banks intervene in currency markets by buying or selling foreign exchange. A stronger currency helps limit inflation by reducing the cost of imports.
Five-year government bonds rose for a second day on optimism yields near the highest since January will lure buyers.
The yield on the 5.25 percent note due March 2013 fell 4 basis points to 5.87 percent, according to Korea Exchange. The price rose 0.18, or 18 won per 10,000 won face amount, to 99.02. A basis point is 0.01 percentage point.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Philippine Peso Advances as Fed's Growth Outlook Boosts Stocks
By Clarissa Batino
June 26 (Bloomberg) -- The Philippine peso gained on speculation investors will buy the nation's stocks after the Federal Reserve said risks to U.S. growth have diminished and inflation will moderate later this year.
The peso, the region's worst performer this quarter, climbed after the main stock index advanced for a second day. Bangko Sentral ng Pilipinas Governor Amando Tetangco today said ``the Fed's emphasis on inflation could be positive for emerging-market economies.''
Although the Fed flagged inflation risks, ``it also said that it would moderate and that risks to growth have diminished, improving the sentiment of investors'' and buoying the local currency, said Ricky Cebrero, a treasurer at East West Banking Corp. in Manila.
The currency rose to 44.475 per dollar as of 9:50 a.m. in Manila, according to Tullett Prebon Plc. It closed at 44.59 yesterday, according to Bankers Association of the Philippines. Today's gain is ``just a knee-jerk reaction'' and the peso may weaken to 45.85 next quarter, the East West treasurer said.
The Fed kept its benchmark rate at 2 percent yesterday. ``That gives the Philippine central bank the flexibility not to be aggressive in hiking interest rates,'' Cebrero said.
To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.
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June 26 (Bloomberg) -- The Philippine peso gained on speculation investors will buy the nation's stocks after the Federal Reserve said risks to U.S. growth have diminished and inflation will moderate later this year.
The peso, the region's worst performer this quarter, climbed after the main stock index advanced for a second day. Bangko Sentral ng Pilipinas Governor Amando Tetangco today said ``the Fed's emphasis on inflation could be positive for emerging-market economies.''
Although the Fed flagged inflation risks, ``it also said that it would moderate and that risks to growth have diminished, improving the sentiment of investors'' and buoying the local currency, said Ricky Cebrero, a treasurer at East West Banking Corp. in Manila.
The currency rose to 44.475 per dollar as of 9:50 a.m. in Manila, according to Tullett Prebon Plc. It closed at 44.59 yesterday, according to Bankers Association of the Philippines. Today's gain is ``just a knee-jerk reaction'' and the peso may weaken to 45.85 next quarter, the East West treasurer said.
The Fed kept its benchmark rate at 2 percent yesterday. ``That gives the Philippine central bank the flexibility not to be aggressive in hiking interest rates,'' Cebrero said.
To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net.
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Indonesia's Rupiah Rises to Highest in Seven Weeks on Yield
By Lilian Karunungan
June 26 (Bloomberg) -- Indonesia's rupiah rose to the strongest level in almost seven weeks on speculation overseas investors will buy the nation's bonds as the yield advantage over the U.S. widens.
The currency gained 1.8 percent this year as Bank Indonesia raised its benchmark interest rate to a one-year high this month after inflation accelerated to the fastest pace in 20 months in May. The central bank will next meet to decide interest rates on July 3. The U.S. Federal Reserve kept its target rate at 2 percent yesterday.
``With the Fed holding the rate and if BI will raise the rate, that's good for rupiah assets,'' said Rio Lanasier, a currency trader at Bank DBS Indonesia in Jakarta. ``Mostly foreign banks sold dollars to get rupiah to get into bonds.''
The currency rose as high as 9,225, the highest level since May 9, before trading at 9,229 per dollar as of 9:14 a.m. in Jakarta, compared with 9,263 late yesterday, according to data compiled by Bloomberg. The rupiah may strengthen to 9,220 between now and the end of next week, Lanasier forecast.
The central bank may raise its reference rate for bill sales next week by 25 basis points to 8.75 percent, Lanasier said, pushing Indonesia's benchmark to 6.75 percentage points more than the Fed's, the widest gap since 2006.
Inflation may have quickened to 12.7 percent in June from a year earlier, compared with 10.4 percent in May, according to the median estimate of 12 economists in a Bloomberg News survey before a government report on July 1.
To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.
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June 26 (Bloomberg) -- Indonesia's rupiah rose to the strongest level in almost seven weeks on speculation overseas investors will buy the nation's bonds as the yield advantage over the U.S. widens.
The currency gained 1.8 percent this year as Bank Indonesia raised its benchmark interest rate to a one-year high this month after inflation accelerated to the fastest pace in 20 months in May. The central bank will next meet to decide interest rates on July 3. The U.S. Federal Reserve kept its target rate at 2 percent yesterday.
``With the Fed holding the rate and if BI will raise the rate, that's good for rupiah assets,'' said Rio Lanasier, a currency trader at Bank DBS Indonesia in Jakarta. ``Mostly foreign banks sold dollars to get rupiah to get into bonds.''
The currency rose as high as 9,225, the highest level since May 9, before trading at 9,229 per dollar as of 9:14 a.m. in Jakarta, compared with 9,263 late yesterday, according to data compiled by Bloomberg. The rupiah may strengthen to 9,220 between now and the end of next week, Lanasier forecast.
The central bank may raise its reference rate for bill sales next week by 25 basis points to 8.75 percent, Lanasier said, pushing Indonesia's benchmark to 6.75 percentage points more than the Fed's, the widest gap since 2006.
Inflation may have quickened to 12.7 percent in June from a year earlier, compared with 10.4 percent in May, according to the median estimate of 12 economists in a Bloomberg News survey before a government report on July 1.
To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.
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Euro May Stall at $1.5726 on Charts, Societe Generale Says
By Kosuke Goto
June 26 (Bloomberg) -- The euro's advance may stall at $1.5726 against the dollar, said Yuji Saito, head of foreign- exchange sales at Societe Generale SA, citing charts traders use to predict price movements.
The so-called resistance level of $1.5726 represents the upper side of a Bollinger band with a 21-day moving average, said Tokyo-based Saito. Resistance is a level where sellers are expected to outweigh buyers.
``The markets will be well conscious of that technical level as resistance,'' said Saito at France's second-largest bank by market value.
Europe's single currency traded at $1.5668 against the dollar as of 10:34 a.m. in Tokyo from $1.5666 in New York yesterday, when it rose to $1.5686, the highest level since June 9. The euro has gained more than 1 percent in the past week.
Bollinger bands are two standard deviations above and below the average price of a currency or security over the past 20 or 21 days. A standard deviation on a Bollinger band chart measures how tightly prices are clustered around the mean.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter for this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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June 26 (Bloomberg) -- The euro's advance may stall at $1.5726 against the dollar, said Yuji Saito, head of foreign- exchange sales at Societe Generale SA, citing charts traders use to predict price movements.
The so-called resistance level of $1.5726 represents the upper side of a Bollinger band with a 21-day moving average, said Tokyo-based Saito. Resistance is a level where sellers are expected to outweigh buyers.
``The markets will be well conscious of that technical level as resistance,'' said Saito at France's second-largest bank by market value.
Europe's single currency traded at $1.5668 against the dollar as of 10:34 a.m. in Tokyo from $1.5666 in New York yesterday, when it rose to $1.5686, the highest level since June 9. The euro has gained more than 1 percent in the past week.
Bollinger bands are two standard deviations above and below the average price of a currency or security over the past 20 or 21 days. A standard deviation on a Bollinger band chart measures how tightly prices are clustered around the mean.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter for this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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Australian, N.Z. Dollars Rise on Reduced Bets for Fed Rate Gain
By Ron Harui and Tracy Withers
June 26 (Bloomberg) -- The Australian and New Zealand dollars climbed after the U.S. Federal Reserve gave no indication when it will begin raising interest rates after leaving them unchanged yesterday.
``The Fed has moved to neutral and maybe wasn't as aggressive as some had expected,'' said Alex Sinton, senior currency trader at ANZ National Bank Ltd. in Auckland. ``The Australian dollar has moved higher and dragged the kiwi with it,'' he said, calling New Zealand's currency by its nickname.
Australia's dollar rose to 96.02 U.S. cents, the highest since June 10, before trading at 95.92 U.S. cents at 12:42 p.m. in Sydney from 95.53 cents late in Asia yesterday. It has gained 5.1 percent this quarter and 9.6 percent this year.
New Zealand's dollar climbed to 75.74 U.S. cents from 75.60 cents late in Asia yesterday. It earlier reached 76.03 cents, the strongest since June 23. It has fallen 3.6 percent this quarter and 1.1 percent this year.
Fed Rate Bets
The Australian currency gained for a third day after Fed policy makers kept borrowing costs at 2 percent and said that ``uncertainty'' about the inflation outlook remains high. While economists were unanimous that the Fed would leave rates unchanged, some traders were expecting policy makers to signal that rates may need to rise.
Futures contracts on the Chicago Board of Trade show a 66 percent chance the Fed will hold the target rate for overnight lending between banks unchanged at the September meeting, compared with 10 percent odds the previous day. There's a 94 percent probability the Fed will keep rates on hold at its August meeting.
Benchmark interest rates are 7.25 percent in Australia and 8.25 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the Australian and New Zealand currencies favorites for the so-called carry trade.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency market moves erase those profits.
`Through to Parity'
``We've got cash rates at 7.25 percent, so the currency really is one of the highest-yielding currencies around the globe,'' said Martin Lakos, division director at Macquarie Private Wealth in Sydney, in a Bloomberg Television interview. ``It is possible that it'll move through to parity,'' he said referring to the Australian dollar against the U.S. dollar.
Australia's dollar climbed as high as 103.65 yen, the most since Nov. 9, from 103.13 yen late in Asia yesterday. The currency has gained 13.8 percent this quarter and 5.9 percent this year against the yen. New Zealand's dollar rose to 81.77 yen from 81.60 yen. It has appreciated 4.4 percent this quarter, limiting its drop this year to 4.5 percent.
New Zealand's dollar pared today's advance after a government report showed the nation's current-account deficit narrowed less than economists expected in the first quarter as payments to foreign investors accelerated.
The gap shrank to NZ$13.79 billion ($10.5 billion) in the 12 months ended March 31 from NZ$13.84 billion in the year through December, Statistics New Zealand said in Wellington today. The median estimate of 12 economists surveyed by Bloomberg News was for a NZ$13.32 billion shortfall.
`Midst of Recession'
``There is a risk, with the economy in the midst of a recession, that investors could lose confidence in New Zealand's ability to meet its obligations, which is a big negative for the currency,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney.
A separate government report tomorrow may show New Zealand's economy contracted 0.3 percent in the first three months of the year, according to the median forecast of 13 economists surveyed by Bloomberg News. Seven of the economists said the economy may also shrink in the second quarter, pushing New Zealand into its first recession since 1998.
Australian 10-year government bonds declined. The yield on the 10-year note rose 3 basis points, or 0.03 percentage point, to 6.51 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond maturing in March 2019 fell 0.2, or A$2.00 per A$1,000 face amount, to 90.383.
New Zealand government debt were little changed. The yield on the 10-year note was unchanged from yesterday at 6.42 percent and the three-year yield held at 6.48 percent. Bond yields move inversely to prices.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Tracy Withers in Wellington at twithers@bloomberg.net.
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Yen Falls to Record Low Against Euro on Lure of Higher Yield
By Stanley White and Kosuke Goto
June 26 (Bloomberg) -- The yen fell to a record low against the euro on speculation Japanese investors will use summer bonuses to buy overseas assets offering higher yields.
Japan's currency declined for a third day versus the 15- nation euro as traders forecast the European Central Bank will raise interest rates next month as the Bank of Japan keeps its benchmark rate on hold. The dollar was near the lowest in more than two weeks against the euro after the Federal Reserve gave no indication it will increase borrowing costs following yesterday's decision to keep rates at 2 percent.
``Investor outflows could weigh on the yen,'' said Katsunori Kitakura, chief treasury dealer in Tokyo at Chuo Mitsui Trust & Banking Co., Japan's seventh-largest publicly listed lender. ``With no clear guidance from the Fed, that puts the spotlight on the euro. There's no sign of a rate hike in Japan, leaving the yen at a great disadvantage.''
The yen fell to 169.27 per euro, the weakest since the currency's debut in 1999, and traded at 169.21 as of 11:45 a.m. in Tokyo from 168.90 yesterday. Japan's currency stood at 107.98 versus the dollar from 107.80. The U.S. currency traded at $1.5670 per euro after dropping yesterday to $1.5686, the lowest level since June 9. The yen may decline to 170 per euro next week, Kitakura forecast.
Against the Australian dollar, the yen declined to a seven- month low of 103.63 from 103.48 late yesterday in New York. It fell to 213.21 per British pound from 212.93.
Yield Spread
Employees at private companies may get summer bonuses totaling 14.8 trillion yen ($137 billion) in 2008, down 1.8 percent from a year earlier, according to Kazuyoshi Nakata, an economist in Tokyo at Mitsubishi UFJ Research and Consulting Co., a unit of Japan's largest publicly traded lender by assets.
The yield spread on two-year German government debt over similar maturity Japanese government notes widened to 3.72 percentage points from 3.37 percentage points a month ago.
ECB President Jean-Claude Trichet told the European Parliament in Brussels yesterday that he's leaving open the option of raising interest rates again to contain accelerating inflation.
``The ECB will raise rates in July for sure,'' said Takahide Nagasaki, senior currency strategist in Tokyo at Daiwa Securities SMBC Co., a unit of Japan's second-largest brokerage. ``In Japan, it's still hard to do so. The widening interest-rate gap will push down the yen against the euro to 170.''
Traders raised wagers the ECB will increase borrowing costs. The implied yield on the December Euribor futures contract climbed to 5.27 percent from 5 percent at the end of May.
BOJ Rates
Investors reduced bets the BOJ will raise borrowing costs this year. The odds of a Bank of Japan rate increase fell to 37 percent from 92 percent on June 11, interest-rate swaps show.
The dollar was also near a two-week low versus the Swiss franc as traders reduced bets the U.S. central bank will raise its target lending rate by a quarter-percentage point in September. Policy makers said yesterday in the statement announcing the decision to hold the fed funds target at 2 percent that ``uncertainty'' about the inflation outlook remains high.
``The trend is to sell the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``As worried as the Fed is about inflation, weakness in many parts of the economy means it won't be able to raise rates as soon as it might like.''
The U.S. currency may fall to $1.57 per euro and 107.30 yen today, he forecast.
Fed Futures
Futures on the Chicago Board of Trade show a 66 percent chance the central bank will leave its target rate for overnight lending between banks unchanged at its September meeting, compared with 10 percent odds yesterday. There's a 94 percent chance the Fed will keep rates on hold at the next meeting in August, the contracts show.
Fed Chairman Ben S. Bernanke and his colleagues refreshed their forecasts at their two-day meeting, reporting that the economy keeps expanding. At the same time, crude oil prices have almost doubled in the past year and the cost of commodities from wheat to tin jumped to unprecedented levels.
The Fed's preferred gauge of inflation, which excludes food and fuel costs, was unchanged at 2.1 percent last month, according to the median forecast of 26 economists surveyed by Bloomberg News. The Commerce Department will deliver its report tomorrow. Policy makers including Bernanke have said they prefer core inflation to be below 2 percent.
The U.S. currency has dropped 12 percent against the euro since Sept. 18, when the Fed made the first of seven reductions in the target lending rate. The dollar touched $1.6019 per euro on April 22, the weakest level on record.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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June 26 (Bloomberg) -- The yen fell to a record low against the euro on speculation Japanese investors will use summer bonuses to buy overseas assets offering higher yields.
Japan's currency declined for a third day versus the 15- nation euro as traders forecast the European Central Bank will raise interest rates next month as the Bank of Japan keeps its benchmark rate on hold. The dollar was near the lowest in more than two weeks against the euro after the Federal Reserve gave no indication it will increase borrowing costs following yesterday's decision to keep rates at 2 percent.
``Investor outflows could weigh on the yen,'' said Katsunori Kitakura, chief treasury dealer in Tokyo at Chuo Mitsui Trust & Banking Co., Japan's seventh-largest publicly listed lender. ``With no clear guidance from the Fed, that puts the spotlight on the euro. There's no sign of a rate hike in Japan, leaving the yen at a great disadvantage.''
The yen fell to 169.27 per euro, the weakest since the currency's debut in 1999, and traded at 169.21 as of 11:45 a.m. in Tokyo from 168.90 yesterday. Japan's currency stood at 107.98 versus the dollar from 107.80. The U.S. currency traded at $1.5670 per euro after dropping yesterday to $1.5686, the lowest level since June 9. The yen may decline to 170 per euro next week, Kitakura forecast.
Against the Australian dollar, the yen declined to a seven- month low of 103.63 from 103.48 late yesterday in New York. It fell to 213.21 per British pound from 212.93.
Yield Spread
Employees at private companies may get summer bonuses totaling 14.8 trillion yen ($137 billion) in 2008, down 1.8 percent from a year earlier, according to Kazuyoshi Nakata, an economist in Tokyo at Mitsubishi UFJ Research and Consulting Co., a unit of Japan's largest publicly traded lender by assets.
The yield spread on two-year German government debt over similar maturity Japanese government notes widened to 3.72 percentage points from 3.37 percentage points a month ago.
ECB President Jean-Claude Trichet told the European Parliament in Brussels yesterday that he's leaving open the option of raising interest rates again to contain accelerating inflation.
``The ECB will raise rates in July for sure,'' said Takahide Nagasaki, senior currency strategist in Tokyo at Daiwa Securities SMBC Co., a unit of Japan's second-largest brokerage. ``In Japan, it's still hard to do so. The widening interest-rate gap will push down the yen against the euro to 170.''
Traders raised wagers the ECB will increase borrowing costs. The implied yield on the December Euribor futures contract climbed to 5.27 percent from 5 percent at the end of May.
BOJ Rates
Investors reduced bets the BOJ will raise borrowing costs this year. The odds of a Bank of Japan rate increase fell to 37 percent from 92 percent on June 11, interest-rate swaps show.
The dollar was also near a two-week low versus the Swiss franc as traders reduced bets the U.S. central bank will raise its target lending rate by a quarter-percentage point in September. Policy makers said yesterday in the statement announcing the decision to hold the fed funds target at 2 percent that ``uncertainty'' about the inflation outlook remains high.
``The trend is to sell the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``As worried as the Fed is about inflation, weakness in many parts of the economy means it won't be able to raise rates as soon as it might like.''
The U.S. currency may fall to $1.57 per euro and 107.30 yen today, he forecast.
Fed Futures
Futures on the Chicago Board of Trade show a 66 percent chance the central bank will leave its target rate for overnight lending between banks unchanged at its September meeting, compared with 10 percent odds yesterday. There's a 94 percent chance the Fed will keep rates on hold at the next meeting in August, the contracts show.
Fed Chairman Ben S. Bernanke and his colleagues refreshed their forecasts at their two-day meeting, reporting that the economy keeps expanding. At the same time, crude oil prices have almost doubled in the past year and the cost of commodities from wheat to tin jumped to unprecedented levels.
The Fed's preferred gauge of inflation, which excludes food and fuel costs, was unchanged at 2.1 percent last month, according to the median forecast of 26 economists surveyed by Bloomberg News. The Commerce Department will deliver its report tomorrow. Policy makers including Bernanke have said they prefer core inflation to be below 2 percent.
The U.S. currency has dropped 12 percent against the euro since Sept. 18, when the Fed made the first of seven reductions in the target lending rate. The dollar touched $1.6019 per euro on April 22, the weakest level on record.
To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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Oil Is Steady After Falling as U.S. Demand Drops on High Prices
By Christian Schmollinger
June 26 (Bloomberg) -- Crude oil was little changed after falling more than $2 a barrel yesterday as a report showed U.S. fuel demand fell to its lowest level since January 2007 as record prices limited purchases.
Fuel demand averaged 20.2 million barrels a day in the past four weeks, down 2.3 percent from a year earlier, the Energy Department said yesterday in a report. Consumption has slipped 5 percent this year from its peak of 21.3 million barrels a day on Jan. 4, data from the Energy Department shows. Retail gasoline prices have climbed 31 percent over that same period.
``With demand noticeably down that's a bit more of a story,'' said Gerard Burg, energy economist at National Australia Bank Ltd. in Melbourne. ``Overall demand is declining.''
Crude oil for August delivery was at $134.47 a barrel, down 8 cents, at 10:21 a.m. Singapore time in after-hours electronic trade on the New York Mercantile Exchange. Yesterday, futures dropped $2.45, or 1.8 percent, to settle at $134.55 a barrel. Oil touched a record $139.89 on June 16.
Gasoline consumption has averaged 9.28 million barrels a day for the past four weeks, down 2.1 percent from last year, the department said yesterday. Motor fuel purchases fell 2.7 percent last week, the ninth consecutive decline, MasterCard Inc. said in a June 25 report.
``The Energy Department numbers have been lagging some of the other indicators of fuel demand for the past few months such as the MasterCard announcements,'' said National Australia's Burg. ``So this potentially just brings them in line.''
Gasoline for July delivery rose 0.59 cent to $3.40 a gallon in New York. Yesterday, it fell 6.94 cents, or 2 percent, to settle at $3.3941 a gallon. Futures reached a record $3.5762 a gallon on June 16.
Brent, Nigeria
Brent crude oil for August settlement was at $134.12 a barrel, down 21 cents, on London's ICE Futures Europe exchange at 10:19 a.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
A strike by Nigerian white-collar oil workers against Chevron Corp.'s local unit entered a third day, a union official said. Production remained unaffected.
The union and management will hold talks with Petroleum Minister H. Odein Ajumogobia tomorrow and with Abubakar Yar'Adua, head of the state-owned oil company, on June 27.
The strike will continue through the talks ``as long as we are not getting what we want,'' Jonathan Omare, secretary of the Chevron branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by telephone.
``It's possible the strike may linger but it's more an accumulation of news in Nigeria,'' Burg said. ``With the number of other outages there, it's just one more concern.''
Stockpiles Gain
Crude oil also fell as U.S. crude oil inventories unexpectedly increased for the first time in six weeks.
Crude stockpiles gained 803,000 barrels to 301.8 million last week, the Energy Department said. A 1.1 million-barrel drop was forecast by analysts in a Bloomberg News survey.
Gasoline stockpiles fell 153,000 barrels to 208.8 million barrels, the department said. Analysts surveyed before the report were split over whether supplies would rise or fall.
Distillate-fuel inventories rose 2.82 million barrels to 119.4 million barrels in the week ended June 20, the seventh- straight increase, the report showed. A 2 million-barrel gain was forecast. Stockpiles last week were 1.1 percent higher than the five-year average, the department said.
Demand for distillate fuel, a category that includes heating oil and diesel, averaged 4.06 million barrels a day, down by 1.1 percent from a year earlier.
Interest Rates
Oil was unchanged earlier yesterday after the Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as record energy prices threaten to increase inflation.
Futures have almost doubled over the past year as investors looking to hedge against the dollar's drop have purchased commodities, helping push oil, gold and corn to records. Rising Asian fuel consumption and falling output in the North Sea, Russia and Mexico have contributed to the rally.
``This might have impacted more of the other commodities such as gold,'' said Burg. ``It was the most likely outcome and was probably factored into the market already.''
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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June 26 (Bloomberg) -- Crude oil was little changed after falling more than $2 a barrel yesterday as a report showed U.S. fuel demand fell to its lowest level since January 2007 as record prices limited purchases.
Fuel demand averaged 20.2 million barrels a day in the past four weeks, down 2.3 percent from a year earlier, the Energy Department said yesterday in a report. Consumption has slipped 5 percent this year from its peak of 21.3 million barrels a day on Jan. 4, data from the Energy Department shows. Retail gasoline prices have climbed 31 percent over that same period.
``With demand noticeably down that's a bit more of a story,'' said Gerard Burg, energy economist at National Australia Bank Ltd. in Melbourne. ``Overall demand is declining.''
Crude oil for August delivery was at $134.47 a barrel, down 8 cents, at 10:21 a.m. Singapore time in after-hours electronic trade on the New York Mercantile Exchange. Yesterday, futures dropped $2.45, or 1.8 percent, to settle at $134.55 a barrel. Oil touched a record $139.89 on June 16.
Gasoline consumption has averaged 9.28 million barrels a day for the past four weeks, down 2.1 percent from last year, the department said yesterday. Motor fuel purchases fell 2.7 percent last week, the ninth consecutive decline, MasterCard Inc. said in a June 25 report.
``The Energy Department numbers have been lagging some of the other indicators of fuel demand for the past few months such as the MasterCard announcements,'' said National Australia's Burg. ``So this potentially just brings them in line.''
Gasoline for July delivery rose 0.59 cent to $3.40 a gallon in New York. Yesterday, it fell 6.94 cents, or 2 percent, to settle at $3.3941 a gallon. Futures reached a record $3.5762 a gallon on June 16.
Brent, Nigeria
Brent crude oil for August settlement was at $134.12 a barrel, down 21 cents, on London's ICE Futures Europe exchange at 10:19 a.m. Singapore time. It fell $2.13, or 1.6 percent, to settle at $134.33 a barrel yesterday. Prices climbed to a record $139.32 on June 16.
A strike by Nigerian white-collar oil workers against Chevron Corp.'s local unit entered a third day, a union official said. Production remained unaffected.
The union and management will hold talks with Petroleum Minister H. Odein Ajumogobia tomorrow and with Abubakar Yar'Adua, head of the state-owned oil company, on June 27.
The strike will continue through the talks ``as long as we are not getting what we want,'' Jonathan Omare, secretary of the Chevron branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by telephone.
``It's possible the strike may linger but it's more an accumulation of news in Nigeria,'' Burg said. ``With the number of other outages there, it's just one more concern.''
Stockpiles Gain
Crude oil also fell as U.S. crude oil inventories unexpectedly increased for the first time in six weeks.
Crude stockpiles gained 803,000 barrels to 301.8 million last week, the Energy Department said. A 1.1 million-barrel drop was forecast by analysts in a Bloomberg News survey.
Gasoline stockpiles fell 153,000 barrels to 208.8 million barrels, the department said. Analysts surveyed before the report were split over whether supplies would rise or fall.
Distillate-fuel inventories rose 2.82 million barrels to 119.4 million barrels in the week ended June 20, the seventh- straight increase, the report showed. A 2 million-barrel gain was forecast. Stockpiles last week were 1.1 percent higher than the five-year average, the department said.
Demand for distillate fuel, a category that includes heating oil and diesel, averaged 4.06 million barrels a day, down by 1.1 percent from a year earlier.
Interest Rates
Oil was unchanged earlier yesterday after the Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as record energy prices threaten to increase inflation.
Futures have almost doubled over the past year as investors looking to hedge against the dollar's drop have purchased commodities, helping push oil, gold and corn to records. Rising Asian fuel consumption and falling output in the North Sea, Russia and Mexico have contributed to the rally.
``This might have impacted more of the other commodities such as gold,'' said Burg. ``It was the most likely outcome and was probably factored into the market already.''
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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China Stocks Rise for Third Day; Vanke, Ping An Lead Advance
By Zhang Shidong
June 26 (Bloomberg) -- China's stocks rose for a third day as some investors judged an eight-month slump overdone. China Vanke Co. and Ping An Insurance (Group) Co. led the advance.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, gained 26, or 0.9 percent, to 2,995.54 as of 10:03 a.m. local time. Almost four stocks rose for each that declined on the benchmark gauge, which has fallen 49 percent from its Oct. 16 record.
Stocks have slumped amid concern government measures to control inflation will hurt corporate profits. Consumer prices gained 7.7 percent in May, slower than April's 8.5 percent clip.
``The market has already bottomed out and the investment values stand out now,'' said Wu Youhui, a strategist at GF Securities Co. in Guangzhou. ``We've also seen a trend of decelerating inflation growth, which will be positive for the market.''
China Vanke, the country's largest publicly traded real- estate developer, gained 2.7 percent to 9.94 yuan, paring its decline this year to 45 percent. Ping An added 1.4 percent to 51.69 yuan. The stock is still down 51 percent in 2008.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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June 26 (Bloomberg) -- China's stocks rose for a third day as some investors judged an eight-month slump overdone. China Vanke Co. and Ping An Insurance (Group) Co. led the advance.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, gained 26, or 0.9 percent, to 2,995.54 as of 10:03 a.m. local time. Almost four stocks rose for each that declined on the benchmark gauge, which has fallen 49 percent from its Oct. 16 record.
Stocks have slumped amid concern government measures to control inflation will hurt corporate profits. Consumer prices gained 7.7 percent in May, slower than April's 8.5 percent clip.
``The market has already bottomed out and the investment values stand out now,'' said Wu Youhui, a strategist at GF Securities Co. in Guangzhou. ``We've also seen a trend of decelerating inflation growth, which will be positive for the market.''
China Vanke, the country's largest publicly traded real- estate developer, gained 2.7 percent to 9.94 yuan, paring its decline this year to 45 percent. Ping An added 1.4 percent to 51.69 yuan. The stock is still down 51 percent in 2008.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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