By Bo Nielsen
Sept. 10 (Bloomberg) -- Norway's krone rose against the dollar after a government report showed underlying inflation held near a 7 1/2-year high in August, keeping pressure on the central bank to raise interest rates.
The krone snapped a nine-day drop versus the U.S. currency after Statistics Norway said the inflation rate, excluding energy costs and taxes, fell to 2.8 percent, from 2.9 percent in July. Sweden's krona also rose for the first time in 10 days against the dollar, after the longest run of declines in 12 1/2 years.
Norway's krone advanced 0.2 percent to 5.6846 per dollar by 10:15 a.m. in Oslo, from 5.6971 yesterday. It was also at 8.0528 per euro, from 8.0510.
Norges Bank, which raised its key interest rate twice this year, to 5.75 percent, a 5 1/2-year high, indicated in June it may deliver one more increase by December to curb inflation. The next policy meeting is on Sept. 24.
In other trading, the Swedish currency climbed 0.2 percent to 6.7290 per dollar, ending the longest losing run since January 1996. It was also at 9.5270 per euro, from 9.5289 yesterday.
The krona was buoyed as Swedish industrial production unexpectedly advanced for a second month in July, keeping pressure on the Riksbank to increase interest rates.
Production climbed an adjusted 1.2 percent from June, when it rose a revised 0.8 percent, Stockholm-based Statistics Sweden said today. Output was expected to fall 0.3 percent, according to the median estimate of eight analysts surveyed by Bloomberg.
``We'll always get small corrections in the krona but the currency is weakening in the longer run,'' said John Hydeskov, a senior analyst at Danske Bank A/S, Denmark's biggest bank.
The Riksbank last week lifted its main rate to 4.75 percent and said growth and inflation will slow in Scandinavia's largest economy, signaling its next move in rates will probably be a reduction.
Nordic government bonds fell, with the yield on Sweden's 5.25 percent note due in March 2011 gaining 1 basis point to 4.22 percent. The yield on Norway's 6 percent bond maturing May 2011 climbed 2 basis points to 5.05 percent, according to Danske Bank prices. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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Wednesday, September 10, 2008
Yuan Is Little Changed as Easing Prices May Allow Slower Gains
By Bob Chen and Jiang Jianguo
Sept. 10 (Bloomberg) -- The yuan was little changed after gaining yesterday on speculation cooling inflation will give China's central bank more leeway to slow the currency's appreciation and boost export growth. Bonds advanced.
The appreciation in the currency, which is Asia's best performer this year, has stalled this quarter after a 4.2 percent rise in the first three months and 2.3 percent in the second quarter. Consumer prices climbed 4.9 percent in August from a year ago, the slowest pace since June 2007, China's statistics bureau said today. Currency gains hurt exporters by making their products more expensive and reducing demand in overseas markets.
``Inflation coming off will ease the pressure on China to appreciate the yuan,'' said Daniel Soh, an economist at Forecast Pte in Singapore. ``China is concerned about a spike in the unemployment rate in the export sector.''
The currency traded at 6.8392 a dollar as of 1:07 p.m. in Shanghai, versus 6.8381 yesterday, according to the China Foreign Exchange Trade System.
In a sign of weaker growth ahead, China's passenger-car sales fell in August for the first time in more than three years, the China Association of Automobile Manufacturers said yesterday.
Focus on Growth
China's trade surplus unexpectedly widened in August to $28.69 billion from $25.28 billion the previous month, a government report showed today. Economists in a Bloomberg News survey had forecast the surplus would shrink to $23.55 billion. Exports growth in August slowed less than expected while imports growth weakened more than expected.
``The Chinese government has already shifted its focus on growth,'' said Jerry Yoshikoshi, a market analyst with Sumitomo Mitsui Banking Corp. in Singapore. ``We'll continue to see a slower appreciation or flat movement in the yuan.''
China's economy expanded 10.1 percent in the three months ended June 30 from a year earlier, slowing for a fourth straight quarter as exports cooled. Weaker overseas demand, rising costs and a strengthening currency have put pressure on exporters of shoes, toys and clothes.
Non-deliverable forwards contracts indicate the yuan will gain 1 percent to 6.774 per dollar in the next six months. Forwards are agreements in which assets are bought and sold at current prices for future delivery.
Low Yields
Government bonds rose, pushing 10-year yields to the lowest in more than two months, as inflation slowed.
The yield on the 4.07 percent note due March 2018 fell 1 basis point to 4.09 percent, the lowest since July 1, according to the China Interbank Bond Market. The price rose 0.08 per 100 yuan face amount to 99.85. A basis point is 0.01 percentage point.
``This is good news for the bond market,'' said Nie Shuguang, a fixed-income trader at Industrial Bank Co. in Shanghai. Inflation erodes the fixed payments from debt.
Food prices rose 10.3 percent in August from a year earlier after gaining 14.4 percent in July, the statistics bureau said. Non-food prices increased 2.1 percent, the same as the gain in July. Food costs account for about a third of China's consumer price index.
China Development Bank sold 30 billion yuan ($4.39 billion) of 10-year bonds at a 4.28 percent yield today, less than the 4.5 percent some traders had estimated, Nie said. Investors have the option to sell the securities back to the bank at face value after three years. The lender increased the offer size by 50 percent from 20 billion yuan.
To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net; Jiang Jianguo in Shanghai at jjiang@bloomberg.net
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Sept. 10 (Bloomberg) -- The yuan was little changed after gaining yesterday on speculation cooling inflation will give China's central bank more leeway to slow the currency's appreciation and boost export growth. Bonds advanced.
The appreciation in the currency, which is Asia's best performer this year, has stalled this quarter after a 4.2 percent rise in the first three months and 2.3 percent in the second quarter. Consumer prices climbed 4.9 percent in August from a year ago, the slowest pace since June 2007, China's statistics bureau said today. Currency gains hurt exporters by making their products more expensive and reducing demand in overseas markets.
``Inflation coming off will ease the pressure on China to appreciate the yuan,'' said Daniel Soh, an economist at Forecast Pte in Singapore. ``China is concerned about a spike in the unemployment rate in the export sector.''
The currency traded at 6.8392 a dollar as of 1:07 p.m. in Shanghai, versus 6.8381 yesterday, according to the China Foreign Exchange Trade System.
In a sign of weaker growth ahead, China's passenger-car sales fell in August for the first time in more than three years, the China Association of Automobile Manufacturers said yesterday.
Focus on Growth
China's trade surplus unexpectedly widened in August to $28.69 billion from $25.28 billion the previous month, a government report showed today. Economists in a Bloomberg News survey had forecast the surplus would shrink to $23.55 billion. Exports growth in August slowed less than expected while imports growth weakened more than expected.
``The Chinese government has already shifted its focus on growth,'' said Jerry Yoshikoshi, a market analyst with Sumitomo Mitsui Banking Corp. in Singapore. ``We'll continue to see a slower appreciation or flat movement in the yuan.''
China's economy expanded 10.1 percent in the three months ended June 30 from a year earlier, slowing for a fourth straight quarter as exports cooled. Weaker overseas demand, rising costs and a strengthening currency have put pressure on exporters of shoes, toys and clothes.
Non-deliverable forwards contracts indicate the yuan will gain 1 percent to 6.774 per dollar in the next six months. Forwards are agreements in which assets are bought and sold at current prices for future delivery.
Low Yields
Government bonds rose, pushing 10-year yields to the lowest in more than two months, as inflation slowed.
The yield on the 4.07 percent note due March 2018 fell 1 basis point to 4.09 percent, the lowest since July 1, according to the China Interbank Bond Market. The price rose 0.08 per 100 yuan face amount to 99.85. A basis point is 0.01 percentage point.
``This is good news for the bond market,'' said Nie Shuguang, a fixed-income trader at Industrial Bank Co. in Shanghai. Inflation erodes the fixed payments from debt.
Food prices rose 10.3 percent in August from a year earlier after gaining 14.4 percent in July, the statistics bureau said. Non-food prices increased 2.1 percent, the same as the gain in July. Food costs account for about a third of China's consumer price index.
China Development Bank sold 30 billion yuan ($4.39 billion) of 10-year bonds at a 4.28 percent yield today, less than the 4.5 percent some traders had estimated, Nie said. Investors have the option to sell the securities back to the bank at face value after three years. The lender increased the offer size by 50 percent from 20 billion yuan.
To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net; Jiang Jianguo in Shanghai at jjiang@bloomberg.net
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Oil Investors Pulled $39 Billion in Futures, Triggering Decline
By Daniel Whitten
Sept. 10 (Bloomberg) -- Commodity index investors, blamed for record oil prices, sold $39 billion worth of oil futures between their July record and Sept. 2, causing crude to plunge, according to a report to be released today.
The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records, and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee.
Masters testified three times before Congress this year, arguing that limits on traders would cut oil prices to $65 to $70 a barrel. He has been cited by lawmakers who introduced at least 20 measures to curb speculation. Congressional pressure on the CFTC to step up enforcement and restrict anonymous trades has pushed index traders out of their positions, Masters said.
``I don't think it's just coincidence that the money came out after the pressure was put on these folks,'' Masters, who wants legislation that would set limits on index commodity holdings, said in an interview.
Crude oil futures surged to a record $147.27 on July 11, an increase of 53 percent for the year, on the New York Mercantile Exchange, then fell 26 percent to $109.71 on Sept. 2. Oil dropped $3.08 to $103.26 yesterday on the Nymex.
``The speculators that drove prices up basically deflated the bubble,'' said Fadel Gheit, director of oil and gas research at Oppenheimer Capital in New York. ``They said, `That's it, the game is over. We are going to bet on another horse.'''
CFTC Report
The commission is expected to release a report tomorrow that will lay out its findings on the impact of index investors and over-the-counter trading on commodities. Regulators may require Wall Street banks to regularly disclose their energy futures positions connected to the unregulated swaps market, according to people familiar with the discussions.
JPMorgan Chase and Co., Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley control 70 percent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts, Masters said.
Representatives for all four banks declined to comment. Banks enter into swaps with airlines and hedge funds to profit from moves in crude prices and then offset some of that risk in futures markets such as the Nymex.
``These large financial players have become the primary source of the recent dramatic and damaging price volatility,'' Masters said in the report.
The commission has put out special requests for information from traders and imposed limits on the number of U.S. oil futures contracts a trader can hold on Intercontinental Exchange Inc.'s London-based ICE Futures Europe market.
Masters's Critics
Critics of Masters's earlier work said he lacks access to the data needed to draw his conclusions. His hedge fund is based in the U.S. Virgin Islands.
Walter Lukken, the acting chairman of the commission, is among those who question the validity of Masters's data.
``Just as weather forecasters have no effect on the weather, energy speculators have no effect on the price of oil,'' said Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents investors. ``His fallacy is that he ignores the laws of supply and demand, which determine the price of oil.''
Masters earlier this year reported that index speculators such as those that trade on Standard & Poor's GSCI accounted for $260 billion of assets, up from $13 billion in 2003. As of Sept. 2 that number was down to $223 billion, Masters said.
``For the supply and demand people, what I would like for them to explain is how from the supply-and-demand rationale you could have oil at $95 in January, at $150 in June and back to $100 in September,'' Masters said.
Hedge Fund Holdings
Masters's hedge fund held shares in the four major U.S. airlines, AMR Corp., Delta Air Lines Inc., US Airways Group Inc. and UAL Corp, according to a June 30 regulatory filing. Airlines hedge oil and have been hurt by commodity price fluctuations.
He said he extrapolates his numbers from agricultural data, which is publicly available, to arrive at overall numbers that include oil futures investments.
In arguing for legislation, lawmakers, primarily Democrats will point to the Masters report and a Massachusetts Institute of Technology report released in June alleging that speculation caused the rise in energy prices.
``Why did so much money come into these markets and why is it leaving,'' asked Senator Maria Cantwell, a Washington Democrat, in an interview. If Congress reduces scrutiny, ``do we see the run-ups happening again?''
CFTC data show that speculative net long positions in crude oil for non-commercial traders dropped from 115,145 for the week ended March 11, to a net short position, or a bet that prices would drop, for the week ended July 22, when prices started to plunge. For the week ended Sept. 2, net long speculative positions were 14,331.
To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net
Read more...
Sept. 10 (Bloomberg) -- Commodity index investors, blamed for record oil prices, sold $39 billion worth of oil futures between their July record and Sept. 2, causing crude to plunge, according to a report to be released today.
The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records, and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee.
Masters testified three times before Congress this year, arguing that limits on traders would cut oil prices to $65 to $70 a barrel. He has been cited by lawmakers who introduced at least 20 measures to curb speculation. Congressional pressure on the CFTC to step up enforcement and restrict anonymous trades has pushed index traders out of their positions, Masters said.
``I don't think it's just coincidence that the money came out after the pressure was put on these folks,'' Masters, who wants legislation that would set limits on index commodity holdings, said in an interview.
Crude oil futures surged to a record $147.27 on July 11, an increase of 53 percent for the year, on the New York Mercantile Exchange, then fell 26 percent to $109.71 on Sept. 2. Oil dropped $3.08 to $103.26 yesterday on the Nymex.
``The speculators that drove prices up basically deflated the bubble,'' said Fadel Gheit, director of oil and gas research at Oppenheimer Capital in New York. ``They said, `That's it, the game is over. We are going to bet on another horse.'''
CFTC Report
The commission is expected to release a report tomorrow that will lay out its findings on the impact of index investors and over-the-counter trading on commodities. Regulators may require Wall Street banks to regularly disclose their energy futures positions connected to the unregulated swaps market, according to people familiar with the discussions.
JPMorgan Chase and Co., Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley control 70 percent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts, Masters said.
Representatives for all four banks declined to comment. Banks enter into swaps with airlines and hedge funds to profit from moves in crude prices and then offset some of that risk in futures markets such as the Nymex.
``These large financial players have become the primary source of the recent dramatic and damaging price volatility,'' Masters said in the report.
The commission has put out special requests for information from traders and imposed limits on the number of U.S. oil futures contracts a trader can hold on Intercontinental Exchange Inc.'s London-based ICE Futures Europe market.
Masters's Critics
Critics of Masters's earlier work said he lacks access to the data needed to draw his conclusions. His hedge fund is based in the U.S. Virgin Islands.
Walter Lukken, the acting chairman of the commission, is among those who question the validity of Masters's data.
``Just as weather forecasters have no effect on the weather, energy speculators have no effect on the price of oil,'' said Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents investors. ``His fallacy is that he ignores the laws of supply and demand, which determine the price of oil.''
Masters earlier this year reported that index speculators such as those that trade on Standard & Poor's GSCI accounted for $260 billion of assets, up from $13 billion in 2003. As of Sept. 2 that number was down to $223 billion, Masters said.
``For the supply and demand people, what I would like for them to explain is how from the supply-and-demand rationale you could have oil at $95 in January, at $150 in June and back to $100 in September,'' Masters said.
Hedge Fund Holdings
Masters's hedge fund held shares in the four major U.S. airlines, AMR Corp., Delta Air Lines Inc., US Airways Group Inc. and UAL Corp, according to a June 30 regulatory filing. Airlines hedge oil and have been hurt by commodity price fluctuations.
He said he extrapolates his numbers from agricultural data, which is publicly available, to arrive at overall numbers that include oil futures investments.
In arguing for legislation, lawmakers, primarily Democrats will point to the Masters report and a Massachusetts Institute of Technology report released in June alleging that speculation caused the rise in energy prices.
``Why did so much money come into these markets and why is it leaving,'' asked Senator Maria Cantwell, a Washington Democrat, in an interview. If Congress reduces scrutiny, ``do we see the run-ups happening again?''
CFTC data show that speculative net long positions in crude oil for non-commercial traders dropped from 115,145 for the week ended March 11, to a net short position, or a bet that prices would drop, for the week ended July 22, when prices started to plunge. For the week ended Sept. 2, net long speculative positions were 14,331.
To contact the reporter on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net
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Yen Falls as Lehman Speculation Boosts Demand for Higher Yields
By Agnes Lovasz and Stanley White
Sept. 10 (Bloomberg) -- The yen weakened on speculation Lehman Brothers Holdings Inc. will survive a credit-market slump, prompting investors to increase holdings of higher- yielding assets funded in the Japanese currency.
The yen fell against the euro for the first time in three days and slid versus the dollar as Lehman rose in German share trading before the bank reports results today. The Australian dollar fell to the lowest in more than a year as declines in gold weighed on the outlook for the commodities exporter.
``We have the Lehman numbers coming out later and one expects that they may have something concrete in terms of restructuring or sell-off news,'' said Jeremy Stretch, senior strategist in London at Rabobank International, the third- largest Dutch bank. ``As the news ebbs and flows, the yen seems to be reflecting the change in sentiment.''
The yen dropped to 151.91 per euro at 9 a.m. in London, down from a one-year high of 150.52 earlier and 150.94 yesterday in New York. It fell to 107.22 per dollar from 106.81. The euro rose to $1.4170 from $1.4133. It reached $1.4047 yesterday, the lowest since October 2007.
Lehman, the fourth-largest U.S. securities firm, said yesterday it will disclose ``key strategic initiatives'' when it reports third-quarter earnings today, a week earlier than planned. Korea Development Bank is in talks to buy more than 25 percent of Lehman for about $6 billion, Yonhap reported today, citing an executive at KDB it didn't identify. The yen pared its declines after KDB said in a subsequent statement it has terminated talks with Lehman.
`Never Say Never'
``It looks at this juncture that the Korean deal is dead but one should never say never in this environment,'' said Stretch.
Lehman rose 36 percent in German share trading today. The stock dropped 45 percent yesterday to the lowest level in a decade as a person familiar with the firm said talks with the Korean firm had broken down.
The yen typically falls when demand for higher-risk assets increases, as traders put on so-called carry trades. In such transactions, investors get funds in a country with low borrowing costs and put them into one with higher interest rates. The risk is that currency market moves erase those profits. Japan's 0.5 percent target lending rate compares with 7 percent in Australia and 8 percent in New Zealand.
Australia's currency dropped to below 80 U.S. cents for the first time since August 2007 before trading at 80.62 cents, from 81.39 cents yesterday in Asia, as the price of gold, the nation's fourth most-valuable export commodity, declined to a 10-month low. Gold futures for December delivery fell as much as 2.7 percent to $770.70 an ounce after reaching $763.20, the lowest since October 2007.
Gold Decline
``The decline in gold is causing a lot of problems for people who were betting on further gains,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``Investors are closing out a lot of bets, and it seems that money is flowing from other currencies into the U.S. dollar.''
The Australian dollar will likely recover after the unwinding of the carry trade ends, said investor Jim Rogers, who correctly predicted the start of the commodities rally in 1999.
``I still own the Australian dollar,'' Rogers told Bloomberg Television. ``I'm not thinking of selling it because if I'm right, the reversal of the carry trade is not going to last forever, it will last for a while.''
The euro also rose against the yen as technical analysis shows that its 9.4 percent decline this quarter is overdone, according to Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo.
Technical Analysis
The euro's 14-day relative strength index against the yen, a comparison of the magnitude of gains and losses, was 18.75. A reading below 30 typically signals a change in price direction is imminent.
``People have been wondering when the markets were going to take a break,'' said Suzuki. ``A bout of risk aversion led to a massive reversal in many trades that pushed down the euro and caused the yen to rise. This move has clearly gone too far.''
The yen also declined against the dollar on speculation Japanese importers sold it for foreign currencies to pay their bills. Many Japanese companies close their accounts on the fifth, the 10th, the 15th, the 20th, the 25th and the last business day of every month. These days are known as ``Gotobi'' in Japanese.
``There were orders from Japanese importers that weighed on the yen,'' said Katsunori Kitakura, chief treasury dealer in Tokyo at Chuo Mitsui Trust & Banking Co., Japan's seventh- largest publicly listed lender. ``The market had been moving in one direction for some time, and it seems some people were waiting to sell into the yen's rally.''
The yen may fall to 107.50 versus the dollar today, he said.
To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net
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Philippine Peso to Gain 4%, AIG's Son Keng Po Says
By Lilian Karunungan
Sept. 10 (Bloomberg) -- The Philippine peso will gain 4 percent by the year's end as inflation eases and Filipinos working abroad send more money home, said Wilfred Son Keng Po, a managing director of AIG Global Investment Corp. Asia Ltd.
The currency, the worst performer in the past six months among Asia's 10 most-active currencies outside Japan, will reach a four-month high of 45 per dollar by December, said Son Keng Po, who helps manage total assets of $117 billion in Asia excluding Japan for the largest U.S. insurer by assets. That matches the median estimate of a Bloomberg News survey of 15 economists.
``The peso might actually have a better shot of strengthening toward the year-end,'' Son Keng Po said in an interview from Manila, adding that the forecast is his personal view. ``If oil prices stay where they are or slide that would contribute to slower month-on-month inflation. That will help the cause.''
The peso lost 12.3 percent in the past six months as inflation quickened to a 16-year high of 12.5 percent in August and a slump in the region's equities caused Asian currencies to weaken against the dollar. The central bank raised its benchmark interest rate three times this year to 6 percent to quell inflation. The currency traded at 46.84 per dollar as of 12:26 p.m. in Manila, according to Tullett Prebon Plc.
Remittances
Crude traded at $103.75 a barrel today, a decline of 30 percent from a peak of $147.27 in July, easing costs for the Philippines, which imports almost all its crude.
Remittances from Filipinos working overseas, which account for 10 percent of the economy, jumped 30 percent from a year earlier to $1.5 billion in June, the highest since records began in 1989, the central bank said Aug. 15. A total of 1.08 million Filipinos worked abroad last year, of which at least 40 percent went to Middle Eastern countries including Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.
``Remittances have been a surprise on the upside,'' said Son Keng Po, who has two decades of investment experience, including as fund manager and research head for a unit of Bank of the Philippine Islands, the nation's biggest bank. He cited increased demand for the nation's workers from oil-rich countries that have benefited from rising crude prices.
Gains in the peso will be limited by concern Philippine economic growth may slow and as foreign investors sell more of the nation's stocks.
Growth Slowdown
``It might be difficult for the peso to be at a much better level because of the situation where the Philippine economy is not going to enjoy the same growth rate as a year ago when we had 7 percent,'' Son Keng Po said. ``This year we should be happy if we hit 4.5 to 5.0 percent.''
The economy grew 4.6 percent in the second quarter, the slowest since 2005, compared with a revised 4.7 percent in the previous three months, the National Statistical Coordination Board said in Manila on Aug.28.
The slowdown prompted foreign investors to sell $551 million more local stocks than they bought this year, according to stock exchange data.
``With the U.S. dollar strengthening and the U.S. economic crisis not over and flowing into Asia economic slowdown, net outflows will persist'' from the stock market, he said, adding that this was his personal view.
To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net
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Australia, N.Z. Dollar Still Attractive, Rogers Says
By Shamim Adam and Catherine Yang
Sept. 10 (Bloomberg) -- The Australia and New Zealand dollars, the worst performers this quarter among the world's major currencies, will likely recover after the unwinding of the carry trade ends, said investor Jim Rogers.
``I still own the Australian dollar,'' Rogers told Bloomberg Television. ``I'm not thinking of selling it because if I'm right, the reversal of the carry trade is not going to last forever, it will last for a while. The Australia, New Zealand currencies are still two of the better currencies in the world longer term.''
The two currencies, favorites of so-called carry trades where investors get funds in a country with low borrowing costs and invest in one with higher interest rates, have dropped as slumping commodity and equity prices slashed demand for the countries' high-yielding assets.
Australia has a benchmark interest rate of 7 percent, while New Zealand's official cash rate is at 8 percent. In comparison, the Japan's key borrowing cost is 0.5 percent.
The Australian dollar has fallen 18 percent in eight weeks since reaching a 25-year high on July 16 and fell below 80 U.S. cents today for the first time since August 2007. New Zealand's dollar is trading near a two-year low.
Rogers, who correctly predicted the start of the commodities rally in 1999, said he is buying ``main victims of the carry trade,'' such as the Japanese yen and the Swiss franc. He also favors the Chinese yuan and the Singapore dollar, and expects the U.S. dollar to continue to strengthen.
Dollar's Rally
``I'm waiting for the dollar to continue to rally so I can sell dollars,'' Rogers said. ``The dollar recovery is certainly taking place and has ways to go -- a few weeks, a few months, maybe another year or so that the dollar could recover because it was beaten down so much.''
Rogers, chairman of Singapore-based Rogers Holdings, said he is still optimistic that commodities such as oil will rise over the longer term. Crude prices have dropped 29 percent since reaching a record $147.27 a barrel on July 11.
``It's not the end of the bull market because nobody's discovered any oil,'' he said. ``The global recession could have an effect on demand.''
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net; Catherine Yang in Hong Kong at cyyang@bloomberg.net
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China August Steel Exports Jump to Record; Fuels Tax Talks
By Xiao Yu
Sept. 10 (Bloomberg) -- China, the world's biggest steel producer, boosted steel-product exports 6.5 percent to a record in August from a month ago, fueling speculation the government would raise taxes this month to rein in shipments.
Exports rose to 7.68 million metric tons last month, from 7.21 million tons in July, the customs office said on its Web site today. That's 43 percent higher than a year earlier, according to Bloomberg data.
Weakening demand in China has forced mills to slash output and cut prices, Nanjing Iron & Steel Co. said last week. China may remove rebates and then raise taxes as rising shipments would encourage rivals in Europe and the U.S. to ask for tariffs.
``Domestic demand is weak on concern of slowing economic growth,'' said Ma Haitian, analyst at Beijing Antaike Information Development Co. The Chinese government may remove rebates and add a 5 percent tax on exports of some alloys as early as this month, he said.
Beijing's Antaike is a research affiliate of the China Nonferrous Metals Association.
Steel demand in China has also dropped because the government closed construction sites in Beijing to reduce pollution for the August Olympic games. Sino-Ocean Land Holdings Ltd., a Beijing-based developer, yesterday said building in the capital was slower than expected because of the games.
Chinese producers are increasing shipment as prices in the U.S. have more than doubled. Prices of hot-rolled coil, a benchmark steel product, gained 7.6 percent this year in China.
European Union steel industry group Eurofer in August said it heightened surveillance of imports from China, and may request tariffs on organic coated sheets and quarto plates.
Steel shipments fell 7.2 percent to 41.8 million tons in the first eight months from a year ago, customs said.
Imports of iron ore, a steel-making ingredient, rose 23 percent to 307 million tons in the first eight months, compared with a year ago. August imports were 37.4 million tons, it said.
To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net
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Sept. 10 (Bloomberg) -- China, the world's biggest steel producer, boosted steel-product exports 6.5 percent to a record in August from a month ago, fueling speculation the government would raise taxes this month to rein in shipments.
Exports rose to 7.68 million metric tons last month, from 7.21 million tons in July, the customs office said on its Web site today. That's 43 percent higher than a year earlier, according to Bloomberg data.
Weakening demand in China has forced mills to slash output and cut prices, Nanjing Iron & Steel Co. said last week. China may remove rebates and then raise taxes as rising shipments would encourage rivals in Europe and the U.S. to ask for tariffs.
``Domestic demand is weak on concern of slowing economic growth,'' said Ma Haitian, analyst at Beijing Antaike Information Development Co. The Chinese government may remove rebates and add a 5 percent tax on exports of some alloys as early as this month, he said.
Beijing's Antaike is a research affiliate of the China Nonferrous Metals Association.
Steel demand in China has also dropped because the government closed construction sites in Beijing to reduce pollution for the August Olympic games. Sino-Ocean Land Holdings Ltd., a Beijing-based developer, yesterday said building in the capital was slower than expected because of the games.
Chinese producers are increasing shipment as prices in the U.S. have more than doubled. Prices of hot-rolled coil, a benchmark steel product, gained 7.6 percent this year in China.
European Union steel industry group Eurofer in August said it heightened surveillance of imports from China, and may request tariffs on organic coated sheets and quarto plates.
Steel shipments fell 7.2 percent to 41.8 million tons in the first eight months from a year ago, customs said.
Imports of iron ore, a steel-making ingredient, rose 23 percent to 307 million tons in the first eight months, compared with a year ago. August imports were 37.4 million tons, it said.
To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net
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PrimeAg Australian Wheat Crop Outlook Boosted by Rain
By Madelene Pearson
Sept. 10 (Bloomberg) -- PrimeAg Australia Ltd., the farm owner that sold A$300 million ($241 million) in shares to buy properties in Australia last year, said recent rains boosted the outlook for its wheat crop.
The company's farms in Queensland and New South Wales states got between 20 millimeters (0.8 inch) and 70 millimeters of rain in the last week, Peter Corish, executive chairman, said today in a statement.
PrimeAg sold shares in an initial public offering to acquire grain farms in Australia, the world's sixth-largest exporter of wheat, to gain from rising demand for agricultural commodities. It planted 10,000 hectares (25,000 acres) of mostly wheat crops in May and June.
``The current wheat crop has been progressing to expectations, and we are finalizing our planning for what is now an increasingly promising wheat harvest,'' Corish said in the statement to the Australian stock exchange. ``These rains will contribute substantially to realizing the full potential of these crops.''
PrimeAg rose 1.9 percent to A$1.65 on the exchange at the 4:10 p.m. close of trade in Sydney.
To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net
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Sept. 10 (Bloomberg) -- PrimeAg Australia Ltd., the farm owner that sold A$300 million ($241 million) in shares to buy properties in Australia last year, said recent rains boosted the outlook for its wheat crop.
The company's farms in Queensland and New South Wales states got between 20 millimeters (0.8 inch) and 70 millimeters of rain in the last week, Peter Corish, executive chairman, said today in a statement.
PrimeAg sold shares in an initial public offering to acquire grain farms in Australia, the world's sixth-largest exporter of wheat, to gain from rising demand for agricultural commodities. It planted 10,000 hectares (25,000 acres) of mostly wheat crops in May and June.
``The current wheat crop has been progressing to expectations, and we are finalizing our planning for what is now an increasingly promising wheat harvest,'' Corish said in the statement to the Australian stock exchange. ``These rains will contribute substantially to realizing the full potential of these crops.''
PrimeAg rose 1.9 percent to A$1.65 on the exchange at the 4:10 p.m. close of trade in Sydney.
To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net
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Palm Oil Must Fall to Boost Biofuel, Food Demand, Mistry Says
By Claire Leow and Feiwen Rong
Sept. 10 (Bloomberg) -- Prices of palm oil, the world's most consumed vegetable oil, need to decline further to spur more demand from the biofuel and food sectors as stockpiles swell to records, said Dorab Mistry, director at Godrej International Ltd.
Palm oil would be a viable feedstock for biofuel at 2,200 ringgit a ton ($636), free-on-board, if crude oil stays around $100 a barrel and the dollar stabilizes at the current level, Mistry said today at a conference. Prices would have to fall to $550 a ton should oil fall to $80 a barrel, he said.
Palm oil has fallen 48 percent from a record on March 4 as expectations for bumper crops and swollen stockpiles have curbed demand. Crude has tumbled 29 percent from its July peak.
``High prices have over time evoked a supply response,'' Mistry said. Record high stockpiles in Indonesia and Malaysia, the world's top producers, will weigh on palm oil and ``prices have to react and correct,'' he said.
Production will jump to 18 million metric tons in Malaysia and 20 million tons in Indonesia this year as favorable weather aided harvests, he said. Stockpiles in the two countries will exceed 5 million tons by the end of November, he said.
Increasing output of other vegetable oils, including soybean oil, the main rival, will add to the glut. China is projected to produce a record 18 million to 19 million tons of soybeans this year, reducing demand from the world's largest buyer, Mistry said.
There will be ``bumper crops of oilseeds'' around the world after a timely monsoon in India and the latest Hurricane Gustav which brought the ``much-needed moisture'' to the developing soybean crop in the U.S. Midwest.
`More Balanced'
Vegetable oil supply and demand may become ``more balanced'' in 2008-09 if biofuel producers consume an additional 2.5 million tons and the food sector uses 4 million tons extra, Mistry said.
The U.S. Department of Agriculture will publish its output estimates of soybean crop in a report to be released on Sept. 12. The agency may reduce its soybean crop estimate by 50 million bushels in Sept. 12 report, but even that reduction ``may not affect prices beyond two days,'' Mistry added.
November-delivery palm oil rose 1.4 percent to 2,388 ringgit a ton on the Malaysia Derivatives Exchange at 3:28 p.m. in Kuala Lumpur. Crude oil for October-delivery on the New York Mercantile Exchange traded at $104.70 a barrel at the same time.
``It's foolish'' to assume the biofuel subsidy in the U.S. and Europe may stoke demand for palm oil, Mistry said.
``Palm diesel must not rely on any subsidy or mandate and it must be cheaper than fossil diesel and make money for producers and blenders'' to attract demand from them, he added.
Godrej International is one of India's biggest importers of vegetable oils, and Mistry has traded the commodity for more than three decades.
To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net; Feiwen Rong in Singapore at frong2@bloomberg.net
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Sept. 10 (Bloomberg) -- Prices of palm oil, the world's most consumed vegetable oil, need to decline further to spur more demand from the biofuel and food sectors as stockpiles swell to records, said Dorab Mistry, director at Godrej International Ltd.
Palm oil would be a viable feedstock for biofuel at 2,200 ringgit a ton ($636), free-on-board, if crude oil stays around $100 a barrel and the dollar stabilizes at the current level, Mistry said today at a conference. Prices would have to fall to $550 a ton should oil fall to $80 a barrel, he said.
Palm oil has fallen 48 percent from a record on March 4 as expectations for bumper crops and swollen stockpiles have curbed demand. Crude has tumbled 29 percent from its July peak.
``High prices have over time evoked a supply response,'' Mistry said. Record high stockpiles in Indonesia and Malaysia, the world's top producers, will weigh on palm oil and ``prices have to react and correct,'' he said.
Production will jump to 18 million metric tons in Malaysia and 20 million tons in Indonesia this year as favorable weather aided harvests, he said. Stockpiles in the two countries will exceed 5 million tons by the end of November, he said.
Increasing output of other vegetable oils, including soybean oil, the main rival, will add to the glut. China is projected to produce a record 18 million to 19 million tons of soybeans this year, reducing demand from the world's largest buyer, Mistry said.
There will be ``bumper crops of oilseeds'' around the world after a timely monsoon in India and the latest Hurricane Gustav which brought the ``much-needed moisture'' to the developing soybean crop in the U.S. Midwest.
`More Balanced'
Vegetable oil supply and demand may become ``more balanced'' in 2008-09 if biofuel producers consume an additional 2.5 million tons and the food sector uses 4 million tons extra, Mistry said.
The U.S. Department of Agriculture will publish its output estimates of soybean crop in a report to be released on Sept. 12. The agency may reduce its soybean crop estimate by 50 million bushels in Sept. 12 report, but even that reduction ``may not affect prices beyond two days,'' Mistry added.
November-delivery palm oil rose 1.4 percent to 2,388 ringgit a ton on the Malaysia Derivatives Exchange at 3:28 p.m. in Kuala Lumpur. Crude oil for October-delivery on the New York Mercantile Exchange traded at $104.70 a barrel at the same time.
``It's foolish'' to assume the biofuel subsidy in the U.S. and Europe may stoke demand for palm oil, Mistry said.
``Palm diesel must not rely on any subsidy or mandate and it must be cheaper than fossil diesel and make money for producers and blenders'' to attract demand from them, he added.
Godrej International is one of India's biggest importers of vegetable oils, and Mistry has traded the commodity for more than three decades.
To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net; Feiwen Rong in Singapore at frong2@bloomberg.net
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Platinum Declines to 18-Month Low in London as Car Sales Slow
By Stuart Wallace
Sept. 10 (Bloomberg) -- Platinum fell to an 18-month low in London and palladium reached its lowest since November 2005 on concern that slowing car sales will sap demand for the metals, used in autocatalysts. Gold and silver were little changed.
U.S. auto sales dropped to a 15-year low in July and Toyota Motor Corp., the world's second-largest carmaker, is cutting production in Europe. Passenger car sales in China fell for the first time in three years last month, the China Association of Automobile Manufacturers said yesterday.
``The precious complex continues to be hard hit by aggressive fund liquidation,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report today.
Platinum for immediate delivery fell as much as $12.95, or 1.1 percent, to $1,222.55 an ounce in London, the lowest compared with intraday prices since March 2007. The metal traded down $8.75 at $1,226.75 as of 8:15 a.m. local time. Platinum has dropped 47 percent from a record $2,301.50 reached March 4.
Prices had jumped as much as 46 percent in the first two months of the year after South Africa restricted power supplies to mines to cope with an energy shortage. South Africa accounts for about three-quarters of world platinum supply, according to Johnson Matthey Plc.
About half of demand comes from carmakers, taking into account recycling from used autocatalysts. Jewelry and the chemical and electrical industries make up most of the rest of consumption.
``With sentiment across the complex looking distinctly negative in the short-term, platinum may now challenge to $1,195/1,145,'' Moore said.
Palladium Plunges
Palladium for immediate delivery fell as much as $10.25, or 4.4 percent, to $222.75 an ounce, the lowest since Nov. 4, 2005. The metal traded down $5.75 at $227.25 as of 8:15 a.m. local time. Palladium traded as high as $595 on March 4, still below its record $1,125 in January 2001.
Platinum and palladium futures on the Tokyo Commodity Exchange plunged by the exchange-imposed daily limits.
Gold for immediate delivery in London fell 90 cents, or 0.1 percent, to $776.35 an ounce. Silver advanced 3 cents, or 0.3 percent, to $11.30 an ounce.
Assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, fell 1.7 percent to 631.2 metric tons yesterday, according to figures on the company's Web site.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
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Sept. 10 (Bloomberg) -- Platinum fell to an 18-month low in London and palladium reached its lowest since November 2005 on concern that slowing car sales will sap demand for the metals, used in autocatalysts. Gold and silver were little changed.
U.S. auto sales dropped to a 15-year low in July and Toyota Motor Corp., the world's second-largest carmaker, is cutting production in Europe. Passenger car sales in China fell for the first time in three years last month, the China Association of Automobile Manufacturers said yesterday.
``The precious complex continues to be hard hit by aggressive fund liquidation,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report today.
Platinum for immediate delivery fell as much as $12.95, or 1.1 percent, to $1,222.55 an ounce in London, the lowest compared with intraday prices since March 2007. The metal traded down $8.75 at $1,226.75 as of 8:15 a.m. local time. Platinum has dropped 47 percent from a record $2,301.50 reached March 4.
Prices had jumped as much as 46 percent in the first two months of the year after South Africa restricted power supplies to mines to cope with an energy shortage. South Africa accounts for about three-quarters of world platinum supply, according to Johnson Matthey Plc.
About half of demand comes from carmakers, taking into account recycling from used autocatalysts. Jewelry and the chemical and electrical industries make up most of the rest of consumption.
``With sentiment across the complex looking distinctly negative in the short-term, platinum may now challenge to $1,195/1,145,'' Moore said.
Palladium Plunges
Palladium for immediate delivery fell as much as $10.25, or 4.4 percent, to $222.75 an ounce, the lowest since Nov. 4, 2005. The metal traded down $5.75 at $227.25 as of 8:15 a.m. local time. Palladium traded as high as $595 on March 4, still below its record $1,125 in January 2001.
Platinum and palladium futures on the Tokyo Commodity Exchange plunged by the exchange-imposed daily limits.
Gold for immediate delivery in London fell 90 cents, or 0.1 percent, to $776.35 an ounce. Silver advanced 3 cents, or 0.3 percent, to $11.30 an ounce.
Assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, fell 1.7 percent to 631.2 metric tons yesterday, according to figures on the company's Web site.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
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China's Stocks Gain as Inflation Cools; Wuhan Steel Advances
By Zhang Shidong
Sept. 10 (Bloomberg) -- China stocks advanced, led by steelmakers and brokerages, after consumer prices rose at the slowest pace since June 2007, giving the central bank more room to stimulate growth.
Wuhan Iron & Steel Co., China's third-biggest steelmaker by value, rose 2 percent and Citic Securities Co., the brokerage unit of China's biggest investment company, gained 4.3 percent, the most in two weeks. Inflation slowed to 4.9 percent in August from 6.3 percent in July, the statistics bureau said today.
``The figure has eased one of the major concerns in the market, that the government will take measures to cool growth and inflation,'' said Fan Dizhao, a portfolio manager at Guotai Asset Management Co. in Shanghai, which manages the equivalent of $5.l billion. ``It has helped to boost buying sentiment.''
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, added 4.03, or 0.2 percent, to 2,143.18 at the close. Stocks rebounded after the 10 a.m. inflation report, reversing a decline of as much as 1.9 percent.
Central bank efforts to cool inflation and concern about a slowdown in global demand for the nation's products have helped drive the CSI 300 down 60 percent this year. That's made it the world's worst-performing stock market, and deflated a boom that drove the gauge up sevenfold in the two years through 2007.
Wuhan, Baoshan Steel
Wuhan Steel climbed 2 percent to 7.02 yuan. Baoshan Iron & Steel Co., China's biggest steelmaker, added 0.2 percent to 6.60 yuan.
Citic Securities advanced 4.3 percent to 19.15 yuan, the biggest gain since Aug. 27. Haitong Securities Co., the country's largest listed brokerage by market value, jumped 5.6 percent to 14.91 yuan. Pacific Securities Co., a brokerage based in the southern province of Yunnan, gained 4.1 percent to 16.70 yuan, the highest since Sept. 2.
Consumer prices had been forecast to gain 5.4 percent in August, according to the median estimate of 23 economists surveyed by Bloomberg News.
The central bank has boosted the reserve ratio requirement 16 times since the beginning of last year and increased interest rates six times to curb inflation that reached a 12-year high in February.
Guangdong Midea Electric Appliances Co. and Panzhihua New Steel & Vanadium Co. gained as their parents said they have increased or will increase their stakes in the units.
Midea, Panzhihua
Midea, China's second-biggest publicly traded appliance maker, added 4.9 percent to 9.45 yuan, extending yesterday's 7.3 percent advance. The company said its parent and affiliates will buy no more than a combined 2 percent stake in the listed unit within a year through the Shenzhen Stock Exchange. An affiliate bought 309,470 shares in the company yesterday, it said.
Panzhihua Steel, the publicly traded unit of southwest China's biggest steelmaker, rose 1.6 percent to 7.80 yuan, advancing for the first time in five days. Parent Anshan Iron & Steel Group bought a 4.9 percent stake in the listed company, or 161.2 million shares, for as much as 1.34 billion yuan ($196 million), increasing its holding to 10 percent, according to a Shenzhen Stock Exchange statement.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 0.2 percent to 2,150.76. The Shenzhen Composite Index added 0.5 percent to 588.31.
The following companies were among the most active in China's markets. Stock symbols are in brackets after the companies' names.
China Eastern Airlines Corp. (600115 CH), the nation's third-largest carrier by fleet size, advanced 0.19 yuan, or 4.6 percent, to 4.34, adding to yesterday's 4.3 percent gain and Shanghai Airlines Co. (600591 CH), the city's second-largest airline, rose 0.05 yuan, or 1.2 percent, to 4.27 after climbing 6.3 percent yesterday. The two airlines said they aren't discussing a possible merger, denying media reports.
China Railway Group Ltd. (601390 CH), Asia's largest construction company, rose 0.14 yuan, or 2.8 percent, to 5.21, the highest close since Sept. 3. The company said its units won five contracts worth a combined 3.07 billion yuan.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Sept. 10 (Bloomberg) -- China stocks advanced, led by steelmakers and brokerages, after consumer prices rose at the slowest pace since June 2007, giving the central bank more room to stimulate growth.
Wuhan Iron & Steel Co., China's third-biggest steelmaker by value, rose 2 percent and Citic Securities Co., the brokerage unit of China's biggest investment company, gained 4.3 percent, the most in two weeks. Inflation slowed to 4.9 percent in August from 6.3 percent in July, the statistics bureau said today.
``The figure has eased one of the major concerns in the market, that the government will take measures to cool growth and inflation,'' said Fan Dizhao, a portfolio manager at Guotai Asset Management Co. in Shanghai, which manages the equivalent of $5.l billion. ``It has helped to boost buying sentiment.''
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, added 4.03, or 0.2 percent, to 2,143.18 at the close. Stocks rebounded after the 10 a.m. inflation report, reversing a decline of as much as 1.9 percent.
Central bank efforts to cool inflation and concern about a slowdown in global demand for the nation's products have helped drive the CSI 300 down 60 percent this year. That's made it the world's worst-performing stock market, and deflated a boom that drove the gauge up sevenfold in the two years through 2007.
Wuhan, Baoshan Steel
Wuhan Steel climbed 2 percent to 7.02 yuan. Baoshan Iron & Steel Co., China's biggest steelmaker, added 0.2 percent to 6.60 yuan.
Citic Securities advanced 4.3 percent to 19.15 yuan, the biggest gain since Aug. 27. Haitong Securities Co., the country's largest listed brokerage by market value, jumped 5.6 percent to 14.91 yuan. Pacific Securities Co., a brokerage based in the southern province of Yunnan, gained 4.1 percent to 16.70 yuan, the highest since Sept. 2.
Consumer prices had been forecast to gain 5.4 percent in August, according to the median estimate of 23 economists surveyed by Bloomberg News.
The central bank has boosted the reserve ratio requirement 16 times since the beginning of last year and increased interest rates six times to curb inflation that reached a 12-year high in February.
Guangdong Midea Electric Appliances Co. and Panzhihua New Steel & Vanadium Co. gained as their parents said they have increased or will increase their stakes in the units.
Midea, Panzhihua
Midea, China's second-biggest publicly traded appliance maker, added 4.9 percent to 9.45 yuan, extending yesterday's 7.3 percent advance. The company said its parent and affiliates will buy no more than a combined 2 percent stake in the listed unit within a year through the Shenzhen Stock Exchange. An affiliate bought 309,470 shares in the company yesterday, it said.
Panzhihua Steel, the publicly traded unit of southwest China's biggest steelmaker, rose 1.6 percent to 7.80 yuan, advancing for the first time in five days. Parent Anshan Iron & Steel Group bought a 4.9 percent stake in the listed company, or 161.2 million shares, for as much as 1.34 billion yuan ($196 million), increasing its holding to 10 percent, according to a Shenzhen Stock Exchange statement.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 0.2 percent to 2,150.76. The Shenzhen Composite Index added 0.5 percent to 588.31.
The following companies were among the most active in China's markets. Stock symbols are in brackets after the companies' names.
China Eastern Airlines Corp. (600115 CH), the nation's third-largest carrier by fleet size, advanced 0.19 yuan, or 4.6 percent, to 4.34, adding to yesterday's 4.3 percent gain and Shanghai Airlines Co. (600591 CH), the city's second-largest airline, rose 0.05 yuan, or 1.2 percent, to 4.27 after climbing 6.3 percent yesterday. The two airlines said they aren't discussing a possible merger, denying media reports.
China Railway Group Ltd. (601390 CH), Asia's largest construction company, rose 0.14 yuan, or 2.8 percent, to 5.21, the highest close since Sept. 3. The company said its units won five contracts worth a combined 3.07 billion yuan.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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Hong Kong Stocks Fall, Led by Developers on Demand Concern
By Chua Kong Ho
Sept. 10 (Bloomberg) -- Hong Kong stocks fell, as property developers slumped on concern weakening demand in China is forcing price cuts, while mining companies tracked declines in metals prices.
Shimao Property Holdings Ltd. dropped 5.7 percent after the Oriental Daily said the company was reducing prices by 25 percent for a project in Nanjing, an eastern Chinese city. China Overseas Land & Investment Ltd., a real-estate developer, plunged 11 percent on lower sales. Zijin Mining Group Co., which owns the nation's largest gold mine, slumped 9.3 percent as the precious metal fell to a 10-month low.
``There's still more uncertainty to come regarding the state of'' China's economy, said Victoria Mio, Hong Kong-based senior portfolio manager at Robeco, which oversees about $200 billion in assets worldwide. ``There will be more bad news, particularly for property.''
The Hang Seng Index fell 491.33, or 2.4 percent, to 19,999.78 at the close. All 11 industry groups on the broader Hang Seng Composite Index declined, with about five stocks falling for each that advanced. Stocks pared a loss of as much as 2.6 percent after official data showed China's inflation cooled to the slowest pace since June 2007.
The Hang Seng has retreated 28 percent this year, dragged down by concerns over slowing global growth and more than $500 billion in writedowns and credit losses at financial companies.
Hong Kong billionaire Lee Shau-kee advised the city's stock investors to maintain a defensive stance because the U.S. economy still faces more negative news, the Oriental Daily reported. Lee, who announced in March last year he owns HK$100 billion ($12.8 billion) of stocks, said he is currently neither buying nor selling Hong Kong shares.
Growth Concerns
China's export growth cooled, rising only 21 percent in August compared with 27 percent in July, according to the Customs Bureau. Consumer prices increased 4.9 percent in August from a year earlier, according to the National Bureau of Statistics. The rate was less than the 5.4 percent median estimate by economists in a Bloomberg News survey.
``As inflation concerns subside, the market is increasingly focused not only on whether China's economy is slowing, but by how much,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co., in an e-mail.
Shimao dropped 5.7 percent to HK$6.35. China Overseas Land fell 11 percent to HK$10.20, after saying August property sales declined 41 percent from July to HK$1.13 billion.
Sino-Ocean, Agile
Sun Hung Kai Properties Ltd., Hong Kong's largest developer which is building a luxury residential project in Chengdu, fell 5.2 percent to HK$92.75. China Vanke Co., Hengda Real Estate Group and Shimao Property Holdings Ltd. are cutting prices at their real estate projects in China by 15 percent to 35 percent, the Oriental Daily reported.
Sino-Ocean Land Holdings Ltd., a Beijing-based real-estate developer, sank 3.7 percent to HK$2.85, after first-half profit fell 48 percent to 541.8 million yuan ($79 million) on lower property revaluation gains.
Agile Property Holdings Ltd., which builds villas and condominiums in China's southern Guangdong province, fell 7.4 percent to HK$4.26, after reporting first-half sales slumped 27 percent from a year earlier.
``The pain for Chinese property developers will continue and is part and parcel of a normal cyclical slowdown,'' said Mark Tan, director at UOB Asset Management Ltd. in Singapore, which oversees about $3 billion in Asian assets. He is ``underweight'' property stocks in Asia.
Jiangxi Copper
Zijin slumped 9.3 percent to HK$3.89, the most since Aug. 5. Gold fell as much as 2.7 percent to $770.70 an ounce on the Comex division of the New York Mercantile Exchange, the lowest since October.
Jiangxi Copper Co., the second-largest Chinese smelter, sank 8.4 percent to HK$9.34. A measure of six metals traded on the London Metal Exchange, including zinc and copper, fell 2 percent yesterday to the lowest since June 27, 2006.
The Hang Seng China Enterprises Index, which tracks so- called H shares, slid 3.1 percent to 10,491.40.
The following shares also rose or fell in Hong Kong. Stock symbols are in parentheses after company names:
Belle International Holdings Ltd. (1880 HK), China's largest retailer of women's shoes, lost HK$0.68, or 9.8 percent, to HK$6.23. First-half profit was little changed at 988 million yuan ($144 million).
China Eastern Airlines Corp. (670 HK), the nation's third- largest carrier, lost HK$0.05, or 3.1 percent, to HK$1.54. Merrill Lynch & Co. cut its price estimate to HK$1 from HK$1.90.
China Shenhua Energy Co. (1088 HK), the country's largest coal producer, fell HK$1.35, or 5.4 percent, to HK$23.50. Coal prices at Qinhuangdao, the nation's benchmark, have fallen 3 percent since a record $168 a metric ton reached on Aug. 8, according to McCloskey Group.
China Cosco Holdings Co. (1919 HK), the world's biggest operator of dry-bulk ships, slumped HK$1.52, or 13 percent, to HK$10.18. The Baltic Dry Index, a measure of commodity cargo rates, tumbled to its lowest in 15 months yesterday, extending its decline from a May 20 record to 55 percent.
Geely Automobile Holdings Ltd. (175 HK), the Chinese maker of $5,000 compacts, gained HK$0.02, or 3.2 percent, to HK$0.65, after first-half profit surged to HK$261 million from HK$82.4 million a year earlier.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net
Read more...
Sept. 10 (Bloomberg) -- Hong Kong stocks fell, as property developers slumped on concern weakening demand in China is forcing price cuts, while mining companies tracked declines in metals prices.
Shimao Property Holdings Ltd. dropped 5.7 percent after the Oriental Daily said the company was reducing prices by 25 percent for a project in Nanjing, an eastern Chinese city. China Overseas Land & Investment Ltd., a real-estate developer, plunged 11 percent on lower sales. Zijin Mining Group Co., which owns the nation's largest gold mine, slumped 9.3 percent as the precious metal fell to a 10-month low.
``There's still more uncertainty to come regarding the state of'' China's economy, said Victoria Mio, Hong Kong-based senior portfolio manager at Robeco, which oversees about $200 billion in assets worldwide. ``There will be more bad news, particularly for property.''
The Hang Seng Index fell 491.33, or 2.4 percent, to 19,999.78 at the close. All 11 industry groups on the broader Hang Seng Composite Index declined, with about five stocks falling for each that advanced. Stocks pared a loss of as much as 2.6 percent after official data showed China's inflation cooled to the slowest pace since June 2007.
The Hang Seng has retreated 28 percent this year, dragged down by concerns over slowing global growth and more than $500 billion in writedowns and credit losses at financial companies.
Hong Kong billionaire Lee Shau-kee advised the city's stock investors to maintain a defensive stance because the U.S. economy still faces more negative news, the Oriental Daily reported. Lee, who announced in March last year he owns HK$100 billion ($12.8 billion) of stocks, said he is currently neither buying nor selling Hong Kong shares.
Growth Concerns
China's export growth cooled, rising only 21 percent in August compared with 27 percent in July, according to the Customs Bureau. Consumer prices increased 4.9 percent in August from a year earlier, according to the National Bureau of Statistics. The rate was less than the 5.4 percent median estimate by economists in a Bloomberg News survey.
``As inflation concerns subside, the market is increasingly focused not only on whether China's economy is slowing, but by how much,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co., in an e-mail.
Shimao dropped 5.7 percent to HK$6.35. China Overseas Land fell 11 percent to HK$10.20, after saying August property sales declined 41 percent from July to HK$1.13 billion.
Sino-Ocean, Agile
Sun Hung Kai Properties Ltd., Hong Kong's largest developer which is building a luxury residential project in Chengdu, fell 5.2 percent to HK$92.75. China Vanke Co., Hengda Real Estate Group and Shimao Property Holdings Ltd. are cutting prices at their real estate projects in China by 15 percent to 35 percent, the Oriental Daily reported.
Sino-Ocean Land Holdings Ltd., a Beijing-based real-estate developer, sank 3.7 percent to HK$2.85, after first-half profit fell 48 percent to 541.8 million yuan ($79 million) on lower property revaluation gains.
Agile Property Holdings Ltd., which builds villas and condominiums in China's southern Guangdong province, fell 7.4 percent to HK$4.26, after reporting first-half sales slumped 27 percent from a year earlier.
``The pain for Chinese property developers will continue and is part and parcel of a normal cyclical slowdown,'' said Mark Tan, director at UOB Asset Management Ltd. in Singapore, which oversees about $3 billion in Asian assets. He is ``underweight'' property stocks in Asia.
Jiangxi Copper
Zijin slumped 9.3 percent to HK$3.89, the most since Aug. 5. Gold fell as much as 2.7 percent to $770.70 an ounce on the Comex division of the New York Mercantile Exchange, the lowest since October.
Jiangxi Copper Co., the second-largest Chinese smelter, sank 8.4 percent to HK$9.34. A measure of six metals traded on the London Metal Exchange, including zinc and copper, fell 2 percent yesterday to the lowest since June 27, 2006.
The Hang Seng China Enterprises Index, which tracks so- called H shares, slid 3.1 percent to 10,491.40.
The following shares also rose or fell in Hong Kong. Stock symbols are in parentheses after company names:
Belle International Holdings Ltd. (1880 HK), China's largest retailer of women's shoes, lost HK$0.68, or 9.8 percent, to HK$6.23. First-half profit was little changed at 988 million yuan ($144 million).
China Eastern Airlines Corp. (670 HK), the nation's third- largest carrier, lost HK$0.05, or 3.1 percent, to HK$1.54. Merrill Lynch & Co. cut its price estimate to HK$1 from HK$1.90.
China Shenhua Energy Co. (1088 HK), the country's largest coal producer, fell HK$1.35, or 5.4 percent, to HK$23.50. Coal prices at Qinhuangdao, the nation's benchmark, have fallen 3 percent since a record $168 a metric ton reached on Aug. 8, according to McCloskey Group.
China Cosco Holdings Co. (1919 HK), the world's biggest operator of dry-bulk ships, slumped HK$1.52, or 13 percent, to HK$10.18. The Baltic Dry Index, a measure of commodity cargo rates, tumbled to its lowest in 15 months yesterday, extending its decline from a May 20 record to 55 percent.
Geely Automobile Holdings Ltd. (175 HK), the Chinese maker of $5,000 compacts, gained HK$0.02, or 3.2 percent, to HK$0.65, after first-half profit surged to HK$261 million from HK$82.4 million a year earlier.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net
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Most Japanese Stocks Rise, Led by Banks, Before Lehman Report
By Patrick Rial and Kotaro Tsunetomi
Sept. 10 (Bloomberg) -- Most Japan stocks rose, led by banks, on speculation a stake sale by Lehman Brothers Holdings Inc. will quell uncertainty in financial markets. Commodity shares fell on concern slower economic growth will curb raw materials demand.
Resona Holdings Inc., Japan's fourth-largest listed bank by value, erased early losses to climb 6 percent after South Korea's Yonhap news agency said Korea Development Bank seeks to buy a stake in Lehman. KDB said after the market closed it ended talks with the U.S. brokerage. Sumitomo Metal Mining Co., Japan's biggest nickel maker, slumped to the lowest in almost three years after metals prices retreated.
The Topix index gained 0.79, or 0.1 percent, to 1,192.38 at the close of trading in Tokyo. About nine shares rose for every seven that declined on the gauge. The Nikkei 225 Stock Average fell 54.02, or 0.4 percent, to 12,346.63.
``The feeling has been that the story of Lehman is headed for a resolution, so investors have been anticipating some kind of news to break,'' said Mitsushige Akino, who oversees $468 million at Ichiyoshi Investment Management Co. in Tokyo. ``It suddenly became the smarter strategy to be a buyer in this kind of cautious market with the report that KDB will make a move.''
Both gauges earlier sank as much as 1.9 percent on concern Lehman would not be able to acquire additional capital, extending credit-market turmoil.
Yonhap Report
Resona rose 6 percent to 118,400 yen. Mitsubishi UFJ Financial Group Inc., the country's biggest lender by market value, advanced 3.2 percent to 867 yen. Nomura, Japan's largest brokerage, climbed 3.2 percent to 1,531 yen.
KDB is seeking to spend about $6 billion to acquire a more than 25 percent stake in Lehman, Yonhap said today. Following the report, KDB said in an e-mailed statement it has ``ended the negotiations as there's differences over the terms of the deal and considering financial market conditions at home and overseas.''
Lehman, the fourth-largest U.S. securities firm, said yesterday will announce third-quarter results a week ahead of schedule along with ``key strategic initiatives.''
Sumitomo Metal retreated 3.8 percent to 1,103 yen, a level not seen since November 2005. Inpex Holdings Inc., the country's largest oil explorer, declined 2.7 percent to 988,000 yen. Mitsubishi Corp., Japan's largest trading company, lost 2.7 percent to 2,520 yen.
Metals, Oil
A measure of six metals traded on the London Metal Exchange, including copper and zinc, dropped 2 percent yesterday. Brent oil in London declined as much as 4.3 percent to $99.04, the first drop below $100 since April. Crude rebounded in New York today after the OPEC president called on members to stop overproducing.
A slowing global economy is reducing global demand for materials. The European Union will cut its economic-growth forecast this week as confidence wanes and inflation expectations increase, EU Commissioner Joaquin Almunia said yesterday.
Takeuchi Manufacturing Co., a mini-shovel maker that exports more than 90 percent of its production, plunged 8.5 percent to 1,420 yen, the lowest since July 2003. Nippon Steel Corp., the world's No. 2 maker of the alloy, lost 4.2 percent to 454 yen. Asahi Glass Co., which gets a quarter of its sales in Europe, declined 2.7 percent to 1,019 yen.
``It's hard to tell at the moment just how deep the global economic downturn is going to get,'' said Hideo Arimura, who oversees about $1.9 billion at Mizuho Asset Management Co. in Tokyo. ``Europe is in the most precarious position, and its weakness is going to be a drag for other economies.''
To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Kotaro Tsunetomi in Tokyo at ktsunetomi@bloomberg.net.
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Asian Stocks Drop for Second Day, Led by Materials Producers
By Kyung Bok Cho and Ian C. Sayson
Sept. 10 (Bloomberg) -- Asian stocks fell for a second day, led by materials and shipping companies, after metals prices declined and cargo rates slumped on concern slowing global growth will curb demand for resources.
BHP Billiton Ltd., the world's largest mining company, and Mitsubishi Corp. dropped more than 2 percent. China Cosco Holdings Co., the world's largest operator of dry-bulk ships, tumbled 13 percent. Banks gained after Yonhap News reported that Korea Development Bank is seeking to buy a stake in Lehman Brothers Holdings Inc. KDB said later it had ended the talks.
``This is not a good time to make new investments in risky assets like stocks,'' said Hiroshi Morikawa, senior strategist at Japan's MU Investments Co., which manages about $14 billion. ``I will keep my money in cash or bonds because of the uncertainties in the global economy. I prefer to stay in a safe harbor.''
The MSCI Asia Pacific Index fell 0.6 percent to 118.00 as of 5:15 p.m. in Tokyo, extending yesterday's 2.2 percent loss. The measure has plunged 25 percent this year as global financial companies posted credit-market related losses and writedowns in excess of $500 billion.
Japan's Nikkei 225 Stock Average lost 0.4 percent to 12,346.63. Nippon Electric Glass Co., the world's third-biggest maker of glass for flat-panel televisions, slumped 12 percent on speculation demand will decline.
China's CSI 300 Index added 0.2 percent, paring earlier losses of as much as 1.9 percent after inflation cooled last month to the slowest pace in a year. All other benchmark indexes in the region fell apart from South Korea, Taiwan and Pakistan.
Metals Decline
U.S. stocks slumped yesterday, with the Standard & Poor's 500 Index falling 3.4 percent, the most since February 2007. In the previous session, the measure gained the most in a month after the government's takeover of Fannie Mae and Freddie Mac. S&P 500 futures were up 0.8 percent recently.
In Asia, an index of materials producers fell 2.9 percent to the lowest since October 2006.
BHP dropped 3.5 percent to A$34.80 in Sydney, the lowest since March 25. Korea Zinc Co., the world's second-biggest zinc refiner, lost 4.2 percent to 115,500 won. Mitsubishi, a Japanese trading company that gets half its profit from commodities, fell 2.7 percent to 2,520 yen, the lowest since Jan. 24.
A measure of six metals traded on the London Metal Exchange, including zinc, declined 2 percent to 3,272.8 yesterday, the lowest since June 27, 2006.
Zijin Mining Group Co., which owns China's largest gold mine, lost 9.3 percent to HK$3.89 in Hong Kong, the lowest since March 20, 2007, after gold fell 2 percent yesterday in Singapore.
Shipping Rates
China Cosco plunged 13 percent to HK$10.18 in Hong Kong, extending yesterday's 7.6 percent decline. Mitsui O.S.K. Lines Ltd., Japan's largest operator of iron-ore ships, fell 2.6 percent to 1,051 yen, the lowest since Dec. 1, 2006.
The Baltic Dry Index, a measure of commodity-shipping costs, tumbled to its lowest in 15 months yesterday, extending its decline from a May 20 record to 55 percent.
Signs of a slowing global economy have damped demand for commodities. The U.K. economy is contracting for the first time in at least a decade, the National Institute for Economic and Social Research said today. The European Union will cut its own growth forecast this week as confidence wanes and inflation expectations increase, EU Commissioner Joaquin Almunia said yesterday.
``It's hard to tell at the moment just how deep the global economic downturn is going to get,'' said Hideo Arimura, who overseas the equivalent $1.9 billion at Mizuho Asset Management Co. in Tokyo. ``Europe is in the most precarious position and its weakness is going to be a drag for other economies.''
Economic Slowdown
Nippon Electric Glass fell 12 percent to 1,105 yen, the lowest close since July 2005. The stock was the second-biggest loser among 1,737 members on the MSCI World Index. Asahi Glass Co., which gets a quarter of its sales in Europe, declined 2.7 percent to 1,019 yen, the lowest since Nov. 10, 2004. Canon Inc., which counts Europe and the U.S. as its biggest markets, lost 3.9 percent to 4,460 yen, the lowest since March 18.
Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, added 3.2 percent to 867 yen, the highest since Aug. 12. Sumitomo Mitsui Financial Group Inc., the second-largest by market value, advanced 3.2 percent to 681,000 yen.
Korea Development Bank is in talks to buy more than 25 percent of Lehman for about $6 billion, Yonhap reported, citing a executive at the Korean bank it didn't name.
Following the report, KDB said in an e-mailed statement that it has ``ended the negotiations as there's differences over the terms of the deal and considering financial market conditions at home and overseas.''
`Strategic Initiatives'
``The feeling has been that the story of Lehman is headed for a resolution, so investors have been anticipating some kind of news to break,'' said Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co. in Tokyo.
Lehman said it will announce ``key strategic initiatives'' and third-quarter results today in the U.S., a week earlier than planned.
Hynix Semiconductor Inc., the world's second-largest computer-memory maker, added 8.1 percent to 20,100 won in Seoul. The company said today it will cut output of NAND flash chips by as much as 30 percent this month after a glut drove down prices. Separately, main creditor Korea Exchange Bank said yesterday it will ask other banks to revive talks on selling their combined 36 percent controlling stake in Hynix.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.
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French Stocks: Dexia, Partouche, Sanofi-Aventis and Vivendi
By Adria Cimino
Sept. 10 (Bloomberg) -- France's CAC 40 Index retreated 24.66, or 0.6 percent, to 4,268.68 at 9:11 a.m. in Paris, declining a second day. The SBF 120 Index also lost 0.6 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Akka Technologies SA (AKA FP) surged 1.10 euros, or 7.9 percent, to 15, gaining for a fourth day. The technology consulting company said first-half net income rose 85 percent to 7.2 million euros ($10 million) and forecast full-year sales will rise to more than 380 million euros.
Dexia SA (DX FP), the world's biggest lender to local governments, retreated 27 cents, or 2.5 percent, to 10.74 euros, falling for the first time this week. Oddo Securities cut its recommendation on the shares to ``reduce'' from ``add.''
Groupe Partouche SA (PARP FP) slid 19 cents, or 2.8 percent, to 6.56 euros, dropping for a second day. France's biggest casino operator said fiscal third-quarter revenue fell 9.5 percent to 116.4 million euros.
Sanofi-Aventis SA (SAN FP), France's biggest drugmaker, jumped 2.20 euros, or 4.6 percent, to 49.70, rising for a third day. Chief Executive Officer Gerard Le Fur is leaving and will be replaced by Chris Viehbacher, Les Echos reported, citing unidentified people.
Vivendi SA (VIV FP), owner of France's second-largest wireless company, lost 56 cents, or 2.2 percent, to 24.83 euros, falling for the first time this week. Lehman Brothers Holdings Inc. cut its recommendation on the stock to ``equal weight'' from ``overweight.''
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Sept. 10 (Bloomberg) -- France's CAC 40 Index retreated 24.66, or 0.6 percent, to 4,268.68 at 9:11 a.m. in Paris, declining a second day. The SBF 120 Index also lost 0.6 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Akka Technologies SA (AKA FP) surged 1.10 euros, or 7.9 percent, to 15, gaining for a fourth day. The technology consulting company said first-half net income rose 85 percent to 7.2 million euros ($10 million) and forecast full-year sales will rise to more than 380 million euros.
Dexia SA (DX FP), the world's biggest lender to local governments, retreated 27 cents, or 2.5 percent, to 10.74 euros, falling for the first time this week. Oddo Securities cut its recommendation on the shares to ``reduce'' from ``add.''
Groupe Partouche SA (PARP FP) slid 19 cents, or 2.8 percent, to 6.56 euros, dropping for a second day. France's biggest casino operator said fiscal third-quarter revenue fell 9.5 percent to 116.4 million euros.
Sanofi-Aventis SA (SAN FP), France's biggest drugmaker, jumped 2.20 euros, or 4.6 percent, to 49.70, rising for a third day. Chief Executive Officer Gerard Le Fur is leaving and will be replaced by Chris Viehbacher, Les Echos reported, citing unidentified people.
Vivendi SA (VIV FP), owner of France's second-largest wireless company, lost 56 cents, or 2.2 percent, to 24.83 euros, falling for the first time this week. Lehman Brothers Holdings Inc. cut its recommendation on the stock to ``equal weight'' from ``overweight.''
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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German Stocks Decline, Led by Deutsche Bank, Metro, Lufthansa
By Henrietta Rumberger
Sept. 10 (Bloomberg) -- German stocks retreated for a second day as concern mounted banks may post more credit-related losses and a jump in oil prices damped the earnings outlook for consumer companies and airlines.
Deutsche Bank AG had its biggest decline this week, leading financial shares lower. Metro AG, the country's largest retailer, and Lufthansa AG, Europe's second-biggest airline, dropped for the first time in three days as crude rebounded in New York.
The benchmark DAX Index slipped 33.11, or 0.5 percent, to 6,200.30 as of 9:48 a.m. in Frankfurt. DAX futures expiring in September decreased 0.5 percent to 6,206.50. The HDAX Index of the country's 110 biggest companies retreated 0.5 percent.
``The banking topic isn't over yet and investors' uncertainty about the industry's future persists,'' said Raimund Saxinger, a senior fund manager at Frankfurt Trust, which oversees the equivalent of $28 billion.
The benchmark index for German equities is down 23 percent this year on concern more than $500 billion in credit-related losses and writedowns at the world's biggest financial firms, slowing economic growth and higher fuel costs will curb earnings.
Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned. The bank, which plunged 45 percent in New York trading yesterday, has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman will report more writedowns and losses today.
`Extremely Nervous'
Deutsche Bank retreated 1.045 euros, or 1.7 percent, to 60.92. Chief Executive Officer Josef Ackermann said financial markets remain ``extremely nervous.''
An economic slowdown ``could lead to the next phase of difficulties for financial markets,'' Ackermann said at a banking conference in Frankfurt today.
Commerzbank AG, Germany's second-largest lender, fell 15 cents, or 0.9 percent, to 12.265 euros. Hypo Real Estate Holding AG, the country's second-biggest commercial-property lender, slipped 13 cents, or 0.8 percent, to 16.70 euros.
Crude oil climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange after OPEC President Chakib Khelil called on members to stop producing more than the group's set quota.
Metro declined 61 cents, or 1.5 percent, to 39.06 euros. Henkel KGaA, the maker of Persil detergent and Dial soap, lost 25 cents, or 1 percent, to 25.85 euros. Deutsche Lufthansa decreased 12.5 cents, or 0.8 percent, to 15.065 euros.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Leoni AG (LEO GY) retreated a second day, losing 64 cents, or 2.3 percent, to 27.15 euros. HSBC Holdings Plc downgraded shares of Germany's biggest maker of electrical cables for cars to ``underweight'' from ``neutral.''
ThyssenKrupp AG (TKA GY) gained for a second time this week, adding 31 cents, or 1.1 percent, to 27.43 euros. Germany's largest steelmaker will expand its bearings factory in Slovakia to make parts for wind power stations, Hospodarske Noviny reported.
Tognum AG (TGM GY) added 34 cents, or 2.5 percent, to 14.12 euros, the steepest advance in more than two weeks. The German diesel-engine maker asked Jefferies Group Inc. to handle the sale of its driveshaft unit Rotorion, Financial Times Deutschland reported, citing an unidentified person familiar with the deal. Neither Tognum nor Jefferies would comment, the newspaper said.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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Sept. 10 (Bloomberg) -- German stocks retreated for a second day as concern mounted banks may post more credit-related losses and a jump in oil prices damped the earnings outlook for consumer companies and airlines.
Deutsche Bank AG had its biggest decline this week, leading financial shares lower. Metro AG, the country's largest retailer, and Lufthansa AG, Europe's second-biggest airline, dropped for the first time in three days as crude rebounded in New York.
The benchmark DAX Index slipped 33.11, or 0.5 percent, to 6,200.30 as of 9:48 a.m. in Frankfurt. DAX futures expiring in September decreased 0.5 percent to 6,206.50. The HDAX Index of the country's 110 biggest companies retreated 0.5 percent.
``The banking topic isn't over yet and investors' uncertainty about the industry's future persists,'' said Raimund Saxinger, a senior fund manager at Frankfurt Trust, which oversees the equivalent of $28 billion.
The benchmark index for German equities is down 23 percent this year on concern more than $500 billion in credit-related losses and writedowns at the world's biggest financial firms, slowing economic growth and higher fuel costs will curb earnings.
Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned. The bank, which plunged 45 percent in New York trading yesterday, has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman will report more writedowns and losses today.
`Extremely Nervous'
Deutsche Bank retreated 1.045 euros, or 1.7 percent, to 60.92. Chief Executive Officer Josef Ackermann said financial markets remain ``extremely nervous.''
An economic slowdown ``could lead to the next phase of difficulties for financial markets,'' Ackermann said at a banking conference in Frankfurt today.
Commerzbank AG, Germany's second-largest lender, fell 15 cents, or 0.9 percent, to 12.265 euros. Hypo Real Estate Holding AG, the country's second-biggest commercial-property lender, slipped 13 cents, or 0.8 percent, to 16.70 euros.
Crude oil climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange after OPEC President Chakib Khelil called on members to stop producing more than the group's set quota.
Metro declined 61 cents, or 1.5 percent, to 39.06 euros. Henkel KGaA, the maker of Persil detergent and Dial soap, lost 25 cents, or 1 percent, to 25.85 euros. Deutsche Lufthansa decreased 12.5 cents, or 0.8 percent, to 15.065 euros.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Leoni AG (LEO GY) retreated a second day, losing 64 cents, or 2.3 percent, to 27.15 euros. HSBC Holdings Plc downgraded shares of Germany's biggest maker of electrical cables for cars to ``underweight'' from ``neutral.''
ThyssenKrupp AG (TKA GY) gained for a second time this week, adding 31 cents, or 1.1 percent, to 27.43 euros. Germany's largest steelmaker will expand its bearings factory in Slovakia to make parts for wind power stations, Hospodarske Noviny reported.
Tognum AG (TGM GY) added 34 cents, or 2.5 percent, to 14.12 euros, the steepest advance in more than two weeks. The German diesel-engine maker asked Jefferies Group Inc. to handle the sale of its driveshaft unit Rotorion, Financial Times Deutschland reported, citing an unidentified person familiar with the deal. Neither Tognum nor Jefferies would comment, the newspaper said.
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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U.K. Stocks Decline; Royal Bank and Barclays Lead the Retreat
By Sarah Thompson
Sept. 10 (Bloomberg) -- U.K. stocks fell for a second day, led by Royal Bank of Scotland Group Plc and Barclays Plc, as investors speculated Lehman Brothers Holdings Inc. might report more losses and writedowns today.
Old Mutual Plc dropped 4.3 percent after South Africa's biggest insurer said it will write down $135 million in the value of preferred stock in Fannie Mae and Freddie Mac.
The FTSE 100 Index retreated 22.8, or 0.4 percent, to 5,392.8 at 9:01 a.m. in London. The FTSE All-Share Index lost 0.5 percent while Ireland's ISEQ Index decreased 1.7 percent.
The U.K. economy is contracting for the first time in at least a decade, the National Institute for Economic and Social Research said.
Gross domestic product dropped 0.2 percent in the June to August period and fell 0.1 percent in the three months through July, the group, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement today.
RBS, the U.K.'s second-biggest bank, dropped 2.5 percent to 242.75 pence. Barclays, the third-largest, decreased 2.1 percent to 358.
Lehman, the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned.
The bank, which plunged 45 percent in New York trading yesterday, has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman will report more writedowns and losses today.
Old Mutual decreased 4.3 percent to 96.6 pence. The company will write down $135 million in the value of preferred stock in Fannie Mae and Freddie Mac and increase reserves by $155 million for guarantees on policies in the U.S. The company will set aside $250 million to support its operation in Bermuda, it said.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
U.K. companies:
EasyJet Plc (EZJ LN) lost 13 pence, or 3.5 percent, to 362.5. Europe's second-biggest discount airline had its share rating downgraded by UBS AG, which said gains in the stock don't reflect challenges it faces next year.
Just Retirement Plc (JR/ LN) fell 0.5 pence, or 0.4 percent, to 119. The U.K. life insurer for retired workers said full-year profit declined 60 percent as it paid out more in claims.
Kesa Electricals Plc (KESA LN) plunged 13.15 pence, or 8.5 percent, to 141.25. The owner of Darty electronics shops in France and the U.K. Comet chain said first-quarter sales dropped after higher living costs hurt demand for flat-screen televisions and laptop computers.
Next Plc (NXT LN) decreased 52 pence, or 4.6 percent, to 1,091. The U.K.'s second-largest clothes retailer said first-half profit fell 13 percent as higher living costs left Britons with less to spend on fashions.
RAB Capital Plc (RAB LN) dropped 3.75 pence, or 13 percent, to 25.5. The London-based hedge fund manager is proposing to freeze client redemptions on its special situations investments and cutting fees on the pools.
RSA Insurance Group Plc (RSA LN) slipped 6.9 pence, or 4.3 percent, to 155.4. The U.K.'s second-largest non-life insurer was cut to ``underweight'' from ``overweight'' at JPMorgan Chase & Co., which said M&A is ``unlikely at current levels.''
Thorntons Plc (THT LN) gained 3 pence, or 2.7 percent, to 115. The U.K. chocolate maker founded in 1911 said full-year profit rose 15 percent on commercial sales.
Town Centre Securities Plc (TCSC LN) lost 2.5 pence, or 1.2 percent, to 199.5. The U.K. real estate company reported a full- year loss of 11.2 million pounds from a 0.5 million pound profit and said it is facing ``very challenging times.''
Irish companies:
Ryanair Holdings Plc (RYA ID) decreased 7 cents, or 2.5 percent, to 2.73 euros. Europe's biggest discount airline postponed the opening of its Edinburgh base after a strike by Boeing Co. machinists delayed the delivery of planes.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
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Sept. 10 (Bloomberg) -- U.K. stocks fell for a second day, led by Royal Bank of Scotland Group Plc and Barclays Plc, as investors speculated Lehman Brothers Holdings Inc. might report more losses and writedowns today.
Old Mutual Plc dropped 4.3 percent after South Africa's biggest insurer said it will write down $135 million in the value of preferred stock in Fannie Mae and Freddie Mac.
The FTSE 100 Index retreated 22.8, or 0.4 percent, to 5,392.8 at 9:01 a.m. in London. The FTSE All-Share Index lost 0.5 percent while Ireland's ISEQ Index decreased 1.7 percent.
The U.K. economy is contracting for the first time in at least a decade, the National Institute for Economic and Social Research said.
Gross domestic product dropped 0.2 percent in the June to August period and fell 0.1 percent in the three months through July, the group, whose clients include the Bank of England and the U.K. Treasury, said in an e-mailed statement today.
RBS, the U.K.'s second-biggest bank, dropped 2.5 percent to 242.75 pence. Barclays, the third-largest, decreased 2.1 percent to 358.
Lehman, the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned.
The bank, which plunged 45 percent in New York trading yesterday, has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman will report more writedowns and losses today.
Old Mutual decreased 4.3 percent to 96.6 pence. The company will write down $135 million in the value of preferred stock in Fannie Mae and Freddie Mac and increase reserves by $155 million for guarantees on policies in the U.S. The company will set aside $250 million to support its operation in Bermuda, it said.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
U.K. companies:
EasyJet Plc (EZJ LN) lost 13 pence, or 3.5 percent, to 362.5. Europe's second-biggest discount airline had its share rating downgraded by UBS AG, which said gains in the stock don't reflect challenges it faces next year.
Just Retirement Plc (JR/ LN) fell 0.5 pence, or 0.4 percent, to 119. The U.K. life insurer for retired workers said full-year profit declined 60 percent as it paid out more in claims.
Kesa Electricals Plc (KESA LN) plunged 13.15 pence, or 8.5 percent, to 141.25. The owner of Darty electronics shops in France and the U.K. Comet chain said first-quarter sales dropped after higher living costs hurt demand for flat-screen televisions and laptop computers.
Next Plc (NXT LN) decreased 52 pence, or 4.6 percent, to 1,091. The U.K.'s second-largest clothes retailer said first-half profit fell 13 percent as higher living costs left Britons with less to spend on fashions.
RAB Capital Plc (RAB LN) dropped 3.75 pence, or 13 percent, to 25.5. The London-based hedge fund manager is proposing to freeze client redemptions on its special situations investments and cutting fees on the pools.
RSA Insurance Group Plc (RSA LN) slipped 6.9 pence, or 4.3 percent, to 155.4. The U.K.'s second-largest non-life insurer was cut to ``underweight'' from ``overweight'' at JPMorgan Chase & Co., which said M&A is ``unlikely at current levels.''
Thorntons Plc (THT LN) gained 3 pence, or 2.7 percent, to 115. The U.K. chocolate maker founded in 1911 said full-year profit rose 15 percent on commercial sales.
Town Centre Securities Plc (TCSC LN) lost 2.5 pence, or 1.2 percent, to 199.5. The U.K. real estate company reported a full- year loss of 11.2 million pounds from a 0.5 million pound profit and said it is facing ``very challenging times.''
Irish companies:
Ryanair Holdings Plc (RYA ID) decreased 7 cents, or 2.5 percent, to 2.73 euros. Europe's biggest discount airline postponed the opening of its Edinburgh base after a strike by Boeing Co. machinists delayed the delivery of planes.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
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Fannie, Freddie Takeover Jolts Preferred Market as Prices Fall
By Caroline Salas
Sept. 10 (Bloomberg) -- Treasury Secretary Henry Paulson's takeover of Fannie Mae and Freddie Mac is roiling the market for preferred securities.
Prices of fixed-rate preferred stock fell an average of 9 cents to 71.5 cents on the dollar this week, according to Merrill Lynch & Co. index data, the biggest two-day drop in more than a decade. The 11 percent decline compares with a 1.4 percent drop in the Standard & Poor's 500 index over the same time.
In putting Fannie and Freddie in conservatorship, Paulson scrapped dividends on the mortgage finance companies' equity securities and said the U.S. would buy as much as $200 billion of preferred stock ranking ahead of existing issues. Investors are more hesitant to invest in similar securities of other financial institutions on concern Paulson set a precedent for issuers. Unlike common stock, preferreds typically carry fixed dividends.
Paulson's ``actions have damaged the preferred market,'' said Thomas Hayden, the investment strategist for Liberty Bankers Life Insurance in Dallas. ``Somebody is going to be looking at an issue of Fannie or Freddie preferred shares that were rated AA up until a few months ago. If that's not money good then what about the small regional bank in some part of the country?''
Hayden, whose $1.5 billion fixed-income portfolio contains preferred shares of Fannie and Freddie, said he's ``not interested'' in buying any more preferred securities.
Rising Costs
The market's tumble is making it more expensive for banks and brokers trying to raise fresh capital after taking $506 billion of writedowns and losses on the collapse of the subprime- mortgage market.
Sales of preferred securities in the U.S. have risen 48 percent this year to about $44 billion from more than $30 billion in the same period of 2007, according to data compiled by Bloomberg. The average yield as measured by the Merrill index has risen to 10.1 percent from 8.8 percent on Sept. 5 and 7.9 percent at the end of last year.
The takeover was ``unambiguously bad'' for preferred investors and ``likely set a precedent for any future rescue transactions,'' Kathleen Shanley, an analyst at bond research firm Gimme Credit LLC in Chicago, wrote in a Sept. 7 report.
Preferred shares of Washington-based Fannie and Freddie of McLean, Virginia were cut to the second-lowest rating by Standard & Poor's and Moody's Investors Service on Sept. 7. The grades were slashed 11 levels by S&P to C and 10 rankings to Ca by Moody's. Moody's rated their preferred stock Aa3, the fourth- highest grade, until July.
Biggest Losers
Freddie preferred shares have lost 83 percent the past two days, while Fannie's have declined 80 percent, the biggest losers in the Merrill index. The two companies account for about $24 billion of the $190 billion par amount in the index. Forty of the top 50 issuers have declined in the last two days.
The declines are particularly stinging for Fannie and Freddie investors because the companies have sold $20.4 billion of the preferred securities since November.
Paulson tried to calm preferred stock investors when he announced the rescue of the government-sponsored enterprises and said the takeover shouldn't have negative implications for the wider market.
``Preferred stock investors should recognize that the GSE's are unlike any other financial institutions and consequently GSE preferred stocks are not a good proxy for financial institution preferred stock more broadly,'' Paulson said in a Sept. 7 statement. ``The broader market for preferred stock issuance should continue to remain available for well-capitalized institutions.''
Lehman, Merrill
Lehman Brothers Holdings Inc. is down 42 percent, while Merrill Lynch has tumbled 16 percent.
``In the primary market it's going to be much more difficult for financials across the board,'' Hayden said. ``If Lehman Brothers thought they needed to go to the market and had any chance at all of issuing preferred stock to raise capital, it is now three times more difficult than it was last Friday.''
Mark Lane, spokesman for Lehman Brothers, and Danielle Robinson, spokeswoman for Merrill, declined to comment. Lehman and Merrill are both based in New York.
Investors will be ``gun-shy'' about buying preferred shares, said Thomas Houghton, who manages $2 billion of corporate bonds at Advantus Capital Management in St. Paul, Minnesota.
``There are a number of financial institutions that are experiencing distress right now, so the dividend on the common and the preferred share are going to be the first to go,'' he said.
To contact the reporter on this story: Caroline Salas in New York at csalas1@bloomberg.net
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Stocks in Europe, Asia Decline; U.S. Index Futures Advance
By Sarah Jones
Sept. 10 (Bloomberg) -- Stocks in Europe and Asia declined for a second day on concern that credit losses at banks will increase, while a rebound in oil curbed earnings prospects for travel companies. U.S. index futures advanced.
Barclays Plc dropped 2.8 percent and UBS AG sank 2.6 percent. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman Brothers Holdings Inc. will report more writedowns and losses today. Ryanair Holdings Plc, Europe's biggest discount airline, dropped 3.1 percent as crude oil rose.
Europe's Dow Jones Stoxx 600 Index lost 0.4 percent to 278.37 at 10:05 a.m. in London, and the MSCI Asia Pacific Index decreased 0.7 percent. More than $17 trillion has been erased from global equities since October as a surge in mortgage defaults sparked $507 billion in bank writedowns and losses.
``In these periods of unprecedented volatility every word by banks or financial institutions is going to be scrutinized,'' said Andy Brough, a fund manager at Schroder Investment Management in London, which has about $12.7 billion. ``People are unsure what the assets of these companies are worth.''
Futures on the Standard & Poor's 500 Index rose 0.9 percent after FedEx Corp., the largest U.S. air-cargo carrier, said profit will surpass its forecast.
RSA Insurance Group Plc slumped 3.8 percent after JPMorgan Chase & Co. recommended selling shares of the U.K's second- largest non-life insurer, saying takeover prospects were limited. Sanofi-Aventis SA gained 4.7 percent on a report that Chief Executive Officer Gerard Le Fur will be replaced by GlaxoSmithKline Plc's Chris Viehbacher.
National Markets
National benchmark indexes dropped in 13 of the 17 western European markets that were open. Germany's DAX declined 0.3 percent, and the U.K.'s FTSE 100 lost 0.5 percent. CAC 40 added 0.1 percent.
Indexes extended declines after the European Commission cut its growth estimate for the euro area this year and signaled it may also lower its 2009 forecast as the U.S. and Asian economies cool.
Barclays, the U.K.'s third-biggest bank, fell 2.3 percent to 357.5 pence. UBS, the European bank hardest hit by subprime- related losses, declined 1.5 percent to 23.88 francs.
Lehman, the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned.
The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.
Asset Sale Talks
Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.
The shares rebounded in German trading today after tumbling 45 percent in New York yesterday. Lehman led financial shares to their steepest drop since July after talks to sell a stake to Korea Development Bank broke down.
Ryanair Holdings, Europe's biggest discount airline, fell 3.1 percent to 2.71 euros. Carnival Plc, the world's largest cruise-line company, retreated 4.1 percent to 2,012 pence.
Oil jumped in New York as OPEC President Chakib Khelil called on members to stop producing more than the group's set quota after prices fell to almost $100 a barrel.
Crude for October delivery climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange.
EasyJet
EasyJet Plc, Europe's second-biggest discount airline, lost 3.5 percent to 362.5 pence. UBS AG downgraded the shares to `sell'' from ``neutral,'' which said gains in the stock don't reflect challenges it faces next year.
FedEx climbed 5 percent to $88.96 in German trading after saying first-quarter profit will exceed the company's forecast as fuel spending fell.
RSA led a retreat by insurers, declining 4.1 percent to 155.6 pence after JPMorgan cut the insurer to ``underweight'' from ``overweight'' as analysts said they see limited prospects for mergers and acquisitions at current levels.
``The risks are now on the downside,'' London-based analyst Andrew Hughes wrote in a note to investors.
Royal Bank of Scotland Group Plc lowered its recommendation for the shares to ``hold'' from ``buy.''
Old Mutual Plc lost 2.6 percent to 98.3 pence, after South Africa's biggest insurer named Julian Roberts as chief executive officer to replace Jim Sutcliffe, who has resigned as the company added to writedowns related to its U.S. business.
Roberts has been head of Old Mutual's Skandia unit since February 2006.
Sanofi-Aventis jumped 4.7 percent to 49.75 euros after Les Echos reported Gerard Le Fur is leaving. Sanofi shareholders Total SA and L'Oreal SA demanded the removal of Le Fur, who had lost the board's confidence, the French newspaper said, citing unidentified people.
Sanofi spokesman Jean-Marc Podvin said he had no information on the matter in an interview today.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Read more...
Sept. 10 (Bloomberg) -- Stocks in Europe and Asia declined for a second day on concern that credit losses at banks will increase, while a rebound in oil curbed earnings prospects for travel companies. U.S. index futures advanced.
Barclays Plc dropped 2.8 percent and UBS AG sank 2.6 percent. Analysts including Merrill Lynch & Co.'s Guy Moszkowski predict Lehman Brothers Holdings Inc. will report more writedowns and losses today. Ryanair Holdings Plc, Europe's biggest discount airline, dropped 3.1 percent as crude oil rose.
Europe's Dow Jones Stoxx 600 Index lost 0.4 percent to 278.37 at 10:05 a.m. in London, and the MSCI Asia Pacific Index decreased 0.7 percent. More than $17 trillion has been erased from global equities since October as a surge in mortgage defaults sparked $507 billion in bank writedowns and losses.
``In these periods of unprecedented volatility every word by banks or financial institutions is going to be scrutinized,'' said Andy Brough, a fund manager at Schroder Investment Management in London, which has about $12.7 billion. ``People are unsure what the assets of these companies are worth.''
Futures on the Standard & Poor's 500 Index rose 0.9 percent after FedEx Corp., the largest U.S. air-cargo carrier, said profit will surpass its forecast.
RSA Insurance Group Plc slumped 3.8 percent after JPMorgan Chase & Co. recommended selling shares of the U.K's second- largest non-life insurer, saying takeover prospects were limited. Sanofi-Aventis SA gained 4.7 percent on a report that Chief Executive Officer Gerard Le Fur will be replaced by GlaxoSmithKline Plc's Chris Viehbacher.
National Markets
National benchmark indexes dropped in 13 of the 17 western European markets that were open. Germany's DAX declined 0.3 percent, and the U.K.'s FTSE 100 lost 0.5 percent. CAC 40 added 0.1 percent.
Indexes extended declines after the European Commission cut its growth estimate for the euro area this year and signaled it may also lower its 2009 forecast as the U.S. and Asian economies cool.
Barclays, the U.K.'s third-biggest bank, fell 2.3 percent to 357.5 pence. UBS, the European bank hardest hit by subprime- related losses, declined 1.5 percent to 23.88 francs.
Lehman, the fourth-largest U.S. securities firm, will report third-quarter financial results today at about 7:30 a.m. in New York, a week earlier than planned.
The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.
Asset Sale Talks
Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.
The shares rebounded in German trading today after tumbling 45 percent in New York yesterday. Lehman led financial shares to their steepest drop since July after talks to sell a stake to Korea Development Bank broke down.
Ryanair Holdings, Europe's biggest discount airline, fell 3.1 percent to 2.71 euros. Carnival Plc, the world's largest cruise-line company, retreated 4.1 percent to 2,012 pence.
Oil jumped in New York as OPEC President Chakib Khelil called on members to stop producing more than the group's set quota after prices fell to almost $100 a barrel.
Crude for October delivery climbed as much as $1.41, or 1.4 percent, to $104.67 a barrel on the New York Mercantile Exchange.
EasyJet
EasyJet Plc, Europe's second-biggest discount airline, lost 3.5 percent to 362.5 pence. UBS AG downgraded the shares to `sell'' from ``neutral,'' which said gains in the stock don't reflect challenges it faces next year.
FedEx climbed 5 percent to $88.96 in German trading after saying first-quarter profit will exceed the company's forecast as fuel spending fell.
RSA led a retreat by insurers, declining 4.1 percent to 155.6 pence after JPMorgan cut the insurer to ``underweight'' from ``overweight'' as analysts said they see limited prospects for mergers and acquisitions at current levels.
``The risks are now on the downside,'' London-based analyst Andrew Hughes wrote in a note to investors.
Royal Bank of Scotland Group Plc lowered its recommendation for the shares to ``hold'' from ``buy.''
Old Mutual Plc lost 2.6 percent to 98.3 pence, after South Africa's biggest insurer named Julian Roberts as chief executive officer to replace Jim Sutcliffe, who has resigned as the company added to writedowns related to its U.S. business.
Roberts has been head of Old Mutual's Skandia unit since February 2006.
Sanofi-Aventis jumped 4.7 percent to 49.75 euros after Les Echos reported Gerard Le Fur is leaving. Sanofi shareholders Total SA and L'Oreal SA demanded the removal of Le Fur, who had lost the board's confidence, the French newspaper said, citing unidentified people.
Sanofi spokesman Jean-Marc Podvin said he had no information on the matter in an interview today.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
Read more...
Banco do Brasil, Lan, Mexichem, Pampa: Latin Equity Preview
By William Freebairn and Paulo Winterstein
Sept. 10 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 5.1 percent yesterday to 3,368.57.
Argentina
Pampa Holdings SA (PAMP AR): Argentina's biggest electricity holding company plans to buy up to $30 million of its own shares. Pampa will pay between 1.1 peso and 1.7 peso a share over four months, it wrote in a statement yesterday. Pampa fell 4.3 percent to 1.35 peso, extending a loss this year to 44 percent.
Brazil
Banco do Brasil SA (BBAS3 BS) and Uniao de Bancos Brasileiros SA (UBBR11 BS): Banco do Brasil, Latin America's biggest bank by assets, and Unibanco, Brazil's third-largest non- government bank, are Deutsche Bank AG's top picks among Brazilian banks on their cheaper prices and earnings growth. Banco do Brasil trades at a price 8 times estimated 2009 earnings, and Unibanco trades at 7.5 times estimated earnings, compared with more than 9 times estimated profit for Banco Itau Holding Financeira SA and Banco Bradesco SA, analyst Mario Pierry wrote in a note yesterday. Banco do Brasil fell 2.1 percent to 21.49 reais. Unibanco fell 3.3 percent to 18.29 reais.
Klabin SA (KLBN4 BS): Corrugated paper sales in August likely rose 1 percent from the year-ago period, the Brazilian Corrugated Paper Association said in a preview, Fator Corretora strategist Lika Takahashi wrote in a note yesterday. Klabin rose 1.6 percent to 4.38 reais.
Chile
Lan Airlines SA (LAN CC): Chile's biggest air carrier said its passenger traffic rose 16 percent and capacity increased 15 percent in August. As a result, the airline's so-called load factor rose 0.9 of a percentage point to 78.7 percent, Lan wrote in a statement distributed yesterday by Business Wire. Lan rose 0.3 percent to 6,300 pesos.
Sociedad Quimica y Minera de Chile SA (SQM/B CC): Chile's biggest fertilizer producer is unaware of any special circumstances to explain the fall in its share price, the Santiago-based company wrote in a statement yesterday, responding to a stock exchange query. SQM tumbled 8.2 percent to 14,878 pesos, extending the longest losing streak in two years.
Mexico
Grupo Televisa SAB (TLEVICPO MM): Mexico's biggest broadcaster may increase 2009 revenue 15 percent from a year earlier even as the U.S. and Mexican economies slow, Bank of Nova Scotia said in a research note sent to clients yesterday. Shares may trade at 63.03 pesos in 12 months, analyst Raul Ochoa said, keeping his ``neutral'' rating on the stock. Televisa fell 1.1 percent to 49.58 pesos.
Mexichem SAB (MEXCHEM* MM): Latin America's biggest maker of plastic pipe used in construction may begin a promotional effort to sell new shares at the end of September, IXE Grupo Financiero said in a research report yesterday. The plan to sell $300 million to $500 million in new shares may dilute the value of existing holders by as little as 8 percent, IXE said. Mexichem fell 1.6 percent to 23.68 pesos.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
Sept. 10 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 5.1 percent yesterday to 3,368.57.
Argentina
Pampa Holdings SA (PAMP AR): Argentina's biggest electricity holding company plans to buy up to $30 million of its own shares. Pampa will pay between 1.1 peso and 1.7 peso a share over four months, it wrote in a statement yesterday. Pampa fell 4.3 percent to 1.35 peso, extending a loss this year to 44 percent.
Brazil
Banco do Brasil SA (BBAS3 BS) and Uniao de Bancos Brasileiros SA (UBBR11 BS): Banco do Brasil, Latin America's biggest bank by assets, and Unibanco, Brazil's third-largest non- government bank, are Deutsche Bank AG's top picks among Brazilian banks on their cheaper prices and earnings growth. Banco do Brasil trades at a price 8 times estimated 2009 earnings, and Unibanco trades at 7.5 times estimated earnings, compared with more than 9 times estimated profit for Banco Itau Holding Financeira SA and Banco Bradesco SA, analyst Mario Pierry wrote in a note yesterday. Banco do Brasil fell 2.1 percent to 21.49 reais. Unibanco fell 3.3 percent to 18.29 reais.
Klabin SA (KLBN4 BS): Corrugated paper sales in August likely rose 1 percent from the year-ago period, the Brazilian Corrugated Paper Association said in a preview, Fator Corretora strategist Lika Takahashi wrote in a note yesterday. Klabin rose 1.6 percent to 4.38 reais.
Chile
Lan Airlines SA (LAN CC): Chile's biggest air carrier said its passenger traffic rose 16 percent and capacity increased 15 percent in August. As a result, the airline's so-called load factor rose 0.9 of a percentage point to 78.7 percent, Lan wrote in a statement distributed yesterday by Business Wire. Lan rose 0.3 percent to 6,300 pesos.
Sociedad Quimica y Minera de Chile SA (SQM/B CC): Chile's biggest fertilizer producer is unaware of any special circumstances to explain the fall in its share price, the Santiago-based company wrote in a statement yesterday, responding to a stock exchange query. SQM tumbled 8.2 percent to 14,878 pesos, extending the longest losing streak in two years.
Mexico
Grupo Televisa SAB (TLEVICPO MM): Mexico's biggest broadcaster may increase 2009 revenue 15 percent from a year earlier even as the U.S. and Mexican economies slow, Bank of Nova Scotia said in a research note sent to clients yesterday. Shares may trade at 63.03 pesos in 12 months, analyst Raul Ochoa said, keeping his ``neutral'' rating on the stock. Televisa fell 1.1 percent to 49.58 pesos.
Mexichem SAB (MEXCHEM* MM): Latin America's biggest maker of plastic pipe used in construction may begin a promotional effort to sell new shares at the end of September, IXE Grupo Financiero said in a research report yesterday. The plan to sell $300 million to $500 million in new shares may dilute the value of existing holders by as little as 8 percent, IXE said. Mexichem fell 1.6 percent to 23.68 pesos.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
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Chemtrade, Harry Winston May Move: Canadian Equity Preview
By John Kipphoff
Sept. 10 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading tomorrow. Stock symbols are in parentheses, and share prices are from the last close in Toronto.
The Standard & Poor's/TSX Composite Index fell 3.9 percent to 12,146.76.
Chemtrade Logistics Income Fund (CHE-U CN): The provider of industrial chemicals said that it expects its Beaumont, Texas, plant to resume production by mid-November, after being shut down on Aug. 21 because of an explosion. The company hasn't determined the amount of any insurance claim it will make, Toronto-based Chemtrade said in a statement on Canada NewsWire. The units dropped 11 percent to C$10.70.
Harry Winston Diamond Corp. (HW CN): The co-owner of the Diavik mine in northern Canada said second-quarter profit more than doubled to $49.9 million (C$53.5 million) from $20.1 million. Per-share net income of 81 cents a share topped the 44- cent average estimate of four analysts surveyed by Bloomberg. The shares fell 8.5 percent to C$17.38.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
Sept. 10 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading tomorrow. Stock symbols are in parentheses, and share prices are from the last close in Toronto.
The Standard & Poor's/TSX Composite Index fell 3.9 percent to 12,146.76.
Chemtrade Logistics Income Fund (CHE-U CN): The provider of industrial chemicals said that it expects its Beaumont, Texas, plant to resume production by mid-November, after being shut down on Aug. 21 because of an explosion. The company hasn't determined the amount of any insurance claim it will make, Toronto-based Chemtrade said in a statement on Canada NewsWire. The units dropped 11 percent to C$10.70.
Harry Winston Diamond Corp. (HW CN): The co-owner of the Diavik mine in northern Canada said second-quarter profit more than doubled to $49.9 million (C$53.5 million) from $20.1 million. Per-share net income of 81 cents a share topped the 44- cent average estimate of four analysts surveyed by Bloomberg. The shares fell 8.5 percent to C$17.38.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
U.S. Stock-Index Futures Gain; FedEx, Texas Instruments Climb
By Adam Haigh
Sept. 10 (Bloomberg) -- U.S. stock-index futures rose after FedEx Corp. said first-quarter profit will exceed a previous forecast on lower fuel spending and Texas Instruments Inc. maintained its sales outlook.
FedEx, the world's largest air-cargo carrier, climbed 4.1 percent in German trading as the new earnings projection topped analysts' estimates. Texas Instruments added 2.7 percent after the second-biggest U.S. semiconductor maker allayed concern that slower mobile-phone demand would drag down sales further. Lehman Brothers Holdings Inc. rallied 32 percent, indicating the stock may rebound from a slump that erased almost half of its value.
Futures on the Standard & Poor's 500 Index expiring in September added 10.4, or 0.9 percent, to 1,236.9 at 10:02 a.m. in London. Dow Jones Industrial Average futures climbed 79 to 11,326. Nasdaq-100 Index futures rose 21 to 1,749.75.
``What FedEx is trying to do is match any fluctuation that they can in the fuel prices,'' said David Hart, a senior equity analyst at London-based investment adviser Fat Prophets U.K. Ltd. ``Oil has come off a lot and that has been good for fuel prices for the company.''
Stocks tumbled yesterday as concern about Lehman's ability to raise capital rattled the banking industry and a drop in oil prices pushed energy companies down by the most in six years. The 3.4 percent decline in the S&P 500 threatened to erase the measure's rebound from a 2 1/2-year low on July 15, leaving it with a gain of 0.8 percent.
FedEx, Texas Instruments
FedEx climbed 4.1 percent to $88.20. Earnings will be $1.23 a share for the period ended Aug. 31, eclipsing the outlook of 80 cents to $1, FedEx said yesterday. Analysts expected 95 cents a share, according to the average of 12 estimates compiled by Bloomberg.
Texas Instruments rose 2.7 percent to $22.29 in Germany. Third-quarter revenue will be between $3.33 billion and $3.47 billion, the Dallas-based company said yesterday. The midpoint, $3.4 billion, matched a previous forecast and the average estimate of analysts in a Bloomberg survey.
Lehman rallied 32 percent to $10.33 in Germany. The fourth- largest U.S. securities firm said it will announce third-quarter results and ``key strategic initiatives'' today at 7:30 a.m. in New York, a week earlier than the date scheduled to report earnings. The stock slumped 45 percent yesterday.
The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.
Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.
For Related News:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
Read more...
Sept. 10 (Bloomberg) -- U.S. stock-index futures rose after FedEx Corp. said first-quarter profit will exceed a previous forecast on lower fuel spending and Texas Instruments Inc. maintained its sales outlook.
FedEx, the world's largest air-cargo carrier, climbed 4.1 percent in German trading as the new earnings projection topped analysts' estimates. Texas Instruments added 2.7 percent after the second-biggest U.S. semiconductor maker allayed concern that slower mobile-phone demand would drag down sales further. Lehman Brothers Holdings Inc. rallied 32 percent, indicating the stock may rebound from a slump that erased almost half of its value.
Futures on the Standard & Poor's 500 Index expiring in September added 10.4, or 0.9 percent, to 1,236.9 at 10:02 a.m. in London. Dow Jones Industrial Average futures climbed 79 to 11,326. Nasdaq-100 Index futures rose 21 to 1,749.75.
``What FedEx is trying to do is match any fluctuation that they can in the fuel prices,'' said David Hart, a senior equity analyst at London-based investment adviser Fat Prophets U.K. Ltd. ``Oil has come off a lot and that has been good for fuel prices for the company.''
Stocks tumbled yesterday as concern about Lehman's ability to raise capital rattled the banking industry and a drop in oil prices pushed energy companies down by the most in six years. The 3.4 percent decline in the S&P 500 threatened to erase the measure's rebound from a 2 1/2-year low on July 15, leaving it with a gain of 0.8 percent.
FedEx, Texas Instruments
FedEx climbed 4.1 percent to $88.20. Earnings will be $1.23 a share for the period ended Aug. 31, eclipsing the outlook of 80 cents to $1, FedEx said yesterday. Analysts expected 95 cents a share, according to the average of 12 estimates compiled by Bloomberg.
Texas Instruments rose 2.7 percent to $22.29 in Germany. Third-quarter revenue will be between $3.33 billion and $3.47 billion, the Dallas-based company said yesterday. The midpoint, $3.4 billion, matched a previous forecast and the average estimate of analysts in a Bloomberg survey.
Lehman rallied 32 percent to $10.33 in Germany. The fourth- largest U.S. securities firm said it will announce third-quarter results and ``key strategic initiatives'' today at 7:30 a.m. in New York, a week earlier than the date scheduled to report earnings. The stock slumped 45 percent yesterday.
The bank has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.
Lehman plans to announce it's in talks with BlackRock Inc. to sell a package of mostly British residential real-estate assets, the Wall Street Journal reported, citing people it didn't identify.
For Related News:
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.
Read more...
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